83 FR 58818 - Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs
DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services
Federal Register Volume 83, Issue 225 (November 21, 2018)
Page Range
58818-59179
FR Document
2018-24243
This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2019 to implement changes arising from our continuing experience with these systems. In this final rule with comment period, we describe the changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. In addition, we are updating the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure under the Hospital Inpatient Quality Reporting (IQR) Program by removing the Communication about Pain questions; and retaining two measures that were proposed for removal, the Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure and Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure, in the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program beginning with the FY 2021 program year.
Federal Register, Volume 83 Issue 225 (Wednesday, November 21, 2018)
[Federal Register Volume 83, Number 225 (Wednesday, November 21, 2018)]
[Rules and Regulations]
[Pages 58818-59179]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-24243]
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Vol. 83
Wednesday,
No. 225
November 21, 2018
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 416 and 419
Medicare Program: Changes to Hospital Outpatient Prospective Payment
and Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; Rules
Federal Register / Vol. 83 , No. 225 / Wednesday, November 21, 2018 /
Rules and Regulations
[[Page 58818]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 416 and 419
[CMS-1695-FC]
RIN 0938-AT30
Medicare Program: Changes to Hospital Outpatient Prospective
Payment and Ambulatory Surgical Center Payment Systems and Quality
Reporting Programs
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period revises the Medicare
hospital outpatient prospective payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment system for CY 2019 to
implement changes arising from our continuing experience with these
systems. In this final rule with comment period, we describe the
changes to the amounts and factors used to determine the payment rates
for Medicare services paid under the OPPS and those paid under the ASC
payment system. In addition, this final rule with comment period
updates and refines the requirements for the Hospital Outpatient
Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR)
Program. In addition, we are updating the Hospital Consumer Assessment
of Healthcare Providers and Systems (HCAHPS) Survey measure under the
Hospital Inpatient Quality Reporting (IQR) Program by removing the
Communication about Pain questions; and retaining two measures that
were proposed for removal, the Catheter-Associated Urinary Tract
Infection (CAUTI) Outcome Measure and Central Line-Associated
Bloodstream Infection (CLABSI) Outcome Measure, in the PPS-Exempt
Cancer Hospital Quality Reporting (PCHQR) Program beginning with the FY
2021 program year.
DATES:
Effective date: This final rule with comment period is effective on
January 1, 2019.
Comment period: To be assured consideration, comments on the
payment classifications assigned to the interim APC assignments and/or
status indicators of new or replacement Level II HCPCS codes in this
final rule with comment period must be received at one of the addresses
provided in the ADDRESSES section no later than 5 p.m. EST on December
3, 2018.
ADDRESSES: In commenting, please refer to file code CMS-1695-FC when
commenting on the issues in this final rule with comment period.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to http://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1695-FC, P.O. Box 8013, Baltimore, MD
21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1695-FC, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
b. For delivery in Baltimore, MD--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
340B Drug Payment Policy to Nonexcepted Off-Campus Departments of a
Hospital, contact Juan Cortes via email [email protected] or at
410-786-4325.
Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact
the HOP Panel mailbox at [email protected].
Ambulatory Surgical Center (ASC) Payment System, contact Scott
Talaga via email [email protected] or at 410-786-4142.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Administration, Validation, and Reconsideration Issues, contact Anita
Bhatia via email [email protected] or at 410-786-7236.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Measures, contact Vinitha Meyyur via email [email protected]
or at 410-786-8819.
Blood and Blood Products, contact Josh McFeeters via email
[email protected] or at 410-786-9732.
Cancer Hospital Payments, contact Scott Talaga via email
[email protected] or at 410-786-4142.
CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck
Braver via email [email protected] or at 410-786-6719.
CPT Codes, contact Marjorie Baldo via email
[email protected] or at 410-786-4617.
Collecting Data on Services Furnished in Off-Campus Provider-Based
Emergency Departments, contact Twi Jackson via email
[email protected] or at 410-786-1159.
Control for Unnecessary Increases in Volume of Outpatient Services,
contact Elise Barringer via email [email protected] or at
410-786-9222.
Composite APCs (Low Dose Brachytherapy and Multiple Imaging),
contact Elise Barringer via email [email protected] or at
410-786-9222.
Comprehensive APCs (C-APCs), contact Lela Strong-Holloway via email
[email protected] or at 410-786-3213.
Expansion of Clinical Families of Services at Excepted Off-Campus
Departments of a Provider, contact Juan Cortes via email
[email protected] or at 410-786-4325.
Hospital Outpatient Quality Reporting (OQR) Program Administration,
Validation, and Reconsideration Issues, contact Anita Bhatia via email
[email protected] or at 410-786-7236.
Hospital Outpatient Quality Reporting (OQR) Program Measures,
contact Vinitha Meyyur via email [email protected] or at 410-
786-8819.
Hospital Outpatient Visits (Emergency Department Visits and
Critical Care Visits), contact Twi Jackson via email
[email protected] or at 410-786-1159.
Inpatient Only (IPO) Procedures List, contact Lela Strong-Holloway
via email [email protected] or at 410-786-3213.
New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga
via email
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[email protected] or at 410-786-4142.
No Cost/Full Credit and Partial Credit Devices, contact Twi Jackson
via email [email protected] or at 410-786-1159.
OPPS Brachytherapy, contact Scott Talaga via email
[email protected] or at 410-786-4142.
OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier
Payments, and Wage Index), contact Erick Chuang via email
[email protected] or at 410-786-1816, Steven Johnson via email
[email protected] or at 410-786-3332, or Scott Talaga via
email [email protected] or at 410-786-4142.
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Josh McFeeters via email [email protected]
or at 410-786-9732.
OPPS New Technology Procedures/Services, contact the New Technology
APC email at [email protected].
OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo via
email [email protected] or at 410-786-4617.
OPPS Packaged Items/Services, contact Lela Strong-Holloway via
email [email protected] or at 410-786-3213.
OPPS Pass-Through Devices, contact the Device Pass-Through email at
[email protected].
OPPS Status Indicators (SI) and Comment Indicators (CI), contact
Marina Kushnirova via email [email protected] or at 410-
786-2682.
Partial Hospitalization Program (PHP) and Community Mental Health
Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at
[email protected].
PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
measures, contact Nekeshia McInnis via email
[email protected].
Rural Hospital Payments, contact Josh McFeeters via email
[email protected] or at 410-786-9732.
Skin Substitutes, contact Josh McFeeters via email
[email protected] or at 410-786-9732.
All Other Issues Related to Hospital Outpatient and Ambulatory
Surgical Center Payments Not Previously Identified, contact Marjorie
Baldo via email [email protected] or at 410-786-4617.
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 website as soon as possible after they have been
received: http://www.regulations.gov/. Follow the search instructions
on that website to view public comments.
Electronic Access
This Federal Register document is also available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Publishing Office. This database can be
accessed via the internet at https://www.thefederalregister.org/fdsys/.
Addenda Available Only Through the Internet on the CMS Website
In the past, a majority of the Addenda referred to in our OPPS/ASC
proposed and final rules were published in the Federal Register as part
of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC
proposed rule, all of the Addenda no longer appear in the Federal
Register as part of the annual OPPS/ASC proposed and final rules to
decrease administrative burden and reduce costs associated with
publishing lengthy tables. Instead, these Addenda are published and
available only on the CMS website. The Addenda relating to the OPPS are
available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating to the
ASC payment system are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Current Procedural Terminology (CPT) Copyright Notice
Throughout this final rule with comment period, we use CPT codes
and descriptions to refer to a variety of services. We note that CPT
codes and descriptions are copyright 2018 American Medical Association.
All Rights Reserved. CPT is a registered trademark of the American
Medical Association (AMA). Applicable Federal Acquisition Regulations
(FAR) and Defense Federal Acquisition Regulations (DFAR) apply.
Table of Contents
I. Summary and Background
A. Executive Summary of This Document
B. Legislative and Regulatory Authority for the Hospital OPPS
C. Excluded OPPS Services and Hospitals
D. Prior Rulemaking
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel
or the Panel)
F. Public Comments Received in Response to the CY 2019 OPPS/ASC
Proposed Rule
G. Public Comments Received in Response to the CY 2018 OPPS/ASC
Final Rule With Comment Period
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default Cost-to-Charge Ratios (CCRs)
E. Adjustment for Rural Sole Community Hospitals (SCHs) and
Essential Access Community Hospitals (EACHs) Under Section
1833(t)(13)(B) of the Act
F. Payment Adjustment for Certain Cancer Hospitals for CY 2019
G. Hospital Outpatient Outlier Payments
H. Calculation of an Adjusted Medicare Payment From the National
Unadjusted Medicare Payment
I. Beneficiary Copayments
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. OPPS Treatment of New CPT and Level II HCPCS Codes
B. OPPS Changes--Variations Within APCs
C. New Technology APCs
D. OPPS APC-Specific Policies
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
B. Device-Intensive Procedures
V. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Payment Status
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
VIII. Payment for Partial Hospitalization Services
A. Background
B. PHP APC Update for CY 2019
C. Outlier Policy for CMHCs
D. Proposed Update to PHP Allowable HCPCS Codes
IX. Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
B. Changes to the Inpatient Only (IPO) List
X. Nonrecurring Policy Changes
A. Collecting Data on Services Furnished in Off-Campus Provider-
Based Emergency Departments
B. Method To Control Unnecessary Increases in the Volume of
Outpatient Services
C. Application of the 340B Drug Payment Policy to Nonexcepted
Off-Campus Departments of a Hospital
D. Expansion of Clinical Families of Services at Excepted Off-
Campus Departments of a Provider
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XI. CY 2019 OPPS Payment Status and Comment Indicators
A. CY 2019 OPPS Payment Status Indicator Definitions
B. CY 2019 Comment Indicator Definitions
XII. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
B. Treatment of New and Revised Codes
C. Update to the List of ASC Covered Surgical Procedures and
Covered Ancillary Services
D. ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services
E. New Technology Intraocular Lenses (NTIOLs)
F. ASC Payment and Comment Indicators
G. Calculation of the ASC Payment Rates and the ASC Conversion
Factor
XIII. Requirements for the Hospital Outpatient Quality Reporting
(OQR) Program
A. Background
B. Hospital OQR Program Quality Measures
C. Administrative Requirements
D. Form, Manner, and Timing of Data Submitted for the Hospital
OQR Program
E. Payment Reduction for Hospitals That Fail To Meet the
Hospital OQR Program Requirements for the CY 2019 Payment
Determination
XIV. Requirements for the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program
A. Background
B. ASCQR Program Quality Measures
C. Administrative Requirements
D. Form, Manner, and Timing of Data Submitted for the ASCQR
Program
E. Payment Reduction for ASCs That Fail To Meet the ASCQR
Program Requirements
XV. Comments Received in Response to Requests for Information (RFIs)
A. Comments Received in Response to Request for Information on
Promoting Interoperability and Electronic Health Care Information
Exchange Through Possible Revisions to the CMS Patient Health and
Safety Requirements for Hospitals and Other Medicare-Participating
and Medicaid-Participating Providers and Suppliers
B. Comments Received in Response to Request for Information on
Price Transparency: Improving Beneficiary Access to Provider and
Supplier Charge Information
C. Comments Received in Response to Request for Information on
Leveraging the Authority for the Competitive Acquisition Program
(CAP) for Part B Drugs and Biologicals for a Potential CMS
Innovation Center Model
XVI. Additional Hospital Inpatient Quality Reporting (IQR) Program
Policies
XVII. Additional PPS-Exempt Cancer Hospital Quality Reporting
(PCHQR) Program Policies
A. Background
B. Retention and Removal of Previously Finalized Quality
Measures for PCHs Beginning With the FY 2021 Program Year
C. Public Display Requirements
XVIII. Files Available to the Public via the Internet
XIX. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
B. ICRs for the Hospital OQR Program
C. ICRs for the ASCQR Program
D. ICRs for the Update to the HCAHPS Survey Measure in the
Hospital IQR Program
E. Total Reduction in Burden Hours and in Costs
XX. Response to Comments
XXI. Economic Analyses
A. Statement of Need
B. Overall Impact for the Provisions of This Final Rule With
Comment Period
C. Detailed Economic Analyses
D. Effects of the Update to the HCAHPS Survey Measure in the
Hospital IQR Program
E. Effects of Requirements for the PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
F. Regulatory Review Costs
G. Regulatory Flexibility Act (RFA) Analysis
H. Unfunded Mandates Reform Act Analysis
I. Reducing Regulation and Controlling Regulatory Costs
J. Conclusion
XXII. Federalism Analysis
Regulation Text
I. Summary and Background
A. Executive Summary of This Document
1. Purpose
In this final rule with comment period, we are updating the payment
policies and payment rates for services furnished to Medicare
beneficiaries in hospital outpatient departments (HOPDs) and ambulatory
surgical centers (ASCs), beginning January 1, 2019. Section 1833(t) of
the Social Security Act (the Act) requires us to annually review and
update the payment rates for services payable under the Hospital
Outpatient Prospective Payment System (OPPS). Specifically, section
1833(t)(9)(A) 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 the wage 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. In addition, under section
1833(i) of the Act, we annually review and update the ASC payment
rates. This final rule with comment period also includes additional
policy changes made in accordance with our experience with the OPPS and
the ASC payment system. We describe these and various other statutory
authorities in the relevant sections of this final rule with comment
period. In addition, this final rule with comment period updates and
refines the requirements for the Hospital Outpatient Quality Reporting
(OQR) Program and the ASC Quality Reporting (ASCQR) Program.
In this final rule with comment period, two quality reporting
policies that impact inpatient hospitals are updated due to their time
sensitivity. In the Hospital IQR Program, we are updating the HCAHPS
Survey measure by removing the Communication about Pain questions from
the HCAHPS Survey, which are used to assess patients' experiences of
care, effective with October 2019 discharges for the FY 2021 payment
determination and subsequent years. This policy addresses public health
concerns about opioid overprescribing through patient pain management
questions that were recommended for removal in the President's
Commission on Combating Drug Addiction and the Opioid Crisis report. In
addition, we are finalizing that we will not publicly report any data
collected from the Communication Abut Pain questions--a modification
from what we proposed. We also are retaining two measures that we
proposed for removal in the PCHQR Program beginning with the FY 2021
program year, the Catheter-Associated Urinary Tract Infection (CAUTI)
Outcome Measure and Central Line-Associated Bloodstream Infection
(CLABSI) Outcome Measure. This policy impacts infection measurement and
public reporting for PPS-exempt cancer hospitals and was deferred to
this rule from the CY 2019 IPPS/LTCH PPS final rule published in August
2018.
2. Improving Patient Outcomes and Reducing Burden Through Meaningful
Measures
Regulatory reform and reducing regulatory burden are high
priorities for CMS. To reduce the regulatory burden on the healthcare
industry, lower health care costs, and enhance patient care, in October
2017, we launched the Meaningful Measures Initiative.\1\ This
initiative is one component of our agency-wide Patients Over Paperwork
Initiative,\2\ which is aimed at evaluating and streamlining
regulations with a goal
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to reduce unnecessary cost and burden, increase efficiencies, and
improve beneficiary experience. The Meaningful Measures Initiative is
aimed at identifying the highest priority areas for quality measurement
and quality improvement in order to assess the core quality of care
issues that are most vital to advancing our work to improve patient
outcomes. The Meaningful Measures Initiative represents a new approach
to quality measures that fosters operational efficiencies, and will
reduce costs including, collection and reporting burden, while
producing quality measurement that is more focused on meaningful
outcomes.
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\1\ Meaningful Measures web page: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
\2\ Remarks by Administrator Seema Verma at the Health Care
Payment Learning and Action Network (LAN) Fall Summit, as prepared
for delivery on October 30, 2017. Available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.
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The Meaningful Measures framework has the following objectives:
Address high-impact measure areas that safeguard public
health;
Patient-centered and meaningful to patients;
Outcome-based where possible;
Fulfill each program's statutory requirements;
Minimize the level of burden for health care providers;
Significant opportunity for improvement;
Address measure needs for population based payment through
alternative payment models; and
Align across programs and/or with other payers.
In order to achieve these objectives, we have identified 19
Meaningful Measures areas and mapped them to six overarching quality
priorities, as shown in the table below.
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By including Meaningful Measures in our programs, we believe that
we can also address the following cross-cutting measure criteria:
Eliminating disparities;
Tracking measurable outcomes and impact;
Safeguarding public health;
Achieving cost savings;
Improving access for rural communities; and
Reducing burden.
We believe that the Meaningful Measures Initiative will improve
outcomes for patients, their families, and health care providers while
reducing burden and costs for clinicians and providers as well as
promoting operational efficiencies.
We received numerous comments from stakeholders regarding the
Meaningful Measures Initiative and the impact of its implementation in
CMS' quality programs. Many of these comments pertained to specific
program proposals, and are discussed in the appropriate program-
specific sections of this final rule with comment period. However,
commenters also provided insights and recommendations for the ongoing
development of the Meaningful Measures Initiative generally, including:
ensuring transparency in public reporting and usability of publicly
reported data; evaluating the benefit of individual measures to
patients via use in quality programs weighed against the burden to
providers of collecting and
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reporting that measure data; and identifying additional opportunities
for alignment across CMS quality programs. We look forward to
continuing to work with stakeholders to refine and further implement
the Meaningful Measures Initiative, and will take commenters' insights
and recommendations into account moving forward.
3. Summary of the Major Provisions
OPPS Update: For CY 2019, we are increasing the payment
rates under the OPPS by an outpatient department (OPD) fee schedule
increase factor of 1.35 percent. This increase factor is based on the
final hospital inpatient market basket percentage increase of 2.9
percent for inpatient services paid under the hospital inpatient
prospective payment system (IPPS), minus the multifactor productivity
(MFP) adjustment of 0.8 percentage point, and minus a 0.75 percentage
point adjustment required by the Affordable Care Act. Based on this
update, we estimate that total payments to OPPS providers (including
beneficiary cost-sharing and estimated changes in enrollment,
utilization, and case-mix) for CY 2019 will be approximately $74.1
billion, an increase of approximately $5.8 billion compared to
estimated CY 2018 OPPS payments.
We are continuing to implement the statutory 2.0 percentage point
reduction in payments for hospitals failing to meet the hospital
outpatient quality reporting requirements, by applying a reporting
factor of 0.980 to the OPPS payments and copayments for all applicable
services.
Comprehensive APCs: For CY 2019, we are creating three new
comprehensive APCs (C-APCs). These new C-APCs include ears, nose, and
throat (ENT) and vascular procedures. This increases the total number
of C-APCs to 65.
Changes to the Inpatient Only List: For CY 2019, we are
removing four procedures from the inpatient only list and adding one
procedure to the list.
Method to Control Unnecessary Increases in Volume of
Outpatient Services: To the extent that similar services are safely
provided in more than one setting, it is not prudent for the OPPS to
pay more for such services because that leads to an unnecessary
increase in the number of those services provided in the OPPS setting.
We believe that capping the OPPS payment at the Physician Fee Schedule
(PFS)-equivalent rate is an effective method to control the volume of
the unnecessary increases in certain services because the payment
differential that is driving the site-of-service decision will be
removed. In particular, we believe this method of capping payment will
control unnecessary volume increases both in terms of numbers of
covered outpatient department services furnished and costs of those
services. Therefore, as we proposed, we are using our authority under
section 1833(t)(2)(F) of the Act to apply an amount equal to the site-
specific PFS payment rate for nonexcepted items and services furnished
by a nonexcepted off-campus provider-based department (PBD) of a
hospital (the PFS payment rate) for the clinic visit service, as
described by HCPCS code G0463, when provided at an off-campus PBD
excepted from section 1833(t)(21) of the Act. We will be phasing in the
application of the reduction in payment for code G0463 in this setting
over 2 years. In CY 2019, the payment reduction will be transitioned by
applying 50 percent of the total reduction in payment that would apply
if these departments were paid the site-specific PFS rate for the
clinic visit service. In other words, these departments will be paid 70
percent of the OPPS rate for the clinic visit service in CY 2019. In CY
2020 and subsequent years, these departments will be paid the site-
specific PFS rate for the clinic visit service. That is, these
departments will be paid 40 percent of the OPPS rate for the clinic
visit in CY 2020 and subsequent years. In addition to this proposal, we
solicited public comments on how to expand the application of the
Secretary's statutory authority under section 1833(t)(2)(F) of the Act
to additional items and services paid under the OPPS that may represent
unnecessary increases in OPD utilization. The public comment we
received will be considered for future rulemaking.
Expansion of Clinical Families of Services at
Excepted Off-Campus Provider-Based Departments (PBDs) of a Hospital:
For CY 2019, we proposed that if an excepted off-campus PBD furnished
items and services from a clinical family of services from which it did
not furnish items and services (and subsequently bill for those items
and services) during a baseline period, services from the new clinical
family of services would not be covered OPD services. Instead, services
in the new clinical family of services would be paid under the PFS.
While we are not finalizing this proposal at this time, we intend to
monitor the expansion of services in excepted off-campus PBDs.
Application of 340B Drug Payment Policy to
Nonexcepted Off-Campus Provider-Based Departments of a Hospital: For CY
2019, as we proposed, we are paying the average sales price (ASP) minus
22.5 percent under the PFS for separately payable 340B-acquired drugs
furnished by nonexcepted, off-campus provider-based departments (PBDs)
of a hospital. This is consistent with the payment methodology adopted
in CY 2018 for 340B-acquired drugs furnished in hospital departments
paid under the OPPS.
Payment Policy for Biosimilar Biological
Products without Pass-Through Status That Are Acquired under the 340B
Program: For CY 2019, we are making payment for nonpass-through
biosimilars acquired under the 340B program at ASP minus 22.5 percent
of the biosimilar's own ASP rather than ASP minus 22.5 percent of the
reference product's ASP.
Payment of Drugs, Biologicals, and
Radiopharmaceuticals If Average Sales Price (ASP) Data Are Not
Available: For CY 2019, we are making payment for separately payable
drugs and biologicals that do not have pass-through payment status and
are not acquired under the 340B Program at wholesale acquisition cost
(WAC)+3 percent instead of WAC+6 percent if ASP data are not available.
If WAC data are not available for a drug or biological product, we are
continuing our policy to pay for separately payable drugs and
biologicals at 95 percent of the average wholesale price (AWP). Drugs
and biologicals that are acquired under the 340B Program will continue
to be paid at ASP minus 22.5 percent, WAC minus 22.5 percent, or 69.46
percent of AWP, as applicable.
Device-Intensive Procedure Criteria: For CY 2019, we are
modifying the device-intensive criteria to allow procedures that
involve single-use devices, regardless of whether or not they remain in
the body after the conclusion of the procedure, to qualify as device-
intensive procedures. We also are allowing procedures with a device
offset percentage of greater than 30 percent to qualify as device-
intensive procedures.
Device Pass-Through Payment Applications: For CY 2019, we
evaluated seven applications for device pass-through payments and based
on public comments received, we are approving one of these applications
for device pass-through payment status.
New Technology APC Payment for Extremely Low-Volume
Procedures: For CY 2019 and future years, we are establishing a
different payment methodology for services assigned to New Technology
APCs with fewer than 100 claims using our equitable adjustment
authority under section 1833(t)(2)(E) of the Act. We will use a
``smoothing methodology'' based on multiple years of claims data to
[[Page 58823]]
establish a more stable rate for services assigned to New Technology
APCs with fewer than 100 claims per year under the OPPS. Under this
policy, we will calculate the geometric mean costs, the median costs,
and the arithmetic mean costs for these procedures and adopt through
our annual rulemaking the most appropriate payment rate for the service
using one of these methodologies. We will use this approach to
establish a payment rate for each low-volume service both for purposes
of assigning the service to a New Technology APC and to a clinical APC
at the conclusion of payment for the service through a New Technology
APC. In addition, we are excluding services assigned to New Technology
APCs from bundling into C-APC procedures.
Cancer Hospital Payment Adjustment: For CY 2019, we are
continuing to provide additional payments to cancer hospitals so that
the cancer hospital's payment-to-cost ratio (PCR) after the additional
payments is equal to the weighted average PCR for the other OPPS
hospitals using the most recently submitted or settled cost report
data. However, section 16002(b) of the 21st Century Cures Act requires
that this weighted average PCR be reduced by 1.0 percentage point.
Based on the data and the required 1.0 percentage point reduction, we
are providing that a target PCR of 0.88 will be used to determine the
CY 2019 cancer hospital payment adjustment to be paid at cost report
settlement. That is, the payment adjustments will be the additional
payments needed to result in a PCR equal to 0.88 for each cancer
hospital.
Rural Adjustment: For 2019 and subsequent years, we are
continuing the 7.1 percent adjustment to OPPS payments for certain
rural SCHs, including essential access community hospitals (EACHs). We
intend to continue the 7.1 percent adjustment for future years in the
absence of data to suggest a different percentage adjustment should
apply.
Ambulatory Surgical Center (ASC) Payment Update: For CYs
2019 through 2023, we are updating the ASC payment system using the
hospital market basket update instead of the CPI-U. However, during
this 5-year period, we intend to examine whether such adjustment leads
to a migration of services from other settings to the ASC setting.
Using the hospital market basket methodology, for CY 2019, we are
increasing payment rates under the ASC payment system by 2.1 percent
for ASCs that meet the quality reporting requirements under the ASCQR
Program. This increase is based on a hospital market basket percentage
increase of 2.9 percent minus a MFP adjustment required by the
Affordable Care Act of 0.8 percentage point.
Based on this update, we estimate that total payments to ASCs
(including beneficiary cost-sharing and estimated changes in
enrollment, utilization, and case-mix) for CY 2019 will be
approximately $4.85 billion, an increase of approximately $200 million
compared to estimated CY 2018 Medicare payments to ASCs. We note that
the CY 2019 ASC payment update, under our prior policy, would have been
1.8 percent, based on a projected CPI-U update of 2.6 percent minus a
MFP adjustment required by the Affordable Care Act of 0.8 percentage
point. In addition, we will continue to assess the feasibility of
collaborating with stakeholders to collect ASC cost data in a minimally
burdensome manner for future policy development.
Changes to the List of ASC Covered Surgical Procedures:
For CY 2019, we are revising our definition of ``surgery'' in the ASC
payment system to account for certain ``surgery-like'' procedures that
are assigned codes outside the Current Procedural Terminology (CPT)
surgical range. In addition, as we proposed, we are adding 12 cardiac
catheterization procedures, and, in response to public comments, an
additional 5 related procedures to the ASC covered procedures list. At
this time, we are not finalizing our proposal to establish an
additional review of recently added procedures to the ASC covered
procedures list.
Payment for Non-Opioid Pain Management Therapy: For CY
2019, in response to the recommendation from the President's Commission
on Combating Drug Addiction and the Opioid Crisis, we are changing the
packaging policy for certain drugs when administered in the ASC setting
and providing separate payment for non-opioid pain management drugs
that function as a supply when used in a surgical procedure when the
procedure is performed in an ASC.
Hospital Outpatient Quality Reporting (OQR) Program: For
the Hospital OQR Program, we are making changes effective with this
final rule with comment period and for the CY 2019, CY 2020, and CY
2021 payment determinations and subsequent years. Effective on the
effective date of this final rule with comment period, we are codifying
several previously established policies: to retain measures from a
previous year's Hospital OQR Program measure set for subsequent years'
measure sets at 42 CFR 419.46(h)(1); to use the rulemaking process to
remove a measure for circumstances for which we do not believe that
continued use of a measure raises specific patient safety concerns at
42 CFR 419.46(h)(3); and to immediately remove measures as a result of
patient safety concerns at 42 CFR 419.46(h)(2). Effective on the
effective date of this final rule with comment period, we also are
updating measure removal Factor 7; adding a new removal Factor 8; and
codifying our measure removal policies and factors. We also are
providing clarification of our criteria for ``topped-out'' measures.
These changes align the Hospital OQR Program measure removal factors
with those used in the ASCQR Program.
Beginning with CY 2019, we are updating the frequency with which we
will release a Hospital OQR Program Specifications Manual, such that it
will occur every 12 months--a modification from what we proposed.
For the CY 2020 payment determination and subsequent years, we are
updating the participation status requirements by removing the Notice
of Participation (NOP) form; extending the reporting period for the OP-
32: Facility Seven-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy measure to 3 years; and removing the OP-27:
Influenza Vaccination Coverage Among Healthcare Personnel measure.
Beginning with the CY 2021 payment determination and subsequent
years, we are removing the following seven measures: OP-5: Median Time
to ECG; OP-9: Mammography Follow-up Rates; OP-11: Thorax CT Use of
Contrast Material; OP-12: The Ability for Providers with HIT to Receive
Laboratory Data Electronically Directly into Their Qualified/Certified
EHR System as Discrete Searchable Data; OP-14: Simultaneous Use of
Brain Computed Tomography (CT) and Sinus CT; OP-17: Tracking Clinical
Results between Visits; and OP-30: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a History of Adenomatous
Polyps--Avoidance of Inappropriate Use. We are not finalizing our
proposals to remove the OP-29 or OP-31 measures.
Ambulatory Surgical Center Quality Reporting (ASCQR)
Program: For the ASCQR Program, we are making changes in policies
effective with this final rule with comment period and for the CY 2019,
CY 2020, and CY 2021 payment determinations and subsequent years.
Effective on the effective date of this final rule with comment period,
we are removing one measure removal factor; adding two new measure
removal factors; and updating the regulations to better reflect our
measure removal policies. We also are making one clarification to
measure removal Factor
[[Page 58824]]
1. These changes align the ASCQR Program measure removal factors with
those used in the Hospital OQR Program.
Beginning with the CY 2020 payment determination and subsequent
years, we are extending the reporting period for the ASC-12: Facility
Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient
Colonoscopy measure to 3 years; and removing the ASC-8: Influenza
Vaccination Coverage Among Healthcare Personnel measure.
Beginning with the CY 2021 payment determination and subsequent
years, we are removing the ASC-10: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a History of Adenomatous
Polyps--Avoidance of Inappropriate Use measure. We are not finalizing
our proposals to remove the following measures: ASC-9: Endoscopy/Polyp
Surveillance Follow-up Interval for Normal Colonoscopy in Average Risk
Patients and ASC-11: Cataracts--Improvement in Patient's Visual
Function within 90 Days Following Cataract Surgery. We also are not
finalizing our proposals to remove the following measures: ASC-1:
Patient Burn; ASC-2: Patient Fall; ASC-3: Wrong Site, Wrong Side, Wrong
Patient, Wrong Procedure, Wrong Implant; and ASC-4: All-Cause Hospital
Transfer/Admission, but are retaining these measures in the ASCQR
Program and suspending data collection for them until further action in
rulemaking with the goal of revising the measures.
Hospital Inpatient Quality Reporting (IQR) Program Update:
In this final rule with comment period, we are finalizing a
modification of our proposals to update the HCAHPS Survey measure by
finalizing the removal of the Communication About Pain questions from
the HCAHPS Survey for the Hospital IQR Program, effective with October
2019 discharges for the FY 2021 payment determination and subsequent
years. In addition, instead of publicly reporting the data from October
2020 until October 2022 and then subsequently discontinuing reporting
as proposed, we are finalizing that we will not publicly report any
data collected from the Communication About Pain questions.
4. Summary of Costs and Benefits
In sections XXI. and XXII. of this CY 2019 OPPS/ASC final rule with
comment period, we set forth a detailed analysis of the regulatory and
Federalism impacts that the changes will have on affected entities and
beneficiaries. Key estimated impacts are described below.
a. Impacts of All OPPS Changes
Table 62 in section XXI. of this final rule with comment period
displays the distributional impact of all the OPPS changes on various
groups of hospitals and CMHCs for CY 2019 compared to all estimated
OPPS payments in CY 2018. We estimate that the policies in this final
rule with comment period will result in a 0.6 percent overall increase
in OPPS payments to providers. We estimate that total OPPS payments for
CY 2019, including beneficiary cost-sharing, to the approximately 3,840
facilities paid under the OPPS (including general acute care hospitals,
children's hospitals, cancer hospitals, and CMHCs) will increase by
approximately $360 million compared to CY 2018 payments, excluding our
estimated changes in enrollment, utilization, and case-mix.
We estimated the isolated impact of our OPPS policies on CMHCs
because CMHCs are only paid for partial hospitalization services under
the OPPS. Continuing the provider-specific structure we adopted
beginning in CY 2011, and basing payment fully on the type of provider
furnishing the service, we estimate a 15.1 percent decrease in CY 2019
payments to CMHCs relative to their CY 2018 payments.
b. Impacts of the Updated Wage Indexes
We estimate that our update of the wage indexes based on the FY
2019 IPPS final rule wage indexes will result in no estimated payment
change for urban hospitals under the OPPS and an estimated decrease of
0.2 percent for rural hospitals. These wage indexes include the
continued implementation of the OMB labor market area delineations
based on 2010 Decennial Census data, with updates, as discussed in
section II.C. of this final rule with comment period.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment
Adjustment
There are no significant impacts of our CY 2019 payment policies
for hospitals that are eligible for the rural adjustment or for the
cancer hospital payment adjustment. We are not making any change in
policies for determining the rural hospital payment adjustments. While
we are implementing the required reduction to the cancer hospital
payment adjustment required by section 16002 of the 21st Century Cures
Act for CY 2019, the target payment-to-cost ratio (PCR) for CY 2019
remains the same as in CY 2018 and therefore does not impact the budget
neutrality adjustments.
d. Impacts of the OPD Fee Schedule Increase Factor
For the CY 2019 OPPS/ASC, we are establishing an OPD fee schedule
increase factor of 1.35 percent and applying that increase factor to
the conversion factor for CY 2019. As a result of the OPD fee schedule
increase factor and other budget neutrality adjustments, we estimate
that rural and urban hospitals will experience an increase of
approximately 1.4 percent for urban hospitals and 1.3 percent for rural
hospitals. Classifying hospitals by teaching status, we estimate
nonteaching hospitals will experience an increase of 1.4 percent, minor
teaching hospitals will experience an increase of 1.3 percent, and
major teaching hospitals will experience an increase of 1.5 percent. We
also classified hospitals by the type of ownership. We estimate that
hospitals with voluntary ownership, hospitals with proprietary
ownership, and hospitals with government ownership will all experience
an increase of 1.4 percent in payments.
e. Impacts of the Policy To Control for Unnecessary Increases in the
Volume of Outpatient Services
In section X.B. of this CY 2019 OPPS/ASC final rule with comment
period, we discuss our CY 2019 proposal and finalized policies to
control for unnecessary increases in the volume of outpatient service
by paying for clinic visits furnished at an off-campus PBD of a
hospital at a PFS-equivalent rate under the OPPS rather than at the
standard OPPS rate. As a result of this finalized policy, we estimated
decreases of 0.6 percent to urban hospitals, and estimated decreases of
0.6 percent to rural hospitals, with the estimated effect for
individual groups of hospitals depending on the volume of clinic visits
provided at the hospitals' off-campus PBDs.
f. Impacts of the ASC Payment Update
For impact purposes, the surgical procedures on the ASC list of
covered procedures are aggregated into surgical specialty groups using
CPT and HCPCS code range definitions. The percentage change in
estimated total payments by specialty groups under the CY 2019 payment
rates, compared to estimated CY 2018 payment rates, generally ranges
between an increase of 1 and 3 percent, depending on the service, with
some exceptions. We estimate the impact of applying the hospital market
basket update to ASC payment rates will increase payments by $80
million under the ASC payment system in CY 2019,
[[Page 58825]]
compared to an increase of $60 million if we had applied an update
based on CPI-U.
c. Impact of the Changes to the Hospital OQR Program
Across 3,300 hospitals participating in the Hospital OQR Program,
we estimate that our requirements will result in the following changes
to costs and burdens related to information collection for the Hospital
OQR Program compared to previously adopted requirements: (1) No change
in the total collection of information burden or costs for the CY 2020
payment determination; (2) a total collection of information burden
reduction of 681,735 hours and a total collection of information cost
reduction of approximately $24.9 million for the CY 2021 payment
determination due to the removal of four measures: OP-5, OP-12, OP-17,
and OP-30.
Further, we anticipate that the removal of a total of eight
measures will result in a reduction in costs unrelated to information
collection. For example, it may be costly for health care providers to
track the confidential feedback, preview reports, and publicly reported
information on a measure where we use the measure in more than one
program. Also, when measures are in multiple programs, maintaining the
specifications for those measures, as well as the tools we need to
collect, validate, analyze, and publicly report the measure data may
result in costs to CMS. In addition, beneficiaries may find it
confusing to see public reporting on the same measure in different
programs.
d. Impact of the Changes to the ASCQR Program
Across 3,937 ASCs participating in the ASCQR Program, we estimate
that our requirements will result in the following changes to costs and
burdens related to information collection for the ASCQR Program,
compared to previously adopted requirements: (1) No change in the total
collection of information burden or costs for the CY 2020 payment
determination; (2) a total collection of information burden reduction
of 62,008 hours and a total collection of information cost reduction of
approximately $2,268,244 for the CY 2021 payment determination due to
the removal of ASC-10.
Further, we anticipate that the removal of ASC-10 will result in a
reduction in costs unrelated to information collection. For example, it
may be costly for health care providers to track the confidential
feedback, preview reports, and publicly reported information on a
measure where we use the measure in more than one program. Also, when
measures are in multiple programs, maintaining the specifications for
those measures as well as the tools we need to collect, analyze, and
publicly report the measure data may result in costs to CMS. In
addition, beneficiaries may find it confusing to see public reporting
on the same measure in different programs.
B. Legislative and Regulatory Authority for the Hospital OPPS
When Title XVIII of the Social Security Act was enacted, Medicare
payment for hospital outpatient services was based on hospital-specific
costs. In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section
1833(t) to the Act, authorizing implementation of a PPS for hospital
outpatient services. The OPPS was first implemented for services
furnished on or after August 1, 2000. Implementing regulations for the
OPPS are located at 42 CFR parts 410 and 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on
March 30, 2010 (these two public laws are collectively known as the
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L.
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93),
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2,
2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113),
enacted on December 18, 2015, the 21st Century Cures Act (Pub. L. 114-
255), enacted on December 13, 2016, the Consolidated Appropriations
Act, 2018 (Pub. L. 115-141), enacted on March 23, 2018, and the
Substance Use-Disorder Prevention that Promotes Opioid Recovery and
Treatment for Patients and Communities Act (Pub. L. 115-271), enacted
on October 24, 2018.
Under the OPPS, we generally pay for hospital Part B services on a
rate-per-service basis that varies according to the APC group to which
the service is assigned. We use the Healthcare Common Procedure Coding
System (HCPCS) (which includes certain Current Procedural Terminology
(CPT) codes) to identify and group the services within each APC. The
OPPS includes payment for most hospital outpatient services, except
those identified in section I.C. of this final rule with comment
period. Section 1833(t)(1)(B) of the Act provides for payment under the
OPPS for hospital outpatient services designated by the Secretary
(which includes partial hospitalization services furnished by CMHCs),
and certain inpatient hospital services that are paid under Medicare
Part B.
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)(B) of the Act, subject
to certain exceptions, items and services within an APC group cannot be
considered comparable with respect to
[[Page 58826]]
the use of resources if the highest median cost (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 (or mean cost, if
elected by the Secretary) 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 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
clinical information and cost 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.
C. 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. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercises the
authority granted under the statute to also exclude from the OPPS
certain 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); certain laboratory services
paid under the Clinical Laboratory Fee Schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD prospective payment system; and services and procedures that
require an inpatient stay that are paid under the hospital IPPS. In
addition, section 1833(t)(1)(B)(v) of the Act does not include
applicable items and services (as defined in subparagraph (A) of
paragraph (21)) that are furnished on or after January 1, 2017 by an
off-campus outpatient department of a provider (as defined in
subparagraph (B) of paragraph (21). We set forth the services that are
excluded from payment under the OPPS in regulations at 42 CFR 419.22.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals that are excluded from payment under the OPPS. These excluded
hospitals include:
Critical access hospitals (CAHs);
Hospitals located in Maryland and paid under the Maryland
All-Payer Model;
Hospitals located outside of the 50 States, the District
of Columbia, and Puerto Rico; and
Indian Health Service (IHS) hospitals.
D. 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)(A) 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 the wage and other adjustments
that take into account changes in medical practices, changes in
technologies, and the addition of new services, new cost data, and
other relevant information and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the
Panel)
1. Authority of the Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Pub. L. 106-113, and redesignated by section 202(a)(2) of Pub. L. 106-
113, requires that we consult with an external advisory panel of
experts to annually review the clinical integrity of the payment groups
and their weights under the OPPS. In CY 2000, based on section
1833(t)(9)(A) of the Act, the Secretary established the Advisory Panel
on Ambulatory Payment Classification Groups (APC Panel) to fulfill this
requirement. In CY 2011, based on section 222 of the Public Health
Service Act, which gives discretionary authority to the Secretary to
convene advisory councils and committees, the Secretary expanded the
panel's scope to include the supervision of hospital outpatient
therapeutic services in addition to the APC groups and weights. To
reflect this new role of the panel, the Secretary changed the panel's
name to the Advisory Panel on Hospital Outpatient Payment (the HOP
Panel or the Panel). The HOP Panel is not restricted to using data
compiled by CMS, and in conducting its review, it may use data
collected or developed by organizations outside the Department.
2. Establishment of the Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the Panel, and, at that time, named the APC Panel. This
expert panel is composed of appropriate representatives of providers
(currently employed full-time, not as consultants, in their respective
areas of expertise) who review clinical data and advise CMS about the
clinical integrity of the APC groups and their payment weights. Since
CY 2012, the Panel also is charged with advising the Secretary on the
appropriate level of supervision for individual hospital outpatient
therapeutic services. The Panel is technical in nature, and it is
governed by the provisions of the Federal Advisory Committee Act
(FACA). The current charter specifies, among other requirements, that
the Panel--
May advise on the clinical integrity of Ambulatory Payment
Classification (APC) groups and their associated weights;
May advise on the appropriate supervision level for
hospital outpatient services;
Continues to be technical in nature;
Is governed by the provisions of the FACA;
[[Page 58827]]
Has a Designated Federal Official (DFO); and
Is chaired by a Federal Official designated by the
Secretary.
The Panel's charter was amended on November 15, 2011, renaming the
Panel and expanding the Panel's authority to include supervision of
hospital outpatient therapeutic services and to add critical access
hospital (CAH) representation to its membership. The Panel's charter
was also amended on November 6, 2014 (80 FR 23009), and the number of
members was revised from up to 19 to up to 15 members. The Panel's
current charter was approved on November 21, 2016, for a 2-year period
(81 FR 94378).
The current Panel membership and other information pertaining to
the Panel, including its charter, Federal Register notices, membership,
meeting dates, agenda topics, and meeting reports, can be viewed on the
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
The Panel has held many meetings, with the last meeting taking
place on August 20, 2018. Prior to each meeting, we publish a notice in
the Federal Register to announce the meeting and, when necessary, to
solicit nominations for Panel membership, to announce new members and
to announce any other changes of which the public should be aware.
Beginning in CY 2017, we have transitioned to one meeting per year (81
FR 31941). Further information on the 2018 summer meeting can be found
in the meeting notice titled ``Medicare Program: Announcement of the
Advisory Panel on Hospital Outpatient Payment (the Panel) Meeting on
August 20-21, 2018'' (83 FR 19785).
In addition, the Panel has established an operational structure
that, in part, currently includes the use of three subcommittees to
facilitate its required review process. The three current subcommittees
include the following:
APC Groups and Status Indicator Assignments Subcommittee,
which advises the Panel on the appropriate status indicators to be
assigned to HCPCS codes, including but not limited to whether a HCPCS
code or a category of codes should be packaged or separately paid, as
well as the appropriate APC assignment of HCPCS codes regarding
services for which separate payment is made;
Data Subcommittee, which is responsible for studying the
data issues confronting the Panel and for recommending options for
resolving them; and
Visits and Observation Subcommittee, which reviews and
makes recommendations to the Panel on all technical issues pertaining
to observation services and hospital outpatient visits paid under the
OPPS.
Each of these subcommittees was established by a majority vote from
the full Panel during a scheduled Panel meeting, and the Panel
recommended at the August 20, 2018 meeting that the subcommittees
continue. We accepted this recommendation.
Discussions of the other recommendations made by the Panel at the
August 20, 2018 Panel meeting, namely CPT codes and a comprehensive APC
for autologous hematopoietic stem cell transplantation, OPPS payment
for outpatient clinic visits and restrictions to service line
expansions, and packaging policies, were discussed in the CY 2019 OPPS/
ASC proposed rule (83 FR 37138 through 37143) or are included in the
sections of this final rule with comment period that are specific to
each recommendation. For discussions of earlier Panel meetings and
recommendations, we refer readers to previously published OPPS/ASC
proposed and final rules, the CMS website mentioned earlier in this
section, and the FACA database at http://facadatabase.gov.
F. Public Comments Received in Response to the CY 2019 OPPS/ASC
Proposed Rule
We received over 2,990 timely pieces of correspondence on the CY
2019 OPPS/ASC proposed rule that appeared in the Federal Register on
July 31, 2018 (83 FR 37046). We note that we received some public
comments that were outside the scope of the CY 2019 OPPS/ASC proposed
rule. Out-of-scope public comments are not addressed in this CY 2019
OPPS/ASC final rule with comment period. Summaries of those public
comments that are within the scope of the proposed rule and our
responses are set forth in the various sections of this final rule with
comment period under the appropriate headings.
G. Public Comments Received on the CY 2018 OPPS/ASC Final Rule With
Comment Period
We received over 125 timely pieces of correspondence on the CY 2018
OPPS/ASC final rule with comment period that appeared in the Federal
Register on December 14, 2017 (82 FR 59216), some of which contained
comments on the interim APC assignments and/or status indicators of new
or replacement Level II HCPCS codes (identified with comment indicator
``NI'' in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that
final rule). Summaries of the public comments are set forth in the CY
2019 proposed rule and this final rule with comment period under the
appropriate subject matter headings.
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for APCs. 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.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37055), for CY 2019,
we proposed to recalibrate the APC relative payment weights for
services furnished on or after January 1, 2019, and before January 1,
2020 (CY 2019), using the same basic methodology that we described in
the CY 2018 OPPS/ASC final rule with comment period (82 FR 52367
through 52370), using updated CY 2017 claims data. That is, as we
proposed, we recalibrate the relative payment weights for each APC
based on claims and cost report data for hospital outpatient department
(HOPD) services, using the most recent available data to construct a
database for calculating APC group weights.
For the purpose of recalibrating the APC relative payment weights
for CY 2019, we began with approximately 163 million final action
claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for HOPD services furnished on or
after January 1, 2017, and before January 1, 2018, before applying our
exclusionary criteria and other methodological adjustments. After the
application of those data processing changes, we used approximately 86
million final action claims to develop the proposed CY 2019 OPPS
payment weights. For exact numbers of claims used and additional
details on the claims accounting process, we refer readers to the
claims accounting narrative under supporting documentation for the CY
2019 OPPS/ASC proposed rule on the CMS website at: http://www.cms.gov/
Medicare/
[[Page 58828]]
Medicare-Fee-for-Service-Payment/Hospital>OutpatientPPS/index.html.
Addendum N to the proposed rule (which is available via the
internet on the CMS website) included the proposed list of bypass codes
for CY 2019. The proposed list of bypass codes contained codes that
were reported on claims for services in CY 2017 and, therefore,
included codes that were in effect in CY 2017 and used for billing, but
were deleted for CY 2018. We retained these deleted bypass codes on the
proposed CY 2019 bypass list because these codes existed in CY 2017 and
were covered OPD services in that period, and CY 2017 claims data were
used to calculate CY 2019 payment rates. Keeping these deleted bypass
codes on the bypass list potentially allows us to create more
``pseudo'' single procedure claims for ratesetting purposes. ``Overlap
bypass codes'' that are members of the proposed multiple imaging
composite APCs were identified by asterisks (*) in the third column of
Addendum N to the proposed rule. HCPCS codes that we proposed to add
for CY 2019 were identified by asterisks (*) in the fourth column of
Addendum N.
In the CY 2019 OPPS/ASC proposed rule, we did not propose to remove
any codes from the CY 2019 bypass list.
We did not receive any public comments on our general proposal to
recalibrate the relative payment weights for each APC based on claims
and cost report data for HOPD services or on our proposed bypass code
process. Therefore, we are adopting as final the proposed ``pseudo''
single claims process and the final CY 2019 bypass list of 169 HCPCS
codes, as displayed in Addendum N to this final rule with comment
period (which is available via the internet on the CMS website). For
this final rule with comment period, for purposes of recalibrating the
final APC relative payment weights for CY 2019, we used approximately
91 million final action claims (claims for which all disputes and
adjustments have been resolved and payment has been made) for HOPD
services furnished on or after January 1, 2017 and before January 1,
2018. For exact numbers of claims used and additional details on the
claims accounting process, we refer readers to the claims accounting
narrative under supporting documentation for this CY 2019 OPPS/ASC
final rule with comment period on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
b. Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2019, in the CY 2019 OPPS/ASC proposed rule (83 FR 37055),
we proposed to continue to use the hospital-specific overall ancillary
and departmental cost-to-charge ratios (CCRs) to convert charges to
estimated costs through application of a revenue code-to-cost center
crosswalk. To calculate the APC costs on which the CY 2019 APC payment
rates are based, we calculated hospital-specific overall ancillary CCRs
and hospital-specific departmental CCRs for each hospital for which we
had CY 2017 claims data by comparing these claims data to the most
recently available hospital cost reports, which, in most cases, are
from CY 2016. For the proposed CY 2019 OPPS payment rates, we used the
set of claims processed during CY 2017. 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 website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
To ensure the completeness of the revenue code-to-cost center
crosswalk, we reviewed changes to the list of revenue codes for CY 2017
(the year of claims data we used to calculate the proposed CY 2019 OPPS
payment rates) and found that the National Uniform Billing Committee
(NUBC) did not add any new revenue codes to the NUBC 2017 Data
Specifications Manual.
In accordance with our longstanding policy, we calculate CCRs for
the standard and nonstandard cost centers accepted by the electronic
cost report database. In general, the most detailed level at which we
calculate CCRs is the hospital-specific departmental level. For a
discussion of the hospital-specific overall ancillary CCR calculation,
we refer readers to the CY 2007 OPPS/ASC final rule with comment period
(71 FR 67983 through 67985). The calculation of blood costs is a
longstanding exception (since the CY 2005 OPPS) to this general
methodology for calculation of CCRs used for converting charges to
costs on each claim. This exception is discussed in detail in the CY
2007 OPPS/ASC final rule with comment period and discussed further in
section II.A.2.a.(1) of the proposed rule and this final rule with
comment period.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840
through 74847), we finalized our policy of creating new cost centers
and distinct CCRs for implantable devices, magnetic resonance imaging
(MRIs), computed tomography (CT) scans, and cardiac catheterization.
However, in response to the CY 2014 OPPS/ASC proposed rule, commenters
reported that some hospitals currently use an imprecise ``square feet''
allocation methodology for the costs of large moveable equipment like
CT scan and MRI machines. They indicated that while CMS recommended
using two alternative allocation methods, ``direct assignment'' or
``dollar value,'' as a more accurate methodology for directly assigning
equipment costs, industry analysis suggested that approximately only
half of the reported cost centers for CT scans and MRIs rely on these
preferred methodologies. In response to concerns from commenters, we
finalized a policy for the CY 2014 OPPS to remove claims from providers
that use a cost allocation method of ``square feet'' to calculate CCRs
used to estimate costs associated with the APCs for CT and MRI (78 FR
74847). Further, we finalized a transitional policy to estimate the
imaging APC relative payment weights using only CT and MRI cost data
from providers that do not use ``square feet'' as the cost allocation
statistic. We provided that this finalized policy would sunset in 4
years to provide a sufficient time for hospitals to transition to a
more accurate cost allocation method and for the related data to be
available for ratesetting purposes (78 FR 74847). Therefore, beginning
CY 2018, with the sunset of the transition policy, we would estimate
the imaging APC relative payment weights using cost data from all
providers, regardless of the cost allocation statistic employed.
However, in the CY 2018 OPPS/ASC final rule with comment period (82 FR
59228 and 59229), we finalized a policy to extend the transition policy
for 1 additional year and continued to remove claims from providers
that use a cost allocation method of ``square feet'' to calculate CT
and MRI CCRs for the CY 2018 OPPS.
As we discussed in the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59228), some stakeholders have raised concerns regarding
using claims from all providers to calculate CT and MRI CCRs,
regardless of the cost allocations statistic employed (78 FR 74840
through 74847). Stakeholders noted that providers continue to use the
``square feet'' cost allocation method and that including claims from
such providers would cause significant
[[Page 58829]]
reductions in the imaging APC payment rates.
Table 1 below demonstrates the relative effect on imaging APC
payments after removing cost data for providers that report CT and MRI
standard cost centers using ``square feet'' as the cost allocation
method by extracting HCRIS data on Worksheet B-1. Table 2 below
provides statistical values based on the CT and MRI standard cost
center CCRs using the different cost allocation methods.
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Our analysis shows that since the CY 2014 OPPS in which we
established the transition policy, the number of valid MRI CCRs has
increased by 17.5 percent to 2,177 providers and the number of valid CT
CCRs has increased by 15.1 percent to 2,251 providers. However, as
shown in Table 1 above, nearly all imaging APCs would see an increase
in payment rates for CY 2019 if claims from providers that report using
the ``square feet'' cost allocation method were removed. This can be
attributed to the generally lower CCR values from providers that use a
cost allocation method of ``square feet'' as shown in Table 2 above.
In response to provider concerns and to provide added flexibility
for hospitals to improve their cost allocation methods, for the CY 2019
OPPS, in the CY 2019 OPPS/ASC proposed rule (83 FR 37056), we proposed
to extend our transition policy and remove claims from providers that
use a cost allocation method of ``square feet'' to calculate CCRs used
to estimate costs with the APCs for CT and MRI identified in Table 2
above. We stated in the proposed rule that this proposed extension
would mean that CMS would now be providing 6 years for providers to
transition from a ``square feet'' cost allocation method to another
cost allocation method. We stated in the proposed rule that we do not
believe
[[Page 58830]]
another extension in CY 2020 will be warranted and expect to determine
the imaging APC relative payment weights for CY 2020 using cost data
from all providers, regardless of the cost allocation method employed.
Comment: Some commenters supported CMS' proposal to extend its
transition policy an additional year and determine imaging APC relative
payment weights for CY 2020 using cost data from all providers.
Response: We thank the commenters for their support.
Comment: Some commenters recommended that CMS discontinue the use
of CT and MRI cost centers for developing CT and MRI CCRs and use a
single diagnostic radiology CCR instead. One commenter suggested that
CCRs for CT and MRI are inaccurate, too low, and equalize the payment
rates for advanced and nonadvanced imaging. This commenter also noted
that if CMS were to use CCRs from all cost allocation methods,
including ``square feet,'' such a change would impact technical
payments under the Medicare Physician Fee Schedule because OPPS
payments for imaging services would fall below the technical payments
for such services under the Medicare Physician Fee Schedule and would
require a reduction as required by section 1848(b)(4) of the Act.
Further, the commenter noted that a significant number of CT and
MRI CCRs are close to zero. The commenter suggested that this probably
reflects that the costs of the equipment and dedicated space for these
services are likely spread across to other departments of hospitals.
The commenter also suggested that hospitals have standard accounting
practices for high-cost moveable equipment and that it would be
burdensome and inconsistent to apply a different standard for costs
associated with CT and MRI.
Response: We appreciate the comments regarding the use of standard
CT and MRI cost center CCRs. As we stated in prior rulemaking, we
recognize the concerns with regard to the application of the CT and MRI
standard cost center CCRs and their use in OPPS ratesetting in lieu of
the previously used single diagnostic radiology CCR. As compared to the
IPPS, there is greater sensitivity to the cost allocation method being
used on the cost report forms for these relatively new standard imaging
cost centers under the OPPS due to the limited size of the OPPS payment
bundles and because the OPPS applies the CCRs at the departmental level
for cost estimation purposes. However, we note that since the time we
initially established the transition policy in the OPPS, we have made
changes toward making the OPPS more of a prospective payment system,
including greater packaging and the development of the comprehensive
APCs. As we have made changes to package a greater number of items and
services with imaging payments under the OPPS, and CT and MRI
procedures are not solely based on the CCR applied to each procedure,
we believe there is less sensitivity to imaging payments that is
attributable to the cost allocation method being used on the cost
report forms.
Table 3 and Table 4 below display the largest and smallest CT and
MRI CCRs based on the cost allocation method, respectively.
Specifically, Tables 3 and 4 display the minimum, 5th percentile, 10th
percentile, 90th percentile, 95th percentile, and maximum CCRs based on
the cost allocation method. While we note that there are differences in
CT and MRI CCR values by the cost allocation method, we also note that
the CT CCR distributions and MRI CCR distributions are largely similar
across the cost allocation method. As stated in past rulemaking, we
also note that our current trimming methodology excludes CCRs that are
+/-3 standard deviations from the geometric mean. While we acknowledge
the commenter's concern that a number of CCRs, particular those CT CCRs
from hospitals that use a cost allocation method of ``square feet,''
are below 0.0100, we do not believe it would be appropriate to modify
our standard trimming methodology because it is not our general policy
to judge the accuracy of hospital charging and hospital cost reporting
practices for purposes of ratesetting.
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In addition, as we stated in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74845), we have noted the potential impact the CT
and MRI CCRs may have on other payment systems. We understand that
payment reductions for imaging services under the OPPS could have
significant payment impacts under the Physician Fee Schedule where the
technical component payment for many imaging services is capped at the
OPPS payment amount. We will continue to monitor OPPS imaging payments
in the future and consider the potential impacts of payment changes to
other payment systems.
Over the past several years, we have encouraged hospitals to use
more precise cost reporting methods through cost reporting instructions
and communication with Medicare contractors regarding the approval of
hospitals' request to switch from the square feet statistical
allocation method. While we have not seen a substantial decline in the
number of hospitals that use the square feet cost allocation method,
and we acknowledge that there are costs and challenges with
transitioning to a different accounting method for CT and MRI costs, we
continue to believe that adopting CT and MRI cost center CCRs fosters
more specific cost reporting and improves the data contained in the
electronic cost report data files and, therefore, the accuracy of our
cost estimation process for the OPPS relative weights. Therefore, for
CY 2019, after consideration of the public comments we received, for CY
2019, we are finalizing our proposal to extend our transition policy
for 1 additional year and continue to remove claims from providers that
use a ``square feet'' cost allocation method to calculate CT and MRI
CCRs for the CY 2019 OPPS.
2. Data Development Process and Calculation of Costs Used for
Ratesetting
In this section of this final rule with comment period, we discuss
the use of claims to calculate the OPPS payment rates for CY 2019. The
Hospital OPPS page on the CMS website on which this final rule is
posted (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of claims used
in the development of the final payment rates. That accounting provides
additional detail regarding the number of claims derived at each stage
of the process. In addition, below in this section we discuss the file
of claims that comprises the data set that is available upon payment of
an administrative fee under a CMS data use agreement. The CMS website,
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about obtaining
the ``OPPS Limited Data Set,'' which now includes the additional
variables previously available only in the OPPS Identifiable Data Set,
including ICD-10-CM diagnosis codes and revenue code payment amounts.
This file is derived from the CY 2017 claims that were used to
calculate the final payment rates for this CY 2019 OPPS/ASC final rule
with comment period.
Previously, the OPPS established the scaled relative weights, on
which payments are based using APC median costs, a process described in
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188).
However, as discussed in more detail in section II.A.2.f. of the CY
2013 OPPS/ASC final rule with comment period (77 FR 68259 through
68271), we finalized the use of geometric mean costs to calculate the
relative weights on which the CY 2013 OPPS payment rates were based.
While this policy changed the cost metric on which the relative
payments are based, the data process in general remained the same,
under the methodologies that we used to obtain appropriate claims data
and accurate cost information in determining estimated service cost. In
the CY 2019 OPPS/ASC proposed rule (83 FR 37057), we proposed to
continue to use geometric mean costs to calculate the relative weights
on which the CY 2019 OPPS payment rates are based.
Comment: One commenter believed that revenue code 0815 (Allogeneic
Stem Cell Acquisition Services) was inadvertently excluded from the
packaged revenue code list for use in the OPPS ratesetting. The
commenter stated that this would primarily have an impact on APC 5244
(Level 4 Blood Product Exchange and Related Services) which would
potentially include those packaged costs. The commenter requested that
CMS include revenue code 0815 on the packaged revenue code list in
order to be consistent with the C-APC ratesetting approach from prior
years.
Response: We thank the commenter for bringing this omission to our
attention. As discussed in the CY 2018 OPPS/ASC final rule with comment
period (81 FR 79586), beginning in CY 2017, we would include the
revenue code for purposes of identifying costs associated with stem
cell transplants. We agree that the revenue code was inadvertently not
included on the packaged revenue code list and therefore have included
it in this final rule with comment period for the CY 2019 OPPS
ratesetting.
After consideration of the public comment on the proposed process
we received, we are adding revenue code 0815 to the packaged revenue
code list and are finalizing our proposed methodology for calculating
geometric mean costs for purposes of creating relative payment weights
and subsequent APC payment rates for the CY 2019 OPPS. For more
information
[[Page 58832]]
regarding the stem cell transplants, we refer readers to section
II.A.2.b. of this final rule with comment period. We used the
methodology described in sections II.A.2.a. through II.A.2.c. of this
final rule with comment period to calculate the costs we used to
establish the relative payment weights used in calculating the OPPS
payment rates for CY 2019 shown in Addenda A and B to this final rule
with comment period (which are available via the internet on the CMS
website). We refer readers to section II.A.4. of this final rule with
comment period for a discussion of the conversion of APC costs to
scaled payment weights.
We note that this is the first year in which claims data containing
lines with the modifier ``PN'' are available, which indicate
nonexcepted items and services furnished and billed by off-campus
provider-based departments (PBDs) of hospitals. Because nonexcepted
services are not paid under the OPPS, in the CY 2019 OPPS/ASC proposed
rule (83 FR 37057), we proposed to remove those claim lines reported
with modifier ``PN'' from the claims data used in ratesetting for the
CY 2019 OPPS and subsequent years.
Comment: One commenter requested that CMS not finalize the removal
of claims with modifier ``PN'' from the CY 2019 OPPS and future
ratesetting. The commenter believed that this could result in unfair
adjustments against hospital outpatient departments with large off-
campus PBD presence and that CMS should perform ratesetting with and
without the modifier in CY 2020 and continue to gather stakeholder
input until the impact of removing those lines is fully understood.
Response: While we generally attempt to obtain more information
from the claims and cost data available to us, we do so to obtain
accurate cost information for OPPS services. As discussed in the
proposed rule, we do not believe that lines with modifier ``PN'' should
be included as part of the OPPS ratesetting process because they are
paid under the otherwise applicable payment system, rather than the
OPPS (83 FR 37056 and 37057). We note that the impact of removing these
modifier ``PN'' lines has only a nominal effect on the APC geometric
mean costs due to the relatively low number of claims reported with
modifier ``PN''.
After consideration of the public comment we received, we are
finalizing the policy of removing lines with the ``PN'' modifier as
proposed.
For details of the claims process used in this final rule with
comment period, we refer readers to the claims accounting narrative
under supporting documentation for this CY 2019 OPPS/ASC final rule
with comment period on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
(a) Methodology
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37057 through 37058),
we proposed to continue to establish payment rates for blood and blood
products using our blood-specific CCR methodology, which utilizes
actual or simulated CCRs from the most recently available hospital cost
reports to convert hospital charges for blood and blood products to
costs. This methodology has been our standard ratesetting methodology
for blood and blood products since CY 2005. It was developed in
response to data analysis indicating that there was a significant
difference in CCRs for those hospitals with and without blood-specific
cost centers, and past public 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 differences in CCRs and
to better reflect hospitals' costs, we proposed to continue to simulate
blood CCRs for each hospital that does not report a blood cost center
by calculating the ratio of the blood-specific CCRs to hospitals'
overall CCRs for those hospitals that do report costs and charges for
blood cost centers. We also proposed to 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 proposed to calculate the costs upon which
the proposed CY 2019 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 hospital-specific, simulated 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
hospital, we believe that it yields more accurate estimated costs for
these products. We stated in the proposed rule that we continue to
believe that this methodology in CY 2019 would result in costs for
blood and blood products that appropriately reflect the relative
estimated costs of these products for hospitals without blood cost
centers and, therefore, for these blood products in general.
We note that, as discussed in section II.A.2.b. of the CY 2018
OPPS/ASC final rule with comment period (82 FR 59234 through 59239), we
defined a comprehensive APC (C-APC) as a classification for the
provision of a primary service and all adjunctive services provided to
support the delivery of the primary service. Under this policy, we
include the costs of blood and blood products when calculating the
overall costs of these C-APCs. In the CY 2019 OPPS/ASC proposed rule
(83 FR 37057 through 37058), we proposed to continue to apply the
blood-specific CCR methodology described in this section when
calculating the costs of the blood and blood products that appear on
claims with services assigned to the C-APCs. Because the costs of blood
and blood products would be reflected in the overall costs of the C-
APCs (and, as a result, in the payment rates of the C-APCs), we
proposed to not make separate payments for blood and blood products
when they appear on the same claims as services assigned to the C-APCs
(we refer readers to the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66796)).
We also referred readers to Addendum B to the CY 2019 OPPS/ASC
proposed rule (which is available via the internet on the CMS website)
for the proposed CY 2019 payment rates for blood and blood products
(which are identified with status indicator ``R''). For a more detailed
discussion of the blood-specific CCR methodology, we refer readers to
the CY 2005 OPPS proposed rule (69 FR 50524 through
[[Page 58833]]
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).
We did not receive any public comments for these proposals.
Therefore, we are finalizing our proposals, without modification, to
continue to apply the blood-specific CCR methodology described in this
section when calculating the costs of the blood and blood products that
appear on claims with services assigned to the C-APCs and to not make
separate payments for blood and blood products when they appear on the
same claims as services assigned to the C-APCs for CY 2019.
(b) Pathogen-Reduced Platelets Payment Rate
In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322
through 70323), we reiterated that we calculate 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. Because HCPCS code P9072 (Platelets, pheresis,
pathogen reduced or rapid bacterial tested, each unit), the predecessor
code to HCPCS code P9073 (Platelets, pheresis, pathogen-reduced, each
unit), was new for CY 2016, there were no claims data available on the
charges and costs for this blood product upon which to apply our blood-
specific CCR methodology. Therefore, we established an interim payment
rate for HCPCS code P9072 based on a crosswalk to existing blood
product HCPCS code P9037 (Platelets, pheresis, leukocytes reduced,
irradiated, each unit), which we believed provided the best proxy for
the costs of the new blood product. In addition, we stated that once we
had claims data for HCPCS code P9072, we would calculate its payment
rate using the claims data that should be available for the code
beginning in CY 2018, which is our practice for other blood product
HCPCS codes for which claims data have been available for 2 years.
We stated in the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59232) that, although our standard practice for new codes
involves using claims data to set payment rates once claims data become
available, we were concerned that there may have been confusion among
the provider community about the services that HCPCS code P9072
described. That is, as early as 2016, there were discussions about
changing the descriptor for HCPCS code P9072 to include the phrase ``or
rapid bacterial tested'', which is a less costly technology than
pathogen reduction. In addition, effective January 2017, the code
descriptor for HCPCS code P9072 was changed to describe rapid bacterial
testing of platelets and, effective July 1, 2017, the descriptor for
the temporary successor code for HCPCS code P9072 (HCPCS code Q9988)
was changed again back to the original descriptor for HCPCS code P9072
that was in place for 2016.
Based on the ongoing discussions involving changes to the original
HCPCS code P9072 established in CY 2016, we believed that claims from
CY 2016 for pathogen reduced platelets may have potentially reflected
certain claims for rapid bacterial testing of platelets. Therefore, we
decided to continue to crosswalk the payment amount for services
described by HCPCS code P9073 to the payment amount for services
described by HCPCS P9037 for CY 2018 (82 FR 59232), as had been done
previously, to determine the payment rate for services described by
HCPCS code P9072. In the CY 2019 OPPS/ASC proposed rule (83 FR 37058),
for CY 2019, we discussed that we had reviewed the CY 2017 claims data
for the two predecessor codes to HCPCS code P9073 (HCPCS codes P9072
and Q9988), along with the claims data for the CY 2017 temporary code
for pathogen test for platelets (HCPCS code Q9987), which describes
rapid bacterial testing of platelets.
We found that there were over 2,200 claims billed with either HCPCS
code P9072 or Q9988. Accordingly, we believe that there are a
sufficient number of claims to use to calculate a payment rate for
HCPCS code P9073 for CY 2019. We also performed checks to estimate the
share of claims that may have been billed for rapid bacterial testing
of platelets as compared to the share of claims that may have been
billed for pathogen-reduced, pheresis platelets (based on when HCPCS
code P9072 was an active procedure code from January 1, 2017 to June
30, 2017). First, we found that the geometric mean cost for pathogen-
reduced, pheresis platelets, as reported by HCPCS code Q9988 when
billed separately from rapid bacterial testing of platelets, was
$453.87, and that over 1,200 claims were billed for services described
by HCPCS code Q9988. Next, we found that the geometric mean cost for
rapid bacterial testing of platelets, as reported by HCPCS code Q9987
on claims, was $33.44, and there were 59 claims reported for services
described by HCPCS code Q9987, of which 3 were separately paid.
These findings imply that almost all of the claims billed for
services reported with HCPCS code P9072 were for pathogen-reduced,
pheresis platelets. In addition, the geometric mean cost for services
described by HCPCS code P9072, which may contain rapid bacterial
testing of platelets claims, was $468.11, which is higher than the
geometric mean cost for services described by HCPCS code Q9988 of
$453.87, which should not have contained claims for rapid bacterial
testing of platelets. Because the geometric mean for services described
by HCPCS code Q9987 is only $33.44, it would be expected that if a
significant share of claims billed for services described by HCPCS code
P9072 were for the rapid bacterial testing of platelets, the geometric
mean cost for services described by HCPCS code P9072 would be lower
than the geometric mean cost for services described by HCPCS code
Q9988. Instead, we found that the geometric mean cost for services
described by HCPCS code Q9988 is higher than the geometric mean cost
for services described by HCPCS code P9072.
Based on our analysis of claims data, we stated in the CY 2019
OPPS/ASC proposed rule that we believed there were sufficient claims
available to establish a payment rate for pathogen-reduced pheresis
platelets without using a crosswalk. Therefore, we proposed to
calculate the payment rate for services described by HCPCS code P9073
in CY 2019 and in subsequent years using claims payment history, which
is the standard methodology used by the OPPS for HCPCS and CPT codes
with at least 2 years of claims history. We referred readers to
Addendum B of the proposed rule for the proposed payment rate for
services described by HCPCS code P9073 reportable under the OPPS.
Addendum B is available via the internet on the CMS website.
Comment: Several commenters opposed the proposal to use claims
history to calculate the payment rate for services described by HCPCS
code P9073. Instead, the commenters requested that CMS calculate the
payment rate for services described by HCPCS code P9072 based on a
crosswalk to existing blood product HCPCS code P9037 through either CY
2019 or CY 2020. The commenters stated that the acquisition cost for
pathogen-reduced platelets is over $600, which is substantially higher
than the proposed payment rate for services described by HCPCS code
P9073 found in Addendum B to the proposed rule
[[Page 58834]]
and closer to the payment rate for services described by HCPCS code
P9073. Some commenters indicated that the cost for pathogen-reduced
platelets is higher than the cost of leukocytes reduced and irradiated
platelets, the product covered by HCPCS code P9073, the crosswalked
code. Several of the commenters believed the claim costs for pathogen-
reduced platelets were lower than actual costs because of coding errors
by providers, providers who did not use pathogen-reduced platelets
billing the service, and confusion over whether to use the hospital CCR
or the blood center CCR to report charges for pathogen-reduced
platelets. One commenter also stated that a provider that billed
several claims for pathogen-reduced platelets believed that CMS
assigned an unusually low CCR to its claims, leading the provider to
report lower than actual costs for the service.
Response: We appreciate the concerns of the commenters. Pathogen-
reduced platelets (HCPCS code P9073) are a relatively new service. As
we noted in the CY 2019 OPPS/ASC proposed rule (83 FR 37058), there
were many changes to the procedure code billed for pathogen-reduced
platelets, as well as with the services covered by the procedure codes
for pathogen-reduced platelets and the code descriptors. We had
concerns that all of these coding changes could lead to billing
confusion. The comments we received from providers, stakeholder groups,
and the developer of the pathogen-reduced technology support that there
indeed may have been confusion about billing that has led to
aberrancies in the data we have available for ratesetting.
After consideration of the public comments we received, we are not
finalizing our proposal to calculate the payment rate for services
described by HCPCS code P9073 in CY 2019 using claims payment history.
Instead, for CY 2019 (that is, for one more year), we are establishing
the payment rate for services described by HCPCS code P9073 by
performing a crosswalk from the payment amount for services described
by HCPCS code P9073 to the payment amount for services described by
HCPCS P9037. We refer readers to Addendum B to this final rule with
comment period for the final payment rate for services described by
HCPCS code P9073 reportable under the OPPS. Addendum B is available via
the internet on the CMS website.
(2) Brachytherapy Sources
Section 1833(t)(2)(H) of the Act mandates the creation of
additional groups of covered OPD services that classify devices of
brachytherapy consisting of a seed or seeds (or radioactive source)
(``brachytherapy sources'') separately from other services or groups of
services. The statute provides certain criteria for the additional
groups. For the history of OPPS payment for brachytherapy sources, we
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC
final rule with comment period (77 FR 68240 through 68241). As we have
stated in prior OPPS updates, we believe that adopting the general OPPS
prospective payment methodology for brachytherapy sources is
appropriate for a number of reasons (77 FR 68240). The general OPPS
methodology uses costs based on claims data to set the relative payment
weights for hospital outpatient services. This payment methodology
results in more consistent, predictable, and equitable payment amounts
per source across hospitals by averaging the extremely high and low
values, in contrast to payment based on hospitals' charges adjusted to
costs. We believe that the OPPS methodology, as opposed to payment
based on hospitals' charges adjusted to cost, also would provide
hospitals with incentives for efficiency in the provision of
brachytherapy services to Medicare beneficiaries. Moreover, this
approach is consistent with our payment methodology for the vast
majority of items and services paid under the OPPS. We refer readers to
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323
through 70325) for further discussion of the history of OPPS payment
for brachytherapy sources.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37059), for CY 2019,
we proposed to use the costs derived from CY 2017 claims data to set
the proposed CY 2019 payment rates for brachytherapy sources because CY
2017 is the same year of data we proposed to use to set the proposed
payment rates for most other items and services that would be paid
under the CY 2019 OPPS. We proposed to base the payment rates for
brachytherapy sources on the geometric mean unit costs for each source,
consistent with the methodology that we proposed for other items and
services paid under the OPPS, as discussed in section II.A.2. of the
proposed rule. We also proposed to continue the other payment policies
for brachytherapy sources that we finalized and first implemented in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). We
proposed to pay for the stranded and nonstranded not otherwise
specified (NOS) codes, HCPCS codes C2698 (Brachytherapy source,
stranded, not otherwise specified, per source) and C2699 (Brachytherapy
source, non-stranded, not otherwise specified, per source), at a rate
equal to the lowest stranded or nonstranded prospective payment rate
for such sources, respectively, on a per source basis (as opposed to,
for example, a per mCi), which is based on the policy we established in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). We
also proposed to continue the policy we first implemented in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding
payment for new brachytherapy sources for which we have no claims data,
based on the same reasons we discussed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66786; which was delayed until January
1, 2010 by section 142 of Pub. L. 110-275). Specifically, this policy
is intended to enable us to assign 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.
The proposed CY 2019 payment rates for brachytherapy sources were
included in Addendum B to the proposed rule (which is available via the
internet on the CMS website) and were identified with status indicator
``U''. For CY 2019, we proposed to continue to assign status indicator
``U'' (Brachytherapy Sources, Paid under OPPS; separate APC payment) to
HCPCS code C2645 (Brachytherapy planar source, palladium-103, per
square millimeter) and to use external data (invoice prices) and other
relevant information to establish the proposed APC payment rate for
HCPCS code C2645. Specifically, we proposed to set the payment rate at
$4.69 per mm\2\, the same rate that was in effect for CYs 2017 and
2018.
We note that, for CY 2019, we proposed to assign status indicator
``E2'' (Items and Services for Which Pricing Information and Claims
Data Are Not Available) to HCPCS code C2644 (Brachytherapy cesium-131
chloride) because this code was not reported on CY 2017 claims.
Therefore, we were unable to calculate a proposed payment rate based on
the general OPPS ratesetting methodology described earlier. Although
HCPCS code C2644 became effective July 1, 2014, there are no CY 2017
claims reporting this code. Therefore, we proposed to assign new
proposed status indicator ``E2'' to HCPCS code C2644 in the CY 2019
OPPS.
[[Page 58835]]
Comment: One commenter expressed concern regarding CMS' policy to
establish prospective payment rates for brachytherapy sources using the
general OPPS methodology, which uses costs based on claims data to set
the relative payment weights for hospital outpatient services. The
commenter stated that, as a result of use of these cost data from
claims, payments for low-volume brachytherapy sources have fluctuated
significantly under the OPPS.
Response: As we stated in the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74161) when we established a prospective payment
for brachytherapy sources, the OPPS relies on the concept of averaging,
where the payment may be more or less than the estimated cost of
providing a service for a particular patient; however, with the
exception of outlier cases, we believe that such a prospective payment
is adequate to ensure access to appropriate care. We acknowledge that
payment for brachytherapy sources based on geometric mean costs from a
small set of claims may be more variable on a year-to-year basis when
compared to geometric mean costs for brachytherapy sources from a
larger claims set. However, as illustrated in Table 5 below, we believe
that payment for currently payable brachytherapy sources has been
relatively consistent over the years and that a prospective payment for
brachytherapy sources based on geometric mean costs is appropriate and
provides hospitals with the greatest incentives for efficiency in
furnishing brachytherapy treatment. For CY 2019 OPPS payment rates for
the brachytherapy sources listed in Table 5, we refer readers to
Addendum B of this final rule with comment period (which is available
via the internet on the CMS website).
BILLING CODE 4120-01-P
[[Page 58836]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.005
BILLING CODE 4120-01-C
After consideration of the public comments we received, we are
finalizing our proposal to continue to set the payment rates for
brachytherapy sources using our established prospective payment
methodology. We also are finalizing our proposal to assign status
indicator ``U'' (Brachytherapy Sources, Paid under OPPS; separate APC
payment) to HCPCS code C2645 (Brachytherapy planar source, palladium-
103, per square millimeter) and to use external data (invoice prices)
and other relevant information to establish the APC payment rate for
HCPCS code C2645 for CY 2019.
Lastly, because we were unable to calculate a payment rate for
HCPCS code C2644 (Brachytherapy cesium-131 chloride) based on the
general OPPS ratesetting methodology, we are finalizing our proposal to
assign HCPCS code C2644 status indicator ``E2'' (Items and Services for
Which Pricing Information and Claims Data Are Not Available) for CY
2019.
The final CY 2019 payment rates for brachytherapy sources are
included in Addendum B to this final rule with comment period (which is
available via the internet on the CMS website) and are identified with
status indicator ``U''.
We continue to invite hospitals and other parties to submit
recommendations to us for new codes to describe new brachytherapy
sources. Such recommendations should be
[[Page 58837]]
directed to the Division of Outpatient Care, Mail Stop C4-01-26,
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.
b. Comprehensive APCs (C-APCs) for CY 2019
(1) Background
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), we finalized a comprehensive payment policy that
packages payment for adjunctive and secondary items, services, and
procedures into the most costly primary procedure under the OPPS at the
claim level. The policy was finalized in CY 2014, but the effective
date was delayed until January 1, 2015, to allow additional time for
further analysis, opportunity for public comment, and systems
preparation. The comprehensive APC (C-APC) policy was implemented
effective January 1, 2015, with modifications and clarifications in
response to public comments received regarding specific provisions of
the C-APC policy (79 FR 66798 through 66810).
A C-APC is defined as a classification for the provision of a
primary service and all adjunctive services provided to support the
delivery of the primary service. We established C-APCs as a category
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015
(79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70332), we finalized 10 additional C-APCs to be
paid under the existing C-APC payment policy and added one additional
level to both the Orthopedic Surgery and Vascular Procedures clinical
families, which increased the total number of C-APCs to 37 for CY 2016.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584
through 79585), we finalized another 25 C-APCs for a total of 62 C-
APCs. In the CY 2018 OPPS/ASC final rule with comment period, we did
not change the total number of C-APCs from 62.
Under this policy, we designate a service described by a HCPCS code
assigned to a C-APC as the primary service when the service is
identified by OPPS status indicator ``J1''. When such a primary service
is reported on a hospital outpatient claim, taking into consideration
the few exceptions that are discussed below, we make payment for all
other items and services reported on the hospital outpatient claim as
being integral, ancillary, supportive, dependent, and adjunctive to the
primary service (hereinafter collectively referred to as ``adjunctive
services'') and representing components of a complete comprehensive
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services
are packaged into the payments for the primary services. This results
in a single prospective payment for each of the primary, comprehensive
services based on the costs of all reported services at the claim
level.
Services excluded from the C-APC policy under the OPPS include
services that are not covered OPD services, services that cannot by
statute be paid for under the OPPS, and services that are required by
statute to be separately paid. This includes certain mammography and
ambulance services that are not covered OPD services in accordance with
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also
are required by statute to receive separate payment under section
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which
also require separate payment under section 1833(t)(6) of the Act;
self-administered drugs (SADs) that are not otherwise packaged as
supplies because they are not covered under Medicare Part B under
section 1861(s)(2)(B) of the Act; and certain preventive services (78
FR 74865 and 79 FR 66800 through 66801). A list of services excluded
from the C-APC policy is included in Addendum J to this final rule with
comment period (which is available via the internet on the CMS
website).
The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period for the C-APCs and modified and
implemented beginning in CY 2015 is summarized as follows (78 FR 74887
and 79 FR 66800):
Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule
with comment period, we define the C-APC payment policy as including
all covered OPD services on a hospital outpatient claim reporting a
primary service that is assigned to status indicator ``J1'', excluding
services that are not covered OPD services or that cannot by statute be
paid for under the OPPS. Services and procedures described by HCPCS
codes assigned to status indicator ``J1'' are assigned to C-APCs based
on our usual APC assignment methodology by evaluating the geometric
mean costs of the primary service claims to establish resource
similarity and the clinical characteristics of each procedure to
establish clinical similarity within each APC.
In the CY 2016 OPPS/ASC final rule with comment period, we expanded
the C-APC payment methodology to qualifying extended assessment and
management encounters through the ``Comprehensive Observation
Services'' C-APC (C-APC 8011). Services within this APC are assigned
status indicator ``J2''. Specifically, we make a payment through C-APC
8011 for a claim that:
Does not contain a procedure described by a HCPCS code to
which we have assigned status indicator ``T'' that is reported with a
date of service on the same day or 1 day earlier than the date of
service associated with services described by HCPCS code G0378;
Contains 8 or more units of services described by HCPCS
code G0378 (Hospital observation services, per hour);
Contains services provided on the same date of service or
1 day before the date of service for HCPCS code G0378 that are
described by one of the following codes: HCPCS code G0379 (Direct
admission of patient for hospital observation care) on the same date of
service as HCPCS code G0378; CPT code 99281 (Emergency department visit
for the evaluation and management of a patient (Level 1)); CPT code
99282 (Emergency department visit for the evaluation and management of
a patient (Level 2)); CPT code 99283 (Emergency department visit for
the evaluation and management of a patient (Level 3)); 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)) or HCPCS code G0380
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B
emergency department visit (Level 2)); HCPCS code G0382 (Type B
emergency department visit (Level 3)); HCPCS code G0383 (Type B
emergency department visit (Level 4)); HCPCS code G0384 (Type B
emergency department visit (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 G0463 (Hospital outpatient
clinic visit for assessment and management of a patient); and
Does not contain services described by a HCPCS code to
which we have assigned status indicator ``J1''.
The assignment of status indicator ``J2'' to a specific combination
of services performed in combination with each other allows for all
other OPPS payable services and items reported on the claim (excluding
services that are
[[Page 58838]]
not covered OPD services or that cannot by statute be paid for under
the OPPS) to be deemed adjunctive services representing components of a
comprehensive service and resulting in a single prospective payment for
the comprehensive service based on the costs of all reported services
on the claim (80 FR 70333 through 70336).
Services included under the C-APC payment packaging policy, that
is, services that are typically adjunctive to the primary service and
provided during the delivery of the comprehensive service, include
diagnostic procedures, laboratory tests, and other diagnostic tests and
treatments that assist in the delivery of the primary procedure; visits
and evaluations performed in association with the procedure; uncoded
services and supplies used during the service; durable medical
equipment as well as prosthetic and orthotic items and supplies when
provided as part of the outpatient service; and any other components
reported by HCPCS codes that represent services that are provided
during the complete comprehensive service (78 FR 74865 and 79 FR
66800).
In addition, payment for hospital outpatient department services
that are similar to therapy services and delivered either by therapists
or nontherapists is included as part of the payment for the packaged
complete comprehensive service. These services that are provided during
the perioperative period are adjunctive services and are deemed not to
be therapy services as described in section 1834(k) of the Act,
regardless of whether the services are delivered by therapists or other
nontherapist health care workers. We have previously noted that therapy
services are those provided by therapists under a plan of care in
accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the
Act and are paid for under section 1834(k) of the Act, subject to
annual therapy caps as applicable (78 FR 74867 and 79 FR 66800).
However, certain other services similar to therapy services are
considered and paid for as hospital outpatient department services.
Payment for these nontherapy outpatient department services that are
reported with therapy codes and provided with a comprehensive service
is included in the payment for the packaged complete comprehensive
service. We note that these services, even though they are reported
with therapy codes, are hospital outpatient department services and not
therapy services. Therefore, the requirement for functional reporting
under the regulations at 42 CFR 410.59(a)(4) and 42 CFR 410.60(a)(4)
does not apply. We refer readers to the July 2016 OPPS Change Request
9658 (Transmittal 3523) for further instructions on reporting these
services in the context of a C-APC service.
Items included in the packaged payment provided in conjunction with
the primary service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged
supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We
refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit
Policy Manual for a description of our policy on SADs treated as
hospital outpatient supplies, including lists of SADs that function as
supplies and those that do not function as supplies.
We define each hospital outpatient claim reporting a single unit of
a single primary service assigned to status indicator ``J1'' as a
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line
item charges for services included on the C-APC claim are converted to
line item costs, which are then summed to develop the estimated APC
costs. These claims are then assigned one unit of the service with
status indicator ``J1'' and later used to develop the geometric mean
costs for the C-APC relative payment weights. (We note that we use the
term ``comprehensive'' to describe the geometric mean cost of a claim
reporting ``J1'' service(s) or the geometric mean cost of a C-APC,
inclusive of all of the items and services included in the C-APC
service payment bundle.) Charges for services that would otherwise be
separately payable are added to the charges for the primary service.
This process differs from our traditional cost accounting methodology
only in that all such services on the claim are packaged (except
certain services as described above). We apply our standard data trims,
which exclude claims with extremely high primary units or extreme
costs.
The comprehensive geometric mean costs are used to establish
resource similarity and, along with clinical similarity, dictate the
assignment of the primary services to the C-APCs. We establish a
ranking of each primary service (single unit only) to be assigned to
status indicator ``J1'' according to its comprehensive geometric mean
costs. For the minority of claims reporting more than one primary
service assigned to status indicator ``J1'' or units thereof, we
identify one ``J1'' service as the primary service for the claim based
on our cost-based ranking of primary services. We then assign these
multiple ``J1'' procedure claims to the C-APC to which the service
designated as the primary service is assigned. If the reported ``J1''
services on a claim map to different C-APCs, we designate the ``J1''
service assigned to the C-APC with the highest comprehensive geometric
mean cost as the primary service for that claim. If the reported
multiple ``J1'' services on a claim map to the same C-APC, we designate
the most costly service (at the HCPCS code level) as the primary
service for that claim. This process results in initial assignments of
claims for the primary services assigned to status indicator ``J1'' to
the most appropriate C-APCs based on both single and multiple procedure
claims reporting these services and clinical and resource homogeneity.
Complexity Adjustments. We use complexity adjustments to provide
increased payment for certain comprehensive services. We apply a
complexity adjustment by promoting qualifying paired ``J1'' service
code combinations or paired code combinations of ``J1'' services and
certain add-on codes (as described further below) from the originating
C-APC (the C-APC to which the designated primary service is first
assigned) to the next higher paying C-APC in the same clinical family
of C-APCs. We apply this type of complexity adjustment when the paired
code combination represents a complex, costly form or version of the
primary service according to the following criteria:
Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
Violation of the 2 times rule in the originating C-APC
(cost threshold).
These criteria identify paired code combinations that occur
commonly and exhibit materially greater resource requirements than the
primary service. The CY 2017 OPPS/ASC final rule with comment period
(81 FR 79582) included a revision to the complexity adjustment
eligibility criteria. Specifically, we finalized a policy to
discontinue the requirement that a code combination (that qualifies for
a complexity adjustment by satisfying the frequency and cost criteria
thresholds described above) also not create a 2 times rule violation in
the higher level or receiving APC.
After designating a single primary service for a claim, we evaluate
that service in combination with each of the other procedure codes
reported on the claim assigned to status indicator ``J1'' (or certain
add-on codes) to determine if
[[Page 58839]]
there are paired code combinations that meet the complexity adjustment
criteria. For a new HCPCS code, we determine initial C-APC assignment
and qualification for a complexity adjustment using the best available
information, crosswalking the new HCPCS code to a predecessor code(s)
when appropriate.
Once we have determined that a particular code combination of
``J1'' services (or combinations of ``J1'' services reported in
conjunction with certain add-on codes) represents a complex version of
the primary service because it is sufficiently costly, frequent, and a
subset of the primary comprehensive service overall according to the
criteria described above, we promote the claim including the complex
version of the primary service as described by the code combination to
the next higher cost C-APC within the clinical family, unless the
primary service is already assigned to the highest cost APC within the
C-APC clinical family or assigned to the only C-APC in a clinical
family. We do not create new APCs with a comprehensive geometric mean
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity
adjustments. Therefore, the highest payment for any claim including a
code combination for services assigned to a C-APC would be the highest
paying C-APC in the clinical family (79 FR 66802).
We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70331), all add-on codes that can be
appropriately reported in combination with a base code that describes a
primary ``J1'' service are evaluated for a complexity adjustment.
To determine which combinations of primary service codes reported
in conjunction with an add-on code may qualify for a complexity
adjustment for CY 2019, in the CY 2019 OPPS/ASC proposed rule (83 FR
37061), we proposed to apply the frequency and cost criteria thresholds
discussed above, testing claims reporting one unit of a single primary
service assigned to status indicator ``J1'' and any number of units of
a single add-on code for the primary ``J1'' service. If the frequency
and cost criteria thresholds for a complexity adjustment are met and
reassignment to the next higher cost APC in the clinical family is
appropriate (based on meeting the criteria outlined above), we make a
complexity adjustment for the code combination; that is, we reassign
the primary service code reported in conjunction with the add-on code
to the next higher cost C-APC within the same clinical family of C-
APCs. As previously stated, we package payment for add-on codes into
the C-APC payment rate. If any add-on code reported in conjunction with
the ``J1'' primary service code does not qualify for a complexity
adjustment, payment for the add-on service continues to be packaged
into the payment for the primary service and is not reassigned to the
next higher cost C-APC. We listed the complexity adjustments proposed
for ``J1'' and add-on code combinations for CY 2019, along with all of
the other proposed complexity adjustments, in Addendum J to the CY 2019
OPPS/ASC proposed rule (which is available via the internet on the CMS
website).
Addendum J to the proposed rule included the cost statistics for
each code combination that would qualify for a complexity adjustment
(including primary code and add-on code combinations). Addendum J to
the proposed rule also contained summary cost statistics for each of
the paired code combinations that describe a complex code combination
that would qualify for a complexity adjustment and were proposed to be
reassigned to the next higher cost C-APC within the clinical family.
The combined statistics for all proposed reassigned complex code
combinations were represented by an alphanumeric code with the first 4
digits of the designated primary service followed by a letter. For
example, the proposed geometric mean cost listed in Addendum J for the
code combination described by complexity adjustment assignment 3320R,
which is assigned to C-APC 5224 (Level 4 Pacemaker and Similar
Procedures), includes all paired code combinations that were proposed
to be reassigned to C-APC 5224 when CPT code 33208 is the primary code.
Providing the information contained in Addendum J to the proposed rule
allowed stakeholders the opportunity to better assess the impact
associated with the proposed reassignment of claims with each of the
paired code combinations eligible for a complexity adjustment.
Comment: Several commenters requested that CMS alter the C-APC
complexity adjustment eligibility criteria to allow additional code
combinations to qualify for complexity adjustments. The commenters
requested that CMS consider clusters of ``J1'' and add-on codes, rather
than only code pairs, and also consider code combinations of ``J1''
codes and devices such as drug-coated balloons and drug-eluting stents.
The commenters also requested that CMS eliminate the 25-claim frequency
threshold. Another commenter requested that CMS consider patient
complexity and procedures assigned to status indicator ``S'' or ``T''
when evaluating procedures for a complexity adjustment. One commenter
suggested that procedures initially eligible for a complexity
adjustment by meeting the applicable requirements in a year maintain
that complexity adjustment for a total period of 3 years, regardless of
whether they continue to meet the criteria after the first year.
In terms of payment for complexity adjustments, one commenter
requested that CMS promote the qualifying code combination to two APC
levels higher than the originating APC rather than to the next higher
paying C-APC. Another commenter suggested that CMS pay the geometric
mean cost of the highest ranking procedure in the qualifying code
combination at 100 percent, and then each secondary procedure at 50
percent of the geometric mean cost of the secondary procedure.
Other commenters also requested an explanation of how the geometric
mean costs of the code combinations evaluated for complexity
adjustments are calculated, stating that the geometric mean cost of
certain code combinations represented in Addendum J were lower than the
geometric mean costs of the primary service when the service is billed
without an additional ``J1'' or ``J1'' add-on procedure. Commenters
also requested that CMS establish complexity adjustments for the
specific code combinations listed in Table 6 below.
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Response: We appreciate these comments. However, at this time, we
do not believe changes to the C-APC complexity adjustment criteria are
necessary or that we should make exceptions to the criteria to allow
claims with the code combinations suggested by the commenters to
receive complexity adjustments. As stated previously (81 FR 79582), we
continue to believe that the complexity adjustment criteria, which
require a frequency of 25 or more claims reporting a code combination
and a violation of the 2 times rule in the originating C-APC in order
to receive payment in the next higher cost C-APC within the clinical
family, are adequate to determine if a combination of procedures
represents a complex, costly subset of the primary service. If a code
combination meets these criteria, the combination receives payment at
the next higher cost C-APC. Code combinations that do not meet these
criteria receive the C-APC payment rate associated with the primary
``J1'' service. A minimum of 25 claims is already very low for a
national payment system. Lowering the minimum of 25 claims further
could lead to unnecessary complexity adjustments for service
combinations that are rarely performed. The complexity adjustment cost
threshold compares the code combinations to the lowest cost-significant
procedure assigned to the APC. If the cost of the code combination does
not exceed twice the cost of the lowest cost-significant procedure
within the APC, no complexity adjustment is made. Lowering or
eliminating this threshold could remove so many claims from the
accounting for the primary ``J1'' service that the geometric mean costs
attributed to the primary procedure could be skewed.
With regard to the specific complexity adjustments requested by
commenters listed in Table 6 above, we note that we did not propose
that claims with these code combinations would receive complexity
adjustments because they did not meet the cost and frequency criteria
for the adjustment. Therefore, we do not believe it is appropriate to
change the complexity adjustment criteria at this time, and because the
suggested code combinations do not meet the existing criteria, we do
not believe it is appropriate to establish complexity adjustments for
these code combinations at this time.
Regarding the request for a code combination that qualified for a
complexity adjustment in a year to continue to qualify for the
adjustment for the next 2 years for a total period of 3 years, we note
that we evaluate code combinations each year against our complexity
adjustment criteria using the latest available data. At this time, we
do not believe it is necessary to expand the ability for code
combinations to meet the complexity adjustment criteria in this manner
because we believe that the existing criteria that were already
established sufficiently reflect those combinations of procedures that
are commonly billed together and are costly enough to merit a
complexity adjustment. Further, we believe that code combinations
should be evaluated each year to determine if they meet the criteria
based on the latest hospital billing and utilization data. We also do
not believe that it is necessary to provide payment for claims
including qualifying code combinations at two APC levels higher than
the originating APC or for CMS to pay based on the geometric mean cost
of the highest ranking procedure in the qualifying code combination at
100 percent, and then each secondary procedure based on 50 percent of
the geometric mean cost of the secondary procedure. We believe that
payment at the next higher paying C-APC is adequate for code
combinations that exhibit materially greater resource requirements than
the primary service and that, in many cases, paying the rate assigned
to two levels higher may lead to a significant overpayment. As
mentioned previously, we do not create new APCs with a comprehensive
geometric mean cost that is higher than the highest geometric mean cost
(or only) C-APC in a clinical family just to accommodate potential
complexity adjustments. The highest payment for any claim including a
code combination for services assigned to a C-APC would be the highest
paying C-APC in the clinical family (79 FR 66802). Therefore, a policy
to pay for claims with qualifying code combinations at two C-APC levels
higher than the originating APC is not always feasible. Likewise, while
paying 100 percent of the highest ranking procedure and paying 50
percent of the
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secondary procedure is the established payment policy under the
multiple procedure payment reduction policy that applies to services
assigned to status indicator ``T,'' we continue to believe that the
established C-APC complexity adjustment policy is appropriate for
services assigned to status indicator ``J1'' or ``J2'', and we do not
believe that it should be replaced with a multiple procedure payment
reduction payment methodology.
In response to the request for an explanation of the cost
statistics for the paired ``J1'' code combinations or paired code
combinations of ``J1'' services and certain add-on codes evaluated for
complexity adjustments, the geometric mean costs of these code
combinations shown in Addendum J are calculated using only claims that
include these code pairings. As stated previously, the cost of the code
combination must exceed twice the cost of the lowest cost-significant
procedure within the APC in order for the combination to qualify for a
complexity adjustment.
Lastly, as stated in the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59238), we do not believe that it is necessary to adjust
the complexity adjustment criteria to allow claims that include a drug
or device code, more than two ``J1'' procedures, or procedures
performed at certain hospitals to qualify for a complexity adjustment.
As mentioned earlier, we believe the current criteria are adequate to
determine if a combination of procedures represents a complex, costly
subset of the primary service.
After consideration of the public comments we received on the
proposed complexity adjustment policy, we are finalizing the C-APC
complexity adjustment policy for CY 2019, as proposed, without
modification.
(2) Additional C-APCs for CY 2019
For CY 2019 and subsequent years, in the CY 2019 OPPS/ASC proposed
rule (83 FR 37062), we proposed to continue to apply the C-APC payment
policy methodology made effective in CY 2015 and updated with the
implementation of status indicator ``J2'' in CY 2016. We refer readers
to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583)
for a discussion of the C-APC payment policy methodology and revisions.
Each year, in accordance with section 1833(t)(9)(A) of the Act, we
review and revise the services within each APC group and the APC
assignments under the OPPS. As a result of our annual review of the
services and the APC assignments under the OPPS, in the proposed rule
(83 FR 37062), we proposed to add three C-APCs under the existing C-APC
payment policy beginning in CY 2019: Proposed C-APC 5163 (Level 3 ENT
Procedures); proposed C-APC 5183 (Level 3 Vascular Procedures); and
proposed C-APC 5184 (Level 4 Vascular Procedures). These APCs were
selected to be included in this proposal because, similar to other C-
APCs, these APCs include primary, comprehensive services, such as major
surgical procedures, that are typically reported with other ancillary
and adjunctive services. Also, similar to other APCs that have been
converted to C-APCs, there are higher APC levels within the clinical
family or related clinical family of these APCs that have previously
been assigned to a C-APC. Table 3 of the proposed rule listed the
proposed C-APCs for CY 2019. All C-APCs were displayed in Addendum J to
the proposed rule (which is available via the internet on the CMS
website). Addendum J to the proposed rule also contained all of the
data related to the C-APC payment policy methodology, including the
list of proposed complexity adjustments and other information.
Comment: Several commenters supported the proposals. Other
commenters, including device manufacturer associations, expressed
ongoing concerns that the C-APC payment rates may not adequately
reflect the costs associated with the services and requested that CMS
not establish any additional C-APCs. These commenters also requested
that CMS provide an analysis of the impact of the C-APC policy on
affected procedures.
Response: We appreciate the commenters' responses. We continue to
believe that the proposed C-APCs for CY 2019 are appropriate to be
added to the existing C-APC payment policy. We also note that, in the
CY 2018 OPPS/ASC final rule with comment period (82 FR 59246), we
conducted an analysis of the effects of the C-APC policy. The analysis
looked at data from CY 2016 OPPS/ASC final rule with comment period,
the CY 2017 OPPS/ASC final rule with comment period, and the CY 2018
OPPS/ASC proposed rule, which involved claims data from CY 2014 (before
C-APCs became effective) to CY 2016. We looked at separately payable
codes that were then assigned to C-APCs and, overall, we observed an
increase in claim line frequency, units billed, and Medicare payment
for those procedures, which suggest that the C-APC payment policy did
not adversely affect access to care or reduce payments to hospitals.
Comment: Several commenters requested that CMS discontinue the C-
APC payment policy for several brachytherapy insertion procedures and
single session stereotactic radiosurgery procedures, stating concerns
that the C-APC methodology does not account for the complexity of
delivering radiation therapy and fails to capture appropriately coded
claims. The commenters also requested that CMS continue to make
separate payments for the 10 planning and preparation codes related to
stereotactic radiosurgery (SRS) and include the HCPCS code for IMRT
planning (77301) on the list of planning and preparation codes, stating
that the service has become more common in single fraction radiosurgery
treatment planning.
Response: At this time, we do not believe that it is necessary to
discontinue the C-APCs that include brachytherapy insertion procedures
and single session SRS procedures. We continue to believe that the C-
APC policy is appropriately applied to these surgical procedures for
the reasons cited when this policy was first adopted and note that the
commenters did not provide any empirical evidence to support their
claims that the existing C-APC policy does not adequately pay for these
procedures. Also, we will continue in CY 2019 to pay separately for the
10 planning and preparation services (HCPCS codes 70551, 70552, 70553,
77011, 77014, 77280, 77285, 77290, 77295, and 77336) adjunctive to the
delivery of the SRS treatment using either the Cobalt-60-based or LINAC
based technology when furnished to a beneficiary within 1 month of the
SRS treatment for CY 2019 (82 FR 59242 and 59243).
Comment: Several commenters representing stem cell transplant
organizations requested that CMS also establish a new C-APC for
autologous stem cell transplants for CY 2019. These commenters stated
that the C-APC methodology will allow CMS to better capture the costs
of additional services, such as laboratory tests, provided with the
autologous transplant. The Advisory Panel on Hospital Outpatient
Payment (HOP Panel) also recommended that CMS study the appropriateness
of creating a comprehensive APC for autologous hematopoietic stem cell
transplantation.
Response: We appreciate these comments and may consider the
creation of a C-APC for autologous stem cell transplants for future
rulemaking as recommended by the HOP Panel.
Comment: Two manufacturers of drugs used in ocular procedures
requested that CMS discontinue the C-APC payment policy for existing C-
APCs that include procedures involving
[[Page 58844]]
their drugs and instead provide separate payment for the drugs. The
manufacturer commenters, as well as several physicians, believed that
the C-APC packaging policy, which packages payment for certain drugs
that are adjunctive to the primary service, results in underpayment for
the drugs.
Response: We continue to believe that the procedures assigned to
the proposed C-APCs, including the procedures involving the drugs used
in ocular procedures mentioned by the commenters, are appropriately
paid through a comprehensive APC and the costs of drugs (as well as
other items or services furnished with the procedures) are reflected in
hospital billing, and therefore the rates that are established for the
ocular procedures. As stated in the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79584), procedures assigned to C-APCs are primary
services (mostly major surgical procedures) that are typically the
focus of the hospital outpatient stay. In addition, with regard to the
packaging of the drugs based on the C-APC policy, as stated in previous
rules (78 FR 74868 through 74869 and 74909 and 79 FR 66800), items
included in the packaged payment provided with the primary ``J1''
service include all drugs, biologicals, and radiopharmaceuticals
payable under the OPPS, regardless of cost, except those drugs with
pass-through payment status.
After consideration of the public comments we received, we are
finalizing the proposed C-APCs for CY 2019. Table 7 below lists the
final C-APCs for CY 2019. All C-APCs are displayed in Addendum J to
this final rule with comment period (which is available via the
internet on the CMS website). Addendum J to this final rule with
comment period also contains all of the data related to the C-APC
payment policy methodology, including the list of complexity
adjustments and other information for CY 2019.
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(3) Exclusion of Procedures Assigned to New Technology APCs From the C-
APC Policy
Services that are assigned to New Technology APCs are typically new
procedures that do not have sufficient claims history to establish an
accurate payment for the procedures. 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 an appropriate
clinical 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 (82 FR 59277).
The C-APC payment policy packages payment for adjunctive and
secondary items, services, and procedures into the most costly primary
procedure under the OPPS at the claim level. When a procedure assigned
to a New Technology APC is included on the claim with a primary
procedure, identified by OPPS status indicator ``J1'', payment for the
new technology service is typically packaged into the payment for the
primary procedure. Because the new technology service is not separately
paid in this scenario, the overall number of single claims available to
determine an appropriate clinical APC for the new service is reduced.
This is contrary to the objective of the New Technology APC payment
policy, which is to gather sufficient claims data to enable us to
assign the service to an appropriate clinical APC.
For example, for CY 2017, there were seven claims generated for
HCPCS code 0100T (Placement of a subconjunctival retinal prosthesis
receiver and pulse generator, and implantation of intraocular retinal
electrode array, with vitrectomy), which involves the use of the
Argus[supreg] II Retinal Prosthesis System. However, several of these
claims were not available for ratesetting because HCPCS code 0100T was
reported with a ``J1'' procedure and, therefore, payment was packaged
into the associated C-APC payment. If these services had been
separately paid under the OPPS, there would be at least two additional
single claims available for ratesetting. As mentioned previously, the
purpose of the new technology APC policy is to ensure that there are
sufficient claims data for new services, which is particularly
important for services with a low volume such as procedures described
by HCPCS code 0100T. Another concern is the costs reported for the
claims when payment is not packaged for a new technology procedure may
not be representative of all of the services included on a claim that
is generated, which may also affect our ability to assign the new
service to the most appropriate clinical APC.
To address this issue and help ensure that there is sufficient
claims data for services assigned to New Technology APCs, in the CY
2019 OPPS/ASC proposed rule (83 FR 37063), we proposed to exclude
payment for any procedure that is assigned to a New Technology APC
(APCs 1491 through 1599 and APCs 1901 through 1908) from being packaged
when included on a claim with a ``J1'' service assigned to a C-APC.
This issue is also addressed in section III.C.3.b. of the proposed rule
and this final rule with comment period.
Comment: Numerous commenters supported the proposal.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing the proposal, without modification, to exclude payment for
any procedure that is assigned to a New Technology APC (APCs 1491
through 1599 and APCs 1901 through 1908) from being packaged when
included on a claim with a ``J1'' service assigned to a C-APC.
c. Calculation of Composite APC Criteria-Based 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 necessary, high quality care as
efficiently as possible. For CY 2008, we developed composite APCs to
provide a single payment for groups of services that are typically
performed together during a single clinical encounter and that result
in the provision of a complete service. Combining payment for multiple,
independent services into a single OPPS payment in this way enables
hospitals to manage their resources with maximum flexibility by
monitoring and adjusting the volume and efficiency of services
themselves. An additional advantage to the composite APC model is that
we can use data from correctly coded multiple procedure claims to
[[Page 58848]]
calculate payment rates for the specified combinations of services,
rather than relying upon single procedure claims which may be low in
volume and/or incorrectly coded. Under the OPPS, we currently have
composite policies for mental health services and multiple imaging
services. (We note that, in the CY 2018 OPPS/ASC final rule with
comment period, we finalized a policy to delete the composite APC 8001
(LDR Prostate Brachytherapy Composite) for CY 2018 and subsequent
years.) We refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66611 through 66614 and 66650 through 66652) for
a full discussion of the development of the composite APC methodology,
and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163)
and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59241
through 59242 and 59246 through 52950) for more recent background.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37064), for CY 2019
and subsequent years, we proposed to continue our composite APC payment
policies for mental health services and multiple imaging services, as
discussed below. In addition, as discussed in section II.A.2.b.(3) and
II.A.2.c. of the CY 2018 OPPS/ASC proposed rule and final rule with
comment period (82 FR 33577 through 33578 and 59241 through 59242 and
59246, respectively), in the CY 2019 proposed rule, we proposed to
continue to assign CPT code 55875 (Transperineal placement of needles
or catheters into prostate for interstitial radioelement application,
with or without cystoscopy) to status indicator ``J1'' and to continue
to assign the services described by CPT code 55875 to C-APC 5375 (Level
5 Urology and Related Services) for CY 2019. We did not receive any
public comments on these proposed assignments. Therefore, for CY 2019,
we are continuing to assign CPT code 55875 to status indicator ``J1''
and to assign services described by CPT code 55875 to C-APC 5375.
(1) Mental Health Services Composite APC
In the CY 2019 OPPS/ASC proposed rule (83 FR 37064), we proposed to
continue our longstanding policy of limiting the aggregate payment for
specified less resource-intensive mental health services furnished on
the same date to the payment for a day of partial hospitalization
services provided by a hospital, which we consider to be the most
resource intensive of all outpatient mental health services. We refer
readers to the April 7, 2000 OPPS final rule with comment period (65 FR
18452 through 18455) for the initial discussion of this longstanding
policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR
74168) for more recent background.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588
through 79589), we finalized a policy to combine the existing Level 1
and Level 2 hospital-based PHP APCs into a single hospital-based PHP
APC, and thereby discontinue APCs 5861 (Level 1 Partial Hospitalization
(3 services) for Hospital-Based PHPs) and 5862 (Level 2 Partial
Hospitalization (4 or more services) for Hospital-Based PHPs) and
replace them with APC 5863 (Partial Hospitalization (3 or more services
per day)).
In the CY 2018 OPPS/ASC proposed rule and final rule with comment
period (82 FR 33580 through 33581 and 59246 through 59247,
respectively), we proposed and finalized the policy for CY 2018 and
subsequent years that, when the aggregate payment for specified mental
health services provided by one hospital to a single beneficiary on a
single date of service, based on the payment rates associated with the
APCs for the individual services, exceeds the maximum per diem payment
rate for partial hospitalization services provided by a hospital, those
specified mental health services will be paid through composite APC
8010 (Mental Health Services Composite). In addition, we set the
payment rate for composite APC 8010 for CY 2018 at the same payment
rate that will be paid for APC 5863, which is the maximum partial
hospitalization per diem payment rate for a hospital, and finalized a
policy that the hospital will continue to be paid the payment rate for
composite APC 8010. Under this policy, the I/OCE will continue to
determine whether to pay for these specified mental health services
individually, or to make a single payment at the same payment rate
established for APC 5863 for all of the specified mental health
services furnished by the hospital on that single date of service. We
continue to believe that the costs associated with administering a
partial hospitalization program at a hospital represent the most
resource intensive of all outpatient mental health services. Therefore,
we do not believe that we should pay more for mental health services
under the OPPS than the highest partial hospitalization per diem
payment rate for hospitals.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37064), for CY 2019,
we proposed that when the aggregate payment for specified mental health
services provided by one hospital to a single beneficiary on a single
date of service, based on the payment rates associated with the APCs
for the individual services, exceeds the maximum per diem payment rate
for partial hospitalization services provided by a hospital, those
specified mental health services would be paid through composite APC
8010 for CY 2019. In addition, we proposed to set the proposed payment
rate for composite APC 8010 at the same payment rate that we proposed
for APC 5863, which is the maximum partial hospitalization per diem
payment rate for a hospital, and that the hospital continue to be paid
the proposed payment rate for composite APC 8010.
Comment: One commenter supported equalizing payments between the
outpatient APC rate and the PHP per diem rate. The commenter also
supported the increase in the proposed CY 2019 payment rates from the
CY 2018 payment rates.
Response: We appreciate the commenter's support.
After consideration of the public comment we received, we are
finalizing our CY 2019 proposal, without modification, that when the
aggregate payment for specified mental health services provided by one
hospital to a single beneficiary on a single date of service, based on
the payment rates associated with the APCs for the individual services,
exceeds the maximum per diem payment rate for partial hospitalization
services provided by a hospital, those specified mental health services
will be paid through composite APC 8010 for CY 2019. In addition, we
are finalizing our CY 2019 proposal, without modification, to set the
payment rate for composite APC 8010 at the same payment rate as APC
5863, which is the maximum partial hospitalization per diem payment
rate for a hospital, and that the hospital continue to be paid the
payment rate for composite APC 8010.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide a single payment each time a
hospital submits a claim for more than one imaging procedure within an
imaging family on the same date of service, in order to reflect and
promote the efficiencies hospitals can achieve when performing multiple
imaging procedures during a single session (73 FR 41448 through 41450).
We utilize three imaging families based on imaging modality for
purposes of this methodology: (1) Ultrasound; (2) computed tomography
(CT) and computed tomographic angiography (CTA); and (3) magnetic
resonance
[[Page 58849]]
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes
subject to the multiple imaging composite policy and their respective
families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74920 through 74924).
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement under section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast.
The five multiple imaging composite APCs established in CY 2009 are:
APC 8004 (Ultrasound Composite);
APC 8005 (CT and CTA without Contrast Composite);
APC 8006 (CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without Contrast Composite); and
APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment based on the payment rate for APC 8008, the ``with
contrast'' composite APC.
We make a single payment for those imaging procedures that qualify
for payment based on the composite APC payment rate, which includes any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging procedures performed across families.
For a full discussion of the development of the multiple imaging
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68559 through 68569).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37065), we proposed,
for CY 2019 and subsequent years, to continue to pay for all multiple
imaging procedures within an imaging family performed on the same date
of service using the multiple imaging composite APC payment
methodology. We stated that we continue to believe that this policy
would reflect and promote the efficiencies hospitals can achieve when
performing multiple imaging procedures during a single session.
The proposed CY 2019 payment rates for the five multiple imaging
composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) were based on
proposed geometric mean costs calculated from a partial year of CY 2017
claims available for the CY 2019 OPPS/ASC proposed rule that qualified
for composite payment under the current policy (that is, those claims
reporting more than one procedure within the same family on a single
date of service). To calculate the proposed geometric mean costs, we
used the same methodology that we have used to calculate the geometric
mean costs for these composite APCs since CY 2014, as described in the
CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The
imaging HCPCS codes referred to as ``overlap bypass codes'' that we
removed from the bypass list for purposes of calculating the proposed
multiple imaging composite APC geometric mean costs, in accordance with
our established methodology as stated in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74918), were identified by asterisks in
Addendum N to the CY 2019 OPPS/ASC proposed rule (which is available
via the internet on the CMS website) and were discussed in more detail
in section II.A.1.b. of the CY 2019 OPPS/ASC proposed rule.
For the CY 2019 OPPS/ASC proposed rule, we were able to identify
approximately 638,902 ``single session'' claims out of an estimated 1.7
million potential claims for payment through composite APCs from our
ratesetting claims data, which represents approximately 37 percent of
all eligible claims, to calculate the proposed CY 2019 geometric mean
costs for the multiple imaging composite APCs. Table 4 of the CY 2019
OPPS/ASC proposed rule listed the proposed HCPCS codes that would be
subject to the multiple imaging composite APC policy and their
respective families and approximate composite APC proposed geometric
mean costs for CY 2019.
We did not receive any public comments on these proposals. However,
in the CY 2019 OPPS/ASC proposed rule (83 FR 37065), we inadvertently
omitted the new CPT codes that will be effective January 1, 2019 from
Table 4. We did include these codes in Addendum M to the proposed rule
(which was available via the internet on the CMS website). Therefore,
new Category I CPT codes that will be effective January 1, 2019 are
flagged with comment indicator ``NI'' in Addendum M to this CY 2019
OPPS/ASC final rule with comment period to indicate that we have
assigned the codes an interim APC assignment for CY 2019. We are
inviting public comments in this CY 2019 OPPS/ASC final rule with
comment period on the interim APC assignments and payment rates for the
new codes in Addendum M that will be finalized in the CY 2020 OPPS/ASC
final rule with comment period.
Table 8 below lists the HCPCS codes that will be subject to the
multiple imaging composite APC policy and their respective families and
approximate composite APC final geometric mean costs for CY 2019.
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3. Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or a bundle of specific services for a particular
patient. The OPPS packages payments
[[Page 58854]]
for multiple interrelated items and services into a single payment to
create incentives for hospitals to furnish services most efficiently
and to manage their resources with maximum flexibility. Our packaging
policies support our strategic goal of using larger payment bundles in
the OPPS to maximize hospitals' incentives to provide care in the most
efficient manner. For example, where there are a variety of devices,
drugs, items, and supplies that could be used to furnish a service,
some of which are more costly than others, packaging encourages
hospitals to use the most cost-efficient item that meets the patient's
needs, rather than to routinely use a more expensive item, which often
occurs if separate payment is provided for the item.
Packaging also encourages hospitals to effectively negotiate 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 delivery.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while scrutinizing the
services ordered by practitioners to maximize the efficient use of
hospital resources. Packaging payments into larger payment bundles
promotes the predictability and accuracy of payment for services over
time. Finally, packaging may reduce the importance of refining service-
specific payment because packaged payments include costs associated
with higher cost cases requiring many ancillary items and services and
lower cost cases requiring fewer ancillary items and services. Because
packaging encourages efficiency and is an essential component of a
prospective payment system, packaging payments for items and services
that are typically integral, ancillary, supportive, dependent, or
adjunctive to a primary service has been a fundamental part of the OPPS
since its implementation in August 2000. For an extensive discussion of
the history and background of the OPPS packaging policy, we refer
readers to the CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66580), the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66817), the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70343), the CY 2017 OPPS/ASC
final rule with comment period (81 FR 79592), and the CY 2018 OPPS/ASC
final rule with comment period (82 FR 59250). As we continue to develop
larger payment groups that more broadly reflect services provided in an
encounter or episode of care, we have expanded the OPPS packaging
policies. Most, but not necessarily all, categories of items and
services currently packaged in the OPPS are listed in 42 CFR 419.2(b).
Our overarching goal is to make payments for all services under the
OPPS more consistent with those of a prospective payment system and
less like those of a per-service fee schedule, which pays separately
for each coded item. As a part of this effort, we have continued to
examine the payment for items and services provided under the OPPS to
determine which OPPS services can be packaged to further achieve the
objective of advancing the OPPS toward a more prospective payment
system.
For CY 2019, we examined the items and services currently provided
under the OPPS, reviewing categories of integral, ancillary,
supportive, dependent, or adjunctive items and services for which we
believe payment would be appropriately packaged into payment of the
primary service that they support. Specifically, we examined the HCPCS
code definitions (including CPT code descriptors) and outpatient
hospital billing patterns to determine whether there were categories of
codes for which packaging would be appropriate according to existing
OPPS packaging policies or a logical expansion of those existing OPPS
packaging policies. In the CY 2019 OPPS/ASC proposed rule (83 37067
through 37071), for CY 2019, we proposed to conditionally package the
costs of selected newly identified ancillary services into payment with
a primary service where we believe that the packaged item or service is
integral, ancillary, supportive, dependent, or adjunctive to the
provision of care that was reported by the primary service HCPCS code.
Below we discuss the proposed and finalized changes to the packaging
policies beginning in CY 2019.
b. CY 2019 Packaging Policy for Non-Opioid Pain Management Treatments
In the CY 2018 OPPS/ASC proposed rule (82 FR 33588), within the
framework of existing packaging categories, such as drugs that function
as supplies in a surgical procedure or diagnostic test or procedure, we
requested stakeholder feedback on common clinical scenarios involving
currently packaged items and services described by HCPCS codes that
stakeholders believe should not be packaged under the OPPS. We also
expressed interest in stakeholder feedback on common clinical scenarios
involving separately payable HCPCS codes for which payment would be
most appropriately packaged under the OPPS. Commenters expressed a
variety of views on packaging under the OPPS. In the CY 2018 OPPS/ASC
final rule with comment period, we summarized the comments received in
response to our request (82 FR 59255). The comments ranged from
requests to unpackage most items and services that are either
conditionally or unconditionally packaged under the OPPS, including
drugs and devices, to specific requests for separate payment for a
specific drug or device. We stated in the CY 2018 OPPS/ASC final rule
with comment period that CMS would continue to explore and evaluate
packaging policies under the OPPS and consider these policies in future
rulemaking.
In addition to stakeholder feedback regarding OPPS packaging
policies, the President's Commission on Combating Drug Addiction and
the Opioid Crisis (the Commission) recently recommended that CMS
examine payment policies for certain drugs that function as a supply,
specifically non-opioid pain management treatments. The Commission was
established in 2017 to study ways to combat and treat drug abuse,
addiction, and the opioid crisis. The Commission's report \3\ included
a recommendation for CMS to ``. . . review and modify ratesetting
policies that discourage the use of non-opioid treatments for pain,
such as certain bundled payments that make alternative treatment
options cost prohibitive for hospitals and doctors, particularly those
options for treating immediate postsurgical pain. . . .'' \4\ With
respect to the packaging policy, the Commission's report states that
``. . . the current CMS payment policy for `supplies' related to
surgical procedures creates unintended incentives to prescribe opioid
medications to patients for postsurgical pain instead of administering
non-opioid pain medications. Under current policies, CMS provides one
all-inclusive bundled payment to hospitals for all `surgical supplies,'
which includes hospital-administered drug products intended to manage
patients' postsurgical pain. This policy results in the hospitals
receiving the same fixed fee from Medicare whether the surgeon
[[Page 58855]]
administers a non-opioid medication or not.'' \5\ HHS also presented an
Opioid Strategy in April 2017 \6\ that aims in part to support cutting-
edge research and advance the practice of pain management. On October
26, 2017, the opioid crisis was declared a national public health
emergency under Federal law \7\ and this determination was renewed on
April 20, 2018.\8\
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\3\ President's Commission on Combating Drug Addiction and the
Opioid Crisis, Report (2017). Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Final_Report_Draft_11-1-2017.pdf.
\4\ Ibid, at page 57, Recommendation 19.
\5\ Ibid.
\6\ Available at: https://www.hhs.gov/about/leadership/secretary/speeches/2017-speeches/secretary-price-announces-hhs-strategy-for-fighting-opioid-crisis/index.html.
\7\ Available at: https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
\8\ Available at: https://www.phe.gov/emergency/news/healthactions/phe/Pages/default.aspx.
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As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37068
through 37071), in response to stakeholder comments on the CY 2018
OPPS/ASC proposed rule and in light of the recommendations regarding
payment policies for certain drugs, we recently evaluated the impact of
our packaging policy for drugs that function as a supply when used in a
surgical procedure on the utilization of these drugs in both the
hospital outpatient department and the ASC setting. Currently, as noted
above, drugs that function as a supply are packaged under the OPPS and
the ASC payment system, regardless of the costs of the drugs. The costs
associated with packaged drugs that function as a supply are included
in the ratesetting methodology for the surgical procedures with which
they are billed and the payment rate for the associated procedure
reflects the costs of the packaged drugs and other packaged items and
services to the extent they are billed with the procedure. In our
evaluation, we used currently available data to analyze the utilization
patterns associated with specific drugs that function as a supply over
a 5-year time period (CYs 2013 through 2017) to determine whether this
packaging policy has reduced the use of these drugs. If the packaging
policy discouraged the use of drugs that function as a supply or
impeded access to these products, we would expect to see a significant
decline in utilization of these drugs over time, although we note that
a decline in utilization could also reflect other factors, such as the
availability of alternative products. We did not observe significant
declines in the total number of units used in the hospital outpatient
department for a majority of the drugs included in our analysis.
In fact, under the OPPS, we observed the opposite effect for
several drugs that function as a supply, including Exparel (HCPCS code
C9290). Exparel is a liposome injection of bupivacaine, an amide local
anesthetic, indicated for single-dose infiltration into the surgical
site to produce postsurgical analgesia. In 2011, Exparel was approved
by the FDA for administration into the postsurgical site to provide
postsurgical analgesia.\9\ Exparel had pass-through payment status from
CYs 2012 through 2014 and was separately paid under both the OPPS and
the ASC payment system during this 3-year period. Beginning in CY 2015,
Exparel was packaged as a surgical supply under both the OPPS and the
ASC payment system. Exparel is currently the only non-opioid pain
management drug that is packaged as a drug that functions as a supply
when used in a surgical procedure under the OPPS and the ASC payment
system.
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\9\ Available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2011/022496s000lbl.pdf.
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From CYs 2013 through 2017, there was an overall increase in the
OPPS Medicare utilization of Exparel of approximately 229 percent (from
2.3 million units to 7.7 million units) during this 5-year time period.
The total number of claims reporting Exparel increased by 222 percent
(from 10,609 claims to 34,183 claims) over this time period. This
increase in utilization continued, even after the 3-year drug pass-
through payment period ended for this product in 2014, with 18 percent
overall growth in the total number of units used from CYs 2015 through
2017 (from 6.5 million units to 7.7 million units). The number of
claims reporting Exparel increased by 21 percent during this time
period (from 28,166 claims to 34,183 claims).
Thus, we have not found evidence to support the notion that the
OPPS packaging policy has had an unintended consequence of discouraging
the use of non-opioid treatment for postsurgical pain management in the
hospital outpatient department. Therefore, based on this data analysis,
we stated in the CY 2019 OPPS/ASC proposed rule that we did not believe
that changes were necessary under the OPPS for the packaged drug policy
for drugs that function as a surgical supply when used in a surgical
procedure in this setting at this time.
In terms of Exparel in particular, we have received several
requests to pay separately for the drug rather than packaging payment
for it as a surgical supply. In the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66874 and 66875), in response to comments from
stakeholders requesting separate payment for Exparel, we stated that we
considered Exparel to be a drug that functions as a surgical supply
because it is indicated for the alleviation of postoperative pain. We
also stated that we consider all items related to the surgical outcome
and provided during the hospital stay in which the surgery is
performed, including postsurgical pain management drugs, to be part of
the surgery for purposes of our drug and biological surgical supply
packaging policy. In the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59345), we reiterated our position with regard to payment
for Exparel, stating that we believed that payment for this drug is
appropriately packaged with the primary surgical procedure. In
addition, we have reviewed recently available literature with respect
to Exparel, including a briefing document \10\ submitted for the FDA
Advisory Committee Meeting held February 14-15, 2018, by the
manufacturer of Exparel that notes that ``. . . Bupivacaine, the active
pharmaceutical ingredient in Exparel, is a local anesthetic that has
been used for infiltration/field block and peripheral nerve block for
decades'' and that ``since its approval, Exparel has been used
extensively, with an estimated 3.5 million patient exposures in the
US.'' \11\ On April 6, 2018, the FDA approved Exparel's new indication
for use as an interscalene brachial plexus nerve block to produce
postsurgical regional analgesia.\12\ Therefore, we also stated in the
CY 2019 OPPS/ASC proposed rule that, based on our review of currently
available OPPS Medicare claims data and public information from the
manufacturer of the drug, we did not believe that the OPPS packaging
policy had discouraged the use of Exparel for either of the drug's
indications. Accordingly, we continue to believe it is appropriate to
package payment for Exparel as we do with other postsurgical pain
management drugs when it is furnished in a hospital outpatient
department. However, we invited public comments on whether separate
payment would nonetheless further incentivize appropriate use of
Exparel in the hospital outpatient setting and peer-reviewed evidence
that such increased utilization would lead to a decrease in
[[Page 58856]]
opioid use and addiction among Medicare beneficiaries.
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\10\ Food and Drug Administration, Meeting of the Anesthetic and
Analgesic Drug Products Advisory Committee Briefing Document (2018).
Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/AnestheticAndAnalgesicDrugProductsAdvisoryCommittee/UCM596314.pdf.
\11\ Ibid, page 9.
\12\ Available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2018/022496s009lbledt.pdf.
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Comment: Several commenters, including hospital associations,
medical specialty societies, and drug manufacturers, requested that CMS
pay separately for Exparel in the hospital outpatient setting. Some of
these commenters noted that Exparel is used more frequently in this
setting and the use of non-opioid pain management treatments should
also be encouraged in the hospital outpatient department. The
manufacturer of Exparel, Pacira Pharmaceuticals, stated that since the
drug became packaged in 2015, utilization of the drug in the hospital
outpatient department has remained flat while the opioid crisis has
continued to worsen. The manufacturer suggested that, to address the
opioid crisis among Medicare beneficiaries, CMS should promote
``increased penetration of non-opioid therapies in the HOPD setting--or
in other words, higher rates of usage of non-opioid treatments for the
same number of surgical procedures.''
Response: While these commenters advocated paying separately for
Exparel in the hospital outpatient setting, we do not believe that
there is sufficient evidence that non-opioid pain management drugs
should be paid separately in the hospital outpatient setting at this
time. The commenters submitted some peer-reviewed studies, discussed in
further detail below, that showed that the use of Exparel could lead to
a decrease in opioid use in the treatment of acute post-surgical pain
among Medicare beneficiaries. However, the commenters did not provide
evidence that the OPPS packaging policy for Exparel (or other non-
opioid drugs) creates a barrier to use of Exparel in the hospital
setting. Further, while we received some public comments suggesting
that, as a result of using Exparel in the OPPS setting, providers may
prescribe fewer opioids for Medicare beneficiaries, we do not believe
that the OPPS payment policy presents a barrier to use of Exparel or
affects the likelihood that providers may prescribe fewer opioids in
the HOPD setting. Several drugs are packaged under the OPPS and payment
for such drugs is included in the payment for the associated primary
procedure. We were not persuaded by the anecdotal information supplied
by commenters suggesting that some providers avoid use of non-opioid
alternatives (including Exparel) solely because of the OPPS packaged
payment policy. Finally, while the rate of growth for Exparel use in
the HOPD setting has declined over recent years, such trend might be
expected because absolute utilization tends to be smaller in the
initial period when a drug first comes available on the U.S. market.
Additionally, we observed that the total number of providers billing
for Exparel under the OPPS has increased each year from 2012 to 2017.
Therefore, we do not believe that the current OPPS payment methodology
for Exparel and other non-opioid pain management drugs presents a
barrier to their use.
In addition, higher use in the hospital outpatient setting not only
supports the notion that the packaged payment for Exparel is not
causing an access to care issue, but also that the payment rate for
primary procedures in the HOPD using Exparel adequately reflects the
cost of the drug. That is, because Exparel is commonly used and billed
under the OPPS, the APC rates for the primary procedures reflect such
utilization. Therefore, the higher utilization in the OPPS setting
should mitigate the need for separate payment. We remind readers that
the OPPS is a prospective payment system, not a cost-based system and,
by design, is based on a system of averages whereby payment for certain
cases may exceed the costs incurred, while for others, it may not. As
stated earlier in this section, the OPPS packages payments for multiple
interrelated items and services into a single payment to create
incentives for hospitals to furnish services most efficiently and to
manage their resources with maximum flexibility. Our packaging policies
support our strategic goal of using larger payment bundles in the OPPS
to maximize hospitals' incentives to provide care in the most efficient
manner. We will continue to analyze the evidence and monitor
utilization of non-opioid alternatives in the OPD and ASC settings for
potential future rulemaking.
We also stated in the proposed rule that, although we found
increases in utilization for Exparel when it is paid under the OPPS, we
did notice different effects on Exparel utilization when examining the
effects of our packaging policy under the ASC payment system. In
particular, during the same 5-year period of CYs 2013 through 2017, the
total number of units of Exparel used in the ASC setting decreased by
25 percent (from 98,160 total units to 73,595 total units) and the
total number of claims reporting Exparel decreased by 16 percent (from
527 claims to 441 claims). In the ASC setting, after the pass-through
payment period ended for Exparel at the end of CY 2014, the total
number of units of Exparel used decreased by 70 percent (from 244,757
units to 73,595 units) between CYs 2015 and 2017. The total number of
claims reporting Exparel also decreased during this time period by 62
percent (from 1,190 claims to 441 claims). However, there was an
increase of 238 percent (from 98,160 total units to 331,348 total
units) in the total number of units of Exparel used in the ASC setting
during the time period of CYs 2013 and 2014 when the drug received
pass-through payments, indicating that the payment rate of ASP+6
percent for Exparel may have had an impact on its usage in the ASC
setting. The total number of claims reporting Exparel also increased
during this time period from 527 total claims to 1,540 total claims, an
increase of 192 percent.
While several variables may contribute to this difference in
utilization and claims reporting between the hospital outpatient
department and the ASC setting, one potential explanation is that, in
comparison to hospital outpatient departments, ASCs tend to provide
specialized care and a more limited range of services. Also, ASCs are
paid, in aggregate, approximately 55 percent of the OPPS rate.
Therefore, fluctuations in payment rates for specific services may
impact these providers more acutely than hospital outpatient
departments, and therefore, ASCs may be less likely to choose to
furnish non-opioid postsurgical pain management treatments, which are
typically more expensive than opioids, as a result. Another possible
contributing factor is that ASCs do not typically report packaged items
and services and, accordingly, our analysis may be undercounting the
number of Exparel units utilized in the ASC setting.
In light of the results of our evaluation of packaging policies
under the OPPS and the ASC payment system, which showed decreased
utilization for certain drugs that function as a supply in the ASC
setting in comparison to the hospital outpatient department setting, as
well as the Commission's recommendation to examine payment policies for
non-opioid pain management drugs that function as a supply, we stated
in the proposed rule that we believe a change in how we pay for non-
opioid pain management drugs that function as surgical supplies may be
warranted. In particular, we stated that we believe it may be
appropriate to pay separately for evidence-based non-opioid pain
management drugs that function as a supply in a surgical procedure in
the ASC setting to address the decreased utilization of these drugs and
to encourage use of these types of drugs rather than prescription
opioids. Therefore, we proposed in section XII.D.3. of the CY 2019
OPPS/ASC
[[Page 58857]]
proposed rule to unpackage and pay separately for the cost of non-
opioid pain management drugs that function as surgical supplies when
they are furnished in the ASC setting for CY 2019 (83 FR 37065).
We have stated previously (82 FR 59250) that our packaging policies
are designed to support our strategic goal of using larger payment
bundles in the OPPS to maximize hospitals' incentives to provide care
in the most efficient manner. The packaging policies established under
the OPPS also typically apply when services are provided in the ASC
setting, and the policies have the same strategic goals in both
settings. While the CY 2019 proposal is a departure from our current
ASC packaging policy for drugs (specifically, non-opioid pain
management drugs) that function as a supply when used in a surgical
procedure, we stated in the proposed rule that we believe that the
proposed change will incentivize the use of non-opioid pain management
drugs and is responsive to the Commission's recommendation to examine
payment policies for non-opioid pain management drugs that function as
a supply, with the overall goal of combating the current opioid
addiction crisis. As previously noted, a discussion of the CY 2019
proposal for payment of non-opioid pain management drugs in the ASC
setting was presented in further detail in section XII.D.3. of the
proposed rule, and we refer readers to section XII.D.3. of this CY 2019
OPPS/ASC final rule with comment period for further discussion of the
final policy for CY 2019. We also stated in the CY 2019 OPPS/ASC
proposed rule that we were interested in peer-reviewed evidence that
demonstrates that use of non-opioid alternatives, such as Exparel,
furnished in the outpatient setting actually does lead to a decrease in
prescription opioid use and addiction and invited public comments
containing evidence that demonstrate whether and how such non-opioid
alternatives affect prescription opioid use during or after an
outpatient visit or procedure.
Comment: Several commenters, including individual stakeholders,
hospital and physician groups, national medical associations, drug
rehabilitation specialists, device manufacturers, and groups
representing the pharmaceutical industry, supported the proposal to
unpackage and pay separately for the cost of non-opioid pain management
drugs that function as surgical supplies, such as Exparel, in the ASC
setting for CY 2019. These commenters believed that packaged payment
for non-opioid alternatives presents a barrier to care and that
separate payment for non-opioid pain management drugs would be an
appropriate response to the opioid drug abuse epidemic.
Other commenters, including MedPAC, did not support this proposal
and stated that the policy was counter to the OPPS packaging policies
created to encourage efficiencies and could set a precedent for
unpackaging services. One commenter stated that Exparel is more costly,
but not more effective than bupivacaine, a less costly non-opioid
alternative. Other commenters expressed concerns that the proposal may
have the unintended consequence of limiting access to opioid
prescriptions for beneficiaries for whom an opioid prescription would
be appropriate. The commenters noted that some non-opioid pain
management treatments may pose other risks for patients and patient
safety.
Response: This comment and other comments specific to packaging
under the ASC payment system are addressed in section XII.D.3. of this
final rule with comment period.
In addition, as noted in section XII.D.3. of the proposed rule (83
FR 37065 through 37068), we sought comments on whether the proposed
policy would decrease the dose, duration, and/or number of opioid
prescriptions beneficiaries receive during and following an outpatient
visit or procedure (especially for beneficiaries at high-risk for
opioid addiction) as well as whether there are other non-opioid pain
management alternatives that would have similar effects and may warrant
separate payment. For example, we stated we were interested in
identifying whether single post-surgical analgesic injections, such as
Exparel, or other non-opioid drugs or devices that are used during an
outpatient visit or procedure are associated with decreased opioid
prescriptions and/or reduced cases of associated opioid addiction
following such an outpatient visit or procedure. We also requested
comments that provide evidence (such as published peer-reviewed
literature) we could use to determine whether these products help to
deter or avoid prescription opioid use and addiction as well as
evidence that the current packaged payment for such non-opioid
alternatives presents a barrier to access to care and, therefore,
warrants separate payment under either or both the OPPS and the ASC
payment system. We stated that any evidence demonstrating the reduction
or avoidance of prescription opioids would be the criterion we use to
determine whether separate payment is warranted for CY 2019. We also
stated that if evidence changes over time, we would consider whether a
reexamination of any policy adopted in the final rule would be
necessary.
Comment: With regard to whether the proposed policy would decrease
the dose, duration, and/or number of opioid prescriptions beneficiaries
receive during and following an outpatient visit or procedure and
supportive evidence of these reductions, one commenter, the
manufacturer of Exparel, submitted studies that claimed that the use of
Exparel by Medicare patients undergoing total knee replacement
procedures reduced prescription opioid consumption by 90 percent
compared to the control group measured at 48 hours post-surgery.\13\
The manufacturer submitted additional studies claiming statistically
significant reductions in opioid use with the use of Exparel for
various surgeries, including laparotomy, shoulder replacement, and
breast reconstruction.
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\13\ Michael A. Mont et al., Local Infiltration Analgesia With
Liposomal Bupivacaine Improves Pain Scores and Reduces Opioid Use
After Total Knee Arthroplasty: Results of a Randomized Controlled
Trial. J. of Arthroplasty (2018).
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Several commenters identified other non-opioid pain management
drugs that they believe decrease the dose, duration, and/or number of
opioid prescriptions beneficiaries receive during and following an
outpatient visit or procedure (especially for beneficiaries at high-
risk for opioid addiction) and may warrant separate payment for CY
2019. Commenters from the makers of other packaged non-opioid pain
management drugs, including a non-opioid intrathecal infusion drug
indicated for the management of severe chronic pain, submitted
supporting studies which claimed that the drug reduced opioid use in
patients with chronic pain.
Several commenters, from hospitals, hospital associations, and
clinical specialty organizations, requested separate payment for IV
acetaminophen, IV ibuprofen, and epidural steroid injections. In
addition, one commenter, the manufacturer of a non-opioid analgesic
containing bupivacaine hcl not currently approved by FDA, requested
clarification regarding whether the proposal would also apply to this
drug once it receives FDA approval. Several commenters requested
separate payment for a drug that treats postoperative pain after
cataract surgery, currently has drug pass-through payment status, and
therefore is not packaged under the OPPS or the ASC payment system. The
commenters requested that CMS explicitly state that this drug will also
be paid for separately in the ASC setting after pass-through
[[Page 58858]]
payment status ends for the drug in 2020. Lastly, one commenter, the
makers of a diagnostic drug that is not a non-opioid, requested
separate payment.
Response: We appreciate these comments. After reviewing the studies
provided by the commenters, we continue to believe the separate payment
is appropriate for Exparel in the ASC setting. At this time, we have
not found compelling evidence for other non-opioid pain management
drugs described above to warrant separate payment under the ASC payment
system for CY 2019. Also, with regard to the requests for CMS to
confirm that the proposed policy would also apply in the future to
certain non-opioid pain management drugs, we reiterate that the
proposed policy is for CY 2019 and is applicable to non-opioid pain
management drugs that are currently packaged under the policy for drugs
that function as a surgical supply when used in the ASC setting, which
currently is only Exparel. To the extent that other non-opioid pain
management drugs become available on the U.S. market in 2019, this
policy would also apply to those drugs.
As noted above, we stated in the proposed rule that we were
interested in comments regarding other non-opioid treatments besides
Exparel that might be affected by our OPPS and ASC packaging policies,
including alternative, non-opioid pain management treatments, such as
devices or therapy services that are not currently separable payable.
We stated that we were specifically interested in comments regarding
whether CMS should consider separate payment for items and services for
which payment is currently packaged under the OPPS and the ASC payment
system that are effective non-opioid alternatives as well as evidence
that demonstrates such items and services lead to a decrease in
prescription opioid use and/or addiction during or after an outpatient
visit or procedure in order to determine whether separate payment may
be warranted. As previously stated, we intended to examine the evidence
submitted to determine whether to adopt a final policy in this final
rule with comment period that incentivizes use of non-opioid
alternative items and services that have evidence to demonstrate an
associated decrease in prescription opioid use and/or addiction
following an outpatient visit or procedure. We stated that some
examples of evidence that may be relevant could include an indication
on the product's FDA label or studies published in peer-reviewed
literature that such product aids in the management of acute or chronic
pain and is an evidence-based non-opioid alternative for acute and/or
chronic pain management. We indicated in the proposed rule that we also
were interested in evidence relating to products that have shown
clinical improvement over other alternatives, such as a device that has
been shown to provide a substantial clinical benefit over the standard
of care for pain management. We stated that this could include, for
example, spinal cord stimulators used to treat chronic pain, such as
the devices described by HCPCS codes C1822 (Generator, neurostimulator
(implantable), high frequency, with rechargeable battery and charging
system), C1820 (Generator, neurostimulator (implantable), with
rechargeable battery and charging system), and C1767 (Generator,
neurostimulator (implantable), nonrechargeable) which are primarily
assigned to APCs 5463 and 5464 (Levels 3 and 4 Neurostimulator and
Related Procedures) with proposed CY 2019 payment rates of $18,718 and
$27,662, respectively, that have received pass-through payment status
as well as other similar devices.
Currently, all devices are packaged under the OPPS and the ASC
payment system unless they have pass-through payment status. However,
we stated in the proposed rule that, in light of the Commission's
recommendation to review and modify ratesetting policies that
discourage the use of non-opioid treatments for pain, we were
interested in comments from stakeholders regarding whether, similar to
the goals of the proposed payment policy for non-opioid pain management
drugs that function as a supply when used in a surgical procedure, a
policy of providing separate payment (rather than packaged payment) for
these products, indefinitely or for a specified period of time, would
also incentivize the use of alternative non-opioid pain management
treatments and improve access to non-opioid alternatives, particularly
for innovative and low-volume items and services.
We also stated that we were interested in comments regarding
whether we should provide separate payment for non-opioid pain
management treatments or products using a mechanism such as an
equitable payment adjustment under our authority at section
1833(t)(2)(E) of the Act, which states that the Secretary shall
establish, in a budget neutral manner, other adjustments as determined
to be necessary to ensure equitable payments. For example, we stated in
the proposed rule that we were considering whether an equitable payment
adjustment in the form of an add-on payment for APCs that use a non-
opioid pain management drug, device, or service would be appropriate.
We indicated that, to the extent that commenters provided evidence to
support this approach, we would consider adopting a final policy in
this final rule with comment period, which could include regulatory
changes that would allow for an exception to the packaging of certain
nonpass-through devices that represent non-opioid alternatives for
acute or chronic pain that have evidence to demonstrate that their use
leads to a decrease in opioid prescriptions and/or opioid abuse or
misuse during or after an outpatient visit or procedure to effectuate
such change.
Comment: Several commenters, manufacturers of spinal cord
stimulators (SCS), stated that separate payment was also warranted for
these devices because they provide an alternative treatment option to
opioids for patients with chronic, leg, or back pain. One of the
manufacturers of a high-frequency SCS device provided supporting
studies which claimed that patients treated with their device reported
a statistically significant average decrease in opioid use compared to
the control group.\14\ This commenter also submitted data that showed a
decline in the mean daily dosage of opioid medication taken and that
fewer patients were relying on opioids at all to manage their pain when
they used the manufacturer's device.\15\ Another commenter, a SCS
manufacturer, stated that there are few peer-reviewed studies that
evaluate opioid elimination and/or reduction following SCS and that
there is a need for more population-based research with opioid
reduction or elimination as a study endpoint. However, this commenter
believed that current studies suggest that opioid use may be reduced
following SCS therapy.
---------------------------------------------------------------------------
\14\ Kapural L, Yu C, Doust MW, Gliner BE, Vallejo R, Sitzman
BT, Amirdelfan K, Morgan DM, Brown LL, Yearwood TL, Bundschu R,
Burton AW, Yang T, Benyamin R, Burgher AH. Novel 10-kHz high-
frequency therapy (HF10 therapy) is superior to traditional low-
frequency spinal cord stimulation for the treatment of chronic back
and leg pain: The SENZA-RCT randomized controlled trial,
Anesthesiology. 2015 Oct;123(4):851-60.
\15\ Al-Kaisy A, Van Buyten JP, Smet I, Palmisani S, Pang D,
Smith T. Sustained effectiveness of 10 kHz high-frequency spinal
cord stimulation for patients with chronic, low back pain: 24-month
results of a prospective multicenter study. Pain Med. 2014 Mar;
15(3):347-54.
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Commenters representing various stakeholders requested separate
payments for various non-opioid pain management treatments, such as
[[Page 58859]]
continuous nerve blocks (including a disposable elastomeric pump that
delivers non-opioid local anesthetic to a surgical site or nerve),
cooled thermal radiofrequency ablation for nonsurgical, chronic nerve
pain, and physical therapy services. These commenters, including
national hospital associations, recommended that while ``certainly not
a solution to the opioid epidemic, unpackaging appropriate non-opioid
therapies, like Exparel, is a low-cost tactic that could change long-
standing practice patterns without major negative consequences.'' This
same commenter suggested that Medicare consider separate payment for
Polar ice devices for postoperative pain relief after knee procedures.
The commenter also noted that therapeutic massage, topically applied
THC oil, acupuncture, and dry needling procedures are very effective
therapies for relief of both postoperative pain and long-term and
chronic pain.
Commenters suggested various mechanisms through which separate
payment or a higher-paying APC assignment for the primary service could
be made. Commenters offered reports, studies, and anecdotal evidence of
varying degrees to support why the items or services about which they
were writing offered an alternative to or reduction of the need for
opioid prescriptions.
Response: We appreciate the detailed responses to our solicitation
for comments on this topic. We plan to take these comments and
suggestions into consideration for future rulemaking. We agree that
providing incentives to avoid and/or reduce opioid prescriptions may be
one of several strategies for addressing the opioid epidemic. To the
extent that the items and services mentioned by the commenters are
effective alternatives to opioid prescriptions, we encourage providers
to use them when medically necessary. We note that some of the items
and services mentioned by commenters are not covered by Medicare, and
we do not intend to establish payment for noncovered items and
services. We look forward to working with stakeholders as we further
consider suggested refinements to the OPPS and the ASC payment system
that will encourage use of medically necessary items and services that
have demonstrated efficacy in decreasing opioid prescriptions and/or
opioid abuse or misuse during or after an outpatient visit or
procedure.
Comment: One commenter suggested that CMS provide separate payment
for HCPCS code A4306 (Disposable drug delivery system, flow rate of
less than 50 ml per hour) in the hospital outpatient department setting
and the ASC setting following a post-surgery procedure. This commenter
explained that if a patient needs additional pain relief 3 to 5 days
post-surgery, a facility cannot receive payment for providing a
replacement disposable drug delivery system (HCPCS code A4306) unless
the entire continuous nerve block procedure is performed. This
commenter believed that CMS should allow for HCPCS code A4306 to be
dispensed to the patient as long as the patient is in pain, the pump is
empty, and the delivery catheters are still in place. The commenter
believed that the drug delivery system should incentivize the continued
use of non-opioid alternatives when needed. In addition, several
commenters stated that CMS should use an equitable payment adjustment
under our authority at section 1833(t)(2)(E) of the Act to establish
add-on payments for packaged devices used as non-opioid alternatives.
Response: We appreciate the commenter's suggestion. We acknowledge
that use of these items may help in the reduction of opioid use
postoperatively. However, we note that packaged payment of such an item
does not prevent the use of these items. We remind readers that payment
for packaged items is included in the payment for the primary service.
We share the commenter's concern about the need to reduce opioid use
and will take the commenter's suggestion into consideration for future
rulemaking.
After reviewing the non-opioid pain management alternatives
suggested by the commenters as well as the studies and other data
provided to support the request for separate payment, we have not
determined that separate payment is warranted at this time for any of
the non-opioid pain management alternatives discussed above.
We also invited public comments on whether a reorganization of the
APC structure for procedures involving non-opioid products or
establishing more granular APC groupings for specific procedure and
device combinations to ensure that the payment rate for such services
is aligned with the resources associated with procedures involving
specific devices would better achieve our goal of incentivizing
increased use of non-opioid alternatives, with the aim of reducing
opioid use and subsequent addiction. For example, we stated we would
consider finalizing a policy to establish new APCs for procedures
involving non-opioid pain management packaged items or services if such
APCs would better recognize the resources involved in furnishing such
items and services and decrease or eliminate the need for prescription
opioids. In addition, given the general desire to encourage provider
efficiency through creating larger bundles of care and packaging items
and services that are integral, ancillary, supportive, dependent, or
adjunctive to a primary service, we also invited comments on how such
alternative payment structures would continue to balance the goals of
incentivizing provider efficiencies with encouraging the use of non-
opioid alternatives to pain management.
Furthermore, because patients may receive opioid prescriptions
following receipt of a non-opioid drug or implantation of a device, we
stated that we were interested in identifying any cost implications for
the patient and the Medicare program caused by this potential change in
policy. We also stated that the implications of incentivizing use of
non-opioid pain management drugs available for postsurgical acute pain
relief during or after an outpatient visit or procedure are of
interest. The goal is to encourage appropriate use of such non-opioid
alternatives. As previously stated, this comment solicitation is also
discussed in section XII.D.3. of this final rule with comment period
relating to the ASC payment system.
Comment: Regarding APC reorganization, one commenter suggested that
CMS restructure the two-level Nerve Procedure APCs (5431 and 5432) to
provide more payment granularity for the procedures included in the
APCs by creating a third level.
Response: This comment is addressed in section III.D.17. of this
final rule with comment period. As stated in that section, we believe
that the current two-level APCs for the Nerve Procedures provide an
appropriate distinction between the resource costs at each level and
provide clinical homogeneity. We will continue to review this APC
structure to determine if additional granularity is necessary for this
APC family in future rulemaking. In addition, we believe that more
analysis of such groupings is necessary before adopting such change.
In addition, in the proposed rule, we invited the public to submit
ideas on regulatory, subregulatory, policy, practice, and procedural
changes to help prevent opioid use disorders and improve access to
treatment under the Medicare program. We stated that we were interested
in identifying barriers that may inhibit access to non-opioid
alternatives for pain treatment and management or access to opioid use
disorder treatment, including those barriers related to payment
methodologies or coverage. In addition, consistent with our ``Patients
Over
[[Page 58860]]
Paperwork'' Initiative, we stated that we were interested in
suggestions to improve existing requirements in order to more
effectively address the opioid epidemic.
Comment: Several commenters addressed payment barriers that may
inhibit access to non-opioid pain management treatments previously
discussed throughout this section. With regard to barriers related to
payment methodologies or coverage, one commenter, a clinical specialty
society, suggested that CMS support multi-modal pain management and
enhanced recovery after surgery (ERAS) and encourage patient access to
certified registered nurse anesthetist (CRNA) pain management. One
commenter also suggested that CMS reduce cost-sharing and eliminate the
need for prior authorization for non-opioid pain management strategies.
Response: We appreciate the various, insightful comments we
received from stakeholders regarding barriers that may inhibit access
to non-opioid alternatives for pain treatment and management in order
to more effectively address the opioid epidemic. Many of these comments
have been previously addressed throughout this section.
After consideration of the public comments that we received, we are
finalizing the proposed policy, without modification, to unpackage and
pay separately at ASP+6 percent for the cost of non-opioid pain
management drugs that function as surgical supplies when they are
furnished in the ASC setting for CY 2019. We will continue to analyze
the issue of access to non-opioid alternatives in the OPD and the ASC
settings as we implement section 6082 of the Substance Use-Disorder
Prevention that Promotes Opioid Recovery and Treatment for Patients and
Communities Act (Pub. L. 115-271 enacted on October 24, 2018. This
policy is also discussed in section XII.D.3 of this final rule with
comment period.
4. Calculation of OPPS Scaled Payment Weights
We established a policy in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68283) of using geometric mean-based APC costs to
calculate relative payment weights under the OPPS. In the CY 2018 OPPS/
ASC final rule with comment period (82 FR 59255 through 59256), we
applied this policy and calculated the relative payment weights for
each APC for CY 2018 that were shown in Addenda A and B to that final
rule with comment period (which were made available via the internet on
the CMS website) using the APC costs discussed in sections II.A.1. and
II.A.2. of that final rule with comment period. For CY 2019, as we did
for CY 2018, in the CY 2019 OPPS/ASC proposed rule (83 FR 37071), we
proposed to continue to apply the policy established in CY 2013 and
calculate relative payment weights for each APC for CY 2019 using
geometric mean-based APC costs.
For CY 2012 and CY 2013, outpatient clinic visits were assigned to
one of five levels of clinic visit APCs, with APC 0606 representing a
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75036 through 75043), we finalized a policy that created
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for
assessment and management of a patient), representing any and all
clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634
(Hospital Clinic Visits). We also finalized a policy to use CY 2012
claims data to develop the CY 2014 OPPS payment rates for HCPCS code
G0463 based on the total geometric mean cost of the levels one through
five CPT E/M codes for clinic visits previously recognized under the
OPPS (CPT codes 99201 through 99205 and 99211 through 99215). In
addition, we finalized a policy to no longer recognize a distinction
between new and established patient clinic visits.
For CY 2016, we deleted APC 0634 and reassigned the outpatient
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and
Related Services) (80 FR 70372). For CY 2019, as we did for CY 2018, we
proposed to continue to standardize all of the relative payment weights
to APC 5012. We believe that standardizing relative payment weights to
the geometric mean of the APC to which HCPCS code G0463 is assigned
maintains consistency in calculating unscaled weights that represent
the cost of some of the most frequently provided OPPS services. For CY
2019, as we did for CY 2018, we proposed to assign APC 5012 a relative
payment weight of 1.00 and to divide the geometric mean cost of each
APC by the geometric mean cost for APC 5012 to derive the unscaled
relative payment weight for each APC. The choice of the APC on which to
standardize the relative payment weights does not affect payments made
under the OPPS because we scale the weights for budget neutrality.
We did not receive any public comments on our proposal to continue
to use the geometric mean cost of APC 5012 to standardize relative
payment weights for CY 2019. Therefore, we are finalizing our proposal
and assigning APC 5012 the relative payment weight of 1.00, and using
the relative payment weight for APC 5012 to derive the unscaled
relative payment weight for each APC for CY 2019.
We note that, in section X.B. of the OPPS/ASC proposed rule (83 FR
37137 through 37138) and of this final rule with comment period, we
discuss our CY 2019 proposal and established final policy to control
for unnecessary increases in the volume of covered outpatient
department services by paying for clinic visits furnished at excepted
off-campus provider-based department (PBD) at an amount of 70 percent
of the OPPS rate for a clinic visit service in CY 2019, rather than at
the standard OPPS rate. While the volume associated with these visits
is included in the impact model, and thus used in calculating the
weight scalar, the proposal and final policy have only a negligible
effect on the scalar. Specifically, under the proposed and final
policy, there is no change to the relativity of the OPPS payment
weights because the adjustment is made at the payment level rather than
in the cost modeling. Further, under our proposed and final policy, the
savings that will result from the change in payments for these clinic
visits will not be budget neutral. Therefore, the impact of the
proposed and final policy will generally not be reflected in the budget
neutrality adjustments, whether the adjustment is to the OPPS relative
weights or to the OPPS conversion factor. We refer readers to section
X.B. of this CY 2019 OPPS/ASC final rule with comment period for
further discussion of this final policy.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2019 is neither
greater than nor less than the estimated aggregate weight that would
have been made without the changes. To comply with this requirement
concerning the APC changes, in the CY 2019 OPPS/ASC proposed rule (83
FR 37071 through 37072), we proposed to compare the estimated aggregate
weight using the CY 2018 scaled relative payment weights to the
estimated aggregate weight using the proposed CY 2019 unscaled relative
payment weights.
For CY 2018, we multiplied the CY 2018 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2017 claims to calculate the total relative
payment weight for
[[Page 58861]]
each service. We then added together the total relative payment weight
for each of these services in order to calculate an estimated aggregate
weight for the year. For CY 2019, we proposed to apply the same process
using the estimated CY 2019 unscaled relative payment weights rather
than scaled relative payment weights. We proposed to calculate the
weight scalar by dividing the CY 2018 estimated aggregate weight by the
unscaled CY 2019 estimated aggregate weight.
For a detailed discussion of the weight scalar calculation, we
refer readers to the OPPS claims accounting document available on the
CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the CY 2019 OPPS
final rule link and open the claims accounting document link at the
bottom of the page.
We proposed to compare the estimated unscaled relative payment
weights in CY 2019 to the estimated total relative payment weights in
CY 2018 using CY 2017 claims data, holding all other components of the
payment system constant to isolate changes in total weight. Based on
this comparison, we proposed to adjust the calculated CY 2019 unscaled
relative payment weights for purposes of budget neutrality. We proposed
to adjust the estimated CY 2019 unscaled relative payment weights by
multiplying them by a proposed weight scalar of 1.4553 to ensure that
the proposed CY 2019 relative payment weights are scaled to be budget
neutral. The proposed CY 2019 relative payment weights listed in
Addenda A and B to the proposed rule (which are available via the
internet on the CMS website) were scaled and incorporated the
recalibration adjustments discussed in sections II.A.1. and II.A.2. of
the proposed rule.
Section 1833(t)(14) of the Act provides the payment rates for
certain SCODs. Section 1833(t)(14)(H) of the Act provides 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. Therefore, the cost
of those SCODs (as discussed in section V.B.2. of this final rule with
comment period) is included in the budget neutrality calculations for
the CY 2019 OPPS.
We did not receive any public comments on the proposed weight
scalar calculation. Therefore, we are finalizing our proposal to use
the calculation process described in the proposed rule, without
modification, for CY 2019. Using updated final rule claims data, we are
updating the estimated CY 2019 unscaled relative payment weights by
multiplying them by a weight scalar of 1.4574 to ensure that the final
CY 2019 relative payment weights are scaled to be budget neutral.
The final CY 2019 relative payments weights listed in Addenda A and
B to this final rule with comment period (which are available via the
internet on the CMS website) were scaled and incorporate the
recalibration adjustments discussed in sections II.A.1. and II.A.2. of
this final rule with comment period.
B. Conversion Factor Update
Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the hospital inpatient market
basket percentage increase applicable to hospital discharges under
section 1886(b)(3)(B)(iii) of the Act. As stated in the CY 2019 OPPS/
ASC proposed rule, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR
20381), consistent with current law, based on IHS Global, Inc.'s fourth
quarter 2017 forecast of the FY 2019 market basket increase, the
proposed FY 2019 IPPS market basket update was 2.8 percent. However,
sections 1833(t)(3)(F) and 1833(t)(3)(G)(v) of the Act, as added by
section 3401(i) of the Patient Protection and Affordable Care Act of
2010 (Pub. L. 111-148) and as amended by section 10319(g) of that law
and further amended by section 1105(e) of the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), provide adjustments to
the OPD fee schedule increase factor for CY 2019.
Specifically, section 1833(t)(3)(F)(i) of the Act requires that,
for 2012 and subsequent years, the OPD fee schedule increase factor
under subparagraph (C)(iv) be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as
equal to the 10-year moving average of changes in annual economy-wide,
private nonfarm business multifactor productivity (MFP) (as projected
by the Secretary for the 10-year period ending with the applicable
fiscal year, year, cost reporting period, or other annual period) (the
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR
51689 through 51692), we finalized our methodology for calculating and
applying the MFP adjustment, and then revised this methodology as
discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). In the
CY 2019 OPPS/ASC proposed rule (83 FR 37072), the proposed MFP
adjustment for FY 2019 was 0.8 percentage point.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37072), we proposed
that if more recent data became subsequently available after the
publication of the proposed rule (for example, a more recent estimate
of the market basket increase and the MFP adjustment), we would use
such updated data, if appropriate, to determine the CY 2019 market
basket update and the MFP adjustment, which are components in
calculating the OPD fee schedule increase factor under sections
1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in this CY 2019 OPPS/
ASC final rule with comment period.
In addition, section 1833(t)(3)(F)(ii) of the Act requires that,
for each of years 2010 through 2019, the OPD fee schedule increase
factor under section 1833(t)(3)(C)(iv) of the Act be reduced by the
adjustment described in section 1833(t)(3)(G) of the Act. For CY 2019,
section 1833(t)(3)(G)(v) of the Act provides a 0.75 percentage point
reduction to the OPD fee schedule increase factor under section
1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of the Act, in the CY 2019 OPPS/
ASC proposed rule, we proposed to apply a 0.75 percentage point
reduction to the OPD fee schedule increase factor for CY 2019.
We note that section 1833(t)(3)(F) of the Act provides that
application of this subparagraph may result in the OPD fee schedule
increase factor under section 1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year, and may result in OPPS payment rates being
less than rates for the preceding year. As described in further detail
below, we are applying an OPD fee schedule increase factor of 1.35
percent for the CY 2019 OPPS (which is 2.9 percent, the final estimate
of the hospital inpatient market basket percentage increase, less the
final 0.8 percentage point MFP adjustment, and less the 0.75 percentage
point additional adjustment).
Hospitals that fail to meet the Hospital OQR Program reporting
requirements are subject to an additional reduction of 2.0 percentage
points from the OPD fee schedule increase factor adjustment to the
conversion factor that would be used to
[[Page 58862]]
calculate the OPPS payment rates for their services, as required by
section 1833(t)(17) of the Act. For further discussion of the Hospital
OQR Program, we refer readers to section XIII. of this final rule with
comment period.
In the CY 2019 OPPS/ASC proposed rule, we proposed to amend 42 CFR
419.32(b)(1)(iv)(B) by adding a new paragraph (10) to reflect the
requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2019,
we reduce the OPD fee schedule increase factor by the MFP adjustment as
determined by CMS, and to reflect the requirement in section
1833(t)(3)(G)(v) of the Act, as required by section 1833(t)(3)(F)(ii)
of the Act, that we reduce the OPD fee schedule increase factor by an
additional 0.75 percentage point for CY 2019.
To set the OPPS conversion factor for the CY 2019 OPPS/ASC proposed
rule, we proposed to increase the CY 2018 conversion factor of $78.636
by 1.25 percent (83 FR 37073). In accordance with section 1833(t)(9)(B)
of the Act, we proposed further to adjust the conversion factor for CY
2019 to ensure that any revisions made to the wage index and rural
adjustment were made on a budget neutral basis. We proposed to
calculate an overall budget neutrality factor of 1.0004 for wage index
changes by comparing proposed total estimated payments from our
simulation model using the proposed FY 2019 IPPS wage indexes to those
payments using the FY 2018 IPPS wage indexes, as adopted on a calendar
year basis for the OPPS.
For the CY 2019 OPPS/ASC proposed rule, we proposed to maintain the
current rural adjustment policy, as discussed in section II.E. of the
proposed rule and this final rule with comment period. Therefore, the
proposed budget neutrality factor for the rural adjustment was 1.0000.
For the CY 2019 OPPS/ASC proposed rule, we proposed to continue
previously established policies for implementing the cancer hospital
payment adjustment described in section 1833(t)(18) of the Act, as
discussed in section II.F. of the proposed rule and this final rule
with comment period. We proposed to calculate a CY 2019 budget
neutrality adjustment factor for the cancer hospital payment adjustment
by comparing estimated total CY 2019 payments under section 1833(t) of
the Act, including the proposed CY 2019 cancer hospital payment
adjustment, to estimated CY 2019 total payments using the CY 2018 final
cancer hospital payment adjustment as required under section
1833(t)(18)(B) of the Act. The CY 2019 proposed estimated payments
applying the proposed CY 2019 cancer hospital payment adjustment were
the same as estimated payments applying the CY 2018 final cancer
hospital payment adjustment. Therefore, we proposed to apply a budget
neutrality adjustment factor of 1.0000 to the conversion factor for the
cancer hospital payment adjustment. In accordance with section 16002(b)
of the 21st Century Cures Act, we stated in the proposed rule that we
are applying a budget neutrality factor calculated as if the proposed
cancer hospital adjustment target payment-to-cost ratio was 0.89, not
the 0.88 target payment-to-cost ratio we are applying as stated in
section II.F. of the proposed rule.
For the CY 2019 OPPS/ASC proposed rule, we estimated that proposed
pass-through spending for drugs, biologicals, and devices for CY 2019
would equal approximately $126.7 million, which represented 0.17
percent of total projected CY 2019 OPPS spending. Therefore, the
proposed conversion factor would be adjusted by the difference between
the 0.04 percent estimate of pass-through spending for CY 2018 and the
0.17 percent estimate of proposed pass-through spending for CY 2019,
resulting in a proposed decrease for CY 2019 of 0.13 percent. Proposed
estimated payments for outliers would remain at 1.0 percent of total
OPPS payments for CY 2019. We estimated for the proposed rule that
outlier payments would be 1.02 percent of total OPPS payments in CY
2018; the 1.00 percent for proposed outlier payments in CY 2019 would
constitute a 0.02 percent increase in payment in CY 2019 relative to CY
2018.
For the CY 2019 OPPS/ASC proposed rule, we also proposed that
hospitals that fail to meet the reporting requirements of the Hospital
OQR Program would continue to be subject to a further reduction of 2.0
percentage points to the OPD fee schedule increase factor. For
hospitals that fail to meet the requirements of the Hospital OQR
Program, we proposed to make all other adjustments discussed above, but
use a reduced OPD fee schedule update factor of -0.75 percent (that is,
the proposed OPD fee schedule increase factor of 1.25 percent further
reduced by 2.0 percentage points). This would result in a proposed
reduced conversion factor for CY 2019 of $77.955 for hospitals that
fail to meet the Hospital OQR Program requirements (a difference of -
1.591 in the conversion factor relative to hospitals that met the
requirements).
In summary, for CY 2019, we proposed to amend Sec.
419.32(b)(1)(iv)(B) by adding a new paragraph (10) to reflect the
reductions to the OPD fee schedule increase factor that are required
for CY 2019 to satisfy the statutory requirements of sections
1833(t)(3)(F) and (t)(3)(G)(v) of the Act. We proposed to use a reduced
conversion factor of $77.955 in the calculation of payments for
hospitals that fail to meet the Hospital OQR Program requirements (a
difference of -1.591 in the conversion factor relative to hospitals
that met the requirements).
For CY 2019, we proposed to use a conversion factor of $79.546 in
the calculation of the national unadjusted payment rates for those
items and services for which payment rates are calculated using
geometric mean costs; that is, the proposed OPD fee schedule increase
factor of 1.25 percent for CY 2019, the required proposed wage index
budget neutrality adjustment of approximately 1.0004, the proposed
cancer hospital payment adjustment of 1.0000, and the proposed
adjustment of -0.13 percentage point of projected OPPS spending for the
difference in pass-through spending that resulted in a proposed
conversion factor for CY 2019 of $79.546.
We invited public comments on these proposals. However, we did not
receive any public comments. Therefore, we are finalizing these
proposals without modification. For CY 2019, we proposed to continue
previously established policies for implementing the cancer hospital
payment adjustment described in section 1833(t)(18) of the Act
(discussed in section II.F. of this final rule with comment period).
Based on the final rule updated data used in calculating the cancer
hospital payment adjustment in section II.F. of this final rule with
comment period, the target payment-to-cost ratio for the cancer
hospital payment adjustment, which was 0.88 for CY 2018, is 0.88 for CY
2019. As a result, we are applying a budget neutrality adjustment
factor of 1.0000 to the conversion factor for the cancer hospital
payment adjustment.
As a result of these finalized policies, the OPD fee schedule
increase factor for the CY 2019 OPPS is 1.35 percent (which reflects
the 2.9 percent final estimate of the hospital inpatient market basket
percentage increase, less the final 0.8 percentage point MFP
adjustment, and less the 0.75 percentage point additional adjustment).
For CY 2019, we are using a conversion factor of $79.490 in the
calculation of the national unadjusted payment rates for those items
and services for which payment rates are calculated using geometric
mean costs; that is, the OPD fee schedule increase factor of 1.35
percent for CY 2019, the required wage index budget neutrality
adjustment of
[[Page 58863]]
approximately 0.9984, and the adjustment of -0.10 percentage point of
projected OPPS spending for the difference in pass-through spending
that results in a conversion factor for CY 2019 of $79.490.
C. Wage Index Changes
Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion
of the OPPS payment rate is called the OPPS labor-related share. Budget
neutrality is discussed in section II.B. of this final rule with
comment period.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, 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 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). In the CY 2019 OPPS/ASC proposed rule (83
FR 37073), we proposed to continue this policy for the CY 2019 OPPS. We
refer readers to section II.H. of this final rule with comment period
for a description and an example of how the wage index for a particular
hospital is used to determine payment for the hospital.
We did not receive any public comments on this proposal. Therefore,
for the reasons discussed above and in the CY 2019 OPPS/ASC proposed
rule (83 FR 37073), we are finalizing our proposal, without
modification, to continue this policy as discussed above for the CY
2019 OPPS.
As discussed in the claims accounting narrative included with the
supporting documentation for this final rule with comment period (which
is available via the internet on the CMS website), for estimating APC
costs, we standardize 60 percent of estimated claims costs for
geographic area wage variation using the same FY 2019 pre-reclassified
wage index 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 copayment amount.
Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS
April 7, 2000 final rule with comment period (65 FR 18495 and 18545)),
the OPPS adopted the final fiscal year IPPS post-reclassified wage
index as the calendar year wage index for adjusting the OPPS standard
payment amounts for labor market differences. Therefore, the wage index
that applies to a particular acute care, short-stay hospital under the
IPPS also applies to that hospital under the OPPS. As initially
explained in the September 8, 1998 OPPS proposed rule (63 FR 47576), we
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.
The Affordable Care Act contained several provisions affecting the
wage index. These provisions were discussed in the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74191). Section 10324 of the
Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act,
which defines a frontier State and amended section 1833(t) of the Act
to add paragraph (19), which requires a frontier State wage index floor
of 1.00 in certain cases, and states that the frontier State floor
shall not be applied in a budget neutral manner. We codified these
requirements at Sec. 419.43(c)(2) and (c)(3) of our regulations. For
the CY 2019 OPPS, we proposed to implement this provision in the same
manner as we have since CY 2011. Under this policy, the frontier State
hospitals would receive a wage index of 1.00 if the otherwise
applicable wage index (including reclassification, the rural floor, and
rural floor budget neutrality) is less than 1.00 (as discussed below
and in the CY 2019 OPPS/ASC proposed rule (83 FR 37074 through 37076),
we proposed not to extend the imputed floor under the OPPS for CY 2019
and subsequent years, consistent with our proposal in the FY 2019 IPPS/
LTCH PPS proposed rule (83 FR 20362 and 20363) not to extend the
imputed floor under the IPPS for FY 2019 and subsequent fiscal years).
Because the HOPD receives a wage index based on the geographic location
of the specific inpatient hospital with which it is associated, we
stated that the frontier State wage index adjustment applicable for the
inpatient hospital also would apply for any associated HOPD. In the CY
2019 OPPS/ASC proposed rule (83 FR 37074), we referred readers to the
FY 2011 through FY 2018 IPPS/LTCH PPS final rules for discussions
regarding this provision, including our methodology for identifying
which areas meet the definition of ``frontier States'' as provided for
in section 1886(d)(3)(E)(iii)(II) of the Act: For FY 2011, 75 FR 50160
through 50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013,
77 FR 53369 through 53370; for FY 2014, 78 FR 50590 through 50591; for
FY 2015, 79 FR 49971; for FY 2016, 80 FR 49498; for FY 2017, 81 FR
56922; and for FY 2018, 82 FR 38142.
We did not receive any public comments on this proposal. Therefore,
for the reasons discussed above and in the CY 2019 OPPS/ASC proposed
rule (83 FR 37074), we are finalizing our proposal to implement the
frontier State floor under the OPPS in the same manner as we have since
CY 2011.
In addition to the changes required by the Affordable Care Act, we
note that the FY 2019 IPPS wage indexes continue to reflect a number of
adjustments implemented over the past few years, including, but not
limited to, reclassification of hospitals to different geographic
areas, the rural floor provisions, an adjustment for occupational mix,
and an adjustment to the wage index based on commuting patterns of
employees (the out-migration adjustment). We refer readers to the FY
2019 IPPS/LTCH PPS proposed rule (83 FR 20353 through 20377) and final
rule (83 FR 41362 through 41390) for a detailed discussion of all
proposed and final changes to the FY 2019 IPPS wage indexes. We note
that, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20362 through
20363), we proposed not to apply the imputed floor to the IPPS wage
index computations for FY 2019 and subsequent fiscal years. Consistent
with this, we proposed in the CY 2019 OPPS/ASC proposed rule (83 FR
37074) not to extend the imputed floor policy under the OPPS beyond
December 31, 2018 (the date the imputed floor policy is set to expire
under the OPPS). In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41376
through 41380), we finalized our proposal to not extend the imputed
floor policy under the IPPS. We refer readers to the FY 2019 IPPS/LTCH
PPS final rule (83 FR 41376 through 41380) for a detailed discussion of
our rationale for discontinuing the imputed floor under the IPPS.
Summarized below are the comments we received regarding our
proposal to discontinue the imputed floor under the OPPS, along with
our response.
Comment: Several commenters agreed with the proposal not to extend
the imputed floor policy under the OPPS beyond December 31, 2018.
Response: We appreciate the commenters' support.
[[Page 58864]]
After consideration of the public comments we received, for the
reasons discussed above and in the CY 2019 OPPS/ASC proposed rule (83
FR 37074), consistent with the FY 2019 IPPS/LTCH PPS final rule, we are
finalizing our proposal not to extend the imputed floor policy under
the OPPS beyond December 31, 2018.
As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951
through 49963) and in each subsequent IPPS/LTCH PPS final rule,
including the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through
41363), the Office of Management and Budget (OMB) issued revisions to
the labor market area delineations on February 28, 2013 (based on 2010
Decennial Census data), that included a number of significant changes
such as new Core Based Statistical Areas (CBSAs), urban counties that
became rural, rural counties that became urban, and existing CBSAs that
were split apart (OMB Bulletin 13-01). This bulletin can be found at:
https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950
through 49985), for purposes of the IPPS, we adopted the use of the OMB
statistical area delineations contained in OMB Bulletin No. 13-01,
effective October 1, 2014. For purposes of the OPPS, in the CY 2015
OPPS/ASC final rule with comment period (79 FR 66826 through 66828), we
adopted the use of the OMB statistical area delineations contained in
OMB Bulletin No. 13-01, effective January 1, 2015, beginning with the
CY 2015 OPPS wage indexes. In the FY 2017 IPPS/LTCH PPS final rule (81
FR 56913), we adopted revisions to statistical areas contained in OMB
Bulletin No. 15-01, issued on July 15, 2015, which provided updates to
and superseded OMB Bulletin No. 13-01 that was issued on February 28,
2013. For purposes of the OPPS, in the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79598), we adopted the revisions to the OMB
statistical area delineations contained in OMB Bulletin No. 15-01,
effective January 1, 2017, beginning with the CY 2017 OPPS wage
indexes. We believe that it is important for the OPPS to use the latest
labor market area delineations available as soon as is reasonably
possible in order to maintain a more accurate and up-to-date payment
system that reflects the reality of population shifts and labor market
conditions.
On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which
provided updates to and superseded OMB Bulletin No. 15-01 that was
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01
provide detailed information on the update to the statistical areas
since July 15, 2015, and are based on the application of the 2010
Standards for Delineating Metropolitan and Micropolitan Statistical
Areas to Census Bureau population estimates for July 1, 2014 and July
1, 2015. In OMB Bulletin No. 17-01, OMB announced that one Micropolitan
Statistical Area now qualifies as a Metropolitan Statistical Area. The
new urban CBSA is as follows:
Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of
the principal city of Twin Falls, Idaho in Jerome County, Idaho and
Twin Falls County, Idaho.
The OMB Bulletin No. 17-01 is available on the OMB website at
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR
20354), we noted that we did not have sufficient time to include this
change in the computation of the proposed FY 2019 IPPS wage index,
ratesetting, and Tables 2 and 3 associated with the FY 2019 IPPS/LTCH
PPS proposed rule. We stated that this new CBSA may affect the IPPS
budget neutrality factors and wage indexes, depending on whether the
area is eligible for the rural floor and the impact of the overall
payments of the hospital located in this new CBSA. As we did in the FY
2019 IPPS/LTCH PPS proposed rule (83 FR 20354), in the CY 2019 OPPS/ASC
proposed rule (83 FR 37075), we provided an estimate of this new area's
wage index based on the average hourly wages for new CBSA 46300 and the
national average hourly wages from the wage data for the proposed FY
2019 IPPS wage index (described in section III.B. of the preamble of
the FY 2019 IPPS/LTCH PPS proposed rule). Currently, provider 130002 is
the only hospital located in Twin Falls County, Idaho, and there are no
hospitals located in Jerome County, Idaho. Thus, the proposed wage
index for CBSA 46300 was calculated using the average hourly wage data
for one provider (provider 130002).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37075), we provided
the proposed FY 2019 IPPS unadjusted and occupational mix adjusted
national average hourly wages and the estimated CBSA average hourly
wages. Taking the estimated average hourly wage of new CBSA 46300 and
dividing by the proposed national average hourly wage resulted in the
estimated wage indexes shown in the table in the proposed rule (83 FR
37075), which is also provided below.
[GRAPHIC] [TIFF OMITTED] TR21NO18.016
As we stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41363),
for the FY 2019 IPPS wage indexes, we used the OMB delineations that
were adopted beginning with FY 2015 to calculate the area wage indexes,
with updates as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01,
and incorporated the revision from OMB Bulletin No. 17-01 in the final
FY 2019 IPPS wage index, ratesetting, and tables. Similarly, in the CY
2019 OPPS/ASC proposed rule (82 FR 37075), for the proposed CY 2019
OPPS wage indexes, we proposed to use the OMB
[[Page 58865]]
delineations that were adopted beginning with CY 2015 to calculate the
area wage indexes, with updates as reflected in OMB Bulletin Nos. 13-
01, 15-01, and 17-01, and stated that we would incorporate the revision
from OMB Bulletin No. 17-01 in the final CY 2019 OPPS wage index,
ratesetting, and tables.
We did not receive any public comments on our proposals.
Accordingly, for the reasons discussed above and in the CY 2019 OPPS/
ASC proposed rule (83 FR 37074 through 37075), we are finalizing the
proposal, without modification, to use the OMB delineations that were
adopted beginning with CY 2015 to calculate the area wage indexes, with
updates as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01, and
have incorporated the revision from OMB Bulletin No. 17-01 in the final
CY 2019 OPPS wage index, ratesetting, and tables.
CBSAs are made up of one or more constituent counties. Each CBSA
and constituent county has its own unique identifying codes. The FY
2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different
lists of codes to identify counties: Social Security Administration
(SSA) codes and Federal Information Processing Standard (FIPS) codes.
Historically, CMS listed and used SSA and FIPS county codes to identify
and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS
wage indexes. However, the SSA county codes are no longer being
maintained and updated, although the FIPS codes continue to be
maintained by the U.S. Census Bureau. The Census Bureau's most current
statistical area information is derived from ongoing census data
received since 2010; the most recent data are from 2015. In the FY 2018
IPPS/LTCH PPS final rule (82 FR 38130), for purposes of crosswalking
counties to CBSAs for the IPPS wage index, we finalized our proposal to
discontinue the use of the SSA county codes and begin using only the
FIPS county codes. Similarly, for the purposes of crosswalking counties
to CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC final rule
with comment period (82 FR 59260), we finalized our proposal to
discontinue the use of SSA county codes and begin using only the FIPS
county codes for the purposes of crosswalking counties to CBSAs for the
OPPS wage index.
The Census Bureau maintains a complete list of changes to counties
or county equivalent entities on the website at: https://www.census.gov/geo/reference/county-changes.html. In our transition to
using only FIPS codes for counties for the IPPS wage index, in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38130), we updated the FIPS codes
used for crosswalking counties to CBSAs for the IPPS wage index
effective October 1, 2017, to incorporate changes to the counties or
county equivalent entities included in the Census Bureau's most recent
list. We included these updates to calculate the area IPPS wage indexes
in a manner that is generally consistent with the CBSA-based
methodologies finalized in the FY 2005 IPPS final rule and the FY 2015
IPPS/LTCH PPS final rule. In the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59261), we finalized our proposal to implement
these FIPS code updates for the OPPS wage index effective January 1,
2018, beginning with the CY 2018 OPPS wage indexes.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37075), we proposed to
use the FY 2019 hospital IPPS post-reclassified wage index for urban
and rural areas as the wage index for the OPPS to determine the wage
adjustments for both the OPPS payment rate and the copayment
standardized amount for CY 2019. Therefore, we stated in the proposed
rule that any adjustments for the FY 2019 IPPS post-reclassified wage
index would be reflected in the final CY 2019 OPPS wage index. (We
refer readers to the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20353
through 20377) and final rule (83 FR 41362 through 41390), and the
proposed and final FY 2019 hospital wage index files posted on the CMS
website.) We stated in the CY 2019 OPPS/ASC proposed rule (83 FR 37075)
that we 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.
Summarized below are the comments we received regarding this
proposal, along with our response.
Comment: Several commenters opposed applying a budget neutrality
adjustment for the rural floor under the OPPS on a national basis. The
commenters believed applying budget neutrality on a national basis
disadvantages hospitals in most States while benefiting hospitals in a
few States that have taken advantage of the system where a rural
hospital has a wage index higher than most or all urban hospitals in a
State. The commenters stated that rural floor budget neutrality
currently requires all wage indexes for hospitals throughout the Nation
to be reduced. However, the commenters added, hospitals in those States
that have higher wage indexes because of the rural floor are not
substantially affected by the wage index reductions. One of the
commenters supported calculating rural floor budget neutrality under
the OPPS for each individual State.
Response: We appreciate these comments. As we stated in the CY 2018
OPPS/ASC final rule with comment period (82 FR 59259), we acknowledge
that the application of the wage index and applicable wage index
adjustments to OPPS payment rates may create distributional payment
variations, especially within a budget neutral system. However, we
continue to believe it is reasonable and appropriate to continue the
current policy of applying budget neutrality for the rural floor under
the OPPS on a national basis, consistent with the IPPS. We believe that
hospital inpatient and outpatient departments are subject to the same
labor cost environment, and therefore, the wage index and any
applicable wage index adjustments (including the rural floor and rural
floor budget neutrality) should be applied in the same manner under the
IPPS and OPPS. Furthermore, we believe that applying the rural floor
and rural floor budget neutrality in the same manner under the IPPS and
OPPS is reasonable and logical, given the inseparable, subordinate
status of the HOPD within the hospital overall. In addition, we believe
the application of different wage indexes and wage index adjustments
under the IPPS and OPPS would add a level of administrative complexity
that is overly burdensome and unnecessary. Therefore, we are continuing
the current policy of applying budget neutrality for the rural floor
under the OPPS on a national basis, consistent with the IPPS.
After consideration of the public comments we received, for the
reasons discussed above and in the CY 2019 OPPS/ASC proposed rule (83
FR 37075), we are finalizing our proposal, without modification, to use
the FY 2019 hospital IPPS post-reclassified wage index for urban and
rural areas as the wage index for the OPPS to determine the wage
adjustments for both the OPPS payment rate and the copayment
standardized amount for CY 2019. Therefore, any adjustments for the FY
2019 IPPS post-reclassified wage index are reflected in the final CY
2019 OPPS wage index. As stated earlier, we continue to believe that
using the final fiscal year IPPS post-reclassified wage index,
inclusive of any adjustments, as the wage index for the OPPS to
determine the wage adjustments for both the OPPS payment rate and the
copayment standardized amount is reasonable and logical, given the
[[Page 58866]]
inseparable, subordinate status of the HOPD within the hospital
overall.
Hospitals that are paid under the OPPS, but not under the IPPS, do
not have an assigned hospital wage index under the IPPS. Therefore, for
non-IPPS hospitals paid under the OPPS, it is our longstanding policy
to assign the wage index that would be applicable if the hospital were
paid under the IPPS, based on its geographic location and any
applicable wage index adjustments. In the CY 2019 OPPS/ASC proposed
rule (83 FR 37075), we proposed to continue this policy for CY 2019,
and included a brief summary of the major proposed FY 2019 IPPS wage
index policies and adjustments that we proposed to apply to these
hospitals under the OPPS for CY 2019, which we have summarized below.
We invited public comments on these proposals. We refer readers to the
FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41390) for a
detailed discussion of the changes to the FY 2019 IPPS wage indexes.
It has been our longstanding policy 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 (section 505 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA)). Applying this adjustment is consistent with our policy of
adopting IPPS wage index policies for hospitals paid under the OPPS. We
note that, because non-IPPS hospitals cannot reclassify, they are
eligible for the out-migration wage adjustment if they are located in a
section 505 out-migration county. This is the same out-migration
adjustment policy that applies if the hospital were paid under the
IPPS. For CY 2019, we proposed to continue our policy of allowing 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
(section 505 of the MMA).
We did not receive any public comments on these proposals.
Therefore, for the reasons discussed above and in the CY 2019 OPPS/ASC
proposed rule (83 FR 37075 through 37076), we are finalizing these
proposals without modification.
As stated earlier, in the FY 2015 IPPS/LTCH PPS final rule, we
adopted the OMB labor market area delineations issued by OMB in OMB
Bulletin No. 13-01 on February 28, 2013, based on standards published
on June 28, 2010 (75 FR 37246 through 37252) and the 2010 Census data
to delineate labor market areas for purposes of the IPPS wage index.
For IPPS wage index purposes, for hospitals that were located in urban
CBSAs in FY 2014 but were designated as rural under these revised OMB
labor market area delineations, we generally assigned them the urban
wage index value of the CBSA in which they were physically located for
FY 2014 for a period of 3 fiscal years (79 FR 49957 through 49960). To
be consistent, we applied the same policy to hospitals paid under the
OPPS but not under the IPPS so that such hospitals maintained the wage
index of the CBSA in which they were physically located for FY 2014 for
3 calendar years (until December 31, 2017). Because this 3-year
transition ended at the end of CY 2017, it was not applied beginning in
CY 2018.
In addition, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR
20362 through 20363), we proposed not to extend the imputed floor
policy under the IPPS for FY 2019 and subsequent fiscal years, and in
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41376 through 41380), we
finalized this proposal. Similarly, in the CY 2019 OPPS/ASC proposed
rule, we proposed not to extend the imputed floor policy under the OPPS
beyond December 31, 2018 (the date the policy is set to expire). The
comments we received on this proposal, along with our response, are
summarized above. As discussed earlier, consistent with the FY 2019
IPPS/LTCH PPS final rule, in this CY 2019 OPPS/ASC final rule with
comment period, we are finalizing our proposal not to extend the
imputed floor policy under the OPPS beyond December 31, 2018.
For CMHCs, for CY 2019, we proposed to continue to calculate the
wage index by using the post-reclassification IPPS wage index based on
the CBSA where the CMHC is located. As with OPPS hospitals and for the
same reasons, for CMHCs previously located in urban CBSAs that were
designated as rural under the revised OMB labor market area
delineations in OMB Bulletin No. 13-01, we finalized a policy to
maintain the urban wage index value of the CBSA in which they were
physically located for CY 2014 for 3 calendar years (until December 31,
2017). Because this 3-year transition ended at the end of CY 2017, it
was not applied beginning in CY 2018. We proposed that the wage index
that would apply to CMHCs for CY 2019 would include the rural floor
adjustment, but would not include the imputed floor adjustment because,
as discussed above, we proposed to not extend the imputed floor policy
beyond December 31, 2018. Also, we proposed that the wage index that
would apply to CMHCs would not include the out-migration adjustment
because that adjustment only applies to hospitals.
We did not receive any public comments on these proposals.
Therefore, for the reasons discussed above and in the CY 2019 OPPS/ASC
proposed rule (83 FR 37076), we are finalizing these proposals without
modification.
Table 2 associated with the FY 2019 IPPS/LTCH PPS final rule
(available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html)
identifies counties eligible for the out-migration adjustment and IPPS
hospitals that will receive the adjustment for FY 2019. We are
including the out-migration adjustment information from Table 2
associated with the FY 2019 IPPS/LTCH PPS final rule as Addendum L to
this final rule with comment period with the addition of non-IPPS
hospitals that will receive the section 505 out-migration adjustment
under the CY 2019 OPPS. Addendum L is available via the internet on the
CMS website. We refer readers to the CMS website for the OPPS at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a
link to the final FY 2019 IPPS wage index tables and Addendum L.
D. Statewide Average Default Cost-to-Charge Ratios (CCRs)
In addition to using CCRs to estimate costs from charges on claims
for ratesetting, CMS uses overall hospital-specific CCRs calculated
from the hospital's most recent cost report to determine outlier
payments, payments for pass-through devices, and monthly interim
transitional corridor payments under the OPPS during the PPS year. MACs
cannot calculate a CCR for some hospitals because there is no cost
report available. For these hospitals, CMS uses the statewide average
default CCRs to determine the payments mentioned earlier until a
hospital's MAC 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, hospitals that have not
accepted assignment of an existing hospital's provider agreement, and
hospitals that have not yet submitted a cost report. CMS also uses the
statewide average default CCRs to determine payments for hospitals that
appear to have a biased CCR (that is, the CCR falls outside the
predetermined ceiling threshold for a valid CCR) or for hospitals in
which the most recent cost report reflects an all-
[[Page 58867]]
inclusive rate status (Medicare Claims Processing Manual (Pub. 100-04),
Chapter 4, Section 10.11).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37076), we proposed to
update the default ratios for CY 2019 using the most recent cost report
data. We discussed our policy for using default CCRs, including setting
the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68594 through 68599) in the context of
our adoption of an outlier reconciliation policy for cost reports
beginning on or after January 1, 2009. For detail on our process for
calculating the statewide average CCRs, we referred readers to the CY
2019 OPPS proposed rule Claims Accounting Narrative that is posted on
the CMS website. Table 5 published in the proposed rule (83 FR 37076
through 37078) listed the proposed statewide average default CCRs for
OPPS services furnished on or after January 1, 2019, based on proposed
rule data.
We did not receive any public comments on our proposal to use
statewide average default CCRs if a MAC cannot calculate a CCR for a
hospital and to use these CCRs to adjust charges to costs on claims
data for setting the final CY 2019 OPPS relative payment weights.
Therefore, we are finalizing our proposal without modification.
Table 9 below lists the statewide average default CCRs for OPPS
services furnished on or after January 1, 2019, based on final rule
data.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential
Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the
Act for CY 2019
In the CY 2006 OPPS final rule with comment period (70 FR 68556),
we finalized a payment increase for rural sole community hospitals
(SCHs) of 7.1 percent for all services and procedures paid under the
OPPS, excluding drugs, biologicals, brachytherapy sources, and devices
paid under the pass-through payment policy, in accordance with section
1833(t)(13)(B) of the Act, as added by section 411 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
(Pub. L. 108-173). Section 1833(t)(13) of the Act provided the
Secretary the authority to make an adjustment to OPPS payments for
rural hospitals, effective January 1, 2006, if justified by a study of
the difference in costs by APC between hospitals in rural areas and
hospitals in urban areas. Our analysis
[[Page 58871]]
showed a difference in costs for rural SCHs. Therefore, for the CY 2006
OPPS, we finalized a payment adjustment for rural SCHs of 7.1 percent
for all services and procedures paid under the OPPS, excluding
separately payable drugs and biologicals, brachytherapy sources, and
devices paid under the pass-through payment policy, in accordance with
section 1833(t)(13)(B) of the Act.
In 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) of the regulations to clarify that essential access
community hospitals (EACHs) also are eligible to receive the rural SCH
adjustment, assuming these entities otherwise meet the rural adjustment
criteria. Currently, two 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 outlier payments and copayments. We stated in the CY 2006
OPPS final rule with comment period (70 FR 68560) that we would not
reestablish the adjustment amount on an annual basis, but we may review
the adjustment in the future and, if appropriate, would revise the
adjustment. We provided the same 7.1 percent adjustment to rural SCHs,
including EACHs, again in CYs 2008 through 2018. Further, in the CY
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated
the regulations at Sec. 419.43(g)(4) to specify, in general terms,
that items paid at charges adjusted to costs by application of a
hospital-specific CCR are excluded from the 7.1 percent payment
adjustment.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37078), for the CY
2019 OPPS, we proposed to continue the current policy of a 7.1 percent
payment adjustment that is done in a budget neutral manner for rural
SCHs, including EACHs, for all services and procedures paid under the
OPPS, excluding separately payable drugs and biologicals, devices paid
under the pass-through payment policy, and items paid at charges
reduced to costs. We invited public comment on our proposal.
In addition, we proposed to maintain this 7.1 percent payment
adjustment for the years after CY 2019 until we identify data in the
future that would support a change to this payment adjustment. We
invited public comments on our proposal.
Comment: Several commenters supported the proposal to continue the
7.1 percent payment adjustment for rural SCHs, including EACHs, for all
services and procedures paid under the OPPS, excluding separately
payable drugs and biologicals, devices paid under the pass-through
payment policy, and items paid at charges reduced to costs. A few
commenters explicitly supported the part of the proposal that would
allow the adjustment to continue after CY 2019 until CMS identifies
data that would cause CMS to reassess the adjustment. These commenters
approved of having more certainty about whether the rural SCH
adjustment would be in effect on an ongoing basis, because it would
help hospitals covered by the adjustment improve their budget
forecasting based on expected revenues.
Response: We appreciate the commenters' support.
Comment: One commenter suggested that CMS further examine whether
the payment adjustment for rural SCHs, including EACHs, should continue
to be 7.1 percent. The commenter noted the rate of the payment
adjustment was based on data analyses that are more than 10 years old.
Response: While the data for the initial analyses are more than 10
years old, we periodically review the calculations used to generate the
rural SCHs and EACHs adjustment. For any given year, the level of
increased costs experienced by rural SCH and EACH may be higher or
lower than the current 7.1 percent adjustment. Since being established
in CY 2008, we believe the payment increase of 7.1 percent has
continued to reasonably reflect the increased costs that rural SCHs and
EACHs face when providing outpatient hospital services based on
regression analyses performed on the claims data.
Comment: Some commenters requested that CMS expand the payment
adjustment for rural SCHs and EACHs to additional types of hospitals.
One commenter requested that the payment adjustment apply to include
urban SCHs because, according to the commenter, urban SCHs care for
patient populations similar to rural SCHs and EACHs, face similar
financial challenges to rural SCHs and EACHs, and act as safety net
providers for rural areas despite their designation as urban providers.
Another commenter requested that the payment adjustment also apply to
Medicare-dependent hospitals (MDHs) because, according to the
commenter, these hospitals face similar financial challenges to rural
SCHs and EACHs, and MDHs play a similar safety net role to rural SCHs
and EACHs, especially for Medicare. One commenter requested that
payment rates for OPPS services for all rural hospitals be increased to
reduce financial vulnerability for rural hospitals related to the high
share of Medicare and Medicaid beneficiaries they serve.
Response: We thank the commenters for their comments. However, the
analysis we did to compare costs of urban providers to those of rural
providers did not support an add-on adjustment for providers other than
rural SCHs and EACHs, and our follow-up analyses performed in recent
years have not shown differences in costs for all services for any of
the additional types of providers mentioned by the commenters.
Accordingly, we do not believe we currently have a basis to expand the
payment adjustment to any other providers other than rural SCHs and
EACHs.
After consideration of the public comments we received, we are
implementing our proposals, without modification, to continue the
current policy of a 7.1 percent payment adjustment that is done in a
budget neutral manner for rural SCHs, including EACHs, for all services
and procedures paid under the OPPS, excluding separately payable drugs
and biologicals, devices paid under the pass-through payment policy,
and items paid at charges reduced to costs. In addition, we will
maintain this 7.1 percent payment adjustment for the years after CY
2019 until our data support a change to this payment adjustment.
F. Payment Adjustment for Certain Cancer Hospitals for CY 2019
1. Background
Since the inception of the OPPS, which was authorized by the
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid
the 11 hospitals that meet the criteria for cancer hospitals identified
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered
outpatient hospital services. These cancer hospitals are exempted from
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced
Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established
section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit
Decline in Payment,'' to determine OPPS payments to cancer and
children's hospitals based on their pre-BBA payment amount (often
referred to as ``held harmless'').
As required under section 1833(t)(7)(D)(ii) of the Act, a cancer
hospital receives the full amount of the difference between payments
for covered outpatient services under the OPPS and a ``pre-BBA
amount.'' That is, cancer hospitals are permanently held harmless to
their ``pre-BBA amount,''
[[Page 58872]]
and they receive transitional outpatient payments (TOPs) or hold
harmless payments to ensure that they do not receive a payment that is
lower in amount under the OPPS than the payment amount they would have
received before implementation of the OPPS, as set forth in section
1833(t)(7)(F) of the Act. The ``pre-BBA amount'' is the product of the
hospital's reasonable costs for covered outpatient services occurring
in the current year and the base payment-to-cost ratio (PCR) for the
hospital defined in section 1833(t)(7)(F)(ii) of the Act. The ``pre-BBA
amount'' and the determination of the base PCR are defined at 42 CFR
419.70(f). TOPs are calculated on Worksheet E, Part B, of the Hospital
Cost Report or the Hospital Health Care Complex Cost Report (Form CMS-
2552-96 or Form CMS-2552-10, respectively), as applicable each year.
Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality
calculations.
Section 3138 of the Affordable Care Act amended section 1833(t) of
the Act by adding a new paragraph (18), which instructs the Secretary
to conduct a study to determine if, under the OPPS, outpatient costs
incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of
the Act with respect to APC groups exceed outpatient costs incurred by
other hospitals furnishing services under section 1833(t) of the Act,
as determined appropriate by the Secretary. Section 1833(t)(18)(A) of
the Act requires the Secretary to take into consideration the cost of
drugs and biologicals incurred by cancer hospitals and other hospitals.
Section 1833(t)(18)(B) of the Act provides that, if the Secretary
determines that cancer hospitals' costs are higher than those of other
hospitals, the Secretary shall provide an appropriate adjustment under
section 1833(t)(2)(E) of the Act to reflect these higher costs. In
2011, after conducting the study required by section 1833(t)(18)(A) of
the Act, we determined that outpatient costs incurred by the 11
specified cancer hospitals were greater than the costs incurred by
other OPPS hospitals. For a complete discussion regarding the cancer
hospital cost study, we refer readers to the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74200 through 74201).
Based on these findings, we finalized a policy to provide a payment
adjustment to the 11 specified cancer hospitals that reflects their
higher outpatient costs, as discussed in the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74202 through 74206). Specifically, we
adopted a policy to provide additional payments to the cancer hospitals
so that each cancer hospital's final PCR for services provided in a
given calendar year is equal to the weighted average PCR (which we
refer to as the ``target PCR'') for other hospitals paid under the
OPPS. The target PCR is set in advance of the calendar year and is
calculated using the most recently submitted or settled cost report
data that are available at the time of final rulemaking for the
calendar year. The amount of the payment adjustment is made on an
aggregate basis at cost report settlement. We note that the changes
made by section 1833(t)(18) of the Act do not affect the existing
statutory provisions that provide for TOPs for cancer hospitals. The
TOPs are assessed, as usual, after all payments, including the cancer
hospital payment adjustment, have been made for a cost reporting
period. For CYs 2012 and 2013, the target PCR for purposes of the
cancer hospital payment adjustment was 0.91. For CY 2014, the target
PCR for purposes of the cancer hospital payment adjustment was 0.89.
For CY 2015, the target PCR was 0.90. For CY 2016, the target PCR was
0.92, as discussed in the CY 2016 OPPS/ASC final rule with comment
period (80 FR 70362 through 70363). For CY 2017, the target PCR was
0.91, as discussed in the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79603 through 79604). For CY 2018, the target PCR was
0.88, as discussed in the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59265 through 59266).
2. Policy for CY 2019
Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255)
amended section 1833(t)(18) of the Act by adding subparagraph (C),
which requires that in applying 42 CFR 419.43(i) (that is, the payment
adjustment for certain cancer hospitals) for services furnished on or
after January 1, 2018, the target PCR adjustment be reduced by 1.0
percentage point less than what would otherwise apply. Section 16002(b)
also provides that, in addition to the percentage reduction, the
Secretary may consider making an additional percentage point reduction
to the target PCR that takes into account payment rates for applicable
items and services described under section 1833(t)(21)(C) of the Act
for hospitals that are not cancer hospitals described under section
1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality
adjustment under section 1833(t) of the Act, the Secretary shall not
take into account the reduced expenditures that result from application
of section 1833(t)(18)(C) of the Act.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37079), for CY 2019,
we proposed to provide additional payments to the 11 specified cancer
hospitals so that each cancer hospital's final PCR is equal to the
weighted average PCR (or ``target PCR'') for the other OPPS hospitals
using the most recent submitted or settled cost report data that were
available at the time of the development of the proposed rule, reduced
by 1.0 percentage point, to comply with section 16002(b) of the 21st
Century Cures Act. We invited public comment on our proposal.
We did not propose an additional reduction beyond the 1.0
percentage point reduction required by section 16002(b) for CY 2019. To
calculate the proposed CY 2019 target PCR, we used the same extract of
cost report data from HCRIS, as discussed in section II.A. of the
proposed rule and this final rule with comment period, used to estimate
costs for the CY 2019 OPPS. Using these cost report data, we included
data from Worksheet E, Part B, for each hospital, using data from each
hospital's most recent cost report, whether as submitted or settled.
We then limited the dataset to the hospitals with CY 2017 claims
data that we used to model the impact of the proposed CY 2019 APC
relative payment weights (3,676 hospitals) because it is appropriate to
use the same set of hospitals that are being used to calibrate the
modeled CY 2019 OPPS. The cost report data for the hospitals in this
dataset were from cost report periods with fiscal year ends ranging
from 2014 to 2017. We then removed the cost report data of the 43
hospitals located in Puerto Rico from our dataset because we did not
believe their cost structure reflected the costs of most hospitals paid
under the OPPS, and, therefore, their inclusion may bias the
calculation of hospital-weighted statistics. We also removed the cost
report data of 18 hospitals because these hospitals had cost report
data that were not complete (missing aggregate OPPS payments, missing
aggregate cost data, or missing both), so that all cost reports in the
study would have both the payment and cost data necessary to calculate
a PCR for each hospital, leading to a proposed analytic file of 3,615
hospitals with cost report data.
Using this smaller dataset of cost report data, we estimated that,
on average, the OPPS payments to other hospitals furnishing services
under the OPPS were approximately 89 percent of reasonable cost
(weighted average PCR of 0.89). Therefore, after applying the
[[Page 58873]]
1.0 percentage point reduction, as required by section 16002(b) of the
21st Century Cures Act, we proposed that the payment amount associated
with the cancer hospital payment adjustment to be determined at cost
report settlement would be the additional payment needed to result in a
proposed target PCR equal to 0.88 for each cancer hospital.
We did not receive any public comments on our proposals. Therefore,
we are finalizing our proposed cancer hospital payment adjustment
methodology without modification. For this final rule with comment
period, we are using the most recent cost report data through June 30,
2018 to update the adjustment. This update yields a target PCR of 0.89.
We limited the dataset to the hospitals with CY 2017 claims data that
we used to model the impact of the CY 2019 APC relative payment weights
(3,696 hospitals) because it is appropriate to use the same set of
hospitals that we are using to calibrate the modeled CY 2019 OPPS. The
cost report data for the hospitals in the dataset were from cost report
periods with fiscal year ends ranging from 2010 to 2018. We then
removed the cost report data of the 46 hospitals located in Puerto Rico
from our dataset because we do not believe that their cost structure
reflects the costs of most hospitals paid under the OPPS and,
therefore, their inclusion may bias the calculation of hospital-
weighted statistics. We also removed the cost report data of 22
hospitals because these hospitals had cost report data that were not
complete (missing aggregate OPPS payments, missing aggregate cost data,
or missing both), so that all cost reports in the study would have both
the payment and cost data necessary to calculate a PCR for each
hospital, leading to an analytic file of 3,628 hospitals with cost
report data.
Using this smaller dataset of cost report data, we estimated a
target PCR of 0.89. Therefore, after applying the 1.0 percentage point
reduction as required by section 16002(b) of the 21st Century Cures
Act, we are finalizing that the payment amount associated with the
cancer hospital payment adjustment to be determined at cost report
settlement will be the additional payment needed to result in a PCR
equal to 0.88 for each cancer hospital. Table 10 below shows the
estimated percentage increase in OPPS payments to each cancer hospital
for CY 2019, due to the cancer hospital payment adjustment policy. The
actual amount of the CY 2019 cancer hospital payment adjustment for
each cancer hospital will be determined at cost report settlement and
will depend on each hospital's CY 2019 payments and costs. We note that
the requirements contained in section 1833(t)(18) of the Act do not
affect the existing statutory provisions that provide for TOPs for
cancer hospitals. The TOPs will be assessed, as usual, after all
payments, including the cancer hospital payment adjustment, have been
made for a cost reporting period.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR21NO18.020
[[Page 58874]]
BILLING CODE 4120-01-C
G. Hospital Outpatient Outlier Payments
1. Background
The OPPS provides outlier payments to hospitals to help mitigate
the financial risk associated with high-cost and complex procedures,
where a very costly service could present a hospital with significant
financial loss. As explained in the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66832 through 66834), we set our projected target
for aggregate outlier payments at 1.0 percent of the estimated
aggregate total payments under the OPPS for the prospective year.
Outlier payments are provided on a service-by-service basis when the
cost of a service exceeds the APC payment amount multiplier threshold
(the APC payment amount multiplied by a certain amount) as well as the
APC payment amount plus a fixed-dollar amount threshold (the APC
payment plus a certain amount of dollars). In CY 2018, the outlier
threshold was met when the hospital's cost of furnishing a service
exceeded 1.75 times (the multiplier threshold) the APC payment amount
and exceeded the APC payment amount plus $4,150 (the fixed-dollar
amount threshold) (82 FR 59267 through 59268). If the cost of a service
exceeds both the multiplier 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
amount. Beginning with CY 2009 payments, outlier payments are subject
to a reconciliation process similar to the IPPS outlier reconciliation
process for cost reports, as discussed in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68594 through 68599).
It has been our policy to report the actual amount of outlier
payments as a percent of total spending in the claims being used to
model the OPPS. Our estimate of total outlier payments as a percent of
total CY 2017 OPPS payments, using CY 2017 claims available for the CY
2019 OPPS/ASC proposed rule (83 FR 37080 through 37081), was
approximately 1.0 percent of the total aggregated OPPS payments.
Therefore, for CY 2017, we estimated that we paid the outlier target of
1.0 percent of total aggregated OPPS payments. Using an updated claims
dataset for this CY 2019 OPPS final rule with comment period, we
estimate that we paid approximately 1.12 percent of the total
aggregated OPPS payments in outliers for CY 2017.
For the CY 2019 OPPS/ASC proposed rule, using CY 2017 claims data
and CY 2018 payment rates, we estimate that the aggregate outlier
payments for CY 2018 would be approximately 1.02 percent of the total
CY 2018 OPPS payments. We provided estimated CY 2019 outlier payments
for hospitals and CMHCs with claims included in the claims data that we
used to model impacts in the Hospital-Specific Impacts--Provider-
Specific Data file on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Outlier Calculation for CY 2019
In the CY 2019 OPPS/ASC proposed rule (83 FR 37080 through 37081),
for CY 2019, we proposed to continue our policy of estimating outlier
payments to be 1.0 percent of the estimated aggregate total payments
under the OPPS. We proposed that a portion of that 1.0 percent, an
amount equal to less than 0.01 percent of outlier payments (or 0.0001
percent of total OPPS payments), would be allocated to CMHCs for PHP
outlier payments. This is the amount of estimated outlier payments that
would result from the proposed CMHC outlier threshold as a proportion
of total estimated OPPS outlier payments. As discussed in section
VIII.C. of the CY 2019 OPPS/ASC proposed rule (83 FR 37134 through
37136), we proposed to continue our longstanding policy that if a
CMHC's cost for partial hospitalization services, paid under APC 5853
(Partial Hospitalization for CMHCs), exceeds 3.40 times the payment
rate for proposed APC 5853, the outlier payment would be calculated as
50 percent of the amount by which the cost exceeds 3.40 times the
proposed APC 5853 payment rate.
For further discussion of CMHC outlier payments, we refer readers
to section VIII.C. of the proposed rule and this final rule with
comment period.
To ensure that the estimated CY 2019 aggregate outlier payments
would equal 1.0 percent of estimated aggregate total payments under the
OPPS, we proposed that the hospital outlier threshold be set so that
outlier payments would be triggered when a hospital's cost of
furnishing a service exceeds 1.75 times the APC payment amount and
exceeds the APC payment amount plus $4,600.
We calculated the proposed fixed-dollar threshold of $4,600 using
the standard methodology most recently used for CY 2018 (82 FR 59267
through 59268). For purposes of estimating outlier payments for the
proposed rule, we used the hospital-specific overall ancillary CCRs
available in the April 2018 update to the Outpatient Provider-Specific
File (OPSF). The OPSF contains provider-specific data, such as the most
current CCRs, which are maintained by the MACs and used by the OPPS
Pricer to pay claims. The claims that we use to model each OPPS update
lag by 2 years.
In order to estimate the CY 2019 hospital outlier payments for the
proposed rule, we inflated the charges on the CY 2017 claims using the
same inflation factor of 1.085868 that we used to estimate the IPPS
fixed-dollar outlier threshold for the FY 2019 IPPS/LTCH PPS proposed
rule (83 FR 20581). We used an inflation factor of 1.04205 to estimate
CY 2018 charges from the CY 2017 charges reported on CY 2017 claims.
The methodology for determining this charge inflation factor is
discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 20581). As we
stated in the CY 2005 OPPS final rule with comment period (69 FR
65845), we believe that the use of these charge inflation factors is
appropriate for the OPPS because, with the exception of the inpatient
routine service cost centers, hospitals use the same ancillary and
outpatient cost centers to capture costs and charges for 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 could systematically overestimate
the OPPS hospital outlier threshold if we did not apply a CCR inflation
adjustment factor. Therefore, we proposed to apply the same CCR
inflation adjustment factor that we proposed to apply for the FY 2019
IPPS outlier calculation to the CCRs used to simulate the proposed CY
2019 OPPS outlier payments to determine the fixed-dollar threshold.
Specifically, for CY 2019, we proposed to apply an adjustment factor of
0.987842 to the CCRs that were in the April 2018 OPSF to trend them
forward from CY 2018 to CY 2019. The methodology for calculating the
proposed adjustment is discussed in the FY 2019 IPPS/LTCH PPS proposed
rule (83 FR 20582).
To model hospital outlier payments for the proposed rule, we
applied the overall CCRs from the April 2018 OPSF after adjustment
(using the proposed CCR inflation adjustment factor of 0.987842 to
approximate CY 2019 CCRs) to charges on CY 2017 claims that were
adjusted (using the proposed charge inflation factor of 1.085868 to
approximate CY 2019 charges). We simulated aggregated CY 2019 hospital
outlier payments using these costs for several different fixed-dollar
thresholds, holding the 1.75 multiplier threshold
[[Page 58875]]
constant and assuming that outlier payments 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 2019 OPPS
payments. We estimated that a proposed fixed-dollar threshold of
$4,600, combined with the proposed multiplier threshold of 1.75 times
the APC payment rate, would allocate 1.0 percent of aggregated total
OPPS payments to outlier payments. For CMHCs, we proposed that, if a
CMHC's cost for partial hospitalization services, paid under APC 5853,
exceeds 3.40 times the payment rate for APC 5853, the outlier payment
would be calculated as 50 percent of the amount by which the cost
exceeds 3.40 times the APC 5853 payment rate.
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. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that will apply to certain outpatient items and services
furnished by hospitals that are required to report outpatient quality
data and that fail to meet the Hospital OQR Program requirements. For
hospitals that fail to meet the Hospital OQR Program requirements, as
we proposed, we are continuing the policy that we implemented in CY
2010 that the hospitals' costs will be compared to the reduced payments
for purposes of outlier eligibility and payment calculation. For more
information on the Hospital OQR Program, we referred readers to section
XIII. of this final rule with comment period.
Comment: One commenter expressed concern that, due to the increase
in the proposed fixed-dollar threshold to $4,600 relative to the
previous CY 2018 fixed-dollar outlier threshold of $4,150, the drastic
reduction in outlier payments would have an adverse effect on access to
services for Medicare beneficiaries. Therefore, the commenter requested
that the threshold be transitioned over a 3-year period.
Response: As indicated earlier, we introduced a fixed-dollar
threshold in order to better target outlier payments to those high-cost
and complex procedures where a very costly service could present a
hospital with significant financial loss. We maintain the target
outlier percentage of 1.0 percent of estimated aggregate total payment
under the OPPS and have a fixed-dollar threshold so that OPPS outlier
payments are made only when the hospital would experience a significant
loss for furnishing a particular service. The methodology we use to
calculate the fixed-dollar threshold for the prospective payment year
factors is based on several data inputs that may change from prior
payment years. For instance, updated hospital CCR data and changes to
the OPPS payment methodology influence projected outlier payments in
the prospective year.
We do not believe that it is appropriate to transition towards
implementation of the CY 2019 OPPS fixed-dollar outlier threshold in
the manner described by the commenter. The fixed-dollar outlier
threshold is specifically developed in order to best estimate aggregate
outlier payments of 1 percent of the OPPS. In addition, transitioning
in this suggested manner would remove the consideration of updated
data, which is critical in best estimating the fixed-dollar threshold
that would result in total OPPS outliers being 1 percent of aggregate
OPPS payments. Finally, we note that the increase in the fixed-dollar
outlier threshold does not necessarily result in a decrease in
aggregate OPPS outlier payments. Rather, it ensures that the aggregate
pool remains at 1 percent and that outlier payments are directed
towards the high cost and complex procedures associated with potential
financial risk.
After consideration of the public comment we received, we are
finalizing our proposal, without modification, to continue our policy
of estimating outlier payments to be 1.0 percent of the estimated
aggregate total payments under the OPPS and to use our established
methodology to set the OPPS outlier fixed-dollar loss threshold for CY
2019.
3. Final Outlier Calculation
Consistent with historical practice, we used updated data for this
final rule with comment period for outlier calculations. For CY 2019,
we are applying the overall CCRs from the October 2018 OPSF file after
adjustment (using the CCR inflation adjustment factor of 0.9813 to
approximate CY 2019 CCRs) to charges on CY 2017 claims that were
adjusted using a charge inflation factor of 1.0434 to approximate CY
2019 charges. These are the same CCR adjustment and charge inflation
factors that were used to set the IPPS fixed-dollar thresholds for the
FY 2019 IPPS/LTCH PPS final rule (83 FR 41722). We simulated aggregated
CY 2019 hospital outlier payments using these costs for several
different fixed-dollar thresholds, holding the 1.75 multiple-threshold
constant and assuming that outlier payments will 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
payment equaled 1.0 percent of aggregated estimated total CY 2019 OPPS
payments. We estimate that a fixed-dollar threshold of $4,825 combined
with the multiple threshold of 1.75 times the APC payment rate, will
allocated the 1.0 percent of aggregated total OPPS payments to outlier
payments.
For CMHCs, if a CMHC's cost for partial hospitalization services,
paid under PAC 5853, exceeds 3.40 times the payment rate the outlier
payment will be calculated as 50 percent of the amount by which the
cost exceeds 3.40 times APC 5853.
H. Calculation of an Adjusted Medicare Payment From the National
Unadjusted Medicare Payment
The basic methodology for determining prospective payment rates for
HOPD services under the OPPS is set forth in existing regulations at 42
CFR part 419, subparts C and D. For this CY 2019 OPPS/ASC final rule
with comment period, the payment rate for most services and procedures
for which payment is made under the OPPS is the product of the
conversion factor calculated in accordance with section II.B. of this
final rule with comment period and the relative payment weight
determined under section II.A. of this final rule with comment period.
Therefore, the national unadjusted payment rate for most APCs contained
in Addendum A to this final rule with comment period (which is
available via the internet on the CMS website) and for most HCPCS codes
to which separate payment under the OPPS has been assigned in Addendum
B to this final rule with comment period (which is available via the
internet on the CMS website) was calculated by multiplying the CY 2019
scaled weight for the APC by the CY 2019 conversion factor.
We note that section 1833(t)(17) of the Act, which applies to
hospitals as defined under section 1886(d)(1)(B) of the Act, requires
that hospitals that fail to submit data required to be submitted on
quality measures selected by the Secretary, in the form and manner and
at a time specified by the Secretary, incur a reduction of 2.0
percentage
[[Page 58876]]
points to their OPD fee schedule increase factor, that is, the annual
payment update factor. The application of a reduced OPD fee schedule
increase factor results in reduced national unadjusted payment rates
that apply to certain outpatient items and services provided by
hospitals that are required to report outpatient quality data and that
fail to meet the Hospital OQR Program (formerly referred to as the
Hospital Outpatient Quality Data Reporting Program (HOP QDRP))
requirements. For further discussion of the payment reduction for
hospitals that fail to meet the requirements of the Hospital OQR
Program, we refer readers to section XIII. of this final rule with
comment period.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37082), we
demonstrated the steps to determine the APC payments that will be made
in a calendar year under the OPPS to a hospital that fulfills the
Hospital OQR Program requirements and to a hospital that fails to meet
the Hospital OQR Program requirements for a service that has any of the
following status indicator assignments: ``J1'', ``J2'', ``P'', ``Q1'',
``Q2'', ``Q3'', ``Q4'', ``R'', ``S'', ``T'', ``U'', or ``V'' (as
defined in Addendum D1 to the proposed rule, which is available via the
internet on the CMS website), in a circumstance in which the multiple
procedure discount does not apply, the procedure is not bilateral, and
conditionally packaged services (status indicator of ``Q1'' and ``Q2'')
qualify for separate payment. We noted that, although blood and blood
products with status indicator ``R'' and brachytherapy sources with
status indicator ``U'' are not subject to wage adjustment, they are
subject to reduced payments when a hospital fails to meet the Hospital
OQR Program requirements.
We did not receive any public comments specific to the steps under
the methodology that we included in the proposed rule to determine the
APC payments for CY 2019. Therefore, we are finalizing use of the steps
in the methodology specified below, as we proposed, to demonstrate the
calculation of the final CY 2019 OPPS payments using the same
parameters.
Individual providers interested in calculating the payment amount
that they will receive for a specific service from the national
unadjusted payment rates presented in Addenda A and B to this final
rule with comment period (which are available via the internet on the
CMS website) should follow the formulas presented in the following
steps. For purposes of the payment calculations below, we refer to the
national unadjusted payment rate for hospitals that meet the
requirements of the Hospital OQR Program as the ``full'' national
unadjusted payment rate. We refer to the national unadjusted payment
rate for hospitals that fail to meet the requirements of the Hospital
OQR Program as the ``reduced'' national unadjusted payment rate. The
reduced national unadjusted payment rate is calculated by multiplying
the reporting ratio of 0.980 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 Hospital OQR Program requirements in order to
receive the full CY 2019 OPPS fee schedule increase factor.
Step 1. Calculate 60 percent (the labor-related portion) of the
national unadjusted payment rate. Since the initial implementation of
the OPPS, we have used 60 percent to represent our estimate of that
portion of costs attributable, on average, to labor. We refer readers
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496
through 18497) for a detailed discussion of how we derived this
percentage. During our regression analysis for the payment adjustment
for rural hospitals in the CY 2006 OPPS final rule with comment period
(70 FR 68553), we confirmed that this labor-related share for hospital
outpatient services is appropriate.
The formula below is a mathematical representation of Step 1 and
identifies the labor-related portion of a specific payment rate for a
specific service.
X is the labor-related portion of the national unadjusted payment rate.
X = .60 * (national unadjusted payment rate).
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. We note that, under the CY 2019 OPPS policy for continuing to
use the OMB labor market area delineations based on the 2010 Decennial
Census data for the wage indexes used under the IPPS, a hold harmless
policy for the wage index may apply, as discussed in section II.C. of
this final rule with comment period. The wage index values assigned to
each area reflect the geographic statistical areas (which are based
upon OMB standards) to which hospitals are assigned for FY 2019 under
the IPPS, reclassifications through the Metropolitan Geographic
Classification Review Board (MGCRB), section 1886(d)(8)(B) ``Lugar''
hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as
defined in Sec. 412.103 of the regulations, and hospitals designated
as urban under section 601(g) of Public Law 98-21. For further
discussion of the changes to the FY 2019 IPPS wage indexes, as applied
to the CY 2019 OPPS, we refer readers to section II.C. of this final
rule with comment period. We are continuing to apply a wage index floor
of 1.00 to frontier States, in accordance with section 10324 of the
Affordable Care Act of 2010.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of Public Law
108-173. Addendum L to this final rule with comment period (which is
available via the internet on the CMS website) contains the qualifying
counties and the associated wage index increase developed for the FY
2019 IPPS, which are listed in Table 2 associated with the FY 2019
IPPS/LTCH PPS final rule available via the internet on the CMS website
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. (Click on the link on the left side of
the screen titled ``FY 2019 IPPS Final Rule Home Page'' and select ``FY
2019 Final Rule Tables.'') This step is to be followed only if the
hospital is not reclassified or redesignated under section 1886(d)(8)
or section 1886(d)(10) of the Act.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4 and
adjusts the labor-related portion of the national unadjusted payment
rate for the specific service by the wage index.
Xa is the labor-related portion of the national unadjusted
payment rate (wage adjusted).
Xa = .60 * (national unadjusted payment rate) * applicable
wage index.
Step 5. Calculate 40 percent (the nonlabor-related portion) of the
national unadjusted payment rate and add that amount to the resulting
product of Step 4. The result is the wage index adjusted payment rate
for the relevant wage index area.
The formula below is a mathematical representation of Step 5 and
calculates the remaining portion of the national payment rate, the
amount not
[[Page 58877]]
attributable to labor, and the adjusted payment for the specific
service.
Y is the nonlabor-related portion of the national unadjusted payment
rate.
Y = .40 * (national unadjusted payment rate).
Adjusted Medicare Payment = Y + Xa.
Step 6. If a provider is an SCH, as set forth in the regulations at
Sec. 412.92, or an EACH, which is considered to be an 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 and
applies the rural adjustment for rural SCHs.
Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment *
1.071.
We are providing 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 Hospital OQR Program requirements, using the
steps outlined above. For purposes of this example, we used a provider
that is located in Brooklyn, New York that is assigned to CBSA 35614.
This provider bills one service that is assigned to APC 5071 (Level 1
Excision/Biopsy/Incision and Drainage). The CY 2019 full national
unadjusted payment rate for APC 5071 is approximately $579.34. The
reduced national unadjusted payment rate for APC 5071 for a hospital
that fails to meet the Hospital OQR Program requirements is
approximately $567.75. This reduced rate is calculated by multiplying
the reporting ratio of 0.980 by the full unadjusted payment rate for
APC 5071.
The FY 2019 wage index for a provider located in CBSA 35614 in New
York is 1.2853. The labor-related portion of the full national
unadjusted payment is approximately $446.77 (.60 * $579.34 * 1.2853).
The labor-related portion of the reduced national unadjusted payment is
approximately $437.84 (.60 * 567.75 * 1.2853). The nonlabor-related
portion of the full national unadjusted payment is approximately
$231.74 (.40 * $579.34). The nonlabor-related portion of the reduced
national unadjusted payment is approximately $227.10 (.40 * $567.75).
The sum of the labor-related and nonlabor-related portions of the full
national adjusted payment is approximately $678.51 ($446.77 + $231.74).
The sum of the portions of the reduced national adjusted payment is
approximately $664.94 ($437.84 + $227.10).
I. Beneficiary Copayments
1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining the unadjusted copayment amounts to be paid by
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of
the Act specifies that the Secretary must reduce the national
unadjusted copayment amount for a covered OPD service (or group of such
services) furnished in a year in a manner so that the effective
copayment rate (determined on a national unadjusted basis) for that
service in the year does not exceed a specified percentage. As
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective
copayment rate for a covered OPD service paid under the OPPS in CY
2006, and in calendar years thereafter, shall not exceed 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. However, section 1833(t)(8)(C)(i) of the
Act limits the amount of beneficiary copayment that may be collected
for a procedure (including items such as drugs and biologicals)
performed in a year to the amount of the inpatient hospital deductible
for that year.
Section 4104 of the Affordable Care Act eliminated the Medicare
Part B coinsurance for preventive services furnished on and after
January 1, 2011, that meet certain requirements, including flexible
sigmoidoscopies and screening colonoscopies, and waived the Part B
deductible for screening colonoscopies that become diagnostic during
the procedure. Our discussion of the changes made by the Affordable
Care Act with regard to copayments for preventive services furnished on
and after January 1, 2011, may be found in section XII.B. of the CY
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. OPPS Copayment Policy
In the CY 2019 OPPS/ASC proposed rule (83 FR 37083), for CY 2019,
we proposed to determine copayment amounts for new and revised APCs
using the same methodology that we implemented beginning in CY 2004.
(We refer readers to the November 7, 2003 OPPS final rule with comment
period (68 FR 63458).) In addition, we proposed to use the same
standard rounding principles that we have historically used in
instances where the application of our standard copayment methodology
would result in a copayment amount that is less than 20 percent and
cannot be rounded, under standard rounding principles, to 20 percent.
(We refer readers to the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66687) in which we discuss our rationale for applying
these rounding principles.) The proposed national unadjusted copayment
amounts for services payable under the OPPS that would be effective
January 1, 2019 were included in Addenda A and B to the proposed rule
(which are available via the internet on the CMS website).
As discussed in section XIII.E. of the proposed rule and this final
rule with comment period, for CY 2019, the Medicare beneficiary's
minimum unadjusted copayment and national unadjusted copayment for a
service to which a reduced national unadjusted payment rate applies
will equal the product of the reporting ratio and the national
unadjusted copayment, or the product of the reporting ratio and the
minimum unadjusted copayment, respectively, for the service.
We note that OPPS copayments may increase or decrease each year
based on changes in the calculated APC payment rates due to updated
cost report and claims data, and any changes to the OPPS cost modeling
process. However, as described in the CY 2004 OPPS final rule with
comment period, the development of the copayment methodology generally
moves beneficiary copayments closer to 20 percent of OPPS APC payments
(68 FR 63458 through 63459).
In the CY 2004 OPPS final rule with comment period (68 FR 63459),
we adopted a new methodology to calculate unadjusted copayment amounts
in situations including reorganizing APCs, and we finalized the
following rules to determine copayment amounts in CY 2004 and
subsequent years.
When an APC group consists solely of HCPCS codes that were
not paid under the OPPS the prior year because they were packaged or
excluded or are new codes, the unadjusted copayment amount would be 20
percent of the APC payment rate.
If a new APC that did not exist during the prior year is
created and consists of HCPCS codes previously assigned to other APCs,
the copayment amount is calculated as the product of the APC payment
rate and the lowest
[[Page 58878]]
coinsurance percentage of the codes comprising the new APC.
If no codes are added to or removed from an APC and, after
recalibration of its relative payment weight, the new payment rate is
equal to or greater than the prior year's rate, the copayment amount
remains constant (unless the resulting coinsurance percentage is less
than 20 percent).
If no codes are added to or removed from an APC and, after
recalibration of its relative payment weight, the new payment rate is
less than the prior year's rate, the copayment amount is calculated as
the product of the new payment rate and the prior year's coinsurance
percentage.
If HCPCS codes are added to or deleted from an APC and,
after recalibrating its relative payment weight, holding its unadjusted
copayment amount constant results in a decrease in the coinsurance
percentage for the reconfigured APC, the copayment amount would not
change (unless retaining the copayment amount would result in a
coinsurance rate less than 20 percent).
If HCPCS codes are added to an APC and, after
recalibrating its relative payment weight, holding its unadjusted
copayment amount constant results in an increase in the coinsurance
percentage for the reconfigured APC, the copayment amount would be
calculated as the product of the payment rate of the reconfigured APC
and the lowest coinsurance percentage of the codes being added to the
reconfigured APC.
We noted in the CY 2004 OPPS final rule with comment period that we
would seek to lower the copayment percentage for a service in an APC
from the prior year if the copayment percentage was greater than 20
percent. We noted that this principle was consistent with section
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the
national unadjusted coinsurance rate so that beneficiary liability will
eventually equal 20 percent of the OPPS payment rate for all OPPS
services to which a copayment applies, and with section 1833(t)(3)(B)
of the Act, which achieves a 20-percent copayment percentage when fully
phased in and gives the Secretary the authority to set rules for
determining copayment amounts for new services. We further noted that
the use of this methodology would, in general, reduce the beneficiary
coinsurance rate and copayment amount for APCs for which the payment
rate changes as the result of the reconfiguration of APCs and/or
recalibration of relative payment weights (68 FR 63459).
Comment: One commenter supported the beneficiary copayment limit
that may be collected for certain drugs to the amount of the inpatient
hospital deductible for that year.
Response: We appreciate the commenter's support. We note that
section 1833(t)(8)(C)(i) of the Act requires us to limit the amount of
beneficiary copayment that may be collected for a procedure (including
items such as drugs and biologicals) performed in a year to the amount
of the inpatient hospital deductible for that year.
3. Calculation of an Adjusted Copayment Amount for an APC Group
Individuals interested in calculating the national copayment
liability for a Medicare beneficiary for a given service provided by a
hospital that met or failed to meet its Hospital OQR Program
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 5071, $115.87 is approximately 20 percent of the
full national unadjusted payment rate of $579.34. For APCs with only a
minimum unadjusted copayment in Addenda A and B to this final rule with
comment period (which are available via the internet on the CMS
website), the beneficiary payment percentage is 20 percent.
The formula below is a mathematical representation of Step 1 and
calculates the national copayment as a percentage of national payment
for a given service.
B is the beneficiary payment percentage.
B = National unadjusted copayment for APC/national unadjusted payment
rate for APC.
Step 2. Calculate the appropriate wage-adjusted payment rate for
the APC for the provider in question, as indicated in Steps 2 through 4
under section II.H. of this final rule with comment period. Calculate
the rural adjustment for eligible providers as indicated in Step 6
under section II.H. of this final rule with comment period.
Step 3. Multiply the percentage calculated in Step 1 by the payment
rate calculated in Step 2. The result is the wage-adjusted copayment
amount for the APC.
The formula below is a mathematical representation of Step 3 and
applies the beneficiary payment percentage to the adjusted payment rate
for a service calculated under section II.H. of this final rule with
comment period, with and without the rural adjustment, to calculate the
adjusted beneficiary copayment for a given service.
Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment
* B.
Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted
Medicare Payment * 1.071) * B.
Step 4. For a hospital that failed to meet its Hospital OQR Program
requirements, multiply the copayment calculated in Step 3 by the
reporting ratio of 0.980.
The unadjusted copayments for services payable under the OPPS that
will be effective January 1, 2019, are shown in Addenda A and B to this
final rule with comment period (which are available via the internet on
the CMS website). We note that the national unadjusted payment rates
and copayment rates shown in Addenda A and B to this final rule with
comment period reflect the CY 2019 OPD fee schedule increase factor
discussed in section II.B. of this final rule with comment period.
In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act
limits the amount of beneficiary copayment that may be collected for a
procedure performed in a year to the amount of the inpatient hospital
deductible for that year.
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. OPPS Treatment of New CPT and Level II HCPCS Codes
CPT and Level II HCPCS codes are used to report procedures,
services, items, and supplies under the hospital OPPS. Specifically,
CMS recognizes the following codes on OPPS claims:
Category I CPT codes, which describe surgical procedures
and medical services;
Category III CPT codes, which describe new and emerging
technologies, services, and procedures; and
Level II HCPCS codes, which are used primarily to identify
products, supplies, temporary procedures, and services not described by
CPT codes.
CPT codes are established by the American Medical Association (AMA)
and the Level II HCPCS codes are established by CMS. These codes are
updated and changed throughout the year. CPT and HCPCS code changes
that affect the OPPS are published both through the annual rulemaking
cycle and through the OPPS quarterly update Change Requests (CRs). CMS
releases new Level II HCPCS codes to the public
[[Page 58879]]
or recognizes the release of new CPT codes by the AMA and makes these
codes effective (that is, the codes can be reported on Medicare claims)
outside of the formal rulemaking process via OPPS quarterly update CRs.
Based on our review, we assign the new CPT and Level II HCPCS codes to
interim status indicators (SIs) and APCs. These interim assignments are
finalized in the OPPS/ASC final rules. This quarterly process offers
hospitals access to codes that may more accurately describe items or
services furnished and provides payment or more accurate payment for
these items or services in a timelier manner than if we waited for the
annual rulemaking process. We solicit public comments on these new
codes and finalize our proposals related to these codes through our
annual rulemaking process.
We note that, under the OPPS, the APC assignment determines the
payment rate for an item, procedure, or service. Those items,
procedures, or services not paid separately under the hospital OPPS are
assigned to appropriate status indicators. Certain payment status
indicators provide separate payment, while other payment status
indicators do not. Section XI. of this final rule with comment period
discusses the various status indicators used under the OPPS.
In Table 11 below, we summarize our current process for updating
codes through our OPPS quarterly update CRs, seeking public comments,
and finalizing the treatment of these new codes under the OPPS.
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[[Page 58880]]
1. Treatment of New HCPCS Codes That Were Effective April 1, 2018 for
Which We Solicited Public Comments in the CY 2019 OPPS/ASC Proposed
Rule
Through the April 2018 OPPS quarterly update CR (Transmittal 4005,
Change Request 10515, dated March 20, 2018), we made effective nine new
Level II HCPCS codes for separate payment under the OPPS. In the CY
2019 OPPS/ASC proposed rule (83 FR 37085), we solicited public comments
on the proposed APC and status indicator assignments for these Level II
HCPCS codes, which were listed in Table 8 of the proposed rule.
We received some public comments related to HCPCS code C9749
(Repair of nasal vestibular lateral wall stenosis with implant(s)),
which we address in section III.D.16. of this final rule with comment
period. With the exception of HCPCS code C9749, we did not receive any
public comments on the proposed OPPS APC and status indicator
assignments for the new Level II HCPCS codes implemented in April 2018.
Therefore, we are finalizing the proposed APC and status indicator
assignments for these codes, as indicated in Table 12 below. We note
that several of the HCPCS C-codes have been replaced with HCPCS J-
codes, effective January 1, 2019. Their replacement codes are listed in
Table 12. The final payment rates for these codes can be found in
Addendum B to this final rule with comment period (which is available
via the internet on the CMS website). In addition, the status indicator
meanings can be found in Addendum D1 to this final rule with comment
period (which is available via the internet on the CMS website).
[GRAPHIC] [TIFF OMITTED] TR21NO18.022
In addition, there were several new laboratory CPT Multianalyte
Assays with Algorithmic Analyses (MAAA) codes (M-codes) and Proprietary
Laboratory Analyses (PLA) codes (U-codes) that were effective April 1,
2018, but were too late to include in the April 2018 OPPS Update.
Because these codes were released on the American Medical Association's
(AMA) CPT website in February 2018, they were too late for us to
include in the April 2018 OPPS Update CR and in the April 2018
Integrated Outpatient Code Editor (IOCE) and, consequently, were
included in the July 2018 OPPS Update with an effective date of April
1, 2018. These CPT codes were listed in Table 9 of the CY 2019 OPPS/ASC
proposed rule (83 FR 37086). In the proposed rule, we solicited public
comments on the proposed APC and status indicator assignments for these
CPT codes. The proposed payment rates for these codes, where
applicable, were included in Addendum B to the proposed rule (which is
available via the internet on the CMS website).
Comment: One commenter stated that the test described by CPT code
0037U (Targeted genomic sequence analysis, solid organ neoplasm, DNA
analysis of 324 genes, interrogation for sequence variants, gene copy
number amplifications, gene rearrangements, microsatellite instability
and tumor mutational burden) specifically, FoundationOne
CDxTM, is a human DNA tumor mutation profiling test that is
covered by Medicare and has been designated as an Advanced Diagnostic
Laboratory Test (ADLT) under the Clinical Laboratory Fee Schedule
(CLFS). The commenter supported the proposed OPPS status indicator
assignment of ``A'' (Not paid under OPPS. Paid by MACs under a fee
schedule or payment system other than OPPS) for CPT code 0037U.
Response: We thank the commenter for the feedback. CPT code 0037U,
[[Page 58881]]
which is covered by Medicare, met the criteria for classification as a
new ADLT and received its ADLT status in May 2018. Under the OPPS,
codes that receive ADLT status under section 1834A(d)(5)(A) of the Act
are assigned to status indicator ``A''. Therefore, we are finalizing
the OPPS status indicator ``A'' for CPT code 0037U as proposed.
After consideration of the public comment we received, we are
finalizing the proposed status indicator assignments for the new MAAA
and PLA CPT codes effective April 1, 2018. The final status indicator
assignments for the CPT codes are listed in Table 13 below. The status
indicator meanings can be found in Addendum D1 (OPPS Payment Status
Indicators for CY 2019) to this final rule with comment period (which
is available via the internet on the CMS website).
[[Page 58882]]
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[[Page 58883]]
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2. Treatment of New HCPCS Codes That Were Effective July 1, 2018 for
Which We Solicited Public Comments in the CY 2019 OPPS/ASC Proposed
Rule
Through the July 2018 OPPS quarterly update CR (Transmittal 4075,
Change Request 1078, dated June 15, 2018), we made 4 new Category III
CPT codes and 10 Level II HCPCS codes effective July 1, 2018 (14 codes
total), and assigned them to appropriate interim OPPS status indicators
and APCs. As listed in Table 10 of the CY 2019 OPPS/ASC proposed rule
(83 FR 37086 through 37087), 13 of the 14 HCPCS codes are separately
payable under the OPPS while 1 HCPCS code is not. Specifically, HCPCS
code Q9994 is assigned to status indicator ``E1'' to indicate that the
item is not payable by Medicare. In addition, we note that HCPCS code
C9469 was deleted June 30, 2018, and replaced with HCPCS code Q9993
effective July 1, 2018. Because HCPCS code Q9993 describes the same
drug as HCPCS code C9469, we proposed to continue the drug's pass-
through payment status and to assign HCPCS code Q9993 to the same APC
and status indicators as its predecessor HCPCS code C9469, as shown in
Table 10 of the proposed rule.
In the CY 2019 OPPS/ASC proposed rule, we solicited public comments
on the proposed APC and status indicator assignments for CY 2019 for
the CPT and Level II HCPCS codes implemented on July 1, 2018, all of
which were listed in Table 10 of the proposed rule. The proposed
payment rates and status indicators for these codes, where applicable,
were included in Addendum B to the proposed rule (which is available
via the internet on the CMS website).
We did not receive any public comments on the proposed APC and
status indicator assignments for the new Category III CPT codes and
Level II HCPCS codes implemented in July 2018. Therefore, we are
finalizing the proposed APC and status indicator assignments for these
codes, as indicated in Table 14 below. We note that several of the
HCPCS C and Q-codes have been replaced with HCPCS J-codes effective
January 1, 2019. Their replacement codes are listed in Table 14 below.
The final payment rates for these codes can be found in Addendum B to
this final rule with comment period (which is available via the
internet on the CMS website). In addition, the status indicator
meanings can be found in Addendum D1 (OPPS Payment Status Indicators
for CY 2019) to this final rule with comment period (which is available
via the internet on the CMS website).
[[Page 58884]]
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[[Page 58885]]
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In addition, there are several new PLA codes (U-codes) that were
effective July 1, 2018, but were too late to include in the July 2018
OPPS Update. Consequently, the codes were included in the October 2018
OPPS Update with an effective date of July 1, 2018. The CPT codes were
listed in Table 11 of the CY 2019 OPPS/ASC proposed rule along with the
proposed APC and status indicator assignments for these CPT codes. In
the CY 2019 OPPS/ASC proposed rule (83 FR 37087), we solicited public
comments on the proposed APC and status indicator assignments for the
CPT codes. The proposed payment rates for these codes, where
applicable, were included in Addendum B to the proposed rule (which is
available via the internet on the CMS website).
We did not receive any public comments on the proposed status
indicator assignments for the PLA codes effective July 1, 2018.
Therefore, we are finalizing the proposed status indicator assignments
for these codes, as indicated in Table 15 below. We note that the
status indicator meanings can be found in Addendum D1 (OPPS Payment
Status Indicators for CY 2019) to this final rule with comment period
(which is available via the internet on the CMS website).
[[Page 58886]]
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[[Page 58887]]
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[[Page 58888]]
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3. Process for New Level II HCPCS Codes That Are Effective October 1,
2018 or Will Be Effective on January 1, 2019 for Which We Are
Soliciting Public Comments in This CY 2019 OPPS/ASC Final Rule With
Comment Period
As has been our practice in the past, we incorporate those new
Level II HCPCS codes that are effective October 1 and January 1 in the
final rule with comment period, thereby updating the OPPS for the
following calendar year, as displayed in Table 11 of this final rule
with comment period. These codes are released to the public through the
October and January OPPS quarterly update CRs and via the CMS HCPCS
website (for Level II HCPCS codes). For CY 2019, these codes are
flagged with comment indicator ``NI'' in Addendum B to this 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 interim status indicator and APC assignments for
codes flagged with comment indicator ``NI'' are open to public comment
in this final rule with comment period, and we will respond to these
public comments in the OPPS/ASC final rule with comment period for the
next year's OPPS/ASC update.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37088), we proposed to
continue this process for CY 2019. Specifically, for CY 2019, we
proposed to include in Addendum B to the CY 2019 OPPS/ASC final rule
with comment period the following new HCPCS codes:
New Level II HCPCS codes effective October 1, 2018, that
would be incorporated in the October 2018 OPPS quarterly update CR; and
New Level II HCPCS codes effective January 1, 2019, that
would be incorporated in the January 2019 OPPS quarterly update CR.
As stated above, the October 1, 2018 and January 1, 2019 codes are
flagged with comment indicator ``NI'' in Addendum B to this CY 2019
OPPS/ASC final rule with comment period to indicate that we have
assigned these codes an interim OPPS payment status for CY 2019. We are
inviting public comments on the interim status indicator and APC
assignments for these codes, if applicable, that will be finalized in
the CY 2020 OPPS/ASC final rule with comment period.
4. Treatment of New and Revised CY 2019 Category I and III CPT Codes
That Will Be Effective January 1, 2019 for Which We Solicited Public
Comments in the CY 2019 OPPS/ASC Proposed Rule
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841
through 66844), we finalized a revised process of assigning APC and
status indicators for new and revised Category I and III CPT codes that
would be effective January 1. Specifically, for the new/revised CPT
codes that we receive in a timely manner from the AMA's CPT Editorial
Panel, we finalized our proposal to include the codes that would be
effective January 1 in the OPPS/ASC proposed rules, along with proposed
APC and status indicator assignments for them, and to finalize the APC
and status indicator assignments in the OPPS/ASC final rules beginning
with the CY 2016 OPPS update. For those new/revised CPT codes that were
received too late for inclusion in the OPPS/ASC proposed rule, we
finalized our proposal to establish and use HCPCS G-codes that mirror
the predecessor CPT codes and retain the current APC and status
indicator assignments for a year until we can propose APC and status
indicator assignments in the following year's rulemaking cycle. We note
that even if we find that we need to create HCPCS G-codes in place of
certain CPT codes for the PFS proposed rule, we do not anticipate that
these HCPCS G-codes will always be necessary for OPPS purposes. We will
make every effort to include proposed APC and status indicator
assignments for all new and revised CPT codes that the AMA makes
publicly available in time for us to include them in the annual
proposed rule, and to avoid the resort to HCPCS G-codes and the
resulting delay in utilization of the most current CPT codes. Also, we
finalized our proposal to make interim APC and status indicator
assignments for CPT codes that are not available in time for the
proposed rule and that describe wholly new services (such as new
technologies or new surgical procedures), solicit public comments, and
finalize the specific APC and status indicator assignments for those
codes in the following year's final rule.
For the CY 2019 OPPS update, we received the CY 2019 CPT codes from
AMA in time for inclusion in the CY 2019 OPPS/ASC proposed rule. The
new, revised, and deleted CY 2019 Category I and III CPT codes were
included in Addendum B to the proposed rule (which is available via the
internet on the CMS website). We noted in the proposed rule that the
new and revised codes are assigned to new comment indicator ``NP'' to
indicate that the code is new for the next calendar year or the code is
an existing
[[Page 58889]]
code with substantial revision to its code descriptor in the next
calendar year as compared to current calendar year with a proposed APC
assignment, and that comments will be accepted on the proposed APC and
status indicator assignments.
Further, we reminded readers that the CPT code descriptors that
appear in Addendum B are short descriptors and do not accurately
describe the complete procedure, service, or item described by the CPT
code. Therefore, we included the 5-digit placeholder codes and their
long descriptors for the new and revised CY 2019 CPT codes in Addendum
O to the proposed rule (which is available via the internet on the CMS
website) so that the public could adequately comment on the proposed
APCs and status indicator assignments. The 5-digit placeholder codes
were included in Addendum O, specifically under the column labeled ``CY
2019 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' to the
proposed rule. We noted that the final CPT code numbers will be
included in this CY 2019 OPPS/ASC final rule with comment period. We
also noted that not every code listed in Addendum O is subject to
public comment. For the new and revised Category I and III CPT codes,
we requested public comments on only those codes that are assigned to
comment indicator ``NP''.
In summary, in the CY 2019 OPPS/ASC proposed rule, we solicited
public comments on the proposed CY 2019 status indicator and APC
assignments for the new and revised Category I and III CPT codes that
will be effective January 1, 2019. The CPT codes were listed in
Addendum B to the proposed rule with short descriptors only. We listed
them again in Addendum O to the proposed rule with long descriptors. We
also proposed to finalize the status indicator and APC assignments for
these codes (with their final CPT code numbers) in the CY 2019 OPPS/ASC
final rule with comment period. The proposed status indicator and APC
assignments for these codes were included in Addendum B to the proposed
rule (which is available via the internet on the CMS website).
Commenters addressed several of the new CPT codes that were
assigned to comment indicator ``NP'' in Addendum B to the CY 2019 OPPS/
ASC proposed rule. We have responded to those public comments in
sections II.A.2.b. (Comprehensive APCs), III.D. (OPPS APC-Specific
Policies), IV.B. (Device-Intensive Procedures) and XII. (Updates to the
ASC Payment System) of this CY 2019 OPPS/ASC final rule with comment
period.
The final status indicators, APC assignments, and payment rates for
the new CPT codes that are effective January 1, 2019 can be found in
Addendum B to this final rule with comment period (which is available
via the internet on the CMS website). In addition, the status indicator
meanings can be found in Addendum D1 (OPPS Payment Status Indicators
for CY 2019) to this final rule with comment period (which is available
via the internet on the CMS website).
B. OPPS Changes--Variations Within APCs
1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient department
services. Section 1833(t)(2)(B) of the Act provides that the Secretary
may establish groups of covered OPD services within this classification
system, so that services classified 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 Ambulatory Payment Classifications (APCs), as set forth
in regulations at 42 CFR[thinsp]419.31. We use Level I and Level II
HCPCS codes 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. We also have developed
separate APC groups for certain medical devices, drugs, biologicals,
therapeutic radiopharmaceuticals, and brachytherapy devices that are
not packaged into the payment for the procedure.
We have packaged into the payment for each procedure or service
within an APC group the costs associated with those items and services
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. Therefore, we do not make separate
payment for these packaged items or services. In general, packaged
items and services include, but are not limited to, the items and
services listed in regulations at 42 CFR 419.2(b). A further discussion
of packaged services is included in section II.A.3. of this final rule
with comment period.
Under the OPPS, we generally pay for covered 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. In the CY 2019 OPPS/ASC proposed rule (83 FR 37089), for CY
2019, we proposed that each APC relative payment weight represents the
hospital cost of the services included in that APC, relative to the
hospital cost of the services included in APC 5012 (Clinic Visits and
Related Services). The APC relative payment weights are scaled to APC
5012 because it is the hospital clinic visit APC and clinic visits are
among the most frequently furnished services in the hospital outpatient
setting.
2. Application of the 2 Times Rule
Section 1833(t)(9)(A) of the Act requires the Secretary to review,
not less often than annually, and revise the APC groups, the relative
payment weights, and the wage and other adjustments described in
paragraph (2) to take into account changes in medical practice, changes
in technology, the addition of new services, new cost data, and other
relevant information and factors. Section 1833(t)(9)(A) of the Act also
requires the Secretary to consult with an expert outside advisory panel
composed of an appropriate selection of representatives of providers to
review (and advise the Secretary concerning) the clinical integrity of
the APC groups and the relative payment weights. We note that the HOP
Panel recommendations for specific services for the CY 2019 OPPS update
are discussed in the relevant specific sections throughout this CY 2019
OPPS/ASC final rule with comment period.
In addition, 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 cost for an item or service in the group is more than 2
times greater than the lowest cost for an item or service within the
same group (referred to as the ``2 times rule''). The statute
authorizes the Secretary to make exceptions to the 2 times rule in
unusual cases, such as low-volume items and services (but the Secretary
may not make such an exception in the case of a drug or biological that
has been designated as an orphan drug under section 526 of the Federal
Food, Drug, and Cosmetic Act). In determining the APCs with a 2 times
rule violation, we consider only those HCPCS codes that are significant
based on the number of claims. We note that, for purposes of
identifying significant procedure codes for examination under
[[Page 58890]]
the 2 times rule, we consider procedure codes that have more than 1,000
single major claims or procedure codes that both have more than 99
single major claims and contribute at least 2 percent of the single
major claims used to establish the APC cost to be significant (75 FR
71832). This longstanding definition of when a procedure code is
significant for purposes of the 2 times rule was selected because we
believe that a subset of 1,000 or fewer claims is negligible within the
set of approximately 100 million single procedure or single session
claims we use for establishing costs. Similarly, a procedure code for
which there are fewer than 99 single claims and that comprises less
than 2 percent of the single major claims within an APC will have a
negligible impact on the APC cost (75 FR 71832). In the CY 2019 OPPS/
ASC proposed rule (83 FR 37089), for CY 2019, we proposed to make
exceptions to this limit on the variation of costs within each APC
group in unusual cases, such as for certain low-volume items and
services.
For the CY 2019 OPPS update, in the CY 2019 OPPS/ASC proposed rule,
we identified the APCs with violations of the 2 times rule. Therefore,
we proposed changes to the procedure codes assigned to these APCs in
Addendum B to the proposed rule. We noted that Addendum B does not
appear in the printed version of the Federal Register as part of the CY
2019 OPPS/ASC proposed rule. Rather, it is published and made available
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. To
eliminate a violation of the 2 times rule and improve clinical and
resource homogeneity, we proposed to reassign these procedure codes to
new APCs that contain services that are similar with regard to both
their clinical and resource characteristics. In many cases, the
proposed procedure code reassignments and associated APC
reconfigurations for CY 2019 included in the proposed rule were related
to changes in costs of services that were observed in the CY 2017
claims data newly available for CY 2019 ratesetting. Addendum B to the
CY 2019 OPPS/ASC proposed rule identified with a comment indicator
``CH'' those procedure codes for which we proposed a change to the APC
assignment or status indicator, or both, that were initially assigned
in the July 1, 2018 OPPS Addendum B Update (available via the internet
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html).
3. APC Exceptions to the 2 Times Rule
Taking into account the APC changes that we proposed to make for CY
2019 in the CY 2019 OPPS/ASC proposed rule, we reviewed all of the APCs
to determine which APCs would not meet the requirements of the 2 times
rule. We used the following criteria to evaluate whether to propose
exceptions to the 2 times rule for affected APCs:
Resource homogeneity;
Clinical homogeneity;
Hospital outpatient setting utilization;
Frequency of service (volume); and
Opportunity for upcoding and code fragments.
Based on the CY 2017 claims data available for the CY 2019 proposed
rule, we found 16 APCs with violations of the 2 times rule. We applied
the criteria as described above to identify the APCs for which we
proposed to make exceptions under the 2 times rule for CY 2019, and
found that all of the 16 APCs we identified met the criteria for an
exception to the 2 times rule based on the CY 2017 claims data
available for the proposed rule. We did not include in that
determination those APCs where a 2 times rule violation was not a
relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS
codes assigned to it that have a similar geometric mean costs and do
not create a 2 time rule violation. Therefore, we only identified those
APCs, including those with criteria-based costs, such as device-
dependent CPT/HCPCS codes, with violations of the 2 times rule.
We note that, for cases in which a recommendation by the HOP Panel
appears to result in or allow a violation of the 2 times rule, we may
accept the HOP Panel's recommendation because those recommendations are
based on explicit consideration (that is, a review of the latest OPPS
claims data and group discussion of the issue) of resource use,
clinical homogeneity, site of service, and the quality of the claims
data used to determine the APC payment rates.
Table 12 of the proposed rule listed the 16 APCs that we proposed
to make an exception for under the 2 times rule for CY 2019 based on
the criteria cited above and claims data submitted between January 1,
2017, and December 31, 2017, and processed on or before December 31,
2017. In the proposed rule, we stated that, for the final rule with
comment period, we intend to use claims data for dates of service
between January 1, 2017, and December 31, 2017, that were processed on
or before June 30, 2018, and updated CCRs, if available.
Based on the updated final rule CY 2017 claims data used for this
CY 2019 final rule with comment period, we were able to remedy 1 APC
violation out of the 16 APCs that appeared in Table 12 of the CY 2019
OPPS/ASC proposed rule. Specifically, APC 5735 (Level 5 Minor
Procedures) no longer met the criteria for exception to the 2 times
rule in this final rule with comment period. In addition, based on our
analysis of the final rule claims data, we found a total of 17 APCs
with violations of the 2 times rule. Of these 17 total APCs, 15 were
identified in the proposed rule and 2 are newly identified APCs.
Specifically, we found the following 15 APCs that were identified for
the proposed rule that continued to have violations of the 2 times rule
for this final rule with comment period:
APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage);
APC 5113 (Level 3 Musculoskeletal Procedures);
APC 5521 (Level 1 Imaging without Contrast);
APC 5522 (Level 2 Imaging without Contrast);
APC 5523 (Level 3 Imaging without Contrast);
APC 5571 (Level 1 Imaging with Contrast);
APC 5612 (Level 2 Therapeutic Radiation Treatment
Preparation);
APC 5691 (Level 1 Drug Administration);
APC 5692 (Level 2 Drug Administration);
APC 5721 (Level 1 Diagnostic Tests and Related Services);
APC 5724 (Level 4 Diagnostic Tests and Related Services);
APC 5731 (Level 1 Minor Procedures);
APC 5732 (Level 2 Minor Procedures);
APC 5822 (Level 2 Health and Behavior Services); and
APC 5823 (Level 3 Health and Behavior Services).
In addition, we found that the following two additional APCs
violated the 2 times rule using the final rule with comment period
claims data:
APC 5193 (Level 3 Endovascular Procedures); and
APC 5524 (Level 4 Imaging without Contrast).
After considering the public comments we received on proposed APC
assignments and our analysis of the CY 2017 costs from hospital claims
and cost report data available for this CY 2019 final rule with comment
period, we are finalizing our proposals, with some modifications.
Specifically, we are
[[Page 58891]]
finalizing our proposal to except 15 of the 16 proposed APCs from the 2
times rule for CY 2019 and also excepting 2 additional APCs (APCs 5193
and 5524). As noted above, we were able to remedy one of the proposed
rule 2 time rule violations in this final rule with comment period (APC
5735).
Table 16 below lists the 17 APCs that we are excepting from the 2
times rule for CY 2019 based on the criteria described earlier and a
review of updated claims data for dates of service between January 1,
2017 and December 31, 2017, that were processed on or before June 30,
2018, and updated CCRs, if available. We note that, for cases in which
a recommendation by the HOP Panel appears to result in or allow a
violation of the 2 times rule, we generally accept the HOP Panel's
recommendation because those recommendations are based on explicit
consideration of resource use, clinical homogeneity, site of service,
and the quality of the claims data used to determine the APC payment
rates. The geometric mean costs for hospital outpatient services for
these and all other APCs that were used in the development of this
final rule with comment period can be found on the CMS website at:
http://www.cms.gov.
[GRAPHIC] [TIFF OMITTED] TR21NO18.030
C. New Technology APCs
1. Background
In the November 30, 2001 final rule (66 FR 59903), we finalized
changes to the time period in which a service can be 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 an appropriate
clinical 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.
In the CY 2004 OPPS final rule with comment period (68 FR 63416),
we restructured the New Technology APCs to make the cost intervals more
consistent across payment levels and refined the cost bands for these
APCs to retain two parallel sets of New Technology APCs, one set with a
status indicator of ``S'' (Significant Procedures, Not Discounted when
Multiple. Paid under OPPS; separate APC payment) and the other set with
a status indicator of ``T'' (Significant Procedure, Multiple Reduction
Applies. Paid under OPPS; separate APC payment). These current New
Technology APC configurations allow us to price new technology services
more appropriately and consistently.
For CY 2018, there were 52 New Technology APC levels, ranging from
the lowest cost band assigned to APC 1491 (New Technology--Level 1A
($0-$10)) through the highest cost band assigned to APC 1908 (New
Technology--Level 52 ($145,001-$160,000)). We note that the cost bands
for the New Technology APCs, specifically, APCs 1491 through 1599 and
1901 through 1908, vary with increments ranging from $10 to $14,999.
These cost bands identify the APCs to which new technology procedures
and services with estimated service costs that fall within those cost
bands are assigned under the OPPS. Payment for each APC is made at the
mid-point of the APC's assigned cost band. For example, payment for New
Technology APC 1507 (New Technology--Level 7 ($501-$600)) is made at
$550.50.
Under the OPPS, one of our goals is to make payments that are
appropriate for the services that are necessary for the treatment of
Medicare beneficiaries. The OPPS, like other Medicare payment systems,
is budget neutral and increases are limited to the annual hospital
inpatient market basket increase. We
[[Page 58892]]
believe that our payment rates generally reflect the costs that are
associated with providing care to Medicare beneficiaries. Furthermore,
we believe that our payment rates are adequate to ensure access to
services (80 FR 70374).
For many emerging technologies, there is a transitional period
during which utilization may be low, often because providers are first
learning about the techniques and their clinical utility. Quite often,
parties request that Medicare make higher payment amounts under the New
Technology APCs for new procedures in that transitional phase. These
requests, and their accompanying estimates for expected total patient
utilization, often reflect very low rates of patient use of expensive
equipment, resulting in high per use costs for which requesters believe
Medicare should make full payment. Medicare does not, and we believe
should not, assume responsibility for more than its share of the costs
of procedures based on projected utilization for Medicare beneficiaries
and does not set its payment rates based on initial projections of low
utilization for services that require expensive capital equipment. For
the OPPS, we rely on hospitals to make informed business decisions
regarding the acquisition of high-cost capital equipment, taking into
consideration their knowledge about their entire patient base (Medicare
beneficiaries included) and an understanding of Medicare's and other
payers' payment policies. (We refer readers to the CY 2013 OPPS/ASC
final rule with comment period (77 FR 68314) for further discussion
regarding this payment policy.)
We note that, in a budget neutral system, payments may not fully
cover hospitals' costs in a particular circumstance, including those
for the purchase and maintenance of capital equipment. We rely on
hospitals to make their decisions regarding the acquisition of high-
cost equipment with the understanding that the Medicare program must be
careful to establish its initial payment rates, including those made
through New Technology APCs, for new services that lack hospital claims
data based on realistic utilization projections for all such services
delivered in cost-efficient hospital outpatient settings. As the OPPS
acquires claims data regarding hospital costs associated with new
procedures, we regularly examine the claims data and any available new
information regarding the clinical aspects of new procedures to confirm
that our OPPS payments remain appropriate for procedures as they
transition into mainstream medical practice (77 FR 68314). For CY 2019,
we included the proposed payment rates for New Technology APCs 1491 to
1599 and 1901 through 1908 in Addendum A to the CY 2019 OPPS/ASC
proposed rule (which is available via the internet on the CMS website).
The final payment rates for these New Technology APCs are included in
Addendum A to the CY 2019 OPPS/ASC final rule with comment period
(which is available via the internet on the CMS website).
2. Establishing Payment Rates for Low-Volume New Technology Procedures
Procedures that are assigned to New Technology APCs are typically
new procedures that do not have sufficient claims history to establish
an accurate payment for the procedures. One of the objectives of
establishing New Technology APCs is to generate sufficient claims data
for a new procedure so that it can be assigned to an appropriate
clinical APC. Some procedures that are assigned to New Technology APCs
have very low annual volume, which we consider to be fewer than 100
claims. We consider procedures with fewer than 100 claims annually as
low-volume procedures because there is a higher probability that the
payment data for a procedure may not have a normal statistical
distribution, which could affect the quality of our standard cost
methodology that is used to assign services to an APC. In addition,
services with fewer than 100 claims per year are not generally
considered to be a significant contributor to the APC ratesetting
calculations and, therefore, are not included in the assessment of the
2 times rule. For these low-volume procedures, we are concerned that
the methodology we use to estimate the cost of a procedure under the
OPPS by calculating the geometric mean for all separately paid claims
for a HCPCS procedure code from the most recent available year of
claims data may not generate an accurate estimate of the actual cost of
the procedure.
In accordance with section 1833(t)(2)(B) of the Act, services
classified within each APC must be comparable clinically and with
respect to the use of resources. As described earlier, assigning a
procedure to a new technology APC allows us to gather claims data to
price the procedure and assign it to the APC with services that use
similar resources and are clinically comparable. However, where
utilization of services assigned to a New Technology APC is low, it can
lead to wide variation in payment rates from year to year, resulting in
even lower utilization and potential barriers to access to new
technologies, which ultimately limits our ability to assign the service
to the appropriate clinical APC. To mitigate these issues, we believe
that it is appropriate to utilize our equitable adjustment authority at
section 1833(t)(2)(E) of the Act to adjust how we determine the costs
for low-volume services assigned to New Technology APCs. We have
utilized our equitable adjustment authority at section 1833(t)(2)(E) of
the Act, which states that the Secretary shall establish, in a budget
neutral manner, other adjustments as determined to be necessary to
ensure equitable payments, to estimate an appropriate payment amount
for low-volume new technology procedures in the past (82 FR 59281).
Although we have used this adjustment authority on a case-by-case basis
in the past, we believe that it is appropriate to adopt an adjustment
for low-volume services assigned to New Technology APCs in order
mitigate the wide payment fluctuations that can occur for new
technology services with fewer than 100 claims and to provide more
predictable payment for these services.
For purposes of this adjustment, we believe that it is appropriate
to use up to 4 years of claims data in calculating the applicable
payment rate for the prospective year, rather than using solely the
most recent available year of claims data, when a service assigned to a
New Technology APC has a low annual volume of claims, which, for
purposes of this adjustment, we define as fewer than 100 claims
annually. We consider procedures with fewer than 100 claims annually as
low-volume procedures because there is a higher probability that the
payment data for a procedure may not have a normal statistical
distribution, which could affect the quality of our standard cost
methodology that is used to assign services to an APC. For these low-
volume procedures, we are concerned that the methodology we use to
estimate the cost of a procedure under the OPPS by calculating the
geometric mean for all separately paid claims for a HCPCS procedure
code from the most recent available year of claims data may not
generate an accurate estimate of the actual cost of the procedure.
Using multiple years of claims data will potentially allow for more
than 100 claims to be used to set the payment rate, which would, in
turn, create a more statistically reliable payment rate.
In addition, to better approximate the cost of a low-volume service
within a New Technology APC, we believe that using the median or
arithmetic mean rather than the geometric mean (which
[[Page 58893]]
``trims'' the costs of certain claims out) may be more appropriate in
some circumstances, given the extremely low volume of claims. Low claim
volumes increase the impact of ``outlier'' claims; that is, claims with
either a very low or very high payment rate as compared to the average
claim, which would have a substantial impact on any statistical
methodology used to estimate the most appropriate payment rate for a
service. We believe that having the flexibility to utilize an
alternative statistical methodology to calculate the payment rate in
the case of low-volume new technology services would help to create a
more stable payment rate. Therefore, in the CY 2019 OPPS/ASC proposed
rule (83 FR 37091 through 37092), we proposed that, in each of our
annual rulemakings, we would seek public comments on which statistical
methodology should be used for each low-volume New Technology APC. In
the preamble of each annual rulemaking, we stated that we will present
the result of each statistical methodology and solicit public comment
on which methodology should be used to establish the payment rate for a
low-volume new technology service. In addition, we will use our
assessment of the resources used to perform a service and guidance from
the developer or manufacturer of the service, as well as other
stakeholders, to determine the most appropriate payment rate. Once we
identify the most appropriate payment rate for a service, we would
assign the service to the New Technology APC with the cost band that
includes its payment rate.
Accordingly, in the CY 2019 OPPS/ASC proposed rule (83 FR 37091
through 37092), for CY 2019, we proposed to establish a different
payment methodology for services assigned to New Technology APCs with
fewer than 100 claims using our equitable adjustment authority under
section 1833(t)(2)(E) of the Act. Under this proposal, we proposed to
use up to 4 years of claims data to establish a payment rate for each
applicable service both for purposes of assigning a service to a New
Technology APC and for assigning a service to a regular APC at the
conclusion of payment for the service through a New Technology APC. The
goal of such a policy is to promote transparency and stability in the
payment rates for these low-volume new technology procedures and to
mitigate wide variation from year to year for such services. We also
proposed to use the geometric mean, the median, or the arithmetic mean
to calculate the cost of furnishing the applicable service, present the
result of each statistical methodology in our annual rulemaking, and
solicit public comment on which methodology should be used to establish
the payment rate. We stated that the geometric mean may not be
representative of the actual cost of a service when fewer than 100
claims are present because the payment amounts for the claims may not
be distributed normally. We stated that, under this proposal, we would
have the option to use the median payment amount or the arithmetic mean
to assign a more representative payment for the service. Once we
identify the payment rate for a service, we would assign the service to
the New Technology APC with the cost band that includes its payment
rate.
Comment: One commenter requested that CMS expand the proposal to
cover all low-volume procedures with fewer than 100 claims annually in
the OPPS rather than only those procedures assigned to New Technology
APCs. The commenter noted the issues cited for establishing the low-
volume policy, including data not having a normal statistical
distribution, excessive influence of outliers, and the quality of
claims data affect all low-volume procedures, and not just those
procedure assigned to a New Technology APC.
Response: We disagree with the commenter's request. The fact that a
procedure has been assigned to a clinical APC means we have some idea
of the resources used for a low-volume procedure and what the cost of
the procedure should be. Concerns over the appropriate APC assignment
for an individual procedure may be addressed on a case-by-case basis
through our annual rulemaking. We remind commenters that they can
submit public comments on the appropriate APC assignment for a
particular code during that process. We believe reviewing each
procedure assigned to a clinical APC annually to determine if the
arithmetic mean, geometric mean, or median of the claims data should be
used to determine the procedure cost is both unnecessary and
operationally infeasible. The low-volume policy instead is intended
only for those procedures assigned to New Technology APCs with such
limited claims data that we are not able to assign them to clinical
APCs and need as much available data to determine the payment rate for
a procedure.
Comment: One commenter asked that CMS use the equitable adjustment
authority under section 1833(t)(2)(E) of the Act in other instances not
covered by the proposed low-volume policy where a procedure that has
recently been introduced to the outpatient setting has inconsistent
payment data due to small number of claims.
Response: We retain the ability to use our equitable adjustment
authority under section 1833(t)(2)(E) of the Act when we determine that
it is needed.
Comment: Several commenters supported the proposal to use up to 4
years of claims data and to have flexibility to use the geometric mean,
arithmetic mean, or median of claims data to establish a payment rate
for low-volume procedures assigned to a New Technology APC.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposed policy to establish payment rates for low-
volume procedures with fewer than 100 claims per year that are assigned
to New Technology APCs, without modification. We may use up to 4 years
of claims data to establish a payment rate for each applicable service
both for purposes of assigning a service to a New Technology APC and
for assigning a service to a regular APC at the conclusion of payment
for the service through a New Technology APC. We will use the geometric
mean, the median, or the arithmetic mean to calculate the cost of
furnishing the applicable service, present the result of each
statistical methodology in our annual rulemaking, and solicit public
comment on which methodology should be used to establish the payment
rate. Once we identify the payment rate for a service, we would assign
the service to the New Technology APC with the cost band that includes
its payment rate.
3. Procedures Assigned to New Technology APC Groups for CY 2019
As we explained in the CY 2002 OPPS final rule with comment period
(66 FR 59902), we generally retain a procedure in the New Technology
APC to which it is initially assigned until we have obtained sufficient
claims data to justify reassignment of the procedure to a clinically
appropriate APC.
In addition, in cases where we find that our initial New Technology
APC assignment was based on inaccurate or inadequate information
(although it was the best information available at the time), where we
obtain new information that was not available at the time of our
initial New Technology APC assignment, 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
[[Page 58894]]
different New Technology APC that more appropriately reflects its cost
(66 FR 59903).
Consistent with our current policy, for CY 2019, in the CY 2019
OPPS/ASC proposed rule (83 FR 37092), we proposed to retain services
within New Technology APC groups until we obtain sufficient claims data
to justify reassignment of the service to a clinically appropriate APC.
The flexibility associated with this policy allows us to reassign a
service from a New Technology APC in less than 2 years if sufficient
claims data are available. It also allows us to retain a service in a
New Technology APC for more than 2 years if sufficient claims data upon
which to base a decision for reassignment have not been obtained (66 FR
59902).
a. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs
1537, 5114, and 5414)
Currently, there are four CPT/HCPCS codes that describe magnetic
resonance image-guided, high-intensity focused ultrasound (MRgFUS)
procedures, three of which we proposed to continue to assign to
standard APCs, and one that we proposed to reassign to a different New
Technology APC for CY 2019. These codes include CPT codes 0071T, 0072T,
and 0398T, and HCPCS code C9734. CPT codes 0071T and 0072T describe
procedures for the treatment of uterine fibroids, CPT code 0398T
describes procedures for the treatment of essential tremor, and HCPCS
code C9734 describes procedures for pain palliation for metastatic bone
cancer.
As shown in Table 13 of the CY 2019 OPPS/ASC proposed rule, and as
listed in Addendum B to the CY 2019 OPPS/ASC proposed rule, we proposed
to continue to assign the procedures described by CPT codes 0071T and
0072T to APC 5414 (Level 4 Gynecologic Procedures), with a proposed
payment rate of approximately $2,410 for CY 2019. We also proposed to
continue to assign the APC to status indicator ``J1'' (Hospital Part B
services paid through a comprehensive APC) to indicate that payment for
all covered Part B services reported on the claim are packaged with the
payment for the primary ``J1'' service for the claim, except for
services assigned to OPPS status indicator ``F'', ``G'', ``H'', ``L'',
and ``U''; ambulance services; diagnostic and screening mammography;
all preventive services; and certain Part B inpatient services. In
addition, we proposed to continue to assign the services described by
HCPCS code C9734 (Focused ultrasound ablation/therapeutic intervention,
other than uterine leiomyomata, with magnetic resonance (mr) guidance)
to APC 5115 (Level 5 Musculoskeletal Procedures), with a proposed
payment rate of approximately $10,936 for CY 2019. We also proposed to
continue to assign HCPCS code C9734 to status indicator ``J1''.
For procedures described by CPT code 0398T, we have only identified
one paid claim for a procedure in CY 2016 and two paid claims in CY
2017, for a total of three paid claims. We note that the procedures
described by CPT code 0398T were first assigned to a New Technology APC
in CY 2016. Accordingly, there are only 2 years of claims data
available for the OPPS ratesetting purposes. The payment amounts for
the claims varied widely, with a cost of $29,254 for the sole CY 2016
claim and a geometric mean cost of $4,647 for the two CY 2017 claims.
In the proposed rule, we expressed concerned that the reported
geometric mean cost for CY 2017, which we would normally use to
determine the proposed payment rate for the procedures described by CPT
code 0398T, was significantly lower than the reported cost of the claim
received in CY 2016, as well as the payment rate for the procedures for
CY 2017 ($9,750.50) and for CY 2018 ($17,500.50). In accordance with
section 1833(t)(2)(B) of the Act, we must establish that services
classified within each APC are comparable clinically and with respect
to the use of resources.
Therefore, as mentioned in section III.C.2. of the proposed rule,
we proposed to use our equitable adjustment authority under section
1833(t)(2)(E) of the Act, which states that the Secretary shall
establish, in a budget neutral manner, other adjustments as determined
to be necessary to ensure equitable payments, to establish a payment
rate that is more likely to be representative of the cost of the
procedures described by CPT code 0398T, despite the low geometric mean
costs for procedures described by CPT code 0398T available in the
claims data used for the proposed rule. We stated that we continue to
believe that this situation for the procedures described by CPT code
0398T is unique, given the very limited number of claims for the
procedures and the high variability for the cost of the claims which
makes it challenging to determine a reliable payment rate for the
procedures.
Our analysis found that the arithmetic mean of the three claims is
$12,849.11, the geometric mean of the three claims is $8,579.91
(compared to $4,646.56 for CY 2017), and the median of the claims is
$4,676.77. Consistent with what we stated in section III.C.2. of the
proposed rule, we presented the result of each statistical methodology
in this preamble, and we sought public comments on which method should
be used to establish payment for the procedures described by CPT code
0398T. We believe that the arithmetic mean is the most appropriate
representative cost of the procedures described by CPT code 0398T,
which gives consideration to the payment rates established for the
procedures in CY 2017 and CY 2018, without any trimming. The arithmetic
mean also gives consideration to the full range in cost for the three
paid claims, which represent 2 years of claims data for the procedures.
We proposed to estimate the proposed payment rate for the procedures
described by CPT code 0398T by calculating the arithmetic mean of the
three paid claims for the procedures in CY 2016 and CY 2017, and
assigning the procedures described by CPT code 0398T to the New
Technology APC that includes the estimated cost. Accordingly, we
proposed to reassign the procedures described by CPT code 0398T from
APC 1576 (New Technology--Level 39 ($15,001-$20,000)) to APC 1575 (New
Technology--Level 38 ($10,001-$15,000)), with a proposed payment rate
of $12,500.50 for CY 2019. We refer readers to Addendum B to the
proposed rule for the proposed payment rates for all codes reportable
under the OPPS. Addendum B is available via the internet on the CMS
website.
Comment: Several commenters opposed the proposed reassignment of
CPT code 0398T to APC 1575 (New Technology--Level 38 ($10,001-
$15,000)), which has a payment rate of $12,500.50. These commenters
asked CMS to maintain the CY 2018 assignment of CPT code 0398T to APC
1576 (New Technology--Level 39 ($15,001-$20,000)). The commenters
believed the cost of the services described by CPT code 0398T is more
than the proposed payment rate of $12,500.50, and reducing payment
would discourage use of this new technology. One commenter, the
developer of the procedure, stated that the reduced payment rate would
be particularly problematic as it would take effect just as MACs are
issuing local coverage determinations to allow the procedure to be
covered more widely by Medicare. This commenter also believed the two
claims from CY 2017 with a geometric mean cost of $4,647 had too low of
a payment rate and submitted additional payment data to CMS to support
that position.
[[Page 58895]]
Response: Since the proposed rule was issued, there have been
several more claims for services described by CPT code 0398T that were
paid in CY 2017. Currently, there are 11 paid claims for services
described by CPT code 0398T for CY 2017, and these 11 claims have an
estimated cost of between $4,186.51 and $5,153.28. We performed our
low-volume new technology process for CPT code 0398T for all available
claims from CY 2017 and included the one claim of $29,254 from CY 2016.
The results of our analysis found that for claims billed with CPT code
0398T, the geometric mean cost was $5,360.99, the arithmetic mean cost
was $6,654.68, and the median cost was $4,581.45.
We have concerns about using the claims data available for this
final rule with comment period to set the payment rate for CPT code
0398T for CY 2019. The payment rate for CPT code 0398T for CY 2018 was
$17,500.50, and in the CY 2019 proposed rule (83 FR 37093), we proposed
a payment rate of $12,500.50. However for this final rule with comment
period, the highest payment rate using the most recent available claims
data and the newly adopted smoothing methodology for low-volume New
Technology APCs is $6,750.50, which is the mid-point of New Technology
APC 1531. New Technology APC 1531 is the cost band for the arithmetic
mean cost of CPT code 0398T. A payment rate of $6,750.50 would be the
result of a $10,750 reduction in the payment rate in a period of just 1
year, or a payment rate reduction of over 60 percent. In addition, this
payment reduction would be based on a total of 14 claims that have been
billed for CPT code 0398T since we first received claims for this
procedure in CY 2016. We believe that it is important to mitigate
significant payment differences, especially payment differences that
result in shifts of over $10,000 in a single year, while also basing
payment rates on available costs information and claims data. We are
concerned that these large changes in payment could potentially create
an access to care issue for services described by CPT code 0398T;
especially, when the procedure is starting to receive local coverage
determinations from MACs allowing more Medicare beneficiaries to use
the procedure. While the proposed payment rate of $12,500.50 is also a
decrease from the current payment rate, we believe that it would be
appropriate to finalize the proposed rate to mitigate a much sharper
decline in payment from one year to the next.
In accordance with section 1833(t)(2)(B) of the Act, we must
establish that services classified within each APC are comparable
clinically and with respect to the use of resources. Accordingly, we
are using our equitable adjustment authority under section
1833(t)(2)(E) of the Act, which states that the Secretary shall
establish, in a budget neutral manner, other adjustments as determined
to be necessary to ensure equitable payments, to maintain the proposed
rate for this procedure, despite the lower geometric mean, arithmetic
mean, and median costs calculated from the claims data used for this
final rule with comment period. As stated earlier, we believe that this
situation is unique, given the large reduction in payment this would
represent for CPT code 0398T and the very limited number of claims
reported for the procedure. Therefore, for CY 2019, we are reassigning
CPT code 0398T from APC 1576 to APC 1575 (New Technology--Level 38
($10,001-$15,000)). This APC assignment will establish a payment rate
for CPT code 0398T of $12,500.50, which was the proposed payment rate
for the procedure in the CY 2019 OPPS/ASC proposed rule. As we do each
year, we acquire claims data regarding hospital costs associated with
new procedures. We regularly examine the claims data and any available
new information regarding the clinical aspects of new procedures to
confirm that our OPPS payments remain appropriate for procedures like
CPT code 0398T as they transition into mainstream medical practice (77
FR 68314).
Comment: One commenter supported the proposed increase in Medicare
payment for MRI-guided high intensity focused ultrasound procedures
described by CPT codes 0071T and 0072T.
Response: We appreciate the commenter's support.
In summary, after consideration of the public comments we received,
we are finalizing our proposal for the APC assignment of CPT code
0398T. Specifically, we are reassigning this code to New Technology APC
1575 (New Technology--Level 38 ($10,001-$15,000)), with a payment rate
of $12,500.50, for CY 2019 through use of our equitable adjustment
authority. In addition, we are finalizing our proposal, without
modification, to assign HCPCS code C9734 to APC 5114. We also are
finalizing our proposal to continue to assign CPT codes 0071T and 0072T
to APC 5414, without modification. Table 17 below lists the final CY
2018 status indicator and APC assignments for MRgFUS procedures. We
refer readers to Addendum B of this final rule with comment period for
the final payment rates for all codes reportable under the OPPS.
Addendum B is available via the internet on the CMS website.
BILLING CODE 4120-01-P
[[Page 58896]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.031
[[Page 58897]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.032
BILLING CODE 4120-01-C
b. Retinal Prosthesis Implant Procedure
CPT code 0100T (Placement of a subconjunctival retinal prosthesis
receiver and pulse generator, and implantation of intra-ocular retinal
electrode array, with vitrectomy) describes the implantation of a
retinal prosthesis, specifically, a procedure involving the use of the
Argus[supreg] II Retinal Prosthesis System. This first retinal
prosthesis was approved by the Food and Drug Administration (FDA) in
2013 for adult patients diagnosed with severe to profound retinitis
pigmentosa. Pass-through payment status was granted for the
Argus[supreg] II device under HCPCS code C1841 (Retinal prosthesis,
includes all internal and external components) beginning October 1,
2013, and this status expired on December 31, 2015. We note that after
pass-through payment status expires for a medical device, the payment
for the device is packaged into the payment for the associated surgical
procedure. Consequently, for CY 2016, the device described by HCPCS
code C1841 was assigned to OPPS status indicator ``N'' to indicate that
payment for the device is packaged and included in the payment rate for
the surgical procedure described by CPT code 0100T. For CY 2016, the
procedure described by CPT code 0100T was assigned to New Technology
APC 1599, with a payment rate of $95,000, which was the highest paying
New Technology APC for that year. This payment includes both the
surgical procedure (CPT code 0100T) and the use of the Argus[supreg] II
device (HCPCS code C1841). However, stakeholders (including the device
manufacturer and hospitals) believed that the CY 2016 payment rate for
the procedure involving the Argus[supreg] II System was insufficient to
cover the hospital cost of performing the procedure, which includes the
cost of the retinal prosthesis at the retail price of approximately
$145,000.
For CY 2017, analysis of the CY 2015 OPPS claims data used for the
CY 2017 final rule with comment period showed 9 single claims (out of
13 total claims) for the procedure described by CPT code 0100T, with a
geometric mean cost of approximately $142,003 based on claims submitted
between January 1, 2015, through December 31, 2015, and processed
through June 30, 2016. Based on the CY 2015 OPPS claims data available
for the final rule with comment period and our understanding of the
Argus[supreg] II procedure, we reassigned the procedure described by
CPT code 0100T from New Technology APC 1599 to New Technology APC 1906,
with a final payment rate of $150,000.50 for CY 2017. We noted that
this payment rate included the cost of both the surgical procedure (CPT
code 0100T) and the retinal prosthesis device (HCPCS code C1841).
For CY 2018, the reported cost of the Argus[supreg] II procedure
based on CY 2016 hospital outpatient claims data used for the CY 2018
OPPS/ASC final rule with comment period was approximately $94,455,
which was more than $55,000 less than the payment rate for the
procedure in CY 2017. We noted that the costs of the Argus[supreg] II
procedure are extraordinarily high compared to many other procedures
paid under the OPPS. In addition, the number of claims submitted has
been very low and has not exceeded 10 claims within a single year. We
believed that it is important to mitigate significant payment
differences, especially shifts of several tens of thousands of dollars,
while also basing payment rates on available cost information and
claims data. In CY 2016, the payment rate for the Argus[supreg] II
procedure was $95,000.50. The payment rate increased to $150,000.50 in
CY 2017. For CY 2018, if we had established the payment rate based on
updated final rule claims data, the payment rate would have decreased
to $95,000.50 for CY 2018, a decrease of $55,000 relative to CY 2017.
We were concerned that these large changes in payment could potentially
create an access to care issue for the Argus[supreg] II procedure, and
we wanted to establish a payment rate to mitigate the potential sharp
decline in payment from CY 2017 to CY 2018.
In accordance with section 1833(t)(2)(B) of the Act, we must
establish that services classified within each APC are comparable
clinically and with respect to the use of resources. Therefore, we used
our equitable adjustment authority under section 1833(t)(2)(E) of the
Act, which states that the Secretary shall establish, in a budget
neutral manner, other adjustments as determined to be necessary to
ensure equitable payments, to maintain the payment rate for this
procedure, despite the lower geometric mean costs available in the
claims data used for the final rule with comment period. For CY 2018,
we reassigned the Argus[supreg] II procedure to APC 1904 (New
Technology--Level 50 ($115,001-$130,000)), which established a payment
rate for the Argus[supreg] II procedure of $122,500.50, which was the
arithmetic mean of the payment rates for the procedure for CY 2016 and
CY 2017.
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37093
through 37094), for CY 2019, the reported cost of the Argus[supreg] II
procedure based on CY 2017 hospital outpatient claims data used for the
CY 2019 OPPS/ASC proposed rule was approximately $152,021, which was
$29,520 more than the payment rate for the procedure for CY 2018. In
the proposed rule, we continued to note that the costs of the
Argus[supreg] II procedure are extraordinarily high compared to many
other procedures paid under the OPPS. In
[[Page 58898]]
addition, the number of claims submitted has been very low and did not
exceed 10 claims for CY 2017. We stated that we continue to believe
that it is important to mitigate significant payment differences,
especially shifts of several tens of thousands of dollars, while also
basing payment rates on available cost information and claims data
because we are concerned that large decreases in the payment rate could
potentially create an access to care issue for the Argus[supreg] II
procedure. In addition, we indicated that we wanted to establish a
payment rate to mitigate the potential sharp increase in payment from
CY 2018 to CY 2019, and potentially ensure a more stable payment rate
in future years.
In accordance with section 1833(t)(2)(B) of the Act, we must
establish that services classified within each APC are comparable
clinically and with respect to the use of resources. Therefore, as
discussed in section III.C.2. of the proposed rule, we proposed to use
our equitable adjustment authority under section 1833(t)(2)(E) of the
Act, which states that the Secretary shall establish, in a budget
neutral manner, other adjustments as determined to be necessary to
ensure equitable payments, to establish a payment rate that is more
representative of the likely cost of the service. We stated that we
believe the likely cost of the Argus[supreg] II procedure is lower than
the geometric mean cost calculated from the CY 2017 claims data used
for the proposed rule and closer to the CY 2018 payment rate.
We analyzed claims data for the Argus[supreg] II procedure using
the last 3 years of available data from CY 2015 through CY 2017. These
data included claims from the last year (CY 2015) that the
Argus[supreg] II received transitional device pass-through payments and
the first 2 years since device pass-through payment status for the
Argus[supreg] II expired. We found the geometric mean for the procedure
to be $129,891 (compared to $152,021 in CY 2017 alone), the arithmetic
mean to be $134,619, and the median to be $133,679. As indicated in our
proposal in section III.C.2. of the proposed rule (83 FR 37091 through
37092), we presented the result of each statistical methodology in the
preamble of the proposed rule, and requested public comment on which
methodology should be used to establish a payment rate. We proposed to
use the arithmetic mean, which generates the highest payment rate of
the three statistical methodologies, to estimate the cost of the
Argus[supreg] II procedure as a means to balance the fluctuations in
the costs of the procedure that have occurred from CY 2015 through CY
2017, while acknowledging the higher payment rates for the procedure in
CY 2015 and CY 2017. Therefore, for CY 2019, we proposed to reassign
the Argus[supreg] II procedure from APC 1904 (New Technology--Level 50
($115,001-$130,000)) to APC 1906 (New Technology--Level 51 ($130,001-
$145,000)), which resulted in a proposed payment rate for the
Argus[supreg] II procedure of $137,500.50.
As we do each year, we acquired claims data regarding hospital
costs associated with new procedures. We regularly examine the claims
data and any available new information regarding the clinical aspects
of new procedures to confirm that our OPPS payments remain appropriate
for procedures like the Argus[supreg] II procedure as they transition
into mainstream medical practice (77 FR 68314). We noted that the
proposed payment rate included both the surgical procedure (CPT code
0100T) and the use of the Argus[supreg] II device (HCPCS code C1841).
Comment: Several commenters requested that CMS reassign CPT code
0100T to APC 1908 (New Technology--Level 52 ($145,001-$160,000)) with a
payment rate of $152,500.50. The commenters were concerned that the
proposed assignment of APC 1906 (New Technology--Level 51 ($130,001-
$145,000)) with a payment rate of $137,500.50 will not cover all of the
costs of the procedure.
Response: We have updated our payment rate for CPT code 0100T. We
analyzed claims data for the Argus[supreg] II procedure using the last
3 years of available data from CY 2015 through CY 2017, which was
updated with additional claims from CY 2017. These data included claims
from the last year (CY 2015) that the Argus[supreg] II received
transitional device pass-through payments and the first 2 years since
device pass-through payment status for the Argus[supreg] II expired. We
found the updated geometric mean cost for the procedure to be $145,808
(compared to $129,891 in the proposed rule), the arithmetic mean cost
to be $151,367, and the median cost to be $151,266. All three of these
methods of calculating the cost of the Argus[supreg] II procedure map
to the cost band associated with APC 1908 (New Technology--Level 52
($145,001-$160,000)), which has a payment rate of $152,500.50.
After reviewing the comments we received and updating our data
analysis, we are reassigning the Argus[supreg] II procedure (CPT code
0100T) to APC 1908 (New Technology--Level 52 ($145,001-$160,000)) with
a payment rate of $152,500.50 for CY 2019.
We discussed in the CY 2019 OPPS/ASC proposed rule that the most
recent claims data available have shown another payment issue with
regard to the Argus[supreg] II procedure. We have found that payment
for the Argus[supreg] II procedure is sometimes bundled into the
payment for another procedure. We identified two possible instances in
the CY 2017 claims data in which this may have occurred. The bundling
of payment for the Argus[supreg] II procedure occurs when the procedure
is reported with other eye procedures assigned to a comprehensive APC
(C-APC). A C-APC bundles payment for all services related to the
primary service into one payment rate. We stated in the proposed rule
that we were concerned that when payment for new technology services is
bundled into the payment for comprehensive procedures, there is not
complete claims information to estimate accurately the cost of these
services to allow their assignment to clinical APCs. Therefore, we
proposed to exclude payment for all procedures assigned to New
Technology APCs from being bundled into the payment for procedures
assigned to a C-APC. This action would allow for separate payment for
the Argus[supreg] II procedure even when it is performed with another
comprehensive service, which would provide more cost information
regarding the procedure. This proposal was also discussed in section
II.A.2.c. of the proposed rule.
Comment: A number of commenters supported the proposal.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to exclude payment for all procedures assigned
to New Technology APCs from being bundled into the payment for
procedures assigned to a C-APC for CY 2019.
c. Bronchoscopy With Transbronchial Ablation of Lesion(s) by Microwave
Energy
CMS has established HCPCS code C9751 (Bronchoscopy, rigid or
flexible, transbronchial ablation of lesion(s) by microwave energy,
including fluoroscopic guidance, when performed, with computed
tomography acquisition(s) and 3-D rendering, computer-assisted, image-
guided navigation, and endobronchial ultrasound (EBUS) guided
transtracheal and/or transbronchial sampling (e.g., aspiration[s]/
biopsy[ies]) and all mediastinal and/or hilar lymph node stations or
structures and therapeutic
[[Page 58899]]
intervention(s)), effective January 1, 2019. This microwave ablation
procedure utilizes a flexible catheter to access the lung tumor via a
working channel and may be used as an alternative procedure to a
percutaneous microwave approach. Based on our review of the New
Technology APC application for this service and the service's clinical
similarity to existing services paid under the OPPS, we estimated the
likely cost of the procedure to be between $8,001 and $8,500.
Therefore, we are assigning the procedure described by HCPCS code C9751
to New Technology APC 1571 (New Technology--Level 34 ($8,001-$8,500)),
with a payment rate of $8,250.50 for CY 2019. Details regarding HCPCS
code C9751 are shown in Table 18.
[GRAPHIC] [TIFF OMITTED] TR21NO18.033
D. OPPS APC-Specific Policies
1. Benign Prostatic Hyperplasia Treatments (APCs 5373 and 5374)
For the CY 2019 OPPS update, the CPT Editorial Panel established
new CPT code 53854 to describe the Rezum Therapy procedure, which is
also known as steam therapy or water vapor therapy, for the treatment
of benign prostatic hyperplasia. Prior to January 1, 2019, the Rezum
Therapy procedure was described by HCPCS code C9748, which was assigned
to APC 5373 (Level 3 Urology and Related Services) when the code was
established effective January 1, 2018. HCPCS code C9748 will be deleted
on December 31, 2018 because it will be replaced with new CPT code
53854, effective January 1, 2019. We note that Table 19 below lists the
long descriptors for both HCPCS code C9748 and CPT code 53854.
As displayed in Table 19 below, and in Addendum B to the CY 2019
OPPS/ASC proposed rule, we proposed to delete HCPCS code C9748 and
assign the code to status indicator ``D'' to indicate that the code
would be deleted for the January 2019 OPPS update. We also proposed to
assign the new replacement code, CPT code 53854, to APC 5373, with a
proposed payment rate of approximately $1,731. We note that the
predecessor HCPCS code for CPT code 53854 (HCPCS code C9748) was also
assigned to APC 5373. In addition, we note that CPT code 53854 was
listed as code 538X3 (the 5-digit CMS placeholder code) in Addendum B,
with the short descriptor, and in Addendum O, with the long descriptor,
to the CY 2019 OPPS/ASC proposed rule. We also assigned CPT code 53854
to comment indicator ``NP'' in Addendum B to indicate that the code is
new for CY 2019 with a proposed APC assignment.
Comment: Several commenters addressed the proposed APC assignment
for the Rezum Therapy procedure (CPT code 53854), as well as the APC
assignments for the following other benign prostatic hyperplasia
treatment procedures:
Transurethral microwave therapy (TUMT) procedure, which is
described by CPT code 53850, and which we proposed to continue to
assign to APC 5374 (Level 4 Urology and Related Services), with a
proposed payment rate of approximately $2,756;
Transurethral needle ablation procedure (TUNA), which is
described by CPT 53852, and which we proposed to continue to assign to
APC 5375 (Level 5 Urology and Related Services) with a proposed payment
rate of approximately $3,776.
We note that Table 19 lists the long descriptors for the Rezum
Therapy, TUMT, and TUNA procedures.
One commenter disagreed with the proposed assignment for the Rezum
Therapy procedure described by CPT code 53854 to APC 5373, and
indicated that APC 5373 does not contain other procedures that are
similar clinically or in resource costs. The commenter stated that the
Rezum Therapy procedure is comparable to the TUMT procedure, which is
proposed to be assigned to APC 5374, and the TUNA procedure, which is
proposed to be assigned to APC 5375. Therefore, the commenter requested
that CPT code 53854, which describes the Rezum Therapy procedure, be
assigned to APC 5375 instead of APC 5373. In addition, the commenter
requested that the TUMT procedure described by CPT code 53850 be
reassigned from APC 5374 to APC 5375. The commenter further stated that
all three benign prostatic hyperplasia treatment procedures are
comparable and suggested that they be assigned to APC 5375 based on
clinical homogeneity and resource costs. Another commenter also
believed that the Rezum Therapy procedure described by CPT code 53854
should be assigned to APC 5375.
Response: Review of our claims data used for this final rule with
comment period, which is based on claims submitted between January 1,
2017 and December 31, 2017, and processed through June 30, 2018,
reveals that the resource costs for these three benign prostatic
hyperplasia treatment procedures are significantly different.
Our analysis shows that the geometric mean cost for CPT code 53850
(the TUMT procedure) is approximately
[[Page 58900]]
$3,272 (based on 107 single claims out of 107 total claims) compared to
CPT code 53852 (the TUNA procedure) whose geometric mean cost is
approximately $2,989 (based on 408 single claims out of 410 total
claims). In addition, in September 2017, CMS received a New Technology
APC application requesting a new HCPCS code for the Rezum Therapy
procedure because, according to the applicant, the only available CPT
code to report the procedure was CPT code 53899 (Unlisted procedure,
urinary system). Based on our review of the application, assessment of
the procedure, and input from our clinical advisors, we established
HCPCS code C9748, effective January 1, 2018, and assigned the code to
APC 5373, with a payment rate of approximately $1,696. We announced
this new HCPCS C-code and APC assignment in the CY 2018 OPPS/ASC final
rule with comment period (82 FR 59320) and stated that we believed the
Rezum Therapy procedure shares similar resource costs and clinical
homogeneity to the other procedures assigned to APC 5373.
Further, because of the public comments received on the Rezum
Therapy procedure, we conducted a preliminary claims review for HCPCS
code C9748, and found that, based on 73 claims that were processed on
or before July 27, 2018, the geometric mean cost for the procedure is
approximately $1,711, which is significantly lower than the geometric
mean cost for either CPT code 53850 (TUMT procedure) at approximately
$3,272 or CPT code 53852 (TUNA procedure) at approximately $2,989.
In addition, a presenter at the August 20, 2018 HOP Panel meeting
requested that the HOP Panel recommend that CMS reassign placeholder
CPT code 538X3 (CPT code 53854) to APC 5374 or 5375 based on clinical
similarity to the procedures described by CPT codes 53850 and 53852.
Based on the information presented at the meeting, the HOP Panel made
no recommendation to revise the APC assignment for the Rezum Therapy
procedure. However, based on the public comments received for the
reassignment for all three benign prostatic hyperplasia treatment
procedures, we reviewed the procedures assigned to the family of
Urology APCs for this final rule with comment period and made some
modifications to more appropriately reflect the resource costs and
clinical characteristics of the services within each APC grouping.
Specifically, we revised the APC assignment of the procedures assigned
to the family of Urology APCs to more appropriately reflect a
prospective payment system that is based on payment groupings and not
code-specific payment rates, while maintaining clinical and resource
homogeneity. Based on our review and modification, we revised the APC
assignment for CPT code 53852 (the TUNA procedure) from APC 5375 (Level
5 Urology and Related Services) to APC 5374 (Level 4 Urology and
Related Services) based on its clinical and resource homogeneity to the
other procedures in the APC 5374. Specifically, our claims data show
that the geometric mean cost for CPT code 53852 is approximately
$2,989, which is comparable to the geometric mean cost of approximately
$2,952 for APC 5374, rather than the geometric mean cost of
approximately $4,055 for APC 5375. We believe that this modification to
the proposed assignment of CPT code 53852 to APC 5374 is appropriate.
In addition, based on our latest claims data used for the final
rule with comment period, we believe that CPT codes 53850 (the TUMT
procedure) and 53852 (the TUNA procedure) are appropriately assigned to
APC 5374. We also believe that, based on our assessment of the Rezum
Therapy procedure and its cost, as reported in the CMS New Technology
application, and based on our preliminary claims review for HCPCS code
C9748 (which is the predecessor code for CPT code 53854), the Rezum
Therapy procedure continues to be appropriately assigned to APC 5373
based on its clinical and resource homogeneity to the other procedures
in the APC.
Comment: One commenter agreed with the proposed continued APC
assignment for CPT code 53852 (the TUNA procedure) to APC 5375. The
commenter also contended that, while the presenter at the August 20,
2018 HOP Panel meeting recommended an assignment of APC 5374 or APC
5375 for the procedure, the Rezum Therapy procedure is less costly to
perform than the TUNA procedure, and also noted that the HOP Panel made
no recommendation to CMS to change the APC assignment for either
procedure.
Response: Based on our comprehensive review of the procedures
assigned to the Urology APCs, and analysis of the latest claims data,
we do not agree that that we should continue to assign the procedure
described by CPT code 58352 (the TUNA procedure) to APC 5375 because
the geometric mean cost of the procedure of approximately $2,989 is
significantly less than the geometric mean cost of approximately $4,055
for APC 5375. We believe that the geometric mean cost of approximately
$2,989 for the procedure described by CPT code 53852 is more comparable
to the geometric mean cost of approximately $2,952 for APC 5374.
Therefore, for this final rule with comment period, we are revising the
proposed APC assignment for the procedure described by CPT code 58352
and assigning the procedure to APC 5374 for CY 2019.
After consideration of the public comments we received, and based
on the information presented above, as well as our evaluation of the
latest claims data for the TUMT, TUNA, and Rezum Therapy procedures, we
are finalizing the proposed APC assignment for the procedures described
by CPT code 53850 and CPT code 53854, and revising the APC assignment
for the procedure described by CPT code 53852 to APC 5374 (instead of
APC 5375). The final APC and status indicator assignments are listed in
Table 19 below. We refer readers to Addendum B to this final rule with
comment period for the final payment rates for all codes reportable
under the OPPS. Addendum B is available via the internet on the CMS
website.
[[Page 58901]]
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2. Cardiac Contractility Modulation (CCM) Therapy (APC 5231)
For CY 2019, we proposed to continue to assign the procedure
described by CPT code 0408T (Insertion or replacement of permanent
cardiac contractility modulation system, including contractility
evaluation when performed, and programming of sensing and therapeutic
parameters; pulse generator with transvenous electrodes) to APC 5231
(Level 1 ICD and Similar Procedures) with a proposed payment rate of
approximately $22,242.
Comment: One commenter disagreed with the proposed APC assignment
of the procedure described by CPT code 0408T to APC 5231 and requested
that CMS assign the procedure to APC 5232 (Level 2 ICD and Similar
Procedures), which had a proposed payment rate of approximately
$30,862. The commenter stated that the proposed payment rate for APC
5231 does not accurately reflect the cost or clinical characteristics
of the procedure and technology. The commenter added that while the
procedure code has had an extremely low volume of OPPS claims, the
number of claims reporting this procedure code is expected to increase
in the future after the completion of a large, prospective multicenter
study to evaluate CCM and its impact on the quality of life and long-
term mortality in patients with moderate to severe heart failure. The
commenter stated that the cost of the complete CCM system is
approximately $25,000, which is comparable to the cost of an ICD system
($20,000) and CRT-D system ($30,000) whose procedure codes are assigned
to APC 5232. Moreover, the commenter noted that, under the IPPS, the
procedures describing the insertion of the complete system are assigned
to one MS-DRG, and suggested that CMS adopt this same methodology under
the OPPS. Specifically, the commenter recommended that CMS assign the
procedure describing the insertion of the complete systems for the CCM,
ICD, and CRT-D systems to APC 5232.
Response: The commenter suggested that we assign the procedures
describing the insertion of the complete CCM, ICD, and CRT-D to one APC
but did not provide the specific CPT codes associated with the ICD and
CRT-D systems. Based on the information provided, we believe that the
commenter is requesting that we assign to APC 5232 the following codes:
Cardiac contractility modulation (CCM): CPT code 0408T
(which we proposed in APC 5231 (Level 1 ICD and Similar Procedures));
Implantable cardioverter-defibrillator (ICD): CPT code
33249 (which we proposed in APC 5232 (Level 2 ICD and Similar
Procedures)); and
Cardiac Resynchronization Therapy Defibrillator (CRT-D):
CPT codes 33249 (which we proposed to assign to APC 5232 (Level 2 ICD
and Similar Procedures) and 33225 (which we proposed to package payment
because this is an add-on code), or CPT code 33270 (which we proposed
to assign to APC 5232 (Level 2 ICD and Similar Procedures)).
Based on the latest hospital outpatient claims data used for this
final rule with comment period, our analysis does not support the
assignment of the procedures describing the insertion of the complete
CCM systems (described by CPT code 0408T) to APC 5232. We examined the
latest hospital outpatient claims data for CPT code 0408T for dates of
service between January 1, 2017, and December 31, 2017, that were
processed on or before June 30, 2018. Our analysis of the claims data
show a geometric mean cost of approximately $15,131 for CPT code 0408T,
based on 2 single claims (out of 2 total claims). We do not believe
that it is appropriate
[[Page 58902]]
to assign the procedure described by CPT code 0408T to APC 5232 because
its geometric mean cost is approximately $30,921, which is
significantly higher than the geometric mean cost of approximately
$15,131 for CPT code 0408T. Therefore, assigning the procedure
described by CPT code 0408T to APC 5232 would result in an overpayment
for the procedure. We believe that APC 5231 is the most appropriate APC
assignment for the procedure described by CPT code 0408T based on its
clinical and resource homogeneity to the other procedures assigned to
this APC.
We also analyzed the latest hospital outpatient claims data for the
procedure for the insertion of the complete systems for ICD and CRT-D.
The insertion of a complete ICD system is described by CPT code 33249,
and our analysis reveals that the geometric mean cost of approximately
$33,384 for CPT code 33249 based on 29,451 single claims (out of 29,867
total claims) is significantly higher than that of CPT code 0408T whose
geometric mean cost is approximately $15,131. The insertion of a
complete CRT-D system is described by either CPT code 33249 or 33270.
Similar to the procedure described by CPT code 33249, our findings
reveal that the geometric mean cost for the procedure described by CPT
code 33270 is approximately $35,361 based on 1,011 single claims (out
of 1,023 total claims), which is significantly greater than that of CPT
code 0408T. Based on our claims data, we do not believe that we should
reassign the procedure described by CPT code 0408T (the insertion of
the complete CCM systems) to APC 5232, which is the APC assignment for
the insertion of the complete ICD and CRT-D systems. We believe that
the geometric mean cost of approximately $15,131 for CPT code 0408T is
comparable to the geometric mean cost of about $22,187 for APC 5231. We
also believe that the geometric mean cost of approximately $33,384 for
CPT code 33249, and the geometric mean cost of approximately $35,361
for CPT code 33270 are comparable to the geometric mean cost of
approximately $30,921 for APC 5232.
Therefore, after consideration of the public comment we received,
we are finalizing our proposal, without modification, to assign CPT
code 0408T to APC 5231, and to continue to assign CPT code 33249 and
33270 to APC 5232 for CY 2019. The final CY 2019 payment rate for the
code can be found in Addendum B to this final rule with comment period
(which is available via the internet on the CMS website).
As we do every year, we will reevaluate the APC assignment for CPT
codes 0408T, 33249, and 33270 for the next rulemaking cycle. We remind
hospitals that we review, on an annual basis, the APC assignments for
all items and services paid under the OPPS.
3. Cardiac Resynchronization Therapy (APCs 5221, 5222, 5231, 5731, and
5741)
In Addendum B to the CY 2019 OPPS/ASC proposed rule, we proposed to
assign eight new CY 2019 cardiac resynchronization therapy CPT codes to
various APCs, which are listed in Table 20 below. The codes were listed
as 06X5T, 06X6T, 06X7T, 06X8T, 06X9T, 07X2T, 06X0T, and 07X0T (the 5-
digit CMS placeholder codes) in Addendum B with short descriptors and
in Addendum O with long descriptors to the CY 2019 OPPS/ASC proposed
rule. We also assigned these codes to comment indicator ``NP'' in
Addendum B to the proposed rule to indicate that the codes are new for
CY 2019 with proposed APC assignments and that public comments would be
accepted on their proposed APC assignments. We note that these codes
will be effective January 1, 2019.
[GRAPHIC] [TIFF OMITTED] TR21NO18.035
Comment: One commenter disagreed with CMS' proposed APC assignments
for certain cardiac resynchronization Category III CPT codes that are
new for CY 2019 and therefore do not have associated claims data
available. Specifically, the commenter requested that five of the eight
new CPT codes be reassigned to the following APCs:
CPT code 0515T (Insertion of wireless cardiac stimulator
for left ventricular pacing, including device interrogation and
programming, and imaging supervision and interpretation
[[Page 58903]]
when performed; complete system (includes electrode and generator
[transmitter and battery]))--from the proposed assignment to APC 5222
(Level 2 Pacemaker and Similar Procedures) to APC 5231 (Level 1 ICD and
Similar Procedures);
CPT code 0516T (Insertion of wireless cardiac stimulator
for left ventricular pacing, including device interrogation and
programming, and imaging supervision and interpretation when performed;
electrode only)--from the proposed assignment to APC 5221 (Level 1
Pacemaker and Similar Procedures) to APC 5194 (Level 4 Endovascular
Procedures);
CPT code 0517T (Insertion of wireless cardiac stimulator
for left ventricular pacing, including device interrogation and
programming, and imaging supervision and interpretation when performed;
pulse generator component(s) only (battery and/or transmitter))--from
the proposed assignment to APC 5221 to APC 5222 (Level 2 Pacemaker and
Similar Procedures);
CPT code 0520T (Removal and replacement of wireless
cardiac stimulator for left ventricular pacing; pulse generator
component(s) (battery and/or transmitter) including placement of a new
electrode)--from the proposed assignment to APC 5221 to APC 5231; and
CPT code 0521T (Interrogation device evaluation (in
person) with analysis, review and report, includes connection,
recording, and disconnection per patient encounter, wireless cardiac
stimulator for left ventricular pacing)--from the proposed assignment
to APC 5731 (Level 1 Minor Procedures) to APC 5741 (Level 1 Electronic
Analysis of Devices)
First, the commenter stated that CPT codes 0515T and 0520T describe
the implantation or removal/replacement of the complete system and,
consequently, these procedures should be assigned to APC 5231. Second,
the commenter stated that the resources associated with the procedure
described by CPT 0516T are similar to those procedures described by CPT
code 33274 (Transcatheter insertion or replacement of permanent
leadless pacemaker, right ventricular, including imaging guidance
(e.g., fluoroscopy, venous ultrasound, ventriculography, femoral
venography) and device evaluation (e.g., interrogation or programming),
when performed), which is assigned to APC 5194, and, therefore, this
new code should also be assigned to the same APC. In addition, the
commenter indicated that the procedure described by CPT code 0517T
shares the same clinical and resource homogeneity as the procedure
described by CPT code 33212 (Insertion of pacemaker pulse generator
only; with existing single lead), which is assigned to APC 5222, and
the procedure described by CPT code 33213 (Insertion of pacemaker pulse
generator only; with existing dual leads), which is assigned to APC
5223 ((Level 3 Pacemaker and Similar Procedures). Further, the
commenter stated that the resources associated with the procedure
described by CPT code 0521T are similar to those for the procedures
described by existing CPT codes 93261 (Interrogation device evaluation
(in person) with analysis, review and report by a physician or other
qualified health care professional, includes connection, recording and
disconnection per patient encounter; implantable subcutaneous lead
defibrillator system), CPT codes 93288 (Interrogation device evaluation
(in person) with analysis, review and report by a physician or other
qualified health care professional, includes connection, recording and
disconnection per patient encounter; single, dual, or multiple lead
pacemaker system), 93289 (Interrogation device evaluation (in person)
with analysis, review and report by a physician or other qualified
health care professional, includes connection, recording and
disconnection per patient encounter; single, dual, or multiple lead
transvenous implantable defibrillator system, including analysis of
heart rhythm derived data elements), 93290 (Interrogation device
evaluation (in person) with analysis, review and report by a physician
or other qualified health care professional, includes connection,
recording and disconnection per patient encounter; implantable
cardiovascular monitor system, including analysis of 1 or more recorded
physiologic cardiovascular data elements from all internal and external
sensors), and 93292 (Interrogation device evaluation (in person) with
analysis, review and report by a physician or other qualified health
care professional, includes connection, recording and disconnection per
patient encounter; wearable defibrillator system), which are all
assigned to APC 5741, and, consequently, the procedure described by CPT
code 0521T also should be assigned to this same APC.
Response: Based on our clinical review, we agree with the commenter
that there is greater homogeneity, both clinically and in terms of
resource use, by assigning CPT codes 0515T and 0520T to APC 5231. We
also agree with the commenter that CPT code 0517T is more homogenous
clinically and in terms of resource use with the procedures assigned to
APC 5222. However, we disagree with the commenter's recommendation to
assign the procedure described by CPT 0516T to APC 5194. Based on our
review of the procedure, we believe that CPT code 0516T is
appropriately assigned to APC 5222 because of its clinical and resource
homogeneity to the other procedures assigned to this APC. We also
disagree with the commenter's suggestion to assign the procedure
described by CPT code 0521T to APC 5741 because the resources required
in performing this procedure are not as intensive as those required for
the procedure described by CPT code 0522T, which we proposed to assign
to APC 5741. We believe that the procedure described by CPT code 0521T
is appropriately assigned to APC 5731 because of its clinical and
resource homogeneity to the other procedures assigned to this APC.
Table 21 below summarizes the commenter's requested APC assignment for
each of the codes along with our decision and the final APC and status
indicator assignments.
In summary, after consideration of the public comment we received,
we are finalizing our proposal to assign the procedures described by
CPT codes 0518T, 0519T, 0521T, and 0522T to the final APCs listed in
Table 21 below. We are modifying our proposed APC assignment of the
procedures described by CPT codes 0515T, 0516T, 0517T, and 0520T, and
these modifications are reflected in the final APCs listed in Table 21
below. The final CY 2019 payment rate for CPT codes 0515T through 0521T
can be found in Addendum B to this final rule with comment period
(which is available via the internet on the CMS website).
BILLING CODE 4120-01-P
[[Page 58904]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.036
BILLING CODE 4120-01-C
4. Chimeric Antigen Receptor T-Cell (CAR T) Therapy (APCs 5694, 9035,
and 9094)
Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene
therapy in which T-cells are collected and genetically engineered to
express a chimeric antigen receptor that will bind to a certain protein
on a patient's cancerous cells. The CAR T-cells are then administered
to the patient to attack certain cancerous cells and the individual is
observed for potential serious side effects that would require medical
intervention.
Two CAR T-cell therapies received FDA approval in 2017.
KYMRIAH[supreg] (manufactured by Novartis Pharmaceuticals Corporation)
was approved for use in the treatment of patients up to 25 years of age
with B-cell precursor acute lymphoblastic leukemia (ALL) that is
refractory or in second or later relapse. In May 2018, KYMRIAH[supreg]
received FDA approval for a second indication, treatment of adult
patients with relapsed or refractory large B-cell lymphoma after two or
more lines of systemic therapy, including diffuse large B-cell lymphoma
(DLBCL), high grade B-cell lymphoma, and DLBCL arising from follicular
lymphoma. YESCARTA[supreg] (manufactured by Kite Pharma, Inc.) was
approved for use in the treatment of adult patients with relapsed or
refractory large B-cell lymphoma and who have not responded to or who
have relapsed after at least two other kinds of treatment.
As indicated in the CY 2019 OPPS/ASC proposed rule (83 FR 37114),
the HCPCS code to describe the use of KYMRIAH[supreg] (HCPCS code
Q2040) has been active since January 1, 2018 for OPPS, and the HCPCS
code to describe the use of YESCARTA[supreg] (HCPCS code Q2041) has
been active since April, 1, 2018 for OPPS. The HCPCS coding for the
currently approved CAR T-cell therapies include leukapheresis and dose
preparation procedures because these services are included in the
manufacturing of these biologicals. Both of these CAR T-cell therapies
were approved for transitional pass-through payment status, effective
April 1, 2018. The HCPCS codes that describe the use of these CAR T-
cell therapies were assigned status indicator ``G'' in Addenda A and B
to the CY 2019 OPPS/ASC proposed rule.
As discussed in section V.A.4. (Drugs, Biologicals, and
Radiopharmaceuticals with New or Continuing Pass-Through Payment Status
in CY 2019) of this final rule with comment period, we are finalizing
our proposal to continue pass-through payment status for HCPCS code
Q2040 (which is being deleted and replaced with HCPCS code Q2042,
effective January 1, 2019) and HCPCS code Q2041 for CY 2019. In section
V.A.4. of this final rule with comment period, we also are finalizing
our proposal to determine the pass-through payment rate following the
standard ASP methodology, updating pass-through payment rates on a
quarterly basis if applicable information indicates that adjustments to
the payment rates are necessary.
The AMA created four Category III CPT codes that are related to CAR
T-cell therapy, effective January 1, 2019. As listed in Addendum B of
the CY 2019 OPPS/ASC proposed rule, we proposed to assign procedures
described by these CPT codes, 0537T, 0538T, 0539T, and 0540T, to status
indicator ``B'' (Codes that are not recognized by OPPS when submitted
on an outpatient hospital Part B bill type (12x and 13x)) to indicate
that the services are not paid under the OPPS. We note that, these
codes were listed as placeholder CPT codes 05X1T, 05X2T, 05X3T, and
05X4T in both Addendum B and O to the CY 2019
[[Page 58905]]
OPPS/ASC proposed rule. Addendum B listed the short descriptor, with
the proposed status indicator of ``B'', while Addendum O listed the
complete long descriptors under placeholder CPT codes 05X1T, 05X2T,
05X3T, and 05X4T. The final CPT codes and long descriptors, with their
respective proposed OPPS status indicators, are listed in Table 23 at
the end of this section.
At the summer 2018 meeting of the HOP Panel, the HOP Panel
recommended that CMS reassign the status indicator for procedures
described by these specific CPT codes from ``B'' to ``S''. The Panel
further recommended that CMS assign the procedures described by CPT
code 0537T and CPT code 0540T to APC 5242 (Level 2 Blood Product
Exchange and Related Services), and the procedures described by CPT
code 0538T and CPT code 0539T to APC 5241 (Level 1 Blood Product
Exchange and Related Services).
Comment: Some commenters disagreed with the proposed status
indicator assignment of ``B'' for the procedures described by CPT codes
0537T, 0538T, 0539T, and 0540T, and requested that CMS recognize these
procedures and the services described by the CPT codes under the OPPS
and pay separately for them. Some of these commenters urged CMS to
accept and finalize the HOP Panel's recommendations for assignment of
these CPT codes. Commenters stated that providers may currently use the
unlisted code (38999) to bill for the services described by the new CPT
codes because the currently available CPT codes fail to accurately
describe the procedure being rendered. The commenters indicated that
these services are similar to stem cell transplant services, and
suggested that the similarities between various codes, including
similarities between the procedures described by CPT code 05X1T (0537T)
and CPT code 38206 (Blood-derived hematopoietic progenitor cell
harvesting for transplantation, per collection; autologous), which is
assigned to APC 5242 (Level 2 Blood Product Exchange and Related
Services); CPT code 05X2T (0538T) and CPT code 38207 (Transplant
preparation of hematopoietic progenitor cells; cryopreservation and
storage), which is assigned to APC 5241 (Level 1 Blood Product Exchange
and Related Services); CPT code 05X3T (0539T) and CPT code 38208
(Transplant preparation of hematopoietic progenitor cells;
cryopreservation and storage; thawing of previously frozen harvest,
without washing, per donor), which is assigned to APC 5241 (Level 1
Blood Product Exchange and Related Services), and finally CPT code
05X4T (0540T) and CPT code 38241(Hematopoietic progenitor cell (hpc);
autologous transplantation), which is assigned to APC 5242 (Level 2
Blood Product Exchange and Related Services), be validly recognized and
considered when determining applicable policy and assignments.
A few commenters believed that there are possible similarities
between the CAR T-cell procedure CPT code 0540T and chemotherapy codes,
in general. However, other commenters asserted that CAR T-cell services
were distinct from the services associated with chemotherapy and stem
cell transplant codes, but noted that the codes suggested were the best
available approximations for payment at present and could provide
useful benchmarks of resource utilization. Some commenters also
supported the creation of a new Autologous HCT C-APC to adequately
compensate providers for providing CAR T-cell related services. Some
commenters requested that the existing Q-codes for CAR T-cell therapies
be revised to reference only the CAR T-cell products, and that
leukapheresis and other services related to the preparation, collection
and treatment be separately coded and paid.
A few commenters referenced the National Coverage Decision (NCD)
for apheresis (effective 1992), which provides coverage only under
limited conditions for therapeutic apheresis, and asked CMS to clarify
whether it applies to harvesting blood-derived T-lymphocytes for
development of genetically modified autologous CAR T-cells. Some
commenters referenced the ongoing National Coverage Analysis (NCA) for
CAR T-cells, and asked CMS to provide guidance in the interim on how to
bill for CAR T-cells and its therapies' administration.
The commenters also suggested additional modifications to HCPCS
codes Q2040 and Q2041, such as adopting HCPCS J-codes instead of HCPCS
Q-codes. Some commenters requested guidance on how to bill for specific
services, incomplete services, or partial services related to CAR T-
cell therapy, including but not limited to, billing for pre-infusion
steps, billing for services provided a number of days before the
infusion, billing if the CAR T-cell product is not infused, and billing
if services are provided at different facilities, such as both
inpatient and outpatient facilities.
Finally, another commenter supported the proposal not to pay
separately for procedures described by CPT codes 0537T, 0538T and 0539T
because the commenters maintained that payment for these CPT codes and
the performance of the services describe various steps of the
manufacturing process and, therefore, are appropriately included and
conveyed in the descriptors of and the existence of Q-codes for CAR T-
cell therapies. The commenter supported the appropriateness of
including these steps in the payment for the drug as a means to ensure
the manufacturer can preserve the integrity of the process and to
maximize the quality of therapy. Finally, one commenter believed that
separate payments for leukapheresis would increase beneficiary cost-
sharing.
Response: We do not believe that separate payment under the OPPS is
necessary for procedures described by CPT codes 0537T, 0538T, and
0539T. The existing CAR T-cell therapies on the market were approved as
biologics and, therefore, provisions of the Medicare statute providing
for payment for biologicals apply. The procedures described by CPT
codes 0537T, 0538T, and 0539T describe various steps required to
collect and prepare the genetically modified T-cells, and Medicare does
not generally pay separately for each step used to manufacture a drug
or biological. We note that the HCPCS coding for the currently approved
CAR T-cell therapy drugs, HCPCS codes Q2040 and Q2041, includes
leukapheresis and dose preparation procedures because these services
are included in the manufacturing of these biologicals. We also note
that, for OPPS billing purposes, the Q-codes are treated in the same
manner as J-codes, and a procedure assignment conversion to a J-code
for payment classification purposes would not affect payment by
Medicare. Q-codes can be updated quarterly, which allows for greater
frequency of modifications and, therefore, we believe are appropriate
for these new therapies. HOPDs can bill Medicare for reasonable and
necessary services that are otherwise payable under the OPPS, and we
believe that the comments in reference to payment for services provided
in settings not payable under OPPS are outside the scope of the
proposed rule.
With respect to NCD 110.14 for apheresis (Therapeutic Pheresis)
(https://www.cms.gov/medicare-coverage-database/details/ncd-details.aspx?NCDId=;82&ncdver=1&bc=AAAAgAAAAAAA&), we note that it
refers only to therapeutic treatments where blood is taken from the
patient, processed, and returned to the patient as
[[Page 58906]]
part of a continuous procedure and is distinguished from situations
where a patient is transfused at a later date. With respect to comments
referencing the ongoing NCA for CAR T-cells, we remind readers that
coverage analysis and determination do not determine what code or
payment is assigned a particular item or service, but information on
this NCA and process may be found at: https://www.cms.gov/medicare-coverage-database/details/nca-tracking-sheet.aspx?NCAId=291.
Accordingly, we are not revising the existing Q-codes for CAR T-cell
therapies to remove leukapheresis and dose preparation procedures, and
we are not accepting the HOP Panel's recommendations for procedures
described by CPT codes 0537T, 0538T and 0539T.
In regard to comments concerning CPT code 0540T, we were persuaded
by commenters that the administration of CAR T-cell services would be
more specifically described by CPT code 0540T. Because CPT code 0540T
is a new code for CY 2019, we do not have any claims data on which to
base our proposed payment rate. In the absence of claims data, we
reviewed the clinical characteristics of the procedures to determine
whether they are similar to existing procedures. After reviewing
information from public commenters and input from our medical advisors,
we believe that new CPT code 0540T is clinically similar to the
services assigned to APC 5694 (Level IV Drug Administration), with a
proposed payment rate of approximately $291, such as the procedure
described by CPT code 96413 (Chemotherapy administration, intravenous
infusion technique; up to 1 hour, single or initial substance/drug). We
acknowledge commenters' supporting data and indications that CAR T-cell
service is complex, distinct from chemotherapy, and has the potential
for highly adverse reactions. However, we note that CPT's prefatory
language for the ``Chemotherapy and Other Highly Complex Drug or Highly
Complex Biologic Agent Administration'' section in which the procedure
described by CPT code 96413, and some other services assigned to APC
5694 are listed, describes these procedures as administration of highly
complex drugs or biologic agents with greater incidence of severe
adverse patient reaction. We also note that the unique toxicities
associated with CAR T-cell therapies tend not to occur at time of
infusion, and services to monitor or treat adverse reactions on a
subsequent day would not be included in the procedure described by CPT
code 0540T. Therefore, we are accepting the HOP Panel's recommendation
and the commenters' request to reassign the status indicator assignment
of the procedure described by CPT code 0540T from ``B'' to ``S.''
However, we are not accepting the HOP Panel's recommendation and the
commenters' request to assign the procedure described by CPT code 0540T
to APC 5242 (Level 2 Blood Product Exchange and Related Services), but
instead are assigning the procedure described by CPT code 0540T to APC
5694 (Level IV Drug Administration) for CY 2019. We remind hospitals
that every year, we review the APC assignments for all services and
items paid under the OPPS, and we will reevaluate the APC assignment
for the procedures described by CPT code 0540T once sufficient claims
data for this code become available.
Comment: Some commenters suggested that separately paying for the
services described by new CPT codes for CAR T-cell therapy under the
OPPS would allow Medicare and others to track utilization and cost data
of these specific services. Some commenters also noted that the
National Uniform Billing Committee (NUBC) established two new revenue
codes and a value code related to CAR T-cell therapy, and expressed
support for CMS' creation of a new CAR T-cell-related cost center (or
centers) to assist with tracking CAR T-cell-related costs.
Response: The existing HCPCS codes for CAR T-cell therapies include
both leukapheresis and dose-preparation procedures, and for the reasons
stated previously, there is no separate payment by Medicare for these
steps in the manufacturing process. However, it will be possible for
Medicare to track utilization and cost data from hospitals reporting
these services, even for codes reported for services in which no
separate payment is made. The CAR T-cell related revenue codes and
value code established by the NUBC will be reportable on HOPD claims,
and will be available for tracking utilization and cost data, effective
for claims received on or after April 1, 2019. At this time, we do not
believe that the additional creation by CMS of a new cost center is
necessary as the currently established methods for tracking CAR T-cell
related costs are sufficient. However, we will monitor for this issue
to determine if a distinct cost center should be established in the
future.
Comment: Some commenters noted that HCPCS code Q2040 describes
doses of ``up to 250 million'' cells, and requested guidance on how to
bill for an adult indication that may require doses of ``up to 600
million cells.''
Response: HCPCS code Q2040 (which is being replaced by HCPCS code
Q2042, effective January 1, 2019) is billed only once per infusion. For
CY 2019, we revised the descriptor for HCPCS code Q2042 to describe
doses ``up to 600 million cells . . . per therapeutic dose.'' For CY
2019, we also revised the descriptor for HCPCS code Q2041, in order to
maintain consistency in the HCPCS coding for CAR T-cells.
In summary, after consideration of the public comments we received,
we are adopting as final, without modification, the proposal to assign
status indicator ``B'' to CPT codes 0537T, 0538T, and 0539T for CY
2019. We are revising our proposal and finalizing the policy to assign
status indicator ``S'' to CPT code 0540T and to assign CPT code 0540T
to APC 5694 for CY 2019. Additionally, for CY 2019, we are assigning
status indicator ``D'' to CPT code Q2040, status indicator ``G'' to
HCPCS code Q2041, and status indicator ``G'' to HCPCS code Q2042, as
summarized in Table 22 below. We refer readers to Addendum B to this
final rule with comment period for the payment rates for all codes
reportable under the OPPS. Addendum B is available via the internet on
the CMS website. In addition, we refer readers to Addendum D1 to this
final rule with comment period for the complete list of the OPPS
payment status indicators and their definitions for CY 2019.
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5. Drug-Eluting Implant (APC 5733)
For CY 2019, we proposed to continue to assign CPT code 0356T
(Insertion of drug-eluting implant (including punctal dilation and
implant removal when performed) into lacrimal canaliculus, each) to APC
5733 (Level 3 Minor Procedures) with a proposed payment rate of
approximately $57. We also proposed to continue to assign the CPT code
to status indicator ``Q1'' to indicate one of the following with
regards to payment:
Packaged APC payment if billed on the same claim as a
HCPCS code assigned status indicator ``S'', ``T'', or ``V''; or
Composite APC payment if billed with specific combinations
of services based on OPPS composite-specific payment criteria. Payment
is packaged into a single payment for specific combinations of
services; or
In other circumstances, payment is made through a separate
APC payment.
Comment: Several commenters disagreed with the proposed
continuation of the status indicator assignment of ``Q1'' for CPT code
0356T and recommended an assignment to a significant procedure status
indicator instead of a conditionally packaged status indicator. One
commenter indicated that the procedure described by CPT code 0356T
represents a nonsurgical, independent procedure that is not based on
any other primary procedure, and believed that a status indicator
reassignment would ensure proper claims processing for providers.
Response: As indicated above and in OPPS Addendum D1 of the CY 2019
OPPS/ASC proposed rule, status indicator ``Q1'' represents one of three
potential payment assignments. Depending on the claim submitted, and
whether the procedure described by CPT code 0356T is performed with any
other surgeries or services on the same day, the procedure described by
CPT code 0356T may be paid separately through an APC (in this case APC
5733) or paid as part of a payment when included in the more
significant procedure that is reported on the claim. Based on the
nature of this procedure, which may be performed by itself or with
other procedures on the same day, we believe that the continued
assignment of status indicator ``Q1'' is appropriate for the procedure
described by CPT code 0356T.
After consideration of the public comments we received, we are
finalizing our proposal, without
[[Page 58909]]
modification, to assign CPT code 0356T to status indicator ``Q1'' for
CY 2019. The final CY 2019 payment rate for the CPT code can be found
in Addendum B to this final rule with comment period (which is
available via the internet on the CMS website).
6. Endovascular Procedures (APCs 5191 Through 5194)
At the annual meeting for the HOP Panel held on August 21, 2017,
the HOP Panel recommended that, for CY 2018, CMS examine the number of
APCs for endovascular procedures. The HOP Panel also recommended that
the appropriate Panel subcommittee review the APCs for endovascular
procedures to determine whether more granularity (that is, more APCs)
is warranted.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59293
through 59294), we stated that we believed that the current C-APC
levels for the Endovascular Procedures C-APC family provide an
appropriate distinction between the resource costs at each level and
clinical homogeneity. We also stated that we would continue to review
the C-APC structure for endovascular procedures to determine if any
additional granularity is necessary for this C-APC family.
Using the most recent data available for the CY 2019 OPPS/ASC
proposed rule, we analyzed the four existing levels of the Endovascular
Procedures C-APCs. We did not observe any violations of the 2 times
rule within the current Endovascular Procedures C-APC structure. Some
stakeholders have suggested that for certain procedures, such as
angioplasty procedures involving the use of a drug-coated balloon in
addition to a nondrug-coated balloon, resource costs are significantly
higher than the geometric mean cost (and associated C-APC payment) for
all of the angioplasty procedures combined. We stated in the proposed
rule that we recognize that the costs of a given procedure, involving
additional devices, will be higher than the costs of the procedure when
it does not involve such additional devices. However, the OPPS is a
prospective payment system based on a system of averages in which the
costs of some cases within an APC will be more costly than the APC
payment rate, while the costs of other cases will be less costly. While
we believe that there is sufficient granularity within the existing
Endovascular Procedures C-APC structure and at least one stakeholder
agrees, we stated that we have also received input from other
stakeholders who have suggested alternative structures for this C-APC
family that include a five-level structure and a six-level structure.
An illustration of these proposed C-APC structure levels was displayed
in Table 15 and Table 16, respectively, of the proposed rule. Because
interested stakeholders have suggested a variety of options for the
endovascular procedures C-APC structure, including keeping the existing
C-APC structure, in the CY 2019 OPPS/ASC proposed rule, we proposed to
maintain the existing four-level structure for this C-APC family listed
in Table 14 of the proposed rule. However, we invited public comments
on our proposal, as well as the stakeholder-requested five-level and
six-level structures displayed in the Tables 15 and 16 of the proposed
rule. We noted that the approximate geometric mean costs associated
with the suggested five-level and six-level C-APC structures shown in
Tables 15 and 16 of the proposed rule were only estimates and, if
either of the suggested structure levels were adopted, they would be
subject to change, depending on the final rule with comment period data
and the particular services that are assigned to each C-APC.
Comment: Several commenters supported CMS' proposal to continue
with a four-level APC structure, along with the proposed CPT code
assignments to each of the endovascular APCs as described in the CY
2019 OPPS/ASC proposed rule. These commenters stated that adding
additional APCs to the endovascular series could result in some APCs
containing very few procedures, and further believed that this policy
change would also be contrary to the concept of broader APC groupings
under the OPPS. Another commenter requested that CMS provide greater
detail about future proposals in order for stakeholders to be able to
provide fully informed comments and recommendations.
Other commenters also agreed with CMS' assessment that the four-
level APC structure and the assignment of the procedures to these APCs
does not result in any 2 times rule violations, and believed that the
current granularity within the existing Endovascular Procedures C-APCs'
structure sufficiently represents resource cost and clinical
homogeneity.
Response: We appreciate the commenters' input and support. At this
time, we believe that the current APC structure levels for the
Endovascular Procedures C-APC family provide an appropriate distinction
between resource costs at each level and clinical homogeneity.
Comment: Several commenters believed that the current structure of
the Endovascular Procedures APCs violates the 2 times rule when certain
code combinations, such as the procedures described by CPT 37224
(Revascularization, endovascular, open or percutaneous, femoral,
popliteal artery(s), unilateral; with transluminal angioplasty) and
HCPCS code C2623 (Catheter, transluminal angioplasty, drug-coated, non-
laser), are reported in combination. As a result, the commenters
requested that CMS make a complexity adjustment for CY 2019 by
assigning cases for the procedures described by CPT code 37224 and
HCPCS code C2623 when reported in combination with one another to APC
5193.
Some of these commenters believed that the current structure of the
Endovascular Procedures APCs is insufficiently granular, and noted that
the current APC structure has significant differentials in payments of
over $5,000 between the current procedures assigned to Level 2 (APC
5192) and between the procedures assigned to Level 3 and Level 4 (APC
5194). These commenters further contended that the large numbers of
procedures assigned to each level of APC, coupled with the high total
volume of procedures assigned to each level within each APC, prevent
technology costs from being adequately and accurately reflected in the
OPPS payment rates. As a result, these commenters requested that CMS
create a six-level structure Endovascular Procedure APC reflecting the
following cost bands:
[[Page 58910]]
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Some of these commenters also specifically suggested that the
procedures described by CPT code 37224 (Revascularization,
endovascular, open or percutaneous, femoral, popliteal artery(s),
unilateral; with transluminal angioplasty) and HCPCS code C2623
(Catheter, transluminal angioplasty, drug-coated, non-laser); and CPT
code 37726 (Revascularization, endovascular, open or percutaneous,
femoral, popliteal artery(s), unilateral; with transluminal stent
placement(s), includes angioplasty within the same vessel, when
performed) and HCPCS code C1874 (Stent, coated/covered, with delivery
system) be assigned to the newly leveled structure within APC 5193 and
APC 5195, respectively, in order to take into consideration the
performance of and utilization of procedures involving drug-coated
balloons and drug eluting stents that are required for these
procedures.
Several of these same commenters requested that CMS create new
HCPCS code modifiers to take into account the performance of the
procedures described by CPT code 37724 when reported in combination
with HCPCS code C2623, and CPT code 37226 when reported in combination
with HCPCS code C1874. The commenters provided that CMS could model the
costs for these cases using CY 2017 and CY 2018 claims data when these
codes are reported in combination with one another. The commenters
further believed that the creation of new HCPCS code modifiers are
necessary in order to differentiate drug-coated device procedures from
non-drug-coated device procedures, and will provide the granularity in
HCPCS and APC coding that will allow CMS to collect data for the CPT/
HCPCS codes to appropriately calculate payment rates within the APCs.
Another commenter further stated that these procedures should be
assigned to the newly created APC 5193 and APC 5195, respectively.
Response: We appreciate the commenters' suggestion. As noted in the
proposed rule, we understand that some stakeholders have suggested that
when certain procedures, such as those described by CPT code 37224 and
HCPCS code C2623 are reported in combination, a 2 times rule violation
occurs. However, we recognize that the costs of a given procedure,
involving additional devices, will be higher than the costs of the
procedure when it does not involve such additional devices, and we do
not believe that these types of 2 times rule violations are avoidable,
given the nature of a prospective payment system (83 FR 37095).
Using the most recent data available for this final rule with
comment period, we analyzed the various alternative suggestions for the
recommended HCPCS code placements, including maintaining the CY 2018
APC groupings, creating a six-level APC, and reconfiguring significant
HCPCS code placements within the current structure. We note that, when
we modeled the creation of a six-level structure APC and modeled a
reconfiguration of significant HCPCS code placements, we noticed
significant downward payment fluctuations for several services, some as
high as a $2,500 decrease relative to the payment rate in CY 2018.
Furthermore, based on these findings, we are still not convinced that
we should pay for a complexity adjustment for the procedure described
by CPT code 37224 when reported in combination with HCPCS code C2623 or
for the procedure described by CPT code 37226 when reported in
combination with HCPCS code C1874. As noted above and as provided in
the proposed rule, the OPPS is a prospective payment system based on a
system of averages in which the costs of some cases within an APC will
be more costly than the APC payment rate, while the costs of other
cases will be less costly and in these particular procedures we believe
that if a complexity adjustment would be applied it would adversely
affect the APC payment (83 FR 37095). Additionally, at this time, we do
not support the creation of any new HCPCS codes for inclusion in the
Endovascular Procedures APCs. Specifically, we do not believe that we
have the needed evidence and data to support combining payment for
either the procedure described by CPT code 37724 when reported in
combination with HCPCS code C2623 or the procedure described by CPT
code 37226 when reported in combination with HCPCS code C1874 because
we believe that payment for these services are currently adequate.
However, we do share similar concerns with the commenters regarding
the significant differential payments between the procedures assigned
within the current four-level structure of the Endovascular Procedures
APCs and intend to revisit this particular issue in future rulemaking.
Therefore, after consideration of the public comments and suggestions
we received, we are maintaining the CY 2018 APC structure of four
levels for the Endovascular Procedures APCs. We understand the
importance of payment stability for providers and believe that
continuation of the four levels within the Endovascular Procedures APCs
will minimize fluctuation in payment rates from CY 2018 to CY 2019. As
displayed in the ``Two Times Listing'' file to this final rule with
comment period, which is available via the internet on the CMS website,
the APC geometric mean costs for APCs 5521 through 5524 are consistent
with the CY 2018 APC geometric mean costs for the same APCs, indicating
the relative weights that are used to calculate payment are stable.
We will continue to review this APC structure to determine if
additional granularity is necessary for this C-APC family, including if
additional HCPCS codes should be created in future rulemaking. We refer
readers to Addendum B to this final rule with comment period for the
payment rates for all codes reported under the OPPS. Additionally, we
refer readers to Addendum A to this final rule with comment period for
the complete list of APCs and their payment rates under the OPPS. Both
Addendum A and Addendum B are available via the internet on the CMS
website.
[[Page 58911]]
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7. Fine Needle Aspiration Biopsy (APC 5071)
As displayed in Table 25 below and in Addendum B to the CY 2019
OPPS/ASC proposed rule, we proposed to assign CPT codes 10009 and 10011
to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage), with a
proposed payment rate of approximately $582. The codes were listed as
10X16 and 10X18 (the 5-digit CMS placeholder codes), respectively, in
Addendum B with the short descriptors and in Addendum O with the long
descriptors to the CY 2019 OPPS/ASC proposed rule. We also assigned
these codes to comment indicator ``NP'' in Addendum B to indicate that
the codes are new for CY 2019, with proposed APC assignments, and that
public comments would be accepted on their proposed APC assignments. We
note that these codes will be effective January 1, 2019.
Comment: One commenter disagreed with the proposed assignment of
the procedure described by CPT code 10009 to APC 5071 and suggested
that APC 5072 (Level 2 Excision/Biopsy/Incision and Drainage), with a
proposed payment rate of approximately $1,370, is more appropriate
because the resource cost of the CT guidance used in the procedure is
higher than the resource cost of ultrasound or fluoroscopy. The
commenter disagreed with the proposed assignment of the procedure
described by CPT code 10011 to APC 5071 and recommended that APC C-5373
(Level 3 Urology and Related Services), with a proposed payment rate of
approximately $1,731, is more appropriate because the cost of the MRI
guidance used in the procedure is clinically similar to the other
services in this APC.
Response: Because CPT codes 10009 and 10011 are new codes for CY
2019, we do not have claims data on which to base the payment rates.
However, in the absence of claims data, we reviewed the clinical
characteristics of the procedures described by CPT codes 10009 and
10011 to determine whether they are similar to existing procedures.
After reviewing information from the public commenter and input from
our medical advisors, we believe that the procedures described by new
CPT codes 10009 and 10011 are clinically similar to those procedures
assigned to APC 5071. We are unclear of the rationale for the
commenter's suggestion of recommending a Urology APC assignment (C-APC
5373) for the procedure described by CPT code 10011 when this procedure
describes a fine needle aspiration biopsy, which is not a urology-
specific procedure. Therefore, we are not accepting the commenter's
recommendation. In addition, we remind hospitals that, every year, we
review the APC assignments for all services and items paid under the
OPPS. We will reevaluate the APC assignment for the procedures
described by CPT codes 10009 and 10011 once we have claims data for the
codes.
After consideration of the public comment received, we are
finalizing our proposal, without modification, to assign the procedures
described by CPT codes 10009 and 10011 to APC 5071 for CY 2019. The
final APC and status indicator assignments are listed in Table 25
below. We refer readers to Addendum B of this final rule with comment
period for the final payment rates for all codes reportable under the
OPPS. Addendum B is available via the internet on the CMS website.
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[[Page 58912]]
8. Fluorescence In Situ Hybridization (FISH) Assays (APCs 5672 and
5673)
As displayed in Table 26 below and in Addendum B to the CY 2019
OPPS/ASC proposed rule, we proposed to assign the procedures described
by CPT codes 88364 through 88377 to status indicator ``N'' to indicate
a packaged payment status, or status indicators ``Q1'' and ``Q2'' to
indicate a conditionally packaged payment status, with APC assignments
to either APC 5672 (Level 2 Pathology), with a proposed payment rate of
approximately $145, or APC 5673 (Level 3 Pathology), with a proposed
payment rate of approximately $273.
Comment: One commenter urged CMS to exclude certain FISH assays
from the OPPS packaging policy. Specifically, the commenter stated that
the technical component of services that are associated with the
services described by CPT codes 88364, 88365, 88366, 88367, 88368,
88369, 88373, 88374, and 88377 have unique clinical utilization that is
distinct from conventional laboratory tests, and suggested that the
services described by these codes be excluded from the OPPS payment
packaging policy. The commenter further stated that these tests are
utilized in both the hospital outpatient and hospital inpatient setting
similar to molecular pathology tests and advanced diagnostic laboratory
tests (ADLTs).
Response: As stated in the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79593), payment for most laboratory tests is packaged
under OPPS. Under our current policy, payment for certain clinical
diagnostic laboratory tests that are listed on the Clinical Laboratory
Fee Schedule (CLFS) is packaged in the OPPS as integral, ancillary,
supportive, dependent, or adjunctive to the primary service or services
provided in the hospital outpatient setting (81 FR 79593 and 42 CFR
419.2(b)(17)). However, we have established exceptions to the OPPS
laboratory test packaging policy for molecular pathology tests, certain
ADLTs, and preventive laboratory tests. Specifically, we exclude from
packaging the following laboratory tests:
Molecular pathology tests, because these relatively new
tests may have a different pattern of clinical use than more
conventional laboratory tests, which may make them generally less tied
to a primary service in the hospital outpatient setting than the more
common and routine laboratory tests that are packaged (80 FR 70348
through 70350);
ADLTs, as designated under the CLFS, that meet the
criteria of section 1834A(d)(5)(A) of the Act (81 FR 79593 through
79594), and
Preventive laboratory tests that are listed in Section
1.2, Chapter 18 of the Medicare Claims Processing Manual (Pub. 100-04)
(80 FR 70349).
We note that laboratory tests also are paid separately when they
are the only services provided to a beneficiary on a claim (81 FR
79593). When payment for laboratory tests is not packaged under the
OPPS, and the tests are listed on the CLFS, the payment is made at the
CLFS payment rates, outside the OPPS, under Medicare Part B.
With regard to the services described by CPT codes 88364, 88369,
and 88373, we proposed to continue to assign these add-on services to
status indicator ``N'' because, under the OPPS, payment for services
described by add-on codes are packaged in accordance with the
regulations at Sec. 419.2(b)(18).
In addition, with regard to the services described by CPT codes
88365, 88366, 88374, and 88377, we proposed to continue to assign these
codes to status indicator ``Q1'' to indicate that these services are
separately payable when not billed on the same claim as a HCPCS code
assigned status indicator ``S'', ``T'', or ``V''. Further, with regard
to the services described by CPT codes 88367 and 88368, we proposed to
continue to assign these codes to status indicator ``Q2'' to indicate
that payment for these services will be packaged in the APC payment if
billed on the same date of service as a HCPCS code assigned to status
indicator ``T'', but in all other circumstances, separate APC payment
for the services would be made. Based on the nature of these services,
we believe the payment for the services described by CPT codes 88365,
88366, 88367, 88368, 88374, and 88377 should continue to be
conditionally packaged under the OPPS because these laboratory tests
may be performed with other procedures on the same day.
In summary, because the services described by CPT codes 88364,
88365, 88366, 88367, 88368, 88369, 88373, 88374, and 88377 are not
molecular pathology laboratory tests, ADLTs, or preventive laboratory
tests as stated in the above response, we believe that we should
continue to package the payment for these services under the OPPS.
Therefore, after consideration of the public comment received, we are
finalizing our proposal, without modification, to assign the services
described by CPT codes 88364, 88365, 88366, 88367, 88368, 88369, 88373,
88374, and 88377 to the final APCs and status indicator assignments
listed in Table 26 below. We refer readers to Addendum B of this final
rule with comment period for the payment rates for all codes reportable
under the OPPS. Addendum B is available via the internet on the CMS
website. In addition, we refer readers to Addendum D1 of this final
rule with comment period for the complete list of the OPPS payment
status indicators and their definitions for CY 2019.
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9. Immediate Breast Implant Following Mastopexy/Mastectomy (C-APC 5092)
For CY 2019, we proposed to continue to assign the procedures
described by CPT code 19340 (Immediate insertion of breast prosthesis
following mastopexy, mastectomy or in reconstruction) to C-APC 5092
(Level 2 Breast/Lymphatic Surgery and Related Procedures), with a
proposed payment rate of approximately $4,960.
Comment: Some commenters disagreed with the proposed continued APC
assignment for the procedure described by CPT code 19340 to C-APC 5092
and suggested instead a reassignment to C-APC 5093 (Level 3 Breast/
Lymphatic Surgery and Related Procedures), with a proposed payment rate
of approximately $7,432. One commenter believed that the procedure
described by CPT code 19340 shares similar clinical and resource
characteristics as the procedures described by CPT codes 19325
(Mammaplasty, augmentation; with prosthetic implant) and 19342 (Delayed
insertion of breast prosthesis following mastopexy, mastectomy or in
reconstruction), which are assigned to C-APC 5093. Another commenter
requested a review and reconfiguration of C-APCs 5092 and 5093, and
believed
[[Page 58914]]
that the cost of performing the procedure described by CPT code 19340
is similar to the surgical procedures assigned to C-APC 5093.
Response: Analysis of the hospital outpatient claims data used for
this final rule with comment period, which is based on claims submitted
between January 1, 2017 and December 31, 2017, and processed through
June 30, 2018, do not support a reassignment of the procedure described
by CPT code 19340 to C-APC 5093. Specifically, our claims data show a
geometric mean cost of approximately $5,341 for the procedure described
by CPT code 19340 based on 1,187 single claims (out of 1,203 total
claims), which is comparable to the geometric mean cost of
approximately $4,958 for C-APC 5092. In contrast, our claims data show
a higher geometric mean cost for the procedures described by CPT codes
19325 (approximately $6,326 based on 209 single claims out of 210 total
claims) and 19342 (approximately $6,232 based on 1,190 single claims
out of 1,202 total claims) that is comparable to the geometric mean
cost of approximately $7,513 for C-APC 5093. Based on our analysis, we
believe that the procedure described by CPT code 19340 is appropriately
assigned to C-APC 5092 based on resource and clinical homogeneity to
the other procedures in the APC. We note that all of the procedures
described by CPT codes assigned to this Breast/Lymphatic Surgery and
Related Procedures C-APC are clinically similar and that the resource
similarity is based on the geometric mean costs derived from claims
submitted by hospitals performing these procedures.
After consideration of the public comments we received and based on
our analysis of the latest hospital outpatient claims data for the
procedures described by CPT codes 19340, 19325, and 19342, we are
finalizing our proposal, without modification, to continue to assign
CPT code 19340 to C-APC 5092. We refer readers to Addendum B of this
final rule with comment period for the payment rates for all codes
reportable under the OPPS. Addendum B is available via the internet on
the CMS website.
10. Intracardiac Ischemia Monitoring (APCs 5221, 5222, 5223, and 5741)
In Addendum B to the CY 2019 OPPS/ASC proposed rule, we proposed to
assign eight new intracardiac ischemia monitoring CPT codes to various
APCs, which are listed in Table 27 below. The codes were listed as
00X0T through 00X7T (the 5-digit CMS placeholder codes) in Addendum B
with short descriptors and in Addendum O with long descriptors to the
CY 2019 OPPS/ASC proposed rule. We also assigned these codes to comment
indicator ``NP'' in Addendum B to the proposed rule to indicate that
the codes are new for CY 2019, with proposed APC assignments, and that
public comments would be accepted on their proposed APC assignments. We
note these codes will be effective January 1, 2019. Although the codes
are new for CY 2019, the services associated with intracardiac ischemia
monitoring were previously described by CPT codes 0302T through 0307T,
which were deleted on December 31, 2017.
[GRAPHIC] [TIFF OMITTED] TR21NO18.043
Comment: One commenter disagreed with CMS' proposed APC assignment
for the new intracardiac ischemia monitoring Category III CPT code
0525T (Insertion or replacement of intracardiac ischemia monitoring
system, including testing of the lead and monitor, initial system
programming, and imaging supervision and interpretation; complete
system (electrode and implantable monitor)) and requested assignment to
APC 5224 (Level 4 Pacemaker and Similar Procedures) instead of APC
5223. The commenter suggested that the procedure described by CPT code
0525T be assigned to APC 5224, which is the same APC that was assigned
to its predecessor CPT code 0302T (Insertion or removal and replacement
of intracardiac ischemia monitoring system including imaging
supervision and interpretation when performed and intra-operative
interrogation and programming when performed; complete system (includes
device and electrode)) when the code was active during CY 2017. The
commenter also stated that the procedure described by CPT code 0525T is
more complex and requires significantly more resources than the other
procedures assigned to APC 5223. The commenter further indicated that
the cost of the Guardian System alone, which is related to the CPT
codes of concern, is between $8,000 to $8,700, while the overall cost
for the insertion of the complete system is between $15,700 and
$16,400.
[[Page 58915]]
Response: For CY 2018, CMS received a New Technology APC
application requesting a new HCPCS code for the insertion of an
intracardiac ischemia monitoring system because no current CPT code
existed to describe the procedure, and because its predecessor CPT code
0302T was deleted on December 31, 2017. Based on our review of the
application, evaluation of the procedure, and input from our clinical
advisors, we agreed that no existing code appropriately describes the
insertion of an intracardiac ischemia monitoring system and, therefore,
established HCPCS code C9750 (Insertion or removal and replacement of
intracardiac ischemia monitoring system including imaging supervision
and interpretation and peri-operative interrogation and programming;
complete system (includes device and electrode)), effective October 1,
2018. For the October 2018 OPPS update, we assigned HCPCS code C9750 to
APC 5223 (Level 3 Pacemaker and Similar Procedures) with a payment rate
of approximately $9,748. We announced this new HCPCS code and APC
assignment in the October 2018 OPPS quarterly update CR (Transmittal
4123, Change Request 10923, dated August 24, 2018). Because the
procedure described by CPT code 0525T is the same procedure described
by HCPCS code C9750, we proposed to assign CPT code 0525T to APC 5223.
In addition, we reviewed our claims data for the predecessor CPT
code 0302T that were submitted during CY 2012 through CY 2017. We note
that predecessor CPT code 0302T became effective July 1, 2012 and was
deleted on December 31, 2017. Our analysis of the claims data for CPT
code 0302T revealed no single claim submitted for CY 2017, CY 2016, CY
2014, CY 2013, or CY 2012. We did find one claim that was submitted
during CY 2015 with a geometric mean cost of approximately $4,619.
However, based on cost information submitted to CMS in the New
Technology APC application, we believe that APC 5223, whose geometric
mean cost is approximately $9,964, is the appropriate APC assignment
for the procedure described by CPT code 0525T. We believe that the
procedure described by CPT code 0525T shares similar resource and
clinical homogeneity to the other procedures currently assigned to APC
5223. Consequently, we did not assign the code to a New Technology APC
because the services assigned to APC 5223 are clinically similar to the
service described by CPT code 0525T. Therefore, we believe that APC
5223 is the more appropriate APC assignment for the procedure described
by CPT code 0525T.
Comment: One commenter also disagreed with the proposed assignment
of the service described by CPT code 0528T to APC 5741, and requested
that the service be assigned to APC 5743 (Level 3 Electronic Analysis
of Devices) instead. The commenter stated that the service generally
takes about 60 minutes to perform, which is similar to the following
services assigned to APC 5743:
CPT code 0462T (Programming device evaluation (in person)
with iterative adjustment of the implantable mechano-electrical skin
interface and/or external driver to test the function of the device and
select optimal permanent programmed values with analysis, including
review and report, implantable aortic counterpulsation ventricular
assist system, per day);
CPT code 0463T (Interrogation device evaluation (in
person) with analysis, review and report, includes connection,
recording and disconnection per patient encounter, implantable aortic
counterpulsation ventricular assist system, per day); and
CPT code 0472T (Device evaluation, interrogation, and
initial programming of intraocular retinal electrode array (e.g.,
retinal prosthesis), in person, with iterative adjustment of the
implantable device to test functionality, select optimal permanent
programmed values with analysis, including visual training, with review
and report by a qualified health care professional).
Response: Based on our review of the predecessor CPT codes for the
intracardiac ischemia monitoring systems that were in existence from
July 1, 2012 through December 31, 2017, we found that the service
described by CPT code 0528T (Programming device evaluation (in person)
of intracardiac ischemia monitoring system with iterative adjustment of
programmed values, with analysis, review, and report) was previously
described by predecessor CPT code 0305T (Programming device evaluation
(in person) of intracardiac ischemia monitoring system with iterative
adjustment of programmed values, with analysis, review, and report).
Similar to predecessor CPT code 0302T, predecessor CPT code 0305T
became effective July 1, 2012 and was deleted on December 31, 2017. Our
analysis of the claims data for the service described by CPT code 0305T
revealed no single claim submitted during CY 2012 through CY 2017.
Based on input from our medical advisors and our APC assignment for
predecessor CPT code 0305T to APC 5741, we believe that APC 5741 is the
appropriate APC assignment for the service described by CPT code 0528T,
based on similar programming device evaluation codes assigned to this
APC.
In summary, after consideration of the public comment we received,
we are finalizing our proposal, without modification, to assign the
services described by CPT codes 0525T through 0532T to the final APCs
listed in Table 28 below. We note that HCPCS code C9750 will be deleted
December 31, 2018, because it will be replaced with CPT code 0525T,
effective January 1, 2019. The final CY 2019 payment rate for CPT codes
0525T through 0532T can be found in Addendum B to this final rule with
comment period (which is available via the internet on the CMS
website).
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[[Page 58916]]
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11. Intraocular Retinal Electrode Programming and Reprogramming (APCs
5742 and 5743)
As noted in Table 29 below, for CY 2019, we proposed to continue to
assign the procedure described by CPT code 0472T to APC 5743 (Level 3
Electronic Analysis of Devices), with a proposed payment rate of
approximately $280. We also proposed to continue to assign the
procedure described by CPT code 0473T to APC 5742 (Level 2 Electronic
Analysis of Devices), with a proposed payment rate of approximately
$115.
Comment: One commenter supported CMS' proposal to continue to
assign the programming services for Argus II, which are described by
CPT codes
[[Page 58917]]
0472T and 0473T, to APCs 5743 and 5742.
Response: We appreciate the commenter's support. Based on input
from our medical advisors, we believe that CPT codes 0472T and 0473T
are appropriately assigned to APCs 5743 and 5742, respectively, based
on clinical and resource homogeneity to the other services assigned to
these APCs.
Therefore, after consideration of the public comment received, we
are finalizing our proposal, without modification, to continue to
assign the procedures described by CPT codes 0472T and 0473T to APCs
5743 and APC 5742, respectively, for CY 2019. The final APC and status
indicator assignments are listed in Table 29 below. The final payment
rates for these codes, where applicable, can be found in Addendum B to
this final rule with comment period (which is available via the
internet on the CMS website).
[GRAPHIC] [TIFF OMITTED] TR21NO18.045
BILLING CODE 4120-01-C
12. Kidney Dilation of Tract (C-APC 5373)
In Addendum B to the CY 2019 OPPS/ASC proposed rule, we proposed to
assign the procedure described by CPT code 50436 (Dilation of existing
tract, percutaneous, for an endourologic procedure including imaging
guidance (e.g., ultrasound and/or fluoroscopy) and all associated
radiological supervision and interpretation, with postprocedure tube
placement, when performed) to C-APC 5373 (Level 3 Urology and Related
Services), with a proposed payment rate of approximately $1,731. This
code was listed as 50X39 (the 5-digit CMS placeholder code) in Addendum
B, with the short descriptor, and in Addendum O, with the long
descriptor, to the CY 2019 OPPS/ASC proposed rule. We also proposed to
assign this code to comment indicator ``NP'' in Addendum B to indicate
that the code is new for CY 2019 with a proposed APC assignment and
that public comments would be accepted on the proposed APC assignment.
We note that this code will be effective January 1, 2019.
Comment: One commenter disagreed with the proposed assignment of
CPT code 50436 to C-APC 5373 and instead recommended assignment to C-
APC 5374 (Level 3 Urology and Related Services), with a proposed
payment rate of approximately $2,755, because of the higher resource
costs associated with the procedure.
Response: Because CPT code 50436 is a new code for CY 2019, we do
not have claims data on which to base a payment rate. However, in the
absence of claims data, we reviewed the clinical characteristics of the
procedure to determine whether the surgical procedure is similar to
existing procedures. After review of the procedure and input from our
clinical advisors, we believe that the procedure described by new CPT
code 50436 is clinically similar to those procedures assigned to C-APC
5373. We will reevaluate the APC assignment for the procedure described
by CPT code 50436 once claims data for this procedure become available.
We note that as we do every year, we review the APC assignments for all
services and items paid under the OPPS.
After consideration of the public comment we received, we are
finalizing our proposal to assign the procedure described by CPT code
50436 to C-APC 5373. We refer readers to Addendum B of this final rule
with comment period for the payment rates for all codes reportable
under the OPPS. Addendum B is available via the internet on the CMS
website.
13. Intraocular Procedures (APC 5494)
In prior years, the procedure described by CPT code 0308T
(Insertion of ocular telescope prosthesis including removal of
crystalline lens or intraocular lens prosthesis) has been assigned to
the APC 5495 (Level 5
[[Page 58918]]
Intraocular Procedures) based on its estimated costs. In addition, its
relative payment weight has been based on its median under our payment
policy for low-volume device-intensive procedures established in the CY
2016 OPPS because the APC contained a low volume of claims. The low-
volume device-intensive procedures policy is discussed in more detail
in section III.C.2. of the proposed rule and this final rule with
comment period.
In reviewing the claims data available for the proposed rule for CY
2019 OPPS ratesetting, we found that there were only two claims
containing procedures described by CPT code 0308T, with a geometric
mean of $5,438.99 and a median of $8,237.56. Based on those two claims,
APC 5495 would have had a proposed geometric mean of $5,438.99 and a
proposed median of $8,237.56. However, based on its estimated costs in
the most recently available claims data, we stated in the proposed rule
that we believe that the procedure described by CPT code 0308T is more
appropriately placed in the APC 5493, which has a geometric mean cost
of $9,821.47, which is more comparable to that of the procedure
described by CPT code 0308T. Therefore, for CY 2019, we proposed to
reassign the procedure described by CPT code 0308T from APC 5495 to APC
5493 (Level 3 Intraocular Procedures) and to delete APC 5495. We stated
that we would continue to monitor the volume of claims reporting a
procedure described by CPT code 0308T available to us for future
ratesetting.
Comment: One commenter requested that the procedure described by
CPT code 0308T be assigned to a New Technology APC based on the
proposed low-volume New Technology policy, without requesting a
specific New Technology APC or cost band. The commenter believed that
the reasons for developing the low volume New Technology policy are
consistent with issues related to the procedure described by CPT code
0308T, including the quality and volume of claims data, and resulting
cost fluctuation. The commenter noted that because those issues facing
low-volume procedures would be the same, regardless of whether the
procedures are assigned to a New Technology or clinical APC, it would
be appropriate to assign the procedure described by CPT code 0308T to a
New Technology APC. However, the commenter requested that, if that
change were not to be made, CMS instead assign the procedure described
by the CPT code to APC 5495, which was previously for ``Level 5
Intraocular Procedures'' and that the same smoothing methodology for
low volume New Technology procedures, which includes use of multiple
years of claims data, apply to the procedure described by CPT code
0308T, given its low volume.
Response: In previous years, the procedure described by CPT code
0308T was assigned to APC 5495 (Level 5 Intraocular Procedures) using a
median-based weight under the low-volume device intensive policy. Based
on the CY 2017 claims data available for ratesetting, in the CY 2019
OPPS/ASC proposed rule, we proposed to assign the procedure described
by CPT code 0308T to APC 5493, noting that we would continue to monitor
the data. In the CY 2019 OPPS final rule claims data, the estimated
cost of the single claim with CPT code 0308T as the primary service is
approximately $12,939.75.
While we appreciate the stakeholder's comments regarding changes in
estimated costs based on the claims data available for ratesetting, we
have concerns with establishing a New Technology APC methodology for a
clinical APC especially in the absence of a New Technology application,
which is used to evaluate new technology APC requests. We also note
that the procedure described by CPT code 0308T has historically been
assigned to a clinical APC beginning with the CY 2013 OPPS.
Recognizing the estimated cost based on the final rule claims data
and the commenter's concerns, we believe that the procedure described
by CPT code 0308T is appropriate for assignment to clinical APC 5494
(Level 4 Intraocular Procedures). CPT code 0308T has device-intensive
status based on its device offset percentage and the fact that the APC
to which the procedure is assigned has fewer than 100 total claims.
Therefore, the low-volume device intensive policy of using the median
cost for OPPS ratesetting would apply.
After consideration of the public comment we received, we are
modifying our proposal to assign the procedure described by CPT code
0308T to APC 5493 and instead are assigning the procedure described by
CPT code 0308T to APC 5494 (Level 4 Intraocular Procedures) for CY
2019.
14. Magnetocardiography
As displayed in Table 30 below and in Addendum B to the CY 2019
OPPS/ASC proposed rule, we proposed to assign the services described by
CPT codes 0541T and 0542T to status indicator ``E1'' to indicate that
these codes are not payable by Medicare when submitted on outpatient
claims (any outpatient bill type) because the services associated with
these codes are either not covered by any Medicare outpatient benefit
category, statutorily excluded by Medicare, or not reasonable and
necessary. The codes were listed as 0X01T and 0X02T (the 5-digit CMS
placeholder codes), respectively, in Addendum B, with the short
descriptors, and in Addendum O, with the long descriptors, to the CY
2019 OPPS/ASC proposed rule. We also assigned these codes to comment
indicator ``NP'' in Addendum B to indicate that the codes are new for
CY 2019 and that public comments would be accepted on their proposed
status indicator assignments. We note that these codes will be
effective January 1, 2019.
Comment: One commenter disagreed with the proposed status indicator
assignment of ``E1'' for CPT codes 0541T and 0542T, and stated that the
technology was approved by the FDA. The commenter explained that these
codes describe magnetocardiography (MCG), which is a ``high-fidelity
biomagnetic imaging technique that utilizes highly sensitive
magnetometers and a compact shield in order to measure, image and
analyze the repolarization patterns of the heart.'' The commenter also
indicated that MCG may be used to replace or avoid the need for
additional cardiac stress and related testing, myocardial perfusion
imaging, and/or PET procedures, and rapidly triage patients who present
to the ED with chest pain or other symptoms of cardiac ischemia.
Because the technology has been approved by the FDA, the commenter
requested that CMS assign the procedures described by both CPT codes to
APC 5593 (Level 3 Nuclear Medicine) or APC 5724 (Level 4 Diagnostic
Tests and Related Services). Although the commenter requested an
assignment to either APC 5593 or 5724, the commenter also noted that
the services described by CPT codes 0541T and 0542T are clinically
comparable to the services that are assigned to the following three
APCs:
APC 5593 (Level 3 Nuclear Medicine), with a proposed
payment rate of approximately $1,228, which includes--
[cir] CPT code 78451 (Myocardial perfusion imaging); and
[cir] CPT code 78452 (Myocardial perfusion imaging)
APC 5594 (Level 4 Nuclear Medicine), with a proposed
payment rate of approximately $1,386, which includes--
[[Page 58919]]
[cir] CPT code 78491 (Positron Emission Tomography (PET) myocardial
functional imaging); and
[cir] CPT code 78492 (Positron Emission Tomography (PET) myocardial
functional imaging)
APC 5724 (Level 4 Diagnostic Tests and Related Services),
with a proposed payment rate of approximately $918, which includes--
[cir] CPT code 95965 (Magnetoencephalography (MEG)); and
[cir] CPT code 95966 (Magnetoencephalography (MEG))
In addition to the requested APC assignment, the commenter
requested that CMS assign the codes status indicator ``S'' (Procedure
or Service, Not Discounted When Multiple. Paid under OPPS; separate APC
payment), instead of status indicator ``E1'', similar to the status
indicator assignment for the comparable codes in APCs 5593, 5594, and
5724.
Response: Based on our understanding of the procedure, we found
that the service associated with these codes are currently in clinical
trial (Study Title: ``Magnetocardiography Using a Novel Analysis System
(Cardioflux) in the Evaluation of Emergency Department Observation Unit
Chest Pain Patients''; ClinicalTrials.gov Identifier: NCT03255772).
Further review of the clinical trial revealed that the clinical study
has not yet met CMS' standards for coverage, nor does it appear on the
CMS Approved IDE List, which can be found at this CMS website: https://www.cms.gov/Medicare/Coverage/IDE/Approved-IDE-Studies.html. Moreover,
based on our review associated with the technology, we have not found
evidence of FDA approval or clearance of the Cardioflux System as it
appears that an application is pending with FDA, even though predicate
devices have already been approved and are on the market. Because this
specific MCG technology has not been approved for Medicare coverage or
cleared by the FDA, we believe that we should continue to assign the
procedures described by CPT codes 0541T and 0542T to status indicator
``E1'' for CY 2019. If this technology later meets CMS' standards for
coverage, we will reassess the APC assignment for the codes in a future
quarterly update and/or rulemaking cycle.
Therefore, after consideration of the public comment received, we
are finalizing our proposal, without modification, for the assignment
of status indicator ``E1'' to the procedures described by CPT codes
0541T and 0542T. The final status indicator assignment for both codes
is listed in Table 30 below. We refer readers to Addendum D1 of this
final rule with comment period for the complete list of the OPPS
payment status indicators and their definitions for CY 2019. Addendum
D1 is available via the internet on the CMS website.
BILLING CODE 4120-01-P
[[Page 58920]]
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BILLING CODE 4120-01-C
15. Musculoskeletal Procedures (APCs 5111 Through 5116)
Prior to the CY 2016 OPPS, payment for musculoskeletal procedures
was primarily divided according to anatomy and the type of
musculoskeletal procedure. As part of the CY 2016 reorganization to
better structure the OPPS payments towards prospective payment
packages, we consolidated those individual APCs so that they became a
general Musculoskeletal Procedures APC series (80 FR 70397 through
70398).
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59300), we continued to apply a six-level structure for the
Musculoskeletal APCs because doing so provided an appropriate
distinction for resource costs at each level and to provide clinical
homogeneity. However, we also indicated that we would continue to
review the structure of these APCs to determine whether additional
granularity would be necessary.
While we did not propose any changes to the 2019 OPPS structure of
the Musculoskeletal Procedures APC series in the CY 2019 OPPS/ASC
proposed rule, we stated that we recognize that commenters have
previously expressed concerns regarding the granularity of the current
APC levels and requested establishment of additional APC levels.
Therefore, we solicited public comments on the creation of a new APC
level between the current Level 5 and Level 6 within the
Musculoskeletal Procedures APC series.
[[Page 58921]]
Table 18 of the proposed rule listed the Musculoskeletal Procedures
APCs, the HCPCS codes assigned to the APCs, and the proposed APC
geometric mean cost.
Comment: Many commenters requested that CMS maintain the current
six-level APC structure. Some of these commenters stated that the
current structure provides sufficient granularity in the APCs, while
other commenters suggested that, because Medicare previously made
changes to create additional APCs in the Musculoskeletal Procedures APC
series in the CY 2016 and CY 2017 OPPS, CMS delay any additional
changes. Some commenters requested that CMS create additional levels
and assign specific codes to either the new levels or existing levels
within the relative structure. One commenter requested CMS maintain the
procedure described by CPT code 27279 (Arthrodesis sacroiliac joint) at
the highest level APC based on its geometric mean cost, if any
additional high cost APC level above the current Level 6 were created.
Another commenter requested that CMS create additional intermediate
levels between the existing APC Levels 4 and 5 and between Levels 5 and
6, and assign the procedures described by CPT code 28740 (Fusion of
foot bones) and CPT code 28297 (Correction hallux valgus) to the new
APC level between Levels 4 and 5. One commenter requested that, if a
level were to be created between the current Levels 5 and 6, the
procedure described by CPT code 27447 (Total knee arthroplasty) be
assigned to that APC level. Other commenters requested that total knee
arthroplasty be assigned to APC 1575 (New Technology--Level 38
($10,001-$15,000)) for CY 2019, which has a payment rate at $12,500
based on their analysis of the costs of the procedure for only those
claims that reported certain device costs, rather than using all claims
to calculate the geometric mean costs of the service.
Response: We appreciate the commenters' support for maintaining the
current APC structure. While we have previously stated that we believe
that the six level APC structure for the Musculoskeletal Procedures APC
series remains appropriate in providing distinction between resource
costs at each level and clinical homogeneity (82 FR 59300), in the CY
2019 proposed rule, we solicited comment on whether additional levels
might be appropriate based on stakeholder concerns (83 FR 37096). Based
on that stakeholder input, we will maintain the existing six level
Musculoskeletal Procedures APC structure for the CY 2019 OPPS. While we
are not creating additional APC levels in this final rule with comment
period, we reviewed the APC assignment of individual HCPCS codes that
commenters requested be reassigned if additional APC levels were
created to confirm whether their current assignment was appropriate. We
believe that the APC assignment of CPT code 27279 (Arthrodesis
sacroiliac joint) to APC 5116, and CPT codes 28740 (Fusion of foot
bones) and 28297 (Correction hallux valgus) to APC 5114 remain
appropriate based on their geometric mean costs.
With regards to the placement of the total knee arthroplasty
procedure in APC 5115 (Level 5 Musculoskeletal Procedures), we continue
to believe that C-APC 5115 is an appropriate APC assignment for the
procedures described by CPT code 27447, which has an estimated
geometric mean cost of $9,997.45. Further, we note that the 50th
percentile IPPS payment for total knee arthroplasty procedures without
major complications or comorbidities (MS-DRG 470) is approximately
$11,550 for FY 2019. We note that the final CY 2019 payment for New
Technology APC 1575 is $12,500.50. As previously stated in the CY 2018
OPPS/ASC final rule with comment period (82 FR 58394 through 59385), we
would expect that beneficiaries selected for outpatient total knee
arthroplasty procedures would generally be expected to be less complex
than those treated as hospital inpatients. Therefore, we do not believe
that it would be appropriate for the OPPS payment rate to exceed the
IPPS payment rate for total knee arthroplasty procedures without major
complications/comorbidities because IPPS cases would generally be
expected to be more complicated and complex than those performed in the
hospital outpatient setting.
We note that we rely on hospitals to bill all HCPCS codes
accurately in accordance with their code descriptors and CPT and CMS
instructions, as applicable, and to report charges on claims and
charges and costs on their Medicare hospital cost reports appropriately
(77 FR 68324). As we do every year, we will review and evaluate the APC
groupings based on the latest available data in the next rulemaking
cycle.
After consideration of the public comments we received, we are
finalizing the six level Musculoskeletal Procedures APC structure. We
also are finalizing the proposed assignments of the procedures
described by CPT codes 27279 (Arthrodesis sacroiliac joint) to APC
5116, the procedures described by CPT codes 28740 (Fusion of foot
bones) and 28297 (Correction hallux valgus) to APC 5114, and the
procedures described by CPT code 27447 (Total knee arthroplasty) to APC
5115.
[GRAPHIC] [TIFF OMITTED] TR21NO18.047
[[Page 58922]]
16. Nasal Airway Obstruction Treatment (APC 5164)
For CY 2019, we proposed to continue to assign the procedures
described by HCPCS code C9749 (Repair of nasal vestibular lateral wall
stenosis with implant(s)) to APC 5164 (Level 4 ENT Procedures) with a
proposed payment rate of approximately $2,241. We note that HCPCS code
C9749 describes the Latera absorbable implant procedure for nasal
airway obstruction.
Comment: One commenter disagreed with the proposed APC assignment
of the procedure described by HCPCS code C9749 to APC 5164 and
requested that CMS assign the procedure to New Technology APC 1523 (New
Technology--Level 23 ($2,501-$3,000)), which had a proposed payment
rate of approximately $2,751. The commenter stated that the cost for a
pair of the Latera implants is $1,325, and that the proposed payment
rate for APC 5164 does not cover the cost of performing the procedure.
The commenter further stated that information from clinical experts and
medical directors suggests that the complexity and resources to perform
the Latera implant procedure are similar to those associated with
procedures assigned to APC 5165 (Level 5 ENT Procedures).
Response: In December 2017, CMS received a New Technology APC
application requesting a new HCPCS code for the Latera implant because,
according to the applicant, the only available CPT code to report the
procedure is CPT code 30999 (Unlisted procedure, nose). Based on our
review of the application, assessment of the procedure, and input from
our clinical advisors, we established HCPCS code C9749 effective April
1, 2018. For the April 2018 OPPS Update, we assigned HCPCS code C9749
to APC 5164 with a payment rate of approximately $2,199. We announced
this new HCPCS code and APC assignment in the April 2018 OPPS quarterly
update change request (Transmittal 4005, Change Request 10515, dated
March 20, 2018). Based on cost information submitted to CMS in the New
Technology APC application, we assigned the procedure to APC 5164
rather than New Technology APC 1523. However, based on further
assessment on the nature of the procedure, and input from public
commenters and our clinical advisors, we believe that HCPCS code C9749
should be reassigned to APC 5165 (Level 5 ENT Procedures) to more
appropriately reflect the resource costs and clinical characteristics
associated with the Latera implant procedure.
Therefore, after consideration of the public comment we received,
we are finalizing our proposal, without modification, to assign the
procedure described by HCPCS code C9749 from APC 5164 to APC 5165. The
final payment rate for HCPCS code C9749 can be found in Addendum B to
this final rule with comment period (which is available via the
internet on the CMS website).
17. Nerve Procedures and Services (APCs 5431 Through 5432)
For CY 2019, we proposed to continue the existing two-level
structure of the Nerve Procedures APCs (APC 5431 through 5432), as
displayed in Table 32 below and in Addendum A to the CY 2019 OPPS/ASC
proposed rule (which is available via the internet on the CMS website).
[GRAPHIC] [TIFF OMITTED] TR21NO18.048
Comment: One commenter requested that CMS create a new modifier to
identify the performance of continuous nerve block procedures that are
performed as a secondary procedure, and to allow payment for the
performance of such procedures, for example, the procedure described by
CPT code 64416 (Injection, anesthetic agent; brachial plexus,
continuous infusion by catheter (including catheter placement)), not to
be packaged if reported in combination with the procedure described by
CPT code 29827 (Arthroscopy, shoulder, surgical; with rotator cuff
repair). Instead, the commenter suggested a modifier to allow for
payment at a full OPPS rate. The commenter noted that continuous nerve
block procedure codes are assigned to status indicator ``T,'' which
further provides that payment for the procedures are currently packaged
when reported in combination with procedures that are assigned to C-
APCs and, therefore, are not separately paid. The commenter stated that
packaging payment for the certain procedures discourages hospitals from
using non-opioid postsurgical pain alternative approaches, such as a
continuous nerve block procedure.
The commenter further believed that CMS should create a new HCPCS
code modifier in order to track, research, and identify the use of non-
opioid pain management alternatives that are resulting in positive
beneficiary health care impacts and outcomes, which are reducing opioid
use and combatting the opioid crisis. Additionally, the commenter
included a list of applicable continuous nerve block procedure codes
(shown in the table below) to which the commenter suggested that a
HCPCS modifier could be appended to indicate that the procedure would
receive separate payment.
[[Page 58923]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.049
Response: We appreciate the commenter's suggestion to create a new
HCPCS modifier to identify the continuous nerve block procedures when
performed as a secondary procedure, as well as recommending the list of
CPT codes that should be considered for such inclusion for separate
payment. However, payment for these continuous nerve block procedures
is currently packaged under the OPPS because they are adjunctive to the
primary service rendered and, therefore, represent components of a
complete service. Therefore, at this time we will continue to package
payment for these services, and consider the creation of a new HCPCS
modifier and separate payment for such non-opioid alternatives
approaches in future rulemaking.
Comment: One commenter suggested that CMS restructure the two-level
Nerve Procedure APCs (APCs 5431 and 5432) to provide more payment
granularity for the types of procedures included in the APCs by
creating a third level. The commenter believed that there is a
substantial payment differential between the procedures assigned to
Level 1 Nerve Procedures APC 5431 and Level 2 Nerve Procedures APC
5432, and that the current payment for some of these procedures does
not adequately cover the cost of providing the services. The commenter
further stated that, as an example, the procedures described by CPT
codes 64633 (Destruction by neurolytic agent, paravertebral facet joint
nerve(s), with imaging guidance (fluoroscopy or CT); cervical or
thoracic, single facet joint) and 64635 (destruction by neurolytic
agent paravertebral facet joint nerve(s), with imaging guidance
(fluoroscopy or CT); lumbar or sacral, single facet joint), which are
assigned to APC 5431 with a proposed payment rate of approximately
$1,644, while the geometric means for each of the procedures described
by CPT codes 64633 and 64635 are $1,482 and $1,729, respectively. The
commenter recommended a potential geometric mean cost for a potential
three-level APC structure within the Nerve Procedures APCs and
submitted a three-level APC structure, along with estimated payment
rates, which is shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR21NO18.050
The commenter also recommended that CMS develop two new HCPCS G-
codes to describe the performance of radiofrequency nerve ablation
procedures. The commenter suggested that one of the G-codes could be
created to describe procedures involving the genicular nerve, and the
other G-code could be created to describe procedures
[[Page 58924]]
involving the sacroiliac joint. The commenter further recommended that
both of these G-codes be created to describe procedures describing non-
opioid treatment alternatives for chronic pain management, and to
assign both of these newly created G-codes to Level 2 Nerve Procedures
APC 5232 based on its recommended three-level APC structure, with an
estimated payment rate of $2,431. The commenter was aware that Category
I CPT codes are in development, but will not be ready for release until
CY 2020 at the earliest. Therefore, the commenter requested that CMS
create such G-codes in order to allow for physicians and hospitals to
report the performance of the procedures and use of the approach, and
to be paid for utilization of these procedures in the interim. The
commenter supplied a suggested descriptor for the G-code for the
genicular nerve as: Radiofrequency nerve ablation; genicular nerves,
including imaging guidance, when performed. The commenter also supplied
a suggested descriptor for the G-code for the sacroiliac joint as:
Radiofrequency never ablation; sacroiliac joint, including imaging
guidance, when performed.
Response: We appreciate the commenter's suggestions. However, at
this time, we believe that the current two-level structure Nerve
Procedures APCs provide an appropriate distinction between the resource
costs at each level and clinical homogeneity. We will continue to
review the APCs' structure to determine if additional granularity is
necessary for this APC family in future rulemaking. In addition, we
believe that more analysis of such groupings is necessary before
adopting such change.
With regard to the request to establish new HCPCS G-codes, although
new CPT codes are in development for release for the CY 2020 update, we
note that it does not appear that a request for new temporary Category
III codes was made for CY 2019. Nonetheless, we intend to take the
commenter's request for new HCPCS G-codes under advisement.
Therefore, after consideration of the public comment received, we
are finalizing our CY 2019 Nerve Procedures APCs two-level structure,
as proposed. We refer readers to Addendum A to this final rule with
comment period for the complete list of APCs and their payment rates.
In addition, we refer readers to Addendum B to this final rule with
comment period for the payment rates for all codes reported under the
OPPS. Both Addendum A and Addendum B are available via the internet on
the CMS website.
18. Radiology and Procedures and Services
a. Imaging Procedures and Services (APCs 5521 Through 5524 and 5571
Through 5573)
Section 1833(t)(2)(G) of the Act requires the Secretary to create
additional groups of covered OPD services that classify separately
those procedures that utilize contrast agents from those procedures
that do not utilize contrast agents. In CY 2016, as a part of our
comprehensive review of the structure of the APCs and procedure code
assignments, we restructured the APCs that contain imaging services (80
FR 70392). The purpose of this restructuring was to more appropriately
reflect the resource costs and clinical characteristics of the services
classified within the Imaging APCs. The restructuring of the Imaging
APCs resulted in broader groupings that removed the excessive
granularity of grouping imaging services according to organ or
physiologic system, which did not necessarily reflect either
significant differences in resources or how these services are
delivered in the hospital outpatient setting. In CY 2017, in response
to public comments on the CY 2017 OPPS/ASC proposed rule, we further
consolidated the Imaging APCs from 17 APCs in CY 2016 to 7 APCs in CY
2017 (81 FR 79633). These included four Imaging without Contrast APCs
and three Imaging with Contrast APCs.
For CY 2018, we proposed to establish a new Level 5 Imaging without
Contrast APC to more appropriately group certain imaging services with
higher resource costs and stated that our latest claims data supported
splitting the CY 2017 Level 4 Imaging without Contrast APC into two
APCs such that the Level 4 Imaging without Contrast APC would include
high frequency, low-cost services and the proposed Level 5 Imaging
without Contrast APC would include low frequency, high-cost services.
Therefore, for CY 2018, we proposed to add a fifth level within the
Imaging without Contrast APCs (82 FR 33608). However, based on public
comments, we did not finalize this proposal. In general, commenters
disagreed with CMS' proposal to add a fifth level within the Imaging
without Contrast APC series because they believed that the addition of
a fifth level would reduce payment for several imaging services,
including vascular ultrasound procedures (82 FR 59309 through 59311).
Commenters also noted that the lower payment rates under the OPPS would
also apply under the PFS.
For the CY 2019 OPPS/ASC proposed rule (83 FR 37096 through 37097),
we reviewed the services assigned to the seven imaging APCs listed in
Table 17 of the proposed rule. Specifically, we evaluated the resource
costs and clinical coherence of the procedures associated with the four
levels of Imaging without Contrast APCs and the three levels of Imaging
with Contrast APCs, as well as identified for correction any 2 times
rule violations, to the extent feasible. Based on the geometric mean
cost for each APC, which was listed in Table 17 of the proposed rule,
for CY 2019, we proposed to maintain the seven Imaging APCs, which
consist of four levels of Imaging without Contrast APCs and three
levels of Imaging with Contrast APCs, and to make minor reassignments
to the HCPCS codes within this series to resolve or mitigate any
violations of the 2 times rule, or both.
We invited public comments on our proposal. Moreover, we
specifically expressed an interest in receiving public comments and
recommendations on the proposed HCPCS code reassignments associated
with each of the seven Imaging APCs. We referred readers to Addendum B
to the proposed rule (which is available via the internet on the CMS
website) for the proposed list of specific codes that would be
reassigned to each Imaging APC.
Comment: Commenters generally agreed with CMS' proposal to maintain
the Imaging APCs: Four levels of Imaging without Contrast APCs and
three levels of Imaging with Contrast APCs. The commenters stated that
maintaining the current Imaging APC structure would provide more
stability for these services and would allow for cost trends to be
assessed over time. Several of these commenters believed that the cost
data for the procedures within these APCs have been consistent for many
years and cautioned CMS against changing payment for services assigned
to these APCs. Commenters recommended that if CMS believes any revision
to the current APCs is necessary, the revisions be considered for
future rulemaking and be subject to review and comment from
stakeholders, in order to continue to maintain stability and sufficient
payment and in order for hospitals to be able to continue to provide
these services.
Response: We appreciate the commenters' support for maintaining the
seven Imaging APCs consisting of four levels of Imaging without
Contrast APCs and three levels of Imaging with Contrast APCs.
Comment: One commenter supported CMS' proposal to maintain the
Level 3 Imaging with Contrast APC (APC 5573) as proposed for CY 2019.
The commenter further stated that the
[[Page 58925]]
proposed payment rate for services in this APC appropriately reflects
use of contrast agents and that a lower payment rate may lead to lower
utilization of medically necessary contrast agents and may lead to use
of more costly advanced imaging modalities such as cardiac MRI and
nuclear perfusion studies, which will increase overall cost.
Response: As noted in the CY 2019 OPPS/ASC proposed rule (83 FR
37096 through 37097), we reviewed the resource costs and clinical
coherence of the procedures associated with the four levels of Imaging
without Contrast APCs and the three levels of Imaging with Contrast
APCs, as well as reviewed any 2 times rule violations. Based on this
review, we decided to maintain the seven Imaging APCs structure based
on the clinical similarities and resource costs and in light of
commenters' support of this proposal.
Comment: One commenter noted the lack of payment stability for the
procedure described by CPT code 93307 (Echocardiography, transthoracic,
real-time with image documentation (2d), includes M-mode recording,
when performed, complete, without spectral or color Doppler
echocardiography). The commenter noted that CMS proposed to reassign
the procedure described by CPT code 93307 to APC 5523, and that, in CY
2018, this code was assigned to APC 5524. The commenter stated that the
reassignment of CPT code 93307 to APC 5523 is inappropriate because it
is not similar to the other procedures in that APC in regard to either
clinical or resource use, and would result in a 52-percent decrease in
payment for CY 2019 compared to the CY 2018 payment rate.
Response: We acknowledge the commenter's concern. However, we
believe that the assignment of the procedure described by CPT code
93307 to APC 5523 is more appropriate based on clinical similarities
and resource use. Specifically, we note that, based on the data
available for this final rule with comment period, the lowest
significant procedure geometric mean cost within APC 5523 is HCPCS code
76000 (Fluoroscopy (separate procedure), up to 1 hour physician or
other qualified health care professional time), with a geometric mean
of $174.34, and the highest significant procedure cost within APC 5523
is HCPCS code 74455 (Urethrocystography, voiding, radiological
supervision and interpretation), with a geometric mean cost of $358.11.
The geometric mean cost of CPT 93307 is $352.15, which is similar to
that of other procedures assigned to APC 5523.
Furthermore, the highest significant cost for a procedure within
APC 5524 is for the procedure described by HCPCS 93312
(Echocardiography, transesophageal, real-time with image documentation
(2d) (with or without m-mode recording); including probe placement,
image acquisition, interpretation and report), which has a geometric
mean cost of $854.45. This proposed reassignment would have a greater
impact on the 2 times violation by being over the violation limit by
approximately $138, compared to the assignment of the CPT code to APC
5523, which also has a 2 times violation, but to a lesser extent (that
is, approximately $31). Therefore, based on this information, we are
finalizing the proposed structure of APC 5523, with assignment of the
CPT codes as proposed in the CY 2019 OPPS/ASC proposed rule. We will
continue to monitor clinical homogeneity and resource costs within
these APCs to identify any payment changes that may be warranted in
future rulemaking.
Comment: One commenter disagreed with the proposal to maintain the
procedure described by HCPCS code G0297 (Low dose CT for lung cancer
screening) in APC 5521 and believed the calculation of the geometric
mean using the CT cost center does not sufficiently estimate costs,
although CMS has 61,505 single claims to calculate the geometric mean
cost for the procedure described by HCPCS code G0297. Based on its
analysis, the commenter believed that using the diagnostic radiology
cost center, which would result in estimated costs of $96.55 for the
service, is more appropriate than the geometric mean cost of using the
CT cost center, which is $37.96. The commenter believed that use of the
CT cost centers is depressing payment for imaging services and believed
all imaging studies should use the diagnostic radiology cost centers
instead.
Response: We believe that the procedure described by HCPCS code
G0297 is appropriately assigned to APC 5521, based on its estimated
cost relative to that of the other procedures in the APC. We believe
that the manner in which we establish the geometric mean for estimating
service costs for the Imaging APCs is appropriate. As part of changes
to establish more accurate cost reporting, we developed the CT, MRI,
and Cardiac Catherization cost centers in the CMS 2552-10 form. Since
the CY 2014 OPPS, in which we first included those cost centers for
ratesetting, we have included a methodology that removes cost data from
providers reporting the standard CT and MRI cost centers using ``square
feet'' as the cost allocation statistic. We continue to believe this is
appropriate as discussed in section II.A.1.b. of this final rule with
comment period. However, we will continue to monitor payment for these
imaging services and will consider the most appropriate methodology for
ratesetting for such services in future rulemaking.
Additionally, we refer readers to the Medicare CY 2019 OPPS Final
Rule Claims Accounting narrative for additional details regarding the
calculation of the geometric mean costs.
Comment: One commenter expressed concern regarding payment
stability for cardiac magnetic imaging with contrast services,
specifically cardiac magnetic resonance imaging (MRI) for morphology
with dye (the procedure described by CPT code 75561 within APC 5572).
The commenter was concerned that the proposed payment for this service
is set to decline by 15 percent from the CY 2018 payment rate and
believed that this would threaten hospitals' ability to maintain
equipment, supplies, and agents used for these services. The commenter
requested that CMS continue to monitor payment for cardiac MR services,
specifically the procedure described by CPT code 75561. The commenter
suggested that CMS study how best to assign low volume procedures to an
APC.
Response: Our analysis of the final rule updated claims data
revealed a geometric mean cost of approximately $416.84 for CPT code
75561 based on 8,248 single claims out of 15,022 total claims. The
geometric mean cost for APC 5572 is approximately $390. After reviewing
the procedures assigned to APC 5572, we believe that the geometric mean
cost for the procedure described by CPT code 75561 indicates that it is
appropriately assigned to APC 5572 based on its clinical homogeneity
and resource costs. As we do each year, we will continue to review the
APC assignments for all services and items paid under the OPPS.
Comment: One commenter expressed concern regarding the payment
amount for the procedure described by CPT code 75574 (Computed
tomographic angiography, heart, coronary arteries and bypass grafts
(when present), with contrast material, including 3d image
postprocessing (including evaluation of cardiac structure and
morphology, assessment of cardiac function, and evaluation of venous
structures, if performed)) within APC 5571. Specifically, the commenter
noted a 20-percent reduction from CY 2018 to CY 2019 within this APC.
The commenter stated that the procedure described by
[[Page 58926]]
CPT code 75574 should be considered a low-volume service compared to
other services within the APC and that high-volume codes within this
APC are diluting the effect of the procedure described by CPT code
75574 on the APC payment rate. As a result, the commenter requested
that CMS study how the APC structure could be modified to define low
volume services and foster payment adequacy for low-volume codes such
as CPT code 75574.
Response: We acknowledge the commenter's concerns regarding payment
for CPT code 75574. At this point, we do not believe we have the
necessary data to finalize a change based on the lack of information
that the payment is insufficient. However, we will take under
advisement and consider studying the impact of the APC structures on
services that make up lower volume HCPCS and CPT codes in comparison to
other services in higher volume HCPCS and CPT codes within an APC in
future rulemaking. We remind hospitals that every year, we review the
APC assignments for all services and items paid under the OPPS. We will
reevaluate the APC assignment for the service described by CPT code
75574 for next year's rulemaking.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the existing levels of the Imaging
APCs, which consist of four levels of Imaging without Contrast APCs and
three levels of Imaging with Contrast APCs. Table 33 below compares the
CY 2018 and CY 2019 geometric mean costs for the imaging APCs. We refer
readers to Addendum B to this final rule with comment period for the
payment rates for all codes reported under the OPPS. In addition, we
refer readers to Addendum D1 to this final rule with comment period for
the status indicator meanings for all codes reported under the OPPS.
Both Addendum B and Addendum D1 are available via the internet on the
CMS website.
[GRAPHIC] [TIFF OMITTED] TR21NO18.051
b. Non-Ophthalmic Fluorescent Vascular Angiography (APC 5572)
As listed in Addendum B of the CY 2019 OPPS/ASC proposed rule, we
proposed to continue to assign the procedure described by HCPCS code
C9733 to APC 5523 (Level 3 Imaging without Contrast) with a proposed
payment rate of approximately $232. We also proposed to maintain the
status indicator assignment of ``Q2'' (T-packaged) to indicate that
payment for the service is conditionally packaged when performed in
conjunction with other procedures on the same day but paid separately
when performed as a stand-alone service.
Comment: One commenter stated that HCPCS code C9733 describes a
procedure that includes disposable components and a contrast agent
(indocyanine green) that cost hospitals approximately $455.
Consequently, the commenter disagreed with the proposed APC assignment
of this service to APC 5523 because the APC payment rate only covers 50
percent of the hospital costs for the procedure. In addition, the
commenter believed that hospitals are underreporting the costs for the
procedure described by HCPCS code C9733 based on its review of the CMS
cost file which showed a geometric mean cost of $252.43, which is below
the cost of the supplies associated with this procedure. The commenter
suggested that hospitals may not be reporting this code when performed
with an outpatient visit because payment for the service described by
HCPCS code C9733 is conditionally packaged. Because of the perceived
underreporting, the commenter requested that CMS provide instructions
to hospitals in an upcoming MLN Matters article on appropriate billing
for the procedure described by HCPCS code C9733.
Response: Based on our review of the CY 2019 final rule claims
data, the procedure described by HCPCS code C9733 has a geometric mean
cost of approximately $250 based on 173 single claims (out of 982 total
claims). Because this procedure involves the use of a contrast agent,
we believe that a reassignment to one of the existing Imaging with
Contrast APCs would be more appropriate for HCPCS code C9733.
Specifically, we believe that a reassignment to APC 5572 (Level 2
Imaging with Contrast), with a geometric mean cost of approximately
$389 is appropriate. We believe this reassignment will improve clinical
homogeneity and align the resource costs of the service described by
HCPCS code C9733 with those of imaging with contrast procedures
assigned to APC 5572.
In addition, with regard to the comment that hospitals underreport
the procedure described by HCPCS code C9733, based on our analysis of
the CY 2019 hospital outpatient claims data used for this final rule
with comment period, we are unable to determine whether hospitals are
underreporting the procedure. It is generally not our policy to judge
the accuracy of hospital coding and charging for purposes of
ratesetting. We rely on hospitals to accurately report the use of HCPCS
codes in accordance with their code descriptors and CPT and CMS
instructions, and to report services on
[[Page 58927]]
claims and charges and costs for the services on their Medicare
hospital cost report appropriately. However, we do not specify the
methodologies that hospitals use to set charges for this or any other
service. In addition, we state in Chapter 4 of the Medicare Claims
Processing Manual that ``it is extremely important that hospitals
report all HCPCS codes consistent with their descriptors; CPT and/or
CMS instructions and correct coding principles, and all charges for all
services they furnish, whether payment for the services is made
separately paid or is packaged'' to enable CMS to establish future
ratesetting for OPPS services.''
After consideration of the public comment received, we are
finalizing our proposal with modification. Specifically, we are
reassigning the procedure described by HCPCS code C9733 to APC 5572
instead of APC 5523, based on its clinical and resource homogeneity to
the other procedures assigned to APC 5572. We refer readers to Addendum
B to this final rule with comment period for the payment rates for all
codes reportable under the OPPS. Addendum B is available via the
internet on the CMS website.
19. Remote Physiologic Monitoring (APCs 5012 and 5741)
As displayed in Table 34 below and in Addendum B to the CY 2019
OPPS/ASC proposed rule, we proposed to assign the procedure described
by CPT code 99453 to APC 5012 (Clinic Visits and Related Services) with
a proposed payment rate of approximately $116. We also proposed to
assign the procedure described by CPT code 99454 to APC 5741 (Level 1
Electronic Analysis of Devices) with a proposed payment rate of
approximately $37. The long descriptors for CPT codes 99453 and 99454
can be found in Table 34 below. The codes were listed as 990X0 and
990X1 (the 5-digit CMS placeholder codes), respectively, in Addendum B,
with short descriptors, and in Addendum O, with long descriptors, to
the CY 2019 OPPS/ASC proposed rule. We also assigned these codes to
comment indicator ``NP'' in Addendum B to the proposed rule to indicate
that the codes are new for CY 2019 with proposed APC assignments, and
that public comments would be accepted on their proposed APC
assignments. We note that these codes will be effective January 1,
2019.
Comment: One commenter supported the APC assignments for both CPT
codes 99453 and 99454 and requested that CMS finalize the APC
assignments for CY 2019.
Response: We appreciate the commenter's support. Based on input
from our medical advisors, we believe that procedures described by CPT
codes 99453 and 99454 are appropriately assigned in APCs 5012 and 5741,
respectively, based on clinical and resource homogeneity to the other
services assigned to these APCs.
Therefore, after consideration of the public comment received, we
are finalizing our proposal without modification for the procedures
described by CPT codes 99453 and 99454. The final APC and status
indicator assignments are listed in Table 34 below. The final payment
rates for these codes, where applicable, can be found in Addendum B to
this final rule with comment period (which is available via the
internet on the CMS website).
[GRAPHIC] [TIFF OMITTED] TR21NO18.052
[[Page 58928]]
20. Sclerotherapy (APC 5054)
As displayed in Table 35 below and in Addendum B of the CY 2019
OPPS/ASC proposed rule, we proposed to continue to assign CPT codes
36465 and 36466 to APC 5054 (Level 4 Skin Procedures), with a proposed
payment rate of approximately $1,565.
Comment: One commenter disagreed with the proposed assignment of
the procedures described by CPT codes 36465 and 36466 to APC 5054 and
requested a reassignment to APC 5183 (Level 3 Vascular Procedures),
which had a proposed payment rate of approximately $2,648. The
commenter stated that the per-procedure cost for the Varithena foam
sclerosant used in the procedure is $1,064. The commenter stated that
APC 5183 is more clinically appropriate and reflects the resources
required to perform the procedure. Specifically, the commenter
indicated that the procedures described by CPT codes 36465 and 36466
share similar clinical and resource characteristics to the following
surgical procedures that are assigned to APC 5183:
CPT code 36473 (Endovenous ablation therapy of incompetent
vein, extremity, inclusive of all imaging guidance and monitoring,
percutaneous, mechanochemical; first vein treated);
CPT code 36475 (Endovenous ablation therapy of incompetent
vein, extremity, inclusive of all imaging guidance and monitoring,
percutaneous, radiofrequency; first vein treated); and
CPT code 36478 (Endovenous ablation therapy of incompetent
vein, extremity, inclusive of all imaging guidance and monitoring,
percutaneous, laser; first vein treated).
Response: Based on input from our clinical advisors, we believe
that the procedures described by CPT codes 36465 and 36466 are
clinically similar to the procedures assigned to APC 5054. We do not
believe that the resources used for the procedures described by CPT
codes 36465 and 36466 are comparable to the procedures described by CPT
codes 36473, 36475, and 36478, which are assigned to C-APC 5183.
Consequently, we believe that APC 5054 appropriately reflects the
resources and clinical characteristics associated with the procedures
described by CPT codes 36465 and 36466. We note that the geometric mean
cost for APC 5054 is approximately $1,562, which exceeds the cost of
the Varithena foam sclerosant (as reported by the commenter) used in
the procedure.
Therefore, after consideration of the public comment received, we
are finalizing our proposal without modification for assignment of the
procedures described by CPT codes 36465 and 36466 to APC 5054. The
final APC and status indicator assignments are listed in Table 35
below. As we do every year, we review the APC assignments for all
services and items paid under the OPPS. We will reassess the APC
assignment for the procedures described by CPT codes 36465 and 36466
for the CY 2020 rulemaking. We refer readers to Addendum B to this
final rule with comment period for the payment rates for all codes
reportable under the OPPS. Addendum B is available via the internet on
the CMS website.
[GRAPHIC] [TIFF OMITTED] TR21NO18.053
[[Page 58929]]
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Beginning Eligibility Date for Device Pass-Through Status and
Quarterly Expiration of Device Pass-Through Payments
a. Background
Under section 1833(t)(6)(B)(iii) of the Act, the period for which a
device category eligible for transitional pass-through payments under
the OPPS can be in effect is at least 2 years but not more than 3
years. Prior to CY 2017, our regulation at 42 CFR 419.66(g) provided
that this pass-through payment eligibility period began on the date CMS
established a particular transitional pass-through category of devices,
and we based the pass-through status expiration date for a device
category on the date on which pass-through payment was effective for
the category. In the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79654), in accordance with section 1833(t)(6)(B)(iii)(II) of the
Act, we amended Sec. 419.66(g) to provide that the pass-through
eligibility period for a device category begins on the first date on
which pass-through payment is made under the OPPS for any medical
device described by such category.
In addition, prior to CY 2017, our policy was to propose and
finalize the dates for expiration of pass-through status for device
categories as part of the OPPS annual update. This means that device
pass-through status would expire at the end of a calendar year when at
least 2 years of pass-through payments have been made, regardless of
the quarter in which the device was approved. In the CY 2017 OPPS/ASC
final rule with comment period (81 FR 79655), we changed our policy to
allow for quarterly expiration of pass-through payment status for
devices, beginning with pass-through devices approved in CY 2017 and
subsequent calendar years, to afford a pass-through payment period that
is as close to a full 3 years as possible for all pass-through payment
devices. We refer readers to the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79648 through 79661) for a full discussion of the
changes to the device pass-through payment policy. We also have an
established policy to package the costs of the devices that are 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).
b. Expiration of Transitional Pass-Through Payments for Certain Devices
As stated earlier, 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 years, but not more
than 3 years. There currently are no device categories eligible for
pass-through payment.
2. New Device Pass-Through Applications
a. Background
Section 1833(t)(6) of the Act provides for pass-through payments
for devices, and section 1833(t)(6)(B) of the Act requires CMS to use
categories in determining the eligibility of devices for pass-through
payments. As part of implementing the statute through regulations, we
have continued to believe that it is important for hospitals to receive
pass-through payments for devices that offer substantial clinical
improvement in the treatment of Medicare beneficiaries to facilitate
access by beneficiaries to the advantages of the new technology.
Conversely, we have noted that the need for additional payments for
devices that offer little or no clinical improvement over previously
existing devices is less apparent. In such cases, these devices can
still be used by hospitals, and hospitals will be paid for them through
appropriate APC payment. Moreover, a goal is to target pass-through
payments for those devices where cost considerations might be most
likely to interfere with patient access (66 FR 55852; 67 FR 66782; and
70 FR 68629).
As specified in regulations at 42 CFR 419.66(b)(1) through (3), to
be eligible for transitional pass-through payment under the OPPS, a
device must meet the following criteria: (1) If required by FDA, the
device must have received FDA approval or clearance (except for a
device that has received an FDA investigational device exemption (IDE)
and has been classified as a Category B device by the FDA), or meet
another appropriate FDA exemption; and the pass-through payment
application must be submitted within 3 years from the date of the
initial FDA approval or clearance, if required, unless there is a
documented, verifiable delay in U.S. market availability after FDA
approval or clearance is granted, in which case CMS will consider the
pass-through payment application if it is submitted within 3 years from
the date of market availability; (2) the device is determined to be
reasonable and necessary for the diagnosis or treatment of an illness
or injury or to improve the functioning of a malformed body part, as
required by section 1862(a)(1)(A) of the Act; and (3) the device is an
integral part of the service furnished, is used for one patient only,
comes in contact with human tissue, and is surgically implanted or
inserted (either permanently or temporarily), or applied in or on a
wound or other skin lesion. In addition, according to Sec.
419.66(b)(4), a device is not eligible to be considered for device
pass-through payment if it is any of the following: (1) Equipment, an
instrument, apparatus, implement, or item of this type for which
depreciation and financing expenses are recovered as depreciation
assets as defined in Chapter 1 of the Medicare Provider Reimbursement
Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident
to a service (for example, a suture, customized surgical kit, or clip,
other than a radiological site marker).
Separately, we use the following criteria, as set forth under Sec.
419.66(c), to determine whether a new category of pass-through payment
devices should be established. The device to be included in the new
category must--
Not be appropriately described by an existing category or
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service
as of December 31, 1996;
Have an average cost that is not ``insignificant''
relative to the payment amount for the procedure or service with which
the device is associated as determined under Sec. 419.66(d) by
demonstrating: (1) The estimated average reasonable costs of devices in
the category exceeds 25 percent of the applicable APC payment amount
for the service related to the category of devices; (2) the estimated
average reasonable cost of the devices in the category exceeds the cost
of the device-related portion of the APC payment amount for the related
service by at least 25 percent; and (3) the difference between the
estimated average reasonable cost of the devices in the category and
the portion of the APC payment amount for the device exceeds 10 percent
of the APC payment amount for the related service (with the exception
of brachytherapy and temperature-monitored cryoblation, which are
exempt from the cost requirements as specified at Sec. 419.66(c)(3)
and (e)); and
Demonstrate a substantial clinical improvement, that is,
substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or
[[Page 58930]]
devices in a previously established category or other available
treatment.
Beginning in CY 2016, we changed our device pass-through evaluation
and determination process. Device pass-through applications are still
submitted to CMS through the quarterly subregulatory process, but the
applications will be subject to notice-and-comment rulemaking in the
next applicable OPPS annual rulemaking cycle. Under this process, all
applications that are preliminarily approved upon quarterly review will
automatically be included in the next applicable OPPS annual rulemaking
cycle, while submitters of applications that are not approved upon
quarterly review will have the option of being included in the next
applicable OPPS annual rulemaking cycle or withdrawing their
application from consideration. Under this notice-and-comment process,
applicants may submit new evidence, such as clinical trial results
published in a peer-reviewed journal or other materials for
consideration during the public comment process for the proposed rule.
This process allows those applications that we are able to determine
meet all the criteria for device pass-through payment under the
quarterly review process to receive timely pass-through payment status,
while still allowing for a transparent, public review process for all
applications (80 FR 70417 through 70418).
More details on the requirements for device pass-through payment
applications are included on the CMS website in the application form
itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the
``Downloads'' section. In addition, CMS is amenable to meeting with
applicants or potential applicants to discuss research trial design in
advance of any device pass-through application or to discuss
application criteria, including the substantial clinical improvement
criterion.
b. Applications Received for Device Pass-Through Payment for CY 2019
We received seven applications by the March 1, 2018 quarterly
deadline, which was the last quarterly deadline for applications to be
received in time to be included in the CY 2019 OPPS/ASC proposed rule.
We received four of the applications in the second quarter of 2017, one
of the applications in the third quarter of 2017, and two of the
applications in the first quarter of 2018. None of the seven
applications were approved for device pass-through payment during the
quarterly review process.
Applications received for the later deadlines for the remaining
2018 quarters (June 1, September 1, and December 1), if any, will be
presented in the CY 2020 OPPS/ASC proposed rule. We note that the
quarterly application process and requirements have not changed in
light of the addition of rulemaking review. Detailed instructions on
submission of a quarterly device pass-through payment application are
included on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf. A
discussion of the seven applications received by the March 1, 2018
deadline is presented below, as detailed in the CY 2019 OPPS/ASC
proposed rule (83 FR 37098 through 37107).
(1) AquaBeam System
PROCEPT BioRobotics Corporation submitted an application for a new
device category for transitional pass-through payment status for the
AquaBeam System. The AquaBeam System is intended for the resection and
removal of prostate tissue in males suffering from lower urinary tract
symptoms (LUTS) due to benign prostatic hyperplasia (BPH). The
applicant stated that this is a very common condition typically
occurring in elderly men. The clinical symptoms of this condition can
include diminished urinary stream and partial urethral obstruction.\16\
According to the applicant, the AquaBeam system resects the prostate to
relieve symptoms of urethral compression. The resection is performed
robotically using a high velocity, nonheated sterile saline water jet
(in a procedure called Aquablation). The applicant stated that the
AquaBeam System utilizes real-time intra-operative ultrasound guidance
to allow the surgeon to precisely plan the surgical resection area of
the prostate and then the system delivers Aquablation therapy to
accurately resect the obstructive prostate tissue without the use of
heat. The materials submitted by the applicant state that the AquaBeam
System consists of a disposable, single-use handpiece as well as other
components that are considered capital equipment.
---------------------------------------------------------------------------
\16\ Chungtai B. Forde JC. Thomas DDM et al. Benign Prostatic
Hyperplasia. Nature Reviews Disease Primers 2 (2016) article 16031.
---------------------------------------------------------------------------
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, the AquaBeam System is integral to the
service provided, is used for one patient only, comes in contact with
human skin, and is surgically implanted or inserted (either permanently
or temporarily). The applicant also claimed the AquaBeam System meets
the device eligibility requirements of Sec. 419.66(b)(4) because it is
not an instrument, apparatus, implement, or items for which
depreciation and financing expenses are recovered, and it is not a
supply or material furnished incident to a service. However, in the CY
2000 interim final rule with comment period (65 FR 67804 through
67805), we explained how we interpreted Sec. 419.43(e)(4)(iv). We
stated that we consider a device to be surgically implanted or inserted
if it is surgically inserted or implanted via a natural or surgically
created orifice, or inserted or implanted via a surgically created
incision. We also stated that we do not consider an item used to cut or
otherwise create a surgical opening to be a device that is surgically
implanted or inserted. We consider items used to create incisions, such
as scalpels, electrocautery units, biopsy apparatuses, or other
commonly used operating room instruments, to be supplies or capital
equipment, not eligible for transitional pass-through payments. We
stated that we believe the function of these items is different and
distinct from that of devices that are used for surgical implantation
or insertion. Finally, we stated that, generally, we would expect that
surgical implantation or insertion of a device occurs after the surgeon
uses certain primary tools, supplies, or instruments to create the
surgical path or site for implanting the device. In the CY 2006 final
rule with comment period (70 FR 68629 and 68630), we adopted as final
our interpretation that surgical insertion or implantation criteria
include devices that are surgically inserted or implanted via a natural
or surgically created orifice, as well as those devices that are
inserted or implanted via a surgically created incision. We reiterated
that we maintain all of the other criteria in Sec. 419.66 of the
regulations, namely, that we do not consider an item used to cut or
otherwise create a surgical opening to be a device that is surgically
implanted or inserted. We invited public comments on whether the
AquaBeam System meets the eligibility criteria at Sec. 419.66(b).
Comment: Commenters, including the manufacturer of AquaBeam and
stakeholders, believed that the AquaBeam System met the eligibility
criteria at Sec. 419.66(b).
Response: We appreciate the commenters' input. However, we do not
believe that the AquaBeam device meets
[[Page 58931]]
the eligibility criteria described at Sec. 419.66(b). Specifically, we
do not believe that the device is surgically implanted or inserted. As
stated earlier, we have described in previous rulemaking (65 FR 67804
through 67805 and 70 FR 68329 through 68630) how we interpret the
surgical insertion or implantation criteria, and we do not believe that
the use of the Aquabeam device is consistent with that interpretation;
namely, that we do not consider an item used to cut or otherwise create
a surgical opening to be a device that is surgically implanted or
inserted (70 FR 68630). Because we have determined that the AquaBeam
device does not meet the basic eligibility criterion for transitional
pass-through payment status, we have not evaluated this product to
determine whether it meets the other criteria required for transitional
pass-through payment for devices; that is the newness criterion, the
substantial clinical improvement criterion, and the cost criterion.
After consideration of the public comments we received, we are not
approving device pass-through payment status for the AquaBeam System
for CY 2019.
(2) BioBag[supreg] (Larval Debridement Therapy in a Contained Dressing)
BioMonde US, LLC resubmitted an application for a new device pass-
through category for the BioBag[supreg] (larval debridement therapy in
a contained dressing), hereinafter referred to as the BioBag[supreg].
The application submitted contained similar information to the previous
application received in March 2016 that was evaluated in the CY 2017
OPPS/ASC final rule with comment period (81 FR 79650). The only new
information provided by the applicant were additional studies completed
since the original application addressing the substantial clinical
improvement criterion.
According to the applicant, the BioBag[supreg] is a biosurgical
wound treatment (``maggot therapy'') consisting of disinfected, living
larvae (Lucilia sericata) in a polyester net bag; the larvae remove
dead tissue from wounds. The BioBag[supreg] is indicated for
debridement of nonhealing necrotic skin and soft tissue wounds,
including pressure ulcers, venous stasis ulcers, neuropathic foot
ulcers, and nonhealing traumatic or postsurgical wounds. Debridement,
which is the action of removing devitalized tissue and bacteria from a
wound, is required to treat or prevent infection and to allow the wound
to progress through the healing process. This system contains
disinfected, living larvae that remove the dead tissue from wounds and
leave healthy tissue undisturbed. The larvae are provided in a sterile
polyester net bag, available in different sizes. The only other similar
product is free-range (that is, uncontained) larvae. Free-range larvae
are not widely used in the United States because application is time
consuming, there is a fear of larvae escaping from the wound, and there
are concerns about proper and safe handling of the larvae. The total
number of treatment cycles depends on the characteristics of the wound,
the response of the wound, and the aim of the therapy. Most ulcers are
completely debrided within 1 to 6 treatment cycles.
With respect to the newness criterion at Sec. 419.66(b)(1), the
applicant received FDA clearance for the BioBag[supreg] through the
premarket notification section 510(k) process on August 28, 2013, and
the first U.S. sale of the BioBag[supreg] occurred in April 2015. The
June 1, 2017 application is more than 3 years after FDA clearance but
less than 3 years after its first U.S. sale. We invited public comments
on whether the BioBag[supreg] meets the newness criterion.
Comment: The manufacturer stated that, although the BioBag[supreg]
received its 510(k) clearance in 2013, BioBag[supreg] was not
commercially available in the United States until its American-based
production facility was established in 2015 to make the product
available on the market.
Response: We appreciate the additional clarification from the
manufacturer regarding the availability of the BioBag[supreg]. Based on
this clarification, we have determined that BioBag[supreg] meets the
newness criterion.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
the applicant claimed that the BioBag[supreg] is an integral part of
the wound debridement, is used for one patient only, comes in contact
with human skin, and is applied in or on a wound. In addition, the
applicant stated that the BioBag[supreg] meets the device eligibility
requirements of Sec. 419.66(b)(4) because it is not an instrument,
apparatus, or item for which depreciation and financing expenses are
recovered. We also had determined in the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79650) that the BioBag[supreg] is not a
material or supply furnished incident to a service. We invited public
comments on whether the BioBag[supreg] meets the eligibility criterion.
Comment: The manufacturer presented several reasons why the
BioBag[supreg] is not a medical supply, but instead is a treatment for
wound debridement, including the specialized nature of the product,
that the product is not purchased in bulk, and that it provides a
treatment outcome for non-healing wounds.
Response: We appreciate the additional information provided by the
manufacturer to demonstrate that the BioBag[supreg] is not a material
or medical supply. Based on this information, we have determined that
the BioBag[supreg] meets the eligibility criterion.
The criteria for establishing new device categories are specified
at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1),
provides that CMS determines that a device to be included in the
category is not appropriately described by any existing categories or
by any category previously in effect, and was not being paid for as an
outpatient service as of December 31, 1996. With respect to the
existence of a previous pass-through device category that describes the
BioBag[supreg], the applicant suggested a category descriptor of
``Contained medicinal larvae for the debridement of necrotic non-
healing skin and soft tissue wounds.'' We have not identified an
existing pass-through payment category that describes the
BioBag[supreg].
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines that a device to be included
in the category has demonstrated that it will substantially improve the
diagnosis or treatment of an illness or injury or improve the
functioning of a malformed body part compared to the benefits of a
device or devices in a previously established category or other
available treatment. With respect to the substantial clinical
improvement criterion, the applicant provided substantial evidence that
larval therapy may improve outcomes compared to other methods of wound
debridement. However, given the existence of the Medical
Maggots[supreg], another form of larval therapy that has been on the
market since 2004, the relevant comparison is between the
BioBag[supreg] and the Medical Maggots[supreg]. There are many reasons
to suspect that the BioBag[supreg] could improve outcomes and be
preferable to the Medical Maggots[supreg]. In essence, with the latter,
the maggots are directly placed on the wound, which may result in
escape, leading to infection control issues as well as dosing
variability. In addition, there are the issues with patient comfort.
With the Biobag[supreg], the maggots are in a sealed container so
escape is not an issue. The applicant cited a study showing large
decreases in maggot escape with the BioBag[supreg] as opposed to the
Medical Maggots[supreg]. However, the applicant did
[[Page 58932]]
not provide any data that clinical outcomes are improved using the
BioBag[supreg] as opposed to the Medical Maggots[supreg]. Based on the
studies presented, we believe there are insufficient data to determine
whether the BioBag[supreg] offers a substantial clinical improvement
over other treatments for wound care. We invited public comments on
whether the BioBag[supreg] meets the substantial clinical improvement
criterion.
Comment: The manufacturer identified four items to indicate that
the BioBag[supreg] may provide substantial clinical improvement over
other available treatments. These items include debridement of wounds
infected with MRSA, removing more tissue than loose maggots, the ease
of use of the BioBag[supreg] over loose maggots, and less pain during
debridement. The commenter stated that these items were supported by
journal citations.
Several other commenters discussed the benefits of the
BioBag[supreg], and a few commenters discussed the benefits of larval
debridement of wounds more generally. The commenters cited benefits
that included that the BioBag[supreg] debrides only dead tissue, that
BioBag[supreg] makes it easier to apply and remove maggots from wounds,
and that BioBag[supreg] is a lower-cost and less-invasive treatment
than surgical debridement. The commenters did not provide any support
of these benefits by medical studies.
Response: We have reviewed these public comments and the additional
journal citations and believe that most of the information provided by
commenters reenforced our discussion in the proposed rule that stated
that there are many reasons why the BioBag[supreg] may be preferable to
treatment from loose maggots. However, we have not been provided with
sufficient support from clinical studies to determine that the
BioBag[supreg] meets the substantial clinical improvement criterion.
Each of the three clinical studies cited by the manufacturer did
identify possible benefits from the use of the BioBag[supreg] over
treatment from loose maggots, hydrogel, or other surgical debridement
methods. However, the findings had only marginal clinical significance,
and did not reflect sufficient clinical support to reach the threshold
of demonstrating significant clinical improvement.
For example, the study of debridement through containment,\17\ was
done in vitro (that is, in a laboratory setting) and not in vivo (that
is, through testing on human subjects). Therefore, we are uncertain how
the study findings would extrapolate to a patient receiving treatment.
Second, we did not find that the clinical evidence fully supported the
commenters' claimed benefits. For instance, a commenter, the
manufacturer provided data comparing the amount of material debrided by
the BioBag[supreg] at 4 days to free larvae at 3 days from the same
study of debridement through containment.\18\ To help demonstrate
substantial clinical improvement, we believe that the commenter should
have compared the amount of material debrided by both treatment methods
over a similar time period. When similar time periods are compared
between both treatment methods, the study found the amount of material
debrided by the BioBag[supreg] and the free larvae is similar. In
another study cited by the commenter discussing the prevalence of pain
during maggot debridement therapy,\19\ the share of study patients
experiencing pain was similar for people receiving treatment using a
BioBag[supreg] device when compared to people receiving maggot
debridement therapy from free larvae kept in a cage-like dressing.
---------------------------------------------------------------------------
\17\ Blake, F. et al. The biosurgical wound debridement:
Experimental investigation of efficiency and practicability. Wound
Rep Reg, 2007: 15; 756-761. 3.
\18\ Ibid. Blake, F. et al.
\19\ Mumcuoglu, K. et al. Pain related to maggot debridement
therapy. J Wound Care. 2012;21(8): 400-405.
---------------------------------------------------------------------------
After consideration of the public comments we received, we have
determined that the BioBag[supreg] does not meet the significant
clinical improvement criterion.
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires us to determine that the cost of a device is not
insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. With
respect to the cost criterion, the applicant stated that the
BioBag[supreg] would be reported with CPT code 97602 (Removal of
devitalized tissue from wound(s), non-selective debridement, without
anesthesia (e.g., wet-to-moist dressings, enzymatic, abrasion, larval
therapy), including topical application(s), wound assessment, and
instruction(s) for ongoing care, per session). CPT code 97602 is
assigned to APC 5051 (Level 1 Skin Procedures), with a payment rate of
$153.12, and a device offset of $0.02. The price of the BioBag[supreg]
varies with the size of the bag ($375 to $435 per bag), and bag size
selection is based on the size of the wound.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The estimated
reasonable cost of $435 for the BioBag[supreg] exceeds the applicable
APC amount for the service related to the category of devices of
$153.12 by 284.09 percent ($435/$153.12 x 100 = 284.09 percent). Thus,
we determined that the BioBag[supreg] appears to meet the first cost
significance test.
The second cost significance test, at Sec. 419.66(d)(2), provides
that the estimated average reasonable cost of devices in the category
must exceed the cost of the device-related portion of the APC payment
amount by at least 25 percent, which means the device cost needs to be
at least 125 percent of the device offset amount (the device-related
portion of the APC found on the offset list). The estimated average
reasonable cost of $435 for the BioBag[supreg] exceeds the proposed
device-related portion of the APC amount for the related service of
$0.02 by 2,175,000 percent ($435/$0.02 x 100 = 2,175,000 percent).
Thus, we determined that the BioBag[supreg] appears to meet the second
cost significance test.
Section 419.66(d)(3), the third cost significance test, requires
that the difference between the estimated average reasonable cost of
the devices in the category and the portion of the APC payment amount
determined to be associated with the device exceeds 10 percent of the
APC payment amount for the related service. The difference between the
estimated average reasonable cost of $435 for the BioBag[supreg] and
the portion of the proposed APC payment for the device of $0.02 exceeds
10 percent at 284.08 percent (($435-$0.02)/$153.12 x 100 = 284.08
percent). Thus, we determined that the BioBag[supreg] appears to meet
the third cost significance test and satisfies the cost significance
criterion. We invited public comments on whether the BioBag[supreg]
meets the device pass-through payment criteria discussed in this
section, including all three cost criteria.
We did not receive any public comments on the cost criteria for the
BioBag[supreg]. Therefore, we have determined that the BioBag[supreg]
does meet all three cost criteria.
After consideration of the public comments we received and our
review of the criteria necessary to receive device pass-through
payment, we are not approving the application for the BioBag[supreg] to
receive device pass-through payment status in CY 2019 because the
BioBag[supreg] does not meet the substantial clinical improvement
criterion.
[[Page 58933]]
(3) BlastX\TM\ Antimicrobial Wound Gel
Next Science\TM\ has submitted an application for a new device
category for transitional pass-through payment status for BlastX\TM\.
According to the manufacturer, BlastX\TM\ is a PEG-based aqueous
hydrogel which contains citric acid, sodium citrate, and benzalkonium
chloride, buffered to a pH of 4.0 at 2.33 osmolarity. BlastX\TM\
received a 510(k) clearance from the FDA on March 6, 2017. BlastX\TM\
is indicated for the management of wounds such as Stage I-IV pressure
ulcers, partial and full thickness wounds, diabetic foot and leg
ulcers, postsurgical wounds, first and second degree burns, and grafted
and donor sites.
The manufacturer stated in its application for transitional pass-
through payment status that BlastX\TM\ works by disrupting the biofilm
matrix in a wound and eliminating the bacteria absorbed within the gel.
The manufacturer asserted that disrupting and eliminating the biofilm
removes a major barrier to wound healing. The manufacturer also
asserted that BlastX\TM\ is not harmful to host tissue and stated that
BlastX\TM\ is applied to the wound every other day as a thin layer
throughout the entire wound healing process. When used as an adjunct to
debridement, BlastX\TM\ is applied immediately after debridement to
eliminate any remaining biofilm and prevent the growth of new biofilm.
Based on the evidence provided in the manufacturer's application,
BlastX\TM\ is not a skin substitute and cannot be considered for
transitional pass-through payment status as a device. To be considered
a device for purposes of the medical device pass-through payment
process under the OPPS, a skin substitute needs to be applied in or on
a wound or other skin lesion based on 42 CFR 419.66(b)(3). It should be
a product that is primarily used in conjunction with the skin graft
procedures described by CPT codes 15271 through 15278 or HCPCS codes
C5271 through C5278 (78 FR 74937). The skin substitute should only be
applied a few times during a typical treatment episode. BlastX\TM\,
according to the manufacturer, may be used in many other procedures
other than skin graft procedures, including several debridement and
active wound care management procedures. The manufacturer also stated
that BlastX\TM\ would be used in association with any currently
available skin substitute product and that the product should be
applied every other day, which is not how skin substitute products for
skin graft procedures are used to heal wounds. BlastX\TM\ is not a
required component of the skin graft service, and is used as a supply
that may assist with the wound healing process that occurs primarily
because of the use of a sheet skin substitute product in a skin graft
procedure.
Therefore, with respect to the eligibility criterion at Sec.
419.66(b)(3), in the proposed rule, we determined that BlastX\TM\ is
not integral to the service provided (which is a skin graft procedure
using a sheet skin substitute), is a material or supply furnished
incidentally to a service, and is not surgically inserted into a
patient. BlastX\TM\ does not meet the eligibility criterion to be
considered a device for transitional pass-through payment. Therefore,
we did not evaluate the product on the other criteria required for
transitional pass-through payment for devices, including the newness
criterion, the substantial clinical improvement criterion, and the cost
criterion. We invited public comments on the eligibility of BlastX\TM\
for transitional pass-through payment for devices.
We did not receive any public comments regarding the eligibility of
BlastX\TM\ for transitional pass-through payment for devices.
Therefore, we are not approving BlastX\TM\ for transitional pass-
through payment status for CY 2019 because the product does not meet
the eligibility criterion to be considered a device.
(4) EpiCord[supreg]
MiMedx[supreg] submitted an application for a new OPPS device
category for transitional pass-through payment status for
EpiCord[supreg], a skin substitute product. According to the applicant,
EpiCord[supreg] is a minimally manipulated, dehydrated, devitalized
cellular umbilical cord allograft for homologous use that provides a
protective environment for the healing process. According to the
applicant, EpiCord[supreg] is comprised of the protective elements of
the umbilical cord with a thin amnion layer and a thicker Wharton's
Jelly mucopolysaccharides component. The Wharton's Jelly contains
collagen, hyaluronic acid, and chondroitin sulfate, which are the
components principally responsible for its mechanical properties.
The applicant stated that EpiCord[supreg] is packaged as an
individual unit in two sizes, 2 cm x 3 cm and 3 cm x 5 cm. The
applicant asserted that EpiCord[supreg] is clinically superior to other
skin substitutes because it is much thicker than dehydrated amnion/
chorion allografts, which allows for application over exposed bone,
tendon, nerves, muscle, joint capsule and hardware. According to the
applicant, due to its unique thicker, stiffer structure, clinicians are
able to apply or suture EpiCord[supreg] for deep, tunneling wounds
where other products cannot fill the entire wound bed or dead spaces.
With respect to the newness criterion at Sec. 419.66(b)(1),
EpiCord[supreg] was added to the MiMedx[supreg] registration for human
cells, tissues, and cellular and tissue-based products (HCT/Ps) on
December 31, 2015. In adding EpiCord, MiMedx[supreg] asserted that
EpiCord[supreg] conformed to the requirements for HCT/Ps regulated
solely under section 361 of the Public Health Service Act and the
regulations at 21 CFR part 1271. For these products, FDA requires that
the manufacturer register and list its HCT/Ps with the FDA's Center for
Biologics Evaluation and Research (CBER) within 5 days after beginning
operations and update its registration annually, and MiMedx[supreg]
provided documentation verifying that EpiCord[supreg] had been
registered. However, no documentation regarding an FDA determination
that EpiCord[supreg] is appropriate for regulation solely under section
361 of the Public Health Service Act had been submitted. According to
the applicant, December 31, 2015 was the first date of sale within the
United States for EpiCord[supreg]. Therefore, it appears that market
availability of EpiCord[supreg] is within 3 years of this application.
We note that a product that is regulated solely under section 361
of the Public Health Service Act and the regulations in 21 CFR part
1271, as asserted by the manufacturer of Epicord[supreg], is not
regulated as a device under the Federal Food, Drug, and Cosmetic Act.
The regulations at 21 CFR 1271.20 state that ``If you are an
establishment that manufactures an HCT/P that does not meet the
criteria set out in Sec. 1271.10(a) [for regulation solely under
section 361 of the Public Health Service Act and the regulations in
part 1271], and you do not qualify for any of the exceptions in Sec.
1271.15, your HCT/P will be regulated as a drug, device, and/or
biological product. . . .'' The Federal Food, Drug, and Cosmetic Act
requires that manufacturers of devices that are not exempt obtain
marketing approval or clearance for their products from FDA before they
may offer them for sale in the United States. We did not receive
documentation from the applicant that EpiCord[supreg] is regulated as a
device by FDA in accordance with Medicare regulations at 42 CFR
419.66(b)(1). We invited public comments on whether EpiCord[supreg]
meets the newness criterion.
[[Page 58934]]
Comment: The manufacturer believed that EpiCord[supreg] meets the
newness criterion. The manufacturer stated that HCT/P products are
regulated by the FDA through a registration process and have been paid
by CMS for many years under the current regulatory structure. The
manufacturer believed the newness criterion requirement for FDA
approval for a product should only apply when FDA approval is required
for that product. The manufacturer stated that FDA approval does not
apply to EpiCord[supreg] because of its HCT/P status. The manufacturer
stated that the pass-through payment application for EpiCord[supreg]
was submitted within 3 years of EpiCord[supreg] being introduced onto
the U.S. market. Finally, the manufacturer noted that the Medicare
statute requires that biologicals be included in the category of
products that can be considered for pass-through payment status and
stated that, if HCT/Ps cannot be considered for transitional pass-
through payment through the device pathway, the HCT/P products should
be returned to the drug and biological transitional pass-through
pathway.
Response: To be able to determine whether a product meets the
newness criterion, we need to determine a date when a product could
first be used in the United States. Generally, we use the FDA clearance
or approval date. We also have a provision in the newness criterion to
use the date of first United States sale of the product rather than the
FDA approval date, to accommodate the rare cases where a device
receives FDA approval but the manufacturer experiences a significant
delay establishing a manufacturing and distribution capacity for the
new device. We agree that FDA approval cannot be required to be used
for the newness criterion when there is no requirement for a new
product to receive FDA approval. However, we still need some means to
determine whether a product has been able for use in the United States
for 3 years or less. The best alternative that we can identify to
establish the date a product is considered new is to rely on
registration to the FDA HCT/P registry, which indicates the existence
of a new product.
Comment: One commenter did not believe that EpiCord[supreg] meets
the newness criterion. The commenter asserted that EpiCord[supreg] is
considered to be the same product as EpiFix[supreg] that was introduced
onto the U.S. market in 2011, and that the application for pass-through
payment status for EpiCord[supreg] was submitted after the 3-year
timeframe for a new product to apply for pass-through payment status.
The commenter cited a HCPCS Workgroup decision in 2016 that assigned
the use of EpiCord[supreg] to HCPCS code Q4131, which, until December
31, 2018, was the identifying HCPCS code for the use of EpiFix[supreg].
The commenter also asserted that EpiFix[supreg] may also receive pass-
through payments, which the commenter believed should not occur,
because it will be difficult to determine whether HCPCS code Q4131 is
being billed for the use of EpiFix[supreg] or EpiCord[supreg].
Response: We disagree with the commenter's assertion that
EpiFix[supreg] and EpiCord[supreg] are the same product. On December
31, 2015, MiMedx, the manufacturer of EpiCord[supreg], submitted a
filing to the FDA HCT/P registry representing EpiCord[supreg] as a new
product that is a separate product from EpiFix[supreg]. In addition,
the HCPCS Workgroup has made a decision, effective on January 1, 2019,
to designate separate HCPCS codes for EpiFix[supreg] (Q4186) and
EpiCord[supreg] (Q4187) that also demonstrates EpiCord[supreg] is a
separate product from EpiFix[supreg]. We believe that EpiCord[supreg]
is a separate product from EpiFix[supreg].
After consideration of the public comments we received, we have
determined that EpiCord[supreg] meets the newness criterion.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, EpiCord[supreg] is a skin substitute
product that is integral to the service provided, is used for one
patient only, comes in contact with human tissue, and is surgically
inserted into the patient. The applicant also claimed EpiCord[supreg]
meets the device eligibility requirements of Sec. 419.66(b)(4) because
EpiCord[supreg] is not an instrument, apparatus, implement, or item for
which depreciation and financing expenses are recovered, and it is not
a supply or material. We invited public comments on whether
EpiCord[supreg] meets these eligibility criteria.
We did not receive any public comments regarding whether
EpiCord[supreg] meets the eligibility criterion. Based on the
information we have received, we have determined that EpiCord[supreg]
meets the eligibility criterion.
The criteria for establishing new device categories are specified
at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1),
provides that CMS determines that a device to be included in the
category is not appropriately described by any of the existing
categories or by any category previously in effect, and was not being
paid for as an outpatient service as of December 31, 1996. We have not
identified an existing pass-through category that describes
EpiCord[supreg]. There are no present or previously established device
categories for pass-through status that describe minimally manipulated,
lyophilized, nonviable cellular umbilical membrane allografts regulated
solely under section 361 of the Public Health Service Act and the
regulations at 21 CFR part 1271. MiMedx[supreg] suggested a new device
category descriptor of ``Dehydrated Human Umbilical Cord Allografts''
for EpiCord[supreg].
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines that a device to be included
in the category has demonstrated that it will substantially improve the
diagnosis or treatment of an illness or injury or improve the
functioning of a malformed body part compared to the benefits of a
device or devices in a previously established category or other
available treatment. With regard to the substantial clinical
improvement criterion, the applicant asserted that EpiCord[supreg]
reduces the mortality rate with use of the device; reduces the rate of
device-related complications; decreases the rate of subsequent
diagnostic or therapeutic interventions; decreases the number of future
hospitalizations or physician visits; provides more rapid beneficial
resolution of the disease process treated because of the use of the
device; decreases pain, bleeding, or other quantifiable symptom; and
reduces recovery time.
To determine if the product meets the substantial improvement
criterion, we compared EpiCord[supreg] to other skin substitute
products. Compared to NEOX CORD 1K Wound Allograft, EpiCord[supreg] has
half the levels of Vascular Endothelial Growth Factor (VEGF) and
insulin-like growth factor binding protein-4 (IGFBP-4) and lower levels
of Glial Cell Line Derived Neurotrophic Factor (GDNF) and Epidermal
Growth Factor (EGF). Despite EpiCord[supreg] having higher levels of
other growth factors, the cumulative effect of these differences has
not been sufficiently demonstrated in the application. Moreover, most
professional opinions do not compare EpiCord[supreg] to specific
alternative skin substitutes; the few that do are, for the most part,
of limited specificity (in terms of foci of superiority to other skin
substitutes). Studies demonstrated 41 percent higher relative rates
(4.1 percent higher absolute rates) of severe complications for
EpiCord[supreg] compared to standard of care. Additionally, the control
group was moist dressings and offloading (instead of another umbilical
or biologic product). Furthermore, 38 percent of EpiCord[supreg]
patients in the study were smokers versus 58 percent of
[[Page 58935]]
control patients (smoking impairs wound healing; thus, this important
dissimilarity between intervention and study populations casts doubt on
attributing observed benefit to the intervention).
Based on the evidence submitted with the application, we had
insufficient evidence that EpiCord[supreg] provides a substantial
clinical improvement over other treatments for wound care. We invited
public comments on whether EpiCord[supreg] meets the substantial
clinical improvement criterion.
Comment: The manufacturer responded to several statements regarding
EpiCord[supreg] and substantial clinical improvement in the CY 2019
OPPS/ASC proposed rule. The analysis in the proposal rule noted that
the pass-through application for EpiCord[supreg] stated that
EpiCord[supreg] had higher levels of some growth factors and lower
levels of other growth factors than NEOX CORD 1K Allograft. However the
original application did not clarify what the overall effect the
differences in growth factors had on the effectiveness of
EpiCord[supreg] for wound care and the proposed rule text expressed
concern regarding comparisons to individual skin substitute products.
The manufacturer asserted that the findings in the application, which
were updated by the manufacturer, show that the combination of growth
factors and proteins working together does improve wound healing in a
complex environment. Also, the manufacturer stated that EpiCord[supreg]
is the only umbilical cord wound product with a published multi-center,
prospective, randomized-controlled, comparative parallel study.
The manufacturer responded to a statement in the proposed rule that
noted 41 percent higher relative rates of severe complications for
EpiCord[supreg] compared to the standard of care, and concerns the
control group in the studies were moist dressings and offloading
instead of a biologic product. The manufacturer indicated that the
studies include adverse events from all causes and a new study in
progress will show no adverse events directly related to
EpiCord[supreg] or alginate dressings. The manufacturer also stated
that many wound experts do not attempt to compare new products to each
other because of the high variability of the composition of products,
how they are applied, and the dynamics of how different products work.
The manufacturer replied to a statement in the CY 2019 OPPS/ASC
proposed rule questioning the substantial higher amount of smokers in
the control group for the primary study compared to the group of
EpiCord[supreg] patients. The manufacturer noted that the concern is
that smoking impairs wound healing, and the presence of a higher number
of smokers in the control group casts doubt on the conclusion that the
difference in outcomes between the control group and the
EpiCord[supreg] group was because of the use of EpiCord[supreg]. The
manufacturer performed statistical analyses and the manufacturer
reported that it found the effect of the higher proportion of smokers
in the control group was not statistically significant.
Finally, the manufacturer asserted that EpiCord[supreg] meets the
substantial clinical improvement criterion as a result of the published
multi-center randomized controlled study showing an 81-percent healing
rate within 12 weeks, which increases to a 96-percent healing rate when
adequate debridement is performed.
Response: We appreciate the detailed response to the questions we
had regarding the study the manufacturer submitted as evidence that
EpiCord[supreg] would have substantial clinical improvement over
comparable wound care treatments. However, this study on its own is not
sufficient to establish substantial clinical improvement. First,
independent replication of the findings of the study has not been
performed. The study indicates beneficial effects from the use of
EpiCord[supreg]; however, it is not clear if the findings can be
reproduced. Multiple studies with similar conditions, and a more
equitable distribution of smokers in the control and intervention
groups, would be a first step to determine if the findings are valid.
Second, more comparisons need to be done with different classes of
biological skin substitute products. Given the number of skin
substitute products on the U.S. market, it is not possible to compare
EpiCord[supreg] to each product. However, we believe that studies
comparing the product against products made with epithelial tissue,
other human-sourced products, and animal-sourced products could provide
more evidence demonstrating the clinical superiority of
EpiCord[supreg].
Comment: Multiple commenters supported granting EpiCord[supreg]
transitional pass-through payment status. Many of the commenters
discussed the strength of the structure of EpiCord[supreg], the high
levels of human growth factors found in the product, and its ability to
heal complex wounds, but did not provide support by studies or other
clinical research.
Response: We appreciate the additional information that the
commenters provided on the performance and the benefits of
EpiCord[supreg]. However, many skin substitute products can be used to
heal complex wounds. In addition, none of the commenters provided
clinical evidence of how the high levels of human growth factors led to
EpiCord[supreg] having a superior performance to other skin substitute
products.
After consideration of the public comments we received, we have
determined that EpiCord[supreg] does not meet the substantial clinical
improvement criterion.
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires us to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant provided the following information in support of the cost
significance requirements. EpiCord[supreg] would be reported with CPT
code 15271 or 15275. CPT code 15271 describes the application of skin
substitute graft to trunk, arms, legs, total wound surface area up to
100 sq cm; first 25 sq cm or less wound surface area. CPT code 15275
describes the application of skin substitute graft to face, scalp,
eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or
multiple digits, total wound surface area up to 100 sq cm; first 25 sq
cm or less wound surface area. Both codes are assigned to APC 5054
(Level 4 Skin Procedures). CPT codes 15271 through 15278 are assigned
to either APC 5054 (Level 4 Skin Procedures), with a payment rate of
$1,427.77 and a device offset of $4.70, or APC 5055 (Level 5 Skin
Procedures), with a payment rate of $2,504.69 and a device offset of
$35.01. The price of EpiCord[supreg] is $1,595 for the 2 cm x 3 cm and
$3,695 for the 3 cm x 5 cm product size.
To meet the cost criterion for device pass-through payment, a
device must pass all three tests of the cost criterion for at least one
APC. Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The estimated
average reasonable cost of $3,695 for the 3 cm x 5 cm product exceeds
the applicable APC amount for the service related to the category of
devices of $1,427.77 by 258.80 percent ($3,695/$1427.77 x 100 percent =
258.80 percent). Therefore, it appears that EpiCord[supreg] meets the
first cost significance test.
The second cost significance test, at Sec. 419.66(d)(2), provides
that the estimated average reasonable cost of the
[[Page 58936]]
devices in the category must exceed the cost of the device-related
portion of the APC payment amount for the related service by at least
25 percent, which means that the device cost needs to be at least 125
percent of the offset amount (the device-related portion of the APC
found on the offset list). The estimated average reasonable cost of
$3,695 for the 3 cm x 5 cm product exceeds the device-related portion
of the APC payment amount for the related service of $4.70 by 78,617.02
percent ($3,695/$4.70 x 100 percent = 78,617.02 percent). Therefore, it
appears that EpiCord[supreg] meets the second cost significance test.
Section 419.66(d)(3), the third cost significance test, requires
that the difference between the estimated average reasonable cost of
the devices in the category and the portion of the APC payment amount
for the device must exceed 10 percent of the APC payment amount for the
related service. The difference between the estimated average
reasonable cost of $3,695 for the 3 cm x 5 cm product and the portion
of the APC payment amount for the device of $4.70 exceeds 10 percent at
258.47 percent (($3,695-$4.70)/$1,427.77) x 100 percent = 258.47
percent). Therefore, it appears that EpiCord[supreg] meets the third
cost significance test. Based on the costs submitted by the applicant
and the calculations noted earlier, it appears that EpiCord[supreg]
meets the cost criterion at Sec. 419.66(c)(3) for new device
categories. We invited public comments on whether EpiCord[supreg] meets
the cost criterion for device pass-through payment.
We did not receive any public comments regarding the cost criteria
for EpiCord[supreg]. Based on the information that we received, we have
determined that EpiCord[supreg] meets the cost criteria.
After consideration of the public comments and additional
information we have received, we are not approving EpiCord[supreg] for
transition pass-through payment status in CY 2019 because the product
does not meet the substantial clinical improvement criterion.
(5) remed[emacr][supreg] System Transvenous Neurostimulator
Respicardia, Inc. submitted an application for a new device
category for transitional pass-through payment status for the
remed[emacr][supreg] System Transvenous Neurostimulator. According to
the applicant, the remed[emacr][supreg] System is an implantable
phrenic nerve stimulator indicated for the treatment of moderate to
severe central sleep apnea (CSA) in adult patients. The applicant
stated that the remed[emacr][supreg] System is the first and only
implantable neurostimulator to use transvenous sensing and stimulation
technology. The applicant also stated that the remed[emacr][supreg]
System consists of an implantable pulse generator, a transvenous lead
to stimulate the phrenic nerve and a transvenous sensing lead to sense
respiration via transthoracic impedance. Lastly, the applicant stated
that the device stimulates a nerve located in the chest (phrenic nerve)
that is responsible for sending signals to the diaphragm to stimulate
breathing to restore normal sleep and respiration in patients with
moderate to severe central sleep apnea (CSA).
With respect to the newness criterion at Sec. 419.66(b)(1), the
applicant received a Category B Investigational Device Exemption (IDE)
from FDA on April 18, 2013. Subsequently, the applicant received
approval of its premarket approval (PMA) application from FDA on
October 6, 2017. The application for a new device category for
transitional pass-through payment status for the remed[emacr][supreg]
System was received on May 31, 2017, which is within 3 years of the
date of the initial FDA approval or clearance. We invited public
comments on whether the remed[emacr][supreg] System meets the newness
criterion.
Comment: The manufacturer believed that that the
remed[emacr][supreg] System meets the newness criterion.
Response: We appreciate the commenter's input.
After consideration of the public comments we received, we believe
that the remed[emacr][supreg] System meets the newness criterion.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, the remed[emacr][supreg] System is integral
to the service provided, is used for one patient only, comes in contact
with human skin, and is applied in or on a wound or other skin lesion.
The applicant also claimed the remed[emacr][supreg] System meets the
device eligibility requirements of Sec. 419.66(b)(4) because it is not
an instrument, apparatus, implement, or item for which depreciation and
financing expenses are recovered, and it is not a supply or material
furnished incident to a service.
The criteria for establishing new device categories are specified
at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1),
provides that CMS determines that a device to be included in the
category is not appropriately described by any of the existing
categories or by any category previously in effect, and was not being
paid for as an outpatient service as of December 31, 1996. We have not
identified an existing pass-through payment category that describes the
remed[emacr][supreg] System. The applicant proposed a category
descriptor for the remed[emacr][supreg] System of ``generator,
neurostimulator (implantable), non-rechargeable, with transvenous
sensing and stimulation.'' We invited public comments on this issue.
Comment: The manufacturer of the device indicated that there is no
an existing pass-through payment category that describes the
remed[emacr][supreg] System.
Response: We appreciate the manufacturer's input.
After consideration of the public comments we received, we believe
that the remed[emacr][supreg] System meets the eligibility criterion.
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines that a device to be included
in the category has demonstrated that it will substantially improve the
diagnosis or treatment of an illness or injury or improve the
functioning of a malformed body part compared to the benefits of a
device or devices in a previously established category or other
available treatment. With respect to this criterion, the applicant
submitted several journal articles that discussed the health effects of
central sleep apnea (CSA) which include fatigue, decreased mental
acuity, myocardial ischemia, and dysrhythmias. The applicant stated
that patients with CSA may suffer from poor clinical outcomes,
including myocardial infarction and congestive heart failure.\20\
---------------------------------------------------------------------------
\20\ Costanzo, M.R., et al., Mechanisms and Clinical
Consequences of Untreated Central Sleep Apnea in Heart Failure.
Journal of the American College of Cardiology, 2015. 65(1): p. 72-
84.
---------------------------------------------------------------------------
The applicant claims that the remed[emacr][supreg] System has been
found to significantly improve apnea-hypopnea index (AHI), which is an
index used to indicate the severity of sleep apnea. AHI is represented
by the number of apnea and hypopnea events per hour of sleep and was
used as the primary effectiveness endpoint in the remed[emacr][supreg]
System pivotal trial. The applicant noted that the remed[emacr][supreg]
System was shown to improve AHI in small, self-controlled studies as
well as in larger trials.
The applicant reported that in the pivotal study, a large,
multicenter, randomized controlled trial of CSA patients, intention-to-
treat analysis found that 51 percent (35/68) of CSA patients using the
remed[emacr][supreg] System had greater than 50 percent reduction of
apnea-hypopnea index (AHI) from baseline at 6 months compared to 11
percent (8/73) of the control group (p<0.0001). Per-protocol analysis
found that 60 percent (35/58) of remed[emacr][supreg] System patients
had a greater than 50
[[Page 58937]]
percent reduction of AHI and in 74 percent (26/35) of these patients
AHI dropped to <20.\21\
---------------------------------------------------------------------------
\21\ Costanzo, M.R., et al. (2016). Transvenous neurostimulation
for central sleep apnoea: a randomised controlled trial. The Lancet,
388(10048): p. 974-982.
---------------------------------------------------------------------------
According to the applicant, an exploratory post-hoc analysis of
patients with CSA and congestive heart failure (CHF) in the Pivotal
trial found that, at 6 months, the remed[emacr][supreg] System group
had a greater percentage of patients with >=50 percent reduction in AHI
compared to control group (63 percent versus 4 percent, p< 0.001).\22\
---------------------------------------------------------------------------
\22\ Goldberg, L.R., et al. (2017). In Heart Failure Patients
with CSA, Stimulation of the Phrenic Nerve Improves Sleep and
Quality of Life. Journal of Cardiac Failure, 23(8): p. S15.
---------------------------------------------------------------------------
The applicant noted that patient symptoms and quality of life were
improved with the remed[emacr][supreg] System therapy. The mean Epworth
Sleepiness Scale (ESS) score significantly decreased in
remed[emacr][supreg] System patients, indicating less daytime
sleepiness.\23\
---------------------------------------------------------------------------
\23\ Costanzo, M.R., et al. (2016). Transvenous neurostimulation
for central sleep apnoea: a randomised controlled trial. The Lancet,
388(10048): p. 974-982.
---------------------------------------------------------------------------
Adverse events associated with remed[emacr][supreg] System
insertion and therapy included lead dislodgement/dislocation, hematoma,
migraine, atypical chest pain, pocket perforation, pocket infection,
extra-respiratory stimulation, concomitant device interaction, and
elevated transaminases.\24\ There were no patient deaths that were
related to the device implantation or therapy.
---------------------------------------------------------------------------
\24\ Costanzo, M.R., et al. (2016). Transvenous neurostimulation
for central sleep apnoea: a randomised controlled trial. The Lancet,
388(10048): p. 974-982.
---------------------------------------------------------------------------
One concern regarding the remed[emacr][supreg] System is the
potential for complications in patients with coexisting cardiac
devices, such as pacemakers or ICDs, given that the
remed[emacr][supreg] System device requires lead placement and
generation of electric impulses. Another concern with the evidence of
substantial clinical improvement is that there is limited long-term
data on patients with remed[emacr][supreg] System implants. The pivotal
trial included only 6 months of follow-up. Also, while the applicant
reported a reduction in AHI in the treatment group, the applicant did
not establish that that level of change was biologically meaningful in
the population(s) being studied. The applicant did not conduct a power
analysis to determine the necessary size of the study population and
the necessary duration of the study to detect both early and late
events.
In addition, patients in the pivotal study were not characterized
by the use of cardiac devices. Cardiac resynchronization therapy (CRT),
in particular, is known to improve chronic sleep apnea in addition to
its primary effects on heart failure, and central apnea is a marker of
the severity of the congestive heart failure. The applicant did not
conduct subset analyses to assess the impact of cardiac
resynchronization therapy.
Lastly, while evaluation of AHI and quality of life metrics show
improvement with the remed[emacr][supreg] System, the translation of
those effects to mortality benefit is yet to be determined. Further
studies of the remed[emacr][supreg] System are likely needed to
determine long-term effects of the device, and as well as its efficacy
compared to existing treatments of CPAP or medications.
Based on the evidence submitted with the application, we had
insufficient evidence that the remed[emacr][supreg] System provides a
substantial clinical improvement over other similar products and
invited public comments on whether the remed[emacr][supreg] System
meets the substantial clinical improvement criterion.
Comment: The manufacturer of the remed[emacr][supreg] System
believed that this device meets the substantial clinical improvement
criterion and provided additional data to support this assertion. The
manufacturer noted that the primary endpoint of the pivotal study was a
reduction of at least 50 percent in the apnea-hyponea index that is
used to classify apnea severity and has been used as a common endpoint
in predicate studies testing apnea therapy in sleep literature. The
manufacturer further indicated that the remed[emacr][supreg] System
significantly improves secondary endpoints. Patients had improved
oxygenation, reduced hypoxia, and 79 percent of treatment group
subjects reported improved quality of life as assessed through the
Patient Global Assessment. The manufacturer asserted that the study
cited was the first randomized study in central sleep apnea to
demonstrate improvements in REM sleep and arousals. Further, the
manufacturer noted that the treatment group experienced a 3.7
percentage point improvement in the Epworth sleepiness scale, meaning
these patients were less sleepy than the control group. The
manufacturer indicated, in response to CMS' questions, that its
clinical trials were not designed to establish a clinical improvement
in mortality from this device. However, the manufacturer asserted that
post-trial analysis indicated some improvement in left ventricular
ejection fraction, which is associated with reduced mortality, and
increased time to first hospitalization for New York Heart Association
heart failure patients with reduced ejection fraction. The manufacturer
also indicated that reductions in the Apnea Hypopnea Index for trial
participants that received the remed[emacr][supreg] System was now
greater at 12 months than it was at 6 months.
In response to CMS' question regarding why an untreated control
group was used in the pivotal trial, as opposed to a direct comparison
with CPAP or other treatments, the manufacturer presented several
reasons, such as considerable controversy about CPAP in CSA patients
with heart failure due to CPAP patients with an ejection fraction less
than 40 percent having higher mortality, and a dearth of prospective,
randomized clinical data on the safety and efficacy of using CPAP, ASV,
or medications to treat patients with non-heart failure CSA.
Regarding CMS' question of why no power analysis was performed to
determine the necessary size of the study population and the necessary
duration of the study to detect both early and late events, the
manufacturer noted that it worked directly with clinical experts and
consulted with the FDA in designing the clinical trial, which the
manufacturer maintains was effective and well-rounded. The manufacturer
noted that the rationale was that the remed[emacr][supreg] System would
be evaluated on a continuum of efficacy versus safety, but noted that
had they determined to power the study for a primary safety endpoint
based on the threshold of other implantable cardiac devices, the
pivotal trial would have been adequately powered based on the study
design (132 patients needed versus 151 enrolled).
In response to CMS' question regarding potential complications in
patients with coexisting cardiac devices, the manufacturer noted that
it was understood that many CSA patients would likely have other
cardiac devices already implanted and that this led to the design of
both implant and testing procedures that accommodated concomitant
devices. The manufacturer noted that the remed[emacr][supreg] System is
typically placed on the right side of the chest to leave room for
patients to have a cardiac device, which are typically placed on the
left side, and that, in the pivotal trial, implantation of the
remed[emacr][supreg] System in patients with a concomitant device did
not demonstrate any increased risk. Further, the manufacturer noted
that key metrics of implant duration, use of contrast dye, and
fluoroscopy time were similar between patients with and without a
[[Page 58938]]
concomitant cardiac device. Regarding specific study results, the
manufacturer noted that 42 percent (64 of 151) of patients in the
pivotal trial had a concomitant device and 98 percent (63 of 64) of
patients with a concomitant cardiac device were successfully implanted,
as compared to 96 percent (81 of 84) of patients with no concomitant
device. The manufacturer believed that there is no increased risk at
the time of implant for patients with a coexisting cardiac device. With
regard to safety post[hyphen]procedure, the commenter noted there was
no difference in related SAEs between the groups with and without a
concomitant cardiac device.
Regarding CMS' question about whether the impact of cardiac
resynchronization therapy (CRT) drove improvement for heart failure
patient with a concomitant CRT device, the manufacturer noted limited
literature available on this topic, but stated that the literature that
does exist suggests that CRT may improve the apnea hypopnea index in
some patients, which may be due to an improvement in ejection fraction.
However, the manufacturer noted that all CRT patients in the
remed[emacr][supreg] System pivotal trial had their CRT devices for a
minimum of nine months and that despite having CRT for a significant
duration, still had severe CSA at baseline. Accordingly, the
manufacturer believed that it is unlikely that significant CSA
improvements were based on CRT rather than the remed[emacr][supreg]
System. The manufacturer noted that statistically significant subgroup
analysis on CRT was difficult, but believed that the CRT subgroup did
not lead to the overall results on the primary endpoint because the CRT
subgroup ``underperformed'' relative to the non-CRT subgroup.
Finally, with respect to CMS' question regarding whether the
clinical results and patient response were durable and sustainable over
time, the manufacturer asserted that it continues to collect
effectiveness data beyond the 6-month endpoints of the pivotal IDE
trial and that 12-month follow-up results on the pivotal IDE trial were
recently published, demonstrating a trend towards increasing benefit
for the treatment group at 12 months. Specifically, the commenter
stated that, at 12 months, 91 percent of patients saw a reduction of
AHI and with 67 percent achieving a 50 percent or greater reduction in
AHI (compared to 60 percent at 6 months).
Several commenters, individual physicians who have treated CSA
patients with the remed[emacr][supreg] System, stated that, for these
patients, traditional types of positive pressure ventilation did not
work and the remed[emacr][supreg] System is the only treatment
available.
Response: We appreciate the commenters' input. After reviewing the
additional information provided during the public comment period, we
agree that the remed[emacr][supreg] System has been shown to improve
patients symptoms of central sleep apnea, improve quality of life,
requires minimal patient compliance compared to other treatments, and
has a low adverse event profile. However, with regard to our questions
about impacts on mortality, the applicant did note that its studies
were not powered to demonstrate a mortality benefit.
Commenters have adequately addressed the clinical concerns that we
outlined in the proposed rule with additional evidence, longer follow-
up from the pivotal IDE trial, the interplay of the
remed[emacr][supreg] System and a concomitant cardiac device, and
information about power calculations and other data summarized above.
Further, we believe that the remed[emacr][supreg] System offers a
treatment option for a patient population unresponsive to, or
ineligible for, treatment involving currently available options. That
is, those patients who have been diagnosed with moderate to severe CSA
have no other available treatment options than the remed[emacr][supreg]
System. Accordingly, we have determined that the remed[emacr][supreg]
System has demonstrated substantial clinical improvement relative to
existing treatment options for patients diagnosed with moderate to
severe CSA.
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires us to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant provided the following information in support of the cost
significance requirements. The applicant stated that the
remed[emacr][supreg] System would be reported with CPT code 0424T. CPT
code 0424T is assigned to APC 5464 (Level 4 Neurostimulator and Related
Procedures). To meet the cost criterion for device pass-through
payment, a device must pass all three tests of the cost criterion for
at least one APC. For our calculations, we used APC 5464, which had a
CY 2017 payment rate of $27,047.11 at the time the application was
received. Beginning in CY 2017, we calculate the device offset amount
at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT
code 0424T had a device offset amount of $11,089 at the time the
application was received. According to the applicant, the cost of the
remed[emacr][supreg] System was $34,500.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The estimated
average reasonable cost of $34,500 for the remed[emacr][supreg] System
exceeds 127 percent of the applicable APC payment amount for the
service related to the category of devices of $27,047.11 ($34,500/
$27,047.11 x 100 = 127.5 percent). Therefore, we believe the
remed[emacr][supreg] System meets the first cost significance test.
The second cost significance test, at Sec. 419.66(d)(2), provides
that the estimated average reasonable cost of the devices in the
category must exceed the cost of the device-related portion of the APC
payment amount for the related service by at least 25 percent, which
means that the device cost needs to be at least 125 percent of the
offset amount (the device-related portion of the APC found on the
offset list). The estimated average reasonable cost of $34,500 for the
remed[emacr][supreg] System exceeds the cost of the device-related
portion of the proposed APC payment amount for the related service of
$11,089 by 311 percent ($34,500-$11,089) x 100 = 311 percent).
Therefore, we believe that the remed[emacr][supreg] System meets the
second cost significance test.
The third cost significance test, at Sec. 419.66(d)(3), requires
that the difference between the estimated average reasonable cost of
the devices in the category and the portion of the APC payment amount
for the device must exceed 10 percent of the APC payment amount for the
related service. The difference between the estimated average
reasonable cost of $34,500 for the remed[emacr][supreg] System and the
portion of the proposed APC payment amount for the device of $11,089
exceeds the APC payment amount for the related service of $27,047.11 by
87 percent (($34,500/11,089)/$27,047.11 x 100 = 86.6 percent).
Therefore, we believe that the remed[emacr][supreg] System meets the
third cost significance test.
We invited public comments on whether the remed[emacr][supreg]
System meets the device pass-through payment criteria discussed in this
section, including the cost criteria for device pass-through payment.
Comment: The manufacturer of the remed[emacr][supreg] System
believed that the remed[emacr][supreg] System meets the cost criterion
for device pass-through payment status.
[[Page 58939]]
Response: We appreciate the manufacturer's input.
After consideration of the public comments we received, we are
approving the remed[emacr][supreg] System for device pass-through
payment status for CY 2019.
(6) Restrata[supreg] Wound Matrix
Acera Surgical, Inc. submitted an application for a new device
category for transitional pass-through payment status for
Restrata[supreg] Wound Matrix. Restrata[supreg] Wound Matrix is a
sterile, single-use product intended for use in local management of
wounds. According to the applicant, Restrata[supreg] Wound Matrix is a
soft, white, conformable, nonfriable, absorbable matrix that works as a
wound care management product by acting as a protective covering for
wound defects, providing a moist environment for the body's natural
healing process to occur. Restrata[supreg] Wound Matrix is made from
synthetic biocompatible materials and was designed with a nanoscale
nonwoven fibrous structure with high porosity, similar to native
extracellular matrix. Restrata[supreg] Wound Matrix allows for cellular
infiltration, new tissue formation, neovascularization, and wound
healing before completely degrading via hydrolysis. The product permits
the ingress of cells and soft tissue formation in the defect space/
wound bed. Restrata[supreg] Wound Matrix can be used to manage wounds,
including: Partial and full-thickness wounds, pressure sores/ulcers,
venous ulcers, diabetic ulcers, chronic vascular ulcers, tunneled/
undermined wounds, surgical wounds (for example, donor site/grafts,
post-laser surgery, post-Mohs surgery, podiatric wounds, wound
dehiscence), trauma wounds (for example, abrasions, lacerations,
partial thickness burns, skin tears), and draining wounds.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, Restrata[supreg] Wound Matrix is a product
that is integral to the service provided, is used for one patient only,
comes in contact with human skin, and is surgically inserted into the
patient. The description of Restrata[supreg] Wound Matrix shows the
product meets the device eligibility requirements of Sec. 419.66(b)(4)
because Restrata[supreg] Wound Matrix is not an instrument, apparatus,
implement, or item for which depreciation and financing expenses are
recovered, and it is not a supply or material. We invited public
comment on whether Restrata[supreg] Wound Matrix meets the eligibility
criteria.
We did not receive any public comments on whether Restrata[supreg]
Wound Matrix meets the eligibility criteria. However, after the CY 2019
OPPS/ASC proposed rule was released, CMS determined that
Restrata[supreg] Wound Matrix is an alginate dressing described with
the HCPCS code series A6196 through A6198 (Alginate or other fiber
gelling dressing, wound cover, sterile). Alginate dressings are not
skin substitute products and are considered to be a supply. According
to the eligibility criterion, a supply or material is not eligible to
receive device pass-through payment. Based on this determination, we
were required to reassess our initial view on whether or not
Restrata[supreg] Wound Matrix meets the eligibility criterion for
device pass-through payment status.
After consideration of all of the information we have received, we
have determined that Restrata[supreg] Wound Matrix is an alginate
dressing and is a supply, and the product does not meet the eligibility
criterion for device pass-through payment status. Because we have
determined that Restrata[supreg] Wound Matrix does not meet the basic
eligibility criterion for transitional pass-through payment status, we
have not evaluated this product to determine whether it meets the other
criteria required for transitional pass-through payment for devices;
that is, the newness criterion, the substantial clinical improvement
criterion, and the cost criterion.
After consideration of the public comments we received, we are not
approving device pass-through payment status for Restrata[supreg] Wound
Matrix for CY 2019.
(7) SpaceOAR[supreg] System
Augmenix, Inc. submitted an application for a new device category
for transitional pass-through payment status for the SpaceOAR[supreg]
System. According to the applicant, the SpaceOAR[supreg] System is a
polyethylene glycol hydrogel spacer that temporarily positions the
anterior rectal wall away from the prostate to reduce the radiation
delivered to the anterior rectum during prostate cancer radiotherapy
treatment. The applicant stated that the SpaceOAR[supreg] System
reduces some of the side effects associated with radiotherapy, which
are collectively known as ``rectal toxicity'' (diarrhea, rectal
bleeding, painful defecation, and erectile dysfunction, among other
conditions). The applicant stated that the SpaceOAR[supreg] is
implanted several weeks before radiotherapy; the hydrogel maintains
space between the prostate and rectum for the entire course of
radiotherapy and is completely absorbed by the patient's body within 6
months.
With respect to the newness criterion at Sec. 419.66(b)(1), FDA
granted a De Novo request classifying the SpaceOAR[supreg] System as a
class II device under section 513(f)(2) of the Federal Food, Drug, and
Cosmetic Act on April 1, 2015. We received the application for a new
device category for transitional pass-through payment status for the
SpaceOAR[supreg] System on June 1, 2017, which is within 3 years of the
date of the initial FDA approval or clearance. We invited public
comments on whether the SpaceOAR[supreg] System meets the newness
criterion.
Comment: The manufacturer of SpaceOAR[supreg] System believed this
device meets the eligibility criteria for device pass-through payment,
but did not specifically comment on the newness criterion.
Response: We appreciate the manufacturer's input.
After consideration of the public comments we received, we believe
that the SpaceOAR[supreg] System meets the newness criterion for device
pass-through payment status.
With respect to the eligibility criterion at Sec. 419.66(b)(3),
according to the applicant, the SpaceOAR[supreg] System is integral to
the service provided, is used for one patient only, comes in contact
with human skin, and is applied in or on a wound or other skin lesion.
The applicant also claimed the SpaceOAR[supreg] System meets the device
eligibility requirements of Sec. 419.66(b)(4) because it is not an
instrument, apparatus, implement, or item for which depreciation and
financing expenses are recovered, and it is not a supply or material
furnished incident to a service.
The criteria for establishing new device categories are specified
at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1),
provides that CMS determines that a device to be included in the
category is not appropriately described by any of the existing
categories or by any category previously in effect, and was not being
paid for as an outpatient service as of December 31, 1996. We have not
identified an existing pass-through payment category that describes the
SpaceOAR[supreg] System. The applicant suggested a category descriptor
for the SpaceOAR[supreg] System of ``Absorbable perirectal spacer''. We
invited public comments on this issue.
Comment: The manufacturer of the SpaceOAR[supreg] System believed
that this device meets the eligibility criteria for device pass-through
payment status, but did not specifically comment on whether a current
pass-through payment
[[Page 58940]]
category appropriately describes this device.
Response: We appreciate the manufacturer's input.
After consideration of the public comments we received, we believe
that there is no existing pass-through payment category that
appropriately describes the SpaceOAR[supreg] System and that the
SpaceOAR[supreg] System meets the eligibility criterion.
The second criterion for establishing a device category, at Sec.
419.66(c)(2), provides that CMS determines that a device to be included
in the category has demonstrated that it will substantially improve the
diagnosis or treatment of an illness or injury or improve the
functioning of a malformed body part compared to the benefits of a
device or devices in a previously established category or other
available treatment. With respect to this criterion, the applicant
submitted studies which discussed the techniques for using hydrogel
spacers to limit radiation exposure to the rectum in prostate
radiotherapy. In support of its assertion that SpaceOAR is a
substantial clinical improvement, the applicant submitted several
studies that examined the effect that the SpaceOAR[supreg] System had
on outcomes such as rectal dose, radiation toxicity, and quality of
life declines after image guided intensity modulated radiation therapy
for prostate cancer. Articles by Mariados et al.\25\ and Hamstra et
al.\26\ discussed the results of a single-blind phase III trial of
image guided intensity modulated radiation therapy with 15 months and 3
years of follow-up, respectively. In the studies, a total of 222 men
were randomized 2:1 to the spacer or control group and received 79.2 Gy
in 1.8-Gy fractions to the prostate with or without the seminal
vesicles.
---------------------------------------------------------------------------
\25\ Mariados N, et al. (2015). Hydrogel Spacer Prospective
Multicenter Randomized Controlled Pivotal Trial: Dosimetric and
Clinical Effects of Perirectal Spacer Application in Men Undergoing
Prostate Image Guided Intensity Modulated Radiation Therapy. Int J
Radiat Oncol Biol Phys.92(5):971-977. Epub 2015 Apr 23. PMID:
26054865.
\26\ Hamstra DA, et al. (2017). Continued Benefit to Rectal
Separation for Prostate Radiation Therapy: Final Results of a Phase
III Trial. Int J Radiat Oncol Biol Phys. Apr 1;97(5):976-985. Epub
2016 Dec 23. PMID:28209443.
---------------------------------------------------------------------------
The results of this study \27\ showed that after 3 years, compared
with the control group, the participants who received the
SpaceOAR[supreg] System injection had a statistically significant
smaller volume of the rectum receiving a threshold radiation exposure,
which was the primary effectiveness endpoint. The results also showed
that in an extended follow up period, the control group experienced
larger declines in bowel and urinary quality of life compared to
participants who received the SpaceOAR[supreg] System treatment.
Lastly, in an extended follow-up period, the probability of grade >=1
rectal toxicity was decreased in the SpaceOAR[supreg] System arm (9
percent control group, 2 percent SpaceOAR[supreg] System group, p <.03)
and no >= grade 2 rectal toxicity was observed in the SpaceOAR[supreg]
System arm. However, the control arm had low rates of rectal toxicity
in general. The results of this 3-year follow-up of these participants
showed that the differences identified in the 15-month follow-up study
were maintained or increased.\28\
---------------------------------------------------------------------------
\27\ Ibid.
\28\ Ibid.
---------------------------------------------------------------------------
The applicant also included a secondary analysis of the phase III
trial data which showed that participants who received lower radiation
doses to the penile bulb, associated with the SpaceOAR[supreg] System
injection, reported similar erectile function compared with the control
group based on patient-reported sexual quality of life.\29\ A 2017
retrospective cohort study by Pinkawa et al.\30\ evaluated quality of
life changes up to 5 years after RT for prostate cancer with the
SpaceOAR[supreg] System and showed that 5 years after radiation
therapy, no patients who received the SpaceOAR[supreg] System reported
moderate/big problems with bowel urgency, losing control of stools, or
with bowel habits overall. However, there were no statistically
significant differences in mean score changes for urinary, bowel, or
sexual bother between the percentage of participants in the
SpaceOAR[supreg] System and control groups at either 1\1/2\ years or 5
years postradiation therapy. CMS had concerns regarding the phase III
trial include inclusion of only low to moderate risk prostate cancer in
the study population and failing to use a clinical outcome as a primary
endpoint, although the purpose of the spacer is to reduce the side
effects of undesired radiation to the rectum including bleeding,
diarrhea, fistula, pain, and/or stricture. Notwithstanding
acknowledgement that rectal complications may be reduced using
biodegradable biomaterials placed to increase the distance between the
rectum and the prostate, it is not clear that the SpaceOAR[supreg]
System is superior to existing alternative biodegradable biomaterials
currently utilized for spacing in the context of prostate radiotherapy.
---------------------------------------------------------------------------
\29\ Hamstra, DA et al. (2018) Sexual quality of life following
prostate intensity modulated radiation therapy (IMRT) with a rectal/
prostate spacer: Secondary analysis of a phase 3 trial. Practical
Radiation Oncology, 8, e7-e15.
\30\ Pinkawa, M. et al. (2017). Quality of Life after Radiation
Therapy for Prostate Cancer With a Hydrogel Spacer: Five Year
Results. Int J Radiat Oncol Biol Phys., Vol. 99, No. 2, pp. 374e377.
---------------------------------------------------------------------------
Based on the evidence submitted with the application, we have
insufficient evidence that the SpaceOAR[supreg] System provides a
substantial clinical improvement over other similar products. We
invited public comments on whether the SpaceOAR[supreg] System meets
the substantial clinical improvement criterion.
Comment: The manufacturer of the SpaceOAR[supreg] System identified
several points which supported this device meeting the substantial
clinical improvement criterion. In response to the statement in the
proposed rule that the control arm of the phase III trial had low rates
of rectal toxicity in general, the manufacturer noted that the low
rates of rectal toxicity in the control arm of the study were due to:
(1) The radiation plans in both the treatment and control groups were
evaluated and approved by an independent core laboratory for compliance
to protocol guidelines, which led to low toxicity in the control group
relative to standard practice; and (2) all study dose plans used CT and
MRI image fusion to improve plan accuracy, while typical plans only use
CT imaging. The manufacturer noted that patients in the
SpaceOAR[supreg] System group still had statistically significant
reductions in rectal toxicity and improvements in quality of life in
comparison to the control group.
The manufacturer disagreed with a statement in the proposed rule
where CMS indicated that the SpaceOAR[supreg] System patients
``reported similar erectile function compared with the control group
based on patient-reported sexual quality of life.'' The commenter noted
that the patient reported quality of life analysis of baseline potent
men at three years found that men treated with the SpaceOAR[supreg]
System had improved scores on ``erections sufficient for intercourse''
as well as better scores on seven of the 13 items regarding sexual
function.\31\
---------------------------------------------------------------------------
\31\ Hamstra, DA et al. (2018) Sexual quality of life following
prostate intensity modulated radiation therapy (IMRT) with a rectal/
prostate spacer: Secondary analysis of a phase 3 trial. Practical
Radiation Oncology, 8, e7-e15.
---------------------------------------------------------------------------
In response to the statement in the proposed rule that the
submitted studies included only low to moderate risk prostate cancer in
the study population and failed to use a clinical outcome as a primary
endpoint, the manufacturer noted that the phase III trial design
specifically selected a low and
[[Page 58941]]
intermediate risk prostate cancer population to better allow for a
safety determination. The manufacturer also noted that the significant
reductions in late rectal toxicity and improvements in quality of life
at 3 years demonstrate that the clinical benefits of this device are
better than anticipated when the study was originally developed.
In response to the statement in the proposed rule that it was
unclear that the SpaceOAR[supreg] System was superior to existing
alternative spacers used for prostate radiotherapy, the manufacturer
noted that the SpaceOAR[supreg] System is the only prostate-rectum
spacer authorized for marketing by the FDA for use in prostate
radiotherapy. The manufacturer indicated that the closest comparable
product is the endorectal balloon, and that a study comparing the
rectal-spacing capabilities of these two products during prostate
cancer stereotactic body radiation therapy found significantly less
rectal radiation dose in the patients who received the SpaceOAR
System[supreg].\32\ The manufacturer noted a study of these two
products during proton radiotherapy found that, with the
SpaceOAR[supreg] System, a larger area around the prostate could be
radiated while still significantly reducing the rectum radiation
dose.\33\ The manufacturer indicated that several studies found that
prostate stability was comparable using these two
products.34 35 36 The manufacturer also noted that
reductions in placement error and patient comfort favors the
SpaceOAR[supreg] System compared to endorectal balloons.\37\ The
manufacturer asserted that the combined impacts of these results make
the SpaceOAR[supreg] System a substantial clinical improvement over
endorectal balloons.
---------------------------------------------------------------------------
\32\ Jones, RT et al. Oosimetric comparison of rectal-
sparingcapabilities of rectal balloon vs inje ctab:e spacer gelin
stereotactic body radiation therapy forprostate cancer: lessons
learned from prospective trials. Medical Dosimetry, Volume 42, Issue
4, winter 2017, Pages 341-347.
\33\ Fagundes MA et al, Evolving Rectal Sparing In Flducfal
BasedImage Guided Proton Therapy for Localized Prostate
Cancer. International Journal of Radiation Oncology
Biology Physics, Vol. 96,
Issue 2, E279, 2016.
\34\ Hedrick SG et al. A comparison between hydrogel spacer and
endorectal balloon: An analysis of lntrafraction prostate motion
during proton therapy. J. Appl. Clln. Med. Phys., Vol. 18, pp. 106-
112, 2017.
\35\ Su Z et al. Hvdrogel Spacer Or Gas Release Rectal Balloon,
a Comparative Study of Prostate lntrafraction Motion in Proton
Therapy. Med Phys. 201S;45(6):el 4l.
\36\ Rendall R. Comparison of hydrogel spacer and rectal
immobilization on Intra-fraction motion efficiency using Image
guidance prostate proton therapy. PTCOG 55,PS02, May 27, 2016.
\37\ EI-Bassiounl et al. Target motion variability and on-line
positioning accuracy during external beam radiation therapy of
prostate cancer with an endorectal balloon device. Strahlenther
Onkol. 2006 Sep;1S2(9):53l[middot]6.
---------------------------------------------------------------------------
Several commenters, representing various oncological and urologic
specialty societies, believed that the SpaceOAR[supreg] System meets
the substantial clinical improvement criterion. These commenters noted
that there were no other alternative biodegradable biomaterials with
FDA marketing authorization currently utilized for spacing in the
context of prostate radiotherapy and that this device provided
physicians with an option to help ensure patients are provided with the
best clinical outcomes with the fewest adverse effects.
Response: We appreciate the manufacturer's and the commenters'
input. We reviewed these comments and the associated literature on this
topic and found that the application did not support that the
SpaceOAR[supreg] System demonstrated a substantial clinical improvement
as a prostate-rectum spacer for men receiving prostate radiotherapy
treatment. While the studies provided by the applicant do indicate that
the device provides a dose reduction at the rectum during IMRT for
prostate cancer, we found the clinical results of these studies were
equivocal and did not provide definitive evidence of substantial
clinical improvement of radiation toxicity and quality of life scores
after radiation therapy.
In response to our concern that the control arm of the study had
very low rates of rectal toxicity (the manufacturers quoted rates of
late rectal toxicity of between 14 and 25 percent for studies without
the use of the SpaceOAR[supreg] System), the commenter responded that
the low rates of rectal toxicity in the control arm of the study were
due to (1) the radiation plans in both the treatment group and the
control group were evaluated and approved by an independent core
laboratory for compliance with protocol guidelines, which led to low
toxicity in the control group relative to standard practice, and (2)
all study dose plans used CT and MRI image fusion to improve plan
accuracy, while typical plans only use CT imaging. The commenter
further noted that, despite low rates of rectal toxicity in the control
arm of the phase III trial, patients in the SpaceOAR[supreg] System
group still had statistically significant reductions in rectal toxicity
and improvements in quality of life in comparison to the control group.
We are still concerned that the low rates of rectal toxicity
demonstrated in the control group may not support claims of substantial
clinical improvement of the SpaceOAR[supreg] System. For example, the
rates of late grade one or higher rectal toxicity in the control
population in the clinical trials submitted by the applicant were 7
percent \38\ and 9.2 percent,\39\ respectively. The rates of late grade
one or higher rectal toxicity in the SpaceOAR[supreg] System groups in
the clinical trials submitted by the applicant were 2 percent in both
studies.40 41 We note that image guided radiation therapy
has drastically improved radiation dose effects, and conventional
radiotherapy is well tolerated by the vast majority of patients.\42\ It
remains unclear if further reduction in radiation dose effects with the
SpaceOAR[supreg] System translates to a substantial clinical
improvement that is maintained over time when compared to patients who
did not receive the SpaceOAR[supreg] System. The applicant's
explanation that all study dose plans used CT and MRI image fusion to
improve plan accuracy, while typical plans only use CT imaging is not
supported in the literature, which states that IMRT is considered the
standard of care in RT treatment centers; in both the United States and
Europe, it has largely replaced older forms of 3D-CRT.43 44
The response that the radiation plans in both the treatment group and
the control group were evaluated and approved by an independent core
laboratory for compliance to protocol guidelines, which led to low
toxicity in the control group relative to standard practice, further
calls into question the direct role of the SpaceOAR[supreg] System in
reducing toxicity versus more precise planning
[[Page 58942]]
protocols and the importance of adhering to guidance protocols.
---------------------------------------------------------------------------
\38\ Mariados N, et al. (2015). Hydrogel Spacer Prospective
Multicenter Randomized Controlled Pivotal Trial: Dosimetric and
Clinical Effects of Perirectal Spacer Application in Men Undergoing
Prostate Image Guided Intensity Modulated Radiation Therapy. Int J
Radiat Oncol Biol Phys. 92(5):971-977. Epub 2015 Apr 23. PMID:
26054865.
\39\ Hamstra DA, et al. (2017). Continued Benefit to Rectal
Separation for Prostate Radiation Therapy: Final Results of a Phase
III Trial. Int J Radiat Oncol Biol Phys. Apr 1;97(5):976-985. Epub
2016 Dec 23. PMID:28209443.
\40\ Ibid.
\41\ Ibid.
\42\ Uhl et al. (2014). Absorbable hydrogel spacer use in men
undergoing prostate cancer radiotherapy: 12 month toxicity and
proctoscopy results of a prospective multicenter phase II trial.
Radiation Oncology, 9:96.
\43\ Sheets NC, Goldin GH, Meyer AM, Wu Y, Chang Y, St[uuml]rmer
T, Holmes JA, Reeve BB, Godley PA, Carpenter WR, Chen RC. (2012).
Intensity-modulated radiation therapy, proton therapy, or conformal
radiation therapy and morbidity and disease control in localized
prostate cancer. JAMA.; 307(15):1611.
\44\ Bauman G, Rumble RB, Chen J, Loblaw A, Warde P, Members of
the IMRT Indications Expert Panel.(2012). Intensity-modulated
radiotherapy in the treatment of prostate cancer. Clin Oncol (R Coll
Radiol), Sep;24(7):461-73. Epub 2012 Jun 4.
---------------------------------------------------------------------------
As discussed further below, we continue to have concerns regarding
the applicant's claims that the statistically significant reduction in
late rectal toxicity as well as the improvements in QOL scores lend to
substantial clinical improvement, despite the relatively low rates of
rectal toxicity in the control group. We note that the data showing
reduction in rectal toxicity and improvements in quality are from
studies that were not designed with primary clinical outcomes to show
superiority, but rather were designed primarily to evaluate the
threshold of radiation exposure to the rectum and adverse events
related to the procedure. Consequently, the studied clinical outcomes
have many differences that did not meet statistical significance or
were not sustained over time.
In the pivotal trial,\45\ no differences in acute rectal or urinary
toxicity from the time of the procedure through the 3-month visit were
observed between the SpaceOAR[supreg] System group and the control
group. In this study,\46\ there was a statistically significant
difference noted between the SpaceOAR[supreg] System group and the
control group in late rectal toxicity (3 to 15 months after the
procedure). In the SpaceOAR[supreg] System group, 2 percent of the
patients (n=3) experienced late rectal toxicity, while 7 percent of
patients in the control group (n=5) experienced late rectal toxicity.
There was one incidence of the more clinically serious (grade 3) late
rectal toxicity reported in the control group and no incidence of grade
4 rectal toxicity in either group.
---------------------------------------------------------------------------
\45\ Mariados N, et al. (2015). Hydrogel Spacer Prospective
Multicenter Randomized Controlled Pivotal Trial: Dosimetric and
Clinical Effects of Perirectal Spacer Application in Men Undergoing
Prostate Image Guided Intensity Modulated Radiation Therapy. Int J
Radiat Oncol Biol Phys. 92(5):971-977. Epub 2015 Apr 23. PMID:
26054865.
\46\ Ibid.
---------------------------------------------------------------------------
Even at 3 years after the procedure, the control arm had very low
rates of rectal toxicity. The 3-year incidence of grade >=1 rectal
toxicity was 9.2 percent (approximately 4 patients) in the control
group versus 2.0 percent (approximately 2 patients) in the
SpaceOAR[supreg] System group. The cumulative rate of grade >=2 rectal
bowel toxicity was 6 percent at 3 years in the control arm, with no
cases of grade >=2 rectal toxicity in the SpaceOAR[supreg] System
group.\47\
---------------------------------------------------------------------------
\47\ Hamstra DA, et al. (2017). Continued Benefit to Rectal
Separation for Prostate Radiation Therapy: Final Results of a Phase
III Trial. Int J Radiat Oncol Biol Phys. Apr 1;97(5):976-985. Epub
2016 Dec 23. PMID:28209443.
---------------------------------------------------------------------------
With regard to corresponding improvements in quality of life, the
pivotal trial,\48\ at 3 months, showed there was no statistically
significant difference between the SpaceOAR[supreg] System group and
the control group in mean changes in bowel and urinary quality of life
domains. Although, at 6, 12, and 15 months, a lower percentage of
patients in the SpaceOAR[supreg] System group reported declines in
bowel quality of life compared to those in the control group, at 15
months, 11.6 percent and 21.4 percent of the SpaceOAR[supreg] System
patients and the control group patients, respectively, experienced 10-
point declines in bowel quality of life. However, this difference was
not statistically significant. In terms of urinary quality of life at 6
months, a higher percentage of patients in the control group (22.2
percent) had 10-point urinary declines in comparison to the the
SpaceOAR[supreg] System group (8.8 percent). However, again the
durability of these improvements disappeared over time because there
was no difference between the SpaceOAR[supreg] System group and the
control group in urinary quality of life decline at 12 and 15 months
follow-ups.\49\
---------------------------------------------------------------------------
\48\ Ibid.
\49\ Ibid.
---------------------------------------------------------------------------
The commenter claimed that when followed up at 3 years, patients in
the phase III trial receiving the SpaceOAR[supreg] System prior to
their prostate cancer radiotherapy demonstrated significant rectal
(bowel), urinary, and sexual benefit. However, we found the data to be
inconsistent and unreliable to support this claim. Specifically, in the
study including 3 years of follow-up data,\50\ quality of life was
examined using the Expanded Prostate Cancer Index Composite (EPIC)
questionnaire, a comprehensive instrument designed to evaluate patient
function and bother after prostate cancer treatment. For the average
bowel summary score, both the SpaceOAR[supreg] System group and the
control group had similar acute declines in bowel quality of life
between enrollment and 3 months after treatment. Also, at 3 months
after treatment, there were no patients in the control group that
reported acute bowel pain while 6.8 percent of the SpaceOAR[supreg]
System patients reported acute bowel pain.
---------------------------------------------------------------------------
\50\ Hamstra DA, et al. (2017). Continued Benefit to Rectal
Separation for Prostate Radiation Therapy: Final Results of a Phase
III Trial. Int J Radiat Oncol Biol Phys. Apr 1;97(5):976-985. Epub
2016 Dec 23. PMID:28209443.
---------------------------------------------------------------------------
In this study, the proportion of patients with measurable changes
in bowel quality of life meeting the minimally important difference
(MID) threshold (5 points) or twice that threshold (10 points) was
evaluated. According to the authors, these thresholds give an idea of
when patient-reported symptoms are likely to be clinically meaningful
to prostate cancer patients, with a 10-point decline indicating a more
serious clinical effect. From 6 months through 3 years, more men in the
control group had a MID in bowel quality of life meeting the threshold
of 5 points, but no difference was found for a 10-point decline. At 3
years, the SpaceOAR[supreg] System group patients were less likely than
the control group patients to have a detectable decline in bowel
quality of life for both MID thresholds (5-point: 41 percent (control)
versus 14 percent (the SpaceOAR[supreg] System; 10-point: 21 percent
(control) versus 5 percent (the SpaceOAR[supreg] System).\51\ However,
more than 30 percent of the patients in both the SpaceOAR[supreg]
System group (n=55) and the control group (n=27) were lost by the 3-
year follow-up and the follow-up data were taken from volunteer centers
that decided to continue in the study. It is unclear if the differences
observed at 3 years are due to the large number of respondents who did
not participate at year 3, resulting in a smaller sample size and more
unreliable data. For example, regarding urinary quality of life, when
averaged over the entire follow-up duration, no significant difference
was found in the mean urinary quality of life between the two groups.
However, at the 3-year point, a statistically significant difference
was found in urinary quality of life favoring the SpaceOAR[supreg]
System group compared with the control group.
---------------------------------------------------------------------------
\51\ Ibid.
---------------------------------------------------------------------------
The researchers in this study also assessed the percent of patients
with moderate or big problems in quality of life. The researchers found
that, at 3 years, only one item showed a statistically significant
difference between the treatment groups (moderate to big bother for
urinary frequency: The control group of 18 percent versus the
SpaceOAR[supreg] System group of 5 percent; P <.05). At 3 years after
treatment, 2.2 percent of the men in the SpaceOAR[supreg] System group
evaluated their overall bowel function as a big or moderate bother.
This compares to 4.4 percent in the control group, which was not a
statistically significant difference. None of the components of rectal
bother were statistically significantly better in the men who received
the SpaceOAR[supreg] System. In contrast, regarding the question of
bowel pain, none of the control group patients reported a moderate or
big bother after 3 years, while 1.1 percent of the SpaceOAR[supreg]
System group patients reported that
[[Page 58943]]
bowel pain was a moderate or big bother.\52\ The study by Pinkawa et
al.\53\ looking at 1\1/2\ and 5 year results comparing quality of life
of patients pretreated with hydrogel and controls further demonstrates
inconsistency in looking at substantial improvements with the
SpaceOAR[supreg] System. In this study percentages of big problems with
bowel urgency, control of stools and bowel habitus overall favored
SpaceOAR at 1\1/2\ years. However, only differences in percentage of
problems of bowel urgency remained after the 5-year follow-up. Also, no
statistically significant difference was shown between the
SpaceOAR[supreg] System group and the control group in comparing mean
bowl bother scores at 1\1/2\ years and 5 years after radiation therapy.
---------------------------------------------------------------------------
\52\ Ibid.
\53\ Pinkawa, M. et al. (2017). Quality of Life after Radiation
Therapy for Prostate Cancer With a Hydrogel Spacer: Five Year
Results. Int J Radiat Oncol Biol Phys., Vol. 99, No. 2, pp. 374e377.
---------------------------------------------------------------------------
The manufacturer stated that CMS incorrectly stated in the proposed
rule that the SpaceOAR[supreg] System patients reported similar
erectile function compared with the control group based on patient-
reported sexual quality of life. The manufacturer is correct; in a
study by Hamstra et al.,\54\ the patient-reported quality of life
analysis of baseline potent men found that men in this group treated
with the SpaceOAR[supreg] System had improved ``erections sufficient
for intercourse'' as well as statistically significant higher scores on
7 of 13 items in the sexual domain in comparison to the control group
at 3 years. However, at baseline, sexual functioning in the study was
low; only 41 percent of patients had no sexual dysfunction at baseline
(EPIC sexual quality of life scores >60, n=88). When comparing men with
poor baseline sexual quality of life (EPIC score <=60, n=125), there
was no difference between the SpaceOAR[supreg] System group and the
control group in function, bother, or sexual summary score at the 3-
year follow up.\55\ We also note that the Pinkawa \56\ study shows that
more men with the SpaceOAR[supreg] System reported erections firm
enough for intercourse to be statistically significant. However, again
the same study reported the changes in sexual quality of life bother
score were not statistically different between the two groups at 5
years. Again, along with the instability of the 3-year data stated
above, the fact that the data are inconsistent and not supported by the
long-term quality of life data, we are unable to substantiate
substantial clinical improvement.
---------------------------------------------------------------------------
\54\ Hamstra, DA et al. (2018) Sexual quality of life following
prostate intensity modulated radiation therapy (IMRT) with a rectal/
prostate spacer: secondary analysis of a phase 3 trial. Practical
Radiation Oncology, Vol. 8, e7-e15.
\55\ Ibid.
\56\ Pinkawa, M. et al. (2017). Quality of Life after Radiation
Therapy for Prostate Cancer With a Hydrogel Spacer: Five Year
Results. Int J Radiat Oncol Biol Phys., Vol. 99, No. 2, pp. 374e377.
---------------------------------------------------------------------------
We appreciate the comments received from the urological and the
oncological community as well members of the public in support of this
technology. The SpaceOAR[supreg] System device effectively displaces
the anterior wall reducing the dose of radiation the rectum receives
during radiation treatment for prostate cancer. However, after
consideration of the public comments and the application materials we
received, at this time we do not believe that the SpaceOAR[supreg]
System meets the substantial clinical improvement criterion to receive
device pass-through payment. The submitted studies were not designed to
show primary clinical outcomes, and consequently the data on toxicity
and quality of life improvement are inconsistent and fail to show
enduring improvements. It is difficult to attribute the reductions in
late rectal toxicity solely to the device, given improvements in
radiation therapy and planning as well as the large number of
nonresponders at 3 years postradiation and the 3-year follow-up data
were being taken from volunteer centers that decided to continue in the
study. We note that many favorable clinical outcomes were not
statistically significant but trended in favor of the SpaceOAR[supreg]
System group. We agree with many authors that seem to suggest that the
greatest utility of the SpaceOAR[supreg] System will be its use in
populations at greatest risk for radiation toxicity such as
hypofractionated treatment or other dose intensifications.
The third criterion for establishing a device category, at Sec.
419.66(c)(3), requires us to determine that the cost of the device is
not insignificant, as described in Sec. 419.66(d). Section 419.66(d)
includes three cost significance criteria that must each be met. The
applicant provided the following information in support of the cost
significance requirements. The applicant stated that the
SpaceOAR[supreg] System would be reported with CPT code 0438T (which
was deleted and replaced with CPT code 55874, effective January 1,
2018). CPT code 0438T was assigned to APC 5374 (Level 4 Urology and
Related Services). To meet the cost criterion for device pass-through
payment, a device must pass all three tests of the cost criterion for
at least one APC. For our calculations, we used APC 5374, which had a
CY 2017 payment rate of $2,542.56 at the time the application was
received. Beginning in CY 2017, we calculate the device offset amount
at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT
code 0438T had a device offset amount of $587.07 at the time the
application was received. According to the applicant, the cost of the
SpaceOAR[supreg] System was $2,850.
Section 419.66(d)(1), the first cost significance requirement,
provides that the estimated average reasonable cost of devices in the
category must exceed 25 percent of the applicable APC payment amount
for the service related to the category of devices. The estimated
average reasonable cost of $2,850 for the SpaceOAR[supreg] System
exceeds 112 percent of the applicable APC payment amount for the
service related to the category of devices of $2,542.56 ($2850/
$2,542.56 x 100 = 112 percent). Therefore, we believe the
SpaceOAR[supreg] system meets the first cost significance test.
The second cost significance test, at Sec. 419.66(d)(2), provides
that the estimated average reasonable cost of the devices in the
category must exceed the cost of the device-related portion of the APC
payment amount for the related service by at least 25 percent, which
means that the device cost needs to be at least 125 percent of the
offset amount (the device-related portion of the APC found on the
offset list). The estimated average reasonable cost of $2,850 for the
SpaceOAR[supreg] System exceeds the cost of the device-related portion
of the APC payment amount for the related service of $587.07 by 485
percent ($2,850/$587.07) x 100 = 485 percent). Therefore, we believe
that the SpaceOAR[supreg] System meets the second cost significance
test.
The third cost significance test, at Sec. 419.66(d)(3), requires
that the difference between the estimated average reasonable cost of
the devices in the category and the portion of the APC payment amount
for the device must exceed 10 percent of the APC payment amount for the
related service. The difference between the estimated average
reasonable cost of $2,850 for the SpaceOAR[supreg] System and the
portion of the APC payment amount for the device of $587.07 exceeds the
APC payment amount for the related service of $2,542.56 by 89 percent
(($2,850-$587.07)/$2,542.56 x 100 = 89 percent). Therefore, we believe
that the SpaceOAR[supreg] System meets the third cost significance
test.
We invited public comments on whether the SpaceOAR[supreg] System
meets the device pass-through payment
[[Page 58944]]
criteria discussed in this section, including the cost criteria.
Comment: The manufacturer of the SpaceOAR[supreg] System believed
this device meets the eligibility criteria for device pass-through
payment status, but did not specifically comment on whether this device
meets the cost criterion.
Response: We appreciate the manufacturer's input.
After consideration of the public comments we received, we believe
that SpaceOAR[supreg] System meets the cost criterion for device pass-
through payment status.
After consideration of the public comments we received, we believe
that SpaceOAR[supreg] System does not qualify for device pass-through
payment status because it does not meet the substantial clinical
improvement criterion, although it may have clinical benefit for
certain patients. As such, we are not approving the application for
device pass-through payment status for the SpaceOAR[supreg] System for
CY 2019.
B. Device-Intensive Procedures
1. Background
Under the OPPS, prior to CY 2017, device-intensive status for
procedures was determined at the APC level for APCs with a device
offset percentage greater than 40 percent (79 FR 66795). Beginning in
CY 2017, CMS began determining device-intensive status at the HCPCS
code level. In assigning device-intensive status to an APC prior to CY
2017, the device costs of all the procedures within the APC were
calculated and the geometric mean device offset of all of the
procedures had to exceed 40 percent. Almost all of the procedures
assigned to device-intensive APCs utilized devices, and the device
costs for the associated HCPCS codes exceeded the 40-percent threshold.
The no cost/full credit and partial credit device policy (79 FR 66872
through 66873) applies to device-intensive APCs and is discussed in
detail in section IV.B.4. of this final rule with comment period. A
related device policy was the requirement that certain procedures
assigned to device-intensive APCs require the reporting of a device
code on the claim (80 FR 70422). For further background information on
the device-intensive APC policy, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70421 through 70426).
a. HCPCS Code-Level Device-Intensive Determination
As stated earlier, prior to CY 2017, the device-intensive
methodology assigned device-intensive status to all procedures
requiring the implantation of a device that were assigned to an APC
with a device offset greater than 40 percent and, beginning in CY 2015,
that met the three criteria listed below. Historically, the device-
intensive designation was at the APC level and applied to the
applicable procedures within that APC. In the CY 2017 OPPS/ASC final
rule with comment period (81 FR 79658), we changed our methodology to
assign device-intensive status at the individual HCPCS code level
rather than at the APC level. Under this policy, a procedure could be
assigned device-intensive status regardless of its APC assignment, and
device-intensive APCs were no longer applied under the OPPS or the ASC
payment system.
We believe that a HCPCS code-level device offset is, in most cases,
a better representation of a procedure's device cost than an APC-wide
average device offset based on the average device offset of all of the
procedures assigned to an APC. Unlike a device offset calculated at the
APC level, which is a weighted average offset for all devices used in
all of the procedures assigned to an APC, a HCPCS code-level device
offset is calculated using only claims for a single HCPCS code. We
believe that this methodological change results in a more accurate
representation of the cost attributable to implantation of a high-cost
device, which ensures consistent device-intensive designation of
procedures with a significant device cost. Further, we believe a HCPCS
code-level device offset removes inappropriate device-intensive status
for procedures without a significant device cost that are granted such
status because of APC assignment.
Under our existing policy, procedures that meet the criteria listed
below in section IV.B.1.b. of this final rule with comment period are
identified as device-intensive procedures and are subject to all the
policies applicable to procedures assigned device-intensive status
under our established methodology, including our policies on device
edits and no cost/full credit and partial credit devices discussed in
sections IV.B.3. and IV.B.4. of this final rule with comment period,
respectively.
b. Use of the Three Criteria To Designate Device-Intensive Procedures
We clarified our established policy in the CY 2018 OPPS/ASC final
rule with comment period (82 FR 52474), where we explained that device-
intensive procedures require the implantation of a device and
additionally are subject to the following criteria:
All procedures must involve implantable devices that would
be reported if device insertion procedures were performed;
The required devices must be surgically inserted or
implanted devices that remain in the patient's body after the
conclusion of the procedure (at least temporarily); and
The device offset amount must be significant, which is
defined as exceeding 40 percent of the procedure's mean cost.
We changed our policy to apply these three criteria to determine
whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66926), where we stated that we
would apply the no cost/full credit and partial credit device policy--
which includes the three criteria listed above--to all device-intensive
procedures beginning in CY 2015. We reiterated this position in the CY
2016 OPPS/ASC final rule with comment period (80 FR 70424), where we
explained that we were finalizing our proposal to continue using the
three criteria established in the CY 2007 OPPS/ASC final rule with
comment period for determining the APCs to which the CY 2016 device
intensive policy will apply. Under the policies we adopted in CYs 2015,
2016, and 2017, all procedures that require the implantation of a
device and meet the above criteria are assigned device-intensive
status, regardless of their APC placement.
2. Changes to the Device-Intensive Procedure Policy for CY 2019 and
Subsequent Years
As part of CMS' effort to better capture costs for procedures with
significant device costs, in the CY 2019 OPPS/ASC proposed rule (83 FR
37108), for CY 2019, we proposed to modify our criteria for device-
intensive procedures. We have heard from stakeholders that the current
criteria exclude some procedures that stakeholders believe should
qualify as device-intensive procedures. Specifically, we were persuaded
by stakeholder arguments that procedures requiring expensive surgically
inserted or implanted devices that are not capital equipment should
qualify as device-intensive procedures, regardless of whether the
device remains in the patient's body after the conclusion of the
procedure. We agreed that a broader definition of device-intensive
procedures was warranted, and proposed two modifications to the
criteria for CY 2019. First, we proposed to allow procedures that
involve surgically inserted or implanted, single-use devices that meet
the device offset percentage threshold to qualify as device-intensive
procedures, regardless
[[Page 58945]]
of whether the device remains in the patient's body after the
conclusion of the procedure. We proposed this policy because we no
longer believed that whether a device remains in the patient's body
should affect its designation as a device-intensive procedure, as such
devices could, nonetheless, comprise a large portion of the cost of the
applicable procedure. Second, we proposed to modify our criteria to
lower the device offset percentage threshold from 40 percent to 30
percent, to allow a greater number of procedures to qualify as device-
intensive. We stated in the proposed rule that we believe allowing
these additional procedures to qualify for device-intensive status will
help ensure these procedures receive more appropriate payment in the
ASC setting, which will help encourage the provision of these services
in the ASC setting. In addition, we stated in the proposed rule that
this proposed change would help to ensure that more procedures
containing relatively high-cost devices are subject to the device
edits, which leads to more correctly coded claims and greater accuracy
in our claims data. Specifically, for CY 2019 and subsequent years, we
proposed that device-intensive procedures would be subject to the
following criteria:
All procedures must involve implantable devices assigned a
CPT or HCPCS code;
The required devices (including single-use devices) must
be surgically inserted or implanted; and
The device offset amount must be significant, which is
defined as exceeding 30 percent of the procedure's mean cost.
In addition, to further align the device-intensive policy with the
criteria used for device pass-through payment status, we proposed to
specify, for CY 2019 and subsequent years, that for purposes of
satisfying the device-intensive criteria, a device-intensive procedure
must involve a device that:
Has received FDA marketing authorization, has received an
FDA investigational device exemption (IDE), and has been classified as
a Category B device by the FDA in accordance with 42 CFR 405.203
through 405.207 and 405.211 through 405.215, or meets another
appropriate FDA exemption from premarket review;
Is an integral part of the service furnished;
Is used for one patient only;
Comes in contact with human tissue;
Is surgically implanted or inserted (either permanently or
temporarily); and
Is not any of the following:
(a) Equipment, an instrument, apparatus, implement, or item of this
type for which depreciation and financing expenses are recovered as
depreciable assets as defined in Chapter 1 of the Medicare Provider
Reimbursement Manual (CMS Pub. 15-1); or
(b) A material or supply furnished incident to a service (for
example, a suture, customized surgical kit, scalpel, or clip, other
than a radiological site marker).
As part of this proposal, we solicited public comment on these
proposed revised criteria, including whether there are any devices that
are not capital equipment that commenters believe should be deemed part
of device-intensive procedures that would not meet the proposed
definition of single-use devices. In addition, we solicited public
comments on the full list of proposed CY 2019 OPPS device-intensive
procedures provided in Addendum P to the proposed rule, which is
available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html. Specifically, we invited public comment on whether any
procedures proposed to receive device-intensive status for CY 2019
should not receive device-intensive status according to the proposed
criteria, or if we did not assign device-intensive status for CY 2019
to any procedures commenters believed should receive device-intensive
status based on the proposed criteria.
Comment: The majority of commenters supported CMS' proposal to
modify the device-intensive criteria to allow procedures that involve
single-use devices, regardless of whether they remain in the body after
the conclusion of the procedure, to qualify as device-intensive
procedures. The commenters believed that this proposed policy change
will better support accurate payment for procedures where an
implantable device is a significant proportion of the total cost of the
procedure. Some commenters indicated that this proposed change would
help to spur innovation in the device industry.
Response: We appreciate the commenters' support.
Comment: The majority of commenters supported the proposal to lower
the device offset percentage threshold for procedures to qualify as
device-intensive from greater than 40 percent to greater than 30
percent. The commenters believed that this proposed policy change will
encourage migration of services from the hospital outpatient department
into the ASC setting, resulting in cost savings to the Medicare program
and Medicare beneficiaries. Some of these commenters encouraged CMS to
further modify its proposal and instead lower the device offset
percentage threshold for procedures to qualify as device-intensive to
25 percent instead of 30 percent, to allow even more procedures to be
designated as device-intensive.
Response: We appreciate commenters' support. At this time, we
continue to believe that applying a device offset percentage threshold
of greater than 30 percent for procedures to qualify as device-
intensive is most appropriate for the reasons described in our original
proposal. Because the ASC payment system is budget neutral, when the
device-intensive threshold is set lower, it results in transfer of
payment from services with high device offsets or that do not qualify
as device-intensive to the services being newly designated as device-
intensive. As a result, it is important that the device-intensive
threshold not be set too low or it will result in the transfer of
payments from procedures with high device offsets to procedures with
low device offsets, which is the opposite of the intended purpose of
this policy. We will take the commenters' suggestion of applying a
device offset percentage threshold of greater than 25 percent for
procedures to qualify as device-intensive into consideration for future
rulemaking.
In addition, for new HCPCS codes describing procedures requiring
the implantation of medical devices that do not yet have associated
claims data, in the CY 2017 OPPS/ASC final rule with comment period (81
FR 79658), we finalized a policy for CY 2017 to apply device-intensive
status with a default device offset set at 41 percent for new HCPCS
codes describing procedures requiring the implantation or insertion of
a medical device that do not yet have associated claims data until
claims data are available to establish the HCPCS code-level device
offset for the procedures. This default device offset amount of 41
percent is not calculated from claims data; instead, it is applied as a
default until claims data are available upon which to calculate an
actual device offset for the new code. The purpose of applying the 41-
percent default device offset to new codes that describe procedures
that implant or insert medical devices is to ensure ASC access for new
procedures until claims data become available.
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37108
through 37109), in accordance with our proposal stated above to lower
the
[[Page 58946]]
device offset percentage threshold for procedures to qualify as device-
intensive from greater than 40 percent to greater than 30 percent, for
CY 2019 and subsequent years, we proposed to modify this policy and
apply a 31-percent default device offset to new HCPCS codes describing
procedures requiring the implantation of a medical device that do not
yet have associated claims data until claims data are available to
establish the HCPCS code-level device offset for the procedures. In
conjunction with the proposal to lower the default device offset from
41 percent to 31 percent, we proposed to continue our current policy
of, in certain rare instances (for example, in the case of a very
expensive implantable device), temporarily assigning a higher offset
percentage if warranted by additional information such as pricing data
from a device manufacturer (81 FR 79658). Once claims data are
available for a new procedure requiring the implantation of a medical
device, device-intensive status will be applied to the code if the
HCPCS code-level device offset is greater than 30 percent, according to
our policy of determining device-intensive status by calculating the
HCPCS code-level device offset.
In addition, in the proposed rule, we clarified that since the
adoption of our policy in effect as of CY 2018, the associated claims
data used for purposes of determining whether or not to apply the
default device offset are the associated claims data for either the new
HCPCS code or any predecessor code, as described by CPT coding
guidance, for the new HCPCS code. Additionally, for CY 2019 and
subsequent years, in limited instances where a new HCPCS code does not
have a predecessor code as defined by CPT, but describes a procedure
that was previously described by an existing code, we proposed to use
clinical discretion to identify HCPCS codes that are clinically related
or similar to the new HCPCS code but are not officially recognized as a
predecessor code by CPT, and to use the claims data of the clinically
related or similar code(s) for purposes of determining whether or not
to apply the default device offset to the new HCPCS code. Clinically
related and similar procedures for purposes of this policy are
procedures that have little or no clinical differences and use the same
devices as the new HCPCS code. In addition, clinically related and
similar codes for purposes of this policy are codes that either
currently or previously describe the procedure described by the new
HCPCS code. Under this proposal, claims data from clinically related
and similar codes would be included as associated claims data for a new
code, and where an existing HCPCS code is found to be clinically
related or similar to a new HCPCS code, we proposed to apply the device
offset percentage derived from the existing clinically related or
similar HCPCS code's claims data to the new HCPCS code for determining
the device offset percentage. We stated in the proposed rule that we
believe that claims data for HCPCS codes describing procedures that
have very minor differences from the procedures described by new HCPCS
codes would provide an accurate depiction of the cost relationship
between the procedure and the device(s) that are used, and would be
appropriate to use to set a new code's device offset percentage, in the
same way that predecessor codes are used. For instance, for CY 2019, we
proposed to use the claims data from existing CPT code 36568 (Insertion
of peripherally inserted central venous catheter (PICC), without
subcutaneous port or pump; younger than 5 years of age), for which the
description as of January 1, 2019 is changing to ``(Insertion of
peripherally inserted central venous catheter (PICC), without
subcutaneous port or pump, without imaging guidance; younger than 5
years of age)'', to determine the appropriate device offset percentage
for new CPT code 36X72 (Insertion of peripherally inserted central
venous catheter (PICC), without subcutaneous port or pump, including
all imaging guidance, image documentation, and all associated
radiological supervision and interpretation required to perform the
insertion; younger than 5 years of age). We believe that although CPT
code 36568 is not identified as a predecessor code by CPT, the
procedure described by new CPT code 36X72 was previously described by
CPT code 36568 and, therefore, CPT code 36X72 is clinically related and
similar to CPT code 36568, and the device offset percentage for CPT
code 36568 can be accurately applied to both codes. If a new HCPCS code
has multiple predecessor codes, the claims data for the predecessor
code that has the highest individual HCPCS-level device offset
percentage would be used to determine whether the new HCPCS code
qualifies for device-intensive status. Similarly, in the event that a
new HCPCS code does not have a predecessor code but has multiple
clinically related or similar codes, the claims data for the clinically
related or similar code that has the highest individual HCPCS level
device offset percentage would be used to determine whether the new
HCPCS code qualifies for device-intensive status.
In the CY 2019 OPPS/ASC proposed rule, we indicated that additional
information for our consideration of an offset percentage higher than
the proposed default of 31 percent for new HCPCS codes describing
procedures requiring the implantation (or, in some cases, the
insertion) of a medical device that do not yet have associated claims
data, such as pricing data or invoices from a device manufacturer,
should be directed to the Division of Outpatient Care, Mail Stop C4-01-
26, Centers for Medicare and Medicaid Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850, or electronically at
[email protected]. Additional information can be submitted
prior to issuance of an OPPS/ASC proposed rule or as a public comment
in response to an issued OPPS/ASC proposed rule. Device offset
percentages will be set in each year's final rule.
The full listing of proposed CY 2019 OPPS device-intensive
procedures was included in Addendum P to the proposed rule (which is
available via the internet on the CMS website).
Comment: Commenters supported the proposal to apply a default
device offset of 31 percent to procedures requiring devices that do not
yet have claims data, as well as the proposal to use claims data from
clinically similar and related codes to establish device offsets for
procedures with new codes that do not have direct predecessor codes
according to CPT.
Response: We appreciate the commenters' support.
Comment: A few commenters suggested that CMS only adjust the non-
device portion of the payment by the wage index, consistent with the
Agency's policy for separately payable drugs and biologicals.
Response: While we did not make such a proposal in this year's
proposed rule, we will take this comment into consideration for future
rulemaking. We note that such a policy would increase payments to
providers with a wage index value of less than 1 and be offset by a
budget neutral decrease in payments to other providers.
Comment: A group of commenters urged CMS to calculate the device
offset percentage for potential device-intensive procedures using the
standard (noncomprehensive APC) ASC ratesetting methodology and to
assign device-intensive status in the ASC system based on that device
offset percentage, as they believed it is more consistent with the
overall ASC payment system. One commenter requested some clarification
in the final
[[Page 58947]]
rule about the current methodology for calculating the device offset
percentage for device-intensive procedures and specifically asked that
CMS:
Confirm that the ASC device-intensive status as assigned
by CMS is based on the offset calculated according to the ASC
ratesetting methodology;
Disclose what offset data (meaning the calculation
methodology used) appear in the second spreadsheet of Addendum P titled
``2019 NPRM HCPCS Offsets'';
Display the device offsets in Addendum P, in future
rulemaking, based on the ASC methodology and not the OPPS methodology
if the offset data displayed in the second spreadsheet of Addendum P is
based on the OPPS methodology and device intensive status is based on
the ASC methodology; and
Modify the second worksheet of Addendum P titled ``2019
NPRM HCPCS Offsets'' to only include the codes for procedures that
employ implantable and insertable devices and exclude all of the codes
that do not employ implantable or insertable devices.
Response: As stated in the CY 2019 OPPS/ASC proposed rule (83 FR
37158), according to our established ASC payment methodology, we apply
the device offset percentage based on the standard OPPS APC ratesetting
methodology to the OPPS national unadjusted payment to determine the
device cost included in the OPPS payment rate for a device-intensive
ASC covered surgical procedure, which we then set as equal to the
device portion of the national unadjusted ASC payment rate for the
procedure. We calculate the service portion of the ASC payment for
device-intensive procedures by applying the uniform ASC conversion
factor to the service (nondevice) portion of the OPPS relative payment
weight for the device-intensive procedure. Finally, we sum the ASC
device portion and ASC service portion to establish the full payment
for the device-intensive procedure under the ASC payment system.
In response to the commenter's questions and suggestions relating
to Addendum P, we note that the device offset percentages reflected in
both worksheets of Addendum P are based upon the OPPS methodology
(including the C-APC methodology). We believe this is appropriate as
Addendum P is created to display the device offsets, device offset
percentages, and device-intensive codes under the OPPS. Specific to the
commenter's suggestion that we modify the second worksheet of Addendum
P titled ``2019 NPRM HCPCS Offsets'' to only include the codes for
procedures that employ implantable and insertable devices and exclude
all of the codes that do not employ implantable or insertable devices,
we note that the second worksheet of Addendum P is intended to display
the device offsets and device offset percentages for all codes for
which we have such data under the OPPS. In addition, the list of
services that qualify as device-intensive under the ASC payment system
and the services' device offset percentages for the ASC payment system
are included on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Policy-Files.html as
``CY 2019 Final ASC Device-Intensive Procedures and Procedures to which
the No Cost/Full Credit and Partial Credit Device Adjustment Policy
Applies.''
Comment: Commenters supported the proposed device-intensive status
for the following CPT codes:
CPT code 28297 (Correction, hallux valgus (bunionectomy),
with sesamoidectomy, when performed; with first metatarsal and medial
cuneiform joint arthrodesis, any method);
CPT code 28730 (Arthrodesis, midtarsal or tarsometatarsal,
multiple or transverse);
CPT code 28740 (Arthrodesis, midtarsal or tarsometatarsal,
single joint);
CPT code 36903 (Introduction of needle(s) and/or
catheter(s), dialysis circuit, with diagnostic angiography of the
dialysis circuit, including all direct puncture(s) and catheter
placement(s), injection(s) of contrast, all necessary imaging from the
arterial anastomosis and adjacent artery through entire venous outflow
including the inferior or superior vena cava, fluoroscopic guidance,
radiological supervision and interpretation and image documentation and
report; with transcatheter placement of intravascular stent(s),
peripheral dialysis segment, including all imaging and radiological
supervision and interpretation necessary to perform the stenting, and
all angioplasty within the peripheral dialysis segment);
CPT code 36904 (Percutaneous transluminal mechanical
thrombectomy and/or infusion for thrombolysis, dialysis circuit, any
method, including all imaging and radiological supervision and
interpretation, diagnostic angiography, fluoroscopic guidance, catheter
placement(s), and intraprocedural pharmacological thrombolytic
injection(s)); and
CPT code 36906 (Percutaneous transluminal mechanical
thrombectomy and/or infusion for thrombolysis, dialysis circuit, any
method, including all imaging and radiological supervision and
interpretation, diagnostic angiography, fluoroscopic guidance, catheter
placement(s), and intraprocedural pharmacological thrombolytic
injection(s); with transcatheter placement of intravascular stent(s),
peripheral dialysis segment, including all imaging and radiological
supervision and interpretation necessary to perform the stenting, and
all angioplasty within the peripheral dialysis circuit).
Other commenters requested that CMS assign device-intensive status
to:
HCPCS code C9747 (Ablation of prostate, transrectal, high
intensity focused ultrasound (hifu), including imaging guidance);
CPT code 43210 (Esophagogastroduodenoscopy, flexible,
transoral; with esophagogastric fundoplasty, partial or complete,
includes duodenoscopy when performed);
CPT code 0275T (Percutaneous laminotomy/laminectomy
(interlaminar approach) for decompression of neural elements, (with or
without ligamentous resection, discectomy, facetectomy and/or
foraminotomy), any method, under indirect image guidance (e.g.,
fluoroscopic, ct), single or multiple levels, unilateral or bilateral;
lumbar);
CPT code 55874 (Transperineal placement of biodegradable
material, peri-prostatic, single or multiple injection(s), including
image guidance, when performed);
CPT code 0409T (Insertion or replacement of permanent
cardiac contractility modulation system, including contractility
evaluation when performed, and programming of sensing and therapeutic
parameters; pulse generator only);
CPT code 0410T (Insertion or replacement of permanent
cardiac contractility modulation system, including contractility
evaluation when performed, and programming of sensing and therapeutic
parameters; atrial electrode only);
CPT code 0411T (Insertion or replacement of permanent
cardiac contractility modulation system, including contractility
evaluation when performed, and programming of sensing and therapeutic
parameters; ventricular electrode only); and
CPT code 0414T (Removal and replacement of permanent
cardiac contractility modulation system pulse generator only).
Response: We appreciate the commenters' support. With respect to
the commenters' request that we assign the device-intensive designation
to
[[Page 58948]]
HCPCS code C9747 and CPT codes 43210, 0275T, and 55874, we note that
the device offset percentage for all four of these procedures (as
identified by the above mentioned HCPCS codes or predecessor codes) is
not above the 30-percent threshold, and therefore these procedures are
not eligible to be assigned device-intensive status. CPT codes 0409T,
0410T, 0411T, and 0414T were inadvertently omitted from the listing of
proposed device-intensive procedures in the CY 2019 OPPS/ASC proposed
rule. However, we have included them as device-intensive procedures in
this final rule with comment period. CPT code 36904 was proposed as a
device-intensive procedure. However, using the most currently available
data for this CY 2019 OPPS/ASC final rule with comment period, we have
determined that its device offset percentage is not above the 30-
percent threshold, and therefore this procedure is not eligible to be
assigned device-intensive status.
Comment: One commenter stated that CPT code 86891 (Autologous blood
or component, collection processing and storage; intra- or
postoperative salvage) was incorrectly proposed to have device-
intensive status for CY 2019.
Response: We agree with the commenter. CPT code 86891 was
inadvertently included in the listing of device-intensive procedures in
Addendum P to the CY 2019 OPPS/ASC proposed rule.
After consideration of the public comments we received, we are
finalizing our proposals to allow procedures that involve surgically
inserted or implanted, single-use devices that meet the device offset
percentage threshold to qualify as device-intensive procedures,
regardless of whether the device remains in the patient's body after
the conclusion of the procedure and to modify our criteria to lower the
device offset percentage threshold from 40 percent to 30 percent. The
full listing of the final CY 2019 device-intensive procedures is
included in Addendum P to this final rule with comment period (which is
available via the internet on the CMS website).
3. Device Edit Policy
In the CY 2015 OPPS/ASC final rule with comment period (79 FR
66795), we finalized a policy and implemented claims processing edits
that require any of the device codes used in the previous device-to-
procedure edits to be present on the claim whenever a procedure code
assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC
final rule with comment period (the CY 2015 device-dependent APCs) is
reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule
with comment period (80 FR 70422), we modified our previously existing
policy and applied the device coding requirements exclusively to
procedures that require the implantation of a device that are assigned
to a device-intensive APC. In the CY 2016 OPPS/ASC final rule with
comment period, we also finalized our policy that the claims processing
edits are such that any device code, when reported on a claim with a
procedure assigned to a device-intensive APC (listed in Table 42 of the
CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)) will
satisfy the edit.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658
through 79659), we changed our policy for CY 2017 and subsequent years
to apply the CY 2016 device coding requirements to the newly defined
device-intensive procedures. For CY 2017 and subsequent years, we also
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the edit. In addition, we created
HCPCS code C1889 to recognize devices furnished during a device-
intensive procedure that are not described by a specific Level II HCPCS
Category C-code. Reporting HCPCS code C1889 with a device-intensive
procedure will satisfy the edit requiring a device code to be reported
on a claim with a device-intensive procedure.
We did not propose any changes to this policy for CY 2019.
Comment: Some commenters expressed concern about a potential claims
processing issue that would arise from a number of codes (listed below
in Table 36) that were proposed to have device-intensive status, which,
in their clinical opinion, do not always require the involvement of
implantable or insertable single-use devices and, therefore, could be
subject to the claims edit requiring device-intensive procedures to be
billed with a device., when the procedure may not require the
involvement of a device.
BILLING CODE 4120-01-P
[[Page 58949]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.054
[[Page 58950]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.055
BILLING CODE 4120-01-C
Response: We have noted the commenters' concern. We have performed
a clinical examination of the potential device-intensive procedures and
believe the codes listed in Addendum P to this CY 2019 OPPS/ASC final
rule with comment period (which is available via the internet on the
CMS website) as OPPS device-intensive meet the newly finalized criteria
of being a device-intensive procedure. To address any potential claims
processing issues pertaining to the device edit policy, we will use
subregulatory authority to ensure that the device edit does not
improperly prevent correctly coded claims from being paid.
Comment: One commenter requested that CMS either revise the
descriptor for HCPCS code C1889 (Implantable/insertable device for
device-intensive procedure, not otherwise classified) to remove the
specific applicability to device-intensive procedures or establish a
new ``Not Otherwise Classified'' (NOC) HCPCS code for devices that do
not have a specific device HCPCS code or are used in a procedure not
designated as device-intensive.
Response: We agree with the commenter and have revised the NOC
HCPCS code to remove the specific applicability to device-intensive
procedures. HCPCS code C1889 now reads ``(Implantable/insertable
device, not otherwise classified)''.
Comment: One commenter requested that CMS restore the device-to-
procedure and procedure-to-device edits.
Response: As we stated in the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66794), we continue to believe that the
elimination of device-to-procedure edits and procedure-to-device edits
is appropriate due to the experience hospitals now have in coding and
reporting these claims fully. More specifically, for the more costly
devices, we believe the C-APCs will reliably reflect the cost of the
device if charges for the device are included anywhere on the claim. We
note that, under our current policy, hospitals are still expected to
adhere to the guidelines of correct coding and append the correct
device code to the claim when applicable. We also note that, as with
all other items and services recognized under the OPPS, we expect
hospitals to code and report their costs appropriately, regardless of
whether there are claims processing edits in place.
4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial
Credit Devices
a. Background
To ensure equitable OPPS payment when a hospital receives a device
without cost or with full credit, in CY 2007, we implemented a policy
to reduce the payment for specified device-dependent APCs by the
estimated portion of the APC payment attributable to device costs (that
is, the device offset) when the hospital receives a specified device at
no cost or with full credit (71 FR 68071 through 68077). Hospitals were
instructed to report no cost/full credit device cases on the claim
using the ``FB'' modifier on the line with the procedure code in which
the no cost/full credit device is used. In cases in which the device is
furnished without cost or with full credit, hospitals were instructed
to report a token device charge of less than $1.01. In cases in which
the device being inserted is an upgrade (either of the same type of
device or to a different type of device) with a full credit for the
device being replaced, hospitals were instructed to report as the
device charge the difference between the hospital's usual charge for
the device being implanted and the hospital's usual charge for the
device for which it received full credit. In CY 2008, we expanded this
payment adjustment policy to include cases in which hospitals receive
partial credit of 50 percent or more of the cost of a specified device.
Hospitals were 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. We refer readers to the CY 2008 OPPS/ASC final rule
with comment period for more background information on the ``FB'' and
``FC'' modifiers payment adjustment policies (72 FR 66743 through
66749).
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005
through 75007), beginning in CY 2014, we modified our policy of
reducing OPPS payment for specified APCs when a hospital furnishes a
specified device without cost or with a full or partial credit. For CY
2013 and prior years, our policy had been to reduce 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 specified
device. For CY 2014, we reduced OPPS payment, for the applicable APCs,
by the full or partial credit a hospital receives for a replaced
device. Specifically, under this modified policy, hospitals are
required to report on the claim the amount of the credit in the amount
portion for value code ``FD'' (Credit Received from the Manufacturer
for a Replaced Medical Device) when the hospital receives a credit for
a replaced device that is 50 percent or greater than the cost of the
device. For CY 2014, we also limited the OPPS payment deduction for the
applicable APCs to the total amount of the device offset when the
``FD'' value code appears on a claim. For CY 2015, we continued our
policy of reducing OPPS payment for specified APCs when a hospital
furnishes a specified device without cost or with a full or partial
credit and to use the three criteria established in the CY 2007 OPPS/
ASC final rule with comment period (71 FR 68072 through 68077) for
determining the APCs to which our CY 2015 policy will apply (79 FR
66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment
period (80 FR 70424), we finalized our policy to no longer specify a
list of devices to which the OPPS payment adjustment for no cost/full
credit and partial credit devices would
[[Page 58951]]
apply and instead apply this APC payment adjustment to all replaced
devices furnished in conjunction with a procedure assigned to a device-
intensive APC when the hospital receives a credit for a replaced
specified device that is 50 percent or greater than the cost of the
device.
b. Policy for No Cost/Full Credit and Partial Credit Devices
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659
through 79660), for CY 2017 and subsequent years, we finalized our
policy to reduce OPPS payment for device-intensive procedures, by the
full or partial credit a provider receives for a replaced device, when
a hospital furnishes a specified device without cost or with a full or
partial credit. Under our current policy, hospitals continue to be
required to report on the claim the amount of the credit in the amount
portion for value code ``FD'' when the hospital receives a credit for a
replaced device that is 50 percent or greater than the cost of the
device.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37110), for CY 2019
and subsequent years, we proposed to apply our no cost/full credit and
partial credit device policies to all procedures that qualify as
device-intensive under our proposed modified criteria discussed in
section IV.B.2. of the proposed rule and this final rule with comment
period.
We did not receive any public comments on this proposal. Therefore,
we are finalizing our proposal to apply our no cost/full credit and
partial credit device policies to all procedures that qualify as
device-intensive under our finalized modified criteria discussed in
section IV.B.2. of this final rule with comment period, for CY 2019 and
subsequent years.
5. Payment Policy for Low-Volume Device-Intensive Procedures
In CY 2016, we used our equitable adjustment authority under
section 1833(t)(2)(E) of the Act and used the median cost (instead of
the geometric mean cost per our standard methodology) to calculate the
payment rate for the implantable miniature telescope procedure
described by CPT code 0308T (Insertion of ocular telescope prosthesis
including removal of crystalline lens or intraocular lens prosthesis),
which is the only code assigned to APC 5494 (Level 4 Intraocular
Procedures) (80 FR 70388). We note that, as stated in the CY 2017 OPPS/
ASC proposed rule (81 FR 45656), we proposed to reassign the procedure
described by CPT code 0308T to APC 5495 (Level 5 Intraocular
Procedures) for CY 2017, but it would be the only procedure code
assigned to APC 5495. The payment rates for a procedure described by
CPT code 0308T (including the predecessor HCPCS code C9732) were
$15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The
procedure described by CPT code 0308T is a high-cost device-intensive
surgical procedure that has a very low volume of claims (in part
because most of the procedures described by CPT code 0308T are
performed in ASCs), and we believe that the median cost is a more
appropriate measure of the central tendency for purposes of calculating
the cost and the payment rate for this procedure because the median
cost is impacted to a lesser degree than the geometric mean cost by
more extreme observations. We stated that, in future rulemaking, we
would consider proposing a general policy for the payment rate
calculation for very low-volume device-intensive APCs (80 FR 70389).
For CY 2017, we proposed and finalized a payment policy for low-
volume device-intensive procedures that is similar to the policy
applied to the procedure described by CPT code 0308T in CY 2016. In the
CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through
79661), we established our current policy that the payment rate for any
device-intensive procedure that is assigned to a clinical APC with
fewer than 100 total claims for all procedures in the APC be calculated
using the median cost instead of the geometric mean cost, for the
reasons described above for the policy applied to the procedure
described by CPT code 0308T in CY 2016. The CY 2018 final rule
geometric mean cost for the procedure described by CPT code 0308T
(based on 19 claims containing the device HCPCS C-code, in accordance
with the device-intensive edit policy) was approximately $21,302, and
the median cost was approximately $19,521. The final CY 2018 payment
rate (calculated using the median cost) was approximately $17,560.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37111), for CY 2019,
we proposed to continue with our current policy of establishing the
payment rate for any device-intensive procedure that is assigned to a
clinical APC with fewer than 100 total claims for all procedures in the
APC based on calculations using the median cost instead of the
geometric mean cost. We stated in the proposed rule that, due to the
proposed change in APC assignment for CPT code 0308T to APC 5493 (Level
3 Intraocular Procedures) from APC 5495 (Level 5 Intraocular
Procedures), our payment policy for low-volume device-intensive
procedures would not apply to CPT code 0308T for CY 2019 because there
are now more than 100 total claims for the APC to which CPT code 0308T
would be assigned. For more information on the proposed and final APC
assignment change for CPT code 0308T, we refer readers to section
III.D.13. of this final rule with comment period.
Based on the CY 2017 claims data available for ratesetting, in the
CY 2019 OPPS/ASC proposed rule, we proposed to assign CPT code 0308T to
APC 5493, noting that we would continue to monitor the data. In the CY
2019 OPPS final rule claims data, we found that the estimated cost of
the single claim with CPT code 0308T as the primary service is
$12,939.75. To recognize the estimated cost based on the final rule
claims data, we have assigned CPT code 0308T to APC 5494 (Level 4
Intraocular Procedures) for CY 2019 instead of APC 5493. Due to the
assignment of CPT code 0308T to APC 5494 for CY 2019, our payment
policy for low-volume device-intensive procedures will apply to CPT
code 0308T for CY 2019 because there are less than 100 total claims for
the APC to which CPT code 0308T is assigned. For more information on
the proposed and final APC assignment change for CPT code 0308T,
including a summary of public comments and our responses, we refer
readers to section III.D.13. of this final rule with comment period.
V. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs of
Drugs, Biologicals, and Radiopharmaceuticals
1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biologicals. Throughout this final rule with comment period, the
term ``biological'' is used because this is the term that appears in
section 1861(t) of the Act. A ``biological'' as used in this final rule
with comment period includes (but is not necessarily limited to) a
``biological product'' or a ``biologic'' as defined in the Public
Health Service Act. As enacted by the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this
pass-through payment 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; current drugs
[[Page 58952]]
and biologicals and brachytherapy sources used in cancer therapy; and
current radiopharmaceutical drugs and biologicals. ``Current'' refers
to those types of drugs or biologicals mentioned above that are
hospital outpatient services under Medicare Part B for which
transitional pass-through payment was made on the first date the
hospital OPPS was implemented.
Transitional pass-through payments also are provided for certain
``new'' drugs and biologicals 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.'' As required
by statute, transitional pass-through payments for a drug or biological
described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a
period of at least 2 years, but not more than 3 years, after the
payment was first made for the product as a hospital outpatient service
under Medicare Part B. CY 2019 pass-through drugs and biologicals and
their designated APCs are assigned status indicator ``G'' in Addenda A
and B to this final rule with comment period (which are available via
the internet on the CMS website).
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 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. The methodology for determining the pass-
through payment amount is set forth in regulations at 42 CFR 419.64.
These regulations specify that the pass-through payment equals the
amount determined under section 1842(o) of the Act minus the portion of
the APC payment that CMS determines is associated with the drug or
biological.
Section 1847A of the Act establishes the average sales price (ASP)
methodology, which is used for payment for drugs and biologicals
described in section 1842(o)(1)(C) of the Act 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, the
wholesale acquisition cost (WAC), and the average wholesale price
(AWP). In this final rule with comment period, 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 website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
The pass-through application and review process for drugs and
biologicals is described on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Three-Year Transitional Pass-Through Payment Period for All Pass-
Through Drugs, Biologicals, and Radiopharmaceuticals and Quarterly
Expiration of Pass-Through Status
As required by statute, transitional pass-through payments for a
drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act
can be made for a period of at least 2 years, but not more than 3
years, after the payment was first made for the product as a hospital
outpatient service under Medicare Part B. Our current policy is to
accept pass-through applications on a quarterly basis and to begin
pass-through payments for newly approved pass-through drugs and
biologicals on a quarterly basis through the next available OPPS
quarterly update after the approval of a product's pass-through status.
However, prior to CY 2017, we expired pass-through status for drugs and
biologicals on an annual basis through notice-and-comment rulemaking
(74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79662), we finalized a policy change, beginning with pass-
through drugs and biologicals newly approved in CY 2017 and subsequent
calendar years, to allow for a quarterly expiration of pass-through
payment status for drugs, biologicals, and radiopharmaceuticals to
afford a pass-through payment period that is as close to a full 3 years
as possible for all pass-through drugs, biologicals, and
radiopharmaceuticals.
This change eliminated the variability of the pass-through payment
eligibility period, which previously varied based on when a particular
application was initially received. We adopted this change for pass-
through approvals beginning on or after CY 2017, to allow, on a
prospective basis, for the maximum pass-through payment period for each
pass-through drug without exceeding the statutory limit of 3 years.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in
CY 2018
In the CY 2019 OPPS/ASC proposed rule (83 FR 37112), we proposed
that the pass-through payment status of 23 drugs and biologicals would
expire on December 31, 2018, as listed in Table 19 of the proposed rule
(83 FR 37112). All of these drugs and biologicals will have received
OPPS pass-through payment for at least 2 years and no more than 3 years
by December 31, 2018. These drugs and biologicals were approved for
pass-through payment status on or before January 1, 2017. In accordance
with the policy finalized in CY 2017 and described earlier, pass-
through payment status for drugs and biologicals newly approved in CY
2017 and subsequent years will expire on a quarterly basis, with a
pass-through payment period as close to 3 years as possible. With the
exception of those groups of drugs and biologicals that are always
packaged when they do not have pass-through payment status
(specifically, anesthesia drugs; drugs, biologicals, and
radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure (including diagnostic
radiopharmaceuticals, contrast agents, and stress agents); and drugs
and biologicals that function as supplies when used in a surgical
procedure), our standard methodology for providing payment for drugs
and biologicals with expiring pass-through payment status in an
upcoming calendar year is to determine the product's estimated per day
cost and compare it with the OPPS drug packaging threshold for that
calendar year (which is $125 for CY 2019), as discussed further in
section V.B.2. of this final rule with comment period. In the CY 2019
OPPS/ASC proposed rule (83 FR 37112), we proposed that if the estimated
per day cost for the drug or biological is less than or equal to the
applicable OPPS drug packaging threshold, we would package payment for
the drug or biological into the payment for the associated procedure in
the upcoming calendar year. If the estimated per day cost of the drug
or biological is greater than the OPPS drug packaging threshold, we
proposed to provide separate payment at the applicable relative ASP-
based payment amount (which was proposed at ASP+6 percent for CY 2019,
and is finalized at ASP+6 percent for CY 2019, as discussed further in
section V.B.3. of this final rule with comment period).
Comment: A number of commenters requested that pass-through payment
status for HCPCS code A9515 (Choline
[[Page 58953]]
c-11, diagnostic, per study dose up to 20 millicuries) be extended
until March 2019 to give 3 full years of pass-through payment status
for the drug. The drug described by HCPCS code A9515 received pass-
through status in April 2016, and in the CY 2019 OPPS/ASC proposed
rule, the pass-through payment period for the drug was scheduled to end
on December 31, 2018, consistent with the policy in effect in CY 2016
that drugs and biologicals receive at least 2 years but no more than 3
years of pass-through payment status where pass-through payment status
for drugs and biologicals was expired on an annual basis through
notice-and-comment rulemaking. One commenter requested an extension of
pass-through payment status to allow for the collection of more cost
data for HCPCS code A9515. Another commenter believed pass-through
payment status for HCPCS code A9515 should be extended because of
concern that the cost of HCPCS code A9515 exceeds the payment rate for
the nuclear medicine services with which HCPCS code A9515 will be
packaged. The commenter cited data showing the pass-through payment
rate for HCPCS code A9515 was $5,700, while the highest APC payment
rate for a nuclear medicine service was $1,377.22 with a drug offset of
$248.31. Two commenters also requested that HCPCS codes Q9982
(Flutemetamol f18, diagnostic, per study dose, up to 5 millicuries) and
Q9983 (Florbetaben f18, diagnostic, per study dose, up to 8.1
millicuries) not be taken off of pass-through payment status due to
similar concerns.
Response: As noted in the proposed rule, all three
radiopharmaceuticals are covered under the pass-through payment
expiration policy in effect in CY 2016 which stated that drugs and
biologicals receive at least 2 years and no more than 3 years of pass-
through payment status, with the pass-through payment period expiring
at the end of a calendar year. Beginning with pass-through drugs and
biologicals newly approved in CY 2017 and subsequent calendar years, a
new policy is in effect to allow for a quarterly expiration of pass-
through payment status for drugs and biologicals to afford a pass-
through payment period that is as close to a full 3 years as possible
for all pass-through drugs, biologicals, and radiopharmaceuticals (82
FR 59337). HCPCS codes A9515, Q9982, and Q9983 are covered by the
policy in effect for CY 2016, and pass-through payment status for these
HCPCS codes will end on December 31, 2018. We note that when a
radiopharmaceutical or other drug or biological is newly packaged into
a related medical procedure, the amount of the payment rate for the
related medical procedure does not stay the same. Instead, the payment
rate for the medical procedure will be adjusted to reflect the
additional cost of the newly packaged radiopharmaceutical in the
overall cost of the medical procedure.
Comment: Some commenters recommended that CMS allow products
covered by Medicare in the context of a coverage with evidence
development (CED) clinical trial to retain their pass-through payment
status for the duration of the CED trial. Two of the commenters focused
on the packaging of diagnostic radiopharmaceuticals that do not have
pass-through payment status. One of the commenters requested that pass-
through payment status for NeuraceqTM (florbetaben F18,
HCPCS code Q9982) and VizamylTM (flutemetamol F18, HCPCS
code Q9983), which is scheduled to end on December 31, 2018, be
extended because of a current CED trial for amyloid positron emission
tomography (PET) that will be active through at least CY 2019.
(Information on this CED trial can be found on the CMS website at
https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/Amyloid-PET.html). This commenter also suggested that if
pass-through payment status is not extended, these drugs could be paid
separately under their own assigned APCs to avoid having the cost of
these drugs packaged into the primary procedures for which they are
used. Another commenter was more broadly concerned about not receiving
payment for a drug or biological when a CED trial is ongoing and a drug
or biological used in the trial loses pass-through payment status and
becomes packaged. The commenters were concerned that ending pass-
through payment for drugs that will no longer be paid separately could
negatively impact CED trials as hospitals would be less likely to
participate because of the risk of receiving lower payment for the
services covered by the CED trial.
Response: We disagree with the commenters' concern that expiration
of pass-through payment status for NeuraceqTM (HCPCS code
Q9982) and VizamylTM (HCPCS code Q9983), and subsequent
packaging of them as ``policy-packaged'' drugs, will affect trial
results. We note that hospitals are not precluded from billing for
NeuraceqTM and VizamylTM in the context of a CED
trial once their pass-through payment status expires. We also note that
the payment for both NeuraceqTM and VizamylTM
will be reflected in the payment rate for the associated procedure.
With respect to the request that we create a new APC for
NeuraceqTM and VizamylTM, we do not believe it is
appropriate, prudent, or practicable to create unique APCs for specific
drugs or biologicals or other individual items that are furnished with
a particular procedure or procedures. Finally, with respect to the
commenters' request that we allow drug or biological pass-through
payment status for products covered by a CED trial for the duration of
the CED trial, we reiterate that the statute limits the period of pass-
through payment eligibility to no more than 3 years after the product's
first payment as a hospital outpatient service under Medicare Part B.
As such, we are unable to extend pass-through payment status beyond 3
years.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to expire the pass-
through payment status of the 23 drugs and biologicals listed in Table
37 below on December 31, 2018.
BILLING CODE 4120-01-P
[[Page 58954]]
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The final packaged or separately payable status of each of these
drugs or biologicals is listed in Addendum B to this final rule with
comment period (which is available via the internet on the CMS
website).
4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing
Pass-Through Payment Status in CY 2019
In the CY 2019 OPPS/ASC proposed rule (83 FR 37112), we proposed to
continue pass-through payment status in CY 2019 for 45 drugs and
biologicals. These drugs and biologicals, which were approved for pass-
through payment status between January 1, 2017, and July 1, 2018, were
listed in Table 20 of the proposed rule (83 FR 37113 through 37114).
The APCs and HCPCS codes for these drugs and biologicals approved for
pass-through
[[Page 58955]]
payment status through December 31, 2018 were assigned status indicator
``G'' in Addenda A and B to the proposed rule (which are available via
the internet on the CMS website). In addition, as indicated in the
proposed rule, there are four drugs and biologicals that have already
had 3 years of pass-through payment status but for which pass-through
payment status is required to be extended for an additional 2 years
under section 1833(t)(6)(G) of the Act, as added by section
1301(a)(1)(C) of the Consolidated Appropriations Act of 2018 (Pub. L.
115-141). Because of this requirement, these drugs and biologicals were
also included in Table 20 of the proposed rule, which brought the total
number of drugs and biologicals with proposed pass-through payment
status in CY 2019 to 49. The requirements of section 1301 of Public Law
115-141 are described in further detail in section V.A.5. of this final
rule with comment period, and we address public comments that we
received related to this topic in that section.
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 and the portion of the otherwise applicable
OPD fee schedule that the Secretary determines is associated with the
drug or biological. For CY 2019, we proposed to continue to pay for
pass-through drugs and biologicals at ASP+6 percent, equivalent to the
payment rate these drugs and biologicals would receive in the
physician's office setting in CY 2019. We proposed that a $0 pass-
through payment amount would be paid for pass-through drugs and
biologicals under the CY 2019 OPPS because the difference between the
amount authorized under section 1842(o) of the Act, which was proposed
at ASP+6 percent, and the portion of the otherwise applicable OPD fee
schedule that the Secretary determines is appropriate, which was
proposed at ASP+6 percent, is $0.
In the case of policy-packaged drugs (which include the following:
Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that
function as supplies when used in a diagnostic test or procedure
(including contrast agents, diagnostic radiopharmaceuticals, and stress
agents); and drugs and biologicals that function as supplies when used
in a surgical procedure), we proposed that their pass-through payment
amount would be equal to ASP+6 percent for CY 2019 minus a payment
offset for any predecessor drug products contributing to the pass-
through payment as described in section V.A.6. of the proposed rule. We
made this proposal because, if not for the pass-through payment status
of these policy-packaged products, payment for these products would be
packaged into the associated procedure.
We proposed to continue to update pass-through payment rates on a
quarterly basis on the CMS website during CY 2019 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
payment drugs or biologicals are necessary. For a full description of
this policy, we refer readers to the CY 2006 OPPS/ASC final rule with
comment period (70 FR 68632 through 68635).
For CY 2019, consistent with our CY 2018 policy for diagnostic and
therapeutic radiopharmaceuticals, we proposed to provide payment for
both diagnostic and therapeutic radiopharmaceuticals that are granted
pass-through payment status based on the ASP methodology. As stated
earlier, for purposes of pass-through payment, we consider
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a
diagnostic or therapeutic radiopharmaceutical receives pass-through
payment status during CY 2019, we proposed to follow the standard ASP
methodology to determine the pass-through payment rate that drugs
receive under section 1842(o) of the Act, which was proposed at ASP+6
percent. If ASP data are not available for a radiopharmaceutical, we
proposed to provide pass-through payment at WAC+3 percent (consistent
with our proposed policy in section V.B.2.b. of the proposed rule), the
equivalent payment provided to pass-through payment drugs and
biologicals without ASP information. Additional detail and comments on
the WAC+3 percent payment policy can be found in section V.B.2.b. of
this final rule. If WAC information also is not available, we proposed
to provide payment for the pass-through radiopharmaceutical at 95
percent of its most recent AWP.
We did not receive any public comments regarding our proposals.
Therefore, we are implementing these proposals for CY 2019 without
modification. We note that public comments pertaining to our proposal
to pay WAC+3 percent for drugs and biologicals without ASP information
as well as public comments on section 1301 pass-through payment status
extensions are addressed elsewhere in this final rule with comment
period.
The drugs and biologicals that continue to have pass-through
payment status for CY 2019 or have been granted pass-through payment
status as of January 2019 are shown in Table 38 below.
[[Page 58956]]
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[[Page 58957]]
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[[Page 58958]]
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[[Page 58959]]
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[[Page 58960]]
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BILLING CODE 4120-01-C
5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through
Status as a Result of Section 1301 of the Consolidated Appropriations
Act of 2018 (Pub. L. 115-141)
As mentioned earlier, section 1301(a)(1) of the Consolidated
Appropriations Act of 2018 (Pub. L. 115-141) amended section 1833(t)(6)
of the Act and added a new section 1833(t)(6)(G), which provides that
for drugs or biologicals whose period of pass-through payment status
ended on December 31, 2017 and for which payment was packaged into a
covered hospital outpatient service furnished beginning January 1,
2018, such pass-through payment status shall be extended for a 2-year
period beginning on October 1, 2018 through September 30, 2020. There
are four products whose period of drug and biological pass-through
payment status ended on December 31, 2017. These products were listed
in Table 21 of the CY 2019 OPPS/ASC proposed rule (83 FR 37115). For CY
2019, we proposed to continue pass-through payment status for the drugs
and biologicals listed in Table 21 of the proposed rule (we note that
these drugs and biologicals were also listed in Table 20 of the
proposed rule). The APCs and HCPCS codes for these drugs and
biologicals approved for pass-through payment status were assigned
status indicator ``G'' in Addenda A and B to the proposed rule (which
are available via the internet on the CMS website).
In addition, new section 1833(t)(6)(H) of the Act specifies that
the payment amount for such drug or biological under this subsection
that is furnished during the period beginning on October 1, 2018, and
ending on March 31, 2019, shall be the greater of: (i) The payment
amount that would otherwise apply under section 1833(t)(6)(D)(i) of the
Act for such drug or biological during such period; or (ii) the payment
amount that applied under section 1833(t)(6)(D)(i) of the Act for such
drug or biological on December 31, 2017. We stated in the proposed rule
that we intended to address pass-through payment for these drugs and
biologicals for the last quarter of CY 2018 through program
instruction. The program instruction covering pass-through payment for
these drugs and biologicals for the last quarter of CY 2018 is
Transmittal 4123 titled ``October 2018 Update of the Hospital
Outpatient Prospective Payment System (OPPS)'', and can be found on the
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/
Transmittals/
[[Page 58961]]
2018Downloads/R4123CP.pdf. For January 1, 2019 through March 31, 2019,
we proposed that pass-through payment for these four drugs and
biologicals would be the greater of: (1) ASP+6 percent based on current
ASP data; or (2) the payment rate for the drug or biological on
December 31, 2017. We also proposed for the period of April 1, 2019
through December 31, 2019 that the pass-through payment amount for
these drugs and biologicals would be the amount that applies under
section 1833(t)(6)(D)(i) of the Act.
We proposed to continue to update pass-through payment rates for
these four drugs and biologicals on a quarterly basis on the CMS
website during CY 2019 if later quarter ASP submissions (or more recent
WAC or AWP information, as applicable) indicate that adjustments to the
payment rates for these pass-through drugs or biologicals are
necessary. For a full description of this policy, we refer readers to
the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632
through 68635).
The four drugs and biologicals that we proposed would have pass-
through payment status for CY 2019 under section 1833(t)(6)(G) of the
Act, as added by section 1301(a)(1)(C) of the Consolidated
Appropriations Act of 2018, were shown in Table 21 of the CY 2019 OPPS/
ASC proposed rule (83 FR 37115). Included as one of the four drugs and
biologicals with pass-through payment status for CY 2019 is HCPCS code
Q4172 (Puraply, and Puraply AM per square centimeter). PuraPly is a
skin substitute product that was approved for pass-through payment
status on January 1, 2015 through the drug and biological pass-through
payment process. Beginning on April 1, 2015, skin substitute products
are evaluated for pass-through payment status through the device pass-
through payment process. However, we stated in the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66887) that skin substitutes that
are approved for pass-through payment status as biologicals effective
on or before January 1, 2015 would continue to be paid as pass-through
biologicals for the duration of their pass-through payment period.
Because PuraPly was approved for pass-through payment status through
the drug and biological pass-through payment pathway, we proposed to
consider PuraPly to be a drug or biological as described by section
1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the
Consolidated Appropriations Act of 2018, and to be eligible for
extended pass-through payment under our proposal for CY 2019.
Comment: Several commenters were opposed to PuraPly and PuraPly AM
receiving pass-through payment status for CY 2019. These commenters
stated that because PuraPly and PuraPly AM received a 510(k) clearance
from the FDA, PuraPly and PuraPly AM should be considered devices
rather than drugs or biologicals or that there is at least some
ambiguity about whether PuraPly and PuraPly AM are devices. The
commenters encouraged CMS to use its discretion and consider PuraPly
and PuraPly AM to be devices along the same lines of reasoning as CMS
has considered biologicals used as skin substitutes to be considered
devices for the purposes of receiving pass-through payment since April
2015. In addition, the commenters noted that PuraPly and PuraPly AM
should not have pass-through payment status extended because they are
no longer new products. Further, the commenters noted that these
products would receive a significant market advantage by being the only
graft skin substitute product to receive separate payment. Other
commenters noted that extending the pass-through payment status of
PuraPly and PuraPly AM would work against the goals CMS has stated in
other parts of the proposed rule regarding skin substitute payment.
Finally, these commenters maintained that extending pass-through
payment status would encourage the use of more high-cost skin
substitute products and lead to increased pricing instability by
increasing the cost thresholds for the high-cost skin substitute group.
Another commenter opposed extending pass-through payment status for
PuraPly and PuraPly AM based on the belief that the manufacturer of
these products may be unfairly increasing the prices for these products
when they return to pass-through payment status.
Response: In the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66887), we stated that skin substitutes that are approved for
pass-through payment status as biologicals effective on or before
January 1, 2015 would continue to be paid as pass-through biologicals
for the duration of their pass-through payment period. PuraPly and
PuraPly AM were originally approved for pass-through payment status on
January 1, 2015 under the drug and biological pass-through payment
pathway as biologicals. We interpret section 1833(t)(6)(G) of the Act,
as added by section 1301(a)(1)(C) of the Consolidated Appropriations
Act of 2018, as extending the original pass-through payment period that
was established for PuraPly and PuraPly AM on January 1, 2015, and
therefore, PuraPly and PuraPly AM will continue to be paid as pass-
through drugs and biologicals. While we acknowledge the comments
pointing out that we currently treat skin substitute products as
devices for purposes of pass-through payment status, this does not
change the fact that PuraPly and PuraPly AM were originally approved
for pass-through payments as biologicals. We believe that PuraPly and
PuraPly AM's original approval for pass-through status as biologicals
means that they should continue to receive pass-through payments under
section 1833(t)(6)(G) of the Act.
We also recognize that the commenters raised important concerns
about the impact that extending pass-through payment status for PuraPly
and PuraPly AM could have on the payment of wound care services using
graft skin substitute products. However, we nonetheless believe that
section 1833(t)(6)(G) of the Act requires us to extend the pass-through
payment period for PuraPly and PuraPly AM.
Comment: One commenter, the manufacturer of PuraPly and PuraPly AM,
urged CMS to implement the proposal to give PuraPly and PuraPly AM
pass-through payment status based on the requirements of section
1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the
Consolidated Appropriations Act of 2018. The commenter stated that
PuraPly and PuraPly AM are biologicals and cited language in OPPS
regulations supporting that designation. The commenter also made the
point that the pass-through payment status granted to PuraPly and
PuraPly AM starting on October 1, 2018 was described in the statute as
an extension of the original pass-through payment status and not a new
pass-through payment period. The commenter stated that this means the
requirements in effect when pass-through payment status for PuraPly and
PuraPly AM was established on January 1, 2015 apply to the extended
pass-through payment period. The commenter noted that CMS changed how
skin substitute products are evaluated for pass-through payment status
by evaluating skin substitutes through the medical device pass-through
pathway in April of 2015, but emphasized that the change was not
retroactive. Therefore, the commenter agreed that PuraPly and PuraPly
AM should continue to receive pass-through payment status.
Several members of Congress supported extending pass-through
payment status for PuraPly and PuraPly
[[Page 58962]]
AM and requested that CMS consider the products to be biologicals that
are covered by section 1833(t)(6)(G) of the Act, as added by section
1301(a)(1)(C) of the Consolidated Appropriations Act of 2018.
Response: We appreciate the commenters' support. We are finalizing
our proposal to extend pass-through payment status for PuraPly and
PuraPly AM based on section 1833(t)(6)(G) of the Act, as added by
section 1301(a)(1)(C) of the Consolidated Appropriations Act of 2018.
Comment: One commenter, the manufacturer of Omidria (HCPCS code
C9447), supported the extended pass-through payment status for Omidria.
Likewise, a second commenter, the manufacturer of Lumason[supreg]
(HCPCS code Q9950), supported the extended pass-through payment status
for Lumason[supreg].
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposals, with modification, to accommodate a coding
change related to the PuraPly products. Specifically, after the
proposed rule was published, we became aware that HCPCS code Q4172
(Puraply, and Puraply AM per square centimeter) will be deleted
effective January 1, 2019, and will be replaced by three new HCPCS
codes: Q4195 (Puraply, per square centimeter); Q4196 (Puraply am, per
square centimeter); and Q4197 (Puraply xt, per square centimeter),
effective January 1, 2019. Two of these products, PuraPly (HCPCS code
Q4195) and PuraPly AM (HCPCS code Q4196), were products that received
original pass-through payment status on January 1, 2015, and will
continue to receive pass-through payment status in CY 2019 when our
finalized policies are implemented.
For January 1, 2019 through March 31, 2019, we are finalizing our
proposal that pass-through payment for the covered drugs and
biologicals will be the greater of: (1) ASP+6 percent based on current
ASP data; or (2) the payment rate for the drug or biological on
December 31, 2017. We also are finalizing our proposal that the pass-
through payment amount for these drugs and biologicals will be the
amount that applies under section 1833(t)(6)(D)(i) of the Act for the
period of April 1, 2019 through December 31, 2019.
We are finalizing our proposal to continue to update pass-through
payment rates for these covered drugs and biologicals on a quarterly
basis on the CMS website during CY 2019 if later quarter ASP
submissions (or more recent WAC or AWP information, as applicable)
indicate that adjustments to the payment rates for these pass-through
drugs or biologicals are necessary. We refer readers to Table 39 below
for the drugs and biologicals covered by the requirements of this
section.
[GRAPHIC] [TIFF OMITTED] TR21NO18.062
6. Provisions for Reducing Transitional Pass-Through Payments for
Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To Offset
Costs Packaged Into APC Groups
Under the regulations at 42 CFR 419.2(b), nonpass-through drugs,
biologicals, and radiopharmaceuticals that function as supplies when
used in a diagnostic test or procedure are packaged in the OPPS. This
category includes diagnostic radiopharmaceuticals, contrast agents,
stress agents, and other diagnostic drugs. Also under 42 CFR 419.2(b),
nonpass-through drugs and biologicals that function as supplies in a
surgical procedure are packaged in the OPPS. This category includes
skin substitutes and other surgical-supply drugs and biologicals. As
described earlier, 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) of the Act and the otherwise applicable OPD fee schedule
amount. Because a payment offset is necessary in order to provide an
appropriate transitional pass-through payment, we deduct from the pass-
through payment for policy-packaged drugs, biologicals, and
radiopharmaceuticals an amount reflecting the portion of the APC
payment associated with predecessor products in order to ensure no
duplicate payment is made. This amount reflecting the portion of the
APC payment associated with predecessor products is called the payment
offset.
The payment offset policy applies to all policy packaged drugs,
biologicals, and radiopharmaceuticals. For a full
[[Page 58963]]
description of the payment offset policy as applied to diagnostic
radiopharmaceuticals, contrast agents, stress agents, and skin
substitutes, we refer readers to the discussion in the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70430 through 70432). In the CY
2019 OPPS/ASC proposed rule (83 FR 37115), for CY 2019, as we did in CY
2018, we proposed to continue to apply the same policy packaged offset
policy to payment for pass-through diagnostic radiopharmaceuticals,
pass-through contrast agents, pass-through stress agents, and pass-
through skin substitutes. The proposed APCs to which a payment offset
may be applicable for pass-through diagnostic radiopharmaceuticals,
pass-through contrast agents, pass-through stress agents, and pass-
through skin substitutes were identified in Table 22 of the proposed
rule (83 FR 37115).
We did not receive any comments on this proposal. Therefore, we are
finalizing this proposal without modification.
[GRAPHIC] [TIFF OMITTED] TR21NO18.063
In the CY 2019 OPPS/ASC proposed rule, we proposed to continue to
post annually on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.html a file that contains the APC offset amounts that will be
used for that year for purposes of both evaluating cost significance
for candidate pass-through payment device categories and drugs and
biologicals and establishing any appropriate APC offset amounts.
Specifically, the file will continue to provide the amounts and
percentages of APC payment associated with packaged implantable
devices, policy-packaged drugs, and threshold packaged drugs and
biologicals for every OPPS clinical APC. We did not receive any public
comments on our proposal, and therefore are finalizing it without
modification.
B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Payment Status
1. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Packaging Threshold
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 four quarter moving average Producer Price Index (PPI) levels
for Pharmaceutical Preparations (Prescription) to trend the $50
threshold forward from the third quarter of CY 2005 (when the Pub. L.
108-173 mandated threshold became effective) to the third quarter of CY
2007. We then rounded the resulting dollar amount to the nearest $5
increment in order to determine the CY 2007 threshold amount of $55.
Using the same methodology as that used in CY 2007 (which is discussed
in more detail in the CY 2007 OPPS/ASC final rule with comment period
(71 FR 68085 through 68086)), we set the packaging threshold for
establishing separate APCs for drugs and biologicals at $120 for CY
2018 (82 FR 59343).
Following the CY 2007 methodology, for this CY 2019 OPPS/ASC final
rule with comment period, we used the most recently available four
quarter moving average PPI levels to trend the $50 threshold forward
from the third quarter of CY 2005 to the third quarter of CY 2019 and
rounded the resulting dollar amount ($127.01) to the nearest $5
increment, which yielded a figure of $125. In performing this
calculation, we used the most recent forecast of the quarterly index
levels for the PPI for Pharmaceuticals for Human Use (Prescription)
(Bureau of Labor Statistics series code WPUSI07003) from CMS' Office of
the Actuary. For this CY 2019 OPPS/ASC final rule with comment period,
based on these calculations using the CY 2007 OPPS methodology,
[[Page 58964]]
we are finalizing a packaging threshold for CY 2019 of $125.
b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs,
Certain Biologicals, and Therapeutic Radiopharmaceuticals Under the
Cost Threshold (``Threshold-Packaged Drugs'')
In the CY 2019 OPPS/ASC proposed rule (83 FR 37116), to determine
the proposed CY 2019 packaging status for all nonpass-through drugs and
biologicals that are not policy packaged, we calculated, on a HCPCS
code-specific basis, the per day cost of all drugs, biologicals, and
therapeutic radiopharmaceuticals (collectively called ``threshold-
packaged'' drugs) that had a HCPCS code in CY 2017 and were paid (via
packaged or separate payment) under the OPPS. We used data from CY 2017
claims processed before January 1, 2018 for this calculation. However,
we did not perform this calculation for those drugs and biologicals
with multiple HCPCS codes that include different dosages, as described
in section V.B.1.d. of the proposed rule, or for the following policy-
packaged items that we proposed to continue to package in CY 2019:
Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that
function as supplies when used in a diagnostic test or procedure; and
drugs and biologicals that function as supplies when used in a surgical
procedure.
In order to calculate the per day costs for drugs, biologicals, and
therapeutic radiopharmaceuticals to determine their proposed packaging
status in CY 2019, we used the methodology that was described in detail
in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and
finalized in the CY 2006 OPPS final rule with comment period (70 FR
68636 through 68638). For each drug and biological HCPCS code, we used
an estimated payment rate of ASP+6 percent (which is the payment rate
we proposed for separately payable drugs and biologicals for CY 2019,
as discussed in more detail in section V.B.2.b. of the proposed rule)
to calculate the CY 2019 proposed rule per day costs. We used the
manufacturer-submitted ASP data from the fourth quarter of CY 2017
(data that were used for payment purposes in the physician's office
setting, effective April 1, 2018) to determine the proposed rule per
day cost.
As is our standard methodology, for CY 2019, we proposed to use
payment rates based on the ASP data from the first quarter of CY 2018
for budget neutrality estimates, packaging determinations, impact
analyses, and completion of Addenda A and B to the proposed rule (which
are available via the internet on the CMS website) because these were
the most recent data available for use at the time of development of
the proposed rule. These data also were the basis for drug payments in
the physician's office setting, effective April 1, 2018. For items that
did not have an ASP-based payment rate, such as some therapeutic
radiopharmaceuticals, we used their mean unit cost derived from the CY
2017 hospital claims data to determine their per day cost.
We proposed to package items with a per day cost less than or equal
to $125, and identify items with a per day cost greater than $125 as
separately payable unless they are policy-packaged. Consistent with our
past practice, we cross-walked historical OPPS claims data from the CY
2017 HCPCS codes that were reported to the CY 2018 HCPCS codes that we
displayed in Addendum B to the proposed rule (which is available via
the internet on the CMS website) for proposed payment in CY 2019.
Comment: A few commenters requested that CMS not finalize the
proposed increase to the packaging threshold to $125 and suggested that
CMS instead lower the packaging threshold. These commenters expressed
concern with the annual increases in the drug packaging threshold,
citing that yearly increases have outpaced conversion factor updates
and place a financial burden on providers.
Response: We have received and addressed similar comments in prior
rules, including most recently in the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79666). As we 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 updating the packaging threshold of $50 for the CY 2005
OPPS is consistent with industry and government practices, and that the
PPI for Prescription Drugs is an appropriate mechanism to gauge Part B
drug inflation. Therefore, because packaging is a fundamental component
of a prospective payment system that continues to provide important
flexibility and efficiency in the delivery of high quality hospital
outpatient services, we are not adopting the commenters' recommendation
to delay updating the packaging threshold or freeze the packaging
threshold at $120.
After consideration of the public comments we received, and
consistent with our methodology for establishing the packaging
threshold using the most recent PPI forecast data, we are adopting a CY
2019 packaging threshold of $125.
Our policy during previous cycles of the OPPS has been to use
updated ASP and claims data to make final determinations of the
packaging status of HCPCS codes for drugs, biologicals, and therapeutic
radiopharmaceuticals for the OPPS/ASC final rule with comment period.
We note that it is also our policy to make an annual packaging
determination for a HCPCS code only when we develop the OPPS/ASC final
rule with comment period for the update year. Only HCPCS codes that are
identified as separately payable in the final rule with comment period
are subject to quarterly updates. For our calculation of per day costs
of HCPCS codes for drugs and biologicals in this CY 2019 OPPS/ASC final
rule with comment period, we used ASP data from the third quarter of CY
2018, 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, 2018, along with updated hospital claims
data from CY 2017. We note that we also used these data for budget
neutrality estimates and impact analyses for this CY 2019 OPPS/ASC
final rule with comment period.
Payment rates for HCPCS codes for separately payable drugs and
biologicals included in Addenda A and B for this final rule with
comment period are based on ASP data from the third quarter of CY 2018.
These data are the basis for calculating payment rates for drugs and
biologicals in the physician's office setting using the ASP
methodology, effective October 1, 2018. These payment rates will then
be updated in the January 2019 OPPS update, based on the most recent
ASP data to be used for physician's office and OPPS payment as of
January 1, 2019. For items that do not currently have an ASP-based
payment rate, we proposed to recalculate their mean unit cost from all
of the CY 2017 claims data and updated cost report information
available for this CY 2019 final rule with comment period to determine
their final per day cost.
Consequently, as stated in the CY 2019 OPPS/ASC proposed rule (83
FR 37117), the packaging status of some HCPCS codes for drugs,
biologicals, and therapeutic radiopharmaceuticals in the proposed rule
may be different from the same drug HCPCS code's packaging status
determined based on the data used for this final rule with comment
period. Under such circumstances, in the CY 2019 OPPS/ASC proposed rule
(83 FR 37117), we proposed to continue to follow the established
policies
[[Page 58965]]
initially adopted for the CY 2005 OPPS (69 FR 65780) in order to more
equitably pay for those drugs whose costs fluctuate relative to the
proposed CY 2019 OPPS drug packaging threshold and the drug's payment
status (packaged or separately payable) in CY 2018. These established
policies have not changed for many years and are the same as described
in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434).
Specifically, for CY 2019, consistent with our historical practice, we
proposed to apply the following policies to these HCPCS codes for
drugs, biologicals, and therapeutic radiopharmaceuticals whose
relationship to the drug packaging threshold changes based on the
updated drug packaging threshold and on the final updated data:
HCPCS codes for drugs and biologicals that were paid
separately in CY 2018 and that were proposed for separate payment in CY
2019, and that then have per day costs equal to or less than the CY
2019 final rule drug packaging threshold, based on the updated ASPs and
hospital claims data used for this CY 2019 final rule, would continue
to receive separate payment in CY 2019.
HCPCS codes for drugs and biologicals that were packaged
in CY 2018 and that were proposed for separate payment in CY 2019, and
that then have per day costs equal to or less than the CY 2019 final
rule drug packaging threshold, based on the updated ASPs and hospital
claims data used for this CY 2019 final rule, would remain packaged in
CY 2019.
HCPCS codes for drugs and biologicals for which we
proposed packaged payment in CY 2019 but that then have per-day costs
greater than the CY 2019 final rule drug packaging threshold, based on
the updated ASPs and hospital claims data used for this CY 2019 final
rule, would receive separate payment in CY 2019.
We did not receive any public comments on our proposal to
recalculate the mean unit cost for items that do not currently have an
ASP-based payment rate from all of the CY 2017 claims data and updated
cost report information available for this CY 2019 final rule with
comment period to determine their final per day cost. We also did not
receive any public comments on our proposal to continue to follow the
established policies, initially adopted for the CY 2005 OPPS (69 FR
65780), when the packaging status of some HCPCS codes for drugs,
biologicals, and therapeutic radiopharmaceuticals in the proposed rule
may be different from the same drug HCPCS code's packaging status
determined based on the data used for the final rule with comment
period. Therefore, for CY 2019, we are finalizing these two proposals
without modification.
c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
As mentioned earlier in this section, in the OPPS, we package
several categories of drugs, biologicals, and radiopharmaceuticals,
regardless of the cost of the products. Because the products are
packaged according to the policies in 42 CFR 419.2(b), we refer to
these packaged drugs, biologicals, and radiopharmaceuticals as
``policy-packaged'' drugs, biologicals, and radiopharmaceuticals. These
policies are either longstanding or based on longstanding principles
and inherent to the OPPS and are as follows:
Anesthesia, certain drugs, biologicals, and other
pharmaceuticals; medical and surgical supplies and equipment; surgical
dressings; and devices used for external reduction of fractures and
dislocations (Sec. 419.2(b)(4));
Intraoperative items and services (Sec. 419.2(b)(14));
Drugs, biologicals, and radiopharmaceuticals that function
as supplies when used in a diagnostic test or procedure (including, but
not limited to, diagnostic radiopharmaceuticals, contrast agents, and
pharmacologic stress agents) (Sec. 419.2(b)(15)); and
Drugs and biologicals that function as supplies when used
in a surgical procedure (including, but not limited to, skin
substitutes and similar products that aid wound healing and implantable
biologicals) (Sec. 419.2(b)(16)).
The policy at Sec. 419.2(b)(16) is broader than that at Sec.
419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with
comment period: ``We consider all items related to the surgical outcome
and provided during the hospital stay in which the surgery is
performed, including postsurgical pain management drugs, to be part of
the surgery for purposes of our drug and biological surgical supply
packaging policy'' (79 FR 66875). The category described by Sec.
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals,
contrast agents, stress agents, and some other products. The category
described by Sec. 419.2(b)(16) includes skin substitutes and some
other products. We believe it is important to reiterate that cost
consideration is not a factor when determining whether an item is a
surgical supply (79 FR 66875).
We did not make any proposals to revise our policy-packaged drug
policy. We solicited public comment on the general OPPS packaging
policies as discussed in section II.3.a. of this final rule with
comment period.
Comment: One commenter recommended that CMS continue to apply the
nuclear medicine procedure to radiolabeled product edits to ensure that
all packaged costs are included on nuclear medicine claims in order to
establish appropriate payment rates in the future. The commenter was
concerned that many providers performing nuclear medicine procedures
are not including the cost of diagnostic radiopharmaceuticals used for
the procedures in their claims submissions. The commenter believed this
lack of drug cost reporting is causing the cost of nuclear medicine
procedures to be underreported, and that the radiolabeled product edits
will ensure providers are reporting the cost of diagnostic
radiopharmaceuticals in their claims data.
Response: We do not agree with the commenter that we should
reinstate the nuclear medicine procedure to radiolabeled product edits,
which required a diagnostic radiopharmaceutical to be present on the
same claim as a nuclear medicine procedure for payment under the OPPS
to be made. The edits were in place between CY 2008 and CY 2014 (78 FR
75033). We believe the period of time in which the edits were in place
was sufficient for hospitals to gain experience reporting procedures
involving radiolabeled products and to become accustomed to ensuring
that they code and report charges so that their claims fully and
appropriately reflect the costs of those radiolabeled products. As with
all other items and services recognized under the OPPS, we expect
hospitals to code and report their costs appropriately, regardless of
whether there are claims processing edits in place.
Comment: Several commenters requested that diagnostic
radiopharmaceuticals be paid separately in all cases, not just when the
drugs have pass-through payment status. The commenters provided limited
data that showed that procedures where diagnostic radiopharmaceuticals
are considered to be a surgical supply often are paid at a lower rate
than what the payment rate is for the diagnostic radiopharmaceutical
itself when the drug is paid separately on pass-through payment status.
The commenters stated that diagnostic radiopharmaceuticals are highly
complex drugs that undergo a rigorous approval process by the FDA.
[[Page 58966]]
The commenters believed that the type of procedure in which a drug or
biological is used should not dictate whether that drug or biological
is a supply and is packaged.
Response: We continue to believe that diagnostic
radiopharmaceuticals are an integral component of many nuclear medicine
and imaging procedures and charges associated with radiopharmaceuticals
should be reported on hospital claims to the extent they are used.
Therefore, payment for the radiopharmaceuticals is reflected within the
payment for the primary procedure. While at least one commenter
provided limited data showing the proposed cost of the packaged
procedure in CY 2019 is substantially lower than the cost of the
separately paid radiopharmaceutical on pass-through payment plus the
cost of the procedure associated with the radiopharmaceutical, we note
the rates are established in a manner that takes the average (more
specifically, the geometric mean) of reported costs to furnish the
procedure based on data submitted to us from all hospitals paid under
the OPPS. Accordingly, the costs that are calculated by Medicare
reflect the average costs of items and services that are packaged into
a primary procedure and will not necessarily equal the sum of the cost
of the primary procedure and the average sales price of items and
services because the billing patterns of hospitals may not reflect that
a particular item or service is always billed with the primary
procedure. Further, the costs will be based on the reported costs
submitted to Medicare by hospitals, not the list price established by
the manufacturer. Claims data that include the radiopharmaceutical
packaged with the associate procedure reflect the combined cost of the
procedure and the radiopharmaceutical used in the procedure.
d. High Cost/Low Cost Threshold for Packaged Skin Substitutes
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
74938), we unconditionally packaged skin substitute products into their
associated surgical procedures as part of a broader policy to package
all drugs and biologicals that function as supplies when used in a
surgical procedure. As part of the policy to finalize the packaging of
skin substitutes, we also finalized a methodology that divides the skin
substitutes into a high cost group and a low cost group, in order to
ensure adequate resource homogeneity among APC assignments for the skin
substitute application procedures (78 FR 74933).
Skin substitutes assigned to the high cost group are described by
HCPCS codes 15271 through 15278. Skin substitutes assigned to the low
cost group are described by HCPCS codes C5271 through C5278. Geometric
mean costs for the various procedures are calculated using only claims
for the skin substitutes that are assigned to each group. Specifically,
claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to
calculate the geometric mean costs for procedures assigned to the high
cost group, and claims billed with HCPCS code C5271, C5273, C5275, or
C5277 are used to calculate the geometric mean costs for procedures
assigned to the low cost group (78 FR 74935).
Each of the HCPCS codes described above are assigned to one of the
following three skin procedure APCs according to the geometric mean
cost for the code: APC 5053 (Level 3 Skin Procedures) (HCPCS codes
C5271, C5275, and C5277); APC 5054 (Level 4 Skin Procedures) (HCPCS
codes C5273, 15271, 15275, and 15277); or APC 5055 (Level 5 Skin
Procedures) (HCPCS code 15273). In CY 2018, the payment rate for APC
5053 (Level 3 Skin Procedures) was $488.20, the payment rate for APC
5054 (Level 4 Skin Procedures) was $1,568.43, and the payment rate for
APC 5055 (Level 5 Skin Procedures) was $2,710.48. This information also
is available in Addenda A and B of the CY 2018 OPPS/ASC final rule with
comment period (which is available via the internet on the CMS
website).
We have continued the high cost/low cost categories policy since CY
2014, and in the CY 2019 OPPS/ASC proposed rule (83 FR 37117), we
proposed to continue it for CY 2019. Under this current policy, skin
substitutes in the high cost category are reported with the skin
substitute application CPT codes, and skin substitutes in the low cost
category are reported with the analogous skin substitute HCPCS C-codes.
For a discussion of the CY 2014 and CY 2015 methodologies for assigning
skin substitutes to either the high cost group or the low cost group,
we refer readers to the CY 2014 OPPS/ASC final rule with comment period
(78 FR 74932 through 74935) and the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66882 through 66885).
For a discussion of the high cost/low cost methodology that was
adopted in CY 2016 and has been in effect since then, we refer readers
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434
through 70435). For CY 2019, as with our policy since CY 2016, we
proposed to continue to determine the high cost/low cost status for
each skin substitute product based on either a product's geometric mean
unit cost (MUC) exceeding the geometric MUC threshold or the product's
per day cost (PDC) (the total units of a skin substitute multiplied by
the mean unit cost and divided by the total number of days) exceeding
the PDC threshold. For CY 2019, as for CY 2018, we proposed to assign
each skin substitute that exceeds either the MUC threshold or the PDC
threshold to the high cost group. In addition, as described in more
detail later in this section, for CY 2019, as for CY 2018, we proposed
to assign any skin substitute with a MUC or a PDC that does not exceed
either the MUC threshold or the PDC threshold to the low cost group.
For CY 2019, we proposed that any skin substitute product that was
assigned to the high cost group in CY 2018 would be assigned to the
high cost group for CY 2019, regardless of whether it exceeds or falls
below the CY 2019 MUC or PDC threshold.
For this CY 2019 OPPS/ASC final rule with comment period,
consistent with the methodology as established in the CY 2014 through
CY 2017 final rules with comment period, we analyzed updated CY 2017
claims data to calculate the MUC threshold (a weighted average of all
skin substitutes' MUCs) and the PDC threshold (a weighted average of
all skin substitutes' PDCs). The final CY 2019 MUC threshold is $49 per
cm\2\ (rounded to the nearest $1) (proposed at $49 per cm\2\) and the
final CY 2019 PDC threshold is $872 (rounded to the nearest $1)
(proposed at $895).
For CY 2019, we proposed to continue to assign skin substitutes
with pass-through payment status to the high cost category. We proposed
to assign skin substitutes with pricing information but without claims
data to calculate a geometric MUC or PDC to either the high cost or low
cost category based on the product's ASP+6 percent payment rate as
compared to the MUC threshold. If ASP is not available, we proposed to
use WAC+3 percent to assign a product to either the high cost or low
cost category. Finally, if neither ASP nor WAC is available, we stated
in the proposed rule that we would use 95 percent of AWP to assign a
skin substitute to either the high cost or low cost category. We
proposed to use WAC+3 percent instead of WAC+6 percent to conform to
our proposed policy described in section V.B.2.b. of the proposed rule
to establish a payment rate of WAC+3 percent for separately payable
drugs and biologicals that do not have ASP data available. We also
[[Page 58967]]
stated in the proposed rule that new skin substitutes without pricing
information would be assigned to the low cost category until pricing
information is available to compare to the CY 2019 MUC threshold. For a
discussion of our existing policy under which we assign skin
substitutes without pricing information to the low cost category until
pricing information is available, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70436).
Some skin substitute manufacturers have raised concerns about
significant fluctuation in both the MUC threshold and the PDC threshold
from year to year. The fluctuation in the thresholds may result in the
reassignment of several skin substitutes from the high cost group to
the low cost group which, under current payment rates, can be a
difference of approximately $1,000 in the payment amount for the same
procedure. In addition, these stakeholders were concerned that the
inclusion of cost data from skin substitutes with pass-through payment
status in the MUC and PDC calculations would artificially inflate the
thresholds. Skin substitute stakeholders requested that CMS consider
alternatives to the current methodology used to calculate the MUC and
PDC thresholds and also requested that CMS consider whether it might be
appropriate to establish a new cost group in between the low cost group
and the high cost group to allow for assignment of moderately priced
skin substitutes to a newly created middle group.
We share the goal of promoting payment stability for skin
substitute products and their related procedures as price stability
allows hospitals using such products to more easily anticipate future
payments associated with these products. We have attempted to limit
year-to-year shifts for skin substitute products between the high cost
and low cost groups through multiple initiatives implemented since CY
2014, including: Establishing separate skin substitute application
procedure codes for low-cost skin substitutes (78 FR 74935); using a
skin substitute's MUC calculated from outpatient hospital claims data
instead of an average of ASP+6 percent as the primary methodology to
assign products to the high cost or low cost group (79 FR 66883); and
establishing the PDC threshold as an alternate methodology to assign a
skin substitute to the high cost group (80 FR 70434 through 70435).
To allow additional time to evaluate concerns and suggestions from
stakeholders about the volatility of the MUC and PDC thresholds, in the
CY 2018 OPPS/ASC proposed rule (82 FR 33627), for CY 2018, we proposed
that a skin substitute that was assigned to the high cost group for CY
2017 would be assigned to the high cost group for CY 2018, even if it
does not exceed the CY 2018 MUC or PDC thresholds. We finalized this
policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR
59347). We stated in the CY 2018 OPPS/ASC proposed rule that the goal
of our proposal to retain the same skin substitute cost group
assignments in CY 2018 as in CY 2017 was to maintain similar levels of
payment for skin substitute products for CY 2018 while we study our
skin substitute payment methodology to determine whether refinement to
the existing policies is consistent with our policy goal of providing
payment stability for skin substitutes.
We stated in the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59347) that we would continue to study issues related to the
payment of skin substitutes and take these comments into consideration
for future rulemaking. We received many responses to our requests for
comments in the CY 2018 OPPS/ASC proposed rule about possible
refinements to the existing payment methodology for skin substitutes
that would be consistent with our policy goal of providing payment
stability for these products. In addition, several stakeholders have
made us aware of additional concerns and recommendations since the
release of the CY 2018 OPPS/ASC final rule with comment period. As
discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37118 through
37119), we have identified four potential methodologies that have been
raised to us that we encouraged the public to review and provide
comments on. We stated in the proposed rule that we are especially
interested in any specific feedback on policy concerns with any of the
options presented as they relate to skin substitutes with differing per
day or per episode costs and sizes and other factors that may differ
among the dozens of skin substitutes currently on the market. We also
specified in the proposed rule that we are interested in any new ideas
that are not represented below along with an analysis of how different
skin substitute products would fare under such ideas. We stated that we
intend to explore the full array of public comments on these ideas for
the CY 2020 rulemaking, and we indicated that we will consider the
feedback received in response to our requests for comments in the CY
2019 proposed rule in developing proposals for CY 2020.
Establish a lump-sum ``episode-based'' payment for a wound
care episode. Under this option, a hospital would receive a lump sum
payment for all wound care services involving procedures using skin
substitutes. The payment would be made for a wound care ``episode''
(such as 12 weeks) for one wound. The lump sum payment could be the
same for all skin substitutes or could vary based on the estimated
number of applications for a given skin substitute during the wound
care episode. Under this option, payment to the provider could be made
at the start of treatment, or at a different time, and could be made
once or split into multiple payments. Quality metrics, such as using
the recommended number of treatments for a given skin substitute during
a treatment episode, and establishing a plan of care for patients who
do not experience 30 percent wound healing after 4 weeks, could be
established to ensure the beneficiary receives appropriate care while
limiting excessive additional applications of skin substitute products.
Eliminate the high cost/low cost categories for skin
substitutes and only have one payment category and set of procedure
codes for all skin substitute products. This option would reduce the
financial incentives to use expensive skin substitutes and would
provide incentives to use less costly skin substitute products that
have been shown to have similar efficacy treating wounds as more
expensive skin substitute products. A single payment category would
likely have a payment rate that is between the current rates paid for
high cost and low cost skin substitute procedures. Initially, a single
payment category may lead to substantially higher payment for skin
graft procedures performed with cheaper skin substitutes as compared to
their costs. However, over time, payment for skin graft procedures
using skin substitutes might reflect the lower cost of the procedures.
Allow for the payment of current add-on codes or create
additional procedure codes to pay for skin graft services between 26
cm\2\ and 99 cm\2\ and substantially over 100 cm\2\. Under this option,
payment for skin substitutes would be made more granularly based on the
size of the skin substitute product being applied. This option also
would reduce the risk that hospitals may not use enough of a skin
substitute to save money when performing a procedure. However, such
granularity in the use of skin substitutes could conflict with the
goals of a prospective payment system, which is based on a system of
averages. Specifically, it is expected that
[[Page 58968]]
some skin graft procedures will be less than 25 cm\2\ or around 100
cm\2\ and will receive higher payments compared to the cost of the
services. Conversely, services between 26 cm\2\ and 99 cm\2\ or those
that are substantially larger than 100 cm\2\ will receive lower
payments compared to the cost of the services, but the payments will
average over many skin graft procedures to an appropriate payment rate
for the provider.
Keep the high cost/low cost skin substitute categories,
but change the threshold used to assign skin substitutes in the high
cost or low cost group. Consider using other benchmarks that would
establish more stable thresholds for the high cost and low cost groups.
Ideas include, but are not limited to, fixing the MUC or PDC threshold
at an amount from a prior year, or setting global payment targets for
high cost and low cost skin substitutes and establishing a threshold
that meets the payment targets. Establishing different thresholds for
the high cost and low cost groups could allow for the use of a mix of
lower cost and higher cost skin substitute products that acknowledges
that a large share of skin substitutes products used by Medicare
providers are higher cost products but still providing substantial cost
savings for skin graft procedures. Different thresholds may also reduce
the number of skin substitute products that switch between the high
cost and low cost groups in a given year to give more payment stability
for skin substitute products.
Comment: Several commenters supported the four options presented in
the CY 2019 OPPS proposed rule (83 FR 37118 through 37119). Other
commenters opposed the four options.
Response: We appreciate the feedback we received from the
commenters. We will continue to study issues related to changing the
methodology for paying for skin substitute products, and we will take
these comments into consideration for CY 2020 rulemaking.
To allow stakeholders time to analyze and comment on the potential
ideas raised above, in the CY 2019 OPPS/ASC proposed rule (83 FR
37119), for CY 2019, we proposed to continue our policy established in
CY 2018 to assign skin substitutes to the low cost or high cost group.
However, for CY 2020, we stated in the proposed rule that we may revise
our policy to reflect one of the potential new methodologies discussed
above or a new methodology included in public comments in response to
the CY 2019 proposed rule. Specifically, for CY 2019, we proposed to
assign a skin substitute with a MUC or a PDC that does not exceed
either the MUC threshold or the PDC threshold to the low cost group,
unless the product was assigned to the high cost group in CY 2018, in
which case we would assign the product to the high cost group for CY
2019, regardless of whether it exceeds the CY 2019 MUC or PDC
threshold. We also proposed to assign to the high cost group any skin
substitute product that exceeds the CY 2019 MUC or PDC thresholds and
assign to the low cost group any skin substitute product that does not
exceed the CY 2019 MUC or PDC thresholds and were not assigned to the
high cost group in CY 2018. We proposed to continue to use payment
methodologies including ASP+6 percent and 95 percent of AWP for skin
substitute products that have pricing information but do not have
claims data to determine if their costs exceed the CY 2019 MUC. In
addition, we proposed to use WAC+3 percent instead of WAC+6 percent for
skin substitute products that do not have ASP pricing information or
have claims data to determine if those products' costs exceed the CY
2019 MUC. We also proposed to retain our established policy to assign
new skin substitute products with pricing information to the low cost
group.
Table 23 in the CY 2019 OPPS/ASC proposed rule (83 FR 37119 through
37120) displayed the proposed CY 2019 high cost or low cost category
assignment for each skin substitute product.
Comment: Two commenters requested that CMS implement a single skin
substitute payment category in CY 2019 rather than keeping the current
high cost and low cost categories. The commenters believed that the
existence of separate categories for high cost and low cost skin
substitutes encourages the over-utilization of high cost skin
substitutes which increases program cost for CMS and copayments for
beneficiaries.
Response: At this time, we do not believe that establishing one
cost category for all skin substitute products is prudent. While
several commenters supported a single payment category for skin
substitutes as a potential future refinement to the payment policy for
these products, several other commenters expressed significant concern
about this payment method. Accordingly, we do not believe it would be
appropriate to establish such a major payment change in this final rule
with comment period without having proposed it.
Comment: A number of commenters supported the proposal to assign a
skin substitute with a MUC or a PDC that does not exceed either the MUC
threshold or the PDC threshold to the low cost group, unless the
product was assigned to the high cost group in CY 2018, in which case
CMS would assign the product to the high cost group for CY 2019,
regardless of whether it exceeds the CY 2019 MUC or PDC threshold.
These commenters also supported the proposal to assign to the high cost
group any skin substitute product that exceeds the CY 2019 MUC or PDC
thresholds and assign to the low cost group any skin substitute product
that does not exceed the CY 2019 MUC or PDC thresholds and was not
assigned to the high cost group in CY 2018. One of the commenters
supported the proposal for CY 2019, but requested that CMS establish
new skin substitute payment policy for CY 2020. Another commenter
requested that CMS maintain the current payment methodologies for up to
5 years until a new skin substitute payment system is implemented.
Response: We appreciate the support from the commenters for our
proposals and their support for developing a new methodology for paying
for skin substitute procedures in future rulemaking.
Comment: One commenter expressed appreciation to CMS for assigning
HCPCS codes Q4122 (Dermacell, per square centimeter) and Q4150
(Allowrap ds or dry, per square centimeter) to the high cost group.
Response: We appreciate the commenter's support.
After consideration of the public comments we received, we are
finalizing our proposal to assign a skin substitute with a MUC or a PDC
that does not exceed either the MUC threshold or the PDC threshold to
the low cost group, unless the product was assigned to the high cost
group in CY 2018, in which case we would assign the product to the high
cost group for CY 2019, regardless of whether it exceeds the CY 2019
MUC or PDC threshold. We also are finalizing our proposal to assign to
the high cost group any skin substitute product that exceeds the CY
2019 MUC or PDC thresholds and assign to the low cost group any skin
substitute product that does not exceed the CY 2019 MUC or PDC
thresholds and was not assigned to the high cost group in CY 2018. We
are finalizing our proposal to continue to use payment methodologies
including ASP+6 percent and 95 percent of AWP for skin substitute
products that have pricing information but do not have claims data to
determine if their costs exceed the CY 2019 MUC. In addition, we are
finalizing our proposal to use WAC+3 percent instead of WAC+6
[[Page 58969]]
percent for skin substitute products that do not have ASP pricing
information or claims data to determine if those products' costs exceed
the CY 2019 MUC. We also are finalizing our proposal to retain our
established policy to assign new skin substitute products with pricing
information to the low cost group.
Table 41 below displays the final CY 2019 cost category assignment
for each skin substitute product.
BILLING CODE 4120-01-P
[[Page 58970]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.064
[[Page 58971]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.065
[[Page 58972]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.066
e. Packaging Determination for HCPCS Codes That Describe the Same Drug
or Biological but Different Dosages
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490
through 60491), we finalized a policy to make a single packaging
determination for a drug, rather than an individual HCPCS code, when a
drug has multiple HCPCS codes describing different dosages because we
believed that adopting the standard HCPCS code-specific packaging
determinations for these codes could lead to inappropriate payment
incentives for hospitals to report certain HCPCS codes instead of
others. We continue to believe that making packaging determinations on
a drug-specific basis eliminates payment incentives for hospitals to
report certain HCPCS codes for drugs and allows hospitals flexibility
in choosing to report all HCPCS codes for different dosages of the same
drug or only the lowest dosage HCPCS code. Therefore, in the CY 2019
OPPS/ASC proposed rule (83 FR 37121), we proposed to continue our
policy to make packaging determinations on a drug-specific basis,
rather than a HCPCS code-specific basis, for those HCPCS codes that
describe the same drug or biological but different dosages in CY 2019.
For CY 2019, in order to propose a packaging determination that is
consistent across all HCPCS codes that describe different dosages of
the same drug or biological, we aggregated both our CY 2017 claims data
and our pricing information at ASP+6 percent across all of the HCPCS
codes that describe each distinct drug or biological in order to
determine the mean units per day of the drug or biological in terms of
the HCPCS code with the lowest dosage descriptor. The following drugs
did not have pricing information available for the ASP methodology for
the CY 2019 OPPS/ASC proposed rule, and as is our current policy for
determining the packaging status of other drugs, we used the mean unit
cost available from the CY 2017 claims data to make the proposed
packaging determinations for these drugs: HCPCS code J1840 (Injection,
kanamycin sulfate, up to 500 mg); HCPCS code J1850 (Injection,
kanamycin sulfate, up to 75 mg); HCPCS code J3472 (Injection,
hyaluronidase, ovine, preservative free, per 1,000 usp units); HCPCS
code J7100 (Infusion, dextran 40, 500 ml); and HCPCS code J7110
(Infusion, dextran 75, 500 ml).
For all other drugs and biologicals that have HCPCS codes
describing different doses, we then multiplied the proposed weighted
average ASP+6 percent per unit payment amount across all dosage levels
of a specific drug or biological by the estimated units per day for all
HCPCS codes that describe each drug or biological from our claims data
to determine the estimated per day cost of each drug or biological at
less than or equal to the proposed CY 2019 drug packaging threshold of
$125 (so that all HCPCS codes for the same drug or biological would be
packaged) or greater than the proposed CY 2019 drug packaging threshold
of $125 (so that all HCPCS codes for the same drug or biological would
be separately payable). The proposed packaging status of each drug and
biological HCPCS code to which this methodology would apply in CY 2019
was displayed in Table 24 of the CY 2019 OPPS/ASC proposed rule (83 FR
37121).
We did not receive any public comments on this proposal. Therefore,
for CY 2019, we are finalizing our CY 2019 proposal, without
modification, to continue our policy to make packaging determinations
on a drug-specific basis, rather than a HCPCS code-specific basis, for
those HCPCS codes that describe the same drug or biological but
different dosages. Table 42 below displays the final packaging status
of each drug and biological HCPCS code to which the finalized
methodology applies for CY 2019.
[[Page 58973]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.067
[[Page 58974]]
BILLING CODE 4120-01-C
2. Payment for Drugs and Biologicals Without Pass-Through Status That
Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other
Separately Payable and Packaged Drugs and Biologicals
Section 1833(t)(14) of the Act defines certain separately payable
radiopharmaceuticals, drugs, and biologicals and mandates specific
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a
``specified covered outpatient drug'' (known as a SCOD) is defined as 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 SCODs. These exceptions are--
A drug or biological for which payment is first made on or
after January 1, 2003, under the transitional pass-through payment
provision in section 1833(t)(6) of the Act.
A drug or biological for which a temporary HCPCS code has
not been assigned.
During CYs 2004 and 2005, an orphan drug (as designated by
the Secretary).
Section 1833(t)(14)(A)(iii) of the Act requires that payment for
SCODs in CY 2006 and subsequent years be equal to the average
acquisition cost for the drug for that year as determined by the
Secretary, subject to any adjustment for overhead costs and taking into
account the hospital acquisition cost survey data collected by the
Government Accountability Office (GAO) in CYs 2004 and 2005, and later
periodic surveys conducted by the Secretary as set forth in the
statute. 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 for purposes of paragraph (14). We refer to this alternative
methodology as the ``statutory default.'' Most physician Part B drugs
are paid at ASP+6 percent in accordance with section 1842(o) and
section 1847A of the Act.
Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in
OPPS payment rates for SCODs to take into account overhead and related
expenses, such as pharmacy services and handling costs. Section
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead
and related expenses and to make recommendations to the Secretary
regarding whether, and if so how, a payment adjustment should be made
to compensate hospitals for overhead and related expenses. Section
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the
weights for ambulatory procedure classifications for SCODs to take into
account the findings of the MedPAC study.\57\
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\57\ Medicare Payment Advisory Committee. June 2005 Report to
the Congress. Chapter 6: Payment for pharmacy handling costs in
hospital outpatient departments. Available at: http://www.medpac.gov/docs/default-source/reports/June05_ch6.pdf?sfvrsn=0.
---------------------------------------------------------------------------
It has been our policy since CY 2006 to apply the same treatment to
all separately payable drugs and biologicals, which include SCODs, and
drugs and biologicals that are not SCODs. Therefore, we apply the
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs,
as required by statute, but we also apply it to separately payable
drugs and biologicals that are not SCODs, which is a policy
determination rather than a statutory requirement. In the CY 2019 OPPS/
ASC proposed rule (83 FR 37122), we proposed to apply section
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and
biologicals, including SCODs. Although we do not distinguish SCODs in
this discussion, we note that we are required to apply section
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying
this provision to other separately payable drugs and biologicals,
consistent with our history of using the same payment methodology for
all separately payable drugs and biologicals.
For a detailed discussion of our OPPS drug payment policies from CY
2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we
first adopted the statutory default policy to pay for separately
payable drugs and biologicals at ASP+6 percent based on section
1833(t)(14)(A)(iii)(II) of the Act. We continued this policy of paying
for separately payable drugs and biologicals at the statutory default
for CYs 2014 through 2018.
Comment: One commenter requested that HCPCS code J0476 (Injection,
baclofen, 50 mcg for intrathecal trial) be separately payable in CY
2019 and be assigned status indicator ``K'' (Paid under OPPS; separate
APC payment).
Response: The per day cost of the drug described by HCPCS code
J0476 is less than the drug packaging threshold amount of $125.
Therefore, the drug described by HCPCS code J0476 will be packaged into
the cost of the related services for CY 2019.
Comment: One commenter supported the assignment of GenVisc 850,
described by HCPCS code J7320, to a separately payable status with
status indicator ``K'' (Paid under OPPS; separate APC payment) for CY
2019. The commenter also requested that TriVisc, described by HCPCS
code J7329, also be assigned to a separately payable status for CY
2019.
Response: We appreciate the commenter's support. For HCPCS code
J7329, we are not able to assign the code to a payable status because
no pricing information is available for the code. If pricing
information becomes available prior to the next rulemaking cycle, we
would expect to assign a payable status in a quarterly update to the
OPPS.
b. CY 2019 Payment Policy
In the CY 2019 OPPS/ASC proposed rule (83 FR 37122), for CY 2019,
we proposed to continue our payment policy that has been in effect
since CY 2013 to pay for separately payable drugs and biologicals at
ASP+6 percent in accordance with section 1833(t)(14)(A)(iii)(II) of the
Act (the statutory default). We proposed to continue to pay for
separately payable nonpass-through drugs acquired with a 340B discount
at a rate of ASP minus 22.5 percent. We refer readers to section V.A.7.
of the proposed rule and this final rule with comment period for more
information about how the payment rate for drugs acquired with a 340B
discount was established.
In the case of a drug or biological during an initial sales period
in which data on the prices for sales for the drug or biological are
not sufficiently available from the manufacturer, section 1847A(c)(4)
of the Act permits the Secretary to make payments that are based on
WAC. Under section 1833(t)(14)(A)(iii)(II), the amount of payment for a
separately payable drug equals the average price for the drug for the
year established under, among other authorities, section 1847A of the
Act. As explained in greater detail in the CY 2019 PFS proposed rule,
under section 1847A(c)(4), although payments may be based on WAC,
unlike section 1847A(b) of the Act (which specifies that certain
payments must be made with a 6 percent add-on), section 1847A(c)(4) of
the Act does not require that a particular
[[Page 58975]]
add-on amount be applied to partial quarter WAC-based pricing.
Consistent with section 1847A(c)(4) of the Act, in the CY 2019 PFS
proposed rule, we proposed that, effective January 1, 2019, WAC-based
payments for Part B drugs made under section 1847A(c)(4) of the Act
would utilize a 3 percent add-on in place of the 6 percent add-on that
is currently being used per our policy in effect as of CY 2018. For the
OPPS, in the CY 2019 OPPS/ASC proposed rule (83 FR 37122), we also
proposed to utilize a 3 percent add-on instead of a 6 percent add-on
for WAC-based drugs pursuant to our authority under section
1833(t)(14)(A)(iii)(II) of the Act, which provides, in part, that the
amount of payment for a SCOD is the average price of the drug in the
year established under section 1847A of the Act. We also apply this
provision to non-SCOD separately payable drugs. Because we proposed to
establish the average price for a WAC-based drug under section 1847A of
the Act as WAC+3 percent instead of WAC+6 percent, we believe it is
appropriate to price separately payable WAC-based drugs at the same
amount under the OPPS. We proposed that, if finalized, our proposal to
pay for drugs or biologicals at WAC+3 percent, rather than WAC+6
percent, would apply whenever WAC-based pricing is used for a drug or
biological. We stated in the proposed rule that for drugs and
biologicals that would otherwise be subject to a payment reduction
because they were acquired under the 340B Program, the 340B Program
rate (in this case, WAC minus 22.5 percent) would continue to apply. We
referred readers to the CY 2019 PFS proposed rule for additional
background on this anticipated proposal.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37123), we proposed
that payments for separately payable drugs and biologicals are included
in the budget neutrality adjustments, under the requirements in section
1833(t)(9)(B) of the Act. We also proposed that the budget neutral
weight scalar not be applied in determining payments for these
separately paid drugs and biologicals.
We note that separately payable drug and biological payment rates
listed in Addenda A and B to this final rule with comment period
(available via the internet on the CMS website), which illustrate the
final CY 2019 payment of ASP+6 percent for separately payable nonpass-
through drugs and biologicals and ASP+6 percent for pass-through drugs
and biologicals, reflect either ASP information that is the basis for
calculating payment rates for drugs and biologicals in the physician's
office setting effective October 1, 2018, or WAC, AWP, or mean unit
cost from CY 2017 claims data and updated cost report information
available for this final rule with comment period. In general, these
published payment rates are not the same as the actual January 2019
payment rates. This is because payment rates for drugs and biologicals
with ASP information for January 2019 will be determined through the
standard quarterly process where ASP data submitted by manufacturers
for the third quarter of CY 2018 (July 1, 2018 through September 30,
2018) will be used to set the payment rates that are released for the
quarter beginning in January 2019 near the end of December 2018. In
addition, payment rates for drugs and biologicals in Addenda A and B to
this final rule with comment period for which there was no ASP
information available for October 2018 are based on mean unit cost in
the available CY 2017 claims data. If ASP information becomes available
for payment for the quarter beginning in January 2019, we will price
payment for these drugs and biologicals based on their newly available
ASP information. Finally, there may be drugs and biologicals that have
ASP information available for this final rule with comment period
(reflecting October 2018 ASP data) that do not have ASP information
available for the quarter beginning in January 2019. As stated in the
CY 2019 OPPS/ASC proposed rule (83 FR 37123), these drugs and
biologicals will then be paid based on mean unit cost data derived from
CY 2017 hospital claims. Therefore, the payment rates listed in Addenda
A and B to this final rule with comment period are not for January 2019
payment purposes and are only illustrative of the CY 2019 OPPS payment
methodology using the most recently available information at the time
of issuance of this final rule with comment period.
Comment: A number of commenters supported CMS' proposal to continue
to pay for separately payable drugs and biologicals based on the
statutory default rate of ASP+6 percent.
Response: We appreciate the commenters' support.
Comment: Several commenters supported the proposal to utilize a 3
percent add-on instead of a 6 percent add-on for drugs that are paid
based on WAC under section 1847A(c)(4) of the Act, pursuant to CMS'
authority under section 1833(t)(14)(A)(iii)(II) of the Act. These
commenters recommended this as a first step to lowering drug costs for
beneficiaries and the Medicare Program as well as removing the
financial incentive associated with a specific prescribing choice. The
commenters suggested modifying the add-on to be a flat fee.
Response: We appreciate the commenters' support. We proposed a
fixed percentage, instead of a flat fee, in order to be consistent with
other provisions in section 1847A of the Act that specify fixed add-on
percentages of 6 percent (section 1847A(b) of the Act) or 3 percent
(section 1847A(d)(3)(C) of the Act). A fixed percentage is also
administratively simple to implement and administer, is predictable,
and is easy for manufacturers, providers and the public to understand.
Comment: Many commenters opposed the proposal to utilize a 3
percent add-on instead of a 6 percent add-on for drugs that are paid
based on WAC under section 1847A(c)(4) of the Act. Several commenters
were concerned that paying less for new drugs may discourage the use of
innovative drugs due to concerns about decreased payment, especially
with the sequestration cuts decreasing the payment further. The
commenters also were concerned that the proposal would only affect
payment to the provider, and would not address pricing on the
pharmaceutical manufacturer side. The commenters requested additional
studies to analyze the appropriateness and accuracy of the 3 percent
reduction, and encouraged additional modifications to ASP reporting,
such as requiring all Part B drug manufacturers to report pricing
information and for all Part B drugs to be included in the ASP
quarterly update file.
Response: We appreciate these comments. The implementation of these
proposals will improve Medicare payment rates by better aligning
payments with drug acquisition costs, which is of great importance to
CMS because spending on Part B drugs has grown significantly. A WAC+3
percent add-on is more comparable to an ASP+6 percent add-on, as the
WAC pricing does not reflect many of the discounts associated with ASP,
such as rebates. The utilization of a 3 percent add-on instead of a 6
percent add-on for drugs that are paid based on WAC under section
1847A(c)(4) of the Act is consistent with MedPAC's analysis and
recommendations cited in its June 2017 Report to the Congress, and as
discussed in the CY 2019 PFS proposed rule (83 FR 35854 through 35855).
Overall, this policy still represents a net payment greater than the
WAC. In addition, this policy decreases beneficiary cost-sharing for
these drugs, which would help Medicare beneficiaries afford to pay for
new drugs by reducing out-of-pocket expenses.
[[Page 58976]]
Comment: Some commenters did not support the inclusion of
radiopharmaceuticals in the proposal to utilize a 3 percent add-on
instead of a 6 percent add-on for drugs that are paid based on WAC. The
commenters cited pharmacy overhead and handling costs for
radiopharmaceuticals, pointed out that these costs are higher than for
any other class of drugs, and suggested an increased payment rate. In
addition, the commenters were concerned that this reduction would
disproportionately affect the pass-through payments for diagnostic
radiopharmaceuticals.
Response: We appreciate these comments. We recognize that
radiopharmaceuticals tend to utilize the WAC-based payment methodology
more compared to other products. However, no significant evidence has
been presented to substantiate that a 3 percent add-on instead of a 6
percent add-on for drugs that are paid based on WAC would negatively
affect access, including during the pass-through payment status period,
if applicable. We received limited current data from commenters to
justify the exclusion of radiopharmaceuticals from this proposal.
Comment: Several commenters made recommendations to exclude certain
drugs and biologicals from this proposal, including skin substitutes
and biosimilar biological products. The commenters were concerned about
skin substitutes being assigned to the high- or low-cost category when
ASP data are not available based on a WAC+3 percent methodology
compared to a WAC+6 percent methodology. The commenters recommended
maintaining payment for biosimilars at WAC+6 percent to encourage the
increase in utilization of biosimilars.
Response: We appreciate these comments. However, use of a 3 percent
add-on instead of a 6 percent add-on for drugs that are paid based on
WAC under section 1847A(c)(4) of the Act is consistent with MedPAC's
analysis and recommendations cited in its June 2017 Report to the
Congress, and as discussed in the CY 2019 PFS proposed rule (83 FR
35854 through 35855). This policy is not meant to give preferential
treatment to any drugs or biologicals.
Comment: Commenters were concerned about coverage for drugs that
are not included in the ASP Quarterly Update File being paid at WAC+3
percent instead of the current rate of ASP+6 percent. For example, the
commenters were concerned that OTIPRIO (HCPCS code J7342), a drug that
is not included in the ASP Quarterly Update File, will not be paid at
ASP+6 percent, and would be paid at WAC+3 percent. In addition, the
commenters requested clarification regarding MAC payment for drugs that
fall under sections 1847A(c)(4) and 1847A(b)(1) of the Act.
Response: Drugs that are not included in the ASP Quarterly Update
File will continue to be paid at their current rate of ASP+6 percent as
long as the manufacturer continues to submit ASP information to CMS on
a timely basis and assuming the drug is not packaged.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to utilize a 3 percent
add-on instead of a 6 percent add-on for drugs that are paid based on
WAC under section 1847A(c)(4) of the Act pursuant to our authority
under section 1833(t)(14)(A)(iii)(II) of the Act.
c. Biosimilar Biological Products
For CY 2016 and CY 2017, we finalized a policy to pay for
biosimilar biological products based on the payment allowance of the
product as determined under section 1847A of the Act and to subject
nonpass-through biosimilar biological products to our annual threshold-
packaged policy (for CY 2016, 80 FR 70445 through 70446; and for CY
2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR
33630), for CY 2018, we proposed to continue this same payment policy
for biosimilar biological products.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59351), we noted that, with respect to comments we received regarding
OPPS payment for biosimilar biological products, in the CY 2018 PFS
final rule, CMS finalized a policy to implement separate HCPCS codes
for biosimilar biological products. Therefore, consistent with our
established OPPS drug, biological, and radiopharmaceutical payment
policy, HCPCS coding for biosimilar biological products will be based
on policy established under the CY 2018 PFS final rule.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR
59351), after consideration of the public comments we received, we
finalized our proposed payment policy for biosimilar biological
products, with the following technical correction: All biosimilar
biological products will be eligible for pass-through payment and not
just the first biosimilar biological product for a reference product.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37123), for CY 2019, we
proposed to continue the policy in place from CY 2018 to make all
biosimilar biological products eligible for pass-through payment and
not just the first biosimilar biological product for a reference
product.
In addition, in CY 2018, we adopted a policy that biosimilars
without pass-through payment status that were acquired under the 340B
Program would be paid the ASP of the biosimilar minus 22.5 percent of
the reference product (82 FR 59367). We adopted this policy in the CY
2018 OPPS/ASC final rule with comment period because we believe that
biosimilars without pass-through payment status acquired under the 340B
Program should be treated in the same manner as other drugs and
biologicals acquired through the 340B Program. As noted earlier,
biosimilars with pass-through payment status are paid their own ASP+6
percent of the reference product's ASP. Separately payable biosimilars
that do not have pass-through payment status and are not acquired under
the 340B Program are also paid their own ASP+6 percent of the reference
product's ASP.
As noted in the CY 2019 OPPS/ASC proposed rule (83 FR 37123),
several stakeholders raised concerns to us that the current payment
policy for biosimilars acquired under the 340B Program could unfairly
lower the OPPS payment for biosimilars not on pass-through payment
status because the payment reduction would be based on the reference
product's ASP, which would generally be expected to be priced higher
than the biosimilar, thus resulting in a more significant reduction in
payment than if the 22.5 percent was calculated based on the
biosimilar's ASP. We agreed with stakeholders that the current payment
policy could unfairly lower the price of biosimilars without pass-
through payment status that are acquired under the 340B Program. In
addition, we believed that these changes would better reflect the
resources and production costs that biosimilar manufacturers incur. We
also believed this approach is more consistent with the payment
methodology for 340B-acquired drugs and biologicals, for which the 22.5
percent reduction is calculated based on the drug or biological's ASP,
rather than the ASP of another product. In addition, we believed that
paying for biosimilars acquired under the 340B Program at ASP minus
22.5 percent of the biosimilar's ASP, rather than 22.5 percent of the
reference product's ASP, will more closely approximate hospitals'
acquisition costs for these products.
Accordingly, in the CY 2019 OPPS/ASC proposed rule (83 FR 37123),
for CY 2019, we proposed changes to our Medicare Part B drug payment
methodology for biosimilars acquired
[[Page 58977]]
under the 340B Program. Specifically, for CY 2019 and subsequent years,
in accordance with section 1833(t)(14)(A)(iii)(II) of the Act, we
proposed to pay nonpass-through biosimilars acquired under the 340B
Program at ASP minus 22.5 percent of the biosimilar's ASP instead of
the biosimilar's ASP minus 22.5 percent of the reference product's ASP.
Comment: Many commenters supported CMS' proposal to pay nonpass-
through biosimilars acquired under the 340B Program at ASP minus 22.5
percent of the biosimilar's ASP, in accordance with section
1833(t)(14)(A)(iii)(II) of the Act. The commenters stated that this
proposal would ensure fair access to biosimilar treatments.
Response: We appreciate the commenters' support. We believe this
proposal appropriately reflects the resources and production costs that
manufacturers incur, as well as more closely aligns with the hospitals'
acquisition costs for these products.
Comment: Several commenters supported CMS' proposal to continue the
policy in place from CY 2018 to make all biosimilar biological products
eligible for pass-through payment and not just the first biosimilar
biological product for a reference product. The commenters stated that
this proposal would continue to lower costs and improve access to
treatments.
Response: We appreciate the commenters' support.
Comment: Some commenters recommended eliminating the proposal to
continue the policy in place from CY 2018 to make all biosimilar
biological products eligible for pass-through payment and not just the
first biosimilar biological product for a reference product. The
commenters believed this policy could potentially encourage
inappropriate treatment changes from a reference product without pass-
through payment to a biosimilar product with pass-through payment.
Response: We are not convinced that making all biosimilar
biological products eligible for pass-through payment will lead to
inappropriate treatment changes from a reference product without pass-
through payment to a biosimilar product with pass-through payment.
Eligibility for pass-through payment status reflects the unique,
complex nature of biosimilars and is important as biosimilars become
established in the market, just as it is for all other new drugs and
biologicals.
After consideration of the public comments we received, we are
finalizing our proposed payment policy for biosimilar products, without
modification, to continue the policy in place from CY 2018 to make all
biosimilar biological products eligible for pass-through payment and
not just the first biosimilar biological product for a reference
product. We also are finalizing our proposal to pay nonpass-through
biosimilars acquired under the 340B Program at the biosimilar's ASP
minus 22.5 percent of the biosimilar's ASP instead of the biosimilar's
ASP minus 22.5 percent of the reference product's ASP, in accordance
with section 1833(t)(14)(A)(iii)(II) of the Act.
3. Payment Policy for Therapeutic Radiopharmaceuticals
In the CY 2019 OPPS/ASC proposed rule (83 FR 37123), for CY 2019,
we proposed to continue the payment policy for therapeutic
radiopharmaceuticals that began in CY 2010. We pay for separately
payable therapeutic radiopharmaceuticals under the ASP methodology
adopted for separately payable drugs and biologicals. If ASP
information is unavailable for a therapeutic radiopharmaceutical, we
base therapeutic radiopharmaceutical payment on mean unit cost data
derived from hospital claims. We believe that the rationale outlined in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524
through 60525) for applying the principles of separately payable drug
pricing to therapeutic radiopharmaceuticals continues to be appropriate
for nonpass-through, separately payable therapeutic
radiopharmaceuticals in CY 2019. Therefore, we proposed for CY 2019 to
pay all nonpass-through, separately payable therapeutic
radiopharmaceuticals at ASP+6 percent, based on the statutory default
described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full
discussion of ASP-based payment for therapeutic radiopharmaceuticals,
we refer readers to the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60520 through 60521). We also proposed to rely on CY 2017 mean
unit cost data derived from hospital claims data for payment rates for
therapeutic radiopharmaceuticals for which ASP data are unavailable and
to update the payment rates for separately payable therapeutic
radiopharmaceuticals according to our usual process for updating the
payment rates for separately payable drugs and biologicals on a
quarterly basis if updated ASP information is unavailable. For a
complete history of the OPPS payment policy for therapeutic
radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule
with comment period (69 FR 65811), the CY 2006 OPPS final rule with
comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60524). The proposed CY 2019 payment rates for
nonpass-through, separately payable therapeutic radiopharmaceuticals
were included in Addenda A and B to the proposed rule (which are
available via the internet on the CMS website).
Comment: Commenters supported continuation of the policy to pay
ASP+6 percent for therapeutic radiopharmaceuticals, if available, and
to base payment on the mean unit cost derived from hospital claims data
when not available. The commenters also requested that CMS examine ways
to compensate hospitals for their documented higher overhead and
handling costs associated with radiopharmaceuticals.
Response: We appreciate the commenters' support. However, as we
stated earlier in section V.B.1.c. of this final rule with comment
period in response to a similar request for additional
radiopharmaceutical payment and as previously stated in the CY 2018
OPPS final rule with comment period (82 FR 59352), we continue to
believe that a single payment is appropriate for radiopharmaceuticals
with pass-through payment status in CY 2019 and that the payment rate
of ASP+6 percent is appropriate to provide payment for both the
radiopharmaceutical's acquisition cost and any associated nuclear
medicine handling and compounding costs incurred by the hospital
pharmacy. Payment for the radiopharmaceutical and radiopharmaceutical
processing services is made through the single ASP-based payment. We
refer readers to the CMS guidance document available via the internet
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Archives.html for details on submission of ASP
data for therapeutic radiopharmaceuticals.
Comment: One commenter asked CMS to clarify the payment rate
reported for APC 1675, P32 Na phosphate (HCPCS code A9563), which is
based on geometric mean unit cost. The commenter stated that, in the
proposed rule, the payment rate for HCPCS code A9563 was reported as
$256.00, but the mean unit cost for the radiopharmaceutical as reported
in data files accompanying the proposed rule was $519.21.
Response: We thank the commenter for bringing this reporting error
to our attention. We are providing a corrected payment rate for APC
1675, P32 Na
[[Page 58978]]
phosphate (HCPCS code A9563) in Addenda A and B of this final rule with
comment period (which is available via the internet on the CMS
website).
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue to pay all
nonpass-through, separately payable therapeutic radiopharmaceuticals at
ASP+6 percent. We also are finalizing our proposal to continue to rely
on CY 2017 mean unit cost data derived from hospital claims data for
payment rates for therapeutic radiopharmaceuticals for which ASP data
are unavailable. The CY 2019 final payment rates for nonpass-through
separately payable therapeutic radiopharmaceuticals are included in
Addenda A and B to this final rule with comment period (which are
available via the internet on the CMS website).
4. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly
Enriched Uranium Sources
Radioisotopes are widely used in modern medical imaging,
particularly for cardiac imaging and predominantly for the Medicare
population. Some of the Technetium-99 (Tc-99m), the radioisotope used
in the majority of such diagnostic imaging services, is produced in
legacy reactors outside of the United States using highly enriched
uranium (HEU).
The United States would like to eliminate domestic reliance on
these reactors, and is promoting the conversion of all medical
radioisotope production to non-HEU sources. Alternative methods for
producing Tc-99m without HEU are technologically and economically
viable, and conversion to such production has begun. We expect that
this change in the supply source for the radioisotope used for modern
medical imaging will introduce new costs into the payment system that
are not accounted for in the historical claims data.
Therefore, beginning in CY 2013, we finalized a policy to provide
an additional payment of $10 for the marginal cost for radioisotopes
produced by non-HEU sources (77 FR 68323). Under this policy, hospitals
report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium
source, full cost recovery add-on per study dose) once per dose along
with any diagnostic scan or scans furnished using Tc-99m as long as the
Tc-99m doses used can be certified by the hospital to be at least 95
percent derived from non-HEU sources (77 FR 68321).
We stated in the CY 2013 OPPS/ASC final rule with comment period
(77 FR 68321) that our expectation is that this additional payment will
be needed for the duration of the industry's conversion to alternative
methods to producing Tc-99m without HEU. We also stated that we would
reassess, and propose if necessary, on an annual basis whether such an
adjustment continued to be necessary and whether any changes to the
adjustment were warranted (77 FR 68316). A 2016 report from the
National Academies of Sciences, Engineering, and Medicine anticipates
the conversion of Tc-99m production from non-HEU sources will not be
complete until the end of 2019.\58\ In addition, one of the
manufacturers of Tc-99m generators sent a letter to CMS to support
continuing the payment adjustment at the current level because only 30
percent of Tc-99m is produced from non-HEU sources. We also met with a
trade group of nuclear pharmacies and cyclotron operators who support
an increase in the payment adjustment by the rate of inflation to cover
more of the cost of Tc-99m from non-HEU sources.
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\58\ National Academies of Sciences, Engineering, and Medicine.
2016. Molybdenum-99 for Medical Imaging. Washington, DC: The
National Academies Press. Available at: https://doi.org/10.17226/23563.
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We appreciate the feedback from stakeholders. However, as stated in
the CY 2019 OPPS/ASC proposed rule, we continue to believe that the
current adjustment is sufficient for the reasons we have outlined in
this and prior rulemakings. The information from stakeholders and the
National Academies of Sciences, Engineering, and Medicine indicates
that the conversion of the production of Tc-99m from non-HEU sources
may take more than 1 year after CY 2018. Therefore, in the CY 2019
OPPS/ASC proposed rule (83 FR 37124), for CY 2019 and subsequent years,
we proposed to continue to provide an additional $10 payment for
radioisotopes produced by non-HEU sources. We noted in the proposed
rule our intention to reassess this payment policy once conversion to
non-HEU sources is closer to completion or has been completed.
Comment: Several commenters requested that the additional payment
for radioisotopes produced by non-HEU sources be increased to either
$30 or $10 plus the percentage increase in hospital charge data for APC
1442 for the period of 2014 through 2019, which appears to be a request
from the commenter to increase the payment by the rate of hospital
inflation. One of the commenters supported this request by supplying
provider cost data showing the cost difference between HEU Mo-99 and
non-HEU Mo-99 in 2017 per curie was around $30.
One commenter requested that CMS provide an explanation for not
applying an annual inflation update to the $10 payment for
radioisotopes produced by non-HEU sources, provide details on plans to
offset nuclear medicine procedures by the amount of cost paid through
the non-HEU policy, and make available to the public data regarding the
claims submitted to date under this policy. The commenter also stated
that CMS should assess whether the beneficiary copayment policy is
adversely impacting patient access.
Response: We appreciate the information we received from
stakeholders supporting an increase to the payment rate of $10 for
HCPCS code Q9969. As we stated in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68317), ``The purpose for the additional payment
is limited to mitigating any adverse impact of existing payment policy
and is based on the authority set forth at section 1833(t)(2)(E) of the
Act.'' However, we are open to further study of this issue and are
interested in exploring whether a higher add-on payment, such as $30,
may be warranted for a future year. We invite stakeholders to continue
to submit data and evidence for further consideration as we continue to
evaluate this policy. As discussed in the CY 2013 OPPS/ASC final rule
with comment period, we did not finalize a policy to use the usual OPPS
methodologies to update the non-HEU add-on payment (77 FR 68317). The
purpose of the additional payment is limited to mitigating any adverse
impact of transitioning to non-HEU sources and is based on the
authority set forth at section 1833(t)(2)(E) of the Act. Therefore, we
will maintain the current payment rate of $10.
With respect to the comment that we should assess whether the
beneficiary copayment amount is adversely affecting patient access, we
will consider the commenter's concern. However, we note that increasing
the add-on payment from the current level as the commenter suggested
would necessarily increase the beneficiary copayment liability.
Finally, the offset for nuclear medicine procedures does not include
the cost of the non-HEU add-on payment.
Comment: One commenter requested that CMS provide detailed data on
hospital costs associated with radiopharmaceuticals reported with HCPCS
code Q9969.
Response: It is unclear what specific data this commenter is
seeking that are not already available through public use
[[Page 58979]]
files. We note that, in 2017, HCPCS code Q9969 was billed 34,439 times
and is commonly reported with Level II HCPCS codes A9500 (Technetium
tc-99m sestamibi, diagnostic, per study dose) and A9503 (Technetium tc-
99m medronate, diagnostic, per study dose, up to 30 millicuries). The
geometric mean costs of this and all Level II HCPCS drug codes,
including radiopharmaceutical drug codes, can be found in the cost
statistics file that is released with this final rule with comment
period.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue the policy
of providing an additional $10 payment for radioisotopes produced by
non-HEU sources for CY 2019 and subsequent years. We will reassess this
payment policy once conversion to non-HEU sources is closer to
completion or has been completed.
5. Payment for Blood Clotting Factors
For CY 2018, we provided payment for blood clotting factors under
the same methodology as other nonpass-through separately payable drugs
and biologicals under the OPPS and continued paying an updated
furnishing fee (82 FR 59353). That is, for CY 2018, we provided payment
for blood clotting factors under the OPPS at ASP+6 percent, plus an
additional payment for the furnishing fee. We note that when blood
clotting factors are provided in physicians' offices under Medicare
Part B and in other Medicare settings, a furnishing fee is also applied
to the payment. The CY 2018 updated furnishing fee was $0.215 per unit.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37124), for CY 2019,
we proposed to pay for blood clotting factors at ASP+6 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. Our policy
to pay for a furnishing fee for blood clotting factors under the OPPS
is consistent with the methodology applied in the physician's office
and in the inpatient hospital setting. These methodologies were first
articulated in the CY 2006 OPPS final rule with comment period (70 FR
68661) and later discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66765). The proposed furnishing fee update was
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. Because the Bureau of Labor Statistics releases the applicable
CPI data after the PFS and OPPS/ASC proposed rules are published, we
were not able to include the actual updated furnishing fee in the
proposed rules. Therefore, in accordance with our policy, as finalized
in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765),
we proposed to 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
website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
Comment: Commenters supported CMS' proposal to continue to pay for
blood clotting factors at ASP+6 percent plus a blood clotting factor
furnishing fee in the hospital outpatient department.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to provide payment for
blood clotting factors under the same methodology as other separately
payable drugs and biologicals under the OPPS and to continue payment of
an updated furnishing fee. We will announce the actual figure of the
percent change in the applicable CPI and the updated furnishing fee
calculation based on that figure through the applicable program
instructions and posting on the CMS website.
6. Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital Claims
Data
In the CY 2019 OPPS/ASC proposed rule (83 FR 37125), for CY 2019,
we proposed to continue to use the same payment policy as in CY 2018
for nonpass-through drugs, biologicals, and radiopharmaceuticals with
HCPCS codes but without OPPS hospital claims data, which describes how
we determine the payment rate for drugs, biologicals, or
radiopharmaceuticals without an ASP. For a detailed discussion of the
payment policy and methodology, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70442 through 70443). The
proposed CY 2019 payment status of each of the nonpass-through drugs,
biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS
hospital claims data was listed in Addendum B to the proposed rule,
which is available via the internet on the CMS website.
We did not receive any comments on our proposal. Therefore, we are
finalizing our CY 2019 proposal without modification, including our
proposal to assign drug or biological products status indicator ``K''
and pay for them separately for the remainder of CY 2019 if pricing
information becomes available. The CY 2019 payment status of each of
the nonpass-through drugs, biologicals, and radiopharmaceuticals with
HCPCS codes but without OPPS hospital claims data is listed in Addendum
B to this final rule with comment period, which is available via the
internet on the CMS website.
7. CY 2019 OPPS Payment Methodology for 340B Purchased Drugs
In the CY 2018 OPPS/ASC proposed rule (82 FR 33558 through 33724),
we proposed changes to the Medicare Part B drug payment methodology for
340B hospitals. We proposed these changes to better, and more
accurately, reflect the resources and acquisition costs that these
hospitals incur. We believed that such changes would allow Medicare
beneficiaries (and the Medicare program) to pay a more appropriate
amount when hospitals participating in the 340B Program furnish drugs
to Medicare beneficiaries that are purchased under the 340B Program.
Subsequently, in the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59369 through 59370), we finalized our proposal and adjusted the
payment rate for separately payable drugs and biologicals (other than
drugs on pass-through payment status and vaccines) acquired under the
340B Program from average sales price (ASP)+6 percent to ASP minus 22.5
percent. Our goal is to make Medicare payment for separately payable
drugs more aligned with the resources expended by hospitals to acquire
such drugs, while recognizing the intent of the 340B Program to allow
covered entities, including eligible hospitals, to stretch scarce
resources in ways that enable hospitals to continue providing access to
care for Medicare beneficiaries and other patients. Critical access
hospitals are not included in this 340B policy change because they are
paid under section 1834(g) of the Act. We also excepted rural sole
community hospitals, children's hospitals, and PPS-exempt cancer
hospitals from the 340B payment adjustment in CY 2018. In addition, as
stated in the CY 2018 OPPS/ASC final rule with comment period, this
policy change does not apply to drugs on pass-through payment status,
which are required to be paid based on the ASP methodology, or
[[Page 58980]]
vaccines, which are excluded from the 340B Program.
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37125),
another topic that has been brought to our attention since we finalized
the payment adjustment for 340B-acquired drugs in the CY 2018 OPPS/ASC
final rule with comment period is whether drugs that do not have ASP
pricing but instead receive WAC or AWP pricing are subject to the 340B
payment adjustment. We did not receive public comments on this topic in
response to the CY 2018 OPPS/ASC proposed rule. However, we have since
heard from stakeholders that there has been some confusion about this
issue. We clarified in the CY 2019 proposed rule that the 340B payment
adjustment applies to drugs that are priced using either WAC or AWP,
and it has been our policy to subject 340B-acquired drugs that use
these pricing methodologies to the 340B payment adjustment since the
policy was first adopted. The 340B payment adjustment for WAC-priced
drugs is WAC minus 22.5 percent and AWP-priced drugs have a payment
rate of 69.46 percent of AWP when the 340B payment adjustment is
applied. The 69.46 percent of AWP is calculated by first reducing the
original 95 percent of AWP price by 6 percent to generate a value that
is similar to ASP or WAC with no percentage markup. Then we apply the
22.5 percent reduction to ASP/WAC-similar AWP value to obtain the 69.46
percent of AWP, which is similar to either ASP minus 22.5 percent or
WAC minus 22.5 percent. The number of separately payable drugs
receiving WAC or AWP pricing that are affected by the 340B payment
adjustment is small--consisting of less than 10 percent of all
separately payable Medicare Part B drugs in April 2018.
Furthermore, data limitations previously inhibited our ability to
identify which drugs were acquired under the 340B Program in the
Medicare OPPS claims data. This lack of information within the claims
data has limited researchers' and our ability to precisely analyze
differences in acquisition cost of 340B and non-340B acquired drugs
with Medicare claims data. Accordingly, in the CY 2018 OPPS/ASC
proposed rule (82 FR 33633), we stated our intent to establish a
modifier, to be effective January 1, 2018, for hospitals to report with
separately payable drugs that were not acquired under the 340B Program.
Because a significant portion of hospitals paid under the OPPS
participate in the 340B Program, we stated our belief that it is
appropriate to presume that a separately payable drug reported on an
OPPS claim was purchased under the 340B Program, unless the hospital
identifies that the drug was not purchased under the 340B Program. We
stated in the CY 2018 proposed rule that we intended to provide further
details about this modifier in the CY 2018 OPPS/ASC final rule with
comment period and/or through subregulatory guidance, including
guidance related to billing for dually eligible beneficiaries (that is,
beneficiaries covered under Medicare and Medicaid) for whom covered
entities do not receive a discount under the 340B Program. As discussed
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369
through 59370), to effectuate the payment adjustment for 340B-acquired
drugs, CMS implemented modifier ``JG'', effective January 1, 2018.
Hospitals paid under the OPPS, other than a type of hospital excluded
from the OPPS (such as critical access hospitals or those hospitals
paid under the Maryland waiver), or excepted from the 340B drug payment
policy for CY 2018, are required to report modifier ``JG'' on the same
claim line as the drug HCPCS code to identify a 340B-acquired drug. For
CY 2018, rural sole community hospitals, children's hospitals and PPS-
exempt cancer hospitals are excepted from the 340B payment adjustment.
These hospitals are required to report informational modifier ``TB''
for 340B-acquired drugs, and continue to be paid ASP+6 percent.
We refer readers to the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59353 through 59370) for a full discussion and rationale
for the CY 2018 policies and use of modifier ``JG''.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37125), for CY 2019,
we proposed to continue the 340B Program policies that were implemented
in CY 2018 with the exception of the way we calculate payment for 340B-
acquired biosimilars (that is, we proposed to pay for nonpass-through
340B-acquired biosimilars at ASP minus 22.5 percent of the biosimilar's
ASP, rather than of the reference product's ASP). More information on
our revised policy for the payment of biosimilars acquired through the
340B Program is available in section V.B.2.c. of this final rule. We
proposed, in accordance with section 1833(t)(14)(A)(iii)(II) of the
Act, to pay for separately payable Medicare Part B drugs (assigned
status indicator ``K''), other than vaccines and drugs on pass-through
payment status, that meet the definition of ``covered outpatient drug''
as defined in section 1927(k) of the Act, that are acquired through the
340B Program at ASP minus 22.5 percent when billed by a hospital paid
under the OPPS that is not excepted from the payment adjustment.
Medicare Part B drugs or biologicals excluded from the 340B payment
adjustment include vaccines (assigned status indicator ``L'' or ``M'')
and drugs with OPPS transitional pass-through payment status (assigned
status indicator ``G''). As discussed in section V.B.2.c. of the
proposed rule, we proposed to pay nonpass-through biosimilars acquired
under the 340B Program at the biosimilar's ASP minus 22.5 percent of
the biosimilar's ASP. We also proposed that Medicare would continue to
pay for drugs or biologicals that were not purchased with a 340B
discount at ASP+6 percent.
As stated earlier, to effectuate the payment adjustment for 340B-
acquired drugs, CMS implemented modifier ``JG'', effective January 1,
2018. For CY 2019, we proposed that hospitals paid under the OPPS,
other than a type of hospital excluded from the OPPS, or excepted from
the 340B drug payment policy for CY 2018, continue to be required to
report modifier ``JG'' on the same claim line as the drug HCPCS code to
identify a 340B-acquired drug. We also proposed for CY 2019 that rural
sole community hospitals, children's hospitals, and PPS-exempt cancer
hospitals continue to be excepted from the 340B payment adjustment. We
proposed that these hospitals be required to report informational
modifier ``TB'' for 340B-acquired drugs, and continue to be paid ASP+6
percent.
Comment: One commenter supported the proposal to continue to pay
for separately payable drugs and biologicals obtained through the 340B
program at ASP minus 22.5 percent. The commenter believed the payment
rate of ASP minus 22.5 percent will help CMS address the large amount
of growth in the 340B Program by increasing oversight and promoting the
integrity of the program.
Another commenter, MedPAC, also supported the proposal. MedPAC
believed a lower payment rate allows beneficiaries to share in the
savings from the 340B Program, better targets resources to hospitals
providing the most uncompensated care, and still allows 340B hospitals
to make a profit off the drugs obtained through the program. MedPAC
preferred that the payment rate be ASP+6 percent minus a 10 percent
discount with the savings assigned to a Medicare-funded uncompensated
care pool, but noted that this policy requires Congressional action.
Response: We appreciate the commenters' support.
[[Page 58981]]
Comment: Several commenters opposed the CY 2019 proposal to
continue to pay for separately payable drugs and biologicals obtained
through the 340B Program at ASP minus 22.5 percent. Many commenters
stated that the new payment rate has hurt hospitals financially and has
hurt efforts by hospitals to provide safety-net care to their patients.
The commenters were also concerned about the same service costing more
at non-340B hospitals than at hospitals enrolled in the 340B Program
because drugs furnished at a non-340B hospital would be paid at ASP+6
percent while drugs furnished at a 340B hospital would be paid at ASP
minus 22.5 percent. One commenter whose hospital provides cancer
treatment stated the reductions in 340B payment mean the hospital
cannot provide the broader cancer care options available at non-340B
hospitals. Commenters also stated that reducing payment for drugs
acquired through the 340B Program does not help reduce high drug costs.
Many commenters asserted, as they have previously done, that CMS does
not have the legal authority to implement payment reductions for drugs
and biologicals obtained through the 340B Program. The commenters
requested that CMS end its policy of paying for drugs obtained through
the 340B program at ASP minus 22.5 percent. Instead, the commenters
suggested that CMS go back to the payment policy that was in place
before CY 2018 where drugs acquired through the 340B Program were paid
at ASP+6 percent.
Response: The commenters stated that the payment rate of ASP minus
22.5 percent for drugs and biologicals has caused financial harm to
hospitals and has caused problems for hospitals to provide safety-net
care to their patients. We noted in the CY 2018 final rule with comment
period (82 FR 59358 through 59359) that the OPPS payment rate of ASP+6
percent at that time significantly exceeded the discounts received for
covered outpatient drugs by hospitals enrolled in the 340B Program,
which can be as much as 50 percent below ASP (or higher through the
PVP). As stated throughout that section, ASP minus 22.5 percent
represents the average minimum discount that 340B enrolled hospitals
paid under the OPPS receive.
Regarding the concerns of the commenters that drugs and biologicals
and services where drugs and biologicals are packaged into the cost of
the service would cost more at hospitals that do not participate in the
340B Program as compared to hospitals participating in the 340B
Program, any differential in these costs is a feature of the 340B
Program rather than Medicare payment policy. In fact, one of the
objectives of our payment policy for drugs and biologicals acquired
through the 340B Program is to lower costs for Medicare beneficiaries,
and we believe it is appropriate that hospitals participating in the
340B Program pass the cost savings they receive to their beneficiaries.
Finally, regarding the commenters' assertion that CMS lacks the
legal authority to continue requiring payment reductions for drugs and
biologicals obtained through the 340B Program, we refer these
commenters to our detailed response regarding our statutory authority
to require payment reductions for drugs and biologicals obtained
through the 340B Program in the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59359 through 59364).
After consideration of the public comments we received, we are
finalizing our proposals without modification. For CY 2019, we are
continuing the 340B Program policies that were implemented in CY 2018
with the exception of the way we are calculating payment for 340B-
acquired biosimilars, which is discussed in section V.B.2.c. of this
final rule with comment period. We refer readers to the CY 2018 final
rule with comment period (82 FR 59369 through 59370) for more detail on
the policies implemented in CY 2018 for drugs acquired through the 340B
Program.
VI. 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,'' currently not to exceed 2.0 percent of total
program payments estimated to be made for all covered services under
the OPPS furnished for that year. 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 prospective 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 estimate the
pass-through spending to determine whether payments exceed the
applicable percentage and the appropriate pro-rata reduction to the
conversion factor for the projected level of pass-through spending in
the following year to ensure that total estimated pass-through spending
for the prospective payment year is budget neutral, as required by
section 1833(t)(6)(E) of the Act.
For devices, developing an estimate of pass-through spending in CY
2019 entails estimating spending for two groups of items. The first
group of items consists of device categories that are currently
eligible for pass-through payment and that will continue to be eligible
for pass-through payment in CY 2019. 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 of items consists of items that we know are newly
eligible, or project may be newly eligible, for device pass-through
payment in the remaining quarters of CY 2018 or beginning in CY 2019.
The sum of the CY 2019 pass-through spending estimates for these two
groups of device categories equals the total CY 2019 pass-through
spending estimate for device categories with pass-through payment
status. We base the device pass-through estimated payments for each
device category on the amount of payment as established in section
1833(t)(6)(D)(ii) of the Act, and as outlined in previous rules,
including the CY 2014 OPPS/ASC final rule with comment period (78 FR
75034 through 75036). We note that, beginning in CY 2010, the pass-
through evaluation process and pass-through payment for implantable
biologicals newly approved for pass-through payment beginning on or
after January 1, 2010, that are surgically inserted or implanted
(through a surgical incision or a natural orifice) use the device pass-
through process and payment methodology (74 FR 60476). As has been our
past practice (76 FR 74335), in the CY 2019 OPPS/ASC proposed rule (83
FR 37126), we proposed to include an estimate of any implantable
biologicals eligible for pass-through payment in our estimate of pass-
through spending for devices. Similarly, we finalized a policy in CY
2015 that applications for pass-through payment for skin substitutes
and similar products be evaluated using the medical device pass-through
process and payment methodology (76 FR 66885 through 66888). Therefore,
as we did beginning in CY 2015, for CY 2019, we
[[Page 58982]]
also proposed to include an estimate of any skin substitutes and
similar products in our estimate of pass-through spending for devices.
For drugs and biologicals eligible for pass-through payment,
section 1833(t)(6)(D)(i) of the Act establishes the pass-through
payment amount as the amount by which the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is covered
under a competitive acquisition contract under section 1847B of the
Act, an amount determined by the Secretary equal to the average price
for the drug or biological for all competitive acquisition areas and
year established under such section as calculated and adjusted by the
Secretary) exceeds the portion of the otherwise applicable fee schedule
amount that the Secretary determines is associated with the drug or
biological. Our estimate of drug and biological pass-through payment
for CY 2019 for this group of items is $0, as discussed below, because
we proposed to pay for most nonpass-through separately payable drugs
and biologicals under the CY 2019 OPPS at ASP+6 percent (with the
exception of 340B-acquired separately payable drugs, for which we do
not yet have sufficient data to estimate a share of total drug
payments), and because we proposed to pay for CY 2019 pass-through
payment drugs and biologicals at ASP+6 percent, as we discuss in
section V.A. of the proposed rule and this final rule with comment
period.
Furthermore, payment for certain drugs, specifically diagnostic
radiopharmaceuticals and contrast agents without pass-through payment
status is packaged into payment for the associated procedures, and
these products will not be separately paid. In addition, we policy-
package all nonpass-through drugs, biologicals, and
radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure and drugs and biologicals that function as
supplies when used in a surgical procedure, as discussed in section
II.A.3. of the proposed rule and this final rule with comment period.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37126), we proposed that
all of these policy-packaged drugs and biologicals with pass-through
payment status would be paid at ASP+6 percent, like other pass-through
drugs and biologicals, for CY 2019. Therefore, our estimate of pass-
through payment for policy-packaged drugs and biologicals with pass-
through payment status approved prior to CY 2019 was not $0, as
discussed below. In section V.A.5. of the proposed rule, we discussed
our policy to determine if the costs of certain policy-packaged drugs
or biologicals are already packaged into the existing APC structure. If
we determine that a policy-packaged drug or biological approved for
pass-through payment resembles predecessor drugs or biologicals already
included in the costs of the APCs that are associated with the drug
receiving pass-through payment, we proposed to offset the amount of
pass-through payment for the policy-packaged drug or biological. For
these drugs or biologicals, the APC offset amount is the portion of the
APC payment for the specific procedure performed with the pass-through
drug or biological, which we refer to as the policy-packaged drug APC
offset amount. If we determine that an offset is appropriate for a
specific policy-packaged drug or biological receiving pass-through
payment, we proposed to reduce our estimate of pass-through payments
for these drugs or biologicals by this amount.
Similar to pass-through spending 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 will continue to be eligible for
pass-through payment in CY 2019. The second group contains drugs and
biologicals that we know are newly eligible, or project will be newly
eligible in the remaining quarters of CY 2018 or beginning in CY 2019.
The sum of the CY 2019 pass-through spending estimates for these two
groups of drugs and biologicals equals the total CY 2019 pass-through
spending estimate for drugs and biologicals with pass-through payment
status.
B. Estimate of Pass-Through Spending
In the CY 2019 OPPS/ASC proposed rule (83 FR 37127), we proposed to
set the applicable pass-through payment percentage limit at 2.0 percent
of the total projected OPPS payments for CY 2019, consistent with
section 1833(t)(6)(E)(ii)(II) of the Act and our OPPS policy from CY
2004 through CY 2018 (82 FR 59371 through 59373).
For the first group, consisting of device categories that are
currently eligible for pass-through payment and will continue to be
eligible for pass-through payment in CY 2019, there are no active
categories for CY 2019. Because there are no active device categories
for CY 2019, we proposed an estimate for the first group of devices of
$0. We did not receive any public comments on the proposal. Therefore,
we are finalizing the proposed estimate for the first group of devices
of $0 for CY 2019.
In estimating our proposed CY 2019 pass-through spending for device
categories in the second group, we included: Device categories that we
knew at the time of the development of the proposed rule will be newly
eligible for pass-through payment in CY 2019; additional device
categories that we estimated could be approved for pass-through status
subsequent to the development of the proposed rule and before January
1, 2019; and contingent projections for new device categories
established in the second through fourth quarters of CY 2019. In the CY
2019 OPPS/ASC proposed rule (83 FR 37127), we proposed to use the
general methodology described in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66778), while also taking into account recent
OPPS experience in approving new pass-through device categories. For
the proposed rule, the estimate of CY 2019 pass-through spending for
this second group of device categories was $10 million.
We did not receive any public comments on this proposal. As stated
earlier in this final rule with comment period, we have decided to
approve one device to receive pass-through status, the
remed[emacr][supreg] System Transvenous Neurostimulator. The
manufacturer of the remed[emacr][supreg] System provided utilization
data that indicate the spending for the device would be approximately
$2.5 million. However, it is possible that additional new devices may
receive pass-through payment status during CY 2019, which would lead to
the higher pass-through spending for new devices closer to our proposed
estimate of $10 million. Therefore, we are finalizing the proposed
estimate for this second group of devices of $10 million for CY 2019.
To estimate proposed CY 2019 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 on pass-through payment status for CY 2019, we proposed to
use the most recent Medicare hospital outpatient claims data regarding
their utilization, information provided in the respective pass-through
applications, historical hospital claims data, pharmaceutical industry
information, and clinical information regarding those drugs or
biologicals to project the CY 2019 OPPS utilization of the products.
For the known drugs and biologicals (excluding policy-packaged
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals,
and radiopharmaceuticals that function as supplies when used in a
diagnostic test
[[Page 58983]]
or procedure, and drugs and biologicals that function as supplies when
used in a surgical procedure) that will be continuing on pass-through
payment status in CY 2019, we estimated the pass-through payment amount
as the difference between ASP+6 percent and the payment rate for
nonpass-through drugs and biologicals that will be separately paid at
ASP+6 percent, which is zero for this group of drugs. Because payment
for policy-packaged drugs and biologicals is packaged if the product
was not paid separately due to its pass-through payment status, we
proposed to include in the CY 2019 pass-through estimate the difference
between payment for the policy-packaged drug or biological at ASP+6
percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC
information is not available) and the policy-packaged drug APC offset
amount, if we determine that the policy-packaged drug or biological
approved for pass-through payment resembles a predecessor drug or
biological already included in the costs of the APCs that are
associated with the drug receiving pass-through payment. For the
proposed rule, using the proposed methodology described above, we
calculated a CY 2019 proposed spending estimate for this first group of
drugs and biologicals of approximately $61.5 million.
We did not receive any public comments on our proposal. Using our
methodology for this final rule with comment period, we calculated a CY
2019 spending estimate for this first group of drugs and biologicals of
approximately $50.9 million.
To estimate proposed CY 2019 pass-through spending for drugs and
biologicals in the second group (that is, drugs and biologicals that we
knew at the time of development of the proposed rule were newly
eligible for pass-through payment in CY 2019, additional drugs and
biologicals that we estimated could be approved for pass-through status
subsequent to the development of the proposed rule and before January
1, 2018, and projections for new drugs and biologicals that could be
initially eligible for pass-through payment in the second through
fourth quarters of CY 2019), we proposed to use utilization estimates
from pass-through applicants, pharmaceutical industry data, clinical
information, recent trends in the per unit ASPs of hospital outpatient
drugs, and projected annual changes in service volume and intensity as
our basis for making the CY 2019 pass-through payment estimate. We also
proposed to consider the most recent OPPS experience in approving new
pass-through drugs and biologicals. Using our proposed methodology for
estimating CY 2019 pass-through payments for this second group of
drugs, we calculated a proposed spending estimate for this second group
of drugs and biologicals of approximately $55.2 million.
We did not receive any public comments on our proposal. Therefore,
for CY 2019, we are continuing to use the general methodology described
above. For this final rule with comment period, we calculated a CY 2019
spending estimate for this second group of drugs and biologicals of
approximately $39.9 million.
In summary, in accordance with the methodology described earlier in
this section, for this final rule with comment period, we estimate that
total pass-through spending for the device categories and the drugs and
biologicals that are continuing to receive pass-through payment in CY
2019 and those device categories, drugs, and biologicals that first
become eligible for pass-through payment during CY 2019 is
approximately $100.8 million (approximately $10 million for device
categories and approximately $90.8 million for drugs and biologicals)
which represents 0.14 percent of total projected OPPS payments for CY
2019 (approximately $74 billion). Therefore, we estimate that pass-
through spending in CY 2019 will not amount to 2.0 percent of total
projected OPPS CY 2019 program spending.
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care
Services
In the CY 2019 OPPS/ASC proposed rule (83 FR 37128), for CY 2019,
we proposed to continue with our current clinic and emergency
department (ED) hospital outpatient visits payment policies. For a
description of the current clinic and ED hospital outpatient visits
policies, we refer readers to the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70448). We also proposed to continue and did not
propose any change to our payment policy for critical care services for
CY 2019. For a description of the current payment policy for critical
care services, we refer readers to the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70449), and for the history of the payment policy
for critical care services, we refer readers to the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75043). In the CY 2019 OPPS/ASC
proposed rule, we sought public comments on any changes to these codes
that we should consider for future rulemaking cycles. We continue to
encourage commenters to provide the data and analysis necessary to
justify any suggested changes.
We did not receive any public comments on our proposals to continue
our current clinic and ED hospital outpatient visits payment policies
and our current critical care services payment policies. Therefore, we
are adopting these proposals as final without modification.
In section X.V. of the CY 2019 OPPS/ASC proposed rule (83 FR 37138
through 37143), for 2019, we proposed a method to control unnecessary
increases in the volume of covered outpatient department services under
section 1833(t)(2)(F) of the Act by utilizing a Medicare Physician Fee
Schedule (PFS)-equivalent payment rate for the hospital outpatient
clinic visit (HCPCS code G0463) when it is furnished by excepted off-
campus provider-based departments (PBDs). For a full discussion of the
proposal as well as the comment solicitation on potential methods to
control for unnecessary increases in the volume of covered outpatient
department services, we refer readers to section X.B. of this final
rule with comment period.
VIII. Payment for Partial Hospitalization Services
A. Background
A partial hospitalization program (PHP) is an intensive outpatient
program of psychiatric services provided as an alternative to inpatient
psychiatric care for individuals who have an acute mental illness,
which includes, but is not limited to, conditions such as depression,
schizophrenia, and substance use disorders. Section 1861(ff)(1) of the
Act defines partial hospitalization services as the items and services
described in paragraph (2) prescribed by a physician and provided under
a program described in paragraph (3) under the supervision of a
physician pursuant to an individualized, written plan of treatment
established and periodically reviewed by a physician (in consultation
with appropriate staff participating in such program), which sets forth
the physician's diagnosis, the type, amount, frequency, and duration of
the items and services provided under the plan, and the goals for
treatment under the plan. Section 1861(ff)(2) of the Act describes the
items and services included in partial hospitalization services.
Section 1861(ff)(3)(A) of the Act specifies that a PHP is a program
furnished by a hospital to its outpatients or by a community mental
health center (CMHC), as a distinct and organized
[[Page 58984]]
intensive ambulatory treatment service, offering less than 24-hour-
daily care, in a location other than an individual's home or inpatient
or residential setting. Section 1861(ff)(3)(B) of the Act defines a
CMHC for purposes of this benefit.
Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the
authority to designate the outpatient department (OPD) services to be
covered under the OPPS. The Medicare regulations that implement this
provision specify, at 42 CFR 419.21, that payments under the OPPS will
be made for partial hospitalization services furnished by CMHCs as well
as Medicare Part B services furnished to hospital outpatients
designated by the Secretary, which include partial hospitalization
services (65 FR 18444 through 18445).
Section 1833(t)(2)(C) of the Act requires the Secretary, in part,
to establish relative payment weights for covered OPD services (and any
groups of such services described in section 1833(t)(2)(B) of the Act)
based on median (or, at the election of the Secretary, mean) hospital
costs using data on claims from 1996 and data from the most recent
available cost reports. In pertinent part, section 1833(t)(2)(B) of the
Act provides that the Secretary may establish groups of covered OPD
services, within a classification system developed by the Secretary for
covered OPD services, so that services classified within each group are
comparable clinically and with respect to the use of resources. In
accordance with these provisions, we have developed the PHP APCs.
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 APCs, effective for services
furnished on or after July 1, 2000 (65 FR 18452 through 18455). Under
this methodology, the median per diem costs were used to calculate the
relative payment weights for the PHP APCs. Section 1833(t)(9)(A) of the
Act requires the Secretary to review, not less often than annually, and
revise the groups, the relative payment weights, and the wage and other
adjustments described in section 1833(t)(2) of the Act to take into
account changes in medical practice, changes in technology, the
addition of new services, new cost data, and other relevant information
and factors.
We began efforts to strengthen the PHP benefit through extensive
data analysis, along with policy and payment changes finalized in the
CY 2008 OPPS/ASC final rule with comment period (72 FR 66670 through
66676). In that final rule with comment period, we made two refinements
to the methodology for computing the PHP median: The first remapped 10
revenue codes that are common among hospital-based PHP claims to the
most appropriate cost centers; and the second refined our methodology
for computing the PHP median per diem cost by computing a separate per
diem cost for each day rather than for each bill.
In CY 2009, we implemented several regulatory, policy, and payment
changes, including a two-tier payment approach for partial
hospitalization services under which we paid one amount for days with 3
services under PHP APC 0172 (Level 1 Partial Hospitalization) and a
higher amount for days with 4 or more services under PHP APC 0173
(Level 2 Partial Hospitalization) (73 FR 68688 through 68693). We also
finalized our policy to deny payment for any PHP claims submitted for
days when fewer than 3 units of therapeutic services are provided (73
FR 68694). Furthermore, for CY 2009, we revised the regulations at 42
CFR 410.43 to codify existing basic PHP patient eligibility criteria
and to add a reference to current physician certification requirements
under 42 CFR 424.24 to conform our regulations to our longstanding
policy (73 FR 68694 through 68695). We also revised the partial
hospitalization benefit to include several coding updates (73 FR 68695
through 68697).
For CY 2010, we retained the two-tier payment approach for partial
hospitalization services and used only hospital-based PHP data in
computing the PHP APC per diem costs, upon which PHP APC per diem
payment rates are based. We used only hospital-based PHP data because
we were concerned about further reducing both PHP APC per diem payment
rates without knowing the impact of the policy and payment changes we
made in CY 2009. Because of the 2-year lag between data collection and
rulemaking, the changes we made in CY 2009 were reflected for the first
time in the claims data that we used to determine payment rates for the
CY 2011 rulemaking (74 FR 60556 through 60559).
In the CY 2011 OPPS/ASC final rule with comment period (75 FR
71994), we established four separate PHP APC per diem payment rates:
Two for CMHCs (APC 0172 (for Level 1 services) and APC 0173 (for Level
2 services)) and two for hospital-based PHPs (APC 0175 (for Level 1
services) and 0176 (for Level 2 services)), based on each provider
type's own unique data. For CY 2011, we also instituted a 2-year
transition period for CMHCs to the CMHC APC per diem payment rates
based solely on CMHC data. Under the transition methodology, CMHC APCs
Level 1 and Level 2 per diem costs were calculated by taking 50 percent
of the difference between the CY 2010 final hospital-based PHP median
costs and the CY 2011 final CMHC median costs and then adding that
number to the CY 2011 final CMHC median costs. A 2-year transition
under this methodology moved us in the direction of our goal, which is
to pay appropriately for partial hospitalization services based on each
provider type's data, while at the same time allowing providers time to
adjust their business operations and protect access to care for
Medicare beneficiaries. We also stated that we would review and analyze
the data during the CY 2012 rulemaking cycle and, based on these
analyses, we might further refine the payment mechanism. We refer
readers to section X.B. of the CY 2011 OPPS/ASC final rule with comment
period (75 FR 71991 through 71994) for a full discussion.
In addition, in accordance with section 1301(b) of the Health Care
and Education Reconciliation Act of 2010 (HCERA 2010), we amended the
description of a PHP in our regulations to specify that a PHP must be a
distinct and organized intensive ambulatory treatment program offering
less than 24-hour daily care other than in an individual's home or in
an inpatient or residential setting. In accordance with section 1301(a)
of HCERA 2010, we revised the definition of a CMHC in the regulations
to conform to the revised definition now set forth under section
1861(ff)(3)(B) of the Act (75 FR 71990).
For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74348 through 74352), we determined the relative
payment weights for partial hospitalization services provided by CMHCs
based on data derived solely from CMHCs and the relative payment
weights for partial hospitalization services provided by hospital-based
PHPs based exclusively on hospital data.
In the CY 2013 OPPS/ASC final rule with comment period, we
finalized our proposal to base the relative payment weights that
underpin the OPPS APCs, including the four PHP APCs (APCs 0172, 0173,
0175, and 0176), on geometric mean costs rather than on the median
costs. We established these four PHP APC per diem payment rates based
on geometric mean cost levels calculated using the most recent claims
and cost data for each provider type. For a detailed discussion on this
policy, we refer readers to the CY 2013 OPPS/ASC
[[Page 58985]]
final rule with comment period (77 FR 68406 through 68412).
In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622),
we solicited comments on possible future initiatives that may help to
ensure the long-term stability of PHPs and further improve the accuracy
of payment for PHP services, but proposed no changes. In the CY 2014
OPPS/ASC final rule with comment period (78 FR 75050 through 75053), we
summarized the comments received on those possible future initiatives.
We also continued to apply our established policies to calculate the
four PHP APC per diem payment rates based on geometric mean per diem
costs using the most recent claims data for each provider type. For a
detailed discussion on this policy, we refer readers to the CY 2014
OPPS/ASC final rule with comment period (78 FR 75047 through 75050).
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66902
through 66908), we continued to apply our established policies to
calculate the four PHP APC per diem payment rates based on PHP APC
geometric mean per diem costs, using the most recent claims and cost
data for each provider type.
In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70455
through 70465), we described our extensive analysis of the claims and
cost data and ratesetting methodology. We found aberrant data from some
hospital-based PHP providers that were not captured using the existing
OPPS 3 standard deviation trims for extreme cost-to-charge
ratios (CCRs) and excessive CMHC charges resulting in CMHC geometric
mean costs per day that were approximately the same as or more than the
daily payment for inpatient psychiatric facility services.
Consequently, we implemented a trim to remove hospital-based PHP
service days that use a CCR that was greater than 5 to calculate costs
for at least one of their component services, and a trim on CMHCs with
a geometric mean cost per day that is above or below 2 (2)
standard deviations from the mean. We stated in the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70456) that, without using a
trimming process, the data from these providers would inappropriately
skew the geometric mean per diem cost for Level 2 CMHC services.
In addition, in the CY 2016 OPPS/ASC final rule with comment period
(80 FR 70459 through 70460), we corrected a cost inversion that
occurred in the final rule data with respect to hospital-based PHP
providers. We corrected the cost inversion with an equitable adjustment
to the actual geometric mean per diem costs by increasing the Level 2
hospital-based PHP APC geometric mean per diem costs and decreasing the
Level 1 hospital-based PHP APC geometric mean per diem costs by the
same factor, to result in a percentage difference equal to the average
percent difference between the hospital-based Level 1 PHP APC and the
Level 2 PHP APC for partial hospitalization services from CY 2013
through CY 2015.
Finally, we renumbered the PHP APCs, which were previously 0172,
0173, 0175, and 0176, to 5851, 5852, 5861, and 5862, respectively. For
a detailed discussion of the PHP ratesetting process, we refer readers
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462
through 70467).
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687
through 79691), we continued to apply our established policies to
calculate the PHP APC per diem payment rates based on geometric mean
per diem costs using the most recent claims and cost data for each
provider type. However, we finalized a policy to combine the Level 1
and Level 2 PHP APCs for CMHCs and to combine the Level 1 and Level 2
APCs for hospital-based PHPs because we believed this would best
reflect actual geometric mean per diem costs going forward, provide
more predictable per diem costs, particularly given the small number of
CMHCs, and generate more appropriate payments for these services, for
example by avoiding the cost inversions for hospital-based PHPs
addressed in the CY 2016 and CY 2017 OPPS/ASC final rules with comment
period (80 FR 70459 and 81 FR 79682). We implemented an 8-percent
outlier cap for CMHCs to mitigate potential outlier billing
vulnerabilities by limiting the impact of inflated CMHC charges on
outlier payments. We will continue to monitor the trends in outlier
payments and consider policy adjustments as necessary.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59373
through 59381), we continued to apply our established policies to
calculate the PHP APC per diem payment rates based on geometric mean
per diem costs using the most recent claims and cost data for each
provider type. We continued to designate a portion of the estimated 1.0
percent hospital outpatient outlier threshold specifically for CMHCs,
consistent with the percentage of projected payments to CMHCs under the
OPPS, excluding outlier payments.
For a comprehensive description of PHP payment policy, including a
detailed methodology for determining PHP per diem amounts, we refer
readers to the CY 2016 and CY 2017 OPPS/ASC final rules with comment
period (80 FR 70453 through 70455 and 81 FR 79678 through 79680).
B. PHP APC Update for CY 2019
1. PHP APC Geometric Mean per Diem Costs
For CY 2019, in the CY 2019 OPPS/ASC proposed rule (83 FR 37130),
we proposed to continue to apply our established policies to calculate
the PHP APC per diem payment rates based on geometric mean per diem
costs using the most recent claims and cost data for each provider
type. Specifically, we proposed to continue to use CMHC APC 5853
(Partial Hospitalization (3 or More Services Per Day)) and hospital-
based PHP APC 5863 (Partial Hospitalization (3 or More Services Per
Day)). We proposed to continue to calculate the geometric mean per diem
costs for CY 2019 for APC 5853 for CMHCs using only CY 2017 CMHC claims
data and the most recent CMHC cost data, and the CY 2019 geometric mean
per diem costs for APC 5863 for hospital-based PHPs using only CY 2017
hospital-based PHP claims data and the most recent hospital cost data.
We summarize the public comments we received related to these PHP
proposals and methodology and include our responses in the sections
below focused on CMHC ratesetting and on hospital-based PHP ratesetting
in this CY 2019 OPPS/ASC final rule with comment period.
2. Development of the PHP APC Geometric Mean per Diem Costs
In the CY 2019 OPPS/ASC proposed rule (83 FR 37130), for CY 2019
and subsequent years, we proposed to follow the PHP ratesetting
methodology described in section VIII.B.2. of the CY 2016 OPPS/ASC
final rule with comment period (80 FR 70462 through 70466) to determine
the PHP APCs' geometric mean per diem costs and to calculate the
payment rates for APCs 5853 and 5863, incorporating the modifications
made in the CY 2017 OPPS/ASC final rule with comment period. As
discussed in section VIII.B.1. of the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79680 through 79687), the geometric mean per diem
cost for hospital-based PHP APC 5863 is based upon actual hospital-
based PHP claims and costs for PHP service days providing 3 or more
services. Similarly, the geometric mean per diem cost for CMHC APC 5853
is based upon actual CMHC claims and costs for CMHC service days
providing 3 or more services.
[[Page 58986]]
The CMHC or hospital-based PHP APC per diem costs are the provider-
type specific costs derived from the most recent claims and cost data.
The CMHC or hospital-based PHP APC per diem payment rates are the
national unadjusted payment rates calculated from the CMHC or hospital-
based PHP APC per diem costs, after applying the OPPS budget neutrality
adjustments described in section II.A.4. of this final rule with
comment period.
As previously stated, in the CY 2019 OPPS/ASC proposed rule, we
proposed to apply our established methodologies in developing the CY
2019 geometric mean per diem costs and payment rates, including the
application of a 2 standard deviation trim on costs per day
for CMHCs and a CCR greater than 5 hospital service day trim for
hospital-based PHP providers. These two trims were finalized in the CY
2016 OPPS/ASC final rule with comment period (80 FR 70455 through
70462) for CY 2016 and subsequent years.
a. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments
For this CY 2019 final rule with comment period, prior to
calculating the final geometric mean per diem cost for CMHC APC 5853,
we prepared the data by first applying trims and data exclusions, and
assessing CCRs as described in the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70463 through 70465), so that ratesetting is not
skewed by providers with extreme data. For this CY 2019 OPPS/ASC final
rule with comment period, we used the same data preparation steps.
Before any trims or exclusions were applied, there were 45 CMHCs in the
final PHP claims data file (compared to 44 in the CY 2019 OPPS/ASC
proposed rule). Under the 2 standard deviation trim policy,
we excluded any data from a CMHC for ratesetting purposes when the
CMHC's geometric mean cost per day was more than 2 standard
deviations from the geometric mean cost per day for all CMHCs. By
applying this trim for CY 2019 ratesetting, in this final rule with
comment period, we excluded 4 CMHCs with geometric mean costs per day
below the trim's lower limit of $49.86 and 2 CMHCs with geometric mean
costs per day above the trim's upper limit of $293.60. This standard
deviation trim removed 6 providers from the ratesetting whose overall
effect on the data would have skewed downward the calculation of the
final geometric mean per diem costs for CMHCs.
In accordance with our PHP ratesetting methodology, as stated in
the proposed rule, we also remove service days with no wage index
values, because we use the wage index data to remove the effects of
geographic variation in costs prior to APC geometric mean per diem cost
calculation (80 FR 70465). For this CY 2019 final rule with comment
period ratesetting, 1 CMHC was missing wage index data for all of its
service days and was excluded.
In addition to our trims and data exclusions, before determining
the PHP APC geometric mean per diem costs, we also assess CCRs (80 FR
70463). Our longstanding PHP OPPS ratesetting methodology defaults any
CMHC CCR greater than 1 to the statewide hospital CCR (80 FR 70457).
For this CY 2019 final rule with comment period ratesetting, we
identified 3 CMHCs that had CCRs greater than 1. These CMHCs' CCRs were
1.053, 1.009, and 1.025, and each was defaulted to its appropriate
statewide hospital CCR for CY 2019 ratesetting purposes.
In summary, these data preparation steps adjusted the CCR for 3
CMHCs by defaulting to the appropriate statewide hospital CCR and
excluded 7 CMHCs, resulting in the inclusion of a total of 38 CMHCs (45
total--7 excluded) in our CY 2019 final rule with comment period
ratesetting modeling (compared to a total of 36 CMHCs in our modeling
in the CY 2019 OPPS/ASC proposed rule). The 2 standard
deviation trim and the exclusion for missing wage index data removed
425 CMHC claims out of a total of 14,431 CMHC claims, resulting in
14,006 CMHC claims used for ratesetting purposes. We believe that
excluding providers with extremely low or high geometric mean costs per
day or extremely low or high CCRs protects CMHCs from having that data
inappropriately skew the calculation of the CMHC APC geometric mean per
diem cost.
After applying all of the above trims, exclusions, and adjustments,
we followed the methodology described in the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70464 through 70465) and modified in
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687
through 79688, and 79691) to calculate the final PHP APC geometric mean
per diem cost.\59\ The final CY 2019 geometric mean per diem cost for
all CMHCs for providing 3 or more services per day (CMHC PHP APC 5853)
is $121.62 (compared to the proposed geometric mean per diem cost of
$119.51).
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\59\ Each revenue code on the CMHC claim must have a HCPCS code
and charge associated with it. We multiply each claim service line's
charges by the CMHC's overall CCR (or statewide CCR, where the
overall CCR was greater than 1) to estimate CMHC costs. Only the
claims service lines containing PHP allowable HCPCS codes and PHP
allowable revenue codes from the CMHC claims remaining after
trimming are retained for CMHC cost determination. The costs,
payments, and service units for all service lines occurring on the
same service date, by the same provider, and for the same
beneficiary are summed. CMHC service days must have 3 or more
services provided to be assigned to CMHC APC 5853. The geometric
mean per diem cost for CMHC APC 5853 is calculated by taking the nth
root of the product of n numbers, for days where 3 or more services
were provided. CMHC service days with costs 3 standard
deviations from the geometric mean costs within APC 5853 are deleted
and removed from modeling. The remaining PHP service days are used
to calculate the geometric mean per diem cost for each PHP APC by
taking the nth root of the product of n numbers for days where 3 or
more services were provided.
---------------------------------------------------------------------------
Below we summarize the public comments we received on our proposals
related to continuing to follow our existing CMHC ratesetting
methodology and the calculation of the CMHC geometric mean per diem
costs.
Comment: Two commenters objected to the continuation of separate
APCs by provider type for CY 2019, stating that CMHCs and hospital-
based PHPs provide the same services and follow the same regulations,
but CMHCs provide them for less costs. One commenter acknowledged that
hospitals have higher cost structures, which the commenter asserted was
due to hospitals' higher overhead allocation, but believed that CMHCs
are being punished for providing more cost-effective and more intensive
services.
Response: We disagree that CMHCs are being punished for providing
more cost-effective and more intensive services. The difference in
payment between CMHCs and hospital-based PHPs reflects differences in
resource use. When Congress required the Secretary to implement a
hospital outpatient prospective payment system, it required the payment
system to group covered services with respect to clinical similarity
and resource use (section 1833(t)(2) of the Act). Because CMHCs' and
hospital-based PHPs' resource uses are different, these two provider
types are paid under different APCs, based on their actual resource
use.
Because the cost of providing partial hospitalization services
differs significantly by site of service, we established different PHP
payment rates for hospital-based PHPs and CMHCs in the CY 2011 OPPS/ASC
final rule with comment period (75 FR 71991 through 71994). With
respect to the continued use of PHP APC geometric mean per diem costs
for determining payment rates by provider, we refer readers to the CY
2013 OPPS/ASC final rule with comment period (77 FR 68406 through
[[Page 58987]]
68412) for a discussion of the implementation of this policy. The
resulting payment rates reflect the geometric mean cost of what
providers expend to maintain such programs, based on data provided by
CMHCs and hospital-based PHPs, which we believe is an improvement over
the two-tiered methodology calculated based on median costs using only
hospital-based data.
Comment: Two commenters opposed the continued use of the single-
tiered payment system implemented in CY 2017 OPPS/ASC rulemaking. One
of these commenters asserted that the single-tiered system was
implemented due to the cost inversion in hospital-based PHP data and,
therefore, was unfairly applied to CMHCs. Another commenter did not
object to the single payment tier, but suggested that CMS monitor the
data to ensure that the single-tiered APCs do not result in a decrease
in the number of operational PHPs.
Response: We thank the commenters for their input. In the CY 2017
OPPS/ASC final rule with comment period, we cited several reasons for
implementing the single-tiered payment system (81 FR 79682 through
79686), including the cost inversion in the hospital-based PHP data
which the commenter cited. A cost inversion exists when, under a 2-
tiered payment system, the Level 1 geometric mean per diem cost for
providing exactly 3 services per day exceeds the Level 2 PHP APC
geometric mean per diem cost for providing 4 or more services per day.
The commenter is correct that CMHCs were not affected by a cost
inversion as hospital-based PHPs were. However, in that same CY 2017
OPPS/ASC final rule with comment period, we noted that another primary
reason for combining the 2-tiered system into a single tier, by
provider type, was the decrease in the number of CMHCs (81 FR 79683).
With a small number of providers, data from large providers with a high
percentage of all PHP service days and unusually high or low geometric
mean costs per day would have a more pronounced effect on the PHP APCs
geometric mean per diem costs, skewing costs up or down. The effect
would be magnified by continuing to split the geometric mean per diem
costs further by distinguishing between Level 1 and Level 2 PHP
services. A single PHP APC for each provider type for providing 3 or
more PHP services per day reduces these cost fluctuations and provides
more stability in the PHP APC geometric mean per diem costs.
We do not believe that the single-tier payment system will lead to
a reduction in the number of PHPs because total payments to an
individual CMHC using the single-tier payment system are approximately
equal to total payments to that same CMHC if the previous 2-tiered
payment system were used instead. The calculated rates for APCs 5853
and 5863 continue to be based upon the actual costs for CMHCs and
hospital-based PHPs, respectively. Therefore, the payment rates for the
single-tier PHP APCs are an appropriate approximation of provider
costs, and should not result in reduced access. As we noted in the CY
2017 OPPS/ASC final rule with comment period (81 FR 79685), the single-
tier PHP APCs are calculated by following the existing methodology for
ratesetting, except that the geometric mean per diem costs for each
provider type were calculated for days providing 3 or more partial
hospitalization services, as opposed to being calculated separately for
days with exactly 3 services and for days with 4 or more services, as
was previously done. The combined PHP APCs' geometric mean costs are
similar to a weighted average of actual provider costs. As such,
combining the PHP APCs geometric mean per diem costs does not reduce
total costs or total payments by provider type. We refer readers to the
CY 2017 OPPS/ASC final rule with comment period for a detailed review
of the methodology used in determining per diem costs using the single-
tier PHP APCs (81 FR 79686 through 79688).
The 2017 claims data used for this CY 2019 ratesetting are the
first year of data using the single-tier payment system. We will
monitor the data for any unintended consequences on the number of
operational PHPs associated with using the single-tier payment system.
We note that the number of PHP providers is generally affected by
multiple factors, such as business and market conditions, competition,
estimated profit margins, private insurance coverage changes, Federal
and State fraud and abuse efforts, and community support for mental
health treatment.
Comment: Several commenters questioned CMS' use of the 2 standard deviation trim on CMHC costs/per day, and asked why it
was different from the OPPS 3 standard deviation trim which
is applied to hospital-based PHPs. The commenters noted that the trims
were implemented to help prevent inappropriate fluctuations in the
data, but were concerned that this trim removed CMHCs from the data,
and that this trim resulted in the decline in the costs per day.
Response: The 2 standard deviation trim on CMHC costs/
per day was implemented in the CY 2016 OPPS final rule with comment
period (80 FR 70455 through 70462) in order to protect CMHCs from
having extreme costs per day inappropriately skew the CMHC PHP APC
geometric mean per diem costs.
As part of the effort to increase the accuracy of the PHP per diem
costs, for the CY 2016 ratesetting, we completed an extensive analysis
of the claims and cost data. That analysis identified aberrant data
from several providers that impacted the calculation of the proposed
PHP geometric mean per diem costs. For example, we found claims with
excessive CMHC charges resulting in CMHC geometric mean costs per day
that were approximately the same as or more than the daily payment for
inpatient psychiatric facility services. For an outpatient program like
PHP, because it does not incur room and board costs such as an
inpatient stay would, these costs per day were excessive. In addition,
we found some CMHCs had very low costs per day (less than $25 per day)
(80 FR 70456). The 2 standard deviation trim on CMHC costs
per day excludes providers with extremely low or extremely high costs
per day, and protects CMHCs from having those extreme costs
inappropriately skew the CMHC PHP APC geometric mean per diem costs.
In addition, in that CY 2016 OPPS final rule with comment, we noted
that the 2 standard deviation trim aligned the geometric
mean and median per diem costs for the CMHC Level 2 PHP APC payment
tier, which indicated that the trim removed the skewing in the data
caused by the inclusion of aberrant data (80 FR 70456). We continue to
believe that the 2 standard deviation trim excludes CMHCs
with aberrant data from the ratesetting process while allowing for the
use of as much data as possible. In addition, we stated that
implementing a 2 standard deviation trim on CMHCs would
target these aberrancies without limiting overall per diem cost
increases. For normally distributed data, 2 standard
deviations from the mean capture approximately 95 percent of the data.
Our analyses for the CY 2016 ratesetting also showed that a higher trim
level, such as a 2.5 standard deviation trim or the 3 standard deviation trim used by the rest of OPPS, did not
remove the CMHCs with aberrant data from the ratesetting process (80 FR
70456 and 70457).
In this CY 2019 OPPS/ASC final rule, the 2 standard
deviation trim on CMHC costs/day removed 6 CMHCs from ratesetting,
which affected the final
[[Page 58988]]
per diem costs. It removed both low-cost and high-cost providers that
fail the trim; its net effect on the CY 2019 ratesetting data was to
increase CMHC geometric mean per diem costs. For CY 2019, if we did not
apply the 2 standard deviation trim on CMHC costs/day, the
final CMHC geometric mean per diem cost would have been $120.77. This
is less than the geometric mean per diem cost of $121.62 which we are
finalizing, and which is after applying the 2 standard
deviation trim.
With regard to the questions about why the same trims are not used
for both CMHCs and hospital-based PHPs, we refer readers to the
discussion in the CY 2016 OPPS/ASC final rule with comment period (80
FR 70458). As we noted in that CY 2016 OPPS/ASC final rule with comment
period, there are differences in the ratesetting process between
hospital-based PHPs and CMHCs, which are largely due to differences
between the hospital cost reports and the CMHC cost reports, and we
believe that having different trims more appropriately targets aberrant
data for each provider type. As noted previously, the OPPS 3 standard deviation trim on per diem costs did not remove the
aberrant CMHC data. We considered applying the 2 standard
deviation trim on per diem costs to hospital-based PHP providers, but
an alternative trim on hospital-based CCRs greater than 5 allowed for
use of more data from hospital-based providers and still removed
aberrant data. We continue to believe this trim based on hospital-based
PHP CCRs is more effective in removing aberrant hospital-based PHP data
and allows for the use and retention of more data than a 2
standard deviation trim on hospital-based PHP costs per day.
Comment: Several commenters objected to the decline in the CMHC per
diem costs that were proposed, and were concerned about the ability to
maintain access to services. One commenter noted that CMHCs cannot
provide all of the services they provide on a daily basis at the
proposed payment rate. Some commenters also stated that CMHCs incur
extra costs to meet the CMHC conditions of participation (CoPs), have
more costly staff, or have experienced an increase in bad debt expense.
A few commenters noted that the number of CMHCs nationally had declined
greatly as a result of declines in payment and payment fluctuations.
One commenter stated that setting CMHCs' payment rates based on a small
number of CMHCs does not reflect the actual cost of providing these
services and expressed concern that basing payments at the mean or
median level would result in half of CMHCs receiving payments less than
their cost, which would guarantee that more CMHCs would close, further
limiting access. Commenters requested that CMS reconsider the payment
rate reduction, which one commenter believed resulted in PHP services
moving toward extinction in the current mode. Another commenter
questioned if CMS had a veiled motivation to eliminate CMHCs
altogether, and wondered if CMHCs were still considered the ``fraud
benefit.'' Commenters also were concerned that if CMHC access declined,
beneficiaries would be pushed toward higher-cost outpatient
departments, resulting in higher out-of-pocket costs for beneficiaries.
One commenter noted that CMHCs are in keeping with the health care
trend to service patients in their communities, rather than forcing
patients to travel to a medical center.
Response: The OPPS pays for outpatient services, including partial
hospitalization services, based on the geometric mean per diem costs of
providing services using provider data from claims and cost reports, in
accordance with statute. For this CY 2019 OPPS/ASC final rule with
comment period, the final geometric mean per diem cost for CMHC APC
5853 is $121.62, which is a slight increase from the proposed geometric
mean per diem cost, but a 15-percent reduction from the CY 2018 final
geometric mean per diem cost.
In response to commenters concerned that CMHCs cannot provide all
of the services offered on a daily basis at the proposed payment rate,
we remind commenters that we calculate the PHP APC geometric mean per
diem costs based on the data provided for each type of provider to
determine payment for these services. The final PHP APC geometric mean
per diem costs for CY 2019 reflect actual provider costs of covered
services. We believe that this system provides appropriate payment for
covered partial hospitalization services based on actual provider
costs. We further note that section 1861(ff)(2)(I) of the Act
explicitly prohibits Medicare from paying for the costs of meals or
transportation, which some CMHCs incur. Therefore, these costs,
although incurred by CMHCs, are not covered under the OPPS.
In response to the commenters who stated that CMHCs incur extra
costs to meet the CMHC CoPs, most (if not all) of the costs associated
with adhering to CoPs should be captured in the cost report data used
in ratesetting and, therefore, are accounted for when computing the
geometric mean per diem costs. Similar to the requirement for CMHCs to
comply with CMHC CoPs, hospital-based PHPs must also comply with
hospital CoPs. All Medicare-participating facilities have CoPs or other
requirements that must be met, and CMHCs are not specifically being
singled out for compliance, nor are there ``extra'' costs associated
with the CMHC CoPs.
Allowable labor costs for providing direct patient care would also
be captured in the cost report data used for ratesetting. We refer the
commenters to the instructions for the CMHC cost reports for more
information on capturing the costs associated with meeting CoPs and
with labor costs for direct patient care, which are available online in
links to Chapters 18 and 45 found at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=scending. The
covered costs of providing PHP care to beneficiaries at CMHCs are
captured as part of CMHC ratesetting, and include allowable labor costs
and the costs of complying with CoPs.
The reduction to bad debt reimbursement was a result of provisions
of section 3201 of the Middle Class Tax Extension and Job Creation Act
of 2012 (Pub. L. 112-96). The reduction to bad debt reimbursement
impacted all providers eligible to receive bad debt reimbursement, as
discussed in the CY 2013 End-Stage Renal Disease final rule (77 FR
67518). Medicare currently reimburses bad debt for eligible providers
at 65 percent. Therefore, CMHCs are not specifically being singled out
for a payment reduction as a result of bad debt expenses. Because this
percentage was enacted by Congress, CMS does not have the authority to
change the percentage.
We appreciate the commenter's input regarding the effect any
reduction in PHP payment rates would have on access to care, but we
disagree with the commenter's assertion that CMS considers CMHCs to be
a ``fraud benefit'' or that CMS has any motivation (veiled or
otherwise) to eliminate CMHCs. Both are simply not true; we appreciate
the work CMHCs do to care for a particularly vulnerable population with
serious mental illnesses. We are very concerned about the decline in
the number of CMHCs, but, as noted in a previous comment response in
this section, we believe that a number of factors affect PHP provider
closures. We will continue working to strengthen
[[Page 58989]]
access to both CMHCs and hospital-based PHPs for eligible Medicare
beneficiaries. As part of that process, we regularly review our
methodology to ensure that it is appropriately capturing the cost of
care reported by providers. For example, for the CY 2016 ratesetting,
we extensively reviewed the methodology used for PHP ratesetting. In
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462
through 70466), we also included a detailed description of the
ratesetting process to help all PHP providers record costs correctly so
that we can more fully capture PHP costs in ratesetting.
We want to ensure that CMHCs remain a viable option as providers of
mental health care in the beneficiary's own community. We agree that
beneficiaries receiving care at a CMHC instead of a hospital-based PHP
would have a lower out-of-pocket cost, which increases the
attractiveness of CMHCs to those needing their services. We will
continue to explore policy options for strengthening the PHP benefit
and increasing access to the valuable services provided by CMHCs as
well as by hospital-based PHPs.
Comment: One commenter suggested that CMS consider paying CMHCs
using a quality-based payment system, and that CMS use value-based
purchasing. The commenter recommended that, instead of basing payment
rates on estimated actual median costs of claims, CMS look at the value
provided by the quality of provided services using different methods
such as records reviews, denials due to lack of medical necessity or
inadequate documentation, site visits, interviews with patients, and,
most importantly, patient outcomes. The commenter believed that
rewarding providers for higher-quality care, as measured by selected
standards instead of rewarding providers by increasing costs, is a
better way to improve the quality of any service.
Response: Currently, there is no statutory language explicitly
authorizing a value-based purchasing program for PHPs. We responded to
a similar public comment in the CY 2016 OPPS/ASC final rule with
comment period (80 FR 70462) and refer readers to a summary of that
comment and our response. To reiterate, sections 1833(t)(2) and
1833(t)(9) of the Act set forth the requirements for establishing and
adjusting OPPS payment rates, which include PHP payment rates. Section
1833(t)(17) of the Act authorizes the Hospital OQR Program, which
applies a payment reduction to subsection (d) hospitals that fail to
meet program requirements. In the CY 2015 OPPS/ASC proposed rule (79 FR
41040), we considered future inclusion of, and requested comments on,
the following quality measures addressing PHP issues that would apply
in the hospital outpatient setting: (1) 30-day Readmission; (2) Group
Therapy; and (3) No Individual Therapy. We also refer readers to the CY
2015 OPPS/ASC final rule with comment period (79 FR 66957 through
66958) for a more detailed discussion of PHP measures considered for
inclusion in the Hospital OQR Program in future years. The Hospital OQR
Program does not apply to CMHCs, and there are no quality measures
applied to CMHCs.
Comment: One commenter noted that, in the past, CMS stated that
CMHCs provide fewer services and have less costly staff than hospitals.
Response: We believe that the commenter may be referring to the CY
2011 OPPS/ASC final rule with comment period (75 FR 71991), wherein CMS
stated we believe that CMHCs have a lower cost structure than their
hospital-based PHP counterparts because the data showed that CMHCs
provide fewer PHP services in a day and use less costly staff than
hospital-based PHPs. Those statements were based on CY 2009 claims and
cost data, which differ from more recent claims and cost data. Each
year, we calculate geometric mean per diem costs based on updated
claims and cost reports. For example, our CY 2019 geometric mean per
diem costs and the APC payment rates are based upon CY 2017 claims and
cost data. We refer the commenter to the utilization data in section
VIII.B.4. of this CY 2019 final rule with comment period for details on
current CMHC utilization. In addition, we continually seek to increase
the accuracy of our payment rates. As noted previously, as part of the
effort to increase the accuracy of the PHP APCs' per diem costs, for
the CY 2016 ratesetting, we completed an extensive analysis of the
claims and cost data. That analysis identified aberrant data from
several providers that impacted the calculation of the proposed PHP
APCs' geometric mean per diem costs.
b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions
For the CY 2019 proposed rule and for this CY 2019 final rule with
comment period, we followed a data preparation process for hospital-
based PHP providers that is similar to that used for CMHCs by applying
trims and data exclusions as described in the CY 2016 OPPS/ASC final
rule with comment period (80 FR 70463 through 70465) so that our
ratesetting is not skewed by providers with extreme data. Before any
trimming or exclusions were applied, there were 426 hospital-based PHP
providers in the final CY 2017 PHP claims data used in this CY 2019
OPPS/ASC final rule with comment period (compared to 394 hospital-based
PHPs in the CY 2019 OPPS/ASC proposed rule).
For hospital-based PHP providers, we applied a trim on hospital
service days when the CCR was greater than 5 at the cost center level.
This trim removed hospital-based PHP service days that use a CCR
greater than 5 to calculate costs for at least one of their component
services. Unlike the 2 standard deviation trim, which
excluded CMHC providers that failed the trim, the CCR greater than 5
trim excluded any hospital-based PHP service day where any of the
services provided on that day were associated with a CCR greater than 5
(in other words, the CCR greater than 5 trim is a (service) day-level
trim in contrast to the CMHC 2 standard deviation trim,
which is a provider-level trim). Applying this CCR greater than 5 trim
removed from our final rule ratesetting affected service days from 3
hospital-based PHP providers with CCRs greater than 5. However, 100
percent of the service days for 1 of these affected hospital-based PHP
providers had at least 1 service associated with a CCR of 9.5744, so
the trim removed that 1 provider entirely from our final rule
ratesetting. The two other providers remained in the ratesetting data,
but with affected service days trimmed out. In addition, 48 hospital-
based PHPs were removed for having no PHP costs and, therefore, no days
with PHP payment. No hospital-based PHPs were removed for missing wage
index data or by the OPPS 3 standard deviation trim on
costs per day.
Therefore, we trimmed out 49 hospital-based PHP providers [(1 with
all service days having a CCR greater than 5) + (48 with zero daily
costs and no PHP payment)], resulting in 377 (426 total-49 excluded)
hospital-based PHP providers in the data used for final rule with
comment period ratesetting (compared to 374 hospital-based PHPs in the
CY 2019 OPPS/ASC proposed rule). No hospital-based PHP providers were
defaulted to using their overall hospital ancillary CCRs due to outlier
cost center CCR values. After completing these data preparation steps,
we calculated the final CY 2019 geometric mean per diem cost for
hospital-based PHP APC 5863 for hospital-based PHP services by
following the methodology described in the CY 2016 OPPS/ASC final rule
with comment period (80 FR 70464 through 70465) and modified in the CY
2017
[[Page 58990]]
OPPS/ASC final rule with comment period (81 FR 79687 and 79691) to
calculate the geometric mean per diem cost.\60\ The final CY 2019
geometric mean per diem cost for hospital-based PHP providers that
provide 3 or more services per service day (hospital-based PHP APC
5863) is $222.76 (compared to $220.52 in the CY 2019 OPPS/ASC proposed
rule).
---------------------------------------------------------------------------
\60\ Each revenue code on the hospital-based PHP claim must have
a HCPCS code and charge associated with it. We multiply each claim
service line's charges by the hospital's department-level CCR; that
CCR is determined by using the OPPS Revenue-code-to-cost-center
crosswalk. Only the claims service lines containing PHP-allowable
HCPCS codes and PHP-allowable revenue codes from the hospital-based
PHP claims remaining after trimming are retained for hospital-based
PHP cost determination. The costs, payments, and service units for
all service lines occurring on the same service date, by the same
provider, and for the same beneficiary are summed. Hospital-based
PHP service days must have 3 or more services provided to be
assigned to hospital-based PHP APC 5863. The geometric mean per diem
cost for hospital-based PHP APC 5863 is calculated by taking the nth
root of the product of n numbers, for days where 3 or more services
were provided. Hospital-based PHP service days with costs 3 standard deviations from the geometric mean costs within APC
5863 are deleted and removed from modeling. The remaining hospital-
based PHP service days are used to calculate the geometric mean per
diem cost for hospital-based PHP APC 5863.
---------------------------------------------------------------------------
Comment: One commenter appreciated the CY 2019 per diem increase
for hospital-based PHPs. The commenter stated that the minimum rate
should be set at the geometric mean rate, rather than at the 2-percent
reduction rate of $216.55, as providers are hit with a second 2-percent
reduction again at actual claim payout. The commenter stated this
reduced the hospital-based PHP rate by 4 percent total, and places more
than half of the providers in a payment setting below their daily costs
of providing the services.
Response: The final hospital-based PHP APC geometric mean per diem
cost is $222.76, which is a slight increase from the proposed $220.52
geometric mean per diem cost in the CY 2019 OPPS/ASC proposed rule (83
FR 37131), and a 7-percent increase from the $208.09 CY 2018 final
geometric mean per diem cost (82 FR 59378). In the OPPS ratesetting,
the geometric mean per diem costs are the basis for the final per diem
rates. However, those costs undergo additional ratesetting steps before
they are developed into payment rates, a process which is described in
Part 2 of the Claims Accounting narrative under supporting
documentation for this CY 2019 OPPS/ASC final rule with comment period
available on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. We believe
that the commenter may have misunderstood that these steps are not
simply a ``standard'' 2-percent reduction applied to those costs when
we determine PHP APC per diem payment rates. Rather, those costs follow
a ratesetting process, which can result in the final per diem payment
rates being more or less than the final per diem costs due to budget
neutrality and other adjustments. It is also possible that the
commenter has not misunderstood the ratesetting process, but is
referring to the 2 percentage point reduction in the provider's annual
ratesetting update factor due to failure to comply with Hospital
Outpatient Quality Reporting Program requirements, which is described
in more detail in section XIII.E. of this final rule with comment
period.
For the second 2-percent reduction that the commenter referenced,
which the commenter noted occurs at actual claim payout, we believe
that the commenter is referencing the required sequestration 2-percent
reduction to the Medicare portion of claim payments. That reduction is
a Congressionally-mandated decrease, established by the Budget Control
Act of 2011 (Pub. L. 112-25) and amended by the American Taxpayer
Relief Act of 2012 (Pub. L. 112-240). Sequestration is discussed in a
Medicare Fee-for-Service Provider eNews article available at: https://www.cms.gov/Outreach-and-Education/Outreach/FFSProvPartProg/Downloads/2013-03-08-standalone.pdf. The reduction in payments due to
sequestration is outside the scope of the CY 2019 OPPS/ASC proposed
rule and this final rule with comment period.
Regarding the usage of the geometric mean per diem cost for
determining payment rates, as we noted in a previous comment response
in this section, we refer readers to the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68406 through 68412) for a discussion of the
implementation of this policy. We believe that this system provides
appropriate payment for partial hospitalization services based on
actual provider costs. The final PHP APC geometric mean per diem costs
for CY 2019 reflect these actual provider costs, using our existing
methodology.
After consideration of the public comments we received, we are
finalizing our proposals, without modification, to continue to follow
our existing ratesetting methodologies for both CMHCs and for hospital-
based PHPs in determining geometric mean per diem costs. Specifically,
we are applying our established methodologies in developing the CY 2019
geometric mean per diem costs and payment rates, including the
application of a 2 standard deviation trim on costs per day
for CMHCs and a CCR greater than 5 hospital service day trim for
hospital-based PHP providers. We also are finalizing our proposals,
without modification, to continue to use CMHC APC 5853 (Partial
Hospitalization (3 or More Services Per Day)) and hospital-based PHP
APC 5863 (Partial Hospitalization (3 or More Services Per Day)) and
base the CMHC geometric mean per diem costs on the most recent
available CMHC claims and CMHC cost data, and the hospital-based PHP
geometric mean per diem costs on the most recent available hospital
claims and cost data.
The final CY 2019 PHP APC geometric mean per diem costs for CMHC
PHP APC 5853 are $121.62 and for hospital-based PHP APC 5863 are
$222.76, as stated above and shown in Table 43. The final PHP APCs
payment rates, which are derived from these PHP APCs geometric mean per
diem costs, are included in Addendum A to this final rule with comment
period (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html).\61\
---------------------------------------------------------------------------
\61\ As discussed in section II.A. of this CY 2019 OPPS/ASC
final rule with comment period, OPPS APC geometric mean per diem
costs (including PHP APC geometric mean per diem costs) are divided
by the geometric mean per diem costs for APC 5012 (Clinic Visits and
Related Services) to calculate each PHP APC's unscaled relative
payment weight. An unscaled relative payment weight is one that is
not yet adjusted for budget neutrality. Budget neutrality is
required under section 1833(t)(9)(B) of the Act, and ensures that
the estimated aggregate weight under the OPPS for a calendar year is
neither greater than nor less than the estimated aggregate weight
that would have been made without the changes. To adjust for budget
neutrality (that is, to scale the weights), we compare the estimated
aggregated weight using the scaled relative payment weights from the
previous calendar year at issue. We refer readers to the ratesetting
procedures described in Part 2 of the OPPS Claims Accounting
narrative and in section II. of this final rule with comment period
for more information on scaling the weights, and for details on the
final steps of the process that lead to PHP APC per diem payment
rates. The OPPS Claims Accounting narrative is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.
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[[Page 58991]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.068
3. Changes to the Revenue-Code-to-Cost Center Crosswalk
In the CY 2017 OPPS/ASC final rule with comment period (81 FR
79691), we received public comments identifying an issue that may have
contributed to a decreased PHP median cost for hospital-based PHPs. The
commenters stated that the lack of a required standardized PHP cost
center on the Medicare cost report may be creating some cost-finding
nuances in the cost report itself--for example, inaccurate step-down of
overhead cost allocations to the PHP program, diluted CCRs by the
comingling of PHP and ``Intensive Outpatient Program (IOP)'' on the
cost report, among others. We agreed with the commenters that, if PHP
costs are combined with other less intensive outpatient mental health
treatment costs in the same cost center, the CCR values could be
diluted, leading to lower geometric mean per diem costs being
calculated. We stated in response that we would consider adding a cost
center to the hospital cost report for PHP costs only.
On November 17, 2017, in Transmittal No. 12, we added a new cost
center, ``Partial Hospitalization Program,'' on Line 93.99 of Worksheet
A (Line 93.99 is also displayed on Worksheets B, Parts I and II, B-1;
and C, Parts I and II) for hospital-based PHPs, for cost reporting
periods ending on or after August 31, 2017 (https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R12P240.pdf). On January 30, 2018, in Transmittal No. 13, we changed
the implementation date from cost reporting periods ending on or after
August 31, 2017, to cost reporting periods ending on or after September
30, 2017 (https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R12P240.pdf). The instructions for this new
PHP cost center (Line 93.99) indicate that effective for cost reporting
periods ending on or after September 30, 2017, the provider is to enter
the costs of providing hospital-based partial hospitalization program
(PHP) services as defined in section 1861(ff) of the Act. Therefore,
this cost center is to include all costs associated with providing PHP
services, as defined in the statute (for example, occupational therapy,
individual and group therapy, among others). It should not include
costs for non-PHP outpatient mental health services, such as costs from
what providers refer to as ``Intensive Outpatient Programs.''
During current hospital-based PHP ratesetting, costs are estimated
by multiplying revenue code charges on the claim by the appropriate
cost center-level CCR from the hospital cost report (80 FR 70465). Each
PHP revenue code is associated with particular cost centers on the cost
report (80 FR 70464). The appropriate cost center-level CCR is
identified by using the OPPS Revenue-Code-to-Cost-Center crosswalk; the
current crosswalk is discussed in the CY 2018 OPPS/ASC final rule with
comment period (82 FR 59228) and is available on the CMS website at:
https://www.cms.gov/apps/ama/license.asp?file=/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/CMS-1678-FC-2018-OPPS-FR-Revenue-Code-to-Cost-Center-Crosswalk.zip. The Revenue-Code-to-
Cost-Center crosswalk identifies the primary, secondary (if any), and
tertiary (if any) cost centers that are associated with each PHP
revenue code, and which are the source for the CCRs used in PHP
ratesetting. As discussed in the CY 2002 OPPS interim final rule (66 FR
59885), hospital-based PHP CCRs are assessed by applying the existing
OPPS 3 standard deviation trim to hospital-based PHP CCRs
within each cost center and to the overall hospital ancillary CCR. In
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70464), we
stated that, if the primary cost center has no CCR or if it fails the
3 standard deviation trim, the ratesetting system will look
for a CCR in the secondary cost center. If the secondary cost center
has no CCR or if it fails the 3 standard deviation trim,
the system will move to the tertiary cost center to look for a CCR. If
the tertiary cost center has no CCR or if it fails the 3
standard deviation trim, the ratesetting system will default to using
the hospital's overall ancillary CCR. If the hospital's overall
ancillary CCR fails the 3 standard deviation trim, we
exclude the hospital from ratesetting. While the hierarchy requires a
primary cost center to be associated with a given revenue code, it is
optional for there to be secondary or tertiary cost centers.
With the new PHP cost center, the crosswalk must be updated for
hospital-based PHP cost estimation to correctly match hospital-based
PHP revenue code charges with the PHP cost center CCR for future
ratesetting. However, because the PHP-allowable revenue codes are also
used for reporting non-PHP mental health services, we could not
designate the PHP cost center as the primary cost center in the
existing OPPS Revenue-Code-to-Cost-Center crosswalk. Therefore, in the
CY 2019 OPPS/ASC proposed rule (83 FR 37132 through 37133), we proposed
to create a separate PHP-only Revenue-Code-to-Cost-Center crosswalk for
use in CY 2019 and subsequent years, which would provide a more
accurate and operationally simpler method of matching hospital-based
PHP charges to the correct hospital-based PHP cost center CCR without
affecting non-PHP ratesetting. We note that, because CMHCs have their
own cost reports, we use each CMHC's overall CCR in estimating costs
for PHP ratesetting (80 FR 70463 through 70464). As such, CMHCs do not
have a crosswalk and, therefore, the proposal to create a PHP-only
crosswalk does not apply to CMHCs.
Therefore, we proposed that, for CY 2019 and subsequent years,
hospital-
[[Page 58992]]
based PHPs would follow a new Revenue-Code-to-Cost-Center crosswalk
that only applies to hospital-based PHPs. We proposed that this new
PHP-only Revenue-Code-to-Cost-Center crosswalk would be comprised of
the existing PHP-allowable revenue codes and would map each of those
PHP-allowable revenue codes to the new PHP cost center Line 93.99 as
the primary cost center source for the CCR. We also proposed to
designate as the new secondary cost center the cost center that is
currently listed as the existing primary cost center, and to designate
as the new tertiary cost center the cost center that is listed as the
existing secondary cost center.
In addition, we proposed one exception to this policy for the
mapping for revenue code 0904, which is the only PHP-allowable revenue
code in the existing crosswalk with a tertiary cost center source for
the CCR. We proposed that for revenue code 0904, the secondary cost
center for CY 2019 and subsequent years would be the existing secondary
cost center 3550 (``Psychiatric/Psychological Services''). Similarly,
we proposed that for revenue code 0904, the tertiary cost center for CY
2019 and subsequent years would be existing tertiary cost center 9000
(``Clinic''). We considered expanding the Revenue-Code-to-Cost-Center
crosswalk hierarchy to add a 4th or quaternary level to the hierarchy,
before the system would default to the overall hospital ancillary CCR.
However, we evaluated the usage of the current hierarchy for revenue
code 0904 for the CY 2017, CY 2018, and CY 2019 PHP ratesetting
modelling, and found that expanding the hierarchy would not be
necessary. Our analysis showed that the existing primary cost center
3580 (``Recreational Therapy'') for revenue code 0904 had not been used
during any of the past 3 years.
We did not receive any public comments on our proposals related to
the PHP-only Revenue-Code-to-Cost-Center crosswalk and, therefore, are
finalizing our proposals, as proposed, for CY 2019 and subsequent
years.
Our previous and newly finalized PHP-only Revenue-Code-to-Cost-
Center Crosswalks are shown in Table 44 below.
BILLING CODE 4120-01-P
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4. PHP Service Utilization Updates
We stated in the CY 2019 OPPS/ASC proposed rule (83 FR 37133
through 37134) that, while we were not proposing any changes to the
policy on PHP service utilization, we would continue to monitor the
provision of days with only 3 services. In the CY 2016 OPPS/ASC final
rule with comment period (81 FR 79684 through 79685), we expressed
concern over the low frequency of individual therapy provided to
beneficiaries. The CY 2017 claims data used for this CY 2019 final rule
with comment period revealed some changes in the provision of
individual therapy compared to CY 2016 and CY 2015 claims data as shown
in the Table 45 below.
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[[Page 58995]]
As shown in Table 45, both CMHCs and hospital-based PHPs have
decreased the provision of individual therapy, based on the CY 2017
claims used for this final rule with comment period.
In the CY 2018 OPPS/ASC proposed rule and final rule with comment
period (82 FR 33640 and 82 FR 59378), we stated that we are aware that
our single-tier payment policy may influence a change in service
provision because providers are able to obtain payment that is heavily
weighted to the cost of providing 4 or more services when they provide
only 3 services. We indicated that we are interested in ensuring that
providers furnish an appropriate number of services to beneficiaries
enrolled in PHPs. Therefore, with the CY 2017 implementation of APC
5853 and APC 5863 for providing 3 or more PHP services per day, we are
continuing to monitor utilization of days with only 3 PHP services.
For this CY 2019 OPPS/ASC final rule with comment period, we used
the final update of the CY 2017 claims data. Table 46 below shows the
utilization findings based on the most recent claims data.
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BILLING CODE 4120-01-C
As shown in Table 46, the CY 2017 claims data used for this final
rule with comment period showed that PHPs maintained an appropriately
low utilization of 3 service days compared to CY 2016 and CY 2015.
Compared to CY 2016, hospital-based PHPs have provided fewer days with
3 services only, fewer days with 4 services only, and more days with 5
or more services. Compared to CY 2016, CMHCs have slightly increased
their provision of 3 service days, increased their provision of days
with 4 services, but have decreased their provision of days with 5 or
more services.
As we noted in the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79685), we will continue to monitor the provision of days with
only 3 services, particularly now that the single-tier PHP APCs 5853
and 5863 are in place for providing 3 or more services per day to CMHCs
and hospital-based PHPs, respectively. The CY 2017 data are the first
year of claims data to reflect the change to the single-tier PHP APCs,
and the declining level of utilization of days with 3 services only by
hospital-based PHPs indicates that these providers did not reduce care
for this patient population. It is too early to determine if the
increase in days providing 3 services only by CMHCs is a trend. We will
continue to monitor the data for both hospital-based PHPs and CMHCs.
It is important to reiterate our expectation that days with only 3
services are meant to be an exception and not the typical PHP day. In
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68694), we
clearly stated that we consider the acceptable minimum units of PHP
services required in a PHP day to be 3 and explained that it was never
our intention that 3 units of service represent the number of services
to be provided in a typical PHP day. PHP is furnished in lieu of
inpatient psychiatric hospitalization and is intended to be more
intensive than a half-day program. We further indicated that a typical
PHP day should generally consist of 5 to 6 units of service (73 FR
68689). We explained that days with only 3 units of services may be
appropriate to bill in certain limited circumstances, such as 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. At
that time, we noted that if a PHP were to only provide days with 3
services, it would be difficult for patients to meet the eligibility
requirement in 42 CFR 410.43(c)(1), that patients must require a
minimum of 20 hours per week of therapeutic services as evidenced in
their plan of care (73 FR 68689).
We made no proposals in this section of the CY 2019 OPPS/ASC
proposed rule, but received several public comments related to
utilization.
Comment: Some commenters were concerned that the single-tiered
payment system implemented in CY 2017 could have unintended
consequences, including reducing the number of services provided per
day, and urged CMS to monitor the data.
[[Page 58996]]
Another commenter thanked CMS for not instituting a code edit for 20
hours per week, and welcomed a further discussion of clinical intensity
and situations affecting weekly attendance. This commenter offered to
convene a meeting of experts from the field to discuss, develop, and
recommend ideas on how best to ensure the appropriate clinical
intensity in PHPs. Another commenter wrote that the utilization data in
Table 28 of the CY 2019 OPPS/ASC proposed rule demonstrated the
commitment of both CMHCs and hospital-based PHPs to fully comply with
and exceed the expectations of the 20-hour rule.
Response: We appreciate these comments and will take them into
consideration.
C. Outlier Policy for CMHCs
In the CY 2019 OPPS/ASC proposed rule (83 FR 37134 through 37136),
for CY 2019, we proposed to continue to calculate the CMHC outlier
percentage, cutoff point and percentage payment amount, outlier
reconciliation, outlier payment cap, and fixed-dollar threshold
according to previously established policies. These topics are
discussed in more detail below. We refer readers to section II.G. of
this final rule with comment period for our general policies for
hospital outpatient outlier payments.
1. Background
As discussed in the CY 2004 OPPS final rule with comment period (68
FR 63469 through 63470), we noted a significant difference in the
amount of outlier payments made to hospitals and CMHCs for PHP
services. 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. Therefore, beginning in CY 2004, we created
a separate outlier policy specific to the estimated costs and OPPS
payments provided to CMHCs. We designated a portion of the estimated
OPPS outlier threshold specifically for CMHCs, consistent with the
percentage of projected payments to CMHCs under the OPPS each year,
excluding outlier payments, and established a separate outlier
threshold for CMHCs. This separate outlier threshold for CMHCs resulted
in $1.8 million in outlier payments to CMHCs in CY 2004 and $0.5
million in outlier payments to CMHCs in CY 2005 (82 FR 59381). In
contrast, in CY 2003, more than $30 million was paid to CMHCs in
outlier payments (82 FR 59381).
2. CMHC Outlier Percentage
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267
through 59268), we described the current outlier policy for hospital
outpatient payments and CMHCs. We note that we also discussed our
outlier policy for CMHCs in more detail in section VIII. C. of that
same final rule (82 FR 59381). We set our projected target for all OPPS
aggregate outlier payments at 1.0 percent of the estimated aggregate
total payments under the OPPS (82 FR 59267). We estimate CMHC per diem
payments and outlier payments by using the most recent available
utilization and charges from CMHC claims, updated CCRs, and the updated
payment rate for APC 5853. For increased transparency, we are providing
a more detailed explanation of the existing calculation process for
determining the CMHC outlier percentages below. As previously stated,
we proposed to continue to calculate the CMHC outlier percentage
according to previously established policies, and we did not propose
any changes to our current methodology for calculating the CMHC outlier
percentage for CY 2019. To calculate the CMHC outlier percentage, we
followed three steps:
Step 1: We multiplied the OPPS outlier threshold, which is
1.0 percent, by the total estimated OPPS Medicare payments (before
outliers) for the prospective year to calculate the estimated total
OPPS outlier payments:
(0.01 x Estimated Total OPPS Payments) = Estimated Total OPPS
Outlier Payments.
Step 2: We estimated CMHC outlier payments by taking each
provider's estimated costs (based on their allowable charges multiplied
by the provider's CCR) minus each provider's estimated CMHC outlier
multiplier threshold (we refer readers to section VIII.C.3. of this
final rule with comment period). That threshold was determined by
multiplying the provider's estimated paid days by 3.4 times the CMHC
PHP APC payment rate. If the provider's costs exceeded the threshold,
we multiplied that excess by 50 percent, as described in section
VIII.C.3. of this final rule with comment period, to determine the
estimated outlier payments for that provider. CMHC outlier payments are
capped at 8 percent of the provider's estimated total per diem payments
(including the beneficiary's copayment), as described in section
VIII.C.5. of this final rule with comment period, so any provider's
costs that exceed the CMHC outlier cap will have its payments adjusted
downward. After accounting for the CMHC outlier cap, we summed all of
the estimated outlier payments to determine the estimated total CMHC
outlier payments.
(Each Provider's Estimated Costs--Each Provider's Estimated
Multiplier Threshold) = A. If A is greater than 0, then (A x 0.50) =
Estimated CMHC Outlier Payment (before cap) = B. If B is greater than
(0.08 x Provider's Total Estimated Per Diem Payments), then cap-
adjusted B = (0.08 x Provider's Total Estimated Per Diem Payments);
otherwise, B = B. Sum (B or cap-adjusted B) for Each Provider = Total
CMHC Outlier Payments.
Step 3: We determined the percentage of all OPPS outlier
payments that CMHCs represent by dividing the estimated CMHC outlier
payments from Step 2 by the total OPPS outlier payments from Step 1:
(Estimated CMHC Outlier Payments/Total OPPS Outlier Payments).
In CY 2018, we designated approximately 0.03 percent of that
estimated 1.0 percent hospital outpatient outlier threshold for CMHCs
(82 FR 59381), based on this methodology. In the proposed rule, we
proposed to continue to use the same methodology for CY 2019.
Therefore, based on our CY 2019 payment estimates, CMHCs are projected
to receive 0.02 percent of total hospital outpatient payments in CY
2019, excluding outlier payments. We proposed to designate
approximately less than 0.01 percent of the estimated 1.0 percent
hospital outpatient outlier threshold for CMHCs. This percentage is
based upon the formula given in Step 3 above.
We did not receive any public comments on our proposal and,
therefore, are finalizing our proposal, without modification, to
continue with this existing policy on outliers, and are implementing
this policy as proposed for CY 2019.
3. Cutoff Point and Percentage Payment Amount
As described in the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59381), our policy has been to pay CMHCs for outliers if the
estimated cost of the day exceeds a cutoff point. In CY 2006, we set
the cutoff point for outlier payments at 3.4 times the highest CMHC PHP
APC payment rate implemented for that calendar year (70 FR 68551). This
cutoff point is sometimes called a multiplier threshold (70 FR 68550).
For CY 2018, the highest CMHC PHP APC payment rate is the payment rate
for CMHC PHP APC 5853. In addition, in 2002, the final OPPS outlier
payment percentage for costs above the multiplier threshold was set at
50 percent (66 FR
[[Page 58997]]
59889). In CY 2018, we continued to apply the same 50 percent outlier
payment percentage that applies to hospitals to CMHCs and continued to
use the existing cutoff point (82 FR 59381). Therefore, for CY 2018, we
continued to pay for partial hospitalization services that exceeded 3.4
times the CMHC PHP APC payment rate at 50 percent of the amount of CMHC
PHP APC geometric mean per diem costs over the cutoff point. For
example, for CY 2018, if a CMHC's cost for partial hospitalization
services paid under CMHC PHP APC 5853 exceeds 3.4 times the CY 2018
payment rate for CMHC PHP APC 5853, the outlier payment would be
calculated as 50 percent of the amount by which the cost exceeds 3.4
times the CY 2018 payment rate for CMHC PHP APC 5853 [0.50 x (CMHC
Cost-(3.4 x APC 5853 rate))].
In the CY 2019 OPPS/ASC proposed rule (83 FR 37135), for CY 2019,
in accordance with our existing policy, we proposed to continue to pay
for partial hospitalization services that exceed 3.4 times the proposed
CMHC PHP APC payment rate at 50 percent of the CMHC PHP APC geometric
mean per diem costs over the cutoff point. That is, for CY 2019, if a
CMHC's cost for partial hospitalization services paid under CMHC PHP
APC 5853 exceeds 3.4 times the payment rate for CMHC APC 5853, the
outlier payment will be calculated as [0.50 x (CMHC Cost-(3.4 x APC
5853 rate))].
We did not receive any public comments on our proposals. We are
finalizing our proposals, without modification, to continue to
calculate the CMHC outlier percentage according to previously
established policies, and are implementing this policy as proposed for
CY 2019.
4. Outlier Reconciliation
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594
through 68599), we established an outlier reconciliation policy to
address charging aberrations related to OPPS outlier payments. We
addressed vulnerabilities in the OPPS outlier payment system that lead
to differences between billed charges and charges included in the
overall CCR, which are used to estimate cost and 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 update of the
CCRs that are based on the latest settled cost report and the current
charges that creates the potential for hospitals and CMHCs to set their
own charges to exploit the delay in calculating new CCRs. CMS initiated
steps to ensure that outlier payments appropriately account for the
financial risk when providing an extraordinarily costly and complex
service, but are only being made for services that legitimately qualify
for the additional payment.
The current outlier reconciliation policy requires that providers
whose outlier payments meet a specified threshold (currently $500,000
for hospitals and any outlier payments for CMHCs) and whose overall
ancillary CCRs change by plus or minus 10 percentage points or more,
are subject to outlier reconciliation, pending approval of the CMS
Central Office and Regional Office (73 FR 68596 through 68599). The
policy also includes provisions related to CCRs and to calculating the
time value of money for reconciled outlier payments due to or due from
Medicare, as detailed in the CY 2009 OPPS/ASC final rule with comment
period and in the Medicare Claims Processing Manual (73 FR 68595
through 68599 and Medicare Claims Processing internet Only Manual,
Chapter 4, Section 10.7.2 and its subsections, available online at:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37135), we proposed to
continue these policies for CY 2019.
We did not receive any public comments on our proposals and,
therefore, are finalizing our proposals, without modification, to
continue our existing policy for CY 2019.
5. Outlier Payment Cap
In the CY 2017 OPPS/ASC final rule with comment period, we
implemented a CMHC outlier payment cap to be applied at the provider
level, such that in any given year, an individual CMHC will receive no
more than a set percentage of its CMHC total per diem payments in
outlier payments (81 FR 79692 through 79695). We finalized the CMHC
outlier payment cap to be set at 8 percent of the CMHC's total per diem
payments (81 FR 79694 through 79695). This outlier payment cap only
affects CMHCs, does not affect other provider types (that is, hospital-
based PHPs), and is in addition to and separate from the current
outlier policy and reconciliation policy in effect. For CY 2018, we
continued this policy in the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59381).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37135 through 37136),
we proposed to continue this policy for CY 2019, such that the CMHC
outlier payment cap would be 8 percent of the CMHC's total per diem
payments.
We did not receive any public comments on our proposal and,
therefore, are finalizing our proposal, without modification, to
continue our existing policy for CY 2019, such that the CMHC outlier
payment cap will be 8 percent of the CMHC's total per diem payments.
6. Fixed-Dollar Threshold
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267
through 59268), for the hospital outpatient outlier payment policy, we
set a fixed-dollar threshold in addition to an APC multiplier
threshold. Fixed-dollar thresholds are typically used to drive outlier
payments for very costly items or services, such as cardiac pacemaker
insertions. CMHC PHP APC 5853 is the only APC for which CMHCs may
receive payment under the OPPS, and is for providing a defined set of
services that are relatively low cost when compared to other OPPS
services. Because of the relatively low cost of CMHC services that are
used to comprise the structure of CMHC PHP APC 5853, it is not
necessary to also impose a fixed-dollar threshold on CMHCs. Therefore,
in the CY 2018 OPPS/ASC final rule with comment period, we did not set
a fixed-dollar threshold for CMHC outlier payments (82 FR 59381).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37134 through 37136),
we proposed to continue this policy for CY 2019.
We did not receive any public comments on our proposal and,
therefore, are finalizing our proposal, without modification, to
continue with this existing policy, and are implementing this policy as
proposed for CY 2019.
D. Proposed Update to PHP Allowable HCPCS Codes
CMS received the CY 2019 CPT codes from the AMA in time for
inclusion in the CY 2019 OPPS/ASC proposed rule (83 FR 37088). The new,
revised, and deleted CY 2019 Category I and III CPT codes were included
in Addendum B to the proposed rule (which is available via the internet
on the CMS website). We are aware that the AMA will be deleting the
following psychological and neuropsychological testing CPT codes, which
affect PHPs, as of January 1, 2019:
CPT code 96101 (Psychological testing by psychologist/
physician);
CPT code 96102 (Psychological testing by technician);
CPT code 96103 (Psychological testing administered by
computer);
[[Page 58998]]
CPT code 96118 (Neuropsychological testing by
psychologist/physician)
CPT code 96119 (Neuropsychological testing by technician);
and
CPT code 96120 (Neuropsychological test administered w/
computer).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37088), we proposed to
delete these 6 CPT codes for the 2019 OPPS update under section
III.A.4. (``Proposed Treatment of New and Revised CY 2019 Category I
and III CPT Codes That Will Be Effective January 1, 2019 For Which We
Are Soliciting Public Comments In This CY 2019 OPPS/ASC Proposed
Rule'').
In addition, the AMA will be adding the following psychological and
neuropsychological testing CPT codes to replace the deleted codes, as
of January 1, 2019:
CPT code 96130 (Psychological testing evaluation by
physician/qualified health care professional; first hour);
CPT code 93131 (Psychological testing evaluation by
physician/qualified health care professional; each additional hour);
CPT code 96132 (Neuropsychological testing evaluation by
physician/qualified health care professional; first hour);
CPT code 96133 (Neuropsychological testing evaluation by
physician/qualified health care professional; each additional hour);
CPT code 96136 (Psychological/neuropsychological testing
by physician/qualified health care professional; first 30 minutes);
CPT code 96137 (Psychological/neuropsychological testing
by physician/qualified health care professional; each additional 30
minutes);
CPT code 96138 (Psychological/neuropsychological testing
by technician; first 30 minutes);
CPT code 96139 (Psychological/neuropsychological testing
by technician; each additional 30 minutes); and
CPT code 96146 (Psychological/neuropsychological testing;
automated result only).
In the CY 2019 OPPS/ASC proposed rule (83 FR 37088), we also
proposed to recognize and assign these 9 CPT codes under the CY 2019
OPPS in section III.A.4. (``Proposed Treatment of New and Revised CY
2019 Category I and III CPT Codes That Will Be Effective January 1,
2019 For Which We Are Soliciting Public Comments In This CY 2019 OPPS/
ASC Proposed Rule'').
While these proposed changes to the above-referenced codes were
included in the CY 2019 OPPS/ASC proposed rule (and are being finalized
in section III.A.3. in this final rule with comment period for the CY
2019 OPPS), PHP is a part of the OPPS and PHP providers may not have
been aware of those proposed changes because we did not also include
the proposals in the PHP discussion presented in the proposed rule. To
ensure that PHP providers are aware of the codes and have the
opportunity to comment on the proposed changes, we are utilizing a
practice similar to the one we use under the OPPS for new Level II
HCPCS codes that become effective after the proposed rule is published.
Therefore, in this final rule with comment period, we are proposing to
delete the same 6 CPT codes listed above from the PHP-allowable code
set for CMHC APC 5853 and hospital-based PHP APC 5863, and replace them
with 9 new CPT codes as shown in Table 47 below, effective January 1,
2019. We are soliciting public comments on these proposals. We will
consider the public comments we receive and seek to finalize our
proposed actions in the CY 2020 OPPS/ASC final rule with comment
period.
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[[Page 58999]]
IX. Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74352 through 74353) for a full historical discussion of
our longstanding policies on how we identify procedures that are
typically provided only in an inpatient setting (referred to as the
inpatient only (IPO) list) and, therefore, will not be paid by Medicare
under the OPPS, and on the criteria that we use to review the IPO list
each year to determine whether or not any procedures should be removed
from the list. The complete list of codes that describe procedures that
will be paid by Medicare in CY 2019 as inpatient only procedures is
included as Addendum E to this CY 2019 OPPS/ASC final rule with comment
period, which is available via the internet on the CMS website.
B. Changes to the Inpatient Only (IPO) List
1. Methodology for Identifying Appropriate Changes to IPO List
In the CY 2019 OPPS/ASC proposed rule (83 FR 37136 through 37143),
for CY 2019, we proposed to use the same methodology (described in the
November 15, 2004 final rule with comment period (69 FR 65834)) of
reviewing the current list of procedures on the IPO list to identify
any procedures that may be removed from the list. We have established
five criteria that are part of this methodology. As noted in the CY
2012 OPPS/ASC final rule with comment period (76 FR 74353), we utilize
these criteria when reviewing procedures to determine whether or not
they should be removed from the IPO list and assigned to an APC group
for payment under the OPPS when provided in the hospital outpatient
setting. We note that a procedure is not required to meet all of the
established criteria to be removed from the IPO list. The criteria
include the following:
1. Most outpatient departments are equipped to provide the services
to the Medicare population.
2. The simplest procedure described by the code may be performed in
most outpatient departments.
3. The procedure is related to codes that we have already removed
from the IPO list.
4. A determination is made that the procedure is being performed in
numerous hospitals on an outpatient basis.
5. A determination is made that the procedure can be appropriately
and safely performed in an ASC and is on the list of approved ASC
procedures or has been proposed by us for addition to the ASC list.
Using the above-listed criteria, for the CY 2019 OPPS, we
identified two procedures described by the following codes that we
proposed to remove from the IPO list for CY 2019: CPT code 31241
(Nasal/sinus endoscopy, surgical; with ligation of sphenopalatine
artery) and CPT code 01402 (Anesthesia for open or surgical
arthroscopic procedures on knee joint; total knee arthroplasty). We
also proposed to add to the IPO list for CY 2019 the procedure
described by HCPCS code C9606 (Percutaneous transluminal
revascularization of acute total/subtotal occlusion during acute
myocardial infarction, coronary artery or coronary artery bypass graft,
any combination of drug-eluting intracoronary stent, artherectomy and
angioplasty, including aspiration thrombectomy when performed, single
vessel). Table 29 of the proposed rule (83 FR 37137) displayed the
proposed changes to the IPO list for CY 2019 and subsequent years,
including the HCPCS codes, long descriptors, and the proposed CY 2019
payment indicators.
As noted earlier, we proposed to remove the procedure described by
CPT code 31241 from the IPO list for CY 2019. Specifically, we stated
that after reviewing the clinical characteristics of the procedure
described by CPT code 31241 and consulting with stakeholders and our
clinical advisors regarding this procedure, we believed that this
procedure met criterion 3; that is, the procedure is related to codes
that we have already removed from the IPO list. We proposed that the
procedure described by CPT code 31241 be assigned to C-APC 5153 (Level
3 Airway Endoscopy) with a status indicator of ``J1.'' We sought public
comments on whether the public believes that the procedure described by
CPT code 31241 meets criterion 3 and whether the procedure meets any of
the other five criteria for removal from the IPO list.
Comment: A majority of the commenters supported the proposed
removal of CPT code 31241 from the IPO list and the proposed APC
assignment to APC 5153 with a status indicator of ``J1''. The
commenters agreed that the procedure described by CPT code 31241 meets
criterion 3 (that is, the procedure described by CPT code 31241 is
related to codes that we have already removed from the IPO list).
Response: We appreciate the commenters' support.
Comment: One commenter opposed the removal of CPT code 31241.
However, the commenter did not provide a rationale for its opposition.
Response: We have noted the commenter's general opposition.
However, for the reasons cited in the proposed rule, we continue to
believe that removal of the procedure described by CPT code 31241from
the IPO list is appropriate. In addition, we received support for the
removal of CPT code 31241 from the IPO list from many other
stakeholders.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to remove CPT code 31241
from the IPO list and to assign the procedure to C-APC 5153 (Level 3
Airway Endoscopy) with a status indicator of ``J1''.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37136), we also
proposed to remove the procedure described by CPT code 01402 from the
IPO list. We reviewed the clinical characteristics of the procedure
described by CPT code 01402, and proposed that this procedure be
removed from the IPO list because it meets above-listed criteria 3 and
4. This procedure is typically billed with the procedure described by
CPT code 27447 (Arthroplasty, knee, condyle and plateau; medial and
lateral compartments with or without patella resurfacing (total knee
arthroplasty)), which was removed from the IPO list for CY 2018 (82 FR
52526). This procedure is also often performed safely in the outpatient
department setting. We sought public comments on whether the procedure
described by CPT code 01402 meets criteria 3 and 4 and whether the
procedure meets any of the other five criteria for removal from the IPO
list.
Comment: Commenters supported the removal of the procedure
described by CPT code 01402 from the IPO list and agreed that the
procedure described by CPT code 01402 was both related to codes that
were previously removed from the IPO list and is performed safely in
numerous hospitals on an outpatient basis.
Response: We thank the commenters for their support.
Comment: One commenter opposed the removal of the procedure
described by CPT code 01402 from the IPO list because the commenter
believed that there would be potential detrimental lateral impacts on
hospitals participating in the Comprehensive Care for Joint Replacement
(CJR) Model, the Bundled Payments for Care Improvement (BPCI)
Initiative, the Hospital Value-Based Purchasing (VBP)
[[Page 59000]]
Program, and the Hospital Readmissions Reduction Program (HRRP).
Response: Removal of the procedure described by CPT code 01402 does
not in any way affect a provider's ability to participate in any of the
initiatives the commenter mentioned. We remind readers that the removal
of any procedure from the IPO list does not mandate that all cases be
performed on an outpatient basis. Rather, such removal allows for
Medicare payment to be made to the hospital when the procedure is
performed in the hospital outpatient department setting. The decision
to admit a patient is a complex medical judgment that is made by the
treating physician. We refer readers to the CY 2017 OPPS/ASC final rule
with comment period (81 FR 79698 through 79699) in which we originally
proposed to remove total knee arthroplasty (TKA) procedure codes from
the IPO list and sought comments on how to modify the CJR Model and the
BPCI Initiative to reflect the shift of some Medicare beneficiaries
from an inpatient TKA procedure to an outpatient TKA procedure in the
BPCI Initiative and the CJR Model pricing methodologies, including
target price calculations and reconciliation processes. However, we
invite interested parties to direct any questions about these
initiatives to the CMS Center for Medicare and Medicaid Innovation.
Comment: One commenter representing a coalition of industry
stakeholders recommended that CMS collect and publish data on morbidity
and mortality rates for TKA performed in the outpatient setting versus
in the inpatient setting. The commenter believed that collecting these
data would allow CMS to evaluate the quality of services in both
settings since the removal of TKA procedures from the IPO list.
Response: We note that since we removed the CPT codes related to
TKA from the IPO list, TKA procedures have only been payable under the
OPPS for less than one year. Accordingly, we do not believe that we
have sufficient data at this time for a meaningful comparison of
quality outcomes associated with TKA procedures performed in the
hospital outpatient setting versus the hospital inpatient setting.
However, we will consider reviewing mortality rates in the future when
appropriate data are available. We would not expect there to be
statistically significant differences in morbidity and mortality among
Medicare beneficiaries based solely on whether the patient was admitted
to the hospital or remained a hospital outpatient (especially because
it is likely the same surgeon, the same clinical protocol, and the same
staff at a given hospital for both inpatient and outpatient orthopaedic
procedures) and would expect that other factors, such as underlying
disease-state and condition of the patient, surgical complications, and
ability to avoid blood clots and other potential adverse event within
90 days postsurgery. We remind readers that there are several short
stay inpatient cases with a length of stay of 1 or 2 days, which is
generally similar to the length of stay for outpatient cases. To be
clear, there is a plethora of surgical procedures that may be performed
on either an inpatient basis or an outpatient basis. However, we are
not aware of differences in clinical outcomes for patients based solely
on this factor. While there are some studies relating to the non-
Medicare population regarding differences in outcomes, depending on
whether the care setting is inpatient versus outpatient (which could
include ASCs), we are not aware of any such studies since the TKA has
become a payable procedure under the OPPS in 2018. In addition, we note
that interested stakeholders are welcome to research these or other
statistics by analyzing data that Medicare makes available. The
Hospital Inpatient Quality Reporting (IQR) Program and the Hospital
Outpatient Quality Reporting (OQR) Program collect and share
information regarding the quality of care in both the hospital
inpatient setting and the hospital outpatient setting. Specifically,
the Hospital IQR Program maintains measures that include complications
and deaths during inpatient hip/knee replacement procedures. However,
an analogous measure for outpatient procedures does not currently
exist.
Comment: One commenter requested that CMS provide guidance and
education regarding the removal of TKA procedures from the IPO list
beginning in CY 2018. The commenter noted that there was confusion
around the policy for hospital systems and health insurance plans, and
that many hospital systems and Medicare Advantage plans were denying
inpatient admissions by default and requiring Medicare patients to
undergo a TKA procedure as a hospital outpatient.
Response: As previously stated in the discussion of the CY 2018
OPPS/ASC final rule with comment period (82 FR 59383), we continue to
believe that the decision regarding the most appropriate care setting
for a given surgical procedure is a complex medical judgment made by
the physician based on the beneficiary's individual clinical needs and
preferences and on the general requirement that any procedure be
reasonable and necessary. We also reiterate our previous statement that
the removal of any procedure from the IPO list does not require the
procedure to be performed only on an outpatient basis. Rather, we
believe that as technology and clinical practice continue to evolve,
beneficiaries should continue to receive care in the most appropriate
setting.
While we continue to expect providers who perform an outpatient TKA
procedure on Medicare beneficiaries to use comprehensive patient
selection criteria to identify appropriate candidates for the
procedure, we believe that the surgeons, clinical staff, and medical
specialty societies representing physicians who perform outpatient TKA
procedures and possess specialized clinical knowledge and experience
are most suited to create such guidelines.
After consideration of the public comments we received, we are
adopting, as final without modification, our proposal to remove the
procedure described by CPT code 01402 from the IPO list. In accordance
with the regulations at 42 CFR 419.2(b)(4), under the OPPS, this
anesthesia service is packaged with the associated procedure and
assigned status indicator ``N'' (Items and Services Packaged into APC
Rates) for CY 2019.
In addition, in the CY 2019 OPPS/ASC proposed rule (83 FR 37136
through 37137), we proposed to add the procedure described by HCPCS
code C9606 (Percutaneous transluminal revascularization of acute total/
subtotal occlusion during acute myocardial infarction, coronary artery
or coronary artery bypass graft, any combination of drug-eluting
intracoronary stent, atherectomy and angioplasty, including aspiration
thrombectomy when performed, single vessel) to the IPO list for CY
2019. The IPO list specifies those procedures and services for which
the hospital will be paid only when the procedures are provided in the
inpatient setting because of the nature of the procedure, the
underlying physical condition of the patient, or the need for at least
24 hours of postoperative recovery time or monitoring before the
patient can be safely discharged (76 FR 74353). After evaluating the
procedure described by HCPCS code C9606 using the criteria described
above, we believe that the procedure should be added to the IPO list
because this procedure is performed during acute myocardial infarction
and it is similar to a procedure already on the IPO list (that is, the
procedure described by CPT code 92941 (Percutaneous transluminal
revascularization of acute total/subtotal occlusion during acute
myocardial
[[Page 59001]]
infarction, coronary artery or coronary artery bypass graft, any
combination of intracoronary stent, artherectomy and angioplasty,
including aspiration thrombectomy when performed, single vessel)),
which was added to the IPO list for CY 2018 (82 FR 52526). We sought
public comments on whether the procedure described by HCPCS code C9606
should be added to the IPO list for CY 2019 and subsequent years.
Comment: Several commenters, largely from specialty medical
societies, supported adding the procedure described by HCPCS code C9606
to the IPO list for CY 2019.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
adopting as final without modification, our proposal to add the
procedure described by HCPCS code C9606 (Percutaneous transluminal
revascularization of acute total/subtotal occlusion during acute
myocardial infarction, coronary artery or coronary artery bypass graft,
any combination of drug eluting intracoronary stent, atherectomy and
angioplasty, including aspiration thrombectomy when performed, single
vessel) to the IPO list for CY 2019.
2. Summary of Public Comments Received in Response to CMS' Solicitation
on the Potential Removal of Procedure Described by CPT Code 0266T From
the IPO List and Our Responses
CPT code 0266T describes the implantation or replacement of carotid
sinus baroreflex activation device; total system (includes generator
placement, unilateral or bilateral lead placement, intra-operative
interrogation, programming, and repositioning, when performed). The
procedure described by CPT code 0266T has been included on the IPO list
since the procedure code became effective in CY 2011.
There are several codes that describe procedures that are similar
to the procedure described by CPT code 0266T that are not on the IPO
list, including: CPT code 0267T (Implantation or replacement of carotid
sinus baroreflex activation device; lead only, unilateral (includes
intra-operative interrogation, programming, and repositioning, when
performed)) and CPT code 0268T (Implantation or replacement of carotid
sinus baroreflex activation device; pulse generator only (includes
intra-operative interrogation, programming, and repositioning, when
performed)). The device that is billed with these two procedures has
been granted a Category B Investigational Device Exemption (IDE) from
FDA.\62\ Currently, there is limited information available to determine
the typical site of service and the ability for the procedure to be
safely performed in the outpatient setting. At the time of development
of the CY 2019 OPPS/ASC proposed rule, we did not believe that we had
adequate information to determine whether the procedure described by
CPT code 0266T should be removed from the IPO list. Therefore, we
sought public comments on the removal of the procedure described by CPT
code 0266T from the IPO list. Specifically, we sought public comments
on whether the procedure described by CPT code 0266T meets any of the
criteria to be removed from the IPO list as well as the appropriate APC
assignment and status indicator for this code.
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\62\ Available at: https://www.cms.gov/Medicare/Coverage/IDE/Approved-IDE-Studies.html.
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Comment: Numerous commenters responded to CMS' solicitation for
discussion of the removal of the Barostim procedure from the IPO list.
Commenters included the manufacturer and practitioners, specifically
cardiologists and cardiovascular surgeons, who have performed the
Barostim procedure multiple times. Commenters referenced their personal
experience with the procedure described by CPT code 0266T, the
advancements and safety of the procedure, and patients' experience
after undergoing the procedure. These commenters argued that procedures
related to CPT code 0266T are commonly being performed safely in the
hospital outpatient department. The manufacturer specifically cited the
CY 2019 NPRM CPT Cost Statistics Files associated with the proposed
rule to show the number of related procedures that have been performed
in the hospital outpatient department this year. Further, another
commenter supported the assertion provided in the proposed rule that
the simplest procedures described by CPT code 0266T, the procedure to
implant or replace the lead or IPG, currently have separate and
distinct CPT codes (0267T and 0268T) that are not included on the IPO
list.
Response: We reviewed clinical characteristics of the Barostim
procedure and related evidence, including input from multiple physician
and cardiology specialty societies, and determined that the procedure
described by CPT code 0266T is an appropriate candidate for removal
from the IPO list. CPT code 0266T is similar to CPT code 0268T, which
is performed in numerous hospitals on an outpatient basis (criterion
3). Furthermore, we believe that most outpatient departments are
equipped to provide the described services to the Medicare population
(criterion 1). Therefore, we are removing the procedure described by
CPT code 0266T from the IPO list for CY 2019.
Comment: Several commenters recommended the removal of several
procedures not originally proposed by CMS for removal from the IPO list
for CY 2019. These recommended procedures related to other procedures
that were recently removed from the IPO. In addition, several
commenters recommended the removal of all orthopaedic, arthroplasty,
and joint replacement procedures from the IPO list. Table 48 below
contains the procedures that were explicitly requested by the
commenters to be removed from the IPO list for CY 2019.
[[Page 59002]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.074
Response: We appreciate the diligence that commenters continue to
show in proposing changes to the IPO list. For the CY 2019 OPPS, we
believe that it is appropriate to remove the procedure described by CPT
code 00670 from the IPO list, as recommended by the commenters. We
refer readers to the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79695 through 79696) in which CMS removed six related codes
(four spine procedure codes and two laryngoplasty codes) from the IPO
list for CY 2017. We believe that the procedure described by CPT code
00670 is appropriate for removal from the IPO list because it relates
to the following codes that CMS removed from the IPO list in CY 2017:
CPT code 22840 (Posterior non-segmental instrumentation (e.g.,
Harrington rod technique, pedicle fixation across 1 interspace,
atlantoaxial transarticular screw fixation, sublaminar wiring at C1,
facet screw fixation) (List separately in addition to code for primary
procedure)); CPT code 22842 (Posterior segmental instrumentation (e.g.,
pedicle fixation, dual rods with multiple hooks and sublaminar wires);
3 to 6 vertebral segments (List separately in addition to code for
primary procedure)); CPT code 22845 (Anterior instrumentation; 2 to 3
vertebral segments (List separately in addition to code for primary
procedure)); and CPT code 22858 (Total disc arthroplasty (artificial
disc), anterior approach, including discectomy with end plate
preparation (includes osteophytectomy for nerve root or spinal cord
decompression and microdissection); second level, cervical (List
separately in addition to code for primary procedure)). We also believe
that this procedure is being performed in numerous hospitals on an
outpatient basis. Accordingly, we are removing the procedure described
by CPT code 00670 from the IPO list for CY 2019. Because this spine
procedure code is an add-on code, in accordance with the regulations at
42 CFR 419.2(b)(18), under the OPPS, this procedure is packaged with
the associated procedure and assigned status indicator ``N'' (Items and
Services Packaged into APC Rates) for CY 2019.
With respect to the commenters' recommendation that we remove CPT
code 63265 (Laminectomy for excision or evacuation of intraspinal
lesion other than neoplasm, extradural; cervical), CPT code 63266
(Laminectomy for excision or evacuation of intraspinal lesion other
than neoplasm, extradural; thoracic), CPT code 63267 (Laminectomy for
excision or evacuation of intraspinal lesion other than neoplasm,
extradural; lumbar), and CPT code 63268 (Laminectomy for excision or
evacuation of intraspinal lesion other than neoplasm, extradural;
sacral) from the IPO list, we intend to continue to review these
procedures and the appropriateness of the potential removal from the
IPO list for subsequent rulemaking.
In regard to the commenters' recommendation to remove all
orthropaedic, arthroplasty, and joint replacement procedures from the
IPO list, we do not believe that we have sufficient data to support
removal of all orthopaedic, arthroplasty, and joint replacement
procedures from the IPO list. However, we encourage stakeholders to
submit specific procedures, along with evidence, to support their
requests for removal from the IPO list.
In conclusion, the complete list of procedure codes that are placed
on the IPO list for CY 2019 is included as Addendum E to this CY 2019
OPPS/ASC final rule with comment period (which is available via the
internet on the CMS website).
Table 49 below contains the final changes that we are making to the
IPO list for CY 2019.
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[[Page 59003]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.075
BILLING CODE 4120-01-C
X. Nonrecurring Policy Changes
A. Collecting Data on Services Furnished in Off-Campus Provider-Based
Emergency Departments
The June 2017 Report to Congress \63\ by the Medicare Payment
Advisory Commission (MedPAC) states that, in recent years, there has
been significant growth in the number of health care facilities located
apart from hospitals that are devoted primarily to emergency department
services. This includes both off-campus provider-based emergency
departments that are eligible for payment under the OPPS and
independent freestanding emergency departments not affiliated with a
hospital that are not eligible for payment under the OPPS. Since 2010,
we have observed a noticeable increase in the number of hospital
outpatient emergency department visits furnished under the OPPS. MedPAC
and other entities have expressed concern that services may be shifting
to the higher acuity and higher cost emergency department setting due
to: (1) Higher payment rates for services performed in off-campus
provider-based emergency departments compared to similar services
provided in other settings (that is, physician offices or urgent care
clinics); and (2) the exemption for services provided in an emergency
department included under section 603 of the Bipartisan Budget Act of
2015 (Pub. L. 114-25), whereby all items and services (emergency and
nonemergency) furnished in an emergency department are excepted from
the payment implications of section 603, as long as the department
maintains its status as an emergency department under the regulation at
42 CFR 489.24(b).
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\63\ Available at: http://www.medpac.gov/docs/default-source/reports/jun17_reporttocongress_sec.pdf.
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MedPAC and other entities are concerned that these payment
incentives may be a key factor contributing to the growth in the number
of emergency departments located off-campus from a hospital. MedPAC
recommended in its March 2017 \64\ and June 2017 Reports to Congress
that CMS require hospitals to append a modifier to claims for all
services furnished in off-campus
[[Page 59004]]
provider-based emergency departments, so that CMS can track the growth
of OPPS services provided in this setting.
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\64\ Available at: http://medpac.gov/docs/default-souce/reports/mar17_entirereport.pdf.
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In order to participate in Medicare as a hospital, the facility
must meet the statutory definition of a hospital at section 1861(e) of
the Act, which requires a facility to be primarily engaged in providing
care and services to inpatients. In addition, 42 CFR 482.55 requires
hospital emergency department services (to include off-campus provider-
based emergency departments) to be fully integrated with departments
and services of the hospital. The integration must be such that the
hospital can immediately make available the full extent of its patient
care resources to assess and furnish appropriate care for an emergency
patient. Such services would include, but are not limited to, surgical
services, laboratory services, and radiology services, among others.
The emergency department must also be integrated with inpatient
services, which means the hospital must have a sufficient number of
inpatient beds and nursing units to support the volume of emergency
department patients that could require inpatient services. The
provision of services, equipment, personnel and resources of other
hospital departments and services to emergency department patients must
be within timeframes that protect the health and safety of patients and
is within acceptable standards of practice.
We agree with MedPAC's recommendation and believe we need to
develop data to assess the extent to which OPPS services are shifting
to off-campus provider-based emergency departments. Therefore, we
announced in the CY 2019 OPPS/ASC proposed rule (83 FR 37138) that we
are implementing through the subregulatory HCPCS modifier process a new
modifier for this purpose, effective beginning January 1, 2019.
We stated in the proposed rule that we will create a HCPCS modifier
(``ER''--Items and services furnished by a provider-based off-campus
emergency department) that is to be reported with every claim line for
outpatient hospital services furnished in an off-campus provider-based
emergency department. We specified in the proposed rule that the
modifier would be reported on the UB-04 form (CMS Form 1450) for
hospital outpatient services. We stated that critical access hospitals
(CAHs) would not be required to report this modifier.
In response to our announcement of the creation of HCPCS modifier
``ER'' (Items and services furnished by a provider-based off-campus
emergency department), we received the following feedback from
commenters in response to the CY 2019 OPPS/ASC proposed rule: Some
commenters, including MedPAC, supported the creation of HCPCS modifier
``ER'', citing the opportunity to facilitate the collection of data on
services furnished in off-campus emergency departments. Other
commenters were opposed to the creation of the HCPCS modifier ``ER''
because they believed it would be an undue and unnecessary
administrative burden on hospitals. Another commenter expressed a
desire to have a better understanding of the reasoning for the creation
of the modifier.
While we note that the creation of the HCPCS modifier ``ER'' was
included in the CY 2019 OPPS/ASC proposed rule as an announcement, as
opposed to a proposal, and therefore was not subject to public comment,
we nonetheless appreciate the feedback provided by interested
stakeholders, and will consider such feedback in potential future
policy development.
B. Method To Control for Unnecessary Increases in the Volume of
Outpatient Services
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37138
through 37143), when the Medicare program was first implemented,
payment for hospital services (inpatient and outpatient) was based on
hospital-specific reasonable costs attributable to furnishing services
to Medicare beneficiaries. Although payment for most Medicare hospital
inpatient services became subject to a prospective payment system (PPS)
under section 1886(d) of the Act in 1983, Medicare hospital outpatient
services continued to be paid based on hospital-specific costs. This
methodology for payment provided little incentive for hospitals to
furnish such outpatient services efficiently and in a cost effective
manner. At the same time, advances in medical technology and changes in
practice patterns were bringing about a shift in the site of medical
care from the hospital inpatient setting to the hospital outpatient
setting.
In the Omnibus Budget Reconciliation Act of 1986 (OBRA 1986) (Pub.
L. 99-509), the Congress paved the way for development of a PPS for
hospital outpatient services. Section 9343(g) of OBRA 1986 mandated
that fiscal intermediaries require hospitals to report claims for
services under the Healthcare Common Procedure Coding System (HCPCS).
Section 9343(c) of OBRA 1986 extended the prohibition against
unbundling of hospital services under section 1862(a)(14) of the Act to
include outpatient services as well as inpatient services. The codes
under the HCPCS enabled us to determine which specific procedures and
services were billed, while the extension of the prohibition against
unbundling ensured that all nonphysician services provided to hospital
outpatients were reported on hospital bills and captured in the
hospital outpatient data that were used to develop an outpatient PPS.
The brisk increase in hospital outpatient services further led to
an interest in creating payment incentives to promote more efficient
delivery of hospital outpatient services through a Medicare outpatient
PPS. Section 9343(f) of OBRA 1986 and section 4151(b)(2) of the Omnibus
Budget Reconciliation Act of 1990 (OBRA 1990) (Pub. L. 101-508)
required that we develop a proposal to replace the existing hospital
outpatient payment system with a PPS and submit a report to the
Congress on a new proposed system. The statutory framework for the
Outpatient Prospective Payment System (OPPS) was established by section
4523 of the Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33), which
amended section 1833 of the Act by adding subsection (t), which
establishes a PPS for hospital outpatient department services, and by
section 201 of the Balanced Budget Reconciliation Act (BBRA) of 1999
(Pub. L. 106-113), which amended section 1833(t) of the Act to require
outlier and transitional pass-through payments. At the outset of the
OPPS, there was significant concern over observed increases in the
volume of outpatient services and corresponding rapidly growing
beneficiary coinsurance. Accordingly, most of the focus was on finding
ways to address those issues.
When section 4523 of the BBA of 1997 established the OPPS, it
included specific authority under section 1833(t)(2)(F) of the Act that
requires the Secretary to develop a method for controlling unnecessary
increases in the volume of covered outpatient department (OPD)
services.\65\ In the initial rule that proposed to implement the OPPS
(63 FR 47585 through 47587), we discussed several possible approaches
for controlling the volume of covered outpatient department services
furnished in subsequent years, solicited comments on those options, and
stated that the agency would propose an appropriate ``volume control''
mechanism for services furnished in CY 2001 and beyond after completing
further analysis. For the CY
[[Page 59005]]
2000 OPPS, we proposed to implement a method that was similar to the
one used under the Medicare Physician Fee Schedule (PFS) (known as the
sustainable growth rate or ``SGR''), which would be triggered when
expenditure targets, based on such factors as volume, intensity, and
beneficiary enrollment, were exceeded (63 FR 47586 through 47587).
However, as we discussed in the CY 2001 OPPS final rule (65 FR 18503)
and the CY 2002 OPPS final rule (66 FR 59908), we delayed the
implementation of the proposed volume control method as suggested by
the ``President's Plan to Modernize and Strengthen Medicare for the
21st Century'' to give hospitals time to adjust to the OPPS and CMS
time to continue to examine methods to control unnecessary increases in
the volume of covered OPD services.
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\65\ Available at: https://www.ssa.gov/OP_Home/ssact/title18/1833.htm.
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In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66611
through 66612), we noted that we had significant concerns about the
growth in program expenditures for hospital outpatient services, and
that while the OPPS was developed in order to address some of those
concerns, its implementation had not generally slowed that growth in
expenditures. To address some of those concerns, we established a set
of packaging policies beginning in CY 2008 that would explicitly
encourage efficiency in the provision of services in the hospital
outpatient setting and potentially control future growth in the volume
of OPPS services (72 FR 66612). Specifically, in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66580), we adopted a policy to
package seven categories of items and services into the payment for the
primary diagnostic or therapeutic modality to which we believe these
items are typically ancillary or supportive.
Similarly, in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 74925 through 74948), we expanded our packaging policies to
include more categories of packaged items and services as part of a
broader initiative to make the OPPS more like a prospective payment
system and less like a per service fee schedule. Packaging can
encourage hospitals to furnish services efficiently while also enabling
hospitals to manage their resources with the maximum flexibility,
thereby encouraging long-term cost containment, which is an essential
component of a prospective payment system. While most of the packaging
policies established in the CY 2014 OPPS focused on ancillary services
that were part of a primary procedure, we also introduced the concept
of comprehensive APCs (C-APCs) (78 FR 74861 through 74910), which were
implemented beginning in the CY 2015 OPPS (79 FR 66798 through 66810).
Comprehensive APCs package payment for adjunctive and secondary items,
services, and procedures into the most costly primary procedure under
the OPPS at the claim level.
While we have developed many payment policies with these goals in
mind, growth in program expenditures for hospital outpatient services
paid under the OPPS continues. As illustrated in Table 30 in the CY
2019 OPPS/ASC proposed rule (83 FR 37139), total spending has been
growing at a rate of roughly 8 percent per year under the OPPS, and
total spending under the OPPS is projected to further increase by more
than $5 billion from approximately $70 billion in CY 2018 through CY
2019 to nearly $75 billion. This is approximately twice the total
estimated spending in CY 2008, a decade ago. We continue to be
concerned with this rate of increase in program expenditures under the
OPPS for several reasons. The OPPS was originally designed to manage
Medicare spending growth. What was once a cost-based system was
mandated by law to become a prospective payment system, which arguably
should have slowed the increases in program spending. To the contrary,
the OPPS has been the fastest growing sector of Medicare payments out
of all payment systems under Medicare Parts A and B. Furthermore, we
are concerned that the rate of growth suggests that payment incentives,
rather than patient acuity or medical necessity, are affecting site-of-
service decision-making. This site-of-service selection has an impact
on not only the Medicare program, but also on Medicare beneficiary out-
of-pocket spending. Therefore, to the extent that there are lower-cost
sites-of-service available, we believe that beneficiaries and the
physicians treating them should have that choice and not be encouraged
to receive or provide care in higher paid settings solely for financial
reasons. For example, to provide for easier comparisons between
hospital outpatient departments and ASCs, as previously discussed in
the CY 2018 OPPS/ASC final rule with comment period (82 FR 59389), we
stated in the CY 2019 OPPS/ASC proposed rule that we also will make
available a website that provides comparison information between the
OPPS and ASC payment and copayment rates, as required under section
4011 of the 21st Century Cures Act (Pub. L. 114-255). Making this
information available can help beneficiaries and their physicians
determine the cost and appropriateness of receiving care at different
sites-of-service. Although resources such as this website will help
beneficiaries and physicians select a site-of-service, we do not
believe this information alone is enough to control unnecessary volume
increases. The growth in OPPS expenditures and the increase in the
volume and intensity of hospital outpatient services were illustrated
in Tables 30 and 31, respectively, of the CY 2019 OPPS/ASC proposed
rule (83 FR 37139 through 37140). These tables, which include updated
information, are presented below.
BILLING CODE 4120-01-P
[[Page 59006]]
[GRAPHIC] [TIFF OMITTED] TR21NO18.076
[GRAPHIC] [TIFF OMITTED] TR21NO18.077
BILLING CODE 4120-01-C
As noted in its March 2018 Report to Congress, the Medicare Payment
Advisory Commission (MedPAC) found that, from 2011 through 2016,
combined program spending and beneficiary cost-sharing on services
covered under the OPPS increased by 51 percent, from $39.8 billion to
$60.0 billion, an average of 8.6 percent per year.\66\ In its 2018
report, MedPAC also noted that ``A large source of growth in spending
on services furnished in hospital outpatient departments (HOPDs)
appears to be the result of the shift of services from (lower cost)
physician offices to (higher cost) HOPDs''. \67\ We consider these
shifts in the sites of service unnecessary if the beneficiary can
safely receive the same services in a lower cost setting but instead
receives care in a higher cost setting.
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\66\ Available at: http://www.medpac.gov/docs/default-source/reports/mar18_medpac_entirereport_sec.pdf?sfvrsn=0.
\67\ Ibid.
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As noted in MedPAC's March 2017 Report to Congress, ``from 2014 to
2015, the use of outpatient services increased by 2.2 percent per
Medicare FFS beneficiary. Over the decade ending in 2015, volume per
beneficiary grew by 47 percent. One-third of the growth in outpatient
volume from 2014 to 2015 was due to an increase in the number of
evaluation and management (E&M) visits billed as outpatient services.
This growth in part reflects hospitals purchasing freestanding
physician practices and converting the billing from the Physician Fee
Schedule to higher paying hospital outpatient department (HOPD) visits.
These conversions shift market share from freestanding physician
offices to HOPDs. From 2012 to 2015, hospital-based E&M visits per
beneficiary grew by 22 percent, compared with a 1-percent decline in
physician office-based visits.'' \68\
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\68\ Available at: http://www.medpac.gov/docs/default-source/reports/mar17_medpac_ch3.pdf?sfvrsn=0.
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MedPAC has documented how the billing for these services has
shifted from physician offices to higher-cost outpatient sites of care
for several years. At the same time, MedPAC has repeated its
recommendation that the difference in payment rates between hospital
outpatient departments and physician offices should be reduced or
eliminated. It specifically recommended in its 2012
[[Page 59007]]
Report to Congress that the payment rates for E&M visits provided in
hospital outpatient departments be reduced so that total payment rates
for these visits are the same, whether the service is provided in a
hospital outpatient department or a physician office. In its 2014
Report to Congress, MedPAC recommended that Congress direct the
Secretary to reduce or eliminate differences in payment rates between
hospital outpatient departments and physician offices for selected
APCs. Both of these recommendations were reiterated in MedPAC's March
2017 Report to Congress.
As previously noted, in addition to the concern that the difference
in payment is leading to unnecessary increases in the volume of covered
outpatient department services, we also are concerned that this shift
in care setting increases beneficiary cost-sharing liability because
Medicare payment rates for the same or similar services are generally
higher in hospital outpatient departments than in freestanding
physician offices. For example, MedPAC estimates that ``the Medicare
program spent $1.0 billion more in 2009, $1.3 billion more in 2014, and
$1.6 billion more in 2015 than it would have if payment rates for E&M
office visits in HOPDs were the same as freestanding office rates.
Relatedly, beneficiaries' cost-sharing was $260 million higher in 2009,
$325 million higher in 2014, and $400 million higher in 2015 than it
would have been because of the higher rates paid in HOPD settings.''
\69\ We believe that this volume growth and the resulting increase in
beneficiary cost-sharing is unnecessary because it appears to have been
incentivized by the difference in payment for each setting rather than
patient acuity. If there was not a difference in payment rates, we
believe that we would not have seen the increase in beneficiaries'
cost-sharing and the shift in site-of-service.
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\69\ Ibid.
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In the CY 2015 OPPS/ASC proposed rule (79 FR 41013), we stated that
we continued to seek a better understanding of how the growing trend
toward hospital acquisition of physicians' offices and subsequent
treatment of those locations as off-campus provider-based departments
(PBDs) of hospitals affects payments under the PFS and the OPPS, as
well as beneficiary cost-sharing obligations. We noted that MedPAC
continued to question the appropriateness of increased Medicare payment
and beneficiary cost-sharing when physicians' offices become hospital
outpatient departments and that MedPAC recommended that Medicare pay
selected hospital outpatient services at PFS rates (MedPAC March 2012
and June 2013 Reports to Congress).
To understand how this trend was affecting Medicare, we explained
that we needed information on the extent to which this shift was
occurring. To that end, during the CY 2014 OPPS/ASC rulemaking cycle,
we sought public comment regarding the best method for collecting
information and data that would allow us to analyze the frequency,
type, and payment for physicians' services and hospital outpatient
services furnished in off-campus PBDs of hospitals (78 FR 75061 through
75062 and 78 FR 74427 through 74428). Based on our analysis of the
public comments we received, we believed that the most efficient and
equitable means of gathering this important information across two
different payment systems would be to create a HCPCS modifier to be
reported with every code for physicians' services and hospital
outpatient services furnished in an off-campus PBD of a hospital on
both the CMS-1500 claim form for physicians' services and the UB-04
form (CMS Form 1450 and OMB Control Number 0938-0997) for hospital
outpatient services. We noted that a main provider may treat an off-
campus facility as provider-based if certain requirements at 42 CFR
413.65 are satisfied, and we define a ``campus'' at 42 CFR 413.65(a)(2)
to be the physical area immediately adjacent to the provider's main
buildings, other areas and structures that are not strictly contiguous
to the main buildings but are located within 250 yards of the main
buildings, and any other areas determined on an individual case basis,
by the CMS regional office, to be part of the provider's campus.
In 2015, the Congress took steps to address the higher Medicare
payments for services furnished by certain off-campus PBDs that may be
associated with hospital acquisition of physicians' offices through
section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74),
enacted on November 2, 2015. In the CY 2017 OPPS/ASC proposed rule, we
discussed section 603 of the Bipartisan Budget Act of 2015, which
amended section 1833(t) of the Act. For the full discussion of our
initial implementation of this provision, we refer readers to the CY
2017 OPPS/ASC final rule with comment period (81 FR 79699 through
79719) and the interim final rule with comment period (79720 through
79729).
Section 603 of the Bipartisan Budget Act of 2015 (Section 603)
amended section 1833(t) of the Act by amending paragraph (1)(B) and
adding a new paragraph (21). As a general matter, under sections
1833(t)(1)(B)(v) and (t)(21) of the Act, applicable items and services
furnished by certain off-campus outpatient departments of a provider on
or after January 1, 2017 are not considered covered OPD services as
defined under section 1833(t)(1)(B) of the Act for purposes of payment
under the OPPS and are instead paid ``under the applicable payment
system'' under Medicare Part B if the requirements for such payment are
otherwise met. We note that, in order to be considered part of a
hospital, an off-campus department of a hospital must meet the
provider-based criteria established under 42 CFR 413.65.
Section 603 amended section 1833(t)(1)(B) of the Act by adding a
new clause (v), which excludes from the definition of ``covered OPD
services'' applicable items and services (defined in paragraph (21)(A)
of the section) that are furnished on or after January 1, 2017, by an
off-campus PBD, as defined in paragraph (21)(B) of the section. Section
603 also added a new paragraph (21) to section 1833(t) of the Act,
which defines the terms ``applicable items and services'' and ``off-
campus outpatient department of a provider,'' requires the Secretary to
make payments for such applicable items and services furnished by an
off-campus PBD under an applicable payment system (other than the
OPPS), provides that hospitals shall report on information as needed
for implementation of the provision, and establishes a limitation on
administrative and judicial review of the Secretary's determinations of
applicable items and services, applicable payment system, whether a
department meets the definition of an off-campus outpatient department
of a provider, and information hospitals are required to report. In
defining the term ``off-campus outpatient department of a provider,''
section 1833(t)(21)(B)(i) of the Act specifies that the term means a
department of a provider (as defined at 42 CFR 413.65(a)(2) as that
regulation was in effect on November 2, 2015, the date of enactment of
Pub. L. 114-74) that is not located on the campus of such provider, or
within the distance from a remote location of a hospital facility.
Section 1833(t)(21)(B)(ii) of the Act excepts from the definition of
``off-campus outpatient department of a provider,'' for purposes of
paragraphs (1)(B)(v) and (21)(B) of the section, an off-campus PBD that
was billing under section 1833(t) of the Act with respect to covered
OPD services furnished prior
[[Page 59008]]
to the date of enactment of the Bipartisan Budget Act of 2015, that is,
November 2, 2015. We note that the definition of ``applicable items and
services'' specifically excludes items and services furnished by a
dedicated emergency department as defined at 42 CFR 489.24(b) and the
definition of ``off-campus outpatient department of a provider'' does
not include PBDs located on the campus of a hospital or within the
distance (described in the definition of campus at Sec. 413.65(a)(2))
from a remote location of a hospital facility; the items and services
furnished by these excepted off-campus PBDs on or after January 1, 2017
continued to be paid under the OPPS.
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699
through 79720), we established a number of policies to implement
section 603 of the Bipartisan Budget Act of 2015. Broadly, we: (1)
Defined applicable items and services in accordance with section
1833(t)(21)(A) of the Act for purposes of determining whether such
items and services are covered OPD services under section
1833(t)(1)(B)(v) of the Act or whether payment for such items and
services will instead be made under the applicable payment system
designated under section 1833(t)(21)(C) of the Act; (2) defined off-
campus PBD for purposes of sections 1833(t)(1)(B)(v) and (t)(21) of the
Act; and (3) established policies for payment for applicable items and
services furnished by an off-campus PBD (nonexcepted items and
services) under section 1833(t)(21)(C) of the Act. To do so, we
finalized policies that define whether certain items and services
furnished by a given off-campus PBD may be considered excepted and,
thus, continue to be paid under the OPPS; established the requirements
for the off-campus PBDs to maintain excepted status (both for the
excepted off-campus PBDs and for the items and services furnished by
such excepted off-campus PBDs); and described the applicable payment
system for nonexcepted items and services (generally, the PFS).
As part of developing policies to implement the section 603
amendments to section 1833(t) of the Act, we solicited public comments
on information collection requirements for implementing this provision
in accordance with section 1833(t)(21)(D) of the Act (81 FR 45686; 81
FR 79709 through 79710). In the CY 2017 OPPS/ASC final rule with
comment period (81 FR 79719 and 79725), we created modifier ``PN'' to
collect data for purposes of implementing section 603 but also to
trigger payment under the newly adopted PFS rates for nonexcepted items
and services.
While the changes required by the section 603 amendments to section
1833(t) of the Act address some of the concerns related to shifts in
settings of care and overutilization in the hospital outpatient
setting, the majority of hospital off-campus departments continue to
receive full OPPS payment (including off-campus emergency departments
and excepted off-campus departments of a hospital), which is often
higher than the payment that would have been made if a similar service
had been furnished in the physician office setting. Therefore, the
current site-based payment creates an incentive for an unnecessary
increase in the volume of this type of OPD service, which results in
higher costs for the Medicare program, its beneficiaries, and taxpayers
more generally. These differences in payment rates have unnecessarily
shifted services away from the lower paying physician's office to the
higher paying hospital outpatient department. We believe that the
higher payment that is made under the OPPS, as compared to payment
under the PFS, contributes to incentivizing providers to furnish care
in the hospital outpatient setting rather than the physician office
setting. In 2012, Medicare was paying approximately 80 percent more for
a 15-minute office visit in a hospital outpatient department than in a
freestanding physician office.\70\
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\70\ Available at: http://www.medpac.gov/docs/default-source/reports/march-2012-report-to-the-congress-medicare-payment-policy.pdf.
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For example, under Medicare payment policy in effect for CY 2018,
the Medicare program would pay more for a clinic visit (HCPCS code
G0463) furnished under the OPPS than it would for the visit codes under
the PFS. In the CY 2017 OPPS/ASC interim final rule, we noted that the
most frequently billed service with the ``PO'' modifier was described
by HCPCS code G0463 (Hospital outpatient clinic visit for assessment
and management of a patient), which is paid under APC 5012 (Clinic
Visits and Related Services); the total number of CY 2017 claim lines
for this service was approximately 10.8 million lines with the ``PO''
modifier as of October 2018, out of a total 30.5 million lines in CY
2017. When services are furnished in the hospital outpatient setting,
an additional payment for the professional services is generally made
under the PFS using the ``facility'' rate. For example, in CY 2017, the
OPPS payment rate for APC 5012, which is the APC to which the
outpatient clinic visit code was assigned, was $106.56. The CY 2017 PFS
``facility'' payment rate for a Level 3 visit, a service that commonly
corresponds to the OPPS clinic visit, was $77.88 for a new patient and
$51.68 for an established patient.
However, when services are furnished in the physician office
setting, only one payment is made--typically, the ``nonfacility'' rate
under the PFS. The CY 2017 PFS nonfacility payment rates for a Level 3
visit, a commonly billed service under the PFS, was $109.46 for a new
patient and $73.93 for an established patient. Therefore, the total
Medicare Part B payment rate (for the hospital and professional
service) for a new patient when the service was furnished in the
hospital outpatient setting was $184.44 ($106.56 + $77.88) compared to
$109.46 in the physician office setting (approximately $75 or 68
percent more per visit), or for an established patient, $158.24
($106.56 + $51.68) in the hospital outpatient setting compared to
$73.93 in the physician office setting (approximately $84 or 114
percent more per visit). Under these examples, the payment rate was
approximately $75 to $84 more for the same service when furnished in
the hospital outpatient setting instead of the physician office
setting, 20 percent of which was the responsibility of the beneficiary.
Taking into account that this payment discrepancy occurs across tens of
millions of claims each year, this is a significant source of
unnecessary spending by Medicare beneficiaries directly (in the form of
unnecessarily high copayments) and on behalf of Medicare beneficiaries
(in the form of unnecessarily high Medicare payments for services that
could be performed in a different setting).
We understand that many off-campus departments converted from
physicians' offices to hospital outpatient departments without a change
in either the physical location or a change in the acuity of the
patients seen. To the extent that similar services can be safely
provided in more than one setting, we do not believe it is prudent for
the Medicare program to pay more for these services in one setting than
another. We believe the difference in payment for these services is a
significant factor in the shift in services from the physician's office
to the hospital outpatient department, thus unnecessarily increasing
hospital outpatient department volume and Medicare program and
beneficiary expenditures.
We consider the shift of services from the physician office to the
hospital outpatient department unnecessary if the beneficiary can
safely receive the same services in a lower cost setting but is instead
receiving services in the
[[Page 59009]]
higher paid setting due to payment incentives. We believe the increase
in the volume of clinic visits is due to the payment incentive that
exists to provide this service in the higher cost setting. Because
these services could likely be safely provided in a lower cost setting,
we believe that the growth in clinic visits paid under the OPPS is
unnecessary. Further, we believe that capping the OPPS payment at the
PFS-equivalent rate would be an effective method to control the volume
of these unnecessary services because the payment differential that is
driving the site-of-service decision will be removed. In particular, we
believe this method of capping payment will control unnecessary volume
increases both in terms of numbers of covered outpatient department
services furnished and costs of those services.
Therefore, given the unnecessary increases in the volume of clinic
visits in hospital outpatient departments, in the CY 2019 OPPS/ASC
proposed rule (83 FR 37142), for the CY 2019 OPPS, we proposed to use
our authority under section 1833(t)(2)(F) of the Act to apply an amount
equal to the site-specific PFS payment rate for nonexcepted items and
services furnished by a nonexcepted off-campus PBD (the PFS payment
rate) for the clinic visit service, as described by HCPCS code G0463,
when provided at an off-campus PBD excepted from section 1833(t)(21) of
the Act (departments that bill the modifier ``PO'' on claim lines).
Off-campus PBDs that are not excepted from section 603 (departments
that bill the modifier ``PN'') already receive a PFS-equivalent payment
rate for the clinic visit.
In CY 2019, for an individual Medicare beneficiary, the standard
unadjusted Medicare OPPS proposed payment for the clinic visit was
approximately $116, with approximately $23 being the average copayment.
The proposed PFS equivalent rate for Medicare payment for a clinic
visit was approximately $46, and the copayment would be approximately
$9. Under this proposal, an excepted off-campus PBD would continue to
bill HCPCS code G0463 with the ``PO'' modifier in CY 2019, but the
payment rate for services described by HCPCS code G0463 when billed
with modifier ``PO'' would now be equivalent to the payment rate for
services described by HCPCS code G0463 when billed with modifier
``PN''. This would save beneficiaries an average of $14 per visit. For
a discussion of the amount paid under the PFS for clinic visits
furnished by nonexcepted off-campus PBDs, we referred readers to the CY
2018 PFS final rule (82 FR 53023 through 53024), as well as the CY 2019
PFS proposed rule and final rule.
In addition, in the CY 2019 OPPS/ASC proposed rule (83 FR 37142),
we proposed to implement this proposed method in a nonbudget neutral
manner. Specifically, while section 1833(t)(9)(B) of the Act requires
that certain changes made under the OPPS be made in a budget neutral
manner, we note that this section does not apply to the volume control
method under section 1833(t)(2)(F) of the Act. In particular, section
1833(t)(9)(A) of the Act, titled ``Periodic review,'' provides, in
part, that the Secretary must annually review and revise the groups,
the relative payment weights, and the wage and other adjustments
described in paragraph (2) to take into account changes in medical
practice, changes in technology, the addition of new services, new cost
data, and other relevant information and factors'' (emphasis added).
Section 1833(t)(9)(B) of the Act, titled ``Budget neutrality
adjustment'' provides that if ``the Secretary makes adjustments under
subparagraph (A), then the adjustments for a year may not cause the
estimated amount of expenditures under this part for the year to
increase or decrease from the estimated amount of expenditures under
this part that would have been made if the adjustments had not been
made'' (emphasis added). However, section 1833(t)(2)(F) of the Act is
not an ``adjustment'' under paragraph (2). Unlike the wage adjustment
under section 1833(t)(2)(D) of the Act and the outlier, transitional
pass-through, and equitable adjustments under section 1833(t)(2)(E) of
the Act, section 1833(t)(2)(F) of the Act refers to a ``method'' for
controlling unnecessary increases in the volume of covered OPD
services, not an adjustment. Likewise, sections 1833(t)(2)(D) and (E)
of the Act also explicitly require the adjustments authorized by those
paragraphs to be budget neutral, while the volume control method
authority at section 1833(t)(2)(F) of the Act does not. Therefore, the
volume control method proposed under section 1833(t)(2)(F) of the Act
is not one of the adjustments under section 1833(t)(2) of the Act that
is referenced under section 1833(t)(9)(A) of the Act that must be
included in the budget neutrality adjustment under section
1833(t)(9)(B) of the Act. Moreover, section 1833(t)(9)(C) of the Act
specifies that if the Secretary determines under methodologies
described in paragraph (2)(F) that the volume of services paid for
under this subsection increased beyond amounts established through
those methodologies, the Secretary may appropriately adjust the update
to the conversion factor otherwise applicable in a subsequent year. We
interpret this provision to mean that the Secretary will have
implemented a volume control method under section 1833(t)(2)(F) of the
Act in a nonbudget neutral manner in the year in which the method is
implemented, and that the Secretary may then make further adjustments
to the conversion factor in a subsequent year to account for volume
increases that are beyond the amounts estimated by the Secretary under
the volume control method.
We stated in the CY 2019 OPPS/ASC proposed rule (83 FR 37143) that
we believe implementing a volume control method in a budget neutral
manner would not appropriately reduce the overall unnecessary volume of
covered OPD services, and instead would simply shift the movement of
the volume within the OPPS system in the aggregate, a concern similar
to the one we discussed in the CY 2008 OPPS final rule with comment
period (72 FR 66613). This estimated payment impact was displayed in
Column 5 of Table 42.-- Estimated Impact of the Proposed Changes for
the Hospital Outpatient Prospective Payment System in the CY 2019 OPPS/
ASC proposed rule (83 FR 37228 through 37229). An estimate that
includes the effects of estimated changes in enrollment, utilization,
and case-mix based on the FY 2019 President's Budget approximates the
estimated savings at $760 million, with $610 million of the savings
accruing to Medicare, and $150 million saved by Medicare beneficiaries
in the form of reduced copayments. In order to effectively establish a
method for controlling the unnecessary growth in the volume of clinic
visits furnished by excepted off-campus PBDs that does not simply
reallocate expenditures that are unnecessary within the OPPS, we
believe that this method must be adopted in a nonbudget neutral manner.
The impact associated with this proposal is further described in
section XXI. of the CY 2019 OPPS/ASC proposed rule.
Comment: Numerous commenters, including organizations representing
private health insurance plans, physician associations, specialty
medical associations, and individual Medicare beneficiaries, supported
the proposal. Some of these commenters commended CMS for its proposal,
which they believed will help to control costs for both beneficiaries
and the Medicare program, as well as foster greater competition in the
physician services market. Commenters were
[[Page 59010]]
supportive of the immediate impact this policy would have in lowering
Medicare beneficiaries' out-of-pocket costs. One commenter noted that
there ``is no principled basis for treating excepted and nonexcepted
PBDs differently with respect to payment for E&M services or for
perpetuating the payment differential between off-campus PBDs and
physician offices.'' Several commenters supported implementing this
policy in a nonbudget neutral manner because they believed to do
otherwise would be simply to redistribute expenditures for unnecessary
services within the OPPS rather than eliminating those expenditures
from the OPPS altogether. A number of commenters urged CMS to continue
on a path to bring full parity in payment for outpatient services,
regardless of the site-of-service, to lower beneficiary cost-sharing,
reduce Medicare expenditures, and stem the tide of provider
consolidation. Two commenters believed that several factors demonstrate
to them that HOPDs drive up volume for several other common outpatient
services, including:
Patients receive more chemotherapy administration
sessions, on average, when treated in the HOPD. Chemotherapy days per
beneficiary were an estimated 9 to 12 percent higher in the hospital
outpatient department than the physician office setting.\71\
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\71\ The Moran Company: Cost Differences in Cancer Care Across
Settings; August 2013.
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Differences in utilization of chemotherapy drugs and
services between hospital outpatient departments and physicians'
offices resulted in an estimated increase in Medicare payments and
Medicare beneficiary copayments of $167 million. Over 93 percent of the
additional payments were related to chemotherapy and other
chemotherapy-related drugs.\72\
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\72\ BRG: Impact of Medicare Payments of Shift in Site of Care
for Chemotherapy Administration; June 2014.
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Cardiac imaging procedures resulted in higher payments for
a 3-day episode (217 percent) and 22-day episodes (80 percent) when
performed in a HOPD compared to a physician's office.\73\
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\73\ Avalere: Medicare Payment Differentials Across Outpatient
Settings of Care; February 2016.
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For certain cardiology, orthopedic, and gastroenterology
services, employed physicians were seven times more likely to perform
services in a HOPD setting than independent physicians, resulting in
additional costs of $2.7 billion to Medicare and $411 million in
patient copayments over a 3-year period.\74\
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\74\ Avalere, PAI: Physician Practice Acquisition Study:
National and Regional Employment Changes, October 2016.
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One commenter believed that payment differentials between
independent physician practices and hospital outpatient departments
stem in part from inadequate Medicare physician payment rates and that
any savings from site neutrality proposals derived from OPPS should be
reinvested in increasing payment rates elsewhere in Part B, including
payments to physicians. Some commenters urged HHS to work with Congress
to expand site-neutral policies in the OPPS.
Response: We appreciate the commenters' support. As mentioned in
the proposed rule (83 FR 37138 through 37143), we share the commenters'
concern that the current payment incentives, rather than patient acuity
or medical necessity, are affecting site-of-service decision-making. As
we noted in the proposed rule (83 FR 37138 through 37143), ``[a] large
source of growth in spending on services furnished in hospital
outpatient departments (HOPDs) appears to be the result of the shift of
services from (lower cost) physician offices to (higher cost)
HOPDs''.\75\ We continue to believe that these shifts in the sites of
service are unnecessary if the beneficiary can safely receive the same
services in a lower cost setting but instead receives care in a higher
cost setting due to payment incentives. In addition to the concern that
the difference in payment is leading to unnecessary increases in the
volume of covered outpatient department services, we remain concerned
that this shift in care setting increases beneficiary cost-sharing
liability because Medicare payment rates for the same or similar
services are generally higher in hospital outpatient departments than
in physician offices.
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\75\ Available at: http://www.medpac.gov/docs/default-source/reports/mar18_medpac_entirereport_sec.pdf?sfvrsn=0.
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We appreciate the comments supporting the implementation of this
policy in a nonbudget neutral manner. As we stated in the proposed rule
(83 FR 37138 through 37143), we believe implementing a volume control
method in a budget neutral manner would not appropriately reduce the
overall unnecessary volume of covered OPD services, and instead would
simply shift the volume of services within the OPPS system in the
aggregate. As detailed later in this section, we are finalizing our
proposal, with modifications, in response to public comments. We will
continue to take information submitted by the commenters into
consideration for future study.
With respect to the comment that it is inappropriate to establish a
PFS-equivalent rate because PFS rates are inadequate and that any
savings should be redistributed across Medicare Part B, we disagree
that PFS rates as a whole are inadequate and note that the methodology
to develop such rates was established by law and regulations and is
updated each year through notice-and-comment rulemaking. We note that
the overall amount of Medicare payments to physicians and other
entities made under the PFS is determined by the PFS statute, and the
rates for individual services are determined based on the resources
involved in furnishing these services relative to other services paid
under the PFS. To the extent the commenter believes that the PFS rate
for a particular service is misvalued relative to other PFS services,
we encourage the commenter to nominate the service for review as a
potentially misvalued service under the PFS.
Comment: MedPAC supported the proposal to reduce the OPPS payment
rate for clinic visits provided in an excepted off-campus PBD to a PFS-
equivalent payment rate. MedPAC noted that the policy would be
consistent with its past recommendations for site-neutral payments
between HOPDs and freestanding physician offices. In its comments,
MedPAC highlighted two key points from its March 2012 recommendation on
site-neutral payments. While MedPAC recommended that OPPS payment rates
for clinic visits be reduced so that Medicare payments for these
services are the same whether they are provided in HOPDs or physician
offices, it also recommended that this policy be phased in over 3 years
to allow providers time to adjust to lower payment rates. During the
phase-in, MedPAC recommended that payment reductions to hospitals with
a disproportionate share (DSH) patient percentage at or above the
median be limited to 2 percent of overall Medicare payments because
these hospitals are often the primary source of care for low-income
beneficiaries and limiting the reduction in revenue would help maintain
access to care for these beneficiaries.
Response: We thank MedPAC for its comments and support of this
policy. In its comments, MedPAC recommended this policy be phased in
over 3 years to allow providers time to adjust to lower payment rates.
As detailed later in this section, we will be implementing this policy
with a 2-year phase-in. We believe that a 2-year phase-in allows us
[[Page 59011]]
to balance the immediate need to address the unnecessary increases in
the volume of clinic visits with concerns like those articulated by
MedPAC regarding providers' need for time to adjust to these payment
changes. While we acknowledge and share MedPAC's concern about
beneficiary access to care, we do not believe that a limit on the
payment reduction to hospitals with a DSH patient percentage at or
above the median is necessary because we believe the increase in the
volume of clinic visits in excepted off-campus provider-based
departments of hospitals with high DSH percentages is equally
unnecessary as it is at other hospitals.
Many commenters challenged the statutory authority for various
aspects of the proposal. These comments are summarized below.
Comment: Several commenters disagreed with CMS' interpretation of
section 1833(t)(2)(F) of the Act. The commenters contended that section
1833(t)(2)(F) of the Act does not confer direct authority on CMS to
modify OPPS payment rates for specific services. Rather, the commenters
asserted that section 1833(t)(2)(F) of the Act only permits the agency
to develop a ``method,'' which the commenters interpreted to mean a
``way of doing things'' or a ``plan.'' The commenters stated that
utilizing the authority at section 1833(t)(2)(F) of the Act to reduce
payments to excepted off-campus PBDs to rates that equal the lower
payment amounts received by nonexcepted off-campus PBDs was improper.
The commenters maintained that the Secretary can only control
unnecessary increases in volume using authority conferred by other
provisions of section 1833(t) of the Act, such as through the equitable
adjustment authority at section 1833(t)(2)(E) of the Act. The
commenters believed that the clinic visit proposal was arbitrary and
capricious for this and other reasons. In particular, the commenters
expressed concern that there was no data-driven basis to conclude that
OPD services have increased unnecessarily. The commenters also claimed
that the proposal is based on unsupported assertions and assumptions
regarding increases in volume. The commenters were concerned that other
factors, such as the shift from inpatient services to outpatient
services or the 2-midnight policy, might be driving the increases in
the volume of outpatient services. Other commenters asserted that CMS
should consider the impact of severity of illness and patient
demographics on outpatient volume prior to moving forward with any
payment changes. One commenter stated that, relative to patients seen
in physician offices, patients seen in HOPDs:
Have more severe chronic conditions;
Have higher prior utilization of hospitals and EDs;
Are more likely to live in low-income areas;
Are 1.8 times more likely to be dually eligible for
Medicare and Medicaid;
Are 1.4 times more likely to be nonwhite;
Are 1.6 times more likely to be under age 65 and disabled;
and
Are 1.1 times more likely to be over 85 years old.
The commenters also noted that Medicare beneficiaries with cancer
seen in HOPDs relative to those beneficiaries seen in physician offices
have more severe chronic conditions, higher prior utilization of
services in hospitals and emergency departments, and higher likelihood
of residing in low-income areas. In addition, the commenters noted that
these cancer patients were more likely to be dually eligible for
Medicare and Medicaid and be nonwhite, under age 65, and disabled.
Response: After consideration of these comments, we continue to
believe that section 1833(t)(2)(F) of the Act gives the Secretary broad
authority to develop a method for controlling unnecessary increases in
the volume of covered outpatient department (OPD) services, including a
method that controls unnecessary volume increases by removing a payment
differential that is driving a site-of-service decision, and as a
result, is unnecessarily increasing service volume.\76\ We continue to
believe shifts in the sites of service described in the preceding
paragraphs are inherently unnecessary if the beneficiary can safely
receive the same services in a lower cost setting but instead receives
care in a higher cost setting due to the payment incentives created by
the difference in payment amounts. While we did receive some data
illustrating that HOPDs serve unique patient populations and provide
services to medically complex beneficiaries, these data did not
demonstrate the need for higher payment for all clinic visits provided
in HOPDs. The fact that the commenters did not supply data supporting
these assertions is suggestive that the payment differential may be the
main driver for unnecessary volume increases in outpatient department
services, particularly clinic visits.
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\76\ Available at: https://www.ssa.gov/OP_Home/ssact/title18/1833.htm.
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In fact, the Government Accountability Office (GAO) found that
``the percentage of E/M visits--as well as the number of E/M office
visits per beneficiary--performed in HOPDs, rather than physician
offices, was generally higher in counties with higher levels of
vertical consolidation in 2007-2013.'' \77\ Vertical consolidation is
the practice of hospitals acquiring physician practices. We believe
that higher payment rates for services furnished in HOPDs, which
include clinic visits, have led hospitals to increasingly purchase
physician practices. We believe there is a correlation among the
increasing volume of HOPD clinic visits, vertical integration, and the
higher OPPS payment rates for clinic visits. The GAO discovered that
``the median percentage of E/M office visits performed in HOPDs in
counties with the lowest levels of vertical consolidation was 4.1
percent in 2013. In contrast, this rate was 14.1 percent for counties
with the highest levels of consolidation.'' The GAO also found that, in
2013, the number of E/M office visits performed in HOPDs per 100
beneficiaries was 26 for the counties with low levels of vertical
consolidation, whereas the number was substantially higher--82 services
per 100 beneficiaries--in counties with the highest levels of vertical
consolidation.\78\ The GAO determined that the association between
higher levels of vertical consolidation and high utilization of E/M
office visits in HOPDs remained even after controlling for differences
in county-level characteristics and other market factors that could
affect the setting in which E/M office visits are performed. The GAO
describes the model it ran as a ``regression model that controlled for
county characteristics that do not change over relatively short periods
of time, such as whether a county is urban or rural, and county
characteristics that could change over time, such as the level of
competition among hospitals and physicians within counties.'' The GAO
explained that its ``regression model's results were similar to [its]
initial results: the level of vertical consolidation in a county was
significantly and positively associated with a higher number and
percentage of E/M office visits performed in HOPDs--that is, as
vertical consolidation increased in a given county, the number and
percentage of E/M office visits
[[Page 59012]]
performed in HOPDs in that county also tended to be higher.'' \79\
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\77\ Available at: https://www.gao.gov/assets/680/674347.pdf.
\78\ Ibid.
\79\ Available at: https://www.gao.gov/assets/680/674347.pdf.
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The GAO findings align with our assertions in the proposed rule (83
FR 37138 through 37143). Paying substantially more for the same service
when performed in an HOPD rather than a physician office provides an
incentive to shift services that were once performed in physician
offices to HOPDs after consolidation has occurred. The GAO findings
suggest that providers responded to this financial incentive: E/M
office visits were more frequently performed in HOPDs in counties with
higher levels of vertical consolidation. The GAO found this association
in both of its analyses of E/M office visit utilization in counties
with varying levels of vertical consolidation and in its regression
analyses.
We heard from many commenters that the higher payment rate was
justified by the fact that HOPDs were treating sicker patient
populations. The GAO's study did not support this conclusion. It
examined counties that experienced large growth in the billing of
clinic visits in HOPDs and was able to determine that: ``Beneficiaries
from counties with higher levels of vertical consolidation were not
sicker, on average, than beneficiaries from counties with lower levels
of consolidation. Specifically, beneficiaries from counties with higher
levels of vertical consolidation tended to have either similar or
slightly lower median risk scores, death rates, rates of end-stage
renal disease, and rates of disability compared to those from counties
with lower levels of consolidation. Further, counties with higher
levels of consolidation had a lower percentage of beneficiaries dually
eligible for Medicaid, who tend to be sicker and have higher Medicare
spending than Medicare beneficiaries who are not dually eligible for
Medicaid.''
This suggests that areas with higher E/M office visit utilization
in HOPDs are not composed of sicker-than-average beneficiaries. As we
stated in the proposed rule (83 FR 37138 through 37143), paying more
for the same service when performed in an HOPD rather than a
physician's office provides an incentive to shift services that were
once performed in physician offices to HOPDs. The GAO's findings
suggest that providers responded to this financial incentive. As we
noted in the proposed rule (83 FR 37138 through 37143), we have
developed many payment policies, such as packaging policies and
comprehensive APCs, to address the rapid growth of services in the
OPPS. However, these policies have not been able to control for
unnecessary increases in volume that are due to site-of-service payment
differentials, which create an incentive to furnish a service in the
OPD that could be furnished in a lower cost setting based solely on the
higher payment amount available under the OPPS. Here, the clinic visit
service furnished in excepted off-campus PBDs is the same as the clinic
visit service furnished in nonexcepted off-campus PBDs. We believe that
applying an amount equal to the site-specific PFS payment rate for
nonexcepted items and services furnished by a nonexcepted off-campus
PBD (the PFS payment rate) for the clinic visit service, as described
by HCPCS code G0463, when provided at an off-campus PBD excepted from
section 1833(t)(21) of the Act is an appropriate method to control the
unnecessary increase in the volume of outpatient services.
Comment: Several commenters expressed concern that CMS lacks the
statutory authority to reduce OPPS payments for certain clinic visit
services furnished at off-campus PBDs that are excepted from payment
``under the applicable payment system'' under section 1833(t)(21) of
the Act. The commenters stated that Congress expressly chose in section
603 of the Bipartisan Budget Act of 2015 not to confer on CMS authority
to pay excepted off-campus PBDs at the reduced rates paid to
nonexcepted off-campus PBDs. The commenters asserted that CMS is
ignoring the express and statutorily mandated grandfathering exception
created by section 603.
Response: We believe the changes required by section 603 of the
Bipartisan Budget Act of 2015 made in section 1833(t) of the Act
address some of the concerns related to shifts in settings of care and
overutilization of services in the hospital outpatient setting for new
off-campus PBDs after November 1, 2015. However, the majority of
hospital off-campus departments continue to receive full OPPS payment
(including off-campus emergency departments and excepted off-campus
departments of a hospital), which is often higher than the payment that
would have been made if a similar service had been furnished in the
physician office setting. Therefore, the current site-based payment
creates an incentive for an unnecessary increase in the volume of this
type of OPD service, which results in higher costs for the Medicare
program, beneficiaries, and taxpayers more generally. We interpret our
authority under section 1833(t)(2)(F) of the Act to allow us to
implement our proposed method of applying an amount equal to the site-
specific PFS payment rate for nonexcepted items and services furnished
by a nonexcepted off-campus PBD (the PFS payment rate) for the clinic
visit service, as described by HCPCS code G0463, when provided at off-
campus PBDs, even those that are excepted from section 1833(t)(21) of
the Act. We believe that this is an appropriate method because the
clinic visit service is the same service furnished in excepted and
nonexcepted off-campus PBDs.
When Congress passed the Bipartisan Budget Act of 2015, Medicare
OPPS expenditures were $56 billion and growing at an annual rate of
about 7.3 percent. In addition, the percentage increase in volume and
intensity of outpatient services was increasing at 3.4 percent. For the
upcoming 2019 calendar year, we estimate that, without this policy,
OPPS expenditures would be $74.5 billion, growing at a rate of 9.1
percent, with the volume and intensity of outpatient services
increasing at 5.4 percent, based on the Midsession Review for 2019.
While it is clear that the action Congress took in 2015 to address
certain off-campus PBDs helped stem the tide of these increases in the
volume of OPD services, it is likewise clear that the more specific
payment adjustment has not adequately addressed the overall increase in
the volume of these types of OPD services because most off-campus PBDs
continue to be paid the higher OPPS amount for these services. We would
not be able to adequately address the unnecessary increases in the
volume of clinic visits in HOPDs if we did not apply this policy to all
off-campus HOPDs. We do not believe that the section 603 amendments to
section 1833(t) of the Act, which exclude applicable items and services
furnished by nonexcepted off-campus PBDs from payments under the OPPS,
preclude us from exercising our authority in section 1833(t)(2)(F) of
the Act to develop a method for controlling unnecessary increases in
the volume of covered outpatient department services under the OPPS.
Comment: Several commenters believed that CMS does not have
statutory authority to implement this policy in a nonbudget neutral
manner. The commenters explained that, because CMS lacks the authority
to reduce clinic visit payment rates as a method to control unnecessary
increases in the volume of covered outpatient department services under
section 1833(t)(2)(F) of the Act, that provision cannot provide
authority for the
[[Page 59013]]
payment reduction to be made in a nonbudget neutral way. The commenters
also claimed that the only nonbudget neutral option available to the
agency is to adjust the conversion factor in a subsequent year, as
provided under section 1833(t)(9)(C) of the Act. The commenters argued
that if Congress had intended to give CMS the authority to make a
volume control method nonbudget neutral, it would have done so in
clearer and more express terms. Other commenters stated that if this
policy is finalized, it should be done so only in a budget neutral
manner.
Response: We maintain that while section 1833(t)(9)(B) of the Act
does require that certain changes made under the OPPS be made in a
budget neutral manner, this provision does not apply to the volume
control method under section 1833(t)(2)(F) of the Act as outlined
through our proposal. As we noted in the proposed rule (83 FR 37138
through 37143), unlike the wage adjustment under section 1833(t)(2)(D)
of the Act and the outlier, transitional pass-through, and equitable
adjustments under section 1833(t)(2)(E) of the Act, section
1833(t)(2)(F) of the Act refers to a ``method'' for controlling
unnecessary increases in the volume of covered OPD services, not an
adjustment. Likewise, sections 1833(t)(2)(D) and (E) of the Act also
explicitly require the adjustments authorized by those paragraphs to be
budget neutral, while the volume control method authority at section
1833(t)(2)(F) of the Act does not include such a requirement.
Therefore, we maintain that the volume control method proposed under
section 1833(t)(2)(F) of the Act is not one of the adjustments under
section 1833(t)(2) of the Act that is referenced under section
1833(t)(9)(A) of the Act that must be included in the budget neutrality
adjustment under section 1833(t)(9)(B) of the Act. Moreover, section
1833(t)(9)(C) of the Act specifies that if the Secretary determines
under methodologies described in paragraph (2)(F) of section 1833(t) of
the Act that the volume of services paid for under this subsection
increased beyond amounts established through those methodologies, the
Secretary may appropriately adjust the update to the conversion factor
otherwise applicable in a subsequent year. We continue to interpret
this provision to mean that the Secretary will have implemented a
volume control method under section 1833(t)(2)(F) of the Act in a
nonbudget neutral manner in the year in which the method is
implemented. Further, as we stated in the proposed rule (83 FR 37138
through 37143), we believe that implementing a volume control method in
a budget neutral manner would not appropriately reduce the overall
unnecessary volume of covered OPD services, and instead would simply
shift the volume within the OPPS system in the aggregate.
Comment: Several commenters supported the recommendation from the
HOP Panel not to implement this proposal and to instead study the
matter to better understand the reasons for increased utilization.
Response: Section 1833(t)(9)(A) of the Act provides that the
Secretary shall consult with the Panel on policies affecting the
clinical integrity of the ambulatory payment classifications and their
associated weights under the OPPS. The Panel met on August 20, 2018 and
made recommendations on this proposed policy, and we consulted with the
Panel on those recommendations. The HOP Panel's recommendations, along
with public comments on provisions of the proposed rule, have been
taken into consideration in the development of this final rule with
comment period. While we are not accepting the HOP Panel's
recommendation to not implement this proposal, we will continue to
monitor and study the utilization of outpatient services as recommended
by the Panel.
Comment: Several commenters expressed concern that this policy
proposal would disproportionately affect safety net hospitals and rural
providers. Numerous commenters representing providers and beneficiaries
in the State of Washington expressed concerned about the impact this
proposal would have on their area. Several commenters also requested
that sole community hospitals (urban and rural), rural referral
centers, and Medicare-dependent hospitals be exempted from this policy.
A number of commenters, including many State hospital associations,
expressed concern that the magnitude of the proposed payment reduction
would have a drastic effect on their margins and endanger the
investments many hospitals have made in their provider-based
facilities. In addition, commenters suggested that the reduction in
payment would ultimately lead to a reduction of services that would
adversely affect vulnerable patient populations. One commenter
conducted a trend analysis and found that 200 hospitals would shoulder
73 percent of the proposed payment reduction. According to this
commenter's analysis, for the 200 hospitals most affected by this
proposal, the average reduction would be 5.5 percent. For the remaining
hospitals, the average reduction would be 0.5 percent.
Response: We share the commenters' concerns about access to care,
especially in rural areas where access issues may be more pronounced
than in other areas of the country. Medicare has long recognized the
unique needs of rural communities and the financial challenges for
rural providers. Across the various Medicare payment systems, CMS has
implemented a number of special payment provisions for rural providers
to maintain access and deliver high quality care to beneficiaries in
rural areas. With respect to the OPPS, section 1833(t)(13) of the Act
provided the Secretary the authority to make an adjustment to OPPS
payments for rural hospitals, effective January 1, 2006, if justified
by a study of the difference in costs by APC between hospitals in rural
areas and hospitals in urban areas. Our analysis showed a difference in
costs for rural sole community hospitals. Therefore, for the CY 2006
OPPS, we finalized a payment adjustment for rural sole community
hospitals of 7.1 percent for all services and procedures paid under the
OPPS, excluding separately payable drugs and biologicals, brachytherapy
sources, and devices paid under the pass-through payment policy, in
accordance with section 1833(t)(13)(B) of the Act. We have continued
this 7.1 percent payment adjustment since 2006. In the CY 2019 OPPS/ASC
proposed rule (83 FR 37143), we sought public comment on how we might
account in the future for providers that serve Medicare beneficiaries
in provider shortage areas, which may include certain rural areas. In
addition, we sought public comment on whether there should be
exceptions from this policy for rural providers, such as those
providers that are at risk of hospital closure or those providers that
are sole community hospitals. Taking into consideration the comments
regarding rural hospitals, we believe that implementing this policy
with a 2-year phase-in will help to mitigate the immediate impact on
rural hospitals. We may revisit this policy to consider potential
exemptions in the CY 2020 OPPS rulemaking.
After consideration of the public comments we received, we are
finalizing our proposal to use our authority under section
1833(t)(2)(F) of the Act to apply an amount equal to the site-specific
PFS payment rate for nonexcepted items and services furnished by a
nonexcepted off-campus PBD (the PFS payment rate) for the clinic visit
service, as described by HCPCS code G0463, when provided at an off-
campus PBD excepted from section 1833(t)(21) of the Act
[[Page 59014]]
(departments that bill the modifier ``PO'' on claim lines). In
addition, we are finalizing our proposal to implement this policy in a
nonbudget neutral manner. We will continue to monitor the impacts of
this policy as it is phased in to ensure that beneficiaries continue to
have access to quality care.
In response to public comments we received, we will be phasing in
the application of the reduction in payment for HCPCS code G0463 in
this setting over 2 years. In CY 2019, the payment reduction will be
transitioned by applying 50 percent of the total reduction in payment
that would apply if these departments were paid the site-specific PFS
rate for the clinic visit service. The final payment rates are
available in Addendum B to this final rule with comment period (which
is available via the internet on the CMS website). The PFS-equivalent
amount paid to nonexcepted off-campus PBDs is 40 percent of OPPS
payment (that is, 60 percent less than the OPPS rate) for CY 2019.
Based on a 2-year phase-in of this policy, half of the total 60-percent
payment reduction, a 30-percent reduction, will apply in CY 2019. In
other words, these departments will be paid approximately 70 percent of
the OPPS rate (100 percent of the OPPS rate minus the 30-percent
payment reduction that applies in CY 2019) for the clinic visit service
in CY 2019. In CY 2020, these departments will be paid the site-
specific PFS rate for the clinic visit service. We note that by phasing
in this policy over 2 years, the estimated savings associated with this
policy will change. Considering the effects of estimated changes in
enrollment, utilization, and case-mix, this policy results in an
estimated CY 2019 savings of approximately $380 million, with
approximately $300 million of the savings accruing to Medicare, and
approximately $80 million saved by Medicare beneficiaries in the form
of reduced copayments. We will continue to monitor the effect of this
change in Medicare payment policy, including the volume of these types
of OPD services.
While we are exploring developing a method to systematically
control for unnecessary increases in the volume of other hospital
outpatient department services that we may propose in future
rulemaking, we continue to recognize the importance of not impeding
development or beneficiary access to new innovations. In the CY 2019
OPPS/ASC proposed rule (83 FR 37143), we solicited public comments on
how to maintain access to new innovations while controlling for
unnecessary increases in the volume of covered hospital OPD services.
In addition, we solicited public comments on how to expand the
application of the Secretary's statutory authority under section
1833(t)(2)(F) of the Act to additional items and services paid under
the OPPS that may represent unnecessary increases in the utilization of
OPD services. Therefore, we sought public comment on the following:
How might Medicare define the terms ``unnecessary'' and
``increase'' for services (other than the clinic visit) that can be
performed in multiple settings of care? Should the method to control
for unnecessary increases in the volume of covered OPD services include
consideration of factors such as enrollment, severity of illness, and
patient demographics?
While we proposed to pay the site-specific PFS payment
rate for clinic visits beginning in CY 2019, we also were interested in
other methods to control for unnecessary increases in the volume of
outpatient services. Prior authorization is a requirement that a health
care provider obtain approval from the insurer prior to providing a
given service in order for the insurer to cover the service. Private
health insurance plans often require prior authorization for certain
services. Should prior authorization be considered as a method for
controlling overutilization of services?
For what reasons might it ever be appropriate to pay a
higher OPPS rate for services that can be performed in lower cost
settings?
Several private health plans use utilization management as
a cost-containment strategy. How might Medicare use the authority at
section 1833(t)(2)(F) of the Act to implement an evidence-based,
clinical support process to assist physicians in evaluating the use of
medical services based on medical necessity, appropriateness, and
efficiency? Could utilization management help reduce the overuse of
inappropriate or unnecessary services?
How should we account for providers that serve Medicare
beneficiaries in provider shortage areas, which may include certain
rural areas? With respect to rural providers, should there be
exceptions from this policy, such as for providers who are at risk of
hospital closure or that are sole community hospitals?
What impact on beneficiaries and the health care market
would such a method to control for unnecessary increases in the volume
of covered OPD services have?
What exceptions, if any, should be made if additional
proposals to control for unnecessary increases in the volume of
outpatient services are made?
We received feedback on a variety of issues in response to the
comment solicitation on additional future considerations. These
comments are summarized below.
Comment: In response to the solicitation on how CMS might expand
the application of the Secretary's statutory authority under section
1833(t)(2)(F) of the Act to additional items and services paid under
the OPPS that may represent unnecessary increases in OPD volume, MedPAC
suggested that CMS consider using the five criteria that MedPAC has
developed for identifying services for which it is reasonable to have
site-neutral payments between freestanding physician offices and
HOPDs.\80\
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\80\ Medicare Payment Advisory Commission. 2013. Report to the
Congress: Medicare and the health care delivery system. Washington,
DC: MedPAC.
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In response to the solicitation on whether prior authorization
should be considered as a method for controlling overutilization of
services, most commenters believed that, while prior authorization may
be a good method for controlling overutilization of services, it can
also lead to increased administrative burden and inhibit patient
access. One commenter suggested that CMS consider applying prior
authorization for providers with service volumes that are statistical
outliers or for those whose ordering rates are not in compliance with
clinical guidelines.
In response to the comment solicitation on when it might be
appropriate to pay a higher OPPS payment rate for a service that can be
performed safely in a lower cost setting, several commenters believed
that it would be appropriate to pay a higher OPPS rate for services
that can be performed in a lower cost setting if providing this higher
payment can improve patient experience, efficiency, and quality of
care. Several commenters also mentioned that the comprehensive care
management and coordination that accompanies receiving services at an
off-campus PBD of a hospital might justify the higher OPPS payment
rate. Commenters also asserted that the additional certifications
required for services furnished in PBDs compared to services furnished
in physician offices justify a higher payment rate.
In response to the comment solicitation on utilization management,
several commenters were opposed to this concept and stated that
utilization management would increase provider burden and delay patient
access to care. One commenter supported the concept
[[Page 59015]]
of utilization management, but believed that it must be based on
clinical validity, support the continuity of patient care, be
transparent and fair, provide timely access to care and administrative
efficiency, and provide alternatives and exemptions to those clinicians
with appropriate utilization rates. Other commenters supported
appropriate use criteria and evidence-based clinical guidelines and
pathways as effective clinical-decision support tools to assist
clinicians and hospitals in the reduction of potentially harmful or
rarely appropriate services.
Response: We thank commenters for their responses to our comment
solicitation. We will consider these comments for future rulemaking.
C. Application of the 340B Drug Payment Policy to Nonexcepted Off-
Campus Departments of a Hospital
1. Historical Perspective
a. Section 603 of the Bipartisan Budget Act of 2015
In the CY 2017 OPPS/ASC final rule with comment period (81 FR
79699), we discussed implementation of section 603 of the Bipartisan
Budget Act of 2015 (Pub. L. 114-74), enacted on November 2, 2015, which
amended section 1833(t) of the Act. Specifically, this provision
amended section 1833(t) of the Act by amending paragraph (1)(B) and
adding a new paragraph (21). As a general matter, under sections
1833(t)(1)(B)(v) and (t)(21) of the Act, applicable items and services
furnished by certain off-campus outpatient departments of a provider on
or after January 1, 2017 are not considered covered OPD services as
defined under section 1833(t)(1)(B) of the Act for purposes of payment
under the OPPS and are instead paid ``under the applicable payment
system'' under Medicare Part B if the requirements for such payment are
otherwise met. We indicated that, in order to be considered part of a
hospital, an off-campus department of a hospital must meet the
provider-based criteria established under 42 CFR 413.65. Accordingly,
we refer to an ``off-campus outpatient department of a provider,''
which is the term used in section 603 of the Bipartisan Budget Act of
2015, as an ``off-campus outpatient provider-based department'' or an
``off-campus PBD.'' For a detailed discussion of the legislative
history and statutory authority related to payments under section 603
of the Bipartisan Budget Act of 2015, we refer readers to the CY 2017
OPPS/ASC final rule with comment period (81 FR 79699 through 79719) and
interim final rule with comment period (81 FR 79720 through 79729).
b. Applicable Payment System
As we stated in the CY 2019 OPPS/ASC proposed rule (83 FR 37143
through 37144), to implement the amendments made by section 603 of
Public Law 114-74, we issued an interim final rule with comment period
(81 FR 79720) which accompanied the CY 2017 OPPS/ASC final rule with
comment period to establish the Medicare PFS as the ``applicable
payment system'' that applies in most cases, and we established payment
rates under the PFS for those nonexcepted items and services furnished
by nonexcepted off-campus PBDs. As we discussed in the CY 2017 OPPS/ASC
interim final rule with comment period (81 FR 79718) and reiterated in
the CY 2018 PFS final rule with comment period (82 FR 53028), payment
for Medicare Part B drugs that would be separately payable under the
OPPS (assigned a status indicator of ``K''), but are not payable under
the OPPS because they are furnished by nonexcepted off-campus PBDs, is
made in accordance with section 1847A of the Act (generally, at a rate
of ASP+6 percent), consistent with Part B drug payment policy for items
or services furnished in the physician office (nonfacility) setting. We
did not propose or make an adjustment to payment for 340B-acquired
drugs in nonexcepted off-campus PBDs in CY 2018, but indicated we may
consider doing so through future notice-and-comment rulemaking.
In the interim final rule with comment period that accompanied the
CY 2017 OPPS/ASC final rule with comment period, we established payment
policies under the Medicare PFS for nonexcepted items and services
furnished by a nonexcepted off-campus PBD on or after January 1, 2017.
In accordance with sections 1848(b) and (c) of the Act, Medicare PFS
payment is based on the relative value of the resources involved in
furnishing particular services (81 FR 79790). Resource-based relative
values are established for each item and service (described by a HCPCS
code(s)) based on the work (time and intensity), practice expense (such
as clinical staff, supplies and equipment, office rent, and overhead),
and malpractice expense required to furnish the typical case of the
service. Because Medicare makes separate payment under institutional
payment systems (such as the OPPS) for the facility costs associated
with many of the same services that are valued under the PFS, we
establish two different PFS payment rates for many of these services--
one that applies when the service is furnished in a location where a
facility bills and is paid for the service under a Medicare payment
system other than the PFS (the facility rate), and another that applies
when the billing practitioner or supplier furnishes and bills for the
entire service (the nonfacility rate). Consistent with the long-
established policy under the PFS to make payment to the billing
practitioner at the facility rate when Medicare makes a corresponding
payment to the facility (under the OPPS, for instance) for the same
service, physicians and nonphysician practitioners furnishing services
in nonexcepted PBDs continue to report their services on a professional
claim form and are paid for their services at the PFS facility rate.
Similarly, there are many (mostly diagnostic) services paid under
the PFS that have two distinct portions of the service: A technical
component (TC) and a professional component (PC). These components can
be furnished independently in time or by different suppliers, or they
may be furnished and billed together as a ``global'' service (82 FR
52981). Payment for these services can also be made under a combination
of payment systems; for example, under the PFS for the professional
component and the OPPS for the facility portion. For instance, for a
diagnostic CT scan, the technical component relates to the portion of
the service during which the image is captured and might be furnished
in an office or HOPD setting, and the professional component relates to
the interpretation and report by a radiologist.
In the CY 2017 interim final rule with comment period, we stated
that we continue to believe that it is operationally infeasible for
nonexcepted off-campus PBDs to bill directly under the PFS for the
subset of PFS services for which there is a separately valued technical
component (81 FR 79721). In addition, we explained that we believe
hospitals that furnish nonexcepted items and services are likely to
furnish a broader range of services than other provider or supplier
types for which there is a separately valued technical component under
the PFS. We stated that we therefore believe it is necessary to
establish a new set of payment rates under the PFS that reflect the
relative resource costs of furnishing the technical component of a
broad range of services to be paid under the PFS that is specific to
one site of service (the off-campus PBD of a hospital) with the
packaging (bundling) rules that are significantly different from
current PFS rules (81 FR 79721).
In continuing to implement the requirements of sections
1833(t)(1)(B) and (t)(21) of the Act, we recognize that
[[Page 59016]]
there is no established mechanism for allowing hospitals to report and
bill under the PFS for the portion of resources incurred in furnishing
the full range of nonexcepted items and services. This is because
hospitals with nonexcepted off-campus PBDs that furnish nonexcepted
items and services generally furnish a broader range of services than
other provider or supplier types for which there is a separately valued
technical component under the PFS. As such, we established a new set of
payment rates under the PFS that reflected the relative resource costs
of furnishing the technical component of a broad range of services to
be paid under the PFS specific to the nonexcepted off-campus PBDs of a
hospital. Specifically, we established a PFS relativity adjuster that
is applied to the OPPS rate for the billed nonexcepted items and
services furnished in a nonexcepted off-campus PBD in order to
calculate payment rates under the PFS. The PFS relativity adjuster
reflects the estimated overall difference between the payment that
would otherwise be made to a hospital under the OPPS for the
nonexcepted items and services furnished in nonexcepted off-campus PBDs
and the resource-based payment under the PFS for the technical aspect
of those services with reference to the difference between the facility
and nonfacility (office) rates and policies under the PFS. The current
PFS relativity adjuster is set at 40 percent of the amount that would
have been paid under the OPPS (82 FR 53028). These PFS rates
incorporate the same packaging rules that are unique to the hospital
outpatient setting under the OPPS, including the packaging of drugs
that are unconditionally packaged under the OPPS. This includes
packaging certain drugs and biologicals that would ordinarily be
separately payable under the PFS when furnished in the physician office
setting.
Nonexcepted off-campus PBDs continue to bill for nonexcepted items
and services on the institutional claim utilizing a new claim line
(modifier ``PN'') to indicate that an item or service is a nonexcepted
item or service. For a detailed discussion of the current PFS
relativity adjuster related to payments under section 603 of Public Law
114-74, we refer readers to the CY 2018 OPPS/ASC final rule with
comment period (82 FR 52356 through 52637), the CY 2018 PFS final rule
with comment period (82 FR 53019 through 53025), and the CY 2019 PFS
proposed rule.
c. Section 340B of the Public Health Service Act
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37144
through 37145), the 340B Program, which was established by section 340B
of the Public Health Service Act by the Veterans Health Care Act of
1992, is administered by the Health Resources and Services
Administration (HRSA) within HHS. The 340B Program allows participating
hospitals and other health care providers to purchase certain ``covered
outpatient drugs'' (as defined under section 1927(k) of the Act and
interpreted by HRSA through various guidance documents) at discounted
prices from drug manufacturers.
In the CY 2018 OPPS/ASC proposed rule (82 FR 33632 through 33635),
we proposed changes to the payment methodology under the OPPS for
separately payable drugs and biologicals acquired under the 340B
Program. We stated that these changes would better, and more
appropriately, reflect the resources and acquisition costs that these
hospitals incur. Such changes would allow Medicare beneficiaries (and
the Medicare program) to pay less when hospitals participating in the
340B Program furnish drugs that are purchased under the 340B Program to
Medicare beneficiaries. Subsequently, in the CY 2018 OPPS/ASC final
rule with comment period, we finalized our proposal that separately
payable, covered outpatient drugs and biologicals (other than drugs on
pass-through payment status and vaccines) acquired under the 340B
Program will be paid ASP minus 22.5 percent, rather than ASP+6 percent,
when billed by a hospital paid under the OPPS that is not excepted from
the payment adjustment. CAHs are not subject to this 340B policy change
because they are paid under section 1834(g) of the Act. Rural sole
community hospitals, children's hospitals, and PPS-exempt cancer
hospitals are excepted from the alternative payment methodology for
340B-acquired drugs and biologicals. In addition, as stated in the CY
2018 OPPS/ASC final rule with comment period, this policy change does
not apply to drugs with pass-through payment status, which are required
to be paid based on the ASP methodology, or to vaccines, which are
excluded from the 340B Program.
2. Proposal and Final Policy To Pay an Adjusted Amount for 340B-
Acquired Drugs and Biologicals Furnished in Nonexcepted Off-Campus PBDs
in CY 2019 and Subsequent Years
As noted in the CY 2017 OPPS/ASC final rule with comment period (81
FR 79716), prior to the implementation of the payment adjustment under
the OPPS for drugs and biologicals acquired under the 340B program,
separately payable drugs and biologicals were paid the same rate at
both excepted and nonexcepted off-campus departments of a hospital. The
policy we finalized in the CY 2018 OPPS/ASC final rule with comment
period, in which we adjusted the payment rate for separately payable
drugs and biologicals (other than drugs on pass-through payment status
and vaccines) acquired under the 340B Program from ASP+6 percent to ASP
minus 22.5 percent, applies to separately payable drugs and biologicals
paid under the OPPS (81 FR 59353 through 59369). Under sections
1833(t)(1)(B)(v) and (t)(21) of the Act, however, in accordance with
our policy in effect as of CY 2018, nonexcepted items and services
furnished by nonexcepted off-campus PBDs are no longer covered
outpatient department services and, therefore, are not payable under
the OPPS. This means that nonexcepted off-campus PBDs are not subject
to the payment changes finalized in the CY 2018 OPPS/ASC final rule
with comment period that apply to hospitals and PBDs paid under the
OPPS. Because the separately payable drugs and biologicals acquired
under the 340B Program and furnished in nonexcepted off-campus PBDs are
no longer covered outpatient department services, as of CY 2018, these
drugs and biologicals are currently paid in the same way Medicare Part
B drugs are paid in the physician office and other nonhospital
settings--typically at ASP+6 percent--regardless of whether they are
acquired under the 340B Program.
The current PFS payment policies for nonexcepted items and services
incorporate a significant number of payment policies and adjustments
made under the OPPS (81 FR 79726; 82 FR 53024 through 53025). In
establishing these policies in prior rulemaking, we pointed out that
the adoption of these policies was necessary in order to maintain the
integrity of the PFS relativity adjuster because it adjusts payment
rates developed under the OPPS (81 FR 79726). For example, it is
necessary to incorporate OPPS packaging rules into the site-specific
PFS rate because the PFS relativity adjuster is applied to OPPS rates
that were developed based on those packaging rules. In addition, many
of the OPPS policies and adjustments are replicated under the
nonexcepted off-campus PBD site-specific PFS rates because they are
specifically applicable to hospitals as a setting of care. For example,
we adopted the geographic adjustments used for hospitals instead of the
adjustments developed for the
[[Page 59017]]
PFS localities, which reflect cost differences calculated for
professionals and suppliers rather than hospitals (81 FR 79726).
We note that, ordinarily, Medicare pays for drugs and biologicals
furnished in the physician's office setting at ASP+6 percent. This is
because section 1842(o)(1)(A) of the Act provides that if a
physician's, supplier's, or any other person's bill or request for
payment for services includes a charge for a drug or biological for
which payment may be made under Medicare Part B and the drug or
biological is not paid on a cost or prospective payment basis as
otherwise provided in this part, the amount for the drug or biological
is equal to the following: The amount provided under section 1847,
section 1847A, section 1847B, or section 1881(b)(13) of the Act, as the
case may be for the drug or biological.
Generally, in the hospital outpatient department setting, low-cost
drugs and biologicals are packaged into the payment for other services
billed under the OPPS. Separately payable drugs (1) have pass-through
payment status, (2) have a per-day cost exceeding a threshold, or (3)
are not policy-packaged or packaged in a C-APC. As described in section
V.A.1. of the CY 2019 OPPS/ASC proposed rule, section 1847A of the Act
establishes the ASP methodology, which is used for payment for drugs
and biologicals described in section 1842(o)(1)(C) of the Act 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, the WAC, and the AWP (82 FR 59337). As noted in section
V.B.2.b. of the CY 2019 OPPS/ASC proposed rule, since CY 2013, our
policy has been to pay for separately payable drugs and biologicals at
ASP plus 6 percent in accordance with section 1833(t)(14)(A)(iii)(II)
of the Act (the statutory default) (82 FR 59350). Consequently, in the
case of services furnished in a hospital outpatient department,
Medicare pays ASP+6 percent for separately payable Part B drugs and
biologicals unless those drugs or biologicals are acquired under the
340B Program, in which case they are paid at ASP minus 22.5 percent.
For a detailed discussion of our current OPPS drug payment policies, we
refer readers to the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59343 through 59371).
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37146),
as a general matter, in the nonexcepted off-campus PBD setting, we pay
hospitals under the PFS for all drugs and biologicals that are packaged
under the OPPS based on a percentage of the OPPS payment rate, which is
determined using the PFS relativity adjuster. Because OPPS packaging
rules apply to the PFS payments to nonexcepted off-campus PBDs, the PFS
payment for some nonexcepted items and services that are packaged
includes payment for some drugs and biologicals that would be
separately payable under the PFS if a similar service had been
furnished in the office-based setting. As we noted in the CY 2017 final
rule with comment period, in analyzing the term ``applicable payment
system,'' we considered whether and how the requirements for payment
could be met under alternative payment systems in order to pay for
nonexcepted items and services, and considered several payment systems
under which payment is made for similar items and services (81 FR
79712). Because the PFS relativity adjuster that is applied to
calculate payment to hospitals for nonexcepted items and services
furnished in nonexcepted off-campus PBDs is based on a percentage (40
percent) of the amount determined under the OPPS for a particular item
or service, and the OPPS is a prospective payment system, we believe
that items and services furnished by nonexcepted off-campus PBDs paid
under the PFS are payable on a prospective payment basis. Therefore, we
believe we have flexibility to pay for separately payable drugs and
biologicals furnished in nonexcepted off-campus PBDs at an amount other
than the amount dictated by sections 1842(o)(1)(C) and 1847A of the
Act.
As we discussed in the CY 2018 OPPS/ASC final rule with comment
period (82 FR 59354), several recent studies and reports on Medicare
Part B payments for 340B-acquired drugs highlight a difference in
Medicare Part B drug spending between 340B hospitals and non-340B
hospitals as well as varying differences in the amount by which the
Part B payment exceeds the drug acquisition cost. When we initially
developed the policy for nonexcepted off-campus PBDs, most separately
payable drugs and biologicals were paid, both in the OPPS and in other
Part B settings, such as physician offices, through similar
methodologies under section 1847A/1842(o) of the Act. For drugs and
biologicals that are packaged in the OPPS, we adopted similar packaging
payment policies for purposes of making the site-specific payment under
the PFS for nonexcepted off-campus PBDs. Because hospitals can, in some
cases, acquire drugs and biologicals under the 340B Program for use in
nonexcepted off-campus PBDs, we believe that not adjusting payment
exclusively for these departments would present a significant
incongruity between the payment amounts for these drugs depending upon
where (for example, excepted PBD or nonexcepted PBD) they are
furnished. This incongruity would distort the relative accuracy of the
resource-based payment amounts under the site-specific PFS rates and
could result in significant perverse incentives for hospitals to
acquire drugs and biologicals under the 340B Program and avoid Medicare
payment adjustments that account for the discount by providing these
drugs to patients predominantly in nonexcepted off-campus PBDs. In
light of the significant drug payment differences between excepted and
nonexcepted off-campus PBDs, in combination with the potential
eligibility for discounts, which result in reduced costs under the 340B
Program for both kinds of departments, our current payment policy could
undermine the validity of the use of the OPPS payment structure in
nonexcepted off-campus PBDs. In order to avoid such perverse incentives
and the potential resulting distortions in drug payment, in the CY 2019
OPPS/ASC proposed rule (83 FR 37146), we proposed, pursuant to our
authority at section 1833(t)(21)(C) of the Act, to identify the PFS as
the ``applicable payment system'' for 340B-acquired drugs and
biologicals and, accordingly, to pay under the PFS instead of under
section 1847A/1842(o) of the Act an amount equal to ASP minus 22.5
percent for drugs and biologicals acquired under the 340B Program that
are furnished by nonexcepted off-campus PBDs. We stated in the proposed
rule that we believe this proposed change in policy would eliminate the
significant incongruity between the payment amounts for these drugs,
depending upon whether they are furnished by excepted off-campus PBDs
or nonexcepted off-campus PBDs, which we believe is an unnecessary
difference in payment where the 340B Program does not differentiate
between PBDs paid under the OPPS and PBDs paid under the PFS using the
PFS relativity adjuster.
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59367
through 59368), we discussed public comments that we received that
noted that the alternative payment methodology for 340B-acquired drugs
and biologicals did not apply to nonexcepted off-campus PBDs of a
hospital and could result in behavioral
[[Page 59018]]
changes that may undermine CMS' policy goals of reducing beneficiary
cost-sharing liability and undercut the goals of section 603 of Public
Law 114-74. Commenters recommended that, if CMS adopted a final policy
to establish an alternative payment methodology for 340B drugs in CY
2018, CMS also apply the same adjustment to payment rates for drugs
furnished in nonexcepted off-campus PBDs of a hospital if such drugs
were acquired under the 340B Program (82 FR 59367). While we did not
propose to adjust payment for 340B-acquired drugs in nonexcepted off-
campus PBDs in CY 2018, we indicated that we would consider adopting
such a policy in future rulemaking.
We agree with commenters that the difference in the payment amounts
for 340B-acquired drugs furnished by hospital outpatient departments,
excepted off-campus PBDs versus nonexcepted off-campus PBDs, creates an
incentive for hospitals to move drug administration services for 340B-
acquired drugs to nonexcepted off-campus PBDs to receive a higher
payment amount for these drugs, thereby undermining our goals of
reducing beneficiary cost-sharing for these drugs and biologicals and
moving towards site neutrality through the section 603 amendments to
section 1833(t) of the Act. Therefore, in the CY 2019 OPPS/ASC proposed
rule (83 FR 37145), we proposed changes to the Medicare Part B drug
payment methodology for drugs and biologicals furnished and billed by
nonexcepted off-campus departments of a hospital that were acquired
under the 340B Program. Specifically, for CY 2019 and subsequent years,
we proposed to pay under the PFS the adjusted payment amount of ASP
minus 22.5 percent for separately payable drugs and biologicals (other
than drugs on pass-through payment status and vaccines) acquired under
the 340B Program when they are furnished by nonexcepted off-campus PBDs
of a hospital. Furthermore, we proposed to except rural sole community
hospitals, children's hospitals, and PPS-exempt cancer hospitals from
this payment adjustment (83 FR 37145). We stated that we believe that
our proposed payment policy would better reflect the resources and
acquisition costs that nonexcepted off-campus PBDs incur for these
drugs and biologicals.
Comment: Some commenters, including organizations representing
physician oncology practices, orthopaedic surgeons, pharmaceutical
research and manufacturing companies, a large network of community-
based oncology practices, physician organizations, and health insurers,
supported the proposal. Some of these commenters commended CMS for its
proposal, which they believed would help address the growth of the 340B
Program, stem physician practice consolidation with hospitals, preserve
patient access to community-based care, and address the significant
incongruity between the payment amounts for 340B-acquired drugs,
depending upon the setting in which they are furnished. One of these
commenters, a pharmaceutical company, stated that the 340B Program has
grown beyond its original intent and needs to be refocused to better
meet the needs of vulnerable patients. The commenter noted that there
is an incentive to inappropriately shift administration of drugs from
excepted to nonexcepted off-campus PBDs for the purpose of securing
higher payment. In addition, the commenter urged HHS to adopt policies
``that prevent the unjustified expansion of the 340B program to
unintended populations through contract pharmacies, child sites, and
individuals who Congress did not intend to be considered 340B
patients.''
A few commenters, including organizations representing community
oncology practices, stated that the opportunity for 340B-participating
hospitals to get substantial revenue from cancer drugs has created
financial incentives for hospitals to expand oncology services, notably
through the acquisition of independent community oncology practices.
Furthermore, one of these commenters asserted that, when these
facilities purchased by 340B-participating entities become off-campus
PBDs, they also become eligible for 340B Program discounts, thus
``further fueling the program's staggering growth.'' These commenters
cited a report that states that, over the last decade, 658 community
oncology practices have been acquired by hospitals, and 3 out of 4 of
these acquisitions were by hospitals already eligible for the 340B
Program. Accordingly, these commenters believe that the growth of Part
B drug spending in recent years has been disproportionately driven by
higher payments in the hospital outpatient setting. Another commenter
asserted that the current situation creates two undesirable incentives.
First, it creates an incentive for physicians to join a hospital to
furnish the same types of services that could have been furnished in
the physician office setting, thereby increasing costs to the Medicare
program, Medicare beneficiaries, and taxpayers without any associated
increase in access to care for Medicare beneficiaries, particularly
low-income beneficiaries. Second, it encourages hospitals to move
services off the hospital campus for financial incentives.
Some commenters urged CMS and HRSA to work with Congress to reform
the 340B Program. One commenter recommended that CMS gather additional
data to better understand 340B Program acquisition costs and the impact
of payment reductions on 340B Program providers. In addition, a few
commenters recommended that CMS revise the definition of ``patient'' to
reflect the program's original intent.
Response: We thank commenters for their support and
recommendations. We agree with the commenters that the difference in
the payment amounts for 340B-acquired drugs furnished by different
types of hospital outpatient departments, excepted off-campus PBDs
versus nonexcepted off-campus PBDs, creates an incentive for hospitals
to move drug administration services for 340B-acquired drugs to
nonexcepted off-campus PBDs to receive a higher payment amount for
these drugs, thereby undermining our goals of reducing beneficiary
cost-sharing for these drugs and biologicals and moving towards site
neutrality through the section 603 amendments to section 1833(t) of the
Act. Therefore, we continue to believe that our proposed policy will
better align Medicare payment for separately payable drugs acquired
under the 340B Program with the actual resources expended to acquire
such drugs in nonexcepted off-campus PBDs of a hospital.
As we previously stated, CMS does not administer the 340B Program.
Accordingly, comments related to eligibility for the 340B Program as
well as 340B Program policies are outside the scope of the proposed
rule and are not addressed in this final rule with comment period.
Comment: One commenter, who cited studies conducted by the GAO,
OIG, and MedPAC, suggested that CMS make additional downward
adjustments to drug payments under the 340B Program in future years
because the 22.5 percent payment reduction ``was conservative'' and the
actual average discount experienced by 340B hospitals is likely much
higher than 22.5 percent. The commenter asserted that 22.5 percent
reflects the average minimum discount that 340B hospitals receive for
drugs acquired under the program, and that discounts across all 340B
providers average 33.6 percent of ASP.
Response: We thank the commenter for this feedback. We will
continue to
[[Page 59019]]
analyze the data on these drugs for future rulemaking. As we mentioned
in the CY 2019 OPPS/ASC proposed rule, we share the commenter's concern
that current Medicare payments for drugs acquired by nonexcepted off-
campus PBDs are well in excess of the overhead and acquisition costs
for drugs purchased under the 340B Program. We also continue to believe
that Medicare beneficiaries should be able to benefit from the
significant discounts hospitals receive on 340B-acquired drugs through
reduced copayments.
Comment: One commenter, an organization representing children's
hospitals, supported the proposal to except children's hospitals from
the proposed payment policy for drugs purchased under the 340B Program.
However, the commenter asserted that children's hospitals are
undercompensated by government programs, and that a recent report found
that the overall Medicare margin for all hospitals is negative.
Furthermore, the commenter stated that, while self-governing children's
hospitals are excepted from the payment policy, children's hospitals
within academic medical centers or health care systems remain subject
to this policy, which will curtail the ability of such children's
hospitals to care for needy children. The commenter urged CMS not to
apply this policy to children's hospitals within academic medical
centers or health care systems.
Response: We thank the commenter for its support and feedback. As
we stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR
59366), because of how children's hospitals are paid under the OPPS, we
acknowledged that the 340B drug payment policy may not result in
reduced payments for these hospitals in the aggregate. While the
payment policy we are establishing in this final rule with comment
period applies to nonexcepted departments of a hospital that are paid
under the PFS rather than the OPPS, we believe that adopting an
analogous policy, regardless of status, is prudent so that a generally
excepted hospital receives payment for drugs in the same manner,
regardless of the status (excepted or nonexcepted) of each PBD of the
hospital.
In addition, it is unclear from the comment whether the referenced
children's hospitals ``within academic medical centers or health care
systems'' are enrolled in the Medicare program as children's hospitals
or whether they are simply a department of an enrolled hospital
provider. However, any separately enrolled children's hospital that is
paid as such is exempt from the 340B-acquired drug payment reduction,
while children's units that are not separately enrolled would not be
exempt from the 340-acquired drug payment policy.
Comment: A few commenters, including organizations representing
sole community hospitals, supported the proposal to extend the
exception for rural sole community hospitals from the proposed 340B
Program payment adjustment. However, these commenters remained
concerned that other vulnerable hospitals continue to be subject to the
340B Program payment reduction. Accordingly, these commenters
recommended that CMS exempt urban sole community hospitals, Medicare-
dependent hospitals, and hospitals with rural referral center status
from the payment adjustment. In addition, rural hospitals recommended
that rural providers be permanently excepted from this policy.
Response: We share commenters' concerns about access to care,
especially in rural areas where access issues may be more pronounced
than in other areas of the country. Medicare has long recognized the
unique needs of rural communities and the financial challenges rural
hospital providers face. Across the various Medicare payment systems,
CMS has established a number of special payment provisions for rural
providers to maintain access to care and to deliver high quality care
to beneficiaries in rural areas. Consequently, for CY 2019, we are
excluding rural sole community hospitals (as described under the
regulations at 42 CFR 412.92 and designated as rural for Medicare
purposes) from this policy. However, we do not believe that a payment
exemption for nonexcepted off-campus departments of urban SCHs is
necessary because these hospitals are not exempted from the 340B
payment policy for hospital departments paid under the OPPS.
Nonetheless, we will continue to analyze the data for these hospitals
to determine whether urban SCHs should be exempt from this payment
policy, as well as whether permanent exemption for rural SCHs is
warranted in future rulemaking.
With respect to rural referral centers, in the CY 2018 OPPS/ASC
final rule with comment period, we noted that there is no special
payment designation for rural referral centers under the OPPS. By
definition, rural referral centers must have at least 275 beds and
therefore are larger relative to rural sole community hospitals. In
addition, rural referral centers are not subject to a distance
requirement from other hospitals. Accordingly, rural referral centers
are neither as small (in terms of bed size) or as isolated (in terms of
proximity to other hospitals) as rural SCHs, nor are they generally
eligible for special payment status under the OPPS, and we do not
believe that a payment exemption from this policy for these centers is
warranted.
Furthermore, as stated earlier in this section, we believe that we
should adopt an analogous payment policy across hospital settings,
regardless of the status of each PBD. Because we did not exempt
grandfathered off-campus PBDs with MDH classification from the 340B
payment adjustment in CY 2018, we do not believe that nonexcepted off-
campus PBDs with Medicare-dependent hospital status should be exempted
at this time. Therefore, for CY 2019, Medicare-dependent hospitals will
not be exempt from this payment policy.
For CY 2019, rural sole community hospitals, children's hospitals,
and PPS-exempt cancer hospitals will be excepted from the alternative
payment methodology for 340B-acquired drugs and biologicals furnished
in nonexcepted off-campus PBDs, and therefore will be required to bill
under the PFS using the institutional claim form and report the
informational modifier ``TB'' for 340B-acquired drugs and biologicals.
These providers will continue to be paid ASP+6 percent for 340B-
acquired drugs and biologicals under the PFS. In addition, as we stated
in the CY 2018 OPPS/ASC final rule with comment period, this policy
change does not apply to drugs with pass-through payment status, which
are required to be paid based on the ASP methodology, or to vaccines,
which are excluded from the 340B Program.
We note that this policy does not alter covered entities' access to
the 340B Program. The expansion of the alternative 340B drug payment
methodology solely changes Medicare payment for drugs furnished in
nonexcepted off-campus PBDs of a hospital if such drugs were acquired
under the 340B Program. We may revisit our policy regarding exceptions
to the 340B drug payment reduction in the CY 2020 OPPS/ASC rulemaking.
Comment: In its comment, MedPAC reiterated recommendations included
in its March 2016 Report to Congress. In this report, MedPAC
recommended that payment rates for all separately payable drugs
provided in a 340B hospital be reduced by 10 percent of the current
payment rate of ASP+6 percent (resulting in ASP minus 5.3 percent after
taking application of the sequester into account). MedPAC noted that
its March 2016 report also included a recommendation to Congress that
[[Page 59020]]
savings from the reduced payment rates be directed to the Medicare-
funded uncompensated care pool, which would target hospitals providing
the most care to the uninsured and in that way benefit indigent
patients, and that payments be distributed in proportion to the amount
of uncompensated care that hospitals provide. MedPAC believed that
legislation would be needed to direct drug payment savings to the
uncompensated care pool and noted that current law requires the savings
to be retained with the OPPS to make the payment system budget neutral.
MedPAC encouraged the Secretary to work with Congress to enact
legislation necessary to allow MedPAC's recommendation to be
implemented, if such a recommendation could not be implemented
administratively. MedPAC further noted that legislation would also
allow Medicare to apply the policy to all OPPS separately payable
drugs, including those on pass-through payment status. Accordingly,
MedPAC recognized that CMS does not have the legal authority to
implement its March 2016 recommendation and shares CMS' concern that
the lack of site-neutral payments may cause a shift in administration
of nonpass-through separately payable drugs to nonexcepted off-campus
PBDs. Additionally, MedPAC stated that CMS should ensure that payment
for 340B-acquired drugs is equal across settings.
Response: We thank MedPAC for its support and feedback. As we
stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR
59364 through 59365), we do not believe that reducing the Medicare
payment rate by only 10 percentage points below the current payment
rate of ASP+6 percent (that is, ASP minus 4 percent) would better
reflect the acquisition costs incurred by 340B-participating hospitals.
We note that we responded to a similar public comment in the CY
2018 OPPS/ASC final rule with comment period (82 FR 59364 through
59365) and refer readers to a summary of that comment and our response.
Comment: Many commenters stated that the Secretary lacks statutory
authority to impose such a large reduction in the payment rate for 340B
drugs acquired in off-campus PBDs, and contended that the expansion of
the 340B payment policy at nonexcepted off-campus PBDs would
``effectively eviscerate'' the 340B Program. These commenters further
noted that extending the Medicare payment cuts to nonexcepted off-
campus PBDs would greatly undermine 340B hospitals' ability to continue
programs designed to improve access to services.
One commenter, an organization representing over 1,300 public and
nonprofit providers enrolled in the 340B Program, argued that since the
340B payment policy took effect in January 2018, many hospitals have
experienced financial and operational challenges, including staff
reductions, fewer free or discounted drugs for patients, clinic and
pharmacy closures, and reductions in services provided. The commenter
opposed the 340B payment proposal for a number of reasons, primarily
because the commenter believed that the current OPPS 340B payment rate
harms hospitals' ability to treat low-income patients and the proposals
to continue and expand the cuts would worsen the impact. Furthermore,
the commenter argued that CMS' proposed payment reduction does not
reduce patient costs or Medicare spending or address ``skyrocketing
drug prices''; CMS' payment reduction violates the 340B statute; CMS'
payment reduction violates the Medicare statute; and CMS' payment
reduction relies on a ``faulty premise that fails to recognize that
340B hospitals serve patients with more expensive medical needs.'' The
commenter further asserted that Congress, as well as ``one-hundred
percent of hospitals,'' have expressed concern about the payment
reduction's impact on 340B providers' ability to serve their patients.
Many additional commenters, including some hospital associations,
contended that CMS does not have the legal authority to apply the OPPS
Medicare payment rate to nonexcepted off-campus PBDs in 340B-
participating hospitals because section 1833(t)(21)(C) of the Act does
not authorize CMS to pay at a rate that is less than the rate paid
under the selected ``applicable payment system.'' Specifically, a few
commenters asserted that payment for these drugs and biologicals is
determined pursuant to the rules of section 1842(o)(1)(C) of the Act,
which mandates that payment is to be made for these drugs and
biologicals when furnished by nonexcepted off-campus PBDs pursuant to
the rules of section 1847A of the Act.
Response: We do not believe that the proposed payment policy
violates section 340B of the Public Health Service Act or the Social
Security Act. There is no requirement in the Public Health Service Act
that drugs or biologicals acquired under the 340B Program generate a
profit margin for hospitals through Medicare payments, and there is no
requirement in any part of section 1833(t) of the Social Security Act
to pay a particular minimum rate for a hospital enrolled in the 340B
Program. Further, we disagree with the commenter's assertion that CMS'
payment reduction does not reduce patient costs or Medicare spending.
Based on our proposed adjustment for CY 2019, we estimated that the
Medicare Program and beneficiaries would save approximately $49 million
under the PFS.
We also disagree with commenters who believe that the OPPS payment
rate for 340B-acquired drugs will ``effectively eviscerate'' the 340B
Program as well as the implication that extending the same rate that
applies to 340B-acquired drugs and biologicals furnished by hospital
departments under the OPPS to nonexcepted off-campus PBDs will
perpetuate that concern. The findings from several 340B studies
conducted by the GAO, OIG, and MedPAC show a wide range of discounts
that are afforded to 340B hospitals, with some reports finding
discounts of up to 50 percent. Indeed, in some cases, beneficiary
coinsurance alone exceeds the amount the hospital paid to acquire the
drug under the 340B Program (OIG November 2015, Report OEI-12-14-00030,
page 9). As stated in the CY 2018 final rule with comment period, we
believe that ASP minus 22.5 percent is a conservative estimate of the
discount for 340B-acquired drugs, and that even with the reduced
payments, hospitals will continue to receive savings that can be
directed at programs and services to carry out the intent of the 340B
Program. We also have noted that 340B Program participation does not
appear to be well aligned with the provision of uncompensated care, as
some commenters suggested (82 FR 59359).
Payment under the ``applicable payment system'' pursuant to section
1833(t)(21)(C) of the Act is made under the PFS for most services,
including for the many drugs that are packaged under the OPPS, using a
PFS relativity adjuster that is applied to the OPPS payment rate. As
such, the PFS payment for nonexcepted items and services in nonexcepted
off-campus PBDs is made on a prospective payment basis, and we are
therefore not required to make payment under section 1847A/1842(o) of
the Act for those packaged drugs, many of which would be separately
payable under the PFS. Further, as we stated in the CY 2019 OPPS/ASC
proposed rule (83 FR 37145), the current PFS payment policies for
nonexcepted items and services incorporate a significant number of
payment policies and adjustments made under the OPPS (81 FR 79726; 82
FR 53024 through 53025). In establishing these policies in prior
rulemaking, we pointed out that
[[Page 59021]]
the adoption of these policies was necessary in order to maintain the
integrity of the PFS relativity adjuster because it adjusts payment
rates developed under the OPPS (81 FR 79726). For example, it is
necessary to incorporate OPPS packaging rules into the site-specific
PFS rate because the PFS relativity adjuster is applied to OPPS rates
that were developed based on those packaging rules. In addition, many
of the OPPS policies and adjustments are replicated under the
nonexcepted off-campus PBD site-specific PFS rates because they are
specifically applicable to hospitals as a setting of care. For example,
we adopted the geographic adjustments used for hospitals instead of the
adjustments developed for the PFS localities, which reflect cost
differences calculated for professionals and suppliers rather than
hospitals (81 FR 79726).
Since we have adopted the payment adjustment under the OPPS for
340B-acquired separately payable drugs, we have become concerned that
there would be a perverse incentive for hospitals to circumvent the
OPPS payment adjustment by furnishing 340B-acquired drugs in
nonexcepted off-campus PBDs where Medicare currently makes payment for
those drugs at ASP+6 percent. To avoid this payment incongruity and
perverse incentive, we proposed to designate the PFS as the
``applicable payment system'' for 340B-acquired separately payable
drugs furnished in nonexcepted off-campus PBDs, and to make payment at
the OPPS-comparable rate.
Comment: A few commenters asserted that, while CMS estimated that
the payment change would result in a payment cut of $48.5 million in CY
2019, CMS provided no data to support this estimate and failed to
provide sufficient access to data, its methodology, or its analysis to
allow the public to assess and replicate the proposed CY 2019 340B
payment policy. One commenter recommended that CMS delay extension of
the 340B payment policy until more information is available related to
the impact on Medicare beneficiaries.
Many commenters opposed reducing payments to hospitals for 340B
drugs in a nonbudget-neutral manner and instead suggested that such
policy be implemented in a budget neutral manner as was implemented in
the CY 2018 OPPS/ASC final rule with comment period. In addition, some
commenters recommended that CMS annually calculate a budget neutral
adjustment for the 340B policy, as the approach is consistent with
other budget neutral policies included in the OPPS.
Response: We thank the commenters for their input. We disagree that
this policy should be implemented in a budget neutral manner because
the payments made to nonexcepted off-campus departments of a hospital
are not paid under the OPPS. As we stated in the CY 2019 OPPS/ASC
proposed rule, to develop an estimated impact of this proposal, we
analyzed the CY 2017 outpatient claims data used in ratesetting for the
CY 2019 proposed rule. Based on the most recent claims data from CY
2017 reporting, we found 117 unique nonexcepted off-campus PBDs
associated with 340B hospitals that billed for status indicator ``K''
drugs. Their ``K'' billing represents approximately $182.5 million in
Medicare payments based on a payment rate of ASP+6 percent. Based on
our proposed adjustment, for CY 2019, we estimated that the Medicare
Program and beneficiaries would save approximately $49 million under
the PFS. Regarding budget neutrality requirements, we note that when we
initially developed the payment policy for nonexcepted items and
services furnished by nonexcepted off-campus PBDs, most separately
payable drugs and biologicals were paid at the same rates specified
under section 1847A/1842(o) of the Act (generally, ASP+6) when
furnished in the HOPD and in other outpatient settings, such as
physician offices. When we initially established the ASP methodology
under section 1847A/1842(o) of the Act as the ``applicable payment
system'' for separately payable drugs under section 1833(t)(21)(C) of
the Act, there was no applicable budget neutrality requirement. For the
proposed change in CY 2019 to establish the PFS as the applicable
payment system for separately payable 340-B-acquired drugs furnished by
nonexcepted off-campus PBDs, we believe the site-specific PFS payment
for these drugs and biologicals represents new utilization under the
PFS and would, consequently, not be subject to the PFS budget
neutrality requirements under 1848(c) of the Act for CY 2019. We will
consider any applicable budget neutrality requirements regarding the
site-specific payment under the PFS for future rulemaking.
Comment: Numerous commenters argued that reducing payments for
340B-acquired drugs could encourage hospitals to selectively purchase
certain drugs at higher prices outside of the 340B Program to maximize
revenue. One of these commenters recommended the implementation of
alternate reimbursement methodologies for 340B-purchased drugs, such as
a 6 percent add-on payment to the product-specific estimated 340B cost,
in order to discourage hospitals from selectively purchasing some drugs
outside of the 340B Program (resulting in ASP minus 16.5 percent after
taking application of the add-on payment into account).
Response: While participation in the 340B Program has always been
voluntary and hospitals have always had the ability to choose to
purchase drugs outside the 340B Program, we do not see the relevance of
these points to our proposed policy. That is, the policy we proposed
with respect to payment for 340B-acquired drugs in nonexcepted
departments for CY 2019 simply aligns with the policy already
established for 340B-acquired drugs under the OPPS for CY 2018. In
addition, as we explained in CY 2018 OPPS rulemaking, the payment rate
of ASP minus 22.5 percent is better aligned with the average resources
to acquire a 340B drug, and therefore, we do not believe that a higher
payment rate for 340B-acquired drugs in nonexcepted departments is
warranted.
We thank the commenters for their feedback. After consideration of
the public comments we received, we are finalizing our proposal,
without modification, to make payment for separately payable 340B-
acquired drugs furnished by nonexcepted off-campus departments of a
hospital under the PFS, and to establish the payment rate for those
drugs at ASP minus 22.5 percent. This policy is expected to lower the
cost of drugs and biologicals for Medicare beneficiaries and ensure
that they benefit from the discounts provided through the program, and
to do so more equitably across HOPD settings.
In summary, for CY 2019, in accordance with section 1833(t)(21)(C)
of the Act and our established 340B payment methodology as described in
the CY 2018 OPPS/ASC final rule with comment period, separately payable
Part B drugs and biologicals (assigned status indicator ``K''), other
than vaccines and drugs with pass-through payment status, that are
acquired through the 340B Program or through the 340B PVP at or below
the 340B ceiling price will be paid at a rate of ASP minus 22.5 percent
when billed by a hospital that is not excepted from the payment
adjustment. Part B drugs or biologicals excluded from the 340B payment
adjustment include vaccines (assigned status indicator ``L'' or ``M'')
and drugs and biologicals with transitional pass-through payment status
(assigned status indicator ``G'').
[[Page 59022]]
Medicare will continue to pay for drugs and biologicals that are not
purchased with a 340B Program discount at ASP+6 percent.
To effectuate the payment adjustment for 340B-acquired drugs and
biologicals, CMS implemented modifier ``JG'', effective January 1,
2018. Hospitals paid under the OPPS (other than a type of hospital
excluded from the OPPS or excepted from the 340B drug payment policy
for CY 2019) and, beginning January 1, 2019, nonexcepted off-campus
PBDs of a hospital paid under the PFS, are required to report modifier
``JG'' on the same claim line as the drug or biological HCPCS code to
identify a 340B-acquired drug or biological. For CY 2019, rural sole
community hospitals, children's hospitals, and PPS-exempt cancer
hospitals are excepted from the 340B payment adjustment. These
hospitals will be required to report informational modifier ``TB'' for
340B-acquired drugs and biologicals, and will continue to be paid ASP+6
percent.
D. Expansion of Clinical Families of Services at Excepted Off-Campus
Departments of a Provider
1. Background
a. Section 603 of the Bipartisan Budget Act of 2015
We refer readers to section X.C.1.a. of the CY 2019 OPPS/ASC
proposed rule (83 FR 37143) for a discussion of the provisions of
section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74), as
implemented in the CY 2017 OPPS/ASC final rule with comment period (81
FR 79699 through 79719). As discussed in the CY 2017 OPPS/ASC final
rule with comment period, we adopted the PFS as the applicable payment
system for nonexcepted items and services furnished and billed by
nonexcepted off-campus PBDs. In addition, we indicated that, in order
to be considered part of a hospital, an off-campus department of a
hospital must meet the provider-based criteria established under 42 CFR
413.65. For a detailed discussion of the history and statutory
authority related to payments under section 603 of Public Law 114-74,
we refer readers to the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79699 through 79719) and the interim final rule with comment
period (81 FR 79720 through 79729).
b. Expansion of Services at an Off-Campus PBD Excepted Under Section
1833(t)(21)(B)(ii) of the Act
In the CY 2017 OPPS/ASC proposed rule (81 FR 45685), we noted that
we had received questions from some hospitals regarding whether an
excepted off-campus PBD could expand the number or type of services the
department furnishes and maintain excepted status for purposes of
paragraphs (1)(B)(v) and (21) of section 1833(t) of the Act. We
indicated that we were concerned that if excepted off-campus PBDs could
expand the types of services provided at the excepted off-campus PBDs
and also be paid OPPS rates for these new types of services, hospitals
may be able to purchase additional physician practices and expand
services furnished by existing excepted off-campus PBDs as a result (81
FR 45685). This could result in newly purchased physician practices
furnishing services that are paid at OPPS rates, which we believed
these amendments to section 1833(t) of the Act were intended to address
(81 FR 45685). We believed section 1833(t)(21)(B)(ii) of the Act
excepted off-campus PBDs and the items and services that are furnished
by such excepted off-campus PBDs for purposes of paragraphs (1)(B)(v)
and (21) of section 1833(t) of the Act as they were being furnished on
the date of enactment of section 603 of the Bipartisan Budget Act of
2015, as guided by our regulatory definition at Sec. 413.65(a)(2) of a
department of a provider (81 FR 45685). Thus, in the CY 2017 OPPS/ASC
proposed rule, we proposed that if an excepted off-campus PBD furnished
items and services from a clinical family of services (clinical
families of services were identified in Table 21 of the CY 2017
proposed rule (81 FR 45685 through 45686) that it did not furnish prior
to November 2, 2015, and thus did not also bill for, services from
these new expanded clinical families of services would not be covered
OPD services, and instead would be subject to paragraphs (1)(B)(v) and
(21) of section 1833(t) of the Act, as described in section X.A.1.c. of
the CY 2017 proposed rule. In addition, in that rule, we proposed not
to limit the volume of excepted items and services within a clinical
family of services that an excepted off-campus PBD could furnish (81 FR
45685).
The majority of commenters, including several hospital
associations, regional health systems, and medical equipment
manufacturers opposed the proposal primarily because they believed: (1)
CMS exceeded its statutory authority, as the statutory language
included in section 603 does not address changes in service mix by
excepted off-campus PBDs; (2) CMS' proposal did not account for
evolving technologies and would hinder beneficiary access to those
innovative technologies; (3) the term ``clinical families of service''
appeared to be a new term created by CMS for the purpose of
implementing section 603 and it would be difficult for CMS and
hospitals to manage changes in the composition of APCs and HCPCS code
changes contained in those APCs; and (4) the proposal created
significant operational challenges and administrative burden for both
CMS and hospitals because commenters believed it was unnecessarily
complex (81 FR 79706 through 79707).
In addition, MedPAC explained in its comment letter that the
proposal was unnecessarily complex and instead suggested that CMS adopt
a different approach by determining how much the Medicare program had
paid an excepted off-campus PBD for services billed under the OPPS
during a 12-month baseline period that preceded November 2, 2015 and to
cap the OPPS payment made to the off-campus PBD at the amount paid
during the baseline period.\81\ Some commenters, including physician
group stakeholders, supported CMS' intent to monitor service line
expansion and changes in billing patterns by excepted off-campus PBDs.
These commenters urged CMS to work to operationalize a method that
would preclude an excepted off-campus PBD from expanding the excepted
services for which it is paid under the OPPS into wholly new clinical
areas, as they believed an excepted, off-campus PBD should only be able
to bill under the OPPS for those items and services for which it
submitted claims prior to November 2, 2015 (82 FR 33647).
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\81\ Available at: http://medpac.gov/docs/default-source/comment-letters/08172016_opps_asc_comment_2017_medpac_sec.pdf?sfvrsn=0.
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In response to public comments, we did not finalize our proposal to
limit the expansion of excepted services at excepted off-campus PBDs.
However, we stated our intent to monitor this issue and expressed
interest in additional feedback to help us consider whether excepted
off-campus PBDs that expand the types of services offered after
November 2, 2015 should be paid for furnishing those items and services
under the applicable payment system (that is, the PFS) instead of the
OPPS. Specifically, we requested comments on how either a limitation on
volume or a limitation on lines of service would work in practice (81
FR 79707).
In addition, in the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79707), we sought public comments on how either a limitation on
volume of services, or a limitation on lines of
[[Page 59023]]
service, as we laid out in the CY 2017 OPPS/ASC proposed rule, could be
implemented. Specifically, we stated that we were interested in what
data were available or could be collected that would have allowed us to
implement a limitation on the expansion of excepted services.
We provided a summary of and responses to comments received in
response to the CY 2017 OPPS/ASC final rule with comment period in the
CY 2018 OPPS/ASC proposed rule. As stated in that rule, several of the
public comments received in response to the comment solicitation
included in the CY 2017 OPPS/ASC final rule with comment period were
repeated from the same stakeholders in response to the CY 2017 OPPS/ASC
proposed rule. These commenters again expressed concern regarding CMS'
authority to address changes in service-mix; that a limitation on
service expansion or volume would stifle innovative care delivery and
use of new technologies; and that limiting service line expansion using
clinical families of service was not workable. Because these commenters
did not provide new information, we referred readers to the CY 2017
OPPS/ASC final rule with comment period for our responses to comments
on statutory authority and concerns about hindering access to
innovative technologies (81 FR 79707 and 82 FR 59388). A summary of and
our responses to the other comments received in response to the comment
solicitation included in the CY 2017 OPPS/ASC final rule with comment
period were included in the CY 2018 OPPS/ASC proposed rule (82 FR 33645
through 33648).
In the CY 2018 OPPS/ASC proposed rule, we did not propose any
policies related to clinical service line expansion or volume increases
at excepted off-campus PBDs. However, we stated that we would continue
to monitor claims data for changes in billing patterns and utilization,
and we again invited public comments on the issue of service line
expansion. In response to the CY 2018 comment solicitation, MedPAC
largely reiterated the comments it submitted in response to the CY 2017
OPPS/ASC rulemaking and acknowledged the challenges of implementing its
recommended approach as such approach would necessitate CMS requiring
hospitals to report the amount of OPPS payments received by each
excepted off-campus PBD during the baseline period (such as November
2014 through November 2015) because CMS was not collecting data on
payments made to each individual PBD during that period. In its
comments, MedPAC recommended that, to help ensure the accuracy of these
data, CMS could selectively audit hospitals.\82\ Another commenter
expressed support for CMS' efforts to continue to implement and expand
site-neutral payment policies for services where payment differentials
are not warranted, such as between HOPDs and ASCs or physician offices.
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\82\ Available at: http://medpac.gov/docs/default-source/comment-letters/09082017_opps_asc_2018_medpac_comment_sec.pdf?sfvrsn=0.
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2. CY 2019 Proposal and Final Policy
As we previously expressed in CYs 2017 and 2018 OPPS/ASC
rulemaking, we continue to be concerned that if excepted off-campus
PBDs may furnish new types of services that were not provided at the
excepted off-campus PBDs prior to the date of enactment of the
Bipartisan Budget Act of 2015 and can be paid OPPS rates for these new
types of services, hospitals may be able to purchase additional
physician practices and add those physicians to existing excepted off-
campus PBDs. This could result in newly purchased physician practices
furnishing services that are paid at OPPS rates, which we believe the
section 603 amendments to section 1833(t) of the Act are intended to
prevent. Of note, these statutory amendments ``came after years of
nonpartisan economists, health policy experts, and providers expressing
concern over the Medicare program's [OPPS] paying more for the same
services provided at HOPDs than in other settings--such as an
ambulatory surgery center, physician office, or community outpatient
facility.'' \83\ Experts raised concerns that this payment inequity
drove the acquisition of ``standalone or independent practices and
facilities by hospitals, resulted in higher costs for the Medicare
system and taxpayers, and also resulted in beneficiaries needlessly
facing higher cost-sharing in some settings than in others.'' \84\ In
addition, some experts argued that, ``to the extent this payment
differential accelerated consolidation of providers, this would result
in reduced competition among both hospitals and nonaffiliated
outpatient service providers. This, in turn, could reduce large
hospital systems' incentives to reduce costs, increase efficiency, or
focus on patient outcomes.'' \85\
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\83\ Available at: https://archives-energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/114/Letters/20160205SiteNeutralLetter%5b1%5d.pdf.
\84\ Ibid.
\85\ Ibid.
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The Government Accountability Office (GAO) stated in its December
2015 Report to the Congress that ``from 2007 through 2013, the number
of vertically consolidated physicians nearly doubled, with faster
growth in more recent years.'' GAO concluded that, ``regardless of what
has driven hospitals and physicians to vertically consolidate, paying
substantially more for the same service when performed in an HOPD
rather than a physician office provides an incentive to shift services
that were once performed in physician offices to HOPDs after
consolidations have occurred.'' \86\
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\86\ GA0-16-189, ``Increasing Hospital-Physician Consolidation
Highlights Need for Payment Reform.'' Available at: https://www.gao.gov/assets/680/674347.pdf.
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While there is no Congressional Record available for section 603 of
the Bipartisan Budget Act of 2015, we do not believe that Congress
intended to allow for new service lines to be paid OPPS rates because
providing for such payment would allow for excepted off-campus PBDs to
be paid higher rates for types of services they were not furnishing
prior to the date of enactment of the Bipartisan Budget Act of 2015 and
that would be paid at lower rates if performed in a nonexcepted off-
campus PBD. Similarly, we are concerned that a potential shift of
services from nonexcepted off-campus PBDs to excepted off-campus PBDs
may be occurring, given the higher payment rate in this setting. We
believe that the growth of service lines in currently excepted off-
campus PBDs may be an unintended consequence of our current policy,
which allows continued full OPPS payment for any services furnished by
excepted off-campus PBDs, including services in new service lines.
In prior rulemaking, and as discussed in section X.A. of the CY
2019 OPPS/ASC proposed rule, we noted our concerns and discussed our
efforts to begin collecting data and monitoring billing patterns for
off-campus PBDs. Specifically, as described in the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66910 through 66914), we created
HCPCS modifier ``PO'' (Services, procedures, and/or surgeries furnished
at off-campus provider-based outpatient departments) for hospital
claims to be reported with every code for outpatient hospital items and
services furnished in an off-campus PBD of a hospital. Reporting of
this new modifier was voluntary for CY 2015, with reporting required
beginning on January 1, 2016. In addition, we established modifier
``PN'' (Nonexcepted service provided at an off-campus, outpatient,
provider-based department of a hospital) to identify and pay
nonexcepted items and services billed on an institutional claim.
[[Page 59024]]
Effective January 1, 2017, nonexcepted off-campus PBDs of a hospital
were required to report this modifier on each claim line for
nonexcepted items and services to trigger payment under the PFS instead
of the OPPS. As a conforming revision, effective January 1, 2017, the
modifier ``PO'' descriptor was revised to ``excepted service provided
at an off-campus, outpatient, provider-based department of a hospital''
and this modifier continued to be used to identify items and services
furnished by an excepted off-campus PBD of a hospital.
As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33647), a
few commenters supported CMS' intent to monitor service line expansion
and changes in billing patterns by excepted off-campus PBDs. These
commenters urged CMS to work to operationalize a method that would
preclude an excepted off-campus PBD from increasing its payment
advantage under the OPPS by expanding into wholly new clinical areas
(82 FR 33647). Moreover, a few commenters urged CMS to pursue a
limitation on service line expansion to ensure designation as an
excepted off-campus PBD is not ``abused'' (82 FR 33647). One commenter
suggested that CMS evaluate outpatient claims with the ``PO'' modifier
to develop a list of ``grandfathered'' items and services for which the
excepted off-campus PBD may continue to be paid under the OPPS (82 FR
33647). In response to these comments, we stated that we were concerned
with the practicality of developing a list of excepted items and
services for each excepted off-campus PBD, given the magnitude of such
a list (82 FR 33647). We noted in the CY 2018 OPPS/ASC final rule with
comment period, however, that we continued to monitor claims data for
changes in billing patterns and utilization, and invited comments on
this issue (82 FR 59388).
In light of our prior stated concerns about the expansion of
services in excepted off-campus PBDs, in the CY 2019 OPPS/ASC proposed
rule (83 FR 37148 through 37149), for CY 2019 and subsequent years, we
proposed that if an excepted off-campus PBD furnishes services from any
clinical family of services (as clinical families of services are
defined in Table 32 of that proposed rule) from which it did not
furnish an item or service during a baseline period from November 1,
2014 through November 1, 2015 (and subsequently bill under the OPPS for
that item or service), items and services from these new clinical
families of services would not be excepted items and services and,
thus, would not be covered OPD services. Instead, they would be subject
to paragraphs (1)(B)(v) and (21) of section 1833(t) of the Act and paid
under the PFS. Furthermore, in the CY 2019 OPPS/ASC proposed rule, we
proposed to revise 42 CFR 419.48 to limit the definition of ``excepted
items and services'' in accordance with this proposal. Generally,
excepted items and services are items or services that are furnished on
or after January 1, 2017 by an excepted off-campus PBD (as defined in
Sec. 419.48) that has not impermissibly relocated or changed
ownership. Under this proposal, beginning on January 1, 2019, excepted
items and services would be items or services that are furnished and
billed by an excepted off-campus PBD (defined in Sec. 419.48) only
from the clinical families of services (described later in this
section) for which the excepted off-campus PBD furnished (and
subsequently billed under the OPPS) for at least one item or service
from November 1, 2014 through November 1, 2015. Further, for purposes
of this section, ``new clinical families of services'' would be items
or services: (1) That are furnished and billed by an excepted off-
campus PBD; (2) that are otherwise paid under the OPPS through one of
the APCs included in Table 32 of the CY 2019 OPPS/ASC proposed rule;
and (3) that belong to a clinical family listed in Table 32 of the
proposed rule from which the excepted off-campus PBD did not furnish an
item or service during the baseline period from November 1, 2014
through November 1, 2015 (and subsequently bill for that service under
the OPPS). In addition, for CY 2019, we proposed that if an excepted
off-campus PBD furnishes a new item or service from a clinical family
of services listed in Table 32 of the proposed rule from which the off-
campus PBD furnished a service from November 1, 2014 through November
1, 2015, such service would continue to be paid under the OPPS because
items and services from within a clinical family of services for which
the excepted off-campus PBD furnished an item or service during the
baseline period would not be considered a ``service expansion.''
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37149),
in order to determine the types of services provided at an excepted
off-campus PBD, for purposes of OPPS payment eligibility, excepted off-
campus PBDs would be required to ascertain the clinical families from
which they furnished services from November 1, 2014 through November 1,
2015 (that were subsequently billed under the OPPS). In addition, items
and services furnished by an excepted off-campus PBD that were not
identified in Table 32 of the proposed rule would be reported with
modifier ``PN''. We selected the year prior to the date of enactment of
the Bipartisan Budget Act of 2015 as the baseline period because it is
the most recent year preceding the date of enactment of section 603 and
we believed that a full year of claims data would adequately reflect
the types of service lines furnished and billed by an excepted off-
campus PBD. We considered expanding the baseline period to include a
timeframe prior to November 2014, but did not propose this alternative
due to the possibility that hospital claims data for an earlier time
period might not be readily available and reviewing claims from a
longer timeframe may impose undue burden. If an excepted off-campus PBD
did not furnish services under the OPPS until after November 1, 2014,
we proposed that the 1-year baseline period begins on the first date
the off-campus PBD furnished covered OPD services prior to November 2,
2015. For providers that met the mid-build requirement (as defined at
section 1833(t)(21)(B)(v) of the Act), we proposed to establish a 1-
year baseline period that begins on the first date the off-campus PBDs
furnished a service billed under the OPPS. We proposed changes to our
regulation at 42 CFR 419.48 to include these alternative baseline
periods. For guidance on the implementation of sections 16001 and 16002
of the 21st Century Cures Act, we refer readers to the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/Sections-16001-16002.pdf. We stated in
the proposed rule that we were concerned that a 1-year baseline may be
unnecessarily long to the extent that such baseline would be, at least
in part, a prospective period during which such departments would have
time and an incentive to bill services from as many service lines as
possible, thereby limiting the effect of this policy. We welcomed
public comment on whether a different baseline period, such as 3 or 6
months, should be used for off-campus PBDs that began furnishing
services and billing after November 1, 2014, or that met the mid-build
requirement.
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37149),
we were aware of past stakeholder concern regarding limiting service
line expansion for excepted off-campus PBDs using the 19 clinical
families identified in Table 32 of the proposed
[[Page 59025]]
rule. However, we believed that the proposed clinical families
recognized all clinically distinct service lines for which a PBD might
bill under the OPPS, while at the same time allowing for new services
within a clinical family of services to be considered for designation
as ``excepted items and services'', as defined in the regulations at 42
CFR 419.48 where the types of services within a clinical family expand
due to new technology or innovation. We stated in the proposed rule
that we believed that requiring excepted off-campus PBDs to limit their
services to the exact same services they furnished during the proposed
baseline period would be too restrictive and administratively
burdensome. We requested public comments on the proposed clinical
families. We also solicited public comments on whether any specific
groups of hospitals should be excluded from our proposal to limit the
expansion of excepted services, such as certain rural hospitals (for
example, rural sole community hospitals), in light of recent reports of
hospital closures in rural areas.
In addition, we solicited public comments on alternate
methodologies to limit the expansion of excepted services in excepted
off-campus PBDs for CY 2019. Specifically, we invited public comments
on the adoption and implementation of other methodologies, such as the
approach recommended by MedPAC (discussed earlier in this section) in
response to the CY 2017 and CY 2018 proposals whereby CMS would
establish a baseline service volume for each applicable off-campus PBD,
cap excepted services (regardless of clinical family) at that limit,
and when the hospital reaches the annual cap for that location,
additional services furnished by that off-campus PBD would no longer be
considered covered OPD services and would instead be paid under the PFS
(the annual cap could be updated based on the annual updates to the
OPPS payment rates). Under such alternate approach, hospitals would
need to report service volume for each off-campus PBD for the
applicable period (such as November 1, 2014-November 1, 2015) and such
applicable periods would be subject to audit.
Comment: Some commenters, including an organization representing
orthopaedic surgeons, commended CMS for its efforts to expand the
application of site neutral payments to additional items and services
in excepted off-campus PBDs. These commenters asserted that the
expansion of services in excepted off-campus PBDs has an adverse effect
on the control of unnecessary utilization of services in PBDs. One
commenter who supported the proposal stated that ``all sites of service
should provide the same service at the same cost'' and that Medicare
``should not be in the business of supporting or favoring more
expensive sites of service, when the service can be furnished safely at
a less expensive'' and more efficient setting. Another commenter argued
that the consolidation of these facilities effectively inhibits a
physician's ability to refer freely to the best specialists or most
affordable health centers, and obstructs patients' access to
potentially better, more affordable care without their knowledge.
One commenter, a pharmaceutical research and manufacturing
organization, stated that this proposal ``strikes a reasonable
balance'' in that the proposal would not limit PBDs to exactly the same
services that they provided in the past, but would allow them to adjust
their service-mix within relevant clinical families that reflect their
specialties. The commenter contended that this provision would permit
appropriate changes to the services excepted off-campus PBDs offer as
clinical practices evolve. Additionally, the commenter stated that this
policy proposal would prevent attempts to circumvent ``the obvious
intent of the law to reign in conversion of non-hospital entities into
PBDs primarily in order to secure better payment, but without
commensurate clinical benefit.''
A few commenters stated that most off-campus PBDs are able to take
advantage of higher payment rates for a wide variety of services.
Specifically, the commenters asserted that, given the significant
payment disparities for certain services (for example, based on OPPS
rates versus PFS rates--chemotherapy: $281 versus $136; cardiac
imaging: $2,078 versus $655; and colonoscopy: $1,383 versus $625),
hospital systems have been purchasing physician practices and, by
integrating them with excepted off-campus PBDs, secured OPPS payment
rates for these services.
Another commenter asserted that CMS is taking important steps to
close loopholes that have enabled hospitals to continue driving volume
of services through excepted off-campus PBDs. Moreover, the commenter
noted that the current policy has caused ``hundreds of hospitals that
have already absorbed physician practices and converted them into PBDs
. . . to enjoy an unfair reimbursement advantage'' over other
providers. The commenter further asserted that the proposal does not
sufficiently limit the items and services for which an excepted off-
campus PBD can seek payment under the OPPS, and that the proposal would
still allow a PBD to expand its services ``no matter how limited the
PBD's range or volume of services were within that clinical family''
during the baseline period. The commenter also expressed concern that
CMS did not propose to limit the volume of excepted items and services
within a clinical family of services that an excepted off-campus PBD
can furnish, and indicated that, without such limitation, an excepted
off-campus PBD has every incentive to grow the scope of its practice in
order to maximize its ability to seek payment under the OPPS. Moreover,
this commenter contended that CMS could require that ``excepted''
status be tied to those physicians and particular services that were in
place at the off-campus PBD prior to November 2, 2015. In other words,
an excepted off-campus PBD would not be able to seek payment under the
OPPS with respect to: (1) Items or services furnished by a physician
(as identified by National Provider Identifier) who did not furnish
items or services at the off-campus PBD prior to November 2, 2015; or
(2) any items or services that were not among the items or services for
which the off-campus PBD billed Medicare at any point in the 12 months
preceding November 2, 2015.
Accordingly, the commenter urged CMS to modify the portion of the
proposed rule that would enable excepted PBDs to bill under the OPPS
for any and all items and services within the clinical families through
which the excepted PBDs had furnished care during the 12 months prior
to November 2, 2015, and to adopt, instead, a policy that would limit
excepted off-campus PBDs to billing under the OPPS for those items and
services furnished in a hospital's outpatient department in the year
prior to November 2, 2015, and within the specific, excepted PBD in
2016.
Response: We thank the commenters for their support and for the
many detailed comments on this topic. As mentioned in the proposed
rule, we are concerned that if excepted off-campus PBDs can expand the
types of services provided at the excepted off-campus PBDs and also be
paid OPPS rates for these new types of services, hospitals may be able
to purchase additional physician practices and add those physicians to
existing excepted off-campus PBDs. This could result in newly purchased
physician practices furnishing services that are paid at OPPS rates,
which we believe the
[[Page 59026]]
amendments to section 1833(t) of the Act are intended to prevent.
However, while we continue to believe that section
1833(t)(21)(B)(ii) of the Act excepted off-campus PBDs as they existed
at the time that Pub. L. 114-74 was enacted, and provides the authority
to define excepted off-campus PBDs, including those items and services
furnished and billed by such a PBD that may be paid under the OPPS, we
are concerned that the implementation of this payment policy may pose
operational challenges and administrative burden for both CMS and
hospitals. After consideration of the public comments we received, we
are not finalizing this policy as detailed below.
Comment: A few commenters suggested that CMS revise the proposed
clinical families to modify the proposed 19 clinical APC groups and
services. We will continue to study issues related to the expansion of
services at excepted off-campus PBDs and take these comments into
consideration for future rulemaking.
Response: We appreciate the feedback we received from the
commenters.
Comment: One commenter asserted that the proposed 12-month baseline
period was not ``necessary,'' and suggested that a 6-month baseline
period would adequately capture any service line initially intended for
provision at a PBD. However, another commenter suggested that CMS
extend the baseline period to 3 years prior to the enactment of the BBA
of 2015, to ensure that all items and services provided by an excepted
off-campus PBD prior to November 2, 2015 would be excepted from the
proposed payment policy.
Response: We thank the commenters for their feedback. We are not
finalizing our proposed policy at this time. We intend to monitor the
expansion of services in excepted off-campus PBDs. We may propose to
adopt a limitation on the expansion of services in future rulemaking
and will take this comment into consideration.
Comment: The majority of commenters, including individual
stakeholders and hospital systems and associations, opposed the
proposal to limit the expansion of services in excepted off-campus
PBDs. The commonly cited concerns among the commenters who opposed the
proposed policy were as follows:
Many commenters stated that the proposal is arbitrary and
capricious, that CMS lacks statutory authority to pay new clinical
families of service in excepted off-campus PBDs at the rate paid to
nonexcepted PBDs, and that the proposal would pose operational
challenges and create administrative burden on hospitals. In addition,
some commenters asserted that the requirements for provider-based
status are designed to ``ensure integration with the main hospital''
and, accordingly, these facilities should be able to ``furnish health
care services of the same type as the main provider.''
MedPAC expressed concern that CMS' proposed approach to address the
issue of undesirable incentives for excepted PBDs was unnecessarily
complex. MedPAC believed that a better approach would be for CMS to
determine how much the Medicare program had paid an off-campus PBD for
items and services billed under the OPPS during a 12-month baseline
period, specifically, CY 2017. Then, beginning January 1, 2019, annual
program spending for items and services billed by the PBD under the
OPPS would be capped at the amount paid to the PBD during the baseline
period. However, MedPAC acknowledged that, for hospitals that have more
than one excepted off-campus PBD, CMS would have to determine which
claims to attribute to each excepted off-campus PBD. MedPAC believed
that this approach would be easier to administer and would curb the
ability of hospitals to benefit financially from purchasing
freestanding physician practices and converting them to off-campus
PBDs.
Several commenters argued that off-campus PBDs must be able to
expand the items and services that they offer in order to meet changes
in clinical practice and the changing needs of their communities
without losing their ability to be paid under the OPPS. Generally,
these commenters asserted that finalizing this proposal would
significantly discourage hospitals from offering new and enhanced
outpatient services and, as a result, the payment policy would hinder
beneficiary access to innovative technologies.
Many commenters asserted that it is unclear how CMS or hospitals
will determine what service families were being provided during the
baseline period, given the lack of department-specific data and that
provider-based attestations are voluntary. In addition, these
commenters contended that, even if CMS and the providers could identify
the clinical families of services furnished during the baseline period,
it would be exceedingly complicated and burdensome to providers and CMS
to ensure services belonging to a new clinical family for the PBD are
accurately reported.
Response: We appreciate the detailed comments that were submitted,
and we recognize that services provided in off-campus PBDs may evolve
to reflect changes in clinical practice and community health care
needs. As discussed in the CY 2017 OPPS/ASC proposed rule and final
rule with comment period (81 FR 45685 through 45686 and 81 FR 79706
through 79707), we believe section 1833(t)(21)(B)(ii) of the Act, as
added by section 603 of Public Law 114-74, excepts off-campus provider-
based departments and the items and services that are furnished by such
excepted off-campus PBDs for purposes of paragraphs (1)(B)(v) and (21)
of section 1833(t) of the Act as they were being furnished on the date
of enactment of section 603 of Public Law 114-74, as guided by our
regulatory definition of a department of a provider at Sec.
413.65(a)(2). We also believe that we have the authority to define
excepted items and services furnished and billed by excepted off-campus
PBDs that may be paid under the OPPS. While we disagree with the
commenters' assertion that section 603 does not provide us the
authority to adopt a policy that would limit OPPS payment to the type
of services that had been furnished and billed at an off-campus PBD
prior to enactment of Public Law 114-74, we are concerned that the
implementation of this payment policy may be operationally complex and
could create an administrative burden for hospitals.
We believe the statute gives us the authority to limit the volume
of services furnished to the level that was furnished prior to the date
of enactment; however, we did not propose to do so. As we mentioned in
the proposed rule and reiterated earlier in this section, we are
concerned that if excepted off-campus PBDs could expand the types of
services provided at the excepted off-campus PBDs and also be paid OPPS
rates for these new types of services, hospitals may be able to
purchase additional physician practices and add those physicians to
existing excepted off-campus PBDs.
Several commenters, including MedPAC, asserted that our proposed
policy could be operationally complex and could create an
administrative burden for hospitals, CMS, and CMS contractors to
identify, track, and monitor billing for clinical services. We agree
with these commenters regarding these concerns. Therefore, we are not
finalizing our proposed policy.
Comment: Some commenters, specifically hospital associations that
opposed the proposal, asserted that CMS did not provide any claims-
based or other supporting evidence that demonstrates that excepted off-
campus PBDs are taking advantage of the current
[[Page 59027]]
policy. Further, these commenters noted that many of the services
listed in the detailed families of services are not payable in a
physician office setting and can only be provided in a hospital
setting. In addition, some of these commenters urged CMS to exempt
rural sole community hospitals and other vulnerable facilities from the
policy proposal.
Response: We appreciate the commenters' detailed responses to our
proposal. We are collecting data on the claims billed by off-campus
PBDs with modifier ``PO'' (for excepted services) and modifier ``PN''
(for nonexcepted services). We believe that data collected using these
modifiers will be a useful tool in furthering our efforts to monitor
the expansion of services at excepted off-campus PBDs and to address
any issues as they may arise. We will continue to monitor claims data
for changes in billing patterns and utilization and investigate methods
to ensure all hospitals are treated as fairly as possible within the
program.
After consideration of the public comments we received, we are not
finalizing this proposal at this time. However, we intend to monitor
expansion of services in off-campus PBDs and, if appropriate, may
propose to adopt a limitation on the expansion of excepted services in
future rulemaking. In that event, we will consider the concerns
expressed by commenters on the proposed policy in development of any
future rulemaking on service line expansion. Therefore, an excepted
off-campus PBD will continue to receive payments under the OPPS in CY
2019 for all billed items and services that are paid under the OPPS,
regardless of whether it furnished such items and services prior to the
date of enactment of Public Law 114-74, as long as the excepted off-
campus PBD remains excepted, including meeting the relocation and
change of ownership requirements adopted in the CY 2017 OPPS/ASC final
rule with comment period if applicable (81 FR 79705 through 79706 and
79708 through 79709). As mentioned earlier in this section, we intend
to monitor this issue and continue to consider how potential policies
could address this issue.
XI. CY 2019 OPPS Payment Status and Comment Indicators
A. CY 2019 OPPS Payment Status Indicator Definitions
Payment status indicators (SIs) that we assign to HCPCS codes and
APCs serve 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.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37150), for CY 2019,
we did not propose to make any changes to the definitions of status
indicators that were listed in Addendum D1 to the CY 2018 OPPS/ASC
final rule with comment period available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1656-FC.html?DLPage=1&DLEntries=10&DLSort=2&DLSortDir=descending.
Comment: One commenter recommended that CMS split status indicator
``C'' into ``C1'' and ``C2'' in the interest of improved clarity and
transparency. The commenter noted this methodology is very similar to
the way Medicare split status indicator ``E'' into indicators ``E1''
and ``E2.'' The commenter requested that CMS identify inpatient only
(IPO) procedures that are on the separate procedure list (as determined
by the American Medical Association) with a unique status indicator
such as ``C1'' and others as ``C2''. The commenter believed that the
presence of a unique status indicator would ultimately assist providers
in ensuring that their claims processing system edits are set up to
bill these scenarios on an OPPS claim to CMS, and that CMS would
benefit by having more accurate claims data submitted. The commenter
believed that this will also increase the number of claims available
for capturing cost data and utilizing for future ratesetting.
The commenter also requested that CMS reiterate that the I/OCE
logic regarding IPO procedures that are classified as a separate
procedure (for example, status indicator of ``C1'') is a line item
rejection and does not cause the entire claim to be rejected.
Response: We appreciate the commenter's concerns. However, at this
time, we do not believe it is necessary to establish a unique status
indicator to identify IPO procedures that are on the separate
procedures list. As stated in the latest October 2018 Integrated (IOCE)
CMS Specifications V19.3 document, these procedures are bypassed when
performed incidental to a surgical procedure with status indicator
``T'', or effective January 1, 2015, if reported on a claim with a
comprehensive APC procedure (status indicator = ``J1''). The line(s)
with the inpatient-separate procedure is/are rejected by the I/OCE with
Edit 45 ``Inpatient separate procedures not paid'' and the claim is
processed per usual OPPS rules. Therefore, there is no need to split
the definition of status indicator ``C'' and to establish a new status
indicator ``C1'' as suggested by the commenter. As discussed
previously, our status indicators exist for purposes of assisting in
determining payment, and a single status indicator ``C'' is sufficient
for services that CMS designates to be ``inpatient only'' services,
regardless of whether or not they are on the separate procedure list.
There are currently 26 different status indicators in Addendum D1
that are used to indicate whether a service described by a HCPCS code
is payable under the OPPS or another payment system and whether
particular OPPS payment policies apply to the code. We believe that it
is important to maintain only status indicators in the OPPS that convey
the necessary payment-related information, and that additional
indicators should only be created when necessary for payment policy
purposes.
In regard to the comment related to the I/OCE, the latest October
2018 I/OCE CMS Specifications V19.3 document on the CMS website located
at: https://www.cms.gov/Medicare/Coding/OutpatientCodeEdit/OCEQtrReleaseSpecs.html already contains the correct logic regarding
IPO procedures that are classified as a separate procedures.
After considering the comments received, we continue to believe
that the existing definitions of the OPPS status indicators will be
appropriate for CY 2019. Therefore, we are finalizing our proposed
policy without modifications.
The complete list of the payment status indicators and their
definitions that will apply for CY 2019 is displayed in Addendum D1 to
this final rule with comment period, which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
The CY 2019 payment status indicator assignments for APCs and HCPCS
codes are shown in Addendum A and Addendum B, respectively, to this
final rule with comment period, which are available on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
B. CY 2019 Comment Indicator Definitions
In the CY 2019 OPPS/ASC proposed rule (83 FR 37150), we proposed to
use four comment indicators for the CY 2019 OPPS. These comment
indicators, ``CH'', ``NC'', ``NI'', and ``NP'', are in effect for CY
2018 and we proposed to continue their use in CY 2019. The
[[Page 59028]]
proposed CY 2019 OPPS comment indicators are as follows:
``CH''--Active HCPCS code in current and next calendar
year, status indicator and/or APC assignment has changed; or active
HCPCS code that will be discontinued at the end of the current calendar
year.
``NC''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year for which we
requested comments in the proposed rule, final APC assignment; comments
will not be accepted on the final APC assignment for the new code.
``NI''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year, interim APC
assignment; comments will be accepted on the interim APC assignment for
the new code.
``NP''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year, as compared to current calendar year, proposed APC
assignment; comments will be accepted on the proposed APC assignment
for the new code.
We did not receive any public comments regarding the proposed CY
2019 OPPS comment indicators. Therefore, we are adopting, as final, our
proposal to continue to use for CY 2019 comment indicators ``CH'',
``NI'', ``NP'', and ``NP''. The definitions of the final OPPS comment
indicators for CY 2019 are listed in Addendum D2 to this final rule
with comment period, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
XII. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
1. Legislative History, Statutory Authority, and Prior Rulemaking for
the ASC Payment System
For a detailed discussion of the legislative history and statutory
authority related to payments to ASCs under Medicare, we refer readers
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through
32292). For a discussion of prior rulemaking on the ASC payment system,
we refer readers to the CYs 2012, 2013, 2014, 2015, 2016, 2017 and 2018
OPPS/ASC final rules with comment period (76 FR 74378 through 74379; 77
FR 68434 through 68467; 78 FR 75064 through 75090; 79 FR 66915 through
66940; 80 FR 70474 through 70502; 81 FR 79732 through 79753; and 82 FR
59401 through 59424, respectively).
2. Policies Governing Changes to the Lists of Codes and Payment Rates
for ASC Covered Surgical Procedures and Covered Ancillary Services
Under 42 CFR 416.2 and 416.166 of the Medicare regulations, subject
to certain exclusions, covered surgical procedures in an ASC 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 for which standard medical practice dictates
that the beneficiary would not typically be expected to require active
medical monitoring and care at midnight following the procedure
(``overnight stay''). We adopted this standard for defining which
surgical procedures are covered under the ASC payment system as an
indicator of the complexity of the procedure and its appropriateness
for Medicare payment in ASCs. We use this standard only for purposes of
evaluating procedures to determine whether or not they are appropriate
to be furnished to Medicare beneficiaries in ASCs. We define surgical
procedures as those described by Category I CPT codes in the surgical
range from 10000 through 69999 as well as those Category III CPT codes
and Level II HCPCS codes that directly crosswalk or are clinically
similar to procedures in the CPT surgical range that we have determined
do not pose a significant safety risk, that we would not expect to
require an overnight stay when performed in ASCs, and that are
separately paid under the OPPS (72 FR 42478).
In the August 2, 2007 final rule (72 FR 42495), we also established
our policy to make separate ASC payments for the following ancillary
items and services when they are provided integral to ASC covered
surgical procedures: (1) Brachytherapy sources; (2) certain implantable
items that have pass-through payment status under the OPPS; (3) certain
items and services that we designate as contractor-priced, including,
but not limited to, procurement of corneal tissue; (4) certain drugs
and biologicals for which separate payment is allowed under the OPPS;
and (5) certain radiology services for which separate payment is
allowed under the OPPS. In the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66932 through 66934), we expanded the scope of ASC
covered ancillary services to include certain diagnostic tests within
the medicine range of CPT codes for which separate payment is allowed
under the OPPS when they are provided integral to an ASC covered
surgical procedure. Covered ancillary services are specified in Sec.
416.164(b) and, as stated previously, are eligible for separate ASC
payment. Payment for ancillary items and services that are not paid
separately under the ASC payment system is packaged into the ASC
payment for the covered surgical procedure.
We update the lists of, and payment rates for, covered surgical
procedures and covered ancillary services in ASCs in conjunction with
the annual proposed and final rulemaking process to update the OPPS and
the ASC payment system (Sec. 416.173; 72 FR 42535). We base ASC
payment and policies for most covered surgical procedures, drugs,
biologicals, and certain other covered ancillary services on the OPPS
payment policies, and we use quarterly change requests (CRs) to update
services covered under the OPPS. We also provide quarterly update CRs
for ASC covered surgical procedures and covered ancillary services
throughout the year (January, April, July, and October). We release new
and revised Level II HCPCS codes and recognize the release of new and
revised CPT codes by the AMA and make these codes effective (that is,
the codes are recognized on Medicare claims) via these ASC quarterly
update CRs. We recognize the release of new and revised Category III
CPT codes in the July and January CRs. These updates implement newly
created and revised Level II HCPCS and Category III CPT codes for ASC
payments and update the payment rates for separately paid drugs and
biologicals based on the most recently submitted ASP data. New and
revised Category I CPT codes, except vaccine codes, are released only
once a year, and are implemented only through the January quarterly CR
update. New and revised Category I CPT vaccine codes are released twice
a year and are implemented through the January and July quarterly CR
updates. We refer readers to Table 41 in the CY 2012 OPPS/ASC proposed
rule for an example of how this process, which we finalized in the CY
2012 OPPS/ASC final rule with comment period, is used to update HCPCS
and CPT codes (76 FR 42291; 76 FR 74380 through 74381).
In our annual updates to the ASC list of, and payment rates for,
covered surgical procedures and covered ancillary services, we
undertake a review of excluded surgical procedures (including all
procedures newly proposed for removal from the OPPS
[[Page 59029]]
inpatient list), new codes, and codes with revised descriptors, to
identify any that we believe meet the criteria for designation as ASC
covered surgical procedures or covered ancillary services. Updating the
lists of ASC 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 many 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.
3. Definition of ASC Covered Surgical Procedures
Since the implementation of the ASC prospective payment system, we
have defined a ``surgical'' procedure under the payment system as any
procedure described within the range of Category I CPT codes that the
CPT Editorial Panel of the American Medical Association (AMA) defines
as ``surgery'' (CPT codes 10000 through 69999) (72 FR 42478). We also
have included as ``surgical,'' procedures that are described by Level
II HCPCS codes or by Category III CPT codes that directly crosswalk or
are clinically similar to procedures in the CPT surgical range that we
have determined do not pose a significant safety risk, would not expect
to require an overnight stay when performed in an ASC, and are
separately paid under the OPPS (72 FR 42478).
As we noted in the CY 2008 final rule that implemented the revised
ASC payment system, using this definition of surgery would exclude from
ASC payment certain invasive, ``surgery-like'' procedures, such as
cardiac catheterization or certain radiation treatment services that
are assigned codes outside the CPT surgical range (72 FR 42477). We
stated in that final rule that we believed continuing to rely on the
CPT definition of surgery is administratively straightforward, is
logically related to the categorization of services by physician
experts who both establish the codes and perform the procedures, and is
consistent with a policy to allow ASC payment for all outpatient
surgical procedures (72 FR 42477).
In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59402
through 59403), we noted that some stakeholders have suggested that
certain procedures that are outside the CPT surgical range but that are
similar to surgical procedures currently covered in an ASC setting
should be ASC covered surgical procedures. For example, some
stakeholders have recommended adding certain cardiovascular procedures
to the ASC Covered Procedures List (CPL) due to their similarity to
currently covered peripheral endovascular procedures in the surgical
code range for surgery and the cardiovascular system. Further,
stakeholders also noted that the AMA's CPT code manual states that the
listing of a procedure in a specific section of the book may reflect
historical or other considerations and should not be interpreted as
strictly classifying the procedure as ``surgery'' or ``not surgery''
for insurance purposes. As the CPT codebook states: ``It is equally
important to recognize that as techniques in medicine and surgery have
evolved, new types of services, including minimally invasive surgery,
as well as endovascular, percutaneous, and endoscopic interventions
have challenged the traditional distinction of Surgery vs Medicine.
Thus, the listing of a service or procedure in a specific section of
this book should not be interpreted as strictly classifying the service
or procedure as `surgery' or `not surgery' for insurance or other
purposes. The placement of a given service in a specific section of the
book may reflect historical or other considerations (e.g., placement of
the percutaneous peripheral vascular endovascular interventions in the
Surgery/Cardiovascular System section, while the percutaneous coronary
interventions appear in the Medicine/Cardiovascular section)''
(emphasis added) (CPT[supreg] 2018 Professional Edition, ``Instructions
for Use of the CPT Code Book,'' page xii.). While we continue to
believe that using the CPT code range to define surgery represents a
logical, appropriate, and straightforward approach to defining a
surgical procedure, we also believe it may be appropriate for us to use
the CPT surgical range as a guide rather than a strict determinant as
to whether a procedure is surgical, which would give us more
flexibility to include ``surgery-like'' procedures on the ASC CPL.
We also are cognizant of the dynamic nature of ambulatory surgery
and the continued shift of services from the inpatient setting to the
outpatient setting over the past decade. In the CY 2018 OPPS/ASC final
rule with comment period (82 FR 59402 through 59403), we responded to
public comments that we had solicited regarding services that are
described by Category I CPT codes outside of the surgical range, or
Level II HCPCS codes or Category III CPT codes that do not directly
crosswalk and are not clinically similar to procedures in the CPT
surgical range, but that nonetheless may be appropriate to include as
covered surgical procedures that are payable when furnished in the ASC
setting. Commenters offered mixed views of changing the current
definition of surgery; however, most commenters were supportive of
changing the definition. Some commenters recommended broadening the
definition of surgery to include procedures not described by the CPT
surgical range. Another commenter recommended making all surgical codes
payable in a hospital outpatient department payable in an ASC and
further suggested that CMS at least redefine surgical procedures to
include invasive procedures such as percutaneous transluminal
angioplasty and cardiac catheterization.
One commenter recommended using a definition of surgery developed
by the AMA Specialty Society Relative Value Scale Update Society for
use in the agency's Physician Fee Schedule (PFS) professional liability
insurance relative values. In calculating the professional liability
insurance relative values, certain cardiology codes outside the CPT
surgical range are considered surgical codes for both the calculation
and assignment of the surgery-specific malpractice risk factors.
However, we note that the distinction between ``surgical'' and
``nonsurgical'' codes developed by the AMA Specialty Society Relative
Value Scale Update Society is used by CMS to calculate professional
liability risk factors and not necessarily to define surgery. The codes
considered surgeries by the AMA Society Relative Value Scale Update
Society were most recently displayed on the CMS website for the CY 2018
Medicare Physician Fee Schedule final rule under the file ``Invasive
Cardiology Services Outside of Surgical HCPCS Code Range Considered
Surgery.'' We refer readers to that file, which is available on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Downloads/CY2018-PFS-FR-Invasive-Cardiology.zip.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37152), after further
consideration of comments we received in response to the CY 2018 OPPS/
ASC final rule with comment period, we proposed to revise our
definition of ``surgery'' for CY 2019 to account for ``surgery-like''
procedures that are assigned codes outside the CPT surgical range
(10000 through 69999). We
[[Page 59030]]
believe it is appropriate to expand our definition of covered surgical
procedures to include Category I CPT codes that are not in the Category
I CPT surgical range but that directly crosswalk or are clinically
similar to procedures in the Category I CPT code surgical range
because, as commenters have noted, the CPT Codebook's classification of
certain procedures as ``surgical'' should not be considered dispositive
of whether a procedure is or is not surgery. We also believe that
considering these codes for potential inclusion on the covered surgical
procedures list is consistent with our policy for Level II HCPCS codes
and Category III CPT codes.
For CY 2019, we proposed that these newly eligible ``surgery-like''
procedures are procedures that are described by Category I CPT codes
that are not in the surgical range but, like procedures described by
Level II HCPCS codes or by Category III CPT codes under our current
policy, directly crosswalk or are clinically similar to procedures in
the Category I CPT surgical range. These Category I CPT codes would be
limited to those that we have determined do not pose a significant
safety risk, would not be expected to require an overnight stay when
performed in an ASC, and are separately paid under the OPPS.
We invited comments on our proposal to revise the definition of
surgery for the ASC prospective payment system. We also solicited
comments on whether we should expand our definition of ``surgery'' to
include procedures that fall outside the CPT surgical range, but fall
within the definition of ``surgery'' developed by the AMA Specialty
Society Relative Value Scale Update Society for use in the agency's
Physician Fee Schedule (PFS) professional liability insurance relative
values, that we determine do not pose a significant safety risk, would
not be expected to require an overnight stay when performed in an ASC,
and are separately paid under the OPPS.
Comment: A majority of commenters supported the proposal, stating
that the expansion of the definition of surgery would allow Medicare
beneficiaries access to these procedures at a safe, lower-priced and
more convenient site of service. One commenter expressed general
concern about the proposal to revise the definition of surgery, citing
``surgery-like'' procedures that might expose Medicare beneficiaries to
a significant safety risk when performed in an ASC.
Response: We appreciate commenters' support. As we stated in the CY
2019 OPPS/ASC proposed rule (83 FR 37152), we are cognizant of the
dynamic nature of ambulatory surgery and the continued shift of
services from the inpatient setting to the outpatient setting over the
past decade. We also noted that the AMA's CPT code manual states that
the listing of a procedure in a specific section of the book may
reflect historical or other considerations and should not be
interpreted as strictly classifying the procedure as ``surgery'' or
``not surgery'' for insurance or other purposes.
With respect to the commenter's concern that this proposal may
expose beneficiaries to significant safety risk, we note that any
procedure added to the ASC CPL is evaluated against the existing
regulatory criteria and would not be expected pose a significant safety
risk, would not be expected to require an overnight stay when performed
in an ASC, and is separately paid under the OPPS. In addition, we
expect that physicians treating beneficiaries are well-equipped to
decide whether the ASC setting would be appropriate based on the
clinical needs of the patient, among other factors. Therefore, we do
not share the commenter's concern.
Comment: One commenter asked CMS to clarify if it bases its
determination of whether a procedure is an ASC covered surgical
procedure on the fact that the procedure does not require an
``overnight'' stay or the fact that the procedure requires less than 24
hours of active medical care following the procedure.
Response: As codified in our regulations at 42 CFR 416.166(b),
covered surgical procedures are surgical procedures for which, among
other things, standard medical practice dictates that the beneficiary
would not typically be expected to require active medical monitoring
and care at midnight following the procedure. In the CY 2019 OPPS/ASC
proposed rule (83 FR 37151), we explained this requirement by stating
that we would not expect a covered surgical procedure to require an
overnight stay when performed in the ASC. Also in the CY 2019 OPPS/ASC
proposed rule, we explained that we adopted this standard for defining
which surgical procedures are covered surgical procedures under the ASC
payment system as an indicator of the complexity of the procedure and
its appropriateness for Medicare payment in ASCs (83 FR 37151). We use
this standard only for purposes of evaluating procedures to determine
whether or not they are appropriate for Medicare beneficiaries in ASCs.
After consideration of the public comments we received, we are
finalizing our proposal to define a surgical procedure under the ASC
payment system as any procedure described within the range of Category
I CPT codes that the CPT Editorial Panel of the American Medical
Association (AMA) defines as ``surgery'' (CPT codes 10000 through
69999) (72 FR 42478), as well as procedures that are described by Level
II HCPCS codes or by Category I CPT codes or by Category III CPT codes
that directly crosswalk or are clinically similar to procedures in the
CPT surgical range that we have determined are not expected to pose a
significant risk to beneficiary safety when performed in an ASC, for
which standard medical practice dictates that the beneficiary would not
typically be expected to require an overnight stay following the
procedure, and are separately paid under the OPPS.
B. Treatment of New and Revised Codes
1. Background on Current Process for Recognizing New and Revised
Category I and Category III CPT Codes and Level II HCPCS Codes
Category I CPT, Category III CPT, and Level II HCPCS codes are used
to report procedures, services, items, and supplies under the ASC
payment system. Specifically, we recognize the following codes on ASC
claims:
Category I CPT codes, which describe surgical procedures
and vaccine codes;
Category III CPT codes, which describe new and emerging
technologies, services, and procedures; and
Level II HCPCS codes, which are used primarily to identify
items, supplies, temporary procedures, and services not described by
CPT codes.
We finalized a policy in the August 2, 2007 final rule (72 FR 42533
through 42535) to evaluate each year all new and revised Category I and
Category III CPT codes and Level II HCPCS codes that describe surgical
procedures, and to make preliminary determinations during the annual
OPPS/ASC rulemaking process regarding whether or not they meet the
criteria for payment in the ASC setting as covered surgical procedures
and, if so, whether or not they are office-based procedures. In
addition, we identify new and revised codes as ASC covered ancillary
services based upon the final payment policies of the revised ASC
payment system. In prior rulemakings, we refer to this process as
recognizing new codes. However, this process has always involved the
recognition of new and revised codes. We consider revised codes to be
new when they have substantial revision to their code
[[Page 59031]]
descriptors that necessitate a change in the current ASC payment
indicator. To clarify, we referred to these codes as new and revised in
the CY 2018 OPPS/ASC proposed rule.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37152 through 37155),
we separated our discussion based on when the codes were released and
whether we were soliciting public comments in the proposed rule (and
responding to those comments in this CY 2019 OPPS/ASC final rule with
comment period) or whether we would be soliciting public comments in
this CY 2019 OPPS/ASC final rule with comment period (and responding to
those comments in the CY 2020 OPPS/ASC final rule with comment period).
We note that we sought public comments in the CY 2018 OPPS/ASC
final rule with comment period (82 FR 59405 through 59406) on the new
and revised Level II HCPCS codes effective October 1, 2017 or January
1, 2018. These new and revised codes, with an effective date of October
1, 2017 or January 1, 2018, were flagged with comment indicator ``NI''
in Addenda AA and BB to the CY 2018 OPPS/ASC final rule with comment
period to indicate that we were assigning them an interim payment
status and payment rate, if applicable, which were subject to public
comment following publication of the CY 2018 OPPS/ASC final rule with
comment period. In the CY 2019 OPPS/ASC proposed rule, we stated that
we will respond to public comments and finalize the treatment of these
codes under the ASC payment system in this CY 2019 OPPS/ASC final rule
with comment period.
As we did in Table 33 of the CY 2019 OPPS/ASC proposed rule (83 FR
37153), in Table 52 below, we summarize our process for updating codes
through our ASC quarterly update CRs, seeking public comments, and
finalizing the treatment of these new codes under the OPPS.
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[[Page 59032]]
2. Treatment of New and Revised Level II HCPCS Codes Implemented in
April 2018 for Which We Solicited Public Comments in the CY 2019 OPPS/
ASC Proposed Rule
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37153),
in the April 2018 ASC quarterly update (Transmittal 3996, Change
Request 10530, dated March 09, 2018), we added nine new Level II HCPCS
codes to the ASC CPL and list of covered ancillary services. Table 34
of the proposed rule (83 FR 37153) listed the new Level II HCPCS codes
that were implemented April 1, 2018, along with their proposed payment
indicators for CY 2019. We invited public comments on these proposed
payment indicators and the proposed payment rates for the new Level II
HCPCS codes that were recognized as ASC covered surgical procedures or
ancillary services in April 2018 through the quarterly update CRs, as
listed in Table 34 of the proposed rule. We proposed to finalize their
payment indicators and their payment rates in this CY 2019 OPPS/ASC
final rule with comment period.
Comment: Several commenters supported the addition of HCPCS code
C9749 (Repair of nasal vestibular lateral wall stenosis with
implant(s)), which describes the Latera implant surgical procedure, to
the ASC covered surgical procedures list and its designation as a
device-intensive procedure. However, they expressed concern that the
proposed ASC payment rate for the procedure does not sufficiently cover
the full cost of providing the surgery. One commenter stated that the
proposed ASC payment rate of approximately $1,271 does not cover the
cost of the device implant, let alone the full cost of the procedure
including the device. These commenters believed that the low payment
rate would hinder physicians from offering the procedure in ASCs. The
commenters requested that CMS review the payment rate and adjust it
appropriately so that physicians can continue to perform this procedure
safely and effectively in the ASC setting.
Response: The OPPS and the ASC payment system utilize different
conversion factors to establish payment rates for covered services to
account for changes in expenditures. In the CY 2019 OPPS/ASC proposed
rule, we stated that the proposed OPPS conversion factor was $79.546,
while the proposed ASC conversion factor was $46.500. Consequently, the
proposed ASC payment rate of approximately $1,271 for HCPCS code C9749
would be less than the proposed OPPS payment rate of approximately
$2,241. We have used different conversion factor updates for the OPPS
and the ASC payment system since the revised ASC payment system was
implemented on January 1, 2008. For more information regarding the
payment methodology for ASC services, we refer readers to section
XII.G. (Calculation of the ASC Payment Rates and the ASC Conversion
Factor) of this CY 2019 OPPS/ASC final rule with comment period.
Further, we also note that HCPCS code C9749 has been assigned a
payment indicator of ``J8'' and is therefore designated as a device-
intensive procedure. As discussed in section XII.C.1.b. of this final
rule with comment period, under the ASC payment system, device-
intensive procedures are paid a higher payment than if the procedure
was not designated as device-intensive.
After consideration of the public comments we received, we are
adopting as final the CY 2019 proposed payment indicators for new level
II HCPCS codes for covered surgical procedures and ancillary services
effective on April 1, 2018, as indicated in Table 53. We note that
several of the HCPCS C-codes have been replaced with HCPCS J-codes,
effective January 1, 2019. The replacement codes are listed in Table
53. The final payment rates for these codes can be found in Addendum BB
to this final rule with comment period (which is available via the
internet on the CMS website). In addition, the payment indicator
definitions can be found in Addendum DD1 to this final rule with
comment period (which is available via the internet on the CMS
website).
[[Page 59033]]
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3. Treatment of New and Revised Category III CPT and Level II HCPCS
Codes Implemented in July 2018 for Which We Solicited Public Comments
in the CY 2019 OPPS/ASC Proposed Rule
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37154),
in the July 2018 ASC quarterly update (Transmittal 4076, Change Request
10788, dated June 26, 2018), we added eight new Level II HCPCS codes to
the list of covered ancillary services. In Table 35 of the proposed
rule (83 FR 37154), we listed the new HCPCS codes that are effective
July 1, 2018.
In addition, through the July 2018 quarterly update CR, we also
implemented one new Category III CPT code as an ASC covered ancillary
service effective July 1, 2018. This code was listed in Table 36 of the
proposed rule, along with its proposed payment indicator. The proposed
payment rate for this new Category III CPT code was included in
Addendum AA to the proposed rule (which is available via the internet
on the CMS website).
We invited public comments on these proposed payment indicators and
the proposed payment rates for the new Category III CPT code and Level
II HCPCS codes that were expected to be newly recognized as ASC covered
surgical procedures or covered ancillary services in July 2018 through
the quarterly update CRs, as listed in Tables 35 and 36 of the proposed
rule. We proposed to finalize their payment indicators and their
payment rates in the CY 2019 OPPS/ASC final rule with comment period.
We did not receive any public comments regarding these proposed ASC
payment indicators and payment rates. Therefore, we are adopting as
final the CY 2019 proposed payment indicators for these codes, as
indicated in Tables 54 and 55. We note that several of the HCPCS C-
codes have been replaced with HCPCS J-codes, effective January 1, 2019.
Their replacement codes are listed in Table 55. The final payment rates
for these codes for CY 2019 can be found in Addendum BB to this final
rule with comment period (which is available via the internet on the
CMS website). In addition, the payment indicator definitions can be
found in Addendum DD1 to this final rule with comment period (which is
available via the internet on the CMS website).
[[Page 59034]]
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4. Process for New and Revised Level II HCPCS Codes That Will Be
Effective October 1, 2018 and January 1, 2019 for Which We Are
Soliciting Public Comments in This CY 2019 OPPS/ASC Final Rule With
Comment Period
As has been our practice in the past, we incorporate those new and
revised Level II HCPCS codes that are effective January 1 in the final
rule with comment period, thereby updating the OPPS and the ASC payment
system for the following calendar year. These codes are released to the
public via the CMS HCPCS website, and also through the January OPPS
quarterly update CRs. In the past, we also released new and revised
Level II HCPCS codes that are effective October 1 through the October
OPPS quarterly update CRs and incorporated these new codes in the final
rule with comment period.
In the CY 2019 OPPS/ASC proposed rule (83 FR 37154), for CY 2019,
consistent with our established policy, we proposed that the Level II
HCPCS codes that will be effective October 1, 2018 and January 1, 2019
would be flagged with comment indicator ``NI'' in Addendum B to the CY
2019 OPPS/ASC final rule with comment period to indicate that we have
assigned the codes an interim OPPS payment status for CY 2019. We did
not receive any public comments on our proposal. As we stated that we
would do in the proposed rule, we are inviting public comments in this
CY 2019 OPPS/ASC final rule with comment period on the interim status
indicator and APC assignments, and
[[Page 59035]]
payment rates for these codes that will be finalized in the CY 2020
OPPS/ASC final rule with comment period.
5. Process for Recognizing New and Revised Category I and Category III
CPT Codes That Will Be Effective January 1, 2019 for Which We Are
Soliciting Public Comments in This CY 2019 OPPS/ASC Final Rule With
Comment Period
We generally include the new and revised CPT codes that are
effective January 1 of a calendar year in the proposed rule to request
public comments on the ASC payment indicator assignments. In addition,
these codes are assigned to comment indicator ``NP'' to indicate that
the code is new for the next calendar year or the code is an existing
code with substantial revision to its code descriptor in the next
calendar year as compared to current calendar year and that comments
will be accepted on the proposed payment indicator. There are no
existing codes with substantial revision to the code descriptor
effective January 1, 2019. However, we inadvertently omitted most of
the new Category I and III CPT codes effective January 1, 2019 from ASC
Addendum AA, BB, and EE to the CY 2019 OPPS/ASC proposed rule. We did
not omit eight new CPT codes that we proposed to designate as
temporarily office based effective January 1, 2019. We refer readers to
Table 39 of the proposed rule.
Therefore, in addition to the Level II HCPCS codes that will be
effective October 1, 2018, and January 1, 2019, we are flagging the new
Category I and III CPT codes that will be effective January 1, 2019,
that were omitted from the CY 2019 OPPS/ASC proposed rule, with comment
indicator ``NI'' in ASC Addendum AA, BB, and EE to this CY 2019 OPPS/
ASC final rule with comment period to indicate that we have assigned
the codes an interim ASC payment indicator for CY 2019. We are inviting
public comments on the interim ASC payment indicator assignments and
payment rates for these codes that we intend to finalize in the CY 2020
OPPS/ASC final rule with comment period. We note that we are finalizing
the ASC payment indicators for the eight codes that we proposed to
designate as temporarily office based effective January 1, 2019 because
we previously sought comments on their ASC payment indicator
assignment. Table 58 of this final rule with comment period contains
the list of these eight codes and their final ASC payment indicators.
Further, we remind readers that the CPT code descriptors that
appear in ASC Addendum AA, BB, and EE are short descriptors and do not
fully describe the complete procedure, service, or item described by
the CPT code. Therefore, we have included the 5-digit CPT codes and
their long descriptors for the new CPT codes in Addendum O (which is
available via the internet on the CMS website) so that the public can
adequately comment on our interim ASC payment indicator assignments.
In summary, we are soliciting public comments on the interim ASC
payment indicators for the new Category I and III CPT codes that will
be effective January 1, 2019, which we have assigned to ASC comment
indicator ``NI'' in this CY 2019 OPPS/ASC final rule with comment
period. We intend to finalize the interim ASC payment indicators in the
CY 2020 OPPS/ASC final rule with comment period. The CPT codes are
listed in ASC Addendum AA, BB, and EE with short descriptors only but
we list them again in Addendum O with long descriptors.
C. Update to the List of ASC Covered Surgical Procedures and Covered
Ancillary Services
1. Covered Surgical Procedures
a. Covered Surgical Procedures Designated as Office-Based
(1) Background
In the August 2, 2007 ASC final rule, we finalized our policy to
designate as ``office-based'' those procedures that are added to the
ASC CPL in CY 2008 or later years that we determine are performed
predominantly (more than 50 percent of the time) in physicians' offices
based on consideration of the most recent available volume and
utilization data for each individual procedure code and/or, if
appropriate, the clinical characteristics, utilization, and volume of
related codes. In that rule, we also finalized our policy to exempt all
procedures on the CY 2007 ASC list from application of the office-based
classification (72 FR 42512). The procedures that were added to the ASC
CPL beginning in CY 2008 that we determined were office-based were
identified in Addendum AA to that rule 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 procedures 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 the procedure would be paid according to the standard ASC
payment methodology based on its OPPS relative payment weight or at the
MPFS nonfacility PE RVU-based amount.
Consistent with our final policy to annually review and update the
ASC CPL eligible for payment in ASCs, each year we identify covered
surgical procedures as either temporarily office-based (these are new
procedure codes with little or no utilization data that we have
determined are clinically similar to other procedures that are
permanently office-based), permanently office-based, or nonoffice-
based, after taking into account updated volume and utilization data.
(2) Changes for CY 2019 to Covered Surgical Procedures Designated as
Office-Based
In developing the CY 2019 OPPS/ASC proposed rule and this final
rule with comment period, we followed our policy to annually review and
update the covered 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 CY
2017 volume and utilization data and the clinical characteristics for
all covered surgical procedures that are assigned payment indicator
``G2'' (Nonoffice-based surgical procedure added in CY 2008 or later;
payment based on OPPS relative payment weight) in CY 2017, as well as
for those procedures assigned one of the temporary office-based payment
indicators, specifically ``P2'', ``P3'', or ``R2'' in the CY 2018 OPPS/
ASC final rule with comment period (82 FR 59406 through 59408).
As discussed in the CY 2019 OPPS/ASC proposed rule (83 FR 37155
through 37157), our review of the CY 2017 volume and utilization data
resulted in our identification of 4 covered surgical procedures that we
believe meet the criteria for designation as office-based. The data
indicate that these procedures are performed more than 50 percent of
the time in physicians' offices, and we believe that the services are
of a level of complexity consistent with other procedures performed
routinely in physicians' offices. The CPT codes that we proposed to
permanently designate as office-based for CY 2019 were listed in Table
37 of the proposed rule (83 FR 37156).
Comment: Several commenters disagreed with the proposal to
designate CPT codes 36902 (Intro cath dialysis circuit) and 36905
(Thrmbc/nfs dialysis
[[Page 59036]]
circuit) as permanently office-based. Commenters suggested that a
permanent office-based designation, and therefore a permanent payment
rate of the lesser of the PFS nonfacility PE RVU-based or the OPPS
relative weight amount, would pay too little to make it a viable option
for ASCs to perform these vascular access services, which the
commenters suggested is the optimal setting for receiving vascular
access services. Commenters also suggested that a permanent office-
based designation may inadvertently incentivize the migration of
vascular access procedures to the more costly hospital setting.
Further, commenters noted that vascular access procedure codes (CPT
codes 36901 through 36909) became effective January 1, 2017, and were
added to the ASC CPL for CY 2017. Because several of these procedures
were not included on the ASC CPL prior to that time, commenters
expressed concern that CMS is not likely to have data that accurately
reflect the ASC utilization of the full suite of vascular access
procedures until CY 2020 or later.
Some commenters recommended that CMS delay the proposal to
designate CPT codes 36902 and 36905 as office-based procedures. Other
commenters recommended that CMS permanently exempt such CPT codes from
office-based designations, similar to the existing exemptions from the
policy governing payment for covered ancillary radiology services for
certain nuclear medicine procedures (CPT codes 78000 through 78999) and
those covered ancillary radiology services that use a contrast agent as
codified under 42 CFR 416.171(d). Commenters believed that such an
exemption is warranted because certain vascular access add-on
procedures (that is, CPT codes 36907, 36908, and 36909) are often
billed with CPT codes 36902 and 36905, which are separately payable
under the PFS but are packaged under the OPPS and the ASC payment
system. Therefore, the commenters stated, the ASC payment rate for an
office-based vascular access procedure with a vascular access add-on
procedure may be lower than would otherwise be paid under the PFS.
Response: We appreciate the commenters' feedback on our proposal.
As noted in the proposed rule, we assign office-based designations when
our data indicate that these procedures are performed more than 50
percent of the time in physicians' offices, and we believe that the
services are of a level of complexity consistent with other procedures
performed routinely in physicians' offices. We believe this is the most
appropriate approach to prevent creating a payment incentive to migrate
lower complexity services on the ASC CPL from physicians' offices to
ASCs.
In response to the comment recommending that we establish a
permanent office-based designation exemption for vascular access
procedures, we do not believe such an exemption is necessary at this
time. However, we would like to study this issue further in future
policy development. As stated in the CY 2011 OPPS/ASC final rule with
comment period (75 FR 72050), we established an exemption to the policy
governing payment for covered ancillary radiology services for certain
nuclear medicine procedures (CPT codes 78000 through 78999) because the
PFS nonfacility PE RVU amounts did not reflect the diagnostic
radiopharmaceutical costs, which are paid separately under the MPFS. In
addition, as stated in the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74429 through 74430), because the same issue exists for
radiology procedures that use contrast agents (the contrast agent is
packaged under the ASC payment system but is separately paid under the
PFS), we exempted radiology services that use contrast agents from our
policy governing payment for covered ancillary radiology services so
that payment for these procedures will be based on the OPPS relative
payment weight and will, therefore, include the cost for the contrast
agent. We did not propose an equivalent exception for vascular access
codes for CY 2019, and do not believe permanent exemption would be
appropriate at this time. However, we intend to examine whether CPT
codes 36902 and 36905 may be subject to circumstances similar to those
that led to the exemptions for certain nuclear medicine procedures and
radiology procedures that use contrast agents in future rulemaking.
The most recent full year for which we have claims, volume, and
utilization data is CY 2017. We believe these data are generally an
appropriate source to inform our decisions regarding the predominant
site of service for procedures. As stated in the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60605 through 60606), when we believe
that the available data in our review process are inadequate to make a
determination that a procedure should be office-based, we either make
no change to the procedure's payment status or make the change
temporary and reevaluate our decision using data that become available
for our next evaluation. We believe that it is appropriate to continue
using our judgment regarding whether the volume of cases and the
proportion of cases that are provided in the physicians' office setting
indicate that the procedures is an office-based procedure in addition
to our medical advisors' clinical judgments, utilization data for
procedures that are closely related to the procedures being evaluated,
and any other information that is available to us.
While the currently available data for CPT codes 36902 and 36905
support our office-based designation proposal, we agree with the
commenters that CY 2017 claims data may not be sufficiently adequate to
capture the current volume and utilization for the ASC and physician
office sites of service for CPT codes 36902 and 36905. Because we share
commenters' concerns that the available data may not be adequate to
make a determination that these procedures should be office-based, we
believe it is premature to assign office-based payment for these
procedures at this time. Therefore, we are not designating CPT codes
36902 and 36905 as office-based procedures for CY 2019. We will
reevaluate these procedures in our CY 2020 rulemaking period. For CY
2019, these procedures will retain their current payment indicator,
``G2.''
We did not receive any public comments related to our proposal to
designate CPT codes 31573 (Laryngoscopy, flexible; with therapeutic
injection(s) (e.g., chemodenervation agent or corticosteroid, injected
percutaneous, transoral, or via endoscope channel), unilateral) and
36513 (Therapeutic apheresis; for platelets) as office-based
procedures. Therefore, we are finalizing our proposal, without
modification, to designate CPT codes 31573 and 36513 as permanently
office-based procedures. However, in response to public comments we
received, we are not finalizing our proposal to designate CPT codes
36902 and 36905 as office-based. CPT codes 36902 and 36905 will retain
the same payment indicator, ``G2'', that the procedures were assigned
in CY 2018. We intend to reevaluate these using the most recent
available volume and utilization data procedures in our CY 2020
rulemaking period. The procedures we are designating as permanently
office-based beginning in CY 2019 are listed in Table 56 below.
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We also reviewed CY 2017 volume and utilization data and other
information for 10 procedures designated as temporarily office-based in
Tables 84 and 85 in the CY 2018 OPPS/ASC final rule with comment period
(82 FR 59408). Of these 10 procedures, there were very few claims in
our data and no claims data for 4 procedures described by CPT codes
38222, 65785, 67229, and 0402T. Consequently, we proposed to maintain
the temporary office-based designations for these 4 CPT codes for CY
2019. We included codes for which we proposed to maintain the temporary
office-based designations for CY 2019 in Table 38 of the proposed rule
which listed the covered surgical procedures we designated as temporary
office-based in the CY 2018 OPPS/ASC final rule with comment period.
The procedures for which the proposed office-based designations for CY
2019 are temporary also were indicated by asterisks in Addendum AA to
the proposed rule (which is available via the internet on the CMS
website).
The volume and utilization data for 3 procedures that have a
temporary office-based designation for CY 2018, described by CPT codes
36473 and 36901 and HCPCS code G0429, are sufficient to indicate that
these procedures are performed predominantly in physicians' offices
and, therefore, should be assigned an office-based payment indicator in
CY 2019. Consequently, we proposed to designate these procedures as
permanently office based and assign payment indicator ``P2'', ``P3'',
``R2'' to these covered surgical procedure codes in CY 2019. These
procedures are displayed above in Table 56. The volume and utilization
data for the remaining three procedures that have a temporary office-
based designation for CY 2018, described by CPT codes 10030, 64461, and
64463, are sufficient
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to indicate that these covered surgical procedures were not performed
predominantly in physicians' offices and, therefore, should be assigned
non-office-based payment indicator ``G2'' in CY 2019.
Comment: One commenter requested that CMS exempt CPT code 36901
from the office-based designation, similar to the existing office-based
exemptions for certain nuclear medicine procedures (CPT codes 78000
through 78999) as well as ancillary radiology services that use a
contrast agent as codified under 42 CFR 416.171(d). The commenter
suggested that the payment volatility over the past several years would
limit patient access to vascular access services in the ASC setting and
encourage the migration of these services to the more expensive
hospital setting.
Response: We do not believe establishing an office-based exemption
for CPT code 36901 is warranted. We note that the exceptions for
certain nuclear medicine procedures and for ancillary radiology
services that use a contrast agent are exceptions to our policy
governing payment for covered ancillary radiology services, not
exceptions to our office-based policy. In addition, as stated in the CY
2011 OPPS/ASC final rule with comment period (75 FR 72050), we
established the exemption to our policy governing payment for covered
ancillary radiology services for certain nuclear medicine procedures
(CPT codes 78000 through 78999) because the PFS nonfacility PE RVU
amounts did not reflect the diagnostic radiopharmaceutical costs which
are paid separately under the MPFS. In addition, as stated in the CY
2012 OPPS/ASC final rule with comment period (76 FR 74429 through
74430), because the same issue exists for radiology procedures that use
contrast agents (the contrast agent is packaged under the ASC payment
system but is separately paid under the MPFS), we also exempted
radiology services that use contrast agents from this policy, so that
payment for these procedures will be based on the OPPS relative payment
weight which includes the cost for the contrast agent.
Because its predecessor code was office-based, we have designated
CPT code 36901 as office-based since it was established in CY 2017. As
stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR
59407), we reviewed the clinical characteristics, utilization, and
volume of related codes and determined that the procedure described by
CPT code 36901 would be predominantly performed in physician offices.
However, because we did not have utilization data for this procedure,
we made the office-based designation temporary rather than permanent
for CY 2018. Our review of the CY 2017 volume and utilization data
indicates that CPT code 36901 is performed 54 percent of the time in
physicians' offices. Our policy is to designate as office-based those
procedures that are performed more than 50 percent of the time in
physicians' offices. We do not believe that there is a justification
for exempting this procedure from office-based status for CY 2019.
Therefore, we are designating CPT code 36901 as permanently office-
based for CY 2019 as proposed.
While we assigned CPT codes 10030, 64461, and 64463 payment
indicators of ``G2'' (Non-office-based surgical procedure added in CY
2008 or later; payment based on OPPS relative payment weight) in Table
38 of the CY 2019 OPPS/ASC proposed rule, we inadvertently indicated in
the preamble of the proposed rule that those were office-based
procedures (83 FR 37156). We are not designating CPT codes 10030,
64461, and 64463 as office-based procedures for CY 2019 and are
finalizing our payment indicator of ``G2'' for such procedures. We note
that we did not receive any public comments on these codes.
After consideration of the public comment we received, we are
finalizing our proposal, with modification, to designate the procedures
shown in Table 57 below as temporarily office-based for CY 2019.
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For CY 2019, we proposed to designate 8 new CY 2019 CPT codes for
ASC covered surgical procedures as temporarily office-based, as
displayed in Table 39 of the proposed rule. After reviewing the
clinical characteristics, utilization, and volume of related procedure
codes, we determined that the procedures described by the new CPT codes
would be predominantly performed in physicians' offices. However,
because we had no utilization data for the procedures specifically
described by these new CPT codes, we proposed to make the office-based
designation temporary rather than permanent, and stated that we will
reevaluate the procedures when data become available. The procedures
for which the proposed office-based designation for CY 2019 is
temporary were indicated by asterisks in Addendum AA to the proposed
rule (which is available via the internet on the CMS website).
We did not receive any public comments on our proposal. Therefore,
we are finalizing our proposal, without modification, to designate the
procedures shown in Table 58 below as temporarily office-based. The
procedures for which the office-based designation for CY 2019 is
temporary are indicated by an asterisk in Addendum AA to this final
rule with comment period (which is available via the internet on the
CMS website).
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b. ASC Covered Surgical Procedures To Be Designated as Device-Intensive
(1) Background
As discussed in the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79739 through 79740), we implemented a payment methodology for
calculating the ASC payment rates for covered surgical procedures that
are designated as device-intensive.
According to this ASC payment methodology, we apply the device
offset percentage based on the standard OPPS APC ratesetting
methodology (which does not include the C-APC methodology) to the OPPS
national unadjusted payment to determine the device cost included in
the OPPS payment rate for a device-intensive ASC covered surgical
procedure, which we then set as equal to the device portion of the
national unadjusted ASC payment rate for the procedure. We calculate
the service portion of the ASC payment for device-intensive procedures
by applying the uniform ASC conversion factor to the service (non-
device) portion of the OPPS relative payment weight for the device-
intensive procedure. Finally, we sum the ASC device portion and ASC
service portion to establish the full payment for the device-intensive
procedure under the ASC payment system.
We also finalized in the CY 2017 OPPS/ASC final rule that device-
intensive procedures will be subject to all of the payment policies
applicable to procedures designated as an ASC device-intensive
procedure under our established methodology, including our policies on
no cost/full credit and partial credit devices and discontinued
procedures.
In addition, in the CY 2017 OPPS/ASC final rule with comment period
(81 FR 79739 through 79740), we adopted a policy for new HCPCS codes
describing procedures involving the implantation of medical devices
that do not yet have associated claims data, to designate these
procedures as device-intensive with a default device offset set at 41
percent until claims data are available to establish the HCPCS code-
level device offset for the procedures. This default device offset
amount of 41 percent is not calculated from claims data; instead, it
[[Page 59041]]
is applied as a default until claims data are available upon which to
calculate an actual device offset for the new code. The purpose of
applying the 41-percent default device offset to new codes that
describe procedures that involve the implantation of medical devices
would be to ensure ASC access for new procedures until claims data
become available. However, in certain rare instances, for example, in
the case of a very expensive implantable device, we indicated we might
temporarily assign a higher offset percentage if warranted by
additional information, such as pricing data from a device
manufacturer. Once claims data are available for a new procedure
involving the implantation of a medical device, the device-intensive
designation is applied to the code if the HCPCS code device offset is
greater than 40 percent, according to our policy of determining device-
intensive status, by calculating the HCPCS code-level device offset.
(2) Changes to List of ASC Covered Surgical Procedures Designated as
Device-Intensive for CY 2019
In the CY 2019 OPPS/ASC proposed rule (83 FR 37158), we noted that,
as discussed in section IV.B.2. of the proposed rule, for CY 2019 we
proposed to modify our criteria for device-intensive procedures to
better capture costs for procedures with significant device costs. We
proposed to allow procedures that involve surgically inserted or
implanted, high-cost, single-use devices to qualify as device-intensive
procedures. In addition, we proposed to modify our criteria to lower
the device offset percentage threshold from 40 percent to 30 percent.
Specifically, for CY 2019 and subsequent years, we proposed that
device-intensive procedures would be subject to the following criteria:
All procedures must involve implantable devices assigned a
CPT or HCPCS code;
The required devices (including single-use devices) must
be surgically inserted or implanted; and
The device offset amount must be significant, which is
defined as exceeding 30 percent of the procedure's mean cost.
Corresponding to this change in the cost criterion we proposed that the
default device offset for new codes that describe procedures that
involve the implantation of medical devices would be 31 percent
beginning in CY 2019. For new codes describing procedures that are
payable when furnished in an ASC involving the implantation of a
medical device, we proposed that the default device offset would be
applied in the same manner as proposed in section IV.B.2. of the
proposed rule. We proposed to amend Sec. 416.171(b)(2) of the
regulations to reflect these new device criteria.
In addition, as also proposed in section IV.B.2. of the proposed
rule, to further align the device-intensive policy with the criteria
used for device pass-through status, we proposed to specify, for CY
2019 and subsequent years, that for purposes of satisfying the device-
intensive criteria, a device-intensive procedure must involve a device
that:
Has received FDA marketing authorization, has received an
FDA investigational device exemption (IDE) and has been classified as a
Category B device by the FDA in accordance with 42 CFR 405.203 through
405.207 and 405.211 through 405.215, or meets another appropriate FDA
exemption from premarket review;
Is an integral part of the service furnished;
Is used for one patient only;
Comes in contact with human tissue;
Is surgically implanted or inserted (either permanently or
temporarily); and
Is not any of the following:
(a) Equipment, an instrument, apparatus, implement, or item of this
type for which depreciation and financing expenses are recovered as
depreciable assets as defined in Chapter 1 of the Medicare Provider
Reimbursement Manual (CMS Pub. 15-1); or
(b) A material or supply furnished incident to a service (for
example, a suture, customized surgical kit, scalpel, or clip, other
than a radiological site marker).
Based on our proposed modifications to our device-intensive
criteria, for CY 2019, we proposed to update the ASC CPL that are
eligible for payment according to our proposed device-intensive
procedure payment methodology, reflecting the proposed individual HCPCS
code device-offset percentages based on CY 2017 OPPS claims and cost
report data available for the proposed rule.
The ASC covered surgical procedures that we proposed to designate
as device-intensive, and therefore subject to the device-intensive
procedure payment methodology for CY 2019, were assigned payment
indicator ``J8'' and were included in ASC Addendum AA to the proposed
rule (which is available on the CMS website). The CPT code, the CPT
code short descriptor, and the proposed CY 2019 ASC payment indicator,
and an indication of whether the full credit/partial credit (FB/FC)
device adjustment policy would apply because the procedure is
designated as device intensive also are included in Addendum AA to the
proposed rule. In addition, for CY 2019, we proposed to only apply our
proposed device-intensive procedure payment methodology to device-
intensive procedures under the ASC payment system when the device-
intensive procedure is furnished with a surgically inserted or
implanted device (including single use medical devices). Under this
proposal, the payment rate under the ASC payment system for device-
intensive procedures furnished without an implantable or inserted
medical device would be calculated by applying the uniform ASC
conversion factor to both the device portion and service (nondevice)
portion of the OPPS relative payment weight for the device-intensive
procedure and summing both portions (device and service) to establish
the ASC payment rate.
Comment: The majority of commenters supported the proposal to lower
the device offset percentage threshold for procedures to qualify as
device-intensive from greater than 40 percent to greater than 30
percent. The commenters believed that the proposed policy change will
encourage migration of services into the high-quality, less-expensive
ASC setting, resulting in cost savings to the Medicare program and
Medicare beneficiaries. Some of these commenters encouraged CMS to
further modify its proposal and instead lower the device offset
percentage threshold for procedures to qualify as device-intensive to
25 percent instead of 30 percent.
Response: We appreciate commenters' support. At this time, we
continue to believe that applying a device offset percentage threshold
of greater than 30 percent for procedures to qualify as device-
intensive is most appropriate for the reasons described in our original
proposal. We will take commenters' suggestion of applying a device
offset percentage threshold of greater than 25 percent for procedures
to qualify as device-intensive into consideration for future
rulemaking.
Comment: The majority of commenters supported CMS proposal to
modify the device-intensive criteria to allow procedures that involve
single-use devices, regardless of whether they remain in the body after
the conclusion of the procedure, to qualify as device-intensive
procedures. The commenters believed that this proposed policy change
will better support accurate payment for procedures where an
implantable device is a significant proportion of total costs and,
ultimately, will spur innovation.
[[Page 59042]]
Response: We appreciate the commenters' support.
Comment: One commenter requested that CMS assign device-intensive
status, payment indicator ``J8'', to CPT codes 0410T (Insertion or
replacement of permanent cardiac contractility modulation system,
including contractility evaluation when performed, and programming of
sensing and therapeutic parameters; pulse generator only), 0411T
(Insertion or replacement of permanent cardiac contractility modulation
system, including contractility evaluation when performed, and
programming of sensing and therapeutic parameters; ventricular
electrode only), and 0414T (Removal and replacement of permanent
cardiac contractility modulation system pulse generator only).
Response: We agree with the commenter's request and have assigned
CPT codes 0410T, 0411T, and 0414T to payment indicator ``J8'' for CY
2019. These CPT codes represent procedures requiring the implantation
of medical devices that do not yet have associated claims data and
therefore have been granted device-intensive status with our current
default device offset percentage of 31 percent, in accordance with our
current policy outlined in the CY 2017 OPPS/ASC final rule with comment
period (81 FR 79658).
Comment: A few commenters suggested that CMS only adjust the non-
device portion of the payment by the wage index, consistent with the
Agency's policy for separately payable drugs and biologicals.
Response: In response to the commenters' suggestion that CMS only
adjust the non-device portion of the payment by the wage index, we note
that such a policy would increase payment for providers with a
relatively low wage index (that is, a wage index value of less than 1)
and decrease it for providers with a relatively high wage index (that
is, a wage index value of greater than 1), and that we did not make
such a proposal. However, we will take this comment into consideration
for future rulemaking.
Comment: A few commenters urged CMS to calculate the device offset
percentage for potential device-intensive procedures using the standard
(non-comprehensive APC) ASC ratesetting methodology and to assign
device-intensive status in the ASC system based on that device offset
percentage because they believed it is more consistent with the overall
ASC payment system. One commenter requested some clarification in the
final rule with comment period about CMS' current methodology for
calculating the device offset percentage for device-intensive
procedures and specifically asked that CMS: