[Federal Register: July 18, 2008 (Volume 73, Number 139)]
[Proposed Rules]
[Page 41415-42234]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jy08-27]
[[Page 41415]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 410 and 419
Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates; Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410 and 419
[CMS-1404-P]
RIN 0938-AP17
Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system to implement applicable statutory
requirements and changes arising from our continuing experience with
this system. In this proposed rule, we describe the proposed changes to
the amounts and factors used to determine the payment rates for
Medicare hospital outpatient services paid under the prospective
payment system. These changes would be applicable to services furnished
on or after January 1, 2009.
In addition, this proposed rule would update the revised Medicare
ambulatory surgical center (ASC) payment system to implement applicable
statutory requirements and changes arising from our continuing
experience with this system. In this proposed rule, we propose the
applicable relative payment weights and amounts for services furnished
in ASCs, specific HCPCS codes to which these proposed changes would
apply, and other pertinent ratesetting information for the CY 2009 ASC
payment system. These changes would be applicable to services furnished
on or after January 1, 2009.
DATES: To be assured consideration, comments on all sections of the
preamble of this proposed rule must be received at one of the addresses
provided in the ADDRESSES section no later than 5 p.m. EST on September
2, 2008.
ADDRESSES: In commenting, please refer to file code CMS-1404-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the filecode to find the document
accepting comments.
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1404-P, P.O. Box 8013, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1404-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses:
a. Room 445-G, Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call the telephone number (410) 786-9994 in advance to schedule
your arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following the
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Alberta Dwivedi, (410) 786-0378--
Hospital outpatient prospective payment issues; Dana Burley, (410) 786-
0378--Ambulatory surgical center issues; Suzanne Asplen, (410) 786-
4558--Partial hospitalization and community mental health center
issues; Sheila Blackstock, (410) 786-3502--Reporting of quality data
issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://
www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, MD 21244, on Monday through Friday of each week from 8:30
a.m. to 4 p.m. EST. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Electronic Access
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. Free public access is available on a Wide
Area Information Server (WAIS) through the Internet and via
asynchronous dial-in. Internet users can access the database by using
the World Wide Web; the Superintendent of Documents' home page address
is http://www.gpoaccess.gov/index.html, by using local WAIS client
software, or by telnet to swais.access.gpo.gov, then login as guest (no
password required). Dial-in users should use communications software
and modem to call (202) 512-1661; type swais, then login as guest (no
password required).
Alphabetical List of Acronyms Appearing in This Proposed Rule
ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
APC Ambulatory payment classification
AMP Average manufacturer price
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
[[Page 41417]]
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L.
106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Pub. L. 106-554
CAH Critical access hospital
CAP Competitive Acquisition Program
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CERT Comprehensive Error Rate Testing
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth
Edition, 2007, copyrighted by the American Medical Association
CRNA Certified registered nurse anesthetist
CY Calendar year
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DMERC Durable medical equipment regional carrier
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Pub. L. 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FTE Full-time equivalent
FY Federal fiscal year
GAO Government Accountability Office
GME Graduate medical education
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
IDE Investigational device exemption
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractors
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MIEA-TRHCA Medicare Improvements and Extension Act under Division B,
Title I of the Tax Relief Health Care Act of 2006, Pub. L. 109-432
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L.
110-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PPV Pneumococcal pneumonia vaccine
PRA Paperwork Reduction Act
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
[Program]
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-
248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
WAC Wholesale acquisition cost
In this document, we address two payment systems under the Medicare
program: The hospital outpatient prospective payment system (OPPS) and
the revised ambulatory surgical center (ASC) payment system. The
provisions relating to the OPPS are included in sections I. through
XIV., and XVI. through XXI. of this proposed rule and in Addenda A, B,
C (Addendum C is available on the Internet only; see section XVIII. of
this proposed rule), D1, D2, E, L, and M to this proposed rule. The
provisions related to the revised ASC payment system are included in
sections XV. and XVII. through XXI. of this proposed rule and in
Addenda AA, BB, DD1, DD2, and EE (Addendum EE is available on the
Internet only; see section XVIII. of this proposed rule) to this
proposed rule.
Table of Contents
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient
Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. APC Advisory Panel
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
E. Provisions of the Medicare, Medicaid, and SCHIP Extension Act of
2007
F. Summary of the Major Contents of This Proposed Rule
1. Proposed Updates Affecting OPPS Payments
2. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
3. Proposed OPPS Payment for Devices
4. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals
5. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
6. Proposed OPPS Payment for Brachytherapy Sources
7. Proposed OPPS Payment for Drug Administration Services
8. Proposed OPPS Payment for Hospital Outpatient Visits
9. Proposed Payment for Partial Hospitalization Services
10. Proposed Procedures That Will Be Paid Only as Inpatient Services
11. OPPS Nonrecurring and Policy Clarifications
12. Proposed OPPS Payment Status and Comment Indicators
13. OPPS Policy and Payment Recommendations
14. Proposed Update of the Revised Ambulatory Surgical Center
Payment System
15. Proposed Quality Data for Annual Payment Updates
16. Healthcare-Associated Conditions
17. Regulatory Impact Analysis
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
b. Proposed Use of Single and Multiple Procedure Claims
c. Proposed Calculation of CCRs
(1) Development of the CCRs
(2) Charge Compression
2. Proposed Calculation of Median Costs
a. Claims Preparations
b. Splitting Claims and Creation of ``Pseudo'' Single Claims
c. Completion of Claim Records and Median Cost Calculations
d. Proposed Calculation of Single Procedure APC Criteria-Based
Median Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Single Allergy Tests
(4) Echocardiography Services
(5) Nuclear Medicine Services
(6) Hyperbaric Oxygen Therapy
(7) Payment for Ancillary Outpatient Services When Patient Expires
(-CA Modifier)
e. Proposed Calculation of Composite APC Criteria-Based Median Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002 and
8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC
8001)
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC
(APC 8000)
(4) Mental Health Services Composite APC (APC 0034)
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(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007,
and 8008)
3. Proposed Calculation of OPPS Scaled Payment Weights
4. Proposed Changes to Packaged Services
a. Background
b. Service-Specific Packaging Issues
(1) Package Services Addressed by APC Panel Recommendations
(2) IVIG Preadministration-Related Services
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default CCRs
E. Proposed OPPS Payments to Certain Rural Hospitals
1. Hold Harmless Transitional Payment Changes Made by Pub. L. 109-
171 (DRA)
2. Proposed Adjustment for Rural SCHs Implemented in CY 2006 Related
to Pub. L. 108-173 (MMA)
F. Proposed Hospital Outpatient Outlier Payments
1. Background
2. Proposed Outlier Calculation
3. Outlier Reconciliation
G. Proposed Calculation of an Adjusted Medicare Payment from the
National Unadjusted Medicare Payment
H. Proposed Beneficiary Copayments
1. Background
2. Proposed Copayments
3. Calculation of a Proposed Adjusted Copayment Amount for an APC
Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New HCPCS and CPT Codes
1. Proposed Treatment of New HCPCS Codes Included in the April and
July Quarterly OPPS Updates for CY 2008
2. Proposed Treatment of New Category I and III CPT Codes and Level
II HCPCS Codes
B. Proposed OPPS Changes--Variations within APCs
1. Background
2. Application of the 2 Times Rule
3. Proposed Exceptions to the 2 Times Rule
C. New Technology APCs
1. Background
2. Proposed Movement of Procedures from New Technology APCs to
Clinical APCs
D. Proposed OPPS APC-Specific Policies
1. Trauma Response Associated with Hospital Critical Care Services
(APC 0618)
2. Suprachoroidal Delivery of Pharmacologic Agent (APC 0236)
3. Closed Treatment Fracture of Finger/Toe/Trunk (APC 0043)
4. Individual Psychotherapy (APCs 0322 and 0323)
5. Implant Injection for Vesicoureteral Reflex (APC 0162)
IV. Proposed OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
a. Background
b. Proposed Policy
2. Proposed Provisions for Reducing Transitional Pass-Through
Payments to Offset Costs Packaged into APC Groups
a. Background
b. Proposed Policy
B. Proposed Adjustment to OPPS Payments for Partial or Full Credit
Devices
1. Background
2. Proposed APCs and Devices Subject to the Adjustment Policy
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for Additional
Costs of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Proposed Drugs and Biologicals with Expiring Pass-Through Status
in CY 2008
3. Proposed Drugs, Biologicals, and Radiopharmaceuticals with New or
Continuing Pass-Through Status in CY 2009
4. Proposed Reduction of Transitional Pass-Through Payments for
Diagnostic Radiopharmaceuticals to Offset Costs Packaged into APC
Groups
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals,
and Radiopharmaceuticals
a. Drugs, Biologicals, and Therapeutic Radiopharmaceuticals
b. Proposed Payment for Diagnostic Radiopharmaceuticals and Contrast
Agents
3. Proposed Payment for Drugs and Biologicals without Pass-Through
Status That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs)
b. Proposed Payment Policy
c. Proposed Payment for Blood Clotting Factors
4. Proposed Payment for Therapeutic Radiopharmaceuticals
a. Background
b. Proposed Payment Policy
5. Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals with HCPCS Codes, but without OPPS Hospital
Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Brachytherapy Sources
A. Background
B. Proposed OPPS Payment Policy
VIII. Proposed OPPS Payment for Drug Administration Services
A. Background
B. Proposed Coding and Payment for Drug Administration Services
IX. Proposed OPPS Payment for Hospital Outpatient Visits
A. Background
B. Proposed Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
2. Emergency Department Visits
3. Visit Reporting Guidelines
X. Proposed Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update
C. Proposed Policy Changes
1. Proposal to Deny Payments for Low Intensity Days
2. Proposal to Strengthen PHP Patient Eligibility Criteria
3. Proposed Partial Hospitalization Coding Update
C. Proposed Separate Threshold for Outlier Payments to CMHCs
XI. Proposed Procedures That Will Be Paid Only as Inpatient
Procedures
A. Background
B. Proposed Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy Clarifications
A. Physician Supervision of HOPD Services
1. Background
2. Summary
B. Reporting of Pathology Services for Prostrate Saturation Biopsy
XIII. Proposed OPPS Payment Status and Comment Indicators
A. Proposed OPPS Payment Status Indicator Definitions
1. Proposed Payment Status Indicators to Designate Services That Are
Paid under the OPPS
2. Proposed Payment Status Indicators to Designate Services That Are
Paid under a Payment System Other Than the OPPS
3. Proposed Payment Status Indicators to Designate Services That Are
Not Recognized under the OPPS But That May Be Recognized by Other
Institutional Providers
4. Proposed Payment Status Indicators to Designate Services That Are
Not Payable by Medicare
B. Proposed Comment Indicator Definitions
XIV. OPPS Policy and Payment Recommendations
A. Medicare Payment Advisory Commission (MedPAC) Recommendations
1. March 2008 Report
2. June 2007 Report
B. APC Panel Recommendations
C. OIG Recommendations
XV. Proposed Update of the Revised Ambulatory Surgical Center
Payment System
A. Background
1. Legislative Authority for the ASC Payment System
2. Prior Rulemaking
3. Policies Governing Changes to the Lists of HCPCS Codes and
Payment Rates for ASC Covered Surgical Procedures and Covered
Ancillary Services
B. Proposed Treatment of New Codes
1. Proposed Treatment of New Category I and III CPT Codes and Level
II HCPCS Codes
2. Proposed Treatment of New Level II HCPCS Codes Implemented in
April and July 2008
C. Proposed Update to the Lists of ASC Covered Surgical Procedures
and Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Additions to the List of ASC Covered Surgical Procedures
b. Covered Surgical Procedures Designated as Office Based
(1) Background
(2) Proposed Changes to Covered Surgical Procedures Designated as
Office-Based for CY 2009
c. Covered Surgical Procedures Designated as Device-Intensive
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(1) Background
(2) Proposed Changes to List of Covered Surgical Procedures
Designated as Device-Intensive for CY 2009
2. Covered Ancillary Services
D. Proposed ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services
1. Proposed Payment for Covered Surgical Procedures
a. Background
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates
for CY 2009
c. Proposed Adjustment to ASC Payments for Partial or Full Device
Credit
2. Proposed Payment for Covered Ancillary Services
a. Background
b. Proposed Payment for Covered Ancillary Services for CY 2009
E. New Technology Intraocular Lenses
1. Background
2. NTIOL Application Process for Payment Adjustment
3. Classes of NTIOLs Approved and New Request for Payment Adjustment
a. Background
b. Requests to Establish New NTIOL Class for CY 2009 and Deadline
for Public Comment
4. Proposed Payment Adjustment
5. Proposed ASC Payment for Insertion of IOLs
F. Proposed ASC Payment and Comment Indicators
1. Background
2. Proposed ASC Payment and Comment Indicators
G. Calculation of the ASC Conversion Factor and ASC Payment Rates
1. Background
2. Proposed Policy Regarding Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2009 and Future
Years
b. Updating the ASC Conversion Factor
3. Display of Proposed ASC Payment Rates
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Reporting Hospital Outpatient Quality Data for Annual Payment
Update
2. Reporting ASC Quality Data for Annual Payment Update
B. Existing Hospital Outpatient Measures for CY 2009
C. Proposed Quality Measures for CY 2010 and Subsequent Calendar
Years and Proposed Process to Update Measures
1. Proposed Quality Measures for CY 2010 Payment Determinations
2. Proposed Process for Updating Measures
3. Possible New Quality Measures for CY 2011 and Subsequent Calendar
Years
D. Proposed Payment Reduction for Hospitals That Fail to Meet the
HOP QDRP Requirements for the CY 2009 Payment Update
1. Background
2. Proposed Reduction of OPPS Payments for Hospitals That Fail to
Meet the HOP QDRP CY 2009 Payment Update Requirements
a. Calculation of Reduced National Unadjusted Payment Rates
b. Calculation of Reduced Minimum Unadjusted and National Unadjusted
Beneficiary Copayments
c. Treatment of Other Payment Adjustments
E. Requirements for HOP Quality Data Reporting for CY 2010 and
Subsequent Calendar Years
1. Administrative Requirements
2. Data Collection and Submission Requirements
3. HOP QDRP Validation Requirements
a. Proposed Data Validation Requirements for CY 2010
b. Alternative Data Validation Approaches for CY 2011
F. Publication of HOP QDRP Data
G. Proposed HOP QDRP Reconsideration and Appeals Procedures
H. Reporting of ASC Quality Data
XVII. Healthcare-Associated Conditions
A. Background
B. Broadening the Concept of the IPPS Hospital-Acquired Conditions
Payment Provision to the OPPS
1. Criteria for Possible Candidate OPPS Conditions
2. Collaboration Process
3. Potential OPPS Healthcare-Associated Conditions
4. OPPS Infrastructure and Payment for Encounters Resulting in
Healthcare-Associated Conditions
XVIII. Files Available to the Public Via the Internet
A. Information in Addenda Related to the Proposed CY 2009 Hospital
OPPS
B. Information in Addenda Related to the Proposed CY 2009 ASC
Payment System
XIX. Collection of Information Requirements
A. Legislative Requirement for Solicitation of Comments
B. Associated Information Collections Not Specified in Regulatory
Text
C. Addresses for Submittal of Comments on ICRs
XX. Response to Comments
XXI. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Proposed Rule
1. Alternatives Considered
2. Limitation of Our Analysis
3. Estimated Effects of This Proposed Rule on Hospitals
4. Estimated Effects of This Proposed Rule on CMHCs
5. Estimated Effects of This Proposed Rule on Beneficiaries
6. Conclusion
7. Accounting Statement
C. Effects of ASC Payment System Changes in This Proposed Rule
1. Alternatives Considered
2. Limitations on Our Analysis
3. Estimated Effects of This Proposed Rule on ASCs
4. Estimated Effects of This Proposed Rule on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Proposed Requirements for Reporting of Quality Data
for Annual Hospital Payment Update
E. Executive Order 12866
Regulation Text
Addenda
Addendum A--Proposed OPPS APCs for CY 2009
Addendum AA--Proposed ASC Covered Surgical Procedures for CY 2009
(Including Surgical Procedures for Which Payment Is Packaged)
Addendum B--Proposed OPPS Payment by HCPCS Code for CY 2009
Addendum BB--Proposed ASC Covered Ancillary Services Integral to
Covered Surgical Procedures for CY 2009 (Including Ancillary
Services for Which Payment Is Packaged)
Addendum D1--Proposed OPPS Payment Status Indicators
Addendum DD1--Proposed ASC Payment Indicators
Addendum D2--Proposed OPPS Comment Indicators
Addendum DD2--Proposed ASC Comment Indicators
Addendum E--Proposed HCPCS Codes That Would Be Paid Only as
Inpatient Procedures for CY 2009
Addendum L--Proposed Out-Migration Adjustment
Addendum M--Proposed HCPCS Codes for Assignment to Composite APCs
for CY 2009
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient
Prospective Payment System
When the Medicare statute was originally enacted, Medicare payment
for hospital outpatient services was based on hospital-specific costs.
In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33) added section
1833(t) to the Social Security Act (the Act) authorizing implementation
of a PPS for hospital outpatient services.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
(BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital
outpatient prospective payment system (OPPS). The Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 (Pub.
L. 106-554) made further changes in the OPPS. Section 1833(t) of the
Act was also amended by the Medicare Prescription Drug, Improvement,
and Modernization Act (MMA) of 2003 (Pub. L. 108-173). The Deficit
Reduction Act (DRA) of 2005 (Pub. L. 109-171), enacted on February 8,
2006, also made additional changes in the OPPS. In addition, the
Medicare Improvements and Extension Act under Division B of Title I of
the
[[Page 41420]]
Tax Relief and Health Care Act (MIEA-TRHCA) of 2006 (Pub. L. 109-432),
enacted on December 20, 2006, made further changes in the OPPS.
Further, the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of
2007 (Pub. L. 110-173), enacted on December 29, 2007, made additional
changes in the OPPS. A discussion of these changes is included in
sections I.E., II.C., V., and VII. of this proposed rule.
The OPPS was first implemented for services furnished on or after
August 1, 2000. Implementing regulations for the OPPS are located at 42
CFR part 419.
Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the ambulatory payment
classification (APC) group to which the service is assigned. We use the
Healthcare Common Procedure Coding System (HCPCS) codes (which include
certain Current Procedural Terminology (CPT) codes) and descriptors to
identify and group the services within each APC group. The OPPS
includes payment for most hospital outpatient services, except those
identified in section I.B. of this proposed rule. Section
1833(t)(1)(B)(ii) of the Act provides for Medicare payment under the
OPPS for hospital outpatient services designated by the Secretary
(which includes partial hospitalization services furnished by community
mental health centers (CMHCs)) and hospital outpatient services that
are furnished to inpatients who have exhausted their Part A benefits,
or who are otherwise not in a covered Part A stay. Section 611 of Pub.
L. 108-173 added provisions for Medicare coverage of an initial
preventive physical examination, subject to the applicable deductible
and coinsurance, as an outpatient department service, payable under the
OPPS.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, services and items within an APC group cannot be
considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the APC group is more than 2 times greater than the
lowest median cost for an item or service within the same APC group
(referred to as the ``2 times rule''). In implementing this provision,
we generally use the median cost of the item or service assigned to an
APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
data to appropriately assign them to a clinical APC group, we have
established special APC groups based on costs, which we refer to as New
Technology APCs. These New Technology APCs are designated by cost bands
which allow us to provide appropriate and consistent payment for
designated new procedures that are not yet reflected in our claims
data. Similar to pass-through payments, an assignment to a New
Technology APC is temporary; that is, we retain a service within a New
Technology APC until we acquire sufficient data to assign it to a
clinically appropriate APC group.
B. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule.
Section 614 of Pub. L. 108-173 amended section 1833(t)(1)(B)(iv) of the
Act to exclude payment for screening and diagnostic mammography
services from the OPPS. The Secretary exercised the authority granted
under the statute to also exclude from the OPPS those services that are
paid under fee schedules or other payment systems. Such excluded
services include, for example, the professional services of physicians
and nonphysician practitioners paid under the Medicare Physician Fee
Schedule (MPFS); laboratory services paid under the clinical diagnostic
laboratory fee schedule (CLFS); services for beneficiaries with end-
stage renal disease (ESRD) that are paid under the ESRD composite rate;
and services and procedures that require an inpatient stay that are
paid under the hospital inpatient prospective payment system (IPPS). We
set forth the services that are excluded from payment under the OPPS in
Sec. 419.22 of the regulations.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals and entities that are excluded from payment under the OPPS.
These excluded entities include Maryland hospitals, but only for
services that are paid under a cost containment waiver in accordance
with section 1814(b)(3) of the Act; critical access hospitals (CAHs);
hospitals located outside of the 50 States, the District of Columbia,
and Puerto Rico; and Indian Health Service hospitals.
C. Prior Rulemaking
On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, relative payment weights, and other adjustments that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. We published in the Federal Register on November 27, 2007
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66580). In
that final rule with comment period, we revised the OPPS to update the
payment weights and conversion factor for services payable under the CY
2008 OPPS on the basis of claims data from January 1, 2006, through
December 31, 2006, and to implement certain provisions of Pub. L. 108-
173 and Pub. L. 109-171. In addition, we responded to public comments
received on the provisions of the November 26, 2006 final rule with
comment period (71 FR 67960) pertaining to the APC assignment of HCPCS
codes identified in Addendum B to that rule with the new interim (NI)
comment indicator; and public comments received on the August 2,
[[Page 41421]]
2007 OPPS/ASC proposed rule for CY 2008 (72 FR 42628).
Subsequent to publication of the CY 2008 OPPS/ASC final rule with
comment period, we published in the Federal Register on February 22,
2008, a correction notice (73 FR 9860) to correct certain technical
errors in the CY 2008 OPPS/ASC final rule with comment period.
D. APC Advisory Panel
1. Authority of the APC Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
the BBRA, and redesignated by section 202(a)(2) of the BBRA, requires
that we consult with an outside panel of experts to review the clinical
integrity of the payment groups and their weights under the OPPS. The
Act further specifies that the panel will act in an advisory capacity.
The Advisory Panel on Ambulatory Payment Classification (APC) Groups
(the APC Panel), discussed under section I.D.2. of this proposed rule,
fulfills these requirements. The APC Panel is not restricted to using
data compiled by CMS, and it may use data collected or developed by
organizations outside the Department in conducting its review.
2. Establishment of the APC Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the APC Panel. This expert panel, which may be composed of
up to 15 representatives of providers subject to the OPPS (currently
employed full-time, not as consultants, in their respective areas of
expertise), reviews clinical data and advises CMS about the clinical
integrity of the APC groups and their payment weights. For purposes of
this APC Panel, consultants or independent contractors are not
considered to be full-time employees. The APC Panel is technical in
nature, and is governed by the provisions of the Federal Advisory
Committee Act (FACA). Since its initial chartering, the Secretary has
renewed the APC Panel's charter three times: on November 1, 2002; on
November 1, 2004; and effective November 21, 2006. The current charter
specifies, among other requirements, that the APC Panel continues to be
technical in nature; is governed by the provisions of the FACA; may
convene up to three meetings per year; has a Designated Federal Officer
(DFO); and is chaired by a Federal official designated by the
Secretary.
The current APC Panel membership and other information pertaining
to the APC Panel, including its charter, Federal Register notices,
membership, meeting dates, agenda topics, and meeting reports can be
viewed on the CMS Web site at: http://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27, February 28, and March 1,
2001. Since the initial meeting, the APC Panel has held 13 subsequent
meetings, with the last meeting taking place on March 5, and March 6,
2008. Prior to each meeting, we publish a notice in the Federal
Register to announce the meeting, and when necessary, to solicit
nominations for APC Panel membership, and to announce new members.
The APC Panel has established an operational structure that, in
part, includes the use of three subcommittees to facilitate its
required APC review process. At its March 2008 meeting, the APC Panel
recommended that the Observation and Visit Subcommittee's name be
changed to the ``Visits and Observation Subcommittee.'' We are
accepting this recommendation and will refer to the subcommittee by its
new name, as appropriate, throughout this proposed rule. Thus, the
three current subcommittees are the Data Subcommittee, the Visits and
Observation Subcommittee, and the Packaging Subcommittee. The Data
Subcommittee is responsible for studying the data issues confronting
the APC Panel, and for recommending options for resolving them. The
Visits and Observation Subcommittee reviews and makes recommendations
to the APC Panel on all technical issues pertaining to observation
services and hospital outpatient visits paid under the OPPS (for
example, APC configurations and APC payment weights). The Packaging
Subcommittee studies and makes recommendations on issues pertaining to
services that are not separately payable under the OPPS, but whose
payments are bundled or packaged into APC payments. Each of these
subcommittees was established by a majority vote from the full APC
Panel during a scheduled APC Panel meeting, and their continuation as
subcommittees was last approved at the March 2008 APC Panel meeting.
All subcommittee recommendations are discussed and voted upon by the
full APC Panel.
Discussions of the recommendations resulting from the APC Panel's
March 2008 meeting are included in the sections of this proposed rule
that are specific to each recommendation. For discussions of earlier
APC Panel meetings and recommendations, we refer readers to previously
published hospital OPPS final rules or the Web site mentioned earlier
in this section.
E. Provisions of the Medicare, Medicaid, and SCHIP Extension Act of
2007
The Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007,
(Pub. L. 110-173), enacted on December 29, 2007, included the following
provisions that affect the OPPS and the revised APC payment system:
1. Increase in Physician Payment Update
Section 101 of the MMSEA provides a 0.5 percent increase in the
physician payment update from January 1, 2008 through June 30, 2008;
revises the Physician Assistance and Quality Initiative Fund, and
extends through 2009 the physician quality reporting system. We refer
readers to section XV. of this proposed rule for discussion of the
effect of this provision on services paid under the revised ASC payment
system.
2. Extended Expiration Date for Cost-Based OPPS Payment for
Brachytherapy Sources and Therapeutic Radiopharmaceuticals
Section 106 of the MMSEA amended section 1833(t)(16)(C) of the Act,
as amended by section 107 of the MIEA-TRCHA to extend for an additional
6 months, through June 30, 2008, payment for brachytherapy devices at
hospitals' charges adjusted to costs and to mandate that the same cost-
based payment methodology apply to therapeutic radiopharmaceuticals for
the same extended payment period. We refer readers to sections V. and
VII of this proposed rule for discussion of this provision.
3. Alternative Volume Weighting in Computation of Average Sales Price
(ASP) for Medicare Part B Drugs
Section 112 of the MMSEA amended section 1847A(b) to provide for
application of alternative volume weighting in computing the average
sales price (ASP) for payment of Part B multiple source and single
source drugs furnished after April 1, 2008, and for a special rule,
beginning April 1, 2008, for payment of single source drugs or
biologicals treated as a multiple source drug. This provision is
discussed in section V. of this proposed rule.
[[Page 41422]]
4. Extended Expiration Date for Certain IPPS Wage Index Geographic
Reclassifications and Special Exceptions
Section 117 of the MMSEA extended through September 30, 2008, both
the reclassifications that were extended by section 106 of MIEA-TRCHA
as well as certain special exception wage indices referenced in the FY
2005 IPPS final rule (69 FR 49105 and 49107). This provision also
amended section 508 of Pub. L. 108-173 to specify conditions specific
to the reclassification of a group of hospitals in a geographic area
for discharges occurring during FY 2008. In addition, for hospital
reclassifications extended by section 106(a) of the MIEA-TRCHA, that
resulted in a lower wage index for the second half of FY 2007 than
applicable to such hospitals during the first half of FY 2007, section
117 of the MMSEA directs the Secretary to apply a higher wage index to
such hospitals for the entire FY 2007. We refer readers to section
II.C. of this proposed rule for discussion of this provision.
F. Summary of the Major Contents of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare hospital OPPS for CY 2009. These changes would be effective
for services furnished on or after January 1, 2009. We are also setting
forth proposed changes to the Medicare revised ASC payment system for
CY 2009. These changes would be effective for services furnished on or
after January 1, 2009. The following is a summary of the major changes
that we are proposing to make:
1. Proposed Updates Affecting OPPS Payments
In section II. of this proposed rule, we set forth--
The methodology used to recalibrate the proposed APC
relative payment weights.
The proposed changes to packaged services.
The proposed update to the conversion factor used to
determine payment rates under the OPPS. In this section we set forth
changes in the amounts and factors for calculating the full annual
update increase to the conversion factor.
The proposed retention of our current policy to use the
IPPS wage indices to adjust, for geographic wage differences, the
portion of the OPPS payment rate and the copayment standardized amount
attributable to labor-related cost.
The proposed update of statewide average default CCRs.
The proposed application of hold harmless transitional
outpatient payments (TOPs) for certain small rural hospitals.
The proposed payment adjustment for rural SCHs.
The proposed calculation of the hospital outpatient
outlier payment.
The calculation of the proposed national unadjusted
Medicare OPPS payment.
The proposed beneficiary copayments for OPPS services.
2. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies
In section III. of this proposed rule, we discuss the proposed
additions of new procedure codes to the APCs; our proposal to establish
a number of new APCs; and our analyses of Medicare claims data and
certain recommendations of the APC Panel. We also discuss the
application of the 2 times rule and proposed exceptions to it; proposed
changes to specific APCs; and the proposed movement of procedures from
New Technology APCs to clinical APCs.
3. Proposed OPPS Payment for Devices
In section IV. of this proposed rule, we discuss proposed pass-
through payment for specific categories of devices and the proposed
adjustment for devices furnished at no cost or with partial or full
credit.
4. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
In section V. of this proposed rule, we discuss proposed CY 2009
OPPS payment for drugs, biologicals, and radiopharmaceuticals,
including the proposed payment for drugs, biologicals, and
radiopharmaceuticals with and without pass-through status.
5. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
In section VI. of this proposed rule, we discuss the estimate of CY
2009 OPPS transitional pass-through spending for drugs, biologicals,
and devices.
6. Proposed OPPS Payment for Brachytherapy Sources
In section VII. of this proposed rule, we discuss our proposal
concerning coding and payment for brachytherapy sources.
7. Proposed OPPS Payment for Drug Administration Services
In section VIII. of this proposed rule, we set forth our proposed
policy concerning payment and coding for drug administration services.
8. Proposed OPPS Payment for Hospital Outpatient Visits
In section IX. of this proposed rule, we set forth our proposed
policies for the payment of clinic and emergency department visits and
critical care services based on claims paid under the OPPS.
9. Proposed Payment for Partial Hospitalization Services
In section X. of this proposed rule, we set forth our proposed
payment for partial hospitalization services, including the proposed
separate threshold for outlier payments for CMHCs.
10. Proposed Procedures That Will Be Paid Only as Inpatient Procedures
In section XI. of this proposed rule, we discuss the procedures
that we are proposing to remove from the inpatient list and assign to
APCs.
11. OPPS Nonrecurring Technical and Policy Clarifications
In section XII. of this proposed rule, we set forth our
nonrecurring technical and policy clarifications.
12. Proposed OPPS Payment Status and Comment Indicators
In section XIII. of this proposed rule, we discuss our proposed
changes to the definitions of status indicators assigned to APCs and
present our proposed comment indicators for the CY 2009 OPPS/ASC final
rule with comment period.
13. OPPS Policy and Payment Recommendations
In section XIV. of this proposed rule, we address recommendations
made by the Medicare Payment Advisory Commission (MedPAC) in its June
2007 and March 2008 reports to Congress, by the APC Panel regarding the
OPPS for CY 2009, and by the Office of the Inspector General (OIG) in
its June 2007 report.
14. Proposed Update of the Revised Ambulatory Surgical Center Payment
System
In section XV. of this proposed rule, we discuss the proposed
update of the revised ASC payment system payment rates for CY 2009.
15. Proposed Reporting of Hospital Outpatient Quality Data for Annual
Hospital Payment Rate Updates and CY 2009 Payment Reduction
In section XVI. of this proposed rule, we discuss the proposed
quality
[[Page 41423]]
measures for reporting hospital outpatient quality data for CY 2010 and
subsequent calendar years, set forth the requirements for data
collection and submission for the annual payment update, and propose a
reduction in the OPPS payment for hospitals that fail to meet the HOP
QDRP requirements for CY 2009.
16. Healthcare-Associated Conditions
In section XVII. of this proposed rule, we discuss considerations
related to potentially extending the principle of Medicare not paying
more for the preventable healthcare-associated conditions acquired
during inpatient stays paid under the IPPS to other Medicare payment
systems for healthcare-associated conditions that occur or result from
care in other settings.
17. Regulatory Impact Analysis
In section XXI. of this proposed rule, we set forth an analysis of
the impact the proposed changes would have on affected entities and
beneficiaries.
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
and revise the relative payment weights for APCs at least annually. In
the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we
explained in detail how we calculated the relative payment weights that
were implemented on August 1, 2000 for each APC group. As discussed in
the November 13, 2000 interim final rule (65 FR 67824 through 67827),
except for some reweighting due to a small number of APC changes, these
relative payment weights continued to be in effect for CY 2001.
We are proposing to use the same basic methodology that we
described in the April 7, 2000 OPPS final rule with comment period to
recalibrate the APC relative payment weights for services furnished on
or after January 1, 2009, and before January 1, 2010 (CY 2009). That
is, we are proposing to recalibrate the relative payment weights for
each APC based on claims and cost report data for outpatient services.
We are proposing to use the most recent available data to construct the
database for calculating APC group weights. For the purpose of
recalibrating the proposed APC relative payment weights for CY 2009, we
used approximately 130 million final action claims for hospital
outpatient department (HOPD) services furnished on or after January 1,
2007, and before January 1, 2008. (For exact counts of claims used, we
refer readers to the claims accounting narrative under supporting
documentation for this proposed rule on the CMS Web site at: http://
www.cms.hhs.gov/HospitalOutpatientPPS/HORD/).
Of the 130 million final action claims for services provided in
hospital outpatient settings used to calculate the CY 2009 OPPS payment
rates for this proposed rule, approximately 100 million claims were of
the type of bill potentially appropriate for use in setting rates for
OPPS services (but did not necessarily contain services payable under
the OPPS). Of the 100 million claims, approximately 45 million were not
for services paid under the OPPS or were excluded as not appropriate
for use (for example, erroneous cost-to-charge ratios (CCRs) or no
HCPCS codes reported on the claim). We were able to use approximately
52 million whole claims of the approximately 54 million claims that
remained to set the OPPS APC relative weights that we are proposing for
the CY 2009 OPPS. From the 52 million whole claims, we created
approximately 90 million single records, of which approximately 60
million were ``pseudo'' single claims (created from multiple procedure
claims using the process we discuss in this section). Approximately
627,000 claims trimmed out on cost or units in excess of +/-3 standard
deviations from the geometric mean, yielding approximately 89 million
single bills used for median setting. Ultimately, we were able to use
for proposed CY 2009 ratesetting some portion of the data from 96
percent of the CY 2007 claims containing services payable under the
OPPS.
The proposed APC relative weights and payments for CY 2009 in
Addenda A and B to this proposed rule were calculated using claims from
CY 2007 that were processed before January 1, 2008, and continue to be
based on the median hospital costs for services in the APC groups. We
selected claims for services paid under the OPPS and matched these
claims to the most recent cost report filed by the individual hospitals
represented in our claims data. We continue to believe that it is
appropriate to use the most current full calendar year claims data and
the most recently submitted cost reports to calculate the median costs
which we are proposing to convert to relative payment weights for
purposes of calculating the CY 2009 payment rates.
b. Proposed Use of Single and Multiple Procedure Claims
For CY 2009, in general, we are proposing to continue to use single
procedure claims to set the medians on which the APC relative payment
weights would be based, with some exceptions as discussed below. We
generally use single procedure claims to set the median costs for APCs
because we believe that it is important that the OPPS relative weights
on which payment rates are based be appropriate when one and only one
procedure is furnished and because we are, so far, unable to ensure
that packaged costs can be appropriately allocated across multiple
procedures performed on the same date of service. We agree that,
optimally, it is desirable to use the data from as many claims as
possible to recalibrate the APC relative payment weights, including
those claims for multiple procedures. As we have for several years, we
continued to use date of service stratification and a list of codes to
be bypassed to convert multiple procedure claims to ``pseudo'' single
procedure claims. Through bypassing specified codes that we believe do
not have significant packaged costs, we are able to use more data from
multiple procedure claims. In many cases, this enables us to create
multiple ``pseudo'' single claims from claims that, as submitted,
contained numerous separately paid procedures reported on the same date
on one claim. We refer to these newly created single procedure claims
as ``pseudo'' single claims because they were submitted by providers as
multiple procedure claims. The history of our use of a bypass list to
generate ``pseudo'' single claims is well documented, most recently in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66590
through 66597). In addition, for CY 2008, we increased packaging and
created composite APCs, which also increased the number of bills we
were able to use for median calculation by enabling us to use claims
that contained multiple major procedures that previously would not have
been usable. We refer readers to section II.A.2.e. of this proposed
rule for discussion of the use of claims to establish median costs for
composite APCs.
We are proposing to continue to apply these processes to enable us
to use as much claims data as possible for ratesetting for the CY 2009
OPPS. Application of these processes in development of this proposed
rule data resulted in our being able to use some or all of the data
from 96 percent of the total claims that are eligible for use in
[[Page 41424]]
the OPPS ratesetting and modeling for this proposed rule. This process
enabled us to create, for this proposed rule, approximately 60 million
``pseudo'' single claims, including multiple imaging composite ``single
session'' bills (we refer readers to section II.A.2.e.(5) of this
proposed rule for further discussion), and approximately 30 million
``natural'' single bills. For this proposed rule, ``pseudo'' single
procedure bills represent 67 percent of all single bills used to
calculate median costs. This compares favorably to the CY 2008 OPPS/ASC
final rule with comment period data in which ``pseudo'' single bills
represented 66 percent of all single bills used to calculate the median
costs on which the CY 2008 OPPS payment rates were based.
For CY 2009, we are proposing to bypass 452 HCPCS codes that are
identified in Table 1 of this proposed rule. We are proposing to
continue the use of the codes on the CY 2008 OPPS bypass list. Since
the inception of the bypass list, we have calculated the percent of
``natural'' single bills that contained packaging for each HCPCS code
and the amount of packaging in each ``natural'' single bill for each
code. We have generally retained the codes on the previous year's
bypass list and used the update year's data (for CY 2009, data
available for the first CY 2008 APC Panel meeting for services
furnished on and after January 1, 2007 through and including September
30, 2007) to determine whether it would be appropriate to add
additional codes to the previous year's bypass list. The entire list
(including the codes that remained on the bypass list from prior years)
is open to public comment. We removed two HCPCS codes from the CY 2008
bypass list for this CY 2009 proposal because the codes were deleted on
December 31, 2005, specifically C8951 (Intravenous infusion for
therapy/diagnosis; each additional hour (List separately in addition to
C8950)) and C8955 (Chemotherapy administration, intravenous; infusion
technique, each additional hour (List separately in addition to
C8954)). We updated HCPCS codes on the CY 2008 bypass list that were
mapped to new HCPCS codes for CY 2009 ratesetting. We are proposing to
add to the bypass list all HCPCS codes not on the CY 2008 bypass list
that, using the APC Panel data, meet the same previously established
empirical criteria for the bypass list that are summarized below. We
assume that the representation of packaging in the single claims for
any given code is comparable to packaging for that code in the multiple
claims. The proposed criteria for the bypass list are:
There are 100 or more single claims for the code. This
number of single claims ensures that observed outcomes are sufficiently
representative of packaging that might occur in the multiple claims.
Five percent or fewer of the single claims for the code
have packaged costs on that single claim for the code. This criterion
results in limiting the amount of packaging being redistributed to the
separately payable procedure remaining on the claim after the bypass
code is removed and ensures that the costs associated with the bypass
code represent the cost of the bypassed service.
The median cost of packaging observed in the single claims
is equal to or less than $50. This limits the amount of error in
redistributed costs.
The code is not a code for an unlisted service.
In addition, we are proposing to add to the bypass list HCPCS codes
that CMS medical advisors believe have minimal associated packaging
based on their clinical assessment of the complete CY 2009 OPPS
proposal. To ensure clinical consistency in our treatment of related
services, we are also proposing to add the other CPT add-on codes for
drug administration services to the CY 2009 bypass list, in addition to
the CPT codes for additional hours of infusion that were previously
included on the CY 2008 bypass list, because adding them enables us to
use many correctly coded claims for initial drug administration
services that would otherwise not be available for ratesetting. The
result of this proposal is that the packaged costs associated with add-
on drug administration services are packaged into payment for the
initial administration service, as has been our payment policy for the
past 2 years for the CPT codes for additional hours of infusion. We are
also proposing to add HCPCS code G0390 (Trauma response team activation
associated with hospital critical care service) because we think it is
appropriate to attribute all of the packaged costs that appear on a
claim with HCPCS code G0390 and CPT code 99291 (Critical care,
evaluation and management of the critically ill or critically injured
patient; first 30-74 minutes) to CPT code 99291. If we did not add
HCPCS code G0390 to the bypass list, we would have many fewer claims to
use to set the median costs for APCs 0617 (Critical Care) and 0618
(Trauma Response with Critical Care). By definition, we could not have
any properly coded ``natural'' single bills for HCPCS code G0390.
Including HCPCS code G0390 on the bypass list allows us to create more
``pseudo'' single bills for CPT code 99291 and HCPCS code G0390, and,
therefore, to improve the accuracy of the median costs of APCs 0617 and
0618 to which the two codes are assigned, respectively. The Integrated
Outpatient Code Editor (I/OCE) logic rejects a line for HCPCS code
G0390 if CPT code 99291 is not also reported on the claim. Therefore,
we cannot assess whether HCPCS code G0390 would meet the empirical
criteria for inclusion on the bypass list because we have no
``natural'' single claims for HCPCS code G0390.
As a result of the multiple imaging composite APCs that we are
proposing to establish for CY 2009 as discussed in section II.A.2.e.(5)
of this proposed rule, the ``pseudo'' single converter logic for
bypassed codes that are also members of multiple imaging composite APCs
would change. When creating the set of ``pseudo'' single claims, claims
that contain ``overlap bypass codes,'' that is, those HCPCS codes that
are both on the bypass list and are members of the multiple imaging
composite APCs, are identified first. These HCPCS codes are then
processed to create multiple imaging composite ``single'' bills, that
is, claims containing HCPCS codes from only one imaging family, thus
suppressing the initial use of these codes as bypass codes. However,
these ``overlap bypass codes'' are retained on the bypass list because
single unit occurrences of these codes are identified as single bills
at the end of the ``pseudo'' single processing logic. The net effect of
using these HCPCS codes in building multiple imaging composite ``single
session'' claims rather than for bypass purposes is a slight reduction
in the number of ``pseudo'' single claims available for the ``overlap
bypass codes'' and a handful of services that would be frequently
billed with an ``overlap bypass code.'' This process also creates
multiple imaging composite ``single session'' bills that can be used
for calculating composite APC median costs. ``Overlap bypass codes''
that would be members of the proposed multiple imaging composite APCs
are identified by asterisks (*) in Table 1.
We note that this list contains bypass codes that were appropriate
to claims for services in CY 2007 and, therefore, includes codes that
were deleted for CY 2008. Moreover, there are codes on the proposed
bypass list that are new for CY 2008 and which are appropriate
additions to the bypass list in preparation for use of the CY 2008
claims for creation of the CY 2010 OPPS. Table 1 below includes a list
of the bypass codes that we are proposing
[[Page 41425]]
for CY 2009. We specifically request public comment on this proposed
list of bypass codes for CY 2009.
Table 1.--Proposed CY 2009 Bypass Codes for Creating ``Pseudo'' Single
Claims for Calculating Median Costs
------------------------------------------------------------------------
``Overlap bypass
HCPCS code Short descriptor codes''
------------------------------------------------------------------------
11056........................... Trim skin lesions, ..................
2 to 4.
11057........................... Trim skin lesions, ..................
over 4.
11300........................... Shave skin lesion. ..................
11301........................... Shave skin lesion. ..................
11719........................... Trim nail(s)...... ..................
11720........................... Debride nail, 1-5. ..................
11721........................... Debride nail, 6 or ..................
more.
11954........................... Therapy for ..................
contour defects.
17000........................... Destruct premalg ..................
lesion.
17003........................... Destruct premalg ..................
les, 2-14.
29220........................... Strapping of low ..................
back.
31231........................... Nasal endoscopy, ..................
dx.
31579........................... Diagnostic ..................
laryngoscopy.
51798........................... Us urine capacity ..................
measure.
53661........................... Dilation of ..................
urethra.
54240........................... Penis study....... ..................
56820........................... Exam of vulva w/ ..................
scope.
57150........................... Treat vagina ..................
infection.
67820........................... Revise eyelashes.. ..................
69210........................... Remove impacted ..................
earwax.
69220........................... Clean out mastoid ..................
cavity.
70030........................... X-ray eye for ..................
foreign body.
70100........................... X-ray exam of jaw. ..................
70110........................... X-ray exam of jaw. ..................
70120........................... X-ray exam of ..................
mastoids.
70130........................... X-ray exam of ..................
mastoids.
70140........................... X-ray exam of ..................
facial bones.
70150........................... X-ray exam of ..................
facial bones.
70160........................... X-ray exam of ..................
nasal bones.
70200........................... X-ray exam of eye ..................
sockets.
70210........................... X-ray exam of ..................
sinuses.
70220........................... X-ray exam of ..................
sinuses.
70250........................... X-ray exam of ..................
skull.
70260........................... X-ray exam of ..................
skull.
70328........................... X-ray exam of jaw ..................
joint.
70330........................... X-ray exam of jaw ..................
joints.
70336........................... Magnetic image, *
jaw joint.
70355........................... Panoramic x-ray of ..................
jaws.
70360........................... X-ray exam of neck ..................
70370........................... Throat x-ray & ..................
fluoroscopy.
70371........................... Speech evaluation, ..................
complex.
70450........................... Ct head/brain w/o *
dye.
70480........................... Ct orbit/ear/fossa *
w/o dye.
70486........................... Ct maxillofacial w/ *
o dye.
70490........................... Ct soft tissue *
neck w/o dye.
70544........................... Mr angiography *
head w/o dye.
70551........................... Mri brain w/o dye. *
71010........................... Chest x-ray....... ..................
71015........................... Chest x-ray....... ..................
71020........................... Chest x-ray....... ..................
71021........................... Chest x-ray....... ..................
71022........................... Chest x-ray....... ..................
71023........................... Chest x-ray and ..................
fluoroscopy.
71030........................... Chest x-ray....... ..................
71034........................... Chest x-ray and ..................
fluoroscopy.
71035........................... Chest x-ray....... ..................
71100........................... X-ray exam of ribs ..................
71101........................... X-ray exam of ribs/ ..................
chest.
71110........................... X-ray exam of ribs ..................
71111........................... X-ray exam of ribs/ ..................
chest.
71120........................... X-ray exam of ..................
breastbone.
71130........................... X-ray exam of ..................
breastbone.
71250........................... Ct thorax w/o dye. *
72010........................... X-ray exam of ..................
spine.
72020........................... X-ray exam of ..................
spine.
72040........................... X-ray exam of neck ..................
spine.
72050........................... X-ray exam of neck ..................
spine.
72052........................... X-ray exam of neck ..................
spine.
72069........................... X-ray exam of ..................
trunk spine.
72070........................... X-ray exam of ..................
thoracic spine.
72072........................... X-ray exam of ..................
thoracic spine.
72074........................... X-ray exam of ..................
thoracic spine.
72080........................... X-ray exam of ..................
trunk spine.
72090........................... X-ray exam of ..................
trunk spine.
72100........................... X-ray exam of ..................
lower spine.
72110........................... X-ray exam of ..................
lower spine.
72114........................... X-ray exam of ..................
lower spine.
72120........................... X-ray exam of ..................
lower spine.
72125........................... Ct neck spine w/o *
dye.
72128........................... Ct chest spine w/o *
dye.
72131........................... Ct lumbar spine w/ *
o dye.
72141........................... Mri neck spine w/o *
dye.
72146........................... Mri chest spine w/ *
o dye.
72148........................... Mri lumbar spine w/ *
o dye.
72170........................... X-ray exam of ..................
pelvis.
72190........................... X-ray exam of ..................
pelvis.
72192........................... Ct pelvis w/o dye. *
72202........................... X-ray exam ..................
sacroiliac joints.
72220........................... X-ray exam of ..................
tailbone.
73000........................... X-ray exam of ..................
collar bone.
73010........................... X-ray exam of ..................
shoulder blade.
73020........................... X-ray exam of ..................
shoulder.
73030........................... X-ray exam of ..................
shoulder.
73050........................... X-ray exam of ..................
shoulders.
73060........................... X-ray exam of ..................
humerus.
73070........................... X-ray exam of ..................
elbow.
73080........................... X-ray exam of ..................
elbow.
73090........................... X-ray exam of ..................
forearm.
73100........................... X-ray exam of ..................
wrist.
73110........................... X-ray exam of ..................
wrist.
73120........................... X-ray exam of hand ..................
73130........................... X-ray exam of hand ..................
73140........................... X-ray exam of ..................
finger(s).
73200........................... Ct upper extremity *
w/o dye.
73218........................... Mri upper *
extremity w/o dye.
73221........................... Mri joint upr *
extrem w/o dye.
73510........................... X-ray exam of hip. ..................
73520........................... X-ray exam of hips ..................
73540........................... X-ray exam of ..................
pelvis & hips.
73550........................... X-ray exam of ..................
thigh.
73560........................... X-ray exam of ..................
knee, 1 or 2.
73562........................... X-ray exam of ..................
knee, 3.
[[Page 41426]]
73564........................... X-ray exam, knee, ..................
4 or more.
73565........................... X-ray exam of ..................
knees.
73590........................... X-ray exam of ..................
lower leg.
73600........................... X-ray exam of ..................
ankle.
73610........................... X-ray exam of ..................
ankle.
73620........................... X-ray exam of foot ..................
73630........................... X-ray exam of foot ..................
73650........................... X-ray exam of heel ..................
73660........................... X-ray exam of ..................
toe(s).
73700........................... Ct lower extremity *
w/o dye.
73718........................... Mri lower *
extremity w/o dye.
73721........................... Mri jnt of lwr *
extre w/o dye.
74000........................... X-ray exam of ..................
abdomen.
74010........................... X-ray exam of ..................
abdomen.
74020........................... X-ray exam of ..................
abdomen.
74022........................... X-ray exam series, ..................
abdomen.
74150........................... Ct abdomen w/o dye *
74210........................... Contrst x-ray exam ..................
of throat.
74220........................... Contrast x-ray, ..................
esophagus.
74230........................... Cine/vid x-ray, ..................
throat/esoph.
74246........................... Contrst x-ray uppr ..................
gi tract.
74247........................... Contrst x-ray uppr ..................
gi tract.
74249........................... Contrst x-ray uppr ..................
gi tract.
76100........................... X-ray exam of body ..................
section.
76510........................... Ophth us, b & ..................
quant a.
76511........................... Ophth us, quant a ..................
only.
76512........................... Ophth us, b w/non- ..................
quant a.
76513........................... Echo exam of eye, ..................
water bath.
76514........................... Echo exam of eye, ..................
thickness.
76516........................... Echo exam of eye.. ..................
76519........................... Echo exam of eye.. ..................
76536........................... Us exam of head ..................
and neck.
76645........................... Us exam, breast(s) ..................
76700........................... Us exam, abdom, *
complete.
76705........................... Echo exam of *
abdomen.
76770........................... Us exam abdo back *
wall, comp.
76775........................... Us exam abdo back *
wall, lim.
76776........................... Us exam k transpl *
w/doppler.
76801........................... Ob us <14 wks, ..................
single fetus.
76805........................... Ob us >=14 wks, ..................
sngl fetus.
76811........................... Ob us, detailed, ..................
sngl fetus.
76816........................... Ob us, follow-up, ..................
per fetus.
76817........................... Transvaginal us, ..................
obstetric.
76830........................... Transvaginal us, ..................
non-ob.
76856........................... Us exam, pelvic, *
complete.
76857........................... Us exam, pelvic, *
limited.
76870........................... Us exam, scrotum.. *
76880........................... Us exam, extremity ..................
76970........................... Ultrasound exam ..................
follow-up.
76977........................... Us bone density ..................
measure.
76999........................... Echo examination ..................
procedure.
77072........................... X-rays for bone ..................
age.
77073........................... X-rays, bone ..................
length studies.
77074........................... X-rays, bone ..................
survey, limited.
77075........................... X-rays, bone ..................
survey complete.
77076........................... X-rays, bone ..................
survey, infant.
77077........................... Joint survey, ..................
single view.
77078........................... Ct bone density, ..................
axial.
77079........................... Ct bone density, ..................
peripheral.
77080........................... Dxa bone density, ..................
axial.
77081........................... Dxa bone density/ ..................
peripheral.
77082........................... Dxa bone density, ..................
vert fx.
77083........................... Radiographic ..................
absorptiometry.
77084........................... Magnetic image, ..................
bone marrow.
77280........................... Set radiation ..................
therapy field.
77285........................... Set radiation ..................
therapy field.
77290........................... Set radiation ..................
therapy field.
77295........................... Set radiation ..................
therapy field.
77300........................... Radiation therapy ..................
dose plan.
77301........................... Radiotherapy dose ..................
plan, imrt.
77315........................... Teletx isodose ..................
plan complex.
77326........................... Brachytx isodose ..................
calc simp.
77327........................... Brachytx isodose ..................
calc interm.
77328........................... Brachytx isodose ..................
plan compl.
77331........................... Special radiation ..................
dosimetry.
77332........................... Radiation ..................
treatment aid(s).
77333........................... Radiation ..................
treatment aid(s).
77334........................... Radiation ..................
treatment aid(s).
77336........................... Radiation physics ..................
consult.
77370........................... Radiation physics ..................
consult.
77401........................... Radiation ..................
treatment
delivery.
77402........................... Radiation ..................
treatment
delivery.
77403........................... Radiation ..................
treatment
delivery.
77404........................... Radiation ..................
treatment
delivery.
77407........................... Radiation ..................
treatment
delivery.
77408........................... Radiation ..................
treatment
delivery.
77409........................... Radiation ..................
treatment
delivery.
77411........................... Radiation ..................
treatment
delivery.
77412........................... Radiation ..................
treatment
delivery.
77413........................... Radiation ..................
treatment
delivery.
77414........................... Radiation ..................
treatment
delivery.
77416........................... Radiation ..................
treatment
delivery.
77418........................... Radiation tx ..................
delivery, imrt.
77470........................... Special radiation ..................
treatment.
77520........................... Proton trmt, ..................
simple w/o comp.
77523........................... Proton trmt, ..................
intermediate.
80500........................... Lab pathology ..................
consultation.
80502........................... Lab pathology ..................
consultation.
85097........................... Bone marrow ..................
interpretation.
86510........................... Histoplasmosis ..................
skin test.
86850........................... RBC antibody ..................
screen.
86870........................... RBC antibody ..................
identification.
86880........................... Coombs test, ..................
direct.
[[Page 41427]]
86885........................... Coombs test, ..................
indirect, qual.
86886........................... Coombs test, ..................
indirect, titer.
86890........................... Autologous blood ..................
process.
86900........................... Blood typing, ABO. ..................
86901........................... Blood typing, Rh ..................
(D).
86903........................... Blood typing, ..................
antigen screen.
86904........................... Blood typing, ..................
patient serum.
86905........................... Blood typing, RBC ..................
antigens.
86906........................... Blood typing, Rh ..................
phenotype.
86930........................... Frozen blood prep. ..................
86970........................... RBC pretreatment.. ..................
86977........................... RBC pretreatment, ..................
serum.
88104........................... Cytopath fl ..................
nongyn, smears.
88106........................... Cytopath fl ..................
nongyn, filter.
88107........................... Cytopath fl ..................
nongyn, sm/fltr.
88108........................... Cytopath, ..................
concentrate tech.
88112........................... Cytopath, cell ..................
enhance tech.
88160........................... Cytopath smear, ..................
other source.
88161........................... Cytopath smear, ..................
other source.
88162........................... Cytopath smear, ..................
other source.
88172........................... Cytopathology eval ..................
of fna.
88173........................... Cytopath eval, ..................
fna, report.
88182........................... Cell marker study. ..................
88184........................... Flowcytometry/ tc, ..................
1 marker.
88185........................... Flowcytometry/tc, ..................
add-on.
88300........................... Surgical path, ..................
gross.
88302........................... Tissue exam by ..................
pathologist.
88304........................... Tissue exam by ..................
pathologist.
88305........................... Tissue exam by ..................
pathologist.
88307........................... Tissue exam by ..................
pathologist.
88311........................... Decalcify tissue.. ..................
88312........................... Special stains.... ..................
88313........................... Special stains.... ..................
88321........................... Microslide ..................
consultation.
88323........................... Microslide ..................
consultation.
88325........................... Comprehensive ..................
review of data.
88331........................... Path consult ..................
intraop, 1 bloc.
88342........................... Immunohistochemist ..................
ry.
88346........................... Immunofluorescent ..................
study.
88347........................... Immunofluorescent ..................
study.
88348........................... Electron ..................
microscopy.
88358........................... Analysis, tumor... ..................
88360........................... Tumor ..................
immunohistochem/
manual.
88361........................... Tumor ..................
immunohistochem/
comput.
88365........................... In situ ..................
hybridization
(FISH).
88368........................... Insitu ..................
hybridization,
manual.
88399........................... Surgical pathology ..................
procedure.
89049........................... Chct for mal ..................
hyperthermia.
89230........................... Collect sweat for ..................
test.
89240........................... Pathology lab ..................
procedure.
90472........................... Immunization ..................
admin, each add.
90474........................... Immune admin oral/ ..................
nasal addl.
90761........................... Hydrate iv ..................
infusion, add-on.
90766........................... Ther/proph/dg iv ..................
inf, add-on.
90767........................... Tx/proph/dg addl ..................
seq iv inf.
90770........................... Sc ther infusion, ..................
addl hr.
90771........................... Sc ther infusion, ..................
reset pump.
90775........................... Tx/pro/dx inj new ..................
drug add-on.
90801........................... Psy dx interview.. ..................
90802........................... Intac psy dx ..................
interview.
90804........................... Psytx, office, 20- ..................
30 min.
90805........................... Psytx, off, 20-30 ..................
min w/e&m.
90806........................... Psytx, off, 45-50 ..................
min.
90807........................... Psytx, off, 45-50 ..................
min w/e&m.
90808........................... Psytx, office, 75- ..................
80 min.
90809........................... Psytx, off, 75-80, ..................
w/e&m.
90810........................... Intac psytx, off, ..................
20-30 min.
90811........................... Intac psytx, 20- ..................
30, w/e&m.
90812........................... Intac psytx, off, ..................
45-50 min.
90816........................... Psytx, hosp, 20-30 ..................
min.
90818........................... Psytx, hosp, 45-50 ..................
min.
90826........................... Intac psytx, hosp, ..................
45-50 min.
90845........................... Psychoanalysis.... ..................
90846........................... Family psytx w/o ..................
patient.
90847........................... Family psytx w/ ..................
patient.
90853........................... Group ..................
psychotherapy.
90857........................... Intac group psytx. ..................
90862........................... Medication ..................
management.
90899........................... Psychiatric ..................
service/therapy.
92002........................... Eye exam, new ..................
patient.
92004........................... Eye exam, new ..................
patient.
92012........................... Eye exam ..................
established pat.
92014........................... Eye exam & ..................
treatment.
92020........................... Special eye ..................
evaluation.
92025........................... Corneal topography ..................
92081........................... Visual field ..................
examination(s).
92082........................... Visual field ..................
examination(s).
92083........................... Visual field ..................
examination(s).
92135........................... Ophth dx imaging ..................
post seg.
92136........................... Ophthalmic ..................
biometry.
92225........................... Special eye exam, ..................
initial.
92226........................... Special eye exam, ..................
subsequent.
92230........................... Eye exam with ..................
photos.
92240........................... Icg angiography... ..................
92250........................... Eye exam with ..................
photos.
92275........................... Electroretinograph ..................
y.
92285........................... Eye photography... ..................
92286........................... Internal eye ..................
photography.
92520........................... Laryngeal function ..................
studies.
92541........................... Spontaneous ..................
nystagmus test.
92546........................... Sinusoidal ..................
rotational test.
92548........................... Posturography..... ..................
92552........................... Pure tone ..................
audiometry, air.
92553........................... Audiometry, air & ..................
bone.
92555........................... Speech threshold ..................
audiometry.
92556........................... Speech audiometry, ..................
complete.
[[Page 41428]]
92557........................... Comprehensive ..................
hearing test.
92567........................... Tympanometry...... ..................
92582........................... Conditioning play ..................
audiometry.
92585........................... Auditor evoke ..................
potent, compre.
92603........................... Cochlear implt f/ ..................
up exam 7 >.
92604........................... Reprogram cochlear ..................
implt 7 >.
92626........................... Eval aud rehab ..................
status.
93005........................... Electrocardiogram, ..................
tracing.
93017........................... Cardiovascular ..................
stress test.
93225........................... ECG monitor/ ..................
record, 24 hrs.
93226........................... ECG monitor/ ..................
report, 24 hrs.
93231........................... Ecg monitor/ ..................
record, 24 hrs.
93232........................... ECG monitor/ ..................
report, 24 hrs.
93236........................... ECG monitor/ ..................
report, 24 hrs.
93270........................... ECG recording..... ..................
93271........................... Ecg/monitoring and ..................
analysis.
93278........................... ECG/signal- ..................
averaged.
93727........................... Analyze ilr system ..................
93731........................... Analyze pacemaker ..................
system.
93732........................... Analyze pacemaker ..................
system.
93733........................... Telephone analy, ..................
pacemaker.
93734........................... Analyze pacemaker ..................
system.
93735........................... Analyze pacemaker ..................
system.
93736........................... Telephonic analy, ..................
pacemaker.
93741........................... Analyze ht pace ..................
device sngl.
93742........................... Analyze ht pace ..................
device sngl.
93743........................... Analyze ht pace ..................
device dual.
93744........................... Analyze ht pace ..................
device dual.
93786........................... Ambulatory BP ..................
recording.
93788........................... Ambulatory BP ..................
analysis.
93797........................... Cardiac rehab..... ..................
93798........................... Cardiac rehab/ ..................
monitor.
93875........................... Extracranial study ..................
93880........................... Extracranial study ..................
93882........................... Extracranial study ..................
93886........................... Intracranial study ..................
93888........................... Intracranial study ..................
93922........................... Extremity study... ..................
93923........................... Extremity study... ..................
93924........................... Extremity study... ..................
93925........................... Lower extremity ..................
study.
93926........................... Lower extremity ..................
study.
93930........................... Upper extremity ..................
study.
93931........................... Upper extremity ..................
study.
93965........................... Extremity study... ..................
93970........................... Extremity study... ..................
93971........................... Extremity study... ..................
93975........................... Vascular study.... ..................
93976........................... Vascular study.... ..................
93978........................... Vascular study.... ..................
93979........................... Vascular study.... ..................
93990........................... Doppler flow ..................
testing.
94015........................... Patient recorded ..................
spirometry.
94690........................... Exhaled air ..................
analysis.
95115........................... Immunotherapy, one ..................
injection.
95117........................... Immunotherapy ..................
injections.
95165........................... Antigen therapy ..................
services.
95250........................... Glucose ..................
monitoring, cont.
95805........................... Multiple sleep ..................
latency test.
95806........................... Sleep study, ..................
unattended.
95807........................... Sleep study, ..................
attended.
95808........................... Polysomnography, 1- ..................
3.
95812........................... Eeg, 41-60 minutes ..................
95813........................... Eeg, over 1 hour.. ..................
95816........................... Eeg, awake and ..................
drowsy.
95819........................... Eeg, awake and ..................
asleep.
95822........................... Eeg, coma or sleep ..................
only.
95869........................... Muscle test, thor ..................
paraspinal.
95872........................... Muscle test, one ..................
fiber.
95900........................... Motor nerve ..................
conduction test.
95921........................... Autonomic nerv ..................
function test.
95925........................... Somatosensory ..................
testing.
95926........................... Somatosensory ..................
testing.
95930........................... Visual evoked ..................
potential test.
95950........................... Ambulatory eeg ..................
monitoring.
95953........................... EEG monitoring/ ..................
computer.
95970........................... Analyze neurostim, ..................
no prog.
95972........................... Analyze neurostim, ..................
complex.
95974........................... Cranial neurostim, ..................
complex.
95978........................... Analyze neurostim ..................
brain/1h.
96000........................... Motion analysis, ..................
video/3d.
96101........................... Psycho testing by ..................
psych/phys.
96111........................... Developmental ..................
test, extend.
96116........................... Neurobehavioral ..................
status exam.
96118........................... Neuropsych tst by ..................
psych/phys.
96119........................... Neuropsych testing ..................
by tec.
96150........................... Assess hlth/ ..................
behave, init.
96151........................... Assess hlth/ ..................
behave, subseq.
96152........................... Intervene hlth/ ..................
behave, indiv.
96153........................... Intervene hlth/ ..................
behave, group.
96402........................... Chemo hormon ..................
antineopl sq/im.
96411........................... Chemo, iv push, ..................
addl drug.
96415........................... Chemo, iv ..................
infusion, addl hr.
96417........................... Chemo iv infus ..................
each addl seq.
96423........................... Chemo ia infuse ..................
each addl hr.
96900........................... Ultraviolet light ..................
therapy.
96910........................... Photochemotherapy ..................
with UV-B.
96912........................... Photochemotherapy ..................
with UV-A.
96913........................... Photochemotherapy, ..................
UV-A or B.
96920........................... Laser tx, skin ..................
<250 sq cm.
98925........................... Osteopathic ..................
manipulation.
98926........................... Osteopathic ..................
manipulation.
98927........................... Osteopathic ..................
manipulation.
98940........................... Chiropractic ..................
manipulation.
98941........................... Chiropractic ..................
manipulation.
98942........................... Chiropractic ..................
manipulation.
99204........................... Office/outpatient ..................
visit, new.
99212........................... Office/outpatient ..................
visit, est.
99213........................... Office/outpatient ..................
visit, est.
99214........................... Office/outpatient ..................
visit, est.
[[Page 41429]]
99241........................... Office ..................
consultation.
99242........................... Office ..................
consultation.
99243........................... Office ..................
consultation.
99244........................... Office ..................
consultation.
99245........................... Office ..................
consultation.
0144T........................... CT heart wo dye; ..................
qual calc.
G0008........................... Admin influenza ..................
virus vac.
G0101........................... CA screen; pelvic/ ..................
breast exam.
G0127........................... Trim nail(s)...... ..................
G0130........................... Single energy x- ..................
ray study.
G0166........................... Extrnl ..................
counterpulse, per
tx.
G0175........................... OPPS Service,sched ..................
team conf.
G0340........................... Robt lin-radsurg ..................
fractx 2-5.
G0344........................... Initial preventive ..................
exam.
G0365........................... Vessel mapping ..................
hemo access.
G0367........................... EKG tracing for ..................
initial prev.
G0376........................... Smoke/tobacco ..................
counseling >10.
G0389........................... Ultrasound exam ..................
AAA screen.
G0390........................... Trauma response w/ ..................
hosp criti.
M0064........................... Visit for drug ..................
monitoring.
Q0091........................... Obtaining screen ..................
pap smear.
------------------------------------------------------------------------
c. Proposed Calculation of CCRs
(1) Development of the CCRs
We calculated hospital-specific overall CCRs and hospital-specific
departmental CCRs for each hospital for which we had CY 2007 claims
data. For CY 2009 OPPS ratesetting, we used the set of claims processed
during CY 2007. We applied the hospital-specific CCR to the hospital's
charges at the most detailed level possible, based on a revenue code-
to-cost center crosswalk that contains a hierarchy of CCRs used to
estimate costs from charges for each revenue code. That crosswalk is
available for review and continuous comment on the CMS Web site at:
http://www.cms.hhs.gov/HospitalOutpatientPPS/03_
crosswalk.asp#TopOfPage. We calculated CCRs for the standard and
nonstandard cost centers accepted by the electronic cost report
database. In general, the most detailed level at which we calculated
CCRs was the hospital-specific departmental level.
We are proposing to make a change to the revenue code-to-cost
center crosswalk for the CY 2009 OPPS. Specifically, for revenue code
0904 (Activity Therapy), we are proposing to make cost center 3550
(Psychiatric/Psychological Services) the primary cost center and to
make cost center 6000 (Clinic services) the secondary cost center. For
CY 2008, for revenue code 0904, the primary cost center is 3580
(Recreational Therapy), cost center 3550 is secondary; and cost center
6000 is tertiary. We are proposing this change to conform the OPPS
methodology for hospital claims to the crosswalk that is being used to
calculate partial hospitalization costs for CMHCs.
We would like to affirm that the longstanding Medicare principles
of cost apportionment at Sec. 413.53 convey that, under the
departmental method of apportionment, the cost of each ancillary
department is to be apportioned separately rather than being combined
with another department. However, CMS does not specify a revenue code-
to-cost center crosswalk that hospitals must adopt to prepare the cost
report, but instead, requires hospitals to submit their individual
crosswalk to the Medicare contractor when the cost report is filed. The
proposed CY 2009 OPPS revenue code-to-cost center crosswalk contains
several potential cost center locations for a revenue code because it
is an attempt to best represent the association of revenue codes with
cost centers across all hospitals for modeling purposes. Assignment to
cost centers is mutually exclusive and only defaults to the next level
when the cost center with higher priority is unavailable. The changes
to the crosswalk for revenue code 0904 mentioned above are used by CMS
for modeling purposes only, and we fully expect hospitals to comply
with the Medicare reimbursement policies when reporting their costs and
charges on the cost report.
At the March 2008 APC Panel meeting, we reviewed with the APC
Panel's Data Subcommittee the current revenue code-to-cost center
crosswalk, as well as other data in preparation for the CY 2009
rulemaking cycle. At this meeting, the APC Panel recommended that the
Data Subcommittee continue its work and we are accepting that
recommendation. We will continue to work with the APC Panels' Data
Subcommittee to prepare and review data and analyses relevant to the
APC configurations and OPPS payment policies for hospital outpatient
items and services.
(2) Charge Compression
Since the implementation of the OPPS, some commenters have raised
concerns about potential bias in the OPPS cost-based weights due to
``charge compression,'' which is the practice of applying a lower
charge markup to higher-cost services and a higher charge markup to
lower-cost services. As a result, the cost-based weights suffer from
aggregation bias, undervaluing high cost items and overvaluing low cost
items if an estimate of average markup embodied in a single CCR is
applied to items of widely varying costs in the same cost center.
Commenters expressed increased concern about the impact of charge
compression when, partially in response to recommendations of the
Medicare Payment Advisory Commission (MedPAC), CMS proposed to set the
relative weights for payment under the IPPS based on the costs of
inpatient hospital services, rather than the charges for the services.
To explore this issue, in August 2006 we awarded a contract to RTI
International (RTI) to study the effects of charge compression in
calculating the IPPS relative weights, particularly with regard to the
impact on inpatient diagnosis-related group (DRG) payments, and to
consider methods to reduce the variation in the CCRs used to calculate
costs for the IPPS relative weights across services within cost
centers. Of specific note was RTI's analysis of a regression-based
methodology estimating an average adjustment for CCR by type of revenue
code from an observed relationship between provider cost center CCRs
and proportional billing of high and low cost services in the cost
center. RTI issued a report in March 2007 with its findings on charge
compression. The report is available on the CMS Web site at: http://
www.cms.hhs.gov/reports/downloads/Dalton.pdf. Although this report was
focused largely on charge compression in the context of the IPPS cost-
based relative weights, several of the findings were relevant to the
OPPS. Therefore, we discussed the findings and our responses to that
interim draft report in the CY 2008 OPPS/ASC proposed rule (72 FR 42641
through 42643) and reiterated them in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66599 through 66602).
As RTI noted in its 2007 report that its research was limited to
IPPS DRG cost-based weights and that it did not examine potential areas
of charge compression specific to hospital outpatient services, we were
concerned
[[Page 41430]]
that the analysis was too limited in scope because typically hospital
cost report CCRs encompass both inpatient and outpatient services for
each cost center. Further, because both the IPPS and OPPS rely on cost-
based weights, we preferred to introduce any methodological adjustments
to both payment systems at the same time. We believe that because
charge compression affects the cost estimates for services paid under
both IPPS and OPPS in the same way, it is appropriate that we would use
the same approach to address the issue. Finally, we noted that we
wished to assess the educational activities being undertaken by the
hospital community to improve cost reporting accuracy in response to
RTI's findings, either as an adjunct to or in lieu of regression-based
adjustments to CCRs.
We have since expanded RTI's analysis of charge compression to
incorporate outpatient services. In August 2007, we again contracted
with RTI. Under this contract, we asked RTI to evaluate the cost
estimation process for the OPPS relative weights. This research
included a reassessment of the regression-based CCR models using
hospital outpatient and inpatient charge data, as well as a detailed
review of the OPPS revenue code-to-cost center crosswalk and the OPPS'
hospital-specific CCR methodology. In evaluating cost-based estimation,
in general, the results of RTI's analyses impact both the OPPS APC
relative weights and the IPPS MS-DRG (Medicare-Severity) relative
weights. With the release of the IPPS FY 2009 proposed rule in April
2008, CMS also posted an interim report discussing RTI's research
findings for the IPPS MS-DRG relative weights to be available during
the public comment period on the FY 2009 IPPS proposed rule. This
report can be found on RTI's Web site at: http://www.rti.org/reports/
cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_
200804.pdf. The IPPS-specific chapters, which were separately displayed
in the April 2008 interim report, as well as the more recent OPPS
chapters, are included in the July 2008 RTI final report entitled,
``Refining Cost to Charge Ratios for Calculating APC and DRG Relative
Payment Weights,'' that became available at the time of the development
of this proposed rule. The RTI final report can be found on RTI's Web
site at: http://www.rti.org.
RTI's final report distinguished between two types of research
findings and recommendations, those pertaining to the accounting or
cost report data itself and those related to statistical regression
analysis. Because the OPPS uses a hospital-specific CCR methodology,
employs detailed cost report data, and estimates costs at the claim
level, CMS asked RTI to closely evaluate the accounting component of
the cost-based weight methodology, specifically the revenue code-to-
cost center crosswalk. In reviewing the cost report data for
nonstandard cost centers used in the crosswalk, RTI discovered some
problems concerning the classification of nonstandard cost centers, and
reclassified nonstandard cost centers by reading providers' cost center
labels. Standard cost centers are preprinted in the CMS-approved cost
report software, while nonstandard cost centers are identified and
updated periodically through analysis of frequently used labels. RTI
also evaluated the revenue code-to-cost center crosswalk after
examining hospitals' cost report and revenue code billing patterns in
order to reduce aggregation bias inherent in defaulting to the overall
ancillary CCR and generally to improve the empirical accuracy of the
crosswalk.
With regard to the statistical adjustments, RTI confirmed the
findings of its March 2007 report that regression models are a valid
approach for diagnosing potential aggregation bias within selected
services for the IPPS and found that regression models are equally
valid for setting payments under the OPPS. RTI also suggested that
regression-based CCRs could provide a short-term correction until
accounting data could be refined to support more accurate CCR estimates
under both the IPPS and the OPPS. RTI again found aggregation bias in
devices, drugs, and radiology and, using combined outpatient and
inpatient claims, expanded the number of recommended regression-
adjusted CCRs.
In almost all cases, RTI observed that potential distortions in the
APC relative weights were proportionally much greater than for MS-DRGs
for both accounting-based and statistical adjustments because APC
groups are small and generally price a single service. However, just as
the overall impacts on MS-DRGs were more moderate because MS-DRGs
experienced offsetting effects of changes in cost estimation, a given
hospital outpatient visit might include more than one service, leading
to offsetting effects in cost estimation for services provided in the
outpatient episode as a whole. In general, APC relative weights are
more volatile than MS-DRG relative weights from year to year yet OPPS
provider impacts are typically quite modest and, in light of this
experience, we expect that overall provider impacts could be much more
moderate than those suggested by individual APC impacts from the RTI
analysis.
Notwithstanding likely offsetting effects at the provider-level,
RTI asserted that, while some averaging is appropriate for a
prospective payment system, extreme distortions in APC payments for
individual services bias perceptions of service profitability and may
lead hospitals to inappropriately set their charge structure. RTI noted
that this may not be true for ``core'' hospital services, such as
oncology, but has a greater impact in evolving areas with greater
potential for provider-induced demand, such as specialized imaging
services. RTI also noted that cost-based weights are only one component
of a final prospective payment rate. There are other rate adjustments
(wage index, indirect medical education (IME), and disproportionate
share hospital (DSH)) to payment derived from the revised cost-based
weights and the cumulative effect of these components may not improve
the ability of final payment to reflect resource cost. With regard to
APCs and MS-DRGs that contain substantial device costs, RTI cautioned
that other prospective payment system adjustments (wage index, IME, and
DSH) largely offset the effects of charge compression among hospitals
that receive these adjustments. RTI endorsed short-term regression-
based adjustments, but also concluded that more refined and accurate
accounting data are the preferred long-term solution to mitigate charge
compression and related bias in hospital cost-based weights.
As a result of this research, RTI made 11 recommendations, 2 of
which are specific to IPPS MS-DRGs and are not discussed in this
proposed rule. The first set of non-IPPS-specific recommendations
concentrates on short-term accounting changes to current cost report
data; the second set addresses short-term regression-based and other
statistical adjustments. RTI concluded its recommendations with longer-
term accounting changes to the cost report. (RTI report, ``Refining
Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment
Weights,'' July 2008). Given the magnitude and scope of impacts on APC
relative weights that would result from adopting both accounting and
statistical changes, as specifically observed in Chapter 6 of RTI's
July 2008 final report and Attachments 4a, 4b, and 5 (RTI report,
``Refining Cost to Charge Ratios for Calculating APC and MS-DRG
Relative Payment Weights,'' July 2008), we are not proposing to adopt
any short-term adjustments to OPPS payment rate
[[Page 41431]]
calculations for CY 2009. Furthermore, the numerous and substantial
changes that RTI recommends have significantly complex interactions
with one another and we believe that we should proceed cautiously. In a
budget neutral payment system, increases in payment for some services
must be countered by reductions to payment for other services.
We are, however, specifically seeking public comments on several of
RTI's recommended accounting-based changes pertaining to the cost
report as discussed below because we plan to consider these public
comments in our current revision to the Medicare hospital cost report
and in our decisions pertaining to the CY 2010 OPPS. We believe that
improved and more precise cost reporting is the best way to improve the
accuracy of all cost-based payment weights, including relative weights
for the IPPS MS-DRGs. Because both the IPPS and the OPPS rely on cost-
based weights derived, in part, from data on the Medicare hospital cost
report form, public comments on recommended changes to the cost report
should address any impact on both the inpatient and outpatient payment
systems.
We noted in the FY 2009 IPPS proposed rule that we are updating the
cost report form to eliminate outdated requirements in conjunction with
the Paperwork Reduction Act (PRA), and that we plan to propose actual
changes to the cost reporting form, the attending cost reporting
software, and the cost report instructions in Chapter 36 of the
Medicare Provider Reimbursement Manual (PRM), Part II (73 FR 23546
through 23547). We anticipate proposing these revisions shortly. We
would consider any public comments on our proposals for cost report
changes, as well as any public comments on RTI's cost estimation
findings and recommendations for revising the cost report in general,
in updating the cost report. We expect the revised cost report may be
available for hospitals to use when submitting cost reports during FY
2010, that is, for cost reporting periods beginning after October 1,
2008, and we expect that we would be able to use some of these data for
setting payment rates for future OPPS updates.
RTI's first set of four recommendations for accounting changes
addressed improved use of existing cost report and claims data. RTI
recommended: (1) Immediately using text searches of providers' line
descriptions to more appropriately classify nonstandard cost centers in
current hospital cost report data; (2) changing cost report preparation
software to impose fixed descriptions on nonstandard cost centers; (3)
slightly revising CMS' cost center aggregation table to eliminate
duplicative or misplaced nonstandard cost centers and to add
nonstandard cost centers for common services without one; and (4)
adopting RTI's recommended changes to the revenue code-to-cost center
crosswalk.
Given the magnitude and scope of impacts resulting from RTI's
recommended revisions, we are not proposing to adopt any of the short-
term accounting changes, including text searches of providers' line
descriptions to more appropriately classify nonstandard cost centers
and recommended changes to the revenue code-to-cost center crosswalk.
We will modify the cost report preparation software that will accompany
the revised Medicare cost report form to print a brief fixed
description with a nonstandard cost center number, while continuing to
allow the hospital to enter a line description.
With regard to revisions to the cost center aggregation table, we
are specifically inviting public comment on whether several identified
cost centers are duplicative (RTI report, ``Refining Cost to Charge
Ratios for Calculating APC and MS-DRG Relative Payment Weights,'' July
2008). We are also specifically requesting public comment on creation
of new nonstandard cost centers for services that are well represented
in line descriptions associated with ``other ancillary services'' cost
centers, but for which no distinct nonstandard cost center currently
exists and for which UB-04 revenue codes do exist, including cardiac
rehabilitation, hyperbaric oxygen therapy, and patient education (RTI
report, ``Refining Cost to Charge Ratios for Calculating APC and MS-DRG
Relative Payment Weights,'' July 2008). We will consider these comments
as we continue our work on revising the Medicare hospital cost report
form.
Furthermore, we are interested in public comment on RTI's
recommended changes to the OPPS revenue code-to-cost center crosswalk,
and we may propose to adopt crosswalk changes for CY 2010 based on
RTI's analyses and related public comments received on this issue.
Although available on the CMS Web site for continuous public comment,
we have received relatively few public comments over the last several
years on the OPPS revenue code-to-cost center crosswalk, which has
undergone only minimal change since the inception of the OPPS. RTI's
revised crosswalk in Attachment 2b of its final report reflected all
accounting changes, including reclassification of nonstandard cost
centers from text searches, removal of duplicative cost centers, and
addition of new nonstandard cost centers for common services.
Throughout the July 2008 final report, RTI used a subscripting
nomenclature developed from CMS' aggregation table to identify cost
centers. To disentangle the combined impact of these changes and
clearly communicate RTI's recommended changes in current cost center
numbers, we have made available on the CMS Web site a revised (RTI-
recommended) crosswalk using current standard and nonstandard cost
centers in the same format as the crosswalk proposed for the CY 2009
OPPS. This revised (RTI-recommended) crosswalk may be found on the CMS
Web site under supporting documentation for this proposed rule at:
http://www.cms.hhs.gov/HospitalOutpatientPPS/HORD/list.asp#TopOfPage.
We did not include RTI's recommended new or collapsed nonstandard cost
centers in this revised crosswalk.
We are specifically inviting public comment on the numerous changes
included in this crosswalk. Areas of specific interest include the
addition of ``default'' CCRs for clinic, cardiology, and therapy
services before defaulting to the overall ancillary CCR, as is our
current policy. The overall ancillary CCR is charge-weighted and
heavily influenced by the relationship between costs and charges for
surgical and imaging services. RTI also introduced cost center 4300
(Radioisotope) as a primary cost converter for the nuclear medicine
revenue codes (034X). Further, RTI added secondary and tertiary
crosswalk maps for services that frequently appear together, such as
CCRs for Computed Tomography (CT) Scan as a secondary cost converter
for the Magnetic Resonance Imaging (MRI) revenue codes (061X) (RTI
report, ``Refining Cost to Charge Ratios for Calculating APC and MS-DRG
Relative Payment Weights,'' July 2008).
RTI's second set of recommendations concentrated on short-term
statistical regression-based adjustments to address aggregation bias.
RTI recommended: (1) Adopting regression-adjusted OPPS CCRs for
Devices, Other Supplies Sold, Additional Detail Coded Drugs, and
Intravenous (IV) Solutions and Other Drugs Sold; and (2) adopting a set
of CCRs that blend corrected cost report and regression-adjusted CCRs
for CT scanning, MRI, therapeutic radiology, nuclear medicine, and
other diagnostic radiology services for hospitals that did not report
these standard and nonstandard cost centers. We agree that
[[Page 41432]]
improved data for cost estimation in these areas is a desirable goal.
However, we have chosen to concentrate our efforts on concrete steps to
improve the quality of cost report accounting data that ultimately
would be used to calculate both hospital inpatient and outpatient
prospective payment system relative weights. In the proposed rule for
the FY 2009 IPPS (73 FR 23544), for which the public comment period
closed on June 13, 2008, we emphasize this fundamental goal of
improving cost report accounting data rather than making short-term
statistical adjustments.
RTI's third and final set of recommendations focused on long-term
accounting revisions to the cost report and educational efforts to
improve the overall accuracy of accounting data. RTI recommended: (1)
Clarifying cost report instructions and requiring hospitals to use all
standard lines in the cost report if their facility offers the
described services; (2) creating new standard lines on the cost report
for CT Scanning, MRI, Cardiac Catheterization, Devices, and Drugs
Requiring Additional Coding; and (3) educating hospitals through
industry-led educational initiatives directed at methods for capital
cost finding, specifically encouraging providers to use direct
assignment of equipment depreciation and lease costs wherever possible,
or at least to allocate moveable equipment depreciation based on dollar
value of assigned depreciation costs.
We will consider the best means to clarify the principle of
departmental apportionment of costs at Sec. 413.53, which states that
hospitals should apportion separately the costs and charges of each
ancillary department for which charges are customarily made separately
rather than combining those costs and charges with another ancillary
department. RTI noted that many hospitals combine costs and charges for
therapeutic radiology and nuclear medicine services under the
diagnostic radiology cost center, when these are services with their
own specific and distinct charges and cost centers (RTI report,
``Refining Cost to Charge Ratios for Calculating APC and MS-DRG
Relative Payment Weights,'' July 2008). We seek to better understand
the reason for this aggregation and other relatively common scenarios,
such as a failure to report the standard cost center 4700 (Blood
Storing, Processing & Transp.) when the hospital bills Medicare for
blood products that always have storage and processing costs and
charges, as well as any concerns hospitals may have about reporting all
appropriate standard cost centers.
With regard to creating new standard lines on the cost report, we
are proposing standard lines on the cost report for Devices and Drugs
Requiring Additional Coding. In the FY 2009 IPPS proposed rule (73 FR
23546), we proposed to create two new cost centers, Medical Supplies
Charged to Patients and Implantable Devices Charged to Patients, to
replace the current cost center called Supplies Charged to Patients as
part of our initiative to revise and update the Medicare hospital cost
report form. In our discussion of pharmacy overhead cost in section
V.B.3. of this proposed rule, we are proposing to create two other new
cost centers, Drugs with High Overhead Costs Charged to Patients and
Drugs with Low Overhead Costs Charged to Patients, to replace the
current cost center called Drugs Charged to Patient. Public comment on
the proposal for these two other new cost centers included in this
proposed rule should be made in reference to that detailed discussion.
We believe that standard cost centers for CT Scanning, MRI, and
Cardiac Catheterization also may be appropriate as we revise the
Medicare hospital cost report form. CMS already has established
nonstandard cost centers for these services and many, but not all,
hospitals currently report costs and charges in these cost centers. As
noted earlier in this section, cost center coding is a way to
standardize cost reporting across hospitals. Standard cost centers are
preprinted through CMS-approved cost report software, and nonstandard
cost centers are identified and updated periodically through analysis
of frequently used labels. While we currently use available nonstandard
cost center CCRs for cost estimation under the OPPS, creating standard
lines for CT Scanning, MRI, and Cardiac Catheterization would do more
to require hospitals to break out their costs and charges for services
in these clinical areas, especially as we pursue clarifying our
departmental apportionment regulations requiring reporting of distinct
charge types in separate ancillary cost centers. We are specifically
inviting public comment on the appropriateness of creating standard
cost centers for CT Scanning, MRI, and Cardiac Catheterization, rather
than continuing the established nonstandard cost centers for these
services.
The accuracy of capital cost allocation under Medicare allocation
methods remains an issue when discussing the accuracy of CCRs for
radiology and other capital-intensive services. We are supportive of
industry-led educational initiatives to improve the quality of
reporting capital costs on the cost report and, as we explained in the
FY 2008 IPPS final rule with comment period (72 FR 47196), we are
willing to work with the hospital industry to further such initiatives.
In summary, for CY 2009, we are proposing to adopt or support
several of RTI's accounting recommendations that would improve the
accuracy of cost report data, including educational initiatives on
reporting capital costs, additional standard cost centers on the cost
report for Drugs with High Overhead Costs and Drugs with Low Overhead
Costs, adding fixed descriptions to the cost report software, and
clarifying instructions requiring hospitals to report all standard cost
centers if they offer services of the appropriate type. We are
interested in significant public discussion of some of RTI's short-term
and long-term recommendations, including RTI's suggested revisions to
the revenue code-to-cost center crosswalk and recommended creation of
standard cost centers for CT Scanning, MRI, and Cardiac
Catheterization. We believe our CY 2009 proposals and certain short-
term and long-term recommendations included in RTI's July 2008 final
report would further our pursuit of concrete steps for CY 2009 and
future years to improve the overall accuracy of cost report accounting
data and, therefore, hospital cost-based relative weights.
2. Proposed Calculation of Median Costs
In this section of this proposed rule, we discuss the use of claims
to calculate the proposed OPPS payment rates for CY 2009. The hospital
OPPS page on the CMS Web site on which this proposed rule is posted
provides an accounting of claims used in the development of the
proposed rates at: http://www.cms.hhs.gov/HospitalOutpatientPPS. The
accounting of claims used in the development of this proposed rule is
included on the Web site under supplemental materials for the CY 2009
proposed rule. That accounting provides additional detail regarding the
number of claims derived at each stage of the process. In addition,
below we discuss the files of claims that comprise the data sets that
are available for purchase under a CMS data user contract. Our CMS Web
site, http://www.cms.hhs.gov/HospitalOutpatientPPS, includes
information about purchasing the following two OPPS data files: ``OPPS
Limited Data Set'' and ``OPPS Identifiable Data Set.'' These files are
available for the claims that were used to calculate the proposed
payment rates for the CY 2009 OPPS.
[[Page 41433]]
We used the following methodology to establish the relative weights
used in calculating the proposed OPPS payment rates for CY 2009 shown
in Addenda A and B to this proposed rule.
a. Claims Preparation
We used the CY 2007 hospital outpatient claims processed before
January 1, 2008, to set the proposed relative weights for CY 2009. To
begin the calculation of the relative weights for CY 2009, we pulled
all claims for outpatient services furnished in CY 2007 from the
national claims history file. This is not the population of claims paid
under the OPPS, but all outpatient claims (including, for example, CAH
claims and hospital claims for clinical laboratory services for persons
who are neither inpatients nor outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77.
These are claims that providers submitted to Medicare knowing that no
payment would be made. For example, providers submit claims with a
condition code 21 to elicit an official denial notice from Medicare and
document that a service is not covered. We then excluded claims for
services furnished in Maryland, Guam, the U.S. Virgin Islands, American
Samoa, and the Northern Mariana Islands because hospitals in those
geographic areas are not paid under the OPPS.
We divided the remaining claims into the three groups shown below.
Groups 2 and 3 comprise the 100 million claims that contain hospital
bill types paid under the OPPS.
1. Claims that were not bill types 12X, 13X (hospital bill types),
or 76X (CMHC bill types). Other bill types are not paid under the OPPS
and, therefore, these claims were not used to set OPPS payment. In
prior years, we also used claims of bill type 14X to set payment rates
under the OPPS. However, bill type 14X ceased to be used to report any
services for which payment is made under the OPPS effective April 1,
2006. Therefore, we did not use these claims in development of the
proposed CY 2009 OPPS rates.
2. Claims that were bill types 12X or 13X (hospital bill types).
These claims are hospital outpatient claims.
3. Claims that were bill type 76X (CMHC). (These claims are later
combined with any claims in item 2 above with a condition code 41 to
set the per diem partial hospitalization rate determined through a
separate process.)
For the CCR calculation process, we used the same general approach
as we used in developing the final APC rates for CY 2007 using the
revised CCR calculation which excluded the costs of paramedical
education programs and weighted the outpatient charges by the volume of
outpatient services furnished by the hospital. We refer readers to the
CY 2007 OPPS/ASC final rule with comment period for more information
(71 FR 67983 through 67985). We first limited the population of cost
reports to only those for hospitals that filed outpatient claims in CY
2007 before determining whether the CCRs for such hospitals were valid.
We then calculated the CCRs for each cost center and the overall
CCR for each hospital for which we had claims data. We did this using
hospital-specific data from the Healthcare Cost Report Information
System (HCRIS). We used the most recent available cost report data, in
most cases, cost reports for CY 2006. For this proposed rule, we used
the most recently submitted cost reports to calculate the CCRs to be
used to calculate median costs for the proposed CY 2009 OPPS rates. If
the most recent available cost report was submitted but not settled, we
looked at the last settled cost report to determine the ratio of
submitted to settled cost using the overall CCR, and we then adjusted
the most recent available submitted but not settled cost report using
that ratio. We calculated both an overall CCR and cost center-specific
CCRs for each hospital. We used the overall CCR calculation discussed
in section II.A.1.c. of this proposed rule for all purposes that
require use of an overall CCR.
We then flagged CAH claims, which are not paid under the OPPS, and
claims from hospitals with invalid CCRs. The latter included claims
from hospitals without a CCR; those from hospitals paid an all-
inclusive rate; those from hospitals with obviously erroneous CCRs
(greater than 90 or less than .0001); and those from hospitals with
overall CCRs that were identified as outliers (3 standard deviations
from the geometric mean after removing error CCRs). In addition, we
trimmed the CCRs at the cost center (that is, departmental) level by
removing the CCRs for each cost center as outliers if they exceeded
3 standard deviations from the geometric mean. We used a
four-tiered hierarchy of cost center CCRs to match a cost center to
every possible revenue code appearing in the outpatient claims, with
the top tier being the most common cost center and the last tier being
the default CCR. If a hospital's cost center CCR was deleted by
trimming, we set the CCR for that cost center to ``missing'' so that
another cost center CCR in the revenue center hierarchy could apply. If
no other cost center CCR could apply to the revenue code on the claim,
we used the hospital's overall CCR for the revenue code in question.
For example, if a visit was reported under the clinic revenue code, but
the hospital did not have a clinic cost center, we mapped the hospital-
specific overall CCR to the clinic revenue code. The hierarchy of CCRs
is available for inspection and comment on the CMS Web site: http://
www.cms.hhs.gov/HospitalOutpatientPPS. We note that as discussed in
section II.A.1.c.(1) of this proposed rule, we are proposing to remove
cost center 3580 (Recreational Therapy) from the hierarchy of CCRs for
revenue code 0904 (Activity Therapy).
We then converted the charges to costs on each claim by applying
the CCR that we believed was best suited to the revenue code indicated
on the line with the charge. Table 2 of this proposed rule contains a
list of the revenue codes we are proposing to package. Revenue codes
not included in Table 2 are those not allowed under the OPPS because
their services could not be paid under the OPPS (for example, inpatient
room and board charges), and thus charges with those revenue codes were
not packaged for creation of the OPPS median costs. One exception to
this general methodology for converting charges to costs on each claim
is the calculation of median blood costs, as discussed in section
II.A.2.d.(2) of this proposed rule.
Thus, we applied CCRs as described above to claims with bill type
12X or 13X, excluding all claims from CAHs and hospitals in Maryland,
Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana
Islands and claims from all hospitals for which CCRs were flagged as
invalid.
We identified claims with condition code 41 as partial
hospitalization services of hospitals and moved them to another file.
These claims were combined with the 76X claims identified previously to
calculate the partial hospitalization per diem rate.
We then excluded claims without a HCPCS code. We moved to another
file claims that contained nothing but influenza and pneumococcal
pneumonia (PPV) vaccines. Influenza and PPV vaccines are paid at
reasonable cost and, therefore, these claims are not used to set OPPS
rates. We note that the separate file containing partial
hospitalization claims is included in the files that are available for
purchase as discussed above.
We next copied line-item costs for drugs, blood, and brachytherapy
sources (the lines stay on the claim, but are copied onto another file)
to a separate file. No claims were deleted when we copied these lines
onto another file.
[[Page 41434]]
These line-items are used to calculate a per unit mean and median cost
and a per day mean and median cost for drugs, radiopharmaceutical
agents, blood and blood products, and brachytherapy sources, as well as
other information used to set payment rates, such as a unit-to-day
ratio for drugs.
b. Splitting Claims and Creation of ``Pseudo'' Single Claims
We then split the remaining claims into five groups: single majors,
multiple majors, single minors, multiple minors, and other claims.
(Specific definitions of these groups follow below.) We are proposing
to continue our current policy of defining major procedures as any
procedure having a status indicator of ``S,'' ``T,'' ``V,'' or ``X;''
defining minor procedures as any code having a status indicator of
``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,'' and
classifying ``other'' procedures as any code having a status indicator
other than one that we have classified as major or minor. For CY 2009,
we are proposing that status indicator ``R'' would be assigned to blood
and blood products; status indicator ``U'' would be assigned to
brachytherapy sources; status indicator ``Q1'' would be assigned to all
``STVX-packaged codes;'' status indicator ``Q2'' would be assigned to
all ``T-packaged codes;'' and status indicator ``Q3'' would be assigned
to all codes that may be paid through a composite APC based on
composite-specific criteria or paid separately through single code APCs
when the criteria are not met. The codes with proposed status
indicators ``Q1,'' ``Q2,'' and ``Q3'' were previously assigned status
indicator ``Q'' for the CY 2008 OPPS. As we discuss in section
XIII.A.1. of this proposed rule, we are proposing to assign these new
status indicators to facilitate identification of the different
categories of codes. We are proposing to treat these codes in the same
manner for data purposes for CY 2009 as we treated them for CY 2008.
Specifically, we are proposing to continue to evaluate whether the
criteria for separate payment of codes with status indicator ``Q1'' or
``Q2'' are met in determining whether they are treated as major or
minor codes. Codes with status indicator ``Q1'' or ``Q2'' are carried
through the data either with status indicator ``N'' as packaged or, if
they meet the criteria for separate payment, they are given the status
indicator of the APC to which they are assigned and are considered as
``pseudo'' single major codes. Codes assigned status indicator ``Q3''
are paid under individual APCs unless they occur in the combinations
that qualify for payment as composite APCs and, therefore, they carry
the status indicator of the individual APC to which they are assigned
through the data process and are treated as major codes during both the
split and ``pseudo'' single creation process. The calculation of the
median costs for composite APCs from multiple major claims is discussed
in section II.A.2.e. of this proposed rule.
Specifically, we divided the remaining claims into the following
five groups:
1. Single Major Claims: Claims with a single separately payable
procedure (that is, status indicator ``S,'' ``T,'' ``V,'' or ``X,''
which includes codes with status indicator ``Q3''); claims with one
unit of a status indicator ``Q1'' code (``STVX-packaged'') where there
was no code with status indicator ``S,'' ``T,'' ``V,'' or ``X'' on the
same claim on the same date; or claims with one unit of a status
indicator ``Q2'' code (``T-packaged'') where there was no code with a
status indicator ``T'' on the same claim on the same date.
2. Multiple Major Claims: Claims with more than one separately
payable procedure (that is, status indicator ``S,'' ``T,'' ``V,'' or
``X,'' which includes codes with status indicator ``Q3''), or multiple
units of one payable procedure. These claims include those codes with a
status indicator ``Q2'' code (``T-packaged'') where there was no
procedure with a status indicator ``T'' on the same claim on the same
date of service but where there was another separately paid procedure
on the same claim with the same date of service (that is, another code
with status indicator ``S,'' ``V,'' or ``X''). We also include in this
set claims that contained one unit of one code when the bilateral
modifier was appended to the code and the code was conditionally or
independently bilateral. In these cases, the claims represented more
than one unit of the service described by the code, notwithstanding
that only one unit was billed.
3. Single Minor Claims: Claims with a single HCPCS code that was
assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,''
``U,'' or ``N'' and not status indicator ``Q1'' (``STVX-packaged'') or
status indicator ``Q2'' (``T-packaged'') code.
4. Multiple Minor Claims: Claims with multiple HCPCS codes that are
assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,''
``U,'' or ``N;'' claims that contain more than one code with status
indicator ``Q1'' (``STVX-packaged'') or more than one unit of a code
with status indicator ``Q1'' but no codes with status indicator ``S,''
``T,'' ``V,'' or ``X'' on the same date of service; or claims that
contain more than one code with status indicator ``Q2'' (T-packaged),
or ``Q2'' and ``Q1,'' or more than one unit of a code with status
indicator ``Q2'' but no code with status indicator ``T'' on the same
date of service.
5. Non-OPPS Claims: Claims that contain no services payable under
the OPPS (that is, all status indicators other than those listed for
major or minor status). These claims were excluded from the files used
for the OPPS. Non-OPPS claims have codes paid under other fee
schedules, for example, durable medical equipment or clinical
laboratory tests, and do not contain either a code for a separately
paid OPPS service or a code for a packaged service. Non-OPPS claims
include claims for ``sometimes'' therapy HCPCS codes for wound care
paid sometimes under the OPPS but billed, in these non-OPPS cases, with
revenue codes indicating that the therapy services would be paid under
the Medicare Physician Fee Schedule (MPFS).
The claims listed in numbers 1, 2, 3, and 4 above are included in
the data files that can be purchased as described above. Claims that
contain codes to which we are proposing to assign status indicators
``Q1'' (``STVX-packaged'') and ``Q2'' (``T-packaged'') appear in the
data for the single major file, the multiple major file, and the
multiple minor file used in this proposed rule. Claims that contain
codes to which we are proposing to assign status indicator ``Q3''
(composite APC members) appear in both the data of the single and
multiple major files used in this proposed rule, depending on the
specific composite calculation.
To develop ``pseudo'' single claims for this proposed rule, we
examined both the multiple major claims and the multiple minor claims.
We first examined the multiple major claims for dates of service to
determine if we could break them into ``pseudo'' single procedure
claims using the dates of service for all lines on the claim. If we
could create claims with single major procedures by using dates of
service, we created a single procedure claim record for each separately
paid procedure on a different date of service (that is, a ``pseudo''
single).
We also used the bypass codes listed earlier in Table 1 and
discussed in section II.A.1.b. of this proposed rule to remove
separately payable procedures that we determined contained limited or
no packaged costs or that were otherwise suitable for inclusion on the
bypass list from a multiple procedure bill. When one of the two
separately payable procedures on a multiple procedure claim was on the
bypass list, we split the claim into two ``pseudo''
[[Page 41435]]
single procedure claim records. The single procedure claim record that
contained the bypass code did not retain packaged services. The single
procedure claim record that contained the other separately payable
procedure (but no bypass code) retained the packaged revenue code
charges and the packaged HCPCS code charges. We also removed lines that
contained multiple units of codes on the bypass list and treated them
as ``pseudo'' single claims by dividing the cost for the multiple units
by the number of units on the line. Where one unit of a single,
separately paid procedure code remained on the claim after removal of
the multiple units of the bypass code, we created a ``pseudo'' single
claim from that residual claim record, which retained the costs of
packaged revenue codes and packaged HCPCS codes. This enabled us to use
claims that would otherwise be multiple procedure claims and could not
be used.
However, where only one unit of one of an ``overlap bypass code''
appeared on a claim with only one unit of another separately paid code,
we used the line-item cost of the ``overlap bypass code'' to create a
``pseudo'' single procedure claim for the ``overlap bypass code'' but
did not use the remaining costs on the claim for the other separately
paid procedure. We did not incorporate the changes to create ``pseudo''
single claims from the remaining information on these claims in the
data development process for this proposed rule. We believe this
simplifies our communication of the claims development process to the
public by not adding unnecessary complexity. Furthermore, the limited
increase of only 1 percent in the number of ``pseudo'' single claims
that would be created from the remaining data made it impractical to
include the changes to the data development process that would be
required, taking into consideration the complexity of making such
changes.
We also examined the multiple minor claims to determine whether we
could create ``pseudo'' single procedure claims. Specifically, where
the claim contained multiple codes with status indicator ``Q1''
(``STVX-packaged'') on the same date of service or contained multiple
units of a single code with status indicator ``Q1,'' we selected the
status indicator ``Q1'' HCPCS code that had the highest CY 2008
relative weight, moved the units to one on that HCPCS code, and
packaged all costs for other codes with status indicator ``Q1,'' as
well as all other packaged HCPCS code and packaged revenue code costs,
into a total single cost for the claim to create a ``pseudo'' single
claim for the selected code. We changed the status indicator for
selected codes from the data status indicator of ``N'' to the status
indicator of the APC to which the selected procedure was assigned for
further data processing and considered this claim as a major procedure
claim. We used this claim in the calculation of the APC median cost for
the status indicator ``Q1'' HCPCS code.
Similarly, where a multiple minor claim contained multiple codes
with status indicator ``Q2'' (``T-packaged'') or multiple units of a
single code with status indicator ``Q2,'' we selected the status
indicator ``Q2'' HCPCS code that had the highest CY 2008 relative
weight, moved the units to one on that HCPCS code, and packaged all
costs for other codes with status indicator ``Q2,'' as well as all
other packaged HCPCS code and packaged revenue code costs into a total
single cost for the claim to create a ``pseudo'' single claim for the
selected code. We changed the status indicator for the selected code
from a data status indicator of ``N'' to the status indicator of the
APC to which the selected code was assigned, and we considered this
claim as a major procedure claim.
Lastly, where a multiple minor claim contained multiple codes with
status indicator ``Q2'' (``T-packaged'') and status indicator ``Q1''
(``STVX-packaged''), we selected the status indicator ``Q2'' HCPCS code
(``T-packaged'') that had the highest relative weight for CY 2008,
moved the units to one on that HCPCS code, and packaged all costs for
other codes with status indicator ``Q2,'' costs of all codes with
status indicator ``Q1'' (``STVX-packaged''), other packaged HCPCS code
and packaged revenue code costs into a total single cost for the claim
to create a ``pseudo'' single claim for the selected (``T-packaged'')
code. We favor status indicator ``Q2'' over ``Q1'' HCPCS codes because
``Q2'' HCPCS codes have higher CY 2008 relative weights. If a status
indicator ``Q1'' HCPCS code had a higher CY 2008 relative weight, it
would become the primary code for the simulated single bill process. We
changed the status indicator for the selected status indicator ``Q2''
(``T-packaged'') code from a data status indicator of ``N'' to the
status indicator of the APC to which the selected code was assigned and
we considered this claim as a major procedure claim.
After we assessed the conditional packaging of HCPCS codes with
proposed status indicators ``Q1'' and ``Q2,'' we then assessed the
claims to determine if the proposed criteria for the multiple imaging
composite APCs, discussed in section II.A.2.e.(5) of this proposed
rule, were met. Where the criteria for the proposed imaging composite
APCs were met, we created a ``single session'' claim for the applicable
imaging composite service and determined whether we could use the claim
in ratesetting. For HCPCS codes that are both conditionally packaged
and are proposed members of a multiple imaging composite APC, we first
assessed whether the code would be packaged and if so, the code ceased
to be available for further assessment as part of the composite APC.
Because the code would not be a separately payable procedure, we
considered it to be unavailable for use in setting the composite APC
median cost.
We excluded those claims that we were not able to convert to single
claims even after applying all of the techniques for creation of
``pseudo'' singles to multiple majors and to multiple minors. As has
been our practice in recent years, we also excluded claims that
contained codes that were viewed as independently or conditionally
bilateral and that contained the bilateral modifier (Modifier 50
(Bilateral procedure)) because the line-item cost for the code
represented the cost of two units of the procedure, notwithstanding
that the code appeared with a unit of one.
c. Completion of Claim Records and Median Cost Calculations
We then packaged the costs of packaged HCPCS codes (codes with
status indicator ``N'' listed in Addendum B to this proposed rule and
the costs of those lines for codes with status indicator ``Q1'' or
``Q2'' when they are not separately paid) and packaged revenue codes
into the cost of the single major procedure remaining on the claim.
The list of packaged revenue codes is shown in Table 2 below. As
noted in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation
that requires CMS to review the final list of packaged revenue codes
for consistency with OPPS policy and ensure that future versions of the
I/OCE edit accordingly. We compared the packaged revenue codes in the
I/OCE to the final list of packaged revenue codes for the CY 2008 OPPS
(72 FR 66608 through 66609) that we used for packaging costs in median
calculation. As a result of that analysis, we are proposing to use the
packaged revenue codes for CY 2009 displayed in Table 2 below.
We also excluded (1) claims that had zero costs after summing all
costs on the claim and (2) claims containing packaging flag number 3.
Effective for
[[Page 41436]]
services furnished on or after July 1, 2004, the I/OCE assigned
packaging flag number 3 to claims on which hospitals submitted token
charges for a service with status indicator ``S'' or ``T'' (a major
separately paid service under the OPPS) for which the fiscal
intermediary was required to allocate the sum of charges for services
with a status indicator equaling ``S'' or ``T'' based on the weight of
the APC to which each code was assigned. We do not believe that these
charges, which were token charges as submitted by the hospital, are
valid reflections of hospital resources. Therefore, we deleted these
claims. We also deleted claims for which the charges equaled the
revenue center payment (that is, the Medicare payment) on the
assumption that where the charge equaled the payment, to apply a CCR to
the charge would not yield a valid estimate of relative provider cost.
For the remaining claims, we then standardized 60 percent of the
costs of the claim (which we have previously determined to be the
labor-related portion) for geographic differences in labor input costs.
We made this adjustment by determining the wage index that applied to
the hospital that furnished the service and dividing the cost for the
separately paid HCPCS code furnished by the hospital by that wage
index. As has been our policy since the inception of the OPPS, we are
proposing to use the pre-reclassified wage indices for standardization
because we believe that they better reflect the true costs of items and
services in the area in which the hospital is located than the post-
reclassification wage indices and, therefore, would result in the most
accurate unadjusted median costs.
We also excluded claims that were outside 3 standard deviations
from the geometric mean of units for each HCPCS code on the bypass list
(because, as discussed above, we used claims that contain multiple
units of the bypass codes).
After removing claims for hospitals with error CCRs, claims without
HCPCS codes, claims for immunizations not covered under the OPPS, and
claims for services not paid under the OPPS, approximately 54 million
claims were left for this proposed rule. Of these 54 million claims, we
were able to use some portion of approximately 52 million whole claims
(96 percent of approximately 54 million potentially usable claims) to
create approximately 90 million single and ``pseudo'' single claims, of
which we used 89 million single bills (after trimming out approximately
627,000 claims as discussed below) in the CY 2009 median development
and ratesetting.
We used the remaining claims to calculate the proposed CY 2009
median costs for each separately payable HCPCS code and each APC. The
comparison of HCPCS and APC medians determines the applicability of the
2 times rule. Section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the group is more than 2 times greater than the lowest
median cost for an item or service within the same group (the 2 times
rule). Finally, we reviewed the medians and reassigned HCPCS codes to
different APCs where we believed that it was appropriate. Section III.
of this proposed rule includes a discussion of certain proposed HCPCS
code assignment changes that resulted from examination of the medians
and for other reasons. The APC medians were recalculated after we
reassigned the affected HCPCS codes. Both the HCPCS medians and the APC
medians were weighted to account for the inclusion of multiple units of
the bypass codes in the creation of ``pseudo'' single bills.
In some cases, APC median costs are calculated using variations of
the process outlined above. Section II.A.2.d. of this proposed rule
that follows addresses the calculation of single APC criteria-based
median costs. Section II.A.2.e. of this proposed rule discusses the
calculation of composite APC criteria-based median costs.
Section X.B. of this proposed rule addresses the methodology for
calculating the median cost for partial hospitalization services.
Table 2.--Proposed CY 2009 Packaged Revenue Codes
------------------------------------------------------------------------
Revenue code Description
------------------------------------------------------------------------
0250.......................................... PHARMACY.
0251.......................................... GENERIC.
0252.......................................... NONGENERIC.
0254.......................................... PHARMACY INCIDENT TO
OTHER DIAGNOSTIC.
0255.......................................... PHARMACY INCIDENT TO
RADIOLOGY.
0257.......................................... NONPRESCRIPTION DRUGS.
0258.......................................... IV SOLUTIONS.
0259.......................................... OTHER PHARMACY.
0260.......................................... IV THERAPY, GENERAL
CLASS.
0262.......................................... IV THERAPY/PHARMACY
SERVICES.
0263.......................................... SUPPLY/DELIVERY.
0264.......................................... IV THERAPY/SUPPLIES.
0269.......................................... OTHER IV THERAPY.
0270.......................................... M&S SUPPLIES.
0271.......................................... NONSTERILE SUPPLIES.
0272.......................................... STERILE SUPPLIES.
0273.......................................... TAKE HOME SUPPLIES.
0275.......................................... PACEMAKER DRUG.
0276.......................................... INTRAOCULAR LENS SOURCE
DRUG.
0278.......................................... OTHER IMPLANTS.
0279.......................................... OTHER M&S SUPPLIES.
0280.......................................... ONCOLOGY.
0289.......................................... OTHER ONCOLOGY.
0343.......................................... DIAGNOSTIC RADIOPHARMS.
0344.......................................... THERAPEUTIC RADIOPHARMS.
0370.......................................... ANESTHESIA.
0371.......................................... ANESTHESIA INCIDENT TO
RADIOLOGY.
0372.......................................... ANESTHESIA INCIDENT TO
OTHER DIAGNOSTIC.
[[Page 41437]]
0379.......................................... OTHER ANESTHESIA.
0390.......................................... BLOOD STORAGE AND
PROCESSING.
0399.......................................... OTHER BLOOD STORAGE AND
PROCESSING.
0560.......................................... MEDICAL SOCIAL SERVICES.
0569.......................................... OTHER MEDICAL SOCIAL
SERVICES.
0621.......................................... SUPPLIES INCIDENT TO
RADIOLOGY.
0622.......................................... SUPPLIES INCIDENT TO
OTHER DIAGNOSTIC.
0624.......................................... INVESTIGATIONAL DEVICE
(IDE).
0630.......................................... DRUGS REQUIRING SPECIFIC
IDENTIFICATION, GENERAL
CLASS.
0631.......................................... SINGLE SOURCE.
0632.......................................... MULTIPLE.
0633.......................................... RESTRICTIVE
PRESCRIPTION.
0681.......................................... TRAUMA RESPONSE, LEVEL
I.
0682.......................................... TRAUMA RESPONSE, LEVEL
II.
0683.......................................... TRAUMA RESPONSE, LEVEL
III.
0684.......................................... TRAUMA RESPONSE, LEVEL
IV.
0689.......................................... TRAUMA RESPONSE, OTHER.
0700.......................................... CAST ROOM.
0709.......................................... OTHER CAST ROOM.
0710.......................................... RECOVERY ROOM.
0719.......................................... OTHER RECOVERY ROOM.
0720.......................................... LABOR ROOM.
0721.......................................... LABOR.
0732.......................................... TELEMETRY.
0762.......................................... OBSERVATION ROOM.
0801.......................................... HEMODIALYSIS.
0802.......................................... PERITONEAL DIALYSIS.
0803.......................................... CAPD.
0804.......................................... CCPD.
0809.......................................... OTHER INPATIENT
DIALYSIS.
0810.......................................... ORGAN ACQUISITION.
0819.......................................... OTHER ORGAN ACQUISITION.
0821.......................................... HEMODIALYSIS COMP OR
OTHER RATE.
0824.......................................... MAINTENANCE 100%.
0825.......................................... SUPPORT SERVICES.
0829.......................................... OTHER HEMO OUTPATIENT.
0942.......................................... EDUCATION/TRAINING.
------------------------------------------------------------------------
d. Proposed Calculation of Single Procedure APC Criteria-Based Median
Costs
(1) Device-Dependent APCs
Device-dependent APCs are populated by HCPCS codes that usually,
but not always, require that a device be implanted or used to perform
the procedure. For a full history of how we have calculated payment
rates for device-dependent APCs in previous years, and a detailed
discussion of how we developed the standard device-dependent APC
ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66739 through 66742). Overviews of the
procedure-to-device edits and device-to-procedure edits used in
ratesetting for device-dependent APCs are available in the CY 2005 OPPS
final rule with comment period (69 FR 65761 through 65763) and the CY
2007 OPPS/ASC final rule with comment period (71 FR 68070 through
68071).
For CY 2009, we are proposing to continue using our standard
methodology for calculating median costs for device-dependent APCs,
which utilizes claims data that generally represent the full cost of
the required device. Specifically, we are proposing to calculate the
medians for device-dependent APCs for CY 2009 using only the subset of
single bills from CY 2007 claims data that pass the procedure-to-device
edits; do not contain token charges for devices; and do not contain the
``FB'' modifier signifying that the device was furnished without cost
to the provider, supplier, or practitioner, or where a full credit was
received. We continue to believe that this methodology gives us the
most appropriate median costs for device-dependent APCs in which the
hospital incurs the full cost of the device.
While the median costs for the majority of device-dependent APCs
show increases from CY 2008 based on the CY 2009 proposed rule claims
data, the median costs for three APCs involving electrode/lead
implantation decreased significantly compared to the CY 2008 final rule
with comment period median costs. Specifically, APCs 0106 (Insertion/
Replacement of Pacemaker Leads and/or Electrodes), 0225 (Implantation
of Neurostimulator Electrodes, Cranial Nerve), and 0418 (Insertion of
Left Ventricular Pacing Electrode), demonstrate median decreases of 26
percent, 52 percent, and 47 percent, respectively. We believe these
decreases reflect hospitals' correction of inaccurate and incomplete
billing practices for these services due to the implementation of
device-to-procedure edits beginning in CY 2007. As discussed in the CY
2007 OPPS/ASC final rule with comment period (71 FR 68070 through
68071), in the course of examining claims data for calculation of the
CY 2007 payment rates, we identified circumstances in which hospitals
billed a device code but failed to bill any procedure code with which
the device could be used correctly. For APCs 0106, 0225, and 0418 in
particular, we saw that hospitals frequently billed a procedure code
for
[[Page 41438]]
lead/electrode implantation with device HCPCS codes for a lead/
electrode and the more expensive pulse generator, but failed to report
a procedure code for generator implantation. These errors in billing
led to the costs of the pulse generator being packaged incorrectly into
the procedure codes for lead/electrode implantation. Hospitals that
coded and billed in this manner received no payment for the procedure
to implant the pulse generator, but these erroneous claims caused the
payment rate for the lead/electrode implantation APCs to be
inappropriately high. To address this problem, we implemented edits to
correct the coding for CY 2007, and the decreases to the median costs
of APCs 0106, 0225, and 0418 for CY 2009 are consistent with what we
expect, based on what we understand to be the nature of the services
and the costs of correctly coded devices. We also note an anticipated
decrease in our frequency of single bills for the services assigned to
APCs 0106, 0225, and 0418, most likely because the device-to-procedure
edits led hospitals to include the pulse generator implantation HCPCS
codes on the same claims, resulting in fewer single claims for the
lead/electrode implantation procedures.
APC 0625 (Level IV Vascular Access Procedures) as configured for CY
2008 and calculated based on CY 2007 claims data also demonstrates a
significant decrease in median cost (approximately 59 percent) relative
to CY 2008 (based on CY 2006 claims data). We believe this decrease is
attributable to the implementation of procedure-to-device edits on
January 1, 2007, for the only CPT code assigned to this APC,
specifically CPT code 36566 (Insertion of tunneled centrally inserted
central venous access device, requiring two catheters via two separate
venous access sites; with subcutaneous port(s)). Because the procedure
described by CPT code 36566 involves the insertion of a dialysis access
system, our edits require that the HCPCS code for that device be
present on the claim any time a hospital bills CPT code 36566. Prior to
January 1, 2007, we believe that hospitals often reported CPT code
36566 without also reporting the device HCPCS code for the dialysis
access system, or incorrectly billed CPT code 36566 for procedures that
do not require the use of the device. Therefore, with the
implementation of procedure-to-device edits, the volume of total CY
2007 claims for CPT code 36566 decreased as hospitals corrected their
claims to report this service only under the appropriate circumstances,
while the correctly coded claims reporting the required device (and
available for CY 2009 ratesetting) increased significantly from CY 2006
to CY 2007. We believe that the CY 2009 proposed rule median cost of
$2,092 calculated for CPT code 36566 from those claims is accurate and
appropriately reflects correct hospital reporting of the procedure and
the associated device. Furthermore, because of the decrease in the
median cost for CPT code 36566, we are proposing for CY 2009 to
reassign the code to APC 0623 (Level III Vascular Access Procedures),
which has a median cost of approximately $1,939. We also are proposing
to delete APC 0625 because no other procedures would map to this APC
once CPT code 36566 is reassigned.
In addition, we note a decrease of approximately 19 percent for APC
0681 (Knee Arthroplasty) relative to CY 2008, which we believe is
attributable to a low volume of services being performed by a small
number of providers. As we have stated in the past, some fluctuation in
relative costs from year to year is to be expected in a prospective
payment system for low volume device-dependent APCs such as APC 0681,
for which the median cost increased approximately 37 percent from CY
2007 to CY 2008.
Table 3 lists the APCs for which we are proposing to use our
standard device-dependent APC ratesetting methodology for CY 2009. We
refer readers to Addendum A to this proposed rule for the proposed
payment rates for these APCs.
Table 3.--Proposed CY 2009 Device-Dependent APCs
----------------------------------------------------------------------------------------------------------------
APC Status indicator APC title
----------------------------------------------------------------------------------------------------------------
0039............................... S Level I Implantation of Neurostimulator.
0040............................... S Percutaneous Implantation of Neurostimulator
Electrodes, Excluding Cranial Nerve.
0061............................... S Laminectomy, Laparoscopy, or Incision for
Implantation of Neurostimulator Electrodes,
Excluding Cranial Nerve.
0082............................... T Coronary or Non Coronary Atherectomy.
0083............................... T Coronary or Non Coronary Angioplasty and
Percutaneous Valvuloplasty.
0084............................... S Level I Electrophysiologic Procedures.
0085............................... T Level II Electrophysiologic Procedures.
0086............................... T Level III Electrophysiologic Procedures.
0089............................... T Insertion/Replacement of Permanent Pacemaker
and Electrodes.
0090............................... T Insertion/Replacement of Pacemaker Pulse
Generator.
0104............................... T Transcatheter Placement of Intracoronary
Stents.
0106............................... T Insertion/Replacement of Pacemaker Leads and/
or Electrodes.
0107............................... T Insertion of Cardioverter-Defibrillator.
0108............................... T Insertion/Replacement/Repair of Cardioverter-
Defibrillator Leads.
0115............................... T Cannula/Access Device Procedures.
0202............................... T Level VII Female Reproductive Procedures.
0222............................... S Level II Implantation of Neurostimulator.
0225............................... S Implantation of Neurostimulator Electrodes,
Cranial Nerve.
0227............................... T Implantation of Drug Infusion Device.
0229............................... T Transcatheter Placement of Intravascular
Shunts.
0259............................... T Level VII ENT Procedures.
0293............................... T Level V Anterior Segment Eye Procedures.
0315............................... S Level III Implantation of Neurostimulator.
0384............................... T GI Procedures with Stents.
0385............................... S Level I Prosthetic Urological Procedures.
0386............................... S Level II Prosthetic Urological Procedures.
0418............................... T Insertion of Left Ventricular Pacing Elect.
0425............................... T Level II Arthroplasty with Prosthesis.
0427............................... T Level II Tube or Catheter Changes or
Repositioning.
[[Page 41439]]
0622............................... T Level II Vascular Access Procedures.
0623............................... T Level III Vascular Access Procedures.
0648............................... T Level IV Breast Surgery.
0652............................... T Insertion of Intraperitoneal and Pleural
Catheters.
0653............................... T Vascular Reconstruction/Fistula Repair with
Device.
0654............................... T Insertion/Replacement of a permanent dual
chamber pacemaker.
0655............................... T Insertion/Replacement/Conversion of a
permanent dual chamber pacemaker.
0656............................... T Transcatheter Placement of Intracoronary Drug-
Eluting Stents.
0674............................... T Prostate Cryoablation.
0680............................... S Insertion of Patient Activated Event
Recorders.
0681............................... T Knee Arthroplasty.
----------------------------------------------------------------------------------------------------------------
(2) Blood and Blood Products
Since the implementation of the OPPS in August 2000, separate
payments have been made for blood and blood products through APCs
rather than packaging them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
For the CY 2009 OPPS, we are proposing to continue to establish
payment rates for blood and blood products using our blood-specific CCR
methodology, which utilizes actual or simulated CCRs from the most
recently available hospital cost reports to convert hospital charges
for blood and blood products to costs. This methodology has been our
standard ratesetting methodology for blood and blood products since CY
2005. It was developed in response to data analysis indicating that
there was a significant difference in CCRs for those hospitals with and
without blood-specific cost centers, and past comments indicating that
the former OPPS policy of defaulting to the overall hospital CCR for
hospitals not reporting a blood-specific cost center often resulted in
an underestimation of the true hospital costs for blood and blood
products. Specifically, in order to address the difference in CCRs and
to better reflect hospitals' costs, we are proposing to continue to
simulate blood CCRs for each hospital that does not report a blood cost
center by calculating the ratio of the blood-specific CCRs to
hospitals' overall CCRs for those hospitals that do report costs and
charges for blood cost centers. We would then apply this mean ratio to
the overall CCRs of hospitals not reporting costs and charges for blood
cost centers on their cost reports in order to simulate blood-specific
CCRs for those hospitals. We calculated the proposed median costs upon
which the proposed CY 2009 payment rates for blood and blood products
are based using the actual blood-specific CCR for hospitals that
reported costs and charges for a blood cost center and a hospital-
specific simulated blood-specific CCR for hospitals that did not report
costs and charges for a blood cost center.
We continue to believe that the blood-specific CCR methodology
better responds to the absence of a blood-specific CCR for a hospital
than alternative methodologies, such as defaulting to the overall
hospital CCR or applying an average blood-specific CCR across
hospitals. Because this methodology takes into account the unique
charging and cost accounting structure of each provider, we believe
that it yields more accurate estimated costs for these products. We
believe that continuing with this methodology in CY 2009 would result
in median costs for blood and blood products that accurately reflect
the relative estimated costs of these products for hospitals without
blood cost centers, and, therefore, for these products in general.
As discussed in section XIII.A.1. of this proposed rule, we are
also proposing to create status indicator ``R'' (Blood and Blood
Products), to denote blood and blood products for publication and
payment purposes in CY 2009. We believe that it is necessary to create
a status indicator that is specific to blood and blood products to
facilitate development of blood product median costs under the blood-
specific CCR methodology and to facilitate implementation of the
reduced payments that would be made to hospitals that fail to report
the hospital outpatient quality data, as discussed in section XVI.D.2.
of this proposed rule.
We refer readers to Addendum B to this proposed rule for the CY
2009 proposed payment rates for blood and blood products, which are
identified with proposed status indicator ``R.'' For more detailed
discussion of the blood-specific CCR methodology, we refer readers to
the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full
history of OPPS payment for blood and blood products, we refer readers
to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807
through 66810).
(3) Single Allergy Tests
We are proposing to continue with our methodology of
differentiating single allergy tests (``per test'') from multiple
allergy tests (``per visit'') by assigning these services to two
different APCs to provide accurate payments for these tests in CY 2009.
Multiple allergy tests are currently assigned to APC 0370 (Allergy
Tests), with a median cost calculated based on the standard OPPS
methodology. We provided billing guidance in CY 2006 in Program
Transmittal 804 (issued on January 3, 2006) specifically clarifying
that hospitals should report charges for the CPT codes that describe
single allergy tests to reflect charges ``per test'' rather than ``per
visit'' and should bill the appropriate number of units of these CPT
codes to describe all of the tests provided. However, our CY 2007
claims data available for this CY 2009 proposed rule for APC 0381 do
not reflect improved and more consistent hospital billing practices of
``per test'' for single allergy tests. The median cost of APC 0381,
calculated for this proposed rule according to the standard single
claims OPPS methodology, is approximately $51, significantly higher
than the CY 2008 median cost of APC 0381 of approximately $17
calculated according to the ``per unit'' methodology, and greater than
we would expect for these procedures that are to be reported ``per
test'' with the appropriate number of units. Some claims for single
allergy tests still appear to provide charges that represent a ``per
visit'' charge, rather than a ``per test'' charge.
Therefore, consistent with our payment policy for CYs 2006, 2007,
and
[[Page 41440]]
2008, we are proposing to calculate a ``per unit'' median cost for APC
0381, based upon 520 claims containing multiple units or multiple
occurrences of a single CPT code. The CY 2009 proposed median cost for
APC 0381 using the ``per unit'' methodology is approximately $25. For a
full discussion of this methodology, we refer readers to the CY 2008
OPPS/ASC final rule with comment period (72 FR 66737).
(4) Echocardiography Services
For the CY 2009 OPPS, we are proposing to continue the packaging of
payment for all contrast agents into the payment for the associated
imaging procedure, as we did in CY 2008. For echocardiography services,
we are proposing to estimate median costs using the same methodology
that we used to set medians for these services for CY 2008. In CY 2008,
we finalized a policy to package payment for all contrast agents into
the payment for the associated imaging procedure regardless of whether
the contrast agent met the OPPS drug packaging threshold. Section
1833(t)(2)(G) of the Act requires us to create additional APC groups of
services for procedures that use contrast agents that classify them
separately from those procedures that do not utilize contrast agents.
To reconcile this statutory provision with our final policy of
packaging all contrast agents, for CY 2008, we calculated HCPCS-
specific median costs for all separately payable echocardiography
procedures that may be performed with contrast agents by isolating
single and ``pseudo'' single claims with the following CPT codes where
a contrast agent was also billed on the claim: 93303 (Transthoracic
echocardiography for congenital cardiac anomalies; complete), 93304
(Transthoracic echocardiography for congenital cardiac anomalies;
follow-up or limited study), 93307 (Echocardiography, transthoracic,
real-time with image documentation (2D) with or without M-mode
recording; complete), 93308 (Echocardiography, transthoracic, real-time
with image documentation (2D) with or without M-mode recording; follow-
up or limited study), 93312 ( Echocardiography, transesophageal, real
time with image documentation (2D) (with or without M-mode recording);
including probe placement, image acquisition, interpretation and
report), 93315 (Transesophageal echocardiography for congenital cardiac
anomalies; including probe placement, image acquisition, interpretation
and report), 93318 (Echocardiography, transesophageal (TEE) for
monitoring purposes, including probe placement, real time 2-dimensional
image acquisition and interpretation leading to ongoing (continuous)
assessment of (dynamically changing) cardiac pumping function and to
therapeutic measures on an immediate time basis), and 93350
(Echocardiography, transthoracic, real-time with image documentation
(2D), with or without M-mode recording, during rest and cardiovascular
stress test using treadmill, bicycle exercise and/or pharmacologically
induced stress, with interpretation and report). As noted in the CY
2008 OPPS/ASC final rule with comment period (72 FR 66644), our
analysis indicated that all echocardiography procedures that may be
performed with contrast agents are reasonably similar both clinically
and in terms of resource use, as evidenced by similar HCPCS median
costs.
Pursuant to the statute, for CY 2008, we created APC 0128
(Echocardiogram With Contrast) to provide payment for echocardiography
procedures that are performed with a contrast agent. In addition, as
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66644 through 66646), in order for hospitals to identify separately and
receive appropriate payment for echocardiography procedures performed
with contrast beginning in CY 2008, we created eight new HCPCS codes
(C8921 through C8928) that corresponded to the related CPT
echocardiography codes and assigned them to the newly created APC 0128.
We instructed hospitals performing echocardiography procedures without
contrast to continue to report the CPT codes and to report the new C-
codes when performing echocardiography procedures with contrast or
without contrast followed by with contrast.
Claims data from CY 2008 are not yet available for ratesetting, so
we do not yet have claims data specific to HCPCS codes C8921 through
C8928 in order to determine the CY 2009 payment rate for APC 0128.
Therefore, for CY 2009, we are proposing to again use the methodology
that we used to set the CY 2008 payment rate for APC 0128 (72 FR
66645). That is, we isolate single and ``pseudo'' single claims in our
database that include those CPT codes in the range of 93303 through
93350 as described above that correspond to the contrast studies
described by HCPCS codes C8921 through C8928. For claims where one of
these echocardiography procedures was billed with a contrast agent, we
packaged the cost of the contrast agent into the cost of the
echocardiography procedure and then calculated a median cost for APC
0128 using this subset of claims to determine the proposed median cost
for APC 0128 of approximately $563. As in CY 2008, the HCPCS code-
specific median costs for echocardiography procedures performed with
contrast are all similar, and we continue to believe these services
share sufficient similarity to be assigned to the same APC.
For CY 2009, we also recalculated the median cost for APCs 0269
(Level II Echocardiogram Without Contrast Except Transesophageal); 0270
(Transesophageal Echocardiogram Without Contrast); and 0697 (Level I
Echocardiogram Without Contrast Except Transesophageal), as we did in
CY 2008 (72 FR 66645). We used claims for CPT codes 93303 through 93350
after removing claims from the ratesetting process that included
contrast agents because these claims were used to set the median cost
for APC 0128.
We continue to believe that these echocardiography APC medians
accurately reflect hospital costs when performing echocardiography
procedures, both with and without contrast. In addition, we believe
that this coding and payment methodology allows us to both adhere to
the statutory requirement to create additional groups of services for
procedures that use contrast agents and to continue packaged payment
for contrast agents.
(5) Nuclear Medicine Services
In CY 2008, we began packaging payment for diagnostic
radiopharmaceuticals into the payment for the associated nuclear
medicine procedure. (For a discussion regarding the distinction between
diagnostic and therapeutic radiopharmaceuticals, we refer readers to
the CY 2008 OPPS/ASC final rule at 72 FR 66636). Prior to the
implementation of this policy, diagnostic radiopharmaceuticals were
subject to the standard OPPS drug packaging methodology whereby
payments are packaged when the estimated mean per day product costs
fall at or below the annual packaging threshold for drugs, biologicals,
and radiopharmaceuticals.
Packaging costs into a single aggregate payment for a service,
encounter, or episode of care is a fundamental principle that
distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of supportive items and services into the
payment for the independent procedure or service with which they are
associated encourages hospital efficiencies and also enables hospitals
to manage their resources with maximum flexibility. All nuclear
medicine procedures require the use of at least
[[Page 41441]]
one radiopharmaceutical or other radiolabeled product, and there are
only a small number of radiopharmaceuticals that may be appropriately
billed with each diagnostic nuclear medicine procedure. For the OPPS,
we distinguish diagnostic radiopharmaceuticals from therapeutic
radiopharmaceuticals for payment purposes, and this distinction is
recognized in the Level II HCPCS codes for diagnostic
radiopharmaceuticals that include the term ``diagnostic'' along with a
radiopharmaceutical in their HCPCS code descriptors. As we stated in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66635), we
believe that our policy to package payment for diagnostic
radiopharmaceuticals (other than those already packaged when their per
day costs are below the packaging threshold for OPPS drugs,
biologicals, and radiopharmaceuticals) is consistent with OPPS
packaging principles, provides greater administrative simplicity for
hospitals, and encourages hospitals to use the most clinically
appropriate and cost efficient diagnostic radiopharmaceutical for each
study. For more background on this policy, we refer readers to
discussions in the CY 2008 OPPS/ASC proposed rule (72 FR 42667 through
42672) and the CY 2008 OPPS/ASC final rule with comment period (72 FR
66635 through 66641).
We continue to believe that it is most appropriate to package
payment for some radiopharmaceuticals, specifically diagnostic
radiopharmaceuticals, into the payment for diagnostic nuclear medicine
procedures, and we are proposing to continue to package payment for
diagnostic radiopharmaceuticals into the payment for the associated
nuclear medicine procedure for CY 2009 as described in section V.B.2.b.
of this proposed rule.
During the March 2008 APC Panel meeting, the APC Panel recommended
that CMS continue to package payment for diagnostic
radiopharmaceuticals for CY 2009. In addition, the APC Panel
recommended that CMS present data at the first CY 2009 APC Panel
meeting on usage and frequency, geographic distribution, and size and
type of hospitals performing nuclear medicine studies using
radioisotopes in order to ensure that access to diagnostic
radiopharmaceuticals is preserved for Medicare beneficiaries. We are
accepting both of these recommendations.
For CY 2008 ratesetting, we used only claims for nuclear medicine
procedures that contained a diagnostic radiopharmaceutical in
calculating the median costs for APCs including nuclear medicine
procedures (72 FR 66639). This is similar to the established
methodology used for device-dependent APCs before claims reflecting the
procedure-to-device edits were included in our claims data. For CY 2008
we also implemented claims processing edits (called procedure-to-
radiopharmaceutical edits) requiring the presence of a
radiopharmaceutical (or other radiolabeled product) HCPCS code when a
separately payable nuclear medicine procedure is present on a claim.
Similar to our practice regarding the procedure-to-device edits that
have been in place for some time, we continually review comments and
requests for changes related to these edits and, based on our review,
may update the edit list during our quarterly update process if
necessary. The radiopharmaceutical (and other radiolabeled product) and
procedure HCPCS codes that are included in these edits can be viewed on
the OPPS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/01_
overview.asp.
The CY 2008 OPPS claims that are subject to the procedure-to-
radiopharmaceutical edits will not be available for setting payment
rates until CY 2010 and, therefore, are not yet available to set
payment rates for CY 2009. Therefore, we are proposing to continue our
established CY 2008 methodology for setting the payment rates for APCs
that include nuclear medicine procedures for CY 2009. We used an
updated list of radiolabeled products from the procedure-to-
radiopharmaceutical edit file to identify single and ``pseudo'' single
claims for nuclear medicine procedures that also included at least one
eligible radiolabeled product. Using this subset of claims, we followed
our standard OPPS ratesetting methodology, discussed in section II.A.
of this proposed rule, to calculate median costs for nuclear medicine
procedures and their associated APCs.
We have identified those APCs containing nuclear medicine
procedures that would be subject to this methodology under our CY 2009
proposal in Table 4 below. As in CY 2008, when we set APC median costs
based on single and ``pseudo'' single claims that also included at
least one radiolabeled product on our edit file, we observed an
equivalent or higher median cost than that calculated from all single
and ``pseudo'' single bills. We believe that this methodology
appropriately ensures that the costs of diagnostic radiopharmaceuticals
are included in the ratesetting process for these APCs.
Table 4.--Proposed APCs Where Nuclear Medicine Procedures Are Assigned
With Median Costs Calculated From Claims With an Associated Radiolabeled
Product
------------------------------------------------------------------------
APC APC title
------------------------------------------------------------------------
0307......................... Myocardial Positron Emission Tomography
(PET) imaging.
0308......................... Non-Myocardial Positron Emission
Tomography (PET) imaging.
0377......................... Level II Cardiac Imaging.
0378......................... Level II Pulmonary Imaging.
0389......................... Level I Non-Imaging Nuclear Medicine.
0390......................... Level I Endocrine Imaging.
0391......................... Level II Endocrine Imaging.
0392......................... Level II Non-imaging Nuclear Medicine.
0393......................... Hematologic Processing & Studies.
0394......................... Hepatobiliary Imaging.
0395......................... GI Tract Imaging.
0396......................... Bone Imaging.
0397......................... Vascular Imaging.
0398......................... Level I Cardiac Imaging.
0400......................... Hematopoietic Imaging.
0401......................... Level I Pulmonary Imaging.
0402......................... Level II Nervous System Imaging.
0403......................... Level I Nervous System Imaging.
[[Page 41442]]
0404......................... Renal and Genitourinary Studies.
0406......................... Level I Tumor/Infection Imaging.
0408......................... Level III Tumor/Infection Imaging.
0414......................... Level II Tumor/Infection Imaging.
------------------------------------------------------------------------
(6) Hyperbaric Oxygen Therapy
Since the implementation of OPPS in August 2000, the OPPS has
recognized HCPCS code C1300 (Hyperbaric oxygen under pressure, full
body chamber, per 30 minute interval) for hyperbaric oxygen therapy
(HBOT) provided in the hospital outpatient setting. In the CY 2005
final rule with comment period (69 FR 65758 through 65759), we
finalized a ``per unit'' median cost calculation for APC 0659
(Hyperbaric Oxygen) using only claims with multiple units or multiple
occurrences of HCPCS code C1300 because delivery of a typical HBOT
service requires more than 30 minutes. We observed that claims with
only a single occurrence of the code were anomalies, either because
they reflected terminated sessions or because they were incorrectly
coded with a single unit. In the same rule, we also established that
HBOT would not generally be furnished with additional services that
might be packaged under the standard OPPS APC median cost methodology.
This enabled us to use claims with multiple units or multiple
occurrences. Finally, we also used each hospital's overall CCR to
estimate costs for HCPCS code C1300 from billed charges rather than the
CCR for the respiratory therapy or other departmental cost centers.
Comments on the CY 2005 proposed rule effectively demonstrated that
hospitals report the costs and charges for HBOT in a wide variety of
cost centers. Since CY 2005, we have used this methodology to estimate
the median cost for HBOT. The median costs of HBOT using this
methodology have been relatively stable for the last 5 years. For CY
2009, we are proposing to continue using the same methodology to
estimate a ``per unit'' median cost for HCPCS code C1300 of
approximately $103 using 71,866 claims with multiple units or multiple
occurrences for this proposed rule.
(7) Payment for Ancillary Outpatient Services When Patient Expires (-CA
Modifier)
In the November 1, 2002 final rule with comment period (67 FR
66798), we discussed the creation of the new HCPCS-CA modifier to
address situations where a procedure on the OPPS inpatient list must be
performed to resuscitate or stabilize a patient (whose status is that
of an outpatient) with an emergent, life-threatening condition, and the
patient dies before being admitted as an inpatient. In Program
Transmittal A-02-129, issued on January 3, 2003, we instructed
hospitals on the use of this modifier. For a complete description of
the history of the policy and development of the payment methodology
for these services, we refer readers to the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68157 through 68158).
For CY 2009, we are proposing to continue to use our established
ratesetting methodology for calculating the median cost of APC 0375
(Ancillary Outpatient Services When Patient Expires), and we are
proposing to continue to make one payment under APC 0375 for the
services that meet the specific conditions for using modifier -CA. We
would calculate the relative payment weight for APC 0375 by using all
claims reporting a status indicator ``C'' procedure appended with the -
CA modifier, using estimated costs from claims data for line-items with
a HCPCS code assigned status indicator ``G,'' ``H,'' ``K,'' ``N,''
``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' ``V,'' and ``X''
and charges for packaged revenue codes without a HCPCS code. We
continue to believe that this methodology results in the most
appropriate aggregate median cost for the ancillary services provided
in these unusual clinical situations.
Also, we believe that hospitals are reporting the -CA modifier
according to the policy initially established in CY 2003. The claims
frequency for APC 0375 has been relatively stable over the past few
years. Although the proposed median cost for APC 0375 is slightly lower
for CY 2009 than for CY 2008, generally it has increased significantly
in recent years. Variation in the median cost for APC 0375 is expected
because of the small number of claims and because the specific cases
are grouped by the presence of the -CA modifier appended to an
inpatient procedure and not according to the standard APC criteria of
clinical and resource homogeneity. Cost variation for APC 0375 from
year to year is anticipated and acceptable so long as hospitals
continue judicious reporting of the -CA modifier.
Table 5 shows the number of claims and the median cost for APC 0375
from CY 2006 to CY 2008. For CY 2009, we are proposing a median cost
for APC 0375 of approximately $4,762.
Table 5.--Claims for Ancillary Outpatient Services When Patient Expires
(-CA Modifier) for CYs 2006 Through 2008
------------------------------------------------------------------------
Number Median
Prospective payment year of cost
claims ($)
------------------------------------------------------------------------
CY 2006.............................................. 370 2,717
CY 2007.............................................. 260 3,549
CY 2008.............................................. 183 4,945
------------------------------------------------------------------------
e. Proposed Calculation of Composite APC Criteria-Based Median Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide only necessary, high quality care
and to provide that care as efficiently as possible. For CY 2008, we
developed composite APCs to provide a single payment for groups of
services that are typically performed together during a single clinical
encounter and that result in the provision of a complete service.
Bundling payment for multiple independent services into a single OPPS
payment in this way enables hospitals to manage their resources with
maximum flexibility by monitoring and adjusting the volume and
efficiency of services themselves. An additional advantage to the
composite APC model is that we can use data from correctly coded
multiple procedure claims to calculate payment rates for the specified
combinations of services, rather than relying upon single procedure
claims which typically are low in volume and/or incorrectly coded. We
refer readers to section II.A.4. of the CY 2008 OPPS/ASC final rule
with comment period for a full discussion of the development of the
composite APC methodology (72 FR
[[Page 41443]]
66611 through 66614 and 66650 through 66652).
We continue to consider the development and implementation of
larger payment bundles, such as composite APCs, a long-term policy
objective for the OPPS and continue to explore other areas where this
payment model may be utilized. In developing this proposed rule, we
followed the same methodology for identifying possible composite APCs
as we did for CY 2008. Specifically, we examined the multiple procedure
claims that we could not convert to single procedure claims to identify
common combinations of services for which we have relatively few single
procedure claims. We then performed a clinical assessment of the
combinations that we identified to determine whether our findings were
consistent with our understanding of the services furnished. In
addition, consistent with our stated intention to involve the APC Panel
in our future exploration of how we can develop encounter-based and
episode-based payment groups (72 FR 66614), we also specifically
explored a possible composite APC for radioimmunotherapy in response to
a recommendation of the APC Panel from its September 2007 meeting.
After performing claims analysis and clinical assessments as
described above, and taking into consideration the recommendation of
the APC Panel from its March 2008 meeting that we continue pursing a
radioimmunotherapy composite APC, we are not proposing a composite APC
payment for radioimmunotherapy for CY 2009, as discussed further in
section V.B.4. of this proposed rule. However, we are proposing to
expand the composite APC model to one new clinical area for CY 2009,
multiple imaging services, as described in detail in section
II.A.2.e.(5) of this proposed rule. We also are proposing to continue
our established composite APC policies for extended assessment and
management, low dose rate (LDR) prostate brachytherapy, cardiac
electrophysiologic evaluation and ablation, and mental health services
for CY 2009, as discussed in sections II.A.2.e.(1), II.A.2.e.(2),
II.A.2.e.(3), and II.A.2.e.(4), respectively, of this proposed rule.
(1) Extended Assessment and Management Composite APCs (APCs 8002 and
8003)
For the CY 2009 OPPS we are proposing to continue to include
composite APC 8002 (Level I Extended Assessment and Management
Composite) and composite APC 8003 (Level II Extended Assessment and
Management Composite) in the OPPS. In addition, we are proposing to
include HCPCS code G0384 (Level 5 hospital emergency department visit
provided in a type B emergency department) in the criteria that
determine eligibility for payment for composite APC 8003. For CY 2008,
we created these two new composite APCs to provide payment to hospitals
in certain circumstances when extended assessment and management of a
patient occur (an extended visit). In most circumstances, observation
services are supportive and ancillary to the other services provided to
a patient. In the circumstances when observation care is provided in
conjunction with a high level visit or direct admission and is an
integral part of a patient's extended encounter of care, payment is
made for the entire care encounter through one of two composite APCs as
appropriate.
As defined for the CY 2008 OPPS, composite APC 8002 describes an
encounter for care provided to a patient that includes a high level
(Level 5) clinic visit or direct admission to observation in
conjunction with observation services of substantial duration (72 FR
66648 through 66649). Composite APC 8003 describes an encounter for
care provided to a patient that includes a high level (Level 4 or 5)
emergency department visit or critical care services in conjunction
with observation services of substantial duration. HCPCS code G0378
(Observation services, per hour) is assigned status indicator ``N,''
signifying that its payment is always packaged. As noted in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66648 through 66649),
the I/OCE evaluates every claim received to determine if payment
through a composite APC is appropriate. If payment through a composite
APC is inappropriate, the I/OCE, in conjunction with the PRICER,
determines the appropriate status indicator, APC, and payment for every
code on a claim. The specific criteria that must be met for the two
extended assessment and management composite APCs to be paid are
provided below in the description of the claims that were selected for
the calculation of the proposed CY 2009 median costs for these
composite APCs. The general composite APC logic and observation care
reporting criteria have also been included in updates to the Claims
Processing and Benefit Policy Manuals through Change Request 5916
(Program Transmittals 82 and 1145), dated February 8, 2008, and we are
not proposing to change these criteria for the CY 2009 OPPS.
When we created composite APCs 8002 and 8003 for CY 2008, we
retained as general reporting requirements for all observation services
those criteria related to physician order and evaluation;
documentation; and observation beginning and ending time as listed in
section XI. of the CY 2008 final rule with comment period (72 FR
66812). We are not proposing to change these reporting requirements for
the CY 2009 OPPS. These are more general requirements that encourage
hospitals to provide medically reasonable and necessary care and help
to ensure the proper reporting of observation services on correctly
coded hospital claims that reflect the full charges associated with all
hospital resources utilized to provide the reported services.
As noted in detail in sections IX.C and XI. of the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66802 through 66805 and 66814),
we saw a normal and stable distribution of clinic and emergency
department visit levels. We do not expect to see an increase in the
proportion of visit claims for high level visits as a result of the new
composite APCs adopted for CY 2008 and proposed for CY 2009. Similarly,
we expect that hospitals will not purposely change their visit
guidelines or otherwise upcode clinic and emergency department visits
reported with observation care solely for the purpose of composite
payment. As stated in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66648), we expect to carefully monitor any changes in
billing practices on a service-specific and hospital-specific level to
determine whether there is reason to request that Quality Improvement
Organizations (QIOs) review the quality of care furnished, or to
request that Benefit Integrity contractors or other contractors review
the claims against the medical record. However, we will not have claims
available for analysis that reflect the new CY 2008 payment policy for
the extended assessment and management composite APCs until the CY 2010
annual OPPS rulemaking cycle.
At the March 2008 meeting of the APC Panel, we discussed with the
Visits and Observation Subcommittee, as well as with the full APC
Panel, the extended assessment and management composite APCs and
observation-related data previously requested by the APC Panel at its
September 2007 meeting. At its March 2008 meeting, the APC Panel
recommended that CMS provide them with additional data related to the
frequency and median cost for the extended assessment and management
composite APCs and length-of-stay
[[Page 41444]]
frequency distribution data for observation services, with additional
detail at the 24-48 hour and greater than 48 hour levels. We are
accepting those recommendations and will provide additional data as
requested at the next APC Panel meeting in 2008. In addition, the APC
Panel recommended continuation of the Visits and Observation
Subcommittee's work. We also are accepting that recommendation.
For CY 2009, we are proposing to continue the extended assessment
and management composite APC payment methodology for APCs 8002 and
8003. As stated above, we are also proposing to continue the general
reporting requirements for observation services reported with HCPCS
code G0378. We continue to believe that the composite APCs 8002 and
8003 and the related policies provide the most appropriate means of
paying for these services. We are proposing to calculate the median
costs for APCs 8002 and 8003 using all single and ``pseudo single''
procedure claims for CY 2007 that meet the criteria for payment of each
composite APC.
Specifically, to calculate the proposed median costs for composite
APCs 8002 and 8003, we selected single and ``pseudo'' single claims
that met each of the following criteria:
1. Did not contain a HCPCS code to which we have assigned status
indicator ``T'' with a date of service 1 day earlier than the date of
service associated with HCPCS code G0378. (By selecting these claims
from single and ``pseudo'' single claims, we had already assured that
they would not contain a code for a service with status indicator ``T''
on the same date of service.);
2. Contained 8 or more units of HCPCS code G0378; and
3. Contained one of the following codes:
In the case of composite APC 8002, HCPCS code G0379
(Direct admission of patient for hospital observation care) on the same
date of service as G0378; or CPT code 99205 (Office or other outpatient
visit for the evaluation and management of a new patient (Level 5)); or
CPT code 99215 (Office or other outpatient visit for the evaluation and
management of an established patient (Level 5)) provided on the same
date of service or one day before the date of service for HCPCS code
G0378.
In the case of composite APC 8003, CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)); CPT code 99291
(Critical care, evaluation and management of the critically ill or
critically injured patient; first 30-74 minutes); or HCPCS code G0384
provided on the same date of service or one day before the date of
service for HCPCS code G0378. (As discussed in detail below, we are
proposing to add HCPCS code G0384 to the eligibility criteria for
composite APC 8003 for CY 2009.)
We applied the standard packaging and trimming rules to the claims
before calculating the proposed median costs. The proposed CY 2009
median cost resulting from this process for composite APC 8002 is $364,
which was calculated from 14,968 single and ``pseudo'' single bills
that met the required criteria. The proposed median cost for composite
APC 8003 is $670, which was calculated from 83,491 single and
``pseudo'' single bills that met the required criteria. This is the
same methodology we used to calculate the medians for composite APCs
8002 and 8003 for the CY 2008 OPPS (72 FR 66649).
As discussed in more detail in section IX.B. of this proposed rule,
we are proposing to reassign HCPCS code G0384 from APC 0608 (Level 5
Hospital Clinic Visits) to APC 0616 (Level 5 Emergency Visits).
Consistent with this change for CY 2009, we are also proposing to add
HCPCS code G0384 to the eligibility criteria for payment of composite
APC 8003. Because these visits are rare, we would not expect that
adding HCPCS code G0384 to the eligibility criteria for payment for
extended assessment and management composite APC 8003 would
significantly increase the relative frequency of the Type B emergency
department Level 5 visits reported using HCPCS code G0384.
As discussed further in sections III.D and IX. of this proposed
rule and consistent with our CY 2008 final policy, when calculating the
median costs for the clinic, Type A emergency department visit, Type B
emergency department visit, and critical care APCs (0604 through 0617
and 0626 through 0629), we would utilize our methodology that excludes
those claims for visits that are eligible for payment through the two
extended assessment and management composite APCs, that is APC 8002 or
APC 8003. We believe that this approach would result in the most
accurate cost estimates for APCs 0604 through 0617 and 0626 through
0629 for CY 2009.
Also as discussed in section XIII.A.1. of this proposed rule, for
CY 2009, we are proposing to replace current status indicator ``Q''
with three new separate status indicators: ``Q1,'' ``Q2,'' and ``Q3.''
We believe that this proposed change would make our policy more
transparent to hospitals and would facilitate the use of status
indicator-driven logic in our ratesetting calculations, and in hospital
billing and accounting systems. Under this proposal, status indicator
``Q3'' would be assigned to all codes that may be paid through a
composite APC based on composite-specific criteria or separately
through single code APCs when the criteria are not met. Therefore, we
are proposing that each of the direct admission, clinic, and emergency
department visit codes that may be paid through composite APCs 8002 and
8003 be assigned status indicator ``Q3'' for CY 2009. We are proposing
that HCPCS code G0378 would continue to be always packaged by assigning
the HCPCS code status indicator ``N,'' its current status indicator
under the CY 2008 OPPS.
We are also proposing that the payment policy for separate payment
of HCPCS code G0379 that was finalized for the CY 2008 OPPS (72 FR
66814 through 66815) would continue to apply for CY 2009 when the
criteria for payment of this service through composite APC 8002 are not
met. The criteria for payment of HCPCS code G0379 under either
composite APC 8002, as part of the extended assessment and management
composite service or APC 0604, as a separately payable individual
service are: (1) both HCPCS codes G0378 and G0379 are reported with the
same date of service; and (2) no service with a status indicator of
``T'' or ``V'' or Critical Care (APC 0617) is provided on the same date
of service as HCPCS code G0379. If either of the above criteria is not
met, HCPCS code G0379 is assigned status indicator ``N'' and its
payment is packaged into the payment for other separately payable
services provided in the same encounter.
In summary, for CY 2009, we are proposing to continue the extended
assessment and management composite APC payment methodology and the
general reporting requirements for observation services reported with
HCPCS code G0378. We are proposing to base the CY 2009 OPPS payment for
composite APC 8002 on a median cost of $364 and to base the payment for
composite APC 8003 on a median cost of $670. For CY 2009, we are also
proposing to add HCPCS code G0384 to the eligibility criteria for
payment of composite APC 8003. Furthermore, we are proposing to assign
status indicator ``Q3'' to each of the visit codes that may be paid
through the Level I and Level II extended assessment and management
composite APCs.
[[Page 41445]]
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
LDR prostate brachytherapy is a treatment for prostate cancer in
which needles or catheters are inserted into the prostate, followed by
permanent implantation of radioactive sources into the prostate through
the hollow needles or catheters. At least two CPT codes are used to
report the composite treatment service because there are separate codes
that describe placement of the needles/catheters and the application of
the brachytherapy sources: CPT code 55875 (Transperineal placement of
needles or catheters into prostate for interstitial radioelement
application, with or without cystoscopy) and CPT code 77778
(Interstitial radiation source application; complex). Generally, the
component services represented by both codes are provided in the same
operative session in the same hospital on the same date of service to
the Medicare beneficiary treated with LDR brachytherapy for prostate
cancer. As discussed in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66653), OPPS payment rates for CPT code 77778, in
particular, have fluctuated over the years. We were frequently informed
by the public that reliance on single procedure claims to set the
median costs for these services resulted in use of only incorrectly
coded claims for LDR prostate brachytherapy because a correctly coded
claim should include, for the same date of service, CPT codes for both
needle/catheter placement and application of radiation sources, as well
as separately coded imaging and radiation therapy planning services
(that is, a multiple procedure claim).
In order to base payment on claims for the most common clinical
scenario, and to contribute to our goal of providing payment under the
OPPS for a larger bundle of component services provided in a single
hospital encounter, beginning in CY 2008 we provide a single payment
for LDR prostate brachytherapy when the composite service, billed as
CPT codes 55875 and 77778, is furnished in a single hospital encounter.
We base the payment for composite APC 8001 (LDR Prostate Brachytherapy
Composite) on the median cost derived from claims for the same date of
service that contain both CPT codes 55875 and 77778 and that do not
contain other separately paid codes that are not on the bypass list. In
uncommon occurrences in which the services are billed individually,
hospitals continue to receive separate payments for the individual
services. We refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66652 through 66655) for a full history of OPPS
payment for LDR prostate brachytherapy and a detailed description of
how we developed the LDR prostate brachytherapy composite APC.
For CY 2009, we are proposing to continue paying for LDR prostate
brachytherapy services using the composite APC methodology proposed and
implemented for CY 2008. That is, we are proposing to use CY 2007
claims on which both CPT codes 55875 and 77778 were billed on the same
date of service with no other separately paid procedure codes (other
than those on the bypass list) to calculate the payment rate for
composite APC 8001. Consistent with our CY 2008 practice, we would not
use the claims that meet these criteria in the calculation of the
median costs for APCs 0163 (Level IV Cystourethroscopy and Other
Genitourinary Procedures) and 0313 (Brachytherapy) to which HCPCS codes
55875 and 77778 are assigned respectively; median costs for APCs 0163
and 0313 would continue to be calculated using single procedure claims.
As discussed in section XIII.A.1. of this proposed rule, we also are
proposing to use new status indicator ``Q3'' (Codes that May be Paid
Through a Composite APC), to denote HCPCS codes such as CPT codes 55875
and 77778 that may be paid through a composite APC for publication and
payment purposes for CY 2009, rather than status indicator ``Q'' that
is being used in CY 2008. We are proposing the status indicator change
to facilitate identification of HCPCS codes that may be paid through
composite APCs and to facilitate development of the composite APC
median costs.
We continue to believe that this composite APC contributes to our
goal of creating hospital incentives for efficiency and cost
containment, while providing hospitals with the most flexibility to
manage their resources. We also continue to believe that data from
claims reporting both services required for LDR prostate brachytherapy
provide the most accurate median cost upon which to base the composite
APC payment rate.
Using partial year CY 2007 claims data available for the CY 2009
proposed rule, we were able to use 6,897 claims that contained both CPT
code 77778 and 55875 to calculate the median cost upon which the CY
2009 proposed payment for composite APC 8001 is based. The proposed
median cost for composite APC 8001 for CY 2009 is approximately $3,509.
This is an increase compared to the CY 2008 OPPS/ASC final rule with
comment period in which we calculated a final median cost for this
composite APC of approximately $3,391 based on a full year of CY 2006
claims data. The CY 2009 proposed composite APC median is slightly less
than $3,581, the sum of the proposed median costs for APCs 0163 (Level
IV Cystourethroscopy and other Genitourinary Procedures) and 0651
(Complex Interstitial Radiation Source Application) ($2,388 + $1,193),
the APCs to which CPT codes 77778 and 55875 map if one service is
billed on a claim without the other. We believe that the proposed
median cost for composite APC 8001 of approximately $3,509, which is
calculated from claims we believe to be correctly coded, would result
in a reasonable and appropriate payment rate for this service in CY
2009.
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC
(APC 8000)
Cardiac electrophysiologic evaluation and ablation services
frequently are performed in varying combinations with one another
during a single episode of care in the HOPD. Therefore, correctly coded
claims for these services often include multiple codes for component
services that are reported with different CPT codes and that, prior to
CY 2008, were always paid separately through different APCs
(specifically, APC 0085 (Level II Electrophysiologic Evaluation), APC
0086 (Ablate Heart Dysrhythm Focus), and APC 0087 (Cardiac
Electrophysiologic Recording/Mapping)). As a result, there would never
be many single bills for cardiac electrophysiologic evaluation and
ablation services, and those that are reported as single bills would
often represent atypical cases or incorrectly coded claims. As
described in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66655 through 66659), the APC Panel and the public expressed persistent
concerns regarding the limited and reportedly unrepresentative single
bills available for use in calculating the median cost for these
services according to our standard OPPS methodology.
Effective January 1, 2008, we established APC 8000 (Cardiac
Electrophysiologic Evaluation and Ablation Composite) to pay for a
composite service made up of at least one specified electrophysiologic
evaluation service and one electrophysiologic ablation service.
Calculating a composite APC for these services allowed us to utilize
many more claims than were available to establish the individual APC
median
[[Page 41446]]
costs for these services, and we also saw this composite APC as an
opportunity to advance our stated goal of promoting hospital efficiency
through larger payment bundles. In order to calculate the median cost
upon which the payment rate for composite APC 8000 is based, we used
multiple procedure claims that contained at least one CPT code from
group A for evaluation services and at least one CPT code from group B
for ablation services reported on the same date of service on an
individual claim. We refer readers to Table 6 for identification of the
CPT codes that are assigned to groups A and B. For a full discussion of
how we identified the group A and group B procedures and established
the CY 2008 payment rate for the cardiac electrophysiologic evaluation
and ablation composite APC, we refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66655 through 66659). Where a
service in group A is furnished on a date of service that is different
from the date of service for a code in group B for the same
beneficiary, payments are made under the appropriate single procedure
APCs and the composite APC does not apply.
For CY 2009, we are proposing to continue paying for cardiac
electrophysiologic evaluation and ablation services using the composite
APC methodology established for CY 2008. Consistent with our CY 2008
practice, we would not use the claims that meet these criteria in the
calculation of the median costs for APCs 0085 (Level II
Electrophysiologic Procedures) and 0086 (Level III Electrophysiologic
Procedures), to which the HCPCS codes in both groups A and B for
composite APC 8000 are otherwise assigned. Median costs for APCs 0085
and 0086 would continue to be calculated using single procedure claims.
As discussed in section XIII.A.1. of this proposed rule, we also are
proposing to use new status indicator ``Q3'' (Codes that May be Paid
Through a Composite APC) to denote HCPCS codes such as the cardiac
electrophysiologic evaluation and ablation CPT codes that may be paid
through a composite APC for publication and payment purposes for CY
2009, rather than the status indicator ``Q'' that is being used in CY
2008. We continue to believe that the composite APC for cardiac
electrophysiologic evaluation and ablation services is the most
efficient and effective way to use the claims data for the majority of
these services and best represents the hospital resources associated
with performing the common combinations of these services that are
clinically typical. Further, this approach creates incentives for
efficiency by providing a single payment for a larger bundle of major
procedures when they are performed together, in contrast to continued
separate payment for each of the individual procedures.
Using partial year CY 2007 claims data available for this proposed
rule, we were able to use 5,603 claims containing a combination of
group A and group B codes and calculated a proposed median cost of
approximately $9,174 for composite APC 8000. This is an increase
compared to the CY 2008 OPPS/ASC final rule with comment period in
which we calculated a final median cost for this composite APC of
approximately $8,438 based on a full year of CY 2006 claims data. We
believe that the proposed median cost of $9,174 calculated from a high
volume of correctly coded multiple procedure claims results in an
accurate and appropriate proposed payment for cardiac
electrophysiologic evaluation and ablation services when at least one
evaluation service is furnished during the same clinical encounter as
at least one ablation service. Table 6 below lists the groups of
procedures upon which we are proposing to base composite APC 8000 for
CY 2009.
Table 6.--Groups of Cardiac Electrophysiologic Evaluation and Ablation Procedures Upon Which We Base Composite
APC 8000
----------------------------------------------------------------------------------------------------------------
Proposed
Codes used in combinations: At least one in HCPCS code single code Proposed CY 2009 SI (composite)
Group A and one in Group B CY 2009 APC
----------------------------------------------------------------------------------------------------------------
Group A
Electrophysiology evaluation............... 93619 0085 Q3
Electrophysiology evaluation............... 93620 0085 Q3
Group B
Ablate heart dysrhythm focus............... 93650 0085 Q3
Ablate heart dysrhythm focus............... 93651 0086 Q3
Ablate heart dysrhythm focus............... 93652 0086 Q3
----------------------------------------------------------------------------------------------------------------
(4) Mental Health Services Composite APC (APC 0034)
For the CY 2009 OPPS, we are proposing to continue our longstanding
policy of limiting the aggregate payment for specified less intensive
mental health services furnished on the same date to the payment for a
day of partial hospitalization, which we consider to be the most
resource intensive of all outpatient mental health treatment. We refer
readers to the April 7, 2000 OPPS final rule with comment period (65 FR
18455) for the initial discussion of this longstanding policy. We
continue to believe that the costs associated with administering a
partial hospitalization program represent the most resource intensive
of all outpatient mental health treatment, and we do not believe that
we should pay more for a day of individual mental health services under
the OPPS than the partial hospitalization per diem payment.
For CY 2009, as discussed further in section X.B. of this proposed
rule, we are proposing to create two new APCs, 0172 (Level I Partial
Hospitalization (3 services)) and 0173 (Level II Partial
Hospitalization (4 or more services)), to replace APC 0033 (Partial
Hospitalization), which we are proposing to delete for CY 2009. In
summary, when a community mental health center (CMHC) or hospital
provides three units of partial hospitalization services and meets all
other partial hospitalization payment criteria, the CMHC or hospital
would be paid through APC 0172. When the CMHC or hospital provides four
or more units of partial hospitalization services and meets all other
partial hospitalization payment criteria, the hospital would be paid
through APC 0173. For CY 2009, we are proposing to set the payment rate
for mental health composite APC 0034 at the same rate as APC 0173,
which is the maximum partial hospitalization per diem payment. We
believe this APC payment
[[Page 41447]]
rate would provide the most appropriate payment for composite APC 0034,
taking into consideration the intensity of the mental health services
and the differences in the HCPCS codes for mental health services that
could be paid through this composite APC compared with the HCPCS codes
that could be paid through partial hospitalization APC 0173. Through
the I/OCE, when the payment for specified mental health services
provided by one hospital to a single beneficiary on one date of service
based on the payment rates associated with the APCs for the individual
services would exceed the maximum per diem partial hospitalization
payment [listed as APC 0173 (Level II Partial Hospitalization (4 or
more services))], those specified mental health services would be
assigned to APC 0034 (Mental Health Services Composite), which has the
same payment rate as APC 0173, and the hospital would be paid one unit
of APC 0034. In the CY 2008 OPPS/ASC final rule with comment period (72
FR 66651), we clarified that this longstanding policy regarding payment
of APC 0034 for combinations of independent mental health services
provided in a single hospital encounter resembles the payment policy
for composite APCs that we finalized for LDR prostate brachytherapy and
cardiac electrophysiologic evaluation and ablation services for CY
2008. Similar to the logic for those two composite APCs, the I/OCE
currently determines, and we are proposing for CY 2009 that it would
continue to determine, whether to pay these specified mental health
services individually or to make a single payment at the same rate as
the APC 0173 per diem rate for partial hospitalization for all of the
specified mental health services furnished on that date of service.
However, we note that this established policy for payment of APC 0034
differs from the payment policies for the LDR prostate brachytherapy
and cardiac electrophysiologic evaluation and ablation composite APCs
because APC 0034 is only paid if the sum of the individual payment
rates for the specified mental health services provided on one date of
service exceeds the APC 0034 payment rate.
For CY 2008 (72 FR 66651), we changed the status indicator to ``Q''
for the HCPCS codes that describe the specified mental health services
to which APC 0034 applies because those codes are conditionally
packaged when the sum of the payment rates for the single code APCs to
which they are assigned exceeds the per diem payment rate for partial
hospitalization. For CY 2009, we are proposing to change the status
indicator from ``Q'' (Packaged Services Subject to Separate Payment
under OPPS Payment Criteria) to ``Q3,'' (Codes that May be Paid Through
a Composite APC), for those HCPCS codes that describe the specified
mental health services to which APC 0034 applies. This is consistent
with our proposal to change the status indicator from ``Q'' to ``Q3''
for all HCPCS codes that may be paid through composite APCs, in order
to further refine our identification of the different types of
conditionally packaged HCPCS codes that were previously all assigned
the same status indicator ``Q'' under the OPPS. We are proposing to
apply this status indicator policy to the HCPCS codes that are assigned
to composite APC 0034 in Addendum M to this proposed rule. We are also
proposing to change the status indicator from ``P'' (Partial
Hospitalization) to ``S'' (Significant Procedure, Not Discounted when
Multiple), for APC 0034. Although APC 0034 has been historically
assigned status indicator ``P'' under the OPPS, this APC provides
payment for mental health services that are furnished in an HOPD
outside of a partial hospitalization program. This proposed status
indicator change should have no practical implications for hospitals
from a billing or payment perspective. Rather, we believe that it is
more appropriate to assign status indicator ``S'' to an APC that
describes mental health services that are provided outside of a partial
hospitalization program. We refer readers to section XIII.A. of this
proposed rule for a complete discussion of status indicators and our
proposed status indicator changes for CY 2009.
In summary, we are not proposing a change to the longstanding
payment policy under which the OPPS pays one unit of APC 0034 in cases
in which the total payments for specified mental health services
provided on the same date of service would otherwise exceed the payment
rate for APC 0173. However, we are proposing to change the status
indicator to ``Q3'' for the HCPCS codes for the mental health services
to which this policy applies, consistent with our belief that payment
for these services should be packaged into a single payment made at the
same rate as a day of partial hospitalization unless the sum of the
individual payments for these codes would be less than the payment for
composite APC 0034.
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Under current OPPS policy, hospitals receive a full APC payment for
each imaging service on a claim, regardless of how many procedures are
performed during a single session using the same imaging modality or
whether the procedures are performed on contiguous body areas. In
response to a 2005 MedPAC recommendation to reduce the technical
component payment for multiple imaging services performed on contiguous
body areas, CMS proposed a payment reduction policy for multiple
imaging procedures performed on contiguous body areas in both the CY
2006 MPFS proposed rule (70 FR 45849 through 45851) and the CY 2006
OPPS proposed rule (70 FR 42748 through 42751). In the March 2005
MedPAC report entitled, ``Report to the Congress: Medicare Payment
Policy,'' MedPAC concluded that Medicare's physician's office payment
rates for imaging services were based on each service being provided
independently and that the rates did not account for efficiencies that
may be gained when multiple studies using the same imaging modality are
performed in the same session. In both the CY 2006 MPFS proposed rule
(70 FR 45849) and the CY 2006 OPPS proposed rule (70 FR 42751), we
suggested that although each imaging procedure entails the use of
hospital resources, including certain staff, equipment, and supplies,
some of those resource costs are not incurred twice when the procedures
are performed in the same session and thus, should not be paid as if
they were incurred twice. Specifically, for CY 2006, for both the MPFS
and the OPPS, we proposed to apply a 50-percent reduction in the
payment for certain second and subsequent imaging procedures performed
during the same session, similar to the longstanding OPPS policy of
reducing payments for certain second and subsequent surgical procedures
performed during the same operative session. We developed the 50-
percent reduction estimate using MPFS input data to estimate the
practice expense resources associated with equipment time and indirect
costs that would not occur for the second and subsequent procedures. We
proposed that the reduction would apply only to individual services
within 11 designated imaging families, which were comprised of
procedures utilizing similar modalities across contiguous body areas
and developed based on MPFS billing data. The imaging modalities
included in the proposal
[[Page 41448]]
were ultrasound, computed tomography (CT), computed tomographic
angiography (CTA), magnetic resonance imaging (MRI), and magnetic
resonance angiography (MRA). Prior to making the proposal for the OPPS,
we confirmed that the CY 2004 OPPS claims for the CY 2006 OPPS update
demonstrated comparable clustering of imaging procedures by modality
and within family. The OPPS and MPFS imaging services provided across
families would not be subject to the reduction policy as proposed for
CY 2006. The proposed 11 families of imaging services were as follows:
Ultrasound (Chest/Abdomen/Pelvis-Non-Obstetrical)
CT and CTA (Chest/Thorax/Abd/Pelvis)
CT and CTA (Head/Brain/Orbit/Maxillofacial/Neck)
MRI and MRA (Chest/Abd/Pelvis)
MRI and MRA (Head/Brain/Neck)
MRI and MRA (Spine)
CT (Spine)
MRI and MRA (Lower Extremities)
CT and CTA (Lower Extremities)
MR and MRI (Upper Extremities and Joints)
CT and CTA (Upper Extremities)
In response to the multiple imaging payment reduction policy
proposed for the CY 2006 OPPS (70 FR 68707 through 68708), several
commenters requested that we postpone implementation until we performed
further analyses and were able to find more substantial, hospital-based
data to support the 50-percent payment reduction rather than base the
policy on MPFS data. Commenters argued that, unlike a relative value
unit (RVU) estimate of the total resources associated with a single
service for the MPFS, the OPPS cost-based methodology already
incorporates the efficiencies of performing multiple procedures during
the same session and that median cost estimates for single procedures
reflect these savings. Specifically, an imaging CCR consists of the
labor and allocated capital and overhead costs for all imaging provided
in a department specified by each hospital on its cost report, divided
by the total charges for all imaging services provided. In short,
commenters stated that because the OPPS cost estimates used for setting
the OPPS payment rates for imaging services already reflect costs for a
department in general, the CCR used to adjust charges to costs
currently incorporated savings from the imaging efficiencies associated
with multiple procedures provided in a single session. By applying this
CCR to every charge on a claim, commenters noted that CMS averages
multiple imaging efficiencies for all imaging services across all
service costs estimated with the departmental CCR. At its August 2005
meeting, the APC Panel heard this and other arguments and recommended
that CMS postpone implementation of the policy for a year in order to
gather more data on the impact of the proposed changes.
In the CY 2006 OPPS final rule with comment period (70 FR 68516),
we acknowledged that, based on our analysis of how hospitals report
charges and costs for diagnostic radiology services, it may be correct
that the median costs from hospital claims data for the imaging
services in the 11 families proposed for the reduction policy already
reflect reduced median costs based, in part, on hospitals' provision of
multiple imaging services in a single session. However, we expressed
concern that the marginal effect of imaging efficiencies on a given CCR
may be negligible, thereby underestimating the impact of multiple
imaging efficiencies, especially where hospitals reported all
diagnostic radiology services in one cost center and did not split the
costs and charges for advanced imaging with CT, MRI, or ultrasound into
separate cost centers. Because efficiencies are inherent in our cost
methodology, our analysis did not provide a definitive answer regarding
how much, on average, the OPPS median costs for single imaging services
in the 11 families are reduced due to existing hospital efficiencies
related to multiple services provided in a single session. Accordingly,
we did not implement a multiple imaging payment reduction policy for
the OPPS in CY 2006 (a modified MPFS multiple imaging payment reduction
policy was implemented with a 25-percent reduction policy for certain
second and subsequent imaging services for CY 2006, and that same
reduction policy currently remains in effect under the MPFS). In the CY
2006 OPPS final rule with comment period (70 FR 68707 through 68708),
we stated that, depending upon the results of future analyses, we might
revisit this issue and propose revisions to the structure of our
payment rates for imaging procedures in order to ensure that those
rates properly reflect the relative costs of initial and subsequent
imaging procedures. Since publication of the CY 2006 OPPS final rule
with comment period, MedPAC has encouraged us to continue our analyses
in order to improve payment accuracy for imaging services under the
OPPS, including considering adopting a multiple procedure payment
reduction policy.
In preparation for the CY 2009 OPPS proposed rule, we revisited the
issue of how we could improve the accuracy of OPPS payment for multiple
imaging services and incorporate the lower marginal cost for conducting
second and subsequent imaging procedures in the same imaging session.
As already noted, for CY 2008, we developed a composite APC methodology
to provide a single payment for two or more major independent services
that are typically performed together during a single operative session
and that result in the provision of a complete service (72 FR 66650
through 66652). The composite APCs for LDR prostate brachytherapy
services and cardiac electrophysiologic evaluation and ablation
services discussed in sections II.A.2.e.(2) and (3), respectively, of
this proposed rule are classic examples. Providing one payment for an
entire session encourages hospitals to closely evaluate the resources
they use for all components of the composite service in order to
improve their payment relative to the costs of performing the composite
service. We decided to explore capturing efficiencies for multiple
imaging procedures through a composite APC payment methodology when a
hospital provides more than one imaging procedure using the same
modality during a single session.
We began by reexamining the 11 imaging families of HCPCS codes for
contiguous body areas involving a single imaging modality that we had
proposed for CY 2006 and that are currently in use under the MPFS for
the multiple imaging procedure payment reduction policy. We based this
code-specific analysis on the HCPCS codes recognized under the OPPS for
the same services that are included in the 11 CY 2008 MPFS imaging
families, and in addition, we incorporated the 10 HCPCS codes that are
proposed for inclusion in these 11 families for the CY 2009 MPFS. We
collapsed the 11 MPFS imaging families into 3 OPPS imaging families
according to their modality--1 for ultrasound, 1 for CT and CTA, and 1
for MRI and MRA services. These larger OPPS imaging families generally
correspond to the larger APC groups of services paid under OPPS
relative to the service-specific payment under the MPFS. We believe
that these larger OPPS imaging families are appropriate because
eliminating the contiguous body area concept that is central to the
MPFS imaging families should not significantly limit potential
efficiencies in an imaging session. For example, we would not expect
second and subsequent imaging services of the same modality involving
noncontiguous body areas to require duplicate facility
[[Page 41449]]
services such as greeting the patient, providing education and
obtaining consent, retrieving prior exams, setting up an intravenous
infusion, and preparing and cleaning the room, any more than second and
subsequent imaging procedures of the same modality on contiguous body
areas. The contiguous body area concept was a component of MedPAC's
recommendation for reducing physician payment, but we believe it is
less appropriate for a single, session-based OPPS composite imaging
payment. In addition, using these collapsed OPPS families would add
only 12 percent additional claims to those eligible for composite
payment relative to using the 11 MPFS imaging families, suggesting that
under the OPPS, multiple imaging claims are within the same imaging
modality and involve contiguous body areas the vast majority of the
time. Nevertheless, the three OPPS imaging families would allow us to
capture additional claims for payment under an imaging composite
payment methodology.
Another unique aspect of imaging services for OPPS ratesetting, in
general, is their inclusion on our bypass list and contribution to
creating ``pseudo'' single claims, particularly those services that are
specifically performed without the administration of contrast. Our
creation of ``pseudo'' single claims from multiple procedure claims is
discussed in section II.A.1.b. of this proposed rule. In beginning to
model these potential multiple imaging composite APCs, we noted that
there would be overlap between the bypass list and noncontrast imaging
HCPCS codes that are included in the three OPPS imaging families. The
bypass process removes any line-item for a bypass HCPCS code,
irrespective of units, from multiple procedure claims. The line-item
information is used to make at least one ``pseudo'' single bill and the
line-items remaining on the claim are split by date and reassessed for
single bill status. To model the median costs for the potential
multiple imaging composite APCs, we removed any HCPCS codes in the OPPS
imaging families that overlap with codes on our bypass list to avoid
splitting claims with multiple units or multiple occurrences of codes
in an OPPS imaging family into new ``pseudo'' single claims. The
imaging HCPCS codes that we removed from the bypass list for purposes
of calculating proposed multiple imaging composite APC median costs
appear in Table 7 below. (We refer readers to section II.A.1.b. of this
proposed rule for further discussion of how we treat claims with HCPCS
codes in the OPPS imaging families that are also on the bypass list.)
We integrated the identification of imaging composite ``single
session'' claims, that is, claims with multiple imaging procedures
within the same family on the same date of service, into the creation
of ``pseudo'' single claims to ensure that claims were split in the
``pseudo'' single process into accurate reflections of either a
composite ``single session'' imaging service or a standard sole imaging
service resource cost. Like all single bills, the new composite
``single session'' claims were for the same date of service and
contained no other separately paid services in order to isolate the
session imaging costs. Our last step after processing all claims
through the ``pseudo'' single process was to make line-items for HCPCS
codes in the OPPS imaging families remaining on multiple procedure
claims with one unit of the imaging HCPCS code and no other imaging
services in the families into ``pseudo'' single bills for use in
calculating the median costs for sole imaging services.
Table 7.--Proposed OPPS Imaging Family Services Overlapping With HCPCS
Codes on the Proposed CY 2009 Bypass List
------------------------------------------------------------------------
------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
76700..................................... Us exam, abdom, complete.
76705..................................... Echo exam of abdomen.
76770..................................... Us exam abdo back wall,
comp.
76775..................................... Us exam abdo back wall, lim.
------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
76776..................................... Us exam k transpl w/doppler.
76856..................................... Us exam, pelvic, complete.
76870..................................... Us exam, scrotum.
76857..................................... Us exam, pelvic, limited.
------------------------------------------------------------------------
Family 2--CT and CTA With and Without Contrast
------------------------------------------------------------------------
70450..................................... Ct head/brain w/o dye.
70480..................................... Ct orbit/ear/fossa w/o dye.
70486..................................... Ct maxillofacial w/o dye.
70490..................................... Ct soft tissue neck w/o dye.
71250..................................... Ct thorax w/o dye.
72125..................................... Ct neck spine w/o dye.
72128..................................... Ct chest spine w/o dye.
72131..................................... Ct lumbar spine w/o dye.
72192..................................... Ct pelvis w/o dye.
73200..................................... Ct upper extremity w/o dye.
73700..................................... Ct lower extremity w/o dye.
74150..................................... Ct abdomen w/o dye.
------------------------------------------------------------------------
Family 3--MRI and MRA With and Without Contrast
------------------------------------------------------------------------
70336..................................... Magnetic image, jaw joint.
70544..................................... Mr angiography head w/o dye.
70551..................................... Mri brain w/o dye.
72141..................................... Mri neck spine w/o dye.
72146..................................... Mri chest spine w/o dye.
72148..................................... Mri lumbar spine w/o dye.
73218..................................... Mri upper extremity w/o dye.
------------------------------------------------------------------------
Family 3--MRI and MRA With and Without Contrast
------------------------------------------------------------------------
73221..................................... Mri joint upr extrem w/o
dye.
------------------------------------------------------------------------
Family 3--MRI and MRA With and Without Contrast
------------------------------------------------------------------------
73718..................................... Mri lower extremity w/o dye.
73721..................................... Mri jnt of lwr extre w/o
dye.
------------------------------------------------------------------------
One final requirement of our assessment of multiple imaging
composite APCs was our expansion of the OPPS families for the three
modalities--ultrasound, CT and CTA, and MRI and MRA--into five
composite APCs to accommodate the statutory requirement in section
1833(t)(2)(G) of the Act, that the OPPS provide payment for imaging
services provided with contrast and without contrast through separate
payment groups. Ultrasound studies do not utilize contrast and thus
this family constituted a single composite APC. However, we had to
split the families for CT and CTA, and MRI and MRA, into two separate
composite APCs each to reflect whether the procedures were performed
with or without contrast. We examined the HCPCS codes on our ``single
session'' claims, and if the claim had at least one HCPCS code that was
performed with contrast, we classified the ``single session'' bill as
``with contrast.'' We then recalculated the median costs for the
standard (sole service) imaging APCs based on single and ``pseudo''
single bills and the imaging composite APC median costs based on
appropriate ``single session'' bills with multiple imaging procedures.
We were able to identify 1.7 million ``single session'' claims out
of an estimated 4 million potential composite cases from our
ratesetting claims database, or almost half of all eligible claims, to
calculate median costs for the 5 OPPS multiple imaging composite APCs.
We used 8 million single and ``pseudo'' single claims to set the
medians for the standard (sole service) APCs for the same imaging
procedures. We specifically note that the proposed CY 2009 payment
rates for multiple imaging services provided during the same session
and within the same OPPS
[[Page 41450]]
imaging family are based entirely on median costs derived empirically
from OPPS claims and Medicare cost report data.
In general, we found that the per service median cost for each of
the multiple imaging procedures performed during a single session, and
reflected in the composite APC median costs, was modestly less than the
sole service median cost when only one imaging service was performed
during a single session, as reflected in the median cost of the
standard (sole service) imaging APCs (that is, those imaging services
that would not have qualified for payment through a multiple imaging
composite APC under the proposed composite methodology). However, we
also noticed that the proposed CY 2009 median costs for the standard
(sole service) imaging APCs increased slightly compared to the median
costs that we would calculate using the current OPPS imaging service
payment policy. These variations in median costs are consistent with
our expectations. Because the OPPS cost-based payment weight
methodology estimates a standard cost per imaging procedure for each
hospital, these results suggest that the imaging composite ``single
session'' claims disproportionately represent services furnished by
more efficient providers that frequently perform more than one imaging
procedure during a single session. The lower cost claims also may
include more providers that appropriately report costs and charges for
nonstandard cost centers for advanced imaging on their cost reports.
In light of these findings, we determined that a proposal to revise
our methodology for paying for multiple imaging procedures is warranted
because the current OPPS policy of providing a full APC payment for
each imaging service on a claim, regardless of how many procedures are
performed during a single session using the same imaging modality,
neither reflects nor promotes the efficiencies hospitals can achieve
when they perform multiple imaging procedures during a single session,
as seen in the claims data.
Therefore, we are proposing to utilize the three OPPS imaging
families discussed above, incorporating statutory requirements to
differentiate OPPS payment for imaging services provided with contrast
and without contrast as required by section 1833(t)(2)(G) of the Act,
to create five multiple imaging composite APCs for payment in CY 2009.
The proposed APCs are: APC 8004 (Ultrasound Composite); APC 8005 (CT
and CTA without Contrast Composite); APC 8006 ( CT and CTA with
Contrast Composite); APC 8007 (MRI and MRA without Contrast Composite);
and APC 8008 (MRI and MRA with Contrast Composite). We calculated the
proposed median costs for these APCs using CY 2007 claims data by
isolating ``single session'' claims with more than one imaging service
within a family as discussed above. Unlike our CY 2006 proposal where
we would have applied a 50-percent payment reduction for second and
subsequent imaging procedures comparable to the proposed MPFS policy,
the CY 2009 OPPS proposal would calculate the composite APC payment
amounts empirically from estimated costs on claims for multiple imaging
services provided in a single session. This proposed composite
methodology for multiple imaging services parallels the payment
methodologies that we are proposing for other composite APCs under the
CY 2009 OPPS.
Table 8 below presents the HCPCS codes comprising the three OPPS
imaging families and five composite APCs that would be created under
this proposal for CY 2009, along with the proposed median costs upon
which the payment rates for these composite APCs would be based. The
HCPCS codes included in Table 8 are assigned status indicator ``Q3'' in
Addendum B to this proposed rule to identify their status as
potentially payable through a composite APC. Their composite APC
assignments are identified in Addendum M to this proposed rule.
To implement this proposed policy, we would provide one composite
APC payment each time a hospital bills more than one procedure
described by the HCPCS codes in one OPPS imaging family displayed in
Table 8 below on a single date of service. If the hospital performs a
procedure without contrast during the same session as at least one
other procedure with contrast using the same imaging modality, then the
hospital would receive payment for the ``with contrast'' composite APC.
A single imaging procedure, or imaging procedures reported with HCPCS
codes assigned to different OPPS imaging families, would be paid
according to the standard OPPS methodology through the standard (sole
service) imaging APCs to which they are proposed for assignment in CY
2009. We are proposing that hospitals would continue to use the same
HCPCS codes to report imaging services, and that the I/OCE would
determine when combinations of imaging procedures would qualify for
composite APC payment or would map to standard APCs for payment. We
would make a single payment for those imaging services that qualify for
composite APC payment, as well as the packaged services furnished on
the same date of service. The proposed composite APCs would have status
indicators of ``S,'' signifying that payment for the APC would not be
reduced when appearing on the same claim with other significant
procedures.
Table 8.--Proposed OPPS Imaging Families and Multiple Imaging Procedure
Composite APCs
------------------------------------------------------------------------
------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
APC 8004 (Ultrasound Composite) Proposed CY 2009 Median Cost
= $194.14
------------------------------------------------------------------------
76604..................................... Us exam, chest.
76700..................................... Us exam, abdom, complete.
76705..................................... Echo exam of abdomen.
76770..................................... Us exam abdo back wall,
comp.
76775..................................... Us exam abdo back wall, lim.
76776..................................... Us exam k transpl w/Doppler.
76831..................................... Echo exam, uterus.
76856..................................... Us exam, pelvic, complete.
76870..................................... Us exam, scrotum.
76857..................................... Us exam, pelvic, limited.
------------------------------------------------------------------------
Family 2--CT and CTA With and Without Contrast
------------------------------------------------------------------------
APC 8005 (CT and CTA without Contrast Proposed CY 2009 Median Cost
Composite) * = $422.98
------------------------------------------------------------------------
0067T..................................... Ct colonography;dx.
70450..................................... Ct head/brain w/o dye.
70480..................................... Ct orbit/ear/fossa w/o dye.
70486..................................... Ct maxillofacial w/o dye.
70490..................................... Ct soft tissue neck w/o dye.
71250..................................... Ct thorax w/o dye.
72125..................................... Ct neck spine w/o dye.
------------------------------------------------------------------------
Family 2--CT and CTA With and Without Contrast
------------------------------------------------------------------------
APC 8005 (CT and CTA without Contrast Proposed CY 2009 Median Cost
Composite) * = $422.98
------------------------------------------------------------------------
72128..................................... Ct chest spine w/o dye.
72131..................................... Ct lumbar spine w/o dye.
72192..................................... Ct pelvis w/o dye.
73200..................................... Ct upper extremity w/o dye.
73700..................................... Ct lower extremity w/o dye.
74150..................................... Ct abdomen w/o dye.
------------------------------------------------------------------------
APC 8006 (CT and CTA with Contrast Proposed CY 2009 Median Cost
Composite) = $639.09
------------------------------------------------------------------------
70487..................................... Ct maxillofacial w/dye.
70460..................................... Ct head/brain w/dye.
[[Page 41451]]
70470..................................... Ct head/brain w/o & w/dye.
70481..................................... Ct orbit/ear/fossa w/dye.
70482..................................... Ct orbit/ear/fossa w/o&w/
dye.
70488..................................... Ct maxillofacial w/o & w/
dye.
70491..................................... Ct soft tissue neck w/dye.
70492..................................... Ct sft tsue nck w/o & w/dye.
70496..................................... Ct angiography, head.
70498..................................... Ct angiography, neck.
71260..................................... Ct thorax w/dye.
71270..................................... Ct thorax w/o & w/dye.
71275..................................... Ct angiography, chest.
72126..................................... Ct neck spine w/dye.
72127..................................... Ct neck spine w/o & w/dye.
72129..................................... Ct chest spine w/dye.
72130..................................... Ct chest spine w/o & w/dye.
72132..................................... Ct lumbar spine w/dye.
72133..................................... Ct lumbar spine w/o & w/dye.
72191..................................... Ct angiograph pelv w/o&w/
dye.
72193..................................... Ct pelvis w/dye.
72194..................................... Ct pelvis w/o & w/dye.
73201..................................... Ct upper extremity w/dye.
73202..................................... Ct uppr extremity w/o&w/dye.
73206..................................... Ct angio upr extrm w/o&w/
dye.
------------------------------------------------------------------------
Family 2--CT and CTA With and Without Contrast
------------------------------------------------------------------------
APC 8006 (CT and CTA with Contrast Proposed CY 2009 Median Cost
Composite) = $639.09
------------------------------------------------------------------------
73701..................................... Ct lower extremity w/dye.
73702..................................... Ct lwr extremity w/o&w/dye.
73706..................................... Ct angio lwr extr w/o&w/dye.
74160..................................... Ct abdomen w/dye.
74170..................................... Ct abdomen w/o & w/dye.
74175..................................... Ct angio abdom w/o & w/dye.
75635..................................... Ct angio abdominal arteries.
* If a ``without contrast'' CT or CTA procedure is performed during the
same session as a ``with contrast'' CT or CTA procedure, the I/OCE will
assign APC 8006 rather than APC 8005.
------------------------------------------------------------------------
Family 3--MRI and MRA With and Without Contrast
------------------------------------------------------------------------
APC 8007 (MRI and MRA without Contrast Proposed CY 2009 Median Cost
Composite) * = $724.66
------------------------------------------------------------------------
70336..................................... Magnetic image, jaw joint.
70540..................................... Mri orbit/face/neck w/o dye.
70544..................................... Mr angiography head w/o dye.
70547..................................... Mr angiography neck w/o dye.
70551..................................... Mri brain w/o dye.
70554..................................... Fmri brain by tech.
71550..................................... Mri chest w/o dye.
72141..................................... Mri neck spine w/o dye.
72146..................................... Mri chest spine w/o dye.
72148..................................... Mri lumbar spine w/o dye.
72195..................................... Mri pelvis w/o dye.
73218..................................... Mri upper extremity w/o dye.
73221..................................... Mri joint upr extrem w/o
dye.
73718..................................... Mri lower extremity w/o dye.
73721..................................... Mri jnt of lwr extre w/o
dye.
74181..................................... Mri abdomen w/o dye.
75557..................................... Cardiac mri for morph.
75559..................................... Cardiac mri w/stress img.
C8901..................................... MRA w/o cont, abd.
------------------------------------------------------------------------
Family 3--MRI and MRA With and Without Contrast
------------------------------------------------------------------------
APC 8007 (MRI and MRA without Contrast Proposed CY 2009 Median Cost
Composite) * = $724.66
------------------------------------------------------------------------
C8904..................................... MRI w/o cont, breast, uni.
C8907..................................... MRI w/o cont, breast, bi.
C8910..................................... MRA w/o cont, chest.
C8913..................................... MRA w/o cont, lwr ext.
C8919..................................... MRA w/o cont, pelvis.
------------------------------------------------------------------------
APC 8008 (MRI and MRA with Contrast Proposed CY 2009 Median Cost
Composite) = $1,002.72
------------------------------------------------------------------------
70549..................................... Mr angiograph neck w/o&w/
dye.
70542..................................... Mri orbit/face/neck w/dye.
70543..................................... Mri orbt/fac/nck w/o & w/
dye.
70545..................................... Mr angiography head w/dye.
70546..................................... Mr angiograph head w/o&w/
dye.
------------------------------------------------------------------------
APC 8008 (MRI and MRA with Contrast Proposed CY 2009 Median Cost
Composite) = $1,002.72
------------------------------------------------------------------------
70548..................................... Mr angiography neck w/dye.
70552..................................... Mri brain w/dye.
70553..................................... Mri brain w/o & w/dye.
71551..................................... Mri chest w/dye.
71552..................................... Mri chest w/o & w/dye.
72142..................................... Mri neck spine w/dye.
72147..................................... Mri chest spine w/dye.
72149..................................... Mri lumbar spine w/dye.
72156..................................... Mri neck spine w/o & w/dye.
72157..................................... Mri chest spine w/o & w/dye.
72158..................................... Mri lumbar spine w/o & w/
dye.
72196..................................... Mri pelvis w/dye.
72197..................................... Mri pelvis w/o & w/dye.
73219..................................... Mri upper extremity w/dye.
73220..................................... Mri uppr extremity w/o&w/
dye.
73222..................................... Mri joint upr extrem w/dye.
73223..................................... Mri joint upr extr w/o&w/
dye.
73719..................................... Mri lower extremity w/dye.
73720..................................... Mri lwr extremity w/o&w/dye.
73722..................................... Mri joint of lwr extr w/dye.
------------------------------------------------------------------------
Family 3--MRI and MRA With and Without Contrast
------------------------------------------------------------------------
APC 8008 (MRI and MRA with Contrast Proposed CY 2009 Median Cost
Composite) = $1,002.72
------------------------------------------------------------------------
73723..................................... Mri joint lwr extr w/o&w/
dye.
74182..................................... Mri abdomen w/dye.
74183..................................... Mri abdomen w/o & w/dye.
75561..................................... Cardiac mri for morph w/dye.
75563..................................... Card mri w/stress img & dye.
C8900..................................... MRA w/cont, abd.
C8902..................................... MRA w/o fol w/cont, abd.
C8903..................................... MRI w/cont, breast, uni.
C8905..................................... MRI w/o fol w/cont, brst,
un.
C8906..................................... MRI w/cont, breast, bi.
C8908..................................... MRI w/o fol w/cont, breast.
C8909..................................... MRA w/cont, chest.
C8911..................................... MRA w/o fol w/cont, chest.
C8912..................................... MRA w/cont, lwr ext.
C8914..................................... MRA w/o fol w/cont, lwr ext.
------------------------------------------------------------------------
APC 8008 (MRI and MRA with Contrast Proposed CY 2009 Median Cost
Composite) = $1,002.72
------------------------------------------------------------------------
C8918..................................... MRA w/cont, pelvis.
C8920..................................... MRA w/o fol w/cont, pelvis.
------------------------------------------------------------------------
* If a ``without contrast'' MRI or MRA procedure is performed during the
same session as a ``with contrast'' MRI or MRA procedure, the I/OCE
will assign APC 8008 rather than 8007.
------------------------------------------------------------------------
3. Proposed Calculation of OPPS Scaled Payment Weights
Using the APC median costs discussed in sections II.A.1. and 2. of
this proposed rule, we calculated the proposed relative payment weights
for each APC for CY 2009 shown in Addenda A and B to this proposed
rule. In years prior to CY 2007, we standardized all the relative
payment weights to APC 0601 (Mid Level Clinic Visit) because mid-level
clinic visits were among the most frequently performed services in the
hospital outpatient setting. We assigned APC 0601 a relative payment
weight of 1.00 and divided the median cost for each APC by the median
cost for APC 0601 to derive the relative payment weight for each APC.
Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all
of the relative payment weights to APC 0606 (Level 3 Clinic Visits)
because we deleted APC 0601 as part of the reconfiguration of the visit
APCs. We selected APC 0606 as the base because
[[Page 41452]]
APC 0606 was the middle level clinic visit APC (that is, Level 3 of
five levels). We had historically used the median cost of the middle
level clinic visit APC (that is APC 0601 through CY 2006) to calculate
unscaled weights because mid-level clinic visits were among the most
frequently performed services in the hospital outpatient setting.
Therefore, for CY 2009, to maintain consistency in using a median for
calculating unscaled weights representing the median cost of some of
the most frequently provided services, we are proposing to continue to
use the median cost of the mid-level clinic visit APC, proposed APC
0606, to calculate unscaled weights. Following our standard
methodology, but using the proposed CY 2009 median cost for APC 0606,
for CY 2009 we assigned APC 0606 a relative payment weight of 1.00 and
divided the median cost of each APC by the proposed median cost for APC
0606 to derive the unscaled relative payment weight for each APC. The
choice of the APC on which to base the relative weights for all other
APCs does not affect the payments made under the OPPS because we scale
the weights for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a manner that assures that aggregate payments under the OPPS
for CY 2009 are neither greater than nor less than the aggregate
payments that would have been made without the changes. To comply with
this requirement concerning the APC changes, we compared aggregate
payments using the CY 2008 relative weights to aggregate payments using
the CY 2009 proposed relative weights. Again this year, we included
payments to CMHCs in our comparison. Based on this comparison, we
adjusted the relative weights for purposes of budget neutrality. The
unscaled relative payment weights were adjusted by a weight scaler of
1.3354 for budget neutrality. In addition to adjusting for increases
and decreases in weight due to the recalibration of APC medians, the
scaler also accounts for any change in the base, other than changes in
volume which are not a factor in the weight scaler. The proposed
relative payment weights listed in Addenda A and B to this proposed
rule incorporate the recalibration adjustments discussed in sections
II.A.1. and 2. of this proposed rule.
Section 1833(t)(14)(H) of the Act, as added by section 621(a)(1) of
Pub. L. 108-173, states that, ``Additional expenditures resulting from
this paragraph shall not be taken into account in establishing the
conversion factor, weighting and other adjustment factors for 2004 and
2005 under paragraph (9) but shall be taken into account for subsequent
years.'' Section 1833(t)(14) of the Act provides the payment rates for
certain ``specified covered outpatient drugs.'' Therefore, the cost of
those specified covered outpatient drugs (as discussed in section V. of
this proposed rule) is included in the budget neutrality calculations
for the CY 2009 OPPS.
4. Proposed Changes to Packaged Services
a. Background
The OPPS, like other prospective payment systems, relies on the
concept of averaging, where the payment may be more or less than the
estimated costs of providing a service or package of services for a
particular patient, but with the exception of outlier cases, is
adequate to ensure access to appropriate care. Packaging and bundling
payment for multiple interrelated services into a single payment create
incentives for providers to furnish services in the most efficient way
by enabling hospitals to manage their resources with maximum
flexibility, thereby encouraging long-term cost containment. For
example, where there are a variety of supplies that could be used to
furnish a service, some of which are more expensive than others,
packaging encourages hospitals to use the least expensive item that
meets the patient's needs, rather than to routinely use a more
expensive item. Packaging also encourages hospitals to negotiate
carefully with manufacturers and suppliers to reduce the purchase price
of items and services or to explore alternative group purchasing
arrangements, thereby encouraging the most economical health care.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while carefully
scrutinizing the services ordered by practitioners to maximize the
efficient use of hospital resources. Finally, packaging payments into
larger payment bundles promotes the stability of payment for services
over time. Packaging and bundling also may reduce the importance of
refining service-specific payment because there is more opportunity for
hospitals to average payment across higher cost cases requiring many
ancillary services and lower cost cases requiring fewer ancillary
services.
Decisions about packaging and bundling payment involve a balance
between ensuring some separate payment for individual services and
establishing incentives for efficiency through larger units of payment.
Over the past several years of the OPPS, greater unpackaging of payment
has occurred simultaneously with continued growth in OPPS expenditures
as a result of increasing volumes of individual services. In an attempt
to address this increase in volume of services, in the CY 2008 OPPS/ASC
final rule with comment period, we finalized additional packaging for
the CY 2008 OPPS, which included the establishment of four new
composite APCs for CY 2008, specifically APC 8000 (Cardiac
Electrophysiologic Evaluation and Ablation Composite), APC 8001 (LDR
Prostate Brachytherapy Composite), APC 8002 (Level I Extended
Assessment & Management Composite), and APC 8003 (Level II Extended
Assessment & Management Composite) (72 FR 66650 through 66659). HCPCS
codes that may be paid through a composite APC if certain composite-
specific criteria are met or otherwise may be paid separately are
assigned status indicator ``Q'' for CY 2008, and we consider them to be
conditionally packaged. We discuss composite APCs in more detail in
section II.A.2.e. of this proposed rule.
In addition, in the CY 2008 OPPS/ASC final rule with comment
period, (72 FR 66610 through 66659), we adopted the packaging of
payment for items and services in the seven categories listed below
into the payment for the primary diagnostic or therapeutic modality to
which we believe these items and services are typically ancillary and
supportive. The seven categories are: Guidance services, image
processing services, intraoperative services, imaging supervision and
interpretation services, diagnostic radiopharmaceuticals, contrast
media, and observation services. We specifically chose these categories
of HCPCS codes for packaging because we believe that the items and
services described by the codes in these categories are the HCPCS codes
that are typically ancillary and supportive to a primary diagnostic or
therapeutic modality and, in those cases, are an integral part of the
primary service they support. We finalized our assignment of status
indicator ``N'' to those HCPCS codes that we believe are always
integral to the performance of the primary modality, so we always
package their costs into the costs of the separately paid primary
services with which they are billed. Services assigned status indicator
``N'' in CY 2008 are unconditionally packaged.
We also finalized our assignment of status indicator ``Q'' to those
HCPCS
[[Page 41453]]
codes that we believe are typically integral to the performance of the
primary modality and, in such cases, we package payment for their costs
into the costs of the separately paid primary services with which they
are usually billed. An ``STVX-packaged code'' describes a HCPCS code
whose payment is packaged when one or more separately paid primary
services are furnished in the hospital outpatient encounter. A ``T-
packaged code'' describes a code whose payment is packaged when one or
more separately paid surgical procedures are provided during the
hospital encounter. ``STVX-packaged codes'' and ``T-packaged codes''
are paid separately in those uncommon cases when they do not meet their
respective criteria for packaged payment. ``STVX-packaged codes'' and
``T-packaged HCPCS codes'' assigned status indicator ``Q'' in CY 2008
are conditionally packaged.
We use the term ``dependent service'' to refer to the HCPCS codes
that represent services that are typically ancillary and supportive to
a primary diagnostic or therapeutic modality. We use the term
``independent service'' to refer to the HCPCS codes that represent the
primary therapeutic or diagnostic modality into which we package
payment for the dependent service. We note that, in future years as we
consider the development of larger payment groups that more broadly
reflect services provided in an encounter or episode of care, it is
possible that we might propose to bundle payment for a service that we
now refer to as ``independent.''
An example of a CY 2008 change in the OPPS packaging status for a
dependent HCPCS code that is ancillary and supportive is CPT code 61795
(Stereotactic computer-assisted volumetric (navigational) procedure,
intracranial, extracranial, or spinal (List separately in addition to
code for primary procedure)). CPT code 61795 was assigned separate
payment in CY 2007 but its payment is packaged during CY 2008. This
service is only performed during the course of a surgical procedure.
Several of the surgical procedures that we would expect to be reported
in association with CPT code 61795 are assigned to APC 0075 (Level V
Endoscopy Upper Airway) for CY 2008. We consider the stereotactic
guidance service to be an ancillary and supportive service that may be
performed only in the same operative session as a procedure that could
otherwise be performed independently of the stereotactic guidance
service.
During its March 2008 meeting, the APC Panel recommended that CMS
report to the APC Panel at its first CY 2009 meeting the impact of
packaging on the net payments for patient care. We will take this
recommendation into consideration and determine which data we can
provide at the first CY 2009 APC Panel meeting that would best respond
to this recommendation. The APC Panel also recommended that CMS present
data at the first CY 2009 APC Panel meeting on usage and frequency,
geographic distribution, and size and type of hospitals performing
nuclear medicine examinations and using radioisotopes to ensure that
access to these services is preserved for Medicare beneficiaries. This
recommendation is discussed in more detail in section V.B.2.b. of this
proposed rule.
Hospitals include charges for packaged services on their claims,
and the costs associated with those packaged services are then added to
the costs of separately payable procedures on the same claims in
establishing payment rates for the separately payable services. We
encourage hospitals to report all HCPCS codes that describe packaged
services that were provided, unless CPT or CMS provide other guidance.
If a HCPCS code is not reported when a packaged service is provided, it
can be challenging to track utilization patterns and resource costs.
For CY 2009, we are proposing to further refine our identification
of the different types of conditionally packaged HCPCS codes that were
previously all assigned status indicator ``Q'' (Packaged Services
Subject to Separate Payment under OPPS Payment Criteria) under the
OPPS. We are proposing to create and assign status indicators ``Q1''
[bs] (``STVX-Packaged Codes''), ``Q2'' (``T-Packaged
Codes''), or ``Q3'' (Codes that may be paid through a composite APC) to
each conditionally packaged HCPCS code. We refer readers to section
XIII.A.1. of this proposed rule for a complete discussion of status
indicators and our proposed status indicator changes for CY 2009.
While most conditionally packaged HCPCS codes are assigned to only
one of the conditionally packaged categories described above, for CY
2009, we are proposing to assign one particular HCPCS code to two
conditionally packaged categories. Specifically, we are proposing to
treat CPT code 75635 (Computed tomographic angiography, abdominal aorta
and bilateral iliofemoral lower extremity runoff, with contrast
material(s), including noncontrast images, if performed, and image
postprocessing) as both a ``T-packaged code'' and a component of
composite APC 8006 (CT and CTA with Contrast Composite). We are
proposing to assign this code status indicator ``Q2'' in Addendum B and
``Q3'' in Addendum M, to signify its dual treatment. For CY 2009, we
are proposing to first assess whether CPT code 75635 would be packaged
or separately payable, based on its status as a ``T-packaged code.'' If
the service reported with CPT code 75635 would be separately payable
due to the absence of another procedure on the claim with status
indicator ``T'' for the same date of service, the code would then be
assessed in the context of any other relevant imaging services reported
on the claim for the same date of service to determine whether payment
for CPT code 75635 under composite APC 8006 would be appropriate. If
the criteria for payment of the code under composite APC 8006 are not
met, then CPT code 75635 would be separately paid based on the proposed
APC 0662 (CT Angiography) and its corresponding proposed payment rate
displayed in Addendum B to this proposed rule.
b. Service-Specific Packaging Issues
(1) Packaged Services Addressed by APC Panel Recommendations
The Packaging Subcommittee of the APC Panel was established to
review all packaged HCPCS codes. In deciding whether to package a
service or pay for a code separately, we have historically considered a
variety of factors, including whether the service is normally provided
separately or in conjunction with other services; how likely it is for
the costs of the packaged code to be appropriately mapped to the
separately payable codes with which it was performed; and whether the
expected cost of the service is relatively low. As discussed in section
II.A.4.a. of this proposed rule regarding our packaging approach for CY
2008, we established packaging criteria that apply to seven categories
of codes whose payments are packaged. Four of the APC Panel's packaging
recommendations from its March 2008 meeting reference codes that are
included in the seven categories of services that we packaged for CY
2008. For these four recommendations, we specifically applied the
packaging considerations that apply to those seven categories of codes
in determining whether a code should be proposed as packaged or
separately payable for CY 2009. Specifically, we determined whether a
service is a dependent service falling into one of the seven specified
categories that is always or almost always provided integral to an
independent service. For those two APC Panel recommendations that do
not fit into any of the seven categories of services that were part of
the CY 2008
[[Page 41454]]
packaging approach, we applied the packaging criteria noted above that
were historically used under the OPPS. Moreover, we took into
consideration our interest in possibly expanding the size of payment
groups for component services to provide encounter-based or episode-of-
care-based payment in the future in order to encourage hospital
efficiency and provide hospitals with maximal flexibility to manage
their resources.
The Packaging Subcommittee reviewed the packaging status of
numerous HCPCS codes and reported its findings to the APC Panel at its
March 2008 meeting. The APC Panel accepted the report of the Packaging
Subcommittee, heard several presentations on certain packaged services,
discussed the deliberations of the Packaging Subcommittee, and
recommended that--
1. CMS provide additional data to support packaging radiation
oncology guidance services for review by the Data Subcommittee at the
next APC Panel meeting.
2. CPT code 36592 (Collection of blood specimen using established
central or peripheral catheter, venous, not otherwise specified) be
treated as an ``STVX-packaged code'' for CY 2009 and assigned to the
same APC as CPT code 36591 (Collection of blood specimen from a
completely implantable venous access device) until adequate data are
collected that would enable CMS to determine its own payment rate.
3. HCPCS code A4306 (Disposable drug delivery system, flow rate of
less than 50 mL per hour) remain packaged for CY 2009.
4. CPT code 74305 (Cholangiography and/or pancreatography; through
existing catheter, radiological supervision and interpretation) be
treated as a ``T-packaged code'' for CY 2009 and that CMS consider
assigning this code to APC 0263 (Level I Miscellaneous Radiology
Procedures).
5. CMS reinstate separate payment for the following intravascular
ultrasound and intracardiac echocardiography codes: CPT codes 37250
(Intravascular ultrasound (non-coronary vessel) during diagnostic
evaluation and/or therapeutic intervention; initial vessel); 37251
(Intravascular ultrasound (non-coronary vessel) during diagnostic
evaluation and/or therapeutic intervention; each additional vessel);
92978 (Intravascular ultrasound (coronary vessel or graft) during
diagnostic evaluation and/or therapeutic intervention including imaging
supervision, interpretation and report; initial vessel); 92979
(Intravascular ultrasound (coronary vessel or graft) during diagnostic
evaluation and/or therapeutic intervention including imaging
supervision, interpretation and report; each additional vessel); and
93662 (Intracardiac echocardiography during therapeutic/diagnostic
intervention, including imaging supervision and interpretation).
6. CMS continue to package diagnostic radiopharmaceuticals for CY
2009.
7. The Packaging Subcommittee continue its work.
We address each of these recommendations in turn in the discussion
that follows.
Recommendation 1
In response to the APC Panel's recommendation, we are adopting the
recommendation and will provide data related to radiation oncology
guidance services to the Data Subcommittee at the next APC Panel
meeting. For CY 2009, we are proposing to maintain the packaged status
of radiation oncology guidance services. These services are ancillary
and dependent in relation to the radiation therapy services with which
they are most commonly furnished. Consistent with the principles of a
prospective payment system, in some cases payment in an individual case
exceeds the average cost, and in other cases payment is less than the
average cost, but on balance, payment should approximate the relative
cost of the average case. While we are aware that some of the radiation
oncology guidance codes describe relatively new technologies, we do not
believe that beneficiary access to care would be harmed by packaging
payment for radiation oncology guidance services. We believe that
packaging will create incentives for hospitals and their physician
partners to work together to establish appropriate protocols that will
eliminate unnecessary services where they exist and institutionalize
approaches to providing necessary services more efficiently. Therefore,
we see no basis for treating radiation oncology services differently
from other guidance services that are ancillary and dependent to the
procedures they facilitate.
Recommendation 2
For CY 2009, we are adopting the APC Panel recommendation and
proposing to treat CPT code 36592 (Collection of blood specimen using
established central or peripheral catheter, venous, not otherwise
specified) as an ``STVX-packaged code'' and assigning it to APC 0624
(Phlebotomy and Minor Vascular Access Device Procedures), the same APC
to which we are proposing to assign CPT 36591 code (Collection of blood
specimen from a completely implantable venous access device).
CPT code 36592 became effective January 1, 2008, and was assigned
interim status indicator ``N'' in the CY 2008 OPPS/ASC final rule with
comment period. Several members of the public requested that we change
the status of this code from unconditionally packaged to conditionally
packaged, thereby paying it identically to CPT code 36591. CPT code
36591 also became effective January 1, 2008, and was assigned interim
status indicator ``Q'' with treatment as an ``STVX-packaged code'' and
assignment to APC 0624. CPT code 36591 was a direct replacement for CPT
code 36540, which was deleted effective January 1, 2008, but was an
``STVX-packaged code'' with assignment to APC 0624 for CY 2007. These
members of the public stated that the resource costs associated with
drawing blood from an established central or peripheral catheter were
almost identical to the resources associated with drawing blood from an
implanted venous access device.
We agree that the resource costs associated with CPT code 36592 are
likely similar to the resource costs associated with CPT code 36591.
When cost data for CPT code 36592 are available for the CY 2010 OPPS
annual update, we will reevaluate whether assignment to APC 0624
continues to be appropriate.
In summary, for CY 2009, we are proposing to change the packaged
status of CPT code 36592 from unconditionally packaged to conditionally
packaged, as an ``STVX-packaged code,'' which is parallel to the
proposed treatment of CPT code 36591. This service would be paid
separately when it is provided in an encounter without a service
assigned status indicator ``S,'' ``T,'' ``V,'' or ``X.'' In all other
circumstances, its payment would be packaged.
As noted above, for CY 2009, we are proposing to further refine our
identification of the different types of conditionally packaged HCPCS
codes that were previously all assigned status indicator ``Q''
(Packaged Services Subject to Separate Payment under OPPS Payment
Criteria) under the OPPS. Therefore, we are proposing to assign status
indicator''Q1'' to CPT code 36592 for CY 2009, which indicates that it
is an ``STVX-packaged code.'' We refer readers to section XIII.A.1. for
a complete discussion of status indicators and our proposed status
indicator changes for CY 2009.
We note that we expect hospitals to follow the CPT guidance related
to CPT
[[Page 41455]]
codes 36591 and 36592 regarding when these services should be
appropriately reported.
Recommendation 3
For CY 2009, we are adopting the APC Panel's recommendation and
proposing to maintain the packaged status of HCPCS code A4306
(Disposable drug delivery system, flow rate of less than 50 mL per
hour).
HCPCS code A4306 describes a disposable drug delivery system with a
flow rate of less than 50 mL per hour. Beginning in CY 2007, HCPCS code
A4306 is payable under the OPPS with status indicator ``N,'' indicating
that its payment is unconditionally packaged. We packaged this code
because it is considered a supply, and under the OPPS it is standard to
package payment for all supplies, including implantable and non-
implantable supplies, into payment for the procedures in which the
supplies are used. In March 2007, we first discussed this code with the
APC Panel. A manufacturer noted in a presentation during the March 2007
APC Panel meeting that there is a particular disposable drug delivery
system that is reported with HCPCS code A4306 that is specifically used
to treat postoperative pain. The manufacturer requested that this code
be moved to its own APC for CY 2008 so that the service could receive
separate payment. During its September 2007 meeting, the APC Panel
recommended that this code remain packaged for CY 2008 and asked CMS to
present additional data to the APC Panel when available.
During the APC Panel's March 2008 meeting, we provided to the
Packaging Subcommittee additional cost data related to this code. Our
CY 2007 proposed rule claims data indicate that HCPCS code A4306 was
billed on OPPS claims approximately 2,400 times, yielding a line-item
median cost of approximately $4. The individual costs for this supply
range from $4 per unit to $2,056 per unit. The Packaging Subcommittee
suggested that this code may not always be correctly reported by
hospitals as the data also show that this code was frequently billed
together with computed tomography (CT) scans of various regions of the
body, without surgical procedures on the same date of service. The APC
Panel speculated that this code may be currently reported when other
types of drug delivery devices are utilized for nonsurgical procedures
or for purposes other than the treatment of postoperative pain. It was
also noted that hospitals may actually be appropriately reporting HCPCS
code A4306, which may be used to describe supplies used for purposes
other than postoperative pain relief.
In summary, because HCPCS code A4306 represents a supply and
payment of supplies is packaged under the OPPS according to
longstanding policy, we are proposing to maintain the unconditionally
packaged status of HCPCS code A4306 for CY 2009.
Recommendation 4
For CY 2009, we are adopting the APC Panel's recommendation and
proposing to treat CPT code 74305 (Cholangiography and/or
pancreatography; through existing catheter, radiological supervision
and interpretation) as a ``T-packaged code'' and assign it to APC 0263
(Level I Miscellaneous Radiology Procedures).
Effective January 1, 2008, CPT code 74305 is unconditionally
packaged and falls into the imaging supervision and interpretation
category of codes that we created as part of the CY 2008 packaging
approach. Several members of the public recently noted that CPT code
74305 may sometimes be provided in a single hospital encounter with CPT
code 47505 (Injection procedure for cholangiography through an existing
catheter (eg, percutaneous transepatic or T-tube)), which is
unconditionally packaged itself, when these are the only two services
reported on a claim. In the case where only these two services were
performed, the hospital would receive no separate payment. Our claims
data indicate that CPT code 74305 is infrequently provided without any
other separately payable services on the same date of service.
Therefore, for CY 2009, we are proposing to change the packaged
status of CPT code 74305 from unconditionally packaged to conditionally
packaged, as a ``T-packaged code,'' which is parallel to the treatment
of many other conditionally packaged imaging supervision and
interpretation codes. Hospitals would receive separate payment for this
service when it appears on a claim without a surgical procedure. The
payment for this service would be packaged into payment for a status
indicator ``T'' surgical procedure when it appears on the same date as
a surgical procedure. Hospitals that furnish this imaging supervision
and interpretation service on the same date as an independent surgical
procedure assigned status indicator ``T'' must bill both services on
the same claim.
As noted above, for CY 2009, we are proposing to further refine our
identification of the different types of conditionally packaged HCPCS
codes that were previously all assigned status indicator ``Q''
(Packaged Services Subject to Separate Payment under OPPS Payment
Criteria) under the OPPS. Therefore, we are proposing to assign status
indicator ``Q2'' to CPT code 74305 for CY 2009, which indicates that it
is a ``T-packaged code.'' We refer readers to section XIII.A.1. for a
complete discussion of status indicators and our proposed status
indicator changes for CY 2009.
In summary, for CY 2009, we are proposing to change the status
indicator for CPT code 74305 from ``N'' to ``Q2,'' with assignment to
APC 0263 (Level I Miscellaneous Radiology Procedures) when it would be
separately paid.
Recommendation 5
For CY 2009, we are proposing to maintain the packaged status of
CPT codes 37250 (Intravascular ultrasound (non-coronary vessel) during
diagnostic evaluation and/or therapeutic intervention; initial vessel);
37251 (Intravascular ultrasound (non-coronary vessel) during diagnostic
evaluation and/or therapeutic intervention; each additional vessel);
92978 (Intravascular ultrasound (coronary vessel or graft) during
diagnostic evaluation and/or therapeutic intervention including imaging
supervision, interpretation and report; initial vessel); 92979
(Intravascular ultrasound (coronary vessel or graft) during diagnostic
evaluation and/or therapeutic intervention including imaging
supervision, interpretation and report; each additional vessel); and
93662 (Intracardiac echocardiography during therapeutic/diagnostic
intervention, including imaging supervision and interpretation). We are
not adopting the APC Panel's recommendation to pay separately for these
intraoperative intravascular ultrasound (IVUS) and intracardiac
echocardiography (ICE) services for CY 2009.
These services were newly packaged for CY 2008 because they were
members of the intraoperative category of services that were included
in the CY 2008 packaging approach. The intraoperative category includes
those codes that are reported for supportive dependent diagnostic
testing or other minor procedures performed during surgical or other
independent procedures. Because these intraoperative IVUS and ICE
services support the performance of an independent procedure and they
are provided in the same operative session as the independent
procedure, we packaged their payment into the OPPS payment for the
independent procedure performed. We believe these IVUS and ICE services
are always integral to and dependent upon the independent
[[Page 41456]]
services that they support and, therefore, we believe their payment
would be appropriately packaged into the independent procedure.
A presenter at the March 2008 APC Panel meeting requested separate
payment for these services, noting that they are high cost and provided
with relatively low frequency compared to the services they typically
accompany. We continue to believe that these services are ancillary and
dependent in relation to the independent cardiac and vascular
procedures with which they are most commonly furnished. We note that
resource cost was not a factor we considered when deciding to package
intraoperative services. Packaging payment for items and services that
are directly related to performing a procedure, even when those
packaged items and services have variable resource costs or different
frequencies of use in relationship to one another or to the independent
services into which their payment is packaged, has been a principle of
the OPPS since the inception of that payment system. For example, once
an implantable device is no longer eligible for device pass-through
payment, our standard policy is to package the payment for the device
into the payment for the procedures with which the device was reported.
These former pass-through devices may be high or low cost in
relationship to the other costs of the associated surgical procedures,
or the devices may be implanted in a large or small proportion of those
surgical procedures, but the device payment is nevertheless packaged.
We do not believe that the fact that a procedure may be performed with
assorted technologies of varying resource costs is a sufficient reason
to pay separately for a particular technology that is clearly ancillary
and dependent in relationship to independent associated procedures. We
acknowledge that the costs associated with packaged services may
contribute more or less to the median cost of the independent service,
depending on how often the dependent service is billed with the
independent service. Consistent with the principles of a prospective
payment system, in some cases payment in an individual case exceeds the
average cost, and in other cases payment is less than the average cost,
but on balance, payment should approximate the relative cost of the
average case. While we understand that these services represent
technologies that are not commonly used in most institutions, we do not
believe that beneficiary access to care would be harmed by packaging
payment for IVUS and ICE services. We note that IVUS and ICE services
are existing, established technologies and that hospitals have provided
some of these services in the HOPD since the implementation of the OPPS
in CY 2000. We believe that packaging will create incentives for
hospitals and their physician partners to work together to establish
appropriate protocols that will eliminate unnecessary services where
they exist and institutionalize approaches to providing necessary
services more efficiently. Therefore, we see no basis for treating IVUS
and ICE services differently from other intraoperative services that
are ancillary and dependent to the procedure they facilitate.
In summary, we are proposing to maintain the unconditionally
packaged status of CPT codes 37250, 37251, 92978, 92979, and 93662 for
CY 2009.
Recommendation 6
For CY 2009, we are adopting the APC Panel recommendation and
proposing to maintain the packaged status of diagnostic
radiopharmaceuticals. This recommendation is discussed in detail in
section V.B.2.b. of this proposed rule.
Recommendation 7
In response to the APC Panel's recommendation for the Packaging
Subcommittee to remain active until the next APC Panel meeting, we note
that the APC Panel Packaging Subcommittee remains active, and
additional issues and new data concerning the packaging status of codes
will be shared for its consideration as information becomes available.
We continue to encourage submission of common clinical scenarios
involving currently packaged HCPCS codes to the Packaging Subcommittee
for its ongoing review, and we also encourage recommendations of
specific services or procedures whose payment would be most
appropriately packaged under the OPPS. Additional detailed suggestions
for the Packaging Subcommittee should be submitted by e-mail to
APCPanel@cms.hhs.gov with Packaging Subcommittee in the subject line.
(2) IVIG Preadministration-Related Services
We are proposing to package payment for HCPCS code G0332 (Services
for intravenous infusion of immunoglobulin prior to administration
(this service is to be billed in conjunction with administration of
immunoglobulin)) for CY 2009. Immune globulin is a complicated
biological product that is developed from human plasma obtained from
human plasma donors. Its purification is a complex process that occurs
along a very long timeline and, therefore, only a small number of
manufacturers provide commercially available products. In past years,
there have been issues reported with the supply of intravenous immune
globulin (IVIG) due to numerous factors, including decreased
manufacturing capacity, increased usage, more sophisticated processing
steps, and low demand for byproducts from IVIG fractionation.
Under the OPPS, the current CY 2008 payment methodology for IVIG
treatments consists of three components, which include payment for the
drug itself (described by a HCPCS J-code), administration of the IVIG
product (described by one or more CPT codes), and the
preadministration-related services (HCPCS code G0332). The CY 2009
proposed OPPS payment rates for IVIG products are established based on
the Part B ASP drug methodology, as discussed further in section V.B.3.
of this proposed rule. Under the OPPS, payment is made separately for
the administration of IVIG and those services are reported using the
CPT code for the first hour and, as needed, additional hour CPT
infusion codes. The CY 2009 proposed OPPS payments for drug
administration services are discussed in section VIII.B. of this
proposed rule. As explained in detail in the CY 2006 OPPS, CY 2007
OPPS/ASC, and CY 2008 OPPS/ASC final rules with comment period (70 FR
68648 to 68650, 71 FR 68092 to 68093, and 72 FR 66697 to 66698,
respectively), we temporarily paid separately for the IVIG
preadministration-related services in CY 2006 through CY 2008 because
of reported instability in the IVIG marketplace due, in part, to the
implementation of the new ASP payment methodology for IVIG drugs. Under
the CY 2006 and CY 2007 OPPS, HCPCS code G0332 was assigned to New
Technology APC 1502 (New Technology--Level II ($50-$100)), with a
payment rate of $75. For CY 2008, HCPCS code G0332 was reassigned to
APC 0430 (Drug Preadministration-Related Services), with a payment rate
of approximately $38 set prospectively based on robust CY 2006 claims
data for this code. In addition, a separate payment for HCPCS code
G0332 has been made under the MPFS during the same time period, CY 2006
to CY 2008.
We specifically indicated in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66697 through 66698) that we would consider
packaging payment for HCPCS code G0332 in future years and that we
intended to reevaluate the
[[Page 41457]]
appropriateness of separate payment for IVIG preadministration-related
services for the CY 2009 OPPS rulemaking cycle, especially as we
explore the potential for greater packaging under the OPPS. We note
that the Office of the Inspector General's (OIG's) study on the
availability and pricing of IVIG published in a report in April 2007
entitled, ``Intravenous Immune Globulin: Medicare Payment and
Availability (OEI-03-05-00404),'' found that for the third quarter of
CY 2006, just over half of the IVIG sales to hospitals and physicians
were at prices below Medicare payment amounts. Relative to the previous
three quarters, this represented a substantial increase in the
percentage of sales with prices below Medicare amounts. We have
reviewed national claims data for IVIG drug utilization, as well as
utilization of the preadministration-related services HCPCS code. These
data show modest increases in the utilization of IVIG drugs and the
preadministration-related services code, which suggest that IVIG
pricing and access may be improving.
IVIG preadministration-related services are dependent services that
are always provided in conjunction with other separately payable
services, such as drug administration services, and thus are well
suited for packaging into the payment for the separately payable
services that they usually accompany. The recent findings of the OIG
report suggest that stability in the IVIG market had improved in late
CY 2006. No other comprehensive studies have been presented to indicate
continued instability in market conditions or systematic problems with
patient access. In addition, beginning July 1, 2007, six new HCPCS
codes for specific IVIG products were adopted to implement separate
payment for these products, contributing to generally increased
payments for IVIG products and, we believe, improved market stability.
Therefore, consistent with our OPPS payment policy for the facility
resources expended to prepare for the administration of all other drugs
and biologicals under the OPPS, we now believe that payment for the
hospital resources required to locate and obtain the appropriate IVIG
products and to schedule patients' infusions should be made through the
OPPS payment for the associated drug administration services.
Furthermore, the cost data that we have gathered for the services
described by HCPCS code G0332 since CY 2006, including the line-item
median cost for the code of approximately $38 from CY 2007 claims data,
indicate that the cost of the services is relatively low. Therefore,
because HCPCS code G0332 meets our historical criteria for packaged
payment, because we paid separately for these services on a temporary
basis only, and because we believe that the reported transient market
conditions that led us to adopt the separate payment for IVIG
preadministration-related services have improved, we now believe that
packaged payment is more appropriate for the CY 2009 OPPS, consistent
with our ongoing efforts to expand the size of the OPPS payment
bundles. Therefore, we are proposing to assign status indicator ``N''
to HCPCS code G0332 for CY 2009. We will continue to work with
stakeholders of the IVIG industry to understand their concerns
regarding the pricing of IVIG and Medicare beneficiary access to this
important therapy.
The treatment of these services under the MPFS will be addressed
separately in the CY 2009 MPFS proposed rule.
B. Proposed Conversion Factor Update
Section 1833(t)(3)(C)(ii) of the Act requires us to update the
conversion factor used to determine payment rates under the OPPS on an
annual basis. Section 1833(t)(3)(C)(iv) of the Act provides that, for
CY 2009, the update is equal to the hospital inpatient market basket
percentage increase applicable to hospital discharges under section
1886(b)(3)(B)(iii) of the Act. The proposed hospital market basket
increase for FY 2009 published in the IPPS proposed rule on April 30,
2008 is 3.0 percent (73 FR 23708). To set the proposed OPPS conversion
factor for CY 2009, we increased the CY 2008 conversion factor of
$63.694, as specified in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66677), by 3.0 percent. Hospitals that fail to meet the
reporting requirements of the Hospital Outpatient Quality Data
Reporting (HOP QDRP) program are subject to a reduction of 2.0
percentage points from the market basket update to the conversion
factor. For a complete discussion of the HOP QDRP program, we refer
readers to section XVI. of this proposed rule.
In accordance with section 1833(t)(9)(B) of the Act, we further
adjust the conversion factor annually to ensure that any revisions we
are proposing to our updates for a revised wage index and rural
adjustment are made on a budget neutral basis. We calculated an overall
budget neutrality factor of 1.0010 for wage index changes by comparing
total payments from our simulation model using the FY 2009 IPPS
proposed wage index values to those payments using the current (FY
2008) IPPS wage index values. For CY 2009, we are not proposing a
change to our rural adjustment policy. Therefore, the budget neutrality
factor for the rural adjustment is 1.000.
For CY 2009, in this proposed rule, we estimate that allowed pass-
through spending for both drugs and biologicals and devices would equal
approximately $19 million, which represents 0.07 percent of total
projected OPPS spending for CY 2009. Therefore, the conversion factor
was also adjusted by the difference between the 0.09 percent pass-
through dollars set aside for CY 2008 and the 0.07 percent estimate for
CY 2009 pass-through spending. Finally, proposed payments for outliers
remain at 1.0 percent of total OPPS payments for CY 2009.
The proposed market basket increase update factor of 3.0 percent
for CY 2009, the required wage index budget neutrality adjustment of
approximately 1.0010, and the proposed adjustment of 0.02 percent of
projected OPPS spending for the difference in the pass-through set
aside result in a proposed full market basket conversion factor for CY
2009 of $65.684. To calculate the CY 2009 reduced market basket
conversion factor for those hospitals that fail to meet the
requirements of the HOP QDRP for the full CY 2009 payment update, we
made all other adjustments discussed above, but used a reduced market
basket increase update factor of 1.0 percent. This results in a
proposed reduced market basket conversion factor for CY 2009 of
$64.409.
C. Proposed Wage Index Changes
Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust, for geographic wage
differences, the portion of the OPPS payment rate, which includes the
copayment standardized amount, that is attributable to labor and labor-
related cost. This adjustment must be made in a budget neutral manner
and budget neutrality is discussed in section II.B. of this proposed
rule.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that approximately 60 percent of the costs of services
paid under the OPPS were attributable to wage costs. We confirmed that
this labor-related share for outpatient services is still appropriate
during our regression analysis for the payment adjustment for rural
hospitals in the CY 2006 OPPS final rule with comment period (70 FR
68553). Therefore, we are not proposing to revise this policy for the
CY 2009 OPPS. We refer readers to section II.G. of this
[[Page 41458]]
proposed rule for a description and example of how the wage index for a
particular hospital is used to determine the payment for the hospital.
As discussed in section II.A.2.c. of this proposed rule, for
estimating national median APC costs, we standardize 60 percent of
estimated claims costs for geographic area wage variation using the
same FY 2009 pre-reclassified wage indices that the IPPS uses to
standardize costs. This standardization process removes the effects of
differences in area wage levels from the determination of a national
unadjusted OPPS payment rate and the copayment amount.
As published in the original OPPS April 7, 2000 final rule with
comment period (65 FR 18545), the OPPS has consistently adopted the
final IPPS wage indices as the wage indices for adjusting the OPPS
standard payment amounts for labor market differences. Thus, the wage
index that applies to a particular acute short-stay hospital under the
IPPS will also apply to that hospital under the OPPS. As initially
explained in the September 8, 1998 OPPS proposed rule, we believed and
continue to believe that using the IPPS wage index as the source of an
adjustment factor for the OPPS is reasonable and logical, given the
inseparable, subordinate status of the HOPD within the hospital
overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS
wage index is updated annually. Therefore, in accordance with our
established policy, we are proposing to use the final FY 2009 version
of the IPPS wage indices used to pay IPPS hospitals to adjust the CY
2009 OPPS payment rates and copayment amounts for geographic
differences in labor cost for all providers that participate in the
OPPS, including providers that are not paid under the IPPS (referred to
in this section as ``non-IPPS'' providers).
We note that the proposed FY 2009 IPPS wage indices continue to
reflect a number of adjustments implemented over the past few years,
including revised Office of Management and Budget (OMB) standards for
defining geographic statistical areas (Core Based Statistical Areas or
CBSAs), reclassification to different geographic areas, rural floor
provisions and the accompanying budget neutrality adjustment, an
adjustment for out-migration labor patterns, an adjustment for
occupational mix, and a policy for allocating hourly wage data among
campuses of multicampus hospital systems that cross CBSAs. In addition,
our proposed changes to the FY 2009 IPPS wage index also included a
revision of the reclassification average hourly wage comparison
criteria and a state-level rural floor and imputed floor budget
neutrality adjustment applied to the wage index. We refer readers to
the FY 2009 IPPS proposed rule (73 FR 23617 through 23639) for a
detailed discussion of these proposed changes to the wage index. In
addition, we refer readers to the CY 2005 OPPS final rule with comment
period (69 FR 65842 through 65844) and subsequent OPPS rules for a
detailed discussion of the history of these wage index adjustments as
applied under the OPPS.
The IPPS wage index that we are proposing to adopt includes all
reclassifications that are approved by the Medicare Geographic
Classification Review Board (MGCRB) for FY 2009. We note that
reclassifications under section 508 of Pub. L. 108-173 were extended by
section 106(a) of the MIEA-TRHCA and were set to terminate September
30, 2007. However, section 117(a)(1) of the Medicare, Medicaid, and
SCHIP Extension Act (MMSEA) of 2007 (Pub. L. 110-173) further extended
geographic reclassifications under section 508 until September 30,
2008. In addition, section 117(a)(2) of the MMSEA extended certain
special exception reclassifications as well. On February 22, 2008, we
published a notice in the Federal Register (73 FR 9807) that indicated
how we are implementing section 117(a) of the MMSEA under the IPPS. We
also issued a joint signature memorandum on January 28, 2008, that
explained how section 117 of the MMSEA would apply to the OPPS. As we
stated in that memorandum, while most of the reclassifications extended
by the MMSEA would expire September 30, 2008, for both the IPPS and the
OPPS (with OPPS hospitals reverting to a previous reclassification or
home area wage index from October 1, 2008, to December 31, 2008),
special exception wage indices for certain hospitals would be extended
through December 31, 2008, under the OPPS in order to give these
hospitals the special exception wage index under the OPPS for the same
time period as under the IPPS. Because the MMSEA provisions expire in
2008, and are not applicable to FY 2009, we are not making any
proposals related to those provisions for the OPPS wage index for CY
2009.
For purposes of the OPPS, we are proposing to continue our policy
in CY 2009 to allow non-IPPS hospitals paid under the OPPS to qualify
for the out-migration adjustment if they are located in a section 505
out-migration county. We note that because non-IPPS hospitals cannot
reclassify, they are eligible for the out-migration wage adjustment.
Table 4J published in the Addendum to the FY 2009 IPPS proposed rule
identifies counties eligible for the out-migration adjustment and
providers receiving the adjustment. As we have done in prior years, we
are reprinting the Table 4J, as Addendum L to this proposed rule, with
the addition of non-IPPS hospitals that would receive the section 505
out-migration adjustment under the CY 2009 OPPS.
As stated earlier in this section, we continue to believe that
using the IPPS wage index as the source of an adjustment factor for the
OPPS is reasonable and logical, given the inseparable, subordinate
status of the HOPD within the hospital overall. Therefore, we are
proposing to use the final FY 2009 IPPS wage indices for calculating
the OPPS payments in CY 2009. With the exception of the out-migration
wage adjustment table (Addendum L to this proposed rule), which
includes non-IPPS hospitals paid under the OPPS, we are not reprinting
the proposed FY 2009 IPPS wage indices referenced in this discussion of
the wage index. We refer readers to the CMS Web site for the OPPS at:
http://www.cms.hhs.gov/providers/hopps. At this link, the reader will
find a link to the proposed FY 2009 IPPS wage indices tables.
D. Proposed Statewide Average Default CCRs
CMS uses CCRs to determine outlier payments, payments for pass-
through devices, and monthly interim transitional corridor payments
under the OPPS. Some hospitals do not have a CCR because there is no
cost report available. For these hospitals, CMS uses the statewide
average default CCRs to determine the payments mentioned above until a
hospital's Medicare contractor is able to calculate the hospital's
actual CCR from its most recently submitted Medicare cost report. These
hospitals include, but are not limited to, hospitals that are new, have
not accepted assignment of an existing hospital's provider agreement,
and have not yet submitted a cost report. CMS also uses the statewide
average default CCRs to determine payments for hospitals that appear to
have a biased CCR, that is, the CCR falls outside predetermined floor
and ceiling thresholds for a valid CCR, or for hospitals whose most
recent cost report reflects an all-inclusive rate status (Section
10.11, Chapter 4, Medicare Claims Processing Manual Pub. 100-04). In
this proposed rule, we are proposing to update the default ratios for
CY 2009 using the most recent cost report data, and we are proposing to
codify our
[[Page 41459]]
policies for using the default ratios for hospitals that do not have a
CCR for outlier payments specifically. We refer readers to section
II.F. of this proposed rule where we discuss this proposal for default
CCRs as part of our broader proposal to implement an outlier
reconciliation process similar to that implemented under the IPPS.
For CY 2009, we used our standard methodology of calculating the
statewide default CCRs using the same hospital overall CCRs that we use
to adjust charges to costs on claims data. Table 9 lists the proposed
CY 2009 default urban and rural CCRs by State and compares them to last
year's default CCRs. These CCRs are the ratio of total costs to total
charges from each provider's most recently submitted cost report, for
those cost centers relevant to outpatient services weighted by Medicare
Part B charges. We also adjusted ratios from submitted cost reports to
reflect final settled status by applying the differential between
settled to submitted costs and charges from the most recent pair of
final settled and submitted cost reports. We then weighted each
hospital's CCR by claims volume corresponding to the year of the
majority of cost reports used to calculate the overall CCR. We refer
readers to section II.E. of the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66680 through 66682) and prior OPPS rules for a
more detailed discussion of our established methodology for calculating
the statewide average default CCRs, including the hospitals used in our
calculations and trimming criteria.
For this proposed rule, approximately 38 percent of the submitted
cost reports represented data for cost reporting periods ending in CY
2005 and 60 percent were for cost reporting periods ending in CY 2006.
Table 9 lists the proposed CY 2009 default urban and rural CCRs by
State and compares them to last year's default CCRs. For Maryland, we
used an overall weighted average CCR for all hospitals in the nation as
a substitute for Maryland CCRs. Few providers in Maryland are eligible
to receive payment under the OPPS, which limits the data available to
calculate an accurate and representative CCR. In general, observed
changes between CY 2008 and CY 2009 are modest and the few significant
changes are associated with a small number of hospitals. The national
urban and rural CCRs observed for Maryland changed by less than 1
percent.
Table 9.--Proposed CY 2009 Statewide Average CCRs
------------------------------------------------------------------------
Previous
Proposed CY default CCR
State Urban/rural 2009 (CY 2008
default CCR OPPS final
rule)
------------------------------------------------------------------------
ALASKA....................... RURAL.......... 0.562 0.537
ALASKA....................... URBAN.......... 0.351 0.351
ALABAMA...................... RURAL.......... 0.223 0.228
ALABAMA...................... URBAN.......... 0.210 0.213
ARKANSAS..................... RURAL.......... 0.258 0.266
ARKANSAS..................... URBAN.......... 0.276 0.270
ARIZONA...................... RURAL.......... 0.269 0.264
ARIZONA...................... URBAN.......... 0.232 0.232
CALIFORNIA................... RURAL.......... 0.223 0.232
CALIFORNIA................... URBAN.......... 0.221 0.218
COLORADO..................... RURAL.......... 0.355 0.355
COLORADO..................... URBAN.......... 0.251 0.254
CONNECTICUT.................. RURAL.......... 0.394 0.391
CONNECTICUT.................. URBAN.......... 0.337 0.339
DISTRICT OF COLUMBIA......... URBAN.......... 0.329 0.346
DELAWARE..................... RURAL.......... 0.298 0.302
DELAWARE..................... URBAN.......... 0.368 0.400
FLORIDA...................... RURAL.......... 0.212 0.219
FLORIDA...................... URBAN.......... 0.194 0.198
GEORGIA...................... RURAL.......... 0.273 0.279
GEORGIA...................... URBAN.......... 0.262 0.269
HAWAII....................... RURAL.......... 0.371 0.373
HAWAII....................... URBAN.......... 0.345 0.317
IOWA......................... RURAL.......... 0.346 0.349
IOWA......................... URBAN.......... 0.317 0.325
IDAHO........................ RURAL.......... 0.434 0.445
IDAHO........................ URBAN.......... 0.419 0.414
ILLINOIS..................... RURAL.......... 0.286 0.286
ILLINOIS..................... URBAN.......... 0.272 0.271
INDIANA...................... RURAL.......... 0.306 0.313
INDIANA...................... URBAN.......... 0.299 0.301
KANSAS....................... RURAL.......... 0.317 0.318
KANSAS....................... URBAN.......... 0.241 0.240
KENTUCKY..................... RURAL.......... 0.240 0.244
KENTUCKY..................... URBAN.......... 0.264 0.262
LOUISIANA.................... RURAL.......... 0.280 0.271
LOUISIANA.................... URBAN.......... 0.268 0.277
MARYLAND..................... RURAL.......... 0.307 0.308
MARYLAND..................... URBAN.......... 0.283 0.284
MASSACHUSETTS................ URBAN.......... 0.342 0.338
MAINE........................ RURAL.......... 0.445 0.433
MAINE........................ URBAN.......... 0.425 0.424
MICHIGAN..................... RURAL.......... 0.326 0.331
[[Page 41460]]
MICHIGAN..................... URBAN.......... 0.328 0.318
MINNESOTA.................... RURAL.......... 0.497 0.499
MINNESOTA.................... URBAN.......... 0.340 0.342
MISSOURI..................... RURAL.......... 0.277 0.289
MISSOURI..................... URBAN.......... 0.282 0.292
MISSISSIPPI.................. RURAL.......... 0.265 0.267
MISSISSIPPI.................. URBAN.......... 0.216 0.217
MONTANA...................... RURAL.......... 0.444 0.453
MONTANA...................... URBAN.......... 0.452 0.450
NORTH CAROLINA............... RURAL.......... 0.284 0.286
NORTH CAROLINA............... URBAN.......... 0.305 0.321
NORTH DAKOTA................. RURAL.......... 0.363 0.379
NORTH DAKOTA................. URBAN.......... 0.357 0.378
NEBRASKA..................... RURAL.......... 0.345 0.347
NEBRASKA..................... URBAN.......... 0.292 0.290
NEW HAMPSHIRE................ RURAL.......... 0.374 0.375
NEW HAMPSHIRE................ URBAN.......... 0.311 0.337
NEW JERSEY................... URBAN.......... 0.272 0.276
NEW MEXICO................... RURAL.......... 0.270 0.275
NEW MEXICO................... URBAN.......... 0.344 0.353
NEVADA....................... RURAL.......... 0.311 0.329
NEVADA....................... URBAN.......... 0.200 0.200
NEW YORK..................... RURAL.......... 0.414 0.417
NEW YORK..................... URBAN.......... 0.396 0.402
OHIO......................... RURAL.......... 0.359 0.354
OHIO......................... URBAN.......... 0.263 0.268
OKLAHOMA..................... RURAL.......... 0.279 0.288
OKLAHOMA..................... URBAN.......... 0.241 0.245
OREGON....................... RURAL.......... 0.320 0.321
OREGON....................... URBAN.......... 0.374 0.366
PENNSYLVANIA................. RURAL.......... 0.285 0.298
PENNSYLVANIA................. URBAN.......... 0.232 0.241
PUERTO RICO.................. URBAN.......... 0.514 0.474
RHODE ISLAND................. URBAN.......... 0.295 0.308
SOUTH CAROLINA............... RURAL.......... 0.260 0.258
SOUTH CAROLINA............... URBAN.......... 0.245 0.244
SOUTH DAKOTA................. RURAL.......... 0.333 0.334
SOUTH DAKOTA................. URBAN.......... 0.269 0.289
TENNESSEE.................... RURAL.......... 0.253 0.256
TENNESSEE.................... URBAN.......... 0.229 0.241
TEXAS........................ RURAL.......... 0.268 0.271
TEXAS........................ URBAN.......... 0.246 0.242
UTAH......................... RURAL.......... 0.417 0.416
UTAH......................... URBAN.......... 0.433 0.406
VIRGINIA..................... RURAL.......... 0.268 0.268
VIRGINIA..................... URBAN.......... 0.275 0.275
VERMONT...................... RURAL.......... 0.409 0.416
VERMONT...................... URBAN.......... 0.408 0.340
WASHINGTON................... RURAL.......... 0.357 0.358
WASHINGTON................... URBAN.......... 0.360 0.368
WISCONSIN.................... RURAL.......... 0.399 0.384
WISCONSIN.................... URBAN.......... 0.357 0.362
WEST VIRGINIA................ RURAL.......... 0.295 0.298
WEST VIRGINIA................ URBAN.......... 0.361 0.360
WYOMING...................... RURAL.......... 0.421 0.449
WYOMING...................... URBAN.......... 0.333 0.351
------------------------------------------------------------------------
E. Proposed OPPS Payment to Certain Rural Hospitals
1. Hold Harmless Transitional Payment Changes Made by Pub. L. 109-171
(DRA)
When the OPPS was implemented, every provider was eligible to
receive an additional payment adjustment (called either transitional
corridor payment or transitional outpatient payment) if the payments it
received for covered outpatient department (OPD) services under the
OPPS were less than the payments it would have received for the same
services under the prior reasonable cost-based system. Section
1833(t)(7) of the Act provides that the transitional corridor payments
are temporary payments for most providers to ease their transition from
the prior reasonable cost-based payment system to the OPPS system.
There are two exceptions, cancer hospitals and
[[Page 41461]]
children's hospitals, to this provision and those hospitals receive the
transitional corridor payments on a permanent basis. Section
1833(t)(7)(D)(i) of the Act originally provided for transitional
corridor payments to rural hospitals with 100 or fewer beds for covered
OPD services furnished before January 1, 2004. However, section 411 of
Pub. L. 108-173 amended section 1833(t)(7)(D)(i) of the Act to extend
these payments through December 31, 2005, for rural hospitals with 100
or fewer beds. Section 411 also extended the transitional corridor
payments to sole community hospitals (SCHs) located in rural areas for
services furnished during the period that begins with the provider's
first cost reporting period beginning on or after January 1, 2004, and
ended on December 31, 2005. Accordingly, the authority for making
transitional corridor payments under section 1833(t)(7)(D)(i) of the
Act, as amended by section 411 of Pub. L. 108-173, for rural hospitals
having 100 or fewer beds and SCHs located in rural areas expired on
December 31, 2005.
Section 5105 of Pub. L. 109-171 reinstituted the hold harmless
transitional outpatient payments (TOPs) for covered OPD services
furnished on or after January 1, 2006, and before January 1, 2009, for
rural hospitals having 100 or fewer beds that are not SCHs. When the
OPPS payment is less than the payment the provider would have received
under the previous reasonable cost-based system, the amount of payment
is increased by 95 percent of the amount of the difference between the
two payment systems for CY 2006, by 90 percent of the amount of that
difference for CY 2007, and by 85 percent of the amount of that
difference for CY 2008.
For CY 2006, we implemented section 5105 of Pub. L. 109-171 through
Transmittal 877, issued on February 24, 2006. We did not specifically
address whether TOPs apply to essential access community hospitals
(EACHs), which are considered to be SCHs under section
1886(d)(5)(D)(iii)(III) of the Act. Accordingly, under the statute,
EACHs are treated as SCHs. Therefore, we believed and continue to
believe that EACHs are not currently eligible for TOPs under Pub. L.
109-171. However, they are eligible for the adjustment for rural SCHs.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and
68228), we updated Sec. 419.70(d) to reflect the requirements of Pub.
L. 109-171.
Effective for services provided on or after January 1, 2009, rural
hospitals having 100 or fewer beds that are not SCHs will no longer be
eligible for hold harmless TOPs, in accordance with section 5105 of
Pub. L. 109-171.
2. Proposed Adjustment for Rural SCHs Implemented in CY 2006 Related to
Pub. L. 108-173 (MMA)
In the CY 2006 OPPS final rule with comment period (70 FR 68556),
we finalized a payment increase for rural SCHs of 7.1 percent for all
services and procedures paid under the OPPS, excluding drugs,
biologicals, brachytherapy seeds, and services paid under pass-through
payment policy in accordance with section 1833(t)(13)(B) of the Act, as
added by section 411 of Pub. L. 108-173. Section 411 gave the Secretary
the authority to make an adjustment to OPPS payments for rural
hospitals, effective January 1, 2006, if justified by a study of the
difference in costs by APC between hospitals in rural and urban areas.
Our analysis showed a difference in costs for rural SCHs. Therefore, we
implemented a payment adjustment for only those hospitals beginning
January 1, 2006.
In CY 2007, we became aware that we did not specifically address
whether the adjustment applies to EACHs, which are considered to be
SCHs under section 1886(d)(5)(D)(iii)(III) of the Act. Thus, under the
statute, EACHs are treated as SCHs. Therefore, in the CY 2007 OPPS/ASC
final rule with comment period (71 FR 68010 and 68227), for purposes of
receiving this rural adjustment, we revised Sec. 419.43(g) to clarify
that EACHs are also eligible to receive the rural SCH adjustment,
assuming these entities otherwise meet the rural adjustment criteria.
Currently, fewer than 10 hospitals are classified as EACHs and as of CY
1998, under section 4201(c) of Pub. L. 105-33, a hospital can no longer
become newly classified as an EACH.
This adjustment for rural SCHs is budget neutral and applied before
calculating outliers and copayment. As stated in the CY 2006 OPPS final
rule with comment period (70 FR 68560), we would not reestablish the
adjustment amount on an annual basis, but we note that we may review
the adjustment in the future and, if appropriate, would revise the
adjustment.
For CY 2009, we are proposing to continue our current policy of a
budget neutral 7.1 percent payment increase for rural SCHs, including
EACHs, for all services and procedures paid under the OPPS, excluding
drugs, biologicals, and services paid under the pass-through payment
policy in accordance with section 1833(t)(13)(B) of the Act. This
adjustment is in accordance with section 411 of the MMA, which gave the
Secretary the authority to make an adjustment to OPPS payments for
rural hospitals, if justified by a study of the difference in costs by
APC between hospitals in rural and urban areas. Our past analysis
showed a difference in costs only for rural SCHs, and we implemented a
payment adjustment for those hospitals beginning January 1, 2006. For
CY 2009, we also are proposing to continue to include brachytherapy
sources in the group of services eligible for the 7.1 percent payment
increase because we are proposing to pay them at prospective rates
based on their median costs as calculated from historical claims data.
We intend to reassess the 7.1 percent adjustment in the near future by
examining differences between urban and rural hospitals' costs using
updated claims, cost, and provider information. In that process, we
will include brachytherapy sources in each hospital's mix of services.
F. Proposed Hospital Outpatient Outlier Payments
1. Background
Currently, the OPPS pays outlier payments on a service-by-service
basis. For CY 2008, the outlier threshold is met when the cost of
furnishing a service or procedure by a hospital exceeds 1.75 times the
APC payment amount and exceeds the APC payment rate plus a $1,575
fixed-dollar threshold. We introduced a fixed-dollar threshold in CY
2005 in addition to the traditional multiple threshold in order to
better target outliers to those high cost and complex procedures where
a very costly service could present a hospital with significant
financial loss. If a hospital meets both of these conditions, the
multiple threshold and the fixed-dollar threshold, the outlier payment
is calculated as 50 percent of the amount by which the cost of
furnishing the service exceeds 1.75 times the APC payment rate. This
outlier payment has historically been considered a final payment by
longstanding OPPS policy.
It has been our policy for the past several years to report the
actual amount of outlier payments as a percent of total spending in the
claims being used to model the proposed OPPS. An accounting error for
CY 2005, CY 2006, and CY 2007 inflated CMS' estimates of OPPS
expenditures, which led us to underestimate outlier payment as a
percentage of total OPPS spending in prior rules. Total OPPS
expenditures have been revised downward, and we have accordingly
revised our outlier payment estimates. We further note that the CY 2005
outlier payment estimate included in the CY 2007 OPPS/ASC
[[Page 41462]]
final rule with comment period (71 FR 68010) has not changed based on
revised spending estimates. However, we previously stated that CY 2006
outlier payment was equal to 1.1 percent of OPPS expenditures for CY
2006 (72 FR 66685), but based on our revised numbers, actual outlier
payments are equal to approximately 1.3 percent of CY 2006 OPPS
expenditures. Our current estimate of total outlier payments as a
percent of total CY 2007 OPPS payment, using available CY 2007 claims
and the revised OPPS expenditure estimate, is approximately 0.9
percent. For CY 2007, the estimated outlier payment was set at 1.0
percent of the total aggregated OPPS payments. Therefore, for CY 2007
we estimate that we paid approximately 0.1 percent less than the CY
2007 outlier target of 1.0 percent of total aggregated OPPS payments.
We will update our estimate of CY 2007 outlier spending in the CY 2009
OPPS/ASC final rule with comment period.
As explained in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66685), we set our projected target for aggregate outlier
payments at 1.0 percent of aggregate total payments under the OPPS for
CY 2008. The outlier thresholds were set so that estimated CY 2008
aggregate outlier payments would equal 1.0 percent of aggregate total
payments under the OPPS. Using the same set of CY 2007 claims and CY
2008 payment rates, we currently estimate that outlier payments for CY
2008 would be approximately 0.8 percent of total CY 2008 OPPS payments.
The difference between 1.0 percent and 0.8 percent is reflected in the
regulatory impact analysis in section XXI.B. of this proposed rule. We
note that we provide estimated CY 2009 outlier payments for hospitals
and CMHCs with claims included in the claims data that we used to model
impacts on the CMS Web site in the Hospital-Specific Impacts--Provider-
Specific Data file on the CMS Web site at: http://www.cms.hhs.gov/
HospitalOutpatientPPS/.
2. Proposed Outlier Calculation
For CY 2009, we are proposing to continue our policy of setting
aside 1.0 percent of aggregate total payments under the OPPS for
outlier payments. We are proposing that a portion of that 1.0 percent,
specifically 0.07 percent, would be allocated to CMHCs for partial
hospitalization program outlier payments. This is the amount of
estimated outlier payments that would result from the proposed CMHC
outlier threshold of 3.40 times the CY 2009 PHP APC payment rates, as a
proportion of all payments dedicated to outlier payments. For further
discussion of CMHC outlier payments, we refer readers to section X.B.4.
of this proposed rule.
To ensure that estimated CY 2009 aggregate outlier payments would
equal 1.0 percent of estimated aggregate total payments under the OPPS,
we are proposing that the hospital outlier threshold be set so that
outlier payments would be triggered when the cost of furnishing a
service or procedure by a hospital exceeds 1.75 times the APC payment
amount and exceeds the APC payment rate plus an $1,800 fixed-dollar
threshold. This proposed threshold reflects the methodology discussed
below, as well as proposed APC recalibration for CY 2009.
We calculated the fixed-dollar threshold for this proposed rule
using largely the same methodology as we did in CY 2008. For purposes
of estimating outlier payments for this proposed rule, we used the CCRs
available in the April 2008 update to the OPSF.
The claims that we use to model each OPPS update lag by 2 years.
For this proposed rule, we used CY 2007 claims to model the CY 2009
OPPS. In order to estimate CY 2009 hospital outlier payments for this
proposed rule, we inflated the charges on the CY 2007 claims using the
same inflation factor of 1.1204 that we used to estimate the IPPS
fixed-dollar outlier threshold for the FY 2009 IPPS proposed rule. For
1 year, the inflation factor is 1.0585. The methodology for determining
this charge inflation factor was discussed in the FY 2009 IPPS proposed
rule (73 FR 23710 through 23711). As we stated in the CY 2005 OPPS
final rule with comment period (69 FR 65845), we believe that the use
of this charge inflation factor is appropriate for the OPPS because,
with the exception of the routine service cost centers, hospitals use
the same cost centers to capture costs and charges across inpatient and
outpatient services.
As noted in the CY 2007 OPPS/ASC final rule with comment period (71
FR 68011), we are concerned that we may systematically overestimate the
OPPS hospital outlier threshold if we did not apply a CCR inflation
adjustment factor. Therefore, we are proposing to apply the same CCR
inflation adjustment factor that we proposed to apply for the FY 2009
IPPS outlier calculation to the CCRs used to simulate the CY 2009 OPPS
outlier payments that determined the fixed-dollar threshold.
Specifically, for CY 2009, we are proposing to apply an adjustment of
0.9920 to the CCRs that are currently in the April 2008 OPSF to trend
them forward from CY 2008 to CY 2009. The methodology for calculating
this adjustment is discussed in the FY 2009 IPPS proposed rule (73 FR
23710 through 23711).
Therefore, to model hospital outliers for this proposed rule, we
applied the overall CCRs from the April 2008 OPSF file after adjustment
(using the proposed CCR inflation adjustment factor of 0.9920 to
approximate CY 2009 CCRs) to charges on CY 2007 claims that were
adjusted (using the proposed charge inflation factor of 1.1204 to
approximate CY 2009 charges). We simulated aggregated CY 2009 hospital
outlier payments using these costs for several different fixed-dollar
thresholds, holding the 1.75 multiple constant and assuming that
outlier payment would continue to be made at 50 percent of the amount
by which the cost of furnishing the service would exceed 1.75 times the
APC payment amount, until the total outlier payments equaled 1.0
percent of aggregated estimated total CY 2009 OPPS payments. We
estimate that a proposed fixed-dollar threshold of $1,800, combined
with the proposed multiple threshold of 1.75 times the APC payment
rate, would allocate 1.0 percent of aggregated total OPPS payments to
outlier payments. We are proposing to continue to make an outlier
payment that equals 50 percent of the amount by which the cost of
furnishing the service exceeds 1.75 times the APC payment amount when
both the 1.75 multiple threshold and the fixed-dollar $1,800 threshold
are met. For CMHCs, if a CMHC's cost for partial hospitalization
exceeds 3.40 times the payment rate for APC 0172 (Level I Partial
Hospitalization (3 services)) or APC 0173 (Level II Partial
Hospitalization (4 or more services)), the outlier payment is
calculated as 50 percent of the amount by which the cost exceeds 3.40
times the APC payment rate.
New section 1833(t)(17)(A) of the Act, which applies to hospitals
as defined under section 1886(d)(1)(B) of the Act, requires that
hospitals that fail to report data required for the quality measures
selected by the Secretary, in the form and manner required by the
Secretary under 1833(t)(17)(B) of the Act, incur a 2.0 percentage point
reduction to their OPD fee schedule increase factor, that is, the
annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that will apply to certain outpatient items and services
performed by hospitals that are required to report outpatient quality
data and that fail to meet the HOP QDRP requirements. For hospitals
that fail to meet the HOP
[[Page 41463]]
QDRP quality data reporting requirements, we are proposing that the
hospitals' costs would be compared to the reduced payments for purposes
of outlier eligibility and payment calculation. We believe no changes
in the regulation text would be necessary to implement this policy
because using the reduced payment for these outlier eligibility and
payment calculations is contemplated in the current regulations at
Sec. 419.43(d). This proposal conforms to current practice under the
IPPS in this regard. Specifically, under the IPPS, for purposes of
determining the hospital's eligibility for outlier payments, the
hospital's estimated operating costs for a discharge are compared to
the outlier cost threshold based on the hospital's actual DRG payment
for the case. For more information on the HOP QDRP, we refer readers to
section XVI. of this proposed rule.
3. Outlier Reconciliation
As provided in section 1833(t)(5) of the Act, and described in the
CY 2001 final rule with comment period (65 FR 18498), we initiated the
use of a provider-specific overall CCR to estimate a hospital's or
CMHC's costs from billed charges on a claim to determine whether a
service's cost was significantly higher than the APC payment to qualify
for outlier payment. Currently, these facility-specific overall CCRs
are determined using the most recent settled or tentatively settled
cost report for each facility. At the end of the cost reporting period,
the hospital or CMHC submits a cost report to its Medicare contractor,
who then calculates the overall CCR that is used to determine outlier
payments for the facility. We believe the intent of the statute is that
outlier payments would be made only in situations where the cost of a
service provided is extraordinarily high. For example, under our
existing outlier methodology, a hospital's billed current charges may
be significantly higher than the charges included in the hospital's
overall CCR that is used to calculate outlier payments, while the
hospital's costs are more similar to the costs included in the overall
CCR. In this case, the hospital's overall CCR used to calculate outlier
payments is not representative of the hospital's current charge
structure. The overall CCR applied to the hospital's billed charges
would estimate an inappropriately high cost for the service, resulting
in inappropriately high outlier payments. This is contrary to the goal
of outlier payments, which are intended to reduce the hospital's
financial risk associated with services that have especially high
costs. The reverse could be true as well, if a hospital significantly
lowered its current billed charges in relationship to its costs, which
would result in inappropriately low outlier payments.
For CY 2009, we are proposing to address vulnerabilities in the
OPPS outlier payment system that lead to differences between billed
charges and charges included in the overall CCR used to estimate cost.
Our proposal would apply to all hospitals and CMHCs paid under the
OPPS. The main vulnerability in the OPPS outlier payment system is the
time lag between the CCRs from the latest settled cost report and
current charges that create the potential for hospitals and CMHCs to
set their own charges to exploit the delay in calculating new CCRs. A
facility can increase its outlier payments during this time lag by
increasing its charges significantly in relation to its cost increases.
The time lag may lead to inappropriately high CCRs relative to billed
charges that overestimate cost, and as a result, greater outlier
payments. Therefore, we are taking steps to ensure that outlier
payments appropriately account for financial risk when providing an
extraordinarily costly and complex service, while only being made for
services that legitimately qualify for the additional payment.
We believe that some CMHCs may have historically increased and
decreased their charges in response to Medicare outlier payment
policies. The HHS Office of the Inspector General (OIG) has published
several reports that found that CMHCs took advantage of vulnerabilities
in the outpatient outlier payment methodology by increasing their
billed charges after their CCRs were established to garner greater
outlier payments (DHHS OIG June 2007, A-07-06-0459, page 2). We discuss
the OIG's most recent report and accompanying recommendations in
section XIV.C. of this proposed rule. We similarly noted in the CY 2004
OPPS final rule with comment period (68 FR 63470) that some CMHCs
manipulated their charges in order to inappropriately receive outlier
payments.
To address these vulnerabilities in the area of the OPPS outlier
payment methodology, we are proposing to update our regulations to
codify two existing longstanding OPPS policies, as discussed in further
detail below. For the CY 2009 OPPS, we are also proposing to
incorporate outlier policies comparable to those that have been
included in several Medicare prospective payment systems, in particular
the IPPS (68 FR 34494). Specifically, we are proposing to allow
Medicare contractors to use a different CCR in certain circumstances to
estimate costs, and we are proposing to require reconciliation of
outlier payments in certain circumstances. We believe that all these
proposed changes would address most of the current vulnerabilities
present in the OPPS outlier payment system.
First, we are proposing to update the regulations to codify two
existing outlier policies. These policies are currently stated in Pub
100-04, Chapter 4, section 10.11.1 of the Internet-Only Manual, as
updated via Transmittal 1445, Change Request 5946, dated February 8,
2008. To be consistent with our manual instructions, for CY 2009, we
are proposing to revise 42 CFR 419.43 to add two new paragraphs
(d)(5)(ii) and (d)(5)(iii). Specifically, we are proposing to add new
paragraph (d)(5)(ii) to incorporate rules governing the overall
ancillary CCR applied to processed claims and new paragraph (d)(5)(iii)
to incorporate existing policy governing when a statewide average CCR
may be used instead of an overall ancillary CCR. We note that use of a
statewide average CCR in the specified cases is to ensure that the most
appropriate CCR possible is used for outlier payment calculations. For
purposes of this discussion and OPPS payment policy in general, we
treat ``overall CCR'' and ``overall ancillary CCR'' as synonymous terms
that refer to the overall CCR that is calculated based on cost report
data, which for hospitals, pertains to a specific set of ancillary cost
centers.
We are proposing new Sec. 419.43(d)(5)(ii) to specify use of the
hospital's or CMHC's most recently updated overall CCR for purposes of
calculating outlier payments. Our ability to identify true outlier
cases depends on the accuracy of the CCRs. To the extent some
facilities may be motivated to maximize outlier payments by taking
advantage of the time lag in updating the CCRs, the payment system
remains vulnerable to overpayments to individual hospitals or CMHCs.
This proposed provision specifies that the overall CCR applied at the
time a claim is processed is based on either the most recently settled
or tentatively settled cost report, whichever is from the latest cost
reporting period. We are also proposing new Sec. 419.43(d)(5)(iii) to
describe several circumstances in which a Medicare contractor may
substitute a statewide average CCR for a hospital's or CMHC's CCR. In
the CY 2007 OPPS/ASC final rule with comment period (71 FR 68006), we
finalized this policy but inadvertently did not update our regulations.
We refer readers to section II.D. of this proposed rule for a more
[[Page 41464]]
detailed discussion of statewide average CCRs. In summary, Medicare
contractors can use a statewide CCR for new hospitals or CMHCs that
have not accepted assignment of the existing provider agreement and who
have not yet submitted a cost report; for hospitals or CMHCs whose
Medicare contractor is unable to obtain accurate data with which to
calculate the overall ancillary CCR; and for facilities whose actual
CCR is more than 3 standard deviations above the geometric mean of
other overall CCRs. For CY 2009, we estimate this upper threshold to be
1.3. While this existing policy minimizes the use of CCRs that are
significantly above the mean for cost estimation, facilities with CCRs
that fall significantly below the mean would continue to have their
actual CCRs utilized, instead of the statewide default CCR. We also are
proposing to reevaluate the upper threshold and propose a new upper
threshold, if appropriate, through rulemaking each year.
These improvements somewhat mitigate, but do not fully eliminate, a
hospital's or CMHC's ability to significantly increase its charges in
relation to its cost increases each year, thereby receiving significant
outlier payments because of the inflated CCR. Therefore, we also are
proposing two new policies to more fully address the vulnerabilities
described above. Specifically, we are proposing new Sec.
419.43(d)(5)(i) that states that for hospital outpatient services
performed on or after January 1, 2009, CMS may specify an alternative
CCR or the facility may request an alternative CCR under certain
circumstances. The alternative CCR in either case may be either higher
or lower than the otherwise applicable CCR. In addition, we are
proposing to allow a facility to request that its CCR be prospectively
adjusted if the facility presents substantial evidence that the overall
CCR that is currently used to calculate outlier payments is inaccurate.
Such an alternative CCR may be appropriate if a facility's charges have
increased at an excessive rate, relative to the rate of increase among
other hospitals or CMHCs. CMS would have the authority to direct the
Medicare contractor to calculate a CCR from the cost report that
accounts for the increased charges. As explained in greater detail
below, we are also proposing new Sec. 419.43(d)(5)(iv) to allow
Medicare contractors the administrative discretion to reconcile
hospital or CMHC cost reports under certain circumstances.
We are proposing to implement a reconciliation process similar to
that implemented by the IPPS in FY 2003 (68 FR 34494). This proposed
policy would subject certain outlier payments to reconciliation when a
hospital or CMHC cost report is settled. While the existing policies
described above partially address the vulnerabilities in the OPPS
outlier payment system, the proposed reconciliation process would more
fully ensure accurate outlier payments for those facilities whose CCRs
fluctuate significantly, relative to the CCRs of other facilities. We
are proposing that this reconciliation process would only apply to
those services provided on or after January 1, 2009. We considered
proposing that this reconciliation process would become effective
beginning with services provided during the hospital's first cost
reporting period beginning in CY 2009 but believe effectuating this
policy based upon date of service would be less burdensome for
hospitals. We are specifically soliciting public comment related to the
effective date for the reconciliation process that would be most
administratively feasible for hospitals and CMHCs. We note this
reconciliation process would be done on a limited basis in order to
ease the administrative burden on Medicare contractors, as well as to
focus on those facilities that appear to have improperly manipulated
their charges to receive excessive outlier payments. We are proposing
to set reconciliation thresholds in the manual, reevaluate them
annually, and modify them as necessary. Following current IPPS outlier
policy, these thresholds would include a measure of acceptable percent
change in a hospital's or CMHC's CCR and an amount of outlier payment
involved. We are further proposing that when the cost report is
settled, reconciliation of outlier payments would be based on the
overall CCR calculated based on the ratio of costs and charges computed
from the cost report at the time the cost report coinciding with the
service dates is settled. Reconciling these outlier payments would
ensure that the outlier payments made are appropriate and that final
outlier payments reflect the most accurate cost data. Because
reconciliation entails evaluating claims for outlier payments using a
revised CCR, this process would not apply to services and items not
otherwise subject to outlier payments, including items and services
paid at charges reduced to cost.
This reconciliation process would require recalculating outlier
payments for individual claims. We understand that the aggregate change
in a facility's outlier payments cannot be determined because changes
in the CCR would affect the eligibility and amount of outlier payment.
For example, if a CCR declined, some services may no longer qualify for
any outlier payments while other services may qualify for lower outlier
payments. Therefore, the only way to accurately determine the net
effect of a decrease in an overall CCR on a facility's total outlier
payments is to assess the impact on a claim-by-claim basis. At this
time, CMS is developing a method for reexamining claims to calculate
outlier payments using a revised CCR.
Similar to the IPPS, we also are proposing to adjust the amount of
final outlier payments determined during reconciliation for the time
value of money. A second vulnerability remaining after reconciliation
is related to the same issue of the ability of hospitals and CMHCs to
manipulate the system by significantly increasing charges in the year
the service is performed, and obtaining excessive outlier payments as a
result. Even though under the proposal the excess money would be
refunded at the time of reconciliation, the facility would have access
to excess payments from the Medicare Trust Fund on a short-term basis.
In cases of underpayment, the facility would not have had access to
appropriate outlier payment for that time period.
Accordingly, we believe it is necessary to adjust the amount of the
final outlier payment to reflect the time value of the funds for that
time period. Therefore, we are proposing to add section Sec.
419.43(d)(6) to provide that when the cost report is settled, outlier
payments would be subject to an adjustment to account for the value of
the money for the time period in which the money was inappropriately
held by the hospital or CMHC. This would also apply where outlier
payments were underpaid. In those cases, the adjustment would result in
additional payments to hospitals or CMHCs. Any adjustment would be made
based on a widely available index to be established in advance by the
Secretary, and would be applied from the midpoint of the cost reporting
period to the date of reconciliation (or when additional payments are
issued, in the case of underpayments). This adjustment to reflect the
time value of a facility's outlier payments would ensure that the
outlier payment finalized at the time its cost report is settled
appropriately reflects the hospital's or CMHC's approximate marginal
costs in excess of the APC payments for services, taking into
consideration the applicable outlier thresholds.
[[Continued on page 41465]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41465-41514]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 41464]]
[[Page 41465]]
Despite the fact that each individual facility's outlier payments
may be subject to adjustment when the cost report is settled, we
continue to believe that the hospital multiple and fixed-dollar outlier
thresholds should be based on projected payments using the latest
available historical data, without retroactive adjustments, to ensure
that actual outlier payments are equal to the target spending
percentage of total anticipated hospital outpatient spending. The
proposed reconciliation process and ability to change overall CCRs are
intended only to adjust actual outlier payments so that they most
closely reflect true costs rather than artificially inflated costs.
These adjustments would be made irrespective of whether total outlier
spending targets are met or not.
We are not proposing to make any changes to the method that we use
to calculate outlier thresholds for CY 2009. The multiple and fixed-
dollar outlier thresholds are an important aspect of the prospective
nature of the OPPS and key to their importance is their predictability
and stability for the prospective payment year. The outlier payment
policy is designed to alleviate any financial disincentive hospitals
may have in providing any medically necessary care their patients may
require, even to those patients who are very sick and would be likely
more costly to treat. Preset and publicized OPPS outlier thresholds
allow hospitals and CMHCs to approximate their Medicare payment for an
individual patient while that patient is still in the hospital. Even
though we are proposing to make outlier payments susceptible to a
reconciliation based on the facility's actual CCRs during the
contemporaneous cost reporting period, the facility should still be in
a position to make this approximation. Hospitals and CMHCs have
immediate access to the information needed to determine what their CCR
will be for a specific time period when their cost report is settled.
Even if the final CCR is likely to be different from the ratio used
initially to process and pay the claim, hospitals and CMHCs not only
have the information available to estimate their CCRs, but they also
have the ability to control those CCRs, through the structure and
levels of their charges. If we were to make retroactive adjustments to
hospital outlier payments to ensure that we met total OPPS outlier
spending targets, we would undermine the critical predictability aspect
of the prospective nature of the OPPS. Making such an across-the-board
adjustment would lead to either more or less outlier payments for all
hospitals that would, therefore, be unable to immediately approximate
the payment they would receive for especially costly services at the
time those services were provided. We believe that it is neither
necessary nor appropriate to make such an aggregate retroactive
adjustment.
For the corresponding proposed regulation text changes, we refer
readers to Sec. 419.43(d)(5) and Sec. 419.43(d)(6) of this proposed
rule.
G. Proposed Calculation of an Adjusted Medicare Payment From the
Proposed National Unadjusted Medicare Payment
The basic methodology for determining prospective payment rates for
HOPD services under the OPPS is set forth in existing regulations at
Sec. 419.31, Sec. 419.32, Sec. 419.43 and Sec. 419.44. The payment
rate for most services and procedures for which payment is made under
the OPPS is the product of the conversion factor calculated in
accordance with section II.B. of this proposed rule and the relative
weight determined under section II.A. of this proposed rule. Therefore,
the national unadjusted payment rate for most APCs contained in
Addendum A to this proposed rule and for most HCPCS codes, to which
separate payment under the OPPS has been assigned in Addendum B to this
proposed rule, was calculated by multiplying the proposed CY 2009
scaled weight for the APC by the proposed CY 2009 conversion factor. We
note that section 1833(t)(17)(A) of the Act, which applies to hospitals
as defined under section 1886(d)(1)(B) of the Act, requires that
hospitals that fail to report data required for the quality measures
selected by the Secretary, in the form and manner required by the
Secretary under 1833(t)(17)(B) of the Act, incur a 2.0 percentage point
reduction to their OPD fee schedule increase factor, that is, the
annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that will apply to certain outpatient items and services provided
by hospitals that are required to report outpatient quality data and
that fail to meet the HOP QDRP requirements. For further discussion of
the proposed payment reduction for hospitals that fail to meet the HOP
QDRP data reporting requirements, we refer readers to section XVI.D. of
this proposed rule.
We demonstrate in the steps below how to determine the APC payment
that would be made in a calendar year under the OPPS to a hospital that
fulfills the HOP QDRP data reporting requirements and to a hospital
that fails to meet the HOP QDRP data reporting requirements for a
service that has any of the status indicator assignments: ``P,''
``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' ``V,'' or ``X'' (as
defined in Addendum D1 to this proposed rule), in a circumstance in
which the multiple procedure discount does not apply and the procedure
is not bilateral.
Individual providers interested in calculating the proposed payment
amount that they specifically would receive for a specific service from
the proposed national unadjusted payment rates presented in Addenda A
and B to this proposed rule, should follow the formulas presented in
the following steps. For purposes of the payment calculations below, we
refer to the national unadjusted payment rate for hospitals that meet
their HOP QDRP reporting requirements as the ``full'' national
unadjusted payment rate. We refer to the national unadjusted payment
rate for hospitals that fail to meet their HOP QDRP reporting
requirements as the ``reduced'' national unadjusted payment rate. The
``reduced'' national unadjusted payment rate is calculated by
multiplying the proposed reporting ratio of 0.981 times the ``full''
national unadjusted payment rate. The national unadjusted payment rate
used in the calculations below is either the ``full'' national
unadjusted payment rate or the ``reduced'' national unadjusted payment
rate, depending on whether the hospital met its HOP QDRP reporting
requirements in order to receive the full CY 2009 OPPS increase factor.
Step 1. Calculate 60 percent (the labor-related portion) of the
national unadjusted payment rate. Since the initial implementation of
the OPPS, we have used 60 percent to represent our estimate of that
portion of costs attributable, on average, to labor. We refer readers
to the April 7, 2000 final rule with comment period (65 FR 18496
through 18497) for a detailed discussion of how we derived this
percentage. We confirmed that this labor-related share for hospital
outpatient services is still appropriate during our regression analysis
for the payment adjustment for rural hospitals in the CY 2006 OPPS
final rule with comment period (70 FR 68553).
The formula below is a mathematical representation of Step 1
discussed above and identifies the labor-related portion of a specific
payment rate for the specific service.
[[Page 41466]]
x - Labor-related portion of the national unadjusted payment rate
x = .60 * (national unadjusted payment rate)
Step 2. Determine the wage index area in which the hospital is
located and identify the wage index level that applies to the specific
hospital. The wage index values assigned to each area reflect the new
geographic statistical areas as a result of revised OMB standards
(urban and rural) to which hospitals are assigned for FY 2009 under the
IPPS, reclassifications through the Medicare Geographic
Reclassification Review Board (MCGRB), section 1886(d)(8)(B) ``Lugar''
hospitals, and section 401 of Pub. L. 108-173. We note that the
reclassifications of hospitals under the section 508 of Pub. L. 108-173
are scheduled to expire on September 30, 2008 and will not be
applicable to FY 2009. The wage index values include the occupational
mix adjustment described in section II.C. of this proposed rule that
was developed for the proposed FY 2009 IPPS payment rates published in
the Federal Register on April 30, 2008 (73 FR 23624 through 23632).
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of Pub. L.
108-173. Addendum L to this proposed rule contains the qualifying
counties and the proposed wage index increase developed for the FY 2009
IPPS and published in the FY 2009 IPPS proposed rule as Table 4J (73 FR
23810 through 23819). This step is to be followed only if the hospital
has chosen not to accept reclassification under Step 2 above.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4
discussed above and adjusts the labor-related portion of the national
payment rate for the specific service by the wage index.
xa - Labor-related portion of the national unadjusted payment rate
(wage adjusted)
xa = .60 * (national unadjusted payment rate) * applicable wage index.
Step 5. Calculate 40 percent (the nonlabor-related portion) of the
national unadjusted payment rate and add that amount to the resulting
product of Step 4. The result is the wage index adjusted payment rate
for the relevant wage index area.
The formula below is a mathematical representation of Step 5
discussed above and calculates the remaining portion of the national
payment rate, the amount not attributable to labor, and the adjusted
payment for the specific service.
y - Nonlabor-related portion of the national unadjusted payment rate
y = .40 * (national unadjusted payment rate)
Adjusted Medicare Payment = y + xa
Step 6. If a provider is a SCH, as defined in the regulations at
Sec. 412.92, or an EACH, which is considered to be a SCH under section
1886(d)(5)(D)(iii)(III) of the Act, and located in a rural area, as
defined in Sec. 412.64(b), or is treated as being located in a rural
area under Sec. 412.103, multiply the wage index adjusted payment rate
by 1.071 to calculate the total payment.
The formula below is a mathematical representation of Step 6
discussed above and applies the rural adjustment for rural SCHs.
Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment
x 1.071
We have provided examples below of the calculation of both the full
and reduced national unadjusted payment rates that will apply to
certain outpatient items and services performed by hospitals that meet
and that fail to meet the HOP QDRP requirements, using the steps
outlined above. For purposes of this example, we will use a provider
that is located in Brooklyn, New York that is assigned to CBSA 35644.
This provider bills one service that is assigned to APC 0019 (Level I
Excision/Biopsy). The proposed CY 2009 full national unadjusted payment
rate for APC 0019 is $288.20. The reduced national unadjusted payment
rate for a hospital that fails to meet the HOP QDRP requirements would
be $282.72. This reduced rate is calculated by multiplying the
reporting ratio of 0.981 by the full unadjusted payment rate for APC
0019.
The FY 2009 wage index for a provider located in CBSA 35644 in New
York is 1.3043. The labor portion of the proposed full national
unadjusted payment is $225.54 (.60 x 288.20 x 1.3043). The labor
portion of the reduced national unadjusted payment is $221.25 (.60 x
282.72 x 1.3043). The nonlabor portion of the proposed full national
unadjusted payment is $115.28 (.40 x $288.20). The nonlabor portion of
the reduced national unadjusted payment is $113.08 (.40 x $282.72). The
sum of the labor and nonlabor portions of the proposed full national
adjusted payment is $340.82 ($225.54 + $115.28). The sum of the reduced
national adjusted payment is $334.33 ($221.25 + $113.08).
H. Proposed Beneficiary Copayments
1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining copayment amounts to be paid by beneficiaries for
covered OPD services. Section 1833(t)(8)(C)(ii) of the Act specifies
that the Secretary must reduce the national unadjusted copayment amount
for a covered OPD service (or group of such services) furnished in a
year in a manner so that the effective copayment rate (determined on a
national unadjusted basis) for that service in the year does not exceed
a specified percentage. As specified in section 1833(t)(8)(C)(ii)(V) of
the Act, for all services paid under the OPPS in CY 2009, and in
calendar years thereafter, the percentage is 40 percent of the APC
payment rate. Section 1833(t)(3)(B)(ii) of the Act provides that, for a
covered OPD service (or group of such services) furnished in a year,
the national unadjusted copayment amount cannot be less than 20 percent
of the OPD fee schedule amount. Sections 1834(d)(2)(C)(ii) and
(d)(3)(C)(ii) of the Act further require that the copayment for
screening flexible sigmoidoscopies and screening colonoscopies be equal
to 25 percent of the payment amount. Since the beginning of the OPPS,
we have applied the 25-percent copayment to screening flexible
sigmoidoscopies and screening colonoscopies.
[[Page 41467]]
2. Proposed Copayment
For CY 2009, we are proposing to determine copayment amounts for
new and revised APCs using the same methodology that we implemented for
CY 2004. We refer readers to the November 7, 2003 OPPS final rule with
comment period (68 FR 63458). In addition, we are proposing to use the
same rounding methodology implemented in CY 2008 in instances where the
application of our standard copayment methodology would result in a
copayment amount that is less than 20 percent and cannot be rounded,
under standard rounding principles, to 20 percent. (We refer readers to
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687).) The
proposed national unadjusted copayment amounts for services payable
under the OPPS that would be effective January 1, 2009 are shown in
Addendum A and Addendum B to this proposed rule. As discussed in
section XVI.D. of this proposed rule, we are proposing that the
Medicare beneficiary's minimum unadjusted copayment and national
unadjusted copayment for a service to which a reduced national
unadjusted payment rate applies would equal the product of the
reporting ratio and the national unadjusted copayment, or the product
of the reporting ratio and the minimum unadjusted copayment,
respectively, for the service.
3. Calculation of a Proposed Adjusted Copayment Amount for an APC Group
Individuals interested in calculating their proposed national
copayment liability for a given service provided by a hospital that met
or failed to meet its HOP QDRP reporting requirements should follow the
formulas presented in the following steps.
Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its payment rate.
For example, using APC 0019, $71.87 is 24.938 percent of the proposed
full national unadjusted payment rate of $288.20.
The formula below is a mathematical representation of Step 1
discussed above and calculates national copayment as a percentage of
national payment for a given service.
b = Beneficiary payment percentage
b = national unadjusted copayment for APC/national unadjusted payment
rate for APC
Step 2. Calculate the appropriate wage-adjusted payment rate for
the APC for the provider in question, as indicated in section II.G. of
this proposed rule. Calculate the rural adjustment for eligible
providers as indicated in section II.G. of this proposed rule.
Step 3. Multiply the percentage calculated in Step 1 by the payment
rate calculated in Step 2. The result is the wage-adjusted copayment
amount for the APC.
The formula below is a mathematical representation of Step 3
discussed above and applies the beneficiary percentage to the adjusted
payment rate for a service calculated under II.G. above, with and
without the rural adjustment, to calculate the proposed adjusted
beneficiary copayment for a given service.
Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment
* b
Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted
Medicare Payment * 1.071)* b
Step 4. For a hospital that failed to meet its HOP QDRP reporting
requirements, multiply the copayment calculated in Step 3 by the
reporting ratio of 0.981.
The proposed unadjusted copayments for services payable under the
OPPS that would be effective January 1, 2009 are shown in Addenda A and
B to this proposed rule. Please note that the proposed national
unadjusted payment rates and copayment rates shown in Addenda A and B
to this proposed rule reflect the full market basket conversion factor
increase as discussed in section XVI.D. of this proposed rule.
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New HCPCS and CPT Codes
1. Proposed Treatment of New HCPCS Codes Included in the April and July
Quarterly OPPS Updates for CY 2008
During the April and July quarters of CY 2008, we created a total
of 11 new Level II HCPCS codes that were not addressed in the CY 2008
OPPS/ASC final rule with comment period that updated the CY 2008 OPPS.
For the April quarter of CY 2008, we recognized for separate payment a
total of four new Level II HCPCS codes, specifically C9241 (Injection,
doripenem, 10 mg); Q4096 (Injection, von willebrand factor complex,
human, ristocetin cofactor (not otherwise specified), per i.u.
VWF:RCO); Q4097 (Injection, immune globulin (Privigen), intravenous,
non-lyophilized (e.g., liquid), 500 mg); and Q4098 (Injection, iron
dextran, 50 mg). For the July quarter of CY 2008, we recognized a total
of seven new Level II HCPCS codes, specifically C9242 (Injection,
fosaprepitant, 1 mg); C9356 (Tendon, porous matrix of cross-linked
collagen and glycosaminoglycan matrix (TenoGlide Tendon Protector
Sheet), per square centimeter); C9357 (Dermal substitute, granulated
cross-linked collagen and glycosaminoglycan matrix (Flowable Wound
Matrix), 1 cc); C9358 (Dermal substitute, native, non-denatured
collagen (SurgiMend Collagen Matrix), per 0.5 square centimeters);
G0398 (Home sleep study test (HST) w/type II portable monitor,
unattended; minimum of 7 channels: EEG, EOG, EMG, ECG/heart rate,
airflow, respiratory effort and oxygen saturation); G0399 (Home sleep
test (HST) with type III portable monitor, unattended; minimum of 4
channels: 2 respiratory movement/airflow, 1 ECG/heart rate and 1 oxygen
saturation); and G0400 (Home sleep test (HST) with type IV portable
monitor, unattended; minimum of 3 channels). We designated the payment
status of these codes and added them either through the April update
(Transmittal 1487, Change Request 5999, dated April 8, 2008) or the
July update of the CY 2008 OPPS.
In this proposed rule, we are soliciting public comment on the
status indicators, APC assignments, and payment rates of these codes,
which are listed in Table 10 and Table 11 of this proposed rule.
Because of the timing of this proposed rule, the codes implemented
through the July 2008 OPPS update are not included in Addendum B to
this proposed rule. We
[[Page 41468]]
are proposing to assign these new HCPCS codes for CY 2009 to APCs with
the proposed payment rates as displayed in Table 11 and incorporate
them into Addendum B to our final rule with comment period for CY 2009,
which is consistent with our annual APC updating policy. The HCPCS
codes implemented through the April 2008 OPPS update and displayed in
Table 10 are included in Addendum B to this proposed rule, where their
proposed payment rates can also be found.
Table 10.--New HCPCS Codes Implemented in April 2008
----------------------------------------------------------------------------------------------------------------
Proposed CY 2009 status Proposed CY
HCPCS code Long descriptor indicator 2009 APC
----------------------------------------------------------------------------------------------------------------
C9241................................... Injection, doripenem, 10 mg.... G 9241
Q4096................................... Injection, von willebrand K 1213
factor complex, human,
ristocetin cofactor (not
otherwise specified), per i.u.
VWF:RCO.
Q4097................................... Injection, immune globulin K 1214
(Privigen), intravenous, non-
lyophilized (e.g., liquid),
500 mg.
Q4098................................... Injection, iron dextran, 50 mg. K 1215
----------------------------------------------------------------------------------------------------------------
Table 11.--New HCPCS Codes Implemented in July 2008
----------------------------------------------------------------------------------------------------------------
Proposed CY
Proposed CY 2009 Proposed CY 2009
HCPCS code Long descriptor status indicator 2009 APC payment
rate
----------------------------------------------------------------------------------------------------------------
C9242 *............................ Injection, fosaprepitant, 1 G 9242 $1.61
mg.
C9356 *............................ Tendon, porous matrix of G 9356 16.92
cross-linked collagen and
glycosaminoglycan matrix
(TenoGlide Tendon
Protector Sheet), per
square centimeter.
C9357 *............................ Dermal substitute, G 9357 883.33
granulated cross-linked
collagen and
glycosaminoglycan matrix
(Flowable Wound Matrix), 1
cc.
C9358 *............................ Dermal substitute, native, G 9358 10.38
non-denatured collagen
(SurgiMend Collagen
Matrix), per 0.5 square
centimeters.
G0398.............................. Home sleep study test (HST) S 0213 152.52
with type II portable
monitor, unattended;
minimum of 7 channels:
EEG, EOG, EMG, ECG/heart
rate, airflow, respiratory
effort and oxygen
saturation.
G0399.............................. Home sleep test (HST) with S 0213 152.52
type III portable monitor,
unattended; minimum of 4
channels: 2 respiratory
movement/airflow, 1 ECG/
heart rate and 1 oxygen
saturation.
G0400.............................. Home sleep test (HST) with S 0213 152.52
type IV portable monitor,
unattended; minimum of 3
channels.
----------------------------------------------------------------------------------------------------------------
* The drug payment rates displayed in Table 11 reflect the July 2008 ASP data.
2. Proposed Treatment of New Category I and III CPT Codes and Level II
HCPCS Codes
As has been our practice in the past, we implement new Category I
and III CPT codes and new Level II HCPCS codes through program
transmittals, which are released in the summer through the fall of each
year for annual updating, effective January 1, in the final rule
updating the OPPS for the following calendar year. These codes are
flagged with comment indicator ``NI'' in Addendum B to the OPPS/ASC
final rule with comment period to indicate that we are assigning them
an interim payment status which is subject to public comment.
Specifically, the status indicator, the APC assignment, or both, for
all such codes flagged with comment indicator ``NI'' will be open to
public comment in the CY 2009 OPPS/ASC final rule with comment period.
We are proposing to continue this recognition and process for CY 2009.
New Category I and III CPT codes, as well as new Level II HCPCS codes,
effective January 1, 2009, will be listed in Addendum B to the CY 2009
OPPS/ASC final rule with comment period and designated using comment
indicator ``NI.'' We will respond to all comments received concerning
these codes in a subsequent final rule for the next calendar year's
OPPS/ASC update.
In addition, we are proposing to continue our policy of the last 3
years of recognizing new mid-year CPT codes, generally Category III CPT
codes, that the American Medical Association (AMA) releases in January
for implementation the following July through the OPPS quarterly update
process. Therefore, for CY 2009, we are proposing to include in
Addendum B to the CY 2009 OPPS/ASC final rule with comment period the
new Category III CPT codes released in January 2008 for implementation
on July 1, 2008 (through the OPPS quarterly update process), and the
new Category III codes released in July 2008 for implementation on
January 1, 2009. However, only those new Category III CPT codes
implemented effective January 1, 2009, will be flagged with comment
indicator ``NI'' in Addendum B to the CY 2009 OPPS/ASC final rule with
comment period, to indicate that we have assigned them an interim
payment status which is subject to public comment. Category III CPT
codes implemented in July 2008, which appear in Table 12 below, are
subject to comment through this proposed rule, and we are proposing to
finalize their status in the CY 2009 OPPS/ASC final rule with comment
period.
[[Page 41469]]
TABLE 12.--Category III CPT Codes Implemented in July 2008
----------------------------------------------------------------------------------------------------------------
Proposed CY 2009
CPT code Long descriptor status indicator Proposed CY 2009 APC
----------------------------------------------------------------------------------------------------------------
0188T............................... Remote real-time interactive M Not applicable.
videoconferenced critical
care, evaluation and
management of the
critically ill or
critically injured patient;
first 30-74 minutes.
0189T............................... Remote real-time interactive M Not applicable.
videoconferenced critical
care, evaluation and
management of the
critically ill or
critically injured patient;
each additional 30 minutes.
0190T............................... Placement of intraocular T 0237.
radiation source applicator.
0191T............................... Insertion of anterior T 0234.
segment aqueous drainage
device, without extraocular
reservoir; internal
approach.
0192T............................... Insertion of anterior T 0234.
segment aqueous drainage
device, without extraocular
reservoir; external
approach.
----------------------------------------------------------------------------------------------------------------
B. Proposed OPPS Changes--Variations Within APCs
1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient services.
Section 1833(t)(2)(B) of the Act provides that this classification
system may be composed of groups of services, so that services within
each group are comparable clinically and with respect to the use of
resources. In accordance with these provisions, we developed a grouping
classification system, referred to as APCs, as set forth in Sec.
419.31 of the regulations. We use Level I and Level II HCPCS codes and
descriptors to identify and group the services within each APC. The
APCs are organized such that each group is homogeneous both clinically
and in terms of resource use. Using this classification system, we have
established distinct groups of similar services, as well as medical
visits. We also have developed separate APC groups for certain medical
devices, drugs, biologicals, therapeutic radiopharmaceuticals, and
brachytherapy devices.
We have packaged into payment for each procedure or service within
an APC group the costs associated with those items or services that are
directly related to and supportive of performing the main independent
procedures or furnishing the services. Therefore, we do not make
separate payment for these packaged items or services. For example,
packaged items and services include: (1) Use of an operating,
treatment, or procedure room; (2) use of a recovery room; (3)
observation services; (4) anesthesia; (5) medical/surgical supplies;
(6) pharmaceuticals (other than those for which separate payment may be
allowed under the provisions discussed in section V. of this proposed
rule); (7) incidental services such as venipuncture; and (8) guidance
services, image processing services, intraoperative services, imaging
supervision and interpretation services, diagnostic
radiopharmaceuticals, and contrast media. Further discussion of
packaged services is included in section II.A.4. of this proposed rule.
In CY 2008, we implemented composite APCs to provide a single
payment for groups of services that are typically performed together
during a single clinical encounter and that result in the provision of
a complete service. Under current CY 2008 OPPS policy, we provide
composite APC payment for certain extended assessment and management
services, low dose rate prostate brachytherapy, cardiac
electrophysiologic evaluation and ablation, and mental health services.
We also are proposing for CY 2009 a composite APC payment methodology
for multiple imaging services. Further discussion of composite APCs is
included in section II.A.2.e. of this proposed rule.
Under the OPPS, we generally pay for hospital outpatient services
on a rate-per-service basis, where the service may be reported with one
or more HCPCS codes. Payment varies according to the APC group to which
the independent service or combination of services is assigned. Each
APC weight represents the hospital median cost of the services included
in that APC relative to the hospital median cost of the services
included in APC 0606 (Level 3 Hospital Clinic Visits). The APC weights
are scaled to APC 0606 because it is the middle level clinic visit APC
(that is, where the level 3 clinic visit CPT code of five levels of
clinic visits is assigned), and because middle level clinic visits are
among the most frequently furnished services in the hospital outpatient
setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review
the components of the OPPS not less than annually and to revise the
groups and relative payment weights and make other adjustments to take
into account changes in medical practice, changes in technology, and
the addition of new services, new cost data, and other relevant
information and factors. Section 1833(t)(9)(A) of the Act, as amended
by section 201(h) of the BBRA, also requires the Secretary, beginning
in CY 2001, to consult with an outside panel of experts to review the
APC groups and the relative payment weights (the APC Panel
recommendations for specific services for the CY 2009 OPPS and our
responses to them are discussed in the relevant specific sections
throughout this proposed rule).
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median cost, or mean cost as elected by the Secretary, for an
item or service in the group is more than 2 times greater than the
lowest median cost for an item or service within the same group
(referred to as the ``2 times rule''). We use the median cost of the
item or service in implementing this provision. The statute authorizes
the Secretary to make exceptions to the 2 times rule in unusual cases,
such as low-volume items and services.
2. Application of the 2 Times Rule
In accordance with section 1833(t)(2) of the Act and Sec. 419.31
of the regulations, we annually review the items and services within an
APC group to determine, with respect to comparability of the use of
resources, if the median cost of the highest cost item or service
within an APC group is more than 2 times greater than the median of the
lowest cost item or service within that same group (``2 times rule'').
We are proposing to make exceptions to this limit on the variation of
costs within each APC group in unusual cases such as low-volume items
and services.
[[Page 41470]]
During the APC Panel's March 2008 meeting, we presented median cost
and utilization data for services furnished during the period of
January 1, 2007 through September 30, 2007, about which we had concerns
or about which the public had raised concerns regarding their APC
assignments, status indicator assignments, or payment rates. The
discussions of most service-specific issues, the APC Panel
recommendations, if any, and our proposals for CY 2009 are contained
principally in sections III.C. and III.D. of this proposed rule.
In addition to the assignment of specific services to APCs that we
discussed with the APC Panel, we also identified APCs with 2 times
violations that were not specifically discussed with the APC Panel but
for which we are proposing changes to their HCPCS codes' APC
assignments in Addendum B to this proposed rule. In these cases, to
eliminate a 2 times violation or to improve clinical and resource
homogeneity, we are proposing to reassign the codes to APCs that
contain services that are similar with regard to both their clinical
and resource characteristics. We also are proposing to rename existing
APCs, discontinue existing APCs, or create new clinical APCs to
complement proposed HCPCS code reassignments. In many cases, the
proposed HCPCS code reassignments and associated APC reconfigurations
for CY 2009 included in this proposed rule are related to changes in
median costs of services that are observed in the CY 2007 claims data
newly available for CY 2009 ratesetting. We also are proposing changes
to the status indicators for some codes that are not specifically and
separately discussed in this proposed rule. In these cases, we are
proposing to change the status indicators for some codes because we
believe that another status indicator would more accurately describe
their payment status from an OPPS perspective based on the policies
that we are proposing for CY 2009 or because we are proposing new
status indicators to differentiate a related group of services from
other services that previously shared the same status indicator.
Addendum B to this proposed rule identifies with comment indicator
``CH'' those HCPCS codes for which we are proposing a change to the APC
assignment or status indicator as assigned in the April 2008 Addendum B
update (via Transmittal 1487, Change Request 5999, dated April 8,
2008). HCPCS codes with proposed CY 2009 changes in status indicator
assignments from ``Q'' to ``Q1,'' from ``Q'' to ``Q2,'' or from ``Q''
to ``Q3'' are an exception to this identification practice because they
are not flagged with comment indicator ``CH'' in Addendum B to this
proposed rule. These proposed changes in status indicators are to
facilitate policy transparency and operational logic rather than
reflect changes in OPPS payment policy for these services, hence we
believe that identifying these HCPCS codes with ``CH'' could be
confusing to the public.
3. Proposed Exceptions to the 2 Times Rule
As discussed earlier, we may make exceptions to the 2 times limit
on the variation of costs within each APC group in unusual cases such
as low-volume items and services. Taking into account the APC changes
that we are proposing for CY 2009 based on the APC Panel
recommendations discussed mainly in sections III.C. and III.D. of this
proposed rule, the other proposed changes to status indicators and APC
assignments as identified in Addendum B to this proposed rule, and the
use of CY 2007 claims data to calculate the median costs of procedures
classified in the APCs, we reviewed all the APCs to determine which
APCs would not satisfy the 2 times rule. We used the following criteria
to decide whether to propose exceptions to the 2 times rule for
affected APCs:
Resource homogeneity
Clinical homogeneity
Hospital outpatient setting
Frequency of service (volume)
Opportunity for upcoding and code fragments.
For a detailed discussion of these criteria, we refer readers to
the April 7, 2000 OPPS final rule with comment period (65 FR 18457).
Table 13 below lists the APCs that we are proposing to exempt from
the 2 times rule for CY 2009 based on the criteria cited above. For
cases in which a recommendation by the APC Panel appeared to result in
or allow a violation of the 2 times rule, we generally accepted the APC
Panel's recommendation because those recommendations were based on
explicit consideration of resource use, clinical homogeneity, hospital
specialization, and the quality of the CY 2007 claims data used to
determine the APC payment rates that we are proposing for CY 2009. The
median costs for hospital outpatient services for these and all other
APCs that were used in the development of this proposed rule can be
found on the CMS Web site at: http://www.cms.hhs.gov/
HospitalOutpatientPPS/01_overview.asp.
Table 13.--Proposed APC Exceptions to the 2 Times Rule for CY 2009
------------------------------------------------------------------------
APC APC title
------------------------------------------------------------------------
0060...................................... Manipulation Therapy.
0080...................................... Diagnostic Cardiac
Catheterization.
0093...................................... Vascular Reconstruction/
Fistula Repair without
Device.
0105...................................... Repair/Revision/Removal of
Pacemakers, AICDs, or
Vascular Devices.
0141...................................... Level I Upper GI Procedures.
0245...................................... Level I Cataract Procedures
without IOL Insert.
0303...................................... Treatment Device
Construction.
0330...................................... Dental Procedures.
0409...................................... Red Blood Cell Tests.
0426...................................... Level II Strapping and Cast
Application.
0432...................................... Health and Behavior
Services.
0604...................................... Level 1 Hospital Clinic
Visits.
------------------------------------------------------------------------
C. New Technology APCs
1. Background
In the November 30, 2001 final rule (66 FR 59903), we finalized
changes to the time period a service was eligible for payment under a
New Technology APC. Beginning in CY 2002, we retain services within New
Technology APC groups until we gather sufficient claims data to enable
us to assign the service to a clinically appropriate APC. This policy
allows us to move a service from a New Technology APC in less than 2
years if sufficient data are available. It also allows us to retain a
service in a New Technology APC for more than 2 years if sufficient
data upon which to base a decision for reassignment have not been
collected.
We note that the cost bands for New Technology APCs range from $0
to $50 in increments of $10, from $50 to $100 in increments of $50,
from $100 through $2,000 in increments of $100, and from $2,000 through
$10,000 in increments of $500. These increments, which are in two
parallel sets of New Technology APCs, one with status indicator ``S''
and the other with status indicator ``T,'' allow us to price new
technology services more appropriately and consistently.
2. Proposed Movement of Procedures from New Technology APCs to Clinical
APCs
As we explained in the November 30, 2001 final rule (66 FR 59897),
we generally keep a procedure in the New Technology APC to which it is
initially assigned until we have collected data sufficient to enable us
to move the procedure to a clinically appropriate
[[Page 41471]]
APC. However, in cases where we find that our original New Technology
APC assignment was based on inaccurate or inadequate information, or
where the New Technology APCs are restructured, we may, based on more
recent resource utilization information (including claims data) or the
availability of refined New Technology APC cost bands, reassign the
procedure or service to a different New Technology APC that most
appropriately reflects its cost.
Consistent with our current policy, for CY 2009 we are proposing to
retain services within New Technology APC groups until we gather
sufficient claims data to enable us to assign the service to a
clinically appropriate APC. The flexibility associated with this policy
allows us to move a service from a New Technology APC in less than 2
years if sufficient data are available. It also allows us to retain a
service in a New Technology APC for more than 2 years if sufficient
hospital claims data upon which to base a decision for reassignment
have not been collected. HCPCS codes C9725 (Placement of endorectal
intracavitary applicator for high intensity brachytherapy), C9726
(Placement and removal (if performed) of applicator into breast for
radiation therapy), and C9727 (Insertion of implants into the soft
palate; minimum of three implants), which are presented below in Table
14 of this proposed rule, represent services assigned to New Technology
APCs for CY 2008 for which we believe we have sufficient claims data to
propose their reassignment to clinically appropriate APCs for CY 2009.
These 3 procedures have been assigned to their New Technology APCs for
at least 3 years, thereby providing us with sufficient data from at
least 2 years of hospital claims upon which to base our proposed
reassignments. In addition, these three procedures are clinically
similar to other services currently paid through clinical APCs under
the OPPS and for which we have substantial claims data regarding
hospital costs. Therefore, for CY 2009, we are proposing to reassign
these procedures to clinically appropriate APCs, applying their CY 2007
claims data to develop their clinical APC median costs upon which
payments would be based. These procedures and their proposed APC
assignments are displayed in Table 14 below.
HCPCS code C9723 (Dynamic infrared blood perfusion imaging (diri))
was assigned to New Technology APC 1502 (New Technology--Level II ($50-
$100)) when it was implemented in April 2005. However, based on our
claims data for the past 3 years, which have shown no utilization for
this code, we are proposing to delete HCPCS code C9723 on December 31,
2008.
Table 14.--Proposed CY 2009 APC Reassignments of New Technology Procedures to Clinical APCs
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
HCPCS code Short descriptor CY 2008 SI CY 2008 APC 2009 APC 2009 SI
----------------------------------------------------------------------------------------------------------------
C9725.......................... Placement of S 1507 0164 T
endorectal
intracavitary
applicator for
high intensity
brachytherapy.
C9726.......................... Placement and S 1508 0028 T
removal (if
performed) of
applicator into
breast for
radiation therapy.
C9727.......................... Insertion of S 1510 0252 T
implants into the
soft palate;
minimum of three
implants.
----------------------------------------------------------------------------------------------------------------
D. Proposed OPPS APC-Specific Policies
1. Trauma Response Associated With Hospital Critical Care Services (APC
0618)
In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68133
through 68134), we discussed the creation of HCPCS code G0390 (Trauma
response team activation associated with hospital critical care
service), which became effective January 1, 2007. HCPCS code G0390 is
reported by hospitals when providing critical care services in
association with trauma response team activation. HCPCS code G0390 has
been assigned to APC 0618 (Trauma Response with Critical Care) since CY
2007, with payment rates of approximately $495 and $330, for CYs 2007
and 2008, respectively. The creation of HCPCS code G0390 enables us to
pay differentially for critical care when trauma response team
activation is associated with critical care services and when there is
no trauma response team activation. We instructed hospitals to continue
to report CPT codes 99291 (Critical care, evaluation and management of
the critically ill or critically injured patient; first 30-74 minutes)
and 99292 (Critical care, evaluation and management of the critically
ill or critically injured patient; each additional 30 minutes (List
separately in addition to code for primary service)) for critical care
services when they also report HCPCS code G0390.
For CY 2007 and CY 2008, we calculated the median cost for APC 0617
(Critical Care) to which CPT code 99291 is assigned using the subset of
single claims for CPT code 99291 that did not include charges under
revenue code 068x, the trauma revenue code, reported on the same day.
We established the median cost for APC 0618 (Trauma Response with
Critical Care) by calculating the difference in median costs between
the two subsets of single claims for CPT code 99291 representing the
reporting of critical care services with and without revenue code 068x
charges reported on the same day. For a complete description of the
history of the policy and development of the payment methodology for
these services, we refer readers to the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68133 through 68134). We provided billing
guidance in CY 2006 in Transmittal 1139, Change Request 5438, issued on
December 22, 2006, specifically clarifying when it would be appropriate
to report HCPCS code G0390. The I/OCE logic only accepts HCPCS code
G0390 when it is reported with revenue code 068x and CPT code 99291 on
the same claim and on the same date of service.
For CY 2009, we are proposing a median cost for APC 0617 of
approximately $488 and a median cost for APC 0618 of approximately
$989. For CY 2009 OPPS ratesetting, we are using claims data from CY
2007 that also include claims for HCPCS code G0390, as CY 2007 is the
initial year that we established OPPS payment for HCPCS code G0390. We
are proposing to use the line-item median cost for HCPCS code G0390 in
the CY 2007 claims to set the median cost for APC 0618, as HCPCS code
G0390 is the only code assigned to that APC. As discussed in section
II.A.1.b. of this proposed rule, we are proposing to add HCPCS code
G0390 to the CY 2009 bypass list to isolate the line-item cost for
HCPCS code G0390 and ensure that the critical
[[Page 41472]]
care claims for CPT code 99291 that are reported with HCPCS code G0390
are available to set the medians for APC 0617 and composite APC 8003.
The costs of packaged revenue code charges and HCPCS codes for services
with status indicator ``N'' on a claim with HCPCS code G0390 would be
associated with CPT code 99291 for ratesetting, if the claim for CPT
code 99291 is a single or ``pseudo'' single bill.
For APC 0617, we are proposing to calculate the median cost using
our standard methodology that excludes those single claims for critical
care services that are eligible for payment through the Level II
extended assessment and management composite APC, that is APC 8003, as
described in section II.A.2.e.(1) of this proposed rule. We believe
that these proposed refinements in median cost calculations would
result in more accurate cost estimates and payments for APCs 0617 and
0618 for CY 2009.
2. Suprachoroidal Delivery of Pharmacologic Agent (APC 0236)
CPT code 0186T (Suprachoroidal delivery of pharmacologic agent
(does not include supply of medication)) is a new code for CY 2008. It
was released on the AMA CPT Web site on July 1, 2007, and implemented
on January 1, 2008. In the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66997), we assigned this code to APC 0236 (Level II
Posterior Segment Eye Procedures) with a CY 2008 payment rate of
approximately $1,161. We also assigned this code comment indicator
``NI'' in Addendum B to the CY 2008 OPPS/ASC final rule with comment
period to indicate that it is a new code for CY 2008 with an interim
payment status subject to public comment following publication of that
rule.
As has been our practice in the past, we implement new HCPCS codes
in the OPPS/ASC final rule with comment period, at which time we invite
public comment on our interim treatment of the new codes. We
subsequently respond to those comments in the final rule with comment
period for the following year's OPPS update.
In its March 2008 presentation to the APC Panel, a presenter
requested the reassignment of CPT code 0186T from APC 0236 to APC 0237
(Level III Posterior Segment Eye Procedures), which has a CY 2008
payment rate of approximately $1,774. The presenter indicated that CPT
code 0186T is analogous to CPT code 67027 (Implantation of intravitreal
drug delivery system (e.g., ganciclovir implant), includes concomitant
removal of vitreous), which is assigned to APC 0672 (Level IV Posterior
Segment Eye Procedures) with a CY 2008 payment rate of about $2,370.
Although the presenter stated that both procedures share similar
clinical characteristics and resource costs, the presenter believed
that CPT code 0186T would be most appropriately assigned to APC 0237
based on the procedure's estimated hospital cost. The APC Panel noted
that because the CPT code is new and there are no claims data for this
procedure, the APC Panel would not make a specific CY 2009 APC
assignment recommendation to CMS at this time. However, the APC Panel
recommended that CMS share with the APC Panel the claims data for CPT
code 0186T at the first CY 2009 APC Panel meeting, and that CMS
reevaluate the assignment of CPT code 0186T to APC 0236 on the basis of
those data. We are accepting the recommendation of the APC Panel and
will provide the initial OPPS claims data available for this CPT code,
based on CY 2008 claims data, for the first CY 2009 APC Panel meeting.
These data will not be available until the CY 2010 OPPS update
rulemaking cycle.
Under the OPPS, we generally assign a new Category III CPT code to
an APC if we believe that the procedure, if covered, would be
appropriate for separate payment under the OPPS. A specific assignment
to a clinical APC where HCPCS codes with comparable clinical and
resource characteristics also reside is based on a variety of types of
information including, but not limited to: Advice from our medical
advisors, information from specialty societies, review of resource
costs for related services from historical hospital claims data,
consideration of the clinical similarity of the service to existing
procedures, and review of any other information available to us.
Based upon our further review and analysis of the clinical
characteristics and resource costs associated with CPT code 0186T, we
agree with the presenter that the most appropriate CY 2009 APC
assignment for this procedure is APC 0237. We believe that the other
procedures also assigned to APC 0237 are similar to the procedure
described by CPT code 0186T. Therefore, for CY 2009, we are proposing
to reassign CPT code 0186T from APC 0236 to APC 0237, which has a
proposed median cost of approximately $1,447. We also note that because
CPT code 0186T describes a specific drug administration service, the
drug itself would be separately reported under the appropriate Level II
HCPCS drug code.
3. Closed Treatment of Fracture of Finger/Toe/Trunk (APC 0043)
We received a comment to the CY 2008 OPPS/ASC proposed rule on the
variety of procedures assigned to APC 0043 (Closed Treatment Fracture
Finger/Toe/Trunk). The commenter did not agree with the placement of
various procedures in APC 0043 as many of the procedures vary in
resource costs. In particular, the commenter asserted that the costs
associated with finger treatments, hip dislocations, and spinal
fractures vary significantly, and further stated that the costs of
treating spinal fractures are significantly greater than the costs
associated with finger or toe fractures. The commenter also expressed
concern that grouping all of the approximately 150 procedures in one
clinical APC violated the 2 times rule, and that continuing to exempt
APC 0043 from the 2 times rule was not appropriate. The commenter
recommended that CMS pay appropriately for these procedures, and stated
that this could be achieved by dividing the procedures currently
assigned to APC 0043 into several APCs. However, the commenter did not
make any specific recommendations regarding alternative APC
configurations. Because APC 0043 contains so many different fracture
treatment procedures with low volume, we were concerned that any
restructuring for CY 2008 without the benefit of public comment could
result in the reconfiguration of APCs that did not reflect improved
clinical and resource homogeneity over the proposed configuration.
Therefore, we did not reconfigure APC 0043 for CY 2008, and we
finalized a payment rate for APC 0043 of about $113.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66723), we stated that we agreed with the commenter that grouping all
of the closed fracture treatment procedures in one APC may not
accurately distinguish the more expensive from the less resource-
intensive fracture treatment procedures. However, we also explained
that we found that there were only 13 procedures that were significant
procedures with the frequency necessary to assess the APC's alignment
with the 2 times rule. The other procedures were all very low volume
and, therefore, not significant procedures for purposes of evaluating
the APC with respect to the 2 times rule. We noted that APC 0043 has
been exempted from the 2 times rule for the past 7 years under the
OPPS, and we had not previously received public comments regarding the
structure of this APC. In that same rule (72 FR 66723) we
[[Page 41473]]
specifically invited public recommendations on potential alternative
APC configurations for the services currently assigned to APC 0043 for
the CY 2009 APC review process. We received no public comments on this
APC issue.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66723), we also stated that we would bring this APC issue to the
attention of the APC Panel at its March 2008 meeting and requested
input as to how to most appropriately categorize the procedures in APC
0043. Based on the updated CY 2007 hospital outpatient claims data
available for the March 2008 APC Panel meeting, we presented a possible
reconfiguration of APC 0043 for the APC Panel's consideration. In
particular, the potential reconfiguration reviewed and discussed by the
APC Panel would delete APC 0043 and replace it with three new APCs,
configured based on the hospital resource data from the CY 2007 claims
data, as well as the clinical characteristics of the procedures
currently assigned to APC 0043. The APC Panel recommended that CMS
adopt the approach that CMS described to the APC Panel to reconfigure
APC 0043 into three new APCs, and we are accepting the APC Panel's
recommendation for CY 2009. Therefore, for CY 2009, we are proposing
three new APCs to replace APC 0043, with proposed configurations as
displayed in Table 15 below.
Based on these configurations, proposed new APC 0129 (Level I
Closed Treatment Fracture Finger/Toe/Trunk) has a proposed APC median
cost of approximately $104, with the HCPCS code-specific median costs
of the significant procedures ranging from approximately $74 to $124.
Proposed new APC 0138 (Level II Closed Treatment Fracture Finger/Toe/
Trunk) has a proposed APC median cost of approximately $397, with only
one significant procedure with a HCPCS code-specific median cost of
approximately $399. Proposed new APC 0139 (Level III Closed Treatment
Fracture Finger/Toe/Trunk) has a proposed APC median cost of
approximately $1,340, with only one significant volume HCPCS code whose
median cost is approximately $1,574.
While all three proposed APCs contain many procedures that are very
low in volume, this reconfiguration reflects an attempt to realign the
procedures previously assigned to APC 0043 based on their clinical
characteristics and resource costs into APC groups that are more
homogeneous. Therefore, for CY 2009, we are proposing to reconfigure
APC 0043 by deleting APC 0043 and reassigning the HCPCS codes
previously assigned to APC 0043 to proposed new APCs 0129, 0138, and
0139.
Table 15.--Proposed New APCs for Closed Treatment Fracture of Finger/Toe/Trunk
----------------------------------------------------------------------------------------------------------------
Proposed CY
Proposed CY 2009 new APC HCPCS code SI Short descriptor 2009 APC
median cost
----------------------------------------------------------------------------------------------------------------
0129................................ 21800 T Treatment of rib fracture... $103.52
21820 T Treat sternum fracture......
22305 T Treat spine process fracture
23500 T Treat clavicle fracture.....
23540 T Treat clavicle dislocation..
23570 T Treat shoulder blade fx.....
23600 T Treat humerus fracture......
23620 T Treat humerus fracture......
23650 T Treat shoulder dislocation..
23675 T Treat dislocation/fracture..
23929 T Shoulder surgery procedure..
24500 T Treat humerus fracture......
24505 T Treat humerus fracture......
24530 T Treat humerus fracture......
24560 T Treat humerus fracture......
24565 T Treat humerus fracture......
24576 T Treat humerus fracture......
24600 T Treat elbow dislocation.....
24640 T Treat elbow dislocation.....
24650 T Treat radius fracture.......
24670 T Treat ulnar fracture........
24675 T Treat ulnar fracture........
24999 T Upper arm/elbow surgery.....
25500 T Treat fracture of radius....
25530 T Treat fracture of ulna......
25535 T Treat fracture of ulna......
25560 T Treat fracture radius & ulna
25600 T Treat fracture radius/ulna..
25622 T Treat wrist bone fracture...
25630 T Treat wrist bone fracture...
25650 T Treat wrist bone fracture...
25660 T Treat wrist dislocation.....
25675 T Treat wrist dislocation.....
25680 T Treat wrist fracture........
25999 T Forearm or wrist surgery....
26600 T Treat metacarpal fracture...
26605 T Treat metacarpal fracture...
26641 T Treat thumb dislocation.....
26670 T Treat hand dislocation......
26700 T Treat knuckle dislocation...
26705 T Treat knuckle dislocation...
[[Page 41474]]
26720 T Treat finger fracture, each.
26725 T Treat finger fracture, each.
26740 T Treat finger fracture, each.
26742 T Treat finger fracture, each.
26750 T Treat finger fracture, each.
26755 T Treat finger fracture, each.
26770 T Treat finger dislocation....
26989 T Hand/finger surgery.........
27193 T Treat pelvic ring fracture..
27200 T Treat tail bone fracture....
27220 T Treat hip socket fracture...
27230 T Treat thigh fracture........
27250 T Treat hip dislocation.......
27256 T Treat hip dislocation.......
27265 T Treat hip dislocation.......
27267 T Cltx thigh fx...............
27299 T Pelvis/hip joint surgery....
27501 T Treatment of thigh fracture.
27503 T Treatment of thigh fracture.
27508 T Treatment of thigh fracture.
27516 T Treat thigh fx growth plate.
27517 T Treat thigh fx growth plate.
27520 T Treat kneecap fracture......
27530 T Treat knee fracture.........
27538 T Treat knee fracture(s)......
27550 T Treat knee dislocation......
27560 T Treat kneecap dislocation...
27599 T Leg surgery procedure.......
27750 T Treatment of tibia fracture.
27760 T Cltx medial ankle fx........
27767 T Cltx post ankle fx..........
27768 T Cltx post ankle fx w/mnpj...
27780 T Treatment of fibula fracture
27786 T Treatment of ankle fracture.
27788 T Treatment of ankle fracture.
27808 T Treatment of ankle fracture.
27816 T Treatment of ankle fracture.
27824 T Treat lower leg fracture....
27830 T Treat lower leg dislocation.
27899 T Leg/ankle surgery procedure.
28400 T Treatment of heel fracture..
28430 T Treatment of ankle fracture.
28435 T Treatment of ankle fracture.
28450 T Treat midfoot fracture, each
28455 T Treat midfoot fracture, each
28470 T Treat metatarsal fracture...
28475 T Treat metatarsal fracture...
28490 T Treat big toe fracture......
28495 T Treat big toe fracture......
28510 T Treatment of toe fracture...
28515 T Treatment of toe fracture...
28530 T Treat sesamoid bone fracture
28540 T Treat foot dislocation......
28600 T Treat foot dislocation......
28605 T Treat foot dislocation......
28630 T Treat toe dislocation.......
28660 T Treat toe dislocation.......
28899 T Foot/toes surgery procedure.
0138................................ 20660 T Apply, rem fixation device.. 397.39
22310 T Treat spine fracture........
23520 T Treat clavicle dislocation..
23525 T Treat clavicle dislocation..
23545 T Treat clavicle dislocation..
23575 T Treat shoulder blade fx.....
23665 T Treat dislocation/fracture..
24535 T Treat humerus fracture......
24577 T Treat humerus fracture......
24655 T Treat radius fracture.......
25505 T Treat fracture of radius....
[[Page 41475]]
25520 T Treat fracture of radius....
25565 T Treat fracture radius & ulna
25605 T Treat fracture radius/ulna..
25624 T Treat wrist bone fracture...
25635 T Treat wrist bone fracture...
26340 T Manipulate finger w/anesth..
26645 T Treat thumb fracture........
26675 T Treat hand dislocation......
27238 T Treat thigh fracture........
27246 T Treat thigh fracture........
27500 T Treatment of thigh fracture.
27510 T Treatment of thigh fracture.
27810 T Treatment of ankle fracture.
27818 T Treatment of ankle fracture.
27840 T Treat ankle dislocation.....
28570 T Treat foot dislocation......
0139................................ 22315 T Treat spine fracture........ 1,339.53
23505 T Treat clavicle fracture.....
23605 T Treat humerus fracture......
23625 T Treat humerus fracture......
24620 T Treat elbow fracture........
25259 T Manipulate wrist w/anesthes.
25690 T Treat wrist dislocation.....
26607 T Treat metacarpal fracture...
26706 T Pin knuckle dislocation.....
27502 T Treatment of thigh fracture.
27532 T Treat knee fracture.........
27752 T Treatment of tibia fracture.
27762 T Cltx med ankle fx w/mnpj....
27781 T Treatment of fibula fracture
27825 T Treat lower leg fracture....
27831 T Treat lower leg dislocation.
28405 T Treatment of heel fracture..
28575 T Treat foot dislocation......
----------------------------------------------------------------------------------------------------------------
4. Individual Psychotherapy (APCs 0322 and 0323)
APC 0323 (Extended Individual Psychotherapy) had a 2 times rule
violation for CYs 2007 and 2008, and was exempted from the 2 times rule
during those years. APC 0323 would continue to have a 2 times rule
violation in CY 2009 if its configuration is not adjusted. In the CY
2008 OPPS/ASC final rule with comment period (72 FR 66739), we agreed
to review APC 0323 at the next APC Panel meeting and seek the APC
Panel's guidance in reconfiguring this APC for CY 2009.
It was brought to our attention that a handful of CPT codes
describe psychotherapy services that could be appropriately provided
and reported as part of a partial hospitalization program, but would
not otherwise be appropriately reported by a HOPD for those
psychotherapy services. Specifically, the category heading in the 2008
CPT book specifies that the CPT codes listed in Table 16 below are to
be reported for services provided in an ``inpatient hospital, partial
hospital, or residential care facility.'' These CPT codes have been
assigned to APCs 0322 (Brief Individual Psychotherapy) and 0323 since
the implementation of the OPPS.
Table 16.--Inpatient Hospital, Partial Hospital, or Residential Care
Facility Psychotherapy Codes
------------------------------------------------------------------------
CPT code Long descriptor
------------------------------------------------------------------------
90816........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an inpatient hospital,
partial hospital or residential care
setting, approximately 20 to 30 minutes
face-to-face with the patient;
90817........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an inpatient hospital,
partial hospital or residential care
setting, approximately 20 to 30 minutes
face-to-face with the patient; with
medical evaluation and management
services.
90818........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an inpatient hospital,
partial hospital or residential care
setting, approximately 45 to 50 minutes
face-to-face with the patient;
90819........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an inpatient hospital,
partial hospital or residential care
setting, approximately 45 to 50 minutes
face-to-face with the patient; with
medical evaluation and management.
90821........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an inpatient hospital,
partial hospital or residential care
setting, approximately 75 to 80 minutes
face-to-face with the patient;
[[Page 41476]]
90822........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an inpatient hospital,
partial hospital or residential care
setting, approximately 75 to 80 minutes
face-to-face with the patient; with
medical evaluation and management
services.
90823........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an inpatient hospital, partial
hospital or residential care setting,
approximately 20 to 30 minutes face-to-
face with the patient;
90824........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an inpatient hospital, partial
hospital or residential care setting,
approximately 20 to 30 minutes face-to-
face with the patient; with medical
evaluation and management services.
90826........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an inpatient hospital, partial
hospital or residential care setting,
approximately 45 to 50 minutes face-to-
face with the patient;
90827........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an inpatient hospital, partial
hospital or residential care setting,
approximately 45 to 50 minutes face-to-
face with the patient; with medical
evaluation and management services.
90828........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an inpatient hospital, partial
hospital or residential care setting,
approximately 75 to 80 minutes face-to-
face with the patient;
90829........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an inpatient hospital, partial
hospital or residential care setting,
approximately 75 to 80 minutes face-to-
face with the patient; with medical
evaluation and management services.
------------------------------------------------------------------------
The 2008 CPT book also includes a parallel set of CPT codes whose
category heading in the CPT book specifies that these codes are to be
reported for services provided in the office or other outpatient
facilities. These CPT codes are listed in Table 17. These CPT codes
have also been assigned to APCs 0322 and 0323 since the implementation
of the OPPS.
Table 17.--Office or Other Outpatient Facility Psychotherapy Codes
------------------------------------------------------------------------
CPT code Long descriptor
------------------------------------------------------------------------
90804........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an office or outpatient
facility, approximately 20 to 30 minutes
face-to-face with the patient;
90805........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an office or outpatient
facility, approximately 20 to 30 minutes
face-to-face with the patient; with
medical evaluation and management
services.
90806........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an office or outpatient
facility, approximately 45 to 50 minutes
face-to-face with the patient;
90807........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an office or outpatient
facility, approximately 45 to 50 minutes
face-to-face with the patient; with
medical evaluation and management.
90808........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an office or outpatient
facility, approximately 75 to 80 minutes
face-to-face with the patient;
90809........................ Individual psychotherapy, insight
oriented, behavior modifying and/or
supportive, in an office or outpatient
facility, approximately 75 to 80 minutes
face-to-face with the patient; with
medical evaluation and management
services.
90810........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an office or outpatient facility,
approximately 20 to 30 minutes face-to-
face with the patient;
90811........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an office or outpatient facility,
approximately 20 to 30 minutes face-to-
face with the patient; with medical
evaluation and management services.
90812........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an office or outpatient facility,
approximately 45 to 50 minutes face-to-
face with the patient;
90813........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an office or outpatient facility,
approximately 45 to 50 minutes face-to-
face with the patient; with medical
evaluation and management services.
90814........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an office or outpatient facility,
approximately 75 to 80 minutes face-to-
face with the patient;
90815........................ Individual psychotherapy, interactive,
using play equipment, physical devices,
language interpreter, or other
mechanisms of non-verbal communication,
in an office or outpatient facility,
approximately 75 to 80 minutes face-to-
face with the patient; with medical
evaluation and management services.
------------------------------------------------------------------------
Our CY 2007 claims data for this proposed rule (excluding all
claims for partial hospitalization services) include approximately
10,000 OPPS claims for CPT codes 90816 through 90829, compared with
approximately 500,000 claims for CPT codes 90804 through 90815. We are
unclear as to what HOPD services these claims for CPT codes 90816
through 90829 represent and believe that these may be miscoded claims.
We do not believe that CPT codes 90816 through 90829 could be
appropriately reported for hospital outpatient services that are not
part of a partial hospitalization program. Therefore, for CY 2009, we
are proposing to assign status indicator ``P'' to CPT codes 90816
through 90829, indicating that these services may be billed
appropriately and paid under the
[[Page 41477]]
OPPS only when they are part of a partial hospitalization program.
Partial hospitalization services are not included in our ratesetting
process for nonpartial hospitalization OPPS services. Under this
proposal, hospitals would continue to report CPT codes 90804 through
90815 for individual psychotherapy services provided in the HOPD that
are not part of partial hospitalization services, consistent with CPT
instructions.
We recalculated the median costs for APCs 0322 and 0323, after
assigning status indicator ``P'' to CPT codes 90816 through 90829. As
partial hospitalization services only, the claims data for these codes
would only be considered for ratesetting with respect to partial
hospitalization services paid through the two proposed CY 2009 partial
hospitalization APCs, specifically APC 0172 (Level I Partial
Hospitalization (3 services)) and APC 0173 (Level II Partial
Hospitalization (4 or more services)), and no historical hospital
claims data would continue to map to APCs 0322 and 0323. We refer
readers to section X.B. of this proposed rule for a complete discussion
of the proposed CY 2009 partial hospitalization payment policy. The CY
2009 proposed median costs for APCs 0322 and 0323 are approximately $88
and $108, respectively. This new configuration for APC 0323 eliminates
the longstanding 2 times violation for this APC, although the median
cost remains approximately the same as it was for CYs 2007 and 2008.
During its March 2008 APC Panel meeting, the APC Panel recommended
that CMS restructure APC 0323 as described above, and that a similar
restructuring be considered for APC 0322. For CY 2009, we are adopting
the APC Panel's recommendation and, therefore, we are proposing to
assign status indicator ``P'' to CPT codes 90816 through 90829.
5. Implant Injection for Vesicoureteral Reflex (APC 0162)
Following publication of the CY 2008 OPPS/ASC final rule with
comment period, several members of the public contacted us to express
their concerns regarding decreased access to and inadequate payment for
CPT code 52327 (Cystourethroscopy, including ureteral catheterization,
with subureteric injection of implant material). The CY 2008 OPPS
payment for this procedure, which is assigned to APC 0162 (Level III
Cystourethroscopy and other Genitourinary Procedures), is approximately
$1,578. This procedure is primarily performed on pediatric patients to
correct an anatomical defect that causes urine to reflux back to the
kidneys (vesicoureteral reflux disease or VUR). From the perspective of
these stakeholders, the assignment of this procedure to APC 0162
provides inadequate payment to cover the hospital's cost for the
procedure, which they asserted requires expensive implant material.
Specifically, they stated that the currently available CPT and Level II
HCPCS coding lacks the specificity needed to properly account for the
cost of the ureteral implant, resulting in inadequate payment for this
procedure. In addition to receiving several letters on this subject, we
also met with several stakeholders about the concerns of pediatric
urologists regarding decreased access to and inadequate payment for
performance of this procedure.
At the March 2008 APC Panel meeting, a presenter requested that the
APC Panel recommend reassignment of CPT code 52327 from APC 0162 to APC
0385 (Level I Prosthetic Urological Procedures), which has a CY 2008
payment rate of approximately $5,327. The presenter indicated that
while CPT code 52327 is clinically similar to other procedures assigned
to APC 0162, it is not similar in terms of resource utilization. The
presenter stated that CPT code 52327 is the only procedure assigned to
APC 0162 that uses a high cost implant, yet it is paid the same as
procedures that do not. The APC Panel recommended that CMS consider
reassigning CPT code 52327 to a more appropriate APC.
Based upon our further review and analysis of the clinical
characteristics and resource costs associated with the procedure, we
are accepting the APC Panel's recommendation and proposing to reassign
CPT code 52327 to APC 0163 (Level IV Cystourethroscopy and other
Genitourinary Procedures) for CY 2009. The median cost of CPT code
52327 is approximately $2,030 based on 246 single claims available for
this proposed rule. The proposed median cost of APC 0163 is
approximately $2,388, and the median costs of significant procedures in
this APC range from approximately $1,951 to $2,526. A number of the
procedures assigned to APC 0163 are clinically similar to CPT code
52327, involving the use of a cystoscope and the implantation of
devices. Based on our review of its clinical and resource
characteristics, we believe the most appropriate CY 2009 APC assignment
for CPT code 52327 is APC 0163. Therefore, for CY 2009, we are
proposing to reassign CPT code 52327 from APC 0162 to APC 0163, with a
proposed median cost of approximately $2,388.
IV. Proposed OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
Section 1833(t)(6)(B)(iii) of the Act requires that, under the
OPPS, a category of devices be eligible for transitional pass-through
payments for at least 2, but not more than 3, years. This period begins
with the first date on which a transitional pass-through payment is
made for any medical device that is described by the category. We may
establish a new device category for pass-through payment in any
quarter. Under our established policy, we base the expiration dates for
the category codes on the date on which a category was first eligible
for pass-through payment. We propose and finalize the dates for
expiration of pass-through payments for device categories as part of
the OPPS annual update.
Two currently eligible categories, C1821 (Interspinous process
distraction device (implantable)) and L8690 (Auditory osseointegrated
device, includes all internal and external components), were
established for pass-through payment as of January 1, 2007. These two
device categories will be eligible for pass-through payment for 2 years
through December 31, 2008. In the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66751), we finalized our policy to expire these
two categories from pass-through device payment after December 31,
2008.
We also have an established policy to package the costs of the
devices no longer eligible for pass-through payments into the costs of
the procedures with which the devices are reported in the claims data
used to set the payment rates (67 FR 66763). Brachytherapy sources,
which are now separately paid in accordance with section 1833(t)(2)(H)
of the Act, are an exception to this established policy.
b. Proposed Policy
For CY 2009, we are implementing the final decisions that we
discussed in the CY 2008 OPPS/ASC final rule with comment period that
finalizes the expiration date of pass-through status for device
categories C1821 and L8690. Therefore, as of January 1, 2009, we will
discontinue pass-through payment for device category codes C1821 and
L8690. In accordance with our established policy, we will package the
costs of the devices assigned to these device categories into the costs
of the procedures with which the devices were
[[Page 41478]]
billed in CY 2007, the year of hospital claims data used for this OPPS
update.
We currently have no established device categories eligible for
pass-through payment that are continuing into CY 2009. We continue to
evaluate applications for devices pass-through payment on an ongoing
basis. We may establish a new device category in any quarter, and we
will advise the public of our decision to establish a new device
category in a subsequent quarter in CY 2008 through the transmittal
that implements the OPPS update for the applicable quarter. We would
then propose an expiration date for such new categories in future OPPS
annual updates.
2. Proposed Provisions for Reducing Transitional Pass-Through Payments
To Offset Costs Packaged Into APC Groups
a. Background
We have an established policy to estimate the portion of each APC
payment rate that could reasonably be attributed to the cost of the
associated devices that are eligible for pass-through payments (66 FR
59904). We deduct from the pass-through payments for identified device
categories eligible for pass-through payments an amount that reflects
the portion of the APC payment amount that we determine is associated
with the cost of the device, defined as the APC offset amount, as
required by section 1833(t)(6)(D)(ii) of the Act. We have consistently
employed an established methodology to estimate the portion of each APC
payment rate that could reasonably be attributed to the cost of an
associated device eligible for pass-through payment, using claims data
from the period used for the most recent recalibration of the APC rates
(72 FR 66751 through 66752). We establish and update the applicable APC
offset amounts for eligible pass-through device categories through the
transmittals that implement the quarterly OPPS updates.
b. Proposed Policy
We are proposing to continue our established policies for
calculating and setting the APC offset amounts for each device category
eligible for pass-through payment. We are also proposing to continue to
review each new device category on a case-by-case basis, to determine
whether device costs associated with the new category are packaged into
the existing APC structure. If device costs packaged into the existing
APC structure are associated with the new category, we would deduct the
APC offset amount from the pass-through payment for the device
category.
B. Proposed Adjustment to OPPS Payment for Partial or Full Credit
Devices
1. Background
In recent years there have been several field actions and recalls
as a result of implantable device failures. In many of these cases, the
manufacturers have offered devices without cost to the hospital or with
credit for the device being replaced if the patient required a more
expensive device. In order to ensure that payment rates for procedures
involving devices reflect only the full costs of those devices, our
standard rate-setting methodology for device-dependent APCs uses only
claims that contain the correct device code for the procedure, do not
contain token charges, and do contain the ``FB'' modifier signifying
that the device was furnished without cost or with a full credit.
To ensure equitable payment when the hospital receives a device
without cost or with full credit, in CY 2007 we implemented a policy to
reduce the payment for specified device-dependent APCs by the estimated
portion of the APC payment attributable to device costs (that is, the
device offset) when the hospital receives a specified device at no cost
or with full credit. Hospitals are instructed to report such full
credit/no cost cases using the ``FB'' modifier on the line with the
procedure code in which the free device is used. In cases in which the
device is furnished without cost, the hospital is to report a token
device charge of less than $1.01. In cases in which the device being
inserted is an upgrade (either of the same type of device or to a
different type of device) with a full credit for the device being
replaced, the hospital is to report as the device charge the difference
between its usual charge for the replacement device being implanted and
its usual charge for the replaced device for which it received full
credit. In CY 2008, we expanded this payment adjustment policy to
include cases in which hospitals receive partial credits of 50 percent
or more of the cost of a specified device. Hospitals are instructed to
append the ``FC'' modifier to the procedure code that reports the
service provided to furnish the device when they receive a partial
credit of 50 percent or more of the cost of the new device. In CY 2008,
OPPS payment for the implantation procedure is reduced by 100 percent
of the device offset for full credit/no cost cases when both a
specified device code is present on the claim and the procedure code
maps to a specified APC. Payment for the implantation procedure is
reduced by 50 percent of the device offset for partial credit cases
when both a specified device code is present on the claim and the
procedure code maps to a specified APC. Beneficiary copayment is based
on the reduced payment amount when either the ``FB'' or ``FC'' modifier
is billed and the procedure and device codes appear on the lists of
procedures and devices to which this policy applies. We refer readers
to the CY 2008 OPPS/ASC final rule with comment period for more
background information on the ``FB'' and ``FC'' payment adjustment
policy (72 FR 66743 through 66749).
2. Proposed APCs and Devices Subject to the Adjustment Policy
For CY 2009, we are proposing to continue the policy of reducing
OPPS payment by 100 percent of the device offset amount when a hospital
furnishes a specified device without cost or with a full credit and by
50 percent of the device offset amount when the hospital receives
partial credit in the amount of 50 percent or more of the cost for the
device. Because the APC payments for the related services are
specifically constructed to ensure that the full cost of the device is
included in the payment, we continue to believe that it is appropriate
to reduce the APC payment in cases in which the hospital receives a
device without cost, with full credit, or with partial credit, in order
to provide equitable payment in these cases (we refer readers to
section II.A.2.d.(1) of this proposed rule for a description of our
standard ratesetting methodology for device-dependent APCs). Moreover,
the payment for these devices comprises a large part of the APC payment
on which the beneficiary copayment is based, and we continue to believe
it is equitable that the beneficiary cost sharing reflect the reduced
costs in these cases.
We also are proposing to continue using the three criteria
established in the CY 2007 OPPS/ASC final rule with comment period for
determining the APCs to which this policy applies (71 FR 68072 through
68077). Specifically, (1) all procedures assigned to the selected APCs
must require implantable devices that would be reported if device
insertion procedures were performed, (2) the required devices must be
surgically inserted or implanted devices that remain in the patient's
body after the conclusion of the procedures (at least temporarily), and
(3) the device offset amount must be significant, which for purposes of
this policy is defined as exceeding 40 percent of the APC cost. We also
are proposing to continue to restrict the devices to which
[[Page 41479]]
the APC payment adjustment would apply to a specific set of costly
devices to ensure that the adjustment would not be triggered by the
implantation of an inexpensive device whose cost would not constitute a
significant proportion of the total payment rate for an APC. We
continue to believe that these criteria are appropriate because free
devices and credits are likely to be associated with particular cases
only when the device must be reported on the claim and is of a type
that is implanted and remains in the body when the beneficiary leaves
the hospital. We believe that the reduction in payment is appropriate
only when the cost of the device is a significant part of the total
cost of the APC into which the device cost is packaged, and that the 40
percent threshold is a reasonable definition of a significant cost.
We examined the offset amounts calculated from the CY 2009 proposed
rule data and the clinical characteristics of APCs to determine whether
the APCs to which the full credit/no cost and partial credit device
adjustment policy applies in CY 2008 continue to meet the criteria for
CY 2009, and to determine whether other APCs to which the policy does
not apply in CY 2008 would meet the criteria for CY 2009. Table 18
below lists the proposed APCs to which the payment reduction policy for
full credit/no cost and partial credit devices would apply in CY 2009
and displays the proposed payment reduction percentages for both full
credit/no cost and partial credit circumstances. Table 19 lists the
proposed devices to which this policy would apply in CY 2009. As
reflected in the tables, we are proposing to add APC 0425 (Level II
Arthroplasty or Implantation with Prosthesis) and APC 0648 (Level IV
Breast Surgery) and their associated devices that would not otherwise
be on the device list for CY 2009 because the device offset percentages
for these two APCs are above the 40 percent threshold based on the CY
2007 claims data available for the proposed rule. We also are proposing
to remove APC 0106 (Insertion/Replacement of Pacemaker Leads and/or
Electrodes) and device HCPCS codes associated only with procedures
assigned to this APC because the proposed device offset percentage for
that APC is less than 40 percent. We will update the lists of APCs and
devices to which the full credit/no cost and partial credit device
adjustment policy would apply in CY 2009 based on the final CY 2007
claims data available for the CY 2009 OPPS/ASC final rule with comment
period.
Table 18.--Proposed APC Adjustments in Cases of Devices Furnished at No Cost or With Full or Partial Credit
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
2009 2009
reduction reduction
APC SI APC title for full for partial
credit case credit case
(percent) (percent)
----------------------------------------------------------------------------------------------------------------
0039............................... S Level I Implantation of 83 42
Neurostimulator.
0040............................... S Percutaneous Implantation 56 28
of Neurostimulator
Electrodes, Excluding
Cranial Nerve.
0061............................... S Laminectomy, Laparoscopy, 61 30
or Incision for
Implantation of
Neurostimulator
Electrodes, Excluding
Cranial Nerve.
0089............................... T Insertion/Replacement of 72 36
Permanent Pacemaker and
Electrodes.
0090............................... T Insertion/Replacement of 73 36
Pacemaker Pulse Generator.
0107............................... T Insertion of Cardioverter- 89 44
Defibrillator.
0108............................... T Insertion/Replacement/ 88 44
Repair of Cardioverter-
Defibrillator Leads.
0222............................... S Level II Implantation of 84 42
Neurostimulator.
0225............................... S Implantation of 61 30
Neurostimulator
Electrodes, Cranial Nerve.
0227............................... T Implantation of Drug 81 40
Infusion Device.
0259............................... T Level VII ENT Procedures... 83 42
0315............................... S Level III Implantation of 88 44
Neurostimulator.
0385............................... S Level I Prosthetic 57 29
Urological Procedures.
0386............................... S Level II Prosthetic 64 32
Urological Procedures.
0418............................... T Insertion of Left 70 35
Ventricular Pacing Elect.
0425............................... T Level II Arthroplasty or 46 23
Implantation with
Prosthesis.
0648............................... T Level IV Breast Surgery.... 41 21
0654............................... T Insertion/Replacement of a 77 38
permanent dual chamber
pacemaker.
0655............................... T Insertion/Replacement/ 75 37
Conversion of a permanent
dual chamber pacemaker.
0680............................... S Insertion of Patient 71 35
Activated Event Recorders.
0681............................... T Knee Arthroplasty.......... 74 37
----------------------------------------------------------------------------------------------------------------
Table 19.--Proposed Devices for Which the ``FB'' or ``FC'' Modifier Must
Be Reported With the Procedure Code When Furnished at No Cost or With
Full or Partial Credit
------------------------------------------------------------------------
Device HCPCS code Short descriptor
------------------------------------------------------------------------
C1721............................. AICD, dual chamber.
C1722............................. AICD, single chamber.
C1728............................. Cath, brachytx seed adm.
C1764............................. Event recorder, cardiac.
C1767............................. Generator, neurostim, imp.
C1771............................. Rep dev, urinary, w/sling.
C1772............................. Infusion pump, programmable.
C1776............................. Joint device (implantable).
C1778............................. Lead, neurostimulator.
[[Page 41480]]
C1779............................. Lead, pmkr, transvenous VDD.
C1785............................. Pmkr, dual, rate-resp.
C1786............................. Pmkr, single, rate-resp.
C1789............................. Prosthesis, breast, imp.
C1813............................. Prosthesis, penile, inflatab.
C1815............................. Pros, urinary sph, imp.
C1820............................. Generator, neuro rechg bat sys.
C1881............................. Dialysis access system.
C1882............................. AICD, other than sing/dual.
C1891............................. Infusion pump, non-prog, perm.
C1897............................. Lead, neurostim, test kit.
C1898............................. Lead, pmkr, other than trans.
C1900............................. Lead coronary venous.
C2619............................. Pmkr, dual, non rate-resp.
C2620............................. Pmkr, single, non rate-resp.
C2621............................. Pmkr, other than sing/dual.
C2622............................. Prosthesis, penile, non-inf.
C2626............................. Infusion pump, non-prog, temp.
C2631............................. Rep dev, urinary, w/o sling.
L8600............................. Implant breast silicone/eq.
L8614............................. Cochlear device/system.
L8690............................. Aud osseo dev, int/ext comp.
------------------------------------------------------------------------
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biological agents. As originally enacted by the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Pub. L. 106-
113), this provision requires the Secretary to make additional payments
to hospitals for current orphan drugs, as designated under section 526
of the Federal Food, Drug, and Cosmetic Act (Pub. L. 107-186); current
drugs and biological agents and brachytherapy sources used for the
treatment of cancer; and current radiopharmaceutical drugs and
biological products. For those drugs and biological agents referred to
as ``current,'' the transitional pass-through payment began on the
first date the hospital OPPS was implemented (before enactment of the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
(BIPA) of 2000 (Pub. L. 106-554), on December 21, 2000).
Transitional pass-through payments are also provided for certain
``new'' drugs and biological agents that were not being paid for as an
HOPD service as of December 31, 1996, and whose cost is ``not
insignificant'' in relation to the OPPS payments for the procedures or
services associated with the new drug or biological. For pass-through
payment purposes, radiopharmaceuticals are included as ``drugs.'' Under
the statute, transitional pass-through payments can be made for at
least 2 years but not more than 3 years. Proposed CY 2009 pass-through
drugs and biologicals and their APCs are assigned status indicator
``G'' as indicated in Addenda A and B to this proposed rule.
Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through
payment amount, in the case of a drug or biological, is the amount by
which the amount determined under section 1842(o) of the Act (or, if
the drug or biological is covered under a competitive acquisition
contract under section 1847B of the Act, an amount determined by the
Secretary equal to the average price for the drug or biological for all
competitive acquisition areas and year established under such section
as calculated and adjusted by the Secretary) for the drug or biological
exceeds the portion of the otherwise applicable Medicare OPD fee
schedule that the Secretary determines is associated with the drug or
biological. This methodology for determining the pass-through payment
amount is set forth in Sec. 419.64 of the regulations, which specifies
that the pass-through payment equals the amount determined under
section 1842(o) of the Act minus the portion of the APC payment that
CMS determines is associated with the drug or biological. Section 1847A
of the Act, as added by section 303(c) of Pub. L. 108-173, establishes
the use of the average sales price (ASP) methodology as the basis for
payment for drugs and biologicals described in section 1842(o)(1)(C) of
the Act that are furnished on or after January 1, 2005. The ASP
methodology, as applied under the OPPS, uses several sources of data as
a basis for payment, including the ASP, wholesale acquisition cost
(WAC), and average wholesale price (AWP). In this proposed rule, the
term ``ASP methodology'' and ``ASP-based'' are inclusive of all data
sources and methodologies described therein. Additional information on
the ASP methodology can be found on the CMS Web site at: http://
www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/01_overview.asp#TopOfPage.
As noted above, section 1833(t)(6)(D)(i) of the Act also states
that if a drug or biological is covered under a competitive acquisition
contract under section 1847B of the Act, the payment rate is equal to
the average price for the drug or biological for all competitive
acquisition areas and the year established as calculated and adjusted
by the Secretary. Section 1847B of the Act, as added by section 303(d)
of Pub. L. 108-173, establishes the payment methodology for Medicare
Part B drugs and biologicals under the competitive acquisition program
(CAP). The Part B drug CAP was implemented July 1, 2006, and includes
approximately 190 of the most common Part B drugs provided in the
physician's office setting. The list of drugs and biologicals covered
under the Part B drug CAP, their associated payment rates, and the Part
B drug CAP pricing methodology can be found on the CMS Web site at:
http://www.cms.hhs.gov/CompetitiveAcquisforBios.
For CYs 2005, 2006, and 2007, we estimated the OPPS pass-through
payment amount for drugs and biologicals to be zero based on our
interpretation that the ``otherwise applicable Medicare OPD fee
schedule'' amount was equivalent to the amount to be paid for pass-
through drugs and biologicals under section 1842(o) of the Act (or
section 1847B of the Act, if the drug or biological is covered under a
competitive acquisition contract). We concluded for those years that
the resulting difference between these two rates would be zero. For CY
2008, we estimated the OPPS pass-through payment amount for drugs and
biologicals to be $6.6 million. Our proposed OPPS pass-through payment
estimate for drugs and biologicals in CY 2009 is $8.9 million, which is
discussed in section VI.B. of this proposed rule.
The pass-through application and review process for drugs and
biologicals is explained on the CMS Web site at: http://
www.cms.hhs.gov/HospitalOutpatientPPS/04_passthrough_payment.asp.
2. Proposed Drugs and Biologicals With Expiring Pass-Through Status in
CY 2008
Section 1833(t)(6)(C)(i) of the Act specifies that the duration of
transitional pass-through payments for drugs and biologicals must be no
less than 2 years and no longer than 3 years. We are proposing that the
pass-through status of 15 drugs and biologicals expire on December 31,
2008, as listed in Table 20 below. Our standard methodology for
providing payment for drugs and biologicals with expiring pass-through
status in an upcoming calendar year is to determine the product's
estimated per day cost and compare it with the OPPS drug packaging
threshold for that
[[Page 41481]]
calendar year (proposed at $60 for CY 2009). If the estimated per day
cost is less than or equal to the applicable OPPS drug packaging
threshold, we would package payment for the drug or biological into the
payment for the associated procedure in the upcoming calendar year. If
the estimated per day cost is greater than the OPPS drug packaging
threshold, we would provide separate payment at the applicable relative
ASP-based payment amount (proposed at ASP + 4 percent for CY 2009). For
drugs and biologicals that are currently covered under the CAP, we are
proposing to use the payment rates calculated under that program that
are in effect as of April 1, 2008, for purposes of packaging decisions
and for Addenda A and B to this proposed rule. We are proposing to
update these payment rates for purposes of the CY 2009 OPPS/ASC final
rule with comment period.
Three of the products with expiring pass-through status for CY 2009
are biologicals that are solely surgically implanted according to their
Food and Drug Administration-approved indications. These products are
described by HCPCS codes C9352 (Microporous collagen implantable tube
(Neuragen Nerve Guide), per centimeter length); C9353 (Microporous
collagen implantable slit tube (NeuraWrap Nerve Protector), per
centimeter length); and J7348 (Dermal (substitute) tissue of nonhuman
origin, with or without other bioengineered or processed elements,
without metabolically active elements (Tissuemend), per square
centimeter).
The methodology of calculating a product's estimated per day cost
and comparing it to the annual OPPS drug packaging threshold has been
used to determine the packaging status of all drugs and biologicals
under the OPPS (except for our exemption for 5HT3 anti-emetics),
including injectable products paid for under the OPPS as biologicals
(such as intraarticular sodium hyaluronate products). However, we
believe that the three products described above with expiring pass-
through status for CY 2009 differ from other biologicals paid under the
OPPS in that they specifically function as surgically implanted
devices. Both implantable devices under the OPPS and these three
biologicals with expiring pass-through status are always surgically
inserted or implanted (including through a surgical incision or a
natural orifice). Furthermore, in some cases these implantable
biologicals can substitute for implantable nonbiologic devices (such as
for synthetic nerve conduits or synthetic mesh used in tendon repair).
To date, for other nonpass-through biologicals paid under the OPPS
which may sometimes be used as implantable devices, we have instructed
hospitals, via Transmittal 1336, Change Request 5718, dated September
14, 2007, to not separately bill for the HCPCS codes for the products
when using these items as implantable devices (including as a scaffold
or an alternative to human or nonhuman connective tissue or mesh used
in a graft) during surgical procedures. In such cases, we consider
payment for the biological used as an implantable device in a specific
clinical case to be included in payment for the surgical procedure.
As we established in the CY 2003 OPPS final rule with comment
period (67 FR 66763), when the pass-through payment period for an
implantable device ends, it is standard OPPS policy to package payment
for the implantable device into payment for its associated surgical
procedure. We consider nonpass-through implantable devices to be
integral and supportive items and services for which packaged payment
is most appropriate. According to our regulations at Sec. 419.2(b), as
a prospective payment system, the OPPS establishes a national payment
rate that includes operating and capital-related costs that are
directly related and integral to performing a procedure or furnishing a
service on an outpatient basis including, but not limited to,
implantable prosthetics, implantable durable medical equipment, and
medical and surgical supplies. Therefore, when the period of device
pass-through payment ends, we package the costs of the devices no
longer eligible for pass-through payment into the costs of the
procedures with which the devices were reported in the claims data used
to set the payment rates for the upcoming calendar year. We believe
this policy to package payment for implantable devices that are
integral to the performance of separately paid procedures should also
apply to payment for implantable biologicals without pass-through
status, when those biologicals function as implantable devices. As
stated above, implantable biologicals may be used in place of other
implantable nonbiologic devices whose costs are already accounted for
in the associated procedural APC payments for surgical procedures. If
we were to provide separate payment for these implantable biologicals
without pass-through status, we would potentially be providing
duplicate device payment, both through the packaged nonbiologic device
cost included in the surgical procedure's payment and separate
biological payment. We see no basis for treating implantable biological
and nonbiologic devices without pass-through status differently for
OPPS payment purposes, because both are integral to and supportive of
the separately paid surgical procedures in which either may be used.
Therefore, for CY 2009, we are proposing to package payment for any
biological without pass-through status that is surgically inserted or
implanted (through a surgical incision or a natural orifice) into the
payment for the associated surgical procedure. As a result of this
proposed methodology, HCPCS codes C9352, C9353 and J7348 would be
packaged and assigned status indicator ``N'' for CY 2009. In addition,
any new biologicals without pass-through status that are surgically
inserted or implanted (through a surgical incision or a natural
orifice) would be packaged beginning in CY 2009. Moreover, for nonpass-
through biologicals which may sometimes be used as implantable devices,
we would continue to instruct hospitals to not bill separately for the
HCPCS codes for the products when used as implantable devices. This
reporting would ensure that the costs of these products that may be,
but are not always, used as implanted biologicals are appropriately
packaged into payment for the associated implantation procedures.
Table 20.--Proposed Drugs and Biologicals for Which Pass-Through Status Would Expire December 31, 2008
----------------------------------------------------------------------------------------------------------------
Proposed CY 2009 Proposed CY
CY 2009 HCPCS code CY 2008 HCPCS code CY 2008 descriptor SI 2009 APC
----------------------------------------------------------------------------------------------------------------
C9352............................ C9352.............. Neuragen nerve guide, N ...........
per cm.
C9353............................ C9353.............. Neurawrap nerve N ...........
protector, cm.
J0129............................ J0129*............. Abatacept injection..... K 9230
[[Page 41482]]
J0348............................ J0348.............. Anadulafungin injection. K 0760
J0894............................ J0894*............. Decitabine injection.... K 9231
J1740............................ J1740*............. Ibandronate sodium K 9229
injection.
J1743............................ J1743.............. Idursulfase injection... K 9232
J2248............................ J2248.............. Micafungin sodium K 9227
injection.
J2323............................ J2323*............. Natalizumab injection... K 9126
J2778............................ J2778*............. Ranibizumab injection... K 9233
J3243............................ J3243.............. Tigecycline injection... K 9228
J3473............................ J3473.............. Hyaluronidase N ...........
recombinant.
J7348............................ J7348.............. Tissuemend tissue....... N ...........
J7349............................ J7349.............. Primatrix tissue........ K 1141
J9303............................ J9303.............. Panitumumab injection... K 9235
----------------------------------------------------------------------------------------------------------------
* Indicates that the drug was paid at a rate determined by the Part B drug CAP methodology while identified as
pass-through under the OPPS.
3. Proposed Drugs, Biologicals, and Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY 2009
We are proposing to continue pass-through status in CY 2009 for 16
drugs and biologicals. These items, which were approved for pass-
through status between April 1, 2007 and July 1, 2008, are listed in
Table 21. The APCs and HCPCS codes for these proposed drugs and
biologicals listed in Table 21 are assigned status indicator ``G'' in
Addenda A and B to this proposed rule.
Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through
payment for pass-through drugs and biologicals (the pass-through
payment amount) as the difference between the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is covered
under a CAP under section 1847B of the Act, an amount determined by the
Secretary equal to the average price for the drug or biological for all
competitive acquisition areas and year established under such section
as calculated and adjusted by the Secretary) and the portion of the
otherwise applicable fee schedule amount that the Secretary determines
is associated with the drug or biological. Given our CY 2009, proposal
to provide payment for nonpass-through separately payable drugs and
biologicals at ASP+4 percent as described further in section V.B.3. of
this proposed rule, we believe it would be consistent with the statute
to provide payment for drugs and biologicals with pass-through status
that are not part of the Part B drug CAP at a rate of ASP+6 percent,
the amount authorized under section 1842(o) of the Act, rather than
ASP+4 percent that would be the otherwise applicable fee schedule
portion associated with the drug or biological. The difference between
ASP+4 percent and ASP+6 percent, therefore, would be the CY 2009 pass-
through payment amount for these drugs and biologicals. Thus, for CY
2009, we are proposing to pay for pass-through drugs and biologicals
that are not part of the Part B drug CAP at ASP+6 percent, equivalent
to the rate these drugs and biologicals would receive in the
physician's office setting in CY 2009.
Section 1842(o) of the Act also states that if a drug or biological
is covered under the CAP under section 1847B of the Act, the payment
rate is equal to the average price for the drug or biological for all
competitive acquisition areas and year established as calculated and
adjusted by the Secretary. For CY 2009, we are proposing to provide
payment for drugs and biologicals with pass-through status that are
offered under the Part B drug CAP at a rate equal to the Part B drug
CAP rate. Therefore, considering ASP+4 percent to be the otherwise
applicable fee schedule portion associated with these drugs or
biologicals, the difference between the Part B drug CAP rate and ASP+4
percent would be the pass-through payment amount for these drugs and
biologicals. HCPCS codes that are offered under the CAP program as of
April 1, 2008 are identified in Table 21 below with an asterisk.
In section V.B.5. of this proposed rule, we discuss our proposal to
make separate payment in CY 2009 for new drugs and biologicals with a
HCPCS code but without hospital claims data, consistent with the
provisions of section 1842(o) of the Act, at a rate that is equivalent
to the payment they would receive in a physician's office setting (or
under section 1847B of the Act, if the drug or biological is covered
under a competitive acquisition contract) only if we have received a
pass-through application for the item and pass-through status has been
subsequently granted. Otherwise, we are proposing to pay ASP+4 percent
for these products in CY 2009.
In addition, we are proposing to update pass-through payment rates
on a quarterly basis on our Web site during CY 2009 if later quarter
ASP submissions (or more recent WAC or AWP information, as applicable)
indicate that adjustments to the payment rates for these pass-through
drugs and biologicals are necessary. If a drug or biological that has
been granted pass-through status for CY 2009 becomes covered under the
Part B drug CAP, we are proposing to make the appropriate adjustments
to the payment rates for these drugs and biologicals on a quarterly
basis.
In CY 2009, we are proposing to provide payment for diagnostic and
therapeutic radiopharmaceuticals that are granted pass-through status
based on the ASP methodology. As stated above, for purposes of pass-
through payment, we consider radiopharmaceuticals to be drugs under the
OPPS and, therefore, if a diagnostic or therapeutic radiopharmaceutical
receives pass-through status during CY 2009, we are proposing to follow
the standard ASP methodology to determine its pass-through payment rate
under the OPPS. If ASP information is available, the payment rate would
be equivalent to the payment rate that drugs receive under section
1842(o) of the Act, that is, ASP+6 percent. If ASP data are not
available for a radiopharmaceutical, we are proposing to base the pass-
through payment on the product's WAC. If WAC information is also not
available, we are proposing to provide payment for the pass-through
radiopharmaceutical at 95 percent of its most recent AWP.
[[Page 41483]]
Table 21.--Proposed Drugs and Biologicals With Continuing Pass-Through Status in CY 2009
----------------------------------------------------------------------------------------------------------------
Proposed CY 2009 Proposed CY
CY 2008 HCPCS code CY 2009 HCPCS code Short descriptor SI 2009 APC
----------------------------------------------------------------------------------------------------------------
C9238............................ C9238.............. Inj, levetiracetam...... G 9238
C9239............................ C9239.............. Inj, temsirolimus....... G 1168
C9240*........................... C9240.............. Injection, ixabepilone.. G 9240
C9241............................ C9241.............. Injection, doripenem.... G 9241
C9242............................ C9242.............. Injection, fosaprepitant G 9242
C9354............................ C9354.............. Veritas collagen matrix, G 9354
cm2.
C9355............................ C9355.............. Neuromatrix nerve cuff, G 9355
cm.
C9356............................ C9356.............. TenoGlide Tendon Prot, G 9356
cm2.
C9357............................ C9357.............. Flowable Wound Matrix, 1 G 9357
cc.
C9358............................ C9358.............. SurgiMend, 0.5 cm2...... G 9358
J1300............................ J1300.............. Eculizumab injection.... G 9236
J1571............................ J1571.............. HepaGam B IM Injection.. G 0946
J1573............................ J1573.............. Hepagam B intravenous, G 9356
inj.
J3488*........................... J3488.............. Reclast injection....... G 0951
J9226............................ J9226.............. Supprelin LA implant.... G 1142
J9261............................ J9261.............. Nelarabine injection.... G 0825
----------------------------------------------------------------------------------------------------------------
* Indicates that the drug was paid at a rate determined by the Part B drug CAP methodology while identified as
pass-through under the OPPS.
4. Proposed Reduction of Transitional Pass-Through Payments for
Diagnostic Radiopharmaceuticals To Offset Costs Packaged Into APC
Groups
Prior to CY 2008, certain diagnostic radiopharmaceuticals were paid
separately under the OPPS if their mean per day costs were greater than
the applicable year's drug packaging threshold. In CY 2008 (72 FR
66768), we packaged payment for all nonpass-through diagnostic
radiopharmaceuticals as ancillary and supportive items and services.
Specifically, we packaged payment for all nonpass-through diagnostic
radiopharmaceuticals, including those products that would not otherwise
have been packaged based solely on the CY 2008 drug packaging
threshold, into payment for their associated nuclear medicine
procedures. We are proposing to continue to package payment in CY 2009
for all nonpass-through diagnostic radiopharmaceuticals as discussed in
section V.B.2.b. of this proposed rule.
As previously noted, for OPPS pass-through payment purposes,
radiopharmaceuticals are considered to be ``drugs.'' As described
above, section 1833(t)(6)(D)(i) of the Act specifies that the
transitional pass-through payment amount for pass-through drugs and
biologicals is the difference between the amount paid under section
1842(o) or the Part B drug CAP rate and the otherwise applicable OPPS
payment amount. Furthermore, transitional pass-through payments for
drugs, biologicals, and radiopharmaceuticals under the OPPS are made
for a period of at least 2 but not more than 3 years. There are
currently no radiopharmaceuticals with pass-through status under the
OPPS. For new pass-through radiopharmaceuticals with no ASP information
or CAP rate, our proposed CY 2009 payment methodology is discussed in
section V.A.3. of this proposed rule. According to this proposal and
consistent with our CY 2008 final policy (72 FR 66755), new pass-
through diagnostic radiopharmaceuticals without ASP information would
be paid based on WAC or, if WAC is not available, based on 95 percent
of the product's most recently published AWP.
As described in section IV.A.2.a. of this proposed rule regarding
pass-through device payment, we have consistently employed an
established methodology to estimate the portion of each APC payment
rate that could reasonably be attributed to the cost of an associated
device eligible for pass-through payment (the APC device offset amount)
to avoid duplicate payment for the device portion of a procedure. This
calculation uses calendar year claims data from the period used for the
most recent recalibration of the APC payment rates (72 FR 66751 through
66752). We evaluate new pass-through device categories individually to
determine if there are device costs packaged into the associated
procedural APC payment rate from predecessor devices that resemble the
new pass-through device category, suggesting that a device offset
amount would be appropriate. On an ongoing basis, through the quarterly
transmittals that implement the quarterly OPPS updates, we establish
the applicable APC device offset amount, if any, in the same quarter as
the eligible pass-through device category is first established. We
update device offset amounts annually for eligible pass-through device
categories when we recalibrate APC payment rates. We note that we
initially implemented the device offset policy in CY 2001 only for
pacemakers and neurostimulators but subsequently expanded the offset to
other pass-through devices with costs from predecessor devices packaged
into the existing APC structure beginning in CY 2002. Since April 2002,
we have applied a uniform reduction, the APC device offset amount for
the associated procedure, to payment for each of the devices receiving
transitional pass-through payments furnished on or after April 1, 2002,
and for which we have determined that the pass-through device resembles
packaged predecessor devices.
Because of our proposed CY 2009 packaging policy for diagnostic
radiopharmaceuticals, we believe that a payment offset policy, as
discussed previously for implantable devices, is now appropriate for
diagnostic radiopharmaceuticals approved for pass-through payment
status. An APC radiopharmaceutical offset amount would allow us to
avoid duplicate payment for the diagnostic radiopharmaceutical portion
of a nuclear medicine procedure by providing a diagnostic
radiopharmaceutical pass-through payment that represents the difference
between the payment rate for the diagnostic radiopharmaceutical and the
packaged radiopharmaceutical cost included in the procedural APC
payment for the nuclear medicine procedure. The otherwise applicable
OPPS payment amount for the diagnostic radiopharmaceutical would
roughly be the median cost of the predecessor diagnostic
radiopharmaceuticals that is packaged into the payment for the nuclear
[[Page 41484]]
medicine procedure. This APC radiopharmaceutical offset amount, similar
to the longstanding device offset policy for payment of implantable
devices with pass-through status, would be calculated based on a
percentage of the APC payment for a nuclear medicine procedure
attributable to the costs of packaged diagnostic radiopharmaceuticals,
as reflected in the most recent complete year of hospital outpatient
claims data.
Beginning in CY 2009, we are proposing to review each new pass-
through diagnostic radiopharmaceutical on a case-by-case basis, to
determine whether radiopharmaceutical costs associated with
predecessors of the new product are packaged into the existing APC
structure for those nuclear medicine procedures with which the new
radiopharmaceutical would be used. This proposed methodology is
consistent with our current policy for new device categories. Because
of the nature of diagnostic radiopharmaceuticals and the small number
of nuclear medicine procedures to which they are typically closely
linked, we believe that we would usually find costs for predecessor
diagnostic radiopharmaceuticals packaged into the existing APC payment
for the nuclear medicine procedures associated with the new product. In
these cases, we would deduct the uniform, applicable APC
radiopharmaceutical offset amount for the associated nuclear medicine
procedure, calculated as described below, from the pass-through payment
for the diagnostic radiopharmaceutical. We are proposing to establish
the pertinent APC radiopharmaceutical offset amounts for newly eligible
pass-through diagnostic radiopharmaceuticals quarterly through the
transmittals that implement the quarterly OPPS updates and update these
offset amounts annually, as needed.
Not all CY 2007 OPPS claims for nuclear medicine procedures include
radiolabeled products because radiopharmaceutical claims processing
edits were implemented beginning in CY 2008. These claims processing
edits require that a radiolabeled product be included on all claims for
nuclear medicine procedures to ensure that we capture the full costs of
the packaged diagnostic radiopharmaceuticals used for the procedures in
future ratesetting. Because our most recent claims data do not yet
reflect the results of these edits, we are proposing to use only those
claims that pass the radiopharmaceutical edits to set rates for nuclear
medicine procedures in CY 2009 as discussed in section II.A.2.d.(5) of
this proposed rule. We are proposing to use the same claims to
calculate the APC radiopharmaceutical offset amounts. Specifically, we
would calculate the APC radiopharmaceutical offset fraction as: 1 minus
(the cost from single procedure claims in the APC that pass the
radiopharmaceutical edits after removing the costs for packaged
diagnostic radiopharmaceuticals divided by the cost from single
procedure claims in the APC that pass the radiopharmaceutical edits).
To determine the actual APC offset amount, we would then multiply the
resulting fraction by the CY 2009 APC payment amount for the procedure
with which the new diagnostic radiopharmaceutical is used and,
accordingly, reduce the transitional pass-through payment for the
diagnostic radiopharmaceutical with pass-through status by this amount.
Table 22 displays the APCs to which nuclear medicine procedures are
proposed for assignment in CY 2009 and for which we would expect that
an APC radiopharmaceutical offset could be applicable in the case of
new diagnostic radiopharmaceuticals with pass-through status.
Table 22.--APCs to Which Nuclear Medicine Procedures Are Proposed for CY
2009 Assignment
------------------------------------------------------------------------
APC APC title
------------------------------------------------------------------------
0307.............................. Myocardial Positron Emission
Tomography (PET) imaging.
0308.............................. Non-Myocardial Positron Emission
Tomography (PET) imaging.
0377.............................. Level II Cardiac Imaging.
0378.............................. Level II Pulmonary Imaging.
0389.............................. Level I Non-imaging Nuclear
Medicine.
0390.............................. Level I Endocrine Imaging.
0391.............................. Level II Endocrine Imaging.
0392.............................. Level II Non-imaging Nuclear
Medicine.
0393.............................. Hematologic Processing & Studies.
0394.............................. Hepatobiliary Imaging.
0395.............................. GI Tract Imaging.
0396.............................. Bone Imaging.
0397.............................. Vascular Imaging.
0398.............................. Level I Cardiac Imaging.
0400.............................. Hematopoietic Imaging.
0401.............................. Level I Pulmonary Imaging.
0402.............................. Level II Nervous System Imaging.
0403.............................. Level I Nervous System Imaging.
0404.............................. Renal and Genitourinary Studies.
0406.............................. Level I Tumor/Infection Imaging.
0408.............................. Level III Tumor/Infection Imaging.
0414.............................. Level II Tumor/Infection Imaging.
------------------------------------------------------------------------
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Status
1. Background
Under the CY 2008 OPPS, we currently pay for drugs, biologicals,
and radiopharmaceuticals that do not have pass-through status in one of
two ways: Packaged payment into the payment for the associated service
or separate payment (individual APCs). We explained in the April 7,
2000, OPPS final rule with comment period (65 FR 18450) that we
generally package the cost of drugs and radiopharmaceuticals into the
APC payment rate for the procedure or treatment with which the products
are usually furnished. Hospitals do not receive separate payment from
Medicare for packaged items and supplies, and hospitals may not bill
beneficiaries separately for any packaged items and supplies whose
costs are recognized and paid within the national OPPS payment rate for
the associated procedure or service. (Program Memorandum Transmittal A-
01-133, issued on November 20, 2001, explains in greater detail the
rules regarding separate payment for packaged services.)
Packaging costs into a single aggregate payment for a service,
procedure, or episode of care is a fundamental principle that
distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of items and services into the payment for
the primary procedure or service with which they are associated
encourages hospital efficiencies and also enables hospitals to manage
their resources with maximum flexibility.
Section 1833(t)(16)(B) of the Act, as added by section 621(a)(2) of
Pub. L. 108-173, sets the threshold for establishing separate APCs for
drugs and biologicals at $50 per administration for CYs 2005 and 2006.
Therefore, for CYs 2005 and 2006, we paid separately for drugs,
biologicals, and radiopharmaceuticals whose per day cost exceeded $50
and packaged the costs of drugs, biologicals, and radiopharmaceuticals
whose per day cost was equal to or less than $50 into the procedures
with which they were billed. For CY 2007, the packaging threshold for
drugs, biologicals, and radiopharmaceuticals that were not new and did
not have pass-through status was established at $55. For CY 2008, the
packaging threshold for drugs, biologicals, and radiopharmaceuticals
that are not new and do not have pass-through status was established at
$60. The methodology used to establish the $55 threshold for CY 2007,
the $60
[[Page 41485]]
threshold for CY 2008, and our proposed approach for CY 2009 are
discussed in more detail in section V.B.2. of this proposed rule.
In addition, since CY 2005, we have provided an exemption to this
packaging determination for oral and injectable 5HT3 anti-emetic
products. We discuss in section V.B.2. of this proposed rule our
proposed CY 2009 payment policy for these anti-emetic products.
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals and
Radiopharmaceuticals
a. Drugs, Biologicals, and Therapeutic Radiopharmaceuticals
As indicated above, in accordance with section 1833(t)(16)(B) of
the Act, the threshold for establishing separate APCs for payment of
drugs and biologicals was set to $50 per administration during CYs 2005
and 2006. In CY 2007, we used the fourth quarter moving average
Producer Price Index (PPI) levels for prescription preparations to
trend the $50 threshold forward from the third quarter of CY 2005 (when
the Pub. L. 108-173 mandated threshold became effective) to the third
quarter of CY 2007. We then rounded the resulting dollar amount to the
nearest $5 increment in order to determine the CY 2007 threshold amount
of $55. Using the same methodology as that used in CY 2007 (which is
discussed in more detail in the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68085 through 68086)), for CY 2008 we set the
packaging threshold for establishing separate APCs for drugs and
biologicals at $60.
Following the CY 2007 methodology for CY 2009, we used updated
fourth quarter moving average PPI levels to trend the $50 threshold
forward from the third quarter of CY 2005 to the third quarter of CY
2009 and again rounded the resulting dollar amount ($61.25) to the
nearest $5 increment, which yielded a figure of $60. In performing this
calculation, we used the most up-to-date forecasted, quarterly PPI
estimates from CMS' Office of the Actuary (OACT). As actual inflation
for past quarters replaced forecasted amounts, the PPI estimates for
prior quarters have been revised (compared with those used in the CY
2007 OPPS/ASC final rule with comment period) and have been
incorporated into our calculation. Based on the calculations described
above, we are proposing a packaging threshold for CY 2009 of $60. As
stated in the CY 2007 OPPS/ASC final rule with comment period (71 FR
68086), we believe that packaging certain items is a fundamental
component of a prospective payment system, that packaging these items
does not lead to beneficiary access issues and does not create a
problematic site of service differential, that the packaging threshold
is reasonable based on the initial establishment in law of a $50
threshold for the CY 2005 OPPS, that updating the $50 threshold is
consistent with industry and government practices, and that the PPI for
prescription preparations is an appropriate mechanism to gauge Part B
drug inflation. During the March 2008 APC Panel meeting, the APC Panel
made a recommendation supporting CMS' current methodology of adjusting
the threshold dollar amount for packaging drugs and biologicals on the
basis of the PPI for prescription drugs. We are adopting the APC
Panel's recommendation, and we are proposing to continue this
methodology for updating the drug packaging threshold for CY 2009.
To determine their CY 2009 proposed packaging status, we calculated
the per day cost of all drugs, biologicals, and therapeutic
radiopharmaceuticals that had a HCPCS code in CY 2007 and were paid
(via packaged or separate payment) under the OPPS using claims data
from January 1, 2007, to December 31, 2007. In order to calculate the
per day costs for drugs, biologicals, and therapeutic
radiopharmaceuticals to determine their packaging status in CY 2009, we
are proposing to use the methodology that was described in detail in
the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and
finalized in the CY 2006 OPPS final rule with comment period (70 FR
68636 through 70 FR 68638). To calculate the proposed CY 2009 per day
costs, we used an estimated payment rate for each drug and biological
of ASP+4 percent (which is the payment rate we are proposing for
separately payable drugs and biologicals in CY 2009, as discussed in
more detail in section V.B.3.b. of this proposed rule). We used the
manufacturer submitted ASP data from the fourth quarter of CY 2007
(data that were used for payment purposes in the physician's office
setting, effective April 1, 2008) to determine the proposed per day
cost.
As is our standard methodology, we are proposing to use payment
rates based on the ASP data from the fourth quarter of CY 2007 for
budget neutrality estimates, packaging determinations, impact analyses,
and completion of Addenda A and B to this proposed rule because these
are the most recent data available for use at the time of development
of this proposed rule. These data are also the basis for drug payments
in the physician's office setting, effective April 1, 2008. For items
that did not have an ASP-based payment rate, we used their mean unit
cost derived from the CY 2007 hospital claims data to determine their
per day cost. We packaged items with a per day cost less than or equal
to $60 and identified items with a per day cost greater than $60 as
separately payable. Consistent with our past practice, we crosswalked
historical OPPS claims data from the CY 2007 HCPCS codes that were
reported to the CY 2008 HCPCS codes that we display in Addendum B to
this proposed rule for payment in CY 2009.
Our policy during previous cycles of the OPPS has been to use
updated ASP and claims data to make final determinations of the
packaging status of drugs, biologicals, and radiopharmaceuticals for
the final rule with comment period. We note that it is also our policy
to make an annual packaging determination only when we develop the
OPPS/ASC final rule for the update year. Only items that are identified
as separately payable in the final rule would be subject to quarterly
updates. For our calculation of per day costs of drugs, biologicals,
and therapeutic radiopharmaceuticals in the CY 2009 OPPS/ASC final rule
with comment period, we are proposing to use ASP data from the first
quarter of CY 2008, which is the basis for calculating payment rates
for drugs and biologicals in the physician's office setting using the
ASP methodology, effective July 1, 2008, along with updated hospital
claims data from CY 2007. We note that we would also use these data for
budget neutrality estimates and impact analyses for the CY 2009 OPPS/
ASC final rule with comment period. Payment rates for separately
payable drugs and biologicals included in Addenda A and B to that final
rule with comment period would be based on ASP data from the second
quarter of CY 2008, which are the basis for calculating payment rates
for drugs and biologicals in the physician's office setting using the
ASP methodology, effective October 1, 2008. These rates would then be
updated in the January 2009 OPPS update, based on the most recent ASP
data to be used for physician's office and OPPS payment as of January
1, 2009.
Consequently, the packaging status for drugs, biologicals, and
therapeutic radiopharmaceuticals in the CY 2009 OPPS/ASC final rule
with comment period using the updated data may be different from their
packaging status determined based on the data used for
[[Page 41486]]
this proposed rule. Under such circumstances, we are proposing to apply
the following policies to these drugs, biologicals, and therapeutic
radiopharmaceuticals whose relationship to the proposed $60 threshold
changes based on the final updated data:
Drugs, biologicals, and therapeutic radiopharmaceuticals
that were paid separately in CY 2008, proposed for separate payment in
CY 2009, and have per day costs equal to or less than $60 based on the
updated ASPs and hospital claims data used for the CY 2009 final rule
with comment period, would continue to receive separate payment in CY
2009.
Drugs, biologicals, and therapeutic radiopharmaceuticals
that were packaged in CY 2008 and that were proposed for separate
payment in CY 2009, and have per day costs equal to or less than $60
based on the updated ASPs and hospital claims data used for the CY 2009
final rule with comment period, would remain packaged in CY 2009.
Drugs, biologicals, and therapeutic radiopharmaceuticals
for which we proposed packaged payment in CY 2009, but have per day
costs greater than $60 based on the updated ASPs and hospital claims
data used for the CY 2009 final rule with comment period, would receive
separate payment in CY 2009.
For CY 2009, we are also proposing to continue exempting the oral
and injectable forms of 5HT3 anti-emetic products from packaging,
thereby making separate payment for all of the 5HT3 anti-emetic
products. As we stated in the CY 2005 OPPS final rule with comment
period (69 FR 65779 through 65780), it is our understanding that
chemotherapy is very difficult for many patients to tolerate, as the
side effects are often debilitating. In order for Medicare
beneficiaries to achieve the maximum therapeutic benefit from
chemotherapy and other therapies with side effects of nausea and
vomiting, anti-emetic use is often an integral part of the treatment
regimen. We believe that we should continue to ensure that Medicare
payment rules do not impede a beneficiary's access to the particular
anti-emetic that is most effective for him or her as determined by the
beneficiary and his or her physician.
Table 23.--Proposed Anti-Emetics to Exempt From CY 2009 OPPS Drug
Packaging Threshold
------------------------------------------------------------------------
HCPCS code Short descriptor
------------------------------------------------------------------------
J1260............................. Dolasetron mesylate.
J1626............................. Granisetron HCl injection.
J2405............................. Ondansetron hcl injection.
J2469............................. Palonosetron HCl.
Q0166............................. Granisetron HCl 1 mg oral.
Q0179............................. Ondansetron HCl 8 mg oral.
Q0180............................. Dolasetron mesylate oral.
------------------------------------------------------------------------
b. Proposed Payment for Diagnostic Radiopharmaceuticals and Contrast
Agents
As established in the CY 2008 final rule with comment period (72 FR
66766 through 66768), we began packaging payment for all diagnostic
radiopharmaceuticals and contrast agents into the payment for the
associated procedure, regardless of their per day costs. Packaging
costs into a single aggregate payment for a service, encounter, or
episode-of-care is a fundamental principle that distinguishes a
prospective payment system from a fee schedule. In general, packaging
the costs of items and services into the payment for the primary
procedure or service with which they are associated encourages hospital
efficiencies and also enables hospitals to manage their resources with
maximum flexibility. Prior to CY 2008, we noted that the proportion of
drugs, biologicals, and radiopharmaceuticals that were separately paid
under the OPPS had increased in recent years, a pattern that we also
observed for procedural services under the OPPS. Our final CY 2008
policy that packaged payment for all nonpass-through diagnostic
radiopharmaceuticals and contrast agents regardless of their per day
costs contributed significantly to expanding the size of the OPPS
payment bundles and is consistent with the principles of a prospective
payment system.
During the March 2008 meeting of the APC Panel, the APC Panel
recommended that CMS continue to package payment for diagnostic
radiopharmaceuticals for CY 2009. We are accepting this recommendation
and, therefore, for CY 2009, we are proposing to continue packaging
payment for all nonpass-through diagnostic radiopharmaceuticals and
contrast agents regardless of their per day costs for the reasons
discussed below. As we established in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66768), we identify diagnostic
radiopharmaceuticals specifically as those Level II HCPCS codes that
include the term ``diagnostic'' along with a radiopharmaceutical in
their long code descriptors.
We continue to believe that our proposal to continue to treat
diagnostic radiopharmaceuticals and contrast agents differently from
other specified covered outpatient drugs (SCODs) is appropriate for
several reasons. First, the statutory requirement that we must pay
separately for drugs and biologicals for which the per day cost exceeds
$50 under section 1833(t)(16)(B) of the Act has expired. Therefore, we
are not restricted in the extent to which we can package payment for
SCODs and other drugs, nor are we required to treat all classes of
drugs in the same manner with regard to whether they are packaged or
separately paid. We have used this flexibility to make different
packaging determinations with regard to specific anti-emetic drugs.
Second, diagnostic radiopharmaceuticals and contrast agents
function effectively as supplies that enable the provision of an
independent service. More specifically, contrast agents are always
provided in support of a diagnostic or therapeutic procedure that
involves imaging, and diagnostic radiopharmaceuticals are always
provided in support of a diagnostic nuclear medicine procedure. This is
different from many other SCODs, such as therapeutic
radiopharmaceuticals, where the therapeutic radiopharmaceutical itself
is the primary therapeutic modality. Given the inherent function of
contrast agents and diagnostic radiopharmaceuticals as supportive to
the performance of an independent procedure, we continue to view the
packaging of payment for contrast agents and diagnostic
radiopharmaceuticals as a logical expansion of packaging for SCODs. As
we consider the possibility of moving to additional encounter-based and
episode-based payment in future years, we may consider additional
options for packaging more SCODs in the future.
Third, section 1833(t)(14)(A)(iii) of the Act requires that payment
for SCODs be set prospectively based on a measure of average hospital
acquisition cost. We believe our claims data offer an acceptable proxy
for average hospital acquisition cost and associated handling and
preparation costs for radiopharmaceuticals. We believe that hospitals
have adapted to the CY 2006 coding changes for radiopharmaceuticals and
responded to our instructions to include charges for
radiopharmaceutical handling in their charges for the
radiopharmaceutical products. We have relied on mean unit
[[Page 41487]]
costs derived from our claims data as one proxy for average acquisition
cost and pharmacy overhead, and we use these data to determine the
packaging status for SCODs.
In the case of contrast agents, while we have ASP data that could
be a proxy for average hospital acquisition cost and associated
handling and preparation costs, payment for almost all contrast agents
would be packaged under the OPPS for CY 2009 based on the proposed CY
2009 OPPS $60 per day packaging threshold. Therefore, we believe it
would be appropriate to continue to package payment for all contrast
agents for CY 2009, to provide accurate payment for the associated
tests and procedures using an approach that promotes hospital
efficiency.
In summary, we view diagnostic radiopharmaceuticals and contrast
agents as ancillary and supportive of the diagnostic tests and
therapeutic procedures in which they are used. In light of our
authority to make different packaging determinations and the improved
reporting of hospital charges for radiopharmaceutical handling in the
CY 2007 claims data, we are proposing to continue packaging payment for
all contrast agents and diagnostic radiopharmaceuticals regardless of
their per day costs for CY 2009.
For more information on how we are proposing to set CY 2009 payment
rates for nuclear medicine procedures in which diagnostic
radiopharmaceuticals are used and echocardiography services provided
with and without contrast agents, we refer readers to sections
II.A.2.d.(5) and (4), respectively, of this proposed rule.
During the March 2008 APC Panel meeting, the APC Panel also
recommended that CMS present data at the first CY 2009 APC Panel
meeting on usage and frequency, geographic distribution, and size and
type of hospitals performing nuclear medicine studies using
radioisotopes in order to ensure that access is preserved for Medicare
beneficiaries. We are accepting this recommendation and will present
information to the APC Panel at its first CY 2009 meeting when initial
claims data from CY 2008 will be available.
3. Proposed Payment for Drugs and Biologicals Without Pass-Through
Status That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs)
Section 1833(t)(14) of the Act, as added by section 621(a)(1) of
Pub. L. 108-173, requires special classification of certain separately
paid radiopharmaceuticals, drugs, and biologicals and mandates specific
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a
``specified covered outpatient drug'' is a covered outpatient drug, as
defined in section 1927(k)(2) of the Act, for which a separate APC has
been established and that either is a radiopharmaceutical agent or is a
drug or biological for which payment was made on a pass-through basis
on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and
biologicals are designated as exceptions and are not included in the
definition of ``specified covered outpatient drugs,'' known as SCODs.
These exceptions are--
A drug or biological for which payment is first made on or
after January 1, 2003, under the transitional pass-through payment
provision in section 1833(t)(6) of the Act.
A drug or biological for which a temporary HCPCS code has
not been assigned.
During CYs 2004 and 2005, an orphan drug (as designated by
the Secretary).
Section 1833(t)(14)(A)(iii) of the Act, as added by section
621(a)(1) of Pub. L. 108-173, requires that payment for SCODs in CY
2006 and subsequent years be equal to the average acquisition cost for
the drug for that year as determined by the Secretary, subject to any
adjustment for overhead costs and taking into account the hospital
acquisition cost survey data collected by the Government Accountability
Office (GAO) in CYs 2004 and 2005. If hospital acquisition cost data
are not available, the law requires that payment be equal to payment
rates established under the methodology described in section 1842(o),
section 1847A, or section 1847B of the Act, as calculated and adjusted
by the Secretary as necessary.
In the CY 2006 OPPS proposed rule (70 FR 42728), we discussed the
CY 2005 report by MedPAC regarding pharmacy overhead costs in HOPDs and
summarized the findings of that study:
Handling costs for drugs, biologicals, and
radiopharmaceuticals administered in the HOPD are not insignificant;
Little information is available about the magnitude of
pharmacy overhead costs;
Hospitals set charges for drugs, biologicals, and
radiopharmaceuticals at levels that reflected their respective handling
costs; and
Hospitals vary considerably in their likelihood of
providing services which utilize drugs, biologicals, or
radiopharmaceuticals with different handling costs.
As a result of these findings, MedPAC developed seven drug
categories for pharmacy and nuclear medicine handling costs based on
the estimated level of hospital resources used to prepare the products.
Associated with these categories were two recommendations for accurate
payment of pharmacy overhead under the OPPS.
1. CMS should establish separate, budget neutral payments to cover
the costs hospitals incur for handling separately payable drugs,
biologicals and radiopharmaceuticals.
2. CMS should define a set of handling fee APCs that group drugs,
biologicals, and radiopharmaceuticals based on attributes of the
products that affect handling costs; CMS should instruct hospitals to
submit charges for these APCs and base payment rates for the handling
fee APCs on submitted charges reduced to costs.
In assigning drugs to the seven categories, MedPAC considered
additional characteristics that contribute to differential pharmacy
handling costs, such as radioactivity, toxicity, mode of
administration, and the need for special handling. While MedPAC was
able to include information on a variety of drugs with many of these
characteristics, hospitals participating in MedPAC's research were not
able to provide sufficient cost information regarding the handling of
outpatient radiopharmaceuticals for MedPAC to make a recommendation
about overhead categories for these products.
In response to the MedPAC findings, in the CY 2006 OPPS proposed
rule (70 FR 42729), we discussed our belief that because of the varied
handling resources required to prepare different forms of drugs, it
would be impossible to exclusively and appropriately assign a drug to a
certain overhead category that would apply to all hospital outpatient
uses of the drug. Therefore, our CY 2006 OPPS proposal included a
proposal to establish three distinct Level II HCPCS C-codes and three
corresponding APCs for drug handling categories to differentiate
overhead costs for drugs and biologicals. We also proposed: (1) To
combine several overhead categories recommended by MedPAC according to
Table 24, as shown below; (2) to establish three drug handling
categories, as we believed that larger groups would minimize the number
of drugs that may fit into more than one category and would lessen any
undesirable payment policy incentives to utilize particular forms of
drugs or specific preparation methods; (3) to collect hospital charges
for these C-codes for 2 years; and (4) to ultimately base payment for
the corresponding drug handling APCs on
[[Page 41488]]
CY 2006 claims data available for the CY 2008 OPPS. Both the MedPAC
categories and the CY 2006 proposed categories are identified in Table
24 below.
Table 24.--Drug Overhead Category Groupings Discussed in the CY 2006 OPPS Proposed Rule
----------------------------------------------------------------------------------------------------------------
Proposed CY 2006 drug overhead
MedPAC drug overhead category Description category
----------------------------------------------------------------------------------------------------------------
Category 1.............................. Orals (oral tablets, capsules, Category 1.
solutions).
Category 2.............................. Injection/Sterile Preparation Category 2.
(draw up a drug for
administration).
Category 3.............................. Single IV Solution/Sterile Category 2.
Preparation (adding a drug or
drugs to a sterile IV solution)
or Controlled Substances.
Category 4.............................. Compounded/Reconstituted IV Category 2.
Preparations (requiring
calculations performed
correctly and then compounded
correctly).
Category 5.............................. Specialty IV or Agents requiring Category 3.
special handling in order to
preserve their therapeutic
value or Cytotoxic Agents, oral
(chemotherapeutic, teratogenic,
or toxic) requiring personal
protective equipment (PPE).
Category 6.............................. Cytotoxic Agents Category 3.
(chemotherapeutic, teratogenic,
or toxic) in all formulations
except oral requiring PPE.
Category 7.............................. Radiopharmaceutical: Basic and
Complex Diagnostic Agents, PET
Agents, Therapeutic Agents, and
Radioimmunoconjugates.
----------------------------------------------------------------------------------------------------------------
In the CY 2006 OPPS final rule with comment period (70 FR 68659
through 68665), we discussed the public comments we received on our
proposal regarding pharmacy overhead. The overwhelming majority of
commenters did not support our proposal and urged us not to finalize
this policy, as it would be administratively burdensome for hospitals.
Therefore, we did not finalize this proposal for CY 2006.
As we noted in the CY 2006 OPPS final rule with comment period (70
FR 68640), findings from a MedPAC survey of hospital charging practices
indicated that hospitals set charges for drugs, biologicals, and
radiopharmaceuticals high enough to reflect their pharmacy handling
costs as well as their acquisition costs. After considering all public
comments received, in the CY 2006 OPPS final rule with comment period
(70 FR 68642), we established a policy to provide a combined payment
rate of ASP+6 percent for both the hospital's drug and biological
acquisition costs and associated pharmacy overhead costs, as this was
the equivalent average ASP-based amount to the aggregate cost from CY
2004 hospital claims data for separately payable drugs under the OPPS.
We acknowledged the limitations of this methodology, namely that
pharmacy overhead costs of specific drugs and biologicals are not
directly related to their specific acquisition costs. We also solicited
additional comments on future options for ways to identify and provide
an alternative payment methodology for pharmacy overhead costs under
the OPPS.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68091), we proposed and finalized a policy that provided a single
payment of ASP+6 percent for the hospital's acquisition cost for the
drug or biological and all associated pharmacy overhead and handling
costs. The ASP+6 percent rate was higher than the equivalent average
ASP-based amount calculated from claims of ASP+4 percent, but we
adopted this methodology for stability while we continued to examine
the issue of the costs of pharmacy overhead in the HOPD.
We continued to meet with interested pharmacy stakeholders
regarding the various issues related to hospital charging practices and
how these practices would affect our potential proposals for payment of
drugs and pharmacy overhead under the OPPS. Many comments from the
hospital industry reiterated that hospitals do not attach a specific
pharmacy overhead charge to a particular drug. In particular, a more
expensive drug with high pharmacy overhead costs does not commonly
result in a sufficiently high hospital charge for the drug to account
for all of the associated drug acquisition and pharmacy overhead costs.
We have been told that hospitals frequently allocate a relatively
greater pharmacy overhead charge to the single hospital charge for less
expensive drugs to counterbalance the lesser charge for pharmacy
overhead for more expensive drugs with high pharmacy overhead costs.
Therefore, the pharmacy overhead costs of one drug may be
distributed among charges for many drugs. This practice of unequally
distributing pharmacy overhead charges among all drugs provided by the
hospital pharmacy makes the single CCR for cost center 5600 (Drugs
Charged to Patients) applied for OPPS cost estimation of drugs through
the revenue code-to-cost center crosswalk result in less accurate costs
for individual drugs. The result is that the charges and estimated
costs for less expensive drugs shoulder a higher burden of pharmacy
overhead costs as compared to the charges and estimated costs for more
expensive drugs. Commenters have suggested that our OPPS methodology of
applying a single CCR for the cost estimation of all drugs unfairly
reduces payment amounts for separately payable expensive drugs, as the
actual CCR varies widely across drugs. The concerns surrounding the
impact on payment accuracy of differential hospital charging practices
for pharmacy overhead costs resemble the concerns regarding charge
compression that have been raised for expensive implantable devices
over the past several years of the OPPS (72 FR 66599 through 66602). In
general, differential hospital markup policies related to the cost of
an item lead to overestimating the cost of inexpensive items and
underestimating the cost of expensive items when a single CCR is
applied to charges on claims.
In the CY 2008 OPPS/ASC proposed rule (72 FR 42735), in response to
ongoing discussions with interested parties, we proposed to continue
our methodology of providing a combined payment rate for drug and
biological acquisition and pharmacy overhead costs. We also proposed to
instruct hospitals to remove the pharmacy overhead charge for both
packaged and separately paid drugs and biologicals from the charge for
the drug or biological and report the pharmacy overhead charge on an
uncoded revenue code line on the claim. We believed that
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this would provide us with an avenue for collecting pharmacy handling
cost data specific to drugs in order to package the overhead costs of
these items into the associated procedures, most likely drug
administration services. We believed that this methodology of reporting
pharmacy overhead costs on an uncoded revenue center line would
increase the accuracy of pharmacy overhead payments for drugs and
biologicals as it would package the overhead cost for similar drugs
into the commonly associated separately payable services, for example,
by packaging the pharmacy overhead cost for a chemotherapy drug with
the cost of the chemotherapy drug administration service also included
on the claim.
Similar to the public response to our CY 2006 pharmacy overhead
proposal, the overwhelming majority of commenters did not support our
CY 2008 proposal and urged us to not finalize this policy (72 FR
66761). While MedPAC supported the proposal for improving the accuracy
of drug payment by incorporating variability in pharmacy overhead
costs, most other commenters cited the increased hospital burden that
would be associated with manipulating accounting systems and making
manual calculations, along with concerns about making these changes to
their billing operations while continuing to set charges for particular
services that were the same for all payers. After hearing concerns
about the burden of establishing a unique pharmacy overhead charge for
every drug, at its September 2007 meeting, the APC Panel recommended
that hospitals not be required to separately report charges for
pharmacy overhead and handling and that payment for overhead be
included as part of drug payment. The APC Panel also recommended that
CMS continue to evaluate alternative methods to standardize the capture
of pharmacy overhead costs in a manner that is simple to implement at
the organizational level (72 FR 66761). Because of these concerns, we
did not finalize the proposal to instruct hospitals to separately
report pharmacy overhead charges for CY 2008. Instead, in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66763), we finalized a
policy of providing payment for separately payable drugs and
biologicals and their pharmacy overhead at ASP+5 percent as a
transition from their CY 2007 payment of ASP+6 percent to payment based
on the equivalent average ASP-based payment rate calculated from
hospital claims, which was ASP+3 percent for the CY 2008 OPPS/ASC final
rule with comment period. Hospitals continued to include charges for
pharmacy overhead costs in the line-item charges for the associated
drugs reported on claims.
b. Proposed Payment Policy
The provision in section 1833(t)(14)(A)(iii) of the Act, as
described above, continues to be applicable to determining payments for
SCODs for CY 2009. This provision requires that, in CY 2009, payment
for SCODs be equal to the average acquisition cost for the drug for
that year as determined by the Secretary, subject to any adjustment for
overhead costs and taking into account the hospital acquisition cost
survey data collected by the GAO in CYs 2004 and 2005. If hospital
acquisition cost data are not available, the law requires that payment
be equal to payment rates established under the methodology described
in section 1842(o), section 1847A, or section 1847B of the Act, as
calculated and adjusted by the Secretary as necessary. In addition,
section 1833(t)(14)(E)(ii) authorizes the Secretary to adjust APC
weights for SCODs to take into account the MedPAC report relating to
overhead and related expenses, such as pharmacy services and handling
costs.
During this past year, we have met with a variety of stakeholders
regarding different proposals for collecting pharmacy overhead cost
information for setting OPPS payment rates. One such proposal was
endorsed by several stakeholders during the March 2008 APC Panel
meeting. Presenters to the APC Panel explained that CMS' methodology of
using a single CCR to determine the acquisition and pharmacy overhead
cost for all drugs attributes a greater relative share of pharmacy
overhead cost to the lower-priced packaged drugs and a lower relative
share of pharmacy overhead cost to the more expensive, separately
payable drugs. Because the OPPS packages payment for drugs and
biologicals with an estimated per day cost of $60 or less and estimates
the equivalent average ASP-based amount based only on the costs of
separately payable drugs, some pharmacy overhead cost that should be
associated with separately payable drugs is being packaged into payment
for the procedures that are performed with lower cost packaged drugs.
This stakeholder proposal suggested that CMS recalculate the
equivalent average ASP-based amount based on the costs of packaged and
separately payable drugs with HCPCS codes, rather than on our current
methodology of calculating an ASP-based amount solely from claims data
for separately payable drugs. CMS would then use this equivalent
average ASP-based amount (or the physician's office payment rate of
ASP+6 percent) to represent the acquisition and pharmacy overhead cost
of all packaged drugs and would substitute this figure for the costs of
packaged drugs in ratesetting for their associated procedures. The pool
of money under the budget neutral OPPS that would result from this
methodology that would package lower drug costs with associated
procedures than our current methodology could then be distributed to
OPPS payment in a number of ways, such as increasing the combined
acquisition and overhead cost payment for separately payable drugs to a
higher average ASP-based amount and/or providing separate payment for
pharmacy overhead costs for either all drugs or only separately payable
drugs based on a flat add-on rate or on tiers of pharmacy service
complexity. The stakeholders presented APC median cost estimates
demonstrating that their recommendation would significantly impact drug
payment rates but would only change the majority of APC median costs by
less than 2 percent.
At its March 2008 meeting, the APC Panel recommended that CMS work
with stakeholders to further develop recommendations on the validity of
this methodology and conduct an impact analysis, with consideration for
CY 2009 rulemaking. Because CMS would redistribute pharmacy overhead
cost when modeling payment rates for ratesetting, the suggested
methodology would be administratively simple for hospitals. This
approach also would refine the existing OPPS methodology for estimating
pharmacy overhead cost in a budget neutral manner, without
redistributing money from the payment for nondrug components of other
services to payment for drugs. However, we also believe that
substituting an average ASP-based amount (or the physician's office
payment rate of ASP+6 percent) on claims for purposes of packaging drug
costs into associated procedures would be a highly significant change
to our established methodology. It is our longstanding policy to accept
hospital charge data as it is reported on claims, in order to capture
variability in hospitals' unique charges that is specific to each
hospital's charging structure, as well as other potential efficiencies.
The stakeholder recommendation would eliminate the expected variability
in hospitals' costs of drugs that are packaged into their associated
procedures.
While we appreciate the thoughtful approach to OPPS payment for
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pharmacy overhead costs as described above, we believe there are
several issues to be seriously considered before we could potentially
propose the adoption of such a methodology including, but not limited
to, its implications for how we would more generally estimate the costs
of items packaged into a primary service. We package payment under the
OPPS for the costs of many items and services other than relatively
inexpensive drugs that are integral to separately payable primary
services. In addition, it is not clear to us what approach for
redistributing pharmacy overhead dollars would be most accurate and
operationally feasible for CMS. We specifically invite public comment
on this potential approach for estimating pharmacy overhead costs and
redistributing pharmacy overhead payment under the OPPS.
Recently, RTI completed its evaluation of the OPPS cost-based
weight methodology in general, and charge compression in particular.
Pharmacy stakeholders have already noted that accurately estimating
pharmacy overhead cost is intimately related to the CCR used to
estimate costs from claims' charges. As discussed above, hospitals have
informed us that they redistribute the cost of pharmacy overhead from
expensive to inexpensive drugs when setting charges for drugs.
RTI determined that hospitals billing a greater percent of drug
charges under revenue code 0636 (Drugs requiring detail coding) out of
all revenue codes related to drugs had a significantly higher CCR for
cost center 5600 (Drugs Charged to Patients). ``These findings are
consistent with the a priori expectation that providers tend to use
lower markup rates on these relatively expensive items, as compared
with other items in their CCR group.'' (RTI report, ``Refining Cost to
Charge Ratios for Calculating APC and MS-DRG Relative Payment
Weights,'' July 2008). RTI, in its March 2007 report, noted that
hospitals billing a greater percent of drug charges under revenue code
0258 (IV solutions) out of all revenue codes related to drugs had a
significantly lower CCR for cost center 5600. In the short term, RTI
recommends that CMS adopt regression-adjusted CCRs under the OPPS for
drugs requiring detail coding (reported under revenue code 0636) and
for IV solutions (reported under revenue code 0258) for purposes of
estimating median costs. To eliminate the need for simulated CCRs in
the longer term, RTI recommends that CMS create a new standard cost
center on the cost report for drugs requiring detail coding (reported
under revenue code 0636) to mitigate charge compression by acquiring
more specific CCRs (RTI report, ``Refining Cost to Charge Ratios for
Calculating APC and MS-DRG Relative Payment Weights,'' July 2008.).
RTI's recommendations provide other alternatives to the recent pharmacy
stakeholder recommended approach described above for improving the cost
estimation of the acquisition and pharmacy overhead costs of drugs
under the OPPS.
As discussed further in section II.A.1.c. of this proposed rule and
consistent with our proposal for the FY 2009 IPPS, we are not proposing
to adopt regression-based CCRs for cost estimation in any area of the
CY 2009 OPPS, including drugs requiring detail coding and IV solutions.
Instead, we believe that RTI's empirical findings would appropriately
be addressed through concrete steps to improve the quality of
accounting information used to estimate future costs from drug charges.
Cognizant of public comments on past proposals, we also believe that
this should be done in a manner that is fairly simple for hospitals to
implement.
For CY 2009, we are proposing to continue our policy of making a
combined payment for the acquisition and pharmacy overhead costs of
separately payable drugs and biologicals at an equivalent average ASP-
based amount calculated based on our standard methodology of estimating
drug costs from claims. Using updated data for this proposed rule,
after determining the proposed CY 2009 packaging status of drugs and
biologicals, we estimated the aggregate cost of all drugs and
biologicals (excluding therapeutic radiopharmaceuticals for which no
ASP data are currently available) that would be separately payable in
CY 2009 based on mean costs from hospital claims data and calculated
the equivalent average ASP-based payment rate that would equate to the
aggregate reported hospital cost. The results of our analysis indicate
that setting the payment rates for drugs and biologicals that would be
separately payable in CY 2009 based on hospital costs would be
equivalent to providing payment, on average, at ASP+4 percent.
Therefore, we are proposing to pay for separately payable drugs and
biologicals under the CY 2009 OPPS at ASP+4 percent because we believe
that this is the best currently available proxy for average hospital
acquisition cost and associated pharmacy overhead costs.
In addition, we are also proposing to break the single standard
cost center 5600 into two standard cost centers, Drugs with High
Overhead Cost Charged to Patients and Drugs with Low Overhead Cost
Charged to Patients, to reduce the reallocation of pharmacy overhead
cost from expensive to inexpensive drugs and biologicals when setting
an equivalent average ASP-based payment amount in the future. This
proposal is consistent with RTI's recommendation for creating a new
cost center whose CCR would be used to adjust charges to costs for
drugs requiring detail coding. We note, however, that while improved
CCRs would more accurately estimate the ASP-based amount for combined
drug and pharmacy overhead payment, they would not capture within HCPCS
code variability in pharmacy handling costs resulting from different
methods of drug preparation used by hospitals. As discussed above, we
believe that improved and more precise cost reporting is the best way
to improve the accuracy of all cost-based payment weights, including
relative weights for the IPPS MS-DRGs. Because both the IPPS and the
OPPS rely on cost-based weights derived, in part, from data on the
Medicare hospital cost report form, public comment on this proposed
change to the cost report to break the single standard cost center 5600
into two standard cost centers should address any impact on both the
inpatient and outpatient payment systems.
This proposal would not affect OPPS cost estimation for
radiopharmaceuticals for several reasons. First, we would not expect
the costs and charges for radiopharmaceuticals to be assigned to cost
center 5600. Rather cost center 4300 (Radioisotope) is more appropriate
for these items. Second, our claims data demonstrate that some
hospitals continue to bill radiopharmaceuticals under revenue code
0636, contrary to UB-04 instructions (Official UB04 Data Specifications
Manual, AHA 2007, p. 127) specifically noting that radiopharmaceuticals
should be billed under revenue codes 0343 (Diagnostic
Radiopharmaceuticals) and 0344 (Therapeutic Radiopharmaceuticals). We
believe that billing radiopharmaceuticals under revenue code 0636 could
be a result of dated CMS' guidance regarding billing
radiopharmaceuticals under revenue code 0636. On April 8, 2008, we
deleted this guidance from our Claims Processing Manual through
administrative issuance (Transmittal 1487, Change Request 5999).
Finally, RTI did not observe evidence of differential mark-up in cost
center 4300 (for hospitals reporting the cost center) for products
reported under revenue
[[Page 41491]]
codes 0343 and 0344 (RTI report, ``Refining Cost to Charge Ratios for
Calculating APC and MS-DRG Relative Payment Weights,'' July 2008).
In the FY 2009 IPPS proposed rule (73 FR 23544 through 23546), we
proposed creating two cost centers, specifically (1) Medical Supplies
Charged to Patients and (2) Implantable Devices Charged to Patients, to
replace the current cost center Supplies Charged to Patients as part of
our initiative to revise and update the Medicare hospital cost report
form. We noted that we were only proposing one additional cost center
in order to proceed cautiously with changes to the Medicare cost report
in order to avoid unintended consequences for hospitals paid on a cost
basis and to limit hospitals' administrative burden associated with
adapting to new cost reporting forms and instructions. We remain
committed to moving cautiously but recognize the need for a judicious
number of additional cost centers in specific areas, including drugs
and biologicals. As with the items reported in the cost center Supplies
Charged to Patients, items reported in Drugs Charged to Patients
demonstrate significant variability in the costs of included items.
We noted in the FY 2009 IPPS proposed rule (73 FR 23546 through
23547) that we are updating the cost report form to eliminate outdated
requirements in conjunction with the PRA, and that we plan to propose
actual changes to the cost reporting form, the attending cost reporting
software, and the cost report instructions in Chapter 36 of the
Medicare Provider Reimbursement Manual (PRM), Part II. We anticipate
proposing these revisions shortly. If we were to adopt as final our
proposal to create one cost center for Drugs with High Overhead Cost
Charged to Patients and one cost center for Drugs with Low Overhead
Cost Charged to Patients in the CY 2009 OPPS/ASC final rule with
comment period, the cost report forms and instructions would reflect
those changes. We expect the revised cost report may be available for
hospitals to use when submitting cost reports during FY 2009, that is,
for cost reporting periods beginning after October 1, 2008, and we
expect that we would be able to use some of these data for setting drug
payment rates for a future OPPS update, generally 2 to 3 years from
implementation of the new cost report form.
Currently, to estimate the cost of separately payable drugs and
biologicals for purposes of establishing the equivalent average ASP-
based amount, we estimate costs from charges billed with UB-04 drug
revenue codes 025X (Pharmacy) and 063X (Drugs Require Specific ID)
using the CCR for cost center 5600. Our current revenue code-to-cost
center crosswalk is available on the CMS Web site: (http://
www.cms.hhs.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage). As
part of our effort to isolate the costs and charges for drugs with high
and low pharmacy overhead costs respectively, as proposed, we would
instruct hospitals to report the charges for drugs and biologicals
qualifying for the Drugs with High Overhead Cost Charged to Patients
cost center under revenue code 0636 and all other drugs and biologicals
under other appropriate drug revenue codes.
It is current practice for hospitals to bill only outpatient drug
and biological charges with revenue code 0636. Payment for inpatient
hospital services through DRGs does not require detailed HCPCS coding
for drugs and biologicals. More importantly, CMS claims processing
systems currently allow only HCPCS codes for blood clotting factors to
be reported with revenue code 0636 on inpatient claims. Under our CY
2009 proposal, we would instruct hospitals to report charges for drugs
and biologicals meeting the criteria for the proposed Drugs with High
Overhead Costs Charged to Patients cost center under revenue code 0636
for both inpatient and outpatient claims. CMS would need to change its
claims processing systems and, because revenue code 0636 requires all
charges to be reported in association with HCPCS codes, this approach
would require hospitals to report HCPCS codes for drug charges under
revenue code 0636 on inpatient claims. We believe that consistent
billing of drugs and biologicals across inpatient and outpatient
settings in the same hospital would be more appropriate than current
practice, in order to refine our cost estimation for drugs with high
and low pharmacy overhead costs. Continuing to exclude inpatient
hospital charges for drugs and biologicals with high overhead costs
from being reported under revenue code 0636 would leave some averaging
of high and low pharmacy overhead costs under other pharmacy revenue
codes, especially revenue code series 025X that we would map to the
proposed new cost center Drugs with Low Overhead Costs Charged to
Patients. As a result, there would be no improvement in the accuracy of
MS-DRG weights based on the two new cost centers that we are proposing
to create. However, we specifically invite public comment on how a CMS
requirement to report certain drug and biological charges under revenue
code 0636 on hospital inpatient claims would impact hospitals.
There are several ways we could define these new cost centers for
purposes of hospital reporting. First, we could adopt the assumptions
behind RTI's empirical findings and require that hospitals simply
report the costs and charges associated with revenue code 0636 in the
proposed new cost center Drugs with High Overhead Costs Charged to
Patients. This approach would require hospitals to report charges and
costs for all other drugs in the proposed new cost center Drugs with
Low Overhead Costs Charged to Patients. We believe this approach would
be administratively simple for hospitals to implement because it would
easily align revenue code and cost center relationships and would not
require hospitals to otherwise categorize drugs or estimate a unique
pharmacy overhead cost for each drug. Notwithstanding our requirement
for hospitals to report, consistent with CPT and CMS instructions, all
services described by HCPCS codes provided in an encounter, to the
extent that hospitals report HCPCS codes for drugs that are not
packaged, this approach might isolate costs and charges for drugs that
are separately paid under the OPPS for purposes of more accurately
estimating their costs. While we believe that RTI's findings suggest an
increase in the CCR for adjustment of drug charges to costs would
result from isolating the costs and charges for drugs billed under
revenue code 0636, one limitation of this approach is that it would not
fully mitigate the disproportionate allocation of pharmacy overhead
cost reflected in differential markup. Although clearly an improvement
in accuracy over current cost estimation, it is likely that significant
variability in markup and overhead cost for drugs currently billed
under revenue code 0636 would remain in the proposed new cost center
CCR for Drugs with High Overhead Costs Charged to Patients.
Second, we could set a cost threshold for drug acquisition and
pharmacy overhead cost for purposes of including costs and charges for
the drug in one of the two proposed new cost centers. If we were to
implement this methodology, we potentially could set the threshold at
the OPPS drug packaging threshold, which is proposed to be $60 for CY
2009. This would clearly identify those drugs that would be billed in
each cost center because all drug and biological HCPCS codes would be
assigned either separately payable or
[[Page 41492]]
packaged status under the CY 2009 OPPS. However, we believe that using
the OPPS drug packaging threshold may be too low, and probably does not
identify a cost point that would maximize cost differences between
drugs with relatively high pharmacy overhead costs and drugs with
relatively low pharmacy overhead costs. This approach has the benefit
of considering cost, which appears largely to determine the amount of
markup for pharmacy overhead costs a hospital incorporates into drug
charges. Although some high cost drugs may have low pharmacy overhead
costs, in general this alternative may do a better job of improving
cost estimates for drugs with high pharmacy overhead costs through the
use of more specific CCRs than the first alternative discussed, a cost
center that would include all drugs currently billed under revenue code
0636. On the other hand, we are uncertain as to how we would identify
the most appropriate cost threshold amount, or the manner and frequency
with which we would update the threshold. More importantly, we are
concerned that identifying the unique acquisition and overhead cost for
each drug could impose a comparable administrative burden as other
prior proposals.
Third, we could also set a cost threshold for pharmacy overhead
specifically to define high versus low overhead cost for purposes of
reporting costs and charges for drugs in the two new cost centers. This
alternative would require hospitals to identify the cost of pharmacy
overhead for every drug in order to assign it to a cost center. This
approach would most accurately isolate drugs with high and low overhead
costs, respectively. The resulting CCRs, therefore, would better
estimate the average acquisition and overhead cost for these drugs. On
the other hand, as with the second alternative, we are uncertain as to
how we would identify the most appropriate pharmacy cost threshold
amount, or the manner and frequency with which we would update the
threshold. Further, this approach could also impose a significant
hospital administrative burden, comparable to the burden identified by
commenters regarding other prior proposals.
A fourth approach would be to instruct hospitals to assign those
drugs they administer in the OPPS to the two proposed new cost centers
according to the categories discussed in the CY 2006 final rule with
comment period and presented in Table 24 above. Under this methodology,
drugs falling in CMS categories 1 and 2 would be billed under revenue
codes 025X or 063X (other than 0636) and captured on the cost report in
the proposed new cost center Drugs with Low Overhead Cost Charged to
Patients, while drugs falling in CMS category 3 would be billed under
revenue code 0636 and reported in the proposed new cost center Drugs
with High Overhead Cost Charged to Patients. CMS would provide some
examples in the cost report instructions of appropriate drugs for each
category. We are aware that some pharmacy stakeholders have already
categorized drug and biological HCPCS codes into the three CMS pharmacy
overhead categories that were proposed for CY 2006. Because pharmacy
overhead costs may vary depending on the preparation of a specific
product at an individual hospital and hospital accounting also varies,
the same drug could appear in a different cost center across hospitals.
However, we do not believe it would be necessary for hospitals to
assign exactly the same drugs to each of the two proposed new cost
centers, as long as hospitals' assessment of the pharmacy overhead cost
category is consistent with their billing of these drugs under revenue
codes 063X (other than 0636) and 025X or 0636 and the inclusion of
these drugs in the associated cost centers. Prospectively, the OPPS
cost estimation methodology would use the CCR calculated for the
proposed new cost center Drugs with High Overhead Cost Charged to
Patients to adjust drug charges billed under revenue code 0636 to cost
and the CCR calculated for the proposed new cost center Drugs with Low
Overhead Cost Charged to Patients to adjust drug charges billed under
revenue codes 025X and 063X (other than 0636) to cost for determining
drug acquisition and pharmacy overhead costs. We believe that this
fourth approach would best estimate a CCR for drugs with high pharmacy
overhead cost and relatively low markup as reflected in hospitals'
charges. Because the number of drugs in pharmacy overhead category
three would be limited based on the specific category description, this
approach should more accurately address the limited markup for very
expensive drugs with high pharmacy overhead costs, where charges do not
reflect the hospitals' pharmacy overhead costs for those drugs. We also
believe that hospitals would find this alternative easier to implement
than any policy requiring hospitals to identify a unique total
acquisition and overhead cost or a specific pharmacy overhead cost for
each drug for purposes of assigning the drug's costs and charges to one
of the two proposed new cost centers. However, we realize that there
would still be some additional administrative burden for hospitals that
have not yet determined the appropriate pharmacy overhead category for
each of their drugs, and that they would need to educate their billing
staff, to modify their chargemasters, and to adapt other billing
software.
In summary, we are proposing to pay for the combined average
acquisition and pharmacy overhead cost of separately payable drugs and
biologicals at ASP+4 percent under the CY 2009 OPPS. In addition, we
are proposing to create two new cost centers when we revise the
Medicare hospital cost report form, specifically Drugs with High
Overhead Cost Charged to Patients and Drugs with Low Overhead Cost
Charged to Patients. We expect that CCRs from these proposed new cost
centers would be available in 2 to 3 years to refine OPPS drug cost
estimates by accounting for differential hospital markup practices for
drugs with high and low pharmacy overhead costs. We specifically invite
public comment on the policy and operational benefits, challenges, and
concerns that may be associated with these proposals, specifically as
they relate to our proposed approach to distinguishing between drugs
and biologicals for purposes of inclusion in the two proposed new cost
centers and the other alternatives discussed above.
c. Proposed Payment for Blood Clotting Factors
For CY 2008, we are providing payment for blood clotting factors
under the OPPS at ASP+5 percent, plus an additional payment for the
furnishing fee that is also a part of the payment for blood clotting
factors furnished in physicians' offices under Medicare Part B. The CY
2008 updated furnishing fee increased by 4.0 percent to $0.158 per
unit.
For CY 2009, we are proposing to pay for blood clotting factors at
ASP+4 percent, consistent with our proposed payment policy for other
nonpass-through separately payable drugs and biologicals, and to
continue our policy for payment of the furnishing fee using an updated
amount for CY 2009. Because the furnishing fee update is based on the
percentage increase in the Consumer Price Index (CPI) for medical care
for the 12-month period ending with June of the previous year and the
Bureau of Labor Statistics releases the applicable CPI data after the
MPFS and OPPS/ASC proposed rules are published, we are not able to
include the actual updated furnishing fee in this proposed rule.
Therefore, in accordance with our policy as finalized in the CY
[[Page 41493]]
2008 OPPS/ASC final rule with comment period (72 FR 66765), we will
announce the actual figure for the percent change in the applicable CPI
and the updated furnishing fee calculated based on that figure through
applicable program instructions and posting on the CMS Web site at:
http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/.
4. Proposed Payment for Therapeutic Radiopharmaceuticals
a. Background
Section 303(h) of Pub. L. 108-173 exempted radiopharmaceuticals
from ASP pricing in the physician's office setting. Beginning in the CY
2005 OPPS final rule with comment period, we have exempted
radiopharmaceutical manufacturers from reporting ASP data for payment
purposes under the OPPS. (For more information, we refer readers to the
CY 2005 OPPS final rule with comment period (69 FR 65811) and the CY
2006 OPPS final rule with comment period (70 FR 68655).) Consequently,
we did not have ASP data for radiopharmaceuticals for consideration for
previous years' OPPS ratesetting. In accordance with section
1833(t)(14)(B)(i)(I) of the Act, we have classified
radiopharmaceuticals under the OPPS as SCODs. As such, we have paid for
radiopharmaceuticals at average acquisition cost as determined by the
Secretary and subject to any adjustment for overhead costs.
Radiopharmaceuticals are also subject to the policies affecting all
similarly classified OPPS drugs and biologicals, such as pass-through
payment for diagnostic and therapeutic radiopharmaceuticals and
individual packaging determinations for therapeutic
radiopharmaceuticals, discussed earlier in this proposed rule.
For CYs 2006 and 2007, we used mean unit cost data from hospital
claims to determine each radiopharmaceutical's packaging status and
implemented a temporary policy to pay for separately payable
radiopharmaceuticals based on the hospital's charge for each
radiopharmaceutical adjusted to cost using the hospital's overall CCR.
In addition, in the CY 2006 final rule with comment period (70 FR
68654), we instructed hospitals to include charges for
radiopharmaceutical handling in their charges for the
radiopharmaceutical products so these costs would be reflected in the
CY 2008 ratesetting process. We note that this continues to be our
expectation, and we believe that the charges for radiopharmaceuticals
in the CY 2007 claims data that we are using for this proposed rule
reflect both the acquisition cost of the radiopharmaceutical and its
associated overhead. The methodology of providing separate payment
based on the individual hospital's overall CCR for CYs 2006 and 2007
was finalized as an interim proxy for average acquisition cost because
of the unique circumstances associated with providing
radiopharmaceutical products to Medicare beneficiaries. The single OPPS
payment represented Medicare payment for both the acquisition cost of
the radiopharmaceutical and its associated handling costs.
During the CY 2006 and CY 2007 rulemaking processes, we encouraged
hospitals and radiopharmaceutical stakeholders to assist us in
developing a viable long-term prospective payment methodology for these
products under the OPPS. As reiterated in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66766), we were pleased to note that we
had many discussions with interested parties regarding the availability
and limitations of radiopharmaceutical cost data.
In considering payment options for therapeutic radiopharmaceuticals
for CY 2008, we examined several alternatives which we discussed in our
CY 2008 OPPS/ASC proposed rule (72 FR 42738 through 42739) and CY 2008
OPPS/ASC final rule with comment period (72 FR 66769 through 66770).
(We refer readers to these rules for a full discussion of all of the
options that we considered.) After considering the options and all
public comments, we finalized a CY 2008 methodology to provide a
prospective payment for therapeutic radiopharmaceuticals (defined as
those Level II HCPCS codes that include the term ``therapeutic'' along
with a radiopharmaceutical in their long code descriptors) using mean
costs derived from the CY 2006 claims data, where the costs are
determined using our standard methodology of applying hospital-specific
departmental CCRs to radiopharmaceutical charges, defaulting to
hospital-specific overall CCRs only if appropriate departmental CCRs
are unavailable (72 FR 66772). We additionally finalized a policy to
package payment for all diagnostic radiopharmaceuticals (defined as
Level II HCPCS codes that include the term ``diagnostic'' along with a
radiopharmaceutical in their long code descriptors) for CY 2008. As
discussed in the CY 2008 OPPS/ASC proposed rule (72 FR 42739), we
believed that adopting prospective payment based on historical hospital
claims data was appropriate because it served as our most accurate
available proxy for the average hospital acquisition cost of separately
payable therapeutic radiopharmaceuticals. In addition, we noted that we
have found that our general prospective payment methodology based on
historical hospital claims data results in more consistent,
predictable, and equitable payment amounts across hospitals and likely
provides incentives to hospitals for efficiently and economically
providing these outpatient services.
Prior to implementation of our finalized CY 2008 methodology of
providing a prospective payment for therapeutic radiopharmaceuticals,
section 106(b) of the MMSEA was enacted on December 29, 2007, that
provided payment for therapeutic radiopharmaceuticals based on
individual hospital charges adjusted to cost. Therefore, hospitals
continue to receive payment for therapeutic radiopharmaceuticals by
applying the hospital-specific overall CCR to each hospital's charge
for a therapeutic radiopharmaceutical from January 1, 2008 through June
30, 2008. Thereafter, the OPPS provides payment for separately payable
therapeutic radiopharmaceuticals on a prospective basis, with payment
rates based upon mean costs from hospital claims data as set forth in
the CY 2008 OPPS/ASC final rule with comment period, unless otherwise
required by law.
b. Proposed Payment Policy
Since the start of the temporary cost-based payment methodology for
radiopharmaceuticals in CY 2006, we have met with several interested
parties on a number of occasions regarding payment under the OPPS for
radiopharmaceuticals and have received numerous different suggestions
from these stakeholders regarding payment methodologies that we could
employ for future use under the OPPS.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66771), we solicited comments requesting interested parties to provide
information related to if and how the existing ASP methodology could be
used to establish payment for specific therapeutic radiopharmaceuticals
under the OPPS. We received several responses to our request for
comments.
Similar to the recommendations we received during the CY 2008 OPPS/
ASC proposed rule comment period (72 FR 66770), we received several
suggestions regarding the establishment of an OPPS-specific methodology
for radiopharmaceutical payment that would be similar to the ASP
methodology, without following the
[[Page 41494]]
established ASP procedures referenced at 1847A of the Act and
implemented through rulemaking. Some commenters recommended using
external data submitted by a variety of sources other than
manufacturers. Along this line, commenters suggested gathering
information from nuclear pharmacies using methodologies with a variety
of names such as Nuclear Pharmacy Calculated Invoiced Price (Averaged)
(CIP) and Calculated Pharmacy Sales Price (CPSP). Other commenters
recommended that CMS base payment for certain radiopharmaceuticals on
manufacturer-reported ASP.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66771), a ratesetting approach based on external data would be
administratively burdensome for us because we would be required to
collect, process, and review external information to ensure that it was
valid, reliable, and representative of a diverse group of hospitals so
that it could be used to establish rates for all hospitals. However, we
specifically requested additional comments regarding the use of the
existing ASP reporting structure for therapeutic radiopharmaceuticals
as this established methodology is already used for payment of other
drugs provided in the hospital outpatient setting (72 FR 66771). While
we received several recommendations from commenters on the CY 2008
OPPS/ASC final rule with comment period regarding payment of
therapeutic radiopharmaceuticals based on estimated costs provided by
manufacturers or other parties, we believe that the use of external
data for payment of therapeutic radiopharmaceuticals should only be
adopted if those external data are subject to the same well-established
regulatory framework as the ASP data currently used for payment of
separately payable drugs and biologicals under the OPPS. We have
previously indicated that nondevice external data used for setting
payment rates should be publicly available and representative of a
diverse group of hospitals both by location and type, while it should
also identify its data sources. We do not believe that external
therapeutic radiopharmaceutical cost data voluntarily provided outside
of the established ASP methodology, either by manufacturers or nuclear
pharmacies, would generally satisfy these criteria that are minimum
standards for setting OPPS payment rates.
Another commenter on the CY 2008 OPPS/ASC final rule with comment
period recommended that CMS identify the therapeutic
radiopharmaceutical used for Zevalin therapy (A9543 (Yttrium Y-90
ibritumomab tiuxetan, therapeutic, per treatment dose, up to 40
millicuries)) as a biological for payment purposes, instead of treating
it as a radiopharmaceutical. As discussed in the CY 2003 OPPS final
rule with comment period (67 FR 66757), Zevalin treatment consists of a
radioactive isotope that is delivered to its target tissue by a
monoclonal antibody. At that time, we explained that because of the
specific requirements associated with delivery of radioactive isotope
therapy, any product containing a therapeutic radioisotope, including
Y-90 Zevalin, would be considered to be covered and paid under the
category of benefits described under section 1861(s)(4) of the Act for
radioactive isotope therapy. We stated that we would not consider
therapeutic radiopharmaceuticals to be drugs as described in section
1861(t) and, therefore, the OPPS payment methodology for separately
payable drugs and biologicals would not be applicable to payment for Y-
90 Zevalin. We continue to believe that the most appropriate Medicare
benefit category for Y-90 Zevalin is provided in section 1861(s)(4) of
the Act because this product is a specific radioactive isotope therapy.
Therefore, the CY 2009 OPPS proposal for nonpass-through payment of
separately payable biologicals that is described in section V.B.3.b. of
this proposed rule would not apply to payment for Y-90 Zevalin.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66770), at its September 2007 meeting, the APC Panel recommended
that CMS create a composite APC for Bexxar or related therapies and
present it for the APC Panel's consideration at the next APC Panel
meeting. We accepted this recommendation and modeled a
radioimmunotherapy (RIT) composite APC for both Bexxar and Zevalin
therapies using our final rule CY 2008 claims database. We discussed
this analysis with the APC Panel at its March 2008 meeting.
To perform this analysis for the APC Panel, we first identified all
claims that had an occurrence of a case-defining therapeutic
radiopharmaceutical HCPCS code used for a RIT treatment: A9545 (Iodine
I-131 tositumomab, therapeutic, per treatment dose) and A9543 (Yttrium
Y-90 ibritumomab tiuxetan, therapeutic, per treatment dose, up to 40
millicuries). We then identified what we considered to be the HCPCS
codes for services and products associated with RIT, based on
information from the manufacturers and suggestions from CMS medical
advisors and identified associated claims (using beneficiary health
insurance claim (HIC) numbers) to develop the total median cost for a
RIT composite APC.
We note that very few hospitals billed all of the HCPCS codes for
an individual beneficiary that we expected to be reported for a case of
RIT treatment. We used this ``HIC-linked'' file consisting of all
associated claims for each beneficiary from one hospital that we
considered to be part of a single case of RIT treatment to develop a
composite APC cost estimate for a course of RIT treatment, where a case
required: (1) HCPCS code A9545 or A9543; (2) an HCPCS code for either
nonradiolabeled tositumomab (G3001 (Administration or supply of
tositumomab, 450 mg)) or rituximab (J9310 (Rituximab, 100 mg)) (which
would also indicate the start of a RIT case); (3) a HCPCS code for the
corresponding diagnostic radiopharmaceutical (A9544 (Iodine I-131
tositumomab, diagnostic, per study dose) or A9542 (Indium In-111,
ibritumomab tiuxetan, diagnostic, per study dose, up to 5
millicuries)); and (4) at least one instance of a diagnostic imaging
service (CPT code 78804 (Radiopharmaceutical localization of tumor or
distribution of radiopharmaceutical agent(s); whole body, requiring two
or more days imaging)) prior to the administration of the therapeutic
radiopharmaceutical. In addition, in order to further define the case
for an estimate of a composite APC cost, we did not include the costs
of services occurring on dates before the provision of the
nonradiolabeled tositumomab or rituximab or after the administration of
the therapeutic radiopharmaceutical.
Other services we expected to be reported for a case, such as CPT
code 79403 (Radiopharmaceutical therapy, radiolabeled monoclonal
antibody by intravenous infusion) and CPT code 77300 (Basic radiation
dosimetry calculation, central axis depth dose calculation, TDF, NSD,
gap calculation, off axis factor, tissue inhomogeneity factors,
calculation of non-ionizing radiation surface and depth dose, as
required during course of treatment, only when prescribed by the
treating physician), were considered optional and, although they were
not required in order to determine the RIT case, the costs of these
associated services were included when we established the median cost
of the RIT composite APC.
We determined that the median cost for the RIT composite APC,
including required and optional additional services directly related to
the RIT treatment, would be approximately $19,000. This figure
represents, at a minimum, the estimated cost of the nonradiolabeled
tositumomab (or
[[Page 41495]]
rituximab), the diagnostic radiopharmaceutical, the therapeutic
radiopharmaceutical, and the imaging, based on costs from hospital
claims data.
Upon review of this study, the APC Panel, at its March 2008
meeting, recommended that CMS pursue a RIT composite APC that uses
existing claims and stakeholder data to establish appropriate payment
rates for RIT protocols. In addition, the APC Panel recommended that
CMS provide specific guidance to hospitals on appropriate billing for
RIT under a composite APC methodology. We are not accepting these
recommendations of the APC Panel. First, we do not believe it would be
appropriate to incorporate external data into a composite APC
methodology, when composite APC median costs for a comprehensive
service that the composite APC describes are based upon reported
hospital costs on claims as described in section II.A.2.e. of this
proposed rule. As we have hospital costs from CY 2007 claims for the
services that would be paid through a RIT composite APC, we would have
no reason to use external stakeholder data instead of reported hospital
costs for ratesetting for such an APC. In addition, as the APC Panel
alluded to in its second recommendation regarding billing guidance to
hospitals, our claims analysis demonstrated that, according to hospital
claims data, apparently few patients actually received all the
component services associated with RIT treatment from a single
hospital, or many RIT treatments were incorrectly reported by
hospitals. A composite APC payment provides more accurate payment for a
set of major services with only limited variation from hospital to
hospital or from case to case and relies on correctly coded claims for
the comprehensive service to develop the composite cost, whereas RIT
treatment does not appear to have these characteristics. Stakeholders
have confirmed that a proportion of patients receiving a diagnostic
radiopharmaceutical and imaging in preparation for RIT treatment do not
go on to receive the therapeutic radiopharmaceutical for a variety of
specific clinical reasons. Furthermore, the whole course of RIT
treatment may occur over a several week period, and the challenges
associated with instructing hospitals to report component services in a
timely fashion that would allow the I/OCE to determine whether a
composite payment would be appropriate are significant. Therefore, we
believe it would be premature to propose payment of a composite APC for
RIT treatment for CY 2009.
We received comments on the CY 2008 OPPS/ASC final rule with
comment period from certain radiopharmaceutical manufacturers who
indicated that the standard ASP methodology could be used for payment
of certain therapeutic radiopharmaceutical products. Specifically,
these manufacturers expressed interest in providing ASP for their
therapeutic radiopharmaceutical products as a basis for payment under
the OPPS. We appreciate the willingness of these manufacturers to
provide ASP data, but we recognize that payment based on the ASP
methodology may not be possible for all therapeutic
radiopharmaceuticals if manufacturers are unable or unwilling to
voluntarily submit ASP data. Therefore, we are proposing the following
payment methodology for therapeutic radiopharmaceuticals under the CY
2009 OPPS. For therapeutic radiopharmaceuticals where ASP information
is submitted through the established ASP process by all manufacturers
of the specific therapeutic radiopharmaceutical, we would provide
payment for the average acquisition and associated handling costs of
the therapeutic radiopharmaceutical at the same relative ASP-based
amount (proposed at ASP+4 percent for CY 2009) that we would pay for
separately payable drugs and biologicals in CY 2009 under the OPPS. If
sufficient ASP information is not submitted or appropriately certified
by the manufacturer for a given calendar year quarter, then for that
quarter we are proposing that the OPPS would provide a prospective
payment based on the mean cost from hospital claims data as displayed
in Table 25 below, as this was the methodology finalized in the CY 2008
OPPS/ASC final rule with comment period. Further, we are proposing to
continue the methodology, as discussed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66772), of eliminating claims from
providers who consistently (more than 2 times) reported charges in the
CY 2007 claims data that were less than $100 when converted to costs
for HCPCS codes A9543 and A9545 as part of the usual ratesetting
process. We believe that this would mitigate the effects of using
incorrectly coded claims from several providers in our standard
ratesetting methodology which calculates the mean costs for these two
products from the claims available for the update year.
Because we do not have ASP data for therapeutic
radiopharmaceuticals that were used for payment in April 2008, the
proposed payment rates included in Addenda A and B to this proposed
rule are based on mean costs from historical hospital claims data
available for this proposed rule. Under our proposal that initially
looks to ASP data to establish the payment rates for separately payable
therapeutic radiopharmaceuticals, beginning in CY 2009, we would update
the payment rates for therapeutic radiopharmaceuticals quarterly as new
ASP data become available, just as we would update the payment rates
for separately payable drugs and biologicals under the OPPS.
We are proposing to allow manufacturers to submit ASP information
for any separately payable therapeutic radiopharmaceutical for payment
purposes under the OPPS. However, we are not proposing to compel
manufacturers to submit ASP information. The ASP data submitted would
need to be provided for a patient-specific dose, or patient-ready form,
of the therapeutic radiopharmaceutical in order to properly calculate
the ASP amount for a given HCPCS code. In addition, in those instances
where there is more than one manufacturer of a particular therapeutic
radiopharmaceutical, we note that all manufacturers would need to
submit ASP information in order for payment to be made on an ASP basis.
We are specifically requesting public comment on the development of a
crosswalk, similar to the NDC/HCPCS crosswalk for separately payable
drugs and biologicals posted on the CMS Web site at: http://
www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/01a_2008aspfiles.asp, for
use for therapeutic radiopharmaceuticals. We believe that the use of
ASP information for OPPS payment would provide an opportunity to
improve payment accuracy for these products by applying an established
methodology that has already been successfully implemented under the
OPPS for other separately payable drugs and biologicals. As is the case
with other drugs and biologicals subject to ASP reporting, in order for
a therapeutic radiopharmaceutical to receive payment based on ASP
beginning January 1, 2009, we would need to receive ASP information
from the manufacturer in October 2008 that would reflect therapeutic
radiopharmaceutical sales in the third quarter of CY 2008 (July 1, 2008
through September 30, 2008). These data would not be available for
publication in the CY 2009 OPPS/ASC final rule with
[[Page 41496]]
comment period but would be included in the January 2009 OPPS quarterly
release that would update the payment rates for separately payable
drugs, biologicals, and therapeutic radiopharmaceuticals based on the
most recent ASP data, consistent with our customary practice over the
past 3 years when we have used the ASP methodology for payment of
separately payable drugs and biologicals under the OPPS. In addition,
we would need to receive information from radiopharmaceutical
manufacturers that would allow us to calculate a unit dose cost
estimate based on the applicable HCPCS code for the therapeutic
radiopharmaceutical.
We realize that not all therapeutic radiopharmaceutical
manufacturers may be willing or able to submit ASP information for a
variety of reasons. We are proposing to provide payment at the ASP rate
if ASP information is available for a given calendar year quarter or,
if ASP information is not available, we are proposing to provide
payment based on the most recent hospital mean unit cost data that we
have available. We believe that both methodologies represent an
appropriate and adequate proxy for average hospital acquisition cost
and associated handling costs for these products. Therefore, if ASP
information for the appropriate period of sales related to payment in
any CY 2009 quarter is not available, we would rely on the CY 2007 mean
unit cost data derived from hospital claims to set the payment rates
for therapeutic radiopharmaceuticals. We note that this is not the
usual OPPS process that relies on alternative data sources, such as WAC
or AWP, when ASP information is temporarily unavailable, prior to
defaulting to the mean unit cost from hospital claims data. We are
proposing this methodology specifically for therapeutic
radiopharmaceuticals whereby we would immediately default to the mean
unit cost from hospital claims if sufficient ASP data were not
available because we are not proposing to require therapeutic
radiopharmaceutical manufacturers to report ASP data at this time. We
do not believe that WAC or AWP is an appropriate proxy for OPPS payment
for average therapeutic radiopharmaceutical acquisition cost and
associated handling costs when manufacturers are not required to submit
ASP data and, therefore, payment based on WAC or AWP could continue for
the full calendar year.
Similar to the ASP process already in place for drugs and
biologicals, we are proposing to update ASP data for therapeutic
radiopharmaceuticals through our quarterly process as updates become
available. In addition, we are proposing to assess the availability of
ASP data for therapeutic radiopharmaceuticals quarterly, and if ASP
data become available midyear, we would transition at the next
available quarter to ASP-based payment. For example, if ASP data are
not available for the quarter beginning January 2009 (that is, ASP
information reflective of third quarter CY 2008 sales are not submitted
in October 2008), then the next opportunity to begin payment based on
ASP data for a therapeutic radiopharmaceutical would be April 2009 if
ASP data reflective of fourth quarter CY 2008 sales were submitted in
January 2009.
Table 25.--Proposed CY 2009 Separately Payable Therapeutic Radiopharmaceuticals
----------------------------------------------------------------------------------------------------------------
Proposed CY
2009
payment
HCPCS code Short descriptor Proposed CY Proposed CY rate based
2009 APC 2009 SI on mean
cost from
claims
----------------------------------------------------------------------------------------------------------------
A9517.................................. I131 iodide cap, rx............ 1064 K $514.52
A9530.................................. I131 iodide sol, rx............ 1150 K 424.97
A9543.................................. Y90 ibritumomab, rx............ 1643 K 15,159.66
A9545.................................. I131 tositumomab, rx........... 1645 K 10,554.47
A9563.................................. P32 Na phosphate............... 1675 K 164.98
A9564.................................. P32 chromic phosphate.......... 1676 K 560.36
A9600.................................. Sr89 strontium................. 0701 K 1,308.96
A9605.................................. Sm 153 lexidronm............... 0702 K 2,655.52
----------------------------------------------------------------------------------------------------------------
5. Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes, but Without OPPS Hospital Claims
Data
Pub. L. 108-173 does not address the OPPS payment in CY 2005 and
after for drugs, biologicals, and radiopharmaceuticals that have
assigned HCPCS codes, but that do not have a reference AWP or approval
for payment as pass-through drugs or biologicals. Because there is no
statutory provision that dictated payment for such drugs and
biologicals in CY 2005, and because we had no hospital claims data to
use in establishing a payment rate for them, we investigated several
payment options for CY 2005 and discussed them in detail in the CY 2005
OPPS final rule with comment period (69 FR 65797 through 65799).
For CYs 2005 to 2007, we implemented a policy to provide separate
payment for new drugs, biologicals, and radiopharmaceuticals with HCPCS
codes, but which did not have pass-through status, at a rate that was
equivalent to the payment they received in the physician's office
setting, established in accordance with the ASP methodology. For CY
2008, we finalized a policy to provide payment for new drugs and
biologicals with HCPCS codes but which do not have pass-through status
and are without OPPS hospital claims data, at ASP+5 percent, consistent
with the final OPPS payment methodology for other separately payable
drugs and biologicals. We are proposing to continue this methodology
for CY 2009. Therefore, for CY 2009, we are proposing to provide
payment for new drugs and biologicals with HCPCS codes, but which do
not have pass-through status and are without OPPS hospital claims data,
at ASP+4 percent, consistent with the CY 2009 proposed payment
methodology for other separately payable nonpass-through drugs and
biologicals. It is our belief that this policy ensures that new
nonpass-through drugs and biologicals are treated like other drugs and
biologicals under the OPPS, unless they are granted pass-through
status. Only if
[[Page 41497]]
they are pass-through drugs and biologicals would they receive a
different payment for CY 2009, generally equivalent to the payment
these drugs and biologicals would receive in the physician's office
setting, consistent with the requirements of the statute. We are
proposing to continue packaging payment for all new nonpass-through
diagnostic radiopharmaceuticals in CY 2009.
In accordance with the ASP methodology, in the absence of ASP data,
we are proposing, for CY 2009, to continue the policy we implemented
beginning in CY 2005 of using the WAC for the product to establish the
initial payment rate for new nonpass-through drugs and biologicals with
HCPCS codes, but which are without OPPS claims data. However, we note
that if the WAC is also unavailable, we would make payment at 95
percent of the product's most recent AWP. We are also proposing to
assign status indicator ``K'' to HCPCS codes for new drugs and
biologicals for which we have not received a pass-through application.
We further note that with respect to new items for which we do not have
ASP data, once their ASP data become available in later quarter
submissions, their payment rates under the OPPS would be adjusted so
that the rates are based on the ASP methodology and set to the
finalized ASP-based amount (proposed for CY 2009 at ASP+4 percent) for
items that have not been granted pass-through status.
For CY 2009, we also are proposing to base payment for new
therapeutic radiopharmaceuticals with HCPCS codes as of January 1,
2009, but which do not have pass-through status, on the WACs for these
products if ASP data for these therapeutic radiopharmaceuticals are not
available. If the WACs are also unavailable, we would make payment for
new therapeutic radiopharmaceuticals at 95 percent of their most recent
AWPs because we would not have mean costs from hospital claims data
upon which to base payment. Analogous to new drugs and biologicals, we
are proposing to assign status indicator ``K'' to HCPCS codes for new
therapeutic radiopharmaceuticals for which we have not received a pass-
through application.
Consistent with other ASP-based payments, for CY 2009, we are
proposing to make any appropriate adjustments to the payment amounts
for new drugs and biologicals in the CY 2009 OPPS/ASC final rule with
comment period and also on a quarterly basis on our Web site during CY
2009 if later quarter ASP submissions (or more recent WACs or AWPs)
indicate that adjustments to the payment rates for these drugs and
biologicals are necessary. The payment rates for new therapeutic
radiopharmaceuticals would also be adjusted accordingly. We note, the
new CY 2009 HCPCS codes for drugs, biologicals, and therapeutic
radiopharmaceuticals are not available at the time of development of
this proposed rule; however, they will be included in the CY 2009 OPPS/
ASC final rule with comment period where they will be assigned comment
indicator ``NI'' to reflect that their interim final OPPS treatment is
open to comment in the CY 2009 OPPS/ASC final rule with comment period.
There are several nonpass-through drugs and biologicals that were
payable in CY 2007 and/or CY 2008 for which we do not have any CY 2007
hospital claims data. In order to determine the packaging status of
these items for CY 2009, we calculated an estimate of the per day cost
of each of these items by multiplying the payment rate for each product
based on ASP+4 percent, similar to other nonpass-through drugs and
biologicals paid separately under the OPPS, by an estimated average
number of units of each product that would typically be furnished to a
patient during one administration in the hospital outpatient setting.
We are proposing to package items for which we estimate the per
administration cost to be less than or equal to $60, which is the
general packaging threshold that we are proposing for drugs,
biologicals, and therapeutic radiopharmaceuticals in CY 2009. We are
proposing to pay separately for items with an estimated per
administration cost greater than $60 (with the exception of diagnostic
radiopharmaceuticals and contrast agents which we are proposing to
continue to package regardless of cost, as discussed in more detail in
section V.B.2.b. of this proposed rule) in CY 2009. We are proposing
that the CY 2009 payment for separately payable items without CY 2007
claims data would be based on ASP+4 percent, similar to other
separately payable nonpass-through drugs and biologicals under the
OPPS. In accordance with the ASP methodology used in the physician's
office setting, in the absence of ASP data, we would use the WAC for
the product to establish the initial payment rate. However, we note
that if the WAC is also unavailable, we would make payment at 95
percent of the most recent AWP available.
Table 26 lists all of the nonpass-through drugs and biologicals
without available CY 2007 claims data to which these policies would
apply in CY 2009.
Table 26.--Drugs and Biologicals Without CY 2007 Claims Data
----------------------------------------------------------------------------------------------------------------
Proposed Estimated
ASP-based average number Proposed CY Proposed CY
HCPCS code Short descriptor payment of units per 2009 SI 2009 APC
rate administration
----------------------------------------------------------------------------------------------------------------
C9237......................... Inj, lanreotide $23.90 90 K 9237
acetate.
J0400......................... Aripiprazole injection ........... 39 N ...........
J1573......................... Hepagam B intravenous, 47.43 8 K 1138
inj.
J2724......................... Protein C concentrate. 11.96 630 K 1139
J3355......................... Urofollitropin, 75 iu. 48.25 2 K 1741
Q4096......................... VWF complex, not 0.64 6825 K 1213
Humate-P.
Q4097......................... Inj IVIG Privigen 500 33.54 84 K 1214
mg.
----------------------------------------------------------------------------------------------------------------
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66776), we began recognizing, for OPPS payment purposes, multiple HCPCS
codes indicating different dosages for covered Part B drugs. In
general, prior to CY 2008, the OPPS recognized the lowest available
administrative dose of a drug if multiple HCPCS codes existed for the
drug; for the remainder of the doses, the HCPCS codes were assigned
status indicator ``B'' indicating that another code existed for OPPS
purposes. For example, if drug X has 2 HCPCS codes, 1 for a 1 ml dose
and a second for a 5
[[Page 41498]]
ml dose, prior to CY 2008, the OPPS would have assigned a payable
status indicator to the 1 ml dose and status indicator ``B'' to the 5
ml dose. Hospitals were then responsible for billing the appropriate
number of units for the 1 ml dose in order to receive payment for the
drug under the OPPS.
As these HCPCS codes were previously unrecognized under the OPPS
prior to CY 2008, we do not have claims data to determine their
appropriate packaging status for CY 2009. For the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66775), we implemented a policy
that assigned the status indicator of the previously recognized HCPCS
code to the associated newly recognized code(s). For CY 2009, we are
again proposing to continue to use this methodology. Table 27 below
shows the CY 2007 unrecognized HCPCS code, the CY 2007 status indicator
for the unrecognized HCPCS code, the CY 2008 short descriptor for the
unrecognized HCPCS code, the associated recognized CY 2007 HCPCS code,
and the proposed status indicator for the newly recognized code. As
noted in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66775), we believe that this approach is the most appropriate and
reasonable way to implement this change in HCPCS code recognition under
the OPPS without impacting payment. However, once claims data are
available for these previously unrecognized HCPCS codes, we would
determine the packaging status and resulting status indicator for each
HCPCS code according to the general code-specific methodology for
determining a code's packaging status for a given update year. As we
stated in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66775), we plan to closely follow our claims data to ensure that our
annual packaging determinations for the different HCPCS codes
describing the same drug do not create inappropriate payment incentives
for hospitals to report certain HCPCS codes instead of others.
Table 27.--HCPCS Codes Unrecognized in CY 2007, Associated Recognized HCPCS Codes, and Proposed Status
Indicators for CY 2009
----------------------------------------------------------------------------------------------------------------
Proposed CY 2009
Associated HCPCS SI for HCPCS
HCPCS codes not recognized in CY CY 2007 SI CY 2008 short recognized in CY code newly
2007 descriptor 2007 recognized in CY
2008
----------------------------------------------------------------------------------------------------------------
J1470........................... B Gamma globulin 2 CC inj J1460........... K
J1480........................... B Gamma globulin 3 CC inj J1460........... K
J1490........................... B Gamma globulin 4 CC inj J1460........... K
J1500........................... B Gamma globulin 5 CC inj J1460........... K
J1510........................... B Gamma globulin 6 CC inj J1460........... K
J1520........................... B Gamma globulin 7 CC inj J1460........... K
J1530........................... B Gamma globulin 8 CC inj J1460........... K
J1540........................... B Gamma globulin 9 CC inj J1460........... K
J1550........................... B Gamma globulin 10 CC J1460........... K
inj.
J1560........................... B Gamma globulin > 10 CC J1460........... K
inj.
J8521........................... B Capecitabine, oral, 500 J8520........... K
MG.
J9062........................... B Cisplatin 50 MG J9060........... N
injection.
J9080........................... B Cyclophosphamide 200 MG J9070........... N
inj.
J9090........................... B Cyclophosphamide 500 MG J9070........... N
inj.
J9091........................... B Cyclophosphamide 1.0 J9070........... N
Grm inj.
J9092........................... B Cyclophosphamide 2.0 J9070........... N
Grm inj.
J9094........................... B Cyclophosphamide J9093........... N
lyophilized.
J9095........................... B Cyclophosphamide J9093........... N
lyophilized.
J9096........................... B Cyclophosphamide J9093........... N
lyophilized.
J9097........................... B Cyclophosphamide J9093........... N
lyophilized.
J9110........................... B Cytarabine hcl 500 MG J9100........... N
inj.
J9140........................... B Dacarbazine 200 MG inj. J9130........... N
J9182........................... B Etoposide 100 MG inj... J9181........... N
J9260........................... B Methotrexate sodium inj J9250........... N
J9290........................... B Mitomycin 20 MG inj.... J9280........... N
J9291........................... B Mitomycin 40 MG inj.... J9280........... N
J9375........................... B Vincristine sulfate 2 J9370........... N
MG inj.
J9380........................... B Vincristine sulfate 5 J9370........... N
MG inj.
----------------------------------------------------------------------------------------------------------------
Finally, there are 8 drugs and biologicals, shown in Table 28
below, that were payable in CY 2007 for which we lack CY 2007 claims
data and for which we are unable to determine the per day cost based on
the ASP methodology. As we are unable to determine the packaging status
and subsequent payment rates, if applicable, for these drugs and
biologicals for CY 2009 based on the ASP methodology or claims data, we
are proposing to package payment for these drugs and biologicals in CY
2009.
Table 28.--Drugs and Biologicals Without Information on per Day Cost
That Are Proposed for Packaging in CY 2009
------------------------------------------------------------------------
Proposed CY
HCPCS code Short descriptor 2009 SI
------------------------------------------------------------------------
90393.......................... Vaccina ig, im........ N
[[Page 41499]]
90581.......................... Anthrax vaccine, sc... N
J0350.......................... Injection anistreplase N
30 u.
J0395.......................... Arbutamine HCl N
injection.
J1452.......................... Intraocular Fomivirsen N
na.
J2670.......................... Totazoline hcl N
injection.
J3530.......................... Nasal vaccine N
inhalation.
Q0174.......................... Thiethylperazine N
maleate 10 mg.
------------------------------------------------------------------------
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
Section 1833(t)(6)(E) of the Act limits the total projected amount
of transitional pass-through payments for drugs, biologicals,
radiopharmaceuticals, and categories of devices for a given year to an
``applicable percentage'' of projected total Medicare and beneficiary
payments under the hospital OPPS. For a year before CY 2004, the
applicable percentage was 2.5 percent; for CY 2004 and subsequent
years, we specify the applicable percentage up to 2.0 percent.
If we estimate before the beginning of the calendar year that the
total amount of pass-through payments in that year would exceed the
applicable percentage, section 1833(t)(6)(E)(iii) of the Act requires a
uniform reduction in the amount of each of the transitional pass-
through payments made in that year to ensure that the limit is not
exceeded. We make an estimate of pass-through spending to determine not
only whether payments exceed the applicable percentage, but also to
determine the appropriate reduction to the conversion factor for the
projected level of pass-through spending in the following year.
For devices, developing an estimate of pass-through spending in CY
2009 entails estimating spending for two groups of items. The first
group of items consists of device categories that were recently made
eligible for pass-through payment and that would continue to be
eligible for pass-through payment in CY 2009. The CY 2008 OPPS/ASC
final rule with comment period (72 FR 66778) describes the methodology
we have used in previous years to develop the pass-through spending
estimate for known device categories continuing into the applicable
update year. The second group contains items that we know are newly
eligible, or project would be newly eligible, for device pass-through
payment in the remainder of CY 2008 or beginning in CY 2009. The sum of
the CY 2009 pass-through estimates for these two groups of device
categories would equal the total CY 2009 pass-through spending estimate
for device categories with pass-through status.
For drugs and biologicals, section 1833(t)(6)(D)(i) of the Act
establishes the pass-through payment amount for drugs and biologicals
eligible for pass-through payment as the amount by which the amount
authorized under section 1842(o) of the Act (or, if the drug or
biological is covered under a competitive acquisition contract under
section 1847B of the Act, an amount determined by the Secretary equal
to the average price for the drug or biological for all competitive
acquisition areas and year established under such section as calculated
and adjusted by the Secretary) exceeds the portion of the otherwise
applicable fee schedule amount that the Secretary determines is
associated with the drug or biological. Because we are proposing to pay
for nonpass-through separately payable drugs and biologicals under the
CY 2009 OPPS at ASP+4 percent, which represents the otherwise
applicable fee schedule amount associated with a pass-through drug or
biological, and we would pay for pass-through drugs and biologicals at
ASP+6 percent or the Part B drug CAP rate, if applicable, our estimate
of drug and biological pass-through payment for CY 2009 is not zero.
Similar to estimates for devices, the first group of drugs and
biologicals requiring a pass-through payment estimate consists of those
products that were recently made eligible for pass-through payment and
that would continue to be eligible for pass-through payment in CY 2009.
The second group contains drugs and biologicals that we know are newly
eligible, or project would be newly eligible, beginning in CY 2009. The
sum of the CY 2009 pass-through estimates for these two groups of drugs
and biologicals would equal the total CY 2009 pass-through spending
estimate for drugs and biologicals with pass-through status.
B. Proposed Estimate of Pass-Through Spending
We are proposing to set the applicable percentage limit at 2.0
percent of the total OPPS projected payments for CY 2009, consistent
with our OPPS policy from CY 2004 through CY 2008.
As discussed in section IV.A. of this proposed rule, there are
currently no known device categories receiving pass-through payment in
CY 2008 that would continue for payment during CY 2009. Therefore,
there are no device categories in the first group, that is, device
categories recently made eligible for pass-through payment and
continuing into CY 2009, and the estimate for this group is $0.
In estimating CY 2009 pass-through spending for device categories
in the second group (that is, device categories that we know at the
time of the development of this proposed rule would be newly eligible
for pass-through payment in CY 2009 (of which there are none),
additional device categories that we estimate could be approved for
pass-through status subsequent to the development of this proposed rule
and before January 1, 2009, and contingent projections for new
categories in the second through fourth quarters of CY 2009), we are
proposing to use the general methodology described in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66778), while also taking
into account recent OPPS experience in approving new pass-through
device categories. The estimate of CY 2009 pass-through spending for
this second group is $10.0 million. Employing our established
methodology that the estimate of pass-through device spending in CY
2009 incorporates CY 2009 estimates of pass-through spending for known
device categories continuing in CY 2009, those first effective January
1, 2009, and those device categories projected to be approved during
subsequent quarters of CY 2008 and CY 2009, our proposed total pass-
through estimate for device categories for CY 2009 is $10.0 million.
[[Page 41500]]
To estimate CY 2009 pass-through spending for drugs and biologicals
in the first group, specifically those drugs and biologicals recently
made eligible for pass-through payment and continuing into CY 2009, we
are proposing to utilize the most recent Medicare physician's office
data regarding their utilization, information provided in the
respective pass-through applications, historical hospital claims data,
pharmaceutical industry information, and clinical information regarding
the drugs or biologicals, in order to project the CY 2009 OPPS
utilization of the products. For the known drugs and biologicals that
would continue on pass-through status in CY 2009, we then estimate the
total pass-through payment amount as the difference between ASP+6
percent or the Part B drug CAP rate, as applicable, and ASP+4 percent,
aggregated across the projected CY 2009 OPPS utilization of these
products. If payment for the drug or biological would be packaged if
the product were not paid separately because of its pass-through
status, we include in the pass-through estimate the full payment for
the drug or biological at ASP+6 percent. Based on these analyses, we
are proposing the estimated pass-through spending attributable to the
first group (that is, the known drugs and biologicals continuing with
pass-through eligibility in CY 2009) described above to be about $3.4
million for CY 2009. This $3.4 million estimate of CY 2009 pass-through
spending for the first group of pass-through drugs and biologicals
reflects the current pass-through drugs and biologicals that are
continuing on pass-through status into CY 2009, which are displayed in
Table 21 in section V.A.3. of this proposed rule.
To estimate CY 2009 pass-through spending for drugs and biologicals
in the second group (that is, drugs and biologicals that we know at the
time of development of this proposed rule would be newly eligible for
pass-through payment in CY 2009 (of which there are none), additional
drugs and biologicals that we estimate could be approved for pass-
through status subsequent to the development of this proposed rule and
before January 1, 2009, and projections for new drugs and biologicals
that could be initially eligible for pass-through payment in the second
through fourth quarters of CY 2009), we are proposing to use
utilization estimates from applicants, pharmaceutical industry data,
and clinical information as the basis for pass-through spending
estimates for these drugs and biologicals for CY 2009, while also
considering the most recent OPPS experience in approving new pass-
through drugs and biologicals. Based on these analyses, we are
proposing the estimated pass-through spending attributable to this
second group of drugs and biologicals to be about $5.5 million for CY
2009.
In the CY 2005 OPPS final rule with comment period (69 FR 65810),
we indicated that we are accepting pass-through applications for new
radiopharmaceuticals that are assigned a HCPCS code on or after January
1, 2005. (Prior to this date, radiopharmaceuticals were not included in
the category of drugs paid under the OPPS, and, therefore, were not
eligible for pass-through status.) There are no radiopharmaceuticals
that are eligible for pass-through payment at the time of publication
of this proposed rule. In addition, we have no information identifying
new radiopharmaceuticals to which a HCPCS code might be assigned on or
after January 1, 2009, for which pass-through payment status would be
sought. We also have no historical data regarding payment for new
radiopharmaceuticals with pass-through status under the methodology
that we specified for the CY 2005 OPPS or the CY 2009 methodology that
we are proposing as discussed in section V.A.3. of this proposed rule.
However, we do not believe that pass-through spending for new
radiopharmaceuticals in CY 2009 would be significant enough to
materially affect our estimate of total pass-through spending in CY
2009. Therefore, we are not including radiopharmaceuticals in our
proposed estimate of pass-through spending for CY 2009. We discuss the
proposed methodology for determining the CY 2009 payment amount for new
therapeutic radiopharmaceuticals without pass-through status in section
V.B.5. of this proposed rule. We discuss our proposal to package
payment for all new diagnostic radiopharmaceuticals without pass-
through status in CY 2009 in section V.B.2.b. of this proposed rule.
In accordance with the comprehensive methodology described above,
we estimate that total pass-through spending for the device categories
and the drugs and biologicals that are continuing for pass-through
payment into CY 2009 and those devices, drugs, biologicals, and
radiopharmaceuticals that first become eligible for pass-through status
subsequent to this proposed rule in CY 2008 or during CY 2009 would
approximate $18.9 million, which represents 0.07 percent of total OPPS
projected payments for CY 2009.
Because we estimate that pass-through spending in CY 2009 would not
amount to 2.0 percent of total projected OPPS CY 2009 spending, we are
proposing to return 1.93 percent of the pass-through pool to adjust the
conversion factor, as we discuss in section II.B. of this proposed
rule.
VII. Proposed OPPS Payment for Brachytherapy Sources
A. Background
Section 1833(t)(2)(H) of the Act, as added by section 621(b)(2)(C)
of Public Law 108-173, mandated the creation of separate groups of
covered OPD services that classify brachytherapy devices separately
from other services or groups of services. The additional groups must
reflect the number, isotope, and radioactive intensity of the devices
of brachytherapy furnished, including separate groups for palladium-103
and iodine-125 devices.
Section 1833(t)(16)(C) of the Act, as added by section 621(b)(1) of
Public Law 108-173, established payment for devices of brachytherapy
consisting of a seed or seeds (or radioactive source) based on a
hospital's charges for the service, adjusted to cost. The period of
payment under this provision is for brachytherapy sources furnished
from January 1, 2004, through December 31, 2006. Under section
1833(t)(16)(C) of the Act, charges for the brachytherapy devices may
not be used in determining any outlier payments under the OPPS for that
period of payment. Consistent with our practice under the OPPS to
exclude items paid at cost from budget neutrality consideration, these
items were excluded from budget neutrality for that time period as
well.
Section 621(b)(3) of Pub. L. 108-173 required the GAO to conduct a
study to determine appropriate payment amounts for devices of
brachytherapy, and to submit a report on its study to the Congress and
the Secretary, including recommendations on the appropriate payments
for such devices. This report was due to Congress and to the Secretary
no later than January 1, 2005. The GAO's final report, ``Medicare
Outpatient Payments: Rates for Certain Radioactive Sources Used in
Brachytherapy Could Be Set Prospectively'' (GAO-06-635), was published
on July 24, 2006. We summarized and discussed the report's findings and
recommendations in the CY 2007 OPPS/ASC final rule with comment period
(71 FR 68103 through 68105). The GAO report principally recommended
that we use OPPS historical claims data to determine prospective
payment rates for two of the
[[Page 41501]]
most frequently used brachytherapy sources, iodine-125 and palladium-
103, and also recommended that we consider using claims data for the
third source studied, high dose rate (HDR) iridium-192.
In our CY 2007 annual OPPS rulemaking, we proposed and finalized a
policy of prospective payment based on median costs for the 11
brachytherapy sources for which we had claims data. We based the
prospective payment rates on median costs for each source from our CY
2005 claims data (71 FR 68102 through 71 FR 68114).
Subsequent to publication of the CY 2007 OPPS/ASC final rule with
comment period, section 107(a) of the MIEA-TRHCA amended section
1833(t)(16)(C) of the Act by extending the payment period for
brachytherapy sources based on a hospital's charges adjusted to cost
for 1 additional year, through December 31, 2007. Therefore, we
continued to pay for brachytherapy sources on charges adjusted to cost
for CY 2007.
Section 107(b)(1) of the MIEA-TRHCA amended section 1833(t)(2)(H)
of the Act by adding a requirement for the establishment of separate
payment groups for ``stranded and non-stranded'' brachytherapy devices
beginning July 1, 2007. Section 107(b)(2) of the MIEA-TRHCA authorized
the Secretary to implement this new requirement by ``program
instruction or otherwise.'' This new requirement is in addition to the
requirement for separate payment groups based on the number, isotope,
and radioactive intensity of brachytherapy devices that was previously
established by section 1833(t)(2)(H) of the Act. We note that
commenters who responded to the CY 2007 proposed rule asserted that
stranded sources, which they described as embedded into the stranded
suture material and separated within the strand by material of an
absorbable nature at specified intervals, had greater production costs
than non-stranded sources (71 FR 68113 through 68114).
As a result of the statutory requirement to create separate groups
for stranded and non-stranded sources as of July 1, 2007, we
established several coding changes via program transmittal, effective
July 1, 2007 (Transmittal 1259, dated June 1, 2007). Based upon
comments on our CY 2007 proposed rule and industry input, we were aware
of three sources available in stranded and non-stranded forms at that
time: iodine-125; palladium-103; and cesium-131 (72 FR 42746). We
created six new HCPCS codes to differentiate the stranded and non-
stranded versions of iodine, palladium and cesium sources.
The first partial year claims data for separately coded stranded
and non-stranded iodine, palladium, and cesium sources are now
available in the CY 2007 claims data that we are using for CY 2009
ratesetting for brachytherapy sources included in this proposed rule.
In Transmittal 1259, we indicated that if we receive information
that any of the other sources now designated as non-stranded are
marketed as a stranded source, we would create a code for the stranded
source. We also established two ``Not Otherwise Specified'' (NOS) codes
for billing stranded and non-stranded sources that are not yet known to
us and for which we do not have source-specific codes, that is, C2698
(Brachytherapy source, stranded, not otherwise specified, per source)
for stranded NOS sources, or C2699 (Brachytherapy source, non-stranded,
not otherwise specified, per source) for non-stranded NOS sources.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66783
through 66784), we again finalized prospective payment for
brachytherapy sources, beginning in CY 2008, with payment rates
determined using the CY 2006 claims-based costs per source for each
brachytherapy source. Consistent with our policy regarding APC payments
made on a prospective basis, we finalized our policy in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66686) to subject the
cost of brachytherapy sources to the outlier provision of section
1833(t)(5) of the Act, and to also subject brachytherapy source payment
weights to scaling for purposes of budget neutrality. Therefore,
brachytherapy sources could receive outlier payments if the costs of
furnishing brachytherapy sources met the criteria for outlier payment.
In addition, as noted in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66683), implementation of prospective payment for
brachytherapy sources provides opportunities for hospitals to receive
additional payments under certain circumstances through the 7.1 percent
rural SCH adjustment.
We proposed and finalized a policy for CY 2008 to pay the two NOS
codes, C2698 and C2699, based on a rate equal to the lowest stranded or
non-stranded prospective payment rate for such sources, respectively,
on a per source basis (as opposed, for example, to per mci). We
reasoned that this payment methodology for NOS sources would provide
payment to a hospital for new sources, while encouraging interested
parties to quickly bring new sources to our attention so specific
coding and payment could be established (72 FR 66785).
After we finalized our proposal to pay for brachytherapy sources in
CY 2008 based on median costs, section 106(a) of the MMSEA extended the
charges adjusted to cost payment methodology for an additional 6
months, through June 30, 2008. On January 18, 2008, we issued
Transmittal R1417CP to indicate how we are implementing this provision.
At this time, the prospective payment rates for brachytherapy sources
finalized in the CY 2008 OPPS/ASC final rule with comment period will
become effective July 1, 2008.
Status indicator ``H'' (defined in the CY 2008 OPPS/final rule with
comment period as ``Pass-Through Device Categories. Separate cost-based
pass-through payment; not subject to copayment.'') is currently
assigned to brachytherapy sources through June 30, 2008, for claims
processing purposes, although a beneficiary copayment is being applied
to payment for these sources. We finalized a policy in the CY 2008
OPPS/ASC final rule with comment period to assign status indicator
``K'' (defined as ``Nonpass-Through Drugs and Biologicals; Therapeutic
Radiopharmaceuticals; Brachytherapy Sources; Blood and Blood Products.
Paid under OPPS; separate APC payment.'') to all brachytherapy source
APCs because the sources would be paid based on prospective payment.
The definition of status indicator ``K'' was initially changed for CY
2007 to accommodate prospective payment for brachytherapy sources and
this change was continued for CY 2008 (72 FR 66785). Brachytherapy
source APCs will be assigned status indicator ``K'' beginning July 1
through December 31, 2008.
For CY 2008, we also adopted the policy we established in the CY
2007 OPPS/ASC final rule with comment period (which was superseded by
section 107 of the MIEA-TRHCA) regarding payment for new brachytherapy
sources for which we have no claims data. We assign future new HCPCS
codes for new brachytherapy sources to their own APCs, with prospective
payment rates set based on our consideration of external data and other
relevant information regarding the expected costs of the sources to
hospitals (72 FR 66785). When section 106(a) of the MMSEA extended the
charges adjusted to cost payment methodology for brachytherapy sources
through June 30, 2008, this policy was not implemented as of January 1,
2008. We anticipate implementing this policy as of July 1, 2008.
At its March 2008 meeting, the APC Panel recommended that CMS use
[[Page 41502]]
median cost data to pay for brachytherapy sources in CY 2009, as
presented by the CMS staff and reviewed by the APC Panel Data
Subcommittee.
B. Proposed OPPS Payment Policy
As we have stated in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66780), we believe that adopting prospective payment for
brachytherapy sources would be appropriate for a number of reasons. The
general OPPS payment methodology is a prospective payment system using
median costs based on claims data to set the relative payment weights
for hospital outpatient services. This prospective payment methodology
would result in more consistent, predictable, and equitable payment
amounts per source across hospitals by eliminating some of the
extremely high and low payment amounts resulting from payment based on
hospitals' charges adjusted to cost. Prospective payment would also
provide hospitals with incentives for efficiency in the provision of
brachytherapy services to Medicare beneficiaries. Moreover, this
approach is consistent with our payment methodology for the vast
majority of items and services paid under the OPPS. Indeed, section
1833(t)(2)(C) of the Act requires us to establish prospective payment
rates for the OPPS system based on median costs (or mean costs if
elected by the Secretary). Only pass-through devices continue to be
paid at charges adjusted to cost for all of CY 2008, while
brachytherapy sources and therapeutic radiopharmaceuticals are paid at
charges adjusted to cost for the first 6 months of CY 2008.
We are proposing to use CY 2007 claims data for setting the CY 2009
rates for brachytherapy sources, as we are proposing for most other
items and services that will be paid under the CY 2009 OPPS, using our
standard OPPS ratesetting methodology. We believe that we have
sufficiently robust CY 2007 claims data for all payable brachytherapy
sources, including stranded and non-stranded iodine, palladium, and
cesium sources. As indicated earlier, at the March 2008 APC Panel
meeting, the APC Panel Data Subcommittee reviewed the CY 2007 claims
data for brachytherapy sources and the APC Panel recommended using the
median cost data for CY 2009 rates. We are accepting the APC Panel's
recommendation, which is consistent with our proposal.
We are proposing to pay for the stranded and non-stranded NOS
codes, C2698 and C2699, based on a rate equal to the lowest stranded or
non-stranded prospective payment rate for such sources, respectively,
on a per source basis (as opposed, for example, to per mci). This
proposed payment methodology for NOS sources would provide payment to a
hospital for new sources, while encouraging interested parties to
quickly bring new sources to our attention so specific coding and
payment could be established.
We are proposing to establish new status indicator ``U''
(Brachytherapy Sources. Paid under OPPS; separate APC payment) for
brachytherapy sources as of January 1, 2009. Status indicator ``H'' is
currently used for the periods when brachytherapy sources are paid
based on the charges adjusted to cost payment methodology, while status
indicator ``K'' is used for brachytherapy source payment as of July 1,
2008 through December 31, 2008, in accordance with the policy we
finalized in the CY 2008 OPPS/ASC final rule with comment period.
Status indicator ``K'' currently encompasses nonpass-through drugs and
biologicals, therapeutic radiopharmaceuticals, brachytherapy sources,
and blood and blood products. Assigning status indicator ``K'' to
several types of items and services with potentially differing payment
policies has added unnecessary complexity to our operations. In
addition, in CY 2009 we are implementing section 1833(t)(17)(A) of the
Act that specifies payment to hospitals based on a reduced conversion
factor when those hospitals fail to submit timely hospital outpatient
quality data as required. Therefore, to facilitate implementation of
this payment change and streamline operations, we are proposing to
assign new status indicator ``U'' to brachytherapy source HCPCS codes
beginning in CY 2009.
We are, therefore, proposing to pay for brachytherapy sources at
prospective rates based on their source-specific median costs for CY
2009. The separately payable brachytherapy source codes, descriptors,
APCs, approximate median costs, and status indicators are presented in
Table 29.
TABLE 29.--Proposed Separately Payable Brachytherapy Sources for CY 2009
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
HCPCS code Long descriptor Proposed CY 2009 median 2009 status
2009 APC cost indicator
----------------------------------------------------------------------------------------------------------------
A9527.................................. Iodine I-125, sodium iodide 2632 $36 U
solution, therapeutic, per
millicurie.
C1716.................................. Brachytherapy source, non- 1716 34 U
stranded, Gold-198, per source.
C1717.................................. Brachytherapy source, non- 1717 212 U
stranded, High Dose Rate
Iridium-192, per source.
C1719.................................. Brachytherapy source, non- 1719 65 U
stranded, Non-High Dose Rate
Iridium-192, per source.
C2616.................................. Brachytherapy source, non- 2616 13,426 U
stranded, Yttrium-90, per
source.
C2634.................................. Brachytherapy source, non- 2634 43 U
stranded, High Activity,
Iodine-125, greater than 1.01
mCi (NIST), per source.
C2635.................................. Brachytherapy source, non- 2635 27 U
stranded, High Activity,
Palladium-103, greater than
2.2 mCi (NIST), per source.
C2636.................................. Brachytherapy linear source, 2636 60 U
non-stranded, Palladium-103,
per 1MM.
C2638.................................. Brachytherapy source, stranded, 2638 40 U
Iodine-125, per source.
C2639.................................. Brachytherapy source, non- 2639 36 U
stranded, Iodine-125, per
source.
C2640.................................. Brachytherapy source, stranded, 2640 66 U
Palladium-103, per source.
C2641.................................. Brachytherapy source, non- 2641 63 U
stranded, Palladium-103, per
source.
C2642.................................. Brachytherapy source, stranded, 2642 100 U
Cesium-131, per source.
C2643.................................. Brachytherapy source, non- 2643 59 U
stranded, Cesium-131, per
source.
C2698.................................. Brachytherapy source, stranded, 2698 40 U
not otherwise specified, per
source.
C2699.................................. Brachytherapy source, non- 2699 27 U
stranded, not otherwise
specified, per source.
----------------------------------------------------------------------------------------------------------------
[[Page 41503]]
In addition, in CY 2009, we are proposing to continue the policy we
established in the CY 2007 OPPS/ASC final rule with comment period
(which was superseded by section 107 of the MIEA-TRHCA) regarding
payment for new brachytherapy sources for which we have no claims data.
In accordance with that policy, we would assign future new HCPCS codes
for new brachytherapy sources to their own APCs, with prospective
payment rates set based on our consideration of external data and other
relevant information regarding the expected costs of the sources to
hospitals.
We continue to invite hospitals and other parties to submit
recommendations to us for new HCPCS codes to describe new sources
consisting of a radioactive isotope, including a detailed rationale to
support recommended new sources. Such recommendations should be
directed to the Division of Outpatient Care, Mail Stop C4-05-17,
Centers for Medicare and Medicaid Services, 7500 Security Boulevard,
Baltimore, MD 21244. We will continue to add new brachytherapy source
codes and descriptors to our systems for payment on a quarterly basis.
VIII. Proposed OPPS Payment for Drug Administration Services
A. Background
In CY 2005, in response to the recommendations made by commenters
and the hospital industry, OPPS transitioned to the use of CPT codes
for drug administration services. These CPT codes allowed specific
reporting of services regarding the number of hours for an infusion and
provided consistency in coding between Medicare and other payers. (For
a discussion regarding coding and payment for drug administration
services prior to CY 2005, we refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66787).)
While hospitals began adopting CPT codes for outpatient drug
administration services in CY 2005, physicians paid under the MPFS were
using HCPCS G-codes in CY 2005 to report office-based drug
administration services. These G-codes were developed in anticipation
of substantial revisions to the drug administration CPT codes by the
CPT Editorial Panel that were expected for CY 2006.
In CY 2006, as anticipated, the CPT Editorial Panel revised its
coding structure for drug administration services, incorporating new
concepts such as initial, sequential, and concurrent services into a
structure that previously distinguished services based on type of
administration (chemotherapy/nonchemotherapy), method of administration
(injection/infusion/push), and for infusion services, first hour and
additional hours. For CY 2006, we implemented the CY 2006 drug
administration CPT codes that did not reflect the concepts of initial,
sequential, and concurrent services under the OPPS, and we created
HCPCS C-codes that generally paralleled the CY 2005 CPT codes for
reporting these other services.
For CY 2007, as a result of comments on our proposed rule and
feedback from the hospital community and the APC Panel, we implemented
the full set of CPT codes, including codes incorporating the concepts
of initial, sequential, and concurrent. In addition, the CY 2007 update
process offered us the first opportunity to consider data gathered from
the use of CY 2005 CPT codes for purposes of ratesetting. For CY 2007,
we used CY 2005 claims data to implement a six-level APC structure for
drug administration services. This six-level APC structure for drug
administration services was continued in CY 2008.
B. Proposed Coding and Payment for Drug Administration Services
The CY 2009 ratesetting process affords us the first opportunity to
examine hospital claims data for the full set of CPT codes that reflect
the concepts of initial, concurrent, and sequential services. We
performed our standard annual OPPS review of the clinical and resource
characteristics of the drug administration HCPCS codes assigned to APCs
0436 (Level I Drug Administration), 0437 (Level II Drug
Administration), 0438 (Level III Drug Administration), 0439 (Level IV
Drug Administration), 0440 (Level V Drug Administration), and 0441
(Level VI Drug Administration) for CY 2008 based on the CY 2007 claims
data available for this proposed rule. Under the CY 2008 APC
configurations for drug administration services, we observed several 2
times violations among the 6 APCs. Therefore, we are proposing to
reconfigure the drug administration APCs for CY 2009 to improve the
clinical and resource homogeneity of the APCs. (We refer readers to
section III.B. of this proposed rule for further discussion of the 2
times rule.)
As a result of our hospital cost analysis and detailed clinical
review, we are proposing a five-level APC structure for CY 2009 drug
administration services to more appropriately reflect their resource
utilization in APCs that also group clinically similar services. These
APCs generally demonstrate the clinically expected and actually
observed comparative relationships between the median costs of
different types of drug administration services, including initial and
additional services, chemotherapy and other diagnostic, prophylactic,
or therapeutic services, injections and infusions, and simple and
complex methods of drug administration. We do not believe that six drug
administration APCs continue to be necessary to pay appropriately for
drug administration services based on the significant clinical and
resource differences among services. Instead, we believe that the
proposed five-level APC structure for CY 2009, displayed in Table 30
below, is the more appropriate structure based on hospital claims data
for the full range of CPT drug administration codes.
We presented a potential four-level drug administration APC
structure to the APC Panel during the March 2008 APC Panel meeting.
After reviewing the data, the APC Panel recommended that CMS not
implement this configuration until more data are available and that CMS
provide the APC Panel with a crosswalk analysis of the data. We
appreciate the recommendation of the APC Panel. We are accepting this
recommendation, and we are not proposing to implement a four-level APC
structure for drug administration services in CY 2009.
We last reconfigured the drug administration APCs for CY 2007 when
we first had 1 year of claims data reflecting the costs of predecessor
drug administration CPT codes. Therefore, in parallel fashion we
believe it is appropriate to propose to reconfigure the drug
administration APCs for CY 2009 when we first have a year of hospital
claims data for the full range of CPT codes. Our prior assignments of
CPT codes without data were based only on estimates of hospital
resource costs, and our usual practice is to closely examine the APC
assignments of all HCPCS codes once we have actual claims data. We note
that, for most of the drug administration services, we have thousands
of single bills available for ratesetting from the claims submitted by
thousands of hospitals, increasing our confidence in the accuracy and
stability of the claims data. In addition, our bypass code methodology
as described in section II.A.1.b. of this proposed rule, which
specifically incorporates packaged costs into the costs of the initial
drug administration service and not into the additional drug
administration services provided in the same hospital encounter,
ensures that
[[Page 41504]]
the single claims used for ratesetting represent a large proportion of
total hospital claims for most drug administration services. Therefore,
we believe that this proposed five-level drug administration APC
structure would be most appropriate after examination of the robust set
of drug administration claims available for CY 2009 ratesetting because
the proposed structure would result in payment groups with greater
clinical and resource homogeneity. In addition, we do not believe that
a crosswalk analysis of the cost data would be pertinent because, for a
number of the CPT codes, our APC assignments prior to CY 2009 were
based only on our estimates of their expected costs, and not based on
hospitals' actual costs for services reported according to the current
CPT code descriptors and guidelines.
We believe that the proposed five-level drug administration APC
structure presented below in Table 30 accurately refines the drug
administration APCs based on updated and comprehensive hospital claims
data. Therefore, we are proposing to implement the APC structure
displayed in Table 30 below for CY 2009. In addition to adopting this
drug administration APC structure for payment of services, we are
proposing to continue the use of drug administration CPT codes for OPPS
reporting in CY 2009. As described earlier, APC reconfiguration is a
regular part of the annual OPPS update in response to our assessment of
the most recent hospital claims data. Although changes to the APC
assignments of HCPCS codes, including the drug administration CPT
codes, affect hospital payment for services, they do not require any
coding changes by hospitals.
Table 30.--Proposed CY 2009 Drug Administration APCs
------------------------------------------------------------------------
Proposed CY
Proposed CY 2009 2009 APC HCPCS code Long descriptor
APC median cost
------------------------------------------------------------------------
0436............... $24.98 90471 Immunization
administration (includes
percutaneous,
intradermal,
subcutaneous, or
intramuscular
injections); one vaccine
(single or combination
vaccine/toxoid).
90472 Immunization
administration (includes
percutaneous,
intradermal,
subcutaneous, or
intramuscular
injections); each
additional vaccine
(single or combination
vaccine/toxoid)(List
separately in addition
to code for primary
procedure).
90473 Immunization
administration by
intranasal or oral
route; one vaccine
(single or combination
vaccine/toxoid).
90474 Immunization
administration by
intranasal or oral
route; each additional
vaccine (single or
combination vaccine/
toxoid) (List separately
in addition to code for
primary procedure).
90761 Intravenous infusion,
hydration; each
additional hour (List
separately in addition
to code for primary
procedure).
90766 Intravenous infusion, for
therapy, prophylaxis, or
diagnosis (specify
substance or drug); each
additional hour (List
separately in addition
to code for primary
procedure).
90771 Subcutaneous infusion for
therapy or prophylaxis
(specify substance or
drug); additional pump
set-up with
establishment of new
subcutaneous infusion
site(s) (List separately
in addition to code for
primary procedure).
90772 Therapeutic, prophylactic
or diagnostic injection
(specify substance or
drug); subcutaneous or
intramuscular.
90779 Unlisted therapeutic,
prophylactic or
diagnostic intravenous
or intra-arterial
injection or infusion.
95115 Professional services for
allergen immunotherapy
not including provision
of allergenic extracts;
single injection.
95117 Professional services for
allergen immunotherapy
not including provision
of allergenic extracts;
two or more injections.
95145 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy (specify
number of doses); single
stinging insect venom.
95165 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy; single or
multiple antigens
(specify number of
doses).
95170 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy; whole
body extract of biting
insect or other
arthropod (specify
number of doses).
96549 Unlisted chemotherapy
procedure.
G0008 Administration of
influenza virus vaccine.
G0009 Administration of
pneumococcal vaccine.
90767 Intravenous infusion, for
therapy, prophylaxis, or
diagnosis (specify
substance or drug);
additional sequential
infusion, up to 1 hour
(List separately in
addition to code for
primary procedure).
90770 Subcutaneous infusion for
therapy or prophylaxis
(specify substance or
drug); each additional
hour (List separately in
addition to code for
primary procedure)
90773 Therapeutic, prophylactic
or diagnostic injection
(specify substance or
drug); intra-arterial.
90774 Therapeutic, prophylactic
or diagnostic injection
(specify substance or
drug); intravenous push,
single or initial
substance/drug.
0437............... $36.59 90775 Therapeutic, prophylactic
or diagnostic injection
(specify substance or
drug); each additional
sequential intravenous
push of a new substance/
drug (List separately in
addition to code for
primary procedure).
95144 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy, single
dose vial(s) (specify
number of vials).
95148 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy (specify
number of doses); four
single stinging insect
venoms.
96401 Chemotherapy
administration,
subcutaneous or
intramuscular; non-
hormonal anti-
neoplastic.
96402 Chemotherapy
administration,
subcutaneous or
intramuscular; hormonal
anti-neoplastic.
96405 Chemotherapy
administration;
intralesional, up to and
including 7 lesions.
96415 Chemotherapy
administration,
intravenous infusion
technique; each
additional hour (List
separately in addition
to code for primary
procedure).
[[Page 41505]]
0438............... $74.19 90760 Intravenous infusion,
hydration; initial, 31
minutes to 1 hour.
90769 Subcutaneous infusion for
therapy or prophylaxis
(specify substance or
drug); initial, up to
one hour, including pump
set-up and establishment
of subcutaneous infusion
site(s).
95146 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy (specify
number of doses); two
single stinging insect
venoms.
95147 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy (specify
number of doses); three
single stinging insect
venoms.
96406 Chemotherapy
administration;
intralesional, more than
7 lesions.
96411 Chemotherapy
administration;
intravenous, push
technique, each
additional substance/
drug (List separately in
addition to code for
primary procedure).
96417 Chemotherapy
administration,
intravenous infusion
technique; each
additional sequential
infusion (different
substance/drug), up to 1
hour (List separately in
addition to code for
primary procedure).
96423 Chemotherapy
administration, intra-
arterial; infusion
technique, each
additional hour (List
separately in addition
to code for primary
procedure).
90765 Intravenous infusion, for
therapy, prophylaxis, or
diagnosis (specify
substance or drug);
initial, up to 1 hour.
95149 Professional services for
the supervision of
preparation and
provision of antigens
for allergen
immunotherapy (specify
number of doses); five
single stinging insect
venoms.
0439............... $126.58 96409 Chemotherapy
administration;
intravenous, push
technique, single or
initial substance/drug.
96420 Chemotherapy
administration, intra-
arterial; push
technique.
96522 Refilling and maintenance
of implantable pump or
reservoir for drug
delivery, systemic
(e.g., intravenous,
intra-arterial).
96542 Chemotherapy injection,
subarachnoid or
intraventricular via
subcutaneous reservoir,
single or multiple
agents.
0440............... $190.72 95990 Refilling and maintenance
of implantable pump or
reservoir for drug
delivery, spinal
(intrathecal, epidural)
or brain
(intraventricular).
95991 Refilling and maintenance
of implantable pump or
reservoir for drug
delivery, spinal
(intrathecal, epidural)
or brain
(intraventricular);
administered by a
physician.
96413 Chemotherapy
administration,
intravenous infusion
technique; up to 1 hour,
single or initial
substance/drug.
96416 Chemotherapy
administration,
intravenous infusion
technique; initiation of
prolonged chemotherapy
infusion (more than 8
hours), requiring use of
a portable or
implantable pump.
96422 Chemotherapy
administration, intra-
arterial; infusion
technique, up to one
hour.
96425 Chemotherapy
administration, intra-
arterial; infusion
technique, initiation of
prolonged infusion (more
than 8 hours), requiring
the sue of a portable or
implantable pump.
96440 Chemotherapy
administration into
pleural cavity,
requiring and including
thoracentesis.
96445 Chemotherapy
administration into
peritoneal cavity,
requiring and including
peritoneocentesis.
96450 Chemotherapy
administration, into CNS
(eg, intrathecal),
requiring and including
spinal puncture.
96521 Refilling and maintenance
of portable pump.
C8957 Intravenous infusion for
therapy/diagnosis;
initiation of prolonged
infusion (more than
eight hours), requiring
use of portable or
implantable pump.
------------------------------------------------------------------------
IX. Proposed OPPS Payment for Hospital Outpatient Visits
A. Background
Currently, hospitals report visit HCPCS codes to describe three
types of OPPS services: clinic visits, emergency department visits, and
critical care services. CPT indicates that office or other outpatient
visit codes are used to report evaluation and management (E/M) services
provided in the physician's office or in an outpatient or other
ambulatory facility. For OPPS purposes, we refer to these as clinic
visit codes. CPT also indicates that emergency department visit codes
are used to report E/M services provided in the emergency department,
which is defined as an ``organized hospital-based facility for the
provision of unscheduled episodic services to patients who present for
immediate medical attention. The facility must be available 24 hours a
day.'' For OPPS purposes, we refer to these as emergency department
visit codes that specifically apply to the reporting of visits to Type
A emergency departments. Furthermore, for CY 2007 we established five
new Level II HCPCS codes to report visits to Type B emergency
departments (defined as dedicated emergency departments that incur
Emergency Medical Treatment and Labor Act (EMTALA) of 1986 (Pub. L. 99-
272) obligations but that do not meet the Type A emergency department
definition, as described in more detail below). These new Level II
HCPCS codes were developed because there were no CPT codes at that time
that fully described services provided in this type of facility. CPT
defines critical care services to be reported with critical care CPT
codes as the ``direct delivery by a physician(s) of medical care for a
critically ill or critically injured patient.'' Under the OPPS, in
Transmittal 1139, Change Request 5438, dated December 22, 2006, we have
stated that the time that can be reported as critical care is the time
spent by a physician and/or hospital staff engaged in active face-to-
face critical care of a critically ill or critically injured patient.
We also established HCPCS code G0390 (Trauma response team associated
with hospital critical care service) in CY 2007 for the reporting of a
trauma response in association with critical care services. We refer
readers to section III.D.1. of this proposed rule for further
discussion of payment for a trauma response associated with hospital
critical care services.
Currently, CMS instructs hospitals to report the CY 2008 CPT codes
that describe new and established clinic visits, Type A emergency
department
[[Page 41506]]
visits, and critical care services, and the six Level II HCPCS codes to
report Type B emergency department visits and trauma activation
provided in association with critical care services. These codes are
listed below in Table 31. We are not proposing to change the visit
HCPCS codes that hospitals report for CY 2009.
Table 31.--CY 2008 CPT E/M and Level II HCPCS Codes Used To Report
Clinic and Emergency Department Visits and Critical Care Services
------------------------------------------------------------------------
HCPCS Code Descriptor
------------------------------------------------------------------------
Clinic Visit HCPCS Codes
------------------------------------------------------------------------
99201........................ Office or other outpatient visit for the
evaluation and management of a new
patient (Level 1).
99202........................ Office or other outpatient visit for the
evaluation and management of a new
patient (Level 2).
99203........................ Office or other outpatient visit for the
evaluation and management of a new
patient (Level 3).
99204........................ Office or other outpatient visit for the
evaluation and management of a new
patient (Level 4).
99205........................ Office or other outpatient visit for the
evaluation and management of a new
patient (Level 5).
99211........................ Office or other outpatient visit for the
evaluation and management of an
established patient (Level 1).
99212........................ Office or other outpatient visit for the
evaluation and management of an
established patient (Level 2).
99213........................ Office or other outpatient visit for the
evaluation and management of an
established patient (Level 3).
99214........................ Office or other outpatient visit for the
evaluation and management of an
established patient (Level 4).
99215........................ Office or other outpatient visit for the
evaluation and management of an
established patient (Level 5).
------------------------------------------------------------------------
Emergency Department Visit HCPCS Codes
------------------------------------------------------------------------
99281........................ Emergency department visit for the
evaluation and management of a patient
(Level 1).
99282........................ Emergency department visit for the
evaluation and management of a patient
(Level 2).
99283........................ Emergency department visit for the
evaluation and management of a patient
(Level 3).
99284........................ Emergency department visit for the
evaluation and management of a patient
(Level 4).
99285........................ Emergency department visit for the
evaluation and management of a patient
(Level 5).
G0380........................ Type B emergency department visit (Level
1).
G0381........................ Type B emergency department visit (Level
2).
G0382........................ Type B emergency department visit (Level
3).
G0383........................ Type B emergency department visit (Level
4).
G0384........................ Type B emergency department visit (Level
5).
------------------------------------------------------------------------
Critical Care Services HCPCS Codes
------------------------------------------------------------------------
99291........................ Critical care, evaluation and management
of the critically ill or critically
injured patient; first 30-74 minutes.
99292........................ Critical care, evaluation and management
of the critically ill or critically
injured patient; each additional 30
minutes.
G0390........................ Trauma response associated with hospital
critical care service.
------------------------------------------------------------------------
The majority of CPT code descriptors are applicable to both
physician and facility resources associated with specific services.
However, we have acknowledged from the beginning of the OPPS that we
believe that CPT E/M codes were defined to reflect the activities of
physicians and do not necessarily fully describe the range and mix of
services provided by hospitals during visits of clinic or emergency
department patients or critical care encounters. While awaiting the
development of a national set of facility-specific codes and
guidelines, we have advised hospitals that each hospital's internal
guidelines that determine the levels of clinic and emergency department
visits to be reported should follow the intent of the CPT code
descriptors, in that the guidelines should be designed to reasonably
relate the intensity of hospital resources to the different levels of
effort represented by the codes.
During its March 2008 APC Panel meeting, the APC Panel recommended
that CMS provide, for review by the Visits and Observation Subcommittee
at the next CY 2008 APC Panel meeting: (1) Frequency and median cost
data on new and established patient clinic visits and Type A and Type B
emergency department visits; (2) data on CPT code 99291 (Critical care,
evaluation and management of the critically ill or critically injured
patient; first 30-74 minutes) and APC 617 (Critical Care); and (3)
frequency and median cost data on the extended assessment and
management composite APCs (that is, APCs 8002 and 8003). We are
adopting all three of these recommendations and will provide frequency
and cost data related to these services at the next CY 2008 APC Panel
meeting. The complete discussion related to visits is provided below. A
complete discussion related to the extended assessment and management
composite APCs can be found in section II.A.2.e.(1) of this proposed
rule.
B. Proposed Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
CPT defines an established patient as ``one who has received
professional services from the physician or another physician of the
same specialty who belongs to the same group practice, within the past
3 years.'' To apply this definition to hospital clinic visits, we
stated in the April 7, 2000 OPPS final rule with comment period (65 FR
18451), that the meanings of ``new'' and ``established'' pertain to
whether or not the patient already has a hospital medical record
number. If the patient has a hospital medical record that was created
within the past 3 years, that patient is considered an established
patient to the hospital. The same patient could be ``new'' to the
physician but an ``established'' patient to the hospital. The opposite
could be true if the physician has a longstanding relationship with the
patient, in which case the patient would be an ``established'' patient
with respect to the physician and a ``new'' patient with respect to the
hospital. Our resource cost data continue to show that new patient
visits are consistently more costly than established patient visits of
the same level.
Since the implementation of the OPPS, we have received very few
[[Page 41507]]
comments related to the definitions of new and established patient
visits. However, during the past year, we have heard from several
provider groups that hospitals cannot easily distinguish between new
and established patients for purposes of correctly reporting clinic
visits under the OPPS, based on the definition above. We considered
several options for refining the definitions of new and established
patients as they would apply under the CY 2009 OPPS in order to reduce
hospitals' administrative burden associated with reporting appropriate
clinic visit CPT codes.
We considered proposing to eliminate the distinction between new
and established patient visits under the OPPS, as had previously been
recommended by the APC Panel for CY 2008. We considered instructing
hospitals to bill all visits as established patient visits and the
hospital would determine the appropriate code level based on the
resources expended during the visit. However, because hospital claims
data continue to show significant cost differences between new and
established patient visits, we believe it is most appropriate to
continue to recognize the CPT codes for both new and established
patient visits and, in some cases, provide differential payment for new
and established patient visits of the same level. In addition, we
continue to believe it is important that CPT codes be reported
consistent with their code descriptors, and some patients will always
be new to the hospital, regardless of any potential refinement in the
definition of ``new'' for reporting clinical visits under the OPPS.
Therefore, we are not proposing this approach for CY 2009.
Another alternative we considered was proposing to define an
established patient as a patient who already had a hospital medical
record number at the hospital where he or she is currently receiving
services, regardless of when this medical record was created. Several
commenters to the CY 2008 OPPS/ASC proposed rule preferred this
distinction rather than the current policy, which requires hospitals to
determine if the patient's hospital medical record was created within
the past 3 years (72 FR 66793). However, one commenter noted an extreme
example in which a patient who was born at a hospital and assigned a
medical record number would always be considered an established patient
to that hospital, even if the patient was not treated again at that
hospital until decades later. We continue to believe it is appropriate
to include a time limit when determining whether a patient is new or
established from the hospital's perspective because we would expect
that care of a patient who was not treated at the hospital for several
years prior to a visit could require significantly greater hospital
resources than care for a patient who was recently treated at the
hospital. Therefore, we are not proposing this alternative for CY 2009.
We considered proposing to modify the new and established patient
definitions for reporting clinic visits under the OPPS so they would
pertain to whether or not the patient was registered in a specific
hospital clinic within the past 3 years. However, we believe this
approach could be problematic because we do not believe that every
clinic has clear administrative boundaries that define whether the
patient was previously seen in that particular clinic. For example, a
hospital-based clinic may have several locations, including on-campus
and off-campus sites, or a specific area of the hospital may house two
or more specialty clinics that treat disparate types of clinical
conditions.
We considered and are not proposing to adopt the three alternatives
described above, for CY 2009, but are instead proposing to modify the
definitions of ``new'' and ``established'' patients as they apply to
hospital outpatient visits. Specifically, the meanings of ``new'' and
``established'' would pertain to whether or not the patient was
registered as an inpatient or outpatient of the hospital within the
past 3 years. Under this proposal, hospitals would not need to
determine the specific clinic where the patient was previously treated
because the proposed approach would not rely upon when the medical
record was initially created but rather, would depend upon whether the
individual had been registered as a hospital inpatient or outpatient
within the previous 3 years.
Hospitals would also not need to determine when the medical record
was initially created. If the patient were registered as an inpatient
or outpatient of the hospital within the past 3 years, that patient
would be considered an ``established'' patient to the hospital. If a
patient were registered as an outpatient in a hospital's off-campus
provider-based clinic or emergency department within the past 3 years,
that patient would still be an ``established'' patient to the hospital
for an on-campus or off-campus clinic visit even if the medical record
was initially created by the hospital prior to the past 3 years.
Consistent with past policy, the same patient could be ``new'' to the
physician but an ``established'' patient to the hospital. The opposite
could be true if the physician has a longstanding relationship with the
patient, in which case the patient would be an ``established'' patient
with respect to the physician and a ``new'' patient with respect to the
hospital. We believe that our proposed refinement of the new and
established patient definitions for reporting visits under the OPPS
would be administratively straightforward for hospitals to apply, while
continuing to capture differences in hospital resources required to
provide new and established patient clinic visits. Furthermore, we
believe that costs from historical hospital claims data for services
reported under the past OPPS interpretation of new and established
patient visits could simply be crosswalked to the expected costs of the
corresponding visit level reported under our proposed framework,
thereby providing appropriate payment for new and established clinic
visits of all five levels until CY 2009 claims data reflecting the
refined definitions would be available for CY 2011 ratesetting. We
would expect only minimal cost differences for clinic visits if these
new definitions were finalized for CY 2009.
In summary, for CY 2009, we are proposing to modify the definitions
of new and established patient visits as they relate to reporting
hospital outpatient visits under the OPPS. We welcome public comment
related to the proposed definitions of new and established patient
visits under the OPPS. For CY 2009, we are proposing to continue our
usual policy of calculating median costs for clinic visits under the
OPPS using historical hospital claims data.
As discussed further in section II.A.2.e.(1) of this proposed rule
and consistent with our CY 2008 policy, when calculating the median
costs for the clinic visit APCs (0604 through 0608), we would utilize
our methodology that excludes those claims for visits that are eligible
for payment through the extended assessment and management composite
APC 8002 (Level I Extended Assessment and Management Composite). We
believe that this approach would result in the most accurate cost
estimates for APCs 0604 through 0608 for CY 2009.
2. Emergency Department Visits
As described in section IX.A. of this proposed rule, CPT defines an
emergency department as ``an organized hospital-based facility for the
provision of unscheduled episodic services to patients who present for
immediate medical attention. The facility must be available 24 hours a
day.'' Prior to CY 2007, under the OPPS we restricted the
[[Page 41508]]
billing of emergency department CPT codes to services furnished at
facilities that met this CPT definition. Facilities open less than 24
hours a day should not have reported the emergency department CPT codes
for visits.
Sections 1866(a)(1)(I), 1866(a)(1)(N), and 1867 of the Act impose
specific obligations on Medicare-participating hospitals and CAHs that
offer emergency services. These obligations concern individuals who
come to a hospital's dedicated emergency department and request
examination or treatment for medical conditions, and apply to all of
these individuals, regardless of whether or not they are beneficiaries
of any program under the Act. Section 1867(h) of the Act specifically
prohibits a delay in providing required screening or stabilization
services in order to inquire about the individual's payment method or
insurance status. Section 1867(d) of the Act provides for the
imposition of civil monetary penalties on hospitals and physicians
responsible for failing to meet the provisions listed above. These
provisions, taken together, are frequently referred to as the EMTALA
provisions.
Section 489.24 of the EMTALA regulations defines ``dedicated
emergency department'' as any department or facility of the hospital,
regardless of whether it is located on or off the main hospital campus,
that meets at least one of the following requirements: (1) It is
licensed by the State in which it is located under applicable State law
as an emergency room or emergency department; (2) It is held out to the
public (by name, posted signs, advertising, or other means) as a place
that provides care for emergency medical conditions on an urgent basis
without requiring a previously scheduled appointment; or (3) During the
calendar year immediately preceding the calendar year in which a
determination under the regulations is being made, based on a
representative sample of patient visits that occurred during that
calendar year, it provides at least one-third of all of its outpatient
visits for the treatment of emergency medical conditions on an urgent
basis without requiring a previously scheduled appointment.
In the CY 2008 OPPS/ASC proposed rule (72 FR 42756), we reiterated
our belief that every emergency department that meets the CPT
definition of emergency department also qualifies as a dedicated
emergency department under EMTALA. However, we indicated that we were
aware that there are some departments or facilities of hospitals that
meet the definition of a dedicated emergency department under the
EMTALA regulations, but that do not meet the more restrictive CPT
definition of an emergency department. For example, a hospital
department or facility that meets the definition of a dedicated
emergency department may not be available 24 hours a day, 7 days a
week. Nevertheless, hospitals with such departments or facilities incur
EMTALA obligations with respect to an individual who presents to the
department and requests, or has requested on his or her behalf,
examination or treatment for an emergency medical condition. However,
because they did not meet the CPT requirements for reporting emergency
visit E/M codes, prior to CY 2007, these facilities were required to
bill clinic visit codes for the services they furnished under the OPPS.
We had no way to distinguish in our hospital claims data the costs of
visits provided in dedicated emergency departments that did not meet
the CPT definition of emergency department from the costs of clinic
visits.
Prior to CY 2007, some hospitals requested that they be permitted
to bill emergency department visit codes under the OPPS for services
furnished in a facility that met the CPT definition for reporting
emergency department visit E/M codes, except that the facility was not
available 24 hours a day. These hospitals believed that their resource
costs for visits were more similar to those of emergency departments
that met the CPT definition than they were to the resource costs of
clinics. Representatives of such facilities argued that emergency
department visit payments would be more appropriate, on the grounds
that their facilities treated patients with emergency conditions whose
costs exceeded the resources reflected in the clinic visit APC
payments, even though these emergency departments were not available 24
hours per day. In addition, these hospital representatives indicated
that their facilities had EMTALA obligations and should, therefore, be
able to receive emergency department visit payments. While these
emergency departments may have provided a broader range and intensity
of hospital services, and required significant resources to assure
their availability and capabilities in comparison with typical hospital
outpatient clinics, the fact that they did not operate with all
capabilities full-time suggested that hospital resources associated
with visits to emergency departments or facilities available less than
24 hours a day might not be as great as the resources associated with
emergency departments or facilities that were available 24 hours a day,
and that fully met the CPT definition.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68132), we finalized the definition of Type A emergency departments to
distinguish them from Type B emergency departments. A Type A emergency
department must be available to provide services 24 hours a day, 7 days
a week, and meet one or both of the following requirements related to
the EMTALA definition of a dedicated emergency department,
specifically: (1) It is licensed by the State in which it is located
under the applicable State law as an emergency room or emergency
department; or (2) It is held out to the public (by name, posted signs,
advertising, or other means) as a place that provides care for
emergency medical conditions on an urgent basis without requiring a
previously scheduled appointment. For CY 2007 (71 FR 68140), we
assigned the five CPT E/M emergency department visit codes for services
provided in Type A emergency departments to the five newly created
Emergency Visit APCs, specifically 0609 (Level 1 Emergency Visits),
0613 (Level 2 Emergency Visits), 0614 (Level 3 Emergency Visits), 0615
(Level 4 Emergency Visits), and 0616 (Level 5 Emergency Visits).
We defined a Type B emergency department as any dedicated emergency
department that incurred EMTALA obligations under Sec. 489.24 of the
EMTALA regulations but that did not meet the Type A emergency
department definition. To determine whether visits to Type B emergency
departments have different resource costs than visits to either clinics
or Type A emergency departments, in the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68132), we finalized a set of five G-codes
for use by hospitals to report visits to all entities that meet the
definition of a dedicated emergency department under the EMTALA
regulations in Sec. 489.24, but that are not Type A emergency
departments. These codes are called ``Type B emergency department visit
codes.'' In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68132), we explained that these new G-codes would serve as a vehicle to
capture median cost and resource differences among visits provided by
Type A emergency departments, Type B emergency departments, and
clinics. For CYs 2007 and 2008, we assigned the five new Type B
emergency department visit codes for services provided in a Type B
emergency department to the five Clinic
[[Page 41509]]
Visit APCs, specifically 0604 (Level 1 Hospital Clinic Visits), 0605
(Level 2 Hospital Clinic Visits), 0606 (Level 3 Hospital Clinic
Visits), 0607 (Level 4 Hospital Clinic Visits), and 0608 (Level 5
Hospital Clinic Visits). This payment policy for Type B emergency
department visits was similar to our previous policy, which required
that services furnished in emergency departments that had an EMTALA
obligation but did not meet the CPT definition of emergency department
be reported using CPT clinic visit E/M codes, resulting in payments
based upon clinic visit APCs. While maintaining the same payment policy
for Type B emergency department visits in CYs 2007 and 2008, we believe
the reporting of specific G-codes for emergency department visits
provided in Type B emergency departments would permit us to
specifically collect and analyze the hospital resource costs of visits
to these facilities in order to determine if in the future a proposal
for an alternative payment policy might be warranted. We expected
hospitals to adjust their charges appropriately to reflect differences
in Type A and Type B emergency department visit costs. We noted that
the OPPS rulemaking cycle for CY 2009 would be the first year that we
would have cost data for these new Type B emergency department HCPCS
codes available for analysis.
We now have CY 2007 cost data for CY 2009 ratesetting for the Type
B emergency department HCPCS codes G0380 through G0384. Based on these
data, 342 hospitals billed at least one Type B emergency department
visit code in CY 2007, with a total frequency of visits provided in
Type B emergency departments of approximately 200,000. All except 2 of
the 342 hospitals reporting Type B emergency department visits in CY
2007 also reported Type A emergency department visits. Overall, many
more hospitals (approximately 2,911 total hospitals) reported Type A
emergency department visits than Type B emergency department visits.
For comparison purposes, the total frequency of visits provided in
hospital outpatient clinics and Type A emergency departments is
approximately 14.5 million and 10.3 million, respectively. The median
costs for the Type B emergency department visit HCPCS codes, as
compared to the clinic visit and Type A emergency visit APC median
costs, are shown in Table 32 below.
Table 32.--Comparison of Median Costs for Clinic Visit APCs, Type B Emergency Department Visit HCPCS Codes, and
Type A Emergency Visit APCs
----------------------------------------------------------------------------------------------------------------
Type B
emergency Type A
Visit level Clinic visit department emergency
APCs visit HCPCS visit APCs
code
----------------------------------------------------------------------------------------------------------------
Level 1......................................................... $55 $48 $54
Level 2......................................................... 68 65 87
Level 3......................................................... 88 92 136
Level 4......................................................... 117 156 219
Level 5......................................................... 155 326 325
----------------------------------------------------------------------------------------------------------------
The median costs of the lowest level visit are similar across all
settings, including clinic and Type A and B emergency departments.
Visit levels 2 and 3 share similar resource costs in the clinic and
Type B emergency department settings, while visits provided in Type A
emergency departments have higher estimated resource costs at these
levels. The level 4 clinic visit APC is less resource intensive than
the level 4 Type B emergency department visit, which is similarly less
resource intensive than the level 4 Type A emergency department visit.
The Type A and B emergency department level 5 visit median costs are
similar to each other and significantly exceed the level 5 clinic visit
cost.
We performed additional data analyses in preparation for this
proposed rule to gather more information for our proposal for payment
of Type B emergency department visits. This included studying the
emergency department visit charges and costs of hospitals that billed
Type B emergency department visits, analyzing the cost data for various
subsets of hospitals that billed the Type B emergency department visit
codes, and comparing visit cost data for hospitals that did and did not
bill Type B emergency department visit codes. Hospitals that reported
both Type A and Type B emergency department visits billed lower charges
for Type B emergency department visits than Type A emergency department
visits, presumably reflecting the lower costs for Type B emergency
department visits. Moreover, hospitals that billed both Type A and Type
B emergency department visits also had lower costs for Type B emergency
department visits than Type A emergency department visits at all levels
except for the level 5 Type B emergency department visit. The Type A
emergency department visit costs for hospitals that billed both Type A
and Type B emergency department visits resemble the Type A emergency
department visit costs of hospitals that billed only Type A emergency
department visits and did not bill any Type B emergency department
visits. We also determined that the majority of Type B emergency
department visits were reported under an emergency department revenue
code. In summary, our further analyses confirmed that the median costs
of Type B emergency department visits are less than the median costs of
Type A emergency department visits for all but the level 5 visit, and
that the observed differences are not attributable to provider-level
differences in the visit costs of the different groups of hospitals
reporting Type A and Type B emergency department visits. In other
words, the median costs from CY 2007 hospital claims represent real
differences in the hospital resource costs for the same level of visit
in a Type A or Type B emergency department. As noted earlier, the CY
2007 claims data are the first year of claims data that include
providers' cost data for the Type B emergency department visits. We
will perform additional analyses to monitor patterns of billing and
costs of these services throughout the CY 2009 rulemaking cycle, and in
preparation for the CY 2010 rulemaking cycle, as additional cost data
become available.
We shared preliminary cost and frequency data with the Visits and
Observation Subcommittee of the APC Panel and the full APC Panel during
its March 2008 meeting. The APC Panel recommended that CMS continue to
pay
[[Page 41510]]
levels 1, 2, and 3 Type B emergency department visits at the
corresponding clinic visit levels. The APC Panel also recommended that
CMS consider using the clinic visit level 5 APC as the basis of payment
for the level 4 Type B emergency department visit and the level 5 Type
A emergency department visit APC as the basis of payment for the level
5 Type B emergency department visit. Given the limited data presently
available for Type B emergency department visits, the APC Panel also
recommended that CMS reconsider payment adjustments as more claims data
become available. In general, the APC Panel's recommended configuration
would pay appropriately for each level of Type B emergency department
visit, based on the resource costs of Type B emergency department
visits that are reflected in claims data.
In accordance with the APC Panel's assessment, we are proposing to
pay for Type B emergency department visits in CY 2009 consistent with
their median costs, although we are not fully adopting the APC Panel's
recommended payment configuration. Specifically, we are proposing to
pay levels 1, 2, 3, and 4 Type B emergency department visits through
four levels of newly created APCs, 0626 (Level 1 Type B Emergency
Visits), 0627 (Level 2 Type B Emergency Visits), 0628 (Level 3 Type B
Emergency Visits), and 0629 (Level 4 Type B Emergency Visits). We are
proposing to assign HCPCS codes G0380, G0381, G0382, and G0383, the
levels 1, 2, 3, and 4 Type B emergency department visit Level II HCPCS
codes, to APCs 0626, 0627, 0628, and 0629, respectively, for CY 2009.
These HCPCS codes would be the only HCPCS codes assigned to these newly
created APCs. Furthermore, to distinguish these new APCs from the APCs
for levels 1, 2, 3, and 4 Type A emergency visits, we are proposing to
modify the titles of the current APCs for these visits to incorporate
Type A in their names. Therefore, their proposed revised titles would
be: APC 0609, Level 1 Type A Emergency Visits; APC 0613, Level 2 Type A
Emergency Visits; APC 0614, Level 3 Type A Emergency Visits; and APC
0615, Level 4 Type A Emergency Visits. Finally, we are proposing to map
the level 5 Type B emergency department visit code, HCPCS code G0384,
to APC 0616 (Level 5 Emergency Visits), which is the same APC that
contains CPT code 99285, the level 5 Type A emergency department visit
code. Consistent with the APC Panel recommendation, the level 5 Type B
emergency department visit payment rate would be the same as the level
5 Type A emergency department visit payment rate, based upon the
similar median costs for these visits. For this highest level of
emergency department visits, the costs of these relatively uncommon
visits to Type A and Type B emergency departments are comparable,
reflecting the considerable hospital resources required to care for
these sick patients in both settings.
Table 33 below displays the proposed APC median costs for each
level of Type B emergency department visit, under our proposed CY 2009
configuration. We believe the CY 2009 proposed assignments of the
levels 1 through 4 Type B emergency department visits to their own new
clinical APCs, and the proposed assignment of the level 5 Type B
emergency department visit to APC 0616, would pay appropriately for all
levels of Type B emergency department visits, taking into consideration
the hospital costs for these visits.
As more cost data become available and hospitals gain additional
experience with reporting visits to Type B emergency departments, we
would continue to regularly reevaluate patterns of Type A and Type B
emergency visit reporting at varying levels of disaggregation below the
national level to ensure that hospitals continue to bill appropriately
and differentially for these services. In addition, according to our
usual practice, we would examine trends in cost data over time and
consider alternative emergency department visit APC configurations in
the future if updated data indicate that changes to the proposed
payment structure for CY 2009 should be considered.
Table 33.--Proposed CY 2009 Type B Emergency Department Visit APC
Assignments and Median Costs
------------------------------------------------------------------------
Proposed CY Proposed CY
Type B emergency department visit level 2009 APC 2009 APC
assignment median cost
------------------------------------------------------------------------
Level 1................................. 0626 $48
Level 2................................. 0627 65
Level 3................................. 0628 92
Level 4................................. 0629 156
Level 5................................. 0616 325
------------------------------------------------------------------------
For the CY 2009 OPPS, we are also proposing to include HCPCS code
G0384 in the criteria that determine eligibility for payment of
composite APC 8003 (Level II Extended Assessment and Management
Composite). We refer the readers to section II.A.2.e.(1) of this
proposed rule for further discussion related to the extended assessment
and management composite APCs. As discussed in detail in sections
II.A.2.e.(1) and III.D.1. of this proposed rule and consistent with our
CY 2008 practice, when calculating the median costs for the Type A and
Type B emergency visit APCs (0609 through 0616 and 0626 through 0629),
we would utilize our methodology that excludes those claims for visits
that are eligible for payment through the extended assessment and
management composite APC 8003. We believe that this approach would
result in the most accurate cost estimates for APCs 0609 through 0616
and 0626 through 0629 for CY 2009.
3. Visit Reporting Guidelines
As described in section IX.A. of this proposed rule, since April 7,
2000, we have instructed hospitals to report facility resources for
clinic and emergency department hospital outpatient visits using the
CPT E/M codes and to develop internal hospital guidelines for reporting
the appropriate visit level.
As noted in detail in sections IX.C. of the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66802 through 66805), we observed a
normal and stable distribution of clinic and emergency department visit
levels in hospital claims over the past several years. The data
indicated that hospitals, on average, were billing all five levels of
visit codes with varying frequency, in a consistent pattern over time.
Overall, both the clinic and emergency department visit distributions
indicated that hospitals were billing consistently over time and in a
manner that distinguished between visit levels,
[[Page 41511]]
resulting in relatively normal distributions nationally for the OPPS,
as well as for specific classes of hospitals. The results of these
analyses were generally consistent with our understanding of the
clinical and resource characteristics of different levels of hospital
outpatient clinic and emergency department visits. In the CY 2008 OPPS/
ASC proposed rule (72 FR 42764 through 42765), we specifically invited
public comment as to whether a pressing need for national guidelines
continued at this point in the maturation of the OPPS, or if the
current system where hospitals create and apply their own internal
guidelines to report visits was currently more practical and
appropriately flexible for hospitals. We explained that although we
have reiterated our goal since CY 2000 of creating national guidelines,
this complex undertaking for these important and common hospital
services was proving more challenging than we initially thought as we
received new and expanded information from the public on current
hospital reporting practices that led to appropriate payment for the
hospital resources associated with clinic and emergency department
visits. We believed that many hospitals had worked diligently and
carefully to develop and implement their own internal guidelines that
reflected the scope and types of services they provided throughout the
hospital outpatient system. Based on public comments, as well as our
own knowledge of how clinics operate, it seemed unlikely that one set
of straightforward national guidelines could apply to the reporting of
visits in all hospitals and specialty clinics. In addition, the stable
distribution of clinic and emergency department visits reported under
the OPPS over the past several years indicated that hospitals, both
nationally in the aggregate and grouped by specific hospital classes,
were generally billing in an appropriate and consistent manner as we
would expect in a system that accurately distinguished among different
levels of service based on the associated hospital resources.
Therefore, we did not propose to implement national visit
guidelines for clinic or emergency department visits for CY 2008. Since
publication of the CY 2008 OPPS/ASC final rule with comment period, we
have once again examined the distribution of clinic and Type A
emergency department visit levels based upon updated CY 2007 claims
data available for this proposed rule and confirmed that we continue to
observe a normal and stable distribution of clinic and emergency
department visit levels in hospital claims. We continue to believe
that, based on the use of their own internal guidelines, hospitals are
generally billing in an appropriate and consistent manner that
distinguishes among different levels of visits based on their required
hospital resources. As a result of our updated analyses, we are
proposing that hospitals should continue to report visits during CY
2009 according to their own internal hospital guidelines.
In the absence of national guidelines, we would continue to
regularly reevaluate patterns of hospital outpatient visit reporting at
varying levels of disaggregation below the national level to ensure
that hospitals continue to bill appropriately and differentially for
these services. We do not expect to see an increase in the proportion
of visit claims for high level visits as a result of the new extended
assessment and management composite APCs 8002 and 8003 adopted for CY
2008 and proposed for CY 2009. Similarly, we expect that hospitals will
not purposely change their visit guidelines or otherwise upcode clinic
and emergency department visits reported with observation care solely
for the purpose of composite APC payment. As stated in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66648), we expect to
carefully monitor any changes in billing practices on a service-
specific and hospital-specific level to determine whether there is
reason to request that QIOs review the quality of care furnished, or to
request that Benefit Integrity contractors or other contractors review
the claims against the medical record.
In addition, we note our continued expectation that hospitals'
internal guidelines would comport with the principles listed in the CY
2008 OPPS/ASC final rule with comment period (72 FR 66805). We
encourage hospitals with more specific questions related to the
creation of internal guidelines to contact their local fiscal
intermediary or Medicare Administrative Contractor (MAC).
We appreciate all of the comments we have received in the past from
the public on visit guidelines, and we encourage continued submission
of comments throughout the year that would assist us and other
stakeholders interested in the development of national guidelines.
Until national guidelines are established, hospitals should continue
using their own internal guidelines to determine the appropriate
reporting of different levels of clinic and emergency department
visits. While we understand the interest of some hospitals in our
moving quickly to promulgate national guidelines that would ensure
standardized reporting of hospital outpatient visit levels, we believe
that the issues and concerns identified both by us and others that may
arise are important and require serious consideration prior to the
implementation of national guidelines. Because of our commitment to
provide hospitals with 6 to 12 months' notice prior to implementation
of national guidelines, we would not implement national guidelines
prior to CY 2010. Our goal is to ensure that OPPS national or hospital-
specific visit guidelines continue to facilitate consistent and
accurate reporting of hospital outpatient visits in a manner that is
resource-based and supportive of appropriate OPPS payments for the
efficient and effective provision of visits in hospital outpatient
settings.
X. Proposed Payment for Partial Hospitalization Services
A. Background
Partial hospitalization is an intensive outpatient program of
psychiatric services provided to patients as an alternative to
inpatient psychiatric care for beneficiaries who have an acute mental
illness. Section 1833(t)(1)(B)(i) of the Act provides the Secretary
with the authority to designate the hospital outpatient department
services to be covered under the OPPS. The Medicare regulations at
Sec. 419.21(c) that implement this provision specify that payments
under the OPPS will be made for partial hospitalization services
furnished by CMHCs as well as those furnished to hospital outpatients.
Section 1833(t)(2)(C) of the Act requires that we establish relative
payment weights based on median (or mean, at the election of the
Secretary) hospital costs determined by 1996 claims data and data from
the most recent available cost reports. Because a day of care is the
unit that defines the structure and scheduling of partial
hospitalization services, we established a per diem payment methodology
for the PHP APC, effective for services furnished on or after August 1,
2000 (65 FR 18452).
Historically, the median per diem cost for CMHCs greatly exceeded
the median per diem cost for hospital-based PHPs and fluctuated
significantly from year to year, while the median per diem cost for
hospital-based PHPs remained relatively constant ($200-$225). We
believe that CMHCs may have increased and decreased their charges in
response to Medicare payment policies. As discussed in more detail in
section X.B. of this proposed rule and in the CY 2004
[[Page 41512]]
OPPS final rule with comment period (68 FR 63470), we also believe that
some CMHCs manipulated their charges in order to inappropriately
receive outlier payments.
In the CY 2005 OPPS update, the CMHC median per diem cost was $310,
the hospital-based PHP median per diem cost was $215, and the combined
CMHC and hospital-based median per diem cost was $289, a reduction in
median cost from previous years. We believed the reduction indicated
that the use of updated CCRs had accounted for the previous increase in
CMHC charges and represented a more accurate estimate of CMHC per diem
costs for PHP.
For the CY 2006 OPPS final rule with comment period, the median per
diem cost for CMHCs dropped to $154, while the median per diem cost for
hospital-based PHPs was $201. We believed that a combination of reduced
charges and slightly lower CCRs for CMHCs resulted in a significant
decline in the CMHC median per diem cost between CY 2003 and CY 2004.
The CY 2006 OPPS updated combined hospital-based and CMHC median
per diem cost was $161, a decrease of 44 percent compared to the CY
2005 combined median per diem amount. Due to concern that this amount
may not cover the cost for PHPs, as stated in the CY 2006 OPPS final
rule with comment period (70 FR 68548 and 68549), we applied a 15-
percent reduction to the combined hospital-based and CMHC median per
diem cost to establish the CY 2006 PHP APC. (We refer readers to the CY
2006 OPPS final rule with comment period for a full discussion of how
we established the CY 2006 PHP rate (70 FR 68548).) In that rule, we
stated our belief that a reduction in the CY 2005 median per diem cost
would strike an appropriate balance between using the best available
data and providing adequate payment for a program that often spans 5-6
hours a day. We stated that 15 percent was an appropriate reduction
because it recognized decreases in median per diem costs in both the
hospital data and the CMHC data, and also reduced the risk of any
adverse impact on access to these services that might result from a
large single-year rate reduction. However, we adopted this policy as a
transitional measure, and stated in the CY 2006 OPPS final rule with
comment period that we would continue to monitor CMHC costs and charges
for these services and work with CMHCs to improve their reporting so
that payments could be calculated based on better empirical data (70 FR
68548). To apply this methodology for CY 2006, we reduced the CY 2005
combined unscaled hospital-based and CMHC median per diem cost of $289
by 15 percent, resulting in a combined median per diem cost of $245.65
for CY 2006.
For the CY 2007 OPPS/ASC final rule with comment period, we
analyzed hospital and CMHC PHP claims for services furnished between
January 1, 2005, and December 31, 2005, and used the most currently
available CCRs to estimate costs. The median per diem cost for CMHCs
was $173, while the median per diem cost for hospital-based PHPs was
$190.
The combined hospital-based and CMHC median per diem cost would
have been $175 for CY 2007. Rather than allowing the PHP per diem rate
to drop to this level, we proposed to reduce the PHP median cost by 15
percent, similar to the methodology used for the CY 2006 update.
However, after considering all public comments received concerning the
proposed CY 2007 PHP per diem rate and results obtained using more
current data, we modified our proposal. We made a 5-percent reduction
to the CY 2006 median per diem rate to provide a transitional path to
the per diem cost indicated by the data. This approach accounted for
the downward direction of the data and addressed concerns raised by
commenters about the magnitude of another 15-percent reduction in 1
year. Thus, to calculate the CY 2007 APC PHP per diem cost, we reduced
$245.65 (the CY 2005 combined hospital-based and CMHC median per diem
cost of $289 reduced by 15 percent) by 5 percent, which resulted in a
combined per diem cost of $233.37.
For the CY 2008 OPPS/ASC final rule with comment period, we
analyzed 12 months of current data for hospital-based PHP claims
(condition code 41) and CMHC PHP claims for PHP services furnished
between January 1, 2006, and December 31, 2006. We also used the most
currently available CCRs to estimate costs for a day of PHP services.
The median per diem cost for CMHCs was $172, while the median per diem
cost for hospital-based PHPs was $177. The combined median per diem
cost, which is computed from both hospital-based and CMHC PHP data was
$172.
For the past 3 years, we have been concerned that we did not have
sufficient evidence to support using the median per diem cost produced
by the most current year's PHP data. As discussed in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66671), after extensive data
analysis we now believe the data reflect the level of cost for the type
of services that are being provided. This analysis included an
examination of revenue-to-cost center mapping, refinements to the per
diem methodology, and an in-depth analysis of the number of units of
services per day. (We refer readers to the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66671 through 66675) for a detailed
discussion of the data analysis.)
Thus, for CY 2008, we proposed and finalized two refinements to the
methodology for computing the PHP median; however, these refinements
did not appreciably impact the median per diem cost. We remapped the 10
revenue codes to the most appropriate cost centers and computed the
median using a per day methodology (as described below). As noted in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66671),
after extensive analysis, we now believe the data reflected the level
of cost for the type of services that are being provided. We continued
to observe a clear downward trend in the CY 2006 data used to develop
the CY 2008 OPPS/ASC final rule with comment period.
Thus, for CY 2008, we refined our methodology for computing PHP per
diem costs. We developed an alternate method to determine median cost
by computing a separate per diem cost for each day rather than for each
bill. Under this method, we computed a cost separately for each day of
PHP care. When there are multiple days of care entered on a claim, a
unique cost is computed for each day of care. We only assigned costs
for line items on days when a payment is made. All of these costs were
then arrayed from lowest to highest and the middle value of the array
would be the median per diem cost. A complete discussion of the refined
method of computing the PHP median cost can be found in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66672).
Because partial hospitalization is provided in lieu of inpatient
care, it should be a highly structured and clinically-intensive
program, usually lasting most of the day. Our goal is to improve the
level of service furnished in a PHP day. For CY 2008, we were concerned
that the proposed decrease in PHP payment may not reflect the mix and
quantity of services that should be provided under such an intensive
program. In an effort to ensure access to this needed service to
vulnerable populations, we mitigated the proposed reduction to 50
percent of the difference between the CY 2007 APC amount ($233) and the
computed amount based on the PHP data ($172), resulting in an APC
median cost of $203 for CY 2008. As stated in the CY 2008 OPPS/ASC
[[Page 41513]]
final rule with comment period (72 FR 66673), we believe this payment
amount would give the providers an opportunity to increase the
intensity of their programs and maintain partial hospitalization as
part of the continuum of mental health care.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66673), we reiterated our expectation that hospitals and CMHCs will
provide a comprehensive program consistent with the statutory intent.
We also indicated that we intend to explore changes to our regulations
and claims processing systems in order to deny payment for low
intensity days and we specifically invited public comment on the most
appropriate threshold. We received no public comments on this issue.
B. Proposed PHP APC Update
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66672
through 66674), we presented our analysis of the number of units of
service provided in a day of care, as a possible explanation for the
low per diem cost for PHP. Both hospital-based and CMHC PHPs had a
significant number of days where fewer than 4 units of service were
provided. As noted in the CY 2008 OPPS/ASC final rule with comment
period, review of CY 2006 data showed that 64 percent of the CMHC days
were days where fewer than 4 units of service were provided, and 31
percent of the hospital-based PHP days were days where fewer than 4
units of service were provided (72 FR 66672).
We have updated this analysis using CY 2007 claims and found that
the results and trends have continued. In fact, there are even more
days with less than four services provided in CMHCs, but there were
fewer days with less than 4 units of service provided in hospital-based
PHPs compared to the CY 2006 data. Using CY 2007 claims, 73 percent of
CMHC days have fewer than 4 units of service, and 28 percent of
hospital-based PHP days have fewer than 4 units of service. Based on
these updated findings, we computed median per diem costs in the
following three categories: (1) All days; (2) Days with 3 units of
service; and (3) Days with 4 units or more. These updated median per
diem costs were computed separately for CMHCs and hospital-based PHPs
and are shown in the table below:
----------------------------------------------------------------------------------------------------------------
Hospital-based
CMHCs PHPs Combined
----------------------------------------------------------------------------------------------------------------
All Days........................................................ $145 $177 $146
Days with 3 units............................................... 139 151 140
Days with 4 units or more....................................... 171 205 174
----------------------------------------------------------------------------------------------------------------
Using CY 2007 data and our refined methodology for computing PHP
per diem costs adopted in our CY 2008 OPPS/ASC final rule with comment
period (72 FR 66672), the median per diem cost calculated from all
claims is $146. The data indicate that CMHCs provide far fewer days
with 4 or more units of service and that CMHC median per diem cost
($145) is substantially lower than the comparable data from hospital-
based PHPs ($177). Medians for claims containing 4 or more units of
service are $205 for hospital-based PHPs and $174 for all PHP claims
regardless of site of service. Medians for claims containing 3 units of
service are $139 for CMHCs, $151 for hospital-based PHPs, and $140 for
all PHP claims regardless of site of service.
As we stated in our CY 2008 OPPS/ASC final rule with comment period
(72 FR 66672), it was never our intention that days with three services
represented the number of services provided in a typical day. Our
intention was to cover days that consisted of only three services in
certain limited circumstances. For example, we note there are days when
a patient is transitioning towards discharge (or days when a patient
who is transitioning at the beginning of his or her PHP stay). Another
example of when it may be appropriate for a program to provide only
three services in a day is when a patient is required to leave the PHP
early for the day due to an unexpected medical appointment. Therefore,
we recognize there may be limited circumstances when it is appropriate
for PHPs to receive payment for days when only three services are
provided. However, we believe that programs that provide four or more
services should be paid an amount that recognizes that they have
provided a more intensive day of care. A higher rate for more intensive
days is consistent with our goal that hospitals and CMHCs provide a
comprehensive program in keeping with the statutory intent.
Accordingly, as there are circumstances when three services
provided may be appropriate, but to reflect our general belief that the
data trend that four or more services more appropriately indicated the
comprehensive nature of PHP services, for CY 2009, we are proposing to
create two separate APC payment rates for PHP: one for days with three
services and one for days with four or more services. We are proposing
to create two new APCs for PHP as follows:
------------------------------------------------------------------------
Proposed
Proposed APC Group title per diem
rate
------------------------------------------------------------------------
0172.............................. Level I Partial $140
Hospitalization (3
services).
0173.............................. Level II Partial 174
Hospitalization (4 or
more services).
------------------------------------------------------------------------
For APC 0172, we are proposing to use the median per diem cost for
CMHC and hospital-based PHP days with 3 units of services ($140). For
APC 00173, we are proposing to use the median per diem cost for CMHC
and hospital-based PHP days with 4 or more units of service ($174). As
noted previously, these proposed payment rates are derived from both
PHP-based and CMHC-based claims, and represent the median cost of
providing PHP services for the unit of services described. We believe
that $140 is an appropriate payment rate for less intensive days
because it is derived from both hospital-based PHP and CMHC claims data
using all days with three services. We believe that $174 is an
appropriate payment rate for more intensive days because it is derived
from both hospital-based PHP and CMHC claims data, using all days with
four or more services. We believe that creating a rate specific to days
with
[[Page 41514]]
three services is consistent with our proposal to require CMHCs and
hospital-based PHPs to provide a minimum of 3 units of service per day
in order to receive payment as discussed below in section X.C.1. of
this proposed rule. Our proposal to use two separate PHP rates provides
a lower payment for days with only three services, while not penalizing
programs that provide four or more services by excluding days with
three services in the computation of APC 0173. We believe our proposal
appropriately balances our concern that a PHP program is an intensive
program and should generally consist of five to six services provided,
with the realization that there may nonetheless be appropriate
circumstances where three services may be provided.
C. Proposed Policy Changes
1. Proposal to Deny Payment for Low Intensity Days
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66673), we reiterated our expectation that hospitals and CMHCs will
provide a comprehensive program consistent with the statutory intent.
We also indicated that we intend to explore changes to our regulations
and claims processing systems in order to deny payment for low
intensity days and we specifically invited public comment on the most
appropriate threshold. We received no public comments on this subject.
Our analysis of claims data indicates that CMHCs (and to a lesser
extent hospital-based PHPs) are furnishing a substantial number of low
unit days. We consider providing only one or two services to be a low
unit day. Although we currently consider the acceptable minimum number
of PHP services required in a PHP day to be three, it was never our
intention that three or fewer services should represent the number of
services to be provided in a typical PHP day. PHP is furnished in lieu
of an inpatient psychiatric hospitalization and is intended to be more
intensive than a half-day program. We believe the typical PHP day
should include five to six services with a break for lunch. As
indicated in section X.B. above, we are proposing two PHP per diem
rates that reflect the level of care provided.
In conjunction with and to conform to our proposed CY 2009 PHP per
diem rates that account for a minimum of 3 units of service provided,
we also are proposing changes to the existing PHP logic portion of the
I/OCE to require that CMHCs and hospital-based PHPs provide a minimum
of three services per day in order to receive PHP payment. Currently,
the PHP logic portion of the I/OCE results in a ``suspension of claim
for medical review'' for claims with fewer than three services provided
in a day. For CY 2009, we are proposing to deny payment for any PHP
claims for days when fewer than three therapeutic services are
provided. We believe that three services should be the minimum number
of services allowed in a PHP day because a day with one or two services
does not meet the statutory intent of a PHP program. Three services are
a minimum threshold that permits unforeseen circumstances, such as
medical appointments, while allowing payment, but still maintains the
integrity of a comprehensive program. As noted previously, we also
believe that a day where a patient receives only three services should
only occur under certain circumstances. As we explained in section X.B.
of this proposed rule, an example of when it may be appropriate to bill
only three services a day would be when a patient might need to leave
early for a medical appointment and, therefore, would be unable to
complete a full day of PHP treatment. However, PHP programs that
provide three services in a day should be the exception, as we expect
PHP programs to generally provide a more intensive day of services as
PHP is a more comprehensive program than three services. CMS will be
observing trends and assessing this proposed two payment rate approach
in its continued review to protect the integrity of the PHP program.
2. Proposal to Strengthen PHP Patient Eligibility Criteria
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66671), we established the current PHP payment rate of $203. As
part of our ongoing review of ensuring the most appropriate payment is
made for these intensive, service-oriented programs, we also explored
changes that could enhance and strengthen the integrity of the PHP
benefit overall. As part of this review, we looked at existing
instructions to providers, including current regulations, manuals, and
other guidance. We are proposing to codify existing policy regarding
PHP patient eligibility as we believe it will help strengthen the
integrity of the PHP benefit by conforming our regulations to our
longstanding policy and making available the general program
requirements in one regulatory section. These requirements are
currently stated in the Medicare Benefit Policy Manual, Pub. 100-02,
Chapter 6, section 70.3, available on the CMS Web site at: http://
www.cms.hhs.gov/manuals/Downloads/bp102c06.pdf) and in Transmittal 10,
Change Request 3298, dated May 7, 2004, but not codified. The
regulatory text changes that we are proposing are intended to
strengthen PHP requirements by adding the existing patient eligibility
conditions to the existing PHP regulations, and do not reflect a change
in policy. Specifically, we are proposing to revise 42 CFR 410.43 to
add a reference to current regulations at Sec. 424.24(e) that requires
that PHP services are furnished pursuant to a physician certification
and plan of care. While the requirements at Sec. 424.24(e) are not
new, we believe the addition of this reference to Sec. 410.43 will
provide a more complete description of our expectations for PHP
programs in Sec. 410.43.
We also are proposing to revise 42 CFR 410.43 to add the following
patient eligibility criteria. We are proposing to state that partial
hospitalization programs are intended for patients who--
(1) Require 20 hours per week of therapeutic services;
(2) Are likely to benefit from a coordinated program of services
and require more than isolated sessions of outpatient treatment;
(3) Do not require 24-hour care;
(4) Have an adequate support system while not actively engaged in
the program;
(5) Have a mental health diagnosis;
(6) Are not judged to be dangerous to self or others; and
(7) Have the cognitive and emotional ability to participate in the
active treatment process and can tolerate the intensity of the partial
hospitalization program.
We would like to generally note that partial hospitalization is the
level of intervention that falls between inpatient hospitalization and
episodic treatment in the continuum of care for the mentally ill. While
we require a patient to have a mental health diagnosis, we caution that
the diagnosis in itself is not the sole determining factor for
coverage.
Because partial hospitalization is provided in lieu of inpatient
care, it should be a highly structured and clinically-intensive
program. Our goal is to improve the level of service furnished in a PHP
day, while also ensuring that the partial hospitalization benefit is
being utilized by the appropriate population. For example, a PHP
candidate should be able to tolerate a day of PHP and benefit from the
intense treatment provided in the program. In addition, for the program
to be fully beneficial, a PHP participant should have a strong support
system outside of the PHP program helping to ensure success. Moreover,
the safety of all PHP
[[Continued on page 41515]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41515-41564]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 41514]]
[[Page 41515]]
patients is extremely important and, therefore, all PHP participants
should be able to live safely in the community, and not be a danger to
self or others. For these reasons, it has been our longstanding policy
that these criteria are vital in determining the patient's eligibility
to participate in a PHP and believe it necessary to propose to codify
the above list of basic patient eligibility requirements in Sec.
410.43.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66673), we reiterated our expectation that hospitals and CMHCs will
provide a comprehensive program consistent with the statutory intent.
We believe the addition of these requirements to the regulations helps
provide a clear and consistent description of our expectations for PHP
programs and would strengthen the integrity of the PHP benefit by
noting such in the PHP regulations.
3. Proposed Partial Hospitalization Coding Update
As part of our ongoing evaluation of partial hospitalization codes,
we are proposing several coding changes. We identified several CPT
codes that we believe are inappropriate for billing PHP claims. Upon
further study and after consultation with CMS medical advisors, we are
proposing to eliminate use of the following three CPT codes for billing
PHP claims: 90846 (Family psychotherapy (without the patient present)),
90849 (Multi-family group psychotherapy), and 90899 (Unlisted
psychiatric service or procedure). While these three CPT codes
constitute 0.157 percent of the total PHP claims for CY 2006, we
believe there are similar and more appropriate HCPCS codes to use to
bill for these services. We specifically request public comment on our
proposed elimination of these three CPT codes from use in the PHP
benefit.
Our review of the claims data associated with CPT code 90846 found
that this code accounts for approximately 0.004 percent of the total
services billed on PHP claims in CY 2006. We also believe that CPT code
90846 is not an appropriate code for the PHP benefit, because it
excludes the beneficiary. Rather, we believe that another available PHP
code CPT code 90847 (Family psychotherapy (conjoint psychotherapy with
patient present)), which is currently a billable PHP code, is the more
appropriate CPT code to use to bill for family psychotherapy services
because it requires the presence of the patient as part of the family
psychotherapy session.
In addition, our review of the CY 2006 claims data associated with
CPT code 90849 found that this code accounts for approximately 0.058
percent of the total services billed on PHP claims in CY 2006. We also
believe that the intended use of this code, which is for the reporting
of multiple family group therapy sessions, is not appropriate for our
use under PHP because PHP care is centered on the beneficiary. As
stated earlier, we believe that CPT code 90847 is the more appropriate
code to use for PHP payment of family psychotherapy services, because
it provides for the conduct of individualized family psychotherapy with
the patient present. Therefore, for CY 2009, we are proposing to
eliminate CPT code 90849 for use as a PHP code.
In addition, evaluation of the CY 2006 claims data found that CPT
code 90899 accounted for approximately 0.095 percent of total services
billed on PHP claims. Upon closer examination, we found that CPT code
90899 is predominantly used to bill for patient education services.
This is an unlisted CPT procedure code and such CPT unlisted procedure
codes are used to report unlisted psychiatric procedures that are not
accurately described by any other, more specific CPT codes. Because of
our concerns about the type of services that may be billed using an
unlisted CPT code and because a more appropriate code is currently
available that better describes the patient education services for
which PHP payment may be made, we are proposing to eliminate PHP
payment for CPT code 90899 in CY 2009, and are proposing to replace CPT
code 90899 with HCPCS code G0177 (Patient Education and Training). We
further note that eliminating unlisted CPT procedure codes is
consistent with how other payment systems currently treat such codes,
in that more specific coding is preferred over general coding.
In addition, we are proposing to eliminate two group therapy CPT
codes currently used in a PHP setting, 90853 (Group psychotherapy other
than of a multiple-family group) and 90857 (Interactive group
psychotherapy), and replace them with two new parallel timed HCPCS G-
codes: GXXX1 (Group psychotherapy other than of a multiple-family
group, in a partial hospitalization setting, approximately 45 to 50
minutes) and GXXX2 (Interactive group psychotherapy, in a partial
hospitalization setting, approximately 45 to 50 minutes). As most of
the current PHP codes already include time estimates, we believe in
order to maintain consistency with the existing HCPCS codes used in
PHP, the group therapy codes should likewise include a time descriptor.
We believe the time of 45 to 50 minutes for a group therapy session is
reasonable as it approximately reflects the timing of group sessions in
current clinical practices. Therefore, we are proposing the two new
timed HCPCS G-codes for PHP group therapies: GXXX1 and GXXX2. We note
that both CPT code 90853 and 90857 may still be used in a non-PHP
setting.
The table of billable PHP revenue and HCPCS codes originally
published in the April 7, 2000 OPPS final rule with comment period (65
FR 18454) was updated and published in Transmittal 1487, Change Request
5999, dated April 8, 2008, and is currently located in, the Medicare
Claims Processing Manual, Pub. 100-04, Chapter 4, section 260.1, which
is available on the CMS Web site at: http://www.cms.hhs.gov/manuals/
downloads/clm104c04.pdf. Table 34 below displays the revised list of
billable PHP revenue codes and HCPCS codes shown in Transmittal 1487.
This table also includes the five CPT codes that we are proposing to
eliminate for CY 2009 and the two new HCPCS G-codes we are proposing to
add for CY 2009. The five CPT codes that we are proposing to eliminate
are shown in the HCPCS code column with a line struck through each
code. The two new HCPCS G-codes that we are proposing are shown in the
HCPCS code column, in the row with revenue code 0915 (Group Therapy).
[[Page 41516]]
[GRAPHIC] [TIFF OMITTED] TP18JY08.672
D. Proposed Separate Threshold for Outlier Payments to CMHCs
In the November 7, 2003 final rule with comment period (68 FR
63469), we indicated that, given the difference in PHP charges between
hospitals and CMHCs, we did not believe it was appropriate to make
outlier payments to CMHCs using the outlier percentage target amount
and threshold established for hospitals. There was a significant
difference in the amount of outlier payments made to hospitals and
CMHCs for PHP. In addition, further analysis indicated that using the
same OPPS outlier threshold for both hospitals and CMHCs did not limit
outlier payments to high cost cases and resulted in excessive outlier
payments to CMHCs. Therefore, beginning in CY 2004, we established a
separate outlier threshold for CMHCs. For CYs 2004 and 2005, we
designated a portion of the estimated 2.0 percent outlier target amount
specifically for CMHCs, consistent with the percentage of projected
payments to CMHCs under the OPPS in each of those years, excluding
outlier payments. For CY 2006, we set the estimated outlier target at
1.0 percent and allocated a portion of that 1.0 percent, an amount
equal to 0.6 percent (or 0.006 percent of total OPPS payments), to
CMHCs for PHP outliers. For CY 2007, we set the estimated outlier
target at 1.0 percent and allocated a portion of that 1.0 percent, an
amount equal to 0.15 percent of outlier payments (or 0.0015 percent of
total OPPS payments), to CMHCs for PHP outliers. For CY 2008, we set
the estimated outlier target at 1.0 percent and allocated a portion of
that 1.0 percent, an amount equal to 0.02 percent of outlier payments
(or 0.0002 percent of total OPPS payments), to CMHCs for PHP outliers.
The CY 2008 CMHC outlier threshold is met when the cost of furnishing
services by a CMHC exceeds 3.40 times the PHP APC payment amount. The
CY 2008 OPPS outlier payment percentage is 50 percent of the amount of
costs in excess of the threshold.
The separate outlier threshold for CMHCs became effective January
1, 2004, and has resulted in more commensurate outlier payments. In CY
2004, the separate outlier threshold for CMHCs resulted in $1.8 million
in outlier payments to CMHCs. In CY 2005, the separate outlier
threshold for CMHCs resulted in $0.5 million in outlier payments to
CMHCs. In contrast, in CY 2003, more than $30 million was paid to CMHCs
in outlier payments. We believe this difference in outlier payments
indicates that the separate outlier threshold for CMHCs has been
successful in keeping outlier payments to CMHCs in line with the
percentage of OPPS payments made to CMHCs.
As noted in section II.F. of this proposed rule, for CY 2009, we
are proposing to continue our policy of setting aside 1.0 percent of
the aggregate total payments under the OPPS for outlier payments. We
are proposing that a portion of that 1.0 percent, an amount equal to
0.07 percent of outlier payments (or 0.0007 percent of total OPPS
payments), would be allocated to CMHCs for PHP outliers. As discussed
in section II.F. of this proposed rule, we again are proposing to set a
dollar threshold in addition to an APC multiplier threshold for OPPS
outlier payments. However, because the PHP APC is the only APC for
which CMHCs may receive payment under the OPPS, we would not expect to
redirect outlier payments by imposing a dollar threshold. Therefore, we
are not proposing to set a dollar threshold for CMHC outliers. As noted
above, we are proposing to set the outlier threshold for CMHCs for CY
2009 at 3.40 times the APC payment amount and the CY 2009 outlier
payment percentage applicable to costs in excess of the threshold at 50
percent.
XI. Proposed Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
Section 1833(t)(1)(B)(i) of the Act gives the Secretary broad
authority to determine the services to be covered and paid for under
the OPPS. Before implementation of the OPPS in August 2000, Medicare
paid reasonable costs for services provided in the outpatient
department. The claims submitted were subject to medical review by the
fiscal intermediaries to determine the appropriateness of providing
certain services in the outpatient setting. We did not specify in
regulations those services that were appropriate to provide only in the
inpatient setting and that, therefore, should be payable only when
provided in that setting.
In the April 7, 2000 final rule with comment period (65 FR 18455),
we identified procedures that are typically provided only in an
inpatient setting and, therefore, would not be paid by Medicare under
the OPPS. These procedures comprise what is referred to as the
``inpatient list.'' The inpatient list specifies those services that
are only paid when provided in an inpatient setting because of the
nature of the procedure, the need for at least 24 hours of
postoperative recovery time or monitoring before the patient can be
safely discharged, or the underlying physical condition of the patient.
As we discussed in that rule and in the November 30, 2001 final rule
(66 FR 59856), we may use any of the following criteria when reviewing
procedures to
[[Page 41517]]
determine whether or not they should be moved from the inpatient list
and assigned to an APC group for payment under the OPPS:
Most outpatient departments are equipped to provide the
services to the Medicare population.
The simplest procedure described by the code may be
performed in most outpatient departments.
The procedure is related to codes that we have already
removed from the inpatient list.
In the November 1, 2002 final rule with comment period (67 FR
66741), we added the following criteria for use in reviewing procedures
to determine whether they should be removed from the inpatient list and
assigned to an APC group for payment under the OPPS:
We have determined that the procedure is being performed
in numerous hospitals on an outpatient basis; or
We have determined that the procedure can be appropriately
and safely performed in an ASC, and is on the list of approved ASC
procedures or has been proposed by us for addition to the ASC list.
We believe that these additional criteria help us to identify
procedures that are appropriate for removal from the inpatient list.
The list of codes that we are proposing to be paid by Medicare in
CY 2009 only as inpatient procedures is included as Addendum E to this
proposed rule.
B. Proposed Changes to the Inpatient List
For the CY 2009 OPPS, we used the same methodology as described in
the November 15, 2004 final rule with comment period (69 FR 65835) to
identify a subset of procedures currently on the inpatient list that
are being performed a significant amount of the time on an outpatient
basis. These procedures were then clinically reviewed for possible
removal from the inpatient list. We solicited the APC Panel's input at
its March 2008 meeting on the appropriateness of removing the following
six CPT codes from the CY 2009 OPPS inpatient list: 21172
(Reconstruction superior-lateral orbital rim and lower forehead,
advancement or alteration, with or without grafts (includes obtaining
autografts)); 21386 (Open treatment of orbital floor blowout fracture;
periorbital approach); 21387 (Open treatment of orbital floor blowout
fracture; combined approach); 27479 (Arrest, epiphyseal, any method
(e.g., epiphysiodesis); combined distal femur, proximal tibia and
fibula); 54535 (Orchiectomy, radical, for tumor; with abdominal
exploration); and 61850 (Twist drill or burr hole(s) for implantation
of neurostimulator electrodes, cortical).
In addition to presenting to the APC Panel the six candidate
procedures that we believed could be appropriate for removal from the
inpatient list for CY 2009, we also presented utilization data for two
procedures, specifically CPT code 64818 (Sympathectomy, lumbar) and CPT
code 20660 (Application of cranial tongs caliper, or stereotactic
frame, including removal (separate procedure)) that were discussed as
possible procedures for removal from the inpatient list during the
March 2007 APC Panel meeting. At that meeting, the APC Panel
recommended that we obtain additional utilization data for these two
procedures for its consideration at a subsequent meeting.
Following discussion, the APC Panel recommended that CMS remove
from the inpatient list four of the six procedures (presented as
candidates for removal from the list), specifically CPT codes 21172,
21386, 21387, and 27479, and one of the two codes for which additional
utilization data were presented, specifically CPT code 20660. The APC
Panel also recommended that CMS seek input from relevant physician
specialty groups on the removal of two of the six procedures (presented
to them as possible candidates for removal from the inpatient list),
CPT codes 54535 and 61850. The APC Panel made no recommendation
regarding removal of CPT code 64818 from the inpatient list after
review of the additional data presented. For CY 2009, we are proposing
to remove all of the codes except for CPT code 64818 from the inpatient
list that were presented to the APC Panel as candidates for removal
during its March 2008 meeting and, as recommended by the APC Panel, are
specifically soliciting public comment on the proposed removal of CPT
codes 54535 and 61850 from the inpatient list.
In addition to the procedures discussed at the APC Panel's March
2008 meeting, we also reviewed and are proposing to remove three
procedures from the inpatient list that were requested for removal
during the comment period on the CY 2008 OPPS/ASC proposed rule. We
believe that these procedures are appropriate for removal from the
inpatient list and are soliciting public comment on our proposal to
remove these three procedures: CPT codes 27886 (Amputation, leg,
through tibia and fibula; reamputation); 43420 (Closure of
esophagostomy or fistula; cervical approach); and 50727 (Revision of
urinary-cutaneous anastomosis (any type urostomy)).
Furthermore, during the March 2008 meeting of the APC Panel, a
meeting attendee requested removal of several CPT codes from the
inpatient list. That verbal request was followed by a letter in which
the stakeholder requested that we remove five other procedures from the
inpatient list for CY 2009. These procedures are: CPT code 50580 (Renal
endoscopy through nephrotomy or pyelotomy, with or without irrigation,
instillation, or ureteropyelography, exclusive of radiologic service;
with removal of foreign body or calculus); CPT code 51845 (Abdomino-
vaginal vesical neck suspension, with or without endoscopic control
(e.g., Stamey, Raz, modified Pereyra); CPT code 51860 (Cystorrhaphy,
suture of bladder wound, injury or rupture; simple); CPT code 54332
(One stage proximal penile or penoscrotal hypospadias repair requiring
extensive dissection to correct chordee and urethroplasty by use of
skin graft tube and/or island flap); and CPT code 54336 (One stage
perineal hypospadias repair requiring extensive dissection to correct
chordee and urethroplasty by use of skin graft tube and/or island
flap). Based on our utilization data and clinical review, we are
proposing to remove one of these procedures from the inpatient list,
specifically CPT code 54332, and note that effective January 1, 2008,
CPT code 50580 was removed from the inpatient list and assigned to APC
0161.
Consistent with our established policy for removing procedures from
the inpatient list, we rely on recommendations from the public and the
APC Panel, combined with our utilization data and review by CMS medical
advisors, to determine which procedures are candidates for removal. We
believe that our policy of proposing the procedures for removal and
soliciting comments from the public, which includes physician specialty
societies, is the most appropriate process to receive input from the
public on this issue. Rather than solicit approval from a select group
(for example, specific physician specialty societies), we believe that
solicitation of comments from all interested parties is more consistent
with meeting our obligation to the public regarding outpatient services
provided by hospitals. Therefore, we are accepting both recommendations
of the APC Panel from its March 2008 meeting regarding the inpatient
list, including (1) proposing to remove the five specific procedures
the APC Panel recommended for removal (CPT codes 21172, 21386, 21387,
27479, and 20660)
[[Page 41518]]
and (2) seeking input from relevant professional societies regarding
our CY 2009 proposal to remove from the inpatient list CPT codes 54535
and 61850.
The utilization data and clinical review findings for the 11
procedures we are proposing to remove from the inpatient list for CY
2009 support our proposal. Therefore, we are proposing that 11
procedures be removed from the OPPS inpatient list for CY 2009 and be
assigned to clinically appropriate APCs, as shown in Table 35 below.
Table 35.--Proposed HCPCS Codes for Removal From Inpatient List and Their Proposed APC Assignments for CY 2009
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY 2009
HCPCS code Long descriptor 2009 APC status indicator
----------------------------------------------------------------------------------------------------------------
20660.......................... Application of cranial tongs caliper, or 0138 T
stereotactic frame, including removal
(separate procedure).
21172.......................... Reconstruction superior-lateral orbital rim 0256 T
and lower forehead, advancement or
alteration, with or without grafts
(includes obtaining autografts).
21386.......................... Open treatment of orbital floor blowout 0256 T
fracture; periorbital approach.
21387.......................... Open treatment of orbital floor blowout 0256 T
fracture; combined approach.
27479.......................... Arrest, epiphyseal, any method (e.g., 0050 T
epiphysiodesis); combined distal femur
proximal tibia and fibula.
27886.......................... Amputation, leg, through tibia and fibula; 0049 T
reamputation.
43420.......................... Closure of esophagostomy or fistula; 0254 T
cervical approach.
50727.......................... Revision of urinary-cutaneous anastomosis 0165 T
(any type urostomy).
54332.......................... One stage proximal penile or penoscrotal 0181 T
hypospadias repair requiring extensive
dissection to correct chordee and
urethroplasty by use of skin graft tube
and/or island flap.
54535.......................... Orchiectomy, radical, for tumor; with 0181 T
abdominal exploration.
61850.......................... Twist drill or burr hole(s) for 0061 S
implantation of neurostimulator
electrodes, cortical.
----------------------------------------------------------------------------------------------------------------
XII. OPPS Nonrecurring Technical and Policy Clarifications
A. Physician Supervision of HOPD Services
1. Background
The following discussion is a restatement and clarification of the
requirements for physician supervision of therapeutic hospital
outpatient services. We have received many questions related to
physician supervision in hospitals and provider-based departments of
hospitals in response to recent changes to the Medicare Benefit Policy
Manual, Pub.100-2, issued via Transmittal 82, Change Request 5496,
dated February 8, 2008. That change request updated the Medicare
Benefit Policy Manual, Chapter 6, sections 20 through 20.6 and 70.5 to
clarify existing OPPS policy. The change request incorporated a
citation and reference language from 42 CFR 410.27(f) into the text of
the manual for the first time since the regulatory language was
finalized in the April 7, 2000 OPPS final rule with comment period (65
FR 18524 through 18526). We believe that the updated manual language
drew renewed attention to the longstanding OPPS policy on physician
supervision. Based on the number and scope of the questions raised to
us, and varying interpretations of the existing policy that
stakeholders have described, we are including this discussion in this
proposed rule to provide up-to-date clarification of the existing
policy that may resolve some of the questions brought to our attention.
Section 1861(s)(2)(C) of the Act authorizes payment for diagnostic
services, which are furnished to a hospital outpatient for the purpose
of diagnostic study. We have further defined the requirements for
diagnostic services furnished to hospital outpatients, including
requirements for physician supervision of diagnostic services, in
Sec. Sec. 410.28 and 410.32. Section 410.28(e) states that Medicare
Part B will make payment for diagnostic services furnished at provider-
based departments of hospitals ``only when the diagnostic services are
furnished under the appropriate level of physician supervision
specified by CMS in accordance with the definitions in Sec. Sec.
410.32(b)(3)(i), (b)(3)(ii), and (b)(3)(iii).'' In addition, in the
April 7, 2000 OPPS final rule with comment period (65 FR 18526), we
stated that our model for the requirement was the requirement for
physician supervision of diagnostic tests payable under the MPFS that
was set forth in the CY 1998 MPFS final rule (62 FR 59048) that was
published in the Federal Register on October 31, 1998. We also
explained with respect to the supervision requirements for individual
diagnostic tests that we intended to instruct hospitals and fiscal
intermediaries to use the MPFS as a guide pending issuance of updated
requirements. For diagnostic services not listed in the MPFS, we stated
that fiscal intermediaries, in consultation with their medical
directors, would define appropriate supervision levels in order to
determine whether claims for these services are reasonable and
necessary. We have not subsequently issued new requirements for the
physician supervision of diagnostic tests in provider-based departments
of hospitals. Instead, we have continued to follow the supervision
requirements for individual diagnostic tests as listed each year in the
updates to the MPFS.
Section 1861(s)(2)(B) of the Act authorizes payment for hospital
services ``incident to physicians' services rendered to outpatients.''
We have further defined the requirements for outpatient hospital
therapeutic services and supplies ``incident to'' a physician's service
in Sec. 410.27. More specifically, Sec. 410.27(f) states, ``Services
furnished at a department of a provider, as defined in Sec.
413.65(a)(2) of this subchapter, that has provider-based status in
relation to a hospital under Sec. 413.65 of this subchapter, must be
under the direct supervision of a physician. `Direct supervision' means
the physician must be present and on the premises of the location and
immediately available to furnish assistance and direction throughout
the performance of the procedure. It does not mean that the physician
must be present in the room when the procedure is performed.'' This
[[Page 41519]]
language makes no distinction between on-campus and off-campus
provider-based departments.
However, in the preamble of the April 7, 2000 OPPS final rule with
comment period (68 FR 18525), we further discussed the requirement for
physician supervision and the finalization of the proposed regulation
text. In that discussion, we stated that the language of Sec.
410.27(f) ``applies to services furnished at an entity that is located
off the campus of a hospital that we designate as having provider-based
status as a department of a hospital in accordance with Sec. 413.65.''
We also stated that for services furnished in a department of a
hospital that is located on the campus of a hospital, ``we assume the
direct supervision requirement to be met as we explain in section
3112.4(a) of the Intermediary Manual.'' We went on to add that ``we
assume the physician supervision requirement is met on hospital
premises because staff physicians would always be nearby within the
hospital.''
Based on questions received recently, we are concerned that some
stakeholders may have misunderstood our use of the term ``assume'' in
the April 7, 2000 OPPS final rule with comment period, believing that
our statement meant that we do not require any supervision in the
hospital or in an on-campus provider-based department for therapeutic
OPPS services, or that we only require general supervision for those
services. This is not the case. It is our expectation that hospital
outpatient therapeutic services are provided under the direct
supervision of physicians in the hospital and in all provider-based
departments of the hospital, specifically both on-campus and off-campus
departments of the hospital. The expectation that a physician would
always be nearby predates the OPPS and is related to the statutory
authority for payment of hospital outpatient services--that Medicare
makes payment for hospital outpatient services ``incident to'' the
services of physicians in the treatment of patients as described in
section 1861(s)(2)(B) of the Act. Longstanding hospital outpatient
policy language states that, ``the services and supplies must be
furnished as an integral though incidental part of the physicians'
professional services in the course of treatment of an illness or
injury.'' We refer readers to Sec. 410.27(a) and to the Medicare
Benefit Policy Manual, Pub. 100-2, Chapter 6, section 20.5.1, for
further description of hospital outpatient services incident to a
physician's service. The Medicare Benefit Policy Manual also states in
Chapter 6, section 20.5.1, that services and supplies must be furnished
on a physician's order and delivered under physician supervision.
However, the manual indicates further that each occasion of a service
by a nonphysician does not need also be the occasion of the actual
rendition of a personal professional service by the physician
responsible for the care of the patient. Nevertheless, as stipulated in
that same section of the manual ``during any course of treatment
rendered by auxiliary personnel, the physician must personally see the
patient periodically and sufficiently often enough to assess the course
of treatment and the patient's progress and, where necessary, to change
the treatment regimen.''
The expectation that a physician would always be nearby also dates
back to a time when inpatient hospital services provided in a single
hospital building represented the majority of hospital payments by
Medicare. Since that time, advances in medical technology, changes in
the patterns of healthcare delivery, and changes in the organizational
structure of hospitals have led to the development of extensive
hospital campuses, sometimes spanning several city blocks, as well as
off-campus and satellite provider-based campuses at different
locations. In the April 7, 2000 OPPS final rule with comment period (65
FR 18525), we described the focus of the direct physician supervision
requirement on off-campus provider-based departments. We will continue
to emphasize the physician supervision requirement for off-campus
provider-based departments. However, we note that if there were
problems with outpatient care in a hospital or in an on-campus
provider-based department where direct supervision was not in place
(that is, the expectation of direct physician supervision was not met),
we would consider that to be a concern. We want to ensure that OPPS
payment is made for high quality hospital outpatient services provided
to beneficiaries in a safe and effective manner and consistent with
Medicare requirements.
The definition of direct supervision in Sec. 410.27(f) requires
that the physician must be present and on the premises of the location
and immediately available to furnish assistance and direction
throughout the performance of the procedure. In the April 7, 2000 OPPS
final rule with comment period (65 FR 18525), we define ``on the
premises of the location'' by stating `` * * * a physician must be
present on the premises of the entity accorded status as a department
of the hospital and therefore, immediately available to furnish
assistance and direction for as long as patients are being treated at
the site.'' We also stated that this does not mean that the physician
must be physically in the room where a procedure or service is
furnished. Although we have not further defined the term ``immediately
available'' for this specific context, the lack of timely physician
response to a problem in the HOPD would represent a quality concern
from our perspective that hospitals should consider in structuring
their provision of services in ways that meet the direct physician
supervision requirement for HOPD services.
2. Summary
In summary, direct physician supervision is the standard set forth
in the April 7, 2000 OPPS final rule with comment period for
supervision of hospital outpatient therapeutic services covered and
paid by Medicare in hospitals and provider-based departments of
hospitals. While we have emphasized and will continue to emphasize the
direct supervision requirement for off-campus provider-based
departments, we are reiterating our expectation of direct physician
supervision of all hospital outpatient therapeutic services, regardless
of their on-campus or off-campus location. Appropriate supervision is a
key aspect of the delivery of safe and high quality hospital outpatient
services that are paid based on the statutory authority of the OPPS.
B. Reporting of Pathology Services for Prostate Saturation Biopsy
Prostate saturation biopsy is a technique currently described by
Category III CPT code 0137T (Biopsy, prostate, needle, saturation
sampling for prostate mapping). Typically this service entails
obtaining 40 to 80 core samples from the prostate under general
anesthesia. Currently the samples are reviewed by a pathologist, and
the pathology service is reported with CPT code 88305 (Level IV--
Surgical pathology, gross and microscopic examination). Since the
beginning of the OPPS, Medicare has paid for the gross and microscopic
pathology examination of prostate biopsy specimens using CPT code
88305. This CPT code has been paid separately under the OPPS and
assigned to APC 0343 (Level III Pathology) with status indicator ``X''
since August 2000. For CY 2008, CPT code 88305 is assigned to APC 0343
with a payment rate of approximately $33.
In view of the large number of samples that are taken from a single
body organ during prostate saturation biopsy and that must undergo
gross and
[[Page 41520]]
microscopic examination by a pathologist, for CY 2009, we are proposing
to recognize four new more specific Level II HCPCS G-codes under the
OPPS for these pathology services, consistent with the CY 2009 proposal
for the MPFS. The proposed HCPCS codes are: GXXX1 (Surgical pathology,
gross and microscopic examination for prostate needle saturation biopsy
sampling, 1-20 specimens); GXXX2 (Surgical pathology, gross and
microscopic examination for prostate needle saturation biopsy sampling
21-40 specimens); GXXX3 (Surgical pathology, gross and microscopic
examination for prostate needle saturation biopsy sampling, 41-60
specimens); and GXXX4 (Surgical pathology, gross and microscopic
examination for prostate needle saturation biopsy sampling, greater
than 60 specimens). We believe the descriptors of these proposed HCPCS
G-codes more specifically reflect the characteristics of prostate
saturation biopsy pathology services so that reporting would result in
more accurate cost data for OPPS ratesetting and, ultimately, more
appropriate payment. CPT code 88305 would continue to be recognized
under the OPPS for those surgical pathology services unrelated to
prostate needle saturation biopsy sampling. Consistent with the
proposed CY 2009 APC assignment for CPT code 88305, we are proposing to
assign these four new HCPCS G-codes to APC 0343, with a proposed APC
median cost of approximately $35. We are specifically interested in
public comment on the appropriateness of recognizing these proposed new
HCPCS G-codes under the OPPS and their proposed APC assignments,
specifically with regard to the expected hospital resources required
for the preparation of the biopsy specimens that would be reported with
the proposed new HCPCS G-codes and the extent to which those resources
necessary to provide a single unit of each proposed new HCPCS G-code
would differ from the resources required to provide a single unit of
CPT code 88305 for a conventional prostate needle biopsy specimen.
XIII. Proposed OPPS Payment Status and Comment Indicators
A. Proposed OPPS Payment Status Indicator Definitions
The OPPS payment status indicators (SIs) that we assign to HCPCS
codes and APCs play an important role in determining payment for
services under the OPPS. They indicate whether a service represented by
a HCPCS code is payable under the OPPS or another payment system and
also whether particular OPPS policies apply to the code. Our proposed
CY 2009 status indicator assignments for APCs and HCPCS codes are shown
in Addendum A and Addendum B, respectively, to this proposed rule. We
are proposing to use the status indicators and definitions that are
listed in Addendum D1 to this proposed rule, which we discuss below in
greater detail.
1. Proposed Payment Status Indicators To Designate Services That Are
Paid Under the OPPS
----------------------------------------------------------------------------------------------------------------
Indicator Item/code/service OPPS payment status
----------------------------------------------------------------------------------------------------------------
G........................ Pass-Through Drugs and (1) Paid under OPPS; separate APC payment.
Biologicals.
H........................ Pass-Through Device Categories.. Separate cost-based pass-through payment; not
subject to copayment.
K........................ (1) Non-Pass-Through Drugs and (1) Paid under OPPS; separate APC payment.
Biologicals.
(2) Therapeutic (2) Paid under OPPS; separate APC payment.
Radiopharmaceuticals.
N........................ Items and Services Packaged into Paid under OPPS; payment is packaged into payment
APC Rates. for other services. Therefore, there is no
separate APC payment.
P........................ Partial Hospitalization......... Paid under OPPS; per diem APC payment.
Q1....................... STVX-Packaged Codes............. Paid under OPPS; Addendum B displays APC
assignments when services are separately payable.
(1) Packaged APC payment if billed on the same
date of service as a HCPCS code assigned status
indicator ``S,'' ``T,'' ``V,'' or ``X.''
(2) In all other circumstances, payment is made
through a separate APC payment.
Q2....................... T-Packaged Codes................ Paid under OPPS; Addendum B displays APC
assignments when services are separately payable.
(1) Packaged APC payment if billed on the same
date of service as a HCPCS code assigned status
indicator ``T.''
(2) In all other circumstances, payment is made
through a separate APC payment.
Q3....................... Codes that may be paid through a Paid under OPPS; Addendum B displays APC
composite APC. assignments when services are separately payable.
Addendum M displays composite APC assignments when
codes are paid through a composite APC.
(1) Composite APC payment based on OPPS composite-
specific payment criteria. Payment is packaged into
a single payment for specific combinations of
service.
(2) In all other circumstances, payment is made
through a separate APC payment or packaged into
payment for other services.
R........................ Blood and Blood Products........ Paid under OPPS; separate APC payment.
S........................ Significant Procedure, Not Paid under OPPS; separate APC payment.
Discounted when Multiple.
T........................ Significant Procedure, Multiple Paid under OPPS; separate APC payment.
Reduction Applies.
U........................ Brachytherapy Sources........... Paid under OPPS; separate APC payment.
V........................ Clinic or Emergency Department Paid under OPPS; separate APC payment.
Visit.
X........................ Ancillary Services.............. Paid under OPPS; separate APC payment.
----------------------------------------------------------------------------------------------------------------
For CY 2009, we are proposing to replace current status indicator
``Q'' with three new separate status indicators: ``Q1,'' ``Q2,'' and
``Q3.'' We are proposing that status indicator ``Q1'' would be assigned
to all ``STVX-packaged codes;'' status indicator ``Q2'' would be
assigned to all ``T-packaged codes;'' and status indicator ``Q3'' would
be assigned to all codes that may be paid through a composite APC based
on composite-specific criteria or separately through single code APCs
when the criteria are not met. We note that a commenter to the CY 2008
OPPS/
[[Page 41521]]
ASC proposed rule requested that we assign a distinct status indicator
to services that may be subject to a composite APC methodology because
the commenter believed that the composite payment policy differed
significantly from the policies for payment of ``T-packaged'' and
``STVX-packaged codes'' (72 FR 66824). Therefore, we believe that this
proposed change to establish new status indicators ``Q1,'' ``Q2,'' and
``Q3'' would make our policies more transparent to hospitals and would
facilitate the use of status indicator-driven logic in our ratesetting
calculations, and in hospital billing and accounting systems.
For CY 2009, we are proposing to use new payment status indicator
``R'' for all blood and blood product APCs and to use new payment
status indicator ``U'' for all brachytherapy source APCs. Nonpass-
through drugs and biologicals which do not require a conversion factor
to calculate their payment rates would continue to be assigned status
indicator ``K.'' We are proposing to create these new status indicators
for blood and blood products and for brachytherapy sources to
facilitate implementation of the reduced market basket conversion
factor that would apply to payments to hospitals that are required to
report quality data but that fail to meet the established quality
reporting standards.
This is necessary because we are proposing to continue our final CY
2008 policies of setting prospective payment rates for brachytherapy
sources and blood and blood products calculated as the product of
scaled relative weights and the conversion factor and, therefore, blood
and blood products and brachytherapy sources, but no other services
that are currently assigned status indicator ``K'' would be subject to
the reduced conversion factor. We refer readers to section XVI. of this
proposed rule for discussion of the requirements of the hospital
outpatient quality data reporting program and the reduced market basket
conversion factor that would apply to payment for specific services
when hospitals for which reporting is required fail to meet the
reporting standards.
2. Proposed Payment Status Indicators To Designate Services That Are
Paid Under a Payment System Other Than the OPPS
We are proposing no changes to the status indicators as listed
below for the CY 2009 OPPS.
------------------------------------------------------------------------
Indicator Item/code/service OPPS payment status
------------------------------------------------------------------------
A........................... Services furnished Not paid under OPPS.
to a hospital Paid by fiscal
outpatient that are intermediaries/MACs
paid under a fee under a fee
schedule or payment schedule or payment
system other than system other than
OPPS, for example: OPPS.
Ambulance
Services.
Clinical Not subject to
Diagnostic deductible or
Laboratory Services coinsurance.
Non-
Implantable
Prosthetic and
Orthotic Devices
EPO for
ESRD Patients
Physical,
Occupational, and
Speech Therapy
Routine
Dialysis Services
for ESRD Patients
Provided in a
Certified Dialysis
Unit of a Hospital
Diagnostic
Mammography
Screening Not subject to
Mammography. deductible.
C........................... Inpatient Procedures Not paid under OPPS.
Admit patient. Bill
as inpatient.
F........................... Corneal Tissue Not paid under OPPS.
Acquisition; Paid at reasonable
Certain CRNA cost.
Services; and
Hepatitis B
Vaccines.
L........................... Influenza Vaccine; Not paid under OPPS.
Pneumococcal Paid at reasonable
Pneumonia Vaccine. cost; not subject
to deductible or
coinsurance.
M........................... Items and Services Not paid under OPPS.
Not Billable to the
Fiscal Intermediary/
MAC.
Y........................... Non-Implantable Not paid under OPPS.
Durable Medical All institutional
Equipment. providers other
than home health
agencies bill to
DMERC.
------------------------------------------------------------------------
3. Proposed Payment Status Indicators To Designate Services That Are
Not Recognized Under the OPPS But That May Be Recognized by Other
Institutional Providers
We are proposing no changes to the status indicators as listed
below for the CY 2009 OPPS.
------------------------------------------------------------------------
Indicator Item/code/service OPPS payment status
------------------------------------------------------------------------
B........................... Codes that are not Not paid under OPPS.
recognized by OPPS May be paid
when submitted on by fiscal
an outpatient intermediaries/MACs
hospital Part B when submitted on a
bill type (12x different bill
and13x). type, for example,
75x (CORF), but not
paid under OPPS.
An
alternate code that
is recognized by
OPPS when submitted
on an outpatient
hospital Part B
bill type (12x and
13x) may be
available.
------------------------------------------------------------------------
[[Page 41522]]
4. Proposed Payment Status Indicators To Designate Services That Are
Not Payable by Medicare
We are proposing no changes to the status indicators as listed
below for the CY 2009 OPPS.
------------------------------------------------------------------------
Indicator Item/code/service OPPS payment status
------------------------------------------------------------------------
D........................... Discontinued Codes.. Not paid under OPPS
or any other
Medicare payment
system.
E........................... Items, Codes, and Not paid under OPPS
Services: or any other
That are Medicare payment
not covered by system.
Medicare based on
statutory exclusion.
That are
not covered by
Medicare for
reasons other than
statutory exclusion
That are
not recognized by
Medicare but for
which an alternate
code for the same
item or service may
be available
For which
separate payment is
not provided by
Medicare.
------------------------------------------------------------------------
To address providers' broader interests and to make the published
Addendum B more convenient for public use, we are displaying in
Addendum B to this proposed rule all active HCPCS codes for CY 2009
that describe items and services that are: (1) Payable under the OPPS;
(2) paid under a payment system other than the OPPS; (3) not recognized
under the OPPS but that may be recognized by other institutional
providers; and (4) not payable by Medicare. The universe of CY 2009
status indicators that we are proposing for these items and services
are listed in the tables above.
Addendum B, with a complete listing of HCPCS codes that includes
their proposed payment status indicators and proposed APC assignments
for CY 2009, is available electronically on the CMS Web site under
supporting documentation for this proposed rule at: http://
www.cms.hhs.gov/HospitalOutpatientPPS/HORD/list.asp#TopOfPage.
B. Proposed Comment Indicator Definitions
For the CY 2009 OPPS, we are proposing to continue use of the two
comment indicators that are in effect for the CY 2008 OPPS. These two
comment indicators are listed below.
``CH''--Active HCPCS codes in current and next calendar
year; status indicator and/or APC assignment have changed or active
HCPCS code that will be discontinued at the end of the current calendar
year.
``NI''--New code, interim APC assignment; Comments will be
accepted on the interim APC assignment for the new code.
We are proposing to use the ``CH'' indicator in the CY 2009 OPPS/
ASC final rule with comment period to indicate HCPCS codes for which
the status indicator or APC assignments, or both, would change in CY
2009 compared to their assignment as of December 31, 2008.
We are using the ``CH'' indicator in this proposed rule to call
attention to proposed changes in the payment status indicator and/or
APC assignment for HCPCS codes for CY 2009. In this proposed rule, the
``CH'' indicator is appended to HCPCS codes for which we are proposing
changes in the payment status indicator and/or APC assignment for CY
2009 compared to their assignment as of June 30, 2008. We believe that
using the ``CH'' indicator in this proposed rule would facilitate the
public's review of the changes that we are proposing to make final in
CY 2009. The use of the comment indicator ``CH'' in association with a
composite APC indicates that the configuration of the composite APC is
proposed for change in this proposed rule.
``STVX-packaged codes,'' ``T-packaged codes,'' and other HCPCS
codes that could be paid through a composite APC with proposed CY 2009
changes in status indicator assignments from ``Q'' to ``Q1,'' from
``Q'' to ``Q2,'' and from ``Q'' to Q3,'' as well as HCPCS codes for
blood and blood products and for brachytherapy sources with proposed CY
2009 changes in status indicator assignments from ``K'' to ``R'' and
from ``K'' to ``U,'' respectively, are not flagged with comment
indicator ``CH'' in Addendum B to this proposed rule. These proposed
changes in status indicators are to facilitate policy transparency and
operational logic rather than to reflect changes in OPPS payment policy
for these services, so we believe that identifying these HCPCS codes
with ``CH'' could be confusing to the public.
We are proposing to continue our policy of using comment indicator
``NI'' in the OPPS/ASC final rule with comment period. We are proposing
that only HCPCS codes with comment indicator ``NI'' in the CY 2009
OPPS/ASC final rule with comment period would be subject to comment at
that time. We are proposing that HCPCS codes that do not appear with
comment indicator ``NI'' in the CY 2009 OPPS/ASC final rule with
comment period would not be open to public comment, unless we
specifically request additional comments at that time. The disposition
of HCPCS codes that appear in the CY 2009 OPPS/ASC final rule with
comment period to which comment indicator ``NI'' is not appended will
have been open to public comment as a result of this proposed rule.
The two comment indicators that we are proposing to continue using
in CY 2009 and their definitions are listed in Addendum D2 to this
proposed rule.
XIV. OPPS Policy and Payment Recommendations
A. Medicare Payment Advisory Commission (MedPAC) Recommendations
MedPAC was established under section 1805 of the Act to advise the
U.S. Congress on issues affecting the Medicare program. As required
under the statute, MedPAC submits reports to Congress not later than
March and June of each year that present its Medicare payment policy
recommendations. The following section describes recent recommendations
relevant to the OPPS that have been made by MedPAC.
[[Page 41523]]
1. March 2008 Report
The March 2008 MedPAC ``Report to Congress: Medicare Payment
Policy'' included the following recommendation relating specifically to
the Medicare hospital OPPS:
Recommendation 2A-1: The Congress should increase payment rates for
the acute inpatient and outpatient prospective payment systems in 2009
by the projected rate of increase in the hospital market basket index,
concurrent with implementation of a quality incentive payment program.
CMS Response: We are proposing to increase payment rates for the CY
2009 OPPS by the projected rate of increase in the hospital market
basket through adjustment of the full CY 2009 conversion factor.
Simultaneously, we are proposing to implement, effective for CY 2009,
the reduction in the annual update factor by 2.0 percentage points for
hospitals that are defined under section 1886(d)(1)(B) of the Act and
that do not meet the hospital outpatient quality data reporting
required by section 1833(t)(17) of the Act, as added by section 109(a)
of the MIEA-TRHCA. Specifically, we are proposing to calculate two
conversion factors, a full conversion factor based on the full hospital
market basket increase and a reduced conversion factor that reflects
the 2.0 percentage point reduction to the market basket. Our proposed
update of the conversion factor and our proposed adoption and
implementation of the reduced conversion factor that would apply to
hospitals that fail their quality reporting requirements for the CY
2009 OPPS are discussed in detail in section XVI.D.2. of this proposed
rule.
This full MedPAC report can be downloaded from MedPAC's Web site
at: http://www.medpac.gov/documents/Mar08_EntireReport.pdf.
2. June 2007 Report
In its June 2007 ``Report to the Congress: Promoting Greater
Efficiency in Medicare,'' MedPAC included analysis and recommendations
on alternatives to the current method for computing the IPPS wage index
for FY 2009. (We refer readers to Chapter 6 of the June 2007 MedPAC
report to Congress.) In accordance with our established policy, under
the OPPS we adopt the IPPS wage indices to adjust the OPPS standard
payment amounts for labor market differences. Therefore, MedPAC's
analysis and recommendations have implications for the CY 2009 OPPS. We
have considered MedPAC's recommendations and analysis in making a
proposal to revise the IPPS wage indices in the FY 2009 IPPS proposed
rule (73 FR 23617 through 23623), as required by section 106(b)(2) of
the MIEA-TRHCA. We discuss our proposed application of changes to the
IPPS wage index for the CY 2009 OPPS in section II.C. of this proposed
rule.
This full MedPAC report can be downloaded from MedPAC's Web site at
http://www.medpac.gov/document/Jun07_EntireReport.pdf.
B. APC Panel Recommendations
Recommendations made by the APC Panel at its March 2008 meeting are
discussed in sections of this proposed rule that correspond to topics
addressed by the APC Panel. The report and recommendations from the APC
Panel's March 5-6, 2008 meeting are available on the CMS Web site at:
http://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
C. OIG Recommendations
The mission of the OIG, as mandated by Public Law 95-452, as
amended, is to protect the integrity of the U.S. Department of Health
and Human Services (HHS) programs, as well as the health and welfare of
beneficiaries served by those programs. This statutory mission is
carried out through a nationwide network of audits, investigations, and
inspections. In June 2007 the OIG released a report, entitled ``Impact
of Not Retroactively Adjusting Outpatient Outlier Payments,'' that
described the OIG's research into sources of error in CMHC outlier
payments. The OIG report included the following two recommendations
relating specifically to the hospital OPPS under which payment is made
for outpatient services provided by CMHCs.
Recommendation 1: The OIG recommended that CMS require adjustments
of outpatient outlier payments at final cost report settlement,
retroactive to the beginning of the cost report period.
CMS Response: We have been proactive in addressing this issue for
partial hospitalization prospective payment by designating a unique
outlier threshold for CMHCs beginning in CY 2004. As discussed in the
CY 2007 OPPS/ASC final rule with comment period (71 FR 68002 through
68003), differences in total CMHC outlier payments between CY 2004 and
CY 2005 demonstrate that designating a separate threshold has
successfully restrained CMHC outlier payments. Moreover, until the CY
2005 implementation of a fixed dollar outlier threshold for most other
hospital outpatient services that concentrates outlier payments on
costly and complex services, we did not believe it would be cost-
effective to pursue adjustments of outlier payments for all of the
OPPS. However, in addition to the unique outlier threshold for CMHCs
that we have recently adopted to address excessive CMHC outlier
payments, we are proposing to provide for reconciliation of outlier
payments under the OPPS at final cost report settlement as recommended
by the OIG, beginning in CY 2009. We discuss our rationale for
proposing to reconcile outlier payments in more detail in section II.F.
of this proposed rule.
Recommendation 2: The OIG recommended that CMS require retroactive
adjustments of outpatient outlier payments when an error caused by the
fiscal intermediary or provider is identified after the cost report is
settled.
CMS Response: We note that the OIG's findings were based largely on
information from the OPPS' early implementation period, between CY 2000
and CY 2003. We believe we have taken several steps since that time in
order to improve the accuracy and frequency of the Medicare
contractors' CCR calculations, including updating our instructions,
increasing the frequency of calculation, and conducting an annual
review of CMHC CCRs. However, in light of this OIG recommendation, for
the CY 2009 OPPS we are also proposing to provide for reconciliation of
outlier payments under the OPPS. We discuss our rationale for proposing
to reconcile outlier payments in more detail in section II.F. of this
proposed rule.
XV. Proposed Update of the Revised Ambulatory Surgical Center Payment
System
A. Background
1. Legislative Authority for the ASC Payment System
Section 1832(a)(2)(F)(i) of the Act provides that benefits under
Medicare Part B include payment for facility services furnished in
connection with surgical procedures specified by the Secretary that are
performed in an ASC. To participate in the Medicare program as an ASC,
a facility must meet the standards specified in section
1832(a)(2)(F)(i) of the Act, which are set forth in 42 CFR part 416,
subpart B and subpart C of our regulations. The regulations at 42 CFR
part 416, subpart B describe the general conditions and requirements
for ASCs, and the regulations at subpart C explain the specific
conditions for coverage for ASCs.
[[Page 41524]]
Section 141(b) of the Social Security Act Amendments of 1994,
Public Law 103-432, requires us to establish a process for reviewing
the appropriateness of the payment amount provided under section
1833(i)(2)(A)(iii) of the Act for intraocular lenses (IOLs) that belong
to a class of new technology intraocular lenses (NTIOLs). That process
was the subject of a separate final rule entitled ``Adjustment in
Payment Amounts for New Technology Intraocular Lenses Furnished by
Ambulatory Surgical Centers,'' published on June 16, 1999, in the
Federal Register (64 FR 32198).
Section 626(b) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), Public Law 108-173, added section
1833(i)(2)(D) to the Act, which required the Secretary to implement a
revised ASC payment system to be effective not later than January 1,
2008. Section 626(c) of the MMA amended section 1833(a)(1) of the Act
to require that, beginning with implementation of the revised ASC
payment system, payment for surgical procedures furnished in ASCs shall
be 80 percent of the lesser of the actual charge for the services or
the amount determined by the Secretary under the revised payment
system.
Section 5103 of the Deficit Reduction Act of 2005 (DRA), Public Law
109-171, amended section 1833(i)(2) of the Act by adding a new
subparagraph (E) to place a limitation on payment amounts for surgical
procedures in ASCs. Section 1833(i)(2)(E) of the Act provides that if
the standard overhead amount under section 1833(i)(2)(A) of the Act for
an ASC facility service for such surgical procedures, without
application of any geographic adjustment, exceeds the Medicare payment
amount under the hospital OPPS for the service for that year, without
application of any geographic adjustment, the Secretary shall
substitute the OPPS payment amount for the ASC standard overhead
amount. This provision applied to surgical procedures furnished in ASCs
on or after January 1, 2007, but before the effective date of the
revised ASC payment system (that is, January 1, 2008). Section 109(b)
of the Medicare Improvements and Extension Act of 2006 of the Tax
Relief and Health Care Act of 2006 (MIEA-TRHCA), Public Law 109-432,
amended section 1833(i) of the Act, in part, by adding a new clause
(iv) to paragraph (2)(D) and by also adding paragraph (7)(A), which
authorize the Secretary to require ASCs to submit data on quality
measures and to reduce the annual update by 2 percentage points for an
ASC that fails to submit data as required by the Secretary on selected
quality measures. Section 109(b) of the MIEA-TRHCA also amended section
1833(i) of the Act by adding new paragraph (7)(B), which requires that
certain quality of care reporting requirements mandated for hospitals
paid under the OPPS, according to section 109(a) of the MIEA-TRHCA, be
applied in a similar manner to ASCs unless otherwise specified by the
Secretary.
For a detailed discussion of the legislative history related to
ASCs, we refer readers to the June 12, 1998 proposed rule (63 FR 32291
through 32292).
2. Prior Rulemaking
On August 2, 2007, we published in the Federal Register (72 FR
42470) the final rule for the revised ASC payment system, effective
January 1, 2008. We revised our criteria for identifying surgical
procedures that are eligible for Medicare payment when furnished in
ASCs and adopted the method we would use to set payment rates for ASC
covered surgical procedures and covered ancillary services furnished in
association with those covered surgical procedures beginning in CY
2008. In that final rule, we also established a policy for updating on
an annual calendar year basis the ASC conversion factor, the relative
payment weights and APC assignments, the ASC payment rates, and the
list of procedures for which Medicare would not make an ASC payment. We
also established a policy for treating new and revised HCPCS and CPT
codes under the ASC payment system. This policy is consistent with the
OPPS to the extent possible (72 FR 42533).
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66827), we updated and finalized the CY 2008 ASC rates and lists of
covered surgical procedures and covered ancillary services. We also
made regulatory changes to 42 CFR parts 411, 414, and 416 related to
our final policies to provide payments to physicians who perform
noncovered ASC procedures in ASCs based on the facility practice
expense (PE) relative value units (RVUs), to exclude covered ancillary
radiology services and covered ancillary drugs and biologicals from the
categories of designated health services (DHS) that are subject to the
physician self-referral prohibition, and to reduce ASC payments for
surgical procedures when the ASC receives full or partial credit toward
the cost of the implantable device.
3. Policies Governing Changes to the Lists of Codes and Payment Rates
for ASC Covered Surgical Procedures and Covered Ancillary Services
The August 2, 2007, final rule established our policies for
determining which procedures are ASC covered surgical procedures and
covered ancillary services. Under Sec. Sec. 416.2 and 416.166, subject
to certain exclusions, covered surgical procedures are surgical
procedures that are separately paid under the OPPS, that would not be
expected to pose a significant risk to beneficiary safety when
performed in an ASC, and that would not be expected to require an
overnight stay. We defined surgical procedures as those described by
Category I CPT codes in the surgical range from 10000 through 69999, as
well as those Category III CPT codes and Level II HCPCS codes that
crosswalk or are clinically similar to ASC covered surgical procedures
(72 FR 42478).
In the August 2, 2007, final rule, we also established our policy
to make separate ASC payments for the following ancillary services, for
which separate payment is made under the OPPS, when they are provided
integral to ASC covered surgical procedures: Brachytherapy sources;
certain implantable items that have pass-through status under the OPPS;
certain items and services that we designate as contractor-priced,
including, but not limited to, procurement of corneal tissue; certain
drugs and biologicals; and certain radiology services. These covered
ancillary services are specified in Sec. 416.164(b) and are eligible
for separate ASC payment (72 FR 42495). Payment for ancillary services
that are not paid separately under the ASC payment system is packaged
into the ASC payment for the covered surgical procedure.
The full CY 2008 lists of ASC covered surgical procedures and
covered ancillary services are included in Addendum AA and BB,
respectively, to the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66945 through 66993 and 67165 through 67188).
We update the lists of, and payment rates for, covered surgical
procedures and covered ancillary services, in conjunction with the
annual proposed and final rulemaking process to update the OPPS and ASC
payment system (Sec. 416.173; 72 FR 42535). In addition, because we
base ASC payment policies for covered surgical procedures, drugs,
biologicals, and certain other covered ancillary services on the OPPS
payment policies, we also provide quarterly updates for ASC services
throughout the year (January, April, July, and October),
[[Page 41525]]
just as we do for the OPPS. The updates are to implement newly created
Level II HCPCS codes and Category III CPT codes for ASC payment and to
update the payment rates for separately paid drugs and biologicals
based on the most recently submitted ASP data.
In our annual updates to the ASC list of, and payment rates for,
covered surgical procedures and covered ancillary services we undertake
a review of excluded surgical procedures, new procedures, and
procedures for which there is revised coding, to identify any that we
believe meet the criteria for designation as ASC covered surgical
procedures or covered ancillary services. Updating the lists of covered
surgical procedures and covered ancillary services, as well as their
payment rates, in association with the annual OPPS rulemaking cycle is
particularly important because the OPPS relative payment weights and,
in some cases, payment rates, are used as the basis for the payment of
covered surgical procedures and covered ancillary services under the
revised ASC payment system. This joint update process ensures that the
ASC updates occur in a regular, predictable, and timely manner.
B. Proposed Treatment of New Codes
1. Proposed Treatment of New Category I and III CPT Codes and Level II
HCPCS Codes
We finalized a policy in the August 2, 2007, final rule to evaluate
each year all new Category I and Category III CPT codes and Level II
HCPCS codes that describe surgical procedures to make preliminary
determinations in the annual OPPS/ASC final rule with comment period
regarding whether or not they meet the criteria for payment in the ASC
setting and, if so, whether they are office-based procedures (72 FR
42533). In addition, we identify new codes as ASC covered ancillary
services based upon the final payment policies of the revised ASC
payment system. New HCPCS codes that are released in the summer through
the fall of each year, to be effective January 1, are included in the
final rule updating the ASC payment system for the following calendar
year. These new codes are flagged with comment indicator ``NI'' in
Addenda AA and BB to the OPPS/ASC final rule with comment period to
indicate that we are assigning them an interim status which is subject
to public comment on that final rule. These interim determinations must
be made in the OPPS/ASC final rule with comment period because, in
general, the new HCPCS codes and their descriptors for the upcoming
calendar year are not available at the time of development of the OPPS/
ASC proposed rule. The interim payment indicators assigned to the new
codes under the revised ASC payment system are subject to comment in
that final rule. We will respond to those comments in the OPPS/ASC
update final rule with comment period for the following calendar year.
We are proposing to continue this recognition process for CY 2009.
In addition, we are proposing to continue our policy of
implementing through the ASC quarterly update process new mid-year CPT
codes, generally Category III CPT codes, that the AMA releases in
January to become effective the following July. Therefore, we are
proposing to include in Addenda AA or BB, as appropriate, to the CY
2009 OPPS/ASC final rule with comment period the new Category III CPT
codes released in January 2008 for implementation on July 1, 2008
(through the ASC quarterly update process), that we identify as ASC
covered services. Similarly, we are proposing to include in Addenda AA
and BB to that final rule any new Category III CPT codes that the AMA
releases in July 2008 to be effective on January 1, 2009, that we
identify as ASC covered services. However, only those new Category III
CPT codes implemented effective January 1, 2009, will be designated by
comment indicator ``NI'' in the Addenda to the CY 2009 OPPS/ASC final
rule with comment period, to indicate that we have assigned them an
interim payment status which is subject to public comment. The Category
III CPT codes implemented in July 2008 for ASC payment, which appear in
Table 36 below, are subject to comment through this proposed rule, and
we are proposing to finalize their payment indicators in the CY 2009
OPPS/ASC final rule with comment period. We are proposing to assign
payment indicator ``G2'' (Non office-based surgical procedure added in
CY 2008 or later; payment based on OPPS relative payment weight) to
each of these three new codes. Because of the timing of this proposed
rule, these codes are not listed in Addendum AA to this proposed rule
although they will be included in Addendum AA to the CY 2009 OPPS/ASC
final rule with comment period.
Table 36.--New Category III CPT Codes Implemented in July 2008 for ASC Payment
----------------------------------------------------------------------------------------------------------------
Proposed CY 2009 ASC Proposed CY 2009 ASC
HCPCS code Long descriptor payment indicator payment
----------------------------------------------------------------------------------------------------------------
0190T.............................. Placement of intraocular G2.................... $890.60
radiation source
applicator.
0191T.............................. Insertion of anterior G2.................... 968.22
segment aqueous drainage
device, without
extraocular reservoir;
internal approach.
0192T.............................. Insertion of anterior G2.................... 968.22
segment aqueous drainage
device, without
extraocular reservoir;
external approach.
----------------------------------------------------------------------------------------------------------------
2. Proposed Treatment of New Level II HCPCS Codes Implemented in April
and July 2008
New Level II HCPCS codes may describe covered surgical procedures
or covered ancillary services. All new Level II HCPCS codes implemented
in April and July 2008 for ASCs describe covered ancillary services.
During the second quarter of CY 2008, we added to the list of covered
ancillary services a total of four new Level II HCPCS codes for drugs
and biologicals because they are eligible for separate payment under
the OPPS. Those HCPCS codes are: C9241 (Injection, doripenem, 10 mg);
Q4096 (Injection, von willebrand factor complex, human, ristocetin
cofactor (not otherwise specified), per i.u. VWF.RCO); Q4097
(Injection, immune globulin (Privigen), intravenous, non-lyophilized
((e.g., liquid), 500 mg); and Q4098 (Injection, iron dextran, 50 mg).
Similarly, for the third quarter of CY 2008, we added a total of four
new Level II HCPCS codes to the list of ASC covered ancillary services
for drugs and biologicals because they are eligible for separate
payment under the OPPS. Those HCPCS codes are: C9242 (Injection,
fosaprepitant, 1 mg); C9356 (Tendon, porous matrix of cross-linked
collagen and glycosaminoglycan matrix ((TenoGlide Tendon Protector
Sheet), per square centimeter); C9357 (Dermal
[[Page 41526]]
substitute, granulated cross-linked collagen and glycosaminoglycan
matrix ((Flowable Wound Matrix), 1 cc); and C9358 (Dermal substitute,
native, non-denatured collagen ((SurgiMend Collagen Matrix), per 0.5
square centimeters). We assigned the payment indicator ``K2'' (Drugs
and biologicals paid separately when provided integral to a surgical
procedure on ASC list; payment based on OPPS rate) for all of these new
Level II HCPCS codes and added them to the list of covered ancillary
services either through the April update (Transmittal 1488, Change
Request 5994, dated April 9, 2008) or the July update of the CY 2008
ASC payment system. In this CY 2009 OPPS/ASC proposed rule, we are
soliciting public comment on the proposed ASC payment indicators and
payment rates for these codes, as listed in Tables 37 and 38. The codes
listed in Table 37 also are included in Addendum BB of this proposed
rule. These HCPCS codes are paid in ASCs beginning in April and July
2008, respectively, based on the ASC rates posted for the appropriate
calendar quarter on the CMS Web site at: http://www.cms.hhs.gov/
ASCPayment/. However, because of the timing of this proposed rule, the
codes implemented by the July 2008 ASC update and their proposed CY
2009 payment rates (based on July 2008 ASP data) that are displayed in
Table 38 are not included in Addendum BB to this proposed rule. We are
proposing to include the new HCPCS codes displayed in Tables 37 and 38
and, for the codes in Table 37, in Addendum BB to the list of covered
ancillary services and to incorporate all of them into Addendum BB to
our final rule with comment period for CY 2009, consistent with our
annual update policy.
Table 37.--New Level II HCPCS Codes Implemented in April 2008
------------------------------------------------------------------------
Proposed CY 2009
HCPCS code Long descriptor ASC payment
indicator
------------------------------------------------------------------------
C9241......................... Injection, doripenem, K2
10 mg.
Q4096......................... Injection, von K2
willebrand factor
complex, human,
ristocetin cofactor
(not otherwise
specified), per i.u.
VWF:RCO.
Q4097......................... Injection, immune K2
globulin (Privigen),
intravenous, non-
lyophilized (e.g.,
liquid), 500 mg.
Q4098......................... Injection, iron K2
dextran, 50 mg.
------------------------------------------------------------------------
Table 38.--New Level II HCPCS Codes Implemented in July 2008
----------------------------------------------------------------------------------------------------------------
Proposed CY 2009
HCPCS code Long descriptor ASC payment Proposed CY 2009
indicator ASC payment
----------------------------------------------------------------------------------------------------------------
C9242*........................ Injection, fosaprepitant, 1 mg............ K2............... $1.61
C9356*........................ Tendon, porous matrix of cross-linked K2............... 16.92
collagen and glycosaminoglycan matrix
(TenoGlide Tendon Protector Sheet), per
square centimeter.
C9357*........................ Dermal substitute, granulated cross-linked K2............... 883.33
collagen and glycosaminoglycan matrix
(Flowable Wound Matrix), 1 cc.
C9358*........................ Dermal substitute, native, non-denatured K2............... 10.38
collagen (SurgiMend Collagen Matrix), per
0.5 square centimeters.
----------------------------------------------------------------------------------------------------------------
* The payment rates displayed in Table 38 reflect the July 2008 ASP data.
C. Proposed Update to the Lists of ASC Covered Surgical Procedures and
Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Additions to the List of ASC Covered Surgical Procedures
We are proposing to update the ASC list of covered surgical
procedures by adding nine procedures to the list. Three of the nine
procedures, specifically CPT code 0190T (Placement of intraocular
radiation source applicator), CPT code 0191T (Insertion of anterior
segment aqueous drainage device, without extraocular reservoir;
internal approach), and CPT code 0192T (Insertion of anterior segment
aqueous drainage device, without extraocular reservoir; external
approach) are new Category III CPT codes that became effective July 1,
2008, and were implemented in the July 2008 ASC update. The other six
procedures were excluded from the ASC list for CY 2008 because we
believed they did not meet the definition of a covered surgical
procedure based on our expectation that they would pose a significant
safety risk to Medicare beneficiaries or would require an overnight
stay if performed in ASCs. During our annual review of excluded codes
in which we used most recent utilization data, we identified the
following six procedures that we believe should no longer be excluded
from the ASC list: CPT code 31293 (Nasal/sinus endoscopy, surgical;
with medial orbital wall and inferior orbital wall decompression); CPT
code 34490 (Thrombectomy, direct or with catheter; axillary and
subclavian vein, by arm incision); CPT code 36455 (Exchange
transfusion, blood; other than newborn); CPT code 49324 (Laparoscopy,
surgical; with drainage of lymphocele to peritoneal cavity); CPT code
49325 (Laparoscopy, surgical; with revision of previously placed
intraperitoneal cannula or catheter, with removal of intraluminal
obstructive material if performed); and CPT code 49326 (Laparoscopy,
surgical; with omentopexy (omental tacking procedure)). The nine codes
that we are proposing to add to the ASC list of covered surgical
procedures and their proposed CY 2009 payment indicator ``G2'' (Non
office-based surgical procedure added in CY 2008 or later; payment
based on OPPS relative payment weight) are displayed in Table 39,
below.
[[Page 41527]]
Table 39.--Proposed New ASC Covered Surgical Procedures for CY 2009
------------------------------------------------------------------------
Proposed CY
2009 ASC
HCPCS code Short descriptor payment
indicator
------------------------------------------------------------------------
31293.................... Nasal/sinus endoscopy, surg.. G2
34490.................... Removal of vein clot......... G2
36455.................... Bl exchange/transfuse non-nb. G2
49324.................... Lap insertion perm ip cath... G2
49325.................... Lap insertion perm ip cath... G2
49326.................... Lap w/omentopexy add-on...... G2
0190T.................... Place intraoc radiation src.. G2
0191T.................... Insert ant segment drain int. G2
0192T.................... Insert ant segment drain ext. G2
------------------------------------------------------------------------
b. Covered Surgical Procedures Designated as Office-Based
(1) Background
In the August 2, 2007 final rule, we finalized our policy to
designate as ``office-based'' those procedures that are added to the
ASC list of covered surgical procedures in CY 2008 or later years that
we determine are usually performed in physicians' offices based on
consideration of the most recent available volume and utilization data
for each individual procedure code (that is, performed more than 50
percent of the time in physicians' offices) and/or, if appropriate, the
clinical characteristics, utilization, and volume of related codes. In
that rule, we also finalized our policy to exempt all procedures on the
CY 2007 ASC list from application of the office-based classification
(72 FR 42512).
In the August 2, 2007 final rule, we identified a list of
procedures as office-based after taking into account the most recently
available CY 2005 volume and utilization data for each individual
procedure or group of related procedures. We believed that the
resulting list accurately reflected Medicare practice patterns and that
the procedures were of similar complexity. In Addendum AA to that final
rule, each of the office-based procedures was identified by payment
indicator ``P2'' (Office-based surgical procedure added to ASC list in
CY 2008 or later with MPFS nonfacility PE RVUs; payment based on OPPS
relative payment weight); ``P3'' (Office-based surgical procedure added
to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs; payment
based on MPFS nonfacility PE RVUs); or ``R2'' (Office-based surgical
procedure added to ASC list in CY 2008 or later without MPFS
nonfacility PE RVUs; payment based on OPPS relative payment weight),
depending on whether we estimated it would be paid according to the
standard ASC payment methodology based on its OPPS relative payment
weight or at the MPFS nonfacility PE RVU amount.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66840
through 66841), we finalized the temporary office-based designations of
4 procedures, while newly designating 19 procedures as permanently
office-based. In addition, we designated 3 procedures coded by CPT
codes that were new for CY 2008 as temporarily office-based on an
interim final basis. Those 3 temporary designations for the new CY 2008
CPT codes were open to comment during the 60-day comment period for the
CY 2008 OPPS/ASC final rule with comment period. We indicated that we
would respond to public comments on those designations in the OPPS/ASC
final rule with comment period for CY 2009.
(2) Proposed Changes to Covered Surgical Procedures Designated as
Office-Based for CY 2009
In developing this proposed rule, we followed our final policy to
annually review and update the surgical procedures for which ASC
payment is made and to identify new procedures that may be appropriate
for ASC payment, including their potential designation as office-based.
We reviewed the CY 2007 utilization data and clinical characteristics
for all those surgical procedures newly added for ASC payment in CY
2008 that were assigned payment indicator ``G2'' in the CY 2008 OPPS/
ASC final rule with comment period.
As a result of that review, we identified the following 5
procedures that we are proposing to newly designate as office-based
procedures for CY 2009: CPT code 0084T (Insertion of a temporary
prostatic urethral stent); CPT code 36515 (Therapeutic apheresis; with
extracorporeal immunoadsorption and plasma reinfusion); CPT code 36516
(Therapeutic apheresis; with extracorporeal selective adsorption or
selective filtration and plasma reinfusion); CPT code 65436 (Removal of
corneal epithelium; with application of chelating agent (e.g., EDTA));
and CPT code 67505 (Retrobulbar injection; alcohol). Of those, we are
proposing to make the office-based designation of CPT code 0084T
temporary because we do not have adequate data upon which to base a
permanent designation. We are proposing to make permanent office-based
designations for the remaining four procedures. The codes that we are
newly proposing as office-based are displayed in Table 40.
Table 40.--CY 2009 Proposed New Designations of ASC Covered Surgical
Procedures as Office-Based
------------------------------------------------------------------------
Proposed CY
CY 2008 ASC 2009 ASC
HCPCS code Short descriptor payment payment
indicator indicator
------------------------------------------------------------------------
0084T............ Temp prostate G2 R2*
urethral stent.
36515............ Apheresis, adsorp/ G2 P2
reinfuse.
36516............ Apheresis, selective. G2 P2
65436............ Curette/treat cornea. G2 P3
[[Page 41528]]
67505............ Inject/treat eye G2 P3
socket.
------------------------------------------------------------------------
* Denotes temporary payment indicator.
Furthermore, we reviewed CY 2007 utilization information for the
seven procedures with temporary office-based designations for CY 2008.
Of those procedures, we are proposing to make permanent the office-
based designation for CPT code 28890 (Extracorporeal shock wave, high
energy, performed by a physician, requiring anesthesia other than
local, including ultrasound guidance, involving the plantar fascia). In
response to comments on the CY 2008 OPPS/ASC proposed rule, in the CY
2008 OPPS/ASC final rule with comment period, we made the office-based
designation for CPT code 28890 temporary rather than permanent as was
proposed (72 FR 66839 through 66840). Although the CY 2006 utilization
data available for development of the CY 2008 OPPS/ASC final rule with
comment period showed that the service was provided more than 70
percent of the time in the physician's office setting, we were
persuaded by commenters that providers may have been using CPT code
28890, which was new for CY 2006, erroneously to report less intensive
extracorporeal shock wave procedures that would be more frequently
performed in the physician's office. Our review of the CY 2007 data
continues to support our designation of this procedure as office-based
and thus, we believe it is appropriate at this time to propose to make
that designation permanent for CY 2009.
We are not proposing to make permanent the office-based
designations for the 6 other procedures for which the CY 2008
designations are temporary. For those procedures, we do not believe
that the currently available utilization data provide an adequate basis
for proposing permanent office-based designations. The procedures with
temporary office-based status for the CY 2008 ASC payment system that
we are proposing to continue to temporarily designate as office-based
procedures for CY 2009 are displayed in Table 40A, below. In our review
of these codes, we also determined that it would be consistent for the
office-based assignment of HCPCS code C9728 (Placement of interstitial
device(s) for radiation therapy/surgery guidance (e.g., fiducial
markers, dosimeter), other than prostate (any approach), single or
multiple) to be temporary. This procedure is paid under the CY 2008 ASC
payment system as an office-based procedure but is analogous to CPT
code 55876 (Placement of interstitial device(s) for radiation therapy
guidance (e.g., fiducial markers, dosimeter), prostate (via needle, any
approach), single or multiple), for which we are proposing to maintain
the temporary office-based payment indicator for CY 2009. Therefore, we
also are proposing to assign a temporary office-based payment indicator
to HCPCS code C9728 for CY 2009. All procedures for which the proposed
office-based designation for CY 2009 is temporary are indicated by an
asterisk in Addendum AA to this proposed rule.
Table 40A.--CY 2008 Office-Based Procedures for Which Their Proposed CY
2009 Designation Is Temporarily Office-Based
------------------------------------------------------------------------
Proposed CY
2009 ASC
HCPCS code Short descriptor payment
indicator
------------------------------------------------------------------------
0099T.................... Implant corneal ring......... R2*
0124T.................... Conjunctival drug placement.. R2*
21073.................... Mnpj of tmj w/anesth......... P3*
55876.................... Place rt device/marker, pros. P3*
67229.................... Tr retinal les preterm inf... R2*
68816.................... Probe nl duct w/balloon...... P3*
C9728.................... Place device/marker, non pro. R2*
------------------------------------------------------------------------
* Denotes temporary office-based payment indicator.
c. Covered Surgical Procedures Designated as Device-Intensive
(1) Background
As discussed in the August 2, 2007 final rule (72 FR 42503 through
42508), we adopted a modified payment methodology for calculating the
ASC payment rates for covered surgical procedures that are assigned to
the subset of OPPS device-dependent APCs with a device offset
percentage greater than 50 percent under the OPPS, in order to ensure
that payment for the procedure is adequate to provide packaged payment
for the high-cost implantable devices used in those procedures. We
assigned payment indicators ``H8'' (Device-intensive procedure on ASC
list in CY 2007; paid at adjusted rate) and ``J8'' (Device-intensive
procedure added to ASC list in CY 2008 or later; paid at adjusted rate)
to identify the procedures that were eligible for ASC payment
calculated according to the modified methodology, depending on whether
the procedure was included on the ASC list of covered surgical
procedures prior to CY 2008 and therefore, subject to transitional
payment as discussed in section XV.D.1.b. of this proposed rule. The 45
``device-intensive'' procedures for which the modified rate calculation
methodology applies in CY 2008 are displayed in Table 56 and in
Addendum AA to the CY 2008 OPPS/ASC final rule with comment period (72
FR 66843 and 66945 through 66993).
[[Page 41529]]
(2) Proposed Changes to List of Covered Surgical Procedures Designated
as Device-Intensive for CY 2009
We are proposing to update the ASC list of covered surgical
procedures that are eligible for payment according to the modified
methodology for CY 2009 consistent with the proposed update to the
device-dependent APCs under the OPPS that reflects the proposed APC
assignments of procedures, designation of APCs as device-dependent, and
APC device offset percentages based on CY 2007 claims data. OPPS
device-dependent APCs are discussed further in section II.A.2.d.(1) of
this proposed rule. The ASC covered surgical procedures that we are
proposing to designate as device-intensive and that would be subject to
the device-intensive procedure payment methodology are listed in Table
41 below. The HCPCS code, the HCPCS code short descriptor, the proposed
payment indicator, the proposed CY 2009 OPPS APC assignment, and the
proposed CY 2009 OPPS APC device offset percentage are also listed in
Table 41. Each proposed device-intensive procedure is assigned payment
indicator ``H8'' or ``J8,'' depending on whether it is subject to
transitional payment, and all of these codes are included in Addendum
AA to this proposed rule.
Table 41.--ASC Covered Surgical Procedures Proposed for Designation as Device-Intensive for CY 2009
----------------------------------------------------------------------------------------------------------------
Proposed
Proposed CY 2009
CY 2009 ASC Proposed device-
HCPCS code Short descriptor payment CY 2009 OPPS APC title dependent
indicator OPPS APC APC offset
percentage
----------------------------------------------------------------------------------------------------------------
27446........................ Revision of knee J8 0681 Knee Arthroplasty... 74
joint.
33206........................ Insertion of heart J8 0089 Insertion/ 72
pacemaker. Replacement of
Permanent Pacemaker
and Electrodes.
33207........................ Insertion of heart J8 0089 Insertion/ 72
pacemaker. Replacement of
Permanent Pacemaker
and Electrodes.
33208........................ Insertion of heart J8 0655 Insertion/ 75
pacemaker. Replacement/
Conversion of a
permanent dual
chamber pacemaker.
33212........................ Insertion of pulse H8 0090 Insertion/ 73
generator. Replacement of
Pacemaker Pulse
Generator.
33213........................ Insertion of pulse H8 0654 Insertion/ 77
generator. Replacement of a
permanent dual
chamber pacemaker.
33214........................ Upgrade of pacemaker J8 0655 Insertion/ 75
system. Replacement/
Conversion of a
permanent dual
chamber pacemaker.
33224........................ Insert pacing lead & J8 0418 Insertion of Left 70
connect. Ventricular Pacing
Elect..
33225........................ Lventric pacing lead J8 0418 Insertion of Left 70
add-on. Ventricular Pacing
Elect..
33240........................ Insert pulse J8 0107 Insertion of 89
generator. Cardioverter-
Defibrillator.
33249........................ Eltrd/insert pace- J8 0108 Insertion/ 88
defib. Replacement/Repair
of Cardioverter-
Defibrillator Leads.
33282........................ Implant pat-active J8 0680 Insertion of Patient 71
ht record. Activated Event
Recorders.
53440........................ Male sling procedure H8 0385 Level I Prosthetic 57
Urological
Procedures.
53444........................ Insert tandem cuff.. H8 0385 Level I Prosthetic 57
Urological
Procedures.
53445........................ Insert uro/ves nck H8 0386 Level II Prosthetic 64
sphincter. Urological
Procedures.
53447........................ Remove/replace ur H8 0386 Level II Prosthetic 64
sphincter. Urological
Procedures.
54400........................ Insert semi-rigid H8 0385 Level I Prosthetic 57
prosthesis. Urological
Procedures.
54401........................ Insert self-contd H8 0386 Level II Prosthetic 64
prosthesis. Urological
Procedures.
54405........................ Insert multi-comp H8 0386 Level II Prosthetic 64
penis pros. Urological
Procedures.
54410........................ Remove/replace penis H8 0386 Level II Prosthetic 64
prosth. Urological
Procedures.
54416........................ Remv/repl penis H8 0386 Level II Prosthetic 64
contain pros. Urological
Procedures.
55873........................ Cryoablate prostate. H8 0674 Prostate 59
Cryoablation.
61885........................ Insrt/redo neurostim H8 0039 Level I Implantation 83
1 array. of Neurostimulator.
61886........................ Implant neurostim H8 0315 Level III 88
arrays. Implantation of
Neurostimulator.
62361........................ Implant spine H8 0227 Implantation of Drug 81
infusion pump. Infusion Device.
62362........................ Implant spine H8 0227 Implantation of Drug 81
infusion pump. Infusion Device.
63650........................ Implant H8 0040 Percutaneous 56
neuroelectrodes. Implantation of
Neurostimulator
Electrodes,
Excluding Cranial
Nerve.
63655........................ Implant J8 0061 Laminectomy, 61
neuroelectrodes. Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
63685........................ Insrt/redo spine n H8 0222 Level II 84
generator. Implantation of
Neurostimulator.
64553........................ Implant H8 0225 Implantation of 61
neuroelectrodes. Neurostimulator
Electrodes, Cranial
Nerve.
64555........................ Implant J8 0040 Percutaneous 56
neuroelectrodes. Implantation of
Neurostimulator
Electrodes,
Excluding Cranial
Nerve.
64560........................ Implant J8 0040 Percutaneous 56
neuroelectrodes. Implantation of
Neurostimulator
Electrodes,
Excluding Cranial
Nerve.
64561........................ Implant H8 0040 Percutaneous 56
neuroelectrodes. Implantation of
Neurostimulator
Electrodes,
Excluding Cranial
Nerve.
[[Page 41530]]
64565........................ Implant J8 0040 Percutaneous 56
neuroelectrodes. Implantation of
Neurostimulator
Electrodes,
Excluding Cranial
Nerve.
64573........................ Implant H8 0225 Implantation of 61
neuroelectrodes. Neurostimulator
Electrodes, Cranial
Nerve.
64575........................ Implant H8 0061 Laminectomy, 61
neuroelectrodes. Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
64577........................ Implant H8 0061 Laminectomy, 61
neuroelectrodes. Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
64580........................ Implant H8 0061 Laminectomy, 61
neuroelectrodes. Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
64581........................ Implant H8 0061 Laminectomy, 61
neuroelectrodes. Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
64590........................ Insrt/redo pn/gastr H8 0039 Level I Implantation 83
stimul. of Neurostimulator.
65770........................ Revise cornea with H8 0293 Level V Anterior 68
implant. Segment Eye
Procedures.
69930........................ Implant cochlear H8 0259 Level VII ENT 83
device. Procedures.
----------------------------------------------------------------------------------------------------------------
2. Covered Ancillary Services
We are proposing to update the ASC list of covered ancillary
services to reflect the services' proposed separate payment status
under the CY 2009 OPPS. Maintaining consistency with the OPPS may
result in proposed changes to ASC payment indicators because some
covered ancillary services that are paid separately under the revised
ASC payment system in CY 2008 are proposed for packaged status under
the OPPS for CY 2009. Comment indicator ``CH,'' as discussed in section
XV.F. of this proposed rule, is used in Addendum BB to this proposed
rule to indicate covered ancillary services for which we are proposing
a change in the ASC payment indicator that reflects, for example, our
proposal to package payment for the service under the CY 2009 ASC
payment system consistent with its proposed treatment under the CY 2009
OPPS.
Except for the Level II HCPCS code listed in Table 38 of this
proposed rule, all covered ancillary services and their proposed
payment indicators for CY 2009 are included in Addendum BB to this
proposed rule.
D. Proposed ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services
1. Proposed Payment for Covered Surgical Procedures
a. Background
Our final payment policy for covered surgical procedures under the
revised ASC payment system is described in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66828 through 66831). In that rule, we
updated the CY 2008 rates for covered surgical procedures with payment
indicators of ``A2,'' ``G2,'' ``H8,'' and ``J8'' using CY 2006 data,
consistent with the CY 2008 OPPS update. We also updated the payment
amounts for office-based procedures (payment indicators ``P2,'' ``P3,''
and ``R2'') using the most recent available MPFS and OPPS data. We
compared the estimated CY 2008 rate for each of the office-based
procedures calculated according to the standard methodology of the
revised ASC payment system to the MPFS nonfacility PE RVU amount to
determine which was the lower payment amount that, therefore, would be
the rate for payment of the procedure according to the final policy of
the revised ASC payment system. See Sec. 416.171(d).
Subsequent to publication of that rule, the Congress enacted the
Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L. 110-173.
That law required changes to the rates paid under the MPFS for the
first 6 months of CY 2008, and therefore, the ASC rates for some
office-based procedures were also affected. We revised the CY 2008 ASC
payment rates and made them available by posting them to the CMS Web
site at: http://www.cms.hhs.gov/ASCPayment/.
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for
CY 2009
We are proposing CY 2009 payment rates for procedures with payment
indicator ``G2'' that are calculated according to the standard
methodology of multiplying the proposed CY 2009 ASC relative payment
weight for the procedure by the proposed CY 2009 ASC conversion factor
(72 FR 42492 through 42493). Also, according to our established policy,
we are proposing CY 2009 payments for procedures subject to the
transitional payment methodology (payment indicators ``A2'' and ``H8'')
using a blend of 50 percent of the proposed CY 2009 ASC rate calculated
according to the standard or device-intensive methodology,
respectively, and 50 percent of the CY 2007 ASC payment rate (72 FR
42519).
We are proposing payment rates for office-based procedures (payment
indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive procedures
(payment indicators ``J8'' and ``H8'') calculated according to our
established policies (72 FR 42504 and 42511). Thus, we are proposing to
update the payment
[[Page 41531]]
amounts for device-intensive procedures based on the CY 2009 OPPS
proposal that reflects updated OPPS claims data and to make payment for
office-based procedures at the lesser of the proposed CY 2009 MPFS
nonfacility PE RVU amount or the CY 2009 ASC payment amount calculated
according to the standard methodology. Similarly, ASC payment rates for
the device-intensive procedures would be based on the proposed updated
CY 2009 OPPS device-offset amounts as displayed in Table 41 above.
c. Proposed Adjustment to ASC Payments for Partial or Full Device
Credit
Under Sec. 416.179, our ASC policies with regard to payment for
costly devices implanted in ASCs at no cost or with full or partial
credit are fully consistent with the OPPS policies. The proposed CY
2009 OPPS APCs and devices subject to the adjustment policy are
discussed in section IV.B.2. of this proposed rule. The ASC policies
include adoption of the OPPS policy for reduced payment to providers
when a device is furnished without cost or with full credit for the
cost of the device for those ASC covered surgical procedures that are
assigned to APCs under the OPPS to which this policy applies. According
to that policy, payment to the ASC is reduced by the device offset
amount that we estimate represents the cost of the device when the
necessary device is furnished without cost to the ASC or with a full
credit for the cost of the new device (72 FR 42504). We provide the
same amount of payment reduction based on the device offset amount in
ASCs that would apply under the OPPS under the same circumstances.
Specifically, when a procedure that is listed in Table 42 of this
proposed rule is performed in an ASC and the case involves implantation
of a no cost or full credit device listed in Table 43, the ASC must
report the HCPCS ``FB'' modifier on the line with the covered surgical
procedure code to indicate that an implantable device in Table 43 was
furnished without cost.
When the ``FB'' modifier is reported with a procedure code that is
listed in Table 42, the contractor reduces the ASC payment by the
amount of payment that is attributed to the device when the ASC payment
rate is calculated. The reduction of ASC payment in this circumstance
is necessary to pay appropriately for the covered surgical procedure
being furnished by the ASC.
Consistent with the OPPS policy, we also adopted an ASC payment
policy for certain procedures involving partial credit for a specified
device. Specifically, we reduce the payment for implantation procedures
listed in Table 42 by one-half of the device offset amount that would
be applied if a device were provided at no cost or with full credit, if
the credit to the ASC is 50 percent or more of the device cost (72 FR
66846). ASCs must append the modifier ``FC'' to the code for the
surgical procedure when the facility receives a partial credit of 50
percent or more of the cost of a device listed in Table 43 when used in
a surgical procedure listed in Table 42. In order to report that they
received a partial credit of 50 percent or more of the cost of a
device, ASCs have the option of either: (1) Submitting the claim for
the device implantation procedure to their Medicare contractor after
the procedure's performance but prior to manufacturer acknowledgment of
credit for the device, and subsequently contacting the contractor
regarding a claims adjustment once the credit determination is made; or
(2) holding the claim for the device implantation procedure until a
determination is made by the manufacturer on the partial credit and
submitting the claim with the ``FC'' modifier appended to the
implantation procedure HCPCS code if the partial credit is 50 percent
or more of the cost of the device. Beneficiary coinsurance is based on
the reduced payment amount.
Consistent with the OPPS, we are proposing to update the list of
device-intensive procedures that would be subject to the full and
partial credit payment reduction policies for CY 2009. Table 42
displays the ASC covered implantation procedures and their payment
indicators that we are proposing would be subject to the full and
partial device credit policies for CY 2009.
Specifically, when a procedure that is listed in Table 42 below is
performed in an ASC and the case involves implantation of a no cost or
full credit device or a device for which the ASC received at least a 50
percent partial credit that is listed in Table 43, the ASC must report
the HCPCS ``FB'' or ``FC'' modifier, as appropriate, on the line with
the covered surgical procedure code. The procedures listed in Table 42
are those ASC covered device-intensive procedures assigned to APCs
under the OPPS to which the policy applies. We are not proposing to
apply this policy to the procedures and devices associated with APCs
0425 (Level II Arthroplasty or Implantation with Prosthesis) and 0648
(Level IV Breast Surgery), which are proposed for inclusion in the OPPS
full and partial credit payment reduction policy for CY 2009, because
ASC covered procedures assigned to these two APCs under the OPPS do not
qualify for payment as ASC covered device-intensive surgical procedures
(that is, their estimated device offset percentages are less than 50
percent).
Table 42.--Proposed CY 2009 Adjustments to Payments for ASC Covered Surgical Procedures in Cases of Devices
Reported at No Cost or With Full or Partial Credit
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
Proposed CY Proposed CY 2009 OPPS 2009 OPPS
HCPCS code Short descriptor 2009 ASC 2009 OPPS OPPS APC title full partial
payment APC offset offset
indicator percentage percentage
----------------------------------------------------------------------------------------------------------------
27446...... Revision of knee joint. J8 0681 Knee Arthroplasty..... 74 37
33206...... Insertion of heart J8 0089 Insertion/Replacement 72 36
pacemaker. of Permanent
Pacemaker and
Electrodes.
33207...... Insertion of heart J8 0089 Insertion/Replacement 72 36
pacemaker. of Permanent
Pacemaker and
Electrodes.
33208...... Insertion of heart J8 0655 Insertion/Replacement/ 75 37
pacemaker. Conversion of a
permanent dual
chamber pacemaker.
33212...... Insertion of pulse H8 0090 Insertion/Replacement 73 36
generator. of Pacemaker Pulse
Generator.
33213...... Insertion of pulse H8 0654 Insertion/Replacement 77 38
generator. of a permanent dual
chamber pacemaker.
[[Page 41532]]
33214...... Upgrade of pacemaker J8 0655 Insertion/Replacement/ 75 37
system. Conversion of a
permanent dual
chamber pacemaker.
33224...... Insert pacing lead & J8 0418 Insertion of Left 70 35
connect. Ventricular Pacing
Elect.
33225...... Lventric pacing lead J8 0418 Insertion of Left 70 35
add-on. Ventricular Pacing
Elect.
33240...... Insert pulse generator. J8 0107 Insertion of 89 44
Cardioverter-
Defibrillator.
33249...... Eltrd/insert pace-defib J8 0108 Insertion/Replacement/ 88 44
Repair of
Cardioverter-
Defibrillator Leads.
33282...... Implant pat-active ht J8 0680 Insertion of Patient 71 35
record. Activated Event
Recorders.
53440...... Male sling procedure... H8 0385 Level I Prosthetic 57 29
Urological Procedures.
53444...... Insert tandem cuff..... H8 0385 Level I Prosthetic 57 29
Urological Procedures.
53445...... Insert uro/ves nck H8 0386 Level II Prosthetic 64 32
sphincter. Urological Procedures.
53447...... Remove/replace ur H8 0386 Level II Prosthetic 64 32
sphincter. Urological Procedures.
54400...... Insert semi-rigid H8 0385 Level I Prosthetic 57 29
prosthesis. Urological Procedures.
54401...... Insert self-contd H8 0386 Level II Prosthetic 64 32
prosthesis. Urological Procedures.
54405...... Insert multi-comp penis H8 0386 Level II Prosthetic 64 32
pros. Urological Procedures.
54410...... Remove/replace penis H8 0386 Level II Prosthetic 64 32
prosth. Urological Procedures.
54416...... Remv/repl penis contain H8 0386 Level II Prosthetic 64 32
pros. Urological Procedures.
61885...... Insrt/redo neurostim 1 H8 0039 Level I Implantation 83 42
array. of Neurostimulator.
61886...... Implant neurostim H8 0315 Level III Implantation 88 44
arrays. of Neurostimulator.
62361...... Implant spine infusion H8 0227 Implantation of Drug 81 40
pump. Infusion Device.
62362...... Implant spine infusion H8 0227 Implantation of Drug 81 40
pump. Infusion Device.
63650...... Implant neuroelectrodes H8 0040 Percutaneous 56 28
Implantation of
Neurostimulator
Electrodes, Excluding
Cranial Nerve.
63655...... Implant neuroelectrodes J8 0061 Laminectomy, 61 30
Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
63685...... Insrt/redo spine n H8 0222 Level II Implantation 84 42
generator. of Neurostimulator.
64553...... Implant neuroelectrodes H8 0225 Implantation of 61 30
Neurostimulator
Electrodes, Cranial
Nerve.
64555...... Implant neuroelectrodes J8 0040 Percutaneous 56 28
Implantation of
Neurostimulator
Electrodes, Excluding
Cranial Nerve.
64560...... Implant neuroelectrodes J8 0040 Percutaneous 56 28
Implantation of
Neurostimulator
Electrodes, Excluding
Cranial Nerve.
64561...... Implant neuroelectrodes H8 0040 Percutaneous 56 28
Implantation of
Neurostimulator
Electrodes, Excluding
Cranial Nerve.
64565...... Implant neuroelectrodes J8 0040 Percutaneous 56 28
Implantation of
Neurostimulator
Electrodes, Excluding
Cranial Nerve.
64573...... Implant neuroelectrodes H8 0225 Implantation of 61 30
Neurostimulator
Electrodes, Cranial
Nerve.
64575...... Implant neuroelectrodes H8 0061 Laminectomy, 61 30
Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
[[Page 41533]]
64577...... Implant neuroelectrodes H8 0061 Laminectomy, 61 30
Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
64580...... Implant neuroelectrodes H8 0061 Laminectomy, 61 30
Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
64581...... Implant neuroelectrodes H8 0061 Laminectomy, 61 30
Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electr.
64590...... Insrt/redo pn/gastr H8 0039 Level I Implantation 83 42
stimul. of Neurostimulator.
69930...... Implant cochlear device H8 0259 Level VII ENT 83 42
Procedures.
----------------------------------------------------------------------------------------------------------------
Table 43.--Proposed Devices for Which the ``FB'' or ``FC'' Modifier Must
Be Reported With the Procedure Code When Furnished at No Cost or With
Full or Partial Credit
------------------------------------------------------------------------
Device HCPCS code Short descriptor
------------------------------------------------------------------------
C1721......................... AICD, dual chamber.
C1722......................... AICD, single chamber.
C1764......................... Event recorder, cardiac.
C1767......................... Generator, neurostim, imp.
C1771......................... Rep dev, urinary, w/sling.
C1772......................... Infusion pump, programmable.
C1776......................... Joint device (implantable).
C1778......................... Lead, neurostimulator.
C1779......................... Lead, pmkr, transvenous VDD.
C1785......................... Pmkr, dual, rate-resp.
C1786......................... Pmkr, single, rate-resp.
C1813......................... Prosthesis, penile, inflatab.
C1815......................... Pros, urinary sph, imp.
C1820......................... Generator, neuro rechg bat sys.
C1881......................... Dialysis access system.
C1882......................... AICD, other than sing/dual.
C1891......................... Infusion pump, non-prog, perm.
C1897......................... Lead, neurostim, test kit.
C1898......................... Lead, pmkr, other than trans.
C1900......................... Lead coronary venous.
C2619......................... Pmkr, dual, non rate-resp.
C2620......................... Pmkr, single, non rate-resp.
C2621......................... Pmkr, other than sing/dual.
C2622......................... Prosthesis, penile, non-inf.
C2626......................... Infusion pump, non-prog, temp.
C2631......................... Rep dev, urinary, w/o sling.
L8614......................... Cochlear device/system.
------------------------------------------------------------------------
2. Proposed Payment for Covered Ancillary Services
a. Background
Our final CY 2008 payment policies under the revised ASC payment
system for covered ancillary services vary according to the particular
type of service and its payment policy under the OPPS. Our overall
policy provides separate ASC payment for certain ancillary services
integrally related to the provision of ASC covered surgical procedures
that are paid separately under the OPPS and provides packaged ASC
payment for other ancillary services that are packaged under the OPPS.
Thus, we established a final policy to align ASC payment bundles with
those under the OPPS (72 FR 42495).
Our ASC payment policies provide separate payment for drugs and
biologicals that are separately paid under the OPPS at the OPPS rates,
while we pay for separately payable radiology services at the lower of
the MPFS nonfacility PE RVU (or technical component) amount or the rate
calculated according to the standard ASC payment methodology (72 FR
42497). In all cases, these services must be provided integral to the
performance of ASC covered surgical procedures for which the ASC bills
Medicare. As noted in section XV.D.1.a. of this proposed rule, changes
were made to the MPFS payment rates for the period of January 1, 2008
through June 30, 2008 as a result of the enactment of the Medicare,
Medicaid, and SCHIP Extension Act of 2007. In addition to changing the
ASC payment rates for some office-based procedures, those changes also
affected the ASC rates for some covered ancillary radiology services
for the first 6 months of CY 2008.
ASC payment policy for brachytherapy sources generally mirrors the
payment policy under the OPPS. We finalized our policy to pay for
brachytherapy sources applied in ASCs at the same prospective rates
that were adopted under the OPPS or, if the OPPS rates were
unavailable, at contractor-priced rates in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66832). Subsequent to publication of
that rule, section 106 of the Medicare, Medicaid, and SCHIP Extension
Act of 2007 mandated that, for the period January 1, 2008 through June
30, 2008, brachytherapy sources be paid under the OPPS at charges
adjusted to cost. Therefore, because our final overall ASC payment
policy requires payment for brachytherapy sources at contractor-priced
rates if prospective OPPS rates are not available (72 FR 42499), we
paid ASCs at contractor-priced rates for brachytherapy sources provided
in ASCs for this period of time. Beginning July 1, 2008, brachytherapy
sources applied in ASCs are paid at the same prospectively set rates
that were finalized in the CY 2008 OPPS/ASC final rule with comment
period, unless Congress specifies another payment methodology.
Other separately paid covered ancillary services in ASCs,
specifically corneal tissue acquisition and device categories with OPPS
pass-through status, do not have prospectively established ASC payment
rates according to the final policies of the revised ASC payment system
(72 FR 42502 and 42509). Under the revised ASC payment system, corneal
tissue acquisition is paid based on the invoiced costs for acquiring
the corneal tissue for transplantation. As discussed in section IV.A.1.
of this proposed rule, new pass-through device categories may be
established on a quarterly basis, but currently there are no OPPS
device pass-through categories that would continue for OPPS pass-
through payment (and, correspondingly, separate ASC payment) in CY
2009.
b. Proposed Payment for Covered Ancillary Services for CY 2009
For CY 2009, we are proposing to update the ASC payment rates and
make
[[Page 41534]]
changes to payment indicators as necessary in order to maintain
alignment between the OPPS and ASC payment systems regarding the
packaged or separately payable status of services and the proposed CY
2009 OPPS and ASC payment rates. The proposed CY 2009 OPPS payment
methodologies for separately payable drugs and biologicals and
brachytherapy sources are discussed in sections V. and VII. of this
proposed rule, respectively, and the CY 2009 ASC payment rates for
those services are proposed to equal the proposed CY 2009 OPPS rates.
In Addendum BB, we indicate whether the proposed CY 2009 payment rate
for radiology services is based on the MPFS PE RVU amount or the
standard ASC payment calculation. Thus, the proposed CY 2009 payment
indicator for a covered radiology service may differ from its CY 2008
payment indicator based on packaging changes under the OPPS or the
comparison of the CY 2009 proposed MPFS nonfacility PE RVU amount to
the CY 2009 ASC payment rate calculated according to the standard
methodology. Services that we are proposing to pay based on the
standard ASC rate methodology are assigned payment indicator ``Z2''
(Radiology service paid separately when provided integral to a surgical
procedure on ASC list; payment based on OPPS relative payment weight)
and those for which payment is based on the MPFS PE RVU amount are
assigned payment indicator ``Z3'' (Radiology service paid separately
when provided integral to a surgical procedure on ASC list; payment
based on MPFS nonfacility PE RVUs).
Covered ancillary services and their proposed payment indicators
are listed in Addendum BB to this proposed rule.
E. New Technology Intraocular Lenses
1. Background
In the CY 2007 OPPS/ASC final rule with comment period, we
finalized our proposal to update and streamline the process for
reviewing applications to establish new active classes of new
technology intraocular lenses (NTIOLs) and for recognizing new
candidate intraocular lenses (IOLs) inserted during or subsequent to
cataract extraction as belonging to a new technology intraocular lens
(NTIOL) class that is qualified for a payment adjustment (71 FR 68176)
Specifically, we established the following process:
We will announce annually in the Federal Register document
that proposes the update of ASC payment rates for the following
calendar year, a list of all requests to establish new NTIOL classes
accepted for review during the calendar year in which the proposal is
published and the deadline for submission of public comments regarding
those requests. The deadline for receipt of public comments will be 30
days following publication of the list of requests.
In the Federal Register document that finalizes the update
of ASC payment rates for the following calendar year, we will--
+ Provide a list of determinations made as a result of our review
of all new class requests and public comments; and
+ Publish the deadline for submitting requests for review of an
application for a new NTIOL class in the following calendar year.
In determining whether a lens belongs to a new class of NTIOLs and
whether the ASC payment amount for insertion of that lens in
conjunction with cataract surgery is appropriate, we expect that the
insertion of the candidate IOL would result in significantly improved
clinical outcomes compared to currently available IOLs. In addition, to
establish a new NTIOL class, the candidate lens must be distinguishable
from lenses already approved as members of active or expired classes of
NTIOLs that share a predominant characteristic associated with improved
clinical outcomes that was identified for each class. Furthermore, in
the CY OPPS/ASC 2007 final rule with comment period, we finalized our
proposal to base our determinations on consideration of the following
factors (71 FR 68177):
The IOL must have been approved by the FDA and claims of
specific clinical benefits and/or lens characteristics with established
clinical relevance in comparison with currently available IOLs must
have been approved by the FDA for use in labeling and advertising.
The IOL is not described by an active or expired NTIOL
class; that is, it does not share the predominant, class-defining
characteristic associated with improved clinical outcomes with
designated members of an active or expired NTIOL class.
Evidence demonstrates that use of the IOL results in
measurable, clinically meaningful, improved outcomes in comparison with
use of currently available IOLs. According to the statute, and
consistent with previous examples provided by CMS, superior outcomes
that would be considered include the following:
+ Reduced risk of intraoperative or postoperative complication or
trauma;
+ Accelerated postoperative recovery;
+ Reduced induced astigmatism;
+ Improved postoperative visual acuity;
+ More stable postoperative vision;
+ Other comparable clinical advantages, such as--
++ Reduced dependence on other eyewear (for example, spectacles,
contact lenses, and reading glasses);
++ Decreased rate of subsequent diagnostic or therapeutic
interventions, such as the need for YAG laser treatment;
++ Decreased incidence of subsequent IOL exchange;
++ Decreased blurred vision, glare, other quantifiable symptom or
vision deficiency.
For a request to be considered complete, we require submission of
the information that is found in the guidance document entitled
``Application Process and Information Requirements for Requests for a
New Class of New Technology Intraocular Lens (NTIOL)'' posted on the
CMS Web site at: http://www.cms.hhs.gov/ASCPayment/05_NTIOLs.asp.
As stated in the CY 2007 OPPS/ASC final rule with comment period
(71 FR 68180), there are three possible outcomes from our review of a
request for establishment of a new NTIOL class. As appropriate, for
each completed request for consideration of a candidate IOL into a new
class that is received by the established deadline, one of the
following determinations would be announced annually in the final rule
updating the ASC payment rates for the next calendar year:
The request for a payment adjustment is approved for the
candidate IOL for 5 full years as a member of a new NTIOL class
described by a new HCPCS code.
The request for a payment adjustment is approved for the
candidate IOL for the balance of time remaining as a member of an
active NTIOL class.
The request for a payment adjustment is not approved.
We also discussed our plan to summarize briefly in the final rule
the evidence that was reviewed, the public comments, and the basis for
our determinations in consideration of applications for establishment
of a new NTIOL class. We established that when a new NTIOL class is
created, we would identify the predominant characteristic of NTIOLs in
that class that sets them apart from other IOLs (including those
previously approved as members of other expired or active NTIOL
classes) and that is associated with improved clinical outcomes. The
date of implementation of a payment adjustment in the case of approval
of an
[[Page 41535]]
IOL as a member of a new NTIOL class would be set prospectively as of
30 days after publication of the ASC payment update final rule,
consistent with the statutory requirement.
2. NTIOL Application Process for Payment Adjustment
In CY 2007, we posted an updated guidance document to the CMS Web
site to provide process and information requirements for applications
requesting a review of the appropriateness of the payment amount for
insertion of an IOL to ensure that the ASC payment for covered surgical
procedures includes payment that is reasonable and related to the cost
of acquiring a lens that is approved as belonging to a new class of
NTIOLs. This guidance document can be accessed on the CMS Web site at:
http://www.cms.hhs.gov/ASCPayment/downloads/NTIOLprocess.
We note that we have also issued a guidance document entitled
``Revised Process for Recognizing Intraocular Lenses Furnished by
Ambulatory Surgery Centers (ASCs) as Belonging to an Active Subset of
New Technology Intraocular Lenses (NTIOLs).'' This guidance document
can be accessed on the CMS Web site at: http://www.cms.hhs.gov/
ASCPayment/Downloads/Request_for_inclusion_in_current_NTIOL_
subset.pdf.
This second guidance document provides specific details regarding
requests for recognition of IOLs as belonging to an existing, active
NTIOL class, the review process, and information required for a request
to review. Currently, there is one active NTIOL class whose defining
characteristic is the reduction of spherical aberration. CMS accepts
requests throughout the year to review the appropriateness of
recognizing an IOL as a member of an active class of NTIOLs. That is,
review of candidate lenses for membership in an existing, active NTIOL
class is ongoing and not limited to the annual review process that
applies to the establishment of new NTIOL classes. We ordinarily
complete the review of such a request within 90 days of receipt, and
upon completion of our review, we notify the requestor of our
determination and post on the CMS Web site notification of a lens newly
approved for a payment adjustment as an NTIOL belonging to an active
NTIOL class when furnished in an ASC.
3. Classes of NTIOLs Approved and New Requests for Payment Adjustment
a. Background
Since implementation of the process for adjustment of payment
amounts for NTIOLs that was established in the June 16, 1999 Federal
Register, we have approved three classes of NTIOLs, as shown in the
following table, with the associated qualifying IOLs to date:
----------------------------------------------------------------------------------------------------------------
$50 approved for
NTIOL class HCPCS code services furnished NTIOL IOLs eligible for adjustment
on or after characteristic
----------------------------------------------------------------------------------------------------------------
1.......... Q1001............... May 18, 2000, Multifocal......... Allergan AMO Array Multifocal
through May 18, lens, model SA40N.
2005.
2.......... Q1002............... May 18, 2000, Reduction in STAAR Surgical Elastic Ultraviolet-
through May 18, Preexisting Absorbing Silicone Posterior
2005. Astigmatism. Chamber IOL with Toric Optic,
models AA4203T, AA4203TF, and
AA4203TL.
3.......... Q1003............... February 27, 2006, Reduced Spherical Advanced Medical Optics (AMO)
through February Aberration. Tecnis[supreg] IOL models Z9000,
26, 2011. Z9001, Z9002, ZA9003, AR40xEM and
Tecnis[supreg] 1-Piece model
ZCB00; Alcon Acrysof[supreg] IQ
Model SN60WF and Acrysert
Delivery System model SN60WS;
Bausch & Lomb Sofport AO models
LI61AOV, and LI61AOV; STAAR
Affinity Collamer model CQ2015A.
----------------------------------------------------------------------------------------------------------------
b. Request To Establish New NTIOL Class for CY 2009 and Deadline for
Public Comment
As discussed below and explained in the guidance document on the
CMS Web site, a request for review for a new class of NTIOLs for CY
2009 must have been submitted to CMS by March 14, 2008, the due date
published in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66855). We received one request for review of the appropriateness of
the ASC payment amount for insertion of a candidate IOL as a member of
a new class of NTIOLs for CY 2009 by the March 14, 2008 due date. A
summary of this request follows.
Requestor: Rayner Surgical, Inc.
Manufacturer: Rayner Intraocular Lenses Limited.
Lens Model Number: C-flex IOL, Model Number 570C.
Summary of the Request: Rayner Surgical, Inc. (Rayner) submitted a
request for CMS to determine that its C-flex Model 570C intraocular
lens meets the criteria for recognition as an NTIOL and to concurrently
establish a new class of NTIOLs, with this lens as a member. As part of
its request, Rayner submitted descriptive information about the
candidate IOL as outlined in the guidance document that we make
available on the CMS Web site for the establishment of a new class of
NTIOLs, as well as information regarding approval of the candidate IOL
by the U.S. Food and Drug Administration (FDA). This information
included the approved labeling for the candidate lens, a summary of the
IOL's safety and effectiveness, a copy of the FDA's approval
notification, and instructions for its use. In addition, Rayner also
submitted several peer-reviewed articles in support of its claim that
the design features and hydrophilic properties of the candidate lens
would reduce silicone oil adhesion and silicone oil-induced
opacification. We note that we have previously considered other
candidate IOLs for which ASC payment review was requested on the basis
of their hydrophilic characteristics or their associated reduction in
cellular deposits. We discussed these lenses in the December 20, 1999
and May 3, 2000 NTIOL proposed and final rules published in the Federal
Register (FR 64 71148 through 71149 and 65 FR 25738 through 25740,
respectively).
In its CY 2009 request, Rayner asserts that the design features and
hydrophilic properties of the candidate lens would reduce silicone oil
adhesion and silicone oil-induced opacification problems associated
with FDA-approved IOL materials currently marketed in the United
States. Rayner states that silicone oil is widely used as a tamponade
in vitreoretinal surgery, and that silicone oil-induced opacification
of an IOL, through adherence of the oil to the IOL surface, is a well-
known surgical complication. Rayner also states that at present, there
are no active or expired NTIOL classes that describe IOLs similar to
its IOL.
We established in the CY 2007 OPPS/ASC final rule with comment
period that when reviewing a request for recognition of an IOL as an
NTIOL and a concurrent request to establish a new class of NTIOLs, we
would base our
[[Page 41536]]
determination on consideration of the three major criteria that are
outlined in the discussion above. We have begun our review of Rayner's
request to recognize its C-flex IOL as an NTIOL and concurrently
establish a new class of NTIOLs. We are soliciting comments on this
candidate IOL with respect to the established NTIOL criteria as
discussed above.
First, for an IOL to be recognized as an NTIOL we require that the
IOL must have been approved by the FDA and claims of specific clinical
benefits and/or lens characteristics with established clinical
relevance in comparison with currently available IOLs must have been
approved by the FDA for use in labeling and advertising. We note that
FDA approval for the candidate lens was granted in May of 2007 and in
its request, Rayner provided FDA approval documentation, including a
copy of the FDA's approval notification, the FDA's summary of the IOL's
safety and effectiveness, and the labeling approved by the FDA. The
approved label for the Rayner C-flex states, ``The hydrophilic nature
of the Rayacryl material and the design features of the Rayner C-Flex
lens reduce the problems of silicone oil adhesion and silicone oil
opacification.'' The FDA label does not otherwise reference specific
clinical benefits or lens characteristics with established clinical
relevance in comparison with currently available IOLs. Although the
labeling reference to reduced ``problems'' could imply clinical
relevance and clinical benefits of the lens, the label does not
indicate the specific clinical benefits associated with the lens. We
are interested in public comments on the specific clinical benefits
and/or lens characteristics with established clinical relevance in
comparison with currently available IOLs that may be associated with
the silicone adherence and silicone oil-induced opacification reducing
characteristics of this candidate lens.
Second, we also require that the candidate IOL not be described by
an active or expired NTIOL class, that is, it does not share the
predominant, class-defining characteristic associated with improved
clinical outcomes with designated members of an active or expired NTIOL
class. As noted in the table above regarding active and expired NTIOL
classes, since implementation of the NTIOL review process that was
established in the June 16, 1999 Federal Register, we have approved
three classes of NTIOLs: Multifocal and Reduction in Preexisting
Astigmatism classes, both of which were created in 2000 and expired in
2005, and the currently active Reduced Spherical Aberration class,
which was created in 2006 and will expire in 2011. The class-defining
characteristic specific to IOLs that are members of these classes is
evident in the name assigned to the class. For example, IOLs recognized
as members of the reduced spherical aberration class are characterized
by their aspheric design that results in reduced spherical aberration.
Please refer to the table above for information about the NTIOL classes
that have been created since the implementation of the review process.
Based on this information, the candidate lens may not be described by
an active or expired NTIOL class. Its proposed class-defining
characteristic and associated clinical benefits that were described in
the submitted request, specifically the hydrophilic nature of the
Rayacryl material and the design features of the C-flex lens to reduce
problems with silicone oil adhesion and silicone oil-induced
opacification, may not be similar to the class-defining characteristics
and associated benefits of the two expired NTIOL classes, the
Multifocal and Reduction in Preexisting Astigmatism classes, or to the
class-defining characteristic and associated benefits of the currently
active Reduced Spherical Aberration class. We welcome public comments
that address whether the proposed class-defining characteristic and
associated clinical benefits of the candidate Rayner IOL are described
by the expired or currently active NTIOL classes.
Third, our NTIOL evaluation criteria also require that an applicant
submit evidence that demonstrates use of the IOL results in measurable,
clinically meaningful, improved outcomes in comparison with use of
currently available IOLs. We note that in the CY 2007 OPPS/ASC final
rule with comment period, we sought comments as to what constitutes
currently available IOLs for purposes of such comparisons, and we
received several comments in response to our solicitation (71 FR
68178). We agreed with commenters that we should remain flexible with
respect to our view of ``currently available lenses'' for purposes of
reviewing NTIOL requests, in order to allow for consideration of
technological advances in lenses over time. For purposes of reviewing
this request to establish a new NTIOL class for CY 2009, we believe
that foldable, spherical, monofocal IOLs made of acrylic, silicone, or
polymethylmethacrylate materials represent the currently available
lenses against which the candidate NTIOL to establish a new class
should be compared. The Rayner request asserts that the hydrophilic
material of the candidate lens with respect to silicone oil adhesion
makes the lens a novel IOL in the U.S. market. We are seeking public
comment on our view of ``currently available lenses'' for the purposes
of this CY 2009 review.
We reviewed the four peer-reviewed articles submitted by Rayner
with the request, specifically three bench studies of silicone oil
coverage of various IOL materials and a single series of three clinical
case histories where silicone oil adhesion was documented. The
literature did not clearly provide information regarding the clinical
benefit to patients who received the candidate lens in conjunction with
cataract removal surgery compared to patients receiving currently
available IOLs. As stated in the Rayner request, the potential benefits
of the candidate lens would apply only to individuals undergoing
vitreoretinal surgery, in which silicone oil was used as a tamponade at
some time after insertion of the intraocular lens. The size and
composition of this population that could potentially benefit is
unclear, and it is also unclear how often and what other alternative
tamponade materials may be employed in the U.S. relative to silicone
oil. We welcome public comments and relevant data specifically
addressing whether use of the Rayner C-flex IOL results in measurable,
clinically meaningful, improved outcomes in comparison with use of
currently available IOLs.
In accordance with our established NTIOL review process, we are
seeking public comments on all of the review criteria for establishing
a new NTIOL class with the characteristic of reduced silicone oil-
induced opacification based on the request for the Rayner C-flex IOL
Model 570C lens. All comments on this request must be received by
August 18, 2008. The announcement of CMS' determination regarding this
request will appear in the CY 2009 OPPS/ASC final rule with comment
period. If a determination of membership of the candidate lens in a new
or currently active NTIOL class is made, this determination will be
effective 30 days following the date that the final rule is published
in the Federal Register.
4. Proposed Payment Adjustment
The current payment adjustment for a 5-year period from the
implementation date of a new NTIOL class is $50. In the CY 2007 OPPS/
ASC final rule with comment period, we revised Sec. 416.200(a) through
(c) to clarify how the IOL payment adjustment will be made and how an
NTIOL will be paid
[[Page 41537]]
after expiration of the payment adjustment, as well as made minor
editorial changes to Sec. 416.200(d). For CY 2008, we did not revise
the current payment adjustment amount, and we are not proposing to
revise the payment adjustment amount for CY 2009 in light of our very
short experience with the revised ASC payment system, implemented
initially on January 1, 2008.
5. Proposed ASC Payment for Insertion of IOLs
In accordance with the final policies of the revised ASC payment
system, for CY 2009 payment for IOL insertion procedures will be
established according to the standard payment methodology of the
revised payment system, which multiples the ASC conversion factor by
the ASC payment weight for the surgical procedure to implant the IOL.
CY 2009 ASC payment for the cost of a conventional lens will be
packaged into the payment for the associated covered surgical
procedures performed by the ASC. The proposed CY 2009 ASC payment rates
for IOL insertion procedures are included in Table 44.
Table 44.--Insertion of IOL Procedures and Their Proposed CY 2009 ASC
Payment Rates
------------------------------------------------------------------------
Proposed CY
HCPCS code Long descriptor 2009 ASC
payment
------------------------------------------------------------------------
66983........ Intracapsular cataract extraction with $961.91
insertion of intraocular lens prosthesis
(one stage procedure).
66984........ Extracapsular cataract removal with 961.91
insertion of intraocular lens prosthesis
(one stage procedure), manual or mechanical
technique (e.g., irrigation and aspiration
or phacoemulsification).
66985........ Insertion of intraocular lens prosthesis 890.22
(secondary implant), not associated with
concurrent cataract removal.
66986........ Exchange of intraocular lens................ 890.22
------------------------------------------------------------------------
F. Proposed ASC Payment and Comment Indicators
1. Background
In addition to the payment indicators that we introduced in the
August 2, 2007 final rule, we also created final comment indicators for
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66855). We created Addendum DD1 to define ASC payment
indicators that we use in Addenda AA and BB to provide payment
information regarding covered surgical procedures and covered ancillary
services, respectively, under the revised ASC payment system. The ASC
payment indicators in Addendum DD1 are intended to capture policy-
relevant characteristics of HCPCS codes that may receive packaged or
separate payment in ASCs, including: Their ASC payment status prior to
CY 2008; their designation as device-intensive or office-based and the
corresponding ASC payment methodology; and their classification as
separately payable radiology services, brachytherapy sources, OPPS
pass-through devices, corneal tissue acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that lists the ASC comment indicators.
The ASC comment indicators used in Addenda AA and BB to the final rule
with comment period will serve to identify, for the revised ASC payment
system, the status of a specific HCPCS code and its payment indicator
with respect to the timeframe when comments will be accepted. The
comment indicator ``NI'' will be used in the final rule to indicate new
HCPCS codes for which the interim payment indicator assigned is subject
to comment.
The ``CH'' comment indicator is used in Addenda AA and BB to this
CY 2009 proposed rule to indicate that: A new payment indicator (in
comparison with the indicator for the CY 2008 ASC April quarterly
update) is proposed for assignment to an active HCPCS code for the next
calendar year; an active HCPCS code is proposed for addition to the
list of procedures or services payable in ASCs; or an active HCPCS code
is proposed for deletion at the end of the current calendar year. The
``CH'' comment indicators that are published in the final rule with
comment period are provided to alert readers that a change has been
made from one calendar year to the next, but do not indicate that the
change is subject to comment. The full definitions of the comment
indicators are provided in Addendum DD2 to this proposed rule.
2. Proposed ASC Payment and Comment Indicators
We are proposing to revise the definition of one ASC payment
indicator for CY 2009. We are proposing that the definition of payment
indicator ``F4'' would be changed from ``Corneal tissue acquisition;
paid at reasonable cost'' to ``Corneal tissue acquisition, hepatitis B
vaccine; paid at reasonable cost'' for CY 2009 as displayed in Addendum
DD1 to this proposed rule. While we did not include hepatitis B vaccine
HCPCS codes in Addendum BB to the CY 2008 OPPS/ASC final rule with
comment period, we consider these vaccines to be separately payable
drugs under the OPPS, and the revised ASC payment system policy
provides the same payment for covered ancillary drugs and biologicals
as would be made under the OPPS (72 FR 42501). Under the OPPS, these
hepatitis B vaccines are proposed for CY 2009 payment at reasonable
cost and, therefore, for the ASC payment system, we are proposing to
include hepatitis B vaccines in the payment indicator definition of
``F4'' for CY 2009.
G. Calculation of the ASC Conversion Factor and ASC Payment Rates
1. Background
In the August 2, 2007 final rule, we made final our proposal to
base ASC relative payment weights and payment rates under the revised
ASC payment system on APC groups and relative payment weights (72 FR
42493). Consistent with that policy and the requirement at section
1833(i)(2)(D)(ii) of the Act that the revised payment system be
implemented so that it would be budget neutral, the initial ASC
conversion factor (CY 2008) was calculated so that estimated total
Medicare payments under the revised ASC payment system in the first
year would be budget neutral to estimated total Medicare payments under
the existing (CY 2007) ASC payment system. That is, application of the
ASC conversion factor was designed to result in aggregate expenditures
under the revised ASC payment system in CY 2008 equal to aggregate
expenditures that would have occurred in CY 2008 in the absence of the
revised system, taking into consideration the cap on payments in CY
2007 as required under section
[[Page 41538]]
1833(i)(2)(E) of the Act (72 FR 42521 through 42522).
We note that we consider the term ``expenditures'' in the context
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of
the Act to mean expenditures from the Medicare Part B Trust Fund. We do
not consider expenditures to include beneficiary coinsurance and
copayments. This distinction was important for the CY 2008 ASC budget
neutrality model that considered payments across hospital outpatient,
ASC, and MPFS payment systems. However, because coinsurance is almost
always 20 percent for ASC services, this interpretation of expenditures
has minimal impact for subsequent budget neutrality adjustments
calculated within the revised ASC payment system.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857
through 66858), we set out a step-by-step illustration of the final
budget neutrality adjustment calculation based on the methodology
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531)
and as applied to updated data available for the CY 2008 OPPS/ASC final
rule with comment period. The application of that methodology to the
data available for the CY 2008 OPPS/ASC final rule with comment period
resulted in a budget neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS relative payment weights for most
services as the ASC relative payment weights and, consistent with the
final policy, we calculated the CY 2008 ASC payment rates by
multiplying the ASC relative payment weights by the CY 2008 ASC
conversion factor of $41.401. For covered office-based surgical
procedures and covered ancillary radiology services, the final policy
is to set the relative payment weights so that the national unadjusted
ASC payment rate does not exceed the MPFS unadjusted nonfacility PE RVU
amount. Further, as discussed in section XV.F. of this proposed rule,
in addition to the standard payment methodology, we also adopted
several other alternative payment methods for specific types of
services (for example, device-intensive procedures).
Beginning in CY 2008, Medicare accounts for geographic wage
variation in labor cost when calculating individual ASC payments by
applying the pre-floor and pre-reclassified hospital wage index values
that CMS calculates for payment and updated Core Based Statistical
Areas (CBSAs) issued by the Office of Management and Budget in June
2003. This is the same wage index that is used to adjust for geographic
differences in labor costs in all Medicare payment systems except the
IPPS and the OPPS. As discussed in the August 2, 2007 final rule (72 FR
42518), the revised ASC payment system accounts for geographic wage
variation when calculating individual ASC payments by applying the pre-
floor and pre-reclassified hospital wage index to the labor-related
portion, which is 50 percent of the ASC payment amount.
We note that as part of our review of the hospital wage index, in
accordance with section 106(b)(1) of the MIEA-TRHCA, CMS has initiated
a research contract that will evaluate the application of the hospital
wage index in non-inpatient settings (73 FR 23618). For further
information, see the discussion in the FY 2009 IPPS proposed rule.
2. Proposed Policy Regarding Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2009 and Future
Years
We update the ASC relative payment weights in the revised ASC
payment system each year using the national OPPS relative payment
weights (and MPFS nonfacility PE RVU amounts, as applicable) for that
same calendar year and uniformly scale the ASC relative payment weights
for each update year to make them budget neutral (72 FR 42531 through
42532). Consistent with our established policy, we are proposing to
scale the CY 2009 relative payment weights for ASCs according to the
following method. Holding ASC utilization and the mix of services
constant from CY 2007, for CY 2009, we would compare the total payment
weight using the CY 2008 ASC relative payment weights under the 75/25
blend (of the CY 2007 payment rate and the revised ASC payment rate)
with the total payment weight using the CY 2009 ASC relative payment
weights under the 50/50 blend (of the CY 2007 ASC payment rate and the
revised ASC payment rate) to take into account the changes in the OPPS
relative payment weights between CY 2008 and CY 2009. We would use the
ratio of CY 2008 to CY 2009 total payment weight (the weight scaler) to
scale the ASC relative payment weights for CY 2009. The proposed ASC
scaler is 0.9753 and scaling of ASC relative payment weights would
apply to covered surgical procedures and covered ancillary radiology
services whose ASC payment rates are based on OPPS relative payment
weights. Scaling would not apply in the case of ASC payment for
separately payable covered ancillary services that have a predetermined
national payment amount (that is, their national ASC payment amounts
are not based on OPPS relative payment weights), such as drugs and
biologicals or brachytherapy sources that are separately paid under the
OPPS or services that are contractor-priced or paid at reasonable cost
in ASCs. Any service with a predetermined national payment amount would
be included in the ASC budget neutrality comparison, but scaling of the
ASC relative payment weights would not apply to those services. The ASC
payment weights for those services without predetermined national
payment amounts (that is, those services with national payment amounts
that would be based on OPPS relative payment weights if a payment
limitation did not apply) would be scaled to eliminate any difference
in the total payment weight between the current year and the update
year.
The proposed weight scaler used to model ASC fully implemented
rates in order to reflect our estimate of rates if there was no
transition for CY 2009 is equal to 0.9412. This scaler was applied to
all payment weights subject to scaling, in order to estimate the fully
implemented payment rates for CY 2009 without the transition, for
purposes of the ASC impact analysis discussed in section XXI.D. of this
proposed rule.
For any given year's ratesetting, we typically use the most recent
full calendar year of claims data to model budget neutrality
adjustments. We currently have 95 percent of CY 2007 ASC claims data
available for this proposed rule. These claims do not include new
covered surgical procedures and covered ancillary services under the
revised ASC payment system that were first payable in ASCs in CY 2008
and only contain data for ASC services billed in CY 2007 that were
eligible to receive payment under the previous ASC payment system. We
do not have sufficiently robust CY 2008 ASC claims data upon which to
base the CY 2009 ASC payment system update. Therefore, for CY 2009
budget neutrality adjustments, we assume that there would be no
significant change in the weight scaler or wage adjustment attributable
to new covered surgical and covered ancillary services.
To create an analytic file to support calculation of the weight
scaler and budget neutrality adjustment for the wage index (discussed
below), we summarized available CY 2007 ASC claims by provider and by
HCPCS code. We defined a unique supplier identifier solely for the
purpose of identifying unique providers within the CY 2007 claims data.
We used the provider zip code reported on the claim to associate
[[Page 41539]]
state, county, and CBSA with each ASC. This file, available to the
public as a supporting data file for this proposed rule, is posted on
the CMS Web site at: http://www.cms.hhs.gov/ASCPayment/01_
Overview.asp#TopOfPage.
b. Updating the ASC Conversion Factor
Under the OPPS, we typically apply a budget neutrality adjustment
for provider-level changes, most notably a change in the wage index for
the upcoming year, to the conversion factor. For the CY 2009 ASC
payment system, we are proposing to calculate and apply the pre-floor
and pre-reclassified hospital wage index that is used for ASC payment
adjustment to the ASC conversion factor, just as the OPPS wage index
adjustment is calculated and applied to the OPPS conversion factor. For
CY 2009, we calculated this proposed adjustment for the revised ASC
payment system by using the most recent CY 2007 claims data available
and estimating the difference in total payment that would be created by
introducing the CY 2009 pre-floor and pre-reclassified hospital wage
index. Specifically, holding CY 2007 ASC utilization and service-mix
and CY 2009 national payment rates after application of the weight
scaler constant, we calculated the total adjusted payment using the CY
2008 pre-floor and pre-reclassified hospital wage index and a total
adjusted payment using the proposed CY 2009 pre-floor and pre-
reclassified hospital wage index. We used the 50-percent labor that we
finalized for the revised ASC payment system in CY 2008 for both total
adjusted payment calculations. We then compared the total adjusted
payment calculated with the CY 2008 pre-floor and pre-reclassified
hospital wage index to the total adjusted payment calculated with the
proposed CY 2009 pre-floor and pre-reclassified hospital wage index and
applied the resulting ratio of 0.9996 (the ASC wage index budget
neutrality adjustment) to the CY 2008 ASC conversion factor to
calculate the CY 2009 ASC conversion factor.
Section 1833(i)(2)(C) of the Act requires that, if the Secretary
has not updated the ASC payment amounts in a calendar year after CY
2009, the payment amounts shall be increased by the percentage increase
in the Consumer Price Index for All Urban Consumer (CPI-U) as estimated
by the Secretary for the 12-month period ending with the midpoint of
the year involved. Therefore, as discussed in the August 2, 2007 final
rule, we adopted a final policy to update the ASC conversion factor
using the CPI-U in order to adjust ASC payment rates for inflation (72
FR 42518 through 42519). We will implement the annual updates through
an adjustment to the conversion factor under the revised ASC payment
system beginning in CY 2010 when the statutory requirement for a zero
update no longer applies. Therefore, for CY 2009, we are only proposing
to update the ASC conversion factor with the budget neutrality
adjustment due to the revised CY 2009 pre-floor and pre-reclassified
hospital wage index, resulting in a proposed CY 2009 ASC conversion
factor of $41.384, which is the product of $41.401 multiplied by
0.9996.
3. Display of Proposed ASC Payment Rates
Addenda AA and BB to this proposed rule display the proposed
updated ASC payment rates for CY 2009 for covered surgical procedures
and covered ancillary services, respectively. These addenda contain
several types of information related to the proposed CY 2009 payment
rates. Specifically, in Addendum AA, the column titled ``Subject to
Multiple Procedure Discounting'' indicates whether a surgical procedure
would be subject to the multiple procedure payment reduction policy. As
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66829 through 66830), most covered surgical procedures are subject to a
50-percent reduction in the ASC payment for the lower-paying procedure
when more than one procedure is performed in a single operative
session. Display of the comment indicator ``CH'' in the column titled
``Comment Indicator'' indicates a proposed change in payment policy for
the item or service, including identifying new or discontinued HCPCS
codes, designating items or services newly proposed for payment under
the ASC payment system, and identifying items or services with a
proposed change in the ASC payment indicator for CY 2009. The column
titled ``CY 2009 Second Year Transition Payment Weight'' is the
relative transition payment weight for the service. CY 2009 is the
second year of a 4-year transition to ASC payment rates calculated
according to the standard methodology of the revised ASC payment
system. As proposed, the CY 2009 ASC payment rates for the covered
surgical procedures subject to transitional payment (payment indicators
``A2'' and ``H8'' in Addendum AA) are based on a blend of 50 percent of
the CY 2007 ASC payment weight for the procedure and 50 percent of the
proposed CY 2009 fully implemented ASC weight before scaling for budget
neutrality, calculated according to the standard methodology. The
payment weights for all covered surgical procedures and covered
ancillary radiology services whose ASC payment rates are based on OPPS
relative payment weights are scaled for budget neutrality. Thus,
scaling was not applied for the device portion of the device-intensive
procedures, services that are paid at the MPFS nonfacility PE RVU
amount, separately payable covered ancillary services that have a
predetermined national payment amount, such as drugs, biologicals, and
brachytherapy sources that are separately paid under the OPPS or
services that are contractor-priced or paid at reasonable cost in ASCs.
To derive the proposed CY 2009 payment rate displayed in the ``CY
2009 Second Year Transition Payment'' column, each ASC payment weight
in the ``CY 2009 Second Year Transition Payment Weight'' column is
multiplied by the proposed CY 2009 ASC conversion factor of $41.384,
that includes a budget neutrality adjustment for changes in the wage
index. Items and services with a predetermined national payment amount,
such as separately payable drugs and biologicals displayed in Addendum
BB to this proposed rule, may not show a relative payment weight. The
``CY 2009 Second Year Transition Payment'' column displays the proposed
CY 2009 national unadjusted ASC payment rates for all items and
services. The proposed CY 2009 ASC payment rates for separately payable
drugs and biologicals are based on ASP data used for payment in
physicians' offices in April 2008.
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Reporting Hospital Outpatient Quality Data for Annual Payment Update
Section 109(a) of the MIEA-TRHCA (Pub. L. 109-432) amended section
1833(t) of the Act by adding a new subsection (17) that affects the
payment rate update applicable to OPPS payments for services furnished
by hospitals in outpatient settings on or after January 1, 2009.
Section 1833(t)(17)(A) of the Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of the Act, requires that hospitals
that fail to report data required for the quality measures selected by
the Secretary in the form and manner required by the Secretary under
section 1833(t)(17)(B) of the Act will incur a reduction in their
annual payment update factor by 2.0 percentage points. Section
1833(t)(17)(B) of the Act
[[Page 41540]]
requires that hospitals submit quality data in a form and manner, and
at a time that the Secretary specifies. Sections 1833(t)(17)(C)(i) and
(ii) of the Act require the Secretary to develop measures appropriate
for the measurement of the quality of care (including medication
errors) furnished by hospitals in outpatient settings and that these
measures reflect consensus among affected parties and, to the extent
feasible and practicable, include measures set forth by one or more
national consensus building entities. The Secretary is not prevented
from selecting measures that are the same as (or a subset of) the
measures for which data are required to be submitted under section
1886(b)(3)(B)(viii) of the Act for the IPPS Reporting Hospital Quality
Data for Annual Payment Update (RHQDAPU) program. Section
1833(t)(17)(D) of the Act gives the Secretary the authority to replace
measures or indicators as appropriate, such as when all hospitals are
effectively in compliance or when the measures or indicators have been
subsequently shown not to represent the best clinical practice. Section
1833(t)(17)(E) of the Act requires the Secretary to establish
procedures for making data submitted available to the public. Such
procedures must give hospitals the opportunity to review data before
these data are released.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR
68189), we indicated our intent to establish an OPPS payment program
modeled after the current IPPS RHQDAPU program. We stated our belief
that the quality of hospital outpatient services would be most
appropriately and fairly rewarded through the reporting of quality
measures developed specifically for application in the hospital
outpatient setting. We agreed that assessment of hospital outpatient
performance would ultimately be most appropriately based on reporting
of hospital outpatient measures developed specifically for this
purpose. We stated our intent to implement the full OPPS payment rate
update beginning in CY 2009 based upon hospital reporting of quality
data beginning in CY 2008, using effective measures of the quality of
hospital outpatient care that have been carefully developed and
evaluated, and endorsed as appropriate, with significant input from
stakeholders.
The amendments to the Act made by section 109(a) of the MIEA-TRHCA
are consistent with our intent and direction outlined in the CY 2007
OPPS/ASC final rule with comment period. Under these amendments, we
were statutorily required to establish a program under which hospitals
would report data on the quality of hospital outpatient care using
standardized measures of care in order to receive the full annual
update to the OPPS payment rate, effective for payments beginning in CY
2009. We refer to the program established under these amendments as the
Hospital Outpatient Quality Data Reporting Program (HOP QDRP).
In reviewing the measures currently available for care in the
hospital outpatient settings, we continue to believe that it would be
most appropriate and desirable to use measures that specifically apply
to the hospital outpatient setting. In other words, we do not believe
that we should simply, without further analysis, adopt the IPPS RHQDAPU
program measures as the measures for the HOP QDRP. Nonetheless, we note
that section 1833(t)(17)(C)(ii) of the Act allows the Secretary to
``[select] measures that are the same as (or a subset of) the measures
for which data are required to be submitted'' under the IPPS RHQDAPU
program. We invite comment on whether we should select for the HOP QDRP
some or all measures from the current RHQDAPU program measure set that
apply to the outpatient setting. In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66860), we established a separate reporting
program, and adopted quality measures that were deemed appropriate for
measuring hospital outpatient quality of care that reflected consensus
among affected parties, and were set forth by one or more national
consensus building entities.
2. Reporting ASC Quality Data for Annual Payment Update
Section 109(b) of the MIEA-TRHCA amended section 1833(i) of the Act
by adding new sections 1833(i)(2)(D)(iv) and 1833(i)(7) to the Act.
These amendments may affect ASC payments for services furnished in ASC
settings on or after January 1, 2009. Section 1833(i)(2)(D)(iv) of the
Act authorizes the Secretary to implement the revised payment system
for services furnished in ASCs (established under section 1833(i)(2)(D)
of the Act), ``so as to provide for a reduction in any annual payment
increase for failure to report on quality measures * * *.''
Section 1833(i)(7)(A) of the Act authorizes the Secretary to
provide that any ASC that fails to report data required for the quality
measures selected by the Secretary in the form and manner required by
the Secretary under section 1833(i)(7) of the Act will incur a
reduction in any annual payment update of 2.0 percentage points.
Section 1833(i)(7)(A) of the Act also specifies that a reduction for
one year cannot be taken into account in computing the ASC update for a
subsequent calendar year.
Section 1833(i)(7)(B) of the Act provides that, ``except as the
Secretary may otherwise provide,'' the hospital outpatient quality data
provisions of section 1833(t)(17)(B) through (E) of the Act, summarized
above, shall apply to ASCs. We did not implement an ASC quality
reporting program for CY 2008 (72 FR 66875).
We refer readers to section XVI.H. of this proposed rule for a
discussion of our proposal to implement ASC quality data reporting in a
later rulemaking.
B. Hospital Outpatient Quality Measures for CY 2009
For the CY 2009 annual payment update, we required HOP QDRP
reporting using 7 quality measures--5 Emergency Department measures
plus 2 Perioperative Care measures. These measures address care
provided to a large number of adult patients in hospital outpatient
settings, across a diverse set of conditions, and were selected for the
initial set of HOP QDRP measures based on their relevance as a set to
all hospital outpatient departments.
The five Emergency Department measures capture the quality of
outpatient care in hospital emergency departments (EDs), specifically
for those adult patients with acute myocardial infarction (AMI) who are
treated and then transferred to another facility for further care.
These patients receive many of the same interventions as patients who
are evaluated and admitted at the same facility. Three of these five
measures are currently reported under the IPPS RHQDAPU program, and are
published on the Hospital Compare Web site at: http://
www.HospitalCompare.hhs.gov. Transferred AMI patients are currently not
included in the calculation of the inpatient AMI measures because of
differences in data collection and reporting for this patient group.
The processes of care encompassed by these measures address care on
arrival, the promptness of interventions, and discharge care for
patients presenting to a hospital with an AMI.
In addition to the five ED-AMI measures, we required reporting of
two measures related to surgical care improvement. These two surgical
care improvement measures derived from the Physician Quality Reporting
Initiative (PQRI) are directly related to interventions provided in the
outpatient setting.
[[Page 41541]]
Specifically, in order for hospitals to receive the full OPPS
payment update for services furnished in CY 2009, in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66860) we required that
subsection (d) hospitals paid under the OPPS submit data on the
following 7 measures as designated below, effective with hospital
outpatient services furnished on or after April 1, 2008:
Quality Measure
------------------------------------------------------------------------
-------------------------------------------------------------------------
ED-AMI-1--Aspirin at Arrival.
ED-AMI-2--Median Time to Fibrinolysis.
ED-AMI-3--Fibrinolytic Therapy Received within 30 Minutes of Arrival.
ED-AMI-4--Median Time to Electrocardiogram (ECG).
ED-AMI-5: Median Time to Transfer for Primary PCI.
PQRI 20: Perioperative Care: Timing of Antibiotic Prophylaxis.
PQRI 21: Perioperative Care: Selection of Perioperative
Antibiotic.
------------------------------------------------------------------------
C. Proposed Quality Measures for CY 2010 and Subsequent Calendar Years
and Proposed Process to Update Measures
1. Proposed Quality Measures for CY 2010 Payment Determinations
For CY 2010, we are proposing to require continued submission of
data on the existing 7 measures discussed above and to adopt 4 imaging
measures. We propose to designate the existing 7 measures as follows:
CY 2009 Quality Measures With Proposed CY 2010 Designations
------------------------------------------------------------------------
Current designation Proposed quality measure designation
------------------------------------------------------------------------
ED-AMI-2......................... OP-1: Median Time to Fibrinolysis.
ED-AMI-3......................... OP-2: Fibrinolytic Therapy Received
Within 30 Minutes.
ED-AMI-5......................... OP-3: Median Time to Transfer to
Another Facility for Acute Coronary
Intervention.
ED-AMI-1......................... OP-4: Aspirin at Arrival.
ED-AMI-4......................... OP-5: Median Time to ECG.
PQRI 20................. OP-6: Timing of Antibiotic
Prophylaxis.
PQRI 21................. OP-7: Prophylactic Antibiotic
Selection for Surgical Patients.
------------------------------------------------------------------------
The 4 imaging measures that we are proposing to adopt beginning
with the CY 2010 payment determination are claims-based measures that
CMS can calculate using Medicare Part B claims data without imposing on
hospitals the burden of additional chart abstraction. For purposes of
the CY 2010 payment determination, CMS will calculate these measures
using CY 2008 Medicare administrative claims data.
The proposed imaging measures are based on clinical evidence that,
we believe, promote efficient and high quality patient care. MedPAC has
expressed concern about potential overuse of imaging services based
upon the rapid growth in the volume of usage over the last 5 years.
Because of growing concerns regarding overuse of imaging services, CMS
has developed and is now proposing 4 imaging measures which measure
high quality, efficient use of services for the outpatient setting.
Efficiency has been identified as an important area of development by
the Institute of Medicine (IOM).
Proposed Additional Quality Measures for CY 2010
----------------------------------------------------------------------------------------------------------------
Topic Measure
----------------------------------------------------------------------------------------------------------------
Imaging Efficiency.................................. OP-8: MRI Lumbar Spine for Low Back Pain.
OP-9: Mammography Follow-up Rates.
OP-10: Abdomen CT--Use of Contrast Material:
OP-10: CT Abdomen--Use of Contrast Material.
OP-10a: CT Abdomen--Use of Contrast Material
excluding calculi of the kidneys, ureter, and/or urinary
tract.
OP-10b: CT Abdomen--Use of Contrast Material for
diagnosis of calculi in the kidneys, ureter, and/or
urinary tract.
OP-11: Thorax CT--Use of Contrast Material.
----------------------------------------------------------------------------------------------------------------
We invite public comment on these 4 proposed imaging measures which
have been submitted to the NQF for consideration. The NQF is one
example of a voluntary consensus building entity, thus, meeting the
requirement to include measures set forth by one or more such entities
for use in HOP QDRP reporting as stipulated in section
1833(t)(17)(C)(i) of the Act.
While we are required under section 1833(t)(17)(C)(i) of the Act to
develop measures appropriate for the measurement of the quality of care
furnished by hospitals in hospital outpatient settings, it is also our
intent to consider, when developing these measures, whether they can be
``harmonized'' with measures that can be or are already adopted in the
context of comparable inpatient and ambulatory care. In other words, it
is CMS' intent to harmonize measures that assess the care that is given
across settings and providers and to use the same measure
specifications based on clinical evidence and guidelines for the care
being assessed regardless of provider and setting. The goal of
harmonization is to assure that comparable care in different settings
can be evaluated in similar ways, which further assures that quality
measurement can focus more on the needs of a patient with a particular
condition than on the specific program or policy attributes of the
setting in which the care is provided.
2. Proposed Process for Updating Measures
Although we adopt measures through the rulemaking process, we are
proposing to establish a sub-regulatory process that will allow us to
update the technical specifications that we use to calculate those
measures when we believe such updates are warranted based on scientific
evidence and guidance from a consensus building entity such as the NQF.
We believe that the establishment of such a sub-regulatory process is
necessary so that the HOP QDRP measures are calculated based on the
most up-to-date scientific and consensus standards. We also recognize
that neither scientific advances nor updates to measure
[[Page 41542]]
specifications made by a consensus building entity are linked to the
timing of regulatory actions. An example of changes that would prompt
us to update a measure would be a change in antibiotic selection and/or
timing (see measures with proposed designations of OP-6 and OP-7) based
on updated clinical guidelines or best practices.
Therefore, we are proposing that when a consensus building entity
such as the NQF updates the measure specifications for a measure that
we have adopted for the HOP QDRP program, we will update our measure
specifications for that measure accordingly. We will provide
notification of the measure specification updates on the QualityNet Web
site, http://www.qualitynet.org, and in the CMS Hospital Outpatient
Quality Measures Specifications Manual (Specifications Manual) no less
than three months before any changes become effective for purposes of
reporting under the HOP QDRP. We are inviting public comments on this
proposal.
3. Possible New Quality Measures for CY 2011 and Subsequent Calendar
Years
We are seeking comment on possible new quality measures for CY 2011
and subsequent calendar years. The following table contains a list of
18 measures included within 9 measure sets from which additional
quality measures could be selected for inclusion in the HOP QDRP. This
table includes measures and measure sets that are part of clinical
topics for which we currently do not require quality measure data
reporting, such as cancer. We note that we sought comment on some of
these measures in the CY 2008 OPPS/ASC proposed rule. We are seeking
public comment on the measures and measure sets that are listed below
as well as on any possible critical gaps or missing measures or measure
sets. We specifically request input concerning the following:
Which of the measures or measure sets should be included
in the HOP QDRP for CY 2011 or subsequent calendar years?
What challenges for data collection and reporting are
posed by the identified measures and measure sets?
What improvements could be made to data collection or
reporting that might offset or otherwise address those challenges?
We are soliciting public comment on the following measure sets and
measures for consideration in CY 2011 and subsequent calendar years.
Measures Under Consideration for CY 2011 and Subsequent Calendar Years
------------------------------------------------------------------------
Topic Measure
------------------------------------------------------------------------
Cancer....................... 1. Radiation Therapy is Administered
within 1 Year of Diagnosis for Women
Under Age 70 Receiving Breast Conserving
Surgery for Breast Cancer.*
2. Adjuvant Chemotherapy is Considered or
Administered within 4 Months of Surgery
to Patients Under Age 80 with AJCC III
Colon Cancer.*
3. Adjuvant Hormonal Therapy for Patients
with Breast Cancer.*
4. Needle Biopsy to Establish Diagnosis
of Cancer Precedes Surgical Excision/
Resection.*
ED Throughput................ 5. Median Time from ED Arrival to ED
Departure for Discharged ED Patients.
Diabetes..................... 6. Low Density Lipoprotein Control in
Type 1 or 2 Diabetes Mellitus.*
7. High Blood Pressure Control in Type 1
or 2 Diabetes Mellitus.*
Falls........................ 8. Screening for Fall Risk.*
Depression................... 9. Antidepressant Medication During Acute
Phase for Patients with New Episode of
Major Depression.*
Stroke & Rehabilitation...... 10. Computed Tomography (CT) or Magnetic
Resonance Imaging (MRI) Reports.*
11. Carotid Imaging Reports.*
Osteo........................ 12. Communication with the Physician
Managing Ongoing Care Post Fracture.*
13. Screening or Therapy for Women Aged
65 Years and Older.*
14. Pharmacologic Therapy.*
15. Management Following a Fracture.*
Medication Reconciliation.... 16. Medication Reconciliation.*
Respiratory.................. 17. Asthma Pharmacological Therapy.*
18. Assessment of Mental Status for
Community Acquired Pneumonia.*
------------------------------------------------------------------------
* One of the 30 measures included as ``under consideration'' in the CY
2008 OPPS/ASC proposed rule.
We welcome suggestions regarding other additional measures and
topics relevant to the hospital outpatient setting that we could use to
further develop the measure set, and are particularly interested in
receiving comments on potential HOP QDRP measures that could be used to
measure the quality of care in other settings (such as hospital
inpatient, physician office, and emergency care settings) and, thus,
contribute to improved coordination and harmonization of high quality
patient care.
D. Proposed Payment Reduction for Hospitals That Fail To Meet the HOP
QDRP Requirements for the CY 2009 Payment Update
1. Background
Section 1833(t)(17)(A) of the Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of the Act, requires that hospitals
that fail to report data required for the quality measures selected by
the Secretary, in the form and manner required by the Secretary under
section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point
reduction to their OPD fee schedule increase factor, that is, the
annual payment update factor. Section 1833(t)(17)(A)(ii) of the Act
specifies that any reduction would apply only to the payment year
involved and would not be taken into account in computing the
applicable OPD fee schedule increase factor for a subsequent payment
year.
This section discusses how the proposed payment reduction for
failure to meet the administrative, data collection and submission
requirements of the HOP QDRP will affect the CY 2009 payment update
applicable to OPPS payments for HOPD services furnished by the
hospitals defined under section 1886(d)(1)(B) of the Act to which the
program applies. The application of a reduced OPD fee schedule increase
factor results in reduced national unadjusted payment rates that will
apply to certain outpatient items and services provided
[[Page 41543]]
by hospitals that are required to report outpatient quality data and
that fail to meet the HOP QDRP requirements. All other hospitals paid
under the CY 2009 OPPS will receive the full OPPS payment update
without the reduction.
2. Proposed Reduction of OPPS Payments for Hospitals That Fail To Meet
the HOP QDRP CY 2009 Payment Update Requirements
a. Calculation of Reduced National Unadjusted Payment Rates
The national unadjusted payment rates for many services paid under
the OPPS equal the product of the OPPS conversion factor and the scaled
relative weight for the APC to which the service is assigned. The OPPS
conversion factor is updated annually by the OPD fee schedule increase
factor. The conversion factor is used to calculate the OPPS payment
rate for services with the following status indicators (listed in
Addendum B to this proposed rule): ``P,'' ``Q1,'' ``Q2,'' ``Q3,''
``R,'' ``S,'' ``T,'' ``U,'' ``V,'' or ``X.'' We are proposing that
payment for all services assigned the status indicators listed above
would be subject to the reduction of the national unadjusted payment
rates for applicable hospitals, with the exception of services assigned
to New Technology APCs. While services assigned to New Technology APCs,
specifically APCs 1491 (New Technology-Level IA ($0-$10)) through 1574
(New Technology-Level XXXVII ($9,500-$10,000)), are assigned status
indicator ``S'' or ``T,'' the payment rates for New Technology APCs are
set at the mid-point of a cost band increment, rather than based on the
product of the OPPS conversion factor and relative payment weight.
Therefore, we are proposing to exclude services assigned to New
Technology APCs from the list of services that are subject to the
reduced national unadjusted payment rates because the OPD fee schedule
increase factor is not used to update the payment rates for these APCs.
The conversion factor is also not used to calculate the OPPS
payment rates for separately payable services that are assigned status
indicators other than status indicators ``P,'' ``Q1,'' ``Q2,'' ``Q3,''
``R,'' ``S,'' ``T,'' ``U,'' ``V,'' or ``X.'' These services include
separately payable drugs and biologicals, separately payable
therapeutic radiopharmaceuticals, pass-through drugs and devices that
are paid at charges adjusted to cost, and a few other specific services
that receive cost-based payment. As a result, we are also proposing
that the OPPS payment rates for these services would not be reduced
because the payment rates for these services are not calculated using
the conversion factor and, therefore, the payment rates for these
services are not updated by the OPD fee schedule increase factor.
The OPD fee schedule increase factor, or market basket update, is
an input into the OPPS conversion factor, which is used to calculate
OPPS payment rates. To implement the requirement to reduce the market
basket update for hospitals that fail to meet reporting requirements,
we are proposing that, effective for services paid under the CY 2009
OPPS, CMS would calculate two conversion factors: A full market basket
conversion factor (that is, the full conversion factor) and a reduced
market basket conversion factor (that is, the reduced conversion
factor). It is necessary to calculate a reduced market basket
conversion factor for hospitals that fail to meet reporting
requirements as section 1833(t)(17)(A)(i) of the Act requires a
reduction of 2.0 percentage points from the market basket update for
those hospitals. (We implemented this statutory requirement in
regulations at 42 CFR 419.43(h).) For a complete discussion of the
calculation of the OPPS conversion factor, we refer readers to section
II.B. of this proposed rule. Therefore, we are proposing to calculate a
reduction ratio by dividing the reduced conversion factor by the full
conversion factor. We refer to this reduction ratio as the ``reporting
ratio'' to indicate that it applies to payment for hospitals that fail
to meet their reporting requirements. Beginning January 1, 2009, the
PRICER will calculate reduced national unadjusted payment rates that
will be used as a basis for paying hospitals that fail to meet the
requirements of the HOP QDRP by multiplying the national unadjusted
payment rates by the reporting ratio. This will result in reduced
national unadjusted payment rates that are mathematically equivalent to
the reduced national unadjusted payment rates that would result if we
multiplied the scaled OPPS relative weights by the reduced conversion
factor. For CY 2009, we are proposing a reporting ratio of 0.981,
calculated by dividing the reduced conversion factor of $64.409 by the
full conversion factor of $65.684. As stated above, the use of the
reporting ratio is mathematically equivalent to the creation and
application of a reduced conversion factor to the OPPS payment weights.
To determine the proposed reduced national unadjusted payment rates
that would apply to hospitals that fail to meet their quality reporting
requirements for the CY 2009 OPPS, we would multiply the proposed full
national unadjusted payment rate in Addendum B to this proposed rule by
the proposed reporting ratio of 0.981. For example, CPT code 11401
(Excision, benign lesion including margins, except skin tag (unless
listed elsewhere) trunk, arms or legs; excised diameter 0.6 to 1.0 cm),
is assigned to APC 0019, with a proposed national unadjusted payment
rate of $288.20. Where a hospital fails to meet the requirements of the
HOP QDRP for the CY 2009 payment update, the reduced national
unadjusted payment rate for that hospital would be $282.72 (the
reporting ratio of 0.981 multiplied by the full national unadjusted
payment rate for CPT code 11401).
b. Calculation of Reduced Minimum Unadjusted and National Unadjusted
Beneficiary Copayments
Under the OPPS, we have two levels of Medicare beneficiary
copayment for many services: the minimum unadjusted copayment and the
national unadjusted copayment. The minimum unadjusted copayment is
always 20 percent of the national unadjusted payment rate for each
separately payable service. The national unadjusted copayment is
determined based on the historic coinsurance rate for the services
assigned to the APC. Where the national unadjusted copayment is blank
for an item or service listed in Addendum B to this proposed rule, the
national unadjusted copayment is equal to the minimum unadjusted
copayment. In general, under our longstanding copayment policy, the
coinsurance percentage (the ratio of the copayment to the service
payment) for a particular service may decline over time to a minimum of
20 percent but will never increase. This is consistent with the
statute's intent that eventually all services paid under the OPPS would
be subject to a 20 percent coinsurance percentage. We refer readers to
section 1833(t)(3)(B)(ii) of the Act for the specific statutory
language. For additional background on the standard OPPS copayment
calculation, we refer readers to the CY 2004 OPPS final rule with
comment period (68 FR 63458 through 63459).
For hospitals that receive the reduced OPPS payment for failure to
meet the HOP QDRP requirements, we believe that it is both equitable
and appropriate that a reduction in the payment for a service should
result in proportionately reduced copayment liability for
beneficiaries. Similarly, we believe that it would be inequitable to
the beneficiary and in conflict with the intent of the law (section
1833(t)(3)(B)(ii) of the Act) and our longstanding policy (68 FR 63458
[[Page 41544]]
through 63459) if the coinsurance percentage of the total payment for
certain OPPS services to which reduced national unadjusted payment
rates apply was to increase as a result of using the reduced conversion
factor to calculate these reduced national unadjusted payment rates.
Therefore, we are proposing that the Medicare beneficiary's minimum
unadjusted copayment and national unadjusted copayment for a service to
which a reduced national unadjusted payment rate applies would each
equal the product of the reporting ratio and the national unadjusted
copayment or the minimum unadjusted copayment, as applicable, for the
service, under the authority of section 1833(t)(2)(E) of the Act, which
authorizes the Secretary to ``establish, in a budget neutral manner, *
* * adjustments as determined to be necessary to ensure equitable
payments'' under the OPPS.
We considered calculating the national unadjusted copayments and
the minimum unadjusted copayments based on the reduced national
unadjusted payment rates, using our standard copayment methodology. We
found that in many cases the beneficiary's copayment amount would
remain the same as calculated based on the full national unadjusted
payment rate, although the total reduced national unadjusted payment
rate would decline because of the reduction to the conversion factor.
Therefore, in these cases, the ratio of the copayment to the total
payment (the coinsurance percentage) would increase rather than
decrease if we were to calculate copayments based on the reduced
national unadjusted payment rates. For example, in the case of APC 0019
(Level I Excision/Biopsy), the full national unadjusted payment rate
for CY 2008 is $274.13 and the national unadjusted copayment is $71.87
or 26 percent of the full national unadjusted payment rate for the APC.
If the reduction were in effect for CY 2008, the reduced national
unadjusted payment rate would be $268.65, but the national unadjusted
copayment, if calculated under the standard rules, would continue to be
$71.87, which represents 27 percent of the reduced national unadjusted
payment rate. We believe that the increased coinsurance percentage that
results from this methodology is contradictory to the intent of the
statute that the coinsurance percentage would never increase and is
also contradictory to our copayment rules that are intended to
gradually reduce the percentage of the payment attributed to copayments
until the national unadjusted copayment is equal to the minimum
unadjusted copayment for all services.
To avoid this inconsistent result, we are proposing to apply the
reporting ratio to the national unadjusted copayment and the minimum
unadjusted copayment to calculate the national unadjusted copayments
that would apply to each APC for hospitals that receive the reduced CY
2009 OPPS payment update. This application of the reporting ratio would
be to the national unadjusted and minimum unadjusted copayments as
calculated according to Sec. 419.41, prior to any adjustment for
hospitals' failure to meet the quality reporting standards according to
Sec. 419.43(h). Beneficiaries and secondary payers would thereby share
in the reduction of payments to these hospitals. We believe that
applying this copayment calculation methodology for those hospitals
that fail to meet the HOP QDRP requirements allows us to appropriately
set the national unadjusted copayments for the reduced OPPS national
unadjusted payment rates and is most consistent with the eventual
establishment of 20 percent of the payment rate as the uniform
coinsurance percentage for all services under the OPPS. We are
proposing to make changes to Sec. Sec. 419.41, 419.42, and 419.43 in
this proposed rule to reflect this policy.
c. Treatment of Other Payment Adjustments
We are proposing that all other applicable adjustments to the OPPS
national unadjusted payment rates would apply in those cases when the
OPD fee schedule increase factor is reduced for hospitals that fail to
meet the requirements of the HOP QDRP. For example, the following
standard adjustments would apply to the reduced national unadjusted
payment rates: The wage index adjustment, the multiple procedure
adjustment, the interrupted procedure adjustment, the rural sole
community hospital adjustment, and the adjustment for devices furnished
with full or partial credit or without cost. We believe that these
adjustments continue to be equally applicable to payments for hospitals
that do not meet the HOP QDRP requirements.
Similarly, we are proposing that outlier payments would continue to
be made when the criteria are met. For hospitals that fail to meet the
quality data reporting requirements, we are proposing that the
hospitals' costs would be compared to the reduced payments for purposes
of outlier eligibility and payment calculation. We believe no changes
in the regulation text would be necessary to implement this policy
because using the reduced payment for these outlier eligibility and
payment calculations is contemplated in the current regulations at
Sec. 419.43(d). This proposal conforms to current practice under the
IPPS in this regard. Specifically, under the IPPS, for purposes of
determining the hospital's eligibility for outlier payments, the
hospital's estimated operating costs for a discharge are compared to
the outlier cost threshold based on the hospital's actual DRG payment
for the case. For a complete discussion of the OPPS outlier calculation
and eligibility criteria, we refer readers to section II.F. of this
proposed rule.
E. Requirements for HOP Quality Data Reporting for CY 2010 and
Subsequent Calendar Years
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66869), we stated that in order to participate in the HOP QDRP for CY
2009 and subsequent calendar years, hospitals must meet administrative,
data collection and submission, and data validation requirements.
Hospitals that do not meet the requirements of the HOP QDRP, as well as
hospitals not participating in the program and hospitals that withdraw
from the program, will not receive the full OPPS payment rate update.
Instead, in accordance with section 1833(t)(17)(A) of the Act, those
hospitals would receive a reduction of 2.0 percentage points in their
updates for the affected payment year.
For payment determinations affecting the CY 2010 payment update, we
are proposing to implement the requirements listed below. Most of these
requirements are the same as the requirements we implemented for the CY
2009 payment determination.
1. Administrative Requirements
To participate in the HOP QDRP, several administrative steps must
be completed. These steps require the hospital to:
Identify a QualityNet administrator who follows the
registration process and submits the information to the appropriate CMS
designated contractor. All CMS designated contractors will be
identified on the QualityNet Web site. The same person may be the
QualityNet administrator for both the IPPS RHQDAPU program and the OPPS
HOP QDRP. This designation must be kept current and must be done,
regardless of whether the hospital submits data directly to the CMS
designated contractor or uses a vendor for transmission of data.
[[Page 41545]]
Register with QualityNet regardless of the method used for
data submission.
Complete the Notice of Participation form if one has not
been completed or if a hospital has previously submitted a withdrawal
form. We remind hospitals that they do not need to submit another
Notice of Participation form if they have already done so and they have
not withdrawn from participation. At this time, the participation form
for the HOP QDRP is separate from the IPPS RHQDAPU program and
completing a Notice of Participation form for each program is required.
Agreeing to participate includes acknowledging that the data submitted
to the CMS designated contractor will be submitted to CMS and may also
be shared with a different CMS contractor or contractors supporting the
implementation of the HOP QDRP program. For HOP QDRP decisions
affecting CY 2010 payment determinations, hospitals that share the same
Medicare Provider Number (MPN), now known as the CMS Certification
Number (CCN) must complete a single Notice of Participation form.
Hospitals with a newly acquired CCN and hospitals that are not
participating in the CY 2009 HOP QDRP must send a completed paper copy
of the Notice of Participation form to the appropriate CMS designated
contractor in order to participate in the CY 2010 HOP QDRP. Hospitals
with a newly acquired CCN must submit a Notice of Participation form no
later than 30 days after receiving their new provider CCN. Hospitals
that did not participate or withdrew from participation in the CY 2009
HOP QDRP must submit a Notice of Participation form by January 31, 2009
in order to participate in the CY 2010 HOP QDRP. We are proposing for
CY 2011 to implement an on-line registration form and eliminate the
paper form. We invite public comment on this proposed change.
Hospitals with newly acquired CCNs, as well as hospitals that are
not participating in the CY 2009 HOP QDRP, that do not properly submit
a Notice of Participation form for CY 2010 as described above will be
deemed as non-participatory, will not be able to submit data to the
OPPS Clinical Warehouse, and will be deemed as not meeting reporting
requirements under the HOP QDRP for CY 2010. Hospitals that have
previously completed a Notice of Participation form and subsequently
wish to terminate participation in the HOP QDRP must submit a
withdrawal form.
2. Data Collection and Submission Requirements
We are proposing that, to be eligible for the full OPPS payment
update in CY 2010, hospitals must:
Collect data required for the CY 2010 measure set that
will be finalized in the CY 2009 OPPS/ASC final rule and that will be
published and maintained in the Specifications Manual that can be found
at: http://www.qualitynet.org. It will not be necessary to submit data
for all eligible cases for some measures if sufficient eligible case
thresholds are met. Instead, for those measures where a hospital has a
sufficiently large number of cases, the hospital will be allowed to
sample cases and submit data for these sampled cases rather than
submitting data from all eligible cases. This sampling scheme will be
set out in the Specifications Manual at least 4 months in advance of
required data collection.
In addition, in order to reduce the burden on hospitals that treat
a low number of patients who meet the submission requirements for a
particular quality measure, we are proposing that beginning with
services furnished on or after January 1, 2009, hospitals that have
five or fewer claims (both Medicare and non-Medicare) for any measure
included in a measure topic in a quarter will not be required to submit
patient level data for the entire measure topic for that quarter.
However, the hospital would still be required to submit its aggregate
measure population and sample size counts for the applicable measure
topic as part of its quarterly data submission.
Submit the data according to the data submission schedule
that will be available on the QualityNet Web site. HOP QDRP data will
continue to be submitted through the QualityNet secure Web site
(https://www.qualitynet.org). This Web site meets or exceeds all
current Health Insurance Portability and Accountability Act
requirements. Submission deadlines will be four months after the last
day of each calendar quarter for measures finalized in the CY 2009
OPPS/ASC final rule. Thus, for example, the submission deadline for
data for services occurring during the first calendar quarter of 2009
(January-March 2009) will be August 1, 2009, and the submission
deadline for the second calendar quarter of 2009 (April-June 2009) will
be November 1, 2009.
Submit data to the OPPS Clinical Warehouse using either
the CMS Abstraction and Reporting Tool for Outpatient Department
measures (CART-OPD) or the tool of a third-party vendor that meets the
measure specification requirements for data transmission to QualityNet.
Hospitals must submit quality data through the QualityNet Web site
to the OPPS Clinical Warehouse; a CMS-designated contractor will submit
OPPS Clinical Warehouse data to CMS. Under current implementation, OPPS
Clinical Warehouse data are not considered QIO data. However, it is
possible that the information in the OPPS Clinical Warehouse may at
some point be considered QIO information. If this occurs, OPPS Clinical
Warehouse data may become subject to the stringent QIO confidentiality
regulations in 42 CFR part 480.
Hospitals are to submit data under the HOP QDRP on outpatient
episodes of care to which the required measures apply. For the purposes
of the HOP QDRP, an outpatient episode of care is defined as care
provided to a patient who has not been admitted as an inpatient but who
is registered on the hospital's medical records as an outpatient and
receives services (rather than supplies alone) directly from the
hospital. Every effort will be made to assure that data elements common
to both inpatient and outpatient settings are defined consistently
(such as ``time of arrival'').
To be accepted by the CMS designated contractor, submissions would,
at a minimum, need to be timely, complete, and accurate. Data are
considered to have been ``timely'' when data are submitted prior to the
reporting deadline and have passed all CMS designated contractor edits.
A ``complete'' submission is determined based on sampling criteria that
will be published and maintained in the Specifications Manual to be
found on the Web site at http://www.qualitynet.org, and must correspond
to both the aggregate number of cases submitted by a hospital and the
number of Medicare claims it submits for payment. To be considered
``accurate,'' submissions must pass validation, if applicable.
Submit the aggregate numbers of outpatient episodes of
care which are eligible for submission under the HOP QDRP. These
aggregated numbers of outpatient episodes would represent the number of
outpatient episodes of care in the universe eligible for data reporting
under the HOP QDRP. We plan to use the aggregate population and sample
size data to assess data submission completeness and adherence to
sampling requirements for Medicare and non-Medicare patients.
[[Page 41546]]
3. HOP QDRP Validation Requirements
a. Proposed Data Validation Requirements for CY 2010
Validation, as discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66871), is intended to provide assurance of the
accuracy of the hospital abstracted data. A data validation requirement
was not implemented for purposes of the CY 2009 annual payment update.
We are now proposing to implement validation requirements that will
apply beginning with the CY 2010 payment determinations.
Specifically, we propose to randomly select per year, 50 patient
episodes of care that a hospital successfully submitted to the OPPS
Clinical Warehouse for the relevant time period and validate those data
by requesting that the hospital send the supporting medical record
documentation that corresponds to each selected episode to a CMS
contractor within 30 calendar days of the date of the request. The CMS
contractor will then independently reabstract quality measure data
elements from those records, compare the reabstracted data to the data
originally submitted by the hospital, and provide feedback to each
hospital on the results of the reabstraction.
We propose to validate data reported beginning with January 2009
episodes of care to be used toward CY 2010 payment determinations.
Unlike the IPPS RHQDAPU program, where we validate data for each
participating hospital each quarter (for a total of 20 cases per year),
we are proposing not to validate data submitted by every hospital
participating in the HOP QDRP every year. Instead, we are proposing to
validate data from 800 randomly selected hospitals (approximately 20
percent of all participating HOP QDRP hospitals) each year. In other
words, only 800 participating HOP QDRP hospitals will have their data
validated each year. However, we note that because the 800 hospitals
will be selected randomly, every HOP QDRP participating hospital will
be eligible each year for validation selection. We believe that the
approach of validating a larger number of cases per hospital will
produce a more reliable estimate of whether that hospital's data has
been submitted accurately and will provide more reliable estimates of
measure level data.
For calculation of a hospital's validation score, we propose that
percent agreement for each calculated clinical measure rather than for
the individual data elements would be calculated. Due to the contingent
nature of data elements comprising quality measures, a mismatch of a
few data elements can result in the elimination of subsequent data
elements from the data abstraction process. Thus, while the quality
measure calculation can match, a low validation score based upon level
of data element match can occur. Calculating match rates at the quality
measure level obviates the issue of low validation scores at the data
element level and also validates the data as they are publicly
reported, that is, at the measure level.
To receive the full OPPS payment rate update, the hospital must
pass our validation requirement of a minimum of 80 percent reliability,
based upon our validation process, for the designated time periods. In
addition, an upper bound of 95 percent confidence interval to measure
accuracy will be used.
The methodology to be used for calculating the confidence intervals
under the HOP QDRP will be the methodology currently utilized for the
IPPS RHQDAPU program. We anticipate estimating the percent reliability
based upon a review of submitted documentation and then calculating the
upper 95 percent confidence limit for that estimate. If that upper
limit is above the required 80 percent reliability threshold, we will
consider the hospital's data ``validated'' for payment update purposes
for CY 2010. We intend to use the design specific estimate of the
variance for the confidence interval calculation, which, in this case,
is a single stage cluster sample, with unequal cluster sizes. (For
reference, see Cochran, William G. (1977) Sampling Techniques, John
Wiley & Sons, New York, chapter 3, section 3.12.) Each sampled medical
record is considered as a cluster for variance estimation purposes, as
documentation and abstraction errors are believed to be clustered
within specific medical records.
We solicit comment on this validation methodology, and believe that
this approach is a reliable process that is suitable for the HOP QDRP.
We also note that we are considering whether to propose a similar
approach for the RHQDAPU program in future years. CMS continues to
study approaches to improve its quality data reporting program, and
aligning the RHQDAPU program and HOP QDRP validation approaches in the
future is one possible area of improvement.
b. Alternative Data Validation Approaches for CY 2011
We are also soliciting comments on three alternative validation
methodologies. We are considering whether we could apply one of these
methodologies to validate data as part of our CY 2011 payment
determination. The first alternative approach would be to validate data
from all participating HOP QDRP hospitals, as is currently done under
the RHQDAPU program. Under this approach, data validation would be done
on a random sample of 5 records per quarter (20 records per year) per
hospital.
A second alternative approach would be to select targeted hospitals
based on criteria designed to measure whether the data being reported
by them raises a concern regarding their accuracy. We welcome
suggestions for criteria to be used for targeting hospitals for
validation. Either percent agreement at the clinical measure level or
the data element level (currently used for the RHQDAPU program) could
be calculated for the validation score. Because few data have been
collected under the HOP QDRP at this point, we are considering this
approach for possible use in future years.
A third alternative approach would involve some combination of the
two approaches discussed above.
F. Publication of HOP QDRP Data
Section 1833(t)(17)(E) of the Act requires that the Secretary
establish procedures to make data collected under this program
available to the public and to report quality measures of process,
structure, outcome, patients' perspectives of care, efficiency, and
costs of care that relate to services furnished in outpatient settings
in hospitals on the CMS Web site. We intend to make the information
collected under the HOP QDRP public in CY 2010 by posting it on the CMS
Web site. Participating hospitals will be granted the opportunity to
review this information as we have recorded it before the information
is published.
CMS requires hospitals to sign and submit a Notice of Participation
form in order to participate in the HOP QDRP. Hospitals signing this
form agree that they will allow CMS to publicly report the quality
measures as required by the HOP QDRP.
All hospitals have a unique CCN, whereas a single hospital may have
multiple National Provider Identifiers (NPI), another CMS identifier.
We propose for CY 2010 that hospitals sharing the same CCN must combine
data collection and submission across their multiple campuses for all
clinical measures for public reporting purposes. We also propose to
publish quality data by CCN under the HOP QDRP; however, we will note
on our Web site where the publicly reported measures combine
[[Page 41547]]
results from two or more hospitals. This approach is consistent with
the approach taken under the IPPS RHQDAPU program.
G. Proposed HOP QDRP Reconsideration and Appeals Procedures
When the IPPS RHQDAPU program was initially implemented, it did not
include a reconsideration submission process for hospitals.
Subsequently, we received many requests for reconsideration of those
payment decisions, and as a result established a process by which
participating hospitals would submit requests for reconsideration. We
anticipate similar concerns with the HOP QDRP and in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66875), we stated our intent
to implement for the HOP QDRP a reconsideration process modeled after
the reconsideration process we implemented for the IPPS RHQDAPU
program. We are therefore proposing a mandatory reconsideration and
appeals process that will apply to the CY 2010 payment decisions. In
order to receive reconsideration of a CY 2010 payment decision, the
hospitals must--
Submit to CMS, via QualityNet, a Reconsideration Request
form that will be made available on the QualityNet Web site. This form
shall contain the following information:
[cir] Hospital Medicare ID number known as the CCN.
[cir] Hospital Name.
[cir] CMS-identified reason for failure (as provided in any CMS
notification of failure to the hospital).
[cir] Hospital basis for requesting reconsideration. This must
identify the hospital's specific reason(s) for believing it met the HOP
QDRP program requirements and should receive a full annual payment
update.
[cir] CEO contact information, including name, e-mail address,
telephone number, and mailing address (must include physical address,
not just a post office box).
[cir] A copy of all material that the hospital submitted to CMS in
order to receive the full payment update for the year that is the
subject of the reconsideration request. Such material would include,
but not be limited to, the applicable Notice of Participation form,
quality measure data that the hospital submitted, and data that the
hospital submitted in response to a validation request.
[cir] QualityNet System Administrator contact information,
including name, e-mail address, telephone number, and mailing address
(must include physical address, not just the post office box).
[cir] The request must be signed by the hospital's CEO.
Following receipt of a request for reconsideration, CMS
will--
[cir] Provide an e-mail acknowledgement, using the contact
information provided in the reconsideration request, to the CEO and the
QualityNet Administrator notifying them that the hospital's request has
been received.
[cir] Provide a formal response to the hospital CEO, using the
contact information provided in the reconsideration request, notifying
the hospital of the outcome of the reconsideration process.
If a hospital is dissatisfied with the result of a HOP QDRP
reconsideration decision, the hospital may file a claim under 42 CFR
part 405, subpart R (PRRB) appeal.
H. Reporting of ASC Quality Data
As discussed above, section 109(b) of the MIEA-TRHCA amended
section 1833(i) of the Act by redesignating clause (iv) as clause (v),
adding section 1833(i)(2)(D)(iv) to the Act, and adding section
1833(i)(7) to the Act. These amendments authorize the Secretary to
require ASCs to submit data on quality measures and to reduce the
annual payment update in a year by 2.0 percentage points for ASCs that
fail to do so. These provisions permit, but do not require, the
Secretary to require ASCs to submit such data and to reduce any annual
increase for non-compliant ASCs.
In the CY 2008 OPPS/ASC final rule with comment period, we
indicated that we intended to implement the provisions of section
109(b) of the MIEA-TRHCA in a future rulemaking (72 FR 66875). While we
believe that promoting high quality care in the ASC setting through
quality reporting is highly desirable and fully in line with our
efforts under other payment systems, we believed that the transition to
the revised payment system in CY 2008 posed such a significant
challenge to ASCs that it would be most appropriate to allow some
experience with the revised payment system before introducing other new
requirements. We believed that implementation of quality reporting in
CY 2008 would require systems changes and other accommodations by ASCs,
facilities which do not have prior experience with quality reporting as
hospitals already have for inpatient quality measures, at a time when
they are implementing a significantly revised payment system. We
believed that our CY 2008 decision to implement quality reporting for
HOPDs prior to establishing quality reporting for ASCs would allow time
for ASCs to adjust to the changes in payment and case-mix that are
anticipated under the revised payment system. We would also gain
experience with quality measurement in the ambulatory setting in order
to identify the most appropriate measures for quality reporting in ASCs
prior to the introduction of the requirement in ASCs.
We continue to believe that promoting high quality care in the ASC
setting through quality reporting is highly desirable and fully in line
with our efforts under other payment systems. However, we continue to
have the concerns outlined above for CY 2009 and, therefore, we intend
to implement the provisions of section 109(b) of the MIEA-TRHCA in a
future rulemaking. We invite public comment on this deferral of quality
data reporting for ASCs and invite suggestions for quality measures
geared toward the services provided by ASCs. We also seek comment on
potential reporting mechanisms for ASC quality data, including
electronic submission of these data.
XVII. Healthcare-Associated Conditions
A. Background
In its landmark 1999 report ``To Err is Human: Building a Safer
Health System,'' the Institute of Medicine found that medical errors,
particularly hospital-acquired conditions (referred to as HACs in the
FY 2008 IPPS proposed and final rules and the FY 2009 IPPS proposed
rule) caused by medical errors, are a leading cause of morbidity and
mortality in the United States. The report noted that the number of
Americans who die each year as a result of medical errors that occur in
hospitals may be as high as 98,000. The cost burden of hospital-
acquired conditions is also high. Total national costs of these errors
due to lost productivity, disability, and health care costs were
estimated at $17 billion to $29 billion.\1\ In 2000, the CDC estimated
that hospital-acquired infections added nearly $5 billion to U.S.
health care costs every year.\2\ A 2007 study found that, in 2002, 1.7
million hospital-acquired infections were associated
[[Page 41548]]
with 99,000 deaths.\3\ Research has also shown that hospitals are not
following recommended guidelines to avoid preventable hospital-acquired
infections. A 2007 Leapfrog Group survey of 1,256 hospitals found that
87 percent of those hospitals do not follow recommendations to prevent
many of the most common hospital-acquired infections.\4\
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\1\ Institute of Medicine: To Err Is Human: Building a Safer
Health System, November 1999. Available at: http://www.iom.edu/
Object.File/Master/4/117/ToErr-8pager.pdf.
\2\ Centers for Disease Control and Prevention: Press Release,
March 2000. Available at: http://www.cdc.gov/od/oc/media/pressrel/
r2k0306b.htm.
\3\ Klevens et al. Estimating Health Care-Associated Infections
and Deaths in U.S. Hospitals, 2002. Public Health Reports. March-
April 2007. Volume 122.
\4\ 2007 Leapfrog Group Hospital Survey. The Leapfrog Group
2007. Available at: http://www.leapfroggroup.org/media/file/
Leapfrog_hospital_acquired_infections_release.pdf.
---------------------------------------------------------------------------
As one approach to combating hospital-acquired conditions in 2005
Congress authorized CMS to adjust Medicare IPPS hospital payments to
encourage the prevention of these conditions. Section 1886(d)(4)(D) of
the Act (as added by section 5001(c) of the Deficit Reduction Act (DRA)
of 2005, Pub. L. 109-171) required the Secretary to select by October
1, 2007, at least two conditions that are: (1) High cost, high volume,
or both; (2) assigned to a higher paying DRG when present as a
secondary diagnosis; and (3) could reasonably have been prevented
through the application of evidence-based guidelines. Beginning October
1, 2008, Medicare cannot assign an inpatient discharge that includes
the selected conditions to a higher-paying MS-DRG unless these
conditions were present on admission. Beginning October 1, 2007, CMS
required hospitals to begin submitting information on Medicare hospital
claims specifying whether diagnoses were present on admission (POA). In
the FY 2008 IPPS final rule with comment (72 FR 47202 through 47218),
eight conditions were selected for the hospital-acquired conditions
payment provision. In the FY 2009 IPPS proposed rule (73 FR 23547
through 23562), 10 additional conditions are proposed for the hospital-
acquired conditions payment provision.
The preventable hospital-acquired conditions payment provision at
section 1886(d)(4)(D) of the Act is part of an array of Medicare value-
based purchasing (VBP) tools that CMS is using to promote increased
quality and efficiency of care. Those tools include measuring
performance, using payment incentives, publicly reporting performance
results, applying national and local coverage policy decisions,
enforcing conditions of participation, and providing direct support for
providers through QIO activities. CMS' application of VBP tools through
various initiatives is transforming Medicare from a passive payer to an
active purchaser of higher-value health care services. CMS is applying
these strategies across the continuum of care for Medicare
beneficiaries.
B. Broadening the Concept of the IPPS Hospital-Acquired Conditions
Payment Provision to the OPPS
The principle of Medicare not paying more for the preventable
hospital-acquired conditions during inpatient stays paid under the IPPS
could be applied more broadly to other Medicare payment systems for
conditions that occur or result from care in other settings. Other
potential settings of care include HOPDs, ASCs, SNFs, home health care,
end-stage renal disease (ESRD) facilities, and physicians' practices;
therefore, we will refer to conditions that occur in settings other
than the inpatient hospital setting as ``healthcare-associated
conditions.'' The implementation would be different for each setting,
as each Medicare payment system is different, and the reasonable
preventability through the application of evidence-based guidelines
would vary for candidate conditions across the various care settings.
However, alignment of incentives across settings of care is an
important goal for all of CMS' VBP initiatives, including the hospital-
acquired conditions payment provision.
The risks of preventable medical errors leading to the occurrence
of healthcare-associated conditions is likely high in the outpatient
setting, given the substantially larger number of encounters and
exposures that occur in those settings. For example, studies indicate
that 400,000 preventable drug-related injuries occur each year in
hospitals. Roughly 530,000 preventable drug-related injuries occur each
year among Medicare beneficiaries in outpatient clinics.\5\ These
statistics clearly point to the significant magnitude of the problem of
healthcare-associated conditions in outpatient settings. Indeed, we
would have no reason to believe that medical errors would be less
common in the outpatient setting than the hospital inpatient setting
and, as increasingly more health care services are delivered in
outpatient settings, we would expect the occurrence of healthcare-
associated conditions stemming from outpatient care to grow directly as
a result of this shift in sites of service.
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\5\ Asplen, P., Wolcott, J., Bootman, J.L., Cronenwett, L.R.
(editors): Preventing Medication Errors: Quality Chasm Series, The
National Academy Press, 2007. Available at: http://www.nap.edu/
catalog.php?record_id=11623.
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The HOPD, where a broad array of services covered and paid under
the OPPS are provided, could be another setting for Medicare to extend
the concept of not paying more for preventable healthcare-associated
conditions that occur as a result of care provided during an encounter.
Hospitals provide a range of services under the OPPS that may overlap
or precede the inpatient activities of the hospital, including many
surgical procedures and diagnostic tests that are commonly performed on
both hospital inpatients and outpatients. Similarly, individuals who
are eventually admitted as hospital inpatients often initiate their
hospital encounter in the HOPD, where they receive clinic or emergency
department visits or observation care that precede their ultimate
hospital admission. In addition, like the IPPS, under the authority of
section 1833(t)(17) of the Act (as amended by section 109(a) of the
MIEA-TRHCA), the OPPS is also subject to the ``pay-for-reporting''
provision that affects the hospital annual payment update. Under this
authority, hospitals report quality data for specified performance
measures related to hospital outpatient services under the HOP QDRP.
Hospitals that fail to meet the reporting requirements established by
CMS for the payment update year receive a reduced payment update that
is applicable to OPPS payments for most services furnished by hospitals
in outpatient settings in the succeeding year. The HOP QDRP is further
discussed in section XVI. of this proposed rule.
We note that we are not proposing new Medicare policy in this
discussion of healthcare-associated conditions as they relate to the
OPPS. Instead, we are seeking public comments on options and
considerations, including statutory authority, related to extending the
IPPS hospital-acquired conditions payment provision for hospitals to
the OPPS. We understand that there would be challenges in expanding the
IPPS provision to other settings paid under different Medicare payment
systems, and we are seeking public comments that present ideas and
models for extending the principle behind the IPPS provision to the
OPPS. To stimulate reflection and creativity, we present discussion in
the following areas:
Criteria for possible candidate OPPS conditions
Collaboration process
Potential OPPS healthcare-associated conditions
OPPS infrastructure and payment for encounters resulting
in healthcare-associated conditions
[[Page 41549]]
1. Criteria for Possible Candidate OPPS Conditions
We have applied the following statutory criteria to the analysis of
candidate inpatient conditions for the IPPS hospital-acquired
conditions payment provision:
Cost or Volume--Medicare data must support that the
selected inpatient conditions are high cost, high volume, or both.
Complicating Conditions (CC) or Major Complication
Conditions (MCC)--Selected inpatient conditions must be represented by
ICD-9-CM diagnosis codes that clearly identify the condition, are
designated as a CC or an MCC, and result in the assignment of the case
to an MS-DRG that has a higher payment when the code is reported as a
secondary diagnosis. That is, selected inpatient conditions must be a
CC or an MCC that would, in the absence of this provision, result in
assignment to a higher paying MS-DRG.
Evidence-Based Guidelines--Selected inpatient conditions
must be reasonably presentable through the application of evidence-
based guidelines. By reviewing guidelines developed by professional
organizations, academic institutions, and other entities such as the
Healthcare Infection Control Practices Advisory Committee (HICPAC), we
evaluated whether guidelines are available that hospitals should follow
to prevent the condition from occurring in the hospital.
Reasonably Preventable--Selected inpatient conditions must
be reasonably preventable through the application of evidence-based
guidelines.
We are seeking public comment on the applicability of these
criteria to the selection of candidate healthcare-associated conditions
for the OPPS. Specifically, we are interested in comments on the
definition of reasonably preventable in the HOPD setting. Additionally,
there are significant infrastructure differences between the IPPS and
the OPPS (discussed further in section XVII.V.4. below). OPPS payment
is determined by assignment of HCPCS codes for items and services to
APCs that represent groups of services that share clinical and resource
characteristics. APC assignments for related services are determined by
the similarities between the clinical aspects of services and their
hospital costs from claims data, rather than by patient-specific
clinical parameters such as level of severity or comorbidities. In some
cases, there are multiple related levels of APCs for specific types of
services defined by distinct HCPCS codes (for examples, APCs 0203
through 0207 for Levels I, II, III, and IV Nerve Injections) based on
increasing hospital resource requirements, but, in other cases, there
is only a single level APC to which all related HCPCS codes are
assigned (for example, APC 0283 for Computed Tomography with Contrast).
As explained below in more detail, under the OPPS--unlike the IPPS--
payment generally depends on the package of services provided rather
than severity of illness. Thus, as higher severity of illness does not
directly affect payment under the OPPS as it does under the IPPS, it is
not as straightforward as not recognizing the healthcare-associated
condition when determining how not to pay a hospital for its higher
costs in the OPPS when a preventable adverse event occurs as a result
of treatment. We are interested in public comments generally and
specifically those that would help answer the following questions:
Are there examples within the context of the reporting of
ICD-9-CM codes for diagnoses and HCPCS codes for services on OPPS
claims that could be used to identify where a higher payment for a
hospital outpatient encounter would result from a medical error?
Are there examples of evidence-based guidelines related to
the prevention of high volume or high cost conditions, or both, that
are sufficiently rigorous to permit selection of healthcare-associated
conditions that could reasonably have been prevented in the HOPD
setting?
What other criteria should be considered in the selection
of healthcare-associated conditions for the OPPS?
2. Collaboration Process
CMS has worked with public health and infectious disease experts
from the Centers for Disease Control and Prevention (CDC) to select
hospital-acquired conditions, including infections, that meet the
statutory criteria under section 1886(d)(4)(D) of the Act for
application in the hospital inpatient setting. CMS and CDC have also
collaborated to develop the process for submission of a present on
admission (POA) indicator on the inpatient claim for each diagnosis. We
would expect to continue our collaboration with CDC to examine the
relevance and applicability of a POA indicator in the HOPD setting, and
also to utilize their expertise in chronic diseases in the selection of
candidate healthcare-associated conditions for the OPPS. In addition,
we would expect to seek collaboration with the Agency for Healthcare
Research and Quality (AHRQ) to utilize its expertise in patient safety.
We would also expect to seek collaboration with other Federal agencies
and with medical specialty societies. We are soliciting public comment
regarding a collaborative process for the identification of candidate
healthcare-associated conditions for hospital outpatient services and a
mechanism for public input from stakeholders.
3. Potential OPPS Healthcare-Associated Conditions
The FY 2008 IPPS final rule with comment period (72 FR 47202
through 47218) provides a detailed analysis supporting the hospital-
acquired conditions selected for application under the IPPS for FY
2008. We believe that only a small number of the hospital-acquired
conditions adopted in the FY 2008 IPPS final rule with comment period
could potentially be applicable to the OPPS. These include:
Object left in during surgery;
Air embolism;
Blood incompatibility; and
Falls and trauma fractures, dislocations, intracranial
injuries, crushing injuries, and burns.
The characteristics of these conditions are such that they would be
relatively straightforward to incorporate in an OPPS healthcare-
associated conditions payment provision. For example, these events
would likely occur and be coded in the timeframe of an OPPS encounter
reported on a single claim and determination of the occurrence of these
events would probably not require sequential evaluation of claims over
time. We are seeking public comment on the potential for considering
these conditions as healthcare-associated conditions for the HOPD.
Also, we are soliciting public comment on which of the hospital-
acquired conditions proposed in the FY 2009 IPPS proposed rule (73 FR
23554 through 23555) might be considered for the OPPS. For reasons
cited above, we believe only a small number of the proposed conditions
(for example, iatrogenic pneumothorax) might be considered for the
OPPS.
We understand that this short list of possible candidate conditions
for the OPPS is weighted toward surgical procedures. However, surgical
procedures account for a large proportion (about 33 percent) of total
OPPS spending. Overall, surgical procedures, together with imaging,
separately payable drugs, and clinic visits, account for approximately
80 percent of OPPS spending.
We acknowledge that reporting even this short list of healthcare-
associated
[[Page 41550]]
conditions as a secondary diagnosis on a claim in order to attribute
their occurrence to the HOPD encounter might present problems for
hospitals, particularly for the conditions resulting from trauma or
falls. Consequently, we are also seeking comment on whether or not we
could assume that these conditions reported as secondary diagnoses on
OPPS claims would have developed during the encounter or whether the
reporting of POA indicator information should be required under the
OPPS (and perhaps under every Medicare payment system) because POA data
increase the utility of claims for analyzing the characteristics of a
clinical encounter. More generally, we recognize that patients may be
cared for by different providers across settings and that the provider
caring for certain types of complicating conditions may not have
provided the health care services that led to the healthcare-associated
condition. Therefore, we welcome broad public comment on the approaches
and challenges related to the appropriate attribution of different
types of healthcare-associated conditions encountered in the HOPD.
Ultimately, payment policy for healthcare-associated conditions under
the OPPS should fully address the broad range of clinical services in
the HOPD where preventable healthcare-associated conditions may harm
Medicare beneficiaries. Therefore, we are seeking public comment on
additional candidate conditions that could have applicability to the
OPPS, beyond those mentioned above that would be extensions from the
IPPS final or proposed hospital-acquired conditions. We are
particularly interested in recommendations of preventable healthcare-
associated conditions that are likely to occur with frequency in the
HOPD (and other outpatient settings) and that may be associated with
significant harm, such as adverse drug events related to medication
errors or other complications of care for which we either currently
have no diagnosis codes or where correct coding for such occurrences
has not been clearly defined.
The CDC has been interested in further developing and expanding
strategies to improve the External Cause-of-Injury coding (E-codes). A
recent CDC Workgroup report discussed the importance and value of using
high-quality E-coding.\6\ Workgroup recommendations included enhancing
the completeness and accuracy of E-coding and making E-coded data more
useful for injury surveillance and prevention activities (including
medical errors) at the local, State, and Federal levels. E-coding may
represent a mechanism for coding clarity for preventable healthcare-
associated conditions such as adverse drug events related to medication
errors. In addition, we are seeking public comment on how to account
for patient-specific risk factors that increase the likelihood of the
occurrence of healthcare-associated conditions.
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\6\ Centers for Disease Control and Prevention: Morbidity and
Mortality Weekly Report, March 28, 2008, Vol. 57, No. RR-1.
Available at: http://cdc.gov/mmwr/mmwr_rr.html.
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4. OPPS Infrastructure and Payment for Encounters Resulting in
Healthcare-Associated Conditions
The OPPS infrastructure is a prospective payment system based on
relative costs from hospital claims for services assigned to APC
groups, where there is an individual payment rate that is specific to
each APC. Each APC contains HCPCS codes for items or services that are
clinically similar and that have comparable resource costs. In most
cases, an APC payment is made for each unit of each separately payable
HCPCS code through the code's assigned APC. For a single hospital
outpatient clinical encounter in which a patient receives services
described by several HCPCS codes with individual APC assignments (for
example, emergency department visit, first hour of therapeutic
intravenous infusion, chest x-ray, and electrocardiogram), the hospital
would receive multiple APC payments for that encounter. This payment
approach is altogether different from the MS-DRG-based IPPS, which
groups the services provided to an inpatient into an assigned MS-DRG
for which a single payment for the inpatient case is made. Under the
MS-DRGs that took effect in FY 2008, there are currently 258 sets of
MS-DRGs that are split into 2 or 3 subgroups based on the presence or
absence of a CC or an MCC. (We refer readers to the FY 2008 IPPS final
rule with comment period for a discussion of DRG reforms (72 FR
47141).) Prior to the October 1, 2008, effective date of the IPPS
hospital-acquired conditions payment provision, if a condition acquired
during a hospital stay was one of the conditions on the CC or MCC list,
the hospital received a higher payment under the MS-DRGs. Beginning
October 1, 2008, Medicare can no longer assign an inpatient hospital
discharge to a higher paying MS-DRG if a selected hospital-acquired
condition was not present on admission and no other CC or MCC that is
not on the list of hospital-acquired conditions is present. That is,
the case will be paid as though the secondary diagnosis (selected
hospital-acquired condition) was not present, unless a nonselected
secondary diagnosis that is a CC or an MCC is also present. Medicare
will continue to assign a discharge to a higher paying MS-DRG if the
selected condition was present on admission.
As discussed previously, the OPPS currently has neither the
infrastructure to identify POA indicator data nor the ability to
stratify by CC or MCC for differential payment under the present APC
payment methodology. OPPS claims report an ``admitting diagnosis''
which identifies the reason for the encounter prior to the
establishment of the principal diagnosis, but the admitting diagnosis
cannot be presumed to be equivalent to a diagnosis that is present on
admission as reported on an inpatient claim. As a consequence, initial
application of a healthcare-associated conditions payment policy under
the OPPS might be limited in its scope of conditions as discussed above
and in its options for payment adjustment. We welcome public comment on
how necessary a POA indicator would be for the candidate conditions we
have identified for potential use in the OPPS setting, and on how the
OPPS infrastructure could be modified to allow for the incorporation of
any POA information.
We also seek recommendations regarding how hospital payment for a
clinical encounter (which could include multiple individual APC
payments) could be adjusted to reflect a derivative payment reduction
similar to the CC/MCC MS-DRG adjustment for hospital-acquired
conditions under the IPPS. Without a POA and risk stratification
infrastructure for the OPPS, one approach to limiting OPPS payment for
healthcare-associated conditions in the short term could be to pay for
all services provided in the encounter that led to the healthcare-
associated condition at the same reduced rate that would be paid to a
hospital that failed to meet the quality reporting requirements.
Currently, this would mean that the hospital payment for an encounter
where a healthcare-associated condition resulted would be based on the
OPPS conversion factor reduced by a 2 percentage point reduction to the
market basket increase for the year. Alternatively, a flat case rate
reduction percentage could be considered for all, or a subset, of
services provided in the clinical encounter. This reduction could
potentially be empirically derived from analyzing the costs of subsets
of OPPS claims for Medicare beneficiaries with and without healthcare-
associated conditions, or could possibly be
[[Page 41551]]
developed through analysis of the IPPS payment relationship between MS-
DRGs with the presence or absence of a CC or an MCC. Any reduction in
OPPS payment should also be applied to the 20-percent beneficiary
copayment requirement for the OPPS so that the beneficiary's cost
sharing (which is paid for each service furnished) would not rise as a
proportion of the total Medicare payment when the payment would be
reduced. In contrast to the payment limitation approach used for the
IPPS, we recognize that neither of the possible payment limitation
approaches discussed above would specifically target the separate OPPS
payment for those additional hospital services provided as a result of
the healthcare-associated condition (as opposed to the payment for the
services that initially brought the beneficiary to the HOPD). We note
that the current OPPS payment structure sets a single payment rate for
a service based on the APC median cost from all claims for services
assigned to the APC, including cases with healthcare-associated
conditions as well as cases without healthcare-associated conditions.
Therefore, we believe it could be appropriate to reduce the single OPPS
payment through one of the general payment limitation approaches
described above for the OPPS because any additional costs of encounters
resulting in healthcare-associated conditions would already be included
in the base OPPS payment rates for most OPPS services. We are seeking
public comment on these possibilities or other ways to use or adapt the
current OPPS infrastructure for purposes of implementing a healthcare-
associated conditions payment provision.
A related application of the broad principle behind the IPPS
hospital-acquired conditions payment provision could be accomplished
through Medicare secondary payer policy by requiring the provider that
failed to prevent the occurrence of a healthcare-associated condition
in one setting to pay for all or part of the necessary followup care in
a second setting. This would shield the Medicare program from paying
for the downstream effects of a condition acquired in the first setting
but treated in the second setting. This type of scenario would likely
be common for certain healthcare-associated conditions related to HOPD
care, given the relatively short lengths of stay for HOPD services. We
are interested in public comments regarding this more general approach
to extending beyond the inpatient setting the concept of not providing
Medicare payment for healthcare-associated conditions, including the
advantages and disadvantages of taking a payment system by payment
system approach or of adopting the general principle of holding the
provider that failed to prevent the occurrence of a condition in one
setting responsible for payment of the followup care in any other
setting.
We emphasize that we are not proposing new Medicare policy in this
discussion of extending the principle behind the IPPS hospital-acquired
conditions payment provision to the OPPS. Rather, we are seeking public
comment on this discussion of possible healthcare-associated conditions
and the challenges associated with OPPS implementation of related
payment policies. We look forward to continuing to work with
stakeholders to improve the quality, safety, and value of health care.
We view addressing the ongoing problem of preventable healthcare-
associated conditions in outpatient settings, including the HOPD, as a
key VBP strategy to sharpen the focus on such improvements beyond
hospital inpatient care to those settings where the majority of
Medicare beneficiaries receive most of their health care services.
XVIII. Files Available to the Public Via the Internet
A. Information in Addenda Related to the Proposed CY 2009 Hospital OPPS
Addenda A and B to this proposed rule provide various data
pertaining to the proposed CY 2009 payment for items and services under
the OPPS. Addendum A, which includes a list of all APCs proposed to be
payable under the OPPS, and Addendum B, which includes a list of all
active HCPCS codes and their proposed CY 2009 OPPS payment status, are
available to the public by clicking ``Hospital Outpatient Regulations
and Notices'' on the CMS Web site at: http://www.cms.hhs.gov/
HospitalOutpatientPPS/.
For the convenience of the public, we are also including on the CMS
Web site a table that displays the HCPCS data in Addendum B sorted by
proposed APC assignment, identified as Addendum C.
Addendum D1 defines the proposed payment status indicators that are
used in Addenda A and B. Addendum D2 defines the proposed comment
indicators that are used in Addendum B. Addendum E lists the proposed
HCPCS codes that would only be payable as inpatient procedures and
would not be payable under the OPPS. Addendum L contains the proposed
out-migration wage adjustment for CY 2009. Addendum M lists the
proposed HCPCS codes that would be members of a composite APC and
identifies the composite APC to which they would be assigned. This
addendum also identifies the status indicator for the code and a
comment indicator if there is a proposed change in the code's status
with regard to its membership in the composite APC. Each of the
proposed HCPCS codes included in Addendum M has a single procedure
payment APC, listed in Addendum B, to which it would be assigned when
the criteria for assignment to the composite APC are not met. When the
criteria for payment of the code through the composite APC are met, one
unit of the composite APC payment is paid, thereby providing packaged
payment for all services that are assigned to the composite APC
according to the specific I/OCE logic that applies to the APC. We refer
readers to the discussion of composite APCs in section II.A.2.e. of
this proposed rule for a complete description of the composite APCs.
These addenda and other supporting OPPS data files are available on
the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/.
B. Information in Addenda Related to the Proposed CY 2009 ASC Payment
System
Addenda AA and BB to this proposed rule provide various data
pertaining to the proposed CY 2009 payment for ASC covered surgical
procedures and covered ancillary services for which ASCs may receive
separate payment. Addendum AA lists the proposed ASC covered surgical
procedures and the proposed CY 2009 ASC payment indicators and payment
rates for each procedure. Addendum BB displays the proposed ASC covered
ancillary services and their proposed CY 2009 payment indicators and
payment rates. All proposed relative payment weights and payment rates
for CY 2009 are a result of applying the revised ASC payment system
methodology established in the final rule for the revised ASC payment
system published in the Federal Register on August 2, 2007 (72 FR 42470
through 42548) to the proposed CY 2009 OPPS and MPFS ratesetting
information.
Addendum DD1 defines the proposed payment indicators that are used
in Addenda AA and BB. Addendum DD2 defines the proposed comment
indicators that are used in Addenda AA and BB.
Addendum EE (available only on the Internet) lists the surgical
procedures that we are proposing to exclude from Medicare payment if
furnished in ASCs. The excluded procedures listed in
[[Page 41552]]
Addendum EE are surgical procedures that would either be assigned to
the OPPS inpatient list, would not be covered by Medicare, would be
reported using a CPT unlisted code, or have been determined to pose a
significant safety risk or are expected to require an overnight stay
when performed in ASCs.
These addenda and other supporting ASC data files are included on
the CMS Web site at: http://www.cms.hhs.gov/ASCPayment/. The MPFS data
files are located at: http://www.cms.hhs.gov/PhysicianFeeSched/.
The links to all of the FY 2009 IPPS wage index related tables
(that are proposed to be used for the CY 2009 OPPS) from the FY 2009
IPPS proposed rule (73 FR 23723 through 23886) are accessible on the
CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/
list.asp#TopofPage.
XIX. Collection of Information Requirements
A. Legislative Requirement for Solicitation of Comments
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 (PRA) requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
B. Associated Information Collections Not Specified in Regulatory Text
This proposed rule makes reference to one associated information
collection, HOP QDRP, that is not presented in the regulatory text. The
following is a discussion of this collection:
Section 419.43(h) requires hospitals, in order to qualify for the
full annual update, to submit quality data to CMS, as specified by CMS.
In this proposed rule, we are proposing the specific requirements
related to the data that must be submitted for the update for CY 2010.
The burden associated with this section is the time and effort
associated with collecting and submitting the data, completing
participating forms and submitting charts for chart audit validation.
We estimate that there will be approximately 3,500 respondents per
year.
For hospitals to collect and submit the information on the required
measures, we estimate it will take 30 minutes per sampled case.
Further, based on an estimated 10 percent sample size and estimated
populations of 2.5 to 5 million outpatient visits per measure, we
estimate a total of 1,800,000 cases per year. In addition, we estimate
that completing participation forms will require approximately 4 hours
per hospital per year. We expect the burden for all of these hospitals
to total 914,000 hours per year.
For CY 2010, our proposed validation process requires a random
sample of 800 participating hospitals to submit 50 charts on an annual
basis. The burden associated with this requirement is the time and
effort associated with collecting, copying, and submitting these
charts. It will take approximately 20 hours per hospital to submit the
50 charts. There will be a total of approximately 40,000 charts (800
hospitals x 50 charts per hospital) submitted by the hospitals to CMS
for a total burden of 16,000 hours. Therefore, the total burden for all
hospitals would be 930,000 hours per year.
We have submitted a copy of this proposed rule to OMB for its
review of the information collection requirements described above.
These requirements are not effective until they have been approved by
OMB.
C. Addresses for Submittal of Comments on ICRs
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Mail copies to the address specified in the ADDRESSES section of
this proposed rule and to--Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10235, New Executive
Office Building, Washington, DC 20503, Attn: Carolyn L. Raffaelli, CMS
Desk Officer, CMS-1390-P, e-mail: Carolyn_L._Raffaelli@omb.eop.gov,
Fax (202) 395-6974.
XX. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document(s), we will
respond to those comments in the preamble to that document(s).
XXI. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this proposed rule as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).
1. Executive Order 12866
Executive Order 12866 (as amended by Executive Order 13258) directs
agencies to assess all costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). A regulatory impact analysis (RIA) must be prepared for
major rules with economically significant effects ($100 million or more
in any 1 year).
We estimate that the effects of the OPPS provisions that would be
implemented by this proposed rule would result in expenditures
exceeding $100 million in any 1 year. We estimate the total increase
(from proposed changes in this proposed rule as well as enrollment,
utilization, and case-mix changes) in expenditures under the OPPS for
CY 2009 compared to CY 2008 to be approximately $1.8 billion.
We estimate that the proposed update to the ASC payment system for
CY 2009 (such as adding nine procedures to the ASC list of covered
surgical procedures and designating five additional procedures as
office-based) would have no net effect on Medicare expenditures in CY
2009 compared to the level of expenditures in CY 2008. A more detailed
discussion of the effects of the proposed changes to the ASC payment
system for CY 2009 is provided in section XXI.C. of this proposed rule.
[[Page 41553]]
We estimate that this proposed rulemaking is ``economically
significant'' as measured by the $100 million threshold, and hence also
a major rule under the Congressional Review Act. Accordingly, we have
prepared an initial Regulatory Impact Analysis that, to the best of our
ability, presents the costs and benefits of the rulemaking.
2. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small businesses if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals, other providers, ASCs, and
other suppliers are considered to be small entities, either by being
nonprofit organizations or by meeting the Small Business Administration
(SBA) definition of a small business (having revenues of $31.5 million
or less in any 1 year). (For details on the latest standards for health
care providers, we refer readers the SBA's Web site at: http://sba.gov/
idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf
(refer to the 620000 series).
For purposes of the RFA, we have determined that most hospitals and
most ASCs would be considered small entities according to the SBA size
standards. Individuals and States are not included in the definition of
a small entity. Therefore, the Secretary has determined that this
proposed rule would have a significant impact on a substantial number
of small entities.
3. Small Rural Hospitals
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. With
the exception of hospitals located in certain New England counties, for
purposes of section 1102(b) of the Act, we now define a small rural
hospital as a hospital that is located outside of an urban area and has
fewer than 100 beds. Section 601(g) of the Social Security Amendments
of 1983 (Pub. L. 98-21) designated hospitals in certain New England
counties as belonging to the adjacent urban areas. Thus, for OPPS
purposes of this proposed rule, we continue to classify these hospitals
as urban hospitals. We believe that the proposed changes to the OPPS in
this proposed rule would affect both a substantial number of rural
hospitals as well as other classes of hospitals and that the effects on
some may be significant. The proposed changes to the ASC payment system
for CY 2009 would have no effect on small rural hospitals.
Therefore, the Secretary has determined that this proposed rule
would have a significant impact on the operations of a substantial
number of small rural hospitals.
4. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $130 million. This proposed rule will
not mandate any requirements for State, local, or tribal government,
nor will it affect private sector costs.
5. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct costs on State and local
governments, preempts State law, or otherwise has Federalism
implications.
We have examined the OPPS and ASC proposed provisions included in
this proposed rule in accordance with Executive Order 13132,
Federalism, and have determined that they would not have a substantial
direct effect on State, local or tribal governments, preempt State law,
or otherwise have a Federalism implication. As reflected in Table 45
below, we estimate that OPPS payments to governmental hospitals
(including State and local governmental hospitals) would increase by
3.9 percent under this proposed rule. The proposed provisions related
to payments to ASCs in CY 2009 would not affect payments to
governmental hospitals.
B. Effects of OPPS Changes in This Proposed Rule
We are proposing to make several changes to the OPPS that are
required by the statute. We are required under section
1833(t)(3)(C)(ii) of the Act to update annually the conversion factor
used to determine the APC payment rates. We are also required under
section 1833(t)(9)(A) of the Act to revise, not less often than
annually, the wage index and other adjustments. In addition, we must
review the clinical integrity of payment groups and weights at least
annually. Accordingly, in this proposed rule, we are proposing to
update the conversion factor and the wage index adjustment for hospital
outpatient services furnished beginning January 1, 2009, as we discuss
in sections II.B. and II.C., respectively, of this proposed rule. We
also are proposing to revise the relative APC payment weights using
claims data from January 1, 2007 through December 31, 2007 and updated
cost report information. We are proposing to continue the payment
adjustment for rural SCHs, including EACHs. We are proposing to remove
two device categories, HCPCS code C1821 (Interspinous process
distraction device (implantable)) and HCPCS code L8690 (Auditory
osseointegrated device, includes all internal and external components),
from pass-through payment status in CY 2009. Finally, we list the 15
drugs and biologicals in Table 20 of this proposed rule that we are
proposing to remove from pass-through payment status for CY 2009.
Under this proposed rule, the proposed update change to the
conversion factor as provided by statute would increase total OPPS
payments by 3.0 percent in CY 2009. The proposed changes to the APC
weights, the proposed changes to the wage indices, and the proposed
continuation of a payment adjustment for rural SCHs, including EACHs,
would not increase OPPS payments because these proposed changes to the
OPPS are budget neutral. However, these proposed updates do change the
distribution of payments within the budget neutral system as shown in
Table 45 below and described in more detail in this section.
1. Alternatives Considered
Alternatives to the changes we are proposing to make and the
reasons that we have chosen the options are discussed throughout this
proposed rule. Some of the major issues discussed in this proposed rule
and the options considered are discussed below.
a. Alternatives Considered for Payment of Multiple Imaging Procedures
We are proposing to revise our payment methodology for multiple
imaging procedures performed during a single session using the same
imaging modality by applying a composite APC payment methodology in CY
2009. We would provide one composite APC payment each time a hospital
bills for second and subsequent procedures described by the HCPCS codes
in one imaging family on a single date of service. As discussed in
detail in section II.A.2.e.(5) of this proposed rule, we are
[[Page 41554]]
proposing to utilize three imaging families of HCPCS codes based on
imaging modality for purposes of this methodology (that is, Ultrasound,
CT and CTA, and MRI and MRA). The proposed composite APC methodology
for multiple imaging services would result in the creation of the
following five new APCs due to the statutory requirement that we
differentiate payment for OPPS imaging services provided with and
without contrast: APC 8004 (Ultrasound Composite); APC 8005 (CT and CTA
without Contrast Composite); APC 8006 (CT and CTA with Contrast
Composite); APC 8007 (MRI and MRA without Contrast Composite); and APC
8008 (MRI and MRA with Contrast Composite).
We considered three alternative CY 2009 payment options for imaging
services under the OPPS. The first alternative we considered was to
make no change to the current payment policy of providing hospitals a
full APC payment for each imaging service on a claim, regardless of how
many procedures are performed during a single session using the same
imaging modality or whether the procedures are performed on contiguous
body areas. We did not choose this alternative because we believe that
continuing the current payment methodology would neither reflect nor
promote the efficiencies hospitals can achieve when they perform
multiple imaging procedures during a single session, as demonstrated in
CY 2007 claims data and discussed in section II.A.2.e.(5) of this
proposed rule.
The second alternative we considered was to utilize the 11 families
of imaging HCPCS codes applicable under the MPFS multiple imaging
discount policy, distinct groups of codes which are based on imaging
modality and contiguous body area, in the development of the multiple
imaging composite APCs. We did not choose this alternative because, as
we discuss in section II.A.2.e.(5) of this proposed rule, we believe
that the large number of smaller MPFS families are neither appropriate
nor necessary for the OPPS. These groups do not correspond to the
larger APC groups of services paid under the OPPS in contrast to the
service-specific payment under the MPFS, and would not reflect all
efficiencies that may typically be gained in a single imaging session
in the hospital outpatient setting of care.
The third alternative we considered and are proposing for CY 2009
is to develop the multiple imaging composite APCs by collapsing the 11
MPFS imaging families into 3 imaging families based solely on imaging
modality. We chose this alternative because we believe that the
contiguous body area concept that is central to the MPFS imaging
families is not necessary to capture potential efficiencies in a
hospital outpatient imaging session. As discussed in section
II.A.2.e.(5) of this proposed rule, we would not expect second and
subsequent imaging services of the same modality involving
noncontiguous body areas to require certain duplicate facility
services. We believe that collapsing the 11 MPFS imaging families into
3 groups for purposes of the OPPS multiple imaging composite payment
methodology most accurately reflects how these services are provided in
the hospital outpatient setting of care and would most effectively
encourage hospital efficiencies that could be achieved when multiple
imaging procedures are performed during a single session. We also
believe that deriving the proposed multiple imaging composite APCs from
3 collapsed imaging families, rather than the 11 MPFS imaging families,
would enable us to maximize the use of multiple imaging claims for
ratesetting.
b. Alternatives Considered for the Proposed HOP QDRP Requirements for
the CY 2009 Payment Update
As discussed in section XVI.D.2. of this proposed rule, we are
proposing to implement the payment provisions of section 109 of the
MIEA-TRHCA, which amended section 1833(t) of the Act by adding a new
subsection (17). In summary, new section 1833(t)(17)(A) of the Act
requires that certain hospitals that fail to meet the HOP QDRP
reporting requirements incur a 2.0 percentage point reduction to their
OPD fee schedule increase factor, that is, the market basket update.
The application of a reduced OPD fee schedule increase factor results
in reduced national unadjusted payment rates that will apply to certain
outpatient items and services performed by hospitals that are required
to report outpatient quality data and that fail to meet the HOP QDRP
requirements.
As described in detail in section XVI.D.2. of this proposed rule,
we are proposing that, effective for services paid under the CY 2009
OPPS, we would calculate two conversion factors: A full market basket
conversion factor (that is, the full CF) and a reduced market basket
conversion factor (that is, the reduced CF). Therefore, we are
proposing to calculate a ``reporting ratio'' which would apply to
payment for hospitals that fail to meet their reporting requirements,
by dividing the reduced CF by the full CF.
Under the OPPS, we have two levels of Medicare beneficiary
copayment for many separately paid services: The minimum unadjusted
copayment and the national unadjusted copayment. The minimum unadjusted
copayment is always 20 percent of the unadjusted national payment rate
for each separately payable service. The national unadjusted copayment
is determined based on the historic coinsurance rate for the services
assigned to the APC. We considered two alternative policy options for
the copayment calculation methodology for those hospitals that fail to
meet the HOP QDRP requirements.
The first alternative we considered was to calculate the national
unadjusted copayments and the minimum unadjusted copayments based on
the reduced national unadjusted payment amounts, using our standard
copayment methodology. We found that in many cases the beneficiary
copayment amount would remain the same as calculated based on the full
national unadjusted payment rates, although the total reduced national
unadjusted payment rate would decline because of the reduction to the
conversion factor. Therefore, in these cases, the ratio of the
copayment to the total payment (the coinsurance percentage) would
increase rather than decrease if we were to calculate copayments based
on the reduced national unadjusted payment rates. We did not choose
this option because we believe that the increased coinsurance
percentage that results from this methodology is contradictory to the
intent of the statute that the coinsurance percentage should never
increase and is also contradictory to our copayment rules that are
intended to gradually reduce the percentage of the payment attributed
to copayments until the copayment is equal to the minimum unadjusted
copayment for all services.
The second alternative we considered and are proposing is to apply
the reporting ratio noted above to both the national unadjusted
copayment and the minimum unadjusted copayment that would apply to each
APC for hospitals that receive the reduced CY 2009 OPPS payment update.
Beneficiaries and secondary payers would thereby not pay a higher
coinsurance rate and would share in the reduction of payments to these
hospitals. We believe that this alternative would allow us to
appropriately set the national unadjusted copayments for the reduced
OPPS national unadjusted payment rates and is most consistent with the
eventual establishment of 20 percent of the payment rate as the uniform
coinsurance percentage for all services under the OPPS.
[[Page 41555]]
c. Alternatives Considered Regarding OPPS Cost Estimation for Relative
Payment Weights
Since the implementation of the OPPS, some commenters have raised
concerns about potential bias in the OPPS cost-based weights due to
``charge compression,'' which is the practice of applying a lower
charge markup to higher-cost services and a higher charge markup to
lower-cost services. To explore this issue, in August 2006 we awarded a
contract to RTI to study the effects of charge compression in
calculating the IPPS relative weights, particularly with regard to the
impact on inpatient DRG payments, and to consider methods to reduce the
variation in the CCRs used to calculate costs for the IPPS relative
weights across services within cost centers. Of specific note was
analysis of a regression-based methodology estimating an average
adjustment for CCRs by type of revenue code from an observed
relationship between provider cost center CCRs and proportional billing
of high and low cost services in the cost center. In August 2007, we
expanded the RTI contract to determine whether the findings of the
report were also applicable to the payment weights established under
the OPPS and to more systematically explore cost estimation issues
specific to the OPPS, including the revenue code-to-cost center
crosswalk. We refer readers to section II.A.1.c. of this proposed rule
for discussion of the issues and http://www.rti.org for the RTI
findings and recommendations. The final RTI report describing its
research findings was made available at about the time of the release
of this proposed rule in July 2008. In this report, RTI made a number
of recommendations for achieving more accurate estimates of cost for
services paid under both the IPPS and the OPPS. This report also
distinguished between two types of research findings and
recommendations, that is, those pertaining to the accounting or cost
report data itself and those related to statistical regression
analysis. RTI made 11 recommendations to improve IPPS and OPPS cost
estimation, including both short- and long-term accounting changes, and
short-term regression-based and other statistical adjustments. For a
detailed discussion of the RTI recommendations from the July 2008
report, we refer readers to section II.A.1.c. of this proposed rule.
With respect to adopting the RTI recommendations, we considered
three alternatives. The first alternative we considered was to propose
no changes in response to the RTI findings and to accept none of the
recommendations regarding cost estimation. We did not choose this
alternative because we agree with RTI's findings that there are likely
misassigned costs in the cost reports that could adversely affect the
OPPS relative weights and that charge compression influences the OPPS
payment weights.
The second alternative we considered was to accept all of the RTI
recommendations. We did not choose this alternative because of the
magnitude and scope of impact on APC relative weights that would result
from adopting all accounting and statistical changes in cost estimation
that were recommended. Further, the numerous and substantial changes
that RTI recommended have significantly complex interactions with one
another and we believe that we should proceed cautiously in considering
their adoption. In a budget neutral payment system, increases in
payment for some services always result in reductions to payment for
other services. We believe that any potential accounting and
statistical changes in cost estimation are likely to result in
significant shifts in payment within hospital departments and between
hospitals and should be thoroughly assessed before we decide whether to
propose changes beyond those we are proposing for CY 2009 as discussed
below.
The third alternative we considered and the one we are proposing in
this OPPS rule is to break the single standard cost center 5600 into
two proposed new standard cost centers: Drugs with High Overhead Cost
Charged to Patients and Drugs with Low Overhead Cost Charged to
Patients, to reduce the reallocation of pharmacy overhead cost from
expensive to inexpensive drugs and biologicals when setting an
equivalent average ASP-based payment amount in the future. This
proposal is consistent with RTI's recommendation for creating a new
cost center whose CCR would be used to adjust charges to costs for
drugs requiring detail coding. We refer readers to section V.B.3. of
this proposed rule for the discussion of the creation of the two
proposed new cost centers and the potential approaches to
distinguishing between the two groups of drugs and biologicals. We note
that we made a similar proposal for the Medical Supplies Charged to
Patients cost center in the FY 2009 IPPS proposed rule (73 FR 23546).
We are proposing this alternative because we believe that it would lead
to more accurate cost estimation for drugs and biologicals and their
associated pharmacy overhead costs in a manner that is consistent with
our current methodology for estimating costs under both the IPPS and
the OPPS. The nature of cost report timing and changes in reporting
charges would phase in the resulting changes to payment rates in such a
way that the impact would be moderated compared to the effect of
applying the regression adjustments to the current claims data.
Therefore, this approach would ultimately provide more accurate payment
for drugs and biologicals based on the costs of hospitals as reported
to us and would also not introduce a high level of instability in the
OPPS payment rates. Moreover, we would be able to complete a full
assessment of the potential impact of all of the cost estimation
changes recommended by RTI and to consider and analyze public comments
on the numerous other recommendations before deciding whether or not to
propose any of the other recommendations of the RTI study.
2. Limitations of Our Analysis
The distributional impacts presented here are the projected effects
of the proposed CY 2009 policy changes on various hospital groups. We
post our hospital-specific estimated payments for CY 2009 with the
other supporting documentation for this proposed rule. To view the
hospital-specific estimates, we refer readers to the CMS Web site at:
http://www.cms.hhs.gov/HospitalOutpatientPPS/. Select ``regulations and
notices'' from the left side of the page and then select ``CMS-1404-P''
from the list of regulations and notices. The hospital-specific file
layout and the hospital-specific file are listed with the other
supporting documentation for this proposed rule. We show hospital-
specific data only for hospitals whose claims were used for modeling
the impacts shown in Table 45 below. We do not show proposed hospital-
specific impacts for hospitals whose claims we were unable to use. We
refer readers to section II.A.2. of this proposed rule for a discussion
of the hospitals whose claims we do not use for ratesetting and impact
purposes.
We estimate the effects of the proposed individual policy changes
by estimating payments per service, while holding all other payment
policies constant. We use the best data available but do not attempt to
predict behavioral responses to our proposed policy changes. In
addition, we do not make adjustments for future changes in variables
such as service volume, service-mix, or number of encounters. As we
have done in previous rules, we are soliciting public comment and
information about the anticipated effect
[[Page 41556]]
of the proposed changes on hospitals and our methodology for estimating
them.
3. Estimated Effects of This Proposed Rule on Hospitals
Table 45 below shows the estimated impact of this proposed rule on
hospitals. Historically, the first line of the impact table, which
estimates the proposed change in payments to all hospitals, has always
included cancer and children's hospitals, which are held harmless to
their pre-BBA payment to cost ratio. We are also including CMHCs in the
first line that includes all providers because we included CMHCs in our
weight scaler estimate. We typically do not report a separate impact
for CMHCs because they are paid for only one service, PHP, under the
OPPS, and each CMHC can typically easily estimate the impact of the
proposed changes by referencing payment for PHP services in Addendum A.
Because we are proposing a CY 2009 policy change to PHP payment that is
more complicated than a simple change in the payment rate, this year we
present separate impacts for CMHCs in Table 45 and discuss the impact
on CMHCs in section XXI.B.4. below.
The estimated increase in the total payments made under the OPPS is
limited by the increase to the conversion factor set under the
methodology in the statute. The distributional impacts presented do not
include assumptions about changes in volume and service-mix. The
enactment of Pub. L. 108-173 on December 8, 2003 provided for the
additional payment outside of the budget neutrality requirement for
wage indices for specific hospitals reclassified under section 508. The
MMSEA extended section 508 reclassifications through September 30,
2008. The amounts attributable to this reclassification are
incorporated into the CY 2008 estimates but because section 508 expires
in 2008, no additional payments under section 508 are considered for CY
2009 in this impact analysis.
Table 45 shows the estimated redistribution of hospital and CMHC
payments among providers as a result of proposed APC reconfiguration
and recalibration; wage indices; the combined impact of the APC
recalibration, wage effects, and the market basket update to the
conversion factor; and, finally, estimated redistribution considering
all proposed payments for CY 2009 relative to all payments for CY 2008,
including the impact of changes in the outlier threshold and changes to
the pass-through estimate. We did not model a budget neutrality
adjustment for the rural adjustment for SCHs, including EACHs, because
we are not proposing any changes to the policy for CY 2009. Because
updates to the conversion factor, including the update of the market
basket and the addition of money not dedicated to pass-through payment
for CY 2009, are applied uniformly across services, observed
redistributions of payments in the impact table for hospitals largely
depend on the mix of services furnished by a hospital (for example, how
the APCs for the hospital's most frequently furnished services would
change), and the impact of the wage index changes on the hospital.
However, total payments made under this system and the extent to which
this proposed rule would redistribute money during implementation also
would depend on changes in volume, practice patterns, and the mix of
services billed between CY 2008 and CY 2009, which CMS cannot forecast.
Overall, the proposed OPPS rates for CY 2009 would have a positive
effect for providers paid under the OPPS, resulting in a 3.2 percent
increase in Medicare payments. Removing cancer and children's hospitals
because their payments are held harmless to the pre-BBA ratio between
payment and cost, and CMHCs, suggests that proposed changes would
result in a 3.6 percent increase in Medicare payments to all other
hospitals, exclusive of transitional pass-through payments.
To illustrate the impact of the proposed CY 2009 changes, our
analysis begins with a baseline simulation model that uses the final CY
2008 weights, the FY 2008 final post-reclassification IPPS wage
indices, and the final CY 2008 conversion factor. Column 2 in Table 45
shows the independent effect of proposed changes resulting from the
reclassification of services among APC groups and the proposed
recalibration of APC weights, based on 12 months of CY 2007 hospital
OPPS claims data and more recent cost report data. We modeled the
effect of proposed APC recalibration changes for CY 2009 by varying
only the weights (the final CY 2008 weights versus the estimated
proposed CY 2009 weights) and calculating the percent difference in
payments. Column 2 also reflects the effect of proposed changes
resulting from the APC reclassification and recalibration changes and
any changes in multiple procedure discount patterns that occur as a
result of the changes in the relative magnitude of proposed payment
weights.
Column 3 reflects the independent effects of updated wage indices,
including proposed application of budget neutrality for the rural floor
policy on a statewide basis. While we have included changes to the
rural adjustment in this column in the past, we did not model a budget
neutrality adjustment for the rural adjustment for SCHs, including
EACHs, because we are proposing no changes to the policy for CY 2009.
We modeled the independent effect of updating the wage index and the
rural adjustment by varying only the wage index, using the proposed CY
2009 scaled weights and a CY 2008 conversion factor that included a
budget neutrality adjustment for changes in wage effects and the rural
adjustment between CY 2008 and CY 2009.
Column 4 demonstrates the combined ``budget neutral'' impact of APC
recalibration (that is, Column 2), the wage index update (that is,
Column 3), as well as the impact of updating the conversion factor with
the market basket update. We modeled the independent effect of the
budget neutrality adjustments and the market basket update by using the
weights and wage indices for each year, and using a CY 2008 conversion
factor that included the market basket update and budget neutrality
adjustments for differences in wages.
Finally, Column 5 depicts the full impact of the CY 2009 proposed
policies on each hospital group by including the effect of all the
proposed changes for CY 2009 (including the APC reconfiguration and
recalibration shown in Column 2) and comparing them to all estimated
payments in CY 2008, including changes to the wage index under section
508 of Pub. L. 108-173 as extended by the MMSEA. Column 5 shows the
combined budget neutral effects of Columns 2 through 4, plus the impact
of the proposed change to the fixed outlier threshold from $1,575 to
$1,800; the impact of expiring section 508 reclassification wage index
increases; and the impact of reducing the estimate of the percentage of
total OPPS payments dedicated to transitional pass-through payments. We
estimate that these proposed cumulative changes would increase payments
to all providers by 3.2 percent for CY 2009. We modeled the independent
effect of all proposed changes in Column 5 using the final weights for
CY 2008 and the proposed weights for CY 2009. We used the final
conversion factor for CY 2008 of $63.694 and the proposed CY 2009
conversion factor of $65.684. Column 5 also contains simulated outlier
payments for each year. We used the charge inflation factor used in the
FY 2009 IPPS proposed rule of 5.84 percent (1.0585) to increase
individual costs on
[[Page 41557]]
the CY 2007 claims to reflect CY 2008 dollars, and we used the most
recent overall CCR in the April 2008 Outpatient Provider-Specific File.
Using the CY 2007 claims and a 5.84 percent charge inflation factor, we
currently estimate that outlier payments for CY 2008, using a multiple
threshold of 1.75 and a fixed-dollar threshold of $1,575, would be
approximately 0.76 percent of total payments. Outlier payments of 0.76
percent appear in the CY 2008 comparison in Column 5. We used the same
set of claims and a charge inflation factor of 12.04 percent (1.1204)
and the CCRs in the April 2008 Outpatient Provider-Specific File, with
an adjustment of 0.9920 to reflect relative changes in cost and charge
inflation between CY 2007 and CY 2009, to model the proposed CY 2009
outliers at 1.0 percent of total payments using a multiple threshold of
1.75 and a fixed-dollar threshold of $1,800.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 45 shows the total number of
providers (4,181), including cancer and children's hospitals and CMHCs
for which we were able to use CY 2007 hospital outpatient claims to
model CY 2008 and CY 2009 payments by classes of hospitals. We excluded
all hospitals for which we could not accurately estimate CY 2008 or CY
2009 payment and entities that are not paid under the OPPS. The latter
entities include CAHs, all-inclusive hospitals, and hospitals located
in Guam, the U.S. Virgin Islands, Northern Mariana Islands, American
Samoa, and the State of Maryland. This process is discussed in greater
detail in section II.A. of this proposed rule. At this time, we are
unable to calculate a disproportionate share (DSH) variable for
hospitals not participating in the IPPS. Hospitals for which we do not
have a DSH variable are grouped separately and generally include
psychiatric hospitals, rehabilitation hospitals, and LTCHs. We show the
total number (3,902) of OPPS hospitals, excluding the hold-harmless
cancer and children's hospitals, and CMHCs, on the second line of the
table. We excluded cancer and children's hospitals because section
1833(t)(7)(D) of the Act permanently holds harmless cancer hospitals
and children's hospitals to a proportion of their pre-BBA payment
relative to their pre-BBA costs and, therefore, we removed them from
our impact analyses. We show the isolated impact on 218 CMHCs in the
last row of the impact table and discuss that impact separately below.
Column 2: APC Changes Due to Reassignment and Recalibration
This column shows the combined effects of proposed reconfiguration,
recalibration, and other policies (such as composite payment for
multiple imaging procedures performed on the same day, payment for
drugs at ASP+4 percent, and changes in payment for PHP services). In
many cases, the redistribution created by the reduction in the PHP
payment offsets other recalibration losses. Specifically, the reduction
in PHP payment is redistributed to hospitals and reflected in the 0.4
percent increase for the 3,902 hospitals that remain after excluding
hospitals held harmless and CMHCs. Overall, these proposed changes
would increase payments to urban hospitals by 0.4 percent. We estimate
that large urban hospitals would see an increase of 0.4 percent and
other urban hospitals would see a 0.5 percent increase in payments, all
attributable to recalibration.
Overall, rural hospitals would show a 0.5 percent increase as a
result of proposed changes to the APC structure. With the money
redistributed from PHP services, rural hospitals of all bed sizes would
experience no change or would experience increases ranging from 0.4 to
0.7 percent.
Among teaching hospitals, the largest observed impacts resulting
from APC recalibration include an increase of 0.6 percent for major
teaching hospitals and an increase of 0.4 percent for minor teaching
hospitals.
Classifying hospitals by type of ownership suggests that
proprietary hospitals would see an increase of 0.3 percent,
governmental hospitals would see an increase of 0.4 percent, and
voluntary hospitals would see an increase of 0.5 percent.
We note also that both low volume urban and rural hospitals with
less than 5,000 lines and hospitals for which DSH payments are not
available would experience decreases of 0.2 to 6.2 percent as a result
of the decline in payment for PHP services and the proposed change in
payment policy for PHP services from one per diem rate in CY 2008 to
two per diem rates in CY 2009.
Column 3: New Wage Indices and the Effect of the Rural Adjustment
This column estimates the impact of applying the proposed FY 2009
IPPS wage indices for the CY 2009 OPPS. Overall, these proposed changes
would not change the payments to urban or rural hospitals.
Among teaching hospitals, the largest observed impact resulting
from proposed changes to the wage indices is a decrease of 0.1 percent
for major teaching hospitals in contrast to no change for minor
teaching hospitals. Classifying hospitals by type of ownership suggests
that proprietary hospitals would gain 0.1 percent, governmental
hospitals would see an increase of 0.2 percent, and voluntary hospitals
would experience no change.
We estimate that the combination of updated wage data from FY 2005
cost reports and statewide application of rural floor budget neutrality
redistributes payment among regions. Both rural and urban areas in New
England and the Middle Atlantic states experience declines up to 2.0
percent. The Central regions (excluding the East North Central regions)
and the Pacific regions of the country experience increases up to 0.5
percent. Change in Puerto Rico's wage data contributes to the decrease
of 0.8 percent.
Column 4: All Proposed Budget Neutrality Changes and Market Basket
Update
With the exception of urban hospitals with the lowest volume of
services and hospitals not paid under the IPPS, including psychiatric
hospitals, rehabilitation hospitals, and long term care hospitals (DSH
not available), the addition of the proposed market basket update of
3.0 percent mitigates any negative impacts on proposed payments for CY
2009 created by the budget neutrality adjustments made in Columns 2 and
3. In general, all hospitals would see an increase of 3.4 percent,
attributable to the proposed 3.0 percent market basket increase and the
0.4 percent increase in payment weight created by the reduction in
payment for PHP services that is then redistributed to other services.
Overall, these proposed changes would increase payments to urban
hospitals by 3.4 percent. We estimate that large urban hospitals would
see an increase of 3.3 percent and other urban hospitals would see a
3.6 percent increase. In contrast, small urban hospitals that bill
fewer than 5,000 lines per year would experience a decrease in payment
of 1.0 percent, largely as a result of the decrease in payment for PHP
and mental health services appearing in Column 2.
Overall, rural hospitals would show a 3.5 percent increase as a
result of the proposed market basket update. Rural hospitals that bill
less than 5,000 lines would see a 3.5 percent increase. Increases in
payment due to the proposed wage index modestly offset the reduction in
payment for PHP services in low volume rural hospitals.
[[Page 41558]]
Rural hospitals that bill more than 5,000 lines would experience
increases of 2.7 to 3.6 percent.
Among teaching hospitals, the observed impacts resulting from the
proposed market basket update include an increase of 3.4 percent for
both major and minor teaching hospitals.
Classifying hospitals by type of ownership suggests that
proprietary hospitals would increase 3.3 percent, governmental
hospitals would increase 3.6 percent, and voluntary hospitals would
experience an increase of 3.4 percent.
Column 5: All Proposed Changes for CY 2009
Column 5 compares all proposed changes for CY 2009 to final payment
for CY 2008 and includes the expiring section 508 reclassification wage
indices, the change in the outlier threshold, and the difference in
pass-through estimates which are not included in the combined
percentages shown in Column 4. Overall, we estimate that providers
would see an increase of 3.2 percent under this proposed rule in CY
2009 relative to total spending in CY 2008. The projected 3.2 percent
increase for all providers in Column 5 reflects the proposed 3.0
percent market basket increase, plus 0.02 percent for the proposed
change in the pass-through estimate between CY 2008 and CY 2009, plus
0.24 percent for the difference in estimated outlier payments between
CY 2008 (0.76 percent) and CY 2009 (1.0 percent), less 0.09 percent for
the expired section 508 wage payments. When we exclude cancer and
children's hospitals (which are held harmless to their pre-OPPS costs)
and CMHCs, the gain would be 3.6 percent.
The combined effect of all proposed changes for CY 2009 would
increase payments to urban hospitals by 3.6 percent. We estimate that
large urban hospitals would see a 3.5 percent increase, while ``other''
urban hospitals would experience an increase of 3.6 percent. Urban
hospitals that bill less than 5,000 lines would experience a decrease
of 1.0 percent.
Overall, rural hospitals would show a 3.6 percent increase as a
result of the combined effects of all proposed changes for CY 2009.
Rural hospitals that bill less than 5,000 lines would experience an
increase of 4.0 percent, which is greater than the 3.5 percent increase
in Column 4. All rural hospitals that bill greater than 5,000 lines
would experience increases ranging from 2.9 percent to 3.7 percent.
Among teaching hospitals, the largest observed impacts resulting
from the combined effects of all proposed changes include an increase
of 3.9 percent for major teaching hospitals and an increase of 3.5
percent for minor teaching hospitals.
Classifying hospitals by type of ownership suggests that
proprietary hospitals would gain 3.4 percent, governmental hospitals
would experience an increase of 3.9 percent, and voluntary hospitals
would experience an increase of 3.5 percent.
4. Estimated Effects of This Proposed Rule on CMHCs
The last row of the impact analysis in Table 45 demonstrates the
impact on CMHCs. We modeled this impact assuming that CMHCs would
continue to provide the same number of days of PHP care, with each day
having either three services or four or more services, as seen in the
CY 2007 claims data. Using these assumptions, there would be a 33.2
percent decrease in payments to CMHCs due to these proposed APC policy
changes (shown in Column 2). Column 3 shows that the CY 2009 proposed
wage index updates account for a small decrease in payments to CMHCs
(0.2 percent). We note that all providers paid under the OPPS,
including CMHCs, receive a 3.0 percent market basket increase (shown in
Column 4). Combining this market basket increase, along with proposed
changes in APC policy for CY 2009 and the CY 2009 wage index updates,
the combined impact on CMHCs for CY 2009 is a 30.3 percent decrease.
We anticipate that CMHCs would change their behavior in response to
the CY 2009 proposed payment rates for PHP services, consistent with
patient need. By providing one additional qualifying partial
hospitalization service, CMHCs would qualify for payment of proposed
APC 0173 (Level II Partial Hospitalization payment (4 or more
services)), whose proposed payment rate is approximately $174, rather
than proposed APC 0172 (Level I Partial Hospitalization payment rate (3
services)), whose proposed payment rate is approximately $140. This
change in behavior would lessen the impact on CMHCs in CY 2009.
Using the CY 2007 CMHC claims data, there are a large number of
days provided by CMHCs with only 3 services furnished in a given day
(nearly 1 million days billed by CMHCs were for 3 units of service). If
CMHCs were to provide 1 additional service on 50 percent of those 1
million days with 3 services, we estimate that the impact on CY 2009
payment to CMHCs would be a 26.8 percent decrease rather than a 33.2
percent decrease (which is the decrease due to proposed APC changes,
while keeping the number of days with 3 services the same as reflected
in CY 2007 claims data). Continuing to use the assumption that 50
percent of CMHC days would qualify for the Level II PHP payment rate,
we estimate that the combined impact including all changes (market
basket increase, proposed changes in APC policy for CY 2009, and CY
2009 wage index updates), on CMHCs for CY 2009 would be approximately a
24.7 percent decrease in payment.
We believe that CMHCs may provide additional services on days in
excess of the 50 percent of current 3 service days assumed in the
scenario described above, behavior which would further mitigate the
estimated decrease in payments to CMHCs. Furthermore, we note that
there are approximately 40,000 days billed by CMHCs in CY 2007 with
only 1 or 2 PHP services. The impact analysis shown in Table 45 is
modeled assuming that those days would not receive any payment, in
accordance with our proposed policy to deny payment for days with less
than three services. However, we anticipate that CMHCs would also
change their behavior in response to our proposed policy to deny
payment for days with less than three services, to the extent providing
additional services is consistent with the plan of care established by
each patient's physician. This change in behavior would mitigate
modeled payment reductions to CMHCs because additional days would
qualify for proposed new APC 0172.
BILLING CODE 4120-01-P
[[Page 41559]]
[GRAPHIC] [TIFF OMITTED] TP18JY08.668
[[Page 41560]]
[GRAPHIC] [TIFF OMITTED] TP18JY08.669
[[Page 41561]]
[GRAPHIC] [TIFF OMITTED] TP18JY08.670
BILLING CODE 4120-01-C
5. Estimated Effect of This Proposed Rule on Beneficiaries
For services for which the beneficiary pays a copayment of 20
percent of the payment rate, the beneficiary share of payment would
increase for services for which the OPPS payments would rise and would
decrease for services for which the OPPS payments would fall. For
example, for a service assigned to Level IV Needle Biopsy/Aspiration
Except Bone Marrow (APC 0037) in the CY 2008 OPPS, the national
unadjusted copayment was $228.76, and the minimum unadjusted copayment
was $172.95. For CY 2009, the proposed national unadjusted copayment
for APC 0037 is $228.76, the same national unadjusted copayment in
effect for CY 2008. The proposed minimum unadjusted copayment for APC
0037 is $177.69, or 20 percent of the proposed national unadjusted
payment rate for APC 0037 of $888.42 for CY 2009. The proposed minimum
unadjusted copayment would rise because the proposed payment rate for
APC 0037 would rise for CY 2009. In all cases, the statute limits
beneficiary liability for copayment for a service to the inpatient
hospital deductible for the applicable year. The CY 2009 inpatient
deductible is not yet available.
In order to better understand the impact of proposed changes in
copayment on beneficiaries, we modeled the percent change in total
copayment liability using CY 2007 claims. We estimate, using the claims
of the 4,181 hospitals and CMHCs on which our modeling is based, that
total beneficiary liability for copayments would decline as an overall
percentage of total payments from 24.9 percent in CY 2008 to 23.1
percent in CY 2009. This estimated decline in beneficiary liability is
a consequence of the APC recalibration and reconfiguration we are
proposing for CY 2009.
6. Conclusion
The proposed changes in this proposed rule would affect all classes
of hospitals. Some classes of hospitals would experience significant
gains and others less significant gains, but almost all classes of
hospitals would experience positive updates in OPPS payments in CY
2009. Table 45 demonstrates the estimated distributional impact of the
OPPS budget neutrality requirements that results in a 3.2 percent
increase in payments for CY 2009, after considering all proposed
changes to APC reconfiguration and recalibration, as well as the
proposed market basket increase, wage index changes, estimated payment
for outliers, and proposed changes to the pass-through payment
estimate. The accompanying discussion, in combination with the rest of
this proposed rule, constitutes a regulatory impact analysis.
[[Page 41562]]
7. Accounting Statement
As required by OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004a-4.pdf), in Table 46, we have
prepared an accounting statement showing the CY 2009 estimated hospital
OPPS incurred benefit impact associated with the proposed CY 2009
hospital outpatient market basket update shown in this proposed rule,
based on the 2008 Trustees' Report baseline. All estimated impacts are
classified as transfers.
Table 46.--Accounting Statement: CY 2009 Estimated Hospital OPPS
Incurred Benefit Impact Associated With the Proposed CY 2009 Hospital
Outpatient Market Basket Update
[In billions]
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $0.6.
From Whom to Whom...................... Federal Government to
outpatient hospitals and other
providers who received payment
under the hospital OPPS.
--------------------------------
Total.............................. $0.6.
------------------------------------------------------------------------
C. Effects of Proposed ASC Payment System Changes in This Proposed Rule
On August 2, 2007, we published in the Federal Register the final
rule for the revised ASC payment system, effective January 1, 2008 (72
FR 42470). In that final rule, we: Adopted the methodologies to set
payment rates for covered ASC services to implement the revised payment
system so that it would be designed to result in budget neutrality as
required by section 626 of Public Law 108-173; established that the
OPPS relative payment weights would be the basis for payment and that
we would update the system annually as part of the OPPS rulemaking
cycle; and provided that the revised ASC payment rates would be phased
in over four years. During the 4-year transition to full implementation
of the revised ASC rates, payments for surgical procedures paid in ASCs
in CY 2007 will be made using a blend of the CY 2007 ASC payment rate
and the revised ASC payment rate for that calendar year. In CY 2009, we
are proposing to pay ASCs using a 50/50 blend, in which payment would
be calculated by adding 50 percent of the CY 2007 ASC rate for a
surgical procedure on the CY 2007 ASC list of covered surgical
procedures and 50 percent of the CY 2009 revised ASC rate for the same
procedure. For CY 2010, we would transition the blend to a 25/75 blend
of the CY 2007 ASC rate and the revised ASC payment rate. Beginning in
CY 2011, we would pay ASCs for all covered surgical procedures,
including those on the CY 2007 ASC list, at the full revised ASC
payment rates. Payment for procedures that were not included on the ASC
list of covered surgical procedures in CY 2007 are not subject to the
transitional payment methodology.
ASC payment rates are calculated by multiplying the ASC conversion
factor by the ASC relative payment weight. As discussed fully in
section XV. of this proposed rule, we set the CY 2009 proposed ASC
relative payment weights by scaling unadjusted CY 2009 ASC relative
payment weights by the ASC scaler of 0.9753. These weights take into
consideration the 50/50 blend for the second year of transitional
payment for certain services. If there were no transition, the scaler
for CY 2009 fully implemented payment rates would be 0.9412. The
estimated effects on payment rates during this transitional period are
varied and are reflected in the estimated payments displayed in Tables
47 and 48 below.
The proposed CY 2009 ASC conversion factor was calculated by
adjusting the CY 2008 ASC conversion factor to account for changes in
the pre-floor and pre-reclassified hospital wage indices between CY
2008 and CY 2009. Under section 1833(i)(2)(C)(iv) of the Act, there is
no inflation update to the ASC conversion factor for CY 2009. The
proposed CY 2009 ASC conversion factor is $41.384.
1. Alternatives Considered
Alternatives to the changes we are making and the reasons that we
have chosen the options are discussed throughout this proposed rule.
a. Office-Based Procedures
According to our final policy for the revised ASC payment system,
we designate as office-based those procedures that are added to the ASC
list of covered surgical procedures in CY 2008 or later years and that
we determine are usually performed in physicians' offices based on
consideration of the most recent available volume and utilization data
for each individual procedure code and/or, if appropriate, the clinical
characteristics, utilization, and volume of related codes. We establish
payment for procedures designated as office-based at the lesser of the
MPFS nonfacility PE RVU amount or the ASC rate developed according to
the standard methodology of the revised ASC payment system.
In developing this proposed rule, we reviewed the newly available
CY 2007 utilization data for all surgical procedures added to the ASC
list of covered surgical procedures in CY 2008 and for those procedures
for which the office-based designation is temporary in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66840 through 66841).
Based on that review, and as discussed in section XV.C.1.b. of this
proposed rule, we are proposing to newly designate five surgical
procedures as office-based, with four of those designations as
permanent. We considered two alternatives in developing this policy.
The first alternative we considered was to make no change to the
procedure payment designations. This would mean that we would continue
to pay for the five procedures we are proposing to designate as office-
based at an ASC payment rate developed according to the standard
methodology of the revised ASC payment system. We did not select this
alternative because our analysis of data for these services and related
procedures indicated that the five procedures we are proposing to
designate as office-based could be considered to be usually performed
in physicians' offices. Consistent with our final policy adopted in the
August 2, 2007 revised ASC payment system final rule (72 FR 42509), we
were concerned that if these services were not designated as office-
based, their ASC payment could create financial incentives for the
procedures to shift from physicians' offices to ASCs for reasons
unrelated to clinical decisions regarding the most appropriate setting
for surgical care.
[[Page 41563]]
The second alternative we considered, and the alternative we
selected, is to propose to designate five additional procedures added
to the ASC list of covered surgical procedures in CY 2008 as office-
based for CY 2009. We selected this alternative because our claims data
indicate that these procedures could be considered to be usually
performed in physicians' offices. We believe that designating these
procedures as office-based, which results in the ASC payment rate for
these procedures potentially being capped at the physician's office
rate (that is, the MPFS nonfacility PE RVU amount), if applicable, is
an appropriate step to ensure that Medicare payment policy does not
create financial incentives for such procedures to shift unnecessarily
from physicians' offices to ASCs, consistent with our final policy
adopted in the August 2, 2007 revised ASC payment system final rule.
b. Covered Surgical Procedures
According to our final policy for the revised ASC payment system,
we designate as covered surgical procedures all surgical procedures
that we determine do not pose a significant risk to beneficiary safety
or are not expected to require an overnight stay.
In developing this proposed rule, we reviewed the clinical
characteristics and newly available CY 2007 utilization data, if
applicable, for all procedures reported by Category III CPT codes
implemented July 1, 2008 and surgical procedures that were excluded
from ASC payment for CY 2008. Based on that review, we identified nine
surgical procedures that meet the criteria for inclusion on the ASC
list of covered surgical procedures and we are proposing to add those
procedures to the list for CY 2009 payment. We considered two
alternatives in developing this policy.
The first alternative we considered was to make no change to the
ASC list of covered surgical procedures. We did not select this
alternative because our analysis of data for these services and related
procedures indicated that the nine procedures we are proposing to
designate as covered surgical procedures for CY 2009 may be safely
provided to beneficiaries in ASCs and are not expected to require an
overnight stay. Consistent with our final policy, we were concerned
that if these services were not designated as ASC covered surgical
procedures, beneficiaries would lack access to these services in the
most clinically appropriate setting.
The second alternative we considered, and the alternative we
selected, is to propose to designate nine additional procedures as ASC
covered surgical procedures for CY 2009. We selected this alternative
because our claims data indicate that these procedures do not pose a
significant risk to beneficiary safety and are not expected to require
an overnight stay, and thus they meet the criteria for inclusion on the
list of ASC covered surgical procedures. We believe that adding these
procedures to the list of covered surgical procedures is an appropriate
step to ensure that beneficiary access to services is not limited
unnecessarily.
2. Limitations of Our Analysis
Presented here are the estimated effects of the proposed changes
for CY 2009 on Medicare payment to ASCs. A key limitation of our
analysis is our inability to predict changes in ASC service-mix between
CY 2007 and CY 2009 with precision. The aggregate impacts displayed in
Tables 47 and 48 below are based upon a methodology that assumes no
changes in service-mix with respect to the CY 2007 ASC data used for
this proposed rule. In addition, data on services that are newly
payable under the revised ASC payment system are not yet reflected in
the available claims data. We believe that the net effect on Medicare
expenditures resulting from the CY 2009 changes will be negligible in
the aggregate. However, such changes may have differential effects
across surgical specialty groups as ASCs adjust to payment rates. We
are unable to accurately project such changes at a disaggregated level.
Clearly, individual ASCs will experience changes in payment that differ
from the aggregated estimated impacts presented below.
3. Estimated Effects of This Proposed Rule on Payments to ASCs
Some ASCs are multispecialty facilities that perform the gamut of
surgical procedures, from excision of lesions to hernia repair to
cataract extraction; others focus on a single specialty and perform
only a limited range of surgical procedures, such as eye, digestive
system, or orthopedic procedures. The combined effect on an individual
ASC of the update to the CY 2009 payments will depend on a number of
factors including, but not limited to, the mix of services the ASC
provides, the volume of specific services provided by the ASC, the
percentage of its patients who are Medicare beneficiaries, and the
extent to which an ASC will choose to provide different services in the
coming year. The following discussion presents tables that provide
estimates of the impact of the proposed CY 2009 update to the revised
ASC payment system on Medicare payments to ASCs, assuming the same mix
of services as reflected in our CY 2007 claims data. Table 47 depicts
the estimated aggregate percent change in payment by surgical specialty
group and Table 48 shows a comparison of payment for procedures that we
estimate would receive the most Medicare payment in CY 2008.
Table 47 shows the expected effects on aggregate Medicare payments
under the revised ASC payment system by surgical specialty group. We
have aggregated the surgical HCPCS codes by specialty group and
estimated the effect on aggregated payment for surgical specialty
groups, considering separately the CY 2009 transitional rates and the
fully implemented revised ASC payment rates that would apply in CY 2009
if there were no transition. The groups are sorted for display in
descending order by estimated Medicare program payment to ASCs for CY
2008. The following is an explanation of the information presented in
Table 47.
Column 1--Surgical Specialty Group indicates the surgical
specialties into which ASC procedures are grouped. We used the CPT code
range definitions and Level II HCPCS codes and Category III CPT codes,
as appropriate, to account for all surgical procedures to which the
Medicare program payments are attributed.
Column 2--Estimated CY 2008 ASC Payments were calculated
using CY 2007 ASC utilization (the most recent full year of ASC
utilization) and CY 2008 ASC payment rates. The surgical specialty
groups are displayed in descending order based on estimated CY 2008 ASC
payments.
Column 3--Estimated CY 2009 Percent Change with Transition
(50/50 Blend) is the aggregate percentage increase or decrease,
compared to CY 2008, in Medicare program payment to ASCs for each
surgical specialty group that is attributable to proposed updates to
the ASC payment rates for CY 2009 under the scaled, 50/50 blend of the
CY 2007 ASC payment rate and the proposed CY 2009 revised ASC payment
rate.
Column 4--Estimated CY 2009 Percent Change without
Transition (Fully Implemented) is the aggregate percentage increase or
decrease in Medicare program payment to ASCs for each surgical
specialty group that is attributable to proposed updates to ASC payment
rates for CY 2009 compared to CY 2008 if there were no transition
period to the revised payment rates. We used a different relative
payment weight scaler to model the estimated CY 2009 ASC payment
effects as a result of ASC
[[Page 41564]]
rates without the transition than we did for the proposed CY 2009 ASC
payment rates with the transition. The percentages appearing in Column
4 are presented only as comparisons to the percentage changes under the
transition policy in column 3. We are not proposing to eliminate or
modify the transition that was finalized in the August 2, 2007 revised
ASC payment system final rule (72 FR 42519).
As seen in Table 47, the proposed update to ASC rates for CY 2009
is expected to result in small aggregate decreases in payment amounts
for eye and ocular adnexa and nervous system procedures and somewhat
greater decreases for digestive system procedures. As shown in column 4
in the table, those payment decreases would be expected to be greater
in CY 2009 if there were no transitional payment for all three of those
surgical specialty groups.
Generally, for the surgical specialty groups that account for less
ASC utilization and spending, the expected payment effects of the CY
2009 update are positive. ASC payments for procedures in those surgical
specialties are expected to increase in CY 2009 with the 50/50
transitional payment rates and, in the absence of the transition, would
be expected to increase even more. For instance, in the aggregate,
integumentary system procedures are expected to increase by 7 percent
under the proposed CY 2009 rates and by 19 percent if there were no
transition. Similar effects are observed for genitourinary,
cardiovascular, musculoskeletal, respiratory, and auditory system
procedures as well. An estimated increase in aggregate payment for the
specialty group does not mean that all procedures in the group would
experience increased payment rates. For example, the estimated
increased payments at the surgical specialty group level may be due to
decreased payments for some of the most frequently provided procedures
in the group and the moderating effect of the sometimes substantial
payment increases for the less frequently performed procedures within
the surgical specialty group.
Table 47.--Estimated CY 2009 Impact of the Revised ASC Payment System on Estimated Aggregate CY 2009 Medicare
Program Payments Under the 50/50 Transition Blend and Without a Transition, by Surgical Specialty Group
----------------------------------------------------------------------------------------------------------------
Estimated CY
Estimated CY Estimated CY 2009 percent
2008 ASC 2009 percent change without
Surgical specialty group payments (in change with transition
millions) transition (50/ (fully
50 blend) implemented)
(1) (2) (3) (4)
----------------------------------------------------------------------------------------------------------------
Eye and ocular adnexa........................................ $1,373 -1 -2
Digestive system............................................. 742 -6 -16
Nervous system............................................... 321 -3 -8
Musculoskeletal system....................................... 217 19 54
Integumentary system......................................... 87 7 19
Genitourinary system......................................... 86 11 29
Respiratory system........................................... 22 13 38
Cardiovascular system........................................ 14 16 45
Auditory system.............................................. 5 18 46
----------------------------------------------------------------------------------------------------------------
Table 48 below shows the estimated impact of the proposed updates
to the revised ASC payment system on aggregate ASC payments for
selected procedures during CY 2009 with and without the transitional
blended rate. The table displays 30 of the procedures estimated to be
responsible for the greatest estimated CY 2008 aggregate Medicare
payments to ASCs. The HCPCS codes are sorted in descending order by
estimated program payment.
Column 1--HCPCS code.
Column 2--Short Descriptor of the HCPCS code.
Column 3--Estimated CY 2008 ASC Payments were calculated
using CY 2007 ASC utilization (the most recent full year of ASC
utilization) and the CY 2008 ASC payment rates. The estimated CY 2008
payments are expressed in millions of dollars.
Column 4--CY 2009 Percent Change with Transition (50/50
Blend) reflects the percent differences between the estimated ASC
payment for CY 2008 and the estimated payment for CY 2009 based on the
proposed update, incorporating a 50/50 blend of the CY 2007 ASC payment
rate and the proposed CY 2009 revised ASC payment rate.
Column 5--CY 2009 Percent Change without Transition (Fully
Implemented) reflects the percent differences between the estimated ASC
payment for CY 2008 and the estimated payment for CY 2009 based on the
proposed update if there were no transition period to the fully
implemented revised payment rates. We used a different relative payment
weight scaler to model the estimated CY 2009 ASC payment effects as a
result of ASC rates without the transition than we did for the proposed
CY 2009 ASC payment rates with the transition. The percentages
appearing in Column 5 are presented as a comparison to the percentage
changes under the transition policy in Column 4. We are not proposing
to eliminate or modify the transition that was finalized in the August
2, 2007 revised ASC payment system final rule (72 FR 42519).
As displayed in Table 48, 23 of the 30 procedures with the greatest
estimated aggregate CY 2008 Medicare payment are included in the three
surgical specialty groups that are estimated to account for the most
Medicare payment in CY 2008, specifically eye and ocular adnexa,
digestive system, and nervous system groups. Consistent with the
estimated payment effects on the surgical specialty groups displayed in
Table 47, the estimated effects of the proposed CY 2009 update on ASC
payment for individual procedures in year 2 of the transition are
varied. Aggregate ASC payments for many of the most frequently
furnished ASC procedures are expected to decrease as the transition
causes individual procedure payments to reflect relative ASC payment
weights that are more closely aligned with the relativity of payments
under the OPPS.
The procedure for which the most Medicare ASC payment is estimated
to
[[Continued on page 41565]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41565-41614]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 41564]]
[[Page 41565]]
be made in CY 2008 is the cataract removal procedure reported with CPT
code 66984 (Extracapsular cataract removal with insertion of
intraocular lens prosthesis (one stage procedure), manual or mechanical
technique (e.g., irrigation and aspiration or phacoemulsification)).
The proposed update to the ASC rates is expected to result in a 1
percent payment decrease for that procedure in CY 2009. The estimated
payment effects on the four other high volume eye and ocular adnexa
procedures included in that table are slightly positive and negative,
but for CPT code 66821 (Discission of secondary membranous cataract
(opacified posterior lens capsule and/or anterior hyaloid); laser
surgery (e.g., YAG laser) (one or more stages)), the expected CY 2009
payment decrease is 10 percent, significantly greater than the
decreases expected for any of the other eye and ocular adnexa
procedures shown.
The proposed transitional payment rates for 8 of the 9 digestive
system procedures included in Table 48 are expected to decrease by 6 to
9 percent in CY 2009. Those estimated decreases are consistent with the
estimated 6 percent reduction shown in Table 47 for the digestive
system surgical specialty group.
The 10 nervous system procedures for which the most Medicare
payment is estimated to be made to ASCs in CY 2008 are included in
Table 48. The proposed CY 2009 update is expected to result in 4
percent payment decreases for 5 of those procedures and result in even
more substantial decreases, 19 percent and 22 percent respectively, for
CPT code 64484 (Injection, anesthetic agent and /or steroid,
transforaminal epidural; lumbar or sacral, each additional level) and
CPT code 64476 (Injection, anesthetic agent and/or steroid,
paravertebral facet joint or facet joint nerve; lumbar or sacral, each
additional level). The other three nervous system procedures included
in the table are expected to realize payment increases, especially CPT
code 64721 (Neuroplasty and/or transposition; medial nerve at carpal
tunnel) for which payment is estimated to increase by 13 percent in CY
2009.
The estimated payment effects for most of the remaining procedures
listed in Table 48 are positive. For example, the CY 2009 proposed
transitional payment rate for CPT code 29826 (Arthroscopy, shoulder,
distal claviculectomy (Mumford Procedure); decompression of subacromial
space with partial acromioplasty, with or without coracoacromial
release) is estimated to increase 45 percent over the CY 2008
transitional payment amount.
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Over time, we believe that the ASC payment system has served as an
incentive to ASCs to focus on providing procedures for which they
determine Medicare payments will support ASCs' continued operation. We
note that historically, the ASC payment rates for many of the most
frequently performed procedures in ASCs were similar to the OPPS
payment rates for the same procedures. Conversely, procedures with ASC
payment rates that were substantially lower than the OPPS rates have
been performed least often in ASCs. We believe the revised ASC payment
system represents a major stride towards encouraging greater efficiency
in ASCs and promoting a significant increase in the breadth of surgical
procedures performed in ASCs because it distributes payments across the
entire spectrum of covered surgical procedures based on a coherent
system of relative payment weights that are related to the clinical and
facility resource characteristics of those procedures.
4. Estimated Effects of This Proposed Rule on Beneficiaries
We estimate that the proposed changes to the revised ASC payment
system would be generally positive for beneficiaries with respect to
the procedures newly proposed for addition to the ASC list of covered
surgical procedures and for those proposed as office-based for CY 2009.
First, except for screening colonoscopy and flexible sigmoidoscopy
procedures, the ASC coinsurance rate for all procedures is 20 percent.
This contrasts with procedures performed in HOPDs, where the
beneficiary is responsible for copayments that range from 20 percent to
40 percent of the procedure payment. Second, ASC payment rates under
the revised payment system are lower than payment rates for the same
procedures under the OPPS, so the beneficiary coinsurance amount under
the ASC payment system almost always would be less than the OPPS
copayment amount for the same services. (The only exceptions would be
when the ASC coinsurance amount exceeds the inpatient deducible. The
statute requires that copayment amounts under the OPPS not exceed the
inpatient deductible.) For those procedures newly proposed for addition
to the ASC list of covered surgical procedures in CY 2009
[[Page 41567]]
that would migrate from the HOPD to the ASC, the beneficiary
coinsurance amount would be less than the OPPS copayment amount.
Furthermore, these proposed additions to the list would provide
beneficiaries access to more surgical procedures in ASCs. Beneficiary
coinsurance for services migrating from physicians' offices to ASCs may
decrease or increase under the revised ASC payment system, depending on
the particular service and the relative payment amounts for that
service in the physician's office compared to the ASC. However, for
those procedures newly proposed for designation as office-based in CY
2009, the beneficiary coinsurance amount would be no greater than the
beneficiary coinsurance in the physician's office.
In addition, as finalized in the August 2, 2007, revised ASC
payment system final rule (72 FR 42520), in CY 2009, the second year of
the 4 year transition to the ASC payment rates calculated according to
the standard methodology of the revised ASC payment system, ASC payment
rates for a number of commonly furnished ASC procedures would continue
to be reduced, resulting in lower beneficiary coinsurance amounts for
these ASC services in CY 2009. Continued migration of procedures
currently on the list of ASC covered surgical procedures from the HOPD
to the ASC would also reduce beneficiary liability for these services,
for the two reasons described above with respect to the proposed new
ASC covered services.
5. Conclusion
The updates to the ASC payment system for CY 2009 will affect each
of the approximately 5,300 ASCs currently approved for participation in
the Medicare program. The effect on an individual ASC will depend on
its mix of patients, the proportion of the ASC's patients that are
Medicare beneficiaries, the degree to which the payments for the
procedures offered by the ASC are changed under the revised payment
system, and the degree to which the ASC chooses to provide a different
set of procedures.
Like the OPPS, the revised ASC payment system is designed to result
in the same aggregate amount of Medicare expenditures in CY 2009 as was
estimated to be made in CY 2008. We estimate that the update to the
revised ASC payment system, including the addition of surgical
procedures to the list of covered surgical procedures, that we are
proposing for CY 2009 will have no net effect on Medicare expenditures
compared to the estimated level of Medicare expenditures in CY 2008.
6. Accounting Statement
As required by OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 49 below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the update to the CY 2009 revised ASC
payment system, based on the provisions of this proposed rule. We
estimate that Medicare payments to ASCs for CY 2009 will be about
$3.884 billion. This table provides our best estimate of Medicare
payments to providers and suppliers as a result of the proposed update
to the CY 2009 revised ASC payment system, as presented in this
proposed rule. All expenditures are classified as transfers.
Table 49.--Accounting Statement: Classification of Estimated
Expenditures From CY 2008 to CY 2009 as a Result of the CY 2009 Update
to the Revised ASC Payment System
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $0 Million.
From Whom to Whom...................... Federal Government to Medicare
Providers and Suppliers.
Annualized Monetized Transfer.......... $0 Million.
From Whom to Whom...................... Premium Payments from
Beneficiaries to Federal
Government.
------------------------------------------------------------------------
Total.............................. $0 Million
------------------------------------------------------------------------
D. Effects of Proposed Requirements for Hospital Reporting of Quality
Data for Annual Hospital Payment Update
In section XVII. of the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66871), we finalized our measures and requirements for
reporting of quality data to CMS for services furnished in hospital
outpatient settings under the CY 2009 HOP QDRP. The initial data
submission for April to June 2008 services is due to the OPPS Clinical
Warehouse by November 1, 2008 (72 FR 66871). CMS and its contractors
will provide assistance to all affected hospitals that wish to submit
data. In section XVI. of this proposed rule, we discuss our measures
and requirements for reporting of quality data to CMS for services
furnished in hospital outpatient settings under the CY 2010 HOP QDRP.
We have no previous history under the HOP QDRP to indicate the
percentage of hospitals that will submit quality data. However, for the
initial data submission, in CY 2008, 98 percent of affected hospitals
have pledged to participate. In addition, results from the RHQDAPU
program indicate that over 98 percent of IPPS hospitals submitted
quality data in the initial year of the program. We expect that
affected hospitals will participate at approximately the same rate
under the HOP QDRP. We have continued our efforts to ensure that our
CMS contractors provide assistance to all affected hospitals that wish
to submit data. Therefore, for purposes of this CY 2009 impact
analysis, we have assumed that the 98 percent of affected hospitals
that have pledged to participate will qualify for the full payment
update factor for CY 2009.
E. Executive Order 12866
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the OMB.
List of Subjects
42 CFR Part 410
Health facilities, Health professions, Laboratories, Medicare,
Rural areas, X-rays.
42 CFR Part 419
Hospitals, Medicare, Reporting and recordkeeping requirements.
For reasons stated in the preamble of this proposed rule, the
Centers for Medicare & Medicaid Services is proposing to amend 42 CFR
Chapter IV as set forth below:
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
1. The authority citation for part 410 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. Section 410.43 is amended by--
[[Page 41568]]
a. Removing the word ``and'' at the end of paragraph (a)(2).
b. Redesignating paragraph (a)(3) as paragraph (a)(4).
c. Adding a new paragraph (a)(3).
c. Adding a new paragraph (c).
The additions read as follows:
Sec. 410.43 Partial hospitalization services: Conditions and
exclusions.
(a) * * *
(3) Are furnished in accordance with a physician certification and
plan of care as specified under Sec. 424.24(e) of this chapter; and
* * * * *
(c) Partial hospitalization programs are intended for patients
who--
(1) Require 20 hours per week of therapeutic services;
(2) Are likely to benefit from a coordinated program of services
and require more than isolated sessions of outpatient treatment.
(3) Do not require 24-hour care;
(4) Have an adequate support system while not actively engaged in
the program;
(5) Have a mental health diagnosis;
(6) Are not judged to be dangerous to self or others; and
(7) Have the cognitive and emotional ability to participate in the
active treatment process and can tolerate the intensity of the partial
hospitalization program.
PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES
3. The authority citation for part 419 continues to read as
follows:
Authority: Secs. 1102, 1833(t), and 1871 of the Social Security
Act (42 U.S.C. 1302, 1395l(t), and 1395hh).
4. Section 419.41 is amended by revising paragraph (c)(4)(iv) to
read as follows:
Sec. 419.41 Calculation of national beneficiary copayment amounts
and national Medicare program payment amounts.
* * * * *
(c) * * *
(4) * * *
(iv) The copayment amount is computed as if the adjustment under
Sec. Sec. 419.43(d) and (e) (and any adjustments made under Sec.
419.43(f) in relation to these adjustments) and Sec. 419.43(h) had not
been paid.
* * * * *
5. Section 419.42 is amended by revising paragraph (e) to read as
follows:
Sec. 419.42 Hospital election to reduce insurance.
* * * * *
(e) In electing reduced coinsurance, a hospital may elect a
copayment amount that is less than that year's wage-adjusted copayment
amount for the group but not less than 20 percent of the APC payment
rate as determined under Sec. 419.32 or, in the case of payments
calculated under Sec. 419.43(h), not less than 20 percent of the APC
payment rate as determined under Sec. 419.43(h).
* * * * *
6. Section 419.43 is amended by--
a. Adding new paragraphs (d)(5) and (d)(6).
b. Adding a new paragraph (h)(4).
The additions read as follows:
Sec. 419.43 Adjustments to national program payment and beneficiary
copayment amounts.
* * * * *
(d) * * *
(5) Reconciliation. For hospital outpatient services (or groups of
services) as defined in paragraph (d)(1) of this section performed on
or after January 1, 2009--
(i) CMS may specify an alternative to the overall ancillary cost-
to-charge ratio otherwise applicable under paragraph (d)(5)(ii) of this
section. A hospital may also request that its Medicare contractor use a
different (higher or lower) cost-to-charge ratio based on substantial
evidence presented by the hospital. Such a request must be approved by
the CMS.
(ii) The overall ancillary cost-to-charge ratio applied at the time
a claim is processed is based on either the most recent settled cost
report or the most recent tentative settled cost report, whichever is
from the latest cost reporting period.
(iii) The Medicare contractor may use a statewide average cost-to-
charge ratio if it is unable to determine an accurate overall ancillary
cost-to-charge ratio for a hospital in one of the following
circumstances:
(A) A new hospital that has not yet submitted its first Medicare
cost report. (For purposes of this paragraph, a new hospital is defined
as an entity that has not accepted assignment of an existing hospital's
provider agreement in accordance with Sec. 489.18 of this chapter.)
(B) A hospital whose overall ancillary cost-to-charge ratio is in
excess of 3 standard deviations above the corresponding national
geometric mean. This mean is recalculated annually by CMS and published
in the annual notice of prospective payment rates issued in accordance
with Sec. 419.50(a).
(C) Any other hospital for whom accurate data to calculate an
overall ancillary cost-to-charge ratio are not available to the
Medicare contractor.
(iv) Any reconciliation of outlier payments will be based on an
overall ancillary cost-to-charge ratio calculated based on a ratio of
costs to charges computed from the relevant cost report and charge data
determined at the time the cost report coinciding with the service is
settled.
(6) Time value of money. Effective for services performed on or
after January 1, 2009, at the time of any reconciliation under
paragraph (d)(5)(iv) of this section, outlier payments may be adjusted
to account for the time value of any underpayments or overpayments. Any
adjustment will be based on a widely available index to be established
in advance by CMS, and will be applied from the midpoint of the cost
reporting period to the date of reconciliation.
* * * * *
(h) * * *
(4) Beneficiary copayment. The beneficiary copayment for services
to which the adjustment to the conversion factor specified under
paragraph (h)(1) of this section applies is the product of the national
beneficiary copayment amount calculated under Sec. 419.41 and the
ratio of the adjusted conversion factor calculated under paragraph
(h)(1) of this section divided by the conversion factor specified under
Sec. 419.32(b)(1).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: June 26, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: July 2, 2008.
Michael O. Leavitt,
Secretary.
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[[Continued on page 41615]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41615-41664]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
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[[Continued on page 41665]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41665-41714]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
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[[Continued on page 41715]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41715-41764]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
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-----------------------------------------------------------------------
Part II--Continued
Book 2 of 2 Books
Pages 41743-42256
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Parts 410 and 419
Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates; Proposed Rule
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[[Continued on page 41765]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41765-41814]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
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[[Continued on page 41815]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41815-41864]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
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From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41865-41914]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
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[[Continued on page 41915]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41915-41964]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
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[[Continued on page 41965]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 41965-42014]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 41964]]
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[[Continued on page 42015]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 42015-42064]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 42014]]
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[[Continued on page 42065]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 42065-42114]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 42064]]
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[[Continued on page 42115]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 42115-42164]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 42114]]
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[[Continued on page 42165]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 42165-42214]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 42164]]
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[[Continued on page 42215]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 42215-42234]] Medicare Program: Proposed Changes to the Hospital Outpatient
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes
to the Ambulatory Surgical Center Payment System and CY 2009 Payment
Rates
[[Continued from page 42214]]
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[FR Doc. E8-15539 Filed 7-3-08; 12:00 pm]
BILLING CODE 4120-01-C