Food Safety and Inspection Service
Economic Development Administration
Industry and Security Bureau
International Trade Administration
National Institute of Standards and Technology
National Oceanic and Atmospheric Administration
Federal Energy Regulatory Commission
Agency for Healthcare Research and Quality
Centers for Disease Control and Prevention
Centers for Medicare & Medicaid Services
Children and Families Administration
Food and Drug Administration
National Institutes of Health
Substance Abuse and Mental Health Services Administration
Coast Guard
Federal Emergency Management Agency
Indian Affairs Bureau
Land Management Bureau
Ocean Energy Management Bureau
Surface Mining Reclamation and Enforcement Office
Federal Bureau of Investigation
Justice Programs Office
Federal Aviation Administration
Federal Motor Carrier Safety Administration
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/accounts/USGPOOFR/subscriber/new, enter your e-mail address, then follow the instructions to join, leave, or manage your subscription.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E airspace at Utopia, TX. The FAA is taking this action to support new public instrument procedures.
Effective date 0901 UTC, October 31, 2024. The Director of the Federal Register approves this incorporation by reference action under 1 CFR part 51, subject to the annual revision of FAA Order JO 7400.11 and publication of conforming amendments.
A copy of the Notice of Proposed Rulemaking (NPRM), all comments received, this final rule, and all background material may be viewed online at
FAA Order JO 7400.11H, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Raul Garza Jr., Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222-5874.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes Class E airspace extending upward from 700 feet above the surface at Brushy Creek Ranch Airport, Utopia, TX, to support instrument flight rule operations at this airport.
The FAA published an NPRM for Docket No. FAA 2024-0732 in the
An FAA database review noted that the incorrect airport name was used in the NPRM. This Final Rule replaces the incorrect airport name with the correct airport name,: Brushy Creek Ranch Airport. This action does not change the airspace dimensions or operating requirements.
Class E airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11H, dated August 11, 2023 and effective September 15, 2023. FAA Order JO 7400.11H is publicly available as listed in the
FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
This action amends 14 CFR part 71 by establishing Class E airspace upward from 700 feet above the surface within a 10-mile radius of Brushy Creek Ranch Airport, Utopia, TX.
This action supports new public instrument procedures.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5.a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p.389.
That airspace extending upward from 700 feet above the surface within a 10-mile radius of the Brushy Creek Ranch Airport.
Department of State.
Interim final rule; correction.
The Department of State (the Department) is correcting an interim final rule that appeared in the
Effective on September 1, 2024.
Ms. Engda Wubneh, Foreign Affairs Officer, Office of Defense Trade Controls Policy, U.S. Department of State, telephone (771) 205-9566; email
In FR Doc. 2024-18043, beginning on page 67270 in the
Department of State.
Final rule.
The Vienna Convention on Diplomatic Relations defines “diplomatic agent” and the level of immunity enjoyed by a diplomatic agent. However, because some other individuals who are not themselves “diplomatic agents” as defined in the VCDR also enjoy what is known as “diplomatic agent-level immunity,” the Department of State is promulgating this regulation to clearly and correctly define which foreign persons enjoy diplomatic agent-level immunity within the United States and clarify that the determination of who enjoys diplomatic agent-level immunity and lesser status-based immunity, which is both legal and factual in nature, is made by the Department of State.
This rule is effective on August 28, 2024.
Clifton M. Johnson, Diplomatic Law and Litigation, Office of the Legal Adviser, Department of State, Washington, DC 20520, (202) 647-1075, or
Pursuant to Article II of the Constitution which provides the President with the right to receive ambassadors and other public ministers, the Secretary of State's role to execute the foreign policy of the United States, specific provisions of the U.S. Code discussed below, and well established case law as noted below, the U.S. Department of State is uniquely positioned as the sole United States government agency that accepts the accreditation of foreign diplomats, and is authorized to determine and certify the diplomatic status of a foreign individual and the immunity enjoyed by that individual.
This regulation defines who enjoys diplomatic agent-level immunity and clarifies the comprehensive scope of diplomatic agents' immunity for the non-exclusive purpose of facilitating judicial and administrative proceedings in the United States. The regulation also clarifies that the determination of who enjoys diplomatic agent-level immunity and lesser status-based immunity is one that requires application of law to facts and is made by the Department of State—not any other federal agency or by any foreign mission in the United States. Individuals enjoying diplomatic agent-level immunity are not subject to the criminal jurisdiction of the United States, and are immune from the civil or administrative jurisdiction of the United States, with limited exceptions. Such immunity is enjoyed by diplomatic agents at bilateral diplomatic missions pursuant to the Vienna Convention on Diplomatic Relations (VCDR, 23 U.S.T. 3227; see Articles 29 and 31 in particular); certain senior officials of the United Nations pursuant to Article V, Section 19 of the Convention on Privileges and Immunities of the United Nations of 1970 (21 U.S.T. 1418) (“UN Convention”); diplomatic staff at Permanent Missions of Member States to the United Nations pursuant to Article V, Section 15 of the United Nations Headquarters Agreement of 1947 (1947 U.S.T. 529) and Article IV, Section 11 of the UN Convention; consular officers assigned to consulates of countries with which the United States has an enhanced immunities agreement that “enhances” their immunity to diplomatic agent-level; certain senior officials of and representatives to some international organizations (see,
Accordingly, the intent of the regulation is to strengthen the ability of law enforcement, the courts, foreign governments, and the public to recognize and rely upon authoritative determinations by the United States of the diplomatic status and corresponding level of status-based immunity enjoyed by foreign individuals. It is meant to discourage reliance on outdated or incomplete documentation of diplomatic status or assertions by persons other than Department of State officials that may lead to inaccurate understandings of who enjoys immunity and the scope of that immunity, and to direct interested parties to instead consult with the Department of State for such information. By doing so, the regulation will help ensure that individuals entitled to immunity will be treated accordingly and reduce the risk that individuals who erroneously or misleadingly assert such status are accorded immunity to which they are not entitled. The regulation is necessary to ensure the Secretary of State can continue to meet international and domestic legal obligations to respect the immunities accredited foreign diplomats enjoy. Specifically, the VCDR and various bilateral treaties enhancing immunities of individuals other than diplomatic agents establish immunities that the United States is obligated to respect under international law. Additionally, the Diplomatic Relations Act of 1978 (22 U.S.C. 254b(c)) establishes immunities for members of foreign missions and their families for foreign States not party to the VCDR. The Secretary and the Department of State are uniquely positioned to fulfill those responsibilities in this manner.
The Department of State has legal authority to promulgate this regulation. Article II, Section 3 of the United States Constitution directs the President to “receive Ambassadors and other public Ministers.” 22 U.S.C. 2656 grants the Secretary of State authority to perform duties relative to matters respecting foreign affairs, including duties regarding applications and requests from foreign public ministers or other foreigners. Pursuant to this statutory authority, as well as Article 9 of the VCDR and Article 23 of the VCCR, the Department accepts accreditation of members of foreign diplomatic or consular missions at its discretion. Additionally, Article 10 of the VCDR and Article 24 of the VCCR provide that the Ministry of Foreign Affairs specifically, or the authority designated by that ministry (per the VCCR) or such other ministry as may be agreed (per the VCDR), shall be notified of the appointment of members of a diplomatic or consular mission. Under the VCDR, the Department of State has the broad discretion to classify diplomats. See
With respect to determining the status-based immunity that accredited foreign individuals and their family members enjoy, the Diplomatic Relations Act of 1978 (22 U.S.C. 254c(a)) authorizes the President to, “on the basis of reciprocity and under such terms and conditions as he may determine, specify privileges and immunities for members of the mission, their families and the diplomatic couriers of any sending state which result in more favorable or less favorable treatment than is provided under the Vienna Convention.” The President has delegated authority to prescribe regulations for that purpose to the Secretary of State through Executive Order 12101 (43 FR 54195), amended by Executive Order 12608 (52 FR 34617). The Diplomatic Relations Act of 1978, as amended (22 U.S.C. 254c(b)) also authorizes the Secretary of State, on the basis of reciprocity and under such terms and conditions as the Secretary may determine, with the concurrence of the Attorney General, to specify privileges and immunities for a consular post, the members of a consular post, and their families which result in more favorable or less favorable treatment than is provided in the VCCR. The Secretary's determinations of the scope of the status-based immunity of foreign individuals in that regard are made pursuant to international agreements with foreign governments that the Department of State negotiates, concludes, and interprets pursuant to 22 U.S.C. 254c(b), as well as the President's Article II authority to speak as the sole organ of the government with respect to agreements regarding diplomatic relations, delegated to the Secretary. See 22 U.S.C. 2656;
As the above authorities illustrate, the Department of State is authorized to and responsible for determining whether someone enjoys diplomatic agent-level immunity or other status-based immunity, consistent with the concurrence requirements of 22 U.S.C. 254c(b), as applicable. 22 U.S.C. 2651a authorizes the Secretary “to promulgate such rules and regulations as may be necessary to carry out the functions of the Secretary of State and the Department of State.” Clarifying that the Department of State is responsible for indicating which foreign individuals enjoy diplomatic agent-level immunity or lesser status-based immunity will reduce the risk of conflicting determinations of the diplomatic status and corresponding immunity foreign individuals and their family members may enjoy.
Courts have long held that the Department of State's certification is “conclusive and dispositive evidence” of a diplomat's entitlement to status-based immunity.
This rulemaking is published as a final rule since it relates to a foreign affairs function of the United States and is exempt from notice-and-comment rulemaking. 5 U.S.C. 553(a)(1). Because this rulemaking is exempt from 5 U.S.C. 553, the provisions of 5 U.S.C. 553(d) are not applicable and this rule is effective immediately.
Since this rule is exempt from notice and comment rulemaking, it is also exempt from the provisions of the Regulatory Flexibility Act, 5 U.S.C. 601
This rulemaking does not constitute a major rule, as defined by 5 U.S.C. 804, for purposes of congressional review of agency rulemaking.
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. This rule will not result in any such expenditure nor would it significantly or uniquely affect small governments.
This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor will the regulations have federalism implications warranting the application of Executive Orders 12372 and 13132. This rule will not have tribal implications, will not impose costs on Indian tribal governments, and will not pre-empt tribal law. Accordingly, the requirements of Executive Order 13175 do not apply to this rulemaking.
This rule has been drafted in accordance with the principles of Executive Orders 12866 (as amended by Executive Order 14094) and 13563. This rule has been determined to be a significant rulemaking under section 3 of Executive Order 12866, but not significant under section 3(f)(1). The benefits of the rule are qualitative, in that the rule provides clarity for foreign governments and their personnel, and secondarily for domestic officials and the public, on which individuals are entitled to diplomatic agent-level immunity and the scope of that immunity. Individuals enjoying diplomatic agent-level immunity are not subject to the criminal jurisdiction of the United States, and are immune from the civil or administrative jurisdiction of the United States, with limited exceptions. There are no costs to the rulemaking as the United States is already required to accord immunity to certain foreign individuals pursuant to its obligations under international law, including the VCDR. The rule does not expand or otherwise change the categories or number of individuals who enjoy diplomatic agent-level immunity. The promulgation of this rule will not increase the number of individuals accorded diplomatic agent-level immunity, as the rule will not affect the long-standing standards by which the Department determines a foreign individual's status and corresponding immunity. This rule will help ensure that law enforcement, the courts, foreign governments, and the public are aware of the need to consult the Department of State to understand foreign individuals' diplomatic status and corresponding immunity, which is relevant for, among other purposes, understanding whether their family members born in the United States were born subject to the jurisdiction of the United States under the Fourteenth Amendment of the U.S. Constitution. The rule would reduce the risk of erroneous determinations detrimental to the foreign relations of the United States. This rule also clarifies that the Department itself, in accordance with international and domestic law and taking into account the comprehensive information available to it related to diplomatic status, identifies the diplomatic status and corresponding immunities of foreign persons. In the absence of this rule, there is continued risk of immunity being extended or not extended erroneously, which can result in, inter alia, the inappropriate exercise of criminal jurisdiction over accredited diplomats; the inaccurate determination of lawful permanent residence status; and erroneous decisions on whether an individual was born in the United States subject to the jurisdiction of the Fourteenth Amendment. Therefore, the Department believes that the qualitative benefits of this rulemaking are manifest, and there are few costs.
This rule has been reviewed in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.
Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Foreign officials; Immunity.
For the reasons set forth above the State Department amends title 22, chapter I by adding part 150 to subpart P to read as follows:
22 U.S.C. 2651a, 2656; 22 U.S.C. 254c; Vienna Convention on Diplomatic Relations, Done at Vienna April 18, 1961, 23 U.S.T. 3227; Vienna Convention on Consular Relations, Done at Vienna April 24, 1963, 21 U.S.T. 77; Convention on the Privileges and Immunities of the United Nations, 21 U.S.T. 1418.
Diplomatic Agent-Level Immunity refers to the complete immunity from the criminal jurisdiction of the United States and to comprehensive immunity from the civil and administrative jurisdiction of the United States, and is enjoyed by:
(a) Foreign individuals accredited to the United States as “diplomatic agents” under the Vienna Convention on Diplomatic Relations, and the family members forming part of their households;
(b) Foreign individuals accredited to the United States as administrative and technical staff or service staff of diplomatic missions, or as consular officers of consular missions, and the family members forming part of their households, representing a foreign government with which the United States has an international agreement for the enhancement of immunity of
(c) Certain other foreign officials and representatives as determined by the Department of State.
The question of whether any particular person enjoys diplomatic agent-level immunity and is therefore not subject to the jurisdiction of the United States, or whether they enjoy lesser status-based immunity, on any particular date entails both factual and legal analysis, and is determined by the Department of State, in accordance with relevant international and domestic law.
The provisions of this part are separate and severable from one another. If any provision is stayed or determined to be invalid, it is the Department of State's intention that the remaining provisions shall continue in effect.
Office of Surface Mining Reclamation and Enforcement, Interior.
Final rule; correction.
We, the Office of Surface Mining Reclamation and Enforcement (OSMRE), published a document in the
This correction is effective August 28, 2024.
Mr. Michael Castle, Acting Director, Charleston Field Office, Telephone: (859) 260-3900. Email:
In the final rule published Monday, March 18, 2024, in FR Doc. 2024-05682, on page 19273, column 2, a revision to 30 CFR 948.12 (State statutory, regulatory, and proposed program amendment provisions not approved) that revised paragraph (k) will be corrected to instead add that provision as new paragraph (l). Additionally, we are revising paragraph (k) to reinstate the deferral as it existed in the CFR prior to the publication of the
(k) We are not approving the following portions of provisions of the proposed program amendment that West Virginia submitted on May 15, 2017:
(1) We are deferring our decision on the deletion of provisions from W.Va. Code 22-3-11(g)(2) regarding the development of a long-range planning process for the selection and prioritization of sites to be reclaimed. We defer our decision until we make a determination on West Virginia's related amendment docketed as WV-128-FOR, which relates to the complete and accurate listing of all outstanding reclamation obligations (including water treatment on active permits in the State.
(2) [Reserved]
(l) We are not approving the following provisions of the proposed West Virginia program amendments dated May 2, 2018:
(1) At W.Va. Code 22-3-9, revisions substituting notice by newspaper with notice in a form and manner determined by the Secretary which may be electronic.
(2) At W.Va. Code 22-3-20, revisions substituting notice by newspaper with notice in a form and manner determined by the Secretary which may be electronic.
(3) At CSR 38-2-2.37, the removal of the definition “completion of reclamation”.
(4) At CSR 38-2-12.2.d., the elimination to the existing prohibition on bond release for any site specific bonding (
(5) At CSR 38-2-12.2.e., to restructure and revise existing approved language in this section and move it to CSR 38-2-12.2.a.4.
(6) At CSR 38-2-12.2.f., to move, unchanged, this existing language to CSR 38-2-12.2.d.
(7) At CSR 38-2-12.2.g., to move, unchanged, this existing language to CSR 38-2-12.2.f.
(8) At CSR 38-2-12.2.h., to renumber existing CSR 38-2-12.2.h to 12.2.i. and to insert it as a new CSR 38-2-12.2.h.
(9) At CSR 38-2-12.4.c., to eliminate an existing 180 day window for initiating reclamation operations to reclaim the site in accordance with the approved reclamation plan or modification thereof.
(10) At CSR 38-2-12.5., to delete subsection 12.5 of the West Virginia regulations, which directs WVDEP's collection, analysis and reporting on sites where bond has been forfeited including, in particular, data relating to the water quality of water being discharged from forfeited sites.
Coast Guard, DHS.
Notification of enforcement of regulation.
The Coast Guard will enforce a special local regulation for the Olympia Harbor Days Tugboat Races from 12 until 3 p.m. on September 1, 2024, to ensure the safety of life on the navigable waters of Budd Inlet during the event. During the enforcement period, no person or vessel may enter the regulated area without permission from the on-scene patrol craft.
The regulations in 33 CFR 100.1309 will be enforced from noon until 3 p.m. on September 1, 2024.
If you have questions about this notification of enforcement, call or email Lieutenant Anthony Pinto, Waterways Management Division, U.S. Coast Guard Sector Puget Sound at 205-217-6051 or
The Coast Guard will enforce special local regulation in 33 CFR 100.1309 for the Olympia Harbor Days Tugboat Races in Budd Inlet, WA, from noon until 3 p.m. on September 1, 2024. This action is necessary to ensure the safety of life on the navigable waterways of Budd Inlet during this event. The regulation for the marine events within the Thirteenth Coast Guard District, § 100.1309(a), specifies the location of the regulated area for the Olympia Harbor Days Tugboat Races, which encompasses approximately 2 nautical miles of the navigable waters in Budd Inlet, WA. During the enforcement period, as specified in § 100.1309(c), all persons or vessels who desire to enter the regulated race area while it is enforced must obtain permission from the on-scene patrol craft on VHF Ch 13.
In addition to this notice of enforcement in the
Dated: August 20, 2024.
Coast Guard, DHS.
Notification of enforcement of regulation.
The Coast Guard will enforce the safety zone regulation for the Mukilteo Lighthouse Festival to provide for the safety of life on navigable waters on the Possession Sound, Seattle, Washington during an annual fireworks display. This safety zone will consist of all navigable waters within a 450-yard radius surrounding the event's launch site. Our regulation for safety zones within the Captain of the Port Puget Sound (COTP) Area of Responsibility identifies the specific location for this launch site and the corresponding safety zone for the event.
The regulations in 33 CFR 165.1332 will be enforced from 7 through 10 p.m. for the safety zone identified in the table of § 165.1332, for the Mukilteo Lighthouse Festival event, on September 7, 2024.
If you have questions about this notification of enforcement, call or email Mr. Jeffrey Zappen, Sector Puget Sound Waterways Management, U.S. Coast Guard; telephone 206-217-6076, or email
The Coast Guard will enforce the regulations in 33 CFR 165.1332 for the safety zone identified in the table of § 165.1332, for the Mukilteo Lighthouse Festival on the Possession Sound, from 7 through 10 p.m. on September 7, 2024. This action is being taken to provide for the safety of life on navigable waterways during this 1-day event at the following location:
The special requirements listed in § 165.1332(b) related to fireworks barges and fireworks launch sites shall apply and be implemented during the specified enforcement period of this safety zone.
During the specified enforcement period, no vessel operator may enter, transit, moor, or anchor within this safety zone unless authorized by the COTP or their designated representative(s). The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.
All vessel operators who desire to enter the safety zone must obtain permission from the COTP or their designated representative(s) by contacting either the on-scene patrol craft on VHF Ch. 13 or Ch 16, or calling Coast Guard Sector Puget Sound's Joint Harbor Operations Center telephone 206-217-6002.
In addition to the notification of enforcement in the
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes an exemption from the requirement of a tolerance for residues of
This regulation is effective August 28, 2024. Objections and requests for hearings must be received on or before October 28, 2024, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2019-0627, is available at
Madison Le, Biopesticides and Pollution Prevention Division (7511M), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (202) 564-5754; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 174 through the Office of the Federal Register's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2019-0627 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before October 28, 2024. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2019-0627, by one of the following methods:
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
In the
Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings but does not include occupational exposure. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C), which require EPA to give
EPA evaluated the available toxicity and exposure data on IPD072Aa protein and considered its validity, completeness, and reliability, as well as the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. A summary of the data upon which EPA relied and its risk assessment based on those data can be found within the document entitled “Human Health Risk Assessment and Review of Product Characterization of the Insecticidal Plant-Incorporated Protectants,
IPD072Aa is a modified protein derived from the bacterium
Non-dietary non-occupational or residential exposure via pulmonary or ocular exposure is not likely since IPD072Aa protein is contained within plant cells, and corn pollen is not respirable nor is it present in commercial corn products. Exposure via the skin is somewhat more likely via the contact with corn products which might have been processed in a way that disrupts cellular structure. However, naturally occurring proteases are likely to degrade proteins in contact with the skin and, as described above, the IPD072Aa protein has little or no potential toxicity or allergenicity. Thus, adverse effects are not expected due to non-occupational and residential exposure to IPD072Aa. These findings are discussed in more detail in the Human Health Risk Assessment.
Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.” No risk of cumulative toxicity or effects from IPD072Aa protein has been identified as no toxicity or allergenicity has been shown for this protein in the submitted studies. Therefore, EPA has concluded that IPD072Aa protein does not have a common mechanism of toxicity with other substances.
Although FFDCA section 408(b)(2)(C) provides for an additional tenfold margin of safety for infants and children in the case of threshold effects, EPA has determined that there are no such effects due to the lack of toxicity of IPD072Aa protein. As a result, an additional margin of safety for the protection of infants and children is unnecessary.
Based upon its evaluation described above and in the Human Health Risk Assessment, EPA concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to residues of IPD072Aa protein. Therefore, an exemption from the requirement of a tolerance is established for residues of IPD072Aa protein in or on the food and feed commodities of corn: corn, field; corn, sweet; and corn, pop when used as a plant-incorporated protectant in corn.
EPA has determined that an analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation. Nonetheless, a protocol was submitted for a lateral flow test strip kit to be used for the detection of IPD072Aa protein in corn grain samples. The submitted protocol adequately describes the methodology.
This action establishes a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal governments, on the relationship between the National Government and the States or Tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, for the reasons stated in the preamble, EPA is amending 40 CFR chapter I as follows:
Residues of
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; in-season adjustment.
NMFS adjusts the 2024 Winter II commercial scup quota and per-trip Federal landing limit. This action is necessary to comply with regulations implementing Framework Adjustment 3 to the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan that established the rollover of unused commercial scup quota from the Winter I to the Winter II period. This notification informs the public of the quota and trip limit changes.
Effective October 1, 2024, through December 31, 2024.
Laura Deighan, Fishery Management Specialist, (978) 281-9184; or
NMFS published a final rule for Framework Adjustment 3 to the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan in the
For 2024, the initial Winter II quota is 3,370,790 pounds (lb; 1,528,965 kilograms (kg)). The best available landings information through August 12, 2024, indicates that 1,703,229 lb (772,572 kg) remain of the 9,539,294 lb (4,326,951 kg) Winter I quota. Consistent with Framework 3, the full amount of unused 2024 Winter I quota is being transferred to Winter II, resulting in a revised 2024 Winter II quota 5,074,019 lb (2,301,536 kg). Because the amount transferred is between 1.5 and 2 million lb (680,389 and 907,184 kg), the Federal per-trip possession limit will increase from 12,000 lb (5,443 kg) to 16,500 lb (7,484 kg), as outlined in the final rule that established the possession limit and quota rollover procedures for this year, published on December 21, 2023 (88 FR 88266). The new possession limit will be effective October 1 through December 31, 2024. The Winter II possession limit will revert to 12,000 lb (5,443 kg) at the start of the next fishing year, which begins January 1, 2025.
NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 648.122(d), which was issued pursuant to section 304(b), and is exempted from review under Executive Order 12866.
Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be contrary to the public interest. This action transfers unused quota from the Winter I Period to the Winter II Period to make it accessible to the commercial scup fishery and increase fishing opportunities. If the implementation of this in-season action is delayed to solicit prior public comment, the objective of the fishery
Nuclear Regulatory Commission
Draft guides; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) is issuing for public comment two related draft Regulatory Guides (DGs) namely DG-1420, “Criteria for Power Systems for Nuclear Power Plants,” and DG-1354, “Criteria for the Protection of Class 1E Power Systems and Equipment for Nuclear Power Plants.” DG-1420 is proposed Revision 4 to Regulatory Guide (RG) 1.32 of the same name and DG-1354 is newly proposed Revision 0 of RG 1.238. DG-1420 describes an approach that is acceptable to the NRC staff to meet regulatory requirements for the design, operation, and testing of electric power systems in nuclear power plants. DG-1354 describes an approach that is acceptable to the NRC staff for use in complying with NRC regulations that address the protection of Class 1E power systems and equipment at nuclear power plants.
Submit comments by September 27, 2024. Comments received after this date will be considered if it is practical to do so, but the NRC is able to ensure consideration only for comments received on or before this date.
You may submit comments by any of the following methods; however, the NRC encourages electronic comment submission through the Federal rulemaking website.
•
•
For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Michael Eudy, Office of Nuclear Regulatory Research, telephone: 301-415-3104; email:
Please refer to Docket ID NRC-2024-0140 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
•
•
•
The NRC encourages electronic comment submission through the Federal rulemaking website (
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
The NRC is issuing for public comment two DGs in the NRC's “Regulatory Guide” series namely DG-1354 and DG-1420. This series was developed to describe methods that are acceptable to the NRC staff for implementing specific parts of the agency's regulations, to explain techniques that the staff uses in evaluating specific issues or postulated events, and to describe information that the staff needs in its review of applications for permits and licenses.
The DG, entitled “Criteria for Power Systems for Nuclear Power Plants,” is temporarily identified by its task
DG-1420 describes an approach that is acceptable to the NRC staff to meet regulatory requirements for the design, operation, and testing of electric power systems in nuclear power plants. DG-1420 endorses, with exceptions and clarifications, the Institute of Electrical and Electronics Engineers (IEEE) Standard (Std.) 308 2020, “IEEE Standard Criteria for Class 1E Power Systems for Nuclear Power Generating Stations.” In addition, DG-1420 includes the guidance provisions of RG 1.41, Revision 0, “Preoperational Testing of Redundant On-Site Electric Power Systems to Verify Proper Load Group Assignments,” which describes methods acceptable to the NRC for independence among redundant, onsite power sources and their load groups as part of the initial preoperational testing program and after major modifications or repairs. The staff plans to withdraw RG 1.41 if DG-1420 is finalized as RG 1.32, Revision 4.
DG-1354 describes an approach that is acceptable to the staff of the NRC for use in complying with NRC regulations that address the protection of Class 1E power systems and equipment at nuclear power plants. DG-1354 endorses, with exceptions, additions and clarifications, IEEE Std. 741-2022, “IEEE Standard for Criteria for the Protection of Class 1E Power Systems and Equipment for Nuclear Power Generating Stations.”
The staff is also issuing for public comment the draft regulatory analyses (ADAMS Accession Nos. ML24158A062 and ML24158A042). The staff developed these regulatory analyses to assess the value of issuing or revising the RGs as well as alternative courses of action.
As noted in the
If finalized, DG-1420 and DG-1354, would not constitute backfitting as defined in 10 CFR 50.109, “Backfitting,” and as described in NRC Management Directive (MD) 8.4, “Management of Backfitting, Forward Fitting, Issue Finality, and Information Requests”; affect issue finality of any approval issued under 10 CFR part 52, “Licenses, Certificates, and Approvals for Nuclear Power Plants”; or constitute forward fitting as defined in MD 8.4, because, as explained in these DGs, licensees would not be required to comply with the positions set forth in these DGs.
A member of the public may, at any time, submit suggestions to the NRC for improvement of existing RGs or for the development of new RGs. Suggestions can be submitted on the NRC's public website at
For the Nuclear Regulatory Commission.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notification of data availability and request for comment.
On October 10, 2023, the U.S. Department of Energy (“DOE”) published a notice of proposed rulemaking (“NOPR”), in which DOE proposed new and amended energy conservation standards for commercial refrigerators, freezers, and refrigerator-freezers. In this notification of data availability (“NODA”), DOE is providing updated analytical results that reflect updates to the analysis that DOE is considering based on feedback received in response to the October 10, 2023, NOPR. DOE requests comments, data, and information regarding the updated analyses.
DOE will accept comments, data, and information regarding this NODA no later than September 27, 2024.
Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at
(1)
(2)
(3)
No telefacsimiles (“faxes”) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section IV of this document.
The docket web page can be found at
Mr. Jeremy Dommu, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000
Ms. Kristin Koernig, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-4798. Email:
For further information on how to submit a comment or review other public comments and the docket, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:
EPCA authorizes DOE to regulate the energy efficiency of a number of consumer equipment and certain industrial equipment. (42 U.S.C. 6291-6317, as codified) Title III, Part C of EPCA,
DOE defines a “commercial refrigerator, freezer, or refrigerator-freezer,” consistent with EPCA's definition at 42 U.S.C. 6311(9) and codified at title 10 Code of Federal Regulations (“CFR”) 431.62, as refrigeration equipment that is not a consumer product (as defined in 10 CFR 430.2); is not designed and marketed exclusively for medical, scientific, or research purposes; operates at a chilled, frozen, combination chilled and frozen, or variable temperature; displays or stores merchandise and other perishable materials horizontally, semi-vertically, or vertically; has transparent or solid doors, sliding or hinged doors, a combination of hinged, sliding, transparent, or solid doors, or no doors; is designed for pull-down temperature applications or holding temperature applications; and is connected to a self-contained condensing unit or to a remote condensing unit.
On March 28, 2014, DOE published a final rule in the
On October 10, 2023, DOE published in the
DOE is currently considering comments and feedback received in response to the October 2023 NOPR and November 2023 Public Meeting. DOE has also conducted revised analysis with regard to some of the topics on which it received feedback, as discussed throughout this document. Based on this feedback and DOE's additional analysis, DOE is considering updates to certain inputs to the analysis and certain analytical approaches as presented in the October 2023 NOPR. DOE is publishing this NODA to show how such updates would affect the analytical results in comparison to the results presented in the October 2023 NOPR.
This document provides a high-level summary of the analytical updates that DOE is considering. DOE is also publishing a separate support document (“NODA support document”) and its engineering spreadsheet (“NODA engineering spreadsheet”), available in the docket for this proposed rulemaking, that provide greater details and a full set of analytical results that include updates as compared to the analysis conducted for the October 2023 NOPR. DOE is requesting comments, data, and information regarding the updated analysis. DOE also welcomes feedback and public input on the methodological and analytical approaches used in this updated analysis.
DOE notes that, in this document, DOE is not summarizing or responding to any specific comments received in response to the October 2023 NOPR and November 2023 Public Meeting. DOE is continuing to consider all of the stakeholder comments received in response to the October 2023 NOPR and November 2023 Public Meeting in further development of the rulemaking. Based on consideration of all of the public comments received, including any additional comments received in response to this NODA, DOE may adopt energy efficiency levels that are either higher or lower than the standards proposed in the October 2023 NOPR.
The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of the equipment. For each equipment class, DOE estimates the baseline cost (
In performing the engineering analysis for CRE, DOE selected representative units for each primary equipment class to serve as analysis points in the development of cost-efficiency curves. In the October 2023 NOPR, DOE presented results for a single representative unit at a specific capacity for each CRE equipment class. 88 FR 70196, 70225. In this NODA, DOE made one change to its approach for selecting representative units for the engineering analysis from the October 2023 NOPR.
DOE analyzed additional representative capacities for certain equipment classes in consideration of recent updates to future refrigerant requirements and safety standards in this NODA. In the October 2023 NOPR, DOE stated that it expects that the use of R-290 generally will improve efficiency as compared with the refrigerants currently in use (
Since publishing the October 2023 NOPR, DOE has performed additional analysis as described below—as well as received additional feedback from CRE manufacturers—indicating that larger CRE units, which contain more refrigerant than smaller units, would require more R-290 refrigerant than the maximum allowable charge size specified by UL 60335-2-89. For such equipment, manufacturers will likely instead need to implement other low-GWP refrigerant options to comply with the GWP limits in the October 2023 EPA Final Rule. DOE has identified R-454C and R-455A as alternatives that are mildly flammable (designated “A2L”) refrigerants currently available and could be used for units with cooling capacities greater than would be achievable using an allowable R-290 charge size.
In recognition of this, DOE analyzed two different representative capacities for the following 7 equipment classes: VOP.SC.M, SVO.SC.M, HZO.SC.L, SOC.SC.M,
Table II.1 presents the 7 equipment classes for which DOE analyzed two representative capacities. This NODA presents analytical results of this approach under consideration for each of these 7 equipment classes.
In support of this NODA, DOE investigated currently available compressor performance data of compressors using R-404A, R-454C, and R-455A to compare performance for compressors applicable to CRE in the larger volume or TDA range of each equipment class presented in table II.1. This investigation indicates that compressors using R-454C and R-455A have performance similar to compressors with refrigerants already in use (
Based on feedback to the October 2023 NOPR and in support of this NODA, DOE did not find compressor cost data to indicate that the price of an A2L compressor would be different than the price of an R-290 compressor at the same cooling capacity. As a result, DOE assumes the same cost for an A2L compressor as an R-290 compressor of the same compressor capacity in this NODA. DOE requests comment on any information or cost data that may indicate that the price of an A2L compressor would be different than the price of an R-290 compressor at the same cooling capacity.
As discussed previously, in the October 2023 NOPR, DOE assumed that manufacturers would convert self-contained CRE models to R-290. The use of R-290 is generally expected to provide higher efficiency performance at the baseline level (compared to current refrigerants), such that the baseline efficiency levels defined in the October 2023 NOPR for each class generally reflected a lower energy use than the currently applicable DOE standards for CRE. 88 FR 70196, 70227-70228. In the October 2023 NOPR, DOE's analysis considered that these efficiency improvements, equipment costs, and manufacturer investments required to comply with the December 2022 EPA NOPR would be in effect prior to the time of compliance for the October 2023 NOPR proposed amended DOE CRE standards for all CRE equipment classes and sizes. 88 FR 70196, 70228. Therefore, in the October 2023 NOPR, DOE noted that the October 2023 NOPR analysis did not consider benefits and costs resulting from the December 2022 EPA NOPR. 88 FR 70196, 70208. DOE clarifies that DOE has not double counted any energy savings from the October 2023 EPA
In the October 2023 NOPR, DOE initially determined the energy use associated with the defined baseline efficiency levels for each equipment class by maximizing the single-speed compressor efficiency achievable for each respective equipment class based on the CRE compressors available at the time of the analysis from two commonly-used compressor manufacturers.
In this NODA, DOE updated its analysis of R-290 compressor performance to reflect the average compressor efficiency from the database of CRE compressors it has collected, instead of the maximum compressor efficiency as considered in the October 2023 NOPR. After the publication of the October 2023 NOPR, DOE was able to incorporate into this NODA compressor performance data from an additional compressor manufacturer that was not available to DOE for the October 2023 NOPR. Based on this updated approach, on average, the medium-temperature compressor energy savings presented in this NODA are less than the compressor energy savings in the October 2023 NOPR and the low-temperature compressor energy savings presented in this NODA are greater than the compressor energy savings in the October 2023 NOPR. Table II.2 presents the updated baseline energy use associated with each equipment class, expressed as a reduction in energy compared to the currently applicable standard, for both the R-290 and A2L (if applicable) representative units for each class. As discussed in the previous section, for the large representative capacities (which assume the use of A2L refrigerants), the baseline energy use is set equal to the current standard.
Based on feedback in response to the October 2023 NOPR and November 2023 Public Meeting and additional test and teardown data conducted since the October 2023 NOPR, DOE is updating certain design specifications and components assumed to be used in models at the baseline efficiency level in this NODA. These updates include the insulation R-Value (changing from 8 per inch to 6.5 per inch, which is more representative of current baseline equipment); insulation thickness (changing to be consistent with the thickness analyzed in the March 2014 Final Rule, which remain applicable to current equipment);
These changes result in adjustments to equipment cost at the baseline level, as well as to the magnitude of efficiency improvement provided by higher efficiency design options whose performance depends on the heat load.
In consideration of feedback received in response to the October 2023 NOPR, DOE has removed evaporator fan control and microchannel condensers from consideration as design options and revised the variable speed compressor coefficients, as described in the following sections.
As stated in section 3.3.7.3 of the October 2023 NOPR TSD, evaporator fan motor controls can be programmed such that the evaporator fan motor runs at a 100 percent duty cycle to circulate cold air at all times and to prevent frost build up on the evaporator coil. As a design option, evaporator fan control refers to operating the evaporator fan at an evaporator fan duty cycle less than 100 percent. This design option operates the evaporator fan at an evaporator fan duty cycle that matches the compressor duty cycle, plus some additional operating time to accomplish defrosts and stir cycles.
In the October 2023 NOPR, DOE analyzed the evaporator fan control design option for self-contained, closed CRE. 88 FR 70196, 70222. Feedback received in response to the October 2023 NOPR suggests that the use of evaporator fan controls could reduce air distribution and temperature uniformity in the refrigerated compartment, potentially leading to higher temperatures that would exceed established tolerances for food safety (
In the October 2023 NOPR, DOE considered microchannel condensers as a design option for self-contained CRE, having observed the use of microchannel condensers in other commercial refrigeration equipment such as automatic commercial ice makers (“ACIMs”), including ACIMs that use R-290.
In the October 2023 NOPR, DOE incorporated the performance data for variable-speed R-290 compressors currently available on the market into DOE's engineering spreadsheet.
Since publication of the October 2023 NOPR, DOE has reviewed the Air-Conditioning, Heating, and Refrigeration Institute (“AHRI”) January 2017 white paper,
As DOE typically does during the course of a rulemaking, DOE considered updates to core case costs and certain design option costs to reflect current material prices and production factors that are relevant to the CRE industry.
As part of this update, DOE has reviewed current Krypton gas prices and has observed that the cost differential between triple-pane doors with Argon gas and triple pane doors with Krypton gas has increased significantly
In the October 2023 NOPR, DOE assumed an industry average manufacturer markup of 1.40 for all equipment classes. 88 FR 70196, 70247. Based on stakeholder comments in response to the October 2023 NOPR and market share weights, DOE updated the industry average manufacturer markup to 1.38 for all equipment classes and uses this updated value as the basis for the results presented in this NODA.
In the October 2023 NOPR, DOE proposed less stringent energy conservation standards for equipment of certain classes that have unique features such as forced-air evaporators or certain special door configurations (
As an alternative to the feature-specific multiplier approach, DOE is also tentatively considering a simplified multiplier approach to the eligible equipment classes discussed in the October 2023 NOPR, evaluating the use of a single multiplier for all evaluated equipment classes and feature groupings, including pass-through, sliding door, sliding-door pass-through, roll-in, roll-through, forced-air evaporator, and drawers. To select a single multiplier representative of the range of features analyzed, DOE used a shipment-weighted average of the eligible equipment class average multiplier values for each feature. DOE applied this multiplier to the energy use at each efficiency level for each eligible class, which implies that the difference in energy use of each feature compared to CRE without such feature is proportional to the equipment's energy use prior to the addition of each feature. The result of this single multiplier analysis yields a multiplier of 1.07.
DOE notes that EPCA, as codified, contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6316(e)(1); 42 U.S.C. 6295(o)(1)) Therefore, any multipliers that may be applied to eligible CRE equipment classes in any future DOE actions for this proposed rulemaking may be limited or adjusted due to the anti-backsliding provision. In this NODA, application of the multiplier to the energy use of each efficiency level of a given class is adjusted accordingly, if needed, to avoid backsliding against the current standard.
Based on consideration of all of the public comments received, including any additional comments received in response to this NODA, DOE may adopt the multiplier approach proposed in the October 2023 NOPR, a revised approach with higher or lower multipliers than proposed in the October 2023 NOPR, an approach with additional or fewer multipliers, or a simpler approach in which a single multiplier would be used for any eligible feature for application to specific eligible classes as presented in this NODA.
The purpose of the energy use analysis is to determine the annual energy consumption of CRE at different efficiencies in representative U.S. commercial buildings and to assess the energy savings potential of increased CRE efficiency. The energy use analysis estimates the range of energy use of CRE in the field (
In the October 2023 NOPR, DOE calculated the energy consumption of the equipment as part of the engineering analysis.
For this NODA, DOE conducted an LCC and PBP analysis using the same general methodology described in the October 2023 NOPR.
Because marginal electricity price more accurately captures the incremental savings associated with a change in energy use from higher efficiency, it provides a better representation of incremental change in consumer costs than average electricity prices. Therefore, DOE applied average electricity prices for the energy use of the equipment purchased in the no-new-standards case, and marginal electricity prices for the incremental change in energy use associated with the other efficiency levels considered in the October 2023 NOPR.
To derive electricity prices for this NODA analysis, DOE followed the same methodology as in the October 2023 NOPR. However, in this NODA, DOE updated the price data for current electricity prices (from 2022 to 2023). In particular, DOE developed electricity prices in 2023 for each census division using data from Edison Electric Institute (“EEI”) “Typical Bills and Average Rates” reports.
To estimate energy prices in future years, DOE followed the same approach as in the October 2023 NOPR,
Repair costs are associated with repairing or replacing components that have failed in an appliance or equipment; maintenance costs are associated with maintaining the operation of the equipment. Typically, small incremental increases in equipment efficiency entail no, or only minor, changes in repair and maintenance costs compared to baseline efficiency equipment.
In the October 2023 NOPR, DOE calculated repair costs by considering the typical failure rate of refrigeration system components (compressor, lighting, and evaporator and condenser fan motors), component manufacturer production costs (“MPCs”) and associated markups, and the labor cost of repairs, which is assumed to be performed by private vendors.
In this NODA, DOE also considered repair and replacement costs associated with night curtains and has incorporated such costs into this NODA analysis. Specifically, DOE was informed that night curtains are likely to
To model the phenomenon of CRE sold for refurbishment, DOE utilized a residual value for such equipment in the LCC in the October 2023 NOPR. The residual value represents the remaining dollar value of surviving CRE at the average age of refurbishment. In the October 2023 NOPR, DOE estimated that refurbishments would occur at 5 years for small-size food-service buildings (
Since the publication of the October 2023 NOPR, DOE made adjustments to its refurbishment assumptions based on the premise that if the refurbishment market offers a favorable economic opportunity, it could be utilized by all businesses, not just businesses in small-size buildings. Accordingly, for this NODA, DOE still applies a credit to about 10 percent of all CRE in the sample; however the credit may apply to any self-contained equipment, regardless of building size.
To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE's LCC analysis considers the projected distribution (market shares) of equipment efficiencies under the no-new-standards case (
To estimate the energy efficiency distribution of CRE for 2028 in the October 2023 NOPR, DOE used test data, feedback from manufacturer interviews, surveys, and the “Single Compartment Commercial Refrigeration Equipment” data from DOE's CCD, accessed in March 2024.
To create a robust sample for the energy efficiency distribution used in the LCC analysis, DOE separated the analyzed CRE equipment classes into 27 separate groups for this NODA analysis. DOE notes that the analysis for the October 2023 NOPR was based on 21 separate groups; DOE is considering adding new groups to account for equipment classes with two representative capacities (discussed in section II.A.1 of this document), and some self-contained equipment classes were grouped together if there were few model counts in the CCD. For the equipment classes that DOE relied on CCD model count data to formulate the efficiency distributions, this approach was used to allow equipment classes with a limited sample to share the efficiency distribution of a group of similar classes with a larger sample in the CCD. DOE compared energy use data from the CCD with energy use equations from the engineering analysis to derive model counts at each efficiency level. For the 7 self-contained equipment classes with large representative capacities, model counts for each representative unit were taken from subsets of the CCD, filtered by the appropriate volume or TDA. Equipment classes whose efficiency distributions were derived from aggregated data from manufacturer interviews, surveys, and test data were assigned their own groups (these 9 classes are the same ones from the October 2023 NOPR.) The estimated market shares for the no-new-standards case for CRE and the corresponding groupings are shown in table II.4.
In advance of the October 2023 NOPR, DOE conducted manufacturer interviews and collected shipments data for several equipment classes. The equipment classes for which DOE collected shipments data account for 75 percent of total shipments and are marked with an asterisk in table II.4.
The LCC Monte Carlo simulations draw from the efficiency distributions and randomly assign an efficiency to the CRE purchased by each sample consumer in the no-new-standards case. The resulting percent shares within the sample match the market shares in the efficiency distributions.
DOE uses projections of annual equipment shipments to calculate the national impacts of potential amended or new energy conservation standards
For the shipments analysis conducted for this NODA, DOE followed the same approach as the October 2023 NOPR, with the exception of CRE that may be subject to refurbishment, as discussed in the following paragraph.
To account for a potential increase in refurbished CRE as a result of increased prices from CRE standards, in the October 2023 NOPR, DOE assumed a price elasticity effect for a fraction of CRE shipments, which was limited to small-sized buildings.
The NIA assesses the national energy savings (“NES”) and the NPV from a national perspective of total consumer costs and savings that would be expected to result from new or amended standards at specific efficiency levels.
DOE evaluates the impacts of new or amended standards by comparing a case without such standards with standards-case projections. The no-new-standards case characterizes energy use and consumer costs for each equipment class in the absence of new or amended energy conservation standards. For this projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the no-new-standards case with projections characterizing the market for each equipment class if DOE adopted new or amended standards at specific energy efficiency levels for that class. For the standards cases, DOE considers how a given standard would likely affect the market shares of equipment with efficiencies greater than the standard.
Table II.5 summarizes the inputs and methods DOE used for the NIA for this NODA. DOE made updates to some of the key inputs to the NIA analysis compared to the NIA analysis performed in the October 2023 NOPR. In particular, the NIA for this NODA includes slightly updated shipments (see section II.D of this document), slightly updated efficiency distribution (see section II.C of this document), updated annual energy consumption per unit (see section II.A of this document) and updated total installed costs per unit (see section II.A.6 of this document).
As discussed in section II.A.7 of this document, to account for CRE with certain features (
To evaluate the impact of CRE with these unique energy use characteristics in the NIA, DOE conducted a sensitivity analysis in this NODA and estimated the NES and NPV for all CRE, applying a 1.07 energy use multiplier to CRE with these features. Given a lack of market data regarding CRE with these unique energy use characteristics, DOE relied on CCD model counts to estimate their market share. Table II.6 presents the estimated market share of CRE with unique energy use characteristics compared to their corresponding equipment class.
To model this sensitivity, DOE assumed that the efficiency distribution of the equipment with unique features is the same as that of the overall equipment class. DOE assumed an increased energy consumption for the affected equipment by a factor of 7 percent. DOE modelled another sensitivity with the assumption that 5 percent of equipment in the specified equipment classes will have unique features instead of the market shares shown in table II.6. The results of these sensitivity analyses are shown in the accompanying NODA support document.
DOE uses the Government Regulatory Impact Model (“GRIM”) to quantify the changes in cash flow due to new or amended standards that result in a higher or lower industry value. The GRIM uses a standard, annual, discounted cash-flow analysis that incorporates manufacturer costs, manufacturer markups, shipments, and industry financial information as inputs. The GRIM models changes in costs, distribution of shipments, investments, and manufacturer margins that could result from a new or amended energy conservation standard. The GRIM spreadsheet uses the inputs to arrive at a series of annual cash flows, beginning in 2024 (the base year of the analysis) and continuing 30 years after the analyzed 2028 compliance year. For this NODA analysis, DOE calculated industry net present value (“INPV”) by summing the stream of annual discounted cash flows during the
The changes in the MPCs of covered equipment can affect the revenues, gross margins, and cash flow of the industry. See section II.A of this document for details on the NODA updated engineering analysis.
The GRIM estimates manufacturer revenues based on total unit shipment projections and the distribution of those shipments by efficiency level. Consistent with the October 2023 NOPR, the GRIM uses the NIA's annual shipment projections derived from the shipments analysis.
DOE made certain refinements to the product conversion cost analysis in the October 2023 NOPR, which are incorporated into the analysis conducted for this NODA. 88 FR 70196, 70246-70247. Specifically, for this NODA analysis, DOE incorporated the most recent Department of Labor's Bureau of Labor Statistics (“BLS”) wage data
As discussed in section II.A.1 of this document, the October 2023 EPA Final Rule restricts the use of hydrofluorocarbons (“HFCs”) in specific sectors or subsectors, including use in certain CRE analyzed in this NODA. Consistent with the October 2023 NOPR, DOE accounted for the costs associated with redesigning CRE to make use of low-GWP refrigerants and retrofitting production facilities to accommodate flammable refrigerants in the GRIM in the no-new-standards case and standards cases. DOE considered the October 2023 EPA Final Rule and the expenses associated with the refrigerant transition in the analytical baseline of this analysis since manufacturers would need to comply with the October 2023 EPA Final Rule regardless of whether or not DOE amended or established standards for CRE.
In this NODA, DOE made refinements to its research and development (“R&D”) refrigerant transition estimate to account for increased testing costs associated with third-party laboratories, as well as adjustments to the timeline of when manufacturers would need to make investments related to the refrigerant transition to align with the revised compliance dates for CRE in the October 2023 EPA Final Rule.
This NODA analysis used the same manufacturer markup scenarios as the October 2023 NOPR.
For this NODA pertaining to CRE, DOE conducted the emissions analyses using the same methodology and data sources as in the October 2023 NOPR.
To monetize the benefits of reducing GHG emissions, the October 2023 NOPR used the interim SC-GHG estimates presented in the
Accordingly, in the regulatory analysis of its December 2023 Final Rule, “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review,” EPA estimated climate benefits using a new, updated set of SC-GHG estimates (“2023 SC-GHG estimates”). EPA documented the methodology underlying the new estimates in the regulatory impact analysis (“RIA”) for the December 2023 Final Rule and in greater detail in a technical report entitled
On December 22, 2023, the IWG issued a memorandum directing that “agencies should use their professional judgment to determine which estimates of the SC-GHG reflect the best available evidence, are most appropriate for particular analytical contexts, and best facilitate sound decision-making” consistent with OMB Circular No. A-4 and applicable law.
DOE has been extensively involved in the IWG process and related work on the SC-GHGs for over a decade. This involvement includes DOE's role as the federal technical monitor for the seminal 2017 report on the SC-GHG issued by the National Academies, which provided extensive recommendations on how to strengthen and update the SC-GHG estimates.
Based on this review, DOE has preliminarily determined that the updated 2023 SC-GHG estimates, including the approach to discounting, represent a significant improvement in estimating the SC-GHG through incorporating the most recent advancements in the scientific literature and by addressing recommendations on prior methodologies. In particular, the 2023 SC-GHG estimates implement the key recommendations of the National Academies, and the 2023 SC-GHG estimates incorporate the extensive scientific findings and methodological advances that have occurred since the last IWG updates in 2013, 2015, and 2016.
The 2023 SC-GHG estimates have also been peer-reviewed. As indicated by their statements, the peer reviewers strongly supported the new methodology, calling it “a huge advance,” “a real step change” and “an important improvement” in estimating the SC-GHG, and noting that it addressed the National Academies' and others' recommendations and “generally represents well the emerging consensus in the literature.”
The most significant improvements in the 2023 SC-GHG estimates carry out recommendations made by the National Academies. In its report, the National Academies' principal recommendation was to develop and use “a new framework that would strengthen the scientific basis, provide greater transparency, and improve characterization of the uncertainties of the estimates.”
DOE preliminarily concludes that the 2023 SC-GHG estimates are consistent with the National Academies' 2017 recommendations and represent major scientific advancements over the IWG's approach. In addition, DOE supports the incorporation of more recent scientific findings and data throughout the development of each of the 2023 SC-GHG modules and the underlying components of those modules.
Thus, in accordance with the IWG memo, and having reviewed the 2023 SC-GHG methodologies and updates, DOE has preliminarily determined that the updated 2023 SC-GHG estimates reflect the best available scientific and analytical evidence and methodologies, are accordingly the most appropriate for DOE analyses, and best facilitate sound decision-making by substantially improving the transparency of the estimates and representations of uncertainty inherent in such estimates. DOE welcomes comment on this preliminary determination.
For this NODA, DOE used these updated 2023 SC-GHG values to monetize the climate benefits of the emissions reductions associated at each efficiency level (“EL”) for CRE. These results are shown in the accompanying NODA support document in table 6.7 through table 6.15. Using these the 2023 SC-GHG estimates provides a better-informed range of potential climate benefits associated with the proposed new and amended standards. The EPA technical report presents SC-GHG values for emissions years through 2080; therefore, DOE did not monetize the climate benefits of GHG emissions reductions occurring after 2080. DOE expects additional climate impacts to accrue from GHG emissions changes post 2080, but due to a lack of readily available SC-GHG estimates for emissions years beyond 2080 and the relatively small emission effects expected from those years, DOE has not monetized these additional impacts in this analysis. The overall climate benefits are generally greater when using the higher, updated 2023 SC-GHG estimates, compared to the climate benefits using the older IWG SC-GHG estimates, which were used in the October 2023 NOPR. To facilitate a comparison, DOE also performed a sensitivity analysis using the IWG's 2021 interim SC-GHG estimates. The results are shown in the accompanying NODA support document.
For this NODA, DOE monetized NO
EPCA requires that amended standards would apply to CRE on or after a date that is 3 years after the final rule is published in the
Extending the compliance lead-in period from 3 years to a date between 3 to 5 years after a final rule is published in the
Although a number of inputs to the LCC analysis and NIA are time-dependent (
For the LCC, the relative changes in inputs that are time-dependent are small over a two-year delay. Commercial electricity prices averaged on a national level are forecast by
Regarding the NIA results, time-dependent inputs (
In this NODA, DOE analyzed the economic impacts on CRE consumers by looking at the effects that potential new and amended standards at each EL would have on the LCC and PBP. DOE also examined the impacts of potential standards on selected consumer subgroups. These analyses are discussed in the following sections.
In general, higher-efficiency equipment affect consumers in two ways: (1) purchase price increases and (2) annual operating costs decrease. Inputs used for calculating the LCC and PBP include total installed costs (
Table III.1 through table III.66 show the LCC and PBP results based on the updated analysis for the ELs considered for each equipment class in this NODA. In the first of each pair of tables, the simple payback is measured relative to the baseline equipment. In the second table, impacts are measured relative to the efficiency distribution in the no-new-standards case in the compliance year (see section II.C.4 of this document). Because some consumers purchase equipment with higher efficiency in the no-new-standards case, the average savings are less than the difference between the average LCC of the baseline equipment and the average LCC at each EL. The savings refer only to consumers who are affected by a standard at a given EL. Those who already purchase equipment with efficiency at or above a given EL are not affected. Consumers for whom the LCC increases at a given EL experience a net cost.
In the consumer subgroup analysis in this NODA, DOE estimated the impact of the considered ELs on small businesses. As in the October 2023 NOPR, DOE applies small business-specific discount rates, which are mostly higher than those in the full consumer sample. For this NODA, DOE also applied small business-specific energy prices, which are generally higher than those in the full consumer sample. Table III.67 compares the average LCC savings and PBP at each efficiency level for the consumer subgroups with similar metrics for the entire consumer sample for CRE. In most cases, the average LCC savings and PBP for small businesses at the considered efficiency levels are not substantially different from the average for all consumers.
EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for equipment that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. (42 U.S.C. 6316(e)(1); 42 U.S.C. 6295(o)(2)(B)(iii)) In calculating a rebuttable presumption payback period for each of the considered Els in this NODA, DOE used discrete values and, as required by EPCA, based the energy use calculation on the DOE test procedure for CRE. In contrast, the PBPs presented in section III.B of this document were calculated using distributions that reflect the range of energy use in the field.
Table III. presents the rebuttable-presumption payback periods for the considered ELs for CRE.
Table III.69 shows the efficiency level grouping analyzed in the GRIM in this NODA. The MIA does not present results by equipment class and efficiency level because redesign and investments for one equipment class may impact multiple equipment classes because different equipment classes can share the same architecture, tooling, and production lines. Therefore, the MIA presents results based on a representative combination of efficiency levels for remote-condensing units, self-contained condensing units (non-large), and self-contained condensing units (large). The accompanying NODA support document shows the analyzed design options and energy use equations for each considered efficiency level.
Table III.70 through table III.72 present the GRIM results for the updated CRE analysis discussed in this NODA for the CRE remote-condensing units, the CRE self-contained condensing units (non-large), and the CRE self-contained condensing units (large). The methodology and assumptions used in the MIA did not change from the October 2023 NOPR except for the analytical changes described in prior sections of this document. Details of the MIA inputs and methodology are available in chapter 12 of the October 2023 NOPR TSD.
For the direct employment analysis, DOE revised the methodology used to estimate the lower bound impacts to domestic production employment in the October 2023 NOPR, which was incorporated into the analysis conducted for this NODA. DOE maintained the same estimate of U.S. labor percentage of 77 percent from the October 2023 NOPR for this NODA.
Using the GRIM, DOE estimated that in the absence of new and amended energy conservation standards, there would be 1,966 domestic production and non-production workers for CRE remote-condensing units in 2028, 9,613 domestic production and non-production workers for CRE self-contained condensing units (non-large) in 2028, and 928 production and non-production workers for CRE self-contained condensing units (large) in 2028. Table III.73 through table III.75 show the range of impacts of energy conservation standards on U.S. manufacturing employment in the CRE industry for remote-condensing units, self-contained condensing units (non-large), and self-contained condensing units (large).
The upper bound estimate corresponds to a potential change in the number of domestic production workers that would result from new and amended energy conservation standards if manufacturers continue to produce the same scope of covered equipment within the United States after the analyzed compliance date. Most of the design options analyzed in the engineering analysis require manufacturers to purchase more-efficient components from suppliers. These components do not require significant additional labor to assemble or significant production line updates. For this NODA, DOE modeled an incremental increase in labor content associated with implementing improved door designs (
The lower bound estimate conservatively assumes that some domestic manufacturing either is eliminated or moves abroad at more stringent efficiency levels. For levels that require capital investment and higher per-unit labor content, DOE assumed that some manufacturing could move abroad as relocating production to lower-labor cost countries could become increasingly attractive.
The employment impacts discussed in this section are independent of the employment impacts from the broader U.S. economy.
This section presents DOE's estimates of the NES and the NPV of consumer benefits that would result from each of the ELs considered as potential amended standards.
To estimate the energy savings attributable to potential new and amended standards for CRE, DOE compared their energy consumption under the no-new-standards case to their anticipated energy consumption at each EL in this NODA. The savings are measured over the entire lifetime of equipment purchased in the 30-year period that begins in the year of anticipated compliance with new and amended standards 2028-2057. Table III.76 presents DOE's projections of the national energy savings for each EL for CRE. The savings were calculated using the approach described in section II.E of this document.
DOE estimated the cumulative NPV of the total costs and savings for consumers that would result from the ELs considered for CRE. In accordance with OMB's guidelines on regulatory analysis,
Enhanced energy efficiency, where economically justified, improves the Nation's energy security, strengthens the economy, and reduces the environmental impacts (costs) of energy production. Reduced electricity demand due to energy conservation standards is also likely to reduce the cost of maintaining the reliability of the electricity system, particularly during peak-load periods.
Energy conservation resulting from potential energy conservation standards for CRE is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and greenhouse gases. DOE also estimated monetary benefits likely to result from the reduced emissions that DOE estimated for each of the considered ELs for CRE. Chapter 6 of the accompanying NODA support document provides DOE's estimate of cumulative emissions reductions and associated monetized benefits expected to result at each EL.
DOE requests comment on the updated analysis for CRE presented in the NODA. As noted in the October 2023 NOPR, DOE may adopt energy efficiency levels that are either higher or lower than the proposed standards in
DOE will accept comments, data, and information regarding this NODA no later than the date provided in the
However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.
Do not submit to
DOE processes submissions made through
Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via postal mail or hand delivery/courier, please provide all items on a CD, if feasible, in which case it is not necessary to submit printed copies. No telefacsimiles (“faxes”) will be accepted.
Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
The Secretary of Energy has approved publication of this notification of data availability and request for comment.
This document of the Department of Energy was signed on August 17, 2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
Federal Aviation Administration (FAA), DOT.
Notice of proposed special conditions.
This action proposes special conditions for the Robinson Helicopter Company (Robinson) Model R66 helicopter. This helicopter, as modified by Skyryse, will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for normal category helicopters. This design feature is a novel control input and fly-by-wire (FBW) system. The applicable airworthiness regulations do not contain
Send comments on or before October 15, 2024.
Send comments identified by Docket No. FAA-2024-0875 using any of the following methods:
Daniel Moore, Airframe Section, AIR-622, Technical Policy Branch, Policy and Standards Division, Aircraft Certification Service, Federal Aviation Administration, 901 Locust, Kansas City, MO 64106; telephone (303) 342-1066; email
The FAA invites interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the proposed special conditions, explain the reason for any recommended change, and include supporting data.
The FAA will consider all comments received by the closing date for comments, and will consider comments filed late if it is possible to do so without incurring delay. The FAA may change these special conditions based on the comments received.
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in title 14, Code of Federal Regulations (14 CFR) 11.35, the FAA will post all comments received without change to
Confidential Business Information (CBI) is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to these special conditions contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to these special conditions, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and the indicated comments will not be placed in the public docket of these proposed special conditions. Send submissions containing CBI to the individual listed in the For Further Information Contact section above. Comments the FAA receives, which are not specifically designated as CBI, will be placed in the public docket for these proposed special conditions.
On April 10, 2023, Skyryse applied for a supplemental type certificate for removal of the mechanical control system and installation of a computer controlled flight control system in the Model R66 helicopter. The Robinson Model R66 helicopter, currently approved under Type Certificate No. R00015LA, is a single engine normal category rotorcraft. The maximum take-off weight is 2,700 pounds, with a maximum seating capacity of five passengers.
Under the provisions of 14 CFR 21.101, Skyryse must show that the Robinson Model R66 helicopter, as changed, continues to meet the applicable provisions of the regulations listed in Type Certificate No. R00015LA or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations do not contain adequate or appropriate safety standards for the Robinson Model R66 helicopter because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.
Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the Robinson Model R66 helicopter must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The Robinson Model R66 helicopter will incorporate the following novel or unusual design feature:
Novel control input and FBW system.
Skyryse is proposing to install an FBW flight control system (FCS) intended to replace the current hydraulicly boosted mechanical primary FCS, on a Robinson Model R66 helicopter. FBW systems are new to part 27 rotorcraft and as such, the rotorcraft FCS will now contain control functions that affect the static strength of rotorcraft structure.
These proposed special conditions would give the applicant an option to offset the structural factor of safety based on the probability of system failure. These proposed special conditions apply to systems that can induce loads on the airframe or change the response of the rotorcraft to maneuvers or to control inputs, as a result of failure. Some potential examples include part 27 rotorcraft equipped with FBW or fly-by-light FCSs, autopilots, stability augmentation systems, load alleviation systems, flutter control systems, fuel management systems, and other systems that either directly or as a result of failure or
The FAA has issued special conditions for the interaction of systems and structures to other aircraft in the past (parts 23, 25, and 29). Active flight control systems are capable of providing automatic responses to inputs from sources other than the pilots. These automatic systems may become inoperative or may operate in a degraded mode, which could impact the loads envelope and rotorcraft static strength.
Therefore, it is necessary to determine the structural factors of safety and operating margins such that the joint probability of structural failures due to application of loads during system malfunctions is not greater than that found in rotorcraft equipped with earlier technology control systems. To achieve this objective, it is necessary to define the failure conditions with their associated frequency of occurrence in order to determine the structural factors of safety and operating margins that will ensure an acceptable level of safety.
The proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
As discussed above, these proposed special conditions are applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would apply to the other model as well.
This action affects only a certain novel or unusual design feature on one model of helicopter. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the helicopter.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(f), 106(g), 40113, 44701, 44702, and 44704.
Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Robinson Model R66 helicopters, as modified by Skyryse.
For rotorcraft equipped with systems that affect structural performance, either directly or as a result of a failure or malfunction, the influence of these systems and their failure conditions must be taken into account when showing compliance with the requirements of subparts C and D of part 27 of title 14 of the Code of Federal Regulations (14 CFR).
The following criteria must be used for showing compliance with these special conditions:
(a) The criteria defined herein only address the direct structural consequences of the system responses and performance. They cannot be considered in isolation but should be included in the overall safety evaluation of the rotorcraft. These criteria may, in some instances, duplicate standards already established for this evaluation. These criteria are only applicable to structures whose failure could prevent continued safe flight and landing. Specific criteria that define acceptable limits on handling characteristics or stability requirements, when operating in the system degraded or inoperative mode, are not provided in these special conditions.
(b) Depending upon the specific characteristics of the rotorcraft, additional studies may be required that go beyond the criteria provided in these special conditions in order to demonstrate the capability of the rotorcraft to meet other realistic conditions such as alternative gust or maneuver descriptions for a rotorcraft equipped with a load alleviation system.
(c) The following definitions are applicable to these special conditions.
(1)
(2)
(3)
(4)
(a)
(b)
(1) Limit loads must be derived in all normal operating configurations of the system from all the limit conditions specified in subpart C (or used in lieu of those specified in subpart C), taking into account any special behavior of such a system or associated functions or any effect on the structural performance of the rotorcraft that may occur up to the limit loads. In particular, any significant nonlinearity (rate of displacement of control surface, thresholds, or any other system nonlinearities) must be accounted for in a realistic or conservative way when deriving limit loads from limit conditions.
(2) The rotorcraft must meet the strength requirements of part 27 (static strength, residual strength), using the specified factors to derive ultimate loads from the limit loads defined above. The effect of nonlinearities must be investigated beyond limit conditions to ensure the behavior of the system presents no anomaly compared to the behavior below limit conditions. However, conditions beyond limit conditions need not be considered when it can be shown that the rotorcraft has design features that will not allow it to exceed those limit conditions.
(3) The rotorcraft must meet the flutter requirements of § 27.629.
(c)
(1) At the time of occurrence. Starting from 1-g level flight conditions, a realistic scenario, including pilot corrective actions, must be established to determine the loads occurring at the time of failure and immediately after the failure.
(i) For static strength substantiation, these loads multiplied by an appropriate factor of safety that is related to the probability of occurrence of the failure, are ultimate loads to be considered for design. The factor of safety is defined in Figure 1.
(ii) For residual strength substantiation, the rotorcraft must be able to withstand two thirds of the ultimate loads defined in paragraph (c)(1)(i) of these special conditions.
(iii) Freedom from flutter and divergence must be shown under any condition of operation including:
(A) Airspeeds up to 1.11 V
(B) Main rotor speeds from 0.95 × the minimum permitted speed up to 1.05 × the maximum permitted speed (power on and power off).
(C) The critical combinations of weight, center of gravity position, load factor, altitude, speed, and power condition.
(iv) For failure conditions that result in excursions beyond operating limitations, freedom from flutter and divergence must be shown to increased speeds, so that the margins intended by paragraph (c)(1)(iii) of these special conditions are maintained.
(v) Failures of the system that result in forced structural vibrations (oscillatory failures) must not produce loads that could result in detrimental deformation of primary structure.
(2) For the continuation of the flight. For the rotorcraft in the system failed state, and considering any appropriate reconfiguration and flight limitations, the following apply:
(i) The loads derived from the following conditions (or used in lieu of the following conditions) at speeds up to V
(A) the limit symmetrical maneuvering conditions specified in §§ 27.337 and § 27.339;
(B) the limit gust conditions specified in § 27.341;
(C) the limit yaw maneuvering conditions specified in § 27.351;
(D) the limit unsymmetrical conditions specified in § 27.427; and
(E) the limit ground loading conditions specified in § 27.473.
(ii) For static strength substantiation, each part of the structure must be able to withstand the loads in paragraph (c)(2)(i) of these special conditions multiplied by a factor of safety depending on the probability of being in this failure state. The factor of safety is defined in Figure 2.
If Pj is greater than 10
(iii) For residual strength substantiation, the rotorcraft must be able to withstand two thirds of the ultimate loads defined in paragraph (c)(2)(ii) of these special conditions.
(iv) If the loads induced by the failure condition have a significant effect on fatigue or damage tolerance, then their effects must be taken into account.
(v) Freedom from flutter and divergence must also be shown up to 1.11 V
(3) Consideration of certain failure conditions may be required by other sections of 14 CFR part 27 regardless of calculated system reliability. Where analysis shows the probability of these failure conditions to be extremely improbable, criteria other than those specified in this paragraph may be used for structural substantiation to show continued safe flight and landing.
(d)
(1) The system must be checked for failure conditions, not shown to be extremely improbable, that degrade the structural capability below the level required by part 27 or that significantly reduce the reliability of the remaining operational portion of the system. As far as reasonably practicable, the flight crew must be made aware of these failures before flight. Certain elements of the control system, such as mechanical and hydraulic components, may use special periodic inspections, and electronic components may use daily checks, in lieu of detection and indication systems to achieve the objective of this requirement. These other means of detecting failures before flight are considered certification maintenance requirements and must be limited to components that are not readily detectable by normal detection and indication systems, and where service history shows that inspections will provide an adequate level of safety.
(2) The existence of any failure condition, not shown to be extremely improbable, during flight that could significantly affect the structural capability of the rotorcraft and for which the associated reduction in airworthiness can be minimized by suitable flight limitations, must be signaled to the flight crew. For example, failure conditions that result in a factor of safety between the rotorcraft strength and the loads of subpart C below 1.25, or flutter and divergence margins below 1.11 V
(e)
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain MD Helicopters, LLC, Model 369 (Army YOH-6A), 369A (Army OH-6A), 369D, 369E, 369F, 369FF, 369H, 369HE, 369HM, 369HS, 500N, and 600N helicopters. This proposed AD was prompted by multiple reports of cracked tail rotor (T/R) pedal support brackets. This proposed AD would require repetitively inspecting certain part-numbered T/R pedal support brackets and depending on the results, replacing the T/R pedal support bracket or refinishing any exposed areas. This proposed AD would also prohibit installing certain part-numbered T/R pedal support brackets. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by October 15, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For MD Helicopters material identified in this AD, contact MD Helicopters, LLC, 4555 East McDowell Road, Mesa, AZ 85215-9734; phone: (480) 346-6300; email:
• You may view this material at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N-321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call (817) 222-5110.
Eduardo Orozco-Duran, Aviation Safety Engineer, FAA, 3960 Paramount Boulevard, Lakewood, CA 90712; phone: (562) 627-5264; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Eduardo Orozco-Duran, Aviation Safety Engineer, FAA, 3960 Paramount Boulevard, Lakewood, CA 90712; phone: (562) 627-5264; email:
The FAA received a report of a forced emergency landing involving an MD Helicopters, LLC, Model 369D helicopter in Canada in 2022 that was caused by a cracked magnesium cast T/R pedal support bracket having part number (P/N) 369A7505-8. There have been 16 other reports of cracked magnesium cast T/R pedal support brackets having P/Ns 369A7505-7, 369A7505-8, 369A7505-14, or 369A7505-15 discovered during maintenance in the last 30 years. Material deficiencies associated with magnesium cast parts, as well as fatigue damage and successive in-flight loading have been determined to cause the parts to fail. Additionally, magnesium cast parts are susceptible to corrosion where insufficient protective coatings have shown to wear and deteriorate. All reported failures of this part have been the magnesium cast 369A7505 configuration. The aluminum cast T/R pedal support bracket P/N 369N2640 have no reported failures but are still subject to the inspection requirements of this AD. The natural corrosion advantages of aluminum, as well as the coating requirements of its anodization offer greater mitigation of the risks of corrosion in comparison to the magnesium cast part. Although superior to the magnesium cast part, the alternate aluminum cast part could still be prone to these material deficiencies of cast parts.
This proposed AD would require repetitively inspecting magnesium cast T/R pedal support brackets having P/N 369A7505-7, 369A7505-8, 369A7505-14, or 369A7505-15, and aluminum cast T/R pedal support brackets having P/N 369N2640-1 or 369N2640-2. These T/R pedal support brackets may be installed on MD Helicopters, LLC, Model 369 (Army YOH-6A), 369A (Army OH-6A), 369D, 369E, 369F, 369FF, 369H, 369HE, 369HM, 369HS, 500N, and 600N helicopters. This proposed AD would also prohibit installing magnesium cast T/R pedal support bracket P/N 369A7505-7, 369A7505-8, 369A7505-14, or 369A7505-15 on any helicopter. This condition, if not addressed, could result in failure of the T/R pedal support bracket, reduced controllability of the helicopter, and subsequent loss of control of the helicopter.
The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of these same type designs.
The FAA reviewed MD Helicopters Service Bulletin SB369D-231R2 for Model 369D helicopters, SB369E-131R2 for Model 369E helicopters, SB369F-122R2 for Model 369F and 369FF helicopters, SB369H-265R2 for Model 369H, 369HE, 369HM, and 369HS helicopters, SB500N-068R2 for Model 500N helicopters, and SB600N-082R2 for Model 600N helicopters, each dated November 1, 2023 (co-published as one document). For magnesium cast T/R pedal support brackets P/N 369A7505-7, 369A7505-8, 369A7505-14, and 369A7505-15, this material specifies procedures for visually inspecting each T/R pedal support bracket for a crack and corrosion and depending on the results, replacing the bracket with an aluminum cast T/R pedal support bracket having P/N 369N2640-1 or 369N2640-2, or refinishing any exposed areas. For magnesium cast T/R pedal support brackets P/N 369A7505-7, 369A7505-8, 369A7505-14, and 369A7505-15, this material also specifies procedures for fluorescent penetrant inspecting, eddy current inspecting, or dye penetrant inspecting each T/R pedal support bracket for a crack and depending on the results, replacing the bracket with an aluminum cast T/R pedal support bracket having P/N 369N2640-1 or 369N2640-2, or refinishing any exposed areas. For the purposes of this proposed AD, MD Helicopters, LLC, Model 369 (Army YOH-6A) and 369A (Army OH-6A) helicopters would use MD Helicopters Service Bulletin SB369D-231R2, dated November 1, 2023, to accomplish certain actions required by this proposed AD.
This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This proposed AD would require accomplishing the actions specified in the material already described except as discussed under “Differences Between
The related material applies to magnesium cast T/R pedal support brackets having P/N 369A7505-7, 369A7505-8, 369A7505-14, or 369A7505-15, whereas this proposed AD would apply to those part-numbered magnesium cast T/R pedal support brackets and aluminum cast T/R pedal support brackets having P/N 369N2640-1 or 369N2640-2. This proposed AD would prohibit installing magnesium cast T/R pedal support brackets having P/N 369A7505-7, 369A7505-8, 369A7505-14, or 369A7505-15, whereas the related material does not.
The FAA estimates that this AD, if adopted as proposed, would affect 353 helicopters of U.S. registry. Labor rates are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this proposed AD.
Visually inspecting the T/R pedal support brackets (up to two T/R pedal support brackets per helicopter) would take approximately 0.5 work-hour for an estimated cost of up to $43 per helicopter and $15,179 for the U.S. fleet per inspection cycle. Non-destructive inspection of the T/R pedal support brackets would take approximately 2 work-hours for an estimated cost of up to $170 per helicopter and $60,010 for the U.S. fleet per inspection cycle.
If required, replacing a T/R pedal support bracket would take approximately 8 work-hours and parts would cost approximately $2,075 for an estimated cost of $2,755 per T/R pedal support bracket. Refinishing any exposed areas could vary significantly from helicopter to helicopter. The FAA has no data to determine the costs to accomplish this action or the number of helicopters that may require this action.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by October 15, 2024.
None.
This AD applies to MD Helicopters, LLC, Model 369 (Army YOH-6A), 369A (Army OH-6A), 369D, 369E, 369F, 369FF, 369H, 369HE, 369HM, 369HS, 500N, and 600N helicopters, certificated in any category, with a tail rotor (T/R) pedal support bracket part number (P/N) 369A7505-7, 369A7505-8, 369A7505-14, 369A7505-15, 369N2640-1, or 369N2640-2, installed.
Joint Aircraft System Component (JASC) Code: 6720, tail rotor control system.
This AD was prompted by multiple reports of cracked T/R pedal support brackets. The FAA is issuing this AD to detect a cracked T/R pedal support bracket. The unsafe condition, if not addressed, could result in failure of the T/R pedal support bracket, reduced controllability of the helicopter, and subsequent loss of control of the helicopter.
Comply with this AD within the compliance times specified, unless already done.
(1) Within 25 hours time-in-service (TIS) and thereafter at intervals not to exceed 100 hours TIS, using a 10X power magnification glass, mirror, and flashlight, visually inspect each T/R pedal support bracket for cracks and corrosion by following the Accomplishment Instructions, paragraph 2.A.(2)., of MD Helicopters Service Bulletin SB369D-231R2, SB369E-131R2, SB369F-122R2, SB369H-265R2, SB500N-068R2, or SB600N-082R2, each dated November 1, 2023 (collectively referred to as “the service bulletins”), as applicable to your helicopter model; you may use a borescope as specified in the note in paragraph 2.A.(2) of the service bulletins. For the purposes of this AD, for MD Helicopters, LLC, Model 369 (Army YOH-6A) and 369A (Army OH-6A) helicopters, use MD Helicopters Service Bulletin SB369D-231R2, dated November 1, 2023, to accomplish the actions required by this AD.
(i) If there is a crack or any corrosion as a result of the inspections required by the introductory text of paragraph (g)(1) of this AD, before further flight, remove the T/R pedal support bracket from service and replace it with an airworthy T/R pedal support bracket P/N 369N2640-1 or 369N2640-2.
(ii) If there is not a crack and there is no corrosion as a result of the inspections required by the introductory text of paragraph (g)(1) of this AD, before further flight, refinish any exposed areas.
(2) Within 50 hours TIS and thereafter at intervals not to exceed 300 hours TIS, eddy current, dye penetrant, or fluorescent penetrant inspect each T/R pedal support bracket for a crack by following the Accomplishment Instructions, paragraph 2.B.(2)., of the service bulletins, as applicable to your helicopter model. The inspections required by this paragraph must be performed by a Level II or Level III inspector certified in the FAA-acceptable standards for nondestructive inspection personnel.
(i) If there is a crack as a result of the actions required by the introductory text of paragraph (g)(2) of this AD, before further flight, remove the T/R pedal support bracket from service and replace it with an airworthy T/R pedal support bracket P/N 369N2640-1 or 369N2640-2.
(ii) If there is not a crack as a result of the actions required by the introductory text of paragraph (g)(2) of this AD, before further flight, refinish any exposed areas.
(3) As of the effective date of this AD, do not install magnesium cast T/R pedal support bracket P/N 369A7505-7, 369A7505-8, 369A7505-14, or 369A7505-15 on any helicopter.
(1) The Manager, Western Certification Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the Western Certification Branch, send it to the attention of the person identified in paragraph (i) of this AD. Information may be emailed to
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(1) For more information about this AD, contact Eduardo Orozco-Duran, Aviation Safety Engineer, FAA, 3960 Paramount Boulevard, Lakewood, CA 90712; phone: (562) 627-5264; email:
(2) For advisory circular material identified in this AD that is not incorporated by reference, go to
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the material listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this material as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) MD Helicopters Service Bulletin SB369D-231R2, dated November 1, 2023.
(ii) MD Helicopters Service Bulletin SB369E-131R2, dated November 1, 2023.
(iii) MD Helicopters Service Bulletin SB369F-122R2, dated November 1, 2023.
(iv) MD Helicopters Service Bulletin SB369H-265R2, dated November 1, 2023.
(v) MD Helicopters Service Bulletin SB500N-068R2, dated November 1, 2023.
(vi) MD Helicopters Service Bulletin SB600N-082R2, dated November 1, 2023.
(3) For MD Helicopters material identified in this AD, contact MD Helicopters, LLC, 4555 East McDowell Road, Mesa, AZ 85215-9734; phone: (480) 346-6300; email:
(4) You may view this material at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N-321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call (817) 222-5110.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for all Embraer S.A. Model EMB-135ER, -135KE, -135KL, and -135LR airplanes; and Model EMB-145, -145EP, -145ER, -145LR, -145MP, -145MR, and -145XR airplanes. This proposed AD was prompted by a structural assessment that indicated certain central fuselage longitudinal splices are subjected to fatigue damage on multiple sites due to loose fasteners, which may reduce the structural residual strength below the required levels. This proposed AD would require performing repetitive inspections of certain upper central fuselage longitudinal splices and reporting the inspection results, as specified in an Agência Nacional de Aviação Civil (ANAC) AD, which is proposed for incorporation by reference (IBR). This proposed AD would also require performing corrective actions if necessary. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by October 15, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For ANAC material identified in this proposed AD, contact National Civil Aviation Agency (ANAC), Aeronautical Products Certification Branch (GGCP), Rua Dr. Orlando Feirabend Filho, 230—Centro Empresarial Aquarius—Torre B—Andares 14 a 18, Parque Residencial Aquarius, CEP 12.246-190—São José dos Campos—SP, Brazil; telephone 55 (12) 3203-6600; email
• You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th Street, Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
Hassan Ibrahim, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 206-231-3653; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Hassan Ibrahim, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 206-231-3653; email:
ANAC, which is the aviation authority for Brazil, has issued ANAC AD 2024-04-03R01, effective May 31, 2024 (ANAC AD 2024-04-03R01) (also referred to as the MCAI), to correct an unsafe condition for all Embraer S.A. Model EMB-135ER, -135KE, -135KL, and -135LR airplanes; and Model EMB-145, -145EP, -145ER, -145EU, -145LR, -145LU, -145MK, -145MP, -145MR, and -145XR airplanes. Model EMB-145EU, -145LU, and -145MK airplanes are not certificated by the FAA and are not included on the U.S. type certificate data sheet; this proposed AD therefore does not include those airplanes in the applicability. The MCAI states that a structural assessment indicated that certain central fuselage longitudinal splices are subjected to fatigue damage on multiple sites due to working (
The FAA is proposing this AD to address the unsafe condition on these products.
You may examine the MCAI in the AD docket at
ANAC AD 2024-04-03R01 specifies an initial and repetitive external detailed inspection of the upper central fuselage II, III, and IV longitudinal splices to identify loose fasteners, contacting the manufacturer if any discrepancy is found, and reporting the inspection results. Discrepancies include loose fasteners, missing rivets, and any crack, crease, bend, nick, scratch, gouge, dent, abrasion, or structural deformation found in the skin attachments or fasteners. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in ANAC AD 2024-04-03R01 described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate ANAC AD 2024-04-03R01 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with ANAC AD 2024-04-03R01 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Material required by ANAC AD 2024-04-03R01 for compliance will be available at
The FAA estimates that this AD, if adopted as proposed, would affect 309 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA has received no definitive data on which to base the cost estimates for the corrective actions specified in this proposed AD.
A federal agency may not conduct or sponsor, and a person is not required to
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by October 15, 2024.
None.
This AD applies to all Embraer S.A. (Type Certificate previously held by Yaborã Indústria Aeronáutica S.A.; Embraer S.A.; Empresa Brasileira de Aeronáutica S.A. (EMBRAER)) airplanes specified in paragraphs (c)(1) and (2) of this AD, certificated in any category.
(1) Model EMB-135ER, -135KE, -135KL, and -135LR airplanes.
(2) Model EMB-145, -145EP, -145ER, -145LR, -145MP, -145MR, and -145XR airplanes.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by a structural assessment that indicated certain central fuselage longitudinal splices are subjected to fatigue damage on multiple sites due to loose fasteners, which may reduce the structural residual strength below the required levels. The FAA is issuing this AD to address undetected fatigue damage on certain central fuselage longitudinal splices. The unsafe condition, if not addressed, could result in reduced structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, Agência Nacional de Aviação Civil (ANAC) AD 2024-04-03R01, effective May 31, 2024 (ANAC AD 2024-04-03R01).
(1) Where ANAC AD 2024-04-03R01 refers to its effective date, this AD requires using the effective date of this AD.
(2) Where paragraphs (b)(1) and (2) of ANAC AD 2024-04-03R01 specify the initial compliance time for the external detailed inspection, for this AD, the initial compliance time for doing the external detailed inspection is prior to the accumulation of 44,000 total flight cycles, or within 500 flight cycles after the effective date of this AD, whichever occurs later.
(3) Where paragraph (b)(3) of ANAC AD 2024-04-03R01 specifies “If any discrepancies are found, contact Embraer,” this AD requires replacing that text with “If any cracking is detected during an inspection required by paragraph (g) of this AD, repair the discrepancy (including cracking) before further flight using a method approved by the Manager, International Validation Branch, FAA; or ANAC; or Embraer's ANAC Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.”
(4) Paragraph (d) of ANAC AD 2024-04-03R01 specifies to report inspection results to ANAC and Embraer within a certain compliance time. For this AD, report inspection results after each inspection required by paragraph (g) of this AD at the applicable times specified in paragraph (h)(4)(i) or (ii) of this AD.
(i) If the inspection was done on or after the effective date of this AD: Submit the report within 30 days after the inspection.
(ii) If the inspection was done before the effective date of this AD: Submit the report within 30 days after the effective date of this AD.
(5) This AD does not adopt paragraph (e) of ANAC AD 2024-04-03R01.
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Hassan Ibrahim, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 206-231-3653; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the material listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this material as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Agência Nacional de Aviação Civil (ANAC) AD 2024-04-03R01, effective May 31, 2024.
(ii) [Reserved]
(3) For ANAC material identified in this AD, contact ANAC, Aeronautical Products Certification Branch (GGCP), Rua Dr. Orlando Feirabend Filho, 230—Centro Empresarial Aquarius—Torre B—Andares 14 a 18, Parque Residencial Aquarius, CEP 12.246-190—São José dos Campos—SP, Brazil; telephone 55 (12) 3203-6600; email
(4) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th Street, Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard is proposing to establish a regulated navigation area for certain waters surrounding the Port of Miami. This action is necessary to provide for the safety of life and promote national security by enhancing the protection of increased high-risk vessel traffic and reducing the navigational hazards of the mariners who operate throughout the port. This rulemaking would establish a slow speed zone throughout Fisherman's Channel and the Main Ship Channel for vessels less than 50 meters in length. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before September 27, 2024.
You may submit comments identified by docket number USCG-2024-0205 using the Federal Decision-Making Portal at
If you have questions about this proposed rulemaking, call or email LT Stephanie Miranda, District 7 Dpw, U.S. Coast Guard; telephone (571) 610-4432, email
The Captain of the Port (COTP) Miami has determined that there has been an increase in navigational risk associated to the Port of Miami as the port continues to expand and vessel traffic increase. On May 10th and 11th of 2023, Coast Guard Navigation Center (NAVCEN) and Sector Miami held a Ports and Waterways Safety Assessment (PAWSA) with key stakeholders of the Port of Miami. As a result, the workshop identified hazards associated to the port with the largest concern for navigational safety being the high speed of vessels and wake created by increased vessel traffic. Over the last few years, a growing number of near misses prompts concern for the safety of life as vessel traffic volume and vessel speeds have increased. On June 25, 2023, around 3:30 a.m. a recreational vessel, traveling at a high rate of speed through the Main ship channel, collided with a crossing vehicle ferry, killing one and seriously injuring a second. The incident not only resulted in the loss of life but in the disruption of 30,000 cruise ship passengers and critical cargo movements in the Port of Miami for over 12 hours. Additionally, on February 12, 2024 a recreational vessel collied with an inspected charter vessel in a critical point of Fisherman's Channel. This incident resulted in 13 injuries with one person in critical condition. This regulated navigation area will reduce the navigational risk associated with one of the world's largest ports, reduce the loss of life, and mitigate the chance of disruption to port operations.
In addition, the Port of Miami is expanding its cruise ship terminals and will soon be the largest cruise ship port in the World, moving tens of thousands of passengers every day. With this, the Port of Miami also experienced an increase in Liquified National Gas (LNG) powered cruise ships and cargo vessels resulting in an increase of hazardous bunkering operations within the port. The existing national security risk associated with the Port of Miami is already high and this expansion only increased that risk. The establishment of an RNA reducing the speed of vessels will aid law enforcement officials in monitoring vessel traffic, as vessels not complying with slow speed zones will quickly draw attention, giving law enforcement officials more time to assess the situation and take appropriate action to protect vessels within the port and port facilities.
This rulemaking would establish a slow speed restriction on vessels less than 50 meters within the Port of
The Coast Guard's is proposing to establish a permanent regulated navigation area that would require vessels 50 meters or less to transit the regulated area at a slow speed that creates minimum wake to reduce damage and the navigational hazards associated with the Port of Miami shipping channels around Dodge Island. This regulated navigation area covers the waters of Fisherman's Channel, the Main ship channel, and Moley channel surrounding Dodge Island and Biscayne Bay Causeway Island.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This NPRM has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB).
This regulatory action determination is based on the size and location of the regulated navigation area. The regulated navigation area will only affect vessels entering and passing within the Main ship channel, Fisherman's channel and Meloy channel. Vessels may continue to operate within the regulated navigation area with the only restriction being the requirement to operate at slow speeds and not create an excessive wake. Moreover, upon activating the regulated navigation area, the Coast Guard will notify the local maritime community through various means including, Local Notice to Mariners and Broadcast Notice to Mariners issued on VHF-FM marine radio channel 16.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the regulated navigation area may be small entities, for the reasons stated in section IV. A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have Tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the potential effects of this proposed rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a regulated navigation area requiring vessels 50 meters or less to transit the regulated area at a slow speed that creates minimum wake. Normally such actions are categorically excluded from further review under paragraph L[60a] of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
We view public participation as essential to effective rulemaking and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We review all comments received, but we will only post comments that address the topic of the proposed rule. We may choose not to post off-topic, inappropriate, or duplicate comments that we receive.
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051, 70124; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.3.
(a)
(b)
(1) On plane;
(2) In the process of coming up on or coming off plane; or
(3) Creating an excessive wake.
(c)
(d)
Corporation for National and Community Service.
Proposed rule.
The Corporation for National and Community Service (operating as AmeriCorps) is requesting public comment on a proposal to revise AmeriCorps State and National program regulations on the number of terms for which AmeriCorps will fund living allowances and other benefits for members. The proposal would provide that AmeriCorps funding may be used for living allowances and other benefits for members for as long as it takes the members to either earn the aggregate value of two Segal Education Awards or four terms, whichever is longer.
Written comments must be submitted by September 27, 2024.
Please send your comments electronically through the Federal government's one-stop rulemaking website at
Jennifer Bastress Tahmasebi, Deputy Director, AmeriCorps State and National at
AmeriCorps recently revised AmeriCorps State and National program regulations to, among other changes, remove the four-term limit on AmeriCorps State and National members' service.
Full-time, part-time, and reduced part-time terms of service have different hour requirements and accordingly each take a different number of terms to reach the aggregate value of the two full-time education awards.
Since publication of the final rule, several members of the public have contacted AmeriCorps to point out the negative effect this will have on grantees for whom members typically serve four full-time terms. With the prior four-term limit, those members could earn the aggregate value of two full-time education awards in two years and continue serving two more years to reach the four-term limit of receiving AmeriCorps living allowance and benefits. Under the final rule, those full-time members can no longer continue to serve (receiving AmeriCorps living allowance and benefits) those two years beyond the initial two years it took to earn the aggregate value of two full-time education awards. The members of the public noted a particularly negative effect on grantees in remote and rural locations who have a smaller pool of individuals willing to serve. These grantees rely on the willingness of their AmeriCorps members to serve full-time for four years.
Based on this input, AmeriCorps is proposing to add flexibility to the rule so that grantees and members who rely on the current state of being able to receive AmeriCorps funding for living allowances and benefits for up to four terms would continue to be able to receive that funding for four terms. The proposal also retains the final rule provision that allows AmeriCorps funding for the number of terms it takes to earn the aggregate value of two full-time education awards. Thus, members who serve less than full-time will continue to be funded for however many terms it takes to earn the aggregate value of two education awards.
The proposed change, which appears at § 2522.235, would provide that AmeriCorps will fund living allowances and other benefits only for the number of terms needed to attain the aggregate value of two full-time education awards or for four terms, whichever term duration is longer. Programs may continue to fund benefits from non-AmeriCorps resources, if they choose, for members who serve beyond that time. These term limits only apply to AmeriCorps State and National terms.
AmeriCorps is seeking comment on this proposal for a period of 30 days, which is shorter than the usual 60 days provided, because if this rulemaking is finalized, it will relieve a burden and may take effect on October 1, 2024, the same effective date as the other regulatory changes that were finalized in the May 28, 2024, rule.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Information and Regulatory Affairs in the Office of Management and Budget has determined that this proposed rule is not a significant regulatory action.
As required by the Regulatory Flexibility Act of 1980 (5 U.S.C. 601
For purposes of title II of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, as well as Executive Order 12875, this regulatory action does not contain any Federal mandate that may result in increased expenditures in Federal, State, local, or Tribal Governments in the aggregate, or impose an annual burden exceeding $100 million on the private sector.
Under the PRA, an agency may not conduct or sponsor a collection of information unless the collections of information display valid control numbers. This proposed rule does not include any information collection.
Executive Order 13132, Federalism, prohibits an agency from publishing any rule that has federalism implications if the rule imposes substantial direct compliance costs on State and local Governments and is not required by statute, or the rule preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This rulemaking does not have any federalism implications, as described above.
This proposed rule does not affect a taking of private property or otherwise have taking implications under Executive Order 12630 because this proposed rule does not affect individual property rights protected by the Fifth Amendment or involve a compensable “taking.” A takings implication assessment is not required.
This proposed rule complies with the requirements of Executive Order 12988. Specifically, this rulemaking: (a) meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and (b) meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.
AmeriCorps recognizes the inherent sovereignty of Indian tribes and their right to self-governance. We have evaluated this rulemaking under our consultation policy and the criteria in Executive Order 13175 and determined that this proposed rule does not impose substantial direct effects on federally recognized Tribes.
We are required by Executive Orders 12866 (section 1(b)(12)), and 12988 (section 3(b)(1)(B)), and 13563 (section 1(a)), and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each proposed rule we publish must: (a) be logically organized; (b) use the active voice to address readers directly; (c) use clear language rather than jargon; (d) be divided into short sections and sentences; and (e) use lists and tables wherever possible. If you feel that we have not met these requirements, please send us comments by one of the methods listed in the
Grant programs—social programs, Reporting and recordkeeping requirements, Volunteers.
For the reasons stated in the preamble, under the authority of 42 U.S.C. 12651c(c), the Corporation for National and Community Service proposes to amend chapter XXV, title 45 of the Code of Federal Regulations as follows:
42 U.S.C. 12571-12595; 12651b-12651d; E.O. 13331, 69 FR 9911, Sec. 1612, Pub. L. 111-13.
The number of terms an individual may serve in an AmeriCorps State and National program is not limited, but the limitations in paragraphs (a) and (b) of this section apply.
(a) An individual may attain only the aggregate value of two full-time education awards.
(b) AmeriCorps will fund the benefits described in §§ 2522.240 through 2522.250 only for the number of terms needed to attain the aggregate value of two full-time education awards or for four terms, whichever is longer. Grantees may choose to fund benefits for any additional terms.
Coast Guard, DHS.
Notice of proposed rulemaking; extension of the comment period.
In accordance with the statutory provisions enacted by the Great Lakes Pilotage Act of 1960, on August 5, 2024, the Coast Guard published a notice of proposed rulemaking the Coast Guard is proposing new pilotage rates for 2025. The Coast Guard is extending the comment period of the Great Lakes Pilotage Rates—2025 Annual Review notice of proposed rulemaking for 15 days. The extension is intended to keep the comment window open until after the Great Lakes Pilotage Advisory Committee meeting on September 6, 2024. Participation in this meeting will allow stakeholders to better understand the issues at play and to submit more informed public comments.
The comment period for the notice of proposed rulemaking published on August 5, 2024, 89 FR 63334, is extended. Comments and related material must be received by the Coast Guard on or before September 25, 2024.
You may submit comments identified by docket number USCG-2024-0406 using the Federal Decision Making Portal at
For information about this document, call or email Mr. Brian Rogers, Commandant, Office of Waterways and Ocean Policy—Great Lakes Pilotage Division (CG-WWM-2), Coast Guard; telephone 410-360-9260, email
The U.S. Coast Guard views public participation as essential to establishing equitable pilotage rates in the Great Lakes. The Coast Guard will consider all information and material received during the comment period. If you submit a comment, please include the docket number for this request for information, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
The proposed rule was published on August 5, 2024, with a comment period that ended on September 4, 2024 (89 FR 63334). In the rule, the Coast Guard proposed new pilotage rates for the 2025 season.
On September 6, 2024, the Great Lakes Pilotage Advisory Committee (GLPAC) will meet in Massena, New York, to discuss matters relating to Great Lakes Pilotage, including review of proposed Great Lakes Pilotage regulations and policies. The meeting is open to the public (89 FR 60440). In order to allow interested parties to participate in the GLPAC meeting before drafting and submitting their public comments, the Coast Guard is extending the comment period 15 business days. The new comment period now closes on September 25, 2024.
This document is issued under the authority of 46 U.S.C. 70124.
Agency for International Development.
Notice of information collection; request for comment.
The United States Agency for International Development (USAID), in accordance with the Paperwork Reduction Act (PRA) of 1995, as amended, invites the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. The purpose of this notice is to allow for 60 days of public comment on the AID 114-2 Anti-Harassment Program Intake Summary Sheet, prior to the submission of the information collection request (ICR) to OMB for approval.
All comments should be submitted within 60 calendar days from the date of this publication.
Interested persons are invited to submit written comments by email to
Please reference the AID 114-2 Anti-Harassment Program Intake Summary Sheet in the subject line of your comments
9Tanya Shorter, Lead Anti-Harassment Program Specialist, USAID, Office of Civil Rights, telephone 771-202-3478 or email at
The purpose of the AID 114-2 form is to document basic information regarding allegations of harassment to include the following: Information about involved individuals, including the individual alleged to be harassed, the alleged harasser, and witnesses or others with knowledge of the incident(s): (1) full name, (2) contact information, (3) position title, (4) hiring mechanism, and (5) office/work location; (6) Description of the alleged harassment, including the date(s) the alleged harassment occurred and whether the alleged harassment is alleged to be based on a protected EEO category (race, color, national origin, sex (including pregnancy, gender identity, sexual orientation, or transgender status), age (40 or older), religion, genetic information (including family medical history), physical or mental disability, or retaliation); (7) Whether the supervisor and/or other management official took any steps in response to the alleged harassment; and (8) Any other useful, preliminary information.
We are soliciting general public and other federal agencies comments to permit USAID to:
• Evaluate whether the proposed information collection is necessary for the proper functions of USAID.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the reporting burden on those who are to respond.
Agency for International Development.
Notice of proposed information collection.
The U.S. Agency for International Development (USAID) seeks Office of Management and Budget (OMB) approval to continue the information collection described below. In accordance with the Paperwork Reduction Act of 1995, USAID requests public comment on this collection from all interested individuals and organizations.
Submit comments on or before October 28, 2024.
You may submit comments through the Federal eRulemaking Portal at
Ms. Nicole Thompson, at (202)286-4696 or via email at
All comments must be in writing and submitted through the method(s) specified in the
The U.S. Agency for International Development (USAID) is authorized to make contracts with any corporation, international organization, or other body of persons in or outside of the United States in furtherance of the purposes and within limitations of the Foreign Assistance Act (FAA). As part of this authority, USAID requests certain information from contractors using contract clauses in the USAID Acquisition Regulation (AIDAR). USAID has an existing Information Collection under OMB No: OMB 0412-0520. This information collection includes the following offeror or contractor reporting requirements, identified by the AIDAR section number, as specified in the AIDAR 701.106: 752.219-8, 752.245-70, 752.245-71(c)(2), 752.247-70(c), 752.7001, 752.7002(j), 752.7003, 752.7004 and 752.7032. Other information collection requirements under the AIDAR exist under separate OMB approvals.
The pre-award requirements are based on a need for prudent management in the determination that an offeror either has or can obtain the ability to competently manage development assistance programs using public funds. The requirements for information collection during the post-award period are based on the need to prudently administer public funds. USAID most recently renewed this approval effective July 15, 2021 (86 FR 31693). This current renewal makes no revisions to existing clauses or underlying forms and updates burden estimates.
Comments are requested concerning: (a) Whether the collections of information are necessary for the proper performance of the functions of the Agency, including whether the information shall have practical utility; (b) the accuracy of the burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including through the use of automated collection techniques or other forms of information technology.
USAID will only address comments that explain why the proposed collection would be inappropriate, ineffective, or unacceptable without a change. Comments that are insubstantial or outside the scope of the notice of request for public comment may not be considered.
USAID estimates that approximately 11,052 respondents will submit 75,010 submissions per year across each of the items covered in this information collection. The amount of time estimated to complete each response varies by item.
Agency for International Development.
Notice of request for information.
The U.S. Agency for International Development (USAID) is considering updating its sanctions-related provisions and contract clauses for assistance and acquisition awards. A primary factor under review is whether to expand reporting requirements to enhance USAID's monitoring of recipients' and contractors' activities involving sanctioned jurisdictions or sanctioned individuals and entities subject to the sanctions programs administered by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC). This reporting would facilitate the assessment of whether the U.S. Government is ensuring the efficient delivery of humanitarian and development assistance internationally to the most vulnerable people, while achieving U.S. national security objectives by minimizing benefits to sanctioned individuals and entities. This RFI supports this effort by soliciting feedback from the general public, which will be considered during the process of analyzing whether changes are required, as well as any subsequent drafting of new or revised award terms.
Interested persons and organizations are invited to submit comments October 28, 2024.
Jasen Andersen, USAID/M/OAA/P, 202-286-3116, or
The U.S. Government has taken steps, in line with its foreign policy and national security goals, to modernize and adapt its sanctions policy and operational framework and to ensure that economic sanctions do not impede the delivery of critical humanitarian and development assistance. The Department of the Treasury's
On December 9, 2022, the United Nations Security Council (UNSC) adopted Resolution No. 2664 to carve out certain humanitarian-related activities from UNSC asset freeze sanctions regimes, thereby allowing the flow of funds, financial assets, economic resources, and goods/services to ensure timely delivery of humanitarian aid or support activities that support basic human needs (
The U.S. Government, including USAID and its interagency partners, continue to monitor and assess whether and to what extent the U.S. Government is (1) facilitating the delivery of humanitarian and development assistance, and (2) preventing unanticipated and undesirable benefits to sanctioned individuals and entities.
USAID is considering whether and how to update provisions and contract clauses for USAID assistance and acquisition awards to include a new reporting mechanism for all humanitarian assistance and development work overseas conducted under a USAID award. This approach would (i) require USAID awardees to report on certain incidents involving sanctioned individuals and entities (
• Reporting itemized details regarding payments of funds under the award in the form of taxes, tolls, and fees to, or for the benefit of, sanctioned individuals or entities. For each payment, the awardee will make best efforts to include details about the amount paid, the approximate date and location of the payment, the name of the individual or entity receiving the payment, a description of how such payment facilitated the assistance activities, and remedial steps, if any, taken to address the issue.
• Reporting itemized details regarding diversions of funds, supplies, or services under the award by sanctioned individuals or entities. For each diversion, the awardee will make best efforts to include details about the circumstances of the diversion, the name of the individual or entity causing the diversion, estimated value diverted, the approximate date and location of the diversion, description and intended destination, and remedial steps, if any, taken to address the issue.
For USAID's assistance awards, updates could take the form of revisions to the mandatory standard provisions M12, M14, and M5 (“Preventing Transactions with, or the Provision of Resources or Support to, Sanctioned Groups and Individuals”) found in
This RFI is intended to solicit feedback on the following:
(1) Considerations USAID should take into account when updating the sanctions-related provisions and contract clauses for its assistance and acquisition awards.
(2) Types of information and details that recipients and contractors can report under their award for activities that are subject to OFAC's sanctions, regarding (a) payments of funds to, or for the benefit of, sanctioned individuals or entities; and (b) diversions of funds, supplies, or services by sanctioned individuals or entities.
(3) Constraints that recipients and contractors may face in reporting information regarding (a) payments of funds to, or for the benefit of, sanctioned individuals or entities; and (b) diversions of funds, supplies, or services by sanctioned individuals or entities. Where possible, include specific examples.
(4) Estimates of the burden on individual recipients and contractors in complying with any reporting requirement.
(5) Considerations USAID should consider regarding the flowdown of requirements to subrecipients and subcontractors.
(6) Recommendations on ways USAID can obtain data from recipients and contractors in order to assess the impact of GLs on the delivery of legitimate humanitarian assistance and other development activities to the most vulnerable people, while achieving U.S. national security objectives, including how USAID can collect such information on an aggregated basis from recipients and contractors.
(7) Recommendations on the frequency and method of reporting.
Responses to this RFI are not limited to the items in the above list. Commenters may provide feedback on other factors they deem relevant to USAID's updating of sanctions-related award provisions and contract clauses.
Food Safety and Inspection Service (FSIS), Department of Agriculture (USDA).
Notice of public meeting.
This notice is announcing that the National Advisory Committee on Microbiological Criteria for Foods (NACMCF) will hold a public meeting of the full Committee and Subcommittees from September 24, 2024, to September 26, 2024. The Committee will provide updates on FSIS' Genomics charge and the U.S. Food and Drug Administration's (FDA's)
The full Committee will hold an in-person and virtual public meeting on Tuesday, September 24, 2024, from 10:00 a.m. to 12:00 p.m. and on Thursday, September 26, 2024, from 4:00 p.m. to 5:00 p.m. The Subcommittees on Genomics and on
Persons interested in providing oral comments at the Tuesday, September 24, 2024, public meeting of the full Committee should indicate so when registering. Oral comments will be limited to three minutes per speaker. FSIS will do its best to accommodate all registered persons who request to provide oral comments at the public meeting.
The deadline to submit written comments is Wednesday, September 18, 2024.
The meetings will be held in the USDA Whitten Building, 1400 Independence Ave. SW, Washington, DC 20250. In-person attendees will be escorted to the meeting room upon arrival. Virtual attendees will be provided details on how to access the full Committee and Subcommittee meetings upon registration.
In-person attendees must show valid photo identification and will be required to pass through the security screening systems and escorted to the respective conference rooms. Please allow adequate time for this process.
Attendees must pre-register at
An American Sign Language interpreter will be present online during the public meeting and attendees will also have the option to turn on closed captions.
For more information on the NACMCF charges, visit:
Written comments may be submitted by one of the following methods:
The official transcripts of the September 24-26, 2024, public meetings, when they become available, will be posted on FSIS' website at
Kristal Southern, USDA, FSIS, Office of Public Health Science, 1400 Independence Avenue SW, Room 1128, Washington, DC 20250; Phone: 202-937-4162; Email:
The NACMCF was established in 1988, in response to a recommendation of the National Academy of Sciences for an interagency approach to microbiological criteria for foods, and in response to a recommendation of the U.S. House of Representatives Committee on Appropriations, as expressed in the Rural Development, Agriculture, and Related Agencies Appropriation Bill for fiscal year 1988. The NACMCF provides impartial scientific advice and recommendations to the Secretary of Agriculture and the Secretary of Health and Human Services on public health issues relative to the safety and wholesomeness of the U.S. food supply, including the development of microbiological criteria and review and evaluation of epidemiological and risk assessment data and methodologies for assessing microbiological hazards in foods. The Committee also provides scientific advice and recommendations to the Departments of Commerce and Defense. The Committee reports to the Secretary of Agriculture through the Under Secretary for Food Safety, the Committee's Chair, and to the Secretary of Health and Human Services through the Assistant Secretary for Health, the Committee's Vice-Chair. Currently, Dr. Emilio Esteban, Under Secretary for Food Safety, USDA, is the Committee Chair; Dr. Donald Prater, Acting Director of the Food and Drug Administration's Center for Food Safety and Applied Nutrition (CFSAN), is the Vice-Chair; and Dr. Kristal Southern, USDA FSIS, is the Director of the NACMCF Executive Secretariat and Designated Federal Officer.
The NACMCF charter is available for viewing at
NACMCF documents and comments posted on the FSIS website are electronic conversions from a variety of source formats. In some cases, document conversion may result in character translation or formatting errors. The original document is the official, legal copy. To meet the electronic and information technology accessibility standards in Section 508 of the Rehabilitation Act, NACMCF may add alternate text descriptors for non-text elements (graphs, charts, tables, multimedia, etc.). These modifications only affect the internet copies of the documents. Copyrighted documents will not be posted on FSIS' website but will be available for inspection in the FSIS Docket Room.
Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this
In accordance with Federal civil rights law and USDA civil rights regulations and policies, USDA, its
Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (
To file a program discrimination complaint, a complainant should complete a Form AD-3027,
(1)
(2)
(3)
USDA is an equal opportunity provider, employer, and lender. Equal opportunity practices in accordance with USDA's policies will be followed in all member appointments to the committee. To ensure that the recommendations of the committee consider the needs of the diverse groups served by USDA, membership shall include, to the extent practicable, individuals with demonstrated ability to represent the many communities, identities, races, ethnicities, backgrounds, abilities, cultures, and beliefs of the American people, including underserved communities.
Thursday, October 24, 2024, 2 p.m. ET (2 hours).
Thursday, January 23, 2025, 2 p.m. ET (2 hours).
Thursday, April 24, 2025, 2 p.m. ET (2 hours).
Thursday, July 24, 2025, 2 p.m. ET (2 hours).
The meetings will be held virtually via ZOOM. Links are below and will be available at:
Open to the public.
The Chemical Safety and Hazard Investigation Board (CSB) will convene public meetings on October 24, 2024; January 23, 2025; April 24, 2025; and, July 24, 2025, at 2 p.m. ET. These meetings serve to fulfill the CSB's requirement to hold a minimum of four public meetings for Fiscal Year 2025 pursuant to 40 CFR 1600.5(c). The Board will review the CSB's progress in meeting its mission and as appropriate highlight safety products newly released through investigations and safety recommendations.
Hillary Cohen, Communications Manager, at
The CSB is an independent Federal agency charged with investigating incidents and hazards that result, or may result, in the catastrophic release of extremely hazardous substances. The agency's Board Members are appointed by the President and confirmed by the Senate. CSB investigations look into all aspects of chemical accidents and hazards, including physical causes such as equipment failure as well as inadequacies in regulations, industry standards, and safety management systems.
The meetings are free and open to the public. These meetings will only be available via ZOOM. Close captions (CC) will be provided. At the close of each meeting, there will be an opportunity for public comment. To submit public comments for the record please email the agency at
Economic Development Administration, Department of Commerce.
Notice of information collection, request for comment.
The Department of Commerce, in accordance with the Paperwork Reduction Act of 1995 (PRA), invites the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. The purpose of this notice is to allow for 60 days of public comment preceding submission of the collection to OMB.
To ensure consideration, comments regarding this proposed information collection must be received on or before October 28, 2024.
Interested persons are invited to submit written comments to Bernadette Grafton, Program Analyst, Performance, Research and National Technical Assistance Division, Economic Development Administration, U.S. Department of Commerce, via email at
Requests for additional information or specific questions related to collection activities should be directed to Bernadette Grafton, Program Analyst, Performance, Research and National Technical Assistance Division, Economic Development Administration, U.S. Department of Commerce, via phone at (202) 482-2917 or via email at
The Economic Development Administration (EDA) leads the Federal economic development agenda by promoting innovation and competitiveness, preparing American regions for growth and success in the worldwide economy. Guided by the basic principle that sustainable economic development should be locally-driven, EDA works directly with communities and regions to help them build the capacity for economic development based on local business conditions and needs. The Public Works and Economic Development Act of 1965 (PWEDA) (42 U.S.C. 3121
EDA must collect specific information from financial assistance applicants to evaluate whether proposed projects satisfy eligibility and programmatic requirements contained in PWEDA, EDA regulations at 13 CFR chapter III, and applicable Notices of Funding Opportunity (NOFOs). The purpose of this notice is to seek comments from the public and other Federal agencies regarding EDA's proposed extension of the application materials under this information collection: Forms ED-900 (General Application (GA) for EDA Programs), ED-900B (Beneficiary Information Form), ED-900C (EDA Application Supplement for Construction Programs), ED-900D (Requirements for Design and Engineering Assistance), ED-900E (Calculation of Estimated Relocation and Land Acquisition Expenses), and ED-900F (Additional EDA Assurances for Revolving Loan Fund Investments).
EDA collects information from financial assistance applicants electronically through
We are soliciting public comments to permit the Department/Bureau to: (a) Evaluate whether the proposed information collection is necessary for the proper functions of the Department, including whether the information will have practical utility; (b) Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used; (c) Evaluate ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
The Materials and Equipment Technical Advisory Committee will meet on September 12, 2024, 10:00 a.m.-3:30 p.m., Eastern Daylight Time, in the Herbert C. Hoover Building, Room 3884, 1401 Constitution Avenue NW, Washington, DC (enter through Main Entrance on 14th Street between Constitution and Pennsylvania Avenues). The Committee advises and assists the Secretary of Commerce (Secretary) and other Federal officials and agencies with respect to actions designed to carry out the policy set forth in Section 1752(1)(A) of the Export Control Reform Act. The purpose of the meeting is to have Committee members and U.S. Government representatives mutually review updated technical data and policy-driving information that has been gathered.
1. Opening Remarks and Introduction by BIS Senior Management.
2. Report from working groups.
3. Public comments and Proposals.
4. Discussion of matters determined to be exempt from the open meeting and public participation requirements found in sections 1009(a)(1) and 1009(a)(3) of
The open session will be accessible via teleconference. To join the conference, submit inquiries to Ms. Yvette Springer at
A limited number of seats will be available for members of the public to attend the open session in person. Reservations are not accepted.
To the extent that time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate distribution of materials to the Committee members, the Committee suggests that members of the public forward their materials prior to the meeting to Ms. Springer via email. Material submitted by the public will be made public and therefore should not contain confidential information. Meeting materials from the public session will be accessible via the Technical Advisory Committee (TAC) site at
The Deputy Assistant Secretary for Administration, performing the non-exclusive functions and duties of the Chief Financial Officer and Assistant Secretary for Administration, with the concurrence of the delegate of the General Counsel, formally determined on May 6, 2024, pursuant to 5 U.S.C. 1009(d)), that the portion of the meeting dealing with pre-decisional changes to the Commerce Control List and the U.S. export control policies shall be exempt from the provisions relating to public meetings found in 5 U.S.C. 1009(a)(1) and 1009(a)(3). The remaining portions of the meeting will be open to the public.
For more information, contact Ms. Springer.
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
These surveys are designed to gather information so that BIS can evaluate the impact of foreign imports of strategic commodities on the national security of the United States. Each Section 232 study is for a specific commodity or technology that is required for national security reasons (
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
Bureau of Industry and Security, Commerce.
Notice of information collection, request for comment.
The Department of Commerce, in accordance with the Paperwork Reduction Act of 1995 (PRA), invites the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. The purpose of this notice is to allow for 60 days of public comment preceding submission of the collection to OMB.
To ensure consideration, comments regarding this proposed information collection must be received on or before October 28, 2024.
Interested persons are invited to submit comments by email to Mark Crace, IC Liaison, Bureau of Industry and Security, at
Requests for additional information or specific questions related to collection activities should be directed to Mark Crace, IC Liaison, Bureau of Industry and Security, phone 202-714-8178 or by email at
The Chemical Weapons Convention (CWC) is a multilateral arms control treaty that seeks to achieve an international ban on chemical weapons (CW). The CWC prohibits, the use, development, production, acquisition, stockpiling, retention, and direct or indirect transfer of chemical weapons. This collection implements the following export provision of the treaty in the Export Administration Regulations:
Schedule 1 notification and report: Under Part VI of the CWC Verification Annex, the United States is required to notify the Organization for the Prohibition of Chemical Weapons (OPCW), the international organization created to implement the CWC, at least 30 days before any transfer (export/import) of Schedule 1 chemicals to another State Party. The United States is also required to submit annual reports to the OPCW on all transfers of Schedule 1 Chemicals.
Schedule 3 End-Use Certificates: Under Part VIII of the CWC Verification Annex, the United States is required to obtain End-Use Certificates for exports of Schedule 3 chemicals to States not Party to the CWC to ensure the exported chemicals are only used for the purposes not prohibited under the Convention.
Electronically or on paper.
We are soliciting public comments to permit the Department/Bureau to: (a) Evaluate whether the proposed information collection is necessary for the proper functions of the Department, including whether the information will have practical utility; (b) Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used; (c) Evaluate ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) determines that certain carbon and alloy steel cut-to-length plate (CTL plate) from France was not sold in the United States at less than normal value during the period of review (POR), May 1, 2022, through April 30, 2023.
Applicable August 28, 2024.
Samuel Evans, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-2420.
On June 6, 2024, Commerce published the
The merchandise covered by the
For these final results, we determine that the following estimated weighted-average dumping margin exists for the period May 1, 2022, through April 30, 2023:
Normally, Commerce will disclose to the parties in a proceeding the calculations performed in connection with the final results of review within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of the notice of final results in the
Pursuant to section 751(a)(2)(C) of the Act and 19 CFR 351.212(b)(1), Commerce has determined, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with the final results of this review. Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this review in the
Commerce calculated a weighted-average dumping margin for Dillinger France S.A. (Dillinger) of zero percent in this review. Accordingly, we intend to instruct CBP to liquidate the appropriate entries without regard to antidumping duties. For entries of subject merchandise during the POR produced by Dillinger for which Dillinger did not know its merchandise was destined for the United States, we will instruct CBP to liquidate unreviewed entries at the all-others rate established in the less-than-fair-value (LTFV) investigation (
The following cash deposit requirements will be effective upon publication in the
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice serves as the only reminder to parties subject to an APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a sanctionable violation.
We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i) of the Act, and 19 CFR 351.221(b)(5).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) determines that countervailable subsidies were provided to producers and exporters of wood mouldings and millwork products (millwork products) from the People's Republic of China (China) during the period of review (POR) from January 1, 2022, through December 31, 2022. Commerce is also rescinding the review with respect to one company that had no reviewable entries during the POR.
Applicable August 28, 2024.
Bob Palmer or Brandon James, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-9068 or (202) 482-7472, respectively.
On March 5, 2024, Commerce published the
The merchandise subject to the
In the
For further information regarding this determination,
All issues raised by interested parties in briefs are addressed in the Issues and Decision Memorandum. A list of the issues addressed in the Issues and Decision Memorandum is provided in Appendix I of this notice. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
Based on our review of the record and comments received from interested parties regarding our
Commerce conducted this review in accordance with section 751(a)(1)(A) of the Act. For each of the subsidy programs found countervailable, we find that there is a subsidy,
The statute and Commerce's regulations do not address the establishment of a rate to be applied to companies not selected for individual examination when Commerce limits its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, Commerce looks to section 705(c)(5) of the Act, which provides instructions for determining the all-others rate in an investigation, for guidance when calculating the rate for companies which were not selected for individual examination in an administrative review. Under section 705(c)(5)(A) of the Act, the all-others rate is normally an amount equal to the weighted average of the countervailable subsidy rates established for exporters and producers individually investigated, excluding any zero or
As stated above, there are 20 companies for which a review was requested and not rescinded, and which were not selected as mandatory respondents or found to be cross-owned with a mandatory respondent. For these non-selected companies, because the rates calculated for mandatory respondents Jinquan and Yinfeng were above
We find the countervailable subsidy rates for the mandatory and non-selected respondents under review for the period of January 1, 2022, through December 31, 2022, to be as follows:
We intend to disclose the calculations performed in connection with the final results of review to parties in this proceeding within five days of the date of publication of this notice in the
Pursuant to section 751(a)(2)(C) of the Act and 19 CFR 351.212(b), Commerce has determined, and CBP shall assess, countervailing duties on all appropriate entries of subject merchandise in accordance with the final results of this review, for the above-listed companies at the applicable
In accordance with section 751(a)(1) of the Act, Commerce intends to instruct CBP to collect cash deposits of estimated countervailing duties in the amounts shown for the POR for each of the respective companies listed above on shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review. For all non-reviewed firms subject to the
This notice also serves as a reminder to parties subject to an APO of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
We are issuing and publishing these final results of administrative review and notice in accordance with sections 751(a)(1) and 777(i) of the Act, and 19 CFR 351.221(b)(5).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) preliminarily determines that that critical circumstances exist, with respect to imports of ferrosilicon in the antidumping duty (AD) and countervailing duty (CVD) investigations of ferrosilicon from the Russian Federation (Russia). The AD period of investigation is July 1, 2023, through December 31, 2023, and the CVD period of investigation is January 1, 2023, through December 31, 2023.
Applicable August 28, 2024.
Mark Hoadley AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482- 3148.
These preliminary determinations are made in accordance with sections 703(e) and 733(e) of the Tariff Act of 1930, as amended (the Act). Commerce published the notices of initiation of these AD and CVD investigations on April 24, 2024.
In accordance with sections 703(e)(1) and 733(e)(1) of the Act and 19 CFR 351.206(c)(1) and (2)(ii), because the petitioners submitted the critical circumstances allegations more than 30 days before the scheduled date of the final determinations, Commerce will make preliminary findings as to whether there is a reasonable basis to believe or suspect that critical circumstances exist and will issue preliminary critical circumstances determinations within 30 days after the allegations are filed.
The petitioners allege that imports of ferrosilicon from Russia were massive over a relatively short period, and provided monthly import data comparing a base period of January 2024 through March 2024, to a comparison period of April 2024 through June 2024.
Section 703(e)(1) of the Act provides that Commerce will determine that critical circumstances exist in CVD investigations if there is a reasonable basis to believe or suspect that the alleged countervailable subsidy is inconsistent with the SCM Agreement.
To determine whether an alleged countervailable subsidy is inconsistent with the SCM Agreement, in accordance with section 703(e)(1)(A) of the Act, Commerce considered the evidence currently on the record of this investigation. As determined in the
In determining whether there is a history of dumping pursuant to section 733(e)(1)(A)(i) of the Act, Commerce generally considers current or previous AD orders on subject merchandise from the country in question in the United States and current orders in any other country with regard to imports of subject merchandise.
In determining whether importers knew or should have known that exporters were selling subject merchandise at LTFV and that there was likely to be material injury by reason of such sales, pursuant to section 733(e)(1)(A)(ii), Commerce must rely on the facts before it at the time the determination is made. Commerce generally bases its decision with respect to knowledge on the margins calculated in the preliminary determination and the U.S. International Trade Commission's (ITC) preliminary injury determination.
Commerce normally considers margins of 25 percent or more for export price sales and 15 percent or more for constructed export price sales sufficient to impute importer knowledge of sales at LTFV.
In assessing importers' knowledge of likely material injury, Commerce relies on a preliminary affirmative determination by the ITC to impute the requisite knowledge to U.S. importers.
In determining whether there have been “massive imports” over a “relatively short period,” pursuant to sections 703(e)(1)(B) and 733(e)(1)(B) of the Act and 19 CFR 351.206(h), Commerce normally compares the import volumes of the subject merchandise for at least three months immediately preceding the filing of the petition (
Because the petitions were filed on March 28, 2024, to determine whether there was a massive surge in imports for the cooperating mandatory respondent, Commerce compared the total volume of shipments during the period January 2024 through March 2024 with the volume of shipments during the following three-month period of April 2024 through June 2024. Based on this analysis, we preliminarily determine that there was a massive surge in imports from RFA and “all other” producers/exporters from Russia (for CVD) and for the Russia-wide entity (for AD).
For the CVD investigation, based on the criteria and findings discussed above, we preliminarily determine that critical circumstances exist with respect to imports of ferrosilicon from Russia produced or exported by RFA and all other producers/exporters. For the AD investigation, based on the criteria and findings discussed above, we preliminarily determine that critical circumstances exist with respect to all imports of ferrosilicon from Russia produced or exported by the Russia-wide entity.
We will make final critical circumstances determinations concerning critical circumstances in the final AD and CVD determinations, which are currently due no later than September 11, 2024.
Interested parties are invited to comment on these preliminary critical circumstances determinations no later than five days after the date on which this notice is published in the
We request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs.
In accordance with section 703(e)(2)(A) of the Act, for all entries, we will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of any unliquidated entries of subject merchandise from Russia entered, or withdrawn from warehouse for consumption, on or after March 30, 2024, which is 90 days prior to the date of publication of the
In accordance with sections 703(f) and 733(f) of the Act, we will notify the ITC of these preliminary determinations of critical circumstances.
This determination is issued and published pursuant to sections 703(f), 733(f), and 777(i) of the Act and 19 CFR 351.206.
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
Office of Oceanic and Atmospheric Research (OAR), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Notice of public meeting.
This notice sets forth the schedule and proposed agenda for a meeting of the Ocean Exploration Advisory Board (OEAB). OEAB members will discuss and provide advice on the Federal ocean exploration program, with a particular emphasis on the topics identified in the section on Matters to Be Considered.
The announced meeting is scheduled for Tuesday, Sept. 17, 2024 from 1:00 p.m.-2:00 p.m. (EDT).
This will be a virtual meeting. Information about how to observe virtually will be posted to the OEAB website at
Mr. David Turner, Designated Federal Officer, Ocean Exploration Advisory Board, National Oceanic and Atmospheric Administration,
NOAA established the OEAB under the Federal Advisory Committee Act (FACA) and legislation that gives the agency statutory authority to operate an ocean
OEAB members represent government agencies, the private sector, academic institutions, and not-for-profit institutions involved in all facets of ocean exploration—from advanced technology to public engagement.
In addition to advising NOAA leadership, NOAA expects the OEAB to help to define and develop a national program of ocean exploration—a network of stakeholders and partnerships advancing national priorities for ocean exploration.
One of the OEAB's authorized duties is to annually review the quality and effectiveness of the programs' proposal review processes.
The agenda and other meeting materials will be made available on the OEAB website at
The OEAB expects that public statements at its meetings will not be repetitive of previously submitted verbal or written statements. In general, each individual or group making a verbal presentation will be limited to three minutes. The Designated Federal Officer must receive written comments by Sept. 9, 2024, to provide sufficient time for OEAB review. Written comments received after Sept. 9, 2024, will be distributed to the OEAB but may not be reviewed prior to the meeting date. Comments should be submitted to Designated Federal Officer
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
The Office of Law Enforcement, Alaska Division, is conducting a survey of observer who deploy under the North Pacific Observer Program to determine the true number of observers who experienced victimizing behavior during their deployments, and what factors prevented them from reporting. Twenty questions, describing varying levels of behavior that may violate the Magnuson Act, will determine if an observer has experienced the behavior, if they reported the behavior, and to whom the report was made. The survey will assess the specific impediments to disclosure. This survey will launch on an annual basis. The results of the survey will provide the Office of Law Enforcement a better understanding of how often observers are victimized, which will enable them to reallocate resources as needed, conduct more training for observers to ensure they know how to report, conduct training to ensure people understand what constitutes a victim crime, and to increase awareness of potential victimizations. Additionally, the survey results will help law enforcement understand the barriers to disclosure, so enforcement may begin to address these impediments so they no longer prevent observers from disclosure.
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of hybrid public meeting.
The North Pacific Fishery Management Council (Council) Partial Coverage Fishery Monitoring Advisory Committee (PCFMAC) will meet September 16, 2024.
The meetings will be held on Monday, September 16, 2024, from 8:30 a.m. to 4 p.m., Alaska Time.
For members attending in Seattle, the in-person component of the meeting will be held at the Alaska Fishery Science Center in Room 2079, 7600 Sand Point Way NE, Building 4, Seattle, WA 98115. If you plan to attend in-person, you need to notify Sara Cleaver (
Instructions for attending the meeting are given under
Sara Cleaver, Council staff; telephone: (907) 271-2809; email:
The September 2024 PCFMAC agenda will include: (a) updates since the last PCFMAC meeting; (b) the 2025 Observer Annual report; (c) future scheduling, and (d) other business. The agenda is subject to change, and the latest version will be posted at
You can attend the meeting online using a computer, tablet, or smartphone, or by phone only. Connection information will be posted online at: posted at
Public comment letters will be accepted and should be submitted electronically to posted at
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
Under the provisions of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act; 16 U.S.C. 1801
This action addresses the renewal of permit applications currently approved under PRA 0648-0327. Vessel permits include Atlantic Tunas (except HMS limited access permits, including longline permits, and the HMS Caribbean Smallboat Permit, which are approved under PRA 0648-0205), HMS Charter/Headboat, HMS Angling, and Swordfish General Commercial permits. This action also includes the one-time requirement for commercial vessels greater than 20 meters in length to obtain an International Maritime Organization/Lloyd's Registry (IMO/LR) number.
This action is also being revised to include a new requirement for all HMS vessel permit applications to be submitted online starting in 2025, and the one-time requirement for all permit applicants to set up an account on the HMS permits website. The latter was implemented to make the program compatible with current federal data security requirements, and will make it easier for permit holders with multiple vessel permits to manage their permits by linking them all within a single account. Finally, the action is revised to remove the ability to submit an application for an Atlantic Tunas Purse Seine category permit, as the Atlantic Tunas Purse Seine category was discontinued as part of Amendment 13 to the 2006 Consolidated HMS Fishery Management Plan after years of inactivity in the bluefin tuna fishery. More information on that action can be found in the Amendment 13 final rule (87 FR 59966, October 3, 2022).
The burden estimates in this renewal are also being updated to reflect increases in the total number of permits issued each year, and a $1 increase in the price of HMS vessel permits to $27 per permit, due to increased costs associated with maintaining and executing the program.
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
Defense Security Cooperation Agency, Department of Defense (DoD).
Arms sales notice.
The DoD is publishing the unclassified text of an arms sales notification.
Neil Hedlund at
This 36(b)(1) arms sales notification is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996. The following is a copy of a letter to the Speaker of the House of Representatives with attached Transmittal 23-18, Policy Justification, and Sensitivity of Technology.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
*As defined in Section 47(6) of the Arms Export Control Act.
The Government of Australia has requested to buy up to sixty-three (63) Advanced Anti-Radiation Guided Missiles-Extended Range (AARGM-ERs); and up to twenty (20) AARGM-ER Captive Air Training Missiles (CATMs). Also included are AGM-88G Advanced Anti-Radiation Guided Missile-Extended Range Dummy Air Training Missiles (AARGM-ER DATMs), containers, component parts and support equipment; Repair of Repairables; software (Classified and Unclassified); publications (Classified and Unclassified); training (Classified and Unclassified); transportation; U.S. Government and Contractor engineering support; and other related elements of logistical and program support. The estimated total cost is $506 million.
This proposed sale will support the foreign policy and national security objectives of the United States. Australia is one of our most important allies in the Western Pacific. The strategic location of this political and economic power contributes significantly to ensuring peace and economic stability in the region. It is vital to the U.S. national interest to assist our ally in developing and maintaining a strong and ready self-defense capability.
The proposed sale will improve Australia's capability to meet current and future threats by suppressing and destroying land or sea-based radar emitters associated with enemy air defenses. This capability denies the adversary the use of its air defense systems, thereby improving the survivability of Australia's tactical aircraft. Australia will have no difficulty absorbing this equipment into its armed forces.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The prime U.S. contractor will be the Javelin Joint Venture between Lockheed Martin in Orlando, FL and Raytheon Missiles and Defense in Tucson, AZ. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will require U.S. Government personnel and U.S. Contractor representatives to visit Australia on a temporary basis in conjunction with program technical oversight and support requirements, including program and technical reviews.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The AGM-88G Advanced Anti-Radiation Guided Missile-Extended Range (AARGM-ER) weapon system is an air-to-ground missile intended for Suppression of Enemy Air Defenses (SEAD) and Destruction of Enemy Air Defenses (DEAD) missions. The AARGM-ER provides suppression or destruction of enemy RADAR and denies the enemy the use of air defense systems, thereby improving the survivability of our tactical aircraft. The AGM-88G AARGM-ER Captive Air Training Missiles (CATM) is used by pilots when training for SEAD/DEAD missions.
2. The highest level of classification of defense articles, components, and services included in this potential sale is SECRET.
3. If a technologically advanced adversary were to obtain knowledge of the specific hardware and software elements, the information could be used to develop countermeasures that might reduce weapon system effectiveness or be used in the development of a system with similar or advanced capabilities.
4. A determination has been made that Australia can provide substantially the same degree of protection for the sensitive technology being released as the U.S. Government. This sale is necessary in furtherance of the U.S. foreign policy and national security objectives outlined in the Policy Justification.
5. All defense articles and services listed in this transmittal have been authorized for release and export to Australia.
Defense Security Cooperation Agency, Department of Defense (DoD).
Arms sales notice.
The DoD is publishing the unclassified text of an arms sales notification.
Neil Hedlund at
This 36(b)(5)(C) arms sales notification is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996. The following is a copy of a letter to the Speaker of the House of Representatives with attached Transmittal 22-0W.
(i)
(ii)
Date: June 26, 2018
Implementing Agency: Navy
(iii)
On June 15, 2020, Congress was notified by Congressional certification transmittal number 20-0G of an additional MDE sale of thirty (30) All-Up-Round MK 54 Lightweight Torpedoes (LWT). The following non-MDE items were also be included: MK 54 LWT expendables; MK 54 turnaround kits; MK 54 containers; one (1) MK-695 Torpedo Systems Test Set (TSTS); support equipment including fire control modification platforms and spare parts; torpedo spare parts; training; publications; software; U.S. Government and contractor engineering, technical, and logistics support services and other related elements of logistics and program support. The addition of these items resulted in a net increase in MDE cost of $45 million, resulting in a revised MDE cost of $369.4 million. The total estimated case value increased to $940.4 million.
On June 8, 2022, Congress was notified by Congressional certification transmittal number 22-0G of the MDE replacement of the previously notified two (2) All Up Round MK 54 Mod 0 LWTs with two (2) Exercise MK 54 Mod 0 LWTs. Also included was additional Engineering Technical Assistance for redesign of Radar Signal Processing Group configuration and updates to International Aegis Fire Control Loop design; shipsets of SAASM units and associated spares; COMSEC equipment for use between test sites; and removal of one (1) shipset MK 36 Mod 6 Decoy Launching System. The MDE total value remained $369.4 million; however, the non-MDE estimated value increased from $571 million to $810.6 million. The total estimated case value increased to $1.18 billion.
This transmittal notifies the MDE inclusion of up to an additional sixty-two (62) SM-2 Block IIIB missiles in tactical and telemetered configurations. Also included are MK 13 canisters; spare parts and associated containers; personal training and training equipment; publications and technical data; U.S. Government and contractor technical assistance; and other related elements of logistics and program support. The addition of these items will result in a net increase in MDE value of $260 million, resulting in a revised MDE value of $629.4 million. The non-MDE estimated value will increase from $810.6 million to $850.6 million. The total estimated case value will increase by $300 million to $1.48 billion.
(iv)
(v)
(vi)
(vii)
Defense Security Cooperation Agency, Department of Defense (DoD).
Arms sales notice.
The DoD is publishing the unclassified text of an arms sales notification.
Neil Hedlund at
This 36(b)(1) arms sales notification is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996. The following is a copy of a letter to the Speaker of the House of Representatives with attached Transmittal 23-08, Policy Justification, and Sensitivity of Technology.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
*As defined in Section 47(6) of the Arms Export Control Act.
The Government of the Netherlands has requested to buy twenty (20) M142 High Mobility Artillery Rocket System (HIMARS) launchers; thirty-nine (39) M30A2 Guided Multiple Launch Rocket System (GMLRS) Alternative Warhead (AW) Missile Pods with Insensitive Munitions Propulsion System (IMPS); thirty-eight (38) M31A2 GMLRS Unitary (GMLRS-U) High Explosive (HE) Missile Pods with IMPS; eighty (80) M57 Army Tactical Missile System (ATACMS) Missile Pods; and seventeen (17) M1152A1 High Mobility Multipurpose Wheeled Vehicles (HMMWVs). Also included are M28A2 Reduced Range Practice Rocket (RRPR) pods; radios with similar “SINCGARS” capability, including vehicular dual long-range radio systems w/GPS; single radio, long range vehicular system w/GPS; High Frequency/VHF radios; M1084A2 cargo trucks, Family of Medium Tactical Vehicles (FMTVs) Resupply Vehicles (RSVs); M1089A2 wrecker truck, FMTVs; M1095 5-ton trailer FMTVs; Simple Key Loaders (SKLs), AN/PYQ-10; Defense Advanced Global Positioning System Receivers (DAGRs); machine gun mounts; battle management systems, Vehicle Integration Kits, ruggedized laptops, and training equipment publications for HIMARS and munitions; camouflage screen and support systems; support equipment; communications equipment; spare and repair parts; test sets; training and training equipment; publications; systems integration support; technical data; Stockpile Reliability, Quality Assurance and Technical Assistance teams; U.S. Government and contractor technical, engineering, and logistics support services; and other related elements of logistical and program support. The total estimated cost is $670 million.
This proposed sale will support the foreign policy and national security objectives of the United States by helping to improve the security of a NATO ally that is an important force for political stability and economic progress in Europe.
The proposed sale will improve the Netherlands' military goals of updating capability while further enhancing interoperability with the United States and other allies. The Netherlands intends to use these defense articles and services to modernize its armed forces and expand its capability to strengthen its homeland defense and deter regional threats. The Netherlands will have no difficulty absorbing this equipment into its armed forces.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The principal contractor will be Lockheed Martin, Grand Prairie, TX. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will require U.S. Government or contractor representatives to travel to the Netherlands for program management reviews to support the program. Travel is expected to occur approximately twice per year as needed to support equipment fielding and training.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The M142 High Mobility Artillery Rocket System (HIMARS) is a C-130 transportable wheeled launcher mounted on a 5-ton Family of Medium Tactical Vehicles truck chassis. HIMARS is the modern Army-fielded version of the Multiple Launch Rocket System (MLRS) M270 launcher and can fire all of the MLRS Family of Munitions (FOM) including Guided Multiple Launch Rocket System (GMLRS) variants and the Army Tactical Missile System (ATACMS). Utilizing the MLRS FOM, the HIMARS can engage targets between 15 and 300 kilometers with GPS-aided precision accuracy.
2. The Guided Multiple Launch Rocket System (GMLRS) M31A2 Unitary is the Army's primary munition for units fielding the M142 HIMARS and M270Al Multiple Launcher Rocket System (MLRS) Launchers. The M31 Unitary is a solid propellant artillery rocket that uses Global Positioning System/Precise Positioning Service (GPS/PPS)-aided inertial guidance to accurately and quickly deliver a single high-explosive blast fragmentation warhead to targets at ranges from 15-70 kilometers. The rockets are fired from a launch pod container that also serves as the storage and transportation container for the rockets. Each rocket pod holds six (6) total rockets.
3. The M30A2 GMLRS Alternative Warhead shares a greater than 90% commonality with the M31A1 Unitary. The primary difference between the GMLRS-U and GMLRS-AW is the replacement of the Unitary' s high explosive warhead with a 200-pound fragmentation warhead of pre-formed tungsten penetrators which is optimized for effectiveness against large area and imprecisely located targets. The munitions otherwise share a common motor, GPS/PPS-aided inertial guidance and control system, fuzing mechanism, multi-option height of burst capability, and effective range of 15-70km.
4. The M57 Army Tactical Missile System (ATACMS)—Unitary is a conventional, semi-ballistic missile that utilizes a 500-pound high explosive warhead. It has an effective range of between 70 and 300 kilometers and has increased lethality and accuracy over previous versions of the ATACMS due to a GPS/Precise Position System (PPS) aided navigation system.
5. The highest level of classification of defense articles, components, and
6. If a technologically advanced adversary were to obtain knowledge of the specific hardware and software elements, the information could be used to develop countermeasures that might reduce weapon system effectiveness or be used in the development of a system with similar or advanced capabilities.
7. A determination has been made that the Netherlands can provide substantially the same degree of protection for the sensitive technology being released as the U.S. Government. This sale is necessary in furtherance of the U.S. foreign policy and national security objectives outlined in the Policy Justification.
8. All defense articles and services listed in this transmittal have been authorized for release and export to the Government of the Netherlands.
Defense Security Cooperation Agency, Department of Defense (DoD).
Arms sales notice.
The DoD is publishing the unclassified text of an arms sales notification.
Neil Hedlund at
This 36(b)(5)(C) arms sales notification is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996. The following is a copy of a letter to the Speaker of the House of Representatives with attached Transmittal 23-0E.
(i)
(ii)
Date: February 5, 2018
Military Department: Navy
(iii)
This transmittal notifies the inclusion of the following MDE items: eighty-four (84) RIM-162J Evolved SEASPARROW Missiles (ESSM), Block 2; to replace the previously notified sixty-eight (68) ESSMs. Also included are MK25 quad pack canisters and MK852 shipping containers. The addition of these items will result in a net increase in MDE value of $81.4 million, resulting in a revised MDE value of $174 million. The non-MDE estimated value will increase from $20.1 million to $28.9 million. The total estimated case value will increase by $90.2 million to $202.9 million.
(iv)
(v)
(vi)
The highest level of classification of defense articles, components, and services included in this potential sale is SECRET.
(vii)
In notice document 2024-18294, appearing on pages 66360-66362, in the issue of Thursday, August 15, 2024, make the following correction:
On page 66361, an incorrect graphic referencing Transmittal No. 22-69 was inadvertently published in error. The correct graphic for Transmittal No. 22-63 is corrected to appear as set forth below:
Under Secretary of Defense for Personnel and Readiness, Department of Defense (DoD).
Notice of Federal advisory committee meetings.
The DoD is publishing this notice to announce the following Federal Advisory Committee meetings of the Uniform Formulary Beneficiary Advisory Panel (UFBAP) will take place.
Open to the public, Wednesday, September 25th, 2024, 10:00 a.m.-1:00 p.m. Eastern Standard Time (EST). Wednesday, December 18th, 2024, 10:00 a.m.-1:00 p.m. EST.
The meetings will be held telephonically or via conference call. The phone number for the remote access is CONUS: 1-888-831-4306; OCONUS: 1-210-234-8694; PARTICIPANT CODE: 9136304.
These numbers and the dial-in instructions will also be posted on the UFBAP website at:
Designated Federal Official (DFO) Captain Tiffany F. Cline, USN, 703-681-2890 (voice),
These meetings are being held under the provisions of chapter 10 of title 5, United States Code (U.S.C.) (commonly
Defense Security Cooperation Agency, Department of Defense (DoD).
Arms sales notice.
The DoD is publishing the unclassified text of an arms sales notification.
Neil Hedlund at
This 36(b)(1) arms sales notification is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996. The following is a copy of a letter to the Speaker of the House of Representatives with attached Transmittal 23-05 and Policy Justification.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
* As defined in Section 47(6) of the Arms Export Control Act.
The Government of Kuwait has requested to buy planning, integration, implementation, and maintenance of a Medical Information System for its KMMC that consists of: Health Information Systems Information Technology (IT) hardware and software, IT infrastructure, implementation of life-cycle management practices, training, maintenance, support and warranty services, along with U.S. Government and contractor engineering, technical and logistics support services; and other related elements of logistical and program support. The estimated total cost is $250 million.
This proposed sale will support the foreign policy and national security objectives of the United States by helping to improve the infrastructure of a Major Non-NATO ally that has been and continues to be an important force for political stability and economic progress in the Middle East.
This proposed sale will improve Kuwait's capability to provide greater health security for its KMMC infrastructure. Kuwait will use the enhanced capability to strengthen its medical services management. Kuwait will have no difficulty absorbing this infrastructure, support, and associated services into its armed forces.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The principal contractor will be the Cerner Corporation, Kansas City, Missouri. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will require the assignment of as many as fifteen (15) additional U.S. Government or U.S. contractor representatives to Kuwait for a duration of up to seven (7) years to provide systems planning, implementation, management, and oversight.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
Federal Student Aid, Department of Education.
Notice.
The Chief Operating Officer for Federal Student Aid announces the interest rates for Federal Direct Stafford/Ford Loans (Direct Subsidized Loans), Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans), and Federal Direct PLUS Loans (Direct PLUS Loans) made under the William D. Ford Federal Direct Loan (Direct Loan) Program, Assistance Listing Number 84.268, with first disbursement dates on or after July 1, 2024, and before July 1, 2025.
Travis Sturlaugson, U.S. Department of Education, 830 First Street NE, Washington, DC 20202. Telephone: 202-377-4174 or by email:
If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.
Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans (collectively referred to as “Direct Loans”) may have either fixed or variable interest rates, depending on when the loan was first disbursed or, in the case of a Direct Consolidation Loan, when the application for the loan was received. Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2006, and Direct Consolidation Loans for which the application was received on or after February 1, 1999, have fixed interest rates that apply for the life of the loan. Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed before July 1, 2006, and Direct Consolidation Loans for which the application was received before February 1, 1999, have variable interest rates that are determined annually and are in effect during the period from July 1 of one year through June 30 of the following year.
This notice announces the fixed interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans with first disbursement dates on or after July 1, 2024, and before July 1, 2025, and provides interest rate information for other fixed-rate Direct Loans. Interest rate information for variable-rate Direct Loans is announced in a separate
Section 455(b) of the Higher Education Act of 1965, as amended (HEA) (20 U.S.C. 1087e(b)), includes formulas for determining the interest rates for all Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2013. The interest rate for these loans is a fixed rate that is determined annually for all loans first disbursed during any 12-month period beginning on July 1 and ending on June 30. The rate is equal to the high yield of the 10-year Treasury notes auctioned at the final auction held before June 1 of that 12-month period, plus a statutory add-on percentage that varies depending on the loan type and, for Direct Unsubsidized Loans, whether the loan was made to an undergraduate or graduate student. The calculated interest rate may not exceed a maximum rate specified in the HEA. If the interest rate formula results in a rate that exceeds the statutory maximum rate, the rate is the statutory maximum rate. Loans first disbursed during different 12-month periods that begin on July 1 and end on June 30 may have different interest rates, but the rate determined for any loan is a fixed interest rate for the life of the loan.
On May 8, 2024, the United States Treasury Department held a 10-year Treasury note auction that resulted in a high yield of 4.483 percent, rounded to 4.48 percent.
Chart 1 shows the fixed interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2024, and before July 1, 2025.
For reference
Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2006, and before July 1, 2013, have fixed interest rates that are specified in section 455(b) of the HEA (20 U.S.C. 1087e(b)). Chart 3 shows the interest rates for these loans.
Section 455(b) of the HEA specifies that all Direct Consolidation Loans for which the application was received on or after February 1, 1999, have a fixed interest rate that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent. For Direct Consolidation Loans for which the application was received on or after February 1, 1999, and before July 1, 2013, the interest rate may not exceed 8.25 percent. However, under section 455(b) of the HEA, the 8.25 percent interest rate cap does not apply to Direct Consolidation Loans made based on applications received on or after July 1, 2013. Chart 4 shows the interest rates for fixed-rate Direct Consolidation Loans.
You may also access documents of the Department published in the
Federal Student Aid, Department of Education.
Notice.
The Chief Operating Officer for Federal Student Aid announces the interest rates for Federal Direct Stafford/Ford Loans (Direct Subsidized Loans), Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans), and Federal Direct PLUS Loans (Direct PLUS Loan), Assistance Listing Number 84.268, with first disbursement dates before July 1, 2006, and for Federal Direct Consolidation Loans (Direct Consolidation Loans) for which the application was received before February 1, 1999. The rates announced in this notice are in effect for the period July 1, 2024, through June 30, 2025.
Travis Sturlaugson, U.S. Department of Education, 830 First Street NE, Washington, DC 20202. Telephone: 202-377-4174 or by email:
If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.
Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans (collectively referred to as “Direct Loans”) may have either fixed or variable interest rates, depending on when the loan was first disbursed or, in the case of a Direct Consolidation Loan, when the application for the loan was received. Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed before July 1, 2006, and Direct Consolidation Loans for which the application was received before February 1, 1999, have variable interest rates. For these loans, a new rate is determined annually and is in effect during the period from July 1 of one year through June 30 of the following year.
Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans first disbursed on or after July 1, 2006, and Direct Consolidation Loans for which the application was received on or after February 1, 1999, have fixed interest rates that apply for the life of the loan.
This notice announces the interest rates for variable-rate Direct Loans that will apply during the period from July 1, 2024, through June 30, 2025. Interest rate information for fixed-rate Direct Loans is announced in a separate notice published in the
Interest rates for variable-rate Direct Loans are determined in accordance with formulas specified in section 455(b) of the Higher Education Act of 1965, as amended (HEA) (20 U.S.C. 1087e(b)). The formulas vary depending on loan type and when the loan was first disbursed or, for certain Direct Consolidation Loans, when the application for the loan was received. The HEA specifies a maximum interest rate for these loan types. If the interest rate formula results in a rate that exceeds the statutory maximum rate, the rate is the statutory maximum rate.
For Direct Subsidized Loans and Direct Unsubsidized Loans with first disbursement dates before July 1, 2006, and for Direct PLUS Loans with first disbursement dates on or after July 1, 1998, and before July 1, 2006, the interest rate is equal to the lesser of—
(1) The bond equivalent rate of 91-day Treasury bills auctioned at the final auction held before the June 1 immediately preceding the 12-month period to which the interest rate applies, plus a statutory add-on percentage; or
(2) 8.25 percent (for Direct Subsidized Loans and Direct Unsubsidized Loans) or 9.00 percent (for Direct PLUS Loans).
For Direct Subsidized Loans and Direct Unsubsidized Loans with first disbursement dates on or after July 1, 1995, and before July 1, 2006, the statutory add-on percentage varies depending on whether the loan is in an in-school, grace, or deferment status, or in any other status. For all other loans, the statutory add-on percentage is the same during any status.
The bond equivalent rate of 91-day Treasury bills auctioned on May 28, 2024, is 5.40 percent.
For Direct PLUS Loans with first disbursement dates before July 1, 1998, the interest rate is equal to the lesser of—
(1) The weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before the June 26 preceding the 12-month period to which the interest rate applies, plus a statutory add-on percentage; or
(2) 9.00 percent.
The weekly average of the one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before June 26, 2024, is 5.10 percent.
A Direct Consolidation Loan may have up to three components, depending on the types of loans that were repaid by the consolidation loan and when the application for the consolidation loan was received. The three components are called Direct Subsidized Consolidation Loans, Direct Unsubsidized Consolidation Loans, and (only for Direct Consolidation Loans made based on applications received before July 1, 2006) Direct PLUS Consolidation Loans. In most cases the interest rates for variable-rate Direct Subsidized Consolidation Loans, Direct Unsubsidized Consolidation Loans, and Direct PLUS Consolidation Loans are determined in accordance with the same formulas that apply to Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans, respectively.
Charts 1 and 2 show the interest rate formulas used to determine the interest rates for all variable-rate Direct Loans and the rates that are in effect during the 12-month period from July 1, 2024, through June 30, 2025.
Chart 1 shows the interest rates for loans with rates based on the 91-day Treasury bill rate. Chart 2 shows the interest rates for loans with rates based on the weekly average of the one-year constant maturity Treasury yield.
You may also access documents of the Department published in the
Institute of Education Sciences (IES), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act (PRA) of 1995, the Department is proposing a new information collection request (ICR).
Interested persons are invited to submit comments on or before September 27, 2024.
Written comments and recommendations for proposed information collection requests should be submitted within 30 days of publication of this notice. Click on this link
For specific questions related to collection activities, please contact Janelle Sands, 202-245-6786.
The Department is especially interested in public comment addressing the following issues: (1) is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
The evaluation will focus on measuring the toolkit's impact on three teacher-level outcomes: explicit instruction, classroom management, and data use to inform instruction during small group time. The evaluation also will examine the impact of the toolkit on students' foundational reading skills.
In addition to collecting data to measure teacher and student outcomes, the evaluation team will collect data to document the implementation of the toolkit in treatment schools and the service contrast between treatment and control schools, and to describe the characteristics of participating schools, teachers, and students at baseline.
The evaluation will produce a publicly available report that summarizes evaluation findings. The
Federal Student Aid, Department of Education.
Notice.
The Chief Operating Officer for Federal Student Aid announces the interest rates for loans made under the Federal Family Education Loan (FFEL) Program, Assistance Listing Number 84.032, that have variable interest rates. The rates announced in this notice are in effect for the period July 1, 2024, through June 30, 2025.
Travis Sturlaugson, U.S. Department of Education, 830 First Street NE, Washington, DC 20202. Telephone: 202-377-4174. Email:
If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.
Section 427A of the Higher Education Act of 1965, as amended (HEA) (20 U.S.C. 1077a), provides formulas for determining the interest rates charged to borrowers on loans made under the FFEL Program, including Federal Subsidized and Unsubsidized Stafford Loans (Stafford Loans), Federal PLUS Loans (PLUS Loans), Federal Consolidation Loans (Consolidation Loans), and Federal Supplemental Loans for Students (SLS Loans). No new loans have been made under the FFEL Program since June 30, 2010.
The FFEL Program includes loans with variable interest rates that change each year and loans with fixed interest rates that remain the same for the life of the loan. For loans with a variable interest rate, the specific interest rate formula that applies to a particular loan depends on the date of the first disbursement of the loan or, in the case of a Consolidation Loan, the date the application for the loan was received. If a loan has a variable interest rate, a new rate is determined annually and is in effect during the period from July 1 of one year through June 30 of the following year.
This notice announces the interest rates for variable-rate FFEL Program loans that will be in effect during the period from July 1, 2024, through June 30, 2025. Interest rates for fixed-rate FFEL Program loans may be found in a
For the majority of variable-rate FFEL Program loans, the annual interest rate is equal to the lesser of—
(1) The bond equivalent rate of the 91-day Treasury bills auctioned at the final auction held before June 1 of each year, plus a statutory add-on percentage; or
(2) A statutorily established maximum interest rate.
The bond equivalent rate of the 91-day Treasury bills auctioned on May 28, 2024, is 5.40 percent.
For PLUS Loans first disbursed before July 1, 1998, and for all SLS Loans, the annual interest rate is equal to the lesser of—
(1) The weekly average of the one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before June 26 of each year, plus a statutory add-on percentage; or
(2) A statutorily established maximum interest rate.
The weekly average of the one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before June 26, 2024, is 5.10 percent.
For Consolidation Loans that have a variable interest rate, the annual interest rate for the portion of a Consolidation Loan that repaid loans other than loans made under the Health Education Assistance Loans (HEAL) Program is equal to—
(1) The bond equivalent rate of the 91-day Treasury bill auctioned at the final auction held before June 1 of each year, plus a statutory add-on percentage; or
(2) A statutorily established maximum interest rate.
If a Consolidation Loan (whether a variable-rate loan or a fixed-rate loan) repaid loans made under the HEAL Program, the interest rate on the portion of the Consolidation Loan that repaid HEAL loans is a variable rate that is equal to the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending June 30, plus a statutory add-on percentage. For the portion of a Consolidation Loan that repaid HEAL loans, there is no maximum interest rate.
The average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending on June 30, 2024, is 5.39 percent.
The statutory add-on percentages and maximum interest rates vary depending on loan type and when the loan was first disbursed. In addition, the add-on percentage for certain Stafford Loans is different depending on whether the loan is in an in-school, grace, or deferment status, or in any other status. If the interest rate calculated in accordance with the applicable formula exceeds the statutory maximum interest rate, the statutory maximum rate applies.
Charts 1 through 4 show the interest rate formulas that are used to determine the interest rates for all variable-rate FFEL Program loans and the interest rates that are in effect during the 12-month period from July 1, 2024, through June 30, 2025. Unless otherwise indicated, the cohorts shown in each chart include all borrowers, regardless of prior borrowing.
Chart 1 shows the interest rates for loans with rates based on the 91-day Treasury bill, with the exception of “converted” variable-rate Federal Stafford Loans and certain Federal Consolidation Loans.
Chart 2 shows the interest rates for loans with rates based on the weekly average of the one-year constant maturity Treasury yield.
Chart 3 shows the interest rates for “converted” variable-rate Federal Stafford Loans. These are loans that originally had varying fixed interest rates.
Finally, Chart 4 shows the interest rates for variable-rate Federal Consolidation Loans, and for the portion of any Federal Consolidation Loan that repaid loans made under the HEAL Program.
You may also access documents of the Department published in the
In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's (Commission or FERC) regulations, 18 CFR part 380, Commission staff reviewed STS Hydropower, LLC's (licensee) application for surrender of license for the Kanaka Hydroelectric Project No. 7242 and have prepared an Environmental Assessment (EA) for the proposed surrender. Following a wildfire that destroyed many of the project features, the licensee proposes to remove mechanical and electrical
The EA contains Commission staff's analysis of the potential environmental effects of the proposed surrender, alternatives to the proposed action, and concludes that the proposed surrender, with appropriate environmental protective measures, would not constitute a major federal action that would significantly affect the quality of the human environment.
The EA may be viewed on the Commission's website at
You may also register online at
All comments must be filed by September 23, 2024.
The Commission strongly encourages electronic filing. Please file comments using the Commission's eFiling system at
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
For further information, contact Diana Shannon at 202-502-6136 or
The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental document that will discuss the environmental impacts of the DeLa Express Project involving construction and operation of facilities by DeLa Express LLC (DeLa Express) in Reeves, Loving, Andrews, Ward, Winkler, Ector, Midland, Upton, Glasscock, Sterling, Coke, Runnels, Coleman, Brown, Mills, Hamilton, Coryell, McLennan, Falls, Bell, Robertson, Milam, Brazos, Grimes, Montgomery, Walker, San Jacinto, Liberty, Hardin, Jefferson, and Orange Counties, Texas and Calcasieu Parish, Louisiana. The Commission will use this environmental document in its decision-making process to determine whether the project is in the public convenience and necessity.
This notice announces the opening of the scoping process the Commission will use to gather input from the public and interested agencies regarding the project. As part of the National Environmental Policy Act (NEPA) review process, the Commission takes into account concerns the public may have about proposals and the environmental impacts that could result from its action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. This gathering of public input is referred to as “scoping.” The main goal of the scoping process is to focus the analysis in the environmental document on the important environmental issues. Additional information about the Commission's NEPA process is described below in the
By this notice, the Commission requests public comments on the scope of issues to address in the environmental document. To ensure that your comments are timely and properly recorded, please submit your comments so that the Commission receives them in Washington, DC on or before 5:00 p.m. Eastern Time on September 23, 2024. Comments may be submitted in written or oral form. Further details on how to submit comments are provided in the
Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. Your input will help the Commission staff determine what issues they need to evaluate in the environmental document. Commission staff will consider all written or oral comments during the preparation of the environmental document.
If you submitted comments on this project to the Commission
This notice is being sent to the Commission's current environmental mailing list, as described in the Environmental Mailing List section of this notice. State and local government representatives should notify their constituents of this planned project and encourage them to comment on their areas of concern.
If you are a landowner receiving this notice, a pipeline company representative may contact you about the acquisition of an easement to construct, operate, and maintain the planned facilities. The company would seek to negotiate a mutually acceptable easement agreement. You are not required to enter into an agreement. However, if the Commission approves the project, the Natural Gas Act conveys the right of eminent domain to the company. Therefore, if you and the company do not reach an easement agreement, the pipeline company could initiate condemnation proceedings in court. In such instances, compensation would be determined by a judge in accordance with state law. The Commission does not subsequently grant, exercise, or oversee the exercise of that eminent domain authority. The courts have exclusive authority to
A fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility On My Land? What Do I Need To Know?” addresses typically asked questions, including the use of eminent domain and how to participate in the Commission's proceedings. This fact sheet along with other landowner topics of interest are available for viewing on the FERC website (
There are four methods you can use to submit your comments to the Commission. Please carefully follow these instructions so that your comments are properly recorded. The Commission encourages electronic filing of comments and has staff available to assist you at (866) 208-3676 or
(1) You can file your comments electronically using the
(2) You can file your comments electronically by using the eFiling feature, which is located on the Commission's website (
(3) You can file a paper copy of your comments by mailing them to the Commission. Be sure to reference the project docket number (PF24-4-000) on your letter. Submissions sent via the U.S. Postal Service must be addressed to: Debbie-Anne A. Reese, Acting Secretary, Federal Energy Regulatory Commission, 888 First Street NE, Room 1A, Washington, DC 20426. Submissions sent via any other carrier must be addressed to: Debbie-Anne A. Reese, Acting Secretary, Federal Energy Regulatory Commission, 12225 Wilkins Avenue, Rockville, Maryland 20852.
(4) In lieu of sending written comments, the Commission invites you to attend one of the public scoping sessions its staff will conduct in the project area, scheduled as follows:
The primary goal of these scoping sessions is to have you identify the specific environmental issues and concerns that should be considered in the environmental document. Individual oral comments will be taken on a one-on-one basis with a court reporter. This format is designed to receive the maximum amount of oral comments in a convenient way during the timeframe allotted.
Each scoping session is scheduled from 4:30 p.m. to 6:30 p.m. Central. You may arrive at any time after 4:30 p.m. There will not be a formal presentation by Commission staff when the session opens. If you wish to speak, the Commission staff will hand out numbers in the order of your arrival. Comments will be taken until 6:30 p.m. However, if no additional numbers have been handed out and all individuals who wish to provide comments have had an opportunity to do so, staff may conclude the session at 6:00 p.m. Please see appendix 1 for additional information on the session format and conduct.
Your scoping comments will be recorded by a court reporter (with FERC staff or representative present) and become part of the public record for this proceeding. Transcripts will be publicly available on FERC's eLibrary system (see the last page of this notice for instructions on using eLibrary). If a significant number of people are interested in providing oral comments in the one-on-one settings, a time limit of 5 minutes may be implemented for each commentor.
It is important to note that the Commission provides equal consideration to all comments received, whether filed in written form or provided orally at a scoping session. Although there will not be a formal presentation, Commission staff will be available throughout the scoping session to answer your questions about the environmental review process. Representatives from DeLa Express will also be present to answer project-specific questions.
Additionally, the Commission offers a free service called eSubscription, which makes it easy to stay informed of all issuances and submittals regarding the dockets/projects to which you subscribe. These instant email notifications are the fastest way to receive notification and provide a link to the document files which can reduce the amount of time you spend researching proceedings. Go to
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and
DeLa Express plans to construct and operate an approximately 645.5-mile-long, 42-inch-diameter natural gas transportation mainline pipeline originating in Winkler County, Texas to a termination point in Calcasieu Parish, Louisiana. The Project would also consist of six lateral pipelines (totaling 139 miles). The DeLa Express Project would provide about 2 billion cubic feet per day of natural gas transportation from the Permian Basin in West Texas to Gulf Coast markets between Jefferson County, Texas and Cameron Parish, Louisiana. The Project is specifically designed to ease future supply and demand market constraints and increase U.S. consumers' access to natural gas and natural gas liquids. The Project will enable DeLa Express to transport liquids-rich natural gas from Permian receipt points with metering, dew point control, and heavy liquids removal to the Lake Charles, Louisiana area.
The DeLa Express Project would include construction of the following facilities:
• 645.5 miles of 42-inch-diameter mainline pipeline from Compressor Station 1 in Winkler County, Texas to a gas plant in Calcasieu Parish, Louisiana;
• six pipeline laterals, including the:
○ Field Gas Transport Lateral—a 60.0-mile, 42-inch-diameter pipeline in Reeves, Loving, and Winkler Counties. DeLa Express would also construct a 35.5-mile non-jurisdictional liquids line adjacent to the Field Gas Transport Lateral.
○ Red Bluff Lateral—an 8.3-mile, 24-inch-diameter pipeline in Reeves County, Texas;
○ China Draw Lateral—a 6.7-mile, 30-inch-diameter pipeline in Reeves County, Texas;
○ Lea Lateral—a 5.9-mile, 30-inch-diameter pipeline in Loving County, Texas;
○ Pecos Lateral—a 33.8-mile, 30-inch-diameter pipeline in Winkler and Ward Counties, Texas. DeLa Express would also construct a non-jurisdictional liquids line adjacent to the full length of the Pecos Lateral.
○ Andrews Lateral—a 24.3-mile, 30-inch-diameter pipeline in Winkler and Andrews Counties, Texas. DeLa Express would also construct a non-jurisdictional liquids line adjacent to the full length of the Andrews Lateral.
• six new electric-driven compressor stations, including one each in Winkler, Glasscock, Coleman, Coryell, Brazos, and Liberty Counties, Texas;
• three new dew point control sites
• one new stabilization plant collocated with the compressor station in Winkler County, Texas;
• a total of 42 mainline and 5 lateral valve sites;
• multiple meter stations collocated at other aboveground facilities; and,
• pig launcher/receiver sites, including 10 collocated within other aboveground facilities and 4 standalone sites.
The general location of the project facilities is shown in appendix 2.
Construction of the planned facilities would disturb about 12,940 acres of land for the aboveground facilities and the pipelines. Following construction, DeLa Express would maintain about 5,459 acres for permanent operation of the project's facilities; the remaining acreage would be restored. About 83 percent of the planned pipeline route parallels existing pipeline, utility, or road rights-of-way.
Any environmental document issued by Commission staff will discuss impacts that could occur as a result of the construction and operation of the planned project under the relevant general resource areas:
• geology and soils;
• water resources and wetlands;
• vegetation and wildlife;
• threatened and endangered species;
• cultural resources;
• land use;
• socioeconomics;
• environmental justice;
• air quality and noise; and
• reliability and safety.
Commission staff have already identified several issues that deserve attention based on a preliminary review of available draft reports and monthly updates provided by DeLa Express. This preliminary list of issues may change based on your comments and our analysis of final reports provided with the application for the Project:
• cumulative impacts associated with multiple adjacent pipeline easements;
• wetland and waterbody impacts;
• specialty crops and agricultural land use;
• environmental justice concerns;
• pipeline safety;
• noise and air impacts associated with compressor stations;
• impacts on existing buried utility lines;
• post-construction vegetation restoration;
• federal and state land impacts; and
• federally and state listed species.
Commission staff will also evaluate reasonable alternatives to the planned project or portions of the project and make recommendations on how to lessen or avoid impacts on the various resource areas. Your comments will help Commission staff identify and focus on the issues that might have an effect on the human environment and potentially eliminate others from further study and discussion in the environmental document.
Although no formal application has been filed, Commission staff have already initiated a NEPA review under the Commission's pre-filing process. The purpose of the pre-filing process is to encourage early involvement of interested stakeholders and to identify and resolve issues before the Commission receives an application. As part of the pre-filing review, Commission staff will contact federal and state agencies to discuss their involvement in the scoping process and the preparation of the environmental document.
If a formal application is filed, Commission staff will then determine whether to prepare an Environmental Assessment (EA) or an Environmental Impact Statement (EIS). The EA or the EIS will present Commission staff's independent analysis of the environmental issues. If Commission staff prepares an EA, a
With this notice, the Commission is asking agencies with jurisdiction by law and/or special expertise with respect to the environmental issues related to this project to formally cooperate in the preparation of the environmental document.
In accordance with the Advisory Council on Historic Preservation's implementing regulations for section 106 of the National Historic Preservation Act, the Commission is using this notice to initiate consultation with the applicable State Historic Preservation Office(s), and to solicit their views and those of other government agencies, interested Indian tribes, and the public on the project's potential effects on historic properties.
The environmental mailing list includes federal, state, and local government representatives and agencies; elected officials; environmental justice stakeholders and public interest groups; Native American Tribes; other interested parties; and local libraries and newspapers. This list also includes all affected landowners (as defined in the Commission's regulations) who are potential right-of-way grantors, whose property may be used temporarily for project purposes, or who own homes within certain distances of aboveground facilities, and anyone who submits comments on the project and includes a mailing address with their comments. Commission staff will update the environmental mailing list as the analysis proceeds to ensure that Commission notices related to this environmental review are sent to all individuals, organizations, and government entities interested in and/or potentially affected by the planned project.
(1) Send an email to
(2) Return the attached “Mailing List Update Form” (appendix 3).
Once DeLa Express files its application with the Commission, you may want to become an “intervenor” which is an official party to the Commission's proceeding. Only intervenors have the right to seek rehearing of the Commission's decision and be heard by the courts if they choose to appeal the Commission's final ruling. An intervenor formally participates in the proceeding by filing a request to intervene pursuant to Rule 214 of the Commission's Rules of Practice and Procedures (18 CFR 385.214). Motions to intervene are more fully described at
Additional information about the project is available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC website (
Public sessions or site visits will be posted on the Commission's calendar located at
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
The filings are accessible in the Commission's eLibrary system (
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
Take notice that on August 21, 2024, Penelope M. Conner submitted for filing, application for authority to hold interlocking positions, pursuant to section 305(b) of the Federal Power Act, 16 U.S.C. 825d (b) and Part 45.8 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR part 45.8.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. On or before the comment date, it is not necessary to serve motions to intervene or protests on persons other than the Applicant.
In addition to publishing the full text of this document in the
User assistance is available for eLibrary and the Commission's website during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system (
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
The staff of the Federal Energy Regulatory Commission (FERC or Commission) will prepare an environmental document that will discuss the environmental impacts of the Gulfstream LNG Project involving construction and operation of facilities by Gulfstream LNG Development, LLC (Gulfstream LNG) in Plaquemines Parish, Louisiana. The Commission will use this environmental document in its decision-making process to determine whether the project is in the public interest.
This notice announces the opening of the scoping process the Commission will use to gather input from the public and interested agencies regarding the project. As part of the National Environmental Policy Act (NEPA) review process, the Commission takes into account concerns the public may have about proposals and the environmental impacts that could result from its action whenever it considers the issuance of an authorization. This gathering of public input is referred to as “scoping.” The main goal of the scoping process is to focus the analysis in the environmental document on the important environmental issues. Additional information about the Commission's NEPA process is described below in the
By this notice, the Commission requests public comments on the scope of issues to address in the environmental document. To ensure that your comments are timely and properly recorded, please submit your comments so that the Commission receives them in Washington, DC on or before 5:00 p.m. Eastern Time on September 23, 2024. Comments may be submitted in written or oral form. Further details on how to submit
Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. Your input will help the Commission staff determine what issues they need to evaluate in the environmental document. Commission staff will consider all written and oral comments during the preparation of the environmental document.
If you submitted comments on this project to the Commission
This notice is being sent to the Commission's current environmental mailing list for this project. State and local government representatives should notify their constituents of this planned project and encourage them to comment on their areas of concern.
A fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility On My Land? What Do I Need To Know?” addresses typically asked questions, including the use of eminent domain and how to participate in the Commission's proceedings. This fact sheet along with other landowner topics of interest are available for viewing on the FERC website (
There are four methods you can use to submit your comments to the Commission. Please carefully follow these instructions so that your comments are properly recorded. The Commission encourages electronic filing of comments and has staff available to assist you at (866) 208-3676 or
(1) You can file your comments electronically using the
(2) You can file your comments electronically by using the eFiling feature, which is located on the Commission's website (
(3) You can file a paper copy of your comments by mailing them to the Commission. Be sure to reference the project docket number (PF24-5-000) on your letter. Submissions sent via the U.S. Postal Service must be addressed to: Debbie-Anne A. Reese, Acting Secretary, Federal Energy Regulatory Commission, 888 First Street NE, Room 1A, Washington, DC 20426. Submissions sent via any other carrier must be addressed to: Debbie-Anne A. Reese, Acting Secretary, Federal Energy Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852; or
(4) In lieu of sending written comments, the Commission invites you to attend one of the public scoping sessions
The primary goal of these scoping sessions is to have you identify the specific environmental issues and concerns that should be considered in the environmental document. Individual oral comments will be taken on a one-on-one basis with a court reporter. This format is designed to receive the maximum amount of oral comments in a convenient way during the timeframe allotted.
Each scoping session is scheduled from 4:00 p.m. to 6:00 p.m. Central Time. You may arrive at any time after the scheduled start time. There will not be a formal presentation by Commission staff when the session opens. If you wish to speak, the Commission staff will hand out numbers in the order of your arrival. Comments will be taken until 6:00 p.m. Central Time. Please see appendix 1 for additional information on the session format and conduct.
Your scoping comments will be recorded by a court reporter (with FERC staff or representative present) and become part of the public record for this proceeding. Transcripts will be publicly available on FERC's eLibrary system (see the last page of this notice for instructions on using eLibrary). If a significant number of people are interested in providing oral comments in the one-on-one settings, a time limit of 5 minutes may be implemented for each commentor.
It is important to note that the Commission provides equal consideration to all comments received, whether filed in written form or provided orally at a scoping session. Although there will not be a formal presentation, Commission staff will be available throughout the scoping session to answer your questions about the environmental review process. Representatives from Gulfstream LNG will also be present to answer project-specific questions.
Additionally, the Commission offers a free service called eSubscription, which makes it easy to stay informed of all issuances and submittals regarding the dockets/projects to which you subscribe. These instant email notifications are the fastest way to receive notification and provide a link to the document files which can reduce the amount of time you spend researching proceedings. Go to
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission
Gulfstream LNG plans to construct and operate a liquefied natural gas (LNG) terminal facility for export, domestic sales, and storage along the Mississippi River in Plaquemines Parish, Louisiana. The project would consist of three mid-scale liquefaction trains capable of producing up to 4 million tons per annum of LNG combined; gas processing facilities; two marine loading docks; one LNG storage tank; flares; and other support and ancillary facilities. Feed gas would be sourced from an existing, on-site, 26-inch-diameter intrastate natural gas pipeline owned by High Point Gas Transmission, LLC.
The general location of the project facilities is shown in appendix 2.
Construction of the planned facilities would disturb about 260 acres of land. Following construction, Gulfstream LNG would maintain about 185 acres for permanent operation of the project's facilities; the remaining acreage would be restored and revert to former uses.
Any environmental document issued by Commission staff will discuss impacts that could occur as a result of the construction and operation of the project under the relevant general resource areas:
• geology and soils;
• water resources and wetlands;
• vegetation and wildlife;
• threatened and endangered species;
• cultural resources;
• land use;
• socioeconomics and environmental justice;
• air quality and noise; and
• reliability and safety.
Commission staff have already identified several issues that deserve attention based on a preliminary review of the planned facilities and the environmental information provided by Gulfstream LNG. This preliminary list of issues may change based on your comments and our analysis:
Commission staff will also evaluate reasonable alternatives to the planned project or portions of the project and make recommendations on how to lessen or avoid impacts on the various resource areas. Your comments will help Commission staff identify and focus on the issues that might have an effect on the human environment and potentially eliminate others from further study and discussion in the environmental document.
Although no formal application has been filed, Commission staff have already initiated a NEPA review under the Commission's pre-filing process. The purpose of the pre-filing process is to encourage early involvement of interested stakeholders and to identify and resolve issues before the Commission receives an application. As part of the pre-filing review, Commission staff will contact federal and state agencies to discuss their involvement in the scoping process and the preparation of the environmental document.
If a formal application is filed, Commission staff will then determine whether to prepare an Environmental Assessment (EA) or an Environmental Impact Statement (EIS). The EA or the EIS will present Commission staff's independent analysis of the environmental issues. If Commission staff prepares an EA, a
With this notice, the Commission is asking agencies with jurisdiction by law and/or special expertise with respect to the environmental issues related to this project to formally cooperate in the preparation of the environmental document.
In accordance with the Advisory Council on Historic Preservation's implementing regulations for section 106 of the National Historic Preservation Act, the Commission is using this notice to initiate consultation with the Louisiana State Historic Preservation Office, and to solicit its views and those of other government agencies, interested Indian tribes, and the public on the project's potential effects on historic properties.
The environmental mailing list includes federal, state, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American Tribes; other interested parties; and local libraries and newspapers. This list also includes all affected landowners (as defined in the Commission's regulations) whose property may be used temporarily for project purposes, who own homes within certain distances of aboveground facilities, and anyone who submits comments on the project and includes a mailing address with their comments. Commission staff will update the environmental mailing list as the analysis proceeds to ensure that
(1) Send an email to
(2) Return the attached “Mailing List Update Form” (appendix 3).
Once Gulfstream LNG files its application with the Commission, you may want to become an “intervenor” which is an official party to the Commission's proceeding. Only intervenors have the right to seek rehearing of the Commission's decision and be heard by the courts if they choose to appeal the Commission's final ruling. An intervenor formally participates in the proceeding by filing a request to intervene pursuant to Rule 214 of the Commission's Rules of Practice and Procedures (18 CFR 385.214). Motions to intervene are more fully described at
Additional information about the project is available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC website (
Public sessions or site visits will be posted on the Commission's calendar located at
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA or Agency) is announcing the scheduling of two virtual public meetings to provide information regarding existing chemical pre-prioritization and prioritization activities under the Toxic Substances Control Act (TSCA). Prioritization is the initial step in the process of evaluating existing chemicals under TSCA and implementing regulations. The purpose of prioritization is to designate a chemical substance as being either high priority for immediate further risk evaluation, or low priority, for which risk evaluation is not warranted at the time. The webinars will take place on two separate days, but the content presented at each meeting will be identical. EPA will explain the prioritization process and provide an overview of information that may be used to inform the considerations that ultimately support a High- or Low-Priority Substance designation, such as information on conditions of use and health effects resulting from exposure to the chemicals of interest. In addition, the list of candidate chemical substances currently being considered for future prioritization actions will be presented for stakeholders to comment on the data and scientific research available that may be used to help EPA determine which chemical substances may undergo prioritization in the near term. EPA is committed to engaging with the public to identify potentially relevant information on chemical substances being considered for future prioritization actions during pre-prioritization timeframes.
• For the webinar on Monday, September 30, 2024, register at:
• For the webinar on Tuesday, October 1, 2024, register at:
Sarah Soliman, Office of Pollution Prevention and Toxics (7201M), Office of Chemical Safety and Pollution Prevention (OCSPP), Environmental
This action is directed to the public in general and may be of interest to entities that may manufacture (including import) a chemical substance regulated under TSCA (
TSCA section 6, 15 U.S.C. 2605, requires EPA to evaluate existing chemicals via a three-stage process. The three stages of EPA's process for existing chemicals are prioritization, risk evaluation, and risk management. See also the implementing procedural regulations at 40 CFR part 702. For more information about the TSCA risk evaluation process for existing chemicals, go to
EPA is announcing the scheduling of two virtual public meetings to provide information regarding existing chemical pre-prioritization and prioritization activities under TSCA. Prioritization is the initial step in the process of evaluating existing chemicals under TSCA and implementing regulations. The purpose of prioritization is to designate a chemical substance as being either high priority for immediate further risk evaluation, or low priority, for which risk evaluation is not warranted at the time. The webinars will take place on two separate days, but the content presented at each meeting will be identical. EPA will explain the prioritization process and provide an overview of information that may be used to inform the considerations that ultimately support a High- or Low-Priority Substance designation, such as information on conditions of use and health effects resulting from exposure to the chemicals of interest. In addition, the list of candidate chemical substances currently being considered for future prioritization actions will be presented for stakeholders to comment on the data and scientific research available that may be used to help EPA determine which chemical substances may undergo prioritization in the near term.
EPA is committed to engaging with the public to identify potentially relevant information on chemical substances being considered for future prioritization actions during pre-prioritization timeframes. This action is intended to increase transparency in the TSCA prioritization process by encouraging public engagement in earlier activities.
EPA values broad external input, which is critical to the prioritization process. EPA is committed to developing a sustainable program where information is continually collected by the Agency on chemicals of interest so that prioritization occurs on an annual basis to replace High-Priority Substances for which EPA has completed risk evaluations. Information provided during and following these public meetings will inform EPA's determination regarding whether chemical substances have sufficient information to support either a High- or Low Priority Substance designation during prioritization or a risk evaluation, should a chemical substance be designated as a High-Priority Substance during prioritization.
Pre-prioritization represents the Agency's commitment to fostering a transparent collaborative effort with the public by allowing stakeholders to engage with EPA on its list of potential prioritization candidates; learn about the type of information EPA seeks to support the proposed and final designations as either High- or Low-Priority Substances; and how stakeholders can provide that information.
Prioritization is the initial step in the process of evaluating existing chemicals under TSCA section 6(b) and implementing regulations at 40 CFR part 702. The purpose of prioritization is to designate a chemical substance as either high priority for immediate further risk evaluation, or low priority, for which risk evaluation is not warranted at the time.
To identify candidates for the prioritization process, TSCA requires that at least 50 percent of all chemical substances on which risk evaluations are being conducted by the Administrator are drawn from the TSCA Work Plan for Chemical Assessments: 2014 Update available at:
• Persistence and bioaccumulation scores of three; and
• Known human carcinogens, and high acute or chronic toxicity.
Aside from these statutory directions, EPA has discretion to determine which chemical substances will undergo prioritization.
EPA is announcing its intention to hold virtual public meetings on September 30 and October 1, 2024, to seek individual input from the public on the proposed efforts regarding pre-prioritization and the consideration of existing chemical substances for future prioritization actions under the TSCA. The virtual public meetings will take place on two separate days, but the content presented at each meeting will be identical. EPA intends to explain the prioritization process and provide an overview of information that may be used to inform the considerations that ultimately support a High- or Low-Priority Substance designation, such as information on conditions of use and health effects resulting from exposure to the chemicals of interest. In addition, the Agency intends to share the list of candidate chemical substances currently being considered for future prioritization actions, along with relevant information available to EPA, and intends to open a comment period to provide an opportunity for stakeholders to comment on the data and scientific research available that may be used to help EPA determine which chemical substances may undergo prioritization in the near term.
Following EPA's presentation during the public webinars, interested persons will have opportunities to provide feedback and/or potentially relevant information regarding the prioritization efforts, with priority given to those who registered for oral comments. Instructions on registering for the public
The public meetings are virtual and will be accessible via webcast. To receive a virtual meeting link via email, use the public virtual meeting respective registration links provided under
Following EPA's presentation during the public webinars, interested persons will have opportunities to provide comments and/or potentially relevant information regarding upcoming prioritization efforts. You will also have the opportunity to provide written comments to the docket after the public meetings. Instructions on registering to attend or present at the public meetings, and to submit written comments following the virtual public meetings are detailed under
Each individual or group wishing to make brief oral comments during the virtual public meetings should first register for the public meetings, and then also email their request to make oral comments with their name, affiliation, and contact information, to the person listed under
Written statements and supporting information submitted to the docket during the comment period will be considered with the same weight as oral comments and supporting information presented at the public meeting.
After the conclusion of the webinar on October 1, 2024, the material presented at the webinars, including the EPA presentation, the list of candidate chemical substances currently being considered for future prioritization actions, and related supporting information about those chemicals will be added to the docket, along with other materials provided by participants or that may become available. In addition, after the meetings, EPA intends to prepare meeting minutes summarizing the individual comments received at the meetings, which will be added to the docket as soon as they are available.
1.
2.
3.
Please note that any updates made to any aspect of the webinar will be communicated with a document being added to the docket. While EPA expects the webinar to go forward as set forth above, please monitor our website,
Environmental Protection Agency (EPA).
Notice of intended transfer of confidential business information to contractor and its subcontractors.
The Environmental Protection Agency (EPA) intends to transfer confidential business information (CBI) collected from numerous industries under a newly awarded blanket purchase agreement (BPA), effective July 19, 2024, to ICF International, LLC (ICF) and its subcontractors. In addition, the EPA intends to transfer CBI collected from the meat and poultry products (MPP) industry to ICF and its subcontractors under a task order on a different contract, effective July 3, 2024. Transfer of this information is necessary for ICF to assist the Office of Water in the preparation of effluent guidelines and standards and with its effluent guidelines planning and review activities. Much of the information being transferred was or will be collected under the authority of section 308 of the Clean Water Act (CWA). Interested persons may submit comments on this intended transfer of information to the address noted below.
Comments on the transfer of data are due September 5, 2024.
Comments may be sent to M. Ahmar Siddiqui, Document Control Officer, Engineering and Analysis Division (4303T), U.S. EPA, 1200 Pennsylvania Ave. NW, Washington, DC 20460, or via email at
M. Ahmar Siddiqui, Document Control Officer, at (202) 566-1044, or via email at
The EPA has transferred CBI to various contractors and subcontractors over the history of the effluent guidelines program under 40 CFR 2.302(h). The EPA determined that this transfer was necessary to enable the contractors and subcontractors to perform their work in supporting EPA in planning, developing, and reviewing effluent guidelines and standards for certain industries.
In this document, pursuant to 40 CFR 2.302(h)(2), the EPA is giving notice that, effective July 19, 2024, it has entered into a new BPA with ICF, BPA number 68HERC24A0011, located in
In addition to the BPA, the EPA is giving notice that it will be transferring CBI to ICF, located in Reston, VA, under contract number 68HERC23D0003. The purpose of this transfer is to support economic and environmental analysis support for the EPA in its development of effluent guidelines and standards for the MPP industry. To support this contract, ICF has entered into contracts with the following subcontractors and consultants: Neptune and Company (located in Lakewood, Colorado), Avanti Corporation (located in Alexandria, Virginia), Cadmus (located in Waltham, Massachusetts), Gibb Epidemiology Consulting (located in Washington, District of Columbia), Great Lakes Environmental Center (located in Traverse City, Michigan), Inotiv (located in Morrisville, North Carolina), Mote Marine Laboratory (located in Sarasota, Florida), Pradeep Rajan, LLC (located in Chapel Hill, North Carolina), Soller Environmental (located in Berkeley, California), Vireo Advisers, LLC (located in Boston, Massachusetts), Dr. Alexandria Boehm (located in Stanford, California), Dr. Erica McKenzie (located in Philadelphia, Pennsylvania), Dr. Kara Nelson (located in Berkeley, California), Dr. Ian Pepper (located in Tucson, Arizona), and Dr. Jill Stewart (located in Carrboro, North Carolina).
All EPA contractor, subcontractor, and consultant personnel are bound by the requirements and sanctions contained in their contracts with the EPA and in the EPA's confidentiality regulations found at 40 CFR part 2, subpart B. ICF will adhere to EPA-approved security plans which describe procedures to protect CBI. ICF will apply the procedures in these plans to CBI previously gathered by the EPA and to CBI that may be gathered in the future. The security plans specify that contractor personnel are required to sign non-disclosure agreements and are briefed on appropriate security procedures before they are permitted access to CBI. No person is automatically granted access to CBI: a need to know must exist.
The information that will be transferred to ICF consists of information previously collected by the EPA to support the development and review of effluent limitations guidelines and standards under the CWA and that the EPA had transferred to ICF under a previous contract with them. In particular, information, including CBI, collected for the planning, development, and review of effluent limitations guidelines and standards for the following industries may be transferred to ICF under the new contract: airport deicing; aquaculture; centralized waste treatment; coal bed methane; concentrated animal feeding operations; coal mining; construction and development; drinking water treatment; industrial container and drum cleaning; industrial laundries; industrial waste combustors; iron and steel manufacturing; landfills; meat and poultry products; metal finishing; metal products and machinery; nonferrous metals manufacturing; oil and gas extraction (including coalbed methane); ore mining and dressing; organic chemicals, plastics, and synthetic fibers; pesticide chemicals; petroleum refining; pharmaceutical manufacturing; pulp, paper, and paperboard manufacturing; shale gas extraction; steam electric power generation; textile mills; timber products processing; tobacco; transportation equipment cleaning; and other industrial categories that the EPA has reviewed or may review as part of its CWA required annual review activities.
The EPA also intends to transfer to ICF all information listed in this document, of the type described above (including CBI) that may be collected in the future under the authority of section 308 of the CWA or voluntarily submitted (
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA or Agency) is announcing the availability of the final guidance and test method for adding efficacy claims to antimicrobial products for use in cooling tower water to reduce the level of planktonic
The guidance is effective on August 28, 2024.
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2023-0430, is available online at
This action is directed to the public in general; although this action may be of particular interest to those persons who are or may be required to conduct efficacy testing of chemical substances under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the appropriate person listed under
EPA is issuing this guidance and test method document pursuant to its authority under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. 136
EPA is announcing the availability of the final guidance and test method for adding efficacy claims to antimicrobial products for use in cooling tower water to reduce the level of planktonic
As guidance, these documents are not binding on the Agency or any outside parties, and the Agency may depart from these documents where circumstances warrant and without prior notice. While EPA has made every effort to ensure the accuracy of the discussion in the guidance, the obligations of EPA and the regulated community are determined by statutes, regulations, or other legally binding documents. In the event of a conflict between the discussion in the guidance documents and any statute, regulation, or other legally binding document, the guidance documents will not be controlling.
EPA developed the guidance and test method in response to requests from stakeholders that asked EPA to develop a test method, guidance, and an associated registration process to support adding claims to antimicrobial products intended to control planktonic
In October 2023, EPA announced the availability and sought public comments on the draft guidance and test method (88 FR 67749, October 2, 2023 (FRL-11382-01-OCSPP)). The Agency received 41 comments regarding clarifications and revisions to the draft guidance and test method. After considering the public comments, EPA is releasing the final guidance and test method documents, as well as a response to comments document.
Environmental Protection Agency (EPA).
Notice of meeting.
Pursuant to the Federal Advisory Committee Act (FACA), the Environmental Protection Agency (EPA) is announcing a public meeting of the Clean Air Act Advisory Committee (CAAAC). The EPA renewed the CAAAC charter on October 31, 2022, to provide independent advice and counsel to EPA on economic, environmental, technical, scientific and enforcement policy issues associated with implementation of the Clean Air Act of 1990.
The CAAAC will hold its next hybrid (in-person and virtual) public meeting on Tuesday, September 17, 2024, from 1:00 p.m. to 4:00 p.m. (EST) and Wednesday, September 18, 2024, from 9:00 a.m. to 12:00 p.m. (EST). Members of the public may register to listen to the meeting or provide comments, by emailing
Lorraine Reddick, Designated Federal Officer, Clean Air Act Advisory Committee (6103A), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: 202-564-1293; email address:
Pursuant to 5 U.S.C. App. 2 section 10(a)(2), notice is hereby given that the Clean Air Act Advisory Committee will hold its next hybrid (in-person and virtual) public meeting on Tuesday, September 17, 2024, from 1:00 p.m. to 4:00 p.m. (EST) and Wednesday, September 18, 2024, from 9:00 a.m. to 12:00 p.m. (EST).
The committee agenda and any documents prepared for the meeting will be publicly available on the CAAAC website at
For information on access or services for individuals with disabilities, please contact Lorraine Reddick at
Environmental Protection Agency (EPA).
Notice.
EPA is required under the Toxic Substances Control Act (TSCA), as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, to make information publicly available and to publish information in the
Comments identified by the specific case number provided in this document must be received on or before September 27, 2024.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2024-0057, through the
This document provides the receipt and status reports for the period from 7/01/2024 to 7/31/2024. The Agency is providing notice of receipt of PMNs, SNUNs, and MCANs (including amended notices and test information); an exemption application under 40 CFR part 725 (Biotech exemption); TMEs, both pending and/or concluded; NOCs to manufacture a new chemical substance; and a periodic status report on new chemical substances that are currently under EPA review or have recently concluded review.
EPA is also providing information on its website about cases reviewed under the amended TSCA, including the section 5 PMN/SNUN/MCAN and exemption notices received, the date of receipt, the final EPA determination on the notice, and the effective date of EPA's determination for PMN/SNUN/MCAN notices on its website at:
Under the Toxic Substances Control Act (TSCA), 15 U.S.C. 2601
Any person who intends to manufacture (including import) a new chemical substance for a non-exempt commercial purpose, or to manufacture or process a chemical substance in a non-exempt manner for a use that EPA has determined is a significant new use, is required by TSCA section 5 to provide EPA with a PMN, MCAN, or SNUN, as appropriate, before initiating the activity. EPA will review the notice, make a risk determination on the chemical substance or significant new use, and take appropriate action as described in TSCA section 5(a)(3).
TSCA section 5(h)(1) authorizes EPA to allow persons, upon application and under appropriate restrictions, to manufacture or process a new chemical substance, or a chemical substance subject to a significant new use rule (SNUR) issued under TSCA section 5(a)(2), for “test marketing” purposes, upon a showing that the manufacture, processing, distribution in commerce, use, and disposal of the chemical will not present an unreasonable risk of injury to health or the environment. This is referred to as a test marketing exemption, or TME. For more information about the requirements applicable to a new chemical go to:
Under TSCA sections 5 and 8 and EPA regulations, EPA is required to publish in the
This action provides information that is directed to the public in general.
No.
1.
2.
In the past, EPA has published individual notices reflecting the status of TSCA section 5 filings received, pending or concluded. In 1995, the Agency modified its approach and streamlined the information published in the
For the PMN/SNUN/MCANs that have passed an initial screening by EPA during this period, Table I provides the following information (to the extent that such information is not subject to a CBI claim) on the notices screened by EPA during this period: The EPA case number assigned to the notice that indicates whether the submission is an initial submission, or an amendment, a notation of which version was received, the date the notice was received by EPA, the submitting manufacturer (
As used in each of the tables in this unit, (S) indicates that the information in the table is the specific information provided by the submitter, and (G) indicates that this information in the table is generic information because the specific information provided by the submitter was claimed as CBI. Submissions which are initial submissions will not have a letter following the case number. Submissions which are amendments to previous submissions will have a case number followed by the letter “A” (
In Table II of this unit, EPA provides the following information (to the extent that such information is not claimed as CBI) on the NOCs that have passed an initial screening by EPA during this period: The EPA case number assigned to the NOC including whether the submission was an initial or amended submission, the date the NOC was received by EPA, the date of commencement provided by the submitter in the NOC, a notation of the type of amendment (
In Table III of this unit, EPA provides the following information (to the extent such information is not subject to a CBI claim) on the test information that has been received during this time period: The EPA case number assigned to the test information; the date the test information was received by EPA, the type of test information submitted, and chemical substance identity.
If you are interested in information that is not included in these tables, you may contact EPA's technical information contact or general information contact as described under
The Commission hereby gives notice of filing of the following agreement under the Shipping Act of 1984. Interested parties may submit comments, relevant information, or documents regarding the agreement to the Secretary by email at
The notificants listed below have applied under the Change in Bank Control Act (Act) (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the applications are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments received are subject to public disclosure. In general, comments received will be made available without change and will not be modified to remove personal or business information including confidential, contact, or other identifying information. Comments should not include any information such as confidential information that would not be appropriate for public disclosure.
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington DC 20551-0001, not later than September 12, 2024.
1.
Board of Governors of the Federal Reserve System.
The companies listed in this notice have given notice under section 4 of the Bank Holding Company Act (12 U.S.C. 1843) (BHC Act) and Regulation Y, (12 CFR part 225) to engage de novo, or to acquire or control voting securities or assets of a company, including the companies listed below, that engages either directly or through a subsidiary or other company, in a nonbanking activity that is listed in § 225.28 of Regulation Y (12 CFR 225.28) or that the Board has determined by Order to be closely related to banking and permissible for bank holding companies. Unless otherwise noted, these activities will be conducted throughout the United States.
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments received are subject to public disclosure. In general, comments received will be made available without change and will not be modified to remove personal or business information including confidential, contact, or other identifying information. Comments should not include any information such as confidential information that would not be appropriate for public disclosure.
Unless otherwise noted, comments regarding the applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington DC 20551-0001, not later than September 12, 2024.
1.
Board of Governors of the Federal Reserve System.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments received are subject to public disclosure. In general, comments received will be made available without change and will not be modified to
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington, DC 20551-0001, not later than September 27, 2024.
1.
1.
Board of Governors of the Federal Reserve System.
Agency for Healthcare Research and Quality (AHRQ), HHS. ACTION: Request for Supplemental Evidence and Data Submission SUMMARY: The Agency for Healthcare Research and Quality (AHRQ) is seeking scientific information submissions from the public. Scientific information is being solicited to inform our review on
Kelly Carper, Telephone: 301-427-1656 or Email:
The Agency for Healthcare Research and Quality has commissioned the Evidence-based Practice Centers (EPC) Program to complete a review of the evidence for
The EPC Program is dedicated to identifying as many studies as possible that are relevant to the questions for each of its reviews. In order to do so, we are supplementing the usual manual and electronic database searches of the literature by requesting information from the public (
This is to notify the public that the EPC Program would find the following information on
A list of completed studies that your organization has sponsored for this topic. In the list, please
Description of whether the above studies constitute
Your contribution is very beneficial to the Program. Materials submitted must be publicly available or able to be made public. Materials that are considered confidential; marketing materials; study types not included in the review; or information on topics not included in the review cannot be used by the EPC Program. This is a voluntary request for information, and all costs for complying with this request must be borne by the submitter.
The draft of this review will be posted on AHRQ's EPC Program website and available for public comment for a period of 4 weeks. If you would like to be notified when the draft is posted, please sign up for the email list at:
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice.
The Centers for Disease Control and Prevention (CDC), located within the Department of Health and Human Services (HHS), announces 23 separate awards to fund the California Department of Public Health; Chicago Department of Public Health; Delaware Department of Health and Social Services; Florida Department of Health; Georgia Department of Public Health; Houston Department of Health and Human Services; Illinois Department of Public Health; Indiana State Department of Health; Los Angeles County Department of Public Health; Michigan Department of Health and Human Services; Mississippi State Department of Health; New Jersey Department of Health and Senior Services; New York City Department of Health and Mental Hygiene; New York State Department of Health; North Carolina Department of Health and Human Services; Oregon Health Authority; Pennsylvania Department of Health; Philadelphia Department of Public Health; Puerto Rico Department of Health; San Francisco Department of Public Health; Texas Department of State Health Services; Virginia Department of Health; and Washington State Department of Health.
The total amount of awards is approximately $16,305,555 in Federal Fiscal Year (FFY) 2025, with an expected total funding of approximately $81,527,775 for the five-year period of performance, subject to availability of funds. The awards will support implementation of the Medical Monitoring Project (MMP), an ongoing public health surveillance program funded since 2005 and designed to learn more about the experiences and needs of adults aged 18 or older living with HIV (PWH) in the United States.
The period for these awards will be June 1, 2025, through May 31, 2030.
Jason Craw, National Center for HIV, Viral Hepatitis, STD and TB Prevention, Centers for Disease Control and Prevention, 1600 Clifton Road, MS H24-5, Atlanta, GA 30333, Telephone: (404) 639-6395, E-Mail:
The single source award will support the collection of comprehensive clinical and behavioral information from persons carefully sampled to represent everyone diagnosed with HIV in the U.S. The data are collected through in-person or telephone interviews with participants and a two-year medical chart abstraction for all persons who have been in care. MMP produces nationally representative data on important sociodemographic, behavioral, and clinical characteristics among PWH in the U.S. MMP reports essential data on barriers to care and viral suppression, including social determinants of health and indicators of quality of life among PWH that are used to plan and monitor state and local HIV programs, inform national HIV clinical guidelines and assess national progress towards meeting the goals of the National HIV/AIDS Strategy for the United States 2022-2025, the Ending the HIV Epidemic in the United States (EHE) initiative, the HIV Care Continuum, and CDC's High-Impact Prevention (HIP) approach.
The 23 previously listed state, local and territorial health departments are in a unique position to conduct this work as (1) they are the only entities with legal authority to mandate the collection of public health surveillance data in their jurisdictions, (2) they can continue monitoring and reporting MMP data without lapse and (3) their selection can ensure adherence to the project's established scientific sampling strategy that ensures the national representativeness of MMP data.
Children's Bureau, Administration on Children, Youth and Families, Administration for Children and Families, Department of Health and Human Services.
Request for public comments.
The Administration for Children and Families (ACF) Children's Bureau plans to submit revisions to an approved generic information collection (GenIC) under the umbrella generic: Generic Clearance for Financial Reports used for ACF Non-Discretionary Grant Programs (0970-0510). This request revises form CB-496, the Title IV-E Programs Quarterly Financial Report, used by title IV-E agencies to submit financial claims for the title IV-E entitlement grant programs.
Copies of the proposed collection of information can be obtained and comments may be forwarded by emailing
This specific GenIC collects quarterly cost and caseload data for five title IV-E programs (
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) announces a forthcoming public advisory committee meeting of the Patient Engagement Advisory Committee (the Committee). The general function of the Committee is to provide advice and recommendations to the Agency on FDA's regulatory issues. The meeting will be open to the public.
The meeting will be held on October 30, 2024, from 10 a.m. to 5 p.m. Eastern Time.
All meeting participants will be heard, viewed, captioned, and recorded for this advisory committee meeting via an online teleconferencing and/or video conferencing platform.
Answers to commonly asked questions about FDA advisory committee meetings may be accessed at:
Letise Williams, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5407, Silver Spring, MD 20993-0002,
The Committee will provide recommendations on the informed consent process and the areas of focus of the informed consent. The Committee will also provide recommendations on factors to consider when communicating informed consent to clinical study participants to increase the likelihood of participants understanding the key elements of research.
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its website prior to the meeting, the background material will be made publicly available on FDA's website at the time of the advisory committee meeting, and the background material will be posted on FDA's website after the meeting. Background material and the link to the online teleconference and/or video conference meeting will be available at
For press inquiries, please contact the Office of Media Affairs at
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with disabilities. If you require accommodations due to a disability, please contact AnnMarie Williams at
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our website at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. 1001
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the issuance of a priority review voucher to the sponsor of a rare pediatric disease product application. The Federal Food, Drug, and Cosmetic Act (FD&C Act) authorizes FDA to award priority review vouchers to sponsors of approved rare pediatric disease product applications that meet certain criteria. FDA is required to publish notice of the award of the priority review voucher. FDA has determined that LIVMARLI (maralixibat), approved on September 29, 2021, manufactured by Mirum Pharmaceuticals, Inc., meets the criteria for a priority review voucher.
Cathryn Lee, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Silver Spring, MD 20993-0002, 301-796-1394,
FDA is announcing the issuance of a priority review voucher to the sponsor of an approved rare pediatric disease product application. Under section 529 of the FD&C Act (21 U.S.C. 360ff), FDA will award priority review vouchers to sponsors of approved rare pediatric disease product applications that meet certain criteria. FDA has determined that LIVMARLI (maralixibat), manufactured by Mirum Pharmaceuticals, Inc., meets the criteria for a priority review voucher. LIVMARLI (maralixibat) oral solution is indicated for the treatment of cholestatic pruritus in patients with Alagille syndrome (ALGS) 1 year of age and older.
For further information about the Rare Pediatric Disease Priority Review Voucher Program and for a link to the full text of section 529 of the FD&C Act, go to
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) has determined that FENTANYL CITRATE Injections, equivalent to 2.5 milligram (mg) base/50 milliliter (mL) (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), were not withdrawn from sale for reasons of safety or effectiveness. This determination will allow FDA to approve abbreviated new drug applications (ANDAs) for FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), if all other legal and regulatory requirements are met.
Swati Rawani, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6221, Silver Spring, MD 20993-0002, 240-402-9917,
Section 505(j) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) allows the submission of an ANDA to market a generic version of a previously approved drug product. To obtain approval, the ANDA applicant must show, among other things, that the generic drug product: (1) has the same active ingredient(s), dosage form, route of administration, strength, conditions of use, and (with certain exceptions) labeling as the listed drug, which is a version of the drug that was previously approved; and (2) is bioequivalent to the listed drug. ANDA applicants do not have to repeat the extensive clinical testing otherwise necessary to gain
Section 505(j)(7) of the FD&C Act requires FDA to publish a list of all approved drugs. FDA publishes this list as part of the “Approved Drug Products With Therapeutic Equivalence Evaluations,” which is known generally as the “Orange Book.” Under FDA regulations, drugs are removed from the list if the Agency withdraws or suspends approval of the drug's NDA or ANDA for reasons of safety or effectiveness or if FDA determines that the listed drug was withdrawn from sale for reasons of safety or effectiveness (21 CFR 314.162).
A person may petition the Agency to determine, or the Agency may determine on its own initiative, whether a listed drug was withdrawn from sale for reasons of safety or effectiveness. This determination may be made at any time after the drug has been withdrawn from sale, but must be made prior to approving an ANDA that refers to the listed drug (§ 314.161 (21 CFR 314.161)). FDA may not approve an ANDA that does not refer to a listed drug.
FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), are the subject of NDA 215870, held by Exela Pharma Sciences, LLC, and initially approved on February 8, 2023. FENTANYL CITRATE is indicated in adult and pediatric patients ages 2 years and older for use as an opioid analgesic supplement in general anesthesia, for administration with a neuroleptic for the induction of anesthesia and as an adjunct in the maintenance of general anesthesia, and for use as an anesthetic agent with oxygen in selected high-risk patients, such as those undergoing open heart surgery or certain complicated neurological or orthopedic procedures.
Exela Pharma Sciences, LLC, has never marketed FENTANYL Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100mL (EQ 0.05 mg base/mL). In a letter dated May 5, 2023, Exela Pharma Sciences, LLC, notified FDA that FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), were being discontinued, and FDA moved these drug products to the “Discontinued Drug Product List” section of the Orange Book. In previous instances (see,
Hyman, Phelps & McNamara, P.C., submitted a citizen petition dated February 13, 2024 (Docket No. FDA-2024-P-0805), under 21 CFR 10.30, requesting that the Agency determine whether FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), were withdrawn from sale for reasons of safety or effectiveness.
After considering the citizen petition and reviewing Agency records and based on the information we have at this time, FDA has determined under § 314.161 that FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), were not withdrawn for reasons of safety or effectiveness. The petitioner has identified no data or other information suggesting that these drug products were withdrawn for reasons of safety or effectiveness. We have carefully reviewed our files for records concerning the withdrawal of FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), from sale. We have reviewed the available evidence and determined that these drug products were not withdrawn from sale for reasons of safety or effectiveness.
Accordingly, the Agency will continue to list FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), in the “Discontinued Drug Product List” section of the Orange Book. The “Discontinued Drug Product List” delineates, among other items, drug products that have been discontinued from marketing for reasons other than safety or effectiveness. ANDAs that refer to FENTANYL CITRATE Injections, EQ 2.5 mg base/50 mL (EQ 0.05 mg base/mL) and EQ 5 mg base/100 mL (EQ 0.05 mg base/mL), may be approved by the Agency as long as they meet all other legal and regulatory requirements for the approval of ANDAs. If FDA determines that labeling for these drug products should be revised to meet current standards, the Agency will advise ANDA applicants to submit such labeling.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Substance Abuse and Mental Health Services Administration, HHS.
Notice.
Notice is hereby given for the meetings on September 17, 2024, of the Substance Abuse and Mental Health Services Administration's Tribal Technical Advisory Committee (TTAC); and on September 18, 2024, a joint meeting with the TTAC and Indian Health Service (IHS) National Tribal Advisory Committee on Behavioral Health (NTAC). Both meetings are open to the public and will be held in person and virtually. Agenda with call-in information will be posted on the SAMHSA website prior to the meeting at:
September 17, 2024, 10:00 a.m. to 5:30 p.m. (PT) (TTAC).
September 18, 2024, 9:00 a.m. to 5:00 p.m. (PT) (SAMHSA TTAC/IHS NTAC).
Silver Reef Casino Resort, 4876 Haxton Way, Ferndale, WA 98248.
Karen Hearod, CAPT, USPHS, Director, Office of Tribal Affairs Policy, 5600 Fishers Lane, Rockville, Maryland 20857 (mail); telephone: (202) 868-9931; email:
SAMHSA TTAC provides a venue wherein Tribal leadership and SAMHSA staff can exchange information about public health issues, identify urgent mental health and substance abuse needs, and discuss collaborative approaches to addressing these behavioral health issues and needs.
TTAC meetings are exclusively between federal officials and elected officials of Tribal governments (or their designated employees) to exchange views, information, or advice related to the management or implementation of SAMHSA programs. The public may attend but are not allowed to participate in the meeting.
To obtain the call-in number, access code, and/or web access link; or request special accommodations for persons with disabilities, please register on-line at:
Meeting information and a roster of TTAC members may be obtained either by accessing the SAMHSA Council's website at:
Coast Guard, DHS.
Sixty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995, the U.S. Coast Guard intends to submit an Information Collection Request (ICR) to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: without change. 1625-0020, Security Zones, Regulated Navigation Areas, and Safety Zones; without change. Our ICR describes the information we seek to collect from the public. Before submitting this ICR to OIRA, the Coast Guard is inviting comments as described below.
Comments must reach the Coast Guard on or before October 28, 2024.
You may submit comments identified by Coast Guard docket number [USCG-2024-0286] to the Coast Guard using the Federal eRulemaking Portal at
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) the practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology.
In response to your comments, we may revise this ICR or decide not to seek an extension of approval for the Collection. We will consider all comments and material received during the comment period.
We encourage you to respond to this request by submitting comments and related materials. Comments must contain the OMB Control Number of the ICR and the docket number of this request, USCG-2024-0286, and must be received by October 28, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. Comments we post to
Coast Guard, DHS.
Sixty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995, the U.S. Coast Guard intends to submit an Information Collection Request (ICR) to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625-0022, Application for Tonnage Measurement of Vessels; without change.
Our ICR describes the information we seek to collect from the public. Before submitting this ICR to OIRA, the Coast Guard is inviting comments as described below.
Comments must reach the Coast Guard on or before October 28, 2024.
You may submit comments identified by Coast Guard docket number [USCG-2024-0287] to the Coast Guard using the Federal eRulemaking Portal at
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) the practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology.
In response to your comments, we may revise this ICR or decide not to seek an extension of approval for the Collection. We will consider all comments and material received during the comment period.
We encourage you to respond to this request by submitting comments and related materials. Comments must contain the OMB Control Number of the ICR and the docket number of this request, USCG-2024-0287, and must be received by October 28, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. Comments we post to
Coast Guard, DHS.
Sixty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995, the U.S. Coast Guard intends to submit an Information Collection Request (ICR) to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information:
Comments must reach the Coast Guard on or before October 28, 2024.
You may submit comments identified by Coast Guard docket number [USCG-2024-0289] to the Coast Guard using the Federal eRulemaking Portal at
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) the practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology.
In response to your comments, we may revise this ICR or decide not to seek an extension of approval for the Collection. We will consider all comments and material received during the comment period.
We encourage you to respond to this request by submitting comments and related materials. Comments must contain the OMB Control Number of the ICR and the docket number of this request, USCG-2024-0289, and must be received by October 28, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. Comments we post to
Coast Guard, DHS.
Thirty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995 the U.S. Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625-0097, Plan Approval and Records for Marine Engineering Systems; without change. Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensure we only impose paperwork burdens commensurate with our performance of duties.
You may submit comments to the Coast Guard and OIRA on or before September 27, 2024.
Comments to the Coast Guard should be submitted using the Federal eRulemaking Portal at
Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) the practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology. These comments will help OIRA determine whether to approve the ICR referred to in this Notice.
We encourage you to respond to this request by submitting comments and related materials. Comments to Coast Guard or OIRA must contain the OMB Control Number of the ICR. They must also contain the docket number of this request, USCG-2024-0340, and must be received by September 27, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. Comments we post to
This request provides a 30-day comment period required by OIRA. The Coast Guard published the 60-day notice (89 FR 48905 June 10, 2024) required by 44 U.S.C. 3506(c)(2). That notice elicited no comments. Accordingly, no changes have been made to the Collection.
Coast Guard, DHS.
Notification of issuance of a Certificate of Alternative Compliance.
The Coast Guard announces that the Chief of the Prevention Division, Fifth Coast Guard District, has issued a certificate of alternative compliance from the International Regulations for Preventing Collisions at Sea, 1972 (72 COLREGS), for the CHARYBDIS, O.N. 1346442. We are issuing this notice because its publication is required by statute. Due to the unique construction of this vessel CHARYBDIS cannot fully comply with the light, shape, or sound signal provisions of the 72 COLREGS without interfering with the vessel's design and construction. This notification of issuance of a certificate of alternative compliance promotes the Coast Guard's marine safety mission.
The Certificate of Alternative Compliance was issued on August 21, 2024.
For information or questions about this notice call or email Mr. Julio A. Martinez, Marine Safety Specialist, Prevention Division, Fifth Coast Guard District, U.S. Coast Guard; telephone (757) 398-6689, email
The United States is signatory to the International Maritime Organization's International Regulations for Preventing Collisions at Sea, 1972 (72 COLREGS),
The owner, builder, operator, or agent of a special construction or purpose vessel may apply to the Coast Guard District Office in which the vessel is being built or operated for a determination that compliance with alternative requirements is justified,
The Chief of the Prevention Division, Fifth Coast Guard District, certifies that the CHARYBDIS, O.N. 1346442, is a vessel of special construction or purpose, and that, with respect to the horizontal positioning of the Aft Masthead Light, and the horizontal sector of the Restricted in Ability to Maneuver (RAM) and Not Under Command (NUC) all-around lights, it is not possible to comply fully with the requirements of the provisions enumerated in the 72 COLREGS, without interfering with the normal operation, construction, or design of the vessel. The Chief of the Prevention Division, Fifth Coast Guard District, further finds and certifies that the Aft Masthead Light carried at a horizontal distance of 23 feet-
This notice is issued under authority of 33 U.S.C. 1605(c) and 33 CFR 81.18.
Coast Guard, DHS.
Thirty-day notice requesting comments.
In compliance with the Paperwork Reduction Act of 1995 the U.S. Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs (OIRA), requesting an extension of its approval for the following collection of information: 1625-0045, Adequacy Certification for Reception Facilities and Advance Notice; without change. Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensure we only impose paperwork burdens commensurate with our performance of duties.
You may submit comments to the Coast Guard and OIRA on or before September 27, 2024.
Comments to the Coast Guard should be submitted using the Federal eRulemaking Portal at
Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.
A copy of the ICR is available through the docket on the internet at
A.L. Craig, Office of Privacy Management, telephone 202-475-3528, fax 202-372-8405, or email
This notice relies on the authority of the Paperwork Reduction Act of 1995; 44 U.S.C. 3501
The Coast Guard invites comments on whether this ICR should be granted based on the Collection being necessary for the proper performance of Departmental functions. In particular, the Coast Guard would appreciate comments addressing: (1) the practical utility of the Collection; (2) the accuracy of the estimated burden of the Collection; (3) ways to enhance the quality, utility, and clarity of information subject to the Collection; and (4) ways to minimize the burden of the Collection on respondents, including the use of automated collection techniques or other forms of information technology. These comments will help OIRA determine whether to approve the ICR referred to in this Notice.
We encourage you to respond to this request by submitting comments and related materials. Comments to Coast Guard or OIRA must contain the OMB Control Number of the ICR. They must also contain the docket number of this request, USCG-2024-0382, and must be received by September 27, 2024.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. Comments we post to
This request provides a 30-day comment period required by OIRA. The Coast Guard published the 60-day notice (89 FR 48904, June 10, 2024) required by 44 U.S.C. 3506(c)(2). That notice elicited no comments. Accordingly, no changes have been made to the Collection.
• CG-5401, Certificate of Adequacy for Reception Facility
• CG-5401A, Application for a Reception Facility Certificate of Adequacy (COA) for Oil, Form A
• CG-5401B, Application for a Reception Facility Certificate of Adequacy (COA) for Noxious Liquid Substance (NLS) Residues and Mixtures Containing NLS Residues, Form B
• CG-5401C, Application for a Reception Facility Certificate of Adequacy for Garbage, Form C
• CG-5401D, Application for a Reception Facility Certificate of Adequacy for Ozone Depletion Substances and Exhaust Gas Cleaning System Residue, Form D
• CG-5401X, Certificate of Adequacy (COA) Application
Federal Emergency Management Agency, Department of Homeland Security.
Notice of Open Federal advisory committee meeting.
The Federal Emergency Management Agency (FEMA) Technical Mapping Advisory Council (TMAC) will hold a virtual meeting on Tuesday, November 19, 2024. The meeting will be open to the public via a Microsoft Teams Video Communications link.
The TMAC will meet on Tuesday, November 19, 2024, from 8:00 a.m. to 5:00 p.m. Eastern Time (ET). Please note that the meeting will close early if the TMAC has completed its business.
The meeting will be held virtually using the following Microsoft Teams Video Communications link (
To facilitate public participation, members of the public are invited to provide written comments on the issues to be considered by the TMAC, as listed in the
•
•
A public comment period will be held on Tuesday, November 19, 2024, from 3:30 p.m. to 4:00 p.m. ET. The public comment period will not exceed 30 minutes. Please note that the public comment period may end before the time indicated, following the last call for comments. Contact the individual listed below to register as a speaker by Thursday, November 14, 2024, 5:00 p.m. ET. Please be prepared to submit a written version of your public comment by Monday, November 18, 2024, 5:00 p.m. ET.
FEMA is committed to ensuring all participants have equal access regardless of disability status. If you require reasonable accommodation to fully participate due to a disability,
Brian Koper, Designated Federal Officer for the TMAC, FEMA, 400 C St. SW, Washington, DC 20472, telephone 202-646-3085, and email
Notice of this meeting is given under the
In accordance with the
Office of Policy Development and Research, Chief Data Officer, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for an additional 30 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Interested persons are also invited to submit comments regarding this proposal and comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Clearance Officer, REE, Department of Housing and Urban Development, 451 7th Street SW, Room 8210, Washington, DC 20410-5000; email
Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 7th Street SW, Room 8210, Washington, DC 20410; email
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
The
The current Paperwork Reduction Act approval under OMB Control No. 2506-0133 covers reporting, record keeping, and application requirements for both the HOPWA formula and competitive grant programs. The competitive grant program includes new competitive grants and renewal/replacement grants. This revision applies to reporting and closeout requirements for all HOPWA grantees.
This submission requests to add additional data elements to form HUD-4155, remove forms that are no longer needed, remove pre-award information that will be covered with a child submission through the HUD generic information collection request under OMB Control Number 2501-0044, adjust language in form HUD-4154, update form HUD-4153 to reflect published Notices of Funding Opportunity (NOFOs), and add grant closeout to the paperwork collection package with a new HOPWA grant closeout form.
The addition of information collection for grant closeout will apply to all HOPWA grantees. The use of a new HOPWA grant closeout certification form, the SF425, and all other relevant
HUD systematically reviews and conducts data analysis in order to prepare national and individual grantee performance profiles that are not only used to measure program performance against benchmark goals and objectives, but also to communicate the program's achievement and contributions towards Departmental strategic goals. HUD plans to continue using the data elements in this submission for these purposes.
HOPWA grantees and applicants may be required to respond to more than one piece of information collection. All annualized costs reflect staff time spent on tasks in the table. The hourly rate of $28.73 is based on a GS-9 for Rest of United States. 10,320 hours * $28.73 = $296,493.
The estimated costs under this OMB approval number in this request is lower than previous approval. This accounts for the removal of forms HUD-40110-C/D, and removal of pre-award information. Updates on the chart also include the addition of grant closeout, increases for a larger number of new competitive SPNS grants, and higher hourly wage.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
(5) ways to minimize the burden of the collection of information on those who are to respond, including the use of automated collection techniques or other forms of information technology.
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507.
Bureau of Indian Affairs, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the Bureau of Indian Education (BIE) are proposing to renew an information collection.
Interested persons are invited to submit comments on or before September 27, 2024.
Written comments and recommendations for the proposed information collection request (ICR) should be sent within 30 days of publication of this notice to the Office of Information and Regulatory Affairs (OIRA) through
To request additional information about this ICR, contact Steven Mullen, Information Collection Clearance Officer, Office of Regulatory Affairs and Collaborative Action—Indian Affairs, U.S. Department of the Interior, 1001 Indian School Road NW, Suite 229, Albuquerque, New Mexico 87104;
In accordance with the Paperwork Reduction Act of 1995 (PRA, 44 U.S.C. 3501
A
As part of our continuing effort to reduce paperwork and respondent burdens, we are again soliciting comments from the public and other Federal agencies on the proposed ICR that is described below. We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments that you submit in response to this notice are a matter of public record. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Office of the Secretary, Office of Employee Development, Federal Consulting Group, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, the Office of Employee Development, Federal Consulting Group is proposing to renew an information collection.
Interested persons are invited to submit comments on or before September 27, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
To request additional information about this ICR, contact Federal Consulting Group, Attention: Lucy Adams, 1849 C St. NW MS 4320, Washington, DC 20240-0001, or via email to
In accordance with the Paperwork Reduction Act of 1995 (PRA, 44 U.S.C. 3501
A
As part of our continuing effort to reduce paperwork and respondent burdens, we are again soliciting comments from the public and other Federal agencies on the proposed ICR that is described below. We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments that you submit in response to this notice are a matter of public record. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
This information collection activity provides a means to consistently assess, benchmark, and improve customer satisfaction with Federal government agency websites within the Executive Branch. The Federal Consulting Group of the Department of the Interior serves as the executive agent for this assessment to federal agencies.
The Website Satisfaction Surveys will be completed subject to the Privacy Act of 1974, Public Law 93-579, December 31, 1974 (5 U.S.C. 522a). The agency information collection will be used solely for the purpose of the survey. The contractor will not be authorized to release any agency information upon completion of the survey without first obtaining permission from the Federal Consulting Group and the participating agency. In no case shall any new system of records containing privacy information be developed by the Federal Consulting Group, participating agencies, or the contractor collecting the data. In addition, participating Federal agencies may only provide information used to randomly selected respondents from among established systems of records provided for such routine uses.
There is no other agency or organization able to provide the information accessible through the surveying approach used in this information collection. Further, the information will enable Federal agencies to determine customer satisfaction metrics with discrimination capability across variables. Thus, this information collection will assist Federal agencies in making the best use of resources in a targeted manner to improve service to the public.
This survey asks no questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, or other matters that are commonly considered private.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it is operating under a currently valid Office of Management and Budget control number. The Office of Management and Budget control number for this collection is 1090-0008. The control number will be displayed on the surveys used. For expeditious administration of the surveys, the expiration date will not be displayed on the individual instruments. Response to the surveys is voluntary.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Bureau of Land Management, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995 (PRA), the Bureau of Land Management (BLM) proposes to renew an information collection.
Interested persons are invited to submit comments on or before September 27, 2024.
Written comments and recommendations for this information collection request (ICR) should be sent within 30 days of publication of this notice to
To request additional information about this ICR, contact Jeff Holdren by email at
In accordance with the PRA (44 U.S.C. 3501
A
As part of our continuing effort to reduce paperwork and respondent burdens, we are again inviting the public and other Federal agencies to comment on the proposed ICR described below. The BLM is especially interested in public comment addressing the following:
(1) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility.
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used.
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments submitted in response to this notice are a matter of public record. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
An agency may not conduct or sponsor and, notwithstanding any other provision of law, a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Bureau of Land Management, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, the Bureau of Land Management (BLM) proposes to renew an information collection.
Interested persons are invited to submit comments on or before October 28, 2024.
Send your written comments on this information collection request (ICR) by mail to Darrin King, Information Collection Clearance Officer, U.S. Department of the Interior, Bureau of Land Management, Attention PRA Office, 440 W 200 S #500, Salt Lake City, UT 84101; or by email to
To request additional information about this ICR, contact Amanda Fox by email at
In accordance with the Paperwork Reduction Act of 1995 (PRA, 44 U.S.C.
As part of our continuing effort to reduce paperwork and respondent burdens, we invite the public and other Federal agencies to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
We are especially interested in public comment addressing the following:
(1) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
• Chapter 3A, Subchapter I of the Mineral Leasing Act, 30 U.S.C. 181-196;
• Chapter 3A, Subchapter IV of the Mineral Leasing Act, 30 U.S.C. 223-236b;
• The Mineral Leasing Act for Acquired Lands, 30 U.S.C. 351 360;
• The Federal Oil and Gas Royalty Management Act, 30 U.S.C. 1701-1759; and
• The Federal Land Policy and Management Act, 43 U.S.C. 1701-1787.
In order to fulfill its responsibilities under these statutes, the BLM needs to perform the information collection (IC) activities set forth in the regulations at 43 CFR part 3170, and in onshore oil and gas orders promulgated in accordance with 43 CFR 3164.1. This OMB control number is currently scheduled to expire January 31, 2025. The BLM plans to request that OMB renew OMB this control number for an additional three (3) years.
Indian lands.
An agency may not conduct or sponsor and, notwithstanding any other provision of law, a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Bureau of Land Management, Interior.
Notice of realty action.
The Bureau of Land Management (BLM) is proposing a non-competitive (direct) sale of public lands near Barstow, San Bernardino County, California, to Burlington Northern Santa Fe (BNSF), LLC, a Delaware Corporation, under the provisions of the Federal Land Policy and Management Act of 1976 (FLPMA), as amended, and BLM land sale regulations. The purpose of the non-competitive land sale to BNSF is to support development of the Barstow International Gateway project, which would facilitate the transfer of goods between different modes of transportation throughout the United States, including rail, truck, and ocean carriers. The sale will be for no less than the appraised fair market value (FMV) of $98,000.
Interested parties may submit written comments no later than October 15, 2024. The land will not be offered for sale until after October 28, 2024.
Written comments regarding the proposed sale should be submitted to BLM, Barstow Field Office, ATTN: Tim McCain, Realty Specialist, 2601 Barstow Road, Barstow, California 92311, or via email to
Tim McCain, Realty Specialist, BLM Barstow Field Office, phone: 951-972-7849, email:
The public lands are located approximately one-half mile west of the city of Barstow in San Bernardino County, California, and are legally described below.
The areas described aggregate 30 acres, according to the official plat of the survey on file with the BLM.
The proposed sale of the parcels described above is in conformance with the land use plan as the parcels have been designated as Development Focus Areas available for disposal in the California Desert Conservation Area Plan of 1980, as amended by the Desert Renewable Energy Conservation Plan of 2016. Conveyance of any mineral interests pursuant to section 209 of FLPMA have been analyzed as a part of this transaction, and the authorized officer determined that all mineral interests will be reserved to the United States. The land sale meets the criteria for a direct sale under 43 CFR 2711.3-3(a) and is consistent with Section 203(a)(3) of FLPMA, which states: “Disposal of such tract will serve important public objectives, including but not limited to expansion of communities and economic development.”
Publication of this notice in the
1. A reservation of a right-of-way for ditches and canals constructed by authority of the United States, Act of August 30, 1890 (43 U.S.C. 945).
2. A reservation of all minerals to the United States, and the right to prospect for, mine, and remove the minerals under applicable law and any regulations that the Secretary of the Interior may prescribe, including all necessary access and exit rights, pursuant to 43 CFR 2720.0-6.
3. An appropriate indemnification clause protecting the United States from claims arising out of the purchaser's use, occupancy, or operations on the conveyed lands.
4. Additional terms and conditions that the authorized officer deems appropriate.
The segregation will terminate upon issuance of a patent, publication in the
In addition to publication in the
Interested parties may submit substantive written comments regarding the proposed sale and environmental assessment DOI-BLM-CA-D080-2024-0012-EA via the BLM National NEPA Register at
Before including your address, phone number, email address, or other personal identifying information in your comment, be advised that your entire comment-including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold from public review your personal identifying information, we cannot guarantee that we will be able to do so.
Bureau of Ocean Energy Management, Interior.
Notice of information collection; request for comments.
In accordance with the Paperwork Reduction Act of 1995, the Bureau of Ocean Energy Management (BOEM) proposes a new information collection request (ICR) to gather information regarding outdoor recreation and tourism in the Cook Inlet Outer Continental Shelf (OCS) Planning Area and adjacent coastal areas.
Comments must be received by the Office of Management and Budget (OMB) desk officer no later than September 27, 2024.
Submit your written comments on this ICR to the OMB's desk officer for the Department of the Interior at
Anna Atkinson by email at
In accordance with the Paperwork Reduction Act of 1995, BOEM provides the general public and Federal agencies with an opportunity to comment on new, proposed, revised, and continuing collections of information. This helps BOEM assess the impact of the information collection requirements and minimize the public's reporting burden. It also helps the public understand BOEM's information collection requirements and provide the requested data in the desired format.
BOEM intends to conduct a research study of outdoor recreation and tourism in the Cook Inlet OCS Planning Area and adjacent coastal areas (
Specifically, this information collection would involve primary data collection (following ICR approval by OMB) to elicit information on: (a) activities and attributes contributing to the value of recreational experiences; (b) expenditures related to recreational activities; and (c) how these things differ across the region and different user groups (
The study's primary research design would include four components: focus groups, cognitive interviews, onsite intercept surveys, and written surveys. The focus groups and cognitive interviews would be used to develop and pretest a draft written survey, first in a group setting (focus groups) and then in a one-on-one interview setting (cognitive interviews). The onsite survey would include a small number of questions to determine eligibility for recruitment to the written survey. It will be pretested onsite while investigators are in the field for the focus groups. The final onsite and written surveys would be administered at approximately two dozen sites in the study area during the primary recreation season from May to October. Potential respondents would be approached as they arrive to a site and invited to fill out the survey.
1. Focus Groups—To inform survey development, BOEM would conduct focus groups with recreationists in the study area. The recreationists would identify their preferred coastal- and marine-related recreation sites; why they choose their preferred sites; the differences they perceive between sites near existing energy infrastructure (in portions of the Upper Cook Inlet) to sites that are not near any energy infrastructure, and the recreational quality of those sites; what they like about their recreational experiences around Cook Inlet; what they do not like about the Cook Inlet sites they avoid; how offshore energy exploration and development activities may affect their recreation site choice and experience; and other related issues.
2. Cognitive Interviews—The findings of the focus groups would be used to develop a draft written survey instrument. BOEM would then conduct 25 cognitive interviews to test and refine the survey. Specifically, the interviews would test if the survey is working as expected. Factors relevant to that determination include evaluating if questions are easily understood, whether respondents misunderstand the questions in any way, whether response categories are exhaustive and mutually exclusive, and other similar issues.
3. Onsite Intercept Surveys—A short in-person survey to be conducted with recreationists as they arrive at a site. The questions will determine eligibility for recruitment to the written survey, including whether they are participating in recreation activities. The onsite interview will also include selected demographic questions for comparison with respondents to the written survey and evaluation of nonresponse. Surveys would be administered at a range of sites, including public lands, visitor centers, seaports, airports, and marinas. Because the surveys would be administered between May and September, a potential respondent may be intercepted on more than one occasion. If a respondent clarifies that they have already taken the survey, they would not be asked to take it again.
4. Written Surveys—The written survey would cover topics such as recreational destinations, frequency of use in the past 12 months, recreation trip-related expenditures, preferences for recreation site attributes, attitudes about offshore energy projects and impacts of the projects on recreation, and respondent demographics.
A
BOEM is again soliciting comments on this proposed ICR. BOEM is especially interested in public comment addressing the following issues: (1) is the collection necessary to the proper functions of BOEM; (2) what can BOEM do to ensure this information will be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might BOEM enhance the quality, utility, and clarity of the information to be collected; and (5) how might BOEM minimize the burden of this collection on the respondents, including minimizing the burden through the use of information technology?
Comments that you submit in response to this notice are a matter of public record and will be available for public review on
For BOEM to consider withholding from disclosure your personally identifiable information, you must identify, in a cover letter, any information contained in your comment that, if released, would constitute a clearly unwarranted invasion of your personal privacy. You must also briefly describe any possible harmful consequences of the disclosure of information, such as embarrassment, injury, or other harm.
Even if BOEM withholds your personally identifiable information in the context of this ICR, your comment is subject to the Freedom of Information Act (FOIA). Your information will only be withheld if a determination is made that one of the FOIA exemptions to disclosure applies. Such a determination will be made in accordance with the Department of the Interior's (DOI) FOIA implementing regulations (43 CFR part 2) and applicable law.
BOEM will make available for public inspection all comments in their entirety (except privileged or confidential information) submitted by organizations and businesses, or by individuals identifying themselves as representatives of organizations or businesses. BOEM protects privileged and confidential information in accordance with FOIA and DOI's implementing regulations.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Office of Surface Mining Reclamation and Enforcement, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the Office of Surface Mining Reclamation and Enforcement (OSMRE), are proposing to renew an information collection.
Interested persons are invited to submit comments on or before October 28, 2024.
Send your comments on this information collection request (ICR) by mail to Mark Gehlhar, Office of Surface Mining Reclamation and Enforcement, 1849 C Street NW, Room 1544-MIB, Washington, DC 20240, or by email to
To request additional information about this ICR, contact Mark Gehlhar by email at
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
We are soliciting comments on the proposed ICR that is described below. We are especially interested in public comment addressing the following issues: (1) is the collection necessary to the proper functions of the agency; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the agency enhance the quality, utility, and clarity of the information to be collected; and (5) how might the agency minimize the burden of this collection on the respondents, including through the use of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Office of Surface Mining Reclamation and Enforcement, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the Office of Surface Mining Reclamation and Enforcement (OSMRE), are proposing to renew an information collection.
Interested persons are invited to submit comments on or before October 28, 2024.
Send your comments on this information collection request (ICR) by mail to Mark Gehlhar, Office of Surface Mining Reclamation and Enforcement, 1849 C Street NW, Room 1544-MIB, Washington, DC 20240, or by email to
To request additional information about this ICR, contact Mark Gehlhar by email at
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
We are soliciting comments on the proposed ICR that is described below. We are especially interested in public comment addressing the following issues: (1) is the collection necessary to the proper functions of the agency; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the agency enhance the quality, utility, and clarity of the information to be collected; and (5) how might the agency minimize the burden of this collection on the respondents, including through the use of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has received a complaint entitled
Lisa R. Barton, Secretary to the Commission, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-2000. The public version of the complaint can be accessed on the Commission's Electronic Document Information System (EDIS) at
General information concerning the Commission may also be obtained by accessing its internet server at United States International Trade Commission (USITC) at
The Commission has received a complaint and a submission pursuant to § 210.8(b) of the Commission's Rules of Practice and Procedure filed on behalf of Maxell, Ltd. on August 22, 2024. The complaint alleges violations of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain smart televisions. The complaint names as respondents: TCL Electronics Holdings Ltd. (f/k/a TCL Multimedia Technology Holdings, Ltd.) of Hong Kong; TCL Industries Holdings Co., Ltd. of China; T.C.L. Industries Holdings (H.K.) Limited of Hong Kong; TTE Technology, Inc. (d/b/a TCL North America) of Corona, CA; TTE Corporation of Hong Kong; TCL King Electrical Appliances (Huizhou) Co. Ltd. of China; Manufacturas Avanzadas S.A. de C.V. of Mexico; TCL Smart Device (Vietnam) Co., Ltd. of Vietnam; Shenzhen TCL New Technology Co., Ltd. of China; TCL Optoelectronics Technology (Huizhou) Co., Ltd. of China; TCL Overseas Marketing Ltd. of Hong Kong; and TCL Technology Group Corporation (f/k/a TCL Corp.) of China. The complainant requests that the Commission issue a limited exclusion order, cease and desist orders, and impose a bond upon respondents' alleged infringing articles during the 60-day Presidential review period pursuant to 19 U.S.C. 1337(j).
Proposed respondents, other interested parties, members of the public, and interested government agencies are invited to file comments on any public interest issues raised by the complaint or § 210.8(b) filing. Comments should address whether issuance of the relief specifically requested by the complainant in this investigation would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.
In particular, the Commission is interested in comments that:
(i) explain how the articles potentially subject to the requested remedial orders are used in the United States;
(ii) identify any public health, safety, or welfare concerns in the United States relating to the requested remedial orders;
(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) indicate whether complainant, complainant's licensees, and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the requested exclusion order and/or a cease and desist order within a commercially reasonable time; and
(v) explain how the requested remedial orders would impact United States consumers.
Written submissions on the public interest must be filed no later than by close of business, eight calendar days after the date of publication of this notice in the
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. Submissions should refer to the docket number (“Docket No. 3769”) in a prominent place on the cover page and/or the first page. (
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
This action is taken under the authority of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and of §§ 201.10 and 210.8(c) of the Commission's Rules of Practice and Procedure (19 CFR 201.10, 210.8(c)).
By order of the Commission.
On the basis of the record
The Commission instituted these reviews on January 2, 2024 (89 FR 96) and determined on April 8, 2024 that it would conduct expedited reviews (89 FR 43873, May 20, 2024).
The Commission made these determinations pursuant to section 751(c) of the Act (19 U.S.C. 1675(c)). It completed and filed its determinations in these reviews on August 23, 2024. The views of the Commission are contained in USITC Publication 5538 (August 2024), entitled
By order of the Commission.
Federal Bureau of Investigation (FBI), Justice.
Notice.
The FBI is authorized to establish and collect fees for providing fingerprint-based and name-based criminal history record information (CHRI) checks submitted by authorized users for noncriminal justice purposes including employment and licensing. A portion of the fee is intended to reimburse the FBI for the cost of providing fingerprint-based and name-based CHRI checks (“cost reimbursement portion” of the fee). The FBI is also authorized to charge an additional amount to defray expenses for the automation of fingerprint identification and criminal justice information services and associated costs (“automation portion” of the fee). This notice provides the revised fee schedule.
This revised fee schedule is effective January 1, 2025.
Ms. Cynthia D. Harris, Chief, Financial Management Unit, Resources Management Section, Criminal Justice Information Services (CJIS) Division, FBI, 1000 Custer Hollow Road, Module D-3, Clarksburg, WV 26306. Telephone number 304-625-4152.
Pursuant to the authority in Public Law 101-515, as amended and codified at 34 United States Code (U.S.C.) section 41104, the FBI has established user fees for authorized agencies requesting noncriminal justice fingerprint-based and name-based CHRI checks. These noncriminal justice, fingerprint-based CHRI checks are performed for noncriminal justice, non-law enforcement employment and licensing purposes, and for certain employees of private sector contractors with classified government contracts. The noncriminal justice, name-based CHRI checks are biographic checks of the biometric system limited to those agencies authorized via 5 U.S.C. 9101, Security Clearance Information Act of 1985.
In accordance with the requirements of Title 28, Code of Federal Regulations (CFR), section 20.31(e), the FBI periodically reviews the process of providing fingerprint-based and name-based CHRI checks to determine the proper fee amounts which should be collected, and the FBI publishes any resulting fee adjustments in the
A fee study was conducted in keeping with 28 CFR 20.31(e)(2) and employed the methodology detailed in
Pursuant to the recommendations of the study, the fees for fingerprint-based CHRI checks will be decreased and the fee for name-based CHRI checks will also decrease for federal agencies specifically authorized by statute,
The following tables detail the fee amounts for authorized users requesting fingerprint-based and name-based CHRI checks for noncriminal justice purposes, including the difference from the fee schedule currently in effect.
On August 22, 2024, the Department of Justice lodged a proposed consent decree with the United States District Court for the Southern District of New York in the lawsuit entitled
In this action, the United States seeks injunctive relief from Legacy Builders/Developers Corp. in connection with the defendant's unlawful work practices during renovations governed the Renovation, Repair, and Painting Rule, 40 CFR part 745, subpart E, promulgated under the Toxic Substances Control Act (“TSCA”). The proposed consent decree resolves the United States' claims, requires Legacy Builders/Developers Corp. to pay $168,000, and imposes injunctive relief.
The publication of this notice opens a period for public comment on the consent decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
Any comments submitted in writing may be filed by the United States in whole or in part on the public court docket without notice to the commenter.
During the public comment period, the consent decree may be examined and downloaded at this Justice Department website:
On August 22, 2024, the Department of Justice lodged a proposed consent decree with the United States District Court for the Middle District of Louisiana in the lawsuit entitled
The proposed consent decree resolves claims alleged against Clean Harbors, Inc., Clean Harbors Baton Rouge, LLC, and Baton Rouge Disposal, LLC, under sections 106 and 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. 9606 and 9607(a), for hazardous waste cleanup and response costs incurred by the United States at the Devil's Swamp Lake Superfund Site (“Site”), located in East Baton Rouge Parish, Louisiana. The proposed consent decree requires the Defendants to perform a cleanup of hazardous waste estimated to cost $3,191,000, to pay the United States $2,047,313.63 for costs incurred in responding to the contamination at the Site, and to pay the United States all future costs expended for that purpose.
The publication of this notice opens a period for public comment on the consent decree. Comments should be
Any comments submitted in writing may be filed in whole or in part on the public court docket without notice to the commenter.
During the public comment period, the consent decree may be examined and downloaded at this Justice Department website:
Coordinating Council on Juvenile Justice and Delinquency Prevention.
Notice of meeting.
The Coordinating Council on Juvenile Justice and Delinquency Prevention announces its next meeting.
Thursday, September 19, 2024, at 1:00 p.m.-4:00 p.m. ET.
The meeting will take place at the Department of Justice, 810 7th St. NW, Washington, DC.
Visit the website for the Coordinating Council at
The Coordinating Council on Juvenile Justice and Delinquency Prevention (“Council”), established by statute in the Juvenile and Delinquency Prevention Act of 1974 section 206(a) (34 U.S.C. 11116(a)), will meet to carry out its advisory functions. Information regarding this meeting will be available on the Council's web page at
Although designated agency representatives may attend in lieu of members, the Council's formal membership consists of the following secretaries and/or agency officials; Attorney General (Chair), Administrator of the Office of Juvenile Justice and Delinquency Prevention (Vice Chair), Secretary of Health and Human Services, Assistant Secretary for Mental Health and Substance Use, Secretary of the Interior, Secretary of Labor, Secretary of Education, Secretary of Housing and Urban Development, Director of the Office of National Drug Control Policy, Chief Executive Officer of AmeriCorps, and the Director of the U.S. Immigration and Customs Enforcement. Up to ten additional members are appointed by the President of the United States, the Speaker of the U.S. House of Representatives, the U.S. Senate Majority Leader, and the Chairman of the Committee on Indian Affairs of the Senate. Further agencies that take part in Council activities include the Departments of Agriculture and Defense, and the Consumer Financial Protection Bureau.
Council meeting agendas are available on
All members of the public who wish to attend must register in advance. To attend
Interested parties may submit written comments and questions in advance to Shauntice McCorkle, Meeting Planner (contact information above). All comments and questions should be submitted no later than 5:00 p.m. ET on Friday, September 13, 2024.
The Council will limit public statements if they are found to be duplicative. Written questions submitted by public attendees may also be considered by the Council, time permitting.
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting this Occupational Safety & Health Administration (OSHA)-sponsored information collection request (ICR) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). Public comments on the ICR are invited.
The OMB will consider all written comments that the agency receives on or before September 27, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Nicole Bouchet by telephone at 202-
The standard for shackles and hooks (29 CFR 1915.113(b)(1)) requires that all hooks for which no applicable manufacturer's recommendations are available be tested and that the employer retain a certification record. The standard on portable air receivers (29 CFR 1915.172(d)) requires that portable, unfired pressure vessels be examined quarterly and subjected to a yearly hydrostatic pressure test and that a certification record be maintained. For additional substantive information about this ICR, see the related notice published in the
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless the OMB approves it and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid OMB Control Number.
DOL seeks PRA authorization for this information collection for three (3) years. OMB authorization for an ICR cannot be for more than three (3) years without renewal. The DOL notes that information collection requirements submitted to the OMB for existing ICRs receive a month-to-month extension while they undergo review.
(Authority: 44 U.S.C. 3507(a)(1)(D))
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting this Occupational Safety & Health Administration (OSHA)-sponsored information collection request (ICR) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). Public comments on the ICR are invited.
The OMB will consider all written comments that the agency receives on or before September 27, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Nicole Bouchet by telephone at 202-693-0213, or by email at
The purpose of the cotton dust standard and its information collection requirements is to provide protection for employees from the adverse health effects associated with occupational exposure to cotton dust. Employers must monitor employee exposure, reduce employee exposure to within permissible exposure limits, provide employees with medical examinations and training, and establish and maintain employee exposure monitoring and medical records. For additional substantive information about this ICR, see the related notice published in the
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless the OMB approves it and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid OMB Control Number.
DOL seeks PRA authorization for this information collection for three (3) years. OMB authorization for an ICR cannot be for more than three (3) years without renewal. The DOL notes that information collection requirements submitted to the OMB for existing ICRs receive a month-to-month extension while they undergo review.
(Authority: 44 U.S.C. 3507(a)(1)(D))
National Archives and Records Administration.
Notice; SES Performance Review Board.
Notice is hereby given of the appointment of members of the National Archives and Records Administration (NARA) Performance Review Board (PRB). The members of the PRB for the National Archives and Records Administration are: William J. Bosanko, Deputy Archivist; Valorie F. Findlater, Chief Human Capital Officer, and Colleen Murphy, Chief Financial Officer and Acting Chief, Management and Administration. These appointments supersede all previous appointments.
This appointment is effective on August 28, 2024.
Valorie Findlater, Office of Human Capital, at
The authority for this notice is 5 U.S.C. 4314(c), which also requires each agency to establish, in accordance with regulations prescribed by the Office of Personnel Management, one or more SES Performance Review Boards. The Board shall review the initial appraisal of a senior executive's performance by the supervisor and recommend final action to the appointing authority regarding matters related to senior executive performance.
National Science Foundation.
Request for information.
The National Science Foundation (NSF) requests input from the full range of institutions and organizations across all relevant sectors—industry, academia, non-profits, government, venture capital, and others—to inform the development of a proposed subsea telecommunications cable capable of being equipped with sensors to support science research that would connect the largest U.S. research facility in Antarctica, McMurdo Station, with either the South Island of New Zealand or Southeast Australia. The proposed cable is expected to host the point science sensor concept promoted by the UN IOC/UNESCO Joint Task Force on Science Monitoring And Reliable Telecommunications (
Interested persons or organizations are invited to submit responses to this notice on or before 11:59 p.m. (EDT) on November 5, 2024.
Options for Responses to this notice are as follows:
•
•
•
•
The preferred method of response is the Electronic On-line Submission.
Patrick D. Smith, Technology Development Manager for Polar Research Support, National Science Foundation, Geosciences Directorate, Office of Polar Programs, 2415 Eisenhower Ave., Suite W7251, Alexandria, VA 22314; telephone (703) 292-7455.
Over 500 subsea fiber optic telecommunications cables, including both installed and planned cables, cover nearly all ocean regions including multiple high Arctic cables. NSF is investigating the implementation of a modern subsea fiber optic telecommunications cable connecting the largest U.S. Antarctic Program (
The NSF Directorates for Geosciences (GEO), Computer and Information Science and Engineering (CISE), and Technology, Innovation, and Partnerships (TIP) have identified the potential subsea cable as an opportunity for transformational changes in the conduct of science, vast improvements in telecommunications capability supporting Antarctica, and innovative public-private partnerships linking science and technology.
Additionally, the cable would have the ability to accommodate additional, multiple forms of distributed fiber optic sensing that are advancing rapidly in technology maturity (
Further, science research supported by the cable sensors is of societal relevance on a global scale for a number of reasons, such as (1) filling significant knowledge gaps of key global ocean processes and trends for improved understanding and monitoring climate change, including ocean heat transport, CO
In late June 2021, the NSF Directorate for Geosciences, Office of Polar Programs (GEO/OPP) (
The Workshop's Executive Summary captured four primary findings:
In response to the 2021 Science Workshop, NSF contracted a comprehensive preliminary concept/feasibility study (known as a Desktop Study, or DTS
The DTS addresses two proposed routes for comparison: (1) McMurdo Station to Sydney, Australia and (2) McMurdo Station to Invercargill, New Zealand. It includes brief assessments of optional extensions from the main cable routes to Macquarie Island for potential interconnection to the Australian research station located there and to nearby international research stations located in the Western Ross Sea/Terra Nova Bay area. More details on the proposed routes including landing sites and relevant diagrams can be found in section 2 of the DTS.
The study Executive Summary summarizes the key study results in a comparison of the two routes considered.
Both routes were considered technically feasible with the following observations:
(1) The NZ route is 1,500 km shorter and thus considerably more economical.
(2) The Australian route has additional geophysical risk to the cable arising from a crossing of the seismically active Macquarie Ridge Complex to the north of Macquarie Island.
(3) The New Zealand route covers more regions of science interest as indicated by science researcher input to the study. Seismologist interests obtained during the study proposed cable branching units located at 60° S and 50° S for future sea bottom seismometer instruments tapping the cable's power and communications.
(4) The risk from ice scour appears reasonable based upon detailed near-shore bathymetry—the Antarctic SMART Cable landing risk mitigation uses standard subsea cable landing techniques called Horizontal Directional Drilling (HDD). Bathymetry and iceberg keel depth studies pertaining to the cable route transit across the Ross Sea continental shelf yield a similar low risk assessment.
(5) Environmental assessments and permitting will be a significant component of future work, as is the case with all subsea cable projects, and will include the Antarctic Treaty Committee on Environmental Protection protocols. Coordination with the Committee for the Conservation of Antarctic Marine Living Resources (CCAMLR) will be needed as the proposed cable route transits the CCAMLR governed Marine Protected Areas in the Ross Sea region.
A subsea cable installation represents a substantial economic investment. As such, modern subsea telecommunications cables are designed with a 25-year or greater lifetime and thus are designed for high reliability and low maintenance. The introduction of SMART sensors into commercial subsea telecommunications cables is a new phenomenon, with the Government of Portugal-sponsored Atlantic CAM cable (
Through this notice, NSF seeks information from the public to evolve the development of the Antarctic SMART Cable. NSF requests information regarding the subsea cable route that both minimizes the risk to the cable and maximizes science research potential, the range of potential science sensors to include, as well as their geographic distribution, the locations of powered cable branching units for future sensor cable build-out or undersea observatory-style point sensor arrays, concepts for the incorporation of existing or promising distributed fiber sensing techniques, and suggested paths to catalyze the necessary technology to develop such a cable system. Additionally, NSF seeks information relevant to partnership opportunities with the public (U.S., international) and private (academia, for-profit and non-profit) sectors that will facilitate the conceptualization, development, deployment and sustainment of the cable system and related scientific infrastructure.
The information requested here will be used to inform the proposed Antarctic SMART Cable project via the NSF Major Research Equipment Facilities and Construction (MREFC) program that funds the development of facility infrastructure. MREFC projects are funded via a separate appropriation intended for large capital-intensive investments, distinct from the NSF appropriations funding research and related activities.
Responses submitted via Email and Letter Mail are requested to follow the Electronic On-line Submission data capture questions and format for ease in analyzing responses. These responses may address one or as many topics as desired from the enumerated list provided in this RFI, noting the corresponding number of the topic(s) to which the response pertains. Written submissions must be type-written and not exceed 3 pages (exclusive of cover page and accompanying graphics) in 11-point or larger font, single spacing and with a page number provided on each page.
Comments containing references, studies, research, and other empirical data that are not widely published or widely available should include copies or electronic links of the referenced materials; these materials, as well as a list of references, do not count toward the 3-page limit. No business proprietary information, copyrighted information, or personally identifiable information (aside from optional information requested below) should be submitted in response to this RFI. Comments submitted in response to this RFI will be used internally at NSF and may be shared with other Federal agencies and NSF contractors assigned to process the responses.
Responders are asked to answer one or more of the following questions in responses to the RFI. There are no known risks to participating, and participation is voluntary. Unless provided by you, no identifying information will be collected; therefore, all responses will remain confidential, anonymous, and reported in the aggregate. While there is no sensitive content, you may skip a question at any time.
1. In which sector do you currently work?
2. Please select up to three (3) areas of expertise/interest:
3. For how long have you been working in your current field(s)?
4. How familiar are you with the overall SMART Cable concept?
5. Prior to the NSF
6. Which of the following major research areas do you see the observational capability of the cable supporting? Select all that apply.
7. If you selected “NONE OF THE ABOVE” in the previous question, please elaborate here:
The initial SMART Cable sensor concept incorporates three basic measurements: Ocean Bottom Pressure, Ocean Bottom Temperature, and Seismic Ground Motion (seismic acceleration and/or velocity). At the time of the release of this survey, the supplier for the two commercial SMART Cable systems under development is finalizing their sensor and vendor selection process, but future systems—like the Antarctic SMART Cable—may have some limited flexibility in the types of sensors which can be incorporated. The following questions explore the range of potential sensor capabilities under consideration for inclusion in the Antarctic SMART Cable.
8. How important is it for the sensor to measure each of the following?
9. If you'd like, please use this space to elaborate on your answers to Question 8.
10. How important is it for the sensor to measure each of the following?
11. If you'd like, please use this space to elaborate on your answers to Question 10.
12. How important is it for the sensor to measure each of the following?
13. If you'd like, please use this space to elaborate on your answers to Question 12.
14. How important is it to include the following additional sensors in the cable?
15. In the previous question, for any selections you indicated were “important” or “very important,” please explain why you feel these sensor types should be included on the cable:
16. In question #14, for any selections you indicated were “not very important” or “not important at all,” please explain why you feel these sensor types are not needed:
17. In your view, how do SMART and distributed fiber sensing (
18. What new scientific discoveries or breakthroughs do you anticipate as a direct result of having access to the long-term measurement data collected by the cable's sensors?
To catalyze rapid sensor development and increase their Technology Readiness Levels (TRLs) for inclusion in the Antarctic SMART Cable, a range of organizational approaches may be necessary.
19. Should NSF facilitate further development for SMART Cable sensors? If so, how (
20. If you'd like, please use this space to elaborate on your answer to question 19.
For some segments of the cable, it may be possible to shift the cable's path slightly in some locations to accommodate additional science or enable long-term monitoring of specific scientific targets. Further, depending upon the final technological solution(s) for how sensor units will be incorporated into the cable, there may be opportunities to select the locations of some of the sensor modules. Finally, the cable may be able to include one or more Branching Units (BUs). A BU can be used for multiple purposes, such as adding another cable branch, attaching a localized device, or providing an entry point for including a localized network of sensors focused on a specific area or areas.
21. Referring to the above Figure and noting the region of potential cable locations, would you shift the position of the proposed cable route within the buffer zone (dark gray area in the figure)? If so, where? Note that cable path shifts will be minimal without additional engineering evaluations for deployment feasibility and cable safety.
22. If you'd like, please use this space to elaborate on your answer to question 21.
23. How valuable would it be to your research to be able to select the specific locations of the SMART sensor modules along the cable?
24. How important is it to include one or more Branching Units?
25. In terms of current and future research, in your view what are potential uses for Branching Units?
26. Referring again to the above Figure and noting the corridor available around the trunk lines to deploy stubs from Branching Units (dark gray shaded areas surrounding the white dotted lines), would you place additional BUs?
27. If you'd like, please use this space to elaborate on your answers to question 26. If you answered yes, please indicate where and why.
28. What potential do you see for the cable to enable the vision of the networked ocean as a relay platform for an “internet of Underwater Things”, such as subsea gliders, submersible float sensors, ROVs and similar submersible autonomous instrumentation systems?
The Whitepaper (
29. What private and/or public sector groups (
30. Beyond the potential direct benefits to support science in the Antarctic and the region covered directly by the Antarctic SMART Cable, there may be broader benefits to developing the Antarctic SMART Cable. In your view, what are the global, national, and societal benefits of this cable?
31. A successor science workshop is being considered for 2025 to build upon and extend the work of the June 2021 workshop and this Electronic On-Line Submission. How interested would you be in attending virtually or in-person, provided full or partial travel expenses could be provided?
32. If there is anything else you'd like to share or elaborate upon regarding the topics mentioned here, please provide them here.
33. Please complete the form below to indicate your interest in future participation in this project. This is completely voluntary, and your responses collected will be included in the analysis regardless of your response below.
Nuclear Regulatory Commission.
Notice of submission to the Office of Management and Budget; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) has recently submitted a request for renewal of an existing collection of information to the Office of Management and Budget (OMB) for review. The information collection is entitled, “U.S. NRC Acquisition Regulation.”
Submit comments by September 27, 2024. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
David Cullison, NRC Clearance Officer, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-2084; email:
Please refer to Docket ID NRC-2023-0199 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
•
•
•
•
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
The NRC cautions you not to include identifying or contact information in comment submissions that you do not want to be publicly disclosed in your comment submission. All comment submissions are posted at
If you are requesting or aggregating comments from other persons for submission to the OMB, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that comment submissions are not routinely edited to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
Under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the NRC recently submitted a request for renewal of an existing collection of information to OMB for review entitled, “U.S. NRC Acquisition Regulation.” The NRC hereby informs potential respondents that an agency may not conduct or sponsor, and that a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
The NRC published a
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
For the Nuclear Regulatory Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning a negotiated service agreement. This
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the Market Dominant or the Competitive product list, or the modification of an existing product currently appearing on the Market Dominant or the Competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's website (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern Market Dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern Competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment deadline(s) for each request appear in section II.
1.
2.
3.
4.
5.
6.
7.
8.
9.
This Notice will be published in the
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 20, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 21, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 20, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean Robinson, 202-268-8405.
The United States Postal Service ® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 21, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 20, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service ® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 20, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 21, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 20, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 19, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 21, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean Robinson, 202-268-8405.
The United States Postal Service ® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 21, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 19, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 19, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 21, 2024, it filed with the Postal Regulatory Commission a
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on August 20, 2024, it filed with the Postal Regulatory Commission a
Securities and Exchange Commission (“Commission”).
Notice.
Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 18(a)(2), 18(c), 18(i) and section 61(a) of the Act.
Applicants request an order to permit certain registered closed-end investment companies that have elected to be regulated as business development companies to issue multiple classes of shares with varying sales loads and asset-based service and/or distribution fees.
AB Private Credit Investors, LLC and AB Private Lending Fund.
The application was filed on July 24, 2023, and amended on October 31, 2023, and August 7, 2024.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the SEC's Secretary at
The Commission:
Chris Chase, Senior Counsel, or Lisa Reid Ragen, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
For Applicants' representations, legal analysis, and condition, please refer to Applicants' second amended and restated application, dated August 7, 2024, which may be obtained via the Commission's website by searching for the file number at the top of this document, or for an Applicant using the Company name search field, on the SEC's EDGAR system. The SEC's EDGAR system may be searched at
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Cboe EDGA Exchange, Inc. (the “Exchange” or “EDGA”) proposes to adopt new market data reports. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Rule 13.8 (EDGA Book Feeds) to adopt the Cboe Timestamping Service, which is a market data service comprised of two distinct market data reports. The Cboe Timestamping Service will provide timestamp information for orders and cancels for market participants. More specifically, the Cboe Timestamping Service reports will provide various timestamps relating to the message lifecycle throughout the exchange system. The first report—the Missed Liquidity Report—will cover order messages and the second report—Cancels Report—will cover cancel messages. The proposed reports are optional products that will be available to all Members and Members may opt to choose both reports, one report, or neither report. Corresponding fees will be assessed based on the number of reports selected.
The Exchange notes that the data included in the proposed reports will be based only on the data of the market participant that opts to subscribe to the reports (“Recipient Member”) and will not include information related to any Member other than the Recipient Member. The Exchange will restrict all other market participants from receiving another market participant's data. Additionally, neither report includes real-time market data. Rather, the reports will contain historical data from the prior trading day and will be available after the end of the trading day, generally on a T+1 basis.
Currently, the Exchange provides real-time prices and analytics in the marketplace. The Exchange proposes to introduce the Missed Liquidity and Cancel Reports in response to Member demand for additional data concerning the timeliness of their incoming orders, cancel messages and executions against resting orders. Members have frequently requested from the Exchange's trading operations personnel information concerning the timeliness of their incoming orders, cancel messages and efficacy of their attempts to execute against resting liquidity on the Exchange's Book. The Exchange believes the additional data points outlined below may help Members gain a better understanding about their interactions with the Exchange. The Exchange believes these reports will provide Members with an opportunity to learn more about better opportunities to access liquidity and receive better execution rates and improve order cancel success. The proposed reports will also increase transparency and democratize information so that all Members that subscribe to either or both reports have access to the same information on an equal basis.
The proposed Missed Liquidity Report will provide time details for executions of orders that rest on the book where the Member receiving the report attempted to execute against that resting order within an Exchange-
The Cancels Report will provide liquidity response time details for orders that rest on the book where the Member receiving the report attempted to cancel that resting order or any other resting order within an Exchange-determined amount of time (not to exceed 1 millisecond) after receipt of the order that executed against the resting order and within an Exchange-determined amount of time (not to exceed 100 microseconds) before receipt of the order that executed against the resting order.
Both the Missed Liquidity Report and Cancels Report will include the following data elements for orders
Market participants generally would use liquidity accessing orders if there is a high probability that it will execute an order resting on the Exchange order book. As noted above, the Missed Liquidity Report helps subscribing market participants to better understand by how much time they missed executing against certain resting orders. The Exchange therefore believes this report will provide greater visibility into what was missed in trading so market participants can better determine whether they want to invest in the technology to mitigate the misses. It may also allow for them to optimize their models and trading patterns to yield better execution results. Similarly, the Cancels Report will provide information that helps subscribing market participants determine how best to improve success rates with respect to canceling their orders, which reduces exposure and manages risk.
The Exchange notes the data information contained within the proposed Missed Opportunities Report and Cancels Report are similar to data provided in reports that currently are, or historically have been, offered by other exchanges.
The Exchange will announce via Exchange Notice the implementation date of the proposed rule change, which shall occur no later than 60 days after the operative date of this rule filing.
The Exchange believes that the proposed Cboe One Options Feed [sic] is consistent with Section 6(b) of the Act,
The Exchange also believes this proposal is consistent with Section 6(b)(5) of the Act because it protects investors and the public interest and promotes just and equitable principles of trade by providing investors with new options for receiving market data as requested by potential purchasers. The proposed rule change would benefit investors by facilitating their prompt access to the value-added information that is included in the proposed reports. The reports will allow Members to access information regarding their trading activity that they may utilize to evaluate their own trading behavior and order interactions. It also promotes just and equitable principles of trade because it would provide latency information in a systematized way and standardized format to any Member that chooses to subscribe to the proposed reports. As discussed, the proposed reports are also not real-time market data products, but rather provide only historical trading data for the previous trading day, generally on a T+1 basis. In addition, the data in the reports regarding incoming orders that failed to execute or incoming cancels that failed to cancel would be specific to the Recipient Member's messages. As noted above, no specific information about the resting orders on the Exchange book will be provided and any information relating to another Member would be anonymized.
In adopting Regulation NMS, the Commission granted self-regulatory organizations (“SROs”) and broker dealers increased authority and flexibility to offer new and unique market data to consumers of such data. It was believed that this authority would expand the amount of data available to users and consumers of such data and also spur innovation and competition for the provision of market data. The Exchange believes that the proposed reports are the sort of market data product that the Commission envisioned when it adopted Regulation NMS.
The Commission concluded that Regulation NMS—by deregulating the market in proprietary data—would itself further the Act's goals of facilitating efficiency and competition:
“[E]fficiency is promoted when broker-dealers who do not need the data beyond the prices, sizes, market center identifications of the NBBO and consolidated last sale information are not required to receive (and pay for) such data. The Commission also believes that efficiency is promoted when broker-dealers may choose to receive (and pay for) additional market data based on their own internal analysis of the need for such data.”
By removing “unnecessary regulatory restrictions” on the ability of exchanges to sell their own data, Regulation NMS advanced the goals of the Act and the principles reflected in its legislative history. This proposed Cboe Timestamping Service (
The proposed reports are designed for Members that are interested in gaining insight into latency in connection with their respective (1) orders that failed to execute against an order resting on the Exchange order book and/or (2) cancel messages that failed to cancel resting orders. The Exchange believes that providing this optional data to interested market participants for a fee is consistent with facilitating transactions in securities, removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest because it provides additional information and insight to subscribing market participants regarding their trading activity on the Exchange. More specifically, the proposed reports provide greater visibility into exactly what was missed in trading so market participants may optimize their models and trading patterns to yield better execution results by identifying by how much time an order that may have been marketable missed executing and by how much time a cancel message missed canceling.
As mentioned above, other exchanges currently offer, or have previously offered, similar trading related reports that have been reviewed and approved by the Commission.
The proposed reports include the following information that are/were not included in either the MIAX Emerald Liquidity Taker Event Report and/or Nasdaq Missed Opportunities—Latency Report:
Lastly, the proposed reports do not include the following information that is/was included in both the MIAX Emerald Liquidity Taker Event Report and Nasdaq Missed Opportunities—Latency Report:
As illustrated above, the proposed reports are substantially similar to the MIAX Emerald Liquidity Taker Event Report and Nasdaq's former Missed Opportunities—Latency Report and includes a number of the same data elements designed to assist Members in better understanding their trading activity on the Exchange and augment their trading strategies to improve their execution opportunities.
In approving Nasdaq's Missed Opportunity—Latency report, the Commission noted that the report “would increase transparency, particularly for Members who may not have the expertise to generate the same information.”
The Exchange proposes to provide the reports on a voluntary basis and no Member will be required to subscribe to either report. The Exchange notes that there is no rule or regulation that requires the Exchange to produce, or that a Member elect to receive, either report. It is entirely a business decision of each Member to subscribe to one, both, or neither report. The Exchange proposes to offer the reports as a convenience to Members to provide them with additional information regarding trading activity on the Exchange on a delayed basis after the close of regular trading hours. A Member that chooses to subscribe to the reports may discontinue receiving either report at any time if that Member determines that the information contained in the Report is no longer useful.
In summary, the proposed reports will help to protect a free and open market by providing additional historical data (offered on an optional basis) to the marketplace and by providing investors with greater choices. Additionally, the proposal would not permit unfair discrimination because the proposed reports will be available to all Exchange Members.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the Exchange believes that the proposed Report will enhance competition by providing a new option for receiving market data to Members. The proposed Report will also further enhance competition between exchanges by allowing the Exchange to expand its product offerings to include reports similar to a report that is currently offered by other exchanges.
Additionally, the Exchange believes the proposed rule change does not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Market participants are not required to purchase either proposed report, and the Exchange is not required to make either report available to investors. Rather, the Exchange is voluntarily making these reports available, as requested by Members, and Members may choose to receive (and pay for) this data based on their own business needs. Potential purchasers may request the data at any time if they believe it to be valuable or may decline to purchase such data.
The Exchange neither solicited nor received comments on the proposed rule change.
Because the foregoing proposed rule change does not:
A. significantly affect the protection of investors or the public interest;
B. impose any significant burden on competition; and
C. become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Cboe EDGX Exchange, Inc. (the “Exchange” or “EDGX”) proposes to adopt new market data reports. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Rule 13.8 (EDGX Book Feeds) to adopt the Cboe Timestamping Service, which is a market data service comprised of two distinct market data reports. The Cboe Timestamping Service will provide timestamp information for orders and cancels for market participants. More specifically, the Cboe Timestamping Service reports will provide various timestamps relating to the message lifecycle throughout the exchange system. The first report—the Missed Liquidity Report—will cover order messages and the second report—Cancels Report—will cover cancel messages. The proposed reports are optional products that will be available to all Members and Members may opt to choose both reports, one report, or neither report. Corresponding fees will be assessed based on the number of reports selected.
The Exchange notes that the data included in the proposed reports will be based only on the data of the market participant that opts to subscribe to the reports (“Recipient Member”) and will not include information related to any Member other than the Recipient Member. The Exchange will restrict all other market participants from receiving another market participant's data. Additionally, neither report includes real-time market data. Rather, the reports will contain historical data from the prior trading day and will be available after the end of the trading day, generally on a T+1 basis.
Currently, the Exchange provides real-time prices and analytics in the marketplace. The Exchange proposes to introduce the Missed Liquidity and Cancel Reports in response to Member demand for additional data concerning the timeliness of their incoming orders, cancel messages and executions against resting orders. Members have frequently requested from the Exchange's trading operations personnel information concerning the timeliness of their incoming orders, cancel messages and efficacy of their attempts to execute against resting liquidity on the Exchange's Book. The Exchange believes the additional data points outlined below may help Members gain a better understanding about their
The proposed Missed Liquidity Report will provide time details for executions of orders that rest on the book where the Member receiving the report attempted to execute against that resting order within an Exchange-determined amount of time (not to exceed 1 millisecond) after receipt of the first attempt to execute against the resting order and within an Exchange-determined amount of time (not to exceed 100 microseconds) before receipt of the first attempt to execute against the resting order.
The Cancels Report will provide liquidity response time details for orders that rest on the book where the Member receiving the report attempted to cancel that resting order or any other resting order within an Exchange-determined amount of time (not to exceed 1 millisecond) after receipt of the order that executed against the resting order and within an Exchange-determined amount of time (not to exceed 100 microseconds) before receipt of the order that executed against the resting order.
Both the Missed Liquidity Report and Cancels Report will include the following data elements for orders
Market participants generally would use liquidity accessing orders if there is a high probability that it will execute an order resting on the Exchange order book. As noted above, the Missed Liquidity Report helps subscribing market participants to better understand by how much time they missed executing against certain resting orders. The Exchange therefore believes this report will provide greater visibility into what was missed in trading so market participants can better determine whether they want to invest in the technology to mitigate the misses. It may also allow for them to optimize their models and trading patterns to yield better execution results. Similarly, the Cancels Report will provide information that helps subscribing market participants determine how best to improve success rates with respect to canceling their orders, which reduces exposure and manages risk.
The Exchange notes the data information contained within the proposed Missed Opportunities Report and Cancels Report are similar to data provided in reports that currently are, or historically have been, offered by other exchanges.
The Exchange will announce via Exchange Notice the implementation date of the proposed rule change, which shall occur no later than 60 days after the operative date of this rule filing.
The Exchange believes that the proposed Cboe One Options Feed [sic] is consistent with Section 6(b) of the Act,
The Exchange also believes this proposal is consistent with Section 6(b)(5) of the Act because it protects investors and the public interest and promotes just and equitable principles of trade by providing investors with new options for receiving market data as requested by potential purchasers. The proposed rule change would benefit investors by facilitating their prompt access to the value-added information that is included in the proposed reports. The reports will allow Members to access information regarding their trading activity that they may utilize to evaluate their own trading behavior and order interactions. It also promotes just and equitable principles of trade because it would provide latency information in a systematized way and standardized format to any Member that chooses to subscribe to the proposed reports. As discussed, the proposed reports are also not real-time market data products, but rather provide only historical trading data for the previous trading day, generally on a T+1 basis. In addition, the data in the reports regarding incoming orders that failed to execute or incoming cancels that failed to cancel would be specific to the Recipient Member's messages. As noted above, no specific information about the resting orders on the Exchange book will be provided and any information relating to another Member would be anonymized.
In adopting Regulation NMS, the Commission granted self-regulatory organizations (“SROs”) and broker dealers increased authority and flexibility to offer new and unique market data to consumers of such data. It was believed that this authority would expand the amount of data available to users and consumers of such data and also spur innovation and competition for the provision of market data. The Exchange believes that the proposed reports are the sort of market data product that the Commission envisioned when it adopted Regulation NMS.
The Commission concluded that Regulation NMS—by deregulating the market in proprietary data—would itself further the Act's goals of facilitating efficiency and competition:
“[E]fficiency is promoted when broker-dealers who do not need the data beyond the prices, sizes, market center identifications of the NBBO and consolidated last sale information are not required to receive (and pay for) such data. The Commission also believes that efficiency is promoted when broker-dealers may choose to receive (and pay for) additional market data based on their own internal analysis of the need for such data.”
By removing “unnecessary regulatory restrictions” on the ability of exchanges to sell their own data, Regulation NMS advanced the goals of the Act and the principles reflected in its legislative history. This proposed Cboe Timestamping Service (
The proposed reports are designed for Members that are interested in gaining insight into latency in connection with their respective (1) orders that failed to execute against an order resting on the Exchange order book and/or (2) cancel messages that failed to cancel resting orders. The Exchange believes that providing this optional data to interested market participants for a fee is consistent with facilitating transactions in securities, removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest because it provides additional information and insight to subscribing market participants regarding their trading activity on the Exchange. More specifically, the proposed reports provide greater visibility into exactly what was missed in trading so market participants may optimize their models and trading patterns to yield better execution results by identifying by how much time an order that may have been marketable missed executing and by how much time a cancel message missed canceling.
As mentioned above, other exchanges currently offer, or have previously offered, similar trading related reports that have been reviewed and approved by the Commission.
The proposed reports include the following information that are/were not included in either the MIAX Emerald Liquidity Taker Event Report and/or Nasdaq Missed Opportunities—Latency Report:
Lastly, the proposed reports do not include the following information that is/was included in both the MIAX Emerald Liquidity Taker Event Report and Nasdaq Missed Opportunities—Latency Report:
As illustrated above, the proposed reports are substantially similar to the MIAX Emerald Liquidity Taker Event Report and Nasdaq's former Missed Opportunities- Latency Report and includes a number of the same data elements designed to assist Members in better understanding their trading activity on the Exchange and augment their trading strategies to improve their execution opportunities.
In approving Nasdaq's Missed Opportunity—Latency report, the Commission noted that the report “would increase transparency, particularly for Members who may not have the expertise to generate the same information.”
The Exchange proposes to provide the reports on a voluntary basis and no Member will be required to subscribe to either report. The Exchange notes that there is no rule or regulation that requires the Exchange to produce, or that a Member elect to receive, either report. It is entirely a business decision of each Member to subscribe to one, both, or neither report. The Exchange proposes to offer the reports as a convenience to Members to provide them with additional information regarding trading activity on the Exchange on a delayed basis after the close of regular trading hours. A Member that chooses to subscribe to the reports may discontinue receiving either report at any time if that Member determines that the information contained in the Report is no longer useful.
In summary, the proposed reports will help to protect a free and open market by providing additional historical data (offered on an optional basis) to the marketplace and by providing investors with greater choices. Additionally, the proposal would not permit unfair discrimination because the proposed reports will be available to all Exchange Members.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the Exchange believes that the proposed Report will enhance competition by providing a new option for receiving market data to Members. The proposed Report will also further enhance competition between exchanges by allowing the Exchange to expand its product offerings to include reports similar to a report that is currently offered by other exchanges.
Additionally, the Exchange believes the proposed rule change does not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Market participants are not required to purchase either proposed report, and the Exchange is not required to make either report available to investors. Rather, the Exchange is voluntarily making these reports available, as requested by Members, and Members may choose to receive (and pay for) this data based on their own business needs. Potential purchasers may request the data at any time if they believe it to be valuable or may decline to purchase such data.
The Exchange neither solicited nor received comments on the proposed rule change.
Because the foregoing proposed rule change does not:
A. significantly affect the protection of investors or the public interest;
B. impose any significant burden on competition; and
C. become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange is filing with the Commission a proposed rule change to amend the Exchange's fee schedule applicable to Members
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend the Options Fee Schedule to (i) increase the transaction rebate for executions of contracts where the underlying security of the applicable option is not in the Penny Interval program (“Non-Penny options”)
The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The Exchange is one of only 17 options venues to which market participants may direct their order flow. Based on publicly available information, no single options exchange has more than 17.16% of the market share and currently the Exchange represents only approximately 3.34% of the market share.
Currently, the Exchange provides a standard transaction rebate of $1.04 per contract on Non-Penny options (as defined above) in the Customer capacity which add liquidity to the MEMX Options Book. Now, the Exchange proposes to amend the standard transaction rebate on such contracts from $1.04 per contract to $1.15 per contract. The purpose of increasing the rebate is to incentivize Members to execute additional contracts in Non-Penny names in the Customer capacity which add liquidity. The Exchange's proposal is designed to encourage the execution of additional contracts on the Exchange in order to enhance volume, deepen liquidity and promote price discovery on the MEMX Options platform. The Exchange believes that the increased rebate is in line with the rebates provided by other national securities exchanges.
Currently, the Exchange assesses a standard transaction fee of $1.10 per contract on Non-Penny options (as defined above) in non-Customer capacities which remove liquidity from the MEMX Options Book. Now, the Exchange proposes to amend the standard transaction fee on such contracts from $1.10 per contract to $1.21 per contract. The purpose of increasing the fee is for business and competitive reasons. The Exchange believes that the increased fee is in line with or below the fees charged by other national securities exchanges and remains commensurate with the market quality benefits that such discounted fee is intended to achieve.
The Exchange believes that its proposal to amend its Options Fee Schedule is consistent with the provisions of Section 6 of the Act,
MEMX Options operates in a highly fragmented and competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient, and the Exchange represents only a small percentage of the overall market. The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
Accordingly, competitive forces constrain the Exchange's transaction fees and rebates, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange believes the proposal reflects a reasonable and competitive pricing structure which the Exchange believes would promote price discovery and enhance liquidity and market quality on the Exchange to the benefit of all Members and market participants.
The Exchange believes that the proposed change to increase the rebate for executions on Non-Penny options in the Customer capacity that add liquidity to the Exchange to $1.15 per contract is reasonable and equitable because it is designed to incentivize Members to submit additional liquidity-adding
The Exchange believes that the proposed change to increase the fee for executions on Non-Penny options in non-Customer capacities that remove liquidity from the Exchange to $1.21 per contract is equitable because such fee would continue to be charged uniformly to all executions of such contracts for all Members. The Exchange further believes the proposed increased fee is reasonable and appropriate because it is comparable to, and competitive with, the fees charged by other exchanges for executions in the non-Customer capacity in Non-Penny options which remove liquidity.
Further, the Exchange believes it is reasonable, equitable, and not unfairly discriminatory for Members to receive a higher rebate for executions of contracts in Non-Penny options in the Customer capacity which add liquidity to the Exchange, as compared to the rebate provided for executions of contracts in Non-Penny options in non-Customer capacities (
For the reasons discussed above, the Exchange submits that its proposed changes to the Options Transaction Fee Schedule satisfy the requirements of Sections 6(b)(4) and 6(b)(5) of the Act
The Exchange does not believe that the proposal will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. As a relatively new entrant in the already highly competitive environment for options trading, the Exchange believes that the proposed changes would encourage the submission of additional order flow to the Exchange, thereby promoting market depth, execution incentives and enhanced execution opportunities, as well as price discovery and transparency for all Members. Further, MEMX Options' proposed modified transaction rebates and modified transaction fees are comparable to the transaction fees and rebates assessed by other options exchanges.
The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed fees and rebates apply equally to all Options Members. The proposed pricing structure is intended to encourage participants to trade on MEMX Options by providing rebates that are comparable to those offered by other exchanges as well as providing competitive fees. The Exchange believes that the proposed rebates and fees will help to encourage Options Members to send orders to the Exchange to the benefit of all Exchange participants. As the proposed fees and rebates are equally applicable to all market participants, the Exchange does not believe there is any burden on intramarket competition.
The Exchange does not believe that the proposed rule change will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the Exchange believes that the proposed pricing structure will increase competition and is intended to encourage market participants to trade on the exchange by providing rebates and assessing fees that are comparable to those offered by other exchanges, which the Exchange believes will help to encourage Members to send orders to the Exchange to the benefit of all Exchange participants. As the proposed rates are equally applicable to all market participants, the Exchange does not believe there is any burden on intramarket competition.
Additionally, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing a proposal to amend the MIAX Sapphire Options Exchange Fee Schedule (the “Fee Schedule”).
While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on August 12, 2024.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Section (1) of the Fee Schedule to adopt Section (1) (a) as “Electronic Transactions,” and Section (1) (a) (i) as “Transaction Rebates/Fees” to adopt certain fees and rebates applicable to transactions on the Exchange. The Exchange also proposes to adopt Section (1) (a) (iv) of the Fee Schedule as “C2C and cC2C Fees” to adopt certain fees and rebates applicable to C2C
The Exchange proposes to adopt Section (1) (a) (i) of the Fee Schedule as “Transaction Rebates/Fees” to adopt certain fees and rebates applicable to transactions on the Exchange. The Exchange proposes to adopt one table entitled “Simple” for transaction rebates and fees for transactions that occur in the Exchange's Simple Order Book;
Under the Exchange's proposal transactions will be assessed a per contract fee (or provided a credit) dependent upon the origin of the initiating party, the origin of the contra party, and whether the transaction provides liquidity (“Maker”) or removes liquidity (“Taker”). Additionally, the Exchange proposes to segregate rebates and fees by class (Penny or Non-Penny) and to also separately account for transactions in SPDR S&P 500 ETF (“SPY”), Invesco QQQ Trust (“QQQ”), and iShares Russell 2000 Index Fund (“IWM”) as these are highly liquid symbols and are commonly treated separately by options exchanges.
Specifically, for Priority Customer
For Market Maker
For Non Priority Customer/Non Market Maker transactions in the Simple Order Book the Exchange proposes to assess a Maker Fee of $0.20 and a Taker Fee of $0.50 for transactions in SPY, QQQ, or IWM; a Maker Fee of $0.50 and a Taker Fee of $0.50 for transactions in Penny Classes (excluding SPY, QQQ, and IWM); and a Maker Fee of $0.95 and a Taker Fee of $0.94 for transactions in Non-Penny Classes.
Additionally, the Exchange proposes to add a note to the table that states, “Priority Customer simple orders contra to Priority Customer simple orders are neither charged nor rebated.”
For Priority Customer transactions that occur in the Strategy Book the Exchange proposes to provide a Maker Rebate of ($0.36) and a Taker Rebate of ($0.25) for transactions in SPY, QQQ, or IWM; a Maker Rebate of ($0.34) and a Taker Rebate of ($0.54) for transactions in Penny Classes (excluding SPY, QQQ, and IWM); and a Maker Rebate of ($0.71) and a Taker Rebate of ($0.98) for transactions in Non-Penny Classes.
For Market Maker transactions in the Strategy Book the Exchange proposes to assess a Maker Fee of $0.20 and a Taker Fee of $0.50 for transactions in SPY, QQQ, or IWM; a Maker Fee of $0.50 and a Taker Fee of $0.50 for transactions in Penny Classes (excluding SPY, QQQ, and IWM); and a Maker Fee of $0.95 and a Taker Fee of $0.94 for transactions in Non-Penny Classes.
For Non Priority Customer/Non Market Maker transactions in the Strategy Book the Exchange proposes to assess a Maker Fee of $0.20 and a Taker Fee of $0.50 for transactions in SPY, QQQ, or IWM; a Maker Fee of $0.50 and a Taker Fee of $0.50 for transactions in Penny Classes (excluding SPY, QQQ,
The Exchange proposes to adopt the following notes to the Complex table. Note (1) to the Complex table that will provide, “Priority Customer complex orders contra to Priority Customer complex orders are neither charged nor rebated.” Note (2) to the Complex table will provide that, “Fees and Rebates are per contract leg.” Finally, note (3) to the Complex table will provide, “a per contract surcharge of $0.12 will be assessed for trading against a Priority Customer complex order in all classes and will apply to all origins except Priority Customer when trading against a Priority Customer on the Strategy Book.”
The Exchange proposes to adopt Section 1) a) iv) to the Fee Schedule as “C2C and cC2C Fees” to establish fees and rebates applicable to C2C and cC2C Orders.
Customer to Customer Cross Orders are comprised entirely of Priority Customer orders, therefore the Exchange assesses a $0.00 per contract transaction fee and provides a $0.00 rebate to such orders, pursuant to Section 1) a) i) of the Fee Schedule. However, the Exchange desires to clarify and make explicit that C2C Orders are assessed a $0.00 per contract transaction fee and are paid a $0.00 per contract rebate. The Exchange is also proposing to assess cC2C Orders a $0.00 per contract transaction fee and to pay a $0.00 per contract rebate. The Exchange also proposes to adopt certain explanatory text relating to the C2C and cC2C Fees table. The text provides that all fees and rebates are per contract per leg. Also, a C2C Order is comprised of a Priority Customer Order to buy and a Priority Customer Order to sell at the same price and for the same quantity. A cC2C Order is comprised of one Priority Customer complex order to buy and one Priority Customer complex order to sell at the same price and for the same quantity.
The Exchange proposes to adopt Section (1) (a) (v) of the Fee Schedule as “Complex Stock-Option Order Fees” to adopt certain fees for stock-option orders.
The Exchange proposes to adopt a stock handling fee applicable to stock-option orders executed against other stock-option orders in the complex order book, which the Exchange must route to an outside venue. Specifically, the Exchange proposes to adopt a stock handling fee of $0.0010 per share for the stock leg of stock-option orders executed against other stock-option orders in the complex order book, which are routed to an outside venue. This stock handling fee to be assessed by the Exchange will cover all fees charged by the outside venue that prints the trade, and it is also intended to compensate the Exchange for matching these stock-option orders against other stock-option orders on the complex order book. A maximum of $50 per order, per day, will be assessed under this fee. The cap is intended to give market participants assurance that they will not pay more than the capped amount for the execution of the stock leg of their stock-option orders. The Exchange believes that by limiting this fee to a maximum of $50 per order, per day, the Exchange addresses the possibility that a GTC order could be executed over multiple days. For example, if such an order was partially-executed on a Monday, and then the remainder was fully-executed on a Tuesday, the total maximum fee charged to the market participant would be $100 ($50 per day). In addition to the Exchange's fee, the Exchange will also pass through to the Member any fees assessed by the routing broker-dealer utilized by the Exchange with respect to the execution of the stock leg of any such order (with such fees to be passed through at cost). For example, the Exchange anticipates that the routing broker-dealer will bill the Exchange for Section 31 fees and FINRA Trading Activity Fees with respect to the execution of the stock leg of any such order. The Exchange will pass such fees through to the Member, at cost (that is, without any additional mark-up).
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The proposed changes are reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for options securities transaction services that constrain its pricing determinations in that market. The fact that this market is competitive has long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows” “[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, [i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers' . . .”
The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
The Exchange is a new entrant to the market and will be one of eighteen options exchanges to which market participants may direct their order flow. Within this environment, market participants can freely shift their order flow among exchanges in response to changes in their respective pricing schedules. As such, this proposal
The Exchange believes the proposed fee structure is equitable and not unfairly discriminatory because all similarly situated market participants are subject to the same fee and rebate structure for order transactions in the Simple Market. The Exchange's proposal to offer Maker and Taker Rebates to Priority Customers is reasonable because the Exchange desires to attract Priority Customers to the Exchange. Priority Customers are being paid Maker Rebates and Taker Rebates in all classes, as compared to other origins which are not rebated at all, as Priority Customer activity enhances liquidity on the Exchange for the benefit of all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants.
The Exchange believes its Maker Rebate of ($0.30) in SPY, QQQ, and IWM; its Maker Rebate of ($0.28) in Penny Classes (excluding SPY, QQQ, and IWM); and its Maker Rebate of ($0.65) in Non-Penny classes is reasonable as it is in line with current rebates provided by at least one other competing options exchange.
The Exchange believes its Market Maker and Non Priority Customer/Non Market Maker Maker/Taker Fees to be reasonable as the Exchange proposes to assess a $0.20 Maker Fee and a $0.50 Taker Fee for orders in SPY, QQQ, and IWM. The Exchange believes this fee structure will encourage Market Makers, Non Priority Customers, and Non Market Makers to submit orders in SPY, QQQ, and IWM. Additionally, the Exchange believes its Market Maker and Non Priority Customer/Non Market Maker Maker Fee of $0.50 and its Taker Fee of $0.50 in Penny Classes (excluding SPY, QQQ, and IWM) is reasonable as at least one other competing options exchange assesses a similar fee for Market Maker and Non Priority Customer/Non Market Maker orders in Penny Symbols.
Additionally, the Exchange believes its proposal regarding Maker/Taker Fees for the Simple Market is equitable and not unfairly discriminatory. The Exchange will uniformly apply the proposed fees and rebates to each origin in accordance to the Simple table.
The Exchange believes the proposed fee structure is equitable and not unfairly discriminatory because all similarly situated market participants are subject to the same fee and rebate structure for complex order transactions in the Complex Market. The Exchange's proposal to offer Maker and Taker Rebates to Priority Customers is reasonable because the Exchange desires to attract Priority Customers to the Exchange. Priority Customers are being paid Maker Rebates and Taker Rebates in all classes, as compared to other origins which are not rebated at all, as Priority Customer activity enhances liquidity on the Exchange for the benefit of all market participants by providing more trading opportunities, which attracts market makers. Additionally, the Exchange believes that its Priority Customer Maker Rebate of ($0.36) and Taker Rebate of ($0.25) in SPY, QQQ, and IWM; its ($0.34) Maker Rebate and ($0.54) Taker Rebate in Penny Classes (excluding SPY, QQQ, and IWM); and its ($0.71) Maker Rebate and ($0.98) Taker Rebate in Non-Penny Classes is reasonable as it is designed to attract Priority Customer complex order flow to the Exchange.
The Exchange believes its Market Maker and Non Priority Customer/Non Market Maker Maker/Taker Fees to be reasonable as the Exchange proposes to assess a $0.20 Maker Fee and a $0.50 Taker Fee for orders in SPY, QQQ, and IWM. The Exchange believes this fee structure will encourage Market Makers, Non Priority Customers, and Non Market Makers to submit orders in SPY, QQQ, and IWM. Additionally, the Exchange believes its Market Maker and Non Priority Customer/Non Market Maker Maker Fee of $0.50 and its Taker Fee of $0.50 in Penny Classes (excluding SPY, QQQ, and IWM) is reasonable as it provides a standard fee for both Maker and Taker activity. Finally, the Exchange believes its Market Maker and Non Priority Customer/Non Market Maker Maker Fee of $0.95 and its Taker Fee of $0.94 in Non-Penny Classes is reasonable as at least one other exchange charges a similar Maker Fee
The Exchange's proposal to establish and assess a surcharge of $0.12 per contract for all origins (excluding Priority Customer) that add or remove liquidity in Penny Classes (including SPY, QQQ, and IWM) and non-Penny Classes when trading against a Priority Customer on the Strategy Book. The Exchange believes this surcharge is consistent with Section 6(b)(4) of the Act
The Exchange believes that adding the C2C fee to the Fee Schedule is reasonable since it is clarifying the Exchange's existing practice and by adding such C2C Order fee to the Fee Schedule the Exchange believes that it will make it more transparent as to how the Exchange assesses such fee and avoid any confusion as to how such fee is assessed for simple (C2C) and complex (cC2C) orders. The Exchange believes that the proposed transaction fee for cC2C Orders is reasonable because the proposed amount is identical to the fee assessed for C2C transactions, which is currently $0.00. The proposed fees would be charged to all Priority Customers alike and the Exchange believes that assessing a $0.00 fee to Priority Customers is equitable and not unfairly discriminatory. By assessing a $0.00 fee to Priority Customer orders, the C2C and cC2C transaction fees will not discourage the sending of Priority Customer orders.
The Exchange believes that the proposed stock handling fee for stock-option orders is consistent with Section 6(b)(4) of the Act in that it is reasonable, equitable and not unfairly discriminatory. The Exchange believes the proposed stock handling fee for stock-option orders is reasonable and equitable as the proposed fee will cover the costs of developing and maintaining the systems that allow for the matching and processing of the stock legs of stock-option orders executed in the complex order book, as well as all fees charged by the outside venue that prints the trade. The Exchange also believes it is reasonable and equitable to pass through to the Member any fees assessed by the routing broker-dealer utilized by the Exchange with respect to the execution of the stock leg of any such order (with such fees to be passed through at cost). The Exchange notes that another exchange has a comparable fee for the handling of the stock leg of stock-option orders. Specifically, Nasdaq ISE (“ISE”) charges a stock handling fee of $0.0010 per share which is capped at $50 per order.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
The proposal does not impose an undue burden on intra-market competition as its fees will be applied uniformly to each respective origin in accordance to either the Simple Market or Complex Market table. The Exchange believes its proposal will encourage Members
Additionally, the Exchange does not believe its Maker/Taker Fees for Market Makers and Non Priority Customers/Non Market Makers will impose a burden on competition as the fees will be applied in a uniform manner to similarly situated participants in accordance to either the Simple or Complex table.
The proposal does not impose an undue burden on inter-market competition. The Exchange believes its proposal remains competitive with other options markets and will offer market participants with another choice on where to route their orders for execution. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. With the addition of MIAX Sapphire, there are currently 18 registered options exchanges competing for order flow. For the month of July 2024, based on publicly-available information, and excluding index-based options, no single exchange (MIAX Sapphire excluded) exceeded approximately 13-14% of the market share of executed volume of multiply-listed equity and exchange-traded fund (“ETF”) options.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing a proposal to amend the MIAX Sapphire Options Exchange Fee Schedule (the “Fee Schedule”) to establish fees for the Exchange's proprietary market data feeds: (i) MIAX Sapphire Top of Market (“ToM”) data feed; (ii) MIAX Sapphire Complex Top of Market (“cToM”) data feed; and (iii) MIAX Sapphire Liquidity Feed (“SLF”).
While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on August 12, 2024.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
MIAX Sapphire plans to commence electronic operations on August 12, 2024.
The ToM data feed contains top of book quotations based on options
The Exchange notes that there is no requirement that any Member
The SLF data feed provides market participants with a direct data feed that allows subscribers to receive real-time updates of options orders, products traded on MIAX Sapphire, MIAX Sapphire System status, and MIAX Sapphire underlying trading status. When an order is received or an order state changes, published order information will be transmitted over SLF, including time stamp, action, product ID, order ID, order side, order type, order price, original order size, open order size, time in force, origin, open or close, and route instruction. For complex orders, complex strategy definition notification and complex order notice are also included. Subscribers to the SLF will get a list of all options symbols and strategies that will be traded and sourced on that feed at the start of every session.
Each of the proposed fees are described below. Again, the Exchange proposes to not charge the proposed fees during the Initial Waiver Period. Even though the Exchange proposes to waive these particular fees during the Initial Waiver Period, the Exchange believes that it is appropriate to provide market participants with the overall structure of the fees by outlining the structure and amounts in the Fee Schedule so that there is general awareness that the Exchange intends to assess such fees upon expiration of the defined term of the Initial Waiver Period.
The Exchange proposes to charge a monthly fee of $1,200 to Internal Distributors
The Exchange proposes to charge a monthly fee of $1,200 to Internal Distributors and $2,000 to External Distributors for the cToM data feed after the expiration of the Initial Waiver Period. The proposed fees are intended to cover the Exchange's costs with compiling and producing the cToM data feed described in the Exchange's cost analysis detailed below. The Exchange proposes to assess Internal Distributors fees that are less than the fees assessed for External Distributors because External Distributors may monetize their receipt of the cToM data feed by charging their customers fees for receipt of the Exchange's data. Internal Distributors do not have the same ability. The Exchange does not propose to charge any additional fees based on a Distributor's use of the cToM data feed (
The Exchange proposes to charge a monthly fee of $3,000 to Internal Distributors and $3,500 to External Distributors for the SLF data feed after the expiration of the Initial Waiver Period. The proposed fees are intended to cover the Exchange's costs with compiling and producing the SLF data feed described in the Exchange's Cost Analysis detailed below. The Exchange proposes to assess Internal Distributors fees that are less than the fees assessed for External Distributors because External Distributors may monetize their receipt of the SLF data feed by charging their customers fees for receipt of the Exchange's data. Internal Distributors do not have the same ability. The Exchange does not propose to charge any additional fees based on a Distributor's use of the SLF data feed (
The Exchange proposes that each Distributor would be charged for each month it is credentialed to receive ToM, cToM, and/or SLF in the Exchange's production environment. Fees for each of the market data feeds will be reduced for new Distributors who subscribe to a market data feed mid-month for the first month they subscribe following the expiration of the Initial Waiver Period, as described above. New Distributors who subscribe mid-month for each market data feed would be assessed a pro-rata percentage of the applicable Distribution fee based on the percentage of the number of trading days remaining in the affected calendar month as of the date on which they have been first credentialed to receive each of the market data feeds in the production environment, divided by the total number of trading days in the affected calendar month.
The Exchange believes the proposed fees will allow the Exchange to offset the expenses the Exchange has and will continue to incur associated with compiling and disseminating the market data feeds. Further, the Exchange believes it provided sufficient transparency in the Cost Analysis provided below, which provides a basis for how the Exchange determined to charge such fees.
The Exchange issued an alert publicly announcing the proposed fees on July 23, 2024.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)
In 2019, Commission staff published guidance suggesting the types of information that self-regulatory organizations (“SROs”) may use to demonstrate that their fee filings comply with the standards of the Exchange Act (the “Staff Guidance”).
In general, the Exchange believes that exchanges, in setting fees of all types, should meet very high standards of transparency to demonstrate why each new fee or fee increase meets the requirements of the Act that fees be reasonable, equitably allocated, not unfairly discriminatory, and not create an undue burden on competition among Members and markets. The Exchange believes this high standard is especially important when an exchange imposes various fees for market participants to access an exchange's market data. The Exchange believes that it is important to demonstrate that these fees are based on its costs and reasonable business needs. Accordingly, the Exchange included a cost analysis below in connection with the proposed market data fees and the costs associated with compiling and providing the ToM, cToM, and SLF feeds (the “Cost Analysis”).
Accordingly, in proposing to charge fees for market data, the Exchange is especially diligent in assessing those fees in a transparent way against its own aggregate costs of providing the related service, and in carefully and transparently assessing the impact on Members—both generally and in relation to other Members—to ensure the fees will not create a financial burden on any participant and will not have an undue impact in particular on smaller Members and competition among Members in general. The Exchange does not believe it needs to otherwise address questions about market competition in the context of this filing because the proposed fees are consistent with the Act based on the Exchange's Cost Analysis. The Exchange also believes that this level of diligence and transparency is called for by the requirements of Section 19(b)(1) under the Act,
The Exchange's affiliates
As an initial step, the Exchange determined the total cost for the Exchange and its affiliated markets for each cost driver as part of the Exchange's 2024 budget review process. The 2024 budget review is a company-wide process that occurs over the course of many months, includes meetings among senior management, department heads, and the Finance Team. Each department head is required to send a “bottom up” budget to the Finance Team allocating costs at the profit and loss account and vendor levels for the Exchange and its affiliated markets based on a number of factors, including server counts, additional hardware and software utilization, current or anticipated functional or non-functional development projects, capacity needs, end-of-life or end-of-service intervals, number of members, market model (
The next step involves determining what portion of the cost allocated to the Exchange pursuant to the above methodology is to be allocated to each core service,
By allocating segmented costs to each core service, the Exchange was able to estimate by core service the potential margin it might earn based on different fee models. The Exchange notes that it has five primary sources of revenue that it can potentially use to fund its operations: transaction fees, connectivity and port service fees,
Through the Exchange's extensive Cost Analysis, the Exchange analyzed nearly every expense item in the Exchange's general expense ledger to determine whether each such expense relates to the provision of the market data feeds, and, if such expense did so relate, what portion (or percentage) of such expense actually supports the provision of the market data feeds, and thus bears a relationship that is, “in nature and closeness,” directly related to the market data feeds. In turn, the Exchange allocated certain costs more to physical connectivity and others to ports, while certain costs were only allocated to such services at a very low percentage or not at all, using consistent allocation methodologies as described above. Based on this analysis, the Exchange estimates that the aggregate monthly cost to provide ToM, cToM, and SLF data feeds is $59,161 (the Exchange divided the annual cost for each of ToM, cToM, and SLF by 12 months, then added all three numbers together), as further detailed below.
The following chart details the individual line-item (annual) costs considered by the Exchange to be related to offering the ToM, cToM, and SLF data feeds to its Members and other customers, as well as the percentage of the Exchange's overall costs that such costs represent for such area (
Below are additional details regarding each of the line-item costs considered by the Exchange to be related to offering the market data feeds.
The Exchange notes that it and its affiliated markets anticipate that by year-end 2024, there will be 289 employees (excluding employees at non-options/equities exchange subsidiaries of Miami International Holdings, Inc. (“MIH”), the holding company of the Exchange and its affiliated markets), and each department leader has direct knowledge of the time spent by each employee with respect to the various tasks necessary to operate the Exchange. Specifically, twice a year, and as needed with additional new hires and new project initiatives, in consultation with employees as needed, managers and department heads assign a percentage of time to every employee and then allocate that time amongst the Exchange and its affiliated markets to determine each market's individual Human Resources expense. Then, managers and department heads assign a percentage of each employee's time allocated to the Exchange into buckets including network connectivity, ports, market data, and other exchange services. This process ensures that every employee is 100% allocated, ensuring there is no double counting between the Exchange and its affiliated markets.
For personnel costs (Human Resources), the Exchange calculated an allocation of employee time for employees whose functions include
The Exchange also allocated Human Resources costs to provide the market data feeds to a limited subset of personnel with ancillary functions related to establishing and maintaining such market data feeds (such as information security, sales, membership, and finance personnel). The Exchange allocated cost on an employee-by-employee basis (
The estimates of Human Resources cost were therefore determined by consulting with such department leaders, determining which employees are involved in tasks related to providing market data feeds, and confirming that the proposed allocations were reasonable based on an understanding of the percentage of time such employees devote to those tasks. This includes personnel from the Exchange departments that are predominately involved in providing the market data feeds: Business Systems Development, Trading Systems Development, Systems Operations and Network Monitoring, Network and Data Center Operations, Listings, Trading Operations, and Project Management. Again, the Exchange allocated 7.3% of each of their employee's time assigned to the Exchange for the market data feeds, as stated above. Employees from these departments perform numerous functions to support the market data feeds, such as the configuration and maintenance of the hardware necessary to support the market data feeds. This hardware includes servers, routers, switches, firewalls, and monitoring devices. These employees also perform software upgrades, vulnerability assessments, remediation and patch installs, equipment configuration and hardening, as well as performance and capacity management. These employees also engage in research and development analysis for equipment and software supporting the market data feeds and design, and support the development and on-going maintenance of internally-developed applications as well as data capture and analysis, and Member and internal Exchange reports related to network and system performance. The above list of employee functions is not exhaustive of all the functions performed by Exchange employees to support the market data feeds, but illustrates the breath of functions those employees perform in support of the above cost and time allocations.
Lastly, the Exchange notes that senior level executives' time was only allocated to the market data feeds related Human Resources costs to the extent that they are involved in overseeing tasks related to providing market data. The Human Resources cost was calculated using a blended rate of compensation reflecting salary, equity and bonus compensation, benefits, payroll taxes, and 401(k) matching contributions.
The Connectivity cost driver includes cabling and switches required to generate and disseminate the market data feeds and operate the Exchange. The Connectivity cost driver is more narrowly focused on technology used to complete Member subscriptions to the market data feeds and the servers used at the Exchange's primary and back-up data centers specifically for the market data feeds. Further, as certain servers are only partially utilized to generate and disseminate the market data feeds, only the percentage of such servers devoted to generating and disseminating the market data feeds was included (
The next cost driver consists of internet services and external market data. Internet services includes third-party service providers that provide the internet, fiber and bandwidth connections between the Exchange's networks, primary and secondary data centers, and office locations in Princeton and Miami. External market data includes fees paid to third parties, including other exchanges, to receive market data. The Exchange did not allocate any costs associated with internet services or external market data to the ToM, cToM or SLF data feeds.
Data Center costs includes an allocation of the costs the Exchange incurs to provide the market data feeds in the third-party data centers where the Exchange maintains its equipment (such as dedicated space, security services, cooling and power). The Exchange does not own the primary data center or the secondary data center, but instead leases space in data centers operated by third parties. As the Data Center costs are primarily for space, power, and cooling of servers, the Exchange allocated 2.0% to the applicable Data Center costs to the market data feeds. The Exchange believes it is reasonable to apply the same proportionate percentage of Data Center costs to that of the Connectivity cost driver.
Hardware and Software Maintenance and Licenses includes hardware and software licenses used to operate and monitor physical assets necessary to offer the market data feeds. Because the hardware and software license fees are correlated to the servers used by the Exchange, the Exchange again applied an allocation of 2.0% of its costs for Hardware and Software Maintenance and Licenses to the market data feeds.
All physical assets, software, and hardware used to provide the market data feeds, which also includes assets used for testing and monitoring of Exchange infrastructure to provide market data, were valued at cost, and depreciated or leased over periods ranging from three to five years. Thus, the depreciation cost primarily relates to servers necessary to operate the Exchange, some of which are owned by the Exchange and some of which are leased by the Exchange in order to allow efficient periodic technology refreshes. The vast majority of the software the Exchange uses for its operations to generate and disseminate the market data feeds has been developed in-house over an extended period. This software development also requires quality assurance and thorough testing to ensure the software works as intended. The Exchange also included in the Depreciation cost driver certain budgeted improvements that the Exchange intends to capitalize and depreciate with respect to the market data feeds in the near-term. As with the other allocated costs in the Exchange's updated Cost Analysis, the Depreciation cost was therefore narrowly tailored to depreciation related to the market data feeds. As noted above, the Exchange allocated 1.1% of its allocated depreciation costs to providing the market data feeds.
Finally, as with other exchange products and services, a portion of general shared expenses was allocated to the provision of the market data feeds. These general shared costs are integral to exchange operations, including its ability to provide the market data feeds. Costs included in general shared expenses include office space and office expenses (
The Exchange employed a process to determine a reasonable percentage to allocate general shared expenses to the market data feeds pursuant to its multi-layered allocation process. First, general expenses were allocated among the Exchange and affiliated markets as described above. Then, the general shared expense assigned to the Exchange was allocated across core services of the Exchange, including market data. Then, these costs were further allocated to sub-categories within the final categories,
Again, a portion of all shared expenses were allocated to the Exchange (and its affiliated markets) which, in turn, allocated a portion of that overall allocation to all market data products offered by the Exchange. The Exchange believes this allocation percentage is reasonable because, while the overall dollar amount may be higher than other cost drivers, the 1.5% is based on and in line with the percentage allocations of each of the Exchange's other cost drivers. The percentage allocated to the market data feeds also reflects its importance to the Exchange's strategy and necessity towards the nature of the Exchange's overall operations, which is to provide a resilient, highly deterministic trading system that relies on faster market data feeds than the Exchange's competitors to maintain premium performance. This allocation reflects the Exchange's focus on providing and maintaining high performance market data services, of which ToM, cToM, and SLF are main contributors.
After determining the approximate allocated monthly cost related to the market data feeds combined, the total monthly cost for the market data feeds of $59,161 was divided by the total number of projected subscribers
In conducting its Cost Analysis, the Exchange did not allocate any of its expenses in full to any core service (including market data) and did not double-count any expenses. Instead, as described above, the Exchange allocated applicable cost drivers across its core services and used the same Cost Analysis to form the basis of this proposal. For instance, in calculating the Human Resources expenses to be allocated to market data based upon the above described methodology, the Exchange allocated a higher percentage of dedicated network infrastructure personnel (7.3%) due to their focus on functions necessary to provide market data. The remaining 92.7% of the Human Resources expense was then allocated to connectivity services, port services, transaction services, and membership services. The Exchange did not allocate any other Human Resources expense for providing market data to any other employee group, outside of a smaller allocation of 4.9% for costs associated with certain specified personnel who work closely with and support network infrastructure personnel.
In total, the Exchange allocated 6.2% of its personnel costs (Human Resources) to providing the market data
As another example, the Exchange allocated depreciation expense to all core services, including market data, but in different amounts. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense includes the actual cost of the computer equipment, such as dedicated servers, computers, laptops, monitors, information security appliances and storage, and network switching infrastructure equipment, including switches and taps that were purchased to operate and support the network. Without this equipment, the Exchange would not be able to operate the network and provide the market data feeds to its Members and their customers. However, the Exchange did not allocate all of the depreciation and amortization expense toward the cost of providing the market data feeds, but instead allocated approximately 1.1% of the Exchange's overall depreciation and amortization expense to the market data feeds combined. The Exchange allocated the remaining depreciation and amortization expense (98.9%) toward the cost of providing transaction services, membership services, connectivity services, and port services.
The Exchange notes that its revenue estimates are based on projections across all potential revenue streams and will only be realized to the extent such revenue streams actually produce the revenue estimated. The revenue estimates are based upon the Exchange's projected number of Internal and External Distributors for each of the ToM, cToM, and SLF data feeds upon the expiration of the fee waiver periods for each market data feed and then annualized. The Exchange does not yet know whether such expectations will be realized. For instance, in order to generate the revenue expected from the market data feeds, the Exchange will have to be successful in attracting customers to a new exchange and then successfully retain those customers that wish to maintain subscriptions to the market data feeds or obtain new customers that will purchase such services. Similarly, the Exchange will have to be successful in retaining a positive net capture on transaction fees in order to realize the anticipated revenue from transaction pricing.
The Exchange notes that the Cost Analysis is based on the Exchange's 2024 fiscal year of operations and projections, which will only be for part of the year. It is possible, however, that actual costs may be higher or lower. The proposed fee waivers for the market data feeds mean that the Exchange will receive no revenue from market data distribution in 2024. To the extent the Exchange sees growth in use of market data services in 2025, following the expiration of the Initial Waiver Period, it will begin to receive revenue to offset future cost increases. However, if use of market data services is static or decreases, the Exchange might not realize the revenue that it anticipates or needs in order to cover applicable costs. Accordingly, the Exchange is committing to conduct a one-year review after implementation of these fees and expiration of the fee waivers. The Exchange expects that it may propose to adjust fees at that time, to increase fees in the event that revenues fail to cover costs and a reasonable mark-up of such costs. Similarly, the Exchange may propose to decrease fees in the event that revenue materially exceeds our current projections. In addition, the Exchange will periodically conduct a review to inform its decision making on whether a fee change is appropriate (
The proposed fees will allow the Exchange to cover certain costs incurred by the Exchange associated with creating, generating, and disseminating the market data feeds and the fact that the Exchange will need to fund future expenditures (increased costs, improvements, etc.). The Exchange routinely works to improve the performance of the network's hardware and software. The costs associated with maintaining and enhancing a state-of-the-art exchange network is a significant expense for the Exchange, and thus the Exchange believes that it is reasonable and appropriate to help offset those costs by establishing fees for market data subscribers. Subscribers to the ToM, cToM and SLF data feeds expect the Exchange to provide this level of support so they continue to receive the performance they expect. This differentiates the Exchange from its competitors. As detailed above, the Exchange has five primary sources of revenue that it can potentially use to fund its operations: transaction fees, connectivity service fees, membership and regulatory fees, and market data fees. Accordingly, the Exchange must cover its expenses from these five primary sources of revenue.
The Exchange's Cost Analysis estimates the annual cost to provide the market data feeds will equal $709,927. Based on projected ToM, cToM and SLF subscribers once the waiver periods expire for the market data feeds, the Exchange projects to generate annual revenue of approximately $726,000 for the market data feeds combined. The Exchange believes this represents a modest profit of 2.2% when compared to the cost of providing the market data feeds on an annualized basis once the waiver periods expire, which the Exchange believes is fair and reasonable after taking into account the costs related to creating, generating, and disseminating the market data feeds and the fact that the Exchange will need to fund future expenditures (increased costs, improvements, etc.). To determine the projected number of Distributors for each of the market data feeds, the Exchange reviewed its anticipated Distributor population from July 2024 based on Distributor on-boarding documents the Exchange received that showed interest in the market data products in the month preceding when the Exchange filed its proposal to implement the proposed fees, and assumed a 5% attrition rate. The 5% attrition rate was based on surveying the current Distributor population when socializing the proposed fee structure with market participants.
Based on the above discussion, the Exchange believes that even if the Exchange earns the above revenue or incrementally more or less, the proposed fees are fair and reasonable
The Exchange's affiliated markets, MIAX and MIAX Emerald, charge similar or higher rates for their respective ToM, cToM and MOR data feeds.
Accordingly, the Exchange believes that comparable and competitive pricing are key factors in determining whether a proposed fee meets the requirements of the Act, regardless of whether that same fee across the Exchange's affiliated markets leads to slightly different profit margins due to factors outside of the Exchange's control (
The Exchange also reiterates that it proposes to waive the fees for the market data feeds for a defined period of time. The Exchange is owned by a holding company that is the parent company of five exchange markets and, therefore, the Exchange and its affiliated markets must allocate shared costs across all of those markets accordingly, pursuant to the above-described allocation methodology. In contrast, IEX, which currently operates only one exchange, in its recent non-transaction fee filing allocated the entire amount of that same cost to a single exchange. This can result in lower profit margins for the non-transaction fees proposed by IEX because the single allocated cost does not experience the efficiencies and synergies that result from sharing costs across multiple platforms.
Further, the proposal reflects the Exchange's efforts to control its costs, which the Exchange does on an ongoing basis as a matter of good business practice. A potential profit margin should not be judged alone based on its size, but is also indicative of costs management and whether the ultimate fee reflects the value of the services provided. For example, a profit margin on one exchange should not be deemed excessive where that exchange has been successful in controlling its costs, but not excessive where on another exchange where that exchange is charging comparable fees but has a lower profit margin due to higher costs. Doing so could have the perverse effect of not incentivizing cost control where higher costs alone are used to justify fees increases.
Accordingly, while the Exchange is supportive of transparency around costs and potential margins (applied across all exchanges), as well as periodic review of revenues and applicable costs (as discussed below), the Exchange does not believe that these estimates should form the sole basis of whether or not a proposed fee is reasonable or can be adopted. Instead, the Exchange believes that the information should be used solely to confirm that an Exchange is not earning—or seeking to earn—supra-competitive profits, the standard set forth in the Staff Guidance. The Exchange believes the Cost Analysis and related projections in this filing demonstrate this fact.
The Exchange has not determined its proposed overall market data fees based on assumptions about market competition, instead relying upon a cost-plus model to determine a reasonable fee structure that is informed by the Exchange's understanding of different uses of the products by different types of participants. In this context, the Exchange believes the proposed fees overall are fair and reasonable as a form of cost recovery plus the possibility of a reasonable return for the Exchange's aggregate costs of offering the market data feeds. The Exchange believes the proposed fees are reasonable because they are designed to generate annual revenue to recoup some or all of Exchange's annual costs of providing the market data feeds with a reasonable mark-up. As discussed above, the Exchange estimates this fee filing will result in annual revenue of approximately $726,000 once the fee waivers expire for the market data feeds, representing a potential mark-up of just 2.2% over the cost of providing the market data feeds. Accordingly, the Exchange believes that this fee methodology is reasonable because it allows the Exchange to recoup all of its expenses for providing the market data feeds (with any additional revenue representing no more than what the Exchange believes to be a reasonable rate of return). The Exchange also believes that the proposed fees are reasonable because they are generally less than the fees charged by competing options exchanges for comparable market data products, notwithstanding that the competing exchanges may have different system architectures that may result in different cost structures for the provision of market data.
The Exchange believes the proposed fees for the market data products are reasonable when compared to fees for comparable products, compared to which the Exchange's proposed fees are generally lower, as well as other comparable data feeds priced significantly higher than the Exchange's proposed fees for the market data feeds.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the market data feeds are reasonable.
The Exchange believes that the proposed fees are equitably allocated because they will apply uniformly to all data recipients that choose to subscribe to the market data feeds. Any subscriber or vendor that chooses to subscribe to the market data feeds is subject to the same Fee Schedule, regardless of what type of business they operate, and the decision to subscribe to one or more of the ToM, cToM or SLF data feeds is based on objective differences in usage of each market data feed among different Members, which are still ultimately in the control of any particular Member. The Exchange believes the proposed pricing of the market data feeds is equitably allocated because it is based, in part, upon the amount of information contained in each data feed, which may have additional value to market participants.
The Exchange believes that it is reasonable, equitable and not unfairly discriminatory to assess Internal Distributors fees that are less than the fees assessed for External Distributors for subscriptions to the ToM, cToM and SLF data feeds because Internal Distributors have limited, restricted usage rights to the market data, as compared to External Distributors, which have more expansive usage rights. All Members and non-Members that decide to receive any market data feed of the Exchange (or its affiliates, MIAX, MIAX Pearl and MIAX Emerald), must first execute, among other things, the MIAX Exchange Group Data Agreement (the “Exchange Data Agreement”).
The Exchange also utilizes more resources to support External Distributors versus Internal Distributors, as External Distributors have reporting and monitoring obligations that Internal Distributors do not have, thus requiring additional time and effort of Exchange staff. For example, External Distributors have monthly reporting requirements under the Exchange's Market Data Policies.
The Exchange believes the proposed market data fees are equitable and not unfairly discriminatory because the fee level results in a reasonable and equitable allocation of fees amongst subscribers for similar services, depending on whether the subscriber is an Internal or External Distributor. Moreover, the decision as to whether or not to purchase market data is entirely optional to all market participants. Potential purchasers are not required to purchase the market data, and the Exchange is not required to make the market data available. Purchasers may request the data at any time or may decline to purchase such data. The allocation of fees among users is fair and reasonable because, if market participants decide not to subscribe to the data feed, firms can discontinue their use of any of the market data feeds.
For all of the foregoing reasons, the Exchange believes that the proposed fees are equitably allocated and not unfairly discriminatory.
In accordance with Section 6(b)(8) of the Act,
The Exchange does not believe that the proposed fees place certain market participants at a relative disadvantage to other market participants because, as noted above, the proposed fees are associated with usage of the data feed by each market participant based on whether the market participant internally or externally distributes the Exchange data, which are still ultimately in the control of any particular Member, and such fees do not impose a barrier to entry to smaller participants. Accordingly, the proposed fees do not favor certain categories of market participants in a manner that would impose a burden on competition; rather, the allocation of the proposed fees reflects the types of data consumed by various market participants and their usage thereof.
The Exchange does not believe the proposed fees place an undue burden on competition on other exchanges that is not necessary or appropriate. In particular, market participants are not forced to subscribe to any of the market data feeds. Additionally, other exchanges have similar market data fees with comparable rates in place for their participants.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Texas (FEMA—4798—DR), dated 08/21/2024.
Issued on 08/21/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the President's major disaster declaration on 08/21/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 205688 and for economic injury is 205690.
Small Business Administration.
Amendment 2.
This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of Minnesota (FEMA—4797-DR), dated 06/28/2024.
Issued on 08/21/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
The notice of the President's major disaster declaration for Private Non-Profit organizations in the State of Minnesota, dated 06/28/2024, is hereby amended to include the following areas as adversely affected by the disaster.
All other information in the original declaration remains unchanged.
Small Business Administration.
Amendment 1.
This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of Vermont (FEMA-4810-DR), dated 08/20/2024.
Issued on 08/22/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
The notice of the President's major disaster
All other information in the original declaration remains unchanged.
Notice of request for public comment and submission to OMB of proposed collection of information.
The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995, we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment.
Submit comments up to September 27, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Anabel Moreno-Mendez, Visa Services, Department of State, 600 19th St. NW, Washington, DC 20006, who may be reached at 202-485-7611 or
•
•
•
•
•
•
•
•
•
•
•
•
We are soliciting public comments to permit the Department to:
• Evaluate whether the proposed information collection is necessary for the proper functions of the Department.
• Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Please note that comments submitted in response to this Notice are public record. Before including any detailed personal information, you should be aware that your comments as submitted, including your personal information, will be available for public review.
Under section 101(a)(15)(E) of the Immigration and Nationality Act (INA) (8 U.S.C. 1101(a)(15)(E)), noncitizens of certain countries may qualify for a nonimmigrant visa to carry out activities as a treaty trader, treaty investor, or other treaty worker in specialty occupation. Such individuals must be nationals of countries with a qualifying Treaty of Friendship, Commerce, and Navigation or its equivalent with the United States, or that is accorded such privileges by specific legislation. The Department uses the DS-156E to elicit information necessary to determine a foreign national's qualification for a nonimmigrant visa under these provisions. Only certain applicants seeking E nonimmigrant treaty trader/investor visas to the United States will complete Form DS-156E.
After completing Form DS-160, Online Nonimmigrant Visa Application, applicants can access the DS-156E online, print a copy of the form, and then submit it in person, via email, or via mail, depending on the procedures at the relevant consulate or embassy.
The U.S. Department of State's Office of Economic Sanctions Policy and Implementation (SPI) is publishing the name of one person who has been removed from the List of Specially Designated Nationals and Blocked Persons (SDN List) maintained by the Office of Foreign Assets Control (OFAC) and is consequently no longer subject to the prohibitions imposed pursuant to Executive Order 14024 of April 15, 2021, “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation.”
The action described in this notice was effective on July 8, 2024.
Aaron P. Forsberg, Director, Office of Economic Sanctions Policy and Implementation, Bureau of Economic and Business Affairs, Department of State, Washington, DC 20520, tel.: (202) 647 7677, email:
The SDN List and additional information concerning OFAC sanctions programs are available from OFAC's website at
On July 8, 2024, pursuant to a decision by the Department of State, OFAC removed from the SDN List the person listed below, who was subject to prohibitions imposed pursuant to E.O. 14024.
On July 25, 2024, in Docket No. FD 36798, Waterloo Railroad, LLC (WTRL), filed a verified notice for a change in operator exemption. Under this exemption, WTRL would lease and operate approximately 6.9 miles of rail line owned by Union Pacific Railroad Company (UP), between milepost 325.1 and milepost 332.0, along with connecting ancillary trackage (yard and side tracks), in Black Hawk County, Iowa (the Line). In doing so, WTRL would replace the Line's current lessee and operator, Iowa Northern Railway Company (IANR). On August 7, 2024, in Docket No. AB 284 (Sub-No. 5X), IANR filed a petition for exemption to discontinue its operations on the Line.
As discussed below, WTRL's notice of exemption will be issued, and IANR's petition for exemption will be denied as moot.
Under 49 CFR 1011.7(a)(2)(x)(A), the Director of the Office of Proceedings (Director) is delegated the authority to determine whether to issue notices of exemption under 49 U.S.C. 10502 for lease and operation transactions under 49 U.S.C. 10901. However, the Board reserves to itself the consideration and disposition of all matters involving issues of general transportation importance. 49 CFR 1011.2(a)(6). Accordingly, the Board will revoke the delegation to the Director with respect to issuance of the pending notice of exemption for a change in operator on the Line. The Board determines that this notice of exemption should be issued and does so here.
WTRL, a noncarrier, has filed a verified notice of exemption pursuant to 49 CFR 1150.31 to lease and operate approximately 6.9 miles of rail line owned by UP, between milepost 325.1 and milepost 332.0, along with connecting ancillary trackage (yard and side tracks), in Black Hawk County, Iowa. The Line, known as the Waterloo Industrial Line, is currently operated by IANR, pursuant to a lease with UP.
According to the verified notice, WTRL will replace IANR as the operator of the Line. Upon WTRL's assumption of operations, IANR will have no common carrier obligation on the Line.
Although IANR stated in its July 26 Reply that it “could not consent to the change in operator filing,” (IANR Reply 1, July 26, 2024, FD 36798;
This transaction is related to a concurrently filed verified notice of exemption in
WTRL certifies that the draft lease agreement between WTRL and UP contains an interchange commitment that affects interchange with third-party connecting carriers.
WTRL certifies that its projected annual revenues as a result of this transaction will not result in it becoming a Class II or Class I rail carrier and that its projected annual revenues will not exceed $5 million.
Under 49 CFR 1150.32(b), a change of operator requires that notice be given to shippers. The verified notice indicates
The earliest this transaction may be consummated is September 6, 2024, the effective date of the exemption.
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than August 30, 2024 (at least seven days before the exemption becomes effective).
All pleadings, referring to Docket No. FD 36798, must be filed with the Surface Transportation Board either via e-filing on the Board's website or in writing addressed to 395 E Street SW, Washington, DC 20423-0001. In addition, a copy of each pleading must be served on WTRL's representative, William A. Mullins, Mullins Law Group PLLC, 2001 L Street NW, Suite 720, Washington, DC 20036.
According to WTRL, this action is categorically excluded from environmental review under 49 CFR 1105.6(c) and from historic preservation reporting requirement under 49 CFR 1105.8(b).
Decisions of the Board are available at
IANR filed its petition under 49 U.S.C. 10502 for exemption from the prior approval requirements of 49 U.S.C. 10903 to discontinue its lease operations over the Line. IANR states that the proposed discontinuance of service would allow IANR “to effectuate an orderly transfer of rail operations from IANR to WTRL.” (IANR Pet. 2, Aug. 7, 2024, AB 284 (Sub-No. 5X).) IANR requests expedited consideration of its petition. (
Because the change of operator exemption issued here in Docket No. FD 36798 effectively discontinues IANR's common carrier obligation on the Line, IANR's petition to discontinue its operations on the Line will be denied as moot, effective concurrently with effectiveness of the change in operator exemption.
1. The delegation of authority to the Director under 49 CFR 1011.7(a)(2)(x)(A) to determine whether to issue a notice of exemption in this proceeding is revoked.
2. WTRL's notice of exemption is issued and is effective September 6, 2024.
3. IANR's petition for exemption is denied as moot, effective on September 6, 2024.
4. This decision will be published in the
5. This decision is effective on its service date.
By the Board, Board Members Fuchs, Hedlund, Primus, and Schultz. Board Member Fuchs concurred with a separate expression.
While I agree with the today's decision and find sufficient indication that IANR consents to exiting the Line,
OPSEU Pension Plan Trust Fund (OPTrust), Jaguar Transport Holdings, LLC (JTH), and Jaguar Rail Holdings, LLC (JRH, and collectively with OPTrust and JTH, Jaguar), each a noncarrier, have filed a verified notice of exemption under 49 CFR 1180.2(d)(2) to continue in control of Waterloo Railroad, LLC (WTRL), upon WTRL's becoming a Class III rail carrier. WTRL is a directly controlled holding of JRH. OPTrust indirectly controls JTH, which directly controls JRH. Jaguar collectively controls nine Class III rail carriers. (
This transaction is related to a concurrently filed verified notice of exemption in
Jaguar represents that: (1) WTRL does not connect with any railroads in Jaguar's corporate family; (2) the transaction is not part of a series of anticipated transactions that would connect WTRL with the rail lines of any other carrier in Jaguar's corporate family; and (3) the transaction does not involve a Class I carrier. Therefore, the transaction is exempt from the prior approval requirements of 49 U.S.C. 11323.
Under 49 U.S.C. 10502(g), the Board may not use its exemption authority to relieve a rail carrier of its statutory obligation to protect the interests of its employees. However, 49 U.S.C. 11326(c) does not provide for labor protection for transactions under 49 U.S.C. 11324 and 11325 that involve only Class III rail carriers. Accordingly, because this transaction involves Class III rail carriers only, the Board may not impose labor protective conditions here.
The earliest this transaction may be consummated is September 6, 2024, the effective date of the exemption. If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(g) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed by August 30, 2024 (at least seven days before the exemption becomes effective).
All pleadings, referring to Docket No. FD 36797, must be filed with the Surface Transportation Board either via e-filing on the Board's website or in writing addressed to 395 E Street SW, Washington, DC 20423-0001. In addition, a copy of each pleading must be served on Jaguar's representative, William A. Mullins, Mullins Law Group PLLC, 2001 L Street NW, Suite 720, Washington, DC 20036.
Board decisions and notices are available at
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
Federal Aviation Administration (FAA), DOT.
Notice.
The FAA is considering a proposal to change approximately 36.1875 acres of airport land from aeronautical use to non-aeronautical use and to authorize the sale of airport property located at Youngstown Regional Airport, Youngstown, Ohio. The property is located in the northwest corner of the airport, outside the airfield fence and is separated from the airport by Ridge Road. The aforementioned land is proposed to be sold for warehousing/storage facilities and is not needed for aeronautical use.
Comments must be received on or before September 27, 2024.
All requisite and supporting documentation will be made available for review by appointment at the FAA Detroit Airports District Office, Marlon Pena, Program Manager, 11677 S Wayne Rd., Romulus, MI 48174. Telephone: (734) 229-2900/Fax: (734) 229-2950.
Written comments on the Sponsor's request may be submitted using any of the following methods:
•
•
•
•
Marlon Pena, Program Manager, Federal Aviation Administration, Detroit Airports District Office, 11677 S Wayne Rd., Romulus, MI 48174. Telephone Number: (734) 229-2900/Fax: (734) 229-2950.
In accordance with section 47107(h) of Title 49, United States Code, this notice is required to be published in the
The subject property is mostly wooded undeveloped land that was federally conveyed as part of a larger parcel under the Federal Property and Administrative Services Act of 1949, as amended, and the Surplus Property Act of 1944, as amended. The airport sponsor proposes to sell the land, at fair market value, to a private party to be developed as warehousing/storage facilities.
The disposition of proceeds from the sale of the airport property will be in accordance with FAA's Policy and Procedures Concerning the Use of Airport Revenue, published in the
This notice announces that the FAA is considering the release of the subject airport property at the Youngstown Regional Airport, Youngstown, Ohio, from federal land covenants, subject to a reservation for continuing right of flight as well as restrictions on the released property as required in FAA Order 5190.6B section 22.16. Approval does not constitute a commitment by the FAA to financially assist in the disposal of the subject airport property nor a determination of eligibility for grant-in-aid funding from the FAA.
Vienna Township, Trumbull County, State of Ohio
Known as being part of Section No. 44 in said Vienna Township (Township 4, Range 2) and being further bounded and described as follows:
Beginning at a
Thence South 89°18′00″ West along the northerly line of said lands of Antique Tractor Club of Trumbull County, Inc. a distance of 1633.23 feet to a
Thence North 01°28′55″ West along the easterly line of said lands of A&N Land Company, LLC a distance of 1157.30 feet to a
Thence North 89°17′40″ East through the lands of the Grantor and passing over a southerly corner of lands of the United States of America (Deed Volume 1051, Pages 80 and 95) a distance of 756.12 feet to a
Thence South 54°32′04″ East along said westerly line of Ridge Road a
Thence continuing along said westerly line of Ridge Road along a curve to the right having an arc distance of 834.88 feet a radius of 904.93 feet a delta angle of 52°51′39″ and a chord which bears South 28°06′15″ East a distance of 805.59 feet to a
Thence South 01°40′25″ East continuing along said westerly line of Ridge Road a distance of 61.19 feet to the POINT OF BEGINNING and containing 1,576,325.47 square feet or 36.1875 acres of land, more or less.
Federal Aviation Administration (FAA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The
Written comments should be submitted by September 27, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Henry Trammel by email at:
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FMCSA announces its plan to submit the Information Collection Request (ICR) described below to the Office of Management and Budget (OMB) for review and approval. FMCSA is replacing its Unified Registration System (URS), with a new, online registration system, which will be named the “FMCSA Registration System” (FRS). The new system will allow all persons required to register under the Agency's commercial or safety jurisdiction to do so online.
Comments on this notice must be received on or before September 27, 2024.
Written comments and recommendations for the proposed information collection should be submitted within 30 days of publication of this notice to
Mr. Jeffrey Secrist, Office of Registration, Chief, Registration Division, DOT, FMCSA, West Building, 6th Floor, 1200 New Jersey Avenue SE, Washington, DC 20590; (202) 385-2367;
This new ICR will apply to: new registrants applying for safety and/or operating authority registration for the first time from FMCSA; existing registrants (
FMCSA registers for-hire motor carriers of regulated commodities and of passengers, under 49 United States Code (U.S.C.) 13902(a); surface freight forwarders, under 49 U.S.C. 13903; property brokers, under 49 U.S.C. 13904; certain Mexico-domiciled motor carriers, under 49 U.S.C. 13902(c), and cargo tank motor vehicle manufacturers, assemblers, repairers, inspectors, testers, and design certifying engineers under 49 U.S.C. 5121a, 49 CFR 1.87, and 49 CFR part 107, subpart F. These motor carriers may conduct transportation services in the United States only if they are registered with FMCSA. Each registration is effective from the date specified and remains in effect for such period as the Secretary of Transportation (Secretary) determines by regulations.
Motor carriers, freight forwarders, and property brokers are required to request a name or address change and to request reinstatement of a revoked operating authority. Procedures for changing the name or business form of a motor carrier, freight forwarder, or property broker (§ 365.413T) require that motor carriers, forwarders, and brokers must submit the required information to FMCSA's Office of Registration requesting the change.
Subsection (d) of 49 U.S.C. 13905 also provides that on application of the registrant, the Secretary may amend or revoke a registration, and hence the registrant's operating authority. These registrants may apply to voluntarily revoke their operating authority or parts thereof. If the registrant fails to maintain evidence of the required level of insurance coverage on file with FMCSA, its operating authority will be revoked involuntarily. Although the effect of both types of revocation is the same, some registrants prefer to request voluntary revocation. For various business reasons, a registrant may request revocation of part, but not all, of its operating authority.
Registered motor carriers, brokers, and freight forwarders must designate an agent on whom service of notices in proceedings before the Secretary may be made (49 U.S.C. 13303). Registered motor carriers must also designate an agent for every State in which they operate and traverse in the United States during such operations, on whom process issued by a court may be served in actions brought against the registered motor carrier (49 U.S.C. 13304, § 366.4T). Every broker shall make a designation for each State in which its offices are located or in which contracts are written (49 U.S.C. 13304, § 366.4T). Regulations governing the designation of process agents are found at 49 CFR part 366.
FMCSA requests information to identify the applicant, the nature and scope of its proposed operations, safety-related details, and information regarding the drivers and vehicles it plans to use in U.S. operations. FMCSA and the States use registration information collected to track motor carriers, freight forwarders, brokers, and other entities they regulate. Registering motor carriers is essential to being able to identify carriers so that their safety performance can be tracked and evaluated. The data makes it possible to link individual trucks to the responsible motor carrier, thus implementing the mandate under 49 U.S.C. 31136(a)(1); that is, ensuring that commercial motor vehicles are maintained and operated safely. In general, registration information collected informs prioritization of the Agency's activities and aids in assessing and statistically analyzing the safety outcomes of those activities.
The final rule titled “Unified Registration System,” (78 FR 52608) dated August 23, 2013, implemented statutory provisions for an online registration system for entities that are subject to FMCSA's licensing, registration, and certification regulations. When developing URS, FMCSA planned that the OP-1 series of forms (except for OP-1(MX)) would ultimately be folded into one overarching form (MCSA-1), which would be used by all motor carriers seeking authority.
FMCSA began a phased rollout of URS in 2015. The first phase, which became effective on December 12, 2015, impacted only first-time applicants seeking an FMCSA-issued registration. FMCSA had planned subsequent rollout phases for existing registrants; however, there were substantial delays, and
Pursuant to this final rule, FMCSA was accepting forms OP-1, OP-1(P), OP-1(FF), and OP-1(NNA) for existing registrants wishing to apply for additional authorities. Separately, FMCSA requires Form OP-1(MX) for Mexico-domiciled carriers that wish to operate beyond the U.S. municipalities on the U.S.-Mexico border and their commercial zones. Forms in the OP-1 series request information to identify the applicant, the nature and scope of its proposed operations, a narrative description of the applicant's safety policies and procedures, and information regarding the drivers and vehicles it plans to use in U.S. operations. The OP-1 series also requests information on the applicant's familiarity with relevant safety requirements, the applicant's willingness to comply with those requirements during its operations, and the applicant's willingness to meet any specific statutory and regulatory requirements applicable to its proposed operations. Information collected through these forms aids FMCSA in determining the type of operation a company may run, the cargo it may carry, and the resulting level of insurance coverage the applicant will be required to obtain and maintain to continue its operating authority.
In addition, FMCSA accepted Form MCS-150 (Motor Carrier Identification Report, Application for USDOT Number), Form MCS-150B (Combined Motor Carrier Identification Report and Hazardous Materials Permit Application), and MCS-150C (Intermodal Equipment Provider Identification Report, Application for USDOT Number). Title 49, U.S.C. 504(b)(2) provides the Secretary with authority to require carriers, lessors, associations, or classes of these entities to file annual, periodic, and special reports containing answers to questions asked by the Secretary. Existing registrants use the MCS-150 or MCS-150B to update their information in the Motor Carrier Management Information System, while applicants filing for the first time were required to file on-line using URS. Form MCS-150 or MCS-150B is also used for Mexico-domiciled carriers that seek authority to operate beyond the United States municipalities on the United States-Mexico border and their commercial zones.
Registered motor carriers, brokers, and freight forwarders must designate an agent on whom service of notices in proceedings before the Secretary may be made through filing the Form BOC-3, Designation of Agents for Service of Process. Registered motor carriers must designate an agent for every State in which they operate and traverse in the United States during such operations, on whom process issued by a court may be served in actions brought against the registered motor carrier (49 U.S.C. 13304, § 366.4T). Every broker must also make a designation for each State in which its offices are located or in which contracts are written (49 U.S.C. 13304, § 366.4T).
This new ICR impacts several currently approved collections of information, listed below. However, until the new FRS is completed, FMCSA cannot estimate the burden, in hours or expense, that FRS users will be required to endure in comparison to the burdens associated for the approved collections listed below. FMCSA is developing FRS in such a way as to save users as much time as possible. However, FMCSA expects that, at worst, the time and effort required to complete an application, update, or process agent designation in FRS will be the same as it is to complete in the URS or using a paper form. Thus, for purposes of this new collection, FMCSA assumes the same time and cost burdens as were previously listed in the approved collections. In the future, during routine renewals and/or revisions for this new collection, and as FMCSA gathers information on average time per transaction in FRS, FMCSA expects to be able to refine these estimates.
It is expected that FMCSA will eliminate the following collections, along with all associated forms, as users will instead use the FRS to collect the information previously submitted using the listed forms. However, until FMCSA completes a regulatory change to remove reference to these forms from regulation, registrants may continue to use these forms to request the appropriate registration action.
As part of the new FRS, FMCSA plans to verify individuals' identities by establishing a secure and reliable process that utilizes an identity-proofing solution. This will improve the overall resilience of the Agency's digital ecosystems, promote user confidence, and ensure that only verified entities register with FMCSA and gain access to their data. FMCSA will develop measures to verify and secure individuals' identities in the digital space through an identity-proofing solution that supports omni-channel onboarding. This means customers may use different channels such as remotely using a smartphone, tablet, or personal computer, or alternatively, in-person assistance via agents, to verify their identity. The identity-proofing solution will interface with existing FMCSA applications using either application programming interfaces (APIs) or lightweight connectors, which do not require extensive development resources for FMCSA. Based on FMCSA's research, the contracted verification system has a user-friendly interface and experience that allows for seamless interaction during the identity-proofing process—promoting ease of use for both administrators and customers.
To complete the verification process, an applicant must: (1) transmit a photo of a valid state-issued Driver's License or other acceptable forms of identification and (2) use their personal mobile device for facial recognition verification. The contracted vendor will validate the customer's form of identification, confirm the identity of the individual, and compare the results with data in their existing databases. Customers who are unable or unwilling to verify their identity using digital means (
FMCSA will begin with identity proofing, verifying the identity of all new applicants, as well as the approximately 800,000 existing registrants within a designated timeframe. Later, the Agency will initiate a process for verifying the business which is being registered by the individual. FMCSA estimates that the government conducts approximately 3.5 million transactions annually for motor carrier registration and compliance-related purposes that would require identity proofing.
The current information collection supports the DOT Strategic Goal of Safety. It streamlines registration processes and ensures that FMCSA can more efficiently track motor carriers, freight forwarders, brokers, and other entities regulated by the Agency.
On April 19, 2024, FMCSA published a 60-day
One comment was submitted by the firms of Seaton & Husk, L.P. and Clark Hill PLC on behalf of a coalition of transportation, logistics, and security organizations. These stakeholders expressed concern that the FRS proposal was premature and could not be artificially separated from currently pending proposals to amend motor carrier, broker, and forwarder registration requirements relating to safety fitness and prevention of fraud. The stakeholders commended FMCSA for recognizing that closer scrutiny of registration applications is necessary to prevent supply chain fraud ranging from identity theft to stolen loads. However, the commenters stated the FRS questionnaire alone would not be nearly enough unless backed up by hands-on vetting and verification of applicants before operating authority is granted. The commenters request that implementation of the new application be postponed because: (1) the Agency's acknowledgement during its May 29, 2024, listening session that additional rulemaking would be required to vet existing carriers and intermediaries, regardless of commodity or size of equipment; (2) pending rulemakings which are intended to address the need for vetting all new applicants for safety; (3) the absence of clarity on the FMCSA's role in identifying, policing, and prosecuting supply chain fraud; and (4) pending congressional initiatives and the unaddressed possibility of inter-agency coordination to address supply chain fraud with the full implementation of government resources.
FMCSA reviewed the comments submitted by the coalition and finds the comments are not applicable to requesting OMB review and approval of this ICR, which will impact several currently approved information collections. Under FRS, these forms will be integrated into the online system through a series of questions that will be asked, using smart logic. None of the coalition's comments relate to either the currently approved forms or the idea of consolidating them into one, online system. FMCSA will consider the coalition's comments as they relate to other, ongoing actions.
One comment was received from the American Trucking Associations (ATA) and ATA's Moving and Storage Conference (MSC). ATA supports FMCSA's transition to a modernized online registration system, as well as its efforts to bolster the safety, security, and efficiency of its existing carrier registration system. ATA provided recommendations and considerations to further strengthen the system against fraudulent activities, including: (1) streamline access and use for legitimate carriers without undue regulatory hurdles; (2) enhance identity verification and security measures; (3) improve data quality and accessibility; (4) operating authority and USDOT number issuance; (5) establish thresholds for entry; (6) FMCSA Registration System implementation; and (7) create an ecosystem of fraud prevention beyond registration system. ATA called for FMCSA to dedicate resources to better understanding and identifying sources of fraud, their prevalence, and the extent to which fraudulent practices are committed by individuals acting within legitimate organizations (
FMCSA reviewed the comments submitted by ATA and MSC and finds the recommendations and considerations listed above are not applicable to requesting OMB review and approval of this ICR. However, FMCSA will consider these comments as it takes advantage of the new, enhanced technology and system design, adds fraud prevention and security measures, simplifies a complex application process, and improves data quality and safety.
You are asked to comment on any aspect of this information collection, including: (1) whether the proposed collection is necessary for the performance of FMCSA's functions; (2) the accuracy of the estimated burden; (3) ways for FMCSA to enhance the quality, usefulness, and clarity of the collected information; and (4) ways that the burden could be minimized without reducing the quality of the collected information.
Issued under the authority of 49 CFR 1.87.
Veterans Health Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995, this notice announces that the Veterans Health Administration (VHA), Department of Veterans Affairs (VA), will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden, and it includes the actual data collection instrument.
Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice by clicking on the following link
VA PRA information: Maribel Aponte, 202-461-8900,
The purpose of this information collection is to receive and process complaints related to fraud, waste and abuse in VA health care programs. An individual can file a complaint with the VA Office of Integrity and Compliance (OIC) using the Department's regular mail (letter), email, hotline telephone line, fax or, in the future, by filing a web-based complaint. The new VA Form 10-390 can be used by individuals to capture information for a fraud, waste or abuse complaint. The form may be submitted anonymously, and there is no requirement to complete all the fields. All complaints are entered into the Compliance Inquiry Reporting & Tracking System (CIRTS), which is used by VA OIC Staff to record and track complaints as they are processed by VA.
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).
Final rule.
This final rule revises the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals; makes changes relating to Medicare graduate medical education (GME) for teaching hospitals; updates the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs); and makes other policy-related changes.
With the exception of instruction 2 (§ 405.1845), instruction 29 (§ 482.42(e)) and instruction 31 (§ 485.640(d)), this final rule is effective October 1, 2024. The regulation at § 405.1845 is effective January 1, 2025. The regulations at §§ 482.42(e) and 485.640(d) are effective on November 1, 2024.
Donald Thompson, and Michele Hudson, (410) 786-4487 or
Emily Lipkin, and Jim Mildenberger,
Lily Yuan,
Mady Hue,
Jonathan Rudy,
Jeris Smith,
Lang Le,
Ngozi Uzokwe,
Jennifer Tate,
Ngozi Uzokwe,
Julia Venanzi,
Melissa Hager,
Elizabeth Goldstein,
Jennifer Tate,
Kristina Rabarison,
Lorraine Wickiser,
Jessica Warren,
Bridget Dickensheets,
Benjamin Cohen,
Nicholas Bonomo,
Lauren Blum,
The IPPS tables for this fiscal year (FY) 2025 final rule are available on the CMS website at
Readers who experience any problems accessing any of the tables that are posted on the CMS websites, as previously identified, should contact Michael Treitel,
This FY 2025 IPPS/LTCH PPS final rule makes payment and policy changes under the Medicare inpatient prospective payment system (IPPS) for operating and capital-related costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it makes payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). This final rule also makes policy changes to
We are finalizing our proposal of a separate IPPS payment for establishing and maintaining access to essential medicines.
In the Hospital Value-Based Purchasing (VBP) Program, we are finalizing our proposal to modify scoring of the Person and Community Engagement Domain for the FY 2027 through FY 2029 program years to only score six unchanged dimensions of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure, and we are finalizing our proposal to adopt the updated HCAHPS Survey measure in the Hospital VBP Program beginning with the FY 2030 program year after the updated measure has been publicly reported under the Hospital Inpatient Quality Reporting (IQR) Program for 1 year. We are also finalizing our proposal to modify scoring on the HCAHPS Survey measure beginning with the FY 2030 program year to incorporate the updated HCAHPS Survey measure into nine survey dimensions. Lastly, we provide previously and newly established performance standards for the FY 2027 through FY 2030 program years for the Hospital VBP Program.
In the Hospital IQR Program, we are finalizing our proposals to add seven new measures, with modifications to our proposal to adopt the Patient Safety Structural measure, modify two existing measures including the HCAHPS Survey measure, and remove five measures. We are also finalizing our proposed changes to the validation process for the Hospital IQR Program data. We are finalizing the proposed reporting and submission requirements for electronic clinical quality measures (eCQMs) with modifications.
In the PPS-Exempt Cancer Hospital Quality Reporting Program (PCHQR), we are finalizing the adoption of the Patient Safety Structural measure with modification beginning with the CY 2025 reporting period/FY 2027 program year. We are also finalizing our proposed changes to the HCAHPS Survey measure and our proposal to move up the start date for publicly displaying hospital performance on the Hospital Commitment to Health Equity measure.
In the LTCH Quality Reporting Program (QRP), we are finalizing our proposals to add four assessment items to the LTCH Continuity Assessment Record and Evaluation (CARE) Data Set (LCDS) and modify one assessment item on the LCDS beginning with the FY 2028 LTCH QRP. Additionally, we are finalizing our proposal to extend the admission assessment window for the LCDS beginning with the FY 2028 LTCH QRP. Finally, we summarize the feedback we received on our requests for information on future measure concepts for the LTCH QRP and a future LTCH Star Rating system.
In the Medicare Promoting Interoperability Program, we are finalizing our proposal to separate the Antimicrobial Use and Resistance (AUR) Surveillance measure into two measures, an Antimicrobial Use (AU) Surveillance measure and an Antimicrobial Resistance (AR) Surveillance measure, beginning with the electronic health record (EHR) reporting period in CY 2025. We are also finalizing the following proposals to: increase the performance-based scoring threshold from 60 points to 70 points for the EHR reporting period in CY 2025 and from 70 points to 80 points beginning with the EHR reporting period in CY 2026; adopt two new eCQMs and modify one eCQM, in alignment with the Hospital IQR Program; and change the reporting and submission requirements for eCQMs with modifications, in alignment with the Hospital IQR Program.
We proposed the creation and testing of a new mandatory alternative payment model called the Transforming Episode Accountability Model (TEAM). The intent of TEAM is to improve beneficiary care through financial accountability for episodes categories that begin with one of the following procedures: coronary artery bypass graft surgery (CABG), lower extremity joint replacement (LEJR), major bowel procedure, surgical hip/femur fracture treatment (SHFFT), and spinal fusion. TEAM will test whether financial accountability for these episode categories reduces Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. We anticipated that TEAM would benefit Medicare beneficiaries through improving the coordination of items and services paid for through Medicare fee-for-service (FFS) payments, encouraging provider investment in health care infrastructure and redesigned care processes, and incentivizing higher value care across the inpatient and post-acute care settings for the episode. We proposed to test TEAM for a 5-year model performance period, beginning January 1, 2026, and ending December 31, 2030. Under the Quality Payment Program (QPP), we anticipated that TEAM would be an Advanced Alternative Payment Model (APM)for Track 2 and Track 3 and a Merit-based Incentive Payment System (MIPS) APM for all participation tracks. We are finalizing some policies as proposed and we are finalizing others with modification. There are also certain proposed policies that we are not finalizing, and we will instead go through future rulemaking to promulgate new policies before the model start date.
We are also finalizing the proposal requiring respiratory illness reporting for hospitals and critical access hospitals as a condition of participation following the expiration of the COVID-19 public health emergency requirements.
Under various statutory authorities, we either discuss continued program implementation or make changes to the Medicare IPPS, the LTCH PPS, other related payment methodologies and programs for FY 2025 and subsequent fiscal years, and other policies and provisions included in this rule. These statutory authorities include, but are not limited to, the following:
• Section 1886(d) of the Social Security Act (the Act), which sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires that, instead of paying for capital-related costs of inpatient hospital services on a reasonable cost basis, the Secretary use a prospective payment system (PPS).
• Section 1886(d)(1)(B) of the Act, which specifies that certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: rehabilitation hospitals and units; LTCHs; psychiatric hospitals and units; children's hospitals; cancer hospitals; extended neoplastic disease care hospitals; and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS.
• Sections 123(a) and (c) of the Balanced Budget Refinement Act of 1999 (BBRA) (Public Law (Pub. L.) 106-113) and section 307(b)(1) of the Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554) (as codified under section 1886(m)(1) of the
• Section 1814(l)(4) of the Act requires downward adjustments to the applicable percentage increase, beginning with FY 2015, for CAHs that do not successfully demonstrate meaningful use of certified electronic health record technology (CEHRT) for an EHR reporting period for a payment adjustment year.
• Section 1886(a)(4) of the Act, which specifies that costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. Hospitals paid under the IPPS with approved GME programs are paid for the indirect costs of training residents in accordance with section 1886(d)(5)(B) of the Act.
• Section 1886(d)(5)(F) of the Act provides for additional Medicare IPPS payments to subsection (d) hospitals that serve a significantly disproportionate number of low-income patients. These payments are known as the Medicare disproportionate share hospital (DSH) adjustment. Section 1886(d)(5)(F) of the Act specifies the methods under which a hospital may qualify for the DSH payment adjustment.
• Section 1886(b)(3)(B)(viii) of the Act, which requires the Secretary to reduce the applicable percentage increase that would otherwise apply to the standardized amount applicable to a subsection (d) hospital for discharges occurring in a fiscal year if the hospital does not submit data on measures in a form and manner, and at a time, specified by the Secretary.
• Section 1886(b)(3)(B)(ix) of the Act, which requires downward adjustments to the applicable percentage increase, beginning with FY 2015 (and beginning with FY 2022 for subsection (d) Puerto Rico hospitals), for eligible hospitals that do not successfully demonstrate meaningful use of CEHRT for an EHR reporting period for a payment adjustment year.
• Section 1866(k) of the Act, which provides for the establishment of a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act, referred to as “PPS-exempt cancer hospitals.”
• Section 1886(n) of the Act, which establishes the requirements for an eligible hospital to be treated as a meaningful EHR user of CEHRT for an EHR reporting period for a payment adjustment year or, for purposes of subsection (b)(3)(B)(ix) of the Act, for a fiscal year.
• Section 1886(o) of the Act, which requires the Secretary to establish a Hospital Value-Based Purchasing (VBP) Program, under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year.
• Section 1886(p) of the Act, which establishes a Hospital-Acquired Condition (HAC) Reduction Program, under which payments to applicable hospitals are adjusted to provide an incentive to reduce hospital-acquired conditions.
• Section 1886(q) of the Act, as amended by section 15002 of the 21st Century Cures Act, which establishes the Hospital Readmissions Reduction Program. Under the program, payments for discharges from an applicable hospital as defined under section 1886(d) of the Act will be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act directs the Secretary to compare hospitals with respect to the number of their Medicare-Medicaid dual-eligible beneficiaries in determining the extent of excess readmissions.
• Section 1886(r) of the Act, as added by section 3133 of the Affordable Care Act, which provides for a reduction to disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Act and for an additional uncompensated care payment to eligible hospitals. Specifically, section 1886(r) of the Act requires that, for fiscal year 2014 and each subsequent fiscal year, subsection (d) hospitals that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act will receive two separate payments: (1) 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act if subsection (r) did not apply (“the empirically justified amount”), and (2) an additional payment for the DSH hospital's proportion of uncompensated care, determined as the product of three factors. These three factors are: (1) 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act, in the absence of section 1886(r) of the Act; (2) 1 minus the percent change in the percent of individuals who are uninsured; and (3) the hospital's uncompensated care amount relative to the uncompensated care amount of all DSH hospitals expressed as a percentage.
• Section 1886(m)(5) of the Act, which requires the Secretary to reduce by 2 percentage points the annual update to the standard Federal rate for discharges for a long-term care hospital (LTCH) during the rate year for LTCHs that do not submit data on quality measures in the form, manner, and at a time, specified by the Secretary.
• Section 1886(m)(6) of the Act, as added by section 1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67) and amended by section 51005(a) of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS, with implementation beginning in FY 2016. Section 51005(b) of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B) by adding new clause (iv), which specifies that the IPPS comparable amount defined in clause (ii)(I) shall be reduced by 4.6 percent for FYs 2018 through 2026.
• Section 1899B of the Act, which provides for the establishment of standardized data reporting for certain post-acute care providers, including LTCHs.
• Section 1115A of the Act authorizes the testing of innovative payment and service delivery models that preserve or enhance the quality of care furnished to Medicare, Medicaid, and Children's Health Insurance Program (CHIP) beneficiaries while reducing program expenditures.
• Sections 1866 and 1902 of the Act, which requires providers of services seeking to participate in the Medicare or Medicaid program, or both, to enter into an agreement with the Secretary or the state Medicaid agency, as appropriate. Hospitals (all hospitals to which the requirements of 42 CFR part 482 apply, including short-term acute care hospitals, LTC hospitals, rehabilitation hospitals, psychiatric hospitals, cancer hospitals, and children's hospitals) and critical access hospitals (CAHs) seeking to be Medicare and Medicaid providers of services under 42 CFR part 485, subpart F, must be certified as meeting Federal participation requirements (conditions of participation (CoPs) and conditions for coverage (CfCs)). Section 1861(e) of the Act provides the patient health and safety protections established by the Secretary for hospital CoPs. Section 1820(e) of the Act provides similar authority for CAHs.
The following is a summary of the major provisions in this final rule. In
To help mitigate growing wage index disparities between high wage and low wage hospitals, in the FY 2020 IPPS/LTCH PPS rule (84 FR 42326 through 42332), we adopted a policy to increase the wage index values for certain hospitals with low wage index values (the low wage index hospital policy). This policy was adopted in a budget neutral manner through an adjustment applied to the standardized amounts for all hospitals. We indicated our intention that this policy would be effective for at least 4 years, beginning in FY 2020, in order to allow employee compensation increases implemented by these hospitals sufficient time to be reflected in the wage index calculation. As discussed in section III.G.5. of the preamble of this final rule, while we are using the FY 2021 cost report data for the FY 2025 wage index, we are unable to comprehensively evaluate the effect, if any, the low wage index hospital policy had on hospitals' wage increases during the years the COVID-19 public health emergency (PHE) was in effect. We believe it is necessary to wait until we have useable data from fiscal years after the PHE before reaching any conclusions about the efficacy of the policy. Therefore, after consideration of public comments, we are finalizing our proposal that the low wage index hospital policy and the related budget neutrality adjustment would be effective for at least 3 more years, beginning in FY 2025.
As discussed in section V.J. of the preamble of this final rule, the Biden-Harris administration has made it a priority to strengthen the resilience of medical supply chains and support reliable access to products for public health, including through prevention and mitigation of medical product shortages. As a first step in this initiative, we proposed to establish a separate payment for small, independent hospitals for the IPPS shares of the additional resource costs to voluntarily establish and maintain a 6-month buffer stock of one or more of 86 essential medicines, either directly or through contractual arrangements with a pharmaceutical manufacturer, distributor, or intermediary. For the purposes of this policy, eligibility is limited to small, independent hospitals as hospitals with 100 beds or fewer that are not part of a chain organization. We are finalizing our proposal to make this separate payment in a non-budget neutral manner under section 1886(d)(5)(I) of the Act. We are also finalizing our proposal that the payment adjustments would commence for cost reporting periods beginning on or after October 1, 2024.
Under section 1886(r) of the Act, which was added by section 3133 of the Affordable Care Act, starting in FY 2014, Medicare disproportionate share hospitals (DSHs) receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remaining amount, equal to 75 percent of the amount that would have been paid as Medicare DSH payments under section 1886(d)(5)(F) of the Act if subsection (r) did not apply, is paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH that has uncompensated care will receive an additional payment based on its share of the total amount of uncompensated care for all Medicare DSHs for a given time period. This additional payment is known as the uncompensated care payment.
In this final rule, we are finalizing the proposed update to our estimates of the three factors used to determine uncompensated care payments for FY 2025. We also proposed to continue to use uninsured estimates produced by CMS' Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA) in conjunction with more recently available data in the calculation of Factor 2, and we are finalizing this approach. Consistent with the regulation at § 412.106(g)(1)(iii)(C)(
Beginning with FY 2023 (87 FR 49047 through 49051), we also established a supplemental payment for IHS and Tribal hospitals and hospitals located in Puerto Rico. In section IV.D. of the preamble of this final rule, we summarized the ongoing methodology for supplemental payments.
In this final rule, we are finalizing our proposal to calculate the per-discharge amount for interim uncompensated care payments for FY 2025 and subsequent fiscal years with modification. Specifically, for FY 2025, we will calculate the per-discharge amount for interim uncompensated care payments using the average of the most recent 2 years of discharge data. In light of the commenters' concerns regarding a trend of decreasing discharge volume and possible overestimation of discharges in recent years, we believe that, on balance, omitting FY 2021 data from the calculation of interim uncompensated care payments is likely to more accurately estimate FY 2025 discharges. Therefore, we are finalizing our proposal with modification. We are modifying the text of § 412.106(i)(1) to state that for FY 2025, interim uncompensated care payments will be calculated based on an average of the most recent 2 years of available historical discharge data, and, consistent with the proposed rule,, interim uncompensated care payments for FY 2026 and subsequent fiscal years will be calculated based on an average of the most recent 3 years of available historical discharge data.
The Patient Safety Structural measure is an attestation-based measure that assesses whether hospitals have a structure and culture that prioritizes safety as demonstrated by the following five domains: (1) leadership commitment to eliminating preventable harm; (2) strategic planning and organizational policy; (3) culture of safety and learning health system; (4) accountability and transparency; and (5) patient and family engagement. Hospitals will attest to whether they engage in specific evidence-based best practices within each of these domains to achieve a score from zero to five out of five points. We proposed that hospitals would be required to report this measure beginning with the CY 2025 reporting period/FY 2027 program year for the PCHQR Program and for the CY 2025 reporting period/FY 2027 payment determination for the Hospital IQR Program. We are finalizing this proposal, with a modification to one of the domains.
The updated version of the HCAHPS Survey measure aligns with the National Quality Strategy goal to bring patient voices to the forefront by incorporating feedback from patients and caregivers. We proposed that the updated HCAHPS Survey measure would be adopted for the Hospital IQR and PCHQR Programs beginning with the CY 2025 reporting period/FY 2027 payment determination and the CY 2025 reporting period/FY 2027 program year, respectively. For the Hospital VBP Program, we proposed to modify scoring on the Person and Community Engagement Domain for the FY 2027 through FY 2029 program years to only score the six dimensions of the HCAHPS Survey measure that would remain unchanged from the current version of the survey. We proposed to adopt the updated HCAHPS Survey measure beginning with the FY 2030 program year, which would result in nine HCAHPS Survey measure dimensions for the Person and Community Engagement Domain. We also proposed to modify scoring of the Person and Community Engagement Domain beginning with the FY 2030 program year to account for the proposed updates to the HCAHPS Survey measure. We are finalizing all of these proposals.
Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. We proposed to modify scoring on the Person and Community Engagement Domain for the FY 2027 through FY 2029 program years while the updated HCAHPS Survey measure would be publicly reported under the Hospital IQR Program. In addition, we proposed to adopt the updated HCAHPS Survey measure beginning with the FY 2030 program year and modify scoring beginning with the FY 2030 program year to account for the updated HCAHPS Survey measure. We are finalizing these proposals.
Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) hospitals are required to report data on measures selected by the Secretary for a fiscal year in order to receive the full annual percentage increase. In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed several changes to the Hospital IQR Program. We proposed the adoption of seven new measures: (1) Patient Safety Structural measure beginning with the CY 2025 reporting period/FY 2027 payment determination; (2) Age Friendly Hospital measure beginning with the CY 2025 reporting period/FY 2027 payment determination; (3) Catheter-Associated Urinary Tract Infection (CAUTI) Standardized Infection Ratio Stratified for Oncology Locations beginning with the CY 2026 reporting period/FY 2028 payment determination; (4) Central Line-Associated Bloodstream Infection (CLABSI) Standardized Infection Ratio Stratified for Oncology Locations beginning with the CY 2026 reporting period/FY 2028 payment determination; (5) Hospital Harm—Falls with Injury eCQM beginning with the CY 2026 reporting period/FY 2028 payment determination; (6) Hospital Harm—Postoperative Respiratory Failure eCQM beginning with the CY 2026 reporting period/FY 2028 payment determination; and (7) Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue) measure beginning with the July 1, 2023-June 30, 2025 reporting period/FY 2027 payment determination. We also proposed refinements to two measures currently in the Hospital IQR Program measure set: (1) Global Malnutrition Composite Score (GMCS) eCQM, beginning with the CY 2026 reporting period/FY 2028 payment determination; and (2) the HCAHPS Survey beginning with the CY 2025 reporting period/FY 2027 payment determination. In addition, we proposed the removal of five measures: (1) Death Among Surgical Inpatients with Serious Treatable Complications (CMS PSI 04) measure beginning with the July 1, 2023-June 30, 2025 reporting period/FY 27 payment determination; (2) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Acute Myocardial Infarction (AMI) measure beginning with the July 1, 2021-June 30, 2024 reporting period/FY 2026 payment determination; (3) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Heart Failure (HF) measure beginning with the July 1, 2021-June 30, 2024 reporting period/FY 2026 payment determination; (4) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Pneumonia (PN) measure beginning with July 1, 2021-June 30, 2024 reporting period/FY 2026 payment determination, and (5) Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) measure beginning with the April 1, 2021-March 31, 2024 reporting period/FY 2026 payment determination. We are finalizing all of these proposals as proposed with the exception of the Patient Safety Structural measure, which we are finalizing with modifications.
Lastly, we proposed to modify eCQM data reporting and submission requirements by proposing a progressive increase in the number of mandatory eCQMs a hospital would be required to report on beginning with the CY 2026 reporting period/FY 2028 payment determination. We also proposed two changes to current policies related to validation of hospital data: (1) to implement eCQM validation scoring based on the accuracy of eCQM data beginning with the validation of CY 2025 eCQM data affecting the FY 2028 payment determination; and (2) modification of the data validation reconsideration request requirements to make medical records submission optional for reconsideration requests beginning with CY 2023 discharges/FY 2026 payment determination. We are finalizing all of these proposals as proposed with the exception of the proposed progressive increase in the number of mandatory eCQMs, which we are finalizing with modifications.
Section 1866(k)(1) of the Act requires, for purposes of FY 2014 and each subsequent fiscal year, that a hospital described in section 1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH) submit data in accordance with section 1866(k)(2) of the Act with respect to such fiscal year. In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed the following:
• To adopt the Patient Safety Structural measure beginning with the CY 2025 reporting period/FY 2027 program year.
• To modify the HCAHPS Survey measure beginning with the CY 2025 reporting period/FY 2027 program year.
• To move up the start date for publicly displaying hospital performance on the Hospital Commitment to Health Equity measure from July 2026 to January 2026 or as soon as feasible thereafter.
We are finalizing all of these proposals as proposed with the
We proposed and are finalizing the following changes to the LTCH QRP: (1) add four assessment items to the LCDS beginning with the FY 2028 LTCH QRP; (2) modify one item on the LCDS beginning with the FY 2028 LTCH QRP; and (3) extend the admission assessment window for the LCDS from 3 days to 4 days beginning with the FY 2028 LTCH QRP. We also summarize the feedback we received on requests for information in the proposed rule on future measure concepts for the LTCH QRP and a future LTCH Star Rating system.
In section X.F. of the preamble of the proposed rule, we proposed several changes to the Medicare Promoting Interoperability Program. Specifically, we proposed: (1) to separate the Antimicrobial Use and Resistance (AUR) Surveillance measure into two measures, an Antimicrobial Use (AU) Surveillance measure and an Antimicrobial Resistance (AR) Surveillance measure, beginning with the EHR reporting period in CY 2025; to add a new exclusion for eligible hospitals or critical access hospitals (CAHs) that do not have a data source containing the minimal discrete data elements that are required for AU or AR Surveillance reporting; to modify the existing exclusions for the AUR Surveillance measure to apply to the proposed AU Surveillance and AR Surveillance measures, respectively; and to treat the AU Surveillance and AR Surveillance measures as new measures with respect to active engagement beginning with the EHR reporting period in CY 2025; (2) to increase the performance-based scoring threshold for eligible hospitals and CAHs reporting under the Medicare Promoting Interoperability Program from 60 points to 80 points beginning with the EHR reporting period in CY 2025; (3) to adopt two new eCQMs that hospitals can select as one of their three self-selected eCQMs beginning with the CY 2026 reporting period: the Hospital Harm—Falls with Injury eCQM and the Hospital Harm—Postoperative Respiratory Failure eCQM; (4) beginning with the CY 2026 reporting period, to modify one eCQM, the Global Malnutrition Composite Score eCQM; and (5) to modify eCQM data reporting and submission requirements by proposing a progressive increase in the number of mandatory eCQMs eligible hospitals and CAHs would be required to report on beginning with the CY 2026 reporting period. We are finalizing all proposals as proposed, with the exception of our proposals to increase the performance-based scoring threshold for eligible hospitals and CAHs, and to progressively increase the number of mandatory eCQMs required for reporting, which we are finalizing with modification. We are finalizing, with modification, an increase to the performance-based scoring threshold for eligible hospitals and CAHs from 60 points to 70 points for the EHR reporting period in CY 2025 and from 70 points to 80 points beginning with the EHR reporting period in CY 2026, and finalizing, with modification, the regulatory text accordingly. We are also finalizing, with modification, our proposal to increase the eCQM reporting requirements in the Medicare Promoting Interoperability Program for the CY 2026, CY 2027, CY 2028, and subsequent years' reporting periods. Specifically, eligible hospitals and CAHs will be required to report a total of eight eCQMs for the CY 2026 reporting period, a total of nine eCQMs for the CY 2027 reporting period, and a total of eleven eCQMs beginning with the CY 2028 reporting period.
In the proposed rule, we included a proposal to implement section 4122 of the CAA, 2023. Section 4122(a) of the CAA, 2023, amended section 1886(h) of the Act by adding a new section 1886(h)(10) of the Act requiring the distribution of additional residency positions (also referred to as slots) to hospitals. After consideration of public comments, we are finalizing this proposal, with minor modifications. We refer readers to section V.F.2. of the preamble of this final rule for a summary of the provisions of section 4122 of the CAA, 2023 that we are implementing in this final rule.
The Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42), enacted on March 9, 2024, extended the MDH program and the temporary changes to the low-volume hospital qualifying criteria and payment adjustment under the IPPS for a portion of FY 2025. Specifically, section 306 of the CAA, 2024, further extended the modified definition of low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals under section 1886(d)(12) of the Act through December 31, 2024. Section 307 of the CAA, 2024, extended the MDH program under section 1886(d)(5)(G) of the Act through December 31, 2024. Prior to enactment of the CAA, 2024, the low-volume hospital qualifying criteria and payment adjustment were set revert to the statutory requirements that were in effect prior to FY 2011 at the end of FY 2024 and beginning October 1, 2024, the MDH program would have no longer been in effect.
We recognize the importance of these extensions with respect to the goal of advancing health equity by addressing the health disparities that underlie the health system is one of CMS' strategic pillars
As discussed in section X.A. of the preamble of this final rule, we are finalizing the Transforming Episode Accountability Model (TEAM). TEAM will be a 5-year mandatory model tested under the authority of section 1115A of the Act, beginning on January 1, 2026, and ending on December 31, 2030. The intent of TEAM is to improve beneficiary care through financial accountability for episode categories that begin with one of the following procedures: coronary artery bypass graft surgery (CABG), lower extremity joint replacement (LEJR), major bowel procedure, surgical hip/femur fracture treatment (SHFFT), and spinal fusion. TEAM will test whether financial accountability for these episode categories reduces Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries.
Under Traditional Medicare, Medicare makes separate payments to providers and suppliers for the items and services furnished to a beneficiary over the course of an episode of care. Because providers and suppliers are paid for each individual item or service delivered, providers may not be incentivized to invest in quality improvement and care coordination
Under TEAM, all acute care hospitals, with limited exceptions, located within the mandatory Core-Based Statistical Areas (CBSAs) that CMS selected for model implementation will be required to participate in TEAM. CMS will allow a one-time opportunity for hospitals that participate until the last day of the last performance period in the BPCI Advanced model or the last day of the last performance year of the CJR model, that are not located in a mandatory CBSA selected for TEAM participation to voluntarily opt into TEAM.
TEAM participants will continue to bill Medicare FFS as usual but will receive target prices for episodes prior to each performance year. Target prices will be based on 3 years of baseline data, prospectively trended forward to the relevant performance year, and calculated at the level of MS-DRG/HCPCS episode type and region. Target prices will also include a discount factor, normalization factor, retrospective trend adjustment factor, and beneficiary and provider level risk-adjustment. Performance in the model will be assessed by comparing TEAM participants' actual Medicare FFS spending during a performance year to their reconciliation target price as well as by performance on three quality measures. TEAM participants will earn a payment from CMS, subject to a quality performance adjustment, if their spending is below the reconciliation target price. TEAM participants will owe CMS a repayment amount, subject to a quality performance adjustment, if their spending is above the reconciliation target price. In section X.A. of the preamble of this final rule some policies as proposed, and we are finalizing others with modification. There are also certain proposed policies that we are not finalizing, and we will instead go through rulemaking in the future to promulgate new policies before the model start date.
In alignment with the Biden-Harris Administration's commitment to addressing the maternal health crisis, this RFI sought to gather information on differences between hospital resources required to provide inpatient pregnancy and childbirth services to Medicare patients as compared to non-Medicare patients. To the extent that the resources required differ between patient populations, we also wanted to gather information on the extent to which non-Medicare payers, or other commercial insurers may be using the IPPS as a basis for determining their payment rates for inpatient pregnancy and childbirth services and the effect, if any, that the use of the IPPS as a basis for determining payment by those payers may have on maternal health outcomes. We summarize the comments received in section X.C. of the preamble of this final rule.
In section X.F. of the preamble of the proposed rule, we proposed to update the hospital and CAH infection prevention and control and antibiotic stewardship programs conditions of participation (CoPs) to extend a limited subset of the current COVID-19 and influenza data reporting requirements. These proposed reporting requirements ensure that hospitals and CAHs have appropriate insight related to evolving infection control needs. Specifically, we proposed to replace the COVID-19 and Seasonal Influenza reporting standards for hospitals and CAHs with a new standard addressing acute respiratory illnesses to require that, beginning on October 1, 2024, hospitals and CAHs would have to electronically report information about COVID-19, influenza, and RSV. We also proposed that outside of a public health emergency (PHE), hospitals and CAHs would have to report these data on a weekly basis. In section X.F. of the preamble of this final rule, we are finalizing these proposals with revisions.
As discussed in section II.C. of the preamble of this final rule, we are finalizing the proposed change to the severity level designation for the social determinants of health (SDOH) diagnosis codes describing inadequate housing and housing instability from non-complication or comorbidity (NonCC) to complication or comorbidity (CC) for FY 2025. Consistent with our annual updates to account for changes in resource consumption, treatment patterns, and the clinical characteristics of patients, we recognize inadequate housing and housing instability as indicators of increased resource utilization in the acute inpatient hospital setting.
Consistent with the Administration's goal of advancing health equity for all, including members of historically underserved and under-resourced communities, as described in the President's January 20, 2021 Executive Order 13985 on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,”
The following table provides a summary of the costs, transfers, savings, and benefits associated with the major provisions described in section I.A.2. of the preamble of this final rule.
Section 1886(d) of the Act sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to use a prospective payment system (PPS) to pay for the capital-related costs of inpatient hospital services for these “subsection (d) hospitals.” Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located. If the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-living adjustment factor. This base payment rate is multiplied by the DRG relative weight.
If the hospital treats a high percentage of certain low-income patients, it receives a percentage add-on payment applied to the DRG-adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment varies based on the outcome of the statutory calculations. The Affordable Care Act revised the Medicare DSH payment methodology and provides for an additional Medicare payment beginning on October 1, 2013, that considers the amount of uncompensated care furnished by the hospital relative to all other qualifying hospitals.
If the hospital is training residents in an approved residency program(s), it receives a percentage add-on payment for each case paid under the IPPS, known as the indirect medical education (IME) adjustment. This percentage varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. In general, to qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment. In addition, certain transformative new devices and certain antimicrobial products may qualify under an alternative inpatient new technology add-on payment pathway by demonstrating that, absent an add-on payment, they would be inadequately paid under the regular DRG payment.
The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any eligible outlier payment is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology or medical service add-on adjustments and, beginning in FY 2023 for IHS and Tribal hospitals and hospitals located in Puerto Rico, the new supplemental payment.
Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid in whole or in part based on their hospital-specific rate, which is determined from their costs in a base year. For example, sole community hospitals (SCHs) receive the higher of a hospital-specific rate based on their costs in a base year (the highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the standardized amount. SCHs are the sole source of care in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a hospital that is located more than 35 road miles from another hospital or that, by reason of factors such as an isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of hospital inpatient services reasonably available to Medicare beneficiaries. In addition, certain rural hospitals previously designated by the Secretary as essential access community hospitals are considered SCHs.
With the recent enactment of section 307 of the CAA, 2024, under current law, the Medicare-dependent, small rural hospital (MDH) program is effective through December 31, 2024. For discharges occurring on or after October 1, 2007, but before January 1, 2025, an MDH receives the higher of the Federal rate or the Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major source of care for Medicare beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area (or, as amended by the Bipartisan Budget Act of 2018, a hospital located in a State with no rural area that meets certain statutory criteria), has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (not less than 60 percent of its inpatient days or discharges in its cost reporting year beginning in FY 1987 or in two of its three most recently settled Medicare cost reporting years). As section 307 of the CAA, 2024, extended the MDH program through the first quarter of FY 2025 only, beginning on January 1, 2025, the MDH program will no longer be in effect absent a change in law. Because the MDH program is not authorized by statute beyond December 31, 2024, beginning January 1, 2025, all hospitals that previously qualified for MDH status under section 1886(d)(5)(G) of the Act will no longer have MDH status and will be paid based on the IPPS Federal rate.
Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services in accordance with a prospective payment system established by the Secretary. The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital IPPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Capital IPPS payments are also adjusted for IME and DSH, similar to the adjustments made under the operating IPPS. In addition, hospitals may receive outlier payments for those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR part 412, subparts A through M.
Under section 1886(d)(1)(B) of the Act, as amended, certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Inpatient rehabilitation facility (IRF) hospitals and units; long-term care hospitals (LTCHs); psychiatric hospitals and units; children's hospitals; cancer hospitals; extended neoplastic disease care hospitals, and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin
The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413.
The Medicare prospective payment system (PPS) for LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of the Act, effective for cost reporting periods beginning on or after October 1, 2002. The LTCH PPS was established under the authority of sections 123 of the BBRA and section 307(b) of the BIPA (as codified under section 1886(m)(1) of the Act). Section 1206(a) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the site neutral payment rate under the LTCH PPS, which made the LTCH PPS a dual rate payment system beginning in FY 2016. Under this statute, effective for LTCH's cost reporting periods beginning in FY 2016 cost reporting period, LTCHs are generally paid for discharges at the site neutral payment rate unless the discharge meets the patient criteria for payment at the LTCH PPS standard Federal payment rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR part 412, subpart O. Beginning October 1, 2009, we issue the annual updates to the LTCH PPS in the same documents that update the IPPS.
Under sections 1814(l), 1820, and 1834(g) of the Act, payments made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services are generally based on 101 percent of reasonable cost. Reasonable cost is determined under the provisions of section 1861(v) of the Act and existing regulations under 42 CFR part 413.
Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. The amount of payment for direct GME costs for a cost reporting period is based on the hospital's number of residents in that period and the hospital's costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413. Section 1886(d)(5)(B) of the Act provides that prospective payment hospitals that have residents in an approved GME program receive an additional payment for each Medicare discharge to reflect the higher patient care costs of teaching hospitals relative to non-teaching hospitals. The additional payment is based on the indirect medical education (IME) adjustment factor, which is calculated using a hospital's ratio of residents to beds and a multiplier, which is set by Congress. Section 1886(d)(5)(B)(ii)(XII) of the Act provides that, for discharges occurring during FY 2008 and fiscal years thereafter, the IME formula multiplier is 1.35. The regulations regarding the indirect medical education (IME) adjustment are located at 42 CFR 412.105.
Section 4122 of the CAA, 2023, amended section 1886(h) of the Act by adding a new section 1886(h)(10) of the Act requiring the distribution of additional residency positions (also referred to as slots) to hospitals. Section 1886(h)(10)(A) of the Act requires that for FY 2026, the Secretary shall initiate an application round to distribute 200 residency positions. At least 100 of the positions made available under section 1886(h)(10)(A) of the Act shall be distributed for psychiatry or psychiatry subspecialty residency training programs. The Secretary is required, subject to certain provisions in the law, to increase the otherwise applicable resident limit for each qualifying hospital that submits a timely application by the number of positions that may be approved by the Secretary for that hospital. The Secretary is required to notify hospitals of the number of positions distributed to them by January 31, 2026, and the increase is effective beginning July 1, 2026.
In determining the qualifying hospitals for which an increase is provided, section 1886(h)(10)(B)(i) of the Act requires the Secretary to take into account the “demonstrated likelihood” of the hospital filling the positions made available within the first 5 training years beginning after the date the increase would be effective, as determined by the Secretary.
Section 1886(h)(10)(B)(ii) of the Act requires a minimum distribution for certain categories of hospitals. Specifically, the Secretary is required to distribute at least 10 percent of the aggregate number of total residency positions available to each of four categories of hospitals. Stated briefly, and discussed in greater detail later in this final rule, the categories are as follows: (1) hospitals located in rural areas or that are treated as being located in a rural area (pursuant to sections 1886(d)(2)(D) and 1886(d)(8)(E) of the Act); (2) hospitals in which the reference resident level of the hospital is greater than the otherwise applicable resident limit; (3) hospitals in States with new medical schools or additional locations and branches of existing medical schools; and (4) hospitals that serve areas designated as Health Professional Shortage Areas (HPSAs). Section 1886(h)(10)(F)(iii) of the Act defines a qualifying hospital as a hospital in one of these four categories.
Section 1886(h)(10)(B)(iii) of the Act further requires that each qualifying hospital that submits a timely application receive at least 1 (or a fraction of 1) of the residency positions made available under section 1886(h)(10) of the Act before any qualifying hospital receives more than 1 residency position.
Section 1886(h)(10)(C) of the Act places certain limitations on the distribution of the residency positions.
Section 306 of the CAA, 2024, extended through the first 3 months of FY 2025 the modified definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals in effect for FYs 2019 through 2024. Specifically, under section 1886(d)(12)(C)(i) of the Act, as amended, for FYs 2019 through 2024 and the portion of FY 2025 occurring before January 1, 2025, a subsection (d) hospital qualifies as a low-volume hospital if it is more than 15 road miles from another subsection (d) hospital and has less than 3,800 total discharges during the fiscal year. Under section 1886(d)(12)(D) of the Act, as amended, for discharges occurring in FYs 2019 through December 31, 2024, the Secretary determines the applicable percentage increase using a continuous, linear sliding scale ranging from an additional 25 percent payment adjustment for low-volume hospitals with 500 or fewer discharges to a zero percent additional payment for low-volume hospitals with more than 3,800 discharges in the fiscal year.
Section 307 of the CAA, 2024, amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act to provide for an extension of the MDH program through the first 3 months of FY 2025 (that is, through December 31, 2024).
The FY 2025 IPPS/LTCH PPS proposed rule appeared in the May 2, 2024,
The following is a general summary of the changes that we proposed to make:
In section II. of the preamble of the proposed rule, we included the following:
• Proposed changes to MS-DRG classifications based on our yearly review for FY 2025.
• Proposed recalibration of the MS-DRG relative weights.
• A discussion of the proposed FY 2025 status of new technologies approved for add-on payments for FY 2024, a presentation of our evaluation and analysis of the FY 2025 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) Public Law 108-173, obtained in a town hall meeting for applications not submitted under an alternative pathway), and a discussion of the proposed status of FY 2025 new technology applicants under the alternative pathways for certain medical devices and certain antimicrobial products.
• A proposed change to the April 1 cutoff to October 1 for determining whether a technology would be within its 2- to 3-year newness period when considering eligibility for new technology add-on payments, beginning in FY 2026, effective for those technologies that are approved for new technology add-on payments starting in FY 2025 or a subsequent year (as discussed in II.E.8. of the preamble of the proposed rule).
• A proposal that, beginning with new technology add-on payment applications for FY 2026, we will no longer consider a hold status to be an inactive status for the purposes of eligibility for the new technology add-on payment (as discussed in section II.E.9. of the preamble of the proposed rule).
• A proposal that, subject to our review of the new technology add-on payment eligibility criteria, for certain gene therapies approved for new technology add-on payments in the FY 2025 IPPS/LTCH final rule that are indicated and used specifically for the treatment of sickle cell disease (SCD), effective with discharges on or after October 1, 2024, and concluding at the end of the 2- to 3-year newness period for such therapy, we would temporarily increase the new technology add-on payment percentage to 75 percent (as discussed in section II.E.10. of the preamble of the proposed rule).
In section III. of the preamble of the proposed rule, we proposed revisions to the wage index for acute care hospitals and the annual update of the wage data. Specific issues addressed include, but are not limited to, the following:
• Proposed changes in core-based statistical areas (CBSAs) as a result of new OMB labor market area delineations and proposed policies related to the proposed changes in CBSAs.
• The proposed FY 2025 wage index update using wage data from cost reporting periods beginning in FY 2019.
• Calculation, analysis, and implementation of the proposed occupational mix adjustment to the wage index for acute care hospitals for FY 2025 based on the 2022 Occupational Mix Survey.
• Proposed application of the rural, imputed and frontier State floors, and continuation of the low wage index hospital policy.
• Proposed revisions to the wage index for acute care hospitals, based on hospital redesignations and reclassifications under sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
• Proposed adjustment to the wage index for acute care hospitals for FY 2025 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index.
• Proposed labor-related share for the FY 2025 wage index.
In section IV. of the preamble of this proposed rule, we discuss the following:
• Proposed calculation of Factor 1 and Factor 2 of the uncompensated care payment methodology.
• Proposed methodological approach for determining Factor 3 of the uncompensated care payment for FY 2025, which is the same methodology that was used for FY 2024.
• Proposed methodological approach for determining the amount of interim uncompensated care payments using the average of the most recent 3 years of discharge data.
In section V. of the preamble of the proposed rule, we discussed proposed changes or clarifications of a number of the provisions of the regulations in 42 CFR parts 412 and 413, including the following:
• Proposed inpatient hospital update for FY 2025.
• Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status and clarification of the qualification under the discharge criterion for osteopathic hospitals.
• Proposed implementation of the statutory extension of the temporary changes to the low-volume hospital payment adjustment through December 31, 2024, the statutory expiration beginning January 1, 2025, and the proposed payment adjustments for low-volume hospitals for FY 2025.
• Proposed implementation of the statutory extension of the MDH program through December 31, 2024, and the statutory expiration beginning January 1, 2025.
• A proposal to implement a provision of the Consolidated Appropriations Act relating to payments to hospitals for GME and IME costs, proposed direct graduate medical education (DGME) and IME policy modifications to the criteria for new residency programs; technical fixes to the DGME regulations; and a notice of closure of two teaching hospitals and opportunities to apply for available slots and a reminder of CBSA changes and application to GME policies.
• Proposed nursing and allied health education program Medicare Advantage (MA) add-on rates and direct GME MA percent reductions for CY 2023.
• Proposed update to the payment adjustment for certain clinical trial and expanded access use immunotherapy cases.
• Proposed separate IPPS payment for establishing and maintaining access to essential medicines.
• Proposed update to the estimate of the financial impacts for the FY 2025 Hospital Readmissions Reduction Program.
• Proposed modifications to the scoring of the Person and Community Engagement Domain in the Hospital VBP Program.
++ For the FY 2027 through FY 2029 program years to only score on six unchanged dimensions of the HCAHPS Survey.
++ Beginning with the FY 2030 program year to account for the proposed updated HCAHPS Survey.
• Updating the proposed estimate of the financial impacts for the FY 2025 Hospital-Acquired Conditions Reduction Program.
• Discussion of and proposed changes relating to the implementation of the Rural Community Hospital Demonstration Program in FY 2025.
In section VI. of the preamble of the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2025.
In section VII. of the preamble of the proposed rule, we discussed the following:
• Proposed changes to payments to certain excluded hospitals for FY 2025.
• Proposed continued implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration.
In section VIII. of the preamble of the proposed rule, we proposed to rebase and revise the LTCH market basket to reflect a 2022 base year, which includes a proposed update to the LTCH PPS labor-related share. In section VIII. of the preamble of the proposed rule, we set forth proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2025. We also proposed a technical clarification to the regulations for hospitals seeking to be classified as an LTCH.
In section IX. of the preamble of the proposed rule, we addressed the following:
• Solicitation of comment on adopting measures across the hospital quality reporting and value-based purchasing programs which capture more forms of unplanned post-acute care and encourage hospitals to improve discharge processes.
• Proposed changes to the requirements for the Hospital IQR Program.
• Proposed changes to the requirements for the PCHQR Program.
• Proposed adoption of the Patient Safety Structural measure in the Hospital IQR Program and the PCHQR Program.
• Proposed updated HCAHPS Survey measure in the Hospital IQR Program, PCHQR Program, and Hospital VBP Program.
• Proposed changes to the requirements for the LTCH QRP, and requests for information on future measure concepts for the LTCH QRP and a star rating system for the LTCH QRP.
• Proposed changes to requirements pertaining to eligible hospitals and CAHs participating in the Medicare Promoting Interoperability Program.
Section X. of the preamble of the proposed rule includes the following:
• Proposed implementation of TEAM that would test whether an episode-based pricing methodology linked with accountability for quality measure performance for select acute care hospitals reduces Medicare program expenditures while preserving or improving the quality of care for Medicare beneficiaries.
• Proposed changes to permit a Provider Reimbursement Review Board (PRRB) member to serve up to 3 consecutive terms (9 consecutive years total), and up to 4 consecutive terms (12 consecutive years total) in cases where a PRRB Member who, in their second or third consecutive term, is designated as Chairperson, to continue serving as Chairperson in the fourth consecutive term.
• Solicitation of comments to gather information on differences between hospital resources required to provide inpatient pregnancy and childbirth services to Medicare patients as compared to non-Medicare patients.
• Solicitation of comments to gather information on potential solutions that can be implemented through the hospital CoPs to address well-documented concerns regarding maternal morbidity, mortality, disparities, and maternity care access in the United States. See the calendar year (CY) 2025 Outpatient Prospective Payment System (OPPS) proposed rule (89 FR XXXXX) for more information about this RFI.
• Proposal to remove the exclusion of Puerto Rico from the Payment Error Rate Measurement (PERM) program found at 42 CFR 431.954(b)(3).
• Proposal for a new hospital CoP to replace the COVID-19 and Seasonal Influenza reporting standards for
Section XI.A. of the preamble of the proposed rule includes our discussion of the MedPAC Recommendations.
Section XI.B. of the preamble of the proposed rule includes a descriptive listing of the public use files associated with this proposed rule.
Section XII. of the preamble of the proposed rule includes the collection of information requirements for entities based on our proposals.
Section XIII. of the preamble of the proposed rule includes information regarding our responses to public comments.
In sections II. and III. of the Addendum of the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2025 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We proposed to establish the threshold amounts for outlier cases. In addition, in section IV. of the Addendum of the proposed rule, we addressed the proposed update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2025 for certain hospitals excluded from the IPPS.
In section V. of the Addendum of the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2025 LTCH PPS standard Federal payment rate and other factors used to determine LTCH PPS payments under both the LTCH PPS standard Federal payment rate and the site neutral payment rate in FY 2025. We proposed to establish the adjustments for the wage index (including proposed changes to the LTCH PPS labor market area delineations based on the new OMB delineations), labor-related share, the cost-of-living adjustment, and high-cost outliers, including the applicable fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both payment rates.
In Appendix A of the proposed rule, we set forth an analysis of the impact the proposed changes would have on affected acute care hospitals, CAHs, LTCHs and other entities.
In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2025 for the following:
• A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs of acute care hospitals (and hospital-specific rates applicable to SCHs and MDHs).
• Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by certain hospitals excluded from the IPPS.
• The LTCH PPS standard Federal payment rate and the site neutral payment rate for hospital inpatient services provided for LTCH PPS discharges.
Under section 1805(b) of the Act, MedPAC is required to submit a report to Congress, no later than March 15 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2024 recommendations concerning hospital inpatient payment policies address the update factor for hospital inpatient operating costs and capital-related costs for hospitals under the IPPS. We addressed these recommendations in Appendix B of the proposed rule. For further information relating specifically to the MedPAC March 2024 report or to obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit MedPAC's website at
We received approximately 6,180 timely pieces of correspondence containing multiple comments on the proposed rule that appeared in the May 2, 2024
Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as diagnosis-related groups (DRGs)) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. Therefore, under the IPPS, Medicare pays for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs.
Section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually to account for changes in resource consumption. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources.
For information on the adoption of the MS-DRGs in FY 2008, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189).
For general information about the MS-DRG system, including yearly reviews and changes to the MS-DRGs, we refer readers to the previous discussions in the FY 2010 IPPS/rate year (RY) 2010 LTCH PPS final rule (74 FR 43764 through 43766) and the FYs 2011 through 2023 IPPS/LTCH PPS final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through 56872; 82 FR
For discussion regarding our previously finalized policies (including our historical adjustments to the payment rates) relating to the effect of changes in documentation and coding that do not reflect real changes in case mix, we refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 48799 through 48800).
As of October 1, 2015, providers use the International Classification of Diseases, 10th Revision (ICD-10) coding system to report diagnoses and procedures for Medicare hospital inpatient services under the MS-DRG system instead of the ICD-9-CM coding system, which was used through September 30, 2015. The ICD-10 coding system includes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and Reporting. For a detailed discussion of the conversion of the MS-DRGs to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56789).
As discussed in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28127) and final rule (87 FR 48800 through 48801), beginning with FY 2024 MS-DRG classification change requests, we changed the deadline to request changes to the MS-DRGs to October 20 of each year to allow for additional time for the review and consideration of any proposed updates. We also described the new process for submitting requested changes to the MS-DRGs via a new electronic application intake system, Medicare Electronic Application Request Information System
We note that the burden associated with this information collection requirement is the time and effort required to collect and submit the data in the request for MS-DRG classification changes to CMS. The aforementioned burden is subject to the Paperwork Reduction Act (PRA) of 1995 and approved under OMB control number 0938-1431, and has an expiration date of 09/30/2025.
As noted previously, interested parties had to submit MS-DRG classification change requests for FY 2025 by October 20, 2023. As we have discussed in prior rulemaking, we may not be able to fully consider all of the requests that we receive for the upcoming fiscal year. We have found that, with the implementation of ICD-10, some types of requested changes to the MS-DRG classifications require more extensive research to identify and analyze all of the data that are relevant to evaluating the potential change. In the proposed rule, we noted those topics for which further research and analysis
As discussed in the proposed rule, we received four requests to modify the GROUPER logic in a number of cardiac MS-DRGs under Major Diagnostic Category (MDC) 05 (Diseases and Disorders of the Circulatory System). Specifically, we received requests to:
• Modify the GROUPER logic of new MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures) to be defined by cases reporting procedure codes describing a single open mitral or aortic valve replacement/repair (MVR or AVR) procedure, plus an open coronary artery bypass graft procedure (CABG) or open surgical ablation or cardiac catheterization procedure plus a second concomitant procedure.
• Modify the GROUPER logic of new MS-DRG 212 by redefining the procedure code list that describes the performance of a cardiac catheterization by either removing the ICD-10-PCS codes that describe plain radiography of coronary artery codes from the logic list or adding ICD-10-PCS procedure codes that involve computed tomography (CT) or magnetic resonance imaging (MRI) scanning using contrast to the list. This requestor also suggested that CMS add ICD-10-PCS procedures codes that describe endovascular valve replacement or repair procedures into the GROUPER logic of MS-DRG 212.
• Modify the GROUPER logic of new MS-DRGs 323, 324, and 325 (Coronary Intravascular Lithotripsy with Intraluminal Device with MCC, without MCC, and without Intraluminal Device, respectively). In two separate but related requests, the requestors suggested that we add procedure codes that describe additional percutaneous coronary intervention (PCI) procedures such as percutaneous coronary rotational, laser, and orbital atherectomy to the GROUPER logic of new MS-DRGs 323, 324, and 325.
In the proposed rule, we stated that we appreciated the submissions and related analyses provided by the requestors for our consideration as we reviewed MS-DRG classification change requests for FY 2025; however, we also noted the complexity of the GROUPER logic for these MS-DRGs in connection with these requests requires more extensive analyses to identify and evaluate all of the data relevant to assessing these potential modifications. Specifically, we noted the list of procedure codes that describe the performance of a cardiac catheterization is in the definition of multiple MS-DRGs in MDC 05. Analyzing the impact of revising this list would necessitate evaluating the impact across numerous other MS-DRGs in MDC 05 that also include this list in their definition, in addition to new MS-DRG 212. Secondly, as discussed further in section II.C.4.c. of the preamble of the proposed rule, we stated that our analysis continues to indicate that, when performed, open cardiac valve replacement and supplement procedures are clinically different from endovascular cardiac valve replacement and supplement procedures in terms of technical complexity and hospital resource use. Lastly, as we have stated in prior rule making (88 FR 58708), atherectomy is distinct from coronary lithotripsy in that each of these procedures are defined by clinically distinct definitions and objectives. Additional analysis to assess for unintended consequences across the classification is needed as we have made a distinction between the root operations used to describe atherectomy (Extirpation) and the root operation used to describe lithotripsy (Fragmentation) in evaluating other requests in rulemaking. We stated we will need to consider the application of these two root operations in other scenarios where we have also specifically stated that Extirpation is not the same as Fragmentation and do not warrant similar MS-DRG assignment (85 FR 58572 through 58573). Furthermore, as MS-DRG 212 and MS-DRGs 323, 324, and 325 recently became effective on October 1, 2023 (FY 2024), we stated additional time is needed to review and evaluate extensive modifications to the structure of these MS-DRGs.
Some commenters were not supportive of the suggestion to assign cases reporting a single AVR or MVR procedure and another concomitant procedure to MS-DRG 212. These commenters stated that assigning cases reporting a single AVR or MVR procedure and another concomitant procedure to MS-DRG 212 would have a significant negative impact on the remaining MS-DRGs, notably MS-DRG 216. Other commenters suggested that CMS consider moving the aortic and mitral valve procedure codes with the root operations of “Creation”, “Release”, “Restriction” and “Supplement,” that are currently listed under the Concomitant Procedures list in the GROUPER logic for MS-DRG 212 in the ICD-10 MS-DRG Definitions Manual Version 41.1 to the appropriate logic list of aortic valve or mitral valve procedures. This commenter stated that procedure codes with these other root operations also represent types of valvular repairs and should be included on the aortic valve procedures and mitral valve procedures logic lists rather than the “Concomitant Procedure” logic list. A few commenters urged CMS to devise a broader, more inclusive, supplemental payment mechanism to facilitate incremental payment when
In regard to the request to modify the GROUPER logic of new MS-DRGs 323, 324, and 325 (Coronary Intravascular Lithotripsy with Intraluminal Device with MCC, without MCC, and without Intraluminal Device, respectively), some commenters stated they agreed with CMS' assessment that atherectomy and coronary lithotripsy are mechanistically and clinically distinct. A commenter specifically noted that this distinction is supported by scientific literature and applauded CMS for demonstrating consistency on these questions and awareness of their impact across MDC 05. Other commenters stated they were disappointed that CMS did not propose to modify MS-DRGs 323, 324, and 325 to add procedure codes describing complex PCI procedures, including percutaneous coronary atherectomy procedures for FY 2025. A commenter stated that they offer a broad portfolio of products across the percutaneous coronary intervention space and believe they can provide additional input and data for consideration that would be helpful to CMS in evaluating potential modifications to the GROUPER logic to include orbital atherectomy procedures in the newly created MS-DRGs. Another commenter noted that the pipeline for additional technologies in the atherectomy family is expanding and recommended that CMS undertake an analysis of all ICD-10-PCS codes for atherectomy. A commenter questioned if Extirpation was the appropriate root operation to describe rotational and orbital atherectomy, as in their view, the procedures themselves are not removing calcified material. This commenter stated that in prior rulemaking CMS has stated procedures such as rotational and orbital atherectomy are reported with the root operation Extirpation because both techniques cut up the calcified material into small particles that are removed from the blood stream by the normal hemofiltration process and noted that in lithotripsy procedures, which are reported with the root operation Fragmentation, the normal hemofiltration process also removes the fragmented calcified material from the blood stream and suggested that CMS reconsider the root operation of atherectomy procedures as Fragmentation rather than Extirpation.
As discussed in the proposed rule, as we continue the analysis of the claims data with respect to MS-DRGs in MDC 05, we welcome public comments and feedback on other factors that should be considered in the potential restructuring of these MS-DRGs. Feedback and other suggestions may be directed to MEARIS
As we did for the FY 2024 IPPS/LTCH PPS proposed rule, for the FY 2025 IPPS/LTCH PPS proposed rule we provided a test version of the ICD-10 MS-DRG GROUPER Software, Version 42, so that the public can better analyze and understand the impact of the proposals included in the proposed rule. We noted that this test software reflected the proposed GROUPER logic for FY 2025. Therefore, it included the new diagnosis and procedure codes that are effective for FY 2025 as reflected in Table 6A.—New Diagnosis Codes—FY 2025 and Table 6B.—New Procedure Codes—FY 2025 that were associated with the proposed rule, and does not include the diagnosis codes that are invalid beginning in FY 2025 as reflected in Table 6C.—Invalid Diagnosis Codes—FY 2025, and Table 6D.—Invalid Procedure Codes—FY 2025 associated with the proposed rule. Those tables were not published in the Addendum to the proposed rule, but are available on the CMS website at:
We noted in the proposed rule that in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58764), as discussed in the CY 2024 Outpatient Prospective Payment System and Ambulatory Surgical Center (OPPS/ASC) proposed rule (CY 2024 OPPS/ASC proposed rule) (88 FR 49552, July 31, 2023), we stated that, consistent with the process that is used for updates to the “Integrated” Outpatient Code Editor (I/OCE) and other Medicare claims editing systems, we proposed to address any future revisions to the IPPS Medicare Code Editor (MCE), including any additions or deletions of claims edits, as well as the addition or deletion of ICD-10 diagnosis and procedure codes to the applicable MCE edit code lists, outside of the annual IPPS rulemakings. As discussed in the CY 2024 OPPS/ASC proposed rule, we proposed to remove discussion of the IPPS MCE from the annual IPPS rulemakings, beginning with the FY 2025 rulemaking, and to generally address future changes or updates to the MCE through instruction to the
As also discussed in the proposed rule, in the CY 2024 OPPS/ASC final rule (88 FR 82121 through 82124), after consideration of the public comments we received, we finalized the proposal to remove discussion of the MCE from the annual IPPS rulemakings, beginning with FY 2025 rulemaking, and to generally address future changes or updates to the MCE through instruction to the MACs. We also stated that, beginning with FY 2025, in association with the annual proposed rule, we are making available a draft version of the Definitions of Medicare Code Edits (MCE) Manual to provide the public with an opportunity to review any changes that will become effective October 1 for the upcoming fiscal year. In addition, as a result of new and modified code updates approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting, any further changes to the MCE will be reflected in the finalized Definitions of Medicare Code Edits (MCE) Manual, made available in association with the annual final rule. As such, we made available the draft FY 2025 ICD-10 MCE Version 42 Manual file on the CMS website at:
We noted in the proposed rule that the MCE manual is comprised of two chapters:
The commenters stated that the draft version of the Definitions of Medicare Code Edits (MCE) Manual file made available in association with the proposed rule is a helpful reference, however revisions should be explicitly stated as proposed revisions or additions for consideration. According to the commenters, as currently written, the changes are not listed as proposals within the manual and are implied as changes that have already been decided and will be effective with the upcoming fiscal year. Another commenter expressed appreciation that CMS stated it will make available a draft version of the Definitions of Medicare Code Edits (MCE) Manual file in association with the annual proposed rule to provide the public with an opportunity to review any changes that will become effective October 1 for the upcoming fiscal year. However, the commenter also stated that it is difficult to identify the changes in the draft version of the MCE Manual and recommended that CMS provide a list of the draft MCE changes each year (including any additions or deletions of diagnosis or procedure codes or MCE edits).
We noted in the proposed rule, and as previously described in this final rule, that the MCE manual is comprised of two chapters:
As discussed in prior rulemaking (88 FR 58764), as a result of new and modified code updates approved after the annual spring ICD-10 Coordination
Therefore, although we published, and will continue to publish, the edit code list changes in the “draft version” of the MCE manual, because discussion of the MCE has been removed from IPPS rulemakings, beginning with FY 2025 rulemaking as previously described, the edit code lists that appear in the “draft version” of the MCE manual in association with the proposed rule are considered final at the time of the development of the proposed rule. While the public may continue to submit any questions, comments, concerns, or recommendations regarding the MCE to the CMS mailbox at
In summary, we thank the commenters for their views and feedback. Because we finalized the proposal to remove discussion of the MCE from the annual IPPS rulemakings beginning with FY 2025 rulemaking, the public may submit any future questions, comments, concerns, or recommendations regarding the MCE to the CMS mailbox at
In association with the proposed rule, we made available the test version of the ICD-10 MS-DRG GROUPER Software, Version 42, the draft version of the ICD-10 MS-DRG Definitions Manual, Version 42, the draft version of the Definitions of Medicare Code Edits Manual, Version 42, and the supplemental mapping files in Table 6P.1a and 6P.1b of the FY 2024 and FY 2025 ICD-10-CM diagnosis and ICD-10-PCS procedure codes which are available at
Following are the changes that we proposed to the MS-DRGs for FY 2025. We invited public comments on each of the MS-DRG classification proposed changes, as well as our proposals to maintain certain existing MS-DRG classifications discussed in the proposed rule. In some cases, we proposed changes to the MS-DRG classifications based on our analysis of claims data and clinical appropriateness. In other cases, we proposed to maintain the existing MS-DRG classifications based on our analysis of claims data and clinical appropriateness. As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2023 update of the FY 2023 MedPAR file, which contains hospital bills received from October 1, 2022, through September 30, 2023. In our discussion of the proposed MS-DRG reclassification changes, we referred to these claims data as the “September 2023 update of the FY 2023 MedPAR file.”
As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modifications to the MS-DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients represented in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay and rely on clinical factors to determine whether patients are clinically distinct or similar to other patients represented in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58448), we finalized our proposal to expand our existing criteria to create a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS-DRG. Specifically, we finalized the expansion of the criteria to include the NonCC subgroup for a three-way severity level split. We stated we believed that applying these criteria to the NonCC subgroup would better reflect resource stratification as well as promote stability in the relative weights by avoiding low volume counts for the NonCC level MS-DRGs. We noted that in our analysis of MS-DRG classification requests for FY 2021 that were received by November 1, 2019, as well as any additional analyses that were conducted in connection with those requests, we applied these criteria to each of the MCC, CC, and NonCC subgroups. We also noted that the application of the NonCC subgroup criteria going forward may result in modifications to certain MS-DRGs that are currently split into three severity levels and result in MS-DRGs that are split into two severity levels. We stated that any proposed modifications to the MS-DRGs would be addressed in future rulemaking consistent with our annual process and reflected in Table 5—Proposed List of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay for the applicable fiscal year.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798), we finalized a delay in applying this technical criterion to existing MS-DRGs until FY 2023 or future rulemaking, in light of the public health emergency (PHE). Interested parties recommended that a complete analysis of the MS-DRG changes to be proposed for future rulemaking in connection with the expanded three-way severity split criteria be conducted and made available to enable the public an opportunity to review and consider the redistribution of cases, the impact to the relative weights, payment rates, and hospital case mix to allow meaningful comment prior to implementation.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48803), we also finalized a delay in application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split in light of the ongoing PHE and until such time additional analyses can be performed to assess impacts, as discussed in response to public comments in the FY 2022 and FY 2023 IPPS/LTCH PPS final rules.
In association with our discussion of application of the NonCC subgroup criteria in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26673 through 26676), we provided an alternate test version of the ICD-10 MS-DRG GROUPER Software, Version 41.A, reflecting the proposed GROUPER logic for FY 2024 as modified by the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split, available at
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58655 through 58661), we finalized to delay the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2024. We stated that we would continue to review and consider the feedback we had received in response to the additional information we made available in association with the FY 2024 IPPS/LTCH PPS proposed rule for our development of the FY 2025 proposed rule.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35950), we noted that the IPPS Payment Impact File made available in connection with our annual IPPS rulemakings includes information used to categorize hospitals by various geographic and special payment consideration groups, including geographic location (urban or rural), teaching hospital status (that is, whether or not a hospital has GME residency programs and receives an IME adjustment), DSH hospital status (that is, whether or not a hospital receives Medicare DSH payments), special payment groups (that is, SCHs, MDHs, and RRCs) and other categories reflected in the impact analysis generally shown in Appendix A of the annual IPPS rulemakings. The IPPS Payment Impact File associated with the FY 2024 IPPS/LTCH PPS final rule can be found on the CMS website at:
We proposed to continue to delay application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025, as we continue to consider the public comments received in response to the FY 2024 rulemaking. In addition, we encouraged interested parties to review the impacts and other information made available with the alternate test software (V41.A) and other additional files provided in connection with the FY 2024 IPPS/LTCH PPS proposed rule, as previously discussed, and stated that we continue to welcome feedback for consideration for future rulemaking.
We note that we did not propose to apply the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025. Moreover, as noted, we are continuing to consider comments received in response to FY 2024 rulemaking.
After consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to delay the application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025 as we continue to consider the public comments received in response to the FY 2024 rulemaking. We also continue to encourage interested parties to review the impacts and other information made available with the alternate test software (V41.A) and other additional files provided in connection with the FY 2024 IPPS/LTCH PPS proposed rule, as previously discussed. We continue to welcome feedback for consideration for future rulemaking that may be directed to MEARIS
As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58661), we continue to apply the criteria to create subgroups, including application of the NonCC subgroup criteria, in our annual analysis of MS-DRG classification requests, consistent with our approach since FY 2021 when we finalized the expansion of the criteria to include the NonCC subgroup for a three-way severity level split. Accordingly, in our analysis of the MS-DRG classification requests for FY 2025 that we received by October 20, 2023, as well as any additional analyses that were conducted in connection with those requests, we applied these criteria to each of the MCC, CC, and NonCC subgroups, as described in the following table.
In general, once the decision has been made to propose to make further modifications to the MS-DRGs as described previously, such as creating a new base MS-DRG, or in our evaluation of a specific MS-DRG classification request to split (or subdivide) an existing base MS-DRG into severity levels, all five criteria must be met for the base MS-DRG to be split (or subdivided) by a CC subgroup. We note that in our analysis of requests to create a new MS-DRG, we typically evaluate the most recent year of MedPAR claims data available. For example, we stated earlier that for the FY 2025 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2023 update of the FY 2023 MedPAR file. However, in our evaluation of requests to split an existing base MS-DRG into severity levels, as noted in prior rulemaking (80 FR 49368), we typically analyze the most recent two years of data. This analysis includes two years of MedPAR claims data to compare the data results from one year to the next to avoid making determinations about whether additional severity levels are warranted based on an isolated year's data fluctuation and also, to validate that the established severity levels within a base MS-DRG are supported. The first step in our process of evaluating if the creation of a new CC subgroup within a base MS-DRG is warranted is to determine if all the criteria is satisfied for a three-way split. In applying the criteria for a three-way split, a base MS-DRG is initially subdivided into the three subgroups: MCC, CC, and NonCC. Each subgroup is then analyzed in relation to the other two subgroups using the volume (Criteria 1 and 2), average cost (Criteria 3 and 4), and reduction in variance (Criteria 5). If the criteria fail, the next step is to determine if the criteria are satisfied for a two-way split. In applying the criteria for a two-way split, a base MS-DRG is initially subdivided into two subgroups: “with MCC” and “without MCC” (1_23) or “with CC/MCC” and “without CC/MCC” (12_3). Each subgroup is then analyzed in relation to the other using the volume (Criteria 1 and 2), average cost (Criteria 3 and 4), and reduction in variance (Criteria 5). If the criteria for both of the two-way splits fail, then a split (or CC subgroup) would generally not be warranted for that base MS-DRG. If the three-way split fails on any one of the five criteria and all five criteria for both two-way splits (1_23 and 12_3) are met, we would apply the two-way split with the highest R2 value. We note that if the request to split (or subdivide) an existing base MS-DRG into severity levels specifies the request is for either one of the two-way splits (1_23 or 12_3), in response to the specific request, we will evaluate the criteria for both of the two-way splits; however, we do not also evaluate the criteria for a three-way split.
We are making the FY 2025 ICD-10 MS-DRG GROUPER and Medicare Code Editor (MCE) Software Version 42, the ICD-10 MS-DRG Definitions Manual files Version 42 and the Definitions of Medicare Code Edits Manual Version 42 available to the public on our CMS
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35951 through 35952), we discussed a request we received to revise the title of Pre-MDC MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies) in connection with an ICD-10-PCS procedure code request that was submitted via MEARIS
Because the diagnosis and procedure code proposals that are presented at the March ICD-10-CM Coordination and Maintenance Committee meeting for an October 1 implementation (upcoming FY) are not finalized in time to include in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes in association with the proposed rule, as we have noted in prior rulemaking, we use our established process to examine the MS-DRG assignment for the predecessor codes to determine the most appropriate MS-DRG assignment. Specifically, we review the predecessor code and MS-DRG assignment most closely associated with the new procedure code, and in the absence of claims data, we consider other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We have noted in prior rulemaking that this process does not automatically result in the new procedure code being assigned to the same MS-DRG or to have the same designation (O.R. versus Non-O.R.) as the predecessor code. Under this established process, the MS-DRG assignment for the upcoming fiscal year for any new diagnosis or procedure codes finalized after the March meeting would be reflected in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes associated with the final rule for that fiscal year. Accordingly, we stated that the MS-DRG assignment for any new procedure codes describing PZ, if finalized following the March meeting, would be reflected in Table 6B.—New Procedure Codes associated with the final rule for FY 2025. As noted in prior rulemaking (87 FR 28135), the codes that are finalized after the March meeting are specifically identified with a footnote in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes that are made publicly available in association with the final rule on the CMS website at
We note that the proposal to create new procedure codes that describe the application of PZ as discussed at the March 19-20, 2024, ICD-10 Coordination and Maintenance Committee meeting was approved and finalized as reflected in the FY 2025 ICD-10-PCS Code Update files that were made publicly available on the CMS website on June 5, 2024 at
We stated in the proposed rule that we did not agree with the request to revise the title for Pre-MDC MS-DRG 018 for FY 2025 as requested because the logic for Pre-MDC MS-DRG 018 is intended to include other immunotherapies and is not restricted to CAR T-cell and autologous gene and cell therapies. As discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798 through 44806), we finalized our proposal to revise the title of Pre-MDC MS-DRG 018 to include “Other Immunotherapies” to better reflect the cases reporting the administration of non-CAR T-cell therapies and other immunotherapies that would also be assigned to this MS-DRG, in addition to CAR T-cell therapies. We noted that the term “Other Immunotherapies” is intended to encompass the group of therapies that are currently available and being utilized today (for which codes have been created for reporting in response to industry requests or are being considered for implementation), and to enable appropriate MS-DRG assignment for any future therapies that may also fit into this category and are not specifically identified as a CAR T-cell product, that may become available (for example receive marketing authorization or a newly established procedure code in the ICD-10-PCS classification).
In the proposed rule we also noted that, as discussed in prior rulemaking, this category of therapies continues to evolve, and we are in the process of carefully considering the feedback we have previously received about ways in which we can continue to appropriately reflect resource utilization while maintaining clinical coherence and stability in the relative weights under the IPPS MS-DRGs. We stated we will continue to examine these complex issues in connection with future rulemaking and acknowledged that there may be distinctions to account for as we continue to gain more experience in the use of these therapies and have additional claims data to analyze.
Therefore, we did not propose to revise the title for Pre-MDC MS-DRG 018 to reflect “Chimeric Antigen Receptor (CAR) T and Other Autologous Gene and Cell Therapies” and proposed to maintain the existing title to Pre-MDC MS-DRG 018, “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” for FY 2025.
Another commenter stated that if CMS were to continue to assign new, higher volume, lower cost therapies to MS-DRG 018, it could potentially distort the relative weight of the MS-DRG, resulting in inadequate payment for CAR T-cell therapies. This commenter also recommended that CMS not map cases reporting application of PZ to Pre-MDC MS-DRG 018 due to clinical resource differences with other therapies currently mapped to Pre-MDC MS-DRG 018. The commenter further stated that given the important role CAR T-cell therapies play, and will continue to play for cancer patients, CMS should clarify its methodology for the inclusion of new procedure codes within Pre-MDC MS-DRG 018 and consider the resource costs and needs of potential new therapies to this MS-DRG so as not to limit access to current therapies. Other commenters recommended that CMS provide transparency in the assignment of therapies to Pre-MDC MS-DRG 018 to ensure accurate, predictable, and appropriate payment, including consideration of comparable resource use to existing therapies currently mapped to Pre-MDC MS-DRG 018.
Another commenter requested that CMS map the new procedure codes describing application of PZ to Pre-MDC MS-DRG 018, given the clinical characteristics and resource intensity of the gene and cellular therapy. According to the commenter, administration of both autologous CAR T-cell therapies and PZ is initiated through the collection of a sample of the patient's own cells. The commenter stated the cells are then modified as part of a complex and resource intensive process requiring the insertion of a new gene into the patient's own cells before administering them back to the patient. Specifically, the commenter stated that the keratinocyte cells (that is, the most prominent cells in the epidermis) of patients diagnosed with RDEB are collected via a “punch” biopsy procedure and transduced with a functional COL7A1 transgene using a retroviral vector, which is intended to result in adequate expression and secretion of the type VII collagen protein critical to anchoring the epidermis and facilitating wound healing. The commenter stated the transduced cells are then expanded, matured, and processed into sheets through an approximate 25-day process before they can be delivered to the hospital site and applied to the patient. The commenter stated that this process mirrors the CAR T-cell therapy development and administration process, where cells are harvested from the patient's blood, the patient's T-cells are isolated through a leukapheresis procedure, and the T-cells then are transduced with a CAR-encoding viral vector and expanded over an approximate month-long period before being returned to the treatment center for administration to the patient. The commenter also stated that the application of PZ shares other similarities with the technologies currently assigned to Pre-MDC MS-DRG 018, including the need for an inter-disciplinary team of health care personnel, and an extended length of stay following treatment. According to the commenter, from a resource perspective, like other therapies currently assigned to Pre-MDC MS-DRG 018, the main driver of resource utilization for an inpatient stay is the administration of the technology.
We note that historically, in the development of the DRGs, the initial step in the determination of the DRG had been the assignment of the appropriate MDC based on the principal diagnosis, however, beginning with the eighth version of the GROUPER (CMS 8.0), the initial step in DRG assignment was based on the procedure being performed, thus the creation of the Pre-MDC DRGs, where the patient is assigned to these DRGs independent of the MDC of the principal diagnosis. Therefore, while the existing therapies (that is, CAR T-cell and non-CAR T-cell) currently mapped to Pre-MDC MS-DRG 018 may be indicated in the treatment of patients with cancer, the logic for case assignment to Pre-MDC MS-DRG 018 does not preclude the assignment of other therapies indicated in the treatment of patients that do not have a diagnosis of cancer. In our review of the MS-DRG assignment for application of PZ, we recognized that this technology is defined as an investigational genetically engineered autologous cell therapy. We also note that similar to the discussions in prior rulemaking with respect to the difficulty in predicting what the associated costs will be in the future for CAR T-cell and other immunotherapies that remain under development (87 FR 48806), it is also difficult to predict what the associated costs will be in the future for cell and gene therapies that remain under development or in clinical trials.
We further note that, in response to the President's Executive Order 14087, “Lowering Prescription Drug Costs for Americans”, a Cell and Gene Therapy
Until such time additional data becomes available, we believe it is appropriate to map cases reporting the application of PZ to Pre-MDC MS-DRG 018 for FY 2025 based on the information currently available indicating similar utilization of resources for other cases currently mapped to MS-DRG 018 with regard to patients' severity of illness, treatment difficulty, and complexity of service.
In response to concerns that the assignment of new, higher volume, lower cost therapies to MS-DRG 018 could potentially distort the relative weight of the MS-DRG resulting in inadequate payment for CAR T-cell therapies, we note that in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48807), we addressed similar comments and also noted that we provided detailed summaries and responses to these same or similar comments in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798 through 44806). We also refer the reader to the discussion in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36018 through 36020), and in section II.D.2.b. of this final rule, regarding the proposed and finalized relative weight methodology for cases mapping to Pre-MDC MS-DRG 018 effective October 1, 2024, for FY 2025.
After consideration of the public comments we received, we are finalizing our proposal to maintain the existing title to Pre-MDC MS-DRG 018, “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” for FY 2025. We are also finalizing the assignment of the eight procedure codes describing the use of PZ to Pre-MDC MS-DRG 018 as reflected in Table 6B.—New Procedure Codes, in association with this final rule and available on the CMS website at
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58661 through 58667), we discussed a request to reassign cases describing the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain from MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) to MS-DRG 021 (Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with CC) or reassign all cases currently assigned to MS-DRG 023 that involve a craniectomy or a craniotomy with the insertion of device implant and create a new MS-DRG for these cases.
We stated the requestor acknowledged that the relatively low volume of cases that only involve the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain in the claims data was likely not sufficient to warrant the creation of a new MS-DRG. The requestor further stated given the limited options within the existing MS-DRG structure that fit from both a cost and clinical cohesiveness perspective, they believed that MS DRG 021 was the most logical fit in terms of average costs and clinical coherence for reassignment even though, according to the requestor, the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain is technically more complex and involves a higher level of training, extreme precision and sophisticated technology than performing a craniectomy for hemorrhage.
We noted that while our data findings demonstrated the average costs are higher for the cases with a principal diagnosis of epilepsy with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain when compared to all cases in MS-DRG 023, these cases represented a small percentage of the total number of cases reported in this MS-DRG. We stated that while we appreciated the requestor's concerns regarding the differential in average costs for cases describing the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain when compared to all cases in their assigned MS-DRG, we believed additional time was needed to evaluate these cases as part of our ongoing examination of the case logic to the MS-DRGs for craniotomy and endovascular procedures, which are MS-DRG 023, MS-DRG 024 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC), and MS-DRGs 025, 026, and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively).
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48808 through 48820), in connection with our analysis of cases reporting laser interstitial thermal therapy (LITT) procedures performed on the brain or brain stem in MDC 01, we stated we have started to examine the logic for case assignment to MS-DRGs 023 through 027 to determine where further refinements could potentially be made to better account for differences in the technical complexity and resource utilization among the procedures that are currently assigned to those MS-DRGs. We stated that specifically, we were in the process of evaluating procedures that are performed using an open craniotomy (where it is necessary to surgically remove a portion of the skull) versus a percutaneous burr hole (where a hole approximately the size of a pencil is drilled) to obtain access to the brain in the performance of a procedure. We stated we were also reviewing the indications for these procedures, for example, malignant neoplasms versus epilepsy to consider if there may be merit in considering restructuring the current MS-DRGs to better recognize the clinical distinctions of these patient populations in the MS-DRGs.
As part of this evaluation, as discussed in the FY 2024 IPPS/LTCH PPS final rule, we have begun to analyze the ICD-10 coded claims data to determine if the patients' diagnoses, the objective of the procedure performed, the specific anatomical site where the procedure is performed or the surgical approach used (for example, open, percutaneous, percutaneous endoscopic, among others) demonstrates a greater severity of illness and/or increased treatment difficulty as we consider restructuring MS-DRGs 023 through 027, including how to better align the clinical indications with the performance of specific intracranial procedures. We referred the reader to Tables 6P.2b through 6P.2f associated with the FY 2024 IPPS/LTCH PPS proposed rule (available on the CMS website at:
In summary, we stated that while we agreed that neurostimulator cases can have average costs that are higher than the average costs of all cases in their respective MS-DRGs, in our analysis of this issue, it was difficult to detect
In the FY 2024 IPPS/LTCH PPS final rule, we stated we continue to believe that additional time is needed to evaluate these cases as part of our ongoing examination of the case logic for MS-DRGs 023 through 027. As part of our ongoing, comprehensive analysis of the MS-DRGs under ICD-10, we stated we would continue to explore mechanisms to ensure clinical coherence between these cases and the other cases with which they may potentially be grouped. We stated that the data analysis as displayed in Tables 6P.2b through 6P.2f associated with the FY 2024 IPPS/LTCH PPS proposed rule was displayed to provide the public an opportunity to review our examination of the procedures by their approach (open versus percutaneous), clinical indications, and procedures that involve the insertion or implantation of a device and to reflect on what factors should be considered in the potential restructuring of these MS-DRGs. We welcomed further feedback on how CMS should define technical complexity, what factors should be considered in the analysis, and whether there are other data not included in Tables 6P.2b through 6P.2f that CMS should analyze. We also stated we are interested in receiving feedback on where further refinements could potentially be made to better account for differences in the technical complexity and resource utilization among the procedures that are currently assigned to these MS-DRGs.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35952 through 35953), we discussed two comments we received by the October 20, 2023 deadline in response to this discussion in the FY 2024 IPPS/LTCH PPS final rule. A commenter recommended that CMS not use surgical approach (for example, open versus percutaneous) as a factor to reclassify MS-DRGs 023 through 027. The commenter stated whether the opening is created via a drill into the skull percutaneously or through a larger incision in the skull for a craniotomy, both approaches involve the risk of intracranial bleeding, infection, and brain swelling. The commenter further stated they do not support a consideration of the reassignment of the ICD-10-PCS procedure codes describing LITT, currently assigned to MS-DRGs 025 through 027, based on the diagnosis being treated. The commenter stated that the LITT procedure requires the same steps, time, and clinical resources when performed for brain cancer or epilepsy. In the commenter's view, differences in the disease causing the tumors or lesions do not affect the resources used for performing the procedure or the post-operative care for the patient. Lastly, the commenter stated they support the current structure of MS-DRGs 023 and 024 based on an acute complicated principal diagnosis, or chemotherapy implant, or epilepsy with neurostimulator. The commenter stated these diagnoses represent severe complex conditions that require immediate and urgent intervention.
Another commenter stated that the current logic for MS-DRGs 023 through 027 is sufficient and supports the clinical and resource similarities of the procedures reflected in these MS-DRGs. The commenter performed its own analysis and stated they found that realignment based on surgical approach or root operation could create significant new inequities. The commenter recommended that CMS maintain the current logic for MS-DRGs 025 through 027, as making changes could be disruptive to hospitals and create challenges for Medicare beneficiary access to life-saving technologies. The commenter stated they strongly believe that maintaining the current structure provides payment stability and integrity of these procedures over time.
In this final rule, we summarize the additional comments we received in response to this discussion in the FY 2025 IPPS/LTCH PPS proposed rule.
In response to the comments suggesting that CMS allow more time, it is unclear which diagnosis code and which procedure code the commenters were referring to as CMS did not propose to move any codes to MS-DRG 021 in the FY 2025 IPPS/LTCH proposed rule, and the commenters did not specifically identify any ICD-10 codes for CMS to consider.
CMS appreciates the comments submitted in response to the request for feedback in the FY 2024 IPPS/LTCH PPS final rule, as well as the comments submitted in response to the discussion in the FY 2025 IPPS/LTCH PPS proposed rule. As we continue analysis of the claims data with respect to MS-DRGs 023 through 027, we continue to seek public comments and feedback on other factors that should be considered in the potential restructuring of these MS-DRGs. As stated in prior
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35953 through 35956), we received a request to add ICD-10-PCS procedure codes D0Y0CZZ (Intraoperative radiation therapy (IORT) of brain) and D0Y1CZZ (Intraoperative radiation therapy (IORT) of brain stem), to the Chemotherapy Implant logic list in MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator). According to the requestor, intraoperative radiation therapy (IORT) for the brain is always performed as part of the surgery to remove a brain tumor during the same operative episode. The requestor stated that once maximal safe tumor resection is achieved, the tumor cavity is examined for active egress of cerebrospinal fluid or bleeding. Next, intraoperative measurements are made using neuro-navigation or intraoperative imaging such as magnetic resonance imaging (MRI) or computed tomography (CT) to ensure safe distance to organs or tissues at risk, aid in appropriate dose calculation, and selection of proper applicator size. The applicator is then implanted into the tumor cavity and the radiation dose is delivered. The requestor stated that delivery time can be up to 40 minutes and upon completion of the treatment, the source is removed, and the cavity is re-inspected for active egress of cerebrospinal fluid and bleeding.
As discussed in the proposed rule, the requestor stated that currently the ICD-10-PCS procedure codes for excision of a brain tumor, 00B00ZZ (Excision of brain, open approach) and 00B70ZZ (Excision of cerebral hemisphere, open approach) map to both sets of craniotomy MS-DRGs. Specifically, MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) and MS-DRG 024 (Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC), and MS-DRGs 025, 026, and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively). However, the requestor also stated that the procedure codes describing IORT (D0Y0CZZ or D0Y1CZZ) are not listed in the GROUPER logic and do not affect MS-DRG assignment. Therefore, cases reporting a procedure code describing excision of a brain tumor (00B00ZZ or 00B70ZZ) with IORT currently map to MS-DRGs 025, 026, and 027. The requestor suggested that cases reporting a procedure code describing excision of a brain tumor (00B00ZZ or 00B70ZZ) with IORT (D0Y0CZZ or D0Y1CZZ) should map to MS-DRG 023 because of the higher costs associated with the addition of IORT to the excision of brain tumor surgery. According to the requestor, MS-DRG 023 includes complicated craniotomy cases involving the placement of radiological sources and chemotherapy implants. The requestor stated that because IORT involves a full course of radiation therapy delivered directly to the tumor bed via an applicator that is implanted into the tumor cavity during the same surgical session and is clinically similar to two other procedures listed in the Chemotherapy Implant logic list, it should also be included in the Chemotherapy Implant logic list. Specifically, the requestor stated procedure code 00H004Z (Insertion of radioactive element, cesium-131 collagen implant into brain, open approach) and procedure code 3E0Q305 (Introduction of other antineoplastic into cranial cavity and brain, percutaneous approach) also involve the delivery of either radiation or chemotherapy directly after tumor resection. According to the requestor, the resources involved in placing the delivery device are similar for all three procedures and the distinction is that the procedures described by codes 00H004Z and 3E0Q305 involve the insertion of devices that deliver radiation or chemotherapy over a period of time, whereas IORT delivers the entire dose of radiation during the operative session. As such, the requestor asserted that IORT is clinically aligned with the other procedures from a therapeutic and resource utilization perspective.
We noted in the proposed rule that the requestor performed its own analysis using the FY 2022 MedPAR file that was made available in association with the FY 2024 IPPS/LTCH PPS final rule and stated it found fewer than 11 cases reporting IORT in MS-DRGs 025, 026, and 027, with the majority of those cases mapping to MS-DRG 025. According to the requestor, the volume of claims reporting IORT is anticipated to increase as appropriate use of the technology is adopted.
We also noted in the proposed rule that the requestor is correct that currently, the logic for case assignment to MS-DRG 023 includes a Chemotherapy Implant logic list and the procedure codes that identify IORT (D0Y0CZZ and D0Y1CZZ) are not listed in the GROUPER logic and do not affect MS-DRG assignment as the procedures are designated as non-O.R. procedures. The requestor is also correct that cases reporting a procedure code describing excision of a brain tumor (00B00ZZ or 00B70ZZ) with IORT currently map to MS-DRGs 025, 026, and 027. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at:
As discussed in the proposed rule, we analyzed claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 023, 024, 025, 026, and 027 and for cases reporting excision of brain tumor and IORT. We identified claims reporting excision of brain tumor with procedure code 00B00ZZ or 00B70ZZ and identified claims reporting IORT with procedure code D0Y0CZZ or D0Y1CZZ. The findings from our analysis are shown in the following table. We note that there were no cases found to report IORT of brain (D0Y0CZZ) or brain stem (D0Y1CZZ) with excision of brain (00B00ZZ) or excision of cerebral hemisphere (00B70ZZ).
As the data show, there were no cases found to report the use of IORT in the performance of a brain tumor excision; therefore, we are unable to evaluate whether the use of IORT directly impacts resource utilization. For this reason, we proposed to maintain the current structure of MS-DRGs 023, 024,
After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 023, 024, 025, 026, and 027 for FY 2025.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35956 through 35959), we received a request to create a new MS-DRG to better accommodate the costs of concomitant left atrial appendage closure and cardiac ablation for atrial fibrillation in MDC 05 (Diseases and Disorders of the Circulatory System). Atrial fibrillation (AF) is an irregular and often rapid heart rate that occurs when the two upper chambers of the heart experience chaotic electrical signals. AF presents as either paroxysmal (lasting < 7 days), persistent (lasting > 7 day, but less than 1 year), or long standing persistent (chronic)(lasting > 1 year) based on time duration and can increase the risk for stroke, heart failure, and mortality. Management of AF has two primary goals: optimizing cardiac output through rhythm or rate control and decreasing the risk of cerebral and systemic thromboembolism. Among patients with AF, thrombus in the left atrial appendage (LAA) is a primary source for thromboembolism. Left Atrial Appendage Closure (LAAC) is a surgical or minimally invasive procedure to seal off the LAA to reduce the risk of embolic stroke.
According to the requestor, the manufacturer of the WATCHMAN
As discussed in the proposed rule, the requestor identified the following potential procedure code combination that would comprise a concomitant left atrial appendage closure and cardiac ablation procedure: ICD-10-PCS procedure code 02L73DK (Occlusion of left atrial appendage with intraluminal device, percutaneous approach), that identifies the WATCHMAN
We reviewed this request and in the proposed rule noted concerns regarding making proposed MS-DRG changes based on a specific, single technology (the WATCHMAN
Similarly, as noted previously, the requestor identified code 02583ZZ (Destruction of conduction mechanism, percutaneous approach) to describe cardiac ablation. In our review of the ICD-10-PCS classification, in the proposed rule we stated we identified 26 additional ICD-10-PCS codes that describe cardiac ablation that we also examined. The 27 codes we included in our analysis are listed in the following table.
In the ICD-10 MS-DRGs Definitions Manual Version 41.1, for concomitant left atrial appendage closure and cardiac ablation procedures, the GROUPER logic assigns MS-DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with and without MCC, respectively) depending on the presence of any additional MCC secondary diagnoses. We stated in the proposed rule that we examined claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 273 and 274 and compared the results to cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation. Our findings are shown in the following table.
As shown in the table, in MS-DRG 273, we identified a total of 7,250 cases with an average length of stay of 5.4 days and average costs of $35,197. Of those 7,250 cases, there were 80 cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 273 ($70,447 compared to $35,197) and a slightly longer average length of stay (5.8 days compared to 5.4 days). In MS-DRG 274, we identified a total of 47,801 cases with an average length of stay of 1.4 days and average costs of $29,209. Of those 47,801 cases, there were 781 cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 274 ($66,277 compared to $29,209) and a slightly longer average length of stay (1.5 days compared to 1.4 days).
In the proposed rule we stated we reviewed these data and noted, clinically, the management of AF by performing concomitant left atrial appendage closure and cardiac ablation can improve symptoms, prevent stroke, and reduce the risk of bleeding compared with oral anticoagulants. We stated the data analysis clearly shows that cases reporting concomitant left atrial appendage closure and cardiac ablation procedures have higher average costs and slightly longer lengths of stay compared to all the cases in their assigned MS-DRG. For these reasons, we proposed to create a new MS-DRG for cases reporting a LAAC procedure and a cardiac ablation procedure.
As discussed in the proposed rule, to compare and analyze the impact of our suggested modifications, we ran a simulation using the claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 1,723 cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation. We stated we believed the resulting proposed MS-DRG assignment is more clinically homogeneous, coherent and better reflects hospital resource use.
We applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the FY 2025 IPPS/LTCH PPS proposed rule. As shown in the table that follows, a three-way split of the proposed new MS-DRGs failed the criterion that there be at least 500 cases for each subgroup due to low volume. Specifically, for the “with MCC” split, there were only 268 cases in the subgroup.
We noted that we then applied the criteria for a two-way split for the “with CC/MCC” and “without CC/MCC” subgroups and found that the criterion that there be at least a 20% difference in average cost between subgroups could not be met. The following table illustrates our findings.
We also applied the criteria for a two-way split for the “with MCC” and “without MCC” subgroups and found that the criterion that there be at least 500 or more cases in each subgroup similarly could not be met. The criterion that there be at least a 20% difference in average costs between the subgroups also was not met. The following table illustrates our findings.
Therefore, for FY 2025, we did not propose to subdivide the proposed new MS-DRG for cases reporting procedure codes describing concomitant left atrial appendage closure and cardiac ablation into severity levels.
In summary, for FY 2025, taking into consideration that it clinically requires greater resources to perform concomitant left atrial appendage closure and cardiac ablation procedures, we proposed to create a new base MS-DRG for cases reporting a LAAC procedure and a cardiac ablation procedure in MDC 05. The proposed new MS-DRG is proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation). We also proposed to include the nine ICD-10-PCS procedure codes that describe LAAC procedures and the 27 ICD-10-PCS procedure codes that describe cardiac ablation listed previously in the logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for the proposed new MS-DRG.
In response to suggestion that CMS provide insight regarding the difference in case volume between the table which we stated reflects our examination of the claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 273 and 274, compared to the results for cases reporting procedure codes describing concomitant LAAC and cardiac ablation in those MS-DRGs, and the table which we stated illustrated our findings for all 1,723 cases reporting procedure codes describing concomitant LAAC and cardiac ablation, we note that as stated in the proposed rule, for concomitant LAAC and cardiac ablation procedures, the GROUPER logic assigns MS-DRGs 273 or 274 (Percutaneous and Other Intracardiac Procedures with or without MCC, respectively) depending on the presence of any additional MCC secondary diagnoses. Therefore, we focused our examination of claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 273 and 274 and compared the results to cases reporting procedure codes describing concomitant LAAC and cardiac ablation.
While not explicitly stated, assignment to MS-DRGs 273 or 274 is also dependent on the absence of other procedure codes that could affect MS-DRG assignment on the claim. If other procedure codes that could affect MS-DRG assignment are also reported on the claim along with procedure codes describing concomitant left atrial appendage closure and ablation, the MS-DRG assignment can vary depending on the procedure codes reported.
As discussed in section II.C.14. of the preamble of the proposed rule and this final rule, in our proposal to revise the surgical hierarchy for the MS-DRGs in MDC 05, we proposed to sequence proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) above MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC) and below MS-DRGs 231, 232, 233, 234, 235, and 236 (Coronary Bypass with or without PTCA, with or without Cardiac Catheterization or Open Ablation, with and without MCC, respectively). Under this proposal, if procedure codes describing concomitant LAAC and cardiac ablation are reported, the GROUPER logic would assign new MS-DRG 317 in the absence of other procedure codes that could affect MS-DRG assignment to an MS-DRG that would be sequenced higher in the surgical hierarchy than MS-DRG 317 in MDC 05. The table which we stated illustrated our findings for all 1,723 cases reporting procedure codes describing concomitant LAAC and cardiac ablation includes cases that are anticipated to potentially shift or be redistributed as a result of the proposal to 1) create a new base MS-DRG 317 and 2) the proposal to sequence the new MS-DRG above MS-DRG 275 and below MS-DRGs 231, 232, 233, 234, 235, and 236 in MDC 05.
To illustrate these shifts for this final rule, we again analyzed the September 2023 update of the FY 2023 MedPAR file for cases reporting procedure codes describing concomitant LAAC and cardiac ablation. We then examined the redistribution of cases that is anticipated to occur as a result of the proposal to create a new base MS-DRG 317 by processing the claims data from the September 2023 update of the FY 2023 MedPAR file through the ICD-10 MS-DRG GROUPER Version 41 and then processing the same claims data through the ICD-10 MS-DRG GROUPER Version 42 for comparison. The number of cases from this comparison that result in different MS-DRG assignments is the number of the cases that are anticipated to potentially shift or be redistributed. Our findings are shown in the following table.
As stated in the proposed rule and reflected in the previous table, we found 1,723 cases reporting procedure codes describing concomitant LAAC and cardiac ablation that are anticipated to potentially shift or be redistributed into MS-DRG 317. The largest number of cases moving into new MS-DRG 317 are moving out of MS-DRGs 274, 229, 228 and 273. In response to the suggestion that CMS incorporate other MS-DRGs into our analysis, we examined the claims data from the September 2023 update of the FY 2023 MedPAR file to identify the average length of stay and average costs for all cases in MS-DRGs 228, 229, 242, 243, 244, 245, 267, 268, 269, 270, 271, 272, 273, 274, 275, 276, 277, 319, and 320. Our findings are shown in the following table.
In reviewing the data analysis performed, the 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have higher average costs when compared to all the cases in MS-DRGs 228, 229, 273, and 274 ($54,629 versus $44,565, $28,987, $35,197, and $29,209, respectively). The 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRGs 228, 229, and 273 (3.1 days versus 8.7 days, 3.3 days, and 5.4 days, respectively) and a longer average length of stay when compared to all the cases in MS-DRG 274 (3.1 days versus 1.4 days). We note that the 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have lower average costs when compared to all the cases in MS-DRGs 275, 268, and 276 ($54,629 versus $63,181, $59,383, and $54, 993, respectively), however only seven cases reported procedure codes describing concomitant left atrial appendage closure and cardiac ablation in these MS-DRGs. We also note that the 1,723 cases anticipated to potentially shift or be redistributed into MS-DRG 317 have a longer average length of stay when compared to all the cases in MS-DRGs 244, 272, 269, and 267 (3.1 days versus 2.5 days, 2.3 days, 2 days, and 1.5 days, respectively), however only 20 cases reported procedure codes describing concomitant left atrial appendage closure and cardiac ablation in these MS-DRGs. We reviewed these data and believed the proposal to create new base MS-DRG 317 for cases reporting procedure codes describing concomitant LAAC and cardiac ablation in MDC 05 and the proposed revision to the surgical hierarchy leads to a grouping that is more coherent and better reflects the clinical severity and resource use involved in these cases.
We agree that in the ICD-10 MS-DRGs Definitions Manual Version 41.1, the nine ICD-10-PCS procedure codes that describe LAAC procedures are recognized as non-O.R. procedures affecting the MS-DRGs to which they are assigned. We refer the reader to Section II.C.10 in the proposed rule and this final rule for the complete discussion of the designations each ICD-10-PCS code has under the IPPS MS-DRGs that determine whether and in what way the presence of that procedure code on a claim impacts the MS-DRG assignment. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44898 through 44899) we reviewed these nine ICD-10-PCS procedure codes that
We continue to believe that circumstances in which a patient is admitted for a principal diagnosis outside of MDC 05 and LAAC is performed as the only surgical procedure in the same admission are infrequent, and that the current designation of LAAC procedures as non-O.R. procedures that affect the assignment for MS-DRGs 273 and 274, and now MS-DRG 317, is clinically appropriate to account for the subset of patients undergoing left atrial appendage closure specifically.
Similarly, we agree that in the ICD-10 MS-DRGs Definitions Manual Version 41.1, procedure codes 02570ZK, 02573ZK, and 02574ZK are recognized as non-O.R. procedures affecting the MS-DRGs as reflected in the following table, specifically.
We believe that circumstances in which a patient is admitted for a principal diagnosis outside of MDC 05 and a cardiac ablation is performed as the only surgical procedure in the same admission are infrequent, and that the current designation of 02570ZK, 02573ZK, and 02574ZK as non-O.R. procedures that affect the assignment for the MS-DRGs reflected in the previous table, and now MS-DRG 317, is clinically appropriate to account for the subset of patients undergoing cardiac ablation specifically.
As noted previously, atrial fibrillation (AF) is an irregular and often rapid heart rate that occurs when the two upper chambers of the heart experience chaotic electrical signals. Cardiac ablation is a procedure that is performed to correct a disturbance in the conduction system of the heart by damaging small areas of tissue using radiofrequency energy or freezing so that the damaged tissue can no longer generate or conduct electrical impulses. We agree that ablation of the chordae tendineae, which are the strong, fibrous connections between the valve leaflets and the papillary muscles, is not performed to stop abnormal electrical pathways as the cardiac conduction system does not pass through the chordae tendineae.
We examined claims data from the September 2023 update of the FY 2023 MedPAR file to evaluate the frequency with which ablation of the chordae tendineae is reported with left atrial appendage closure, and found one case reporting procedure codes 02590ZZ (Destruction of chordae tendineae, open approach) and 02L70ZK (Occlusion of left atrial appendage, open approach) in MS-DRG 219 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC) with a length of stay of 7 days and costs of $28,989.
We note that assignment of this one case to MS-DRG 219 indicates that other procedure code(s) assigned to the GROUPER logic of MS-DRG 219 were reported in addition to procedure codes 02590ZZ and 02L70ZK to drive assignment to this MS-DRG. We reviewed these data and because our analysis identified only one case reporting ablation of the chordae tendineae and left atrial appendage closure, and recognizing that ablation of the chordae tendineae is not performed to stop abnormal electrical pathways, we agree that procedure codes 02590ZZ, 02593ZZ, and 02594ZZ should be removed from the list of 27 ICD-10-PCS procedure codes that describe cardiac ablation listed previously in the proposed logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for the proposed new MS-DRG.
These commenters noted that cardiac ablation procedures performed with the PulseSelect
We note that irreversible electroporation for cardiac ablation, also referred to as pulsed field ablation, delivers electrical pulses that result in destruction of selected cardiac tissue by irreversibly increasing the porosity of the cell membranes, inducing cell death, and can be used as a treatment for paroxysmal and persistent atrial fibrillation. As a procedure code that also describes the performance of cardiac ablation, we agree that procedure code 02583ZF should be added to the list of ICD-10-PCS procedure codes that describe cardiac ablation listed previously in the proposed logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for the proposed new MS-DRG. In response to the suggestion that CMS continue to evaluate evidence on the safety and efficacy of using this new modality in concomitant procedures before assigning procedure code 02583ZF to new MS-DRG 317, we note that procedure code 02583ZF describes a procedure that is clinically coherent with the other procedure codes proposed for assignment to MS-DRG 317, so it is reasonable that cases reporting procedure code 02583ZF and a procedure code describing LAAC group to the same MS-DRG.
Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to create new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) in MDC 05, with modification, effective October 1, 2024, for FY 2025. Specifically, we are modifying the proposed list of ICD-10-PCS procedure codes that describe cardiac ablation in the Version 42 GROUPER logic of new MS-DRG 317 by removing ICD-10-PCS codes 02590ZZ (Destruction of chordae tendineae, open approach), 02593ZZ (Destruction of chordae tendineae, percutaneous approach), and 02594ZZ (Destruction of chordae tendineae, percutaneous endoscopic approach) and adding ICD-10-PCS procedure code 02583ZF (Destruction of conduction mechanism using irreversible electroporation, percutaneous approach), as discussed previously.
The 25 ICD-10-PCS procedure codes that describe cardiac ablation that we are finalizing in the logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for FY 2025 are listed in the following table. This assignment is reflected in the final Version 42 GROUPER logic.
Table 6B.—New Procedure Codes, associated with this final rule reflects the modification to the MS-DRG assignments for procedure code 02583ZF for FY 2025. We refer the reader to section II.C.13. of the preamble of this final rule for further information regarding the table.
Lastly, we are finalizing the inclusion of the nine ICD-10-PCS procedure codes that describe LAAC procedures listed previously in the logic for assignment of cases reporting a LAAC procedure and a cardiac ablation procedure for new MS-DRG 317, without modification, for FY 2025. We refer the reader to section II.C.15. of the preamble of this final rule for the discussion of the surgical hierarchy and the complete list of our proposed modifications to the surgical hierarchy as well as our finalization of those proposals.
The BAROSTIM
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48837 through 48843), we discussed a request we received to reassign the ICD-10-PCS procedure codes that describe the implantation of the BAROSTIM
In the FY 2023 IPPS/LTCH PPS final rule, we stated that the results of the claims analysis demonstrated we did not have sufficient claims data on which to base and evaluate any proposed changes to the current MS-DRG assignment. We also expressed concern in equating the implantation of a BAROSTIM
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58712 through 58720), we discussed a request we received to add ICD-10-CM diagnosis code R57.0 (Cardiogenic shock) to the list of “secondary diagnoses” that grouped to MS-DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac Catheterization with Acute Myocardial Infarction (AMI), Heart Failure (HF), or Shock with and without MCC, respectively). During our review of the issue, we noted that the results of our claims analysis showed that in procedures involving a cardiac defibrillator implant, the average costs and length of stay were generally similar without regard to the presence of diagnosis codes describing AMI, HF, or shock. We stated we believed that it may no longer be necessary to subdivide MS-DRGs 222, 223, 224, 225, 226, and 227 based on the diagnosis codes reported. After consideration of the public comments we received, and for the reasons stated in the rule, we finalized our proposal to delete MS-DRGs 222, 223, 224, 225, 226, and 227. We also finalized our proposal to create new MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC), new MS-DRG 276 (Cardiac Defibrillator Implant with MCC) and new MS-DRG 277 (Cardiac Defibrillator Implant without MCC) in MDC 05 for FY 2024.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35959 through 35962), we received a similar request to again review the MS-DRG assignment of the ICD-10-PCS procedure codes that describe the implantation of the BAROSTIM
In the proposed rule we noted that the requestor stated the BAROSTIM
The following ICD-10-PCS procedure codes uniquely identify the implantation of the BAROSTIM
We stated in the proposed rule that to analyze this request, we first examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 252, 253, and 254 to identify cases reporting procedure codes describing the implantation of the BAROSTIM
As shown in the table, in MS-DRG 252, we identified a total of 18,964 cases with an average length of stay of 8 days and average costs of $30,456. Of those 18,964 cases, there was one case reporting procedure codes describing the implantation of the BAROSTIM
As stated in the proposed rule, we then examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 275, 276, and 277. Our findings are shown in the following table.
As the table shows, for MS-DRG 275, there were a total of 3,358 cases with an average length of stay of 10.3 days and average costs of $63,181. For MS-DRG 276, there were a total of 3,264 cases with an average length of stay of 8.2 days and average costs of $54,993. For MS-DRG 277, there were a total of 3,840 cases with an average length of stay of 4.2 days and average costs of $42,111.
In exploring mechanisms to address this request, in the proposed rule we noted in total, there were only 23 cases reporting procedure codes describing the implantation of a BAROSTIM
In the proposed rule we further noted, that of the 23 cases reporting procedure codes describing the implantation of a BAROSTIM
As stated in the proposed rule, further analysis of the claims data demonstrated that the 23 cases reporting procedure codes describing the implantation of a BAROSTIM
In the proposed rule we stated we reviewed the clinical issues and the claims data, and while we continue to note that there is no intravascular component or vascular puncture involved when implanting a BAROSTIM
Therefore, for FY 2025, we proposed to reassign all cases with one of the following ICD-10-PCS code combinations capturing cases reporting procedure codes describing the implantation of a BAROSTIM
• 0JH60MZ (Insertion of stimulator generator into chest subcutaneous tissue and fascia, open approach) in combination with 03HK3MZ (Insertion of stimulator lead into right internal carotid artery, percutaneous approach); and
• 0JH60MZ (Insertion of stimulator generator into chest subcutaneous tissue and fascia, open approach) in combination with 03HL3MZ (Insertion of stimulator lead into left internal carotid artery, percutaneous approach).
We also proposed to change the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator” to reflect the proposed modifications to MS-DRG assignments. We refer the reader to section II.C.15. of the preamble of this final rule for the discussion of the surgical hierarchy and the complete list of our proposed modifications to the surgical hierarchy as well as our finalization of those proposals.
After consideration of the public comments we received, we are finalizing our proposal to reassign cases reporting one of the previously listed ICD-10-PCS code combinations describing the implantation of a BAROSTIM
The human heart contains four major valves—the aortic, mitral, pulmonary, and tricuspid valves. These valves function to keep blood flowing through the heart. When conditions such as stenosis or insufficiency/regurgitation occur in one or more of these valves, valvular heart disease may result. Intervention options, including surgical aortic valve replacement or transcatheter aortic valve replacement can be performed to treat diseased or damaged aortic heart valves. Surgical aortic valve replacement (SAVR) is a traditional, open-chest surgery where an incision is made to access the heart. The damaged valve is replaced, and the chest is surgically closed. Since SAVR is a major surgery that involves an incision, recovery time tends to be longer. Transcatheter aortic valve replacement (TAVR) is a minimally invasive procedure that involves a catheter being inserted into an artery, without an incision for most cases, and then guided to the heart. The catheter delivers the new valve without the need for the chest or heart to be surgically opened. Since TAVR is a non-surgical procedure, it is generally associated with a much shorter recovery time.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49892 through 49893), we discussed a request we received to create a new MS-DRG that would only include the various types of cardiac valve replacements performed by an endovascular or transcatheter technique. We reviewed the claims data and stated the data analysis showed that cardiac valve replacements performed by an endovascular or transcatheter technique had a shorter average length of stay and higher average costs in comparison to all of the cases in their assigned MS-DRGs, which were MS-DRGs 216, 217, 218, 219, 220, and 221 (Cardiac Valve & Other Major Cardiothoracic Procedure with and without Cardiac Catheterization, with MCC, with CC, and without CC/MCC, respectively). In the FY 2015 IPPS/LTCH PPS final rule we stated that patients receiving endovascular cardiac valve replacements were significantly different from those patients who undergo an open chest cardiac valve replacement and noted that patients receiving endovascular cardiac valve replacements are not eligible for open chest cardiac valve procedures because of a variety of health constraints, which we stated highlights the fact that peri-operative complications and post-operative morbidity have significantly different profiles for open chest procedures compared with endovascular interventions. We further noted that separately grouping these endovascular valve replacement procedures provides greater clinical cohesion for this subset of high-risk patients. Therefore, we finalized our proposal to create MS-DRGs 266 and 267 (Endovascular Cardiac Valve Replacement, with MCC and without MCC, respectively) for FY 2015.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42080 through 42089), we discussed a request we received to modify the MS-DRG assignment for transcatheter mitral valve repair (TMVR) with implant procedures. We reviewed the claims data and stated based on our data analysis, transcatheter cardiac valve repair procedures and transcatheter (endovascular) cardiac valve replacement procedures are more clinically coherent in that they describe endovascular cardiac valve interventions with implants and were similar in terms of average length of stay and average costs to cases in MS-DRGs 266 and 267 when compared to other procedures in their current MS-DRG assignment. For the reasons described in the rule and after consideration of the public comments we received, we finalized our proposal to modify the structure of MS-DRGs 266 and 267 by reassigning the procedure codes that describe transcatheter cardiac valve repair (supplement) procedures, to revise the title of MS-DRG 266 from “Endovascular Cardiac Valve Replacement with MCC” to “Endovascular Cardiac Valve Replacement and Supplement Procedures with MCC” and to revise the title of MS-DRG 267 from “Endovascular Cardiac Valve Replacement without MCC” to “Endovascular Cardiac Valve Replacement and Supplement Procedures without MCC”, to reflect the finalized restructuring.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35962 through 35966), we received a request to delete MS-DRGs 266 and 267 and to move the cases reporting transcatheter aortic valve replacement or repair (supplement) procedures currently assigned to those MS-DRGs into MS-DRGs 216, 217, 218, 219, 220, and 221. The requestor asserted that under the current IPPS payment methodology, TAVR procedures are not profitable to hospitals and when patients are clinically eligible for both a TAVR and SAVR procedures, factors beyond clinical appropriateness can drive treatment decisions. According to the requestor (the manufacturer of the SAPIEN
As discussed in the proposed rule, the requestor noted that currently surgical cardiac valve replacement and supplement procedures, such as SAVR, are assigned to MS-DRGs 216, 217, 218, 219, 220, and 221, and endovascular cardiac valve replacement and supplement procedures, such as TAVR, are assigned to MS-DRGs 266 and 267. The requestor stated that both sets of MS-DRGs address valve disease and include valve repair or replacement procedures for any of the four heart valves. According to the requestor, while the sets of MS-DRGs involve clinically similar cases their payment rates differ which may be unintentionally influencing clinical decision-making by incentivizing hospitals to choose more invasive SAVR procedures over less-invasive TAVR procedures.
As mentioned earlier, the requestor recommended that CMS delete MS-DRGs 266 and 267 and move the cases reporting transcatheter aortic valve replacement or repair (supplement) procedures currently assigned to those MS-DRGs into MS-DRGs 216, 217, 218, 219, 220, and 221. We stated in the proposed rule that the requestor performed its own analysis and stated that the models of this suggested solution indicated the change would result in moderate differences in per case payments by case type and would
As discussed in the proposed rule, we reviewed this request and noted the requestor was correct that in Version 41.1 cases reporting procedure codes that describe endovascular cardiac valve replacement and supplement procedures, including TAVR, group to MS-DRGs 266 and 267. We stated that the requestor was also correct that cases reporting procedure codes that describe surgical cardiac valve replacement and supplement procedures, including SAVR, group to MS-DRGs 216, 217, 218, 219, 220, and 221. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at:
As discussed in the proposed rule, to begin our analysis, we identified the ICD-10-PCS procedure codes that describe endovascular (transcatheter) cardiac valve replacement and supplement procedures and the ICD-10-PCS procedure codes that describe surgical cardiac valve replacement and supplement procedures. We also identified the ICD-10-PCS codes that describe cardiac catheterization, as MS-DRGs 216, 217, and 218 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively) are defined by the performance of cardiac catheterization. We refer the reader to Table 6P.2a, Table 6P.2b, and Table 6P.2c, respectively, associated with the proposed rule and this final rule (available at:
As discussed in the proposed rule, we then examined the claims data from the September 2023 update of the FY 2023 MedPAR file for all cases in MS-DRGs 216, 217, 218, 219, 220, and 221 and compared the results to cases reporting surgical cardiac valve replacement and supplement procedures in MS-DRG 216, 217, 218, 219, 220, and 221. The following table shows our findings:
As shown in the table, in MS-DRG 216, we identified a total of 5,033 cases with an average length of stay of 13.9 days and average costs of $84,176. Of those 5,033 cases, there were 2,973 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 216 ($87,497 compared to $84,176) and a longer average length of stay (16.8 days compared to 13.9 days). In MS-DRG 217, we identified a total of 1,635 cases with an average length of stay of 7.2 days and average costs of $58,381. Of those 1,635 cases, there were 867 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 217 ($56,829 compared to $58,381) and a longer average length of stay (9.5 days compared to 7.2 days). In MS-DRG 218, we identified a total of 275 cases with an average length of stay of 3.4 days and average costs of $54,624. Of those 275 cases, there were 60 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 218 ($45,096 compared to $54,624) and a longer average length of stay (6.7 days compared to 3.4 days). In MS-DRG 219, we identified a total of 12,458 cases with an average length of stay of 10.5 days and average costs of $67,228. Of those 12,458 cases, there were 9,780 cases reporting surgical cardiac valve replacement and supplement procedures, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 219 ($64,954
Next, as discussed in the proposed rule, we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRGs 266 and 267. Our findings are shown in the following table.
As noted in the proposed rule, because there is a two-way split within MS-DRGs 266 and 267 and there is a three-way split within MS-DRGs 216, 217, and 218, and MS-DRGs 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively), we also analyzed the cases reporting a code describing an endovascular cardiac valve replacement and supplement procedure with a procedure code describing the performance of a cardiac catheterization for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC). We also analyzed the cases reporting a code describing an endovascular cardiac valve replacement and supplement procedure without a procedure code describing the performance of a cardiac catheterization for the presence or absence of a secondary diagnosis designated as a CC or an MCC.
As shown in the table, the data analysis performed indicates that the 5,443 cases in MS-DRG 266 reporting endovascular cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC have an average length of stay that is shorter than the average length of stay (7.9 days versus 16.8 days) and lower average costs ($63,128 versus $87,497) when compared to the cases in MS-DRG 216 reporting surgical cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC. The 4,761 cases in MS-DRG 267 reporting endovascular cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC have an average length of stay that is shorter than the average length of stay (2 days versus 9.5 days) and lower average costs ($42,163 versus $56,829) when compared to the cases in MS-DRG 217 reporting surgical cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an CC. The 1,386 cases in MS-DRG 267 reporting
The 14,493 cases in MS-DRG 266 reporting endovascular cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC have an average length of stay that is shorter than the average length of stay (3.5 days versus 10.3 days) and lower average costs ($50,831 versus $64,954) when compared to the cases in MS-DRG 219 reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC. The 22,996 cases in MS-DRG 267 reporting endovascular cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC have an average length of stay that is shorter than the average length of stay (1.5 days versus 6.4 days) and lower average costs ($43,637 versus $46,245) when compared to the cases in MS-DRG 220 reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an CC. The 7,522 cases in MS-DRG 267 reporting endovascular cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, and without a secondary diagnosis code designated as a CC or MCC have an average length of stay that is shorter than the average length of stay (1.2 days versus 4.9 days) and higher average costs ($42,472 versus $39,081) when compared to the cases in MS-DRG 221 reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization, without a secondary diagnosis code designated as a CC or MCC.
We stated in the proposed rule that this data analysis shows the cases in MS-DRG 266 and 267 reporting endovascular cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization when distributed based on the presence or absence of a secondary diagnosis designated as a CC or a MCC have average costs lower than the average costs of cases reporting surgical cardiac valve replacement and supplement procedures with a procedure code describing the performance of a cardiac catheterization in the FY 2023 MedPAR file for MS-DRGs 216, 217, and 218 respectively, and the average lengths of stay are shorter. Similarly, the cases in MS-DRG 266 and 267 reporting endovascular cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization when distributed based on the presence or absence of a secondary diagnosis designated as a CC or a MCC generally have average costs lower than the average costs of cases reporting surgical cardiac valve replacement and supplement procedures without a procedure code describing the performance of a cardiac catheterization in the FY 2023 MedPAR file for MS-DRGs 219, 220, and 221 respectively, and the average lengths of stay are shorter.
We stated in the proposed rule that for patients with an indication for cardiac valve replacement, clinical and anatomic factors must be considered when decision-making between procedures such as TAVR and SAVR. We noted that SAVR is not a treatment option for patients with extreme surgical risk (that is, high probability of death or serious irreversible complication), severe atheromatous plaques of the ascending aorta such that aortic cross-clamping is not feasible, or with other conditions that would make operation through sternotomy or thoracotomy prohibitively hazardous. We stated that we agreed that the endovascular or transcatheter technique presents a viable option for high-risk patients who are not candidates for the traditional open surgical approach, however we also noted that TAVR is not indicated for every patient. TAVR is contraindicated in patients who cannot tolerate an anticoagulation/antiplatelet regimen, or who have active bacterial endocarditis or other active infections, or who have significant annuloplasty ring dehiscence.
In the proposed rule, we stated we had concern with the assertion that clinicians perform more invasive surgical procedures, such as SAVR procedures, only to increase payment to their facility where minimally invasive TAVR procedures are also viable option. The choice of SAVR versus TAVR should not be based on potential facility payment. Instead, the decision on the procedural approach to be utilized should be based upon an individualized risk-benefit assessment that includes reviewing factors such as the patient's age, surgical risk, frailty, valve morphology, and presence of concomitant valve disease or coronary artery disease. As we have stated in prior rulemaking (83 FR 41201), it is not appropriate for facilities to deny treatment to beneficiaries needing a specific type of therapy or treatment that involves increased costs. Conversely, it is not appropriate for facilities to recommend a specific type of therapy or treatment strictly because it may involve higher payment to the facility.
Also, we stated we had concern with the requestor's assertion that sharing a single set of MS-DRGs could eliminate any perceived disincentives hospitals may face and create financial neutrality between the two lifesaving treatment options. In the proposed rule, we noted that the data analysis shows that cases reporting surgical cardiac valve replacement and supplement procedures have higher costs and longer lengths of stay. We stated that if clinical decision-making is being driven by financial motivations, as suggested by the requestor, in circumstances where the decision on which approach is best (for example, TAVR or SAVR) is left to the providers' discretion, it is unclear how reducing payment for surgical cardiac valve replacement and supplement procedures would eliminate possible disincentives, or not have the opposite effect, and instead incentivize endovascular cardiac valve replacement and supplement procedures.
As discussed in the proposed rule, the MS-DRGs are a classification system intended to group together diagnoses and procedures with similar clinical characteristics and utilization of resources and are not intended to be utilized as a tool to incentivize the performance of certain procedures. When performed, surgical cardiac valve replacement and supplement procedures are clinically different from endovascular cardiac valve replacement and supplement procedures in terms of technical complexity and hospital
As stated in prior rulemaking (88 FR 58730), the MS-DRGs were developed as a patient classification scheme consisting of patients who are similar clinically and with regard to their consumption of hospital resources. While all patients are unique, groups of patients have diagnostic and therapeutic attributes in common that determine their level of resource intensity. Similar resource intensity means that the resources used are relatively consistent across the patients in each MS-DRG. When performed, surgical cardiac valve replacement and supplement procedures are clinically different from endovascular cardiac valve replacement and supplement procedures in terms of technical complexity and hospital resource use. We continue to believe that endovascular cardiac valve replacement and supplement procedures are clinically coherent in their currently assigned MS-DRGs.
As stated earlier, the MS-DRGs are not intended to be utilized as a tool to incentivize the performance of certain procedures. As we have stated in prior rulemaking, we rely on providers to assess the needs of their patients and provide the most appropriate treatment. It is not appropriate for facilities to deny treatment to beneficiaries needing a specific type of therapy or treatment that potentially involves increased costs (86 FR 44847). It would also not be appropriate to consider modifications to the MS-DRG assignment of cases reporting the performance of a specific procedure solely as an incentive for providers to perform one procedure over another.
Therefore, after consideration of the public comments we received, and for the reasons stated earlier, we are finalizing our proposal to maintain the structure of MS-DRGs 266 and 267, without modification, for FY 2025.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35966 through 35968), we discussed a request we received to review the GROUPER logic for MS-DRG 215 (Other Heart Assist System Implant) in MDC 05 (Diseases and Disorders of the Circulatory System). The requestor stated that when the procedure code describing the revision of malfunctioning devices within the heart via an open approach is assigned, the encounter groups to MS-DRG 215. The requestor stated that, in their observation, ICD-10-PCS code 02WA0JZ (Revision of synthetic substitute in heart, open approach) can only be assigned if a more specific anatomical site is not documented in the operative note. The requestor further stated they interpreted this to mean that an ICD-10-PCS procedure code describing the open revision of a synthetic substitute in the heart can only apply to the ventricular wall or left atrial appendage and excludes the atrial or ventricular septum or any valve to qualify for MS-DRG 215 and recommended that CMS consider the expansion of the open revision of heart structures to include the atrial or ventricular septum and heart valves.
In the proposed rule we stated that to begin our analysis, we reviewed the GROUPER logic. We stated that the requestor is correct that ICD-10-PCS procedure code 02WA0JZ is currently one of the listed procedure codes in the GROUPER logic for MS-DRG 215. While the requestor stated that when procedures codes describing the revisions of malfunctioning devices within the heart via an open approach are assigned, the encounter groups to MS-DRG 215, we stated we wished to clarify that the revision codes listed in the GROUPER logic for MS-DRG 215 specifically describe procedures to correct, to the extent possible, a portion of a malfunctioning heart assist device or the position of a displaced heart assist device. Further, we stated it was unclear what was meant by the requestor's statement that ICD-10-PCS code 02WA0JZ can only be assigned if more specific anatomical site is not documented in the operative note, as ICD-10-PCS code 02WA0JZ is used to describe the open revision of artificial heart systems. We noted that total artificial hearts are pulsating bi-ventricular devices that are implanted into the chest to replace a patient's left and right ventricles and can provide a bridge to heart transplantation for patients who have no other reasonable medical or surgical treatment options. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at:
As previously noted, as discussed in the proposed rule, the requestor recommended that we consider expansion of the open revision of heart structures to include the atrial or ventricular septum and heart valves. The requestor did not provide a specific list of procedure codes involving the open revision of heart structures. While not explicitly stated, we stated we understood this request to be for our consideration of the reassignment of the procedure codes describing the open revision of devices in the heart valves, atrial septum, or ventricular septum to MS-DRG 215, therefore, we stated we reviewed the ICD-10-PCS classification and identified the following 18 procedure codes. These 18 codes are all assigned to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively) in MDC 05 in Version 41.1.
Next, in the proposed rule we stated we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 228 and 229 to identify cases reporting one of the 18 codes listed previously that describe the open revision of devices in the heart valves, atrial septum, or ventricular septum. Our findings are shown in the following table:
As shown in the table, in MS-DRG 228, we identified a total of 4,391 cases with an average length of stay of 8.7 days and average costs of $44,565. Of those 4,391 cases, there were 12 cases reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 228 ($51,549 compared to $44,565) and a longer average length of stay (15.7 days compared to 8.7 days). In MS-DRG 229, we identified a total of 5,712 cases with an average length of stay of 3.3 days and average costs of $28,987. Of those 5,712 cases, there was one case reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum with costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 229 ($11,322 compared to $28,987) and a shorter length of stay (1 day compared to 3.3 days).
We stated we then examined claims data from the September 2023 update of the FY 2023 MedPAR for MS-DRG 215. Our findings are shown in the following table.
In the proposed rule we stated our analysis indicates that the cases assigned to MS-DRG 215 have much higher average costs than the cases reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum currently assigned to MS-DRGs 228 and 229. Instead, the average costs and average length of stay for case reporting a procedure code describing the open revision of devices in the heart valves, atrial septum, or ventricular septum appear to be generally more aligned with the average costs and average length of stay for all cases in MS-DRGs 228 and 229, where they are currently assigned.
In addition, based on our review of the clinical considerations, we stated we did not believe the procedure codes describing the open revision of devices in the heart valves, atrial septum, or ventricular septum are clinically coherent with the procedure codes currently assigned to MS-DRG 215. We noted that heart assist devices, such as ventricular assist devices and artificial heart systems, provide circulatory support by taking over most of the workload of the left ventricle. Blood enters the pump through an inflow conduit connected to the left ventricle and is ejected through an outflow conduit into the body's arterial system. Heart assist devices can provide temporary left, right, or biventricular support for patients whose hearts have failed and can also be used as a bridge for patients who are awaiting a heart transplant. In the proposed rule we stated that devices placed in the heart valves, atrial septum, or ventricular septum do not serve the same purpose as heart assist devices and we stated we did not believe the procedure codes describing the revision of these devices should be assigned to MS-DRG 215. Further, we stated that the various indications for devices placed in the heart valves, atrial septum or ventricular septum are not aligned with the indications for heart assist devices. We stated we believe that patients with indications for heart assist devices tend to be more severely ill and these inpatient admissions are associated with greater resource utilization. Therefore, for the reasons stated previously, we proposed to maintain the GROUPER logic for MS-DRG 215 for FY 2025.
Therefore, after consideration of the public comments we received, we are finalizing our proposal to maintain the GROUPER logic for MS-DRG 215 for FY 2025, without modification.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35968 through 35969), we identified a replication issue from the ICD-9 based MS-DRGs to the ICD-10 based MS-DRGs regarding the assignment of eight ICD-10-PCS codes that describe the excision of intestinal body parts by open, percutaneous, or percutaneous endoscopic approach. Under the Version 32 ICD-9 based MS-DRGs, ICD-9-CM procedure code 45.33 (Local excision of lesion or tissue of small intestine, except duodenum) was designated as an O.R. procedure and was assigned to MDC 06 (Diseases and Disorders of the Digestive System) in MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively).
In the proposed rule, we noted that there are eight ICD-10-PCS code translations that provide more detailed and specific information for ICD-9-CM code 45.33 that also currently group to MS-DRGs 347, 348, and 349 in the ICD-10 MS-DRGs Version 41.1. These eight procedure codes are shown in the following table:
In the proposed rule we stated we noted during our review of this issue that under ICD-9-CM, procedure code 45.33 did not differentiate the specific type of approach used to perform the procedure. This is in contrast to the eight comparable ICD-10-PCS code translations listed in the previous table that do differentiate among various approaches (open, percutaneous, and percutaneous endoscopic). We also noted that there are four additional ICD-10-PCS code translations that provide more detailed and specific information for ICD-9-CM code 45.33, however these four codes currently group to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively), and not MS-DRGs 347, 348, and 349, in the ICD-10 MS-DRGs Version 41.1. These four procedure codes are shown in the following table:
We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at:
Next, as discussed in the proposed rule we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 347, 348, and 349 to identify cases reporting one of the eight codes listed previously that describe excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach. Our findings are shown in the following table:
As shown in the table, in MS-DRG 347, we identified a total of 752 cases with an average length of stay of 7.6 days and average costs of $21,462. Of those 752 cases, there were 66 cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 347 ($27,081 compared to $21,462) and a longer average length of stay (8.5 days compared to 7.6 days). In MS-DRG 348, we identified a total of 1,580 cases with an average length of stay of 4.2 days and average costs of $12,020. Of those 1,580 cases, there were 192 cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 348 ($17,063 compared to $12,020) and a longer average length of stay (4.9 days compared to 4.2 days). In MS-DRG 349, we identified a total of 644 cases with an average length of stay of 2.2 days and average costs of $9,095. Of those 644 cases, there were 117 cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, with average
We stated we then examined claims data from the September 2023 update of the FY 2023 MedPAR for MS-DRGs 329, 330, and 331. Our findings are shown in the following table.
While the average costs for all cases in MS-DRGs 329, 330, and 331 are higher than the average costs of the cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach, we stated the data suggest that overall, cases reporting one of eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach may be more appropriately aligned with the average costs of the cases in MS-DRGs 329, 330, and 331 in comparison to MS-DRGs 347, 348, and 349, even though the average lengths of stay are shorter.
In the proposed rule we stated we reviewed this grouping issue, and our analysis indicates that the eight procedure codes describing the excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach were initially assigned to the list of procedures in the GROUPER logic for MS-DRGs 347, 348, and 349 as a result of replication in the transition from ICD-9 to ICD-10 based MS-DRGs. We also noted that procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ do not describe procedures on a stoma, which is an artificial opening on the abdomen that can be connected to either the digestive or urinary system to allow waste to be diverted out of the body, or the anus. We stated we supported the reassignment of codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ for clinical coherence and that we believe these eight procedure codes should be appropriately grouped along with the four other procedure codes that describe excision of intestinal body parts by an open, or percutaneous endoscopic approach currently assigned to MS-DRGs 329, 330, and 331.
Accordingly, because the procedures described by the eight procedure codes that describe excision of intestinal body parts by an open, percutaneous, or percutaneous endoscopic approach are not clinically consistent with procedures on the anus or stoma, and it is clinically appropriate to reassign these procedures to be consistent with the four other procedure codes that describe excision of intestinal body parts by an open, or percutaneous endoscopic approach in MS-DRGs 329, 330, and 331, we proposed the reassignment of procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ from MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06, effective FY 2025.
After consideration of the public comments we received, we are finalizing our proposal to reassign procedure codes 0DB83ZZ, 0DBA3ZZ, 0DBA4ZZ, 0DBB3ZZ, 0DBB4ZZ, 0DBC0ZZ, 0DBC3ZZ, and 0DBC4ZZ from MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 06, without modification, effective October 1, 2024, for FY 2025.
In the proposed rule we discussed an inconsistency in the GROUPER logic for MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC, with CC, and without CC/MCC, respectively) related to ICD-10-CM diagnosis codes describing deforming dorsopathies. The logic for case assignment to MS-DRGs 456, 457, and 458 as displayed in the ICD-10 MS-DRG Definitions Manual Version 41.1 (which is available on the CMS website at:
In the second logic list entitled “Spinal Curvature/Malignancy/Infection” there are a subset of six diagnosis codes describing other specified deforming dorsopathies as shown in the following table.
In the third logic list entitled “OR Secondary Diagnosis” there are currently 14 diagnosis codes listed, one of which is diagnosis code M43.8X9 (Other specified deforming dorsopathies, site unspecified) as shown in the following table.
In the proposed rule we stated that we recognized that the five diagnosis codes describing deforming dorsopathies of specific anatomic sites that are listed in the second logic list entitled “Spinal Curvature/Malignancy/Infection” are not listed in the third logic list entitled “OR Secondary Diagnosis”, rather, only diagnosis code M43.8X9 (Other specified deforming dorsopathies, site unspecified) appears in both logic lists. Therefore, we considered if it was clinically appropriate to add the five diagnosis codes describing deforming dorsopathies of specific anatomic sites that are listed in the second logic list entitled “Spinal Curvature/Malignancy/Infection” to the third logic list entitled “OR Secondary Diagnosis”.
A deforming dorsopathy is characterized by abnormal bending or flexion in the vertebral column. All spinal deformities involve problems with curve or rotation of the spine, regardless of site specificity. In the proposed rule we stated our belief that the five diagnosis codes describing deforming dorsopathies of specific anatomic sites are clinically aligned with the diagnosis codes currently included in the “OR Secondary Diagnosis” logic list. Therefore, for clinical consistency we proposed to add diagnosis codes M43.8X4, M43.8X5, M43.8X6, M43.8X7, and M43.8X8 to the “OR Secondary Diagnosis” logic list for MS-DRGs 456, 457, and 458, effective October 1, 2024, for FY 2025.
After consideration of the public comments we received, we are finalizing our proposal to add diagnosis codes M43.8X4, M43.8X5, M43.8X6, M43.8X7, and M43.8X8 to the “OR Secondary Diagnosis” logic list for MS-DRGs 456, 457, and 458 effective October 1, 2024, for FY 2025.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35971 through 35985), we discussed a request we received to reassign cases reporting spinal fusion procedures using an aprevo
In the proposed rule we noted that this topic has been discussed previously in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26726 through 26729) and final rule (88 FR 58731 through 58735, as corrected in the FY 2024 final rule correction notice at 88 FR 77211). We also noted that the aprevo
Additionally, in the proposed rule we noted that in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26726 through 26729) and final rule (88 FR 58731 through 58735), effective October 1, 2021 (FY 2022), we implemented 12 new ICD-10-PCS procedure codes to identify and describe spinal fusion procedures using the aprevo
As discussed in the proposed rule, the code title changes for the 12 ICD-10-PCS procedure codes to identify and describe spinal fusion procedures using the aprevo
Accordingly, effective with discharges on and after October 1, 2023 (FY 2024), the 12 ICD-10-PCS procedure codes to identify and describe spinal fusion procedures using the aprevo
As stated in the proposed rule, as part of our analysis of the manufacturer's request to reassign cases involving the aprevo
In the proposed rule, we noted that the manufacturer provided us with a list of the providers with which it indicated it has an explicit relationship, to assist in our ongoing review of its request for reassignment of cases reporting spinal fusion procedures using an aprevo
As stated in the proposed rule, to continue our analysis of cases reporting spinal fusion procedures using an aprevo
We identified the majority of cases reporting the performance of a spinal fusion procedure using an aprevo
For MS-DRGs 456, 457, and 458, we found a total of 19 cases (2 + 11 + 6 = 19) reporting the performance of a spinal fusion procedure using an aprevo
For MS-DRGs 459 and 460, we found a total of 65 cases reporting the performance of a spinal fusion procedure using an aprevo
As discussed in the FY 2024 final rule, the manufacturer expressed concern that there may be unintentional miscoded claims from providers with whom they do not have an explicit relationship and, as previously discussed, subsequently provided the list of providers with which it indicated it has an explicit relationship to assist in our ongoing review. We noted in the proposed rule that in connection with the list of providers submitted, the manufacturer also resubmitted claims data from the Standard Analytical File (SAF) that included FY 2022 claims and the first two quarters (discharges beginning October 1, 2022 through March 31, 2023) of FY 2023 from these providers. We stated that the list of providers the manufacturer submitted to us was considered applicable for the dates of service in connection with the resubmitted claims data. The manufacturer stated that the list of providers with which it has an explicit relationship is subject to change on a weekly basis as additional providers begin to use the technology. The manufacturer also clarified that the external customer data it had previously referenced in connection with the FY 2024 rulemaking that was received directly from the providers with which it has an explicit relationship is Medicare data. As stated in the proposed rule, we reviewed the September update of the FY 2022 MedPAR file and compared it against the claims data file with the list of providers submitted by the manufacturer for FY 2022. We noted that with this updated analysis of the September update of the FY 2022 MedPAR claims data, we were able to confirm that the majority of the cases for the providers with which the manufacturer indicated it has an explicit relationship matched the claims data in our FY 2022 MedPAR file. However, we also stated that we identified 3 claims that appeared in the manufacturer's file that were not found in our FY 2022 MedPAR file and could not be validated. Next, we reviewed the September update of the FY 2023 MedPAR file and compared it against the claims data file with the list of providers submitted by the manufacturer for the first two quarters of FY 2023. We stated we were able to confirm that the majority of the cases for the providers with which the manufacturer indicated it has an explicit relationship matched the claims data in our FY 2023 MedPAR file. However, we also stated that we identified 2 claims that appeared in the manufacturer's file that were not found in our FY 2023 MedPAR file and could not be validated.
As discussed in the proposed rule, in our analysis of the cases reporting the performance of a spinal fusion procedure using an aprevo
For MS-DRG 453, the data show that of the 26 cases found to report the performance of a spinal fusion procedure using an aprevo
For MS-DRG 456, the data show that of the 2 cases found to report the performance of a spinal fusion procedure using an aprevo
For MS-DRG 459, the data show that the single case found to report the performance of a spinal fusion procedure using an aprevo
As discussed in the proposed rule, we considered these data findings with regard to the concerns expressed by the manufacturer that there may be unintentional miscoded claims reporting the performance of a spinal fusion procedure using an aprevo
In the proposed rule we noted that, while a newly established ICD-10 code may be associated with an application for new technology add-on payment, such codes are not generally established to be product specific. We stated that, if, after consulting the official coding guidelines, a provider determines that an ICD-10 code associated with a new technology add-on payment describes the technology that they are billing, the hospital may report the code and be eligible to receive the associated add-on payment. We noted that providers are responsible for ensuring that they are billing correctly for the services they render. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued independently from payment policy. We also noted that, historically, we have not provided coding advice in rulemaking with respect to policy (82 FR 38045). We stated that as one of the Cooperating Parties for ICD-10, we collaborate with the American Hospital Association (AHA) through the
Accordingly, after review of the list of providers and associated claims data submitted by the manufacturer, and our analysis of the MedPAR data, we stated we believed these MedPAR data are appropriate for our FY 2025 analysis. Therefore, in assessing the request for reassignment of cases reporting the performance of a spinal fusion procedure using an aprevo
We stated in the proposed rule that, based on the findings from our analysis and clinical review, we do not believe the requested reassignments are supported. Specifically, we stated it would not be appropriate to propose to reassign the 87 cases reporting the performance of a spinal fusion procedure using an aprevo
As discussed in the proposed rule, in light of the higher average costs of the cases reporting the performance of a spinal fusion procedure using an aprevo
As discussed in the proposed rule, in our analysis of the claims data for MS-DRGs 453, 454, and 455, we also identified a number of cases for which additional spinal fusion procedures were performed, beyond the logic for case assignment to the respective MS-DRG. For example, the logic for case assignment to MS-DRGs 453, 454, and 455 requires at least one anterior column fusion and one posterior column fusion (that is, combined anterior and posterior fusion). We noted that the aprevo
We noted in the proposed rule that while the findings from our analysis indicate a wide range in the average length of stay and average costs for cases reporting the performance of a spinal fusion procedure using an aprevo
As discussed in the proposed rule, in our analysis of the data for MS-DRGs 453, 454, and 455 and cases reporting the performance of a spinal fusion procedure using an aprevo
As previously summarized, our analysis of the claims data for cases reporting the performance of a spinal fusion procedure using an aprevo
As stated in the proposed rule, we began our expanded analysis with MS-DRGs 453, 454, and 455. Based on the findings for a subset of the cases (that is, the subset of cases reporting the performance of a spinal fusion procedure using an aprevo
Findings from our analysis are shown in the following table.
The data show that across MS-DRGs 453, 454, and 455, cases reporting multiple level combined anterior and posterior fusion procedures have a comparable average length of stay (9.6 days versus 9.5 days, 4.8 days versus 4.3 days, and 3.0 days versus 2.6 days, respectively) and higher average costs ($91,358 versus $80,420, $64,065 versus $54,983, and $50,097 versus $41,015) compared to all the cases in MS-DRGs 453, 454, and 455, respectively. The data also show that across MS-DRGs 453, 454, and 455, cases reporting multiple level combined anterior and posterior fusion procedures have a longer average length of stay (9.6 days versus 6.4 days, 4.8 days versus 3.4 days, and 3.0 days versus 2.3 days, respectively) and higher average costs ($91,358 versus $47,031, $64,065 versus $38,107, and $50,097 versus $33,010, respectively) compared to cases reporting a single level combined anterior and posterior fusion. For cases reporting a combined anterior and posterior cervical fusion across MS-DRGs 453 and 454, the data show a longer average length of stay (12.5 days versus 9.5 days, and 5.1 days versus 4.3 days, respectively) compared to all the cases in MS-DRGs 453 and 454 and a comparable average length of stay (2.9 days versus 2.6 days) for cases reporting a combined anterior and posterior cervical fusion in MS-DRG 455. The data also show that across MS-DRGs 453, 454, and 455, cases reporting a combined anterior and posterior cervical fusion have higher average costs ($75,077 versus $47,031, $52,274 versus $38,107, and $37,515 versus $33,010, respectively) compared to the single level combined anterior and posterior fusion cases.
The data also reflect that in applying the logic that was developed for the three categories of spinal fusion in MS-DRGs 453, 454, and 455 (single level combined anterior and posterior fusion except cervical, multiple level combined anterior and posterior fusion except cervical, and combined anterior and posterior cervical fusion), there is a small redistribution of cases from the current MS-DRGs 453, 454, and 455 to other spinal fusion MS-DRGs because the logic for case assignment to MS-DRGs 453, 454, and 455 is currently satisfied with any one procedure code from the anterior spinal fusion logic list and any one procedure code from the posterior spinal fusion logic list, however, the logic lists that were developed for our analysis using the three categories of spinal fusion are comprised of specific procedure code combinations to satisfy the criteria for case assignment to any one of the three categories developed. For example, based on our analysis of MS-DRG 453 using the September update of the FY 2023 MedPAR file, the total number of cases found in MS-DRG 453 is 4,066 and with application of the logic for each of the three categories, the total number of cases in MS-DRG 453 is 4,042 (791 + 2,664 + 587 = 4,042), a difference of 24 cases. Using the September update of the FY 2023 MedPAR file, the total number of cases found in MS-DRG 454 is 20,425 and with application of the logic for each of the three categories, the total number of cases in MS-DRG 454 is 20,370 (6,481 + 12,498 + 1,391 = 20,370), a difference of 55 cases. Lastly, using the September update of the FY 2023 MedPAR file, the total number of cases found in MS-DRG 455 is 17,000 and with application of the logic for each of the three categories, the total number of cases in MS-DRG 455 is 16,987 (9,763 + 6,879 + 345 = 16,987), a difference of 13 cases. Overall, a total of 92 cases are redistributed from MS-DRGs 453, 454,
We stated in the proposed rule that the findings from our analysis of MS-DRGs 453, 454, and 455 are consistent with the expectation that clinically, the greater the number of spinal fusion procedures performed during a single procedure (for example, intervertebral levels fused), the greater the consumption of resources expended. We also stated we believed the use of interbody fusion cages, other types of spinal instrumentation, operating room time, comorbidities, pharmaceuticals, and length of stay may all be contributing factors to resource utilization for spinal fusion procedures. In addition, it is expected that as a result of potential changes to the logic for case assignment to a MS-DRG, there will be a redistribution of cases among the MS-DRGs.
We stated in the proposed rule that, based on our review and analysis of the spinal fusion cases in MS-DRGs 453, 454, and 455, we believe new MS-DRGs are warranted to differentiate between multiple level combined anterior and posterior spinal fusions except cervical, single level combined anterior and posterior spinal fusions except cervical, and combined anterior and posterior cervical spinal fusions, to more appropriately reflect utilization of resources for these procedures, including those performed with an aprevo
To compare and analyze the impact of our suggested modifications, we noted that we ran simulations using claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 23,017 cases reporting procedure codes describing multiple level combined anterior and posterior spinal fusions.
We stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of the proposed new base MS-DRG was met. The following table illustrates our findings.
For the proposed new MS-DRGs, there is (1) at least 500 or more cases in the MCC group, the CC subgroup, and in the without CC/MCC subgroup; (2) at least 5 percent of the cases are in the MCC subgroup, the CC subgroup, and in the without CC/MCC subgroup; (3) at least a 20 percent difference in average costs between the MCC subgroup and the CC subgroup and between the CC group and NonCC subgroup; (4) at least a $2,000 difference in average costs between the MCC subgroup and the with CC subgroup and between the CC subgroup and NonCC subgroup; and (5) at least a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system.
As a result, for FY 2025, we proposed to create new MS-DRG 426 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC), new MS-DRG 427 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with CC), and new MS-DRG 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical without CC/MCC). The following table reflects a simulation of the proposed new MS-DRGs.
The next step in our analysis of the impact of our suggested modifications to MS-DRGs 453, 454, and 455 was to review the cases reporting single combined anterior and posterior cervical fusions. The following table
We stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of this proposed new base MS-DRG failed to meet the criterion that at least 5% or more of the cases are in the MCC subgroup. It also failed to meet the criterion that there be at least a 20% difference in average costs between the CC and NonCC (without CC/MCC) subgroup. The following table illustrates our findings.
As discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. We therefore applied the criteria for a two-way split for the “with MCC and without MCC” subgroups. We noted that, as shown in the table that follows, a two-way split of this base MS-DRG failed to meet the criterion that there be at least 5% or more of the cases in the with MCC subgroup.
We then applied the criteria for a two-way split for the “with CC/MCC and without CC/MCC” subgroups. As shown in the table that follows, a two-way split of this base MS-DRG failed to meet the criterion that there be at least a 20% difference in average costs between the “with CC/MCC and without CC/MCC” subgroup.
We noted that because the criteria for both of the two-way splits failed a split (or CC subgroup) is not warranted for the proposed new base MS-DRG. As a result, for FY 2025, we proposed to create new base MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical). The following table reflects a simulation of the proposed new base MS-DRG.
For the final step in our analysis of the impact of our suggested modifications to MS-DRGs 453, 454, and 455 we reviewed the cases reporting combined anterior and posterior cervical fusions. The following table illustrates our findings for all 2,323 cases reporting procedure codes describing combined anterior and posterior cervical spinal fusions.
We stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of this proposed new base MS-DRG failed to meet the criterion that that there be at least 500 cases in the NonCC subgroup.
As discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. We therefore applied the criteria for a two-way split for the “with MCC and without MCC” subgroups. We note that, as shown in the table that follows, a two-way split of this proposed new base MS-DRG was met. For the proposed MS-DRGs, there is at least (1) 500 or more cases in the MCC group and in the without MCC subgroup; (2) 5 percent or more of the cases in the MCC group and in the without MCC subgroup; (3) a 20 percent difference in average costs between the MCC group and the without MCC group; (4) a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system. The following table illustrates our findings for the suggested MS-DRGs with a two-way severity level split.
Accordingly, because the criteria for the two-way split were met, we stated we believed a split (or CC subgroup) is warranted for the proposed new base MS-DRG. As a result, for FY 2025, we proposed to create new MS-DRG 429 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC) and new MS-DRG 430 (Combined Anterior and Posterior Cervical Spinal Fusion without MCC). The following table reflects a simulation of the proposed new MS-DRGs.
We then analyzed the cases reporting spinal fusion procedures in MS-DRGs 456, 457, and 458. As previously described, the logic for case assignment to MS-DRGs 456, 457, and 458 is defined by principal diagnosis logic and extensive fusion procedures. Cases reporting a principal diagnosis of spinal curvature, malignancy, or infection or an extensive fusion procedure will group to these MS-DRGs. We referred the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 available on the CMS website at:
As also previously described, in our initial analysis of cases reporting the performance of a spinal fusion procedure using an aprevo
The data show that the 332 cases reporting an extensive fusion procedure in MS-DRG 456 have a shorter average length of stay (11.5 days versus 12.6 days) and higher average costs ($89,773 versus $76,060) compared to all the cases in MS-DRG 456. For MS-DRG 457, the data show that the 171 cases reporting an extensive fusion have a comparable average length of stay (6.6 days versus 6.1 days) and higher average costs ($75,588 versus $52,179) compared to all the cases in MS-DRG 457. Lastly, for MS-DRG 458, the data show that the 146 cases reporting an extensive fusion procedure have a comparable average length of stay (3.8 days versus 3.1 days) and higher average costs ($48,035 versus $39,260) compared to all the cases in MS-DRG 458.
In the proposed rule we stated we believe that over time, the volume of cases reporting the performance of a spinal fusion procedure using an aprevo
Next, we performed an expanded analysis for spinal fusion cases reported in MS-DRGs 459 and 460. We noted that cases grouping to MS-DRG 459 have at least one secondary diagnosis MCC condition reported (“with MCC”) and because MS-DRG 460 is “without MCC”, cases grouping to this MS-DRG may include the reporting of at least one secondary diagnosis CC condition (in addition to cases that may not report a CC (for example, NonCC)). Based on the findings for a subset of the cases (that is, the subset of cases reporting the performance of a spinal fusion procedure using an aprevo
The data show that the 2,069 cases reporting a multiple level spinal fusion except cervical in MS-DRG 459 have a longer average length of stay (10.1 days versus 9.6 days) and higher average costs ($57,209 versus $53,192) when compared to all the cases in MS-DRG 459. The data also show that the 2,069 cases reporting a multiple level spinal fusion except cervical in MS-DRG 459 have a longer average length of stay (10.1 days versus 8.9 days) and higher average costs ($57,209 versus $46,031) when compared to the 1,098 cases reporting a single level spinal fusion except cervical in MS-DRG 459. For MS-DRG 460, the data show that the 14,677 cases reporting a multiple level spinal fusion except cervical have a comparable average length of stay (3.9 days versus 3.4 days) and higher average costs ($36,932 versus $32,586) when compared to all the cases in MS-DRG 460. The data also show that the 14,677 cases reporting a multiple level spinal fusion except cervical have a comparable average length of stay (3.9 days versus 3.0 days) and higher average costs ($36,932 versus $28,110) when compared to the 14,058 cases reporting a single level spinal fusion except cervical in MS-DRG 460.
In the proposed rule we stated that based on our review and analysis of the spinal fusion cases in MS-DRGs 459 and 460, we believe new MS-DRGs are warranted to differentiate between multiple level spinal fusions except cervical and single level spinal fusions except cervical to more appropriately reflect utilization of resources for these procedures, including those performed with an aprevo
To compare and analyze the impact of our suggested modifications, we ran simulations using claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 16,746 cases reporting procedure codes describing multiple level spinal fusions except cervical.
We stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of this proposed new base MS-DRG failed to meet the criterion that there be at least a 20% difference in average costs between the CC and NonCC (without CC/MCC) subgroup. The following table illustrates our findings.
As discussed in section II.C.1.b. of the preamble of the proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. We therefore applied the criteria for a two-way split for the “with MCC and without MCC” subgroups. We noted that, as shown in the table that follows, a two-way split of this proposed new base MS-DRG was met. For the proposed MS-DRGs, there is at least (1) 500 or more cases in the MCC group and in the without MCC subgroup; (2) 5 percent or more of the cases in the MCC group and in the without MCC subgroup; (3) a 20 percent difference in average costs between the MCC group and the without MCC group; (4) a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system. The following table illustrates our findings for the suggested MS-DRGs with a two-way severity level split.
As a result, for FY 2025, we proposed to create new MS-DRGs 447 (Multiple Level Spinal Fusion Except Cervical with MCC) and new MS-DRG 448 (Multiple Level Spinal Fusion Except Cervical without MCC). We also proposed to revise the title for existing MS-DRGs 459 and 460 to “Single Level Spinal Fusion Except Cervical with MCC and without MCC”, respectively. In the proposed rule we stated that this proposal would better differentiate the resource utilization, severity of illness and technical complexity between single level and multiple level spinal fusions that do not include cervical spinal fusions in the logic for case assignment. The following table reflects a simulation of the proposed new MS-DRGs.
In conclusion, we proposed to delete MS-DRGs 453, 454, and 455 and proposed to create 8 new MS-DRGs. We proposed to create new MS-DRG 426 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC), MS-DRG 427 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with CC), MS-DRG 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical without CC/MCC), MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical), MS-DRG 429 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC), MS-DRG 430 (Combined Anterior and Posterior Cervical Spinal Fusion without MCC), MS-DRG 447 (Multiple Level Spinal Fusion Except Cervical with MCC) and MS-DRG 448 (Multiple Level Spinal Fusion Except Cervical without MCC) for FY 2025. We proposed the logic for case assignment to these proposed new MS-DRGs as displayed in Table 6P.2d, Table 6P.2e, Table 6P.2f, Table 6P.2g, and Table 6P.2h in association with the proposed rule and available via the CMS website at
Another commenter stated that currently, MS-DRGs 453 through 455 do not adequately differentiate between the complexity and relative resource use associated with multiple level procedures. The commenter stated that this adjustment will lead to more accurate payment, resource allocation, and further aligns with the clinical accuracy and medical advancements of these procedures.
A commenter stated it supported the proposed changes as it would create further specificity in coding. Another commenter also expressed appreciation for CMS's efforts to update the spinal fusion MS-DRGs to better reflect current clinical practice delineating single versus multiple level procedures with the detailed analysis that outlined the proposed changes. This commenter stated they plan to monitor the impact of the proposed revisions, if finalized, for both its customers and patients.
With respect to the commenters' concerns that we excluded analysis of MS-DRGs 471, 472, and 473 for FY 2025, we note that the MS-DRG request under consideration for ongoing review was related to assignment of cases reporting procedures involving use of the aprevo
A couple commenters stated that CMS has previously given two years notice to hospitals about potential changes and provided the example of CMS's request for public comments and feedback on potential restructuring for MS-DRGs 023 through 027, as discussed in FY 2024 and FY 2025 rulemaking. Another commenter stated that the proposed restructuring of the spinal fusion MS-DRGs is a major revision, and without any warning to hospitals. However, this commenter also stated that regardless of the outcome for the proposed reorganization of the spinal fusion MS-DRGs, CMS should address the resource utilization disparity related to the use of the aprevo
With respect to the commenter's concern that hospitals had no warning regarding the proposed restructuring for a subset of the spinal fusion MS-DRGs, we note that in addition to proposing these changes in the FY 2025 IPPS/LTCH PPS proposed rule, we discussed this topic in the FY 2024 IPPS/LTCH PPS rulemaking, including noting that our work in this area was ongoing, and that we would continue to examine the data and consider these issues as we develop potential future rulemaking proposals. Providers have had the opportunity to consider how spinal fusion cases (including cases reporting
A commenter stated that the version 42 AOR table showed more spinal fusion cases in comparison to the total spinal fusion cases included in the rule discussion. The commenter questioned if there was duplication of the same patients being counted based on the logic lists for the proposal and stated it was not clear how duplications may have been handled in the data if there was both a multiple level fusion and single level fusion reported on the same case.
With respect to the differences in case counts between the version 42 AOR table in comparison to the number of cases included in the rule discussion for the proposed spinal fusion MS-DRGs, we note that, as stated in the proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2023 update of the FY 2023 MedPAR file, which contains hospital bills received from October 1, 2022, through September 30, 2023. In comparison, as also stated in the proposed rule, the FY 2023 MedPAR file used in developing the proposed MS-DRG relative weights for FY 2025 included discharges occurring on October 1, 2022, through September 30, 2023, based on bills received by CMS through December 31, 2023.
The commenter stated that in the case of the aprevo
We note that historically, our approach to proposing and finalizing new procedure codes through the ICD-10 Coordination and Maintenance Committee meeting process was largely built on the fact that the procedure classification system was designed to report the procedure performed, not the device or other specific technology used. However, we also note that with the implementation of the new technology add-on payment policy, aspects of that approach to creating new procedure codes have been become more complex. While we have strived to maintain consistency with that historical approach, we also recognize the responsibility to balance and support the requirements of the new technology add-on payment policy, which have continued to evolve since its inception.
The commenter is correct that certain ICD-10-PCS codes located in the New Technology section of the ICD-10-PCS procedure classification, also known as “Section X”, are product specific. For example, a procedure code request for the administration of a therapeutic agent, regardless of it being related to a new technology add-on payment application, is often presented as a proposal through the ICD-10 Coordination and Maintenance Committee meeting process, and subsequently finalized (following review and consideration of the public comments) with the generic name of the agent in the code description (title). Oftentimes, there is a clinical need and several benefits to capture a certain level of specificity for purposes of data collection, such as tracking a particular patient population, or assessing clinical outcomes. We note that following the finalization of a new procedure code that is classified within the new technology section (Section X) of ICD-10-PCS, we discuss the disposition of that code after a 3-year period during a future ICD-10 Coordination and Maintenance Committee meeting, which also generally aligns with the expiration of a product's eligibility for an add-on payment under the new technology add-on payment policy. We also take this opportunity to point out that a procedure, service, or technology is not required to submit a new technology add-on payment application for consideration of a Section X code. As discussed in prior rulemaking (80 FR 49434 through 49435), when the ICD-10-PCS New Technology section was under development, we established that the purpose of the New Technology section is to also provide a mechanism to capture services that would not normally be coded and reported in the inpatient setting.
We appreciate the commenter's feedback on this topic and will continue to consider how to better address coding proposals in connection with new technologies for future discussion at the ICD-10 Coordination and Maintenance Committee meeting.
The commenter provided a comprehensive list detailing the sequence of events related to prior rulemaking discussions involving custom-made anatomically designed interbody fusion devices including its approved eligibility for new technology add-on payments, revisions to the procedure code title to change the description from “customizable” to “custom-made anatomically designed” interbody fusion device, and prior data analysis findings. The commenter also provided extensive clinical background on custom-made anatomically designed interbody fusion devices and reiterated the designation as an FDA Breakthrough technology. Additionally, the commenter stated that published clinical data has shown that custom-made anatomically designed interbody fusion devices improve care by delivering more precise patient specific alignment,
In response to publication of the FY 2025 IPPS/LTCH PPS proposed rule, the commenter stated its belief that 1.) CMS contradicted its position on the original description of the procedure codes by making the statement in the FY 2025 IPPS/LTCH PPS proposed rule that a newly established ICD-10 code may be associated with an application for new technology add-on payment and such codes are not generally established to be product specific and 2.) CMS acknowledged that the description used in the original ICD-10 code inadvertently described several types of technologies, and this likely contributed to the miscoded claims. According to the commenter, because CMS decided to consider resource utilization disparities for
The commenter stated that CMS sought to find an alternative explanation for the resource incoherence demonstrated across the cases reporting any one of the 12 procedure codes describing a spinal fusion procedure with a custom-made anatomically designed interbody spinal fusion device and that the expanded analysis was unrelated to the original request because it did not provide data related to the use of custom-made anatomically designed devices under the proposed single level versus multiple level MS-DRG construct. The commenter further stated that the absence of this specific data (single level versus multiple level) in the proposed rule necessitated the submission of a revised request under the proposed new structure and the findings from its analysis for CMS's review and consideration.
The commenter provided prior examples of MS-DRG classification requests comparing length of stay differences and low claims volume to demonstrate instances for which CMS reassigned cases from a lower severity level MS-DRG to a higher severity level MS-DRG, including the proposal regarding the Neuromodulation Device Implant for Heart Failure (Barostim
The commenter also remarked on CMS's discussion of the data analysis presented in the proposed rule regarding the wide range in average costs for claims reporting the use of a
The commenter conducted additional analyses using the FY 2023 MedPAR data with the logic lists from the tables provided in association with the proposed rule and stated that its findings demonstrate disparities in resource utilization for cases reporting use of a custom-made anatomically designed interbody fusion device among the proposed multiple level and single level spinal fusion MS-DRGs. Specifically, the commenter stated cases reporting the use of a custom-made anatomically designed interbody fusion device under the proposed MS-DRG structure should be reassigned as shown in the table that follows.
According to the commenter, findings from its analysis under the proposed MS-DRG structure support the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from the lower severity proposed MS-DRGs to the higher severity level proposed MS-DRGs because the resource utilization of cases reporting the use of a custom-made anatomically designed interbody fusion device align more closely with the resource utilization of cases in the requested MS-DRG. The commenter stated that the requested reassignments are consistent with other MS-DRG classifications CMS has previously finalized and therefore, the precedent exists.
The commenter also provided an alternative recommendation for CMS's consideration based on the current, existing spinal fusion MS-DRGs, with minor modifications from its initial FY 2024 request for the reassignment of cases reporting a custom-made anatomically designed interbody fusion device. Specifically, the commenter provided its analysis under the existing MS-DRGs and indicated that cases reporting the use of a custom-made anatomically designed interbody fusion device under the existing MS-DRG structure should be considered for reassignment as shown in the table that follows, if the proposed structure is not finalized.
Based on the findings from its analyses under the proposed and current MS-DRG structure for spinal fusions, the commenter asserted that reassignment of cases reporting the use of a custom-made anatomically
Some commenters stated that the new technology add-on payment for custom-made anatomically designed interbody spinal fusion devices is ending on September 30, 2024, and if CMS decides to move forward with the proposed MS-DRG changes without the reassignment of the procedure codes describing the custom-made anatomically designed technology to more appropriate MS-DRGs, it would create a financial disincentive for hospitals and eliminate access to the breakthrough technology for patients. The commenters reiterated prior concerns raised in public comments by spine surgeons that were discussed in the FY 2024 rulemaking and stated that without adequate payment, hospitals will not authorize use of the technology.
A few commenters suggested that if CMS is going to finalize the proposed restructuring, consideration be given to deleting MS-DRGs 459 and 460 and creating new MS-DRGs for single level spinal fusion except cervical with MCC and without MCC because they stated the proposed revisions would significantly change the types of cases classified to these MS-DRGs.
We disagree with the commenter's assertion that CMS contradicted its prior position on length of stay differences with respect to clinical coherence. We note that in the examples provided by the commenter of MS-DRG classification requests comparing length of stay differences and low claims volume to demonstrate instances for which CMS reassigned cases from a lower severity level MS-DRG to a higher severity level MS-DRG, the topics were discussed and considered in more than one rulemaking cycle prior to finalizing the reassignment of cases from the lower severity level to the higher severity level and length of stay was still a factor under consideration. We also note that because of the lag in claims data used in our analysis of MS-DRG classification requests, depending on the specific procedures and technology under consideration, it is not uncommon to delay a decision and continue to monitor the data until additional analysis can be performed.
In this case, CMS performed additional analyses to examine if other factors could be identified as contributing to the increased resource utilization for cases reporting any one of the 12 procedure codes describing a spinal fusion procedure with a custom-made anatomically designed interbody spinal fusion device. We disagree that the expanded analysis was unrelated to the original request because it did not specifically provide data related to the use of custom-made anatomically designed devices under the proposed single level versus multiple level MS-DRG construct, however, we appreciate the commenter's submission of suggested alternative reassignments under the proposed new structure and optional consideration under the existing structure.
In response to the commenter's request to reassign cases reporting the use of a custom-made anatomically designed interbody fusion device under the proposed restructuring for the spinal fusion MS-DRGs, we analyzed claims data from the September update of the FY 2023 MedPAR file for proposed MS-DRGs 402, 426, 427, 428, 447, 448, 459 and 460 and cases reporting spinal fusion using a custom-made anatomically designed interbody fusion device. Our findings are shown in the following table.
The findings show that the 307 cases reporting a spinal fusion procedure using a custom-made anatomically designed interbody fusion device in MS-DRGs 402, 426, 427, 428, 447, 448, 459 and 460 have higher average costs in comparison to the average costs of all the cases in their respective proposed MS-DRG. We note, as shown in the table, that there were zero cases found to report the use of a custom-made anatomically designed interbody fusion device in proposed revised MS-DRG 459. For proposed MS-DRGs 402 and 428, the findings show that the cases reporting the use of a custom-made anatomically designed interbody fusion device have a comparable average length of stay compared to all the cases in their respective proposed MS-DRG. The findings also show that for proposed MS-DRGs 426 and 427, the cases reporting the use of a custom-made anatomically designed interbody fusion device have a longer average length of stay compared to all the cases in their respective proposed MS-DRG. For proposed MS-DRG 447, we note that the single case reporting the use of a custom-made anatomically designed interbody fusion device is an outlier. For proposed MS-DRG 448 and proposed revised MS-DRG 460, cases reporting the use of a custom-made anatomically designed interbody fusion device have a shorter average length of stay compared to all the cases in their respective proposed MS-DRG.
We reviewed the requested reassignment for the 66 cases from proposed MS-DRG 402 to proposed MS-DRG 428 and note that the logic for case assignment to proposed MS-DRG 428 is comprised of cases reporting a multiple level combined anterior and posterior fusion (except cervical) without a CC/MCC and the logic for case assignment for proposed MS-DRG 402 is comprised of cases reporting a single level combined anterior and posterior fusion (except cervical) that may also
Next, we reviewed the requested reassignment for the 51 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 428 (without CC/MCC) to proposed MS-DRG 427 (with CC) and for the 101 cases from proposed MS-DRG 427 (with CC) to proposed MS-DRG 426 (with MCC). We note that because the proposed MS-DRGs are subdivided with a three-way split, it is not feasible to reassign cases reporting the use of a custom-made anatomically designed interbody fusion device as requested at this time. Generally, with a three-way split, the requested reassignment of cases can only be considered for movement from one severity level to the next highest severity level. For example, consideration could be given to reassign cases from the “without CC/MCC” severity level to the “with CC” severity level or from the “with CC” level to the “with MCC” severity level. Because the proposed logic lists for case assignment to each of these proposed MS-DRGs includes the procedure codes describing the use of a custom-made anatomically designed interbody fusion device in the definition of the respective proposed MS-DRG, the GROUPER software is not able to exclude cases reporting a custom-made anatomically designed interbody fusion device from grouping to proposed MS-DRG 426 (“with MCC”) that would otherwise group to proposed MS-DRG 428 (“without CC/MCC”).
We then reviewed the requested reassignment for the 38 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 to proposed MS-DRG 447. We note that the logic for case assignment to proposed MS-DRG 447 is comprised of cases reporting a multiple level spinal fusion (except cervical) and the logic for case assignment for proposed revised MS-DRG 460 is comprised of cases reporting a single level spinal fusion (except cervical). The proposed logic for case assignment to each of these proposed MS-DRGs includes the procedure codes describing the use of a custom-made anatomically designed interbody fusion device in the definition of the respective proposed MS-DRG. Therefore, the reassignment of the 38 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 to proposed MS-DRG 447 would not be feasible and would not be consistent with the logic of the proposed MS-DRGs which is intended to differentiate a single level spinal fusion from a multiple level spinal fusion.
Lastly, we reviewed the requested reassignment for the 26 cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 448 to proposed MS-DRG 447. Based on the logic lists for case assignment and because these MS-DRGs are subdivided by a two-way split that both describe multiple level spinal fusion (except cervical), we determined it would be feasible to reassign cases from the “without MCC” severity level (MS-DRG 448) to the “with MCC” severity level (MS-DRG 447).
As previously described, when MS-DRGs are subdivided with a three-way split, the requested reassignment of cases can only be considered from one severity level to the next highest severity level. In our review of the data for proposed MS-DRGs 426, 427, and 428, we considered the average costs of the 24 cases found in proposed MS-DRG 426 reporting the use of a custom-made anatomically designed interbody fusion device compared to the average cost of all the cases in proposed MS-DRG 426 ($103,956 versus $91,358) and the average costs of the 101 cases found in proposed MS-DRG 427 reporting the use of a custom-made anatomically designed interbody fusion device compared to the average cost of all the cases in proposed MS-DRG 427 ($76,827 versus $64,065). Although the average length of stay for cases reporting a custom-made anatomically designed interbody fusion device in proposed MS-DRG 427 is shorter in comparison to the average length of stay of all the cases in proposed MS-DRG 426, we believe the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 427 (with CC) to proposed MS-DRG 426 (with MCC) is supported and better reflects the resource utilization and complexity of cases using the custom-made anatomically designed interbody fusion device technology in a multiple level combined anterior and posterior spinal fusion. We recognize that the 51 cases found in proposed MS-DRG 428 reporting the use of a custom-made anatomically designed interbody fusion device have higher average costs compared to the average cost of all the cases in MS-DRG 428 ($64,038 versus $50,097), however, as previously described, we are unable to accommodate two severity level reassignment requests for an MS-DRG subdivided by a three-way split at this time.
We noted earlier in this section of the preamble of this final rule, in our review of the requested reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 448 to proposed MS-DRG 447 that the request was feasible based on the logic of the proposed MS-DRGs that are subdivided with a two-way split. In our review of the data for proposed MS-DRGs 447 and 448, we considered the average costs of the 26 cases found in proposed MS-DRG 448 reporting the use of a custom-made anatomically designed interbody fusion device compared to the average cost of all the cases in proposed MS-DRG 448 ($62,831 versus $36,932). We also considered the one case found in proposed MS-DRG 447 reporting the use of a custom-made anatomically designed interbody fusion device to be an outlier with costs of $288,499 compared to the average costs of all the cases in proposed MS-DRG 447 ($57,209). We believe the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed MS-DRG 448 (without MCC) to proposed MS-DRG 447 (with MCC) is supported and better reflects the resource utilization and complexity of cases using the custom-made anatomically designed interbody fusion device technology in a multiple level anterior and posterior spinal fusion.
As previously discussed, we determined that the requested reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 to proposed MS-DRG 447 would not be feasible based on the logic for case assignment. However, based on the data findings, we believe it is appropriate to consider the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG
We recognize that with the requested reassignments the average length of stay for cases reporting a custom-made anatomically designed interbody fusion device varies from the average length of stay for all the cases in the requested MS-DRGs, and we continue to believe that length of stay is a factor in assessing clinical coherence, however, we also consider the use of a specific technology in the performance of a procedure as a measure of complexity in connection with resource consumption, particularly when that technology is indicated for a specific population. In the case of custom-made anatomically designed interbody fusion devices, the technology is indicated for patients who have complicated spinal anatomy necessitating individualized treatment plants to precisely address spinal alignment needs and reduce the risk of revision surgery.
After consideration of the public comments we received, we are finalizing our proposal to delete MS-DRGs 453, 454, and 455 and to create new MS-DRGs 426, 427, and 428, with modification, for FY 2025. Specifically, we are finalizing our proposal with modification to assign cases reporting the use of a custom-made anatomically designed interbody fusion device with a CC to new MS-DRG 426. Conforming changes to the GROUPER logic are also are shown in Table 6P.2e associated with this final rule and available on the CMS website at
We are also finalizing our proposal to create new MS-DRGs 447 and 448, with modification, for FY 2025. Specifically, we are finalizing our proposal with modification to assign cases reporting the use of a custom-made anatomically designed interbody fusion device without an MCC to MS-DRG 447. Conforming changes to the GROUPER logic are shown in Table 6P.2h associated with this final rule and available on the CMS website at
As previously discussed, we stated we believe the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device from proposed revised MS-DRG 460 (without MCC) to proposed revised MS-DRG 459 (with MCC) is supported and agree with the commenters that the proposed revisions to the MS-DRG logic change the types of cases that would be classified to MS-DRGs 459 and 460. As previously noted, the logic for case assignment to existing MS-DRGs 459 and 460 was proposed to be restructured to better differentiate between single level and multiple level spinal fusions, therefore it would not be appropriate to retain the existing MS-DRG numbers 459 and 460 with revised titles because the cases that group to these MS-DRGs would change. Therefore, for FY 2025, we are deleting MS-DRGs 459 and 460, and finalizing the creation of MS-DRGs 450 and 451. The logic for case assignment to MS-DRGs 450 and 451 is comprised of the logic lists that were initially proposed for revised MS-DRGs 459 and 460, with modification. We are also finalizing the assignment of cases reporting the use of a custom-made anatomically designed interbody fusion device without an MCC to MS-DRG 450. Conforming changes to the GROUPER logic are shown in Table 6P.2g associated with this final rule and available on the CMS website at
We are also finalizing our proposal to create new MS-DRG 402, and new MS-DRGs 429 and 430, without modification, for FY 2025. Accordingly, we are finalizing the proposed GROUPER logic for these MS-DRGs as shown in Table 6P.2d and 6P.2f, respectively, associated with this final rule and available on the CMS website at
In the proposed rule, we noted that we identified an inconsistency in the MDC and MS-DRG assignment of procedure codes describing resection of the right large intestine and resection of the left large intestine with an open and percutaneous endoscopic approach. ICD-10-PCS procedure codes 0DTG0ZZ (Resection of left large intestine, open approach) and 0DTG4ZZ (Resection of left large intestine, percutaneous endoscopic approach) are currently assigned to MDC 10 in MS-DRGs 628, 629, and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). However, the procedure codes that describe resection of the right large intestine with an open or percutaneous endoscopic approach, 0DTF0ZZ (Resection of right large intestine, open approach) and 0DTF4ZZ (Resection of right large intestine, percutaneous endoscopic approach) are not assigned to MDC 10 in MS-DRGs 628, 629, and 630. To ensure clinical alignment and consistency, as well as appropriate MS-DRG assignment, we proposed to add procedure codes 0DTF0ZZ and 0DTF4ZZ to MDC 10 in MS-DRGs 628, 629, and 630 effective October 1, 2024, for FY 2025.
After consideration of the public comments we received, we are finalizing our proposal to add procedure codes 0DTF0ZZ and 0DTF4ZZ to MDC 10 in MS-DRGs 628, 629, and 630 effective October 1, 2024, for FY 2025.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35985 through 35991), we received a request to review the GROUPER logic that would determine the assignment of cases to MS-DRG 794 (Neonate with Other Significant Problems). The requestor stated that it appears that MS-DRG 794 is the default MS-DRG in MDC 15 (Newborns and Other Neonates with Conditions Originating in Perinatal Period), as the GROUPER logic for MS-DRG 794 displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual is defined by a “principal or secondary diagnosis of newborn or neonate, with other significant problems, not assigned to DRG 789 through 793 or 795”. The requestor expressed concern that defaulting to MS-DRG 794, instead of MS-DRG 795 (Normal Newborn), for assignment of cases in MDC 15 could contribute to overpayments in healthcare by not aligning the payment amount to the appropriate level of care in newborn cases. The requestor recommended that CMS update the GROUPER logic that would determine the assignment of cases to MS-DRGs in MDC 15 to direct all cases that do not have the diagnoses and procedures as specified in the Definitions Manual to instead be grouped to MS-DRG 795.
Specifically, as discussed in the proposed rule, the requestor expressed concern that a newborn encounter coded with a principal diagnosis code from ICD-10-CM category Z38 (Liveborn infants according to place of birth and type of delivery), followed by code P05.19 (Newborn small for gestational age, other), P59.9 (Neonatal jaundice, unspecified), Q38.1 (Ankyloglossia), Q82.5 (Congenital non-neoplastic nevus), or Z23 (Encounter for immunization) is assigned to MS-DRG 794. The requestor stated that they performed a detailed claim level study, and in their clinical assessment, newborn encounters coded with a principal diagnosis code from ICD-10-CM category Z38, followed by diagnosis code P05.19, P59.9, Q38.1, Q82.5, or Z23 in fact clinically describe normal newborn encounters and the case assignment should instead be to MS-DRG 795.
We stated in the proposed rule that our analysis of this grouping issue confirmed that when a principal diagnosis code from MDC 15, such as a diagnosis code from category Z38 (Liveborn infants according to place of birth and type of delivery), is reported followed by ICD-10-CM code P05.19 (Newborn small for gestational age, other), Q38.1 (Ankyloglossia) or Q82.5 (Congenital non-neoplastic nevus), the case is assigned to MS-DRG 794.
However, as we examined the GROUPER logic that would determine an assignment of cases to MS-DRG 795, we noted in the proposed rule that the “only secondary diagnosis” list under MS-DRG 795 already includes ICD-10-CM codes P59.9 (Neonatal jaundice, unspecified) and Z23 (Encounter for immunization). Therefore, when a principal diagnosis code from MDC 15, such as a diagnosis code from category
Next, we stated in the proposed rule that we reviewed the claims data from the September 2023 update of the FY 2023 MedPAR file; however, we found zero cases across MS-DRGs 794 and 795. We then examined the clinical factors. The description for ICD-10-CM diagnosis code P05.19 is “Newborn small for gestational age, other” and the inclusion term in the ICD-10-CM Tabular List of Diseases for this diagnosis code is “Newborn small for gestational age, 2,500 grams and over.” We noted in the proposed rule that “small-for-gestational age” is diagnosed by assessing the gestational age and the weight of the baby after birth. There is no specific treatment for small-for-gestational-age newborns. Most newborns who are moderately small for gestational age are healthy babies who just happen to be on the smaller side. Unless the newborn is born with an infection or has a genetic disorder, most small-for-gestational-age newborns have no symptoms and catch up in their growth during the first year of life and have a normal adult height. Next, ICD-10-CM diagnosis code Q38.1 describes ankyloglossia, also known as tongue-tie, which is a condition that impairs tongue movement due to a restrictive lingual frenulum. We noted that in infants, tongue-tie is treated by making a small cut to the lingual frenulum to allow the tongue to move more freely. This procedure, called a frenotomy, can be done in a healthcare provider's office without anesthesia. Newborns generally recover within about a minute of the procedure, and pain relief is usually not indicated. Lastly, ICD-10-CM diagnosis code Q82.5 describes a congenital non-neoplastic nevus. A congenital nevus is a type of pigmented birthmark that appears at birth or during a baby's first year. Most congenital nevi do not cause health problems and may only require future monitoring.
In reviewing these three ICD-10-CM codes and the conditions they describe; we stated in the proposed rule that we believe these diagnoses generally do not prolong the inpatient admission of the newborn and newborns with these diagnoses generally receive standard follow-up care after birth. We stated clinically, we agreed with the requestor that newborn encounters coded with a principal diagnosis code from ICD-10-CM category Z38 (Liveborn infants according to place of birth and type of delivery), followed by code P05.19 (Newborn small for gestational age, other), Q38.1 (Ankyloglossia), or Q82.5 (Congenital non-neoplastic nevus) should not map to MS-DRG 794 (Neonate with Other Significant Problems) and should instead be assigned to MS-DRG 795 (Normal Newborn). Therefore, for the reasons discussed, we proposed to reassign diagnosis code P05.19 from the “principal or secondary diagnosis” list under MS-DRG 794 to the “principal diagnosis” list under MS-DRG 795 (Normal Newborn). We also proposed to add diagnosis codes Q38.1 and Q82.5 to the “only secondary diagnosis” list under MS-DRG 795 (Normal Newborn). Under this proposal, cases with a principal diagnosis described by an ICD-10-CM code from category Z38 (Liveborn infants according to place of birth and type of delivery), followed by codes P05.19, Q38.1, or Q82.5 will be assigned to MS-DRG 795.
In response to the recommendation that CMS update the GROUPER logic that would determine an assignment of cases to MS-DRGs in MDC 15, in the proposed rule we stated we agreed with the requestor that the GROUPER logic for MS-DRG 794 is defined by a “principal or secondary diagnosis of newborn or neonate, with other significant problems, not assigned to DRG 789 through 793 or 795”. We acknowledged that MS-DRG 794 utilizes “fall-through” logic, meaning if a diagnosis code is not assigned to any of the other MS-DRGs, then assignment “falls-through” to MS-DRG 794. As discussed in the proposed rule, we have started to examine the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15, including MS-DRGs 794 and 795, to determine where further refinements could potentially be made to better account for differences in clinical complexity and resource utilization. However, as we have noted in prior rulemaking (72 FR 47152), we cannot adopt the same approach to refine the newborn MS-DRGs because of the extremely low volume of Medicare patients there are in these MS-DRGs. Additional time is needed to fully and accurately evaluate cases currently grouping to the MS-DRGs in MDC 15 to consider if restructuring the current MS-DRGs would better recognize the clinical distinctions of these patient populations. Any proposed modifications to these MS-DRGs will be addressed in future rulemaking consistent with our annual process.
While indicating their support for the proposal, some commenters provided the following list of diagnoses which they stated also clinically describe normal newborn encounters when reported and therefore case assignment should also be to MS-DRG 795 instead of MS-DRG 794.
We will review the remaining diagnoses suggested by the commenters as we examine the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15, including MS-DRGs 794 and 795. We note that we would address any proposed modifications to the existing logic in future rulemaking.
A commenter disagreed with the proposal to remove ICD-10-CM diagnosis code P05.19 (newborn small for gestation age, other) from the logic for MS-DRG 794 and stated that newborns that are small for gestational age must undergo hypoglycemia screening, which includes the monitoring of glucose levels at 1, 2, 3, 12, and 24 hours of life and are at increased risk for complications such as neonatal asphyxia, hypothermia, hypoglycemia, hypocalcemia, polycythemia, sepsis, and death. This commenter stated review of the neonatal admissions at their facility supports that these neonates often require longer lengths of stay and utilize increased resources as 5% of approximately 800 cases reporting a secondary diagnosis of P05.19 had a length of stay greater or equal to 4 days. This commenter stated that should diagnosis codes P05.19 and Q38.1 be removed from the logic of MS-DRG 794, a new MS-DRG should be created to capture newborns with minor problems.
Similarly, in infants with ankyloglossia indicated for frenotomy, the frenotomy is generally a quick, non-invasive procedure that can be done in a healthcare provider's office without anesthesia. Should the uncommon postprocedural complications noted by the commenter arise when frenotomy is performed in the inpatient setting, those complications should be reported to fully reflect the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the complication. We also note, as discussed in prior rulemaking (86 FR 44878), the MS-DRG system is a system of averages and it is expected that within the diagnostic related groups, some cases may demonstrate higher than average costs, while other cases may demonstrate lower than average costs. We also provide outlier payments to mitigate extreme loss on individual cases.
We will review the suggestion to create an MS-DRG for newborns with minor problems as we examine the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15 and would address any proposed modifications to the existing logic in future rulemaking.
Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to reassign diagnosis code P05.19 from the “principal or secondary diagnosis” list under MS-DRG 794 to the “principal diagnosis” list under MS-DRG 795 (Normal Newborn), without modification, effective October 1, 2024, for FY 2025. We are also finalizing our proposal to add diagnosis codes Q38.1 and Q82.5 to the “only secondary diagnosis” list under MS-DRG 795 (Normal Newborn), without modification, effective October 1, 2024, for FY 2025. Under these finalizations, cases with a principal diagnosis described by an ICD-10-CM code from category Z38 (Liveborn infants according to place of birth and type of delivery), followed by codes P05.19, Q38.1, or Q82.5 will be assigned to MS-DRG 795.
As noted earlier and discussed in the proposed rule, we have started our examination of the GROUPER logic that would determine an assignment of cases to MS-DRGs in MDC 15. During this review, we stated in the proposed rule we noted the logic for MS-DRG 795 (Normal Newborn) includes five diagnosis codes from ICD-10-CM category Q81 (Epidermolysis bullosa). We refer the reader to the ICD-10 MS-DRG Version 41.1 Definitions Manual (available via on the CMS website at:
In the proposed rule we stated we reviewed this grouping issue and noted that epidermolysis bullosa (EB) is a group of genetic (inherited) disorders that causes skin to be fragile, blister, and tear easily in response to minimal friction or trauma. In some cases, blisters form inside the body in places such as the mouth, esophagus, other internal organs, or eyes. When the blisters heal, they can cause painful scarring. In severe cases, the blisters and scars can harm internal organs and tissue enough to be fatal. Patients diagnosed with severe cases of EB have a life expectancy that ranges from infancy to 30 years of age.
We noted in the proposed rule that EB has four primary types: simplex, junctional, dystrophic, and Kindler syndrome, and within each type there are various subtypes, ranging from mild to severe. A skin biopsy can confirm a diagnosis of EB and identify which layers of the skin are affected and determine the type of epidermolysis bullosa. Genetic testing may also be ordered to diagnose the specific type and subtype of the disease. In caring for patients with EB, adaptions may be necessary in the form of handling, feeding, dressing, managing pain, and treating wounds caused by the blisters and tears. If there is a known diagnosis of EB, but the neonate has no physical signs at birth, there will still need to be specialty consultation in the inpatient setting or referral for outpatient follow-up. We stated we believe the five diagnosis codes from ICD-10-CM category Q81 (Epidermolysis bullosa) describe conditions that require advanced care and resources similar to other conditions already assigned to the logic of MS-DRG 794 and MS-DRGs 595 and 596 (Major Skin Disorders with MCC and without MCC, respectively), even in cases where the type of EB is unspecified.
Therefore, for clinical consistency, we proposed to reassign ICD-10-CM diagnosis codes Q81.0, Q81.1, Q81.2, Q81.8, and Q81.9 from MS-DRGs 606 and 607 in MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRG 795 (Normal Newborn) in MDC 15 to MS-DRGs 595 and 596 in MDC 09 and MS-DRG 794 in MDC 15, effective October 1, 2024, for FY 2025.
After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-CM diagnosis codes Q81.0, Q81.1, Q81.2, Q81.8, and Q81.9 from MS-DRGs 606 and 607 in MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) and MS-DRG 795
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35986 through 35991), we identified a replication issue from the ICD-9 based MS-DRGs to the ICD-10 based MS-DRGs regarding the assignment of six ICD-10-CM diagnosis codes that describe a type of acute leukemia. We noted that under the Version 32 ICD-9-CM based MS-DRGs, the ICD-9-CM diagnosis codes as shown in the following table were assigned to surgical MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively), surgical MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively), and medical MS-DRGs 840, 841, and 842 (Lymphoma and Non-Acute Leukemia with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms). The six ICD-10-PCS code translations also shown in the following table, that provide more detailed and specific information for the ICD-9-CM codes reflected, also currently group to MS-DRGs 820, 821, 822, 823, 824, 825, 840, 841 and 842 in the ICD-10 MS-DRGs Version 41.1. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at:
In the proposed rule we stated that during our review of this issue, we noted that under ICD-9-CM, the diagnosis codes as reflected in the table did not describe the acuity of the diagnosis (for example, acute versus chronic). This is in contrast to their six comparable ICD-10-CM code translations listed in the previous table that provide more detailed and specific information for the ICD-9-CM diagnosis codes and do specify the acuity of the diagnoses.
We noted in the proposed rule that ICD-10-CM codes C94.20, C94.21, and C94.22 describe acute megakaryoblastic leukemia (AMKL), a rare subtype of acute myeloid leukemia (AML) that affects megakaryocytes, platelet-producing cells that reside in the bone marrow. Similarly, ICD-10-CM codes C94.40, C94.41, and C94.42 describe acute panmyelosis with myelofibrosis (APMF), a rare form of acute myeloid leukemia characterized by acute panmyeloid proliferation with increased blasts and accompanying fibrosis of the bone marrow that does not meet the criteria for AML with myelodysplasia related changes. As previously mentioned, these six diagnosis codes are assigned to MS-DRGs 820, 821, 822, 823, 824, 825, 840, 841, and 842. In the proposed rule, we noted that GROUPER logic lists for MS-DRGs 820, 821, and 822 includes diagnosis codes describing lymphoma and both acute and non-acute leukemias, however the logic lists for MS-DRGs 823, 824, 825, 840, 841, and 842 contain diagnosis codes describing lymphoma and non-acute leukemias. We stated that in our analysis of this grouping issue, we also noted that cases reporting a chemotherapy principal diagnosis with a secondary diagnosis describing acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis are assigned to MS-DRGs 846, 847, and 848 (Chemotherapy without Acute Leukemia as Secondary Diagnosis, with MCC, with CC, and without CC/MCC, respectively) in Version 41.1.
Next, in the proposed rule we stated we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 823, 824, 825, 840, 841, and 842 to identify cases reporting one of the six diagnosis codes listed previously that describe acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis. We also examined MS-DRGs 846, 847, and 848 (Chemotherapy without Acute Leukemia as Secondary Diagnosis, with MCC, with CC, and without CC/MCC, respectively). Our findings are shown in the following tables:
As shown in the table, in MS-DRG 823, we identified a total of 2,235 cases with an average length of stay of 14 days and average costs of $40,587. Of those 2,235 cases, there were two cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 823 ($49,600 compared to $40,587) and a longer average length of stay (31.5 days compared to 14 days). We found zero cases in MS-DRG 824 reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis. In MS-DRG 825, we identified a total of 427 cases with an average length of stay of 2.9 days and average costs of $10,959. Of those 427 cases, there was one case reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with costs higher than the average costs in the FY 2023 MedPAR file for MS-DRG 825 ($17,293 compared to $10,959) and a longer length of stay (6 days compared to 2.9 days).
As shown in the table, in MS-DRG 840, we identified a total of 7,747 cases with an average length of stay of 9.6 days and average costs of $26,215. Of those 7,747 cases, there were 12 cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 840 ($21,357 compared to $26,215) and a shorter average length of stay (8.7 days compared to 9.6 days). In MS-DRG 841, we identified a total of 5,019 cases with an average length of stay of 5.3 days and average costs of $13,502. Of those 5,019 cases, there were six cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 841 ($6,976 compared to $13,502) and a shorter average length of stay (2.8 days compared to 5.3 days). We found zero cases in MS-DRG 842 reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis.
As shown in the table, in MS-DRG 847, we identified a total of 7,329 cases with an average length of stay of 4.4 days and average costs of $11,250. Of those 7,329 cases, there were two cases reporting a chemotherapy principal diagnosis code with a secondary diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, with average costs lower than the average costs in the FY 2023 MedPAR file for MS-DRG 840 ($7,569 compared to $11,250) and a longer average length of stay (5 days compared to 4.4 days). We found zero cases in MS-DRGs 846 and 848 reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis.
As discussed in the proposed rule, next, we examined the MS-DRGs within MDC 17. Given that the six diagnoses codes describe subtypes of acute myeloid leukemia, we stated that we determined that the cases reporting a principal diagnosis of acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis would more suitably group to medical MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). Similarly, we stated cases reporting a chemotherapy principal diagnosis with a secondary diagnosis describing acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis would more suitably group to medical MS-DRGs 837, 838, and 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis, or with High Dose Chemotherapy Agent with MCC, with CC or High Dose Chemotherapy Agent, and without CC/MCC, respectively).
We stated we then examined claims data from the September 2023 update of the FY 2023 MedPAR for MS-DRGs 834, 835, 836, 837, 838, and 839. Our findings are shown in the following table.
While the average costs for all cases in MS-DRGs 834, 835, 836, 837, 838, and 839 are higher than the average costs of the small number of cases reporting a diagnosis code that describes acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, or reporting a chemotherapy principal diagnosis with a secondary diagnosis describing acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis, and the average lengths of stay are longer, we noted that diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 describe types of acute leukemia. In the proposed rule we stated that for clinical coherence, we believe these six diagnosis codes would be more appropriately grouped along with other ICD-10-CM diagnosis codes that describe types of acute leukemia.
We reviewed this grouping issue, and stated our analysis indicates that the six diagnosis codes describing the acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis were initially assigned to the list of diagnoses in the GROUPER logic for MS-DRGs 823, 824, 825, 840, 841, and 842 as a result of replication in the transition from ICD-9 to ICD-10 based MS-DRGs. We also noted that diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 do not describe non-acute leukemia diagnoses.
Accordingly, because the six diagnosis codes that describe acute megakaryoblastic leukemia or acute panmyelosis with myelofibrosis are not clinically consistent with non-acute leukemia diagnoses, and it is clinically
After consideration of the public comments we received, we are finalizing our proposal to reassign diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 from MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively), and MS-DRGs 840, 841, and 842 (Lymphoma and Non-Acute Leukemia with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 837, 838, and 839 (Chemotherapy with Acute Leukemia as Secondary Diagnosis, or with High Dose Chemotherapy Agent with MCC, with CC or High Dose Chemotherapy Agent, and without CC/MCC, respectively) in MDC 17, without modification, effective October 1, 2024, for FY 2025. Under this finalization, diagnosis codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 will continue to be assigned to surgical MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).
As discussed in the proposed rule, in our review of the MS-DRGs in MDC 17 for further refinement, we next examined the procedures currently assigned to MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). We noted that the logic for case assignment to MS-DRGs 820, 821, 822, 826, 827, and 828 is comprised of a logic list entitled “Operating Room Procedures” which is defined by a list of 4,320 ICD-10-PCS procedure codes, including 90 ICD-10-PCS codes describing bypass procedures from the cerebral ventricle to various body parts. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 41.1 (available on the CMS website at:
In the proposed rule we stated in our review of the procedures currently assigned to MS-DRGs 820, 821, 822, 826, 827, and 828, we noted 12 ICD-10-PCS procedure codes that describe bypass procedures from the cerebral ventricle to the subgaleal space or cerebral cisterns, such as subgaleal or cisternal shunt placement, that are not included in the logic for MS-DRGs 820, 821, 822, 826, 827, and 828. The 12 procedure codes are listed in the following table.
We noted in the proposed rule that a subgaleal shunt consists of a shunt tube with one end in the lateral ventricles while the other end is inserted into the subgaleal space of the scalp, while a ventriculo-cisternal shunt diverts the cerebrospinal fluid flow from one of the lateral ventricles, via a ventricular catheter, to the cisterna magna of the posterior fossa. Both procedures allow for the drainage of excess cerebrospinal fluid. Indications for ventriculosubgaleal or ventriculo-cisternal shunting include acute head trauma, subdural hematoma, hydrocephalus, and leptomeningeal disease (LMD) in malignancies such as breast cancer, lung cancer, melanoma, acute lymphocytic leukemia (ALL) and non-hodgkin's lymphoma (NHL).
Recognizing that acute lymphocytic leukemia (ALL) and non-hodgkin's lymphoma (NHL) are indications for ventriculosubgaleal or ventriculo-
After consideration of the public comments we received, we are finalizing our proposal to add the 12 procedure codes that describe bypass procedures from the cerebral ventricle to the subgaleal space or cerebral cisterns listed previously to MS-DRGs 820, 821, 822, 826, 827, and 828 in MDC 17, without modification, effective October 1, 2024, for FY 2025.
Lastly, as discussed in the proposed rule, in our analysis of the MS-DRGs in MDC 17 for further refinement, we noted that the logic for case assignment to medical MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS website at:
As medical MS-DRG 834, 835, and 836 contains GROUPER logic that includes ICD-10-PCS procedure codes designated as O.R. procedures, in the proposed rule we stated we examined claims data from the September 2023 update of the FY 2023 MedPAR file for MS-DRG 834, 835, and 836 to identify cases reporting an O.R. procedure. Our findings are shown in the following table:
As shown by the table, in MS-DRG 834, we identified a total of 4,094 cases, with an average length of stay of 16.3 days and average costs of $49,986. Of those 4,094 cases, there were 277 cases reporting an O.R. procedure, with higher average costs as compared to all cases in MS-DRG 834 ($92,246 compared to $49,986), and a longer average length of stay (28.2 days compared to 16.3 days). In MS-DRG 835, we identified a total of 1,682 cases with an average length of stay of 7.2 days and average costs of $19,023. Of those 1,682 cases, there were 79 cases reporting an O.R. procedure, with higher average costs as compared to all cases in MS-DRG 835 ($30,771 compared to $19,023), and a longer average length of stay (10.4 days compared to 7.2 days). In MS-DRG 836, we identified a total of 230 cases with an average length of stay of 4 days and average costs of $11,225. Of those 230 cases, there were 7 cases reporting an O.R. procedure, with higher average costs as compared to all cases in MS-DRG 836 ($17,950 compared to $11,225), and a longer average length of stay (5.9 days compared to 4 days). We stated that the data analysis shows that the average costs of cases reporting an O.R. procedure are higher than for all cases in their respective MS-DRG.
We stated in the proposed rule that the data analysis clearly shows that cases reporting a principal diagnosis code describing a type of acute leukemia with an ICD-10-PCS procedure code designated as O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 have higher average costs and longer lengths of stay compared to all the cases in their assigned MS-DRG. For these reasons, we proposed to create a new surgical MS-DRG for cases reporting a principal diagnosis code describing a type of acute leukemia with an O.R. procedure.
To compare and analyze the impact of our suggested modifications, as discussed in the proposed rule, we ran a simulation using the claims data from the September 2023 update of the FY 2023 MedPAR file. The following table illustrates our findings for all 367 cases reporting a principal diagnosis code describing a type of acute leukemia with an ICD-10-PCS procedure code designated as O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822. We stated we believe the resulting proposed MS-DRG assignment, reflecting these modifications, is more clinically
In the proposed rule, we stated we applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of this FY 2025 IPPS/LTCH PPS proposed rule. As shown in the table, we identified a total of 367 cases using the claims data from the September 2023 update of the FY 2023 MedPAR file, so the criterion that there are at least 500 or more cases in each subgroup could not be met. Therefore, for FY 2025, we did not propose to subdivide the proposed new MS DRG for acute leukemia with other procedures into severity levels.
In summary, for FY 2025, we proposed to create a new base surgical MS-DRG for cases reporting a principal diagnosis describing a type of acute leukemia with an ICD-10-PCS procedure code designated as an O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 in MDC 17. The proposed new MS-DRG is proposed new MS-DRG 850 (Acute Leukemia with Other Procedures). We proposed to add the 27 ICD-10-CM diagnosis codes describing various types of acute leukemias currently listed in the logic list entitled “Principal Diagnosis” in MS-DRGs 834, 835, and 836 as well as ICD-10-CM codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 discussed earlier in this section to the proposed new MS-DRG 850. We also proposed to add the procedure codes from current MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively) to the proposed new MS-DRG 850. In the proposed rule, we noted that in the current logic list of MS-DRGs 823, 824, and 825 there are 189 procedure codes describing stereotactic radiosurgery of various body parts that are designated as non-O.R. procedures affecting the MS-DRG, therefore, as part of the logic for new MS-DRG 850, we also proposed to designate these 189 codes as non-O.R. procedures affecting the MS-DRG.
In addition, we proposed to revise the titles for MS-DRGs 834, 835, and 836 by deleting the reference to “Major O.R. Procedures” in the title. Specifically, we proposed to revise the titles of medical MS-DRGs 834, 835, and 836 from “Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC”, respectively to “Acute Leukemia with MCC, with CC, and without CC/MCC”, respectively to better reflect the GROUPER logic that will no longer include ICD-10-PCS procedure codes designated as O.R. procedures. We refer the reader to section II.C.15. of the preamble of this final rule for the discussion of the surgical hierarchy and the complete list of our proposed modifications to the surgical hierarchy as well as our finalization of those proposals.
As further discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58659 through 58660), the minimum case volume requirements were established to avoid overly fragmenting the MS-DRG classification system. We stated that with smaller volumes, the MS-DRGs will be subject to stochastic (unpredictable) effects. We continue to believe that stability of MS-DRG payment is an important objective and therefore, that a volume criterion is a needed adjunct to cost differentiation. We established a 500-case minimum to support this stability. Additionally, we note that in examining the claims data from the September 2023 update of the FY 2023 MedPAR file to identify cases reporting an O.R. procedure and a principal diagnosis code describing various types of acute leukemias, there were only 7 cases reporting an O.R. procedure with a principal diagnosis code describing various types of acute leukemias, without reporting a secondary diagnosis designated as a CC or an MCC. As stated in the proposed rule (89 FR 36021), we set a threshold of 10 cases as the minimum number of
We also note, as discussed in prior rulemaking (86 FR 44878), the MS-DRG system is a system of averages and it is expected that within the diagnostic related groups, some cases may demonstrate higher than average costs, while other cases may demonstrate lower than average costs. We also provide outlier payments to mitigate extreme loss on individual cases.
We refer the reader to section II.C.1.b. of the preamble of this final rule for related discussion regarding our finalization of the expansion of the criteria to include the NonCC subgroup in the FY 2021 final rule and our finalization of the proposal to continue to delay application of the NonCC subgroup criteria to existing MS-DRGs with a three-way severity level split for FY 2025.
After consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to create new base surgical MS-DRG 850 (Acute Leukemia with Other Procedures) for cases reporting a principal diagnosis describing a type of acute leukemia with an ICD-10-PCS procedure code designated as an O.R. procedure that is not listed in the logic list of MS-DRGs 820, 821, and 822 in MDC 17, without modification, effective October 1, 2024, for FY 2025. Accordingly for FY 2025, we are finalizing our proposal to add the 27 ICD-10-CM diagnosis codes describing various types of acute leukemias currently listed in the logic list entitled “Principal Diagnosis” in MS-DRGs 834, 835, and 836 as well as ICD-10-CM codes C94.20, C94.21, C94.22, C94.40, C94.41, and C94.42 discussed earlier in this section to new MS-DRG 850. We are finalizing our proposal to add the procedure codes from current MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively) to new MS-DRG 850. In addition, we are also finalizing our proposal to designate the 189 codes describing stereotactic radiosurgery of various body parts as non-O.R. procedures affecting the MS-DRG as part of the logic for new MS-DRG 850 for FY 2025.
Lastly, we are finalizing our proposal to revise the titles for medical MS-DRGs 834, 835, and 836 from “Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC”, respectively to “Acute Leukemia with MCC, with CC, and without CC/MCC”, respectively for FY 2025.
We annually conduct a review of procedures producing assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987 through 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) on the basis of volume, by procedure, to see if it would be appropriate to move cases reporting these procedure codes out of these MS-DRGs into one of the surgical MS-DRGs for the MDC into which the principal diagnosis falls. The data are arrayed in two ways for comparison purposes. We look at a frequency count of each major operative procedure code. We also compare procedures across MDCs by volume of procedure codes within each MDC. We use this information to determine which procedure codes and diagnosis codes to examine.
We identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical MS-DRGs for the MDC in which the diagnosis falls. We also consider whether it would be more appropriate to move the principal diagnosis codes into the MDC to which the procedure is currently assigned.
Based on the results of our review of the claims data from the September 2023 update of the FY 2023 MedPAR file of cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, in the proposed rule (89 FR 35991) we stated we did not identify any cases for reassignment and did not propose to move any cases from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into a surgical MS-DRGs for the MDC into which the principal diagnosis or procedure is assigned.
In addition to the internal review of procedures producing assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, we also consider requests that we receive to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to determine if it would be appropriate to add procedure codes to one of the surgical MS-DRGs for the MDC into which the principal diagnosis falls or to move the principal diagnosis to the surgical MS-DRGs to which the procedure codes are assigned. As discussed in the proposed rule, we did not receive any requests suggesting reassignment.
We also review the list of ICD-10-PCS procedures that, when in combination with their principal diagnosis code, result in assignment to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those two groups of MS-DRGs to the other group of MS-DRGs based on average costs and the length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting MS-DRG assignment illogical. If we find these shifts, we would propose to move cases to keep the MS-DRGs clinically similar or to provide payment for the cases in a similar manner. Generally, we move only those procedures for which we have an adequate number of discharges to analyze the data.
Additionally, we also consider requests that we receive to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to determine if it would be appropriate for the cases to be reassigned from one of the MS-DRG groups to the other. Based on the results of our review of the claims data from the September 2023 update of the FY 2023 MedPAR file, in the proposed rule we stated we did not identify any cases for reassignment. We also did not receive any requests suggesting reassignment. Therefore, for FY 2025 we did not propose to move any cases reporting procedure codes from MS-DRGs 981 through 983 to MS-DRGs 987 through 989 or vice versa.
After consideration of the public comments we received, we are finalizing, without modification, our proposal to not move any cases from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into a surgical MS-DRGs for the MDC into which the principal diagnosis or procedure is assigned. We are also finalizing, without modification, our proposal to not move any cases reporting procedure codes
Under the IPPS MS-DRGs (and former CMS MS-DRGs), we have a list of procedure codes that are considered operating room (O.R.) procedures. Historically, we developed this list using physician panels that classified each procedure code based on the procedure and its effect on consumption of hospital resources. For example, generally the presence of a surgical procedure which required the use of the operating room would be expected to have a significant effect on the type of hospital resources (for example, operating room, recovery room, and anesthesia) used by a patient, and therefore, these patients were considered surgical. Because the claims data generally available do not precisely indicate whether a patient was taken to the operating room, surgical patients were identified based on the procedures that were performed.
Generally, if the procedure was not expected to require the use of the operating room, the patient would be considered medical (non-O.R.).
Currently, each ICD-10-PCS procedure code has designations that determine whether and in what way the presence of that procedure on a claim impacts the MS-DRG assignment. First, each ICD-10-PCS procedure code is either designated as an O.R. procedure for purposes of MS-DRG assignment (“O.R. procedures”) or is not designated as an O.R. procedure for purposes of MS-DRG assignment (“non-O.R. procedures”). Second, for each procedure that is designated as an O.R. procedure, that O.R. procedure is further classified as either extensive or non-extensive. Third, for each procedure that is designated as a non-O.R. procedure, that non-O.R. procedure is further classified as either affecting the MS-DRG assignment or not affecting the MS-DRG assignment. We refer to these designations that do affect MS-DRG assignment as “non O.R. affecting the MS-DRG.” For new procedure codes that have been finalized through the ICD-10 Coordination and Maintenance Committee meeting process and are proposed to be classified as O.R. procedures or non-O.R. procedures affecting the MS-DRG, we recommend the MS-DRG assignment which is then made available in association with the proposed rule (Table 6B.—New Procedure Codes) and subject to public comment. These proposed assignments are generally based on the assignment of predecessor codes or the assignment of similar codes. For example, we generally examine the MS-DRG assignment for similar procedures, such as the other approaches for that procedure, to determine the most appropriate MS-DRG assignment for procedures proposed to be newly designated as O.R. procedures. As discussed in section II.C.13 of the preamble of this final rule, we are making Table 6B.—New Procedure Codes—FY 2025 available on the CMS website at:
In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that, given the long period of time that has elapsed since the original O.R. (extensive and non-extensive) and non-O.R. designations were established, the incremental changes that have occurred to these O.R. and non-O.R. procedure code lists, and changes in the way inpatient care is delivered, we plan to conduct a comprehensive, systematic review of the ICD-10-PCS procedure codes. This will be a multiyear project during which we will also review the process for determining when a procedure is considered an operating room procedure. For example, we may restructure the current O.R. and non-O.R. designations for procedures by leveraging the detail that is now available in the ICD-10 claims data. We refer readers to the discussion regarding the designation of procedure codes in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38066) where we stated that the determination of when a procedure code should be designated as an O.R. procedure has become a much more complex task. This is, in part, due to the number of various approaches available in the ICD-10-PCS classification, as well as changes in medical practice. While we have typically evaluated procedures on the basis of whether or not they would be performed in an operating room, we believe that there may be other factors to consider with regard to resource utilization, particularly with the implementation of ICD-10.
We discussed in the FY 2020 IPPS/LTCH PPS proposed rule that as a result of this planned review and potential restructuring, procedures that are currently designated as O.R. procedures may no longer warrant that designation, and conversely, procedures that are currently designated as non-O.R. procedures may warrant an O.R. type of designation. We intend to consider the resources used and how a procedure should affect the MS-DRG assignment. We may also consider the effect of specific surgical approaches to evaluate whether to subdivide specific MS-DRGs based on a specific surgical approach. We stated we plan to utilize our available MedPAR claims data as a basis for this review and the input of our clinical advisors. As part of this comprehensive review of the procedure codes, we also intend to evaluate the MS-DRG assignment of the procedures and the current surgical hierarchy because both of these factor into the process of refining the ICD-10 MS-DRGs to better recognize complexity of service and resource utilization.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58540 through 58541), we provided a summary of the comments we had received in response to our request for feedback on what factors or criteria to consider in determining whether a procedure is designated as an O.R. procedure in the ICD-10-PCS classification system for future consideration. We also stated that in consideration of the PHE, we believed it may be appropriate to allow additional time for the claims data to stabilize prior to selecting the timeframe to analyze for this review.
We stated in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58749) that we continue to believe additional time is necessary as we continue to develop our process and methodology. Therefore, we stated we will provide more detail on this analysis and the methodology for conducting this review in future rulemaking. In response to this discussion in the FY 2024 IPPS/LTCH PPS final rule, we received a comment by the October 20, 2023 deadline. As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35992), the commenter acknowledged that there is no easy rule that would allow CMS to designate certain surgeries as “non-O.R.” procedures. The commenter stated that they believed that open procedures should always be designated O.R. procedures and approaches other than open should not be a sole factor in designating a procedure as non-O.R. as some minimally invasive procedures
As discussed in the proposed rule, CMS appreciates the commenter's feedback and recommendations as to factors to consider in evaluating O.R. designations. We stated we agree with the commenter and believe that there may be other factors to consider with regard to resource utilization. As discussed in the FY 2024 IPPS/LTCH PPS final rule, we have signaled in prior rulemaking that the designation of an O.R. procedure encompasses more than the physical location of the hospital room in which the procedure may be performed; in other words, the performance of a procedure in an operating room is not the sole determining factor we will consider as we examine the designation of a procedure in the ICD-10-PCS classification system. We are exploring alternatives on how we may restructure the current O.R. and non-O.R. designations for procedures by leveraging the detail that is available in the ICD-10 claims data.
As part of the broader and continuing conversation about the designations of procedures in the ICD-10-PCS classification system, a few commenters recommended that CMS work closely with physician specialty societies and industry stakeholders to identify the most important drivers of complexity and resource use in the hospital setting. A commenter specifically recommended that CMS consider a technical expert panel (TEP) made up of industry stakeholders and experts to review methodologies for determining the designation of procedure codes in the ICD-10-PCS classification system. Another commenter encouraged CMS to consider factors such as:
• whether the procedure involves either the intentional non-transient alteration of structures of the body, or cutting into the body, or both;
• the surgical approach (
• the requirement of either a surgeon or non-surgeon provider to be present during procedure;
• the complexity of procedures performed in an operating room, or a hybrid operating room, versus procedures performed in an electrophysiology laboratory;
• resource utilization requirements during the performance of the procedure in terms of the need for anesthesia and monitoring, etc.; and
• inpatient versus outpatient status.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, we did not receive any requests regarding changing the designation of specific ICD-10-PCS procedure codes from non-O.R. to O.R. procedures, or to change the designation from O.R. procedures to non-O.R. procedures by the October 20, 2023 deadline. In this section of this final rule, as we did in the proposed rule, we discuss the proposals we made based on our internal review and analysis and we discuss the process that was utilized for evaluating each procedure code. For each procedure, we considered—
• Whether the procedure would typically require the resources of an operating room;
• Whether it is an extensive or a non-extensive procedure; and
• To which MS-DRGs the procedure should be assigned.
We note that many MS-DRGs require the presence of any O.R. procedure. As a result, cases with a principal diagnosis associated with a particular MS-DRG would, by default, be grouped to that MS-DRG. Therefore, we do not list these MS-DRGs in our discussion in this section of this final rule. Instead, we only discuss MS-DRGs that require explicitly adding the relevant procedure codes to the GROUPER logic in order for those procedure codes to affect the MS-DRG assignment as intended.
For procedures that would not typically require the resources of an operating room, we determined if the procedure should affect the MS-DRG assignment. In cases where we proposed to change the designation of procedure codes from non-O.R. procedures to O.R. procedures, we also proposed one or more MS-DRGs with which these
In addition, cases that contain O.R. procedures will map to MS-DRGs 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when they do not contain a principal diagnosis that corresponds to one of the MDCs to which that procedure is assigned. These procedures need not be assigned to MS-DRGs 981 through 989 in order for this to occur. Therefore, we did not specifically address that aspect in summarizing the proposals we made based on our internal review and analysis in the proposed rule and in this section of this final rule.
As discussed in the proposed rule (89 FR 35993), during our review, we noted inconsistencies in how procedures involving laparoscopic excisions of intestinal body parts are designated. Procedure codes describing the laparoscopic excision of intestinal body parts differ by qualifier. ICD-10-PCS procedure codes describing excisions of intestinal body parts with the diagnostic qualifier “X”, are used to report these procedures when performed for diagnostic purposes. We identified the following five related codes:
In the proposed rule, we noted the ICD-10-PCS procedure codes describing the laparoscopic excision of intestinal body parts for diagnostic purposes listed previously have been assigned different attributes in terms of designation as an O.R. or non-O.R. procedure when compared to similar procedures describing the laparoscopic excisions of intestinal body parts for nondiagnostic purposes. We noted in the ICD-10 MS-DRGs Version 41, these ICD-10-PCS codes are currently recognized as non-O.R. procedures for purposes of MS-DRG assignment, while similar excision of intestinal body part procedure codes with the same approach but different qualifiers are recognized as O.R. procedures.
As discussed in the proposed rule, upon further review and consideration, we stated we believe that procedure codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX describing a laparoscopic excision of an intestinal body parts for diagnostic purposes warrant designation as an O.R. procedures consistent with other laparoscopic excision procedures performed on the same intestinal body parts for nondiagnostic purposes. We stated we also believe it is clinically appropriate for these procedures to group to the same MS-DRGs as the procedures describing excision procedures performed on the intestinal body parts for nondiagnostic purposes. Therefore, we proposed to add procedure codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX to the FY 2025 ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRG 264 (Other Circulatory System O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System); MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, CC, without CC/MCC, respectively) and MS-DRGS 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).
After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0DBF4ZX, 0DBG4ZX, 0DBL4ZX, 0DBM4ZX and 0DBN4ZX from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2024.
As discussed in the proposed rule (89 FR 35994), during our review, we noted inconsistencies in how procedures involving laparoscopic excisions of gallbladder or pancreas are designated. Procedure codes describing the laparoscopic excision of the gallbladder or pancreas differ by qualifier. The ICD-10-PCS procedure code describing an excision of the gallbladder and the procedure code describing an excision of the pancreas with the diagnostic qualifier “X”, are used to report these procedures when performed for diagnostic purposes. We stated we identified the following two related codes:
In the proposed rule, we noted the ICD-10-PCS procedure codes describing the laparoscopic excision of the gallbladder or the pancreas for diagnostic purposes listed previously have been assigned different attributes in terms of designation as an O.R. or a non-O.R. procedure when compared to similar procedures describing the laparoscopic excisions of the gallbladder or the pancreas for nondiagnostic purposes. In the ICD-10 MS-DRGs Version 41, these ICD-10-PCS codes are currently recognized as non-O.R. procedures for purposes of MS-DRG assignment, while similar excision of the gallbladder or the pancreas procedure codes with the same approach but different qualifiers are recognized as O.R. procedures.
As discussed in the proposed rule, upon further review and consideration, we stated we believe that procedure code 0FB44ZX describing a laparoscopic excision of the gallbladder for diagnostic purposes and procedure code 0FBG4ZX describing a laparoscopic excision of the pancreas for diagnostic purposes both warrant designation as an O.R. procedure consistent with other laparoscopic excision procedures performed on the same body parts for nondiagnostic purposes. We stated we also believe it is clinically appropriate for these procedures to group to the same MS-DRGs as the procedures describing excision procedures performed on the gallbladder or pancreas for nondiagnostic purposes. Therefore, we proposed to add procedure code 0FB44ZX to the FY 2025 ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure assigned to MS-DRGs 411, 412, and 413 (Cholecystectomy with C.D.E., with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 417, 418, and 419 (Laparoscopic Cholecystectomy without C.D.E., with MCC, with CC, and without CC/MCC, respectively) in MDC 07 (Diseases and Disorders of the Hepatobiliary System and Pancreas); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) and MS-DRGS 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).
We also proposed to add procedure code 0FBG4ZX to the FY 2025 ICD-10 MS-DRG Version 42 Definitions Manual in Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure assigned to MS-DRGs 405, 406, and 407 (Pancreas, Liver and Shunt Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of the Digestive System); MS-DRGs 628, 629 and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).
After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0FB44ZX and 0FBG4ZX from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2024.
Under the IPPS MS-DRG classification system, we have developed a standard list of diagnoses that are considered CCs. Historically, we developed this list using physician panels that classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition that, because of its presence with a specific principal diagnosis, would cause an increase in the length-of-stay by at least 1 day in at least 75 percent of the patients. However, depending on the principal diagnosis of the patient, some diagnoses on the basic list of complications and comorbidities may be excluded if they are closely related to the principal
In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described our process for establishing three different levels of CC severity into which we would subdivide the diagnosis codes. The categorization of diagnoses as a MCC, a CC, or a NonCC was accomplished using an iterative approach in which each diagnosis was evaluated to determine the extent to which its presence as a secondary diagnosis resulted in increased hospital resource use. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach. Since the comprehensive analysis was completed for FY 2008, we have evaluated diagnosis codes individually when assigning severity levels to new codes and when receiving requests to change the severity level of specific diagnosis codes.
We noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235 through 19246) that with the transition to ICD-10-CM and the significant changes that have occurred to diagnosis codes since the FY 2008 review, we believed it was necessary to conduct a comprehensive analysis once again. Based on this analysis, we proposed changes to the severity level designations for 1,492 ICD-10-CM diagnosis codes and invited public comments on those proposals. As summarized in the FY 2020 IPPS/LTCH PPS final rule, many commenters expressed concern with the proposed severity level designation changes overall and recommended that CMS conduct further analysis prior to finalizing any proposals. After careful consideration of the public comments we received, as discussed further in the FY 2020 IPPS/LTCH PPS final rule, we generally did not finalize our proposed changes to the severity designations for the ICD-10-CM diagnosis codes, other than the changes to the severity level designations for the diagnosis codes in category Z16 (Resistance to antimicrobial drugs) from a NonCC to a CC. We stated that postponing adoption of the proposed comprehensive changes in the severity level designations would allow further opportunity to provide additional background to the public on the methodology utilized and clinical rationale applied across diagnostic categories to assist the public in its review. We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42150 through 42152) for a complete discussion of our response to public comments regarding the proposed severity level designation changes for FY 2020.
As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550), to provide the public with more information on the CC/MCC comprehensive analysis discussed in the FY 2020 IPPS/LTCH PPS proposed and final rules, CMS hosted a listening session on October 8, 2019. The listening session included a review of this methodology utilized to mathematically measure the impact on resource use. We refer readers to
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through 58554), we discussed our plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) and the application of nine guiding principles and plan to present the findings and proposals in future rulemaking. The nine guiding principles are as follows:
• Represents end of life/near death or has reached an advanced stage associated with systemic physiologic decompensation and debility.
• Denotes organ system instability or failure.
• Involves a chronic illness with susceptibility to exacerbations or abrupt decline.
• Serves as a marker for advanced disease states across multiple different comorbid conditions.
• Reflects systemic impact.
• Post-operative/post-procedure condition/complication impacting recovery.
• Typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).
• Impedes patient cooperation or management of care or both.
• Recent (last 10 years) change in best practice, or in practice guidelines and review of the extent to which these changes have led to concomitant changes in expected resource use.
We refer readers to the FY 2021 IPPS/LTCH PPS final rule for a complete summation of the comments we received for each of the nine guiding principles and our responses to those comments. In the proposed rule we noted that since the FY 2021 IPPS/LTCH PPS final rule we have continued to solicit feedback regarding the nine guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. We have encouraged the public to provide a detailed explanation of how applying a suggested concept or principle would ensure that the severity designation appropriately reflects resource use for any diagnosis code when providing feedback or comments. In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26748 through 26750) we illustrated how the nine guiding principles might be applied in evaluating changes to the severity designations of diagnosis codes in our discussion of our proposed changes to the severity level designation for certain diagnosis codes that describe homelessness. In the proposed rule, we stated that we have not received any additional feedback or comments on the nine guiding principles since the FY 2021 IPPS/LTCH PPS final rule; therefore, in the FY 2025 IPPS/LTCH PPS proposed rule we proposed to finalize the nine guiding principles as listed previously. We stated that under this proposal, our evaluations to determine the extent to which the presence of a diagnosis code as a secondary diagnosis results in increased hospital resource use will include a combination of mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) and the application of the nine guiding principles.
We note the focus of our analysis is on the appropriate severity level designation of individual ICD-10-CM codes as secondary diagnosis codes and how they relate to inpatient prospective payment and the resource utilization required while the patient is in the hospital. We wish to clarify for commenters that the application of the nine guiding principles is not a departure from our historic approach of considering both mathematical analysis and clinical factors as described in the FY 2008 IPPS/LTCH PPS final rule. In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47153 through 47154), we stated the need for a revised CC list prompted a reexamination of the secondary diagnoses that qualify as a CC and stated our intent was to better distinguish cases that are likely to result in increased hospital resource use based on secondary diagnoses. We stated that using a combination of mathematical data and the judgment of our medical advisors, we included the condition on the CC list if it could demonstrate that its presence would lead to substantially increased hospital resource use. We stated diagnoses may require increased hospital resource use because of a need for such services as:
• Intensive monitoring (for example, an intensive care unit (ICU) stay).
• Expensive and technically complex services (for example, heart transplant).
• Extensive care requiring a greater number of caregivers (for example, nursing care for a patient with quadriplegia).
In reviewing the diagnosis codes that describe chronic diseases, we stated in the FY 2008 IPPS/LTCH PPS final rule that we made exceptions for diagnosis codes that indicate a chronic disease in which the underlying illness has reached an advanced stage or is associated with systemic physiologic decompensation and debility. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47153 through 47154) for a complete discussion of our approach.
The nine guiding principles were developed to build on the process we described in the FY 2008 IPPS/LTCH PPS final rule and are not intended to turn the analysis into a quantitative exercise, requiring that every diagnosis code satisfy each principle. Instead, as stated in prior rulemaking, the nine guiding principles are intended to provide a framework for assessing relevant clinical factors to help denote if, and to what degree, additional resources are required above and beyond those that are already being utilized to address the principal diagnosis or other secondary diagnoses that might also be present on the claim. In response to the commenter's concerns regarding a lack of detailed definition of each principle, we refer commenters to the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through 58554), for a complete discussion of our response to similar public comments regarding each of the nine guiding principles.
We do not believe the nine guiding principles would be mostly applicable, or only applicable, to MCC conditions. In applying the nine guiding principles in our review of the appropriate severity level designation, the intention is not to require that a diagnosis code satisfy each principle, or a specific number of principles in assessing whether to designate a secondary diagnosis code as a NonCC versus a CC versus an MCC. Rather, the severity level determinations would be based on the consideration of the clinical factors captured by these principles as well as the empirical analysis of the additional resources associated with the secondary diagnosis.
We wish to clarify that the definition of a “substantial complication or comorbidity” from the MS-DRG Definition Manual that the commenter referenced, is the definition of a CC that was used in Version 8 of the DRGs. In FY 2008, for Version 25 of the MS-DRGs, the diagnoses comprising the CC list were completely redefined and instead each CC was categorized as a major CC or a CC (that is, non-major CC) based on relative resource use. As stated previously, we refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach.
We note that in addition to the FY 2021 IPPS/LTCH PPS rule, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44915 through 44926), the FY 2023 IPPS/LTCH PPS final rule (87 FR 48865 through 48872), the FY 2024 IPPS/LTCH PPS final rule (88 FR 58753 through 58759), and in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35997 through 36001), we have illustrated how the guiding principles might be applied in evaluating changes to the severity designations of diagnosis codes. We have also continued to solicit feedback regarding the guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. We note the commenters did not provide alternative principles for consideration, nor was feedback provided as to other possible ways we can incorporate meaningful indicators of clinical severity.
As discussed in prior rulemaking, our intended approach is for CMS to first use these guiding principles in making an initial clinical assessment of the appropriate severity level designation
Therefore, after consideration of the public comments received, and for the reasons discussed, we are finalizing the nine guiding principles as listed previously in this FY 2025 IPPS/LTCH PPS final rule. Accordingly, our evaluations to determine the extent to which the presence of a diagnosis code as a secondary diagnosis results in increased hospital resource use will include a combination of mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) and the application of the nine guiding principles. We thank commenters for sharing their views and their willingness to support CMS in our efforts to continue a comprehensive CC/MCC analysis.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175 through 25180), as another interval step in our comprehensive review of the severity designations of ICD-10-CM diagnosis codes, we requested public comments on a potential change to the severity level designations for “unspecified” ICD-10-CM diagnosis codes that we were considering adopting for FY 2022. Specifically, we noted we were considering changing the severity level designation of “unspecified” diagnosis codes to a NonCC where there are other codes available in that code subcategory that further specify the anatomic site. As summarized in the FY 2022 IPPS/LTCH PPS final rule, many commenters expressed concern with the potential severity level designation changes overall and recommended that CMS delay any possible change to the designation of these codes to give hospitals and their physicians time to prepare. After careful consideration of the public comments we received, we maintained the severity level designation of the “unspecified” diagnosis codes currently designated as a CC or MCC where there are other codes available in that code subcategory that further specify the anatomic site for FY 2022. We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR 44916 through 44926) for a complete discussion of our response to public comments regarding the potential severity level designation changes. Instead, for FY 2022, we finalized a new Medicare Code Editor (MCE) code edit for “unspecified” codes, effective with discharges on and after April 1, 2022. We stated we believe finalizing this new edit would provide additional time for providers to be educated while not affecting the payment the provider is eligible to receive. We refer the reader to section II.D.14.e. of the FY 2022 IPPS/LTCH PPS final rule (86 FR 44940 through 44943) for the complete discussion.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48866), we stated that as the new unspecified edit became effective beginning with discharges on and after April 1, 2022, we believed it was appropriate to not propose to change the designation of any ICD-10-CM diagnosis codes, including the unspecified codes that are subject to the “Unspecified Code” edit, as we continue our comprehensive CC/MCC analysis to allow interested parties the time needed to become acclimated to the new edit.
In the FY 2023 IPPS/LTCH proposed rule (87 FR 28177 through 28181), we also requested public comments on how the reporting of diagnosis codes in categories Z55-Z65 might improve our ability to recognize severity of illness, complexity of illness, and/or utilization of resources under the MS-DRGs. Consistent with the Administration's goal of advancing health equity for all, including members of historically underserved and under-resourced communities, as described in the President's January 20, 2021 Executive Order 13985 on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,”
We noted that social determinants of health (SDOH) are the conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.
We received numerous public comments that expressed a variety of views on our comment solicitation, including many comments that were supportive, and others that offered specific suggestions for our consideration in future rulemaking. Many commenters applauded CMS' efforts to encourage documentation and
As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58755 through 58759), based on our analysis of the impact on resource use for the ICD-10-CM Z codes that describe homelessness and after consideration of public comments, we finalized changes to the severity levels for diagnosis codes Z59.00 (Homelessness, unspecified), Z59.01 (Sheltered homelessness), and Z59.02 (Unsheltered homelessness), from NonCC to CC. We stated our expectation that finalizing the changes would encourage the increased documentation and reporting of the diagnosis codes describing social and economic circumstances and serve as an example for providers that, when they document and report SDOH codes, CMS can further examine the claims data and consider future changes to the designation of these codes when reported as a secondary diagnosis. We further stated CMS would continue to monitor and evaluate the reporting of the diagnosis codes describing social and economic circumstances.
We refer the reader to the following section of this final rule for discussion of our proposed changes to the severity level designation for the diagnosis codes that describe inadequate housing and housing instability for FY 2025, as well as our finalization of that proposal.
We have updated the Impact on Resource Use Files on the CMS website so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2019 through the FY 2023 MedPAR files. These files are posted on the CMS website at
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35997), for new diagnosis codes approved for FY 2025, consistent with our annual process for designating a severity level (MCC, CC, or NonCC) for new diagnosis codes, we first review the predecessor code designation, followed by review and consideration of other factors that may be relevant to the severity level designation, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis or treatment of the condition. We note that this process does not automatically result in the new diagnosis code having the same designation as the predecessor code. We refer the reader to section II.C.13 of this final rule for the discussion of the finalized changes to the ICD-10-CM and ICD-10-PCS coding systems for FY 2025.
As discussed earlier in this section and in the proposed rule (89 FR 35997 through 35999), in continuation of our examination of the SDOH Z codes, we reviewed the mathematical data on the impact on resource use for the subset of ICD-10-CM Z codes that describe the social determinants of health found in categories Z55-Z65 (Persons with potential health hazards related to socioeconomic and psychosocial circumstances).
As discussed in the proposed rule, the ICD-10-CM SDOH Z codes that describe inadequate housing and housing instability are currently designated as NonCCs when reported as secondary diagnoses. The following table reflects the impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our historical approach to mathematically evaluate the extent to which the presence of an ICD-10-CM code as a secondary diagnosis resulted in increased hospital resource use, and a more detailed explanation of the columns in the table.
The table shows that the C1 value is 2.63 for ICD-10-CM diagnosis code Z59.10 and 1.85 for ICD-10-CM diagnosis code Z59.19. A value close to 2.0 in column C1 suggests that the secondary diagnosis is more aligned with a CC than a NonCC. Because the C1 values in the table are generally close to 2, the data suggest that when these two SDOH Z codes are reported as a secondary diagnosis, the resources involved in caring for a patient experiencing inadequate housing support increasing the severity level from a NonCC to a CC. In contrast, the C1 value for ICD-10-CM diagnosis code Z59.11 is 0.51 and is 0.99 for ICD-10-CM diagnosis code Z59.12. A C1 value generally closer to 1 suggests the resources involved in caring for patients experiencing inadequate housing in terms of environmental temperature and utilities are more aligned with a NonCC severity level than a CC or an MCC severity level.
As discussed in the proposed rule, the underlying cause of the inconsistency between the C1 values for inadequate housing, unspecified and other inadequate housing and the two more specific codes that describe the necessities unavailable in the housing environment is unclear. We noted that diagnosis codes Z59.10 (Inadequate housing, unspecified), Z59.11 (Inadequate housing environmental temperature), Z59.12 (Inadequate housing utilities), and Z59.19 (Other inadequate housing) became effective on April 1, 2023 (FY 2023). In reviewing the historical C1 values for code Z59.1 (Inadequate housing), the predecessor code before the code was expanded to further describe inadequate housing and the basic necessities unavailable in the housing environment, we noted the mathematical data for the impact on resource use generated using claims from the FY 2019, FY 2020, FY 2021, and FY 2022 MedPAR files reflects C1 values for code Z59.1 of 2.09, 1.73, 2.04, and 2.69, respectively. We refer the reader to the Impact on Resource Use Files generated using claims from the FY 2019 through the FY 2022 MedPAR files posted on the CMS website at
Similarly, the table shows that the C1 value is 1.97 for ICD-10-CM diagnosis code Z59.811. A value close to 2.0 in column C1 suggests that the secondary diagnosis is more aligned with a CC than a NonCC. Because the C1 value in the table is generally close to 2, the data suggest that when this SDOH Z code is reported as a secondary diagnosis, the resources involved in caring for a patient experiencing an imminent risk of homelessness support increasing the severity level from a NonCC to a CC. In contrast, the C1 value for ICD-10-CM diagnosis code Z59.812 (Housing instability, housed, homelessness in past 12 months) and (Housing instability, housed unspecified) is 0.76 and is 0.92 for ICD-10-CM diagnosis code Z59.819. A C1 value generally closer to 1 suggests the resources involved in caring for patients experiencing housing instability, with history of homelessness in the past 12 months or housing instability, unspecified are more aligned with a NonCC severity level than a CC or an MCC severity level. We stated in the proposed rule that the underlying cause of the inconsistency between the C1 values for codes describing housing instability is unclear.
In the proposed rule, we noted that diagnosis codes Z59.811, Z59.812, and Z59.819 became effective on October 1, 2021 (FY 2022). In reviewing the historical C1 values for code Z59.8 (Other problems related to housing and economic circumstances), the predecessor code before the code was expanded to further describe the
As discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through 58554), and earlier in this section, following the listening session on October 8, 2019, we reconvened an internal workgroup comprised of clinicians, consultants, coding specialists and other policy analysts to identify guiding principles to apply in evaluating whether changes to the severity level designations of diagnoses are needed and to ensure the severity designations appropriately reflect resource use based on review of the claims data, as well as consideration of relevant clinical factors (for example, the clinical nature of each of the secondary diagnoses and the severity level of clinically similar diagnoses) and improve the overall accuracy of the IPPS payments.
In considering the nine guiding principles identified by the workgroup, as summarized previously, in the proposed rule we noted that, similar to homelessness, inadequate housing and housing instability are circumstances that can impede patient cooperation or management of care, or both. In addition, patients experiencing inadequate housing and housing instability can require a higher level of care by needing an extended length of stay.
Inadequate housing is defined as an occupied housing unit that has moderate or severe physical problems (for example, deficiencies in plumbing, heating, electricity, hallways, and upkeep).
As discussed in the proposed rule, housing instability encompasses a number of challenges, such as having trouble paying rent, overcrowding, moving frequently, or spending the bulk of household income on housing.
In reviewing the mathematical data for the impact on resource use generated using claims from the FY 2023 MedPAR file for the seven ICD-10-CM codes describing inadequate housing and housing instability comprehensively and reviewing the potential impact these circumstances could have on patients' clinical course, we noted in the proposed rule that whether the patient is experiencing inadequate housing or housing instability, the patient may have limited or no access to prescription medicines or over-the-counter medicines, including adequate locations to store medications away from the heat or cold, and have difficulties adhering to medication regimens. Experiencing inadequate housing or housing instability may negatively affect a patient's physical health and make it harder to access timely health care.
Therefore, after considering the impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file for the seven ICD-10-CM diagnosis codes that describe inadequate housing and housing instability and consideration of the nine guiding principles, we proposed to change the severity level designation for diagnosis codes Z59.10 (Inadequate housing, unspecified), Z59.11 (Inadequate housing environmental temperature), Z59.12 (Inadequate housing utilities), Z59.19 (Other inadequate housing), Z59.811 (Housing instability, housed, with risk of homelessness), Z59.812 (Housing instability, housed, homelessness in past 12 months) and Z59.819 (Housing instability, housed unspecified) from NonCC to CC for FY 2025.
Specifically, many commenters stated that research has found a strong association between food insecurity and chronic conditions and encouraged CMS to examine the severity designation of ICD-10-CM SDOH Z code Z59.41 (Food insecurity). These commenters stated that food insecurity can be an indicator of food deprivation, malnutrition, or lack of access to healthy foods and diet, which could have differing impacts on a patient and could be associated with higher healthcare utilization and costs. A commenter stated that in their observation, many hospitals have built robust programs to address the food needs of inpatients and stated that several hospitals have even begun to provide patients with fresh fruit, vegetables, and other essential groceries to take home upon discharge without payment.
We note that as described in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58761), CMS has undertaken interval steps towards a comprehensive CC/MCC analysis. We stated in the FY 2024 IPPS/LTCH PPS final rule, considering the potential impact of implementing a significant number of severity designation changes, and in light of the public health emergency (PHE) that was occurring concurrently from 2020 until 2023, we believe these interval steps were appropriate as we plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of nine guiding principles. We refer the reader to the discussion earlier in this section where we discuss the finalization of the nine guiding principles for FY 2025.
In response to comments that CMS examine the severity designation of ICD-10-CM code Z59.41 (Food insecurity), we note that ICD-10-CM code Z59.41 is currently designated as a NonCC when reported as a secondary diagnosis. The following table reflects the impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file for code Z59.41. We refer readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion of our historical approach to mathematically evaluate the extent to which the presence of an ICD-10-CM code as a secondary diagnosis resulted in increased hospital resource use, and a more detailed explanation of the columns in the table.
The table shows that the C1 value is 0.9273 for ICD-10-CM diagnosis code is Z59.41. A C1 value generally closer to 1 suggests the resources involved in caring for patients experiencing food insecurity are more aligned with a NonCC severity level, as the code is currently designated, rather than a CC or an MCC severity level. This contrasts with the conclusions documented in research that has shown that food insecurity empirically can be associated with higher healthcare use and costs, even when accounting for other socioeconomic factors.
The impact on resource use data generated using claims from the September 2023 update of the FY 2023 MedPAR file for code Z59.41 again illustrates that if SDOH Z codes are not consistently reported in inpatient claims data, our methodology utilized to mathematically measure the impact on resource use, as described previously, may not adequately reflect what additional resources were expended by hospitals to address these circumstances. If SDOH Z codes are consistently reported in inpatient claims, the impact on resource use data may more adequately reflect what additional resources were expended to address these SDOH circumstances in terms of requiring clinical evaluation, extended length of hospital stay, increased nursing care or monitoring or both, and comprehensive discharge planning and we can re-examine these severity designations in future rulemaking.
In Table 6P.3b associated with this final rule, we have made available the data generated using claims from the September 2023 update of the FY 2023 MedPAR file describing the impact on resource use when reported as a secondary diagnosis for the ICD-10-CM codes describing various diagnoses and circumstances that commenters to the FY 2025 IPPS/LTCH proposed rule suggested CMS review to determine if changes to the severity level designations are warranted in future rulemaking. These data are consistent with data historically used to mathematically measure impact on resource use for secondary diagnoses, and the data which we will use in combination with application of the nine guiding principles as we continue the comprehensive CC/MCC analysis. We will examine these suggestions and determine if there are other diagnoses codes, including diagnosis codes that describe SDOH, that should also be considered further and will provide more detail in future rulemaking.
Other commenters stated that healthcare providers may gravitate towards certain codes, while other, possibly more specific codes, may exist in the classification that could accurately describe similar situations. These commenters stated that this can lead to inconsistent code usage and can limit the ability to see any correlations between these particular conditions and the resulting patient complexity and additional cost of care. A commenter noted that the difference between the seven different codes describing inadequate housing and housing instability requires a nuanced understanding and stated that appropriately documenting the Z codes for inadequate housing and housing instability will require training of staff to understand the differences. Another commenter suggested that CMS focus on addressing infrastructural, technological, and knowledge gaps to facilitate use of Z codes and stated if CMS does not address these gaps, inequities between well-funded hospitals that can afford to train staff to document and report Z codes as compared to other struggling hospitals who lack the means or know-how will be exacerbated.
A commenter expressed concern and stated that documentation of an SDOH circumstance does not always clearly demonstrate whether or how the SDOH impacts the patient's health. This commenter stated that while SDOH Z codes help with mapping the social factors afflicting a patient, that map does not (and cannot) fully describe the patient's life which can present a challenge for the provider when determining what factors to document, and for the coder, when deciding how to report that documentation using the appropriate SDOH Z code(s).
Many other commenters also expressed concern and stated that while they support the use of Z codes to help identify the complexity of issues impacting patients, information about an individual's social risk and needs has been shown to be sensitive. Commenters stated that expressing certain circumstances, such as housing instability or inadequacy, can be uncomfortable for patients, which could result in underreporting. These commenters also stated they believed the descriptions of ICD-10-CM SDOH Z codes can be stigmatizing, and therefore the descriptions should be changed to be more patient friendly to protect the patient-provider relationship since patients can access their code assignments in after-visit summaries.
We also note that the ICD-10-CM Official Guidelines for Coding and Reporting have been regularly revised to provide additional guidance as it relates to diagnosis codes describing social determinants of health. We encourage the commenters to review the Official ICD-10-CM Coding Guidelines, which can be found on the CDC website at:
A few commenters stated that simply changing the severity designation of SDOH Z codes to CCs and marginally increasing payment will be inadequate to meaningfully drive CMS' stated equity mission. These commenters stated CMS' reporting and payment rules should better reflect and compensate hospitals for the multiple health-related social needs that patients experience to truly improve health outcomes and mitigate the current health disparities that exist. A commenter suggested that CMS consider an alternative policy that would provide increased payment for a CC designation only in certain MS-DRGs when certain Z codes are reported. Another commenter stated that they believed that the creation of a new Hierarchical Condition Category (HCC) for SDOH Z codes is needed to foster necessary support for delivering consistent levels of care and could help mitigate the challenges that social risk factors pose to creating effective treatment plans for patients. Some commenters suggested that CMS incentivize the use of patient self-report screening tools that are integrated within electronic health records to support the use of Z codes.
Other commenters noted that currently, if another secondary diagnosis designated as a CC or MCC is documented and reported, there will be no additional payment if the clinician reports a diagnosis code describing inadequate housing and housing instability, potentially minimalizing the practical impact of changing the severity level designation of these codes. These commenters recommended CMS provide increased flexibility in payment to account for multiple CCs or MCCs that may be reported for a given patient who may be experiencing numerous health and social concerns at the same time, stating that it is almost impossible to isolate and address only one need and expect an improved health outcome in their view.
After consideration of the public comments received, we are finalizing changes to the severity levels for diagnosis codes Z59.10, Z59.11, Z59.12, Z59.19, Z59.811, Z59.812, and Z59.819, from NonCC to CC for FY 2025, without modification. In addition, these diagnosis codes are reflected in Table 6J.1—Additions to the CC List—FY 2025 associated with this final rule and available at:
We hope and expect that this finalization will foster the increased documentation and reporting of the diagnosis codes describing social and economic circumstances and continue to serve as an example for providers that when they document and report Z codes, CMS can further examine the claims data and consider future changes to the designation of these codes when reported as a secondary diagnoses. As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48868), if SDOH Z codes are not consistently reported in inpatient claims data, our methodology utilized to mathematically measure the impact on resource use, as described previously, may not adequately reflect what additional resources were expended by the hospital to address these SDOH circumstances in terms of requiring clinical evaluation, extended length of hospital stay, increased nursing care or monitoring or both, and comprehensive discharge planning. We will continue to monitor SDOH Z code reporting, including reporting based on SDOH screening performed as a result of quality measures in the Hospital Inpatient Quality Reporting program.
Furthermore, we may consider proposing changes for other diagnosis codes, including SDOH codes, in the future based on our analysis of the impact on resource use, per our methodology, as previously described, and consideration of the guiding principles. We continue to be interested in receiving feedback on how we might otherwise foster the documentation and reporting of the diagnosis codes to more accurately reflect each health care encounter and improve the reliability and validity of the coded data.
To inform future rulemaking, feedback and other suggestions may be submitted by October 20, 2024, and directed to MEARIS
Additionally, as discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35999 through 36001), we received a request to change the severity level designations of the ICD-10-CM diagnosis codes that describe causally
As noted in the proposed rule, the requestor further stated that there is robust literature detailing the impact delirium can have on cognitive decline, rates of functional decline, subsequent dementia diagnosis, institutionalization, care complexity and costs, readmission rates, and mortality. The requestor considered each of the nine guiding principles discussed earlier in this section and noted how each of the principles could be applied in evaluating changes to the severity designations of the diagnosis codes that describe causally specified delirium in their request. Specifically, the requestor stated that delirium is a textbook example that maps to the nine guiding principles for evaluating a potential change in severity designation in that delirium (1) has a bidirectional link with dementia, (2) indexes physiological vulnerability across populations, (3) impacts healthcare systems across levels of care, (4) complicates postoperative recovery, (5) consigns patients to higher levels of care, and for longer, (6) impedes patient engagement in care, (7) has several recent treatment guidelines, (8) indicates neuronal/brain injury, and (9) represents a common expression of terminal illness.
The requestor identified 37 ICD-10-CM diagnosis codes that describe causally specified delirium. In the proposed rule we stated we agree that these 37 diagnosis codes are all currently designated as CCs. We refer the reader to Appendix G of the ICD-10 MS-DRG Version 41.1 Definitions Manual (available on the CMS website at:
To evaluate this request, as discussed in the proposed rule, we analyzed the claims data in the September 2023 update of the FY 2023 MedPAR file. The following table shows the analysis for each of the diagnosis codes identified by the requestor that describe causally specified delirium.
As discussed in the proposed rule, we analyzed these data as described in FY 2008 IPPS final rule (72 FR 47158 through 47161). The table shows that the C1 values of the diagnosis codes that describe causally specified delirium range from a low of 0.35 to a high of 4.00. As stated earlier, a C1 value close to 2.0 suggests the condition is more like a CC than a NonCC but not as significant in resource usage as an MCC. On average, the C1 values of the diagnoses that describe causally specified delirium suggest that these codes are more like a NonCC than a CC. In the proposed rule, we noted diagnosis code F11.221 (Opioid dependence with intoxication delirium) had a C1 value of 4.00, however our analysis reflects that this diagnosis code was reported as a secondary diagnosis in only 42 claims, and only one claim reported F11.221 as a secondary diagnosis with no other secondary diagnosis or with all other secondary diagnoses that are NonCCs.
The C2 findings of the diagnosis codes that describe causally specified delirium range from a low of 0.28 to a high of 3.22 and the C3 findings range from a low of 1.25 to a high of 3.85. We stated that the data are clearly mixed between the C2 and C3 findings, and do not consistently support a change in the severity level. On average, the C2 and C3 findings again suggest that these codes that describe causally specified delirium are more similar to a NonCC.
As discussed in the proposed rule, in considering the nine guiding principles, as summarized previously, we note that delirium is a diagnosis that can impede patient cooperation or management of care or both. Delirium is a confusional state that can manifest as agitation, tremulousness, and hallucinations or even somnolence and decreased arousal. In addition, patients diagnosed with delirium can require a higher level of care by needing intensive monitoring, and a greater number of caregivers. Managing disruptive behavior, particularly agitation and combative behavior, is a challenging aspect in caring for patients diagnosed with delirium. Prevention and treatment of delirium can include avoiding factors known to cause or aggravate delirium; identifying and treating the underlying acute illness; and where appropriate using low-dose, short-acting pharmacologic agents.
In the proposed rule we stated that after considering the C1, C2, and C3 values of the 37 ICD-10-CM diagnosis codes that describe causally specified delirium and consideration of the nine guiding principles, we believe these 37 codes should not be designated as MCCs. While there is a lack of consistent claims data to support a severity level change from CCs to MCCs, we stated we recognize patients with delirium can utilize increased hospital resources and can be at a higher severity level. Therefore, we proposed to retain the severity designation of the 37 codes listed previously as CCs for FY 2025.
Some commenters stated that practitioners have been inclined to report the ICD-10-CM diagnosis codes that describe toxic or metabolic encephalopathy, that are designated as MCCs, rather than report diagnosis codes that describe delirium, which they state is the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, Text Revision (DSM-5-TR) preferred terminology to describe the syndrome of cognitive and behavioral changes that can occur in response to acute physical illness. Commenters stated that parity in the severity level designation of the codes that describe causally specified delirium with the severity level designation of the codes that describe acute encephalopathy is essential to enhancing awareness of the clinical and economic costs associated with managing delirium and will encourage widespread delirium prevention efforts. Another commenter stated that if parity is not achieved between the codes that describe causally specified delirium and codes that describe toxic or metabolic encephalopathy, clinicians will continue to favor reporting the relatively uninformative diagnoses of toxic or metabolic encephalopathy, thereby directing attention away from delirium guidelines and care pathways. Other commenters suggested that retaining the severity designation of delirium as a CC reinforces the stigma of mental health conditions, promotes the use of non-specific diagnoses that require no more than a cursory evaluation of mental status, directs clinicians away from the use of delirium clinical practice guidelines, stands against the broad consensus recommendation to use the term “delirium” across invested major medical specialty organizations, and discourages efforts to detect and manage delirium.
Several commenters suggested that the mathematical analysis of the FY 2023 MedPAR file provided in the proposed rule is confounded given that delirium is being preferentially coded as toxic or metabolic encephalopathy. A commenter noted that there is robust literature detailing the impact of delirium on care complexity and costs, readmissions, rates of functional decline, institutionalization, cognitive decline, subsequent dementia diagnosis, and mortality and stated that the evidence suggests that delirium is underdiagnosed or being classified as encephalopathy and is having an impact on the data available for analysis.
Another commenter stated that they believe the September 2023 update of the FY 2023 MedPAR file generally supports the request to change delirium from a CC to an MCC in their review of the analyses for each of the diagnosis codes identified by the requestor that describe causally specified delirium presented in the proposed rule. Specifically, the commenter stated that based on their review of the C1, C2, and C3 values presented for ICD-10-CM code F05 (Delirium due to known physiological condition), which are 1.68, 2.46, and 3.38, respectively, F05 appears to be performing very similarly to many other conditions that are currently designated as MCCs. The commenter further stated that based on their analysis, the weighted average of the C1, C2, and C3 values of the 37 diagnosis codes that describe causally specified delirium are 1.68, 2.47, 3.38, respectively. This commenter stated they also reviewed the updated impact on resource use files provided on the CMS website so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2023 MedPAR file and stated that many codes currently designated as MCCs have C values similar to the values for causally specified delirium and stated on this basis alone, the severity designation of codes that describe causally specified delirium deserves to be changed from a CC to an MCC. The commenter specifically referenced the mathematical data for the impact on resource use generated using claims from the FY 2023 MedPAR file for the following codes that are designated as MCCs in Version 41.1:
In response to the analysis of the impact on resource use files performed by the commenter, as stated in prior rulemaking (84 FR 42150), C1, C2, and C3 values are a measure of the ratio of average costs for patients with these conditions to the expected average cost across all cases. We have stated a value close to 1.0 in the C1 field would suggest that the code produces the same expected value as a NonCC diagnosis. That is, average costs for the case are similar to the expected average costs for that subset and the diagnosis is not expected to increase resource usage. A higher value in the C1 (or C2 and C3) field suggests more resource usage is associated with the diagnosis and an increased likelihood that it is more like a CC or major CC than a NonCC. Thus, a value close to 2.0 suggests the condition is more like a CC than a NonCC but not as significant in resource usage as an MCC. A value close to 3.0 suggests the condition is expected to consume resources more similar to an MCC than a CC or NonCC.
Accordingly, the C1, C2, and C3 values highlighted by the commenter for the diagnosis codes reflected in the previous table currently designated as MCCs generally suggests that the conditions actually are more like CCs rather than NonCCs or MCCs and suggests the severity designation of the diagnoses designated as MCCs should be changed to CCs. We will consider these codes as we continue our comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of nine guiding principles to determine the extent to which presence of each code as a secondary diagnosis results in increased hospital resource use and will provide more detail in future rulemaking.
In response to the commenters that suggested that delirium “fully satisfies CMS' nine guiding principles”, as stated earlier, the nine guiding principles are not intended to turn the analysis into a quantitative exercise, requiring that every diagnosis code satisfy each principle. As discussed in prior rulemaking and earlier in this section, our intended approach is first, CMS will use the guiding principles in making an initial clinical assessment of the appropriate severity level designation for each ICD-10-CM code as a secondary diagnosis. CMS will then use a mathematical analysis of claims data as discussed in the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) to determine if the presence of the ICD-10-CM code as a secondary diagnosis appears to, or does not appear to, increase hospital resource consumption. There may be instances in which we would decide that the clinical analysis weighs in favor of proposing to maintain or proposing to change the severity designation of an ICD-10-CM code after application of the nine guiding principles. The nine guiding principles are intended to provide a framework for assessing relevant clinical factors to help denote if, and to what degree, additional resources are required above and beyond those that are already being utilized to address the principal diagnosis or other secondary diagnoses that might also be present on the claim.
In response to the suggestion that clinicians favor reporting encephalopathy as opposed to delirium, we note that providers are responsible for ensuring that they are documenting as specifically and accurately as possible for the conditions they are treating and the services they render to correctly reflect the severity of illness and capture how truly sick a patient is when causally specified delirium or encephalopathy are present. In addition, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued independently from payment policy. We also note that, historically, we have not provided coding advice in rulemaking with respect to policy (82 FR 38045). As one of the Cooperating Parties for ICD-10, we collaborate with the American Hospital Association (AHA) through the
We consulted with the staff at the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS), because NCHS has the lead responsibility for maintaining the ICD-10-CM diagnosis codes. The NCHS' staff acknowledged the terms delirium and encephalopathy are differentiated in the classification, such that coding would usually depend on the specific terms used in the medical record documentation. NCHS confirmed that they would consider further review of the classification, including review of the Excludes notes, for these two diagnoses. As such, we believe it would be appropriate to maintain the current severity level designations of the ICD-10-CM diagnosis codes that describe causally specified delirium at this time in order to further examine the relevant clinical factors and possible similarities in resource consumption in order to best represent this subset of patients within the MS-DRG classification.
Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal, without modification, to maintain the current severity level designation of the 37 ICD-10-CM diagnosis codes that describe causally specified delirium listed previously as CCs for FY 2025.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36001), we noted the following tables identify the proposed additions and deletions to the diagnosis code MCC severity levels list and the proposed additions and deletions to the diagnosis code CC severity levels list for FY 2025 and are available on the CMS website at:
Table 6I.1—Proposed Additions to the MCC List—FY 2025;
Table 6J.1—Proposed Additions to the CC List—FY 2025; and
Table 6J.2—Proposed Deletions to the CC List—FY 2025
The following tables associated with this final rule reflect the finalized severity levels under Version 42 of the ICD-10 MS-DRGs for FY 2025 and are available on the CMS website at:
In the September 1, 1987 final notice (52 FR 33143) concerning changes to the DRG classification system, we modified the GROUPER logic so that certain diagnoses included on the standard list of CCs would not be considered valid CCs in combination with a particular principal diagnosis. We created the CC Exclusions List for the following reasons: (1) to preclude coding of CCs for closely related conditions; (2) to preclude duplicative or inconsistent coding from being treated as CCs; and (3) to ensure that cases are appropriately classified between the complicated and uncomplicated DRGs in a pair.
In the May 19, 1987 proposed notice (52 FR 18877) and the September 1, 1987 final notice (52 FR 33154), we explained that the excluded secondary diagnoses were established using the following five principles:
• Chronic and acute manifestations of the same condition should not be considered CCs for one another;
• Specific and nonspecific (that is, not otherwise specified (NOS)) diagnosis codes for the same condition should not be considered CCs for one another;
• Codes for the same condition that cannot coexist, such as partial/total, unilateral/bilateral, obstructed/unobstructed, and benign/malignant, should not be considered CCs for one another;
• Codes for the same condition in anatomically proximal sites should not be considered CCs for one another; and
• Closely related conditions should not be considered CCs for one another.
The creation of the CC Exclusions List was a major project involving hundreds of codes. We have continued to review the remaining CCs to identify additional exclusions and to remove diagnoses from the master list that have been shown not to meet the definition of a CC. We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 through 50544) for detailed information regarding revisions that were made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
The ICD-10 MS-DRGs Version 41.1 CC Exclusion List is included as Appendix C in the ICD-10 MS-DRG Definitions Manual (available in two formats; text and HTML). The manuals are available on the CMS website at:
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36002 through 36006), effective for the April 1, 2024, release of the ICD-10 MS-DRG Definitions Manual, Version 41.1, a new section has been added to Appendix C as follows:
Part 3 lists diagnosis codes that are designated as a complication or comorbidity (CC) or major complication or comorbidity (MCC) and included in the definition of the logic for the listed MS-DRGs. When reported as a secondary diagnosis and grouped to one of the listed MS-DRGs, the diagnosis is excluded from acting as a CC/MCC for severity in DRG assignment.
The purpose of this new section is to include the list of MS-DRGs subject to what is referred to as suppression logic. In addition to the suppression logic excluding secondary diagnosis CC or MCC conditions that may be included in the definition of the logic for a DRG, it is also based on the presence of other secondary diagnosis logic defined within certain base DRGs. Therefore, if a MS-DRG has secondary diagnosis logic, the suppression is activated regardless of the severity of the secondary diagnosis code(s) for appropriate grouping and MS-DRG assignment.
In the proposed rule we noted that each MS-DRG is defined by a particular set of patient attributes including principal diagnosis, specific secondary diagnoses, procedures, sex, and discharge status. The patient attributes which define each MS-DRG are displayed in a series of headings which indicate the patient characteristics used to define the MS-DRG. These headings indicate how the patient's diagnoses and procedures are used in determining MS-DRG assignment. Following each heading is a complete list of all the ICD-10-CM diagnosis or ICD-10-PCS procedure codes included in the MS-DRG. One of these headings is secondary diagnosis.
•
The full list of MS-DRGs where suppression occurs is shown in the following table.
In the proposed rule we stated we believe this additional information about the suppression logic may further assist users of the ICD-10 MS-DRG GROUPER software and related materials.
As noted in the proposed rule, during our review of the MS-DRGs containing secondary diagnosis logic in association with the suppression logic previously discussed, we identified another set of MS-DRGs containing secondary diagnosis logic in the definition of the MS-DRG. Specifically, we identified MS-DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), as displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual (which is available on the CMS website at:
As stated in the proposed rule, of the seven logic lists included in the definition of MS-DRGs 673, 674, and 675, there are three “Or Principal Diagnosis” logic lists and one “With
Under the Version 41.1 ICD-10 MS-DRGs, diagnosis code N18.5 (Chronic kidney disease, stage 5) is currently designated as a CC and diagnosis code N18.6 (End stage renal disease) is designated as an MCC. As discussed in the proposed rule, in our review of the MS-DRGs containing secondary diagnosis logic in association with the suppression logic, we noted that currently, when some diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675 are reported as the principal diagnosis and either diagnosis code N18.5 or N18.6 from the “With Secondary Diagnosis” logic list is reported as a secondary diagnosis, some cases are grouping to MS-DRG 673 (Other Kidney and Urinary Tract Procedures with MCC) or to MS-DRG 674 (Other Kidney and Urinary Tract Procedures with CC) in the absence of any other MCC or CC secondary diagnoses being reported.
In our analysis of this issue as discussed in the proposed rule, we noted diagnosis codes N18.5 and N18.6 are excluded from acting as a CC or MCC, when reported with principal diagnoses from Principal Diagnosis Collection Lists 1379 and 1380, respectively, as reflected in Part 1 of Appendix C in the CC Exclusion List. We refer the reader to Part 1 of Appendix C in the CC Exclusion List as displayed in the ICD-10 MS-DRG Version 41.1 Definitions Manual (which is available on the CMS website at:
In the proposed rule, we also noted that currently, a subset of diagnosis codes from the first “Or Principal Diagnosis” logic list in MS-DRGs 673, 674, and 675 are not listed in Principal Diagnosis Collection Lists 1379 or 1380 for diagnosis codes N18.5 and N18.6, respectively. As a result, when one of the 13 diagnosis codes listed in the following table are reported as the principal diagnosis, and either diagnosis code N18.5 or N18.6 from the “With Secondary Diagnosis” logic list are reported as a secondary diagnosis, the cases are grouping to MS-DRG 673 (Other Kidney and Urinary Tract Procedures with MCC) or to MS-DRG 674 (Other Kidney and Urinary Tract Procedures with CC) when also reported with a procedure code describing the
We noted in the proposed rule that consistent with how other similar logic lists function in the ICD-10 GROUPER software for case assignment to the “with MCC” or “with CC” MS-DRGs, the logic for case assignment to MS-DRG 673 is intended to require any
Therefore, for FY 2025, we proposed to correct the logic for case assignment to MS-DRGs 673, 674, and 675 by adding suppression logic to exclude diagnosis codes N18.5 (Chronic kidney disease, stage 5) and N18.6 (End stage renal disease) from the logic list entitled “With Secondary Diagnosis” from acting as a CC or an MCC, respectively, when reported as a secondary diagnosis with one of the 13 previously listed principal diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675 for appropriate grouping and MS-DRG assignment. Under this proposal, when diagnosis codes N18.5 or N18.6 are reported as a secondary diagnosis with one of the 13 previously listed principal diagnosis codes, the GROUPER will assign MS-DRG 675 (Other Kidney and Urinary Tract Procedures without CC/MCC) in the absence of any other MCC or CC secondary diagnoses being reported. In the proposed rule we also noted that the current list of MS-DRGs subject to suppression logic as previously discussed and listed under Version 41.1 includes MS-DRGs that are not subdivided by a two-way severity level split (“with MCC and without MCC” or “with CC/MCC and without CC/MCC”) or a three-way severity level split (with MCC, with CC, and without CC/MCC, respectively), or the listed MS-DRG includes diagnoses that are not currently designated as a CC or MCC. To avoid potential confusion, we proposed to refine how the suppression logic is displayed under Appendix C—Part 3 to not display the MS-DRGs where the suppression logic has no impact on the grouping (meaning the logic list for the affected MS-DRG contains diagnoses that are all designated as NonCCs, or the MS-DRG is not subdivided by a severity level split) as reflected in the draft Version 42 ICD-10 MS-DRG Definitions Manual, which is available in association with the proposed rule at:
We note that, because the commenters raised concerns regarding the principal diagnoses listed under Part 1 of Appendix C—CC Exclusions List in Principal Diagnosis Collection Lists 1378 and 1379 that currently exclude diagnosis codes N18.5 and N18.6 from acting as a CC or MCC under the CC exclusion logic in accordance with the list of five principles established in 1987, we intend to perform a broad review of the conditions in these lists to determine if any modifications are warranted and to ensure they continue to be clinically appropriate. To inform future rulemaking, feedback and other suggestions may be submitted by October 20, 2024, and directed to MEARIS
After consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to add suppression logic to exclude diagnosis codes N18.5 (Chronic kidney disease, stage 5) and N18.6 (End stage renal disease) from the logic list entitled “With Secondary Diagnosis” from acting as a CC or an MCC, respectively, when reported as a secondary diagnosis with one of the 13 previously listed principal diagnosis codes from the “Or Principal Diagnosis” logic lists in MS-DRGs 673, 674, and 675, without modification, effective October 1, 2024 for FY 2025.
We also note that during our review of the 37 diagnosis codes that describe causally specified delirium as discussed in section II.C.12.c.2. of the preamble of this final rule, we identified diagnosis code F05 (Delirium due to known physiological condition) as a condition that is listed on a subset of the Principal Diagnosis Collection Lists under Part 1 of Appendix C—CC Exclusions List. Specifically, we found diagnosis code F05 listed on Principal Diagnosis Collection List numbers 642, 643, 645, 646, and 647. Diagnosis code F05 is listed on the Unacceptable Principal Diagnosis Code edit code list in the Medicare Code Editor and is not appropriate to report as a principal diagnosis according to the ICD-10-CM Tabular List of Diseases and Injuries instructional note to “Code first the underlying physiological condition, such as: dementia (F03.9-)”. Consistent with the MCE Unacceptable Principal Diagnosis Code edit code list and the instructional note in the ICD-10-CM Tabular List of Diseases and Injuries, we are removing diagnosis code F05 from the previously listed Principal Diagnosis Collection Lists effective October 1, 2024, for FY 2025.
Lastly, we are finalizing our proposal to refine how the suppression logic is displayed under Appendix C—Part 3, without modification, effective October 1, 2024, for FY 2025. Under this finalization, MS-DRGs where the suppression logic has no impact on the grouping (meaning the logic list for the affected MS-DRG contains diagnoses that are all designated as NonCCs, or the MS-DRG is not subdivided by a severity level split) will not be displayed in Appendix C—Part 3 as reflected in the Version 42 ICD-10 MS-DRG Definitions Manual, which is available in association with this final rule at:
In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed additional changes to the ICD-10 MS-DRGs Version 42 CC Exclusion List based on the diagnosis code updates as discussed in section II.C.12. of the proposed rule and set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2 associated with the proposed rule and available on the CMS website at:
We did not receive any public comments opposing the proposed CC Exclusions List, however, during our internal review of the proposed CC Exclusions List we identified some inconsistencies with the 77 new Hodgkin lymphoma diagnosis codes that were proposed to be designated as a CC (based on the predecessor code designation and now finalized as reflected in Table 6A.- New Diagnosis Codes—FY 2025 associated with this final rule). We determined that clinically, all 77 Hodgkin lymphoma diagnosis codes should be excluded from acting as a CC when another Hodgkin lymphoma diagnosis code is reported as the principal diagnosis. Therefore, for FY 2025, we are finalizing, with modification, the CC exclusions for the 77 Hodgkin lymphoma codes after internal review as reflected in Tables 6G.1 and 6G.2 in association with this final rule.
The finalized CC Exclusions List as displayed in Tables 6G.1, 6G.2, 6H.1, 6H.2, and 6K, associated with this final rule reflect the severity levels under V42 of the ICD-10 MS-DRGs. We have developed Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2025; Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2025; Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2025; and Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2025; and Table 6K. Complete List of CC Exclusions-FY 2025.
For Table 6G.1, each secondary diagnosis code finalized for addition to the CC Exclusion List is shown with an asterisk and the principal diagnoses finalized to exclude the secondary diagnosis code are provided in the indented column immediately following it. For Table 6G.2, each of the principal diagnosis codes for which there is a CC exclusion is shown with an asterisk and the conditions finalized for addition to the CC Exclusion List that will not count as a CC are provided in an indented column immediately following the affected principal diagnosis. For Table 6H.1, each secondary diagnosis code finalized for deletion from the CC Exclusion List is shown with an asterisk followed by the principal diagnosis
To identify new, revised, and deleted diagnosis and procedure codes, for FY 2025, we have developed Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, Table 6D.—Invalid Procedure Codes, Table 6E.—Revised Diagnosis Code Titles, and Table 6F.—Revised Procedure Code Titles for this final rule.
These tables are not published in the Addendum to the proposed rule or final rule, but are available on the CMS website at:
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36006), we proposed the MDC and MS-DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes. We also stated that the proposed severity level designations for the new diagnosis codes are set forth in Table 6A. and the proposed O.R. status for the new procedure codes are set forth in Table 6B. Consistent with our established process, we examined the MS-DRG assignment and the attributes (severity level and O.R. status) of the predecessor diagnosis or procedure code, as applicable, to inform our proposed assignments and designations.
Specifically, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new diagnosis or procedure code, and in the absence of claims data, we considered other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We noted that this process does not automatically result in the new diagnosis or procedure code being proposed for assignment to the same MS-DRG or to have the same designation as the predecessor code.
In this FY 2025 IPPS/LTCH PPS final rule, we present a summation of the comments we received in response to the proposed assignments, our responses to those comments, and our finalized policies.
The commenters stated these new diagnosis codes are intended to facilitate standardized diabetes and hypoglycemia reporting and enable consistent quantification, tracking, and outcomes measurement. According to the commenters, the more granular presymptomatic diabetes diagnosis codes will help identify early disease progression and support appropriate intervention, including documentation of an individual's need for a continuous glucose monitor (CGM). The commenters urged CMS to incorporate these finalized diagnosis codes throughout Medicare payment and coverage policies.
Specifically, the commenters requested assignment of the previously listed procedure codes to the following surgical MS-DRGs:
The commenters stated that based on the usual surgical hierarchy rules, the reporting of one of the vessel preparation steps (that is, angioplasty, atherectomy, or lithotripsy), or placement of a new stent in connection with the reported use of the AGENT
Under our established process, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new procedure codes. We note that because the procedure codes describing the use of an AGENT
The commenter indicated that the new codes will be critical for proper payment, accurate documentation, appropriate clinical care and management, and the ability to conduct research. The commenter also indicated that accurate documentation of the Duffy status will decrease duplicative testing and allow for more precise medication administration, consistent with need.
After consideration of the public comments received, we are finalizing the MDC and MS-DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.—New Diagnosis Codes and Table 6B.—New Procedure Codes associated with this final rule. In addition, the finalized severity level designations for the new diagnosis codes are set forth in Table 6A. and the finalized O.R. status for the new procedure codes are set forth in Table 6B associated with this final rule.
In association with this final rule, we are making the following tables available on the CMS website at
• Table 6A.—New Diagnosis Codes—FY 2025;
• Table 6B.—New Procedure Codes—FY 2025;
• Table 6C.—Invalid Diagnosis Codes—FY 2025;
• Table 6D.—Invalid Procedure Codes—FY 2025;
• Table 6E.—Revised Diagnosis Code Titles—FY 2025;
• Table 6F.—Revised Procedure Code Titles—FY 2025;
• Table 6G.1.—Secondary Diagnosis Order Additions to the CC Exclusions List—FY 2025;
• Table 6G.2.—Principal Diagnosis Order Additions to the CC Exclusions List—FY 2025;
• Table 6H.1.—Secondary Diagnosis Order Deletions to the CC Exclusions List—FY 2025;
• Table 6H.2.—Principal Diagnosis Order Deletions to the CC Exclusions List—FY 2025;
• Table 6I.—Complete MCC List—FY 2025;
• Table 6I.1.—Additions to the MCC List—FY 2025;
• Table 6J.1.—Complete CC List—FY 2025;
• Table 6J.1.—Additions to the CC List—FY 2025;
• Table 6J.2.—Deletions to the CC List—FY 2025; and
• Table 6K.—Complete List of CC Exclusions—FY 2025.
Some inpatient stays entail multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different MS-DRG within the MDC to which the principal diagnosis is assigned. Therefore, it is necessary to have a decision rule within the GROUPER by which these cases are assigned to a single MS-DRG. The surgical hierarchy, an ordering of surgical classes from most resource-intensive to least resource-intensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS-DRG associated with the most resource-intensive surgical class.
A surgical class can be composed of one or more MS-DRGs. For example, in MDC 11, the surgical class “kidney transplant” consists of a single MS-DRG (MS-DRG 652) and the class “major bladder procedures” consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact on more than one MS-DRG. The methodology for determining the most resource-intensive surgical class involves weighting the average resources for each MS-DRG by frequency to determine the weighted average resources for each surgical class.
This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted MS-DRG (in the highest, most resource-intensive surgical class) of the available alternatives. However, given that the logic underlying the surgical hierarchy provides that the GROUPER search for the procedure in the most resource-intensive surgical class, in cases involving multiple procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a few instances when a surgical class with a lower average cost is ordered above a surgical class with a higher average cost. For example, the “other O.R. procedures” surgical class is uniformly ordered last in the surgical hierarchy of each MDC in which it occurs, regardless of the fact that the average costs for the MS-DRG or MS-DRGs in that surgical class may be higher than those for other surgical classes in the MDC. The “other O.R. procedures” class is a group of procedures that are only infrequently related to the diagnoses in the MDC but are still occasionally performed on patients with cases assigned to the MDC with these diagnoses. Therefore, assignment to these surgical classes should only occur if no other surgical class more closely related to the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average costs for two surgical classes is very small. We have found that small differences generally do not warrant reordering of the hierarchy because, as a result of reassigning cases on the basis of the hierarchy change, the average costs are likely to shift such that the higher-ordered surgical class has lower average costs than the class ordered below it.
Based on the changes that we proposed to make for FY 2025, as discussed in section II.C. of the preamble of the proposed rule and this final rule, we proposed to modify the existing surgical hierarchy for FY 2025 as follows.
As discussed in section II.C.4.a. of the preamble of the proposed rule and this final rule, we proposed to revise the surgical hierarchy for the MDC 05 (Diseases and Disorders of the Circulatory System) MS-DRGs as follows: In the MDC 05 MS-DRGs, we proposed to sequence proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation) above MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC) and below MS-DRGs 231, 232, 233, 234, 235, and 236 (Coronary Bypass with or without PTCA, with or without Cardiac Catheterization or Open Ablation, with and without MCC, respectively). As discussed in section II.C.4.b. of the preamble of the proposed rule and this final rule, we proposed to revise the title for MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator”.
As discussed in section II.C.6.b. of the preamble of the proposed rule and this final rule, we proposed to delete MS-DRGs 453, 454, and 455 (Combined Anterior and Posterior Spinal Fusion with MCC, with CC, and without CC/MCC, respectively). Based on the changes we proposed to make for those MS-DRGs in MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue), we proposed to revise the surgical hierarchy for MDC 08 as follows: In MDC 08, we proposed to sequence proposed new MS-DRGs 426, 427, and 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC, with CC, and without CC/MCC, respectively) above proposed new MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical). We proposed to sequence proposed new MS-DRGs 429 and 430 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC and without MCC, respectively) above MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC, with CC, and without CC/MCC, respectively) and below proposed new MS-DRG 402. We proposed to sequence proposed new MS-DRGs 447 and 448 (Multiple Level Spinal Fusion Except Cervical with MCC and without MCC, respectively) above proposed revised MS-DRGs 459 and 460 (Single Level Spinal Fusion Except Cervical with and without MCC, respectively) and below MS-DRGs 456, 457, and 458.
Lastly, as discussed in section II.C.9. of the preamble of the proposed rule and this final rule, we proposed to revise the surgical hierarchy for the MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms) MS-DRGs as follows: For the MDC 17 MS-DRGs, we proposed to sequence proposed new MS-DRG 850 (Acute Leukemia with Other Procedures) above MS-DRGs 823, 824, and 825 (Lymphoma and Non-Acute Leukemia with Other Procedures with MCC, with CC, and without CC/MCC, respectively) and below MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).
Our proposal for Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the version of the ICD-10 MS-DRG Definitions Manual Version 42 is illustrated in the following tables.
In the absence of a specific example, we are unclear why the commenter referenced data to differentiate cases where both multiple and single level spinal fusion procedures were performed on the same patient or during the same operative episode and its impact on resource utilization with respect to the data analysis provided in the proposed rule since, as stated in the proposed rule, the spinal fusion cases (for example, from MS-DRGs 453, 454, and 455) were separated into three categories (single level combined anterior and posterior fusions except cervical, multiple level combined anterior and posterior fusions except cervical, and combined anterior and posterior cervical spinal fusions), according to the proposed logic lists made available in Tables 6P.2d, 6P.2e, and 6P.2f in association with the proposed rule. The data analysis findings presented in the proposed rule show the difference in the number of cases, average length of stay, and average costs between multiple level and single level combined anterior and posterior spinal fusion cases. In consideration of the proposed logic, it would not be possible for a case to be reflected under both proposed MS-DRG categories at the same time.
Therefore, after consideration of the public comments we received, and based on the changes that we are finalizing for FY 2025, as discussed in section II.C. of the preamble of this final rule, we are finalizing our proposals to modify the existing surgical hierarchy, effective with the ICD-10 MS-DRGs Version 42, with modification. As discussed in section II.C.6.b., we are deleting MS-DRGs 459 and 460 and creating new MS-DRGs 450 and 451 (Single Level Spinal Fusion Except Cervical with MCC and without MCC, respectively). The finalized surgical hierarchy for MDC 08 is shown in the following table.
For issues pertaining to the surgical hierarchy, as with other MS-DRG related requests, we encourage interested parties to submit comments no later than October 20, 2024, via the Medicare Electronic Application Request Information System
In September 1985, the ICD-9-CM Coordination and Maintenance Committee was formed. This is a Federal interdepartmental committee, co-chaired by the Centers for Disease Control and Prevention's (CDC) National Center for Health Statistics (NCHS) and CMS, charged with maintaining and updating the ICD-9-CM system. The final update to ICD-9-CM codes was made on October 1, 2013. Thereafter, the name of the Committee was changed to the ICD-10 Coordination and Maintenance Committee, effective with the March 19-20, 2014 meeting. The ICD-10 Coordination and Maintenance Committee addresses updates to the ICD-10-CM and ICD-10-PCS coding systems. The Committee is jointly responsible for approving coding changes, and developing errata, addenda, and other modifications to the coding systems to reflect newly developed procedures and technologies and newly identified diseases. The Committee is also responsible for promoting the use of Federal and non-Federal educational programs and other communication techniques with a view toward standardizing coding applications and upgrading the quality of the classification system.
The official list of ICD-9-CM diagnosis and procedure codes by fiscal year can be found on the CMS website at:
The official list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website at:
The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM diagnosis codes included in the Tabular List and Alphabetic Index for Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-9-CM procedure codes included in the Tabular List and Alphabetic Index for Procedures.
The Committee encourages participation in the previously mentioned process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and proposed coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups, as well as individual physicians, health information management professionals, and other members of the public, to contribute ideas on coding matters. After considering the opinions expressed during the public meetings and in writing, the Committee formulates recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes for implementation in FY 2025 at a public meeting held on September 12-13, 2023, and finalized the coding changes after consideration of comments received at the meetings and in writing by November 15, 2023.
The Committee held its Spring 2024 meeting on March 19-20, 2024. The deadline for submitting comments on these code proposals was April 19, 2024. It was announced at this meeting that any new diagnosis and procedure codes for which there was consensus of public support, and for which complete tabular and indexing changes would be made by June 2024 would be included in the October 1, 2024 update to the ICD-10-CM diagnosis and ICD-10-PCS procedure code sets. As discussed in earlier sections of the preamble of this final rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that are captured in Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, Table 6D.—Invalid Procedure Codes, Table 6E.—Revised Diagnosis Code Titles, and Table 6F.—Revised Procedure Code Titles for this final rule, which are available on the CMS website at:
The code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee process. Therefore, although we make the code titles available for the IPPS proposed and final rules, they are not subject to comment in the proposed or final rule. Because of the length of these tables, they are not published in the Addendum to the proposed or final rule. Rather, they are available on the CMS website as discussed in section VI. of the Addendum to the proposed rule and this final rule.
Recordings for the virtual meeting discussions of the procedure codes at the Committee's September 12-13, 2023 meeting and the March 19-20, 2024 meeting can be obtained from the CMS website at:
We encourage commenters to submit questions and comments on coding issues involving diagnosis codes via Email to:
Questions and comments concerning the procedure codes should be submitted via Email to:
As discussed in the proposed rule, CMS implemented 41 new procedure codes including the insertion of a palladium-103 collagen implant into the brain, the excision or resection of intestinal body parts using a laparoscopic hand-assisted approach, the transfer of omentum for pedicled omentoplasty procedures, and the administration of talquetamab into the ICD-10-PCS classification effective with discharges on and after April 1, 2024. The procedure codes are as follows:
The 41 procedure codes are also reflected in Table 6B—New Procedure Codes in association with the proposed rule and available on the CMS website at:
In the proposed rule, we also noted that Change Request (CR) 13458, Transmittal 12384, titled “April 2024 Update to the Medicare Severity—Diagnosis Related Group (MS-DRG) Grouper and Medicare Code Editor (MCE) Version 41.1” was issued on November 30, 2023 (available on the CMS website at:
In the September 7, 2001 final rule implementing the IPPS new technology add-on payments (66 FR 46906), we indicated we would attempt to include proposals for procedure codes that would describe new technology discussed and approved at the Spring meeting as part of the code revisions effective the following October.
Section 503(a) of the Medicare Modernization Act (Pub. L. 108-173) included a requirement for updating diagnosis and procedure codes twice a year instead of a single update on October 1 of each year. This requirement was included as part of the amendments to the Act relating to recognition of new technology under the IPPS. Section 503(a) of Public Law 108-173 amended section 1886(d)(5)(K) of the Act by adding a clause (vii) which states that the Secretary shall provide for the addition of new diagnosis and procedure codes on April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) until the fiscal year that begins after such date. This requirement improves the recognition of new technologies under the IPPS by providing information on these new technologies at an earlier date. Data will
In the FY 2005 IPPS final rule, we implemented section 1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 108-173, by developing a mechanism for approving, in time for the April update, diagnosis and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee meeting were considered for an April 1 update if a strong and convincing case was made by the requestor during the Committee's public meeting. The request needed to identify the reason why a new code was needed in April for purposes of the new technology process. Meeting participants and those reviewing the Committee meeting materials were provided the opportunity to comment on the expedited request. We refer the reader to the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950) for further discussion of the implementation of this prior April 1 update for purposes of the new technology add-on payment process.
However, as discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950 through 44956), we adopted an April 1 implementation date, in addition to the annual October 1 update, beginning with April 1, 2022. We noted that the intent of this April 1 implementation date is to allow flexibility in the ICD-10 code update process. With this new April 1 update, CMS now uses the same process for consideration of all requests for an April 1 implementation date, including for purposes of the new technology add-on payment process (that is, the prior process for consideration of an April 1 implementation date only if a strong and convincing case was made by the requestor during the meeting no longer applies). We are continuing to use several aspects of our existing established process to implement new codes through the April 1 code update, which includes presenting proposals for April 1 consideration at the September ICD-10 Coordination and Maintenance Committee meeting, requesting public comments, reviewing the public comments, finalizing codes, and announcing the new codes with their assignments consistent with the new GROUPER release information. We note that under our established process, requestors indicate whether they are submitting their code request for consideration for an April 1 implementation date or an October 1 implementation date. The ICD-10 Coordination and Maintenance Committee makes efforts to accommodate the requested implementation date for each request submitted. However, the Committee determines which requests are to be presented for consideration for an April 1 implementation date or an October 1 implementation date. As discussed earlier in this section of the preamble of this final rule, there were code proposals presented for an April 1, 2024 implementation at the September 12-13, 2023 Committee meetings. Following the receipt of public comments, the code proposals were approved and finalized, therefore, there were new codes implemented April 1, 2024.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, consistent with the process we outlined for the April 1 implementation date, we announced the new codes in November 2023 and provided the updated code files in December 2023 and ICD-10-CM Official Guidelines for Coding and Reporting in January 2024. In the February 05, 2024
ICD-9-CM addendum and code title information is published on the CMS website at
In the proposed rule, we noted that for FY 2024, there are currently 74,044 diagnosis codes and 78,638 procedure codes. We also noted that as displayed in Table 6A.—New Diagnosis Codes and in Table 6B.—New Procedure Codes associated with the proposed rule (and available on the CMS website at
As discussed in section II.C.13 of the preamble of this final rule, we are making Table 6A.—New Diagnosis Codes, Table 6B.—New Procedure Codes, Table 6C.—Invalid Diagnosis Codes, Table 6D.—Invalid Procedure Codes, Table 6E.—Revised Diagnosis Code Titles and Table 6F.—Revised Procedure Code Titles available on the CMS website at:
We also note, as reflected in Table 6C.—Invalid Diagnosis Codes and in Table 6D.—Invalid Procedure Codes, there are a total of 36 diagnosis codes and 61 procedure codes that will become invalid effective October 1, 2024. Based on these code updates, effective October 1, 2024, there are a total of 74,260 ICD-10-CM diagnosis codes and 78,948 ICD-10-PCS procedure codes for FY 2025 as shown in the following table.
As stated previously, the public is provided the opportunity to comment on any requests for new diagnosis or procedure codes discussed at the ICD-10 Coordination and Maintenance Committee meeting. The code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee process. Thus, although we publish the code titles in the IPPS proposed and final rules, they are not subject to comment in the proposed or final rules.
In the FY 2008 IPPS final rule with comment period (72 FR 47246 through 47251), we discussed the topic of Medicare payment for devices that are replaced without cost or where credit for a replaced device is furnished to the hospital. We implemented a policy to reduce a hospital's IPPS payment for certain MS-DRGs where the implantation of a device that subsequently failed or was recalled determined the base MS-DRG assignment. At that time, we specified that we will reduce a hospital's IPPS payment for those MS-DRGs where the hospital received a credit for a replaced device equal to 50 percent or more of the cost of the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 51557), we clarified this policy to state that the policy applies if the hospital received a credit equal to 50 percent or more of the cost of the replacement device and issued instructions to hospitals accordingly.
As discussed in section II.C.5. of the preamble of the proposed rule and this final rule, for FY 2025, we proposed to revise the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator”.
As stated in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24409), we generally map new MS-DRGs onto the list when they are formed from procedures previously assigned to MS-DRGs that are already on the list. Currently, MS-DRG 276 is on the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit as shown in the following table. Therefore, we proposed that if the applicable proposed MS-DRG changes are finalized, we would make conforming changes to the title of MS-DRG 276 as reflected in the table that follows. We also proposed to continue to include the existing MS-DRGs currently subject to the policy.
As discussed in section II.C.5. of the preamble of this final rule, we are finalizing our proposal to revise the title of MS-DRG 276 from “Cardiac Defibrillator Implant with MCC” to “Cardiac Defibrillator Implant with MCC or Carotid Sinus Neurostimulator”. We did not receive any public comments opposing our proposal make conforming changes to the title of MS-DRG 276 in the list of MS-DRGs that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2024. Additionally, we did not receive any public comments opposing our proposal to continue to include the existing MS-DRGs currently subject to the policy. Therefore, we are finalizing the list of MS-DRGs in the following table that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2024.
The final list of MS-DRGs subject to the IPPS policy for replaced devices offered without cost or with a credit will be issued to providers in the form of a Change Request (CR).
We received public comments on MS-DRG related issues that were
Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule. As stated in section II.C.1.b. of the preamble of this final rule, we encourage individuals with comments about MS-DRG classifications to submit these comments no later than October 20, 2024, via the Medicare Electronic Application Request Information System
Consistent with our established policy, in developing the MS-DRG relative weights for FY 2025, we proposed to use two data sources: claims data and cost report data. The claims data source is the MedPAR file, which includes fully coded diagnostic and procedure data for all Medicare inpatient hospital bills. The FY 2023 MedPAR data used in this final rule include discharges occurring on October 1, 2022, through September 30, 2023, based on bills received by CMS through March 31, 2024, from all hospitals subject to the IPPS and short-term, acute care hospitals in Maryland (which at that time were under a waiver from the IPPS).
The FY 2023 MedPAR file used in calculating the relative weights includes data for approximately 6,916,571 Medicare discharges from IPPS providers. Discharges for Medicare beneficiaries enrolled in a Medicare Advantage managed care plan are excluded from this analysis. These discharges are excluded when the MedPAR “GHO Paid” indicator field on the claim record is equal to “1” or when the MedPAR DRG payment field, which represents the total payment for the claim, is equal to the MedPAR “Indirect Medical Education (IME)” payment field, indicating that the claim was an “IME only” claim submitted by a teaching hospital on behalf of a beneficiary enrolled in a Medicare Advantage managed care plan. In addition, the March 2024 update of the FY 2023 MedPAR file complies with version 5010 of the X12 HIPAA Transaction and Code Set Standards, and includes a variable called “claim type.” Claim type “60” indicates that the claim was an inpatient claim paid as fee-for-service. Claim types “61,” “62,” “63,” and “64” relate to encounter claims, Medicare Advantage IME claims, and HMO no-pay claims. Therefore, the calculation of the relative weights for FY 2025 also excludes claims with claim type values not equal to “60.” The data exclude CAHs, including hospitals that subsequently became CAHs after the period from which the data were taken. In addition, the data exclude Rural Emergency Hospitals (REHs), including hospitals that subsequently became REHs after the period from which the data were taken. We note that the FY 2025 relative weights are based on the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes from the FY 2023 MedPAR claims data, grouped through the ICD-10 version of the FY 2025 GROUPER (Version 42).
The second data source used in the cost-based relative weighting methodology is the Medicare cost report data files from the Healthcare Cost Report Information System (HCRIS). In general, we use the HCRIS dataset that is 3 years prior to the IPPS fiscal year. Specifically, for this final rule, we used the March 2024 update of the FY 2022 HCRIS for calculating the FY 2025 cost-based relative weights. Consistent with our historical practice, for this FY 2025 final rule, we are providing the version of the HCRIS from which we calculated these 19 cost-to charge-ratios (CCRs) on the CMS website at
We calculated the FY 2025 relative weights based on 19 CCRs. The methodology we proposed to use to calculate the FY 2025 MS-DRG cost-based relative weights based on claims data in the FY 2023 MedPAR file and data from the FY 2022 Medicare cost reports is as follows:
• To the extent possible, all the claims were regrouped using the FY 2025 MS-DRG classifications discussed in sections II.B. and II.C. of the preamble of this final rule.
• The transplant cases that were used to establish the relative weights for heart and heart-lung, liver and/or intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively) were limited to those Medicare-approved transplant centers that have cases in the FY 2023 MedPAR file. (Medicare coverage for heart, heart-lung, liver and/or intestinal, and lung transplants is limited to those facilities that have received approval from CMS as transplant centers.)
• Organ acquisition costs for kidney, heart, heart-lung, liver, lung, pancreas, and intestinal (or multivisceral organs) transplants continue to be paid on a reasonable cost basis. Because these acquisition costs are paid separately from the prospective payment rate, it is necessary to subtract the acquisition charges from the total charges on each transplant bill that showed acquisition charges before computing the average cost for each MS-DRG and before eliminating statistical outliers.
Section 108 of the Further Consolidated Appropriations Act, 2020 provides that, for cost reporting periods beginning on or after October 1, 2020, costs related to hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant shall be paid on a reasonable cost basis. We refer the reader to the FY 2021 IPPS/LTCH PPS final rule for further discussion of the reasonable cost basis payment for cost reporting periods beginning on or after October 1, 2020 (85 FR 58835 through 58842). For FY 2022 and subsequent years, we subtract the hematopoietic stem cell acquisition charges from the total charges on each transplant bill that showed hematopoietic stem cell acquisition charges before computing the average cost for each MS-DRG and before eliminating statistical outliers.
• Claims with total charges or total lengths of stay less than or equal to zero were deleted. Claims that had an amount in the total charge field that differed by more than $30.00 from the sum of the routine day charges, intensive care charges, pharmacy charges, implantable devices charges, supplies and equipment charges, therapy services charges, operating room charges, cardiology charges, laboratory charges, radiology charges, other service charges, labor and delivery charges, inhalation therapy charges, emergency room charges, blood and blood products charges, anesthesia charges, cardiac catheterization charges, CT scan charges, and MRI charges were also deleted.
• At least 92.6 percent of the providers in the MedPAR file had charges for 14 of the 19 cost centers. All claims of providers that did not have charges greater than zero for at least 14
• Statistical outliers were eliminated by removing all cases that were beyond 3.0 standard deviations from the geometric mean of the log distribution of both the total charges per case and the total charges per day for each MS-DRG.
• Effective October 1, 2008, because hospital inpatient claims include a Present on Admission (POA) field for each diagnosis present on the claim, only for purposes of relative weight-setting, the POA indicator field was reset to “Y” for “Yes” for all claims that otherwise have an “N” (No) or a “U” (documentation insufficient to determine if the condition was present at the time of inpatient admission) in the POA field.
Under current payment policy, the presence of specific HAC codes, as indicated by the POA field values, can generate a lower payment for the claim. Specifically, if the particular condition is present on admission (that is, a “Y” indicator is associated with the diagnosis on the claim), it is not a HAC, and the hospital is paid for the higher severity (and, therefore, the higher weighted MS-DRG). If the particular condition is not present on admission (that is, an “N” indicator is associated with the diagnosis on the claim) and there are no other complicating conditions, the DRG GROUPER assigns the claim to a lower severity (and, therefore, the lower weighted MS-DRG) as a penalty for allowing a Medicare inpatient to contract a HAC. While the POA reporting meets policy goals of encouraging quality care and generates program savings, it presents an issue for the relative weight-setting process. Because cases identified as HACs are likely to be more complex than similar cases that are not identified as HACs, the charges associated with HAC cases are likely to be higher as well. Therefore, if the higher charges of these HAC claims are grouped into lower severity MS-DRGs prior to the relative weight-setting process, the relative weights of these particular MS-DRGs would become artificially inflated, potentially skewing the relative weights. In addition, we want to protect the integrity of the budget neutrality process by ensuring that, in estimating payments, no increase to the standardized amount occurs as a result of lower overall payments in a previous year that stem from using weights and case-mix that are based on lower severity MS-DRG assignments. If this would occur, the anticipated cost savings from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to “Y” only for relative weight-setting purposes for all claims that otherwise have an “N” or a “U” in the POA field. This resetting “forced” the more costly HAC claims into the higher severity MS-DRGs as appropriate, and the relative weights calculated for each MS-DRG more closely reflect the true costs of those cases.
In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013 and subsequent fiscal years, we finalized a policy to treat hospitals that participate in the Bundled Payments for Care Improvement (BPCI) initiative the same as prior fiscal years for the IPPS payment modeling and ratesetting process without regard to hospitals' participation within these bundled payment models (77 FR 53341 through 53343). Specifically, because acute care hospitals participating in the BPCI Initiative still receive IPPS payments under section 1886(d) of the Act, we include all applicable data from these subsection (d) hospitals in our IPPS payment modeling and ratesetting calculations as if the hospitals were not participating in those models under the BPCI initiative. We refer readers to the FY 2013 IPPS/LTCH PPS final rule for a complete discussion on our final policy for the treatment of hospitals participating in the BPCI initiative in our ratesetting process. For additional information on the BPCI initiative, we refer readers to the CMS' Center for Medicare and Medicaid Innovation's website at
The participation of hospitals in the BPCI initiative concluded on September 30, 2018. The participation of hospitals in the BPCI Advanced model started on October 1, 2018. The BPCI Advanced model, tested under the authority of section 1115A of the Act, is comprised of a single payment and risk track, which bundles payments for multiple services that beneficiaries receive during a Clinical Episode. Acute care hospitals may participate in BPCI Advanced in one of two capacities: as a model Participant or as a downstream Episode Initiator. Regardless of the capacity in which they participate in the BPCI Advanced model, participating acute care hospitals will continue to receive IPPS payments under section 1886(d) of the Act. Acute care hospitals that are Participants also assume financial and quality performance accountability for Clinical Episodes in the form of a reconciliation payment. For additional information on the BPCI Advanced model, we refer readers to the BPCI Advanced web page on the CMS Center for Medicare and Medicaid Innovation's website at
The charges for each of the 19 cost groups for each claim were standardized to remove the effects of differences in area wage levels, IME and DSH payments, and for hospitals located in Alaska and Hawaii, the applicable cost-of-living adjustment. Because hospital charges include charges for both operating and capital costs, we standardized total charges to remove the effects of differences in geographic adjustment factors, cost-of-living adjustments, and DSH payments under the capital IPPS as well. Charges were then summed by MS-DRG for each of the 19 cost groups so that each MS-DRG had 19 standardized charge totals. Statistical outliers were then removed. These charges were then adjusted to cost by applying the national average CCRs developed from the FY 2022 cost report data.
The 19 cost centers that we used in the relative weight calculation are shown in a supplemental data file, Cost Center HCRIS Lines Supplemental Data File, posted via the internet on the CMS website for this final rule and available at
Consistent with historical practice, we account for rare situations of non-monotonicity in a base MS-DRG and its severity levels, where the mean cost in the higher severity level is less than the mean cost in the lower severity level, in determining the relative weights for the different severity levels. If there are initially non-monotonic relative weights in the same base DRG and its severity levels, then we combine the cases that group to the specific non-monotonic MS-DRGs for purposes of relative weight calculations. For example, if there are two non-monotonic MS-DRGs, combining the cases across those two MS-DRGs results in the same relative weight for both MS-DRGs. The relative weight calculated using the combined cases for those severity levels is monotonic, effectively removing any non-monotonicity with the base DRG and its severity levels. For this FY 2025 final rule, this calculation was applied to address non-monotonicity for cases that grouped to the following: MS-DRG 016 and MS-DRG 017, MS-DRG 095 and MS-DRG 096, MS-DRG 504 and MS-DRG 505, MS-DRG 797 and MS-DRG 798. In the supplemental file titled AOR/BOR File, we include statistics for the affected MS-DRGs both separately and with cases combined.
We invited public comments on our proposals related to recalibration of the proposed FY 2025 relative weights and the changes in relative weights from FY 2024.
We received several comments that we consider to be out of scope. For example, a commenter requested a “device intensive” cost threshold. Because we consider these comments to be out of scope, we are not responding in this final rule.
After consideration of the comments received, we are finalizing our proposals without modifications related to the recalibration of the FY 2025 relative weights. We summarize and respond to comments relating to the methodology for calculating the relative weight for MS-DRG 018 in the next section of this final rule.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58451 through 58453), we created MS-DRG 018 for cases that include procedures describing CAR T-cell therapies. We also finalized our proposal to modify our existing relative weight methodology to ensure that the relative weight for MS-DRG 018 appropriately reflects the relative resources required for providing CAR T-cell therapy outside of a clinical trial, while still accounting for the clinical trial cases in the overall average cost for all MS-DRGs (85 FR 58599 through 58600). Specifically, we stated that clinical trial claims that group to new MS-DRG 018 would not be included when calculating the average cost for MS-DRG 018 that is used to calculate the relative weight for this MS-DRG, so that the relative weight reflects the costs of the CAR T-cell therapy drug. We stated that we identified clinical trial claims as claims that contain ICD-10-CM diagnosis code Z00.6 or contain standardized drug charges of less than $373,000, which was the average sales price of KYMRIAH and YESCARTA, the two CAR T-cell biological products licensed to treat relapsed/refractory large B-cell lymphoma as of the time of the development of the FY 2021 final rule. In addition, we stated that (a) when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for new MS-DRG 018 to the extent such cases can be identified in the historical data, and (b) when there is expanded access use of immunotherapy, these cases will not be included when calculating the average cost for new MS-DRG 018 to the extent such cases can be identified in the historical data.
We also finalized our proposal to calculate an adjustment to account for the CAR T-cell therapy cases identified as clinical trial cases in calculating the national average standardized cost per case that is used to calculate the relative weights for all MS-DRGs and for purposes of budget neutrality and outlier simulations. We calculate this adjustor by dividing the average cost for cases that we identify as clinical trial cases by the average cost for cases that we identify as non-clinical trial cases, with the additional refinements that (a) when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for cases not determined to be clinical trial cases to the extent such cases can be identified in the historical data, and (b) when there is expanded access use of immunotherapy, these cases will be included when calculating the average cost for cases determined to be clinical trial cases to the extent such cases can be identified in the historical data. We stated that to the best of our knowledge, there were no claims in the historical data used in the calculation of this adjustment for cases involving a clinical trial of a different product, and to the extent the historical data contain claims for cases involving expanded access use of immunotherapy we believe those claims would have drug charges less than $373,000.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58842), we also finalized an adjustment to the payment amount for applicable clinical trial and expanded access use immunotherapy cases that group to MS-DRG 018, and indicated that we would provide instructions for identifying these claims in separate guidance. Following the issuance of the FY 2021 IPPS/LTCH PPS final rule, we issued guidance
In the FY 2022 IPPS/LTCH PPS final rule, we revised MS-DRG 018 to include cases that report the procedure codes for CAR T-cell and non-CAR T-cell therapies and other immunotherapies (86 FR 44798 through 44806). We also finalized our proposal to continue to use the proxy of standardized drug charges of less than $373,000 (86 FR 44965) to identify clinical trial claims. We also finalized use of this same proxy for the FY 2023 IPPS/LTCH PPS final rule (87 FR 48894).
Following the issuance of the FY 2023 IPPS/LTCH PPS final rule, we issued guidance
In the FY 2024 IPPS/LTCH PPS final rule, we explained that the MedPAR claims data now includes a field that identifies whether or not the claim includes expanded access use of immunotherapy. We stated that for the FY 2022 MedPAR claims data, this field identifies whether or not the claim includes condition code ZB, and for the FY 2023 MedPAR data and subsequent years, this field will identify whether or not the claim includes condition code 90. We further noted that the MedPAR files now also include a variable that indicates whether the claim includes the payer-only condition code “ZC”, which identifies a case involving the clinical trial of a different product where the CAR T-cell, non-CAR T-cell, or other immunotherapy product is purchased in the usual manner.
Accordingly, and as discussed further in the FY 2024 IPPS/LTCH PPS final rule, we finalized two modifications to our methodology for identifying clinical trial claims and expanded access use claims in MS-DRG 018 (88 FR 58791). First, we finalized to exclude claims with the presence of condition code “90” (or, for FY 2024 ratesetting, which was based on the FY 2022 MedPAR data, the presence of condition code “ZB”) and claims that contain ICD-10-CM diagnosis code Z00.6 without payer-only code “ZC” that group to MS-DRG 018 when calculating the average cost for MS-DRG 018. Second, we finalized to no longer use the proxy of standardized drug charges of less than $373,000 to identify clinical trial claims and expanded access use cases when calculating the average cost for MS-DRG 018. Accordingly, we finalized that in calculating the relative weight for MS-DRG 018 for FY 2024, only those claims that group to MS-DRG 018 that (1) contain ICD-10-CM diagnosis code Z00.6 and do not include payer-only code “ZC” or (2) contain condition code “ZB” (or, for subsequent fiscal years, condition code “90”) would be excluded from the calculation of the average cost for MS-DRG 018. Consistent with this, we also finalized modifications to our calculation of the adjustment to account for the CAR T-cell therapy cases identified as clinical trial cases in calculating the national average standardized cost per case that is used to calculate the relative weights for all MS-DRGs. We refer readers to the FY 2024 IPPS/LTCH PPS final rule for further discussion of these modifications (88 FR 58791).
In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to continue to use our methodology as modified in the FY 2024 IPPS/LTCH PPS final rule for identifying clinical trial claims and expanded access use claims in MS-DRG 018. First, we exclude claims with the presence of condition code “90” and claims that contain ICD-10-CM diagnosis code Z00.6 without payer-only code “ZC” that group to MS-DRG 018 when calculating the average cost for MS-DRG 018. Second, we no longer use the proxy of standardized drug charges of less than $373,000 to identify clinical trial claims and expanded access use cases when calculating the average cost for MS-DRG 018. Accordingly, we proposed that in calculating the relative weight for MS-DRG 018 for FY 2025, only those claims that group to MS-DRG 018 that (1) contain ICD-10-CM diagnosis code Z00.6 and do not include payer-only code “ZC” or (2) contain condition code “90” would be excluded from the calculation of the average cost for MS-DRG 018.
We also proposed to continue to use the methodology as modified in the FY 2024 IPPS/LTCH PPS final rule to calculate the adjustment to account for the CAR T-cell therapy cases identified as clinical trial cases in calculating the national average standardized cost per case that is used to calculate the relative weights for all MS-DRGs:
• Calculate the average cost for cases assigned to MS-DRG 018 that either (a) contain ICD-10-CM diagnosis code Z00.6 and do not contain condition code “ZC” or (b) contain condition code “90”.
• Calculate the average cost for all other cases assigned to MS-DRG 018.
• Calculate an adjustor by dividing the average cost calculated in step 1 by the average cost calculated in step 2.
• Apply the adjustor calculated in step 3 to the cases identified in step 1 as applicable clinical trial or expanded access use cases, then add this adjusted case count to the non-clinical trial case count prior to calculating the average cost across all MS-DRGs.
Under our proposal to continue to apply this methodology, based on the December 2023 update of the FY 2023 MedPAR file used for the proposed rule, we estimated that the average costs of cases assigned to MS-DRG 018 that are identified as clinical trial cases ($116,831) were 34 percent of the average costs of the cases assigned to MS-DRG 018 that are identified as non-clinical trial cases ($342,684). Accordingly, as we did for FY 2024, we proposed to adjust the transfer-adjusted case count for MS-DRG 018 by applying the proposed adjustor of 0.34 to the applicable clinical trial and expanded access use immunotherapy cases, and to use this adjusted case count for MS-DRG 018 in calculating the national average cost per case, which is used in the calculation of the relative weights. Therefore, in calculating the national average cost per case for purposes of the proposed rule, each case identified as an applicable clinical trial or expanded access use immunotherapy case was adjusted by 0.34. As we did for FY 2024, we applied this same adjustor for the applicable cases that group to MS-DRG 018 for purposes of budget neutrality and outlier simulations. We also proposed to update the value of the adjustor based on more recent data for the final rule.
After consideration of the public comments we received, we are finalizing our proposals without modifications regarding the calculation of the relative weight for MS-DRG 018. Applying this finalized methodology, based on the March 2024 update of the FY 2023 MedPAR file used for this final rule, we estimated that the average costs of cases assigned to MS-DRG 018 that are identified as clinical trial cases ($111,211) were 33 percent of the average costs of the cases assigned to MS-DRG 018 that are identified as non-clinical trial cases ($334,119). Accordingly, as we did for FY 2024, we are finalizing our proposal to adjust the transfer-adjusted case count for MS-DRG 018 by applying the adjustor of 0.33 to the applicable clinical trial and expanded access use immunotherapy cases, and to use this adjusted case count for MS-DRG 018 in calculating the national average cost per case, which is used in the calculation of the relative weights. Therefore, in calculating the national average cost per case for purposes of this final rule, each case identified as an applicable clinical trial or expanded access use immunotherapy case was adjusted by 0.33. As we did for FY 2024, we are applying this same adjustor for the applicable cases that group to MS-DRG 018 for purposes of budget neutrality and outlier simulations.
In the FY 2023 IPPS/LTCH PPS final rule, we finalized a permanent 10-percent cap on the reduction in an MS-DRG's relative weight in a given fiscal year, beginning in FY 2023. We also finalized a budget neutrality adjustment to the standardized amount for all hospitals to ensure that application of the permanent 10-percent cap does not result in an increase or decrease of estimated aggregate payments. We refer the reader to the FY 2023 IPPS/LTCH PPS final rule for further discussion of this policy. In the Addendum to this IPPS/LTCH PPS final rule, we present the budget neutrality adjustment for reclassification and recalibration of the FY 2025 MS-DRG relative weights with application of this cap. We are also making available on the CMS website a supplemental file demonstrating the application of the permanent 10 percent cap for FY 2025. For a further discussion of the budget neutrality adjustment for FY 2025, we refer readers to the Addendum of this final rule.
We developed the national average CCRs as follows:
Using the FY 2022 cost report data, we removed CAHs, Indian Health Service hospitals, all-inclusive rate hospitals, and cost reports that represented time periods of less than 1 year (365 days). We included hospitals located in Maryland because we include their charges in our claims database. Then we created CCRs for each provider for each cost center (see the supplemental data file for line items used in the calculations) and removed any CCRs that were greater than 10 or less than 0.01. We normalized the departmental CCRs by dividing the CCR for each department by the total CCR for the hospital for the purpose of trimming the data. Then we took the logs of the normalized cost center CCRs and removed any cost center CCRs where the log of the cost center CCR was greater or less than the mean log plus/minus 3 times the standard deviation for the log of that cost center CCR. Once the cost report data were trimmed, we calculated a Medicare-specific CCR. The Medicare-specific CCR was determined by taking the Medicare charges for each line item from Worksheet D-3 and deriving the Medicare-specific costs by applying the hospital-specific departmental CCRs to the Medicare-specific charges for each line item from Worksheet D-3. Once each hospital's Medicare-specific costs were established, we summed the total Medicare-specific costs and divided by the sum of the total Medicare-specific charges to produce national average, charge-weighted CCRs.
After we multiplied the total charges for each MS-DRG in each of the 19 cost centers by the corresponding national average CCR, we summed the 19 “costs” across each MS-DRG to produce a total standardized cost for the MS-DRG. The average standardized cost for each MS-DRG was then computed as the total standardized cost for the MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The average cost for each MS-DRG was then divided by the national average standardized cost per case to determine the relative weight. The final FY 2025 cost-based relative weights were then normalized by an adjustment factor of 1.92336 so that the average case weight after recalibration was equal to the average case weight before recalibration. The normalization adjustment is intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act. We then applied the permanent 10-percent cap on the reduction in a MS-DRG's relative weight in a given fiscal year; specifically for those MS-DRGs for which the relative weight otherwise would have declined by more than 10 percent from the FY 2024 relative weight, we set the final FY 2025 relative weight equal to 90 percent of the FY 2024 relative weight. The final relative weights for FY 2025 as set forth in Table 5 associated with this final rule and available on the CMS website at
The 19 national average CCRs for FY 2025 are as follows:
Since FY 2009, the relative weights have been based on 100 percent cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a threshold of 10 cases as the minimum number of cases required to compute a reasonable weight. We proposed to use that same case threshold in recalibrating the proposed MS-DRG relative weights for FY 2025. Using data from the FY 2023 MedPAR file, there were 8 MS-DRGs that contain fewer than 10 cases. For FY 2025, because we do not have sufficient MedPAR data to set accurate and stable cost relative weights for these low-volume MS-DRGs, we proposed to compute relative weights for the low-volume MS-DRGs by adjusting their final FY 2024 relative weights by the percentage change in the average weight of the cases in other MS-DRGs from FY 2024 to FY 2025. The crosswalk table is as follows.
After consideration of the public comments we received, we are finalizing our proposals without modification.
Effective for discharges beginning on or after October 1, 2001, section 1886(d)(5)(K)(i) of the Act requires the Secretary to establish (after notice and opportunity for public comment) a mechanism to recognize the costs of new medical services and technologies (sometimes collectively referred to in this section as “new technologies”) under the IPPS. Section 1886(d)(5)(K)(vi) of the Act specifies that a medical service or technology will be considered new if it meets criteria established by the Secretary after notice and opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or technology may be considered for new technology add-on payment if, based on the estimated costs incurred with respect to discharges involving such service or technology, the DRG prospective payment rate otherwise applicable to such discharges under this subsection is inadequate. The regulations at 42 CFR 412.87 implement these provisions and § 412.87(b) specifies three criteria for a new medical service or technology to receive the additional payment: (1) The medical service or technology must be new; (2) the medical service or technology must be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate; and (3) the service or technology must demonstrate a substantial clinical improvement over existing services or technologies. In addition, certain transformative new devices and antimicrobial products may qualify under an alternative inpatient new technology add-on payment pathway, as set forth in the regulations at § 412.87(c) and (d).
We note that section 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services and technologies under the payment system established under that subsection, which establishes the system for paying for the operating costs of inpatient hospital services. The system of payment for capital costs is established under section 1886(g) of the Act. Therefore, as discussed in prior rulemaking (72 FR 47307 through 47308), we do not include capital costs in the add-on payments for a new medical service or technology or make
In this rule, we highlight some of the major statutory and regulatory provisions relevant to the new technology add-on payment criteria, as well as other information. For further discussion on the new technology add-on payment criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574), the FY 2020 IPPS/LTCH PPS final rule (84 FR 42288 through 42300), and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58736 through 58742).
Under the first criterion, as reflected in § 412.87(b)(2), a specific medical service or technology will no longer be considered “new” for purposes of new medical service or technology add-on payments after CMS has recalibrated the MS-DRGs, based on available data, to reflect the cost of the technology. We note that we do not consider a service or technology to be new if it is substantially similar to one or more existing technologies. That is, even if a medical product receives a new FDA approval or clearance, it may not necessarily be considered “new” for purposes of new technology add-on payments if it is “substantially similar” to another medical product that was approved or cleared by FDA and has been on the market for more than 2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 through 43814), we established criteria for evaluating whether a new technology is substantially similar to an existing technology, specifically whether: (1) a product uses the same or a similar mechanism of action to achieve a therapeutic outcome; (2) a product is assigned to the same or a different MS-DRG; and (3) the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population. If a technology meets all three of these criteria, it would be considered substantially similar to an existing technology and would not be considered “new” for purposes of new technology add-on payments. For a detailed discussion of the criteria for substantial similarity, we refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 47352) and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 43814).
Under the second criterion, § 412.87(b)(3) further provides that, to be eligible for the add-on payment for new medical services or technologies, the MS-DRG prospective payment rate otherwise applicable to discharges involving the new medical service or technology must be assessed for adequacy. Under the cost criterion, consistent with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess the adequacy of payment for a new technology paid under the applicable MS-DRG prospective payment rate, we evaluate whether the charges of the cases involving a new medical service or technology will exceed a threshold amount that is the lesser of 75 percent of the standardized amount (increased to reflect the difference between cost and charges) or 75 percent of one standard deviation beyond the geometric mean standardized charge for all cases in the MS-DRG to which the new medical service or technology is assigned (or the case-weighted average of all relevant MS-DRGs if the new medical service or technology occurs in many different MS-DRGs). The MS-DRG threshold amounts generally used in evaluating new technology add-on payment applications for FY 2025 are presented in a data file that is available, along with the other data files associated with the FY 2024 IPPS/LTCH PPS final rule and correction notification, on the CMS website at:
We note that, under the policy finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58603 through 58605), beginning with FY 2022, we use the proposed threshold values associated with the proposed rule for that fiscal year to evaluate the cost criterion for all applications for new technology add-on payments and previously approved technologies that may continue to receive new technology add-on payments, if those technologies would be assigned to a proposed new MS-DRG for that same fiscal year.
As finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41275), beginning with FY 2020, we include the thresholds applicable to the next fiscal year (previously included in Table 10 of the annual IPPS/LTCH PPS proposed and final rules) in the data files associated with the prior fiscal year. Accordingly, the final thresholds for applications for new technology add-on payments for FY 2026 are presented in a data file that is available on the CMS website, along with the other data files associated with this FY 2025 final rule, by clicking on the FY 2025 IPPS Final Rule Home Page at:
In the September 7, 2001 final rule that established the new technology add-on payment regulations (66 FR 46917), we discussed that applicants should submit a significant sample of data to demonstrate that the medical service or technology meets the high-cost threshold. Specifically, applicants should submit a sample of sufficient size to enable us to undertake an initial validation and analysis of the data. We also discussed in the September 7, 2001 final rule (66 FR 46917) the issue of whether the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164, subparts A and E, applies to claims information that providers submit with applications for new medical service or technology add-on payments. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51573) for further information on this issue.
Under the third criterion at § 412.87(b)(1), a medical service or technology must represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42288 through 42292), we prospectively codified in our regulations at § 412.87(b) the following aspects of how we evaluate substantial clinical improvement for purposes of new technology add-on payments under the IPPS:
• The totality of the circumstances is considered when making a determination that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
• A determination that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries means—
++ The new medical service or technology offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments;
++ The new medical service or technology offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable, or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods, and there must also be evidence that use of the new medical service or technology to make a diagnosis affects the management of the patient.
++ The use of the new medical service or technology significantly improves clinical outcomes relative to services or technologies previously available as demonstrated by one or more of the following: a reduction in at least one clinically significant adverse event, including a reduction in mortality or a clinically significant complication; a decreased rate of at least one subsequent diagnostic or therapeutic intervention; a decreased number of future hospitalizations or physician visits; a more rapid beneficial resolution of the disease process treatment including, but not limited to, a reduced length of stay or recovery time; an improvement in one or more activities of daily living; an improved quality of life; or, a demonstrated greater medication adherence or compliance; or
++ The totality of the circumstances otherwise demonstrates that the new medical service or technology substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
• Evidence from the following published or unpublished information sources from within the United States or elsewhere may be sufficient to establish that a new medical service or technology represents an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of Medicare beneficiaries: clinical trials, peer reviewed journal articles; study results; meta-analyses; consensus statements; white papers; patient surveys; case studies; reports; systematic literature reviews; letters from major healthcare associations; editorials and letters to the editor; and public comments. Other appropriate information sources may be considered.
• The medical condition diagnosed or treated by the new medical service or technology may have a low prevalence among Medicare beneficiaries.
• The new medical service or technology may represent an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of a subpopulation of patients with the medical condition diagnosed or treated by the new medical service or technology.
We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42288 through 42292) for additional discussion of the evaluation of substantial clinical improvement for purposes of new technology add-on payments under the IPPS.
We note, consistent with the discussion in the FY 2003 IPPS final rule (67 FR 50015), that while FDA has regulatory responsibility for decisions related to marketing authorization (for example, approval, clearance, etc.), we do not rely upon FDA criteria in our evaluation of substantial clinical improvement for purposes of determining what services and technologies qualify for new technology add-on payments under Medicare. This criterion does not depend on the standard of safety and effectiveness on which FDA relies but on a demonstration of substantial clinical improvement in the Medicare population.
Beginning with applications for FY 2021 new technology add-on payments, under the regulations at § 412.87(c), a medical device that is part of FDA's Breakthrough Devices Program may qualify for the new technology add-on payment under an alternative pathway. Additionally, under the regulations at § 412.87(d) for certain antimicrobial products, beginning with FY 2021, a drug that is designated by FDA as a Qualified Infectious Disease Product (QIDP), and, beginning with FY 2022, a drug that is approved by FDA under the Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD), may also qualify for the new technology add-on payment under an alternative pathway. We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through 42297) and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58737 through 58739) for further discussion on this policy. We note that CMS reviews the application based on the information provided by the applicant only under the alternative pathway specified by the applicant at the time of application submission. To receive approval for the new technology add-on payment under that alternative pathway, the technology must have the applicable FDA designation and meet all other requirements in the regulations in § 412.87(c) and (d), as applicable.
For applications received for new technology add-on payments for FY 2021 and subsequent fiscal years, a medical device designated under FDA's Breakthrough Devices Program that has received FDA marketing authorization will be considered not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to meet the requirement under § 412.87(b)(1) that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. Under this alternative pathway, a medical device that has received FDA marketing authorization (that is, has been approved or cleared by, or had a De Novo classification request granted by, FDA) as a Breakthrough Device, for the indication covered by the Breakthrough Device designation, will need to meet the requirements of § 412.87(c). We note that in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58734 through 58736), we clarified our policy that a new medical device under this alternative pathway must receive marketing authorization for the indication covered by the Breakthrough Devices Program designation. We refer the reader to the FY 2021 IPPS/LTCH PPS final rule (85 FR 58734 through 58736) for further discussion regarding this clarification.
For applications received for new technology add-on payments for certain antimicrobial products, beginning with FY 2021, if a technology is designated by FDA as a QIDP and received FDA marketing authorization, and, beginning with FY 2022, if a drug is approved under FDA's LPAD pathway and used for the indication approved under the LPAD pathway, it will be considered not substantially similar to an existing technology for purposes of new technology add-on payments and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. Under this alternative pathway for QIDPs and LPADs, a medical product that has received FDA marketing authorization and is designated by FDA as a QIDP or approved under the LPAD pathway will need to meet the requirements of § 412.87(d). We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through
We note that, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58737 through 58739), we clarified that a new medical product seeking approval for the new technology add-on payment under the alternative pathway for QIDPs must receive FDA marketing authorization for the indication covered by the QIDP designation. We also finalized our policy to expand our alternative new technology add-on payment pathway for certain antimicrobial products to include products approved under the LPAD pathway and used for the indication approved under the LPAD pathway.
The new medical service or technology add-on payment policy under the IPPS provides additional payments for cases with relatively high costs involving eligible new medical services or technologies, while preserving some of the incentives inherent under an average-based prospective payment system. The payment mechanism is based on the cost to hospitals for the new medical service or technology. As noted previously, we do not include capital costs in the add-on payments for a new medical service or technology or make new technology add-on payments under the IPPS for capital-related costs (72 FR 47307 through 47308).
For discharges occurring before October 1, 2019, under § 412.88, if the costs of the discharge (determined by applying operating cost-to-charge ratios (CCRs) as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), CMS made an add-on payment equal to the lesser of: (1) 50 percent of the costs of the new medical service or technology; or (2) 50 percent of the amount by which the costs of the case exceed the standard DRG payment.
Beginning with discharges on or after October 1, 2019, for the reasons discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297 through 42300), we finalized an increase in the new technology add-on payment percentage, as reflected at § 412.88(a)(2)(ii). Specifically, for a new technology other than a medical product designated by FDA as a QIDP, beginning with discharges on or after October 1, 2019, if the costs of a discharge involving a new technology (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 65 percent of the costs of the new medical service or technology; or (2) 65 percent of the amount by which the costs of the case exceed the standard DRG payment. For a new technology that is a medical product designated by FDA as a QIDP, beginning with discharges on or after October 1, 2019, if the costs of a discharge involving a new technology (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 75 percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment. For a new technology that is a medical product approved under FDA's LPAD pathway, beginning with discharges on or after October 1, 2020, if the costs of a discharge involving a new technology (determined by applying CCRs as described in § 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 75 percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment. As set forth in § 412.88(b)(2), unless the discharge qualifies for an outlier payment, the additional Medicare payment will be limited to the full MS-DRG payment plus 65 percent (or 75 percent for certain antimicrobial products (QIDPs and LPADs)) of the estimated costs of the new technology or medical service. We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297 through 42300) for further discussion on the increase in the new technology add-on payment beginning with discharges on or after October 1, 2019.
As discussed further in section II.E.10. of this final rule, we are finalizing our proposal that for certain gene therapies approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule that are indicated and used specifically for the treatment of SCD, effective with discharges on or after October 1, 2024 and concluding at the end of the 2- to 3-year newness period for such therapy, if the costs of a discharge (determined by applying CCRs as described in § 412.84(h)) involving the use of such therapy for the treatment of SCD exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 75 percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment. We note that these payment amounts would only apply to Casgevy
We note that, consistent with the prospective nature of the IPPS, we finalize the new technology add on payment amount for technologies approved or conditionally approved for new technology add-on payments in the final rule for each fiscal year and do not make mid-year changes to new technology add-on payment amounts. Updated cost information may be submitted and included in rulemaking to be considered for the following fiscal year.
Section 503(d)(2) of the MMA (Pub. L. 108-173) provides that there shall be no reduction or adjustment in aggregate payments under the IPPS due to add-on payments for new medical services and technologies. Therefore, in accordance with section 503(d)(2) of the MMA, add-on payments for new medical services or technologies for FY 2005 and subsequent years have not been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we modified our regulation at § 412.87 to codify our longstanding practice of how CMS evaluates the eligibility criteria for new medical service or technology add-on payment applications. That is, we first determine whether a medical service or technology meets the newness criterion, and only if so, do we then make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. We specified that all applicants for new technology add-on payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. In the FY 2021 IPPS/LTCH
Additionally, in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58739 through 58742), we finalized our proposal to provide conditional approval for new technology add-on payment for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products at § 412.87(d) that does not receive FDA marketing authorization by July 1 prior to the particular fiscal year for which the applicant applied for new technology add-on payments, provided that the technology otherwise meets the applicable add-on payment criteria. Under this policy, cases involving eligible antimicrobial products would begin receiving the new technology add-on payment sooner, effective for discharges the quarter after the date of FDA marketing authorization, provided that the technology receives FDA marketing authorization before July 1 of the fiscal year for which the applicant applied for new technology add-on payments.
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958), we finalized that, beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA market authorization request at the time of new technology add-on payment application submission and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. See § 412.87(e) and further discussion in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958). We also finalized that, beginning with FY 2025 applications, in order to be eligible for consideration for the new technology add-on payment for the upcoming fiscal year, an applicant for new technology add-on payments must have received FDA approval or clearance by May 1 (rather than July 1) of the year prior to the beginning of the fiscal year for which the application is being considered (except for an application that is submitted under the alternative pathway for certain antimicrobial products), as reflected at §§ 412.87(f)(2) and (f)(3), as amended and redesignated in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958, 88 FR 59331).
Many interested parties (including device/biologic/drug developers or manufacturers, industry consultants, others) engage CMS for coverage, coding, and payment questions or concerns. In order to streamline engagement by centralizing the different innovation pathways within CMS including new technology add-on payments, CMS has established a team of new technology liaisons that can serve as an initial resource for interested parties. This team is available to assist with all of the following:
• Help to point interested parties to or provide information and resources where possible regarding process, requirements, and timelines.
• Coordinate and facilitate opportunities for interested parties to engage with various CMS components.
• Serve as a primary point of contact for interested parties and provide updates on developments where possible or appropriate.
We receive many questions from parties interested in pursuing new technology add-on payments who may not be entirely familiar with working with CMS. While we encourage interested parties to first review our resources available at
Applicants for add-on payments for new medical services or technologies for FY 2026 must submit a formal request, including a full description of the clinical applications of the medical service or technology and the results of any clinical evaluations demonstrating that the new medical service or technology represents a substantial clinical improvement (unless the application is under one of the alternative pathways as previously described), along with a significant sample of data to demonstrate that the medical service or technology meets the high-cost threshold. CMS will review the application based on the information provided by the applicant under the pathway specified by the applicant at the time of application submission. Complete application information, along with final deadlines for submitting a full application, will be posted as it becomes available on the CMS website at:
To allow interested parties to identify the new medical services or technologies under review before the publication of the proposed rule for FY 2026, once the application deadline has closed, CMS will post on its website a list of the applications submitted, along with a brief description of each technology as provided by the applicant.
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48986 through 48990), we finalized our proposal to publicly post online new technology add-on payment.
Applications, including the completed application forms, certain related materials, and any additional updated application information submitted subsequent to the initial application submission (except certain volume, cost and other information identified by the applicant as confidential), beginning with the application cycle for FY 2024, at the time the proposed rule is published. We also finalized that with the exception of information included in a confidential information section of the application, cost and volume information, and materials identified by the applicant as copyrighted and/or not otherwise releasable to the public, the contents of the application and related materials may be posted publicly, and that we
We note that the burden associated with this information collection requirement is the time and effort required to collect and submit the data in the formal request for add-on payments for new medical services and technologies to CMS. The aforementioned burden is subject to the PRA and approved under OMB control number 0938-1347 and has an expiration date of December 31, 2026.
Section 1886(d)(5)(K)(viii) of the Act, as amended by section 503(b)(2) of the MMA, provides for a mechanism for public input before publication of a notice of proposed rulemaking regarding whether a medical service or technology represents a substantial clinical improvement. The process for evaluating new medical service and technology applications requires the Secretary to do all of the following:
• Provide, before publication of a proposed rule, for public input regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of Medicare beneficiaries.
• Make public and periodically update a list of the services and technologies for which applications for add-on payments are pending.
• Accept comments, recommendations, and data from the public regarding whether a service or technology represents a substantial clinical improvement.
• Provide, before publication of a proposed rule, for a meeting at which organizations representing hospitals, physicians, manufacturers, and any other interested party may present comments, recommendations, and data regarding whether a new medical service or technology represents a substantial clinical improvement to the clinical staff of CMS.
In order to provide an opportunity for public input regarding add-on payments for new medical services and technologies for FY 2025 prior to publication of the FY 2025 IPPS/LTCH PPS proposed rule, we published a notice in the
Approximately 130 individuals registered to attend the virtual town hall meeting. We posted the recordings of the virtual town hall on the CMS web page at:
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434), the ICD-10-PCS includes a new section containing the new Section “X” codes, which began being used with discharges occurring on or after October 1, 2015. Decisions regarding changes to ICD-10-PCS Section “X” codes will be handled in the same manner as the decisions for all of the other ICD-10-PCS code changes. That is, proposals to create, delete, or revise Section “X” codes under the ICD-10-PCS structure will be referred to the ICD-10 Coordination and Maintenance Committee. In addition, several of the new medical services and technologies that have been, or may be, approved for new technology add-on payments may now, and in the future, be assigned a Section “X” code within the structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS website at:
In this section of the final rule, we discuss the FY 2025 status of 31 technologies approved for FY 2024 new technology add-on payments, as set forth in the tables that follow. In the proposed rule, we presented our proposals to continue the new technology add-on payments for FY 2025 for those technologies that were approved for the new technology add-on payment for FY 2024, and which would still be considered “new” for purposes of new technology add-on payments for FY 2025. We also presented our proposals to discontinue new technology add-on payments for FY 2025 for those technologies that were approved for the new technology add-on payment for FY 2024, and which would no longer be considered “new” for purposes of new technology add-on payments for FY 2025.
Additionally, we noted that we conditionally approved DefenCath® (taurolidine/heparin) for FY 2024 new technology add-on payments under the alternative pathway for certain antimicrobial products (88 FR 58942 through 58944), subject to the technology receiving FDA marketing authorization by July 1, 2024. DefenCath® (taurolidine/heparin) received FDA marketing authorization on November 15, 2023, and was eligible to receive new technology add-on payments in FY 2024 beginning with discharges on or after January 1, 2024. As DefenCath® (taurolidine/heparin) received FDA marketing authorization prior to July 1, 2024, and was approved for new technology add-on payments in FY 2024, we proposed and are finalizing to continue making new technology add-on payments for DefenCath® for FY 2025.
Our policy is that a medical service or technology may continue to be
In the proposed rule, we provided a table listing the technologies for which we proposed to continue making new technology add-on payments for FY 2025 because they were still considered “new” for purposes of new technology add-on payments. This table also presented the newness start date, new technology add-on payment start date, 3-year anniversary date of the product's entry onto the U.S. market, relevant final rule citations from prior fiscal years, proposed maximum add-on payment amount, and coding assignments for each technology. We referred readers to the cited final rules in the following table for a complete discussion of the new technology add-on payment application, coding, and payment amount for these technologies, including the applicable indications and discussion of the newness start date.
We invited public comments on our proposals to continue new technology add-on payments for FY 2025 for the technologies listed in Table II.E.-01 of the proposed rule.
For new technology add-on payments, as we have discussed in prior rulemaking (77 FR 53348), generally, our policy is to begin the newness period on the date of FDA approval or clearance or, if later, the date of availability of the technology on the U.S. market. Furthermore, as we have stated in prior rulemaking, the newness period does not necessarily start with the approval date for the medical service or technology. Instead, it begins with availability of the technology on the market, which is when data become available. We have consistently applied this standard, and believe that it is most consistent with the purpose of new technology add-on payments (69 FR 49003), because section 1886(d)(5)(K)(ii)(II) of the Act requires CMS to establish a mechanism to provide for the collection of data with respect to the costs of a new medical service or technology for a period of not less than two years and not more than three years beginning on the date on which an inpatient hospital code is issued for the service or technology. Our regulations at § 412.87(b)(2), 412.87(c)(2), and 412.87(d)(2) further allow new medical services and technologies to be considered new for the first 2 to 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology, which is during the period when the costs of the new technology are not yet fully reflected in the DRG weights. The costs of the new medical service or technology, once paid for by Medicare for this 2-year to 3-year period, are accounted for in the MedPAR data that are used to recalibrate the DRG weights on an annual basis. Therefore, it is appropriate to limit the add-on payment window for those technologies to this 2-to 3-year timeframe. For these reasons, we continue to disagree that the appropriate policy would be for the newness period to begin with the date of the first claim.
In particular, the applicant for the SAINT Neuromodulation System submitted a comment to provide an update on its launch timeline and the commercial availability of technology in the provider market. The applicant confirmed that the SAINT Neuromodulation System is currently launching in the United States, and requested that CMS assign a newness date of April 5, 2024. The applicant stated that although SAINT received FDA clearance on September 1, 2022, there were significant product development, manufacturing design, and compliance steps that the company needed to complete before the device could become commercially available and be used to treat patients. It stated that initially, it had planned to develop and manufacture its own hardware; however, after much time and effort, it was determined in the second half of 2023 that the best course was to work with third-party manufacturers for the stimulator and neuronavigation hardware. The applicant provided a summary and timeline of all the activities that it completed prior to the device becoming commercially available to treat patients on April 5, 2024. The timeline also included information regarding the installation, training, and use of the SAINT Neuromodulation System at two hospitals after April 5, 2024.
Another commenter also submitted a comment requesting that CMS reassess the new technology add-on payment
Although the applicant states that DefenCath® was launched on April 15, 2024, we did not receive information regarding a documented delay in market availability, and absent additional information from the applicant, we cannot determine a newness date based on a documented delay in the technology's availability on the U.S. market. Therefore, we continue to consider the beginning of the newness period to commence on November 15, 2023, the date of FDA marketing authorization for the indication covered by its QIDP designation.
DefenCath®'s current new technology add-on payment amount is $17,111.25, based on a WAC of $1,170 per 3mL vial. As we noted in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58943), on average, patients would receive 9.75 HD treatments per inpatient stay based upon the average length of stay of 13.3 days, which would require 19.5 vials. For FY 2025, the maximum new technology add-on payment amount is $3,656.10, based on an updated WAC of $249.99 per 3mL vial, as reflected in Table II.E.-01 in this final rule.
We further note that, as discussed in section II.E.5.d. of this final rule, because ELREXFIO
Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of ELREXFIO
After consideration of the public comments we received, we are finalizing our proposals to continue new technology add-on payments for FY 2025 for the technologies that were approved for new technology add-on payment for FY 2024 and would still be considered “new” for purposes of new technology add-on payments for FY 2025, as listed in the proposed rule and in the following Table II.E.-01 in this section of this final rule.
We note that the following Table II.E.-01 is the same as Table II.E.-01 that was presented in the proposed rule, but Table II.E.-01 in this final rule includes the updated cost information for TECVAYLI® and DefenCath® and the updated newness start date for REZZAYO
In the proposed rule, we provided Table II.E.-02 listing the technologies for which we proposed to discontinue making new technology add-on
We invited public comments on our proposals to discontinue new technology add-on payments for FY 2025 for the technologies listed in Table II.E.-02 of the proposed rule.
After consideration of the public comments we received, we are finalizing our proposal to discontinue new technology add-on payments for the technologies as listed in the proposed rule and in the following Table II.E.-02 of this final rule for FY 2025 because they are no longer “new” for purposes of new technology add-on payments. This table also presents the newness start date, new technology add-on payment start date, the 3-year anniversary date of the product's entry onto the U.S. market, and relevant final rule citations from prior fiscal years. We refer readers to the final rules cited in the following table for a complete discussion of each new technology add-on payment application and the coding and payment amount for these technologies, including the applicable indications and discussion of the newness start date.
As discussed previously, in the FY 2023 IPPS/LTCH PPS final rule, we finalized our policy to publicly post online applications for new technology add-on payment beginning with FY 2024 applications (87 FR 48986 through 48990). As noted in the FY 2023 IPPS/LTCH PPS final rule, we are continuing to summarize each application in this final rule. However, while we are continuing to provide discussion of the concerns or issues we identified with respect to applications submitted under the traditional pathway, we are providing more succinct information as part of the summaries in the proposed and final rules regarding the applicant's assertions as to how the medical service or technology meets the newness, cost, and substantial clinical improvement criteria. We refer readers to
We received 16 applications for new technology add-on payments for FY 2025 under the new technology add-on payment traditional pathway. As discussed previously, in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958), we finalized that beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA market authorization request at the time of new technology add-on payment application submission and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. See § 412.87(e) and further discussion in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958). Of the 16 applications received under the traditional pathway, one applicant was not eligible for consideration for new technology add-on payment because it did not meet these requirements, and three applicants withdrew their application prior to the issuance of the proposed rule. In accordance with the regulations under § 412.87(f), applicants for FY 2025 new technology add-on payments must have received FDA approval or clearance by May 1 of the year prior to the beginning of the fiscal year for which the application is being considered. Subsequently, prior to the issuance of this final rule, two additional applications were withdrawn for odronextamab (R/R DLBCL indication) and odronextamab (R/R FL indication). We are not including in this final rule the description and discussion of applications that were withdrawn or that are ineligible for consideration for FY 2025. We are addressing the remaining 10 applications. We note that the manufacturer for Casgevy
Vertex Pharmaceuticals, Inc. submitted an application for new technology add-on payments for Casgevy
Please refer to the online application posting for Casgevy
With respect to the newness criterion, according to the applicant, Casgevy
Effective April 1, 2023, the following ICD-10-PCS codes may be used to uniquely describe procedures involving
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered “new” for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted that Casgevy
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36032), we noted that Casgevy
We invited public comments on whether Casgevy
Another commenter who is the manufacturer of Lyfgenia
According to the commenter, increasing HbA
The commenter also described potential risks associated with consideration of the two technologies as a single application. Specifically, the commenter stated that if Lyfgenia
With respect to the cost criterion, the applicant searched the FY 2022 MedPAR file and provided multiple analyses to demonstrate that Casgevy
The applicant performed two analyses for each cohort: one with all prior drug charges maintained, representing a scenario in which there is no change to patient drug regimen with the use of Casgevy
According to the applicant, eligible cases for Casgevy
For the first cohort, the applicant included all cases associated with MS-DRG 014 (Allogeneic Bone Marrow Transplant). The applicant used the inclusion/exclusion criteria described in the following table and identified 996
For the second cohort, the applicant searched for cases within MS-DRG 014 with any ICD-10-CM diagnosis codes representing SCD or TDT. The applicant used the inclusion/exclusion criteria described in the following table and identified 11 claims mapping to MS-DRG 014. With all prior drug charges maintained (Scenario 3), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,125,212, which exceeded the average case-weighted threshold amount of $182,491. With all prior drug charges removed (Scenario 4), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,086,551, which exceeded the average case-weighted threshold amount of $182,491.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant maintained that Casgevy
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36034), we invited public comments on whether Casgevy
With regard to the substantial clinical improvement criterion, the applicant asserted that Casgevy
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36035 through 36036), after reviewing the information provided by the applicant, we stated we had the following concerns regarding whether Casgevy
Furthermore, the applicant asserted that Casgevy
With regards to the claim that Casgevy
With regard to the claim that Casgevy
We invited public comments on whether Casgevy
In response to our concerns about providing peer-reviewed evidence of the safety profile of Casgevy
In response to our concern regarding oncogenesis with gene therapy, the applicant stated that the two primary potential mechanisms for oncogenesis post-treatment include a late effect of alkylating chemotherapy or oncogene activation from off-target editing or insertional oncogenesis, as seen in other technologies used in treatment of SCD. In Frangoul, et al. (2024) no off-target editing was found through multiple orthogonal approaches. The applicant clarified, however, that alkylating agents generally require 5 to 7 years before secondary malignancies occur, and although off-target genome editing was not observed in the edited CD34+ cells evaluated from healthy donors and patients, the risk of unintended, off-target editing in an individual's CD34+ cells cannot be ruled out due to genetic variants and therefore, the clinical significance of potential off-target editing is unknown. The applicant further stated that longest follow-up in both the CLIMB SCD-121 and CLIMB THAL-111 trials has surpassed 4 years, and stated that it will continue to follow study patients for up to 15 years. The applicant further asserted that due to Casgevy
In response to our concerns about sample size, the applicant stated its belief that the study sample sizes are appropriate. The applicant stated that SCD affects an estimated 100,000 Americans and that the sample size of the studies reflects the challenges
In response to our concern about the generalizability of the evidence to the Medicare population, the applicant commented that it believed the study population reflects the patient population for these medical conditions, including Medicare-covered patients who, as noted, may be dually eligible for Medicare and Medicaid (and thus often not over the age of 65). The commenter also stated that, as noted in the CMS SCD Action Plan,
After consideration of the public comments and the information included in the applicant's new technology add-on payment application, we have determined that Casgevy
Cases involving the use of Casgevy
In its application, the applicant estimated that the cost of Casgevy
Vertex Pharmaceuticals, Inc. submitted an application for new technology add-on payments for Casgevy
Please refer to the online application posting for Casgevy
With respect to the newness criterion, according to the applicant, Casgevy
Effective April 1, 2023, the following ICD-10-PCS codes may be used to uniquely describe procedures involving the use of Casgevy
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36036), we stated our belief that the relevant ICD-10-CM codes to identify the indication of TDT would be: D56.1 (Beta thalassemia), D56.2 (Delta-beta thalassemia), or D56.5 (Hemoglobin E-beta thalassemia). We invited public comments on the use of these ICD-10-CM diagnosis codes to identify the indication of TDT for purposes of the new technology add-on payment, if approved.
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered “new” for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted that Casgevy
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36037), we questioned whether Casgevy
We invited public comments on whether Casgevy
Another commenter, who is the manufacturer of Zynteglo
With respect to the cost criterion, the applicant searched the FY 2022 MedPAR file and provided multiple analyses to demonstrate that Casgevy
The applicant performed two analyses for each cohort: one with all prior drug charges maintained, representing a scenario in which there is no change to patient drug regimen with the use of Casgevy
According to the applicant, eligible cases for Casgevy
For the first cohort, the applicant included all cases associated with MS-DRG 014 (Allogeneic Bone Marrow Transplant). The applicant used the inclusion/exclusion criteria described in the following table and identified 996 claims mapping to MS-DRG 014. With all prior drug charges maintained (Scenario 1), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,325,062, which exceeded the average case-weighted threshold amount of $182,491. With all prior drug charges removed (Scenario 2), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,181,526, which exceeded the average case-weighted threshold amount of $182,491.
For the second cohort, the applicant searched for cases within MS-DRG 014 (Allogeneic Bone Marrow Transplant) with any ICD-10-CM diagnosis codes representing SCD or TDT. The applicant used the inclusion/exclusion criteria described in the following table and identified 11 claims mapping to MS-DRG 014 (Allogeneic Bone Marrow Transplant). With all prior drug charges maintained (Scenario 3), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,125,212, which exceeded the average case-weighted threshold amount of $182,491. With all prior drug charges removed (Scenario 4), the applicant calculated a final inflated average case-weighted standardized charge per case of $12,086,551, which exceeded the average case-weighted threshold amount of $182,491.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that Casgevy
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36039), we invited public comments on whether Casgevy
With regard to the substantial clinical improvement criterion, the applicant asserted that Casgevy
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36039), after reviewing the information provided by the applicant, we stated we had the following concerns regarding whether Casgevy
Furthermore, we stated that with regard to the claim that Casgevy
We invited public comments on whether Casgevy
The applicant submitted a public comment regarding the substantial clinical improvement criterion. The applicant stated that following its application submission, additional data were published in the peer-reviewed New England Journal of Medicine for the TDT therapy indication which provides further support for why Casgevy
The applicant also stated that the study population from the CLIMB THAL-111 trial was generalizable to the Medicare population, stating that Casgevy
The applicant stated that peer-reviewed data demonstrates the well-tolerated safety profile of Casgevy
The applicant stated that with respect to CMS's question about the length of the follow-up durations being studied, a long-term follow-up study is also continuing to monitor total and fetal hemoglobin levels and safety, including (but not limited to) the potential for secondary cancers, vaso-occlusive events, and markers of end-organ damage in patients who have completed the current study (CLIMB-131; NCT04208529); other studies are being conducted to assess the risk of secondary cancers and off-target effects after genome editing.
In response to CMS's concern regarding oncogenesis with gene therapy, the applicant noted that the two primary potential mechanisms for oncogenesis post-treatment include a late effect of alkylating chemotherapy or oncogene activation from off-target editing or insertional oncogenesis, as seen in other technologies used in treatment of TDT. The applicant stated in newly published peer-reviewed research in New England Journal of Medicine,
In response to CMS's concern regarding whether variations in clinical trial conditions allows for adequate comparison of adverse event rates between clinical trials with respect to the applicant's claim that Casgevy
Another commenter, the manufacturer of Zynteglo
After review of the information submitted by the applicant as part of its FY 2025 new technology add-on payment application for Casgevy
Marizyme, Inc. submitted an application for new technology add-on payments for DuraGraft® for FY 2025. According to the applicant, DuraGraft® is an intraoperative vein-graft preservation solution used during the harvesting and grafting interval during coronary artery bypass graft (CABG) surgery. The applicant stated that the use of DuraGraft® does not change clinical/surgical practice; it replaces solutions currently used for flushing and storage of the saphenous vein grafts (SVG) from harvesting through grafting, including tests for graft leakage. As noted in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26795), Somahlution, Inc., acquired by Marizyme in 2020,
Please refer to the online application posting for DuraGraft®, available at
With respect to the newness criterion, according to the applicant, DuraGraft® was granted De Novo classification from FDA on October 4, 2023, for adult patients undergoing CABG surgeries and is intended for flushing and storage of SVGs from harvesting through grafting for up to 4 hours. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36040), we noted that, per the applicant, DuraGraft® was not yet commercially available due to a delay related to finalizing the label prior to manufacturing.
The applicant stated that, effective October 1, 2017, the following ICD-10-PCS code may be used to uniquely describe procedures involving the use of DuraGraft®: XY0VX83 (Extracorporeal introduction of endothelial damage inhibitor to vein graft, new technology group 3). Please refer to the online application posting for the complete list of ICD-10-CM and -PCS codes provided by the applicant.
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered “new” for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted that DuraGraft® is not substantially similar to other currently available technologies because DuraGraft® is a first-in-class product as a storage and flushing solution for vascular grafts used during CABG surgery and the components of DuraGraft® directly interfere with the mechanisms of oxidative damage, and that therefore, the technology meets the newness criterion. The following table summarizes the applicant's assertions regarding the substantial similarity criteria. Please see the online application posting for DuraGraft® for the applicant's complete statements in support of its assertion that DuraGraft® is not substantially similar to other currently available technologies.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36040), we stated that in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26796), we expressed concern that the mechanism of action of DuraGraft® may be the same or similar to other vein graft storage solutions. Similarly, we noted that, according to the applicant, DuraGraft® prevents intraoperative ischemic injury to the endothelial layer of free vascular grafts, reducing the risks for post-CABG vein graft disease and graft failure, which are clinical manifestations of graft ischemia reperfusion injury (IRI), and we questioned whether DuraGraft® might have a similar mechanism of action as existing treatments for preventing ischemic injury of vein grafts during CABG surgery and reducing vein graft disease or its complications following CABG surgery. We invited public comments on whether DuraGraft® is substantially similar to existing technologies and whether DuraGraft® meets the newness criterion.
With respect to CMS's concern regarding existing treatments for preventing ischemic injury of vein grafts during CABG surgery, the applicant stated that is not clear which treatments CMS is referring to as there are no legally marketed treatments or products intended for treating or storing vascular grafts besides DuraGraft®. The applicant further stated that while vascular grafts are placed in a liquid, usually Ringers Lactate, Plasmalyte or Normosol, to keep them from drying out between harvesting and implantation, in no way should these liquids be compared to or considered similar to DuraGraft®. The applicant also stated that these liquids cannot prevent ischemic or oxidative damage to vascular grafts. The applicant provided a table showing the components of competing wetting solutions to demonstrate that the solutions do not have the same molecules needed to prevent oxidative damage as DuraGraft®. The applicant stated that on the other hand, the mechanism of action of DuraGraft® as stated in the Instructions for Use (IFU) is through reduction of oxidative damage to maintain the structural and functional integrity of vascular conduits. The applicant asserted that Duragraft®'s primary function is to provide a reducing environment for vascular grafts to prevent oxidative damage which occurs during ischemic storage of grafts, using a combination of L-glutathione and L-Ascorbic acid that is manufactured in such a way as to preserve these molecules in their reduced state. The applicant concluded that, based upon composition, the stated mechanism of action, and preclinical evidence showing maintenance of the graft's structural and functional integrity provided on the DuraGraft® label, there are no similar products.
The applicant also stated that DuraGraft® is considered the first product of its type by FDA. Additionally, the applicant stated that in 2018, CMS established a new ICD-10-PCS code, XYOVX83 (Extracorporeal introduction of endothelial damage inhibitor to vein graft, new technology group 3), to report DuraGraft® when used in CABG procedures. The applicant stated that this ICD-10-PCS code would not be used with other procedures, outside of a few isolated instances. The applicant stated that claims submitted with this ICD-10-PCS code would be in error as DuraGraft® was not authorized or commercialized in the United States prior to October 2023.
A few commenters submitted comments stating that the mechanism of action is not substantially similar to existing technologies and that DuraGraft® has a novel mechanism of action in preventing oxidative damage to prevent ischemic injury and subsequent Ischemic Reperfusion Injury (IRI).
One commenter stated that they remained concerned that the information provided by the applicant does not show that DuraGraft® meets the newness criterion.
With respect to the cost criterion, to identify potential cases representing patients who may be eligible for DuraGraft®, the applicant searched the FY 2022 MedPAR file for cases reporting a combination of ICD-10-CM/PCS codes that represent patients who underwent CABG procedures. Please see the online posting for DuraGraft® for a complete list of MS-DRGs and ICD-10-CM and -PCS codes provided by the applicant. Using the inclusion/exclusion criteria described in the following table, the applicant identified 33,511 cases mapping to 59 MS-DRGs, including MS-DRG 236 (Coronary Bypass Without Cardiac Catheterization Without MCC) representing 21.9 percent of the identified cases. The applicant followed the order of operations described in the following table and calculated a final inflated average case-weighted standardized charge per case of $321,620, which exceeded the average case-weighted threshold amount of $235,829. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that DuraGraft® meets the cost criterion.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36041), we noted the following concerns regarding the cost criterion. Although the applicant did not remove direct or indirect charges related to the prior technology, we noted that the applicant indicated that the use of DuraGraft® replaces solutions currently used for flushing and storage of the SVGs harvested through grafting, including tests for graft leakage, in its discussion of the newness criterion. Therefore, we questioned whether the cost criterion analysis should remove charges for related or prior technologies, such as autologous heparinized blood, Plasmalyte/Normosol, Lactated Ringers, and heparinized saline.
We invited public comments on whether DuraGraft® meets the cost criterion.
With regard to the substantial clinical improvement criterion, the applicant asserted that DuraGraft® represents a substantial clinical improvement over existing technologies because there is no other product or technology that reduces the incidence of peri-operative myocardial infarction. The applicant provided four studies to support this assertion, as well as 47 background articles about reducing major adverse cardiac events (MACE).
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36042 through 36043), after review of the information provided by the applicant, we stated we
Similar to the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26800 through 26801), we also questioned whether the results from the Haime, et al. (2018)
We invited public comments on whether DuraGraft® meets the substantial clinical improvement criterion.
In response to CMS's concerns regarding small sample sizes in the Perrault, Szalkiewicz, and Lopez-Menendez studies, the applicant stated that the sample size for the Perrault study was typical for a Class 2 medical device pivotal study under FDA, with 125 patients enrolled. The applicant stated that the study utilized a within-patient control design in that each patient received a DuraGraft® treated graft and a control graft, eliminating the need for a control group. The applicant also stated that the study was powered to observe changes in saphenous vein graft wall thickening, a surrogate endpoint in the pathophysiology of vein graft stenosis after CABG. Additionally, the applicant stated that the study, with each patient acting as their own control point, was powered to demonstrate a difference in the primary multidetector computed tomography (MDCT)-based endpoints. The applicant asserted that despite smaller sample sizes compared to those for drug studies, the size is typical for that of a medical device. Per the applicant, the study demonstrates important graft pathophysiology associated with the use of DuraGraft. The applicant further stated that the outcomes of each study are consistent with the growing body of data on DuraGraft® and is generalizable to the Medicare population. The applicant stated that the Szalkiewicz study was retrospective and powered to demonstrate the change in a surrogate endpoint of myocardial damage. The study was based on a sample size of 272 patients, with a mean age of 72 years (inter-quartile range (IQR): 62-75 years) in the DuraGraft® arm and 70 years (IQR: 61-76 years) in the control arm. The applicant stated the age is typical of CABG patients and the Medicare population. Regarding the Lopez-Menendez study, the applicant explained that this observational, prospective, single-center study had a follow-up period of 3 years and a sample size of 180 patients, 90 in the DuraGraft® arm and 90 in the control arm. The applicant stated that the study results showed a reduction of MACE in the DuraGraft® arm and, in a subset analysis, the use of DuraGraft® in diabetic patients was associated with better event-free survival. Additionally, the applicant stated that the observational study in the Marizyme internal study report had more than 5,000 patients and demonstrated DuraGraft®'s long-term treatment effects by comparing 3-year mortality from CABG patients in the DuraGraft® registry to a propensity matched cohort from the STS registry. The applicant asserted that the overall sample size of the patients treated with DuraGraft® in these four studies was 2,700.
The applicant also commented on CMS's concerns about the differences in the distribution of demographic characteristics between the patients in the Perrault, Haime, and Szalkewicz studies and the U.S. Medicare population. To address this concern, the applicant highlighted a head-to-head comparison (described in the DuraGraft IFU) comparing CABG patients on the European DuraGraft® registry, who were exposed to DuraGraft®, to those in the U.S. STS CABG registry, who were not. The applicant stated that outcomes from patients from the European DuraGraft® Registry (n=2522) were compared to randomly selected patients from the STS registry database in the U.S. who were operated on during the same period (n=294,725). The applicant stated that prior to propensity score
With respect to the Perrault study, the applicant stated it was a medical device study conducted with input from FDA, which involved radiologic assessment, using MDCT angiography, to evaluate graft morphology changes post-CABG comparing DuraGraft® treated grafts to saline controls. The applicant stated that some of the study results, reduction in wall thickening and reduction in maximal focal narrowing of the graft following use of DuraGraft®, have been allowed in the DuraGraft® label. The applicant stated that the study patient population was 91.2 percent male and 8.8 percent female and somewhat under-represented Medicare eligible women 8.9 percent versus 23.9 percent based on data in the STS database and CMS data for the timeframe. The applicant stated that the study still represented a study that included women, and taken together with the European DuraGraft® registry described earlier in this section, it was the applicant's conclusion that together these studies are representative of the Medicare eligible population. Additionally, the applicant stated that the average age of the patients, 66.2, was consistent with the age of a Medicare beneficiary.
With respect to the Haime study, the applicant stated that it was a single site study performed at the Boston Veterans Affairs (VA) hospital. According to the applicant, while the group was 99 percent male, the population of the VA hospitals typically represents one with elevated cardiac risk factors. The applicant stated that the characteristics of the study participants are typical for studies of CABG surgery and align with the Medicare population in terms of age, BMI, and presence of a diabetes diagnosis. The applicant stated that according to both CMS and STS data taken from the same time period in which both the Perrault and Registry comparison studies were performed, the percentage of Medicare eligible women undergoing CABG surgery ranges between 23.9 to 25.3 percent. The applicant stated that while the Perrault study included 8.9 percent women, the Registry comparison study patient population was 17.5 percent women. The applicant also stated that the percentage of women in the study reported by Lopez-Menendez (2023) was 17.8 percent, only a few percentage points lower than the percentage of Medicare eligible women undergoing CABG surgery based on both CMS and STS data.
The applicant commented that its current data does not allow an assessment of whether race changes the effect of DuraGraft® and acknowledged that the race of the patients in all the DuraGraft® studies was predominantly Caucasian. According to the applicant, in the Marizyme internal study report, it tried to isolate population differences and eliminate possible biases by propensity score matching based on 35 variables most strongly associated with surgical risk. The applicant cited the Shahian 2012 ASCERT study,
Another commenter cited a study by Gaudino and team (2023),
One commenter stated that the study design for the Perrault study, in which each patient received a DuraGraft® treated graft and a control graft to control for patient-specific graft effects, obviated the need for a separate control patient cohort, thereby decreasing the sample size required for the study. The commenter asserted that the study was powered appropriately as the MDCT scanning measurements were taken every 10mm along the whole of the grafts at 1, 3, and 12 months for the endpoints of the study.
One commenter expressed concern that the data received to date did not support the substantial clinical improvement criterion for DuraGraft®.
We continue to question whether the patient samples in the studies provided are representative of the Medicare population, as this could impact the extent to which the results related to DuraGraft®'s effects on clinical outcomes could be generalized to the
Furthermore, we continue to have concerns about the sample sizes in some of the studies referenced. Based on the information provided, we remain unclear about how the sample sizes were calculated and the parameters used in the calculations, such as the size of the populations that the samples represented, the effect size,
As noted, the applicant stated that the Perrault study showed that DuraGraft®-treated SVGs had smaller mean wall thickness and lesser maximum focal narrowing at 12 months versus saline controls, and that these results were included in the FDA label for DuraGraft®. The applicant stated that the Perrault study was powered to observe changes in SVG wall thickening, which it stated is a surrogate endpoint in the pathophysiology of vein graft stenosis. While we acknowledge that the study demonstrated smaller wall thickness and lesser maximum focal narrowing at 12 months for DuraGraft®-treated SVGs versus saline controls, as included in the FDA label, we also agree that these are surrogate endpoints. As the study was not powered to demonstrate an improved clinical outcome as described under the regulations at 412.87(b)(1)(ii), we do not believe the inclusion of these findings from this study support a finding of substantial clinical improvement. We also note that we do not believe that the inclusion of outcomes on the FDA label by itself supports a finding of substantial clinical improvement. In addition, the Perrault study compared DuraGraft® to saline controls. However, as previously noted, there are other vein graft preservation solutions, including but not limited to Plasmalyte, Normosol, lactated ringers, and heparinized autologous blood, to which DuraGraft® was not compared. We further note that studies have shown that these solutions have differing effects on graft endothelium.
With regard to the applicant's assertions that results of the Marizyme internal study report showing reduced mortality at three years in DuraGraft® patients were included in the FDA label, we note that the primary endpoint was mortality through 1 year of follow up. While the applicant stated in its comment that the study results demonstrated a reduced mortality estimate at 3 years for Duragraft®-treated patients compared to SOC controls, we note that differences in mortality were not statistically significant at the primary endpoint of 1 year. Similarly, we do not believe the inclusion of outcomes on the FDA label by itself supports a finding of substantial clinical improvement. In addition, although we acknowledge that, as stated by the applicant, it tried to isolate population differences and eliminate possible biases by propensity score matching
Therefore, after consideration of the public comments we received and based on the information stated previously, we are unable to determine that DuraGraft® represents a substantial clinical improvement over existing therapies, and we are not approving new technology add-on payments for DuraGraft® for FY 2025.
Two manufacturers, Pfizer, Inc. and Johnson & Johnson Health Care Systems, Inc. submitted separate applications for new technology add-on payments for FY 2025 for ELREXFIO
In the FY 2025 IPPS/LTCH PPS proposed rule (86 FR 36043 through 36052 and 36087 through 36092), we discussed these applications as two separate technologies. However, after further consideration and as discussed later in this section, we believe ELREXFIO
Please refer to the online application posting for ELREXFIO
Please refer to the online application posting for TALVEY
With respect to the newness criterion, the applicant for ELREXFIO
The applicant for TALVEY
The applicant for ELREXFIO
The applicant for TALVEY
As stated earlier and for the reasons discussed further later in this section, we believe that ELREXFIO
With respect to the substantial similarity criteria, in its application for new technology add-on payments for FY 2025, the applicant for ELREXFIO
With respect to the substantial similarity criteria, in its application for new technology add-on payments for FY 2025, the applicant for TALVEY
In the FY 2025 IPPS/LTCH PPS proposed rule (86 FR 36046 through 36047 and 36088 through 36089), we stated that we believed ELREXFIO
Accordingly, we noted that, as it appears that ELREXFIO
We also stated that we believed ELREXFIO
We also noted that per the applicant for TALVEY
We also noted that ELREXFIO
We stated we were interested in receiving information on how these technologies may differ from each other with respect to the substantial similarity and newness criteria to inform our analysis of whether ELREXFIO
We invited public comments on whether ELREXFIO
The applicant for TALVEY
The applicant for TALVEY
After consideration of the comments received, and for the reasons discussed, we believe that ELREXFIO
Consistent with our policy statements in the past regarding substantial similarity, we will not be making a determination on cost and substantial clinical improvement for ELREXFIO
Cases involving the use of ELREXFIO
Each of the applicants submitted cost information for its application. The manufacturer of ELREXFIO
Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of ELREXFIO
Flosonics Medical (R.A. 1929803 Ontario Corp.) submitted an application for new technology add-on payments for FloPatch FP120 for FY 2025. According to the applicant, FloPatch FP120 is a wireless, wearable, continuous wave (4 MHz) Doppler ultrasound device that adheres over peripheral vessels (that is, carotid and jugular) that assesses blood flow in the peripheral vessels, enabling rapid and repeatable dynamic assessments of both arterial and venous flow simultaneously. According to the applicant, FloPatch FP120 cardiovascular blood flowmeter adheres to a patient's neck (or any other major vessel) and transmits Doppler-shifted ultrasonic waves from the transducer to the artery and vein at a fixed angle of insonation that are then reflected by moving blood cells back to the transducer. Per the applicant, the signal processing unit wirelessly outputs data to a secure iOS mobile medical application, which displays metrics from the Doppler signal, such as maximal velocity trace and corrected flow time, in a user-friendly interface. Per the applicant, FloPatch FP120 will optimize clinical workflow, is easy-to-use and hands-free, cloud-connected, and can be deployed in under one minute, providing instantaneous results.
Please refer to the online application posting for FloPatch FP120, available at
With respect to the newness criterion, according to the applicant, FloPatch FP120 received 510(k) clearance from FDA on May 3, 2023, for the noninvasive assessment of blood flow in the carotid artery. Per the applicant, in a more recent FDA 510(k) submission, the proposed indication is for use for the noninvasive assessment of blood flow in peripheral vasculature. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36052), we stated that based on the application submitted by the applicant, the new technology add-on payment application for FloPatch FP120 is not eligible for consideration for FY 2025 for the proposed indication (for use for the noninvasive assessment of blood flow in peripheral vasculature) because documentation of FDA acceptance or filing of the marketing authorization request that indicates that FDA has determined that the application is sufficiently complete to allow for substantive review by FDA, was not provided to CMS at the time of new technology add-on payment application submission. As such, we stated that the new technology add-on payment application for FloPatch FP120 is only eligible for consideration for FY 2025 for the narrower indication for use for the noninvasive assessment of blood flow in carotid artery.
In the proposed rule (89 FR 36052), we noted that prior to the May 3, 2023, clearance, there were two FDA 510(k) clearances for FloPatch FP120; one obtained in 2022 and one in 2020. The indications in the 2020, 2022, and 2023 clearances are identical, that is, for use for the noninvasive assessment of blood flow in the carotid artery.
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for FloPatch FP120 and was granted approval to use the following procedure code effective October 1, 2024: XX25X0A (Monitoring of blood flow, adhesive ultrasound patch technology, new technology group 10). The applicant provided a list of diagnosis codes that may be used to currently identify the indication for FloPatch FP120 under the ICD-10-CM coding system. Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant.
As previously discussed, if a technology meets all three of the substantial similarity criteria under the
With respect to the substantial similarity criteria, the applicant asserted that FloPatch FP120 is not substantially similar to other currently available technologies because FloPatch FP120 offers real-time, non-invasive monitoring of hemodynamic changes of both the arterial and venous blood flow, improving fluid management decisions. Per the applicant, FloPatch FP120 surpasses current methods by providing continuous data, enhancing patient safety, and addressing unmet clinical needs for immediate, precise assessments, and therefore, the technology meets the newness criterion. The following table summarizes the applicant's assertions regarding the substantial similarity criteria. Please see the online application posting for FloPatch FP120, for the applicant's complete statements in support of its assertion that FloPatch FP120 is not substantially similar to other currently available technologies.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36054), we noted the following concerns with regard to the newness criterion. With respect to the first substantial similarity criterion, whether FloPatch FP120 uses the same or similar mechanism of action for a therapeutic outcome when compared to existing technologies, we stated we had not received information from the applicant regarding predicate devices for FloPatch FP120 that were previously FDA-cleared in its discussion of existing technologies. We stated that there are three FDA 510(k) clearances for FloPatch FP120, with the same indication for use for the noninvasive assessment of blood flow in the carotid artery.
In addition, we questioned whether a different placement method or the addition of a wearable functionality for the noninvasive assessment of blood flow would constitute a different mechanism of action, and whether these differences may instead be relevant to the assessment of substantial clinical improvement, rather than of newness. For example, while the applicant described FloPatch FP120 as user-friendly, we questioned whether ease-of-use in itself represented a mechanism of action unique from existing technologies for a therapeutic outcome, as the primary underlying mechanism of action is still Doppler ultrasound technology.
With respect to the second substantial similarity criterion, that is, whether a product is assigned to the same or a different MS-DRG, the applicant asserted that the device is new and has not undergone sufficient review to be recognized as a treatment within the existing MS-DRGs. However, we noted that the applicant also stated that FloPatch FP120 could be relevant to existing MS-DRGs that pertain to septicemia or severe sepsis for the assessment of volume responsiveness. We stated we believed that, based on its indication, cases involving the use of FloPatch FP120 would be assigned to the same MS-DRGs as those involving existing technologies used for invasive and non-invasive measurements of blood flow, such as for patients with septicemia or severe sepsis.
With respect to the third substantial similarity criterion, that is, whether the technology involves treatment of the same or similar type of disease or patient population when compared to an existing technology, the applicant maintained that existing technologies do not provide clinicians with the information they need, and while FloPatch FP120 serves a similar purpose as existing technology, its process has been optimized by providing a safer, more accurate, and instantaneous method of assessment. While this may be relevant to the assessment of substantial clinical improvement, we stated it did not appear to be related to newness, and we remained unclear about how the patient population for which FloPatch FP120 is used differs from other patients for which existing non-invasive (for example, Doppler ultrasound devices) and invasive technologies are used for hemodynamic monitoring in a same or similar type of disease (such as septicemia or severe sepsis).
Accordingly, we stated that as it appears that the May 3, 2023, FDA 510(k) clearance and prior FDA 510(k) clearances for FloPatch FP120 may use the same or similar mechanism of action to achieve a therapeutic outcome, would be assigned to the same MS-DRG, and treat the same or similar patient population and disease, we believed that these technologies may be substantially similar to each other. We noted that if FloPatch FP120 as described in its 2023 FDA 510(k) clearance is substantially similar to prior versions as described in the 2022 and 2020 FDA 510(k) clearances, we believed the newness period for this technology would begin on March 24, 2020, with the earliest FDA 510(k) clearance date for FloPatch FP120 (K200337) and therefore, because the 3-year anniversary date of the technology's entry onto the U.S. market (March 24, 2023) occurred in FY 2023, the technology would no longer be considered new and would not be eligible for new technology add-on payments for FY 2025.
We invited public comments on whether FloPatch FP120 is substantially similar to existing technologies and whether FloPatch FP120 meets the newness criterion.
Because FloPatch FP120 meets all three of the substantial similarity criteria, we believe FloPatch FP120 is substantially similar to the version of FloPatch FP120 that was FDA-cleared on March 24, 2020, an existing noninvasive technology that assesses blood flow in the carotid artery. Therefore, we consider the newness period for FloPatch FP120 to begin on the date it first received FDA 510(k) clearance for the noninvasive assessment of blood flow in the carotid artery. Since FloPatch FP 120 has been on the U.S. market since 2020, the 3-year anniversary date of its entry onto the market occurred prior to FY 2025. Therefore, FloPatch FP120 does not meet the newness criterion, and is not eligible for new technology add-on payments for FY 2025. We note that we received public comments with regard to the cost and substantial clinical improvement criteria for this technology, but because we have determined that the technology does not meet the newness criterion and therefore is not eligible for approval for new technology add-on payments for FY 2025, we are not summarizing comments received or making a determination on those criteria in this final rule.
Delcath System submitted an application for new technology add-on payments for HEPZATO
Please refer to the online application posting for HEPZATO
With respect to the newness criterion, according to the applicant, HEPZATO
The applicant stated that, effective October 1, 2023, the following ICD-10-PCS code may be used to uniquely describe procedures involving the use of HEPZATO
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered “new” for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted that HEPZATO
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36060), we invited public comments on whether HEPZATO
The applicant also stated that by isolating the liver throughout the procedure and actively filtering out melphalan during the 30-minute infusion and subsequent 30-minute washout period, HEPZATO
Regarding the concern that the third criterion for substantial similarity is broad enough to cause drug-device combinations to be overlooked without evaluating the clinical improvement they may provide for specific patients, and also the applicant's comment that CMS should consider whether the combination either offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments or significantly improves clinical outcomes relative to technologies previously available, we do not agree that we should evaluate clinical improvement while assessing the newness criterion. Rather, we follow a logical sequence of determinations, moving from the newness criterion to the cost criterion and finally to the substantial clinical improvement criterion, as discussed in the FY 2006 IPPS final rule. Therefore, we are reluctant to import substantial clinical improvement considerations into the decision about whether technologies are new (70 FR 47348). Regarding patient populations unresponsive to, or ineligible for, currently available treatments, as noted, the third criterion for substantial similarity considers whether the new use of the technology involves the treatment of the same or similar type of disease and patient population when compared to an existing technology.
With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that it meets the cost criterion. For each analysis, the applicant searched the FY 2022 MedPAR file using a combination of ICD-10-CM and/or PCS codes to identify potential cases representing patients who may be eligible for HEPZATO
For the first analysis, the applicant searched for cases with ICD-10-PCS code 3E05305 (Introduction of other antineoplastic into peripheral artery, percutaneous approach) for the PHP procedure, and ICD-10-CM code Z51.11 (Encounter for antineoplastic chemotherapy) as the primary diagnosis for the administration of chemotherapy during an inpatient stay. In addition, the applicant narrowed the analysis to cases with liver-dominant mOM using at least one secondary liver metastases diagnosis plus at least one ocular melanoma diagnosis. Please see the online posting for HEPZATO
For the second analysis, the applicant searched for the following combination of ICD-10-CM diagnosis codes: Z51.11 (Encounter for antineoplastic chemotherapy) as the primary diagnosis code, in combination with at least one of the following secondary liver metastases codes: C78.7 (Secondary malignant neoplasm of liver and intrahepatic bile duct), or C22.9 (Malignant neoplasm of liver, not specified as primary or secondary). The applicant used the inclusion/exclusion criteria described in the following table. Under this analysis, the applicant identified 1,134 claims mapping to nine MS-DRGs, with 94 percent of identified cases mapping to three MS-DRGs: 829 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedures with CC/MCC), as well as 846 and 847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with MCC, and with CC, respectively). The applicant calculated a final inflated average case-weighted standardized charge per case of $1,066,207, which exceeded the average case-weighted threshold amount of $81,652.
For the third analysis, the applicant searched for cases where the ICD-10-CM code Z51.11 (Encounter for antineoplastic chemotherapy) is the primary diagnosis or the ICD-10 PCS code 3E05305 (Introduction of other
For the fourth analysis, the applicant searched for cases reporting the following combination of ICD-10-CM diagnosis codes: C78.7 (Secondary malignant neoplasm of liver and intrahepatic bile duct) or C22.9 (Malignant neoplasm of liver), in combination with at least one ocular melanoma ICD-10-CM code. Please see the online posting for HEPZATO
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that HEPZATO
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36062), we invited public comments on whether HEPZATO
We agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all
With regard to the substantial clinical improvement criterion, the applicant asserted that HEPZATO
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36064 through 36066), after review of the information provided by the applicant, we stated we had the following concerns regarding whether HEPZATO
Regarding the claim that HEPZATO
We stated that the applicant also submitted summary presentation material evidence to support this claim in the form of a poster and slides for the FOCUS study,
We further noted that in the published randomized clinical trial
Regarding the claim that HEPZATO
Regarding the unpublished FOCUS study (Delcath ASCO 2022 FOCUS Trial Poster),
Lastly, we stated that with regard to the assertion that HEPZATO
We invited public comments on whether HEPZATO
The applicant noted that the previously unpublished FOCUS study (Delcath ASCO 2022 FOCUS Trial Poster) has since been published, but did not make the study available for review.
In response to CMS's request for additional evidence that HEPZATO
Regarding the claim that HEPZATO
We received several additional comments in support of the application for HEPZATO
We also received one comment stating that it did not support approval of HEPZATO
After consideration of the public comments we received and the information included in the applicant's new technology add-on payment application, we have determined that HEPZATO
In its application, the applicant stated that the cost of HEPZATO
CellTrans Inc. submitted an application for new technology add-on payments for Lantidra
Please refer to the online application posting for Lantidra
With respect to the newness criterion, according to the applicant, Lantidra
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36066), we noted that under national coverage determination (NCD) 260.3.1 Islet Cell Transplantation in the Context of a Clinical Trial, Medicare will pay for the routine costs, as well as transplantation and appropriate related items and services, for Medicare beneficiaries participating in a National Institutes of Health (NIH)-sponsored clinical trial(s). Specifically, Medicare will cover transplantation of pancreatic islet cells, the insulin producing cells of the pancreas. Coverage may include the costs of acquisition and delivery of the pancreatic islet cells, as well as clinically necessary inpatient and outpatient medical care and immunosuppressants. Because Lantidra
The applicant stated that the recommended minimum dose is 5,000 equivalent islet number (EIN)/kg for the initial infusion, and 4,500 EIN/kg for subsequent infusion(s) in the same recipient. The maximum dose per infusion is dictated by the estimated tissue volume, which should not exceed 10 cc per infusion, and the total EIN present in the infusion bag (up to a maximum of 1 × 10 ‸ 6 EIN per bag). A second infusion may be performed if the patient does not achieve independence from exogenous insulin within 1-year post-infusion or within 1-year after losing independence from exogenous insulin after a previous infusion. A third infusion may be performed using the same criteria as for the second infusion.
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for Lantidra
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered new for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted that Lantidra
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36067), we invited public comments on whether Lantidra
We also agree with the applicant that the underlying mechanism of action of Lantidra
In addition, we note that although Lantidra
Therefore, based on our review of the comments received and information submitted by the applicant as part of its FY 2025 new technology add-on payment application for Lantidra
With respect to the cost criterion, the applicant included the two most recent patient cases with charges of Lantidra
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36067 through 36068), we noted the following concerns regarding the cost criterion. We noted that the applicant did not remove any charges or indirect charges related to prior technology without providing further details. We stated we were interested in additional information regarding whether Lantidra
We invited public comments on whether Lantidra
With respect to the estimation of an inflation factor of 10 percent that the applicant applied to the standard charges, the applicant stated that, as claims data were not used in the cost analysis of Lantidra
To address the request for additional analysis, the applicant performed four additional cost analyses. The applicant stated that each scenario and corresponding sensitivity analysis utilized the FY 2022 MedPAR file and the results showed Lantidra
Per the applicant, the first analysis was to evaluate cases identified by ICD-10-PCS code E033U1 (Introduction of nonautologous pancreatic islet cells into peripheral vein, percutaneous approach), which best describes procedures similar to the administration of Lantidra
In the second analysis, the applicant evaluated cases with an ICD-10-CM code E10649 (Type 1 diabetes mellitus with hypoglycemia without coma), regardless of MS-DRG assignment. The applicant stated this diagnosis code best describes patients that may be suitable to receive Lantidra
In the third analysis, the applicant identified 67,277 cases in MS-DRGs 637 (Diabetes with MCC), 638 (Diabetes with CC), and 639 (Diabetes without CC/MCC). Per the applicant, the majority of
In the fourth analysis, to further refine the analysis to patients that may be eligible for Lantidra
The applicant stated that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all additional analyses. The applicant clarified that administration of Lantidra
With regard to the substantial clinical improvement criterion, the applicant asserted that Lantidra
As stated in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36069), after review of the information provided by the applicant, we had the following concerns regarding whether Lantidra
We invited public comments on whether Lantidra
The applicant reiterated that the hard-to-control T1D subgroup of patients does not adequately benefit from current diabetes management technologies, including AP systems. The applicant also cited studies that islet transplantation impacted health-related quality of life of patients by reducing fear of hypoglycemia, changing behaviors adopted to avoid hypoglycemia, reducing depression and confusion, or allowing patients to better engage in vacationing and vigorous physical activities such as hiking, sprinting, etc. For example, the applicant cited a study by Häggström et al. (2011), in which 11 patients who had received islet transplants at Uppsala University Hospital were surveyed about their fear of hypoglycemia, health-related quality of life, and social life situation in relation to their fear of hypoglycemia. The applicant asserted that while the results for health-related quality of life were lower than in the normal population, changes in fear of hypoglycemia suggested an improvement for the patients who had undergone islet transplantation. The applicant stated that the patients felt they experienced improved control over their social situations.
With regards to the concern about long term follow up and the small number of evaluable patients in the studies provided as evidence in the original application, the applicant explained that the number of evaluable patients decreases in each subsequent year after the last islet transplant in part because some of the patients had not yet reached yearly milestones at the time of data cutoff
The applicant stated that long term studies of more than 10 years have provided direct evidence that islet transplantation in patients with T1D can markedly improve metabolic control and suppress severe hypoglycemic events.
The applicant concluded in its public comments that the clinical data supports the safety and efficacy of FDA-approved Lantidra
A commenter also submitted a public comment in support of Lantidra
In addition, while the applicant provided studies to demonstrate that current therapies are inadequate, we note that the Anderson et al. (2019)
With regard to the studies cited by the applicant that islet transplantation impacted health-related quality of life, and the study provided by the commenter regarding safety and efficacy of islet cell transplantation, we note that the additional data provided did not assess Lantidra
We also remain concerned with regard to the generalizability of the outcomes given the small number of evaluable patients. We note the applicant stated that the number of evaluable patients decreased in each subsequent year after the last islet transplant in part because some of the patients had not yet reached yearly milestones at the time of data cutoff, and because the follow up year resets for patients that receive an additional transplant, and also the number of patients in the clinical trials supporting Lantidra
In addition, in response to our question about the availability of evidence that Lantidra
After consideration of all the information received from the applicant, as well as the public comments we received, we are unable to determine that Lantidra
Iovance Biotherapeutics, Inc. submitted an application for new technology add-on payments for AMTAGVI
Please refer to the online application posting for AMTAGVI
With respect to the newness criterion, according to the applicant, AMTAGVI
According to the applicant, AMTAGVI
The applicant stated that effective October 1, 2022, the following ICD-10-PCS codes may be used to uniquely describe procedures involving the use of AMTAGVI
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered “new” for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted that AMTAGVI
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36071), we invited public comments on whether AMTAGVI
The applicant also responded to CMS's request for additional information regarding the delay in the technology's market availability, stating that AMTAGVI
With respect to the applicant's request to start the AMTAGVI
With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that it meets the cost criterion. For each analysis, the applicant searched the FY 2022 MedPAR file using different combinations of ICD-10-CM codes, ICD-10-PCS codes, and/or inpatient length-of-stay (LOS) of 10 or more days. The applicant explained that it used different combinations to demonstrate four different cohorts that may be eligible for the technology. According to the applicant, eligible cases for AMTAGVI
For the first analysis, the applicant searched for potential cases for the following combination of ICD-10-CM diagnosis/procedure codes: any melanoma and metastasis diagnosis codes and any IL-2 or chemotherapy procedure codes. Please see the online posting for AMTAGVI
For the second analysis, the applicant searched for potential cases for the following ICD-10-CM diagnosis/procedure codes in combination with an inpatient LOS of 10 or more days: any melanoma and metastasis diagnosis codes and any IL-2 or chemotherapy procedure codes. Please see the online posting for AMTAGVI
For the third analysis, the applicant searched for potential cases for the following combination of ICD-10-CM diagnosis/procedure codes: a code describing primary or admitting diagnosis of melanoma and a metastasis diagnosis code. Please see the online posting for AMTAGVI
For the fourth analysis, the applicant searched for potential cases for the following combination of ICD-10-CM diagnosis/procedure codes: a code describing any diagnosis of melanoma and a metastasis diagnosis code. Please see the online posting for AMTAGVI
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that AMTAGVI
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36074), we invited public comments on whether AMTAGVI
We did not receive any comments on whether AMTAGVI
With regard to the substantial clinical improvement criterion, the applicant asserted that AMTAGVI
The following table summarizes the applicant's assertions regarding the substantial clinical improvement criterion. Please see the online posting for AMTAGVI
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36075 through 36076), after reviewing the information provided by the applicant, we stated we had the following concerns regarding whether AMTAGVI
In support of its application, the applicant provided data from the C-144-01 study, an ongoing phase two multicenter study (NCT02360579) to assess the efficacy and safety of autologous TIL in patients with stage IIIc-IV metastatic melanoma, which consisted of: Cohort 1 (n = 30 generation 1 no-cryopreserved TIL product); Cohort 2 (n = 66 generation 2 cryopreserved TIL product); Cohort 3 (a sub-sample of n = 10 from Cohorts 1, 2, and 4); and Cohort 4 (n = 75 generation 2 cryopreserved TIL product). Regarding the sample studied (Cohorts 2 & 4 combined) by Chesney, et al. (2022),
Second, similar to concerns raised in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25279 through 25282) and the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28256 through 28257), we stated that we continued to note that while multiple background studies were provided in support of the applicant's claims for substantial clinical improvement, those that evaluate AMTAGVI
Third, similar to concerns raised in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25279 through 25282), and the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28256 through 28257), we noted that the Chesney et al. (2022)
Finally, similar to concerns raised in the FY 2023 IPPS/LTCH PPS proposed rule (87 FR 28256 through 28257), we noted that according to the applicant, high-dose IL-2 has been used to treat metastatic melanoma in the past and is given as a post-treatment to AMTAGVI
We invited public comments on whether AMTAGVI
In addition, in response to CMS's concerns regarding whether the C-144-01 study population age, demographics, and disease burden were representative of the Medicare population, the applicant provided information about the inclusion criteria for Cohorts 2 and 4. The applicant noted that Medicare beneficiaries with advanced melanoma qualify for Medicare coverage by age (65 or greater) or disability (any age insured by Social Security Disability Insurance, SSDI) as well as noting that the study C-144-01 population is extrapolatable across the advanced melanoma Medicare-age population, with 24 percent of enrollees in Cohorts 2 and 4 aged 66 years or older.
Regarding CMS's interest in additional information comparing AMTAGVI
In response to CMS's concern about using a surrogate endpoint, ORR, and whether it correlated to clinical outcomes such as OS, the applicant cited an analysis of C-144-01 in patients who achieved response at first assessment (6 weeks or approximately 1.5 months) and provided a Kaplan-Meier curve showing a statistically significant difference in overall survival between patients who achieved an early response versus non-responders.
Regarding CMS's concerns related to the cause of grade 3 and 4 TEAEs and questions about being able to distinguish the effect of AMTAGVI
We also received several additional comments in support of the application for AMTAGVI
With respect to the applicant's assertion that CMS had previously approved new technology add-on payments for therapies approved under FDA's accelerated approval pathway for oncology and hematology uses, and the majority of these therapies were granted FDA accelerated approvals based on surrogate efficacy endpoints, including the same ORR and DOR endpoints used
In addition, as described in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36075 through 36076), we continue to have concerns that the patient population evaluated in the C-144-01, Chesney, et al. (2022), and Sarnaik, et al. (2021) studies are not appropriately representative of the Medicare population and the disease burden seen in Medicare beneficiaries. While the applicant provided clarifying information about the inclusion and exclusion criteria for the C-144-01 study, the applicant did not provide additional information about the race, ethnicity, or other demographics of these individuals to demonstrate general applicability to the Medicare population. In addition, while the applicant stated that all patients had a high disease burden, it did not comment on whether the study population had a disease burden inclusive of the comorbidities generally found in the Medicare population. Thus, we remain concerned that the findings may not be generalizable to Medicare beneficiaries and their disease burden.
After consideration of all the information from the applicant, as well as the comments we received, we are unable to determine that AMTAGVI
Bluebird bio, Inc. submitted an application for new technology add-on payments for Lyfgenia
Please refer to the online application posting for Lyfgenia
With respect to the newness criterion, according to the applicant, Lyfgenia
According to the applicant, as of October 1, 2023, there are currently two ICD-10-PCS procedure codes to distinctly identify the intravenous administration of Lyfgenia
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered “new” for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted that Lyfgenia
The following table summarizes the applicant's assertions regarding the substantial similarity criteria. Please see the online application posting for Lyfgenia
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36077 through 36078), we noted that Lyfgenia
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36078), we invited public comment on whether Lyfgenia
The applicant also submitted a public comment regarding the newness criterion. With respect to mechanism of action, the applicant stated that Lyfgenia
According to the applicant, increasing HbA
The applicant also described potential risks associated with consideration of the two technologies as a single application. Specifically, the applicant commented that if Lyfgenia
The applicant also stated that provided that CMS finalize its policy to change the newness cutoff date from April 1 to October 1 to determine whether a new technology is within its 2- to 3-year newness period (as further described in section II.E.8 of the preamble of this final rule), the applicant would agree that it was reasonable to consider the start of Lyfgenia
With regards to the market availability of Lyfgenia
With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that it meets the cost criterion. For each analysis, the applicant searched the FY 2022 MedPAR file using different ICD-10-CM codes to identify potential cases representing patients who may be eligible for Lyfgenia
According to the applicant, eligible cases for Lyfgenia
For the primary cohort, the applicant searched for an appropriate group of patients with any ICD-10-CM diagnosis code for SCD with crisis. Please see the online posting for Lyfgenia
For the sensitivity 1 cohort, the applicant searched for a narrower cohort of patients with the admitting or primary ICD-10-CM diagnosis codes of Hemoglobin-SS (Hb-SS) SCD with crisis for the most common genotype of SCD. Please see the online posting for Lyfgenia
For the sensitivity 2 cohort, the applicant searched for a broader cohort of patients with the primary or secondary ICD-10-CM diagnosis codes for SCD with or without crisis. Please see the online posting for Lyfgenia
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant maintained that Lyfgenia
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36079), we invited public comments on whether Lyfgenia
With regard to the substantial clinical improvement criterion, the applicant asserted that Lyfgenia
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36081), after reviewing the information provided by the applicant, we stated we had the
Finally, with respect to the applicant's assertion that Lyfgenia
We invited public comments on whether Lyfgenia
In response to our concern that the safety and efficacy data for Lyfgenia
A few commenters commented in support of approving Lyfgenia
After consideration of the public comments received, and the information included in the applicant's new technology add-on payment application, we have determined that Lyfgenia
In its application, the applicant estimated that the cost of Lyfgenia
Omniscient Neurotechnology submitted an application for new technology add-on payments for Quicktome Software Suite for FY 2025. According to the applicant, Quicktome Software Suite is a cloud-based software that uses artificial intelligence (AI) tools and the scientific field of connectomics to analyze millions of data points derived from a patient's magnetic resonance imaging (MRI). Per the applicant, Quicktome Software Suite's proprietary Structural Connectivity Atlas (SCA) uses machine learning and tractographic techniques to create highly specific and personalized maps of a patient's brain or connectome from a standard MRI scan, regardless of brain shape, size, or physical distortion. The applicant asserted that the SCA is combined with a key refinement algorithm that identifies the location of parcels based on the specific structural characteristics of an individual's brain. The applicant asserted that Quicktome Software Suite uses resting-state functional MRI (rs-fMRI) to unveil the brain's network architecture or functional connectome by mapping blood oxygen level dependent (BOLD) signal correlations across brain parcels. Per the applicant, using data from a structural or a functional MRI (fMRI) scan, Quicktome Software Suite's proprietary AI allows clinicians to quickly and accurately assess the structural layout (that is, the locations and integrity) or the functional connectivity (that is, how different brain regions are working together) of a patient's brain.
Please refer to the online application posting for Quicktome Software Suite, available at
With respect to the newness criterion, according to the applicant, Quicktome Software Suite received FDA 510(k) clearance on May 30, 2023. Per the FDA-cleared indication, Quicktome Software Suite is composed of a set of modules intended for the display of medical images and other healthcare data. It includes functions for image review, image manipulation, basic measurements, planning, three-dimensional (3D) visualization (multiplanar reconstructions (MPR) and 3D volume rendering), and the display of BOLD rs-MRI scan studies. The FDA clearance for Quicktome Software Suite was based on substantial equivalence to the legally marketed predicate device, StealthViz Advanced Planning Application with Stealth Diffusion Tensor Imaging (DTI)
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for Quicktome Software Suite and was granted approval to use the following procedure code effective October 1, 2024: 00K0XZ1 (Map brain using connectomic analysis, external approach). The applicant provided a list of diagnosis codes that it stated may currently be used to identify the indication for Quicktome Software Suite under the ICD-10-CM coding system. Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant.
As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered new for the purpose of new technology add-on payments.
With respect to the substantial similarity criteria, the applicant asserted
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36083), we noted the following concerns regarding whether Quicktome Software Suite meets the newness criterion. With respect to the applicant's claim that Quicktome Software Suite does not use the same or similar mechanism of action as existing technologies to achieve a therapeutic outcome, we noted that, according to the 510(k) application, it appears that Quicktome Software Suite is equivalent to StealthViz
In addition, we noted that there are several existing FDA-approved or cleared technologies (for example, StealthViz
With respect to the third criterion, whether Quicktome Software Suite involves the treatment of the same or similar disease and patient population compared to existing technologies, we noted that according to the applicant, Quicktome Software Suite does not treat a new disease type or patient population but does provide new information for the treatment of existing patient populations. However, the provision of new information for the treatment of existing patient populations does not mean that the technology treats a new disease type or patient population, and
We stated that, as discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44981), we also continued to be interested in public comments regarding issues related to determining newness for technologies that use AI, an algorithm, or software. Specifically, we stated that we were interested in public comment on how these technologies may be considered for the purpose of identifying a unique mechanism of action; how updates to AI, an algorithm, or software would affect an already approved technology or a competing technology; whether software changes for an already approved technology could be considered a new mechanism of action; and whether an improved algorithm by competing technologies would represent a unique mechanism of action if the outcome is the same as an already approved AI new technology.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36083), we invited public comments on whether Quicktome Software Suite is substantially similar to existing technologies and whether Quicktome Software Suite meets the newness criterion.
The commenters also stated, with regard to whether Quicktome Software Suite treats the same or similar type of disease and patient population as existing technologies that analyze fMRI and other medical imaging data for neurologic planning, such as StealthViz
A commenter stated that it is important to note that receiving clearance through a 510(k) should not be a definitive determination that a technology is substantially similar, particularly for one that has received FDA Breakthrough Device designation. The commenter further stated that over the last few years, CMS has approved a number of technologies for new technology add-on payments (thus having demonstrated newness) that received 510(k) clearance by demonstrating substantial equivalence to a previously approved or cleared technology.
However, with regard to whether a technology treats the same or similar type of disease and patient population, we agree with the commenters that Medicare patients who suffer from cognitive or motor impairments and cannot cooperate with task-based protocols would represent a patient population that could not utilize existing technologies for patient-specific connectomic analysis for neurological planning. Therefore, based on our review of the comments received, we agree that Quicktome Software Suite is not substantially similar to existing technologies and meets the newness criterion. We consider the beginning of the newness period to commence on May 30, 2023, when Quicktome Software Suite received FDA market authorization.
Another commenter recommended that CMS consider revisions to the regulations for new technology add-on payments under 42 CFR 412.87 to establish an alternative pathway for high-value AI technologies. The commenter suggested that newness should be determined by whether the technology enables a clinically valuable task for the Medicare patient population not previously achievable without the technology. The commenter continued by stating that “uniqueness” should be determined by whether the technology addresses a high-value clinical use case not previously addressed by other available technologies or medical procedures. The commenter also stated CMS's understanding of “value” of the Medicare population should be guided primarily by input from physician-experts and/or specialists in the related fields as well as product performance data.
With respect to the cost criterion, to identify potential cases representing patients who may be eligible for Quicktome Software Suite, the applicant searched 2020 Medicare Inpatient Hospitals—by Provider and Service data.
We noted the following concerns regarding the cost criterion. We noted that the applicant limited its cost analysis to MS-DRGs 025, 026, and 027 because those three MS-DRGs represent brain tumor resection procedures, which are the first and most clearly established procedures for which the technology offers clinical utility. We stated that we were interested in information as to whether the technology would map to other MS-DRGs, such as 023 and 024 (Craniotomy with Major Device Implant or Acute Complex CNS PDX with MCC or Chemotherapy, or without MCC, respectively), or 054 and 055 (Nervous System Neoplasms with and without MCC, respectively), and if these MS-DRGs should also be included in the cost analysis. In addition, we questioned whether every case within MS-DRGs 025, 026, and 027 would be eligible for the technology and whether there would be any appropriate inclusion/exclusion criteria by ICD-10-CM/PCS codes within these MS-DRGs to identify potential cases representing patients who may be eligible for Quicktome Software Suite.
We invited public comments on whether Quicktome Software Suite meets the cost criterion.
We did not receive any comments on whether the Quicktome Software Suite cost analysis should include other MS-DRGs, such as 023 and 024 (Craniotomy with Major Device Implant or Acute Complex CNS PDX with MCC or Chemotherapy, or without MCC, respectively), or 054 and 055 (Nervous System Neoplasms with and without MCC, respectively), or if any additional inclusion/exclusion criteria should be applied to the MS-DRGs the applicant included in its cost analysis, specifically MS-DRGs 025, 026, and 027. As previously discussed, based on the information submitted by the applicant as part of its new technology add-on payment application, the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount for MS-DRGs 025, 026, and 027, which represent brain tumor resection procedures. Therefore, Quicktome Software Suite meets the cost criterion for use with brain tumor resection procedures mapping to MS-DRGs 025, 026, and 027.
With regard to the substantial clinical improvement criterion, the applicant asserted that Quicktome Software Suite represents a substantial clinical improvement over existing technologies because Quicktome Software Suite supports the visualization and brain mapping that improve clinical outcomes such as reducing the risk of an extended length of stay (LOS) and unplanned readmissions for craniotomy patients by reducing new postoperative neurological deficits that are caused by damage to brain networks or a patient's connectome. The applicant further asserted that Quicktome Software Suite is the first and only FDA-cleared platform to enable connectomic analysis at an individual level, enabling surgeons to visualize and avoid damaging these brain networks during surgery, thereby significantly improving clinical outcomes relative to services or technologies previously available. The applicant submitted three published studies and one unpublished study evaluating Quicktome Software Suite to support these claims, as well as four background articles about complications leading to unplanned readmissions after cranial surgery, factors associated with extended LOS in patients undergoing craniotomy for tumor resection, the association of incorporating fMRI in presurgical planning with mortality and morbidity in brain tumor patients, and the clinical importance of non-traditional, large-scale brain networks with respect to the potential adverse effects on patients when these networks
The following table summarizes the applicant's assertions regarding the substantial clinical improvement criterion. Please see the online posting for Quicktome Software Suite for the applicant's complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36085 through 36087), after our review of the information provided by the applicant, we stated that we had the following concerns regarding whether Quicktome Software Suite meets the substantial clinical improvement criterion. With respect to the applicant's claim that Quicktome Software Suite supports the visualization of brain networks and surgical planning to avoid damaging them during surgery, we stated we were concerned that the evidence does not appear to demonstrate that the Quicktome Software Suite's visualization and brain mapping techniques improve clinical outcomes relative to services or technologies already available by avoiding or reducing damage to the brain networks during surgery. For example, the Shah et al. (2023)
In addition, we questioned whether the findings related to Quicktome Software Suite's efficacy were generalizable to the Medicare population. Specifically, the Wu et al. (2023)
We also questioned whether the use of Quicktome Software Suite had a direct impact on significantly reducing neurological or cognitive deficits post-surgery. The applicant cited Morell et al. (2022),
Similarly, we noted that the applicant cited Hendricks et al. (n.d.),
With respect to the applicant's claim that damaging brain networks during surgery leads to neurologic complications, which are a leading contributor to increased length of stay (LOS), ICU admission, and readmissions, the applicant asserted that Quicktome Software Suite enables surgeons to visualize these brain networks and change their surgical approach as needed to avoid damages. We noted that the applicant submitted two documents in support of this claim, both of which are background documents rather than studies that evaluate clinical outcomes associated with the use of Quicktome Software Suite. In particular, the Elsamadicy et al. (2018)
With respect to the applicant's claim that damaging brain networks during surgery has adverse effects for patients, including decreased quality of life and loss of function, the applicant asserted that Quicktome Software Suite enables surgeons to visualize brain networks
We stated in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36087) that we were also interested in public comments related to how we should evaluate issues related to determining substantial clinical improvement for technologies that use AI, an algorithm or software, including issues related to algorithm transparency, and how CMS should consider these issues in our assessment of substantial clinical improvement, as we continue to gain experience in this area. We noted that algorithm transparency refers to whether, and the extent to which, clinical users are able to access a consistent, baseline set of information about the algorithms they use to support their decision making and to assess such algorithms for fairness, appropriateness, validity, effectiveness, and safety.
We invited public comments on whether Quicktome Software Suite meets the substantial clinical improvement criterion.
We did not receive comments relating to how we should evaluate issues related to determining substantial clinical improvement for technologies that use AI, an algorithm or software, including issues related to algorithm transparency, and how CMS should consider these issues in our assessment of substantial clinical improvement. We will continue to consider these questions as we gain more experience, and we continue to welcome comments in this area.
After consideration of all the information submitted by the applicant as well as the comments we received, we are unable to determine that Quicktome Software Suite meets the substantial clinical improvement criterion for the reasons discussed in the proposed rule and in this final rule, and therefore, we are not approving new technology add-on payments for Quicktome Software Suite for FY 2025.
As discussed previously, beginning with applications for FY 2021, a medical device designated under FDA's Breakthrough Devices Program that has received marketing authorization as a Breakthrough Device, for the indication covered by the Breakthrough Device designation, may qualify for the new technology add-on payment under an alternative pathway. Additionally, beginning with FY 2021, a medical product that is designated by the FDA as a Qualified Infectious Disease Product (QIDP) and has received marketing authorization for the indication covered by the QIDP designation, and, beginning with FY 2022, a medical product that is a new medical product approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) and used for the indication approved under the LPAD pathway, may also qualify for the new technology add-on payment under an alternative pathway. Under an alternative pathway, a technology will be considered not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS and will not need to meet the requirement that it represents an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. These technologies must still be within the 2-to-3-year newness period to be considered “new,” and must also still meet the cost criterion.
As discussed previously, in the FY 2023 IPPS/LTCH PPS final rule, we finalized our proposal to publicly post online applications for new technology add-on payment beginning with FY 2024 applications (87 FR 48986 through 48990). As noted in the FY 2023 IPPS/LTCH PPS final rule, we are continuing to summarize each application in this final rule. However, while we are continuing to provide discussion of the concerns or issues, we identified with respect to applications submitted under the alternative pathway, we are providing more succinct information as part of the summaries in the proposed and final rules regarding the applicant's assertions as to how the medical service or technology meets the applicable new technology add-on payment criteria. We refer readers to
We received 23 applications for new technology add-on payments for FY 2025 under the new technology add-on payment alternative pathway. As discussed previously, in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958), we finalized that beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA market authorization request at the time of new technology add-on payment application submission and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. See § 412.87(e) and further discussion in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958). Of the 23 applications received under the alternative pathway, seven applications were not eligible for consideration for new technology add-on payment because they did not meet these requirements; and two applicants withdrew their applications prior to the issuance of the proposed rule, including the withdrawal of the application for DefenCath
In accordance with the regulations under § 412.87(f)(2), applicants for new technology add-on payments for FY 2025 for Breakthrough Devices must have FDA marketing authorization by May 1 of the year prior to the beginning of the fiscal year for which the application is being considered. Under § 412.87(f)(3), applicants for new technology add-on payments for FY 2025 for QIDPs and technologies approved under the LPAD pathway must have FDA marketing authorization by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. The policy finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58742) provides for conditional approval for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products (QIDPs and LPADs) at § 412.87(d) that does not receive FDA
As we did in the FY 2024 IPPS/LTCH PPS proposed rule, for applications under the alternative new technology add-on payment pathway, in the FY 2025 IPPS/LTCH PPS proposed rule we proposed to approve or disapprove each of these 11 applications for FY 2025 new technology add-on payments. Therefore, in this section of the preamble of this final rule, we provide background information on each of the remaining alternative pathway applications and our determination on whether or not each technology is eligible for the new technology add-on payment for FY 2025. We are not including in this final rule the description and discussion of applications that were withdrawn or that are ineligible for consideration for FY 2025.
We refer readers to section II.H.8. of the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292 through 42297) and section II.F.6 of preamble of the FY 2021 IPPS/LTCH PPS final rule (85 FR 58715 through 58733) for further discussion of the alternative new technology add-on payment pathways for these technologies.
Annalise-Ai Pty Ltd submitted an application for new technology add-on payments for the Annalise Enterprise CTB Triage—OH for FY 2025. According to the applicant, the Annalise Enterprise CTB Triage—OH is a medical device software application used to aid in the triage and prioritization of studies with features suggestive of obstructive hydrocephalus (OH). Per the applicant, the device analyzes studies using an artificial intelligence (AI) algorithm to identify suspected OH findings in non-contrast computed tomography (NCCT) brain scans and makes study-level output available to an order and imaging management system for worklist prioritization or triage.
Please refer to the online application posting for the Annalise Enterprise CTB Triage—OH available at
According to the applicant, the Annalise Enterprise CTB Triage—OH received Breakthrough Device designation from FDA on February 17, 2023, for use in the medical care environment to aid in triage and prioritization of studies with features suggestive of OH. The device analyzes studies using an AI algorithm to identify findings. It makes study-level output available to an order and imaging management system for worklist prioritization or triage. The applicant stated that the technology received 510(k) clearance from FDA on August 15, 2023, for the same indication consistent with the Breakthrough Device designation. Per the applicant, the Annalise Enterprise CTB Triage—OH was not immediately available for sale because there were additional steps to be completed following 510(k) clearance prior to the product becoming commercially available. According to the applicant, these additional steps involved generating a new unique device identifier (UDI) to incorporate the recently cleared finding for OH, integrating this UDI into the device, and releasing it. Per the applicant, the Annalise Enterprise CTB Triage—OH became commercially available on October 10, 2023.
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for the Annalise Enterprise CTB Triage—OH beginning in FY 2025 and was granted approval for the following procedure code effective October 1, 2024: XXE0X1A (Measurement of intracranial cerebrospinal fluid flow, computer-aided triage and notification, new technology group 10). The applicant provided a list of diagnosis codes that may be used to currently identify the indication for the Annalise Enterprise CTB Triage—OH under the ICD-10-CM coding system. Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant.
With respect to the cost criterion, the applicant provided three analyses to demonstrate that the technology meets the cost criterion. The applicant stated that for all three analyses, it used the 2021 Standard Analytic Files (SAF) Limited Data Set (LDS) to identify the top admitting diagnosis codes for inpatient stays that were admitted from the emergency room (ER) and included a non-contrast CT head scan. Next, it searched the FY 2022 MedPAR data to identify applicable inpatient stays based on different sets of admitting diagnosis codes for each of the three analyses. The applicant explained that it used admitting diagnosis codes from the inpatient stays, rather than discharge diagnosis codes, because the Annalise Enterprise CTB Triage—OH is an AI-based technology used to identify and prioritize patients suspected of OH. As a result, it will commonly be used in the ER before the doctor and/or the hospital has assigned the primary or secondary diagnosis for the inpatient stay. The applicant stated that admitting diagnosis codes may be better predictors for whether the Annalise Enterprise CTB Triage—OH service will be used, rather than primary or secondary diagnosis at discharge, which will likely represent information known after the procedure is performed. Per the applicant, for identifying the top admitting diagnosis codes, the inpatient stays were further narrowed down to only those where the patient had a physician claim during the inpatient stay or one day before for a non-contrast CT head scan (defined as CPT codes 70450, 70480, 70486), or had an outpatient claim for a non-contrast CT head scan the day of admission or one day before. Each analysis followed the order of operations described in the table that follows later in this section.
For the primary analysis, the applicant stated that it searched the FY 2022 MedPAR file for cases with emergency room charges (that is, emergency room charge amount greater than $0) and/or an inpatient admission type code (IP_ADMSN_TYPE_CD) equal to 1 for emergency, and reporting one of the top 25 diagnosis codes associated with 50 percent of all identified inpatient stays in the 2021 SAF. According to the applicant, it identified 2,206,036 claims mapping to 714 MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis without MV >96 Hours with MCC), which represented 16 percent of identified cases. The applicant stated that it calculated a final inflated average case-weighted standardized charge per case of $80,407, which exceeded the average case-weighted threshold amount of $69,892.
For the second analysis, the applicant stated that it conducted a sensitivity analysis using cases with emergency room charges (that is, emergency room charge amount greater than $0) and/or an inpatient admission type code (IP_ADMSN_TYPE_CD) equal to 1 for emergency, and reporting one of the top 186 admitting diagnosis codes associated with 80 percent of all identified inpatient stays in the 2021 SAF LDS. The applicant noted that it identified 3,991,354 claims mapping to 739 MS-DRGs, including MS-DRG 871
For the third analysis, the applicant stated that it conducted a sensitivity analysis that identified cases using the same criteria as the primary analysis, and further limited it to cases that also incurred CT charges. Per the applicant, it performed this sensitivity analysis because although doctors are likely to order the Annalise AI technology when a NCCT head scan is performed and the patient is admitted through the emergency room, the MedPAR file variable for CT charges does not differentiate between contrast and NCCTs, or the area of the body where the CT is performed, and does not capture CT charges billed by physicians during the inpatient stay. As a result, it further limited the cases to those with charges for CT to assess if this would impact whether the technology would meet the cost criterion. Per the applicant, it identified 1,546,504 claims mapping to 702 MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis without MV >96 Hours with MCC), which represented 17 percent of identified cases. The applicant stated that it calculated a final inflated average case-weighted standardized charge per case of $89,176, which exceeded the average case-weighted threshold amount of $71,344.
The applicant asserted that because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the Annalise Enterprise CTB Triage—OH meets the cost criterion.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36108), we noted the following concern regarding the cost criterion. According to the applicant, the technology is used to aid in the triage and prioritization of studies with features suggestive of OH. However, the diagnosis codes that the applicant used to identify eligible cases included non-neurologic diagnosis codes (for example, U071, R0602, J189). We questioned whether these diagnosis codes were applicable, and whether using neurologic diagnosis codes for diagnoses that exhibit symptoms similar
Subject to the applicant adequately addressing this concern, we agreed with the applicant that the technology meets the cost criterion and proposed to approve the Annalise Enterprise CTB Triage—OH for new technology add-on payments for FY 2025.
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the Annalise Enterprise CTB Triage—OH to the hospital to be $371.37 per patient. According to the applicant, hospitals acquire the Annalise Enterprise CTB Triage—OH system on a subscription-based model, with an annual cost of $180,000 per hospital. The applicant stated that the average cost per patient per hospital will vary by the volume of the NCCT cases for which the software is used. To determine the cost per case, the applicant used the following methodology:
First, the applicant conducted market research to estimate the percent of NCCT cases where this software would likely be ordered, which was estimated at 50 percent of NCCT head scans for older patients (>65 years of age) and 30 percent of NCCT head scans for younger patients (<65 years of age).
Second, the applicant used the 2021 SAF LDS to identify total NCCT scans by hospital. To represent the full Medicare fee-for-service population, the applicant multiplied total NCCT head scans at each hospital from the data by 20.
Third, to calculate the total number of NCCT head scans for each hospital, the applicant assumed that 56.5 percent of all NCCT scans are for Medicare beneficiaries, based on literature on trends in the utilization of head CT scans in the United States.
Fourth, to calculate the cost per case for each hospital, the applicant divided $180,000 by the estimated number of NCCT head scans analyzed by the technology for each hospital. Per the applicant, the average cost per case across all IPPS hospitals was then calculated at $371.37.
The applicant asserted that calculating the cost per case across all IPPS hospitals was reasonable. The applicant noted that given its limited time on the market and low number of subscribers, it used all IPPS hospitals to calculate cost per case rather than limiting the analysis to current subscribers. The applicant mentioned that for technologies that are commercially available for a longer period of time and with more subscribers, it may make sense to limit the cost per case analysis to hospitals that are current subscribers rather than using all IPPS hospitals in the calculation.
As we noted in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58630) and in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44983), we understand that there are unique circumstances with respect to determining a cost per case for a technology that utilizes a subscription for its cost and we will continue to consider the issues relating to calculation of the cost per unit of technologies sold on a subscription basis as we gain more experience in this area. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36109), we stated that we continued to welcome comments from the public as to the appropriate method to determine a cost per case for such technologies, including comments on whether the cost analysis should be updated based on the most recent subscriber data for each year for which the technology may be eligible for add-on payment.
We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the Annalise Enterprise CTB Triage—OH would be $241.39 for FY 2025 (that is, 65 percent of the average cost of the technology).
We invited public comments on whether the Annalise Enterprise CTB Triage—OH meets the cost criterion and our proposal to approve new technology add-on payments for the Annalise Enterprise CTB Triage—OH for FY 2025 for use in the medical care environment to aid in triage and prioritization of studies with features suggestive of OH.
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the Annalise Enterprise CTB Triage—OH meets the cost criterion. The technology received 510(k) clearance on August 15, 2023 as a Breakthrough Device, with an indication for use in the medical care environment to aid in triage and prioritization of studies with features suggestive of OH, which is covered by its Breakthrough Device designation. Therefore, we are finalizing our proposal to approve new technology add-on payments for the Annalise Enterprise CTB Triage—OH for FY 2025. We consider the beginning of the newness period to commence on October 10, 2023, the date on which the technology became commercially available for the indication covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule, the cost per case of the Annalise Enterprise CTB Triage—OH is $371.37. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the Annalise Enterprise CTB Triage—OH is $241.39 for FY 2025 (that is, 65 percent of the average cost of the technology). Cases involving the use of the Annalise Enterprise CTB Triage—OH that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure code: XXE0X1A (Measurement of intracranial cerebrospinal fluid flow, computer-aided triage and notification, new technology group 10).
Q-linea submitted an application for new technology add-on payments for the ASTar ® System for FY 2025. According to the applicant, the ASTar ® System is a fully automated system for rapid antimicrobial susceptibility testing (AST). The applicant stated that the proprietary AST technology is based on broth microdilution (BMD), optimized for high sensitivity and short time-to-result, delivering phenotypic AST with true minimum inhibitory concentration (MIC) results in approximately six hours.
Please refer to the online application posting for the ASTar ® System, available at
According to the applicant, the ASTar ® System consists of the ASTar ® Instrument and the ASTar ® BC G-Kit. According to the applicant, the ASTar ® Instrument and ASTar ® BC G-Kit, which includes the ASTar ® BC G-Consumable Kit and the ASTar BC G-Frozen Insert, received Breakthrough Device designation from FDA on April 7, 2022. The ASTar ® BC G-Kit is a multiplexed,
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for the ASTar® System beginning in FY 2025 and was granted approval for the following procedure code effective October 1, 2024: XXE5X2A (Measurement of infection, phenotypic fully automated rapid susceptibility technology with controlled inoculum, new technology group 10). The applicant provided a list of diagnosis codes that may be used to currently identify the indication for the ASTar® System under the ICD-10-CM coding system. Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant.
With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that it meets the cost criterion. Each analysis used different ICD-10-CM codes to identify potential cases in the FY 2022 MedPAR file representing patients who may be eligible for the ASTar® System. According to the applicant, Cohort 1 comprised patients with non-sepsis infections and Cohort 2 consisted of patients with sepsis resulting from bacteria identifiable by the ASTar® System. The applicant explained that these scenarios were separated as the applicant believed that charges and MS-DRG assignments may differ due to the resources required to treat sepsis patients compared to those required for less severe infections. Finally, Cohort 3 included all ICD-10-CM codes from Cohorts 1 and 2 because the applicant stated that the ASTar® System may be used to identify any infection caused by the bacteria listed in Cohorts 1 and 2. The applicant stated that in all three cohorts, the patients mapped to a large number of MS-DRGs based on the listed ICD-10-CM codes. Therefore, in the analyses, the applicant only included the most common MS-DRGs, that is, the MS-DRGs containing at least 1 percent of the potential case volume within each of the three cohorts, as these are the MS-DRGs to which potential ASTar® System cases would most closely map. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section to identify claims for each cohort. Each analysis followed the order of operations described in the table that follows later in this section.
For Cohort 1, the applicant identified 440,838 claims mapping to 14 MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis with MV >96 Hours with MCC) representing 25 percent of identified cases, and calculated a final inflated average case-weighted standardized charge per case of $85,525, which exceeded the average case-weighted threshold amount of $70,398.
For Cohort 2, the applicant identified 224,825 claims mapping to 7 MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis with MV >96 Hours with MCC) representing 54 percent of identified cases, and calculated a final inflated average case-weighted standardized charge per case of $99,508, which exceeded the average case-weighted threshold amount of $82,171.
For Cohort 3, the applicant identified 603,877 claims mapping to 13 MS-DRGs, including MS-DRG 871 (Septicemia or Severe Sepsis with MV >96 Hours with MCC) representing 34 percent of identified cases, and calculated a final inflated average case-weighted standardized charge per case of $88,395 which exceeded the average case-weighted threshold amount of $73,727.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all the three cohorts, the applicant asserted that the ASTar® System meets the cost criterion.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36110), we agreed with the applicant that the ASTar® System meets the cost criterion and therefore proposed to approve the ASTar® System for new technology add-on payments for FY 2025, subject to the technology receiving FDA marketing authorization as a Breakthrough Device for the indication corresponding to the Breakthrough Device designation by May 1, 2024.
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the operating cost of the ASTar® System to the hospital to be $150 per patient, based on the operating component ASTar® BC G-Kit (composed of the ASTar® BC G-Consumable Kit ($141) and ASTar BC G-Frozen Insert ($9)). The applicant also noted a capital cost of $200,000 for the ASTar® Instrument. Because section 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services or technologies under the payment system established under that subsection, which establishes the system for payment of the operating costs of inpatient hospital services, we do not include capital costs in the add-on payments for a new medical service or technology or make new technology add-on payments under the IPPS for capital-related costs (86 FR 45145). As noted, the applicant stated that the cost of the ASTar® Instrument is a capital cost. Therefore, we stated that it appeared that this component was not eligible for new technology add-on payment because, as discussed in prior
We invited public comments on whether the ASTar® System meets the cost criterion and our proposal to approve new technology add-on payments for the ASTar® System for FY 2025, subject to the technology receiving FDA marketing authorization as a Breakthrough Device for the indication corresponding to the Breakthrough Device designation by May 1, 2024.
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the ASTar® System meets the cost criterion. The technology received 510(k) clearance on April 26, 2024, as a Breakthrough Device, with the following indication for use: the ASTar® System, comprised of the ASTar® Instrument with the ASTar® BC G-Kit (ASTar® BC G-Consumable kit, ASTar® BC G-Frozen insert, and ASTar® BC G-Kit software), utilizes high-speed, time-lapse microscopy imaging of bacteria for the in vitro, quantitative determination of antimicrobial susceptibility of on-panel gram-negative bacteria. The test is performed directly on positive blood culture samples signaled as positive by a continuous monitoring blood culture system and confirmed to contain gram-negative bacilli by Gram stain. Since the indication for which the applicant received FDA 510(k) clearance is included within the scope of the Breakthrough Device designation, we are finalizing our proposal to approve new technology add-on payments for the ASTar® System for FY 2025. We consider the beginning of the newness period to commence on April 26, 2024, the date on which technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule, the cost per case of the ASTar® System is $150, based on the operating component ASTar® BC G-Kit (composed of the ASTar® BC G-Consumable Kit ($141) and ASTar BC G-Frozen Insert ($9). Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the ASTar® System is $97.50 for FY 2025 (that is, 65 percent of the average cost of the technology). Cases involving the use of the ASTar® System that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure code XXE5X2A (Measurement of infection, phenotypic fully automated rapid susceptibility technology with controlled inoculum, new technology group 10).
Edwards Lifesciences LLC submitted an application for new technology add-on payments for the Edwards EVOQUE
Please refer to the online application posting for the Edwards EVOQUE
According to the applicant, the EVOQUE
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for the EVOQUE
With respect to the cost criterion, the applicant provided two analyses to demonstrate that the technology meets the cost criterion. To identify potential cases representing patients who may be eligible for the EVOQUE
For the first analysis, the applicant searched for cases assigned to MS-DRGs 266 (Endovascular Cardiac Valve Replacement and Supplement Procedures with MCC) and 267 (Endovascular Cardiac Valve
For the second analysis, the applicant searched for the cases that included any of the ICD-10-PCS codes for percutaneous repair or replacement of the tricuspid valve in any position, in combination with one of the four ICD-10-CM codes for tricuspid valve insufficiency as the primary diagnosis, as listed in the table that follows later in this section. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 198 claims mapping to 6 MS-DRGs and calculated a final inflated average case-weighted standardized charge per case of $327,236, which exceeded the average case-weighted threshold amount of $219,225.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that the EVOQUE
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36114), we agreed with the applicant that the EVOQUE
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the EVOQUE
We invited public comments on whether the EVOQUE
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the EVOQUE
Based on the information available at the time of this final rule, the cost per case of the EVOQUE
W.L. Gore & Associates, Inc. submitted an application for new technology add-on payments for the TAMBE Device for FY 2025. According to the applicant, the TAMBE Device is used for endovascular repair in patients with thoracoabdominal aortic aneurysms (TAAA) and high-surgical risk patients with pararenal abdominal aortic aneurysms (PAAA) who have appropriate anatomy. Per the applicant, the TAMBE Device is comprised of multiple required components, including: (1) an Aortic Component, (2) Branch Components, (3) a Distal Bifurcated Component, and (4) Contralateral Leg Component. According to the applicant, these components together comprise the TAMBE Device.
Please refer to the online application posting for the GORE® EXCLUDER® Thoracoabdominal Branch Endoprosthesis (TAMBE Device), available at
According to the applicant, the TAMBE Device received Breakthrough Device designation from FDA on October 1, 2021, for endovascular repair of thoracoabdominal and pararenal aneurysms in the aorta in patients who have appropriate anatomy. According to the applicant, the TAMBE Device received premarket approval (PMA) from FDA on January 12, 2024, for a slightly narrower indication for use, namely, TAAA and high-surgical risk patients with PAAA who have appropriate anatomy. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36115), we noted that since the indication for which the applicant received premarket approval is included within the scope of the Breakthrough Device designation, it appears that the PMA indication is appropriate for consideration for new technology add-on payment under the alternative pathway criteria. According to the applicant, the TAMBE Device is not yet available for sale due to the required lead time to train physicians on the TAMBE Device, and the first commercial device will only be implanted May 1, 2024 or later. We stated in the proposed rule that we were interested in additional information regarding the delay in the technology's market availability, as we questioned whether the date the device first became available for sale would be the same as the date the first commercial device is implanted.
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for the TAMBE Device beginning in FY 2025 and was granted approval for the following procedure code effective October 1, 2024: X2VE3SA (Restriction of descending thoracic aorta and abdominal aorta using branched intraluminal device, manufactured integrated system, four or more arteries, percutaneous approach, new technology group 10). The applicant provided a list of diagnosis codes that may be used to currently identify the proposed indication for the TAMBE Device under the ICD-10-CM coding system. Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant.
With respect to the cost criterion, to identify potential cases representing patients who may be eligible for the TAMBE Device, the applicant searched the FY 2022 MedPAR file for claims that had at least one of the ICD-10-CM codes and at least one of the ICD-10-PCS codes as listed in the following table. Using the inclusion/exclusion criteria described in the following table, the applicant identified 1,005 claims mapping to 19 MS-DRGs, including MS-DRG 269 (Aortic and Heart Assist Procedures except Pulsation Balloon without MCC), which represented 54.5 percent of the identified cases. The applicant followed the order of operations described in the following table and calculated a final inflated average case-weighted standardized charge per case of $448,347, which exceeded the average case-weighted threshold amount of $185,799. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36116), we agreed with the applicant that the TAMBE Device meets the cost criterion and therefore proposed to approve the TAMBE Device for new technology add-on payments for FY 2025.
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the TAMBE Device to the hospital to be $72,675 per patient. Per the applicant, the TAMBE Device has a number of required components, including the aortic component ($29,000), branch components ($3,355), distal bifurcated component (DBC) ($10,758), DBC extender component ($3,037), contralateral leg endoprosthesis ($4,390), and iliac extender endoprosthesis ($3,037). The applicant stated that the actual type and number of components used varies by patient depending on their anatomy and the extent of the patient's aneurysm. The applicant determined the number and types of components that were used in an average patient based on a multicenter pivotal clinical trial conducted predominantly in the U.S. and calculated the case cost per component. We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the TAMBE Device would be $47,238.75 for FY 2025 (that is, 65 percent of the average cost of the technology).
We invited public comments on whether the TAMBE Device meets the cost criterion and our proposal to approve new technology add-on payments for the TAMBE Device for FY 2025, for endovascular repair in patients with thoracoabdominal aortic
The applicant and another commenter expressed support for our proposal to approve new technology add-on payments for FY 2025 for the TAMBE Device. The applicant also agreed with the proposed maximum new technology add-on payment amount for the TAMBE Device.
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the TAMBE Device meets the cost criterion. The technology received FDA premarket approval on January 12, 2024 as a Breakthrough Device, with an indication for endovascular repair in patients with TAAA and high-surgical risk patients with PAAA who have appropriate anatomy, which is covered by its Breakthrough Device designation. Therefore, we are finalizing our proposal to approve new technology add-on payments for the TAMBE Device for FY 2025. As previously discussed, absent additional information from the applicant, we consider the beginning of the newness period to commence on January 12, 2024, the date on which the technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule, the cost per case of the TAMBE Device is $72,675, based on the average case cost per component for the: aortic component, branch components, distal bifurcated component (DBC), DBC extender component, contralateral leg endoprosthesis, and iliac extender endoprosthesis. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the TAMBE Device is $47,238.75 for FY 2025 (that is, 65 percent of the average cost of the technology). Cases involving the use of the TAMBE Device that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure code X2VE3SA (Restriction of descending thoracic aorta and abdominal aorta using branched intraluminal device, manufactured integrated system, four or more arteries, percutaneous approach, new technology group 10).
LimFlow Inc. submitted an application for new technology add-on payments for the LimFlow
Please refer to the online application posting for the LimFlow
According to the applicant, the LimFlow
The applicant provided a list of ICD-10-PCS codes that, effective October 1, 2018, can be used to uniquely describe procedures involving the use of the LimFlow
With respect to the cost criterion, the applicant provided three analyses to demonstrate that it meets the cost criterion. Each analysis used the same ICD-10-PCS codes to identify potential cases representing patients who may be eligible for the LimFlow
For the first analysis, the applicant searched FY 2022 MedPAR data for claims reporting at least one of the ICD-10-PCS codes listed in the table that follows later in this section to identify cases that may be eligible for the LimFlow
For the second analysis, the applicant searched FY 2021 MedPAR data for claims reporting at least one of the ICD-10-PCS codes listed in the table that follows later in this section to identify cases that may be eligible for the LimFlow
For the third analysis, the applicant searched FY 2020 MedPAR data for claims reporting at least one of the ICD-10-PCS codes listed in the table that follows later in this section to identify cases that may be eligible for the LimFlow
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that the LimFlow
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36118), we agreed with the applicant that the LimFlow
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the LimFlow
We invited public comments on whether the LimFlow
The applicant stated that the LimFlow
Based on the information available at the time of this final rule, the cost per case of the LimFlow
ReCor Medical submitted an application for new technology add-on payments for the Paradise
Please refer to the online application posting for the Paradise
According to the applicant, the Paradise
The applicant stated that effective October 1, 2023, the following ICD-10-PCS code may be used to uniquely describe procedures involving the use of the Paradise
With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that it meets the cost criterion. Each analysis used different MS-DRGs and/or ICD-10-CM codes to identify potential cases representing patients who may be eligible for the Paradise
For the first analysis, the applicant searched the FY 2022 MedPAR file for all cases that map to MS-DRG 264 (Other Circulatory System O.R. Procedures). The applicant stated that medical MS-DRGs 304 and 305 (Hypertension with MCC and without MCC) are specific to hypertension. However, given the nature of the procedure, the applicant's expectation is that the DRG Grouper logic would assign potential cases representing patients who may be eligible for the Paradise
For the second analysis, as a sensitivity analysis the applicant searched the FY 2022 MedPAR file for all cases that map to MS-DRGs 304 or 305 (Hypertension with MCC and without MCC), which are specific to hypertension. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 32,433 claims mapping to MS-DRG 304 (Hypertension with MCC) or 305 (Hypertension without MCC) and calculated a final inflated average case-weighted standardized charge per case of $268,298, which exceeded the average case-weighted threshold amount of $46,986.
For the third analysis, the applicant provided a sensitivity analysis that combined the first and second scenario together for a broader list of MS-DRGs. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 39,497 claims mapping to MS-DRGs 264 (Other Circulatory System O.R. Procedures), 304 (Hypertension with MCC), or 305 (Hypertension without MCC) and calculated a final inflated average case-weighted standardized charge per case of $284,306, which exceeded the average case-weighted threshold amount of $56,237.
For the fourth analysis, the applicant performed a sensitivity analysis to subset the cases assigned to MS-DRG 264 (Other Circulatory System O.R. Procedures) to those reporting the following ICD-10-CM codes: I10 (Essential (primary) hypertension), I15.1 (Hypertension secondary to other renal disorders), I15.8 (Other secondary hypertension), or I15.9 (Secondary hypertension, unspecified) in any position. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 1,477 claims mapping to MS-DRG 264 (Other Circulatory System O.R. Procedures) and calculated a final inflated average case-weighted standardized charge per case of $325,810, which exceeded the average case-weighted threshold amount of $98,708.
For the fifth analysis, the applicant performed a sensitivity analysis to subset the cases assigned to MS-DRGs 264 (Other Circulatory System O.R. Procedures), 304 (Hypertension with MCC), or 305 (Hypertension without MCC) to those reporting the following ICD-10-CM codes: I10 (Essential (primary) hypertension), I15.1 (Hypertension secondary to other renal disorders), I15.8 (Other secondary hypertension), or I15.9 (Secondary hypertension, unspecified) in any position. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 14,415 claims mapping to MS-DRGs 264 (Other Circulatory System O.R. Procedures), 304 (Hypertension with MCC), or 305 (Hypertension without MCC) and calculated a final inflated average case-weighted standardized charge per case of $272,701, which exceeded the average case-weighted threshold amount of $50,817.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all analyses, the applicant asserted that the Paradise
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36121), we agreed with the applicant that the Paradise
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the Paradise
We invited public comments on whether the Paradise
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the Paradise
Based on the information available at the time of this final rule, the cost per case of the Paradise
Medtronic, Inc. submitted an application for new technology add-on payments for the PulseSelect
Please refer to the online application posting for the PulseSelect
According to the applicant, the PulseSelect
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for the PulseSelect
With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that it meets the cost criterion. The applicant stated that there is an expectation the PulseSelect
For the first analysis, the applicant searched the FY 2022 MedPAR file for claims that had the ICD-10-PCS code 02583ZZ (Destruction of conduction mechanism, percutaneous approach) in any procedure code position on the claim and identified 98 MS-DRGs. The applicant limited the cost analysis to the top six MS-DRGs that had over 2 percent of cases in each MS-DRG (see the table that follows later in this section for a complete list of MS-DRGs provided by the applicant). According to the applicant, these six MS-DRGs represented 86 percent of all cardiac catheter ablation cases. Using the inclusion/exclusion criteria described in the table that follows later in this section, the applicant identified 14,695 claims mapping to these 6 MS-DRGs. The applicant followed the order of operations described in the table that follows later in this section and calculated a final inflated average case-weighted standardized charge per case of $176,942, which exceeded the average case-weighted threshold amount of $136,813.
For the second analysis, the applicant searched the FY 2022 MedPAR file for claims that had the ICD-10-PCS code 02583ZZ (Destruction of conduction mechanism, percutaneous approach) in any procedure code position on the claim, and had one of the ICD-10-CM codes for atrial fibrillation listed in the table that follows later in this section. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 12,088 claims mapping to the top six MS-DRGs (representing 82.3 percent of all cases) and calculated a final inflated average case-weighted standardized charge per case of $179,931, which exceeded the average case-weighted threshold amount of $136,782.
For the third analysis, the applicant searched the FY 2022 MedPAR file for claims that had the ICD-10-PCS code 02583ZZ (Destruction of conduction mechanism, percutaneous approach) in any procedure code position on the claim and had one of the ICD-10-CM codes for paroxysmal or persistent atrial fibrillation listed in the table that follows later in this section. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 9,446 claims mapping to the top six MS-DRGs (representing 64.3 percent of all cases) and calculated a final inflated average case-weighted standardized charge per case of $180,114, which exceeded the average case-weighted threshold amount of $136,193.
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that the PulseSelect
In
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the cost of the PulseSelect
We invited public comments on whether the PulseSelect
In addition, we note that procedure codes under the ICD-10-PCS are not manufacturer specific; rather, they are used to describe the hospital service that was performed. If, after consulting current official coding guidelines a hospital determines that an ICD-10-PCS procedure code associated with a new technology add-on payment describes the technology that it used in the performance of a procedure, the hospital may report the code and may be eligible to receive the associated new technology add-on payment. We note that similar procedures using the same device or technology may also be appropriately coded differently under the ICD-10-PCS classification. An entity that is seeking coding guidance may contact the American Hospital Association's Central Office on ICD-10-CM/PCS systems for such advice.
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the PulseSelect
Based on the information available at the time of this final rule, the cost per case of the PulseSelect
Medtronic submitted an application for new technology add-on payments for the Symplicity Spyral
Please refer to the online application posting for the Symplicity Spyral
According to the applicant, the Symplicity Spyral
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for the Symplicity Spyral
With respect to the cost criterion, the applicant provided two analyses and two sensitivity analyses to demonstrate that it meets the cost criterion. Each analysis used a common set of ICD-10-CM codes but different criteria for the inclusion/exclusion of MS-DRGs and outlier cases to identify potential cases representing patients who may be eligible for the Symplicity Spyral
For the first scenario (Cost Analysis #1), the applicant searched the FY 2022 MedPAR file for cases where essential (primary) hypertension was the reason for the admission, using at least one of the ICD-10-CM diagnosis codes in the table that follows later in this section. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 490,387 claims mapping to 99 MS-DRGs, including MS-DRG 291 (Heart Failure and Shock With MCC) representing 67 percent of identified cases. The applicant calculated a final inflated average case-weighted standardized charge per case of $136,450, which exceeded the average case-weighted threshold amount of $62,312.
The second scenario (Cost Analysis #1 with Outliers) was a sensitivity analysis that mirrored the first scenario, except that cases with outlier payments were included. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 501,760 claims mapping to 101 MS-DRGs, including MS-DRG 291 (Heart Failure and Shock With MCC) representing 66.7 percent of identified cases. The applicant calculated a final inflated average case-weighted standardized charge per case of $145,001, which exceeded the average case-weighted threshold amount of $63,789.
For the third scenario (Cost Analysis #2), the applicant searched the FY 2022 MedPAR file for claims reporting any of the ICD-10-CM diagnosis codes listed in the table that follows later in this section but limited the case selection to MS-DRGs where the principal diagnosis was essential hypertension, and no procedures were performed. Per the applicant, this list represents a subset of cases that were most likely to benefit from the new procedural treatment option for primary hypertension. The applicant used the inclusion/exclusion criteria described in the table that follows later in this section. Under this analysis, the applicant identified 390,384 claims mapping to 8 MS-DRGs, including MS-DRG 291 (Heart Failure and Shock With MCC) representing 84.4 percent of identified cases. The applicant calculated a final inflated average case-weighted standardized charge per case of $124,525, which exceeded the average case-weighted threshold amount of $52,861.
The fourth scenario (Cost Analysis #2 with Outliers) mirrored the third
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that the Symplicity Spyral
In the
We noted in the proposed rule that an estimate for the cost of the Symplicity Spyral
We invited public comments on whether the Symplicity Spyral
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the Symplicity Spyral
Based on the information available at the time of this final rule, the cost per case of the single-use Symplicity Spyral
Abbott submitted an application for new technology add-on payments for TriClip
Please refer to the online application posting for TriClip
According to the applicant, the TriClip
According to the applicant, the following ICD-10-PCS code may be used to describe procedures involving the use of TriClip
With respect to the cost criterion, to identify potential cases representing patients who may be eligible for TriClip
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant asserted that TriClip
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36132), we agreed with the applicant that TriClip
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of TriClip
We invited public comments on whether TriClip
Based on the information available at the time of this final rule, the cost per case of TriClip
Icotec Medical, Inc. submitted an application for new technology add-on payments for the VADER® Pedicle System for FY 2025. According to the applicant, the VADER® Pedicle System is a pedicle screw system for standard posterior fixation of the spinal column used to provide stabilization of infected spinal segments after debridement of infectious tissues. According to the applicant, the VADER® Pedicle System is made from high strength carbon fiber reinforced polyether ether ketone, which provides low artifact imaging to allow for post-operative surveillance of the healing of the infected spinal segment.
Please refer to the online application posting for the VADER® Pedicle System, available at
According to the applicant, the VADER® Pedicle System received Breakthrough Device designation from FDA on July 31, 2023 for stabilizing the thoracic and/or lumbar spinal column as an adjunct to fusion in patients diagnosed with an active spinal infection (for example, spondylodiscitis, osteomyelitis) who are at risk of spinal instability, progressive spinal deformity, or neurologic compromise, following surgical debridement. The applicant stated that the technology received 510(k) clearance from FDA on February 26, 2024, for the following indication, which is the subject of the new technology add-on payment application, and is consistent with the Breakthrough Device designation: to stabilize the thoracic and/or lumbar spinal column in patients who are or will be receiving concurrent medical treatment for an active spinal infection (for example, spondylodiscitis, osteomyelitis) that, without stabilization, could lead to deterioration of bony structures and misalignment with neurological compromise. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36132), we noted that the VADER® Pedicle System has received FDA 510(k) clearance for multiple indications since 2019.
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for the VADER® Pedicle System beginning in FY 2025 and was granted approval for the following procedure codes effective October 1, 2024:
The applicant provided a list of diagnosis codes that may be used to currently identify the indication for the VADER® Pedicle System under the ICD-10-CM coding system, describing spinal infections including osteomyelitis, discitis, and spondylopathies of various vertebral spine body parts including the cervical, thoracic, and lumbar regions. Please refer to the online application posting for the complete list of ICD-10-CM codes provided by the applicant. As previously noted, only use of the technology for the indications corresponding to the Breakthrough Device designation would be relevant for new technology add-on payment purposes. Therefore, in the proposed rule (89 FR 36132) we stated that we believed that the relevant ICD-10-CM codes to identify the Breakthrough Device-designated indication would be the codes included in category M46 (Other inflammatory spondylopathies) under the ICD-10-CM classification in subcategories: M46.2- (Osteomyelitis of vertebra), M46.3- (Infection of intervertebral disc (pyogenic)), M46.4- (Discitis, unspecified), M46.5- (Other infective spondylopathies), M46.8- (Other specified inflammatory spondylopathies), and M46.9- (Unspecified inflammatory spondylopathy). We invited public comment on the use of these ICD-10-CM diagnosis codes to identify the Breakthrough Device-designated indication for purposes of the new technology add-on payment, if approved.
With respect to the cost criterion, to identify potential cases representing patients who may be eligible for the VADER® Pedicle System, the applicant searched the FY 2022 MedPAR file for claims reporting a combination of ICD-10-CM/PCS codes as listed in the online posting for the VADER® Pedicle System. The applicant believes these cases represent patients who have undergone fusion procedures and have been diagnosed with an active spinal infection (such as spondylodiscitis or osteomyelitis), and these patients are at risk of spinal instability, progressive spinal deformity, or neurologic compromise following surgical debridement, making them suitable candidates for the use of the technology. Using the inclusion/exclusion criteria
In
Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the VADER® Pedicle System to the hospital to be $43,450 per patient. According to the applicant, the unit prices are $6,500 for a pedicle screw, $4,600 for a rod, and $350 for a set screw. The applicant stated that an average of five pedicle screws, two rods, and five set screws would be used for a spinal fusion procedure. The applicant calculated the total cost of the technology by multiplying the unit price of each component by the average number of that component used in the procedure. We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we proposed that the maximum new technology add-on payment for a case involving the use of the VADER® Pedicle System would be $28,242.50 for FY 2025 (that is, 65 percent of the average cost of the technology).
We invited public comments on whether the VADER® Pedicle System meets the cost criterion and our
We note that we did not receive any public comments on the ICD-10-CM diagnosis codes we provided in the proposed rule to identify the Breakthrough Device-designated indication for purposes of the new technology add-on payment.
Based on the information provided in the application for new technology add-on payments, and after consideration of the public comments we received, we believe the VADER® Pedicle System meets the cost criterion. The technology received 510(k) clearance from FDA on February 26, 2024 as a Breakthrough Device, with an indication for use to stabilize the thoracic and/or lumbar spinal column in patients who are or will be receiving concurrent medical treatment for an active spinal infection (for example, spondylodiscitis, osteomyelitis) that, without stabilization, could lead to deterioration of bony structures and misalignment with neurological compromise, which is covered by its Breakthrough Device designation. Therefore, we are finalizing our proposal to approve new technology add-on payments for the VADER® Pedicle System for FY 2025. We consider the beginning of the newness period to commence on February 26, 2024, the date on which technology received FDA marketing authorization for the indication covered by its Breakthrough Device designation.
Based on the information available at the time of this final rule, the cost per case of the VADER® Pedicle System is $43,450 per patient. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS-DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the VADER® Pedicle System is $28,242.50 for FY 2025 (that is, 65 percent of the average cost of the technology). As noted earlier in this section, the VADER® Pedicle System has received FDA 510(k) clearance for multiple indications since 2019, and only the use of the VADER® Pedicle System to stabilize the thoracic and/or lumbar spine as an adjunct to fusion in patients with spinal infection, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2025. Therefore, cases involving the use of the VADER® Pedicle System that are eligible for new technology add-on payments will be identified by any of the ICD-10-PCS procedure codes listed in the following table, in combination with any one of the ICD-10-CM diagnosis codes listed in a following table.
Basilea Pharmaceutica International Ltd, Allschwil submitted an application for new technology add-on payments for ZEVTERA
Please refer to the online application posting for ZEVTERA
According to the applicant, ZEVTERA
The applicant submitted a request for approval for a unique ICD-10-PCS procedure code for ZEVTERA
With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that it meets the cost criterion. For each analysis, the applicant searched the FY 2022 MedPAR file using different sets of ICD-10-CM codes in the first five diagnosis positions to identify potential cases representing different cohorts of patients who may be eligible for ZEVTERA
For the first analysis, the applicant searched for claims with a diagnosis code for ABSSSI using the ICD-10-CM codes listed in the online posting for ZEVTERA
For the second analysis, the applicant searched for claims with a diagnosis code for CABP using the ICD-10-CM codes listed in the online posting for ZEVTERA
For the third analysis, the applicant searched for claims with a diagnosis code for SAB using the ICD-10-CM codes listed in the online posting for ZEVTERA
For the fourth analysis, the applicant searched for claims with diagnosis codes for ABSSSI, CABP, or SAB in the first five positions on a claim, using the ICD-10-CM codes listed in the online
Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in all scenarios, the applicant asserted that ZEVTERA
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36135), we agreed with the applicant that ZEVTERA
Based on preliminary information from the applicant at the time of the proposed rule, the pricing for this treatment is set at $125 per vial, and the recommended dosage varies depending on the condition being treated. The applicant stated that for ABSSSI and CABP, the suggested daily dose is 3 vials per day for a duration of 5-14 days, resulting in an estimated average cost of $3,750 for a 10-day therapy. The applicant noted that for SAB, the recommended dose is every 6 hours for the first 8 days, followed by every 8 hours for up to 42 days. The applicant made the assumption that patients would be inpatient for 28 days and then continue the therapy as an outpatient for up to 42 days, which resulted in an average inpatient cost of $11,500. We noted that the cost information for this technology may be updated in the final rule based on revised or additional
We invited public comments on whether ZEVTERA
We did not receive any comments related to ZEVTERA
Based on the information provided in the application for new technology add-on payments, we believe ZEVTERA
Based on the information available at the time of this final rule, the average inpatient cost per case of ZEVTERA
Cases involving the use of ZEVTERA
Cases involving the use of ZEVTERA
We received several public comments requesting changes to the new technology add-on payment policies such as creating new alternative pathway categories for different FDA designations or types of treatments, expanding the conditional approval process to additional types of technologies or designations, moving to a biannual process that would set two annual deadlines for manufacturers to apply for new technology add-on payment, and requiring Medicare Advantage (MA) to provide new technology add-on payment. These comments were outside the scope of the proposals included in the FY 2025 IPPS/LTCH PPS proposed rule and we are therefore not addressing them in this final rule.
As discussed previously in this rule, section 1886(d)(5)(K)(i) of the Act requires the Secretary to establish (after notice and opportunity for public comment) a mechanism to recognize the costs of new medical services and technologies under the IPPS. Section 1886(d)(5)(K)(vi) of the Act specifies that a medical service or technology will be considered new if it meets criteria established by the Secretary after notice and opportunity for public comment. The regulations at 42 CFR 412.87 implement these provisions. As further discussed in FY 2005 IPPS final rule (69 FR 49002), the intent of section 1886(d)(5)(K) of the Act and regulations under § 412.87(b)(2) is to pay for new medical services and technologies for the first 2 to 3 years that a product comes on the market, during the period when the costs of the new technology are not yet fully reflected in the DRG weights. Generally, we use the FDA marketing authorization date as the indicator of the time when a technology begins to become available on the market and data reflecting the costs of the technology begin to become available for recalibration of the DRG weights. In specific circumstances, we have recognized a date later than the FDA marketing authorization date as the appropriate starting point for the 2- to 3-year newness period. For example, we have recognized a later date where an applicant could prove a delay in actual availability of a product after FDA approval or clearance. The costs of the new medical service or technology, once paid for by Medicare for this 2- to 3-year period, are accounted for in the MedPAR data that are used to recalibrate the DRG weights on an annual basis. Therefore, we stated it is appropriate to limit the add-on payment window for technologies that have passed this 2- to 3-year timeframe.
As discussed previously in this rule, our policy is that a medical service or technology may continue to be considered “new” for purposes of new technology add-on payments within 2 or 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology. Our practice has been to begin and end new technology add-on payments on the basis of a fiscal year, and we have generally followed a guideline that uses a 6-month window before and after the start of the fiscal year to determine whether to extend the new technology add-on payment for an additional fiscal year. In general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the fiscal year, that is, after April 1 (70 FR 47362).
We have not implemented a policy to stop new technology add-on payment in the middle of the fiscal year (for example, during the month that a technology reaches its three-year anniversary date of entry onto the U.S. market) because, as we discussed in the FY 2005 IPPS final rule, we believe that predictability is an important aspect of the prospective payment system
As previously discussed, in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958), we finalized that beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA marketing authorization request at the time of new technology add-on payment application submission and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. We also finalized that, beginning with FY 2025 applications, in order to be eligible for consideration for new technology add-on payment for the upcoming fiscal year, an applicant for new technology add-on payments must have received FDA approval or clearance by May 1 (rather than July 1) of the year prior to the beginning of the fiscal year for which the application is being considered (except for an application that is submitted under the alternative pathway for certain antimicrobial products).
As we summarized in the FY 2024 IPPS/LTCH PPS final rule, commenters raised concerns that this policy would adversely impact their ability to receive maximum flexibility with respect to when to apply to FDA and when they apply for new technology add-on payment (88 FR 58953). Many commenters expressed specific concerns regarding moving the FDA marketing authorization deadline to May 1 and the impact it would have on how long technologies may be eligible for new technology add-on payment. Several of the commenters asserted that this policy change would prevent a 3-year new technology add-on payment duration for almost all applicants, as only those technologies that receive FDA marketing authorization in April would be eligible for 3 years of new technology add-on payments, shortening the window from 3 months under the former policy (April 1 until July 1) to just 1 month (April 1 until May 1) (88 FR 58954). In response, we noted in that even under the former policy, not all applicants receive the full 3 years of new technology add on payments, and that there are many factors (including timing of interactions with the FDA and manufacturing readiness) that can delay a technology's approval by the FDA that would disrupt a technology's ability to receive the full 3 years of payment. However, we also noted the commenters' concerns regarding the shortened time period between April 1 and May 1 under the new policy and stated that we would consider for future rulemaking how we assess new technology add-on payment eligibility in the third year of newness, such as consideration of adjusting the April 1 cutoff to allow for a longer window of eligibility (88 FR 58955).
In the proposed rule (89 FR 36136 through 36137), after further consideration of commenters' concerns that the policy we finalized in the FY 2024 IPPS/LTCH PPS final rule may limit the ability of new technology add-on payment applicants to be eligible for a third year of new technology add-on payments due to the shortened timeframe between April 1 and May 1, we stated that we agreed that there may be merit to modifying our current 6-month guideline to provide additional flexibility for applications submitted in accordance with this new policy. While technologies that are FDA approved or cleared in April, and technologies with a documented delay in availability on the U.S. market such that the product's entry onto the U.S. market falls within the second half of the fiscal year, would still be eligible for a third year of new technology add-on payments under current policy, we agreed that the change in the FDA marketing authorization deadline from July 1 to May 1 may limit the ability of new technology add-on payment applicants to be eligible for 3 years of new technology add-on payments. Therefore, we proposed to change the April 1 cutoff for determining whether a technology would be within its 2- to 3-year newness period when considering eligibility for new technology add-on payments. We stated that we believed this proposed change would continue the flexibility applicants had with respect to when they apply to FDA and when they apply for new technology add-on payment, while preserving a predictable and consistent payment methodology for new technologies throughout the fiscal year.
Specifically, we proposed that beginning with new technology add-on payments for FY 2026, in assessing whether to continue the new technology add-on payments for those technologies that are first approved for new technology add-on payments in FY 2025 or a subsequent year, we would extend new technology add-on payments for an additional fiscal year when the 3-year anniversary date of the product's entry onto the U.S. market occurs on or after October 1 of that fiscal year. We proposed that this policy change would become effective beginning with those technologies that are initially approved for new technology add-on payments in FY 2025 or a subsequent year to allow additional flexibility for those applications for new technologies which were first subject to the change in the deadline for FDA marketing authorization from July 1 to May 1. Therefore, for technologies that were first approved for new technology add-on payments prior to FY 2025, including for technologies we determine to be substantially similar to those technologies, we stated we would continue to use the midpoint of the upcoming fiscal year (April 1) when determining whether a technology would still be considered “new” for purposes of new technology add-on payments. Similarly, we also proposed that beginning with applications for new technology add-on payments for FY 2026, we would use the start of the fiscal year (October 1) instead of April 1 to determine whether to approve new technology add-on payment for that fiscal year.
We sought public comment on our proposal to change the April 1 cutoff to October 1 for determining whether a technology would be within its 2- to 3-year newness period when considering eligibility for new technology add-on payments, beginning in FY 2026, effective for those technologies that are approved for new technology add-on payments starting in FY 2025 or a subsequent year.
Commenters stated that the policy would allow more innovative technologies to receive new technology add-on payment for a third year. Commenters further stated that this would help to incentivize new treatment options and ensure continued access to breakthrough and life-saving technologies for Medicare beneficiaries and their providers during the first years of product availability and with substantially reduced payment disincentives inherent in how IPPS payment rates are established. Commenters stated this would help more hospitals offer these technologies, which would improve the claims data for MS-DRG assignments and ensure appropriate MS-DRG recalibration following the new technology add-on payment period. Commenters were also supportive of the increased time for cost data collection, stating that it would be particularly helpful in accruing data for low-volume technologies and/or those with a significant delay between their newness date and the timeframe when claims began accumulating in the data.
Some commenters stated that this proposed policy would leave CMS with unreliable claims data for rate-setting at the expiration of new technology add-on payment because CMS uses MedPAR data from two years prior to the applicable fiscal year for ratesetting, and for services that use new technology with only 2 years of new technology add-on payment status, CMS is effectively relying on the first year of data to set rates for the first fiscal year following the end of new technology add-on payment status. Commenters stated that the first year of new technology add-on payment is typically when a technology is first coming to market and there are typically fewer claims reflecting use of the technology, especially for technologies that may not have received new technology add-on payment until a year or more after their FDA approval date, resulting in a small number of claims that may not be stable or reliable. Commenters stated that by granting all new technologies 3 years of new technology add-on payment status, CMS can ensure sufficient reliable claims data for ratesetting at the end of new technology add-on payment status, and that the applicable statute and regulations discuss newness in relation to the availability of claims data.
Some commenters believed that this and other proposals did not adequately address what they described as the consistent and severe underfunding of gene therapies and breakthrough drugs. A commenter stated that although this change would enable more products to qualify for add-on payments during the third year, it did not guarantee that these products would benefit from a full three years of new technology add-on payment. The commenter stated that the proposal narrowly addresses the issue of timing but fails to expand the overall eligibility window in a meaningful way that would support a greater number of innovative products.
A few commenters further stated that the proposal did not actually help the technologies impacted by the July 1 to May 1 FDA marketing authorization deadline change, as the only products for which this proposal would allow for an additional third year of new technology add-on payment are those products approved between October 1 and March 31. The commenters stated that products approved April 1 to May 1 were not affected by the change in the FDA approval deadline and would not be impacted by this proposal. The commenters stated that products approved May 2 to July 1 lost a third year of new technology add-on payment status when the July 1 to May 1 rule was finalized and would not gain back the third year of new technology add-on payment status under CMS's proposal because their FDA approval date occurs before October 1 of what would be the third fiscal year. The commenters also stated that products approved July 1 to October 1 would continue to remain ineligible for the third year of new technology add-on payment. Therefore, commenters stated that granting all new technologies three years of payment would rectify the problem for technologies approved between May 1 and July 1.
Some commenters also stated that the statute did not mention the FDA approval date, nor was there a statutory preclusion from granting all products a third year of payment. Another commenter asserted that CMS could statutorily grant three full years of new technology add-on payment status to new technologies based on the effective date of the ICD-10-PCS code that describes the service/technology, which could be set at October 1, the date that new technology add-on payment status begins, and that this approach was in line with how CMS makes passthrough payment under the OPPS. The commenter explained that FDA approvals can arbitrarily occur in the second half of the fiscal year, rather than in the first half of the following fiscal year, and that it is challenging to time FDA application submissions to try to get approval in the first half of the fiscal year, and that new therapeutic products approved between April 2 and September 30 face potentially slow uptake given the up to 17 months before new technology add-on payment adjustments would be effective.
As we stated in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58955), section 1886(d)(5)(K)(ii) of the Act establishes a period of not less than 2 years and not more than 3 years for the collection of data with respect to the costs of new services or technologies; a full 3 years is not required. As we had stated, consistent with the statute and our implementing regulations, a technology is no longer considered “new” once it is more than 2 to 3 years old, irrespective of how frequently the medical service or technology has been used in the Medicare population (70 FR 47349). As such, once a technology has been available on the U.S. market for more than 2 to 3 years, we consider the costs to be included in the MS-DRG relative weights regardless of whether the technology's use in the Medicare population has been frequent or infrequent. Therefore, we do not believe that 2 years' worth of data would be insufficient to inform rate-setting for the inpatient setting.
We also disagree that this proposed policy would leave CMS with unreliable claims data for ratesetting for technologies that would be on the market for a year or more before they could begin receiving new technology add-on payment and receive payment for at most two years based on their FDA marketing authorization dates. As described in the FY 2005 IPPS final rule (69 FR 49003), even if a technology does not receive new technology add-on payments, CMS continues to pay for new technologies through the regular payment mechanism established by the DRG payment methodology. In addition, the costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any eligible outlier payment is added to the DRG-adjusted base payment rate (88 FR 58648). We further note that whether a technology receives new technology add-on payments or not does not affect coverage of the technology or the ability for hospitals to provide a technology to patients where appropriate. Therefore, data reflecting the costs of a new technology begin to become available for recalibration of the DRG weights starting from when the technology became available on the U.S. market. As we previously stated, the newness period does not necessarily start with the approval date for the medical service or technology and does not necessarily start with the issuance of a distinct code. Instead, it begins with availability of the product on the market, which is when data become available (69 FR 49003).
Another commenter further stated that CMS should finalize this proposal such that technologies that received a second year of new technology add-on payment status in FY 2024, receive a third year of new technology add-on payment status in FY 2025; technologies that received their first year of new technology add-on payment status in FY 2024 would receive new technology add-on payment through FY 2026; and technologies first approved for new technology add-on payment in FY 2025 and future years are automatically eligible for three full years of new technology add-on payment. The commenter suggested that if CMS were to move forward with its current proposal, it should be effective for applicants that first receive new technology add-on payment starting in FY 2024, rather than FY 2025, as otherwise CMS would be relying on the FY 2024 claims data for rate-setting in FY 2026, and there may be a low number of claims with significant variability in reported charges resulting in less reliable ratesetting.
We have also stated that for technologies that do not have a unique ICD-10 code, while it may be impossible to identify when a particular product was used because there is no unique code to identify it amongst other products in the category, the product is nonetheless used and paid for. In addition, hospital charges reflect the services provided to patients receiving the new service or device whether or not a specific code is assigned. Therefore, data containing payments for these new technologies are already in our MedPAR database and when DRG recalibration occurs these costs are accounted for. Furthermore, assignment of new codes can occur for many reasons other than the introduction of new procedures and technologies. For example, new codes can simply reflect more refined and discriminating descriptions of existing procedures and technologies (69 FR 49003).
We also disagree that the newness period should start on the date of the first sale or at the first administration of a technology. As we previously noted, while CMS may consider a documented delay in a technology's availability on the U.S. market in determining when the newness period begins, under our historical policy, we do not consider how frequently the medical service or technology has been used in our determination of newness (70 FR 47349). Consistent with the statute, a technology no longer qualifies as new once it is more than 2 to 3 years old irrespective of how frequently it has been used in the Medicare population.
Therefore, after consideration of the comments received, and for the reasons discussed previously and in the FY 2025 IPPS/LTCH PPS proposed rule, we are finalizing our proposal that, beginning with new technology add-on payments for FY 2026, in assessing whether to continue the new technology add-on payments for those technologies that are first approved for new technology add-on payments in FY 2025 or a subsequent year, we will extend new technology add-on payments for an additional fiscal year when the 3-year anniversary date of the product's entry onto the U.S. market occurs on or after October 1 of that fiscal year. This policy change will become effective beginning with those technologies that are initially approved for new technology add-on payments in FY 2025 or a subsequent year. For technologies that were first approved for new technology add-on payments prior to FY 2025, including for technologies we determine to be substantially similar to those technologies, we will continue to use the midpoint of the upcoming fiscal year (April 1) when determining whether a technology would still be considered “new” for purposes of new technology add-on payments. Similarly, we are also finalizing that beginning with applications for new technology add-on payments for FY 2026, we will use the start of the fiscal year (October 1) instead of April 1 to determine whether to approve new technology add-on payment for that fiscal year.
As previously discussed, in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958), we finalized that beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA market authorization request at the time of new technology add-on payment application submission, and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. See § 412.87(e) and further discussion in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958).
As we discussed further in the FY 2024 IPPS/LTCH PPS final rule, the documentation of FDA acceptance or filing of a marketing authorization request must be provided at the time of new technology add-on payment application, and be consistent with the type of FDA marketing authorization the applicant has submitted to FDA. We stated that we only accept new technology add-on payment applications once FDA has received all of the information necessary to determine whether it will accept (such as in the case of a 510(k) premarket submission or De Novo Classification request) or file (such as in the case of a PMA, NDA, or BLA) the application as demonstrated by documentation of the acceptance/filing that is provided by FDA. The applicant is required to submit documentation with its new technology add-on payment application to demonstrate that FDA has determined that the application is sufficiently complete to allow for substantive review by the FDA (88 FR 58955).
We also explained that, for the purposes of new technology add-on payment applications, we consider an FDA marketing authorization application to be in an active status when it has not been withdrawn, is not the subject of a Complete Response Letter or final decision from FDA to refuse to approve the application, and is not on hold (88 FR 58955 through 58956).
We stated in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36137) that, as noted in the FY 2024 IPPS/LTCH PPS final rule, we collaborated with FDA in developing the terminology used for purposes of this policy, and the intent behind using the terms we did was to ensure that the requirement could apply to and be inclusive of the various FDA applications and approval pathways for different types of drugs and devices. We stated in the proposed rule that, as such, we did not use terms defined in statute or existing regulations or terms defined by FDA (88 FR 58955). We stated that while FDA may consider an application for an FDA marketing authorization to be under active review despite a hold status, under our current policy we do not consider marketing authorization applications in a hold with FDA to be in an active status for the purposes of new technology add-on payment application eligibility. As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58956) our intent with respect to considering applications that are on hold at the time of new technology add-on payment application submission to be inactive was to ensure that applicants are far enough along in the FDA review process that applicants would be able to reasonably provide sufficient information at the time of new technology add-on payment application submission for CMS to identify critical
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36137 through 36138), we stated that we also recognized that applications for FDA marketing authorization may go in and out of a hold status at various stages during the FDA application process and for various reasons. The maximum length of a hold status can vary based on the FDA approval pathway, such that the time remaining for an applicant to resolve the hold may vary from days to several months after the start of the new technology add-on payment application cycle, depending on the FDA pathway, reason(s) for the hold status, and how the timing of the hold coincides with the annual new technology add-on payment application submission date. Additionally, FDA may need to issue secondary letters of request for additional information, often depending on the quality of initial response from the applicant. Accordingly, we stated that while we continued to believe that an application that is in a hold status with FDA pending additional information may lack critical information that is needed to evaluate whether the technology meets the eligibility criteria, we also recognized the variability in the reasons for a hold and the varying lengths of time for which an application can be on hold with FDA, such that some applicants may be farther along in the process to obtain FDA marketing authorization at the time of the hold.
Further, we stated that after further consideration, based on the variability in the timing of and reasons underlying hold statuses with FDA, we believed it was appropriate to propose to update our policy. Specifically, we proposed, beginning with new technology add-on payment applications for FY 2026, to no longer consider a hold status to be an inactive status for the purposes of eligibility for the new technology add-on payment. We stated we would continue to consider an application to be in an inactive status where it is withdrawn, the subject of a Complete Response Letter, or the subject of a final decision from FDA to refuse to approve the application. Because of the variety of circumstances for which a technology may be in a hold, as previously discussed, we noted that we may reassess this policy for future years, if finalized, based on ongoing experience.
We invited public comments on our proposal to no longer consider a hold status to be an inactive status for the purposes of eligibility for new technology add-on payment, beginning with new technology add-on payment applications for FY 2026.
Several commenters suggested that CMS should instead provide an alternate deadline to provide the necessary information regarding FDA marketing authorization, such as within 60 days after application submission, the December supplemental information deadline, or no earlier than March 1, and that CMS should make these changes via notice and comment rulemaking.
Several commenters made additional requests from CMS, if CMS were to decide not to reverse the policy. A commenter requested that CMS provide an analysis of the impact of the FDA submission/authorization requirements on new technology add-on payment application volume, CMS workload, and the average time between marketing authorization and new technology add-
After consideration of the public comments we received, we are finalizing our proposal that, beginning with new technology add-on payment applications for FY 2026, we will no longer consider an FDA hold to be an inactive status for the purposes of eligibility for the new technology add-on payment for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application. As previously noted, because of the variety of circumstances for which a technology may be on hold, we may reassess this policy for future years based on ongoing experience.
As discussed previously in this section, section 1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or technology may be considered for a new technology add-on payment if, based on the estimated costs incurred with respect to discharges involving such service or technology, the DRG prospective payment rate otherwise applicable to such discharges under this subsection is inadequate. Under our current policy, as set forth in § 412.88(b)(2), unless the discharge qualifies for an outlier payment, the additional Medicare payment will be limited to the full MS-DRG payment plus 65 percent (or 75 percent for a medical product designated by the FDA as a Qualified Infectious Disease Product [QIDP] or approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs [LPAD]) of the estimated costs of the new technology or medical service.
Since establishing the new technology add-on payment, we have been cautious about increasing the new technology add-on payment percentage. As stated in the May 4, 2001 proposed rule (66 FR 22695), we believe limiting the new technology add-on payment percentage would provide hospitals an incentive for continued cost-effective behavior in relation to the overall costs of the case. In the FY 2020 IPPS/LTCH PPS final rule, in adopting the general increase in the new technology add-on payment percentage from 50 percent to 65 percent, we stated that we believed that 65 percent would be an incremental increase that would reasonably balance the need to maintain the incentives inherent to the prospective payment system while also encouraging the development and use of new
In the FY 2020 IPPS/LTCH PPS final rule, we also finalized an increase in the new technology add-on payment percentage for QIDPs from 65 percent to 75 percent. We stated that we shared commenters' concerns related to antimicrobial resistance and its serious impact on Medicare beneficiaries and public health overall. We noted that the Centers for Disease Control and Prevention (CDC) described antimicrobial resistance as “one of the biggest public health challenges of our time.” We stated that we believe that Medicare beneficiaries may be disproportionately impacted by antimicrobial resistance due in large part to the unique vulnerability to drug-resistant infections (for example, due to age-related and/or disease-related immunosuppression, greater pathogen exposure via catheter use) among individuals aged 65 or older. We further stated that antimicrobial resistance results in a substantial number of additional hospital days for Medicare beneficiaries, resulting in significant unnecessary health care expenditures.
To address the continued issues related to antimicrobial resistance resulting in a substantial number of increased hospital days and significant unnecessary health care expenditures for Medicare beneficiaries, in the FY 2021 IPPS/LTCH PPS final rule, we finalized a proposal to expand the alternative new technology add-on payment pathway for QIDPs to include products approved under the LPAD pathway and to increase the maximum new technology add-on payment percentage for a product approved under FDA's LPAD pathway, from 65 percent to 75 percent, consistent with the new technology add-on payment percentage for a product that is designated by FDA as a QIDP, beginning with discharges occurring on or after October 1, 2020 (85 FR 58739).
In the proposed rule (89 FR 36138 through 36139), we stated that since finalizing our current policy for QIDPs and LPADs, we continued to receive feedback from interested parties regarding the adequacy of new technology add-on payments for certain categories of technologies, including cell and gene therapies to treat sickle cell disease (SCD). We stated that although we still believe it is prudent to proceed cautiously with increasing the new technology add-on payment percentage, we recognize that SCD, the most common inherited blood disorder, has historically had limited treatment options. In addition, hospitalizations and other health episodes related to SCD cost the health system $3 billion per year.
Accordingly, we stated that we believe that further facilitating access to these gene therapies for Medicare beneficiaries with SCD may have the potential to simultaneously improve the health of impacted Medicare beneficiaries and potentially lead to long-term savings in the Medicare program. We also noted that some gene therapies that treat SCD are among the costliest treatments to date, and we were concerned about a hospital's ability to sustain a potential financial loss to provide access to such treatments. As we discussed when we increased the new technology add-on payment for QIDPs in the FY 2020 IPPS/LTCH PPS final rule and products approved under FDA's LPAD in the FY 2021 IPPS/LTCH PPS final rule from 65 percent to 75 percent, we stated that we believe that it may be appropriate to increase the maximum add-on amount in limited cases where the current new technology add-on payment does not provide a sufficient incentive for the use of a new technology, which we believed may be the case for gene therapies that treat SCD. Accordingly, and consistent with our new technology add-on payment policy for products designated by the FDA as a QIDP or LPAD, we stated that we believe there would be merit in also increasing the new technology add-on payment percentage for gene therapies that are indicated and used for the treatment of SCD to 75 percent.
Therefore, we proposed that, subject to our review of the new technology add-on payment eligibility criteria, for certain gene therapies approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule for the treatment of SCD, effective with discharges on or after October 1, 2024 and concluding at the end of the 2- to 3-year newness period for such therapy, if the costs of a discharge (determined by applying CCRs as described in § 412.84(h)) involving the use of such therapy for the treatment of SCD exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare would make an add-on payment equal to the lesser of: (1) 75 percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment. We stated that, if finalized, these payment amounts would only apply to any gene therapy indicated and used specifically for the treatment of SCD that CMS determines in the FY 2025 IPPS/LTCH PPS final rule meets the criteria for approval for new technology add-on payment. We also proposed to add new § 412.88(a)(2)(ii)(C) and § 412.88(b)(2)(iv) to reflect this proposed change to the calculation of the new technology add-on payment amount, beginning in FY 2025 and concluding at the end of the 2- to 3-year newness period for each such therapy. With this incremental increase, we stated that we believe hospitals would continue to have an incentive to balance the desirability of using the new technology for patients as medically appropriate while also maintaining an incentive for continued cost-effective behavior in relation to the overall costs of the case.
We invited public comments on this proposal to temporarily increase the new technology add-on payment percentage to 75 percent for a gene therapy that is indicated and used for the treatment of SCD as described previously. We also sought comment on whether we should make this proposed 75 percent add-on payment percentage available only to applicants that meet certain additional criteria, such as attesting to offering and/or participating in outcome-based pricing arrangements with purchasers (without regard to whether the specific purchaser availed itself of the outcome-based arrangements), or otherwise engaging in behaviors that promote access to these therapies at lower cost.
Most of the commenters supporting the policy stated that they believed CMS should finalize as proposed, and also requested that CMS extend the policy further in various ways, while some stated they would support the proposal with varied modifications. Many of the commenters requested that CMS expand or modify the proposal to increase the add-on percentage to other therapies in addition to gene therapies treating SCD, stating that increasing the percentage allows for hospital adoption of groundbreaking therapies and advances the new technology add-on payment program's objective for expanding patient access to innovative new technologies. A commenter stated that while the focus on SCD is commendable, the narrow application of the proposal to specific therapies, and potentially only those engaged in value-based purchasing agreements, indicates a limited scope of financial support.
A few of the commenters recommended that all technologies that meet the new technology add-on payment eligibility criteria should receive 75 percent. A commenter stated that hospitals find the current 65 percent add-on payment insufficient to cover the costs of using new technologies, and that 75 percent would mitigate losses and encourage adoption of new technologies. The commenter further stated that an analysis demonstrated that hospitals receive millions in outlier payments on the same cases that receive new technology add-on payment payments, highlighting how inadequate the new technology add-on payment is. Another commenter stated that a consistent payment percentage for all therapies would eliminate inequity for manufacturers, improve transparency, and reduce payment confusion for hospitals. One of these commenters stated that this piecemeal approach (that is, highlighting one group of technologies for a higher payment percentage) fails to recognize the financial difficulties that hospitals face in adopting other innovative technologies not yet reflected in Medicare rates. Other commenters believed that by having a higher payment percentage for select groups of technologies (such as SCD therapies or QIDP/LPADs), CMS is making a value judgement that these therapies are more valuable than other qualifying technologies or medical conditions, and that this is beyond the purview of CMS and not the intent of the new technology add-on payment program. The commenters stated that while each technology has varying levels of impact on the Medicare population, once CMS has established that a technology meets the new technology add-on payment criteria, all drugs and devices should be treated equally. A few commenters also requested that CMS provide details regarding any criteria that CMS uses to determine which categories of technologies warrant increased payment levels, as well as the appropriate payment level for each class of technologies via rulemaking to allow for stakeholder input. A commenter further requested that as an alternative to raising the payment percentage to 75 percent for all technologies, CMS should, at a minimum, establish a process and criteria by which manufacturers can request an enhanced new technology add-on payment percentage. The commenter stated that it is difficult to discern a clear and consistent set of criteria that were used to determine which technologies should receive enhanced payment from discussions of these decisions in the
A few commenters requested that CMS extend the 75 percent to therapies with regenerative medicine advanced therapy (RMAT) or Breakthrough Therapy designations; to those targeting rare diseases, unmet needs, or vulnerable groups; or to other transformative therapies that Medicare beneficiaries may have difficulty accessing. Some commenters requested that CMS extend an increased new technology add-on payment percentage to align with other Administration priorities, such as hospital preterm deliveries, very low birth weight babies, other critically ill pediatric patients, and maternal health technologies. A commenter requested that CMS extend the increased maximum percentage to transformative therapies as opportunities arise, and that CMS monitor when additional increases higher than 75 percent are warranted.
Some of the commenters stated that all cell and gene therapies should receive the increase to 75 percent, stating that CMS's stated reasons for the proposal apply to these therapies as well, and that cell and gene therapies may pose similar beneficiary access challenges based on inadequate payment. Commenters cited as their rationales that these therapies are generally treating small patient populations, rare disease, certain cancers, underserved populations, and/or orphan indications with significant unmet medical need. A commenter explained that cell and gene therapies often require complex manufacturing processes, specialized infrastructure, and intensive monitoring, and that these costs are embedded in the cost of these products, making them more costly. The commenter added that these therapies often have no historical claims data to characterize resource use associated with the inpatient admissions since patients may not even have been admitted previously due to a lack of treatment options (as compared to other types of new technology add-on payment technologies that represent improvements on or alternatives to existing treatments), and that therefore new technology add-on payment is needed to compensate for the absence of any costs from the rate setting methodology. Another commenter added that cell and gene therapies cause a significant strain on hospital financial resources; even with a new technology add-on payment, these therapies are more likely than other inpatient stays to qualify for outlier payments. A commenter stated that there is a need to incentivize newly approved high-cost, high-reward cellular and gene therapies through new technology add-on payment as there continues to be insufficient inpatient reimbursement for autologous cellular therapies, like CAR T-cell therapies. Commenters stated that inpatient stays with cell and gene therapies are inadequately paid, even with new technology add-on payments, which could dissuade hospitals from providing these therapies. A commenter specified further that particularly cell and gene therapies that treat other inherited, debilitating, and under-treated conditions like hemophilia and Duchenne muscular dystrophy (DMD)
Several commenters requested that CMS expand its proposal to include transfusion-dependent beta thalassemia (TDT). Commenters questioned why this proposal from CMS only applied to gene therapies for SCD and did not include FDA-approved gene therapies for TDT, which have the same public policy, pricing, and access concerns as SCD, and also have no curative alternatives. A commenter further stated that like SCD, historical treatment options for TDT also carry numerous limitations resulting in significantly under-served patient populations. The commenter also stated that extending enhanced new technology add-on payment to gene therapies used for TDT would be likely to have a minimal impact to the IPPS from a budget neutrality perspective because there was only an estimated 1,000 to 1,500 individuals in the U.S. living with TDT, with a far smaller proportion of Medicare-eligible individuals.
With regard to commenters requesting that the proposal include different groups of therapies or those with particular designations, or all therapies approved for new technology add-on payment, we recognize that the goal of facilitating access to new technologies for Medicare beneficiaries could also apply to other types of therapies. However, as discussed in the proposed rule (89 FR 36138), we focused our proposal on gene therapies for Medicare beneficiaries with SCD, as the most common inherited blood disorder, with historically limited treatment options and a significant clinical and financial impact on the healthcare system, and consistent with the Administration's commitment to improving outcomes for patients with SCD by facilitating access to gene therapies that treat SCD. We appreciate commenters' interest in improving access to these and other technologies through the new technology add-on payment program, and will continue to consider the interest areas raised by commenters.
With respect to comments that stated hospitals receive millions in outlier payments on the same cases that receive new technology add-on payment payments, highlighting how inadequate the new technology add-on payment is, and that even with a new technology add-on payment, cell and gene therapies are more likely than other inpatient stays to qualify for outlier payments, we disagree that the existence of outlier payments for some new technology cases is evidence that those payments are necessarily inadequate, as there may be unrelated reasons why a hospital would receive outlier payments. There may also be circumstances where new technology payments and outlier payments work in a complementary manner for related reasons, that do not necessarily mean the appropriate policy is to increase new technology payments.
A commenter shared data modeling simulating potential payment scenarios to demonstrate the impact of the current methodology to hospitals and the impact of potential new technology add-on payment percentage amounts at 65 percent, 75 percent, 85 percent and 100
A commenter stated that CMS had the statutory authority to provide for additional payment beyond the proposed 75 percent. The commenter stated that for SCD gene therapy, CMS's new technology add-on payment mechanism fails to “adequately reflect[ ] the estimated average cost of such service or technology” as required by the applicable statute, and that payment based on a portion of charges reduced to costs under section 412.88 would result in significant financial losses for providers. Therefore, the commenter recommended that CMS temporarily adopt a 100 percent cost-based reimbursement methodology for SCD gene therapy and/or take other measures to ensure that the payment methodology fully recognizes the estimated average cost of the care.
Another commenter stated that anything short of 100 percent reimbursement of acquisition costs would be inadequate for cell and gene therapies while eligible for new technology add-on payment. The commenter stated that increasing the payment to the full cost amount would ensure health equity and access. Another commenter suggested that CMS fully cover the costs of SCD gene therapy either by increasing the payment rate or through another innovative approach such as developing a new DRG with a higher base payment. A commenter also suggested that as an alternative to 100 percent payment, CMS should negotiate drug prices directly with drug manufacturers, or alternative pathways to support coverage and access. Another commenter advocated for a policy solution that would ensure providers recoup at least the invoice cost of high-cost therapies such as Casgevy
A few commenters requested that CMS instead increase the marginal payment rate (which we understand to refer to the maximum new technology add-on payment percentage) to at least 80 percent to better account for the high costs of these therapies and to address the lack of significant payment proposals related to these therapies. A commenter who requested a marginal payment rate of 100 percent stated that a marginal cost factor of less than 100 percent encourages efficient selection of alternative existing treatments for a condition, but for this particular set of patients there is no alternative treatment that is equal to an effective cure. The commenter further stated that an argument for the efficient selection of alternative treatments for these patients is an argument for early adoption of advanced curative services.
A few commenters who requested expansion of the proposal to additional therapies or a further increase in the payment percentage also commented on the short-term nature of the proposal, noting that there is no opportunity for other future new technology add-on payment-approved therapies to receive the increased percentage. The commenters requested that CMS make any changes permanent rather than limiting it to therapies approved for new technology add-on payment for FY 2025.
With regard to the comments requesting an increase to the new technology add-on payment percentage above the proposed rate of 75 percent, we acknowledge that SCD gene therapies are among the costliest therapies to date and there may be significant related costs associated with inpatient stays during which the therapies are provided. We also recognize that new technology add-on payment would not fully cover a hospital's costs, even with a 100 percent payment rate, due to the inherent design of the IPPS. At the same time, we note that we remain concerned about the extremely high cost of these products, and want to ensure we do not create incentives to increase prices. We continue to believe that limiting the new technology add-on payment percentage provides hospitals an incentive for continued cost-effective behavior in relation to the overall costs of the case. In response to commenters requesting a new technology add-on payment percentage of 100 percent, we believe that this would result in very little of the incentive for cost-effective behavior inherent to the prospective payment system. While we continue to believe that our standard add-on payment percentage is generally appropriate, due to the particular concerns related to SCD gene therapies previously discussed and confirmed by comments and consistent with the Administration's commitment to improving outcomes for patients with SCD by facilitating access to gene therapies that treat SCD, at this time we believe it is appropriate to apply a higher new technology add-on payment of 75 percent for SCD gene therapies approved for new technology add-on payment for FY 2025 during their new technology add-on payment period. We believe that the proposed 75 percent payment rate would reasonably address these concerns while also maintaining the incentives inherent to the prospective payment system, and it is consistent with our new technology add-on payment policy for QIDPs and LPADs. For these reasons, we are finalizing the increase in the new technology add-on payment percentage for cell and gene therapies that treat SCD as proposed.
With respect to commenters' other requested changes to our current payment mechanisms, due to the relative newness of these gene therapies for SCD and our continued consideration of approaches and authorities to encourage value-based care and lower prices of costly
A commenter stated that CMS did not discuss its evaluation of any other solutions for improving the overall MS-DRG payment system, nor propose any other solutions for gene therapies, despite stakeholders having provided many ideas in the past. The commenter stated that CMS risked creating a two-tier system by fostering innovation for Medicaid patients via the CMS Innovation Center's new CGT Access Model, while offering no solutions for traditional Medicare FFS or Medicaid-Medicare dual-eligible patients with SCD or TDT, and did not view the proposal to be in harmony with the attention and effort being put into the CMS Innovation Center model. The commenter also asserted that the new technology add-on payment increase that CMS proposed does not address the series of compounding losses for hospitals that wish to provide these therapies: a low base MS-DRG payment rate, an inadequate new technology add-on payment percentage, the highest-ever fixed-loss threshold, and recovery of only 80 percent of remaining calculated costs through the outlier formula, which it stated directly obstruct Medicare patients' access to gene therapies. The commenter requested that CMS reimburse hospitals for 100 percent of their product acquisition costs related to gene therapies for SCD and TDT, potentially using CMS's adjustment authority under section 1886(d)(5)(I) of the Act. The commenter stated that this request could be operationalized by requiring hospitals to use value code 90 to report the product acquisition cost, providing payment at 100 percent of the reported product cost, and remove the charges reported in revenue code 0892 when calculating total case payment in determining whether an outlier payment is warranted. The commenter explained that hospitals would still be incentivized to provide cost-effective care, as the MS-DRG payment and outlier calculations would still be applicable to the clinical care portion of the claim. The commenter also expressed concern that charge
Some commenters stated that, while they were supportive of the proposed increase in payment for SCD gene therapies, they were concerned that the change would not adequately address gaps in payment or access issues for these therapies. A commenter stated that the SCD gene therapies map to DRGs that have base rates far below the costs of these products, and that reimbursement only covers a minimal portion of the drug cost and no provider and facility costs for the 30-days of inpatient care.
Multiple commenters also discussed similar concerns generally with new technology add-on payment methodology and in particular for costly therapies. They referenced the practice of “charge compression” due to CCRs and the way that the add-on payment amount is calculated as the “lesser of” two different values, which they stated results in hospitals incurring at least 35 percent of the new technology costs even with the new technology add-on payment (based on a 65 percent maximum add-on payment). Another commenter also suggested that CMS should eliminate the “lesser of” new technology add-on payment methodology for gene therapies targeting SCD and other technologies, which it stated required hospitals to artificially inflate their charges to obtain appropriate reimbursement.
We continue to believe that changing the “lesser of” methodology, using the acquisition costs, or otherwise further increasing the add-on payment percentage would remove consideration of the costs of new technology from treatment decisions, and that it is important to maintain some incentive to weigh the costs of new technology in making clinical decisions. Similar to our discussion in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42299), we believe that paying hospitals for 100 percent of their product acquisition costs related to gene therapies would result in very little of the incentives inherent to the prospective payment system.
We also disagree with the commenter that this proposal, or other suggestions offered by other commenters, would have a limited total fiscal impact to CMS because of the limited number of treatments that will happen in the next few years and the small percentage of applicable Medicare beneficiaries. With regard to the commenter's statement regarding a pool of new technology add-on payment dollars that are allocated, we note that CMS does not allocate dollars to new technology add-on payments. We note that the citation provided by the commenter indicated that when implementing the new technology add-on payment in the September 7, 2001 final rule (66 FR 46902), CMS set a target limit for these payments at 1 percent of total operating prospective payments. However, the new mechanism was initially required to be implemented in a budget neutral manner, and as we had noted at that time, this limit was set to address CMS's concern that new technology add-on payments should not result in inappropriately large redistributions of payments from hospitals that do not employ new technology to those that do (66 FR 46920). In the FY 2005 IPPS final rule, we provided an update, that as a result of the enactment of section 503(d) of Public Law 108-173, we will no longer include the impact of additional payments for new medical services and technologies in the budget neutrality factor (69 FR 49084). Due to the high cost of these gene therapy technologies, and because the total number of patients that will receive these treatments and the amount of new technology add-on payments associated with care of these patients in the future is unknown, it is unclear to us that the fiscal impact to CMS would be limited. We also note that because new technology add-on payments are not administered in a budget neutral manner, by default, they have the potential to result in increases to Medicare spending that are unpredictable and beyond our control, which is why we have remained
A commenter voiced concerns over the rise of high-cost therapies generally and CMS's ability to appropriately account for their costs when determining payments to hospitals and health systems, urging CMS to examine the adequacy of its payments to hospitals. The commenter noted that many of these therapies' prices are beyond what would have been predicted when the inpatient PPS system was designed, and they are therefore adding to the existing and rising challenge of paying for a massive increase in high-cost therapies and technologies in health care.
Therefore, after consideration of the public comments received, for the reasons discussed previously and in the FY 2025 IPPS/LTCH PPS proposed rule, we are finalizing our policy as proposed. We are finalizing that for certain gene therapies approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule that are indicated and used specifically for the treatment of SCD, effective with discharges on or after October 1, 2024 and concluding at the end of the 2- to 3-year newness period for such therapy, if the costs of a discharge (determined by applying CCRs as described in § 412.84(h)) involving the use of such therapy for the treatment of SCD exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 75 percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment. We note that these payment amounts would only apply to Casgevy
Section 1886(d)(3)(E) of the Act requires that, as part of the methodology for determining prospective payments to hospitals, the Secretary adjust the standardized amounts for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level. We currently define hospital labor market areas based on the delineations of statistical areas established by the Office of Management and Budget (OMB). A discussion of the FY 2025 hospital wage index based on the statistical areas appears under section III.B. of the preamble of this final rule.
Section 1886(d)(3)(E) of the Act requires the Secretary to update the wage index annually and to base the update on a survey of wages and wage-related costs of short-term, acute care hospitals. CMS collects these data on the Medicare cost report, CMS Form 2552-10, Worksheet S-3, Parts II, III, IV. The OMB control number for this information collection request is 0938-0050, which expires on September 30, 2025. Section 1886(d)(3)(E) of the Act also requires that any updates or adjustments to the wage index be made in a manner that ensures that aggregate payments to hospitals are not affected by the change in the wage index. The adjustment for FY 2025 is discussed in section II.B. of the Addendum to this final rule.
As discussed in section III.I. of the preamble of this final rule, we also take into account the geographic reclassification of hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating IPPS payment amounts. Under section 1886(d)(8)(D) of the Act, the Secretary is required to adjust the standardized amounts so as to ensure that aggregate payments under the IPPS after implementation of the provisions of sections 1886(d)(8)(B), 1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate prospective payments that would have been made absent these provisions. The budget neutrality adjustment for FY 2025 is discussed in section II.A.4.b. of the Addendum to this final rule.
Section 1886(d)(3)(E) of the Act also provides for the collection of data every 3 years on the occupational mix of employees for short-term, acute care
The wage index is calculated and assigned to hospitals on the basis of the labor market area in which the hospital is located. Under section 1886(d)(3)(E) of the Act, beginning with FY 2005 (69 FR 49026 through 49032), we delineate hospital labor market areas based on OMB-established Core-Based Statistical Areas (CBSAs). The current statistical areas (which were implemented beginning with FY 2021) are based on revised OMB delineations issued on Sept 14, 2018, in OMB Bulletin No. 18-04.
Historically, OMB issued major revisions to statistical areas every 10 years, based on the results of the decennial census, and occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses through OMB Bulletins. On February 28, 2013, OMB issued Bulletin No. 13-01. CMS adopted these delineations, based on the results of the 2010 census, effective beginning with the FY 2015 IPPS wage index (79 FR 49951 through 49957). OMB subsequently issued Bulletin No. 15-01 on July 15, 2015, followed by OMB Bulletin No. 17-01 on August 15, 2017, which provided updates to and superseded OMB Bulletin No. 15-01. The attachments to OMB Bulletin No. 17-01 provided detailed information on the update to statistical areas since July 15, 2015, and were 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 the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41363), we adopted the updates set forth in OMB Bulletin No. 17-01 effective October 1, 2018, beginning with the FY 2019 wage index. OMB Bulletin No. 17-01 was superseded by the April 10, 2018, OMB Bulletin No. 18-03, and then by the September 14, 2018, OMB Bulletin No. 18-04. These bulletins established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. In FY 2021, we adopted the updates set forth in OMB Bulletin No. 18-04 (85 FR 58743 through 58753). Thus, most recently in the FY 2024 IPPS/LTCH PPS final rule, we continued to use the OMB delineations that were adopted beginning with FY 2015 (based on the revised delineations issued in OMB Bulletin No. 13-01) to calculate the area wage indexes, with updates as reflected in OMB Bulletin Nos. 15-01, 17-01, and 18-04.
In the July 16, 2021,
We believe that using the revised delineations based on OMB Bulletin No. 23-01 will increase the integrity of the IPPS wage index by creating a more accurate representation of current geographic variations in wage levels. Therefore, we proposed to implement the revised OMB delineations as described in the July 21, 2023, OMB Bulletin No. 23-01, beginning with the FY 2025 IPPS wage index. We proposed to use these revised delineations to calculate area wage indexes in a manner that is generally consistent with the CMS' implementation of CBSA-based wage index methodologies.
CMS has recognized that hospitals in certain areas may experience a negative impact on their IPPS payment due to the proposed adoption of the revised OMB delineations, and has finalized transition policies to mitigate negative financial impacts and provide stability to year-to-year wage index variations. We refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49956 through 49962) for discussion of the transition period finalized the last time CMS adopted revised OMB delineations after a decennial census, and to the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018) for discussion of wage index transition policies that we finalized for FYs 2020, 2021, and 2022 to apply a 5 percent cap on any decrease in a hospital's final wage index from the prior fiscal year. Beginning with FY 2023, we finalized and codified at 42 CFR 412.64(h)(7) a permanent policy to apply a 5 percent cap on any decrease to a hospital's wage index from its wage index in the prior FY, regardless of the circumstances causing the decline (87 FR 49018-49020). This 5 percent cap policy is discussed in further detail in section III.G.6 of the preamble of this final rule. We believe it is important for the IPPS to use the updated labor market area delineations to maintain a more accurate and up-to-date payment system that reflects the reality of current labor market conditions. We believe the 5 percent cap policy will sufficiently mitigate any potential significant disruptive financial impacts on hospitals that are negatively affected by the proposed adoption of the revised OMB delineations and thus, we did not propose a transition period for these hospitals.
For the reasons described in this section, we are finalizing the use of the revised labor market area delineations based on OMB Bulletin No. 23-01 beginning with the FY 2025 IPPS hospital wage index as proposed.
The OMB “2020 Standards” define a “Micropolitan Statistical Area” as being associated with at least one urban area that has a population of at least 10,000, but less than 50,000. A Micropolitan Statistical Area comprises the central county or counties containing the core, plus adjacent outlying counties having a high degree of social and economic integration with the central county or counties as measured through commuting (86 FR 37778). We refer to these areas as Micropolitan Areas. Since FY 2005, we have treated Micropolitan Areas as rural and included hospitals located in Micropolitan Areas in each State's rural wage index. We refer
According to OMB's “2020 Standards” (86 FR 37776), a metropolitan division is a county or group of counties within a metropolitan statistical area (MSA) with a population of at least 2.5 million. Thus, MSAs may be subdivided into metropolitan divisions. A county qualifies as a “main county” of a metropolitan division if 65 percent or more of workers living in the county also work within the county and the ratio of the number of workers working in the county to the number of workers living in the county is at least 0.75. A county qualifies as a “secondary county” if 50 percent or more, but less than 65 percent, of workers living in the county also work within the county and the ratio of the number of workers working in the county to the number of workers living in the county is at least 0.75. After all the main and secondary counties are identified and grouped, each additional county that already has qualified for inclusion in the MSA falls within the metropolitan division associated with the main/secondary county or counties with which the county at issue has the highest employment interchange measure. Counties in a metropolitan division must be contiguous. In the FY 2005 IPPS final rule (69 FR 49029), CMS finalized our policy to use the metropolitan divisions where applicable under the CBSA definitions. CMS concluded that including the metropolitan divisions in the CBSA definitions most closely approximated the labor market delineation from the “Primary Metropolitan Statistical Areas” delineations in place prior to FY 2005.
Under the current delineations, 11 MSAs are subdivided into a total of 31 metropolitan divisions. The revised OMB delineations have subdivided two additional existing MSAs into metropolitan divisions relative to the previous delineations, resulting in 13 MSAs (the 11 currently subdivided MSAs plus two additional MSAs) that are subdivided into 37 metropolitan divisions. Since the configurations of most subdivided MSAs remain substantially similar in the revised delineations compared to those used for the wage index in FY 2024, to maintain continuity and predictability in labor market delineations, we proposed to continue our policy to include metropolitan divisions as separate CBSAs for wage index purposes.
In a June 6, 2022, Notice (87 FR 34235 through 34240), the Census Bureau announced that it was implementing the State of Connecticut's request to replace the 8 counties in the State with 9 new “Planning Regions.” Planning regions now serve as county-equivalents within the CBSA system. OMB Bulletin No. 23-01 is the first set of revised delineations that referenced the new county-equivalents for Connecticut. We have evaluated the change in hospital assignments for Connecticut hospitals and proposed to adopt the planning regions as county equivalents for wage index purposes. As all forthcoming county-based delineation data will utilize these new county-equivalent definitions for Connecticut, we believe it is necessary to adopt this migration from counties to planning region county-equivalents to maintain consistency with OMB Bulletin No. 23-01 and future OMB updates. We are providing the following crosswalk for each hospital in Connecticut with the current and proposed Federal Information Processing Standard (FIPS) county and county-equivalent codes and CBSA assignments.
We note that we proposed that a remote location of a multicampus hospital currently indicated with 07B033 would be located in the same
We also note, as discussed in Section III.B.3 of the preamble of this final rule, we proposed to add both of the newly proposed rural planning regions in Connecticut to the list of “Lugar” counties.
As previously discussed, we proposed to implement the revised OMB statistical area delineations (based upon OMB Bulletin No. 23-01) beginning in FY 2025. Our analysis shows that a total of 53 counties (and county equivalents) and 33 hospitals that were once considered part of an urban CBSA would be considered to be located in a rural area, beginning in FY 2025, under these revised OMB delineations. The following chart lists the 53 urban counties that will become rural under the revised OMB delineations. We note that there are four cases (CBSA 14100 [Bloomsburg-Berwick, PA], CBSA 19180 [Danville, IL], CBSA 20700 [East Stroudsburg, PA], and CBSA 35100 [New Bern, NC]) where all constituent counties in an urban CBSA become rural under the revised OMB delineations.
We proposed that the wage data for all hospitals located in the counties listed in the chart above would now be considered when calculating their
We also proposed revisions to the list of counties deemed urban under section 1886(d)(8)(B) of the Act, which would affect a number of the hospitals located in these proposed rural counties. We note that we proposed to add 17 of the 53 counties listed above to the list of “Lugar” counties whose hospitals, pursuant to section 1886(d)(8)(B), are deemed to be in an urban area. We refer readers to section III.F.4.b for further discussion.
In addition, we note the provisions of § 412.102 of our regulations continue to apply with respect to determining DSH payments. Specifically, in the first year after a hospital loses urban status, the hospital will receive an adjustment to its DSH payment that equals two-thirds of the difference between the urban DSH payments applicable to the hospital before its redesignation from urban to rural and the rural DSH payments applicable to the hospital subsequent to its redesignation from urban to rural. In the second year after a hospital loses urban status, the hospital will receive an adjustment to its DSH payment that equals one third of the difference between the urban DSH payments applicable to the hospital before its redesignation from urban to rural and the rural DSH payments applicable to the hospital subsequent to its redesignation from urban to rural.
As previously discussed, we proposed to implement the revised OMB statistical area delineations (based upon OMB Bulletin No. 23-01) beginning in FY 2025. Analysis of these OMB statistical area delineations shows that a total of 54 counties (and county equivalents) and 24 hospitals that were located in rural areas would be located in urban areas under the revised OMB delineations. The following chart lists the 54 rural counties that will be urban under the revised OMB delineations.
We proposed that when calculating the area wage index, the wage data for hospitals located in these counties would be included in their new respective urban CBSAs. We also note that due to the proposed adoption of the revised OMB delineations, some CAHs that were previously located in rural areas may be located in urban areas. The regulations at §§ 412.103(a)(6) and 485.610(b)(5) provide affected CAHs with a two-year transition period that begins from the date the redesignation becomes effective. The affected CAHs must reclassify as rural during this transition period to retain their CAH status after the two-year transition period ends. We refer readers to the FY 2015 IPPS/LTCH final rule (79 FR 50162 through 50163) for further discussion of the two-year transition period for CAHs. We also note that special statuses limited to hospitals located in rural areas (such as MDH or SCH status) may be terminated if hospitals are located in proposed urban counties. In these cases, affected hospitals should apply for rural reclassification status under § 412.103 prior to October 1, 2024, to ensure no disruption in status.
In addition to rural counties becoming urban and urban counties becoming rural, some urban counties shift from one urban CBSA to a new or existing urban CBSA under the new OMB delineations.
In some cases, the change in CBSA extends only to a change in name. Revised CBSA names can be found in Table 3 of the addendum of the final rule. In other cases, the CBSA number also changes. For these CBSAs, the list of constituent urban counties in FY 2024 and FY 2025 is the same (except in instances where an urban county became rural, or a rural county became urban, as discussed in the previous section). The following table lists the CBSAs where, under the new delineations, the CBSA name and number change but the constituent counties do not change (not including instances where an urban county became rural, or a rural county became urban).
In some cases, all of the urban counties from a FY 2024 CBSA have moved and been subsumed by another CBSA in FY 2025. The following table lists the CBSAs that, under the new delineations, are subsumed by an another CBSA.
In other cases, some counties shift between existing and new CBSAs, changing the constituent makeup of the CBSAs. For example, Calvert County, MD moved from the current CBSA 12580 (Washington-Arlington-Alexandria, DC-VA-MD-WV) into proposed CBSA 30500 (Lexington Park, MD). The other constituent counties of CBSA 12580 are split into urban CBSAs 47664 (Washington, DC-MD) and 11694 (Arlington-Alexandria-Reston, VA-WV). The following chart lists the urban counties that split off from one urban CBSA and move to a newly proposed or modified urban CBSA under the revised OMB delineations.
For hospitals located in these counties that move from one CBSA to another under the revised OMB delineations, there may be impacts, both negative and positive, upon their specific wage index values. We refer readers to section III.F.3.b.. of the preamble of this final rule for discussion of our proposals to address the assignment of MGCRB wage index reclassifications for hospitals currently reclassified to these modified CBSAs.
• use all-employer, occupation-level wage data with different occupation weights for the wage index of each provider type;
• reflect local area level differences in wages between and within metropolitan statistical areas and statewide rural areas; and
• smooth wage index differences across adjacent local areas.
Another commenter requested that CMS solicit input from the hospital community on reforms to the wage index and efforts to improve the sustainability of workforce, especially in rural and underserved communities.
As stated previously, CMS continued to evaluate other potential methods to calculate variations in geographic labor markets in a manner that maintains or improves consistency and equity in hospital payments in response to recommendations from MedPAC. However, as stated in the 2012 Report to Congress: Plan to Reform the Medicare Wage Index (on the web at
Overall, we believe implementing the new OMB labor market area delineations would result in wage index values being more representative of the actual current costs of labor in a given area. However, we recognize that some hospitals would experience decreases in wage index values as a result of our proposed implementation of the new labor market area delineations. We also realize that some hospitals would have higher wage index values due to our proposed implementation of the new labor market area delineations.
In the past, we have provided for transition periods when adopting changes that have significant payment implications, particularly large negative impacts. When adopting new OMB delineations based on the decennial census for the 2005 and 2015 wage indexes, we applied a 3-year transition for urban hospitals that became rural under the new delineations and a 50/50 blended wage index adjustment for all hospitals that would experience any decrease in their actual payment wage index (69 FR 49032 through 49034 and 79 FR 28060 through 28062).
In connection with our adoption in FY 2021 of the updates in OMB Bulletin 18-04, which included more modifications to the CBSAs than are typical for OMB bulletins issued between decennial censuses, we adopted a policy to place a 5 percent cap on any decrease in a hospital's wage index from the hospital's final wage index in FY 2020 so that a hospital's final wage index for FY 2021 would not be less than 95 percent of its final wage index for FY 2020 (85 FR 58753 through 58755). Given the unprecedented nature of the COVID-19 public health emergency (PHE), we adopted a policy in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45164 through 45165) to apply an extended transition to the FY 2022 wage index for hospitals affected by the transition in FY 2021 to mitigate significant negative impacts of, and provide additional time for hospitals to adapt to, the CMS decision to adopt the revised OMB delineations. In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through 49021), under the authority at sections 1886(d)(3)(E) and 1886(d)(5)(I)(i) of the Act, we finalized a policy for FY 2023 and subsequent years to apply a 5 percent cap on any decrease to a hospital's wage index from its wage index in the prior FY, regardless of the circumstances causing the decline.
We believe that this permanent cap policy, reflected at 42 CFR 412.64(h)(7) and discussed in section in III.G.6. of the preamble of this final rule, sufficiently mitigates any large negative impacts of adopting the new delineations. As we stated when finalizing the permanent 5 percent cap policy in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through 49021), we further considered the comments we received during the FY 2022 rulemaking recommending a permanent 5 percent cap policy to prevent large year-to-year variations in wage index values as a means to reduce overall volatility for hospitals. We do not believe any additional transition period is necessary considering that the current cap on wage index decreases, which was not in place when we implemented the decennial census updates in FY 2005 and FY 2015, ensures that a hospital's wage index would not be less than 95 percent of its final wage index for the prior year.
The FY 2025 wage index values are based on the data collected from the Medicare cost reports submitted by hospitals for cost reporting periods beginning in FY 2021 (the FY 2024 wage indexes were based on data from cost reporting periods beginning during FY 2020).
The FY 2025 wage index includes all of the following categories of data associated with costs paid under the IPPS (as well as outpatient costs):
• Salaries and hours from short-term, acute care hospitals (including paid lunch hours and hours associated with military leave and jury duty).
• Home office costs and hours.
• Certain contract labor costs and hours, which include direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services, and certain contract indirect patient care services (as discussed in the FY 2008 final rule with comment period (72 FR 47315 through 47317)).
• Wage-related costs, including pension costs (based on policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586 through 51590) and modified in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49505 through 49508)) and other deferred compensation costs.
Consistent with the wage index methodology for FY 2024, the wage index for FY 2025 excludes the direct and overhead salaries and hours for services not subject to IPPS payment, such as skilled nursing facility (SNF) services, home health services, costs related to GME (teaching physicians and residents) and certified registered nurse anesthetists (CRNAs), and other subprovider components that are not paid under the IPPS. The FY 2025 wage index also excludes the salaries, hours, and wage-related costs of hospital-based rural health clinics (RHCs), and Federally Qualified Health Centers (FQHCs), because Medicare pays for these costs outside of the IPPS (68 FR 45395). In addition, salaries, hours, and wage-related costs of CAHs are excluded from the wage index for the reasons explained in the FY 2004 IPPS final rule (68 FR 45397 through 45398). Similar to our treatment of CAHs, as discussed later in this section, we proposed to exclude Rural Emergency Hospitals (REHs) from the wage index.
For FY 2020 and subsequent years, other wage-related costs are also excluded from the calculation of the wage index. As discussed in the FY 2019 IPPS/LTCH final rule (83 FR 41365 through 41369), other wage-related costs reported on Worksheet S-3, Part II, Line 18 and Worksheet S-3, Part IV, Line 25 and subscripts, as well as all other wage-related costs, such as contract labor costs, are excluded from the calculation of the wage index.
Data collected for the IPPS wage index also are currently used to calculate wage indexes applicable to suppliers and other providers, such as SNFs, home health agencies (HHAs), ambulatory surgical centers (ASCs), and hospices. In addition, they are used for prospective payments to IRFs, IPFs, and LTCHs, and for hospital outpatient services. We note that, in the IPPS rules, we do not address comments pertaining to the wage indexes of any supplier or provider except IPPS providers and LTCHs. Such comments should be made in response to separate proposed rules for those suppliers and providers.
The wage data for the FY 2025 wage index were obtained from Worksheet S-3, Parts II, III and IV of the Medicare cost report, CMS Form 2552-10 (OMB Control Number 0938-0050 with an expiration date September 30, 2025) for cost reporting periods beginning on or after October 1, 2020, and before October 1, 2021. For wage index purposes, we refer to cost reports beginning on or after October 1, 2020, and before October 1, 2021, as the “FY 2021 cost report,” the “FY 2021 wage data,” or the “FY 2021 data.” Instructions for completing the wage index sections of Worksheet S-3 are included in the Provider Reimbursement Manual (PRM), Part 2 (Pub. 15-2), Chapter 40, Sections 4005.2 through 4005.4. The data file used to construct the FY 2025 wage index includes FY 2021 data submitted to us as of June 2024. As in past years, we performed an extensive review of the wage data, mostly through the use of edits designed to identify aberrant data.
Consistent with the IPPS and LTCH PPS ratesettings, our policy principles with regard to the wage index include generally using the most current data and information available, which is usually data on a 4-year lag (for example, for the FY 2023 wage index we used cost report data from FY 2019). We stated in the FY 2023 IPPS/LTCH final rule (87 FR 48994) that we will be looking at the differential effects of the COVID-19 PHE on the audited wage data in future fiscal years. We also stated we plan to review the audited
In the proposed rule we stated that in considering the impacts of the COVID-19 PHE on the FY 2021 wage data, we compared that data with recent historical data. Based on pre reclassified wage data, the changes in the wage data from FY 2020 to FY 2021 show the following compared to the annual changes for the most recent 3 fiscal year periods (that is, FY 2017 to FY 2018, FY 2018 to FY 2019 and FY 2019 to FY 2020):
• Approximately 91 percent of hospitals have an increase in their average hourly wage (AHW) from FY 2020 to FY 2021 compared to a range of 76-86 percent of hospitals for the most recent 3 fiscal year periods.
• Approximately 97 percent of all CBSA AHWs are increasing from FY 2020 to FY 2021 compared to a range of 84-91 percent of all CBSA AHWs for the most recent 3 fiscal year periods.
• Approximately 51 percent of all urban areas have an increase in their area wage index from FY 2020 to FY 2021 compared to a range of 36-43 percent of all urban areas for the most recent 3 fiscal year periods.
• Approximately 55 percent of all rural areas have an increase in their area wage index from FY 2020 to FY 2021 compared to a range of 31-46 percent of all rural areas for the most recent 3 fiscal year periods.
• The unadjusted national average hourly wage increased by a range of 2.4-5.4 percent per year from FY 2017-FY 2020. For FY 2021, the unadjusted national average hourly increased by 8.7 percent from FY 2020.
Similar to the FY 2024 wage index, we stated it is not readily apparent even if the comparison with the historical trends had indicated greater differences at a national level in this context, how any changes due to the COVID-19 PHE differentially impacted the wages paid by individual hospitals. Furthermore, even if changes due to the COVID-19 PHE did differentially impact the wages paid by individual hospitals over time, it is not clear how those changes could be isolated from changes due to other reasons and what an appropriate potential methodology might be to adjust the data to account for the effects of the COVID-19 PHE.
Lastly, we also noted that we have not identified any significant issues with the FY 2021 wage data itself in terms of our audits of this data. As usual, the data was audited by the Medicare Administrative Contractors (MACs), and there were no significant issues reported across the data for all hospitals.
Taking all of these factors into account, we stated that we believe the FY 2021 wage data is the best available wage data to use for FY 2025 and proposed to use the FY 2021 wage data for FY 2025.
We welcomed comments from the public with regard to the FY 2021 wage data. We also noted, AHW data by provider and CBSA, including the data upon which the comparisons provided previously are based, is available in our Public Use Files released with each proposed and final rule each fiscal year. The Public Use Files for the respective FY Wage Index Home Page can be found on the Wage Index Files web page at
We did not receive any other comments regarding the use of the FY 2021 wage data for FY 2025. We are finalizing as proposed to use the FY 2021 wage data for the FY 2025 wage index.
We requested that our MACs revise or verify data elements that resulted in specific edit failures. For the proposed FY 2025 wage index, we identified and excluded 69 providers with aberrant data that should not be included in the wage index. However, we stated that if data elements for some of these providers are corrected, we intend to include data from those providers in the final FY 2025 wage index. We also adjusted certain aberrant data and included these data in the wage index. For example, in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). We instructed MACs to complete their verification of questionable data elements and to transmit any changes to the wage data no later than March 20, 2024. After we issued the proposed rule, for the final FY 2025 wage index, we restored the data of 8 hospitals to the wage index, because their data was either verified or improved and removed the data of 3 hospitals with aberrant data. Thus, 64 hospitals with aberrant data remain excluded from the FY 2025 wage index (69−8 + 3 = 64).
In constructing the proposed FY 2025 wage index, we included the wage data for facilities that were IPPS hospitals in FY 2021, inclusive of those facilities that have since terminated their participation in the program as hospitals, as long as those data did not fail any of our edits for reasonableness. We stated in the proposed rule (89 FR 36151-36152) that we believe that including the wage data for these hospitals is, in general, appropriate to reflect the economic conditions in the various labor market areas during the relevant past period and to ensure that the current wage index represents the labor market area's current wages as compared to the national average of wages. However, we excluded the wage data for CAHs as discussed in the FY 2004 IPPS final rule (68 FR 45397 through 45398); that is, any hospital that is designated as a CAH by 7 days prior to the publication of the preliminary wage index public use file (PUF) is excluded from the calculation of the wage index. For the proposed FY 2025 wage index, we removed 8 hospitals that converted to CAH status on or after January 23, 2023, the cut-off date for CAH exclusion from the FY 2024 wage index, and through and including January 24, 2024, the cut-off date for CAH exclusion from the FY 2025 wage index. We noted that we also removed 2 hospitals that converted to CAH status prior to January 23, 2023. We did not receive any comments with regard to this proposal, and we are finalizing as proposed to exclude hospitals that have subsequently converted to CAH from the wage index calculation. Since the proposed rule, we learned of 1 more hospital that converted to CAH status on or after January 22, 2023, and through and including January 23, 2024. We removed this additional hospital from the FY 2025 wage index due to its conversion to CAH status.
The Consolidated Appropriations Act (CAA), 2021, was signed into law on December 27, 2020. Section 125 of Division CC (section 125) established a new rural Medicare provider type: Rural Emergency Hospitals (REHs). (We refer the reader to the CMS website at
For the FY 2025 wage index, we allotted the wages and hours data for a multicampus hospital among the different labor market areas where its campuses are located using campus full-time equivalent (FTE) percentages as originally finalized in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51591). Table 2, which contains the FY 2025 wage index associated with this final rule (available via the internet on the CMS website), includes separate wage data for the campuses of 26 multicampus hospitals. The following chart lists the multicampus hospitals by CMS certification number (CCN) and the FTE percentages on which the wages and hours of each campus were allotted to their respective labor market areas:
We note that, in past years, in Table 2, we have placed a “B” to designate the subordinate campus in the fourth position of the hospital CCN. However, for the FY 2019 IPPS/LTCH PPS proposed and final rules and subsequent rules, we have moved the “B” to the third position of the CCN. Because all IPPS hospitals have a “0” in the third position of the CCN, we believe that placement of the “B” in this third position, instead of the “0” for the subordinate campus, is the most efficient method of identification and interferes the least with the other variable digits in the CCN.
The preliminary, unaudited Worksheet S-3 wage data files for the proposed FY 2025 wage index were made available on May 23, 2023, through the internet on the CMS website at
On January 31, 2024, we posted a public use file (PUF) at
In the interest of meeting the data needs of the public, beginning with the proposed FY 2009 wage index, we post an additional PUF on the CMS website that reflects the actual data that are used in computing the proposed wage index. The release of this file does not alter the current wage index process or schedule. We notify the hospital community of the availability of these data as we do with the current public use wage data files through our Hospital Open Door Forum. We encourage hospitals to sign up for automatic notifications of information
In a memorandum dated May 4, 2023, we instructed all MACs to inform the IPPS hospitals that they service of the availability of the preliminary wage index data files and the CY 2022 occupational mix survey data files posted on May 23, 2023, and the process and timeframe for requesting revisions.
If a hospital wished to request a change to its data as shown in the May 23, 2023, preliminary wage data files and occupational mix data files, the hospital had to submit corrections along with complete, detailed supporting documentation to its MAC so that the MAC received them by September 1, 2023. Hospitals were notified of these deadlines and of all other deadlines and requirements, including the requirement to review and verify their data as posted in the preliminary wage index data files on the internet, through the letters sent to them by their MACs.
November 3, 2023, was the date by when MACs notified State hospital associations regarding hospitals that failed to respond to issues raised during the desk reviews. Additional revisions made by the MACs were transmitted to CMS throughout January 2024. CMS published the wage index PUFs that included hospitals' revised wage index data on January 31, 2024. Hospitals had until February 16, 2024, to submit requests to the MACs to correct errors in the January 31, 2024, PUF due to CMS or MAC mishandling of the wage index data, or to revise desk review adjustments to their wage index data as included in the January 31, 2024, PUF. Hospitals also were required to submit sufficient documentation to support their requests. Hospitals' requests and supporting documentation must have been received by the MAC by the February deadline (that is, by February 16, 2024, for the FY 2025 wage index).
After reviewing requested changes submitted by hospitals, MACs were required to transmit to CMS any additional revisions resulting from the hospitals' reconsideration requests by March 20, 2024. Under our current policy as adopted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38153), the deadline for a hospital to request CMS intervention in cases where a hospital disagreed with a MAC's handling of wage data on any basis (including a policy, factual, or other dispute) was April 3, 2024. Data that were incorrect in the preliminary or January 31, 2024, wage index data PUFs, but for which no correction request was received by the February 16, 2024, deadline, are not considered for correction at this stage. In addition, April 3, 2024, was the deadline for hospitals to dispute data corrections made by CMS of which the hospital was notified after the January 31, 2024, PUF and at least 14 calendar days prior to April 3, 2024 (that is, March 20, 2024), that do not arise from a hospital's request for revisions. The hospital's request and supporting documentation must be received by CMS (and a copy received by the MAC) by the April deadline (that is, by April 3, 2024, for the FY 2025 wage index). We refer readers to the FY 2025 Hospital Wage Index Development Time Table for complete details.
Hospitals were given the opportunity to examine Table 2 associated with the proposed rule, which is listed in section VI. of the Addendum to the proposed rule and available via the internet on the CMS website at
We posted the final wage index data PUFs on April 29, 2024, on the CMS website at
After the release of the April 2024 wage index data PUFs, changes to the wage and occupational mix data can only be made in those very limited situations involving an error by the MAC or CMS that the hospital could not have known about before its review of the final wage index data files. Specifically, neither the MAC nor CMS will approve the following types of requests:
• Requests for wage index data corrections that were submitted too late to be included in the data transmitted to CMS by the MACs on or before March 20, 2024.
• Requests for correction of errors that were not, but could have been, identified during the hospital's review of the January 31, 2024, wage index PUFs.
• Requests to revisit factual determinations or policy interpretations made by the MAC or CMS during the wage index data correction process.
If, after reviewing the April 2024 final wage index data PUFs, a hospital believes that its wage or occupational mix data are incorrect due to a MAC or CMS error in the entry or tabulation of the final data, the hospital is given the opportunity to notify both its MAC and CMS regarding why the hospital believes an error exists and provide all supporting information, including relevant dates (for example, when it first became aware of the error). The hospital was required to send its request to CMS and to the MAC so that it was received no later than May 29, 2024. May 29, 2024, was also the deadline for hospitals to dispute data corrections made by CMS of which the hospital was notified on or after 13 calendar days prior to April 3, 2024 (that is, March 21, 2024), and at least 14 calendar days prior to May 29, 2024 (that is, May 15, 2024), that did not arise from a hospital's request for revisions. (Data corrections made by CMS of which a hospital is notified on or after 13 calendar days prior to May 29, 2024 (that is, May 16, 2024), may be appealed to the Provider Reimbursement Review Board (PRRB)). In accordance with the FY 2025 Hospital Wage Index Development Time Table posted on the CMS website at
Verified corrections to the wage index data received timely (that is, by May 29, 2024) by CMS and the MACs were incorporated into the final FY 2025 wage index, which will be effective October 1, 2024.
We created the processes previously described to resolve all substantive wage index data correction disputes before we finalize the wage and occupational mix data for the FY 2025 payment rates. Accordingly, hospitals
Again, we believe the wage index data correction process described earlier provides hospitals with sufficient opportunity to bring errors in their wage and occupational mix data to the MAC's attention. Moreover, because hospitals had access to the final wage index data PUFs by late April 2024, they have an opportunity to detect any data entry or tabulation errors made by the MAC or CMS before the development and publication of the final FY 2025 wage index by August 2024, and the implementation of the FY 2025 wage index on October 1, 2024. Given these processes, the wage index implemented on October 1 should be accurate. Nevertheless, in the event that errors are identified by hospitals and brought to our attention after May 29, 2024, we retain the right to make midyear changes to the wage index under very limited circumstances.
Specifically, in accordance with § 412.64(k)(1) of our regulations, we make midyear corrections to the wage index for an area only if a hospital can show that: (1) The MAC or CMS made an error in tabulating its data; and (2) the requesting hospital could not have known about the error or did not have an opportunity to correct the error, before the beginning of the fiscal year. For purposes of this provision, “before the beginning of the fiscal year” means by the May deadline for making corrections to the wage data for the following fiscal year's wage index (for example, May 29, 2024, for the FY 2025 wage index). This provision is not available to a hospital seeking to revise another hospital's data that may be affecting the requesting hospital's wage index for the labor market area. As indicated earlier, because CMS makes the wage index data available to hospitals on the CMS website prior to publishing both the proposed and final IPPS rules, and the MACs notify hospitals directly of any wage index data changes after completing their desk reviews, we do not expect that midyear corrections will be necessary. However, under our current policy, if the correction of a data error changes the wage index value for an area, the revised wage index value will be effective prospectively from the date the correction is made.
In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and 47485), we revised § 412.64(k)(2) to specify that, effective on October 1, 2005, that is, beginning with the FY 2006 wage index, a change to the wage index can be made retroactive to the beginning of the Federal fiscal year only when CMS determines all of the following: (1) The MAC or CMS made an error in tabulating data used for the wage index calculation; (2) the hospital knew about the error and requested that the MAC and CMS correct the error using the established process and within the established schedule for requesting corrections to the wage index data, before the beginning of the fiscal year for the applicable IPPS update (that is, by the May 29, 2024, deadline for the FY 2025 wage index); and (3) CMS agreed before October 1 that the MAC or CMS made an error in tabulating the hospital's wage index data and the wage index should be corrected.
In those circumstances where a hospital requested a correction to its wage index data before CMS calculated the final wage index (that is, by the May 29, 2024 deadline for the FY 2025 wage index), and CMS acknowledges that the error in the hospital's wage index data was caused by CMS' or the MAC's mishandling of the data, we believe that the hospital should not be penalized by our delay in publishing or implementing the correction. As with our current policy, we indicated that the provision is not available to a hospital seeking to revise another hospital's data. In addition, the provision cannot be used to correct prior years' wage index data; it can only be used for the current Federal fiscal year. In situations where our policies would allow midyear corrections other than those specified in § 412.64(k)(2)(ii), we continue to believe that it is appropriate to make prospective-only corrections to the wage index.
We note that, as with prospective changes to the wage index, the final retroactive correction will be made irrespective of whether the change increases or decreases a hospital's payment rate. In addition, we note that the policy of retroactive adjustment will still apply in those instances where a final judicial decision reverses a CMS denial of a hospital's wage index data revision request.
The process set forth with the wage index timetable discussed in section III.C.4. of the preamble of this final rule allows hospitals to request corrections to their wage index data within prescribed timeframes. In addition to hospitals' opportunity to request corrections of wage index data errors or MACs' mishandling of data, CMS has the authority under section 1886(d)(3)(E) of the Act to make corrections to hospital wage index and occupational mix data to ensure the accuracy of the wage index. As we explained in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of the Act requires the Secretary to adjust the proportion of hospitals' costs attributable to wages and wage-related costs for area differences reflecting the relative hospital wage level in the geographic areas of the hospital compared to the national average hospital wage level. We believe that, under section 1886(d)(3)(E) of the Act, we have discretion to make corrections to hospitals' data to help ensure that the costs attributable to wages and wage-related costs in fact accurately reflect the relative hospital wage level in the hospitals' geographic areas.
We have an established multistep, 15-month process for the review and correction of the hospital wage data that is used to create the IPPS wage index for the upcoming fiscal year. Since the origin of the IPPS, the wage index has been subject to its own annual review process, first by the MACs, and then by CMS. As a standard practice, after each annual desk review, CMS reviews the results of the MACs' desk reviews and focuses on items flagged during the desk
We note that CMS corrects errors to hospital wage data as appropriate, regardless of whether that correction will raise or lower a hospital's average hourly wage. For example, as discussed in section III.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41364), in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). Furthermore, if CMS discovers after conclusion of the desk review, for example, that a MAC inadvertently failed to incorporate positive adjustments resulting from a prior year's wage index appeal of a hospital's wage-related costs such as pension, CMS would correct that data error, and the hospital's average hourly wage would likely increase as a result.
While we maintain CMS' authority to conduct additional review and make resulting corrections at any time during the wage index development process, in accordance with the policy finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156) and as first implemented with the FY 2019 wage index (83 FR 41389), hospitals are able to request further review of a correction made by CMS that did not arise from a hospital's request for a wage index data correction. Instances where CMS makes a correction to a hospital's data after the January 31 PUF based on a different understanding than the hospital about certain reported costs, for example, could potentially be resolved using this process before the final wage index is calculated. We believe this process and the timeline for requesting review of such corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS final rule) promote additional transparency in instances where CMS makes data corrections after the January 31 PUF and provide opportunities for hospitals to request further review of CMS changes in time for the most accurate data to be reflected in the final wage index calculations. These additional appeals opportunities are described earlier and in the FY 2025 Hospital Wage Index Development Time Table, as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156).
The method used to compute the proposed FY 2025 wage index without an occupational mix adjustment follows the same methodology that we used to compute the wage indexes without an occupational mix adjustment in the FY 2021 IPPS/LTCH PPS final rule (see 85 FR 58758-58761), and we did not propose any changes to this methodology. We have restated our methodology in this section of this rule.
Step 1.—We gathered data from each of the non-Federal, short-term, acute care hospitals for which data were reported on the Worksheet S-3, Parts II and III of the Medicare cost report for the hospital's cost reporting period relevant to the wage index (in this case, for FY 2025, these were data from cost reports for cost reporting periods beginning on or after October 1, 2020, and before October 1, 2021). In addition, we included data from hospitals that had cost reporting periods beginning prior to the October 1, 2020 begin date and extending into FY 2021 but that did not have any cost report with a begin date on or after October 1, 2020 and before October 1, 2021. We include this data because no other data from these hospitals would be available for the cost reporting period as previously described, and because particular labor market areas might be affected due to the omission of these hospitals. However, we generally describe these wage data as data applicable to the fiscal year wage data being used to compute the wage index for those hospitals. We note that, if a hospital had more than one cost reporting period beginning during FY 2021 (for example, a hospital had two short cost reporting periods beginning on or after October 1, 2020, and before October 1, 2021), we include wage data from only one of the cost reporting periods, the longer, in the wage index calculation. If there was more than one cost reporting period and the periods were equal in length, we included the wage data from the later period in the wage index calculation.
Step 2.—Salaries.—The method used to compute a hospital's average hourly wage excludes certain costs that are not paid under the IPPS. (We note that, beginning with FY 2008 (72 FR 47315), we included what were then Lines 22.01, 26.01, and 27.01 of Worksheet S-3, Part II of CMS Form 2552-96 for overhead services in the wage index. Currently, these lines are lines 28, 33, and 35 on CMS Form 2552-10. However, we note that the wages and hours on these lines are not incorporated into Line 101, Column 1 of Worksheet A, which, through the electronic cost reporting software, flows directly to Line 1 of Worksheet S-3, Part II. Therefore, the first step in the wage index calculation is to compute a “revised” Line 1, by adding to the Line 1 on Worksheet S-3, Part II (for wages and hours respectively) the amounts on Lines 28, 33, and 35.) In calculating a hospital's Net Salaries (we note that we previously used the term “average” salaries in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592), but we now use the term “net” salaries) plus wage-related costs, we first compute the following: Subtract from Line 1 (total salaries) the GME and CRNA costs reported on CMS Form 2552-10, Lines 2, 4.01, 7, and 7.01, the Part B salaries reported on Lines 3, 5 and 6, home office salaries reported on Line 8, and exclude salaries reported on Lines 9 and 10 (that is, direct salaries attributable to SNF services, home health services, and other subprovider components not subject to the IPPS). We also subtract from Line 1 the salaries for which no hours were reported. Therefore, the formula for Net Salaries (from Worksheet S-3, Part II) is the following:
To determine Total Salaries plus Wage-Related Costs, we add to the Net Salaries the costs of contract labor for direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services (Lines 11, 12 and 13), home office salaries and wage-related costs reported by the hospital on Lines 14.01, 14.02, and 15, and nonexcluded area wage-
Step 3.—Hours.—With the exception of wage-related costs, for which there are no associated hours, we compute total hours using the same methods as described for salaries in Step 2. The formula for Total Hours (from Worksheet S-3, Part II) is the following:
Step 4.—For each hospital reporting both total overhead salaries and total overhead hours greater than zero, we then allocate overhead costs to areas of the hospital excluded from the wage index calculation. First, we determine the “excluded rate”, which is the ratio of excluded area hours to Revised Total Hours (from Worksheet S-3, Part II) with the following formula:
• We determine the “overhead rate” (from Worksheet S-3, Part II), which is the ratio of overhead hours (Lines 26 through 43 minus the sum of Lines 28, 33, and 35) to revised hours excluding the sum of lines 28, 33, and 35 (Line 1 minus the sum of Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, 9, 10, 28, 33, and 35). We note that, for the FY 2008 and subsequent wage index calculations, we have been excluding the overhead contract labor (Lines 28, 33, and 35) from the determination of the ratio of overhead hours to revised hours because hospitals typically do not provide fringe benefits (wage-related costs) to contract personnel. Therefore, it is not necessary for the wage index calculation to exclude overhead wage-related costs for contract personnel. Further, if a hospital does contribute to wage-related costs for contracted personnel, the instructions for Lines 28, 33, and 35 require that associated wage-related costs be combined with wages on the respective contract labor lines. The formula for the Overhead Rate (from Worksheet S-3, Part II) is the following:
• We compute overhead wage-related costs by multiplying the overhead hours ratio by wage-related costs reported on Part II, Lines 17, 22, 25.50, 25.51, and 25.52.
• We multiply the computed overhead wage-related costs by the previously described excluded area hours ratio.
Finally, we subtract the computed overhead salaries, wage-related costs, and hours associated with excluded areas from the total salaries (plus wage-related costs) and hours derived in Steps 2 and 3.
Step 5.—For each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the employment cost index (ECI) for compensation for each 30-day increment from October 14, 2020, through April 15, 2022, for private industry hospital workers from data obtained from the Bureau of Labor Statistics' (BLS') Office of Compensation and Working Conditions. We use the ECI because it reflects the price increase associated with total compensation (salaries plus fringes) rather than just the increase in salaries. In addition, the ECI includes managers as well as other hospital workers. This methodology to compute the monthly update factors uses actual quarterly ECI data and assures that the update factors match the actual quarterly and annual percent changes. We also note that, since April 2006 with the publication of March 2006 data, the BLS' ECI uses a different classification system, the North American Industrial Classification System (NAICS), instead of the Standard Industrial Codes (SICs), which no longer exist. We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the IPPS market basket, and we did not propose to make any changes to the usage of the ECI for FY 2025. The factors used to adjust the hospital's data are based on the midpoint of the cost reporting period, as indicated in this rule.
Step 6.—Each hospital is assigned to its appropriate urban or rural labor market area before any reclassifications under section 1886(d)(8)(B), 1886(d)(8)(E), or 1886(d)(10) of the Act. Within each urban or rural labor market area, we add the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in that area to determine the total adjusted salaries plus wage-related costs for the labor market area.
Step 7.—We divide the total adjusted salaries plus wage-related costs obtained under Step 6 by the sum of the corresponding total hours (from Step 4) for all hospitals in each labor market area to determine an average hourly wage for the area.
Step 8.—We add the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in the Nation and then divide the sum by the national sum of total hours from Step 4 to arrive at a national average hourly wage.
Step 9.—For each urban or rural labor market area, we calculate the hospital wage index value, unadjusted for occupational mix, by dividing the area average hourly wage obtained in Step 7 by the national average hourly wage computed in Step 8.
Step 10.—For each urban labor market area for which we do not have any hospital wage data (either because there are no IPPS hospitals in that labor market area, or there are IPPS hospitals in that area but their data are either too new to be reflected in the current year's wage index calculation, or their data are aberrant and are deleted from the wage index), we finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42305) that, for FY 2020 and subsequent years' wage index calculations, such CBSAs' wage index would be equal to total urban salaries plus wage-related costs (from Step 5) in the State, divided by the total urban hours (from Step 4) in the State, divided by the national average hourly wage from Step 8 (see 84 FR 42305 and 42306,). We stated that we believe that, in the absence of wage data for an urban labor market area, it is reasonable to use a statewide urban average, which is based on actual, acceptable wage data of hospitals in that State, rather than impute some other
We refer readers to section II. of the Appendix of the final rule for the policy regarding rural areas that do not have IPPS hospitals.
Step 11.—Section 4410 of Public Law 105-33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. The areas affected by this provision are identified in Table 2 listed in section VI. of the Addendum to the final rule and available via the internet on the CMS website.
The following is our policy with regard to rounding of the wage data (dollar amounts, hours, and other numerical values) in the calculation of the unadjusted and adjusted wage index, as finalized in the FY 2020 IPPS/LTCH final rule (84 FR 42306). For data that we consider to be “raw data,” such as the cost report data on Worksheets S-3, Parts II and III, and the occupational mix survey data, we use such data “as is,” and do not round any of the individual line items or fields. However, for any dollar amounts within the wage index calculations, including any type of summed wage amount, average hourly wages, and the national average hourly wage (both the unadjusted and adjusted for occupational mix), we round the dollar amounts to 2 decimals. For any hour amounts within the wage index calculations, we round such hour amounts to the nearest whole number. For any numbers not expressed as dollars or hours within the wage index calculations, which could include ratios, percentages, or inflation factors, we round such numbers to 5 decimals. However, we continue rounding the actual unadjusted and adjusted wage indexes to 4 decimals, as we have done historically.
As discussed in the FY 2012 IPPS/LTCH PPS final rule, in “Step 5,” for each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the ECI for compensation for each 30-day increment from October 14, 2020, through April 15, 2022, for private industry hospital workers from the BLS' Office of Compensation and Working Conditions data. We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the IPPS market basket, and we did not propose any changes to the usage of the ECI for FY 2025. The factors used to adjust the hospital's data were based on the midpoint of the cost reporting period, as indicated in the following table.
For example, the midpoint of a cost reporting period beginning January 1, 2021, and ending December 31, 2021, is June 30, 2021. An adjustment factor of 1.03606 was applied to the wages of a hospital with such a cost reporting period.
Previously, we also would provide a Puerto Rico overall average hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we calculated a Puerto Rico specific wage index that was applied to the labor-related share of the Puerto Rico-specific standardized amount. Section 601 of Division O, Title VI (section 601) of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. As we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56915 through
Based on the previously discussed methodology, we stated in the proposed rule (89 FR 36159) that the proposed FY 2025 unadjusted national average hourly wage was $54.80.
Based on the previously described methodology, the final FY 2025 unadjusted national average hourly wage is the following:
As stated earlier, section 1886(d)(3)(E) of the Act provides for the collection of data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program, to construct an occupational mix adjustment to the wage index, for application beginning October 1, 2004 (the FY 2005 wage index). The purpose of the occupational mix adjustment is to control for the effect of hospitals' employment choices on the wage index. For example, hospitals may choose to employ different combinations of registered nurses, licensed practical nurses, nursing aides, and medical assistants for the purpose of providing nursing care to their patients. The varying labor costs associated with these choices reflect hospital management decisions rather than geographic differences in the costs of labor.
Section 304(c) of Appendix F, Title III of the Consolidated Appropriations Act, 2001 (Pub. L. 106-554) amended section 1886(d)(3)(E) of the Act to require CMS to collect data every 3 years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program and to measure the earnings and paid hours of employment for such hospitals by occupational category. As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25402 through 25403) and final rule (86 FR 45173), we collected data in 2019 to compute the occupational mix adjustment for the FY 2022, FY 2023, and FY 2024 wage indexes. A new measurement of occupational mix is required for FY 2025.
The FY 2025 occupational mix adjustment is based on a new calendar year (CY) 2022 survey. Hospitals were required to submit their completed 2022 surveys (Form CMS-10079, OMB Number 0938-0907, expiration date January 31, 2026) to their MACs by July 1, 2023. The preliminary, unaudited CY 2022 survey data were posted on the CMS website on July 12, 2023. As with the Worksheet S-3, Parts II and III cost report wage data, as part of the FY 2025 desk review process, the MACs revised or verified data elements in hospitals' occupational mix surveys that resulted in certain edit failures.
Consistent with the IPPS and LTCH PPS ratesettings, our policy principles with regard to the occupational mix adjustment include generally using the most current data and information available, which is usually occupational mix data on a 3-year lag in the first year of the use of the occupational mix survey (for example, for the FY 2022 wage index we used occupational mix data from 2019; we also used this data for the FY 2023 and FY 2024 wage indexes). In the FY 2024 IPPS/LTCH final rule (88 FR 58969-58970), a commenter had concerns that the occupational mix data [that would be used for FY 2025?] may be skewed due to the COVID-19 PHE, and we stated that we planned to assess the CY 2022 Occupational Mix Survey data in the FY 2025 IPPS final rule.
In the proposed rule, we explained that based on pre-reclassified wage data, we computed the unadjusted and adjusted wage indexes for FY 2025 using the 2022 occupational mix survey data. We then measured the increases and decreases by CBSA as a result of the 2022 occupational mix survey data. We compared this table to the same table for the FY 2024 wage indexes, which used the 2019 occupational mix data, as well as the FY 2021 wage indexes, which used the 2016 occupational mix data. We stated that this table demonstrates the impact of the occupational mix adjusted wage data compared to unadjusted wage data for the most recent three occupational mix surveys using the 2022 survey data compared to the 2019 survey data and the 2016 survey data. That is, it shows whether hospitals' wage indexes will increase or decrease under the 2022 survey data as compared to the most recent years using the prior 2019 survey data and 2016 survey data respectively.
Based on the table, we stated that increases and decreases by CBSA are alike across each year of occupational mix data. For example, 60.19 percent of urban areas' wage indexes are increasing in FY 2025 due to the CY 2022 occupational mix data compared to 56.07 percent in FY 2024 using CY 2019 occupational mix data. Similarly, 59.57 percent of rural areas' wage indexes are increasing in FY 2025 due to the CY 2022 occupational mix data compared to 57.45 percent in FY 2024 using CY 2019 occupational mix data. We also noted that similar to the wage data, it is not readily apparent, even if the comparison with the historical trends had indicated greater differences by CBSA in this context, how any changes due to the COVID-19 PHE differentially impacted the occupational mix adjusted wages paid in each CBSA. Furthermore, even if hypothetically changes due to the COVID-19 PHE did differentially impact the occupational mix adjusted wage index over time, it is not clear how those changes could be isolated from changes due to other reasons and what an appropriate potential methodology might be to adjust the data accordingly.
Lastly, we also noted that we have not identified any significant issues with the 2022 occupational mix data itself in terms of our audits of this data. As usual, the data was audited by the MACs, and there were no significant issues reported across the data for all hospitals.
Taking all these factors into account, we stated that we believe the CY 2022 occupational mix data is the best available data to use for FY 2025 and proposed to use the CY 2022 occupational mix data for FY 2025.
We did not receive any comments with regard to the use of the CY 2022 occupational mix data for FY 2025.We are finalizing as proposed to use the CY 2022 occupational mix data for the FY 2025 wage index.
For FY 2025, we proposed to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index (76 FR 51582 through 51586) and to apply the occupational mix adjustment to 100 percent of the FY 2025 wage index. In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42308), we modified our methodology with regard to how dollar amounts, hours, and other
Similar to the method we use for the calculation of the wage index without occupational mix, salaries and hours for a multicampus hospital are allotted among the different labor market areas where its campuses are located. Table 2 associated with this final rule (which is available via the internet on the CMS website), which contains the final FY 2025 occupational mix adjusted wage index, includes separate wage data for the campuses of multicampus hospitals. We refer readers to section III.C. of the preamble of this final rule for a chart listing the multicampus hospitals and the FTE percentages used to allot their occupational mix data.
Because the statute requires that the Secretary measure the earnings and paid hours of employment by occupational category not less than once every 3 years, all hospitals that are subject to payments under the IPPS, or any hospital that would be subject to the IPPS if not granted a waiver, must complete the occupational mix survey, unless the hospital has no associated cost report wage data that are included in the proposed FY 2025 wage index. For the proposed FY 2025 wage index, we used the Worksheet S-3, Parts II and III wage data of 3,075 hospitals, and we used the occupational mix surveys of 2,950 hospitals for which we also had Worksheet S-3 wage data, which represented a “response” rate of 96 percent (2,950/3,075). For the proposed FY 2025 wage index, we applied proxy data for noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage index occupational mix adjustment (76 FR 51586). As a result of applying this methodology, the proposed FY 2025 occupational mix adjusted national average hourly wage was $54.73.
We did not receive any comments on our proposed calculation of the occupational mix adjustment to the FY 2025 wage index. Thus, for the reasons discussed in this final rule and in the FY 2025 IPPS/LTCH PPS proposed rule, we are finalizing our proposal without modification to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index and to apply the occupational mix adjustment to 100 percent of the FY 2025 wage index.
As discussed in section III.E. of the preamble of this final rule, for FY 2025, we are applying the occupational mix adjustment to 100 percent of the FY 2025 wage index. We calculated the occupational mix adjustment using data from the 2022 occupational mix survey, using the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51582—51586).
Based on the 2022 occupational mix survey data, the FY 2025 national average hourly wages for each occupational mix nursing subcategory as calculated in Step 2 of the occupational mix calculation are as follows:
The national average hourly wage for the entire nurse category is computed in Step 5 of the occupational mix calculation. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of greater than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of less than 1.0. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of less than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of greater than 1.0.
Based on the 2022 occupational mix survey data, we determined (in Step 7 of the occupational mix calculation) the following:
The following sections III.F.1 through III.F.4 discuss revisions to the wage index based on hospital redesignations and reclassifications. Specifically, hospitals may have their geographic area changed for wage index payment by applying for urban to rural reclassification under section 1886(d)(8)(E) of the Act (implemented at § 412.103), reclassification by the Medicare Geographic Classification Review Board (MGCRB) under section 1886(d)(10) of the Act, Lugar status redesignations under section 1886(d)(8)(B) of the Act, or a combination of the foregoing.
Under section 1886(d)(8)(E) of the Act, a qualifying prospective payment hospital located in an urban area may apply for rural status for payment purposes separate from reclassification through the MGCRB. Specifically, section 1886(d)(8)(E) of the Act provides that, not later than 60 days after the receipt of an application (in a form and manner determined by the Secretary) from a subsection (d) hospital that satisfies certain criteria, the Secretary shall treat the hospital as being located in the rural area (as defined in paragraph (2)(D)) of the State in which the hospital is located. We refer readers to the regulations at § 412.103 for the general criteria and application requirements for a subsection (d) hospital to reclassify from urban to rural status in accordance with section 1886(d)(8)(E) of the Act (such hospitals are referred to herein as “§ 412.103 hospitals”). The FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes our policies regarding the effect of wage data from reclassified or redesignated hospitals. We refer readers to the FY 2024 IPPS/LTCH final rule (88 FR 58971 through 58977) for a review of our policy finalized in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49004) to calculate the rural floor with the wage data of urban hospitals reclassifying to rural areas under § 412.103, and discussion of our modification to the calculation of the rural wage index and its implications for the rural floor.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41369 through 41374), we codified certain policies regarding multicampus hospitals in the regulations at §§ 412.92, 412.96, 412.103, and 412.108. We stated that reclassifications from urban to rural under § 412.103 apply to the entire hospital (that is, the main campus and its remote location(s)). We also stated that a main campus of a hospital cannot obtain Sole Community Hospital (SCH), Rural Referral Center (RRC), or Medicare Dependent Hospital (MDH) status, or rural reclassification under § 412.103, independently or separately from its remote location(s), and vice versa. In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49012 and 49013), we added § 412.103(a)(8) to clarify that for a multicampus hospital, approved rural reclassification status applies to the main campus and any remote location located in an urban area, including a main campus or any remote location deemed urban under section 1886(d)(8)(B) of the Act. If a remote location of a hospital is located in a different CBSA than the main campus of the hospital, it is CMS' longstanding policy to assign that remote location a wage index based on its own geographic area to comply with the statutory requirement to adjust for geographic differences in hospital wage levels (section 1886(d)(3)(E) of the Act). Hospitals are required to identify and allocate wages and hours based on FTEs for remote locations located in different CBSAs on Worksheet S-2, Part I, Lines 165 and 166 of form CMS-2552-10. In calculating wage index values, CMS identifies the allocated wage data for these remote locations in Table 2 with a “B” in the 3rd position of the CCN. These remote locations of hospitals with § 412.103 rural reclassification status in a different CBSA are identified in Table 2, and hospitals should evaluate potential wage index outcomes for their remote location(s) when withdrawing or terminating MGCRB reclassification, or canceling § 412.103 rural reclassification status.
We also note that in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59038 through 59039), we changed the effective date of rural reclassification for a hospital qualifying for rural reclassification under § 412.103(a)(3) by meeting the criteria for SCH status (other than being located in a rural area), and also applying to obtain SCH status under § 412.92, where eligibility for SCH classification depends on a hospital merger. Specifically, we finalized that in these circumstances, and subject to the hospital meeting the requirements set forth at § 412.92(b)(2)(vi), the effective date for rural reclassification will be the effective date set forth in § 412.92(b)(2)(vi).
Finally, we remind hospitals currently located in rural areas becoming urban under the adoption of the revised OMB delineations that if they have SCH, MDH, or RRC status, they may choose to apply for a § 412.103 urban to rural reclassification if qualifying criteria are met to maintain
Section 1886(d)(8)(E) of the Act describes criteria for hospitals located in urban areas to be treated as being located in a rural area of their state. The criterion at section 1886(d)(8)(E)(ii)(I) of the Act requires that the hospital be located in a rural census tract of a metropolitan statistical area (as determined under the most recent modification of the Goldsmith Modification, originally published in the
This condition is implemented in the regulation at § 412.103(a)(1), which currently states: “the hospital is located in a rural census tract of a Metropolitan Statistical Area (MSA) as determined under the most recent version of the Goldsmith Modification, the Rural-Urban Commuting Area codes, as determined by the Office of Rural Health Policy (ORHP) of the Health Resources and Services Administration (HRSA), which is available via the ORHP website at:
The Goldsmith Modification
The Federal Office of Rural Health Policy (FORHP) (known as ORHP in § 412.103) later funded development of Rural-Urban Commuting Area (RUCA) codes via the U.S. Department of Agriculture's (USDA) Economic Research Service as the latest version of the Goldsmith Modification, described in a May 3, 2007
FORHP has since published a revised definition of eligibility for rural health grants for FY 2022 in a January, 12, 2021
It has come to our attention that our current regulation text at § 412.103(a)(1) does not describe FORHP's expanded definition of a “rural area” from the FY 2022
We proposed to amend the regulation text at 412.103(a)(1) to read: the hospital is located in a rural census tract of a Metropolitan Statistical Area (MSA) as determined under the most recent version of the Goldsmith Modification, using the Rural-Urban Commuting Area codes and additional criteria, as determined by the Federal Office of Rural Health Policy (FORHP) of the Health Resources and Services Administration (HRSA), which is available at the web link provided in the most recent
We did not receive any comments on this proposal and are finalizing as proposed to amend the regulation text at § 412.103(a)(1).
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49499 through 49500), CMS discussed its longstanding policy to terminate MGCRB wage index reclassification status under section 1886(d)(10) of the Act for hospitals with terminated CMS certification numbers (CCN). We determined that it would be appropriate to terminate the MGCRB reclassification status for these hospitals (with a limited exception for certain locations acquired by another hospital in a different CBSA), as the hospital may no longer be able to make timely and informed decisions regarding reclassification statuses.
At the time, we did not articulate a similar policy for hospitals reclassified as rural under § 412.103. While policies regarding MGCRB reclassification were adopted for purposes related to the hospital wage index, § 412.103 reclassifications may have broader implications. At the time the policy to terminate MGCRB reclassifications for hospitals with terminated CCNs was implemented, § 412.103 reclassifications were less common, and generally had negligible effects on State rural wage index values. Prior to FY 2024, as a result of various wage index value hold-harmless policies, discussed in detail in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58973-58974), § 412.103 hospital data rarely affected a state's final rural wage index value. Under the current policy first implemented in FY 2024, however, § 412.103 hospital data is only excluded from the rural wage index when indicated by the hold harmless provision at section 1886(d)(8)(C)(ii) of the Act. Hospitals reclassified under § 412.103 now impact the rural wage index value of most states. We refer readers to the FY 2024 IPPS/LTCH final rule (88 FR 58973 through 58977) for discussion on how CMS finalized the current policy to include the wage index data for § 412.103 hospitals in more iterations of the rural wage index calculation. Furthermore, following the policy implemented in the April 21, 2016, interim final rule with comment period (IFC) (81 FR 23428 through 23438), which allowed hospitals to maintain dual § 412.103 and MGCRB reclassification status, the number of rural reclassifications has grown significantly. We now believe it is appropriate to propose a policy regarding terminated or “tied-out” hospitals, effective for FY 2025, to address our concerns regarding the impacts these hospitals would have on rural wage index values. Therefore, we proposed that § 412.103 reclassifications will be considered cancelled for the purposes of calculating the area wage index for any hospital with a CCN listed as terminated or “tied-out” as of the date that the hospital ceased to operate with an active CCN. We propose to obtain and review the best available CCN termination status lists as of the § 412.103(b)(6) “lock-in” date (60 days after the proposed rule for the FY is displayed in the
As stated previously, § 412.103 reclassification may have other implications for hospital status and payment. Hospitals may obtain rural reclassification for several reasons, such as to convert to a Critical Access Hospital (CAH), or to obtain SCH status. Eligibility requirements for Rural Emergency Hospital (REH) qualification under section 1861(kkk)(3) of the Act included a reference to reclassification under section 1886(d)(8)(E) (implemented by § 412.103). We note that our proposal to consider § 412.103 reclassifications cancelled for the purposes of calculating area wage index for any hospital with a CCN listed as terminated or “tied-out” is not intended to alter or affect the qualification for such statuses or to have other effects unrelated to hospital wage index calculations. The rural reclassification status would remain in effect for any period that the original PPS hospital remains in operation with an active CCN. For REH qualification requirement purposes, this would include the date of enactment of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260), which was December 27, 2020. We believe this policy provides consistency and predictability in wage index values.
Under section 1886(d)(10) of the Act, the MGCRB considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. Hospitals must apply to the MGCRB to reclassify not later than 13 months prior to the start of the fiscal year for which reclassification is sought (usually by September 1). Generally, hospitals must be proximate to the labor market area to which they are seeking reclassification and must demonstrate characteristics similar to hospitals located in that area. The MGCRB issues its decisions by the end of February for reclassifications that become effective for the following fiscal year (beginning October 1). The regulations applicable to reclassifications by the MGCRB are located in §§ 412.230 through 412.280. (We refer readers to a discussion in the FY 2002 IPPS final rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage for purposes of the proximity requirements.) The general policies for reclassifications and redesignations and the policies for the effects of hospitals' reclassifications and redesignations on the wage index are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012 final wage index (76 FR 51595 and 51596).
In addition, in the FY 2012 IPPS/LTCH PPS final rule, we discussed the effects on the wage index of urban
On April 21, 2016, we published an interim final rule with comment period (IFC) in the
We discussed that when there is both a § 412.103 redesignation and an MGCRB reclassification, the MGCRB reclassification controls for wage index calculation and payment purposes. Prior to FY 2024, we excluded hospitals with § 412.103 redesignations from the calculation of the reclassified rural wage index if they also have an active MGCRB reclassification to another area. That is, if an application for urban reclassification through the MGCRB is approved and is not withdrawn or terminated by the hospital within the established timelines, we consider the hospital's geographic CBSA and the urban CBSA to which the hospital is reclassified under the MGCRB for the wage index calculation. We refer readers to the April 21, 2016 IFC (81 FR 23428 through 23438) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56922 through 56930), in which we finalized the April 21, 2016 IFC, for a full discussion of the effect of simultaneous reclassifications under both the § 412.103 and the MGCRB processes on wage index calculations. For FY 2024 and subsequent years, we refer readers to section III.G.1 of the preamble of the FY 2024 IPPS/LTCH PPS final rule for discussion of our policy to include hospitals with a § 412.103 redesignation that also have an active MGCRB reclassification to another area in the calculation of the reclassified rural wage index (88 FR 58971 through 58977).
On May 10, 2021, we published an interim final rule with comment period (IFC) in the
In a comment on the May 10, 2021 IFC (86 FR 24735 through 24739), a commenter noted that the IFC states that a hospital reclassified under § 412.103 could potentially reclassify to any area with a pre-reclassified average hourly wage that is higher than the pre-reclassified average hourly wage for the rural area of the state for purposes of the regulation at § 412.230(a)(5)(i). The commenter asserted that CMS' use of
In response, we clarified that the commenter's interpretation of our policy is correct. We stated that while the court's decision
While we clarified our policy in response to the aforementioned comment, the regulation text inadvertently was not similarly clarified to reflect this policy. Therefore, we proposed to revise the regulation text at § 412.230(a)(5)(i) to reflect our policy clarified in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45189). While it has been CMS' policy to allow a § 412.103 hospital to use either its geographic area or the rural area of the state for purposes of § 412.230(a)(5)(i), we believe that synchronizing the regulation text with our policy clarified in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45189) is necessary for consistency and to reduce unnecessary administrative appeals.
Specifically, we proposed to replace the phrase in the regulation at § 412.230(a)(5)(i) that reads “in the rural area of the state” with the phrase “either in its geographic area or in the rural area of the state.” Section 412.230(a)(5)(i) with this proposed revision would read: An individual hospital may not be redesignated to another area for purposes of the wage index if the pre-reclassified average hourly wage for that area is lower than the pre-reclassified average hourly wage for the area in which the hospital is located. An urban hospital that has been granted redesignation as rural under § 412.103 is considered to be located either in its geographic area or in the rural area of the state for the purposes of this paragraph (a)(5)(i).
As previously stated, under section 1886(d)(10) of the Act, the MGCRB considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. The specific procedures and rules that apply to the geographic reclassification process are outlined in regulations under 42 CFR 412.230 through 412.280. There are 470 hospitals approved for wage index reclassifications by the MGCRB starting in FY 2025. Because MGCRB wage index reclassifications are effective for 3 years, for FY 2025, hospitals reclassified beginning in FY 2023 or FY 2024 are eligible to continue to be reclassified to a particular labor market area based on such prior reclassifications for the remainder of their 3-year period. There were 256 hospitals approved for wage index reclassifications in FY 2023 that will continue for FY 2025, and 352 hospitals approved for wage index reclassifications in FY 2024 that will continue for FY 2025. Of all the hospitals approved for reclassification for FY 2023, FY 2024, and FY 2025, 1,078 hospitals (approximately 32.5 percent of IPPS hospitals) are in a MGCRB reclassification status for FY 2025 (with 237 of these hospitals reclassified back to their urban geographic location). We refer readers to Section III.F.3.b of this final rule for information on the effects of implementation of new OMB labor market area delineations on reclassified hospitals.
Under the existing regulations at § 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw their applications if the request for withdrawal is received by the MGCRB any time before the MGCRB issues a decision on the application, or after the MGCRB issues a decision, provided the request for withdrawal is received by the MGCRB within 45 days of the date that CMS' annual notice of proposed rulemaking is issued in the
For information about the current process for withdrawing, terminating, or canceling a previous withdrawal or termination of a 3-year reclassification for wage index purposes, we refer readers to § 412.273, as well as the FY 2002 IPPS final rule (66 FR 39887 through 39888) and the FY 2003 IPPS final rule (67 FR 50065 through 50066). Additional discussion on withdrawals and terminations, and clarifications regarding reinstating reclassifications and “fallback” reclassifications were included in the FY 2008 IPPS final rule (72 FR 47333) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148 through 38150).
Applications for FY 2026 reclassifications are due to the MGCRB by September 1, 2024. This is also the current deadline for canceling a previous wage index reclassification withdrawal or termination under § 412.273(d) for the FY 2025 cycle.
Applications and other information about MGCRB reclassifications may be obtained beginning in mid-July 2024 via the internet on the CMS website at
With regard to the commenter's suggested revision to the regulation at § 412.256(c), we did not propose any modifications to the regulations at § 412.256(c) and believe that the current regulation at § 412.256(c) already provides for a robust and transparent process. Specifically, the regulation at 412.256(c)(1) states: “The MGCRB will review an application within 15 days of receipt to determine if the application is complete. If the MGCRB determines that an application is incomplete, the MGCRB will notify the hospital, with a copy to CMS, within the 15 day period, that it has determined that the application is incomplete and may dismiss the application if a complete application is not filed by September 1.” We reiterate that a hospital can avoid the administrative burden of an appeal by submitting a complete application at the time of filing.
Reclassifications granted under section 1886(d)(10) of the Act are effective for 3 fiscal years, so that a hospital or county group of hospitals would be assigned a wage index based upon the wage data of hospitals in the labor market area to which it reclassified for a 3-year period. Because hospitals that have been reclassified beginning in FY 2023, 2024, or 2025 were reclassified based on the current labor market delineations, under the revised OMB delineations based on the OMB Bulletin No. 23-01 beginning in FY 2025 the CBSAs to which they have been reclassified, or the CBSAs where they are located, may change. In the proposed rule, we encouraged hospitals with current reclassifications to verify area wage indexes in Table 2 in the appendix, and to confirm that the CBSAs to which they have been reclassified for FY 2025 would continue to provide a higher wage index than their geographic area wage index. Hospitals were able to withdraw or terminate their FY 2025 reclassifications by contacting the MGCRB within 45 days from the date the proposed rule was issued in the
We proposed that in the case where a CBSA adds a current rural county, or loses a current constituent rural county, a hospital's current reclassification to the resulting CBSA would be maintained. In some cases, a hospital may be located in a rural county that would join the CBSA to which the hospital is reclassified. We note that in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49977), CMS terminated reclassifications when, as a result of adopting the revised OMB delineations, a hospital's geographic county was located in the CBSA for which it was approved for MGCRB reclassification. At that time, there was no means for a hospital to obtain an MGCRB reclassification to its own geographic area (which we refer to as “home area” reclassifications). However, as discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56925), “home area” reclassifications have since become possible as a result of the change in policy in the 2016 IFC (81 FR 23428 through 23438) discussed earlier allowing for dual reclassifications. We therefore do not believe it is necessary to terminate these reclassifications as we did in FY 2015. In general, once the MGCRB has approved a reclassification in accordance with subpart L of 42 CFR part 412, that reclassification remains in place for 3 years (see § 412.274(b)(2)) unless terminated by the hospital pursuant to § 412.273, and CMS does not reevaluate whether the hospital continues to meet the criteria for reclassification during the three-year period. As such, we proposed to maintain these as “home area” reclassifications instead of terminating them.
If a county is removed from a CBSA and becomes rural, a hospital in that county with a current “home area” reclassification would no longer be geographically located in the CBSA to which they are reclassified. We proposed that these reclassifications would no longer be considered “home area” reclassifications, and the hospital would be assigned the wage index applicable to other hospitals that reclassify into the CBSA (which may be lower than the wage index calculated for hospitals geographically located in the CBSA due to the hold harmless provision at section 1886(d)(8)(C)(i) of the Act).
Finally, as discussed in section III.B.4, all the constituent counties of CBSA 14100 (Bloomsberg-Berwick, PA), CBSA 19180 (Danville, IL), CBSA 20700 (East Stroudsburg, PA) and CBSA 35100 (New Bern, NC) become rural under the revised OMB delineations. There are 6 hospitals with reclassifications to these previously urban CBSAs.
As there is no sufficiently similar urban CBSA in the revised delineations, we proposed that hospitals' MGCRB reclassifications to these CBSAs would be terminated for FY 2025. The effect of such terminations would be that these hospitals would receive the wage index for the CBSA in which they are geographically located, or in the case of hospitals with § 412.103 reclassification, the rural wage index. While we would prefer to maintain the remaining years of a MGCRB reclassification and transition these reclassified hospitals to the most appropriate CBSA under the revised delineations, because there are no urban counties remaining in the CBSAs listed above to which they are currently reclassified, there is no urban area to which they can be assigned that includes at least one county from the CBSA to which the MGCRB approved reclassification. We received no comments regarding our proposed policy to maintain MGCRB reclassification to a CBSA that either gains or loses one or more counties to or from a rural area, nor did we receive comments regarding our proposed policy for addressing home area reclassifications in these areas. We are finalizing these policies as proposed.
Furthermore, while we acknowledge that dual § 412.103 and MGCRB reclassification status has an impact on the rural wage index, as described in detail in the FY 2024 final rule (88 FR 58971 through 58977), we are not convinced that this impact warrants any special exception or treatment by CMS.
For these reasons, CMS will not adopt any of the alternative reclassification assignment approaches suggested by the commenter. Each recommendation requires CMS to effectively initiate and approve a new MGCRB reclassification. In each recommended option, no part of any CBSA that could be assigned was included in the original application approved by the MGCRB. We are finalizing the policy to terminate MGCRB reclassifications in cases where the CBSA to which a hospital's reclassification was approved became rural under the revised OMB delineations adopted in this final rule.
We proposed that in the case of a CBSA that experiences a change in CBSA number, or where all urban counties in the CBSA are subsumed by another CBSA, MGCRB reclassifications approved to the FY 2024 CBSA would be assigned the revised FY 2025 CBSA (as described in the section III.B.6). In some cases, this reconfiguration of CBSAs would result in an MGCRB reclassification approved to a different area becoming a “home area” reclassification, if a hospital's current geographic urban CBSA is subsumed by its reclassified CBSA. Otherwise, the current reclassification would continue to the proposed revised CBSA number.
We did not receive any comments specific to this proposal and are finalizing this policy to assign the revised CBSA number to hospitals reclassified to a CBSA where the CBSA number changes, or the CBSA is subsumed by another CBSA.
In some cases, adopting the revised OMB delineations would result in one or more counties splitting apart from their current CBSAs to form new CBSAs, or counties shifting from one CBSA designation to another CBSA. If CBSAs are split apart, or if counties shift from one CBSA to another under the revised OMB delineations, for hospitals that have reclassified to these CBSAs we must determine which reclassified area to assign to the hospital for the remainder of a hospital's 3-year reclassification period.
Consistent with the policy implemented in FY 2021 (85 FR 58743 through 58753), we proposed to assign current “home area” reclassifications to these CBSAs to the hospital's geographic CBSA. That is, hospitals that were approved for MGCRB reclassification to the geographic area they are located in effective for FYs 2023, 2024, or 2025 would continue to be assigned a reclassification to their geographic “home area.” The assigned “home area” reclassification CBSA may be different from previous years if the hospital is located in a county that was relocated to a new or different urban CBSA.
The following is a table of hospitals with current “home area” reclassification to CBSAs where one or more counties move to a new or different urban CBSA under the revised OMB delineations. The reclassification noted by an asterisk on the “MGCRB Case Number” was withdrawn for FY 2025, but may be reinstated for FY 2026.
Consistent with the policy CMS implemented in the FY 2005 IPPS final rule (69 FR 49054 through 49056), the FY 2015 IPPS final rule (79 FR 49973 through 49977), and in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58743 through 58753), for FY 2025, if a CBSA would be reconfigured due to adoption of the revised OMB delineations and it would not be possible for the reclassification to continue seamlessly to the reconfigured CBSA (not including
The following Table X provides a list of current FY 2024 CBSAs (column 1) where one or more counties would be relocated to a new or different urban CBSA under the proposed policy. Hospitals with active MGCRB reclassifications into the current FY 2024 CBSAs in column 1 would be subject to the reclassification assignment policy described in this subsection. The third column of “eligible” CBSAs lists all proposed revised CBSAs that contain at least one county that is part of the current FY 2024 CBSA (in column 1).
We did not receive any comments regarding the MGCRB reclassification assignment and reassignment policy. We are finalizing the policy as proposed.
We received five requests to reassign the assigned CBSA to a different eligible CBSA (as described in Table X). One request was related to the comment summarized above regarding the termination of reclassification for hospitals reclassified to areas where all counties in the CBSA would become rural. This hospital (CCN 140113) requested to have its MGCRB reclassification reassigned to its geographic “home” CBSA 16580. We did not propose this CBSA as eligible for reassignment and are denying this request for the reasons discussed earlier. We note that this hospital, by cancelling its current § 412.103 rural reclassification, will receive the wage index for its geographic CBSA in FY 2025.The remaining requests are as follows:
We note that MGCRB Case No. 25C0250 (CCN 490113) was a “home area” reclassification and was assigned its new geographic “home area” in the proposed rule. We did not explicitly address in the proposed rule whether hospitals with “home area” reclassifications to a CBSA that had one or more counties move to a new or different CBSA would be eligible to request reassignment to that new or different CBSA. However, we find that the case meets the proposed requirements for reassignment applicable generally to hospitals whose reclassifications are reassigned on the basis of changes to the CBSA under the revised OMB delineations, as the hospital is requesting to be reclassified to an area that is a) not its geographic CBSA and b) contains at least one county from its approved CBSA.
After reviewing the submitted materials, we have determined these four requests meet the appropriate distance requirements for reassignment and have approved the requests as described.
Table Y lists all hospitals subject to our reclassification assignment and reassignment policy and the CBSA assigned or reassigned for FY 2025 under this policy. Cases marked with an asterisk were withdrawn or terminated for FY 2025 but may be reinstated in FY 2026.
We note that the Office of Hearings Case and Document Management System (OH CDMS) may not be updated to reflect different CBSA numbers for reclassification assignments and reassignments finalized in this rule. When making withdrawal, termination, or reinstatement requests for these cases, the original CBSA number may be displayed in the OH CDMS. If hospitals require further assistance in this matter, please contact
As discussed in section III.B., CMS is adopting the revised OMB Bulletin No. 23-01 delineations, which use planning regions instead of counties as the basis for CBSA construction in the State of Connecticut. There are five current urban CBSAs that include at least one county in Connecticut. These are 14860 (Bridgeport-Stamford-Norwalk, CT), 25540 (Hartford-East Hartford-Middletown, CT), 35300 (New Have-Milford, CT), 35980 (Norwich-New London, CT), and 49340 (Worcester, MA-CT). In the FY 2025 CBSAs, based on the OMB Bulletin No. 23-01 delineations, there are five CBSAs that will contain at least one county-equivalent “planning region.” The five CBSAs are 14860 (Bridgeport-Stamford-Danbury, CT), 25540 (Hartford-West Hartford-East Hartford, CT), 35300 (New Haven, CT), 35980 (Norwich-New London-Willimantic, CT), and 47930 (Waterbury-Shelton, CT).
As there was significant reconfiguration of the CBSAs due to the transition from counties to planning regions, we proposed to adopt a similar assignment policy for hospitals reclassified to CBSAs that currently include Connecticut counties as we did for hospitals reclassified to CBSAs where one or more counties move to a new or different urban CBSA (described in the previous subsection).
The following table lists all current “home area” reclassifications to one of the CBSAs that currently contain at least one county in Connecticut.
The following table provides a list of current FY 2024 CBSAs (column 1) that contain at least one county in Connecticut. Under the proposal, hospitals with active MGCRB reclassifications into the CBSAs in column 1 would be subject to the reclassification assignment policy. The third column of “eligible” CBSAs lists all revised CBSAs that contain at least one planning region that is part of the current FY 2025 CBSA (in column 1). Consistent with the policy discussed in the previous section, we proposed a policy that affected reclassified hospitals be assigned to a CBSA that would contain the most proximate planning region that (1) is located outside of the hospital's proposed FY 2025 geographic labor market area, and (2) contains a portion of a county included in the original FY 2024 CBSA to which the hospital is reclassified.
We believe that assigning reclassifications to the CBSA that contains the nearest county-equivalent planning region that meets the aforementioned criteria satisfies the statutory requirement at section 1886(d)(10)(v) of the Act by maintaining reclassification status for a period of 3 fiscal years, while generally respecting the longstanding principle of geographic proximity in the labor market reclassification process. For county group reclassifications, we would follow our proposed policy, as previously discussed, except that we proposed to reassign hospitals in a county group reclassification to the CBSA under the revised OMB delineations that contains the county-equivalent to which the majority of hospitals in the group reclassification are geographically closest. We also proposed to allow such hospitals, or county groups of hospitals, to submit a request to the
We did not receive any comments regarding the MGCRB reclassification assignment and reassignment policy due to the adoption of the revised Connecticut county-equivalents. We are finalizing the policy as proposed.
We received two requests from hospitals affected by this policy to reassign the assigned CBSA to a different eligible CBSA (as described in Table X).
After reviewing the submitted materials, we have determined both requests meet the appropriate distance requirements for reassignment and have approved these requests.
Table Y lists all hospitals subject to our reclassification assignment and reassignment policy for CBSAs reconfigured due to the migration to Connecticut planning regions and the CBSA assigned or reassigned for FY 2025 under this policy. Cases marked with an asterisk were withdrawn for FY 2025 but may be reinstated in FY 2026.
We note that the OH CDMS may not be updated to reflect different CBSA numbers for reclassification assignments and reassignments finalized in this rule. When making withdrawal, termination, or reinstatement requests for these cases, the original CBSA number may be displayed in the OH CDMS. If hospitals require further assistance in this matter, please contact
As mentioned in section III.F.3.a of this final rule, under the regulations at § 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw or terminate an approved reclassification. The current regulations at § 412.273(c)(1)(ii) and (c)(2) for withdrawals and terminations require the request to be received by the MGCRB within 45 days of the date that CMS' annual notice of proposed rulemaking is issued in the
In the 2018 IPPS/LTCH PPS Final Rule (82 FR 38148 through 38150), we finalized changes to the 45-day notification rules so that hospitals have 45 days from the public display of the annual proposed rule for the IPPS instead of 45 days from publication to inform CMS of certain requested changes relating to the development of the hospital wage index. We stated that we believe that the public has access to the necessary information from the date of public display of the proposed rule at the Office of the Federal Register and on its website to make the decisions at issue. While we finalized changes to the 45-day notification rules for decisions about the outmigration adjustment and waiving Lugar status, we did not finalize a change to the timing for withdrawing or terminating MGCRB decisions.
Instead, in response to comments expressing concern that some hospitals may be disadvantaged if the Administrator's decision on a hospital's request for review of an MGCRB decision has not been issued prior to the proposed deadline for submitting withdrawal or termination requests to the MGCRB, we maintained our existing policy of requiring hospitals to request from the MGCRB withdrawal or termination of an MGCRB reclassification within 45 days of issuance in the
However, the MGCRB currently issues decisions earlier, in January, which mitigates this concern. For example, the MGCRB has sent decision letters to hospitals via email on January 23, 2024, for the FY 2025 cycle and on January 31, 2023, for the FY 2024 cycle. We believe that the MGCRB will continue to issue its decisions in January, due to their upgrade to an electronic system that expedites processing applications and issuing decision letters efficiently. The regulations at §§ 412.278(a) and (b)(1) provide that a hospital may request the Administrator to review the MGCRB decision within 15 days after the date the MGCRB issues its decision. Under § 412.278(f)(2)(i), the Administrator issues a decision not later than 90 days following receipt of the party's request for review. Consequently, MGCRB decisions could be issued as late as the end of January, and the 15 days the hospital has to request the Administrator's review, plus the 90 days the Administrator has to issue a decision, would result in hospitals receiving the results of the review prior to 45 days after display (which would be May 16th if the proposed rule is displayed on the target date of April 1, but later if there is a delay).
While the current timing of MGCRB decisions in January allows for hospitals to receive the results of any review prior to 45 days after display of the proposed rule for the relevant FY, and we expect this timing to continue, we acknowledge that section 1886(d)(10)(C)(iii)(I) of the Act grants the MGCRB 180 days after the application deadline to render a decision. If the MGCRB were to delay issuing decisions until the last day possible according to the Statute, which is February 28th, a hospital requesting the Administrator's review may not receive the results of the review prior to 45 days after display.
Therefore, we proposed to change the deadline for hospitals to withdraw or terminate MGCRB classifications from within 45 days of the date that the annual notice of proposed rulemaking is issued in the
Specifically, we proposed to change the words “within 45 days of the date that CMS' annual notice of proposed rulemaking is issued in the
Therefore, we are finalizing our proposed changes without modification to the regulations for withdrawals and terminations at § 412.273(c)(1)(ii) & (c)(2).
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599 through 51600), we adopted the policy that, beginning with FY 2012, an eligible hospital that waives its Lugar status to receive the out-migration adjustment has effectively waived its deemed urban status and, thus, is rural for all purposes under the IPPS effective for the fiscal year in which the hospital receives the outmigration adjustment. In addition, in that rule, we adopted a minor procedural change that would allow a Lugar hospital that qualifies for and accepts the out-migration adjustment (through written notification to CMS within 45 days from the issuance of the proposed rule in the
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42314 and 42315), we clarified that in circumstances where an eligible hospital elects to receive the outmigration adjustment within 45 days of the public display date of the proposed rule at the Office of the Federal Register in lieu of its Lugar wage index reclassification, and the county in which the hospital is located would no longer qualify for an outmigration adjustment when the final rule (or a subsequent correction notice) wage index calculations are completed, the hospital's request to accept the outmigration adjustment would be denied, and the hospital would be automatically assigned to its deemed urban status under section 1886(d)(8)(B) of the Act. We stated that final rule wage index values would be recalculated to reflect this reclassification, and in some instances, after taking into account this reclassification, the out-migration adjustment for the county in question could be restored in the final rule. However, as the hospital is assigned a Lugar reclassification under section 1886(d)(8)(B) of the Act, it would be ineligible to receive the county outmigration adjustment under section 1886(d)(13)(G) of the Act.
As discussed in section III.A.2. of the preamble of this final rule, CMS is updating the CBSA labor market delineations to reflect the changes made in the July 15, 2023, OMB Bulletin 23-01. In that section, we noted that 54 currently rural counties will be added to new or existing urban CBSAs. Of those 54 counties, 22 are currently deemed urban under section 1886(d)(8)(B) of the Act. We proposed that hospitals located in such a “Lugar” county, barring another form of wage index reclassification, are assigned the reclassified wage index of a designated urban CBSA. Section 1886(d)(8)(B) of the Act defines a deemed urban county as a “rural county adjacent to one or more urban areas” that meets certain commuting thresholds. Since we proposed to modify the status of these 22 counties from rural to urban, they would no longer qualify as “Lugar” counties. Hospitals located within these counties would be considered geographically urban under the revised OMB delineations. The table in this section of this rule lists the counties that are no longer deemed urban under section 1886(d)(8)(B) of the Act under the revised OMB delineations. We note that in almost all instances, the “Lugar” county is joining the same (or a substantially similar) urban CBSA as it was deemed to in FY 2024.
We note that in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49973 through 49977), when we adopted large scale changes to the CBSA labor market delineations based on the new 2010 decennial census, we also re-evaluated the commuting data thresholds for all eligible rural counties in accordance with the requirement set forth in section 1886(d)(8)(B)(ii)(II) of the Act to base the list of qualifying hospitals on the most recently available decennial population data. Therefore, we proposed to reevaluate the “Lugar” status for all counties in FY 2025 using the same commuting data table used to develop the OMB Bulletin No. 23-01 revised delineations. The data table is the “2016-2020 5-Year American Community Survey Commuting Flows” (available on OMB's website:
By applying the 2020 American Community Survey (ACS) commuting data to the updated OMB labor market delineations, we proposed the following changes to the current “Lugar” county list: 17 of the 53 urban counties that were proposed to become rural under the revised OMB delineations, and both newly created rural Connecticut planning region county-equivalents would qualify as “Lugar” counties. We also determined that, as proposed, 33 rural counties (an approximately 11 hospitals) would lose “Lugar” status, as the county no longer meets the commuting thresholds or adjacency criteria specified in section 1886(d)(8)(B) of the Act.
The following table lists all proposed “Lugar” counties for FY 2025. We indicated additions to the list for FY 2025 with “New” in column 5.
We noted that Litchfield County, CT is no longer listed as a “Lugar” county as it is not included in the revised CBSA delineations. The majority of Litchfield County is now within the Northwest Hills Planning Region county-equivalent, with some of the county's current constituent townships assigned to other urban county-equivalents. We
We recognize that the changes to the “Lugar” list may have negative financial impacts for hospitals that lose deemed urban status. We believe that the 5 percent cap on negative wage index changes discussed in section III.G.6, would mitigate significant negative payment impacts for FY 2025, and would afford hospitals adequate time to fully assess any additional reclassification options available to them. We also note that special statuses limited to hospitals located in rural areas (such as MDH or SCH status) may be terminated if hospitals are deemed urban under section 1886(d)(8)(B) of the Act. In these cases, hospitals should apply for rural reclassification status under § 413.103 prior to October 1, 2024, if they wish to ensure no disruption in status.
We did not receive any comments regarding the implementation of revised OMB labor market area delineations for redesignations under section 1886(d)(8)(B) of the Act. We are finalizing without modification the list of proposed qualifying counties listed in the prior table.
The following adjustments to the wage index are listed in the order that they are generally applied. First, the rural floor, imputed floor, and state frontier floor provide a minimum wage index. The rural floor at section 4410(a) of the Balanced Budget Act of 1997 (Pub. L. 105-33) provides that the wage index for hospitals in urban areas of a State may not be less than the wage index applicable to hospitals located in rural areas in that State. The imputed floor at section 1886(d)(3)(E)(iv) of the Act provides a wage index minimum for all-urban states. The state frontier floor at section 1886(d)(3)(E)(iii) of the Act requires that hospitals in frontier states cannot be assigned a wage index of less than 1.0000. Next, the out-migration adjustment at section 1886(d)(13)(A) of the Act is applied, potentially increasing the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county but work in a different county or counties with a higher wage index. The low-wage index hospital adjustment finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42325 through 42339) is then applied, which increases the wage index values for hospitals with wage indexes at or below the 25th percentile. Finally, all hospital wage index decreases are capped at 95 percent of the hospital's final wage index in the prior fiscal year, according to the policy finalized in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through 49021).
Section 4410(a) of the Balanced Budget Act of 1997 (Pub. L. 105-33) provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. This provision is referred to as the rural floor. Section 3141 of the Patient Protection and Affordable Care Act (Pub. L. 111-148) also requires that a national budget neutrality adjustment be applied in implementing the rural floor. Based on the FY 2025 wage index associated with this final rule (which is available via the internet on the CMS website), and based on the calculation of the rural floor including the wage data of hospitals that have reclassified as rural under § 412.103, we estimate that 771 hospitals would receive the rural floor in FY 2025. The budget neutrality impact of the proposed application of the rural floor is discussed in section II.A.4.e. of Addendum A of this final rule.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48784), CMS finalized a policy change to calculate the rural floor in the same manner as we did prior to the FY 2020 IPPS/LTCH PPS final rule, in which the rural wage index sets the rural floor. We stated that for FY 2023 and subsequent years, we would include the wage data of § 412.103 hospitals that have no MGCRB reclassification in the calculation of the rural floor, and include the wage data of such hospitals in the calculation of “the wage index for rural areas in the State in which the county is located” as referred to in section 1886(d)(8)(C)(iii) of the Act.
In the FY 2024 IPPS/LTCH final rule (88 FR 58971-77), we finalized a policy change beginning that year to include the data of
Accordingly, in the FY 2024 IPPS/LTCH PPS final rule, we finalized a policy to include hospitals with § 412.103 reclassification along with geographically rural hospitals in all rural wage index calculations, and to exclude “dual reclass” hospitals (hospitals with simultaneous § 412.103 and MGCRB reclassifications) that are implicated by the hold harmless provision at section 1886(d)(8)(C)(ii) of the Act. (For additional information on these changes, we refer readers to the FY 2024 IPPS/LTCH PPS final rule (88 FR 58971 through 58977).)
Multiple commenters expressed concern over the rural floor budget neutrality factor. A commenter disagreed with CMS' decision to budget neutralize the policy to include hospitals with simultaneous § 412.103 and MGCRB reclassifications in the rural wage index calculation. The commenter stated that some hospitals are paying a substantial cost for an artificial increase in the wage index of other hospitals, and that this cost escalates as hospitals around the country make reclassification decisions to take advantage of this policy change. Another commenter pointed out that the rural floor budget neutrality factor has more than doubled over the past decade, with the most notable increase occurring in FY 2024 due to CMS' decision to include § 412.103 reclassifications along with geographically rural hospitals in the
Other commenters acknowledged CMS' statutory budget neutrality requirement but challenged CMS' application of the rural floor. These commenters argued that section 4410(b) of the Balanced Budget Act of 1997 (BBA) exempts urban and reclassified rural hospitals that receive the rural floor from having their wage indexes reduced. According to these commenters, the rural floor budget neutrality adjustment should be applied only to the wage indexes of hospitals not receiving the rural floor (
In response to the commenter asking for clarification about how § 412.103 hospitals are reflected in the pre-reclassified wage index, we are clarifying that the pre-reclassified wage index reflects hospitals' locations prior to any form of reclassification for budget neutrality purposes.
We understand the commenter's concerns regarding the effect that the rural floor budget neutrality factor has on some hospitals as other hospitals make reclassification decisions to take advantage of the rural floor policy. The commenter noting the increase in the rural floor budget neutrality factor in FY 2024 is correct that the budget neutrality factor increased by 2.87% that year, compared to 1.56% the year before. As we noted in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58975), we expect that the number of IPPS hospitals assigned their State's rural wage index will increase in future years as hospitals adjust to the policy and as the relative value of States' rural wage index values increase due to the inclusion of hospitals that strategically obtain § 412.103 reclassification. As a result, the majority of hospitals (if not all) will be assigned identical wage index values within their states. For example, for FY 2025, 58% of geographically urban hospitals are receiving a wage index equal to their State's rural floor, imputed floor, or frontier floor prior to any outmigration, low wage index hospital, or 5 percent decrease cap adjustments. As we stated in last year's IPPS/LTCH PPS final rule (88 FR 58975), as substantially more hospitals receive the rural floor, there will be a consequently greater budget neutrality impact. However, we believe this result would be unavoidable given the requirement of section 1886(d)(8)(E) of the Act to treat § 412.103 hospitals `as being located in the rural area' of the state, as well as the requirement at sections 4410(b) of the BBA 1997 and 3141 of the Patient Protection and Affordable Care Act (Pub. L. 111-148) that a uniform, national budget neutrality adjustment be applied in implementing the rural floor. With regard to the commenter requesting evaluation of the impacts of the policy at the hospital and state-specific levels, we refer the commenter to the IPPS Payment Impact File associated with this final rule (available on the CMS website at:
With regard to the commenters' assertion that urban and reclassified rural hospitals that receive the rural floor should be excluded from the application of the rural floor budget neutrality factor, we considered this approach in the FY 2008 IPPS proposed and final rules (72 FR 24787 and 72 FR 47325) and believe we have applied the rural floor budget neutrality adjustment in a manner consistent with the statute. Specifically, in the FY 2008 IPPS proposed rule, we rejected a reading of section 4410(b) of the BBA requiring that the budget neutrality adjustment would be applied only to those hospitals that do not receive the rural floor, because urban hospitals receiving the rural floor would receive a higher wage index than the rural hospitals within the same State (because hospitals receiving the rural floor would not be subject to budget neutrality, whereas rural hospitals would be) (72 FR 24787). We continue to believe that such a reading would not be consistent with the best reading of the statute. The statute sets a floor for urban hospitals. The statute does not instruct CMS to pay urban hospitals a wage index higher than the wage index applicable to rural hospitals, and contains no suggestion that the general budget neutrality provisions of section 1886(d)(8)(D)—which expressly apply to the adjustments made in section 1886(d)(C)—should not apply . In the FY 2008 IPPS final rule, we adopted the current approach to implement rural floor budget neutrality by applying a uniform, national adjustment to the wage index (72 FR 47325). Since then, Congress specifically endorsed our approach in section 3141 of the Patient Protection and Affordable Care Act (Pub. L. 111-148), which requires that the rural floor budget neutrality adjustment be applied “in the same manner as the Secretary administered such [adjustment] for discharges occurring during fiscal year 2008 (through a uniform, national adjustment to the area wage index).”
In addition, we note that section 4410 of the BBA to which the commenter refers provides that the rural floor is equal to “the area wage index applicable under [section 1886(d)(3)(E) of the Social Security Act] to hospitals located in rural areas in the State.” Under our existing policy, the rural floor and the rural wage index for the state are the same after application of the rural floor budget neutrality adjustment factor, and nothing in section 4410 of the BBA requires otherwise. Put differently, CMS' methodology amounts to merely calculating the amount of the rural floor such that it is the same as the final rural wage index for the state, rather than reducing the wage indices of low wage urban hospitals or reclassified rural hospitals that receive the rural floor relative to what they would be otherwise—in that way it appropriately implements both section 4410 of the BBA and section 3141 of the ACA. Thus, consistent with our longstanding methodology for implementing the rural floor, we believe it is appropriate to continue to apply a budget neutrality adjustment to all hospitals' wage indexes.
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we adopted the imputed floor policy as a temporary 3-year regulatory measure to address concerns from hospitals in all-urban States that have stated that they are disadvantaged by the absence of rural hospitals to set a wage index floor for those States. We extended the imputed floor policy eight times since its initial implementation, the last of which was adopted in the FY 2018 IPPS/LTCH PPS final rule and expired on September 30, 2018. We refer readers to further discussions of the imputed floor in the IPPS/LTCH PPS final rules from FYs 2014 through 2019 (78 FR 50589 through 50590, 79 FR 49969 through
Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-2), enacted on March 11, 2021, amended section 1886(d)(3)(E)(i) of the Act and added section 1886(d)(3)(E)(iv) of the Act to establish a minimum area wage index for hospitals in all-urban States for discharges occurring on or after October 1, 2021. Specifically, section 1886(d)(3)(E)(iv)(I) and (II) of the Act provides that for discharges occurring on or after October 1, 2021, the area wage index applicable to any hospital in an all-urban State may not be less than the minimum area wage index for the fiscal year for hospitals in that State established using the methodology described in § 412.64(h)(4)(vi) as in effect for FY 2018. Unlike the imputed floor that was in effect from FYs 2005 through 2018, section 1886(d)(3)(E)(iv)(III) of the Act provides that the imputed floor wage index shall not be applied in a budget neutral manner. Section 1886(d)(3)(E)(iv)(IV) of the Act provides that, for purposes of the imputed floor wage index under clause (iv), the term all-urban State means a State in which there are no rural areas (as defined in section 1886(d)(2)(D) of the Act) or a State in which there are no hospitals classified as rural under section 1886 of the Act. Under this definition, given that it applies for purposes of the imputed floor wage index, we consider a hospital to be classified as rural under section 1886 of the Act if it is assigned the State's rural area wage index value.
Effective beginning October 1, 2021 (FY 2022), section 1886(d)(3)(E)(iv) of the Act reinstates the imputed floor wage index policy for all-urban States, with no expiration date, using the methodology described in § 412.64(h)(4)(vi) as in effect for FY 2018. We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR 45176 through 45178) for further discussion of the original imputed floor calculation methodology implemented in FY 2005 and the alternative methodology implemented in FY 2013.
Based on data available for this final rule, States that will be all-urban States as defined in section 1886(d)(3)(E)(iv)(IV) of the Act, and thus hospitals in such States that will be eligible to receive an increase in their wage index due to application of the imputed floor for FY 2025, are identified in Table 3 associated with this final rule. States with a value in the column titled “State Imputed Floor” are eligible for the imputed floor.
The regulations at § 412.64(e)(1) and (4) and (h)(4) and (5) implement the imputed floor required by section 1886(d)(3)(E)(iv) of the Act for discharges occurring on or after October 1, 2021. The imputed floor will continue to be applied for FY 2025 in accordance with the policies adopted in the FY 2022 IPPS/LTCH PPS final rule. For more information regarding our implementation of the imputed floor required by section 1886(d)(3)(E)(iv) of the Act, we refer readers to the discussion in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45176 through 45178).
Section 10324 of Public Law 111-148 requires that hospitals in frontier States cannot be assigned a wage index of less than 1.0000. (We refer readers to the regulations at § 412.64(m) and to a discussion of the implementation of this provision in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50160 through 50161).) In the FY 2025 IPPS/LTCH PPS proposed rule, we did not propose any changes to the frontier floor policy for FY 2025. In the proposed rule we stated 41 hospitals would receive the frontier floor value of 1.0000 for their FY 2025 proposed wage index. These hospitals are located in Montana, North Dakota, South Dakota, and Wyoming.
We did not receive any public comments on the application of the State frontier floor for FY 2025. In this final rule, 41 hospitals will receive the frontier floor value of 1.0000 for their FY 2025 wage index. These hospitals are located in Montana, North Dakota, South Dakota, and Wyoming. We note that while Nevada meets the criteria of a frontier State, all hospitals within the State currently receive a wage index value greater than 1.0000.
The areas affected by the rural and frontier floor policies for the final FY 2025 wage index are identified in Table 3 associated with this final rule, which is available via the internet on the CMS website.
In accordance with section 1886(d)(13) of the Act, as added by section 505 of Public Law 108-173, beginning with FY 2005, we established a process to make adjustments to the hospital wage index based on commuting patterns of hospital employees (the “out-migration” adjustment). The process, outlined in the FY 2005 IPPS final rule (69 FR 49061), provides for an increase in the wage index for hospitals located in certain counties that have a relatively high percentage of hospital employees who reside in the county but work in a different county (or counties) with a higher wage index.
Section 1886(d)(13)(B) of the Act requires the Secretary to use data the Secretary determines to be appropriate to establish the qualifying counties. When the provision of section 1886(d)(13) of the Act was implemented for the FY 2005 wage index, we analyzed commuting data compiled by the U.S. Census Bureau that were derived from a special tabulation of the 2000 Census journey-to-work data for all industries (CMS extracted data applicable to hospitals). These data were compiled from responses to the “long-form” survey, which the Census Bureau used at that time, and which contained questions on where residents in each county worked (69 FR 49062). However, the 2010 Census was “short form” only; information on where residents in each county worked was not collected as part of the 2010 Census. The Census Bureau worked with CMS to provide an alternative dataset based on the latest available data on where residents in each county worked in 2010, for use in developing a new out-migration adjustment based on new commuting patterns developed from the
To determine the out-migration adjustments and applicable counties for FY 2016, we analyzed commuting data compiled by the Census Bureau that were derived from a custom tabulation of the American Community Survey (ACS), an official Census Bureau survey, utilizing 2008 through 2012 (5-year) Microdata. The data were compiled from responses to the ACS questions regarding the county where workers reside and the county to which workers commute. As we discussed in prior IPPS/LTCH PPS final rules, most recently in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58983), we have applied the same policies, procedures, and computations since FY 2012. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49500 through 49502) for a full explanation of the revised data source. We also stated that we would consider determining out-migration adjustments based on data from the next Census or other available data, as appropriate.
As discussed earlier in section III.B., CMS proposed to adopt revised delineations from the OMB Bulletin 23-01, published July 21, 2023. The revised delineations incorporate population estimates based on the 2020 decennial census, as well as updated journey-to-work commuting data. The Census Bureau once again worked with CMS to provide an alternative dataset based on the latest available data on where residents in each county worked, for use in developing a new out-migration adjustment based on new commuting patterns. We analyzed commuting data compiled by the Census Bureau that were derived from a custom tabulation of the ACS, utilizing 2016 through 2020 data. The Census Bureau produces county level commuting flow tables every 5 years using non-overlapping 5-year ACS estimates. The data include demographic characteristics, home and work locations, and journey-to-work travel flows. The custom tabulation requested by CMS was specific to general medical and surgical hospital and specialty (except psychiatric and substance use disorder treatment) hospital employees (hospital sector Census code 8191/NAICS code 6221 and 6223) who worked in the 50 States, Washington, DC, and Puerto Rico and, therefore, provided information about commuting patterns of workers at the county level for residents of the 50 States, Washington, DC, and Puerto Rico.
For the ACS, the Census Bureau selects a random sample of addresses where workers reside to be included in the survey, and the sample is designed to ensure good geographic coverage. The ACS samples approximately 3.5 million resident addresses per year.
For FY 2025, and subsequent years, we proposed that the out-migration adjustment will be based on the data derived from the previously discussed custom tabulation of the ACS utilizing 2016 through 2020 (5-year) Microdata. As discussed earlier, we believe that these data are the most appropriate to establish qualifying counties, because they are the most accurate and up-to-date data that are available to us. Furthermore, we stated in the proposed rule (89 FR 36183) that with the proposed transition of several counties in Connecticut to “planning region” county equivalents (discussed in section III.B.3. of the preamble the proposed rule), the continued use of a commuting dataset developed with expiring county definitions would be less accurate in approximating commuting flows. We proposed that the FY 2025 out-migration adjustments continue to be based on the same policies, procedures, and computation that were used for the FY 2012 out-migration adjustment. We have applied these same policies, procedures, and computations since FY 2012, and we believe they continue to be appropriate for FY 2025. (We refer readers to a full discussion of the out-migration adjustment, including rules on deeming hospitals reclassified under section 1886(d)(8) or section 1886(d)(10) of the Act to have waived the out-migration adjustment, in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51601 through 51602).) Table 2 of this final rule (which is available via the internet on the CMS website) lists the out-migration adjustments for the FY 2025 wage index.
We did not receive any comments regarding the proposed policy to use the custom tabulations of the ACS 2016 through 2020 (5-year) Microdata as the basis for the out-migration adjustment. We are finalizing the policy as proposed. We also note that we published the raw data file received from the US Census Bureau on the FY 2025 IPPS Proposed Rule Home Page. The file is item 15 in the supplementary file section at
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42325 through 42339), we finalized a policy to address the artificial magnification of wage index disparities, based in part on comments we received in response to our request for information included in our FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20372 through 20377). In the FY 2020 IPPS/LTCH final rule, based on those public comments and the growing disparities between wage index values for high- and low-wage-index hospitals, we explained that those growing disparities are likely caused, at least in part, by the use of historical wage data to prospectively set hospitals' wage indexes. That lag creates barriers to hospitals with low wage index values being able to increase employee compensation, because those hospitals will not receive corresponding increases in their Medicare payment for several years (84 FR 42327). Accordingly, we finalized a policy that provided certain low wage index hospitals with an opportunity to increase employee compensation without the usual lag in those increases being reflected in the calculation of the wage index (as they would expect to do if not for the lag).
We increased the wage index for hospitals with a wage index value below the 25th percentile wage index value for a fiscal year by half the difference between the otherwise applicable final wage index value for a year for that hospital and the 25th percentile wage index value for that year across all hospitals (the low wage index hospital policy). We stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42326 through 42328) our intention that this policy would be effective for at least 4 years, beginning in FY 2020, to allow employee compensation increases implemented by these hospitals sufficient time to be reflected in the wage index calculation.
We note that the FY 2020 low wage index hospital policy and the related budget neutrality adjustment are the subject of pending litigation in multiple courts. On July 23, 2024, the Court of Appeals for the D.C. Circuit held that the Secretary lacked authority under 1886(d)(3)(E) or 1886(d)(5)(I)(i) of the Act to adopt the low wage index hospital policy for FY 2020, and that the policy and related budget neutrality adjustment must be vacated.
As noted earlier, we finalized this policy in the FY 2020 IPPS/LTCH final rule to provide low wage index hospitals with an opportunity to increase employee compensation without the usual lag in those increases being reflected in the calculation of the wage index (as they would expect to do if not for the lag). This continues to be the purpose of the policy. We stated in the FY 2020 IPPS/LTCH PPS final rule our intention that it would be in effect for at least 4 years beginning October 1, 2019 (84 FR 42326). We also stated we intended to revisit the issue of the duration of this policy in future rulemaking as we gained experience under the policy. What could not have been anticipated at the time the policy was promulgated was that implementation of the policy would occur during the COVID-19 PHE, which was declared starting in January of 2020 and continued until May of 2023. The effects of the COVID-19 PHE complicate our ability to evaluate the low wage index hospital policy and our ability to determine whether low-wage hospitals have been provided a sufficient opportunity to increase employee compensation under the policy without the usual lag.
In the proposed rule, to help gauge the impact of the COVID-19 PHE relative to the impact of the low wage index hospital policy, we examined the aggregate revenue each hospital reported on their FY 2020 cost reports from the COVID-19 PHE Provider Relief Fund, the Small Business Administration Loan Forgiveness program, and other sources of COVID-19 related funding such as payroll retention credits and state emergency relief funds. Specifically, we examined Worksheet G-3, lines 24.50 through 24.60 for each IPPS hospital's 2020 cost report. We found that hospitals in the aggregate reported $31.1 billion in COVID-19 related funding, and of that amount low-wage hospitals reported $3.6 billion. These amounts are much larger than, and likely had a much greater impact on hospital operations, the approximately $230 million impact of the low wage index hospital policy.
In addition to examining the COVID-19 related funding data, we also examined the wage index data itself. For the FY 2025 wage index the best available data typically would be from the FY 2021 wage data from hospital cost reports. As discussed earlier in more detail in section III.C, in considering the impacts of the COVID-19 PHE on the FY 2021 hospital wage data, we compared that data with recent historical data. While there are some differences, in the proposed rule we stated that it is not readily apparent how any changes due to the COVID-19 PHE differentially impacted the wages paid by individual hospitals. Furthermore, even if changes due to the COVID-19 PHE did differentially impact the wages paid by individual hospitals over time, it is not clear how those changes could be isolated from changes due to other reasons and what an appropriate potential methodology might be to adjust the data to account for the effects of the COVID-19 PHE. Our inability to isolate the wage data changes due to the COVID-19 PHE and disentangle them from changes due to the low wage index hospital policy makes isolating and evaluating the impact of the low wage index hospital policy challenging. We reached similar conclusions with respect to the FY 2020 hospital wage data.
To help further inform our FY 2025 rulemaking with respect to the low wage index hospital policy, in the proposed rule we stated that we also conducted an analysis of hospitals that received an increase to their wage index due to the policy in FY 2020 (referred to as the low wage index hospitals for brevity in the following discussion). Specifically, for each low wage index hospital we calculated the percent increase in its average hourly wages (AHWs) from FY 2019 to FY 2021 based on dividing its FY 2021 average hourly wage (using the wage data one year after the low wage index hospital policy was implemented in FY 2020, available on the FY 2025 IPPS Proposed Rule web page) by its average hourly wage from the FY 2019 wage data (the wage data one year before the low wage index hospital policy was implemented in FY 2020, available on the FY 2023 IPPS final rule web page). We performed the same calculation for the hospitals that were not low wage index hospitals. We then compared the distributions of the average hourly wage increases between the two groups. The results are shown in the following chart (Chart 1).
In general, the chart shows that the distribution of the changes in the average hourly wages of the low wage index hospitals (mean=15.1%, standard deviation=11.0%) is similar to the distribution of the changes in the average hourly wages of the non-low wage index hospitals (mean=14.7%, standard deviation=8.9%). Although some low-wage hospitals have indicated to us that they did use the increased payments they received under the low wage index hospital policy to increase wages more than they otherwise would have, the similarity in the two distributions indicates that, based on the audited wage data available to us, the policy has generally not yet had the effect of substantially reducing the wage index disparities that existed at the time the policy was promulgated. Also, to the extent that wage index disparities for a subset of low wage index hospitals has diminished, it is unclear to what extent that is attributable to the low wage index hospital policy given the effects of the COVID-19 PHE (as discussed later in this section).
The COVID-19 PHE ended in May of 2023. With regard to the wage index, 4 years is the minimum time before increases in employee compensation included in the Medicare cost report could be reflected in the wage index data. The first full fiscal year of wage data after the COVID-19 PHE is the FY 2024 wage data, which would be available for the FY 2028 IPPS/LTCH PPS rulemaking. As we explained earlier in this section, at the time the low wage index hospital policy was finalized, our intention was that it would be in effect for at least 4 fiscal years beginning October 1, 2019, and to revisit the issue of the duration of this policy as we gained experience under the policy. Because the effects of the COVID-19 PHE complicate our ability to evaluate the low wage index hospital policy and our ability to determine whether low-wage hospitals have been provided a sufficient opportunity to increase employee compensation under the policy without the usual lag, we proposed that the low wage index hospital policy and the related budget neutrality adjustment would be effective for at least three more years, beginning in FY 2025. We noted that this would result in the policy being in effect for at least 4 full fiscal years in total after the end of the COVID-19 PHE in May of 2023. We also stated that this will allow us to gain experience under the policy for the same duration and in an environment more similar to the one we expected at the time the policy was first promulgated.
To offset the estimated increase in IPPS payments to hospitals with wage index values below the 25th percentile wage index value, for FY 2025 and for subsequent fiscal years during which the low wage index hospital policy is in effect, we proposed to apply a budget neutrality adjustment in the same manner as we have applied it since FY 2020, as a uniform budget neutrality factor applied to the standardized amount. We refer readers to section II.A.4.f. of the Addendum to the proposed rule and this final rule for further discussion of the budget neutrality adjustment for FY 2025.
Commenters indicated that the low wage index policy has helped to slightly level the playing field in Medicare reimbursement for rural hospitals and cautioned CMS that any efficacy analysis regarding the policy should recognize that the policy does not operate in a vacuum. According to commenters, low-wage hospitals face numerous challenges beyond just the wage index that make it difficult for them to significantly increase wages, particularly in relation to high-wage hospitals. Commenters stated that having a lower wage index over many years makes it difficult to ever catch up to high-wage hospitals. According to commenters, even though the wage index for many low-wage hospitals has increased since the policy began, their wage index remains significantly below the wage index for most high-wage hospitals.
Commenters also expressed that beyond staffing issues, low-wage hospitals generally have higher Medicare utilization in relation to total patient volume, and as a result Medicare losses are a higher proportion of their operations. The commenters indicated these hospitals face difficulty in making up for these losses as they receive less utilization from patients with traditional third-party insurance payment.
Commenters also provided other suggestions for data and alternative methodologies to include: reducing the wage index for hospitals with values above the 75th percentile; working with Congress on a more permanent fix to address the disparities in the wage index by establishing a national floor for all hospitals; and seeking input from the hospital community on best overall reform options that will improve the sustainability of the workforce, especially in rural and underserved communities.
Regarding the comment stating that an increase in the budget neutrality adjustment required to implement the low wage index hospital policy in FY 2024 and FY 2025 suggests that the policy has been ineffective, we disagree. As discussed earlier in this section, the effects of the COVID-19 PHE complicate our ability to evaluate the low wage index hospital policy and our ability to determine whether low-wage hospitals have been provided a sufficient opportunity to increase employee compensation under the policy without the usual lag. Because of this, we proposed that the low wage index hospital policy and the related budget neutrality adjustment would be effective for at least three more years, beginning in FY 2025. We noted that this would result in the policy being in effect for at least 4 full fiscal years in total after the end of the COVID-19 PHE in May of 2023. We also stated that this will allow us to gain experience under the policy for the same duration and in an environment more similar to the one we expected at the time the policy was first promulgated. For FY 2025 and for subsequent fiscal years during which the low wage index hospital policy is in effect, we also proposed to apply the associated budget neutrality adjustment in the same manner as we have applied it since FY 2020, as a uniform budget neutrality factor applied to the standardized amount.
With regard to the commenter's concern that application of the low wage index hospital policy may result in a reduction to overall payment if the amount of benefit received from the policy is less than the reduction to the standardized amount, as explained in response to comments in previous rulemaking, we believe we have applied both the quartile policy and the budget neutrality policy appropriately.
Regarding the comment suggesting funds be added to the wage index system through implementation of the low wage index hospital policy in a non-budget neutral manner to account for alleged Medicare reimbursement underpayments, we disagree. We believe it would be inappropriate to use the wage index to increase or decrease overall IPPS spending. As we discuss elsewhere in this section, the intent of the low wage index hospital policy is to increase the accuracy of the wage index as a technical adjustment, and not to use the wage index as a policy tool to address non-wage issues related to hospitals, or the laudable goals of the overall financial health of hospitals in low-wage areas or broader wage index reform.
Regarding the comment about reducing the wage index for hospitals with values above the 75th percentile, as we discussed in our response to comments in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58979), in the FY 2020 IPPS/LTCH final rule (84 FR 42329), we noted that we originally proposed to reduce the wage index values for high wage index hospitals using a methodology analogous to the methodology used to increase the wage index values for low wage index hospitals, as described in section III.N.3.a. of the preamble of the proposed rule; that is, we proposed to decrease the wage index values for high wage index hospitals by a uniform factor of the distance between the hospital's otherwise applicable wage index and the 75th percentile wage index value for a fiscal year across all hospitals. In response to comments we received (84 FR 42329 and 42330), we acknowledged that some commenters presented reasonable policy arguments that we should consider further regarding the relationship between our proposed budget neutrality adjustment targeting high-wage hospitals and the design of the wage index to be a relative measure of the wages and wage-related costs of subsection (d) hospitals in the United States. Therefore, in the FY 2020 IPPS/LTCH final rule, we did not finalize our proposal to target that budget neutrality adjustment on high-wage hospitals (84 FR 42331). Regarding the comment about the establishment of a national floor for all hospitals, as we pointed out in response to comments in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58979 through 58980), we noted in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42338 through 42339) that we do not have evidence a national rural labor market exists or would be created if we were to adopt this alternative, and this alternative would not increase the accuracy of the wage index. Also, we believe we have applied both the quartile policy and the budget neutrality policy appropriately, as we explained in response to comments in the FYs 2021, 2022 and 2023 IPPS/LTCH PPS final rules and most recently FY 2024 IPPS/LTCH PPS final rule (88 FR 58979 through 58980). The quartile adjustment is applied to the wage index, which resulted in an increase to the wage index for hospitals below the 25th percentile. The budget neutrality adjustment is applied to the standardized amount to ensure that the low wage index hospital policy is implemented in a budget neutral manner.
Similar to comments made on the low wage index hospital policy in the FY 2022 IPPS/LTCH PPS rulemaking (86 FR 45179), a commenter argued that the low wage index hospital policy is ineffective, pointing to an Office of Inspector General (OIG) report
In response to the assertion that the low wage index hospital policy does not recognize real differences in labor costs, we continue to believe, for the reasons stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42327 and 42328), that by preserving the rank order in wage index values, our policy continues to reflect meaningful distinctions between the employee compensation costs faced by hospitals in different geographic
Some commenters stated that our policy is ineffective, referencing the OIG report cited above. As we explained in our response to comments in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45179), we believe that the numerous comments we continue to receive in support of this policy indicate that many low-wage hospitals are indeed helped by this policy. Specifically, comments stating that the policy has been helpful in addressing wage disparities and allowing low wage hospitals to be more competitive in recruiting staff, indicate that the policy helped low wage hospitals to raise wages. In response to the commenter's suggestion to refine our criteria to target a subset of low-wage hospitals, such as low-wage hospitals that are rural or that have negative profit margins, we believe that this would not maintain the rank order in wage index values. As we stated earlier, we believe that maintaining the rank order of wage index values is important to reflect meaningful distinctions between the employee compensation costs faced by hospitals in different geographic areas. Even several commenters that disagreed with our policy stressed the need for the wage index to be an accurate measure of the
Regarding CMS' comparison of the distribution of the percentage change in AHWs from FY 2019 to FY 2021 for low wage index hospitals and non-low wage index hospitals, commenters agreed with CMS that the analysis did not show a substantial effect on reducing wage disparities. However, commenters asked CMS to evaluate whether this is due to other factors, such as inflation and other market forces impacted by the effects of the COVID-19 PHE, which are not clearly accounted for or represented in the current low wage index hospital policy, or if this is due to the ineffectiveness of the low wage index hospital policy. Commenters submitted the results of a separate analysis to emphasize that wages across the board have increased in recent years. Specifically, commenters submitted an analysis from the Kaiser Family Foundation (KFF) and Peterson Center, which evaluated changes in hospital employment data, including wage data, from February 2020 at the start of the COVID-19 pandemic through early 2024. Commenters stated that this analysis found that the average weekly earnings for healthcare employees had gone up 20.8% from $1,038 to $1,254 weekly in January 2024. Commenters further stated that even more specific to the IPPS, the report found that hospital workers wages saw a 20.3% increase between February 2020 to January 2024, going from $1,269 to $1,527 per week.
According to some commenters, CMS misunderstands the various programs that provided financial support to hospitals during the COVID-19 PHE. These commenters explained that all of the programs, including the Provider Relief Fund, state emergency relief funds and Small Business Administration Loan Forgiveness program, were intended in some fashion to replace some or all revenue hospitals lost due to decreases in demand associated with the COVID-19 PHE and cover the extraordinary costs hospitals incurred responding to the PHE that are not reimbursed through payments from Medicare, Medicaid, and commercial payers. The commenters stated that the funds from these programs were distributed using consistent criteria that applied to all eligible hospitals and therefore were not intended to advantage certain hospitals over others by increasing revenue for some hospitals and not others in a given category, as the low wage index hospital policy does. According to the commenters, the COVID-19 relief programs were intended to replace revenue that hospitals lost as a result of circumstances beyond their control and cover the extraordinary costs of saving patients' lives, mitigating the spread of a deadly pathogen, and protecting communities during a global pandemic. These commenters stated that if CMS was concerned data from the COVID-19 period were so flawed it could not determine the impact of the bottom quartile policy on impacted hospitals, it might stand to reason that the data would also be so flawed that they could not be used for payment updates. According to the commenters, CMS had enough confidence in the “normalcy” of data from years (federal and calendar) impacted by COVID-19 to use it to set MS-DRG weights, fixed-loss outlier thresholds, wage index values, and other key components of the IPPS in FY 2024 and it further proposes to use data from COVID-19 impacted years for the same functions in FY 2025. Finally, the commenters explained that CMS even acknowledges this in the proposed rule by stating that while there are some differences, it is not readily apparent how any changes due to the COVID-19 PHE differentially impacted the wages paid by individual hospitals. According to the commenters, the proposed rule attempts to justify this continuation by discussing the challenges of normalizing hospital wage data to understand the impact of this policy if changes due to the COVID-19 PHE did differentially impact wages paid by hospitals over time. The commenters stated that if CMS is confident enough in the data to use them for rate setting, then it should be confident enough to assume there was no differential impact that would spoil an impact analysis of the bottom quartile policy.
Regarding the comments about CMS' attempt to gauge the impact of the COVID-19 PHE relative to the impact of the low wage index hospital policy by examining the aggregate revenue each hospital reported on their FY 2020 cost reports from the COVID-19 PHE Provider Relief Fund, the Small Business Administration Loan Forgiveness program, and other sources of COVID-19 related funding such as payroll retention credits and state emergency relief funds, we disagree with the commenters. Our intention was not to convey that the purpose of various COVID-19 related funding opportunities was the same as the purpose of the low wage index hospital policy, but instead, to provide a statistical comparison examining the overall amount hospitals reported in COVID-19 related funding to the portion of that amount the amount low-wage hospitals received. Our explanation in the proposed rule and earlier in this section also aimed to explain our thinking that COVID-19 related funding played a role in increasing hospital employee compensation, and since that was and remains the goal of the low wage index hospital policy, it was not possible to quantify which sources of funding, COVID-19 related or low wage index hospital policy, actually contributed to hospitals increasing employee compensation. In addition, as explained earlier in this section we compared FY 2021 wage data from hospital cost
We appreciate the comment concerning CMS' use of data from the COVID-19 PHE period for payment update purposes. However, the purpose of and data used for general payment updates is different than that of the low wage index hospital policy. We primarily use two data sources in the IPPS and LTCH PPS ratesetting: claims data and cost report data. The claims data source is the Medicare Provider Analysis and Review (MedPAR) file, which includes fully coded diagnostic and procedure data for all Medicare inpatient hospital bills for discharges in a fiscal year. The cost report data source is the Medicare hospital cost report data files from the most recent quarterly Healthcare Cost Report Information System (HCRIS) release. Our goal is always to use the best available data overall for ratesetting. However, due to the impact of the COVID-19 PHE on our ordinary payment update data, we finalized modifications to our usual payment update procedures in order to satisfy the purpose of updating payments, approximating the inpatient experience at IPPS hospitals and LTCHs in FY 2024 (88 FR 58651 through 58553). As we discuss throughout this section, the purpose of the low wage index hospital policy is to provide low wage index hospitals with an opportunity to increase employee compensation without the usual lag in those increases being reflected in the calculation of the wage index (as they would expect to do if not for the lag). We also discussed earlier in this section that to the extent that wage index disparities for a subset of low wage index hospitals has diminished, it is unclear to what extent that is attributable to the low wage index hospital policy given the effects of the COVID-19 PHE (as discussed below). Again, as we stated earlier in this section, even if changes due to the COVID-19 PHE did differentially impact the wages paid by individual hospitals over time, it is not clear how those changes could be isolated from changes due to other reasons and what an appropriate potential methodology might be to adjust the data accordingly. Therefore, the concerns we identified about the use of data from the time period during the COVID-19 PHE are specific to the purpose of the low wage index hospital policy. Maintaining the policy for at least 4 full fiscal years in total after the end of the COVID-19 PHE in May of 2023 will allow us to gain experience under the policy for the same duration and in an environment more similar to the one we expected at the time the policy was first promulgated and will provide us with the best opportunity to evaluate the effectiveness of the policy.
Regarding the commenters' thoughts on CMS' comparison of the distribution of the percentage change in AHWs from FY 2019 to FY 2021 for low wage index hospitals and non-low wage index hospitals, we appreciate the separate analysis referenced by commenters that the commenters indicate confirms CMS' analysis that based on the data currently available, the low wage index hospital policy has not yet had the effect of substantially reducing the wage index disparities that existed at the time the policy was promulgated. We also appreciate the commenters' suggestions for further evaluation of data as it becomes available and acknowledgement of whether other factors may play a role in assessing the effectiveness of the low wage index hospital policy. As we explained earlier in this section, the uncertainty around the impact of the COVID-19 PHE and its effects on CMS' ability to assess and compare wage data make it difficult to sufficiently assess the effectiveness of the policy at this time. We also appreciate the input from commenters charging CMS to be as thoughtful and comprehensive as possible to address the effectiveness and implementation of this policy going forward. As we indicated in the proposed rule and previous rulemaking, we finalized this policy in the FY 2020 IPPS/LTCH final rule to provide low wage index hospitals with an opportunity to increase employee compensation without the usual lag in those increases being reflected in the calculation of the wage index (as they would expect to do if not for the lag). This continues to be the purpose of the policy. As we explained earlier in this section, at the time the low wage index hospital policy was finalized, our intention was that it would be in effect for at least 4 fiscal years beginning October 1, 2019, and to revisit the issue of the duration of this policy as we gained experience under the policy. The effects of the COVID-19 PHE complicate our ability to evaluate the low wage index hospital policy and our ability to determine whether low wage hospitals have been provided a sufficient opportunity to increase employee compensation under the policy without the usual lag. As we discussed in the proposed rule, if the policy were to be in effect for at least 4 full fiscal years in total after the end of the COVID-19 PHE in May of 2023, it would allow us to gain experience under the policy for the same duration and in an environment more similar to the one we expected at the time the policy was first promulgated.
Therefore, after consideration of the comments received, and for the reasons stated previously in the proposed rule, we are finalizing as proposed that the low wage index hospital policy and the related budget neutrality adjustment be effective for at least three more years, beginning in FY 2025. For purposes of the low wage index hospital policy, based on the data for this final rule, the table displays the 25th percentile wage index value across all hospitals for FY 2025.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 through 49021), we finalized a wage index cap policy and associated budget neutrality adjustment for FY 2023 and subsequent fiscal years. Under this policy, we apply a 5-percent cap on any decrease to a hospital's wage index from its wage index in the prior FY, regardless of the circumstances causing the decline. A hospital's wage index will not be less than 95 percent of its final wage index for the prior FY. If a hospital's prior FY wage index is calculated with the application of the 5-percent cap, the following year's wage index will not be less than 95 percent of the hospital's capped wage index in the prior FY. Except for newly opened hospitals, we apply the cap for a FY using the final wage index applicable to the hospital on the last day of the prior FY. A newly opened hospital will be paid the wage index for the area in
We explained in the proposed rule that for FY 2025, we would apply the wage index cap and associated budget neutrality adjustment in accordance with the policies adopted in the FY 2023 IPPS/LTCH PPS final rule. We noted that the budget neutrality adjustment will be updated, as appropriate, based on the final rule data. We refer readers to the Addendum of this final rule for further information regarding the budget neutrality calculations.
In this FY 2025 IPPS/LTCH PPS final rule, we have included the following wage index tables: Table 2 titled “Case-Mix Index and Wage Index Table by CCN”; Table 3 titled “Wage Index Table by CBSA”; Table 4A titled “List of Counties Eligible for the Out-Migration Adjustment under Section 1886(d)(13) of the Act”; and Table 4B titled “Counties redesignated under section 1886(d)(8)(B) of the Act (Lugar Counties).” We refer readers to section VI. of the Addendum to this final rule for a discussion of the wage index tables for FY 2025.
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust the proportion of the national prospective payment system base payment rates that are attributable to wages and wage-related costs by a factor that reflects the relative differences in labor costs among geographic areas. It also directs the Secretary to estimate from time to time the proportion of hospital costs that are labor-related and to adjust the proportion (as estimated by the Secretary from time to time) of hospitals' costs that are attributable to wages and wage-related costs of the DRG prospective payment rates. We refer to the portion of hospital costs attributable to wages and wage-related costs as the labor-related share. The labor-related share of the prospective payment rate is adjusted by an index of relative labor costs, which is referred to as the wage index.
Section 403 of Public Law 108-173 amended section 1886(d)(3)(E) of the Act to provide that the Secretary must employ 62 percent as the labor-related share unless this would result in lower payments to a hospital than would otherwise be made. However, this provision of Public Law 108-173 did not change the legal requirement that the Secretary estimate from time to time the proportion of hospitals' costs that are attributable to wages and wage-related costs. Thus, hospitals receive payment based on either a 62-percent labor-related share, or the labor-related share estimated from time to time by the Secretary, depending on which labor-related share results in a higher payment.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45194 through 45208), we rebased and revised the hospital market basket to a 2018-based IPPS hospital market basket, which replaced the 2014-based IPPS hospital market basket, effective beginning October 1, 2021. Using the 2018-based IPPS market basket, we finalized a labor-related share of 67.6 percent for discharges occurring on or after October 1, 2021. In addition, in FY 2022, we implemented this revised and rebased labor-related share in a budget neutral manner (86 FR 45193, 86 FR 45529 through 45530). However, consistent with section 1886(d)(3)(E) of the Act, we did not take into account the additional payments that would be made as a result of hospitals with a wage index less than or equal to 1.0000 being paid using a labor-related share lower than the labor-related share of hospitals with a wage index greater than 1.0000.
The labor-related share is used to determine the proportion of the national IPPS base payment rate to which the area wage index is applied. We include a cost category in the labor-related share if the costs are labor intensive and vary with the local labor market. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45204 through 45207), we included in the labor-related share the national average proportion of operating costs that are attributable to the following cost categories in the 2018-based IPPS market basket: Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; and All Other: Labor-Related Services. In the proposed rule, for FY 2025, we did not propose to make any further changes to the labor-related share. For FY 2025, we are finalizing the policy to continue to use a labor-related share of 67.6 percent for discharges occurring on or after October 1, 2024. We note that,
As discussed in section V.B. of the preamble of this final rule, prior to January 1, 2016, Puerto Rico hospitals were paid based on 75 percent of the national standardized amount and 25 percent of the Puerto Rico-specific standardized amount. As a result, we applied the Puerto Rico-specific labor-related share percentage and nonlabor-related share percentage to the Puerto Rico-specific standardized amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that the payment calculation with respect to operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, shall use 100 percent of the national standardized amount. Because Puerto Rico hospitals are no longer paid with a Puerto Rico-specific standardized amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as amended by section 601 of the Consolidated Appropriations Act, 2016, there is no longer a need for us to calculate a Puerto Rico-specific labor-related share percentage and nonlabor-related share percentage for application to the Puerto Rico-specific standardized amount. Hospitals in Puerto Rico are now paid 100 percent of the national standardized amount and, therefore, are subject to the national labor-related share and nonlabor-related share percentages that are applied to the national standardized amount. Accordingly, for FY 2025, we did not propose a Puerto Rico-specific labor-related share percentage or a nonlabor-related share percentage.
Tables 1A and 1B, which are published in section VI. of the Addendum to this FY 2025 IPPS/LTCH PPS final rule and available via the internet on the CMS website, reflect the national labor-related share. Table 1C, in section VI. of the Addendum to this FY 2025 IPPS/LTCH PPS final rule and available via the internet on the CMS website, reflects the national labor-related share for hospitals located in Puerto Rico. For FY 2025, for all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are less than or equal to 1.0000, we are applying the wage index to a labor-related share of 62 percent of the national standardized amount. For all IPPS hospitals (including Puerto Rico hospitals) whose wage indexes are greater than 1.000, for FY 2025, we are applying the wage index to a labor-related share of 67.6 percent of the national standardized amount.
Section 1886(d)(5)(F) of the Act provides for additional Medicare payments to subsection (d) hospitals that serve a significantly disproportionate number of low-income patients. The Act specifies two methods by which a hospital may qualify for the Medicare disproportionate share hospital (DSH) adjustment. Under the first method, hospitals that are located in an urban area and have 100 or more beds may receive a Medicare DSH payment adjustment if the hospital can demonstrate that, during its cost reporting period, more than 30 percent of its net inpatient care revenues are derived from State and local government payments for care furnished to patients with low incomes. This method is commonly referred to as the “Pickle method.” The second method for qualifying for the DSH payment adjustment, which is the more commonly used method, is based on a complex statutory formula under which the DSH payment adjustment is based on the hospital's geographic designation, the number of beds in the hospital, and the level of the hospital's disproportionate patient percentage (DPP).
A hospital's DPP is the sum of two fractions: the “Medicare fraction” and the “Medicaid fraction.” The Medicare fraction (also known as the “SSI fraction” or “SSI ratio”) is computed by dividing the number of the hospital's inpatient days that are furnished to patients who were entitled to both Medicare Part A and Supplemental Security Income (SSI) benefits by the hospital's total number of patient days furnished to patients entitled to benefits under Medicare Part A. The Medicaid fraction is computed by dividing the hospital's number of inpatient days furnished to patients who, for such days, were eligible for Medicaid, but were not entitled to benefits under Medicare Part A, by the hospital's total number of inpatient days in the same period.
Because the DSH payment adjustment is part of the IPPS, the statutory references to “days” in section 1886(d)(5)(F) of the Act have been interpreted to apply only to hospital acute care inpatient days. Regulations located at 42 CFR 412.106 govern the Medicare DSH payment adjustment and specify how the DPP is calculated as well as how beds and patient days are counted in determining the Medicare DSH payment adjustment. Under § 412.106(a)(1)(i), the number of beds for the Medicare DSH payment adjustment is determined in accordance with bed counting rules for the IME adjustment under § 412.105(b).
Section 3133 of the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by section 10316 of the same Act and section 1104 of the Health Care and Education Reconciliation Act (Pub. L. 111-152), added a section 1886(r) to the Act that modifies the methodology for computing the Medicare DSH payment adjustment. We refer to these provisions collectively as section 3133 of the Affordable Care Act. Beginning with discharges in FY 2014, hospitals that qualify for Medicare DSH payments under section 1886(d)(5)(F) of the Act receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments. This provision applies equally to hospitals that qualify for DSH payments under section 1886(d)(5)(F)(i)(I) of the Act and those hospitals that qualify under the Pickle method under section 1886(d)(5)(F)(i)(II) of the Act.
The remaining amount, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, reduced to reflect changes in the percentage of individuals who are uninsured, is available to make additional payments to each hospital that qualifies for Medicare DSH payments and that has uncompensated care. The payments to each hospital for a fiscal year are based on the hospital's amount of uncompensated care for a given time period relative to the total amount of uncompensated care for that same time period reported by all hospitals that receive Medicare DSH payments for that fiscal year.
Since FY 2014, section 1886(r) of the Act has required that hospitals that are eligible for DSH payments under section 1886(d)(5)(F) of the Act receive 2 separately calculated payments:
Specifically, section 1886(r)(1) of the Act provides that the Secretary shall pay to such subsection (d) hospital 25 percent of the amount the hospital would have received under section 1886(d)(5)(F) of the Act for DSH payments, which represents the empirically justified amount for such payment, as determined by the MedPAC in its March 2007 Report to Congress.
In addition to this empirically justified Medicare DSH payment, section 1886(r)(2) of the Act provides that, for FY 2014 and each subsequent fiscal year, the Secretary shall pay to such subsection (d) hospital an additional amount equal to the product of three factors. The first factor is the difference between the aggregate amount of payments that would be made to subsection (d) hospitals under section 1886(d)(5)(F) of the Act if subsection (r) did not apply and the aggregate amount of payments that are made to subsection (d) hospitals under section 1886(r)(1) of the Act for such fiscal year. Therefore, this factor amounts to 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act.
The second factor is, for FY 2018 and subsequent fiscal years, 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS) and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified).
The third factor is a percent that, for each subsection (d) hospital, represents the quotient of the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data), including the use of alternative data where the Secretary determines that alternative data are available which are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, and the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act. Therefore, this third factor represents a hospital's uncompensated care amount for a given time period relative to the uncompensated care amount for that same time period for all hospitals that receive Medicare DSH payments in the applicable fiscal year, expressed as a percent.
For each hospital, the product of these three factors represents its additional payment for uncompensated care for the applicable fiscal year. We refer to the additional payment determined by these factors as the “uncompensated care payment.” In brief, the uncompensated care payment for an individual hospital is determined as the product of the following 3 factors:
Section 1886(r) of the Act applies to FY 2014 and each subsequent fiscal year. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50620 through 50647) and the FY 2014 IPPS interim final rule with comment period (78 FR 61191 through 61197), we set forth our policies for implementing the required changes to the Medicare DSH payment methodology made by section 3133 of the Affordable Care Act for FY 2014. In those rules, we noted that, because section 1886(r) of the Act modifies the payment required under section 1886(d)(5)(F) of the Act, it affects only the DSH payment under the operating IPPS. It does not revise or replace the capital IPPS DSH payment provided under the regulations at 42 CFR part 412, subpart M, which was established through the exercise of the Secretary's discretion in implementing the capital IPPS under section 1886(g)(1)(A) of the Act.
Finally, section 1886(r)(3) of the Act provides that there shall be no administrative or judicial review under section 1869, section 1878, or otherwise of any estimate of the Secretary for purposes of determining the factors described in section 1886(r)(2) of the Act or of any period selected by the Secretary for the purpose of determining those factors. Therefore, there is no administrative or judicial review of the estimates developed for purposes of applying the three factors used to determine uncompensated care payments, or of the periods selected to develop such estimates.
The payment methodology under section 3133 of the Affordable Care Act applies to “subsection (d) hospitals” that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act. Therefore, hospitals must receive empirically justified Medicare DSH payments in a fiscal year to receive an additional Medicare uncompensated care payment for that year. Specifically, section 1886(r)(2) of the Act states that, in addition to the empirically justified Medicare DSH payment made to a subsection (d) hospital under section 1886(r)(1) of the Act, the Secretary shall pay to “such subsection (d) hospitals” the uncompensated care payment. Section 1886(r)(2)'s reference to “such subsection (d) hospitals” refers to hospitals that receive empirically justified Medicare DSH payments under section 1886(r)(1) for the applicable fiscal year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and the FY 2014 IPPS interim final rule with comment period (78 FR 61193), we explained that hospitals that are not eligible to receive empirically justified Medicare DSH payments in a fiscal year will not receive uncompensated care payments for that year. We also specified that we would make a determination concerning eligibility for interim uncompensated care payments based on each hospital's estimated DSH status (that is, eligibility to receive empirically justified Medicare DSH payments) for the applicable fiscal year (using the most recent data that are available). For the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36188 through 36189), we estimated DSH status for all hospitals using the most recent available SSI ratios and information from the most recent available Provider Specific File. We noted that FY 2020 SSI ratios available on the CMS website were the most recent available SSI ratios at the time of developing the proposed rule.
Our final determinations of a hospital's eligibility for uncompensated care and empirically justified Medicare DSH payments will be based on the hospital's actual DSH status at cost report settlement for FY 2025.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and in the rulemakings for subsequent fiscal years, we have specified our policies for several specific classes of hospitals within the scope of section 1886(r) of the Act. Eligible hospitals include the following:
• Subsection (d) Puerto Rico hospitals that are eligible for DSH payments also are eligible to receive empirically justified Medicare DSH payments and uncompensated care payments under section 1886(r) of the Act (78 FR 50623 and 79 FR 50006).
• Sole community hospitals (SCHs) that are paid under the IPPS Federal rate receive interim payments based on what we estimate and project their DSH status to be prior to the beginning of the fiscal year (based on the best available data at that time) subject to settlement through the cost report. If they receive interim empirically justified Medicare DSH payments in a fiscal year, they will also be eligible to receive interim uncompensated care payments for that fiscal year on a per discharge basis. Final eligibility determinations will be made at the end of the cost reporting period at settlement, and both interim empirically justified Medicare DSH payments and uncompensated care payments will be adjusted accordingly (78 FR 50624 and 79 FR 50007).
• Medicare-dependent, small rural hospitals (MDHs) are paid based on the IPPS Federal rate or, if higher, the IPPS Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the updated hospital-specific rate from certain specified base years (76 FR 51684). The IPPS Federal rate that is used in the MDH payment methodology is the same IPPS Federal rate that is used in the SCH payment methodology. Because MDHs are paid based on the IPPS Federal rate, they continue to be eligible to receive empirically justified Medicare DSH payments and uncompensated care payments if their DPP is at least 15 percent, and we apply the same process to determine MDHs' eligibility for interim empirically justified Medicare DSH and interim uncompensated care payments as we do for all other IPPS hospitals. Recently enacted legislation has extended the MDH program through December 31, 2024. We refer readers to section V.F. of the preamble of this final rule for further discussion of the MDH program.
Section 307 of the Consolidated Appropriations Act, 2024 extended the MDH program through December 31, 2024. We will continue to make a determination concerning an MDH's eligibility for interim empirically justified Medicare DSH and uncompensated care payments based on the hospital's estimated DSH status for the applicable fiscal year.
• IPPS hospitals that elect to participate in the Bundled Payments for Care Improvement Advanced (BPCI Advanced) model, will continue to be paid under the IPPS and, therefore, are eligible to receive empirically justified Medicare DSH payments and uncompensated care payments until the Model's final performance year, which ends on December 31, 2025. For further information regarding the BPCI Advanced model, we refer readers to the CMS website at
• IPPS hospitals that participate in the Comprehensive Care for Joint Replacement (CJR) Model's (80 FR 73300) continue to be paid under the IPPS and, therefore, are eligible to receive empirically justified Medicare DSH payments and uncompensated care
• Transforming Episode Accountability Model (TEAM) is a new episode-based payment model, which is discussed in section X.A. of the preamble of this final rule. Hospitals participating in TEAM would continue to be paid under the IPPS and, therefore, are eligible to receive empirically justified Medicare DSH payments and uncompensated care payments. The model's start date is January 1, 2026.
Ineligible hospitals include the following:
• Maryland hospitals are not eligible to receive empirically justified Medicare DSH payments and uncompensated care payments under the payment methodology of section 1866(r) of the Act because they are not paid under the IPPS. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41402 through 41403), CMS and the State have entered into an agreement to govern payments to Maryland hospitals under a new payment model, the Maryland Total Cost of Care (TCOC) Model, which began on January 1, 2019. Under the Maryland TCOC Model, which concludes on December 31, 2026, Maryland hospitals are not paid under the IPPS and are ineligible to receive empirically justified Medicare DSH payments and uncompensated care payments under section 1886(r) of the Act.
• SCHs that are paid under their hospital-specific rate are not eligible for Medicare DSH and uncompensated care payments (78 FR 50623 and 50624).
• Hospitals participating in the Rural Community Hospital Demonstration Program are not eligible to receive empirically justified Medicare DSH payments and uncompensated care payments under section 1886(r) of the Act because they are not paid under the IPPS (78 FR 50625 and 79 FR 50008). The Rural Community Hospital Demonstration Program was originally authorized for a 5-year period by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173).
In response to our comment solicitation on these policies in the proposed rule, we received comments related to the eligibility of SCHs paid under hospital-specific rates and MDHs to receive empirically justified DSH and uncompensated care payments. Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule.
As we have discussed earlier, section 1886(r)(1) of the Act requires the Secretary to pay 25 percent of the amount of the Medicare DSH payment that would otherwise be made under section 1886(d)(5)(F) of the Act to a subsection (d) hospital. Because section 1886(r)(1) of the Act merely requires the Secretary to pay a designated percentage of these payments, without revising the criteria governing eligibility for DSH payments or the underlying payment methodology, we stated in the FY 2014 IPPS/LTCH PPS final rule that we did not believe that it was necessary to develop any new operational mechanisms for making such payments.
Therefore, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50626), we implemented this provision by advising Medicare Administrative Contractors (MACs) to simply adjust subsection (d) hospitals' interim claim payments to an amount equal to 25 percent of what would have been paid if section 1886(r) of the Act did not apply. We also made corresponding changes to the hospital cost report so that these empirically justified Medicare DSH payments could be settled at the appropriate level at the time of cost report settlement. We provided more detailed operational instructions and cost report instructions following issuance of the FY 2014 IPPS/LTCH PPS final rule that are available on the CMS website at
In response to our comment solicitation on these policies in the proposed rule, a commenter stated that some subsection (d) hospitals' ability to meet the eligibility requirements for empirically justified DSH payments is at risk due to changes to the Medicaid fraction of their DPPs. The commenter explained that many hospitals will no longer be eligible for empirically justified payments as a result of the unwinding of the Medicaid continuous enrollment condition. The commenter also stated that the unexpectedly high rate of Medicaid beneficiaries losing coverage because of redeterminations is placing many hospitals at risk of falling below the 15 percent minimum DPP. The commenter requested that CMS allow hospitals whose eligibility for empirically justified payments has been impacted by unwinding to receive empirically justified payments, retroactively and in the future. Because we consider this public comment to be outside the scope of the proposed rule, we are not addressing this comment in this final rule.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through 49051), we established a new supplemental payment for IHS/Tribal hospitals and hospitals located in Puerto Rico for FY 2023 and subsequent fiscal years. This payment was established to help to mitigate the impact of the decision to discontinue the use of low-income insured days as a proxy for uncompensated care costs for these hospitals and to prevent undue long-term financial disruption for these providers. The regulations located at 42 CFR 412.106(h) govern the supplemental payment. In brief, the supplemental payment for a fiscal year is determined as the difference between the hospital's base year amount and its uncompensated care payment for the applicable fiscal year as determined under § 412.106(g)(1). The base year
In the FY 2025 IPPS/LTCH PPS proposed rule, we did not propose any changes to the methodology for determining supplemental payments. For FY 2025, we will calculate the supplemental payments to eligible IHS/Tribal and Puerto Rico hospitals consistent with the methodology described in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through 49051) and § 412.106(h).
As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49048 and 49049), the eligibility and payment processes for the supplemental payment are consistent with the processes for determining eligibility to receive interim and final uncompensated care payments adopted in FY 2014 IPPS/LTCH PPS final rule. We note that the MAC will make a final determination with respect to a hospital's eligibility to receive the supplemental payment for a fiscal year, in conjunction with its final determination of the hospital's eligibility for DSH payments and uncompensated care payments for that fiscal year.
Another commenter thanked CMS for continuing to provide supplemental payments but requested that CMS evaluate alternatives that would better support hospitals in Puerto Rico if uninsured days increased. This commenter asserted that the current supplemental payment policy only protects against the reduction of uncompensated care payments below FY 2022 levels. The commenter stated that the current policy is not helpful if uninsured patient volumes rise above FY 2022 levels. The same commenter further expressed that they would support a return to the prior method of using a proxy to determine uninsured days for hospitals in Puerto Rico given the challenges related to Worksheet S-10 data collection for hospitals in Puerto Rico.
Regarding the commenter's request that all acute care hospitals in Puerto Rico receive uncompensated care payments regardless of DSH eligibility, we refer readers to the policy initially adopted in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622 and 50623), which explains that hospitals, including Puerto Rico hospitals, must be eligible to receive empirically justified Medicare DSH payments to receive an uncompensated care payment for that fiscal year. As discussed earlier in this section of this final rule and in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49048 and 49049), the processes for determining eligibility for supplemental payments and making interim and final payments are consistent with the processes for determining eligibility to receive interim and final uncompensated care payments adopted in the FY 2014 IPPS/LTCH PPS final rule and the approach used to make interim uncompensated care payments on a per discharge basis.
With respect to the commenters who recommended that CMS determine eligibility for uncompensated care payments and supplemental payments using the suggested Medicare SSI days proxy of 42 percent and calculate the supplemental payment for Puerto Rico hospitals using a base year amount determined from that same Medicare SSI days proxy data, we note that in the FY 2025 IPPS/LTCH PPS proposed rule, we did not propose to adopt any changes to our policies for determining eligibility for uncompensated care payments or supplemental payments, nor did we propose changes to our methodology for calculating supplemental payments. We also note that we did not propose to adopt a proxy for Puerto Rico hospitals' Medicare SSI days for purposes of determining eligibility for empirically justified DSH payments. Therefore, we consider these comments to be outside the scope of the proposed rule. However, we refer readers to our responses to similar comments in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58992 and 58993) and the FY 2023 IPPS/LTCH PPS final rule (87 FR 49049 and 49050) for further discussion on these issues.
Concerning the comment encouraging CMS to evaluate alternatives to supplemental payments to better support hospitals in the case of increasing uninsured days, including using a proxy to determine uninsured days for hospitals in Puerto Rico, we refer readers to our responses to similar comments in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48780) and the FY 2024 IPPS/LTCH PPS final rule (88 FR 58640). As we explained in those rulemakings, prior to FY 2023, we used low-income insured days as a proxy for uncompensated care costs. Fluctuations in uninsured days were never a direct consideration in the calculation of uncompensated care payments. Therefore, we continue to believe that supplemental payments, which are based on the FY 2022 uncompensated care payments calculated for Puerto
As discussed earlier in this section, for FY 2025, we will calculate the supplemental payments to eligible IHS/Tribal and Puerto Rico hospitals consistent with the methodology described in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through 49051) and § 412.106(h).
As we discussed earlier, section 1886(r)(2) of the Act provides that, for each eligible hospital in FY 2014 and subsequent years, the uncompensated care payment is the product of three factors, which are discussed in the next sections.
Section 1886(r)(2)(A) of the Act establishes Factor 1 in the calculation of the uncompensated care payment. The regulations located at 42 CFR 412.106(g)(1)(i) govern the Factor 1 calculation. Under a prospective payment system, we would not know the precise aggregate Medicare DSH payment amounts that would be paid for a fiscal year until cost report settlement for all IPPS hospitals is completed, which occurs several years after the end of the fiscal year. Therefore, section 1886(r)(2)(A)(i) of the Act provides authority to estimate this amount by specifying that, for each fiscal year to which the provision applies, such amount is to be estimated by the Secretary. Similarly, we would not know the precise aggregate empirically justified Medicare DSH payment amounts that would be paid for a fiscal year until cost report settlement for all IPPS hospitals is completed. Thus, section 1886(r)(2)(A)(ii) of the Act provides authority to estimate this amount. In brief, Factor 1 is the difference between the Secretary's estimates of: (1) the amount that would have been paid in Medicare DSH payments for the fiscal year, in the absence of section 1886(r) of the Act; and (2) the amount of empirically justified Medicare DSH payments that are made for the fiscal year, which takes into account the requirement to pay 25 percent of what would have otherwise been paid under section 1886(d)(5)(F) of the Act.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36190), we proposed to continue the policy that has applied since the FY 2014 final rule (78 FR 50627 through 50631): to determine Factor 1 from the most recently available estimates of the aggregate amount of Medicare DSH payments that would be made for FY 2025 in the absence of section 1886(r)(1) of the Act and the aggregate amount of empirically justified Medicare DSH payments that would be made for FY 2025, both as calculated by CMS' Office of the Actuary (OACT). Consistent with the policy that has applied in previous years, these estimates will not be revised or updated subsequent to publication of our final projections in this FY 2025 IPPS/LTCH PPS final rule.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36190 through 36192), to calculate both estimates, we used the most recently available projections of Medicare DSH payments for the fiscal year, as calculated by OACT using the most recently filed Medicare hospital cost reports with Medicare DSH payment information and the most recent DPPs and Medicare DSH payment adjustments provided in the IPPS Impact File. The projection of Medicare DSH payments for the fiscal year is also partially based on OACT's Part A benefits projection model, which projects, among other things, inpatient hospital spending. Projections of DSH payments additionally require projections of expected increases in utilization and case-mix. The assumptions that were used in making these inpatient hospital spending, utilization, and case-mix projections and the resulting estimates of DSH payments for FY 2022 through FY 2025 are discussed later in this section and in the table titled “Factors Applied for FY 2022 through FY 2025 to Estimate Medicare DSH Expenditures Using FY 2021 Baseline.”
For purposes of calculating Factor 1 and modeling the impact of the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36190 through 36192), we used OACT's January 2024 Medicare DSH estimates, which were based on data from the December 2023 update of the Medicare Hospital Cost Report Information System (HCRIS) and the FY 2024 IPPS/LTCH PPS final rule IPPS Impact File, published in conjunction with the publication of the FY 2024 IPPS/LTCH PPS final rule. Because SCHs that are projected to be paid under their hospital-specific rate are ineligible for empirically justified Medicare DSH payments and uncompensated care payments, they were excluded from the January 2024 Medicare DSH estimates. Because Maryland hospitals are not paid under the IPPS, they are also ineligible for empirically justified Medicare DSH payments and uncompensated care payments and were also excluded from OACT's January 2024 Medicare DSH estimates.
The 23 hospitals that CMS expects will participate in the Rural Community Hospital Demonstration Program in FY 2025 were also excluded from OACT's January 2024 Medicare DSH estimates because under the payment methodology that applies during the demonstration, these hospitals are not eligible to receive empirically justified Medicare DSH payments or uncompensated care payments.
For the proposed rule, using the data sources previously discussed, OACT's January 2024 estimates of Medicare DSH payments for FY 2025 without regard to the application of section 1886(r)(1) of the Act was approximately $13.943 billion. Therefore, also based on OACT's January 2024 Medicare DSH estimates, the estimate of empirically justified Medicare DSH payments for FY 2025, with the application of section 1886(r)(1) of the Act, was approximately $3.486 billion (or 25 percent of the total amount of estimated Medicare DSH payments for FY 2025). Under § 412.106(g)(1)(i), Factor 1 is the difference between these two OACT estimates. Therefore, in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35934), we proposed that Factor 1 for FY 2025 would be $10,457,250,000, which is equal to 75 percent of the total amount of estimated Medicare DSH payments for FY 2025 ($13.943 billion minus $3.486 billion). We noted that, consistent with our approach in previous rulemakings, OACT intended to use more recent data that may become available for purposes of projecting the final Factor 1 estimates for the FY 2025 IPPS/LTCH PPS final rule (89 FR 36191).
In the FY 2025 IPPS/LTCH PPS proposed rule, we noted that the Factor 1 estimates for IPPS/LTCH PPS proposed rules are generally consistent with the economic assumptions and actuarial analysis used to develop the President's Budget estimates under current law, and Factor 1 estimates for IPPS/LTCH PPS final rules are generally consistent with those used for the Midsession Review of the President's Budget.
For a general overview of the principal steps involved in projecting future inpatient costs and utilization, we referred readers to the “2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” available on the CMS website at
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36190 through 36192), we included information regarding the data sources, methods, and assumptions employed by OACT's actuaries in determining our estimate of Factor 1. We indicated the historical HCRIS data update OACT used to estimate Medicare DSH payments; we explained that the most recent Medicare DSH payment adjustments provided in the IPPS Impact File were used, and we provided the components of all the update factors that were applied to the historical data to estimate the Medicare DSH payments for the upcoming fiscal year, along with the associated rationale and assumptions. The discussion also included descriptions of the “Other” and “Discharges” assumptions and provided additional information regarding how we address Medicaid expansion.
We invited public comments on our proposed Factor 1 for FY 2025.
A few commenters asserted that the lack of opportunity afforded to hospitals to review the data used in rulemaking is in violation of the Administrative Procedure Act. These commenters expressed concerns about the lack of transparency in how Factor 1 is calculated, arguing that hospitals cannot meaningfully comment on the Factor 1 calculation methodology given the lack of details provided by CMS in each IPPS/LTCH PPS proposed rule. In particular, these commenters stated that the FY 2025 IPPS/LTCH PPS proposed rule provided neither sufficient details nor a complete explanation of the treatment of Medicaid expansions in the calculation for Factor 1.
Additionally, while some commenters thanked CMS for increasing the “Other” factor from the amount finalized in the FY 2024 final rule, several commenters stated that CMS failed to provide sufficient details on how the “Other” factor is calculated, including both the overall calculation and individual inputs used to determine the estimate. Some of these commenters requested that CMS publish a detailed methodology of its “Other” calculation, specifying how all components contribute to changes in its estimate from year to year. Other commenters expressed concern about the lack of clarity regarding the ending of COVID-19 PHE flexibilities, such as payment add-ons and the unwinding of the Medicaid continuous enrollment condition, and their impact on the “Other” factor. These commenters suggested that CMS address this issue by disaggregating the variables that contribute to the “Other” factor and then demonstrating the separate impacts of each of those variables on the final value. A couple of commenters requested that CMS clarify why the “Other” factor frequently varies in successive rulemaking cycles.
To provide additional context, and as we have explained in prior rulemakings (
For a general overview of the principal steps involved in projecting future inpatient costs and utilization, we refer readers to the “2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” available under “Downloads” on the CMS website at:
Additionally, as described in more detail later in this section, in the FY 2025 IPPS/LTCH PPS proposed rule, we included information regarding the data sources, methods, and assumptions employed by the actuaries to determine the OACT's estimate of Factor 1. We explained that the most recent Medicare DSH payment adjustments provided in the IPPS Impact File were used, and we provided the components of all update factors that were applied to the historical data to estimate the Medicare DSH payments for the upcoming fiscal year, along with the associated rationale and assumptions. This discussion also included a description of the “Other,” “Case-Mix,” and “Discharges” assumptions, as well as additional information regarding the estimated impact of the COVID-19 PHE on our calculation of Factor 1. For additional context, our calculation of the “Other” factor for FY 2025 reflects the expectation that DSH payments will grow faster than IPPS payments in 2025.
Regarding the commenter who expressed concern that our proposed calculation of Factor 1 would disproportionately impact safety net providers, we continue to believe that estimating Factor 1 based on the economic data and assumptions detailed in this final rule and the FY 2025 IPPS/LTCH PPS proposed rule is appropriate and consistent with the requirements of section 1886(r)(2)(A) of the Act.
Finally, a commenter commended CMS for increasing the Factor 1 estimate for FY 2025, while another commenter requested that CMS increase the FY 2025 Factor 1 “Update” component consistent with the MedPAC recommended increases to the IPPS market basket used to estimate DSH payments for FY 2022, FY 2024, and FY 2025. This commenter cited MedPAC's March 2023 and March 2024 Reports to Congress, where the Commission recommended a 1.0 percent increase to the FY 2024 market basket percentage and a 1.5 percent increase to the FY 2025 market basket percentage increase.
In response to commenters' request that CMS explain why the projection of the “Discharges” component in the FY 2025 IPPS/LTCH PPS proposed rule was lower than the projections for FY 2023 and FY 2024, we point commenters to discussion elsewhere in this section of this final rule and relevant discussion in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36192), which detail the calculations and assumptions we used to calculate the FY 2025 “Discharges” factor. We also note that consistent with the policy that we have applied since FY 2014 (
Regarding the comments on the impacts of MA enrollment on Medicare FFS discharge volume, we refer commenters to the actuarial projections and assumptions regarding future trends in Medicare FFS and MA program enrollment, utilization, and costs of health care services covered by Medicare, as well as other factors affecting Medicare FFS and MA program expenditures, contained in the “2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” available under “Downloads” on the CMS website at:
Regarding the commenter who requested that CMS increase the FY 2025 Factor 1 “Update” component consistent with the MedPAC recommended increases to the IPPS market basket used to estimate DSH payments for FY 2022, FY 2024, and FY 2025, we refer readers to the discussion in section V.B. of the preamble of this final rule. Consistent with the inpatient hospital update discussion in section V.B. of the preamble of this final rule, OACT is using the final inpatient hospital market basket update and productivity adjustment for FY 2025 based on the more recent data available for this final rule for the final FY 2025 “Update” component in the Factor 1 calculation.
After consideration of the public comments we received, we are finalizing, as proposed, the methodology for calculating Factor 1 for FY 2025. We discuss the resulting Factor 1 amount for FY 2025 in this final rule. Consistent with prior rulemakings, for this final rule, OACT used the most recently submitted Medicare cost report data from the March 31, 2024, update of HCRIS to identify Medicare DSH payments and the most recent Medicare DSH payment adjustments provided in the Impact File and applied update factors and assumptions for projected changes in utilization and case-mix to estimate Medicare DSH payments for the upcoming fiscal year.
The June 2024 OACT estimate for Medicare DSH payments for FY 2025, without regard to the application of section 1886(r)(1) of the Act, was approximately $14.013 billion. This estimate excluded Maryland hospitals, which participate in the Maryland Total Cost of Care Model and are not paid under the IPPS, hospitals participating in the Rural Community Hospital Demonstration, and SCHs paid under their hospital-specific payment rate. Therefore, based on this June 2024 estimate, the estimate of empirically justified Medicare DSH payments for FY 2025, with the application of section 1886(r)(1) of the Act, was approximately $3.503 billion (or 25 percent of the total amount of estimated Medicare DSH payments for FY 2025). Under § 412.106(g)(1)(i), Factor 1 is the difference between these two OACT estimates. Therefore, the final Factor 1 for FY 2025 is $10,509,750,000, which is equal to 75 percent of the total amount of estimated Medicare DSH payments for FY 2025 ($14,013,000,000 minus $3,503,250,000).
OACT's estimates for FY 2025 for this final rule began with a baseline of $13.401 billion in Medicare DSH expenditures for FY 2021. The following table shows the factors applied to update this baseline through the current estimate for FY 2025:
In this table, the discharges column shows the changes in the number of Medicare FFS inpatient hospital discharges. The discharge figures for FY 2022 and FY 2023 are based on Medicare claims data that have been adjusted by a completion factor to account for incomplete claims data. We note that these claims data reflect the impact of the COVID-19 pandemic. The discharge figure for FY 2024 is based on preliminary data. The discharge figure for FY 2025 is an assumption based on recent historical experience, an assumed partial return to pre-COVID 19 trends, and assumptions related to how many beneficiaries will be enrolled in MA plans. Accordingly, the discharge figures for FY 2022 to FY 2025 incorporate the actual impact and estimated future impact of the COVID-19 pandemic.
The case-mix column shows the estimated change in case-mix for IPPS hospitals. The case-mix figures for FY 2022 and FY 2023 are based on actual claims data adjusted by a completion factor to account for incomplete claims data. We note that these claims data reflect the impact of the COVID-19 pandemic. The case-mix figures for FY 2024 and for FY 2025 are assumptions based on the 2012 “Review of Assumptions and Methods of the Medicare Trustees' Financial Projections” report by the 2010-2011 Medicare Technical Review Panel.
The “Other” column reflects the change in other factors that contribute to the Medicare DSH estimates. These factors include the difference between the total inpatient hospital discharges and IPPS discharges and various adjustments to the payment rates that have been included over the years but are not reflected in the other columns (such as the 20 percent add-on for COVID-19 discharges). In addition, the “Other” column includes a factor for the estimated changes in Medicaid enrollment through FY 2023. Based on the most recent available data, Medicaid enrollment is estimated to change as follows: +8.3 percent in FY 2022, +5.2 percent in FY 2023, −11.9 percent in FY 2024, and −5.3 percent in FY 2025. In future IPPS rulemakings, our assumptions regarding Medicaid enrollment may change based on actual enrollment in the States.
We note that, in developing their estimates of the effect of Medicaid expansion on Medicare DSH expenditures, our actuaries have assumed that the new Medicaid enrollees are healthier than the average Medicaid enrollee and, therefore, receive fewer hospital services.
The following table shows the factors that are included in the “Update” column of the previous table:
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the calculation of the uncompensated care payment. Section 1886(r)(2)(B)(ii) of the Act provides that, for FY 2018 and subsequent fiscal years, the second factor is 1 minus the percent change in the percent of individuals who are uninsured, as determined by comparing the percent of individuals who were uninsured in 2013 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of CMS) and the percent of individuals who were uninsured in the most recent period for which data are available (as so estimated and certified).
We are continuing to use the methodology that was used in FY 2018 through FY 2024 to determine Factor 2 for FY 2025—to use the National Health Expenditure Accounts (NHEA) data to determine the percent change in the percent of individuals who are uninsured. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198) for a complete discussion of the NHEA and why we determined, and continue to believe, that it is the data source for the rate of uninsurance that, on balance, best meets all our considerations and is consistent with the statutory requirement that the estimate of the rate of uninsurance be based on data from the Census Bureau or other sources the Secretary determines appropriate.
In brief, the NHEA represents the government's official estimates of economic activity (spending) within the health sector. The NHEA includes comprehensive enrollment estimates for total private health insurance (PHI) (including direct and employer-sponsored plans), Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and other public programs, and estimates of the number of individuals who are uninsured. The NHEA data are publicly available on the CMS website at
To compute Factor 2 for FY 2025, the first metric that is needed is the proportion of the total U.S. population that was uninsured in 2013. For a complete discussion of the approach OACT used to prepare the NHEA's estimate of the rate of uninsurance in 2013, including the data sources used, we refer readers to the FY 2024 IPPS/LTCH PPS final rule (88 FR 58998 and 58999).
The next metrics needed to compute Factor 2 for FY 2025 are projections of the rate of uninsurance in both CY 2024 and CY 2025. On an annual basis, OACT projects enrollment and spending trends for the coming 10-year period. The most recent projections are for 2023 through 2032 and were published on June 12, 2024. Those projections used the latest NHEA historical data that were available at the time of their construction (that is, historical data through 2022). The NHEA projection methodology accounts for expected changes in enrollment across all of the categories of insurance coverage previously listed. For a complete discussion of how the NHEA data account for expected changes in enrollment across all the categories of insurance coverage previously listed, we refer readers to the FY 2024 IPPS/LTCH PPS final rule (88 FR 58999).
Using these data sources and the previously described methodologies, at the time of developing the proposed rule and using the NHEA data for 2022 through 2031 that were published on June 14, 2023, OACT estimated that the uninsured rate for the historical, baseline year of 2013 was 14 percent, and that the uninsured rates for CYs 2024 and 2025 were 8.5 percent and 8.8 percent, respectively (89 FR 36193). As required by section 1886(r)(2)(B)(ii) of the Act, the Chief Actuary of CMS certified these estimates. We refer readers to OACT's Memorandum on Certification of Rates of Uninsured prepared for the FY 2025 IPPS/LTCH PPS proposed rule for further details on the methodology and assumptions that were used in the projection of these rates of uninsurance.
As with the CBO estimates on which we based Factor 2 for fiscal years before FY 2018, the NHEA estimates are for a calendar year. Under the approach originally adopted in the FY 2014 IPPS/LTCH PPS final rule, we have used a weighted average approach to project
OACT certified the estimate of the rate of uninsurance for FY 2025 determined using this weighted average approach to be reasonable and appropriate for purposes of section 1886(r)(2)(B)(ii) of the Act. In the proposed rule (89 FR 36193), we noted that we may also consider the use of more recent data that may become available for purposes of estimating the rates of uninsurance used in the calculation of the final Factor 2 for FY 2025.
In the proposed rule, we outlined the calculation of the proposed Factor 2 for FY 2025 as follows:
• Percent of individuals without insurance for CY 2013: 14 percent.
• Percent of individuals without insurance for CY 2024: 8.5 percent.
• Percent of individuals without insurance for CY 2025: 8.8 percent.
• Percent of individuals without insurance for FY 2025: (0.25 times 0.085) + (0.75 times 0.088) = 8.7 percent.
• Factor 2: 1 − |((0.14−0.087)/0.14)| = 1−0.3786 = 0.6214 (62.14 percent).
We proposed that Factor 2 for FY 2025 would be 62.14 percent.
The proposed FY 2025 uncompensated care amount was equivalent to proposed Factor 1 multiplied by proposed Factor 2, which was $6,498,135,150.00.
We invited public comments on our proposed Factor 2 for FY 2025.
A few commenters expressed their concern that the NHEA data source that CMS proposed to use for Factor 2 does not reflect current trends in the uninsured rate as the Medicaid continuous enrollment provisions unwind. Many commenters also indicated that they expect increases in the uninsured rates in their communities. Citing CMS' statement in the proposed rule that the agency could consider more recent data that may become available for the calculation of final Factor 2 for FY 2025, these commenters urged CMS to use more recent and accurate data sources to account for the anticipated increase in the uninsured rate. Considering the expiration of the COVID-19 PHE and the unwinding of the Medicaid continuous enrollment provisions, some of these commenters urged CMS to consider utilizing alternative data sources and calculations to ensure that the Factor 2 estimate accurately reflects the current coverage landscape, including uninsurance rates.
Several commenters referenced data sources and analyses, such as analyses by the Kaiser Family Foundation (KFF) and the Urban Institute, that project that at least 22 million individuals will lose their Medicaid coverage in FY 2024, with the number expected to grow in FY 2025. These commenters stated that they expect at least an additional 5.0 million uninsured individuals for processed redeterminations and an additional 1.7 million for those yet to be processed. Another commenter cited an analysis by the Alliance of Safety-Net Hospitals that indicated that there will be 32.5 million uninsured individuals in FY 2024, yielding an uninsurance rate of 9.6 percent for FY 2024. Accordingly, these commenters requested that CMS increase Factor 2 to reflect the anticipated increase in the uninsured population. A commenter recommended that CMS consider implementing a one-time increase in the percentage used in Factor 2 to account for the lag in data and anticipated rise in the uninsured rate as Medicaid unwinding continues in FY 2025.
Several commenters indicated their support for CMS' proposed increases in FY 2025's Factor 2 and Medicare DSH uncompensated care payments, compared to the FY 2024 Factor 2 and Medicare DSH uncompensated care payments. Some commenters raised concerns regarding the proposed increase in uncompensated care payments for FY 2025, stating that an increase in uncompensated care payments in one year does not make up for underpayments in prior years. In addition, a few commenters asked CMS to increase the uncompensated care amount beyond the amount proposed in the FY 2025 IPPS/LTCH PPS proposed rule, while others urged CMS to increase the uncompensated care amount for community safety-net hospitals in particular given that these hospitals are already financially strained.
A commenter requested that CMS ensure that the assumptions used for the FY 2025 IPPS/LTCH PPS proposed rule's Factor 1 are internally consistent with the assumptions used in the FY 2025 IPPS/LTCH PPS proposed rule's Factor 2. This commenter noted that CMS estimated an 18.2 percentage point decline in Medicaid enrollment between FY 2023 and FY 2025 when calculating Factor 1 but did not account for the same decline in the number of Medicaid beneficiaries when estimating the uninsured rate in Factor 2.
In the FY 2025 IPPS/LTCH PPS proposed rule, we explained that we used the most recent available estimates from the NHEA at that time, and we refer readers to the relevant discussion in the proposed rule and OACT's Memorandum on Certification of Rates of Uninsured prepared for the proposed rule for further details on the methodology and assumptions used in the proposed rule's calculation of the projected uninsured rate. In brief, we indicated that our projection of the rates of uninsurance for CY 2024 and CY 2025 were from the latest NHEA historical data available and accounted for expected changes in enrollment across all categories of insurance coverage. Using estimates from the NHEA that were publicly available at the time of the proposed rule, OACT
In response to commenters who requested that we update the Factor 2 estimates and account for any anticipated changes in the uninsured rate using more recent or alternative data sources, in the proposed rule (89 FR 36193), we stated we may consider the use of more recent data that may become available for purposes of estimating the rates of uninsurance used in the calculation of the final Factor 2 for FY 2025. In this final rule, we are using the most recent NHEA estimates for the rate of uninsurance, which became available on June 12, 2024, and account for the legislative impacts of the expiration of the Families First Coronavirus Response Act's Medicaid continuous coverage provision, the extension of the American Rescue Plan's Marketplace enhanced premium tax credits via the Inflation Reduction Act, and the effects of the COVID-19 PHE on insurance coverage. Consistent with prior final IPPS/LTCH PPS rulemakings (
Based on these latest projections, we note that the insured share of the population is expected to have been 93.1 percent in CY 2023. In CY 2024, a decrease in Medicaid enrollment on an average monthly basis of 10.2 million enrollees is expected, with an additional decline of 1.6 million enrollees projected in CY 2025.
Regarding the commenter who expressed concerns that there may be a discrepancy between assumptions regarding Medicaid enrollment used in FY 2025 IPPS/LTCH PPS proposed rule's Factor 1 and Factor 2, we note that the Medicaid enrollment data used for purposes of uninsured rate projections use the most recent available calendar year data and are generally consistent with the Federal fiscal year data used for purposes of the Factor 1 estimates.
These changes in enrollment, along with projected trends in other forms of coverage (
Regarding the comments requesting that CMS increase the uncompensated care amount for FY 2025, generally or for community safety-net hospitals in particular, we continue to believe that estimating Factor 2 based on the best available data is appropriate and consistent with the requirements of section 1886(r)(2)(B)(ii) of the Act.
After consideration of the public comments we received, we are updating the calculation of Factor 2 for FY 2025 to incorporate more recent data from NHEA. The final estimates of the percent of uninsured individuals have been certified by the Chief Actuary of CMS. We note that the CY 2024 and CY 2025 uninsurance rates are projected to be higher than CY 2023's partly because of the expiration of the Medicaid continuous enrollment provisions and the projected declines in Medicaid enrollment in CY 2024 and CY 2025, which are also larger in the final rule than in the proposed rule. However, the lower projected rates of uninsurance in CY 2024 and CY 2025 in the final rule relative to the proposed rule largely reflect higher expected enrollment in direct-purchase insurance in those years. This higher expected enrollment is associated with enrollment in Marketplace plans and is related to (i) the Inflation Reduction Act's extension of the American Rescue Plan Act's enhanced Marketplace premium subsidies through 2025 and (ii) a
The calculation of the final Factor 2 for FY 2025 using a weighted average of OACT's updated projections for CY 2024 and CY 2025 is as follows:
• Percent of individuals without insurance for CY 2013: 14.0 percent.
• Percent of individuals without insurance for CY 2024: 7.3 percent.
• Percent of individuals without insurance for CY 2025: 7.7 percent,
• Percent of individuals without insurance for FY 2025: (0.25 times 0.073) + (0.75 times 0.077) = 7.6 percent.
• Factor 2: 1−|((0.076−0.14)/0.14)| = 1−0.457 = 0.5429 (54.29 percent).
Therefore, the final Factor 2 for FY 2025 is 54.29 percent. The final FY 2025 uncompensated care amount is $10,509,750, 000 * 0.5429 = $5,705,743,275.
Section 1886(r)(2)(C) of the Act defines Factor 3 in the calculation of the uncompensated care payment. As we have discussed earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is equal to the percent, for each subsection (d) hospital, that represents the quotient of: (1) the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and (2) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period (as so estimated, based on such data).
Therefore, Factor 3 is a hospital-specific value that expresses the proportion of the estimated uncompensated care amount for each subsection (d) hospital and each subsection (d) Puerto Rico hospital with the potential to receive Medicare DSH payments relative to the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the fiscal year for which the uncompensated care payment is to be made. Factor 3 is applied to the product of Factor 1 and Factor 2 to determine the amount of the uncompensated care payment that each eligible hospital will receive for FY 2014 and subsequent fiscal years. In order to implement the statutory requirements for this factor of the uncompensated care payment formula, it was necessary for us to determine: (1) the definition of uncompensated care or, in other words, the specific items that are to be included in the numerator (that is, the estimated uncompensated care amount for an individual hospital) and the denominator (that is, the estimated uncompensated care amount for all hospitals estimated to receive Medicare DSH payments in the applicable fiscal year); (2) the data source(s) for the estimated uncompensated care amount; and (3) the timing and manner of computing the quotient for each hospital estimated to receive Medicare DSH payments. The statute instructs the Secretary to estimate the amounts of uncompensated care for a period based on appropriate data. In addition, we note that the statute permits the Secretary to use alternative data in the case where the Secretary determines that such alternative data are available that are a better proxy for the costs of subsection (d) hospitals for treating individuals who are uninsured. For a discussion of the methodology, we used to calculate Factor 3 for fiscal years 2014 through 2022, we refer readers to the FY 2024 IPPS/LTCH final rule (88 FR 59001 and 59002).
Section 1886(r)(2)(C) of the Act governs the selection of the data to be used in calculating Factor 3 and allows the Secretary the discretion to determine the time periods from which we will derive the data to estimate the numerator and the denominator of the Factor 3 quotient. Specifically, section 1886(r)(2)(C)(i) of the Act defines the numerator of the quotient as the amount of uncompensated care for a subsection (d) hospital for a period selected by the Secretary. Section 1886(r)(2)(C)(ii) of the Act defines the denominator as the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under section 1886(r) of the Act for such period. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50634 through 50647), we adopted a process of making interim payments with final cost report settlement for both the empirically justified Medicare DSH payments and the uncompensated care payments required by section 3133 of the Affordable Care Act. Consistent with that process, we also determined the time period from which to calculate the numerator and denominator of the Factor 3 quotient in a way that would be consistent with making interim and final payments. Specifically, we must have Factor 3 values available for hospitals that we estimate will qualify for Medicare DSH payments for a fiscal year and for those hospitals that we do not estimate will qualify for Medicare DSH payments for that fiscal year but that may ultimately qualify for Medicare DSH payments for that fiscal year at the time of cost report settlement.
As described in the FY 2022 IPPS/LTCH PPS final rule, commenters expressed concerns that the use of only 1 year of data to determine Factor 3 would lead to significant variations in year-to-year uncompensated care payments. Some stakeholders recommended the use of 2 years of historical data from Worksheet S-10 data of the Medicare cost report (86 FR 45237). In the FY 2022 IPPS/LTCH PPS final rule, we stated that we would consider using multiple years of data when the vast majority of providers had been audited for more than 1 fiscal year under the revised reporting instructions. Audited FY 2019 cost reports were available for the development of the FY 2023 IPPS/LTCH PPS proposed and final rules. Feedback from previous audits and lessons learned were incorporated into the audit process for the FY 2019 reports.
In consideration of the comments discussed in the FY 2022 IPPS/LTCH PPS final rule, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49036 through 49047), we finalized a policy of using a multi-year average of audited Worksheet S-10 data to determine Factor 3 for FY 2023 and subsequent fiscal years. We explained our belief that this approach would be generally consistent with our past practice of using the most recent single year of audited data from the Worksheet S-10, while also addressing commenters' concerns regarding year-to-year fluctuations in uncompensated care payments. Under this policy, we used a 2-year average of audited FY 2018 and FY 2019 Worksheet S-10 data to
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49033 through 49047), we also modified our policy regarding cost reports that start in one fiscal year and span the entirety of the following fiscal year. Specifically, in the rare cases when we use a cost report that starts in one fiscal year and spans the entirety of the subsequent fiscal year to determine uncompensated care costs for the subsequent fiscal year, we would not use the same cost report to determine the hospital's uncompensated care costs for the earlier fiscal year. We explained that using the same cost report to determine uncompensated care costs for both fiscal years would not be consistent with our intent to smooth year-to-year variation in uncompensated care costs. As an alternative, we finalized our proposal to use the hospital's most recent prior cost report, if that cost report spans the applicable period.
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59003), we continued the policy finalized in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042) to address the effects of calculating Factor 3 using data from multiple fiscal years, in which we apply a scaling factor to the Factor 3 values calculated for all DSH-eligible hospitals so that total uncompensated care payments to hospitals that are projected to be DSH-eligible for a fiscal year will be consistent with the estimated amount available to make uncompensated care payments for that fiscal year. Pursuant to that policy, we divide 1 (the expected sum of all DSH-eligible hospitals' Factor 3 values) by the actual sum of all DSH-eligible hospitals' Factor 3 values and then multiply the quotient by the uncompensated care payment determined for each DSH-eligible hospital to obtain a scaled uncompensated care payment amount for each hospital. This process is designed to ensure that the sum of the scaled uncompensated care payments for all hospitals that are projected to be DSH-eligible is consistent with the estimate of the total amount available to make uncompensated care payments for the applicable fiscal year.
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59003), we continued our new hospital policy that was modified in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49042) and initially adopted in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42370 through 42371) to determine Factor 3 for new hospitals. Consistent with our policy of using multiple years of cost reports to determine Factor 3, we defined new hospitals as hospitals that do not have cost report data for the most recent year of data being used in the Factor 3 calculation. Under this definition, the cut-off date for the new hospital policy is the beginning of the fiscal year after the most recent year for which audits of the Worksheet S-10 data have been conducted. For FY 2024, the FY 2020 cost reports were the most recent year of cost reports for which audits of Worksheet S-10 data had been conducted. Thus, hospitals with CMS Certification Numbers (CCNs) established on or after October 1, 2020, were subject to the new hospital policy for FY 2024.
Under our modified new hospital policy, if a new hospital has a preliminary projection of being DSH-eligible based on its most recent available disproportionate patient percentage, it may receive interim empirically justified DSH payments. However, new hospitals will not receive interim uncompensated care payments because we would have no uncompensated care data on which to determine what those interim payments should be. The MAC will make a final determination concerning whether the hospital is eligible to receive Medicare DSH payments at cost report settlement. In FY 2024, while we continued to determine the numerator of the Factor 3 calculation using the new hospital's uncompensated care costs reported on Worksheet S-10 of the hospital's cost report for the current fiscal year, we determined Factor 3 for new hospitals using a denominator based solely on uncompensated care costs from cost reports for the most recent fiscal year for which audits have been conducted. In addition, we applied a scaling factor to the Factor 3 calculation for a new hospital.
In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59004), we continued our policy of treating hospitals that merge after the development of the final rule for the applicable fiscal year similar to new hospitals. As explained in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50021), for these newly merged hospitals, we do not have data currently available to calculate a Factor 3 amount that accounts for the merged hospital's uncompensated care burden. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50021 and 50022), we finalized a policy under which Factor 3 for hospitals that we do not identify as undergoing a merger until after the public comment period and additional review period following the publication of the final rule or that undergo a merger during the fiscal year will be recalculated similar to new hospitals.
Consistent with the policy adopted in the FY 2015 IPPS/LTCH PPS final rule, in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59004), we stated that we would continue to treat newly merged hospitals in a similar manner to new hospitals, such that the newly merged hospital's final uncompensated care payment will be determined at cost report settlement where the numerator of the newly merged hospital's Factor 3 will be based on the cost report of only the surviving hospital (that is, the newly merged hospital's cost report) for the current fiscal year. However, if the hospital's cost reporting period includes less than 12 months of data, the data from the newly merged hospital's cost report will be annualized for purposes of the Factor 3 calculation. Consistent
The calculation of a hospital's total uncompensated care costs on Worksheet S-10 requires the use of the hospital's cost to charge ratio (CCR). In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59004 through 59005), we continued the policy of trimming CCRs, which we adopted in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49043), for FY 2024. Under this policy, we apply the following steps to determine the applicable CCR separately for each fiscal year that is included as part of the multi-year average used to determine Factor 3:
After completing these steps, we re-calculate the hospital's uncompensated care costs (Line 30) for the applicable fiscal year using the trimmed CCR (the statewide average CCR (urban or rural, as applicable)).
After applying the CCR trim methodology, there are rare situations where a hospital has potentially aberrant uncompensated care data for a fiscal year that are unrelated to its CCR. Therefore, under the trim methodology for potentially aberrant uncompensated care costs (UCC) that was included as part of the methodology for purposes of determining Factor 3 in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58832), if the hospital's uncompensated care costs for any fiscal year that is included as a part of the multi-year average are an extremely high ratio (greater than 50 percent) of its total operating costs in the applicable fiscal year, we will determine the ratio of uncompensated care costs to the hospital's total operating costs from another available cost report, and apply that ratio to the total operating expenses for the potentially aberrant fiscal year to determine an adjusted amount of uncompensated care costs for the applicable fiscal year.
However, we note that we have audited the Worksheet S-10 data that will be used in the Factor 3 calculation for a number of hospitals. Because the UCC data for these hospitals have been subject to audit, we believe that there is increased confidence that if high uncompensated care costs are reported by these audited hospitals, the information is accurate. Therefore, as we explained in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58832), we determined it is unnecessary to apply the UCC trim methodology for a fiscal year for which a hospital's UCC data have been audited.
In rare cases, hospitals that are not currently projected to be DSH-eligible and that do not have audited Worksheet S-10 data may have a potentially aberrant amount of insured patients' charity care costs (line 23 column 2). In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59004), we stated that in addition to the UCC trim methodology, we will continue to apply an alternative trim specific to certain hospitals that do not have audited Worksheet S-10 data for one or more of the fiscal years that are used in the Factor 3 calculation. For FY 2023 and subsequent fiscal years, in the rare case that a hospital's insured patients' charity care costs for a fiscal year are greater than $7 million and the ratio of the hospital's cost of insured patient charity care (line 23 column 2) to total uncompensated care costs (line 30) is greater than 60 percent, we will not calculate a Factor 3 for the hospital at the time of proposed or final rulemaking. This trim will only impact hospitals that are not currently projected to be DSH-eligible; and therefore, are not part of the calculation of the denominator of Factor 3, which includes only uncompensated care costs for hospitals projected to be DSH-eligible. Consistent with the approach adopted in the FY 2022 IPPS/LTCH PPS final rule, if a hospital would be trimmed under both the UCC trim methodology and this alternative trim, we will apply this trim in place of the existing UCC trim methodology. We continue to believe this alternative trim more appropriately addresses potentially aberrant insured patient charity care costs compared to the UCC trim methodology, because the UCC trim is based solely on the ratio of total uncompensated care costs to total operating costs and does not consider the level of insured patients' charity care costs.
Similar to the approach initially adopted in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45245 and 45246), in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59005), we also stated that we would continue to use a threshold of 3 standard deviations from the mean ratio of insured patients' charity care costs to total uncompensated care costs (line 23 column 2 divided by line 30) and a dollar threshold that is the median total uncompensated care cost reported on
For FY 2025, consistent with § 412.106(g)(1)(iii)(C)(
Thus, for FY 2025, we will use 3 years of audited Worksheet S-10 data to calculate Factor 3 for all eligible hospitals, including IHS and Tribal hospitals and Puerto Rico hospitals that have a cost report for 2013, following these steps:
We received comments regarding the definition of uncompensated care costs for purposes of the Factor 3 calculation, Worksheet S-10 cost report audits, the newly merged hospitals policy, and our Factor 3 calculation instructions.
Regarding the request to include costs for teaching and providing physician and other professional services, including GME costs, when calculating the CCR, we note that because the CCR on Line 1 of Worksheet S-10 is obtained from Worksheet C, Part I, and is also used in other IPPS rate setting contexts (such as high-cost outliers and the calculation of the MS-DRG relative weights) from which it is appropriate to exclude the costs associated with physician and professional services and GME costs, we remain reluctant to adjust CCRs in the narrower context of calculating uncompensated care costs. Therefore, as stated in past final rules, including the FY 2022 IPPS/LTCH PPS final rule (86 FR 45241 and 45242) and the FY 2023 IPPS/LTCH PPS final rule (87 FR 49039), we continue to believe that it is not appropriate to modify the calculation of the CCR on Line 1 of Worksheet S-10 to include any additional costs in the numerator of the CCR calculation.
With regard to the comments requesting that payment shortfalls from Medicaid and state and local indigent care programs be included in uncompensated care cost calculations, we have consistently explained in past final rules (
Other commenters proposed changes to the Worksheet S-10 audit process. For example, a commenter requested that CMS disseminate a comprehensive audit policy and protocols that must be employed by all auditors and MACs and disclose these through notice and comment rulemaking. The same commenter reiterated a previous request made in prior comments that CMS implement a workable appeal or review process to correct errors and inconsistent audit disallowances in a timely manner. A commenter encouraged CMS to work with auditors to streamline the audit process and improve consistency. Another commenter requested that CMS make audit protocols publicly available and ensure that Worksheet S-10 audits impose minimal burden and are equitable and uniform across hospitals.
We appreciate all commenters' input and recommendations on how to improve our audit process and reiterate our commitment to continue working with MACs and providers on audit improvements, which include making changes to increase the efficiency of the audit process, building on the lessons learned in previous audit years. We will take commenters' recommendations into consideration for future rulemaking.
Regarding the request to make public the audit policies and protocols, as we previously explained in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59008), the FY 2021 IPPS/LTCH PPS final rule (85 FR 58822), the FY 2020 IPPS/LTCH PPS final rule (84 FR 42368), and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56964) we do not make our protocols public as CMS desk review and audit protocols are confidential and are for CMS and MAC use only. In addition, there is no requirement under either the Administrative Procedure Act or the Medicare statute that CMS adopt audit policies or protocols through notice and comment rulemaking. As previously discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59008) and the FY 2021 IPPS/LTCH PPS final rule (85 FR 58822), to most efficiently and appropriately utilize our limited audit resources, we do not plan on introducing an audit appeal process at this time.
We continue to believe our efforts to refine the Worksheet S-10 instructions and related guidance have improved provider understanding of Worksheet S-10 and made the instructions clearer. We also recognize that there are continuing opportunities to further improve the accuracy and consistency of the information that is reported on the Worksheet S-10, and to the extent that commenters have raised new questions and concerns regarding the reporting requirements, we will attempt to address them through future rulemaking and/or sub-regulatory guidance and subsequent outreach [to MACs and providers]. However, as stated in previous IPPS/LTCH PPS rulemakings (
Regarding the commenter's request that CMS clarify whether non-Medicare bad debt is multiplied by CCR, we believe that the Worksheet S-10 instructions are clear and indicate that the CCR will not be applied to the deductible and coinsurance amounts for insured patients approved for charity care and non-reimbursed Medicare bad debt.
For purposes of identifying new hospitals, for FY 2025, the FY 2021 cost reports are the most recent year of cost reports for which audits of Worksheet S-10 data have been conducted. Thus, hospitals with CCNs established on or after October 1, 2021, will be subject to the new hospital policy in FY 2025. If a new hospital is ultimately determined to be eligible for Medicare DSH payments for FY 2025, the hospital will receive an uncompensated care payment calculated using a Factor 3 where the numerator is the uncompensated care costs reported on Worksheet S-10 of the hospital's FY 2025 cost report, and the denominator is the sum of the uncompensated care costs reported on Worksheet S-10 of the FY 2021 cost reports for all DSH-eligible hospitals. In addition, we will apply a scaling factor, as discussed previously, to the Factor 3 calculation for a new hospital. As we explained in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59004), we believe applying the scaling factor is appropriate for purposes of calculating Factor 3 for all hospitals, including new hospitals and hospitals that are treated as new hospitals, to improve consistency and predictability across all hospitals.
For FY 2025, the eligibility of a newly merged hospital to receive interim uncompensated care payments will be based on whether the surviving CCN has a preliminary projection of being DSH-eligible, and the amount of any interim uncompensated care payments will be based on the uncompensated care costs from the FY 2019, FY 2020, and FY 2021 cost reports available for the surviving CCN at the time the final rule is developed. However, at cost report settlement, we will determine the newly merged hospital's final uncompensated care payment based on the uncompensated care costs reported on its FY 2025 cost report. That is, we will revise the numerator of Factor 3 for the newly merged hospital to reflect the uncompensated care costs reported on the newly merged hospital's FY 2025 cost report. The denominator will be the sum of the uncompensated care costs reported on Worksheet S-10 of the FY 2021 cost reports for all DSH-eligible hospitals, which is the most recent fiscal year for which audits have been conducted. We will also apply a scaling factor, as described previously.
For a hospital that is subject to either of the trims for potentially aberrant data (the UCC trim and alternative trim methodology explained in the previous section of this final rule) and is ultimately determined to be DSH-eligible at cost report settlement, its uncompensated care payment will be calculated only after the hospital's reporting of insured charity care costs on its FY 2025 Worksheet S-10 has been reviewed. Accordingly, the MAC will calculate a Factor 3 for the hospital only after reviewing the uncompensated care information reported on Worksheet S-10 of the hospital's FY 2025 cost report. Then we will calculate Factor 3 for the hospital using the same methodology used to determine Factor 3 for new hospitals. Specifically, the numerator will reflect the uncompensated care costs reported on the hospital's FY 2025 cost report, while the denominator will reflect the sum of the uncompensated care costs reported on Worksheet S-10 of the FY 2021 cost reports of all DSH-eligible hospitals. In addition, we will apply a scaling factor, as discussed previously, to the Factor 3 calculation for the hospital.
We did not receive any comments on the discussion of the CCR trim methodology, the UCC trim methodology, or the alternative trim methodology.
Under the CCR trim methodology, for purposes of this final rule, the statewide average CCR was applied to 10 hospitals' FY 2019 reports, of which 4 hospitals had FY 2019 Worksheet S-10 data. The statewide average CCR was applied to 8 hospitals' FY 2020 reports, of which 3 hospitals had FY 2020 Worksheet S-10 data. The statewide average CCR was applied to 9 hospitals' FY 2021 reports, of which 4 hospitals had FY 2021 Worksheet S-10 data.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36197), we stated that for purposes of this FY 2025 IPPS/LTCH PPS final rule, consistent with our Factor 3 methodology since the FY 2014 IPPS/LTCH PPS final rule (78 FR 50642), we intended to use data from the March 2024 HCRIS extract for this calculation. We explained that the March 2024 HCRIS extract would be the latest quarterly HCRIS extract that would be publicly available at the time of the development of the FY 2025 IPPS/LTCH PPS final rule.
Regarding requests from providers to amend and/or reopen previously audited Worksheet S-10 data for the most recent 3 cost reporting years that are used in the methodology for calculating Factor 3, we noted that MACs follow normal timelines and procedures. We explained that for purposes of the Factor 3 calculation for the FY 2025 IPPS/LTCH PPS final rule, any amended reports and/or reopened reports would need to have completed the amended report and/or reopened report submission processes by the end of March 2024. In other words, if the amended report and/or reopened report was not available for the March HCRIS extract, then that amended and/or reopened report data would not be part of the FY 2025 IPPS/LTCH PPS final rule's Factor 3 calculation. We noted that the March HCRIS data extract would be available during the comment period for the proposed rule if providers wanted to verify that their amended and/or reopened data is reflected in the March HCRIS extract.
Since FY 2014, we have made interim uncompensated care payments during the fiscal year on a per-discharge basis. Typically, we use a 3-year average of the number of discharges for a hospital to produce an estimate of the amount of the hospital's uncompensated care payment per discharge. Specifically, the hospital's total uncompensated care payment amount for the applicable fiscal year is divided by the hospital's historical 3-year average of discharges computed using the most recent available data to determine the uncompensated care payment per discharge for that fiscal year.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45247 and 45248), we modified this calculation for FY 2022 to be based on an average of FY 2018 and FY 2019 historical discharge data, rather than a 3-year average using the most recent 3 years of discharge data, which would have included data from FY 2018, FY 2019, and FY 2020. We explained our belief that computing a 3-year average with FY 2020 discharge data would underestimate discharges, due to the decrease in discharges during the COVID-19 pandemic. For the same reason, in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49045), we calculated interim uncompensated care payments based on the 3-year average of discharges from FY 2018, FY 2019, and FY 2021 rather than a 3-year average using the most recent 3 years of discharge data.
We explained in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59010) that we believed that computing a 3-year average using the most recent 3 years of discharge data would potentially underestimate the number of discharges for FY 2024 due to the effects of the COVID-19 pandemic during FY 2020, which was the first year of the COVID-19 pandemic. We considered using an average of FY 2019, FY 2021, and FY 2022 discharge data to calculate the per-discharge amount for interim uncompensated care payments for FY 2024. However, we agreed with commenters that using FY 2019 data may overestimate discharge volume because updated claims data used to estimate the FY 2024 discharges in the Factor 1 calculation indicated that discharge volumes were not expected to return to pre-pandemic levels during FY 2024. Therefore, for FY 2024, we finalized a policy of calculating the per-discharge amount for interim uncompensated care payments using an average of FY 2021 and FY 2022 discharge data.
For FY 2025 and subsequent fiscal years, we proposed to calculate the per-discharge amount for interim uncompensated care payments using the average of the most recent 3 years of discharge data. Accordingly, for FY 2025, we proposed to use an average of discharge data from FY 2021, FY 2022, and FY 2023. We stated that we believed that our proposed approach would likely result in a better estimate of the number of discharges during FY 2025 and subsequent years for purposes of the interim uncompensated care payment calculation.
As we explained in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50645), we generally believe that it is appropriate to use a 3-year average of discharge data to reduce the degree to which we would over- or under-pay the uncompensated care payment on an interim basis. In any given year, a hospital could have low or high Medicare utilization that differs from other years. For example, if a hospital had two Medicare discharges in its most recent year of claims data but experienced four discharges in FY 2025, during the fiscal year, we would pay two times the amount the hospital should receive and need to adjust for that at cost report settlement. Similarly, if a hospital had four Medicare discharges in its most recent year of claims data, but experienced two discharges in FY 2025, during the fiscal year, we would only pay half the amount the hospital should receive and need to adjust for that at cost report settlement.
In the FY 2025 IPPS/LTCH PPS proposed rule, we stated that we believed that, generally, use of the most recent 3 years of discharge data, rather than older data, is more likely to reflect current trends in discharge volume and provide an approximate estimate of the number of discharges in the applicable fiscal year. In addition, we noted that including discharge data from FY 2023 to compute this 3-year average would be consistent with the proposed use of FY 2023 Medicare claims in the IPPS ratesetting, as discussed in section I.E. of the preamble of this FY 2025 IPPS/LTCH PPS final rule.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to use the resulting 3-year average of the most recent years of available historical discharge data to calculate a per-discharge payment amount that would be used to make interim uncompensated care payments to each projected DSH-eligible hospital during FY 2025 and subsequent fiscal years. Interim uncompensated care payments made to a hospital during the fiscal year are reconciled following the end of the year to ensure that the final payment amount is consistent with the hospital's prospectively determined uncompensated care payment for the fiscal year.
We proposed to make conforming changes to the regulations under 42 CFR 412.106. Specifically, we proposed to modify paragraph (1) of § 412.106(i) to state that for FY 2025 and subsequent fiscal years, interim uncompensated care payments will be calculated based on an average of the most recent 3 years of available historical discharge data. We requested comments on this proposal.
Additionally, we believe using an average of the most recent 3 years of available historical discharge data will appropriately reflect year-to-year variations in discharge volumes in FY 2026 and subsequent fiscal years. As explained earlier in this section of this final rule and in the proposed rule, the effect of the COVID-19 pandemic on discharges was the rationale for modifying the interim uncompensated care payment methodology in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45247 and 45248). We believe the effect on discharge volume of the COVID-19 pandemic will likely be diminished beginning in FY 2026. Therefore, consistent with the proposed rule, we are modifying the text of § 412.106(i)(1) to state that for FY 2026 and subsequent fiscal years, interim uncompensated care payments will be calculated based on an average of the most recent 3 years of available historical discharge data.
At this time, we are not adopting a national adjustment approach because, as we explain more fully earlier in this section and in the proposed rule, we believe that in FY 2026 and subsequent years, using an average of the most recent 3 years of available discharge data will likely result in a reasonable estimate at the provider level, for purposes of interim uncompensated care payments. We will consider commenters' other suggested modifications to our interim uncompensated care payment policies, such as using a national adjustment factor, in future rulemaking.
Further, as we explained in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36198-36199), we finalized a voluntary process in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58833 and 58834), through which a hospital may submit a request to its MAC for a lower per-discharge interim uncompensated care payment amount, including a reduction to zero, once before the beginning of the fiscal year and/or once during the fiscal year. In conjunction with this request, the hospital must provide supporting documentation demonstrating that there would likely be a significant recoupment at cost report settlement if the per-discharge amount is not lowered (for example, recoupment of 10 percent or more of the hospital's total uncompensated care payment, or at least $100,000). For example, a hospital might submit documentation showing a large projected increase in discharges during the fiscal year to support reduction of its per-discharge uncompensated care payment amount. As another example, a hospital might request that its per-discharge uncompensated care payment amount be reduced to zero midyear if the hospital's interim uncompensated care payments during the year have already surpassed the total uncompensated care payment calculated for the hospital.
Under the policy we finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58833 through 58834), the hospital's MAC will evaluate these requests and the supporting documentation before the beginning of the fiscal year and/or with midyear requests when the historical average number of discharges
We received comments related to the uncompensated care payment reconciliation process.
As we have done for every proposed and final rule beginning in FY 2014, in conjunction with this final rule, we will publish on the CMS website a table listing Factor 3 for hospitals that we estimate will receive empirically justified Medicare DSH payments in FY 2025 (that is, those hospitals that will receive interim uncompensated care payments during the fiscal year), and for the remaining subsection (d) hospitals and subsection (d) Puerto Rico hospitals that have the potential of receiving an uncompensated care payment in the event that they receive an empirically justified Medicare DSH payment for the fiscal year as determined at cost report settlement. However, we note that a Factor 3 will not be published for new hospitals and hospitals that are subject to the alternative trim for hospitals with potentially aberrant data that are not projected to be DSH-eligible.
We also will publish a supplemental data file containing a list of the mergers that we are aware of and the computed uncompensated care payment for each merged hospital. In the DSH uncompensated care supplemental data file, we list new hospitals and the 8 hospitals that would be subject to the alternative trim for hospitals with potentially aberrant data that are not projected to be DSH-eligible, with aN/A in the Factor 3 column.
Hospitals had 60 days from the date of public display of the FY 2025 IPPS/LTCH PPS proposed rule in the
As discussed in section III.B. of the preamble of this final rule, in the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to implement the new OMB labor market area delineations (which are based on 2020 Decennial Census data) for the FY 2025 wage index. We stated that this proposal also would have an impact on the calculation of Medicare DSH payment adjustments to certain hospitals. Hospitals that are designated as rural with less than 500 beds and are not rural referral centers (RRCs) or Medicare-dependent, small rural hospitals (MDHs) are subject to a maximum DSH payment adjustment of 12 percent. Accordingly, hospitals with less than 500 beds that are currently in urban counties that would become rural if we finalize our proposal to adopt the new OMB delineations, and that do not become RRCs or MDHs, would be subject to a maximum DSH payment adjustment of 12 percent. (We note, as discussed in section V.F.2. of the preamble of this final rule, under current law the MDH program will expire on December 31, 2024). We also note that urban hospitals are only subject to a maximum DSH payment adjustment of 12 percent if they have less than 100 beds.
In that same proposed rule, we explained that our existing regulations at 42 CFR 412.102 will apply in FY 2025 with respect to the calculation of the DSH payments to hospitals that are currently located in urban counties that would become rural if we finalize our proposal to adopt the new OMB delineations. The provisions of 42 CFR 412.102 specify that an urban hospital that was part of an MSA, but was redesignated as rural (as defined in the regulations), as a result of the most recent OMB standards for delineating statistical areas adopted by CMS, may receive an adjustment to its rural Federal payment amount for operating costs for two successive fiscal years. Specifically, the regulations state that, in the first year after a hospital loses urban status, the hospital will receive an additional payment that equals two thirds of the difference between the disproportionate share payments as applicable to the hospital before its redesignation from urban to rural and disproportionate share payments otherwise, applicable to the hospital subsequent to its redesignation from urban to rural. In the second year after a hospital loses urban status, the hospital will receive an additional payment that equals one-third of the difference between the disproportionate share payments applicable to the hospital before its redesignation from urban to rural and disproportionate share payments otherwise applicable to the hospital subsequent to its redesignation from urban to rural.
In
The FY 2005 regulation at issue in
The Supreme Court has concluded that the interpretation set forth in the FY 2005 IPPS final rule “correctly construes the statutory language at issue.”
The withdrawal of this regulation will not serve as a basis to reopen a CMS or contractor determination, a contractor hearing decision, a CMS reviewing official decision, or a decision by the Provider Reimbursement Review Board or the Administrator. We recognize that hospitals may have anticipated receiving greater Medicare reimbursement for still-open pre-FY 2005 cost reporting periods in circumstances where the “covered” days limitation would have resulted in a larger DSH adjustment. However, we are obliged to apply the statute as the Supreme Court determined Congress wrote it.
We also disagree with the commenter's suggestion that
Contrary to the commenter's contention and consistent with what we said in the proposed rule, we do not believe that withdrawing a regulation that conflicts with the governing statute constitutes an exercise of our “retroactive” rulemaking authority under section 1871(e)(1)(A) of the Act. Rather, we are simply giving effect to the language of the statute as it has
We also disagree with the commenter's assertion that our proposal would penalize affected hospitals and deprive them of fair notice and due process. Our proposal applies the meaning of the statute as it was written in 1986, and the operative language has not changed in any material way since then. As we said in the proposed rule, we recognize that hospitals may have anticipated receiving greater Medicare reimbursement for their still-open pre-FY 2005 cost reporting periods in circumstances where the “covered days” limitation would have resulted in a larger DSH payment. Nonetheless, it would not be reasonable for those hospitals to expect us to ignore the statute and pay them more than Congress allowed or, to the extent their still-open DSH adjustments were already paid based on the pre-FY 2005 rule, allow them to retain overpayments not authorized by Congress, after the Supreme Court settled the plain meaning of the statute. Our proposal was not meant to penalize affected hospitals in any way, and it is not an enforcement action. Rather, our proposal was intended to ensure, going forward, that providers' DSH adjustments are paid in accordance with the statute.
Finally, we disagree with the commenter's assertion that our proposal would be unfair to affected hospitals because other hospitals whose cost reporting periods were settled before the Supreme Court issued
After considering the comment received, we are finalizing our proposal to formally withdraw 42 CFR 412.106 as it existed prior to the effective date of the FY 2005 IPPS final rule to the extent it included only covered days in the SSI ratio when calculating a hospital's DSH adjustment. The withdrawal of this regulation will not serve as a basis to reopen a CMS or contractor determination, a contractor hearing decision, a CMS reviewing official decision, or a decision by the Provider Reimbursement Review Board or the Administrator.
We received several comments outside the scope of the proposed rule. These comments related to the exclusion of days associated with uncompensated care pools under section 1115 waivers from the numerator of the Medicaid fraction, requests for CMS to modernize DSH and work more closely with other agencies, Medicaid eligibility and redetermination, and concern over 340B eligibility. Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing these comments in this final rule.
Existing regulations at 42 CFR 412.4(a) define discharges under the IPPS as situations in which a patient is formally released from an acute care hospital or dies in the hospital. Section 412.4(b) defines acute care transfers, and § 412.4(c) defines postacute care transfers. Our policy set forth in § 412.4(f) provides that when a patient is transferred and his or her length of stay is less than the geometric mean length of stay for the MS-DRG to which the case is assigned, the transferring hospital is generally paid based on a graduated per diem rate for each day of stay, not to exceed the full MS-DRG payment that would have been made if the patient had been discharged without being transferred.
The per diem rate paid to a transferring hospital is calculated by dividing the full MS-DRG payment by the geometric mean length of stay for the MS-DRG. Based on an analysis that showed that the first day of hospitalization is the most expensive (60 FR 45804), our policy generally provides for payment that is twice the per diem amount for the first day, with each subsequent day paid at the per diem amount up to the full MS-DRG payment (§ 412.4(f)(1)). Transfer cases also are eligible for outlier payments. In
We established the criteria set forth in § 412.4(d) for determining which DRGs qualify for postacute care transfer payments in the FY 2006 IPPS final rule (70 FR 47419 through 47420). The determination of whether a DRG is subject to the postacute care transfer policy was initially based on the Medicare Version 23.0 GROUPER (FY 2006) and data from the FY 2004 MedPAR file. However, if a DRG did not exist in Version 23.0 or a DRG included in Version 23.0 is revised, we use the current version of the Medicare GROUPER and the most recent complete year of MedPAR data to determine if the DRG is subject to the postacute care transfer policy. Specifically, if the MS-DRG's total number of discharges to postacute care equals or exceeds the 55th percentile for all MS-DRGs and the proportion of short-stay discharges to postacute care to total discharges in the MS-DRG exceeds the 55th percentile for all MS-DRGs, CMS will apply the postacute care transfer policy to that MS-DRG and to any other MS-DRG that shares the same base MS-DRG. The statute at subparagraph 1886(d)(5)(J) of the Act directs CMS to identify MS-DRGs based on a high volume of discharges to postacute care facilities and a disproportionate use of postacute care services. As discussed in the FY 2006 IPPS final rule (70 FR 47416), we determined that the 55th percentile is an appropriate level at which to establish these thresholds. In that same final rule (70 FR 47419), we stated that we will not revise the list of DRGs subject to the postacute care transfer policy annually unless we are making a change to a specific MS-DRG.
To account for MS-DRGs subject to the postacute care policy that exhibit exceptionally higher shares of costs very early in the hospital stay, § 412.4(f) also includes a special payment methodology. For these MS-DRGs, hospitals receive 50 percent of the full MS-DRG payment, plus the single per diem payment, for the first day of the stay, as well as a per diem payment for subsequent days (up to the full MS-DRG payment (§ 412.4(f)(6))). For an MS-DRG to qualify for the special payment methodology, the geometric mean length of stay must be greater than 4 days, and the average charges of 1-day discharge cases in the MS-DRG must be at least 50 percent of the average charges for all cases within the MS-DRG. MS-DRGs that are part of an MS-DRG severity level group will qualify under the MS-DRG special payment methodology policy if any one of the MS-DRGs that share that same base MS-DRG qualifies (§ 412.4(f)(6)).
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), under section 1886(d)(5)(J) of the Act, a discharge was deemed a “qualified discharge” if the individual was discharged to one of the following postacute care settings:
• A hospital or hospital unit that is not a subsection (d) hospital.
• A skilled nursing facility.
• Related home health services provided by a home health agency provided within a timeframe established by the Secretary (beginning within 3 days after the date of discharge).
Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care provided by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41394), we made conforming amendments to § 412.4(c) of the regulation to include discharges to hospice care occurring on or after October 1, 2018, as qualified discharges. We specified that hospital bills with a Patient Discharge Status code of 50 (Discharged/Transferred to Hospice—Routine or Continuous Home Care) or 51 (Discharged/Transferred to Hospice, General Inpatient Care or Inpatient Respite) are subject to the postacute care transfer policy in accordance with this statutory amendment.
As discussed in the proposed rule and section II.C. of the preamble this final rule, based on our analysis of FY 2023 MedPAR claims data, CMS proposed to make changes to a number of MS-DRGs, effective for FY 2025. Specifically, we proposed the following changes:
• Adding ICD-10-PCS codes describing left atrial appendage closure (LAAC) procedures and cardiac ablation procedures to proposed new MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation).
• Deleting existing MS-DRGs 453, 454, and 455 (Combined Anterior and Posterior Spinal Fusion with MCC, with CC, and without CC/MCC, respectively) and to reassign procedures from the existing MS-DRGs, 453, 454, and 455 and MS-DRGs 459 and 460 (Spinal Fusion Except Cervical with MCC and without MCC, respectively) to proposed new MS-DRG 402 (Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical), proposed new MS-DRGs 426, 427, and 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC, with CC, without MCC/CC, respectively), proposed new MS-DRGs 429 and 430 (Combined Anterior and Posterior Cervical Spinal Fusion with MCC and without MCC, respectively), and proposed new MS-DRGs 447 and 448 (Multiple Level Spinal Fusion Except Cervical with MCC and without MCC, respectively). We also proposed to revise the title of MS-DRGs 459 and 460 to “Single Level Spinal Fusion Except Cervical with MCC and without MCC, respectively”. As discussed in section II.C. of the preamble of this final rule and later in this section, we are finalizing our proposals, with modification, to reflect the reassignment of cases reporting the use of a custom-made anatomically designed interbody fusion device and to delete MS-DRGs 459 and 460 and renumber as MS-DRGs 450 and 451.
• Reassigning cases that report a principal diagnosis of acute leukemia with an “other” O.R. procedure from MS-DRGs 834, 835, and 836 (Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) to new MS-DRG 850 (Acute Leukemia with Other O.R. Procedures). We note that we also proposed to revise the title of MS-DRGs 834, 835, and 836 from “Acute Leukemia without Major O.R. Procedures with MCC, with CC, and without CC/MCC”, respectively to “Acute Leukemia with MCC, with CC, and without CC/MCC”.
We noted in the proposed rule that proposed revised MS-DRGs 459 and 460 are currently subject to the postacute care transfer policy. We stated that we believe it is appropriate to reevaluate the postacute care transfer policy status for MS-DRGs 459 and 460. When proposing changes to MS-DRGs that involve adding, deleting, and reassigning procedures between proposed new and revised MS-DRGs, we continue to believe it is necessary to evaluate all of the affected MS-DRGs to determine whether they should be subject to the postacute care transfer policy.
We stated that MS-DRGs 834, 835, and 836 are currently not subject to the postacute care transfer policy. We noted that while we are proposing to reassign certain cases from these MS-DRGs to newly proposed MS-DRGs, we estimated that less than 5 percent of the current cases would shift from the current assigned MS-DRGs to the proposed new MS-DRGs. We stated that
In light of the proposed changes to the MS-DRGs for FY 2025, according to the regulations under § 412.4(d), we evaluated the MS-DRGs using the general postacute care transfer policy criteria and data from the FY 2023 MedPAR file. If an MS-DRG qualified for the postacute care transfer policy, we also evaluated that MS-DRG under the special payment methodology criteria according to regulations at § 412.4(f)(6). We continue to believe it is appropriate to assess new MS-DRGs and reassess revised MS-DRGs when proposing reassignment of procedure codes or diagnosis codes that would result in material changes to an MS-DRG.
We stated that proposed new MS-DRGs 426, 427, 447, and 448 would qualify to be included on the list of MS-DRGs that are subject to the postacute care transfer policy. As described in the regulations at § 412.4(d)(3)(ii)(D), MS-DRGs that share the same base MS DRG will all qualify under the postacute care transfer policy if any one of the MS-DRGs that share that same base MS-DRG qualifies. We therefore proposed to add proposed new MS-DRGs 426, 427, 428, 447, and 448 to the list of MS-DRGs that are subject to the postacute care transfer policy.
We noted that MS-DRGs 459 and 460 are currently subject to the postacute care transfer policy. As a result of our review, these MS-DRGs, as proposed to be revised, would not qualify to be included on the list of MS-DRGs that are subject to the postacute care transfer policy. We therefore proposed to remove revised MS-DRGs 459 and 460 from the list of MS-DRGs that are subject to the postacute care transfer policy.
As discussed in section II.C. of the preamble of this final rule, we are finalizing these proposed changes to the MS-DRGs, with modification, to delete MS-DRGs 459 and 460 and renumber these MS-DRGs as MS-DRGs 450 and 451. We therefore have evaluated the renumbered MS-DRGs 450 and 451 in the updated analysis that follows.
Using the March 2024 update of the FY 2023 MedPAR file, we have developed the following chart which sets forth the most recent analysis of the postacute care transfer policy criteria completed for this final rule with respect to each of these new or revised MS-DRGs.
During our annual review of proposed new or revised MS-DRGs and analysis of the December 2023 update of the FY 2023 MedPAR file, we reviewed the list of proposed revised or new MS-DRGs that qualify to be included on the list of MS-DRGs subject to the postacute care transfer policy for FY 2025 to determine
Based on our analysis of the proposed changes to MS-DRGs included in the proposed rule, we determined that proposed new MS-DRGs 426, 427, and 447 meet the criteria for the MS-DRG special payment methodology. As described in the regulations at § 412.4(f)(6)(iv), MS-DRGs that share the same base MS-DRG will all qualify under the MS-DRG special payment policy if any one of the MS-DRGs that share that same base MS-DRG qualifies. We proposed that MS-DRGs 426, 427, 428, 447, 448, would be subject to the MS-DRG special payment methodology, effective for FY 2025. For this final rule, we updated this analysis using data from the March 2024 update of the FY 2023 MedPAR file.
After consideration of the comment we received, we are finalizing our proposal to add MS-DRGs 426, 427, 428, 447, and 448 to the list of MS-DRGs subject to the postacute care and special payment policies. As noted, we proposed to remove MS-DRGs 459 and 460 from the list of MS-DRGS subject to the postacute care policy. These MS-DRGs are being deleted and renumbered to MS-DRGs 450 and 451, which will not be added to the postacute care policy list.
The postacute care transfer and special payment policy status of these MS-DRGs is reflected in Table 5 associated with this final rule, which is listed in section VI. of the Addendum to this final rule and available on the CMS website.
In accordance with section 1886(b)(3)(B)(i) of the Act, each year we update the national standardized amount for inpatient hospital operating costs by a factor called the “applicable percentage increase.” For FY 2025, we stated in the proposed rule that we are setting the applicable percentage increase by applying the adjustments listed in this section in the same sequence as we did for FY 2024. (We note that section 1886(b)(3)(B)(xii) of the Act required an additional reduction each year only for FYs 2010 through 2019.) Specifically, consistent with section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and 10319(a) of the Affordable Care Act, we stated that we are setting the applicable percentage increase by applying the following adjustments in the following sequence. The applicable percentage increase under the IPPS for FY 2025 is equal to the rate-of-increase in the hospital market basket for IPPS hospitals in all areas, subject to all of the following:
• A reduction of one-quarter of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals that fail to submit quality information under rules established by the Secretary in accordance with section 1886(b)(3)(B)(viii) of the Act.
• A reduction of three-quarters of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for hospitals not considered to be meaningful EHR users in accordance with section 1886(b)(3)(B)(ix) of the Act.
• An adjustment based on changes in economy-wide multifactor productivity (MFP) (the productivity adjustment).
Section 1886(b)(3)(B)(xi) of the Act, as added by section 3401(a) of the Affordable Care Act, states that application of the productivity adjustment may result in the applicable percentage increase being less than zero.
As published in the FY 2006 IPPS final rule (70 FR 47403), in accordance with section 404 of Public Law 108-173, CMS determined a new frequency for rebasing the hospital market basket of every 4 years. In compliance with section 404 of the of Public Law 108-173, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45194 through 45204), we replaced the 2014-based IPPS operating and capital market baskets
We proposed to base the FY 2025 market basket update used to determine the applicable percentage increase for the IPPS on IHS Global Inc.'s (IGI's) fourth quarter 2023 forecast of the 2018-based IPPS market basket rate-of-increase with historical data through third quarter 2023, which was estimated to be 3.0 percent. We also proposed that if more recent data subsequently became available (for example, a more recent estimate of the market basket update), we would use such data, if appropriate, to determine the FY 2025 market basket update in the final rule.
Many commenters stated that rapid and sustained growth in labor costs have put persistent cost pressure on hospitals. They also noted increases in drug prices, citing a recent study and a report by the Health and Human Services (HHS) Assistant Secretary for Planning and Evaluation which found that in 2022 and 2023, prices for nearly 2,000 drugs increased faster than the rate of general inflation, with an average price increase of 15.2 percent. Several commenters also stated that hospitals have seen significant growth in administrative costs due to what they described as inappropriate practices by large commercial health insurers, including Medicare Advantage and Medicaid managed care plans, such as automatic claim denials and onerous prior authorization requirements. Several commenters also discussed the continued costs of addressing past and preventing future cyberattacks and a commenter stated they have seen significant increases in capital costs, particularly since the pandemic. A commenter stated that recently increased tariffs on imported supplies from China will result in substantial price increase for gloves, masks, needles, and other supplies. A commenter stated private equity firms continue to achieve greater penetration across healthcare markets and the costs of contracting with specialties such as physician practices has skyrocketed, which the commenter stated is not factored into CMS' payments. Commenters urged CMS to consider the changing health care environment which they state is putting enormous financial strain on hospitals and health systems and is expected to continue through 2025. A commenter stated that the net market basket update is too low, and that the budget neutrality impact of the low wage policy will exacerbate the insufficient market basket update for high wage areas.
Several commenters proposed CMS apply a payment increase of at least 4.1 percent which is aligned with MedPAC's March 2024 Report to Congress, which recommended a 1.5 percentage points increase over the FY 2025 payment update. These commenters noted that this was the second year that MedPAC made a recommendation of increasing the market basket update. A commenter stated that, while they fully understand the need to protect the Medicare Hospital Insurance Trust Fund, they requested CMS review data beyond normal data and consider increasing the market basket amount to at least 3.5 percent to more realistically reflect inflation. Several commenters suggested various higher market basket increases, which they believe better reflects hospitals' input prices and the contract labor staffing challenge. A commenter encouraged CMS to consider, at a minimum, matching the 3.7 percent increase that the commenter stated Medicare Advantage will receive. A commenter supported an annual inflation-based payment update based on the full Medicare Economic Index.
Several commenters recommended CMS look to alternative data sources that they asserted better reflect true labor and input cost increases in a timely manner. The commenters stated that the proposed payment update does not recognize these challenges, nor does it factor in the realities of inflation impacting operating costs. Commenters also stated CMS must use data that better reflects the input price inflation that hospitals have experienced and are projected to experience in FY 2025. A commenter stated that they did not understand why the FY 2025 market basket increase is lower than FY 2024. A commenter recommended CMS use more recent data to update adjustments to 2025 IPPS rates.
Several commenters requested that CMS use its “special exceptions and adjustments” authority to implement a market basket adjustment that is more consistent with the significant cost increases that are being experienced by hospitals. They urged CMS to revisit its assumptions and focus on appropriately accounting for recent and future trends in inflationary pressure and cost increases in the hospital payment update, which they stated is essential to ensure that Medicare payments for acute care services more accurately reflect the cost of providing hospital care. A commenter urged CMS to adjust its methodology for calculating the annual payment update for FY 2025 to ensure it provides a robust payment update that adequately incorporates the effects of inflation and rising workforce costs on hospitals. A commenter asked that CMS, at a minimum, reconsider the proposed labor expense calculations to provide a more appropriate update based on growing and unsustainable costs. Several commenters recommended a comprehensive evaluation of the current rate-setting methodology to accurately capture the true costs of care delivery and provide a fair and sustainable reimbursement framework. A commenter stated it was unacceptable that CMS' payment update does not factor in changes in hospital admissions, case-mix intensity, or the mandatory 2 percent sequestration adjustment reductions.
Many commenters noted their financial pressures due to the PHE, aging, more complex patients, negative Medicare margins of −12.7 percent as estimated by MedPAC, and reliance on public payers. Several commenters noted that historically, hospitals mitigated losses incurred from serving underinsured patients by negotiating higher payment rates from commercial payors; however, due to high inflation and an increasing deficit generated by serving governmental payor patients, they stated hospitals can no longer rely on commercial payors to offset those losses. Several commenters urged CMS to consider and assess the financial position of hospitals, particularly those with low margins. A commenter
CMS understands that the market basket updates may differ from other overall inflation indexes such as the topline CPI; however, we would reiterate that these topline indexes are not comparable since they measure different mixes of products, services, or wages than the legislatively defined CMS IPPS hospital market basket. In addition, the CPI for hospital inpatient services does not reflect the input price inflation facing hospitals, and in some instances can reflect hospital charges or list prices.
We would highlight that the market basket percentage increase is a forecast of the price pressures that hospitals are expected to face in FY 2025. We also note that when developing its forecast for the ECI for hospital workers, IGI considers overall labor market conditions (including rise in contract labor employment due to tight labor market conditions) as well as trends in contract labor wages, which both have an impact on wage pressures for workers employed directly by the hospital. As projected by IGI and other independent forecasters, compensation growth and upward price pressures are expected to slow in 2025 relative to 2023 and 2024.
As is our general practice, we proposed that if more recent data became available, we would use such data, if appropriate, to derive the final FY 2025 IPPS market basket update for the final rule. We appreciate the commenters' concern regarding inflationary pressure and other rising costs and the request to use more recent data to determine the FY 2025 IPPS market basket update. For this final rule, we are using an updated forecast of the price proxies underlying the market basket that incorporates more recent historical data and reflects a revised outlook regarding the U.S. economy, including compensation and inflationary pressures.
Based on the more recent IGI second quarter 2024 forecast with historical data through the first quarter of 2024, the projected 2018-based IPPS market basket increase factor for FY 2025 is 3.4 percent, which is 0.4 percentage point higher than the projected FY 2025 market basket increase factor in the proposed rule and reflects an increase in compensation prices of 3.9 percent. We would note that the 10-year historical average (2014-2023) growth rate of the 2018-based IPPS market basket is 2.8 percent with compensation prices increasing 2.8 percent.
For these reasons, we believe that the 2018-based IPPS market basket continues to appropriately reflect IPPS cost structures, and we believe the price proxies used (such as those from BLS that reflect wage and benefit price growth) are an appropriate representation of price changes for the inputs used by hospitals in providing services. Given that we believe the 2018-based IPPS market basket reflects an index of appropriately weighted indicators of changes in wages and prices that are representative of the mix of goods and services included in such inpatient hospital services and the percentage change of the 2018-based IPPS market basket is based on IGI's more recent forecast reflecting the prospective price pressures for FY 2025, we do not believe it would be appropriate to use our exceptions and adjustment authority to create a separate payment that would have the effect of modifying the current law update.
From 2019 to 2022, however, as noted by the commenters, contract labor utilization increased and IPPS Medicare allowable salaries and contract labor costs per hour increased faster than prior historical periods. We note there has likely been a shift to higher-skilled occupations for the 2019 to 2022 period associated with a 6.5-percent increase in case mix for inpatient hospital services, with notable increases of 3.8 percent in 2020 and 2.9 percent in 2021 (see table IV.A.1. of the 2024 Medicare Trustees Report
For this final rule, based on the more recent IGI second quarter 2024 forecast with historical data through the first quarter of 2024, the projected 2018-based IPPS market basket increase factor for FY 2025 reflects a projected increase in compensation prices of 3.9 percent, which is 1.1 percentage points faster than the 10-year historical average (2014-2023) growth rate of compensation prices.
We believe the Medicare cost report data is the most complete, timely and relevant data source for the development of the cost weights. We also welcome information on alternative publicly available data sources.
Several commenters, including many associations, urged CMS to use its special exceptions and adjustments authority under section 1886(d)(5)(I)(i) of the Act to implement a retrospective one-time adjustment for FY 2025 to account for the underestimation of the market basket updates over the last several years. Commenters recommended that CMS implement various one-time adjustments to account for underpayments in 1 or more years between FY 2021 and FY 2023 as well as for forecasted underpayments for FY 2024. The commenters stated the underestimation is, in large part, because the market basket is a time-lagged estimate that cannot fully account for unexpected changes that occur, such as historic inflation and increased labor and supply costs. They stated this is exactly what occurred at the end of the CY 2021 into CY 2022, which resulted in a large forecast error in the FY 2022 market basket update.
Several commenters noted that CMS currently implements a capital IPPS market basket forecast error adjustment as well as SNF PPS market basket forecast error adjustment policy which resulted in FY 2024 and FY 2025 SNF forecast error adjustments of 3.6 percentage points and 1.7 percentage points, respectively. They stated while CMS has not developed an analogous policy for the IPPS operating update, they believe such a forecast error adjustment to the FY 2025 IPPS operating update could be adopted under CMS' existing authority. They noted the forecast errors for FY 2021 through FY 2023 for IPPS exceeded the 0.5 percentage point threshold that is used for the SNF forecast error adjustment policy. A commenter recommended CMS establish a forecast error threshold of 1.5 percentage points, and retroactively adjust payments for that year.
Many commenters noted financial hardships, particularly in 2022 with high inflation and workforce shortages. They noted that MedPAC found that all-payment operating and overall Medicare margins both fell to record lows, estimating Medicare hospital margins for FY 2022 of negative 12.7 percent. MedPAC's FY 2024 recommendation was to increase the market basket update by one percentage point and for FY 2025 recommended that Congress increase the acute hospital market basket by 1.5 percentage points over
We note that the under forecast of the IPPS market basket increase in the recent time period was largely due to unanticipated inflationary and labor market pressures as the economy emerged from the COVID-19 PHE. However, an analysis of the forecast error of the IPPS market basket over a longer period of time shows the forecast error has been both positive and negative. Only considering the forecast error for years when the final hospital market basket update was lower than the actual market basket update does not consider the full experience and impact of forecast error, in particular the numerous years that providers benefited from the forecast error. Relatedly, as we discussed in the FY 2024 IPPS/LTCH PPS final rule in response to similar comments (88 FR 59034), the capital IPPS and SNF PPS forecast error adjustments were adopted very early in both payment systems and, unlike what commenters are requesting here for the IPPS, forecast errors over many years have been consistently addressed within each of the Capital IPPS and SNF PPS.
For these reasons, we continue to believe it is not appropriate to include adjustments to the market basket update for future years based on the difference between the actual and forecasted market basket increase in prior years. We thank the commenters for their comments. After consideration of the comments received and consistent with our proposal, we are finalizing to use more recent data to determine the FY 2025 market basket update for the final rule. Specifically, based on more recent data available, we determined final applicable percentage increases to the standardized amount for FY 2025, as specified in the table that appears later in this section.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the productivity adjustment. As we explained in that rule, section 1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the Affordable Care Act, defines this productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business MFP (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, calendar year, cost reporting period, or other annual period). The U.S. Department of Labor's Bureau of Labor Statistics (BLS) publishes the official measures of private nonfarm business productivity for the U.S. economy. We note that previously the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private nonfarm business multifactor productivity. Beginning with the November 18, 2021, release of productivity data, BLS replaced the term multifactor productivity (MFP) with total factor productivity (TFP). BLS noted that this is a change in terminology only and will not affect the data or methodology. As a result of the BLS name change, the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as private nonfarm business total factor productivity. However, as mentioned, the data and methods are unchanged. Please see
For FY 2025, we proposed a productivity adjustment of 0.4 percent. Similar to the proposed market basket rate-of-increase, for the proposed rule, the estimate of the proposed FY 2025 productivity adjustment was based on IGI's fourth quarter 2023 forecast. As noted previously, we proposed that if more recent data subsequently became available, we would use such data, if appropriate, to determine the FY 2025 productivity adjustment for the final rule.
As stated in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36204) and
The proposed FY 2025 productivity adjustment of 0.4 percent was based on IGI's forecast of the 10-year moving average of annual economy-wide private nonfarm business TFP, reflecting historical data through 2022 as published by BLS and forecasted TFP growth for 2023 through 2025. Based on more recent data available, the final FY 2025 productivity adjustment of 0.5 percent is based on IGI's forecast of the 10-year moving average of annual economy-wide private nonfarm business TFP, reflecting historical data through 2023 as published by BLS and forecasted TFP growth for 2024 through 2025. The higher productivity adjustment for FY 2025 (0.5 percent for the final rule) compared to FY 2024 (0.2 percent) is primarily a result of incorporating BLS's revised historical data through 2022 and a preliminary historical growth rate in TFP for 2023, as well as an updated forecast for TFP growth for 2024 reflecting higher expected growth in economic output.
We thank the commenters for their comments. After consideration of the comments received and consistent with our proposal, we are finalizing as proposed to use more recent data to determine the FY 2025 productivity adjustment for the final rule.
In summary, based on more recent data available for this FY 2025 IPPS/LTCH PPS final rule (that is, IGI's second quarter 2024 forecast of the 2018-based IPPS market basket rate-of-increase with historical data through the first quarter of 2024), we estimate that the FY 2025 market basket update used to determine the applicable percentage increase for the IPPS is 3.4 percent. Based on more recent data available for this FY 2025 IPPS/LTCH PPS final rule (that is, IGI's second quarter 2024 forecast of the productivity adjustment), the current estimate of the productivity adjustment for FY 2025 is 0.5 percentage point. Based on these data, we have determined four applicable percentage increases to the standardized amount for FY 2025, as specified in the following table:
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42344), we revised our regulations at 42 CFR 412.64(d) to reflect the current law for the update for FY 2020 and subsequent fiscal years. Specifically, in accordance with section 1886(b)(3)(B) of the Act, we added paragraph (d)(1)(viii) to § 412.64 to set forth the applicable percentage increase to the operating standardized amount for FY 2020 and subsequent fiscal years as the percentage increase in the market basket index, subject to the reductions specified under § 412.64(d)(2) for a hospital that does not submit quality data and § 412.64(d)(3) for a hospital that is not a meaningful EHR user, less a productivity adjustment.
As discussed in section V.F. of the preamble of this final rule, section 4102 of the Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328) extended the MDH program through FY 2024 (that is, for discharges occurring on or before September 30, 2024). Subsequently, section 307 of the Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42), enacted on March 9, 2024, further extended the MDH program for FY 2025 discharges occurring before January 1, 2025. Prior to enactment of the CAA, 2024, the MDH program was only to be in effect through the end of FY 2024. Under current law, the MDH program will expire for discharges on or after January 1, 2025. We refer readers to section V.F. of the preamble of this final rule for further discussion of the MDH program.
Section 1886(b)(3)(B)(iv) of the Act provides that the applicable percentage increase to the hospital-specific rates for SCHs and MDHs equals the applicable percentage increase set forth in section 1886(b)(3)(B)(i) of the Act (that is, the
For FY 2025, we proposed the following updates to the hospital-specific rates applicable to SCHs and MDHs: A proposed update of 2.6 percent for a hospital that submits quality data and is a meaningful EHR user; a proposed update of 0.35 percent for a hospital that submits quality data and is not a meaningful EHR user; a proposed update of 1.85 percent for a hospital that fails to submit quality data and is a meaningful EHR user; and a proposed update of −0.4 percent for a hospital that fails to submit quality data and is not an meaningful EHR user. As previously discussed, we proposed that if more recent data subsequently became available (for example, a more recent estimate of the market basket update and the productivity adjustment), we would use such data, if appropriate, to determine the market basket update and the productivity adjustment in the final rule.
We did not receive any public comments on our proposed updates to hospital-specific rates applicable to SCHs and MDHs. The general comments we received on the proposed FY 2025 update (including the proposed market basket update and productivity adjustment) are discussed earlier in this section. For FY 2025, we are finalizing the proposal to determine the update to the hospital specific rates for SCHs and MDHs in this final rule using the more recent available data, as previously discussed.
For this final rule, based on more recent available data, we are finalizing the following updates to the hospital specific rates applicable to SCHs and MDHs: An update of 2.9 percent for a hospital that submits quality data and is a meaningful EHR user; an update of 2.05 percent for a hospital that fails to submit quality data and is a meaningful EHR user; an update of 0.35 percent for a hospital that submits quality data and is not a meaningful EHR user; and an update of −0.5 percent for a hospital that fails to submit quality data and is not a meaningful EHR user.
Section 602 of Public Law 114-113 amended section 1886(n)(6)(B) of the Act to specify that subsection (d) Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016. In addition, section 1886(n)(6)(B) of the Act was amended to specify that the adjustments to the applicable percentage increase under section 1886(b)(3)(B)(ix) of the Act apply to subsection (d) Puerto Rico hospitals that are not meaningful EHR users, effective beginning FY 2022. Accordingly, for FY 2022, section 1886(b)(3)(B)(ix) of the Act in conjunction with section 602(d) of Public Law 114-113 requires that any subsection (d) Puerto Rico hospital that is not a meaningful EHR user as defined in section 1886(n)(3) of the Act and not subject to an exception under section 1886(b)(3)(B)(ix) of the Act will have “three-quarters” of the applicable percentage increase (prior to the application of other statutory adjustments), or three-quarters of the applicable market basket rate-of-increase, reduced by 33
For FY 2025, consistent with section 1886(b)(3)(B) of the Act, as amended by section 602 of Public Law 114-113, we are setting the applicable percentage increase for Puerto Rico hospitals by applying the following adjustments in the following sequence. Specifically, the applicable percentage increase under the IPPS for Puerto Rico hospitals will be equal to the rate of-increase in the hospital market basket for IPPS hospitals in all areas, subject to a reduction of three-quarters of the applicable percentage increase (prior to the application of other statutory adjustments; also referred to as the market basket update or rate-of-increase (with no adjustments)) for Puerto Rico hospitals not considered to be meaningful EHR users in accordance with section 1886(b)(3)(B)(ix) of the Act, and then subject to the productivity adjustment at section 1886(b)(3)(B)(xi) of the Act. As noted previously, section 1886(b)(3)(B)(xi) of the Act states that application of the productivity adjustment may result in the applicable percentage increase being less than zero.
In the FY 2025 IPPS/LTCH PPS proposed rule, based on IGI's fourth quarter 2023 forecast of the 2018-based IPPS market basket update with historical data through third quarter 2023, in accordance with section 1886(b)(3)(B) of the Act, as discussed previously, for Puerto Rico hospitals we proposed a market basket update of 3.0 percent less a productivity adjustment of 0.4 percentage point. For FY 2025, depending on whether a Puerto Rico hospital is a meaningful EHR user, there are two possible applicable percentage increases that could be applied to the standardized amount. Based on these data, we determined the following proposed applicable percentage increases to the standardized amount for FY 2025 for Puerto Rico hospitals:
• For a Puerto Rico hospital that is a meaningful EHR user, we proposed a FY 2025 applicable percentage increase to the operating standardized amount of 2.6 percent (that is, the FY 2025 estimate of the proposed market basket rate-of-increase of 3.0 percent less 0.4 percentage point for the proposed productivity adjustment).
• For a Puerto Rico hospital that is not a meaningful EHR user, we proposed a FY 2025 applicable percentage increase to the operating standardized amount of 0.35 percent (that is, the FY 2025 estimate of the proposed market basket rate-of-increase of 3.0 percent, less an adjustment of 2.25 percentage points (the proposed market basket rate-of-increase of 3.0 percent × 0.75 for failure to be a meaningful EHR user), and less 0.4 percentage point for the proposed productivity adjustment).
As noted previously, we proposed that if more recent data subsequently became available, we would use such data, if appropriate, to determine the FY 2025 market basket update and the productivity adjustment for the FY 2025 IPPS/LTCH PPS final rule. We did not receive any public comments on our proposed updates to the standardized amount for FY 2025 for Puerto Rico hospitals. The general comments we received on the proposed FY 2025 update (including the proposed market basket update and productivity adjustment) are discussed in greater detail earlier in this section. For FY 2025, we are finalizing the proposal to determine the update to the standardized amount for FY 2025 for Puerto Rico hospitals in this final rule using the more recent available data, as previously discussed.
As previously discussed in section V.A.1. of the preamble of this final rule, based on more recent data available for this final rule (that is, IGI's second quarter 2024 forecast of the 2018-based IPPS market basket rate-of-increase with historical data through the first quarter of 2024), we estimate that the FY 2025 market basket update used to determine the applicable percentage increase for the IPPS is 3.4 percent and a productivity adjustment of 0.5 percent. For FY 2025, depending on whether a Puerto Rico hospital is a meaningful EHR user, there are two possible applicable percentage increases that can be applied to the standardized amount. Based on these data, in accordance with section 1886(b)(3)(B) of the Act, we determined the following applicable percentage increases to the standardized amount for FY 2025 for Puerto Rico hospitals:
• For a Puerto Rico hospital that is a meaningful EHR user, an applicable percentage increase to the operating standardized amount of 2.9 percent (that is, the FY 2025 estimate of the market basket rate-of-increase of 3.4 percent less an adjustment of 0.5 percentage point for the productivity adjustment).
• For a Puerto Rico hospital that is not a meaningful EHR user, an applicable percentage increase to the operating standardized amount of 0.35 percent (that is, the FY 2025 estimate of the market basket rate-of-increase of 3.4 percent, less an adjustment of 2.55 percentage point (the market basket rate-of-increase of 3.4 percent × 0.75 for failure to be a meaningful EHR user), and less an adjustment of 0.5 percentage point for the productivity adjustment).
Under the authority of section 1886(d)(5)(C)(i) of the Act, the regulations at § 412.96 set forth the criteria that a hospital must meet in order to qualify under the IPPS as a rural referral center (RRC). RRCs receive special treatment under both the DSH payment adjustment and the criteria for geographic reclassification.
Section 402 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173) raised the DSH payment adjustment for RRCs such that they are not subject to the 12-percent cap on DSH payments that is applicable to other rural hospitals. RRCs also are not subject to the proximity criteria when applying for geographic reclassification. In addition, they do not have to meet the requirement that a hospital's average hourly wage must exceed, by a certain percentage, the average hourly wage of the labor market area in which the hospital is located.
Section 4202(b) of the Balanced Budget Act of 1997 (Pub. L. 105-33) states, in part, that any hospital classified as an RRC by the Secretary for FY 1991 shall be classified as such an RRC for FY 1998 and each subsequent fiscal year. In the August 29, 1997, IPPS final rule with comment period (62 FR 45999 through 46000), we reinstated RRC status for all hospitals that lost that status due to triennial review or MGCRB reclassification. However, we did not reinstate the status of hospitals that lost RRC status because they were now urban for all purposes because of the OMB designation of their geographic area as urban. Subsequently, in the August 1, 2000 IPPS final rule (65 FR 47087), we indicated that we were revisiting that decision. Specifically, we stated that we would permit hospitals that previously qualified as an RRC and lost their status due to OMB redesignation of the county in which they are located from rural to urban, to be reinstated as an RRC. Otherwise, a hospital seeking RRC status must satisfy all of the other applicable criteria. We use the definitions of “urban” and “rural” specified in subpart D of 42 CFR part 412. One of the criteria under which a hospital may qualify as an RRC is to have 275 or more beds available for use (§ 412.96(b)(1)(ii)). A rural hospital that does not meet the bed size requirement can qualify as an RRC if the hospital meets two mandatory prerequisites (a minimum case-mix index (CMI) and a minimum number of discharges), and at least one of three optional criteria (relating to specialty composition of medical staff, source of inpatients, or referral volume). (We refer readers to § 412.96(c)(1) through (5) and the September 30, 1988,
• CMI is at least equal to the lower of the median CMI for urban hospitals in its census region, excluding hospitals with approved teaching programs, or the median CMI for all urban hospitals nationally; and
• Number of discharges is at least 5,000 per year, or, if fewer, the median number of discharges for urban hospitals in the census region in which the hospital is located. The number of discharges criterion for an osteopathic hospital is at least 3,000 discharges per year, as specified in section 1886(d)(5)(C)(i) of the Act.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45217), in light of the COVID-19 PHE, we amended the regulations at § 412.96(h)(1) to provide for the use of the best available data rather than the latest available data in calculating the national and regional CMI criteria. We also amended the regulations at § 412.96(c)(1) to indicate that the individual hospital's CMI value for discharges during the same Federal fiscal year used to compute the national and regional CMI values is used for purposes of determining whether a hospital qualifies for RRC classification.
Section 412.96(c)(1) provides that CMS establish updated national and regional CMI values in each year's annual notice of prospective payment rates for purposes of determining RRC status. The methodology we used to determine the national and regional CMI values is set forth in the regulations at § 412.96(c)(1)(ii). The national median CMI value for FY 2025 is based on the CMI values of all urban hospitals nationwide, and the regional median CMI values for FY 2025 are based on the CMI values of all urban hospitals within each census region, excluding those hospitals with approved teaching programs (that is, those hospitals that train residents in an approved GME program as provided in § 413.75). These values are based on discharges occurring during FY 2023 (October 1, 2022 through September 30, 2023), and include bills posted to CMS' records through March 2024. We believe that this is the best available data for use in calculating the national and regional median CMI values and is consistent with our use of the FY 2023 MedPAR claims data for FY 2025 ratesetting.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36206), we proposed that, in addition to meeting other criteria, if rural hospitals with fewer than 275 beds are to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2024, they must have a CMI value for FY 2023 that is at least—
• 1.7764 (national—all urban); or
• The median CMI value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 413.75) calculated by CMS for the census region in which the hospital is located. (We refer readers to the table set forth in the FY 2025 IPPS/LTCH PPS proposed rule at 89 FR 36207). In the proposed rule we stated that we intended to update the proposed CMI values in the FY 2025 IPPS/LTCH PPS final rule to reflect the updated FY 2023 MedPAR file, which contains data from additional bills received through March 2024.
Therefore, based on the best available data (FY 2023 bills received through March 2024), in addition to meeting other criteria, if rural hospitals with fewer than 275 beds are to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2024, they must have a CMI value for FY 2023 that is at least:
• 1.7789 (national—all urban); or
• The median CMI value (not transfer-adjusted) for urban hospitals (excluding hospitals with approved teaching programs as identified in § 413.75) calculated by CMS for the census region in which the hospital is located.
The final CMI values by region are set forth in the following table.
A hospital seeking to qualify as an RRC should obtain its hospital-specific CMI value (not transfer-adjusted) from its MAC. Data are available on the Provider Statistical and Reimbursement (PS&R) System. In keeping with our policy on discharges, the CMI values are computed based on all Medicare patient discharges subject to the IPPS MS-DRG-based payment.
Section 412.96(c)(2)(i) provides that CMS set forth the national and regional numbers of discharges criteria in each year's annual notice of prospective payment rates for purposes of determining RRC status. As specified in section 1886(d)(5)(C)(ii) of the Act, the national standard is set at 5,000 discharges. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36207), we proposed to update the regional standards based on discharges for urban hospitals' cost reporting periods that began during FY 2022 (that is, October 1, 2021 through September 30, 2022). Because this is the latest available cost reporting data, we believe that this is the best available data for use in calculating the median number of discharges by region and is consistent with our finalized data proposal to use cost report data from cost reporting periods beginning during FY 2022 for FY 2025 ratesetting. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36207), we proposed that, in addition to meeting other criteria, a hospital, if it is to qualify for initial RRC status for cost reporting periods beginning on or after October 1, 2024, must have, as the number of discharges for its cost reporting period that began during FY 2022, at least—
• 5,000 (3,000 for an osteopathic hospital); or
• If less, the median number of discharges for urban hospitals in the census region in which the hospital is located. (We refer readers to the table set forth in the FY 2025 IPPS/LTCH PPS proposed rule at 89 FR 36207). In the proposed rule, we stated that we
Therefore, based on the best available discharge data at this time, that is, for cost reporting periods that began during FY 2022, the final median number of discharges for urban hospitals by census region are set forth in the following table.
We note that because the median number of discharges for hospitals in each census region is greater than the national standard of 5,000 discharges, under this final rule, 5,000 discharges is the minimum criterion for all hospitals, except for osteopathic hospitals for which the minimum criterion is 3,000 discharges.
Section 1886(d)(5)(C) of the Act sets forth certain criteria that must be met for a hospital to be classified as a rural referral center, including a discharge criterion specifying the hospital has at least 5,000 discharges a year or, if less, the median number of discharges in urban hospitals in the region in which the hospital is located. Section 9106 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-272) amended section 1886(d)(5)(C) of the Act to provide for a separate discharge criterion for an osteopathic hospital to qualify for classification as a rural referral center, effective for cost reporting periods beginning on or after January 1, 1986. To implement this statutory provision, in the FY 1987 IPPS final rule, we revised 42 CFR 412.96(c)(2) to specify that for cost reporting periods beginning on or after January 1, 1986 an osteopathic hospital, recognized by the American Osteopathic Hospital Association, that is located in a rural area must have at least 3,000 discharges during its most recently completed cost reporting period to meet the number of discharges criterion (51 FR 31471). In the FY 1996 IPPS final rule, in light of a name change of the American Osteopathic Hospital Association to the American Osteopathic Healthcare Association, we subsequently revised 42 CFR 412.96(c)(2) to specify that the osteopathic hospital must be recognized by the American Osteopathic Healthcare Association “(or any successor organization)” (60 FR 45810).
As we discussed in implementing the number of discharges criterion for osteopathic hospitals in the FY 1987 IPPS final rule, “[b]ecause section 1886(d)(5)(C)(i) of the Act specifically limits this qualification to osteopathic hospitals, we do not believe that this standard should apply to all hospitals” (51 FR 31473). Accordingly, to qualify under this lower number of discharges criterion, a hospital must be an osteopathic hospital. It has come to the attention of CMS that the successor organization to the American Osteopathic Healthcare Association, namely the Accreditation Commission for Health Care, accredits acute care hospitals, including hospitals that are not osteopathic. Thus, a hospital receiving an accreditation letter or certificate from the successor organization is not necessarily an osteopathic hospital. Therefore, we proposed to revise the regulations at 42 CFR 412.96(c)(2) to clarify that, to qualify for RRC classification based on the lower discharge criterion for osteopathic hospitals, a hospital must be an osteopathic hospital and by itself recognition (such as an accreditation letter) by a successor organization to the American Osteopathic Healthcare Association is not necessarily sufficient to demonstrate that a hospital is an osteopathic hospital.
We proposed to amend our regulations at 42 CFR 412.96 by revising paragraph (c)(2)(ii) as follows: “(ii) For cost reporting periods beginning on or after January 1, 1986, an osteopathic hospital, recognized by the American Osteopathic Healthcare Association (or any successor organization), that is located in a rural area must have at least 3,000 discharges during its cost reporting period that began during the same fiscal year as the cost reporting periods used to compute the regional median discharges under paragraph (i) of this section to meet the number of discharges criterion. A hospital applying for rural referral center status under the number of discharges criterion in this paragraph must demonstrate its status as an osteopathic hospital.” Consistent with section 1886(d)(5)(C)(i) of the Act, evidence of osteopathic status may include, but is not limited to, the hospital's scope of services and its mix of medical specialties. CMS will consider the totality of the information demonstrating whether an applicant hospital is an osteopathic hospital. We sought comment on additional types of evidence we should consider in the determination of a hospital's osteopathic status.
After consideration of the comment received, we are finalizing our updates to the regulation text as proposed. CMS will determine osteopathic status of a hospital applying for rural referral status according to the totality of the information submitted.
Section 1886(d)(12) of the Act provides for an additional payment to each qualifying low-volume hospital under the IPPS beginning in FY 2005. The low-volume hospital payment adjustment is implemented in the regulations at 42 CFR 412.101. The additional payment adjustment to a low-volume hospital provided for under section 1886(d)(12) of the Act is in addition to any payment calculated under section 1886 of the Act and is based on the per discharge amount paid to the qualifying hospital. In other words, the low-volume hospital payment adjustment is based on total per discharge payments made under section 1886 of the Act, including capital, DSH, IME, and outlier payments. For SCHs and MDHs, the low-volume hospital payment adjustment is based in part on either the Federal rate or the hospital-specific rate, whichever results in a greater operating IPPS payment. The payment adjustment for low-volume hospitals is not budget neutral.
As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59041 through 59045), section 4101 of the CAA, 2023 (Pub. L. 117-328) extended through FY 2024 the modified definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals in effect for FYs 2019 through 2022. The Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42), enacted on March 9, 2024, extended the temporary changes to the low-volume hospital qualifying criteria and payment adjustment under the IPPS for a portion of FY 2025. Specifically, section 306 of the CAA, 2024 further extended the modified definition of low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals under section 1886(d)(12) through December 31, 2024. Beginning January 1, 2025, the low-volume hospital qualifying criteria and payment adjustment will revert to the statutory requirements that were in effect prior to FY 2011, and the preexisting low-volume hospital payment adjustment methodology and qualifying criteria, as implemented in FY 2005 and discussed later in this section, will resume. We discuss our proposals for the payment policies for FY 2025, which we are finalizing as proposed after consideration of public comments, in section V.E.2. of the preamble of this final rule.
As discussed previously, section 4101 of the CAA, 2023 modified the definition of low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals under section 1886(d)(12) of the Act through September 30, 2024. Prior to the enactment of the CAA, 2024 (Pub. L. 118-42), the temporary changes to the low-volume hospital qualifying criteria and payment adjustment provided by section 4101 of CAA, 2023 were set to expire on October 1, 2024. Section 306 of the CAA, 2024 extends the temporary changes to the low-volume hospital qualifying criteria and payment adjustment under the IPPS for the portion of FY 2025 beginning on October 1, 2024, and ending on December 31, 2024 (that is, for discharges occurring before January 1, 2025).
Under section 1886(d)(12)(C)(i) of the Act, as amended by Public Law 118-42, for FYs 2019 through 2024 and the portion of FY 2025 occurring before January 1, 2025, a subsection (d) hospital qualifies as a low-volume hospital if it is more than 15 road miles from another subsection (d) hospital and has less than 3,800 total discharges during the fiscal year. In accordance with the existing regulations at § 412.101(a), we define the term “road miles” to mean “miles” as defined at § 412.92(c)(1). Under section 1886(d)(12)(D) of the Act, as amended, for discharges occurring in FY 2019 through December 31, 2024, the Secretary determines the applicable percentage increase using a continuous, linear sliding scale ranging from an additional 25 percent payment adjustment for low-volume hospitals with 500 or fewer discharges to a zero percent additional payment for low volume hospitals with more than 3,800 discharges in the fiscal year. Consistent with the requirements of section 1886(d)(12)(C)(ii) of the Act, the term “discharge” for purposes of these provisions refers to total discharges, regardless of payer (that is, Medicare and non-Medicare discharges).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399), we specified a continuous, linear sliding scale formula to determine the low volume payment adjustment, as reflected in the regulations at § 412.101(c)(3)(ii). Consistent with the statute, we provided
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36209), consistent with the extension of the methodology for calculating the payment adjustment for low-volume hospitals through FY 2024, we proposed to continue using the previously specified continuous, linear sliding scale formula to determine the low-volume hospital payment adjustment for the portion of FY 2025 occurring before January 1, 2025. We also proposed to make conforming changes to the regulation text in § 412.101 to reflect the extensions of the changes to the qualifying criteria and the payment adjustment methodology for low-volume hospitals in accordance with provisions of the CAA, 2024. Specifically, we proposed to make conforming changes to paragraphs (b)(2)(iii) and (c)(3) introductory text of § 412.101 to reflect that the low-volume hospital payment adjustment policy in effect for the portion of FY 2025 through December 31, 2024, is the same low-volume hospital payment adjustment policy in effect for FYs 2019 through 2024 (as described in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41398 through 41399) and in the FY 2024 IPPS/LTCH final rule (88 FR 59041 through 59045)). In addition, in accordance with the provisions of the CAA, 2024, we proposed to make conforming changes to paragraphs (b)(2)(i) and (c)(1) of § 412.101 to reflect that for the portion of FY 2025 beginning on January 1, 2025 and for subsequent fiscal years, the low-volume hospital payment adjustment policy will revert back to the low-volume hospital payment adjustment policy in effect for FYs 2005 through 2010, as described in section V.E.3. of the preamble of this final rule. We further proposed that if the temporary changes to the low-volume payment adjustment were extended through legislation beyond December 31, 2024, we would make the conforming changes to the regulations at § 412.101(b)(2)(i), (b)(2)(iii), (c)(1), and (c)(3) to reflect any further extension.
After consideration of the public comments we received regarding the temporary changes to the qualifying criteria and the payment adjustment methodology for low-volume hospitals through December 31, 2024, we are finalizing our proposals on the extension of these changes without modification, including our proposal to codify these extensions in the regulation text at § 412.101 without modification.
In accordance with section 1886(d)(12) of the Act, as amended by section 306 of the CAA, 2024, beginning with FY 2025 discharges occurring on or after January 1, 2025, the low-volume hospital definition and payment adjustment methodology will revert to the statutory requirements that were in effect prior to the amendments made by the Affordable Care Act and subsequent legislation. Specifically, section 1886(d)(12)(B) of the Act requires, for discharges occurring in FYs 2005 through 2010, FY 2025 discharges occurring on or after January 1, 2025 and subsequent years, that the Secretary determine an applicable percentage increase for these low-volume hospitals based on the “empirical relationship” between the standardized cost-per-case for such hospitals and the total number of discharges of such hospitals and the amount of the additional incremental costs (if any) that are associated with such number of discharges. The statute thus mandates that the Secretary develop an empirically justifiable adjustment based on the relationship between costs and discharges for these low-volume hospitals.
Therefore, effective for the portion of FY 2025 beginning on January 1, 2025 and subsequent years, under current policy at § 412.101(b), to qualify as a low-volume hospital, a subsection (d) hospital must be more than 25 road miles from another subsection (d) hospital and have less than 200 discharges (that is, less than 200 discharges total, including both Medicare and non-Medicare discharges) during the fiscal year. For the portion of FY 2025 beginning on January 1, 2025, and subsequent years, the statute specifies that a low-volume hospital must have less than 800 discharges during the fiscal year. However, as required by section 1886(d)(12)(B)(i) of the Act, the Secretary has developed an empirically justifiable payment adjustment based on the relationship, for IPPS hospitals with less than 800 discharges, between the additional incremental costs (if any) that are associated with a particular number of discharges. Based on an analysis we conducted for the FY 2005 IPPS final rule (69 FR 49099 through 49102), a 25-percent low-volume adjustment to all qualifying hospitals with less than 200 discharges was found to be most consistent with the statutory requirement to provide relief for low-volume hospitals where there is empirical evidence that higher incremental costs are associated with low numbers of total discharges. (Under the policy we established in that same final rule, hospitals with between 200
As discussed previously, for FYs 2005 through 2010 and FY 2019 and subsequent years, the discharge determination is made based on the hospital's number of total discharges, that is, Medicare and non-Medicare discharges. The hospital's most recently submitted cost report is used to determine if the hospital meets the discharge criterion to receive the low-volume payment adjustment in the current year (§ 412.101(b)(2)(i)). We use cost report data to determine if a hospital meets the discharge criterion because this is the best available data source that includes information on both Medicare and non-Medicare discharges. We note that, for FYs 2011 through 2018, we used the most recently available MedPAR data to determine the hospital's Medicare discharges because only Medicare discharges were used to determine if a hospital met the discharge criterion for those years.
In addition to the discharge criterion, a hospital must also meet the mileage criterion to qualify for the low-volume payment adjustment. As specified by section 1886(d)(12)(C)(i) of the Act, a low-volume hospital must be more than 25 road miles (or 15 road miles for FYs 2011 through 2024) from another subsection (d) hospital. Accordingly, for FY 2025 and subsequent fiscal years, in addition to the discharge criterion, the eligibility for the low-volume payment adjustment is also dependent upon the hospital meeting the mileage criterion at § 412.101(b)(2)(i), which specifies that a hospital must be located more than 25 road miles from the nearest subsection (d) hospital, consistent with section 1886(d)(12)(C)(i) of the Act. We define, at § 412.101(a), the term “road miles” to mean “miles” as defined at § 412.92(c)(1) (75 FR 50238 through 50275 and 50414). As previously noted, we proposed to make conforming changes to paragraphs (b)(2)(i) and (c)(1) of § 412.101 to reflect that for the portion of FY 2025 beginning on January 1, 2025, and subsequent fiscal years, the low-volume hospital payment adjustment policy is the same as that in effect for FYs 2005 through 2010.
On average, approximately 600 hospitals per year were eligible for the low-volume hospital payment adjustment for FYs 2019 through 2024 under the temporary changes in the low-volume hospital payment policy as amended by section 50204 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), and section 4101 of the Consolidated Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117-328). As discussed previously, the CAA, 2024 further extended the modified definition of low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals under section 1886(d)(12) through December 31, 2024. Therefore, for the portion of FY 2025 beginning on January 1, 2025 and for subsequent years the low-volume hospital qualifying criteria and payment adjustment will revert to the statutory requirements that were in effect prior to FY 2011. Based on historical data for hospitals that qualified during FYs 2005-2010, we estimate that fewer than 10 hospitals would qualify for the low-volume hospital payment adjustment for the portion of FY 2025 beginning on January 1, 2025 under current law.
After consideration of the public comments we received, we are finalizing our proposals, without modification. Consistent with current law, effective beginning with the portion of FY 2025 beginning on January 1, 2025, the low-volume hospital definition and payment adjustment methodology will revert to the policy established under statutory requirements that were in effect prior to the amendments made by the Affordable Care Act and extended through subsequent legislation.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275 and 50414) and subsequent rulemaking, most recently in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59044 through 59045), we discussed the process for requesting and obtaining the low-volume hospital payment
As explained earlier, for FY 2019 and subsequent fiscal years, the discharge determination is made based on the hospital's number of total discharges, that is, Medicare and non-Medicare discharges, as was the case for FYs 2005 through 2010. Under § 412.101(b)(2)(i) and (iii), a hospital's most recently submitted cost report is used to determine if the hospital meets the discharge criterion to receive the low-volume payment adjustment in the current year. As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399 and 41400), we use cost report data to determine if a hospital meets the discharge criterion because this is the best available data source that includes information on both Medicare and non-Medicare discharges. (For FYs 2011 through 2018, the most recently available MedPAR data were used to determine the hospital's Medicare discharges because non-Medicare discharges were not used to determine if a hospital met the discharge criterion for those years.) Therefore, a hospital must refer to its most recently submitted cost report for total discharges (Medicare and non-Medicare) to decide whether or not to apply for low-volume hospital status for a particular fiscal year.
In addition to the discharge criterion, eligibility for the low-volume hospital payment adjustment is also dependent upon the hospital meeting the applicable mileage criterion specified in section 1886(d)(12)(C)(i) of the Act, which is codified at § 412.101(b)(2), for the fiscal year. Specifically, to meet the mileage criterion to qualify for the low-volume hospital payment adjustment for the portion of FY 2025 beginning October 1, 2024 through December 31, 2024, a hospital must be located more than 15 road miles from the nearest subsection (d) hospital, as reflected in proposed revised § 412.101(b)(2). Additionally, to meet the mileage criterion to qualify for the low-volume hospital payment adjustment for the portion of FY 2025 beginning January 1, 2025 through September 30, 2025, a hospital must be located more than 25 road miles from the nearest subsection (d) hospital. (We define in § 412.101(a) the term “road miles” to mean “miles” as defined in § 412.92(c)(1) (75 FR 50238 through 50275 and 50414).) For establishing that the hospital meets the mileage criterion, the use of a web-based mapping tool as part of the documentation is acceptable. The MAC will determine if the information submitted by the hospital, such as the name and street address of the nearest hospital(s), location on a map, and distance from the hospital requesting low-volume hospital status, is sufficient to document that it meets the mileage criterion. If not, the MAC will follow up with the hospital to obtain additional necessary information to determine whether or not the hospital meets the applicable mileage criterion.
In accordance with our previously established process, a hospital must make a written request for low-volume hospital status that is received by its MAC by September 1 immediately preceding the start of the Federal fiscal year for which the hospital is applying for low-volume hospital status in order for the applicable low-volume hospital payment adjustment to be applied to payments for its discharges for the fiscal year beginning on or after October 1 immediately following the request (that is, the start of the Federal fiscal year). For a hospital whose request for low-volume hospital status is received after September 1, if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the applicable low-volume hospital payment adjustment to determine payment for the hospital's discharges for the fiscal year, effective prospectively within 30 days of the date of the MAC's low-volume status determination.
Consistent with this previously established process, for FY 2025, we proposed that a hospital must submit a written request for low-volume hospital status to its MAC that includes sufficient documentation to establish that the hospital meets the applicable mileage and discharge criteria (as described earlier). Specifically, for the portion of FY 2025 beginning October 1, 2024 through December 31, 2024, a hospital must make a written request for low-volume hospital status that is received by its MAC no later than September 1, 2024, in order for the low-volume, add-on payment adjustment to be applied to payments for its discharges beginning on or after October 1, 2024. If a hospital's written request for low-volume hospital status for the portion of FY 2025 beginning October 1, 2024 through December 31, 2024 is received after September 1, 2024, and if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC would apply the low-volume hospital payment adjustment to determine the payment for the hospital's FY 2025 discharges prior to January 1, 2025, effective prospectively within 30 days of the date of the MAC's low-volume hospital status determination.
Additionally, we proposed that a hospital must also submit a written request for low-volume hospital status to its MAC that includes sufficient documentation to establish that the hospital continues to meet the applicable mileage and discharge criteria for the portion of FY 2025 beginning on January 1, 2025 through September 30, 2025 (as described earlier). Specifically, for the portion of FY 2025 beginning on January 1, 2025, a hospital must make a written request for low-volume hospital status that is received by its MAC no later than December 1, 2024, in order for the 25-percent, low-volume, add-on payment adjustment to be applied to payments for its discharges beginning on or after January 1, 2025. If a hospital's written request for low-volume hospital status for the portion of FY 2025 beginning on January 1, 2025 is received after December 1, 2024, and if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC would apply the low-volume hospital payment adjustment to determine the payment for the hospital's FY 2025 discharges on or after January 1, 2025, effective prospectively within 30 days of the date of the MAC's low-volume hospital status determination.
A hospital may choose to make a single written request for low-volume hospital status to its MAC for both the portion of FY 2025 beginning on October 1, 2024, and ending December 31, 2024, and the portion of FY 2025 beginning on January 1, 2025, through September 30, 2025, by the September 1, 2024, deadline discussed previously. Alternatively, a hospital may choose to submit separate written requests, one for
Under this process, a hospital that qualified for the low-volume hospital payment adjustment for FY 2024 may continue to receive a low-volume hospital payment adjustment for FY 2025 without reapplying if it meets both the discharge criterion and the mileage criterion applicable for FY 2025 (that is, the discharge criterion and mileage criterion for the period beginning October 1, 2024 through December 31, 2024, as well as the discharge criterion and mileage criterion for the period beginning on January 1, 2025 through September 30, 2025, respectively). As discussed previously, for the portion of FY 2025 beginning on January 1, 2025, the discharge and the mileage criteria are reverting to the statutory requirements that were in effect prior to FY 2011, and to the preexisting low-volume hospital qualifying criteria, as implemented in FY 2005 and specified in the existing regulations at § 412.101(b)(2)(i). As in previous years, we proposed that such a hospital must send written verification that is received by its MAC no later than September 1, 2024 or December 1, 2024, respectively, stating that it meets the mileage criterion for the applicable portion(s) of FY 2025, as described previously. For example, for the portion of FY 2025 beginning October 1, 2024 through December 31, 2024, the hospital must state it is located more than 15 road miles from the nearest “subsection (d)” hospital. Similarly, for the portion of FY 2025 beginning on January 1, 2025, the hospital must state it is located more than 25 road miles from the nearest “subsection (d)” hospital. For FY 2025, we further proposed that this written verification must also state, based upon the most recently submitted cost report, that the hospital meets the discharge criterion for the applicable portion(s) of FY 2025, as described previously. For example, for the portion of FY 2025 beginning October 1, 2024 through December 31, 2024, the hospital must have less than 3,800 discharges total, including both Medicare and non-Medicare discharges. Similarly, for the portion of FY 2025 beginning on January 1, 2025, the hospital must have less than 200 discharges total, including both Medicare and non-Medicare discharges. If a hospital's request for low-volume hospital status for FY 2025 is received after September 1, 2024, (or after December 1, 2024 for the portion of FY 2025 beginning on January 1, 2025) and if the MAC determines the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the applicable low-volume add-on payment adjustment to determine the payment for the hospital's discharges for the applicable portion(s) of FY 2025, effective prospectively within 30 days of the date of the MAC's low-volume hospital status determination.
We did not receive any comments on our process for requesting and obtaining the low-volume payment adjustment for the portion of FY 2025 beginning October 1, 2024 through December 31, 2024 or the portion of FY 2025 beginning on January 1, 2025. Therefore, we are finalizing our proposals, without modification.
Section 1886(d)(5)(G) of the Act provides special payment protections, under the IPPS, to a Medicare-dependent, small rural hospital (MDH). (For additional information on the MDH program and the payment methodology, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51683 through 51684).) As discussed in section V.B. of the preamble of this final rule, section 307 of the Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42), enacted on March 9, 2024, extended the MDH program for FY 2025 discharges occurring before January 1, 2025. Prior to enactment of the CAA, 2024, the MDH program was only to be in effect through the end of FY 2024. Under current law, the MDH program provisions at section 1886(d)(5)(G) of the Act will expire for discharges on or after January 1, 2025. Beginning with discharges occurring on or after January 1, 2025, all hospitals that previously qualified for MDH status will be paid based on the Federal rate.
Since the extension of the MDH program through FY 2012 provided by section 3124 of the Affordable Care Act, the MDH program had been extended by subsequent legislation as follows: section 606 of the American Taxpayer Relief Act (Pub. L. 112-240) extended the MDH program through FY 2013 (that is, for discharges occurring before October 1, 2013). Section 1106 of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) extended the MDH program through the first half of FY 2014 (that is, for discharges occurring before April 1, 2014). Section 106 of the Protecting Access to Medicare Act (Pub. L. 113-93) extended the MDH program through the first half of FY 2015 (that is, for discharges occurring before April 1, 2015). Section 205 of the MACRA (Pub. L. 114-10) extended the MDH program through FY 2017 (that is, for discharges occurring before October 1, 2017). Section 50205 of the Bipartisan Budget Act (Pub. L. 115-123) extended the MDH program through FY 2022 (that is for discharges occurring before October 1, 2022). Section 102 of the Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023 (Pub. L. 117-180) extended the MDH program through December 16, 2022. Section 102 of the Further Continuing Appropriations and Extensions Act, 2023 (Pub. L. 117-229) extended the MDH program through December 23, 2022. Section 4102 of the Consolidated Appropriations Act, 2023 (Pub. L. 117-328) extended the MDH program through FY 2024 (that is for discharges occurring before October 1, 2024). Lastly, under current law, section 307 of the CAA, 2024 (Pub. L. 118-42) extended the MDH program through December 31, 2024 (that is, for discharges occurring before January 1, 2025).
For additional information on the extensions of the MDH program after FY 2012, we refer readers to the following
Prior to the enactment of Public Law 118-42, under section 4102 of Public Law 117-328, the MDH program authorized by section 1886(d)(5)(G) of the Act was set to expire at the end of FY 2024. Section 307 of Public Law 118-42 amended sections 1886(d)(5)(G)(i) and 1886(d)(5)(G)(ii)(II) of the Act by striking “October 1, 2024” and inserting “January 1, 2025”. Section 307 of Public Law 118-42 also made
Therefore, in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36212), we proposed to make conforming changes to the regulations governing the MDH program at § 412.108(a)(1) and (c)(2)(iii) and the general payment rules at § 412.90(j) to reflect the extension of the MDH program through December 31, 2024.
As a result of the extension of the MDH program through December 31, 2024 as provided by section 307 of Public Law 118-42, a provider that is classified as an MDH as of September 30, 2024, will continue to be classified as an MDH as of October 1, 2024, with no need to reapply for MDH classification.
Because section 307 of the CAA, 2024 extended the MDH program through December 31, 2024 only, beginning January 1, 2025, the MDH program will no longer be in effect. Since the MDH program is not authorized by statute beyond December 31, 2024, beginning January 1, 2025, all hospitals that previously qualified for MDH status under section 1886(d)(5)(G) of the Act will no longer have MDH status and will be paid based on the IPPS Federal rate. There are currently 173 MDHs, of which we estimate 117 would have been paid under the blended payment of the Federal rate and hospital-specific rate while the remaining 56 would have been paid based on the IPPS Federal rate. With the expiration of the MDH program, all these providers will all be paid based on the IPPS Federal rate beginning with discharges occurring on or after January 1, 2025.
When the MDH program was set to expire at the end of FY 2012, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53404 through 53405), we revised our sole community hospital (SCH) policies to allow MDHs to apply for SCH status in advance of the expiration of the MDH program and be paid as such under certain conditions. We codified these changes in the regulations at § 412.92(b)(2)(i) and (b)(2)(v). Specifically, the existing regulations at § 412.92(b)(2)(i) and (b)(2)(v) allow for an effective date of an approval of SCH status that is the day following the expiration date of the MDH program. We note that these same conditions apply to MDHs that intend to apply for SCH status with the expiration of the MDH program on December 31, 2024. Therefore, in order for an MDH to receive SCH status effective January 1, 2025, the MDH must apply for SCH status at least 30 days before the expiration of the MDH program; that is, the MDH must apply for SCH status by December 2, 2024. The MDH also must request that, if approved as an SCH, the SCH status be effective with the expiration of the MDH program; that is, the MDH must request that the SCH status, if approved, be effective January 1, 2025, immediately after its MDH status expires with the expiration of the MDH program on December 31, 2024. We emphasize that an MDH that applies for SCH status in anticipation of the expiration of the MDH program would not qualify for the January 1, 2025 effective date for SCH status if it does not apply by the December 2, 2024 deadline. If the MDH does not apply by the December 2, 2024 deadline, the hospital would instead be subject to the usual effective date for SCH classification as specified at § 412.92(b)(2)(i); that is, as of the date the MAC receives the complete application from the provider.
In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to make conforming changes to the regulations governing the MDH program at § 412.108(a)(1) and (c)(2)(iii) and the general payment rules at § 412.90(j) to reflect the extension of the MDH program through December 31, 2024. We further proposed that if the MDH program were to be extended by law beyond December 31, 2024, similar to how it was extended by prior legislation as described previously, we would, depending on timing of such legislation in relation to the final rule, modify our proposed conforming changes to the regulations governing the MDH program at § 412.108(a)(1) and (c)(2)(iii) and the general payment rules at § 412.90(j) to reflect any such further extension of the MDH program. We also noted that these modifications to our proposed conforming changes would only be made if the MDH program were to be extended by statute beyond December 31, 2024.
In summary, under current law, beginning January 1, 2025, all hospitals that previously qualified for MDH status will no longer have MDH status.
After consideration of the public comments we received, we are adopting as final the proposed conforming changes to the regulations text at §§ 412.90 and 412.108 to reflect the extension of the MDH program through December 31, 2024 in accordance with section 307 of the CAA, 2024 (Pub. L. 118-42). We are finalizing the proposed changes in paragraphs (a)(1) and (c)(2)(iii) of § 412.108 and paragraph (j) of § 412.90 without modification.
Section 1886(h) of the Act, as added by section 9202 of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L. 99-272) and as currently implemented in the regulations at 42 CFR 413.75 through 413.83, establishes a methodology for determining payments to hospitals for the direct costs of approved graduate medical education (GME) programs. Section 1886(h)(2) of the Act sets forth a methodology for the determination of a hospital-specific base-period per resident amount (PRA) that is calculated by dividing a hospital's allowable direct costs of GME in a base period by its number of full-time equivalent (FTE) residents in the base period. The base period is, for most hospitals, the hospital's cost reporting period beginning in FY 1984 (that is, October 1, 1983 through September 30, 1984). The base year PRA is updated annually for inflation. In general, Medicare direct GME payments are calculated by multiplying the hospital's updated PRA by the weighted number of FTE residents working in all areas of the hospital complex (and at nonprovider sites, when applicable), and the hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for a payment adjustment known as the indirect medical education (IME) adjustment under the IPPS for hospitals that have residents in an approved GME program, in order to account for the higher indirect patient care costs of teaching hospitals relative to nonteaching hospitals. The regulations regarding the calculation of this additional payment are located at 42 CFR 412.105. The hospital's IME adjustment applied to the DRG payments is calculated based on the ratio of the hospital's number of FTE residents training in either the inpatient or outpatient departments of the IPPS hospital (and, for discharges occurring on or after October 1, 1997, at non-provider sites, when applicable) to the number of inpatient hospital beds.
The calculation of both direct GME payments and the IME payment adjustment is affected by the number of FTE residents that a hospital is allowed to count. Generally, the greater the number of FTE residents a hospital counts, the greater the amount of Medicare direct GME and IME payments the hospital will receive. In an attempt to end the implicit incentive for hospitals to increase the number of FTE residents, Congress established a limit on the number of allopathic and osteopathic residents that a hospital could include in its FTE resident count for direct GME and IME payment purposes in the Balanced Budget Act of 1997 (Pub. L. 105-33). Under section 1886(h)(4)(F) of the Act, for cost reporting periods beginning on or after October 1, 1997, a hospital's unweighted FTE count of residents for purposes of direct GME cannot exceed the hospital's unweighted FTE count for direct GME in its most recent cost reporting period ending on or before December 31, 1996. Under section 1886(d)(5)(B)(v) of the Act, a similar limit based on the FTE count for IME during that cost reporting period is applied, effective for discharges occurring on or after October 1, 1997. Dental and podiatric residents are not included in this statutorily mandated cap.
We received some IME and direct GME (DGME) related comments that were outside the scope of the proposed rule, including a comment related to the eligibility of SCHs paid under the hospital-specific rate and MDHs to receive IME payments. Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing these comments in this final rule.
CMS has increased the overall number of slots available to teaching hospitals on several previous occasions. Notably, Congress authorized Medicare payment for one thousand additional FTE GME resident slots in section 126(a) of the Consolidated Appropriations Act, 2021, adding paragraph 1886(h)(9) to the Act.
Most recently, section 4122(a) of the CAA, 2023 amended section 1886(h) of the Act by adding a new section 1886(h)(10) of the Act requiring the distribution of additional residency positions (also referred to as slots) to hospitals. Section 1886(h)(10)(A) of the Act requires that for FY 2026, the Secretary shall initiate an application round to distribute 200 residency positions. At least 100 of the positions made available under section
In determining the qualifying hospitals for which an increase is provided, section 1886(h)(10)(B)(i) of the Act requires the Secretary to take into account the “demonstrated likelihood” of the hospital filling the positions made available within the first 5 training years beginning after the date the increase would be effective, as determined by the Secretary.
Section 1886(h)(10)(B)(ii) of the Act requires a minimum distribution for certain categories of hospitals. Specifically, the Secretary is required to distribute at least 10 percent of the aggregate number of total residency positions available to each of four categories of hospitals. Stated briefly, and discussed in greater detail later in this final rule, the categories are as follows: (1) hospitals located in rural areas or that are treated as being located in a rural area (pursuant to sections 1886(d)(2)(D) and 1886(d)(8)(E) of the Act); (2) hospitals in which the reference resident level of the hospital is greater than the otherwise applicable resident limit; (3) hospitals in states with new medical schools or additional locations and branches of existing medical schools; and (4) hospitals that serve areas designated as Health Professional Shortage Areas (HPSAs). Section 1886(h)(10)(F)(iii) of the Act defines a qualifying hospital as a hospital in one of these four categories.
Section 1886(h)(10)(B)(iii) of the Act further requires that each qualifying hospital that submits a timely application receive at least 1 (or a fraction of 1) of the residency positions made available under section 1886(h)(10) of the Act before any qualifying hospital receives more than 1 residency position.
Section 1886(h)(10)(C) of the Act places certain limitations on the distribution of the residency positions. First, a hospital may not receive more than 10 additional full-time equivalent (FTE) residency positions. Second, no increase in the otherwise applicable resident limit of a hospital may be made unless the hospital agrees to increase the total number of FTE residency positions under the approved medical residency training program of the hospital by the number of positions made available to that hospital. Third, if a hospital that receives an increase to its otherwise applicable resident limit under section 1886(h)(10) of the Act is eligible for an increase to its otherwise applicable resident limit under 42 CFR 413.79(e)(3) (or any successor regulation), that hospital must ensure that residency positions received under section 1886(h)(10) of the Act are used to expand an existing residency training program and not for participation in a new residency training program.
Section 1886(h)(10)(B)(i) of the Act directs the Secretary to take into account the “demonstrated likelihood” of the hospital filling the positions made available within the first 5 training years beginning after the date the increase would be effective, as determined by the Secretary. In accordance with section 1886(h)(10)(A)(iv) of the Act, the increase would be effective beginning July 1 of the fiscal year of the increase; therefore, additional residency positions under section 1886(h)(10) of the Act would be effective July 1, 2026.
Consistent with the application cycle established for section 126 of the CAA, 2021 (86 FR 73419 through 73445) we proposed that the application deadline for the additional positions made available for a fiscal year be March 31 of the prior fiscal year; that is, for FY 2026, the application deadline would be March 31, 2025. Accordingly, all references in this section to the application deadline are references to the application deadline of March 31, 2025.
We proposed that a hospital show a “demonstrated likelihood” of filling the additional positions (sometimes equivalently referred to as slots) for which it applies by demonstrating that it does not have sufficient room under its current FTE resident cap(s) to accommodate a planned new program or expansion of an existing program. In order to be eligible for additional positions, the new program or expansion of an existing program could not begin prior to July 1, 2026, the effective date of the section 4122 residency positions.
In order to demonstrate that a hospital does not have sufficient room under its current FTE resident cap(s) for purposes of the prioritization discussed at section c.3. of this preamble, if applicable, we proposed that a hospital would be required to submit copies of its most recently submitted Worksheet E, Part A and Worksheet E-4 from the Medicare cost report (CMS-Form- 2552-10) as part of its application for an increase to its FTE resident cap(s). The hospital would demonstrate and attest to a planned new program or expansion of an existing program by meeting at least one of the following two “Demonstrated Likelihood” criteria:
•
++ Application for accreditation of the new residency program has been submitted to the Accreditation Council for Graduate Medical Education (ACGME) (or application for approval of the new residency program has been submitted to the American Board of Medical Specialties (ABMS)) by the application deadline.
++ The hospital has received written correspondence from the ACGME (or ABMS) acknowledging receipt of the application for the new residency program, or other types of communication concerning the new program accreditation or approval process (such as notification of site visit) by the application deadline.
•
++ The hospital has received approval by the application deadline from an appropriate accrediting body (the
++ The hospital has submitted a request by the application deadline for a permanent complement increase of the existing residency program.
++ The hospital currently has unfilled positions in its residency program that have previously been approved by the ACGME and is now seeking to fill those positions.
Under “Demonstrated Likelihood” Criterion 2, the hospital is applying for an increase in its FTE resident cap because it is expanding an existing residency program. We proposed that as of the application deadline the hospital is either already training residents in this program, or, if the program exists at another hospital as of that date, the residents will begin to rotate to the applying hospital on or after the effective date of the increase. In addition, we note that section 1886(h)(10)(C)(ii) of the Act requires that if a hospital is awarded positions, that hospital must increase the number of its residency positions by the amount the hospital's FTE resident cap increases, based on the newly awarded positions under section 4122 of CAA, 2023. Therefore, we proposed that a hospital must, as part of its application, attest to increasing the number of its residency positions by the amount of the hospital's FTE resident cap increase based on any newly awarded positions, in accordance with the provisions of section 1886(h)(10)(C)(ii) of the Act.
In this section we present a summary of the public comments and our responses related to the proposal determining whether a hospital has a “demonstrated likelihood” of filling the positions awarded under section 4122 of the CAA, 2023.
A commenter asked that CMS reconsider the policy related to “demonstrated likelihood” and allow for exceptions for certain unique situations where a hospital may be training under its cap at the time of the application but would be training at or over its cap by the time the additional slots under section 4122 would be effective. The commenter provided the example of a hospital training residents in a new residency program. In this example the hospital is operating below its cap because it is currently building the program, but the hospital expects to be operating above its cap when the additional section 4122 slots would be effective. The commenter stated that such a hospital should be eligible for its full FTE request under section 4122.
Specifically, in the proposed rule we stated that “in order to demonstrate that a hospital does not have sufficient room under its current FTE resident cap(s) for purposes of the prioritization discussed at section c.3. of this preamble, if applicable . . .” (89 FR 36214). Section c.3. referred to the section “Prioritization of Applications by HPSA Score”, this is a separate section from the discussion of awarding each qualifying hospital up to 1.00 FTE, which was included at section c.2., “Pro Rata Distribution and Limitation on Individual Hospitals”. We note that if we prioritize the distribution of any remaining slots by HPSA score, we would only consider the FTE cap and count information included on the cost report submitted with the application; we would not consider a future cost report as the commenter suggests. In addition to providing a level of efficiency with respect to the section 4122 application reviews, we attempt to limit the need to have decision criteria based on future expectations versus cost report data, as the latter can be audited under existing processes.
After consideration of the comments received, we are finalizing our proposed policies related to the determination that a hospital has demonstrated a likelihood of filling the positions for “Demonstrated Likelihood” Criterion 1 (New Residency Program) or for “Demonstrated Likelihood” Criterion 2 (Expansion of an Existing Residency Program), without modification.
Section 1886(h)(10)(B)(ii) of the Act requires the Secretary to distribute not less than 10 percent of resident positions available for distribution to each of four categories of hospitals. Under section 1886(h)(10)(B)(ii)(I) of the Act, the first of these categories consists of hospitals that are located in a rural area (as defined in section 1886(d)(2)(D) of the Act) or are treated as being located in a rural area (pursuant to section 1886(d)(8)(E) of the Act). We refer to this category as Category One. We note that the definition of Category One for purposes of section 4122 of the CAA, 2023 mirrors the definition of Category One included under section 1886(h)(9)(B)(ii)(I) for purposes of section 126 of the CAA, 2021. Therefore, we proposed to determine Category One eligibility as discussed in the final rule implementing section 126 of the CAA, 2021 (86 FR 73422 through 73424).
For purposes of determining whether a hospital is considered rural, we proposed to use the County to CBSA Crosswalk and Urban CBSAs and Constituent Counties for Acute Care Hospitals File, or successor files containing similar information, from the
Under section 1886(d)(8)(E) of the Act, a subsection (d) hospital (that is, generally, an IPPS hospital) that is physically located in an urban area is treated as being located in a rural area for purposes of payment under the IPPS if it meets criteria specified in section 1886(d)(8)(E)(ii) of the Act, as implemented in the regulations at § 412.103. Under these regulations, a hospital may apply to CMS to be treated as located in a rural area for purposes of payment under the IPPS. Given the fixed number of available residency positions, it is necessary to establish a deadline by which a hospital must be treated as being located in a rural area for purposes of Category One. We proposed to use Table 2, or a successor table containing similar information, posted with the most recent IPPS final rule, available on the CMS website in approximately August 2024, (or correction notice if applicable), to determine whether a hospital is reclassified to rural under § 412.103. If a hospital is not listed as reclassified to rural on Table 2, but has been subsequently approved by the CMS Regional Office to be treated as being located in a rural area for purposes of payment under the IPPS as of the March 31, 2025 application deadline, the hospital would submit its approval letter with its application in order to be treated as being located in a rural area for purposes of Category One.
In this section we present a summary of the public comments and our responses to the proposed determination of which hospitals are located in a rural area or are treated as being located in a rural area (Category One).
A few commenters encouraged CMS to consider how to incentivize rural hospitals to apply for the section 4122 opportunity and award slots that will increase rural training.
In order to support geographically rural hospitals in the application process we anticipate continuing the outreach efforts that we have in place for the section 126 distribution, and adding outreach regarding the section 4122 distribution in these efforts. CMS has worked in conjunction with the Health Resources and Services Administration's (HRSA) Federal Office of Rural Health Policy to educate potential applicants about the section 126 application process. On February 13, 2023 and January 17, 2024, CMS participated with HRSA and Rural Residency Planning and Development—Technical Assistance Center (
Under section 1886(h)(10)(B)(ii)(II) of the Act, the second category consists of hospitals in which the reference resident level of the hospital (as specified in section 1886(h)(10)(F)(iv) of the Act) is greater than the otherwise applicable resident limit. We refer to this category as Category Two. We note the definition of Category Two under section 1886(h)(10)(B)(ii)(II) of the Act mirrors the definition of Category Two under section 1886(h)(9)(B)(ii)(II), section 126 of the CAA, 2021. Therefore, we proposed to determine Category Two eligibility as discussed in the final rule implementing section 126 of the CAA, 2021 (86 FR 73424 through 73425) with adjustments to consider the provisions of sections 126, 127, and 131 of the CAA, 2021, as discussed later.
Under section 1886(h)(10)(F)(iv) of the Act, the term “reference resident level” means, with respect to a hospital, the resident level for the most recent cost reporting period of the hospital ending on or before the date of enactment of section 1886(h)(10) of the Act, December 29, 2022, for which a cost report has been settled (or, if not, submitted (subject to audit)).
Under section 1886(h)(10)(F)(v) of the Act, the term “resident level” has the meaning given such term in paragraph (7)(C)(i). That section defines “resident level” as with respect to a hospital, the total number of full-time equivalent residents, before the application of weighting factors (as determined under paragraph (4)), in the fields of allopathic and osteopathic medicine for the hospital.
Under section 1886(h)(10)(F)(i) of the Act, the term “otherwise applicable resident limit” means, “with respect to a hospital, the limit otherwise applicable under subparagraphs (F)(i) and (H) of paragraph (4) on the resident level for the hospital determined without regard to the changes made by this provision of the CAA, 2023, but taking into account section 1886(h)(7)(A), (7)(B), (8)(A), (8)(B), and (9)(A)” of the Act. These cross-referenced sub-paragraphs all address the distribution of positions and redistribution of unused positions.
As finalized for purposes of section 126 of the CAA, 2023, the “reference resident level” refers to a hospital's allopathic and osteopathic FTE resident count for a specific period. The definition can vary based on what calculation is being performed to determine the correct allopathic and osteopathic FTE resident count (see, for example, 42 CFR 413.79(c)(1)(ii)) (86 FR 73424)). As noted previously, section 4122 of the CAA, 2023, under new section 1886(h)(10)(F)(iv) of the Act defines the “reference resident level” as coming from the most recent cost reporting period of the hospital ending
Under new section 1886(h)(10)(F)(i) of the Act, the term “otherwise applicable resident limit” is defined as “the limit otherwise applicable under subparagraphs (F)(i) and (H) of paragraph (4) on the resident level for the hospital determined without regard to this paragraph [that is, section 1886(h)(10) of the Act], but taking into account paragraphs (7)(A), (7)(B), (8)(A), (8)(B), and (9)(A).” In the FY 2022 IPPS/LTCH PPS final rule (86 FR 25505), we finalized for purposes of section 126 of the CAA, 2021, the definition of “otherwise applicable resident limit” as the hospital's 1996 cap during its reference year, adjusted for the following: “new medical residency training programs” as defined at § 413.79(l); participation in a Medicare GME affiliation agreement as defined at §§ 413.75(b) and referenced at 413.79(f); participation in an Emergency Medicare GME affiliation agreement as defined at § 413.79(f); participation in a hospital merger; whether an urban hospital has a separately accredited rural training track program as defined at § 413.79(k); applicable decreases or increases under section 422 of the MMA, applicable decreases or increases under section 5503 of the Affordable Care Act, and applicable increases under section 5506 of the Affordable Care Act. For purposes of section 4122 of the CAA, 2023, we proposed to use this same definition of “otherwise applicable resident limit” and adding to this definition the following: applicable increases or adjustments under sections 126, 127, and 131 of the CAA, 2021.
Regarding the term “resident level”, in the CY 2011 OPPS final rule (75 FR 46391) we indicated that we generally refer to a hospital's number of unweighted allopathic and osteopathic FTE residents in a particular period as the hospital's resident level, which we proposed to define consistently with the definition in section 4122 of the CAA, 2023; that is, the “resident level” under section 1886(h)(7)(c)(i) of the Act, which is defined as the total number of full-time equivalent residents, before the application of weighting factors (as determined under paragraph 1886(h)(4) of the Act), in the fields of allopathic and osteopathic medicine for the hospital.
For the purposes of section 4122 of the CAA, 2023 we proposed that the definitions of the terms “otherwise applicable resident limit,” “reference resident level,” and “resident level” should be as similar as possible to the definitions those terms have in the regulations at § 413.79(c), as initially set out in the CY 2011 OPPS rulemaking, as revised for purposes of section 126 of the CAA, 2021 (86 FR 73424) with adjustments made to the definition of “otherwise applicable resident limit” for sections 126, 127, and 131 of the CAA, 2021.
We did not receive any public comments on our proposal for determining whether a hospital's refence resident level is greater than its otherwise applicable resident limit (Category Two). We are finalizing this policy as proposed.
The third category specified in section 1886(h)(10)(B)(ii)(III) of the Act, as added by section 4122 of CAA, 2023, consists of hospitals located in States with new medical schools that received “Candidate School” status from the Liaison Committee on Medical Education (LCME) or that received “Pre-Accreditation” status from the American Osteopathic Association (AOA) Commission on Osteopathic College Accreditation (the COCA) on or after January 1, 2000, and that have achieved or continue to progress toward “Full Accreditation” status (as such term is defined by the LCME) or toward “Accreditation” status (as such term is defined by the COCA); or additional locations and branch campuses established on or after January 1, 2000, by medical schools with “Full Accreditation” status (as such term is defined by LCME) or “Accreditation” status (as such term is defined by the COCA). We note that the statutory language is specific with respect to these definitions. We refer to this category as Category Three. We note that the definition of Category Three for purposes of section 4122 of the CAA, 2023, mirrors the definition of Category Three included under section 1886(h)(9)(B)(ii)(III) of the Act for purposes of section 126 of the CAA, 2021. Therefore, we proposed to determine Category Three eligibility as discussed in the final rule implementing section 126 of the CAA, 2021 (86 FR 73425 through 73426).
We proposed that the hospitals located in the following 35 States and one territory, referred to as Category Three States, would be considered Category Three hospitals: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin. If a hospital is located in a state not listed here, but it believes the state in which it is located should be on this list, the hospital may contact CMS through the MEARIS
In this section we present a summary of the public comments and our responses related to the proposal determining which hospitals are located in states with new medical schools or additional locations and branch campuses (Category Three).
A commenter requested CMS amend the list of states where hospitals may qualify under Category Three to include Montana and Oregon. The commenter stated that colleges of osteopathic medicine locations in Montana and Oregon meet the definition of “New Medical Schools, or Additional Locations and Branch Campuses”. The commenter noted that Western University of Health Sciences/College of Osteopathic Medicine of the Pacific- Northwest in Lebanon, Oregon, began operation in 2011, Touro College of Osteopathic Medicine Montana opened in 2023, and Rocky Vista University Montana College of Osteopathic Medicine opened in 2023.
The fourth category specified in the law consists of hospitals that serve areas designated as HPSAs under section 332(a)(1)(A) of the Public Health Service Act (PHSA), as determined by the Secretary. Category Four for section 4122 of the CAA, 2023 mirrors the definition of Category Four included under section 1886(h)(9)(B)(ii)(IV) for purposes of implementing section 126 of the CAA, 2021. Therefore, we proposed to determine Category Four eligibility as discussed in the final rule implementing section 126 of the CAA, 2021 (86 FR 73426 through 73430).
We proposed that an applicant hospital qualifies under Category Four if it participates in training residents in a program in which the residents rotate for at least 50 percent of their training time to a training site(s) physically located in a primary care or mental-health-only geographic HPSA. Specific to mental-health-only geographic HPSAs, we proposed that the program must be a psychiatry program or a subspecialty of psychiatry. In addition, a Category Four hospital must submit an attestation, signed and dated by an officer or administrator of the hospital who signs the hospital's Medicare cost report, that it meets the requirement that residents rotate for at least 50 percent of their training time to a training site(s) physically located in a primary care or mental-health-only geographic HPSA.
In this section we present a summary of the public comments and our responses related to determining which hospitals serve areas designated as HPSAs under section 332(a)(1)(A) of the PHSA (Category Four).
Section 1886(h)(10)(F)(iii) of the Act defines a “qualifying hospital” as “a hospital described in any of the subclauses (I) through (IV) of subparagraph (B)(ii).” As such, and consistent with the definition of “qualifying hospital” used for purposes of section 126 of the CAA, 2021 (86 FR 73430 through 73431), we proposed to define a qualifying hospital as a Category One, Category Two, Category Three, or Category Four hospital, or one that meets the definitions of more than one of these categories.
In this section we present a summary of the public comments and our responses related to determining whether a hospital is considered a qualifying hospital.
After consideration of the comments received, we are finalizing our policy with respect to the definition of a qualifying hospital as proposed, without modification.
Section 1886(h)(10)(A)(ii) of the Act limits the aggregate number of total new residency positions made available in FY 2026 across all hospitals to no more than 200. Section 1886(h)(10)(A)(iii) of the Act further specifies that at least 100 of the positions made available under section 1886(h)(10) must be distributed for a psychiatry or psychiatry subspecialty residency. The phrase “psychiatry or psychiatry subspecialty residency” is defined at section 1886(h)(10)(F)(ii) of the Act to mean “a residency in psychiatry as accredited by the Accreditation Council for Graduate Medical Education (ACGME) for the purpose of preventing, diagnosing, and treating mental health disorders.”
We proposed that of the total residency slots distributed under section 4122 of the CAA, 2023, at least 100 but not more than 200 slots would be distributed to hospitals applying for residency programs in psychiatry and psychiatry subspecialties. For purposes of determining which programs are considered psychiatry subspecialties, we proposed to refer to the list included on ACGME website at
In this section we present a summary of public the comments and our responses related to the requirement that at least 100 but not more than 200 of the positions made available under section 4122 must be distributed for a psychiatry or psychiatry subspecialty residency.
A few commenters stated that CMS should consider scenarios under which the agency receives applications for fewer than 100 psychiatry FTEs for FY 2026. The commenters requested that in the final rule, CMS address two scenarios: (1) Where fewer than 100 FTEs are awarded to psychiatry or psychiatry subspecialty programs; and (2) Where fewer than 200 positions are awarded in total. The commenters stated that they interpret the statutory language in section 4122 to mean that slots will become effective as of “July 1 of the fiscal year of the increase,” which should allow CMS to award positions through another application cycle if fewer than 100 positions are awarded to psychiatry programs or fewer than 200 positions are awarded in total.
Another commenter stated that it is not clear how CMS would proceed if it does not receive enough requests to allocate 100 slots to psychiatry or psychiatry subspecialty programs. The commenter stated that they recognize the need to train, recruit, and retain behavioral health providers, but believe that CMS should not reserve unfilled slots from this application round for any specialty for future rounds of distribution. As an example, if CMS receives applications for only 90 psychiatry slots, those 10 remaining slots should be allocated to other programs that have submitted applications and qualify under the proposed eligibility criteria. The commenter stated that withholding slots for certain specialties would ignore the growing urgency of physician shortages across all specialties and therefore asked CMS to clarify what it intends to do if the psychiatry slots are not filled in a single round.
Another commenter recommended that if CMS does not receive enough applications to distribute the 100 slots designated for psychiatry programs (or the full 200 slots more generally) in a single round, that CMS hold another application cycle to distribute the remaining slots.
The commenters stated that awards made under section 4122 would likely represent the largest increase in Medicare-funded psychiatry or psychiatry subspecialty training since Congress capped hospitals' FTE counts in 1997. The commenters requested that because psychiatry residents often spend a significant amount of time training at IPF hospitals and units, CMS should use its authority to increase the number of FTEs at IPFs excluded from requests for increases for IPPS purposes, for slot distributions under section 4122 and section 126.
Another commenter stated that they recognize that CMS is required to prioritize distribution to psychiatry specialties and subspecialties to improve access to critical mental health services, however, they urged CMS to ensure that an adequate number of slots go towards primary care and other specialties with well documented shortages, like internal medicine, family medicine, and pediatrics. The commenter stated that it is important to note that primary care physicians play a significant role in providing mental health care services. The commenter referred to a cross-sectional study using Medical Expenditure Panel Survey data, which found that during the COVID-19 pandemic, primary care physicians provided a significant proportion of care for people with mental health disorders—nearly 40 percent of visits for depression, anxiety, and any mental illness were performed by primary care physicians. The commenter stated that primary care physicians also provided over one-third of the care and wrote a quarter of the prescribed medications for patients with severe mental illness. Another commenter stated that the forecasted insufficiency of primary care physicians in the future health care workforce makes this a pressing concern for public health agencies to take immediate action to prioritize educating and training the next generation of primary care physicians and providing sufficient resources to training centers to competently supervise and instruct these scarce professionals. The commenter recommended that primary care be prioritized in the distribution of the remaining 100 GME slots.
A commenter stated that they support CMS' proposal to include Hospice and Palliative Medicine as a psychiatry subspecialty that may qualify for the reserved psychiatry GME positions under section 4122. The commenter stated that Hospice and Palliative Medicine is an important component of psychiatric care, and the prioritization of this subspecialty will help to build a workforce capable of addressing the needs of patients with serious illness through a psychiatric lens. The commenter requested that as CMS contemplates final policies for allocating the remaining, non-psychiatry GME positions, CMS add a method for prioritizing specialties that offer high value and/or demonstrate significant shortage, such as Hospice and Palliative Medicine. The commenter stated that programs that maintain partnerships with Hospice and Palliative Medicine fellowship programs, for example, surgery residencies that include a paired Hospice and Palliative fellowship track, should also be prioritized. The commenter stated that these changes would help build a physician workforce closely aligned with the nation's evolving healthcare needs and improve care and quality of life for millions of Americans facing serious illness, along with their families and caregivers.
A commenter stated that CMS should enable applicants to tailor programs to support positions needed most in rural and underserved communities. The commenter stated that they commend the emphasis on behavioral health but that the dedication of at least one-half of the total number of positions to psychiatry or psychiatry subspecialty residencies may result in some slots going unused. The commenter stated that in Iowa and nationally, there are additional and significant specialty needs in family medicine, particularly in rural areas (but urban as well); OBGYN, and geriatrics, among others. The commenter stated that they discourage CMS from establishing a set-aside percentage for behavioral health and recommend that CMS defer to local needs.
A commenter stated that while they understand the requirement to distribute at least 100 slots to psychiatry is statutory, the commenter's psychiatry programs are not full, and psychiatrists are permitted to start their practices without completing their last year of residency training. The commenter stated that they have not experienced the need for more slots to train psychiatry residents and requiring 100 slots to be dedicated to psychiatry means those slots cannot be allocated to other programs that are pushing hospitals over their caps.
A commenter stated that they support the provision that directs half of the resident slots towards psychiatry or psychiatry subspecialities, but there is no assurance that these slots will go to the areas that need them most. The commenter stated that CMS should create guardrails to ensure the lack of
After consideration of the comments received, we are finalizing the policy to distribute at least 100 slots to psychiatry or subspecialties of psychiatry as proposed, without modification.
As noted earlier in this preamble, section 1886(h)(10)(B)(iii) of the Act requires that each qualifying hospital that submits a timely application under subparagraph 1886(h)(10)(A) of the Act would receive at least 1 (or a fraction of 1) of the positions made available under section 1886(h)(10) of the Act before any qualifying hospital receives more than 1 of such positions. Section 1886(h)(10)(C)(i) of the Act limits a qualifying hospital to receiving no more than 10 additional FTEs from those authorized under section 1886(h)(10) of the Act. As stated earlier in this preamble, we proposed that a qualifying hospital is a Category One, Category Two, Category Three, or Category Four hospital, or one that meets the definitions of more than one of these categories. For purposes of distributing residency slots under section 4122 of the CAA, 2023, we proposed to first distribute slots by prorating the available 200 positions among all qualifying hospitals such that each qualifying hospital receives up to 1.00 FTE, that is, 1.00 FTE or a fraction of 1.00 FTE. We proposed that if residency positions are awarded based on a fraction of 1.00 FTE, each qualifying hospital would receive the same FTE amount. Consistent with the number of decimal places used for the FTE slots awards in other distributions such as section 126 of the CAA, 2021, we proposed to prorate the slot awards under section 4122 of the CAA, 2023, rounded to two decimal places. The table later in this section provides examples of how the 200 slots would be prorated based on the number of qualifying applicants. Given the limited number of residency positions available and the number of hospitals we expect to apply, we proposed that a hospital may not submit more than one application under section 4122 of the CAA, 2023.
We refer readers to further below in this section where we discuss an alternative we considered for the distribution of slots under section 4122 of the CAA, 2023 and present a summary of the public comments we received and our responses. We also refer readers to section I.O.6. of Appendix A of this final rule where we discuss the same alternative considered.
In this section we present a summary of the public comments and our responses related to the requirement to distribute at least 1 (or a fraction of 1) of the positions made available under section 4122 of the CAA, 2023, before any qualifying hospital receives more than 1 position.
A few commenters expressed concern that awarding up to 1.00 FTE per hospital would dissuade rural programs from applying. The commenters noted that these programs are already deterred from applying for section 126 slots because of the HPSA score prioritization and that a disadvantageous pro rata distribution under section 4122 would add yet another barrier to applying. The commenters stated that some rural hospitals may not apply because they may not receive a full slot, or a full FTE. The commenters stated that one slot, or one FTE, covers the cost of training one resident for one year whereas a fraction of an FTE is not incentive enough for rural residency programs to apply because most of the resident's training would not be funded by Medicare. The commenter stated that rural residency programs are less able to shoulder unfunded training compared to large urban academic medical centers and that this situation makes CMS' decision on how to administer the pro rata distribution paramount.
Several commenters expressed concern related to hospitals having to self-fund additional FTEs under the scenario where each qualifying hospital would receive up to 1.00 FTE. Commenters stated that as part of the proposal for section 126, CMS attempted to award slots in a similar
A commenter stated they have significant concerns that CMS' proposed methodology could result in many hospitals receiving only a 1.00 FTE (or less) cap slot, which does not support expanding or starting a new multi-year residency program. The commenter stated they recognize that the language within section 4122 mandating awarding every applicant hospital that applies with up to 1.00 FTE presents certain implementation challenges, however, the commenter requested that CMS consider the implications of not tying the initial pro rata distribution for hospitals to the distribution of remaining slots to those same hospitals. The commenter stated that residency programs typically expand by the length of their program. For example, if a hospital with a four-year psychiatry program currently training 16 residents applied to expand, it would normally do so for four positions (to become a 20-resident training program) or some multiple of four positions. The commenter stated that under CMS' proposal, if a hospital applied to expand a four-year psychiatry program and received only 1.00 FTE under section 4122, the hospital would not receive any reimbursement for the three FTEs required to expand the program by one resident each year. The commenter stated that the only specialty training programs that could reasonably be expected to expand by one resident are transitional year programs and one-year fellowship programs. The commenter stated that while these are important specialties to expand, they do not believe it was Congress's intent to incentivize training in just these programs. The commenter stated that the CMS proposal leaves little incentive for hospitals to apply for these slots for psychiatry, primary care, general surgery, geriatrics, or other shortage specialties if hospitals are likely to be responsible for most of the cost of expanding or starting these programs. The commenter stated that they note that in a separate section of the proposed rule, which discusses how to evaluate new residency programs for rural-based or small programs, CMS states, “[W]e solicit comment on defining a small residency program as a program accredited for 16 or fewer resident positions, because 16 positions would encompass the minimum number of resident positions required for accredited programs in certain specialties, such as primary care and general surgery, that have historically experienced physician shortages, and therefore have been prioritized by Congress and CMS for receipt of slots under sections 5503 and 5506 of the Affordable Care Act [emphasis added].” The commenter stated they agree with CMS that Congress has repeatedly prioritized these specialty programs, and they encourage CMS to use the implementation of section 4122 to continue to prioritize these and other shortage specialty programs.
Another commenter stated that if more than 200 applicants apply, the resulting award would be pro-rated FTEs and if the number of applicants exceed 400, the award would be virtually unworkable for many programs. The commenter stated that from a sustainability standpoint, it is operationally preferrable to have CMS guarantee an award of at least 1.00 FTE, and ideally to fund entirely in 1.00 FTE increments. Another commenter requested that CMS provide a minimum of 1.0 FTE to each qualifying hospital.
After consideration of the comments received, we are finalizing our policies as proposed with respect to the pro rata distribution of slots under section 4122, without modification. Specifically, we will first distribute slots by prorating the available 200 positions among all qualifying hospitals such that each qualifying hospital receives up to 1.00 FTE, that is, 1.00 FTE or a fraction of 1.00 FTE up to two decimal places. If residency positions are awarded based on a fraction of 1.00 FTE, each qualifying hospital would receive the same FTE amount.
The following section includes a summary of the comments and our responses related to the alternative considered for the prioritization of slots under section 4122 of the CAA, 2023. We considered an alternative approach to distributing the 200 residency slots under section 4122 of the CAA, 2023, which would place greater emphasis on the distribution of additional residency positions to hospitals that are training residents in geographic and population HPSAs. Under this approach, the statutory requirement that each qualifying hospital receive 1 slot or a fraction of 1 slot would be met by awarding each qualifying hospital 0.01 FTE. The remaining residency slots would be prioritized for distribution based on the HPSA score associated with the program for which each hospital is applying using the HPSA prioritization methodology we finalized for purposes of implementing section 126 of the CAA, 2021 (86 FR 73434 through 73440). To illustrate, if 1,000 qualifying hospitals were to apply under section 4122 of the CAA, 2023, we would first award each qualifying hospital 0.01 FTEs, resulting in the distribution of 10.00 FTEs (1,000 × 0.01). We would then distribute the remaining 190 slots (200−10) based on the HPSA prioritization method we finalized for implementation of section 126 of the CAA, 2021, such that applications associated with higher HPSA scores would receive priority.
We believed that under this alternative distribution methodology we would further the work achieved by section 126 of the CAA, 2021, by distributing residency slots to underserved areas in greatest need of additional physicians. Using this alternative distribution methodology, we would limit a qualifying hospital's total award under section 4122 of the CAA, 2023, to 10.00 additional FTEs
A few commenters stated that although they believe that the alternative distribution proposal would not benefit the expansion of rural residency programs, it would provide rural hospitals with a better chance of receiving new positions. The commenters explained that if a high number of hospitals apply for residency positions under section 4122, under the alternative distribution methodology, there would be more slots leftover to be distributed to each of the four categories, prioritized by HPSA score compared to the other proposed distribution method. According to a commenter, the alternative distribution method creates more potential for rural hospitals to receive multiple slots whereas the other proposed distribution method would make it less likely that rural hospitals would receive more than 1.0 FTE if 200 or more hospitals apply. Commenters referenced round 1 of the distribution of residency positions under section 126, where 291 hospitals applied for residency positions, to support their projection that 200 or more hospitals were likely to apply for the distribution of section 4122 residency positions. The commenters stated that rural hospitals likely need to receive 3-5 residency positions to fully fund a resident for an entire residency and that the alternative distribution methodology gives these hospitals the best chance for that outcome, whereas the other distribution methodology would provide each qualifying hospital with about 0.68 FTE with no remaining residency positions available for distribution.
For the several commenters opposed to the alternative considered, we agree that an increase of only 0.01 FTE may not make a significant enough impact to allow a program to begin or expand. We also agree that there is significant burden associated with having to account for 0.01 FTE on a cost report and to attest that the hospital was able to meet the statutory requirement to increase the total number of FTE residency positions in their residency program by 0.01 FTE. Under the proposed methodology, applicants also have the potential to be awarded a fraction of an FTE, but that amount would likely be higher than 0.01 (based on the number of qualifying hospitals that apply), and therefore provide a relatively larger FTE cap increase. We refer readers to the table earlier in this section which provides examples of how the 200 slots would be prorated based on the number of qualifying applicants.
After consideration of the comments received and the limited support for the alternative considered, we are not finalizing the alternative methodology.
We proposed that if any residency slots remain after distributing up to 1.00 FTE to each qualifying hospital, we would prioritize the distribution of the remaining slots based on the HPSA score associated with the program for which each hospital is applying. Taking an example from the table in the previous section, if 180 qualifying hospitals apply under section 4122 of the CAA, 2023, each qualifying hospital would receive 1.00 FTE and the 20 remaining residency positions would be prioritized for distribution based on the HPSA score associated with the program for which each hospital is applying. We proposed the HPSA prioritization methodology would be the methodology we finalized for purposes of section 126 of the CAA, 2021 (86 FR 73434 through 73440). We believe including such a prioritization would further support the training of residents in underserved and rural areas thereby helping to address physician shortages and the larger issue of health inequities in these areas. Using this HPSA prioritization method, we proposed to limit a qualifying hospital's total award under section 4122 of the CAA, 2023, to 10.00 additional FTEs, consistent with section 1886(h)(10)(C)(i) of the Act. Consistent with the methodology we use for implementing section 126 of the CAA, 2021, as part of determining eligibility for additional slots, we would compare the hospital's FTE resident count to its adjusted FTE resident cap on the cost report worksheets submitted with its application. If the hospital's FTE count is below its adjusted FTE cap, the hospital would be ineligible for its full FTE request, because the facility had not yet fully utilized the already-allotted slots. We note that in calculating the adjusted FTE cap we would not consider adjustments for Medicare GME Affiliation Agreements since these adjustments are temporary.
We proposed that as finalized under section 126 of the CAA, 2021 (86 FR 73435), for purposes of prioritization under section 4122 of the CAA, 2023, primary care and mental-health-only population and geographic HPSAs
Given that residency slots under section 4122 of the CAA, 2023 are to be distributed in FY 2026, we proposed that the HPSA IDs and scores used for the prioritization of slots, if applicable, would be the same HPSA IDs and scores used for the prioritization of slots under round 4 of section 126 of the CAA, 2021. This group would include HPSAs that are in designated or proposed for withdrawal status at the time the HPSA information is received from HRSA. As noted in section j. of this preamble, CMS would request HPSA data from HRSA in November 2024 to be used for purposes of section 4122 of the CAA, 2023.
In this section we present a summary of the public comments and our responses related to prioritizing the distribution of slots by HPSA score for purposes of the section 4122, if any slots remain after awarding each qualifying hospital up to 1.00 FTE.
A commenter stated they advocated for and are deeply supportive of CMS' proposal to apply the same methodology for distributing the new slots that was finalized for the slots enacted by section 126 of the 2021 CAA, including the proposal to require hospitals that serve areas designated as HPSAs to have at least 50 percent of residents' training time occur at training locations within a primary care or mental health-only geographic HPSA in order to be able to apply for new GME slots. The commenter stated that they strongly believe continuing this equity-focused methodology would help mitigate health access disparities and more effectively address physician shortages.
Another commenter stated that they encourage CMS to prioritize the distribution of slots by awarding to primary care programs and that they support the proposal to prioritize the distribution of remaining slots by HPSA score. The commenter stated that they believe such a prioritization would ensure that an appropriate number of the new residency positions would go to the hospitals where they would have the greatest impact on access to care—where there were well-documented shortages in primary care and other internal medicine subspecialties. The commenter stated that this HPSA-based approach would not only address the current maldistribution of the physician workforce and mitigate workforce shortages in primary care, including general internal medicine, but also address health inequities and reach underserved populations.
A commenter stated that they do not believe that Congress intended for CMS to revert to the methodology used under section 126. The commenter stated that Congress newly added the pro rata distribution in section 4122 as a directive to CMS to not simply use the same methodology as was used in section 126. The commenter stated that the fact CMS is using that same methodology after implementing the pro rata distribution seems to fly in the face of how Congress deliberately modified the distribution methodology for section 4122 from what was included in section 126. The commenter stated that had Congress wished to create a “super prioritization” and focus on hospitals that train residents in HPSAs, it would have done so. The commenter stated that prioritization using HPSAs favors rural areas over urban areas and that according to their analysis, 75.4 percent of HPSAs are rural or partially rural, and rural and partially rural HPSAs are disproportionately represented among those HPSAs with the highest scores. The commenter stated they do not
Several commenters conveyed their opposition to what they believe is CMS' overreliance on HPSA scores in the distribution of slots and stated HPSAs should be used sparingly. The commenters stated the HPSA prioritization has no foundation in the enabling legislation and that it is inherently unfair to deserving hospitals that may qualify for new residency slots in the other three (nonHPSA) categories. The commenters stated that CMS noted in the past that its methodology does not intend to exclude hospitals that do not serve HPSAs from receiving new residency slots, but regardless of this intention, commenters argued this could ultimately be a result of continuing to rely so heavily on HPSAs. A few commenters referred to an analysis from the Alliance of Safety Net Hospitals, which found that giving exclusive priority to applications from hospitals with high HPSA scores would have this effect and that time has proven this analysis to be accurate; they suggested that this has made vast parts of the country virtually ineligible for new residency slots. The commenters further stated that this outcome does not reflect Congress's intention when it authorized the new residency slots.
A commenter stated that for Pennsylvania, where HPSAs exist in all corners of the commonwealth but the individual HPSA scores are much lower than they are in other states, giving exclusive priority to applications from hospitals with high HPSA scores has the effect of excluding almost all Pennsylvania teaching hospitals from this program even when they meet the statutory criteria. The commenter stated that this outcome does not reflect Congress's intention when it authorized the new residency slots.
A commenter stated that Wisconsin has currently seen no new slots awarded, despite having multiple entities that fit at least one, if not more, of the four criteria in statute. Rather, they state that the majority of slots CMS awarded so far were not distributed to geographically rural hospitals, but rather, urban and suburban hospitals that serve rural patients, and notes that this is not following Congressional intent.
A commenter urged the agency to also consider the population and communities that a hospital system serves when awarding residency slots. The commenter stated that while it is headquartered in two small Wisconsin cities, its hospital system serves rural communities. The commenter stated that because of its headquarters, its hospital frequently does not score high enough to receive additional slots and requests CMS consider the hospital system's service area, not just the headquarters, when distributing the new residency positions.
In addition, we do not agree that the proposed methodology for the distribution of slots under section 4122 exhibits an overreliance on HPSA scores or is inconsistent with the law. The prioritization of HPSA scores is only part of the distribution process under section 4122 and applies after each qualifying hospital receives up to 1.00 FTE as required by statute, which means qualifying hospitals in states with limited HPSAs will still receive FTE cap increases under section 4122. As noted earlier, section 4122 added this requirement not found in section 126. There is no added provision of section 4122, which was enacted after our implementation of section 126, that precludes the use of HPSA scores for purposes of prioritization. If there are any remaining slots to be distributed after each qualifying hospital receives up to 1.00 FTE as required by statute, there needs to be some prioritization if the number of slots requested across all hospitals exceeds the number of slots authorized under section 4122. Allocation by the severity of the health professional shortage in a HPSA is a reasonable and transparent prioritization approach. If a program serving a particular HPSA, or programs serving HPSAs in a particular state, do not receive additional slots under section 4122 that does not mean that those areas have sufficient health professionals. Rather, it is a reflection that the number of slots authorized by section 4122 is less than the requested number of slots from applicant hospitals with teaching programs that serve HPSAs.
A few commenters stated that during the first two rounds of the section 126 slot distributions, only 7 geographically rural hospitals received slots. The commenters stated that they believe high HPSA scores serve as a barrier to entry for rural hospitals seeking slots because HPSA scores often do not prioritize or accurately reflect the needs of areas with small populations. The commenters noted that three primary factors are used in scoring criteria across primary care, mental health, and dental HPSAs: population-to-provider ratio; poverty rates; and travel distance or time to the nearest accessible source of care. They further noted that there is no measure to account for rurality or unique access problems associated with rural areas. Another commenter questioned whether all states comprehensively and accurately survey and present data to have HSPAs be the best measure for rural health care access.
Commenters opined that the health needs measured by HPSAs are not reflective of the needs of older populations. A commenter stated that the higher utilization of services by older adult populations in rural areas and their related risk factors are not accounted for in the current HPSA scoring methodology. Another commenter stated that the existing components that factor into a HPSA score are not reflective of access problems that many rural areas face. The commenter stated that the older adult populations of rural areas result in higher utilization of health services, and their respective risk factors are not accounted for in the existing HPSA formula. The commenter stated that unless the HPSA methodology is updated to reflect these concerns, they do not believe that basing distribution of the additional residency slots on the HPSA score alone will provide for GME
A few commenters stated that if plans for section 4122 mirror section 126 there would be continued limits on allocations to geographically rural hospitals. Commenters stated that some geographically rural hospitals may have lower HPSA scores or be discouraged from applying when they are not located in a HPSA. Commenters stated that updating rurality to CMS defined criteria (that is, non-metropolitan training sites) and allocating at least 10 percent of those slots to rural areas regardless of HPSA score may better align with legislative intent. Commenters stated that equally important is eliminating the application of HPSA prioritization from within the rural category. Commenters stated that many rural hospitals are saddled with low HPSA scores as an artifact of the methodology for calculating those scores and are thus eliminated from consideration even though they are serving communities most in need of new physicians. Commenters asked CMS to consider changing the definition of which hospitals qualify for “rural” categorization to eliminate hospitals “treated as rural” that are not in fact geographically rural and include in the “rural” categorization all hospitals located in rural geographic locations regardless of HPSA score. The commenters requested that if eliminating urban hospitals “treated as rural” is not possible, CMS continue the HPSA score prioritization for those urban hospitals.
Another commenter stated they are concerned that the proposal to prioritize slots based on HPSA score will unnecessarily end up excluding hospitals that no longer reside in HPSAs due to HRSA's misguided shortage designation modernization project that, while well-intended, is exacerbating challenges for rural hospitals. The commenter stated that, for example, around 25 Wisconsin hospitals lost their HPSA designations at the start of 2024 due to the way the HRSA updated its HPSA renewal process. The commenter stated that some applicants have reported their concerns that relying too much on HPSA scores has unfairly led to the exclusion of their GME slot applications from consideration and has further discouraged other interested applicants from expending resources on an application that is unlikely to result in an award.
Another commenter stated that due to their smaller populations, rural communities that add new physicians as faculty and retain residents, can significantly shift their HPSA scores or lose their HPSA designation, which can prevent a hospital in a rural area from receiving GME slots based on current CMS policy.
Several commenters stated that CMS should evaluate the application pool and, if able to meet the statutory distribution requirements, award all slots on a pro-rata basis. The commenters stated that if CMS is unable to meet the statutory requirements using this methodology, CMS should prioritize the remaining slots or pro rata slots to hospitals that meet all four qualifying categories listed above first; then hospitals that meet three criteria and so forth, until all slots are distributed.
A commenter noted that they do not believe that training residents in HPSAs is an appropriate measure of reducing health inequities, which was CMS's stated goal in implementing this distribution methodology for section 126. The commenter stated that while they agree that HPSA designation is a good starting point for identifying an area that needs more physician services, the designation system for HPSAs is not without controversy. The commenter suggested that a more holistic approach to addressing the physician shortage would be to recognize medical education hubs such as those located in densely populated and diverse urban areas because training residents in densely populated urban areas with a diverse set of patients is the single best means of exposing physicians in training to the cultural complexities that CMS should want all physicians exposed to during their training to promote health equity. The commenter stated that CMS should review data indicating which areas of the country and which organizations are producing physicians for HPSAs. The commenter stated that New York's teaching hospitals for example are a major “feeder” for the rest of the nation's physician workforce and included data supporting their statement. The commenter stated that after the initial pro rata distribution is complete, CMS should prioritize making those applications more “whole” by awarding the applicant as many of the number of slots that is commensurate with their planned expansion of existing residency programs or establishment of new programs. The commenter stated that CMS should accomplish this process by prioritizing those hospitals that meet all four qualifying criteria first, and then hospitals that meet three criteria and so on until all slots are distributed. The commenter stated that if CMS determines that not enough slots remain to make all hospitals that received a pro rata distribution whole, it should prioritize doing so for psychiatry and psychiatry subspecialty programs. The commenter stated they believe that this approach would more closely align with the intent of the legislation to prioritize residency slots for psychiatry programs while also operating within the requirements that each applicant receive at least one (or a fraction of one) of the residency positions made available. The commenter stated that if there are not enough slots to make all hospitals that received a pro rata distribution whole, CMS should allow these hospitals to apply for the number of slots that would make the program whole in round five of the section 126 distributions. These slots would be effective July 1, 2027. Using both distributions to make an application whole would allow hospitals to expand and start new programs more easily.
A commenter stated that Congress has voiced concerns about a shortage of physicians serving rural areas and referred to data from U.S. House Committee on Ways & Means. The commenter stated they agree with the findings of the Committee on Ways & Means and believe that physicians who participate in rural residency programs are more likely to practice in underserved rural areas. The commenter encouraged CMS to implement a process by which the first round of slots are granted to hospitals located in areas that truly are rural. Once those slots have been awarded, they recommend CMS distribute remaining slots as proposed.
A commenter recommended CMS consider distributing slots in areas where there are high rates of maternal mortality. The commenter stated that when considering residency and fellowship positions, they believe it would be beneficial to take this data into account, coupled with geographic areas with high rates of sickle cell diseases and other hemoglobinopathies. The commenter stated that this approach might not always align with traditional HPSA delineations, but they believe it is worth exploring given the serious hematologic needs of these patients.
A commenter stated that they do not believe CMS should finalize a distribution for new residency positions that incorporates a HPSA prioritization and, consistent with their prior comments, they encourage CMS to work more closely with the GME community regarding distribution.
A commenter urged CMS to consider historical state-by-state distribution of GME slots. The commenter stated that the caps established through the Balanced Budget Act of 1997 created an inequity in states that did not have robust residency programs at the time but have had significant population growth since the 1997 caps were implemented. The commenter stated that it is critical to develop a workforce that can meet the needs of a state's population and that around two-thirds of doctors live in the state they train in. The commenter stated that Florida, which will have an expected shortage of more than 18,000 physicians by 2035, is one of the nation's fastest growing states, and has the second largest number of Medicare beneficiaries in the country. The commenter stated that it is in the interest of the Medicare program to ensure that Florida has enough physicians, and this requirement could be met by increasing the number of physicians trained in the state. The commenter stated that CMS should give preferential consideration to states that are historically underserved by the Medicare GME program and states that have a large Medicare population.
A commenter stated that CMS should prioritize the distribution of new resident slots to essential hospitals. The commenter stated that essential hospitals are committed to training the next generation of health professionals and equipping them with the necessary skills to provide culturally and linguistically competent care to all populations, including underrepresented and marginalized people. The commenter stated that because essential hospitals play such a unique and critical role in preparing
With respect to prioritizing by eligibility category such that the more eligibility categories the hospital meets the higher its prioritization, we do not believe that this methodology would provide a sufficient level of prioritization since our experience with section 126 to date indicates that many applicants would meet two or three out of the four eligibility categories.
While we agree with the comment suggesting that training residents in medical education hubs, located in densely populated and diverse urban areas, allows residents to gain experience caring for a diverse set of patients and promotes an understanding of cultural complexities necessary for well-rounded patient care, we believe that such a methodology would be limited in that it does not fully consider the advantages of training residents in rural areas.
With respect to making a program whole in round 5 of section 126 if it did not receive all of the slots it was eligible for under section 4122, we do not believe there is any statutory language precluding a hospital from applying for unfilled slots under round 5 of section 126 if it applied for that same program under section 4122.
With respect to prioritizing geographically rural hospitals for the distribution of slots under section 4122, while our goal is to support rural hospitals in applying for additional slots under section 4122, we do not believe we have the authority to distinguish between geographically rural hospitals and hospitals that have reclassified as rural when awarding slots since the statute considers both types of hospitals to be Category One hospitals.
In response to the recommendation that CMS account for areas of high maternal mortality and areas with high rates of sickle cell diseases and other hemoglobinopathies in its prioritization, we agree that these geographic and population groups would benefit from an increased supply of physicians. We are currently unaware of a nationally defined measure that we could incorporate into the HPSA methodology to distribute any slots remaining after the pro-rata distribution of slots, and we welcome feedback on any available measures.
Lastly, we support the general goal of increasing residency training at essential hospitals and safety-net hospitals since they are often the primary means of accessing healthcare for underserved members of the population. However, a lack of a specific, generally accepted, and existing definition of an “essential hospital” or “safety-net hospital” for purposes of GME makes it challenging to concretely incorporate these concepts currently into slot distributions under section 4122.
After the consideration of the comments received, and for the reasons discussed above, we are finalizing our proposal without modification to prioritize the distribution of any remaining slots under section 4122 by HPSA score. Specifically, if any slots remain after awarding up to 1.00 FTE to each qualifying hospital, we will prioritize the distribution of the remaining slots by the HPSA score associated with the program for which the hospital is applying. Primary care and mental-health-only geographic HPSAs are applicable for this prioritization. If a hospital is applying using a mental-health-only HPSA, it must apply for slots for a psychiatry program or a subspecialty of psychiatry. We continue to welcome comments from the GME community related to an alternative means for distributing slots under section 126 and for potential future slot distributions.
Section 1886(h)(10)(C)(iii) of the Act requires that if a hospital that receives an increase in the otherwise applicable resident limit under section 1886(h)(10) of the Act would be eligible for an adjustment to the otherwise applicable resident limit for participation in a new medical residency training program under 42 CFR 413.79(e)(3) (or any successor regulation), the hospital shall ensure that any positions made available under this paragraph are used to expand an existing program of the hospital, and not be utilized for new medical residency training programs. Under the regulations at 42 CFR 413.79(e)(3), a rural hospital may receive an increase to its cap for participating in training residents in a new program, which is effective after a 5-year cap-building period for that new program. We note that if a rural hospital were to receive a cap increase for a new program under the 5-year cap-building period as well as a cap increase for the new program under section 4122 of the CAA, 2023, there may be duplicative awarding of cap slots for the same program. Therefore, we proposed to implement section 1886(h)(10)(C)(iii) of the Act by allowing rural hospitals to apply for slots to expand an existing program, but not for slots to begin a new program. We proposed that this policy apply to both geographically rural hospitals and hospitals that have reclassified as rural under 42 CFR 412.103, since both groups of hospitals are considered rural under section 1886(h)(10)(B)(ii)(I), which we refer to as Category One hospitals. Only geographically urban hospitals that have not reclassified as rural under 42 CFR 412.103 would be permitted to apply for slots to begin a new program.
In this section we present a summary of the public comments and our responses related to the requirement that if a hospital is eligible for a cap increase under 42 CFR 413.79(e)(3) (or any successor regulation), the hospital may only apply for section 4122 slots to expand an existing program.
A commenter stated that they support CMS' proposal that if a hospital is eligible for a cap adjustment for participation a new program (as is the case for rural hospitals and hospitals that have reclassified as rural), the hospital can only use awarded slots to expand an existing program and not for
Another commenter stated that they disagree with CMS' proposed limitation on rural reclassified hospitals to apply only for slots to expand an existing program, but not for slots to begin a new program. The commenter stated that while they concur with the potential overlap of cap adjustments for geographically rural hospitals, rural reclassified hospitals cannot generate cap slots for DGME under the regulations at 42 CFR 413.79(e)(3). The commenter encouraged CMS to allow rural reclassified hospitals to apply for new program slots, but to limit their application to only DGME slots, similar to the current methodology employed for section 126.
After consideration of the comments received, we are finalizing our policy as proposed without modification; that is, both geographically rural hospitals and hospitals that have reclassified as rural may apply for section 4122 slots for a program expansion, however, they may not apply for slots for a new program. We are not extending this policy to section 126 because the statutory language that is explicit in section 4122 is not included in section 126. We note that under both provisions, any hospital that is applying for slots for a new program must make sure that the slots for which they are applying are not duplicative of slots they will receive under the normal 5-year cap-building process.
Section 1886(h)(10)(B)(ii) of the Act requires the Secretary to distribute at least 10 percent of the aggregate number of total residency positions available to each of the following categories of hospitals discussed earlier. Given our experience with distributing slots under section 126 of the CAA, 2021, we expect many hospitals will meet the qualifications of more than one category. We proposed to collect information regarding qualification for all four categories in the distribution of slots under section 4122 of the CAA, 2023, to allow us to confirm that we have met this statutory requirement. Like the CAA, 2023 provision, section 1886(h)(9)(B)(ii) of the Act from 2021 also requires the Secretary to distribute at least 10 percent of the aggregate number of total residency positions available to the same four categories of hospitals. Section 126 of the CAA, 2021, makes available 1,000 residency positions and therefore, at least 100 residency positions must be distributed to hospitals qualifying in each of the four categories. In the final rule implementing section 126 of the CAA, 2021, we stated we would track progress in meeting all statutory requirements and evaluate the need to modify the distribution methodology in future rulemaking (86 FR 73441).
To date, we have completed the distribution of residency slots under rounds 1 and 2 of the section 126 distributions (refer to CMS' DGME web page for links to the round 1 and 2 awards:
As discussed in the final rule implementing section 126 of the CAA, 2021, an applicant hospital qualifies under Category Four if it participates in training residents in a program in which the residents rotate for at least 50 percent of their training time to a training site(s) physically located in a primary care or mental-health-only geographic HPSA. Specific to mental-health-only geographic HPSAs, the program must be a psychiatric or a psychiatric subspecialty program (86 FR 73430). Given that only 12.76 DGME slots and 18.06 IME slots have been distributed to hospitals qualifying under Category Four, we proposed an amendment to our prioritization methodology for rounds 4 and 5 of section 126 of the CAA, 2021, to ensure that at least 100 residency slots are distributed to these hospitals. We did not propose an amendment to our prioritization methodology for round 3 because the application period for round 3 runs from January 9, 2024 to March 31, 2024, prior to the date any proposals in this rule might be finalized.
Our current methodology for distributing residency slots under section 126 prioritizes slot awards based on the HPSA score associated with the program for which the hospital is applying, with higher scores receiving priority (86 FR 73434 through 73440). We proposed that in rounds 4 and 5 of section 126 of the CAA, 2021, we would prioritize the distribution of slots to hospitals that qualify under Category Four, regardless of HPSA score. The remaining slots awarded under rounds 4 and 5 would be distributed using the existing methodology based on HPSA score (86 FR 73434 through 73440). That is, the remaining slots would be distributed to hospitals qualifying under Category One, Category Two, or Category Three, or hospitals that meet the definitions of more than one of these categories, based on the HPSA score
In this section we present a summary of the public comments and our responses related to (1) distributing at least 10 percent of the aggregate number of total residency positions available to each of the four eligibility categories under section 4122 of the CAA, 2023; and (2) prioritizing the distribution of slots to hospitals that qualify under Category Four, regardless of HPSA score, for rounds 4 and 5 of section 126 of the CAA, 2021.
Commenters stated that they were similarly concerned with CMS' proposal to prioritize hospitals serving HPSAs for rounds 4 and 5 of section 126. The commenters urged CMS to prioritize slot distribution based solely on the four categories included in the law because they believe such an approach was consistent with the statute, which would be less burdensome, and offer a much clearer metric for qualifying hospitals.
A few commenters suggested CMS prioritize applications from geographically rural hospitals regardless of HPSA score. One commenter stated that they appreciate CMS' careful tracking of the round 1 and 2 slot distributions related to section 126 of the CAA, 2021. The commenter stated that while it is unfortunate that Category Four hospitals did not have their slots filled during rounds 1 or 2, the commenter is broadly supportive of CMS' proposed amendment to their prioritization methodology for rounds 4 and 5. However, the commenter stated that although they support the proposal to prioritize Category Four hospitals, the current HPSA methodology limits the ability of many geographically rural hospitals to receive slots, as their HPSA scores are not high enough or they are not located in a HPSA. The commenter stated that to better align with legislative intent going forward, CMS should consider updating its definition of rural to align with other CMS-defined criteria (all people and territory in an area with less than 50,000 people) and using that parameter to allocate at least 10 percent of slots to rural areas, regardless of HPSA score. The commenter stated that they applaud the work CMS has undertaken in recent years to promote health and health equity in rural and underserved communities and believe this change would support goals of delivering better care where patients most need it. The commenter stated that evidence indicates that physicians typically practice within 100 miles of their residency program and therefore, the distribution of trainees in large academic hospitals leads to physician shortages in medically underserved and rural areas. The commenter stated that family medicine is also facing a particularly critical workforce shortage and directing Medicare GME resources to underserved areas is an essential strategy for advancing health equity.
A commenter stated that the requirement that 10 percent of slots go to each of the four categories of qualifying hospitals helps to ensure appropriate distribution of training slots to the communities that need them, however, this goal should not be undermined by a policy design that results in positions being unallocated if there are insufficient applicants in a given category. The commenter stated they appreciate CMS modifying its methodology from the CAA 2021 to address this issue and they urge CMS to ensure that the policy finalized allows all funded slots to be distributed to programs. The commenter stated that they encourage CMS to perform a meaningful estimate of the future distribution of available slots to help ensure that another “catch-up” change in priorities is not needed and hospitals have a consistent and clear metric for applying for new slots.
Similarly, we are not considering updating our definition of “rural” for purposes of distributing slots under future rounds of section 126, as suggested by a commenter. The definition of rural that we use to implement section 126 is consistent with how that term is defined in the context of the Medicare statute, specifically section 1886(h)(9)(B)(ii)(I) of the Act, as added by section 126, which refers to the definition of a rural area at section 1886(d)(2)(D) of the Act. Furthermore, as we stated in the December 27, 2021
In response to the comment recommending that CMS ensure the policy finalized allows all funded slots to be distributed and that CMS perform a meaningful estimate of the future distribution of available slots to help ensure that another change in priorities is not needed, we note that the requirement to distribute at least 10 percent of slots of hospitals in each eligibility category is statutory and we must therefore consider amending our distribution process if we anticipate that this requirement will not be met. However, as stated earlier, the section 4122 distribution methodology as finalized in this rule includes two processes for distributing slots and we do not believe we need to consider any further adjustments to the finalized methodologies at this time.
As noted above, in order to check Category Four eligibility, we verified the HPSAs each awardee selected to use for prioritization of their application with the HPSA Public ID and Score Information included on CMS' DGME website and the HPSA Find tool at
Information regarding progress towards meeting the 10 percent requirement for each category will be available on the CMS DGME website.
The commenters stated that the statute requires that 10 percent of the aggregate number of residency slots must go to each of the four eligible hospital categories, however, CMS' prioritization disproportionately impacts states like New Jersey in which the HPSA designation is not an accurate reflection of patient access to care. The commenters stated that as of March 2023, New Jersey has only one geographic HPSA and no population HPSAs while by comparison, it has 32 medically underserved areas and 5 medically underserved populations. The commenters urged CMS to prioritize slot distribution based solely on the four categories included in the law but if the agency chooses to continue the practice of super-prioritization for round 3, the commenter requested that CMS either: (a) make exceptions for all-urban states for which a HPSA score is not an accurate measure of patient access; or (b) use a substitute measure that considers the unique population characteristics of those states. A commenter stated that they believe CMS' contention that it is satisfying Congressional intent is misplaced and instead CMS achieved a minimum 10 percent in three categories by coincidence, rather than the intent to prioritize hospitals across each of the four enumerated categories. The commenter stated that they urge CMS to reassess its HPSA prioritization and rebalance its methodology for assessing resident cap slot applications prior to the awarding of round 3 slots.
A commenter stated that CMS not meeting the 10 percent statutory requirement for Category Four is likely due to CMS prioritizing applications based on both population and geographic HPSA scores. The commenter stated that in many cases it is easier to achieve a higher population HPSA score compared to a geographic HPSA score, therefore hospitals with a high HPSA score that have received slots are not serving a geographic HPSA because of how CMS is prioritizing applications. A few commenters stated that 7 geographically rural hospitals have received slots in the first two rounds of distribution of section 126 and that in the second round, only 3 programs that received slots trained for more than 50 percent of the time in a CMS or Federal Office of Rural Health Policy designated rural area. The commenters stated that these two programs include 2 geographically rural hospitals and 1 urban hospital serving as an urban partner in a Rural Track Program. The commenters stated that this analysis implies that reclassified hospitals are making up the bulk of those that receive slots set aside for rural hospitals. The commenters stated that limiting the rural set aside to geographically rural hospitals would align with the legislative intent of section 126 and the commenter stated they are committed to working with Congress and CMS on ensuring that rural hospitals receive future slots.
After consideration of the comments received, we are finalizing our policy as proposed with respect to prioritizing hospitals that qualify under Category Four regardless of HPSA score for rounds 4 and 5 of section 126, without modification. The remaining slots awarded under rounds 4 and 5 will be distributed using the existing methodology based on HPSA score (86 FR 73434 through 73440). That is, the remaining slots will be distributed to hospitals qualifying under Category One, Category Two, or Category Three, or hospitals that meet the definitions of more than one of these categories, based on the HPSA score associated with the program for which each hospital is applying.
For section 126 of the CAA, 2021, we previously finalized a policy that all applicant hospitals be required to attest that they meet the National Standards for Culturally and Linguistically Appropriate Services in Health and Health Care (the National CLAS Standards) (86 FR 73441). This was to ensure that the section 126 distribution broadened the availability of quality care and services to all individuals, regardless of preferred language, cultures, and health beliefs. We stated in the final rule that the National CLAS standards are aligned with the Administration's commitment to addressing healthcare barriers, which include that residents are educated and trained in culturally and linguistically appropriate policies and practices. This continues to be the case today. Therefore, we proposed the same requirement for section 4122 of the CAA, 2023, that we adopted for section 126 of the CAA, 2021, for the same reason. Specifically, we proposed that in order to ensure that residents are educated and trained in culturally and linguistically appropriate policies and practices, all applicant hospitals for slots allocated under section 4122 of the CAA, 2023, would be required to attest that they meet the National CLAS Standards to ensure that the section 4122 distribution broadens the availability of quality care and services to all individuals, regardless of preferred language, cultures, and health beliefs. (For more information on the CLAS standards, please refer to
We did not receive any public comments related to our proposal that all applicant hospitals be required to attest that they meet the National Standards for Culturally and Linguistically Appropriate Services in Health and Health Care (the National CLAS Standards). We are finalizing this policy as proposed.
Section 1886(h)(10)(D) requires that CMS pay a hospital for additional positions awarded under this paragraph using the hospital's existing direct GME nonprimary care PRAs consistent with the regulations at § 413.77. We note that as specified in section 1886(h)(2)(D)(ii) of the Act, for cost reporting periods beginning on or after October 1, 1993, through September 30, 1995, each hospital's PRA for the previous cost reporting period was not updated for inflation for any FTE residents who were not either a primary care or an obstetrics and gynecology resident. As a result, hospitals with both primary care and obstetrics and gynecology residents and nonprimary care residents in FY 1994 or FY 1995 have two separate PRAs: one for primary care and obstetrics and gynecology and one for nonprimary care. Those hospitals that only trained primary care and/or obstetrics and gynecology residents and those that did not become teaching hospitals until after this 2-year period, have a single PRA for direct GME payment purposes. Therefore, we proposed that for purposes of direct GME payments for section 4122 of the CAA, 2023, if a hospital has both a primary care and obstetrics and gynecology PRA and a nonprimary care PRA, the nonprimary care PRA will be used, and if a hospital has a single PRA, that PRA will be used. Furthermore, similar to the policy finalized for purposes of direct GME payments under section 126 of the CAA, 2021 (86 FR 73441), we proposed that a hospital that receives additional positions under section 4122 of the CAA, 2023, would be paid for the FTE residents counted under those positions using the PRAs for which payment is made for FTE residents subject to the 1996 FTE cap. We expect to revise Worksheet E-4 to add a line on which hospitals will report the number of FTEs by which the hospital's FTE caps were increased for direct GME positions received under section 4122 of the CAA, 2023.
We did not receive any public comments related to our proposal for payment of additional FTE residency positions awarded under section 4122 of the CAA, 2023. We are finalizing this policy as proposed.
Section 1886(h)(10)(E) of the Act states that the Secretary shall permit hospitals receiving additional residency positions attributable to the increase provided under 1886(h)(10) to, beginning in the fifth year after the effective date of such increase, apply such positions to the limitation amount under paragraph (4)(F) that may be aggregated pursuant to paragraph (4)(H) among members of the same affiliated group. Therefore, we proposed that FTE resident cap positions added under section 4122 of the CAA, 2023, may be used in a Medicare GME affiliation agreement beginning in the 5th year after the effective date of the FTE resident cap positions consistent with the regulations at 42 CFR 413.75(b) and 413.79(f). We proposed to amend paragraph (8) at 42 CFR 413.79(f) to state that FTE resident cap slots added under section 4122 of Public Law 117-328 may be used in a Medicare GME affiliation agreement beginning in the fifth year after the effective date of those FTE resident cap slots.
We did not receive any public comments related to our proposal for the aggregation of additional FTE residency positions awarded under section 4122 of the CAA, 2023. We are finalizing this policy as proposed.
Section 4122 of the CAA, 2023, under subsection (b), amends section 1886(d)(5)(B) of the Act to provide for increases in FTE resident positions for IME payment purposes. Specifically, subsection (b) adds a new section 1886(d)(5)(B)(xiii) of the Act, which states that for discharges occurring on or after July 1, 2026, if additional payment is made for FTE resident positions distributed to a hospital for direct GME purposes under section 1886(h)(10) of the Act, the hospital will receive IME payments based on the additional residency positions awarded using the same IME adjustment factor used for the hospital's other FTE residents. We proposed conforming amendments to the IME regulations at 42 CFR 412.105(f)(1)(iv)(C)(4) to specify that effective for portions of cost reporting periods beginning on or after July 1, 2026, a hospital may qualify to receive
We also proposed to amend our regulations at 42 CFR 413.79 by adding a paragraph (q) to specify that for portions of cost reporting periods beginning on or after July 1, 2026, a hospital may receive an increase in its otherwise applicable FTE resident cap (as determined by CMS) if the hospital meets the requirements and qualifying criteria under section 1886(h)(10) of the Act and if the hospital submits an application to CMS within the timeframe specified by CMS.
We did not receive any public comments on our proposal related to the conforming amendments for 42 CFR 412.105 and 42 CFR 413.79. We are finalizing this policy as proposed.
Section 4122 of the CAA, 2023, under subsection (c), prohibits administrative and judicial review of actions taken under section 1886(h)(10) of the Act. Specifically, subsection (c) amends section 1886(h)(7)(E) of the Act by inserting “paragraph (10),” after “paragraph (8),” adding to the that paragraph to the list of residency distributions not subject to review. Therefore, we proposed that the determinations and distribution of residency positions under sections 1886(d)(5)(B)(xiii) and 1886(h)(10) of the Act would be final and could not be subject to administrative or judicial review.
We did not receive any comments related to our proposal on the prohibition on administrative or judicial review. We are finalizing this policy as proposed.
All qualifying hospitals seeking increases in their FTE resident caps must submit timely applications for this distribution by March 31, 2025. The completed application must be submitted to CMS using an online application system, the Medicare Electronic Application Request Information System
We proposed that the following information be submitted as part of an application for the application to be considered complete:
• The name and Medicare provider number (CCN) of the hospital.
• The name of the Medicare Administrative Contractor to which the hospital submits its Medicare cost report.
• The residency program for which the hospital is applying to receive an additional position(s).
• FTE resident counts for direct GME and IME and FTE resident caps for direct GME and IME reported by the hospital in the most recent as-filed cost report. (Including copies of Worksheet E, Part A, and Worksheet E-4).
• If the hospital qualifies under “Demonstrated Likelihood” Criterion 1 (New Residency Program), which of the following applies:
++ Application for accreditation of the new residency program has been submitted to the Accreditation Council for Graduate Medical Education (ACGME) (or application for approval of the new residency program has been submitted to the American Board of Medical Specialties (ABMS)) by March 31, 2025.
++ The hospital has received written correspondence from the ACGME (or ABMS) acknowledging receipt of the application for the new residency program, or other types of communication concerning the new program accreditation or approval process (such as notification of a site visit) by March 31, 2025.
• If the hospital qualifies under “Demonstrated Likelihood” Criterion 2 (Expansion of an Existing Residency Program), which of the following applies:
++ The hospital has received approval by March 31, 2025 from an appropriate accrediting body (the ACGME or ABMS) to expand the number of FTE residents in the program.
++ The hospital has submitted a request by March 31, 2025 for a permanent complement increase of the existing residency training program.
++ The hospital currently has unfilled positions in its residency program that have previously been approved by the ACGME and is now seeking to fill those positions.
• Indication of the categories under section 1886(h)(10)(F)(iii) of the Act under which the hospital believes itself to qualify:
++ (I) The hospital is located in a rural area (as defined in section 1886(d)(2)(D) of the Act) or is treated as being located in a rural area (pursuant to section 1886(d)(8)(E) of the Act).
++ (II) The reference resident level of the hospital (as specified in section 1886(h)(10)(F)(iv) of the Act) is greater than the otherwise applicable resident limit.
++ (III) The hospital is located in a State with a new medical school (as specified in section 1886(h)(10)(B)(ii)(III)(aa) of the Act), or with additional locations and branch campuses established by medical schools (as specified in section 1886(h)(10)(B)(ii)(III)(bb) of the Act) on or after January 1, 2000.
++ (IV) The hospital serves an area designated as a HPSA under section 332(a)(1)(A) of the Public Health Service Act, as determined by the Secretary.
• The HPSA (if any) served by the residency program for which the hospital is applying and the HPSA ID for that HPSA.
• An attestation, signed and dated by an officer or administrator of the hospital who signs the hospital's Medicare cost report, stating the following:
“I hereby certify that the hospital is a Qualifying Hospital under section 1886(h)(10)(F)(iii) of the Social Security Act, and that there is a “demonstrated likelihood” that the hospital will fill the position(s) made available under section 1886(h)(10) of the Act within the first 5 training years beginning after the date the increase would be effective.”
“I hereby certify that (choose if applicable):
__If my application is for a currently accredited residency program, the number of full-time equivalent (FTE) positions requested by the hospital does not exceed the number of positions for which the program is accredited.
__If my hospital currently has unfilled positions in its residency program that have previously been approved by the ACGME, the number of FTE positions requested by the hospital does not exceed the number of previously approved unfilled residency positions.
__If my application is for a residency training program with more than one participating site, I am only requesting the FTE amount that corresponds with the training occurring at my hospital, and any FTE training occurring at nonprovider settings consistent with 42 CFR 412.105(f)(1)(ii)(E) and 413.78(g).”
“I hereby certify that the hospital agrees to increase the number of its residency positions by the amount the hospital's FTE resident caps are increased under section 4122 of Subtitle C of the Consolidated Appropriations Act, 2023, if awarded positions under section 1886(h)(10)(C)(ii) of the Act.”
“I hereby certify that (choose one):
__In the geographic HPSA the hospital is requesting that CMS use for prioritization of its application, at least 50 percent of the program's training time based on resident rotation schedules (or similar documentation) occurs at training sites that treat the population of the HPSA and are physically located in the HPSA.
__In the population HPSA the hospital is requesting that CMS use for prioritization of its application, at least 50 percent of the program's training time based on resident rotation schedules (or similar documentation) occurs at training sites that treat the designated underserved population of the HPSA and are physically located in the HPSA.
__In the geographic HPSA the hospital is requesting that CMS use for prioritization of its application, at least 5 percent of the program's training time based on resident rotation schedules (or similar documentation) occurs at training sites that treat the population of the HPSA and are physically located in the HPSA, and the program's training time at those sites plus the program's training time at Indian or Tribal facilities located outside of the HPSA is at least 50 percent of the program's training time.
__In the population HPSA the hospital is requesting that CMS use for prioritization of its application, at least 5 percent of the program's training time based on resident rotation schedules (or similar documentation) occurs at training sites that treat the designated underserved population of the HPSA and are physically located in the HPSA, and the program's training time at those sites plus the program's training time at Indian or Tribal facilities located outside of that HPSA is at least 50 percent of the program's training time.
__None of the above apply.”
“I hereby certify that the hospital meets the National Standards for Culturally and Linguistically Appropriate Services in Health and Health Care (the National CLAS Standards).”
“I hereby certify that I understand that misrepresentation or falsification of any information contained in this application may be punishable by criminal, civil, and administrative action, fine and/or imprisonment under Federal law. Furthermore, I understand that if services identified in this application were provided or procured through payment directly or indirectly of a kickback or where otherwise illegal, criminal, civil, and administrative action, fines and/or imprisonment may result. I also certify that, to the best of my knowledge and belief, it is a true, correct, and complete application prepared from the books and records of the hospital in accordance with applicable instructions, except as noted. I further certify that I am familiar with the laws and regulations regarding Medicare payment to hospitals for the training of interns and residents.”
The completed application must be submitted to CMS using the online application system MEARIS
We note that if the hospital is applying using a HPSA ID, the HPSA score associated with that ID will automatically populate in the application module. In preparing their applications for additional residency positions, hospitals should refer to HRSA's Find Shortage Areas by Address (
The information will also be posted on the CMS website at:
However, we did receive comments asking CMS to provide guidance regarding the interaction between round 4 of section 126 of the CAA, 2021 and section 4122 of the CAA, 2023, since slots for both of these provisions will be effective July 1, 2026. Specifically, commenters asked whether a hospital may: (1) apply for an increase through section 126 round 4 and section 4122; and (2) apply for increases in the same residency program for both section 126 round 4 and section 4122. Another commenter asked whether the same provider site could apply for pediatrics FTE(s) under section 4122 and internal medicine FTE(s) under round 4 of section 126. The commenter asked, if such an application is allowed, whether there would be any impact in prioritization in dual applications.
Section 1886(h)(4)(H)(i) of the Act requires CMS to establish rules for applying the direct GME cap in the case of medical residency training programs established on or after January 1, 1995. Under section 1886(d)(5)(B)(viii) of the Act, this provision also applies for purposes of the IME adjustment. Accordingly, we issued regulations at §§ 413.79(e)(1) through (3) discussing the direct GME cap calculation for a hospital that begins training residents in a new medical residency training program(s) on or after January 1, 1995. The same regulations apply for purposes of the IME cap calculation at § 412.105(f)(1)(vii). CMS implemented these statutory requirements in the August 29, 1997
Section 413.79(l) defines a new medical residency training program as “a medical residency that receives initial accreditation by the appropriate accrediting body or begins training residents on or after January 1, 1995.” In the August 27, 2009
• The residents are new, and
• The program director is new, and
• The teaching staff are new.
Over the years, we have received questions regarding the application of these criteria, such as whether CMS would still consider a program to be new for cap adjustment purposes if the three criteria were partially, but not fully, met. We have answered such questions by stating that, generally, a residency program's newness would not be compromised as long as the “overwhelming majority” of the residents or staff are not coming from previously existing programs in that same specialty.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36221), the question of what constitutes a “new” program for purposes of receiving additional Medicare-funded GME slots has taken on increasing significance in light of the ability of urban hospitals to reclassify as rural under 42 CFR 412.103 for IME purposes, and thus receive additional IME cap slots for any new program started. In the proposed rule, we stated that, to continue to ensure that newly funded cap slots are created appropriately, we ultimately would like to establish in rulemaking additional criteria for determining program newness. However, we also indicated that we were not yet certain about some of the criteria that should be proposed. Therefore, we proposed a policy for determining whether the residents in a program are genuinely new, while we solicited comments through a Request for Information (RFI) to gain additional clarity on best practices in other areas.
We received many comments in response to our proposed criterion for ensuring newness of residents, and to our RFIs regarding criteria for program directors, teaching staff, and other issues such as commingling of residents. With regard to the RFIs, we will carefully consider comments received and will take them into account for future rulemaking. We acknowledge that the vast majority of commenters opposed any restrictions on the program director, faculty, comingling of residents, and one hospital sponsoring two programs in the same specialty.
Regarding our proposed criterion for ensuring newness of residents, we received many wide-ranging comments and commenters did not arrive at a consensus on the best approach to this issue. Accordingly, at this time, we are not finalizing our proposal that at least 90 percent of the individual resident trainees (not FTEs) must not have previous training in the same specialty as the new program. Instead, in an effort to achieve greater consensus on this issue, we are initiating another RFI particularly focused on the criterion regarding newness of residents. Commenters should review and consider all of the comments summarized below when formulating responses to this RFI. We look forward to receiving additional feedback from commenters after they have had the opportunity to review the comments and suggestions of others.
Generally, when a hospital is creating a new residency program, it recruits individuals that have recently graduated from medical school, have no previous residency training experience, and would be entering the program as first year (PGY1) residents. However, new programs sometimes receive inquiries from applicants that have training experience already, but for a variety of reasons need to transfer to another program. If the program that such a resident wishes to join is still within the 5-year cap building period, then, consistent with the criteria adopted in the August 27, 2009 final rule, the program director of this “new” program should be judicious with regard to accepting residents who have received previous training in the same specialty. In order to maintain the classification as a “new” residency program, the “overwhelming majority” of residents in the program must be new. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36222), we stated that we believe it would be useful for the provider community to have a concrete standard to refer to in determining whether the “overwhelming majority” of residents in a program are in fact new. Therefore, we proposed that, in order for a residency program to be considered new, at least 90 percent of the individual resident trainees (not FTEs) must not have previous training in the same specialty as the new program. For example, if there were 50 trainees (not FTEs) entering the program over the course of the 5-year cap building period, then at least 45 of the trainees (90 percent of 50) must enter the program as brand new first year residents in that particular specialty. If more than 10 percent of the trainees (not FTEs) transferred from another program at a different hospital/sponsor in the same specialty, even during their first year of training, we proposed that this would render the program ineligible for new cap slots. (We noted that we would apply standard rounding when 90 percent of a number does not equal a whole number, rounding down to the nearest whole number when the remainder is less than 0.5, and rounding up to the nearest whole number when the remainder is 0.5 or above. For example, if there were 48 trainees (not FTEs) entering the program over the course of the 5-year cap building period, then at least 43 of the trainees (90 percent of 48 = 43.2, which rounds down to 43) must enter the program as brand new first year residents in that particular
For example, if a new program is in internal medicine, then, under our proposal, at least 90 percent of the entering residents must
We proposed a threshold of 90 percent for new residents as that is generally consistent with the concept of an “overwhelming majority,” and because we have precedent for such a threshold in the regulations for section 5506 of the Affordable Care Act, which state that a hospital is considered to have taken over an “entire” program from a closed hospital if it can demonstrate that it took in 90 percent or more of the FTE residents in that program. Accordingly, for a program to be considered “new” for the purpose of determining if a hospital can receive additional direct GME and/or IME cap slots for that program, we proposed that at least 90 percent of the individual resident trainees (not FTEs) in the program as a whole must not have had previous training in the same specialty as the new program. If more than 10 percent of the trainees (not FTEs) transferred from another program at a different hospital/sponsor in the same specialty, even during their first year of training, we proposed that this would render the program as a whole (but not the entire hospital or its other new programs, if applicable) ineligible for new cap slots.
In addition, we stated in the proposed rule that we understand that there may be certain challenges that are unique to small or rural-based programs in developing new residencies, and that meeting a proposed threshold of 90 percent of resident trainees with no previous training experience in the specialty may be more difficult for those programs. Accordingly, we solicited comments on what should be considered a “small” program and what percentage threshold or other approach regarding new resident trainees should be applied to these programs. We also solicited comment on defining a small residency program as a program accredited for 16 or fewer resident positions, because 16 positions would encompass the minimum number of resident positions required for accredited programs in certain specialties, such as primary care and general surgery, that have historically experienced physician shortages, and therefore have been prioritized by Congress and CMS for receipt of slots under sections 5503 and 5506 of the Affordable Care Act.
Several commenters expressed general opposition to our proposal, and to the suggestions presented in our Requests for Information, stating that these policies would be administratively burdensome, ineffective at preventing the transfer of existing programs or the duplication of FTE cap slots, and detrimental to graduate medical education in general and in particular to small and rural residency programs. Other commenters, while supportive in principle of the need for implementing more concrete standards, nevertheless expressed concern that any new guidelines should not adversely affect the educational quality of new programs or impede the establishment of new programs, which are critical to addressing workforce shortages. Furthermore, a number of commenters generally opposed the consideration of individuals' prior training or employment history in the determination of program newness, stating that these factors are extraneous to CMS's central concerns about whether a program has been transferred and whether FTE cap slots may have been duplicated. Commenters also argued that many of the issues addressed in the proposed rule and suggested policies, including the transfer of residents and recruitment of faculty and program directors, are already regulated by entities such as the ACGME, the ABMS, and the National Resident Matching Program (NRMP), and urged CMS to defer to the judgment and expertise of those organizations. For example, several commenters recommended that CMS generally defer to the assessment of the accrediting body and that the determining question in establishing newness should be whether the program has received initial accreditation for the first time from the ACGME. In addition to receiving initial accreditation for the first time from the ACGME, some commenters suggested that CMS could address its concerns if it undertook a “cursory overview” of the program and/or required an attestation from the hospital that the program has not been transferred and that it does not duplicate FTE cap slots associated with an existing program.
A few commenters supported our proposal that at least 90 percent of FTE residents must not have previous training in the same specialty as the new program, stating that this policy would ensure that cap adjustments are granted to genuinely new programs while still providing for the limited inclusion of experienced residents. In addition, several commenters expressed support for our proposed 90 percent threshold, but recommended that we make exceptions for small or mid-sized programs and for circumstances outside of a hospital's control (for example, situations in which departing residents are replaced by transfers from an existing program).
A few commenters recommended that newness of residents should be established if the program fills most resident positions at the PGY 1 level via a separate and distinct recruiting process (as evidenced, for example, by separate NRMP match numbers, or for fellowships, an applicable distinct process). However, commenters stressed that CMS should not penalize hospitals that attempt to fill PGY 1 positions via the National Resident Matching Program (NRMP), but that may need to fill positions in a different manner due to the results of the Match. Commenters
A few commenters supported the approach of defining a minimum threshold for new residents, but recommended adopting a more lenient standard, such as 75 percent or 70 percent, whereas other commenters recommended that our proposed 90 percent threshold should apply only to residents in their first year of training (that is, PGY 1). Alternatively, some commenters suggested that, in order to address the concern about the transfer of existing programs (or “cannibalism”), CMS should focus on limiting the number of residents who all come from the same existing residency program. In addition, some commenters argued that the presence of experienced residents should not disqualify a program from being deemed new, but suggested that those residents could be excluded from the program's FTE cap calculation.
Several commenters also requested that CMS clarify the methodology for determining the proportions of new and experienced residents, with some commenters specifically recommending that CMS make this calculation based on a count of all residents training over the course of the entire five-year cap-building period. Another commenter recommended that if CMS adopts a new resident threshold, it should count residents on the basis of FTEs rather than individual trainees as proposed, since a program's count could be skewed by enrolling a high proportion of partial FTEs. A few commenters also requested confirmation that fellows in subspecialty programs, residents who have completed transitional or preliminary year programs, and residents from closed programs would not be considered to have prior experience training in the same specialty.
A number of commenters suggested alternative methods for assessing program newness that do not depend on the proportion of residents without previous experience training in the same specialty. Some commenters suggested that CMS consider the relationship between the “new” program and the program that appears to have been transferred or duplicated. For example, if the original program remains open for a minimum of one full academic year, then the second program should be considered genuinely “new.”
A commenter recommended that CMS adopt a “totality of circumstances” approach in which we would assess various aspects of the program, such as its age and whether it has existed previously at another site, rather than focusing on rigid individual metrics. Another commenter stated that CMS should apply a “reasonable person” standard in determining whether a program is genuinely new. In addition, a few commenters stated that if CMS were to implement the proposed 90 percent threshold, then a program that fails to meet the threshold should be given the opportunity to demonstrate newness by other means, and that CMS should also consider mitigating factors such the size of the program or matched residents who did not disclose prior training experiences.
In addition to the specific recommendations discussed above, commenters generally expressed concern that any criteria adopted should be objective, transparent and administratively feasible, especially given the significant costs and high financial stakes associated with developing a new residency program. A commenter also recommended that CMS should carry out periodic evaluations of newness during a program's five-year cap-building period to ensure that a hospital has time to make any changes necessary to bring the program into compliance.
Commenters generally agreed that CMS should create exceptions to the newness criteria for small and rural programs; several commenters also argued that we should give similar consideration to programs in urban underserved areas. In particular, commenters noted that many small programs would fail to meet our proposed 90 percent threshold if they admitted even one experienced resident. Several commenters also reported that it is common for new rural programs, including Rural Track Programs, to accept a higher proportion of non-PGY 1 residents as a means of “jump starting” the program and promoting stability. A few commenters indicated that small and rural or urban underserved programs should be exempted from any restrictions on the recruitment of experienced residents (as well as on the recruitment of faculty and program directors). Although commenters agreed that our proposed 90 percent new resident threshold would be too strict for such programs, there was no consensus as to a specific standard that would be appropriate: a few commenters recommended a much lower threshold of 25 percent, while others suggested that 50 percent of PGY 1 residents should be new, with no restrictions on non-PGY 1 residents. Several commenters agreed with our suggestion that a small program should be defined as one accredited for 16 or fewer resident positions; however, a few commenters stated that for purposes of determining exceptions to the newness criteria a small program should also be required to train residents for greater than half the time in a rural area or an urban underserved area. Other commenters recommended lower thresholds for defining small programs, with specific suggestions including 12, 10, 6 or 4 positions. A few commenters recommended that the newness of small programs be evaluated on a case-by-case basis, taking into account the totality of a hospital's financial, geographic and other circumstances.
Several commenters stressed that any new policies should only apply to programs that begin training residents after the effective date of the final rule (that is, on or after October 1, 2024), so as not to adversely impact programs currently in their cap-building period.
Some commenters also objected to CMS's administration and interpretation of the newness criteria promulgated in the August 27, 2009
Section 1886(h)(4)(H)(i) of the Act states that the Secretary shall, consistent with the principles of subparagraphs (F) {Initial Residency Period} and (G) {Period of Board Eligibility} and subject to paragraphs (7) {Redistribution of Unused Residency Positions} and (8) {Distribution of Additional Residency Positions}, prescribe rules for the application of such subparagraphs in the case of medical residency training programs established on or after January 1, 1995 (that is, new programs). In promulgating such rules for purposes of subparagraph (F), the Secretary shall give special consideration to facilities that meet the needs of underserved rural areas.
Thus, the Secretary has broad statutory authority to prescribe rules for counting residents in new programs.
As we stated at the beginning of this section, we received many wide-ranging comments and commenters did not arrive at a consensus on the best approach to the issue of the newness of residents. Accordingly, at this time, we are not finalizing our proposal that at least 90 percent of the individual resident trainees (not FTEs) must not have previous training in the same specialty as the new program. Instead, in an effort to achieve greater consensus on this issue, we are initiating another RFI seeking comment on the appropriate criterion regarding newness of residents. Commenters should review and consider the broad statutory authority provided to the Secretary in this area, our prior rulemaking on this issue, and all of the public comments on our proposal as summarized in Section F.3.b of this final rule when formulating responses to this RFI. We look forward to receiving additional feedback from commenters after they have had the opportunity to review the comments and suggestions of others. We also, in the interest of facilitating consensus, encourage commenters to provide feedback on what alternative to their primary recommended approach they would consider to be most acceptable among the different approaches suggested by commenters.
In the course of our ongoing implementation of policies concerning payment for graduate medical education, we have become aware of the existence of several technical errors in the direct GME regulations at 42 CFR 413.75 through 413.83. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36224 through 36225), we proposed to correct the following technical errors:
In the FY 2010 IPPS final rule (74 FR 43918 and 44001, August 27, 2009), we amended 42 CFR 413.79(f) by adding a new paragraph (f)(6) and redesignating existing paragraph (f)(6) as paragraph (f)(7). The new § 413.79(f)(6) sets forth requirements for participation in a Medicare GME affiliated group by a hospital that is new after July 1 and begins training residents for the first time after the July 1 start date of an academic year, while the redesignated § 413.79(f)(7) contains the regulations pertaining to emergency Medicare GME affiliated groups.
We have discovered that, after redesignating the former § 413.79(f)(6) as § 413.79(f)(7), we inadvertently did not update the cross-references to this paragraph at §§ 413.75(b) and 413.78. Accordingly, in the proposed rule, we proposed to revise the language of the definition of “Emergency Medicare GME affiliated group” under § 413.75(b), as well as the language at §§ 413.78(e)(3)(iii) and (f)(3)(iii), by correcting the cross-references to read “§ 413.79(f)(7).”
Under 42 CFR 413.79(h), a hospital may receive a temporary adjustment to its FTE cap to reflect displaced residents added as a result of the closure of another hospital or residency training program. Furthermore, under § 413.79(d)(6)(i) (previously § 413.79(d)(6)), displaced residents counted under a temporary cap adjustment are added to the receiving hospital's FTE count after application of the three-year rolling average for the duration of the time that the displaced residents are training at the receiving hospital.
In the November 24, 2010 final rule (75 FR 72212 through 72238), we implemented the provisions of section 5506 of the Affordable Care Act, which directs the Secretary to redistribute Medicare GME residency slots from teaching hospitals that close after March 23, 2008. A hospital that had previously accepted residents displaced by a teaching hospital closure and received a temporary cap adjustment for training those residents under § 413.79(h) may subsequently apply for a permanent cap increase under section 5506.
As part of the implementation of section 5506, we finalized several ranking criteria to prioritize applications, and specified the dates on which awards would become effective for hospitals that apply under each of those criteria. In particular, we finalized Ranking Criteria One and Three, which describe applicant hospitals that take over, respectively, an entire residency program(s) or part of a residency program(s) from the closed hospital. Consistent with the policy finalized in the November 24, 2010 final rule, a permanent cap increase awarded under Ranking Criterion One or Three would generally override any temporary cap adjustment that the applying hospital may have received under § 413.79(h), with the result that those resident slots would immediately become subject to the three-year rolling average calculation (75 FR 72224).
We also stated, however, that we believed it would still be appropriate to allow a hospital that ultimately would qualify to receive slots permanently under any of the ranking criteria and that took in displaced residents to receive temporary cap adjustments and, in a limited manner, an exemption from the three-year rolling average. Therefore, we finalized a policy that, in the first cost reporting period in which the applying hospital takes in displaced residents and the hospital closure occurs, the applying hospital could receive a temporary cap adjustment and an exemption from the rolling average for the displaced residents. Then, effective beginning with the cost reporting period following the one in which the hospital closure occurred, the applying hospital's permanent cap increase would take effect, and there would be no exemption from the rolling average (75 FR 72225 and 72263).
Therefore, we amended § 413.79(d) by redesignating the existing paragraph (d)(6) as (d)(6)(i) and by adding new (d)(6)(ii), which states stated that if a hospital received a permanent increase in its FTE resident cap under § 413.79(o)(1) due to redistribution of slots from a closed hospital, the displaced FTE residents that the hospital received would be added to the FTE count after applying the averaging rules only in the first cost reporting period in which the receiving hospital trained the displaced FTE residents. In subsequent cost reporting periods, the displaced FTE residents would be included in the receiving hospital's rolling average calculation.
Subsequently, in the FY 2013 IPPS final rule (77 FR 53437 through 53443, August 31, 2012), we finalized revisions to our policy concerning the effective dates of section 5506 cap increases awarded under the various ranking criteria. In particular, we finalized a policy that slots awarded under Ranking Criteria One and Three become effective seamlessly with the expiration of temporary cap adjustments under § 413.79(h) (that is, on the day after the graduation date(s) of the displaced residents). As stated in that final rule, under this revised policy, permanent cap increases under section 5506 would no longer “replace” temporary cap adjustments under § 413.79(h), and exemptions from the three-year rolling average would no longer be suspended as a consequence of the receipt of permanent slots (77 FR 53441).
Under the policy finalized in the FY 2013 IPPS final rule, there is no longer any need for the regulation at § 413.79(d)(6)(ii), which would apply in the situation where a permanent cap increase under section 5506 would otherwise have overridden a temporary cap adjustment for displaced residents under § 413.79(h). Instead, our policy is that displaced residents are excluded
Accordingly, we proposed to amend § 413.79(d)(6) by removing the no longer applicable paragraph (d)(6)(ii), and by redesignating existing (d)(6)(i) as (d)(6).
In the final rule published on December 27, 2021, as part of the implementation of section 127 of the CAA, 2021 (Pub. L. 116-260), we finalized various changes throughout the regulations text at 42 CFR 413.79(k), “Residents training in rural track programs” (86 FR 73445 through 73457 and 73514 through 73515). We have discovered that the final sentence of § 413.79(k)(2)(i), as amended in that rule, incorrectly states, “For Rural Track Programs prior to the start of the urban or rural hospital's cost reporting period that coincides with or follows the start of the sixth program year of the rural track's existence . . .”
The beginning of the quoted sentence should instead refer to “cost reporting periods beginning on or after October 1, 2022,” and should otherwise be analogous to the similar text that appears at § 413.79(k)(1)(i). Accordingly, we proposed to revise § 413.79(k)(2)(i) to read as follows: “For cost reporting periods beginning on or after October 1, 2022, before the start of the urban or rural hospital's cost reporting period that coincides with or follows the start of the sixth program year of the Rural Track Program's existence, the rural track FTE limitation for each hospital will be the actual number of FTE residents training in the Rural Track Program at the urban or rural hospital and, subject to the requirements under § 413.78(g), at the rural nonprovider site(s).”
We did not receive any comments on our proposed technical revisions to the direct GME regulations. Therefore, we are finalizing the changes as proposed without modification.
Section 5506 of the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) (collectively, “Affordable Care Act”), authorizes the Secretary to redistribute residency slots after a hospital that trained residents in an approved medical residency program closes. Specifically, section 5506 of the Affordable Care Act amended the Act by adding subsection (vi) to section 1886(h)(4)(H) of the Act and modifying language at section 1886(d)(5)(B)(v) of the Act, to instruct the Secretary to establish a process to increase the FTE resident caps for other hospitals based upon the full-time equivalent (FTE) resident caps in teaching hospitals that closed on or after a date that is 2 years before the date of enactment (that is, March 23, 2008). In the CY 2011 Outpatient Prospective Payment System (OPPS) final rule with comment period (75 FR 72264), we established regulations at 42 CFR 413.79(o) and an application process for qualifying hospitals to apply to CMS to receive direct GME and IME FTE resident cap slots from the hospital that closed. We made certain additional modifications to § 413.79 in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53434), and we made changes to the section 5506 application process in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50122 through 50134). The procedures we established apply both to teaching hospitals that closed on or after March 23, 2008, and on or before August 3, 2010, and to teaching hospitals that close after August 3, 2010 (75 FR 72215).
CMS has learned of the closure of Sacred Heart Hospital, located in Eau Claire, WI (CCN 520013). Accordingly, this notice serves to notify the public of the closure of this teaching hospital and initiate another round (“Round 23”) of the application and selection process. This round will be the 23rd round (“Round 23”) of the application and selection process. The table in this section of this rule contains the identifying information and IME and direct GME FTE resident caps for the closed teaching hospital, which are part of the Round 23 application process under section 5506 of the Affordable Care Act.
The application period for hospitals to apply for slots under section 5506 of the Affordable Care Act is 90 days following notice to the public of a hospital closure (77 FR 53436). Therefore, hospitals that wish to apply for and receive slots from the previously noted hospitals' FTE resident caps must submit applications using the electronic application intake system, Medicare Electronic Application Request Information System
CMS will only accept Round 23 applications submitted via MEARIS
• Please refer to the “Resources” section for guidance regarding the application submission process at:
• Technical support is available under “Useful Links” at the bottom of the MEARIS
• Application related questions can be submitted to CMS using the form available under “Contact” at:
Application submission through MEARIS
We have not established a deadline by when CMS will issue the final determinations to hospitals that receive slots under section 5506 of the Affordable Care Act. However, we review all applications received by the application deadline and notify applicants of our determinations as soon as possible.
We refer readers to the CMS Direct Graduate Medical Education (DGME) website at:
In section III.B. of the preamble of this final rule, we discuss the proposed changes to the most recent OMB standards for delineating statistical areas announced in the July 21, 2023 OMB Bulletin No. 23-01. We refer to these statistical areas as Core-Based Statistical Areas (CBSAs). As a result of the new OMB delineations, some teaching hospitals may be redesignated from location in a rural CBSA to an urban CBSA, or from location in an urban CBSA to a rural CBSA. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50111, August 22, 2014), we last discussed the effects of the CBSA changes on IME and DGME payment policy, as at that time, we implemented the changes to the statistical areas resulting from the February 28, 2013, OMB Bulletin No. 13-01. We refer readers to the FY 2015 IPPS/LTCH PPS final rule to learn more about CMS' policies regarding changes to the CBSAs and how IME and DGME payments are impacted. We emphasize that we did not propose any additional policies as a result of the latest CBSA changes; we are merely providing a reference for readers that may have questions about our existing policies. As a general overview, the FY 2015 IPPS/LTCH PPS final rule discusses the effect on the FTE caps of a hospital that was located in a rural CBSA, either at the time that it started training residents in a new residency program, or was located in a rural area when it received accreditation for a new program, but either prior to actually starting the program or during the 5-year cap building period, the CBSA in which the hospital was located became an urban CBSA (79 FR 50111 through 50113). We also discussed what happens to a rural training track when a rural hospital that is participating as the rural site is redesignated as urban, either during the period when the rural track is being established, or after it has been established (79 FR 50113). (Note that under 42 CFR 413.75(b) and 413.79(k), we now refer to rural training tracks as Rural Training Programs (RTPs)). We provided for a transition period, wherein either the redesignated urban hospital must reclassify as rural under § 412.103 for purposes of IME payment only (in addition, this reclassification option only applies to IPPS hospitals (or CAHs under 42 CFR 412.103(a)(6)), not other nonprovider sites), or the “original” urban hospital must have found a new site in a geographically rural area that will serve as the rural site for purposes of the rural track in order for the “original” urban hospital to receive payment under § 413.79(k)(1) or (k)(2). Also see DGME regulations at 42 CFR 413.79(c)(6), 42 CFR 413.79(k)(7), and for IME, at 42 CFR 412.105(f)(1)(iv)(D).
Under section 1861(v) of the Act, Medicare has historically paid providers for Medicare's share of the costs that providers incur in connection with approved educational activities. Approved nursing and allied health (NAH) education programs are those that are, in part, operated by a provider, and meet State licensure requirements, or are recognized by a national accrediting body. The costs of these programs are excluded from the definition of “inpatient hospital operating costs” and are not included in the calculation of payment rates for hospitals or hospital units paid under the IPPS, IRF PPS, or IPF PPS, and are excluded from the rate-of-increase ceiling for certain facilities not paid on a PPS. These costs are separately identified and “passed through” (that is, paid separately on a reasonable cost basis). Existing regulations on NAH education program costs are located at 42 CFR 413.85. The most recent substantive rulemakings on these regulations were in the January 12, 2001 final rule (66 FR 3358 through 3374), and in the August 1, 2003, final rule (68 FR 45423 and 45434).
Section 541 of the Balanced Budget Refinement Act (BBRA) of 1999 provides for additional payments to hospitals for costs of nursing and allied health education associated with services to Medicare+Choice (now called Medicare Advantage (MA
Section 512 of the Benefits Improvement and Protection Act (BIPA) of 2000 changed the formula for determining the additional amounts to be paid to hospitals for Medicare+Choice nursing and allied health costs. Under section 541 of the BBRA, the additional payment amount was determined based on the proportion of each individual hospital's nursing and allied health education payment to total nursing and allied health education payments made to all hospitals. However, this formula did not account for a hospital's specific Medicare+Choice utilization. Section 512 of the BIPA revised this payment formula to specifically account for each hospital's Medicare+Choice utilization. This provision was effective for portions of cost reporting periods occurring in a calendar year, beginning with CY 2001.
The regulations at 42 CFR 413.87 codified both statutory provisions. We first implemented the BBRA NAH Medicare+Choice provision in the August 1, 2000 IPPS interim final rule with comment period (IFC) (65 FR 47036 through 47039), and subsequently implemented the BIPA provision in the August 1, 2001 IPPS final rule (66 FR 39909 and 39910). In those rules, we outlined the qualifying conditions for a hospital to receive the NAH Medicare+Choice payment, how we would calculate the NAH Medicare+Choice payment pool, and how a qualifying hospital would calculate its “share” of payment from that pool. Determining a hospital's NAH Medicare+Choice payment essentially involves applying a ratio of the hospital-specific NAH Part A payments, total inpatient days, and Medicare+Choice inpatient days, to national totals of those same variables, from cost reporting periods ending in the fiscal year that is 2 years prior to the current calendar year. The formula is as follows:
With regard to determining the total national amounts for NAH pass-through payment, Part A inpatient days, and Medicare+Choice inpatient days, we note that section 1886(l) of the Act, as added by section 541 of the BBRA, gives the Secretary the discretion to “estimate” the national components of the formula noted previously. For example, section 1886(l)(2)(A) of the Act states that the Secretary would estimate the ratio of payments for all hospitals for portions of cost reporting periods occurring in the year under subsection 1886(h)(3)(D) of the Act to total direct GME payments estimated for the same portions of periods under section 1886(h)(3) of the Act.
Accordingly, we stated in the August 1, 2000 IFC (65 FR 47038) that each year, we would determine and publish in a final rule the total amount of nursing and allied health education payments made across all hospitals during the fiscal year 2 years prior to the current calendar year. We would use the best available cost reporting data for the applicable hospitals from the Hospital Cost Report Information System (HCRIS) for cost reporting periods in the fiscal year that is 2 years prior to the current calendar year (65 FR 47038).
To calculate the pool, in accordance with section 1886(l) of the Act, we stated that we would “estimate” a total amount for each calendar year, not to exceed $60 million (65 FR 47038). To calculate the proportional reduction to Medicare+Choice (now MA) direct GME payments, we stated that the percentage is estimated by calculating the ratio of the Medicare+Choice nursing and allied health payment “pool” for the current calendar year to the projected total Medicare+Choice direct GME payments made across all hospitals for the current calendar year. We stated that the projections of Medicare+Choice direct GME and Part A direct GME payments are based on the best available cost report data from the HCRIS (for example, for calendar year 2000, the projections are based on the best available cost report data from HCRIS 1998), and these payment amounts are increased using the increases allowed by section 1886(h) of the Act for these services (using the percentage applicable for the current calendar year for Medicare+Choice direct GME and the Consumer Price Index (CPI-U) increases for Part A direct GME). We also stated that we would publish the applicable percentage reduction each year in the IPPS proposed and final rules (65 FR 47038).
Thus, in the August 1, 2000 IFC, we described our policy regarding the timing and source of the national data components for the NAH Medicare+Choice add-on payment and the percent reduction to the direct GME Medicare+Choice payments, and we stated that we would publish the rates for each calendar year in the IPPS proposed and final rules. While the rates for CY 2000 were published in the August 1, 2000 IFC (see 65 FR 47038 and 47039), the rates for subsequent CYs were only issued through Change Requests (CRs) (CR 2692, CR 11642, CR 12407). After recent issuance of the CY 2019 rates in CR 12407 on August 19, 2021, we reviewed our update procedures, and were reminded that the August 1, 2000 IFC states that we would publish the NAH Medicare+Choice rates and direct GME percent reduction every year in the IPPS rules. Accordingly, for CY 2020 and CY 2021, we proposed and finalized the NAH MA add-on rates in the FY 2023 IPPS/LTCH PPS proposed and final rules. We stated that for CYs 2022 and after, we would similarly propose and finalize their respective NAH MA rates and direct GME percent reductions in subsequent IPPS/LTCH PPS rulemakings (see 87 FR 49073, August 10, 2022).
In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed the rates for CY 2023. Consistent with the use of HCRIS data for past calendar years, we proposed to use data from cost reports ending in FY 2021 HCRIS (the fiscal year that is 2 years prior to CY 2023) to compile these national amounts: NAH pass-through payment, Part A Inpatient Days, MA Inpatient Days.
For the proposed rule (89 FR 36227 through 36228), we accessed the FY 2021 HCRIS data from the fourth quarterly HCRIS update of 2023. However, to calculate the “pool” and the direct GME MA percent reduction, we “project” Part A direct GME payments and MA direct GME payments for the current calendar year, which in the proposed rule and in this final rule is CY 2023, based on the “best available cost report data from the HCRIS” (65 FR 47038). Next, consistent with the method we described previously from the August 1, 2000 IFC, we increased these payment amounts from midpoint to midpoint of the appropriate calendar year using the increases allowed by section 1886(h) of the Act for these services (using the percentage applicable for the current calendar year for MA direct GME, and the Consumer Price Index-Urban (CPI-U) increases for Part A direct GME). For CY 2023, the direct GME projections are based on the fourth quarterly update of CY 2021 HCRIS, adjusted for the CPI-U and for increasing MA enrollment.
For CY 2023, the proposed national rates and percentages, and their data sources, are set forth in this table. We stated in the proposed rule that we intend to update these numbers in the FY 2025 final rule based on the latest available cost report data.
For this final rule, consistent with the use of HCRIS data for past calendar years, for CY 2023, we use data from cost reports ending in FY 2021 HCRIS (the fiscal year that is 2 years prior to CY 2023) to compile these national amounts: NAH pass-through payment, Part A Inpatient Days, MA Inpatient Days. For this final rule, we accessed the HCRIS data from the first quarterly HCRIS update of 2024. However, to calculate the “pool” and the direct GME MA percent reduction, we project Part A direct GME payments and MA direct GME payments for the current calendar year, which in this final rule is CY 2023, based on the best available cost report data. Next, consistent with the method we described previously from the August 1, 2000 IFC, we increased these payment amounts from midpoint to midpoint of the appropriate calendar year using the increases allowed by section 1886(h) of the Act for these services (using the percentage applicable for the current calendar year for MA direct GME, and the Consumer Price Index-Urban (CPI-U) increases for Part A direct GME). For CY 2023, the direct GME projections are based on FY 2021 HCRIS, and the final national rates and percentages, and their data sources, are set forth in this table.
We only received comments on this section that were out of the scope of the proposal. In summary, we are finalizing our proposal to use NAH MA add-on rates as well as the direct GME MA percent reductions for CY 2023, based on sufficient HCRIS data to develop the rates for these years. We expect to propose to issue the rates for CY 2024 in the FY 2026 IPPS/LTCH PPS proposed rule, when sufficient HCRIS data is available to develop the rates for CY 2024.
Effective for FY 2021, we created MS-DRG 018 for cases that include procedures describing CAR T-cell therapies, which were reported using ICD-10-PCS procedure codes XW033C3 or XW043C3 (85 FR 58599 through 58600). Effective for FY 2022, we revised MS-DRG 018 to include cases that report the procedure codes for CAR T-cell and non-CAR T-cell therapies and other immunotherapies (86 FR 44798 through 448106).
Effective for FY 2021, we modified our relative weight methodology for MS-DRG 018 in order to develop a relative weight that is reflective of the typical costs of providing CAR T-cell therapies relative to other IPPS services. Specifically, under our finalized policy we do not include claims determined to be clinical trial claims that group to MS-DRG 018 when calculating the average cost for MS-DRG 018 that is used to calculate the relative weight for this MS-DRG, with the additional refinements that: (a) when the CAR T-cell therapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the claim will be included when calculating the average cost for MS DRG 018 to the extent such claims can be identified in the historical data; and (b) when there is expanded access use of immunotherapy, these cases will not be included when calculating the average cost for MS-DRG 018 to the extent such claims can be identified in the historical data (85 FR 58600). The term “expanded access” (sometimes called “compassionate use”) is a potential pathway for a patient with a serious or
Effective FY 2021, we also finalized an adjustment to the payment amount for applicable clinical trial and expanded access immunotherapy cases that group to MS-DRG 018 using the same methodology that we used to adjust the case count for purposes of the relative weight calculations (85 FR 58842 through 58844). (As previously noted, effective beginning FY 2022, we revised MS-DRG 018 to include cases that report the procedure codes for CAR T-cell and non-CAR T-cell therapies and other immunotherapies (86 FR 44798 through 448106).) Specifically, under our finalized policy we apply a payment adjustment to claims that group to MS-DRG 018 and include ICD-10-CM diagnosis code Z00.6, with the modification that when the CAR T-cell, non-CAR T-cell, or other immunotherapy product is purchased in the usual manner, but the case involves a clinical trial of a different product, the payment adjustment will not be applied in calculating the payment for the case. We also finalized that when there is expanded access use of immunotherapy, the payment adjustment will be applied in calculating the payment for the case. This payment adjustment is codified at 42 CFR 412.85 (for operating IPPS payments) and 42 CFR 412.312 (for capital IPPS payments), for claims appropriately containing Z00.6, as described previously, and reflects that the adjustment is also applied for cases involving expanded access use immunotherapy, and that the payment adjustment only applies to applicable clinical trial cases; that is, the adjustment is not applicable to cases where the CAR T-cell, non-CAR T-cell, or other immunotherapy product is purchased in the usual manner, but the case involves a clinical trial of a different product. The regulations at 42 CFR 412.85(c) also specify that the adjustment factor will reflect the average cost for cases to be assigned to MS-DRG 018 that involve expanded access use of immunotherapy or are part of an applicable clinical trial to the average cost for cases to be assigned to MS-DRG 018 that do not involve expanded access use of immunotherapy and are not part of a clinical trial (85 FR 58844).
For FY 2025, we proposed to continue to apply an adjustment to the payment amount for expanded access use of immunotherapy and applicable clinical trial cases that would group to MS-DRG 018, as calculated using the same methodology, as modified in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59062), that we proposed to use to adjust the case count for purposes of the relative weight calculations, as described in section II.D. of the preamble of this final rule.
As discussed in the FY 2024 IPPS/LTCH PPS final rule, the MedPAR claims data now includes a field that identifies whether or not the claim includes expanded access use of immunotherapy. For the FY 2023 MedPAR data and for subsequent years, this field identifies whether or not the claim includes condition code 90. The MedPAR files now also include information for claims with the payer-only condition code “ZC”, which is used by the IPPS Pricer to identify a case where the CAR T-cell, non-CAR T-cell, or other immunotherapy product is purchased in the usual manner, but the case involves a clinical trial of a different product so that the payment adjustment is not applied in calculating the payment for the case (for example, see Change Request 11879, available at
Using the same methodology that we proposed to use to adjust the case count for purposes of the relative weight calculations, we proposed to calculate the adjustment to the payment amount for expanded access use of immunotherapy and applicable clinical trial cases as follows:
• Calculate the average cost for cases assigned to MS-DRG 018 that either (a) contain ICD-10-CM diagnosis code Z00.6 and do not contain condition code “ZC” or (b) contain condition code “90”.
• Calculate the average cost for all other cases assigned to MS-DRG 018.
• Calculate an adjustor by dividing the average cost calculated in step 1 by the average cost calculated in step 2.
• Apply this adjustor when calculating payments for expanded access use of immunotherapy and applicable clinical trial cases that group to MS-DRG 018 by multiplying the relative weight for MS-DRG 018 by the adjustor.
We refer the readers to section II.D. of the preamble of this final rule for further discussion of our methodology.
Consistent with our calculation of the proposed adjustor for the relative weight calculations, for the proposed rule we proposed to calculate this adjustor based on the December 2023 update of the FY 2023 MedPAR file for purposes of establishing the FY 2025 payment amount. Specifically, in accordance with 42 CFR 412.85 (for operating IPPS payments) and 42 CFR 412.312 (for capital IPPS payments), for the proposed rule, we proposed to multiply the FY 2025 relative weight for MS-DRG 018 by a proposed adjustor of 0.34 as part of the calculation of the payment for claims determined to be applicable clinical trial or expanded use access immunotherapy claims that group to MS-DRG 018, which includes CAR T-cell and non-CAR T-cell therapies and other immunotherapies. We also proposed to update the value of the adjustor based on more recent data for the final rule.
We did not receive any comments specifically relating to the proposed payment adjustment for applicable clinical trial and expanded access use immunotherapy cases and are therefore finalizing our proposal without modification. We are also finalizing our proposal to update the value of this adjustor based on more recent data for this final rule. Therefore, using the March 2024 update of the FY 2023 MedPAR data, we are finalizing an adjustor of 0.33 for FY 2025, which will be multiplied by the final FY 2025 relative weight for MS-DRG 018 as part of the calculation of the payment for claims determined to be applicable clinical trial or expanded use access immunotherapy claims that group to MS-DRG 018.
Under existing regulations at § 412.104, we provide an additional payment to a hospital for inpatient services provided to certain Medicare beneficiaries with ESRD who receive a dialysis treatment during a hospital stay, if the hospital's ESRD Medicare beneficiary discharges, excluding discharges classified into the MS-DRGs listed at § 412.104(a), where the beneficiary received dialysis services during the inpatient stay, are 10 percent
On January 1, 2011, we implemented the ESRD PPS, a case-mix adjusted, bundled PPS for renal dialysis services furnished by ESRD facilities as required by section 1881(b)(14) of the Act, as added by section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275). Section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA, and amended by section 3401(h) of the Patient Protection and Affordable Care Act (the Affordable Care Act) (Pub. L. 111-148), established that beginning CY 2012, and each subsequent year, the Secretary of the Department of Health and Human Services (the Secretary) shall annually increase payment amounts by an ESRD market basket percentage increase, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act (74 FR 49927). The ESRD PPS replaced the basic case-mix adjusted composite rate payment system and the payment methodologies for separately billable outpatient renal dialysis items and services. Payment under Medicare Part B for outpatient renal dialysis services has been based entirely on the ESRD PPS since January 1, 2014 (78 FR 72160). The ESRD PPS pays ESRD facilities a case-mix-adjusted, bundled payment, which includes former composite rate services and ESRD-related drugs, laboratory services, and medical equipment and supplies (80 FR 68973). The ESRD PPS base rate is designed to reflect the average cost per-treatment of providing renal dialysis services.
As described previously, under current regulations the ESRD add-on payment is based on the average direct cost of furnishing dialysis services determined from data obtained in connection with establishing the composite rate. Under the current regulations, the average cost of dialysis is reviewed and adjusted, if appropriate, at the time the composite rate reimbursement for outpatient dialysis is reviewed. The last time CMS updated the composite rate was in the CY 2013 ESRD PPS final rule (77 FR 67454), as this was the final year in which payments to ESRD facilities were based on a blend of the composite rate and the ESRD PPS. In light of the time that has passed since the last update to the composite rate, we proposed to change the methodology used to calculate the ESRD add-on payment under current regulations to the ESRD PPS base rate used under the ESRD PPS. In addition, since the renal dialysis services reflected in the ESRD PPS base rate do not include those services that are not essential for the delivery of maintenance dialysis (see § 413.171), using the ESRD PPS base rate to calculate the ESRD add-on payment would maintain consistency with the current calculation, which is based on the average costs determined to be directly related to the renal dialysis service, as determined from the composite rate.
As described previously, under § 412.104(b)(1), the ESRD add-on payment is based on the estimated weekly cost of dialysis and the average length of stay of ESRD beneficiaries for the hospital. In the FY2025 IPPS/LTCH PPS proposed rule (89 FR 35934), we proposed that effective for cost reporting periods beginning on or after October 1, 2024, the estimated weekly cost of dialysis would be calculated as the applicable ESRD PPS base rate (as defined in 42 CFR 413.171) multiplied by three, which represents the typical number of dialysis sessions per week. The ESRD PPS base rate is applicable for renal dialysis services furnished during the calendar year (CY) (that is, effective January 1 through December 31 each year) and updated annually (see § 413.196). In the FY 2025 IPPS/LTCH PPS proposed rule we proposed that the annual CY ESRD PPS base rate (as published in the applicable CY ESRD PPS final rule or subsequent corrections, as applicable) multiplied by three would be used to calculate the ESRD add-on payment for hospital cost reporting periods that begin during the Federal FY for the same year. For example, the CY 2025 ESRD PPS base rate would be used for all cost reports beginning during Federal FY 2025 (that is, for cost reporting periods starting on or after October 1, 2024, through September 30, 2025). The table that follows illustrates the applicable CY ESRD PPS base rate that would be used to determine the add-on amount for eligible discharges during the hospital's cost reporting periods beginning on or after October 1, 2024 (FY 2025) and on or after October 1, 2025 (FY 2026) under this methodology.
In the FY 2025 IPPS/LTCH PPS proposed rule, we noted that use of the applicable CY ESRD PPS base rate to determine the add-on payment amount for the hospital's discharges occurring during the entire cost reporting period based on the cost report's begin date would be consistent with the determination of eligibility for the ESRD add-on payment, which occurs at cost report settlement and is based on the discharges that occur during that cost reporting period.
In the FY 2025 IPPS/LTCH PPS proposed rule, we stated that the payment to a hospital would continue to be calculated as the average length of stay of ESRD beneficiaries in the hospital, expressed as a ratio to 1 week, multiplied by the estimated weekly cost of dialysis multiplied by the number of applicable ESRD beneficiary discharges. Specifically, for cost reporting periods beginning on or after October 1, 2024, the payment to a hospital would equal the average length of stay of ESRD beneficiaries in the hospital, expressed as a ratio to 1 week, multiplied by the estimated weekly cost of dialysis (calculated as the applicable ESRD PPS base rate (as defined in 42 CFR 413.171), multiplied by 3) multiplied by the number of ESRD beneficiary discharges except for those excluded under § 412.104(a).
In the FY2025 IPPS/LTCH PPS proposed rule, we proposed to revise the regulations under 42 CFR 412.104(b) to reflect this proposed change to the calculation of the payment amount for cost reporting periods beginning on or after October 1, 2024. We proposed to revise § 412.104(b)(2) to specify that, effective for cost reporting periods beginning on or after October 1, 2024, the estimated weekly cost of dialysis is calculated as 3 dialysis sessions per week multiplied by the applicable ESRD PPS base rate (as defined in 42 CFR 413.171) that corresponds with the fiscal year in which the cost reporting period begins. For example, the CY 2025 ESRD PPS base rate (multiplied by 3 to determine the estimated weekly cost of dialysis, as described previously) would apply for all hospital cost reporting periods beginning during FY 2025 (that is, for cost reporting periods beginning on or after October 1, 2024, through September 30, 2025). We proposed to make conforming changes to § 412.104(b)(3) and § 412.104(b)(4) to reflect the proposed change in methodology for calculating the ESRD add-on payment amount for cost reporting periods beginning on or after October 1, 2024.
After consideration of the public comments we received, we are finalizing our proposal, without modification, to update the ESRD add-on payment methodology effective for cost reporting periods beginning on or after October 1, 2024 to use the annual CY ESRD PPS base rate (as published in the applicable CY ESRD PPS final rule or subsequent corrections, as applicable) multiplied by three to calculate the ESRD add-on payment for hospital cost reporting periods that begin during the Federal FY for the same year. We are also revising §§ 412.104(b)(2), (b)(3), and § 412.104(b)(4), as proposed, to reflect the new methodology for calculating the ESRD add-on payment amount for cost reporting periods beginning on or after October 1, 2024.
As discussed in the CY 2024 OPPS/ASC proposed rule (88 FR 49867), on January 26, 2021, President Biden issued Executive Order 14001, “A Sustainable Public Health Supply Chain” (86 FR 7219), which launched a whole-of-government effort to strengthen the resilience of medical supply chains, especially for pharmaceuticals and simple medical devices. This effort was bolstered subsequently by Executive Orders 14005, 14017, and 14081 (86 FR 7475, 11849, and 25711, respectively). In June 2021, as tasked in Executive Order 14017 on “America's Supply Chains,” the Department of Health and Human Services released a review of pharmaceuticals and active pharmaceutical ingredients, analyzing risks in these supply chains and recommending solutions to increase their reliability.
Over the last several years, shortages for critical medical products have persisted, with the average drug shortage lasting about 1.5 years.
Recent data suggests that hospitals are estimated to spend more than 8.6 million personnel hours and $360 million per year to address drug shortages,
Hospitals' procurement preferences can be leveraged to help foster a more resilient supply of lifesaving drugs and biologicals. With respect to shortages, supply chain resiliency includes having sufficient inventory that can be leveraged in the event of a supply disruption or demand increase—as opposed to relying on “just-in-time” inventory-management efficiency at the manufacturer level that can leave supply chains vulnerable to shortage.
When hospitals have insufficient supply of essential medicines, such as during a shortage, care for Medicare beneficiaries can be negatively impacted. To mitigate negative care outcomes in the event of insufficient supply, hospitals can adopt procurement strategies that foster a consistent, safe, stable, and resilient supply of these essential medicines. Such procurement strategies can include provisions to maintain or otherwise provide for extra stock of product (for example, either to maintain or to hold directly at the hospital, arrange contractually for a distributor to hold off-site, or arrange contractually with a wholesaler for a manufacturer to hold product) which can act as a buffer in the event of an unexpected increase in product use or disruption to supply. In the event an essential medicine goes into shortage without existing procurement or substitution strategies for affected drugs, negative patient care outcomes can result in reduced quality of care and, in some instances, increased costs by the Medicare program to provide payment for unnecessary services that could have been avoided had the drug been available to the hospital.
In the CY 2024 OPPS/ASC proposed rule (88 FR 49867), CMS requested public comments on a potential Medicare payment policy that would provide separate payment to hospitals under the IPPS for Medicare's share of the inpatient costs of establishing and maintaining access to a 3-month buffer stock of one or more of 86 essential medicines (referred to herein as the “CY 2024 Request for Comment”). Under this potential policy, the allowable costs would have included the hospital's reasonable costs of establishing and maintaining buffer stock(s) of the essential medicines but not the cost of the medicines themselves. We stated that we expected that the resources required to establish and maintain access to a buffer stock of essential medicines would generally be greater than the resources required to establish and maintain access to these medicines without such a buffer stock. While CMS did not finalize any policy regarding payment under the IPPS and OPPS for establishing and maintaining access to essential medicines, we stated we intended to propose new Conditions of Participation in forthcoming notice and comment rulemaking addressing hospital processes for pharmaceutical supply and that we would continue to consider policies related to buffer stock.
As discussed in the CY 2024 OPPS/ASC final rule, many commenters on the CY 2024 Request for Comment supported CMS's efforts to promote resiliency but expressed concerns regarding the potential for such a payment policy to induce or exacerbate drug shortages through demand shocks to the supply chain. Some commenters stated that a 3-month buffer stock may be inadequate to insulate hospitals from drug shortages, and that the policy may encourage hoarding behaviors and further fragment the existing supply of essential medicines, which would primarily disadvantage smaller, less resourced hospitals (88 FR 82129 through 82130). While commenters stated that a 3-month buffer stock may be inadequate to insulate hospitals from shortages given the duration of many drug shortages, some commenters further stated that even a 6-month buffer stock may not fully protect hospitals in the event of a shortage. Commenters cautioned that drug shortages are difficult to predict and often due to problems at the manufacturer level, which can be compounded by panic buying and hoarding behaviors. Some commenters stated that any buffer stock would need to be sufficiently large to account for the ramp up time that manufacturers need to reestablish supply of a given drug in shortage.
As a first step in this initiative, and based on consideration of the comments we received on the CY 2024 Request for Comment, for cost reporting periods beginning on or after October 1, 2024, we proposed to establish a separate payment under the IPPS to small (100 beds or fewer), independent hospitals for the estimated additional resource
As stated in the proposed rule, the appropriate time to establish a buffer stock for a drug is before it goes into shortage or after a shortage period has ended. To further mitigate any potential for the proposed policy to exacerbate existing shortages or contribute to commenters' concerns of hoarding, if an essential medicine is listed as “Currently in Shortage” on the FDA Drug Shortages Database,
As described in sections V.J.2. and .4. of the preamble of this final rule, we proposed that if the number of months of supply of medicine in the buffer stock were to drop to less than 6 months for a reason other than the essential medicine(s) actively being listed as “Currently in Shortage,” any separate payment to a hospital under this policy would be adjusted based on the proportion of the cost reporting period for which the hospital did maintain the 6-month buffer stock of that essential medicine.
We proposed to make this separate payment under the IPPS for the additional resource costs of establishing and maintaining access to buffer stocks of essential medicines under section 1886(d)(5)(I) of the Act, which authorizes the Secretary to provide by regulation for such other exceptions and adjustments to the payment amounts under section 1886(d) of the Act as the Secretary deems appropriate. We did not propose to make this payment adjustment budget neutral under the IPPS.
The report
The ARMI List is a prioritized list of 86 medicines that are either critical for minimum patient care in acute settings or important for acute care with no comparable alternatives available. The medicines included in the ARMI List were considered, by consensus, to be most critically needed for typical acute patient care. In this context, acute patient care was defined as: rescue use or lifesaving use or both (that is, Intensive Care Units, Cardiac/Coronary Care Units, and Emergency Departments), stabilizing patients in hospital continued care to enable discharge, and urgent or emergency surgery.
Development of the ARMI List focused on assessing the clinical criticality and supply chains of small molecules and therapeutic biologics. The development of the ARMI List was informed by meetings with multiple key pharmaceutical supply chain stakeholders (for example, manufacturers, group purchasing organizations, wholesale distributors, providers, pharmacies), surveys and workshops with groups of clinicians and industry stakeholders, public feedback on the E.O. 13944 List (provided during a public comment period starting in October 2020), and other research.
We proposed that for purposes of the separate payment under the IPPS, the costs of buffer stocks that would be eligible for separate payment are the additional resource costs of establishing and maintaining access to a 6-month buffer stock for any eligible medicines on ARMI's List of 86 essential medicines, including any subsequent revisions to that list of medicines. As previously discussed, the ARMI List represents a prioritized list of 86 medicines that were considered, by consensus, to be most critically needed for typical acute patient care. We stated that we believe that the ARMI List constitutes an appropriate set of medicines to initially prioritize under this proposed payment policy to help insulate small, independent hospitals, and the inpatient care they provide, from the negative effects of drug shortages.
As noted earlier, the appropriate time to establish a buffer stock for a drug is before it goes into shortage or after a shortage period has ended. If an essential medicine is listed as “Currently in Shortage” on the FDA Drug Shortages Database, we proposed that a hospital that
As an illustrative example, suppose a hospital established and maintained 6-month buffer stocks for five essential medicines. However, one of those essential medicines was subsequently listed as “Currently in Shortage” on the FDA Drug Shortages Database. The hospital would no longer be required to maintain a 6-month buffer stock of the essential medicine that is in shortage to receive separate payment for maintaining the buffer stock of that essential medicine during the period of shortage. The hospital would continue to be eligible for the separate payment from CMS for the buffer stock for that medicine during the period of shortage as it draws down its established buffer stock of the medicine in shortage as needed. However, the hospital would be required to maintain buffer stocks of no less than 6 months for the other four essential medicines that are not in shortage to be eligible to receive separate payment for those four medicines.
Because medicine can remain on the FDA Drug Shortage Database for years, we requested comments on the duration that CMS should continue to pay hospitals for the maintenance of a less than 6-month buffer stock of the essential medicine if it is “Currently in Shortage.” We also requested comments on if there is a quantity or dosage minimum floor where CMS should no longer pay to maintain a 6-month buffer stock of the essential medicine if it is “Currently in Shortage.”
We proposed that if the ARMI List is updated to add or remove any essential medicines, all medicines on the updated list would be eligible for separate payment under this policy for the IPPS shares of the costs of establishing and maintaining access to 6-month buffer stocks as of the date the updated ARMI List is published. To the extent that in the future other medicines or lists are identified for eligibility in future iterations of this policy, we sought comment on the potential mechanism and timing for incorporating those updates. We stated that comments could consider, among other factors, medicines that were excluded from the ARMI List, the E.O. 13944 List, or both. For example, some categories from the E.O. 13944 List—including Blood and Blood Products, Fractionated Plasma Products, Vaccines, and Volume Expanders—were excluded from the ARMI List due to differences in their supply chains. Additionally, other categories were identified as not needed for routine/typical acute patient care (that is, Biological Threat Medical Countermeasures, Burn and Blast Injuries, Chemical Threat Medical Countermeasures, Pandemic Influenza Medical Countermeasures, Radiologic-Nuclear Threat Medical Countermeasures). The ARMI List does not include certain medicines that have recently been in shortage and that may be considered essential and are more prevalent in specific care settings other than an inpatient hospital, such as drugs used in oncology care on an outpatient basis. Further, there are medicines that are not included on the ARMI List nor the E.O. 13944 List, such as buprenorphine-based medications for treatment of substance use disorder. We sought comment on whether eligibility for separate payment for the IPPS share of the costs of establishing and maintaining access to 6-month buffer stocks of essential medicines should include oncology drugs or other types of drugs not currently on the ARMI List.
We stated in the proposed rule that CMS would conduct provider education regarding additions and deletions to the publicly available FDA Drug Shortages Database to assist hospitals with this proposed policy.
Commenters on the CY 2024 Request for Comment (88 FR 82129 through 82130) raised a number of concerns relating to access to essential medicines for small hospitals and potential hoarding behaviors among better resourced hospitals. Commenters also cautioned against the potential for the policy to cause demand-driven shocks to the pharmaceutical supply chain, exacerbating pharmaceutical access issues for hospitals, which they claimed would disproportionately impact smaller hospitals due to their smaller purchasing power. As hospitals and hospital systems increase in size through expansion of bed count or consolidation or both and vertical integration with other hospitals and health systems, they accrue bargaining leverage for payment negotiations and thereby increase their purchasing power.
We stated that we believe that by focusing eligibility on small, independent hospitals, we can both support these types of hospitals in their efforts to provide patient care during drug shortages and lessen any potential demand shocks to the pharmaceutical supply chain because the buffer stocks these hospitals would require are likely smaller compared to larger hospitals and hospital chains. As discussed further in the regulatory impact analysis associated with this proposed policy in section I.G.6. of Appendix A of the proposed rule, we initially identified 493 potentially eligible hospitals based on FY 2021 hospital cost report data. Of these hospitals, 249 were identified as geographically rural, 6 were identified as geographically urban but reclassified as rural (under our reclassification regulations at § 412.103), and 238 were identified as geographically urban without a reclassification as rural. These hospitals had 216,557 Medicare discharges in total and an average of 442 Medicare discharges per hospital for the FY 2021 cost reporting year.
Because this proposed definition is the definition of chain organization used by a hospital when filling out its cost report, to operationalize our proposed separate payment policy, we proposed that any hospital that appropriately answers “yes” (denoted “Y”) to line 140 column 1 or fills out any part of lines 141 through line 143 on Worksheet S-2, Part I, on Form CMS-2552-10 would be considered to be part of a chain organization and not independent, and therefore not eligible for separate payment under this proposal. Please see Table V.J.-01 for a partial example of this section of Form CMS-2552-10.
Thus, we proposed that to be eligible for this separate payment, under this policy, a hospital would need to be a small hospital with 100 or fewer beds and meet the definition of independent described previously. We sought comment on our proposed eligibility criteria and proposed definition of a small, independent hospital.
We note that critical access hospitals (CAHs) are paid for inpatient and outpatient services at 101 percent of Medicare's share of reasonable costs, including Medicare's share of the reasonable costs of establishing and maintaining access to buffer stocks of medicines. We sought comment on the use of buffer stocks by CAHs, including the medicines in the buffer stocks, the costs of establishing and maintaining the buffer stocks, whether CAHs tend to contract out this activity, and any barriers that CAHs may face in establishing and maintaining access to buffer stocks.
As summarized in the CY 2024 OPPS/ASC final rule and section V.J.1. of the preamble of this final rule, some commenters on the CY 2024 Request for Comment expressed concerns that a 3-month supply of essential medicines may not be sufficient to adequately insulate hospitals from the detrimental effects of future drug shortages. Commenters stated that drug shortages often persist for durations of time in excess of 3 months, such that a 3-month buffer stock may be inadequate to insulate hospitals from the longer-term effects of drug shortages. As noted in section V.J.1. of the preamble of this final rule, drug shortages generally persist for many months, and some research suggests that these shortages last for an average of 1.5 years. Accordingly, we stated in the proposed rule that we believe a buffer stock of at least 6 months would better support small, independent hospitals in contending with future shortages. To better address commenters' concerns and hospital needs during drug shortages, we proposed separate payment for the costs of establishing and maintaining access to a buffer stock that is sufficient for no less than a 6-month period of time for each of one or more essential medicines. As discussed in section V.J.5 of the preamble of this final rule, we also sought comments on whether a phase-in approach that, for example, would provide separate payment for establishing and maintaining access to a 3-month supply for the first year in which the policy is implemented and a 6-month supply for all subsequent years would be appropriate.
We stated in the proposed rule that in estimating the amount of a buffer stock needed for each essential medicine, the hospital should consider that the amount needed to maintain a buffer stock could vary month to month and
As discussed in the CY 2024 Request for Comment, CMS requested public comments on a potential separate payment under the IPPS for the additional, reasonable costs of establishing and maintaining a 3-month buffer stock of one or more essential medicine(s). We stated that participating hospitals could establish and maintain their buffer stocks directly, or through contractual arrangements with pharmaceutical distributors, intermediaries, or manufacturers.
We received comments in response to the CY 2024 Request for Comment stating that hospitals that maintain buffer stocks of essential medicines typically do so through upstream entities, such as pharmaceutical group purchasing organizations and manufacturers. Furthermore, these commenters stated that hospitals typically lack the capacity to stockpile large quantities of essential medicines directly. Some of these commenters stated that any buffer stocks established under the potential policy should be maintained by upstream intermediaries or a neutral third party instead of directly maintained by hospitals, as they stated that these upstream intermediaries are generally better positioned and equipped to maintain these buffer stocks. While other commenters were receptive to directly maintaining their buffer stock(s) or indicated that they already maintained substantial buffer stocks of medicines, these commenters were generally larger, better resourced hospitals or hospital systems.
In this year's proposed rule, we stated that we agreed with commenters that pharmaceutical intermediaries and manufacturers are generally better positioned to establish and maintain larger (for example, 6-month or greater) buffer stocks of essential medicines, as small, independent hospitals may generally lack the space, staff, and specific equipment (like large-scale refrigeration and large, onsite storage) to directly maintain 6-month buffer stock(s) of essential medicine(s). While we stated that we anticipate that most hospitals that elect to establish and maintain buffer stocks under this policy will do so through contractual arrangements with pharmaceutical intermediaries, manufacturers, and distributors, we proposed that the additional resource costs associated with directly maintaining 6-month buffer stock(s) of essential medicine(s) would also be eligible for separate payment under this policy. Accordingly, we proposed that for purposes of the proposed separate payment under the IPPS to small, independent hospitals for the estimated additional resource costs of voluntarily establishing and maintaining access to 6-month buffer stocks of essential medicines, those costs associated with establishing and maintaining access to 6-month buffer stocks either directly or through contractual arrangements with pharmaceutical manufacturers, intermediaries, or distributors would be eligible for additional payment under this policy. These costs do not include the cost of the medicines themselves which would continue to be paid in the current manner. We also noted that the proposed payment is only for the IPPS share of the costs of establishing and maintaining access to buffer stock(s) of one or more essential medicine(s).
We noted the costs associated with directly establishing and maintaining a buffer stock may include utilities like cold chain storage and heating, ventilation, and air conditioning, warehouse space, refrigeration, management of stock including stock rotation, managing expiration dates, and managing recalls, administrative costs related to contracting and record-keeping, and dedicated staff for maintaining the buffer stock(s). We requested comments on other types of costs intrinsic to directly establishing buffer stocks of essential medicines that should be considered eligible for purposes of separate payment under this policy. We also requested comment regarding whether staff costs would increase with the number of essential medicines in buffer stock, and whether there would be efficiencies if multiple hospitals elect to establish buffer stocks of essential medicines with the same pharmaceutical manufacturer, intermediary, or distributor.
We also requested comment on whether this proposed policy should be phased in by the size of the buffer stock to address concerns about infrastructure investments that may be needed to store and maintain the supply. We also referred readers to the Collection of Information Requirements in section XII.B.2. of the preamble of the proposed rule regarding the estimated burden associated with this policy proposal and sought comment on whether there are any other potential methods for hospitals to report costs included under this policy besides the forthcoming supplemental cost reporting worksheet.
Currently, payment for the resources required to establish and maintain access to medically reasonable and necessary drugs and biologicals is generally part of the IPPS payment. As noted in section V.J.2. of the preamble of this final rule, we expect that the resources required to establish and maintain access to buffer stocks of essential medicines will generally be greater than the resources required to establish and maintain access to these medicines without such buffer stocks. Given these additional resource costs and our concern that small, independent hospitals may lack the resources available to larger hospitals and hospital chains to establish buffer stocks of essential medicines, we stated that we believe it is appropriate to propose to pay these hospitals separately for the additional resource costs associated with voluntarily establishing and maintaining access,
CMS proposed to base the IPPS payment under this policy on the IPPS shares of the additional reasonable costs of a hospital to establish and maintain access to its buffer stock. The use of IPPS shares in this payment adjustment would be consistent with the use of these shares for the payment adjustment for domestic NIOSH approved surgical N95 respirators, which is based on the IPPS and OPPS shares of the difference in cost between domestic and non-domestic NIOSH approved surgical N95 respirators for the cost reporting period in which costs are claimed (87 FR 72037). We stated that the hospital would report these costs to CMS on the forthcoming supplemental cost reporting worksheet associated with this proposed policy. The hospital's costs may include costs associated with contractual arrangements between the hospital and a manufacturer, distributor, or intermediary or costs associated with directly establishing and maintaining buffer stock(s). We further stated that these costs would not include the costs of the essential medicine itself, which would continue to be paid in the current manner.
If a hospital establishes and maintains access to buffer stock(s) of essential medicine(s) through contractual arrangements with pharmaceutical manufacturers, intermediaries, or distributors, we stated that the hospital would be required to disaggregate the costs specific to establishing and maintaining the buffer stock(s) from the remainder of the costs present on the contract for purposes of reporting these disaggregated costs under this proposed policy. This disaggregated information, reported by the hospital on the new supplemental cost reporting worksheet, along with existing information already collected on the cost report, would be used to calculate a Medicare payment for the IPPS share of the hospital's costs of establishing and maintaining access to the buffer stock(s) of essential medicine(s).
If a hospital contracts with one or more manufacturers or wholesalers or other intermediaries to establish and maintain 6-month buffer stocks of one or more essential medicines, we stated that the hospital must clearly identify those costs separately from the costs of other provisions of the contract(s). As a simplified example for purposes of illustration, suppose a hospital has a $500,000 contract with a pharmaceutical wholesaler. The contract is for pharmaceutical products, 50 of which are qualifying essential medicines. Additionally, the contract contains a provision for the wholesaler to establish and maintain 6-month buffer stocks of those 50 essential medicines on the hospital's behalf. The contract further specifies that $10,000 of the $500,000 is for the provision of the contract that establishes and maintains the 6-month buffer stocks of those 50 essential medicines. This $10,000 amount does not include any costs to the hospital for the drugs themselves which, as previously noted, would continue to be paid in the current manner. We explained that under this proposal, the hospital would report the $10,000 cost for establishing and maintaining the 6-month buffer stocks of the 50 essential medicines on the supplemental cost reporting worksheet. That $10,000 cost, in addition to other information already existing on the cost report, would be used to calculate the additional payment under this policy including the hospital-specific Medicare IPPS share percentage of this cost, expressed as the percentage of inpatient Medicare costs to total hospital costs. We stated that on average for the small, independent hospitals that are eligible for this policy, the Medicare IPPS share percentage is approximately 11 percent.
If a hospital chooses to directly establish and maintain buffer stock(s) of one or more essential medicines under this policy, we stated that the hospital would be required to report the additional costs associated with establishing and maintaining its buffer stock(s) on the supplemental cost reporting form. We stated that the hospital should clearly specify the total additional resource costs to establish and maintain its 6-month buffer stock(s) of essential medicine(s). As in the previous example, this amount should not include the cost of the essential medicine(s) themselves and would be used, along with other information already existing on the cost report, to calculate the additional payment under this policy.
Additionally, we stated that we would anticipate that when a hospital contracts with one or more manufacturers or wholesalers or other intermediaries to establish and maintain 6-month buffer stocks of one or more essential medicines, it would ensure that a discrete buffer stock is maintained for that hospital. For example, if two hospitals held contracts with a manufacturer arranging for 6-month buffer stocks of certain essential medicines, the hospitals would verify that the manufacturer is maintaining sufficient total buffer stock to account for the 6-month demand of both hospitals in aggregate.
We stated that we seek to support the establishment of buffer stocks when drugs are not currently in shortage to promote the overall resiliency of drug supply chains. As previously discussed, we proposed that buffer stocks for any of the essential medicines on the ARMI List that are listed as “Currently in Shortage” on the FDA Drug Shortages Database would not be eligible for additional payment under this policy for a hospital's cost reporting period unless the hospital had already established and was maintaining a buffer stock of that medicine prior to the shortage. Additionally, we proposed that any essential medicine(s) for which a hospital has successfully established and maintained a buffer stock(s) of at least 6 months that is subsequently listed as “Currently in Shortage” on the FDA Drug Shortages Database would be exempt from the requirement to maintain a 6-month supply of such essential medicine(s) for the duration of the period in which the medicine is in shortage. We stated that we are interested in public comments on the burden associated with hospitals' monitoring of the FDA Drug Shortage Database, and excluding from the cost report any resource costs associated with maintaining a buffer stock of an essential medicine that was listed as “Currently in Shortage,” except where the hospital had already established and was maintaining a 6-month buffer stock of that medicine prior to the shortage. We stated that as of the date that medicine is no longer listed as “Currently in Shortage,” eligibility for separate payment to the hospital for the drug in shortage would be prospectively adjusted based on the proportion of the cost reporting period for which the hospital does maintain the 6-month buffer stock of that essential medicine. Once an essential medicine is no longer listed as “Currently in Shortage” in the FDA Drug Shortages Database, our
We proposed to make separate payments for the IPPS shares of these additional resource costs of establishing and maintaining access to buffer stocks of essential medicines. Payment could be provided as a lump sum at cost report settlement or biweekly as interim lump-sum payments to the hospital, which would be reconciled at cost report settlement. In accordance with the principles of reasonable cost as set forth in section 1861(v)(1)(A) of the Act and in 42 CFR 413.1 and 413.9, Medicare could make a lump-sum payment for Medicare's share of these additional inpatient costs at cost report settlement. Alternatively, a provider may make a request for biweekly interim lump sum payments for an applicable cost reporting period, as provided under 42 CFR 413.64 (Payments to providers: Specific rules) and 42 CFR 412.116(c) (Special interim payments for certain costs). These payment amounts would be determined by the Medicare Administrative Contractor (MAC) consistent with existing policies and procedures. In general, interim payments are determined by estimating the reimbursable amount for the year using Medicare principles of cost reimbursement and dividing it into 26 equal biweekly payments. The estimated amount would be based on the most current cost data available, which will be reviewed and, if necessary, adjusted at least twice during the reporting period. (See CMS Pub 15-1 § 2405.2 for additional information). The MACs would determine the interim lump-sum payments based on the data the hospital may provide that reflects the information that would be included on the new supplemental cost reporting form. CMS is separately seeking comment through the Paperwork Reduction Act (PRA) process on a supplemental cost reporting form that would be used for this purpose. We stated that in future years, the MACs could determine the interim biweekly lump-sum payments utilizing information from the prior year's cost report, which may be adjusted based on the most current data available. This is consistent with the current policies for medical education costs, and bad debts for uncollectible deductibles and coinsurance paid on interim biweekly basis as noted in CMS Pub 15-1 § 2405.2. It is also consistent with the payment adjustment for domestically sourced NIOSH approved surgical N95 respirators (87 FR 72037).
We proposed to codify this payment adjustment in the regulations by adding new paragraph (g) to 42 CFR 412.113 to state the following:
• Essential medicines are the 86 medicines prioritized in the report
• The additional resource costs of establishing and maintaining access to a buffer stock of essential medicines for a hospital are the additional resource costs incurred by the hospital to directly hold a buffer stock of essential medicines for its patients or arrange contractually for such a buffer stock to be held by another entity for use by the hospital for its patients. The additional resource costs of establishing and maintaining access to a buffer stock of essential medicines does not include the resource costs of the essential medicines themselves.
• For cost reporting periods beginning on or after October 1, 2024, a payment adjustment to a small, independent hospital for the additional resource costs of establishing and maintaining access to buffer stocks of essential medicines is made as described in paragraph (g)(4) of this section. For purposes of this section, a
• The payment adjustment is based on the estimated reasonable cost incurred by the hospital for establishing and maintaining access to buffer stocks of essential medicines during the cost reporting period.
We also proposed to make conforming changes to 42 CFR 412.1(a) and 412.2(f) to reflect this proposed payment adjustment for small, independent hospitals for the additional resource costs of establishing and maintaining access to buffer stocks of essential medicines.
In summary, for cost reporting periods beginning on or after October 1, 2024, we proposed to establish a separate payment under the IPPS to small, independent hospitals for the additional resource costs involved in voluntarily establishing and maintaining access to 6-month buffer stocks of essential medicines, either directly or through contractual arrangements with a manufacturer, distributor, or intermediary. We proposed that the costs of buffer stocks that are eligible for separate payment are the costs of buffer stocks for one or more of the medicines on ARMI's List of 86 essential medicines. The separate payment would be for the IPPS share of the additional costs and could be issued in a lump sum, or as biweekly payments to be reconciled at cost report settlement. We proposed that the separate payment would not apply to buffer stocks of any of the essential medicines on the ARMI List that are currently listed as “Currently in Shortage” on the FDA Drug Shortages Database unless a hospital had already established and was maintaining a 6-month buffer stock of that medicine prior to the shortage. Once an essential medicine is no longer listed as “Currently in Shortage” in the FDA Drug Shortages Database, we stated that our proposed policy does not differentiate that essential medicine from other essential medicines and hospitals would be eligible to establish and maintain buffer stocks for the medicine as they would have before the shortage. CMS is separately seeking comment through the PRA process on a supplemental cost reporting form for this proposed payment.
After consideration of the comments received on our proposal, which we summarize and respond to in the section that follows, we are finalizing the proposed separate payment under the IPPS to small, independent hospitals for the additional resource costs involved in voluntarily establishing and maintaining access to 6-month buffer stocks of essential medicines. In future years as we gain experience under this policy, we plan to assess the program's impact and consider revisions, where appropriate, to help ensure availability of essential medicines for patients.
Many commenters requested that we expand or otherwise modify our eligibility requirements of small, independent hospitals of 100 beds or fewer that are not part of a chain organization. Some commenters had specific recommendations for provider types that should be made eligible for the proposed policy, regardless of bed size or independent status, with particular emphasis on CAHs, MDHs, SCHs, children's hospitals, and various outpatient facilities. Several commenters requested that we remove entirely the independent status eligibility requirement, stating that hospitals that are part of chain organizations also face substantial financial obstacles. Other commenters requested that we expand the policy to make all Medicare providers eligible. A commenter requested that we further restrict the pool of eligible providers to test the effects of the proposed policy on the pharmaceutical supply chain.
Some commenters, including MedPAC, indicated that Medicare payment policy is neither a sufficient, nor the best suited, mechanism to support adequate supplies of essential medicines. These commenters generally expressed support for broader policy initiatives beyond the Medicare program to address drug shortages.
For similar reasons, we disagree with commenters who requested that we expand the pool of eligible hospitals now in this initial implementation of the new policy. Without the benefit of actual experience under the policy, expansion of the policy at this time to include hospitals with greater purchasing power than small, independent hospitals could risk inducing or exacerbating drug shortages. Similarly, we disagree that we should restrict the policy to exclude some hospitals with lesser purchasing power, as this policy is meant to assist these hospitals in responding to future drug shortages, and at the same time, we continue to believe that their purchasing power is such that it would not significantly increase the risk of inducing or exacerbating drug shortages, as compared to those hospitals with greater purchasing power. Accordingly, we believe the current scope of identified eligible hospitals is appropriate for purposes of the first year of this policy. As noted, we may consider any future modifications to the scope of eligible hospitals, including potential expansions to hospitals with larger bed counts or certain provider types, as we gain experience under this policy.
Furthermore, as stated in the proposed rule, we note that CAHs are already paid for inpatient and outpatient services at 101 percent of Medicare's share of reasonable costs,
After consideration of the comments received, we are finalizing our criteria for eligible hospitals without modification.
However, we also recognize the concerns raised by commenters who believe a smaller buffer stock size would be more appropriate because the costs of establishing and maintaining buffer stocks of 6 months are greater than the costs for 3 months or other shorter periods. In weighing these competing concerns, at the present time we believe that providing separate payment for the longer 6-month buffer stock is the most appropriate policy because a longer period of buffer stock would better serve to bridge a drug shortage and provide manufacturers with more time to increase production of an affected medicine. However, as we gain experience under this policy, including the extent to which the size of the buffer stock may affect hospital participation, we may revisit this issue in future rulemaking.
In response to commenters who suggested that we consider implementing a cap on the total volume of an applicable generic that any one hospital may obtain under our proposed policy, given that the eligible hospitals are those with lesser purchasing power we do not think these hospitals would use their comparatively limited financial resources to establish buffer stocks of excessive size that would make the establishment of such a cap on the size of the applicable buffer stock for purposes of separate payment under this policy necessary at this time. However, although we do not believe this to be a likely outcome of our policy, we may further consider this issue for future rulemaking as we gain experience under this policy. We reiterate that establishment of one or more buffer stock(s) is purely voluntary on the part of eligible hospitals.
After consideration of the comments received, we are finalizing our proposal on the size of the buffer stock without modification.
We also appreciate commenters sharing their concerns regarding the administrative burden of tracking shortage status of eligible essential medicines. To help mitigate concerns of added administrative burden associated with tracking the shortage status of a given essential medicine, in connection with this final policy, the MACs will inform hospitals of all eligible medicines and their associated shortage status on a calendar quarter basis on or about the start of each quarter. The shortage status information that the MACs will provide to the hospital will be based on the shortage status of each essential medicine(s) as reported on the FDA's Drug Shortage Database. For example, hospitals will be informed by the MACs on or about January 1st each year which essential medicines are considered in shortage for purposes of this policy for the calendar year quarter starting January 1st. The MACs will similarly provide this information for the calendar year quarters beginning April 1st, July 1st, and October 1st.
After consideration of the comments received, we are finalizing without modification our approach of using a supplemental cost reporting form to report the costs associated with establishing and maintaining a buffer stock, subject to the Paperwork Reduction Act Review of the supplemental cost reporting form itself.
Regarding our request for comments on the duration of time that CMS should continue to pay for a buffer stock of an essential medicine after that medicine is listed as “Currently in Shortage,” several commenters stated that we should not limit the amount of time that CMS will continue to pay for the buffer stock. Several of these commenters stated that not applying a limit would be consistent with pharmaceutical purchasing and may promote resiliency in the pharmaceutical supply chain. Other commenters stated that CMS should consider paying for essential medicines that enter shortage on a pro-rated basis. A commenter recommended that we limit payments to 6 months after
After consideration of the comments received, we are finalizing as proposed to not separately pay for a buffer stock newly established after a drug goes into shortage.
Several commenters proposed the gradual expansion of eligible medicines that could be considered essential and provide care to unique patient populations that were otherwise not included. A few commenters also recommended that essential medical devices be included. Others suggested expanded medicines including chemotherapy and other cancer treatment drugs. A commenter suggested excluding immune globulin because these products share the unique supply chain of the excluded fractionated plasma products.
Further, while the E.O. 13944 List includes blood and blood products, this policy is not intended to include medicines that would be used for longer-term chronic management, including those needed to cure a condition through weeks or months of outpatient treatment in the outpatient setting or chronic care (for example, oncology).
Based on the comprehensive assessment and process followed to develop the ARMI List, as well as the inclusion of a variety of inputs and perspectives across the pharmaceutical supply chains—from industry to clinical community and the public at large—we believe that use of the ARMI List to identify essential medicines for purposes of this policy is appropriate to promote supply chain resilience. at this juncture. After consideration of the comments received, we are finalizing as proposed our use of the ARMI List.
Commenters requested clarification on whether all formulations of a drug will be removed from eligibility if a common Active Pharmaceutical Ingredient (API) enters shortage.
As described on the FDA's Drug Shortage Database website,
By contrast, CMS understands the American Society of Health-System Pharmacists (ASHP) list defines a shortage as a supply issue that affects how a pharmacy prepares or dispenses a drug product, and would post a shortage if one manufacturer was out of stock even if the other manufacturers are able to cover the supply gap. This often leads to more drugs being declared in `shortage' by ASHP when compared
As discussed previously, in conjunction with this final policy, CMS will conduct provider outreach on a quarterly basis regarding essential medicines that are in shortage. We intend to make it clear to hospitals on or about the start of each calendar year quarter which drugs are or are not in shortage for the purposes of eligibility for separate payment for the costs of establishing or maintaining their respective buffer stocks. As discussed, we believe this provider outreach will help to mitigate concerns regarding the administrative burden on hospitals of tracking when a drug is considered in shortage under our policy.
After consideration of the public comments received, we are finalizing as proposed our use of the FDA Drug Shortages Database as the basis for determining when an essential medicine is in shortage.
After consideration of the public comments received, we are finalizing as proposed the effective date of October 1, 2024.
After consideration of the public comments we received, we are finalizing our policy as proposed. In summary, for cost reporting periods beginning on or after October 1, 2024, we are establishing a separate payment under the IPPS to small, independent hospitals for the additional resource costs involved in voluntarily establishing and maintaining access to 6-month buffer stocks of essential medicines, either directly or through contractual arrangements with a manufacturer, distributor, or intermediary. The costs of buffer stocks that are eligible for separate payment are the costs of buffer stocks for one or more of the medicines on ARMI's List of 86 essential medicines. The separate payment will be for the IPPS share of the additional costs and could be issued in a lump sum, or as biweekly payments to be reconciled at cost report settlement. The separate payment will not apply to buffer stocks of any of the essential medicines on the ARMI List that are listed as “Currently in Shortage” on the FDA Drug Shortages Database, as communicated to hospitals by the MACs on a quarterly basis, unless a hospital had already established and was maintaining a 6-month buffer stock of that medicine prior to the shortage. Once an essential medicine is no longer in shortage, as communicated by the MACs for the calendar quarter, our policy does not differentiate that essential medicine from other essential medicines, and hospitals would be eligible to establish and maintain buffer stocks for the medicine as they would have before the shortage. We are also finalizing our proposal to codify this payment adjustment in the regulations by adding new paragraph (g) to 42 CFR 412.113, as well as our proposed conforming changes to 42 CFR 412.1(a) and 412.2(f), without modification. In future years as we gain additional experience under this policy, we plan to assess the program's impact and consider revisions.
Section 3025 of the Patient Protection and Affordable Care Act, as amended by section 10309 of the Patient Protection and Affordable Care Act, added section 1886(q) to the Act, which establishes the Hospital Readmissions Reduction Program effective for discharges from applicable hospitals beginning on or after October 1, 2012. Under the Hospital Readmissions Reduction Program, payments to applicable hospitals may be reduced to account for certain excess readmissions. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through 49543) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through 38240) for a general overview of the Hospital Readmissions Reduction Program. We also refer readers to 42 CFR 412.152 through 412.154 for codified Hospital Readmissions Reduction Program requirements. Additionally, we refer readers to the CY 2025 OPPS/ASC proposed rule where we are soliciting input on potential future methodological modifications regarding the Safety of Care measure group within the Overall Hospital Quality Star Rating (89 FR 59509 through 59515).
There were no proposals or updates in the FY 2025 IPPS/LTCH PPS proposed rule for the Hospital Readmissions Reduction Program (89 FR 36238). We refer readers to section I.G.7. of Appendix A of the final rule for an updated estimate of the financial impact of using the proportion of dually eligible beneficiaries, ERRs, and aggregate payments for each condition/procedure and all discharges for applicable hospitals from the FY 2025 Hospital Readmissions Reduction Program applicable period (that is, July 1, 2020, through June 30, 2023).
For background on the Hospital VBP Program, we refer readers to the CMS website at:
Under section 1886(o)(7)(C)(v) of the Act, the applicable percent for the FY 2025 program year is 2.00 percent. Using the methodology we adopted in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53571 through 53573), we estimate that the total amount available for value-based incentive payments for FY 2025 is approximately $1.67 billion, based on the March 2024 update of the FY 2023 MedPAR file.
As finalized in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53573 through 53576), we will utilize a linear exchange function to translate this estimated amount available into a value-based incentive payment percentage for each hospital, based on its Total Performance Score (TPS). We published proxy value-based incentive payment adjustment factors in Table 16 associated with the FY 2025 IPPS/LTCH PPS proposed rule (which is available via the internet on the CMS website). We are publishing updated proxy value-based incentive payment adjustment factors in Table 16A associated with this final rule (which is available via the CMS website) to reflect changes based on the March 2024 update to the FY 2023 MedPAR file. We note that these updated proxy adjustment factors will not be used to adjust hospital payments. These updated proxy adjustment factors were calculated using the historical baseline and performance periods for the FY 2024 Hospital VBP Program. These updated proxy adjustment factors were calculated using the March 2024 update to the FY 2023 MedPAR file. The slope of the linear exchange function used to calculate these proxy factors
We refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 49110 through 49111) for summaries of previously adopted measures for the FY 2025 and FY 2026 program years and to the FY 2024 IPPS/LTCH PPS final rule for summaries of previously adopted measures beginning with the FY 2026 program year (88 FR 59081 through 59083). We did not propose any new measure adoptions or removals to the measure set in the FY 2025 IPPS/LTCH PPS proposed rule. Table V.L.-01 summarizes the previously adopted Hospital VBP Program measure set for the FY-2025 program year.
As discussed in section IX.B.2.g(2) of this final rule, we are finalizing the adoption of the updates to the HCAHPS Survey measure beginning with the FY 2030 program year. We are also finalizing the adoption of the updates to the HCAHPS Survey measure in the Hospital Inpatient Quality Reporting (IQR) Program, beginning with the FY 2027 program year, as described in section IX.B.2.e. of this final rule. Additionally, we are finalizing the modification to the Hospital VBP Program's scoring of the HCAHPS Survey measure for the FY 2027 through FY 2029 program years to score hospitals on only those dimensions of the survey that will remain unchanged from the current version, as described in section IX.B.2.f. of this final rule. Lastly,
We refer readers to the FY 2024 IPPS/LTCH PPS final rule (88 FR 59084 through 59087) for previously adopted baseline and performance periods for the FY 2025 through FY 2029 program years. We also refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56998) in which we finalized a schedule for all future baseline and performance periods for all measures.
Tables V.L.-03, V.L.-04, V.L.-05, V.L.-06, and V.L.-07 summarize the baseline and performance periods that we have previously adopted.
We refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 49115 through 49118) for previously established performance standards for the FY 2025 program year. We also refer readers to the FY 2024 IPPS/LTCH PPS final rule (88 FR 59089 through 59090) for the previously established performance standards for the FY 2026 program year. We refer readers to the FY 2021 IPPS/LTCH PPS final rule for further discussion on performance standards for which the measures are calculated with lower values representing better performance (85 FR 58855).
We have adopted certain measures for the Safety domain, Clinical Outcomes domain, and the Efficiency and Cost Reduction domain for future program years to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45294 through 45295), we established performance standards for the FY 2027 program year for the Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30- CABG, and COMP-HIP-KNEE) and the Efficiency and Cost Reduction domain measure (MSPB). We note that the performance standards for the MSPB Hospital measure are based on performance period data. Therefore, we are unable to provide numerical equivalents for the standards at this time. The previously established and newly estimated performance standards for the FY 2027 program year are set out in Tables V.L.-08 and V.L.-09.
As discussed in section IX.B.2.f. of this final rule, we are finalizing a modification to the scoring of the HCAHPS Survey for the FY 2027 through FY 2029 program years while the updates to the survey are adopted and publicly reported under the Hospital IQR Program. Scoring will be modified to only score hospitals on the six Hospital VBP Program dimensions of the HCAHPS Survey that will remain unchanged from the current version. These six dimensions of the HCAHPS Survey for the Hospital VBP Program will be:
• “Communication with Nurses,”
• “Communication with Doctors,”
• “Communication about Medicines,”
• “Discharge Information,”
• “Cleanliness and Quietness,” and
• “Overall Rating.”
We are finalizing the proposal to exclude the “Responsiveness of Hospital Staff” and “Care Transition” dimensions from scoring in the Hospital VBP Program's HCAHPS Survey measure in the Person and Community Engagement domain for the FY 2027 through FY 2029 program years. This will allow hospitals to be scored on only those dimensions of the survey in the Hospital VBP Program that will remain unchanged from the current version of the survey while the updated HCAHPS Survey is publicly reported on under the Hospital IQR Program for one year as required by statute. We are also finalizing the proposal to adopt the updated version of the HCAHPS Survey measure for use in the Hospital VBP Program beginning in FY 2030 as outlined in section IX.B.2.g. of this final rule.
Scoring will be modified such that for each of the six dimensions listed previously, Achievement Points (0-10 points) and Improvement Points (0-9 points) will be calculated, the larger of which will be summed across these six dimensions to create a pre-normalized HCAHPS Base Score of 0-60 points (as compared to 0-80 points with the current eight dimensions). The pre-normalized HCAHPS Base Score will then be multiplied by
We invited public comment on this proposal in the FY 2025 IPPS/LTCH PPS proposed rule and have summarized all comments and responses in section IX.B.2. of this final rule.
We have adopted certain measures for the Safety domain, Clinical Outcomes domain, and the Efficiency and Cost Reduction domain for future program years to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In the FY 2023 IPPS/LTCH PPS final rule (86 FR 49118), we established performance standards for the FY 2028 program year for the Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30-CABG, and COMP-HIP-KNEE) and the Efficiency and Cost Reduction domain measure (MSPB Hospital). We note that the performance standards for the MSPB Hospital measure are based on performance period data. Therefore, we are unable to provide numerical equivalents for the standards at this time. The previously established performance standards for these measures are set out in Table V.L.-10.
We have adopted certain measures for the Safety domain, Clinical Outcomes domain, and the Efficiency and Cost Reduction domain for future program years to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59091 through 59092), we established performance standards for the FY 2029 program year for the Clinical Outcomes domain measures (MORT-30-AMI, MORT-30-HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30- CABG, and COMP-HIP-KNEE) and the Efficiency and Cost Reduction domain measure (MSPB Hospital). We note that the performance standards for the MSPB Hospital measure are based on performance period data. Therefore, we are unable to provide numerical equivalents for the standards at this time. The previously established performance standards for these measures are set out in Table V.L.-11.
As discussed previously, we have adopted certain measures for the Clinical Outcomes domain (MORT-30- AMI, MORT-30-HF, MORT-30-PN (updated cohort), MORT-30-COPD, MORT-30-CABG, and COMP-HIP- KNEE) and the Efficiency and Cost Reduction domain (MSPB Hospital) for future program years to ensure that we can adopt baseline and performance periods of sufficient length for performance scoring purposes. In accordance with our methodology for calculating performance standards discussed more fully in the Hospital Inpatient VBP Program final rule (76 FR 26511 through 26513), which is codified at 42 CFR 412.160, we are establishing the following performance standards for the FY 2030 program year for the Clinical Outcomes domain and the Efficiency and Cost Reduction domain. We note that the performance standards for the MSPB Hospital measure are based on performance period data. Therefore, we are unable to provide numerical equivalents for the standards at this time. The newly established performance standards for these measures are set out in Table V.L.-12.
We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50707 through 50709) for a general overview of the HAC Reduction Program and a detailed discussion of the statutory basis for the Program. We also refer readers to 42 CFR 412.170 through 412.172 for codified HAC Reduction Program requirements. Additionally, we refer readers to the CY 2025 OPPS/ASC proposed rule where we are soliciting input on potential future methodological modifications regarding the Safety of Care measure group within the Overall Hospital Quality Star Rating (89 FR 59509 through 59515).
The previously finalized measures for the HAC Reduction Program are shown in table V.M.-01. Technical specifications for the CMS PSI 90 measure can be found on the QualityNet website available at:
We did not make any proposals or policy updates for the HAC Reduction Program in the FY 2025 IPPS/LTCH PPS proposed rule. We refer readers to section I.G.9. of Appendix A of this final rule for an updated estimate of the impact of the Program policies on the proportion of hospitals in the worst performing quartile of the Total HAC Scores for the FY 2025 HAC Reduction Program.
While we did not make any proposals or policy updates to the HAC Reduction Program, we did receive comments from interested parties.
The Rural Community Hospital Demonstration was originally authorized by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). The demonstration has been extended three times since the original 5-year period mandated by the MMA, each time for an additional 5 years. These extensions were authorized by sections 3123 and 10313 of the Affordable Care Act (Pub. L. 111-148), section 15003 of the 21st Century Cures Act (Pub. L. 114-255) (Cures Act) enacted in 2016, and most recently, by section 128 of the Consolidated Appropriations Act of 2021 (Pub. L. 116-260). In this final rule, we summarize the status of the demonstration program, and the current methodologies for implementation and calculating budget neutrality.
We are also finalizing the amount to be applied to the national IPPS payment rates to account for the costs of the demonstration in FY 2025, incorporating the reconciled amount of demonstration costs for FY 2019 into the total offset the national IPPS payment rates for FY 2025.
Section 410A(a) of Public Law 108-173 required the Secretary to establish a demonstration program to test the feasibility and advisability of establishing rural community hospitals to furnish covered inpatient hospital services to Medicare beneficiaries. The demonstration pays rural community hospitals under a reasonable cost-based methodology for Medicare payment purposes for covered inpatient hospital services furnished to Medicare beneficiaries. A rural community hospital, as defined in section 410A(f)(1) of Public Law 108-173, is a hospital that—
• Is located in a rural area (as defined in section 1886(d)(2)(D) of the Act) or is treated as being located in a rural area under section 1886(d)(8)(E) of the Act;
• Has fewer than 51 beds (excluding beds in a distinct part psychiatric or
• Provides 24-hour emergency care services; and
• Is not designated or eligible for designation as a CAH under section 1820 of the Act.
Our policy for implementing the 5-year extension period authorized by Public Law 116-260 (the Consolidated Appropriations Act of 2021) follows upon the previous extensions under the ACA (Pub. L. 111-148) and the Cures Act (Pub. L.114-255). Section 410A of Public Law 108-173 (MMA) initially required a 5-year period of performance. Subsequently, sections 3123 and 10313 of Public Law 111-148 required the Secretary to conduct the demonstration program for an additional 5-year period, to begin on the date immediately following the last day of the initial 5-year period. In addition, Public Law 111-148 limited the number of hospitals participating to no more than 30. Section 15003 of the Cures Act required a 10-year extension period in place of the 5-year extension period under the ACA, thereby extending the demonstration for another 5 years. Section 128 of Public Law 116-260, in turn, revised the statute to indicate a 15-year extension period, instead of the 10-year extension period mandated by the Public Law 114-159 (Cures Act). Please refer to the FY 2023 IPPS proposed and final rules (87 FR 28454 through 28458 and 87 FR 49138 through 49142, respectively) for an account of hospitals entering and withdrawing from the demonstration with these re-authorizations. There are currently 22 hospitals participating in the demonstration.
Section 410A(c)(2) of Public Law 108-173 requires that, in conducting the demonstration program under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount that the Secretary would have paid if the demonstration program under this section was not implemented. This requirement is commonly referred to as “budget neutrality.” Generally, when we implement a demonstration program on a budget neutral basis, the demonstration program is budget neutral on its own terms; in other words, the aggregate payments to the participating hospitals do not exceed the amount that would be paid to those same hospitals in the absence of the demonstration program. We note that the payment methodology for this demonstration, that is, cost-based payments to participating small rural hospitals, makes it unlikely that increased Medicare outlays will produce an offsetting reduction to Medicare expenditures elsewhere. Therefore, in the IPPS final rules spanning the period from FY 2005 through FY 2016, we adjusted the national inpatient PPS rates by an amount sufficient to account for the added costs of this demonstration program, thus applying budget neutrality across the payment system as a whole rather than merely across the participants in the demonstration program. (We applied a different methodology for FY 2017, with the demonstration expected to end prior to the Cures Act extension). As we discussed in the FYs 2005 through 2017 IPPS/LTCH PPS final rules (69 FR 49183; 70 FR 47462; 71 FR 48100; 72 FR 47392; 73 FR 48670; 74 FR 43922, 75 FR 50343, 76 FR 51698, 77 FR 53449, 78 FR 50740, 77 FR 50145; 80 FR 49585; and 81 FR 57034, respectively), we believe that the statutory language of the budget neutrality requirements permits the agency to implement the budget neutrality provision in this manner.
We resumed this methodology of offsetting demonstration costs against the national payment rates in the IPPS final rules from FY 2018 through FY 2024. Please see the FY 2024 IPPS final rule for an account of how we applied the budget neutrality requirement for these fiscal years (88 FR 59114 through 59116).
We have generally incorporated two components into the budget neutrality offset amounts identified in the final IPPS rules in previous years. First, we have estimated the costs of the demonstration for the upcoming fiscal year, generally determined from historical, “as submitted” cost reports for the hospitals participating in that year. Update factors representing nationwide trends in cost and volume increases have been incorporated into these estimates, as specified in the methodology described in the final rule for each fiscal year. Second, as finalized cost reports became available, we determined the amount by which the actual costs of the demonstration for an earlier, given year differed from the estimated costs for the demonstration set forth in the final IPPS rule for the corresponding fiscal year, and incorporated that amount into the budget neutrality offset amount for the upcoming fiscal year. If the actual costs for the demonstration for the earlier fiscal year exceeded the estimated costs of the demonstration identified in the final rule for that year, this difference was added to the estimated costs of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for the upcoming fiscal year. Conversely, if the estimated costs of the demonstration set forth in the final rule for a prior fiscal year exceeded the actual costs of the demonstration for that year, this difference was subtracted from the estimated cost of the demonstration for the upcoming fiscal year when determining the budget neutrality adjustment for the upcoming fiscal year.
We note that we have calculated this difference for FYs 2005 through 2018 between the actual costs of the demonstration as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years.
For the most-recently enacted extension period, under the Consolidated Appropriations Act of 2021, we have continued upon the general budget neutrality methodology used in previous years, as described above in the citations to earlier IPPS final rules. Based on the methodology outlined in the FY 2025 proposed rule, we are finalizing the calculation of the offset amount to be applied to the national IPPS payment rates for FY 2025.
Consistent with the general methodology from previous years, we are estimating the costs of the demonstration for the upcoming fiscal year and incorporating this estimate into the budget neutrality offset amount to be applied to the national IPPS rates for the upcoming fiscal year, that is, FY 2025. We are conducting this estimate for FY 2025 based on the 22 currently participating hospitals. The methodology for calculating this amount for FY 2025 proceeds according to the following steps:
Then, we multiply this amount by the FYs 2023, 2024, and 2025 IPPS market basket percentage increases, which are calculated by the CMS Office of the Actuary. (We are using the market basket percentage increase for FY 2025, which can be found at section II.B. of the preamble of this final rule). The result for the 22 hospitals is the general estimated reasonable cost amount for covered inpatient hospital services for FY 2025.
Consistent with our methods in previous years for formulating this estimate, we are applying the IPPS market basket percentage increases for FYs 2023 through 2025 to the applicable estimated reasonable cost amount (previously described) in order to model the estimated FY 2025 reasonable cost amount under the demonstration. We believe that the IPPS market basket percentage increases appropriately indicate the trend of increase in inpatient hospital operating costs under the reasonable cost methodology for the years involved.
For this final rule, the resulting amount is $49,914,526, to be incorporated into the budget neutrality offset adjustment for FY 2025. This estimated amount is based on the specific assumptions regarding the data sources used, that is, recently available “as submitted” cost reports and revised historical update factors for cost and payment for the FY 2025 IPPS final rule.
As described earlier, we have calculated the difference for FYs 2005 through 2018 between the actual costs of the demonstration, as determined from finalized cost reports once available, and estimated costs of the demonstration as identified in the applicable IPPS final rules for these years.
At this time, for the FY 2025 final rule, all of the finalized cost reports are available for the 27 hospitals that completed cost report periods beginning in FY 2019 under the demonstration payment methodology. We have determined the actual costs of the demonstration for FY 2019 based on these cost reports to be $40,429,606. (We note that the Medicare Administrative Contractors (MACs) have corrected the calculation of cost amounts under the demonstration for several of the participating hospitals, and that, although the MACs have not issued the final revised cost reports, we have included these revised cost amounts for these specific hospitals in our determination of the total cost amount for FY 2019).
The estimated amount for the demonstration costs for FY 2019 that was incorporated into the finalized budget neutrality offset amount in the 2019 IPPS final rule was $70,929,313. (83 FR 41504). Therefore, the actual costs of the demonstration for FY 2019 as determined from finalized cost reports fell short of this estimated amount by $30,499,707. In keeping with previous policy, we are subtracting the amount of this difference for the prior year (that is, $30,499,707) for FY 2019) from the estimated amount of the costs of the demonstration for the upcoming fiscal year, (that is, $49,914,526 for FY 2025) in determining the total budget neutrality offset amount for FY 2025
Therefore, for this FY 2025 IPPS/LTCH PPS final rule, the final budget neutrality offset amount for FY 2025 is the difference between: (1) $49,914,526, which is the amount determined under section II.A.4.h. of the Addendum of this final rule, representing the difference applicable to FY 2025 between the sum of the estimated reasonable cost amounts that would be paid under the demonstration for covered inpatient services to the 22 hospitals eligible to participate in the fiscal year and the sum of the estimated amounts that would generally be paid if the demonstration had not been implemented; and (2) $30,499,707, which is the difference between the estimated costs for the demonstration for FY 2019, which was incorporated into the finalized budget neutrality offset amount for 2019, and the actual costs of the demonstration for FY 2019, determined from finalized cost reports for the 27 hospitals that participated in FY 2019. This difference between (1) and (2) is $19,414,819, representing the budget neutrality offset amount to be applied to the national IPPS payment rates for FY 2025.
Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient acute hospital services in accordance with a prospective payment system established by the Secretary. Under the statute, the Secretary has broad authority in establishing and implementing the IPPS for acute care hospital inpatient capital-related costs. We initially implemented the IPPS for capital-related costs in the FY 1992 IPPS final rule (56 FR 43358). In that final rule, we established a 10-year transition period to change the payment methodology for Medicare hospital inpatient capital-related costs from a reasonable cost-based payment methodology to a prospective payment methodology (based fully on the Federal rate).
FY 2001 was the last year of the 10-year transition period that was established to phase in the IPPS for hospital inpatient capital-related costs. For cost reporting periods beginning in FY 2002, capital IPPS payments are based solely on the Federal rate for almost all acute care hospitals (other than hospitals receiving certain exception payments and certain new hospitals). (We refer readers to the FY 2002 IPPS final rule (66 FR 39910 through 39914) for additional information on the methodology used to determine capital IPPS payments to hospitals both during and after the transition period.)
The basic methodology for determining capital prospective payments using the Federal rate is set forth in the regulations at 42 CFR 412.312. For the purpose of calculating capital payments for each discharge, the standard Federal rate is adjusted as follows:
(Standard Federal Rate) × (DRG Weight) × (Geographic Adjustment Factor (GAF) × (COLA for hospitals located in Alaska and Hawaii) × (1 + Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if applicable).
In addition, under § 412.312(c), hospitals also may receive outlier payments under the capital IPPS for extraordinarily high-cost cases that qualify under the thresholds established for each fiscal year.
The regulations at 42 CFR 412.348 provide for certain exception payments under the capital IPPS. The regular exception payments provided under § 412.348(b) through (e) were available only during the 10-year transition period. For a certain period after the transition period, eligible hospitals may have received additional payments under the special exceptions provisions at § 412.348(g). However, FY 2012 was the final year hospitals could receive special exceptions payments. For additional details regarding these exceptions policies, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51725).
Under § 412.348(f), a hospital may request an additional payment if the hospital incurs unanticipated capital expenditures in excess of $5 million due to extraordinary circumstances beyond the hospital's control. Additional information on the exception payment for extraordinary circumstances in § 412.348(f) can be found in the FY 2005 IPPS final rule (69 FR 49185 and 49186).
Under the capital IPPS, the regulations at 42 CFR 412.300(b) define a new hospital as a hospital that has operated (under previous or current ownership) for less than 2 years and lists examples of hospitals that are not considered new hospitals. In accordance with § 412.304(c)(2), under the capital IPPS, a new hospital is paid 85 percent of its allowable Medicare inpatient hospital capital related costs through its first 2 years of operation, unless the new hospital elects to receive full prospective payment based on 100 percent of the Federal rate. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51725) for additional information on payments to new hospitals under the capital IPPS.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57061), we revised the regulations at 42 CFR 412.374 relating to the calculation of capital IPPS payments to hospitals located in Puerto Rico beginning in FY 2017 to parallel the change in the statutory calculation of operating IPPS payments to hospitals located in Puerto Rico, for discharges occurring on or after January 1, 2016, made by section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113). Section 601 of Public Law 114-113 increased the applicable Federal percentage of the operating IPPS payment for hospitals located in Puerto Rico from 75 percent to 100 percent and decreased the applicable Puerto Rico percentage of the operating IPPS payments for hospitals located in Puerto Rico from 25 percent to zero percent, applicable to discharges occurring on or after January 1, 2016. As such, under revised § 412.374, for discharges occurring on or after October 1, 2016, capital IPPS payments to hospitals located in Puerto Rico are based on 100 percent of the capital Federal rate.
The annual update to the national capital Federal rate, as provided for in 42 CFR 412.308(c), for FY 2025 is discussed in section III. of the Addendum to this FY 2025 IPPS/LTCH PPS final rule.
Certain hospitals excluded from a prospective payment system, including children's hospitals, 11 cancer
As explained in the FY 2006 IPPS final rule (70 FR 47396 through 47398), beginning with FY 2006, we have used the percentage increase in the IPPS operating market basket to update the target amounts for children's hospitals, the 11 cancer hospitals, and RNHCIs.
Consistent with the regulations at §§ 412.23(g) and 413.40(a)(2)(ii)(A) and (c)(3)(viii), we also have used the percentage increase in the IPPS operating market basket to update target amounts for short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. In the FY 2018 IPPS/LTCH PPS final rule, we rebased and revised the IPPS operating market basket to a 2014 base year, effective for FY 2018 and subsequent fiscal years (82 FR 38158 through 38175), and finalized the use of the percentage increase in the 2014-based IPPS operating market basket to update the target amounts for children's hospitals, the 11 cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for FY 2018 and subsequent fiscal years. As discussed in section IV. of the preamble of the FY 2022 IPPS/LTCH PPS final rule (86 FR 45194 through 45207), we rebased and revised the IPPS operating market basket to a 2018 base year. Therefore, we used the percentage increase in the 2018-based IPPS operating market basket to update the target amounts for children's hospitals, the 11 cancer hospitals, RNHCIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa for FY 2022 and subsequent fiscal years.
For the FY 2025 IPPS/LTCH PPS proposed rule, based on IGI's 2023 fourth quarter forecast, we estimated that the 2018-based IPPS operating market basket percentage increase for FY 2025 would be 3.0 percent (that is, the estimate of the market basket rate-of-increase). Based on this estimate, the FY 2025 rate-of-increase percentage that we proposed to apply to the FY 2024 target amounts in order to calculate the FY 2025 target amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa was 3.0 percent, in accordance with the applicable regulations at 42 CFR 413.40. However, we proposed that if more recent data became available for the FY 2025 IPPS/LTCH PPS final rule, we would use such data, if appropriate, to calculate the final IPPS operating market basket update for FY 2025. Based on more recent data available (IGI's second quarter 2024 forecast), we estimate that the 2018-based IPPS operating market basket percentage increase for FY 2025 is 3.4 percent (that is, the estimate of the market basket rate-of-increase). Based on this estimate, the FY 2025 rate-of-increase percentage that we will apply to the FY 2024 target amounts in order to calculate the FY 2025 target amounts for children's hospitals, the 11 cancer hospitals, RNCHIs, and short-term acute care hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa is 3.4 percent, in accordance with the applicable regulations at 42 CFR 413.40.
In addition, payment for inpatient operating costs for hospitals classified under section 1886(d)(1)(B)(vi) of the Act (which we refer to as “extended neoplastic disease care hospitals”) for cost reporting periods beginning on or after January 1, 2015, is to be made as described in 42 CFR 412.526(c)(3), and payment for capital costs for these hospitals is to be made as described in 42 CFR 412.526(c)(4). (For additional information on these payment regulations, we refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38321 through 38322).) Section 412.526(c)(3) provides that the hospital's Medicare allowable net inpatient operating costs for that period are paid on a reasonable cost basis, subject to that hospital's ceiling, as determined under § 412.526(c)(1), for that period. Under § 412.526(c)(1), for each cost reporting period, the ceiling was determined by multiplying the updated target amount, as defined in § 412.526(c)(2), for that period by the number of Medicare discharges paid during that period. Section 412.526(c)(2)(i) describes the method for determining the target amount for cost reporting periods beginning during FY 2015. Section 412.526(c)(2)(ii) specifies that, for cost reporting periods beginning during fiscal years after FY 2015, the target amount will equal the hospital's target amount for the previous cost reporting period updated by the applicable annual rate-of-increase percentage specified in § 413.40(c)(3) for the subject cost reporting period (79 FR 50197).
For FY 2025, in accordance with §§ 412.22(i) and 412.526(c)(2)(ii) of the regulations, for cost reporting periods beginning during FY 2025, the proposed update to the target amount for extended neoplastic disease care hospitals (that is, hospitals described under § 412.22(i)) is the applicable annual rate-of-increase percentage specified in § 413.40(c)(3), which was estimated to be the percentage increase in the 2018-based IPPS operating market basket (that is, the estimate of the market basket rate-of-increase). Accordingly, the proposed update to an extended neoplastic disease care hospital's target amount for FY 2025 was 3.0 percent, which was based on IGI's fourth quarter 2023 forecast. Furthermore, we proposed that if more recent data became available for the FY 2025 IPPS/LTCH PPS final rule, we would use such data, if appropriate, to calculate the IPPS operating market basket rate of increase for FY 2025. Based on more recent data available (IGI's second quarter 2024 forecast), we estimate that the 2018-based IPPS operating market basket percentage increase for FY 2025 is 3.4 percent (that is, the estimate of the market basket rate-of-increase). Accordingly, the FY 2025 rate-of-increase percentage that we will apply to the FY 2024 target amounts in order to calculate the FY 2025 target amounts to an extended neoplastic disease care hospital is 3.4 percent, which is based on IGI's second quarter 2024 forecast.
We received no comments on this proposal and therefore are finalizing
Section 4419(b) of Public Law 105-33 requires the Secretary to publish annually in the
The process of requesting, reviewing, and awarding an adjustment payment is likely to occur over a 2-year period or longer. First, generally, an excluded hospital must file its cost report for the fiscal year in accordance with § 413.24(f)(2) of the regulations. The MAC reviews the cost report and issues a notice of provider reimbursement (NPR). Once the hospital receives the NPR, if its operating costs are in excess of the ceiling, the hospital may file a request for an adjustment payment. After the MAC receives the hospital's request in accordance with applicable regulations, the MAC or CMS, depending on the type of adjustment requested, reviews the request and determines if an adjustment payment is warranted. This determination is sometimes not made until more than 180 days after the date the request is filed because there are times when the request applications are incomplete and additional information must be requested in order to have a completed request application. However, in an attempt to provide interested parties with data on the most recent adjustment payments for which we have data, we are publishing data on adjustment payments that were processed by the MAC or CMS during FY 2023.
The table that follows includes the most recent data available from the MACs and CMS on adjustment payments that were adjudicated during FY 2023. As indicated previously, the adjustments made during FY 2023 only pertain to cost reporting periods ending in years prior to FY 2023. Total adjustment payments made to IPPS-excluded hospitals during FY 2023 are $98,720,259.00. The table depicts for each class of hospitals, in the aggregate, the number of adjustment requests adjudicated, the excess operating costs over the ceiling, and the amount of the adjustment payments.
Section 1820 of the Act provides for the establishment of Medicare Rural Hospital Flexibility Programs (MRHFPs), under which individual States may designate certain facilities as critical access hospitals (CAHs). Facilities that are so designated and meet the CAH conditions of participation under 42 CFR part 485, subpart F, will be certified as CAHs by CMS. Regulations governing payments to CAHs for services to Medicare beneficiaries are located in 42 CFR part 413.
The Frontier Community Health Integration Project Demonstration was originally authorized by section 123 of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275). The demonstration has been extended by section 129 of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) for an additional 5 years. In this final rule, we are summarizing the status of the demonstration program, and the ongoing methodologies for implementation and budget neutrality for the demonstration extension period.
As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119 through 59122), section 123 of the Medicare Improvements for Patients and Providers Act of 2008, as amended by section 3126 of the Affordable Care Act, authorized a demonstration project to allow eligible entities to develop and test new models for the delivery of health care services in eligible counties to improve access to and better integrate the delivery of acute care, extended care and other health care services to Medicare beneficiaries. The demonstration was titled “Demonstration Project on Community Health Integration Models in Certain Rural Counties,” and commonly known as the Frontier Community Health Integration Project (FCHIP) Demonstration.
The authorizing statute stated the eligibility criteria for entities to be able to participate in the demonstration. An eligible entity, as defined in section 123(d)(1)(B) of Public Law 110-275, as amended, is a Medicare Rural Hospital Flexibility Program (MRHFP) grantee under section 1820(g) of the Act (that is, a CAH); and is located in a state in which at least 65 percent of the counties in the state are counties that have 6 or less residents per square mile.
The authorizing statute stipulated several other requirements for the demonstration. In addition, section 123(g)(1)(B) of Public Law 110-275 required that the demonstration be budget neutral. Specifically, this provision stated that, in conducting the demonstration project, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project under the section were not implemented. Furthermore, section 123(i) of Public Law 110-275 stated that the Secretary may waive such requirements of titles XVIII and XIX of the Act as may be necessary and appropriate for the purpose of carrying out the demonstration project, thus allowing the waiver of Medicare payment rules encompassed in the demonstration. CMS selected CAHs to participate in four interventions, under which specific waivers of Medicare payment rules would allow for enhanced payment for telehealth, skilled nursing facility/nursing facility beds, ambulance services, and home health services. These waivers were formulated with the goal of increasing access to care with no net increase in costs.
Section 123 of Public Law 110-275 initially required a 3-year period of performance. The FCHIP Demonstration began on August 1, 2016, and concluded on July 31, 2019 (referred to in this section of the final rule as the “initial period”). Subsequently, section 129 of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) extended the demonstration by 5 years (referred to in this section of the final rule as the “extension period”). The Secretary is required to conduct the demonstration for an additional 5-year period. CAHs participating in the demonstration project during the extension period began such participation in their cost reporting year that began on or after January 1, 2022.
As described in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119 through 59122), 10 CAHs were selected for participation in the demonstration initial period. The selected CAHs were located in three states—Montana, Nevada, and North Dakota—and participated in three of the four interventions identified in the FY 2024 IPPS/LTCH PPS final rule. Each CAH was allowed to participate in more than one of the interventions. None of the selected CAHs were participants in the home health intervention, which was the fourth intervention.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through 45328), CMS concluded that the initial period of the FCHIP Demonstration (covering the performance period of August 1, 2016, to July 31, 2019) had satisfied the budget neutrality requirement described in section 123(g)(1)(B) of Pub L. 110-275. Therefore, CMS did not apply a budget neutrality payment offset policy for the initial period of the demonstration.
Section 129 of Public Law 116-260, stipulates that only the 10 CAHs that participated in the initial period of the FCHIP Demonstration are eligible to participate during the extension period. Among the eligible CAHs, five have elected to participate in the extension period. The selected CAHs are located in two states—Montana and North Dakota—and are implementing three of the four interventions. The eligible CAH participants elected to change the number of interventions and payment waivers they would participate in during the extension period. CMS accepted and approved the CAHs intervention and payment waiver updates. For the extension period, five CAHs are participants in the telehealth intervention, three CAHs are participants in the skilled nursing facility/nursing facility bed intervention, and three CAHs are participants in the ambulance services intervention. As with the initial period, each CAH was allowed to participate in more than one of the interventions during the extension period. None of the selected CAHs are participants in the home health intervention, which was the fourth intervention.
As described in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119 through 59122), CMS waived certain Medicare rules for CAHs participating in the demonstration initial period to allow for alternative reasonable cost-based payment methods in the three distinct intervention service areas: telehealth services, ambulance services, and skilled nursing facility/nursing facility (SNF/NF) beds expansion. The payments and payment waiver provisions only apply if the CAH is a participant in the associated intervention. CMS Intervention Payment and Payment Waivers for the demonstration extension period consist of the following:
CMS waives section 1834(m)(2)(B) of the Act, which specifies the facility fee to the originating site for Medicare telehealth services. CMS modifies the facility fee payment specified under section 1834(m)(2)(B) of the Act to make reasonable cost-based reimbursement to the participating CAH where the participating CAH serves as the originating site for a telehealth service furnished to an eligible telehealth individual, as defined in section 1834(m)(4)(B) of the Act. CMS reimburses the participating CAH serving as the originating site at 101 percent of its reasonable costs for overhead, salaries and fringe benefits associated with telehealth services at the participating CAH. CMS does not fund or provide reimbursement to the participating CAH for the purchase of new telehealth equipment.
CMS waives section 1834(m)(2)(A) of the Act, which specifies that the payment for a telehealth service furnished by a distant site practitioner is the same as it would be if the service had been furnished in-person. CMS modifies the payment amount specified for telehealth services under section 1834(m)(2)(A) of the Act to make reasonable cost-based reimbursement to the participating CAH for telehealth services furnished by a physician or practitioner located at distant site that is a participating CAH that is billing for the physician or practitioner professional services. Whether the participating CAH has or has not elected Optional Payment Method II for outpatient services, CMS would pay the participating CAH 101 percent of reasonable costs for telehealth services when a physician or practitioner has reassigned their billing rights to the participating CAH and furnishes telehealth services from the participating CAH as a distant site practitioner. This means that participating CAHs that are billing under the Standard Method on behalf of employees who are physicians or practitioners (as defined in section 1834(m)(4)(D) and (E) of the Act, respectively) would be eligible to bill for distant site telehealth services furnished by these physicians and practitioners. Additionally, CAHs billing under the Optional Method would be reimbursed based on 101 percent of reasonable costs, rather than paid based on the Medicare physician fee schedule, for the distant site telehealth services furnished by physicians and practitioners who have reassigned their billing rights to the CAH. For distant site telehealth services furnished by physicians or practitioners who have not reassigned billing rights to a participating CAH, payment to the distant site physician or practitioner would continue to be made as usual under the Medicare physician fee schedule. Except as described herein, CMS does not waive any other provisions of section 1834(m) of the Act for purposes of the telehealth services intervention payments, including the scope of Medicare telehealth services as established under section 1834(m)(4)(F) of the Act.
CMS waives 42 CFR 413.70(b)(5)(i)(D) and section 1834(l)(8) of the Act, which provides that payment for ambulance services furnished by a CAH, or an entity owned and operated by a CAH, is 101 percent of the reasonable costs of the CAH or the entity in furnishing the ambulance services, but only if the CAH or the entity is the only provider or supplier of ambulance services located within a 35-mile drive of the CAH, excluding ambulance providers or suppliers that are not legally authorized to furnish ambulance services to transport individuals to or from the CAH. The participating CAH would be paid 101 percent of reasonable costs for its ambulance services regardless of whether there is any provider or supplier of ambulance services located within a 35-mile drive of the participating CAH or participating CAH-owned and operated entity. CMS would
CMS waives 42 CFR 485.620(a), 42 CFR 485.645(a)(2), and section 1820(c)(2)(B)(iii) of the Act which limit CAHs to maintaining no more than 25 inpatient beds, including beds available for acute inpatient or swing bed services. CMS waives 1820(f) of the Act permitting designating or certifying a facility as a critical access hospital for which the facility at any time is furnishing inpatient beds which exceed more than 25 beds. Under this waiver, if the participating CAH has received swing bed approval from CMS, the participating CAH may maintain up to ten additional beds (for a total of 35 beds) available for acute inpatient or swing bed services; however, the participating CAH may only use these 10 additional beds for nursing facility or skilled nursing facility level of care. CMS would pay the participating CAH 101 percent of reasonable costs for its SNF/NF services furnished in the 10 additional beds.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through 45328), we finalized a policy to address the budget neutrality requirement for the demonstration initial period. As explained in the FY 2022 IPPS/LTCH PPS final rule, we based our selection of CAHs for participation in the demonstration with the goal of maintaining the budget neutrality of the demonstration on its own terms meaning that the demonstration would produce savings from reduced transfers and admissions to other health care providers, offsetting any increase in Medicare payments as a result of the demonstration. However, because of the small size of the demonstration and uncertainty associated with the projected Medicare utilization and costs, the policy we finalized for the demonstration initial period of performance in the FY 2022 IPPS/LTCH PPS final rule provides a contingency plan to ensure that the budget neutrality requirement in section 123 of Public Law 110-275 is met.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144 through 49147), we adopted the same budget neutrality policy contingency plan used during the demonstration initial period to ensure that the budget neutrality requirement in section 123 of Public Law 110-275 is met during the demonstration extension period. If analysis of claims data for Medicare beneficiaries receiving services at each of the participating CAHs, as well as from other data sources, including cost reports for the participating CAHs, shows that increases in Medicare payments under the demonstration during the 5-year extension period are not sufficiently offset by reductions elsewhere, we would recoup the additional expenditures attributable to the demonstration through a reduction in payments to all CAHs nationwide.
As explained in the FY 2023 IPPS/LTCH PPS final rule, because of the small scale of the demonstration, we indicated that we did not believe it would be feasible to implement budget neutrality for the demonstration extension period by reducing payments to only the participating CAHs. Therefore, in the event that this demonstration extension period is found to result in aggregate payments in excess of the amount that would have been paid if this demonstration extension period were not implemented, CMS policy is to comply with the budget neutrality requirement finalized in the FY 2023 IPPS/LTCH PPS final rule, by reducing payments to all CAHs, not just those participating in the demonstration extension period.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49144 through 49147), we stated that we believe it is appropriate to make any payment reductions across all CAHs because the FCHIP Demonstration was specifically designed to test innovations that affect delivery of services by the CAH provider category. We explained our belief that the language of the statutory budget neutrality requirement at section 123(g)(1)(B) of Public Law 110-275 permits the agency to implement the budget neutrality provision in this manner. The statutory language merely refers to ensuring that aggregate payments made by the Secretary do not exceed the amount which the Secretary estimates would have been paid if the demonstration project was not implemented and does not identify the range across which aggregate payments must be held equal.
In the FY 2023 IPPS/LTCH PPS final rule, we finalized a policy that in the event the demonstration extension period is found not to have been budget neutral, any excess costs would be recouped within one fiscal year. We explained our belief that this policy is a more efficient timeframe for the government to conclude the demonstration operational requirements (such as analyzing claims data, cost report data or other data sources) to adjudicate the budget neutrality payment recoupment process due to any excess cost that occurred as result of the demonstration extension period.
As explained in the FY 2022 IPPS/LTCH PPS final rule, we finalized a policy to address the demonstration budget neutrality methodology and analytical approach for the initial period of the demonstration. In the FY 2023 IPPS/LTCH PPS final rule, we finalized a policy to adopt the budget neutrality methodology and analytical approach used during the demonstration initial period to ensure budget neutrality for the extension period. The analysis of budget neutrality during the initial period of the demonstration identified both the costs related to providing the intervention services under the FCHIP Demonstration and any potential downstream effects of the intervention-related services, including any savings that may have accrued.
The budget neutrality analytical approach for the demonstration initial period incorporated two major data components: (1) Medicare cost reports; and (2) Medicare administrative claims. As described in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45323 through 45328), CMS computed the cost of the demonstration for each fiscal year of the demonstration initial period using Medicare cost reports for the participating CAHs, and Medicare administrative claims and enrollment data for beneficiaries who received demonstration intervention services.
In addition, to capture the full impact of the interventions, CMS developed a statistical modeling, Difference-in-Difference (DiD) regression analysis to estimate demonstration expenditures and compute the impact of expenditures on the intervention services by comparing cost data for the demonstration and non-demonstration groups using Medicare administrative claims across the demonstration period of performance under the initial period of the demonstration. The DiD regression analysis would compare the direct cost and potential downstream effects of intervention services, including any savings that may have accrued, during the baseline and performance period for both the demonstration and comparison groups.
Second, the Medicare administrative claims analysis would be reconciled
As stated in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59119 through 59122), our policy for implementing the 5-year extension period for section 129 of Public Law 116-260 follows same budget neutrality methodology and analytical approach as the demonstration initial period methodology. While we expect to use the same methodology that was used to assess the budget neutrality of the FCHIP Demonstration during initial period of the demonstration to assess the financial impact of the demonstration during this extension period, upon receiving data for the extension period, we may update and/or modify the FCHIP budget neutrality methodology and analytical approach to ensure that the full impact of the demonstration is appropriately captured.
At this time, for the FY 2025 IPPS/LTCH PPS final rule, while this discussion represents our anticipated approach to assessing the financial impact of the demonstration extension period based on upon receiving data for the full demonstration extension period, we may update and/or modify the FCHIP Demonstration budget neutrality methodology and analytical approach to ensure that the full impact of the demonstration is appropriately captured.
Therefore, we did not propose to apply a budget neutrality payment offset to payments to CAHs in FY 2025. This policy would have no impact for any national payment system for FY 2025. We received no comments on this provision and therefore are finalizing this provision without modification.
Section 123 of the Medicare, Medicaid, and SCHIP (State Children's Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), as amended by section 307(b) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554), provides for payment for both the operating and capital- related costs of hospital inpatient stays in long-term care hospitals (LTCHs) under Medicare Part A based on prospectively set rates. The Medicare prospective payment system (PPS) for LTCHs applies to hospitals that are described in section 1886(d)(1)(B)(iv) of the Act, effective for cost reporting periods beginning on or after October 1, 2002.
Section 1886(d)(1)(B)(iv)(I) of the Act originally defined an LTCH as a hospital that has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days.
Section 1886(d)(1)(B)(iv)(II) of the Act also provided an alternative definition of LTCHs (“subclause II” LTCHs). However, section 15008 of the 21st Century Cures Act (Pub. L. 114-255) amended section 1886 of the Act to exclude former “subclause II” LTCHs from being paid under the LTCH PPS and created a new category of IPPS-excluded hospitals, which we refer to as “extended neoplastic disease care hospitals,” to be paid as hospitals that were formally classified as “subclause (II)” LTCHs (82 FR 38298).
Section 123 of the BBRA requires the PPS for LTCHs to be a “per discharge” system with a diagnosis-related group (DRG) based patient classification system that reflects the differences in patient resource use and costs in LTCHs.
Section 307(b)(1) of the BIPA, among other things, mandates that the Secretary shall examine, and may provide for, adjustments to payments under the LTCH PPS, including adjustments to DRG weights, area wage adjustments, geographic reclassification, outliers, updates, and a disproportionate share adjustment.
In the August 30, 2002,
The LTCH PPS replaced the reasonable cost-based payment system under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (Pub. L. 97248) for payments for inpatient services provided by an LTCH with a cost reporting period beginning on or after October 1, 2002. (The regulations implementing the TEFRA reasonable-cost-based payment provisions are located at 42 CFR part 413.) With the implementation of the PPS for acute care hospitals authorized by the Social Security Amendments of 1983 (Pub. L. 98-21), which added section 1886(d) to the Act, certain hospitals, including LTCHs, were excluded from the PPS for acute care hospitals and paid their reasonable costs for inpatient services subject to a per discharge limitation or target amount under the TEFRA system. For each cost reporting period, a hospital specific ceiling on payments was determined by multiplying the hospital's updated target amount by the number of total current year Medicare discharges. (Generally, in this section of the preamble of this final rule, when we refer to discharges, we describe Medicare discharges.) The August 30, 2002, final rule further details the payment policy under the TEFRA system (67 FR 55954).
In the August 30, 2002, final rule, we provided for a 5-year transition period from payments under the TEFRA system to payments under the LTCH PPS. During this 5-year transition period, an LTCH's total payment under the PPS was based on an increasing percentage of the Federal rate with a corresponding decrease in the percentage of the LTCH PPS payment that is based on reasonable cost concepts, unless an LTCH made a one-time election to be paid based on 100 percent of the Federal rate. Beginning with LTCHs' cost reporting periods beginning on or after
In addition, in the August 30, 2002, final rule, we presented an in-depth discussion of the LTCH PPS, including the patient classification system, relative weights, payment rates, additional payments, and the budget neutrality requirements mandated by section 123 of the BBRA. The same final rule that established regulations for the LTCH PPS under 42 CFR part 412, subpart O, also contained LTCH provisions related to covered inpatient services, limitation on charges to beneficiaries, medical review requirements, furnishing of inpatient hospital services directly or under arrangement, and reporting and recordkeeping requirements. We refer readers to the August 30, 2002, final rule for a comprehensive discussion of the research and data that supported the establishment of the LTCH PPS (67 FR 55954).
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623), we implemented the provisions of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which mandated the application of the “site neutral” payment rate under the LTCH PPS for discharges that do not meet the statutory criteria for exclusion beginning in FY 2016. For cost reporting periods beginning on or after October 1, 2015, discharges that do not meet certain statutory criteria for exclusion are paid based on the site neutral payment rate. Discharges that do meet the statutory criteria continue to receive payment based on the LTCH PPS standard Federal payment rate. For more information on the statutory requirements of the Pathway for SGR Reform Act of 2013, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 57068 through 57075).
In the FY 2018 IPPS/LTCH PPS final rule, we implemented several provisions of the 21st Century Cures Act (“the Cures Act”) (Pub. L. 114-255) that affected the LTCH PPS. (For more information on these provisions, we refer readers to (82 FR 38299).)
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41529), we made conforming changes to our regulations to implement the provisions of section 51005 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), which extends the transitional blended payment rate for site neutral payment rate cases for an additional 2 years. We refer readers to section VII.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule for a discussion of our final policy. In addition, in the FY 2019 IPPS/LTCH PPS final rule, we removed the 25-percent threshold policy under 42 CFR 412.538, which was a payment adjustment that was applied to payments for Medicare patient LTCH discharges when the number of such patients originating from any single referring hospital was in excess of the applicable threshold for given cost reporting period.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42439), we further revised our regulations to implement the provisions of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) that relate to the payment adjustment for discharges from LTCHs that do not maintain the requisite discharge payment percentage and the process by which such LTCHs may have the payment adjustment discontinued.
Under the regulations at § 412.23(e)(1), to qualify to be paid under the LTCH PPS, a hospital must have a provider agreement with Medicare. Furthermore, § 412.23(e)(2)(i), which implements section 1886(d)(1)(B)(iv) of the Act, requires that a hospital have an average Medicare inpatient length of stay of greater than 25 days to be paid under the LTCH PPS. In accordance with section 1206(a)(3) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67), as amended by section 15007 of Public Law 114-255, we amended our regulations to specify that Medicare Advantage plans' and site neutral payment rate discharges are excluded from the calculation of the average length of stay for all LTCHs, for discharges occurring in cost reporting period beginning on or after October 1, 2015.
As explained more fully previously, LTCHs are required to have an average length of stay (ALOS) of greater than 25 days. Prior to a hospital being classified as an LTCH, the hospital must first participate in Medicare as a hospital (typically a hospital paid under the IPPS) during which time ALOS data is gathered. This data is used to determine whether the hospital has an ALOS of greater than 25 days, which is required to be classified as an LTCH. We generally refer to the period during which a hospital seeks to establish the required ALOS as a “qualifying period.” The qualifying period is the 6-month period immediately preceding the hospital's conversion to an LTCH, and it has been our policy that the requisite ALOS must be demonstrated based on patient data from at least 5 consecutive months of this period. For example, for a hospital seeking to become an LTCH effective January 1, 2025, the qualifying period would be July 1, 2024 through December 31, 2024 (that is, the 6 months immediately preceding the conversion to an LTCH). In order for the hospital to convert to an LTCH, the ALOS must be demonstrated for a period of at least 5 consecutive months (for example, July 1, 2024 through November 30, 2024 or July 15, 2024 to December 14, 2024) of the 6 month qualifying period.
It has been our general policy to allow a hospital to be classified as an LTCH after only the 6-month qualifying period (as opposed to requiring the completion of the more typical 12-month cost reporting period). We have also referred to the ability of a hospital to be classified as an LTCH after a 6-month qualifying period in preamble previously (73 FR 29705), and the Provider Reimbursement Manual at 3001.4 refers to using data from a 6-month period for hospitals which have not yet filed a cost report. However, our regulations have never explicitly articulated how the qualifying period policy applies to a hospital seeking classification as an LTCH. Therefore, we proposed to revise our regulations at 42 CFR 412.23(e)(4) to explicitly state that a hospital that seeks to be classified as an LTCH may do so after completion of a 6-month qualifying period, provided that the hospital demonstrates an average length of stay (calculated under our existing regulations) of greater than 25 days during at least five consecutive months of the 6-month qualifying period (which is the same timeframe as the “cure period” for existing LTCHs). Specifically, we proposed to add new paragraph § 412.23(e)(4)(iv) to explain the qualifying period for hospitals seeking LTCH classification.
Further, we proposed to revise certain paragraphs and reorder certain paragraphs in § 412.23(e) to improve the clarity of the regulation by clarifying how provisions apply to existing LTCHs and which provisions apply to hospitals seeking classification as an LTCH. First, we proposed to revise paragraph § 412.23(e)(3)(i) to cross-reference new subparagraphs § 412.23(e)(4)(iv) and (e)(4)(v). Second, we proposed to revise paragraph § 412.23(e)(3)(iii) to clarify that it applies in cases of hospitals that have already obtained LTCH classification when the LTCH would not otherwise maintain an average Medicare inpatient length of stay of greater than
We noted that none of these proposed revisions reflect a change to our existing policy; instead, we stated that we believe these revisions will improve the clarity of the regulatory text and better reflect our existing policy.
However, in considering this comment, we noticed that our existing regulation text at § 412.23(e)(3)(iii) (which describes the “cure period” policy for when an existing LTCH's ALOS does not meet the greater than 25 days threshold for a cost reporting period), § 412.23(e)(4)(iii) (which describes the rules for provider based satellite facilities or remote locations of LTCHs becoming separately participating hospitals), § 412.23(e)(4)(v) (which describes the rules for hospitals seeking to participate in Medicare as LTCHs which experience a change of ownership), as well as our proposed clarification to § 412.23(e)(3)(iii), § 412.23(e)(4)(iii), and § 412.23(e)(4)(v) inadvertently omit the word “consecutive” when describing the time period for the calculation. We believe that this may be the source of commenters' confusion on our proposed regulatory language describing how the calculation is performed for the qualifying period;
We believe that, consistent with the way the ALOS is calculated for existing LTCHs, whether for cost reporting periods or cure periods, the ALOS for a hospital's qualifying period should be calculated based on one, single, continuous period. For this reason, we believe that the inclusion of the word “consecutive” is both appropriate and necessary in the regulation text and are finalizing our proposed addition of new paragraph § 412.23(e)(4)(iv). Moreover, for consistency with language used in § 412.23(e)(3)(iii) and § 412.23(e)(4)(iii), we are also adding “the period of” to the text of the finalized regulation. Additionally, in the interest of making our regulations consistent with each other and current policy, as discussed previously, we are adding the word “consecutive” to § 412.23(e)(3)(iii) and § 412.23(e)(4)(iii), and § 412.23(e)(4)(v) as well as the words “the period of at least” to § 412.23(e)(4)(iii). We note, as stated previously, these changes do not represent a change from existing policy, and are instead merely a clarification of our existing policy. We will also clarify in our guidance subsequent to this rule that the requirement is that the ALOS for the qualifying period or cure period, as applicable, in its entirety needs to be greater than 25 days, however it is not necessary for the ALOS in each individual month of that period be greater than 25 days.
We received no other comments with respect to our proposed reordering of and revisions to other paragraphs in 412.23 and as such are finalizing those proposals without modification.
The following hospitals are paid under special payment provisions, as described in § 412.22(c) and, therefore, are not subject to the LTCH PPS rules:
• Veterans Administration hospitals.
• Hospitals that are reimbursed under State cost control systems approved under 42 CFR part 403.
• Hospitals that are reimbursed in accordance with demonstration projects authorized under section 402(a) of the Social Security Amendments of 1967 (Pub. L. 90-248) (42 U.S.C. 1395b- 1), section 222(a) of the Social Security Amendments of 1972 (Pub. L. 92-603) (42 U.S.C. 1395b1 (note)) (Statewide-all payer systems, subject to the rate-of increase test at section 1814(b) of the Act), or section 3021 of the Patient Protection and Affordable Care Act (Pub. L. 111-148) (42 U.S.C. 1315a).
• Nonparticipating hospitals furnishing emergency services to Medicare beneficiaries.
In the August 30, 2002 final rule, we presented an in-depth discussion of beneficiary liability under the LTCH PPS (67 FR 55974 through 55975). This discussion was further clarified in the RY 2005 LTCH PPS final rule (69 FR 25676). In keeping with those discussions, if the Medicare payment to the LTCH is the full LTC-DRG payment amount, consistent with other established hospital prospective payment systems, § 412.507 currently provides that an LTCH may not bill a Medicare beneficiary for more than the deductible and coinsurance amounts as specified under §§ 409.82, 409.83, and 409.87, and for items and services specified under § 489.30(a). However, under the LTCH PPS, Medicare will only pay for services furnished during the days for which the beneficiary has coverage until the short-stay outlier (SSO) threshold is exceeded. If the Medicare payment was for a SSO case (in accordance with § 412.529), and that payment was less than the full LTC-DRG payment amount because the beneficiary had insufficient coverage as a result of the remaining Medicare days, the LTCH also is currently permitted to charge the beneficiary for services delivered on those uncovered days (in accordance with § 412.507). In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49623), we amended our regulations to expressly limit the charges that may be imposed upon beneficiaries whose LTCHs' discharges are paid at the site neutral payment rate under the LTCH PPS. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57102), we amended the regulations under § 412.507 to clarify our existing policy that blended payments made to an LTCH during its transitional period (that is, an LTCH's payment for discharges occurring in cost reporting periods beginning in FYs 2016 through 2019) are considered to be site neutral payment rate payments.
Section 123 of the BBRA required that the Secretary implement a PPS for LTCHs to replace the cost-based payment system under TEFRA. Section 307(b)(1) of the BIPA modified the requirements of section 123 of the BBRA by requiring that the Secretary examine the feasibility and the impact of basing payment under the LTCH PPS on the use of existing (or refined) hospital DRGs that have been modified to account for different resource use of LTCH patients.
Under both the IPPS and the LTCH PPS, the DRG-based classification system uses information on the claims for inpatient discharges to classify patients into distinct groups (for example, DRGs) based on clinical characteristics and expected resource needs. When the LTCH PPS was implemented for cost reporting periods beginning on or after October 1, 2002, we adopted the same DRG patient classification system utilized at that time under the IPPS. We referred to this patient classification system as the “long-term care diagnosis-related groups (LTC-DRGs).” As part of our efforts to better recognize severity of illness among patients, in the FY 2008 IPPS final rule with comment period (72 FR 47130), we adopted the MS-DRGs and the Medicare severity long-term care diagnosis-related groups (MS-LTC-DRGs) under the IPPS and the LTCH PPS, respectively, effective beginning October 1, 2007 (FY 2008). For a full description of the development, implementation, and rationale for the use of the MS-DRGs and MS-LTC-DRGs, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47141 through 47175 and 47277 through 47299). (We note that, in that same final rule, we revised the regulations at § 412.503 to specify that for LTCH discharges occurring on or after October 1, 2007, when applying the provisions of 42 CFR part 412, subpart O, applicable to LTCHs for policy descriptions and payment calculations, all references to LTC-DRGs would be considered a reference to MS-LTC-DRGs. For the remainder of this section, we present the discussion in terms of the current MS-LTC-DRG patient classification system unless specifically referring to the previous LTC-DRG patient classification system that was in effect before October 1, 2007.)
Consistent with section 123 of the BBRA, as amended by section 307(b)(1) of the BIPA, and § 412.515 of the regulations, we use information derived from LTCH PPS patient records to classify LTCH discharges into distinct MS-LTC-DRGs based on clinical characteristics and estimated resource needs. As noted previously, we adopted the same DRG patient classification system utilized at that time under the IPPS. The MS-DRG classifications are updated annually, which has resulted in the number of MS-DRGs changing over time. For FY 2025, there will be 773 MS-DRG, and by extension, MS-LTC-DRG, groupings based on the changes, as discussed in section II.E. of the preamble of this final rule.
Although the patient classification system used under both the LTCH PPS and the IPPS are the same, the relative weights are different. The established relative weight methodology and data used under the LTCH PPS result in relative weights under the LTCH PPS that reflect the differences in patient resource use of LTCH patients, consistent with section 123(a)(1) of the BBRA. That is, we assign an appropriate weight to the MS-LTC-DRGs to account for the differences in resource use by patients exhibiting the case complexity and multiple medical problems characteristic of LTCH patients.
The MS-DRGs (used under the IPPS) and the MS-LTC-DRGs (used under the LTCH PPS) are based on the CMS DRG structure. As noted previously in this section, we refer to the DRGs under the LTCH PPS as MS-LTC-DRGs although they are structurally identical to the MS-DRGs used under the IPPS.
The MS-DRGs are organized into 25 major diagnostic categories (MDCs), most of which are based on a particular organ system of the body; the remainder involve multiple organ systems (such as MDC 22, Burns). Within most MDCs, cases are then divided into surgical DRGs and medical DRGs. Surgical DRGs are assigned based on a surgical hierarchy that orders operating room (O.R.) procedures or groups of O.R. procedures by resource intensity. The GROUPER software program does not recognize all ICD-10-PCS procedure codes as procedures affecting DRG assignment. That is, procedures that are not surgical (for example, EKGs) or are minor surgical procedures (for example, a biopsy of skin and subcutaneous tissue (procedure code 0JBH3ZX)) do not affect the MS-LTC-DRG assignment based on their presence on the claim.
Generally, under the LTCH PPS, a Medicare payment is made at a predetermined specific rate for each discharge that varies based on the MS-LTC-DRG to which a beneficiary's discharge is assigned. Cases are classified into MS-LTC-DRGs for payment based on the following six data elements:
• Principal diagnosis.
• Additional or secondary diagnoses.
• Surgical procedures.
• Age.
• Sex.
• Discharge status of the patient.
Currently, for claims submitted using the version ASC X12 5010 standard, up to 25 diagnosis codes and 25 procedure codes are considered for an MS-DRG assignment. This includes one principal diagnosis and up to 24 secondary diagnoses for severity of illness determinations. (For additional information on the processing of up to 25 diagnosis codes and 25 procedure codes on hospital inpatient claims, we refer readers to section II.G.11.c. of the preamble of the FY 2011 IPPS/LTCH PPS final rule (75 FR 50127).)
Under the HIPAA transactions and code sets regulations at 45 CFR parts 160 and 162, covered entities must comply with the adopted transaction standards and operating rules specified in subparts I through S of part 162. Among other requirements, on or after January 1, 2012, covered entities are required to use the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3—Health Care Claim: Institutional (837), May 2006, ASC X12N/005010X223, and Type 1 Errata to Health Care Claim: Institutional (837) ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, October 2007, ASC X12N/005010X233A1 for the health care claims or equivalent encounter information transaction (45 CFR 162.1102(c)).
HIPAA requires covered entities to use the applicable medical data code sets when conducting HIPAA transactions (45 CFR 162.1000). Currently, upon the discharge of the patient, the LTCH must assign appropriate diagnosis and procedure codes from the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding, both of which were required to be implemented October 1, 2015 (45 CFR 162.1002(c)(2) and (3)). For additional information on the implementation of the ICD-10 coding system, we refer readers to section II.F.1. of the preamble of the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56790) and section II.E.1. of the preamble of this final rule. Additional coding instructions and examples are published in the AHA's
To create the MS-DRGs (and by extension, the MS-LTC-DRGs), base DRGs were subdivided according to the presence of specific secondary diagnoses designated as complications or comorbidities (CCs) into one, two, or three levels of severity, depending on the impact of the CCs on resources used for those cases. Specifically, there are sets of MS-DRGs that are split into 2 or 3 subgroups based on the presence or absence of a CC or a major complication or comorbidity (MCC). We refer readers to section II.D. of the preamble of the FY 2008 IPPS final rule with comment period for a detailed discussion about the creation of MS-DRGs based on severity of illness levels (72 FR 47141 through 47175).
Medicare Administrative Contractors (MACs) enter the clinical and demographic information submitted by LTCHs into their claims processing systems and subject this information to a series of automated screening processes called the Medicare Code Editor (MCE). These screens are designed to identify cases that require further review before assignment into a MS-LTC-DRG can be made. During this process, certain types of cases are selected for further explanation (74 FR 43949).
After screening through the MCE, each claim is classified into the appropriate MS-LTC-DRG by the Medicare LTCH GROUPER software on the basis of diagnosis and procedure codes and other demographic information (age, sex, and discharge status). The GROUPER software used under the LTCH PPS is the same GROUPER software program used under the IPPS. Following the MS-LTC-DRG assignment, the MAC determines the prospective payment amount by using the Medicare PRICER program, which accounts for hospital-specific adjustments. Under the LTCH PPS, we provide an opportunity for LTCHs to review the MS-LTC-DRG assignments made by the MAC and to submit additional information within a specified timeframe as provided in § 412.513(c).
The GROUPER software is used both to classify past cases to measure relative hospital resource consumption to establish the MS-LTC-DRG relative weights and to classify current cases for purposes of determining payment. The records for all Medicare hospital inpatient discharges are maintained in the MedPAR file. The data in this file are used to evaluate possible MS-DRG and MS-LTC-DRG classification changes and to recalibrate the MS-DRG and MS-LTC-DRG relative weights during our annual update under both the IPPS (§ 412.60(e)) and the LTCH PPS (§ 412.517), respectively.
As specified by our regulations at § 412.517(a), which require that the MS-LTC-DRG classifications and relative weights be updated annually, and consistent with our historical practice of using the same patient classification system under the LTCH PPS as is used under the IPPS, in this final rule, as we proposed, we updated the MS-LTC-DRG classifications effective October 1, 2024 through September 30, 2025 (FY 2025) consistent with the changes to specific MS-DRG classifications presented in section II.F. of the preamble of this final rule. Accordingly, the MS-LTC-DRGs for FY 2025 are the same as the MS-DRGs being used under the IPPS for FY 2025. In addition, because the MS-LTC-DRGs for FY 2025 are the same as the MS-DRGs for FY 2025, the other changes that affect MS-DRG (and by extension MS-LTC-DRG) assignments under GROUPER Version 42, as discussed in section II.E. of the preamble of this final rule, including the changes to the MCE software and the ICD-10-CM/PCS coding system, are also applicable under the LTCH PPS for FY 2025.3. Development of the FY 2025 MS-LTC-DRG Relative Weights.
One of the primary goals for the implementation of the LTCH PPS is to pay each LTCH an appropriate amount for the efficient delivery of medical care to Medicare patients. The system must be able to account adequately for each LTCH's case-mix to ensure both fair distribution of Medicare payments and access to adequate care for those Medicare patients whose care is costlier (67 FR 55984). To accomplish these goals, we have annually adjusted the LTCH PPS standard Federal prospective payment rate by the applicable relative weight in determining payment to LTCHs for each case. Under the LTCH PPS, relative weights for each MS-LTC-DRG are a primary element used to account for the variations in cost per discharge and resource utilization among the payment groups (§ 412.515). To ensure that Medicare patients classified to each MS-LTC-DRG have access to an appropriate level of services and to encourage efficiency, we calculate a relative weight for each MS-LTC-DRG that represents the resources needed by an average inpatient LTCH case in that MS-LTC-DRG. For example, cases in an MS-LTC-DRG with a relative weight of 2 would, on average, cost twice as much to treat as cases in an MS-LTC-DRG with a relative weight of 1.
The established methodology to develop the MS-LTC-DRG relative weights is generally consistent with the methodology established when the LTCH PPS was implemented in the August 30, 2002 LTCH PPS final rule (67 FR 55989 through 55991). However, there have been some modifications of our historical procedures for assigning relative weights in cases of zero volume or nonmonotonicity or both resulting from the adoption of the MS-LTC-DRGs. We also made a modification in conjunction with the implementation of the dual rate LTCH PPS payment structure beginning in FY 2016 to use LTCH claims data from only LTCH PPS standard Federal payment rate cases (or LTCH PPS cases that would have qualified for payment under the LTCH PPS standard Federal payment rate if the dual rate LTCH PPS payment structure had been in effect at the time of the discharge). We also adopted, beginning in FY 2023, a 10-percent cap policy on the reduction in a MS-LTC-DRG's relative weight in a given year. (For details on the modifications to our historical procedures for assigning relative weights in cases of zero volume and nonmonotonicity or both, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47289 through 47295) and the FY 2009 IPPS final rule (73 FR 48542 through 48550). For details on the change in our historical methodology to use LTCH claims data only from LTCH PPS standard Federal payment rate cases (or cases that would have qualified for such payment had the LTCH PPS dual payment rate structure been in effect at the time) to determine the MS-LTC-DRG relative weights, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49614 through 49617). For details on our adoption of the 10-percent cap policy, we refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 49152 through 49154).)
For purposes of determining the MS-LTC-DRG relative weights, under our historical methodology, there are three different categories of MS-LTC-DRGs based on volume of cases within specific MS-LTC-DRGs: (1) MS-LTC-DRGs with at least 25 applicable LTCH cases in the data used to calculate the relative weight, which are each assigned a unique relative weight; (2) low-volume MS-LTC-DRGs (that is, MS-LTC-DRGs that contain between 1 and 24 applicable LTCH cases that are grouped into quintiles (as described later in this section in Step 3 of our methodology) and assigned the relative weight of the quintile); and (3) no-volume MS-LTC-DRGs that are cross-walked to other MS-LTC-DRGs based on the clinical similarities and assigned the relative weight of the cross-walked MS-LTC-DRG (as described later in this section in Step 8 of our methodology). For FY 2025, we are continuing to use applicable LTCH cases to establish the same volume-based categories to calculate the FY 2025 MS-LTC-DRG relative weights.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36259 through 36266), we presented our proposed methodology for determining the MS-LTC-DRG relative weights for FY 2025.
We received several comments requesting that CMS modify certain high-volume MS-LTC-DRGs to better account for the variation in patient severity and costs among the cases grouped to these MS-LTC-DRGs. Since these comments were primarily focused on the impact these high-volume MS-LTC-DRGs have on the FY 2025 outlier fixed-loss amount, we have summarized and responded to these comments in section V.D.3. of the Addendum to this final rule. We also received comments requesting CMS to modify our ratesetting methodologies to account for the impact of COVID-19 on the ratesetting data. Since these comments were primarily focused on the specific use of FY 2023 data when determining the FY 2025 outlier fixed-loss amount, we also have summarized and responded to these comments in section V.D.3. of the Addendum to this final rule.
After consideration of the comments we received, we are finalizing, without modification, our proposed methodology for determining the MS-LTC-DRG relative weights for FY 2025. In the remainder of this section, we present our finalized methodology. We first list and provide a brief description of our steps for determining the FY 2025 MS-LTC-DRG relative weights. We then, later in this section, discuss in greater detail each step. We note that, as we did in FY 2024, we used our historical relative weight methodology as described in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58898 through 58907), subject to a ten percent cap as described in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49162).
•
•
•
•
•
•
•
•
•
•
We next describe each of the 11 steps for calculating the FY 2025 MS-LTC-DRG relative weights in greater detail.
For the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36260), we obtained total charges from FY 2023 Medicare LTCH claims data from the December 2023 update of the FY 2023 MedPAR file and used proposed Version 42 of the GROUPER to classify LTCH cases. Consistent with our historical practice, we proposed that if better data become available, we would use those data and the finalized Version 42 of the GROUPER in establishing the FY 2025 MS-LTC-DRG relative weights in the final rule. Accordingly, for this final rule, we are establishing the FY 2025 MS-LTC-DRG relative weights based on updated FY 2023 Medicare LTCH claims data from the March 2024 update of the FY 2023 MedPAR file, which is the best available data at the time of development of this final rule, and the finalized Version 42 of the GROUPER to classify LTCH cases.
To calculate the FY 2025 MS-LTC-DRG relative weights under the dual rate LTCH PPS payment structure, as we proposed, we continue to use applicable LTCH data, which includes our policy of only using cases that meet the criteria for exclusion from the site neutral payment rate (or would have met the criteria had they been in effect at the time of the discharge) (80 FR 49624). Specifically, we began by first evaluating the LTCH claims data in the March 2024 update of the FY 2023 MedPAR file to determine which LTCH cases would meet the criteria for exclusion from the site neutral payment rate under § 412.522(b) or had the dual rate LTCH PPS payment structure applied to those cases at the time of discharge. We identified the FY 2023 LTCH cases that were not assigned to MS-LTC-DRGs 876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945, and 946, which identify LTCH cases that do not have a principal diagnosis relating to a psychiatric diagnosis or to rehabilitation; and that either—
• The admission to the LTCH was “immediately preceded” by discharge from a subsection (d) hospital and the immediately preceding stay in that subsection (d) hospital included at least 3 days in an ICU, as we define under the ICU criterion; or
• The admission to the LTCH was “immediately preceded” by discharge from a subsection (d) hospital and the claim for the LTCH discharge includes the applicable procedure code that indicates at least 96 hours of ventilator services were provided during the LTCH stay, as we define under the ventilator criterion. Claims data from the FY 2023 MedPAR file that reported ICD-10-PCS procedure code 5A1955Z were used to identify cases involving at least 96 hours of ventilator services in accordance with the ventilator criterion. (We note that section 3711(b)(2) of the CARES Act provided a waiver of the application of the site neutral payment rate for LTCH cases admitted during the COVID-19 PHE period. The COVID-19 PHE expired on May 11, 2023. Therefore, all LTCH PPS cases in FY 2023 with admission dates on or before the PHE expiration date were paid the LTCH PPS standard Federal rate regardless of whether the discharge met the statutory patient criteria. However, for purposes of setting rates for LTCH PPS standard Federal rate cases for FY 2025 (including MS-LTC-DRG relative weights), we used FY 2023 cases that meet the statutory patient criteria without consideration to how those cases were paid in FY 2023.)
Furthermore, consistent with our historical methodology, we excluded any claims in the resulting data set that were submitted by LTCHs that were all-inclusive rate providers and LTCHs that are paid in accordance with demonstration projects authorized under section 402(a) of Public Law 90-248 or section 222(a) of Public Law 92-603. In addition, consistent with our historical practice and our policies, we excluded any Medicare Advantage (Part C) claims in the resulting data. Such claims were identified based on the presence of a GHO Paid indicator value of “1” in the MedPAR files.
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49448), we discussed the abnormal charging practices of an LTCH (CCN 312024) in FY 2021 that led to the LTCH receiving an excessive amount of high cost outlier payments. In that rule, we stated our belief, based on information we received from the provider, that these abnormal charging practices would not persist into FY 2023. Therefore, we did not include their cases in our model for determining the FY 2023 outlier fixed-loss amount. In the FY 2024 IPPS/LTCH PPS final rule (88 FR 59127 through 59128), we stated that the FY 2022 MedPAR claims also reflect the abnormal charging practices of this LTCH. Therefore, we removed claims from CCN 312024 when determining the FY 2024 MS-LTC-DRG relative weights and from all other FY 2024 ratesetting calculations, including the calculation of the area wage level adjustment budget neutrality factor and the fixed-loss amount for LTCH PPS standard Federal payment rate cases. Given recent actions by the Department of Justice regarding CCN 312024 (see
In summary, in general, we identified the claims data used in the development of the FY 2025 MS-LTC-DRG relative weights in this final rule by trimming claims data that were paid the site neutral payment rate or would have been paid the site neutral payment rate had the provisions of the CARES Act not been in effect. We trimmed the claims data of all-inclusive rate providers reported in the March 2024 update of the FY 2023 MedPAR file and any Medicare Advantage claims data. There were no data from any LTCHs that are paid in accordance with a demonstration project reported in the March 2024 update of the FY 2023 MedPAR file, but had there been any,
We used the remaining data (that is, the applicable LTCH data) in the subsequent steps to calculate the MS-LTC-DRG relative weights for FY 2025.
The next step in our calculation of the FY 2025 MS-LTC-DRG relative weights is to remove cases with a length of stay of 7 days or less. The MS-LTC-DRG relative weights reflect the average of resources used on representative cases of a specific type. Generally, cases with a length of stay of 7 days or less do not belong in an LTCH because these stays do not fully receive or benefit from treatment that is typical in an LTCH stay, and full resources are often not used in the earlier stages of admission to an LTCH. If we were to include stays of 7 days or less in the computation of the FY 2025 MS-LTC-DRG relative weights, the value of many relative weights would decrease and, therefore, payments would decrease to a level that may no longer be appropriate. We do not believe that it would be appropriate to compromise the integrity of the payment determination for those LTCH cases that actually benefit from and receive a full course of treatment at an LTCH by including data from these very short stays. Therefore, as we proposed, consistent with our existing relative weight methodology, in determining the FY 2025 MS-LTC-DRG relative weights, we removed LTCH cases with a length of stay of 7 days or less from applicable LTCH cases. (For additional information on what is removed in this step of the relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.)
To account for MS-LTC-DRGs with low-volume (that is, with fewer than 25 applicable LTCH cases), consistent with our existing methodology, as we proposed, we are continuing to employ the quintile methodology for low-volume MS-LTC-DRGs, such that we grouped the “low-volume MS-LTC-DRGs” (that is, MS-LTC-DRGs that contain between 1 and 24 applicable LTCH cases into one of five categories (quintiles) based on average charges (67 FR 55984 through 55995; 72 FR 47283 through 47288; and 81 FR 25148)).
In this final rule, based on the best available data (that is, the March 2024 update of the FY 2023 MedPAR file), we identified 235 MS-LTC-DRGs that contained between 1 and 24 applicable LTCH cases. This list of MS-LTC-DRGs was then divided into 1 of the 5 low-volume quintiles. We assigned the low-volume MS-LTC-DRGs to specific low-volume quintiles by sorting the low-volume MS-LTC-DRGs in ascending order by average charge in accordance with our established methodology. Based on the data available for this final rule, the number of MS-LTC-DRGs with less than 25 applicable LTCH cases was evenly divisible by 5. Therefore, the quintiles each contained 47 MS-LTC-DRGs (235/5 = 47). Since the number of MS LTC DRGs with less than 25 applicable LTCH cases was evenly divisible by 5, it was unnecessary to employ our historical methodology of assigning each remainder low-volume MS-LTC-DRG to the low-volume quintile that contains an MS-LTC-DRG with an average charge closest to that of the remainder low-volume MS-LTC-DRG. In cases where these initial assignments of low-volume MS-LTC-DRGs to quintiles results in nonmonotonicity within a base-DRG, as we proposed, we adjusted the resulting low-volume MS-LTC-DRGs to preserve monotonicity, as discussed in Step 7 of our methodology.
To determine the FY 2025 relative weights for the low-volume MS-LTC-DRGs, consistent with our historical practice, we used the five low-volume quintiles described previously. We determined a relative weight and (geometric) average length of stay for each of the five low-volume quintiles using the methodology described in Step 6 of our methodology. We assigned the same relative weight and average length of stay to each of the low-volume MS-LTC-DRGs that make up an individual low-volume quintile. We note that, as this system is dynamic, it is possible that the number and specific type of MS-LTC-DRGs with a low-volume of applicable LTCH cases would vary in the future. Furthermore, we note that we continue to monitor the volume (that is, the number of applicable LTCH cases) in the low-volume quintiles to ensure that our quintile assignments used in determining the MS-LTC-DRG relative weights result in appropriate payment for LTCH cases grouped to low-volume MS-LTC-DRGs and do not result in an unintended financial incentive for LTCHs to inappropriately admit these types of cases.
For this final rule, we are providing the list of the composition of the low-volume quintiles for low-volume MS-LTC-DRGs in a supplemental data file for public use posted via the internet on the CMS website for this final rule at
The next step in our calculation of the FY 2025 MS-LTC-DRG relative weights is to remove statistical outlier cases from the LTCH cases with a length of stay of at least 8 days. Consistent with our existing relative weight methodology, as we proposed, we are continuing to define statistical outliers as cases that are outside of 3.0 standard deviations from the mean of the log distribution of both charges per case and the charges per day for each MS-LTC-DRG. These statistical outliers are removed prior to calculating the relative weights because we believe that they may represent aberrations in the data that distort the measure of average resource use. Including those LTCH cases in the calculation of the relative weights could result in an inaccurate relative weight that does not truly reflect relative resource use among those MS-LTC-DRGs. (For additional information on what is removed in this step of the relative weight methodology, we refer readers to 67 FR 55989 and 74 FR 43959.) After removing cases with a length of stay of 7 days or less and statistical outliers, in each set of claims, we were left with applicable LTCH cases that have a length of stay greater than or equal to 8 days. In this final rule, we refer to these cases as “trimmed applicable LTCH cases.”
As the next step in the calculation of the FY 2025 MS-LTC-DRG relative weights, consistent with our historical approach, as we proposed, we adjusted each LTCH's charges per discharge for those remaining cases (that is, trimmed applicable LTCH cases) for the effects of SSOs (as defined in § 412.529(a) in conjunction with § 412.503). Specifically, as we proposed, we made this adjustment by counting an SSO case as a fraction of a discharge based on the ratio of the length of stay of the case to the average length of stay of all cases grouped to the MS-LTC-DRG. This has the effect of proportionately reducing the impact of the lower charges for the SSO cases in calculating the average charge for the MS-LTC-DRG. This process produces the same result as if the actual charges per discharge of an SSO case were adjusted to what they would have been had the patient's length of stay been equal to the average length of stay of the MS-LTC-DRG.
Counting SSO cases as full LTCH cases with no adjustment in
By nature, LTCHs often specialize in certain areas, such as ventilator-dependent patients. Some case types (MS-LTC-DRGs) may be treated, to a large extent, in hospitals that have, from a perspective of charges, relatively high (or low) charges. This nonrandom distribution of cases with relatively high (or low) charges in specific MS-LTC-DRGs has the potential to inappropriately distort the measure of average charges. To account for the fact that cases may not be randomly distributed across LTCHs, consistent with the methodology we have used since the implementation of the LTCH PPS, in this FY 2025 IPPS/LTCH PPS final rule, as we proposed, we are continuing to use a hospital-specific relative value (HSRV) methodology to calculate the MS-LTC-DRG relative weights for FY 2025. We believe that this method removes this hospital-specific source of bias in measuring LTCH average charges (67 FR 55985). Specifically, under this methodology, we reduced the impact of the variation in charges across providers on any particular MS-LTC-DRG relative weight by converting each LTCH's charge for an applicable LTCH case to a relative value based on that LTCH's average charge for such cases.
Under the HSRV methodology, we standardize charges for each LTCH by converting its charges for each applicable LTCH case to hospital-specific relative charge values and then adjusting those values for the LTCH's case-mix. The adjustment for case-mix is needed to rescale the hospital-specific relative charge values (which, by definition, average 1.0 for each LTCH). The average relative weight for an LTCH is its case-mix; therefore, it is reasonable to scale each LTCH's average relative charge value by its case-mix. In this way, each LTCH's relative charge value is adjusted by its case-mix to an average that reflects the complexity of the applicable LTCH cases it treats relative to the complexity of the applicable LTCH cases treated by all other LTCHs (the average LTCH PPS case-mix of all applicable LTCH cases across all LTCHs). In other words, by multiplying an LTCH's relative charge values by the LTCH's case-mix index, we account for the fact that the same relative charges are given greater weight at an LTCH with higher average costs than they would at an LTCH with low average costs, which is needed to adjust each LTCH's relative charge value to reflect its case-mix relative to the average case-mix for all LTCHs. By standardizing charges in this manner, we count charges for a Medicare patient at an LTCH with high average charges as less resource-intensive than they would be at an LTCH with low average charges. For example, a $10,000 charge for a case at an LTCH with an average adjusted charge of $17,500 reflects a higher level of relative resource use than a $10,000 charge for a case at an LTCH with the same case-mix, but an average adjusted charge of $35,000. We believe that the adjusted charge of an individual case more accurately reflects actual resource use for an individual LTCH because the variation in charges due to systematic differences in the markup of charges among LTCHs is taken into account.
Consistent with our historical relative weight methodology, as we proposed, we calculated the FY 2025 MS-LTC-DRG relative weights using the HSRV methodology, which is an iterative process. Therefore, in accordance with our established methodology, for FY 2025, we continued to standardize charges for each applicable LTCH case by first dividing the adjusted charge for the case (adjusted for SSOs under § 412.529 as described in Step 5 of our methodology) by the average adjusted charge for all applicable LTCH cases at the LTCH in which the case was treated. The average adjusted charge reflects the average intensity of the health care services delivered by a particular LTCH and the average cost level of that LTCH. The average adjusted charge is then multiplied by the LTCH's case-mix index to produce an adjusted hospital-specific relative charge value for the case. We used an initial case-mix index value of 1.0 for each LTCH.
For each MS-LTC-DRG, we calculated the FY 2025 relative weight by dividing the SSO-adjusted average of the hospital-specific relative charge values for applicable LTCH cases for the MS-LTC-DRG (that is, the sum of the hospital-specific relative charge value, as previously stated, divided by the sum of equivalent cases from Step 5 for each MS-LTC-DRG) by the overall SSO-adjusted average hospital-specific relative charge value across all applicable LTCH cases for all LTCHs (that is, the sum of the hospital-specific relative charge value, as previously stated, divided by the sum of equivalent applicable LTCH cases from Step 5 for each MS-LTC-DRG). Using these recalculated MS-LTC-DRG relative weights, each LTCH's average relative weight for all of its SSO-adjusted trimmed applicable LTCH cases (that is, it's case-mix) was calculated by dividing the sum of all the LTCH's MS-LTC-DRG relative weights by its total number of SSO-adjusted trimmed applicable LTCH cases. The LTCHs' hospital-specific relative charge values (from previous) are then multiplied by the hospital-specific case-mix indexes. The hospital-specific case-mix adjusted relative charge values are then used to calculate a new set of MS-LTC-DRG relative weights across all LTCHs. This iterative process continued until there was convergence between the relative weights produced at adjacent steps, for example, when the maximum difference was less than 0.0001.
The MS-DRGs contain base DRGs that have been subdivided into one, two, or three severity of illness levels. Where there are three severity levels, the most severe level has at least one secondary diagnosis code that is referred to as an MCC (that is, major complication or comorbidity). The next lower severity level contains cases with at least one secondary diagnosis code that is a CC (that is, complication or comorbidity). Those cases without an MCC or a CC are referred to as “without CC/MCC.” When data do not support the creation of three severity levels, the base MS-DRG is subdivided into either two levels or the base MS-DRG is not subdivided. The two-level subdivisions may consist of the MS-DRG with CC/MCC and the MS-DRG without CC/MCC. Alternatively, the other type of two-level subdivision may consist of the MS-DRG with MCC and the MS-DRG without MCC.
In those base MS-LTC-DRGs that are split into either two or three severity levels, cases classified into the “without CC/MCC” MS-LTC-DRG are expected to have a lower resource use (and lower costs) than the “with CC/MCC” MS-LTC-DRG (in the case of a two-level split) or both the “with CC” and the “with MCC” MS-LTC-DRGs (in the case of a three-level split). That is, theoretically, cases that are more severe
Using the trimmed applicable LTCH cases, consistent with our historical methodology, we identified the MS-LTC-DRGs for which there were no claims in the March 2024 update of the FY 2023 MedPAR file and, therefore, for which no charge data was available for these MS-LTC-DRGs. Because patients with a number of the diagnoses under these MS-LTC-DRGs may be treated at LTCHs, consistent with our historical methodology, we generally assign a relative weight to each of the no-volume MS-LTC-DRGs based on clinical similarity and relative costliness (with the exception of “transplant” MS-LTC-DRGs, “error” MS-LTC-DRGs, and MS-LTC-DRGs that indicate a principal diagnosis related to a psychiatric diagnosis or rehabilitation (referred to as the “psychiatric or rehabilitation” MS-LTC-DRGs), as discussed later in this section of this final rule). (For additional information on this step of the relative weight methodology, we refer readers to 67 FR 55991 and 74 FR 43959 through 43960.)
Consistent with our existing methodology, as we proposed, we cross-walked each no-volume MS-LTC-DRG to another MS-LTC-DRG for which we calculated a relative weight (determined in accordance with the methodology as previously described). Then, the “no-volume” MS-LTC-DRG is assigned the same relative weight (and average length of stay) of the MS-LTC-DRG to which it was cross-walked (as described in greater detail in this section of this final rule).
Of the 773 MS-LTC-DRGs for FY 2025, we identified 426 MS-LTC-DRGs for which there were no trimmed applicable LTCH cases. The 426 MS-LTC-DRGs for which there were no trimmed applicable LTCH cases includes the 11 “transplant” MS-LTC-DRGs, the 2 “error” MS-LTC-DRGs, and the 15 “psychiatric or rehabilitation” MS-LTC-DRGs, which are discussed in this section of this rule, such that we identified 398 MS-LTC-DRGs that for which, we assigned a relative weight using our existing “no-volume” MS-LTC-DRG methodology (that is, 426−11−2−15 = 398). As we proposed, we assigned relative weights to each of the 398 no-volume MS-LTC-DRGs based on clinical similarity and relative costliness to 1 of the remaining 347 (773−426 = 347) MS-LTC-DRGs for which we calculated relative weights based on the trimmed applicable LTCH cases in the FY 2023 MedPAR file data using the steps described previously. (For the remainder of this discussion, we refer to the “cross-walked” MS-LTC-DRGs as one of the 347 MS-LTC-DRGs to which we cross-walked each of the 398 “no-volume” MS-LTC-DRGs.) Then, in general, we assigned the 398 no-volume MS-LTC-DRGs the relative weight of the cross-walked MS-LTC-DRG (when necessary, we made adjustments to account for nonmonotonicity).
We cross-walked the no-volume MS-LTC-DRG to a MS-LTC-DRG for which we calculated relative weights based on the March 2024 update of the FY 2023 MedPAR file, and to which it is similar clinically in intensity of use of resources and relative costliness as determined by criteria such as care provided during the period of time surrounding surgery, surgical approach (if applicable), length of time of surgical procedure, postoperative care, and length of stay. (For more details on our process for evaluating relative costliness, we refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final rule (73 FR 48543).) We believe in the rare event that there would be a few LTCH cases grouped to one of the no-volume MS-LTC-DRGs in FY 2025, the relative weights assigned based on the cross-walked MS-LTC-DRGs would result in an appropriate LTCH PPS payment because the crosswalks, which are based on clinical similarity and relative costliness, would be expected to generally require equivalent relative resource use.
Then we assigned the relative weight of the cross-walked MS-LTC-DRG as the relative weight for the no-volume MS-LTC-DRG such that both of these MS-LTC-DRGs (that is, the no-volume MS-LTC-DRG and the cross-walked MS-LTC-DRG) have the same relative weight (and average length of stay) for FY 2025. We note that, if the cross-walked MS-LTC-DRG had 25 applicable LTCH cases or more, its relative weight (calculated using the methodology as previously described in Steps 1 through 4) is assigned to the no-volume MS-LTC-DRG as well. Similarly, if the MS-LTC-DRG to which the no-volume MS-LTC-DRG was cross-walked had 24 or less cases and, therefore, was designated to 1 of the low-volume quintiles for purposes of determining the relative weights, we assigned the relative weight of the applicable low-volume quintile to the no-volume MS-LTC-DRG such that both of these MS-LTC-DRGs (that is, the no-volume MS-LTC-DRG and the cross-walked MS-LTC-DRG) have the same relative weight for FY 2025. (As we noted previously, in the infrequent case where nonmonotonicity involving a no-volume MS-LTC-DRG resulted, additional adjustments are required to maintain monotonically increasing relative weights.)
For this final rule, we are providing the list of the no-volume MS-LTC-DRGs and the MS-LTC-DRGs to which each was cross-walked (that is, the cross-walked MS-LTC-DRGs) for FY 2025 in a supplemental data file for public use posted via the internet on the CMS website for this final rule at
To illustrate this methodology for determining the relative weights for the FY 2025 MS-LTC-DRGs with no applicable LTCH cases, we are providing the following example.
Again, we note that, as this system is dynamic, it is entirely possible that the number of MS-LTC-DRGs with no volume would vary in the future. Consistent with our historical practice, as we proposed, we used the best available claims data to identify the trimmed applicable LTCH cases from which we determined the relative weights in the final rule.
For FY 2025, consistent with our historical relative weight methodology, as we proposed, we are establishing a relative weight of 0.0000 for the following transplant MS-LTC-DRGs: Heart Transplant or Implant of Heart Assist System with MCC (MS-LTC-DRG 001); Heart Transplant or Implant of Heart Assist System without MCC (MS-LTC-DRG 002); Liver Transplant with MCC or Intestinal Transplant (MS-LTC-DRG 005); Liver Transplant without MCC (MS-LTC-DRG 006); Lung Transplant (MS-LTC-DRG 007); Simultaneous Pancreas and Kidney Transplant (MS-LTC-DRG 008); Simultaneous Pancreas and Kidney Transplant with Hemodialysis (MS-LTC-DRG 019); Pancreas Transplant (MS-LTC-DRG 010); Kidney Transplant (MS-LTC-DRG 652); Kidney Transplant with Hemodialysis with MCC (MS-LTC-DRG 650), and Kidney Transplant with Hemodialysis without MCC (MS LTC DRG 651). This is because Medicare only covers these procedures if they are performed at a hospital that has been certified for the specific procedures by Medicare and presently no LTCH has been so certified. At the present time, we include these 11 transplant MS-LTC-DRGs in the GROUPER program for administrative purposes only. Because we use the same GROUPER program for LTCHs as is used under the IPPS, removing these MS-LTC-DRGs would be administratively burdensome. (For additional information regarding our treatment of transplant MS-LTC-DRGs, we refer readers to the RY 2010 LTCH PPS final rule (74 FR 43964).) In addition, consistent with our historical policy, we are establishing a relative weight of 0.0000 for the 2 “error” MS-LTC-DRGs (that is, MS-LTC-DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis) and MS-LTC-DRG 999 (Ungroupable)) because applicable LTCH cases grouped to these MS-LTC-DRGs cannot be properly assigned to an MS-LTC-DRG according to the grouping logic.
Additionally, we are establishing a relative weight of 0.0000 for the following “psychiatric or rehabilitation” MS-LTC-DRGs: MS-LTC-DRG 876 (O.R. Procedures with Principal Diagnosis of Mental Illness); MS-LTC-DRG 880 (Acute Adjustment Reaction & Psychosocial Dysfunction); MS-LTC-DRG 881 (Depressive Neuroses); MS-LTC-DRG 882 (Neuroses Except Depressive); MS-LTC-DRG 883 (Disorders of Personality & Impulse Control); MS-LTC-DRG 884 (Organic Disturbances & Intellectual Disability); MS-LTC-DRG 885 (Psychoses); MS-LTC-DRG 886 (Behavioral & Developmental Disorders); MS-LTC-DRG 887 (Other Mental Disorder Diagnoses); MS-LTC-DRG 894 (Alcohol, Drug Abuse or Dependence, Left AMA); MS-LTC-DRG 895 (Alcohol, Drug Abuse or Dependence with Rehabilitation Therapy); MS-LTC-DRG 896 (Alcohol, Drug Abuse or Dependence without Rehabilitation Therapy with MCC); MS-LTC-DRG 897 (Alcohol, Drug Abuse or Dependence without Rehabilitation Therapy without MCC); MS-LTC-DRG 945 (Rehabilitation with CC/MCC); and MS-LTC-DRG 946 (Rehabilitation without CC/MCC). We are establishing a relative weight of 0.0000 for these 15 “psychiatric or rehabilitation” MS-LTC-DRGs because the blended payment rate and temporary exceptions to the site neutral payment rate would not be applicable for any LTCH discharges occurring in FY 2025, and as such payment under the LTCH PPS would be no longer be made in part based on the LTCH PPS standard Federal payment rate for any discharges assigned to those MS-LTC-DRGs.
In accordance with the regulations at § 412.517(b) (in conjunction with § 412.503), the annual update to the MS-LTC-DRG classifications and relative weights is done in a budget neutral manner such that estimated aggregate LTCH PPS payments would be unaffected, that is, would be neither greater than nor less than the estimated aggregate LTCH PPS payments that would have been made without the MS-LTC-DRG classification and relative weight changes. (For a detailed discussion on the establishment of the budget neutrality requirement for the annual update of the MS-LTC-DRG classifications and relative weights, we refer readers to the RY 2008 LTCH PPS final rule (72 FR 26881 and 26882).
To achieve budget neutrality under the requirement at § 412.517(b), under our established methodology, for each annual update the MS-LTC-DRG relative weights are uniformly adjusted to ensure that estimated aggregate payments under the LTCH PPS would not be affected (that is, decreased or increased). Consistent with that provision, as we proposed, we continued to apply budget neutrality adjustments in determining the FY 2025 MS-LTC-DRG relative weights so that our update of the MS-LTC-DRG classifications and relative weights for FY 2025 are made in a budget neutral manner. For FY 2025, as we proposed, we applied two budget neutrality factors to determine the MS-LTC-DRG relative weights. In this step, we describe the determination of the budget neutrality adjustment that accounts for the update of the MS-LTC-DRG classifications and relative weights prior to the application of the ten-percent cap. In steps 10 and 11, we describe the application of the 10-percent cap policy (step 10) and the determination of the budget neutrality factor that accounts for the application of the 10-percent cap policy (step 11).
In this final rule, to ensure budget neutrality for the update to the MS-LTC-DRG classifications and relative weights prior to the application of the 10-percent cap (that is, uncapped relative weights), under § 412.517(b), we continued to use our established two-step budget neutrality methodology. Therefore, in the first step of our MS-LTC-DRG update budget neutrality methodology, for FY 2025, we calculated and applied a normalization factor to the recalibrated relative weights (the result of Steps 1 through 8 discussed previously) to ensure that estimated payments are not affected by changes in the composition of case types or the changes to the classification system. That is, the normalization adjustment is intended to ensure that the recalibration of the MS-LTC-DRG relative weights (that is, the process itself) neither increases nor decreases the average case-mix index.
To calculate the normalization factor for FY 2025, we used the following three steps: (1.a.) use the applicable LTCH cases from the best available data (that is, LTCH discharges from the FY 2023 MedPAR file) and group them
In the second step of our MS-LTC-DRG update budget neutrality methodology, we calculated a budget neutrality adjustment factor consisting of the ratio of estimated aggregate FY 2025 LTCH PPS standard Federal payment rate payments for applicable LTCH cases before reclassification and recalibration to estimated aggregate payments for FY 2025 LTCH PPS standard Federal payment rate payments for applicable LTCH cases after reclassification and recalibration. That is, for this final rule, for FY 2025, we determined the budget neutrality adjustment factor using the following three steps: (2.a.) simulate estimated total FY 2025 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the uncapped normalized relative weights for FY 2025 and GROUPER Version 42; (2.b.) simulate estimated total FY 2025 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the FY 2024 GROUPER (Version 41) and the FY 2024 MS-LTC-DRG relative weights in Table 11 of the FY 2024 IPPS/LTCH PPS final rule; and (2.c.) calculate the ratio of these estimated total payments by dividing the value determined in Step 2.b. by the value determined in Step 2.a. In determining the FY 2025 MS-LTC-DRG relative weights, each uncapped normalized relative weight is then multiplied by a budget neutrality factor of 0.9885836 (the value determined in Step 2.c.) in the second step of the budget neutrality methodology.
To mitigate the financial impacts of significant year-to-year reductions in MS-LTC-DRGs relative weights, beginning in FY 2023, we adopted a policy that applies, in a budget neutral manner, a 10-percent cap on annual relative weight decreases for MS-LTC-DRGs with at least 25 applicable LTCH cases (§ 412.515(b)). Under this policy, in cases where CMS creates new MS-LTC-DRGs or modifies the MS-LTC-DRGs as part of its annual reclassifications resulting in renumbering of one or more MS-LTC-DRGs, the 10-percent cap does not apply to the relative weight for any new or renumbered MS-LTC-DRGs for the fiscal year. We refer readers to section VIII.B.3.b. of the preamble of the FY 2023 IPPS/LTCH PPS final rule with comment period for a detailed discussion on the adoption of the 10-percent cap policy (87 FR 49152 through 49154).
Applying the 10-percent cap to MS-LTC-DRGs with 25 or more cases results in more predictable and stable MS-LTC-DRG relative weights from year to year, especially for high-volume MS-LTC-DRGs that generally have the largest financial impact on an LTCH's operations. For this final rule, in cases where the relative weight for a MS-LTC-DRG with 25 or more applicable LTCH cases would decrease by more than 10-percent in FY 2025 relative to FY 2024, as we proposed, we limited the reduction to 10-percent. Under this policy, we do not apply the 10 percent cap to the low-volume MS-LTC-DRGs identified in Step 3 or the no-volume MS-LTC-DRGs identified in Step 8.
Therefore, in this step, for each FY 2025 MS-LTC-DRG with 25 or more applicable LTCH cases (excludes low-volume and zero-volume MS-LTC-DRGs) we compared its FY 2025 relative weight (after application of the normalization and budget neutrality factors determined in Step 9), to its FY 2024 MS-LTC-DRG relative weight. For any MS-LTC-DRG where the FY 2025 relative weight would otherwise have declined more than 10 percent, we established a capped FY 2025 MS-LTC-DRG relative weight that is equal to 90 percent of that MS-LTC-DRG's FY 2024 relative weight (that is, we set the FY 2025 relative weight equal to the FY 2024 weight × 0.90).
In section II.E. of the preamble of this final rule, we discuss our changes to the MS-DRGs, and by extension the MS-LTC-DRGs, for FY 2025. As discussed previously, under our current policy, the 10-percent cap does not apply to the relative weight for any new or renumbered MS-LTC-DRGs. We did not propose any changes to this policy for FY 2025, and as such any new or renumbered MS-LTC-DRGs for FY 2025 were not eligible for the 10-percent cap.
Under the requirement at existing § 412.517(b) that aggregate LTCH PPS payments will be unaffected by annual changes to the MS-LTC-DRG classifications and relative weights, consistent with our established methodology, we continued to apply a budget neutrality adjustment to the MS-LTC-DRG relative weights so that the 10-percent cap on relative weight reductions (step 10) is implemented in a budget neutral manner. Therefore, we determined the budget neutrality adjustment factor for the 10-percent cap on relative weight reductions using the following three steps: (a) simulate estimated total FY 2025 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the capped relative weights for FY 2025 (determined in Step 10) and GROUPER Version 42; (b) simulate estimated total FY 2025 LTCH PPS standard Federal payment rate payments for applicable LTCH cases using the uncapped relative weights for FY 2025 (determined in Step 9) and GROUPER Version 42; and (c) calculate the ratio of these estimated total payments by dividing the value determined in step (b) by the value determined in step (a). In determining the FY 2025 MS-LTC-DRG relative weights, each capped relative weight is then multiplied by a budget neutrality factor of 0.9945741 (the value determined in step (c)) to achieve the budget neutrality requirement.
Table 11, which is listed in section VI. of the Addendum to this final rule and is available via the internet on the CMS website, lists the MS-LTC-DRGs and their respective relative weights, geometric mean length of stay, and five-sixths of the geometric mean length of stay (used to identify SSO cases under § 412.529(a)) for FY 2025. We also are making available on the website the MS-LTC-DRG relative weights prior to the application of the 10 percent cap on MS-LTC-DRG relative weight reductions and corresponding cap budget neutrality factor.
The basic methodology for determining LTCH PPS standard Federal payment rates is currently set forth at 42 CFR 412.515 through 412.533 and 412.535. In this section, we discuss the factors that we use to update the LTCH PPS standard Federal payment rate for FY 2025, that is, effective for LTCH discharges occurring on or after October 1, 2024, through September 30, 2025. Under the dual rate LTCH PPS payment structure required by statute, beginning with discharges in cost reporting periods beginning in FY 2016, only LTCH discharges that meet the criteria for exclusion from the site neutral payment rate are paid based on the LTCH PPS standard Federal payment rate specified at 42 CFR 412.523. (For additional details on our finalized policies related to the dual rate LTCH PPS payment structure required by statute, we refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR 49601 through 49623).)
Prior to the implementation of the dual payment rate system in FY 2016, all LTCH discharges were paid similarly to those now exempt from the site neutral payment rate. That legacy payment rate was called the standard Federal rate. For details on the development of the initial standard Federal rate for FY 2003, we refer readers to the August 30, 2002 LTCH PPS final rule (67 FR 56027 through 56037). For subsequent updates to the standard Federal rate from FYs 2003 through 2015, and LTCH PPS standard Federal payment rate from FY 2016 through present, as implemented under 42 CFR 412.523(c)(3), we refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42445 through 42446).
In this FY 2025 IPPS/LTCH PPS final rule, we present our policies related to the annual update to the LTCH PPS standard Federal payment rate for FY 2025.
The update to the LTCH PPS standard Federal payment rate for FY 2025 is presented in section V.A. of the Addendum to this final rule. The components of the annual update to the LTCH PPS standard Federal payment rate for FY 2025 are discussed in this section, including the statutory reduction to the annual update for LTCHs that fail to submit quality reporting data for FY 2025 as required by the statute (as discussed in section VIII.C.2.c. of the preamble of this final rule). As we proposed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36267), we also made an adjustment to the LTCH PPS standard Federal payment rate to account for the estimated effect of the changes to the area wage level for FY 2025 on estimated aggregate LTCH PPS payments, in accordance with 42 CFR 412.523(d)(4) (as discussed in section V.B. of the Addendum to this final rule).
Historically, the Medicare program has used a market basket to account for input price increases in the services furnished by providers. The market basket used for the LTCH PPS includes both operating and capital-related costs of LTCHs because the LTCH PPS uses a single payment rate for both operating and capital-related costs. We adopted the 2017-based LTCH market basket for use under the LTCH PPS beginning in FY 2021 (85 FR 58907 through 58909). As discussed in section VIII.D. of the preamble of this final rule, we are finalizing our proposal to rebase and revise the 2017-based LTCH market basket to reflect a 2022 base year. For additional details on the historical development of the market basket used under the LTCH PPS, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53467 through 53476), and for a complete discussion of the LTCH market basket and a description of the methodologies used to determine the operating and capital-related portions of the 2017-based LTCH market basket, we refer readers to the FY 2021 IPPS/LTCH PPS final rule (85 FR 58909 through 58926).
Section 3401(c) of the Affordable Care Act provides for certain adjustments to any annual update to the LTCH PPS standard Federal payment rate and refers to the timeframes associated with such adjustments as a “rate year.” We note that, because the annual update to the LTCH PPS policies, rates, and factors now occurs on October 1, we adopted the term “fiscal year” (FY) rather than “rate year” (RY) under the LTCH PPS beginning October 1, 2010, to conform with the standard definition of the Federal fiscal year (October 1 through September 30) used by other PPSs, such as the IPPS (75 FR 50396 through 50397). Although the language of sections 3004(a), 3401(c), 10319, and 1105(b) of the Affordable Care Act refers to years 2010 and thereafter under the LTCH PPS as “rate year,” consistent with our change in the terminology used under the LTCH PPS from “rate year” to “fiscal year,” for purposes of clarity, when discussing the annual update for the LTCH PPS standard Federal payment rate, including the provisions of the Affordable Care Act, we use “fiscal year” rather than “rate year” for 2011 and subsequent years.
As previously noted, for FY 2025, we are finalizing our proposal to rebase and revise the 2017-based LTCH market basket to reflect a 2022 base year. The 2022-based LTCH market basket is primarily based on the Medicare cost report data submitted by LTCHs and, therefore, specifically reflects the cost structures of LTCHs. As described in more detail in section VIII.D.1 of the preamble of this final rule, we used data from cost reporting periods beginning on and after April 1, 2021, and prior to April 1, 2022 because these data reflect the most recent information that are most representative of FY 2022. We believe that the 2022-based LTCH market basket appropriately reflects the cost structure of LTCHs, as discussed in greater detail in section VIII.D. of the preamble of this final rule. Therefore, in this final rule, as we proposed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36267), we use the 2022-based LTCH market basket to update the LTCH PPS standard Federal payment rate for FY 2025.
Section 1886(m)(3)(A) of the Act provides that, beginning in FY 2010, any annual update to the LTCH PPS standard Federal payment rate is reduced by the adjustments specified in clauses (i) and (ii) of subparagraph (A), as applicable. Clause (i) of section 1886(m)(3)(A) of the Act provides for a reduction, for FY 2012 and each subsequent rate year, by “the productivity adjustment” described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the Affordable Care Act, defines this productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business multifactor productivity (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 U.S. Department of Labor's Bureau of Labor Statistics (BLS) publishes the official measures of private nonfarm business productivity for the U.S. economy. We note that previously the productivity measure referenced in section 1886(b)(3)(B)(xi)(II) was published by
Section 1886(m)(3)(B) of the Act provides that the application of paragraph (3) of section 1886(m) of the Act may result in the annual update being less than zero for a rate year, and may result in payment rates for a rate year being less than such payment rates for the preceding rate year.
In accordance with section 1886(m)(5) of the Act, the Secretary established the Long-Term Care Hospital Quality Reporting Program (LTCH QRP). The reduction in the annual update to the LTCH PPS standard Federal payment rate for failure to report quality data under the LTCH QRP for FY 2014 and subsequent fiscal years is codified under 42 CFR 412.523(c)(4). The LTCH QRP, as required for FY 2014 and subsequent fiscal years by section 1886(m)(5)(A)(i) of the Act, requires that a 2.0 percentage points reduction be applied to any update under 42 CFR 412.523(c)(3) for an LTCH that does not submit quality reporting data to the Secretary in accordance with section 1886(m)(5)(C) of the Act with respect to such a year (that is, in the form and manner and at the time specified by the Secretary under the LTCH QRP) (42 CFR 412.523(c)(4)(i)). Section 1886(m)(5)(A)(ii) of the Act provides that the application of the 2.0 percentage points reduction may result in an annual update that is less than 0.0 for a year, and may result in LTCH PPS payment rates for a year being less than such LTCH PPS payment rates for the preceding year. Furthermore, section 1886(m)(5)(B) of the Act specifies that the 2.0 percentage points reduction is applied in a noncumulative manner, such that any reduction made under section 1886(m)(5)(A) of the Act shall apply only with respect to the year involved and shall not be taken into account in computing the LTCH PPS payment amount for a subsequent year. These requirements are codified in the regulations at 42 CFR 412.523(c)(4). (For additional information on the history of the LTCH QRP, including the statutory authority and the selected measures, we refer readers to section IX. of the preamble of this final rule.)
Consistent with our historical practice, we estimate the market basket percentage increase and the productivity adjustment based on IHS Global Inc.'s (IGI's) forecast using the most recent available data. Based on IGI's fourth quarter 2023 forecast, the proposed FY 2025 market basket percentage increase for the LTCH PPS using the proposed 2022-based LTCH market basket was 3.2 percent. The proposed productivity adjustment for FY 2025 based on IGI's fourth quarter 2023 forecast was 0.4 percentage point.
For FY 2025, section 1886(m)(3)(A)(i) of the Act requires that any annual update to the LTCH PPS standard Federal payment rate be reduced by the productivity adjustment, described in section 1886(b)(3)(B)(xi)(II) of the Act. Consistent with the statute, we proposed to reduce the FY 2025 market basket percentage increase by the FY 2025 productivity adjustment. To determine the proposed market basket update for LTCHs for FY 2025 we subtracted the proposed FY 2025 productivity adjustment from the proposed FY 2025 market basket percentage increase. (For additional details on our established methodology for adjusting the market basket percentage increase by the productivity adjustment, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51771).) In addition, for FY 2025, section 1886(m)(5) of the Act requires that, for LTCHs that do not submit quality reporting data as required under the LTCH QRP, any annual update to an LTCH PPS standard Federal payment rate, after application of the adjustments required by section 1886(m)(3) of the Act, shall be further reduced by 2.0 percentage points.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36268), in accordance with the statute, we proposed to reduce the proposed FY 2025 market basket percentage increase of 3.2 percent (based on IGI's fourth quarter 2023 forecast of the proposed 2022-based LTCH market basket) by the proposed FY 2025 productivity adjustment of 0.4 percentage point (based on IGI's fourth quarter 2023 forecast). Therefore, under the authority of section 123 of the BBRA as amended by section 307(b) of the BIPA, consistent with 42 CFR 412.523(c)(3)(xvii), we proposed to establish an annual market basket update to the LTCH PPS standard Federal payment rate for FY 2025 of 2.8 percent (that is, the proposed LTCH PPS market basket percentage increase of 3.2 percent less the proposed productivity adjustment of 0.4 percentage point). For LTCHs that fail to submit quality reporting data under the LTCH QRP, under 42 CFR 412.523(c)(3)(xvii) in conjunction with 42 CFR 412.523(c)(4), we proposed to further reduce the annual update to the LTCH PPS standard Federal payment rate by 2.0 percentage points, in accordance with section 1886(m)(5) of the Act. Accordingly, we proposed to establish an annual update to the LTCH PPS standard Federal payment rate of 0.8 percent (that is, the proposed 2.8 percent LTCH market basket update minus 2.0 percentage points) for FY 2025 for LTCHs that fail to submit quality reporting data as required under the LTCH QRP. Consistent with our historical practice, we proposed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36268) to use a more recent estimate of the market basket percentage increase and the productivity adjustment, if appropriate, to establish an annual update to the LTCH PPS standard Federal payment rate for FY 2025 in the final rule. We note that, consistent with historical practice, we also proposed to adjust the FY 2025 LTCH PPS standard Federal payment rate by an area wage level budget neutrality factor in accordance with 42 CFR 412.523(d)(4) (as discussed in section V.B.5. of the Addendum to the proposed rule).
A commenter urged CMS to consider the effects of changing health care system dynamics and the unlikelihood of these dynamics returning to “normal” trends, which they stated are straining and will continue to strain hospitals and health systems. For example, commenters cited the disruption to the health care system from the cyberattack on Change Healthcare. The commenter urged CMS to focus on appropriately accounting for recent and future trends in inflationary pressures and cost increases in the hospital payment update, stating it is essential to ensure that Medicare payments for acute care services more accurately reflect the cost of providing hospital care.
Commenters stated that labor costs, especially for clinicians, are continuing to increase at rates that are faster than what CMS factored into the proposed market basket update. A commenter claimed that CMS did not fully account for the increased labor costs that LTCHs are bearing and stated it is important that CMS modify its customary LTCH PPS rate setting methodology to account for the effects of these unprecedented labor costs on the cost to care for Medicare beneficiaries in LTCHs. The commenter stated that its labor costs (for both employed and contract labor) have been increasing at high rates. The commenter stated that increases in its compensation and total operating expenses have been significantly higher than the market basket increases from FY 2020 through FY 2022. The commenter stated that these data as well as other studies and reports highlight the need for additional increases in payments to cover the significant increases in costs that LTCHs have been experiencing. A commenter requested that CMS provide for a “special” increase to the proposed market basket update to account for significantly higher labor and supply costs incurred by LTCHs in recent years and in FY 2025.
A commenter stated that the authorizing statutes for the LTCH PPS do not require or mention the use of an index for an annual update, therefore, CMS is not restrained by the use of the IGI price proxy forecasts or any index with similar data for an annual LTCH PPS rate update. In addition, the commenter noted the broad LTCH PPS authority in the statute to account for circumstances like higher labor and supply costs, stating that Congress would not have included this language in the statute if it did not expect CMS to make such adjustments when appropriate. According to the commenter it is entirely appropriate for CMS to use this broad authority to increase the market basket update to account for high labor and supply costs after the end of the COVID-19 pandemic that LTCHs continue to experience.
Commenters stated that the cumulative impact of inflationary pressure coupled with the proposed low Medicare payment increases for FY 2025 will continue to have negative effects on LTCH PPS operating margins. The commenters urged CMS to use more current data that includes the recent inflationary increases in cost. In the absence of such data, they requested that CMS consider an alternative approach to better align the market basket increases with the rising cost of treating patients.
As discussed in section VIII. D. of this final rule, after consideration of public comments, we are finalizing our proposal to rebase and revise the LTCH market basket to reflect a 2022 base year. We appreciate the commenters' concern regarding inflationary pressure, including labor and supply costs, encountered by LTCHs. The compensation cost weight in the 2022-based LTCH market basket is 8.6 percentage points higher than the compensation cost weight in the 2017-based LTCH market basket, reflecting the faster labor cost growth relative to other input costs as noted by the commenters. We note that the market basket percentage increase is a forecast of the price pressures that LTCHs are expected to face in FY 2025, and the final FY 2025 LTCH market basket percentage increase reflects IGI's (a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the price proxies of the market baskets) projected inflation and overall economic outlook. We also note that when developing its forecast for the ECI for hospital workers, IGI considers overall labor market conditions (including rise in contract labor employment due to tight labor market conditions) as well as trends in contract labor wages, both of which could potentially impact wages for workers employed directly by the hospital. As projected by IGI and other independent forecasters, compensation growth and upward price pressures are expected to slow in FY 2025 relative to FY 2023 and FY 2024.
As is our general practice, we proposed that if more recent data became available, we would use such data, if appropriate, to derive the final FY 2025 LTCH market basket update for the final rule. For this final rule, we are using an updated forecast of the price proxies underlying the market basket that incorporates more recent historical data and reflects a revised outlook regarding the U.S. economy, including compensation and inflationary pressures. Based on IGI's second quarter 2024 forecast with historical data through the first quarter of 2024, the projected 2022-based LTCH market basket percentage increase factor for FY 2025 is 3.5 percent, which is 0.3 percentage point higher than the projected FY 2025 LTCH market basket percentage increase factor in the proposed rule, and reflects a projected increase in compensation prices of 4.0 percent. As discussed earlier, we believe the LTCH market basket percentage increase appropriately reflects the input price growth (including compensation price growth) that LTCHs incur in providing medical services. We would note that the 10-year historical average (2014-2023) growth rate of the 2022-based LTCH market basket is 2.8 percent
Many commenters urged CMS to use the broad LTCH PPS statutory authority to implement forecasting error adjustments in FY 2025 to account for the differences in the market basket forecasts and actual increases since FY 2021, based on the most recent data. Some commenters stated that adopting a one-time forecast error adjustment is necessary to address unprecedented circumstances surrounding the COVID-19 PHE. One commenter urged CMS to increase the market basket whenever CMS determines that the actual market basket percentage increase exceeds the forecasted market basket percentage increase. A few commenters noted that CMS has made forecasting error adjustments for payments to other types of health care providers in the past, stating it would be appropriate to do so for LTCHs as well. Other commenters claimed that CMS wrongly dismissed the option of applying a special payment adjustment to the LTCH PPS rates that accounts for forecast errors in the FY 2023 IPPS/LTCH PPS final rule and FY 2024 IPPS/LTCH PPS final rule leading to underpayments for LTCHs. These commenters stated that a correction to the FY 2025 payment rate is required to prevent underpayments to LTCHs going forward.
Commenters specifically requested that a forecast error adjustment of 4.3 percentage points be added to the FY 2025 annual update to account for the combined understatement of the FY 2021 through FY 2023 LTCH market baskets. A few commenters also requested that, in addition to that estimated 4.3 percentage points forecast error adjustment, CMS also add an unspecified additional amount to compensate LTCHs for four years of underpayments. Other commenters requested that CMS add 3.0 percentage points to the FY 2025 annual update to account for the difference between the market basket update that was implemented for FY 2022 and the actual market basket for FY 2022. One commenter requested that this FY 2022 forecast error adjustment be applied retroactively to the FY 2024 update.
While the projected LTCH basket updates for FY 2021 through FY 2023 were under forecast (actual increases less forecasted increases were positive), this was largely due to unanticipated inflation and labor market pressures as the economy emerged from the COVID-19 PHE. However, an analysis of the forecast error of the LTCH market basket over a longer period of time shows the forecast error has been both positive and negative. The 10-year cumulative forecast error for FY 2014 to FY 2023 (excluding 2018 as the update was statutorily mandated) is +0.7 percent. In addition, for each fiscal year from 2012 through 2020, the forecasted LTCH market basket update implemented in the final rule was shown to be higher than the actual LTCH market basket update once historical data were available. Only considering the forecast error for years when the final LTCH market basket update is lower than the actual LTCH market basket update would not adequately reflect the full impact of forecast error over the past 10 years. For these reasons, we are not adopting the commenters' requests to implement an adjustment for FY 2025 to account for the difference between the actual and forecasted LTCH market basket updates for FYs 2021 through 2023, and, for the reasons stated previously, we disagree that we wrongly dismissed commenters' requests to apply an adjustment that accounts for forecast errors in the FY 2023 and FY 2024 IPPS/LTCH PPS final rules.
A commenter stated that the private nonfarm business TFP is intended to allow for productivity gains resulting from new technologies, economies of scale and changes in production, but because the factor is a 10-year moving average, the status of the current workforce is not appropriately reflected. The commenter further stated that hospitals continue to encounter staffing difficulties, such as obtaining nurses and nursing assistants to care for patients and actions to regulate staffing, which will lead to less efficiency, increased costs and recruitment difficulties and should be accounted for when determining a productivity factor. This commenter and other commenters urged CMS to use its broad LTCH PPS statutory authority to eliminate the productivity adjustment for FY 2025, particularly in light of inadequate market basket increases.
As stated in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36267), BLS publishes the official measures of annual economy-wide, private nonfarm business total factor productivity (TFP) (previously referred to as annual economy-wide, private nonfarm business multifactor productivity). IGI forecasts TFP consistent with BLS methodology by forecasting the detailed components of TFP. A complete description of IGI's TFP projection methodology is available on the CMS website at
The FY 2025 proposed productivity adjustment of 0.4 percent was based on IGI's forecast of the 10-year moving average of annual economy-wide private nonfarm business TFP, reflecting historical data through 2022 as published by BLS and forecasted TFP growth for 2023 through 2025. The FY 2025 final productivity adjustment of 0.5 percent is based on IGI's forecast of the 10-year moving average of annual economy-wide private nonfarm business TFP, reflecting historical data through 2023 as published by BLS, and forecasted TFP growth for 2024 through 2025.
In response to commenters' request for more transparency regarding the productivity adjustment calculation, we have provided the following information on the CMS website and in the
After consideration of public comments, we are finalizing the LTCH PPS payment rate update using the most recent forecast of the 2022-based LTCH market basket percentage increase and productivity adjustment. As such, based on IGI's second quarter 2024 forecast, the FY 2025 market basket percentage increase for the LTCH PPS using the 2022-based LTCH market basket is 3.5 percent. The current estimate of the productivity adjustment for FY 2025 based on IGI's second quarter 2024 forecast is 0.5 percentage point. Therefore, under the authority of section 123 of the BBRA as amended by section 307(b) of the BIPA, consistent with 42 CFR 412.523(c)(3)(xvii), we are establishing an annual market basket update to the LTCH PPS standard Federal payment rate for FY 2025 of 3.0 percent (that is, the most recent estimate of the LTCH PPS market basket percentage increase of 3.5 percent less the productivity adjustment of 0.5 percentage point). For LTCHs that fail to submit quality reporting data under the LTCH QRP, under 42 CFR 412.523(c)(3)(xvii) in conjunction with 42 CFR 412.523(c)(4), as we proposed, we are further reducing the annual update to the LTCH PPS standard Federal payment rate by 2.0 percentage points, in accordance with section 1886(m)(5) of the Act. Accordingly, we are establishing an annual update to the LTCH PPS standard Federal payment rate of 1.0 percent (that is, the 3.0 percent LTCH market basket update minus 2.0 percentage points) for FY 2025 for LTCHs that fail to submit quality reporting data as required under the LTCH QRP.
The input price index (that is, the market basket) that was used to develop the LTCH PPS for FY 2003 was the “excluded hospital with capital” market basket. That market basket was based on 1997 Medicare cost report data and included data for Medicare-participating IRFs, IPFs, LTCHs, cancer hospitals, and children's hospitals. Although the term “market basket” technically describes the mix of goods and services used in providing hospital care, this term is also commonly used to denote the input price index (that is, cost category weights and price proxies combined) derived from that mix. Accordingly, the term “market basket,” as used in this section, refers to an input price index.
Since the LTCH PPS inception, the market basket used to update LTCH PPS payments has been rebased and revised to reflect more recent data. We last rebased and revised the market basket applicable to the LTCH PPS in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58909 through 58926), where we adopted a 2017-based LTCH market basket. References to the historical market baskets used to update LTCH PPS payments are listed in the FY 2021 LTCH PPS final rule (85 FR 58909 through 58910).
For the FY 2025 IPPS/LTCH proposed rule, we proposed to rebase and revise the 2017-based LTCH market basket to reflect a 2022 base year, which would maintain our historical frequency of rebasing the market basket every 4 years. The proposed 2022-based LTCH market basket is primarily based on Medicare cost report data for LTCHs for FY 2022, specifically for cost reporting periods beginning on and after April 1, 2021, and prior to April 1, 2022. For the 2017-based LTCH market, we used Medicare cost report data for LTCHs from cost reporting periods beginning
At the time of proposed rulemaking, we were unable to use data from the FY 2022 HCRIS file, which reflects cost reporting periods beginning on and after October 1, 2021 and prior to September 30, 2022, as most reporters have a begin date of September 1, so the dataset in the file was not yet complete. In the interest of utilizing the most recent, complete data available, we proposed to combine data from multiple HCRIS files to obtain a 2022 base year. We proposed to use a composite timeframe of cost reporting periods beginning on and after April 1, 2021 and prior to April 1, 2022, because April 1 reflects the middle of the fiscal year and this timeframe would allow data from 2022 to be included in this rebasing. Using this proposed method, the weighted average of costs occurring in FY 2022 (accounting for the distribution of providers by Medicare cost report begin date) is 82 percent. Therefore, we believe our proposed methodology of using Medicare cost report data based on cost reporting periods beginning on or after April 1, 2021 and prior to April 1, 2022 reflects the most recent information that is most representative of FY 2022.
As described in the FY 2023 IPPS/LTCH final rule (87 FR 49164 through 49165), we received comments on the FY 2023 IPPS/LTCH PPS proposed rule where stakeholders expressed concern that the proposed market basket update was inadequate relative to input price inflation experienced by LTCHs, particularly as a result of the COVID-19 PHE. These commenters stated that the PHE, along with inflation, has significantly driven up operating costs. Specifically, some commenters noted changes to the labor markets that led to the use of more contract labor. As described in more detail later in this section, we verified this trend when analyzing the Medicare cost reports submitted by LTCHs through 2022. Therefore, we believe it is appropriate to incorporate more recent data to reflect updated cost structures for LTCHs, and so we proposed to use 2022 as the base year because we believe that the Medicare cost reports for this year represent the most recent, complete set of Medicare cost report data available for developing the proposed LTCH market basket at the time of this rulemaking. Given the recent trends in the major cost weights derived from the Medicare cost report data as discussed later in this section, we will continue to monitor these data going forward and any additional changes to the LTCH market basket will be proposed in future rulemaking.
In the following discussion, we provide an overview of the proposed LTCH market basket, describe the proposed methodologies for developing the operating and capital portions of the proposed 2022-based LTCH market basket, and provide information on the proposed price proxies. In each section, we describe any comments received, responses to these comments, and our final policies for this final rule. We received the following comments on our proposal to rebase the LTCH market basket to a 2022 base year.
However, a commenter stated that for FY 2025 payment rates, CMS proposed to return to its standard pre-pandemic rate setting methodologies (FY 2023 MedPAR file and FY 2022 HCRIS file) without any discussion of what are the “best available” data for the FY 2025 rate setting. The commenter stated that CMS is making an exception for the revised and rebased LTCH market basket where it proposed to use cost reports for periods beginning on or after April 1, 2021, and prior to April 1, 2022 to obtain a cost report dataset that is representative of FY 2022. The commenter claimed that based on its own experiences and analysis of its LTCH data, it is clear that LTCH utilization during the pandemic was not representative of typical LTCH utilization patterns. The commenter stated that the highest surge of COVID-19 hospitalizations occurred during FY 2022; therefore, CMS erred by not considering this when deciding which data to use for rate setting in FY 2025.
Similar to the 2017-based LTCH market basket, the proposed 2022-based LTCH market basket is a fixed-weight, Laspeyres-type price index. A Laspeyres price index measures the change in price, over time, of the same mix of goods and services purchased in the base period. Any changes in the quantity or mix (that is, intensity) of
We invited public comments on our proposed methodology, discussed in this section of this rule, for deriving the proposed 2022-based LTCH market basket.
The major types of costs underlying the proposed 2022-based LTCH market basket are derived from the Medicare cost reports (CMS Form 2552-10, OMB Control Number 0938-0050) for LTCHs. Specifically, we use the Medicare cost reports for seven specific costs: Wages and Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, Professional Liability Insurance (PLI), Home Office/Related Organization Contract Labor, and Capital. A residual category is then estimated and reflects all remaining costs not captured in the seven types of costs identified previously. The 2017-based LTCH market basket similarly used the Medicare cost reports.
Medicare cost report data include costs for all patients (including but not limited to those covered by Medicare, Medicaid, and private insurance). Because our goal is to measure cost shares for facilities that serve Medicare beneficiaries and are reflective of case mix and practice patterns associated with providing services to Medicare beneficiaries in LTCHs, we proposed to limit our selection of Medicare cost reports to those from LTCHs that have a Medicare average length of stay (LOS) that is within a comparable range of their total facility average LOS. We define the Medicare average LOS based on data reported on the Medicare cost report (CMS Form 2552-10, OMB Control Number 0938-0050) Worksheet S-3, Part I, line 14. We believe that applying the LOS edit results in a more accurate reflection of the structure of costs associated with Medicare covered days as our proposed edit excludes those LTCHs that had an average total facility LOS that were notably different than the average Medicare LOS. For the 2017-based LTCH market basket, we used the cost reports submitted by LTCHs with Medicare average LOS within 25 percent (that is, 25 percent higher or lower) of the total facility average LOS for the hospital. Based on our analysis of the 2022 Medicare cost reports, for the proposed 2022-based LTCH market basket, we proposed to again use the cost reports submitted by LTCHs with Medicare average LOS within 25 percent (that is, 25 percent higher or lower) of the total facility average LOS for the hospital. The universe of LTCHs had an average Medicare LOS of 26 days, an average total facility LOS of 35 days, and aggregate Medicare utilization (as measured by Medicare inpatient LTCH days as a percentage of total facility inpatient LTCH days) of 34 percent in 2022. Applying the proposed trim excludes 11 percent of LTCH providers and results in a subset of LTCH Medicare cost reports with an average Medicare LOS of 26 days, average facility LOS of 30 days, and aggregate Medicare utilization (based on days) of 40 percent. The 11 percent of providers that are excluded had an average Medicare LOS of 29 days, average facility LOS of 71 days, and aggregate Medicare utilization of 14 percent.
We proposed to use the cost reports for LTCHs that meet this requirement to calculate the costs for the seven major cost categories (Wages and Salaries, Employee Benefits, Contract Labor, Professional Liability Insurance, Pharmaceuticals, Home Office/Related Organization Contract Labor, and Capital) for the market basket. Also, as described in section VIII.D.3.d. of the preamble of this final rule, and as done for the 2017-based LTCH market basket, we also proposed to use the Medicare cost report data to calculate the detailed capital cost weights for the Depreciation, Interest, Lease, and Other Capital-Related cost categories.
We proposed to derive Wages and Salaries costs as the sum of routine inpatient salaries, ancillary salaries, and a proportion of overhead (or general service cost center) salaries as reported on Worksheet A, column 1. Because overhead salary costs are attributable to the entire LTCH, we proposed to only include the proportion attributable to the Medicare allowable cost centers. For the 2022-based LTCH market basket, we proposed that routine and ancillary Wages and Salaries costs would be equal to salary costs as reported on Worksheet A, column 1, lines 30 through 35, 50 through 76 (excluding 52 and 75), 90 through 91, and 93. Then, we proposed to estimate the proportion of overhead salaries that are attributed to Medicare allowable costs centers. We proposed to first calculate overhead salaries as the sum of Worksheet A, column 1, lines 4 through 18. We then calculate the “Medicare allowable ratio” equal to routine and ancillary Wages and Salaries divided by total non-overhead salaries (Worksheet A, column 1, line 200 less overhead salaries). We proposed to multiply this Medicare allowable ratio by overhead salaries to determine the overhead salaries attributed to Medicare allowable cost centers. The sum of routine salaries, ancillary salaries, and the estimated Medicare allowable portion of overhead salaries represent Wages and Salaries costs. A similar methodology was used to derive Wages and Salaries costs in the 2017-based LTCH market basket.
Similar to the 2017-based LTCH market basket, we proposed to calculate Employee Benefits costs using data from Worksheet S-3, part II, column 4, lines 17, 18, 20, and 22. The completion of Worksheet S-3, part II is only required for IPPS hospitals. For 2022, we found that approximately 42 percent of LTCHs voluntarily reported the Employee Benefits data, which has increased from the approximately 20 percent of LTCHs that reported these data that were used for the 2017-based LTCH market basket. Our analysis of the Worksheet S-3, part II data submitted by these LTCHs indicates that we continue to have a large enough sample to enable us to produce a reasonable Employee Benefits cost weight. Specifically, we found that when we recalculated the cost weight after weighting to reflect the characteristics of the universe of LTCHs (such as by type of ownership—nonprofit, for-profit, and government—and by region), the recalculation did not have a material effect on the resulting cost weight. Therefore, we proposed to use Worksheet S-3, part II data (as was done for the 2017-based LTCH market basket) to calculate the Employee Benefits cost weight in the proposed 2022-based LTCH market basket.
We note that, effective with the implementation of CMS Form 2552-10, OMB Control Number 0938-0050, we began collecting Employee Benefits and Contract Labor data on Worksheet S-3, part V, which is applicable to LTCHs. However, approximately 12 percent of LTCHs reported data on Worksheet S-3, part V for 2022, which has fallen since 2017 when roughly 17 percent of LTCHs reported these data. Because a greater percentage of LTCHs continue to report data on Worksheet S-3, part II than Worksheet S-3, part V, we did not propose to use the Employee Benefits and Contract Labor data reported on Worksheet S-3, part V to calculate the Employee Benefits and Contract Labor cost weights in the proposed 2022-based LTCH market basket. We continue to encourage all providers to report Employee Benefits and Contract Labor data on Worksheet S-3, part V.
Contract Labor costs reported on the Medicare cost reports are primarily associated with direct patient care services. Contract Labor costs for services such as accounting, billing, and legal are estimated using other government data sources as described in this section of this final rule. Approximately 40 percent of LTCHs voluntarily reported Contract Labor costs on Worksheet S-3, part II, which was similar to the percentage obtained from 2017 Medicare cost reports.
As was done for the 2017-based LTCH market basket, we proposed to derive the Contract Labor costs for the proposed 2022-based LTCH market basket using voluntarily reported data from Worksheet S-3, part II. Our analysis of these data indicates that we have a large enough sample to enable us to produce a representative Contract Labor cost weight. Specifically, we found that when we recalculated the cost weight after weighting to reflect the characteristics of the universe of LTCHs by region, the recalculation did not have a material effect on the resulting cost weight. Therefore, we proposed to use data from Worksheet S-3, part II, column 4, lines 11 and 13 to calculate the Contract Labor cost weight in the proposed 2022-based LTCH market basket.
We proposed to calculate Pharmaceuticals costs using non-salary costs reported for the pharmacy cost center (line 15) and drugs charged to patients cost center (line 73). We proposed to calculate these costs as Worksheet A, column 7, less Worksheet A, column 1 for each of these lines. A similar methodology was used for the 2017-based LTCH market basket.
We proposed that Professional Liability Insurance (PLI) costs (often referred to as malpractice costs) be equal to premiums, paid losses and self-insurance costs reported on Worksheet S-2, part I, columns 1 through 3, line 118. A similar methodology was used for the 2017-based LTCH market basket.
We proposed to calculate the Home Office/Related Organization Contract Labor costs using data reported on Worksheet S-3, part II, column 4, lines 1401, 1402, 2550, and 2551 for those LTCH providers reporting total salaries on Worksheet S-3, part II, line 1. A similar methodology was used for the 2017-based LTCH market basket.
We proposed that Capital costs be equal to Medicare allowable capital costs as reported on Worksheet B, part II, column 26, lines 30 through 35, 50 through 76 (excluding 52 and 75), 90 through 91 and 93. A similar methodology was used for the 2017-based LTCH market basket.
After we derive costs for the major cost categories for each provider using the Medicare cost report data as previously described, we proposed to trim the data for outliers. For each of the seven major cost categories, we first proposed to divide the calculated costs for the category by total Medicare allowable costs calculated for the provider to obtain cost weights for the universe of LTCH providers. For the 2022-based LTCH market basket (similar to the approach used for the 2017-based LTCH market basket), we proposed that total Medicare allowable costs would be equal to the total costs as reported on Worksheet B, part I, column 26, lines 30 through 35, 50 through 76 (excluding 52 and 75), 90 through 91, and 93.
For the Wages and Salaries, Employee Benefits, Contract Labor, Pharmaceuticals, Professional Liability Insurance, and Capital cost weights, after excluding cost weights that are less than or equal to zero, we proposed to then remove those providers whose derived cost weights fall in the top and bottom 5 percent of provider specific derived cost weights to ensure the exclusion of outliers. We note that missing values are assumed to be zero consistent with the methodology for how missing values were treated in the 2017-based LTCH market basket. After the outliers have been excluded, we sum the costs for each category across all remaining providers. We proposed to divide this by the sum of total Medicare allowable costs across all remaining providers to obtain a cost weight for the 2022-based LTCH market basket for the given category. This trimming process is done for each cost weight separately.
For the Home Office/Related Organization Contract Labor cost weight, we proposed to apply a 1-percent top only trimming methodology. We believe, as the Medicare cost report data (Worksheet S-2, part I, line 140) indicate, that not all LTCHs have a home office. LTCHs without a home office can incur these expenses directly by having their own staff, for which the costs would be included in the Wages and Salaries and Employee Benefits cost weights. Alternatively, LTCHs without a home office could also purchase related services from external contractors for which these expenses would be captured in the residual “All Other” cost weight. We believe this 1-percent top-only trimming methodology is appropriate as it addresses outliers while allowing providers with zero Home Office/Related Organization Contract Labor costs to be included in
Finally, we proposed to calculate the residual “All Other” cost weight that reflects all remaining costs that are not captured in the seven cost categories listed.
We did not receive any specific comments on the proposed methodology to derive the major cost weights using the Medicare cost reports and therefore are finalizing this methodology without modification. We note that comments we received on the overall market basket method, transparency of the method, and resulting market basket updates and labor-related share are discussed later in section VIII.D.5 and VIII.D.6 of the preamble of this final rule. We refer readers to Table EEEE 1 for the resulting proposed and final cost weights for these major cost categories.
The Wages and Salaries and Employee Benefits cost weights calculated from the Medicare cost reports for the 2022-based LTCH market basket are similar to the Wages and Salaries and Employee Benefits cost weights for the 2017-based LTCH market basket. The Contract Labor cost weight, however, is approximately 8 percentage points higher than the Contract Labor cost weight in the 2017-based LTCH market basket. The 2022-based Pharmaceuticals and Capital cost weights are lower than the 2017-based LTCH market basket by 1.7 percentage points and 1.4 percentage points, respectively. The 2022-based Home Office/Related Organization Contract Labor cost weight has increased by 1.8 percentage points compared to the 2017-based LTCH market basket.
As we did for the 2017-based LTCH market basket, we proposed to allocate the Contract Labor cost weight to the Wages and Salaries and Employee Benefits cost weights based on their relative proportions under the assumption that Contract Labor costs are comprised of both Wages and Salaries and Employee Benefits. The Contract Labor allocation proportion for Wages and Salaries is equal to the Wages and Salaries cost weight as a percent of the sum of the Wages and Salaries cost weight and the Employee Benefits cost weight. This rounded percentage is 87 percent. Therefore, we proposed to allocate 87 percent of the Contract Labor cost weight to the Wages and Salaries cost weight and 13 percent to the Employee Benefits cost weight. We received no comments on the proposed methodology to allocate the Contract Labor cost weight to the Wages and Salaries cost weight and Employee Benefits cost weight and therefore, are finalizing this methodology without modification. We refer readers to Table EEEE 2 that shows the proposed and final Wages and Salaries and Employee Benefits cost weights after Contract Labor cost weight allocation for both the 2022-based LTCH market basket and the 2017-based LTCH market basket.
After the allocation of the Contract Labor cost weight, the 2022-based Wages and Salaries cost weight is 7.2 percentage points higher and the Employee Benefits cost weight is 1.4 percentage points higher, relative to the respective cost weights for the 2017-based LTCH market basket. As a result, in the 2022-based LTCH market basket, the compensation cost weight is 8.6 percentage points higher than the Compensation cost weight for the 2017-based LTCH market basket.
To further divide the residual “All Other” cost weight estimated from the 2022 Medicare cost report data into more detailed cost categories, we proposed to use the 2017 Benchmark I-O “The Use Table (Supply-Use Framework)” data for NAICS 622000, Hospitals, published by the Bureau of Economic Analysis (BEA). These data are publicly available at the following website:
The BEA Benchmark I-O data are scheduled for publication every 5 years with the most recent data available for 2017. The 2017 Benchmark I-O data are derived from the 2017 Economic Census and are the building blocks for BEA's economic accounts. Therefore, they represent the most comprehensive and complete set of data on the economic processes or mechanisms by which output is produced and distributed.
Using this methodology, we proposed to derive seventeen detailed LTCH market basket cost category weights within the proposed 2022-based LTCH market basket residual “All Other” cost weight (20.8 percent). These categories are: (1) Electricity and Other Non-Fuel Utilities; (2) Fuel: Oil and Gas; (3) Food: Direct Purchases; (4) Food: Contract Services; (5) Chemicals; (6) Medical Instruments; (7) Rubber and Plastics; (8) Paper and Printing Products; (9) Miscellaneous Products; (10) Professional Fees: Labor-Related; (11) Administrative and Facilities Support Services; (12) Installation, Maintenance, and Repair Services; (13) All Other Labor-Related Services; (14) Professional Fees: Nonlabor-Related; (15) Financial Services; (16) Telephone Services; and (17) All Other Nonlabor-Related Services. We note that these are the same categories as were used in the 2017-based LTCH market basket (with several cost categories being renamed for clarification purposes).
We did not receive any specific comments on the proposed methodology to derive the detailed operating cost weights and therefore are finalizing this methodology without modification. We note that general comments we received on the resulting market basket cost weights are discussed later in section VIII.D.5 and VIII.D.6 of the preamble of this final rule.
As described in section VIII.D.3.b. of the preamble of this final rule, we proposed a Capital-Related cost weight of 8.5 percent in the proposed 2022-based LTCH market basket as calculated from the 2022 Medicare cost reports for LTCHs after applying the proposed trims as previously described. We proposed to then separate this total Capital-Related cost weight into more detailed cost categories. Using Worksheet A-7 in the 2022 Medicare cost reports, we are able to group capital-related costs into the following categories: Depreciation, Interest, Lease, and Other Capital-Related costs, as shown in Table EEEE 3, which is the same methodology used for the 2017-based LTCH market basket.
We also proposed to allocate lease costs, which are 65 percent of total capital costs in the proposed 2022-based LTCH market basket, across each of the remaining detailed capital-related cost categories as was done in the 2017-based LTCH market basket. This would result in three primary capital-related cost categories in the proposed 2022 based LTCH market basket: Depreciation, Interest, and Other Capital-Related costs. Lease costs are unique in that they are not broken out as a separate cost category in the proposed 2022-based LTCH market basket. Rather, we proposed to proportionally distribute these costs among the cost categories of Depreciation, Interest, and Other Capital-Related, reflecting the assumption that the underlying cost structure of leases is similar to that of capital-related costs in general. As was done for the 2017-based LTCH market basket, we proposed to assume that 10 percent of the lease costs represents overhead and to assign those costs to the Other Capital-Related cost category accordingly. Therefore, we are assuming that approximately 6.5 percent (65.0 percent × 0.1) of total capital-related costs represent lease costs attributable to overhead, and we proposed to add this 6.5 percentage points to the 7.3 percent Other Capital-Related cost category weight. We also proposed to distribute the remaining lease costs (58.5 percent, or 65.0 percent less 6.5 percentage points) proportionally across the three cost categories (Depreciation, Interest, and Other Capital-Related) based on the proportion that these categories comprise of the sum of the Depreciation, Interest, and Other Capital-Related cost categories (excluding lease expenses). For example, the Other Capital-Related cost category represented 21.0 percent of all three cost categories (Depreciation, Interest, and Other Capital-Related) prior to any lease expenses being allocated. This 21.0 percent is applied to the 58.5 percent of remaining lease expenses so that another 12.3 percentage points of lease expenses as a percent of total capital-related costs is allocated to the Other Capital-Related cost category. Therefore, the resulting proposed Other Capital-Related cost weight is 26.1 percent (7.3 percent + 6.5 percent + 12.3 percent). This is the same methodology used for the 2017-based LTCH market basket. The proposed allocation of these lease expenses are shown in Table EEEE 3.
Finally, we proposed to further divide the Depreciation and Interest cost categories. We proposed to separate Depreciation cost category into the following two categories: (1) Building and Fixed Equipment and (2) Movable Equipment. We also proposed to separate the Interest cost category into the following two categories: (1) Government/Nonprofit; and (2) For profit.
To disaggregate the Depreciation cost weight, we needed to determine the percent of total depreciation costs for LTCHs (after the allocation of lease costs) that are attributable to Building and Fixed equipment, which we
To disaggregate the Interest cost weight, we determine the percent of total interest costs for LTCHs that are attributable to government and nonprofit facilities, which we hereafter refer to as the “nonprofit percentage,” because price pressures associated with these types of interest costs tend to differ from those for for-profit facilities. We proposed to use interest costs data from Worksheet A-7 of the 2022 Medicare cost reports for LTCHs, which is the same methodology used for the 2017-based LTCH market basket. The nonprofit percentage determined using this method is 48 percent.
We received no specific comments on the proposed methodology to derive the detailed capital cost weights and therefore are finalizing this methodology without modification. Table EEEE 3 provides the proposed and final detailed capital cost shares obtained from the Medicare cost reports. Ultimately, these detailed capital cost shares are applied to the total Capital-Related cost weight determined in section VIII.D.3.b. of the preamble of this final rule to separate the total Capital-Related cost weight of 8.5 percent into more detailed cost categories and weights.
Table EEEE 4 shows the cost categories and weights for the proposed and final 2022-based LTCH market basket compared to the 2017-based LTCH market basket.
After developing the proposed cost weights for the 2022-based LTCH market basket, we selected the most appropriate wage and price proxies currently available to represent the rate of price change for each cost category. For the majority of the cost weights, we base the price proxies on U.S. Bureau of Labor Statistics (BLS) data and group them into one of the following BLS categories:
•
•
•
We evaluate the price proxies using the criteria of reliability, timeliness, availability, and relevance:
•
•
•
•
We believe that the CPIs, PPIs, and ECIs that we have selected meet these criteria. Therefore, we believe that they continue to be the best measure of price changes for the cost categories to which they would be applied.
Table EEEE 7 lists all price proxies that we proposed to use for the 2022-based LTCH market basket. The next section of the rule contains a detailed explanation of the price proxies we proposed for each cost category weight.
We proposed to continue to use the ECI for Wages and Salaries for All Civilian workers in Hospitals (BLS series code CIU1026220000000I) to measure the wage rate growth of this cost category. This is the same price proxy used in the 2017-based LTCH market basket (85 FR 58917).
We proposed to continue to use the ECI for Total Benefits for All Civilian workers in Hospitals to measure price growth of this category. This ECI is calculated using the ECI for Total Compensation for All Civilian workers in Hospitals (BLS series code CIU1016220000000I) and the relative importance of wages and salaries within total compensation. This is the same price proxy used in the 2017-based LTCH market basket (85 FR 58917).
We proposed to continue to use the PPI Commodity Index for Commercial Electric Power (BLS series code WPU0542) to measure the price growth of this cost category. This is the same price proxy used in the 2017-based LTCH market basket (85 FR 58917).
For the 2022-based LTCH market basket, we proposed to use a blend of the PPI Industry for Petroleum Refineries (NAICS 3241), PPI for Other Petroleum and Coal Products (NAICS 32419) and the PPI Commodity for Natural Gas. Our analysis of the Bureau of Economic Analysis' 2017 Benchmark I-O data for NAICS 622000 Hospitals shows that Petroleum Refineries expenses account for approximately 86 percent, Other Petroleum and Coal Products expenses account for about 7 percent and Natural Gas expenses account for approximately 7 percent of Hospitals' (NAICS 622000) total Fuel: Oil and Gas expenses. Therefore, we proposed to use a blend of 86 percent of the PPI Industry for Petroleum Refineries (BLS series code PCU324110324110), 7 percent of the PPI for Other Petroleum and Coal Products (BLS series code PCU32419) and 7 percent of the PPI Commodity Index for Natural Gas (BLS series code WPU0531) as the price proxy for this cost category. The 2017-based LTCH market basket used a 90/10 blend of the PPI Industry for Petroleum Refineries and PPI Commodity for Natural Gas, reflecting the 2012 I-O data (85 FR 58917). We believe that the three proposed price proxies are the most technically appropriate indices available to measure the price growth of the Fuel: Oil and Gas cost category in the 2022-based LTCH market basket.
We proposed to continue to use the CMS Hospital Professional Liability Index as the price proxy for PLI costs in the 2022-based LTCH market basket. To generate this index, we collect commercial insurance medical liability premiums for a fixed level of coverage while holding non-price factors constant (such as a change in the level of coverage). This is the same proxy used in the 2017-based LTCH market basket (85 FR 58917).
We proposed to continue to use the PPI Commodity for Pharmaceuticals for Human Use, Prescription (BLS series code WPUSI07003) to measure the price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58917).
We proposed to continue to use the PPI Commodity for Processed Foods and Feeds (BLS series code WPU02) to measure the price growth of this cost category. This is the same price proxy used in the 2017-based LTCH market basket (85 FR 58917).
We proposed to continue to use the CPI for Food Away From Home (BLS series code CUUR0000SEFV) to measure the price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58917).
Similar to the 2017-based LTCH market basket, we proposed to use a four-part blended PPI as the proxy for the chemical cost category in the 2022-based LTCH market basket. The proposed blend is composed of the PPI Industry for Industrial Gas Manufacturing, Primary Products (BLS series code PCU325120325120P), the PPI Industry for Other Basic Inorganic Chemical Manufacturing (BLS series code PCU32518-32518), the PPI Industry for Other Basic Organic Chemical Manufacturing (BLS series code PCU32519-32519), and the PPI Industry for Other Miscellaneous Chemical Product Manufacturing (BLS series code PCU325998325998). For the 2022-based LTCH market basket, we proposed to derive the weights for the PPIs using the 2017 Benchmark I-O data. The 2017-based LTCH market basket used the 2012 Benchmark I-O data to derive the weights for the four PPIs (85 FR 58917 through 58918). We did not receive comments on the proposed methodology to derive the blended Chemicals price proxy using the 2017 Benchmark I-O and therefore are finalizing this methodology without modification. Table EEEE 5 shows the weights for each of the four PPIs used to create the proposed and final blended Chemicals proxy for the 2022-based LTCH market basket compared to the 2017-based blended Chemicals proxy.
We proposed to use a blended price proxy for the Medical Instruments category. The 2017 Benchmark I-O data shows the majority of medical instruments and supply costs are for NAICS 339112—Surgical and medical instrument manufacturing costs (approximately 64 percent) and NAICS 339113—Surgical appliance and supplies manufacturing costs (approximately 36 percent). To proxy the price changes associated with NAICS 339112, we proposed to use the PPI for Surgical and medical instruments (BLS series code WPU1562). This is the same price proxy we used in the 2017-based LTCH market basket. To proxy the price changes associated with NAICS 339113, we proposed to use a 50/50 blend of the PPI for Medical and surgical appliances and supplies (BLS series code WPU1563) and the PPI for Miscellaneous products, Personal safety equipment and clothing (BLS series code WPU1571). We proposed to include the latter price proxy as it would reflect personal protective equipment including but not limited to face shields and protective clothing. The 2017 Benchmark I-O data does not provide specific expenses for these products; however, we recognize that this category reflects costs faced by LTCHs. For the 2017-based LTCH market basket, we used a blend composed of 57 percent of the commodity-based PPI Commodity for Surgical and Medical Instruments (BLS series code WPU1562) and 43 percent of the PPI Commodity for Medical and Surgical Appliances and Supplies (BLS series code WPU1563) reflecting the 2012 Benchmark I-O data (85 FR 58918).
We proposed to continue to use the PPI Commodity for Rubber and Plastic Products (BLS series code WPU07) to measure price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58918).
We proposed to use a 61/39 blend of the PPI Commodity for Publications Printed Matter and Printing Material (BLS Series Code WPU094) and the PPI Commodity for Converted Paper and Paperboard Products (BLS series code WPU0915) to measure the price growth of this cost category. The 2017 Benchmark I-O data shows that 61 percent of paper and printing expenses are for Printing (NAICS 323110) and the remaining expenses are for Paper manufacturing (NAICS 322). The 2017-based LTCH market basket (85 FR 58918) used the PPI Commodity for Converted Paper and Paperboard Products (BLS series code WPU0915) as this comprised the majority of expenses as reported in the 2012 Benchmark I-O data.
We proposed to continue to use the PPI Commodity for Finished Goods Less Food and Energy (BLS series code WPUFD4131) to measure the price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58918).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Professional and Related (BLS series code CIU2010000120000I) to measure the price growth of this category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58918).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Office and Administrative Support (BLS series code CIU2010000220000I) to measure the price growth of this category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58918).
We proposed to continue to use the ECI for Total Compensation for All Civilian workers in Installation, Maintenance, and Repair (BLS series code CIU1010000430000I) to measure the price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58918).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Service Occupations (BLS series code CIU2010000300000I) to measure the price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58918).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Professional and Related (BLS series code CIU2010000120000I) to measure the price growth of this category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58919).
We proposed to continue to use the ECI for Total Compensation for Private Industry workers in Financial Activities (BLS series code CIU201520A000000I) to measure the price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58919).
We proposed to continue to use the CPI for Telephone Services (BLS series code CUUR0000SEED) to measure the price growth of this cost category. This is the same proxy used in the 2017-based LTCH market basket (85 FR 58919).
We proposed to continue to use the CPI for All Items Less Food and Energy
We received the following comments on our proposed price proxies for the 2022-based LTCH market basket.
The commenters further stated that while the public health emergency has ended, LTCHs' reliance on contract staffing, and in particular contract nurses, has not ended, nor will it anytime soon. The commenters stated that while the need for such supplemental staffing has declined to a degree, it is not going away. The commenters stated their belief that CMS's calculation of Medicare LTCH rates should reflect this. For this reason, the commenters asked CMS to find new or additional data sources that capture this aspect of hospitals' labor costs when calculating future LTCH rate increases, including the final rate increase for FY 2025.
From 2019 to 2022, however, as noted by the commenters, contract labor utilization increased and employed labor utilization decreased, the combination of which is reflected in the LTCH compensation cost weight for the proposed LTCH market basket. Over this same period, the ECI for hospital workers grew 3.6 percent, which is about 1.6 percentage points faster than the 2011 to 2019 historical average growth rate, reflecting the recent wage price inflation cited by the commenters.
For this final rule, based on the more recent IGI second quarter 2024 forecast with historical data through the first quarter of 2024, the projected 2022-based LTCH market basket increase factor for FY 2025 reflects an increase in compensation prices of 4.0 percent.
After consideration of public comments, we are finalizing the price proxies for the operating portion of the 2022-based LTCH market basket as proposed without modification.
We proposed to continue to use the same price proxies for the capital-related cost categories as were applied in the 2017-based LTCH market basket, which are provided in Table EEEE 7 and described in this section of this rule. Specifically, we proposed to proxy:
• Depreciation: Building and Fixed Equipment cost category by BEA's Chained Price Index for Nonresidential Construction for Hospitals and Special Care Facilities (BEA Table 5.4.4. Price Indexes for Private Fixed Investment in Structures by Type).
• Depreciation: Movable Equipment cost category by the PPI Commodity for Machinery and Equipment (BLS series code WPU11).
• Nonprofit Interest cost category by the average yield on domestic municipal bonds (Bond Buyer 20-bond index).
• For-profit Interest cost category by the average yield of the iBoxx AAA Corporate Bond Yield index.
• Other Capital-Related cost category by the CPI-U for Rent of Primary Residence (BLS series code CUUS0000SEHA).
We believe these are the most appropriate proxies for LTCH capital-related costs that meet our selection criteria of relevance, timeliness, availability, and reliability. We also proposed to continue to vintage weight the capital price proxies for Depreciation and Interest in order to capture the long-term consumption of capital. This vintage weighting method is similar to the method used for the 2017-based LTCH market basket and is described in section VIII.D.4.b.(2). of the preamble of this final rule.
We received no comments on the proposed price proxies for the capital portion of the 2022-based LTCH market basket and therefore are finalizing the use of these price proxies without modification.
Because capital is acquired and paid for over time, capital-related expenses in any given year are determined by both past and present purchases of physical and financial capital. The vintage-weighted capital-related portion of the proposed 2022-based LTCH market basket is intended to capture the long-term consumption of capital, using vintage weights for depreciation (physical capital) and interest (financial capital). These vintage weights reflect the proportion of capital-related purchases attributable to each year of the expected life of building and fixed equipment, movable equipment, and interest. We proposed to use vintage weights to compute vintage-weighted price changes associated with depreciation and interest expenses.
Capital-related costs are inherently complicated and are determined by complex capital-related purchasing decisions, over time, based on such factors as interest rates and debt financing. In addition, capital is depreciated over time instead of being consumed in the same period it is purchased. By accounting for the vintage nature of capital, we are able to provide an accurate and stable annual measure of price changes. Annual nonvintage price changes for capital are unstable due to the volatility of interest rate changes and, therefore, do not reflect the actual annual price changes for LTCH capital-related costs. The capital-related component of the proposed 2022-based LTCH market basket reflects the underlying stability of the capital-related acquisition process.
The methodology used to calculate the vintage weights for the proposed 2022-based LTCH market basket is the same as that used for the 2017-based LTCH market basket with the only difference being the inclusion of more recent data. To calculate the vintage weights for depreciation and interest expenses, we first need a time series of capital-related purchases for building
To continue to calculate the vintage weights for depreciation and interest expenses, we also needed to account for the expected lives for building and fixed equipment, movable equipment, and interest for the proposed 2022-based LTCH market basket. We proposed to calculate the expected lives using Medicare cost report data for LTCHs. The expected life of any asset can be determined by dividing the value of the asset (excluding fully depreciated assets) by its current year depreciation amount. This calculation yields the estimated expected life of an asset if the rates of depreciation were to continue at current year levels, assuming straight-line depreciation. Using this proposed method, we determined the average expected life of building and fixed equipment to be equal to 16 years, and the average expected life of movable equipment to be equal to 9 years. For the expected life of interest, we believe that vintage weights for interest should represent the average expected life of building and fixed equipment because, based on previous research described in the FY 1997 IPPS final rule (61 FR 46198), the expected life of hospital debt instruments and the expected life of buildings and fixed equipment are similar. We note that for the 2017-based LTCH market basket, we derived an expected average life of building and fixed equipment of 18 years and an expected average life of movable equipment of 9 years (85 FR 58920).
Multiplying these expected lives by the annual depreciation amounts results in annual year-end asset costs for building and fixed equipment and movable equipment. Then we calculated a time series, beginning in 1964, of annual capital purchases by subtracting the previous year's asset costs from the current year's asset costs.
For the building and fixed equipment and movable equipment vintage weights, we proposed to use the real annual capital-related purchase amounts for each asset type to capture the actual amount of the physical acquisition, net of the effect of price inflation. These real annual capital-related purchase amounts are produced by deflating the nominal annual purchase amount by the associated price proxy as previously provided. For the interest vintage weights, we proposed to use the total nominal annual capital-related purchase amounts to capture the value of the debt instrument (including, but not limited to, mortgages and bonds). Using these capital-related purchase time series specific to each asset type, we proposed to calculate the vintage weights for building and fixed equipment, for movable equipment, and for interest.
The vintage weights for each asset type are deemed to represent the average purchase pattern of the asset over its expected life (in the case of building and fixed equipment and interest, 16 years, and in the case of movable equipment, 9 years). For each asset type, we used the time series of annual capital-related purchase amounts available from 2020 back to 1964. These data allow us to derive forty-two 16-year periods of capital-related purchases for building and fixed equipment and interest, and forty-nine 9-year periods of capital-related purchases for movable equipment. For each 16-year period for building and fixed equipment and interest, or 9-year period for movable equipment, we proposed to calculate annual vintage weights by dividing the capital-related purchase amount in any given year by the total amount of purchases over the entire 16-year or 9-year period. This calculation is done for each year in the 16-year or 9-year period and for each of the periods for which we have data. Then we proposed to calculate the average vintage weight for a given year of the expected life by taking the average of these vintage weights across the multiple periods of data.
We received no comments on the proposed methodology to derive the vintage weights for the 2022-based LTCH market basket and therefore are finalizing these vintage weights without modification.
The vintage weights for the capital-related portion of the proposed and final 2022-based LTCH market basket and the 2017-based LTCH market basket are presented in Table EEEE 6.
The process of creating vintage-weighted price proxies requires applying the vintage weights to the price proxy index where the last applied vintage weight in Table EEEE6 is applied to the most recent data point. We have provided on the CMS website an example of how the vintage weighting price proxies are calculated, using example vintage weights and example price indices. The example can be found at the following link:
Table EEEE 7 shows both the operating and capital price proxies for the proposed and final 2022-based LTCH market basket.
For FY 2025 (that is, October 1, 2024 through September 30, 2025), we proposed to use an estimate of the proposed 2022-based LTCH market basket to update payments to LTCHs based on the best available data. Consistent with historical practice, we estimate the LTCH market basket update for the LTCH PPS based on IHS Global, Inc.'s (IGI) forecast using the most recent available data. IGI is a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the components of the market baskets and total factor productivity (TFP).
Based on IGI's fourth quarter 2023 forecast with history through the third quarter of 2023, the projected market basket update for FY 2025 was 3.2 percent. This projected 2022-based LTCH market basket update reflected an increase in compensation prices (proxied by the ECIs for All Civilian workers in Hospitals) of 3.7 percent. IGI's forecast of the ECIs considers overall labor market conditions (including rise in contract labor employment due to tight labor market conditions) as well as trends in contract labor wages, which both have an impact on wage pressures for workers employed directly by the hospital.
Consistent with our historical practice of estimating market basket increases
Based on the more recent data available for this FY 2025 IPPS/LTCH final rule (that is, IGI's second quarter 2024 forecast of the 2022-based LTCH market basket with historical data through the first quarter of 2024), we estimate that the FY 2025 market basket update is 3.5 percent.
Using the current 2017-based LTCH market basket and IGI's second quarter 2024 forecast for the market basket components, the FY 2025 market basket update would be 3.4 percent (before taking into account any statutory adjustment). Therefore, the update based on the 2022-based LTCH market basket is currently projected to be 0.1 percentage point higher for FY 2025 compared to the current 2017-based LTCH market basket. This higher update is primarily due to the higher Compensation cost weight in the 2022-based market basket (61.8 percent) compared to the 2017-based LTCH market basket (53.2 percent). This is partially offset by the lower cost weight associated with All Other Services (such as Professional Fees and Installation, Maintenance, and Repair Services) for the 2022-based LTCH market basket relative to the 2017-based LTCH market basket. Table EEEE 8 compares the 2022-based LTCH market basket and the 2017-based LTCH market basket percent changes.
Over the historical time period covering FY 2020 through FY 2023, the average growth rate of the 2022-based LTCH market basket is the same as the average growth rate of the 2017-based LTCH market basket. Over the forecasted time period covering FY 2024 through FY 2027, the average growth rate of the 2022-based LTCH market basket is 0.1 percentage point higher than the average growth rate of the 2017-based LTCH market basket. This is driven by higher projected growth for FY 2024 and FY 2025 for the 2022-based LTCH market basket, which is primarily a result of the higher Compensation cost weight combined with faster projected growth in Compensation prices for FY 2024 and FY 2025 relative to projected prices for All Other Services. In FY 2026 and FY 2027 prices for these two aggregate cost categories are projected to grow at similar rates.
We summarize the public comments we received on the adequacy of the proposed LTCH market basket increase and our responses in section VIII.C.2.d. of the preamble of this final rule. Below are comments we received regarding the proposed methods for deriving the LTCH market basket.
Commenters stated that CMS needs to either modify the methodology it used to rebase and revise the market basket or apply a separate adjustment to the market basket rate to account for significantly higher labor and supply costs incurred by providers. Another commenter requested CMS adjust the market basket to reflect staffing levels and ratios as well as stated that it should also account for facilities using highly priced temporary staff during surges or staff shortages.
As indicated by the commenters, the cost weights of the LTCH market basket are intended to reflect the relative proportion that specific costs represent of total costs, and not how much overall costs in those categories have increased since the prior base year. The LTCH market basket is described as a fixed-weight index because it represents the change in price over time of a constant mix (quantity and intensity) of goods and services needed to provide LTCH services. We believe that the proposed methodology to derive the cost categories and cost weights of the proposed market basket is detailed and robust and that this proposed method produces valid relative cost weights that are representative of LTCH cost structures. To allow for interested parties to evaluate this methodology, we have provided the detailed calculations including the data sources (such as the specific Medicare cost report fields) and trimming methodology so that commenters are able to replicate the methodology and provide specific comments on the derivation of these cost weights. We will continue to monitor the Medicare cost reports as new data becomes available, and any changes to the LTCH market basket will be proposed in future rulemaking.
Information on the CMS market baskets can be found at the CMS website:
Commenters also stated that it is confounding how hospitals, and especially labor-intensive LTCHs, could have a market basket that is significantly below general inflation. The commenters stated that there has been very large growth in LTCH costs in the last several years which has exceeded general inflation. However, they stated, even the actual market basket growth (not forecasts) was below general inflation during this time. The commenters stated that the market basket itself may have shortcomings that fail to properly capture growth.
The commenters stated that there may be many overlapping, contributing factors to the market basket failing to capture inflationary factors. One such factor is the increased utilization in contract labor, which the Employment Cost Index does not capture. They encouraged CMS to thoroughly reexamine the market basket and its recent shortcomings to identify other potential areas for refinement and stated support for working with CMS to assist with such an endeavor.
We note that the market basket percentage increase is a forecast of the price pressures that hospitals are expected to face in 2025. We also note that when developing its forecast for the ECI for hospital workers, IGI (a nationally recognized economic and financial forecasting firm with which CMS contracts to forecast the price proxies of the market baskets) considers overall labor market conditions (including rise in contract labor employment due to tight labor market conditions) as well as trends in contract labor wages, both of which could potentially impact wages for workers employed directly by the hospital. As projected by IGI and other independent forecasters, compensation growth and upward price pressures are expected to slow in 2025 relative to 2022 and 2023. Therefore, we believe the projected increase in the LTCH market basket for FY 2025 is reflective of expectations for input price growth in FY 2025.
As is our general practice, we proposed that if more recent data became available, we would use such data, if appropriate, to derive the final FY 2025 LTCH market basket update for the final rule. For this final rule, based on the more recent IGI second quarter 2024 forecast with historical data through the first quarter of 2024, the projected 2022-based LTCH market basket increase factor for FY 2025 is 3.5 percent, which is 0.3 percentage point higher than the projected FY 2025 LTCH market basket increase factor in the proposed rule, and reflects an increase in compensation prices of 4.0 percent. We would note that the 10-year historical average (2014-2023) growth rate of the 2022-based LTCH market basket is 2.8 percent with compensation prices increasing 2.9 percent. The final FY 2025 LTCH market basket increase reflects IGI's projected inflation and overall economic outlook.
As discussed in section V.B. of the Addendum to this final rule, under the authority of section 123 of the BBRA as amended by section 307(b) of the BIPA, we established an adjustment to the LTCH PPS payments to account for differences in LTCH area wage levels (§ 412.525(c)). The labor-related portion of the LTCH PPS standard Federal payment rate, hereafter referred to as the labor-related share, is adjusted to account for geographic differences in area wage levels by applying the applicable LTCH PPS wage index. The labor-related share is determined by identifying the national average proportion of total costs that are related to, influenced by, or vary with the local labor market. As discussed in more detail in this section of this rule and similar to the 2017-based LTCH market basket, we classify a cost category as labor-related and include it in the labor-related share if the cost category is defined as being labor-intensive and its cost varies with the local labor market. As stated in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58988), the labor-related share for FY 2024 was defined as the sum of the FY 2024 relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related Services; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-related Services; and a portion of the Capital-Related Costs from the 2017-based LTCH market basket.
We proposed to continue to classify a cost category as labor-related if the costs are labor-intensive and vary with the local labor market. Given this, based on our definition of the labor-related share and the cost categories in the 2022-based LTCH market basket, we proposed to include in the labor-related share for FY 2025 the sum of the FY 2025 relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-Related Services; and a portion of the Capital-Related cost weight from the 2022-based LTCH market basket.
Similar to the 2017-based LTCH market basket, the 2022-based LTCH market basket includes two cost categories for nonmedical Professional fees (including but not limited to, expenses for legal, accounting, and engineering services). These are Professional Fees: Labor-Related and Professional Fees: Nonlabor-Related. For the 2022-based LTCH market basket, we proposed to estimate the labor-related percentage of non-medical professional fees (and assign these expenses to the Professional Fees: Labor-Related
As was done for the 2017-based LTCH market basket, we proposed to determine the proportion of legal, accounting and auditing, engineering, and management consulting services that meet our definition of labor-related services based on a survey of hospitals conducted by CMS in 2008. We notified the public of our intent to conduct this survey on December 9, 2005 (70 FR 73250) and did not receive any public comments in response to the notice (71 FR 8588). A discussion of the composition of the survey and post-stratification can be found in the FY 2010 IPPS/LTCH PPS final rule (74 FR 43850 through 43856). Based on the weighted results of the survey, we determined that hospitals purchase, on average, the following portions of contracted professional services outside of their local labor market:
• 34 percent of accounting and auditing services.
• 30 percent of engineering services.
• 33 percent of legal services.
• 42 percent of management consulting services.
For the 2022-based LTCH market basket, we proposed to apply each of these percentages to the respective 2017 Benchmark I-O cost category underlying the professional fees cost category to determine the Professional Fees: Nonlabor-Related costs. The Professional Fees: Labor-Related costs were determined to be the difference between the total costs for each Benchmark I-O category and the Professional Fees: Nonlabor-Related costs. This is the same methodology that we used to separate the 2017-based LTCH market basket professional fees category into Professional Fees: Labor-Related and Professional Fees: Nonlabor-Related cost categories.
Effective for transmittal 18 (
In the 2022-based LTCH market basket, we proposed that nonmedical professional fees that were subject to allocation based on these survey results represent approximately 3.6 percent of total costs (and are limited to those fees related to Accounting and Auditing, Legal, Engineering, and Management Consulting services). Based on our survey results, we proposed to apportion approximately 2.3 percentage points of the 3.6 percentage point figure into the Professional Fees: Labor-Related cost category and designate the remaining approximately 1.3 percentage points into the Professional Fees: Nonlabor-Related cost category.
In addition to the professional services as previously listed, for the 2022-based LTCH market basket, we proposed to allocate a proportion of the Home Office/Related Organization Contract Labor cost weight, calculated using the Medicare cost reports as previously stated, into the labor-related and nonlabor-related cost categories. We proposed to classify these expenses as labor-related and nonlabor-related as many facilities are not located in the same geographic area as their home office and, therefore, do not meet our definition for the labor-related share that requires the services to be purchased in the local labor market.
Similar to the 2017-based LTCH market basket, we proposed for the 2022-based LTCH market basket to use the Medicare cost reports for LTCHs to determine the home office labor-related percentages. The Medicare cost report requires a hospital to report information regarding their home office provider. Using information on the Medicare cost report, we compare the location of the LTCH with the location of the LTCH's home office. We proposed to classify a LTCH with a home office located in their respective labor market if the LTCH and its home office are located in the same Metropolitan Statistical Area (MSA). Then we determine the proportion of the Home Office/Related Organization Contract Labor cost weight that should be allocated to the labor-related share based on the percent of total Home Office/Related Organization Contract Labor costs for those LTCHs that had home offices located in their respective MSA of total Home Office/Related Organization Contract Labor costs for LTCHs with a home office. We determined a LTCH's and its home office's MSA using their zip code information from the Medicare cost report. Using this methodology with the 2022 Medicare cost reports, we determined that 4 percent of LTCHs' Home Office/Related Organization Contract Labor costs were for home offices located in their respective MSA, or local labor markets. Therefore, we are allocating 4 percent of the Home Office/Related Organization Contract Labor cost weight (0.1 percentage point = 3.7 percent × 4 percent) to the Professional Fees: Labor-Related cost weight and 96 percent of the Home Office/Related Organization Contract Labor cost weight to the Professional Fees: Nonlabor-Related cost weight (3.6 percentage points = 3.7 percent × 96 percent). For comparison, for the 2017-based LTCH market basket we also allocated 4 percent of the Home Office/Related Organization Contract Labor cost weight to the Professional Fees: Labor-Related cost weight (85 FR 58924).
In summary, based on the two allocations mentioned earlier, we proposed to apportion 2.4 percentage points (2.3 percentage points + 0.1 percentage point) of the Professional Fees and Home Office/Related Organization Contract Labor cost weights into the Professional Fees: Labor-Related cost category. This amount was added to the portion of professional fees that we already identified as labor-related using the I-O data such as contracted advertising and marketing costs (approximately 0.6 percentage point of total costs) resulting in a total Professional Fees: Labor-Related cost weight of 3.0 percent.
We summarize the public comments we received on our proposed methodology for deriving the proposed labor-related share for FY 2025 and our responses here.
The commenter claimed that CMS' assumption that fees for services provided by firms located outside of a hospital's core-based statistical area (CBSA) do not vary based on geography is invalid. The commenter stated that the implied underpinning of this assumption is that national and regional professional services firms do not compete with local professional services firms based in a hospital's CBSA.
Therefore, the commenter asked CMS to provide evidence that pricing for professional services delivered by regional and national firms to hospitals is offered in a market that is not subject to geographic cost variation. The commenter stated that unless the agency can produce strong evidence that prices for professional services provided by firms outside of a hospital's local labor market are homogenous—that an LTCH in San Antonio, Texas, is charged the same hourly rates for audit services by the same national accounting firm as a hospital in Sacramento, Calif.—it asks CMS to restore the 1.3 percentage points it proposes to reclassify to Professional Services: Nonlabor-Related to the Professional Services: Labor-Related category. In the absence of data that show standardized pricing by regional and national professional services firms, the commenter stated that the Professional Services: Labor-Related category cost weight should be 3.6 percentage points.
The purpose of the labor-related share is to reflect the proportion of the national PPS base payment rate that is adjusted by the hospital's wage index (representing the relative costs of their local labor market to the national average). Therefore, we include a cost category in the labor-related share if the costs are labor intensive and vary with the local labor market.
As acknowledged by the commenter and confirmed by the survey of hospitals conducted by CMS in 2008 (as stated previously in this final rule), professional services can be purchased from local firms as well as national and regional professional services firms. It is not necessarily the case, as asserted by the commenter, that these national and regional firms have fees that match those in the local labor market even though providers have the option to utilize those firms. That is, fees for services purchased from firms outside the local labor market may differ from those that would be purchased in the local labor market for any number of reasons (including but not limited to, the skill level of the contracted personnel, higher capital costs, etc.). As noted earlier in this section of this final rule, the definition for the labor-related share requires the services to be purchased in the local labor market; therefore, CMS' allocation of approximately 64 percent (2.3 percentage points of 3.6 percentage points) of the Professional Fees cost weight to Professional Fees: Labor-Related costs based on the 2008 survey results
Therefore, for the reasons discussed, we believe our proposed methodology of continuing to allocate only a portion of Professional Fees to the Professional Fees: Labor-Related cost category is appropriate. As stated previously, effective for transmittal 18 (
As previously stated, we proposed to include in the labor-related share the sum of the relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor- Related; Administrative and Facilities Support Services; Installation, Maintenance, and Repair Services; All Other: Labor-Related Services; and a portion of the Capital-Related cost weight from the 2022-based LTCH market basket. The relative importance reflects the different rates of price change for these cost categories between the base year (2022) and FY 2025. Based on IGI's fourth quarter 2023 forecast of the proposed 2022-based LTCH market basket, the sum of the FY 2025 relative importance for operating costs (Wages and Salaries, Employee Benefits, Professional Fees: Labor-Related, Administrative and Facilities Support Services, Installation Maintenance and Repair Services, and All Other: Labor-Related Services) was 68.9 percent. The portion of Capital costs that is estimated to be influenced by the local labor market is 46 percent, which is the same percentage applied to the 2017-based LTCH market basket. Since the relative importance for Capital is 8.4 percent of the proposed 2022-based LTCH market basket in FY 2025, we took 46 percent of 8.4 percent to determine the proposed labor-related
Based on IGI's second quarter 2024 forecast of the 2022-based LTCH market basket, the sum of the FY 2025 relative importance for Wages and Salaries, Employee Benefits, Professional Fees: Labor-Related, Administrative and Facilities Support Services, Installation Maintenance & Repair Services, and All Other: Labor-Related Services is 68.9 percent. The portion of Capital costs that is influenced by the local labor market is estimated to be 46 percent, which is the same percentage applied to the 2017-based LTCH market basket. Since the relative importance for Capital is 8.4 percent of the 2022-based LTCH market basket in FY 2025, we take 46 percent of 8.4 percent to determine the labor-related share of Capital for FY 2025 of 3.9 percent. Therefore, using more recent data, the total labor-related share for FY 2025 is 72.8 percent (the sum of 68.9 percent for the operating cost and 3.9 percent for the labor-related share of Capital).
We summarize the comments we received on the proposed FY 2025 labor-related share and our responses here.
After consideration of public comments, we are finalizing a FY 2025 labor-related share of 72.8 percent.
Table EEEE 9 shows the FY 2025 labor-related share using the 2022-based LTCH market basket relative importance and the FY 2024 labor-related share using the 2017-based LTCH market basket.
The total difference between the FY 2025 labor-related share using the 2022-based LTCH market basket (72.8 percent) and the FY 2024 labor-related share using the 2017-based LTCH market basket (68.5 percent) is 4.3 percentage points and this difference is primarily attributable to the revision to the base year cost weights for those categories included in the labor-related share. The 4.3 percentage points revision to the base year cost weights is a result of: (1) an 8.6 percentage points upward revision to the base year Compensation cost weight, which is derived using the LTCH Medicare cost report data; (2) a 3.6 percentage points downward revision in the base year labor-related categories associated with incorporating the 2017 Benchmark I-O data; and (3) a 0.7 percentage point
In section IX. of the proposed rule, we sought comment on and proposed changes to a number of Medicare quality reporting programs. Specifically,
• In section IX.B. of the proposed rule (89 FR 36284 through 36306), we made the following crosscutting quality program proposals or request for comment:
++ Adoption of the Patient Safety Structural Measure in the Hospital IQR Program and PCHQR Program.
++ Modification to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey Measure in the Hospital IQR Program, Hospital VBP Program, and PCHQR Program.
++ Advancing Patient Safety and Outcomes Across the Hospital Quality Programs—Request for Comment.
• In section IX.C. of the proposed rule (89 FR 36306 through 36341), the Hospital IQR Program.
• In section IX.D. of the proposed rule (89 FR 36341 through 36343), the PCHQR Program.
• In section IX.E. of the proposed rule (89 FR 36343 through 36352), the LTCH QRP.
• In section IX.F. of the proposed rule (89 FR 36352 through 36381), the Medicare Promoting Interoperability Program for eligible hospitals and critical access hospitals (CAHs) (previously known as the Medicare EHR Incentive Program).
We respond to public comments on each of these sections below.
A foundational commitment of providing healthcare services is to ensure safety, as embedded in the centuries-old Hippocratic Oath, “First, do no harm.” Yet, the landmark reports
Despite established patient safety protocols and quality measures, the COVID-19 public health emergency (PHE) strained the healthcare system substantially, introducing new safety risks and negatively impacting patient safety in the normal delivery of care. Since the onset of the COVID-19 PHE, the U.S. has seen marked declines in patient safety metrics, as evidenced by considerable increases in healthcare-associated infections (HAIs).
As healthcare facilities struggled to address the challenges posed by the COVID-19 PHE, safety gaps and risks in healthcare delivery were illuminated,
In addition to safety issues illuminated during the COVID-19 PHE, two other key patient safety indicators that are worth noting for their prevalence are postoperative respiratory failure
While the COVID-19 PHE may have disrupted routine infection control practices, these key patient safety indicators nevertheless show the importance of addressing gaps in safety to save lives, provide equitable medical care, and ensure that the U.S. healthcare system is resilient enough to withstand future challenges. Now is the time to recommit to better safety practices for both patients and healthcare workers, establish new protocols, and implement early interventions that would save many lives from preventable harms.
To accomplish these goals, the federal government is taking a multi-pronged approach to improve safety and reduce preventable harm to patients. The Agency for Healthcare Research and Quality (AHRQ), on behalf of HHS, has established the National Action Alliance for Patient and Workforce Safety (the National Action Alliance) as a public-private collaboration to improve both patient and workforce safety.
In September 2023, the President's Council of Advisors on Science and Technology (PCAST) published the “Report to the President: A Transformational Effort on Patient Safety,” with a call to action to renew “our nation's commitment to improving patient safety.”
As part of this national recommitment to safety in healthcare, we are promoting the use of safety measures throughout our quality programs to identify and measure quality gaps and processes, and to make that information transparent and available to the public. Effective measurement is paramount to monitoring harm events, identifying key gaps, and tracking progress toward safer, more reliable care. Within CMS' hospital quality measurement programs, there are several outcome and process measures in use that capture specific conditions or procedures such as the Severe Sepsis and Septic Shock: Management Bundle measure, Patient Safety and Adverse Events Composite measure, Severe Obstetric Complications electronic clinical quality measure (eCQM), and the Safe Use of Opioids—Concurrent Prescribing eCQM. While these metrics are important, they are not sufficient by themselves to measure and incentivize investment in a resilient safety culture or the infrastructure necessary for sustainable high performance within the broad and complex domain of patient safety. The systems-level approach to patient safety maintains that errors and accidents in medical care are a reflection of system-level failures, rather than failings on the part of individuals.
To drive action and improvements in safety and address this gap in systems-level measurement for safety within the Hospital IQR and PCHQR Programs, we proposed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36284 through 36293) the adoption of the Patient Safety Structural measure, a new
We note that other safety measures discussed in this FY 2025 IPPS/LTCH PPS final rule complement the goals we have outlined for the Patient Safety Structural measure. Interested parties are encouraged to review our discussion of measures for Hospital Harm—Falls with Injury (section IX.C.5.c), Hospital Harm—Postoperative Respiratory Failure (section IX.C.5.d), and the adoption of two healthcare-associated infection measures (section IX.C.5.b).
In addition to the other federal safety initiatives noted previously, this measure also aligns with the CMS National Quality Strategy. Specifically, the CMS National Quality Strategy identifies four priority areas and eight goals, each with an identified objective, success target, and initial action steps for advancing a “high-quality, safe, equitable, and resilient health care system for all individuals.”
This measure aligns with our efforts under the CMS National Quality Strategy's goal of advancing equity and whole-person care.
The measure also aligns with our Meaningful Measures Framework, which identifies high-priority areas for quality measurement and improvement to assess core issues most critical to high-quality healthcare and improving patient outcomes.
As required under section 1890A of the Act, the Consensus-Based Entity (CBE), currently Battelle, established the Partnership for Quality Measurement (PQM) to convene members comprised of clinicians, patients, measure experts, and health information technology specialists, to participate in the pre-rulemaking process and the measure endorsement process. The pre-rulemaking process, which we refer to as the Pre-Rulemaking Measure Review (PRMR), includes a review of measures published on the publicly available list of Measures Under Consideration (MUC List),
The CBE-established PQM also conducts the measure endorsement and maintenance (E&M) process to ensure a measure submitted for endorsement is evidence-based, reliable, valid, verifiable, relevant to enhanced health outcomes, actionable at the caregiver level, feasible to collect and report, and responsive to variations in patient characteristics—such as health status, language capabilities, race or ethnicity, and income level—and is consistent across types of health care providers, including hospitals and physicians (see section 1890(b)(2) of the Act). The PQM convenes several E&M project groups twice yearly, formally called the E&M Committees, each comprised of an E&M Advisory Group and an E&M Recommendations Group, to vote on whether a measure meets certain quality measure criteria. More details regarding the E&M process may be found in the PQM
For the voting procedures of the PRMR and E&M processes, the PQM utilizes the Novel Hybrid Delphi and Nominal Group (NHDNG) multi-step process, which is an iterative consensus-building approach aimed at a minimum of 75 percent agreement among voting members, rather than a simple majority vote, and supports maximizing the time spent to build consensus by focusing discussion on measures where there is disagreement. For example, the PRMR Hospital Recommendation Group can reach consensus and have the following voting results: (A) Recommend, (B) Recommend with conditions (with 75 percent of the votes casted as recommend with conditions or 75 percent between recommend and recommend with conditions), and (C) Do not recommend. If no voting category reaches 75 percent or greater (including the combined [A] recommend and [B] recommend with conditions), the PRMR Hospital Recommendation Group did not come to consensus and the voting result is `Consensus not reached.' Consensus not reached signals continued disagreement amongst the committee despite being presented with perspectives from public comment, committee member feedback and discussion, and highlights the multi-faceted assessments of quality measures. More details regarding the PRMR voting procedures may be found in Chapter 4 of the PQM
As part of the PRMR process, the PRMR Hospital Recommendation Group reviewed the Patient Safety Structural measure (MUC2023-188) during a meeting on January 18 and 19, 2024. The Patient Safety Structural measure was included for consideration in the Hospital IQR and PCHQR Programs on the publicly available “2023 Measures Under Consideration List” (MUC List).
The voting results of the PRMR Hospital Recommendation Group for the Patient Safety Structural measure for the Hospital IQR Program were: eight members of the group recommended adopting the measure into the Hospital IQR Program without conditions; five members recommended adoption with conditions; three committee members voted not to recommend the measure for adoption. Additionally, nine members of the group recommended adopting the measure into the PCHQR Program without conditions; four members recommended adoption with conditions; three committee members voted not to recommend the measure for adoption. Taken together, 81.3 percent of the votes were recommended with conditions for each program. Thus, the committee reached consensus and recommended the Patient Safety Structural measure for the Hospital IQR Program and the PCHQR Program with conditions.
The conditions recommended by the voting committee were: the publication of an implementation guide that clearly documents how safety is to be measured; and using data to narrow the scope before approving the measure for programs. An Attestation Guide was made available at the time of the publication of the proposed rule on the respective Hospital IQR Program and PCHQR Program pages on QualityNet.
In addition to the formal voting results on the adoption of the Patient Safety Structural measure, we note that the majority of public comments received on this measure during the PRMR process were supportive, with 91 out of 97 public comments (94%) either supporting (81) adoption or supporting adoption with conditions (10). Comments in support of the proposal included the need for a zero preventable harm goal, robust hospital leadership, developing trust through transparency, and the involvement of patients and their families in safety work. We thank the large number of patients, family members, and other interested parties who publicly participated in the PRMR process.
We proposed to adopt this measure into the Hospital IQR Program and the PCHQR Program despite the measure not being endorsed by the CBE. Section 1886(b)(3)(B)(viii)(IX)(aa) of the Act requires that each measure specified by the Secretary for use in the Hospital IQR Program be endorsed by the entity with a contract under section 1890(a) of the Act, and section 1866(k)(3)(A) of the Act imposes the same requirement for measures specified for use in the PCHQR Program. Sections 1886(b)(3)(B)(viii)(IX)(bb) and 1866(k)(3)(B) of the Act state, however, that in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed as long as due consideration is given to a measure that has been endorsed or adopted by a consensus organization identified by the Secretary.
We reviewed measures endorsed by both the CBE which currently holds the contract under section 1890(a) of the Act and measures endorsed by the entity which formerly held that contract and were unable to identify any other CBE-endorsed measures on strategies and practices to strengthen hospitals' systems and culture for safety. Considering the lack of endorsed
The Patient Safety Structural measure is a structural measure developed to assess how well hospitals have implemented strategies and practices to strengthen their systems and culture for safety. The Patient Safety Structural measure comprises a set of complementary statements (or, attestations) that aim to capture the most salient, systems-oriented actions to advance safety. These statements should exemplify a culture of safety and leadership commitment to transparency, accountability, patient and family engagement, and continuous learning and improvement. Table IX.B.1-01 includes the five attestation domains and the corresponding attestation statements.
The Patient Safety Structural measure consists of five domains, each representing a complementary but separate safety commitment. Each of the five domains include five related attestation statements. Hospitals would need to evaluate and determine whether they can affirmatively attest to each domain. For a hospital to affirmatively attest to a domain, and receive a point for that domain, a hospital would evaluate and determine whether it engaged in each of the statements that comprise the domain (see Table IX.B.1-01), for a total of five possible points (one point per domain). A hospital would not be able to receive partial points for a domain.
For example, for Domain 2 (“Strategic Planning & Organizational Policy”), a hospital would evaluate and determine whether it meets the statements related to its strategic plan (Statement A), its safety goals (Statement B), policies and protocols for a “just culture” (Statement C), a patient safety curriculum and competencies for all hospital staff (Statement D), and an action plan for workforce safety (Statement E) (see Table IX.B.1-01). If its plan meets all five of these statements, the hospital would attest “yes” to each of the five attestation statements and would receive one point for Domain 2. If, for example, its plan only meets Statement A and Statement B, but does not meet Statement C, Statement D, and Statement E, the hospital would attest “yes” to Statement A and Statement B, attest “no” to Statement C, Statement D, and Statement E, and receive zero points for Domain 2. The hospital's overall score for the Patient Safety Structural measure can range from a total of zero to five points. If a hospital is comprised of more than one acute care hospital facility under one CCN, all such facilities reporting under the same CCN would need to satisfy these criteria for the hospital to affirmatively attest and receive points.
For more details on the measure specifications and the Attestation Guide for the Hospital IQR Program, we refer readers to the Web-Based Data Collection tab under the IQR Measures page and PCHQR measures page on QualityNet at both:
Hospitals would be required to submit information for the Patient Safety Structural measure once annually using the data submission and reporting standard procedures set forth by the CDC for the National Healthcare Safety Network (NHSN). Presently, hospitals report measure data to the CDC NHSN on a monthly or quarterly basis, depending on the measure. Under the data submission and reporting process for the Patient Safety Structural measure, hospitals would be required to submit data once annually. We refer readers to the CDC's NHSN website (
We proposed to publicly report the hospital's measure performance score, which would range from 0 to 5 points, on an annual basis on Care Compare beginning in Fall 2026 and on the Provider Data Catalog available at
We invited public comment on this proposal.
1(a) through (e). A few commenters recommended aligning with existing requirements, such as those of The Joint Commission or counties or states.
The Attestation Guide provides a description of “serious safety event” (that is, an event judged by the clinical team OR the patient to be “temporary major” or greater). The Attestation Guide also provides more detail and examples of what will be characterized as an event that is greater than “temporary major.” Additionally, the Attestation Guide provides a description of the senior governing board (that is, “the senior governing board is intended to be the body with fiduciary responsibility for the hospital, in charge of resource management, with ultimate authority. The senior governing board may or may not oversee other, subordinate hospital boards and committees”). We monitor measure performance for all of the measures in our quality reporting programs, and if we identify that there is a need for additional guidance, we provide it through our regular education and outreach efforts.
In recognition that new users have faced challenges in the past, the CDC plans to open this measure for test access in NHSN several weeks before the submission period opens on April 1, 2026, to ensure new users have ample time to obtain and test their access to the system before the first reporting deadline of May 15, 2026. More details about test access outside of the submission period will be provided by NHSN through guidance at a later date.
With respect to the specific recommendations raised by commenters, we agree that the absence of measurable preventable harm does not always indicate a safe environment but note that the domain refers to the elimination of preventable harm, regardless of whether and how that harm is measured. We disagree with the commenter that the term “engineer out” more effectively conveys a multidisciplinary approach to safety than the term “eliminate.” We note that the term “engineer out” could be interpreted to compartmentalize responsibility for reducing preventable harm in a way that implies that the staff responsible for developing and implementing processes have responsibility for safety to the exclusion of staff responsible for other functions (such as staff responsible for operations).
• Statement A: Remove language related to annual performance reviews and compensation because of concerns that annual performance reviews are too infrequent to motivate change and that there may be unintended consequences (such as funding going to executive bonuses instead of safety initiatives).
• Statement B: Require each unit or department to set and publicly share a goal which supports the plans and metrics.
• Statement C: Require hospitals to attest that they embed patient safety into everyday clinical operations instead of that they ensure adequate resources to support patient safety.
• Statement D: Increase flexibility with respect to the percentage of regular board meetings focused on safety to allow quality and patient safety subcommittees to meet the requirement, to reduce the 20 percent threshold dedicated to these topics during board meetings, and to not disadvantage hospitals that are required to have open board meetings (that is, public hospitals).
• Statement E: Shorten the timeframe for reporting serious safety events to the board. Require reporting of employee injuries to C-suite executives within 24 hours.
We agree with the commenter that setting and publicly sharing a goal which supports the plans and metrics would be a way of ensuring that these plans and metrics are widely shared across the hospital and note that hospitals will have flexibility to implement this policy under Domain 1 Statement B.
We note that Domain 1 refers to the Leadership Commitment to Eliminating Preventable Harm and that Statement C requires hospitals to attest to whether their hospital governing board, in partnership with leadership, ensures adequate resources to support patient safety. While ensuring adequate resources is a function of the governing board, in partnership with leadership, embedding patient safety into everyday clinical operations is a shared responsibility across the entire hospital workforce. Therefore, the recommended statement exceeds the scope of Domain 1.
With respect to Domain 1 Statement D, we note that there is support for a 20 percent threshold for hospital leadership and board meetings in the Self-Assessment Tool created to complement the recommendations in
With respect to Domain 1 Statement E, we agree with the commenter that it may be appropriate in some situations to notify C-suite executives and individuals on the governing board within 24 hours of employee injuries. However, we wanted to provide hospitals with some flexibility and did not identify a 24 hour deadline as a top priority for safety during our extensive literature review and interaction with patient safety experts, advocates, and patients. We support earlier reporting to the board for serious safety events and recognize that some state and local laws may require more immediate reporting. We reiterate that the Patient Safety Structural measure is intended to provide hospitals flexibility in meeting each of the attestations.
• Statement A: Remove the term “core value” because core values are often differentiating factors, especially for faith-based organizations, and safety should be a universal aspiration integrated into all operations instead of creating value statements.
• Statement B: Add the phrase “either alone or in partnership with community organizations” after the phrase “identify and address” to reflect that many hospitals cannot address disparities in their communities due to resource limitations.
• Statement C: Expand to include a focus on psychological safety as part of a “just culture.” Discuss the proactive use of “just culture” frameworks as part of intentional system design. Reword to read, “Our hospital has written policies and protocols to cultivate a just culture that emphasizes learning, where frontline staff feel safe to speak up about the challenges they face in delivering care. In turn, hospital leadership demonstrates a commitment to those staff who take the time to report concerns by supporting those that experience errors, coaches well-intentioned but misaligned actions, and seeks corrective action for conscious, reckless choices that do not align with our organizational value” to align with a systems view of safety.
• Statement D: Include a patient safety curriculum and competency assessment for all employees and all medical staff regardless of their role or where they work in the system to show that all employees are valued as part of achieving patient safety. Include examples of curricula and competencies to improve workforce safety and provide guidance on measuring these competencies. Rephrase to focus on advancing human factors and systems design improvements instead of specifically advancing skills and behaviors. Exclude C-suite executives and governing board members from the patient safety curriculum and competencies due to concerns that by including executive leaders in the training the training would be too high level to focus on operational issues affecting care providers.
• Statement E: Include “safety for all” instead of more narrowly focusing on workforce safety. Also address fatigue, mental health, and emotional wellbeing.
We agree with the commenter that hospitals cannot address disparities in their communities without partnership with outside organizations. We note that Domain 2 Statement B specifically asks hospitals to attest whether their “hospital safety goals include the use of metrics to identify and address disparities in safety outcomes based on the patient characteristics determined by the hospital to be most important to health care outcomes for the populations served.” We note that in the Attestation Guide for Domain 2 Statement B we recommend potential harm indicators that hospitals can use to identify safety outcomes.
We agree with commenters that the elements of a “just culture” would increase the likelihood of establishing an environment conducive to psychological safety. Specifically, because a “just culture” recognizes that individual practitioners should not be held accountable for system failings over which they have no control and recognizes that many individual or “active” errors represent predictable interactions between human operators and the systems in which they work,
We agree with the commenter that the use of “just culture” frameworks is part of intentional system design. We address the role of “just culture” frameworks as part of intentional system design in the Attestation Guide by stating that, “a just culture recognizes that individual practitioners should not be held accountable for system failings over which they have no control. A just culture also recognizes many individual or `active' errors represent predictable interactions between human operators and the systems in which they work.”
The current language for Domain 2 Statement C is, “Our hospital has implemented written policies and protocols to cultivate a “just culture” that balances no blame and appropriate accountability and reflects the distinction between human error, at-risk behavior, and reckless behavior.” AHRQ defines a “just culture” as a system that holds itself accountable, holds staff members accountable, and has staff members that hold themselves accountable.
With respect to Domain 2 Statement D, we agree with commenters that including all employees, even those who do not work in the hospital, in training with respect to a patient safety curriculum or competency assessment has the potential to show that they are valued members of the patient safety team. We note that this statement does include all clinical and non-clinical staff at the hospital to cover all hospital-based employees. Hospitals and health systems that choose to include additional employees in the patient safety training and competency assessments will be able to do so.
We agree that human factors and system design improvements are a vital part of advancing patient safety. As stated in the Attestation Guide, the development of the Patient Safety Structural measure is anchored in best practices and evidence for improving patient safety and reducing harm using a total systems framework that views patient safety events as a result of system failure rather than individual error and encourages a systems approach which takes the view that most errors reflect predictable human failings in the context of poorly designed systems.
We agree with commenters that patient safety curriculum and competencies for clinical and non-clinical staff would vary based on role. To avoid hospitals using trainings that are so high level that they do not address operational issues affecting care providers we refer readers to the following examples of validated, industry-standard trainings and competencies, which are also included in the Attestation Guide:
• ComprehensiveUnitbased Safety Program (CUSP);
• AHRQ's Communication and Optimal Resolution (CANDOR) toolkit;
• The CDC's Infection Control Assessment and Response program and tool;
• TeamSTEPPS communication framework;
• Institute for Healthcare Improvement's Root Cause Analyses and Action (RCA
• Shared Decision Making;
• Tools to reduce central line infections;
• Utilization of data analytics;
• Performance improvement methodologies such as PlanDoStudyAct;
• Ethical standards.
To allow hospitals flexibility with respect to the curricula they have selected and the competencies that they have determined are most critical to develop within their hospital we have intentionally maintained flexibility to allow each hospital to develop their own competency assessments. We intend to monitor measure performance on the Patient Safety Structural measure and, if we identify that there is a need for additional guidance, provide it through our regular education and outreach efforts.
The statement to which hospitals will attest for Domain 2 Statement E is: “Our hospital has an action plan for workforce safety with improvement activities, metrics and trends that address issues such as slips/trips/falls prevention, safe patient handling, exposures, sharps injuries, violence prevention, fire/electrical safety, and psychological safety.” We note that the list of potential workforce safety elements is intended to be a set of examples, and not a comprehensive list of items affecting workforce safety.
The intent of the Patient Safety Structural measure is to identify hospitals that exemplify a culture of safety and leadership commitment to transparency, accountability, patient and family engagement, and continuous learning and improvement to advance our goal of achieving zero preventable harm. We have focused Domain 2 Statement E on workforce safety, instead of the broader “safety for all” recommended by the commenter because workforce safety is a precondition to advancing patient safety with a unified, total systems-based approach to eliminate harm to both patients and the workforce.
• Statement A: Emphasize that the culture of safety survey should include psychological safety.
• Statement B: Clarify whether an analysis needs to be completed for every event or cluster, and encourage hospitals to perform analyses for events that do not reach the threshold of serious safety events. A commenter also recommended taking an approach of
• Statement C: Transition from benchmarking on external metrics to benchmarking on zero harm to encourage high performing hospitals to continue to improve. Reframe safety as the capacity to make things go right instead of a count of the number of things that go wrong.
• Statement D: Require all the practices listed because they are interconnected and rely on one another. Rephrase as “characteristics of a learning and improving organization” because high reliability is a framework but some of the elements included in the list are improvement methods. Refine the high reliability practices as follows:
++ Require safety and process improvement huddles to start at the unit level, cover all shifts, and roll up on Monday—Friday with additional safety huddles on weekends;
++ Require hospital leaders to participate in weekly safety related rounding to provide sufficient visibility;
++ Encourage coaching leaders between the care delivery personnel and executives on leading for safety and process improvement;
++ Expand from training on team communication and collaboration to include other training elements (specifically, personal habits and skills to reduce lapse, cognitive bias training, and tools to reduce bias);
++ Reframe training on team communication and collaboration to incorporate patient safety principles into leadership training to avoid over reliance on online modules;
++ Add a statement regarding a standard daily process improvement method for every work;
++ Add a statement regarding leadership skills training in leading a team to 100 percent performance on safety practices; and
++ Refine the description of defined improvement methods to ensure that the method is appropriate to the problem(s) being solved.
• Statement E: Remove this statement because many large-scale learning networks are not PSOs and the commenters state that sharing data with these networks would be a violation of the Patient Safety and Quality Improvement Act of 2005 (PSQIA) (Pub. L. 109-41) for hospitals that report to PSOs.
Domain 3 Statement B requires hospitals to attest whether they have a “dedicated team that conducts event analysis of serious safety events using an evidence-based approach, such as the National Patient Safety Foundation's Root Cause Analysis and Action.” This statement does not introduce limitations or requirements on the activities of the dedicated team; instead, it requires hospitals to attest “yes” or “no” as to whether the hospital has such a team. We agree with commenters that it would be worthwhile for these teams to also evaluate events that do not reach the threshold of serious safety events and to seek best practices from situations in which everything went correctly. However, we did not identify this as a top priority for safety during our extensive literature review and interaction with patient safety experts, advocates, and patients and therefore we are not currently requiring hospitals to attest to whether their dedicated teams evaluate these situations. We will monitor performance on the Patient Safety Structural measure, and if we identify opportunities for additional improvements in patient safety structures, we will consider these in future refinements.
As more hospitals begin to benchmark based on external metrics and use those metrics to identify best practices, we anticipate that national performance on patient safety will improve. This improved national performance would, in turn, lead to a higher standard of patient safety in the external metrics that hospitals are using for benchmarking. High performing hospitals could benchmark on zero harm in addition to analyzing their performance on external metrics to further drive quality improvement.
Consistent with AHRQ guidance, we consider patient safety to refer to freedom from accidental or preventable injuries produced by medical care.
The high reliability practices listed under Domain 3 Statement D reflect practices of high reliability organizations. These are organizations or systems that operate in hazardous conditions but have fewer adverse events than comparable organizations. With respect to patient safety, high reliability organizations are considered to operate with nearly failure-free performance records, not simply better than average ones.
With respect to the concern that by submitting data to a PSO, hospitals would no longer be able to work with another large-scale learning network, we disagree. Some information becomes patient safety work product (PSWP) protected under the PSQIA when that information is submitted to a PSO. We refer readers to 42 CFR 3.20 for information regarding what constitutes PSWP. Depending on the individual circumstances of a hospital that chooses to work with both a PSO and a large-scale learning network that is not a PSO, the hospital could disclose other, non-PSWP information to the learning network or disclose non-identifiable PSWP consistent with its obligations under the PSQIA. Therefore, we are not modifying Domain 3 Statement E because there is sufficient flexibility for hospitals to work with large-scale learning networks of their choosing.
Due to commenters' concerns regarding Domain 4 Statement B, discussed in detail below, we are modifying the attestation in Domain 4 Statement B, to the following, “Our hospital voluntarily works with a Patient Safety Organization listed by the Agency for Healthcare Research and Quality (AHRQ)
• Statement B: Remove the requirement that the PSO reports to NPSD and instead work with AHRQ to
• Statement C: Require hospitals to have patient safety metrics available upon request instead of publishing them to reduce operational complexity.
Commenters' concerns that data submitted by PSOs to the NPSD would be identifiable are misplaced. Before any PSWP is shared with the NPSD, a PSO submits the data to the PSO Privacy Protection Center
With respect to the commenters' recommendation that we update Statement C to allow hospitals to make patient safety metrics available upon request instead of publishing them, we understand that hospitals seek to balance transparency and operational complexity. By establishing workflows to report and present safety data, hospitals establish an additional pathway to ensure continuing focus on patient safety. Furthermore, by reporting metrics to all clinical and non-clinical staff and making these data public in hospital units, hospitals provide the opportunity for patients to have access to these important data without the potential for fear of reprisal that may be associated with having to request these data from hospital personnel.
As we noted, this measure is intended to determine the level at which hospitals are performing these identified best practices and to identify opportunities for improvement in structural safety practices. Like other quality measures, we would not expect all hospitals to achieve a perfect or maximum score on the measure, especially during the initial years of using the measure in these programs. We proposed this measure for the Hospital IQR and PCHQR Programs because of the identified gaps and variation in the adoption of these safety practices across hospitals (89 FR 36285). We do want to encourage hospitals to improve their scores on measures over time as a fundamental goal to improve the quality of care. For the Patient Safety Structural measure, improvement on the measure could include hospitals working with PSOs if not already doing so. Furthermore, we note that the TEP included hospital representatives and clinicians who did not express concern that this statement created an implicit mandate for hospitals to report patient safety event information to PSOs.
For the Patient Safety Structural measure, we would publicly report each hospital's score for this measure, which would range from 0 to 5 points, on the Compare tool. We would also publicly report the national average score and the average score in the hospital's state. Therefore, while public reporting of this score could encourage hospitals to work with a PSO if they are not already working with one (as well as encourage improvement upon the other safety practices asked about in the measure), the Patient Safety Structural measure does not require hospitals to achieve any of the listed attestations.
•
•
We agree with commenters that some hospitalized patients may not be able to use patient portals without assistance. In addition to providing and encouraging access to medical records and clinician notes via patient portals, to affirmatively attest to Domain 5 Statement C hospitals must both provide patients with other options for accessing these data and provide support to help patients interpret the information. Therefore, while expanding access to patient approved family caregivers or other parties is a means of engaging these parties, it is not necessary for a hospital to affirmatively attest to Domain 5 Statement C because patient access to medical information is otherwise addressed by the attestation's reference to additional options and support.
After consideration of the public comments we received, we are finalizing adoption of the Patient Safety Structural measure in the Hospital IQR and PCHQR Programs with a modification to the attestation statement in Domain 4 Statement B. The attestation statements we are finalizing are set forth in Table IX.B.1-02.
We
The HCAHPS Survey measure (CBE #0166) asks recently discharged patients questions about aspects of their hospital inpatient experience that they are uniquely suited to respond to. The HCAHPS Survey as a whole is termed as a single “measure” for purposes of the Hospital IQR, PCHQR, and Hospital VBP Programs. We refer to the elements of the HCAHPS Survey that are publicly reported as “sub-measures” and to the questions within each sub-measure as survey “questions,” for the Hospital IQR and PCHQR Programs. Sub-measures are comprised of one, two, or three survey questions. For example, the sub-measure, “Overall Hospital Rating,” consists of one survey question and the sub-measure “Communication with Nurses” consists of three survey questions. In the Hospital VBP Program, the sub-measures of the HCAHPS Survey are referred to as “dimensions.” We refer readers to the HCAHPS On-Line website,
The current HCAHPS Survey measure consists of 29 survey questions that are organized into ten sub-measures in the Hospital IQR and PCHQR Programs, including 19 questions that ask “how often” or whether patients experienced a critical aspect of hospital care, rather than whether they were “satisfied” with their care. The current survey measure also includes three screener questions that direct patients to relevant questions, five questions to adjust for the mix of patients across hospitals, and two questions (race and ethnicity) that support Congressionally mandated reports outlined in the Healthcare Research and Quality Act of 1999 (Pub. L. 106-129).
We proposed to adopt the updated HCAHPS Survey measure for the Hospital IQR, PCHQR, and Hospital VBP Programs in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36298 through 36304). We proposed the updated HCAHPS Survey measure would result in a survey with 32 questions that make up a total of 11 sub-measures, with seven of those sub-measures being multi-question sub-measures and the other four sub-measures being single-question sub-measures. Four of the multi-question sub-measures and three of the single-question sub-measures in the updated version of the HCAHPS Survey measure would remain unchanged from those that are in the current version of the HCAHPS Survey measure. For the Hospital VBP Program, the 32-question survey in the updated HCAHPS Survey measure would be organized into nine dimensions. We outline the specific updates later in this section.
We identified the need for the updates to the HCAHPS Survey measure through focus groups and cognitive interviews with patients and caregivers, discussions with technical experts, and literature reviews that were conducted by a CMS contractor who made recommendations to CMS. A literature scan was used to compile and review items from existing surveys, focusing on topics not covered in the current HCAHPS Survey measure. CMS, patients, and providers reviewed the questions identified through the scan. Four patient focus groups were conducted to assign importance to and inform the further development of potential new questions, while also refining existing questions. This replicates the approach taken during the original development of the HCAHPS Survey measure. The focus groups included people with both planned and unplanned hospital stays, a variety of racial and ethnic groups, and both older and younger adults. The focus groups used both an exploratory and confirmatory approach to explore new topics and confirm the topics we had identified through the survey literature. The group discussion explored what it means to have a quality patient experience and what participants thought of their hospital stay—what went well and what went poorly. Group discussions were conducted in English and Spanish.
The findings from the focus group informed the development of the updates to the HCAHPS Survey questions, including the newly developed questions that were tested in cognitive interviews. Cognitive interviews were also conducted in English and in Spanish. Lastly, a CMS contractor convened a technical expert panel that provided feedback on the
We have determined that adopting the updated version of the HCAHPS Survey measure would amount to a minimal change in burden because the combination of removals and additions of survey questions would result in only an additional 45 seconds to complete the survey. The time required to complete the 32-question survey is estimated to average eight minutes. Additionally, prior to the removal of the “Communication About Pain” questions in the CY 2019 OPPS/ASC final rule (83 FR 59140 through 59149), the HCAHPS Survey measure previously included 32 questions. We refer readers to sections XII.B.4., XII.B.6., and XII.B.7. of this final rule for more information on our estimated changes to the information collection burden.
The adoption of the updated version of the HCAHPS Survey measure would not result in any changes to the survey administration, the data submission and reporting requirements, or the data collection protocols. The updated version of the HCAHPS Survey measure includes three new sub-measures: the multi-item “Care Coordination” sub-measure, the multi-item “Restfulness of Hospital Environment” sub-measure, and the “Information About Symptoms” single-item sub-measure. The updated HCAHPS Survey measure also removes the existing “Care Transition” sub-measure and modifies the existing “Responsiveness of Hospital Staff” sub-measure. The seven new questions are as follows:
• During this hospital stay, how often were doctors, nurses and other hospital staff informed and up-to-date about your care?
• During this hospital stay, how often did doctors, nurses and other hospital staff work well together to care for you?
• Did doctors, nurses or other hospital staff work with you and your family or caregiver in making plans for your care after you left the hospital?
• During this hospital stay, how often were you able to get the rest you needed?
• During this hospital stay, did doctors, nurses and other hospital staff help you to rest and recover?
• During this hospital stay, when you asked for help right away, how often did you get help as soon as you needed?
• Did doctors, nurses or other hospital staff give your family or caregiver enough information about what symptoms or health problems to watch for after you left the hospital?
As discussed more fully later in this section, these new questions address aspects of hospital care identified by patients and then tested in the 2021 HCAHPS Survey large-scale mode experiment described in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59196 through 59197) as important to measuring the quality of hospital care.
The updated HCAHPS Survey measure would no longer include the following four questions:
• During this hospital stay, after you pressed the call button, how often did you get help as soon as you wanted it?
• During this hospital stay, staff took my preferences and those of my family or caregiver into account in deciding what my health care needs would be when I left.
• When I left the hospital, I had a good understanding of the things I was responsible for in managing my health.
• When I left the hospital, I clearly understood the purpose for taking each of my medications.
In the updated HCAHPS Survey measure, the question on the use of the call button is removed in response to hospital input indicating that call buttons have been replaced by other mechanisms (such as a direct phone line). The other questions are removed because they do not follow standard Consumer Assessment of Healthcare Providers & Systems (CAHPS) question wording and were perceived as duplicative of existing and new survey questions by the patients who participated in our content testing.
We refer hospitals and HCAHPS Survey vendors to the official HCAHPS website at
The HCAHPS Survey measure produces systematic, standardized, and comparable information about patients' experience of hospital care and promotes person-centered care. We have identified that patient experience measures, including the HCAHPS Survey measure, are foundational metrics, known as the Universal Foundation of quality measures. The Universal Foundation is intended to focus provider attention, reduce burden, identify disparities in care, prioritize development of interoperable, digital quality measures, allow for cross-comparisons across programs, and help identify measurement gaps.
We refer readers to section IX.B.1.c. of this final rule for details on the Pre-Rulemaking Measure Review (PRMR) process including the voting procedures the PRMR process uses to reach consensus on measure recommendations. The PRMR Hospital Committee, comprised of the PRMR Hospital Advisory Group and PRMR Hospital Recommendation Group, reviewed the proposed updated version of the HCAHPS Survey measure. The PRMR Hospital Recommendation Group reviewed the proposed updated HCAHPS Survey measure (MUC2023-146, 147, 148, 149) during a meeting on January 18-19, 2024, to vote on a recommendation with regard to use of this measure for the PCHQR, Hospital IQR, and Hospital VBP Programs.
The PRMR Hospital Recommendation Group reached consensus for each of the three programs. For each program, they recommended the updates to the HCAHPS Survey measure with conditions.
The voting results of the PRMR Hospital Recommendation Group for the proposed updates to the HCAHPS Survey measure within the Hospital IQR Program were: nine members of the group recommended adopting the updates without conditions; eight members recommended adoption with conditions; and two committee members voted not to recommend the updates for adoption. Taken together, 89.5 percent of the votes were between “recommend” and “recommend with conditions.” Thus, the committee reached consensus and recommended the updates to the HCAHPS Survey measure within the Hospital IQR Program with conditions.
The voting results of the PRMR Hospital Recommendation Group for the proposed updates to the HCAHPS Survey measure within the Hospital VBP Program were: ten members of the group recommended adopting the updates without conditions; seven members recommended adoption with conditions; and two committee members voted not to recommend the updates for adoption. Taken together, 89.5 percent of the votes were between “recommend” and “recommend with conditions.” Thus, the committee reached consensus and recommended the updates to the HCAHPS Survey measure within the Hospital VBP Program with conditions.
The voting results of the PRMR Hospital Recommendation Group for the proposed updates to the HCAHPS Survey measure within the PCHQR Program were: eleven members of the group recommended adopting the updates without conditions; six members recommended adoption with conditions; and two committee members voted not to recommend the updates for adoption. Taken together, 89.5 percent of the votes were between “recommend” and “recommend with conditions.” Thus, the committee reached consensus and recommended the updates to the HCAHPS Survey measure within the PCHQR Program with conditions.
The conditions that the committee recommended for all three programs were: CBE endorsement; consideration should be given to not extending the survey length and removal of overlapping items; use of adaptive questions in computerized administration to minimize items; and use of a mechanism to monitor trends in performance data over time.
After taking these conditions into account, we proposed to adopt the updated HCAHPS Survey measure in all three programs. As noted in section IX.B.2.b. of this final rule and in response to the committee's condition that consideration be given to not extending the survey length, the updated HCAHPS Survey measure would result in only an additional 45 seconds to complete the survey. We have estimated that the total time required to complete the 32-question survey is, on average, eight minutes. Additionally, in response to the committee's condition that consideration be given to removing overlapping items, we note that similar or overlapping questions were identified and considered for removal during the development and testing of the updated HCAHPS Survey measure, as described further in section IX.B.2.b. of this final rule. By developing items with patients' and caregivers' input and then empirically testing the new questions, we have ensured that the questions in the updated HCAHPS Survey add unique, non-redundant information about key aspects of patient experience of care.
We refer readers to section IX.B.1.c. of this final rule for details on the endorsement and maintenance (E&M) process including the measure evaluation procedures the CBE's E&M Committees use to evaluate measures and whether they meet endorsement criteria. The HCAHPS Survey measure was first endorsed in 2005 by the former CBE, the National Quality Forum. The former CBE renewed its endorsement of the current HCAHPS Survey measure in 2009, 2015, and 2019. The current HCAHPS Survey measure was most recently submitted to the CBE for maintenance endorsement review in the Spring 2019 cycle (CBE #0166) and was endorsed on October 25, 2019.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36298 through 36300), we proposed to update the current HCAHPS Survey measure in the Hospital IQR and PCHQR Programs by adding three new sub-measures:
The updates also remove the existing “Care Transition” sub-measure and modify the existing “Responsiveness of Hospital Staff” sub-measure. The new “Care Coordination” sub-measure encompasses and broadens the current “Care Transition” sub-measure and the new questions in the “Care Coordination” sub-measure are more congruent with the other survey questions. The updated measure replaces one of the two survey questions in the current “Responsiveness of Hospital Staff” sub-measure with a new survey question that strengthens this sub-measure. The updates to the HCAHPS Survey measure are detailed in section IX.B.2.b. of this final rule and we refer readers to the HCAHPS website at
In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed that the updated HCAHPS Survey measure would be implemented in the Hospital IQR and PCHQR Programs beginning with patients discharged on January 1, 2025 (89 FR 36298). Reporting of responses from the updated HCAHPS Survey measure for patients discharged between January 1, 2025, and December 31, 2025, would be used for the CY 2025 reporting period/FY 2027 payment determination for the Hospital IQR Program and for the CY 2025 reporting period/FY 2027 program year for the PCHQR Program. HCAHPS Survey sub-measures are publicly reported on a CMS website quarterly on a rolling basis, with the oldest quarter of data rolled off, and the most recent quarter rolled on with each refresh. As such, there would be a period during which some quarters of reporting data come from the current version of the HCAHPS Survey measure, and others come from the updated HCAHPS Survey measure. Through this time period, publicly reported HCAHPS Survey data for the Hospital IQR and PCHQR Programs would consist only of data from the eight unchanged sub-measures in the current HCAHPS Survey measure. When four quarters of the updated HCAHPS Survey data have been submitted, public reporting would reflect all of the modifications in the updated HCAHPS Survey measure. The public reporting timeline of the updates to the HCAHPS Survey measure for the Hospital IQR and PCHQR Programs can be found in Table IX.B.2-02.
The “Care Coordination” sub-measure is a newly developed multi-question sub-measure and is composed of three new survey questions that ask patients how often hospital staff were informed and up-to-date about the patient's care, how often hospital staff worked well together to care for the patient, and whether hospital staff worked with the patient and family or caregiver in making plans for the patient's care post-hospitalization. The new questions address aspects of hospital care identified by patients participating in focus groups as important to measuring the quality of hospital care. Cognitive testing demonstrated the new questions were accurately and consistently interpreted. The “Care Coordination” sub-measure was shown to have good measurement properties (hospital-level reliability is 0.792 and Cronbach's alpha is 0.765) and construct validity in the 2021 mode experiment.
The Restfulness of Hospital Environment—Hospital Patient sub-measure would fill a gap related to providing a restful and healing environment within the hospital setting and support our goal of including measures related to person-centered care. The “Restfulness” sub-measure is a newly developed multi-question sub-measure comprised of three survey questions: two new questions that ask how often patients were able to get the rest they needed, and whether hospital staff helped the patient to rest and recover, and one current survey question that asks how often the area around the patient's room was quiet at night (“Quietness”). Cognitive testing demonstrated the new questions were accurately and consistently interpreted. The 2021 mode experiment established that the “Restfulness” sub-measure has good measurement properties (hospital-level reliability is 0.870 and Cronbach's alpha is 0.735) and construct validity.
The “Information About Symptoms” sub-measure is a newly developed single-question sub-measure that would fill a gap of providing instructions and information for family and caregivers to take care of patients after discharge and supports our goal of including measures related to person-centered care. The new question captures an aspect of hospital care identified by patients participating in focus groups as important, and cognitive testing demonstrated the question was accurately and consistently interpreted. The sub-measure is a stand-alone question that asks the patient whether doctors, nurses, or other hospital staff gave the patient's family or caregiver enough information about symptoms or health problems to watch out for after the patient left the hospital. The sub-measure has good hospital level-reliability (0.729) at the expected average number of completed surveys per hospital.
The revisions to the “Responsiveness of Hospital Staff” sub-measure would entail adding one new survey question to this sub-measure and removing one current survey question from this sub-measure. The current survey question that would be removed from the “Responsiveness of Hospital Staff” sub-measure is the “Call Button” question. Input from hospitals indicated that call buttons have largely been replaced by other mechanisms (such as a direct phone line), and qualitative testing demonstrated that the new question captures all modes of requesting help. The 2021 mode experiment established that the modified “Responsiveness of Hospital Staff” sub-measure has good measurement properties (hospital-level reliability is 0.786 and Cronbach's alpha is 0.749) and construct validity.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53513 through 53516), we added the three-question “Care Transition” sub-measure (CTM-3) to the HCAHPS Survey measure in the Hospital IQR Program. We finalized the addition of the HCAHPS Survey measure, including the CTM-3 sub-measure, for the PCHQR Program in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50844 through 50845). The updates to the HCAHPS Survey measure would remove this three-question sub-measure from the HCAHPS Survey measure and replace it with a new “Care Coordination” sub-measure, which would encompass and broaden the current “Care Transition” sub-measure and is more congruent with the other questions in the HCAHPS Survey measure in terms of question form and response options. For these reasons, the updated version of the HCAHPS Survey measure removes the “Care Transition” sub-measure.
The “About You” questions are used either for patient-mix adjustment or for Congressionally-mandated reports.
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36300), we proposed that the changes to the “About You” section of the updated HCAHPS Survey measure would be:
• replacing the existing “Emergency Room Admission” question with a new, “Hospital Stay Planned in Advance” question;
• reducing the number of response options for the existing “Language Spoken at Home” question;
• alphabetizing the response options for the existing ethnicity question; and
• alphabetizing the response options for the existing race question.
We note that to achieve the goal of fair comparisons across all hospitals that participate in HCAHPS Survey measure, it is necessary to adjust for factors that are not directly related to hospital performance but do affect how patients answer HCAHPS Survey questions. To ensure that differences in HCAHPS Survey measure results reflect differences in hospital quality only, HCAHPS Survey measure results are adjusted for patient-mix and mode of survey administration. Only the adjusted results are publicly reported and considered the official results. Information about the HCAHPS Survey patient-mix adjustment can be found at:
• In general, how would you rate your overall health?
• In general, how would you rate your overall
• What is the highest grade or level of school that you have
• What language do you
Administrative data provided by hospitals are also used in patient-mix adjustment, including patient's age, sex, and service line. Lag time, which is the number of days between a patient's discharge from the hospital and the return of the mail survey or the final disposition of the telephone or interactive voice recognition (IVR)
Neither patient race nor ethnicity is used to adjust HCAHPS Survey results; these questions are included on the survey to support Congressionally-mandated reports. The adjustment model also addresses the effects of non-response bias. More information about the patient-mix adjustment coefficients for publicly reported HCAHPS Survey measure results can be found under “Mode and Patient-Mix Adjustment” at:
The current “About You” survey question that asks whether the patient was admitted to the hospital through the emergency room would be replaced with a new question that asks whether this hospital stay was planned in advance. This “Hospital Stay Planned in Advance” question is being adopted for use as a patient-mix adjuster to distinguish between planned and unplanned stays. Cognitive testing indicated that “Hospital Stay Planned in Advance” is better understood as intended than the current admission through the emergency room question. Unplanned stays are not within the hospital's control but can result in worse patient experiences than hospital stays that had been planned. Accounting for these differences in this preadmission characteristic allows for fairer comparisons of hospital performance.
To make survey administration more efficient and reduce respondent burden, especially in the telephone mode of survey administration, we proposed that the response options for the “Language Spoken at Home” question would be changed to: “English,” “Spanish,” “Chinese,” or “Another language” (89 FR 36300). English, Spanish, and Chinese account for 98.2 percent of all HCAHPS Survey measure responses. The response options for the two race/ethnicity questions would be alphabetized to correspond to current best survey practices.
These modifications would not be included in public reporting of the HCAHPS Survey measure and would not affect scoring under the Hospital VBP Program, but the “Hospital Stay Planned in Advance” question would be employed in the patient-mix adjustment of survey responses.
In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to implement these changes along with the proposed updated version of the HCAHPS Survey measure for the Hospital IQR, PCHQR, and Hospital VBP Programs described in earlier sections (89 FR 36300).
We received public comment on the overall updates to the HCAHPS Survey measure.
The HCAHPS Star Rating Technical Notes will be updated again prior to the October 2026 public reporting on the Compare tool to describe the calculation of the HCAHPS Star Ratings when the number of publicly reported HCAHPS Survey sub-measures increases from 8 to 11. For the October 2026 public reporting and forward, the HCAHPS Summary Star Rating will be constructed by averaging the HCAHPS Star Ratings from “Communication with Nurses,” “Communication with Doctors,” “Restfulness of Hospital Environment,” “Care Coordination,” “Responsiveness of Hospital Staff,” “Communication about Medicines,” “Discharge Information,” the average of the Star Ratings assigned to “Cleanliness of Hospital Environment” and “Information About Symptoms,” and the average of the Star Ratings assigned to “Hospital Rating” and “Recommend the Hospital.” The weight of the Patient Experience measure group in the Overall Hospital Quality Star Rating, which includes the HCAHPS Survey measure, would not change without notice-and-comment rulemaking.
We note that the HCAHPS Survey measure is available in 8 official non-English translations, and that the official Spanish translation must be administered to all Spanish-preferring patients beginning in January 2025.
Survey questions 20 and 23 differ in significant ways. Question 20, “Information About Symptoms,” asks about the engagement of family members or caregivers, specifically whether the patient's family or caregiver received enough information about what symptoms or health problems to help watch for after the patient leaves the hospital. Patients identified information communicated to a patient's family members or caregivers as an aspect of care that is critical to measuring quality. In contrast, Question 23, “Discharge Information in Writing,” is specific to the patient's experience. It asks whether the patient received written information about symptoms or health problems to look out for after leaving the hospital, which patients also identified as an aspect of care that is important to measuring quality and is only asked of patients who go directly home after leaving the hospital. These are different topics and are measured via separate items to ensure that the data collected are actionable. Questions 20 and 23 are also not empirically redundant. The empirical testing of the new questions for the updated HCAHPS Survey measure, both from their content and from statistical evidence, demonstrated that these questions address different aspects of patient care and that each question independently predicts the overall rating of the hospital. We refer the commenter to the PRMR report for additional information on the testing we conducted.
Additionally, we do not agree with commenters' recommendations to combine questions 19 and 22 in the HCAHPS Survey measure because we have determined via qualitative and quantitative testing that these questions address different key aspects of care as identified by patients and caregivers. Question 19, the “Care Coordination Post-Hospital” question, collects information on whether the patient's family or caregiver was involved in discussion of the patient's post-discharge care needs, while question 22, the “Discharge Information Help” question, is specific to the patient's experience and asks patients who were discharged to their own home or someone else's home whether doctors, nurses or other hospital staff talked with them about whether they would have the needed level of help or support after leaving the hospital. As explained above, questions 20 and 23 similarly address different aspects of patient care, focusing on either the experience of the patient's family or caregiver (question 20) or the experience of the patient (question 23) in receiving information about symptoms or health problems to watch for after the patient leaves the hospital.
Patients indicated that how well “doctors, nurses, and other staff work together or as a team” in caring for a patient was the most important information to have in determining what their care would be like at a particular hospital. The term “other hospital staff” refers to anyone else involved in the patient's care during their hospital stay, including but not limited to those who take patients for X-rays or medical tests, individuals providing treatment or therapy during the in-patient stay, and those who participate in discharge planning. Cognitive testing indicates that repeated use of this phrase ensures that patients understand who is included; terms such as “Care team” and “Hospital team” are less familiar to patients. Based on these efforts, we determined that the survey language is clear and intelligible to patients.
We agree with the commenter that the addition of new questions should be limited to only those that provide meaningful and actionable data and have identified that the updates to the HCAHPS Survey measure provide such data. A CMS contractor convened a technical expert panel that engaged physicians, nurses, academics, and representatives of hospitals, insurers, and patient advocacy groups to assess the actionability of all new items proposed for testing to ensure we focused the new content on actionable events, and we note that every proposed question had statistical evidence that it improved measurement of the sub-measure to which it belonged.
We also note that the “Information About Symptoms” question captures an important aspect of hospital care identified by patients and caregivers participating in focus groups. Cognitive testing demonstrated that the “Information About Symptoms” question was accurately and consistently interpreted, as described in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36299). We agree that ensuring patient comprehension is important and will take this feedback into consideration, along with the suggestion to include “in your preferred language in writing,” in the “Discharge Information in Writing” question for future program years.
We also received public comments on the specific addition of the “Care Coordination” sub-measure to the HCAHPS Survey measure.
We also received public comments on the specific addition of the “Restfulness of Hospital Environment” sub-measure to the HCAHPS Survey measure.
In response to the request to remove the “Quietness” question, we note that this question is already included in the current version of the HCAHPS Survey measure as a single-question sub-measure, and the question itself is not changing in the updated version of the survey.
We received public comments on the specific addition of the “Information about Symptoms” sub-measure to the HCAHPS Survey measure.
We also received public comments on the specific modification of the “Responsiveness of Hospital Staff” sub-
We also received public comments on the specific removal of the “Care Transition” sub-measure from the HCAHPS Survey measure.
We also received public comments on the specific modifications to the “About You” section of the HCAHPS Survey measure.
We also invited public comment on the proposed adoption of the updated HCAHPS Survey measure for the Hospital IQR Program beginning with the CY 2025 reporting period/FY 2027 payment determination and the PCHQR Program beginning with the CY 2025 reporting period/FY 2027 program year.
After consideration of the public comments received, we are finalizing adoption of the updated HCAHPS Survey measure in the Hospital IQR and PCHQR Programs as proposed.
As discussed in the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to adopt an updated version of the HCAHPS Survey measure so that IPPS hospitals and PCHs can report patient responses to the updated survey for purposes of the Hospital IQR Program and PCHQR Program, respectively, beginning with January 1, 2025, discharges (89 FR 36298 through 36300). We also proposed to adopt the updated version of the HCAHPS Survey measure for purposes of the Hospital VBP Program in section IX.B.2.g. of this final rule; however, section 1886(o)(2)(C)(i) precludes us from doing so until we have specified the updates under the Hospital IQR Program and included them on Care Compare for at least one year prior to the beginning of the performance period for such fiscal year. For this reason, we proposed to adopt the updated version of the HCAHPS Survey measure beginning with the FY 2030 program year in the Hospital VBP Program. However, to relieve hospitals of the burden of having to use two different versions of the survey between FY 2027 and FY 2029, we proposed that hospitals would be able to administer the updated version of the survey starting with January 1, 2025 discharges, and for the purposes of the Hospital VBP Program, we would only score hospitals on the six dimensions of the HCAHPS Survey measure that would remain unchanged from the current version of the survey.
In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to modify scoring to not include the “Responsiveness of Hospital Staff” and “Care Transition” dimensions from scoring in the Hospital VBP Program's HCAHPS Survey measure in the Person and Community Engagement domain for the FY 2027 through FY 2029 program years (89 FR 36300 through 36301). As noted earlier, we must collect and publicly report four quarters of data on the updated HCAHPS Survey measure before the updates can be adopted into the Hospital VBP Program. As described in section IX.B.2.g(2) of this final rule, the updates to the “Responsiveness of Hospital Staff” dimension would be adopted in the Hospital VBP Program beginning with the FY 2030 program year along with the rest of the updates to the survey after the statutory requirements of section 1886(o)(2)(C)(i) of the Act have been met. As described in section IX.B.2.g(3) of this final rule, scoring on the updated “Responsiveness of Hospital Staff” dimension would begin with the FY 2030 program year. In addition, the “Care Transition” dimension in the current version of the survey would be removed permanently in the proposed updated HCAHPS Survey measure beginning with the FY 2030 program year. Until these updates can be adopted in the Hospital VBP Program beginning in FY 2030, we are excluding these dimensions from scoring for the FY 2027 through FY 2029 program years.
With the adoption of the proposal to not score the “Care Transition” and “Responsiveness of Hospital Staff” dimensions in the Person and Community Engagement domain for the FY 2027 through FY 2029 program years, only six dimensions would continue to be used in the Hospital VBP Program for FY 2027, FY 2028, and FY 2029. By excluding these two dimensions from scoring within the Hospital VBP Program for the FY 2027 through FY 2029 program years, hospitals can continue to be scored on the remaining unchanged dimensions of the current HCAHPS Survey measure until the proposed updated HCAHPS Survey measure could be adopted for use in the Hospital VBP Program beginning in FY 2030.
We proposed to score hospitals only on these six dimensions because we cannot score hospitals on any of the new or updated dimensions associated with the updated HCAHPS Survey measure until they have been adopted and reported in the Hospital IQR Program for one year prior to the beginning of the first performance period of their use in the Hospital VBP Program (89 FR 36300 through 36301). These six unchanged dimensions of the HCAHPS Survey measure would be:
• “Communication with Nurses,”
• “Communication with Doctors,”
• “Communication about Medicines,”
• “Discharge Information,”
• “Cleanliness and Quietness,” and
• “Overall Rating.”
We proposed to modify the scoring such that for each of these six dimensions, Achievement Points (0-10 points) and Improvement Points (0-9 points) would be calculated, the larger of which would be summed across these six dimensions to create a pre-
This scoring modification would ensure that hospitals can continue to receive scores on the dimensions of the HCAHPS Survey measure that would remain unchanged in the current survey and would provide a period of transition until the Hospital VBP Program can adopt the updates to the survey. The updated version of the HCAHPS Survey measure would be adopted in the Hospital IQR and PCHQR Programs beginning with January 1, 2025 discharges, however, those updated sub-measures would not be scored as dimensions for the Hospital VBP Program until the FY 2030 program year. We reiterate that hospitals would only have to circulate one version of the HCAHPS Survey measure at a time.
We invited public comment on this proposal to modify scoring on the HCAHPS Survey measure in the Hospital VBP Program for the FY 2027 through FY 2029 program years to only score on the six dimensions discussed earlier.
After consideration of the public comments received, we are finalizing adoption of the modifications to scoring in the Hospital VBP Program for the FY 2027 through FY 2029 program years as proposed.
As described in the FY 2025 IPPS/LTCH PPS proposed rule and section IX.B.2.e. of this final rule, the modifications to the proposed updated version of the HCAHPS Survey measure include adding three new sub-measures, “Care Coordination,” “Restfulness of Hospital Environment,” and “Information About Symptoms” to the survey (89 FR 36298 through 36300).
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36301 through 36304), we proposed to adopt the updated HCAHPS Survey measure in the Hospital VBP Program beginning with the FY 2030 program year to align with the adoption of the updated HCAHPS Survey measure that we proposed to adopt in the Hospital IQR Program, as described in section IX.B.2.e. of this final rule. Under this proposal, the updated HCAHPS Survey measure would have been publicly reported for one year in the Hospital IQR Program prior to the beginning of the performance period for the HCAHPS Survey measure in the Hospital VBP Program for the FY 2030 program year, which consists of a performance period of CY 2028 and a baseline period of CY 2026.
We note that the number and content of dimensions from the proposed updated HCAHPS Survey measure in the Person and Community Engagement Domain in the Hospital VBP Program in FY 2030 differs slightly from the number and content of the sub-measures in the Hospital IQR and PCHQR Programs. Namely, the “Cleanliness” and “Information about Symptoms” sub-measures are single-item sub-measures in the updated HCAHPS Survey measure in the Hospital IQR and PCHQR Programs, but they would be combined into one dimension in the updated HCAHPS Survey measure for the Hospital VBP Program beginning with the FY 2030 program year.
The dimensions in the Person and Community Engagement Domain in the Hospital VBP Program beginning with the FY 2030 program year are:
• “Communication with Nurses,”
• “Communication with Doctors,”
• “Responsiveness of Hospital Staff,”
• “Communication about Medicines,”
• “Cleanliness and Information About Symptoms,”
• “Discharge Information,”
• “Overall Rating of Hospital,”
• “Care Coordination,” and
• “Restfulness of Hospital Environment.”
We refer readers to Table IX.B.2-03 for the timelines for the current and newly adopted HCAHPS Survey dimensions for the Hospital VBP Program.
In the updated HCAHPS Survey measure, the “Care Transition” dimension is removed. The new “Care Coordination” dimension and the new “Information about Symptoms” question, which is included in the new “Cleanliness and Information about Symptoms” dimension, encompass a broader depiction of person-centered care than does the “Care Transition” dimension. The updated HCAHPS Survey measure includes the new “Care Coordination” dimension, the new “Restfulness of the Hospital Environment” dimension, and the new “Cleanliness and Information about Symptoms” dimension. In the FY 2025 IPPS/LTCH PPS proposed rule, we proposed to begin using these three new dimensions in the Hospital VBP Program beginning with the FY 2030 program year (89 FR 36301 through 36304). As noted in section IX.B.2.e(1) of this final rule, the “Care Coordination” dimension would further coordination efforts within the hospital setting and support our goals of including measures related to seamless care coordination and person-centered care. Additionally, the new “Restfulness of the Hospital Environment” dimension is comprised of three survey questions: two new questions that ask how often patients were able to get the rest they needed, and whether hospital staff helped the patient to rest and recover, and one current survey question that asks how often the area around the patient's room was quiet at night (“Quietness”).
The updated version of the HCAHPS Survey measure further modifies the current “Cleanliness and Quietness” dimension in two ways. Beginning with the FY 2030 program year, the “Quietness” question would be removed from the “Cleanliness and Quietness” dimension and would instead be included in the new “Restfulness of Hospital Environment” dimension; however, the “Quietness” question itself would remain unchanged on the updated HCAHPS Survey measure. Additionally, beginning with the FY 2030 program year, we proposed to modify the “Cleanliness and Quietness” dimension to be called the “Cleanliness and Information About Symptoms” dimension, which would include the existing “Cleanliness” question and the new “Information About Symptoms” question from the updated HCAHPS Survey measure (89 FR 36301 through 36304). The newly developed “Information About Symptoms” question asks the patient whether doctors, nurses, or other hospital staff gave the patient's family or caregiver enough information about symptoms or health problems to watch out for after the patient left the hospital.
We refer readers to section IX.B.2.b. of this final rule where we further describe the updates included in the updated HCAHPS Survey measure and to Table IX.B.2-03 for the timelines for the current and newly adopted HCAHPS Survey dimensions for the Hospital VBP Program.
We invited public comment on the proposal to adopt the updated HCAHPS Survey measure in the Hospital VBP
After consideration of the public comments received, we are finalizing adoption of the updated HCAHPS Survey measure in the Hospital VBP Program beginning with the FY 2030 program year as proposed.
In the FY 2025 IPPS/LTCH PPS proposed rule, we also proposed to adopt a new scoring methodology beginning with the FY 2030 program year (89 FR 36304). For each of the nine dimensions, Achievement Points (0-10 points) and Improvement Points (0-9 points) would be calculated, the larger of which would be summed across the nine dimensions to create a pre-normalized HCAHPS Base Score of 0-90 points (as compared to 0-80 points with the current eight dimensions). The pre-normalized HCAHPS Base Score would then be multiplied by
Additionally, we note that in the scoring of the current HCAHPS Survey measure in the Hospital VBP Program, the “Cleanliness and Quietness” dimension is the average of the publicly reported stand-alone “Cleanliness” and “Quietness” questions. As previously noted, the adoption of the updated HCAHPS Survey measure would result in “Quietness” being removed from this dimension and included as a question in the new “Restfulness of the Hospital Environment” dimension, and “Cleanliness” would be combined with the new “Information about Symptoms.” Therefore, “Quietness” would be scored as part of the “Restfulness of the Hospital Environment” dimension in conjunction with the other questions under that dimension. For the “Cleanliness and Information about Symptoms” dimension, we would take the average of the stand-alone “Cleanliness” and “Information about Symptoms” questions to obtain a score for the “Cleanliness and Information about Symptoms” dimension. For the purposes of the Hospital VBP Program, we proposed these two questions be combined so as not to put more weight on these questions compared to the rest of the HCAHPS Survey questions, which are included in multi-question dimensions (with the exception of Overall Rating) (89 FR 36304). If “Cleanliness,” and “Information About Symptoms,” were treated as single-question dimensions, “Cleanliness,” for example, would receive as much weight as the “Communication with Nurses” dimension, which includes three questions. Therefore, the combined “Cleanliness and Information about Symptoms” dimension is more comparable to the other HCAHPS Survey dimensions.
We invited public comment on this proposal to modify scoring of the HCAHPS Survey measure in the Hospital VBP Program beginning with the FY 2030 program year to account for the adoption of the updated HCAHPS Survey measure.
After consideration of the public comments received, we are finalizing adoption of the modification of the scoring of the HCAHPS Survey measure in the Hospital VBP Program beginning with the FY 2030 program year as proposed.
The Hospital Readmissions Reduction Program was implemented to reduce excess readmissions effective for discharges from applicable hospitals beginning on or after October 1, 2012. The program uses six claims-based measures to track unplanned inpatient admissions within 30 days following discharge. Using the data collected from these measures, we have observed that since the inception of the program, inpatient readmission rates for the conditions and procedures included in the program have gone down.
However, studies have found a concurrent increase in patients who, after being discharged from an inpatient stay, visit the emergency department (ED) or receive observation services as an outpatient.
From a patient perspective, unexpectedly returning to any acute care setting, including the ED, or receiving observation services after being discharged from an inpatient hospital stay,
While these unplanned returns to the hospital impose significant burden on patients, such visits can often be avoided with greater attention to care coordination.
Published online 2019 Apr 25. doi: 10.1016/j.cct.2019.04.014.
Therefore, we are continually seeking ways to build on current measures in several quality reporting programs that account for unplanned patient hospital visits to encourage hospitals to improve discharge processes. Current measures include three Excess Days in Acute Care (EDAC) measures currently in the Hospital Inpatient Quality Reporting (IQR) Program, which estimate days spent in acute care within 30 days post-discharge from an inpatient hospitalization for a principal diagnosis of the measure's specified condition. The acute care outcomes include ED visits, receipt of observation services, and unplanned readmissions.
• Excess Days in Acute Care (EDAC) after Hospitalization for Acute Myocardial Infarction (AMI), adopted in the FY 2016 IPPS/LTCH PPS final rule beginning with the FY 2018 payment determination (80 FR 49680 through 49682);
• Excess Days in Acute Care (EDAC) after Hospitalization for Heart Failure (HF), adopted in the FY 2016 IPPS/LTCH PPS final rule beginning with the FY 2018 payment determination (80 FR 49682 through 49690); and
• Excess Days in Acute Care (EDAC) after Hospitalization for Pneumonia, adopted in the FY 2017 IPPS/LTCH PPS final rule beginning with the FY 2019 payment determination (81 FR 57142 through 57148).
Another existing measure that we use to assess unplanned hospital returns is the Hospital Visits After Hospital Outpatient Surgery measure. We adopted this measure into the Hospital Outpatient Quality Reporting (OQR) Program in the CY 2017 OPPS/ASC final rule beginning with the CY 2020 reporting period (81 FR 79764 through 79771) and the Rural Emergency Hospital Quality Reporting (REHQR) Program in the CY 2024 OPPS/ASC final rule beginning with the CY 2024 reporting period (88 FR 82064 through 82066). This measure's outcome includes any unplanned hospital visits (ED visits, receipt of observation services, or unplanned inpatient admissions) within seven days of outpatient surgery. The measure calculates facility-level measure scores based on the ratio of predicted to expected number of post-surgical hospital visits. By publicly reporting these scores, the measure encourages providers to engage in quality improvement activities to reduce unplanned follow-up visits (81 FR 79765).
While our hospital quality reporting and value-based purchasing programs currently encourage hospitals to address concerns about unplanned returns through several existing measures, we recognize that these measures, taken together, do not comprehensively capture unplanned patient returns to inpatient or outpatient care after discharge. The EDAC measures currently in the Hospital IQR Program only cover patients with a primary discharge of AMI, HF, or Pneumonia. Meanwhile, the Hospital Visits After Hospital Outpatient Surgery measure only covers patients following outpatient surgeries. Furthermore, since both the Hospital IQR and Hospital OQR Programs are quality reporting programs, a hospital's performance on these measures is not tied to payment incentives.
Therefore, we invited public comment on how these programs could further encourage hospitals to improve discharge processes, such as by introducing measures currently in quality reporting programs into value-based purchasing to link outcomes to payment incentives. We noted we were specifically interested in input on adopting measures which better represent the range of outcomes of interest to patients, including unplanned returns to the ED and receipt of observation services within 30 days of a patient's discharge from an inpatient stay.
We invited public comment on this topic. The following provides a summary of the responses we received.
A few commenters supported having the Hospital Readmissions Reduction Program track ED visits and observation services in addition to inpatient readmissions, while others recommended only tracking post-discharge observation services but not ED visits. A commenter recommended that CMS seek to modify the statutory language of the Hospital Readmissions Reduction Program if its current statute does not allow for the measurement of ED visits and observation services. A commenter noted that if the program's statute does not allow for reporting of observation services, CMS could minimize penalties under the program and instead focus on other quality measures and programs. A few commenters recommended that CMS adopt measures that focus on post-discharge outcomes in value-based purchasing programs, to provide greater incentive for hospitals to reduce excess healthcare utilization.
Several commenters supported the EDAC measures as a better measure of preventable hospital returns than CMS' readmission measures, but requested refinements to the EDAC measures first. For example, several commenters recommended that CMS introduce more comprehensive readmissions measures that would encourage involving patients and their caregivers in discharge planning. Another commenter suggested that CMS create a broader EDAC measure that can be segmented by condition and setting, or create an inpatient and outpatient version of this EDAC measure.
Several commenters did not support adding the EDAC measures to the Hospital Readmissions Reduction Program. Several commenters stated that the definition of readmissions in the program's statute does not include observation services or ED visits, while one comment requested that CMS clarify its authority to introduce the EDAC measures into the program. A few other commenters had concerns about adopting the EDAC measures to the Hospital Value-Based Purchasing (VBP) Program, noting that it could lead hospitals to be penalized for some of the same readmissions as in the Hospital Readmissions Reduction Program. A commenter stated that CMS does not have the statutory authority to add EDAC measures to the Hospital VBP Program. A few of the commenters suggested that CMS instead introduce readmission measures into quality reporting programs because they do not have performance-based penalties. As an alternative to quality reporting, a commenter recommended addressing unplanned hospital visits through value-based care models such as the Comprehensive Care for Joint Replacement Model or the Bundled Payments for Care Improvement Advanced Model.
We are also working to harmonize measurement across settings, as noted in the Universal Foundation approach that we published in 2023.
Several commenters offered ways for CMS to ensure better discharge care. A few commenters suggested that CMS reduce readmissions by measuring and promoting access to at home care such as the Acute Hospital Care at Home program. They cited that hospital at home results in fewer complications and improved discharge planning. To ensure more equitable outcomes, a few commenters urged CMS to promote more focus on social determinants of health at discharge, such as by updating Z code reporting. Another commenter recommended that CMS allow hospitals to report transitional care management codes for patients being discharged from the ED, so that patients can receive appropriate discharge care. A commenter emphasized the importance of patient, family, and caregiver engagement, as well as ensuring patient, family, and caregiver health literacy. To that end, the commenter requested that CMS issue guidance to hospitals on how to empower and engage these groups in the patient's care. A commenter suggested that CMS identify opportunities to provide additional financial support for hospitals to improve discharge planning, as financial constraints can pose a barrier to improvement efforts.
A few commenters suggested that CMS consider other measures to reduce readmissions. A commenter suggested that CMS keep the 30-day episode-based cost measures in the Hospital IQR Program while adopting them in the Hospital VBP Program. The commenter believed that this would reduce readmissions because a significant portion of the variation in these measures is driven by readmissions and other returns to acute care. In another suggestion, a commenter recommended that CMS adopt the National Healthcare Safety Network (NHSN) Hospital-Onset Bacteremia & Fungemia Outcome measure into CMS quality reporting and value-based purchasing programs to enhance infection prevention efforts and thus reduce readmissions. Another commenter promoted the Medicare Spending Per Beneficiary measure in the Hospital VBP Program as a comprehensive evaluation of care transition efforts.
A few commenters stated that the word “readmissions” should not be used in the rule to refer interchangeably
A commenter asked that CMS quality measurement include public reporting on ED boarding, that is, when patients are held in the ED while there are no inpatient beds available. The commenter believed that public reporting would hold facilities accountable for long boarding times and make consumers aware of an important aspect of hospital quality of care. Another commenter stated that if CMS chooses to measure observation services in readmission measures, CMS should also include observation services under Medicare Part A payments, or eliminate observation status to create a single hospitalization status. They also suggested counting observation stays towards the skilled nursing facility 3-day rule.
Through the Hospital IQR Program, we strive to ensure that patients, along with their clinicians, can use information from meaningful quality measures to make better decisions about their healthcare. We support technology that reduces burden and allows clinicians to focus on providing high-quality healthcare for their patients. We also support innovative approaches to improve quality, accessibility, affordability, and equity of care while paying particular attention to improving clinicians' and beneficiaries' experiences when interacting with CMS programs. In combination with other efforts across the Department of Health and Human Services (HHS), the Hospital IQR Program incentivizes hospitals to improve healthcare quality and value, while giving patients the tools and information needed to make the best decisions for themselves.
We seek to promote higher quality, equitable, and more efficient healthcare for Medicare beneficiaries. The adoption of widely agreed upon quality and cost measures supports this effort. We work with relevant interested parties to define measures in almost every care setting and currently measure some aspects of care for almost all Medicare beneficiaries. These measures assess clinical processes and outcomes, patient safety and adverse events, patient experiences with care, care coordination, and cost of care. We have implemented quality measure reporting programs for multiple settings of care. To measure the quality of hospital inpatient services, we implemented the Hospital IQR Program. We refer readers to the following final rules for detailed discussions of the history of the Hospital IQR Program, including statutory history, and for the measures we have previously adopted for the Hospital IQR Program measure set:
• The FY 2010 IPPS/LTCH PPS final rule (74 FR 43860 through 43861);
• The FY 2011 IPPS/LTCH PPS final rule (75 FR 50180 through 50181);
• The FY 2012 IPPS/LTCH PPS final rule (76 FR 51605 through 61653);
• The FY 2013 IPPS/LTCH PPS final rule (77 FR 53503 through 53555);
• The FY 2014 IPPS/LTCH PPS final rule (78 FR 50775 through 50837);
• The FY 2015 IPPS/LTCH PPS final rule (79 FR 50217 through 50249);
• The FY 2016 IPPS/LTCH PPS final rule (80 FR 49660 through 49692);
• The FY 2017 IPPS/LTCH PPS final rule (81 FR 57148 through 57150);
• The FY 2018 IPPS/LTCH PPS final rule (82 FR 38326 through 38328 and 82 FR 38348);
• The FY 2019 IPPS/LTCH PPS final rule (83 FR 41538 through 41609);
• The FY 2020 IPPS/LTCH PPS final rule (84 FR 42448 through 42509);
• The FY 2021 IPPS/LTCH PPS final rule (85 FR 58926 through 58959);
• The FY 2022 IPPS/LTCH PPS final rule (86 FR 45360 through 45426);
• The FY 2023 IPPS/LTCH PPS final rule (87 FR 49190 through 49310); and
• The FY 2024 IPPS/LTCH PPS final rule (88 FR 59144 through 59203).
We also refer readers to 42 CFR 412.140 for Hospital IQR Program regulations.
We refer readers to 42 CFR 412.140(g)(1) for our finalized measure retention policy. We first adopted these policies in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53512 through 53513) and codified them in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59174 through 59175). Pursuant to this policy, when we adopt measures for the Hospital IQR Program beginning with a particular payment determination, we automatically readopt these measures for all subsequent payment determinations unless a different or more limited period is proposed and finalized. Measures are also retained unless we propose to remove, suspend, or replace the measures.
We did not propose any changes to these policies in the proposed rule.
We refer readers to 42 CFR 412.140(g)(2) and (3) for the Hospital IQR Program's policy regarding the factors CMS considers when removing measures from the program. We first adopted these factors in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41540 through 41544) and codified them in the FY 2024 IPPS/LTCH PPS final rule (88 FR 59174 through 59175).
We did not propose any changes to these policies in the proposed rule.
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53510 through 53512) for a discussion of the previous considerations we have used to expand and update quality measures under the Hospital IQR Program. We also refer readers to the CMS National Quality Strategy that we launched in 2022, with the aims of promoting the highest quality outcomes and safest care for all individuals.
To comply with statutory requirements that the Secretary of HHS make publicly available certain quality and efficiency measures that the Secretary is considering for adoption through rulemaking under Medicare,
In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36284 through 36293), we proposed to adopt seven new measures: (1) Patient Safety Structural measure beginning with the CY 2025 reporting period/FY 2027 payment determination; (2) Age Friendly Hospital measure beginning with the CY 2025 reporting period/FY 2027 payment; (3) Catheter-Associated Urinary Tract Infection (CAUTI) Standardized Infection Ratio Stratified for Oncology Locations measure beginning with the CY 2026 reporting period/FY 2028 payment determination; (4) Central Line-Associated Bloodstream Infection (CLABSI) Standardized Infection Ratio Stratified for Oncology Locations measure beginning with the CY 2026 reporting period/FY 2028 payment determination; (5) Hospital Harm—Falls with Injury electronic clinical quality measure (eCQM) beginning with the CY 2026 reporting period/FY 2028 payment determination; (6) Hospital Harm—Postoperative Respiratory Failure eCQM beginning with the CY 2026 reporting period/FY 2028 payment determination; and (7) Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue) measure beginning with the July 1, 2023-June 30, 2025 reporting period/FY 2027 payment determination. We provide more details on these proposals in the subsequent sections of the preamble, and details on the proposed Patient Safety Structural measure are in section IX.B.1.
The U.S. population is aging rapidly, with nearly one in seven Americans at age 65 years or older in 2019.
Hospitals are increasingly faced with treating older patients who have complex medical, behavioral, and psychosocial needs that are often inadequately addressed by the current healthcare infrastructure.
The collective evidence from these age-friendly efforts demonstrates that hospitals should prioritize patient-centered care for aging patient populations with multiple chronic conditions. With CMS being the largest provider of healthcare coverage for the 65 years and older population, proposing a quality measure aimed at optimizing care for older patients, using a holistic approach to better serve the needs of this unique population, is timely. Although existing quality metrics have improved both the rate and reporting of clinical outcomes that are important to older individuals, these measures can be narrow in scope and may have limited long term effectiveness due to ceiling effects. We therefore proposed this attestation-based structural measure, the Age Friendly Hospital measure, for the Hospital IQR Program, beginning with the CY 2025 reporting period/FY 2027 payment determination in the FY 2025 IPPS/
In the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 27103 through 27109), we solicited public comments about the potential inclusion of two geriatric care measures in the Hospital IQR Program measure set. These two potential geriatric care measures focused on ensuring hospitals were committed to implementing surgical, and general hospital best practices, for geriatric populations. Public commenters were largely in support of both geriatric care measures (88 FR 59185 through 59193) and stated that measures focused on geriatric care would help a rapidly aging population with unique characteristics find the care they need. The two potential measures, Geriatric Hospital (MUC2022-112) and Geriatric Surgical (MUC2022-032), were included in the “2022 Measures Under Consideration List” (MUC List)
We note that past comments have reflected concerns regarding structural measures because they do not explicitly link to improved outcomes. This is because there is no existing validation process confirming the accuracy of hospitals' responses to these types of measures. Despite this, structural measures, over time and in select circumstances, have certain advantages over other types of measures. Structural measures provide a way to address a new topic for which no outcome measure exists, such as the Age Friendly Hospital measure, the Hospital Commitment to Health Equity measure (87 FR 49191 through 49201), and the Maternal Morbidity structural measure (86 FR 45361 through 45365). In these examples, structural measures set a new expectation for the development of evidence-based programs and processes that would support improvements in these high impact areas. In the future, these structural measures can also be linked to new outcome measures or included in the Hospital Star Ratings Program.
The Age Friendly Hospital measure assesses hospital commitment to improving care for patients 65 years or older receiving services in the hospital, operating room, or emergency department. This measure consists of five domains that address essential aspects of clinical care for older patients. Table IX.C.1 includes the five attestation domains and corresponding attestation statements.
This measure aligns with our efforts under the CMS National Quality Strategy priority area of “Equity and Engagement” that seeks to advance equity and whole-person care as well as to engage individuals and communities to become partners in their care.
The domains and attestation statements in this measure span the breadth of the clinical care pathway and, together, provide a framework for optimal care of the older adult patient. More specifically, the domains focus on patient goals, medication management, frailty, social vulnerability, and leadership/governance commitment. This structural measure identifies the best evidence-based practices for hospital leadership, operations, and high reliability across each domain, particularly with the unavailability of more direct metrics related to each of the domains. In addition, this measure complements current patient safety reporting, supports hospitals in improving the quality of care for a complex patient population, and furthers our commitment to advancing health equity among the diverse older communities served by participants in CMS programs.
We refer readers to the proposed Patient Safety Structural measure in section IX.B.1.c. of the preamble of this final rule for details on the PRMR process including the voting procedures used to reach consensus on measure recommendations. The PRMR Hospital Committee met on January 18-19, 2024, to review measures included by the Secretary on a publicly available “2023 Measures Under Consideration List” (MUC List),
The PRMR Hospital Recommendation Group for the Age Friendly Hospital measure did not reach consensus and did not recommend including this measure in the Hospital IQR Program either with or without conditions. Eleven of the sixteen members of the group recommended adopting the
Several PRMR Hospital Committee members applauded the intent of this measure and the push toward transparency and consistency in reporting, noting these types of measures signal to hospital leadership and governance the importance of prioritizing initiatives and implementing frameworks outlined in the measure, highlighting how important this specific measure is for prioritizing improving care for older patients.
The measure has not been submitted for CBE endorsement at this time. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36307 through 36314), we proposed adoption of this measure into the Hospital IQR Program despite the measure not yet being endorsed by the CBE. Although section 1886(b)(3)(B)(viii)(IX)(aa) of the Act requires that measures specified by the Secretary for use in the Hospital IQR Program be endorsed by the entity with a contract under section 1890(a) of the Act, section 1886(b)(3)(B)(viii)(IX)(bb) of the Act states that in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary. During measure endorsement, the CBE considers whether a measure “is evidence-based, reliable, valid, verifiable, relevant to enhanced health outcomes, actionable at the caregiver level, feasible to collect and report, and responsive to variations in patient characteristics, such as health status, language capabilities, race or ethnicity, and income level; and is consistent across types of health care providers, including hospitals and physicians (section 1890(b)(2)(A) and (B) of the Act).”
We reviewed CBE-endorsed measures and were unable to identify any other CBE-endorsed measures on this topic. We are adopting this measure pursuant to section 1886(b)(3)(B)(viii)(IX)(bb) of the Act. As previously discussed, we have determined this an appropriate topic for a measure to be adopted absent endorsement because this measure is important for establishing a foundation for future health outcome measures and that this measure provides a framework of best practices for delivering care to older adults with multiple chronic conditions from a hospital and health system perspective.
The Age Friendly Hospital measure consists of five domains, each representing a separate domain commitment. Hospitals or health systems would need to evaluate and determine whether they can affirmatively attest to each domain, some of which have multiple attestation statements, for each hospital reported under their CMS certification number (CCN). For a hospital or a health system to affirmatively attest to a domain, and receive a point for that domain, a hospital or health systems would evaluate and determine whether it engaged in each of the elements that comprise the domain (see Table IX.C.1), for a total of five possible points (one point per domain).
A hospital or health system would not be able to receive partial points for a domain. For example, for Domain 3 (“Frailty Screening and Intervention”), a hospital or health system would evaluate and determine whether their hospital or health system's processes meet each of the corresponding attestation statements described in (A), (B), (C), and (D) (see Table IX.C.1). If the hospital or health system's processes meet all four attestation statements in Domain 3, the hospital or health system would receive a point for that domain. However, if the hospital could only affirmatively attest to (B) and (C), for example, then no points could be earned for Domain 3. We note that because the Hospital IQR Program is a pay-for-reporting program, hospitals would receive credit for the reporting of their measure results regardless of their responses to the attestation questions.
For more details on the measure specifications for the Hospital IQR Program, we refer readers to the Web-Based Data Collection tab under the Hospital IQR Program measures page on QualityNet at:
Hospitals and/or health systems are required to submit information for structural measures once annually using a CMS-approved web-based data collection tool available within the Hospital Quality Reporting (HQR) System. In the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36307 through 36314) we proposed the mandatory reporting of this measure beginning with the CY 2025 reporting period/FY 2027 payment determination. We refer readers to section IX.C.9. of the preamble of this final rule for more
We refer readers to section IX.C.9. of this final rule for our previously finalized structural measure reporting and submission requirements.
We invited public comment on our proposal to adopt the Age Friendly Hospital measure beginning with CY 2025 reporting period/FY 2027 payment determination.
We also refer readers to sections IX.C.5.a.(1)., IX.C.5.a.(2)., and IX.C.5.a.(4). of the preamble of this final rule for more details on the guidelines and literature which informed this measure, the CBE input provided, and the significant public comment support expressed from experts, patients, and caregivers.
Additionally, we continually look for methods to minimize provider reporting burden and do not find that this measure is duplicative of other efforts or currently available measures in the Hospital IQR Program.
We thank commenters for their support regarding the inclusion of the Age Friendly Hospital measure and who recommended implementing it sooner than proposed. While we are not finalizing adoption of this measure before the CY 2025 reporting period/FY 2027 payment determination, this does not preclude hospitals from implementing the practices described in the measure sooner if not doing so already.
We acknowledge commenter concerns about public reporting of their score on this measure through Care Compare if a hospital is unable to attest “yes” to a domain. While we recognize that a hospital's performance on the measure may impact the hospital's reputation through public reporting, this reputational impact is a means of encouraging the adoption of frameworks centered around providing high quality care to vulnerable elderly patients with multiple medical, psychological, and social needs at highest risk for adverse events after major health events requiring hospitalization. Further, we believe public reporting of healthcare quality data promotes transparency in the delivery of care by increasing the involvement of leadership in healthcare quality improvement, creating a sense of accountability, helping to focus organizational priorities, and providing a means of delivering important healthcare information to consumers.
We note that the Hospital IQR Program is a pay-for-reporting program, and hospitals' payments are not based on their performance on quality measures. Hospitals would receive credit for successful reporting of their measure results regardless of whether they positively or negatively attest to each statement within a domain. We refer readers to section IX.C.5.a.(6). of this final rule for information on the submission and reporting requirements for this measure. We thank the commenter for their recommendation to include providing referrals to caregivers in element (b) in Domain 4 and will share all feedback with the measure steward.
Regarding commenters concerns about the specificity of this measure and concerns about meaningful improvements, this measure has been developed to provide insightful information to healthcare providers and the public on the number of hospitals currently participating in age friendly care including social vulnerability screening for older adults, ensuring consistent quality care of older patients by ensuring hospitals have an age friendly champion or interprofessional committee, frailty screening for geriatric issues, eliciting patient health related care goals and treatment preferences, and responsible medication management. We also refer readers to sections IX.C.5.a.(1)., IX.C.5.a.(2)., and IX.C.5.a.(4). of the preamble of this final rule for more details on the guidelines and literature which informed this measure, the CBE input provided, and significant public comment support expressed from experts, patients and caregivers.
Regarding the request for data specifications and clarification on required elements for frailty screenings, medication management, malnutrition, and cognitive impairment, and clarity of scope for those requirements, we remind readers that the Hospital IQR Program is a pay-for-reporting program, and therefore, there are no set performance targets. We refer readers to the measure specifications at
We wish to clarify that we will provide educational and training materials to help with consistent implementation which will be conveyed through routine communication channels to hospitals, vendors, and QIOs, including, but not limited to, issuing memos, emails, and notices on the QualityNet website. Additionally, we will provide education and outreach materials to support hospitals in identifying additional evidence-based practices they could adopt and in documenting that they have adopted those practices. For more details on measure specifications, we also refer readers to the Web-Based Data Collection tab under the IQR Measures
We reviewed CBE-endorsed measures and were unable to identify any other CBE-endorsed measures on this topic. We are adopting this measure pursuant to section 1886(b)(3)(B)(viii)(IX)(bb) of the Act. As previously discussed, we have determined this an appropriate topic for a measure to be adopted absent endorsement because this measure is important for establishing a foundation for future health outcome measures and that this measure provides a framework of best practices for delivering care to older adults with multiple chronic conditions from a hospital and health system perspective.
We acknowledge commenters concerns regarding the PRMR Hospital Committee not reaching consensus. We note that this measure has been developed to provide insightful information to healthcare providers and the public on the number of hospitals currently participating in age friendly care including social vulnerability screening for older adults, ensuring consistent quality care of older patients through ensuring hospitals have an age friendly champion or interprofessional committee, frailty screening for geriatric issues, eliciting patient health related care goals and treatment preferences, and responsible medication management. We agree that the potential for unintended consequences exists and note that we consistently monitor all the measures in the Hospital IQR Program for unintended consequences. Furthermore, we note that under our previously finalized measure removal policy, codified at 42 CFR 412.140(g)(2) and (3) (88 FR 59144), if we were to identify unintended consequences related to this measure we would consider it for removal. We also refer readers to sections IX.C.5.a.(1)., IX.C.5.a.(2)., and IX.C.5.a.(4). of the preamble of this final rule for more details on the guidelines and literature which informed this measure, the CBE input provided, and significant public comment support expressed from experts, patients and caregivers.
After consideration of the public comments we received, we are finalizing the Age Friendly Hospital measure as proposed beginning with the CY 2025 reporting period/FY 2027 payment determination.
Healthcare-associated infections (HAIs) are a major cause of illness and death in hospitals, posing a significant threat to patient safety. One in 31 hospital patients in the U.S. have an HAI at any given time, totaling about 687,000 cases per year.
Given the high risk to patient safety, we previously adopted the National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) and NHSN Central Line-Associated Bloodstream Infection (CLABSI) measures in various quality reporting programs that measure the annual risk-adjusted standardized infection ratio (SIR) among adult inpatients. The measures were originally introduced in the Hospital IQR Program in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50200 through 50202) and the FY 2012 IPPS/LTCH PPS final rule (76 FR 51617 through 51618). In the FY 2014 IPPS/LTCH PPS final rule, the CAUTI and CLABSI measures were then adopted in the Hospital-Acquired Condition (HAC) Reduction Program (78 FR 50717) and the Hospital Value-Based Purchasing (VBP) Program (78 FR 50681 through 50687).
Patients with cancer are especially vulnerable to developing HAIs. Chemotherapy, a common treatment for patients with cancer, can weaken patients' immune systems and leave them vulnerable to opportunistic infections.
While many oncology services have transitioned to outpatient settings, acute care hospitals continue to specialize in the treatment of certain types of patients with cancer, for example, patients who have received a hematopoietic stem cell transplant and patients who have febrile neutropenia.
The Biden-Harris administration's Cancer Moonshot Program has put a renewed focus on improving outcomes for patients with cancer.
Urinary tract infections (UTIs) are a common type of HAI and come with many risks to patients. About 12-16 percent of adult patients in inpatient hospitals will have a urinary catheter at some point during their hospital stay, and almost all healthcare associated UTIs are introduced through instrumentation in the urinary tract.
CAUTIs can lead to many negative consequences for patients including cystitis, pyelonephritis, gram-negative bacteremia, endocarditis, vertebral osteomyelitis, septic arthritis, endophthalmitis, and meningitis.
However, CAUTIs can often be prevented by following guidelines for
In another study, nurses at a large urban teaching hospital implemented CAUTI prevention protocols, including removing catheters from patients no longer needing them and finding alternatives to indwelling urinary catheters. As a result of this initiative, catheter days decreased by 11.8 percent and CAUTI rates declined by 38 percent.
To encourage the use of best practices for urinary catheters and reduce the incidence of CAUTIs, we previously adopted the CAUTI measure (CBE #0138) in several quality reporting and value-based payment programs, including the Hospital IQR, Hospital VBP, and HAC Reduction Programs (76 FR 51617 through 51618, 78 FR 50681 through 50687, and 78 FR 50717, respectively), as discussed earlier. We adopted the measure as part of the HHS Action Plan to Prevent HAIs, as this measure was included among the prevention metrics established in the plan which is available at:
As noted earlier, the CAUTI measure used in the HAC Reduction and Hospital VBP Programs does not include inpatients in on