Federal Register, Volume 75 Issue 226 (Wednesday, November 24, 2010)

[Federal Register Volume 75, Number 226 (Wednesday, November 24, 2010)]
[Rules and Regulations]
[Pages 71799-72580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27926]

[[Page 71799]]

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

Part II

Department of Health and Human Services

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

Center for Medicare & Medicaid Services

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

42 CFR Parts 410, 411, 412, et al.

Medicare Program: Hospital Outpatient Prospective Payment System and CY
2011 Payment Rates; Ambulatory Surgical Center Payment System and CY
2011 Payment Rates; Payments to Hospitals for Graduate Medical
Education Costs; Physician Self-Referral Rules and Related Changes to
Provider Agreement Regulations; Payment for Certified Registered Nurse
Anesthetist Services Furnished in Rural Hospitals and Critical Access
Hospitals; Final Rule

Federal Register / Vol. 75 , No. 226 / Wednesday, November 24, 2010 /
Rules and Regulations

[[Page 71800]]

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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 411, 412, 413, 416, 419, and 489

[CMS-1504-FC and CMS-1498-IFC2]
RIN 0938-AP82 and RIN 0938-AP80

Medicare Program: Hospital Outpatient Prospective Payment System
and CY 2011 Payment Rates; Ambulatory Surgical Center Payment System
and CY 2011 Payment Rates; Payments to Hospitals for Graduate Medical
Education Costs; Physician Self-Referral Rules and Related Changes to
Provider Agreement Regulations; Payment for Certified Registered Nurse
Anesthetist Services Furnished in Rural Hospitals and Critical Access
Hospitals

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

ACTION: Final rule with comment period; final rules; and interim final
rule with comment period.

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

SUMMARY: The final rule with comment period in this document revises
the Medicare hospital outpatient prospective payment system (OPPS) to
implement applicable statutory requirements and changes arising from
our continuing experience with this system and to implement certain
provisions of the Patient Protection and Affordable Care Act, as
amended by the Health Care and Education Reconciliation Act of 2010
(Affordable Care Act). In this final rule with comment period, we
describe the changes to the amounts and factors used to determine the
payment rates for Medicare hospital outpatient services paid under the
prospective payment system. These changes are applicable to services
furnished on or after January 1, 2011.
In addition, this final rule with comment period updates the
revised Medicare ambulatory surgical center (ASC) payment system to
implement applicable statutory requirements and changes arising from
our continuing experience with this system and to implement certain
provisions of the Affordable Care Act. In this final rule with comment
period, we set forth the applicable relative payment weights and
amounts for services furnished in ASCs, specific HCPCS codes to which
these changes apply, and other pertinent ratesetting information for
the CY 2011 ASC payment system. These changes are applicable to
services furnished on or after January 1, 2011.
In this document, we also are including two final rules that
implement provisions of the Affordable Care Act relating to payments to
hospitals for direct graduate medical education (GME) and indirect
medical education (IME) costs; and new limitations on certain physician
referrals to hospitals in which they have an ownership or investment
interest.
In the interim final rule with comment period that is included in
this document, we are changing the effective date for otherwise
eligible hospitals and critical access hospitals that have been
reclassified from urban to rural under section 1886(d)(8)(E) of the
Social Security Act and 42 CFR 412.103 to receive reasonable cost
payments for anesthesia services and related care furnished by
nonphysician anesthetists from cost reporting periods beginning on or
after October 1, 2010, to December 2, 2010.

DATES: Effective Dates: The provisions of these rules are effective
January 1, 2011, except for the amendment to 42 CFR
412.113(c)(2)(i)(A), which is effective on December 2, 2010.
Applicability Dates: (1) The amendments to 42 CFR
412.105(f)(1)(ii)(A), (B), (C), and (D) are applicable retroactive to
January 1, 1983; (2) the amendment to 42 CFR 412.105(f)(1)(ii)(E) is
applicable retroactive to July 1, 2010; (3) the amendments to 42 CFR
412.105(f)(1)(iii)(C) and (D) are applicable retroactive to January 1,
1983; (4) the amendment to 42 CFR 413.75(b) is applicable retroactive
to July 1, 2009; (5) the amendment to 42 CFR 413.78(f)(1) is applicable
retroactive to July 1, 2009; (6) the amendment to 42 CFR 413.78(g) is
applicable retroactive to July 1, 2010; and (7) the amendment to 42 CFR
413.78(h) is applicable retroactive to January 1, 1983. In accordance
with sections 1871(e)(1)(A)(i) and (e)(1)(A)(ii) of the Social Security
Act, the Secretary has determined that the retroactive application of
the specified regulatory amendments is necessary to comply with the
statute and that failure to apply these changes retroactively would be
contrary to public interest.
Comment Period: To be assured consideration, comments on the
payment classifications assigned to HCPCS codes identified in Addenda
B, AA, and BB to the final rule with comment period with the ``NI''
comment indicator and on other areas specified throughout the final
rule with comment period, must be received at one of the addresses
provided in the ADDRESSES section no later than 5 p.m. EST on January
3, 2011.
To be assured consideration, comments on the interim final rule
with comment period (under section XXIII. of the preamble and the
amendment to 42 CFR 412.113(c)(2)(i)(A)) relating to reasonable cost
payments to otherwise eligible hospitals and critical access hospitals
that have reclassified from urban to rural for anesthesia services and
related care furnished by nonphysician anesthetists must be received at
one of the addresses provided in the ADDRESSES section no later than 5
p.m. EST on January 3, 2011.
Application Deadline--New Class of New Technology Intraocular
Lenses: Requests for review of applications for a new class of new
technology intraocular lenses must be received by 5 p.m. EST on March
5, 2011.

ADDRESSES: In commenting, please refer to file code CMS-1504-FC for the
provisions of the OPPS/ASC final rule with comment period, and to CMS-
1498-IFC2 for the interim final rule with comment period. Because of
staff and resource limitations, we cannot accept comments by facsimile
(FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions under
the ``More Search Options'' tab.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1504-FC or CMS-1498-IFC2, as
applicable, P.O. Box 8013, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1504-FC or CMS-
1498-IFC2, as applicable, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and

[[Page 71801]]

Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue, SW., Washington, DC 20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call the telephone number (410) 786-7195 in advance to schedule
your arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Gift Tee, (410) 786-9316, Hospital
outpatient prospective payment issues.
Paula Smith, (410) 786-0378, Ambulatory surgical center issues.
Michele Franklin, (410) 786-4533, and Jana Lindquist, (410) 786-
4533, Partial hospitalization and community mental health center
issues.
James Poyer, (410) 786-2261, Reporting of quality data issues.
Tzvi Hefter, (410) 786-4487 and Ing-Jye Cheng, (410) 786-4548,
Direct graduate medical education and indirect medical education
payments issues.
Jacqueline Proctor, (410) 786-8852, Physician ownership and
investment in hospitals issues.
Marc Hartstein, (410) 786-4539, Pass-through payments for certified
registered nurse anesthetists services furnished in rural hospitals and
critical access hospitals.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following Web site as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, MD 21244, on Monday through Friday of each week from 8:30
a.m. to 4 p.m. EST. To schedule an appointment to view public comments,
phone 1-800-743-3951.

Electronic Access

This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. Free public access is available on a Wide
Area Information Server (WAIS) through the Internet and via
asynchronous dial-in. Internet users can access the database by using
the World Wide Web; the Superintendent of Documents' home page address
is http://www.gpoaccess.gov/index.html, by using local WAIS client
software, or by telnet to swais.access.gpo.gov, then login as guest (no
password required). Dial-in users should use communications software
and modem to call (202) 512-1661; type swais, then login as guest (no
password required).

Alphabetical List of Acronyms Appearing in This Federal Register
Document

ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
AMP Average manufacturer price
AOA American Osteopathic Association
APC Ambulatory payment classification
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
AWV Annual Wellness Visit
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Public Law 106-554
CAH Critical access hospital
CAP Competitive Acquisition Program
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CERT Comprehensive Error Rate Testing
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Conditions of Participation
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition,
2009, copyrighted by the American Medical Association
CRNA Certified registered nurse anesthetist
CY Calendar year
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DMERC Durable medical equipment regional carrier
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Public Law 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FTE Full-time equivalent
FY Federal fiscal year
GAO Government Accountability Office
GME [Direct] Graduate medical education
HCERA Health Care and Education Reconciliation Act of 2010, Public
Law 111-152
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Revision,
Procedure Coding System
IDE Investigational device exemption
IHS Indian Health Service
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPE Initial preventive physical examination
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractor
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MIEA-TRHCA Medicare Improvements and Extension Act under Division B,
Title I of the Tax Relief Health Care Act of 2006, Public Law 109-
432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275

[[Page 71802]]

MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public
Law 110-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPACA Patient Protection and Affordable Care Act of 2010, Public Law
111-148
PPI Producer Price Index
PPPS Personalized preventive plan services
PPS Prospective payment system
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
QAPI Quality Assessment and Performance Improvement
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
[Program]
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
USPSTF United States Preventive Services Task Force
WAC Wholesale acquisition cost

In this document, we address two payment systems under the Medicare
program: The hospital outpatient prospective payment system (OPPS) and
the revised ambulatory surgical center (ASC) payment system. In
addition, we address provisions of the Affordable Care Act, relating to
payments to hospitals for direct graduate medical education (GME) and
indirect medical education (IME) costs. We also address provisions
relating to new limitations on certain physician referrals to hospitals
in which they have an ownership or investment interest and making
related changes to the provider agreement regulations. The provisions
relating to the OPPS are included in sections I. through XIV. and XVI.
through XIX. of this final rule with comment period and in Addenda A,
B, C (Addendum C is available on the Internet only; we refer readers to
section XVIII.A. of this final rule with comment period), D1, D2, E, L,
and M to this final rule with comment period. The provisions related to
the revised ASC payment system are included in sections XV., XVI.
through XIX. of this final rule with comment period and in Addenda AA,
BB, DD1, DD2, and EE to this final rule with comment period. (Addendum
EE is available on the Internet only; we refer readers to section
XVII.B. of this final rule with comment period.) The provisions related
to payments to hospitals for direct GME and IME costs are included in
the final rule in section XXI. of this document. The provisions
relating to the new limitations on certain physician referrals to
hospitals in which they have an ownership or investment interest and
related changes to the provider agreement regulations are included in
the final rule in section XXII. of this document. The provision
relating to a change in the effective date for otherwise eligible rural
hospitals and critical access hospitals (CAHs) that have reclassified
from urban to rural areas to receive reasonable cost payments for
anesthesia services and related care furnished by nonphysician
anesthetists is included in the interim final rule with comment period
in section XXIII. of this document.

Table of Contents

I. Background and Summary of the CY 2011 OPPS/ASC Proposed and Final
Rules
A. Legislative and Regulatory Authority for the Hospital
Outpatient Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. The Affordable Care Act
E. Advisory Panel on Ambulatory Payment Classification (APC)
Groups
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
F. Background and Summary of the CY 2011 OPPS/ASC Proposed Rule
1. Updates Affecting OPPS Payments
2. OPPS Ambulatory Payment Classification (APC) Group Policies
3. OPPS Payment for Devices
4. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
5. Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
6. OPPS Payment for Brachytherapy Sources
7. OPPS Payment for Drug Administration Services
8. OPPS Payment for Hospital Outpatient Visits
9. Payment for Partial Hospitalization Services
10. Procedures That Would Be Paid Only as Inpatient Procedures
11. OPPS Nonrecurring Technical and Policy Changes and
Clarifications
12. OPPS Payment Status and Comment Indicators
13. OPPS Policy and Payment Recommendations
14. Updates to the Ambulatory Surgical Center (ASC) Payment
System
15. Reporting Quality Data for Annual Payment Rate Updates
16. Changes Relating to Payments to Hospitals for GME and IME
Costs
17. Changes to Whole Hospital and Rural Provider Exceptions to
the Physician Self-Referral Prohibition and Related Changes to
Provider Agreement Regulations
18. Regulatory Impact Analysis
G. Public Comments Received in Response to the August 3, 2010
OPPS/ASC Proposed Rule
H. Public Comments Received on the November 20, 2009 OPPS/ASC
Final Rule with Comment Period
I. Interim Final Rule on Certified Registered Nurse Anesthetist
(CRNA) Services Furnished in Rural Hospitals and Critical Access
Hospitals
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
b. Use of Single and Multiple Procedure Claims
c. Calculation of Cost to Charge Ratios (CCRs)
2. Data Development Process and Calculation of Median Costs
a. Claims Preparation
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure
Claims
(1) Splitting Claims
(2) Creation of ``Pseudo'' Single Procedure Claims
c. Completion of Claim Records and Median Cost Calculations
d. Calculation of Single Procedure APC Criteria-Based Median
Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Single Allergy Tests (APCs 0370 and 0381)
(4) Hyperbaric Oxygen Therapy (APC 0659)
(5) Payment for Ancillary Outpatient Services When Patient
Expires (APC 0375)
(6) Pulmonary Rehabilitation (APC 0102)
(7) Endovascular Revascularization of the Lower Extremity (APCs
0083, 0229, and 0319)
(8) Non-Congenital Cardiac Catheterization (APC 0080)
(9) Cranial Neurostimulator and Electrodes (APCs 0318)
(10) Cardiac and Intensive Cardiac Rehabilitation (APC 0095)
e. Calculation of Composite APC Criteria-Based Median Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002
and 8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
(APC 8001)
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite
APC (APC 8000)
(4) Mental Health Services Composite APC (APC 0034)
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006,
8007, and 8008)
3. Changes to Packaged Services
a. Background
b. Packaging Issues

[[Page 71803]]

(1) CMS Presentation of Findings Regarding Expanded Packaging at
the February 2010 APC Panel
(2) Packaging Recommendations of the APC Panel at Its February
2010 Meeting
(3) Packaging Services Addressed by the August 2010 APC Panel
Recommendations and Other Issues Raised in Public Comments
(4) Other Service-Specific Packaging Issues
4. Calculation of OPPS Scaled Payment Weights
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default CCRs
E. OPPS Payment to Certain Rural and Other Hospitals
1. Hold Harmless Transitional Payment Changes Made by Public Law
110-275 (MIPPA)
2. Adjustment for Rural SCHs Implemented in CY 2006 Related to
Public Law 108-173 (MMA)
F. OPPS Payments to Certain Cancer Hospitals Described by
Section 1886(d)(1)(B)(v) of the Act
1. Background
2. Study of Cancer Hospital Costs Relative to Other Hospitals
3. Adjustment for Certain Cancer Hospitals
G. Hospital Outpatient Outlier Payments
1. Background
2. Proposed Outlier Calculation
3. Final Outlier Calculation
4. Outlier Reconciliation
H. Calculation of an Adjusted Medicare Payment From the National
Unadjusted Medicare Payment
I. Beneficiary Copayments
1. Background
2. OPPS Copayment Policy
3. Calculation of an Adjusted Copayment Amount for an APC Group
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. OPPS Treatment of New CPT and Level II HCPCS Codes
1. Treatment of New Level II HCPCS Codes and Category I CPT
Vaccine Codes and Category III CPT Codes for Which We Solicited
Public Comment in the Calendar Year 2010 Proposed Rule
2. Process for New Level II HCPCS Codes and Category I and
Category III CPT Codes for Which We Are Soliciting Public Comments
on This Calendar Year 2011 OPPS/ASC Final Rule With Comment Period
3. Temporary HCPCS Codes for 2010-2011 Seasonal Influenza
Vaccines
B. OPPS Changes--Variations Within APCs
1. Background
2. Application of the 2 Times Rule
3. Exceptions to the 2 Times Rule
C. New Technology APCs
1. Background
2. Movement of Procedures From New Technology APCs to Clinical
APCs
D. OPPS APC-Specific Policies
1. Cardiovascular Services
a. Cardiovascular Telemetry (APC 0209)
b. Myocardial Position Emission Tomography (PET) Imaging (APC
0307)
c. Cardiovascular Computed Tomography (CCT) (APC 0340 and 0383)
d. Multifunction Cardiogram (APC 0340)
e. Unlisted Vascular Surgery Procedure (APC 0624)
f. Implantable Loop Recorder Monitoring (APC 0691)
2. Gastrointestinal (GI) Services: Upper GI Endoscopy (APC 0141,
0384, and 0422)
3. Genitourinary Services
a. Radiofrequency Remodeling of Bladder Neck (APC 0165)
b. Percutaneous Renal Cryoablation (APC 0423)
4. Nervous System Services
a. Pain-Related Procedures (APCs 0203, 0204, 0206, 0207, and
0388)
b. Revision Removal of Neurotransmitter Electrodes (APC 0687)
5. Radiation Therapy Services
a. Stereotactic Radiosurgery (SRS) Treatment Delivery Services
(APCs 0065, 0066, 0067, and 0127)
b. Proton Beam Therapy (APCs 0664 and 0667)
c. Device Construction for Intensity Modulated Radiation Therapy
(APC 303)
d. High Dose Rate Brachytherapy (APC 0313)
e. Electronic Brachytherapy (APC 0313)
f. Tumor Imaging (APCs 0406 and 0414)
6. Other Services
a. Skin Repair (APCs 0134 and 0135)
b. Insertion of Anterior Segment Aqueous Drainage Device (APCs
0234, 0255 and 0673)
c. Group Psychotherapy (APCs 0322, 0323, 0324, and 0325)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
2. Provisions for Reducing Transitional Pass-Through Payments To
Offset Costs Packaged Into APC Groups
a. Background
b. Proposed and Final Calendar Year 2011 Policy
B. Adjustment to OPPS Payment for No Cost/Full Credit and
Partial Credit Devices
1. Background
2. APCs and Devices Subject to the Adjustment Policy
V. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Drugs and Biologicals With Expiring Pass-Through Status in CY
2010
3. Drugs, Biologicals, and Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY 2011
4. Provision for Reducing Transitional Pass-Through Payments for
Diagnostic Radiopharmaceuticals and Contrast Agents To Offset Costs
Packaged Into APC Groups
a. Background
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
c. Payment Offset Policy for Contrast Agents
B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Status
1. Background
2. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
b. Cost Threshold for Packaging of Payment for HCPCS Codes That
Describe Certain Drugs, Nonimplantable Biologicals, and Therapeutic
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
c. Packaging Determination for HCPCS Codes That Describe the
Same Drug or Biological But Different Dosages
d. Packaging of Payment for Diagnostic Radiopharmaceuticals,
Contrast Agents, and Implantable Biologicals (``Policy-Packaged''
Drugs and Devices)
3. Payment for Drugs and Biologicals Without Pass-Through Status
That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and
Other Separately Payable and Packaged Drugs and Biologicals
b. Payment Policy
c. Payment Policy for Therapeutic Radiopharmaceuticals
4. Payment for Blood Clotting Factors
5. Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital
Claims Data
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Estimate of Pass-Through Spending
VII. OPPS Payment for Brachytherapy Sources
A. Background
B. OPPS Payment Policy
VIII. OPPS Payment for Drug Administration Services
A. Background
B. Coding and Payment for Drug Administration Services
IX. OPPS Payment for Hospital Outpatient Visits
A. Background
B. Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
2. Emergency Department Visits
3. Visit Reporting Guidelines
X. Payment for Partial Hospitalization Services
A. Background
B. PHP APC Update for CY 2011
C. Changes to Regulations To Incorporate Provisions of HCERA
2010
D. Separate Threshold for Outlier Payments to CMHCs
XI. Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
B. Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy Changes and
Clarifications
A. Physician Supervision
1. Background
a. Outpatient Therapeutic Services
b. Outpatient Diagnostic Services
2. Issues Regarding the Supervision of Hospital Outpatient
Services Raised by Hospitals and Other Stakeholders

[[Page 71804]]

3. Policies for Supervision of Outpatient Therapeutic Services
in Hospital and CAHs
4. Supervision of Hospital Outpatient Diagnostic Services
B. Payment for Preventive Services
1. Definition of ``Preventive Services''
2. Coinsurance and Deductible for Preventive Services
3. Extension of Waiver of Part B Deductible to Services
Furnished in Connection With or in Relation to a Colorectal Cancer
Screening Test That Becomes Diagnostic or Therapeutic
C. Payment for Pulmonary Rehabilitation, Cardiac Rehabilitation,
and Intensive Cardiac Rehabilitation Services Furnished to Hospital
Outpatients
D. Expansion of Multiple Procedure Payment Reduction Under the
Medicare Physician Fee Schedule (MPFS) to Therapy Services
XIII. OPPS Payment Status and Comment Indicators
A. OPPS Payment Status Indicator Definitions
1. Payment Status Indicators To Designate Services That Are Paid
Under the OPPS
2. Payment Status Indicators To Designate Services That Are Paid
Under a Payment System Other Than the OPPS
3. Payment Status Indicators To Designate Services That Are Not
Recognized Under the OPPS But That May Be Recognized by Other
Institutional Providers
4. Payment Status Indicators To Designate Services That Are Not
Payable by Medicare on Outpatient Claims
B. Comment Indicator Definitions
XIV. OPPS Policy and Payment Recommendations
A. MedPAC Recommendations
B. APC Panel Recommendations
C. OIG Recommendations
XV. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
1. Legislative Authority for the ASC Payment System
2. Prior Rulemaking
3. Policies Governing Changes to the Lists of Codes and Payment
Rates for ASC Covered Surgical Procedures and Covered Ancillary
Services
B. Treatment of New Codes
1. Process for Recognizing New Category I and Category III CPT
Codes and Level II HCPCS Codes
2. Treatment of New Level II HCPCS Codes and Category III CPT
Codes Implemented in April and July 2010 for Which We Solicited
Public Comments in Calendar Year 2011 OPPS/ASC Proposed Rule
3. Process for New Level II HCPCS Codes and Category I and
Category III CPT Codes for Which We Are Soliciting Public Comments
in This Calendar Year 2011 OPPS/ASC Final Rule With Comment Period
C. Update to the List of ASC Covered Surgical Procedures and
Covered Ancillary Services
1. Covered Surgical Procedures
a. Additions to the List of ASC Covered Surgical Procedures
b. Covered Surgical Procedures Designated as Office-Based
(1) Background
(2) Changes to Covered Surgical Procedures Designated as Office-
Based for CY 2011
c. ASC Covered Surgical Procedures Designated as Device-
Intensive
(1) Background
(2) Changes to List of Covered Surgical Procedures Designated as
Device-Intensive for CY 2011
d. ASC Treatment of Surgical Procedures Removed From the OPPS
Inpatient List for CY 2011
2. Covered Ancillary Services
D. ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services
1. Payment for Covered Surgical Procedures
a. Background
b. Update to ASC Covered Surgical Procedure Payment Rates for CY
2011
c. Adjustment to ASC Payments for No Cost/Full Credit and
Partial Credit Devices
d. Waiver of Coinsurance and Deductible for Certain Preventive
Services
2. Payment for Covered Ancillary Services
a. Background
b. Payment for Covered Ancillary Services for CY 2011
E. New Technology Intraocular Lenses (NTIOLs)
1. Background
2. NTIOL Application Process for Payment Adjustment
3. Classes of NTIOLs Approved and New Requests for Payment
Adjustment
a. Background
b. Request To Establish New NTIOL Class for CY 2011
4. Payment Adjustment
5. ASC Payment for Insertion of IOLs
6. Announcement of Calendar Year 2011 Deadline for Submitting
Request for CMS Review of Appropriateness of ASC Payment for
Insertion of an NTOL Following Cataract Surgery
F. ASC Payment and Comment Indicators
1. Background
2. ASC Payment and Comment Indicators
G. ASC Policy and Payment Recommendations
H. Calculation of the ASC Conversion Factor and the ASC Payment
Rates
1. Background
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2011 and
Future Years
b. Updating the ASC Conversion Factor
3. Display of Calendar Year 2011 ASC Payment Rates
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Overview
2. Hospital Outpatient Quality Data Reporting under Section
109(a) of MIEA-TRHCA
3. ASC Quality Data Reporting Under Section 109(b) of MIEA-TRHCA
4. HOP QDRP Quality Measures for the CY 2009 Payment
Determination
5. HOP QDRP Quality Measures for the CY 2010 Payment
Determination
6. HOP QDRP Quality Measures, Technical Specification Updates,
and Data Publication for the CY 2011 Payment Determination
a. Quality Measures
b. Maintenance of Technical Specifications for Quality Measures
c. Publication of HOP QDRP Data
B. Expansion of HOP QDRP Quality Measures for the CY 2012, CY
2013, and CY 2014 Payment Determinations
1. Considerations in Expanding and Updating Quality Measures
Under the HOP QRDP
2. Retirement of HOP QDRP Quality Measures
3. HOP QDRP Quality Measures for the CY 2012 Payment
Determination
a. Retention of Existing HOP QDRP Measures for the CY 2012
Payment Determination
b. New Structural Measure for CY 2012 Payment Determination
c. New Claims-Based Measures for CY 2012 Payment Determination
d. New Chart-Abstracted Measures for CY 2012 Payment
Determination
4. HOP QDRP Quality Measures for the CY 2013 Payment
Determination
a. Retention of CY 2012 HOP QDRP Measures for the CY 2013
Payment Determination
b. New Structural Measure for the CY 2013 Payment Determination
c. New Chart-Abstracted Measures for the CY 2013 Payment
Determination
5. HOP QDRP Quality Measures for the CY 2014 Payment
Determination
a. Retention of CY 2013 HOP QDRP Measures for the CY 2014
Payment Determination
b. New Chart-Abstracted Measures for the CY 2014 Payment
Determination
6. Possible Quality Measures Under Consideration for Future
Inclusion in the HOP QDRP
C. Payment Reduction for Hospitals That Fail To Meet the HOP
QDRP Requirements for the CY 2011 Payment Update
1. Background
2. Reporting Ratio Application and Associated Adjustment Policy
for CY 2011
D. Requirements for HOPD Quality Data Reporting for CY 2012 and
Subsequent Years
1. Administrative Requirements
2. Data Collection and Submission Requirements
a. General Data Collection and Submission Requirements
b. Extraordinary Circumstance Extension or Waiver for Reporting
Quality Data
3. HOP QDRP Validation Requirements for Chart-Abstracted Data:
Data Validation Approach for CY 2012 and Subsequent Years
a. Background
b. Data Validation Requirements for CY 2012
c. Additional Data Validation Conditions Under Consideration for
CY 2013 and Subsequent Years
E. HOP QDRP Reconsideration and Appeals Procedures
F. Reporting of ASC Quality Data
G. Electronic Health Records

[[Page 71805]]

XVII. Files Available to the Public via the Internet
A. Information in Addenda Related to the CY 2011 Hospital OPPS
B. Information in Addenda Related to the CY 2011 ASC Payment
System
XVIII. Collection of Information Requirements
A. Legislative Requirements for Solicitation of Comments
B. Associated Information Collections Not Specified in
Regulatory Text
1. Hospital Outpatient Quality Data Reporting Program (HOP QDRP)
2. HOP QDRP Quality Measures for the CY 2011 and CY 2012 Payment
Determinations
3. HOP QDRP Validation Requirements
4. HOP QDRP Reconsideration and Appeals Procedures
5. Additional Topics
XIX. Response to Comments
XX. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Final Rule With Comment
Period
1. Alternatives Considered
2. Limitations of Our Analysis
3. Estimated Effects of This Final Rule With Comment Period on
Hospitals
4. Estimated Effects of This Final Rule With Comment Period on
CMHCs
5. Estimated Effects of This Final Rule With Comment Period on
Beneficiaries
6. Conclusion
7. Accounting Statement
C. Effects of ASC Payment System Changes in This Final Rule With
Comment Period
1. Alternatives Considered
2. Limitations of Our Analysis
3. Estimated Effects of This Final Rule With Comment Period on
Payments to ASCs
4. Estimated Effects of This Final Rule With Comment Period on
Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Requirements for Reporting of Quality Data for
Annual Hospital Payment Update
E. Executive Order 12866
XXI. Final Rule: Changes Relating to Payments to Hospitals for
Direct Graduate Medical Education (GME) and Indirect Medical
Education (IME) Costs
A. Background
B. Counting Resident Time in Nonprovider Settings (Section 5504
of the Affordable Care Act)
1. Background and Changes Made by the Affordable Care Act
2. Elimination of the ``All or Substantially All of the Costs
for the Training Program in the Nonhospital Setting'' Requirement
and New Cost Requirements for Hospitals
3. Revision to Regulations To Allow More Than One Hospital To
Incur the Costs of Training Programs at Nonhospital Settings, Either
Directly or Through a Third Party
4. Changes to Regulations Regarding Recordkeeping and Comparison
to a Base Year
C. Counting Resident Time for Didactic and Scholarly Activities
and Other Activities (Section 5505 of the Affordable Care Act)
1. Background and Changes Made by the Affordable Care Act
2. Definition of ``Nonprovider Setting That is Primarily Engaged
in Furnishing Patient Care''
3. Distinguishing Between Allowed ``Nonpatient Care Activities''
and Nonallowable Research Time
4. Approved Leave of Absence
D. Reductions and Increases to Hospitals' FTE Resident Caps for
GME Payment Purposes
1. General Background on Methodology for Determining the FTE
Resident Count
2. Reduction of Hospitals' FTE Resident Caps Under the
Provisions of Section 5503 of the Affordable Care Act
3. Hospitals Subject to the FTE Resident Cap Reduction
4. Exemption From FTE Resident Cap Reduction for Certain Rural
Hospitals
5. Application of Section 5503 to Hospitals That Participate in
Demonstration Projects or Voluntary Reduction Programs and Certain
Other Hospitals
6. Determining the Estimated Number of FTE Resident Slots
Available for Redistribution
7. Reference Cost Reports That Are Under Appeal
8. Determining the Reduction to a Hospital's FTE Resident Cap
a. Reference Resident Level--General
b. Audits of the Reference Cost Reporting Period
c. Medicare GME Affiliation Agreements
d. Treatment of Hospitals That Have Merged
9. Application of Section 5503 to Hospitals That File Low
Utilization Medicare Cost Reports
10. Treatment of Hospitals With Caps That Have Been Reduced or
Increased Under Section 422 of Public Law 108-173
11. Criteria for Determining Hospitals That Will Receive
Increases in Their FTE Resident Caps
12. Application Process for the Increases in Hospitals' FTE
Resident Caps
13. CMS Evaluation of Applications for Increases in FTE Resident
Caps
14. CMS Evaluation of Application for Increases in FTE Resident
Caps--Evaluation Criteria
15. Exception If Positions Are Not Redistributed by July 1, 2011
16. Application of Direct GME PRAs for Primary Care and
Nonprimary Care Residents and Conforming Changes for the IME
Multiplier
17. Other Issues Related to a Request for Increase in the FTE
Caps Under Section 5503 of the Affordable Care Act
a. Rural Hospitals or Urban Nonteaching Hospitals
b. Closed Teaching Hospitals
c. Requirements for Hospitals That Receive Additional Slots
Under Section 5503
d. No Administrative or Judicial Review
E. Preservation of Resident Cap Positions From Closed Hospitals
(Section 5506 of the Affordable Care Act)
1. Background
2. Definition of a ``Closed Hospital''
3. Priority for Hospitals in Certain Areas
4. Application Process
5. Ranking Criteria
6. Demonstrated Likelihood of Filling the Positions Within a
Certain Time Period
7. No Duplication of FTE Cap Slots
8. Other Payment Issues Regarding Hospitals That Receive
Increase in FTE Caps Based on Slots From Closed Hospitals
9. Other Comments and Responses Regarding Section 5506
10. Application--No Reopening of Settled Cost Reports
11. No Administrative or Judicial Review Under Section 5506
F. Collection of Information Requirements
G. Regulatory Impact Analysis
XXII. Final Rule: Changes to Whole Hospital and Rural Provider
Exceptions to the Physician Self-Referral Prohibition and Related
Changes to Provider Agreement Regulations
A. Background
B. Changes Made by the Affordable Care Act Relating to the Whole
Hospital and Rural Provider Exceptions to Ownership and Investment
Prohibition
C. Changes to Physician Self-Referral Regulations
1. Physician Ownership and Provider Agreement
2. Limitation on Expansion of Facility Capacity
3. Preventing Conflicts of Interest
4. Ensuring Bona Fide Investment
5. Patient Safety
6. Conversion From Ambulatory Surgery Center (ASC)
7. Publication of Information Reported
8. Enforcement
D. Related Changes to Provider Agreement Regulations
E. Conditions of Participation for Hospitals
F. Collection of Information Requirements
G. Regulatory Impact Analysis
XXIII. Interim Final Rule With Comment Period: Certified Nurse
Anesthetists (CRNAs) Services Furnished in Rural Hospitals and
Critical Access Hospitals (CAHs)
A. Background
B. Revised Policy
C. Waiver of Notice of Proposed Rulemaking and Delay in the
Effective Date
D. Response to Comments
E. Collection of Information Requirements
F. Regulatory Impact Analysis
Regulation Text
Addenda
Addendum A--Final OPPS APCs for CY 2011
Addendum AA--Final ASC Covered Surgical Procedures for CY 2011
(Including Surgical Procedures for Which Payment Is Packaged)
Addendum B--Final OPPS Payment by HCPCS Code for CY 2011
Addendum BB--Final ASC Covered Ancillary Services Integral to
Covered

[[Page 71806]]

Surgical Procedures for CY 2011 (Including Ancillary Services for
Which Payment Is Packaged)
Addendum D1--Final OPPS Payment Status Indicators for CY 2011
Addendum DD1--Final ASC Payment Indicators for CY 2011
Addendum D2--Final OPPS Comment Indicators for CY 2011
Addendum DD2--Final ASC Comment Indicators for CY 2011
Addendum E--HCPCS Codes That Will Be Paid Only as Inpatient
Procedures for CY 2011
Addendum L--Final CY 2011 OPPS Out-Migration Adjustment
Addendum M--Final HCPCS Codes for Assignment to Composite APCs for
CY 2011

I. Background and Summary of the CY 2011 OPPS/ASC Proposed and Final
Rules

A. Legislative and Regulatory Authority for the Hospital Outpatient
Prospective Payment System

When Title XVIII of the Social Security Act (the Act) was enacted,
Medicare payment for hospital outpatient services was based on
hospital-specific costs. In an effort to ensure that Medicare and its
beneficiaries pay appropriately for services and to encourage more
efficient delivery of care, the Congress mandated replacement of the
reasonable cost-based payment methodology with a prospective payment
system (PPS). The Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33)
added section 1833(t) to the Act authorizing implementation of a PPS
for hospital outpatient services. The OPPS was first implemented for
services furnished on or after August 1, 2000. Implementing regulations
for the OPPS are located at 42 CFR part 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
(BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital
outpatient prospective payment system (OPPS). The following Acts made
additional changes to the OPPS: the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. L. 106-
554); the Medicare Prescription Drug, Improvement, and Modernization
Act (MMA) of 2003 (Pub. L. 108-173); the Deficit Reduction Act (DRA) of
2005 (Pub. L. 109-171), enacted on February 8, 2006; the Medicare
Improvements and Extension Act under Division B of Title I of the Tax
Relief and Health Care Act (MIEA-TRHCA) of 2006 (Pub. L. 109-432),
enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP
Extension Act (MMSEA) of 2007 (Pub. L. 110-173), enacted on December
29, 2007; the Medicare Improvements for Patients and Providers Act
(MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15, 2008; and most
recently the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on
March 30, 2010. We refer readers to section I.D. of this final rule
with comment period for a summary of the provisions of Public Law 111-
148, as amended by Public Law 111-152, that we are implementing in this
final rule with comment period.
Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the ambulatory payment
classification (APC) group to which the service is assigned. We use the
Healthcare Common Procedure Coding System (HCPCS) codes (which include
certain Current Procedural Terminology (CPT) codes) and descriptors to
identify and group the services within each APC group. The OPPS
includes payment for most hospital outpatient services, except those
identified in section I.B. of this final rule with comment period.
Section 1833(t)(1)(B)(i) of the Act provides for payment under the OPPS
for hospital outpatient services designated by the Secretary (which
includes partial hospitalization services furnished by community mental
health centers (CMHCs)) and hospital outpatient services that are
furnished to inpatients who have exhausted their Part A benefits, or
who are otherwise not in a covered Part A stay.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, items and services within an APC group cannot be
considered comparable with respect to the use of resources if the
highest median cost (or mean cost, if elected by the Secretary) for an
item or service in the APC group is more than 2 times greater than the
lowest median cost for an item or service within the same APC group
(referred to as the ``2 times rule''). In implementing this provision,
we generally use the median cost of the item or service assigned to an
APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
data to appropriately assign them to a clinical APC group, we have
established special APC groups based on costs, which we refer to as New
Technology APCs. These New Technology APCs are designated by cost bands
which allow us to provide appropriate and consistent payment for
designated new procedures that are not yet reflected in our claims
data. Similar to pass-through payments, an assignment to a New
Technology APC is temporary; that is, we retain a service within a New
Technology APC until we acquire sufficient data to assign it to a
clinically appropriate APC group.

B. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercised the
authority granted under the statute to also exclude from the OPPS those
services that are paid under fee schedules or other payment systems.
Such excluded services include, for example, the professional services
of physicians and nonphysician practitioners paid under the Medicare
Physician Fee Schedule (MPFS); laboratory services paid under the
Clinical Diagnostic Laboratory Fee Schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD composite rate; and services and procedures that require an
inpatient stay that are paid under the hospital inpatient prospective
payment system

[[Page 71807]]

(IPPS). We set forth the services that are excluded from payment under
the OPPS in 42 CFR 419.22 of the regulations.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals and entities that are excluded from payment under the OPPS.
These excluded entities include: Maryland hospitals, but only for
services that are paid under a cost containment waiver in accordance
with section 1814(b)(3) of the Act; critical access hospitals (CAHs);
hospitals located outside of the 50 States, the District of Columbia,
and Puerto Rico; and Indian Health Service (IHS) hospitals.

C. Prior Rulemaking

On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, relative payment weights, and other adjustments that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/. The CY 2010 OPPS/ASC final rule
with comment period appears in the November 20, 2009 Federal Register
(74 FR 60316). In that final rule with comment period, we revised the
OPPS to update the payment weights and conversion factor for services
payable under the CY 2010 OPPS on the basis of claims data from January
1, 2008, through December 31, 2008, and to implement certain provisions
of Public Law 110-173 and Public Law 110-275. In addition, we responded
to public comments received on the provisions of the November 18, 2008
final rule with comment period (73 FR 68502) pertaining to the APC
assignment of HCPCS codes identified in Addendum B to that rule with
the new interim (``NI'') comment indicator, and public comments
received on the July 20, 2009 OPPS/ASC proposed rule for CY 2010 (74 FR
35232). On December 31, 2009, we issued in the Federal Register (74 FR
69502) a notice that corrected technical and typographic errors that
appeared in the CY 2010 OPPS/ASC final rule with comment period issued
on November 20, 2009. On August 3, 2010, we issued in the Federal
Register (75 FR 45700) a notice that contained further corrections of
technical errors in the CY 2010 OPPS/ASC final rule with comment period
issued in the Federal Register on November 20, 2009 (74 FR 60316), and
in the correction document for that final rule with comment period that
was issued in the Federal Register on December 31, 2009 (74 FR 69502).
On August 3, 2010, we issued in the Federal Register (75 FR 46169)
a proposed rule for the CY 2011 OPPS/ASC payment systems to implement
statutory requirements and changes arising from our continuing
experience with both systems and to implement certain provisions of the
Affordable Care Act.
On August 3, 2010, we issued a notice in the Federal Register (75
FR 45769) that contained the final wage indices, hospital
reclassifications, payment rates, impacts, and addenda for payments
made under the OPPS for CY 2010 and the final payment rates and addenda
for payments under the ASC payment system for CY 2010, that were
revised to address the provisions of the Affordable Care Act that
impacted both the CY 2010 OPPS and the ASC payment system.

D. Provisions 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)

On March 23, 2010, the Patient Protection and Affordable Care Act,
Public Law 111-148, was enacted. Following the enactment of Public Law
111-148, the Health Care and Education Reconciliation Act of 2010,
Public Law 111-152 (enacted on March 30, 2010), amended certain
provisions of Public Law 111-148. (These two public laws are
collectively known as the Affordable Care Act.) A number of the
provisions of the Affordable Care Act affect the OPPS and the ASC
payment system and the providers and suppliers addressed in this final
rule with comment period. Listed below are the provisions of the
Affordable Care Act that we proposed to implement in the CY 2011 OPPS/
ASC proposed rule and that we are finalizing in this final rule with
comment period. We note that, due to the timing of the passage of the
legislation, we were unable to address some of the provisions of the
Affordable Care Act that affected the IPPS and the LTCH PPS in the FY
2011 IPPS/LTCH PPS proposed rule published in the Federal Register on
May 4, 2010. Therefore, we also included some proposals to implement
certain provisions relating to the IPPS and LTCH PPS in the CY 2011
OPPS/ASC proposed rule and are finalizing them in this final rule. In
addition, we noted in the CY 2011 OPPS/ASC proposed rule that we had
issued or planned to issue separate documents in the Federal Register
addressing other provisions of the Affordable Care Act (75 FR 30756 and
75 FR 31118).
Section 1301 of the Affordable Care Act amended sections
1861(ff)(3))(A) and (B) of the Act to establish new additional
requirements for CMHCs applicable to items or services furnished to
Medicare beneficiaries on or after the first day of the first calendar
quarter that begins at least 12 months after the date of enactment of
Public Law 111-152 (that is, beginning April 1, 2011). The new
requirements specify that a CMHC provide at least 40 percent of its
services to individuals who are not eligible for Medicare benefits
under Title XVIII of the Act and that a partial hospitalization program
must be a distinct and organized intensive ambulatory treatment service
offering less than 24-hour daily care ``other than an individual's home
or in an inpatient or residential setting.'' This provision is
addressed in section X. of this final rule with comment period.
Section 3121(a) of the Affordable Care Act amended section
1833(t)(7)(D)(i) of the Act to extend hold harmless payment adjustments
(called transitional corridor payments or transitional outpatient
payments (TOPS)) to rural hospitals with 100 or fewer beds and that are
not sole community hospitals for covered OPD services furnished on or
after January 1, 2006 and before January 1, 2011. Section 3121(b)
amended section 1833(t)(7)(D)(i)(III) of the Act to provide that, for
SCHs, in the case of covered OPD services furnished on or after January
1, 2010, and before January 1, 2011, the hold harmless TOPS provisions
shall be applied without regard to the 100-bed limitation. These
provisions are addressed in section II.E. of this final rule with
comment period.
Section 3138 of the Affordable Care Act amended section
1833(t) of the Act to direct the Secretary to conduct a study to
determine if costs incurred by cancer hospitals (described in section
1886(d)(1)(B)(v) of the Act) for outpatient hospital services with
respect to APC groups exceed those costs incurred by other hospitals
furnishing these services. In so far as the Secretary determines that
such costs exceed those

[[Page 71808]]

costs incurred by other hospitals, the Secretary shall provide for an
appropriate adjustment under the authority of section 1833(t)(2)(E) to
reflect those higher costs effective for services furnished on or after
January 1, 2011. This provision is addressed in section II.F. of this
final rule with comment period.
Section 3401(i) of the Affordable Care Act amended section
1833(t)(3) of the Act by, among other things, adding new paragraphs
(C)(iv)(F) and (G) to reduce the OPD fee schedule increase factor by a
productivity adjustment and an additional adjustment for payments to
hospital OPDs beginning in various years from CY 2010 through CY 2019
as applicable. These hospital OPD provisions are addressed in section
II.B.1. of this final rule with comment period. Section 3401(k) of the
Affordable Care Act amended section 1833(i)(2)(D) of the Act by
redesignating clause (v) as clause (iv) and adding a new clause (v) to
provide for a similar productivity adjustment for payment for ASC
services. This ASC provision is addressed in section XV.H.2.b. of this
final rule with comment period.
Section 4103(a) of the Affordable Care Act amended section
1861(s)(2) of the Act by adding a new subsection (FF) to provide
Medicare coverage of ``personalized prevention plan services,''
beginning January 1, 2011. Section 4103(b) of the Affordable Care Act
amended section 1861 of the Act by adding a new subsection (hhh) to
define ``personalized prevention plan services'' (also cited as the
``annual wellness visit''). Section 4103(c) of the Affordable Care Act
excludes the annual wellness visit from payment under the OPPS and
provides for the elimination of beneficiary coinsurance requirements
for certain preventive services in outpatient hospital settings and for
waiver of application of the deductible for these services. These
provisions are addressed in section XII.B. of this final rule with
comment period.
Section 4104(a) of the Affordable Care Act amended section
1861(ddd) of the Act to define ``preventive services'' under Medicare
to include screening and preventive services described under subsection
(ww)(2) of the Act (other than services under subparagraph (M)); an
initial preventive physical examination as defined in subsection (ww)
of the Act; and personalized prevention plan services as defined in
subsection (hhh)(1) of the Act. Sections 4104(b) and 10406 of the
Affordable Care Act amended section 1833(a)(1) of the Act, as amended
by section 4103(c)(1) of the Affordable Care Act, to provide for the
elimination of coinsurance for preventive services, and section 4104(c)
amended section 1833(b) of the Act to provide for the waiver of the
application of the deductible for both preventive services and,
specifically, for colorectal cancer screening tests that become
diagnostic and any related services performed with that diagnostic
colorectal cancer screening test performed in the same clinical
encounter, effective for items and services furnished on or after
January 1, 2011. These provisions are addressed in section XII.B. of
this final rule with comment period.
Sections 5503, 5504, 5505, and 5506 of the Affordable Care
Act made a number of changes to various sections of the Act relating to
payment for direct GME and IME costs to hospitals.
(1) Section 5503 amended the Act to add a provision to redistribute
medical residency positions that have been unfilled during a prior cost
reporting period to other hospitals and to direct slots for training
primary care physicians, effective for portions of cost reporting
periods occurring on or after July 1, 2011.
(2) Section 5504 amended sections 1886(h)(4)(E) and
1886(d)(5)(B)(iv) of the Act to allow any time spent by residents
training in a nonprovider setting to count toward direct GME and IME
costs if the hospital incurs the costs of residents' salaries and
fringe benefits, effective for cost reporting periods beginning on or
after July 1, 2010, for direct GME, and for discharges occurring on or
after July 1, 2010, for IME.
(3) Section 5505 amended section 1886(h) and section 1886(d)(5)(B)
of the Act to add a provision to allow hospitals to count resident time
spent in certain non-patient care activities while training in certain
nonprovider settings for direct GME purposes, effective for cost
reporting periods beginning on or after July 1, 2009; to allow
hospitals to count resident time spent in certain non-patient care
activities while training in certain hospital settings for IME purposes
for cost reporting periods beginning on or after January 1, 1983; and
to prohibit the counting of time spent by residents in research not
associated with the treatment or diagnosis of a particular patient for
IME purposes effective October 1, 2001 (with certain limitations).
(4) Section 5506 amended section 1886(h)(4)(H) and section
1886(d)(5)(B)(iv) of the Act to add a provision to allow for the
redistribution to other hospitals in the same or contiguous areas of
FTE resident positions from a hospital that closes (on or after the
date that is 2 years before the date of enactment of Pub. L. 111-148).
These provisions are addressed in section XXI. of this document.
Section 6001 of the Affordable Care Act amended section
1877 of the Act to add provisions under new subsection (i) relating to
the prohibition against referrals to a hospital by a physician who has
an ownership or investment interest in the hospital. This provision is
addressed in section XXII. of this document.
Section 10324(b) of the Affordable Care Act amended
section 1833(t) of the Act by adding a new subsection (19) to provide
for a floor on the area wage adjustment factor for hospital outpatient
department services furnished on or after January 1, 2011, in a State
in which at least 50 percent of the counties in the State are frontier
counties, that is, a county in which the population per square mile is
less than 6. This provision is addressed in section II.C. of this
document.

E. Advisory Panel on Ambulatory Payment Classification (APC) Groups

1. Authority of the Advisory Panel on Ambulatory Payment Classification
(APC) Groups (the APC Panel)
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113, requires that we consult with an outside panel of experts to
review the clinical integrity of the payment groups and their weights
under the OPPS. The Act further specifies that the panel will act in an
advisory capacity. The APC Panel, discussed under section I.E.2. of
this final rule with comment period, fulfills these requirements. The
APC Panel is not restricted to using data compiled by CMS, and it may
use data collected or developed by organizations outside the Department
in conducting its review.
2. Establishment of the APC Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the APC Panel. This expert panel, which may be composed of
up to 15 representatives of providers (currently employed full-time,
not as consultants, in their respective areas of expertise) subject to
the OPPS, reviews clinical data and advises CMS about the clinical
integrity of the APC groups and their payment weights. The APC Panel is
technical in nature, and it is governed by the provisions of the
Federal Advisory Committee Act (FACA). Since its initial chartering,
the Secretary has renewed the APC Panel's charter four times: On
November 1, 2002; on

[[Page 71809]]

November 1, 2004; on November 21, 2006; and on November 2, 2008. (We
note that the charter is scheduled to be renewed on or before November
21, 2010.) The current charter specifies, among other requirements,
that: The APC Panel continues to be technical in nature; is governed by
the provisions of the FACA; may convene up to three meetings per year;
has a Designated Federal Official (DFO); and is chaired by a Federal
official designated by the Secretary.
The current APC Panel membership and other information pertaining
to the APC Panel, including its charter, Federal Register notices,
membership, meeting dates, agenda topics, and meeting reports, can be
viewed on the CMS Web site at: http://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27 through March 1, 2001. Since
the initial meeting, the APC Panel has held 18 meetings, with the last
meeting taking place on August 23-24, 2010. Prior to each meeting, we
publish a notice in the Federal Register to announce the meeting and,
when necessary, to solicit nominations for APC Panel membership and to
announce new members.
The APC Panel has established an operational structure that, in
part, includes the use of three subcommittees to facilitate its
required APC review process. The three current subcommittees are the
Data Subcommittee, the Visits and Observation Subcommittee, and the
Subcommittee for APC Groups and Status Indicator (SI) Assignments
(previously known as the Packaging Subcommittee).
The Data Subcommittee is responsible for studying the data issues
confronting the APC Panel and for recommending options for resolving
them. The Visits and Observation Subcommittee reviews and makes
recommendations to the APC Panel on all technical issues pertaining to
observation services and hospital outpatient visits paid under the OPPS
(for example, APC configurations and APC payment weights). The
Subcommittee for APC Groups and SI Assignments advises the Panel on the
following issues: The appropriate SIs to be assigned to HCPCS codes,
including but not limited to whether a HCPCS code or a category of
codes should be packaged or separately paid; and the appropriate APCs
to be assigned to HCPCS codes regarding services for which separate
payment is made.
Each of these subcommittees was established by a majority vote from
the full APC Panel during a scheduled APC Panel meeting, and the APC
Panel recommended that the subcommittees continue at the August 2010
APC Panel meeting. We accept those recommendations of the APC Panel.
All subcommittee recommendations are discussed and voted upon by the
full APC Panel.
Discussions of the other recommendations made by the APC Panel at
the February and August 2010 meetings are included in the sections of
this final rule with comment period that are specific to each
recommendation. For discussions of earlier APC Panel meetings and
recommendations, we refer readers to previously published hospital
OPPS/ASC proposed and final rules, the CMS Web site mentioned earlier
in this section, and the FACA database at: http://fido.gov/facadatabase/public.asp.

F. Summary of the Major Contents of the CY 2011 OPS/ASC Proposed Rule

A proposed rule appeared in the August 3, 2010 Federal Register (75
FR 46170) that set forth proposed changes to the Medicare hospital OPPS
and the revised Medicare ASC payment system for CY 2011 to implement
statutory requirements and changes arising from our continuing
experience with the system and to implement certain provisions of
Public Law 111-148, as amended by Public Law 111-152 (collectively
known as the Affordable Care Act). We proposed quality measures for the
Hospital Outpatient Quality Data Reporting Program (HOP QDRP) for
reporting quality data for annual payment rate updates for CY 2012 and
subsequent calendar years, the proposed requirements for data
collection and submission for the annual payment update, and a proposed
reduction in the OPPS payment for hospitals that fail to meet the HOP
QDRP requirements for the CY 2011 payment update, in accordance with
the statutory requirement. We also proposed changes to implement
provisions of the Affordable Care Act relating to payments to hospitals
for direct GME and IME costs and the rules relating to physician self-
referrals to hospitals in which they have an ownership or investment
interest. In addition, we set forth proposals affecting certain
payments under the Medicare IPPS. The following is a summary of the
major changes that we proposed to make:
1. Updates Affecting OPPS Payments
In section II. of the proposed rule, we set forth--
The methodology used to recalibrate the proposed APC
relative payment weights.
The proposed changes to packaged services.
The proposed update to the conversion factor used to
determine payment rates under the OPPS. In this section, we proposed
changes in the amounts and factors for calculating the full annual
update increase to the conversion factor.
The proposed retention of our current policy to use the
IPPS wage indices to adjust, for geographic wage differences, the
portion of the OPPS payment rate and the copayment standardized amount
attributable to labor-related cost. This proposal addressed the
provisions of section 10324 of the Affordable Care Act relating to the
establishment of a floor for the area wage adjustment factor for OPD
services furnished in frontier States.
The proposed update of statewide average default CCRs.
The proposed application of hold harmless transitional
outpatient payments (TOPs) for certain small rural hospitals, extended
by section 3121 of the Affordable Care Act.
The proposed payment adjustment for rural SCHs.
The proposed calculation of the hospital outpatient
outlier payment.
The calculation of the proposed national unadjusted
Medicare OPPS payment.
The proposed beneficiary copayments for OPPS services.
2. OPPS Ambulatory Payment Classification (APC) Group Policies
In section III. of the proposed rule, we discussed--
The proposed additions of new HCPCS codes to APCs.
The proposed establishment of a number of new APCs.
Our analyses of Medicare claims data and certain
recommendations of the APC Panel.
The application of the 2 times rule and proposed
exceptions to it.
The proposed changes to specific APCs.
The proposed movement of procedures from New Technology
APCs to clinical APCs.
3. OPPS Payment for Devices
In section IV. of the proposed rule, we discussed the proposed
pass-through payment for specific categories of

[[Page 71810]]

devices and the proposed adjustment for devices furnished at no cost or
with partial or full credit.
4. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
In section V. of the proposed rule, we discussed the proposed CY
2011 OPPS payment for drugs, biologicals, and radiopharmaceuticals,
including the proposed payment for drugs, biologicals, and
radiopharmaceuticals with and without pass-through status.
5. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
In section VI. of the proposed rule, we discussed the estimate of
CY 2011 OPPS transitional pass-through spending for drugs, biologicals,
and devices.
6. OPPS Payment for Brachytherapy Sources
In section VII. of the proposed rule, we discussed our proposal for
payment for brachytherapy sources.
7. OPPS Payment for Drug Administration Services
In section VIII. of the proposed rule, we set forth our proposed
policy concerning coding and payment for drug administration services.
8. OPPS Payment for Hospital Outpatient Visits
In section IX. of the proposed rule, we set forth our proposed
policies for the payment of clinic and emergency department visits and
critical care services based on claims data.
9. Payment for Partial Hospitalization Services
In section X. of the proposed rule, we set forth our proposed
payment for partial hospitalization services, including the proposed
separate threshold for outlier payments for CMHCs. We also set forth
our proposals to implement the new requirements for CMHCs established
by section 1301 of the Affordable Care Act.
10. Procedures That Would Be Paid Only as Inpatient Procedures
In section XI. of the proposed rule, we discussed the procedures
that we proposed to remove from the inpatient list and assign to APCs
for payment under the OPPS.
11. OPPS Nonrecurring Technical and Policy Changes and Clarifications
In section XII. of the proposed rule, we discussed nonrecurring
technical issues and proposed policy changes relating to physician
supervision of OPD services in hospitals, including CAHs. We also
proposed to implement the provisions of sections 4103 and 4104 of the
Affordable Care Act relating to payment for preventive services,
including personalized prevention plan services, and the waiver of
beneficiary coinsurance and deductibles.
12. OPPS Payment Status and Comment Indicators
In section XIII. of the proposed rule, we discussed our proposed
changes to the definitions of status indicators assigned to APCs and
present our proposed comment indicators.
13. OPPS Policy and Payment Recommendations
In section XIV. of the proposed rule, we addressed recommendations
made by the Medicare Payment Advisory Commission (MedPAC) in its March
2010 report to Congress, by the Office of Inspector General (OIG), and
by the APC Panel regarding the OPPS for CY 2011.
14. Updates to the Ambulatory Surgical Center (ASC) Payment System
In section XV. of the proposed rule, we discussed the proposed
updates of the revised ASC payment system and payment rates for CY
2011.
15. Reporting Quality Data for Annual Payment Rate Updates
In section XVI. of the proposed rule, we discussed the proposed
quality measures for reporting hospital outpatient (HOP) quality data
for the annual payment update factor for CY 2012 and subsequent
calendar years; set forth the requirements for data collection and
submission for the annual payment update; and discussed the reduction
in the OPPS payment for hospitals that fail to meet the HOP Quality
Data Reporting Program (QDRP) requirements for CY 2011.
16. Payments to Hospitals for Direct GME and IME Costs
In section XVII. of the proposed rule, we discussed our proposed
implementation of the provisions of section 5503, 5504, 5505, and 5506
of the Affordable Care Act relating to redistribution of FTE resident
slots of closed hospitals and policy changes for the counting of FTE
residents in determining payments to hospitals for direct GME and IME
costs.
17. Physician Self-Referrals to Hospitals
In section XVIII. of the proposed rule, we discussed our proposal
to implement the changes made by section 6001 of the Affordable Care
Act relating to the rules governing the prohibition on referrals to a
hospital by a physician who has an ownership or investment interest in
the hospital.
18. Regulatory Impact Analysis
In section XXII. of the proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected entities
and beneficiaries.

G. Public Comments Received in Response to the CY 2011 OPPS/ASC
Proposed Rule

We received approximately 774 timely pieces of correspondence
containing multiple comments on the CY 2011 OPPS/ASC proposed rule that
appeared in the Federal Register on August 3, 2010. We note that we
received some public comments that were outside the scope of the CY
2011 OPPS/ASC proposed rule. These public comments are not addressed in
this CY 2011 OPPS/ASC final rule with comment period. Summaries of the
public comments that are within the scope of the proposals and our
responses to those public comments are set forth in the various
sections of this final rule with comment period under the appropriate
headings.

H. Public Comments Received on the November 20, 2009 OPPS/ASC Final
Rule With Comment Period

We received approximately 18 timely pieces of correspondence on the
CY 2010 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 20, 2009 (74 FR 60316), some of which
contained multiple comments on the interim APC assignments and/or
status indicators of HCPCS codes identified with comment indicator
``NI'' in Addendum B to that final rule with comment period. Summaries
of those public comments on topics open to comment in the CY 2010 OPPS/
ASC final rule with comment period and our responses to them are set
forth in the various sections of this final rule with comment period
under the appropriate headings.

I. Interim Final Rule on Certified Registered Nurse Anesthetist (CRNA)
Services Furnished in Rural Hospitals and Critical Access Hospitals

Under section XXIII. of this document, we set forth an interim
final rule with comment period that changes the effective date for
otherwise eligible hospitals and CAHs that have been reclassified from
urban to rural status under section 1886(d)(8)(E) of the Act and 42 CFR
412.103 to receive reasonable cost payments for anesthesia services and
related care furnished by

[[Page 71811]]

nonphysician anesthetists, from cost reporting periods beginning on or
after October 1, 2010, to December 2, 2010.

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Weights

1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
and revise the relative payment weights for APCs at least annually. In
the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we
explained in detail how we calculated the relative payment weights that
were implemented on August 1, 2000 for each APC group.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46179), we proposed to
use for CY 2011 the same basic methodology that we described in the
November 20, 2009 OPPS final rule with comment period to recalibrate
the APC relative payment weights for services furnished on or after
January 1, 2011, and before January 1, 2012 (CY 2011). That is, we
proposed to recalibrate the relative payment weights for each APC based
on claims and cost report data for hospital outpatient department
(HOPD) services. We proposed to use the most recent available data to
construct the database for calculating APC group weights. Therefore,
for the purpose of recalibrating the proposed APC relative payment
weights for CY 2011, we used approximately 133 million final action
claims for hospital outpatient department services furnished on or
after January 1, 2009, and before January 1, 2010. For this final rule
with comment period, for the purpose of recalibrating the final APC
relative payment weights for CY 2011, we used approximately 145 million
final action claims for hospital outpatient department services
furnished on or after January 1, 2009, and before January 1, 2010,
based on more recent updated data. (For exact counts of claims used, we
refer readers to the claims accounting narrative under supporting
documentation for the proposed rule and this final rule with comment
period on the CMS Web site at: http://www.cms.gov/
HospitalOutpatientPPS/HORD/.)
Of the 145 million final action claims for services provided in
hospital outpatient settings used to calculate the CY 2011 OPPS payment
rates for this final rule with comment period, approximately 109
million claims were the type of bill potentially appropriate for use in
setting rates for OPPS services (but did not necessarily contain
services payable under the OPPS). Of the 109 million claims,
approximately 4 million claims were not for services paid under the
OPPS or were excluded as not appropriate for use (for example,
erroneous cost-to-charge ratios (CCRs) or no HCPCS codes reported on
the claim). From the remaining 105 million claims, we created
approximately 103 million single records, of which approximately 71
million were ``pseudo'' single or ``single session'' claims (created
from 24 million multiple procedure claims using the process we discuss
later in this section). Approximately 792,000 claims were trimmed out
on cost or units in excess of +/-3 standard deviations from the
geometric mean, yielding approximately 102 million single bills for
median setting. As described in section II.A.2. of this final rule with
comment period, our data development process is designed with the goal
of using appropriate cost information in setting the APC relative
weights. The bypass process is described in section II.A.1.b. of this
final rule with comment period. This section discusses how we develop
``pseudo'' single procedure claims (as defined below), with the
intention of using more appropriate data from the available claims. In
some cases, the bypass process allows us to use some portion of the
submitted claim for cost estimation purposes, while the remaining
information on the claim continues to be unusable. Consistent with the
goal of using appropriate information in our data development process,
we only use claims (or portions of each claim) that are appropriate for
ratesetting purposes. Ultimately, we were able to use for CY 2011
ratesetting some portion of approximately 95 percent of the CY 2009
claims containing services payable under the OPPS.
The final APC relative weights and payments for CY 2011 in Addenda
A and B to this final rule with comment period were calculated using
claims from CY 2009 that were processed before July 1, 2010, and
continue to be based on the median hospital costs for services in the
APC groups. We selected claims for services paid under the OPPS and
matched these claims to the most recent cost report filed by the
individual hospitals represented in our claims data. We continue to
believe that it is appropriate to use the most current full calendar
year claims data and the most recently submitted cost reports to
calculate the median costs underpinning the APC relative payment
weights and the CY 2011 payment rates.
b. Use of Single and Multiple Procedure Claims
For CY 2011, in general, we proposed to continue to use single
procedure claims to set the medians on which the APC relative payment
weights would be based, with some exceptions as discussed below in this
section. We generally use single procedure claims to set the median
costs for APCs because we believe that the OPPS relative weights on
which payment rates are based should be derived from the costs of
furnishing one unit of one procedure and because, in many
circumstances, we are unable to ensure that packaged costs can be
appropriately allocated across multiple procedures performed on the
same date of service.
We agree that, optimally, it is desirable to use the data from as
many claims as possible to recalibrate the APC relative payment
weights, including those claims for multiple procedures. As we have for
several years, we continued to use date of service stratification and a
list of codes to be bypassed to convert multiple procedure claims to
``pseudo'' single procedure claims. Through bypassing specified codes
that we believe do not have significant packaged costs, we were able to
use more data from multiple procedure claims. In many cases, this
enabled us to create multiple ``pseudo'' single procedure claims from
claims that were submitted as multiple procedure claims spanning
multiple dates of service, or claims that contained numerous separately
paid procedures reported on the same date on one claim. We refer to
these newly created single procedure claims as ``pseudo'' single
procedure claims. The history of our use of a bypass list to generate
``pseudo'' single procedure claims is well documented, most recently in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60324
through 60342). In addition, for CY 2008, we increased packaging and
created the first composite APCs. We have continued our packaging
policies and the creation of composite APCs for CY 2009 and 2010, and
we proposed to continue them for CY 2011. This also increased the
number of bills that we were able to use for median calculation by
enabling us to use claims that contained multiple major procedures that
previously would not have been usable. Further, for CY 2009, we
expanded the composite APC model to one additional clinical area,
multiple imaging services (73 FR 68559 through 68569), which also
increased the number of bills we were able to use to calculate APC
median costs. We have continued the composite APCs for

[[Page 71812]]

multiple imaging services for CY 2010, and we proposed to continue to
create them for CY 2011. We refer readers to section II.A.2.e. of the
proposed rule and this final rule with comment period for discussion of
the use of claims to establish median costs for composite APCs.
We proposed to continue to apply these processes to enable us to
use as much claims data as possible for ratesetting for the CY 2011
OPPS. This methodology enabled us to create, for the proposed rule,
approximately 64 million ``pseudo'' single procedure claims, including
multiple imaging composite ``single session'' bills (we refer readers
to section II.A.2.e.(5) of the proposed rule for further discussion),
to add to the approximately 31 million ``natural'' single procedure
claims. For the proposed rule, ``pseudo'' single procedure and ``single
session'' procedure bills represented approximately 67 percent of all
single procedure bills used to calculate median costs.
For CY 2011, we proposed to bypass 448 HCPCS codes for CY 2011 that
were identified in Table 1 of the proposed rule. Since the inception of
the bypass list, which is the list of codes to be bypassed to convert
multiple procedure claims to ``pseudo'' single procedure claims, we
have calculated the percent of ``natural'' single bills that contained
packaging for each HCPCS code and the amount of packaging on each
``natural'' single bill for each code. Each year, we generally retain
the codes on the previous year's bypass list and use the update year's
data (for CY 2011, data available for the February 2010 APC Panel
meeting from CY 2009 claims processed through September 30, 2009, and
CY 2008 claims data processed through June 30, 2009, used to model the
payment rates for CY 2010) to determine whether it would be appropriate
to propose to add additional codes to the previous year's bypass list.
For CY 2011, we proposed to continue to bypass all of the HCPCS codes
on the CY 2010 OPPS bypass list. We updated HCPCS codes on the CY 2010
bypass list that were mapped to new HCPCS codes for CY 2011 ratesetting
by adding the new replacement codes and also removing the deleted
codes, which were listed in Table 2 of the proposed rule. None of these
deleted codes were ``overlap bypass codes'' (those HCPCS codes that are
both on the bypass list and are members of the multiple imaging
composite APCs). We also proposed to add to the bypass list for CY 2011
all HCPCS codes not on the CY 2010 bypass list that, using both CY 2010
final rule data (CY 2008 claims) and February 2010 APC Panel data
(first 9 months of CY 2009 claims), met the same previously established
empirical criteria for the bypass list that are summarized below. The
entire list proposed for CY 2011 (including the codes that remain on
the bypass list from prior years) was open to public comment. Because
we must make some assumptions about packaging in the multiple procedure
claims in order to assess a HCPCS code for addition to the bypass list,
we assumed that the representation of packaging on ``natural'' single
procedure claims for any given code is comparable to packaging for that
code in the multiple procedure claims. The proposed criteria for the
bypass list were:
There are 100 or more ``natural'' single procedure claims
for the code. This number of single procedure claims ensures that
observed outcomes are sufficiently representative of packaging that
might occur in the multiple claims.
Five percent or fewer of the ``natural'' single procedure
claims for the code have packaged costs on that single procedure claim
for the code. This criterion results in limiting the amount of
packaging being redistributed to the separately payable procedures
remaining on the claim after the bypass code is removed and ensures
that the costs associated with the bypass code represent the cost of
the bypassed service.
The median cost of packaging observed in the ``natural''
single procedure claims is equal to or less than $50. This criterion
also limits the amount of error in redistributed costs. Throughout the
bypass process, we do not know the dollar value of the packaged cost
that should be appropriately attributed to the other procedures on the
claim. Ensuring that redistributed costs associated with a bypass code
are small in amount and volume protects the validity of cost estimates
for low cost services billed with the bypassed service.
In response to comments to the CY 2010 OPPS/ASC proposed rule
requesting that the packaged cost threshold be updated, we noted that
we would consider whether it would be appropriate to update the $50
packaged cost threshold for inflation when examining potential bypass
list additions (74 FR 60328). For the CY 2011 OPPS, based on CY 2009
claims data, we proposed to apply the final market basket of 3.6
percent published in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 26584) to the $50 packaged cost threshold used in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60325) that we
initially established in the CY 2005 OPPS final rule based on our
analysis of the data (69 FR 65731), rounded to the nearest $5
increment. This calculation led us to a proposed packaged cost
threshold for bypass list additions of $50 ($51.80 rounded to $50). We
stated that we believe that applying the market basket from the year of
claims data to the packaged cost threshold, rounded to the nearest $5
increment, would appropriately account for the effects of inflation
when considering additions to the bypass list because the market basket
increase percentage reflects the extent to which the price of inputs
for hospital services has increased compared to the price of inputs for
hospital services in the prior year. As discussed in the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60328), the real value of
this packaged cost threshold criterion has declined due to inflation,
making the packaged cost threshold more restrictive over time when
considering additions to the bypass list. Therefore, adjusting the
threshold by the market basket would prevent continuing decline in the
threshold's real value. The dollar threshold would not change for CY
2011 under this proposed policy, because when rounded to the nearest $5
increment after adjustment for the market basket increase, the
threshold would for CY 2011 remain at $50. Therefore, we did not
propose to add any additional bypass codes for CY 2011 as a result of
the proposed policy.
The code is not a code for an unlisted service.
In addition, we proposed to continue to include, on the bypass
list, HCPCS codes that CMS medical advisors believe have minimal
associated packaging based on their clinical assessment of the complete
CY 2011 OPPS proposal. Some of these codes were identified by CMS
medical advisors and some were identified in prior years by commenters
with specialized knowledge of the packaging associated with specific
services. We also proposed to continue to include on the bypass list
certain HCPCS codes in order to purposefully direct the assignment of
packaged costs to a companion code where services always appear
together and where there would otherwise be few single procedure claims
available for ratesetting. For example, we have previously discussed
our reasoning for adding HCPCS code G0390 (Trauma response team
associated with hospital critical care service) and the CPT codes for
additional hours of drug administration to the bypass list (73 FR 68513
and 71 FR 68117 through 68118).

[[Page 71813]]

As a result of the multiple imaging composite APCs that we
established in CY 2009, the program logic for creating ``pseudo''
single procedure claims from bypassed codes that are also members of
multiple imaging composite APCs changed. When creating the set of
``pseudo'' single procedure claims, claims that contain ``overlap
bypass codes'' (those HCPCS codes that are both on the bypass list and
are members of the multiple imaging composite APCs), were identified
first. These HCPCS codes were then processed to create multiple imaging
composite ``single session'' bills, that is, claims containing HCPCS
codes from only one imaging family, thus suppressing the initial use of
these codes as bypass codes. However, these ``overlap bypass codes''
were retained on the bypass list because, at the end of the ``pseudo''
single processing logic, we reassessed the claims without suppression
of the ``overlap bypass codes'' under our longstanding ``pseudo''
single process to determine whether we could convert additional claims
to ``pseudo'' single procedure claims. (We refer readers to section
II.A.2.b. of the proposed rule and this final rule with comment period
for further discussion of the treatment of ``overlap bypass codes.'')
This process also created multiple imaging composite ``single session''
bills that could be used for calculating composite APC median costs.
``Overlap bypass codes'' that are members of the proposed multiple
imaging composite APCs were identified by asterisks (*) in Table 1 of
the proposed rule.
Table 1 published in the CY 2011 OPPS/ASC proposed rule includes
the proposed list of bypass codes for CY 2011. As noted in that
proposed rule (75 FR 46181), the list of bypass codes contained codes
that were reported on claims for services in CY 2009 and, therefore,
included codes that were in effect in 2009 and used for billing but
were deleted for CY 2010. We retained these deleted bypass codes on the
proposed CY 2011 bypass list because these codes existed in CY 2009 and
were covered OPD services in that period. Since these bypass codes were
deleted for billing in CY 2010, we did not need to retain them for the
CY 2010 bypass list. Keeping these deleted bypass codes on the bypass
list potentially allowed us to create more ``pseudo'' single procedure
claims for ratesetting purposes. ``Overlap bypass codes'' that were
members of the proposed multiple imaging composite APCs were identified
by asterisks (*) in the third column of Table 1 of the proposed rule.
HCPCS codes that we proposed to add for CY 2011 also were identified by
asterisks (*) in the fourth column of Table 1 of the proposed rule.
Table 2 of the proposed rule contained the list of codes that we
proposed to remove from the CY 2011 bypass list because they were
deleted from the HCPCS before CY 2009. None of these proposed deleted
codes were ``overlap bypass'' codes.
Comment: Several commenters expressed support for the ratesetting
methodology using single and ``pseudo'' single claims and recommended
that CMS continue to explore additional methodologies to increase the
number of multiple procedure claims used for ratesetting, including
expanding the empirical criteria for inclusion on the bypass list. One
commenter recommended that CMS examine the bypass list on an annual
basis to ensure that the Agency is utilizing as many claims as possible
for ratesetting. One commenter supported the proposal to maintain the
current radiation oncology procedure codes on the CY 2011 bypass list.
Response: We appreciate the commenters' support. We expect to
continue to use our established methodologies and to evaluate
additional refinements and improvements to our methodologies, with the
goal of achieving appropriate and accurate estimates of the costs of
services in the HOPD. We examine the bypass list on an annual basis to
ensure that we are using as much information as is available through
our claims data.
Comment: One commenter requested that CMS explore alternative
methodologies to capture more multiple procedure claims used for future
rate setting of composite APC 8001 (LDR Prostate Brachytherapy
Composite), noting that a number of multiple procedure claims were not
used to model the composite due to containing other payable radiation
therapy codes.
Response: As described above, one of the challenges in estimating
costs for individual items and services is in how to address the
allocation of packaged costs in multiple procedure claims. While we
continue to apply the empirical criteria and examine CMS medical
advisor and public commenter recommendations in determining additions
to the bypass list, we must ensure that the bypass process itself does
not improperly allocate packaged costs. We will continue to explore
methods through which we might obtain more information from our
existing set of claims data.
Comment: Several commenters recommended that CPT codes 93306
(Echocardiography, transthoracic, real-time with image documentation
(2D), includes M-mode recording, when performed, complete, with
spectral Doppler echocardiography, and with color flow Doppler
echocardiography) and 93307 (Echocardiography, transthoracic, real-time
with image documentation (2D), includes M-mode recording, when
performed, complete, without spectral or color Doppler
echocardiography) be removed from the bypass list. The commenters
believed that adding those codes to the bypass list would not
appropriately capture costs associated with providing the services.
Moreover, they believed that these codes do not meet the criteria for
the bypass list. The commenters suggested that hospitals were
continuing to bill CPT 93307 in conjunction with CPT codes 93320
(Doppler echocardiography, pulsed wave and/or continuous wave with
spectral display (List separately in addition to codes for
echocardiographic imaging); complete) and 93325 (Doppler
echocardiography color flow velocity mapping (List separately in
addition to codes for echocardiography) rather than using new CY 2009
CPT code 93306 because they were still adjusting to billing with CPT
code 93306. They noted that because CPT code 93307 was a proposed
addition to the bypass list, the code would not include the packaged
costs of CPT codes 93320 and 93325. The commenters also noted that CPT
code 93307 did not appear to meet the empirical criteria in the
proposed rule claims data. They suggested that, if CMS did not remove
CPT code 93307 from the CY 2011 bypass list, claims with combinations
of CPT codes 93307, 93320, and 93325 be reconstructed as CPT code 93306
and that the simulated claims be used, together with the claims for CPT
code 99306, to set the median costs for CPT code 99306. A few
commenters suggested that assigning CPT code 93307 to the same APC as
CPT code 93306 was inappropriate because that reassignment was based on
the addition of both codes to the bypass list. The commenters also
identified APC 0269 (Level II Echocardiogram Without Contrast) as
having a 2 times rule violation because, they stated, the median cost
of the code with the highest median cost in the APC is more than twice
that of the code with the lowest median cost. The application of the 2
times rule is discussed in section III.B.2. of this final rule with
comment period. Thus, the commenters recommended that CMS review the
coding issues associated with the creation of those codes to ensure
that they are not unduly

[[Page 71814]]

influencing the respective APC payment rates.
Response: We note that, in the CY 2011 OPPS/ASC proposed rule (75
FR 46180), we described our process for identifying additions to the
bypass code list by determining codes that, ``using both CY 2010 final
rule data (CY 2008 claims) and February 2010 APC Panel data (first 9
months of CY 2009 claims), met the same previously established
empirical criteria for the bypass list.'' However, we wish to clarify
that proposed additions to the bypass list were identified by applying
the empirical criteria to both sets of data individually. Thus, a code
that met the empirical criteria in either of the two sets of claims
data would be eligible for addition to the proposed bypass list.
In proposing to add CPT code 93307 to the CY 2011 bypass list, we
had examined the single major claims using CY 2010 final rule data,
after performing the process described in the CY 2010 OPPS/ASC final
rule with comment period to simulate billing for CPT code 93306 (74 FR
60374 through 60376). That is, after we removed the claims that we used
to simulate the code configuration for CPT code 93306, we assessed only
the remaining claims for CPT code 93307 for the bypass list. When we
applied the bypass criteria to these residual final rule claims for CPT
code 93307, CPT code 93307 met the empirical criteria and we added it
to the proposed rule bypass list. However, when we assessed CPT code
93307 against the CY 2009 claims in the APC Panel data, it did not meet
the criteria and, similarly, it does not meet the criteria when
assessed against the proposed rule data. Therefore we are accepting the
comment, and for the CY 2011 OPPS final rule, we are removing CPT code
93307 from the CY 2011 bypass list. However, we are not creating
simulated claims for CPT code 93306 from the claims that report these
services using CPT codes 93307, 93320, and 93325 in place of reporting
CPT code 93306. We have approximately 765,000 single bills for CPT code
93306, and we see no reason to create simulated median costs for
services for which we have adequate cost data from correctly coded
claims. We note that, although miscoded claims for CPT code 93306 (that
is, CPT code 93307 plus CPT code 93320 plus CPT code 93325) appeared in
the data, only CPT code 93307 was paid on these claims because we
implemented NCCI edits on January 1, 2009, that stopped CPT codes 93320
and 93325 from being paid if reported with CPT code 93307. Hospitals
that reported the service using the three codes instead of reporting
CPT code 93306 received payments based on the CY 2009 national
unadjusted payment rate of $255.05 for CPT code 93307 rather than a
payment based on a national unadjusted payment rate of $431.37 that
they would have received if they had reported the correct code for the
service.
Regarding the issue of reassignment of CPT code 93307 from APC 0697
(Level I Echocardiogram Without Contrast) to APC 0269, after removing
CPT code 93306 from the bypass list, the calculated median cost for CPT
code 93306 based on final rule data was approximately $399. The
calculated median cost of approximately $399 for CPT code 93306
suggests that the costs of these two procedures are similar. CPT codes
93306 and 93307 would thus meet the APC recalibration standards of
clinical and resource homogeneity. Thus, we are finalizing our proposal
to assign CPT code 93307 to APC 0269.
As we discussed in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60436), in the determination of APCs that violate the 2
times rule, we apply the 2 times rule to HCPCS codes that are
determined to be significant, either based on having a frequency of
more than 1,000 single major claims or having both more than 99 single
major claims and contributing more than 2 percent of the claims used to
determine the APC median cost. Codes that do not meet these criteria as
``significant procedures'' are not used to determine if there is a 2
times rule violation in an APC. The 2 times rule is discussed in
section III.B. of this final rule with comment period.
Comment: One commenter requested that the proposed application of
market basket update to the median cost of packaging threshold for the
bypass criteria be applied retroactively beginning from CY 2005, when
the $50 median packaged cost threshold criterion was first applied.
Response: In the CY 2011 OPPS/ASC proposed rule, we proposed to
apply the final market basket update for CY 2009, since it is the most
appropriate representation of changes for hospital input prices for CY
2009 and, therefore, most applicable to CY 2009 claims data used to set
the CY 2011 OPPS payment rates, to the median packaged cost threshold
of $50 established in the CY 2010 OPPS/ASC final rule with comment
period (75 FR 46181). We believe that this would ensure that the
packaged cost threshold would accurately reflect changes in costs from
the prior year. However, we proposed that this market basket adjustment
to the packaged cost criterion would apply prospectively. The $50
threshold has historically been an appropriate measure for limiting the
impact of redistributing the packaged costs on the multiple procedure
claims. We established a criterion of a maximum median amount of
packaging of $50 as a means of ensuring that the typical packaging for
the service being placed on the bypass list is minimal in amount. With
respect to the comment that we apply a market basket update to the
median cost of the packaging threshold for the bypass criteria
retroactively to CY 2005, we note that, in general, we update our
payment rates on a prospective basis and, as explained above, we
believe that our proposed and final policy adequately and appropriately
accounts for the effects of inflation over time.
Therefore, for the CY 2011 OPPS, we are applying the final CY 2009
market basket update (which is 3.6 percent) to the $50 median packaged
cost criterion and rounding the result ($51.80) to the neared $5
increment. Thus, for this CY 2011 OPPS/ASC final rule with comment
period, the median cost of packaging criterion for the CY 2011 OPPS
bypass list remains at $50.
Comment: One commenter requested that CPT codes 77310 (Teletherapy,
isodose plan (whether hand or computer calculated); intermediate (3 or
more treatment ports directed to a single area of interest)) and 77789
(Surface application of radiation source) be added to the bypass list
because they believed that these codes meet the bypass criteria. The
commenter also suggested that there was a lack of transparency in how
the criteria were applied, and that when codes were not added that met
the empirical criteria the reasons for doing so should be explained.
Response: Both CPT codes 77310 and 77789 failed to meet the
empirical criterion for addition to the bypass list of having 100 or
more ``natural'' single procedure claims in both the APC Panel data and
the proposed rule data. Specifically, CPT code 77310 had 0 natural
single bills in the CY 2010 final rule data and 2 natural single bills
in the CY 2011 APC Panel data; CPT code 77789 had 30 natural single
bills in the CY 2010 final rule data and 13 natural single bills in the
CY 2011 APC Panel data. As described above, this criterion ensures that
we have an adequate base of claims billed for each code so that we can
bypass lines with the bypass code from the multiple procedure claims.
In addition to failing the number of ``natural'' single procedure
claims criterion, CPT code 77789 failed to meet the percentage of
single claims with packaged costs criterion (no more than

[[Page 71815]]

5 percent of ``natural'' single procedure claims can have any
packaging) because packaged cost appeared on 6.7 percent of the code's
``natural'' single major claims in the CY 2010 final rule data and 38.5
percent of the code's ``natural'' single major claims in the CY 2011
APC Panel data. We are not aware of any codes that met the empirical
criteria for addition to the bypass list that are not included on the
bypass list.
However, in the course of our review of the comment, we realized
that CPT code 77315 (Teletherapy; isodose plan (whether hand or
computer calculated); complex (mantle or inverted Y, tangential ports,
the use of wedges, compensators, complex blocking, rotational beam, or
special beam considerations)) meets the empirical criteria and is on
the bypass list and that two other CPT codes that are very similar were
not on any of the previous bypass code lists. There are three CPT codes
for teletherapy, isodose plan, for which CPT code 77315 reports the
complex level of service. CPT code 77310, which the commenters
requested be added to the bypass list, reports the intermediate level
of the service and CPT code 77305 (Teletherapy, isodose plan (whether
hand or computer calculated); simple (1 or 2 parallel opposed
unmodified ports directed to a single area of interest)) reports the
simple level of the service. However, neither CPT codes 77305 (simple)
nor CPT code 77310 (intermediate) were on any of the previous bypass
code lists, notwithstanding that CPT code 77315 meets the empirical
criteria and is on the bypass list. Agency clinicians believe that the
packaging for CPT codes 77305 and 77310 would be less than for CPT code
77315, because CPT code 77315 represents the most complex level of the
service. Moreover, while the ``natural'' single major claims for CPT
codes 77305 (9 claims) and 77310 (6 claims) did not meet the
``natural'' single major claims criteria of a minimum of 100 claims
each in the CY 2011 proposed rule data, they met all other criteria for
addition to the bypass list. After consultation with our CMS clinical
advisors, we believe that because of the nature of the services and the
fact that both codes meet all criteria for the bypass list other than
the minimum number of single bills, it is appropriate to add them to
the bypass list. We note that, in prior years, we have added low volume
services to the bypass list that are similar to requested additions,
such as CPT codes for hyperthermia added to the CY 2010 bypass list in
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60329).
Thus, for this CY 2011 OPPS/ASC final rule with comment period, we are
adding CPT codes 77305 and 77310 to the bypass list.
However, CPT code 77789 failed to meet both the ``natural'' single
major claims criterion of 100 natural single procedure claims and
greatly exceeded the maximum percentage of single claims with packaging
criteria. Specifically, there were only 30 natural single procedure
claims and 38.5 percent of the ``natural'' single procedure claims for
CPT code 77789 had packaging and thus failed, by a significant amount,
the 5 percent maximum allowable percent of claims with packaging.
Therefore, we are not adding the code to the CY 2011 bypass list.
We believe that the empirical criteria described above are
transparent and clear, and explain the purpose of each criterion in
detail. Moreover we make available our claims data for the public's use
in assessing the bypass criteria or any other purpose. We believe the
extremely detailed comments we receive on our proposals, such as the
comments we received on CPT codes 93306 and 93307, demonstrate that the
information we make public is fully sufficient for purposes of
analyzing our proposed bypass list. In addition, we have a longstanding
practice of adding or removing codes to or from the bypass list through
analysis other than application of the empirical criteria. When we do
this, we explain our rationale for adding or removing those codes from
the bypass list, as we did with the addition of codes for additional
hours of drug administration (71 FR 68117 through 68118), which did not
meet the empirical criteria but which were added because otherwise we
would have had very few claims on which to base the median costs of
both initial and additional drug administration services.
We always appreciate the empirical information that commenters
submit regarding their suggested additions to the bypass list. However,
we note that, due to the redistributive properties of the bypass list
and our process for creating ``pseudo'' single procedure claims, we
carefully consider the redistributive impact of additions to the bypass
list on all HCPCS code and APC median costs. Future recommendations
from the public for additions to the bypass list should consider the
global changes to the bypass list in order to facilitate our evaluation
of codes suggested for inclusion on the bypass list in the future.
After consideration of the public comments we received, we are
adopting as final the proposed ``pseudo'' single claims process and the
final CY 2011 bypass list of 449 HCPCS codes, as displayed in Tables 1
and 2 below. The list has been modified from the CY 2011 proposed list,
with the removal of CPT code 93307 from the CY 2011 bypass list and the
addition of CPT codes 77305 and 77310, as discussed above in this
section.

Table 1--Final CY 2009 Bypass Codes for Creating ``Pseudo'' Single Procedure Claims for Calculating Median Costs
for CY 2011 OPPS
----------------------------------------------------------------------------------------------------------------
``Overlap
CY 2009 HCPCS code CY 2009 Short descriptor bypass codes'' Additions
----------------------------------------------------------------------------------------------------------------
11056......................................... Trim skin lesions, 2 to 4....... .............. ..............
11057......................................... Trim skin lesions, over 4....... .............. ..............
11300......................................... Shave skin lesion............... .............. ..............
11301......................................... Shave skin lesion............... .............. ..............
11719......................................... Trim nail(s).................... .............. ..............
11720......................................... Debride nail, 1-5............... .............. ..............
11721......................................... Debride nail, 6 or more......... .............. ..............
11954......................................... Therapy for contour defects..... .............. ..............
17000......................................... Destruct premalg lesion......... .............. ..............
17003......................................... Destruct premalg les, 2-14...... .............. ..............
23600......................................... Treat humerus fracture.......... .............. *
29220......................................... Strapping of low back........... .............. ..............
29530......................................... Strapping of knee............... .............. *
31231......................................... Nasal endoscopy, dx............. .............. ..............

[[Page 71816]]

31579......................................... Diagnostic laryngoscopy......... .............. ..............
51798......................................... Us urine capacity measure....... .............. ..............
53661......................................... Dilation of urethra............. .............. ..............
54240......................................... Penis study..................... .............. ..............
56820......................................... Exam of vulva w/scope........... .............. ..............
57150......................................... Treat vagina infection.......... .............. ..............
57452......................................... Exam of cervix w/scope.......... .............. *
57454......................................... Bx/curett of cervix w/scope..... .............. *
67820......................................... Revise eyelashes................ .............. ..............
69210......................................... Remove impacted ear wax......... .............. ..............
69220......................................... Clean out mastoid cavity........ .............. ..............
70030......................................... X-ray eye for foreign body...... .............. ..............
70100......................................... X-ray exam of jaw............... .............. ..............
70110......................................... X-ray exam of jaw............... .............. ..............
70120......................................... X-ray exam of mastoids.......... .............. ..............
70130......................................... X-ray exam of mastoids.......... .............. ..............
70140......................................... X-ray exam of facial bones...... .............. ..............
70150......................................... X-ray exam of facial bones...... .............. ..............
70160......................................... X-ray exam of nasal bones....... .............. ..............
70200......................................... X-ray exam of eye sockets....... .............. ..............
70210......................................... X-ray exam of sinuses........... .............. ..............
70220......................................... X-ray exam of sinuses........... .............. ..............
70240......................................... X-ray exam, pituitary saddle.... .............. *
70250......................................... X-ray exam of skull............. .............. ..............
70260......................................... X-ray exam of skull............. .............. ..............
70320......................................... Full mouth x-ray of teeth....... .............. *
70328......................................... X-ray exam of jaw joint......... .............. ..............
70330......................................... X-ray exam of jaw joints........ .............. ..............
70336......................................... Magnetic image, jaw joint....... * ..............
70355......................................... Panoramic x-ray of jaws......... .............. ..............
70360......................................... X-ray exam of neck.............. .............. ..............
70370......................................... Throat x-ray & fluoroscopy...... .............. ..............
70371......................................... Speech evaluation, complex...... .............. ..............
70450......................................... Ct head/brain w/o dye........... * ..............
70480......................................... Ct orbit/ear/fossa w/o dye...... * ..............
70486......................................... Ct maxillofacial w/o dye........ * ..............
70490......................................... Ct soft tissue neck w/o dye..... * ..............
70544......................................... Mr angiography head w/o dye..... * ..............
70547......................................... Mr angiography neck w/o dye..... * *
70551......................................... Mri brain w/o dye............... * ..............
71010......................................... Chest x-ray..................... .............. ..............
71015......................................... Chest x-ray..................... .............. ..............
71020......................................... Chest x-ray..................... .............. ..............
71021......................................... Chest x-ray..................... .............. ..............
71022......................................... Chest x-ray..................... .............. ..............
71023......................................... Chest x-ray and fluoroscopy..... .............. ..............
71030......................................... Chest x-ray..................... .............. ..............
71034......................................... Chest x-ray and fluoroscopy..... .............. ..............
71035......................................... Chest x-ray..................... .............. ..............
71100......................................... X-ray exam of ribs.............. .............. ..............
71101......................................... X-ray exam of ribs/chest........ .............. ..............
71110......................................... X-ray exam of ribs.............. .............. ..............
71111......................................... X-ray exam of ribs/chest........ .............. ..............
71120......................................... X-ray exam of breastbone........ .............. ..............
71130......................................... X-ray exam of breastbone........ .............. ..............
71250......................................... Ct thorax w/o dye............... * ..............
72010......................................... X-ray exam of spine............. .............. ..............
72020......................................... X-ray exam of spine............. .............. ..............
72040......................................... X-ray exam of neck spine........ .............. ..............
72050......................................... X-ray exam of neck spine........ .............. ..............
72052......................................... X-ray exam of neck spine........ .............. ..............
72069......................................... X-ray exam of trunk spine....... .............. ..............
72070......................................... X-ray exam of thoracic spine.... .............. ..............
72072......................................... X-ray exam of thoracic spine.... .............. ..............
72074......................................... X-ray exam of thoracic spine.... .............. ..............
72080......................................... X-ray exam of trunk spine....... .............. ..............
72090......................................... X-ray exam of trunk spine....... .............. ..............
72100......................................... X-ray exam of lower spine....... .............. ..............
72110......................................... X-ray exam of lower spine....... .............. ..............
72114......................................... X-ray exam of lower spine....... .............. ..............

[[Page 71817]]

72120......................................... X-ray exam of lower spine....... .............. ..............
72125......................................... Ct neck spine w/o dye........... * ..............
72128......................................... Ct chest spine w/o dye.......... * ..............
72131......................................... Ct lumbar spine w/o dye......... * ..............
72141......................................... Mri neck spine w/o dye.......... * ..............
72146......................................... Mri chest spine w/o dye......... * ..............
72148......................................... Mri lumbar spine w/o dye........ * ..............
72170......................................... X-ray exam of pelvis............ .............. ..............
72190......................................... X-ray exam of pelvis............ .............. ..............
72192......................................... Ct pelvis w/o dye............... * ..............
72202......................................... X-ray exam sacroiliac joints.... .............. ..............
72220......................................... X-ray exam of tailbone.......... .............. ..............
73000......................................... X-ray exam of collar bone....... .............. ..............
73010......................................... X-ray exam of shoulder blade.... .............. ..............
73020......................................... X-ray exam of shoulder.......... .............. ..............
73030......................................... X-ray exam of shoulder.......... .............. ..............
73050......................................... X-ray exam of shoulders......... .............. ..............
73060......................................... X-ray exam of humerus........... .............. ..............
73070......................................... X-ray exam of elbow............. .............. ..............
73080......................................... X-ray exam of elbow............. .............. ..............
73090......................................... X-ray exam of forearm........... .............. ..............
73100......................................... X-ray exam of wrist............. .............. ..............
73110......................................... X-ray exam of wrist............. .............. ..............
73120......................................... X-ray exam of hand.............. .............. ..............
73130......................................... X-ray exam of hand.............. .............. ..............
73140......................................... X-ray exam of finger(s)......... .............. ..............
73200......................................... Ct upper extremity w/o dye...... * ..............
73218......................................... Mri upper extremity w/o dye..... * ..............
73221......................................... Mri joint upr extrem w/o dye.... * ..............
73510......................................... X-ray exam of hip............... .............. ..............
73520......................................... X-ray exam of hips.............. .............. ..............
73540......................................... X-ray exam of pelvis & hips..... .............. ..............
73550......................................... X-ray exam of thigh............. .............. ..............
73560......................................... X-ray exam of knee, 1 or 2...... .............. ..............
73562......................................... X-ray exam of knee, 3........... .............. ..............
73564......................................... X-ray exam, knee, 4 or more..... .............. ..............
73565......................................... X-ray exam of knees............. .............. ..............
73590......................................... X-ray exam of lower leg......... .............. ..............
73600......................................... X-ray exam of ankle............. .............. ..............
73610......................................... X-ray exam of ankle............. .............. ..............
73620......................................... X-ray exam of foot.............. .............. ..............
73630......................................... X-ray exam of foot.............. .............. ..............
73650......................................... X-ray exam of heel.............. .............. ..............
73660......................................... X-ray exam of toe(s)............ .............. ..............
73700......................................... Ct lower extremity w/o dye...... * ..............
73718......................................... Mri lower extremity w/o dye..... * ..............
73721......................................... Mri jnt of lwr extre w/o dye.... * ..............
74000......................................... X-ray exam of abdomen........... .............. ..............
74010......................................... X-ray exam of abdomen........... .............. ..............
74020......................................... X-ray exam of abdomen........... .............. ..............
74022......................................... X-ray exam series, abdomen...... .............. ..............
74150......................................... Ct abdomen w/o dye.............. * ..............
74210......................................... Contrst x-ray exam of throat.... .............. ..............
74220......................................... Contrast x-ray, esophagus....... .............. ..............
74230......................................... Cine/vid x-ray, throat/esoph.... .............. ..............
74246......................................... Contrst x-ray uppr gi tract..... .............. ..............
74247......................................... Contrst x-ray uppr gi tract..... .............. ..............
74249......................................... Contrst x-ray uppr gi tract..... .............. ..............
76100......................................... X-ray exam of body section...... .............. ..............
76510......................................... Ophth us, b & quant a........... .............. ..............
76511......................................... Ophth us, quant a only.......... .............. ..............
76512......................................... Ophth us, b w/non-quant a....... .............. ..............
76513......................................... Echo exam of eye, water bath.... .............. ..............
76514......................................... Echo exam of eye, thickness..... .............. ..............
76516......................................... Echo exam of eye................ .............. ..............
76519......................................... Echo exam of eye................ .............. ..............
76536......................................... Us exam of head and neck........ .............. ..............
76645......................................... Us exam, breast(s).............. .............. ..............
76700......................................... Us exam, abdom, complete........ * ..............
76705......................................... Echo exam of abdomen............ * ..............

[[Page 71818]]

76770......................................... Us exam abdo back wall, comp.... * ..............
76775......................................... Us exam abdo back wall, lim..... * ..............
76776......................................... Us exam k transpl w/Doppler..... * ..............
76801......................................... Ob us < 14 wks, single fetus.... .............. ..............
76805......................................... Ob us >/= 14 wks, sngl fetus.... .............. ..............
76811......................................... Ob us, detailed, sngl fetus..... .............. ..............
76816......................................... Ob us, follow-up, per fetus..... .............. ..............
76817......................................... Transvaginal us, obstetric...... .............. ..............
76830......................................... Transvaginal us, non-ob......... .............. ..............
76856......................................... Us exam, pelvic, complete....... * ..............
76857......................................... Us exam, pelvic, limited........ * ..............
76870......................................... Us exam, scrotum................ * ..............
76880......................................... Us exam, extremity.............. .............. ..............
76970......................................... Ultrasound exam follow-up....... .............. ..............
76977......................................... Us bone density measure......... .............. ..............
77072......................................... X-rays for bone age............. .............. ..............
77073......................................... X-rays, bone length studies..... .............. ..............
77074......................................... X-rays, bone survey, limited.... .............. ..............
77075......................................... X-rays, bone survey complete.... .............. ..............
77076......................................... X-rays, bone survey, infant..... .............. ..............
77077......................................... Joint survey, single view....... .............. ..............
77078......................................... Ct bone density, axial.......... .............. ..............
77079......................................... Ct bone density, peripheral..... .............. ..............
77080......................................... Dxa bone density, axial......... .............. ..............
77081......................................... Dxa bone density/peripheral..... .............. ..............
77082......................................... Dxa bone density, vert fx....... .............. ..............
77083......................................... Radiographic absorptiometry..... .............. ..............
77084......................................... Magnetic image, bone marrow..... .............. ..............
77300......................................... Radiation therapy dose plan..... .............. ..............
77301......................................... Radiotherapy dose plan, imrt.... .............. ..............
77305......................................... Teletx isodose plan simple...... .............. ..............
77310......................................... Teletx isodose plan intermediate .............. ..............
77315......................................... Teletx isodose plan complex..... .............. ..............
77327......................................... Brachytx isodose calc interm.... .............. ..............
77331......................................... Special radiation dosimetry..... .............. ..............
77336......................................... Radiation physics consult....... .............. ..............
77370......................................... Radiation physics consult....... .............. ..............
77401......................................... Radiation treatment delivery.... .............. ..............
77600......................................... Hyperthermia treatment.......... .............. ..............
77605......................................... Hyperthermia treatment.......... .............. ..............
77610......................................... Hyperthermia treatment.......... .............. ..............
78350......................................... Bone mineral, single photon..... .............. *
80500......................................... Lab pathology consultation...... .............. ..............
80502......................................... Lab pathology consultation...... .............. ..............
85097......................................... Bone marrow interpretation...... .............. ..............
86510......................................... Histoplasmosis skin test........ .............. ..............
86850......................................... RBC antibody screen............. .............. ..............
86870......................................... RBC antibody identification..... .............. ..............
86880......................................... Coombs test, direct............. .............. ..............
86885......................................... Coombs test, indirect, qual..... .............. ..............
86886......................................... Coombs test, indirect, titer.... .............. ..............
86890......................................... Autologous blood process........ .............. ..............
86900......................................... Blood typing, ABO............... .............. ..............
86901......................................... Blood typing, Rh (D)............ .............. ..............
86903......................................... Blood typing, antigen screen.... .............. ..............
86904......................................... Blood typing, patient serum..... .............. ..............
86905......................................... Blood typing, RBC antigens...... .............. ..............
86906......................................... Blood typing, Rh phenotype...... .............. ..............
86930......................................... Frozen blood prep............... .............. ..............
86970......................................... RBC pretreatment................ .............. ..............
86977......................................... RBC pretreatment, serum......... .............. ..............
88104......................................... Cytopath fl nongyn, smears...... .............. ..............
88106......................................... Cytopath fl nongyn, filter...... .............. ..............
88107......................................... Cytopath fl nongyn, sm/fltr..... .............. ..............
88108......................................... Cytopath, concentrate tech...... .............. ..............
88112......................................... Cytopath, cell enhance tech..... .............. ..............
88160......................................... Cytopath smear, other source.... .............. ..............
88161......................................... Cytopath smear, other source.... .............. ..............
88162......................................... Cytopath smear, other source.... .............. ..............
88172......................................... Cytopathology eval of fna....... .............. ..............

[[Page 71819]]

88173......................................... Cytopath eval, fna, report...... .............. ..............
88182......................................... Cell marker study............... .............. ..............
88184......................................... Flowcytometry/tc, 1 marker...... .............. ..............
88185......................................... Flowcytometry/tc, add-on........ .............. ..............
88300......................................... Surgical path, gross............ .............. ..............
88302......................................... Tissue exam by pathologist...... .............. ..............
88304......................................... Tissue exam by pathologist...... .............. ..............
88305......................................... Tissue exam by pathologist...... .............. ..............
88307......................................... Tissue exam by pathologist...... .............. ..............
88311......................................... Decalcify tissue................ .............. ..............
88312......................................... Special stains group 1.......... .............. ..............
88313......................................... Special stains group 2.......... .............. ..............
88314......................................... Histochemical stain add-on...... .............. *
88321......................................... Microslide consultation......... .............. ..............
88323......................................... Microslide consultation......... .............. ..............
88325......................................... Comprehensive review of data.... .............. ..............
88331......................................... Path consult intraop, 1 bloc.... .............. ..............
88342......................................... Immunohistochemistry............ .............. ..............
88346......................................... Immunofluorescent study......... .............. ..............
88347......................................... Immunofluorescent study......... .............. ..............
88348......................................... Electron microscopy............. .............. ..............
88358......................................... Analysis, tumor................. .............. ..............
88360......................................... Tumor immunohistochem/manual.... .............. ..............
88361......................................... Tumor immunohistochem/comput.... .............. ..............
88365......................................... Insitu hybridization (fish)..... .............. ..............
88368......................................... Insitu hybridization, manual.... .............. ..............
89049......................................... Chct for mal hyperthermia....... .............. ..............
89230......................................... Collect sweat for test.......... .............. ..............
89240......................................... Pathology lab procedure......... .............. ..............
90472......................................... Immunization admin, each add.... .............. ..............
90474......................................... Immune admin oral/nasal addl.... .............. ..............
90801......................................... Psy dx interview................ .............. ..............
90802......................................... Intac psy dx interview.......... .............. ..............
90804......................................... Psytx, office, 20-30 min........ .............. ..............
90805......................................... Psytx, off, 20-30 min w/e&m..... .............. ..............
90806......................................... Psytx, off, 45-50 min........... .............. ..............
90807......................................... Psytx, off, 45-50 min w/e&m..... .............. ..............
90808......................................... Psytx, office, 75-80 min........ .............. ..............
90809......................................... Psytx, off, 75-80 min, w/e&m.... .............. ..............
90810......................................... Intac psytx, off, 20-30 min..... .............. ..............
90811......................................... Intac psytx, 20-30 min, w/e&m... .............. ..............
90812......................................... Intac psytx, off, 45-50 min..... .............. ..............
90816......................................... Psytx, hosp, 20-30 min.......... .............. ..............
90818......................................... Psytx, hosp, 45-50 min.......... .............. ..............
90826......................................... Intac psytx, hosp, 45-50 min.... .............. ..............
90845......................................... Psychoanalysis.................. .............. ..............
90846......................................... Family psytx w/o patient........ .............. ..............
90847......................................... Family psytx w/patient.......... .............. ..............
90853......................................... Group psychotherapy............. .............. ..............
90857......................................... Intac group psytx............... .............. ..............
90862......................................... Medication management........... .............. ..............
92002......................................... Eye exam, new patient........... .............. ..............
92004......................................... Eye exam, new patient........... .............. ..............
92012......................................... Eye exam established pat........ .............. ..............
92014......................................... Eye exam & treatment............ .............. ..............
92020......................................... Special eye evaluation.......... .............. ..............
92025......................................... Corneal topography.............. .............. ..............
92060......................................... Special eye evaluation.......... .............. *
92081......................................... Visual field examination(s)..... .............. ..............
92082......................................... Visual field examination(s)..... .............. ..............
92083......................................... Visual field examination(s)..... .............. ..............
92135......................................... Ophth dx imaging post seg....... .............. ..............
92136......................................... Ophthalmic biometry............. .............. ..............
92225......................................... Special eye exam, initial....... .............. ..............
92226......................................... Special eye exam, subsequent.... .............. ..............
92230......................................... Eye exam with photos............ .............. ..............
92240......................................... Icg angiography................. .............. ..............
92250......................................... Eye exam with photos............ .............. ..............
92275......................................... Electroretinography............. .............. ..............
92285......................................... Eye photography................. .............. ..............

[[Page 71820]]

92286......................................... Internal eye photography........ .............. ..............
92520......................................... Laryngeal function studies...... .............. ..............
92541......................................... Spontaneous nystagmus test...... .............. ..............
92542......................................... Positional nystagmus test....... .............. *
92546......................................... Sinusoidal rotational test...... .............. ..............
92548......................................... Posturography................... .............. ..............
92552......................................... Pure tone audiometry, air....... .............. ..............
92553......................................... Audiometry, air & bone.......... .............. ..............
92555......................................... Speech threshold audiometry..... .............. ..............
92556......................................... Speech audiometry, complete..... .............. ..............
92557......................................... Comprehensive hearing test...... .............. ..............
92567......................................... Tympanometry.................... .............. ..............
92582......................................... Conditioning play audiometry.... .............. ..............
92585......................................... Auditor evoke potent, compre.... .............. ..............
92603......................................... Cochlear implt f/up exam 7 >.... .............. ..............
92604......................................... Reprogram cochlear implt 7 >.... .............. ..............
92626......................................... Eval aud rehab status........... .............. ..............
93005......................................... Electrocardiogram, tracing...... .............. ..............
93017......................................... Cardiovascular stress test...... .............. ..............
93225......................................... ECG monitor/record, 24 hrs...... .............. ..............
93226......................................... ECG monitor/report, 24 hrs...... .............. ..............
93231......................................... Ecg monitor/record, 24 hrs...... .............. ..............
93232......................................... ECG monitor/report, 24 hrs...... .............. ..............
93236......................................... ECG monitor/report, 24 hrs...... .............. ..............
93270......................................... ECG recording................... .............. ..............
93271......................................... Ecg/monitoring and analysis..... .............. ..............
93278......................................... ECG/signal-averaged............. .............. ..............
93279......................................... Pm device progr eval, sngl...... .............. *
93280......................................... Pm device progr eval, dual...... .............. *
93281......................................... Pm device progr eval, multi..... .............. *
93282......................................... Icd device progr eval, 1 sngl... .............. *
93283......................................... Icd device progr eval, dual..... .............. *
93284......................................... Icd device progr eval, mult..... .............. *
93285......................................... Ilr device eval progr........... .............. *
93288......................................... Pm device eval in person........ .............. *
93289......................................... Icd device interrogate.......... .............. *
93290......................................... Icm device eval................. .............. *
93291......................................... Ilr device interrogate.......... .............. *
93292......................................... Wcd device interrogate.......... .............. *
93293......................................... Pm phone r-strip device eval.... .............. *
93296......................................... Pm/icd remote tech serv......... .............. *
93306......................................... Tte w/doppler, complete......... .............. *
93786......................................... Ambulatory BP recording......... .............. ..............
93788......................................... Ambulatory BP analysis.......... .............. ..............
93797......................................... Cardiac rehab................... .............. ..............
93798......................................... Cardiac rehab/monitor........... .............. ..............
93875......................................... Extracranial study.............. .............. ..............
93880......................................... Extracranial study.............. .............. ..............
93882......................................... Extracranial study.............. .............. ..............
93886......................................... Intracranial study.............. .............. ..............
93888......................................... Intracranial study.............. .............. ..............
93922......................................... Extremity study................. .............. ..............
93923......................................... Extremity study................. .............. ..............
93924......................................... Extremity study................. .............. ..............
93925......................................... Lower extremity study........... .............. ..............
93926......................................... Lower extremity study........... .............. ..............
93930......................................... Upper extremity study........... .............. ..............
93931......................................... Upper extremity study........... .............. ..............
93965......................................... Extremity study................. .............. ..............
93970......................................... Extremity study................. .............. ..............
93971......................................... Extremity study................. .............. ..............
93975......................................... Vascular study.................. .............. ..............
93976......................................... Vascular study.................. .............. ..............
93978......................................... Vascular study.................. .............. ..............
93979......................................... Vascular study.................. .............. ..............
93990......................................... Doppler flow testing............ .............. ..............
94015......................................... Patient recorded spirometry..... .............. ..............
94690......................................... Exhaled air analysis............ .............. ..............
95115......................................... Immunotherapy, one injection.... .............. ..............
95117......................................... Immunotherapy injections........ .............. ..............

[[Page 71821]]

95165......................................... Antigen therapy services........ .............. ..............
95250......................................... Glucose monitoring, cont........ .............. ..............
95805......................................... Multiple sleep latency test..... .............. ..............
95806......................................... Sleep study unatt & resp efft... .............. ..............
95807......................................... Sleep study, attended........... .............. ..............
95808......................................... Polysomnography, 1-3............ .............. ..............
95812......................................... Eeg, 41-60 minutes.............. .............. ..............
95813......................................... Eeg, over 1 hour................ .............. ..............
95816......................................... Eeg, awake and drowsy........... .............. ..............
95819......................................... Eeg, awake and asleep........... .............. ..............
95822......................................... Eeg, coma or sleep only......... .............. ..............
95869......................................... Muscle test, thor paraspinal.... .............. ..............
95872......................................... Muscle test, one fiber.......... .............. ..............
95900......................................... Motor nerve conduction test..... .............. ..............
95921......................................... Autonomic nerv function test.... .............. ..............
95925......................................... Somatosensory testing........... .............. ..............
95926......................................... Somatosensory testing........... .............. ..............
95930......................................... Visual evoked potential test.... .............. ..............
95950......................................... Ambulatory eeg monitoring....... .............. ..............
95953......................................... EEG monitoring/computer......... .............. ..............
95970......................................... Analyze neurostim, no prog...... .............. ..............
95972......................................... Analyze neurostim, complex...... .............. ..............
95974......................................... Cranial neurostim, complex...... .............. ..............
95978......................................... Analyze neurostim brain/1h...... .............. ..............
96000......................................... Motion analysis, video/3d....... .............. ..............
96101......................................... Psycho testing by psych/phys.... .............. ..............
96111......................................... Developmental test, extend...... .............. ..............
96116......................................... Neurobehavioral status exam..... .............. ..............
96118......................................... Neuropsych tst by psych/phys.... .............. ..............
96119......................................... Neuropsych testing by tec....... .............. ..............
96150......................................... Assess hlth/behave, init........ .............. ..............
96151......................................... Assess hlth/behave, subseq...... .............. ..............
96152......................................... Intervene hlth/behave, indiv.... .............. ..............
96153......................................... Intervene hlth/behave, group.... .............. ..............
96361......................................... Hydrate iv infusion, add-on..... .............. *
96366......................................... Ther/proph/diag iv inf addon.... .............. *
96367......................................... Tx/proph/dg addl seq iv inf..... .............. *
96370......................................... Sc ther infusion, addl hr....... .............. *
96371......................................... Sc ther infusion, reset pump.... .............. *
96375......................................... Tx/pro/dx inj new drug addon.... .............. *
96402......................................... Chemo hormon antineopl sq/im.... .............. ..............
96411......................................... Chemo, iv push, addl drug....... .............. ..............
96415......................................... Chemo, iv infusion, addl hr..... .............. ..............
96417......................................... Chemo iv infus each addl seq.... .............. ..............
96423......................................... Chemo ia infuse each addl hr.... .............. ..............
96900......................................... Ultraviolet light therapy....... .............. ..............
96910......................................... Photochemotherapy with UV-B..... .............. ..............
96912......................................... Photochemotherapy with UV-A..... .............. ..............
96913......................................... Photochemotherapy, UV-A or B.... .............. ..............
96920......................................... Laser tx, skin < 250 sq cm...... .............. ..............
98925......................................... Osteopathic manipulation........ .............. ..............
98926......................................... Osteopathic manipulation........ .............. ..............
98927......................................... Osteopathic manipulation........ .............. ..............
98940......................................... Chiropractic manipulation....... .............. ..............
98941......................................... Chiropractic manipulation....... .............. ..............
98942......................................... Chiropractic manipulation....... .............. ..............
99203......................................... Office/outpatient visit, new.... .............. *
99204......................................... Office/outpatient visit, new.... .............. ..............
99212......................................... Office/outpatient visit, est.... .............. ..............
99213......................................... Office/outpatient visit, est.... .............. ..............
99214......................................... Office/outpatient visit, est.... .............. ..............
99241......................................... Office consultation............. .............. ..............
99242......................................... Office consultation............. .............. ..............
99243......................................... Office consultation............. .............. ..............
99244......................................... Office consultation............. .............. ..............
99245......................................... Office consultation............. .............. ..............
99406......................................... Behav chng smoking 3-10 min..... .............. *
99407......................................... Behav chng smoking > 10 min..... .............. *
0144T......................................... CT heart wo dye; qual calc...... .............. ..............
G0008......................................... Admin influenza virus vac....... .............. ..............

[[Page 71822]]

G0101......................................... CA screen; pelvic/breast exam... .............. ..............
G0127......................................... Trim nail(s).................... .............. ..............
G0130......................................... Single energy x-ray study....... .............. ..............
G0166......................................... Extrnl counterpulse, per tx..... .............. ..............
G0175......................................... OPPS Service,sched team conf.... .............. ..............
G0248......................................... Demonstrate use home inr mon.... .............. *
G0249......................................... Provide INR test mater/equip.... .............. *
G0340......................................... Robt lin-radsurg fractx 2-5..... .............. ..............
G0365......................................... Vessel mapping hemo access...... .............. ..............
G0389......................................... Ultrasound exam AAA screen...... .............. ..............
G0390......................................... Trauma Respons w/hosp criti..... .............. ..............
G0402......................................... Initial preventive exam......... .............. *
G0404......................................... EKG tracing for initial prev.... .............. *
M0064......................................... Visit for drug monitoring....... .............. ..............
Q0091......................................... Obtaining screen pap smear...... .............. ..............
----------------------------------------------------------------------------------------------------------------

Table 2--HCPCS Codes Removed From the CY 2011 Bypass List Because They
Were Deleted Prior to CY 2009
------------------------------------------------------------------------
HCPCS Code HCPCS Short descriptor
------------------------------------------------------------------------
90761............................. Hydrate iv infusion, add-on.
90766............................. Ther/proph/dg iv inf, add-on.
90767............................. Tx/proph/dg addl seq iv inf.
90770............................. Sc ther infusion, addl hr.
90771............................. Sc ther infusion, reset pump.
90775............................. Tx/pro/dx inj new drug add-on.
93727............................. Analyze ilr system.
93731............................. Analyze pacemaker system.
93732............................. Analyze pacemaker system.
93733............................. Telephone analy, pacemaker.
93734............................. Analyze pacemaker system.
93735............................. Analyze pacemaker system.
93736............................. Telephonic analy, pacemaker.
93741............................. Analyze ht pace device sngl.
93742............................. Analyze ht pace device sngl
93743............................. Analyze ht pace device dual.
93744............................. Analyze ht pace device dual.
G0344............................. Initial preventive exam.
G0367............................. EKG tracing for initial prev.
G0376............................. Smoke/tobacco counseling >10.
------------------------------------------------------------------------

c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
In the CY 2011 OPPS/ASC proposed rule (75 FR 46195), we proposed to
continue for CY 2011 to use the hospital-specific overall ancillary and
departmental CCRs to convert charges to estimated costs through
application of a revenue code-to-cost center crosswalk. To calculate
the APC median costs on which the proposed CY 2011 APC payment rates
were based, we calculated hospital-specific overall ancillary CCRs and
hospital-specific departmental CCRs for each hospital for which we had
CY 2009 claims data from the most recent available hospital cost
reports, in most cases, cost reports beginning in CY 2008. For the CY
2011 OPPS proposed rates, we used the set of claims processed during CY
2009. We applied the hospital-specific CCR to the hospital's charges at
the most detailed level possible, based on a revenue code-to-cost
center crosswalk that contains a hierarchy of CCRs used to estimate
costs from charges for each revenue code. That crosswalk is available
for review and continuous comment on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage.
To ensure the completeness of the revenue code-to-cost center
crosswalk, we reviewed changes to the list of revenue codes for CY 2009
(the year of the claims data we used to calculate the CY 2011 OPPS
proposed payment rates). For CY 2009, there were several changes to
these revenue codes. The National Uniform Billing Committee (NUBC) is
the organization that is responsible for the data specifications for
the Uniform Bill (currently the UB-04). For CY 2009, the NUBC changed
the title of revenue code series 076X from ``Specialty Room--Treatment/
Observation Room'' to ``Specialty Services'' and changed the title of
subclassification revenue code 0762 from ``Observation Room'' to
``Observation Hours.'' We did not propose to change the revenue code-
to-cost center crosswalk as a result of this change because we believe
that hospitals have historically reported charges for observation based
on hours of care and that this change reflects existing practices. In
addition, for CY 2009, NUBC removed a note that indicated that
subcategory revenue codes 0912, Behavioral Health Treatment/Services
(also see 091X, an extension of 090X), and 0913, Behavioral Health
Treatment/Services--Extension of 090X, were designed as zero-billed
revenue codes (that is, no dollar in the amount field). This change has
no impact on the revenue code-to-cost center crosswalk. We note that
the addition of revenue codes with effective dates in CY 2010 is not
relevant to this process because the revenue codes were not applicable
to claims for services furnished during CY 2009.
We calculated CCRs for the standard and nonstandard cost centers
accepted by the electronic cost report database. In general, the most
detailed level at which we calculated CCRs was the hospital-specific
departmental level. For a discussion of the hospital-specific overall
ancillary CCR calculation, we refer readers to the CY 2007 OPPS/ASC
final rule with comment period (71 FR 67983 through 67985). One
longstanding exception to this general methodology for calculation of
CCRs used for converting charges to costs on each claim is the
calculation of median blood costs, as discussed in section II.A.2.d.(2)
of the proposed rule and this final rule with comment period and which
has been our standard policy since the CY 2005 OPPS.
For the CCR calculation process, we used the same general approach
that we used in developing the final APC rates for CY 2007 and
thereafter, using the revised CCR calculation that excluded the costs
of paramedical education programs and weighted the outpatient charges
by the volume of outpatient services furnished by the hospital. We
refer readers to the CY 2007 OPPS/ASC final rule with comment period
for more information (71 FR 67983 through 67985). We first limited the
population of cost reports to only those for hospitals that filed
outpatient claims in CY 2009 before determining whether the CCRs for
such hospitals were valid.
We then calculated the CCRs for each cost center and the overall
ancillary CCR for each hospital for which we had claims data. We did
this using hospital-specific data from the Hospital Cost

[[Page 71823]]

Report Information System (HCRIS). We used the most recent available
cost report data, in most cases, cost reports with cost reporting
periods beginning in CY 2007. For the proposed rule, we used the most
recently submitted cost reports to calculate the CCRs to be used to
calculate median costs for the proposed CY 2011 OPPS payment rates. If
the most recent available cost report was submitted but not settled, we
looked at the last settled cost report to determine the ratio of
submitted to settled cost using the overall ancillary CCR, and we then
adjusted the most recent available submitted but not settled cost
report using that ratio. We then calculated both an overall ancillary
CCR and cost center-specific CCRs for each hospital. We used the
overall ancillary CCR referenced in section II.A.1.c. of the proposed
rule for all purposes that require use of an overall ancillary CCR.
Since the implementation of the OPPS, some commenters have raised
concerns about potential bias in the OPPS cost-based weights due to
``charge compression,'' which is the practice of applying a lower
charge markup to higher-cost services and a higher charge markup to
lower-cost services. As a result, the cost-based weights may reflect
some aggregation bias, undervaluing high-cost items and overvaluing
low-cost items when an estimate of average markup, embodied in a single
CCR, is applied to items of widely varying costs in the same cost
center.
To explore this issue, in August 2006, we awarded a contract to RTI
International (RTI) to study the effects of charge compression in
calculating the IPPS cost-based relative weights, particularly with
regard to the impact on inpatient diagnosis-related group (DRG)
payments, and to consider methods to better capture the variation in
cost and charges for individual services when calculating costs for the
IPPS relative weights across services in the same cost center. RTI
issued a report in March 2007 with its findings on charge compression,
which is available on the CMS Web site at: http://www.cms.gov/reports/
downloads/Dalton.pdf. Although this report was focused largely on
charge compression in the context of the IPPS cost-based relative
weights, because several of the findings were relevant to the OPPS, we
discussed that report in the CY 2008 OPPS/ASC proposed rule (72 FR
42641 through 42643) and discussed those findings again in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66599 through 66602).
In August 2007, we contracted with RTI to evaluate the cost
estimation process for the OPPS relative weights because its 2007
report had concentrated on IPPS DRG cost-based relative weights. The
results of RTI's analyses had implications for both the OPPS APC cost-
based relative weights and the IPPS MS-DRG (Medicare severity) cost-
based relative weights. The RTI final report can be found on RTI's Web
site at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/
Refining_Cost_to_Charge_Ratios_200807_Final.pdf. For a complete
discussion of the RTI recommendations, public comments, and our
responses, we refer readers to the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68519 through 68527).
We addressed the RTI finding that there was aggregation bias in
both the IPPS and the OPPS cost estimation of expensive and inexpensive
medical supplies in the FY 2009 IPPS final rule. Specifically, we
finalized our proposal for both the OPPS and IPPS to create one cost
center for ``Medical Supplies Charged to Patients'' and one cost center
for ``Implantable Devices Charged to Patients,'' essentially splitting
the then current CCR for ``Medical Supplies and Equipment'' into one
CCR for low-cost medical supplies and another CCR for high-cost
implantable devices in order to mitigate some of the effects of charge
compression. Accordingly, in Transmittal 20 of the Provider
Reimbursement Manual, Part II (PRM-II), Chapter 36, Form CMS-2552-96,
which was issued in July 2009, we created a new subscripted Line 55.01
on Worksheet A for the ``Implantable Devices Charged to Patients'' cost
center. This new subscripted cost center, placed under the standard
line for ``Medical Supplies Charged to Patients,'' is available for use
for cost reporting periods beginning on or after May 1, 2009. A
subscripted cost center is the addition of a separate new cost center
line and description which bears a logical relationship to the standard
cost center line and is located immediately following a standard cost
center line. Subscripting a cost center line adds flexibility and cost
center expansion capability to the cost report. For example, Line 55 of
Worksheet A on Form CMS 2552-96 (the Medicare hospital cost report) is
``Medical Supplies Charged to Patients.'' The additional cost center,
which isolates the costs of ``Implantable Medical Supplies Charged to
Patients'', was created by adding subscripted Line 55.01 to Worksheet
A.
Because there is approximately a 3-year lag in the availability of
cost report data for IPPS and OPPS ratesetting purposes in a given
calendar year, we believe we will be able to use data from the revised
cost report form to estimate costs from charges for implantable devices
for the CY 2013 OPPS relative weights. For a complete discussion of the
rationale for the creation of the new cost center for ``Implantable
Devices Charged to Patients,'' public comments, and our responses, we
refer readers to the FY 2009 IPPS final rule (73 FR 48458 through
45467).
In the CY 2009 OPPS/ASC final rule with comment period, we
indicated that we would be making some OPPS-specific changes in
response to the RTI report recommendations. Specifically, these changes
included modifications to the cost reporting software and the addition
of three new nonstandard cost centers. With regard to modifying the
cost reporting preparation software in order to offer additional
descriptions for nonstandard cost centers to improve the accuracy of
reporting for nonstandard cost centers, we indicated that the change
would be made for the next release of the cost report software. These
changes have been made to the cost reporting software with the
implementation of CMS Transmittal 21, under Chapter 36 of the Provider
Reimbursement Manual--Part II, available online at http://www.cms.hhs.gov/Manuals/PBM/, which is effective for cost reporting
periods ending on or after October 1, 2009.
We also indicated that we intended to add new nonstandard cost
centers for Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and
Lithotripsy. We note that in January 2010, CMS issued Transmittal 21
which updated the PRM-II, Chapter 36, Form CMS-2552-96. One of the
updates in this transmittal established nonstandard cost centers for
Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and Lithotripsy for
use on Worksheet A. These three new nonstandard cost centers are now
available for cost reporting periods ending on or after October 1,
2009.
Furthermore, we noted in the FY 2010 IPPS/LTCH PPS final rule (74
FR 43781 through 43782) that we were updating the cost report form to
eliminate outdated requirements, in conjunction with the Paperwork
Reduction Act (PRA), and that we had proposed actual changes to the
cost reporting form, the attending cost reporting software, and the
cost report instructions in Chapters 36 and 40 of the PRM-II. The new
draft hospital cost report Form CMS-2552-10

[[Page 71824]]

was published in the Federal Register on July 2, 2009, and was subject
to a 60-day review and comment period, which ended on August 31, 2009.
We received numerous comments on the draft hospital cost report Form
CMS-2552-10, specifically regarding the creation of new cost centers
from which data might be used in the OPPS cost-based relative weights
calculation. We proposed to create new standard cost centers for
Computed Tomography (CT), Magnetic Resonance Imaging (MRI), and Cardiac
Catheterization in Form CMS-2552-10. We also stated that if these
standard cost centers are finalized, when the data become available, we
would analyze the cost and charge data to determine if it is
appropriate to use those data to create distinct CCRs from these cost
centers in setting the relative weights. For a discussion of these cost
centers, we refer readers to the FY 2011 IPPS/LTCH PPS final rule (75
FR 50075 through 50080). Comments will be addressed in detail in the
Federal Register notice that will finalize Form CMS-2552-10. The
revised draft of hospital cost report Form CMS-2552-10 went on public
display on April 23, 2010, and appeared in the Federal Register on
April 30, 2010 (75 FR 22810) with a 30-day public comment period. The
public comment period ended on June 1, 2010. We believe that improved
cost report software, the incorporation of new standard and nonstandard
cost centers, and the elimination of outdated requirements will improve
the accuracy of the cost data contained in the electronic cost report
data files and, therefore, the accuracy of our cost estimation
processes for the OPPS relative weights. We will continue our standard
practice of examining ways in which we can improve the accuracy of our
cost estimation processes.
Comment: One commenter noted that Medicare cost report data show
that there is still much confusion about how hospitals should report
the costs of large imaging equipment. Consequently, the commenter
recommended that CMS delay implementation of the new CT and MRI cost
center data until the cost reports reflect at least 90 percent of CT
and MRI capital costs, based on a comparison to industry average
equipment purchases. Some commenters requested that CMS delay
establishing the new standard cost centers for CT and MRI until the
causes of the associated payment distortions are understood and cost
reporting is improved to more properly allocate large capital costs.
The commenters requested more careful analysis of the impact of
creating the cost centers because of the payment impacts on other
Medicare payment systems. Several commenters encouraged CMS to continue
monitoring the reporting of CT and MRI capital costs over the next few
years. Some commenters recommended that CMS provide explicit,
unambiguous guidance to hospitals on how to improve allocation of the
large capital costs of imaging equipment directly to the new MRI or CT
cost centers. Several commenters supported the decision to establish a
standard cost center for cardiac catheterization but did not support
the creation of cost centers for CT and MRI. Other commenters asked
that CMS ensure that all hospitals are fully educated about the cost
center requirements, ensure that the cost centers are implemented in a
timely manner, and validate the accuracy of the data produced by the
new cost centers to ensure that they are correct and result in more
accurate ratesetting. They did not support use of the resulting cost
center data at the departmental level for ratesetting until after CMS
has produced information on the impact of the use of such data.
Response: We understand the commenters' statements regarding the
challenges and difficulties in appropriately reporting the cost and
charge data accurately for these standard cost centers. We responded to
these concerns in the FY 2011 IPPS/LTCH final rule, including the
treatment of CT and MRI equipment costs as ``major moveable equipment''
rather than as a ``building equipment cost,'' our goal of obtaining
more accurate data in creating these new standard cost centers, the
application of these standard cost centers only for those hospitals who
maintain distinct departments or accounts in their internal accounting
systems for CT scanning, MRI or cardiac catheterization, and other
concerns (75 FR 50076 through 50080). However, we note that hospitals
have been responsible for properly reporting the cost of the equipment
and facilities that are necessary to furnish services for the many
years since the inception of the Medicare program and that the creation
of cost centers for CT, MRI, and cardiac rehabilitation does not alter
the fundamental principles of cost reporting to which hospitals have
been and remain bound and for which they should follow the instructions
in the Medicare Provider Reimbursement Manual.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50080), we finalized
a policy of establishing standard cost centers for CT scanning, MRI
scans, and cardiac catheterization. This policy required hospitals that
furnish these services and maintain distinct departments or accounts in
their internal accounting systems for them to report the costs and
charges under the new cost centers on the revised Medicare cost report
Form CMS 2552-10 for cost report periods beginning on or after May 1,
2010. We established these standard cost centers because we believe
that we should collect cost and charge data for these areas, and use
those data to assess the resulting CCRs specific to CT scanning and MRI
services as a possible means of eliminating aggregation bias for these
and other radiology services in the IPPS and the OPPS. We believe that
establishing these standard cost centers is necessary to improving the
accuracy of estimating costs for imaging services and will allow us to
perform the impact assessment that some commenters want us to do.
In the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 23880) and the CY
2011 OPPS/ASC proposed rule (75 FR 46196), we noted that there is
typically a 3-year lag between the availability of the cost report data
that we use to calculate the relative weights both under the IPPS and
the OPPS and a given fiscal or calendar year, and therefore the data
from the standard cost centers for CT scans, MRI, and cardiac
catheterization respectively, should they be finalized, would not be
available for possible use in calculating the relative weights earlier
than 3 years after Form CMS-2552-10 becomes available. At that time, we
would analyze the data and determine if it is appropriate to use those
data to create distinct CCRs from these cost centers for use in the
relative weights for the respective payment systems. Therefore, we wish
to reassure the commenters that there is no need for immediate concern
regarding possible negative payment impacts on MRI and CT scans under
the IPPS and the OPPS. We will first thoroughly analyze and run impacts
on the data and provide the public with the opportunity to comment, as
usual, before distinct CCRs for MRI and CT scans would be finalized for
use in the calculation of the relative weights. Our decision to
finalize our proposal regarding cost centers for these services is only
the first step to a longer process during which we will continue to
consider public comment.
Comment: One commenter expressed concern over potential payment
changes for cryoablation probes as a result of the cost center creation
of ``Implantable Devices Charged to Patients'' and how hospitals bill
for them. The commenter stated that claims data show hospitals
typically billing for cryoablation probes using revenue code 0272
(Medical/

[[Page 71825]]

Surgical Supplies; Sterile Supplies) rather than revenue code 0278
(Medical/Surgical Supplies; Other Implants). The commenter requested
that interim payment measures regarding how the rates are calculated be
considered until the data demonstrates appropriate revenue assignment
of the devices into revenue code 0278, suggesting that, in the event
that payment for the probes decreases, hospitals may elect not to
provide the service.
Response: In the FY 2009 IPPS final rule (73 FR 48458 through
48467), we explained in detail the reasoning behind the development of
the cost center split for the ``Medical Supplies Charged to Patients''
cost center and our decision to ultimately have hospitals use the
American Hospital Association's National Uniform Billing Committee
(NUBC) revenue codes to determine what would be reported in the
``Medical Supplies Charged to Patients'' and the ``Implantable Devices
Charged to Patients'' cost centers. In that discussion, we noted that
while we require that the device broadly be considered implantable to
have its costs and charges included in the new ``Implantable Devices
Charged to Patients'' cost center, our final policy did not require the
device to remain in the patient at discharge (73 FR 48462 through
48463). In response to comments on our proposal to create the new cost
center in the FY 2009 IPPS final rule, we did define the new
``Implantable Devices Charged to Patients'' cost center by the revenue
codes that we believe would map to this cost center to facilitate ease
of reporting by hospitals. We note that revenue code definitions are
established by the NUBC, and we fully expect hospitals to follow
existing guidelines regarding revenue code use. As we stated in the CY
2010 OPPS/ASC final rule with comment period, with regard to reporting
cryoablation probes, we do not believe that the current NUBC definition
of revenue code 0278 (Medical/Surgical Supplies and Devices (also see
062x, an extension of 027x); Other implants (a)) precludes reporting
hospital charges for cryoablation probes under this revenue code (74 FR
60344). Therefore, we believe hospitals can report charges for
cryoablation probes under the revenue code 0278 using the definitions
in the official UB-04 Data Specifications Manual.
In the FY 2009 IPPS final rule, we noted that using existing
revenue codes and definitions as they have been currently established
by the NUBC made sense, as the definitions have been in place for some
time and are used across all payors (73 FR 48461). Further, we noted
that that methodology and the accuracy of the relative weights are
heavily dependent upon hospitals' reporting practices. Nothing
precludes a hospital that currently reports charges for cryoablation
probes under revenue code 0272 from changing the revenue code under
which it reports charges for cryoablation probes to revenue code 0278
or otherwise, if it determines that doing so would result in more
appropriate payment for the service.
While CMS is responsible for issuing cost reporting instructions
that are clear, hospitals are responsible for ensuring that their cost
reporting and billing practices are consistent and conform to Medicare
policy. We fully expect providers to follow existing guidelines
regarding revenue code use, and we see no basis on which to make
payment on a basis other than the standard OPPS methodology. Therefore,
we are not adopting an interim payment measure in the median cost
calculation of cryoablation probes.
Comment: One commenter requested that CMS acknowledge current
payment inaccuracies for Magnetoencephalography (MEG), also known as
Magnetic Source Imaging. The commenter asked CMS to create a cost
center on the Medicare cost report that would be used solely to capture
hospitals' costs of MEG and indicated that the NUBC had approved a
request for a dedicated revenue code for the reporting of charges for
MEG. The commenter argued that if CMS would create a cost center for
the costs of MEG from which a specific CCR could be developed for
application to MEG charges, the resulting median cost would be a more
accurate reflection of the cost of MEG and would, therefore, result in
more appropriate payment. The commenter suggested that, based on
previous experience where subscripted lines created for MEG identified
significantly different CCRs for the service, there was evidence that
the current methodology of calculating payment for MEG was flawed.
Response: We disagree that a new cost center is needed to capture
the costs of MEG. Over the past several years, we have either proposed
or discussed potential new standard and nonstandard cost centers for
the Medicare hospital cost report in our 2008, 2009, and 2010 hospital
inpatient and outpatient final rules. All of the potential cost centers
that we have discussed for addition to the cost report, whether
standard or nonstandard, have demonstrated volume in the electronic
hospital cost report data. In its July 2008 report on using cost report
data to estimate costs for both the IPPS and OPPS (http://www.rti.org/reports/cms/), RTI International examined the electronic hospital cost
report database and recommended new standard and nonstandard cost
centers on the basis of reporting volume across hospitals. RTI
International typically identified no fewer than 200 institutions
reporting a specific service category, such as cardiac catheterization
or cardiac rehabilitation, in subscripted or other lines for the new
nonstandard and standard cost centers. Historically, our rationale for
adding official nonstandard cost centers to the cost report has been at
the request of Medicare contractors experiencing a significant volume
of requests for a cost center for a specific type of service.
In contrast, the volume of MEG services is extremely low. In the
hospital outpatient CY 2010 OPPS claims data, hospitals reported 131
units of MEG spread among the three CPT codes for MEG among the three
CPT codes for MEG: 52 units of CPT code 95965 (Magnetoencephalography
(MEG), recording and analysis; for spontaneous brain magnetic activity
(e.g. epileptic cerebral cortex localization)); 39 units of CPT code
95966 (Magnetoencephalography (MEG), recording and analysis; for
spontaneous brain magnetic activity (e.g. epileptic cerebral cortex
localization) for evoked magnetic fields, single modality (e.g.
sensory, motor, language or visual cortex localization)); and 40 units
of CPT code 95967 (Magnetoencephalography (MEG), recording and
analysis; for spontaneous brain magnetic activity (e.g. epileptic
cerebral cortex localization), for evoked magnetic fields, each
additional modality (e.g. sensory, motor language, or visual cortex
localization (List separately in addition to code for primary
procedure))). This continues the pattern of low volumes of the total of
the 3 MEG codes that have been reported in the outpatient setting since
the creation of the codes in CY 2005 (39 in CY 2005, 75 in CY 2006, 102
units in CY 2007, 75 units in 2008, 131 units in 2009). Moreover in CY
2009, only 13 hospitals reported CPT code 95965, the highest volume of
the 3 MEG codes. We do not believe that it is necessary to create a
cost center for a service for which so few providers furnish so few
services in a year. We recognize that our claims data show only
Medicare hospital outpatient billings and that there are likely to be
more MEG services that are furnished to Medicare beneficiaries who are
in covered inpatient stays and to patients who are not Medicare
beneficiaries. However,

[[Page 71826]]

the extremely low volume of claims for MEG services furnished to
Medicare beneficiaries in the hospital outpatient setting and the
extremely low number of hospitals that report these codes relative to
the volumes we typically have considered in adding both standard and
nonstandard cost centers to the cost report lead us to conclude that a
specific cost center for MEG is not justified at this time.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to continue to
assign CPT code 95965 (which has a CPT level median of approximately
$2,521) to APC 0067, with a final CY 2010 APC median cost of
approximately $3,272, on which payment will be based, and to continue
to assign CPT codes 95966 (which has a CPT level median of
approximately $1,632) and 96967 (which has a CPT level median of
approximately $1,415) to APC 0065, with a final CY 2010 APC median cost
of approximately $967, on which the payment will be based.
2. Data Development Process and Calculation of Median Costs
In this section of this final rule with comment period, we discuss
the use of claims to calculate final OPPS payment rates for CY 2011.
The hospital OPPS page on the CMS Web site on which this final rule
with comment period is posted provides an accounting of claims used in
the development of the final payment rates at: http://www.cms.gov/
HospitalOutpatientPPS. The accounting of claims used in the development
of this final rule with comment period is included on the CMS Web site
under supplemental materials for this CY 2011 OPPS/ASC final rule with
comment period. That accounting provides additional detail regarding
the number of claims derived at each stage of the process. In addition,
below in this section we discuss the file of claims that comprises the
data set that is available for purchase under a CMS data use agreement.
Our CMS Web site, http://www.cms.gov/HospitalOutpatientPPS, includes
information about purchasing the ``OPPS Limited Data Set,'' which now
includes the additional variables previously available only in the OPPS
Identifiable Data Set, including ICD-9-CM diagnosis codes and revenue
code payment amounts. This file is derived from the CY 2009 claims that
were used to calculate the final payment rates for the CY 2011 OPPS.
We used the methodology described in sections II.A.2.a. through
II.A.2.e. of this final rule with comment period to calculate the
median costs we use to establish the relative weights used in
calculating the final OPPS payment rates for CY 2011 shown in Addenda A
and B to this final rule with comment period. We refer readers to
section II.A.4. of this final rule with comment period for a discussion
of the conversion of APC median costs to scaled payment weights.
a. Claims Preparation
For this final rule with comment period, we used the CY 2009
hospital outpatient claims processed before July 1, 2010 to calculate
the median costs of APCs that underpin the final relative weights for
CY 2011. To begin the calculation of the relative weights for CY 2011,
we pulled all claims for outpatient services furnished in CY 2009 from
the national claims history file. This is not the population of claims
paid under the OPPS, but all outpatient claims (including, for example,
critical access hospital (CAH) claims and hospital claims for clinical
laboratory services for persons who are neither inpatients nor
outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77.
These are claims that providers submitted to Medicare knowing that no
payment would be made. For example, providers submit claims with a
condition code 21 to elicit an official denial notice from Medicare and
document that a service is not covered. We then excluded claims for
services furnished in Maryland, Guam, the U.S. Virgin Islands, American
Samoa, and the Northern Mariana Islands because hospitals in those
geographic areas are not paid under the OPPS.
We divided the remaining claims into the three groups shown below.
Groups 2 and 3 comprise the 110 million claims that contain hospital
bill types paid under the OPPS.
1. Claims that were not bill types 12X, 13X (hospital bill types),
14x (laboratory specimen bill types), or 76X (CMHC bill types). Other
bill types are not paid under the OPPS and, therefore, these claims
were not used to set OPPS payment.
2. Claims that were bill types 12X, 13X or 14X. Claims with bill
types 12X and 13X are hospital outpatient claims. Claims with bill type
14X are laboratory specimen claims, of which we use a subset for the
limited number of services in these claims that are paid under the
OPPS.
3. Claims that were bill type 76X (CMHC).
To convert charges on the claims to estimated cost, we multiplied
the charges on each claim by the appropriate hospital specific CCR
associated with the revenue code for the charge as discussed in section
II.A.1.c. of this final rule with comment period. We then flagged and
excluded CAH claims (which are not paid under the OPPS) and claims from
hospitals with invalid CCRs. The latter included claims from hospitals
without a CCR; those from hospitals paid an all-inclusive rate; those
from hospitals with obviously erroneous CCRs (greater than 90 or less
than 0.0001); and those from hospitals with overall ancillary CCRs that
were identified as outliers (3 standard deviations from the geometric
mean after removing error CCRs). In addition, we trimmed the CCRs at
the cost center (that is, departmental) level by removing the CCRs for
each cost center as outliers if they exceeded +/- 3 standard deviations
from the geometric mean. We used a four-tiered hierarchy of cost center
CCRs, which is the revenue code-to-cost center crosswalk, to match a
cost center to every possible revenue code appearing in the outpatient
claims that is relevant to OPPS services, with the top tier being the
most common cost center and the last tier being the default CCR. If a
hospital's cost center CCR was deleted by trimming, we set the CCR for
that cost center to ``missing'' so that another cost center CCR in the
revenue center hierarchy could apply. If no other cost center CCR could
apply to the revenue code on the claim, we used the hospital's overall
ancillary CCR for the revenue code in question as the default CCR. For
example, if a visit was reported under the clinic revenue code but the
hospital did not have a clinic cost center, we mapped the hospital-
specific overall ancillary CCR to the clinic revenue code. The revenue
code-to-cost center crosswalk is available for inspection and comment
on the CMS Web site: http://www.cms.gov/HospitalOutpatientPPS. Revenue
codes that we do not use to set medians or to model impacts are
identified with an ``N'' in the revenue code-to-cost center crosswalk.
At the February 17-18, 2010 APC Panel Meeting, the Panel
recommended that CMS present to the Data Subcommittee an analysis of
the effect of using a different lower-level threshold in the overall
CCR error trim as part of the standard methodology. The Panel members
were concerned that our current CCR trimming policy (excluding
providers with an overall ancillary CCR greater than 90 or less than
0.0001 or above and then excluding remaining providers with overall
ancillary CCRs beyond +/-3 standard deviations from the geometric mean)
could result in the exclusion of

[[Page 71827]]

claims from providers that could otherwise be used for ratesetting and
modeling. As we indicated in the proposed rule (75 FR 46198), we
accepted this recommendation. At the August 23-24, 2010 APC Panel
meeting, we provided the Data Subcommittee with an analysis that
displayed the number of hospitals trimmed by our current process for
removing hospitals based on aberrant overall ancillary CCRs, as well as
our assessment of the impact if we were to use the error CCR thresholds
established by the IPPS of less than 0.01 and greater than 10.0 (75 FR
50136). Specifically, we found that, using our current trimming
methodology, we trimmed out data from 36 hospitals due to having error
CCRs, while we trimmed data from 61 hospitals because they have CCRs
that were outside 3 standard deviations from the geometric mean. When
we applied the IPPS tolerances, we found that we would trim out data
from 46 hospitals due to having error CCRs, while we would trim data
from 57 hospitals due to the outlier trim (beyond +/-3 standard
deviations from the geometric mean). The slight change between the
numbers occurs because changing the error CCR trim to match the IPPS
tolerances shifts hospitals from being trimmed based on the outlier
trim to being trimmed based on the error trim. The standard outlier
trim is more significant in removing data from hospitals with aberrant
CCRs because it ensures that our claims data are accurately reflective
of hospitals under the OPPS, independent of the actual numeric values
of the CCRs. Observing that the number of hospitals whose data were
removed based on the error CCR trim was limited, that a more
significant number of hospitals were trimmed by the standard trim of
three standard deviations beyond the geometric mean, and that the
impact of adopting the IPPS CCR tolerances had minimal impact on a
small subset of APCs, the Data Subcommittee recommended that CMS
continue to use the current error CCR thresholds of 0.0001 and 90.
We applied the CCRs as described above to claims with bill type
12X, 13X, or 14X, excluding all claims from CAHs and hospitals in
Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the
Northern Mariana Islands and claims from all hospitals for which CCRs
were flagged as invalid.
We identified claims with condition code 41 as partial
hospitalization services of hospitals and moved them to another file.
We note that the separate file containing partial hospitalization
claims is included in the files that are available for purchase as
discussed above.
We then excluded claims without a HCPCS code. We moved to another
file claims that contained nothing but influenza and pneumococcal
pneumonia (PPV) vaccines. Influenza and PPV vaccines are paid at
reasonable cost and, therefore, these claims are not used to set OPPS
rates.
We next copied line-item costs for drugs, blood, and brachytherapy
sources (the lines stay on the claim, but are copied onto another file)
to a separate file. No claims were deleted when we copied these lines
onto another file. These line-items are used to calculate a per unit
mean and median cost and a per day mean and median cost for drugs and
nonimplantable biologicals, therapeutic radiopharmaceutical agents, and
brachytherapy sources, as well as other information used to set payment
rates, such as a unit-to-day ratio for drugs.
To implement our policy adopted in this final rule with comment
period to redistribute some portion of total cost of packaged drugs and
biologicals to the separately payable drugs and biologicals as
acquisition and pharmacy overhead and handling costs discussed in
section V.B.3. of this final rule with comment period, we used the
line-item cost data for drugs and biologicals for which we had a HCPCS
code with ASP pricing information to calculate the ASP+X values, first
for all drugs and biologicals, and then for separately payable drugs
and biologicals and for packaged drugs and biologicals, respectively,
by taking the ratio of total claim cost for each group relative to
total ASP dollars (per unit of each drug or biological HCPCS code's
July 2010 ASP amount multiplied by total units for each drug or
biological in the CY 2009 claims data). These values are ASP+13 percent
(for all drugs and biologicals with HCPCS codes, whether separately
paid or packaged), ASP-1 percent (for drugs and biologicals that are
separately paid), and ASP+296 percent (for drugs and biologicals that
have HCPCS codes and that are packaged), respectively. As we discuss in
section V.B.3. of this final rule with comment period, as we proposed,
in this final rule with comment period, we are redistributing $150
million of the total cost in our claims data for packaged drugs and
biologicals that have an associated ASP from packaged drugs with an ASP
to separately payable drugs and biologicals. As we also proposed, in
this final rule with comment period, we are redistributing an
additional $50 million of the total cost in our claims data for drugs
and biologicals lacking an ASP, largely for estimated costs associated
with uncoded charges billed under pharmacy revenue code series 025X
(Pharmacy (also see 063X, an extension of 025X)), 026X (IV Therapy),
and 063X (Pharmacy--Extension of 025X). We observe approximately $652
million for packaged drugs lacking a HCPCs code and an ASP in our CY
2009 claims data. This total excludes the cost of diagnostic and
therapeutic radiopharmaceuticals because they are not reported under
pharmacy revenue codes or under the pharmacy cost center on the
hospital cost report.
Removing a total of $150 million in pharmacy overhead cost from
packaged drugs and biologicals reduces the $612 million cost of
packaged drugs and biologicals with HCPCS codes and ASPs to $462
million, approximately a 25-percent reduction. Removing $50 million
from the cost of drugs lacking an ASP reduces the $652 million to $602
million, approximately an 8-percent reduction. To implement our CY 2011
policy adopted in this final rule with comment period to redistribute
$150 million in claim cost from packaged drugs and biologicals with an
ASP to separately payable drugs and biologicals and $50 million in
claim cost from packaged drugs and biologicals lacking an ASP,
including uncoded pharmacy revenue code charges, we multiplied the cost
of each packaged drug or biological with a HCPCS code and ASP pricing
information in our CY 2009 claims data by 0.75, and we multiplied all
other packaged drug costs in our CY 2009 claims data, excluding those
for diagnostic radiopharmaceuticals, by 0.92. We also added the
redistributed $200 million to the total cost of separately payable
drugs and biologicals in our CY 2009 claims data, which increased the
relationship between the total cost for separately payable drugs and
biologicals and ASP dollars for the same drugs and biologicals from
ASP-1 percent to ASP+5 percent. We refer readers to section V.B.3. of
this final rule with comment period for a complete discussion of our
policy to pay for separately paid drugs and biologicals and pharmacy
overhead for CY 2011.
We then removed line-items that were not paid during claim
processing, presumably for a line-item rejection or denial. We added
this process to our median cost calculation methodology for the CY 2010
OPPS, as discussed in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60359). The number of edits for valid OPPS payment in the
Integrated Outpatient Code Editor (I/OCE) and elsewhere has grown
significantly in the past few years, especially with the implementation
of

[[Page 71828]]

the full spectrum of National Correct Coding Initiative (NCCI) edits.
To ensure that we are using valid claims that represent the cost of
payable services to set payment rates, we removed line-items with an
OPPS status indicator for the claim year and a status indicator of
``S,'' ``T,'' ``V,'' or ``X'' when separately paid under the
prospective year's payment system. This logic preserves charges for
services that would not have been paid in the claim year but for which
some estimate of cost is needed for the prospective year, such as
services newly proposed to come off the inpatient list for CY 2010 that
were assigned status indicator ``C'' in the claim year. It also
preserves charges for packaged services so that the costs can be
included in the cost of the services with which they are reported, even
if the CPT codes for the packaged services were not paid because the
service is part of another service that was reported on the same claim
or the code otherwise violates claims processing edits.
For CY 2011, for this final rule with comment period, we are
expanding the application of this trim to exclude line-item data for
pass-through drugs and biologicals (status indicator ``G'' for CY 2009)
and nonpass-through drugs and biologicals (status indicator ``K'' for
CY 2009) where the charges reported on the claim for the line were
either denied or rejected during claims processing. Removing lines that
were eligible for payment but were not paid ensures that we are using
appropriate data. The trim avoids using cost data on lines that we
believe were defective or invalid because those rejected or denied
lines did not meet the Medicare requirements for payment. For example,
edits may reject a line for a separately paid drug because the number
of units billed exceeded the number of units that would be reasonable
and, therefore, is likely a billing error (for example, a line
reporting 55 units of a drug for which 5 units is known to be a fatal
dose). For approximately 90 percent of the codes with status indicators
``G'' and ``K'' in their claims year, to which the expansion of the
trim would apply, between 0 and 10 percent of lines would be removed
due to receiving zero payment. As with our trimming in the CY 2010
OPPS/ASC final rule with comment period (74 FR 60359) of line items
with a status indicator of ``S,'' ``T,'' ``V,'' or ``X'', we believe
that unpaid line-items represent services that are invalidly reported
and, therefore, should not be used for ratesetting. We believe that
removing lines with valid status indicators that were edited and not
paid during claims processing increases the accuracy of the single
bills used to determine the mean unit costs for use in the ASP+X
calculation described in section V.B.3. of this final rule with comment
period.
Comment: One commenter requested that CMS conduct analysis of the
overall CCR error trim in 2010 and provide APC-specific impacts for all
radiation oncology services. The commenter also recommended that CMS
consider implementation of a lower-level threshold for the CCR error
trim in future rulemaking.
Response: As we noted above, the impact of moving the lower-level
error CCR threshold is minimal because of its interaction with the
standard trim of all hospitals whose overall ancillary CCR is three
standard deviations beyond the geometric mean. Established tolerances
of 0.0001 and 90 remove those hospitals whose CCRs are highly aberrant
relative to the others in the data set, in particular because they
apply at the hospital level and not at the departmental level. While
the commenter has requested that we conduct an analysis of the impact
of the overall CCR error trim on the APCs for radiation oncology, we
note that this standard error CCR trim is intended to remove all claims
(not limited to a particular category of care) from hospitals with
highly aberrant CCRs so that the relativity of the APC payment weights
is accurate. Therefore, the impact on selected APCs, such as radiation
oncology APCs, is not relevant to a determination of whether a
hospital's overall CCR is so extreme that all claims for the hospital
should be excluded from the data on which the OPPS relative weights are
based. We will continue to monitor whether our established error CCR
thresholds are appropriate. However, based on the recent study we
provided to the APC Panel Data Subcommittee, we agree with the Panel's
assessment that the current error CCR tolerances are appropriate.
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure Claims
(1) Splitting Claims
We then split the remaining claims into five groups: single majors;
multiple majors; single minors; multiple minors; and other claims.
(Specific definitions of these groups follow below.) For CY 2011, we
proposed to continue our current policy of defining major procedures as
any HCPCS code having a status indicator of ``S,'' ``T,'' ``V,'' or
``X;'' defining minor procedures as any code having a status indicator
of ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,'' and
classifying ``other'' procedures as any code having a status indicator
other than one that we have classified as major or minor. For CY 2011,
we proposed to continue assigning status indicator ``R'' to blood and
blood products; status indicator ``U'' to brachytherapy sources; status
indicator ``Q1'' to all ``STVX-packaged codes;'' status indicator
``Q2'' to all ``T-packaged codes;'' and status indicator ``Q3'' to all
codes that may be paid through a composite APC based on composite-
specific criteria or paid separately through single code APCs when the
criteria are not met. As discussed in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68709), we established status indicators
``Q1,'' ``Q2,'' and ``Q3'' to facilitate identification of the
different categories of codes. We proposed to treat these codes in the
same manner for data purposes for CY 2011 as we have treated them since
CY 2008. Specifically, we proposed to continue to evaluate whether the
criteria for separate payment of codes with status indicator ``Q1'' or
``Q2'' are met in determining whether they are treated as major or
minor codes. Codes with status indicator ``Q1'' or ``Q2'' are carried
through the data either with status indicator ``N'' as packaged or, if
they meet the criteria for separate payment, they are given the status
indicator of the APC to which they are assigned and are considered as
``pseudo'' single procedure claims for major codes. Codes assigned
status indicator ``Q3'' are paid under individual APCs unless they
occur in the combinations that qualify for payment as composite APCs
and, therefore, they carry the status indicator of the individual APC
to which they are assigned through the data process and are treated as
major codes during both the split and ``pseudo'' single creation
process. The calculation of the median costs for composite APCs from
multiple procedure major claims is discussed in section II.A.2.e. of
this final rule with comment period.
Specifically, we divided the remaining claims into the following
five groups:
1. Single Procedure Major Claims: Claims with a single separately
payable procedure (that is, status indicator ``S,'' ``T,'' ``V,'' or
``X,'' which includes codes with status indicator ``Q3''); claims with
one unit of a status indicator ``Q1'' code (``STVX-packaged'') where
there was no code with status indicator ``S,'' ``T,'' ``V,'' or ``X''
on the same claim on the same date; or claims with one unit of a status
indicator ``Q2'' code (``T-packaged'') where there was no code with a
status indicator ``T'' on the same claim on the same date.

[[Page 71829]]

2. Multiple Procedure Major Claims: Claims with more than one
separately payable procedure (that is, status indicator ``S,'' ``T,''
``V,'' or ``X,'' which includes codes with status indicator ``Q3''), or
multiple units of one payable procedure. These claims include those
codes with a status indicator ``Q2'' code (``T-packaged'') where there
was no procedure with a status indicator ``T'' on the same claim on the
same date of service but where there was another separately paid
procedure on the same claim with the same date of service (that is,
another code with status indicator ``S,'' ``V,'' or ``X''). We also
include, in this set, claims that contained one unit of one code when
the bilateral modifier was appended to the code and the code was
conditionally or independently bilateral. In these cases, the claims
represented more than one unit of the service described by the code,
notwithstanding that only one unit was billed.
3. Single Procedure Minor Claims: Claims with a single HCPCS code
that was assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,''
``R,'' ``U,'' or ``N'' and not status indicator ``Q1'' (``STVX-
packaged'') or status indicator ``Q2'' (``T-packaged'') code.
4. Multiple Procedure Minor Claims: Claims with multiple HCPCS
codes that are assigned status indicator ``F,'' ``G,'' ``H,'' ``K,''
``L,'' ``R,'' ``U,'' or ``N;'' claims that contain more than one code
with status indicator ``Q1'' (``STVX-packaged'') or more than one unit
of a code with status indicator ``Q1'' but no codes with status
indicator ``S,'' ``T,'' ``V,'' or ``X'' on the same date of service; or
claims that contain more than one code with status indicator ``Q2'' (T-
packaged), or ``Q2'' and ``Q1,'' or more than one unit of a code with
status indicator ``Q2'' but no code with status indicator ``T'' on the
same date of service.
5. Non-OPPS Claims: Claims that contain no services payable under
the OPPS (that is, all status indicators other than those listed for
major or minor status). These claims were excluded from the files used
for the OPPS. Non-OPPS claims have codes paid under other fee
schedules, for example, durable medical equipment or clinical
laboratory tests, and do not contain a code for a separately payable or
packaged OPPS service. Non-OPPS claims include claims for therapy
services paid sometimes under the OPPS but billed, in these non-OPPS
cases, with revenue codes indicating that the therapy services would be
paid under the Medicare Physician Fee Schedule (MPFS).
The claims listed in numbers 1, 2, 3, and 4 above are included in
the data file that can be purchased as described above. Claims that
contain codes to which we have assigned status indicators ``Q1''
(``STVX-packaged'') and ``Q2'' (``T-packaged'') appear in the data for
the single major file, the multiple major file, and the multiple minor
file used in this final rule with comment period. Claims that contain
codes to which we have assigned status indicator ``Q3'' (composite APC
members) appear in both the data of the single and multiple major files
used in this final rule with comment period, depending on the specific
composite calculation.
We did not receive any public comments on our proposed process of
organizing claims by type. Therefore, for the reasons set forth in the
proposed rule (75 CFR 46199), we are finalizing our CY 2011 proposal
without modification.
(2) Creation of ``Pseudo'' Single Procedure Claims
As proposed, to develop ``pseudo'' single procedure claims for this
final rule with comment period, we examined both the multiple procedure
major claims and the multiple procedure minor claims. We first examined
the multiple major procedure claims for dates of service to determine
if we could break them into ``pseudo'' single procedure claims using
the dates of service for all lines on the claim. If we could create
claims with single major procedures by using dates of service, we
created a single procedure claim record for each separately payable
procedure on a different date of service (that is, a ``pseudo''
single).
As proposed, for this final rule with comment period, we also used
the bypass codes listed earlier in Table 1 and discussed in section
II.A.1.b. of this final rule with comment period to remove separately
payable procedures that we determined contained limited or no packaged
costs or that were otherwise suitable for inclusion on the bypass list
from a multiple procedure bill. As discussed above, we ignore the
``overlap bypass codes,'' that is, those HCPCS codes that are both on
the bypass list and are members of the multiple imaging composite APCs,
in this initial assessment for ``pseudo'' single procedure claims. The
CY 2011 ``overlap bypass codes'' are listed in Table 1 in section
II.A.1.b. of this final rule with comment period. When one of the two
separately payable procedures on a multiple procedure claim was on the
bypass list, we split the claim into two ``pseudo'' single procedure
claim records. The single procedure claim record that contained the
bypass code did not retain packaged services. The single procedure
claim record that contained the other separately payable procedure (but
no bypass code) retained the packaged revenue code charges and the
packaged HCPCS code charges. We also removed lines that contained
multiple units of codes on the bypass list and treated them as
``pseudo'' single procedure claims by dividing the cost for the
multiple units by the number of units on the line. Where one unit of a
single, separately payable procedure code remained on the claim after
removal of the multiple units of the bypass code, we created a
``pseudo'' single procedure claim from that residual claim record,
which retained the costs of packaged revenue codes and packaged HCPCS
codes. This enabled us to use claims that would otherwise be multiple
procedure claims and could not be used.
As proposed, for this final rule with comment period, we then
assessed the claims to determine if the criteria for the multiple
imaging composite APCs, discussed in section II.A.2.e.(5) of this final
rule with comment period, were met. Where the criteria for the imaging
composite APCs were met, we created a ``single session'' claim for the
applicable imaging composite service and determined whether we could
use the claim in ratesetting. For HCPCS codes that are both
conditionally packaged and are members of a multiple imaging composite
APC, we first assessed whether the code would be packaged and, if so,
the code ceased to be available for further assessment as part of the
composite APC. Because the packaged code would not be a separately
payable procedure, we considered it to be unavailable for use in
setting the composite APC median cost. Having identified ``single
session'' claims for the imaging composite APCs, we reassessed the
claim to determine if, after removal of all lines for bypass codes,
including the ``overlap bypass codes,'' a single unit of a single
separately payable code remained on the claim. If so, we attributed the
packaged costs on the claim to the single unit of the single remaining
separately payable code other than the bypass code to create a
``pseudo'' single procedure claim. We also identified line-items of
overlap bypass codes as a ``pseudo'' single procedure claim. This
allowed us to use more claims data for ratesetting purposes.
As proposed, for this final rule with comment period, we also
examined the multiple procedure minor claims to determine whether we
could create ``pseudo'' single procedure claims. Specifically, where
the claim contained multiple codes with status indicator

[[Page 71830]]

``Q1'' (``STVX-packaged'') on the same date of service or contained
multiple units of a single code with status indicator ``Q1,'' we
selected the status indicator ``Q1'' HCPCS code that had the highest CY
2010 relative weight, set the units to one on that HCPCS code to
reflect our policy of paying only one unit of a code with a status
indicator of ``Q1.'' We then packaged all costs for the following into
a single cost for the ``Q1'' HCPCS code that had the highest CY 2010
relative weight to create a ``pseudo'' single procedure claim for that
code: Additional units of the status indicator ``Q1'' HCPCS code with
the highest CY 2010 relative weight; other codes with status indicator
``Q1''; and all other packaged HCPCS codes and packaged revenue code
costs. We changed the status indicator for selected codes from the data
status indicator of ``N'' to the status indicator of the APC to which
the selected procedure was assigned for further data processing and
considered this claim as a major procedure claim. We used this claim in
the calculation of the APC median cost for the status indicator ``Q1''
HCPCS code.
Similarly, as we proposed, for this final rule with comment period,
where a multiple procedure minor claim contained multiple codes with
status indicator ``Q2'' (``T-packaged'') or multiple units of a single
code with status indicator ``Q2,'' we selected the status indicator
``Q2'' HCPCS code that had the highest CY 2010 relative weight, set the
units to one on that HCPCS code to reflect our policy of paying only
one unit of a code with a status indicator of ``Q2.'' We then packaged
all costs for the following into a single cost for the ``Q2'' HCPCS
code that had the highest CY 2010 relative weight to create a
``pseudo'' single procedure claim for that code: Additional units of
the status indicator ``Q2'' HCPCS code with the highest CY 2010
relative weight; other codes with status indicator ``Q2;'' and other
packaged HCPCS codes and packaged revenue code costs. We changed the
status indicator for the selected code from a data status indicator of
``N'' to the status indicator of the APC to which the selected code was
assigned, and we considered this claim as a major procedure claim.
Lastly, as proposed, for this final rule with comment period, where
a multiple procedure minor claim contained multiple codes with status
indicator ``Q2'' (``T-packaged'') and status indicator ``Q1'' (``STVX-
packaged''), we selected the status indicator ``Q2'' HCPCS code (``T-
packaged'') that had the highest relative weight for CY 2010 and set
the units to one on that HCPCS code to reflect our policy of paying
only one unit of a code with a status indicator of ``Q2.'' We then
packaged all costs for the following into a single cost for the
selected (``T-packaged'') HCPCS code to create a ``pseudo'' single
procedure claim for that code: Additional units of the status indicator
``Q2'' HCPCS code with the highest CY 2010 relative weight; other codes
with status indicator ``Q2;'' codes with status indicator ``Q1''
(``STVX-packaged''); and other packaged HCPCS codes and packaged
revenue code costs. We favor status indicator ``Q2'' over ``Q1'' HCPCS
codes because ``Q2'' HCPCS codes have higher CY 2010 relative weights.
If a status indicator ``Q1'' HCPCS code had a higher CY 2010 relative
weight, it would become the primary code for the simulated single bill
process. We changed the status indicator for the selected status
indicator ``Q2'' (``T-packaged'') code from a data status indicator of
``N'' to the status indicator of the APC to which the selected code was
assigned and we considered this claim as a major procedure claim.
In public comments received on the CY 2010 OPPS/ASC proposed rule,
a public commenter suggested that CMS could use more claims data to
develop medians for these conditionally packaged codes if CMS applied
the ``pseudo'' single creation process to the conditionally packaged
codes in the multiple major claims that still contained unusable data.
We agreed with the commenter and in the CY 2011 proposed rule, we
proposed to use the otherwise unusable multiple procedure claims data
that remain after the standard pseudo single creation process is
applied to them, in order to create more pseudo single procedure
claims. We did not receive any public comments on this proposal, and
therefore, for the reasons set forth in the proposed rule (75 FR
46201), we followed this practice in creating pseudo single bills for
the proposed rule and this final rule with comment period. We do this
by treating the conditionally packaged codes that do not meet the
criteria for packaging as if they were separately payable major codes
and applying the pseudo single process to the claims data to create
single procedure claims from them if they meet the criteria for single
procedure claims. Conditionally packaged codes are identified using
status indicators ``Q1'' and ``Q2,'' and are described in section
XIII.A.1. of this final rule with comment period. Using the February
2010 APC Panel data, we estimated that the impact of adding this
proposed additional step to the pseudo single creation process would
result in a small increase in the number of claims usable for
ratesetting in most cases, but with more significant increases of
between 5 to 10 percent of claims for a few codes. For most of the
codes affected by adding this proposed additional step to the
``pseudo'' single creation process, we found no significant changes to
the APC medians. Some HCPCS codes do experience some fluctuations, with
the impact of additional claims causing their APC median to decrease.
We believe that this change is consistent with our goal of using more
available data from within the existing set of claims information and
results in a more accurate estimation of the APC median cost for
conditionally packaged services.
As proposed, for this final rule with comment period, we excluded
those claims that we were not able to convert to single procedure
claims even after applying all of the techniques for creation of
``pseudo'' single procedure claims to multiple procedure major claims
and to multiple procedure minor claims. As has been our practice in
recent years, we also excluded claims that contained codes that were
viewed as independently or conditionally bilateral and that contained
the bilateral modifier (Modifier 50 (Bilateral procedure)) because the
line-item cost for the code represented the cost of two units of the
procedure, notwithstanding that hospitals billed the code with a unit
of one.
c. Completion of Claim Records and Median Cost Calculations
As proposed, for this final rule with comment period, we then
packaged the costs of packaged HCPCS codes (codes with status indicator
``N'' listed in Addendum B to this final rule with comment period and
the costs of those lines for codes with status indicator ``Q1'' or
``Q2'' when they are not separately paid), and the costs of the
services reported under packaged revenue codes in Table 3 that appeared
on the claim without a HCPCS code into the cost of the single major
procedure remaining on the claim.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation
that CMS should review the final list of packaged revenue codes for
consistency with OPPS policy and ensure that future versions of the I/
OCE edit accordingly. As we have in the past, we will continue to
compare the final list of packaged revenue codes that we adopt for CY
2011 to the revenue codes that

[[Page 71831]]

the I/OCE will package for CY 2011 to ensure consistency.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68531), we replaced the NUBC standard abbreviations for the revenue
codes listed in Table 2 of the CY 2009 OPPS/ASC proposed rule with the
most current NUBC descriptions of the revenue code categories and
subcategories to better articulate the meanings of the revenue codes
without changing the proposed list of revenue codes. In the CY 2010
OPPS/ASC final rule with comment period (74 FR 60362 through 60363), we
finalized changes to the packaged revenue code list based on our
examination of the updated NUBC codes and public comment to the CY 2010
proposed list of packaged revenue codes. As proposed, for this CY 2011
OPPS/ASC final rule with comment period, we reviewed the changes to
revenue codes that were effective during CY 2009 for purposes of
determining the charges reported with revenue codes but without HCPCS
codes that we would package for the CY 2011 OPPS. As we discuss in the
context of the revenue code-to-cost center crosswalk in section
II.A.1.c. of this final rule with comment period, for CY 2009, the NUBC
changed the title of revenue code series 076x from ``Specialty Room--
Treatment/Observation Room'' to ``Specialty Services'' and changed the
title of subclassification revenue code 0762 from ``Observation Room''
to ``Observation Hours.'' In addition, the NUBC deleted an explanatory
note following revenue code 0913, ``Behavioral Health Treatment
Services--Extension of 090x.'' As we proposed, for this final rule with
comment period, we are revising the title for revenue code 076x,
Observation Hours, in Table 3 to comport to the CY 2009 revenue code
title for revenue code 076x. There is no need to revise the table as a
result of the deletion of the explanatory note. We believe that the
charges reported under the revenue codes listed in Table 3 continue to
reflect ancillary and supportive services for which hospitals report
charges without HCPCS codes. Therefore, as we proposed, we are
continuing to package the costs that we derive from the charges
reported under the revenue codes displayed in Table 3 below for
purposes of calculating the median costs on which the CY 2011 OPPS are
based.
We did not receive any public comments on the proposed packaged
revenue codes for CY 2011. Therefore, for the reasons set forth in the
proposed rule (75 FR 46201) we are finalizing the proposed packaged
revenue codes for CY 2011, without modification, which are identified
in Table 3 below. We note that these revenue codes include only revenue
codes that were in effect for CY 2009, the year of the claims data on
which the CY 2011 OPPS payment rates are based.

Table 3--CY 2011 Packaged Revenue Codes
------------------------------------------------------------------------
Revenue code Description
------------------------------------------------------------------------
0250.................. Pharmacy; General Classification.
0251.................. Pharmacy; Generic Drugs.
0252.................. Pharmacy; Non-Generic Drugs.
0254.................. Pharmacy; Drugs Incident to Other Diagnostic
Services.
0255.................. Pharmacy; Drugs Incident to Radiology.
0257.................. Pharmacy; Non-Prescription.
0258.................. Pharmacy; IV Solutions.
0259.................. Pharmacy; Other Pharmacy.
0260.................. IV Therapy; General Classification.
0261.................. IV Therapy; Infusion Pump.
0262.................. IV Therapy; IV Therapy/Pharmacy Svcs.
0263.................. IV Therapy; IV Therapy/Drug/Supply Delivery.
0264.................. IV Therapy; IV Therapy/Supplies.
0269.................. IV Therapy; Other IV Therapy.
0270.................. Medical/Surgical Supplies and Devices; General
Classification.
0271.................. Medical/Surgical Supplies and Devices; Non-
sterile Supply.
0272.................. Medical/Surgical Supplies and Devices; Sterile
Supply.
0275.................. Medical/Surgical Supplies and Devices;
Pacemaker.
0276.................. Medical/Surgical Supplies and Devices;
Intraocular Lens.
0278.................. Medical/Surgical Supplies and Devices; Other
Implants.
0279.................. Medical/Surgical Supplies and Devices; Other
Supplies/Devices.
0280.................. Oncology; General Classification.
0289.................. Oncology; Other Oncology.
0343.................. Nuclear Medicine; Diagnostic
Radiopharmaceuticals.
0344.................. Nuclear Medicine; Therapeutic
Radiopharmaceuticals.
0370.................. Anesthesia; General Classification.
0371.................. Anesthesia; Anesthesia Incident to Radiology.
0372.................. Anesthesia; Anesthesia Incident to Other DX
Services.
0379.................. Anesthesia; Other Anesthesia.
0390.................. Administration, Processing and Storage for Blood
and Blood Components; General Classification.
0392.................. Administration, Processing and Storage for Blood
and Blood Components; Processing and Storage.
0399.................. Administration, Processing and Storage for Blood
and Blood Components; Other Blood Handling.
0621.................. Medical Surgical Supplies--Extension of 027X;
Supplies Incident to Radiology.
0622.................. Medical Surgical Supplies--Extension of 027X;
Supplies Incident to Other DX Services.
0623.................. Medical Supplies--Extension of 027X, Surgical
Dressings.
0624.................. Medical Surgical Supplies--Extension of 027X;
FDA Investigational Devices.
0630.................. Pharmacy--Extension of 025X; Reserved.
0631.................. Pharmacy--Extension of 025X; Single Source Drug.
0632.................. Pharmacy--Extension of 025X; Multiple Source
Drug.
0633.................. Pharmacy--Extension of 025X; Restrictive
Prescription.
0681.................. Trauma Response; Level I Trauma.
0682.................. Trauma Response; Level II Trauma.
0683.................. Trauma Response; Level III Trauma.

[[Page 71832]]

0684.................. Trauma Response; Level IV Trauma.
0689.................. Trauma Response; Other.
0700.................. Cast Room; General Classification.
0710.................. Recovery Room; General Classification.
0720.................. Labor Room/Delivery; General Classification.
0721.................. Labor Room/Delivery; Labor.
0732.................. EKG/ECG (Electrocardiogram); Telemetry.
0762.................. Specialty services; Observation Hours.
0801.................. Inpatient Renal Dialysis; Inpatient
Hemodialysis.
0802.................. Inpatient Renal Dialysis; Inpatient Peritoneal
Dialysis (Non-CAPD).
0803.................. Inpatient Renal Dialysis; Inpatient Continuous
Ambulatory Peritoneal Dialysis (CAPD).
0804.................. Inpatient Renal Dialysis; Inpatient Continuous
Cycling Peritoneal Dialysis (CCPD).
0809.................. Inpatient Renal Dialysis; Other Inpatient
Dialysis.
0810.................. Acquisition of Body Components; General
Classification.
0819.................. Inpatient Renal Dialysis; Other Donor.
0821.................. Hemodialysis-Outpatient or Home; Hemodialysis
Composite or Other Rate.
0824.................. Hemodialysis-Outpatient or Home; Maintenance.--
100%.
0825.................. Hemodialysis-Outpatient or Home; Support
Services.
0829.................. Hemodialysis-Outpatient or Home; Other OP
Hemodialysis.
0942.................. Other Therapeutic Services (also see 095X, an
extension of 094x); Education/Training.
0943.................. Other Therapeutic Services (also see 095X, an
extension of 094X), Cardiac Rehabilitation.
0948.................. Other Therapeutic Services (also see 095X, an
extension of 094X), Pulmonary Rehabilitation.
------------------------------------------------------------------------

In accordance with our longstanding policy, we are continuing to
exclude: (1) Claims that had zero costs after summing all costs on the
claim; and (2) claims containing packaging flag number 3. Effective for
services furnished on or after July 1, 2004, the I/OCE assigned
packaging flag number 3 to claims on which hospitals submitted token
charges less than $1.01 for a service with status indicator ``S'' or
``T'' (a major separately payable service under the OPPS) for which the
fiscal intermediary or MAC was required to allocate the sum of charges
for services with a status indicator equaling ``S'' or ``T'' based on
the relative weight of the APC to which each code was assigned. We do
not believe that these charges, which were token charges as submitted
by the hospital, are valid reflections of hospital resources.
Therefore, we deleted these claims. We also deleted claims for which
the charges equaled the revenue center payment (that is, the Medicare
payment) on the assumption that where the charge equaled the payment,
to apply a CCR to the charge would not yield a valid estimate of
relative provider cost. As we proposed, for this final rule with
comment period, we are continuing these processes for the CY 2011 OPPS.
As proposed, for this final rule with comment period, for the
remaining claims, we then standardized 60 percent of the costs of the
claim (which we have previously determined to be the labor-related
portion) for geographic differences in labor input costs. We made this
adjustment by determining the wage index that applied to the hospital
that furnished the service and dividing the cost for the separately
paid HCPCS code furnished by the hospital by that wage index. The
claims accounting that we provide for the proposed and final rule
contains the formula we use to standardize the total cost for the
effects of the wage index. As has been our policy since the inception
of the OPPS, we proposed to use the pre-reclassified wage indices for
standardization because we believe that they better reflect the true
costs of items and services in the area in which the hospital is
located than the post-reclassification wage indices and, therefore,
would result in the most accurate unadjusted median costs.
In accordance with our longstanding practice, as proposed, for this
final rule with comment period, we also excluded single and pseudo
single procedure claims for which the total cost on the claim was
outside 3 standard deviations from the geometric mean of units for each
HCPCS code on the bypass list (because, as discussed above, we used
claims that contain multiple units of the bypass codes).
After removing claims for hospitals with error CCRs, claims without
HCPCS codes, claims for immunizations not covered under the OPPS, and
claims for services not paid under the OPPS, approximately 105 million
claims were left. Using these 105 million claims, we created
approximately 103 million single and ``pseudo'' single procedure
claims, of which we used slightly more than 101 million single bills
(after trimming out approximately 792,000 claims as discussed above in
this section) in the final CY 2011 median development and ratesetting.
We used these claims to calculate the final CY 2011 median costs
for each separately payable HCPCS code and each APC. The comparison of
HCPCS code-specific and APC medians determines the applicability of the
2 times rule. Section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the group is more than 2 times greater than the lowest
median cost for an item or service within the same group (the 2 times
rule). We note that, for purposes of identifying significant HCPCS for
examination in the 2 times rule, we consider codes that have more than
1,000 single major claims or codes that have both more than 99 single
major claims and contribute at least 2 percent of the single major
claims used to establish the APC median cost to be significant.
Unlisted codes are not used in establishing the percent of claims
contributing to the APC, nor are their costs used in the calculation of
the APC median. Finally, we reviewed the median costs for the services
for which we are paying separately under this final rule with comment
period, and we reassigned HCPCS codes to different APCs where it was
necessary to ensure clinical and resource homogeneity within the APCs.
Section III of this final

[[Page 71833]]

rule with comment period includes a discussion of many of the HCPCS
code assignment changes that resulted from examination of the median
costs and for other reasons. The APC medians were recalculated after we
reassigned the affected HCPCS codes. Both the HCPCS code-specific
medians and the APC medians were weighted to account for the inclusion
of multiple units of the bypass codes in the creation of ``pseudo''
single procedure claims.
As we discuss in sections II.A.2 d. and II.A.2.e. and in section
X.B. of this final rule with comment period, in some cases, APC median
costs are calculated using variations of the process outlined above.
Specifically, section II.A.2.d. of this final rule with comment period
addresses the calculation of single APC criteria-based median costs.
Section II.A.2.e. of this final rule with comment period discusses the
calculation of composite APC criteria-based median costs. Section X.B.
of this final rule with comment period addresses the methodology for
calculating the median cost for partial hospitalization services.
We received several general comments on the payment rates CMS
proposed in the CY 2011 OPPS/ASC proposed rule:
Comment: Several commenters objected to the volatility of the OPPS
rates from year to year. The commenters asserted that the absence of
stability in the OPPS rates creates budgeting, planning, and operating
problems for hospitals. One commenter suggested that the median costs
from claims be adjusted to limit changes from year to year. Some
commenters asked that CMS limit any decreases in payment compared to
the prior year to no more than a 10-percent decline.
Response: There are a number of factors pertinent to the OPPS that
may cause median costs to change from one year to the next. Some of
these are a reflection of hospital behavior, and some of them are a
reflection of fundamental characteristics of the OPPS as defined in
statute. For example, the OPPS payment rates are based on hospital cost
report and claims data. However, hospital costs and charges change each
year and this results in both changes to the CCRs taken from the most
currently available cost reports and also differences in the charges on
the claims that are the basis of the calculation of the median costs on
which OPPS rates are based. Similarly, hospitals adjust their mix of
services from year to year by offering new services and ceasing to
furnish services and changing the proportion of the various services
they furnish, which have an impact on the CCRs that we derive from
their cost reports. CMS cannot stabilize these hospital-driven
fundamental inputs to the calculation of OPPS payment rates.
Moreover, there are other essential elements of the OPPS that
contribute to the changes in relative weights each year. These include,
but are not limited to, reassignments of HCPCS codes to APCs to rectify
2 times rule violations as required by the law, to address the costs of
new services, to address differences in hospitals' costs that may
result from changes in medical practice, and to respond to public
comments. Our efforts to improve payment accuracy may also contribute
to payment volatility in the short run, as may be the case when we may
eventually be able to use more specific CCRs to estimate the costs of
implantable devices, based on the final policy that we adopted to
disaggregate the single cost center for medical supplies into two more
specific cost centers, as described in the FY 2009 IPPS final rule (73
FR 48458 through 48467). Moreover, for some services, we cannot avoid
using small numbers of claims, either because the volume of services is
naturally low or because the claims data do not facilitate the
calculation of a median cost for a single service. Where there are
small numbers of claims that are used in median calculation, there is
more volatility in the median cost from one year to the next. Lastly,
changes to OPPS payment policy (for example, changes to packaging) also
contribute, to some extent, to the fluctuations in the OPPS payment
rates for the same services from year to year.
We cannot avoid the naturally occurring volatility in the cost
report and claims data that hospitals submit and on which the payment
rates are based. Moreover (with limited exceptions), we reassign HCPCS
codes to APCs where it is necessary to avoid 2 times rule violations.
However, we have made other changes to resolve some of the other
potential reasons for instability from year to year. Specifically, we
continue to seek ways to use more claims data so that we have fewer
APCs for which there are small numbers of single bills used to set the
APC median costs. Moreover, we have tried to eliminate APCs with very
small numbers of single bills where we could do so. We recognize that
changes to payment policies, such as the packaging of payment for
ancillary and supportive services and the implementation of composite
APCs, may contribute to volatility in payment rates in the short term,
but we believe that larger payment packages and bundles should help to
stabilize payments in the long term by enabling us to use more claims
data and by establishing payments for larger groups of services.
While we recognize the reasoning behind a request to limit
reductions in the weights or payment rates of the OPPS, this would not
be as simple or beneficial as commenters have implied. Implementing
such a policy would require the assumption that payment policy is
static from year to year. Based on the data used to develop the OPPS,
we know that this is not true. Further, in seeking to mitigate
fluctuations in the OPPS, implementing such a system would make
payments less reflective of the true service costs. Limiting decreases
to payments across all APCs in a budget neutral payment system could
unfairly reduce the payments for other services due to the effects of
the scaling that is necessary to maintain budget neutrality and would
distort the realtivity of payment that is based on the cost of all
services.
Comment: Several commenters noted that an analysis of the hospital
Medicare cost reports showed a disturbing trend of negative margins and
a wide gap between the outpatient margins of major teaching hospitals
and those of all other hospitals. The commenters recommended that CMS
study whether the hospital outpatient costs of teaching hospitals are
higher than the costs of other hospitals for purposes of determining
whether there should be a teaching hospital adjustment. The commenters
requested that CMS conduct its own analysis and that if that analysis
showed a difference due to the unique missions of teaching hospitals,
CMS should add a teaching adjustment to the OPPS.
Response: Unlike payment under the IPPS, section 1833(t) of the Act
does not require payment for indirect medical education costs to be
made under the OPPS. However, section 1833(t)(2)(E) of the Act provides
the Secretary with authority to make adjustments under the OPPS in
certain circumstances. Specifically, section 1833(t)(2)(E) of the Act
states that the Secretary shall establish, in a budget neutral manner
``* * * other adjustments as determined to be necessary to ensure
equitable payments, such as adjustments for certain classes of
hospitals.'' We have not found such an adjustment to be necessary to
ensure equitable payments to teaching hospitals and, therefore, have
not developed such an adjustment. Furthermore, in this final rule with
comment period, we have developed payment weights that we believe
provide appropriate and adequate payment for the complex medical
services, such as new technology

[[Page 71834]]

services and device-dependent procedures, which we understand are
furnished largely by teaching hospitals. We note that teaching
hospitals benefit from the recalibration of the APCs in this final rule
with comment period and that teaching hospitals benefit from being
generally located in areas with relatively high wage indices. With
respect to the comment that teaching hospitals experience negative
margins and a wide gap in payment between teaching hospitals and other
hospitals, we note it is not clear the extent to which a gap between
teaching hospitals and other hospitals may be attributable to OPPS or
to the costs of medical education for which the law provides payment
outside the OPPS. The final CY 2011 impacts by class of hospital are
displayed in Table 66 in section XX.B. of this final rule with comment
period.
APC Panel Recommendations Regarding Data Development
At the August 2010 APC Panel Meeting, we provided the APC Panel a
list of all APCs decreasing by more than 5 percent and increasing by
more than 15 percent when comparing the proposed CY 2011 median costs
based on data available for the August 2010 APC Panel meeting from CY
2009 claims processed through June 30, 2010, to those based on CY 2010
OPPS/ASC final rule data (CY 2008 claims). The APC Panel reviewed these
fluctuations in the APC median costs and recommended that CMS continue
to identify increases or decreases in APC median costs of 10 percent or
greater and that CMS develop and present explanatory information on
APCs with significant changes. The Panel believes that this would help
the Data Subcommittee to be able to identify APCs that fluctuate due to
coding and APC reassignment changes, and allow them to focus on those
that required more investigation. We accept this comment and will
furnish the Panel with these data. We note that, in some cases, we may
be unable to clearly identify causes for median cost changes, but we
will provide explanatory information to the extent possible.
At its August 23-24, 2010 meeting, the APC Panel made a number of
recommendations related to the data process. The Panel's
recommendations and our responses follow. In instances where we discuss
the issue on which the Panel made a recommendation elsewhere in this
preamble, we provide the cross-reference to the appropriate section of
this final rule with comment period.
Recommendation 1
The Panel recommends that CMS retain the current overall ancillary
cost-to-charge ratio (CCR) trim tolerances of 0.0001, 90, and +/- 3
standard deviations from the geometric mean for determining the
hospitals whose claims are to be included in ratesetting. The study
upon which the Panel based this recommendation is described in section
II.A.2.a. of this final rule with comment period.
We are accepting this recommendation.
Recommendation 2
The Panel recommends that CMS investigate and report at a future
Panel meeting on the reason for the decline in median cost for APC 0307
(Myocardial Positron Emission Tomography (PET) Imaging) from the
calendar year (CY) 2010 OPPS to the proposed CY 2011 OPPS.
This recommendation and APC specific-policies are discussed in
section III.D. of this final rule with comment period.
Recommendation 3
The Panel recommends that CMS identify increases or decreases in
APC median costs of 10 percent or greater and that CMS develop and
present explanatory information on APCs with significant changes.
We are accepting this recommendation, and we discuss APC median
cost fluctuations and the recommendation to identify these changes and
their potential causes in this section.
Recommendation 4
The Panel commends CMS for providing data analyses requested by the
Data Subcommittee.
We appreciate this recommendation.
Recommendation 5
The Panel recommends that Patrick Grusenmeyer, Sc.D., be named
chair of the Data Subcommittee.
We are accepting this recommendation.
Recommendation 6
The Panel recommends that the work of the Data Subcommittee
continue.
We are accepting this most recent recommendation, and we will
continue to work closely with the APC Panel's Data Subcommittee to
prepare and review data and analyses relevant to the APC configurations
and OPPS payment policies for hospital outpatient items and services.
d. Calculation of Single Procedure APC Criteria-Based Median Costs
(1) Device-Dependent APCs
Device-dependent APCs are populated by HCPCS codes that usually,
but not always, require that a device be implanted or used to perform
the procedure. For a full history of how we have calculated payment
rates for device-dependent APCs in previous years and a detailed
discussion of how we developed the standard device-dependent APC
ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66739 through 66742). Overviews of the
procedure-to-device edits and device-to-procedure edits used in
ratesetting for device-dependent APCs are available in the CY 2005 OPPS
final rule with comment period (69 FR 65761 through 65763) and the CY
2007 OPPS/ASC final rule with comment period (71 FR 68070 through
68071).
In the CY 2011 OPPS/ASC proposed rule (75 FR 46204 through 46205),
we proposed to continue for CY 2011 to use the standard methodology for
calculating median costs for device-dependent APCs that was finalized
in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60365).
This methodology utilizes claims data that generally represent the full
cost of the required device. Specifically, we proposed to calculate the
median costs for device-dependent APCs for CY 2011 using only the
subset of single procedure claims from CY 2009 claims data that pass
the procedure-to-device and device-to-procedure edits; do not contain
token charges (less than $1.01) for devices; do not contain the ``FB''
modifier signifying that the device was furnished without cost to the
provider, supplier, or practitioner, or where a full credit was
received; and do not contain the ``FC'' modifier signifying that the
hospital received partial credit for the device. The ``FC'' modifier
became effective January 1, 2008, and was present for the first time on
claims that were used in OPPS ratesetting for CY 2010. The procedure-
to-device edits require that when a particular procedural HCPCS code is
billed, the claim must also contain an appropriate device code, while
the device-to-procedure edits require that a claim that contains one of
a specified set of device codes also contain an appropriate procedure
code. We stated in the proposed rule that we continue to believe the
standard methodology for calculating median costs for device-dependent
APCs gives us the most appropriate median costs for device-

[[Page 71835]]

dependent APCs in which the hospital incurs the full cost of the
device.
The median costs for the majority of device-dependent APCs that
were calculated using the CY 2011 proposed rule claims data were
generally stable, with most median costs increasing moderately compared
to the median costs upon which the CY 2010 OPPS payment rates were
based. However, the median costs for APC 0225 (Implantation of
Neurostimulator Electrodes, Cranial Nerve) and APC 0418 (Insertion of
Left Ventricular Pacing Electrode) demonstrated significant
fluctuation. Specifically, the proposed CY 2011 median cost for APC
0225 increased approximately 40 percent compared to its final CY 2010
median cost, while the proposed CY 2011 median cost for APC 0418, which
had increased approximately 53 percent from CY 2009 to CY 2010, showed
a decrease of approximately 27 percent based on the claims data
available for the proposed rule. We indicated in the CY 2011 OPPS/ASC
proposed rule that we believe the fluctuations in median costs for
these two APCs are a consequence of the small number of single bills
upon which the median costs are based and the small number of providers
of these services. As we have stated in the past, some fluctuation in
relative costs from year to year is to be expected in a prospective
payment system for low volume device-dependent APCs, particularly where
there are small numbers of single bills from a small number of
providers.
Comment: Several commenters supported CMS' proposal to continue
using the standard methodology for calculating median costs for device-
dependent APCs. Some commenters recommended that CMS continue examining
and refining the ratesetting methodology for procedures involving
devices in order to encourage the continued development and
proliferation of new technology. Some commenters also requested the
mandatory reporting of all HCPCS device C-codes on hospital claims for
services involving devices. The commenters urged CMS to continue
educating hospitals on the importance of accurate coding for devices,
supplies, and other technologies, and to continue to encourage
hospitals to remain vigilant in reporting the costs of performing
services involving devices, in order to help ensure that these items
are more appropriately reflected in future years' payment rates for
outpatient services.
Response: We appreciate the commenters' support of the continued
use of the standard device-dependent APC ratesetting methodology.
As we have stated in the past (73 FR 68535 through 68536 and 74 FR
60367), we agree that accurate reporting of device, supply, and
technology charges will help to ensure that these items are
appropriately accounted for in future years' OPPS payment rates. We
encourage stakeholders to carefully review HCPCS code descriptors, as
well as any guidance CMS may have provided for specific HCPCS codes. In
addition, we have provided further instructions on the billing of
medical and surgical supplies in the October 2008 OPPS update
(Transmittal 1599, Change Request 6196, dated September 19, 2008) and
the April 2009 OPPS update (Transmittal 1702, Change Request 6416,
dated March 13, 2009). For HCPCS codes that are paid under the OPPS,
providers may also submit inquiries to the AHA Central Office on HCPCS,
which serves as a clearinghouse on the proper use of Level I HCPCS
codes for hospitals and certain Level II HCPCS codes for hospitals,
physicians, and other health professionals. Inquiries must be submitted
using the approved form, which may be downloaded from the AHA Web site
(http://www.ahacentraloffice.org) and either faxed to 312-422-4583 or
mailed directly to the AHA Central Office: Central Office on HCPCS,
American Hospital Association, One North Franklin, Floor 29, Chicago,
IL 60606.
As we have stated in the past (74 FR 60367), we agree with the
commenters that we should continue to encourage the development and
proliferation of new technology under the OPPS. We have special
mechanisms to provide payment for new technologies and services under
the OPPS, including new technology APCs and transitional pass-through
payments devices. We refer readers to sections III.C. and IV.A.,
respectively, of this final rule with comment period for more
information on these payment methodologies. For all OPPS services, we
continue our efforts to use the data from as many claims as possible,
through approaches such as use of the bypass list and date splitting of
claims as described further in section II.A. of this final rule with
comment period, and through methodologies such as increased packaging
and composite APCs.
Comment: Several commenters supported the proposed CY 2011 payment
rate for the implantation of auditory osseointegrated devices,
described by CPT codes 69714 (Implantation, osseointegrated implant,
temporal bone, with percutaneous attachment to external speech
processor/cochlear stimulator; without mastoidectomy); 69715
(Implantation, osseointegrated implant, temporal bone, with
percutaneous attachment to external speech processor/cochlear
stimulator; with mastoidectomy); 69717 (Replacement (including removal
of existing device), osseointegrated implant, temporal bone, with
percutaneous attachment to external speech processor/cochlear
stimulator; without mastoidectomy); and 69718 (Replacement (including
removal of existing device), osseointegrated implant, temporal bone,
with percutaneous attachment to external speech processor/cochlear
stimulator; with mastoidectomy), which are assigned to APC 0425. Other
commenters also supported the proposed payment rate for APC 0259 (Level
VII ENT Procedures), which includes the insertion of a cochlear
implant.
Response: We appreciate the commenters' support of the proposed
payment rates for procedures involving auditory osseointegrated devices
and cochlear implants. We agree that the payment rates for APCs 0259
and 0425, calculated according to the standard device-dependent APC
ratesetting methodology for the proposed rule and this final rule with
comment period, appropriately reflect hospitals' relative costs for
providing these procedures as reported to us in the claims and cost
report data.
Comment: One commenter concurred with CMS' determination that APC
0385 (Level I Prosthetic Urological Procedures) and APC 0386 (Level II
Prosthetic Urological Procedures) continue to be recognized as device-
dependent APCs. The commenter supported CMS' continued application of
procedure-to-device edits for procedures assigned to these APCs to
ensure the reporting of the appropriate C-code for all device-dependent
APCs.
Response: We appreciate the commenter's support of the continued
recognition of APCs 0385 and 0386 as device-dependent APCs. We agree
that claims processing edits for devices that are integral to the
performance of procedures assigned to device-dependent APCs are an
important element of the standard device-dependent APC ratesetting
methodology.
Comment: Some commenters recommended that CMS create a new APC for
three CPT codes currently assigned to APC 0425 (Level II Arthroplasty
or Implantation with Prosthesis): CPT code 24363 (Arthroplasty, elbow;
with distal humerus and proximal ulnar prosthetic

[[Page 71836]]

replacement (e.g.., total elbow)); CPT code 25446 (Arthroplasty with
prosthetic replacement; distal radius and partial or entire carpus
(total wrist)); and CPT code 27446 (Arthroplasty, knee, condyle and
plateau; medial OR lateral compartment). One commenter suggested that
it would be acceptable also to include CPT code 23470 (Arthroplasty,
glenohumeral joint; hemiarthroplasty) in the new APC. According to the
commenters, CMS should create a new APC because the proposed payment
rate for APC 0425 would result in a significant underpayment for these
arthroplasty procedures. The commenters argued that the broad range in
the median costs of procedures assigned to APC 0425 violates the 2
times rule.
Response: We do not believe that it is necessary to create a new
APC for arthroplasty procedures. We do not agree with the assertion
that the current placement of CPT codes 24363, 25446, and 27446 in APC
0425 would result in significant underpayment for these services.
Payment based on a measure of central tendency is a principle of any
prospective payment system. As we have stated in the past (73 FR
68562), in some individual cases, payment exceeds the average cost, and
in other cases, payment is less than the average cost. However, on
balance, payment should approximate the relative cost of the average
case, recognizing that, as a prospective payment system, the OPPS is a
system of averages. As stated in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66639) and the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68546), a fundamental characteristic of a
prospective payment system is that payment is to be set at an average
for the service which, by definition, means that some services are paid
more or less than the average.
We also do not agree with the commenters' claim that the current
configuration of APC 0425 violates the 2 times rule, which indicates
that an APC group cannot be considered comparable with respect to the
use of resources if the highest median cost (or mean cost if elected by
the Secretary) for an item or service in the group is more than 2 times
greater than the lowest median cost (or mean cost, if so elected) for
an item or service within the same group. As we describe in section
III.B.2. of the proposed rule and this final rule with comment period,
we make exceptions to the 2 times rule in unusual cases, such as low-
volume items and services, and we only consider significant procedures
for purposes of the 2 times assessment. We define significant
procedures as those with a single claim frequency of greater than 1,000
or those with a frequency of greater than 99 and that constitute at
least 2 percent of single claims in the APC. There are three
significant procedures in APC 0425, CPT codes 27446, 23470, and 69714.
The CY 2009 hospital outpatient claims used for CY 2011 ratesetting
show that the median cost of the lowest cost significant service in the
APC, described by CPT code 69714, is approximately $8,212, compared to
approximately $9,557 for the highest cost significant service. Based on
our claims data, there is no 2 times violation in APC 0425.
Comment: Several commenters have noted that, as discussed earlier
in this section, APC 0418 (Insertion of Left Ventricular Pacing
Electrode) has demonstrated a significant fluctuation in median costs.
The commenters agreed that a significant contributing factor to this
fluctuation is a low volume of single bills available for use in
ratesetting. The commenters suggested that CMS develop composite APCs
for cardiac resynchronization services in order to enable CMS to use
more claims data in median cost calculations and to create more
appropriate payment rates.
Response: For all OPPS services, we continue our efforts to use the
data from as many multiple procedure claims as possible, through
approaches such as use of the bypass list and date splitting of claims
as described further in section II.A. of this final rule with comment
period, and through methodologies such as increased packaging and
composite APCs. We refer readers to section II.A.2.e. of this final
rule with comment period for a detailed summary of the public comments
related to the establishment of a composite payment methodology for
procedures involving cardiac resynchronization therapy services and our
responses.
After consideration of the public comments we received, we are
finalizing our proposed CY 2011 payment policies for device-dependent
APCs without modification. The CY 2011 OPPS payment rates for device-
dependent APCs are based on their median costs calculated from CY 2009
claims and the most recent cost report data, using only single
procedure claims that pass the procedure-to-device and device-to-
procedure edits, do not contain token charges for devices, do not have
an ``FB'' modifier signifying that the device was furnished without
cost or with full credit, and do not contain an ``FC'' modifier
signifying that the hospital received partial credit for the device. We
continue to believe that the median costs calculated from the single
claims that meet these criteria represent the most valid estimated
relative costs of these services to hospitals when they incur the full
cost of the devices required to perform the procedures.
Table 4 below lists the APCs for which we used our standard device-
dependent APC ratesetting methodology for CY 2011. We note that we are
adding two new device-dependent APCs for CY 2011 to Table 4 APC 0318
(Implantation of Cranial Neurostimulator Pulse Generator and Electrode)
and APC 0319 (Endovascular Revascularization of the Lower Extremity).
As discussed in sections II.A.2.d.7. and II.A.2.d.9. of this final rule
with comment period, we are creating these new device-dependent APCs in
order to accommodate revisions to coding in CY 2011 for services that
were previously assigned to other device-dependent APCs. We also are
deleting APC 0225 from Table 4 below because it is replaced with APC
0318 for CY 2011. We refer readers to Addendum A to this final rule
with comment period for the final payment rates for these APCs.

Table 4--CY 2011 Device-Dependent APCs
------------------------------------------------------------------------
CY 2011 Status
CY 2011 APC indicator CY 2011 APC Title
------------------------------------------------------------------------
0039........................... S Level I Implantation
of Neurostimulator
Generator.
0040........................... S Percutaneous
Implantation of
Neurostimulator
Electrodes.
0061........................... S Laminectomy,
Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electrodes.
0082........................... T Coronary or Non-
Coronary Atherectomy.
0083........................... T Coronary or Non-
Coronary Angioplasty
and Percutaneous
Valvuloplasty.
0084........................... S Level I
Electrophysiologic
Procedures.

[[Page 71837]]

0085........................... T Level II
Electrophysiologic
Procedures.
0086........................... T Level III
Electrophysiologic
Procedures.
0089........................... T Insertion/Replacement
of Permanent
Pacemaker and
Electrodes.
0090........................... T Insertion/Replacement
of Pacemaker Pulse
Generator.
0104........................... T Transcatheter
Placement of
Intracoronary Stents.
0106........................... T Insertion/Replacement
of Pacemaker Leads
and/or Electrodes.
0107........................... T Insertion of
Cardioverter-
Defibrillator.
0108........................... T Insertion/Replacement/
Repair of
Cardioverter-
Defibrillator Leads.
0115........................... T Cannula/Access Device
Procedures.
0202........................... T Level VII Female
Reproductive
Procedures.
0227........................... T Implantation of Drug
Infusion Device.
0229........................... T Transcatheter
Placement of
Intravascular Shunts.
0259........................... T Level VII ENT
Procedures.
0293........................... T Level V Anterior
Segment Eye
Procedures.
0315........................... S Level II Implantation
of Neurostimulator
Generator.
0318........................... S Implantation of
Cranial
Neurostimulator Pulse
Generator and
Electrode.
0319........................... T Endovascular
Revascularization of
the Lower Extremity.
0384........................... T GI Procedures with
Stents.
0385........................... S Level I Prosthetic
Urological
Procedures.
0386........................... S Level II Prosthetic
Urological
Procedures.
0418........................... T Insertion of Left
Ventricular Pacing
Electrode.
0425........................... T Level II Arthroplasty
or Implantation with
Prosthesis.
0427........................... T Level II Tube or
Catheter Changes or
Repositioning.
0622........................... T Level II Vascular
Access Procedures.
0623........................... T Level III Vascular
Access Procedures.
0648........................... T Level IV Breast
Surgery.
0652........................... T Insertion of
Intraperitoneal and
Pleural Catheters.
0653........................... T Vascular
Reconstruction/
Fistula Repair with
Device.
0654........................... T Insertion/Replacement
of a Permanent Dual
Chamber Pacemaker.
0655........................... T Insertion/Replacement/
Conversion of a
Permanent Dual
Chamber Pacemaker.
0656........................... T Transcatheter
Placement of
Intracoronary Drug-
Eluting Stents.
0674........................... T Prostate Cryoablation.
0680........................... S Insertion of Patient
Activated Event
Recorders.
------------------------------------------------------------------------

(2) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46206), we proposed
for CY 2011 to continue to establish payment rates for blood and blood
products using our blood-specific CCR methodology, which utilizes
actual or simulated CCRs from the most recently available hospital cost
reports to convert hospital charges for blood and blood products to
costs. This methodology has been our standard ratesetting methodology
for blood and blood products since CY 2005. It was developed in
response to data analysis indicating that there was a significant
difference in CCRs for those hospitals with and without blood-specific
cost centers, and past public comments indicating that the former OPPS
policy of defaulting to the overall hospital CCR for hospitals not
reporting a blood-specific cost center often resulted in an
underestimation of the true hospital costs for blood and blood
products. Specifically, in order to address the differences in CCRs and
to better reflect hospitals' costs, we proposed to continue to simulate
blood CCRs for each hospital that does not report a blood cost center
by calculating the ratio of the blood-specific CCRs to hospitals'
overall CCRs for those hospitals that do report costs and charges for
blood cost centers. We would then apply this mean ratio to the overall
CCRs of hospitals not reporting costs and charges for blood cost
centers on their cost reports in order to simulate blood-specific CCRs
for those hospitals. We calculated the median costs upon which the
proposed CY 2011 payment rates for blood and blood products were based
using the actual blood-specific CCR for hospitals that reported costs
and charges for a blood cost center and a hospital-specific simulated
blood-specific CCR for hospitals that did not report costs and charges
for a blood cost center.
We indicated in the CY 2011 OPPS/ASC proposed rule (75 FR 46206)
that we continue to believe the hospital-specific, blood-specific CCR
methodology better responds to the absence of a blood-specific CCR for
a hospital than alternative methodologies, such as defaulting to the
overall hospital CCR or applying an average blood-specific CCR across
hospitals. Because this methodology takes into account the unique
charging and cost accounting structure of each hospital, we believe
that it yields more accurate estimated costs for these products. We
indicated that we believe that continuing with this methodology in CY
2011 would result in median costs for blood and blood products that
appropriately reflect the relative estimated costs of these products
for hospitals without blood cost centers and, therefore, for these
blood products in general.
We requested public comments in the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60373) that addressed whether plasma protein
fraction (PPF) products should be recognized as blood and blood
products,

[[Page 71838]]

designated with status indicator ``R,'' or as nonpass-through drugs and
biologicals, designated with status indicator ``K.'' Specifically, we
were interested in how PPF is derived and manufactured, and whether the
same access and safety concerns that apply to the blood and blood
products recognized under the OPPS for payment purposes also apply to
PPF. Finally, we were interested in the relationship between albumin
and PPF, from clinical, manufacturing, and safety perspectives, and
whether there would be a rationale for treating these products
similarly for OPPS payment purposes.
Comment: Several commenters asserted that CMS' proposed payments
for blood and blood products fail to cover the acquisition and overhead
costs incurred by hospitals for procuring, storing, and processing
blood and blood products, especially high volume products such as
leukocyte reduced red blood cells, described by HCPCS code P9016 (Red
blood cells, leukocytes reduced, each unit). Several commenters noted
that the most recent preliminary data from the National Blood
Collection and Utilization Survey support this assertion, and that the
Bureau of Labor and Statistics Producer Price Index (PPI) for blood and
blood products increased 1.8 percent in 2010 compared to 2009. Other
commenters stated that, as the costs of blood and blood products
continue to rise, it is important for CMS to ensure that APC payment
rates keep pace with technological advances, safety measures, and donor
recruitment challenges. They believed that the 2-year lag inherent in
the OPPS ratesetting process does not allow current payment rates to
reflect these rising costs.
Response: As we indicated in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60372), we continue to believe that using blood-
specific CCRs applied to hospital claims data results in payments that
appropriately reflect hospitals' relative costs of providing blood and
blood products as reported to us by hospitals. We do not believe it is
necessary or appropriate to use the PPI for blood and organ banks or
survey data as a benchmark for updating the payment rates for blood and
blood products from year to year, because it is not our standard
process under the OPPS for any item or service to update payment rates
by implementing across-the-board, product-specific inflation updates,
or updates based on survey data, to the payment rates that were in
place the year before. Rather, we annually update payment groups and
payment weights using the most recently available hospital claims and
cost report data. This process allows us to recalibrate the payment
groups and payment weights in response to changes in hospitals' costs
from year to year. A fundamental principle of the OPPS is that it is
based on relative weights, and as we have stated in the past (73 FR
68541), it is the relativity of the costs to one another, rather than
absolute cost, that is important in setting payment rates. To deviate
from our standard OPPS ratesetting methodology and update the payment
rates for blood and blood products by the PPI or based on survey data
would skew this relativity. We also note that the median costs per unit
(calculated using the blood-specific CCR methodology) for this final
rule with comment period increase for the majority of the most commonly
provided blood and blood products (including the highest volume blood
and blood product, described by HCPCS code P9016) by 4 percent or
greater compared to the CY 2010 median costs.
For all APCs whose payment rates are based upon relative payment
weights, we note that the quality and accuracy of reported units and
charges significantly influence the median costs that are the basis for
our payment rates, especially for low volume items and services. Beyond
our standard OPPS trimming methodology (described in section II.A.2. of
this final rule with comment period) that we apply to those claims that
have passed various types of claims processing edits, it is not our
general policy to judge the accuracy of hospital coding and charging
for purposes of ratesetting.
Comment: One commenter requested that CMS exclude blood and blood
products from the reductions to the increase factor for OPPS services
that are mandated by section 3401(i) of the Affordable Care Act.
Response: As discussed in section II.B.1. of this final rule with
comment period, for CY 2011, section 3401(i) of the Affordable Care Act
mandates a 0.25 percent reduction to the OPPS increase factor. The law
does not exclude blood and blood products from this reduction in
payment for CY 2011, and we see no basis to implement an exclusion.
Comment: One commenter responded to the request for public comments
made in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60373) concerning whether CMS should recognize PPF products as drugs
under the OPPS and assign status indicator ``K,'' rather than
recognizing them as blood and blood products and assigning them status
indicator ``R.'' The same stakeholder also commented on the proposal in
the CY 2011 OPPS/ASC proposed rule to maintain the ``R'' status
indicators for these products in CY 2011. In both comment letters, the
commenter delineated the relationship between PPF and albumin,
indicating that, according to the American Association of Blood Banks
(AABB) and the American Hospital Formulary Service, albumin and PPF are
derived through very similar processes from human plasma, although PPF
is subject to fewer purification steps. According to the commenter,
neither albumin nor PPF is given through a filter as is common with
blood products, they possess similar pharmacologic properties,
contraindications, precautions and adverse reactions; and they are
commonly administered interchangeably. The commenter stated that,
unlike blood products, PPF and albumin should be stored similarly and
not frozen, and although there is potential for transmission of human
virus, the risk is rare. The commenter further stated that they do not
require type and crossmatching, contain no coagulation factors, and are
compatible with whole blood and whole packed red blood cells. Finally,
according to the commenter, the AABB indicates in its billing guide for
transfusion that albumin and PPF are both blood derivatives. The
commenter again recommended that CMS assign HCPCS codes P9043
(Infusion, plasma protein fraction (human), 5%, 50 ml) and P9048
(Infusion, plasma protein fraction (human), 5%, 250 ml) to status
indicator ``K.'' The commenter also requested that CMS instruct
hospitals to bill for PPF using pharmacy revenue codes, and appropriate
injection or infusion CPT codes rather than the CPT code for blood
transfusion because the commenter believed this product is a blood
derivative.
Response: In the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60373), we indicated that, because changing the status
indicators for these products as the commenter recommended could have
significant payment implications, we are seeking information and input
from all interested stakeholders. Specifically, changing the status
indicator from ``R'' to ``K'' would require us to calculate the payment
rates for PPF using mean unit costs from hospital claims data, as we
currently do for albumin products, rather than using our standard
blood-specific CCR methodology for blood and blood products. We did not
receive public comments from other stakeholders within the blood
community regarding this potential change in policy, either in response
to

[[Page 71839]]

the CY 2010 OPPS/ASC final rule with comment period or to the CY 2011
OPPS/ASC proposed rule, and we do not believe we have sufficient
clinical information at this time to warrant changing how we have paid
for PPF for the last several years. Therefore, we do not believe it is
appropriate to change the status indicator assignments for HCPCS codes
P9043 and P9048 from status indicator ``R'' to status indicator ``K''
for CY 2011.
After consideration of the public comments we received, we are
finalizing, without modification, our CY 2011 proposal to calculate
median costs upon which the CY 2011 payments rates for blood and blood
products are based using our blood-specific CCR methodology, which
utilizes actual or simulated CCRs from the most recently available
hospital cost reports to convert hospital charges for blood and blood
products to costs (the methodology we have utilized since CY 2005). We
believe that continuing this methodology in CY 2011 results in median
costs for blood and blood products that appropriately reflect the
relative estimated costs of these products for hospitals without blood
cost centers and, therefore, for these products in general.
We refer readers to Addendum B to this final rule with comment
period for the final CY 2011 payment rates for blood and blood
products, which are identified with status indicator ``R.'' For a more
detailed discussion of the blood-specific CCR methodology, we refer
readers to the CY 2005 OPPS proposed rule (69 FR 50524 through 50525).
For a full history of OPPS payment for blood and blood products, we
refer readers to the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66807 through 66810).
(3) Single Allergy Tests
In the CY 2011 OPPS/ASC proposed rule (75 FR 46206), we proposed to
continue with our methodology of differentiating single allergy tests
(``per test'') from multiple allergy tests (``per visit'') by assigning
these services to two different APCs to provide accurate payments for
these tests in CY 2011. Multiple allergy tests are currently assigned
to APC 0370 (Allergy Tests), with a median cost calculated based on the
standard OPPS methodology. We provided billing guidance in CY 2006 in
Transmittal 804 (issued on January 3, 2006) specifically clarifying
that hospitals should report charges for the CPT codes that describe
single allergy tests to reflect charges ``per test'' rather than ``per
visit'' and should bill the appropriate number of units (as defined in
the CPT code descriptor) of these CPT codes to describe all of the
tests provided. However, as noted in the proposed rule, our CY 2009
claims data available for the proposed rule for APC 0381 did not
reflect improved and more consistent hospital billing practices of
``per test'' for single allergy tests. The median cost of APC 0381,
calculated for the proposed rule according to the standard single
claims OPPS methodology, was approximately $52, significantly higher
than the CY 2010 median cost of APC 0381 of approximately $29
calculated according to the ``per unit'' methodology, and greater than
we would expect for these procedures that are to be reported ``per
test'' with the appropriate number of units. Some claims for single
allergy tests still appear to provide charges that represent a ``per
visit'' charge, rather than a ``per test'' charge. Therefore,
consistent with our payment policy for single allergy tests since CY
2006, we calculated a proposed ``per unit'' median cost for APC 0381,
based upon 595 claims containing multiple units or multiple occurrences
of a single CPT code. The proposed CY 2011 median cost for APC 0381
using the ``per unit'' methodology was approximately $29. For a full
discussion of this methodology, we refer readers to the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66737).
We did not receive any public comments on our CY 2011 proposal for
determining payment of single allergy tests. We are finalizing our CY
2011 proposal, without modification, to calculate a ``per unit'' median
cost for APC 0381 as described above in this section. The final CY 2011
median cost of APC 0381 is approximately $33.
(4) Hyperbaric Oxygen Therapy (APC 0659)
Since the implementation of OPPS in August 2000, the OPPS has
recognized HCPCS code C1300 (Hyperbaric oxygen under pressure, full
body chamber, per 30 minute interval) for hyperbaric oxygen therapy
(HBOT) provided in the hospital outpatient setting. In the CY 2005
final rule with comment period (69 FR 65758 through 65759), we
finalized a ``per unit'' median cost calculation for APC 0659
(Hyperbaric Oxygen) using only claims with multiple units or multiple
occurrences of HCPCS code C1300 because delivery of a typical HBOT
service requires more than 30 minutes. We observed that claims with
only a single occurrence of the code were anomalies, either because
they reflected terminated sessions or because they were incorrectly
coded with a single unit. In the same rule, we also established that
HBOT would not generally be furnished with additional services that
might be packaged under the standard OPPS APC median cost methodology.
This enabled us to use claims with multiple units or multiple
occurrences. Finally, we also used each hospital's overall CCR to
estimate costs for HCPCS code C1300 from billed charges rather than the
CCR for the respiratory therapy or other departmental cost centers. The
public comments on the CY 2005 OPPS proposed rule effectively
demonstrated that hospitals report the costs and charges for HBOT in a
wide variety of cost centers. Since CY 2005, we have used this
methodology to estimate the median cost for HBOT. The median costs of
HBOT using this methodology have been relatively stable for the last 5
years.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46206), for CY 2011,
we proposed to continue using the same methodology to estimate a ``per
unit'' median cost for HCPCS code C1300. This methodology resulted in a
proposed APC median cost of approximately $109 using 328,960 claims
with multiple units or multiple occurrences for HCPCS code C1300 for CY
2011.
We did not receive any public comments on our proposal to continue
to use our established ratesetting methodology for calculating the
median cost of APC 0659 for payment of HBOT for CY 2011. We are
finalizing our CY 2011 proposal, without modification, to continue to
use our established ratesetting methodology for calculating the median
cost of APC 0659 for payment of HBOT, with a final CY 2011 median cost
of approximately $150.
(5) Payment for Ancillary Outpatient Services When Patient Expires (APC
0375)
In the November 1, 2002 final rule with comment period (67 FR
66798), we discussed the creation of the new HCPCS modifier -CA to
address situations where a procedure on the OPPS inpatient list must be
performed to resuscitate or stabilize a patient (whose status is that
of an outpatient) with an emergent, life-threatening condition, and the
patient dies before being admitted as an inpatient. HCPCS modifier -CA
is defined as a procedure payable only in the inpatient setting when
performed emergently on an outpatient who expires prior to admission.
In Transmittal A-02-129, issued on January 3, 2003, we instructed
hospitals on the use of this modifier. For a complete description of
the history of the policy and the development of the

[[Page 71840]]

payment methodology for these services, we refer readers to the CY 2007
OPPS/ASC final rule with comment period (71 FR 68157 through 68158).
In the CY 2011 OPPS/ASC proposed rule (75 FR 46207), for CY 2011,
we proposed to continue to use our established ratesetting methodology
for calculating the median cost of APC 0375 (Ancillary Outpatient
Services When Patient Expires) and to continue to make one payment
under APC 0375 for the services that meet the specific conditions for
using HCPCS modifier -CA. We proposed to calculate the relative payment
weight for APC 0375 by using all claims reporting a status indicator
``C'' (inpatient procedures) appended with HCPCS modifier -CA, using
estimated costs from claims data for line-items with a HCPCS code
assigned to status indicators ``G,'' ``H,'' ``K,'' ``N,'' ``Q1,''
``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' ``V,'' and ``X'' and
charges for packaged revenue codes without a HCPCS code. (We refer
readers to section XIII.A.1. of this final rule with comment period for
a complete listing of status indicators). We continue to believe that
this methodology results in the most appropriate aggregate median cost
for the ancillary services provided in these unusual clinical
situations.
As discussed in the CY 2011 OPPS/ASC proposed rule (75 FR 46207),
we believe that hospitals are reporting the HCPCS modifier -CA
according to the policy initially established in CY 2003. We note that
the claims frequency for APC 0375 has been relatively stable over the
past few years. Although the median cost for APC 0375 has increased,
the median in the CY 2009 OPPS claims data used for development of
proposed rates for CY 2011 was only slightly higher than that for CY
2010. Variation in the median cost for APC 0375 is expected because of
the small number of claims and because the specific cases are grouped
by the presence of the HCPCS modifier -CA appended to an inpatient
procedure and not according to the standard APC criteria of clinical
and resource homogeneity. Cost variation for APC 0375 from year to year
is anticipated and acceptable as long as hospitals continue judicious
reporting of the HCPCS modifier -CA. Table 5 of the proposed rule (75
FR 46207) showed the number of claims and the proposed median costs for
APC 0375 for CYs 2007, 2008, 2009, and 2010. For CY 2011, we proposed a
median cost of approximately $6,566 for APC 0375 based on 117 claims.
We did not receive any public comments regarding this proposal.
Therefore, for the reasons explained in the CY 2011 OPPS/ASC proposed
rule (75 FR 46207), we are finalizing our CY 2011 proposal, without
modification, to continue to use our established ratesetting
methodology for calculating the median cost of APC 0375, which has a
final CY 2011 APC median cost of approximately $6,304. Table 5 below
shows the number of claims and the final median costs for APC 0375 for
CYs 2007, 2008, 2009, 2010, and 2011.

Table 5--Claims for Ancillary Outpatient Services When Patient Expires (-
CA Modifier) for CYs 2007 Through 2011
------------------------------------------------------------------------
APC
Prospective payment year Number of median
claims cost
------------------------------------------------------------------------
CY 2007........................................... 260 $3,549
CY 2008........................................... 183 4,945
CY 2009........................................... 168 5,545
CY 2010........................................... 182 5,911
CY 2011........................................... 168 6,304
------------------------------------------------------------------------

(6) Pulmonary Rehabilitation (APC 0102)
Section 144(a)(1) of Public Law 110-275 (MIPPA) added section
1861(fff) to the Act to provide Medicare Part B coverage and payment
for a comprehensive program of pulmonary rehabilitation services
furnished to beneficiaries with chronic obstructive pulmonary disease,
effective January 1, 2010. Accordingly, in the CY 2010 OPPS/ASC final
rule with comment period, we established a policy to pay for pulmonary
rehabilitation (PR) services furnished as a part of the comprehensive
PR program benefit (74 FR 60567). We created new HCPCS code G0424
(Pulmonary rehabilitation, including exercise (includes monitoring),
one hour, per session, up to two sessions per day) and assigned the
code to new APC 0102 (Level II Pulmonary Treatment).
In the CY 2011 OPPS/ASC proposed rule (75 FR 46207 through 46208),
for CY 2011, we proposed to continue to require hospitals to report PR
services provided under the comprehensive PR benefit provided by
section 1861(fff) of the Act using HCPCS code G0424. We also proposed
to continue to use the methodology described in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60567 through 60570) to calculate
the median cost on which the proposed payment rate for CY 2011 is
based. Specifically, we proposed to continue to assign HCPCS code G0424
to APC 0102 and to calculate a median ``per session'' cost simulated
from historical hospital claims data for similar pulmonary therapy
services for the CY 2011 OPPS.
To simulate the proposed ``per session'' median cost of HCPCS code
G0424 from claims data for existing services, we used only hospital
claims that contained at least one unit of HCPCS code G0239
(Therapeutic procedures to improve respiratory function or increase
strength or endurance of respiratory muscles, two or more individuals
(includes monitoring)), the group code that is without limitation on
time duration, and one unit of HCPCS code G0237 (Therapeutic procedures
to increase strength or endurance of respiratory muscles, face to face,
one on one, each 15 minutes (includes monitoring)) or G0238
(Therapeutic procedures to improve respiratory function, other than
described by G0237, one on one, face to face, per 15 minutes (includes
monitoring)), the individual, face-to-face codes that report 15 minutes
of service on the same date of service. We continue to believe that
patients in a PR program would typically receive individual and group
services during each session of approximately 1 hour in duration. This
proposal is consistent with public comments received on the CY 2010
OPPS/ASC proposed rule that were addressed in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60569). The commenters to the CY
2010 OPPS/ASC proposed rule suggested that PR is often provided in
group sessions in the HOPD, although patients commonly require
additional one-on-one care in order to fully participate in the
program. We note that our use of ``per session'' claims that report one
unit of HCPCS code G0237 or G0238 and one unit of HCPCS code G0239 in
this simulation methodology is also consistent with our overall finding
that approximately 2.4 service units of the HCPCS G-codes are furnished
per day on a single date of service, usually consisting of both
individual and group services, for patients receiving pulmonary therapy
services in the HOPD based upon CY 2008 claims used for CY 2010 OPPS
final rule ratesetting. We continue to believe that the typical session
of PR is 1 hour based on public comments that indicated a session of PR
is typically 1 hour and on our findings that the most commonly reported
HCPCS code for pulmonary treatment is HCPCS code G0239, which has no
time definition for this group service.
In the calculation of the CY 2011 proposed median cost for APC
0102, we included all costs of the related tests and assessment
services, including CPT codes 94620 (Pulmonary stress testing, simple
(e.g. 6-minute walk test,

[[Page 71841]]

prolonged exercise test for bronchospasm with pre- and post-spirometry
and oximetry)), 94664 (Demonstration and/or evaluation of patient
utilization of an aerosol generator, nebulizer, metered dose inhaler or
IPPB device), and 94667 (Manipulation chest wall, such as cupping,
percussing, and vibration to facilitate lung function; initial
demonstration and/or evaluation) and all the costs of all CPT codes for
established patient clinic visits on the same date of service as the
HCPCS codes in the claims we used to simulate the median cost for HCPCS
code G0424, which is the only HCPCS code in APC 0102. After identifying
these ``per session'' claims, which we believe represent 1 hour of
care, we summed the costs and calculated the median cost for the set of
selected claims. In light of the cost and clinical similarities of PR
and the existing services described by HCPCS codes G0237, G0238, and
G0239 and the CPT codes for related assessments and tests, and the
significant number of ``per session'' hospital claims we found, we
indicated in the CY 2011 OPPS/ASC proposed rule that we were confident
that the proposed simulated median cost for HCPCS code G0424 and APC
0102 of approximately $68 was a valid estimate of the expected hospital
cost of a PR session. We noted that this proposed median cost was
higher than the CY 2010 final rule median cost for HCPCS code G0424 and
APC 0102 of approximately $50 on which the CY 2010 payment is based.
Comment: Several commenters approved the increase in payment for PR
services to $68 per hour for CY 2011, stating that the rate better
represents actual costs. One commenter noted a CPT proposal to change
the reference code for the pulmonary rehabilitation portion of lung
volume reduction surgery from CPT code 93797 (Physician services for
outpatient cardiac rehabilitation; without continuous ECG monitoring
(per session) to CPT code 93798 (Physician services for outpatient
cardiac rehabilitation; with continuous ECG monitoring (per session).
The commenter stated that CPT code 93798 is a more appropriate
comparison for HCPCS code G0424. In addition, the commenters noted that
CPT code 94620 (Pulmonary stress testing; simple (e.g. 6-minute walk
test, prolonged exercise test for bronchospasm with pre- and post-
spirometry and oximetry)) is paid at a rate of $65 in the office
setting when performed alone, and when performed with pulmonary
rehabilitation, they are bundled into APC 0102 with a proposed payment
rate of $68 in the hospital outpatient setting and with a proposed
payment rate of $28.58 when the service is provided in the office
setting.
Response: We appreciate the provided information on the change to
the reference code for the pulmonary rehabilitation portion of lung
volume reduction surgery. We believe the commenter relayed this
information to support the proposed increase in payment for HCPCS code
G0424 because CPT code 97398 contains continuous ECG monitoring and CPT
code 97397 does not. While we observe a minimal difference in estimated
cost for CPT codes 93797 and 93798 in the CY 2009 claims data that we
used to model payments in this final rule with comment period, we do
not believe this influenced the observed increase between the CY 2010
median cost of $50 and the proposed CY 2011 median cost of $68. The
proposed CY 2011 median cost for HCPCS code G0424 was based on costs
estimated from hospital charges on CY 2009 claims for HCPCS codes
G0237, G0238, and G0239 and supporting services CPT codes 94620, 94664,
and 94667 and all costs of all CPT codes for established patient clinic
visits reported on the same date. We believe the observed increase in
the median cost for HCPCS code G0424 may be attributable to changes in
hospital charges for these codes or to a change in the mix of hospitals
reporting these services in the CY 2009 claims data.
With regard to the comment about CPT code 94620, we believe the
commenter intended to point out that the median cost for HCPCS code
G0424 does not adequately reflect the cost associated with the 6 minute
walk test. In our analysis for creating a simulated median cost for
G0424 in the CY 2010 final rule with comment period, we observed that
CPT code 94620 appeared on the same claim as HCPCS codes G0237, G0238,
and G0239 in approximately 3 percent of the cases, indicating that this
service is rarely performed as part of a typical pulmonary
rehabilitation session. The proposed median cost of $68 for HCPCS code
G0424 reflects the packaged cost of CPT code 94620 and related services
to the extent that hospitals report this service in conjunction with
pulmonary rehabilitation.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to establish a median
cost for APC 0102 by using claims with one unit of HCPCS code G0239,
and one unit of HCPCS code G0237 or G0238, and including all costs of
the related tests and assessment services (CPT codes 94620, 94664, and
94667 and all the costs of all CPT codes for established patient clinic
visits reported on the same date), which results in a final CY 2011
median cost for HCPCS code G0424 of approximately $62.
(7) Endovascular Revascularization of the Lower Extremity (APCs 0083,
0229, and 0319)
For CY 2011, the AMA's CPT Editorial Panel created 16 new CPT codes
in the Endovascular Revascularization section of the 2011 CPT Code Book
to describe endovascular revascularization procedures of the lower
extremity performed for occlusive disease. Table 6 lists the 16 new CPT
codes that will be effective January 1, 2011.

Table 6--New Endovascular Revascularization CPT Procedure Codes
Effective January 1, 2011
------------------------------------------------------------------------
CPT Code Long descriptor
------------------------------------------------------------------------
37220............................. Revascularization, endovascular,
open or percutaneous, iliac artery,
unilateral, initial vessel; with
transluminal angioplasty.
37221............................. Revascularization, endovascular,
open or percutaneous, iliac artery,
unilateral, initial vessel; with
transluminal stent placement(s),
includes angioplasty within the
same vessel, when performed.
37222............................. Revascularization, endovascular,
open or percutaneous, iliac artery,
each additional ipsilateral iliac
vessel; with transluminal
angioplasty (List separately in
addition to code for primary
procedure).
37223............................. Revascularization, iliac artery,
each additional ipsilateral iliac
vessel; with transluminal stent
placement(s) (List separately in
addition to code for primary
procedure), includes angioplasty
within the same vessel, when
performed.
37224............................. Revascularization, endovascular,
open or percutaneous, femoral/
popliteal artery(s), unilateral;
with transluminal angioplasty.
37225............................. Revascularization, endovascular,
open or percutaneous, femoral/
popliteal artery(s), unilateral;
with atherectomy, includes
angioplasty within the same vessel,
when performed.

[[Page 71842]]

37226............................. Revascularization, endovascular,
open or percutaneous, femoral/
popliteal artery(s), unilateral;
with transluminal stent
placement(s), includes angioplasty
within the same vessel, when
performed.
37227............................. Revascularization, endovascular,
open or percutaneous, femoral/
popliteal artery(s), unilateral;
with transluminal stent
placement(s) and atherectomy,
includes angioplasty within the
same vessel, when performed.
37228............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral,
initial vessel; with transluminal
angioplasty.
37229............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral,
initial vessel; with atherectomy,
includes angioplasty within the
same vessel, when performed.
37230............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral,
initial vessel; with transluminal
stent placement(s), includes
angioplasty within the same vessel,
when performed.
37231............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral,
initial vessel; with transluminal
stent placement(s) and atherectomy,
includes angioplasty within the
same vessel, when performed.
37232............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral, each
additional vessel; with
transluminal angioplasty (List
separately in addition to code for
primary procedure).
37233............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral, each
additional vessel; with atherectomy
(List separately in addition to
code for primary procedure),
includes angioplasty within the
same vessel, when performed.
37234............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral, each
additional vessel; with
transluminal stent placement(s)
(List separately in addition to
code for primary procedure),
includes angioplasty within the
same vessel, when performed.
37235............................. Revascularization, endovascular,
open or percutaneous, tibial/
peroneal artery, unilateral, each
additional vessel; with
transluminal stent placement(s) and
atherectomy (List separately in
addition to code for primary
procedure), includes angioplasty
within the same vessel, when
performed.
------------------------------------------------------------------------

Our standard process for dealing with new CPT codes is to assign
the code to the APC that we believe contains services that are
comparable with respect to clinical characteristics and resources
required to furnish the service. The new CPT code is given a comment
indicator of ``NI'' to identify it as a new interim APC assignment for
the new year and the APC assignment for the new codes is then open to
public comment. In some, but not all, cases, we are able to use the
existing data from established codes to simulate an estimated median
cost for the new code to guide us in the assignment of the new code to
an APC. In the case of the new endovascular revascularization codes, we
were able to use the existing CY 2009 claims and most current cost
report data to create simulated median costs for 12 of the 16 new
separately payable codes.
Specifically, to estimate the hospital costs associated with the 16
new endovascular revascularization CPT codes based on their CY 2011
descriptors, we used claims data from hospital outpatient claims
submitted in CY 2009 and the most recent cost report information
submitted by the hospitals that submitted claims for the services as
they were reported in CY 2009. We note that all of the services that
were previously reported to describe endovascular revascularization of
the lower extremity for occlusive disease were assigned to three APCs
in CY 2009. These included APCs 0082 (Coronary or Non-Coronary
Atherectomy), 0083 (Coronary or Non-Coronary Angioplasty and
Percutaneous Valvuloplasty), and 0229 (Transcatheter Placement of
Intravascular Shunts).
Because the endovascular revascularization CPT codes are new for CY
2011, we used our CY 2009 single and ``pseudo'' single claims data to
simulate the new CY 2011 CPT code definitions. As shown in Table 7
below, many of the new endovascular revascularization CPT codes were
previously reported using a combination of CY 2009 CPT codes. In order
to simulate median costs, we selected claims that we believe meet the
definition for each of the new endovascular revascularization CPT
codes. Table 7 shows the criteria we applied to select a claim to be
used in the calculation of the median cost for the new codes (shown in
column A). We developed these criteria based on our clinicians'
understanding of services that were reported by CY 2009 CPT codes that,
in various combinations, reflect the services provided that are
described by the new CPT codes for CY 2011. For example, in CY 2009,
the procedure described by new CY 2011 CPT code 37222
(Revascularization, endovascular, open or percutaneous, iliac artery,
each additional ipsilateral iliac vessel; with transluminal angioplasty
(List separately in addition to code for primary procedure)) would have
been reported using the following combination of procedures: (1) The
transluminal balloon angioplasty of the iliac would have been reported
using CPT code 35454 (Transluminal balloon angioplasty, open; iliac) or
35473 (Transluminal balloon angioplasty, percutaneous; iliac); (2) the
catheter placement would have been reported using CPT code 36248
(Selective catheter placement, arterial system; additional second
order, third order, and beyond, abdominal, pelvic, or lower extremity
artery branch, within a vascular family (List in addition to code for
initial second or third order vessel as appropriate)); and (3) the
radiological supervision and interpretation of the transluminal balloon
angioplasty would have been reported using CPT code 75962 (Transluminal
balloon angioplasty, peripheral artery, other than cervical carotid,
renal or other visceral artery, iliac or lower extremity, radiological
supervision and interpretation) and/or 75964 (Transluminal balloon
angioplasty, each additional peripheral artery other than cervical
carotid, renal or other visceral artery, iliac and lower extremity,
radiological supervision and interpretation (List separately in
addition to code for primary procedure)). In columns B, C, D, and E of
Table 7, for each new CY 2011 CPT code listed under column A, we
identified the CY 2009 CPT codes that we believed corresponded to each
new code for which we had CY 2009 claims data and that we required or
permitted to be reported on the same line-item date of service for a
particular claim to be used for calculating the median costs for the
new codes. Specifically, we

[[Page 71843]]

required that at least one unit of one of the separately payable codes
in column B must be on the claim (we permitted any number of units of
these codes to be on the claim). Where there are codes listed in column
C, we also required that at least one unit of one and only one of the
codes that appears under column C must be on the claim (we permitted
any number of units of the code to be on the claim). Where there are
codes in column D, we required at least one unit of each of the codes
in column D (we permitted any number of units of these codes to be on
the claim). In addition, in column E, we identified several codes that
were paid separately in CY 2009 but which we decided should be packaged
into the new endovascular revascularization CPT codes if they appeared
on the claim with the other codes in columns B through D.
For example, in determining the CPT median cost for new CPT code
37221, we used only those claims that contained one unit of one and
only one of the CPT codes listed under column B, specifically CPT code
37205 or 37207, and at least one unit (while allowing multiple units)
of one and only one of the CPT codes that appear under column C,
specifically CPT codes 36000, 36245, or 36246. We allowed any number of
units for the code in column D, and packaged the costs for the codes in
column E (CPT codes 35454 and 35473) if they appeared on the claim. We
applied this same methodology to select claims that we believe
reflected the services defined in each new CPT code. In addition, we
excluded claims that met these criteria if the claim contained a
service to which a status indicator of ``S,'' ``T,'' ``V,'' or ``X''
was assigned, if such code did not meet the criteria for the new code.
By doing this, we simulated a single procedure bill for the new code.
In addition, we applied the standard packaging, trimming, and wage
standardization that we apply in the median calculation process. We
used approximately 19,283 claims that met the code specific criteria to
calculate CPT level medians and the median cost for these new codes.
Table 7 below displays the combinations of CY 2009 code data that we
used to select the claims we used to create simulated median costs for
the new codes (columns A through E), and the frequency of claims that
met the criteria (column F) we calculated for each new code using the
CY 2009 data for the previously existing CPT codes for these services.
We note that we did not identify any claims that met the criteria for
new CPT codes 37222, 37223, 37234 and 37235, in part due to the
requirement that there must be no major separately paid procedures on
the claim other than those we identified for the new code.

[[Page 71844]]

Table 7--Simulated CY 2009 Code Combinations and Frequencies for the New CY 2011 Endovascular Revascularization CPT Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
First Required CY 2009 Second Required CY 2009 Third Required CY 2009
CPT Code (At least one CPT Code (At least one CPT Code (At least one
unit (and allow any unit (and allow any unit of each code is Fourth Required CY 2009
CY 2011 CPT Code number of units) of one number of units) of one required and any number CPT Code (Packaged if Frequencies
and only one code must and only one code must of units of all codes appeared on claim)
appear on the claim) appear on the claim) permitted)
Column A Column B Column C Column D Column E Column F
--------------------------------------------------------------------------------------------------------------------------------------------------------
37220 35454 36000 75962 ....................... 508
35473 36245 ........................ ....................... .......................
........................ 34246 ........................ ....................... .......................
37221 37205 36000 75960 35454 4,758
37207 36245 ........................ 35473 .......................
........................ 36246 ........................ ....................... .......................
37222 35454 36248 75962 ....................... 0
35473 ........................ 75964 ....................... .......................
37223 37206 36248 75960 35454 0
37208 ........................ ........................ 35473 .......................
37224 35456 ........................ 75962 ....................... 3,653
35474 ........................ 36247 ....................... .......................
37225 35483 ........................ 75992 35456 1,974
35493 ........................ 36247 35474 .......................
37226 37205 ........................ 75960 35456 2,927
37207 ........................ 36247 35474 .......................
37227 37205 35483 75960 35456 647
37207 35493 75992 35474 .......................
........................ ........................ 36247 ....................... .......................
37228 35459 ........................ 75962 ....................... 1,431
35470 ........................ 36247 ....................... .......................
37229 35485 ........................ 75992 35459 780
35495 ........................ 36247 35470 .......................
37230 37205 ........................ 75960 35459 2,542
37207 ........................ 36247 35470 .......................
37231 37205 35485 75960 35459 53
37207 35495 75992 35470 .......................
........................ ........................ 36247 ....................... .......................
37232 35459 ........................ 75964 ....................... 7
35470 ........................ 36248 ....................... .......................
37233 35485 ........................ 75993 35459 3
35495 ........................ 36248 35470 .......................
37234 37206 ........................ 75960 35459 0
37208 ........................ 36248 35470 .......................
37235 37206 35485 36247 35459 0
37208 35495 36248 35470 .......................
........................ ........................ 75960 ....................... .......................
........................ ........................ 75993 ....................... .......................
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 71845]]

After determining the simulated median costs for the procedures, we
assigned each CPT code to appropriate APCs based on their clinical
homogeneity and resource use. Of the 16 new codes, we assigned nine CPT
codes to APC 0083, five to APC 0229, and created a new APC for two CPT
codes. Specifically, we assigned CPT codes 37220, 37221, 37222, 37223,
37224, 37228, 37232, 37234, and 37235 to APC 0083, which has a final CY
2011 APC median cost of approximately $3,740. In addition, we assigned
CPT codes 37225, 37226, 37229, 37230, and 37233 to APC 0229, which has
a final CY 2011 APC median cost of approximately $7,940. Because the
resource costs associated with CPT codes 37227 and 37231 are not
similar to the costs of procedures in the existing APCs, we established
a new APC, specifically APC 0319 (Endovascular Revascularization of the
Lower Extremity), which has a final CY 2011 APC median cost of
approximately $13,751 to appropriately pay for these services.
The new CY 2011 endovascular revascularization CPT codes and their
final CY 2011 APC assignments and APC median costs are displayed in
Table 8 below. We note that because these codes are new for CY 2011,
they will be identified with comment indicator ``NI'' in Addendum B of
this final rule to identify them as subject to public comment. We
specifically request public comment on our methodology for simulating
the median costs for these new CY 2011 CPT codes, in addition to public
comments on the payment rates themselves.

Table 8--Final CY 2011 APC Assignments and Median Costs for the Endovascular Revascularization CPT Codes
----------------------------------------------------------------------------------------------------------------
Final CY 2011
CY 2011 CPT Code CY 2011 Long descriptor Final CY 2011 CPT median
APC cost
----------------------------------------------------------------------------------------------------------------
37220.................................... Revascularization, endovascular, open 0083 $5,080
or percutaneous, iliac artery,
unilateral, initial vessel; with
transluminal angioplasty.
37221.................................... Revascularization, endovascular, open 0083 6,710
or percutaneous, iliac artery,
unilateral, initial vessel; with
transluminal stent placement(s),
includes angioplasty within the same
vessel, when performed.
37222.................................... Revascularization, endovascular, open 0083 N/A
or percutaneous, iliac artery, each
additional ipsilateral iliac vessel;
with transluminal angioplasty (List
separately in addition to code for
primary procedure).
37223.................................... Revascularization, endovascular, open 0083 N/A
or percutaneous, iliac artery, each
additional ipsilateral iliac vessel;
with transluminal stent placement(s)
(List separately in addition to code
for primary procedure), includes
angioplasty within the same vessel,
when performed.
37224.................................... Revascularization, endovascular, open 0083 5,247
or percutaneous, femoral/popliteal
artery(s), unilateral; with
transluminal angioplasty.
37225.................................... Revascularization, endovascular, open 0229 9,023
or percutaneous, femoral/popliteal
artery(s), unilateral; with
atherectomy, includes angioplasty
within the same vessel, when
performed.
37226.................................... Revascularization, endovascular, open 0229 9,600
or percutaneous, femoral/popliteal
artery(s), unilateral; with
transluminal stent placement(s),
includes angioplasty within the same
vessel, when performed.
37227.................................... Revascularization, endovascular, open 0319 13,754
or percutaneous, femoral/popliteal
artery(s), unilateral; with
transluminal stent placement(s) and
atherectomy, includes angioplasty
within the same vessel, when
performed.
37228.................................... Revascularization, endovascular, open 0083 5,563
or percutaneous, tibial/peroneal
artery, unilateral, initial vessel;
with transluminal angioplasty.
37229.................................... Revascularization, endovascular, open 0229 9,231
or percutaneous, tibial/peroneal
artery, unilateral, initial vessel;
with atherectomy, includes
angioplasty within the same vessel,
when performed.
37230.................................... Revascularization, endovascular, open 0229 7,868
or percutaneous, tibial/peroneal
artery, unilateral, initial vessel;
with transluminal stent placement(s)
, includes angioplasty within the
same vessel, when performed.
37231.................................... Revascularization, endovascular, open 0319 13,604
or percutaneous, tibial/peroneal
artery, unilateral, initial vessel;
with transluminal stent placement(s)
and atherectomy, includes
angioplasty within the same vessel,
when performed.
37232.................................... Revascularization, endovascular, open 0083 9,412
or percutaneous, tibial/peroneal
artery, unilateral, each additional
vessel; with transluminal
angioplasty (List separately in
addition to code for primary
procedure).
37233.................................... Revascularization, endovascular, open 0229 10,183
or percutaneous, tibial/peroneal
artery, unilateral, each additional
vessel; with atherectomy (List
separately in addition to code for
primary procedure), includes
angioplasty within the same vessel,
when performed.
37234.................................... Revascularization, endovascular, open 0083 N/A
or percutaneous, tibial/peroneal
artery, unilateral, each additional
vessel; with transluminal stent
placement(s) (List separately in
addition to code for primary
procedure), includes angioplasty
within the same vessel, when
performed.
37235.................................... Revascularization, endovascular, open 0083 N/A
or percutaneous, tibial/peroneal
artery, unilateral, each additional
vessel; with transluminal stent
placement(s) and atherectomy (List
separately in addition to code for
primary procedure), includes
angioplasty within the same vessel,
when performed.
----------------------------------------------------------------------------------------------------------------

[[Page 71846]]

(8) Non-Congenital Cardiac Catheterization (APC 0080)
For CY 2011, the AMA CPT Editorial Panel deleted 19 non-congenital
cardiac catheterization-related CPT codes and replaced them with 20 new
CPT codes in the Cardiac Catheterization and Injection-Related section
of the 2011 CPT Code Book to describe more precisely the specific
services provided during cardiac catheterization procedures. In
particular, the CPT Editorial Panel deleted 19 non-congenital cardiac
catheterization-related CPT codes from the 93500 series and created 14
new CPT codes in the 93400 series and 6 in the 93500 series. Table 9
below lists the specific CPT codes that will be deleted December 31,
2010, and Table 10 lists the new CPT codes that will be effective
January 1, 2011.

Table 9--Non-Congenital Cardiac Catheterization-Related CPT Procedure
Codes That Will Be Deleted December 31, 2010
------------------------------------------------------------------------
CY 2010 CPT Code Long descriptor
------------------------------------------------------------------------
93501............................. Right heart catheterization
93508............................. Catheter placement in coronary
artery(s), arterial coronary
conduit(s), and/or venous coronary
bypass graft(s) for coronary
angiography without concomitant
left heart catheterization
93510............................. Left heart catheterization,
retrograde, from the brachial
artery, axillary artery or femoral
artery; percutaneous
93511............................. Left heart catheterization,
retrograde, from the brachial
artery, axillary artery or femoral
artery; by cutdown
93514............................. Left heart catheterization by left
ventricular puncture
93524............................. Combined transseptal and retrograde
left heart catheterization
93526............................. Combined right heart catheterization
and retrograde left heart
catheterization
93527............................. Combined right heart catheterization
and transseptal left heart
catheterization through intact
septum (with or without retrograde
left heart catheterization)
93528............................. Combined right heart catheterization
with left ventricular puncture
(with or without retrograde left
heart catheterization)
93529............................. Combined right heart catheterization
and left heart catheterization
through existing septal opening
(with or without retrograde left
heart catheterization)
93539............................. Injection procedure during cardiac
catheterization; for selective
opacification of arterial conduits
(e.g., internal mammary), whether
native or used for bypass
93540............................. Injection procedure during cardiac
catheterization; for selective
opacification of aortocoronary
venous bypass grafts, one or more
coronary arteries
93541............................. Injection procedure during cardiac
catheterization; for pulmonary
angiography
93542............................. Injection procedure during cardiac
catheterization; for selective
right ventricular or right atrial
angiography
93543............................. Injection procedure during cardiac
catheterization; for selective left
ventricular or left atrial
angiography
93544............................. Injection procedure during cardiac
catheterization; for aortography
93545............................. Injection procedure during cardiac
catheterization; for selective
coronary angiography (injection of
radiopaque material may be by hand)
93555............................. Imaging supervision, interpretation
and report for injection
procedure(s) during cardiac
catheterization; ventricular and/or
atrial angiography
93556............................. Imaging supervision, interpretation
and report for injection
procedure(s) during cardiac
catheterization; pulmonary
angiography, aortography, and/or
selective coronary angiography
including venous bypass grafts and
arterial conduits (whether native
or used in bypass)
------------------------------------------------------------------------

Table 10--New Cardiac Catheterization-Related CPT Procedure Codes
Effective January 1, 2011
------------------------------------------------------------------------
CY 2011 CPT Code Long descriptor
------------------------------------------------------------------------
93451............................. Right heart catheterization
including measurement(s) of oxygen
saturation and cardiac output, when
performed
93452............................. Left heart catheterization including
intraprocedural injection(s) for
left ventriculography, imaging
supervision and interpretation,
when performed
93453............................. Combined right and left heart
catheterization including
intraprocedural injection(s) for
left ventriculography, imaging
supervision and interpretation,
when performed
93454............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation
93455............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation; with catheter
placement(s) in bypass graft(s)
(internal mammary, free arterial
venous grafts) including
intraprocedural injection(s) for
bypass graft angiography
93456............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation; with right
heart catheterization
93457............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation; with catheter
placement(s) in bypass graft(s)
(internal mammary, free arterial,
venous grafts) including
intraprocedural injection(s) for
bypass graft angiography and right
heart catheterization
93458............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation; with left heart
catheterization including
intraprocedural injection(s) for
left ventriculography, when
performed
93459............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation; with left heart
catheterization including
intraprocedural injection(s) for
left ventriculography, when
performed, catheter placement(s) in
bypass graft(s) (internal mammary,
free arterial, venous grafts) with
bypass graft angiography

[[Page 71847]]

93460............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation; with right and
left heart catheterization
including intraprocedural
injection(s) for left
ventriculography, when performed
93461............................. Catheter placement in coronary
artery(s) for coronary angiography,
including intraprocedural
injection(s) for coronary
angiography, imaging supervision
and interpretation; with right and
left heart catheterization
including intraprocedural
injection(s) for left
ventriculography, when performed,
catheter placement(s) in bypass
graft(s) (internal mammary, free
arterial, venous grafts) with
bypass graft angiography
93462............................. Left heart catheterization by
transseptal puncture through intact
septum or by transapical puncture
(List separately in addition to
code for primary procedure)
93463............................. Pharmacologic agent administration
(e.g., inhaled nitric oxide,
intravenous infusion of
nitroprusside, dobutamine,
milrinone, or other agent)
including assessing hemodynamic
measurements before, during, after
and repeat pharmacologic agent
administration, when performed
93464............................. Physiologic exercise study (e.g.,
bicycle or arm ergometry including
assessing hemodynamic measurements
before and after) (List separately
in addition to code for primary
procedure)
93563............................. Injection procedure during cardiac
catheterization including imaging
supervision, interpretation, and
report; for selective coronary
angiography during congenital heart
catheterization (List separately in
addition to code for primary
procedure)
93564............................. Injection procedure during cardiac
catheterization including imaging
supervision, interpretation, and
report; for selective opacification
of aortocoronary venous or arterial
bypass graft(s) (e.g.,
aortocoronary saphenous vein, free
radial artery, or free mammary
artery graft) to one or more
coronary arteries and in situ
arterial conduits (e.g., internal
mammary), whether native or used
for bypass to one or more coronary
arteries during congenital heart
catheterization, when performed
(List separately in addition to
code for primary procedure)
93565............................. Injection procedure during cardiac
catheterization including imaging
supervision, interpretation, and
report; for selective left
ventricular or left atrial
angiography (List separately in
addition to code for primary
procedure)
93566............................. Injection procedure during cardiac
catheterization including imaging
supervision, interpretation, and
report; for selective right
ventricular or right atrial
angiography (List separately in
addition to code for primary
procedure)
93567............................. Injection procedure during cardiac
catheterization including imaging
supervision, interpretation, and
report; for supravalvular
aortography (List separately in
addition to code for primary
procedure)
93568............................. Injection procedure during cardiac
catheterization including imaging
supervision, interpretation, and
report; for pulmonary angiography
(List separately in addition to
code for primary procedure)
------------------------------------------------------------------------

Of the 19 deleted non-congenital cardiac catheterization-related
CPT codes, 9 of the CPT codes describe either a left heart
catheterization, right heart catheterization, or a combined left and
right heart catheterization, 7 CPT codes describe injection procedures
during cardiac catheterization, 2 CPT codes describe imaging
supervision during cardiac catheterization, and only 1 CPT code
describes a catheter placement. Of the 19 deleted non-congenital
cardiac catheterization-related CPT codes, 10 CPT codes have been
separately payable under the hospital OPPS, while the other 9 CPT codes
that describe injection procedures and imaging supervision during
cardiac catheterization have been packaged. Specifically, the 10 non-
congenital cardiac catheterization-related CPT codes that have been
separately payable under the hospital OPPS include CPT codes 93501,
93508, 93510, 93511, 93514, 93524, 93526, 93527, 93528, and 93529.
Alternatively, the nine non-congenital cardiac catheterization-related
CPT codes that have been packaged under the hospital OPPS include CPT
codes 93539, 93540, 93541, 93542, 93543, 93544, 93545, 93555, and
93556.
Of the 20 new CPT codes, 4 CPT codes describe either a left heart
catheterization, right heart catheterization, or a combined left and
right heart catheterization, 8 CPT codes describe a catheter placement,
1 CPT code describes a pharmacologic agent administration, 1 CPT code
describes a physiologic exercise study, and 6 CPT codes describe a
combination of injection procedures with imaging supervision during
cardiac catheterization. With the exception of one CPT code (CPT code
93451), many of the new CY 2011 CPT codes are described by multiple CY
2010 CPT codes.
Our standard process for assigning new CPT codes to APCs is to
assign the code to the APC that we believe contains services that are
comparable with respect to clinical characteristics and resources
required to furnish the service. The new CPT code is given a comment
indicator of ``NI'' to identify it as a new interim APC assignment for
the new first year and the APC assignment for the new codes is then
open to public comment. In some, but not all, cases, we are able to use
the existing data from established codes to simulate an estimated
median cost for the new code to guide us in the assignment of the new
code to an APC. In the case of the new cardiac catheterization codes,
we were able to use the existing CY 2009 claims data and the most
recent cost report data to create simulated medians for the new
separately payable CPT codes.
Specifically, to estimate the hospital costs associated with the 20
new non-congenital cardiac catheterization-related CPT codes based on
their CY 2011 descriptors, we used claims and cost report data from CY
2009. We note that all of the services that describe cardiac
catheterization procedures, which include both congenital and non-
congenital cardiac catheterization, are assigned to APC 0080
(Diagnostic Cardiac Catheterization) in CY 2010. Because of the
substantive coding changes associated with the new non-congenital
cardiac catheterization-related CPT codes for CY 2011, we used our CY
2009 single and ``pseudo'' single claims data to simulate the new CY
2011 CPT code definitions. As shown in Table 11 and as stated above,
many of the new CPT codes were previously reported using multiple CY
2009 CPT codes. In order to simulate median costs, we selected claims
that we believe meet the definition for each of the new CY 2011 non-
congenital cardiac catheterization codes. Table 11 shows the criteria
we applied to select a claim to be used in the calculation of the
median cost for the new codes (shown in column A). We developed these

[[Page 71848]]

criteria based on our clinicians' understanding of services that were
reported by CY 2009 CPT codes that, in various combinations, reflect
the services provided that are described in the new CPT codes. For
example, in CY 2009, the procedure described by new CY 2011 CPT code
93454 (Catheter placement in coronary artery(s) for coronary
angiography, including intraprocedural injection(s) for coronary
angiography, imaging supervision and interpretation) would have been
reported using the following combination of procedures: (1) The
catheter placement would have been reported using CPT code 93508
(Catheter placement in coronary artery(s), arterial coronary
conduit(s), and/or venous coronary bypass graft(s) for coronary
angiography without concomitant left heart catheterization); and (2)
the injection procedure would have been reported using CPT code 93545
(Injection procedure during cardiac catheterization; for selective
coronary angiography (injection of radiopaque material may be by hand);
and CPT code 93556 (Imaging supervision, interpretation and report for
injection procedure(s) during cardiac catheterization; pulmonary
angiography, aortography, and/or selective coronary angiography
including venous bypass grafts and arterial conduits (whether native or
used in bypass)). In columns B, C, and D of Table 11, for each new CY
2011 CPT code listed under column A, we identified both the CPT codes
that corresponded to each new code for which we had CY 2009 claims data
and that we required or permitted to be reported on the same line-item
date of service for a particular claim to be used for median setting
for the new codes. Specifically, we required that only one unit of one
and only one of the separately payable codes in column B must be
present on the claim. We also required that at least one unit of each
code that appears under column C must be present on the claim, and we
permitted any number of these codes and any number of units of these
codes to be present on the claim. Where there are codes in column D, we
required at least one unit of one of at least one of the codes in
column D must be on the claim, but we permitted any number of units of
any of the codes shown in column D for the new code.
For example, in determining the CPT median cost for new CPT code
93452, we used only those claims that contained one unit of one and
only one of the CPT codes listed under column B, specifically, CPT
codes 93510, 93511, 93514, or 93524, and at least one unit (while
allowing multiple units) of each of the CPT codes that appear under
column C, specifically, CPT codes 93543 and 93555. Because, in the case
of CPT code 93452, there are no third level codes in the definition of
CPT code 93452, no other code criteria applied and column D is left
blank. In the case of new CPT codes 93459 and 93461, there are third
level criteria in column D, and for those two CPT codes, we required
that the claim contain at least one unit of one code in column D, and
we allowed any number of units for any code in column D. We applied
this same methodology to select claims that we believe reflected the
services defined in each new CPT code. We used approximately 175,000
claims for the new non-congenital catheterization-related CPT codes,
together with the single and pseudo single procedure claims for the
remaining congenital catheterization-related CPT codes in APC 0080, to
calculate CPT level median costs and the median cost for APC 0080 of
approximately $2,698. Table 11 displays the combinations of CY 2009 CPT
code data that we used to select the claims we used to create simulated
median costs for the new CPT codes (columns A through D), the frequency
of claims that met the criteria (column E), and the median costs we
calculated for each new CPT code using the CY 2009 claims data for the
previously existing CPT codes describing these services (column F). We
note that because the CPT codes listed in column A are new for CY 2011,
they will be identified with comment indicator ``NI'' in Addendum B of
this final rule with comment period to identify them as subject to
public comment. We are specifically requesting public comment on our
methodology for simulating the median costs for these new CY 2011 CPT
codes, in addition to public comments on the payment rates themselves.

[[Page 71849]]

Table 11--CY 2009 Code Combinations, Frequencies, and Simulated Median Costs for New CY 2011 Cardiac Catheterization-Related Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Second Required CY 2009 Third Required CY 2009
First Required CY 2009 CPT Code (At least one CPT Code (Any number of
CPT Code (Only one unit unit of each code; any units of at least one
CY 2011 CPT Code of one and only one code number of codes or units code; any number of Frequencies CPT Medians
must appear on the of a code may be on the units of all codes
claim) claim) permitted)
Column A Column B Column C Column D Column E Column F
--------------------------------------------------------------------------------------------------------------------------------------------------------
93451 93501 ........................ ........................ 3,552 1,493
93452 93510 93543 ........................ 1,055 2,876
93511 93555 ........................ ....................... .......................
93514 ........................ ........................ ....................... .......................
93524 ........................ ........................ ....................... .......................
93453 93526 93543 ........................ 225 3,182
93527 93555 ........................ ....................... .......................
93528 ........................ ........................ ....................... .......................
93529 ........................ ........................ ....................... .......................
93454 93508 93545 ........................ 7,852 2,497
........................ 93556 ........................ ....................... .......................
93455 93508 93545 ........................ 1,683 2,673
........................ 93556 ........................ ....................... .......................
........................ 93539 ........................ ....................... .......................
........................ 93540 ........................ ....................... .......................
93456 93508 93501 ........................ 914 2,502
........................ 93545 ........................ ....................... .......................
........................ 93556 ........................ ....................... .......................
93457 93508 93545 ........................ 159 3,923
........................ 93556 ........................ ....................... .......................
........................ 93539 ........................ ....................... .......................
........................ 93540 ........................ ....................... .......................
........................ 93501 ........................ ....................... .......................
93458 93510 93545 ........................ 112,395 2,663
93511 93555 ........................ ....................... .......................
93514 93556 ........................ ....................... .......................
93524 93543 ........................ ....................... .......................
93459 93510 93545 93539 23,352 2,911
93511 93555 93540 ....................... .......................
93514 93556 ........................ ....................... .......................
93524 93543 ........................ ....................... .......................
93460 93526 93545 ........................ 20,697 3,135
93527 93556 ........................ ....................... .......................
93528 93543 ........................ ....................... .......................
93529 93555 ........................ ....................... .......................
93461 93526 93545 93539 3,445 3,382
93527 93556 93540 ....................... .......................
93528 93543 ........................ ....................... .......................
93529 93555 ........................ ....................... .......................
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 71850]]

(9) Cranial Neurostimulator and Electrodes (APC 0318)
For CY 2011, the AMA CPT Editorial Panel created a new CPT code
64568 (Incision for implantation of cranial nerve (e.g., vagus nerve)
neurostimulator electrode array and pulse generator) and indicates that
it describes the services formerly included in the combinations of (1)
CPT code 64573 (Incision for implantation of neurostimulator
electrodes; cranial nerve) and CPT code 61885 (Insertion or replacement
of cranial neurostimulator pulse generator or receiver, direct or
inductive coupling; with connection to a single electrode array); or
(2) CPT code 64573 and CPT code 61886 (Insertion or replacement of
cranial neurostimulator pulse generator or receiver, direct or
inductive coupling; with connection to two or more electrode arrays).
Our standard process for assigning new CPT codes to APCs is to assign
the code to the APC that we believe contains services that are
comparable with respect to clinical characteristics and resources
required to furnish the service. The new CPT code is given a comment
indicator of ``NI'' to identify it as a new interim APC assignment for
the new first year and the APC assignment for the new code is then open
to public comment. In some, but not all, cases, we are able to use the
existing data from established codes to simulate an estimated median
cost for the new code to guide us in the assignment of the new code to
an APC. In the case of the new neurostimulator electrode and pulse
generator implantation CPT code, we were able to use the existing CY
2009 claims and most current cost report data to create a simulated
median cost.
Specifically, to estimate the hospital costs of CPT code 64568
based on its CY 2011 descriptor, we used CY 2009 claims and the most
recent cost report data, using the single and ``pseudo'' single claims
within this data set to simulate the new CY 2011 definition of this
service. Specifically, we selected claims with CPT code 64573 on which
CPT code 61885 or 61886 was also present and consistent with the
description of the new CPT code 64568, and we treated the summed costs
on these claims as if they were a single procedure claim for CPT code
64568. We created an estimated median cost of approximately $22,562 for
CPT code 64568 from 298 single claims to set a final payment rate for
CY 2011 for the new code. We are creating new APC 0318 (Implantation of
Cranial Neurostimulator Pulse Generator and Electrode) for CY 2011, to
which CPT code 64568 is the only procedure assigned. APC 0225
(Implantation of Neurostimulator Electrodes, Cranial Nerve), which
contained only the predecessor CPT code 64573, is deleted effective
January 1, 2011.
We note that because CPT code 64568 is new for CY 2011, it is
identified with comment indicator ``NI'' in Addendum B of this final
rule with comment period to identify it as subject to public comment.
We are specifically requesting public comment on our methodology for
simulating the median cost for this new CY 2011 CPT code, in addition
to public comments on the payment rate itself.
(10) Cardiac and Intensive Cardiac Rehabilitation (APC 0095)
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60566
through 60574), we implemented the provisions of section 144(a) of the
Medicare Improvements for Patients and Providers Act (MIPPA, Pub. L.
110-275). Section 144(a) of Public Law 110-275 amended the Act to
expand Medicare Part B coverage for cardiac rehabilitation (CR) and
intensive cardiac rehabilitation (ICR) services furnished to
beneficiaries with certain conditions, effective January 1, 2010.
Section 144(a) of Public Law 110-275 also expanded coverage for
pulmonary rehabilitation. Section 1861(eee)(4)(C) of the Act provides
for up to 72 one-hour sessions of ICR with up to 6 sessions per day,
over a period of 18 weeks. Medicare limits the number of cardiac
rehabilitation program sessions to a maximum of 2 1-hour sessions per
day, for up to 36 sessions, over up to 36 weeks. Medicare contractors
have the authority to approve additional CR sessions, up to 72 total
sessions, over an additional period of time. Section 144(a)(2) of Pub.
Law 110-275 also includes specific language governing payment for
services furnished in an ICR program under the MPFS, including a
requirement that the Secretary shall substitute the Medicare OPD fee
schedule amount established under the prospective payment system for
hospital outpatient department services under the OPPS.
Last year, we also finalized our requirement that all ICR programs
be approved through the NCD process. Once we have approved an ICR
program or programs through the NCD process, individual sites wishing
to furnish ICR items and services via an approved ICR program may
enroll with their local Medicare contractor to become an ICR program
supplier as outlined in Sec. 424.510. This enrollment is designed to
ensure that the specific sites meet the specific statutory and
regulatory requirements to furnish these services and will provide a
mechanism to appeal a disapproval of a prospective ICR program site.
With regards to billing and payment for CR and ICR services, we stated
that hospital providers will continue to use their CMS Certification
Number (CCN or provider number) and that appeals related to the payment
of claims will follow those established processes.
For CY 2010, we finalized two new HCPCS codes G0422 (Intensive
cardiac rehabilitation; with or without continuous ECG monitoring, with
exercise, per hour, per session) and G0423 (Intensive cardiac
rehabilitation; with or without continuous ECG monitoring, without
exercise, per hour, per session) to describe intensive cardiac
rehabilitation and accompany the CPT codes for cardiac rehabilitation
already recognized for payment under the OPPS: CPT codes 93797
(Physician services for outpatient cardiac rehabilitation; without
continuous ECG monitoring (per session)) and 93798 (Physician services
for outpatient cardiac rehabilitation; with continuous ECG monitoring
(per session)). We finalized payment for all of these HCPCS codes in
APC 0095 with a payment rate of approximately $38 per session. We noted
our belief that hospital costs for a single session would be similar
and that OPPS payment for both CR and ICR services would be provided on
a per session basis (74 FR 60571). Because there were historic claims
data for CR services, we used our standard methodology to estimate a
median cost and $38 payment rate for CR and ICR services.
As discussed in section II.A.2 of this final rule with comment
period, the standard OPPS rate setting methodology we used to establish
a median cost for APC 0095 relies upon converting hospital charges for
CPT codes 97397 and 97398 on claims to costs using hospital-specific
cost-to-charge ratios (CCRs) from the hospital's Medicare cost report
and crosswalking them to claim services based on a ``revenue code-to-
cost center crosswalk'' that matches the revenue codes on a claim to a
hierarchy of cost centers. The OPPS uses this uniform approach to
setting the cost-based relative payment weights for its payment groups,
and these annually updated cost-based weights are the basis for the
prospective payment rates for hospital outpatient services.
In 2008, the results of a study by RTI International (RTI)
commissioned by CMS indicated that cost estimates for CR services may
be under-estimated (``Refining Cost to Charge Ratios for Calculating
APC and MS-DRG Relative Payment Weights: Final Report''

[[Page 71851]]

available at http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/
Refining_Cost_to_Charge_Ratios_200807_Final.pdf). Specifically,
RTI indicated that several changes in cost reporting methods would
result in a more accurate estimated median cost. Accordingly, in
February 2010, CMS established a CR-specific cost center for voluntary
use on the cost report to create a CR-specific CCR and thereby improve
the accuracy of cost estimation. However, we will not have the new cost
report data available for ratesetting until CY 2013. We did not propose
to use interim data from the new cost center to set CY 2011 payment
rates because, as we previously explained, we would have to modify the
data from its submitted form and make assumptions in a methodology that
would be contrary to our principle of using data as submitted by
hospitals in OPPS ratesetting (74 FR 60571 and 73 FR 68525).
Comment: One commenter indicated that the finalized payment of $38
is too low for ICR services, does not cover the extensive cost to
providers to offer these services, and that many providers are closing
due to insufficient payment. The commenter cited the RTI report again
as a source of key recommendations to improve CMS cost estimation
methodology. The commenter indicated that, in comparison to RTI's
finding of about $100 median cost after incorporating all
recommendations, the CMS proposed payment rate of about $39 is
artificially low. The commenter suggested that CMS possesses special
authority to conduct payment evaluations and make changes for services
that are being implemented under national coverage determinations. With
respect to ICR services, the commenter indicated that while more
resources are consumed than during traditional CR programs in terms of
hospital, physician, and patient commitments, ICR services are more
efficacious and yield better outcomes than alternative treatment
measures not only for cardiac conditions but also for comorbidities
such as obesity and diabetes. The commenter stated that Congress
recognized these principles in subjecting ICR programs to a heightened
demonstration of efficacy through a series of measures, as proved
through peer-reviewed literature. The commenter also stated that the
two ICR demonstration programs at Highmark Blue Cross Blue Shield and
Mutual of Omaha evidenced cost savings.
Response: In response to the commenter, we revisited RTI's study.
In further reviewing its recommendations, we agree with the commenter
that payment for CR and ICR services could be improved in this final
rule with comment period. Specifically, we believe that, in addition to
adding the non-standard cost center, we may improve the accuracy of
payment for CR and ICR services by incorporating a second policy that
was recommended in the RTI study. RTI also recommended that we
incorporate a clinic CCR into the ``revenue code-to-cost center
crosswalk'' for cardiac rehabilitation as we did for pulmonary
rehabilitation last year. Therefore, we will add a clinic cost center
to revenue code-to-cost center crosswalk for the hierarchy of cost
centers used to estimate costs from charges for revenue code 0943 for
cardiac rehabilitation. With this revision, the estimated median cost
for CR services rises to $68.08. We are establishing $68.08 as the
median cost for APC 0095 for CR and ICR services. We also believe that
there are other revenue codes for OPPS clinic services that could
include a clinic CCR in their hierarchy, and we will assess potential
changes to the crosswalk for CY 2012.
This policy would follow RTI's general approach of including a
clinic revenue code for services provided in the clinic setting, which
we incorporated last year for pulmonary rehabilitation when we updated
the crosswalk by adding a clinic CCR into the hierarchy for the PR
revenue code 0948 (74 FR 60347). Adding a clinic revenue code to the
crosswalk is consistent with our approach of having up to four tiers in
our hierarchy of cost centers used to apply CCRs to charges by revenue
code on claims data. We also note that the specific new benefits of CR
and PR are similar under the OPPS and that the authorizing statute
defines comparable components for CR, ICR, and PR services, which we
believe supports using a comparable cross-walk approach for these
services.
We appreciate the commenter's information on the efficacy of ICR
programs and their cost effectiveness, but note that this has no
bearing on establishing payments under the OPPS. Also, we disagree with
the commenter that the facility resources required to provide a one
hour session of ICR services differ from the resources required to
provide a one hour session of CR. In our CY 2010 OPPS/ASC final rule
with comment period, we noted our belief that hospital costs for a
single session would be similar and that OPPS payment for both CR and
ICR services would be provided on a per session basis (74 FR 60571).
Therefore, because we believe that CR and ICR services are similar from
a per hour resource perspective, we will continue to assign the CPT
codes for both CR and ICR services per hour to the same APC for CY
2011. However, because we implemented HCPCS codes G0422 and G0423 in CY
2010, we will have historic charge information specific to ICR programs
for CY 2012 ratesetting, and we will reevaluate whether estimated costs
for ICR are sufficiently different from standard CR services to warrant
proposing placement in a different APC. Finally, when the new cost
report information becomes available beginning in CY 2013, we will
reassess placement of CR and ICR in the same APC.
e. Calculation of Composite APC Criteria-Based Median Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide only necessary, high quality care
and to provide that care as efficiently as possible. For CY 2008, we
developed composite APCs to provide a single payment for groups of
services that are typically performed together during a single clinical
encounter and that result in the provision of a complete service.
Combining payment for multiple independent services into a single OPPS
payment in this way enables hospitals to manage their resources with
maximum flexibility by monitoring and adjusting the volume and
efficiency of services themselves. An additional advantage to the
composite APC model is that we can use data from correctly coded
multiple procedure claims to calculate payment rates for the specified
combinations of services, rather than relying upon single procedure
claims which may be low in volume and/or incorrectly coded. Under the
OPPS, we currently have composite APC policies for extended assessment
and management services, low dose rate (LDR) prostate brachytherapy,
cardiac electrophysiologic evaluation and ablation services, mental
health services, and multiple imaging services. We refer readers to the
CY 2008 OPPS/ASC final rule with comment period for a full discussion
of the development of the composite APC methodology (72 FR 66611
through 66614 and 66650 through 66652).
At its February 2010 meeting, the APC Panel recommended that, in
order to support stem cell transplantation, CMS consider creating a
composite APC or custom APC that captures the costs of stem cell
acquisition performed in conjunction with recipient transplantation and
preparation of tissue. In the CY 2011 OPPS/ASC

[[Page 71852]]

proposed rule (75 FR 46208), we indicated that we were accepting this
APC Panel recommendation to consider creating a composite APC or custom
APC that captures the costs of stem cell acquisition performed in
conjunction with recipient transplantation and preparation of tissue,
and would report the results of our assessment to the APC Panel at a
future meeting.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46208), for CY 2011,
we proposed to continue our established composite APC policies for
extended assessment and management, LDR prostate brachytherapy, cardiac
electrophysiologic evaluation and ablation, mental health services, and
multiple imaging services, as discussed in sections II.A.2.e.(1),
II.A.2.e.(2), II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5),
respectively, of the proposed rule and this final rule with comment
period.
Comment: A number of commenters recommended that we establish new
composite APCs in the clinical areas of cardiac resynchronization
therapy (CRT) and stem cell transplantation. Regarding a request for a
new CRT composite APC, a few commenters stated that a CRT composite is
appropriate, recalling that the APC Panel at its February and August
2009 meetings recommended that we evaluate the implications of the
creation of a new composite APC for CRT and recommended that we
reconsider creating a composite APC or group of composite APCs for CRT.
The commenters were concerned that we have not yet reported back to the
APC Panel with an evaluation or a proposed composite APC for CRT
services. Some commenters noted that the procedures involved with
implantation of CRT, CRT with defibrillator (CRT-D) or CRT with
pacemaker (CRT-P) are never captured in claims data as single bills,
which we use in our standard ratesetting methodology; rather, the
correctly coded CRT services always involve the submission of two CPT
codes on the same claim. These commenters asserted that the CY 2011
proposed rule claims data demonstrate that the percentage of single
claims available for use in CRT ratesetting is very low compared to the
total number of claims submitted for CRT-D or CRT-P services. The
result, the commenters claimed, is payment fluctuations over the years
for APC 0418 (Insertion of Left Ventricular Pacing Electrode), which a
CRT composite APC payment methodology will lessen through a more robust
set of claims.
Several commenters supported the APC Panel's recommendation and
welcomed our acceptance of that APC Panel recommendation to consider
creating a composite APC or custom APC that captures the costs of stem
cell acquisition performed in conjunction with recipient
transplantation and preparation of tissue.
Response: While we continue to consider the development and
implementation of larger payment bundles, such as composite APCs (a
long-term policy objective for the OPPS), and continue to explore other
areas where this payment model may be utilized, in the CY 2011 OPPS/ASC
proposed rule, we did not propose any new composite APCs for CY 2011 so
that we may monitor the effects of the existing composite APCs on
utilization and payment, similar to our treatment of the composite APC
methodology mentioned in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60391). As indicated below, we have accepted the APC
Panel recommendations to consider composite APCs for CRT, and we will
reconsider whether it would be appropriate to propose in the future
composite APCs for CRT services and evaluate the implications of such a
potential policy change, and report our findings to the APC Panel at a
future meeting. We note that several commenters to the CY 2011 proposed
rule supported that we did not propose any new composite APCs for CY
2011, such as new multiple imaging APCs, without public notice and
comment.
As noted by a few commenters, at its February 2009 meeting, the APC
Panel recommended that CMS evaluate the implications of creating
composite APCs for CRT services with a defibrillator or pacemaker and
report its findings to the APC Panel. The APC Panel also recommended at
its August 2009 meeting that CMS reconsider creating a new composite
APC or group of composite APCs for CRT procedures. While we did not
propose any new composite APCs for CY 2010 or CY 2011, we accepted both
of these APC Panel recommendations, as noted in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60391). We will reconsider
proposing to create composite APCs for CRT services and evaluate the
implications of such a potential policy change, and report our findings
to the APC Panel at a future meeting. As discussed in the 2011 OPPS/ASC
proposed rule (75 FR 46208), we accepted the APC Panel recommendation
made at its February 2010 meeting, that we consider creating a
composite APC or custom APC that captures the costs of stem cell
acquisition performed in conjunction with recipient transplantation and
preparation of tissue. We also will consider bringing other potential
composite APCs to the APC Panel for further discussion.
After consideration of the public comments we received, for CY
2011, we are finalizing, without modification, our proposal to continue
our established composite APC policies for extended assessment and
management, LDR prostate brachytherapy, cardiac electrophysiologic
evaluation and ablation, mental health services, and multiple imaging
services, as discussed in sections II.A.2.e.(1), II.A.2.e.(2),
II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5), respectively, of this
final rule with comment period.
(1) Extended Assessment and Management Composite APCs (APCs 8002 and
8003)
In the CY 2011 OPPS/ASC proposed rule (75 FR 46208), we proposed to
continue to include composite APC 8002 (Level I Extended Assessment and
Management Composite) and composite APC 8003 (Level II Extended
Assessment and Management Composite) in the OPPS for CY 2011. For CY
2008, we created these two composite APCs to provide payment to
hospitals in certain circumstances when extended assessment and
management of a patient occur (an extended visit). In most
circumstances, observation services are supportive and ancillary to the
other services provided to a patient. In the circumstances when
observation care is provided in conjunction with a high level visit or
direct referral and is an integral part of a patient's extended
encounter of care, payment is made for the entire care encounter
through one of two composite APCs as appropriate.
As defined for the CY 2008 OPPS, composite APC 8002 describes an
encounter for care provided to a patient that includes a high level
(Level 5) clinic visit or direct referral for observation services in
conjunction with observation services of substantial duration (72 FR
66648 through 66649). Composite APC 8003 describes an encounter for
care provided to a patient that includes a high level (Level 4 or 5)
Type A emergency department visit, a high level (Level 5) Type B
emergency department visit, or critical care services in conjunction
with observation services of substantial duration. HCPCS code G0378
(Observation services, per hour) is assigned status indicator ``N,''
signifying that its payment is always packaged. As noted in the CY 2008
OPPS/ASC final rule with comment period (72 FR 66648 through 66649),
the Integrated Outpatient Code Editor (I/OCE) evaluates every claim
received to determine if payment through a composite APC is
appropriate. If

[[Page 71853]]

payment through a composite APC is inappropriate, the I/OCE, in
conjunction with the OPPS Pricer, determines the appropriate status
indicator, APC, and payment for every code on a claim. The specific
criteria that must be met for the two extended assessment and
management composite APCs to be paid are provided below in the
description of the claims that were selected for the calculation of the
proposed CY 2011 median costs for these composite APCs. We did not
propose to change these criteria for the CY 2011 OPPS.
When we created composite APCs 8002 and 8003 for CY 2008, we
retained as general reporting requirements for all observation services
those criteria related to physician order and evaluation,
documentation, and observation beginning and ending time as listed in
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66812).
These are more general requirements that encourage hospitals to provide
medically reasonable and necessary care and help to ensure the proper
reporting of observation services on correctly coded hospital claims
that reflect the full charges associated with all hospital resources
utilized to provide the reported services. We also issued guidance
clarifying the correct method for reporting the starting time for
observation services sections 290.2.2 through 290.5 in the Medicare
Claims Processing Manual (Pub. 100-4), Chapter 4, through Transmittal
1745, Change Request 6492, issued May 22, 2009 and implemented July 6,
2009. We did not propose to change these reporting requirements for the
CY 2011 OPPS.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46209), for CY 2011,
we proposed to continue the extended assessment and management
composite APC payment methodology for APCs 8002 and 8003. We stated in
the proposed rule that we continue to believe that the composite APCs
8002 and 8003 and related policies provide the most appropriate means
of paying for these services. We proposed to calculate the median costs
for APCs 8002 and 8003 using all single and ``pseudo'' single procedure
claims for CY 2009 that meet the criteria for payment of each composite
APC.
Specifically, to calculate the proposed median costs for composite
APCs 8002 and 8003, we selected single and ``pseudo'' single procedure
claims that met each of the following criteria:
1. Did not contain a HCPCS code to which we have assigned status
indicator ``T'' that is reported with a date of service 1 day earlier
than the date of service associated with HCPCS code G0378. (By
selecting these claims from single and ``pseudo'' single claims, we had
already assured that they would not contain a code for a service with
status indicator ``T'' on the same date of service.);
2. Contained 8 or more units of HCPCS code G0378; and
3. Contained one of the following codes:
In the case of composite APC 8002, HCPCS code G0379
(Direct referral of patient for hospital observation care) on the same
date of service as G0378; or CPT code 99205 (Office or other outpatient
visit for the evaluation and management of a new patient (Level 5)); or
CPT code 99215 (Office or other outpatient visit for the evaluation and
management of an established patient (Level 5)) provided on the same
date of service or one day before the date of service for HCPCS code
G0378.
In the case of composite APC 8003, CPT code 99284
(Emergency department visit for the evaluation and management of a
patient (Level 4)); CPT code 99285 (Emergency department visit for the
evaluation and management of a patient (Level 5)); CPT code 99291
(Critical care, evaluation and management of the critically ill or
critically injured patient; first 30-74 minutes); or HCPCS code G0384
(Level 5 hospital emergency department visit provided in a Type B
emergency department) provided on the same date of service or one day
before the date of service for HCPCS code G0378. (As discussed in
detail in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68684), we added HCPCS code G0384 to the eligibility criteria for
composite APC 8003 for CY 2009.)
As discussed further in section IX. of the proposed rule and this
final rule with comment period, and consistent with our CY 2008, CY
2009, and CY 2010 final policies, when calculating the median costs for
the clinic, Type A emergency department visit, Type B emergency
department visit, and critical care APCs (0604 through 0617 and 0626
through 0630), we utilize our methodology that excludes those claims
for visits that are eligible for payment through the two extended
assessment and management composite APCs, that is APC 8002 or APC 8003.
We believe that this approach results in the most accurate cost
estimates for APCs 0604 through 0617 and 0626 through 0630 for CY 2011.
At its February 2010 meeting, the APC Panel recommended that CMS
study the feasibility of expanding the extended assessment and
management composite APC methodology to include services commonly
furnished in conjunction with visits and observation services, such as
drug infusion, electrocardiogram, and chest X-ray. As we indicated in
the proposed rule, we are accepting this recommendation, and we will
share our assessment with the APC Panel at a future meeting. At the
August 2010 APC Panel meeting, a similar recommendation was made that
CMS consider including other services commonly provided with extended
assessment and management services in the extended assessment and
management composite APC. We are accepting this recommendation as well.
In summary, for CY 2011, we proposed to continue to include
composite APCs 8002 and 8003 in the OPPS. We proposed to continue the
extended assessment and management composite APC payment methodology
and criteria that we finalized for CYs 2009 and 2010. We also proposed
to calculate the median costs for APCs 8002 and 8003 using the same
methodology that we used to calculate the medians for composite APCs
8002 and 8003 for the CY 2008 OPPS (72 FR 66649). That is, we used all
single and ``pseudo'' single procedure claims from CY 2009 that met the
criteria for payment of each composite APC and applied the standard
packaging and trimming rules to the claims before calculating the
proposed CY 2011 median costs. The proposed CY 2011 median cost
resulting from this methodology for composite APC 8002 was
approximately $401, which was calculated from 17,398 single and
``pseudo'' single bills that met the required criteria. The proposed CY
2011 median cost for composite APC 8003 was approximately $743, which
was calculated from 201,189 single and ``pseudo'' single bills that met
the required criteria.
Comment: One commenter supported CMS' policy to package payment for
observation care and to not provide additional payment through an
extended assessment and management composite APC payment when
observation services are billed with significant surgical procedures.
According to the commenter, the observation services in such cases are
most likely related to post-procedural recovery, and thus no additional
payment is warranted. The commenter stated that minor procedures with
extended observation care, on the other hand, should be eligible for
additional payment through APCs 8002 and 8003.
Response: We appreciate the commenter's support of our policy not
to allow payment of APC 8002 or 8003 for claims that include a HCPCS
code to which we have assigned status indicator

[[Page 71854]]

``T'' that is reported with a date of service on the same day as or one
day prior to the date of the service associated with HCPCS code G0378.
We agree that payment for such services is included in the payment for
the surgical procedure. It is unclear to us exactly how the commenter
defines minor procedures; however, we do allow payment of APCs 8002 and
8003 when ancillary services with status indicator ``X'' or packaged
services with status indicator ``N'' appear on the same claim as HCPCS
code G0378.
Comment: One commenter recommended that CMS consider adopting the
National Universal Billing Committee (NUBC) guidelines, utilized by
private insurance carriers, which permit payment for observation care
furnished during the time of an inpatient hospital stay that is
subsequently overturned by a hospital's utilization review committee.
Response: This comment is outside of the scope of the proposals in
the CY 2011 OPPS/ASC proposed rule. However, we will consider the
possibility of addressing this concern through other available
mechanisms, as appropriate. We note that we have continued to emphasize
that observation care is a hospital outpatient service, ordered by a
physician and reported with a HCPCS code, like any other outpatient
service. It is not a patient status for Medicare payment purposes.
After consideration of the public comments we received, we are
adopting as final, without modification, our CY 2011 proposal to
continue to include composite APCs 8002 and 8003 in the OPPS and to
continue the extended assessment and management composite APC payment
methodology and criteria that we finalized for CYs 2009 and 2010. We
also are calculating the median costs for APCs 8002 and 8003 using all
single and ``pseudo'' single procedure claims from CY 2009 that meet
the criteria for payment of each composite APC. The final CY 2011
median cost resulting from this methodology for APC 8002 is
approximately $390, which was calculated from 19,156 single and
``pseudo'' single bills that met the required criteria. The final CY
2011 median cost for composite APC 8003 is approximately $707, which
was calculated from 221,246 single and ``pseudo'' single bills that met
the required criteria.
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
LDR prostate brachytherapy is a treatment for prostate cancer in
which hollow needles or catheters are inserted into the prostate,
followed by permanent implantation of radioactive sources into the
prostate through the needles/catheters. At least two CPT codes are used
to report the composite treatment service because there are separate
codes that describe placement of the needles/catheters and the
application of the brachytherapy sources: CPT code 55875 (Transperineal
placement of needles or catheters into prostate for interstitial
radioelement application, with or without cystoscopy) and CPT code
77778 (Interstitial radiation source application; complex). Generally,
the component services represented by both codes are provided in the
same operative session in the same hospital on the same date of service
to the Medicare beneficiary being treated with LDR brachytherapy for
prostate cancer. As discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66653), OPPS payment rates for CPT code 77778, in
particular, had fluctuated over the years. We were frequently informed
by the public that reliance on single procedure claims to set the
median costs for these services resulted in use of mainly incorrectly
coded claims for LDR prostate brachytherapy because a correctly coded
claim should include, for the same date of service, CPT codes for both
needle/catheter placement and application of radiation sources, as well
as separately coded imaging and radiation therapy planning services
(that is, a multiple procedure claim).
In order to base payment on claims for the most common clinical
scenario, and to further our goal of providing payment under the OPPS
for a larger bundle of component services provided in a single hospital
encounter, beginning in CY 2008, we provide a single payment for LDR
prostate brachytherapy when the composite service, reported as CPT
codes 55875 and 77778, is furnished in a single hospital encounter. We
base the payment for composite APC 8001 (LDR Prostate Brachytherapy
Composite) on the median cost derived from claims for the same date of
service that contain both CPT codes 55875 and 77778 and that do not
contain other separately paid codes that are not on the bypass list. In
uncommon occurrences in which the services are billed individually,
hospitals continue to receive separate payments for the individual
services. We refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66652 through 66655) for a full history of OPPS
payment for LDR prostate brachytherapy and a detailed description of
how we developed the LDR prostate brachytherapy composite APC.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46210), for CY 2011,
we proposed to continue paying for LDR prostate brachytherapy services
using the composite APC methodology proposed and implemented for CYs
2008, 2009, and 2010. That is, we proposed to use CY 2009 claims on
which both CPT codes 55875 and 77778 were billed on the same date of
service with no other separately paid procedure codes (other than those
on the bypass list) to calculate the payment rate for composite APC
8001. Consistent with our CY 2008 through CY 2010 practice, we proposed
not to use the claims that meet these criteria in the calculation of
the median costs for APCs 0163 (Level IV Cystourethroscopy and Other
Genitourinary Procedures) and 0651 (Complex Interstitial Radiation
Source Application), the APCs to which CPT codes 55875 and 77778 are
assigned, respectively. The median costs for APCs 0163 and 0651 would
continue to be calculated using single and ``pseudo'' single procedure
claims. We indicated in the proposed rule that we continue to believe
that this composite APC contributes to our goal of creating hospital
incentives for efficiency and cost containment, while providing
hospitals with the most flexibility to manage their resources. We also
continue to believe that data from claims reporting both services
required for LDR prostate brachytherapy provide the most accurate
median cost upon which to base the composite APC payment rate.
Using partial year CY 2009 claims data available for the CY 2011
proposed rule, we were able to use 788 claims that contained both CPT
codes and 55875 and 77778 to calculate the median cost upon which the
proposed CY 2011 payment for composite APC 8001 was based. The proposed
median cost for composite APC 8001 for CY 2011 was approximately
$3,265. This is an increase compared to the CY 2010 OPPS/ASC final rule
with comment period in which we calculated a final median cost for this
composite APC of approximately $3,084 based on a full year of CY 2008
claims data. The proposed CY 2011 median cost for this composite APC
was slightly less than $3,604, the sum of the proposed median costs for
APCs 0163 and 0651 ($2,606 + $998), the APCs to which CPT codes 55875
and 77778 map if one service is billed on a claim without the other. We
indicated in the proposed rule that we believe the proposed CY 2011
median cost for composite APC 8001 of approximately $3,265, calculated
from

[[Page 71855]]

claims we believe to be correctly coded, would result in a reasonable
and appropriate payment rate for this service in CY 2011.
Comment: One commenter expressed appreciation for the proposed
payment increase for composite APC 8001 based on an increase in median
costs, and recommended that CMS finalize the proposed CY 2011 payment
rate. Another commenter was concerned that the 788 claims with both CPT
codes 55875 and 77778 were used for development of the proposed CY 2011
payment rate for APC 8001 was an extremely low number of claims
compared to the number of these procedures performed in hospitals for
cancer patients, and encouraged CMS to explore ways to capture more
multiple claims to be used in future ratesetting for composite APC
8001.
Response: We appreciate the commenter's support for our proposed
payment rate for composite APC 8001. Regarding the commenter's concern
with the number of CY 2011 proposed rule claims used for APC 8001
proposed rate, for the CY 2011 final rule with comment period, we have
849 claims that contain both CPT codes 55875 and 77778 to calculate the
median cost of APC 8001 of approximately $3,195. We believe this is a
robust number of claims from which to calculate accurate and
appropriate payment rates for the services assigned to APC 8001. For
all OPPS services, we continue our efforts to use the data from as many
multiple procedure claims as possible, through approaches such as use
of the bypass list and date splitting of claims as described further in
section II.A. of this final rule with comment period, and through
methodologies such as increased packaging and composite APCs.
After consideration of the public comments we received, we are
finalizing, without modification, our proposal to continue paying for
LDR prostate brachytherapy services using the composite APC methodology
implemented for CYs 2008, 2009, and 2010 described above in this
section. The final CY 2011 median cost for composite APC 8001 is
approximately $3,195 calculated from 849 single bills.
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC
(APC 8000)
Cardiac electrophysiologic evaluation and ablation services
frequently are performed in varying combinations with one another
during a single episode-of-care in the hospital outpatient setting.
Therefore, correctly coded claims for these services often include
multiple codes for component services that are reported with different
CPT codes and that, prior to CY 2008, were always paid separately
through different APCs (specifically, APC 0085 (Level II
Electrophysiologic Evaluation), APC 0086 (Ablate Heart Dysrhythm
Focus), and APC 0087 (Cardiac Electrophysiologic Recording/Mapping)).
As a result, there would never be many single bills for cardiac
electrophysiologic evaluation and ablation services, and those that are
reported as single bills would often represent atypical cases or
incorrectly coded claims. As described in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66655 through 66659), the APC Panel and
the public expressed persistent concerns regarding the limited and
reportedly unrepresentative single bills available for use in
calculating the median costs for these services according to our
standard OPPS methodology.
Effective January 1, 2008, we established APC 8000 (Cardiac
Electrophysiologic Evaluation and Ablation Composite) to pay for a
composite service made up of at least one specified electrophysiologic
evaluation service and one specified electrophysiologic ablation
service. Calculating a composite APC for these services allowed us to
utilize many more claims than were available to establish the
individual APC median costs for these services, and we also saw this
composite APC as an opportunity to advance our stated goal of promoting
hospital efficiency through larger payment bundles. In order to
calculate the median cost upon which the payment rate for composite APC
8000 is based, we used multiple procedure claims that contained at
least one CPT code from group A for evaluation services and at least
one CPT code from group B for ablation services reported on the same
date of service on an individual claim. Table 9 in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66656) identified the CPT codes
that are assigned to groups A and B. For a full discussion of how we
identified the group A and group B procedures and established the
payment rate for the cardiac electrophysiologic evaluation and ablation
composite APC, we refer readers to the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66655 through 66659). Where a service in group A
is furnished on a date of service that is different from the date of
service for a code in group B for the same beneficiary, payments are
made under the appropriate single procedure APCs and the composite APC
does not apply.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46210), for CY 2011,
we proposed to continue to pay for cardiac electrophysiologic
evaluation and ablation services using the composite APC methodology
proposed and implemented for CY 2008, CY 2009, and CY 2010. Consistent
with our CY 2008 through CY 2010 practice, we proposed not to use the
claims that meet the composite payment criteria in the calculation of
the median costs for APC 0085 and APC 0086, to which the CPT codes in
both groups A and B for composite APC 8000 are otherwise assigned.
Median costs for APCs 0085 and 0086 would continue to be calculated
using single procedure claims. As we indicated in the proposed rule, we
continue to believe that the composite APC methodology for cardiac
electrophysiologic evaluation and ablation services is the most
efficient and effective way to use the claims data for the majority of
these services and best represents the hospital resources associated
with performing the common combinations of these services that are
clinically typical. Furthermore, this approach creates incentives for
efficiency by providing a single payment for a larger bundle of major
procedures when they are performed together, in contrast to continued
separate payment for each of the individual procedures.
For CY 2011, using partial year CY 2009 claims data available for
the proposed rule, we were able to use 8,964 claims containing a
combination of group A and group B codes and calculated a proposed
median cost of approximately $10,834 for composite APC 8000. This was
an increase compared to the CY 2010 OPPS/ASC final rule with comment
period in which we calculated a final median cost for this composite
APC of approximately $10,026 based on a full year of CY 2008 claims
data. We indicated in the proposed rule that we believe the proposed
median cost of $10,834 calculated from a high volume of correctly coded
multiple procedure claims would result in an accurate and appropriate
proposed payment for cardiac electrophysiologic evaluation and ablation
services when at least one evaluation service is furnished during the
same clinical encounter as at least one ablation service.
Comment: One commenter supported CMS' proposal to continue to pay
for cardiac electrophysiologic evaluation and ablation services using
composite APC 8001, as the most efficient and

[[Page 71856]]

effective way to use claims data for these services.
Response: We appreciate the supportive comment, and agree that
composite APC 8001 promotes efficient use of resources and results in
accurate and appropriate payment rates for cardiac electrophysiologic
evaluation and ablation services.
After consideration of the public comments received, we are
finalizing our proposal, without modification, to continue to pay for
cardiac electrophysiologic evaluation and ablation services using the
composite APC methodology implemented for CY 2008, CY 2009, and CY
2010. For this final rule with comment period, we were able to use
9,736 claims from CY 2009 containing a combination of group A and group
B codes and calculated a final CY 2011 median cost of approximately
$10,673 for composite APC 8000. Table 12 below lists the groups of
procedures upon which we based composite APC 8000 for CY 2011.

Table 12--Groups of Cardiac Electrophysiologic Evaluation and Ablation Procedures Upon Which Composite APC 8000
Is Based
----------------------------------------------------------------------------------------------------------------
Final single
Codes used in combinations: At least one in group A and one in CY 2011 CPT code CY 2011 Final CY 2011
group B code APC SI (composite)
----------------------------------------------------------------------------------------------------------------
Group A
----------------------------------------------------------------------------------------------------------------
Comprehensive electrophysiologic evaluation with right atrial 93619 0085 Q3
pacing and recording, right ventricular pacing and recording,
His bundle recording, including insertion and repositioning of
multiple electrode catheters, without induction or attempted
induction of arrhythmia........................................
Comprehensive electrophysiologic evaluation including insertion 93620 0085 Q3
and repositioning of multiple electrode catheters with
induction or attempted induction of arrhythmia; with right
atrial pacing and recording, right ventricular pacing and
recording, His bundle recording................................
----------------------------------------------------------------------------------------------------------------
Group B
----------------------------------------------------------------------------------------------------------------
Intracardiac catheter ablation of atrioventricular node 93650 0085 Q3
function, atrioventricular conduction for creation of complete
heart block, with or without temporary pacemaker placement.....
Intracardiac catheter ablation of arrhythmogenic focus; for 93651 0086 Q3
treatment of supraventricular tachycardia by ablation of fast
or slow atrioventricular pathways, accessory atrioventricular
connections or other atrial foci, singly or in combination.....
Intracardiac catheter ablation of arrhythmogenic focus; for 93652 0086 Q3
treatment of ventricular tachycardia...........................
----------------------------------------------------------------------------------------------------------------

(4) Mental Health Services Composite APC (APC 0034)
In the CY 2011 OPPS/ASC proposed rule (75 FR 46211), we proposed to
continue our longstanding policy of limiting the aggregate payment for
specified less resource-intensive mental health services furnished on
the same date to the payment for a day of partial hospitalization,
which we consider to be the most resource-intensive of all outpatient
mental health treatment for CY 2011. We refer readers to the April 7,
2000 OPPS final rule with comment period (65 FR 18452 through 18455)
for the initial discussion of this longstanding policy. We continue to
believe that the costs associated with administering a partial
hospitalization program represent the most resource-intensive of all
outpatient mental health treatment. Therefore, we do not believe that
we should pay more for a day of individual mental health services under
the OPPS than the partial hospitalization per diem payment.
As discussed in detail in section X. of the CY 2011 OPPS/ASC
proposed rule (75 FR 46298 through 46301) and this final rule with
comment period, for CY 2011, we proposed to use a provider-specific two
tiered payment approach for partial hospitalization services that
distinguishes payment made for services furnished in a CMHC from
payment made for services furnished in a hospital. Specifically, we
proposed one APC for partial hospitalization program days with three
services furnished in a CMHC (APC 0172, Level I Partial Hospitalization
(3 services) for CMHCs) and one APC for days with four or more services
furnished in a CMHC (APC 0173, Level II Partial Hospitalization (4 or
more services) for CMHCs). We proposed that the payment rates for these
two APCs be based upon the median per diem costs calculated using data
only from CMHCs. Similarly, we proposed one APC for partial
hospitalization program days with three services furnished in a
hospital (APC 0175, Level I Partial Hospitalization (3 services) for
Hospital-Based PHPs), and one APC for days with four or more services
furnished in a hospital (APC 0176, Level II Partial Hospitalization (4
or more services) for Hospital-Based PHPs). We proposed that the
payment rates for these two APCs be based on the median per diem costs
calculated using data only from hospitals.
Because our longstanding policy of limiting the aggregate payment
for specified less resource-intensive mental health services furnished
on the same date to the payment rate for the most resource-intensive of
all outpatient mental health treatment, we proposed to set the CY 2011
payment rate for APC 0034 (Mental Health Services Composite) at the
same rate as we proposed for APC 0176, which is the maximum partial
hospitalization per diem payment. As we stated in the CY 2011 OPPS/ASC
proposed rule (75 FR 46212), we believe this APC payment rate would
provide the most appropriate payment for composite APC 0034, taking
into consideration the intensity of the mental health services and the
differences in the HCPCS codes for mental health services that could be
paid through this composite APC compared with the HCPCS codes that
could be paid through partial hospitalization APC 0176. When the
aggregate payment for specified mental health services provided by one
hospital to a single beneficiary on one date of service based on the
payment rates associated with the APCs for the individual services
exceeds the maximum per diem partial hospitalization payment, we
proposed that those specified mental health services would be assigned
to APC 0034. We proposed that APC 0034 would have the same payment rate
as APC 0176 and that the hospital would continue to be paid one unit of
APC

[[Page 71857]]

0034. The I/OCE currently determines, and we proposed for CY 2011 that
it would continue to determine, whether to pay these specified mental
health services individually or to make a single payment at the same
rate as the APC 0176 per diem rate for partial hospitalization for all
of the specified mental health services furnished by the hospital on
that single date of service.
Comment: Many commenters strongly supported the CMS proposal to use
the hospital-based partial hospitalization APC 0176 (4 or more units of
service) as the daily payment cap for less intensive mental health
services provided in hospital outpatient departments.
Response: We appreciate the commenters' support for utilizing the
hospital-based partial hospitalization APC 0176 (4 or more units of
service) as the daily payment cap for less intensive mental health
services provided in hospital outpatient departments. We continue to
believe that the costs associated with administering a partial
hospitalization program represent the most resource intensive of all
outpatient mental health treatment, and we do not believe CMS should
pay more for a day of individual mental health services under the OPPS.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to limit the
aggregate payment for specified less intensive outpatient mental health
services furnished on the same date by a hospital to the payment for a
day of partial hospitalization, specifically APC 0176.
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Prior to CY 2009, hospitals received a full APC payment for each
imaging service on a claim, regardless of how many procedures were
performed during a single session using the same imaging modality.
Based on extensive data analysis, we determined that this practice
neither reflected nor promoted the efficiencies hospitals can achieve
when performing multiple imaging procedures during a single session (73
FR 41448 through 41450). As a result of our data analysis, and in
response to ongoing recommendations from MedPAC to improve payment
accuracy for imaging services under the OPPS, we expanded the composite
APC model developed in CY 2008 to multiple imaging services. Effective
January 1, 2009, we provide a single payment each time a hospital bills
more than one imaging procedure within an imaging family on the same
date of service. We utilize three imaging families based on imaging
modality for purposes of this methodology: (1) Ultrasound; (2) computed
tomography (CT) and computed tomographic angiography (CTA); and (3)
magnetic resonance imaging (MRI) and magnetic resonance angiography
(MRA). The HCPCS codes subject to the multiple imaging composite
policy, and their respective families, are listed in Table 13 of the CY
2010 OPPS/ASC final rule with comment period (74 FR 60403 through
60407).
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement at section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included in the policy do not involve contrast, both CT/CTA
and MRI/MRA scans can be provided either with or without contrast. The
five multiple imaging composite APCs established in CY 2009 are:
APC 8004 (Ultrasound Composite);
APC 8005 (CT and CTA without Contrast Composite);
APC 8006 (CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without Contrast Composite); and
APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the hospital performs an MRI without contrast during
the same session as at least one other MRI with contrast, the hospital
will receive payment for APC 8008, the ``with contrast'' composite APC.
Hospitals continue to use the same HCPCS codes to report imaging
procedures, and the I/OCE determines when combinations of imaging
procedures qualify for composite APC payment or map to standard (sole
service) APCs for payment. We make a single payment for those imaging
procedures that qualify for composite APC payment, as well as any
packaged services furnished on the same date of service. The standard
(noncomposite) APC assignments continue to apply for single imaging
procedures and multiple imaging procedures performed across families.
For a full discussion of the development of the multiple imaging
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68559 through 68569).
At its February 2010 meeting, the APC Panel recommended that CMS
continue providing analysis on an ongoing basis of the impact on
beneficiaries of the multiple imaging composite APCs as data become
available. In the CY 2011 OPPS/ASC proposed rule, we indicated that we
are accepting this recommendation and will provide the requested
analysis to the APC Panel at a future meeting.
In summary, for CY 2011, we proposed to continue paying for all
multiple imaging procedures within an imaging family performed on the
same date of service using the multiple imaging composite payment
methodology. The proposed CY 2011 payment rates for the five multiple
imaging composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC
8008) were based on median costs calculated from the partial year CY
2009 claims available for the proposed rule that would have qualified
for composite payment under the current policy (that is, those claims
with more than one procedure within the same family on a single date of
service). To calculate the proposed median costs, we used the same
methodology that we used to calculate the final CY 2010 median costs
for these composite APCs. That is, we removed any HCPCS codes in the
OPPS imaging families that overlapped with codes on our bypass list
(``overlap bypass codes'') to avoid splitting claims with multiple
units or multiple occurrences of codes in an OPPS imaging family into
new ``pseudo'' single claims. The imaging HCPCS codes that we removed
from the bypass list for purposes of calculating the proposed multiple
imaging composite APC median costs appeared in Table 8 of the proposed
rule. (We note that, consistent with our proposal in section II.A.1.b.
of the proposed rule to add CPT code 70547 (Magnetic resonance
angiography, neck; without contrast material(s)) to the list of bypass
codes for CY 2011, we also proposed to add CPT code 70547 to the list
of proposed OPPS imaging family services overlapping with HCPCS codes
on the proposed CY 2010 bypass list.) We integrated the identification
of imaging composite ``single session'' claims, that is, claims with
multiple imaging procedures within the same family on the same date of
service, into the creation of ``pseudo'' single procedure claims to
ensure that claims were split in the ``pseudo'' single process into
accurate reflections of either a composite ``single session'' imaging
service or a standard sole imaging

[[Page 71858]]

service resource cost. Like all single bills, the new composite
``single session'' claims were for the same date of service and
contained no other separately paid services in order to isolate the
session imaging costs. Our last step after processing all claims
through the ``pseudo'' single process was to reassess the remaining
multiple procedure claims using the full bypass list and bypass process
in order to determine if we could make other ``pseudo'' single bills.
That is, we assessed whether a single separately paid service remained
on the claim after removing line-items for the ``overlap bypass
codes.''
We were able to identify 1.7 million ``single session'' claims out
of an estimated 2.7 million potential composite cases from our
ratesetting claims data, or well over half of all eligible claims, to
calculate the proposed CY 2011 median costs for the multiple imaging
composite APCs. We listed in Table 7 of the proposed rule the HCPCS
codes that would be subject to the proposed multiple imaging composite
policy and their respective families for CY 2011.
Comment: A large number of commenters were concerned with the
composite APC policy for imaging services, and recommended separate
payment for all imaging procedures regardless of whether multiple
procedures are performed during the same session. Commenters supported
the fact that CMS did not propose new composite APCs or to expand the
multiple imaging composite APC policy for CY 2011, opining that no
expansion of the imaging composite APCs should be considered until
substantial data on the initial five APCs are available for public
review and comment. The commenters further recommended that future
proposals for expanding the imaging composite APCs should be subject to
public notice and comment. A few commenters suggested that CMS
undertake robust data collection to determine if imaging costs are
correctly captured. Other commenters appreciated our proposed increases
in payment for multiple imaging composite APCs. However, the commenters
were concerned that the multiple imaging composite APC payment rates
remained insufficient to reflect the current costs of diagnostic
imaging procedures, particularly when more than two imaging procedures
are performed. One commenter recommended that we evaluate whether the
methodology used to establish existing composite APCs results in
payments that accurately reflect all of the resources needed to perform
these services. A number of commenters voiced agreement with the APC
Panel's recommendation that we continue to provide analyses on an
ongoing basis of the impact on beneficiaries of the multiple imaging
composite APC methodology as data becomes available.
One commenter requested separate payment when imaging services of
the same modality are performed on the same day but at different times.
The commenter claimed that for some patients, such as cancer or trauma
patients, such protocols are essential for safety and efficacy, and
that the same economies of scale that can be achieved by performing
multiple imaging procedures during the same sitting may not be realized
if a significant amount of time passes between the first and subsequent
imaging procedures. The commenter recommended that CMS implement a
modifier or condition code to distinguish between imaging services
performed during the same sitting and imaging services performed at
different times on the same day.
Another commenter opposed the multiple imaging composite APCs,
stating that the policy penalizes specific imaging services under the
guise of creating incentives for efficiencies, which will not be
achieved because payment rates are already very low under the Deficit
Reduction Act. The commenter further asserted that hospitals will be
encouraged to perform imaging studies on separate days to avoid payment
under composite APCs, thus causing inconvenience to Medicare
beneficiaries.
Response: We appreciate the support for our decision not to propose
any new composite APCs for CY 2011, and for the proposed CY 2011
payment rate for the multiple imaging composite APCs. We would subject
any future proposals on composite APCs to public notice and opportunity
for comment through our normal rulemaking process. As noted previously,
we are accepting the APC Panel recommendation to provide analysis on an
ongoing basis of the impact on beneficiaries of the multiple imaging
composite APCs as data become available, which would include analysis
of whether imaging costs are correctly captured. We do not agree with
the comments that the composite APC payment rates are insufficient to
reflect the current costs of diagnostic imaging procedures when more
than two imaging procedures are performed. As we stated in the CY 2010
OPPS/ASC final rule with comment period (74 FR 60400), we do not
believe that, in aggregate, OPPS payment for multiple imaging services
will be inadequate under the multiple imaging composite APC payment
methodology so as to limit beneficiary access, even considering the
minority of cases in which hospitals provide more than two imaging
procedures on a single date of service. The median costs upon which the
payment rates for the multiple imaging composite APCs are based are
calculated using CY 2009 claims that would have qualified for composite
payment, including those with only two imaging procedures and those
with substantially higher numbers of imaging procedures. Payment based
on a measure of central tendency is a principle of any prospective
payment system. In some individual cases, payment exceeds the average
cost and in other cases payment is less than the average cost. On
balance, however, payment should approximate the relative cost of the
average case, recognizing that, as a prospective payment system, the
OPPS is a system of averages. Moreover, consistent with our policy
regarding APC payments made on a prospective basis, multiple composite
imaging services are subject to the outlier provision of section
1833(t)(5) of the Act for high cost cases meeting specific conditions.
We also do not agree with the commenters that the multiple imaging
composite APC payment methodology will result in hospitals requiring
patients who need more than two imaging procedures to return for
additional sittings on other days. As we stated in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68562), we do not believe that,
in general, hospitals would routinely and for purposes of financial
gain put patients at unnecessary risk of harm from radiation or
contrast exposure, or inconvenience them or risk lack of timely follow-
up to the point of making them return to the hospital on separate days
to receive medically necessary diagnostic studies. However, we again
note that we do have the capacity to examine our claims data for
patterns of fragmented care. If we were to find a pattern in which a
hospital appears to be fragmenting imaging services across multiple
days for individual beneficiaries, we could refer it for review by the
Quality Improvement Organizations (QIOs) with respect to the quality of
care furnished, or for review by the Program Safeguard Contractors of
claims against the medical record, as appropriate to the circumstances
we found.
As we stated in the CY 2010 final rule with comment period (74 FR
60399), we do not agree with the commenters that multiple imaging
procedures of the same modality provided on the same date of service
but at different times

[[Page 71859]]

should be exempt from the multiple imaging composite payment
methodology. As we indicated in the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68565) and the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60399), we believe that composite payment is
appropriate even when procedures are provided on the same date of
service but at different times because hospitals do not expend the same
facility resources each and every time a patient is seen for a distinct
imaging service in a separate imaging session. In most cases, we expect
that patients in these circumstances would receive imaging procedures
at different times during a single prolonged hospital outpatient
encounter. The efficiencies that may be gained from providing multiple
imaging procedures during a single session are achieved in ways other
than merely not having to reposition the patient. Even if the same
level of efficiencies could not be gained for multiple imaging
procedures performed on the same date of service but at different
times, we expect that any higher costs associated with these cases
would be reflected in the claims data and cost reports we use to
calculate the median costs for the multiple imaging composite APCs and,
therefore, in the payment rates for the multiple imaging composite
APCs. Therefore, we do not believe it is necessary or appropriate for
hospitals to report imaging procedures provided on the same date of
service but during different sittings any differently than they would
report imaging procedures performed consecutively in one sitting with
no time in between the imaging services. In addition, for the above
reasons, we do not believe it is necessary to implement a modifier or
condition code to distinguish between such cases.
We disagree with the commenter that multiple imaging composite APCs
penalize specific imaging services rather than create incentives for
efficiencies, and that efficiencies cannot be achieved because payment
rates are already very low under the DRA. As stated in the CY 2009
OPPS/ASC final rule with comment period (72 FR 66613) and previously in
this section, we believe that combining payment for multiple
independent services into a single OPPS payment in this way enables
hospitals to manage their resources with maximum flexibility by
monitoring and adjusting the volume and efficiency of services
themselves. The DRA does not reduce OPPS payment rates for imaging, so
we do not agree that this contributes in any way to payment rates for
imaging services that are too low under the OPPS.
After consideration of the public comments we received, we are
adopting our CY 2011 proposal, without modification, to continue paying
for all multiple imaging procedures within an imaging family performed
on the same date of service using the multiple imaging composite
payment methodology. The CY 2011 payment rates for the five multiple
imaging composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC
8008) are based on median costs calculated from the CY 2009 claims that
would have qualified for composite payment under the current policy
(that is, those claims with more than one procedure within the same
family on a single date of service). Using the same ratesetting
methodology described in the CY 2011 OPPS/ASC proposed rule (75 FR
46213), we were able to identify 1.9 million ``single session'' claims
out of an estimated 2.9 million potential composite cases from our
ratesetting claims data, or well over half of all eligible claims, to
calculate the final CY 2011 median costs for the multiple imaging
composite APCs.
Table 13 below lists the HCPCS codes that will be subject to the
multiple imaging composite policy and their respective families for CY
2011. We note that we have updated Table 13 to reflect HCPCS coding
changes for CY 2011. Specifically, we added CPT code 74176 (Computed
tomography, abdomen and pelvis; without contrast material), CPT code
74177 (Computed tomography, abdomen and pelvis; with contrast
material(s)), and CPT code 74178 (Computed tomography, abdomen and
pelvis; without contrast material in one or both body regions, followed
by contrast material(s) and further sections in one or both body
regions) to the CT and CTA family. These codes are new for CY 2011. We
also added codes C8931 (Magnetic resonance angiography with contrast,
spinal canal and contents), C8932 (Magnetic resonance angiography
without contrast, spinal canal and contents), C8933 (Magnetic resonance
angiography without contrast followed by with contrast, spinal canal
and contents), C8934 (Magnetic resonance angiography with contrast,
upper extremity), C8935 (Magnetic resonance angiography without
contrast, upper extremity), and C8936 (Magnetic resonance angiography
without contrast followed by with contrast, upper extremity), to the
MRI and MRA family. These codes were recognized for OPPS payment in the
October 2010 OPPS Update (Transmittal 2050, Change Request 7117, dated
September 17, 2010). The HCPCS codes listed in Table 13 are assigned
status indicated ``Q3''' in Addendum B to this final rule with comment
period to identify their status as potentially payable through a
composite APC. Their composite APC assignment is identified in Addendum
M to this final rule with comment period. Table 14 below lists the OPPS
imaging family services that overlap with HCPCS codes on the CY 2011
bypass list.

Table 13--OPPS Imaging Families and Multiple Imaging Procedure Composite
APCs
------------------------------------------------------------------------

------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
CY 2011 APC 8004 (Ultrasound composite) CY 2011 Approximate APC
median
cost = $188
------------------------------------------------------------------------
76604..................................... Us exam, chest.
76700..................................... Us exam, abdom, complete.
76705..................................... Echo exam of abdomen.
76770..................................... Us exam abdo back wall,
comp.
76775..................................... Us exam abdo back wall, lim.
76776..................................... Us exam k transpl w/Doppler.
76831..................................... Echo exam, uterus.
76856..................................... Us exam, pelvic, complete.
76870..................................... Us exam, scrotum.
76857..................................... Us exam, pelvic, limited.
------------------------------------------------------------------------
Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
CY 2011 APC 8005 (CT and CTA without CY 2011 Approximate APC
Contrast Composite)* Median Cost = $416
------------------------------------------------------------------------
70450..................................... Ct head/brain w/o dye.
70480..................................... Ct orbit/ear/fossa w/o dye.
70486..................................... Ct maxillofacial w/o dye.
70490..................................... Ct soft tissue neck w/o dye.
71250..................................... Ct thorax w/o dye.
72125..................................... Ct neck spine w/o dye.
72128..................................... Ct chest spine w/o dye.
72131..................................... Ct lumbar spine w/o dye.
72192..................................... Ct pelvis w/o dye.
73200..................................... Ct upper extremity w/o dye.
73700..................................... Ct lower extremity w/o dye.
74150..................................... Ct abdomen w/o dye.
74261..................................... Ct colonography, w/o dye.
74176..................................... Ct angio abd & pelvis.
------------------------------------------------------------------------

[[Page 71860]]

CY 2011 APC 8006 (CT and CTA with Contrast CY 2011 Approximate APC
Composite) Median Cost = $622
------------------------------------------------------------------------
70487..................................... Ct maxillofacial w/dye.
70460..................................... Ct head/brain w/dye.
70470..................................... Ct head/brain w/o & w/dye.
70481..................................... Ct orbit/ear/fossa w/dye.
70482..................................... Ct orbit/ear/fossa w/o & w/
dye.
70488..................................... Ct maxillofacial w/o & w/
dye.
70491..................................... Ct soft tissue neck w/dye.
70492..................................... Ct sft tsue nck w/o & w/dye.
70496..................................... Ct angiography, head.
70498..................................... Ct angiography, neck.
71260..................................... Ct thorax w/dye.
71270..................................... Ct thorax w/o & w/dye.
71275..................................... Ct angiography, chest.
72126..................................... Ct neck spine w/dye.
72127..................................... Ct neck spine w/o & w/dye.
72129..................................... Ct chest spine w/dye.
72130..................................... Ct chest spine w/o & w/dye.
72132..................................... Ct lumbar spine w/dye.
72133..................................... Ct lumbar spine w/o & w/dye.
72191..................................... Ct angiograph pelv w/o & w/
dye.
72193..................................... Ct pelvis w/dye.
72194..................................... Ct pelvis w/o & w/dye.
73201..................................... Ct upper extremity w/dye.
73202..................................... Ct uppr extremity w/o & w/
dye.
73206..................................... Ct angio upr extrm w/o & w/
dye.
73701..................................... Ct lower extremity w/dye.
73702..................................... Ct lwr extremity w/o & w/
dye.
73706..................................... Ct angio lwr extr w/o & w/
dye.
74160..................................... Ct abdomen w/dye.
74170..................................... Ct abdomen w/o & w/dye.
74175..................................... Ct angio abdom w/o & w/dye.
74262..................................... Ct colonography, w/dye.
75635..................................... Ct angio abdominal arteries.
74177..................................... Ct angio abd & pelv w/
contrast.
74178..................................... Ct angio abd & pelv 1+
regns.
------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the
same session as a ``with contrast'' CT or CTA procedure, the I/OCE will
assign APC 8006 rather than APC 8005.
------------------------------------------------------------------------

Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
CY 2011 APC 8007 (MRI and MRA without CY 2011 Approximate APC
Contrast Composite)* Median Cost = $699
------------------------------------------------------------------------
70336..................................... Magnetic image, jaw joint.
70540..................................... Mri orbit/face/neck w/o dye.
70544..................................... Mri angiography head w/o
dye.
70547..................................... Mri angiography neck w/o
dye.
70551..................................... Mri brain w/o dye.
70554..................................... Fmri brain by tech.
71550..................................... Mri chest w/o dye.
72141..................................... Mri neck spine w/o dye.
72146..................................... Mri chest spine w/o dye.
72148..................................... Mri lumbar spine w/o dye.
72195..................................... Mri pelvis w/o dye.
73218..................................... Mri upper extremity w/o dye.
73221..................................... Mri joint upr extrem w/o
dye.
73718..................................... Mri lower extremity w/o dye.
73721..................................... Mri jnt of lwr extre w/o
dye.
74181..................................... Mri abdomen w/o dye.
75557..................................... Cardiac mri for morph.
75559..................................... Cardiac mri w/stress img.
C8901..................................... MRA w/o cont, abd.
C8904..................................... MRI w/o cont, breast, uni.
C8907..................................... MRI w/o cont, breast, bi.
C8910..................................... MRA w/o cont, chest.
C8913..................................... MRA w/o cont, lwr ext.
C8919..................................... MRA w/o cont, pelvis.
C8932..................................... MRA, w/o dye, spinal canal.
C8935..................................... MRA, w/o dye, upper extr.
------------------------------------------------------------------------
CY 2011 APC 8008 (MRI and MRA with CY 2011 Approximate APC
Contrast Composite) Median Cost = $984
------------------------------------------------------------------------
70549..................................... Mri angiograph neck w/o & w/
dye.
70542..................................... Mri orbit/face/neck w/dye.
70543..................................... Mri orbt/fac/nck w/o & w/
dye.
70545..................................... Mri angiography head w/dye.
70546..................................... Mri angiograph head w/o & w/
dye.
70548..................................... Mri angiography neck w/dye.
70552..................................... Mri brain w/dye.
70553..................................... Mri brain w/o & w/dye.
71551..................................... Mri chest w/dye.
71552..................................... Mri chest w/o & w/dye.
72142..................................... Mri neck spine w/dye.
72147..................................... Mri chest spine w/dye.
72149..................................... Mri lumbar spine w/dye.
72156..................................... Mri neck spine w/o & w/dye.
72157..................................... Mri chest spine w/o & w/dye.
72158..................................... Mri lumbar spine w/o & w/
dye.
72196..................................... Mri pelvis w/dye.
72197..................................... Mri pelvis w/o & w/dye.
73219..................................... Mri upper extremity w/dye.
73220..................................... Mri uppr extremity w/o & w/
dye.
73222..................................... Mri joint upr extrem w/dye.
73223..................................... Mri joint upr extr w/o & w/
dye.
73719..................................... Mri lower extremity w/dye.
73720..................................... Mri lwr extremity w/o & w/
dye.
73722..................................... Mri joint of lwr extr w/dye.
73723..................................... Mri joint lwr extr w/o & w/
dye.
74182..................................... Mri abdomen w/dye.
74183..................................... Mri abdomen w/o & w/dye.
75561..................................... Cardiac mri for morph w/dye.
75563..................................... Card mri w/stress img & dye.
C8900..................................... MRA w/cont, abd.
C8902..................................... MRA w/o fol w/cont, abd.
C8903..................................... MRI w/cont, breast, uni.
C8905..................................... MRI w/o fol w/cont, brst,
un.
C8906..................................... MRI w/cont, breast, bi.
C8908..................................... MRI w/o fol w/cont, breast,
C8909..................................... MRA w/cont, chest.
C8911..................................... MRA w/o fol w/cont, chest.
C8912..................................... MRA w/cont, lwr ext.
C8914..................................... MRA w/o fol w/cont, lwr ext.
C8918..................................... MRA w/cont, pelvis.
C8920..................................... MRA w/o fol w/cont, pelvis.
C8931..................................... MRA, w/dye, spinal canal.
C8933..................................... MRA, w/o & w/dye, spinal
canal.
C8934..................................... MRA, w/dye, upper extremity.
C8936..................................... MRA, w/o & w/dye, upper
extr.
------------------------------------------------------------------------
* If a ``without contrast'' MRI or MRA procedure is performed during the
same session as a ``with contrast'' MRI or MRA procedure, the I/OCE
will assign APC 8008 rather than 8007..
------------------------------------------------------------------------

[[Page 71861]]

Table 14--OPPS Imaging Family Services Overlapping With HCPCS Codes on
the CY 2011 Bypass List
------------------------------------------------------------------------

------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
76700..................................... Us exam, abdom, complete.
76705..................................... Echo exam of abdomen.
76770..................................... Us exam abdo back wall,
comp.
76775..................................... Us exam abdo back wall, lim.
76776..................................... Us exam k transpl w/Doppler.
76856..................................... Us exam, pelvic, complete.
76870..................................... Us exam, scrotum.
76857..................................... Us exam, pelvic, limited.
------------------------------------------------------------------------
Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
70450..................................... Ct head/brain w/o dye.
70480..................................... Ct orbit/ear/fossa w/o dye.
70486..................................... Ct maxillofacial w/o dye.
70490..................................... Ct soft tissue neck w/o dye.
71250..................................... Ct thorax w/o dye.
72125..................................... Ct neck spine w/o dye.
72128..................................... Ct chest spine w/o dye.
72131..................................... Ct lumbar spine w/o dye.
72192..................................... Ct pelvis w/o dye.
73200..................................... Ct upper extremity w/o dye.
73700..................................... Ct lower extremity w/o dye.
74150..................................... Ct abdomen w/o dye.
------------------------------------------------------------------------
Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
70336..................................... Magnetic image, jaw joint.
70544..................................... Mri angiography head w/o
dye.
70551..................................... Mri brain w/o dye.
72141..................................... Mri neck spine w/o dye.
72146..................................... Mri chest spine w/o dye.
72148..................................... Mri lumbar spine w/o dye.
73218..................................... Mri upper extremity w/o dye.
73221..................................... Mri joint upr extrem w/o
dye.
73718..................................... Mri lower extremity w/o dye.
73721..................................... Mri jnt of lwr extre w/o
dye.
------------------------------------------------------------------------

3. Changes to Packaged Services
a. Background
The OPPS, like other prospective payment systems, relies on the
concept of averaging, where the payment may be more or less than the
estimated cost of providing a service or bundle of services for a
particular patient, but with the exception of outlier cases, the
payment is adequate to ensure access to appropriate care. Packaging
payment for multiple interrelated services into a single payment
creates incentives for providers to furnish services in the most
efficient way by enabling hospitals to manage their resources with
maximum flexibility, thereby encouraging long-term cost containment.
For example, where there are a variety of supplies that could be used
to furnish a service, some of which are more expensive than others,
packaging encourages hospitals to use the least expensive item that
meets the patient's needs, rather than to routinely use a more
expensive item. Packaging also encourages hospitals to negotiate
carefully with manufacturers and suppliers to reduce the purchase price
of items and services or to explore alternative group purchasing
arrangements, thereby encouraging the most economical health care.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while carefully
scrutinizing the services ordered by practitioners to maximize the
efficient use of hospital resources. Packaging payments into larger
payment bundles promotes the stability of payment for services over
time. Finally, packaging also may reduce the importance of refining
service-specific payment because there is more opportunity for
hospitals to average payment across higher cost cases requiring many
ancillary services and lower cost cases requiring fewer ancillary
services. For these reasons, packaging payment for services that are
typically ancillary and supportive to a primary service has been a
fundamental part of the OPPS since its implementation in August 2000.
We assign status indicator ``N'' to those HCPCS codes that we
believe are always integral to the performance of the primary modality;
therefore, we always package their costs into the costs of the
separately paid primary services with which they are billed. Services
assigned status indicator ``N'' are unconditionally packaged.
We assign status indicator ``Q1'' (``STVX-Packaged Codes''), ``Q2''
(``T-Packaged Codes''), or ``Q3'' (Codes that may be paid through a
composite APC) to each conditionally packaged HCPCS code. An ``STVX-
packaged code'' describes a HCPCS code whose payment is packaged when
one or more separately paid primary services with the status indicator
of ``S,'' ``T,'' ``V,'' or ``X'' are furnished in the hospital
outpatient encounter. A ``T-packaged code'' describes a code whose
payment is packaged when one or more separately paid surgical
procedures with the status indicator of ``T'' are provided during the
hospital encounter. ``STVX-packaged codes'' and ``T-packaged codes''
are paid separately in those uncommon cases when they do not meet their
respective criteria for packaged payment. ``STVX-packaged codes'' and
``T-packaged codes'' are conditionally packaged. We refer readers to
section XIII.A.1. of this final rule with comment period for a complete
listing of status indicators.
We use the term ``dependent service'' to refer to the HCPCS codes
that represent services that are typically ancillary and supportive to
a primary diagnostic or therapeutic modality. We use the term
``independent service'' to refer to the HCPCS codes that represent the
primary therapeutic or diagnostic modality into which we package
payment for the dependent service. In future years, as we consider the
development of larger payment groups that more broadly reflect services
provided in an encounter or episode-of-care, it is possible that we
might propose to bundle payment for a service that we now refer to as
``independent.''
Hospitals include HCPCS codes and charges for packaged services on
their claims, and the estimated costs associated with those packaged
services are then added to the costs of separately payable procedures
on the same claims in establishing payment rates for the separately
payable services. We encourage hospitals to report all HCPCS codes that
describe packaged services that were provided, unless the CPT Editorial
Panel or CMS provide other guidance. The appropriateness of the OPPS
payment rates depend on the quality and completeness of the claims data
that hospitals submit for the services they furnish to our Medicare
beneficiaries.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66610
through 66659), we adopted the packaging of payment for items and
services in seven categories into the payment for the primary
diagnostic or therapeutic modality to which we believe these items and
services are typically ancillary and supportive. The seven categories
are: (1) Guidance services; (2) image processing services; (3)
intraoperative services; (4) imaging

[[Page 71862]]

supervision and interpretation services; (5) diagnostic
radiopharmaceuticals; (6) contrast media; and (7) observation services.
We specifically chose these categories of HCPCS codes for packaging
because we believe that the items and services described by the codes
in these categories are typically ancillary and supportive to a primary
diagnostic or therapeutic modality and, in those cases, are an integral
part of the primary service they support.
In addition, in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66650 through 66659), we finalized additional packaging for the
CY 2008 OPPS, which included the establishment of new composite APCs
for CY 2008, specifically APC 8000 (Cardiac Electrophysiologic
Evaluation and Ablation Composite), APC 8001 (LDR Prostate
Brachytherapy Composite), APC 8002 (Level I Extended Assessment &
Management Composite), and APC 8003 (Level II Extended Assessment &
Management Composite). In the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68559 through 68569), we expanded the composite APC model
to one new clinical area--multiple imaging services. We created five
multiple imaging composite APCs for payment in CY 2009 that incorporate
statutory requirements to differentiate between imaging services
provided with contrast and without contrast as required by section
1833(t)(2)(G) of the Act. The multiple imaging composite APCs are: APC
8004 (Ultrasound Composite); APC 8005 (CT and CTA without Contrast
Composite); APC 8006 (CT and CTA with Contrast Composite); APC 8007
(MRI and MRA without Contrast Composite); and APC 8008 (MRI and MRA
with Contrast Composite). We discuss composite APCs in more detail in
section II.A.2.e. of this final rule with comment period.
We recognize that decisions about packaging and bundling payment
involve a balance between ensuring that payment is adequate to enable
the hospital to provide quality care and establishing incentives for
efficiency through larger units of payment. Therefore, we welcomed
public comments regarding our packaging proposals for the CY 2011 OPPS.
b. Packaging Issues
(1) CMS Presentation of Findings Regarding Expanded Packaging at the
February 2010 APC Panel Meeting
In deciding whether to package a service or pay for a code
separately, we have historically considered a variety of factors,
including whether the service is normally provided separately or in
conjunction with other services; how likely it is for the costs of the
packaged code to be appropriately mapped to the separately payable
codes with which it was performed; and whether the expected cost of the
service is relatively low.
As discussed in section I.E. of this final rule with comment
period, the APC Panel advises CMS on the clinical integrity of payment
groups and their weights, and the APC Panel has had a Packaging
Subcommittee, now renamed the Subcommittee for APC Groups and Status
Indicator (SI) Assignments, that studies and makes recommendations on
issues pertaining to services that are not separately payable under the
OPPS, but whose payments are bundled or packaged into APC payments. The
APC Panel has considered packaging issues at several earlier meetings.
For discussions of earlier APC Panel meetings and recommendations, we
refer readers to previously published hospital OPPS/ASC proposed and
final rules on the CMS Web site at: http://www.cms.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
During the August 5-6, 2009 meeting of the APC Panel, we agreed to
continue to provide the Panel with information on the impact of
increased packaging on Medicare beneficiaries building on the analyses
we had presented at the February 2009 APC Panel meeting. We did not
share additional packaging data with the APC Panel at the August 2009
meeting because we had already presented analysis comparing CY 2007 and
CY 2008 claims data and believed the APC Panel's discussions would
benefit from analyses of CY 2007 and CY 2009 claims data. We indicated
that we planned to incorporate analysis of CY 2009 claims into the
information we would bring to the APC Panel for its review at the
winter 2010 meeting.
At the February 17-18, 2010 APC Panel meeting, we presented
subsequent analyses that compared CY 2007 claims processed through
September 30, 2007 to CY 2009 claims processed through September 30,
2009. Similar to the initial analysis that we presented to the APC
Panel in 2009, the HCPCS codes that we compared are the ones that we
identified in the CY 2008 OPPS final rule with comment period as
fitting into one of the packaging categories, including HCPCS codes
that became effective for CY 2009. As noted above, the seven packaging
categories in our CY 2008 packaging proposal are guidance services,
image processing services, intraoperative services, imaging supervision
and interpretation services, diagnostic radiopharmaceuticals, contrast
media, and observation services. We note that, similar to the initial
analysis, we did not make any adjustments for inflation, changes in the
Medicare population, changes in payment due to APC recalibration,
changes in frequency due to known changes in code definitions and
coding practices, or changes in the population of hospitals paid under
the OPPS. A summary of these data analyses is provided below.
Analysis of the diagnostic radiopharmaceuticals category showed
that the diagnostic radiopharmaceuticals were billed 1 percent more
often during the first 9 months of CY 2009 as compared to the first 9
months of CY 2007. We noticed very little change in the frequency of
hospitals reporting one or more diagnostic radiopharmaceutical between
CY 2007 and CY 2009. Beginning in CY 2008, we required reporting of a
radiolabeled product (including diagnostic radiopharmaceuticals) when
billing a nuclear medicine procedure, and we believe that the modest
increases in frequency of reporting diagnostic radiopharmaceuticals and
the percentage of reporting hospitals generally reflects hospitals
adhering to our reporting requirements.
We also found that nuclear medicine procedures (into which
diagnostic radiopharmaceuticals were packaged) and associated
diagnostic radiopharmaceuticals were billed approximately 3 million
times during the first 9 months of both CY 2007 and CY 2009. Further
analysis revealed that we paid hospitals over $637 million for nuclear
medicine procedures and diagnostic radiopharmaceuticals during the
first 9 months of CY 2007, when diagnostic radiopharmaceuticals were
separately payable, and approximately the same amount for nuclear
medicine procedures and diagnostic radiopharmaceuticals during the
first 9 months of CY 2009, when payment for diagnostic
radiopharmaceuticals was packaged. This suggests that frequency and
payment for nuclear medicine procedures remained fairly steady between
the first 9 months of CY 2007 and the first 9 months of CY 2009.
We conducted the same analysis for guidance services that were
packaged beginning in CY 2008. Analysis of the guidance category (which
includes image-guided radiation therapy services) showed that guidance
services were billed 8 percent more often during CY 2009 as compared to
CY 2007 and that the number of hospitals reporting

[[Page 71863]]

guidance services declined by 1 percent between CY 2007 and CY 2009.
We also analyzed the same data for all contrast services that were
packaged beginning in CY 2008. Analysis of this category showed that
contrast services were billed 9 percent more often during CY 2009 as
compared to CY 2007 and that the number of hospitals reporting contrast
media increased by 1 percent between CY 2007 and CY 2009.
Analysis of the data for image supervision and interpretation
services showed that these services were billed 10 percent more often
during CY 2009 as compared to CY 2007 and, similar to guidance services
and contrast agents, the number of hospitals reporting image
supervision and interpretation services declined by 1 percent between
CY 2007 and CY 2009.
We also analyzed the first 9 months of CY 2007 and CY 2009 data
related to all image processing services that were packaged beginning
in the CY 2008 OPPS. This analysis was difficult because there were
significant changes to the CPT codes in this category for CY 2009. For
example, the procedures described by CPT codes 93320 (which describes
spectral Doppler and which we classified as an intraoperative service)
and 93325 (which describes color flow Doppler and which we classified
as an image processing service) are now reported using one
comprehensive code, CPT 93306, which describes complete transthoracic
echocardiogram with spectral and color flow Doppler. In an effort to
isolate the effects of the changes to coding from our analysis, we
removed the data for any codes experiencing significant modifications
and observed a 7 percent decrease from CY 2007 to CY 2009 in the
frequency of image processing services billed. However, as we pointed
out to the APC panel, these numbers are not necessarily the majority of
services in the category or reflective of behavioral changes for the
services of interest. When we included the image processing services
with the revised coding for CY 2009, the data showed a 61-percent
decrease in the billing of these services between CY 2007 and CY 2009
and a 6-percent decrease in the number of hospitals reporting these
services during the same timeframe.
Our analysis of changes in intraoperative services between CY 2007
and CY 2009 showed a 5-percent decrease in the billing of these
services and a 5-percent decrease in the number of hospitals reporting
these services during the same timeframe.
As we did for our presentation at the February 2009 APC Panel
meeting, we also found that cardiac catheterization and other
percutaneous vascular procedures that would typically be accompanied by
Intravascular Ultrasound (IVUS), Intracardiac echocardiography (ICE),
and Fractional flow reserve (FFR) (including IVUS, ICE, and FFR) were
billed approximately 376,000 times in CY 2007 and approximately 473,000
times in CY 2009, representing an increase of 26 percent in the number
of services and items billed between CY 2007 and CY 2009. IVUS, ICE,
and FFR are intraoperative and image supervision and interpretation
services that have received a lot of attention. Further analysis showed
that the OPPS paid hospitals over $912 million for cardiac
catheterizations, other related services, and IVUS, ICE, and FFR in CY
2007, when IVUS, ICE, and FFR were paid separately. In the first 9
months of CY 2009, the OPPS paid hospitals approximately $1.4 billion
for cardiac catheterization and other percutaneous vascular procedures
and IVUS, ICE, and FFR, when payments for IVUS, ICE, and FFR were
packaged. This is a 58-percent increase in payment from CY 2007. Using
the first 9 months of claims data for both CY 2007 and CY 2009, we
calculated an average payment per service or item provided of $2,430 in
CY 2007 and $3,048 in CY 2009 for cardiac catheterization and other
related services, an increase of 25 percent in average payment per item
or service. This observed increase in average payment per service is
most likely attributable to the observed increase in the frequency of
these cardiac catheterization and other percutaneous vascular
procedures that would typically be accompanied by IVUS, ICE and FFR
(including IVUS, ICE, and FFR) billed in CY 2009.
We also cannot determine how much of the 58-percent increase in
aggregate payment for these services may be due to the packaging of
payment for IVUS, ICE, and FFR (and other services that were newly
packaged for CY 2008) and how much may be due to annual APC
recalibration and typical fluctuations in service frequency. However,
we believe that all of these factors contributed to the notable
increase in aggregate payment between CY 2007 and CY 2009.
We further analyzed the first 9 months of CY 2007 and CY 2009
claims data for radiation oncology services that would be accompanied
by radiation oncology guidance. We found that radiation oncology
services (including radiation oncology guidance services) were billed
approximately 4 million times in CY 2007 and 3.8 million times in CY
2009, representing a decrease in frequency of approximately 6 percent
between CY 2007 and CY 2009. These numbers represented each instance
where a radiation oncology service or a radiation oncology guidance
service was billed. Our analysis indicated that hospitals were paid
over $811 million for radiation oncology services and radiation
oncology guidance services under the OPPS during the first 9 months of
CY 2007, when radiation oncology guidance services were separately
payable. During the first 9 months of CY 2009, when payments for
radiation oncology guidance were packaged, hospitals were paid over
$827 million for radiation oncology services under the OPPS. This $827
million included packaged payment for radiation oncology guidance
services and represented a 2-percent increase in aggregate payment from
CY 2007 to CY 2009. Using the first 9 months of claims data for both CY
2007 and CY 2009, we calculated an average payment per radiation
oncology service or item billed of $199 in CY 2007 and $216 in CY 2009,
representing a per service increase of 8 percent from CY 2007 to CY
2009.
At the February 2009 meeting, the APC panel also requested that CMS
provide separate analyses of radiation oncology guidance, by type of
radiation oncology service, specifically, intensity modulated radiation
therapy (IMRT), stereotactic radiosurgery (SRS), brachytherapy, and
conventional radiation therapy. The results from these analyses are
discussed below:
We conducted these analyses on the specified categories using the
first 9 months of claims and cost report data from CY 2007, before the
expanded packaging went into effect, and the first 9 months of claims
and cost report data from CY 2009--the second year of packaged payment
for the radiation guidance services. We found that IMRT services were
billed approximately 670,000 times during the first 9 months of CY
2007. During this same timeframe, Medicare paid hospitals approximately
$227 million for IMRT services. In comparison, during the first 9
months of CY 2009, IMRT services were billed 713,000 times,
representing an increase in frequency of 6 percent. Further, during the
first 9 months of CY 2009, when payments for radiation oncology
guidance were packaged into the payments for the separately paid IMRT
procedures, we paid hospitals over $298 million, representing a 31-
percent increase in payments from CY 2007 to CY 2009.
We further analyzed the data for SRS services and found that, for
the first 9 months of CY 2007 and CY 2009, SRS services were billed
approximately

[[Page 71864]]

9,000 and 13,000 times, respectively, representing an increase in
frequency of 43 percent. Aggregate Medicare payments for these SRS
services increased by 24 percent from $34 million in CY 2007 to $42
million in CY 2009.
Our review of the data for brachytherapy services revealed that,
for the first 9 months of CY 2007 and CY 2009, these services were
billed approximately 10,000 and 11,000 times, respectively,
representing an increase in frequency of 8 percent. During this
timeframe, aggregate Medicare payments for these brachytherapy services
increased by 1 percent from $9.8 million in CY 2007 to $9.9 million in
CY 2009.
Our review of the data for conventional radiation therapy services
revealed that conventional radiation therapy services were billed 1.4
million times and 1.1 million times, in the first 9 months of CY 2007
and CY 2009, respectively, representing a decrease in frequency of 20
percent. During this timeframe, aggregate Medicare payments for these
conventional radiation services decreased by 10 percent from $189
million in CY 2007 to $169 million in CY 2009.
In reviewing our early CY 2009 claims data, which reflect the
second year of packaged payment for services in the packaged categories
identified in the CY 2008 OPPS/ASC final rule with comment period, we
generally observed increases in the billing and reporting of packaged
services described by these categories, with the caveat that we were
not able to untangle the various causes of declines in the image
processing category, indicating steady beneficiary access to these
categories of supporting and ancillary services. In aggregate, our
analysis showed that hospitals do not appear to have significantly
changed their reporting patterns as a result of the expanded packaging
policy nor do the analyses suggest that hospitals have stopped offering
these supporting and ancillary services with the primary diagnostic and
therapeutic modalities that they support.
(2) Packaging Recommendations of the APC Panel at Its February 2010
Meeting
During the February 2010 APC panel meeting, the APC Panel accepted
the report of the Packaging Subcommittee (the Subcommittee for APC
Groups and Status Indicator (SI) Assignments beginning in August 2010)
heard several presentations related to packaged services, discussed the
deliberations of the Packaging Subcommittee, and made six
recommendations. The Report of the February 2010 meeting of the APC
Panel may be found at the Web site at: http://www.cms.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.
To summarize, the APC Panel made the following recommendations
regarding packaging of payment under the CY 2011 OPPS:
1. That CMS consider whether CPT code 31627 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
computer-assisted, image-guided navigation) (also known as
electromagnetic navigational bronchoscopy (ENB)) should be packaged or
paid separately; if it should be paid separately, CMS should
investigate the appropriate APC assignment. The Panel suggested that
CMS use bronchoscopic ultrasonography (EBUS) as a clinical example for
comparison. (Recommendation 1)
2. That CMS make CPT code 96368 (Intravenous infusion, for therapy,
prophylaxis, or diagnosis (specify substance or drug); concurrent
infusion) and CPT code 96376 (Therapeutic, prophylactic, or diagnostic
injection (specify substance or drug); subcutaneous or intramuscular,
each additional sequential intravenous push of the same substance/drug
provided in the facility (List separately in addition to code for
primary procedure)) separately payable in the CY 2011 OPPS/ASC final
rule with comment period at an appropriate payment rate as determined
by CMS. (Recommendation 2)
3. That CMS conditionally package payment for the guidance
procedures that would accompany breast needle placement (specifically
CPT code 19290 (Preoperative placement of needle localization wire,
breast); CPT code 19291 (Preoperative placement of needle localization
wire, breast; each additional lesion (List separately in addition to
code for primary procedure)); CPT code 19295 (Image guided placement,
metallic localization clip, percutaneous, during breast biopsy/
aspiration (List separately in addition to code for primary
procedure)); CPT code 77031 (Stereotactic localization guidance for
breast biopsy or needle placement (e.g., for wire localization or for
injection)), each lesion, radiological supervision and interpretation);
CPT code 77032 (Mammographic guidance for needle placement, breast
(e.g., for wire localization or for injection), each lesion,
radiological supervision and interpretation); CPT code 76942
(Ultrasonic guidance for needle placement (e.g., biopsy, aspiration,
injection, localization device), imaging supervision and
interpretation)) when these guidance services are performed separately.
(Recommendation 3)
4. The Panel encourages the public to submit common clinical
scenarios involving currently packaged HCPCS codes and recommendations
of specific services or procedures for which payment would be most
appropriately packaged under the OPPS for review by the Packaging
Subcommittee members. (Recommendation 4)
5. That CMS continue providing analysis on an ongoing basis of the
impact on beneficiaries of the multiple imaging composite APCs as data
become available. (Recommendation 5)
6. That the work of the Packaging Subcommittee continue.
(Recommendation 6)
We address each of these recommendations in the discussion that
follows:
Recommendation 1
At the APC Panel's February 2010 meeting, the manufacturer asserted
that use of ENB technology during a bronchoscopy procedure enables
access to distal lesions that are otherwise not accessible without use
of the ENB technology. The manufacturer also argued that without
separate payment for ENB, hospitals would likely not adopt the
technology and the population that would likely benefit from ENB would
not have access to this technology. In response to the manufacturer's
assertion, the APC Panel asked CMS to consider whether CPT code 31627,
which describes Electromagnetic Navigational Bronchoscopy (ENB), should
be packaged or paid separately; and if it should be paid separately,
the APC Panel asked CMS to investigate the appropriate APC assignment.
CPT code 31627 is new for CY 2010, and we assigned it a new interim
status indicator of ``N'' in our CY 2010 OPPS/ASC final rule with
comment period based on our packaging policies (discussed in section
II.A.3.a. of this final rule with comment period). We stated in the
proposed rule that we considered the information available to us for
CPT code 31627 and believed that the code describes a procedure that is
supportive of and ancillary to the primary diagnostic or therapeutic
modality, in this case, bronchoscopy procedures (for example, CPT code
31622 (Bronchoscopy, rigid or flexible, including fluoroscopic
guidance, when performed: Diagnostic, with cell washing, when performed
(separate procedure)). We stated that we currently package payment for
CPT code 31627,

[[Page 71865]]

and that we continued to believe that this is the appropriate treatment
of that code. Therefore, in the CY 2011 OPPS/ASC proposed rule (75 FR
46223), we proposed to package payment for CPT code 31627. As we have
discussed in past rules, in making our decision on whether to package a
service or pay for it separately we consider a variety of factors,
including whether the service is normally provided separately or in
conjunction with other services because it supports those services. By
proposing to packaging payment for this procedure, we would be treating
it in the same manner as similar computer-assisted, navigational
diagnostic procedures that are supportive of and ancillary to a primary
diagnostic or therapeutic modality.
In its recommendation regarding whether to make separate payment
under an APC for CPT code 31627, the APC Panel suggested that we use
bronchoscopic ultrasonography as a clinical example for comparison. We
considered CPT code 31620 (Endobronchial ultrasound (EBUS) during
bronchoscopic diagnostic or therapeutic intervention(s) (List
separately in addition to code for primary procedure)) to be a suitable
comparison because it describes another bronchoscopic procedure in
which a guidance technology (that is, ultrasonography) is used to
achieve the therapeutic benefit of the procedure. Similar to our
proposed payment for CPT code 31627, payment for CPT code 31620 is
currently packaged into the primary modality with which it would be
appropriately billed. In CY 2008, as part of our increased packaging
proposal, we identified the EBUS procedure as an intraoperative
ancillary service that would typically be reported in conjunction with
an independent service. In addition, similar to CPT code 31627, CPT
code 31620 is an add-on code that, in accordance with CPT reporting
guidelines, would only be appropriately reported in conjunction with
specified bronchoscopy procedures with which it would be performed.
Based on these general comparisons of CPT code 31627 to the EBUS
procedure described by CPT code 31620, we stated in the proposed rule
that we believe that our proposal to package payment for CPT code 31627
would be consistent with the packaging approach that we have adopted in
recent years. As we have stated in past rules with regard to EBUS, we
also fully expected that, to the extent these services are billed
appropriately, payment for the primary service would reflect the cost
of the packaged ENB procedure. For example, in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68584), we discussed packaging of
CPT code 31620; we state that we observed increased packaged costs
associated with the services into which CPT code 31620 had been
packaged, which increased the APC payment rates for bronchoscopy
procedures.
In summary, we stated in the proposed rule that we continued to
believe that CPT code 31627 describes a procedure that is ancillary to
and supportive of the primary service with which it is often billed.
Therefore, in the CY 2011 OPPS/ASC proposed rule, for CY 2011, we
proposed to maintain CPT code 31627 as a packaged service.
The APC Panel at its August 23-24, 2010 meeting heard presentations
from the public and discussed whether ENB should remain packaged for CY
2011. We discuss the public comments we received and the Panel
recommendation, and provide our response to the public comments on ENB,
in section II.A.3.b.(2) of this final rule with comment period.
Recommendation 2
In the CY 2011 OPPS/ASC proposed rule (75 FR 46223), we stated that
we did not accept the APC Panel's recommendation that CMS make CPT code
96368 and CPT code 96376 separately payable for the CY 2011 OPPS. We
consider a variety of factors in making a decision whether to package a
service or pay for it separately, including whether the service is
normally provided separately or in conjunction with other services and
how likely it is for the costs of the packaged code to be appropriately
mapped to the separately payable codes with which it was performed. In
the proposed rule, we stated that CPT codes 93676 and 96368 describe
concurrent and sequential services that have always been packaged under
the OPPS. We stated that from the inception of the OPPS through CY
2006, we paid for drug administration under the OPPS using HCPCS
alphanumeric codes that packaged payment for concurrent infusions and
administration of new drugs into the payment for the alphanumeric codes
for drug administration. In CY 2007, we adopted CPT codes for drug
administration services. The CY 2007 CPT codes did not separately
recognize administration of new drugs during the same encounter with a
separate CPT code. Therefore, administration of a new drug continued to
be packaged into payment for the service of which it was a part.
Moreover, for CY 2007, CPT code 90768 (Intravenous infusion, for
therapy, prophylaxis, or diagnosis; concurrent infusion), which was
replaced by CPT code 96368, was packaged under the OPPS, continuing the
longstanding practice of not making separate payment for concurrent
infusion. We also pointed out that, during our implementation of this
new CPT code, while it was new for CY 2007, it represented the same
procedures as described by the previous drug administration HCPCS code
set, and, as a result, the payment data for these procedures would be
captured in the claims that were available to us for ratesetting
purposes.
Similarly, CPT codes 96368 and 96376, which were created by CPT in
2008, are replacement codes for those same procedures that were
described by the previous drug administration code sets and their
associated data would be captured in our claims database. We proposed
that the costs for these services, concurrent infusion and additional
push of the same drug, would continue to be packaged into payment for
the drug administration codes with which they are reported. In the
proposed rule, we indicated that we considered a variety of factors,
including whether the service is normally provided separately or in
conjunction with other services. CPT codes 96368 and 96376 describe
concurrent and sequential drug administration services that, in
accordance with CPT guidelines, are always provided in association with
an initial drug administration service. Therefore, we indicated that we
believe that they continue to be appropriately packaged into the
payment for the separately payable services that they usually
accompany. For example, CPT code 96376 would be billed with CPT code
96374 (Therapeutic, prophylactic, or diagnostic injection; intravenous
push, single or initial substance/drug), which describes an initial
intravenous push code and, as a result, the cost for CPT code 96376
would be reflected in the total cost for CPT code 96374. Moreover, we
said that payment for these services has always been packaged into
payment for the drug administration services without which they cannot
be correctly reported.
In the proposed rule, we stated that these two codes each describe
services that, by definition, are always provided in conjunction with
an initial drug administration code and that we believed that these
services have been packaged since the inception of the OPPS. We further
stated that we continued to believe that they are appropriately
packaged into the payment for the separately payable services without
which, under CPT

[[Page 71866]]

guidelines and definition, they cannot be appropriately reported.
Therefore, for CY 2011, we proposed to continue our established policy
of making packaged payment for CPT code 96368 and CPT code 96376, and
we proposed to assign them a status indicator of ``N.''
Comment: Commenters objected to CMS' proposal to package payment
for CPT codes 96376 and 96368 into payment for the services with which
they are furnished. The commenters believed that the resources
associated with CPT code 96376 are similar to those associated with CPT
code 96374 (Therapeutic, prophylactic, or diagnostic injection (specify
substance or drug); intravenous push, single or initial substance/drug)
(status indicator ``S''). They also believed that while the resources
associated with CPT code 96368 somewhat resemble the resources
associated with CPT code 96366 (Intravenous infusion, for therapy,
prophylaxis, or diagnosis (specify substance or drug); each additional
hour (List separately in addition to code for primary procedure)
(status indicator ``S''), they are more similar to the services
described by CPT code 96375 (Therapeutic, prophylactic, or diagnostic
injection (specify substance or drug); each additional sequential
intravenous push of a new substance/drug (List separately in addition
to code for primary procedure) (status indicator ``S''). The commenters
believed that the fact that CPT codes 96376 and 96368 are add-on codes
does not preclude them from being separately paid.
Several commenters disagreed with CMS' statement that these
services have been packaged since the inception of the OPPS. They
stated that hospitals formerly used a single CPT code for reporting IV
push administrations, CPT code 90784. They further stated that this
code was reported and paid separately for each and every IV push of
either the same or different medications. The commenters indicated that
when the CPT coding system changed, the payment for the ``initial''
successor CPT code (90774 [now 96374]) remained virtually identical to
the rate for the previous code. Similarly, they indicated that services
now reported with CPT code 96368 were historically reported under CPT
codes 90780 and 90781 and received separate payment.
Response: As we discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66787 through 66788) and in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68674), in deciding whether to
package a service or pay for it separately, we consider a variety of
factors, including whether the service is normally provided separately
or in conjunction with other services; how likely it is for the costs
of the packaged code to be appropriately mapped to the separately
payable codes with which it was performed; and whether the expected
cost of the service is relatively low. CPT codes 96376 and 96368, by
definition, are always provided in association with other drug
administration services and the costs of these services are highly
likely to be mapped to the separately paid codes with which they are
performed and reported. For these reasons, we continue to believe that
they are most appropriately packaged under the OPPS. Therefore, we are
not accepting the APC Panel's recommendation to pay them separately.
Furthermore, we do not agree with the commenters that the services
described by CPT code 96376 are similar to those described by CPT code
96374. CPT code 96374 is an initial intravenous push code, and, per CPT
instructions, special billing guidelines apply. Commonly, this service
requires the initial establishment of intravenous access in a patient,
a resource-intensive task performed by hospital staff using special
supplies. In contrast, CPT code 96376 is an add-on code and is reported
for each additional sequential intravenous push of the same substance/
drug. In the case of this sequential service, the patient already has
established intravenous access, so we would expect the service to
require fewer hospital resources. In addition, we do not agree with
commenters that the services described by CPT code 96368 are similar to
those described by CPT code 96375. CPT code 96368 describes a
concurrent intravenous infusion while CPT code 96375 describes a
sequential intravenous push, and we would expect these services to
require different hospital resources because the services require
different medical supplies, require different nursing skills, and
require different amounts of staff time.
With regard to the comment that the predecessor codes were
separately payable until CY 2008 under the OPPS, we acknowledge that
CPT code 90784 (Therapeutic, prophylactic or diagnostic injection
(specify material injected; intravenous) was separately paid from the
inception of the OPPS until its deletion, which was effective December
31, 2005, and might have been reported for an additional sequential
intravenous push of the same substance, although the code was not
defined as being for an additional sequential push. Similarly, CPT code
C8952 (Therapeutic, prophylactic or diagnostic injection; intravenous
push of each new substance/drug), which was effective January 1, 2006,
and was deleted effective December 31, 2006, also was separately paid
during the period that it was effective and might also have been
reported for an additional sequential intravenous push of the same
substance, although the code was not defined as being for an additional
sequential push. CPT code 90776 (Therapeutic, prophylactic or
diagnostic injection (specify substance or drug); each additional
sequential intravenous push of the same substance/drug provided in a
facility (list separately in addition to code for primary procedure)),
which was effective January 1, 2008, and deleted effective December 31,
2008, is the first code to specify that the service is an additional
sequential intravenous push of the same substance/drug and CPT code
90776 was packaged. Hence, before the creation of CPT code 90776, no
code existed to specifically report an additional sequential
intravenous push of the same substance; therefore, when the incidental
service was furnished, there was no separate payment specifically for
this service. We believe that hospital charges for the separately
payable codes for the initial administration would have included a
charge for this service, and therefore, the payment for it would have
been packaged into payment for the separately paid code for the initial
administration service. However, we acknowledge that it is possible
that hospitals reported the service using separately paid codes that
were not defined to be an additional sequential intravenous push of the
same substance, in which case we would have paid for the service under
the code that was reported. When CPT code 96376, which replaces CPT
code 90776, was created effective January 1, 2009, we assigned it the
packaged status of its predecessor code, CPT code 90776. For the
reasons we articulate above, we disagree with the commenter that
predecessor codes were separately payable and continue to believe that
we should continue our policy of packaging the payment for the service
reported by this code.
With respect to CPT code 96368, we disagree with the commenters
that the service has been paid separately since the inception of the
OPPS. CPT code 96368 was made effective January 1, 2009, and for CYs
2009 and 2010, we assigned this code to status indicator ``N'' to
indicate that it is a packaged code under the OPPS. Prior to 2009, CPT
code 96368 was described by its predecessor CPT code 90768
((Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify

[[Page 71867]]

substance or drug); concurrent infusion), which was also assigned to
status indicator ``N'' from January 1, 2006 through December 30, 2008.
Prior to January 2006, there was no specific code that accurately
described this service, and as a result, payment for this service was
packaged. Therefore, we do not believe that we have paid separately in
the past for concurrent intravenous infusions for therapeutic,
prophylaxis, or diagnostic purposes under the OPPS.
After consideration of the APC Panel's recommendation and the
public comments that we received, we are finalizing our CY 2011
proposal, without modification, to continue to assign HCPCS codes 96368
and 96376 to status indicator ``N'' to indicate that payment for these
codes is packaged into the payment for the primary service with which
they are reported.
Recommendation 3
In the CY 2011 OPPS/ASC proposed rule (75 FR 46224), we indicated
that we were not accepting the APC Panel's recommendation that we
propose to conditionally package CPT codes 19290 (Preoperative
placement of needle localization wire, breast), 19291 (Preoperative
placement of needle localization wire, breast; each additional lesion
(List separately in addition to code for primary procedure)), 19295
(Image guided placement, metallic localization clip, percutaneous,
during breast biopsy/aspiration (List separately in addition to code
for primary procedure)), 77031 (Stereotactic localization guidance for
breast biopsy or needle placement (e.g., for wire localization or for
injection)), each lesion, radiological supervision and interpretation),
77032 (Mammographic guidance for needle placement, breast (e.g., for
wire localization or for injection), each lesion, radiological
supervision and interpretation), and 76942 (Ultrasonic guidance for
needle placement (e.g., biopsy, aspiration, injection, localization
device), imaging supervision and interpretation). During the APC
Panel's February 2010 meeting, we shared with the Packaging
Subcommittee our most recent claims data for the guidance procedures
that would accompany breast needle placement, demonstrating that, for
some of these services, the code was billed by itself up to 25 percent
of the time. While the Packaging Subcommittee broadly discussed
clinical scenarios in which these services may be billed separately, it
remains unclear to us why these services are being performed separately
and whether they should be paid separately. We believe that these
services typically are performed in conjunction with surgical
procedures involving the breast and, therefore, are appropriately
packaged. Therefore, we indicated that we were not accepting the APC
Panel's recommendation that we conditionally package payment for these
guidance procedures when they are performed separately.
For CY 2011, we proposed to maintain the unconditional packaged
payment status for these procedures. Specifically, we proposed to
package payment, indicated by a status indicator of ``N,'' for CPT
codes 19290, 19291, 19295, 77031, 77032, and 76942, into the primary
modality with which they would be appropriately billed. However,
observing such a sizable percentage of services that are the only
service appearing on a claim for a packaged item, especially when these
services do not receive separate payment, led us to encourage the
public to submit any clinical scenarios in their public comments
involving these services that show the circumstances under which these
services may be appropriately billed without a primary procedure that
is furnished on the same date.
Comment: Commenters asked that CMS accept the APC Panel's February
2010 recommendation to conditionally package the placement of needle
localization wires and the supporting procedures. Specifically, they
asked that CMS permit CPT codes 19290, 19291, 19295, 77031, 77032, and
76942 to be paid when they are not furnished with a service to which we
have assigned a payable status indicator (for example, ``S,'' ``T,''
``V,'' and ``X'').
Commenters noted that CMS has found that these services are
furnished without a base procedure approximately 25 percent of the
time. They indicated that they believed that this occurs because the
patient is taken to a freestanding radiology center or ASC (which may
or may not be located on the hospital campus) with which the hospital
has a collaborative arrangement for the non-hospital entity to perform
the base procedure and that therefore the hospital does not bill for
the base procedure. The commenters believed that the hospitals should
be paid for the service that they furnish in these circumstances and,
therefore, CMS should change the status of the procedure to
conditionally packaged.
Commenters indicated that it is becoming increasingly common for a
patient to have a radiographic marker (not a wire exiting the skin,
which has the potential for bleeding and infection) on one day, and to
have a stereotactic or ultrasound wire localization breast biopsy on a
different day. This technique permits intraoperative x-ray verification
that the MRI targeted lesion has been removed. The commenters indicated
that this is becoming increasingly common with the growing use of
breast MRI. They stated that, in addition, some patients undergo image-
guided percutaneous placement of a radioactive pellet which is
identified days later at the time of surgery using an intraoperative
hand held gamma probe. Some surgeon and radiology groups have found
that this separation of placement of localization ``wire'' from the
surgical procedure has facilitated scheduling so that any difficulties
or delays in the localization do not translate into delay in the
operating room. Moreover, they stated that some patients with locally
advanced breast cancer benefit from placement of multiple radiographic
markers around the tumor prior to initiating neoadjuvant chemotherapy
because the newer chemotherapy regimens have become so effective at
shrinking aggressive locally advanced breast cancers that surgeons are
faced with performing lumpectomies on patients with no clinically or
radiographically detectable breast cancer. The commenters stated
further that while, in many cases, residual calcifications combined
with the initial marker placed at the time of the needle biopsy are
sufficient for localization, in some cases, it is necessary to
delineate the extent of the primary tumor using several percutaneously
placed markers. The commenters indicated that, in these cases, the
markers are placed after the initial breast biopsy but months before
the patient's definitive surgery.
Response: After further analysis, we agree that it is appropriate
to pay separately for the placement of CPT code 19295 (Image guided
placement, metallic localization clip, percutaneous, during breast
biopsy/aspiration (List separately in addition to code for primary
procedure)) when it is not reported on a claim with any other
separately paid procedure with a status indicator of ``S,'' ``T,''
``V,'' or ``X.'' This makes CPT code 19295 an ``STVX-packaged code.''
As already discussed, an ``STVX-packaged code'' describes a HCPCS code
whose payment is packaged when one or more separately paid primary
services with the status indicator of ``S,'' ``T,'' ``V,'' or ``X'' are
furnished in the hospital outpatient encounter. We are convinced by the
clinical scenarios provided by the commenter that it is appropriate for
a metallic localization clip to be inserted at some point significantly
prior to the procedure for which the localization is needed. Therefore,
separate payment for the performance of the procedure

[[Page 71868]]

described by CPT code 19295 will be made in those circumstances when
the hospital does not report another separately paid procedure with a
status indicator of ``S,'' ``T,'' ``V,'' or ``X'' on the same claim.
CPT code 19295 is used to report the placement of a radiographic marker
(not a wire exiting the skin, which has the potential for bleeding and
infection).
However, we continue to believe that it remains appropriate to
package payment for CPT codes 19290, 19291, 77031, 77032, and 76942
into the payment for the procedures of which these services are a part.
CPT codes 19290 and 19291 may be used to report the placement of
external wires, which, the commenters note, carry a risk of bleeding
and infection, and, therefore, they are not appropriately performed on
a different date than the primary procedure of which they are a part.
With regard to CPT code 76942, the clinical scenario the commenters
presented does not apply to this code, and the commenters did not
present an additional clinical scenario to support the need to pay
separately for this service. In addition, while hospitals reported CPT
codes 77031 and 77032 on claims without any other procedure with a
status indicator of ``S,'' ``T,'' ``V,'' or ``X'' approximately 21
percent and 20 percent of time, respectively, the definitions of the
codes do not fit the clinical scenarios for which the commenters
presented convincing arguments, and the commenters presented no
additional clinical scenarios that supported separate payment for these
codes. For these reasons, we believe that it is inappropriate to make
separate payment that may encourage hospitals to furnish CPT codes
19290, 19291, 77031, 77032, and 76942 without also providing the
primary service.
After considering the APC Panel's recommendation and the public
comments we received on this issue, we believe that it is appropriate
to pay separately for CPT code 19295 when it is not furnished on the
same date as a procedure that is separately paid and, therefore, we
have assigned it a status indicator of ``Q1'' (packaged when reported
with a procedure with a status indicator of ``S,'' ``T,'' ``V,'' or
``X''; otherwise separately paid), and have assigned CPT code 19295 to
APC 0340 (Minor Ancillary Procedures), for which the median cost for CY
2011 is $48.72. We chose APC 0340 because, in the absence of cost data
for the service for CY 2011, we believe that the resources required to
furnish the service are most similar to the resources required to
furnish other separately paid minor ancillary services. However, we
continue to believe that payment for CPT codes 19290, 19291, 77031,
77032, and 76942 should be made as part of the payment for the
procedures with which these codes are reported and, therefore, for CY
2011, we are retaining the status indicator of ``N'' for these codes.
Recommendation 4
In the CY 2011 OPPS/ASC proposed rule (75 FR 46224), we indicated
that we were accepting the APC Panel's recommendation to continue to
encourage submission of common clinical scenarios involving currently
packaged HCPCS codes to the Packaging Subcommittee for its ongoing
review. We also encouraged recommendations from the public on specific
services or procedures whose payment would be most appropriately
packaged under the OPPS. Additional detailed suggestions for the
Packaging Subcommittee could be submitted by e-mail to
[email protected] with Packaging Subcommittee in the subject line.
Recommendation 5
In the CY 2011 OPPS/ASC proposed rule (75 FR 46224), we indicated
that we were accepting the APC Panel's recommendation that CMS provide
information to the APC Panel on the impact of the creation of the
imaging composite APCs on services to beneficiaries. We will present
information on the impact of the imaging composites to the APC Panel at
its winter CY 2011 meeting. Information on the impact of the creation
of the imaging composites and our proposal with regard to the imaging
composite APCs was discussed in detail in section II.A.2.e.(5) of the
proposed rule. Our discussion of the imaging composite APCs is
contained in section II.A.2.e.(5) of this final rule with public
comment period.
Recommendation 6
The Packaging Subcommittee of the APC Panel was established to
review packaging issues. In the CY 2011 OPPS/ASC proposed rule (75 FR
46224), we indicated that we were accepting the APC Panel's
recommendation that the Packaging Subcommittee remain active until the
next APC Panel meeting. That meeting occurred on August 23-24, 2010,
and resulted in a recommendation to broaden the function of the
Packaging Subcommittee and revise its name to Subcommittee for APC
Groups and Status Indicator (SI) Assignments. We refer readers to our
discussion of Recommendation 4 in section II.A.3.b.(2) of this final
rule with comment period.
(3) Packaged Services Addressed by the August 2010 APC Panel
Recommendations and Other Issues Raised in Public Comments
The APC Panel met again on August 23-24, 2010 to hear public
presentations on the proposals set forth in the CY 2011 OPPS/ASC
proposed rule. The APC Panel's Packaging Subcommittee reviewed the
packaging status of several CPT codes and reported its findings to the
APC Panel. The full report of the August 23-24, 2010 APC Panel meeting
can be found on the CMS Web site at: http://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp. The APC Panel
accepted the report of the Packaging Subcommittee, heard several
presentations related to packaged services, discussed the deliberations
of the Packaging Subcommittee, and made the following eight
recommendations:
1. The Panel recommends that Current Procedural Terminology (CPT)
code 31627, Bronchoscopy, rigid or flexible, including fluoroscopic
guidance, when performed; with computer-assisted, image-guided
navigation (List separately in addition to code for primary
procedure[s]), continue to be assigned a status indicator of ``N.''
2. The Panel recommends that CMS provide claims data at the Panel's
winter 2012 meeting about CPT code 31627, Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
computer-assisted, image-guided navigation (List separately in addition
to code for primary procedure[s]), for the Panel's consideration.
3. The Panel recommends that CMS assign CPT 0191T, Insertion of
anterior segment aqueous drainage device, without extraocular
reservoir; internal approach, to APC 0673, Level V Anterior Segment Eye
Procedures, on the basis of its clinical similarity with both CPT
0192T, Insertion of anterior segment aqueous drainage device, without
extraocular reservoir; external approach, and HCPCS code 66180, Aqueous
shunt to extraocular reservoir (e.g., Molteno, Schocket, Denver-
Krupin).
4. The Panel recommends that the Packaging Subcommittee be renamed
the Subcommittee for APC Groups and Status Indicator (SI) Assignments.
5. The Panel requests that CMS provide data for all unconditionally
packaged items and services that appear by themselves on separate bills
in outpatient claims data to the Subcommittee for APC Groups and SI
Assignments.
6. The Panel encourages the public to submit common clinical
scenarios

[[Page 71869]]

involving currently packaged HCPCS codes and recommendations of
specific services or procedures for which payment would be most
appropriately packaged under the Outpatient Prospective Payment System
(OPPS) for review by the Subcommittee for APC Groups and Status
Indicator (SI) Assignments.
7. The Panel recommends that Judith Kelly, R.H.I.T., R.H.I.A.,
C.C.S., be named chair of the Subcommittee for APC Groups and SI
Assignments.
8. The Panel recommends that the work of the Subcommittee for APC
Groups and Status Indicator (SI) Assignments continue.
Our response to the APC Panel's recommendations resulting from its
August 23-24, 2010 public meeting, a summary of the public comments we
received on the proposed rule for related topics, and our responses to
those public comments follow:
Recommendation 1--Packaged Status of CPT Code 31627 (Electromagnetic
Navigational Bronchoscopy (ENB))
Comment: Commenters asked that CMS pay separately for ENB and that
CMS assign it to APC 0415 with a status indicator of ``T''. Another
commenter asked that CMS create a composite APC for ENB that would
establish a separate payment when ENB is performed on the same date as
CPT codes 31625 (Bronchoscopy, rigid or flexible, including
fluoroscopic guidance, when performed; with bronchial or endobronchial
biopsy(s), single or multiple sites), 31626 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
placement of fiducial markers, single or multiple), 31628
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when
performed; with transbronchial lung biopsy(s), single lobe), or 31629
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when
performed; with transbronchial needle aspiration biopsy(s), trachea,
main stem and/or lobar bronchus(i)). The commenters believed that such
a composite APC would ensure that the payment would include the full
costs of the bronchoscopy and the service described by CPT code 31627.
One commenter stated that it is inconsistent for CMS to package
payment for ENB when CMS pays separately for services that are very
similar. The commenter described in detail how ENB is most clinically
similar to CPT code 31636 (Bronchoscopy, rigid or flexible, including
fluoroscopic guidance, when performed; with placement of bronchial
stent(s) (includes tracheal/bronchial dilation as required), initial
bronchus), which is separately paid under the OPPS. The commenter
further stated that both procedures use a computer for registration and
use a bronchoscope to facilitate access for either a guide wire or
catheter. In both procedures, once the guide wire or catheter is in
place, then either a stent or a fiducial marker is placed. In addition,
the commenter noted that CPT code 19103 (Biopsy of breast;
percutaneous, automated vacuum assisted or rotating biopsy device,
using imaging guidance) is not packaged, notwithstanding that it uses
imaging to guide the needle to the lesion for biopsy and is similar to
ENB where the previously obtained CT scan is used to plan the pathway
to the lung lesion and then the ENB catheter is used to reach the
lesion for biopsy. The commenter stated that ENB is different from the
other computer-assisted navigational procedures that CMS has packaged
because, for example, those procedures use a computer only to assist
with coordinate determination (for example, CPT 61795 (Stereotactic
computer-assisted volumetric (navigational) procedure, intracranial,
extracranial, or spinal (List separately in addition to code for
primary procedure)) or anatomy determination (for example, CPT code
20985 (Computer-assisted surgical navigational procedure for
musculoskeletal procedures, image-less (List separately in addition to
code for primary procedure)) but do not describe the steering of a
catheter through an airway of the lung for the purpose of a biopsy or
treatment. The commenter disagreed with the APC Panel that CPT code
31620 (Endobronchial ultrasound (EBUS) during bronchoscopic diagnostic
or therapeutic intervention(s) (List separately in addition to code for
primary procedure)) is a comparable procedure because they stated that
ENB, unlike EBUS, does not produce an image, is not an ancillary
procedure and does not enable a biopsy or placement of a marker for
radiation therapy. The commenter believed that the definition of CPT
code 31627 as an add-on code that can only be correctly reported with a
primary procedure, does not justify packaging payment for the code into
the payment for the primary procedure with which it is furnished
because CMS routinely pays separately for add-on codes.
Several commenters noted that physicians are reimbursed for both
the bronchoscopy and CPT code 31627 when they perform both and that
several physician organizations support that separate payment should be
made for CPT code 31627. Commenters also disagreed that payment for the
primary service would reflect the cost of the packaged ENB procedure
because they believed that a study performed in 2005 found the cost of
ENB to be approximately $2,700 but the payment for bronchoscopy is much
less than $2,700. Other commenters believed that packaging ENB violates
the 2 times rule because CMS proposed to package ENB under a standard
bronchoscopy procedure which is reimbursed under APC 0076 with a
proposed payment of $719.84, although they believed that ENB costs
$2,875.50, which is more than two times the highest median in APC 0076
(CPT code 31899 (Unlisted procedure, trachea, bronchi) at $1,247.56).
In addition, the commenter stated that all Medicare Administrative
Contractor medical directors are covering and making payment for ENB.
In addition, the commenters stated that Administrative Law Judges have,
on multiple occasions, overturned denials of separate payment for ENB
and have ordered CMS to pay for ENB in addition to standard
bronchoscopy. In addition, the commenter stated that all Medicare
Administrative Contractor (MAC) Medicare Directors are covering and
making payment for ENB.
Response: For the CY 2011 OPPS, we proposed to continue to package
the payment for ENB into the payment for the bronchoscopy to which we
believe that it is ancillary and supportive (75 FR 46223). The APC
Panel met on August 23-24, 2010, to discuss the CMS proposed rule and
recommended that CMS continue to package payment for CPT code 31627
into payment for the procedure with which it is performed and asked
that CMS bring claims data on the cost of CPT code 31627 to the APC
Panel's winter 2011 meeting for review. The full set of APC Panel
recommendations that resulted from the Panel's August 23-24, 2010
meeting is provided in this section.
After consideration of all of the information provided by
commenters on this issue, and discussing the issue with the APC Panel
at its August 23-24, 2010 meeting, we are accepting the APC Panel's
Recommendation 1 to continue to package payment for CPT code 31627 into
the payment for the major separately paid procedure with which it is
reported for CY 2011. In addition, we are accepting the APC Panel's
Recommendation 2, discussed below, that CMS bring claims data to the
winter 2011 APC Panel meeting.
We continue to believe that packaging payment for ENB into payment
for the procedure in which it is furnished is appropriate because CPT
code 31627

[[Page 71870]]

describes the computer assisted image guided navigation that is
reported in addition to a specified range of bronchoscopy codes. As
such, we believe that it is an ancillary and dependent service that
enhances and supplements another service. The CPT code does not
describe an independent service that can be reported alone.
We do not believe that CPT code 31627 describes a service that is
similar to the services described by CPT code 31636 or 19103 because
CPT code 31627 is neither for placement of a stent (CPT code 31636) nor
for a biopsy (CPT code 19103). Similarly, we do not agree that ENB is
significantly different from the services described by CPT codes 61795
and 20985 and from EBUS. The commenter stated that these navigation
codes are unlike ENB (CPT code 31627 (Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when performed; with computer-
assisted, image-guided navigation (List separately in addition to code
for primary procedure[s])) because ENB requires steering a catheter
through an airway of the lung for the purpose of a biopsy or treatment.
While a catheter may be used to accomplish localization of the target
during the ENB procedure, when the services described by CPT codes
61795 and 20985 are utilized, another method of localization of the
target is utilized. For example, when CPT code 20985 (Computer-assisted
surgical navigational procedure for musculoskeletal procedures, image-
less (List separately in addition to code for primary procedure)) is
performed, an infra-red, electromagnetic or other form of tracker may
be utilized for localization of the target. Like CPT codes 61795 and
20985, ENB is an add-on code that adds computer-assisted navigation to
the primary procedure, which, in the case of ENB, is a bronchoscopy.
We believe that ENB is an enhancement to the bronchoscopy with
which it must be performed and as such is an ancillary and dependent
service in the same manner that CPT code 31620 (EBUS) is an ancillary
and supportive procedure. Both of these procedures enable the
bronchoscopy with which they are performed to be more effective. We
agree with the APC Panel that EBUS is the most suitable comparison
because it describes another bronchoscopic procedure in which a
guidance technology (that is, ultrasonography) is used to achieve the
therapeutic benefit of the procedure. Similar to our proposed payment
for CPT code 31627, payment for CPT code 31620 is currently packaged
into the primary modality with which it would be appropriately billed.
In CY 2008, as part of our increased packaging proposal, we identified
the EBUS procedure as an intraoperative ancillary service that would
typically be reported in conjunction with an independent service. In
addition, similar to CPT code 31627, CPT code 31620 would only be
appropriately reported in conjunction with specified bronchoscopy
procedures with which it would be performed. Like EBUS, CPT code 31627,
ENB is not an independent separately furnished procedure.
We agree that the status of CPT code 31627 as an add-on code does
not, of its own accord, justify packaged payment for the service as is
evidenced, as the commenter noted, by separate payment under the OPPS
for many add-on services. However, the status of the code as an add-on
code supports the view that the procedure is a service that is always
furnished in addition to another procedure and cannot be performed
independently. We recognize that the Medicare Physician Fee Schedule
(MPFS) pays separately for CPT code 31627, as it does for all add-on
codes, but the MPFS and the OPPS are very different payment systems.
Each is established under a different set of statutory and regulatory
principles and the policies established under the physician fee
schedule do not have bearing on the payment policies under the OPPS.
With regard to the commenter's view that the costs of ENB cannot be
packaged into payment for a bronchoscopy because a study shows the cost
of ENB to be $2,700 or $2,875.50, depending on the commenter, while the
proposed payment CMS proposed for CY 2011 for a bronchoscopy assigned
to APC 0076 is $719.84, we note that we will develop, analyze, and
provide to the APC Panel at its winter 2011 meeting, the cost and
frequency data we derive from the CY 2010 claims for CPT code 31627 for
purposes of illuminating consideration of whether the costs of ENB are
being reflected in the claims for the service with which they are
furnished. With regard to making a composite APC for ENB that would
establish a separate payment for ENB when it is performed on the same
date as the services that are reported using CPT code 31625, 31626,
31628 or 31629, it is unclear whether ENB is a good candidate for a
composite APC because composite APCs usually make payment for two
separately paid procedures that are commonly performed together, and
CPT code 31627 is currently a packaged service.
With regard to the comment that packaging ENB is a violation of the
2 times rule, we note that a 2 times rule violation can exist only
within an APC and ENB has not been assigned to an APC because it is
packaged and hence there is no application of the 2 times rule. We
refer readers to section III. B. of this final rule with comment period
for a more complete discussion of the 2 times rule.
With regard to the argument that CMS should pay separately for ENB
because MAC medical directors cover it and may have made separate
payment for it, and that Administrative Law Judges may have overturned
denials of separate payment for ENB is not relevant to whether the
payment for it should be packaged into the payment for the bronchoscopy
to which it is ancillary and supportive.
After consideration of the public comments we received on this
issue and the APC Panel's August 2010 recommendation on ENB, we are
packaging payment for the service represented by CPT code 31627 into
payment for the procedure with which it is performed for the CY 2011
OPPS.
Recommendation 2--Developing and Sharing Cost Data for ENB
We accept the APC Panel's recommendation to provide cost data on
ENB, and we will provide the APC Panel with cost and frequency data at
the winter 2011 APC Panel meeting for the Panel's use in providing CMS
with a recommendation for CY 2012.
Recommendation 3--APC Assignment for CPT Code 0192T
We are accepting the APC Panel's recommendation. We refer readers
to section III.D. of this final rule with comment period for a
discussion of CPT code 0192T.
Recommendation 4--Name and Function of the Packaging Subcommittee
We agree with the APC Panel's recommendation and have changed the
name and function of the committee to include the assessment of the
content of APCs as well as the appropriate status indicator for each
CPT code, including but not limited to the decision of whether, and if
so when, to package payment for the service into payment for the
services with which it is furnished. The Packaging Subcommittee will be
renamed the ``Subcommittee for APC Groups and Status Indicator (SI)
Assignments.''
Recommendation 5
We agree and will, at the winter 2011 APC Panel meeting, furnish
data about the frequency with which hospitals report unconditionally
packaged HCPCS

[[Page 71871]]

codes on claims without another separately paid procedure.
Recommendation 6
We support the APC Panel's recommendation that the public submit
common clinical scenarios involving currently packaged HCPCS codes and
make recommendations of specific services or procedures for which
payment would be most appropriately packaged under the OPPS for review
by the Subcommittee for APC Groups and Status Indicator (SI)
Assignments.
Recommendation 7--Chair of the Subcommittee for APC Groups and Status
Indicator (SI) Assignments
We are accepting the APC Panel's recommendation that Judith Kelly,
R.H.I.T., R.H.I.A., C.C.S., be named chair of the Subcommittee for APC
Groups and Status Indicator (SI) Assignment.
Recommendation 8
We are accepting the APC Panel's recommendation that the work of
the Subcommittee for APC Groups and Status Indicator (SI) Assignments
continue. We are continuing the work of the APC Panel Subcommittee for
APC Groups and Status Indicator (SI) Assignments, and we appreciate the
Subcommitee's expertise and experience regarding packaging under the
OPPS and the valuable advice the Subcommittee continues to provide to
us. We will continue to bring to the Subcommittee's attention clinical
scenarios identified by us or the public regarding services that are
currently packaged or are candidates for future packaging under the
OPPS.
We received public comments in response to the proposed rule on
several issues related to packaging of payment that were in addition to
those about which the APC Panel has made a recommendation that are
related to packaging payment for ancillary and dependent services into
payment for services that may be furnished independently.
Comment: Commenters stated that CMS' packaging policies would
likely lead to less efficient use of resources, limited access to
innovative treatment options and greater instability in payments
because the policies are based on several flawed assumptions.
Commenters believed that to the extent that hospitals control the array
of services they provide, CMS' packaging policies assume that the same
incentives apply to hospital outpatient departments as to inpatient
services. One commenter stated that under the inpatient prospective
payment system (IPPS), hospitals have an incentive to provide care,
including advanced technologies, in an efficient manner to ensure the
lowest cost for the patient's diagnosis. In contrast, in hospital
outpatient departments, because Medicare payment is based on procedures
rather than diagnoses, the commenter believed that a hospital has an
incentive to provide the lowest cost item or service included in an
APC. The commenter further believed that if that service does not fully
address the patient's needs, the hospital would receive better
reimbursement by bringing the patient back for a second visit or
admitting the patient for inpatient care than by providing a more
costly option within the same APC. Moreover, the commenters believed
that when an APC's payment rate is significantly less than the cost of
a technology, hospitals have a strong disincentive to use that
technology, even if it could reduce the costs of care at a later date.
The commenters believed that CMS' use of expanded packaging has the
risk of encouraging hospitals to forego performing needed services and
using new technologies that may be more resource intensive during one
visit, but could save the patient future outpatient department visits
or inpatient care.
Response: Packaging payment for items and services that are
ancillary to and dependent on the major procedure for which a payment
rate is established is a fundamental concept of the OPPS, based in
regulation in the definition of costs that are included in the national
payment rate for a service (42 CFR 419.2(b)) and in place since the
inception of the OPPS (65 FR 18447). We continue to believe that
packaging creates incentives for hospitals and their physician partners
to work together to establish appropriate protocols that eliminate
unnecessary services where they exist and institutionalize approaches
to providing necessary services more efficiently. With respect to new
services or new applications of existing technology, we believe that
packaging payment for ancillary and dependent services creates
appropriate incentives for hospitals to seriously consider whether a
new service or a new technology offers a benefit that is sufficient to
justify the cost of the new service or technology. Where this review
results in reductions in services that are only marginally beneficial
or hospitals' choices not to utilize certain technologies, we believe
that this could improve, rather than harm, the quality of care for
Medicare beneficiaries because every service furnished in a hospital
carries some level of risk to the patient. Moreover, we believe that
hospitals strive to provide the best care they can to the patients they
serve so that when new technologies are proven to improve the quality
of care, their utilization will increase appropriately, whether the
payment for them is packaged or not.
However, we are aware that there are financial pressures on
hospitals that might motivate some providers to split services among
different hospital encounters in such a way as to maximize payments.
While we do not expect that hospitals would routinely change the way
they furnish services or the way they bill for services in order to
maximize payment, we recognize that it would be possible and we
consider that possibility as we annually review hospital claims data.
We will continue to examine claims data for patterns of fragmented
care, and if we find a pattern in which a hospital appears to be
dividing care across multiple days, we will refer it for investigation
to the QIO or to the program safeguard contractor, as appropriate to
the circumstances we find.
In section II.A.1. of this final rule with comment period, we
discuss the established methodology we use to incorporate the costs of
packaged services into payment for the associated independent
procedures. We package the costs of services into the payment for the
major separately paid procedure on the same claim on which the packaged
service appears. Hence, it is the practice of hospitals with regard to
reporting and charging for packaged services that determines the
separately paid service into which the cost of a packaged service is
incorporated and the amount of packaged cost included the payment for
that separately paid procedure.
We believe it is important to continue to advance value-based
purchasing by Medicare in the hospital outpatient setting by furthering
the focus on value of care rather than volume. While we acknowledge the
concerns of the commenters and, as discussed below, are committed to
considering the impact of packaging payment on Medicare beneficiaries
further in the future, we must balance the concerns of the commenters
with our goal of continuing to encourage efficient use of hospital
resources. As we noted in the CY 2009 OPPS/ASC final rule with comment
period in our response to comments on the CY 2009 OPPS/ASC proposed
rule (73 FR 68572) and as we note in our responses to public comments
on the CY 2011 OPPS/ASC proposed rule, the suggestions and packaging
criteria

[[Page 71872]]

recommended by most commenters are focused almost exclusively on
preventing packaging, rather than on determining when packaging would
be appropriate. We also welcome suggestions from the public on
approaches to packaging that would encourage efficient use of hospital
resources.
Comment: Commenters asked that CMS make underlying payment rates
for packaged services, including utilization rates, estimated median
costs and numbers of hospitals furnishing various services available to
the public. Commenters also asked that CMS continue to compare
utilization of services in 2007 prior to packaging to utilization of
the same services after packaging at the CPT level and make that
information public. In addition, commenters asked that CMS study and
report annually on the impact of packaged payment on beneficiary access
to care. Commenters urged CMS to continue to monitor use of and payment
for these services and share these reports with stakeholders, so that
they can verify that Medicare's payment policies do not harm access to
care. Commenters stated that CMS should provide data that demonstrates
that the full cost of packaged services is reflected in the median cost
for the services in which they are used.
Response: As we note in our discussion above, we have reviewed the
provision of packaged services for several years since we expanded
packaging in CY 2008 and we see no evidence that increased packaging
has caused harm to patient access to care, nor have we been presented
with evidence that documents that packaging has been responsible for
harm to patient access. Each year, CMS makes available an extensive
amount of OPPS data that can be used for any data analysis an
interested party would care to perform. Specifically, we make available
a considerable amount of data for public analysis each year through the
supporting data files that are posted on the CMS Web site in
association with the display of the proposed and final rules. In
addition, we make available the public use files of claims, including,
for CY 2008 and later, supplemental line item cost data for every HCPCS
code under the OPPS and a detailed narrative description of our data
process for the annual OPPS/ASC proposed and final rules that the
public can use to perform any desired analyses. Therefore, commenters
are able to examine and analyze these data to develop specific
information to assess the impact and effect of packaging for the
services of interest to them. Therefore, this information is available
to support their requests for changes to payments under the OPPS,
whether with regard to separate payment for a packaged service or other
issues. We understand that the OPPS is a complex payment system and
that it may be difficult to determine the quantitative amount of
packaged cost included in the median cost for every independent
service. However, commenters routinely provide us with meaningful
analyses at a very detailed and service-specific level based on the
claims data we make available. We routinely receive complex and
detailed public comments including extensive code-specific data
analysis on packaged and separately paid codes, using the data from
this and prior proposed and final rules. With respect to the request
for assurance that the full cost of packaged services is included in
the median cost used to set the payment rate for the independent
service with which the packaged services are reported, we note that the
use of a median cost as the measure of central tendency means that the
full cost of a packaged service becomes part of the cost of the service
with which it is furnished and is reflected in the median cost for the
independent procedure since the median cost reflects the cost at the
50th percentile of the array of the total costs for all claims in the
set of single bills used to calculate the median cost for the CPT code
or the APC.
Comment: Commenters stated that, for packaged services such as
guidance, image processing, and intraoperative services, CMS should
provide separate, additional payment for innovative procedures. They
urged CMS establish a 2- to 3-year data collection period during which
separate payment would be made for these packaged services (or any new
applications of these services). The commenters stated that the data
collected during this period should be used to evaluate the clinical
utilization and financial effects of the new services and that CMS
should use this information to determine whether to propose packaging
for the services or whether to maintain separate payment. They further
stated that hospitals are reluctant to invest in new technologies
because they are uncertain whether they will be able to recoup the cost
of the services and that packaging payment for new technologies into
payment for existing major separately paid procedures discourages them
from making the investment.
Response: We do not agree that innovative guidance, image
processing, and intraoperative services or innovative uses of guidance,
image processing, and intraoperative services should always be
separately paid for a 2- to 3-year data collection period before a
decision to make separate or packaged payment for them. We do not
believe that making separate payment for 2 to 3 years would create
incentives for hospitals to carefully consider whether the innovative
service or innovative use of a pre-existing service represents
sufficient value to be worthy of the investment. We continue to believe
that hospitals will invest in innovative services or services with
innovative uses where these services represent genuinely increased
value to patient care, and where hospitals can furnish them
efficiently. Of course, we will continue to pay separately for
innovative technologies where a device meets the conditions for
separate payment as a pass-through device or where a new procedure
meets the criteria for payment as a new technology APC.
Comment: Commenters believed that CMS assumes that its packaging
policies will allow it to continue to collect the data it needs to set
appropriate, stable payment rates in the future. The commenters
believed that CMS' review of data from 2009 indicates that hospitals
have continued to report codes for packaged services, but they stated
that it remains to be seen if hospitals will continue this practice in
subsequent years, particularly for services that have been packaged
since their introduction. Commenters further stated that CMS' past
experience with packaging payment for ancillary items indicates that
hospitals do not submit codes for services that do not directly affect
their payment and see no reason to believe that this will change and
ask that CMS require complete and correct coding for packaged services
so that all items and services that are not individually reimbursed
must be included on the claim to provide CMS with essential data for
future OPPS updates. Commenters expressed concern about what they
believed to be decreases in the number of hospitals reporting services
as a result of packaging and bundling. They believed that the decline
could be due to one or both of two reasons: Hospitals may no longer be
providing these services or hospitals could be providing these services
but not reporting codes and charges for them, denying CMS accurate data
for use in ratesetting. The commenters were concerned that decreased
reporting of services will result in the costs of packaged services not
being included in the payment for the independent service with which
they are furnished.

[[Page 71873]]

Response: We do not believe that there has been or will be a
significant change in what hospitals report and charge for the
outpatient services they furnish to Medicare beneficiaries and other
patients as a result of our current packaging methodology. Medicare
cost reporting standards specify that hospitals must impose the same
charges for Medicare patients as for other patients. We are often told
by hospitals that many private payers pay based on a percentage of
charges and that, in accordance with Medicare cost reporting rules and
generally accepted accounting principles, hospital chargemasters do not
differentiate between the charges to Medicare patients and other
patients. Therefore, we have no reason to believe that hospitals will
stop reporting HCPCS codes and charges for packaged services they
provide to Medicare beneficiaries. As we stated in the CY 2009 OPPS/ASC
final rule with comment period (74 FR 68575), we strongly encourage
hospitals to report a charge for each packaged service they furnish,
either by billing the packaged HCPCS code and a charge for that service
if separate reporting is consistent with CPT and CMS instructions, by
increasing the charge for the separately paid associated service to
include the charge for the packaged service, or by reporting the charge
for the packaged service with an appropriate revenue code but without a
HCPCS code. Any of these means of charging for the packaged service
will result in the cost of the packaged service being incorporated into
the cost we estimate for the separately paid service. If a HCPCS code
is not reported when a packaged service is provided, we acknowledge
that it can be challenging to specifically track the utilization
patterns and resource cost of the packaged service itself. However, we
have no reason to believe that hospitals have not considered the cost
of the packaged service in reporting charges for the independent,
separately paid service.
We expect that hospitals, as other prudent businesses, have a
quality review process that ensures that they accurately and completely
report the services they furnish, with appropriate charges for those
services to Medicare and all other payers. We encourage hospitals to
report on their claim for payment all HCPCS codes that describe
packaged services that were furnished, unless the CPT Editorial Panel
or CMS provides other guidance. To the extent that hospitals include
separate charges for packaged services on their claims, the estimated
costs of those packaged services are then added to the costs of
separately paid procedures on the same claims and used in establishing
payment rates for the separately paid services.
It is impossible to know with any certainty whether hospitals are
failing to report HCPCS codes and charges for services for which the
payment is packaged into payment for the independent service with which
the packaged service is furnished. Moreover, where hospitals fail to
report the HCPCS codes and charges for packaged services, the reason
may be that the hospital has chosen to package the charge for the
ancillary and dependent service into the charge for the service with
which it is furnished. Although we prefer that hospitals report HCPCS
codes and charges for all services they furnish, if the hospital's
charge for the independent service also reflects the charge for all
ancillary and supportive services it typically provides, the absence of
HCPCS codes and separate charges would not result in inappropriately
low median cost for the independent service, although CMS would not
know which specific ancillary and supportive services were being
furnished. Where a hospital is no longer providing a service, there may
be many reasons that a hospital chooses not to provide a particular
service or chooses to cease providing a particular service, including,
but not limited to, because the hospital has determined that it is no
longer cost effective for the hospital to furnish the service and that
there may be other hospitals in the community that can furnish the
service more efficiently.
Comment: Many commenters who objected to payment for ancillary and
dependent services being packaged into payment for the procedures that
they support said that packaged payment will cause hospitals not to
make these important services available to Medicare beneficiaries
because they are not being paid separately for them by Medicare.
Response: We do not believe that hospitals will cease to furnish
Medicare beneficiaries with the ancillary and dependent services that
are available in the facility when they are necessary to achieve the
best therapeutic effect for their patients because the payment for the
service is made as part of the payment for the procedure that they
support. Instead, we believe that packaging will encourage hospitals to
carefully review whether the ancillary and dependent services are
genuinely necessary in individual cases to all patients and will
carefully evaluate whether the staff and capital investments that are
often necessary to furnish them are worthwhile. We note also that
hospitals that fail to provide Medicare beneficiaries with the same
services that they make available to other patients with the same
conditions are subject to termination from the Medicare program under
42 CFR 489.53(a)(2). Therefore, hospitals have a significant
disincentive to treat Medicare patients differently from other patients
with regard to the nature and scope of the services they furnish them.
Comment: One commenter stated that CMS should provide further
transparency and clarification of its analysis of image processing
procedures because it is not clear why CMS has discussed coding issues
pertaining to intraoperative procedures to support conclusions about
packaging of image processing procedures. Specifically, the commenter
stated that CMS notes that the intraoperative procedures described by
CPT codes 93320 (which describes spectral Doppler) and 93325 (which
describes color flow Doppler) are now reported using one comprehensive
code, CPT 93306, which describes complete transthoracic echocardiogram
with spectral and color flow Doppler. The commenter further reiterated
CMS' statements that when data for any codes experiencing significant
modifications were removed, there was a 7 percent decrease from CY 2007
to CY 2009 in the frequency of image processing services billed. In a
second analysis involving all image processing services, including
those with revised codes, the data showed a 61-percent decrease in the
billing of these services between CY 2007 and CY 2009 and a 6-percent
decrease in the number of hospitals reporting these services during the
same timeframe. The commenter believed the estimated declines in
utilization of imaging processing services should not simply be
disregarded, but in fact may suggest negative impacts on beneficiary
access to these services.
Response: The example we provided was not optimal and we were
incorrect to characterize both CPT codes 93320 and 93325 as
intraoperative services. For purposes of our analysis, we treated CPT
code 93320 as an intraoperative service and we treated CPT code 93325
as an imaging processing service. The point of the example is that
because both codes are reported using CPT code 93306, effective for
services on and after January 1, 2009, the CY 2009 data for these codes
(93320 and 93325) cannot be compared to the data for them in CY 2007 in
a meaningful way and for that reason we believe that the decreases we
found are suspect.

[[Page 71874]]

(4) Other Service-Specific Packaging Issues
We received the following public comments regarding the proposal to
package specific services or services in a specific category.
Comment: Commenters recommended that CMS eliminate packaging of
IGRT services represented by CPT codes 76950 (Ultrasonic guidance for
aspiration of ova, imaging supervision and interpretation), 76965
(Ultrasonic guidance for interstitial radioelement application), 77417
(Therapeutic radiology port film(s)), 77421 (Stereoscopic X ray
guidance for localization of target volume for the delivery of
radiation therapy), and 77014 (Computed tomography guidance for
placement of radiation fields) for CY 2011. The commenters believed
that if packaging is continued, closer monitoring of the claims data is
necessary to better approximate the real costs associated with these
services. They believed that these services are vital to the safe
provision of radiation therapy, and unconditionally packaging payment
for them may discourage hospitals from providing them. The commenters
also believed that hospitals may not be reporting the services
correctly and, therefore, not charging for them, which would lead to
the cost of the service not being reflected into the packaged payment
for the service for which separate payment is made.
Response: We continue to believe that these services are ancillary
and dependent services that, as the commenters indicated, are
fundamental to the provision of optimal radiation therapy services and
that the payment for them should be packaged into the payment for the
procedure to which they are ancillary and supportive. We agree that it
is vital that hospitals ensure that they report the charges for these
services so that the cost of the independent service reflects the cost
of these important ancillary services. We strongly encourage hospitals
to report both the codes and the charges for these services,
recognizing that some hospitals may prefer to incorporate the charge
for the ancillary service into the charge for the service it supports.
We remind hospitals that the payments they receive are developed from
the charges they submit on claims and the charge and costs they report
on their Medicare cost report. Therefore, it behooves them to ensure
that they are fully reporting the charges on the claims they submit for
payment. Moreover, we do not believe that there is value in closer
monitoring of claims data for the purpose of better approximation of
the real costs associated with ancillary and dependent services because
we believe that our standard data process ensures that, to the extent
that hospitals report charges for these services, whether with separate
HCPCS codes or as part of the charge for the procedure to which they
are ancillary and supportive, the cost of the service will be included
in the APC median cost and, therefore, in the payment for the APC to
which the separately paid procedure is assigned.
Comment: One commenter was concerned that intravascular ultrasound
and intracardiac echocardiography services are relatively high cost and
low frequency services and, therefore, a small proportion of their cost
is reflected in the payments for the services with which they are used.
Although the commenter recognized that CMS found increases in reporting
of these codes and payment for the procedures into which they are
packaged from CY 2007 to CY 2009, the commenter continued to be
concerned that payment is not adequate to protect access to these
services and asked that CMS reinstate separate payment for
intravascular ultrasound and intracardiac echocardiography services.
Response: We note that IVUS, ICE, and FFR services are existing,
established, technologies and that hospitals have provided some of
these services in the HOPD since the implementation of the OPPS in CY
2000. IVUS, FFR, and ICE are all dependent services that are always
provided in association with independent services. Given the sizable
increase in the number of services furnished and the associated payment
between CY 2007 and CY 2009, as demonstrated by the analysis we
presented in the proposed rule and recapped earlier in this section, we
have seen no evidence from our claims data that beneficiary access to
care is being harmed by packaging payment for IVUS, ICE, and FFR
services or that payment is inadequate for hospitals to be able to
afford to furnish these services with their associated independent
services. We believe that packaging creates appropriate incentives for
hospitals and their physician partners to carefully consider the
technologies that are used in the care of patients in order to ensure
that technologies are selected for use in each case based on their
expected benefit to a particular Medicare beneficiary.
Comment: Some commenters recommended that if the existing policy to
package payment for nonpass-through implantable biologicals were to
continue, CMS develop a crosswalk that includes specific procedure
codes for nonpass-through implantable biologicals so that procedures
involving those products could be reassigned to new APCs. The
commenters also recommended that CMS provide an in-depth analysis of
the packaging methodology to ensure that the costs of nonpass-through
implantable biologicals are included in the procedural APCs.
Response: We believe that creating and maintaining a crosswalk of
nonpass-through implantable biological HCPCS codes and associated
procedure codes would not be feasible because implantable biologicals
may be used in a wide variety of surgical procedures. We also do not
believe that it is necessary to develop such a crosswalk to ensure that
the costs of nonpass-through implantable biologicals are included in
the APC payment rates. As we discuss in section II.A.3. of this final
rule with comment period, hospitals include HCPCS codes and charges for
packaged services on their claims. Our packaging methodology ensures
that the estimated costs associated with those packaged services are
added to the costs of separately payable procedures on the same claims
in establishing payment rates for the separately payable services.
Regarding the request for in-depth data analysis, we note that each
year CMS makes available an extraordinary amount of OPPS data that can
be used for any data analysis an interested party would care to
perform. Specifically, we make available a considerable amount of data
for public analysis each year through the supporting data files that
are posted on the CMS Web site in association with the display of the
proposed and final rules. In addition, we make available the public use
files of claims, including, for CY 2008 and later, supplemental line
item cost data for every HCPCS code under the OPPS and a detailed
narrative description of our data process for the annual OPPS/ASC
proposed and final rules that the public can use to perform any desired
analyses. Therefore, commenters are able to examine and analyze these
data to develop specific information to assess the impact and effect of
packaging for the services of interest to them or to support their
requests for changes to payments under the OPPS, whether with regard to
separate payment for a packaged service or other issues. We understand
that the OPPS is a complex payment system and that it may be difficult
to determine the quantitative amount of packaged cost included in the
median cost for every independent service. However, commenters
routinely provide us with meaningful analyses at a very detailed and
service-specific level

[[Page 71875]]

based on the claims data we make available. We routinely receive
complex and detailed public comments including extensive code-specific
data analysis on packaged and separately paid codes, using the data
from this and prior proposed and final rules.
Comment: One commenter objected to CMS' policy of packaging payment
for tositumomab into HCPCS code G3001 (Administration and supply of
tositumomab, 450 mg) and requested that CMS create a HCPCS J-code for
tositumomab, which is currently provided under a radioimmunotherapy
regiment and billed as part of HCPCS code G3001. The commenter argued
that because tositumomab is listed in compendia, is approved by the FDA
as part of the BEXXAR[supreg] regimen, and has its own National Drug
Code (NDC) number, it should be recognized as a drug and, therefore, be
paid as other drugs are paid under the OPPS methodology, instead of
having a payment rate determined by hospital claims data. The commenter
suggested that a payment rate could be established using the ASP
methodology.
Response: As we stated in the CY 2010 OPPS/ASC final rule with
comment period (75 FR 60517), we have consistently noted that unlabeled
tositumomab is not approved as either a drug or a radiopharmaceutical,
but it is a supply that is required as part of the radioimmunotherapy
treatment regiment (CY 2009 OPPS/ASC final rule with comment period (73
FR 68658); CY 2008 OPPS/ASC final rule with comment period (72 FR
66765); CY 2006 OPPS final rule with comment period (70 FR 68654); and
CY 2004 OPPS final rule with comment period (68 FR 63443)). We do not
make separate payment for supplies used in services provided under the
OPPS. Payments for necessary supplies are packaged into payment for the
separately payable services provided by the hospital. Specifically,
administration of unlabeled tostitumomab is a complete service that
qualifies for separate payment under its own clinical APC. This
complete service is currently described by HCPCS code G3001. Therefore,
we do not agree with the commenter's recommendation that we assign a
separate HCPCS code to the supply of unlabeled tositumomab. Rather, we
will continue to make separate payment for the administration of
tositumomab while payment for the supply of unlabeled tostitumomab will
continue to be packaged into the administration payment.
In addition to our final policies for specific packaged services,
we will continue to package payment for the services we identified with
a status indicator of ``N'' in Addendum B of the proposed rule with
public comment into the payment for the separately paid procedures with
which they are reported on a claim. We refer readers to section
V.B.2.d. of this final rule with comment period for further discussion
of our final policy to package payment for contrast agents and
diagnostic radiopharmaceuticals. We refer readers to section
II.A.2.e.(1) of this final rule with comment period for further
discussion of our final policy to pay for observation services through
extended assessment and management composite APCs under certain
circumstances.
4. Calculation of OPPS Scaled Payment Weights
As we proposed in the CY 2011 OPPS/ASC proposed rule (75 FR 46224
through 46225), using the APC median costs discussed in sections
II.A.1. and II.A.2. of this final rule with comment period, we
calculated the final relative payment weights for each APC for CY 2011
shown in Addenda A and B to this final rule with comment period. In
years prior to CY 2007, we standardized all the relative payment
weights to APC 0601 (Mid Level Clinic Visit) because mid-level clinic
visits were among the most frequently performed services in the
hospital outpatient setting. We assigned APC 0601 a relative payment
weight of 1.00 and divided the median cost for each APC by the median
cost for APC 0601 to derive the relative payment weight for each APC.
Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all
of the relative payment weights to APC 0606 (Level 3 Clinic Visits)
because we deleted APC 0601 as part of the reconfiguration of the
clinic visit APCs. We selected APC 0606 as the base because APC 0606
was the mid-level clinic visit APC (that is, Level 3 of five levels).
Therefore, in the CY 2011 OPPS/ASC proposed rule (75 FR 46225), for CY
2011, to maintain consistency in using a median for calculating
unscaled weights representing the median cost of some of the most
frequently provided services, we proposed to continue to use the median
cost of the mid-level clinic visit APC (APC 0606) to calculate unscaled
weights. Following our standard methodology, but using the proposed CY
2011 median cost for APC 0606, for CY 2011 we assigned APC 0606 a
relative payment weight of 1.00 and divided the median cost of each APC
by the proposed median cost for APC 0606 to derive the proposed
unscaled relative payment weight for each APC. The choice of the APC on
which to base the proposed relative weights for all other APCs does not
affect the payments made under the OPPS because we scale the weights
for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2011 is neither
greater than nor less than the estimated aggregate weight that would
have been made without the changes. To comply with this requirement
concerning the APC changes, we proposed to compare the estimated
aggregate weight using the CY 2010 scaled relative weights to the
estimated aggregate weight using the proposed CY 2011 unscaled relative
weights. For CY 2010, we multiplied the CY 2010 scaled APC relative
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2009 claims to calculate the total weight for each
service. We then added together the total weight for each of these
services in order to calculate an estimated aggregate weight for the
year. For CY 2011, we performed the same process using the proposed CY
2011 unscaled weights rather than scaled weights. We then calculated
the weight scaler by dividing the CY 2010 estimated aggregate weight by
the proposed CY 2011 estimated aggregate weight. The service-mix is the
same in the current and prospective years because we use the same set
of claims for service volume in calculating the aggregate weight for
each year. For a detailed discussion of the weight scaler calculation,
we refer readers to the OPPS claims accounting document available on
the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/. We
included payments to CMHCs in our comparison of estimated unscaled
weight in CY 2011 to estimated total weight in CY 2010 using CY 2009
claims data, holding all other components of the payment system
constant to isolate changes in total weight. Based on this comparison,
we adjusted the unscaled relative weights for purposes of budget
neutrality. The proposed CY 2011 unscaled relative payment weights were
adjusted by multiplying them by a proposed weight scaler of 1.3650 to
ensure budget neutrality of the proposed CY 2011 relative weights.
Section 1833(t)(14) of the Act provides the payment rates for
certain ``specified covered outpatient drugs.'' That section states
that ``Additional expenditures resulting from this paragraph shall not
be taken into

[[Page 71876]]

account in establishing the conversion factor, weighting and other
adjustment factors for 2004 and 2005 under paragraph (9) but shall be
taken into account for subsequent years.'' Therefore, the cost of those
specified covered outpatient drugs (as discussed in section V.B.3. of
the proposed rule and this final rule with comment period) was included
in the proposed budget neutrality calculations for the CY 2011 OPPS.
We did not receive any public comments on the proposed methodology
for calculating scaled weights from the median costs for the CY 2011
OPPS. Therefore, for the reasons set forth in the proposed rule (75 FR
46224 and 46225), we are finalizing our proposed methodology without
modification, including updating of the budget neutrality scaler for
this final rule with comment period as we proposed. Under this
methodology, the final unscaled payment weights were adjusted by a
weight scaler of 1.4477 for this final rule with comment period. The
final scaled relative payment weights listed in Addenda A and B to this
final rule with comment period incorporate the recalibration
adjustments discussed in sections II.A.1. and II.A.2. of this final
rule with comment period.

B. Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires us to update the
conversion factor used to determine payment rates under the OPPS on an
annual basis by applying the OPD fee schedule increase factor. For CY
2011, for purposes of section 1833(t)(3)(C)(iv) of the Act, subject to
sections 1833(t)(17) and (t)(3)(F), the OPD fee schedule increase
factor is equal to the hospital inpatient market basket percentage
increase applicable to hospital discharges under section
1886(b)(3)(B)(iii) of the Act, which we refer to as the hospital market
basket update, or simply the market basket, in this discussion.
The proposed hospital market basket increase for FY 2011 published
in the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 24062) prior to
changes required by the Affordable Care Act was 2.4 percent. New
sections 1833(t)(3)(F)(iii) and 1833(t)(3)(G)(i) of the Act, as added
by section 3401(i) of the Affordable Care Act and as amended by section
10319(g) of such Act and further amended by section 1105(e) of such
Act, require a 0.25 percentage point reduction to the CY 2011 OPD fee
schedule increase factor, which resulted in a proposed CY 2011 OPPS
market basket update of 2.15 percent. The applicable percentage
increase for FY 2011 published in the IPPS final rule on August 16,
2010, is 2.35 percent (75 FR 50352), which is the 2.6 percent market
basket update, less the 0.25 percentage point reduction required by the
Affordable Care Act. We announced the CY 2010 OPPS conversion factor of
$67.241 in an OPPS/ASC notice (CMS 1504-N), issued in the Federal
Register on August 3, 2010 (75 FR 45771). Hospitals that fail to meet
the reporting requirements of the Hospital Outpatient Quality Data
Reporting Program (HOP QDRP) are subject to a reduction of 2.0
percentage points from the OPD fee schedule increase factor adjustment
to the conversion factor. For a complete discussion of the HOP QDRP
requirements and the payment reduction for hospitals that fail to meet
those requirements, we refer readers to section XVI. of this final rule
with comment period.
To set the OPPS conversion factor for CY 2011, we increased the CY
2010 conversion factor of $67.241 by 2.35 percent. In accordance with
section 1833(t)(9)(B) of the Act, we further adjusted the conversion
factor for CY 2011 to ensure that any revisions we make to the updates
for a revised wage index and rural adjustment are made on a budget
neutral basis. We calculated an overall budget neutrality factor of
1.0009 for wage index changes by comparing total payments from our
simulation model using the FY 2011 IPPS final wage indices to those
payments using the current (FY 2010) IPPS wage indices, as adopted on a
calendar year basis for the OPPS, as indicated in the August 3, 2010
OPPS/ASC Federal Register notice announcing Affordable Care Act changes
to the wage indices (CMS-1504-N, 75 FR 45771). For CY 2011, as we
proposed, we are not making a change to our rural adjustment policy.
Therefore, the budget neutrality factor for the rural adjustment is
1.0000. For CY 2011, we are not finalizing a cancer hospital adjustment
policy, as discussed in section II.G. of this final rule with comment
period, and, therefore, would not have a budget neutrality adjustment
for that policy.
For this final rule with comment period, we estimated that pass-
through spending for both drugs and biologicals and devices for CY 2011
would equal approximately $57.7 million, which represents 0.15 percent
of total projected CY 2011 OPPS spending. Therefore, the conversion
factor was also adjusted by the difference between the 0.14 percent
estimate of pass-through spending for CY 2010 and the 0.15 percent
estimate of CY 2011 pass-through spending. Finally, estimated payments
for outliers remain at 1.0 percent of total OPPS payments for CY 2011.
The OPD fee schedule increase factor of 2.35 percent for CY 2011
(that is, the CY 2011 estimate of the hospital market basket increase
of 2.6 percent minus a 0.25 percentage point adjustment as required by
the Affordable Care Act), the required wage index budget neutrality
adjustment of approximately 1.0009, and the adjustment of 0.01 percent
of projected OPPS spending for the difference in the pass-through
spending resulted in a conversion factor for CY 2011 of $68.876, which
reflects the full OPD fee schedule increase, after the adjustment
required by the Affordable Care Act. To calculate the CY 2011 reduced
market basket conversion factor for those hospitals that fail to meet
the requirements of the HOP QDRP for the full CY 2011 payment update,
we made all other adjustments discussed above, but used a reduced
market basket increase update factor of 0.35 percent (that is, an
unadjusted OPD fee schedule increase factor (market basket update) of
2.6 percent reduced by 0.25 percentage point as required by the
Affordable Care Act and further reduced by 2.0 percentage points as
required by section 1833(t)(17)(A)(i) of the Act for failure to comply
with the OPD quality reporting requirements) . This resulted in a
reduced conversion factor for CY 2011 of $67.530 for those hospitals
that fail to meet the HOP QDRP requirements (a difference of -$1.346 in
the conversion factor relative to those hospitals that met the HOP QDRP
requirements).
As we mentioned above, in accordance with section 1833(t)(3)(C)(iv)
of the Act, each year we update the OPPS conversion factor by an OPD
fee schedule increase factor. For purposes of section 1833(t)(3)(C)(iv)
of the Act, subject to sections 1833(t)(17) and 1833(t)(3)(F) of the
Act, the OPD fee schedule increase factor is equal to the market basket
percentage increase applicable under section 1886(b)(3)(B)(iii) of the
Act to hospital discharges occurring during the fiscal year ending in
such year, reduced by 1 percentage point for such factor for services
furnished in each of 2000 and 2002.
For hospitals that do not meet the HOP QDRP reporting requirements
discussed in section XVI. of this final rule with comment period, the
update is equal to the OPD fee schedule increase factor less an
additional 2.0 percentage points. In accordance with these statutory
provisions, in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60419), we finalized an OPD fee schedule increase factor equal

[[Page 71877]]

to the IPPS full market basket update of 2.1 percent. Hospitals that
failed to meet the HOP QDRP reporting requirements were subject to a
reduced OPD fee schedule increase factor of 0.1 percent.
We note that sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(i) of the
Act, as added by section 3401(i) of the Affordable Care Act and as
amended by section 10319(g) and section 1105(e) of such Act, require
that, after determining the OPD fee schedule increase factor, the
Secretary shall reduce such factor for CY 2010 by 0.25 percentage
point. Therefore, the reduction of 0.25 percentage point applied to the
full IPPS hospital operating market basket increase factor of 2.1
percent results in a revised OPD fee schedule increase factor of 1.85
percent. For hospitals that do not meet the HOP QDRP reporting
requirements, the update is equal to the OPD fee schedule increase
factor, less the additional 0.25 percentage point required by sections
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(i) of the Act, minus 2.0 percentage
points. New section 1833(t)(3)(F) of the Act further states that the
application of section 1833(t)(3)(F) of the Act may result in the OPD
fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act
being less than zero for a given year. Thus, the CY 2010 OPD fee
schedule increase factor was 1.85 percent (that is, 2.1 percent minus
0.25 percentage point) for hospitals that met the HOP QDRP reporting
requirements and negative 0.15 percent (2.1 percent, less the 0.25
percentage point, minus the 2.0 percentage points) for hospitals
failing to meet the HOP QDRP reporting requirements.
As with the CY 2010 OPD fee schedule increase factor, new sections
1833(t)(3)(F)(ii) and (t)(3)(G)(i) of the Act require that the CY 2011
OPD fee schedule increase factor be reduced by 0.25 percentage point,
subject to the hospital submitting quality information under rules
established by the Secretary in accordance with section 1833(t)(17) of
the Act. For hospitals that do not meet the HOP QDRP reporting
requirements, the update is equal to the OPD fee schedule increase
factor minus 0.25 percentage point minus 2.0 percentage points. Section
1833(t)(3)(F) of the Act further states that this amendment may result
in the applicable percentage increase being less than zero.
In the FY 2011 IPPS/LTCH final rule (75 FR 50352), consistent with
current law, based on IHS Global Insight, Inc.'s second quarter 2010
forecast of the FY 2011 market basket increase, we estimated that the
FY 2011 IPPS market basket update is 2.6 percent. However, consistent
with the amendments to sections 1833(t)(3)(F)(ii) and (t)(3)(G)(i) of
the Act, we are required to reduce the OPD fee schedule increase factor
by 0.25 percentage point. Therefore, the market basket update to the CY
2011 OPD fee schedule increase factor is 2.35 percent (that is, the CY
2011 estimate of the OPD fee schedule increase factor of 2.6 percent
minus 0.25 percentage point). For hospitals that do not meet the HOP
QDRP reporting requirements, the update to the OPPS conversion factor
is 0.35 percent (that is, the adjusted CY 2011 estimate of the market
basket rate-of increase of 2.35 percent minus 2.0 percentage points).
In the CY 2011 OPPS/ASC proposed rule (75 FR 46226), we proposed to
revise Sec. 419.32(b)(1)(iv) of the regulations to reflect
requirements of the Affordable Care Act for a 0.25 percentage point
reduction to the OPPS fee schedule increase factor for each of CY 2010
and CY 2011.
Comment: One commenter supported the increase in the proposed
conversion factor, which was updated by the market basket.
Response: We appreciate the commenter's support.
After consideration of the public comment we received, we are
finalizing our proposed changes to Sec. 419.32(b)(1)(iv), without
modification, to reflect requirements of the Affordable Care Act for a
0.25 percentage point reduction to the OPPS fee schedule increase
factor for each of CY 2010 and CY 2011. We are finalizing our CY 2011
proposal, without modification, to update the OPPS conversion factor by
the FY 2011 OPD fee schedule increase factor, which is set at the IPPS
market basket percentage increase of 2.6 percent minus the 0.25
percentage point reduction required under the Affordable Care Act,
resulting in a final full conversion factor of $68.876 and in a reduced
conversion factor of $67.530 for those hospitals that fail to meet the
HOP QDRP reporting requirements for the full CY 2011 payment update.

C. Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust, for geographic wage
differences, the portion of the OPPS payment rate, which includes the
copayment standardized amount, that is attributable to labor and labor-
related cost. This adjustment must be made in a budget neutral manner
and budget neutrality is discussed in section II.B. of this final rule
with comment period.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, approximately 60 percent of
the costs of services paid under the OPPS were attributable to wage
costs. We confirmed that this labor-related share for outpatient
services is still appropriate during our regression analysis for the
payment adjustment for rural hospitals in the CY 2006 OPPS final rule
with comment period (70 FR 68553). Therefore, in the CY 2011 OPPS/ASC
proposed rule (75 FR 46226), we did not propose to revise this policy
for the CY 2011 OPPS. We refer readers to section II.H. of this final
rule with comment period for a description and example of how the wage
index for a particular hospital is used to determine the payment for
the hospital.
As discussed in section II.A.2.c. of this final rule with comment
period, for estimating national median APC costs, we standardize 60
percent of estimated claims costs for geographic area wage variation
using the same FY 2011 pre-reclassified wage index that the IPPS uses
to standardize costs. This standardization process removes the effects
of differences in area wage levels from the determination of a national
unadjusted OPPS payment rate and the copayment amount.
As published in the original OPPS April 7, 2000 final rule with
comment period (65 FR 18545), the OPPS has consistently adopted the
final fiscal year IPPS wage index as the calendar year wage index for
adjusting the OPPS standard payment amounts for labor market
differences. Thus, the wage index that applies to a particular acute
care short-stay hospital under the IPPS would also apply to that
hospital under the OPPS. As initially explained in the September 8,
1998 OPPS proposed rule, we believed and continue to believe that using
the IPPS wage index as the source of an adjustment factor for the OPPS
is reasonable and logical, given the inseparable, subordinate status of
the HOPD within the hospital overall. In accordance with section
1886(d)(3)(E) of the Act, the IPPS wage index is updated annually.
Therefore, in accordance with our established policy, we proposed to
use the final FY 2011 version of the IPPS wage index used to pay IPPS
hospitals to adjust the CY 2011 OPPS payment rates and copayment
amounts for geographic differences in labor cost for all providers that
participate in the OPPS, including providers that are not paid under
the IPPS (referred to in this section as ``non-IPPS'' providers).
The Affordable Care Act contains a number of provisions affecting
the FY 2011 IPPS wage index values, including revisions to the
reclassification wage

[[Page 71878]]

comparability criteria that were finalized in the FY 2009 IPPS final
rule (73 FR 48568 through 48570), and the application of rural floor
budget neutrality on a national, rather than State-specific, basis
through a uniform, national adjustment to the area wage index. These
specific provisions are discussed in more detail in the supplemental FY
2011 IPPS/LTCH PPS proposed rule published on June 2, 2010 in the
Federal Register (75 FR 30920) and in the FY 2011 IPPS/LTCH PPS final
rule which appears in the August 16, 2010 issue of the Federal Register
(75 FR 50159). The Affordable Care Act also required CMS to establish
an adjustment to create a wage index floor of 1.00 for hospitals
located in States determined to be frontier States (section 10324). We
discuss this provision and how it applies to hospital outpatient
departments in more detail below.
Section 10324 of the Affordable Care Act specifies that, for
services furnished beginning CY 2011, the wage adjustment factor
applicable to any hospital outpatient department that is located in a
frontier State (as defined in section 1886(d)(3)(E)(iii)(II) of the
Act) may not be less than 1.00. Further, section 10324 states that this
adjustment to the wage index for these outpatient departments should
not be made in a budget neutral manner. As such, for the CY 2011 OPPS,
we proposed to adjust the wage index for all HOPDs, including those
providers that are not paid under the IPPS, which are identified as
being located in a frontier State, in the manner specified in the
Affordable Care Act. Specifically, we proposed to adjust the FY 2011
IPPS wage index, as adopted on a calendar year basis for the OPPS, for
all hospitals paid under the OPPS, including non-IPPS hospitals,
located in a frontier State to 1.00 in instances where the assigned FY
2011 wage index (that reflects MGCRB reclassifications, application of
the rural floor and rural floor budget neutrality adjustment) for these
hospitals is less than 1.00. Similar to our current policy for HOPDs
that are affiliated with multicampus hospital systems, we fully expect
that the HOPD would receive a wage index based on the geographic
location of the specific inpatient hospital with which it is
associated. Therefore, if the associated hospital is located in a
frontier State, the wage index adjustment applicable for the hospital
would also apply for the affiliated HOPD. We refer readers to the FY
2011 IPPS/LTCH PPS final rule (75 FR 50160) for a detailed discussion
regarding this provision, including our methodology for identifying
which areas meet the definition of frontier States as provided for in
section 1886(d)(3)(E)(iii)(II)) of the Act.
Comment: Commenters supported CMS' frontier State wage index
proposal.
Response: We appreciate the commenters' support.
After consideration of the comments we received, we are finalizing
our proposal, without modification, to adjust the FY IPPS 2011 wage
index, as adopted on a calendar year basis for the OPPS, for all
hospitals paid under the OPPS, including non-IPPS hospitals, located in
a frontier State to 1.00 in instances where the assigned final FY 2011
wage index (that reflects MGCRB reclassifications, application of the
rural floor and rural floor budget neutrality adjustment) for these
hospitals is less than 1.00.
In addition, in the CY 2011 OPPS/ASC proposed rule (75 FR 46227),
we proposed to revise 42 CFR 419.43(c) of the regulations to
incorporate the amendments made by section 10324 of the Affordable Care
Act. Specifically, we proposed to include a provision under a new
paragraph (c)(2) of Sec. 419.43 to state that, for services furnished
beginning January 1, 2011, the wage adjustment factor referenced in the
existing regulations applicable to any HOPD that is located in a
frontier State, as defined in the statute and regulations, may not be
less than 1.00. We also proposed to add a new paragraph (c)(3) to Sec.
419.43 to not consider these additional payments in budget neutrality
calculations.
We did not receive any public comments concerning our proposal to
revise Sec. 419.43(c) of the regulations to incorporate the amendments
made by section 10324 of the Affordable Care Act. Therefore, we are
finalizing our proposed revisions to Sec. 419.43(c)(2) and (c)(3)
without modification.
In addition to the changes required by the Affordable Care Act, we
note that the FY 2011 IPPS wage indices continue to reflect a number of
adjustments implemented over the past few years, including, but not
limited to, revised Office of Management and Budget (OMB) standards for
defining geographic statistical areas (Core-Based Statistical Areas or
CBSAs), reclassification of hospitals to different geographic areas,
rural floor provisions, an adjustment for out-migration labor patterns,
an adjustment for occupational mix, and a policy for allocating hourly
wage data among campuses of multicampus hospital systems that cross
CBSAs. We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR
50157 through 50180) for a detailed discussion of all changes to the
final FY 2011 IPPS wage indices, including changes required by the
Affordable Care Act. In addition, we refer readers to the CY 2005 OPPS
final rule with comment period (69 FR 65842 through 65844) and
subsequent OPPS rules for a detailed discussion of the history of these
wage index adjustments as applied under the OPPS.
The IPPS wage index that we are adopting in this final rule with
comment period includes all reclassifications that are approved by the
Medicare Geographic Classification Review Board (MGCRB) for FY 2011. We
note that reclassifications under section 508 of Public Law 108-173 and
certain special exception wage indices that were extended by section
106(a) of Public Law 109-432 (MIEA--TRHCA) and section 117 (a)(1) of
Public Law 110-173 (MMSEA) were set to terminate September 30, 2008,
but were further extended by section 124 of Public Law 110-275 (MIPPA)
through September 30, 2009, and, most recently, by section 3137, as
amended by section 10317, of the Affordable Care Act through September
30, 2010. We did not make any proposals related to these provisions for
the CY 2010 OPPS wage index because the Affordable Care Act was enacted
after issuance of the CY 2010 OPPS/ASC proposed and final rules. In
accordance with section 10317 of the Affordable Care Act, for CY 2010,
we adopted all section 508 geographic reclassifications through
September 30, 2010. Similar to our treatment of section 508
reclassifications extended under Public Law 110-173 (MMSEA) as
described in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68586), hospitals with section 508 reclassifications will revert to
their home area wage index, with out-migration adjustment if
applicable, or a current MGCRB reclassification, for the last quarter
of CY 2010 (October 1, 2010 to December 31, 2010). In addition, as we
did for CY 2009, we will recognize the revised wage index values for
certain special exception hospitals from January 1, 2010 through
December 31, 2010, under the OPPS, in order to give these hospitals the
special exception wage indices under the OPPS for the same time period
as under the IPPS. We refer readers to the section 508 reclassification
discussion in the FY 2010 IPPS/LTCH PPS notice issued in the Federal
Register on June 2, 2010 (75 FR 31118) for a detailed discussion of the
changes to the wage indices as required by section 10317 of the
Affordable Care Act. We also discuss the impact of the extension of
reclassifications under section 508 and

[[Page 71879]]

special exception wage indices in the OPPS/ASC notice (CMS-1504-N)
published in the Federal Register on August 3, 2010 (75 FR 45771).
Because the provisions of section 10317 of the Affordable Care Act
expire in 2010 (September 30, 2010) and are not applicable to FY 2011,
as we proposed, we are not making any changes related to those
provisions for the OPPS wage indices for CY 2011.
For purposes of the OPPS, as we proposed in the CY 2011 OPPS/ASC
proposed rule (75 FR 46228), we are continuing our policy in CY 2011 to
allow non-IPPS hospitals paid under the OPPS to qualify for the out-
migration adjustment if they are located in a section 505 out-migration
county. We note that because non-IPPS hospitals cannot reclassify, they
are eligible for the out-migration wage adjustment. Table 4J in the FY
2011 IPPS/LTCH PPS final rule (75 FR 50540) identifies counties
eligible for the out-migration adjustment and providers receiving the
adjustment. As we have done in prior years, we are reprinting Table 4J
as Addendum L to this final rule with comment period with the addition
of non-IPPS hospitals that will receive the section 505 out-migration
adjustment under the CY 2011 OPPS.
As stated earlier in this section, we continue to believe that
using the IPPS wage index as the source of an adjustment factor for the
OPPS is reasonable and logical, given the inseparable, subordinate
status of the HOPD within the hospital overall. Therefore, as we
proposed, we are using the final FY 2011 IPPS wage indices for
calculating OPPS payments in CY 2011. With the exception of the out-
migration wage adjustment table (Addendum L to this final rule with
comment period), which includes non-IPPS hospitals paid under the OPPS,
we are not reprinting the FY 2011 IPPS final wage indices referenced in
this discussion of the wage index. We refer readers to the CMS Web site
for the OPPS at: http://www.cms.gov/HospitalOutpatientPPS/. At this
link, readers will find a link to the FY 2011 IPPS final wage index
tables.
Comment: Several commenters expressed support for the CMS proposal
to extend the IPPS wage indices to the OPPS in CY 2011, consistent with
prior year policies under the OPPS.
Response: We appreciate the commenters' support of our proposed CY
2011 wage index policies.
Comment: One commenter recommended that CMS incorporate a different
labor-related share for APCs with high device or supply costs. The
commenter suggested, based on its internal data analysis, that a labor-
related share of 20 percent, rather than the current labor-related
share of 60 percent, would be more appropriate for these APCs.
Response: We do not believe it is appropriate to vary the
percentage of the national payment that is wage adjusted for different
services provided under the OPPS. Such a change could not be considered
without first assessing its impact on the OPPS labor-related share
calculation. The OPPS labor-related share of 60 percent was determined
through regression analyses conducted for the initial OPPS proposed
rule (63 FR 47581) and confirmed for the CY 2006 OPPS final rule with
comment period (70 FR 68556). The labor-related share is a provider-
level adjustment based on the relationship between the labor input
costs and a provider's average OPPS unit cost, holding all other things
constant. While numerous individual services may have variable labor
shares, these past analyses identified 60 percent as the appropriate
labor-related share across all types of outpatient services and are the
basis for our current policy. The provider-level adjustment is an
aggregate, not service-specific, adjustment; it addresses payment for
almost all services paid under the OPPS.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to use the final
FY 2011 IPPS wage indices to adjust the OPPS standard payment amounts
for labor market differences.

D. Statewide Average Default CCRs

In addition to using CCRs to estimate costs from charges on claims
for ratesetting, CMS uses overall hospital-specific CCRs calculated
from the hospital's most recent cost report to determine outlier
payments, payments for pass-through devices, and monthly interim
transitional corridor payments under the OPPS during the PPS year.
Medicare contractors cannot calculate a CCR for some hospitals because
there is no cost report available. For these hospitals, CMS uses the
statewide average default CCRs to determine the payments mentioned
above until a hospital's Medicare contractor is able to calculate the
hospital's actual CCR from its most recently submitted Medicare cost
report. These hospitals include, but are not limited to, hospitals that
are new, have not accepted assignment of an existing hospital's
provider agreement, and have not yet submitted a cost report. CMS also
uses the statewide average default CCRs to determine payments for
hospitals that appear to have a biased CCR (that is, the CCR falls
outside the predetermined ceiling threshold for a valid CCR) or for
hospitals whose most recent cost report reflects an all-inclusive rate
status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4,
Section 10.11). As we proposed, in this final rule with comment period,
we are updating the default ratios for CY 2011 using the most recent
cost report data. We discuss our policy for using default CCRs,
including setting the ceiling threshold for a valid CCR, in the CY 2009
OPPS/ASC final rule with comment period (73 FR 68594 through 68599) in
the context of our adoption of an outlier reconciliation policy for
cost reports beginning on or after January 1, 2009.
For CY 2011, as proposed, we are continuing to use our standard
methodology of calculating the statewide average default CCRs using the
same hospital overall CCRs that we use to adjust charges to costs on
claims data for setting the CY 2011 OPPS relative weights. Table 9
published in the CY 2011 OPPS/ASC proposed rule listed the proposed CY
2011 default urban and rural CCRs by State and compared them to last
year's default CCRs. These proposed CCRs represented the ratio of total
costs to total charges for those cost centers relevant to outpatient
services from each hospital's most recently submitted cost report,
weighted by Medicare Part B charges. We also adjusted ratios from
submitted cost reports to reflect final settled status by applying the
differential between settled to submitted overall CCR for the cost
centers relevant to outpatient services from the most recent pair of
final settled and submitted cost reports. We then weighted each
hospital's CCR by the volume of separately paid line-items on hospital
claims corresponding to the year of the majority of cost reports used
to calculate the overall CCRs. We refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66680 through 66682) and prior
OPPS rules for a more detailed discussion of our established
methodology for calculating the statewide average default CCRs,
including the hospitals used in our calculations and our trimming
criteria.
We did not receive any public comments on our CY 2011 proposal. We
are finalizing our proposal to apply our standard methodology of
calculating the statewide average default CCRs using the same hospital
overall CCRs that we used to adjust charges to costs on claims data. We
used this methodology to calculate the statewide average default CCRs
listed in Table 15 below.

[[Page 71880]]

For this CY 2011 OPS/ASC final rule with comment period,
approximately 47 percent of the submitted cost reports utilized in the
default ratio calculations represented data for cost reporting periods
ending in CY 2009 and 52 percent were for cost reporting periods ending
in CY 2008. For Maryland, we used an overall weighted average CCR for
all hospitals in the nation as a substitute for Maryland CCRs. Few
hospitals in Maryland are eligible to receive payment under the OPPS,
which limits the data available to calculate an accurate and
representative CCR. In general, observed changes in the statewide
average default CCRs between CY 2010 and CY 2011 were modest and the
few significant changes are associated with areas that have a small
number of hospitals.
Table 15 below list the finalized statewide average default CCRs
for OPPS services furnished on or after January 1, 2011.

Table 15--CY 2011 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
Previous
Final CY 2011 default CCR
State Urban/Rural default CCR (CY 2010 OPPS
final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA.......................................................... RURAL 0.479 0.499
ALASKA.......................................................... URBAN 0.315 0.328
ALABAMA......................................................... RURAL 0.212 0.220
ALABAMA......................................................... URBAN 0.193 0.193
ARKANSAS........................................................ RURAL 0.223 0.251
ARKANSAS........................................................ URBAN 0.282 0.263
ARIZONA......................................................... RURAL 0.231 0.251
ARIZONA......................................................... URBAN 0.202 0.217
CALIFORNIA...................................................... RURAL 0.195 0.208
CALIFORNIA...................................................... URBAN 0.205 0.210
COLORADO........................................................ RURAL 0.350 0.345
COLORADO........................................................ URBAN 0.233 0.255
CONNECTICUT..................................................... RURAL 0.356 0.375
CONNECTICUT..................................................... URBAN 0.291 0.319
DISTRICT OF COLUMBIA............................................ URBAN 0.313 0.324
DELAWARE........................................................ RURAL 0.279 0.320
DELAWARE........................................................ URBAN 0.362 0.363
FLORIDA......................................................... RURAL 0.185 0.198
FLORIDA......................................................... URBAN 0.172 0.184
GEORGIA......................................................... RURAL 0.246 0.265
GEORGIA......................................................... URBAN 0.220 0.246
HAWAII.......................................................... RURAL 0.356 0.359
HAWAII.......................................................... URBAN 0.308 0.307
IOWA............................................................ RURAL 0.252 0.332
IOWA............................................................ URBAN 0.288 0.302
IDAHO........................................................... RURAL 0.419 0.507
IDAHO........................................................... URBAN 0.384 0.409
ILLINOIS........................................................ RURAL 0.251 0.273
ILLINOIS........................................................ URBAN 0.239 0.253
INDIANA......................................................... RURAL 0.302 0.299
INDIANA......................................................... URBAN 0.270 0.296
KANSAS.......................................................... RURAL 0.286 0.291
KANSAS.......................................................... URBAN 0.215 0.226
KENTUCKY........................................................ RURAL 0.220 0.223
KENTUCKY........................................................ URBAN 0.244 0.254
LOUISIANA....................................................... RURAL 0.256 0.271
LOUISIANA....................................................... URBAN 0.235 0.259
MARYLAND........................................................ RURAL 0.284 0.294
MARYLAND........................................................ URBAN 0.256 0.267
MASSACHUSETTS................................................... URBAN 0.314 0.323
MAINE........................................................... RURAL 0.460 0.433
MAINE........................................................... URBAN 0.450 0.452
MICHIGAN........................................................ RURAL 0.312 0.318
MICHIGAN........................................................ URBAN 0.320 0.320
MINNESOTA....................................................... RURAL 0.483 0.502
MINNESOTA....................................................... URBAN 0.311 0.330
MISSOURI........................................................ RURAL 0.258 0.266
MISSOURI........................................................ URBAN 0.264 0.270
MISSISSIPPI..................................................... RURAL 0.229 0.244
MISSISSIPPI..................................................... URBAN 0.182 0.192
MONTANA......................................................... RURAL 0.444 0.438
MONTANA......................................................... URBAN 0.399 0.462
NORTH CAROLINA.................................................. RURAL 0.254 0.270
NORTH CAROLINA.................................................. URBAN 0.264 0.285
NORTH DAKOTA.................................................... RURAL 0.351 0.333
NORTH DAKOTA.................................................... URBAN 0.360 0.361
NEBRASKA........................................................ RURAL 0.328 0.340
NEBRASKA........................................................ URBAN 0.259 0.260
NEW HAMPSHIRE................................................... RURAL 0.323 0.329

[[Page 71881]]

NEW HAMPSHIRE................................................... URBAN 0.290 0.285
NEW JERSEY...................................................... URBAN 0.221 0.235
NEW MEXICO...................................................... RURAL 0.277 0.259
NEW MEXICO...................................................... URBAN 0.307 0.329
NEVADA.......................................................... RURAL 0.269 0.296
NEVADA.......................................................... URBAN 0.178 0.187
NEW YORK........................................................ RURAL 0.415 0.423
NEW YORK........................................................ URBAN 0.375 0.383
OHIO............................................................ RURAL 0.327 0.350
OHIO............................................................ URBAN 0.241 0.250
OKLAHOMA........................................................ RURAL 0.260 0.267
OKLAHOMA........................................................ URBAN 0.208 0.225
OREGON.......................................................... RURAL 0.306 0.303
OREGON.......................................................... URBAN 0.340 0.344
PENNSYLVANIA.................................................... RURAL 0.275 0.280
PENNSYLVANIA.................................................... URBAN 0.210 0.223
PUERTO RICO..................................................... URBAN 0.505 0.514
RHODE ISLAND.................................................... URBAN 0.284 0.299
SOUTH CAROLINA.................................................. RURAL 0.222 0.232
SOUTH CAROLINA.................................................. URBAN 0.227 0.242
SOUTH DAKOTA.................................................... RURAL 0.316 0.320
SOUTH DAKOTA.................................................... URBAN 0.251 0.261
TENNESSEE....................................................... RURAL 0.221 0.233
TENNESSEE....................................................... URBAN 0.204 0.214
TEXAS........................................................... RURAL 0.245 0.251
TEXAS........................................................... URBAN 0.216 0.222
UTAH............................................................ RURAL 0.386 0.397
UTAH............................................................ URBAN 0.362 0.400
VIRGINIA........................................................ RURAL 0.241 0.242
VIRGINIA........................................................ URBAN 0.263 0.255
VERMONT......................................................... RURAL 0.411 0.413
VERMONT......................................................... URBAN 0.365 0.397
WASHINGTON...................................................... RURAL 0.367 0.365
WASHINGTON...................................................... URBAN 0.327 0.340
WISCONSIN....................................................... RURAL 0.412 0.384
WISCONSIN....................................................... URBAN 0.334 0.329
WEST VIRGINIA................................................... RURAL 0.291 0.283
WEST VIRGINIA................................................... URBAN 0.337 0.339
WYOMING......................................................... RURAL 0.393 0.407
WYOMING......................................................... URBAN 0.296 0.315
----------------------------------------------------------------------------------------------------------------

E. OPPS Payment to Certain Rural and Other Hospitals

1. Hold Harmless Transitional Payment Changes Made by Public Law 110-
275 (MIPPA)
When the OPPS was implemented, every provider was eligible to
receive an additional payment adjustment (called either transitional
corridor payments or transitional outpatient payment (TOPs)) if the
payments it received for covered OPD services under the OPPS were less
than the payments it would have received for the same services under
the prior reasonable cost-based system (referred to as the pre-BBA
amount). Section 1833(t)(7) of the Act provides that the transitional
corridor payments are temporary payments for most providers and were
intended to ease their transition from the prior reasonable cost-based
payment system to the OPPS system. There are two exceptions to this
provision, cancer hospitals and children's hospitals, and those
hospitals receive the transitional corridor payments on a permanent
basis. Section 1833(t)(7)(D)(i) of the Act originally provided for
transitional corridor payments to rural hospitals with 100 or fewer
beds for covered OPD services furnished before January 1, 2004.
However, section 411 of Public Law 108-173 amended section
1833(t)(7)(D)(i) of the Act to extend these payments through December
31, 2005, for rural hospitals with 100 or fewer beds. Section 411 also
extended the transitional corridor payments to sole community hospitals
(SCHs) located in rural areas for services furnished during the period
that began with the provider's first cost reporting period beginning on
or after January 1, 2004, and ending on December 31, 2005. Accordingly,
the authority for making transitional corridor payments under section
1833(t)(7)(D)(i) of the Act, as amended by section 411 of Public Law
108-173, for rural hospitals having 100 or fewer beds and SCHs located
in rural areas expired on December 31, 2005.
Section 5105 of Public Law 109-171 reinstituted the TOPs for
covered OPD services furnished on or after January 1, 2006, and before
January 1, 2009, for rural hospitals having 100 or fewer beds that are
not SCHs. When the OPPS payment was less than the provider's pre-BBA
amount, the amount of payment was increased by 95 percent of the amount
of the difference between the two amounts for CY 2006, by 90 percent of
the amount of that difference for CY 2007, and by 85 percent of the
amount of that difference for CY 2008.
For CY 2006, we implemented section 5105 of Public Law 109-171
through Transmittal 877, issued on February 24, 2006. In the
Transmittal, we did not

[[Page 71882]]

specifically address whether TOPs apply to essential access community
hospitals (EACHs), which are considered to be SCHs under section
1886(d)(5)(D)(iii)(III) of the Act. Accordingly, under the statute,
EACHs are treated as SCHs. In the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68010), we stated that EACHs were not eligible
for TOPs under Public Law 109-171. However, we stated they were
eligible for the adjustment for rural SCHs. In the CY 2007 OPPS/ASC
final rule with comment period (71 FR 68010 and 68228), we updated
Sec. 419.70(d) of our regulations to reflect the requirements of
Public Law 109-171.
In the CY 2009 OPPS/ASC proposed rule (73 FR 41461), we stated
that, effective for services provided on or after January 1, 2009,
rural hospitals having 100 or fewer beds that are not SCHs would no
longer be eligible for TOPs, in accordance with section 5105 of Public
Law 109-171. However, subsequent to issuance of the CY 2009 OPPS/ASC
proposed rule, section 147 of Public Law 110-275 amended section
1833(t)(7)(D)(i) of the Act by extending the period of TOPs to rural
hospitals with 100 beds or fewer for 1 year, for services provided
before January 1, 2010. Section 147 of Public Law 110-275 also extended
TOPs to SCHs (including EACHs) with 100 or fewer beds for covered OPD
services provided on or after January 1, 2009, and before January 1,
2010. In accordance with section 147 of Public Law 110-275, when the
OPPS payment is less than the provider's pre-BBA amount, the amount of
payment is increased by 85 percent of the amount of the difference
between the two payment amounts for CY 2009.
For CY 2009, we revised our regulations at Sec. Sec. 419.70(d)(2)
and (d)(4) and added a new paragraph (d)(5) to incorporate the
provisions of section 147 of Public Law 110-275. In addition, we made
other technical changes to Sec. 419.70(d)(2) to more precisely capture
our existing policy and to correct an inaccurate cross-reference. We
also made technical corrections to the cross-references in paragraphs
(e), (g), and (i) of Sec. 419.70.
For CY 2010, we made a technical correction to the heading of Sec.
419.70(d)(5) to correctly identify the policy as described in the
subsequent regulation text. The paragraph heading now indicates that
the adjustment applies to small SCHs, rather than to rural SCHs.
In the CY 2010 OPPS/ASC final rule with comment period (74 FR
60425), we stated that, effective for services provided on or after
January 1, 2010, rural hospitals and SCHs (including EACHs) having 100
or fewer beds would no longer be eligible for TOPs, in accordance with
section 147 of Public Law 110-275. However, subsequent to issuance of
the CY 2010 OPPS/ASC final rule with comment period, section 3121(a) of
the Affordable Care Act amended section 1833(t)(7)(D)(i)(III) of the
Act by extending the period of TOPs to rural hospitals that are not
SCHs with 100 beds or fewer for 1 year, for services provided before
January 1, 2011. Section 3121(a) of the Affordable Care Act amended
section 1833(t)(7)(D)(i)(III) of the Act and extended the period of
TOPs to SCHs (including EACHs) for 1 year, for services provided before
January 1, 2011, with section 3121(b) of the Affordable Care Act
removing the 100-bed limitation applicable to such SCHs for covered OPD
services furnished on and after January 1, 2010, and before January 1,
2011. In accordance with section 3121 of the Affordable Care Act, when
the OPPS payment is less than the provider's pre-BBA amount, the amount
of payment is increased by 85 percent of the amount of the difference
between the two payment amounts for CY 2010. Accordingly, in the CY
2011 OPPS/ASC proposed rule (75 FR 46232), we proposed to update Sec.
419.70(d) of the regulations to reflect the TOPs extensions and
amendments described in section 3121 of the Affordable Care Act.
We did not receive any public comments on our proposed policy for
updating the language in Sec. 419.70(d) of the regulations. For the
reasons we specify in the CY 2011 OPPS/ASC proposed rule (75 FR 46231-
46232), we are finalizing our proposed revisions of Sec. 419.70(d)
without modification. Effective for services provided on or after
January 1, 2011, rural hospitals having 100 or fewer beds that are not
SCHs and SCHs (including EACHs) will no longer be eligible for hold
harmless TOPs, in accordance with section 3121 of the Affordable Care
Act.
2. Adjustment for Rural SCHs Implemented in CY 2006 Related to Public
Law 108-173 (MMA)
In the CY 2006 OPPS final rule with comment period (70 FR 68556),
we finalized a payment increase for rural SCHs of 7.1 percent for all
services and procedures paid under the OPPS, excluding drugs,
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the
Act, as added by section 411 of Public Law 108-173. Section 411 gave
the Secretary the authority to make an adjustment to OPPS payments for
rural hospitals, effective January 1, 2006, if justified by a study of
the difference in costs by APC between hospitals in rural areas and
hospitals in urban areas. Our analysis showed a difference in costs for
rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment
adjustment for rural SCHs of 7.1 percent for all services and
procedures paid under the OPPS, excluding separately payable drugs and
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy, in accordance with section 1833(t)(13)(B) of
the Act.
In CY 2007, we became aware that we did not specifically address
whether the adjustment applies to EACHs, which are considered to be
SCHs under section 1886(d)(5)(D)(iii)(III) of the Act. Thus, under the
statute, EACHs are treated as SCHs. Therefore, in the CY 2007 OPPS/ASC
final rule with comment period (71 FR 68010 and 68227), for purposes of
receiving this rural adjustment, we revised Sec. 419.43(g) to clarify
that EACHs are also eligible to receive the rural SCH adjustment,
assuming these entities otherwise meet the rural adjustment criteria.
Currently, fewer than 10 hospitals are classified as EACHs and as of CY
1998, under section 4201(c) of Public Law 105-33, a hospital can no
longer become newly classified as an EACH.
This adjustment for rural SCHs is budget neutral and applied before
calculating outliers and copayment. As stated in the CY 2006 OPPS final
rule with comment period (70 FR 68560), we would not reestablish the
adjustment amount on an annual basis, but we may review the adjustment
in the future and, if appropriate, would revise the adjustment. We
provided the same 7.1 percent adjustment to rural SCHs, including
EACHs, again in CY 2008 and CY 2009. Further, in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68590), we updated the
regulations at Sec. 419.43(g)(4) to specify, in general terms, that
items paid at charges adjusted to costs by application of a hospital-
specific CCR are excluded from the 7.1 percent payment adjustment.
For the CY 2011 OPPS, we proposed to continue our policy of a
budget neutral 7.1 percent payment adjustment for rural SCHs, including
EACHs, for all services and procedures paid under the OPPS, excluding
separately payable drugs and biologicals, devices paid under the pass-
through payment policy, and items paid at charges reduced to costs (75
FR 46232). In the CY 2011 OPPS/ASC proposed rule, we indicated that we
intend to reassess the 7.1 percent adjustment in the near future by

[[Page 71883]]

examining differences between urban and rural hospitals' costs using
updated claims, cost reports, and provider information.
Comment: One commenter supported our proposal to continue to apply
the budget neutral 7.1 percent adjustment to OPPS payment for rural
sole community hospitals. The commenter also recommended that CMS
update the analysis in the near future to assess if the 7.1 percent
payment adjustment remains a valid figure.
Response: We agree that it is appropriate to continue the 7.1
percent adjustment for rural SCHs (including EACHs) as we proposed for
CY 2011. As we indicated above, and in the proposed rule (75 FR 46232),
we intended to reassess the 7.1 percent rural adjustment in the near
future by examining differences between urban rural hospitals' costs
using updated claims, cost reports, and provider information.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to apply the 7.1
percent payment adjustment to rural SCHs, including EACHs, for all
services and procedures paid under the OPPS in CY 2011, excluding
separately payable drugs and biologicals, devices paid under the pass-
through payment policy, and items paid at charges reduced to costs.

F. OPPS Payments to Certain Cancer Hospitals Described by Section
1886(d)(1)(B)(v) of the Act

1. Background
Since the inception of the OPPS, which was authorized by the
Balanced Budget Act of 1997 (BBA), Medicare has paid cancer hospitals
identified in section 1886(d)(1)(B)(v) of the Act (cancer hospitals)
under the OPPS for covered outpatient hospital services. There are 11
cancer hospitals that meet the classification criteria in section
1886(d)(1)(B)(v) of the Act. These 11 cancer hospitals are exempted
from payment under the IPPS. With the Medicare, Medicaid and SCHIP
Balanced Budget Refinement Act of 1999, Congress created section
1833(t)(7) of the Act, ``Transitional Adjustment to Limit Decline in
Payment,'' to serve as a permanent payment floor by limiting cancer
hospitals' potential losses under the OPPS. Through section
1833(t)(7)(D)(ii) of the Act, a cancer hospital receives the full
amount of the difference between payments for covered outpatient
services under the OPPS and a pre-BBA amount. That is, cancer hospitals
are permanently held harmless to their ``pre-BBA'' amount, and they
receive TOPs to ensure that they do not receive a payment that is lower
under the OPPS than the payment they would have received before
implementation of the OPPS, as set forth in section 1833(t)(7)(F) of
the Act. The pre-BBA payment amount is an amount equal to the product
of the reasonable cost of the hospital for such services for the
portions of the hospital's cost reporting period (or periods) occurring
in the year and the base payment to cost ratio (base PCR) for the
hospital. The pre-BBA amount, including the determination of the base
PCR, are defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet
E, Part B, of the Hospital and Hospital Health Care Complex Cost Report
(Form CMS-2552-96) each year. Section 1833(t)(7)(I) of the Act exempts
TOPs from budget neutrality calculations. Almost all of the 11 cancer
hospitals receive TOPs each year. The volume weighted average payment
to cost ratio (PCR) for the cancer hospitals is 0.83, or outpatient
payment with TOPs to cancer hospitals is 83 percent of reasonable cost.
Section 3138 of the Affordable Care Act instructs the Secretary to
conduct a study to determine if, under the OPPS, outpatient costs
incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of
the Act with respect to ambulatory classification groups exceed the
costs incurred by other hospitals furnishing services under this
subsection (section 1833(t) of the Act) as determined appropriate by
the Secretary. In addition, section 3138 of the Affordable Care Act
requires the Secretary to take into consideration the cost of drugs and
biologicals incurred by such hospitals when studying cancer hospital
costliness. Further, section 3138 of the Affordable Care Act states
that if the cancer hospitals' costs are determined to be greater than
the costs of other hospitals paid under the OPPS, the Secretary shall
provide an appropriate adjustment to reflect these higher costs.
Section 3138 of the Affordable Care Act also requires that this
adjustment be budget neutral, and that the adjustment be effective for
outpatient services provided at cancer hospitals on or after January 1,
2011. Cancer hospitals described in section 1886(d)(1)(B)(v) of the Act
remain eligible for TOPs (which are not budget neutral) and outlier
payments (which are budget neutral).
2. Study of Cancer Hospitals' Costs Relative to Other Hospitals
It has been our standard analytical approach to use a combination
of explanatory and payment regression models to assess the costliness
of a class of hospitals while controlling for other legitimate
influences of costliness, such as ability to achieve economies of
scale, to ensure that costliness is due to the type of hospital and to
identify appropriate payment adjustments. We used this approach in our
CY 2006 OPPS final rule with comment period to establish the 7.1
percent payment adjustment for rural SCHs (70 FR 68556 through 68561).
In our discussion for the CY 2006 OPPS proposed rule, we stated that a
simple comparison of unit costs would not be sufficient to assess the
costliness of a class of hospitals because the costs faced by
individual hospitals, whether urban or rural, are a function of many
varying factors, including local labor supply and the complexity and
volume of services provided (70 FR 42699).
In constructing our analysis of cancer hospitals' costs relative to
other hospitals, we considered whether our standard analytical approach
to use a combination of explanatory and payment regression models would
lead to valid results for this particular study, or whether we should
develop a different or modified analytic approach. We note that the
analyses presented in the CY 2006 OPPS proposed and final rules were
designed to establish an adjustment for a large class of rural
hospitals. In contrast, section 3138 of the Affordable Care Act is
specifically limited to identifying an adjustment for 11 cancer
hospitals. With such a small sample size (11 out of approximately 4,000
hospitals paid under the OPPS), we are concerned that the standard
explanatory and payment regression models used to establish the rural
hospital adjustment would lead to imprecise estimates of payment
adjustments for this small group of hospitals. Further, section 3138 of
the Affordable Care Act specifies explicitly that cost comparisons
between classes of hospitals must include the cost of drugs and
biologicals. In our CY 2006 analysis of rural hospitals, we excluded
the cost of drugs and biologicals in our model because the extreme
units associated with proper billing for some drugs and biologicals can
bias the calculation of a service mix index, or volume weighted average
APC relative weight, for each hospital (70 FR 42698). Therefore, we
chose not to pursue our standard combination of explanatory and payment
regression modeling to identify costliness and determine a cancer
hospital adjustment.
While we chose not to use our standard models to calculate a
proposed cancer hospital adjustment, we determined it still would be
appropriate

[[Page 71884]]

to construct our usual provider-level analytical dataset consisting of
variables related to assessing costliness, including average cost per
unit for a hospital and the hospitals average APC relative weight as an
indicator of the hospitals resource intensity, as measured by the APC
relative weights. We used these variables to calculate univariate
statistics that describe the costliness and related aspects of cancer
hospitals and other hospitals paid under the OPPS. While descriptive
statistics cannot control for the myriad factors that contribute to
observed costs, we believe that we can assume that stark differences in
cost between cancer hospitals and other hospitals paid under the OPPS
that would be observable by examining descriptive univariate statistics
would provide some indication of relative costliness. We began our
analysis of the cancer hospitals as we did for the rural hospitals by
creating an analytical dataset of hospitals billing under the OPPS for
CY 2009 (a total of 3,933) that were included in our claims dataset for
establishing the CY 2011 OPPS proposed APC relative weights (discussed
in detail in section II.A. of this final rule with comment period).
This analytical dataset includes the 3,933 OPPS hospitals' total
estimated cost (including packaged cost), total lines, total discounted
units as modeled for CY 2011 OPPS payment, and the average weight of
their separately payable services (total APC weight divided by total
units) as modeled for CY 2011 OPPS. We create this dataset from the
hospital-specific service utilization files that we use to model budget
neutrality and to perform impact analyses after we complete estimating
a median cost (or equivalent amount depending on unique APC
methodologies as discussed in section II of this final rule with
comment period) for each APC. Using the CY 2009 claims that we use to
model the CY 2011 proposed OPPS, we used the utilization on those
claims to model APC payment under the CY 2011 proposed payment
policies, such as proposed payment for drugs and biologicals at ASP+6
percent and proposed reassignment of some HCPCS codes to different
APCs. We then summarized this estimated utilization and payment for
each hospital (``hospital-level''). These files consist of hospital-
level aggregate costs (including the cost of packaged items and
services), total estimated discounted units under the modeled proposed
CY 2011 OPPS, total estimated volume of number of occurrences of
separately payable HCPCS codes under the modeled proposed CY 2011 OPPS,
and total relative weight of separately payable services under the
modeled proposed CY 2011 OPPS. The calculation of these summary files
are discussed in Stage 6 of our claims accounting narrative available
under supporting documentation for the proposed rule on the CMS Web
site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/. After
summarizing modeled payment to the hospital-level, we removed 48
hospitals in Puerto Rico from our dataset because we do not believe
that their cost structure reflects the costs of most hospitals paid
under the OPPS and because they could bias the calculation of hospital-
weighted statistics. We then removed an additional 66 hospitals with a
cost per unit of more than 3 standard deviations from the geometric
mean (mean of the natural log) because including outliers in hospital-
weighted descriptive statistics also could bias those statistics. This
resulted in a dataset with 11 cancer hospitals and 3,808 other
hospitals.
We included the following standard hospital-level variables that
describe hospital costliness in our analysis file: Outpatient cost per
discounted unit under the modeled CY 2011 OPPS (substituting a cost per
administration, rather than a cost per unit, for drugs and
biologicals); each hospital's proposed CY 2011 wage index as a measure
of relative labor cost; the service mix index, or volume-weighted
average proposed CY 2011 APC relative weight (including a simulated
weight for drugs and biologicals created by dividing the CY 2010 April
ASP-based payment amount at ASP+6 percent appearing in Addendum A and B
of the proposed rule by the proposed conversion factor of $68.267);
outpatient volume based on number of occurrences of HCPCS codes in the
CY 2009 claims data; and number of beds. We used these variables
because they are key indicators of costliness under the modeled OPPS
system, and they allow us to assess the relative costliness of classes
of hospitals under the proposed CY 2011 OPPS. We further discussed
these variables in our CY 2006 proposed rule analysis (70 FR 42698
through 42701). A hospital's service mix index is a measure of resource
intensity of the services provided by the hospital as measured by the
proposed CY 2011 OPPS relative weights, and standardizing the cost per
discounted unit by the service mix index creates an adjusted cost per
unit estimate that reflects the remaining relative costliness of a
hospital remaining after receiving the estimated payments that we
proposed to make under the CY 2011 OPPS. In short, if a class of
hospitals demonstrates higher cost per unit after standardization by
service mix, it is an early indication that the class of hospitals may
be significantly more costly in the regression models. We used these
data to calculate the descriptive univariate statistics for cancer
hospitals appearing in Table 16 below. We note that because drugs and
biologicals are such a significant portion of the services that the
cancer hospitals provide, and because section 3138 of the Affordable
Care Act explicitly requires us to consider the cost of drugs and
biologicals, we included the cost of these items in our total cost
calculation for each hospital, counting each occurrence of a drug in
the modeled proposed CY 2011 data (based on units in CY 2009 claims
data). That is, we sought to treat each administration of a drug or
biological as one unit.
In reviewing these descriptive statistics, we observe that cancer
hospitals had a standardized cost per discounted unit of $150.12
compared to a standardized cost per discounted unit of $94.14 for all
other hospitals. That is, cancer hospitals' average cost per discounted
unit remains high even after accounting for payment under the modeled
proposed CY 2011 payment system, which is not true for all other
hospitals. Observing such differences in standardized cost per
discounted unit led us to conclude that cancer hospitals are more
costly than other hospitals paid under the OPPS, even without the
inferential statistical models that we typically employ.

Table 16--Means and Standard Deviations for Key Variables by Cancer and Non-Cancer OPPS Hospitals
----------------------------------------------------------------------------------------------------------------
Cancer hospitals Non-cancer hospitals
---------------------------------------------------
Variable Standard Standard
Mean deviation Mean deviation
----------------------------------------------------------------------------------------------------------------
Outpatient Cost per Unit *.................................. $344.20 (64.68) $264.11 (165.86)

[[Page 71885]]

Unit Cost Standardized by Service Mix Wage Indices.......... 150.12 (31.64) 94.14 (81.19)
Wage Index.................................................. 1.10 (0.13) 0.98 (0.16)
Service Mix Index *......................................... 2.19 (0.26) 3.18 (2.25)
Outpatient Volume........................................... 192,197 (186,063) 34,578 (43,094)
Beds........................................................ 173 (162.33) 173 (171.46)
Number of Hospitals......................................... 11 ........... 3,808 ...........
----------------------------------------------------------------------------------------------------------------
* Includes drugs and biologicals based on per administration rather than per unit.

3. Adjustment for Certain Cancer Hospitals
Having reviewed the cost data from the standard analytic database
and determined that cancer hospitals are more costly than other
hospitals within the OPPS system, we decided to examine hospital cost
report data from Worksheet E, Part B (where TOPs are calculated on the
Hospital and Hospital Health Care Complex Cost Report each year) in
order to determine whether our findings were further supported by cost
report data and to determine an appropriate proposed payment adjustment
methodology. Analyses on our standard analytic database and descriptive
statistics presented in Table 16 above, did not consider TOPs in
assessing costliness of cancer hospitals relative to other hospitals
furnishing services under section 1833(t) of the Act. This is because
section 3138 of the Affordable Care Act requires that any cancer
adjustment be made within the budget neutral system. In making a
determination about a payment adjustment subject to budget neutrality,
we believe it is appropriate to assess costliness and payments within
the budget neutral payment system. We note that TOPs are based on
reasonable cost and are not part of the budget neutral payment system.
Further, TOPs have no associated relative weight that could be included
in an assessment of APC-based payment. TOPs are paid at cost report
settlement on an aggregate basis, not a per service basis, and we would
have no way to break these payments down into a relative weight to
incorporate these retrospective aggregate payments in the form of
relative weight under the proposed modeled CY 2011 OPPS. The cost
report data we selected for the analysis were limited to the OPPS-
specific payment and cost data available on Worksheet E, Part B, which
is also where TOPs are calculated including aggregate OPPS payments,
including outlier payments and the cost of medical and other health
services. These aggregate measures of cost and payment also include the
cost and payment for drugs and biologicals and other adjustments that
we typically include in our regression modeling, including wage index
adjustment and rural adjustment, if applicable. While these cost report
data cannot provide an estimate of cost per unit after controlling for
other potential factors that could influence cost per unit, we can use
this aggregate cost and payment data to examine the cancer hospitals'
OPPS PCR and OPPS PCR with TOPs, and compare these to the OPPS PCR for
other hospitals.
PCRs calculated from the most recent cost report data also indicate
that costs relative to payments at cancer hospitals are higher than
those at other hospitals paid under the OPPS (that is, cancer hospitals
have lower PCRs). In order to calculate PCRs for hospitals paid under
the OPPS (including cancer hospitals), we used the same extract of cost
report data from the HCRIS, as discussed in section II.A. of this final
rule with comment period, that we used to calculate the CCRs that we
used to estimate median costs for the CY 2011 OPPS. Using these cost
report data, we included data from Worksheet E, Part B for each
hospital, keeping data from each hospital's most recent cost report,
whether as submitted or settled. We then limited the dataset to the
hospitals with CY 2009 claims data that we used to model the CY 2011
proposed APC relative weights (3,933 hospitals) because we used the
claims from these hospitals to calculate the estimated costs we used
for the descriptive statistics in our first analysis and because it is
appropriate to use the same set of hospitals that we used to calibrate
the modeled proposed CY 2011 OPPS. The cancer hospitals in this dataset
largely had cost report data from cost reporting periods ending in FY
2008 and FY 2009. The cost report data for the other hospitals were
from cost report periods with fiscal year ends ranging from 2005 to
2009. We then removed the cost report data for 48 hospitals from Puerto
Rico from our dataset because we do not believe that their cost
structure reflects the costs of most hospitals paid under the OPPS and,
therefore, may bias the results of the study. We also removed 301
hospitals with cost report data that were not complete (missing OPPS
payments including outliers, missing aggregate cost data, or both) so
that all cost reports in the study would have both the payment and cost
data necessary to calculate a PCR for each hospital, leading to a final
analytic file of 3,584 hospitals with cost report data. We believe that
the costs, PPS payments, and TOPs reported on Worksheet E, Part B for
the hospitals included in our CY 2011 modeling should be sufficiently
accurate for assessing hospital's relative costliness because all of
the key elements that we believe to be necessary for the analysis
(payment, cost, and TOPs) are contained on this worksheet.
Using this much smaller dataset of cost report data, we estimate
that, on average, the OPPS payments to the 11 cancer hospitals, not
including TOPs, are approximately 62 percent of reasonable cost (that
is, we calculated a PCR of 0.615 for the cancer hospitals), whereas we
estimate that, on average, the OPPS payments to other hospitals paid
under the OPPS are approximately 87 percent of reasonable cost
(resulting in a PCR of 0.868). Individual cancer hospitals' OPPS PCRs
range from approximately 48 percent to approximately 82 percent. When
TOPS are included in the calculation of the PCR, cancer hospitals, as a
group, receive payments that are approximately 83 percent of reasonable
cost, which is still lower than the average PCR of other OPPS hospitals
of approximately 87 percent of reasonable cost. Considering these data,
we find that the cancer hospitals are more costly than other hospitals
paid under the OPPS. The dataset of hospital cost report data that

[[Page 71886]]

we used to model the proposed adjustment is available under supporting
documentation for the proposed rule on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/.)
Based on our findings that cancer hospitals, as a class, have a
significantly lower volume weighted average PCR than the volume
weighted PCR of other hospitals paid under the OPPS and our findings
above that the cancer hospitals cost per discounted unit standardized
for service mix remains much higher than the standardized cost per
discounted unit of all other hospitals, in the CY 2011 OPPS/ASC
proposed rule (75 FR 46235 to 46237), we proposed an adjustment for
cancer hospitals to reflect these higher costs, effective January 1,
2011, as mandated by section 3138 of the Affordable Care Act. For
purposes of calculating a proposed adjustment, we chose to rely on this
straightforward assessment of payments and costs from the cost report
data because of the concerns outlined above with respect to the small
number of hospitals, and because of the challenges associated with
accurately including drug and biological costs in our standard
regression models. We believe that an appropriate adjustment would
redistribute enough payments from other hospitals paid under the OPPS
to the cancer hospitals to give cancer hospitals a PCR that is
comparable to the average PCR for other hospitals paid under the OPPS.
Therefore, we proposed a hospital-specific payment adjustment
determined as the percentage of additional payment needed to raise each
cancer hospital's PCR to the weighted average PCR for all other
hospitals paid under OPPS (0.868) in the CY 2011 dataset. This would be
accomplished by adjusting each cancer hospital's OPPS payment by the
percentage difference between their individual PCR (without TOPs) and
the weighted average PCR of the other hospitals paid under OPPS.
We stated in the proposed rule that the proposed methodology would
result in the proposed percentage payment adjustments for the 11 cancer
hospitals that appeared in Table 11 of the proposed rule. We proposed
that this hospital-specific adjustment would be applied to the wage
adjusted payments for all items, except for items and services paid at
charges adjusted to cost or devices receiving pass-through status
defined in 42 CFR 419.66. We proposed that the proposed cancer hospital
adjustment would not be applied to items and services paid at charges
adjusted to cost because these items and services are always paid the
estimated full cost of the item or service. We proposed to amend the
regulations at Sec. 419.43 to add a new paragraph (i)(2) which would
establish the amount of the adjustment to cancer hospitals. We also
proposed that this adjustment would be budget neutral as set forth in
proposed new Sec. 419.43(i)(3), consistent with section 3138 of the
Affordable Care Act. We note that outlier payments would be
appropriately assessed after application of the cancer adjustment and
that TOPs would continue to apply. The changes made by section 3138 of
the Affordable Care Act do not affect the existing statutory provisions
that provide for outlier payment for all hospitals paid under the OPPS,
including cancer hospitals and TOPs payments for cancer hospitals.
Further, both outlier payments and TOPs serve as a safety net for
hospitals, although outliers are budget neutral and TOPs are not, and
TOPs are limited to certain hospitals. As a means of buffering the
financial risk associated with a prospective payment system, both
adjustments (outliers and TOPs) only should be assessed after final
payments have been made. Because outlier payments are made within the
budget neutrality, outlier payments should be assessed after all budget
neutral payments for an individual service have been made, including
the cancer adjustment. The TOPs payments would be assessed after all
payments have been made for a cost reporting period. We noted that the
proposed adjustment for all cancer hospitals would have result in an
estimated aggregate increase in OPPS payments to cancer hospitals of
41.2 percent for CY 2011 within the PPS system, based on cost report
data, and a net increase in total payments, including TOPs payments, of
5 percent.
Comment: Many commenters urged CMS to consider TOPs when
calculating the cancer hospital payment adjustment. The commenters
stated that the proposed methodology to adjust each cancer hospital's
OPPS payment by the percentage difference between their individual PCR
without TOPs and the weighted average PCR of the other hospitals paid
under OPPS results, largely, in a change in the form of outpatient
payments to cancer hospitals by shifting payment from hold harmless
payments under the TOPs provision to APC payments. This substitution of
TOPs for APC payments, in turn, results in savings to the Medicare
program which, the commenters asserted, is in violation of the
statutory requirement that the policy be budget neutral. The commenters
suggested that because the Congressional Budget Office scoring of
section 3138 of the Affordable Care Act estimates no federal budgetary
impact, Congress did not intend for savings under this provision.
Commenters also suggested that the associated budget neutral
payment reduction of 0.7 percent is not appropriate or equitable to
other hospitals paid under the OPPS. The commenters indicated that it
was not the intent of Congress for the provision to impact the non-
cancer hospitals in a manner that is disproportionate to the benefits
obtained by the cancer hospitals. Many commenters noted that the
majority of cancer care provided in the country is provided by the non-
cancer hospitals that would experience a payment reduction under the
proposal.
Commenters also expressed concern that the proposed payment
adjustment increases beneficiary copayments. That is, they believed
that the proposed cancer hospital adjustment would increase APC
payments and, because beneficiary copayment is a percentage of the APC
payment, Medicare beneficiaries seeking services at the 11 designated
cancer hospitals will experience higher copayments due to the proposed
methodology. One commenter suggested that the cancer hospitals could
potentially lose more payment to bad debt under increased copayments
than benefit from the proposed adjustment. The commenters strongly
encouraged CMS to implement the adjustment in a way that does not
increase beneficiary copayments.
Several commenters indicated that CMS selected an inappropriate
benchmark against which to compare each cancer hospital's PCR.
Specifically, the commenters indicated that CMS should have taken into
account the concentration of outpatient services at the designated
cancer hospitals as compared to other PPS hospitals and adjust the PCR
benchmark higher. The commenters argued that other PPS hospitals have
the ability to improve their Medicare margins through other payment
systems, but that cancer hospitals receive the majority of their
Medicare payments through the OPPS. These commenters asserted that
because concentration of outpatient services was not considered in
establishing the benchmark, the proposed adjustment was not valid.
Several commenters addressed CMS' study methodology. One commenter
suggested that the CMS analysis is inadequate to conclude that costs
are higher in cancer hospitals and that an adjustment is warranted.
This commenter noted that the CMS analysis did not control for the many
factors that

[[Page 71887]]

might explain differences in costliness or assess to what extent cost
differences could be explained by differences in efficiency. This
commenter also asserted that the exclusion of TOPs from the comparison
of costliness distorts the analysis and makes the findings invalid.
Another commenter suggested that CMS examine the costs of cancer
patients generally for all hospitals, and compare the costs of these 11
hospitals to all hospitals providing cancer care to ensure an
adjustment does not reinforce high-cost characteristics of the 11
designated cancer hospitals. One commenter requested that CMS confirm
that it used a regression analysis, similar to that used to determine
the current adjustment for rural SCHs (discussed in section II.E. of
this final rule with comment period) and provide detail on coefficients
and how CMS incorporated drugs into that model. Finally, the commenter
requested that CMS confirm the bed size estimates in the analytic file
that CMS made available with the proposed rule. Another commenter
requested that CMS recalibrate the adjustment annually suggesting that
the PCR for other hospitals will decline proportionate to the cancer
hospital increase and that this should be reflected in any adjustment
for future years.
Another commenter indicated that additional payments to cancer
hospitals should be guided by quality of care and, because the
Affordable Care Act requires the 11 cancer hospitals to begin
submitting quality data in fiscal year 2014, suggested that additional
payments to cancer hospitals be delayed until these quality data are
available to serve as a basis for payment. Another commenter favored
the adjustment, stating that it offered improved beneficiary access to
cancer care.
Response: The many public comments we received have identified a
broad range of very important issues and concerns associated with the
proposed cancer hospital adjustment. After consideration of these
public comments, we have determined that further study and deliberation
related to these issues is critical. This process, however, will take a
longer period of time than is permitted in order for us to meet the
publication deadline of this final rule with comment period. Therefore,
we are not finalizing an adjustment for certain cancer hospitals
identified in section 1886(d)(1)(B)(v) of the Act at this time.

G. Hospital Outpatient Outlier Payments

1. Background
Currently, the OPPS pays outlier payments on a service-by-service
basis. For CY 2010, the outlier threshold is met when the cost of
furnishing a service or procedure by a hospital exceeds 1.75 times the
APC payment amount and exceeds the APC payment rate plus a $2,175
fixed-dollar threshold. We introduced a fixed-dollar threshold in CY
2005 in addition to the traditional multiple threshold in order to
better target outliers to those high cost and complex procedures where
a very costly service could present a hospital with significant
financial loss. If the cost of a service meets both of these
conditions, the multiple threshold and the fixed-dollar threshold, the
outlier payment is calculated as 50 percent of the amount by which the
cost of furnishing the service exceeds 1.75 times the APC payment rate.
Before CY 2009, this outlier payment had historically been considered a
final payment by longstanding OPPS policy. We implemented a
reconciliation process similar to the IPPS outlier reconciliation
process for cost reports with cost reporting periods beginning on or
after January 1, 2009 (73 FR 68594 through 68599).
It has been our policy for the past several years to report the
actual amount of outlier payments as a percent of total spending in the
claims being used to model the proposed OPPS. Our current estimate of
total outlier payments as a percent of total CY 2009 OPPS payment,
using available CY 2009 claims and the revised OPPS expenditure
estimate for the Trustee's Report for FY 2010, is approximately 1.3
percent of the total aggregated OPPS payments. Therefore, for CY 2009,
we estimate that we paid 0.3 percent more than the CY 2009 outlier
target of 1.0 percent of total aggregated OPPS payments.
As explained in the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60426 through 60427), we set our projected target for aggregate
outlier payments at 1.0 percent of the aggregate total payments under
the OPPS for CY 2010. The outlier thresholds were set so that estimated
CY 2010 aggregate outlier payments would equal 1.0 percent of the total
aggregated payments under the OPPS. Using CY 2009 claims data and CY
2010 payment rates, we currently estimate that the aggregate outlier
payments for CY 2010 would be approximately 0.85 percent of the total
CY 2010 OPPS payments. The difference between 1.0 percent and 0.85
percent is reflected in the regulatory impact analysis in section XXII.
of this final rule with comment period. We note that we provide
estimated CY 2011 outlier payments for hospitals and CMHCs with claims
included in the claims data that we used to model impacts in the
Hospital--Specific Impacts--Provider-Specific Data file on the CMS Web
site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/.
2. Proposed Outlier Calculation
In the CY 2011 OPPS/ASC proposed rule (75 FR 46237 through 46238),
we proposed for CY 2011 to continue our policy of estimating outlier
payments to be 1.0 percent of the estimated aggregate total payments
under the OPPS for outlier payments. We proposed that a portion of that
1.0 percent, specifically 0.04 percent, would be allocated to CMHCs for
PHP outlier payments. This is the amount of estimated outlier payments
that would result from the proposed CMHC outlier threshold as a
proportion of total estimated outlier payments. As discussed in section
X.D. of this final rule with comment period, for CMHCs, as we proposed,
we are continuing our longstanding policy that if a CMHC's cost for
partial hospitalization services, paid under either APC 0172 (Level I
Partial Hospitalization (3 services)) or APC 0173 (Level II Partial
Hospitalization (4 or more services)), exceeds 3.40 times the payment
for APC 0173, the outlier payment would be calculated as 50 percent of
the amount by which the cost exceeds 3.40 times the APC 0173 payment
rate. For further discussion of CMHC outlier payments, we refer readers
to section X.D. of this final rule with comment period.
To ensure that the estimated CY 2011 aggregate outlier payments
would equal 1.0 percent of estimated aggregate total payments under the
OPPS, we proposed that the hospital outlier threshold be set so that
outlier payments would be triggered when the cost of furnishing a
service or procedure by a hospital exceeds 1.75 times the APC payment
amount and exceeds the APC payment rate plus a $2,025 fixed-dollar
threshold. This proposed threshold reflects the methodology discussed
below in this section, as well as the proposed APC recalibration for CY
2011.
We calculated the proposed fixed-dollar threshold for the CY 2010
OPPS/ASC proposed rule using largely the same methodology as we did in
CY 2009 (73 FR 41462). For purposes of estimating outlier payments for
the proposed rule, we used the hospital-specific overall ancillary CCRs
available

[[Page 71888]]

in the April 2010 update to the Outpatient Provider-Specific File
(OPSF). The OPSF contains provider-specific data, such as the most
current CCR, which are maintained by the Medicare contractors and used
by the OPPS Pricer to pay claims. The claims that we use to model each
OPPS update lag by 2 years. For the proposed rule, we used CY 2009
claims to model the CY 2011 OPPS. In order to estimate the proposed CY
2011 hospital outlier payments for the proposed rule, we inflated the
charges on the CY 2009 claims using the same inflation factor of 1.1059
that we used to estimate the IPPS fixed-dollar outlier threshold for
the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 24068). We used an
inflation factor of 1.0516 to estimate CY 2010 charges from the CY 2009
charges reported on CY 2009 claims. The methodology for determining
this charge inflation factor was discussed in the FY 2011 IPPS/LTCH PPS
proposed rule (75 FR 24068). As we stated in the CY 2005 OPPS final
rule with comment period (69 FR 65845), we believe that the use of this
charge inflation factor is appropriate for the OPPS because, with the
exception of the inpatient routine service cost centers, hospitals use
the same ancillary and outpatient cost centers to capture costs and
charges for inpatient and outpatient services.
As noted in the CY 2007 OPPS/ASC final rule with comment period (71
FR 68011), we are concerned that we could systematically overestimate
the OPPS hospital outlier threshold if we did not apply a CCR inflation
adjustment factor. Therefore, we proposed to apply the same CCR
inflation adjustment factor that we proposed to apply for the FY 2011
IPPS outlier calculation to the CCRs used to simulate the proposed CY
2011 OPPS outlier payments that determine the fixed-dollar threshold.
Specifically, for CY 2011, we proposed to apply an adjustment of 0.9890
to the CCRs that were in the April 2010 OPSF to trend them forward from
CY 2010 to CY 2011. The methodology for calculating this adjustment was
discussed in the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 24068
through 24070).
Therefore, to model hospital outlier payments for the CY 2011 OPPS/
ASC proposed rule, we applied the overall CCRs from the April 2010 OPSF
file after adjustment (using the proposed CCR inflation adjustment
factor of 0.9890 to approximate CY 2011 CCRs) to charges on CY 2009
claims that were adjusted (using the proposed charge inflation factor
of 1.1059 to approximate CY 2011 charges). We simulated aggregated CY
2011 hospital outlier payments using these costs for several different
fixed-dollar thresholds, holding the 1.75 multiple threshold constant
and assuming that outlier payments would continue to be made at 50
percent of the amount by which the cost of furnishing the service would
exceed 1.75 times the APC payment amount, until the total outlier
payments equaled 1.0 percent of aggregated estimated total CY 2011 OPPS
payments. We estimated that a proposed fixed-dollar threshold of
$2,025, combined with the proposed multiple threshold of 1.75 times the
APC payment rate, would allocate 1.0 percent of aggregated total OPPS
payments to outlier payments. We proposed to continue to make an
outlier payment that equals 50 percent of the amount by which the cost
of furnishing the service exceeds 1.75 times the APC payment amount
when both the 1.75 multiple threshold and the proposed fixed-dollar
threshold of $2,025 are met. For CMHCs, if a CMHC's cost for partial
hospitalization services, paid under either APC 0172 or APC 0173,
exceeds 3.40 times the payment for APC 0173, the outlier payment would
be calculated as 50 percent of the amount by which the cost exceeds
3.40 times the APC 0173 payment rate.
Section 1833(t)(17)(A) of the Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of the Act, requires that hospitals
that fail to report data required for the quality measures selected by
the Secretary, in the form and manner required by the Secretary under
1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to
their OPD fee schedule increase factor, that is, the annual payment
update factor. The application of a reduced OPD fee schedule increase
factor results in reduced national unadjusted payment rates that will
apply to certain outpatient items and services furnished by hospitals
that are required to report outpatient quality data and that fail to
meet the HOP QDRP requirements. For hospitals that fail to meet the HOP
QDRP requirements, we proposed to continue our policy that we
implemented in CY 2009 that the hospitals' costs would be compared to
the reduced payments for purposes of outlier eligibility and payment
calculation. For more information on the HOP QDRP, we refer readers to
section XVI. of this final rule with comment period.
Comment: Several commenters supported the proposed fixed-dollar
threshold for CY 2011 in order to maintain the target outlier spending
percentage of 1.0 percent of total OPPS payments. One commenter
supported CMS' proposal to develop the OPPS fixed-dollar outlier
threshold using the same assumptions and projections that are used in
the IPPS. One commenter believed that the proposed outlier fixed-dollar
threshold was inappropriate and should be reduced because the CMS
projection of estimated outlier spending for CY 2010 was only 0.85
percent in the CY 2011 OPPS/ASC proposed rule (75 FR 46237). That
commenter recommended that the threshold be proportionally reduced
based on the percentage difference between target and actual outlier
percentage spending. One commenter requested that CMS release the
``actual'' percent that outlier payments represent of total OPPS
payments for CY 2007 through CY 2009. One commenter believed that the
threshold calculation should be based on actual payments rather than
estimated payments, and requested that CMS provide the actual percents
of OPPS spending that OPPS outliers represent. One commenter suggested
that visit intensity data or diagnoses are not the only issues when
looking at outliers, and that any methodology related to outliers
should also consider a comprehensive look at resource utilization.
Response: We appreciate the commenters' support regarding the
development of the OPPS outlier policy. We agree that the charge and
CCR inflation factors that apply to inpatient hospitals services are
equally applicable to services provided under the OPPS. As we discussed
in our CY 2005 OPPS final rule, we believe that the use of this charge
inflation factor is appropriate for OPPS because, with the exception of
the routine service cost centers, hospitals use the same cost centers
to capture costs and charges across inpatient and outpatient services
(69 FR 65845). Therefore, as specified below, we are applying the
charge inflation factors that were used to calculate the outlier fixed-
dollar threshold for the IPPS in the calculation of the fixed-dollar
threshold for the CY 2011 OPPS. We are not raising the threshold to
account for the 0.15 percent of OPPS payment that we estimated was not
paid relative to the target outlier percent of 1 percent for CY 2010
because we do not adjust the fixed-dollar threshold for prior year
differences in actual expenditure of outlier payments. We believe that
our proposed and final methodology uses the best available data we have
at the time to yield the most accurate prospective fixed-dollar outlier
threshold for the CY 2011 OPPS. The multiple and fixed-dollar
thresholds are important parts of a prospective

[[Page 71889]]

payment system and should be based on projected payments using the
latest available historical data without adjustments for prior year
outlier payments. In this case, the 0.85 percent is only an estimate
made from CY 2009 claims for purposes of presenting an impact of the
change in the outlier threshold in the regulatory impact analysis.
Although estimated outlier payments for the current PPS year, which
appear in the impact tables, frequently are below the 1 percent target
outlier spending percentage, as we discuss below, we more often than
not pay slightly more than 1 percent of aggregate total OPPS payments
in outlier payments in a given year. We continue to believe that it is
appropriate to maintain the target outlier percentage of 1.0 percent of
estimated aggregate total payment under the OPPS and to have a fixed-
dollar threshold so that OPPS outlier payments are made only when the
hospital would experience a significant loss for supplying a particular
service.
With respect to the commenter that requested that we release the
``actual'' payment percentages for CY 2007 through CY 2009, we note
that we have previously provided and continue to provide estimated
actual percentage spending based on the claims data. In the CY 2009
OPPS/ASC final rule with comment period (73 FR 68592), using CY 2007
claims, we found OPPS outlier spending was 0.9 percent of the total
aggregated OPPS payment for CY 2007. In the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60426), using CY 2008 claims, we found that
OPPS outlier spending was 1.2 percent of the total aggregated OPPS
payments for CY 2008. As discussed earlier in this section, using CY
2009 claims, we found that OPPS outlier spending was 1.3 percent of the
total aggregated OPPS payments for CY 2009. We note that actual outlier
payments can only be determined based on the claims data available and
setting a prospective fixed-dollar outlier threshold without accounting
for changes in CCRs and charges would potentially lead to greater
inaccuracy in establishing the outlier fixed-dollar threshold. OPPS
outliers account for the financial risk hospitals experience when
providing an extraordinarily costly and complex service, and account
for the resource utilization in the methodology by identifying the
costs associated with providing services on each claim. We note that
visit intensity data and diagnoses data are not incorporated into the
calculation of the threshold because these are not components of OPPS
payments or our longstanding policy for determining outlier eligibility
and payment amount.
3. Final Outlier Calculation
For CY 2011, we are applying the overall CCRs from the July 2010
Outpatient Provider-Specific File with a CCR adjustment factor of
0.9910 to approximate CY 2011 CCRs to charges on the final CY 2009
claims that were adjusted to approximate CY 2011 charges (using the
final 2-year charge inflation factor of 1.0988). These are the same CCR
adjustment and charge inflation factors that were used to set the IPPS
fixed-dollar threshold for the FY 2011 IPPS/LTCH PPS final rule (75 FR
50427 through 50431). We simulated aggregated CY 2011 hospital outlier
payments using these costs for several different fixed-dollar
thresholds, holding the 1.75 multiple threshold constant and assuming
that outlier payment would continue to be made at 50 percent of the
amount by which the cost of furnishing the service would exceed 1.75
times the APC payment amount, until the total outlier payments equaled
1.0 percent of aggregated estimated total CY 2011 OPPS payments. We
estimate that a fixed-dollar threshold of $2,025, combined with the
multiple threshold of 1.75 times the APC payment rate, will allocate
1.0 percent of estimated aggregated total OPPS payments to outlier
payments.
In summary, for CY 2011, we will continue to make an outlier
payment that equals 50 percent of the amount by which the cost of
furnishing the service exceeds 1.75 times the APC payment amount when
both the 1.75 multiple threshold and the final fixed-dollar $2,025
threshold are met. For CMHCs, if a CMHC's cost for partial
hospitalization services, paid under either APC 0172 or APC 0173,
exceeds 3.40 times the payment for APC 0173, the outlier payment is
calculated as 50 percent of the amount by which the cost exceeds 3.40
times the APC 0173 payment rate. We estimate that this threshold will
allocate 0.02 percent of outlier payments to CMHCs for PHP outlier
payments.
4. Outlier Reconciliation
In the CY 2009 OPPS/ASC final rule with comment period (73 CFR
68599), we adopted as final policy a process to reconcile hospital or
CMHC outlier payments at cost report settlement for services furnished
during cost reporting periods beginning in CY 2009. OPPS outlier
reconciliation more fully ensures accurate outlier payments for those
facilities whose CCRs fluctuate significantly relative to the CCRs of
other facilities, and who receive a significant amount of outlier
payments (73 FR 68598). As under the IPPS, we do not adjust the fixed-
dollar threshold or the amount of total OPPS payments set aside for
outlier payments for reconciliation activity because such action would
be contrary to the prospective nature of the system. Our outlier
threshold calculation assumes that overall ancillary CCRs accurately
estimate hospital costs based on the information available to us at the
time we set the prospective fixed-dollar outlier threshold. For these
reasons, as we stated in the proposed rule, and have previously
discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68596), we are not incorporating any assumptions about the effects of
reconciliation into our calculation of the OPPS fixed-dollar outlier
threshold.
Comment: One commenter asked that CMS report the amount of outlier
reconciliation activity suggesting that, if the reconciled amounts are
significant, these amounts should be factored into the annual fixed-
dollar outlier threshold in the future. One commenter supported the
current criteria for when OPPS outlier payments would go through a
reconciliation process.
Response: We appreciate the commenter's support for our policy. As
we discuss above, we do not take outlier reconciliation amounts into
account in our projections of future outlier payments. It is difficult
to predict the specific hospitals that will have CCRs and outlier
payments that may be reconciled in any given year. We also note that
reconciliation occurs because hospitals' actual CCRs for the cost
reporting period are different from the interim CCRs used to calculate
outlier payment when a bill is processed. Our fixed-dollar threshold
calculation assumes that CCRs accurately estimate hospital costs based
on information available to us at the time we set the prospective
fixed-dollar threshold. Furthermore, we do not believe that estimating
the fixed-dollar threshold to account for the amount of payment that is
recovered or removed as a result of outlier reconciliation in any given
year would necessarily result in a more accurate estimate of outlier
payments or a more accurate calculation of the fixed-dollar threshold
for outlier payment for the prospective payment year. In our experience
modeling the OPPS fixed dollar threshold each year, changing the CCRs
for a handful for hospitals would not typically result in enough change
in estimated total outlier payments to change the modeled fixed dollar

[[Page 71890]]

threshold. For these reasons, we will not make any assumptions about
the amount of anticipated reconciliation of outlier payments on the
outlier threshold calculation nor will we report the amount of
reconciliation activity.

H. Calculation of an Adjusted Medicare Payment From the National
Unadjusted Medicare Payment

The basic methodology for determining prospective payment rates for
HOPD services under the OPPS is set forth in existing regulations at 42
CFR Part 419, subparts C and D. As proposed, for this final rule with
comment period, the payment rate for most services and procedures for
which payment is made under the OPPS is the product of the conversion
factor calculated in accordance with section II.B. of this final rule
with comment period and the relative weight determined under section
II.A. of this final rule with comment period. Therefore, as proposed,
for this final rule with comment period, the national unadjusted
payment rate for most APCs contained in Addendum A to this final rule
with comment period and for most HCPCS codes to which separate payment
under the OPPS has been assigned in Addendum B to this final rule with
comment period was calculated by multiplying the CY 2011 scaled weight
for the APC by the CY 2011 conversion factor.
We note that section 1833(t)(17) of the Act, which applies to
hospitals as defined under section 1886(d)(1)(B) of the Act, requires
that hospitals that fail to submit data required to be submitted on
quality measures selected by the Secretary, in the form and manner and
at a time specified by the Secretary, incur a 2.0 percentage point
reduction to their OPD fee schedule increase factor, that is, the
annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that apply to certain outpatient items and services provided by
hospitals that are required to report outpatient quality data and that
fail to meet the Hospital Outpatient Quality Data Reporting Program
(HOP QDRP) requirements. For further discussion of the payment
reduction for hospitals that fail to meet the requirements of the HOP
QDRP, we refer readers to section XVI.C. of this final rule with
comment period.
We demonstrate in the steps below how to determine the APC payments
that will be made in a calendar year under the OPPS to a hospital that
fulfills the HOP QDRP requirements and to a hospital that fails to meet
the HOP QDRP requirements for a service that has any of the following
status indicator assignments: ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,''
``S,'' ``T,'' ``U,'' ``V,'' or ``X'' (as defined in Addendum D1 to this
final rule with comment period), in a circumstance in which the
multiple procedure discount does not apply, the procedure is not
bilateral, and conditionally packaged services (status indicator of
``Q1'' and ``Q2'') qualify for separate payment. We note that, although
blood and blood products with status indicator ``R'' and brachytherapy
sources with status indicator ``U'' are not subject to wage adjustment,
they are subject to reduced payments when a hospital fails to meet the
HOP QDRP requirements.
Individual providers interested in calculating the payment amount
that they would receive for a specific service from the national
unadjusted payment rates presented in Addenda A and B to this final
rule with comment period should follow the formulas presented in the
following steps. For purposes of the payment calculations below, we
refer to the national unadjusted payment rate for hospitals that meet
the requirements of the HOP QDRP as the ``full'' national unadjusted
payment rate. We refer to the national unadjusted payment rate for
hospitals that fail to meet the requirements of the HOP QDRP as the
``reduced'' national unadjusted payment rate. The reduced national
unadjusted payment rate is calculated by multiplying the reporting
ratio of 0.980 times the ``full'' national unadjusted payment rate. The
national unadjusted payment rate used in the calculations below is
either the full national unadjusted payment rate or the reduced
national unadjusted payment rate, depending on whether the hospital met
its HOP QDRP requirements in order to receive the full CY 2011 OPPS
increase factor.
Step 1. Calculate 60 percent (the labor-related portion) of the
proposed national unadjusted payment rate. Since the initial
implementation of the OPPS, we have used 60 percent to represent our
estimate of that portion of costs attributable, on average, to labor.
We refer readers to the April 7, 2000 OPPS final rule with comment
period (65 FR 18496 through 18497) for a detailed discussion of how we
derived this percentage. We confirmed that this labor-related share for
hospital outpatient services is still appropriate during our regression
analysis for the payment adjustment for rural hospitals in the CY 2006
OPPS final rule with comment period (70 FR 68553).
The formula below is a mathematical representation of Step 1 and
identifies the labor-related portion of a specific payment rate for a
specific service.

X is the labor-related portion of the national unadjusted payment rate.
X = .60 * (national unadjusted payment rate)

Step 2. Determine the wage index area in which the hospital is
located and identify the wage index level that applies to the specific
hospital. The wage index values assigned to each area reflect the
geographic statistical areas (which are based upon OMB standards) to
which hospitals are assigned for FY 2011 under the IPPS,
reclassifications through the MGCRB, section 1886(d)(8)(B) ``Lugar''
hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as
defined in Sec. 412.103 of the regulations, and hospitals designated
as urban under section 601(g) of Public Law 98-21. We note that the
reclassifications of hospitals under section 508 of Public Law 108-173,
as extended by section 3137 of the Affordable Care Act, expired on
September 30, 2010, and, therefore, are not applicable under the IPPS
for FY 2011. Therefore, these reclassifications will not apply to the
CY 2011 OPPS. (For further discussion of the changes to the FY 2011
IPPS wage indices, as applied to the CY 2011 OPPS, we refer readers to
section II.C. of this final rule with comment period.) In section II.C.
of this final rule with comment period, we also discuss our
implementation of section 10324 of the Affordable Care Act, which
establishes a wage index floor of 1.00 for frontier States, effective
for services furnished on and after January 1, 2011.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of Public Law
108-173. Addendum L to this final rule with comment period contains the
qualifying counties and the associated wage index increase developed
for the FY 2011 IPPS and published as Table 4J in the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50450 through 50646). This step is to be followed
only if the hospital is not reclassified or redesignated under section
1886(d)(8) or section 1886(d)(10) of the Act.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4 and
adjusts the

[[Page 71891]]

labor-related portion of the national payment rate for the specific
service by the wage index.

Xa is the labor-related portion of the national unadjusted payment rate
(wage adjusted).
Xa = .60 * (national unadjusted payment rate) * applicable wage index.

Step 5. Calculate 40 percent (the nonlabor-related portion) of the
national unadjusted payment rate and add that amount to the resulting
product of Step 4. The result is the wage index adjusted payment rate
for the relevant wage index area.
The formula below is a mathematical representation of Step 5 and
calculates the remaining portion of the national payment rate, the
amount not attributable to labor, and the adjusted payment for the
specific service.

Y is the nonlabor-related portion of the national unadjusted payment
rate.
Y = .40 * (national unadjusted payment rate)
Adjusted Medicare Payment = Y + Xa

Step 6. If a provider is a SCH, set forth in the regulations at
Sec. 412.92, or an EACH, which is considered to be a SCH under section
1886(d)(5)(D)(iii)(III) of the Act, and located in a rural area, as
defined in Sec. 412.64(b), or is treated as being located in a rural
area under Sec. 412.103, multiply the wage index adjusted payment rate
by 1.071 to calculate the total payment.
The formula below is a mathematical representation of Step 6 and
applies the rural adjustment for rural SCHs.

Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment *
1.071

We have provided examples below of the calculation of both the full
and reduced national unadjusted payment rates that will apply to
certain outpatient items and services performed by hospitals that meet
and that fail to meet the HOP QDRP requirements, using the steps
outlined above. For purposes of this example, we use a provider that is
located in Brooklyn, New York that is assigned to CBSA 35644. This
provider bills one service that is assigned to APC 0019 (Level I
Excision/Biopsy). The CY 2011 full national unadjusted payment rate for
APC 0019 is $350.49. The reduced national unadjusted payment rate for a
hospital that fails to meet the HOP QDRP requirements is $343.48. This
reduced rate is calculated by multiplying the reporting ratio of 0.980
by the full unadjusted payment rate for APC 0019.
The FY 2011 wage index for a provider located in CBSA 35644 in New
York is 1.3122. The labor-related portion of the full national
unadjusted payment is $275.95 (.60 * $350.49 * 1.3122). The labor-
related portion of the reduced national unadjusted payment is $270.43
(.60 * $343.48 * 1.3122). The nonlabor-related portion of the full
national unadjusted payment is $140.20 (.40 * $350.49). The nonlabor-
related portion of the reduced national unadjusted payment is $137.39
(.40 * $343.48). The sum of the labor-related and nonlabor-related
portions of the full national adjusted payment is $416.15 ($275.95 +
$140.19). The sum of the reduced national adjusted payment is $407.82
($270.43 + $137.39).

I. Beneficiary Copayments

1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining the unadjusted copayment amounts to be paid by
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of
the Act specifies that the Secretary must reduce the national
unadjusted copayment amount for a covered OPD service (or group of such
services) furnished in a year in a manner so that the effective
copayment rate (determined on a national unadjusted basis) for that
service in the year does not exceed a specified percentage. As
specified in section 1833(t)(8)(C)(ii)(V) of the Act, for all services
paid under the OPPS in CY 2010, and in calendar years thereafter, the
percentage is 40 percent of the APC payment rate.
Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered
OPD service (or group of such services) furnished in a year, the
national unadjusted copayment amount cannot be less than 20 percent of
the OPD fee schedule amount. Until CY 2011, sections 1834(d)(2)(C)(ii)
and 1834(d)(3)(C)(ii) of the Act further require that the copayment for
screening flexible sigmoidoscopies and screening colonoscopies be equal
to 25 percent of the payment amount. Since the beginning of the OPPS,
we have applied the 25 percent copayment to screening flexible
sigmoidoscopies and screening colonoscopies. However, section 4104 of
the Affordable Care Act eliminated the coinsurance (to which section
1833(t)(2)(B) refers as the ``copayment'') for preventive services that
meet certain requirements, including flexible sigmoidoscopies and
screening colonscopies, and waived the Part B deductible for screening
colonoscopies that become diagnostic during the procedure. We discuss
our implementation of this provision in section XII.B. of this final
rule with comment period.
2. OPPS Copayment Policy
In the CY 2011 OPPS/ASC proposed rule, for CY 2011, we proposed to
determine copayment amounts for new and revised APCs using the same
methodology that we implemented beginning in CY 2004. (We refer readers
to the November 7, 2003 OPPS final rule with comment period (68 FR
63458).) In addition, we proposed to use the same standard rounding
principles that we have historically used in instances where the
application of our standard copayment methodology would result in a
copayment amount that is less than 20 percent and cannot be rounded,
under standard rounding principles, to 20 percent. (We refer readers to
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in
which we discuss our rationale for applying these rounding principles.)
The national unadjusted copayment amounts for services payable under
the OPPS that will be effective January 1, 2011, are shown in Addenda A
and B to this final rule with comment period. As discussed in section
XVI.D. of this final rule with comment period, for CY 2011, the
Medicare beneficiary's minimum unadjusted copayment and national
unadjusted copayment for a service to which a reduced national
unadjusted payment rate applies would equal the product of the
reporting ratio and the national unadjusted copayment, or the product
of the reporting ratio and the minimum unadjusted copayment,
respectively, for the service.
We did not receive any public comments regarding the proposed
methodology for calculating copayments for CY 2011. Therefore, for the
reasons set forth in the proposed rule (74 FR 46240), we are finalizing
our CY 2011 copayment amounts without modification. We note that we
received comments on the copayments that would apply to beneficiaries
who receive services from dedicated cancer hospitals under our proposal
to provide an adjustment to payments to these hospitals. Those
copayment-related public comments are discussed in section II.F of this
final rule with comment period.
3. Calculation of an Adjusted Copayment Amount for an APC Group
Individuals interested in calculating the national copayment
liability for a Medicare beneficiary for a given service provided by a
hospital that met or failed to meet its HOP QDRP requirements should
follow the formulas presented in the following steps.

[[Page 71892]]

Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its payment rate.
For example, using APC 0019, $70.10 is 20 percent of the full national
unadjusted payment rate of $350.49. For APCs with only a minimum
unadjusted copayment in Addendum A and B of this final rule with
comment period, the beneficiary payment percentage is 20 percent.
The formula below is a mathematical representation of Step 1 and
calculates national copayment as a percentage of national payment for a
given service.

B is the beneficiary payment percentage.
B = National unadjusted copayment for APC/national unadjusted payment
rate for APC

Step 2. Calculate the appropriate wage-adjusted payment rate for
the APC for the provider in question, as indicated in Steps 2 through 4
under section II.H. of this final rule with comment period. Calculate
the rural adjustment for eligible providers as indicated in Step 6
under section II.H. of this final rule with comment period.
Step 3. Multiply the percentage calculated in Step 1 by the payment
rate calculated in Step 2. The result is the wage-adjusted copayment
amount for the APC.
The formula below is a mathematical representation of Step 3 and
applies the beneficiary percentage to the adjusted payment rate for a
service calculated under section II.H. of this final rule with comment
period, with and without the rural adjustment, to calculate the
adjusted beneficiary copayment for a given service.

Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment
* B
Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted
Medicare Payment * 1.071) * B

Step 4. For a hospital that failed to meet its HOP QDRP
requirements, multiply the copayment calculated in Step 3 by the
reporting ratio of 0.980.
The unadjusted copayments for services payable under the OPPS that
are effective January 1, 2011, are shown in Addenda A and B to this
final rule with comment period. We note that the national unadjusted
payment rates and copayment rates shown in Addenda A and B to this
final rule with comment period reflect the full market basket
conversion factor increase, as discussed in section XVI.D. of this
final rule with comment period.

III. OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New HCPCS and CPT Codes

CPT and Level II HCPCS codes are used to report procedures,
services, items, and supplies under the hospital OPPS. Specifically,
CMS recognizes the following codes on OPPS claims: (1) Category I CPT
codes, which describe medical services and procedures; (2) Category III
CPT codes, which describe new and emerging technologies, services, and
procedures; and (3) Level II HCPCS codes, which are used primarily to
identify products, supplies, temporary procedures, and services not
described by CPT codes. CPT codes are established by the American
Medical Association (AMA) and the Level II HCPCS codes are established
by the CMS HCPCS Workgroup. These codes are updated and changed
throughout the year. CPT and HCPCS code changes that affect the OPPS
are published both through the annual rulemaking cycle and through the
OPPS quarterly update Change Requests (CRs). CMS releases new Level II
HCPCS codes to the public or recognizes the release of new CPT codes by
the AMA and makes these codes effective (that is, the codes can be
reported on Medicare claims) outside of the formal rulemaking process
via OPPS quarterly update CRs. This quarterly process offers hospitals
access to codes that may more accurately describe items or services
furnished and/or provides payment or more accurate payment for these
items or services in a timelier manner than if CMS waited for the
annual rulemaking process. We solicit comments on these new codes and
finalize our proposals related to these codes through our annual
rulemaking process. In the CY 2011 OPPS/ASC proposed rule (75 FR 46241
through 46246, we summarized and sought public comments on our process
for updating codes as well as our proposed treatment of certain codes.
As we proposed, in Table 17 below, using the April 1, 2010 through
January 1, 2011 time period, we summarize our process for updating
codes through our OPPS quarterly update CRs, seeking public comments,
and finalizing their treatment under the OPPS. We note that because of
the timing of the publication of the proposed rule, the codes
implemented through the July 2010 OPPS quarterly update were not
included in Addendum B but were listed in Table 14 of the proposed rule
(75 FR 46243), while those codes based upon the April 2010 OPPS
quarterly update were included in Addendum B.

Table 17--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
OPPS quarterly update CR Type of code Effective date Comments sought When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2010................... Level II HCPCS April 1, 2010..... CY 2011 OPPS/ASC CY 2011 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
July 1, 2010.................... Level II HCPCS July 1, 2010...... CY 2011 OPPS/ASC CY 2011 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
Category I July 1, 2010...... CY 2011 OPPS/ASC CY 2011 OPPS/ASC
(certain vaccine proposed rule. final rule with
codes) and III comment period.
CPT codes.
October 1, 2010................. Level II HCPCS October 1, 2010... CY 2011 OPPS/ASC CY 2012 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
January 1, 2011................. Level II HCPCS January 1, 2011... CY 2011 OPPS/ASC CY 2012 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
Category I and III January 1, 2011... CY 2011 OPPS/ASC CY 2012 OPPS/ASC
CPT Codes. final rule with final rule with
comment period. comment period.
----------------------------------------------------------------------------------------------------------------

[[Page 71893]]

This process is discussed in detail below. We have separated our
discussion into two sections based on whether we proposed to solicit
public comments in the CY 2011 OPPS/ASC proposed rule or are soliciting
public comments in this CY 2011 OPPS/ASC final rule with comment
period. In the CY 2011 OPPS/ASC proposed rule, we noted that we sought
public comments in the CY 2010 OPPS/ASC final rule with comment period
on the new CPT and Level II HCPCS codes that were effective January 1,
2010. We also sought public comments in the CY 2010 OPPS/ASC final rule
with comment period on the new Level II HCPCS codes effective October
1, 2009. These new codes with an effective date of October 1, 2009, or
January 1, 2010, were flagged with comment indicator ``NI'' (New code,
interim APC assignment; comments will be accepted on the interim APC
assignment for the new code) in Addendum B to the CY 2010 OPPS/ASC
final rule with comment period to indicate that we were assigning them
an interim payment status and an APC and payment rate, if applicable,
which were subject to public comment following publication of the CY
2010 OPPS/ASC final rule with comment period. We received public
comments on the interim APC assignments for CPT codes 63663 (Revision
including replacement, when performed, of spinal neurostimulator
electrode percutaneous array(s), including fluoroscopy, when
performed), 63664 (Revision including replacement, when performed, of
spinal neurostimulator electrode plate/paddle(s) placed via laminotomy
or laminectomy, including fluoroscopy, when performed), 75571 (Computed
tomography, heart, without contrast material, with quantitative
evaluation of coronary calcium), and 77338 (Multi-leaf collimator (MLC)
device(s) for intensity modulated radiation therapy (IMRT), design and
construction per IMRT plan) in the CY 2010 OPPS/ASC final rule with
comment period. These codes were assigned to comment indicator ``NI''
in that final rule with comment period. We note that we also received
the same comments for these codes from the CY 2011 OPPS/ASC proposed
rule, and a summary of the comments and our responses with our
discussion of our final treatment of these CPT codes can be found in
section III.D. of this final rule with comment period.
1. Treatment of New Level II HCPCS Codes and Category I CPT Vaccine
Codes and Category III CPT Codes for Which We Solicited Public Comments
in the CY 2011 Proposed Rule
As of April 1 and July 1 of CY 2010, we made effective a total of
22 new Level II HCPCS codes, 4 new Category I CPT vaccine codes, and 11
new Category III CPT codes that were not addressed in the CY 2010 OPPS/
ASC final rule with comment period that updated the OPPS. Twenty-two
new Level II HCPCS codes were effective for the April and July 2010
updates, and of the 22 new HCPCS codes, a total of 14 Level II HCPCS
codes were newly recognized for separate payment under the OPPS.
Through the April 2010 OPPS quarterly update CR (Transmittal 1924,
Change Request 6857, dated February 26, 2010), we allowed separate
payment for a total of 6 of the 22 Level II HCPCS codes. Specifically,
as displayed in Table 18 below, these included HCPCS codes C9258
(Injection, telavancin, 10 mg), C9259 (Injection, pralatrexate, 1 mg),
C9260 (Injection, ofatumumab, 10 mg), C9261 (Injection, ustekinumab, 1
mg), C9262 (Fludarabine phosphate, oral, 1 mg), and C9263 (Injection,
ecallantide, 1 mg).
In addition to the six HCPCS C-codes, five new HCPCS G-codes were
made effective on April 1, 2010. We did not recognize the five new
HCPCS G-codes for separate payment under the OPPS because they were
either paid under another Medicare payment system or were noncovered
services under Medicare. Specifically, we assigned HCPCS codes G0432
(Infectious agent antigen detection by enzyme immunoassay (EIA)
technique, qualitative or semi-quantitative, multiple-step method, HIV-
1 or HIV-2, screening), G0433 (Infectious agent antigen detection by
enzyme-linked immunosorbent assay (ELISA) technique, antibody, HIV-1 or
HIV-2, screening), G0435 (Infectious agent antigen detection by rapid
antibody test of oral mucosa transudate, HIV-1 or HIV-2, screening),
and G9143 (Warfarin responsiveness testing by genetic technique using
any method, any number of specimen(s)), to status indicator ``A'' (Not
paid under OPPS. Paid by fiscal intermediaries/MACs under a fee
schedule or payment system other than OPPS) to indicate that these
services are paid under the Medicare Clinical Laboratory Fee Schedule
(CLFS). Further, we did not recognize for separate payment HCPCS code
G9147 (Outpatient Intravenous Insulin Treatment (OIVIT) and assigned it
to status indicator ``E'' (Not paid by Medicare when submitted on
outpatient claims (any outpatient bill type)) because this service is
nationally a noncovered service under Medicare.
In the CY 2011 OPPS/ASC proposed rule, we solicited public comments
on the status indicators and APC assignments of the 11 Level II HCPCS
codes, which were listed in Table 13 of that proposed rule (75 FR
46242) and now appear in Table 18 of this final rule with comment
period.
We did not receive any public comments on the proposed APC
assignments and status indicators for the 11 Level II HCPCS codes
included in Table 13 of the proposed rule. However, for CY 2011, the
HCPCS Workgroup replaced the five of the six HCPCS C-codes with
permanent HCPCS J-codes. Specifically, HCPCS code C9258 was replaced
with HCPCS code J3095 (Injection, telavancin, 10 mg); HCPCS code C9259
with HCPCS code J9307 (Injection, pralatrexate, 1 mg); HCPCS code C9260
with HCPCS code J9302 (Injection, ofatumumab, 10 mg); HCPCS code C9261
with HCPCS code J3357 (Injection, ustekinumab, 1 mg); and HCPCS code
C9263 with HCPCS code J1290 (Injection, ecallantide, 1 mg). We also
note that HCPCS code C9262 was deleted on June 30, 2010, and replaced
with HCPCS code Q2025 (Fludarabine phosphate oral, 1 mg) effective July
1, 2010. Finally, for the CY 2011 update, the HCPCS Workgroup deleted
HCPCS code Q2025 and replaced it with HCPCS code J8562 (Fludarabine
phosphate oral, 10 mg) effective January 1, 2011.
Consistent with our general policy of streamlining coding by using
permanent HCPCS codes if appropriate rather than HCPCS C-codes for the
reporting of drugs under the OPPS, we are showing the replacement HCPCS
J-codes for the same descriptor in Table 18 that replace the HCPCS C-
codes first implemented in April 2010, effective January 1, 2011. With
the exception of HCPCS code C9262, which was deleted June 30, 2010, all
five HCPCS C-codes will be deleted on December 31, 2010. Because HCPCS
codes C9258, C9259, C9260, C9261, and C9263 describe the same drugs and
the same dosages currently designated by HCPCS codes J3095, J9307,
J9302, J3357, and J1290, respectively, these drugs will continue their
pass-through status in CY 2011. Therefore, we are assigning HCPCS codes
J3095, J9307, J9302, J3357, and J1290 to the same status indicators and
APCs as their predecessor C-codes, as shown in Table 18.
We did not receive any public comments on the new Level II HCPCS

[[Page 71894]]

codes that were implemented in April 2010. Therefore, as discussed in
the CY 2011 OPPS/ASC proposed rule (75 FR 46242), we are adopting as
final for CY 2011, without modification, our proposal to assign the
Level II HCPCS codes listed in Table 18 to the specific APCs and status
indicators set forth in the CY 2011 OPPS/ASC proposed rule. Table 18
below shows the final APC and status indicator assignments for all 11
Level II HCPCS codes.

Table 18--Level II HCPCS Codes With a Change in OPPS Status Indicator or Newly Implemented in April 2010
----------------------------------------------------------------------------------------------------------------
Final CY 2011
CY 2011 HCPCS Code CY 2010 HCPCS CY 2011 Long descriptor Status Final CY 2011
Code Indicator APC
----------------------------------------------------------------------------------------------------------------
J3095.......................... C9258 Injection, telavancin, 10 mg.. G 9258
J9307.......................... C9259 Injection, pralatrexate, 1 mg. G 9259
J9302.......................... C9260 Injection, ofatumumab, 10 mg.. G 9260
J3357.......................... C9261 Injection, ustekinumab, 1 mg.. G 9261
J8562.......................... C9262 Fludarabine phosphate, oral, G 1339
10 mg.
J1290.......................... C9263 Injection, ecallantide, 1 mg.. G 9263
G0432.......................... G0432 Infectious agent antibody A NA
detection by enzyme
immunoassay (EIA) technique,
qualitative or
semiquantitative, multiple-
step method, HIV-1 or HIV-2,
screening.
G0433.......................... G0433 Infectious agent antibody A NA
detection by enzyme-linked
immunosorbent assay (ELISA)
technique, antibody, HIV-1 or
HIV-2, screening.
G0435.......................... G0435 Infectious agent detection by A NA
rapid antibody test of oral
mucosa transudate, HIV-1 or
HIV-2, screening.
G9143.......................... G9143 Warfarin responsiveness A NA
testing by genetic technique
using any method, any number
of specimen(s).
G9147.......................... G9147 Outpatient Intravenous Insulin E NA
Treatment (OIVIT) either
pulsatile or continuous, by
any means, guided by the
results of measurements for:
respiratory quotient; and/or,
urine urea nitrogen (UUN);
and/or, arterial, venous or
capillary glucose; and/or
potassium concentration.
----------------------------------------------------------------------------------------------------------------
* Level II HCPCS code C9262 was deleted June 30, 2010, and replaced with HCPCS code Q2025 effective July 1,
2010. Level II HCPCS code Q2025 will be deleted on December 31, 2010, and replaced with HCPCS code J8562
effective January 1, 2011.

Through the July 2010 OPPS quarterly update CR (Transmittal 1980,
Change Request 6996, dated June 4, 2010), which included HCPCS codes
that were made effective July 1, 2010, we allowed separate payment for
8 of the 22 new Level II HCPCS codes. Specifically, as displayed in
Table 14 of the proposed rule, we provided separate payment for HCPCS
codes C9264 (Injection, tocilizumab, 1 mg), C9265 (Injection,
romidepsin, 1 mg), C9266 (Injection, collagenase clostridium
histolyticum, 0.1 mg), C9267 (Injection, von Willebrand factor complex
(human), Wilate, per 100 IU VWF: RCO), C9268 (Capsaicin, patch, 10cm2),
C9367 (Skin substitute, Endoform Dermal Template, per square
centimeter), Q2025 (Fludarabine phosphate oral, 10mg), and C9800
(Dermal injection procedure(s) for facial lipodystrophy syndrome (LDS)
and provision of Radiesse or Sculptra dermal filler, including all
items and supplies).
We note that HCPCS code C9262 was made effective April 1, 2010, and
deleted June 30, 2010, when it was replaced with HCPCS code Q2025. As
discussed in section V.A.3. of the CY 2011 OPPS/ASC proposed rule,
pass-through status began for this drug on April 1, 2010. Because HCPCS
code Q2025 describes the same drug as HCPCS code C9262, we are
continuing its pass-through status and assigning the HCPCS Q-code to
the same APC and status indicator as its predecessor HCPCS C-code, as
shown in Table 19. Specifically, HCPCS code Q2025 is assigned to APC
9262 with a status indicator ``G.''
Of the 12 HCPCS codes that were made effective July 1, 2010, we did
not recognize 4 HCPCS codes for separate payment. Specifically, we did
not recognize HCPCS codes G0428 (Collagen Meniscus Implant procedure
for filling meniscal defects (e.g., CMI, collagen scaffold, Menaflex)),
G0429 (Dermal filler injection(s) for the treatment of facial
lipodystrophy syndrome (LDS) (e.g., as a result of highly active
antiretroviral therapy), Q2026 (Injection, Radiesse, 0.1 ml), and Q2027
(Injection, Sculptra, 0.1 ml). Under the hospital OPPS, we have
assigned HCPCS code G0428 to status indicator ``E'' (Not paid by
Medicare when submitted on outpatient claims (any outpatient bill
type)) because this service is nationally noncovered by Medicare.
Further, because HCPCS code C9800 describes both the injection
procedure and the dermal filler supplies, we have assigned HCPCS codes
G0429, Q2026, and Q2027 to status indicator ``B'' to indicate that
these HCPCS codes are not recognized by OPPS when submitted on an
outpatient hospital Part B bill type 12x and 13x. Specifically,
hospitals must report HCPCS code C9800 to report the dermal filler
supplies and the dermal filler injection procedure. Under the hospital
OPPS, we have assigned HCPCS code C9800 to APC 0135 with a status
indicator ``T.''
Comment: One commenter stated that the proposed payment rate for
HCPCS code C9800 does not cover the cost of Sculptra. The commenter
requested that CMS reevaluate the proposed payment rate for HCPCS code
C9800 to ensure that it covers a hospital's acquisition cost and that
Medicare provide access to this nationally covered therapy. The
commenter provided no pricing information for Sculptra or other
supplies used in this procedure.
Response: The payment rate for HCPCS code C9800 for CY 2011
includes both the administration of the dermal fillers as well as the
dermal filler supplies. We further stated in the CY 2011 OPPS/ASC
proposed rule (75 FR 46242) that because the payment for HCPCS code
C9800 includes both the injection procedure and the dermal filler
supplies, we have assigned HCPCS codes G0429, Q2026, and Q2027 to
indicator ``B'' to indicate that these HCPCS codes are not recognized
by OPPS when submitted on a hospital outpatient Part B bill types 12x
and 13x.

[[Page 71895]]

Specifically, hospital outpatient facilities must use HCPCS code C9800
to report dermal filler supplies and the dermal filler injection
procedure. Although there are two HCPCS codes that describe dermal
filler supplies, specifically, HCPCS codes Q2026 for Radiesse and Q2027
for Sculptra, CMS has not received ASP pricing for these two products.
Under the OPPS, there is no provision to contractor-price drugs and
biologicals, and without ASP information, we could not recognize the Q-
codes for separate payment. We will reevaluate the status indicator
assignments for the HCPCS codes that describe dermal injection
procedure(s) for facial lipodystrophy syndrome (LDS) once we receive
ASP information for the dermal filler supplies. That is, we will
reevaluate the APC and status indicator assignments for HCPCS codes
C9800, G0429, Q2026, and Q20207.
Also, it should be noted that with all new codes for which we lack
pricing information, our policy has been to assign the service to an
existing APC based on input from a variety of sources, including, but
not limited to, review of the clinical similarity of the service to
existing procedures; input from CMS medical advisors; information from
interested specialty societies; and review of all other information
available to us. The OPPS is a prospective payment system that provides
payment for groups of services that share clinical and resource use
characteristics. Based on our review, we believe that the service
described by HCPCS code C9800 shares similar resource and clinical
characteristics to the procedures included in APC 0135 (Level III Skin
Repair). Although we currently do not have ASP information for the
dermal filler supplies, we believe that the service is appropriately
placed in APC 0135 based on the latest available information that we
have. We believe that the service described by HCPCS code C9800 is
analogous to those services currently assigned to APC 0135 because
HCPCS code C9800 and the procedures listed in this APC relate to
procedures involving the skin, and HCPCS code C8900 and other
procedures in this APC involve injection(s) into the dermal layers.
Therefore, after consideration of the public comment we received,
we are adopting as final, without modification, our proposal to
continue to assign HCPCS code C9800 to APC 0135, which has a final CY
2011 APC median cost of approximately $316.
We did not receive any public comments on the other proposed APC
assignments and status indicators for the other 11 Level II HCPCS codes
listed in Table 14 of the CY 2011 OPPS/ASC proposed rule. However, for
CY 2011, the HCPCS Workgroup replaced the six HCPCS C-codes with
permanent HCPCS J-codes. Specifically, HCPCS code C9264 was replaced
with HCPCS code J3262 (Injection, tocilizumab, 1 mg); HCPCS code C9265
was replaced with HCPCS code J9315 (Injection, romidepsin, 1 mg); HCPCS
code C9266 was replaced with HCPCS code J0775 (Injection, collagenase
clostridium histolyticum, 0.01 mg); HCPCS code C9267 was replaced with
HCPCS code J7184 (Injection, von Willebrand factor complex (human),
Wilate, per 100 IU VWF: RCO); HCPCS code C9268 was replaced with J7335
(Capsaicin 8% patch, per 10 square centimeters); and HCPCS code Q2025
(previously described as HCPCS code C9262) was replaced with HCPCS code
J8562 (Fludarabine phosphate oral, 10 mg).
Consistent with our general policy of using permanent HCPCS codes
if appropriate rather than HCPCS C-codes for the reporting of drugs
under the OPPS in order to streamline coding, we are showing the
replacement HCPCS J-codes in Table 19 that will replace the HCPCS C-
codes, effective January 1, 2011. Because HCPCS codes C9264, C9265,
C9267, and C9268 describe the same drugs and the same dosages currently
designated by HCPCS codes J3262, J9315, J7184, and J7335, respectively,
these drugs will continue their pass-through status in CY 2011.
Therefore, we are assigning HCPCS codes J3262, J9315, J7184, and J7335
to the same status indicators and APCs as their predecessor C-codes, as
shown in Table 19. We note that replacement codes for HCPCS codes C9266
and Q2025 do not describe the same dosage descriptors, and
consequently, the replacement HCPCS codes will be given new APCs.
Specifically, HCPCS code C9266 describes a dosage descriptor of 0.1 mg,
however, its replacement HCPCS code J0775 describes a dosage descriptor
of 0.01 mg. Similarly, HCPCS code Q2025 describes a dosage descriptor
of 1 mg; however, its replacement HCPCS code J8562 describes a dosage
descriptor of 10 mg. For CY 2011, HCPCS codes J0775 and J8562 are
assigned to APC 1340 and APC 1339, respectively. Because their
predecessor codes were assigned to pass-through status, both HCPCS
codes J0775 and J8562 continue to be assigned to status indicator ``G''
for CY 2011. We note that we generally assign only one APC to those
HCPCS codes that describe separately payable drugs, and maintain that
same APC when there is no change to the dosage descriptor of a HCPCS
drug code. Alternatively, when there is a change to the dosage
descriptor, we will reassign the separately payable HCPCS drug code to
a new APC to maintain data consistency for future rulemaking.
After consideration of the public comment that we received, we are
adopting as final, without modification, our proposal to assign the
Level II HCPCS codes listed in Table 19 to the APCs and status
indicators as proposed for CY 2011. Table 19 below includes a complete
list of the HCPCS codes that were made effective July 1, 2010, with
their status indicators and APC assignment for CY 2011.

Table 19--New Level II HCPCS Codes Implemented in July 2010
----------------------------------------------------------------------------------------------------------------
Final CY 2011
CY 2011 HCPCS Code CY 2010 HCPCS CY 2011 Long descriptor status Final CY 2011
Code indicator APC
----------------------------------------------------------------------------------------------------------------
J3262.......................... C9264 Injection, tocilizumab, 1 mg.. G 9264
J9315.......................... C9265 Injection, romidepsin, 1 mg... G 9265
J0775.......................... C9266 Injection, collagenase G 1340
clostridium histolyticum,
0.01 mg.
J7184.......................... C9267 Injection, von Willebrand G 9267
factor complex (human),
Wilate, per 100 IU VWF: RCO.
J7335.......................... C9268 Capsaicin 8% patch, per 10 G 9268
square centimeters.
C9367.......................... C9367 Skin substitute, Endoform G 9367
Dermal Template, per square
centimeter.
C9800.......................... C9800 Dermal injection procedure(s) T 0135
for facial lipodystrophy
syndrome (LDS) and provision
of Radiesse or Sculptra
dermal filler, including all
items and supplies.

[[Page 71896]]

G0428.......................... G0428 Collagen meniscus implant E NA
procedure for filling
meniscal defects (e.g., CMI,
collagen scaffold, Menaflex).
G0429.......................... G0429 Dermal filler injection(s) for B NA
the treatment of facial
lipodystrophy syndrome (LDS)
(e.g., as a result of highly
active antiretroviral
therapy).
J8562.......................... Q2025 Fludarabine phosphate oral, 10 G 1339
mg.
Q2026.......................... Q2026 Injection, Radiesse, 0.1 ml... B NA
Q2027.......................... Q2027 Injection, Sculptra, 0.1 ml... B NA
----------------------------------------------------------------------------------------------------------------

For CY 2011, we proposed to continue our established policy of
recognizing Category I CPT vaccine codes for which FDA approval is
imminent and Category III CPT codes that the AMA releases in January of
each year for implementation in July through the OPPS quarterly update
process. Under the OPPS, Category I vaccine codes and Category III CPT
codes that are released on the AMA Web site in January are made
effective in July of the same year through the July quarterly update
CR, consistent with the AMA's implementation date for the codes.
Through the July 2010 OPPS quarterly update CR, we allowed separate
payment for 10 of the 11 new Category III CPT codes effective July 1,
2010. Specifically, as displayed in Table 15 of the proposed rule, we
allow separate payment for CPT codes 0223T (Acoustic cardiography,
including automated analysis of combined acoustic and electrical
intervals; single, with interpretation and report), 0224T (Multiple,
including serial trended analysis and limited reprogramming of device
parameter--AV or VV delays only, with interpretation and report), 0225T
(Multiple, including serial trended analysis and limited reprogramming
of device parameter--AV and VV delays, with interpretation and report),
0226T (Anoscopy, high resolution (HRA) (with magnification and chemical
agent enhancement); diagnostic, including collection of specimen(s) by
brushing or washing when performed), 0227T (Anoscopy, high resolution
(HRA) (with magnification and chemical agent enhancement); with
biopsy(ies)), 0228T (Injection(s), anesthetic agent and/or steroid,
transforaminal epidural, with ultrasound guidance, cervical or
thoracic; single level), 0229T (Injection(s), anesthetic agent and/or
steroid, transforaminal epidural, with ultrasound guidance, cervical or
thoracic; each additional level (List separately in addition to code
for primary procedure)), 0230T (Injection(s), anesthetic agent and/or
steroid, transforaminal epidural, with ultrasound guidance, lumbar or
sacral; single level), 0231T (Injection(s), anesthetic agent and/or
steroid, transforaminal epidural, with ultrasound guidance, lumbar or
sacral; each additional level (List separately in addition to code for
primary procedure)), and 0232T (Injection(s), platelet rich plasma, any
tissue, including image guidance, harvesting and preparation when
performed). We note that CMS has issued a national coverage
determination (NCD) of noncoverage specifically for chronic, non-
healing cutaneous wounds and acute surgical wounds when the autologous
platelet rich plasma (PRP) is applied directly to the closed incision
or for dehiscent wounds. Category III CPT code 0232T has been assigned
to APC 0340 to provide a payment amount when payment is appropriate,
both under the NCD provisions and any local coverage determinations.
Under the hospital OPPS, Category III CPT code 0233T (Skin advanced
glycation endproducts (AGE) measurement by multi-wavelength fluorescent
spectroscopy) is not recognized under the hospital OPPS. However, the
service is paid under the MPFS.
Further, CMS does not recognize the four new H1N1 Category I CPT
vaccine codes or the administration code that are effective on July 1,
2010, for separate payment under the OPPS because we already recognize
an existing HCPCS G-code for reporting the H1N1 vaccine, specifically
HCPCS code G9142 (Influenza a (h1n1) vaccine, any route of
administration) and an existing HCPCS G-code G9141 ((Influenza a (h1n1)
immunization administration (includes the physician counseling the
patient/family)) for reporting the administration of that vaccine,
which was effective September 1, 2009. We have assigned HCPCS code
G9142 to status indicator ``E'' under the OPPS because the vaccine is
expected to be free. Consequently, Category I CPT vaccine codes 90470
(H1N1 immunization administration (intramuscular, intranasal),
including counseling when performed), 90664 (Influenza virus vaccine,
pandemic formulation, live, for intranasal use), 90666 (Influenza virus
vaccine, pandemic formulation, split virus, preservative free, for
intramuscular use), 90667 (Influenza virus vaccine, pandemic
formulation, split virus, adjuvanted, for intramuscular use), and 90668
(Influenza virus vaccine, pandemic formulation, split virus, for
intramuscular use), are assigned to status indicator ``E'' (Not paid
under OPPS or any other Medicare payment system). We note that CPT code
90470 was effective September 28, 2009, when it was released by the AMA
on its Web site.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46243 through 46245),
we solicited public comments on the proposed status indicators and the
APC assignments for the new Category I and III CPT codes. We received
public comments on our payment proposal for CPT code 0232T, and our
coding proposal not to recognize the H1N1 CPT codes 90470, 90664,
90666, 90667, and 90668.
Comment: One commenter requested that CMS reevaluate the APC
assignment for CPT code 0232T, which is assigned to APC 0340 (Minor
Ancillary Procedures) with a proposed payment rate of $47.10 for CY
2011, based on additional cost data that may be provided to CMS.
Response: As part of our review for new CPT codes available mid-
year, we examine the APC assignments for all items and services under
the OPPS for appropriate placements in the context of our proposed
policies for the update year. This review involves careful analysis of
data we have available to us, such as the cost of comparable items or
services, as well as input from our medical advisors, the APC Panel,
and recommendations from the public. Based on our analysis of the
service associated with Category III CPT code 0232T, we believe that
APC 0340 is the

[[Page 71897]]

most appropriate assignment based on its clinical and resource
considerations to other procedures currently assigned in APC 0340. When
the CY 2011 claims data become available for future rulemaking, we will
reevaluate the cost of the service described by Category III CPT code
0232T to assess the appropriateness of the structure of APC 0340 and
its payment rate.
Therefore, after consideration of the public comments we received,
we are finalizing our proposal, without modification, to continue to
assign CPT code 0232T to APC 0340, which has a final CY 2011 APC median
cost of approximately $46.
Comment: Several commenters requested that CMS recognize the H1N1
vaccine administration CPT code 90470 and the four H1N1 vaccine CPT
codes, specifically CPT codes 90664, 906606, 90667, and 90668, because
they are more descriptive than the Level II HCPCS codes G9141 and G9142
describing to the same vaccine and its administration. These commenters
stated that it is operationally burdensome for hospitals to report one
code to Medicare and another code to other payers for the same service,
and requested the deletion of the temporary HCPCS codes G9141 and G9142
to enable a single, standard mechanism for reporting these services
across all payers.
Response: While we agree that CPT codes 90470, 90664, 906606,
90667, and 90668 are more descriptive than the Level II HCPCS codes
G9141 and G9142, payment for H1N1 services are not based on specific
formulations of the H1N1 administered to Medicare beneficiaries. The
new CPT codes describe specific formulations of H1N1, which are not
required for Medicare payment. Further, we do not recognize the H1N1
vaccine and administration CPT codes because Medicare already
recognizes two existing Level II HCPCS codes G9141 and G9142 to
describe the H1N1 vaccine and its administration. As we stated in the
October 2009 OPPS update change request (Transmittal 1803, Change
Request 6626), Level II HCPCS codes G9141 and G9142 were made effective
September 1, 2009.
After consideration of the public comments we received, we are
finalizing our proposal, without modification. For CY 2011, we are
continuing our established policy of recognizing Category I CPT vaccine
codes for which FDA approval is imminent and Category III CPT codes
that the AMA releases in January of each year for implementation in
July through the OPPS quarterly update process. Specifically, for CY
2011 under the OPPS, we are recognizing the current HCPCS codes G9141
and G9142 and are not recognizing the H1N1 vaccine and administration
CPT codes 90470, 90664, 90666, 90667, and 90668. Moreover, we are
assigning HCPCS code G9141 to APC 0350, which has a final CY 2011 APC
median cost of approximately $26, and assigning HCPCS code G9142 to
status indicator ``E.'' Table 20 below lists the Category I CPT vaccine
and Category III CPT codes that were implemented in July 2010 for which
we are allowing separate payment, along with their status indicators,
APC assignments, and payment rates for CY 2011.

Table 20--Category I Vaccine and Category III CPT Codes Implemented in
July 2010
------------------------------------------------------------------------
Final CY 2011
CY 2011 CPT Code CY 2011 Long status Final CY 2011
descriptor indicator APC
------------------------------------------------------------------------
0223T............. Acoustic S 0099
cardiography,
including
automated analysis
of combined
acoustic and
electrical
intervals; single,
with
interpretation and
report.
0224T............. Multiple, including S 0690
serial trended
analysis and
limited
reprogramming of
device parameter--
AV or VV delays
only, with
interpretation and
report.
0225T............. Multiple, including S 0690
serial trended
analysis and
limited
reprogramming of
device parameter--
AV and VV delays,
with
interpretation and
report.
0226T............. Anoscopy, high X 0340
resolution (HRA)
(with
magnification and
chemical agent
enhancement);
diagnostic,
including
collection of
specimen(s) by
brushing or
washing when
performed.
0227T............. Anoscopy, high T 0146
resolution (HRA)
(with
magnification and
chemical agent
enhancement); with
biopsy(ies).
0228T............. Injection(s), T 0207
anesthetic agent
and/or steroid,
transforaminal
epidural, with
ultrasound
guidance, cervical
or thoracic;
single level.
0229T............. Injection(s), T 0206
anesthetic agent
and/or steroid,
transforaminal
epidural, with
ultrasound
guidance, cervical
or thoracic; each
additional level
(List separately
in addition to
code for primary
procedure).
0230T............. Injection(s), T 0207
anesthetic agent
and/or steroid,
transforaminal
epidural, with
ultrasound
guidance, lumbar
or sacral; single
level.
0231T............. Injection(s), T 0206
anesthetic agent
and/or steroid,
transforaminal
epidural, with
ultrasound
guidance, lumbar
or sacral; each
additional level
(List separately
in addition to
code for primary
procedure).
0232T............. Injection(s), X 0340
platelet rich
plasma, any
tissue, including
image guidance,
harvesting and
preparation when
performed.
0233T............. Skin advanced A NA
glycation
endproducts (AGE)
measurement by
multi-wavelength
fluorescent
spectroscopy.
90664............. Influenza virus E NA
vaccine, pandemic
formulation, live,
for intranasal use.
90666............. Influenza virus E NA
vaccine, pandemic
formulation, split
virus,
preservative free,
for intramuscular
use.
90667............. Influenza virus E NA
vaccine, pandemic
formulation, split
virus, adjuvanted,
for intramuscular
use.
90668............. Influenza virus E NA
vaccine, pandemic
formulation, split
virus, for
intramuscular use.
------------------------------------------------------------------------

In the CY 2011 OPPS/ASC proposed rule (75 FR 46243 through 46246),
we solicited public comments on the CY 2011 proposed status indicators
and the proposed APC assignments and payment rates, if applicable, for
the Level II HCPCS codes and the Category I vaccine codes and Category
III CPT codes that are newly recognized in April or July 2010 through
the respective OPPS quarterly update CRs. These codes were listed in
Tables 13, 14, and

[[Page 71898]]

15 of the proposed rule. We proposed to finalize their status
indicators and their APC assignments and payment rates, if applicable,
in this CY 2011 OPPS/ASC final rule with comment period. Because the
July 2010 OPPS quarterly update CR is issued close to the publication
of the proposed rule, the Level II HCPCS codes and the Category I
vaccine and Category III CPT codes implemented through the July 2010
OPPS quarterly update CR could not be included in Addendum B to the
proposed rule. These codes are listed in Tables 19 and 20,
respectively, of this final rule with comment period, and are
incorporated into Addendum B to this final rule with comment period,
which is consistent with our annual OPPS update policy. The Level II
HCPCS codes implemented or modified through the April 2010 OPPS update
CR and displayed in Table 18 are included in Addendum B to this final
rule with comment period, where their CY 2011 payment rates also are
shown. We did not receive any additional comment on this process.
Therefore, as we explained in the CY 2011 OPPS/ASC proposed rule (75 FR
46243 through 46246), we are finalizing the status indicators and their
APC assignments and payment rates, if applicable, for Category I
vaccine codes and Category III CPT codes that are newly recognized in
April or July 2010, in this CY 2011 OPPS/ASC final rule with comment
period.
2. Process for New Level II HCPCS Codes and Category I and Category III
CPT Codes for Which We Are Soliciting Public Comments on This CY 2011
OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Category I and III CPT codes and new Level II HCPCS codes that are
effective January 1 in the final rule with comment period updating the
OPPS for the following calendar year. These codes are released to the
public via the CMS HCPCS (for Level II HCPCS codes) and AMA Web sites
(for CPT codes), and also through the January OPPS quarterly update
CRs. In the past, we also have released new Level II HCPCS codes that
are effective October 1 through the October OPPS quarterly update CRs
and incorporated these new codes in the final rule with comment period
updating the OPPS for the following calendar year. All of these codes
are flagged with comment indicator ``NI'' in Addendum B to the OPPS/ASC
final rule with comment period to indicate that we are assigning them
an interim payment status which is subject to public comment.
Specifically, the status indicator and the APC assignment, and payment
rate, if applicable, for all such codes flagged with comment indicator
``NI'' are open to public comment in the final rule with comment
period, and we respond to these comments in the OPPS/ASC final rule
with comment period for the next calendar year's OPPS/ASC update. In
the CY 2011 OPPS/ASC proposed rule (75 FR 46246), we proposed to
continue this process for CY 2011. Specifically, for CY 2011, we
proposed to include in Addendum B to the CY 2011 OPPS/ASC final rule
with comment period the new Category I and III CPT codes effective
January 1, 2011 (including those Category I vaccine and Category III
CPT codes that were released by the AMA in July 2010) that would be
incorporated in the January 2011 OPPS quarterly update CR and the new
Level II HCPCS codes, effective October 1, 2010, or January 1, 2011,
that would be released by CMS in its October 2010 and January 2011 OPPS
quarterly update CRs. As proposed, these codes are flagged with comment
indicator ``NI'' in Addendum B to this CY 2011 OPPS/ASC final rule with
comment period to indicate that we have assigned them an interim OPPS
payment status for CY 2011. Their status indicators and their APC
assignments and payment rates, if applicable, are open to public
comment in this final rule with comment period and will be finalized in
the CY 2012 OPPS/ASC final rule with comment period. We note that the
Category I vaccine and Category III CPT codes that were released by the
AMA in July 2010 that were subject to comment in the CY 2011 OPPS/ASC
proposed rule, and were listed in Table 15, will not be assigned to
comment indicator ``NI'' in Addendum B because comments about these
codes are addressed in this final rule with comment period.
Comment: Some commenters requested that CMS reconsider the timeline
for APC assignments for new CPT and HCPCS codes for which comments are
sought. The commenters indicated that the current schedule has the
potential to produce long gaps of inappropriate payment with no
mechanism for changes over the short term period. One commenter
suggested including the new Category I CPT codes that are approved in
February to be included in the proposed rule to enable interested
parties to comment on the interim payment values before they are
finalized. This commenter further recommended that CMS should be
prepared to implement corrections on a quarterly basis.
Response: With respect to the comment regarding new Category I CPT
codes that are effective in February, we believe the commenter meant
the new Category I CPT codes that are released in late September or
October when the annual CPT code book for the upcoming year are
published that are then implemented in January, which are not discussed
in the proposed rule but are published in the final rule with comment
period. Because the CPT codes for the January 2011 update were not
issued to the public until October 2010 when AMA published the CY 2011
CPT codes, we could not include them in the CY 2011 OPPS/ASC proposed
rule for comment because the proposed rule is published in the summer,
usually several months in advance of the publication of the CPT code
books. Similarly, the Level II HCPCS codes that are made effective in
October are published after the publication of the proposed rule.
Because these codes are released after the publication of the proposed
rule, we do not discuss either the new Category I CPT codes or the
Level II HCPCS codes that are effective for the upcoming January in the
proposed rule, which is published sometime in the summer.
As has been our practice for the past several years, we list the
new Category I CPT codes and the Level II HCPCS codes in the final
rules and flag them with comment indicator ``NI'' (New code, interim
APC assignment; comments will be accepted on the interim APC assignment
for the new code) in Addendum B to indicate that the codes are assigned
to an interim payment status and an APC and payment rate, if
applicable, that is subject to public comment following the publication
of the final rule with comment period. For these new codes, we are only
able to finalize their assignments in another OPPS final rule in order
to allow for the necessary public notice and comment period and to
allow time for CMS to respond to such comments. Therefore, we only
assign HCPCS codes permanently for the year through the annual
regulatory process.
Because we are not able to revise APC and/or status indicator
assignments for the newly implemented HCPCS codes in CY 2010 that are
assigned an interim final status in this CY 2011 OPPS/ASC final rule
with comment period outside of the rulemaking process, the next
available opportunity to update an APC or status indicator for these
codes is in the CY 2012 final rule with comment period. These HCPCS
codes retain their interim final APC and status indicator assignments
for all of CY 2011. Therefore, only in the CY 2012 OPPS/ASC final rule
with comment period will we be able to finalize the APC and/

[[Page 71899]]

or status indicator assignments of the new CY 2011 HCPCS codes and
respond to all public comments received on their interim designations.
We also cannot implement any changes in status indicator or APC
assignment on a quarterly basis because we have an annual process
subject to notice and comment for the assignment of a status indicator
and, if applicable, APC group. Therefore, actual changes to status
indicator or APC assignments cannot be implemented on a quarterly
basis.
After consideration of the public comments we received, we are
finalizing our policy to include in Addendum B to the CY 2011 OPPS/ASC
final rule with comment period the new Category I and III CPT codes
effective January 1, 2011 (including those Category I vaccine and
Category III CPT codes that were released by the AMA in July 2010) that
would be incorporated in the January 2011 OPPS quarterly update CR and
the new Level II HCPCS codes, effective October 1, 2010, or January 1,
2011, that would be released by CMS in its October 2010 and January
2011 OPPS quarterly update CRs.
3. Temporary HCPCS Codes for 2010-2011 Seasonal Influenza Vaccines
In Addendum B of the CY 2011 OPPS/ASC proposed rule (75 FR 46662),
CPT code 90658 (Influenza virus vaccine, split virus, when administered
to 3 years of age and older, for intramuscular use) was assigned to
status indicator ``L'' to indicate that the code is not paid under the
OPPS; rather, it is paid at a reasonable cost that is not subject to a
deductible or coinsurance. Under the Medicare ASP pricing methodology,
CPT code 90658 currently includes multiple brand name products. For
influenza vaccines, the payment limit is 95 percent of the AWP of the
lowest brand-name product within each billing code. We understand that
the production capacity and supply of the lowest priced brand-name
influenza vaccine product will not meet the program demands of the
Medicare population for the 2010-2011 influenza season. Because of this
patient access problem, we believe it necessary to establish separate
HCPCS codes for the individual brand products currently associated with
CPT code 90658. Thus, Medicare has established five HCPCS Q-codes to
identify the individual influenza products that are reported with CPT
code 90658. The specific list of HCPCS Q-codes can be found in Table 21
below CY 2011. Because the HCPC Q-codes will be recognized by Medicare,
CPT code 90658 will be assigned to status indicator ``E'' to indicate
that the code is not recognized under the hospital OPPS. Hospitals are
advised to report the influenza HCPCS Q-codes rather than CPT code
90658 for CY 2011. These codes have been included in the HCPCS file
with an added date of January 1, 2011, but the HCPCS codes will be
implemented effective October 1, 2010. That is, CPT code 90658 is
assigned to status indicator ``E'' effective October 1, 2010, and HCPCS
Q-codes Q2035, Q2036, Q2037, Q2038, and Q2039 are assigned to status
indicator ``L'' effective January 1, 2011. Table 21 below contains the
final CY 2011 status indicators for CPT code 90658 and HCPCS Q-codes
Q2035, Q2036, Q2037, Q2038, and Q2039.

Table 21--Influenza HCPCS Q-Codes for CY 2011
------------------------------------------------------------------------
Short Final CY 2011
HCPCS descriptor Long descriptor SI
------------------------------------------------------------------------
90658........... Flu vaccine, 3 Influenza virus E
yrs & >, im. vaccine, split
virus, when
administered to 3
years of age and
older, for
intramuscular use.
Q2035........... Afluria vacc, 3 Influenza virus L
yrs & >, im. vaccine, split
virus, when
administered to
individuals 3 years
of age and older,
for intramuscular
use (afluria).
Q2036........... Flulaval vacc, Influenza virus L
3 yrs & >, im. vaccine, split
virus, when
administered to
individuals 3 years
of age and older,
for intramuscular
use (flulaval).
Q2037........... Fluvirin vacc, Influenza virus L
3 yrs & >, im. vaccine, split
virus, when
administered to
individuals 3 years
of age and older,
for intramuscular
use (fluvirin).
Q2038........... Fluzone vacc, 3 Influenza virus L
yrs & >, im. vaccine, split
virus, when
administered to
individuals 3 years
of age and older,
for intramuscular
use (fluzone).
Q2039........... NOS flu vacc, 3 Influenza virus L
yrs & >, im. vaccine, split
virus, when
administered to
individuals 3 years
of age and older,
for intramuscular
use (not otherwise
specified).
------------------------------------------------------------------------

B. OPPS Changes--Variations Within APCs

1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient department
services. Section 1833(t)(2)(B) of the Act provides that the Secretary
may establish groups of covered OPD services within this classification
system, so that services classified within each group are comparable
clinically and with respect to the use of resources (and so that an
implantable item is classified to the group that includes the services
to which the item relates). In accordance with these provisions, we
developed a grouping classification system, referred to as APCs, as set
forth in Sec. 419.31 of the regulations. We use Level I and Level II
HCPCS codes and descriptors to identify and group the services within
each APC. The APCs are organized such that each group is homogeneous
both clinically and in terms of resource use. Using this classification
system, we have established distinct groups of similar services, as
well as medical visits. We also have developed separate APC groups for
certain medical devices, drugs, biologicals, therapeutic
radiopharmaceuticals, and brachytherapy devices.
We have packaged into payment for each procedure or service within
an APC group the costs associated with those items or services that are
directly related to, and supportive of, performing the main independent
procedures or furnishing the services. Therefore, we do not make
separate payment for these packaged items or services. For example,
packaged items and services include: (1) Use of an operating,
treatment, or procedure room; (2) use of a recovery room; (3)
observation services; (4) anesthesia; (5) medical/surgical supplies;
(6) pharmaceuticals (other than those for which separate payment may be
allowed under the provisions discussed in section V. of this final rule
with comment period); (7) incidental services such as venipuncture; and
(8) guidance services, image processing services, intraoperative
services, imaging supervision and interpretation services, diagnostic
radiopharmaceuticals, and

[[Page 71900]]

contrast media. Further discussion of packaged services is included in
section II.A.3. of this final rule with comment period.
In CY 2008, we implemented composite APCs to provide a single
payment for groups of services that are typically performed together
during a single clinical encounter and that result in the provision of
a complete service (72 FR 66650 through 66652). Under CY 2010 OPPS
policy, we provide composite APC payment for certain extended
assessment and management services, low dose rate (LDR) prostate
brachytherapy, cardiac electrophysiologic evaluation and ablation,
mental health services, and multiple imaging services. Further
discussion of composite APCs is included in section II.A.2.e. of this
final rule with comment period.
Under the OPPS, we generally pay for hospital outpatient services
on a rate-per-service basis, where the service may be reported with one
or more HCPCS codes. Payment varies according to the APC group to which
the independent service or combination of services is assigned. Each
APC weight represents the hospital median cost of the services included
in that APC relative to the hospital median cost of the services
included in APC 0606 (Level 3 Hospital Clinic Visits). The APC weights
are scaled to APC 0606 because it is the middle level hospital clinic
visit APC (that is, where the Level 3 hospital clinic visit CPT code of
five levels of hospital clinic visits is assigned), and because middle
level hospital clinic visits are among the most frequently furnished
services in the hospital outpatient setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review
and revise the groups, the relative payment weights, and the wage and
other adjustments to take into account changes in medical practice,
changes in technology, the addition of new services, new cost data, and
other relevant information and factors; the Act further requires us to
repeat this process on a basis that is not less often than annually.
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of the
BBRA, also requires the Secretary, beginning in CY 2001, to consult
with an expert outside advisory panel composed of an appropriate
selection of representatives of providers to review (and advise the
Secretary concerning) the clinical integrity of the APC groups and the
relative payment weights (the APC Panel recommendations for specific
services for the CY 2011 OPPS and our responses to them are discussed
in the relevant specific sections throughout this final rule with
comment period).
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest median cost (or mean cost as elected by the Secretary) for an
item or service in the group is more than 2 times greater than the
lowest median cost (or mean cost, if so elected) for an item or service
within the same group (referred to as the ``2 times rule''). We use the
median cost of the item or service in implementing this provision. The
statute authorizes the Secretary to make exceptions to the 2 times rule
in unusual cases, such as low-volume items and services (but the
Secretary may not make such an exception in the case of a drug or
biological that has been designated as an orphan drug under section 526
of the Federal Food, Drug, and Cosmetic Act).
2. Application of the 2 Times Rule
In accordance with section 1833(t)(2) of the Act and Sec. 419.31
of the regulations, we annually review the items and services within an
APC group to determine, with respect to comparability of the use of
resources, if the median cost of the highest cost item or service
within an APC group is more than 2 times greater than the median of the
lowest cost item or service within that same group. In making this
determination, we consider only those HCPCS codes that are significant
based on the number of claims. That is, we consider only those HCPCS
codes whose claim data reflect more than 1,000 singles, or if less than
1,000 singles, at least those HCPCS codes with more than 99 singles and
represent more than 2 percent of the claims for a given APC (74 FR
60436). In the CY 2011 OPPS/ASC proposed rule (75 FR 46247), we
proposed to make exceptions to this limit on the variation of costs
within each APC group in unusual cases, such as low-volume items and
services for CY 2011.
During the APC Panel's February 2010 meeting, we presented median
cost and utilization data for services furnished during the period of
January 1, 2009 through September 30, 2009, about which we had concerns
or about which the public had raised concerns regarding their APC
assignments, status indicator assignments, or payment rates. The
discussions of most service-specific issues, the APC Panel
recommendations, if any, and our proposals for CY 2011 were contained
mainly in sections III.C. and III.D. of the proposed rule and are
included in the same sections of this final rule with comment period.
In addition to the assignment of specific services to APCs that we
discussed with the APC Panel, we also identified APCs with 2 times
violations that were not specifically discussed with the APC Panel but
for which we proposed changes to their HCPCS codes' APC assignments in
Addendum B to the proposed rule. In these cases, to eliminate a 2 times
violation or to improve clinical and resource homogeneity, we proposed
to reassign the codes to APCs that contain services that are similar
with regard to both their clinical and resource characteristics. We
also proposed to rename existing APCs or create new clinical APCs to
complement proposed HCPCS code reassignments. In many cases, the
proposed HCPCS code reassignments and associated APC reconfigurations
for CY 2011 included in the proposed rule were related to changes in
median costs of services that were observed in the CY 2009 claims data
newly available for CY 2011 ratesetting. We also proposed changes to
the status indicators for some codes that are not specifically and
separately discussed in the proposed rule. In these cases, we proposed
to change the status indicators for some codes because we believe that
another status indicator would more accurately describe their payment
status from an OPPS perspective based on the policies that we proposed
for CY 2011.
We received many public comments regarding the proposed APC and
status indicator assignments for CY 2011 for specific HCPCS codes.
These public comments are discussed mainly in sections III.C. and
III.D. of this final rule with comment period, and the final action for
CY 2011 related to each HCPCS code is noted in those sections.
Addendum B to this final rule with comment period identifies with
comment indicator ``CH'' those HCPCS codes for which we are finalizing
in this final rule with comment period a change to the APC assignment
or status indicator that were initially assigned in the April 2010
Addendum B update (via Transmittal 1924, Change Request 6857, dated
February 26, 2010).
3. Exceptions to the 2 Times Rule
As discussed earlier, we may make exceptions to the 2 times limit
on the variation of costs within each APC group in unusual cases such
as low-volume items and services. Taking into account the APC changes
that we proposed for CY 2011 based on the APC Panel recommendations
that were discussed mainly in sections III.C. and III.D. of the
proposed rule, the other

[[Page 71901]]

proposed changes to status indicators and APC assignments as identified
in Addendum B to the proposed rule, and the use of CY 2009 claims data
to calculate the median costs of procedures classified in the APCs, we
reviewed all the APCs to determine which APCs would not satisfy the 2
times rule. We used the following criteria to decide whether to propose
exceptions to the 2 times rule for affected APCs:
Resource homogeneity.
Clinical homogeneity.
Hospital outpatient setting.
Frequency of service (volume).
Opportunity for upcoding and code fragments.
For a detailed discussion of these criteria, we refer readers to
the April 7, 2000 OPPS final rule with comment period (65 FR 18457 and
18458). Table 16 of the proposed rule listed 17 APCs that we proposed
to exempt from the 2 times rule for CY 2011 based on the criteria cited
above (75 FR 46248).
We did not receive any general public comments related to the list
of proposed exceptions to the 2 times rule. We received a number of
specific public comments about some of the procedures assigned to APCs
that we proposed to make exempt from the 2 times rule for CY 2011.
Those public comments are discussed elsewhere in this preamble, and can
be found in sections related to the types of procedures that were the
subjects of the public comments.
For the proposed rule, the list of 17 APCs that appeared in Table
16 of the CY 2011 OPPS/ASC proposed rule (75 FR 46248) that were
exempted from the 2 times rule were based on data from January 1, 2009,
through September 30, 2009. For this final rule with comment period, we
used claims data for dates of service between January 1, 2009, and
December 31, 2009, that were processed on or before June 30, 2010, and
updated CCRs, if available. Thus, after responding to all of the public
comments on the CY 2010 OPPS/ASC proposed rule and making changes to
APC assignments based on those comments, we analyzed the CY 2009 claims
data used for this final rule with comment period to identify the APCs
with 2 times violations. Based on the final rule CY 2009 claims data,
we found 22 APCs with 2 times rule violations, which is a cumulative
increase of 5 APCs from the proposed rule. We applied the criteria as
described earlier to identify the APCs that are exceptions to the 2
times rule for CY 2010, and identified 10 APCs that meet the criteria
for exception to the 2 times rule for this final rule with comment
period, but that did not meet those criteria using proposed rule data:
APC 0060 (Manipulation Therapy); APC 0076 (Level I Endoscopy Lower
Airway); APC 0083 (Coronary or Non Coronary Angioplasty and
Percutaneous Valvuloplasty), APC 0133 (Level I Skin Repair); APC 0203
(Level IV Nerve Injections); APC 0304 (Level I Therapeutic Radiation
Treatment Preparation); APC 0341 (Skin Tests); APC 0343 (Level III
Pathology); APC 0433 (Level II Pathology); and APC 0607 (Level 4
Hospital Clinic Visits). These APC exceptions are listed in Table 22
below. For this final rule with comment period, we also determined that
there are 5 APCs that no longer violate the 2 times rule: APC 0051
(Level III Musculoskeletal Procedures Except Hand and Foot); APC 0138
(Level II Closed Treatment Fracture Finger/Toe/Trunk); APC 0173 (Level
II Partial Hospitalization (4 or more services)); APC 0325 (Group
Psychotherapy); and APC 0344 (Level IV Pathology). We have not included
in this count those APCs where a 2 times violation is not a relevant
concept, such as APC 0375 (Ancillary Outpatient Services When Patient
Expires), with an APC median cost set based on multiple procedure
claims. As a result, we have identified only final APCs, including
those with criteria-based median costs, such as device-dependent APCs,
with 2 times violations. Table 22 below lists 22 APCs that we are
exempting from the 2 times rule for CY 2011 based on the criteria cited
above and a review of updated claims data.
For cases in which a recommendation by the APC Panel appeared to
result in or allow a violation of the 2 times rule, we generally
accepted the APC Panel's recommendation because those recommendations
were based on explicit consideration of resource use, clinical
homogeneity, hospital specialization, and the quality of the CY 2009
claims data used to determine the APC payment rates that we are
finalizing for CY 2011. The median costs for hospital outpatient
services for these and all other APCs that were used in the development
of this final rule with comment period can be found on the CMS Web site
at: http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp.

Table 22--Final APC Exceptions to the 2 Times Rule for CY 2011
------------------------------------------------------------------------
CY 2011 APC CY 2011 APC title
------------------------------------------------------------------------
0057.............................. Bunion Procedures.
0058.............................. Level I Strapping and Cast
Application.
0060.............................. Manipulation Therapy.
0076.............................. Level I Endoscopy Lower Airway.
0080.............................. Diagnostic Cardiac Catheterization.
0083.............................. Coronary and Noncoronary Angioplasty
and Percutaneous Valvuloplasty.
0105.............................. Repair/Revision/Removal of
Pacemakers, AICDs, or Vascular
Devices.
0133.............................. Level I Skin Repair.
0142.............................. Small Intestine Endoscopy.
0203.............................. Level IV Nerve Injections.
0235.............................. Level I Posterior Segment Eye
Procedures.
0245.............................. Level I Cataract Procedures without
IOL Insert.
0303.............................. Treatment Device Construction.
0304.............................. Level I Therapeutic Radiation
Treatment Preparation.
0340.............................. Minor Ancillary Procedures.
0341.............................. Skin Tests.
0343.............................. Level III Pathology.
0432.............................. Health and Behavior Services.
0433.............................. Level II Pathology.
0604.............................. Level 1 Hospital Clinic Visits.
0607.............................. Level 4 Hospital Clinic Visits.
0664.............................. Level I Proton Beam Radiation
Therapy.
------------------------------------------------------------------------

C. New Technology APCs

1. Background
In the November 30, 2001 final rule (66 FR 59903), we finalized
changes to the time period a service was eligible for payment under a
New Technology APC. Beginning in CY 2002, we retain services within New
Technology APC groups until we gather sufficient claims data to enable
us to assign the service to a clinically appropriate APC. This policy
allows us to move a service from a New Technology APC in less than 2
years if sufficient data are available. It also allows us to retain a
service in a New Technology APC for more than 2 years if sufficient
data upon which to base a decision for reassignment have not been
collected.
We note that the cost bands for New Technology APCs range from $0
to $50 in increments of $10, from $50 to $100 in increments of $50,
from $100 to $2,000 in increments of $100, and from $2,000 to $10,000
in increments of $500. These cost bands identify the APCs to which new
technology procedures and services with estimated service costs that
fall within those cost bands are assigned under the OPPS. Payment for
each APC is made at the mid-point of the APC's assigned cost band. For
example, payment for New Technology APC 1507 (New Technology--Level VII

[[Page 71902]]

($500-$600)) is made at $550. Currently, there are 82 New Technology
APCs, ranging from the lowest cost band assigned to APC 1491 (New
Technology--Level IA ($0-$10)) through the highest cost band assigned
to APC 1574 (New Technology--Level XXXVII ($9,500-$10,000). In CY 2004
(68 FR 63416), we last restructured the New Technology APCs to make the
cost intervals more consistent across payment levels and refined the
cost bands for these APCs to retain two parallel sets of New Technology
APCs, one set with a status indicator of ``S''' (Significant
Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC
payment) and the other set with a status indicator of ``T''
(Significant Procedure, Multiple Reduction Applies. Paid under OPPS;
separate APC payment). These current New Technology APC configurations
allow us to price new technology services more appropriately and
consistently.
Every year we receive many requests for higher payment amounts
under our New Technology APCs for specific procedures under the OPPS
because they require the use of expensive equipment. We are taking this
opportunity to reiterate our response in general to the issue of
hospitals' capital expenditures as they relate to the OPPS and
Medicare.
Under the OPPS, one of our goals is to make payments that are
appropriate for the services that are necessary for the treatment of
Medicare beneficiaries. The OPPS, like other Medicare payment systems,
is budget neutral and increases are limited to the hospital inpatient
market basket increase. We believe that our payment rates generally
reflect the costs that are associated with providing care to Medicare
beneficiaries in cost efficient settings, and we believe that our rates
are adequate to ensure access to services.
For many emerging technologies, there is a transitional period
during which utilization may be low, often because providers are first
learning about the techniques and their clinical utility. Quite often,
parties request that Medicare make higher payment amounts under our New
Technology APCs for new procedures in that transitional phase. These
requests, and their accompanying estimates for expected total patient
utilization, often reflect very low rates of patient use of expensive
equipment, resulting in high per use costs for which requesters believe
Medicare should make full payment. Medicare does not, and we believe
should not, assume responsibility for more than its share of the costs
of procedures based on Medicare beneficiary projected utilization and
does not set its payment rates based on initial projections of low
utilization for services that require expensive capital equipment. For
the OPPS, we rely on hospitals to make informed business decisions
regarding the acquisition of high cost capital equipment, taking into
consideration their knowledge about their entire patient base (Medicare
beneficiaries included) and an understanding of Medicare's and other
payers' payment policies.
We note that, in a budget neutral environment, payments may not
fully cover hospitals' costs in a particular circumstance, including
those for the purchase and maintenance of capital equipment. We rely on
hospitals to make their decisions regarding the acquisition of high
cost equipment with the understanding that the Medicare program must be
careful to establish its initial payment rates, including those made
through New Technology APCs, for new services that lack hospital claims
data based on realistic utilization projections for all such services
delivered in cost-efficient hospital outpatient settings. As the OPPS
acquires claims data regarding hospital costs associated with new
procedures, we regularly examine the claims data and any available new
information regarding the clinical aspects of new procedures to confirm
that our OPPS payments remain appropriate for procedures as they
transition into mainstream medical practice.
2. Movement of Procedures From New Technology APCs to Clinical APCs
As we explained in the November 30, 2001 final rule (66 FR 59902),
we generally keep a procedure in the New Technology APC to which it is
initially assigned until we have collected sufficient data to enable us
to move the procedure to a clinically appropriate APC. However, in
cases where we find that our original New Technology APC assignment was
based on inaccurate or inadequate information (although it was the best
information available at the time), or where the New Technology APCs
are restructured, we may, based on more recent resource utilization
information (including claims data) or the availability of refined New
Technology APC cost bands, reassign the procedure or service to a
different New Technology APC that most appropriately reflects its cost.
Consistent with our current policy, in the CY 2011 OPPS/ASC
proposed rule (75 FR 46249), we proposed for CY 2011 to retain services
within New Technology APC groups until we gather sufficient data to
enable us to assign the service to a clinically appropriate APC. The
flexibility associated with this policy allows us to move a service
from a New Technology APC in less than 2 years if sufficient data are
available. It also allows us to retain a service in a New Technology
APC for more than 2 years if sufficient data upon which to base a
decision for reassignment have not been collected. Table 17 of the
proposed rule listed the HCPCS codes and associated status indicators
that we proposed to reassign from a New Technology APC to a clinically
appropriate APC or to a different New Technology APC for CY 2011.
We note that, for CY 2010, there are four services described by
four HCPCS G-codes receiving payment through a New Technology APC.
Specifically, HCPCS code G0416 (Surgical pathology, gross and
microscopic examination for prostate needle saturation biopsy sampling,
1-20 specimens) is assigned to New Technology APC 1505 (New
Technology--Level V ($300-$400)); HCPCS code G0417 (Surgical pathology,
gross and microscopic examination for prostate needle saturation biopsy
sampling, 21-40 specimens) is assigned to New Technology APC 1507 (New
Technology--Level VII ($500-$600)); HCPCS code G0418 (Surgical
pathology, gross and microscopic examination for prostate needle
saturation biopsy sampling, 41-60 specimens) is assigned to New
Technology APC 1511 (New Technology--Level XI ($900-$1,000)); and HCPCS
code G0419 (Surgical pathology, gross and microscopic examination for
prostate needle saturation biopsy sampling, greater than 60 specimens),
is assigned to New Technology APC 1513 (New Technology--Level XIII
($1,100-$1,200)).
In the CY 2011 OPPS/ASC proposed rule (75 FR 46249), we proposed to
reassign HCPCS code G0416 from New Technology APC 1505 to clinical APC
0661 (Level V Pathology), and HCPCS code G0417 from New Technology APC
1507 (New Technology-Level VII ($500 to $600)) to New Technology APC
1506 (New Technology--Level VI ($400-$500)). Based on our claims data
used for CY 2011 rate setting, as well as clinical characteristics, we
believed that HCPCS code G0416 is comparable clinically and with
respect to the use of resources as other pathology services currently
assigned to APC 0661. Further, we believed that HCPCS code G0417 is
more appropriately placed in New Technology APC 1506 based on the
median cost data for the CY 2011 ratesetting and based on its clinical
and

[[Page 71903]]

resource similarities to procedures currently in APC 1506.
We did not receive any public comments on the APC reassignments of
HCPCS codes G0416 and G0417. Therefore, for the reasons explained
above, we are finalizing our proposal, without modification, to assign
HCPCS code G0416 to APC 0616, which has a final CY 2011 APC median cost
of approximately $149, and to assign HCPCS code G0417 to APC 1506,
which has a final CY 2011 APC median cost of approximately $489. Table
23 below lists the HCPCS codes and associated status indicators that we
are reassigning from a New Technology APC to a clinically appropriate
APC or to a different New Technology APC for CY 2011.
For CY 2011, we also proposed to continue the New Technology APC
assignments for HCPCS codes G0418 and G0419 based on our understanding
of the clinical and cost characteristics of the procedures described by
these HCPCS codes. As we stated in the CY 2011 OPPS/ASC proposed rule
(75 FR 46249), we do not believe we have enough claims data to assign
these codes to a different APC. While we believed that these services
will always be low volume, given the number of specimens being
collected, we believed that we should continue the New Technology
payments for HCPCS codes G0418 and G0419 for another year to see if
more claims data become available. Specifically, we proposed to
continue to assign HCPCS code G0418 to New Technology APC 1511 (New
Technology--Level XI ($900-$1,000)) and HCPCS code G0419 to New
Technology APC 1513 (New Technology--Level XIII ($1,100-$1,200)).
We did not receive any public comments on the continuation of the
APC assignments of HCPCS code G0418 and G0419. Therefore, for the
reasons explained above, we are finalizing our proposal, without
modification, to continue to assign HCPCS code G0418 to APC 1511, and
to continue to assign HCPCS code G0419 to APC 1513. The final CY 2011
payment rates for HCPCS codes G048 and G0419 can be found in Addendum B
of this final rule with comment period.

Table 23--CY 2011 Reassignment of Procedures Assigned to New Technology APCS in CY 2010
----------------------------------------------------------------------------------------------------------------
CY 2010 Short Final CY 2011 Final CY 2011
CY 2010 HCPCS code descriptor CY 2010 SI CY 2010 APC SI APC
----------------------------------------------------------------------------------------------------------------
G0416.................. Sat biopsy prostate 1- S 1505 X 0661
20 spc.
G0417.................. Sat biopsy prostate S 1507 S 1506
21-40.
----------------------------------------------------------------------------------------------------------------

D. OPPS APC-Specific Policies

1. Cardiovascular Services
a. Cardiovascular Telemetry (APC 0209)
For CY 2011, we proposed to continue to assign CPT code 93229
(Wearable mobile cardiovascular telemetry with electrocardiographic
recording, concurrent computerized real time data analysis and greater
than 24 hours of accessible ECG data storage (retrievable with query)
with ECG-triggered and patient-selected events transmitted to a remote
attended surveillance center for up to 30 days; technical support for
connection and patient instructions for use, attended surveillance,
analysis and physician prescribed transmission of daily and emergent
data reports) to APC 0209 (Level II Extended EEG, Sleep, and
Cardiovascular Studies), with a proposed payment rate of approximately
$782.
Comment: Some commenters recommended that CMS assign status
indicator ``A'' (Services furnished to a hospital outpatient that are
paid under a fee schedule or payment system other than OPPS) to CPT
code 93229 in order to make this service nonpayable under the OPPS for
CY 2011. The commenters stated that there are currently no hospitals
that can provide the type of constant monitoring that the service
described by CPT code 93229 requires. For this reason, according to the
commenters, any claims submitted for CPT code 93229 by hospitals are
incorrectly coded. The commenters suggested that, if CMS chose not to
adopt their recommendation and instead chose to continue recognizing
CPT code 93229 as payable under the OPPS, CMS reconsider the proposed
assignment of the service to APC 0209. According to the commenters, the
service described by CPT code 93229 is not similar, clinically or in
terms of resource utilization, to the other procedures assigned to APC
0209, in particular, the polysomnography procedures described by CPT
codes 95810 (Polysomnography; sleep staging with 4 or more additional
parameters of sleep, attended by a technologist) and 95811
(Polysomnography; sleep staging with 4 or more additional parameters of
sleep, with initiation of continuous positive airway pressure therapy
or bilevel ventilation, attended by a technologist), which are the most
commonly reported procedures in APC 0209 with the highest number of
single claims contributing to the APC's median cost. The commenters
urged CMS to assign CPT code 93229 to the New Technology APC 1513 (New
Technology--Level XIII ($1,100-$1,200)), with a proposed payment rate
of approximately $1,150. The commenters stated that, if any hospitals
were to provide the remote cardiac monitoring service described by CPT
code 93229, the proposed payment rate for APC 0209 would be less than
hospitals' costs for providing this service.
Response: We do not agree with the commenters that we should assign
status indicator ``A'' to CPT code 93229 in order to make the service
nonpayable under the OPPS for CY 2011. We typically recognize, for OPPS
payment purposes, HCPCS codes describing services that could be covered
by Medicare when provided to hospital outpatients, regardless of
whether, as the commenters indicated, those services are actually being
provided by hospitals at the time the OPPS/ASC final rule with comment
period for the upcoming year is issued. We believe that CPT code 93229
describes a diagnostic study that could be provided to Medicare
beneficiaries in the hospital outpatient setting and, therefore, could
be covered by Medicare. We also do not agree with the commenters'
statement that there are currently no hospitals that can provide the
type of constant monitoring that the service described by CPT code
93229 requires. Our ratesetting methodology is based on claims
submitted by hospitals, and our final rule claims data show 103 single
claims and 114 total claims for this service. Based on these claims
data, we calculated a final median cost for CPT code 93229 of
approximately $287. (We note that placement of CPT code 93229 in APC
0209 with higher median cost procedures does not violate the 2 times
rule because this service is a low

[[Page 71904]]

volume procedure relative to the other procedures in APC 0209.) As to
whether these claims are miscoded, it is generally not our policy to
judge the accuracy of hospital coding and charging for purposes of
ratesetting. New Technology APCs are designed to allow us to provide
appropriate and consistent payment for designated new procedures that
are not yet reflected in our claims data (74 FR 60438). Because we
already have sufficient claims data for CPT code 93229 to assign it to
a clinically appropriate APC, it would be inappropriate to move it to
the New Technology APC 1513.
As we stated in the CY 2010 OPPS/ASC final rule with comment period
(74 FR 60441), we also continue to believe the service described by CPT
code 93229 is similar, clinically and in terms of resource utilization,
to the other procedures assigned to APC 0209 for CY 2011. For example,
similar to the remote cardiac monitoring service described by CPT code
93229, the polysomnography procedures described by CPT codes 95810 and
95811 involve continuous and simultaneous monitoring and recording of
various physiological and pathophysiological parameters, with
attendance by a technologist.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to assign CPT
code 93229 to APC 0209, with a final CY 2011 APC median cost of
approximately $772.
b. Myocardial Positron Emission Tomography (PET) Imaging (APC 0307)
For CY 2011, we proposed to assign CPT codes 78459 (Myocardial
imaging, positron emission tomography (PET), metabolic evaluation),
78491 (Myocardial imaging, positron emission tomography (PET),
perfusion; single study at rest or stress), and 78492 (Myocardial
imaging, positron emission tomography (PET), perfusion; multiple
studies at rest and/or stress) to APC 0307 (Myocardial Position
Emission Tomography (PET) Imaging), with a proposed median cost of
approximately $1,121. For CY 2010, APC 0307 has a national unadjusted
payment rate of approximately $1,433 based on a CY 2010 OPPS final rule
median cost of approximately $1,420. At its August 2010 meeting, the
APC Panel recommended that CMS investigate and report at a future Panel
meeting on the reason for the decline in median cost for APC 0307 from
the CY 2010 OPPS to the proposed CY 2011 OPPS.
Comment: Commenters objected to the proposed decrease in the
payment rate for myocardial PET under APC 0307. They indicated that
there is increasing interest in the service due to shortages of
radioisotopes required for SPECT myocardial perfusion imaging as well
as developing evidence favoring use of myocardial PET imaging and
growing expertise in the use of myocardial PET imaging. The commenters
were concerned that the volatility of the payment rates from one year
to the next at least since 2006, and the reduction in the payment rate
from $1,433 in CY 2010 to the $1,099 proposed payment rate for APC 0307
for CY 2011 will make it hard for hospitals to plan and budget for the
forthcoming year. The commenters urged CMS to validate the estimated
costs on the CY 2009 claims data for the limited numbers of hospitals
reporting CPT codes 78459, 78491, and 78492 (APC 0307) to determine the
reason for the proposed change in payment. The commenters believed that
the proposed payment rate is a result of the service largely being
furnished by a relatively small number of facilities that may be
driving the observed reduction. One commenter stated that hospitals do
not always align the costs and charges for the service properly in
their accounts and, therefore, the CCRs that result from the cost
reports understate the cost of the services. Another commenter believed
that hospitals with disproportionately low CCRs may have been
disproportionately included in the single bills (compared to the total
volume of service that they furnish). This commenter also stated that
the median cost for single scans, represented by CPT code 78491 has
been higher than the median cost for multiple scans, represented by CPT
code 78492 in 2007, 2009 and 2010 and that the evidence indicates that
the data on which CMS is basing the payment rate are flawed.
One commenter urged CMS to average the median costs over a 4-year
period to provide stability to the payment rates or to assign CPT codes
78459, 78491, and 78492 to New Technology APC Level XIV so that the
services would be paid $1,250 for CY 2011. Another commenter stated
that payment under the MPFS for these services is carrier priced and,
therefore, has remained stable over the years. The commenter asked that
CMS use the payment rates being paid under the MPFS as the basis for
payment under the OPPS for these services. One commenter asked that CMS
eliminate all single bills from hospitals that have a CCR that is less
than 0.2 for the calculation of costs for myocardial PET services and
that CMS establish a cost center and CCR specific to PET that would be
used to reduce charges for PET to costs. Several commenters asked that
CMS limit to 10 percent the amount of decrease in the median cost for
CY 2011 compared to CY 2010 and slowly phase in any reduction beyond 10
percent. Other commenters asked that CMS set the relative weight for
payment for APC 0307 using the mean cost rather than the median cost.
Response: To determine the reason that the median cost declined
from CY 2010 to CY 2011, we examined the data for the single bills that
were used to set the median cost for APC 0307 for CY 2010, the proposed
CY 2011 proposed rule, and the CY 2011 final rule with comment period,
and we determined that there are multiple reasons that the median cost
for APC 0307 declined from CY 2010 to CY 2011. In general, when we
looked the charges and the CCRs for CPT codes 78459, 78491, and 78492
in APC 0307, we found that the charges either stayed the same or
declined, that the CCRs used to estimate cost from charges for these
codes declined, and that the cost of HCPCS code A9555 (Rb82 rubidium),
the radiopharmaceutical that is used in a myocardial PET scan, also
declined. Specifically, the median of the line item charge for CPT code
78492, the highest volume code in APC 0307 (comprising 96 percent of
single bills used to establish the median cost for APC 0307 in the CY
2011 final rule claims data) remained virtually unchanged between the
CY 2010 final rule claims data ($3,859.00) and the CY 2011 final rule
claims data ($3,858.75). However, the median hospital CCR applicable to
the line item charge for CPT code 78492, largely derived from cost
center 4100 (Radiology-Diagnostic), declined from 0.2342 in the CY 2010
HCRIS data to 0.1708 in the CY 2011 final rule claims data. Moreover,
the estimated per day cost of rubidium, which is reported with 95
percent of claims for CPT code 78492, declined from $418.05 per day in
the CY 2010 final rule claims data to $330.06 in the CY 2011 final rule
claims data. The hospital CCR used to estimate costs from charges for
rubidium also is based on cost center 4100. The other two myocardial
PET codes, CPT codes 78459 and 78491, show similar patterns of charges
and CCRs, although they account for a much lower percent of single
bills than CPT code 78492, which causes them to have much less
influence on the median cost for APC 0307. We believe that the absence
of increase in the line item charge, the significant decline in the
applicable CCRs for CPT code 78492, and the significant decline in the
estimated cost

[[Page 71905]]

of rubidium combine to explain the reduction in the median cost for APC
0307 for CY 2011 compared to CY 2010. We also used a substantial volume
of single bills for the APC (3,638 single bills out of 5,732 total
frequency or approximately 64 percent of the claims for services in APC
0307). In addition, as is our standard practice, we used the most
recently submitted cost reports to calculate the CCRs (largely CCRs for
cost center 4100 that are applied to the charges for these imaging
services) to estimate the cost.
We agree that the modest number of hospitals that furnish the
service (50 in the CY 2010 final rule claims data and 61 in the CY 2011
final rule claims data) and the addition of claims from 11 hospitals
that reported the service for the first time in CY 2009 may have some
bearing on the volatility in the median costs, and we will continue to
monitor these data in the future. However, it is also possible that
hospitals are becoming more efficient and that the cost of the service
is declining as it becomes better established. Our standard methodology
of estimating costs from charges and creating single claims with a
unique resource cost for individual services resulted in the use of 64
percent of the claims for services in APC 0307 for ratesetting; and, we
used the most current claims and cost report data that are available
for the estimation of the cost of the service. With regard to the
comment that the estimated cost for CPT code 78491 has been higher than
CPT code 78492 in past years, the low sample size and differences in
the mix of hospitals reporting these codes likely accounts for this
observation and do not suggest the data are flawed. We also note that
any difference in estimated cost between single and multiple studies
would not impact the payment rate as claims for CPT code 78492 drive
the estimated median cost for this APC.
Based on our review of the claim charge data and cost report data,
we believe our estimated cost data for the services in APC 0307 are
accurate and, therefore, will not adopt an alternative methodology,
such as commenters requests to limit CCRs to those at 0.2 or above,
calculating a rolling average based on 4 years of past medians,
assigning the codes to a new technology APC, limiting the decline in
the median cost to 10 percent, setting the weight on the mean cost
rather than the median cost, or setting the payment rate at the amount
paid to physicians for the service. Similarly, we do not believe that
the CCRs that are applied to the charges for myocardial PET result in
flawed estimated costs for the service and that a cost center specific
to PET services is necessary to provide valid CCRs for PET services.
After consideration of the public comments we received and
examination of the reasons for the decline in the median cost for APC
0307, we are not making any of the adjustments to the median cost that
commenters request because we believe that the data on which the median
is calculated are valid and that the median is accurate. Therefore we
are finalizing a payment rate for APC 0307 for CY 2011 based on the CY
2011 OPPS final rule median cost of approximately $1,096. We are
accepting the APC Panel's recommendation and will report the findings
of our investigation into the reason for the decline in median cost for
APC 0307 from the CY 2010 OPPS to the proposed CY 2011 OPPS at the
winter 2011 APC Panel meeting.
c. Cardiovascular Computed Tomography (CCT) (APCs 0340 and 0383)
The AMA CPT Editorial Panel created the following new codes for
Cardiovascular Computed Tomography (CCT) services, effective January 1,
2010: CPT codes 75571 (Computed tomography, heart, without contrast
material, with quantitative evaluation of coronary calcium), 75572
(Computed tomography, heart, with contrast material, for evaluation of
cardiac structure and morphology (including 3D image postprocessing,
assessment of cardiac function, and evaluation of venous structures, if
performed)), 75573 (Computed tomography, heart, with contrast material,
for evaluation of cardiac structure and morphology in the setting of
congenital heart disease (including 3D image postprocessing, assessment
of LV cardiac function, RV structure and function and evaluation of
venous structures, if performed)), and 75574 (Computed tomographic
angiography, heart, coronary arteries and bypass grafts (when present),
with contrast material, including 3D image postprocessing (including
evaluation of cardiac structure and morphology, assessment of cardiac
function, and evaluation of venous structures, if performed). For CY
2010, we assigned CPT code 75571 to APC 0340 (Minor Ancillary
Procedures). For CY 2010, we also assigned CPT codes 75572, 75573, and
75574 to APC 0383 (Cardiac Computed Tomographic Imaging). For CY 2011,
we proposed to maintain these APC assignments, with a proposed rule
median cost for APC 0340 of approximately $48 and a proposed rule
median cost for APC 0383 of approximately $263.
Comment: One commenter urged CMS to consider using data sources in
addition to our claims and cost report data to establish the basis for
payment for CCT because the commenter believed that hospitals have
reported incorrect or incomplete data for CY 2009 for CCT services. The
commenter stated that the incorrect data are due to unfamiliarity or
misinterpretation of Category III CPT codes that were used prior to CY
2010, and are reflected in the charges on the claims for services in CY
2009 on which the median costs for CY 2011 will be based. The commenter
stated that it is developing a data collection to present to CMS to
substantiate that CCT services are more costly than the CY 2009 data
that CMS used. The commenter urged CMS to be open to accepting new
data.
Response: We have no reason to believe that the median costs we
have calculated for CPT codes 75571, 75572, 75573, and 75574 do not
reflect valid estimates of the cost of these services. We proposed to
continue to assign CPT code 75571 to APC 0340, which had a CY 2011
proposed rule APC median cost of approximately $46. We also proposed to
continue to assign CPT codes 75572, 75573, and 75574 to APC 0383, which
had a proposed rule CY 2011 APC median cost of approximately $254.
Because CPT codes 75571, 75572, 75573, and 75574 are all new for CY
2010, we do not have CY 2009 claims data for these codes for CY 2011
OPPS ratesetting. However, we assigned them to APCs 0340 and 0383 based
on what we believe to be their clinical and resource similarity to the
other services in the APC, for which we have claims data.
Concerning the request that we review external data that may be
provided in the future, we do review data that the public wishes to
share with us. However, because the OPPS is a budget neutral relative
weight based system, we believe that it is critical that the same
source of data and the same cost estimation process be used to
establish the median costs for services paid under the OPPS so that the
payment rates derived from the median costs are correct in relativity
to one another.
After considering the public comments we received and reviewing our
updated CY 2009 claims data, we are continuing to maintain the
assignment of CPT code 75571 to APC 0340 for CY 2011, for which we have
calculated a final rule median cost of approximately $46. We also are
maintaining the assignment of CPT codes 75572, 75573, and 75574 to APC
0383, for which we have calculated a

[[Page 71906]]

final rule median cost of approximately $254 for CY 2011.
d. Multifunction Cardiogram (APC 0340)
For CY 2011, we proposed to continue to assign Category III CPT
code 0206T (Algorithmic analysis, remote, of electrocardiographic-
derived data with computer probability assessment, including report) to
APC 0340 (Minor Ancillary Procedures), with a proposed payment rate of
approximately $47.
Comment: One commenter defined the procedure described by CPT code
0206T as a multifunction cardiogram. The commenter stated that CMS
should reconsider the proposed assignment of CPT code 0206T to APC 0340
because it is not similar, clinically or in terms of resource
utilization, to the other procedures assigned to APC 0340. The
commenter stated that the majority of the other procedures in APC 0340
are minor office procedures that are quickly done and do not require
data transmission or analysis. According to the commenter, the complex
data obtained and analyzed by the multifunction cardiogram is
comparable to the data obtained and analyzed during cardiac stress
tests or electrocardiograms, and serve as an alternative to
radionuclide stress testing in the diagnosis of coronary artery
disease. Based on the use of the multifunction cardiogram and the data
it generates, the commenter believed that the procedure described by
CPT code 0206T is most similar clinically to the procedures assigned to
APC 0100 (Cardiac Stress Tests), which had a proposed payment rate of
approximately $180. However, in terms of resource utilization, the
commenter claimed that payment for the multifunction cardiogram should
be $75 more than the payment for APC 0100. The commenter pointed out
that CPT code 0206T was new for CY 2010, and, therefore, no CY 2009
claims data are available for CY 2011 OPPS ratesetting. The commenter
described a multifunction cardiogram as a non-traditional systems
analysis tool that creates a mathematical model for the detection of
myocardial ischemia, and argued that this tool represents a completely
new technology. The commenter recommended that CMS reassign CPT code
0206T to APC 1504 (New Technology--Level IV ($200-$300)).
Response: We appreciate the commenter's submission of this clinical
information for the procedure described by Category III CPT code 0206T
for our review. As a new Category III CPT code for CY 2010, we do not
yet have hospital claims data for the procedure. Category III CPT codes
are temporary codes that describe emerging technology, procedures, and
services, and they are created by the AMA to allow for data collection
for new services or procedures. Under the OPPS, we generally assign a
payment rate to a new Category III CPT code based on input from a
variety of sources, including but not limited to, review of resource
costs and clinical homogeneity of the service to existing procedures,
information from specialty societies, input from CMS medical advisors,
and other information available to us. Based on our review of the
clinical characteristics of CPT code 0206T and the information provided
by the commenter, we do not believe that we have sufficient clinical or
cost information to justify a reassignment to a different APC at this
time. However, the APC Panel Subcommittee for APC Groups and Status
Indicator (SI) Assignments provides substantive advice to us on the
correct assignment of services to APCs, and the Subcommittee members
bring expertise and experience to their review of clinical issues.
Therefore, we will review the procedure described by the commenter with
the APC Panel's Subcommittee for APC Groups and Status Indicator (SI)
Assignments at the winter 2011 APC Panel meeting.
After review of the public comment we received, we are finalizing
our CY 2011 proposal, without modification, to continue to assign
Category III CPT code 0206T to APC 0340. As we indicated earlier, we
also will review the APC assignment of Category III CPT code 0206T with
the APC Panel's Subcommittee for APC Groups and SI Assignments at the
winter 2011 APC Panel meeting.
e. Unlisted Vascular Surgery Procedure (APC 0624)
For CY 2011, we proposed to continue to assign CPT code 37799
(Unlisted procedure, vascular surgery) to APC 0624 (Phlebotomy and
Minor Vascular Access Device Procedures), which had a proposed payment
rate of approximately $43.
Comment: One commenter requested that CMS reassign CPT code 37799
from APC 0624 to APC 0103 (Miscellaneous Vascular Procedures), which
had a proposed CY 2011 OPPS payment rate of approximately $1,309. The
commenter stated that CPT code 37799 is most clinically related to the
services assigned to APC 0103. The commenter further stated that
continuing to assign CPT code 37799 to APC 0624 would limit patient
access to new technology and clinically advanced procedures.
Response: As a matter of policy, which we have stated previously in
the OPPS final rules with comment period since 2005 (69 FR 65724
through 65725), HCPCS codes that are unlisted procedures, not otherwise
classified, or not otherwise specified codes, are assigned to the
lowest level APC that is appropriate to the clinical nature of the
service. We also do not consider the costs of these services in
assessing APCs for 2 times rule violations. We do not believe that the
assignment of CPT code 37799 to APC 0103, as the commenter suggested,
would be consistent with our policy to assign HCPCS codes for unlisted
procedures to the lowest level APC that is appropriate to the clinical
nature of the service. Because unlisted codes do not describe any
specific service, we believe that assigning them to the lowest level
APC is appropriate under the hospital OPPS. Furthermore, we cannot
assess whether the procedure described by CPT code 37799 is similar to
procedures in APC 0103 because the CPT code does not describe any
particular service. We note that the CPT instruction that appears
underneath CPT code 36592 (Collection of blood specimen using
established central or peripheral catheter, venous, not otherwise
specified) refers to the use of unlisted CPT code 37799 for blood
collection from an established arterial catheter, a very low intensity
service. We also note that we would assign a service or procedure to a
more appropriate APC once it is assigned to a specific CPT or HCPCS
code.
After consideration of the public comment we received, we are
finalizing our proposal, without modification, to continue to assign
CPT code 37799 to APC 0624, which has a final CY 2011 APC median cost
of approximately $43.
f. Implantable Loop Recorder Monitoring (APC 0691)
For CY 2011, we proposed to assign CPT code 93299 (Interrogation
device evaluation(s), (remote) up to 30 days; implantable
cardiovascular monitor system or implantable loop recorder system,
remote data acquisition(s), receipt of transmissions and technician
review, technical support and distribution of results) to APC 0691
(Level III Electronic Analysis of Devices), with a proposed payment
rate of approximately $169.
Comment: Some commenters acknowledged that APC 0691 is a reasonable
placement for CPT code 93299 based on its proposed rule median cost of
approximately $274, but questioned the accuracy of the CY 2009 proposed
rule claims data that CMS used to calculate the median cost. One

[[Page 71907]]

commenter stated that claims data were available for this service for
the first time for CY 2011 ratesetting and argued that the proposed
rule median cost for CPT code is too high, pointing out that the
average physician charge for the same service in CY 2009 was only
$42.87. In addition, the commenter stated that the OPPS median cost for
a similar service, described by CPT 93296 (Interrogation device
evaluation(s), (remote), up to 90 days; single, dual, or multiple lead
pacemaker system or implantable cardioverter-defibrillator system,
remote data acquisition(s), receipt of transmissions and technician
review, technical support and distribution of results) is significantly
lower than the median cost for CPT code 93299. Therefore, the commenter
suggested that CPT code 93299 be assigned to APC 0690 (Level I,
Electronic Analysis of Devices), the same APC to which CPT code 93296
is assigned.
Response: The commenters mistakenly cited $274 as the proposed rule
median cost for CPT code 93299 for CY 2011. The proposed rule
``median'' cost for CPT code 93299 was approximately $184, while the
proposed rule ``mean'' cost for CPT code 93299 was approximately $274.
We understand that the commenters are concerned about differences in
costs for services provided in different settings (HOPDs versus
physicians' offices) when the same services are provided to Medicare
beneficiaries. Even though both settings use the standard CPT code set,
the costs of providing these services in one setting may not be the
same as the costs in another setting. The OPPS and the MPFS are
fundamentally different payment systems with essential differences in
their payment policies. Specifically, the OPPS is a prospective payment
system, based on the concept of paying for groups of services that
share clinical and resource characteristics. Payment is made under the
OPPS according to prospectively established payment rates that are
related to the relative costs of hospital resources for services, as
calculated from claims data and Medicare cost reports. The MPFS is a
fee schedule that generally provides separate payment for each
individual service, reflecting the expected typical inputs into these
services. The OPPS methodology allows hospitals to actively contribute
on an ongoing basis to the ratesetting process through its annual
updates and to influence future payment rates for services by
submitting correctly coded and accurately priced claims for the
services they provide. According to this methodology, it is generally
not our policy to judge the accuracy of hospital coding and charging
for purposes of ratesetting. The CY 2011 final rule median cost for CPT
code 93299 is approximately $180, calculated from 558 single claims.
Therefore, we do not agree with commenters that we should assign this
procedure to APC 0690, which has a final rule median cost of only $35.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to continue to
assign CPT code 93299 to APC 0691, with a final CY 2011 APC median cost
of approximately $165.
2. Gastrointestinal (GI) Services: Upper GI Endoscopy (APCs 0141, 0384,
and 0422)
For CY 2011, we proposed to reassign four upper gastrointestinal
endoscopy CPT codes from APC 0141 (Level I Upper GI Procedures) to APC
0422 (Level II Upper GI Procedures). Specifically, we proposed to
reassign CPT codes 43216 (Esophagoscopy, rigid or flexible; with
removal of tumor(s), polyp(s), or other lesion(s) by hot biopsy forceps
or bipolar cautery), 43242 (Upper gastrointestinal endoscopy including
esophagus, stomach, and either the duodenum and/or jejunum as
appropriate; with transendoscopic ultrasound-guided intramural or
transmural fine needle aspiration/biopsy(s) (includes endoscopic
ultrasound examination of the esophagus, stomach, and either the
duodenum and/or jejunum as appropriate), 43510 Gastrotomy; with
esophageal dilation and insertion of permanent intraluminal tube (e.g.,
celestin or mousseaux-barbin)), and 43870 (Closure of gastrostomy,
surgical) from APC 0141, with a proposed payment rate of approximately
$606, to APC 0422, with a proposed payment rate of approximately
$1,113.
For CY 2011, we proposed to continue to assign CPT code 43240
(Upper gastrointestinal endoscopy including esophagus, stomach, and
either the duodenum and/or jejunum as appropriate; with transmural
drainage of pseudocyst) to APC 0141, with a proposed payment rate of
approximately $600. We also proposed to continue to assign CPT code
43228 (Esophagoscopy, rigid or flexible; with ablation of tumor(s),
polyp(s), or other lesion(s), not amenable to removal by hot biopsy
forceps, bipolar cautery or snare technique) to APC 0422 with a
proposed payment rate of approximately $1,113.
Comment: Several commenters disagreed with the reassignment of CPT
codes 43216, 43242, 43510, and 43870 from APC 0141 to APC 0422 because,
they stated, these procedures are similar to those services that will
continue to be assigned to APC 0141, specifically CPT codes 43231
(Esophagoscopy, rigid or flexible; with endoscopic ultrasound
examination), 43232 (Esophagoscopy, rigid or flexible; with
transendoscopic ultrasound-guided intramural or transmural fine needle
aspiration/biopsy(s)), 43237 (Upper gastrointestinal endoscopy
including esophagus, stomach, and either the duodenum and/or jejunum as
appropriate; with endoscopic ultrasound examination limited to the
esophagus), 43238 (Upper gastrointestinal endoscopy including
esophagus, stomach, and either the duodenum and/or jejunum as
appropriate; with transendoscopic ultrasound-guided intramural or
transmural fine needle aspiration/biopsy(s), esophagus (includes
endoscopic ultrasound examination limited to the esophagus)), and 43259
(Upper gastrointestinal endoscopy including esophagus, stomach, and
either the duodenum and/or jejunum as appropriate; with endoscopic
ultrasound examination, including the esophagus, stomach, and either
the duodenum and/or jejunum as appropriate). The commenters stated that
the reassignment to APC 0422 does not maintain the clinical homogeneity
and resource characteristics of these services.
Response: Section 1833(t)(9)(A) of the Act requires the Secretary
to review and revise the groups, the relative payment weights, and the
wage and other adjustments to take into account changes in medical
practice, changes in technology, the addition of new services, new cost
data, and other relevant information and factors; the Act further
requires us to repeat this process on a basis that is not less often
than annually. As such, we review, on an annual basis, all APC
assignments for both general appropriateness and for violations of the
2 times rule and, when necessary, reassign CPT codes to more
appropriate APCs. Although there was no violation of the 2 times rule
in APC 0141, based on our review of the CY 2009 proposed rule claims
data used for ratesetting, we believed that a change in APC assignment
was necessary for CPT codes 43216, 43242, 43510, and 43870. For CY
2011, the proposed median cost for APC 0141 was approximately $618.
However, the median cost for CPT codes 43216, 43242, 43510, and 43870
were significantly higher. Specifically, CPT code 43216 had a median
cost of approximately $1,329, CPT code 43242

[[Page 71908]]

had a median cost of approximately $1,074, CPT code 43510 had a median
cost of approximately $1,471, and CPT code 43870 had a median cost of
approximately $1,509. Based on the proposed rule median costs, we
proposed to reassign the four CPT codes to APC 0422, which had a
proposed APC median cost of approximately $1,136.
Our review of the CY 2011 final rule claims data indicates that the
median costs for these CPT codes continue to be more consistent with
assignment to APC 0422. Specifically, CY 2011 final rule claims data
shows that CPT code 43216 has a final rule median cost of approximately
$1,100, CPT code 43242 has a final rule median cost of approximately
$1,067, CPT code 43510 has a final rule median cost of approximately
$1,362, and CPT code 43870 has a final rule median cost of
approximately $1,454. Based on our examination of the CY 2011 OPPS
final rule claims data, we continue to believe that CPT codes 43216,
43242, 43510, and 43870 are appropriately placed in APC 0422, which has
a final rule APC median cost of approximately $1,137, based on clinical
homogeneity and resource costs.
Comment: Some commenters specifically disagreed with the APC
reassignment of CPT code 43242, which describes an ultrasound
procedure, because, the commenters stated, all the other ultrasound
procedures would continue to be assigned to APC 0141. The commenters
believed that the change may result in upcoding that could lead to
incorrect coding or inappropriate payment, and suggested that, to help
eliminate upcoding, CMS create a new APC specifically for ultrasound
upper GI procedures. Specifically, the commenters suggested the
creation of a new APC whose payment rate would be between the Level I
Upper GI Procedures APC 0141 and Level II Upper GI Procedures APC 0422.
The commenters stated that the restructuring of the current two APCs to
three upper level GI APCs would provide appropriate payment for upper
GI procedures consistent with CMS' policy of APC restructuring based on
resource homogeneity, clinical homogeneity, provider concentration,
frequency of service, and minimal opportunities for upcoding and code
fragmentation.
Response: Based on our review of the hospital outpatient claims
data used for ratesetting for the proposed rule, we determined that a
change in APC assignment for CPT code 43242 was necessary. As we
describe above, we continue to believe that the service associated with
CPT code 43242 is more similar in resource use to those services
assigned to APC 0422.
We do not agree with the commenters' suggestion for creating a new
APC specific to ultrasound upper GI procedures. Based on our medical
review team's assessment of the clinical characteristics of the
procedure described by CPT code 43242 and the other procedures assigned
to APC 0422, and based on the proposed rule and final rule claims data,
we believe that CPT code 43242 is similar clinically and in terms of
resource utilization to the upper GI procedures in APC 0422. Therefore,
for CY 2011, as we proposed, we will reassign CPT code 43242 to APC
0422. We note that, in all cases, hospitals must report HCPCS codes
that accurately reflect the services furnished; upcoding in order to
receive higher payment is considered fraudulent billing.
Comment: Several commenters requested that CMS reassign CPT code
43240 from APC 0141 to APC 0384 (GI Procedures with Stents), which had
a proposed payment rate of approximately $1,876. The commenters
believed that CPT code 43240 would be appropriately placed in APC 0384
based on resource and clinical homogeneity to other procedures assigned
to APC 0384.
Response: After review of our claims data for both the proposed
rule and the final rule and consideration of the clinical
characteristics, we do not agree with the commenters' recommendation to
reassign CPT code 43240 to APC 0384. We believe that the procedure
described by CPT code 43240 shares clinical similarities with the other
upper GI procedures assigned to APC 0141. Furthermore, our CY 2011
final rule claims data show that the median cost for CPT code 43240 of
approximately $738 based on 30 single claims (out of a total of 116
total claims) is substantially dissimilar to the median cost of
approximately $1,893 for APC 0384. We believe that the final rule
median cost of approximately $738 is more similar to the median cost of
approximately $605 for APC 0141. Therefore, for CY 2011, we will
continue to assign CPT code 43240 to APC 0141.
Comment: One commenter stated that the proposed payment reduction
for APC 0422 from $1,635 for CY 2010 to $1,113.48 for CY 2011 will
restrict Medicare beneficiary access to services that are in APC 0422.
The commenter further stated that the payment rate for APC 0422 is
inadequate to pay for the medical device required to perform the
service described by CPT code 43228.
Response: Review of our CY 2011 final rule claims data shows that
the median cost for CPT code 43228 is approximately $1,797 based on
1,759 single claims (out of a total of 2,199 claims), which is
relatively similar to the final rule median cost of $1,137 for APC
0422, which includes many upper GI procedures such as the procedure
described by CPT code 43228. Therefore, we continue to believe that the
procedure described by CPT code 43228 is appropriately placed in APC
0422 based on resource and clinical homogeneity to other procedures
currently assigned to APC 0422. We note that our cost-finding
methodology is based on reducing each hospital's charge for its
services to an estimated cost by applying the most discrete hospital-
specific CCR available for the hospital that submitted the claim.
Hence, it is the hospital's claims and cost reports that determine the
estimated costs that are used to calculate the median cost for each
service and, when aggregated into APC groups, the hospital data is used
to calculate the median cost for the APC on which the APC payment rate
is based.
With regard to the commenter's statement that hospitals will reduce
access to these services for Medicare beneficiaries if the payment for
them declines, we note that our regulations at 42 CFR 489.53(a)(2)
permit CMS to terminate a hospital's provider agreement if the hospital
places restriction on the persons it will accept for treatment and
fails either to exempt Medicare beneficiaries from those restrictions
or to apply them to Medicare beneficiaries the same as to all other
persons seeking care.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to reassign CPT
codes 43216, 43242, 43510, and 43870 from APC 0141 to APC 0422, which
has a final CY 2011 APC median cost of approximately $1,137. We also
are finalizing our CY 2011 proposal, without modification, to continue
to assign CPT code 43240 to APC 0141, which has a final CY 2011 APC
median cost of approximately $605, and to continue to assign CPT code
43228 to APC 0422, which has a final CY 2011 APC median cost of
approximately $1,137.
3. Genitourinary Services
a. Radiofrequency Remodeling of Bladder Neck (APC 0165)
For CY 2011, we proposed to continue to assign Category III CPT
code 0193T

[[Page 71909]]

(Transurethral, radiofrequency micro-remodeling of the female bladder
neck and proximal urethra for stress urinary incontinence) to APC 0165
(Level IV Urinary and Anal Procedures), with a proposed payment rate of
approximately $1,403. This CPT code has been assigned to APC 0165 since
it became effective in CY 2009.
Comment: Some commenters disagreed with the proposed continued APC
assignment of CPT code 0193T to APC 0165. The commenters believed that
the proposed payment rate for APC 0165 does not accurately reflect the
costs incurred by hospitals that perform the procedure described by CPT
code 0193T, especially because the procedure itself utilizes a costly
single-use disposable medical device. The commenters suggested the
assignment of CPT code 0193 to APC 0202 (Level VII Female Reproductive
Procedures), which had a proposed payment rate of $3,086, because APC
0202 contains procedures that are very similar to the provedure
described by CPT code 0193T. Specifically, the commenters indicated
that CPT code 0193T is similar in clinical characteristics and resource
costs to HCPCS codes 58356 (Endometrial cryoablation with ultrasonic
guidance, including endometrial curettage, when performed) and 58565
(Hysteroscopy, surgical; with bilateral fallopian tube cannulation to
induce occlusion by placement of permanent implants), which are
assigned to APC 0202. As an alternative, the commenters recommended the
reassignment of CPT code 0193T to APC 0168 (Level II Urethral
Procedures), which had a proposed payment rate of $2,211, because CPT
code 0193T is also similar clinically and resource costs to CPT code
51715 (Endoscopic injection of implant material into the submucosal
tissues of the urethra and/or bladder neck), which are assigned to APC
0168. The commenters added that the probe used in the procedure
associated with CPT code 0193T costs $1,095, and, overall, the total
procedure cost with the probe is approximately $2,600.
Response: We do not have any CY 2009 hospital claims data for CPT
code 0193T, which became effective on January 1, 2009. Category III CPT
codes are temporary codes that describe emerging technology,
procedures, and services, and these CPT codes were created by AMA to
allow for data collection for new services or procedures. Under the
OPPS, we generally assign new Category III CPT codes to clinical APCs
based on input from a variety of sources, including, but not limited
to, review of resource costs and clinical homogeneity of the service to
existing procedures, information from specialty societies, input from
our medical officers, and other information available to us. Based on
our review of the clinical characteristics of CPT code 0193T, as well
as the other procedures assigned to APCs 0165, 0168, and 0202, we
continue to believe that the most appropriate APC for CPT code 0193T is
APC 0165, and that the procedures contained in APC 0165 are clinically
similar to that of CPT code 0193T. As we have stated in the past (74 FR
60446), we do not agree with the commenters that the procedures
assigned to APC 0202 that involve fallopian tube cannulation or
endometrial ablation are sufficiently similar to the procedure
described by CPT code 0193T based on procedure duration, device
utilization, use of guidance, or other characteristics to warrant
reassignment of CPT code 0193T to APC 0202 based on considerations of
clinical homogeneity. We also do not believe that CPT code 0193T is
sufficiently similar to CPT code 51715, which involves an endoscopic
injection of implant material, to warrant reassignment.
Furthermore, we note that, at the August 2009 APC Panel meeting, a
presenter requested that the APC Panel recommend that CMS reassign CPT
code 0193T to either APC 0202 or APC 0168 based on resource
intensiveness and therapeutic benefit. The presenter claimed that the
device cost associated with CPT code 0193T is comparable to those
single-use devices that are used with certain procedures listed under
APC 0202, specifically those described by CPT codes 58356, 58565, and
57288. This same presenter indicated that, unlike the medical devices
used in the procedures that are in APC 0202, the costs of the single-
use medical devices for the procedures in APC 0165 are very minimal.
After a discussion, the APC Panel recommended that CMS maintain the APC
assignment of CPT code 0193T to APC 0165.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue to assign
CPT code 0193T to APC 0165, which has a final CY 2011 median cost of
approximately $1,369.
For CY 2011, the AMA CPT Editorial Panel decided to delete Category
III CPT code 0193T on December 31, 2010, and replace it with CPT code
53860 (Transurethral radiofrequency micro-remodeling of the female
bladder neck and proximal urethra for stress urinary incontinence)
effective January 1, 2011. Similar to its predecessor CPT code, the
replacement CPT code 53860 will be assigned to APC 0165 effective
January 1, 2011.
b. Percutaneous Renal Cryoablation (APC 0423)
For CY 2011, we proposed to continue to assign CPT code 50593
(Ablation, renal tumor(s), unilateral, percutaneous, cryotherapy) to
APC 0423 (Level II Percutaneous Abdominal and Biliary Procedures), with
a proposed payment rate of approximately $3,905. This CPT code was a
new code in CY 2008; however, the same service was previously described
by CPT code 0135T (Ablation renal tumor(s), unilateral, percutaneous,
cryotherapy). We note that, for CY 2007, based upon the APC Panel's
recommendation made at its March 2006 meeting, we reassigned CPT code
50593 (then CPT code 0135T) from APC 0163 (Level IV Cystourethroscopy
and other Genitourinary Procedures) to APC 0423, effective January 1,
2007.
Comment: One commenter expressed concern that the proposed payment
rate of approximately $3,905 for CPT code 50593 is inadequate because
the payment does not accurately account for the costs incurred by
hospitals in performing the procedure described by this code. The
commenter argued that the proposed payment rate for CPT code 50593,
which the commenter considered low, is attributable to claims data that
do not accurately capture the full costs of CPT code 50593 because only
57 percent of the claims data used to establish the median cost for
this procedure were correctly coded, and that the single claims do not
contain the HCPCS code and associated charge for the required device,
specifically HCPCS code C2618 (Probe, cryoablation). The commenter
requested that CMS designate CPT code 50593 as a device-dependent
procedure, which would require hospitals to submit claims with the
appropriate device HCPCS code, assign the procedure to its own APC, and
set the payment rate for that APC based on claims for CPT code 50593
reported with HCPCS code C2618. The commenter argued that this request
would be appropriate because the procedure described by CPT code 50593
cannot be performed without the utilization of the device described by
HCPCS code C2618. The commenter's analysis concluded that the median
cost on which payment for CPT code 50593 would be based if the request
were honored would be approximately $5,598, resulting in a more
accurate payment rate for the procedure and continued Medicare
beneficiary access to percutaneous renal cryoablation in the hospital
outpatient setting. The

[[Page 71910]]

commenter further stated that, although APC 0423 groups similar
ablation procedures, none of the other procedures in the APC involve
high-cost devices.
Response: We continue to believe that CPT code 50593 is
appropriately assigned to APC 0423 based on clinical and resource
considerations when compared to other procedures also proposed for
assignment to APC 0423 for CY 2011. As we stated in the CY 2007 OPPS
final rule with comment period (71 FR 68049 through 68050), the CY 2008
OPPS/ASC final rule with comment period (72 FR 66709), the CY 2009
OPPS/ASC final rule with comment period (73 FR 68611), and the CY 2010
OPPS/ASC final rule with comment period (74 FR 60444), we initially
revised the APC assignment for the percutaneous renal cryoablation
procedure from APC 0163 to APC 0423 in CY 2007 based on the APC Panel's
recommendation to reassign the procedure to APC 0423. The median costs
of the four HCPCS codes assigned to APC 0423 for CY 2011 range from
approximately $3,477 to $4,736, well within the two-fold variation in
median cost that is permitted by law for an OPPS payment group. Even if
we were to calculate the median cost for CPT code 50593 using only
claims that also contain HCPCS code C2618, estimated by the commenter
to be approximately $5,598 using proposed rule data, the grouping of
these procedures in the same APC would not violate the 2 times rule.
We also do not agree that CPT code 50593 should be designated as a
device-dependent procedure and assigned to its own separate APC. We
have only 344 single claims (out of a total of 757 claims) for CPT code
50593 from CY 2009 and, as such, the procedure has the second lowest
frequency of the four procedures assigned to APC 0423. As we stated in
the CY 2010 OPS/ASC final rule with comment period (74 FR 60444 through
60445), we continue to believe this relatively low volume procedure
should be assigned to a payment group with similar services, as we have
proposed, in order to promote payment stability and encourage hospital
efficiency. In addition, we do not identify individual HCPCS codes as
device-dependent HCPCS codes under the OPPS. Rather, we first consider
the clinical and resource characteristics of a procedure and determine
the most appropriate APC assignment. When we determine that we should
assign a procedure to an APC that is device-dependent, based on whether
that APC has been historically identified under the OPPS as having very
high device costs, we then consider the implementation of device edits,
as appropriate. We again note that the identification of device-
dependent APCs was particularly important in the early years of the
OPPS when separate pass-through payment for many implantable devices
expired. At that time, a variety of methodologies to package the costs
of those devices into procedural APCs was utilized over several years
to ensure appropriate incorporation of the device costs into the
procedure payments. At this point in time, hospitals have significantly
more experience reporting HCPCS codes for packaged and separately
payable items and services under the OPPS and the payment groups are
more mature. We believe our standard ratesetting methodology typically
results in appropriate payment rates for new procedures that utilize
devices, as well as those that do not use high cost devices. In recent
years, we have not encountered circumstances for which we have had to
establish new device-dependent APCs because we were not able to
accommodate the clinical and resource characteristics of a procedure by
assigning it to an existing APC (whether device-dependent or non-
device-dependent), and the procedure described by CPT code 50593 is not
an exception.
While all of the procedures assigned to APC 0423 require the use of
implantable devices, for many of the procedures, there are no Level II
HCPCS codes that describe all of the technologies that may be used in
the procedures. Therefore, as we indicated in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60445), it would not be possible
for us to develop procedure-to-device edits for all of the CPT codes
assigned to APC 0423. Under the OPPS, there are many other procedures
that require the use of implantable devices that, because they are
assigned to OPPS APCs that are not device-dependent, do not have
procedure-to-device edits applied, even if those claims processing
edits would be feasible. We continue to believe that our payments for
procedures that utilize high cost devices are appropriate for those
services, even when those services are grouped with other procedures
that either do not require the use of implantable devices or which
utilize devices that are not described by specific Level II HCPCS
codes.
When reporting CPT code 50593, we expect hospitals to also report
the device HCPCS code C2618, which is associated with this procedure.
We also remind hospitals that they must report all of the HCPCS codes
that appropriately describe the items used to provide services,
regardless of whether the HCPCS codes are packaged or paid separately.
If hospitals use more than one probe in performing the procedure
described by CPT code 50593, we expect hospitals to report this
information on the claim and adjust their charges accordingly.
Hospitals should report the number of cryoablation probes used to
perform the procedure described by CPT code 50593 as the units of HCPCS
code C2618 which describes these devices, with their charges for the
probes. Since CY 2005, we have required hospitals to report device
HCPCS codes for all devices used in procedures if there are appropriate
HCPCS codes available. In this way, we can be confident that hospitals
have included charges on their claims for costly devices used in
procedures when they submit claims for those procedures.
After consideration of the public comment we received, we are
finalizing our CY 2011 proposal, without modification, to continue to
assign CPT code 50593 to APC 0423, which has a final CY 2011 APC median
cost of approximately $3,855.
4. Nervous System Services
a. Pain-Related Procedures (APCs 0203, 0204, 0206, 0207, and 0388)
For CY 2011, we proposed to set the payment rates for APCs to which
pain-related procedures were assigned based on the median costs
determined under the standard OPPS ratesetting methodology.
Specifically, we proposed the following CY 2011 payment rates for the
pain-related APCs: APC 0203 (Level IV Nerve Injections), with a
proposed payment rate of approximately $908; APC 0204 (Level I Nerve
Injections), with a proposed payment rate of approximately $182; APC
0206 (Level II Nerve Injections), with a (proposed payment rate of
approximately $265); APC 0207 (Level III Nerve Injections), with a
proposed payment rate of approximately $527), and APC 0388
(Discography), with a proposed payment rate of approximately $1,702).
For CY 2011, we proposed to reassign CPT codes 62273 (Injection,
epidural, of blood or clot patch) and 64408 (Injection, anesthetic
agent; vagus nerve) from APC 0206 to APC 0207, and to reassign CPT code
62319 (Injection, including catheter placement, continuous infusion or
intermittent bolus, not including neurolytic substances, with or
without contrast (for either localization or epidurography), of
diagnostic or therapeutic substance(s) (including anesthetic,
antispasmodic, opioid, steroid, other solution), epidural

[[Page 71911]]

or subarachnoid; lumbar, sacral (caudal)) from APC 0207 to APC 0203.
Table 24 provides the CPT codes on which we received comments together
with the CY 2010 APC assignment, the CY 2011 proposed rule APC
assignment, and the CY 2011 final rule APC assignment for each code.

Table 24--Pain-Related Procedures On Which We Received Public Comments
----------------------------------------------------------------------------------------------------------------
Proposed CY Final CY 2011
CPT Code Long descriptor CY 2010 APC 2011 APC APC
----------------------------------------------------------------------------------------------------------------
62273.................... Injection, epidural, of blood or clot 0206 0207 0207
patch), 64408 (Injection, anesthetic
agent; vagus nerve.
62318.................... Injection, including catheter 0207 0207 0207
placement, continuous infusion or
intermittent bolus, not including
neurolytic substances, with or
without contrast (for either
localization or epidurography), of
diagnostic or therapeutic
substance(s) (including anesthetic,
antispasmodic, opioid, steroid,
other solution), epidural or
subarachnoid; cervical or thoracic.
62319.................... Injection, including catheter 0207 0203 0203
placement, continuous infusion or
intermittent bolus, not including
neurolytic substances, with or
without contrast (for either
localization or epidurography), of
diagnostic or therapeutic
substance(s) (including anesthetic,
antispasmodic, opioid, steroid,
other solution), epidural or
subarachnoid; lumbar, sacral
(caudal).
64408.................... Injection, anesthetic agent; vagus 0207 0207 0207
nerve.
64410.................... Injection, anesthetic agent; phrenic 0207 0207 0207
nerve.
64412.................... Injection, anesthetic agent; spinal 0207 0207 0207
accessory nerve.
64480.................... Injection, anesthetic agent and/or 0206 0206 0206
steroid, transforaminal epidural;
cervical or thoracic, each
additional level (List separately in
addition to code for primary
procedure).
64484.................... Injection, anesthetic agent and/or 0206 0206 0206
steroid, transforaminal epidural;
lumbar or sacral, each additional
level (List separately in addition
to code for primary procedure).
64491.................... Injection(s), diagnostic or 0204 0204 0204
therapeutic agent, paravertebral
facet (zygapophyseal) joint (or
nerves innervating that joint) with
image guidance (fluoroscopy or CT),
cervical or thoracic; second level
(List separately in addition to code
for primary procedure).
64492.................... Injection(s), diagnostic or 0204 0204 0204
therapeutic agent, paravertebral
facet (zygapophyseal) joint (or
nerves innervating that joint) with
image guidance (fluoroscopy or CT),
cervical or thoracic; third and any
additional level(s) (List separately
in addition to code for primary
procedure).
64493.................... Injection(s), diagnostic or 0207 0207 0207
therapeutic agent, paravertebral
facet (zygapophyseal) joint (or
nerves innervating that joint) with
image guidance (fluoroscopy or CT),
lumbar or sacral; single level.
64494.................... Injection(s), diagnostic or 0204 0204 0204
therapeutic agent, paravertebral
facet (zygapophyseal) joint (or
nerves innervating that joint) with
image guidance (fluoroscopy or CT),
lumbar or sacral; second level (List
separately in addition to code for
primary procedure).
64623.................... Destruction by neurolytic agent, 0207 0207 0207
paravertebral facet joint nerve;
lumbar or sacral, each additional
level (List separately in addition
to code for primary procedure).
64626.................... Destruction by neurolytic agent, 0207 0207 0207
paravertebral facet joint nerve;
cervical or thoracic, single level.
64627.................... Destruction by neurolytic agent, 0204 0204 0204
paravertebral facet joint nerve;
cervical or thoracic, each
additional level (List separately in
addition to code for primary
procedure).
72285.................... Discography, cervical or thoracic, 0338 0338 0338
radiological supervision and
interpretation.
72295.................... Discography, lumbar, radiological 0338 0338 0338
supervision and interpretation.
----------------------------------------------------------------------------------------------------------------

Comment: One commenter objected to what the commenter stated were
continuing declines in OPPS payment for CPT add-on codes 64491, 64492,
64493, 64494, 64480, 64484, 64623, and 64627. The commenter objected
both to the declines in the payment rates, which they indicate have
been as much as 50 percent since CY 2007, and to the application of the
multiple procedure reduction to them which further reduces the payment
for them by both Medicare and other payers.
Response: CPT codes 64491, 64492, 64493, and 64494 were new codes
in CY 2010. Therefore, we do not have CY 2009 claims data on which to
calculate a median cost for CY 2011 ratesetting purposes. In accordance
with our standard ratesetting policy, we proposed to assign the new
codes to the APCs that our clinicians believe are appropriate based on
their understanding of the nature of the service and the resources that
are required by services that they believe to be comparable. These
codes had new interim APC placements for CY 2010 and were open to a 60-
day public comment period. We received no public comments objecting to
the APC placement of the new codes.
With regard to the variation in costs for CPT codes 64480, 64484,
64623, and 64627, as we have stated in the past, OPPS payment rates
fluctuate based on a variety of factors, including, but not limited to,
changes in the mix of hospitals billing the services, differential
changes in hospital charges and costs for the services, and changes in
the volumes of services reported (74 FR 60447). Therefore, the median
costs upon which the OPPS payment rates are based vary from one year to
another. We note that the median costs of all of the APCs to which CPT
codes 64480, 64484, 64623, and 64627 are assigned increased

[[Page 71912]]

between CY 2009 and CY 2010 and again between CY 2010 and CY 2011.
Specifically, for CPT codes 64480 and 64484, the median cost of APC
0206 to which they are assigned increased from approximately $236 in CY
2009 to approximately $249 in CY 2010 and to approximately $265 based
on CY 2011 final rule data. In the case of CPT code 64627, the median
cost of APC 0204 to which CPT code 64627 is assigned increased from
approximately $161 in CY 2009 to approximately $171 in CY 2010 and to
approximately $182 based on CY 2011 final rule data. Lastly, for CPT
code 64623, the median cost of APC 0207 to which the code is assigned
increased from approximately $463 in CY 2009 to approximately $481 in
CY 2010 and to approximately $517 based on final rule data for CY 2011.
We are finalizing the APC assignments for all of these procedures as
shown in Table 24.
With regard to the application of the multiple procedure reduction
for APCs 0204, 0206, and 0207, we continue to believe that it is
appropriate to reduce the payment for services furnished in these APCs
by 50 percent when they are furnished with a procedure that is paid at
the same or a higher rate because we believe that there are significant
efficiencies associated with providing multiple procedures during the
same encounter.
Comment: One commenter objected to the proposed payment rate for
CPT codes 72285 and 72295, which the commenter indicated is a 73-
percent increase compared to the CY 2007 OPPS payment rate. The
commenter stated that CPT codes 62290 (Injection procedure for
discography, each level; lumbar) and 62291 (Injection procedure for
discography, each level; cervical or thoracic) describe the procedures
and that CPT codes 72285 and 72295 are paid at an unreasonable rate.
Response: As we have noted in the past (74 FR 60447), CPT codes
72285 and 72295, both of which are assigned to APC 0388, are ``T''
packaged codes and, as such, are paid separately only if there is no
separately paid surgical procedure with a status indicator of ``T'' on
the same claim. When there is a separate payment made for these
services, the payment is not only payment for the service itself but
also includes payment for all services reported on the claim that are
always packaged (that is, those with a status indicator of ``N''). The
median cost of APC 0388 to which CPT codes 72285 and 72295 are assigned
for payment when separate payment can be made increased from
approximately $1,470 in CY 2009 to approximately $1,727 in CY 2010 and
decreased to approximately $1,654 based on final rule data for CY 2011.
The median costs reflect the cost of all conditionally and
unconditionally packaged services on the claim. Payment for CPT codes
62290 and 62291 is always packaged into payment for the independent,
separately paid procedures with which these codes are reported because
we believe that these codes are ancillary and supportive to other major
separately paid procedures and that they are furnished only as an
ancillary and dependent part of an independent separately paid
procedure. Therefore when CPT codes 72285 and 72295 are the only
separately paid procedures that appear on the claim, payment for CPT
codes 72285 and 72295 includes the payment for CPT codes 62290 and
62291.
Comment: One commenter supported the proposed payment for CPT code
62273 and 62318.
Response: We appreciate the commenter's support.
Comment: One commenter argued that the proposed payment rates for
CPT codes 64408, 64410, and 64412 are excessive because these codes
were proposed to be paid at the same level as epidural and neurolytic
injections. The commenter objected to neurolytic epidural injections
receiving less payment than the payment proposed for these services.
The commenter did not identify the CPT codes of concern.
Response: We proposed to assign CPT codes 64408, 64410, and 64412
to APC 0207 based on what our clinicians believe to be clinical
similarity with other procedures in APC 0207 and because these
procedures have median costs that are similar to the median costs of
other procedures in APC 0207. We continue to believe that these APC
assignments are correct and are finalizing the proposed assignments. We
are unable to compare the clinical characteristics of the services
without knowing the specific CPT codes of the epidural and neurolytic
injections of concern to the commenter.
Comment: One commenter objected to the proposed reassignment of CPT
code 62319 from APC 0207 to APC 0203. The commenter believed this
proposed reassignment would result in excessive payment for CPT code
62319.
Response: CPT code 62319 is assigned to APC 0207 for CY 2010, with
a national unadjusted payment rate of approximately $485. We proposed
to reassign CPT code 62319 from APC 0207 to APC 0203 because the
proposed rule median cost for CPT code 62319 was approximately $887
and, therefore, was far more similar to the proposed rule median cost
of approximately $926 for APC 0203 than it was similar to the proposed
rule median cost of approximately $537 for APC 0207. In the final rule
claims data, the median cost for CPT code 62319, which is approximately
$801, continues to be more similar to the median cost of approximately
$872 for APC 0203 than to the median cost of approximately $517 for APC
0207. Therefore, we are assigning CPT code 62319 to APC 0203 for CY
2011 as we proposed.
Comment: One commenter objected to the proposed reduction in
payment for CPT code 64626 from $908.40 for CY 2010 to $527.12 for CY
2011. The commenter believed that the proposed reduction results from a
reassignment of the code to a new category.
Response: CPT code 64626 is assigned to APC 0207 for CY 2010 and
the national unadjusted payment rate is approximately $485. For CY
2011, we did not propose to reassign CPT code 64626 as the commenter
believed. For CY 2011, we proposed to continue to assign CPT code 64626
to APC 0207, for which we proposed a national unadjusted payment rate
of approximately $527. Based on our analysis of final rule claims data,
we are continuing to assign CPT code 64626, which has a final rule
median cost of approximately $915, to APC 0207, which has a final rule
median cost of approximately $517. We continue to believe that CPT code
64626 is clinically similar and requires resources similar to the other
codes that are assigned to APC 0207. We note that there are no 2 times
violations in APC 0207.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposals, without modification, to pay for CPT
codes 64491, 64492, 64493, 64494, 64480, 64484, 64623, 64627, 72285,
72295, 64408, 64410, 64412, 62318, 62319, and 64626 through APCs 0203,
0204, 0206, 0207, and 0388, as shown in Table 24 above. APC 0203 has a
CY 2011 final rule median cost of approximately $872, APC 0204 has a CY
2011 final rule median cost of approximately $182, APC 0206 has a CY
2011 final rule median cost of approximately $265, APC 0207 has a CY
2011 final rule median cost of approximately $517, and APC 0388 has a
CY 2011 final rule median cost of approximately $1,654. We are
finalizing our proposed assignment of CPT code 62273 to APC 0207. We
also are finalizing our proposed reassignment of CPT code 62319 from
APC 0207 to APC 0203, and we are continuing to assign CPT code 64626 to
APC 0207.

[[Page 71913]]

b. Revision/Removal of Neurostimulator Electrodes (APC 0687)
For CY 2011, we proposed to continue to assign CPT codes 63661
(Removal of spinal neurostimulator electrode percutaneous array(s),
including fluoroscopy, when performed), 63662 (Removal of spinal
neurostimulator electrode plate/paddle(s) placed via laminotomy or
laminectomy, including fluoroscopy, when performed), 63663 (Revision,
including replacement, when performed, of spinal neurostimulator
electrode percutaneous array(s), including fluoroscopy, when
performed), and 63664 (Revision, including replacement, when performed,
of spinal neurostimulator electrode plate/paddle(s) placed via
laminotomy or laminectomy, including fluoroscopy, when performed) to
APC 0687 (Revision/Removal of Neurostimulator Electrodes), for which we
proposed a CY 2011 median cost of approximately $1,527. For CY 2010,
these CPT codes were assigned to APC 0687, which has a CY 2010 national
unadjusted payment rate of approximately $1,324. These new codes were
created effective for services performed on or after January 1, 2010,
when the AMA CPT Editorial Board deleted CPT code 63660 (Revision or
removal of spinal neurostimulator electrode percutaneous array(s) or
plate/paddle(s)) and created new CPT codes 63661, 63662, 63663, and
63664 to differentiate between revision and removal procedures, and to
also differentiate between percutaneous leads (arrays) and surgical
leads (plates/paddles). In accordance with our standard policy, we
indicated in Addendum B of the CY 2010 final rule that the APC
assignments for these new CPT codes for CY 2010 were new interim APC
assignments by showing comment indicator ``NI'' for each new code, and
we accepted public comment on them. We received public comments both in
response to the CY 2010 final rule interim APC assignment and in
response to our CY 2011 proposal to continue to assign the new codes to
APC 0687. We have incorporated the CY 2010 final rule comments and
responses into the summary of the comments and responses on our
proposal to continue to assign the new codes to APC 0687 for CY 2011.
Comment: Commenters supported the placement of CPT codes 63661 and
63662 in APC 0687. However, they objected to the placement of CPT codes
63664 and 63665 in APC 0687 because, they stated, these codes are used
to report both revision and replacement of neurostimulator electrodes.
The commenters believed that hospital resources are substantially
greater when neurostimulator electrodes are being replaced rather than
revised. They asked that CMS create and require hospitals to use four
new Level II alpha numeric codes to report these services in place of
the CPT codes. Specifically, they asked that CMS create Level II alpha
numeric HCPCS codes for (1) Revision of spinal neurostimulator
electrode percutaneous arrays; (2) Revision of spinal neurostimualtor
electrode plate/paddle arrays; (3) Replacement of spinal
neurostimulator electrode percutaneous arrays; and (4) Replacement of
spinal neurostimulator electrode plate/paddle arrays. They stated that
CMS could continue to assign the two new HCPCS codes for revision of
electrodes to APC 0687, which has a CY 2010 national unadjusted payment
rate of approximately $1,324. However, the commenters suggested stated
that CMS assign the new HCPCS codes for replacement of percutaneous
electrodes to device-dependent APC 0040 (Percutaneous Implantation of
Neurostimulator Electrodes), which has a CY 2010 national unadjusted
payment rate of approximately $4,429. They also suggested that CMS
assign the new HCPCS codes for replacement of plate/paddle electrodes
to device dependent APC 0061 (Laminectomy, Laproscopy, or Incision for
Implantation of Neurostimulator Electrodes), which has a CY 2010
national unadjusted payment rate of approximately $5,832. The
commenters believed that the creation of the two Level II alpha numeric
HCPCS codes for replacement of the neurostimulator electrode devices
and their assignment to device-dependent APCs 0040 and 0061 are
necessary to ensure that hospitals are paid appropriately for the cost
of the electrodes that are inserted during a replacement procedure. One
commenter stated that an analysis of the registration information it
maintains on individual patients, products, and associated procedures
from June 2004 to April 2010 shows that 343 lead revisions would
currently fall into CPT code 63663 or 63664. The commenter further
stated that, of these 343 cases, 22 percent were revised without a
device while 78 percent were revised with replacement of a device (the
commenter provided aggregate information across both CPT codes). The
commenter indicated that its data support the need to create the new
Level II alpha numeric HCPCS codes and to assign the codes for
neurostimulator electrode replacement to APCs 0040 and 0061. The
commenter stated that CMS has created Level II alpha numeric HCPCS
codes for the same reason in the past and, therefore, has a precedent
for creating the Level II alpha numeric HCPCS codes as the commenter
requested.
Response: For CY 2011, we are assigning CPT codes 63661, 63662,
63663, and 63664 to APC 0687 as we proposed, with a CY 2011 final rule
median cost of approximately $1,480. We do not have CY 2009 claims data
on the cost of these codes upon which to make an assessment of whether
there is a meaningful difference between the cost of revising the
electrodes or replacing them. Therefore, we are not convinced by the
commenters that the use of the CPT codes for these services and the
assignment of the codes for revision/replacement of neurostimulator
electrodes to APC 0687 are inappropriate. Further, the OPPS is a
payment system of averages in which the payment for a service is based
on the estimated relative cost of the service, including a range of
supply and other input costs, as well as other services in the same APC
that are comparable in resource cost and clinical homogeneity. We
expect that hospital charges for a service, which are derived from the
cost of a service, can vary across individual patients. Therefore, we
expect variability in the estimated cost of a service, across cases in
a hospital and among hospitals, to be reflected at some level in the
final APC relative payment weight. Further, hospitals frequently advise
us that when we create and require that they report Level II alpha
numeric HCPCS codes to report services for which CPT codes exist, it
imposes a significant and costly administrative burden on them. Hence,
we prefer not to create Level II alpha numeric codes unless there is a
strong need to do so to administer the Medicare program, particularly
when there are CPT codes that can be used to accurately report the
service. However, we will examine estimated costs for these four new
CPT codes in the CY 2010 claims data we will use to model the CY 2012
proposed rule when that data are available.
After carefully considering the public comments we received in
response to the CY 2010 final rule with comment period and the CY 2011
proposed rule, we are continuing to assign CPT codes 63661, 63662,
63663, and 63664 to APC 0687, with a CY 2011 final rule median cost of
approximately $1,480.

[[Page 71914]]

5. Radiation Therapy Services
a. Stereotactic Radiosurgery (SRS) Treatment Delivery Services (APCs
0065, 0066, 0067, and 0127)
For CY 2011, we proposed to continue to assign CPT code 77371
(Radiation treatment delivery, stereotactic radiosurgery (SRS),
complete course of treatment of cranial lesion(s) consisting of 1
session; multi-source Cobalt 60 based) to APC 0127 (Level IV
Stereotactic Radiosurgery, MRgFUS, and MEG), with a proposed payment
rate of approximately $7,221.
We also proposed to continue to recognize four existing HCPCS G-
codes that describe linear accelerator-based SRS treatment delivery
services for separate payment in CY 2011. Specifically, we proposed the
following: to assign HCPCS code G0173 (Linear accelerator based
stereotactic radiosurgery, complete course of therapy in one session)
and HCPCS code G0339 (Image-guided robotic linear accelerator-based
stereotactic radiosurgery, complete course of therapy in one session or
first session of fractionated treatment) to APC 0067 (Level III
Stereotactic Radiosurgery, MRgFUS, and MEG), with a proposed payment
rate of approximately $3,414; to assign HCPCS code G0251 (Linear
accelerator-based stereotactic radiosurgery, delivery including
collimator changes and custom plugging, fractionated treatment, all
lesions, per session, maximum five sessions per course of treatment) to
APC 0065 (Level I Stereotactic Radiosurgery, MRgFUS, and MEG), with a
proposed payment rate of approximately $960; and to assign HCPCS code
G0340 (Image-guided robotic linear accelerator-based stereotactic
radiosurgery, delivery including collimator changes and custom
plugging, fractionated treatment, all lesions, per session, second
through fifth sessions, maximum five sessions per course of treatment)
to APC 0066 (Level II Stereotactic Radiosurgery, MRgFUS, and MEG), with
a proposed payment rate of approximately $2,517.
Further, we proposed to continue to assign SRS CPT codes 77372
(Radiation treatment delivery, stereotactic radiosurgery (SRS)
(complete course of treatment of cerebral lesion(s) consisting of 1
session); linear accelerator based) and 77373 (Stereotactic body
radiation therapy, treatment delivery, per fraction to 1 or more
lesions, including image guidance, entire course not to exceed 5
fractions) status indicator ``B'' (Codes that are not recognized by
OPPS when submitted on an outpatient hospital Part B bill type (12x and
13x)) under the OPPS, to indicate that these CPT codes are not payable
under the OPPS.
Comment: One commenter urged CMS to reevaluate the APC assignments
for the linear accelerator-based (LINAC) and robotic Cobalt-60 based
stereotactic radiosurgery (r-SRS) HCPCS codes, given the recent
introduction of a frameless Cobalt-60 system that can be used to
deliver treatments in multiple sessions. The commenter stated that no
clinical data exist to support the need for differential payments for
LINAC-based and Cobalt-60 r-SRS procedures. The commenter further
explained that current medical literature cites no difference in
clinical effectiveness for one system over another, and stated that
treatment with a Cobalt-60 system, when compared to LINAC-based system,
does not lead to superior outcomes. The commenter recommended that CMS
assign HCPCS code G0339 and CPT code 77371 to the same APC, thereby
establishing payment parity for the complete course of treatment for
intracranial and other head and neck r-SRS, regardless of equipment,
energy source, or whether a frame is used in the procedure. In
addition, the commenter argued that this APC reevaluation is necessary
to protect the Medicare program and beneficiaries from excessive costs
associated with Cobalt-60 system, when both the LINAC-based and Cobalt-
60 systems are similar in clinical homogeneity and resource costs.
Response: We disagree with the comment's argument that the LINAC-
based and Cobalt-60 based systems have similar resource costs. For the
past several years, we have seen resource differences based on the
median costs for the LINAC-based and Cobalt-60 based systems, and
analysis of our claims data show that the median costs for LINAC-based
and Cobalt-60 SRS procedures vary significantly. Since CY 2007, when
CPT code 77371 became effective, our claims data have shown
consistently a median cost of more than $7,000 for the service
associated with the Cobalt-60 system, which is higher than the median
cost of approximately $3,500 for the LINAC-based system (described by
HCPCS G-code G0339).
Analysis of the updated CY 2009 claims data used for this final
rule with comment period indicates that the code-specific median costs
for the LINAC-based and Cobalt-60 systems continue to vary. Our updated
claims data on the hospital outpatient claims available for CY 2011
ratesetting show a median cost of approximately $7,580 for CPT code
77371 based on 529 single claims (out of a total of 4,336 claims),
which is significantly higher than the median costs associated with
HCPCS codes G0173, G0251, G0339, and G0340. Specifically, our claims
data indicate a median cost of approximately $2,960 for HCPCS code
G0173 based on 627 single claims (out of a total of 1,460 claims), a
median cost of approximately $964 for HCPCS code G0251 based on 7,005
single claims (out of a total of 7,739 claims), a median cost of
approximately $3,510 for HCPCS code G0339 based on 5,762 single claims
(out of a total of 7,735 claims), and a median cost of approximately
$2,478 for HCPCS code G0340 based on 18,539 single claims (out of a
total of 18,713 claims). Because the median costs of HCPCS code G0339
and CPT code 77371 vary significantly, we do not believe it would be
appropriate to provide OPPS payment through a single APC for these r-
SRS treatment delivery services in CY 2011. We continue to believe that
APC 0127 is an appropriate APC assignment for CPT code 77371, and,
similarly, that APC 0067 is an appropriate APC assignment for HCPCS
code G0339 based on consideration of the clinical characteristics
associated with these procedures and based on the median costs for
these services calculated from the most recently available hospital
outpatient claims and cost report data. Consistent with our current
policy to annually assess the appropriateness of the APC assignments
for all services under the hospital OPPS, we will continue to monitor
our claims data for the SRS treatment delivery services in the future.
As we have stated in the past (74 FR 60456), the OPPS is a
prospective payment system, where APC payment rates are based on the
relative costs of services as reported to us by hospitals according to
the most recent claims and cost report data as described in section
II.A. of this final rule with comment period. The 2 times rule
specifies that the median cost of the highest cost item or service
within a payment group may be no more than 2 times greater than the
median cost of the lowest cost item or service within the same group.
Based on the 2 times rule, HCPCS code G0339 and CPT code 77371 could
not be assigned to the same APC and, because hospitals continue to
report very different costs for these services, we believe it is
appropriate to maintain their assignments to different payment groups
for CY 2011. As a matter of payment policy, the OPPS does not set
payment rates for services based on considerations of clinical
effectiveness. Furthermore, in accordance with the statute, we budget
neutralize the OPPS each year in the annual update so that projected
changes in spending for

[[Page 71915]]

certain services are redistributed to payment for other services.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposals, without modification, to continue to
assign CPT code 77371 to APC 0127, which has a final CY 2011 APC median
cost of approximately $7,580, and to continue to assign HCPCS code
G0339 to APC 0067, which has a final CY 2011 APC median cost of
approximately $3,372.
Comment: One commenter recommended that CMS redefine HCPCS G-code
G0340 to include subsequent fractions delivered with both robotic
LINAC-based and Cobalt-60 based systems because r-SRS can now be
performed with the Cobalt-60 system based over 2 to 5 fractions.
Response: Earlier this year, we met with stakeholders to discuss
this topic, particularly with respect to the OPPS payment assignment of
the LINAC-based and Cobalt-60 SRS procedures. At this meeting we were
informed of recent technological developments that existed in Europe
that utilizes the Cobalt-60 systems to deliver treatments over multiple
fractions. We were informed that, while the technology currently exists
in Europe, it would eventually migrate to the United States. Because
only one CPT code exists currently that describes a procedure that
utilizes a Cobalt-60 system, we believe that stakeholders would seek
guidance from the AMA CPT Editorial Panel on the appropriate reporting
of this service if it is being provided in the United States in a
manner that makes the current CPT coding insufficient or inappropriate.
Specifically, CPT code 77371 is defined as ``Radiation treatment
delivery, stereotactic radiosurgery (SRS), complete course of treatment
of cranial lesion(s) consisting of 1 session; multi-source Cobalt 60
based,'' and does not describe a Cobalt-60 based multi-fraction
service.
We believe that HCPCS G-code G0340 appropriately describes the
service associated with a LINAC-based system that is delivered in
multiple fractions. We do not agree that there is a programmatic need
to modify the descriptor for HCPCS G-code G0340 due to potential
changes in the Cobalt-60 system. We remind hospitals that HCPCS code
G0340 describes a multi-fraction treatment delivery that utilizes a
LINAC-based SRS technology.
Comment: One commenter requested that CMS finalize the proposed APC
and status indicator assignments for HCPCS codes G0173, G0251, G0339,
and G0340 for CY 2011 and the proposed assignment of status indicator
``B'' to CPT codes 77372 and 77373. The commenter also recommended that
CMS revise the code descriptors for HCPCS code G0173, G0251, G0339, and
G0340 to distinguish between robotic and non-robotic gantry-based SRS
systems. Based on analysis of claims data for HCPCS codes G0339 and
G0340, the commenter found that 33 percent of the claims submitted
during CY 2009 were paid to hospitals without image-guided robotic SRS
systems. The commenter suggested specific code descriptor changes for
the four HCPCS G-codes to ensure submission of correctly coded claims.
Alternatively, the commenter requested that CMS provide guidance on the
reporting of the existing SRS HCPCS G-codes if no change is made to the
HCPCS code descriptors.
Response: These HCPCS G-codes for SRS have been in effect for
several years and, based on questions brought to our attention by
hospitals, we have no reason to believe that hospitals are confused
about the reporting of these codes. Moreover, based on our analysis of
the hospital outpatient claims data that we use for ratesetting, we see
resource differences reflected in the median costs of the four HCPCS G-
codes that are reasonably consistent with our expectations for
different median costs for the services based on the current code
descriptors. We believe it would be confusing to hospitals if we were
to revise the code descriptors for HCPCS codes G0173, G0251, G0339, and
G0340 at this point in time and could lead to instability in our median
costs and inaccurate payments for some services. Therefore, we believe
that modifying the G-code descriptors is not necessary for us to
continue to provide appropriate payment for the services they describe.
Further, we have provided instruction on the reporting of these SRS
codes in Chapter 4, Section 200.3 of the Medicare Claims Processing
Manual of the Internet-Only Manual.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposals, without modification, to maintain the
existing CY 2010 APC assignments for the SRS HCPCS codes for CY 2011.
Specifically, we are continuing to assign HCPCS G-codes G0173 and G0339
to APC 0067, which has a final CY 2011 APC median cost of approximately
$3,372; HCPCS G-code G0251 to APC 0065, which has a final CY 2011 APC
median cost of approximately $967; HCPCS G-code G0340 to APC 0066,
which has a final CY 2011 APC median cost of approximately $2,478; and
CPT code 77371 to APC 0127, which has a final CY 2011 APC median cost
of approximately $7,580. In addition, we are finalizing our proposals,
without modification, to continue to assign CPT codes 77372 and 77373
to status indicator ``B'' under the OPPS.
b. Proton Beam Therapy (APCs 0664 and 0667)
For CY 2011, we proposed to continue to assign CPT codes 77520
(Proton treatment delivery; simple, without compensation) and 77522
(Proton treatment delivery; simple, with compensation) to APC 0664
(Level I Proton Beam Radiation Therapy), which had a proposed payment
rate of approximately $902. We also proposed to continue to assign CPT
codes 77523 (Proton treatment delivery; intermediate) and 77525 (Proton
treatment delivery; complex) to APC 0667 (Level II Proton Beam
Radiation Therapy), which had a proposed payment rate of approximately
$1,180.
Comment: Several commenters supported the proposed payments for the
proton beam treatment CPT codes. However, one commenter expressed
concern over the proposed payment rates and requested an explanation on
the fluctuation in payments for CPT codes 77520, 77522, 77523, and
77525 for the past 6 years, which the commenter displayed in a
submitted table.
Another commenter expressed concern with the reduction in the
relative weights for APCs 0664 and 0667. The commenter indicated that
it understood that APC 0664 is exempt from the 2 times rule violation
based on the list of APCs that appeared in Table 16 of the CY 2011
OPPS/ASC proposed rule, but stated that the decrease in the relative
weights would result in decreased payments for these four CPT codes.
Response: In accordance with section 1833(t)(2)(B) of the Act and
Sec. 419.31 of the regulations, we annually review the items and
services within an APC group to determine, with respect to
comparability of the use of resources and clinical homogeneity. The
payment rates, including the relative weights, set annually for these
services are based on review of the claims data used for ratesetting.
For the CY 2011 update, the payment rates for APCs 0664 and 0667 are
based on data from claims submitted during CY 2009 according to the
standard OPPS ratesetting methodology. Specifically, we used 11,963
single claims (out of 12,995 total claims) from CY 2011 proposed rule
claims data (and we used 11,963 single claims (out of 12,995 total
claims) from CY 2011 final rule claims data) to calculate the median
cost upon which the CY 2011 payment rate for APC 0664 is based. In
addition,

[[Page 71916]]

we used 2,799 single claims (out of 3,081 total claims) from CY 2011
proposed rule claims data (and we used 2,799 single claims (out of
3,081 total claims) from CY 2011 final rule claims data) to calculate
the median cost for APC 0667.
For CY 2011, we are setting the final payment rate for proton beam
therapy based on median costs of approximately $1,021 for APC 0664 and
approximately $1,335 for APC 0667. These median costs result in modest
declines in the final CY 2011 payment rates for proton beam therapy
compared to the CY 2010 final payment rates. We note that our cost-
finding methodology is based on reducing each hospital's charge for its
services to an estimated cost by applying the most discrete hospital-
specific CCR available for the hospital that submitted the claim.
Hence, it is the hospital's claims and cost reports that determine the
estimated costs that are used to calculate the median cost for each
service and, when aggregated into APC groups, the hospital data are
used to calculate the median cost for the APC on which the APC payment
rate is based.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to pay for
proton beam therapy through APCs 0664 and 0667, with payment rates
based upon the most current claims and cost report data for these
services. Specifically, we will continue to assign CPT codes 77520 and
77522 to APC 0664, with a final CY 2011 APC median cost of
approximately $1,021, and CPT codes 77523 and 77525 to APC 0667, with a
final CY 2011 APC median cost of approximately $1,335.
c. Device Construction for Intensity Modulated Radiation Therapy (APC
0303)
For CY 2011, we proposed to continue to assign CPT code 77338
(Multi-leaf collimator (MLC) device(s) for intensity modulated
radiation therapy (IMRT), design and construction per IMRT plan) to APC
0303 (Treatment Device Construction), with a proposed payment rate of
approximately $198. CPT code 77338 is a new code for CY 2010 and,
therefore, there are no claims for it in the CY 2009 claims data on
which we are basing the CY 2011 OPPS payment rates. In CY 2009, the
services represented by CPT code 77338 were reported using CPT code
77334 (Treatment devices, design and construction; complex (irregular
blocks, special shields, compensators, wedges, molds or casts)). For CY
2010, CPT code 77338 is assigned to APC 0303, the same APC to which CMS
assigned CPT code 77334. The CY 2010 OPPS payment rate for APC 0303 is
approximately $191.
Comment: Commenters objected to the assignment of CPT code 77338 to
APC 0303 for CY 2010 and to the proposal to continue to assign CPT code
77338 to APC 0303 for CY 2011. The commenters stated that CPT code
77338 is used to report all devices that are necessary for an intensive
modulated radiation therapy (IMRT) treatment and that a typical
treatment requires 3 to 9 devices, whereas CPT code 77334 is used to
report a single device. Therefore, the commenters believed that the
payment for one unit of 77338 should not be paid the same amount as one
unit of CPT code 77334. The commenters stated that there are typically
two courses of IMRT treatment furnished to patients; hence, before the
creation of CPT code 77338, hospitals reported and were paid for 3 to 9
units of CPT code 77334 for each of the two treatments, resulting in an
approximate total payment for all devices required for two courses of
treatment ranging from roughly $1,500 to $3,500. The commenters stated
that assignment of CPT code 77338 to the same APC as CPT code 77334
results in an inappropriate reduction in payment for the creation of
the devices that are necessary to furnish IMRT. One commenter asked CMS
to use the first 6 months of CY 2010 claims data, which would contain
charges for CPT code 77338, to establish an appropriate payment rate
for CPT code 77338.
Response: We examined our updated claims data to determine how many
units of CPT code 77334 were reported in CY 2009 for each Medicare
beneficiary who also received IMRT services. We found that the median
number of units of CPT code 77334 that were furnished to patients who
received IMRT in CY 2009 was eight. This finding is consistent with the
commenters' statement that hospitals furnish three to nine devices per
each of two IMRT treatments (a range of 6 to 18 devices across two
treatments in a year). We then developed a simulated cost for one unit
of CPT code 77338 by using the frequency information we acquired from
the study and the median cost of one unit of CPT code 77334. We assumed
that if a total of eight devices were typically furnished across two
treatments, then approximately four devices were furnished for each
treatment. We assumed that the cost of each device for IMRT would be
approximately the same as a single unit of CPT code 77334 because one
unit of CPT code 77334 represents one device. CPT code 77334 has a
final rule median cost of approximately $198. Therefore, we estimated
that the cost of the devices that would be reported by one unit of CPT
code 77338 would be approximately $792 (4 devices at an estimated per
device cost of $198 each). Using this hypothetical cost per unit for
CPT code 77338, we determined that CPT code 77338 would most
appropriately be assigned to APC 0310 (Level III Therapeutic Radiation
Treatment Preparation), which has a final rule median cost of
approximately $917. We chose not to use our estimated per unit cost for
CPT code 77338 in the calculation of the CY 2011 median cost for APC
0310 because our estimated cost is not derived from claims and cost
report data according to our standard process, and because we made
several assumptions modeling a representative cost, such as whether the
per unit cost for CPT code 77334 for treatment devices specific to IMRT
patients was an appropriate proxy for the cost of each of the multiple
devices, all of which would be reported by one unit of CPT code 77338.
Moreover, we did not consider the other option that commenters
recommended, using CY 2010 claims data to calculate a median cost for
CPT code 77338, because costs estimated from CY 2010 claims would not
be consonant with costs estimated from claims in CY 2009. Our standard
methodology is to use the claims from the same year for all services to
set the relative weights for payment under the OPPS. We believe that
using claims from different years for different services has the
potential to skew the relativity of the median costs on which the OPPS
relative payment weights are based.
After consideration of the public comments we received and
examination of updated CY 2009 claims data, we are reassigning CPT code
77338 from APC 0303 to APC 0310 for CY 2011. For CY 2012 OPPS
ratesetting, we will have claims data for CPT code 77338. For CY 2012,
we plan to use our standard cost estimation process using the CY 2010
claims data and the most recent cost report data to establish a median
cost for CPT code 77338. In addition, we will assess whether placement
of CPT code 77338 in APC 0310 remains appropriate for the CY 2012 OPPS.
d. High Dose Rate Brachytherapy (APC 0313)
For CY 2011, we proposed to include four CPT codes in APC 0313
(Brachytherapy). Specifically, APC 0313 would contain CPT codes 77785
(Remote afterloading high dose rate radionuclide brachytherapy; 1
channel), 77786 (Remote afterloading high dose rate radionuclide
brachytherapy; 2-12

[[Page 71917]]

channels), 77787 (Remote afterloading high dose rate radionuclide
brachytherapy; over 12 channels), and 0182T (High dose rate electronic
brachytherapy, per fraction). For the CY 2011 OPPS, the proposed APC
median cost of APC 0313 was approximately $724.
Comment: One commenter objected to the proposed payment rate of
approximately $724 for APC 0313 because it would be a reduction in
payment from the CY 2010 payment rate of $777.55. The commenter
questioned whether there was an error in the data or calculation of the
proposed median cost for APC 0313. The commenter noted that, for the CY
2010 calculation of the median cost for APC 0313, deleted CPT code
77784 (Remote afterloading high intensity brachytherapy; over 12 source
positions or catheters) had 7,577 total claims, while currently active
CPT code 77787, which the commenter believes is analogous to CPT code
77784 in complexity, had only 1,899 CY 2010 proposed rule total claims.
The commenter stated that, for the CY 2010 OPPS, deleted CPT code
77784, the most complex level of high intensity brachytherapy,
accounted for 23.4 percent of the single bills used to calculate the
median cost for APC 0313, while the most analogous currently active
code, CPT code 77787, accounted for only 4.4 percent of the claims used
to calculate the CY 2011 proposed median cost. The commenter suggested
that the lower percentage of single frequency claims for CPT code
77787, which had a proposed rule median cost of approximately $812,
resulted in a lower median cost for APC 0313. The commenter also noted
that less than half of the total claims were used for CPT codes 77785
and 77786 in the proposed rule median cost calculations. The commenter
asked that CMS check for possible errors in the calculation of the
median cost and the payment rate for APC 0313 and that CMS closely
monitor this APC.
Response: We have reviewed the CY 2011 final rule claims data for
APC 0313, and we have not identified flaws in the data or the process
we used to calculate the median cost of APC 0313. The CY 2011 final
rule median cost for APC 0313 is approximately $693, and the median
cost for CPT code 77785 is approximately $654 based on 11,075 single
bills (out of a total frequency of 19,799 for CPT code 77785). For CPT
code 77786, the median is approximately $748 based on 4,164 single
bills (out of a total frequency of 9,421). For CPT code 77787, the
median cost is approximately $811 based on 687 single bills (out of a
total frequency of 2,149). For CPT code 0182T, the median cost is
approximately $994 based on 101 single bills (out of a total frequency
of 334).
The commenter is correct that the relative weights and median costs
of the procedures that make up APC 0313 influence the overall APC
median cost. However, some fluctuation in median costs across APCs is
always present due to changes in hospital charging practices and costs.
In addition, the CY 2011 median costs are based on CY 2009 claims. CPT
codes 77785, 77786, and 77787 were new for CY 2009. Therefore, the
charge for each of these codes represents a charge for a different
combination of services than was true for the charges of the four CY
2008 predecessor codes on which the median costs for the CY 2010 OPPS
were based. Hence, it is not clear to us that the medians from CY 2010
(based on charges for the four CY 2008 predecessor codes) and CY 2011
(based on charges for the first year for the new codes) can be
appropriately compared. We have reviewed the claims and cost report
data for APC 0313, and have found nothing that causes us to believe
that the median costs at either the CPT code or APC level for APC 0313
are flawed.
After consideration of the public comments we received and analysis
of our CY 2011 final rule claims data, we are finalizing our proposal
to base the APC 0313 payment rate on its CY 2011 final rule median
cost, which is approximately $693.
e. Electronic Brachytherapy (APC 0313)
The AMA CPT Editorial Panel created CPT code 0182T (High dose rate
electronic brachytherapy, per fraction) effective July 1, 2007. We
assigned CPT code 0182T to New Technology APC 1519 from July 1, 2007
through December 31, 2010, with a payment rate of $1,750. For CY 2010,
we assigned CPT code 0182T to APC 0313 (Brachytherapy) because the CY
2010 OPPS final rule median cost for CPT code 0182T was approximately
$506 and the final rule median cost for APC 0313, which contained
services that we believed were clinically similar, was approximately
$770. For CY 2011, we proposed to retain CPT code 0182T in APC 0313,
with a proposed payment rate of approximately $710.
Comment: Several commenters recommended that CPT code 0182T be
removed from APC 0313 and assigned its own APC. The commenters stated
there are significant clinical differences between CPT code 0182T and
the remaining three high dose rate (HDR) service codes in APC 0313: CPT
code 77785 (Remote afterloading high dose rate radionuclide
brachytherapy, 1 channel); CPT code 77786 (Remote afterloading high
dose rate radionuclide brachytherapy, 2-12 channels); and CPT code
77787 (Remote afterloading high dose rate radionuclide brachytherapy,
over 12 channels). However, the commenters did not provide a clinical
rationale to support their statement. The commenters further stated
that the total payment for CPT code 0182T is dissimilar to the total
payment for CPT codes 77785, 77786, and 77787. They stated that CPT
codes 77785, 77786, and 77787 are proposed to be paid both the APC 0313
payment rate, plus the payment rate for the separately paid
brachytherapy source code C1717 (Brachytherapy source, non-stranded,
High Dose Rate Iridium-192, per source), which had a proposed CY 2011
payment rate of approximately $220, thereby resulting in a total
payment of approximately $949 for these codes. In contrast, the
commenters stated that CMS does not allow providers to report the
separate costs of the electronic brachytherapy source, but instead
proposed to pay only the APC 0313 national unadjusted payment rate of
approximately $710. The commenters believed that CMS should permit
providers to capture the cost of the electronic brachytherapy source by
establishing a separate APC for CPT code 0182T based on the median cost
of CPT code 0182T alone.
Response: We believe the clinical characteristics of high dose rate
brachytherapy and electronic brachytherapy are similar because both use
brachytherapy to treat malignancies. Moreover, we do not agree that
there is a need for an additional APC specific to electronic
brachytherapy to ``capture the cost of the electronic brachytherapy
source'' because there is no separate source in the case of electronic
brachytherapy. The costs of electronic brachytherapy are included in
the fractionated costs of the procedure.
The CY 2011 final rule median cost for CPT code 0182T of
approximately $994, based on 101 single service claims, falls well
within two times the APC 0313 median cost. The CY 2011 final rule APC
0313 median is approximately $693, based on 16,027 single bills for CPT
codes 77785, 77786, 77787, and 0182T, which are assigned to APC 0313.
We believe that CPT code 0182T is appropriately placed in APC 0313 for
both resource and clinical reasons, as discussed above. We note that,
in a system of averages, such as the OPPS, we expect that the cost of
some services will fall above the APC median

[[Page 71918]]

cost and that the cost of other services will fall below the APC median
cost.
After consideration of the public comments we received and analysis
of the CY 2011 OPPS final rule claims data, we are assigning CPT code
0182T to APC 0313 for CY 2011. Based on the CY 2011 final rule claims
data, we determined a median cost for CPT code 0182T of approximately
$994 and a median cost for APC 0313 of approximately $693.
f. Tumor Imaging (APC 0406 and 0414)
For CY 2011, we proposed to assign CPT codes 78805
(Radiopharmaceutical localization of inflammatory process; limited
area) and 78806 (Radiopharmaceutical localization of inflammatory
process; whole body) to APC 0414 (Level II Tumor/Infection Imaging),
with a proposed rule APC median cost of approximately $497. We proposed
to assign CPT code 78807 (Radiopharmaceutical localization of
inflammatory process; tomographic (SPECT)) to APC 0406 (Level I Tumor/
Infection Imaging), with a proposed rule APC median cost of
approximately $298. For CY 2011, CPT code 78805 had a proposed median
cost of approximately $545; CPT code 78806 had a proposed median cost
of approximately $561; and CPT code 78807 had a proposed median cost of
approximately $442.
Comment: One commenter asked CMS to restructure APCs 0406 and 0414
to separate tumor imaging procedures from infection imaging procedures
because the respective procedures use different drugs and resources.
Specifically, the commenter recommended that CMS create a new APC for
CPT codes 78805, 78806, and 78807 that would be for infection imaging.
Response: We continue to believe that tumor imaging and infection
imaging are sufficiently clinically similar because they are all
imaging services to justify the inclusion of CPT codes 78805, 78806,
and 78807, which are for infection imaging, in APC 0414 with tumor
imaging procedures. Therefore, we are not creating an APC that is
limited to CPT codes 78805, 78806, and 78807 for infection imaging.
However, after review of the CY 2011 OPPS final rule median costs for
CPT codes 78805, 78806, and 78807, we believe that it is appropriate to
reassign CPT code 78807 to APC 0414 (instead of APC 0406) for CY 2011
because the median cost for CPT code 78807 is similar to the median
cost for CPT codes 78805 and 78806, which are also assigned to this
APC. Based on the CY 2011 OPPS final rule claims data, CPT code 78805
has a median cost of approximately $519, CPT code 78806 has a median
cost of approximately $539, and CPT code 78807 has a final rule median
cost of approximately $428.
At its February 17-18, 2010 meeting, the APC Panel recommended that
CMS analyze claims data for the tumor imaging APCs in terms of the
average, median, and range of costs of packaged diagnostic
radiopharmaceuticals. We are accepting the APC Panel's recommendation
and will present the statistics regarding the use of diagnostic
radiopharmaceuticals in tumor imaging at a forthcoming APC Panel
meeting.
After consideration of the public comments we received and analysis
of the final rule cost data for CPT codes 78805, 78806, and 78807, for
CY 2011, we are retaining CPT codes 78805 and 78806 in APC 0414; we are
assigning CPT code 78807 to APC 0414 (instead of APC 0406 as proposed);
and we are basing the payment for APC 0414 on the CY 2011 final rule
median cost of approximately $470.
6. Other Services
a. Skin Repair (APCs 0134 and 0135)
In the CY 2011 OPPS/ASC proposed rule (75 FR 46251), we proposed to
continue to assign the CPT skin repair codes for the application of
Apligraf, Oasis, and Dermagraft skin substitutes to the same procedural
APCs to which they were assigned for CY 2010. Specifically, we proposed
to continue to assign the Apligraf application CPT codes 15340 (Tissue
cultured allogeneic skin substitute; first 25 sq cm or less) and 15341
(Tissue cultured allogeneic skin substitute; each additional 25 sq cm,
or part thereof) to APC 0134 (Level II Skin Repair), with a proposed
payment rate of approximately $217. Likewise, we proposed to continue
to assign the Dermagraft application CPT codes 15365 (Tissue cultured
allogeneic dermal substitute, face, scalp, eyelids, mouth, neck, ears,
orbits, genitalia, hands, feet, and/or multiple digits; first 100 sq cm
or less, or 1% of body area of infants and children) and 15366 (Tissue
cultured allogeneic dermal substitute, face, scalp, eyelids, mouth,
neck, ears, orbits, genitalia, hands, feet, and/or multiple digits;
each additional 100 sq cm, or each additional 1% of body area of
infants and children, or part thereof) to APC 0134. We proposed to
continue to assign the Oasis application CPT codes 15430 (Acellular
xenograft implant; first 100 sq cm or less, or 1% of body area of
infants and children) and 15431 (Acellular xenograft implant; each
additional 100 sq cm, or each additional 1% of body area of infants and
children, or part thereof) to APC 0135 (Level III Skin Repair), with a
proposed payment rate of approximately $318. In addition, we proposed
to pay the Apligraf, Oasis, and Dermagraft skin substitutes separately.
Specifically, we proposed to pay separately for the Apligraf skin
product HCPCS Q-code Q4101 (Skin substitute, Apligraf, per square
centimeter), the Dermagraft skin product HCPCS Q-code Q4106 ('Skin
substitute, Dermagraft, per square centimeter), and the Oasis skin
product HCPCS Q-codes Q4102 (Skin substitute, Oasis Wound Matrix, per
square centimeter) and Q4103 (Skin substitute, Oasis burn matrix, per
square centimeter), Also, as discussed in more detail below, we also
proposed for CY 2011 to create two new Level II HCPCS G-codes to report
the application of Apligraf or Dermagraft specific to the lower
extremities in order to provide appropriate and consistent payment for
these services as they are commonly furnished, consistent with the CY
2011 proposal for the MPFS.
With regard to the assignment of CPT codes 15340, 15341, 15365,
15366, 15430 and 15431, at the August 2009 APC Panel meeting, one
public presenter requested that the APC Panel recommend that CMS
reassign the Apligraf application CPT codes, specifically CPT codes
15340 and 15341, from APC 0134 to APC 0135. The same presenter
requested that CMS continue to assign the Dermagraft application CPT
codes, specifically CPT codes 15365 and 15366, to APC 0134. The public
presenter believed that the CY 2010 proposal to continue to assign both
the Apligraf and the Dermagraft application CPT codes to APC 0134 would
create a financial incentive favoring the Dermagraft application.
Specifically, the presenter explained that CPT instructions allow the
separate reporting of the CPT codes for site preparation and
debridement when Dermagraft is applied, while the CPT instructions for
Apligraf application codes specify that site preparation and
debridement cannot be separately reported. The presenter believed that
this reporting difference and the resulting expected differences in the
associated application procedure costs could be addressed by assigning
the Apligraf application CPT codes to a higher paying APC than the
Dermagraft application CPT codes, instead of the same APC as CMS
proposed for CY 2010.
During the discussion, the APC Panel members were provided with the
historical information on the coding and APC assignments for the skin
substitute application procedures assigned to

[[Page 71919]]

APCs 0134 and 0135. Specifically, the Apligraf application CPT codes
15340 and 15341, the Dermagraft application CPT codes 15365 and 15366,
as well as the Oasis application CPT codes 15430 and 15431, were at one
time assigned to the same APC level (Level II Skin Repair). However,
because of violations of the 2 times rule, CMS reconfigured the skin
repair APCs and reassigned the Oasis application CPT codes 15430 and
15431 to APC 0135 in CY 2008.
At the August 2009 APC Panel meeting, panel members debated whether
the differences in sizes in each product's application CPT codes and
the ability to bill separately for site preparation and debridement for
Dermagraft application required different APC placement for any of the
skin substitute application codes. We note that the long descriptors
for the Apligraf application CPT codes 15340 and 15341 are scaled to
``25 sq cm,'' whereas the Oasis application CPT codes 15430 and 15431
and the Dermagraft application CPT codes 15365 and 15366 are scaled to
``100 sq cm.'' After review of median cost data from the CY 2008
hospital outpatient claims available at that time (those processed from
January 1, 2008 through December 31, 2009), the APC Panel recommended
that CMS continue to assign all six skin substitute application CPT
codes to their existing APCs for CY 2010. In addition, because of the
variable sizes associated with the skin repair application CPT codes,
the Panel requested that CMS provide data at the next Panel meeting on
the frequency of primary and add-on CPT codes billed for the Apligraf,
Oasis, and Dermagraft applications in order to assess the variability
in billing for the application of these products. In addition, because
of the CPT instructions allowing site preparation and debridement to be
reported separately only for the Dermagraft application, the Panel
requested median cost data for site preparation and debridement.
We accepted the APC Panel's recommendation to continue to assign
the skin repair CPT codes for the application of Apligraf, Oasis, and
Dermagraft skin substitutes to the same procedural APCs for CY 2010 as
their CY 2009 assignments. As a result, we continued to assign the
Apligraf application CPT codes 15340 and 15341 and the Dermagraft
application CPT codes 15365 and 15366 to APC 0134 and assigned the
Oasis application CPT codes 15430 and 15431 to APC 0135 for CY 2010.
At the February 2010 APC Panel meeting, CMS presented the results
of the data requested at the August 2009 meeting to the APC Panel. In
response to data on the frequency of primary and add-on CPT codes,
based on our analysis of the available CY 2009 hospital outpatient
claims data on frequency of primary and add-on CPT codes billed for the
Apligraf, Oasis, and Dermagraft applications (claims processed from
January 1 through September 30, 2009), we found that hospitals report
the application of Apligraf with only the primary code (CPT code 15340)
on 77 percent of claims, while the add-on CPT code 15341 is billed in
addition to the primary code on another 23 percent of claims.
Specifically, our data showed that, for the Apligraf application, there
were a total of 8,614 claims with only the primary CPT code 15340
reported, and 2,545 claims with the add-on CPT code 15341 also reported
on the same date of service. We note that each unit of the add-on CPT
code is paid at 50 percent of the payment for the primary code in
addition to the full payment for the primary code. We also found in our
analysis that, on claims with the Dermagraft and Oasis application CPT
codes, hospitals report the primary code only in approximately 98 to 99
percent of the cases. In addition, in response to the request for data
for site preparation and debridement that may be reported separately
for the Dermagraft application, we found that approximately 87 percent
of procedures for the application of Dermagraft were reported without
debridement or site preparation on the same day. Similarly, we found
that the Apligraf and Oasis procedures were rarely reported with the
site preparation or debridement CPT procedure codes on the same day.
Specifically, we found that the CPT procedure code for the application
of Apligraf was reported without site preparation or debridement in
approximately 94 percent of these cases, and that the CPT procedure
code for application of Oasis was reported without site preparation or
debridement in approximately 95 percent of these cases. Our data
analysis also showed that the CPT median costs for the Apligraf
application CPT code 15340 and the Dermagraft application CPT code
15365 are very similar. Specifically, the CPT code-specific median cost
of CPT code 15340 is approximately $234 for the Apligraf application
and approximately $237 for CPT code 15365 for the Dermagraft
application. In contrast, the CPT median cost for the Oasis application
primary CPT code 15430 of approximately $299 is higher.
At the February 2010 APC Panel meeting, a public presenter again
requested that the APC Panel recommend that CMS reassign the Apligraf
application CPT codes 15340 and 15341 from APC 0134 to APC 0135. The
presenter indicated that the additional payment for site preparation
and debridement procedures that may be reported separately with the
Dermagraft application can significantly affect the total payment for
the procedure. The presenter also provided data on the use of each
product in relation to the size of the wounds treated, and concluded
that the size of the wound treated does not affect the resources used.
After further review of the available CY 2009 hospital outpatient
claims data, the APC Panel recommended that CPT codes 15340 and 15341
remain in APC 0134.
As noted above, in the CY 2011 OPPS/ASC proposed rule (75 FR
46251), we proposed to continue to assign the Apligraf application CPT
codes 15340 and 15341 and the Dermagraft application CPT codes 15365
and 15366 to APC 0134, and, at the same time, continue to assign the
Oasis application CPT codes 15430 and 15431 to APC 0135. Secondly, we
proposed to continue to pay separately for the Apligraf, Dermagraft,
and Oasis products in CY 2011.
Comment: One commenter disagreed with the APC assignment for the
Apligraf CPT codes 15340 and 15341 and recommended a reassignment from
APC 0134 to APC 0135.
Response: We examined the updated CY 2009 claims data available for
the CY 2011 final rule with comment period and, based on the claims
data, we believe that CPT codes 15340 and 15341 are appropriately
placed in APC 0134. Specifically, our claims data show that the median
cost of approximately $231 for CPT code 15340, based on 15,648 single
claims (out of a total of 19,949 claims), and the median cost of
approximately $189 for CPT code 15341, based on 2,621 single claims
(out of a total of 5,468 claims), are relatively similar to the median
cost of approximately $215 for APC 0134, and are dissimilar to the
median cost of approximately $316 for APC 0135. Therefore, we are
assigning CPT codes 15340 and 15341 to APC 0134 for CY 2011.
As noted above, we also proposed for CY 2011 to create two new
Level II HCPCS G-codes to report the application of Apligraf or
Dermagraft specific to the lower extremities in order to provide
appropriate and consistent payment for these services as they are
commonly furnished, consistent with

[[Page 71920]]

the CY 2011 proposal for the MPFS. (We refer readers to the CY 2011
MPFS proposed rule for additional information regarding the MPFS
proposal and to the MPFS final rule for the final CMS decision
regarding the use of these codes for the MPFS.) The proposed HCPCS
codes were: GXXX1 (Application of tissue cultured allogeneic skin
substitute or dermal substitute; for use on lower limb, includes the
site preparation and debridement if performed; first 25 sq cm or less);
and GXXX2 (Application of tissue cultured allogeneic skin or dermal
substitute; for use on lower limb, includes the site preparation and
debridement if performed; each additional 25 sq cm). We note that, for
this CY 2011 OPPS/ASC final rule with comment period, GXXX1 has been
designated as HCPCS code G0440 and HCPCS code GXXX2 as HCPCS code
G0441. As indicated in the HCPCS G-code descriptors, these codes will
not allow separate reporting of CPT codes for site preparation or
debridement. In the proposed rule, we indicated that we believed the
descriptors of the proposed HCPCS G-codes more specifically reflect the
characteristics of the application of Apligraf or Dermagraft to the
lower limb so that reporting would result in more accurate cost data
for OPPS ratesetting and, ultimately, more appropriate payment.
Consistent with the proposed CY 2011 APC assignment for the Apligraf
and Dermagraft application CPT codes, we proposed to assign new HCPCS
codes G0440 and G0441 to APC 0134, with a proposed APC median cost of
approximately $222. We indicated that we were specifically interested
in public comment on the appropriateness of recognizing these proposed
new HCPCS G-codes under the OPPS and their proposed APC assignments.
Comment: Some commenters agreed with the establishment of HCPCS
codes GXXX1 and GXXX2, and supported their APC assignment to APC 0134.
One commenter suggested that, if CMS finalizes the proposal to
establish the HCPCS G-codes, then it should recognize for CY 2011 the
skin repair CPT codes, and also recommended that the HCPCS G-codes be
assigned to APC 0135 rather than the proposed APC 0134. The commenter
requested clarification on the definition of ``dermal substitute.''
However, many commenters disagreed with the establishment of the
HCPCS G-codes. The commenters argued that, although they understood the
need to report the services accurately, they did not believe that
creating two HCPCS G-codes is appropriate because there are existing
CPT codes that describe the application of both the Apligraf and
Dermagraft. They stated that if a revision to the CPT code descriptors
is necessary to accurately describe the services associated with these
products, CMS should work with the AMA CPT Editorial Panel in making
the revisions rather than creating two new HCPCS G-codes. One commenter
stated that the inappropriate reimbursement for the application of
these products is a MPFS issue and does not apply to the hospital OPPS.
The commenter suggested that the proposed changes to create two HCPCS
G-codes would cause providers to use the two more expensive products
and, thereby, inadvertently create a competitive disadvantage for other
products.
Response: We are persuaded from the commenters' statements that
this is a payment issue that applies to the MPFS and not to the
hospital OPPS, because the existing CPT codes for the application of
these products does not impede our ability, under the standard OPPS
ratesetting methodology, to calculate accurate median costs for these
procedures and to assign them to appropriate APCs. Therefore, we are
not finalizing our proposal to assign HCPCS G-codes G0440 and G0441 to
APC 0134. For CY 2011, we are assigning the status indicators for both
HCPCS G-codes to status indicator ``B'' to indicate that these HCPCS
codes are not recognized under the hospital OPPS, and that hospitals
should use a more specific HCPCS code(s) to describe the services
associated with HCPCS codes G0440 and G0441.
With regard to the definition of ``dermal substitute,'' we are
directing our Medicare contractors to provide further guidance if
specific questions arise.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue to assign
the Apligraf application CPT codes 15340 and 15341 and the Dermagraft
application CPT codes 15365 and 15366 to APC 0134, with a final CY 2011
APC median cost of approximately $215 and to assign the Oasis
application CPT codes 15430 and 15431 to APC 0135, with a final CY 2011
APC median cost of approximately $316. In addition, we received no
comments on our proposal to continue to pay separately for the skin
products. For CY 2011, we are finalizing our proposal, without
modification, to continue to pay separately for the skin products,
which are described by Level II HCPCS Q-codes. That is, we are
finalizing our proposal to pay separately for the Apligraf skin product
HCPCS Q-code Q4101, the Dermagraft skin product HCPCS Q-code Q4106, and
the Oasis skin product HCPCS Q-codes Q4102 and Q4103. Further, HCPCS Q-
codes Q4101, Q4102, Q4103, and Q4106 are assigned to status indicator
``K'' to indicate that they are separately payable under the hospital
OPPS for CY 2011. In addition, we are not finalizing our proposal to
recognize new HCPCS G-codes G0440 and G0441 as payable under the
hospital OPPS. New HCPCS codes G0440 and G0441 are assigned to status
indicator ``B'' to indicate that hospitals must report a more specific
HCPCS code(s) to describe the services associated with HCPCS codes
G0440 and G0441 for CY 2011.
b. Insertion of Anterior Segment Aqueous Drainage Device (APCs
0234, 0255, and 0673)
The AMA CPT Editorial Panel created Category III CPT code 0191T
(Insertion of anterior segment aqueous drainage device, without
extraocular reservoir; internal approach) effective on July 1, 2008. We
assigned CPT code 0191T to APC 0234 (Level III Anterior Segment Eye
Procedures) in the OPPS, effective July 1, 2008, and maintained this
APC assignment for CY 2009 and CY 2010. For CY 2011, we proposed to
continue to assign CPT code 0191T to APC 0234, with a proposed payment
rate of approximately $1,674. For CY 2011, we also proposed to create
new APC 0255 (Level III Anterior Segment Eye Procedures), and to rename
APC 0234 as ``Level IV Anterior Segment Eye Procedures'' and APC 0673
as ``Level V Anterior Segment Eye Procedures.''
At its August 2010 meeting, the APC Panel recommended that CMS
assign CPT code 0191T to APC 0673 (Level V Anterior Segment Eye
Procedures), on the basis of its clinical similarity to both CPT code
0192T (Insertion of anterior segment aqueous drainage device, without
extraocular reservoir; external approach), and to CPT code 66180
(Aqueous shunt to extraocular reservoir (e.g., Molteno, Schocket,
Denver-Krupin)), which were proposed to be assigned to APC 0673 for CY
2011.
The AMA CPT Editorial Panel revised the descriptor of CPT code
0191T to ``Insertion of anterior segment aqueous drainage device,
without extraocular reservoir; internal approach, into the trabecular
meshwork,'' to be effective January 1, 2011.
Comment: A large number of commenters recommended that CMS reassign
CPT code 0191T from APC 0234 to APC 0673, with a proposed CY 2011
payment rate of approximately $3,039. The commenters claimed that CPT
code 0191T is more appropriately assigned to APC 0673 based on clinical

[[Page 71921]]

homogeneity and resource costs. They pointed out that none of the
procedures in APC 0234 have implanted device costs associated with the
procedures, except CPT code 0191T, while most procedures in APC 0673
have implanted device costs, including glaucoma procedures with
implanted device costs, namely CPT code 66180 and CPT code 0192T. A few
commenters claimed that each of the shunt devices in APC 0673 serve to
shunt the aqueous fluid in the eye to another region in order to lower
intraocular pressure, a common clinical purpose related to CPT code
0191T. Commenters asserted that the major cost of performing the
procedure described by CPT code 0191T is the device itself, and that
the proposed payment rate for APC 0234 is too low to compensate
hospitals and ASCs for the cost of the procedure, thus preventing
Medicare beneficiary access. Commenters also pointed out that cataract
surgery is almost always performed with CPT code 0191T, as many
cataract patients have mild to moderate glaucoma, resulting in a
multiple procedure surgical session with a 50 percent multiple
procedure reduction in payment for CPT code 0191T, which is
predominantly performed in the ASC setting.
Many commenters asserted that the shunt device implantation
performed with CPT code 0191T has much in common clinically with the
implantation of the shunt device procedure performed with CPT code
0192T, which is assigned to APC 0673. Some commenters stated that the
CPT code 0191T procedure is well within the skill set of a general
ophthalmologist performing cataract surgery and promises to avoid some
glaucoma medication usage.
One commenter argued that the resource costs of CPT code 0191T as
demonstrated by CMS claims data is closer to the costs in APC 0673 than
APC 0234, pointing out that the CY 2011 proposed rule median cost of
approximately $2,964 for CPT code 0191T is appreciably higher than the
range of costs of approximately $1,726 to approximately $2,026 for the
10 most frequent procedures in APC 0234. On the other hand, the
commenter stated that the CY 2011 proposed rule median cost of CPT code
0191T is closer to the proposed rule median cost of approximately
$3,099 for APC 0673 and the costs of its two most frequent procedures,
that of CPT code 66180 (approximately $3,092) and CPT code 0192T
(approximately $3,131). The commenter claimed that CMS has grouped
clinically similar CPT codes together into an APC even though some
services are significantly below the proposed APC costs. The commenter
also noted that the procedure's device, the iStent Trabecular Micro-
Bypass Stent (iStent), is currently under an investigational device
exemption (IDE) and is awaiting full premarket approval (PMA) from the
FDA, which it expects to receive by the end of 2011.
Response: After further analysis of this issue, we agree with the
APC Panel and the commenters that CPT code 0191T is similar clinically
and in terms of resource utilization to the procedures in APC 0673.
Several procedures in APC 0673 have device implants that are related to
glaucoma, such as CPT 0192T and CPT code 66180, and the CY 2011 final
median cost for CPT code 0191T of approximately $3,139 is very similar
to the median cost calculated for APC 0673 of approximately $2,946.
Therefore, we are accepting the APC Panel's and the commenters'
recommendation to reassign CPT code 0191T to APC 0673 for CY 2011.
After consideration of the public comments we received, we are
modifying our CY 2011 proposal and reassigning CPT code 0191T to APC
0673 for CY 2011. We will continue to monitor claims and cost report
data for CPT code 0191T in APC 0673.
c. Group Psychotherapy (APCs 0322, 0323, 0324, and 0325)
For CY 2011, we proposed to set the CY 2011 payment rates for APCs
0322 (Brief Individual Psychotherapy), 0323 (Extended Individual
Psychotherapy), 0324 (Family Psychotherapy), and 0325 (Group
Psychotherapy) based on the median costs determined under the OPPS
standard ratesetting methodology. We also proposed to continue to
assign CPT codes 90849 (Multiple family group psychotherapy), 90853
(Group psychotherapy (other than of a multiple-family group)), and
90857 (Interactive group psychotherapy) to APC 0325, with a proposed
payment rate of approximately $54, calculated according to the standard
OPPS ratesetting methodology. In CY 2010, these three CPT codes also
were the only codes assigned to APC 0325, with a payment rate of
approximately $60.
Comment: Some commenters expressed concern over the decreases in
the proposed payment rates for APCs 0322, 0323, 0324, and 0325.
Particularly, several commenters expressed concern that the CY 2011
proposed payment rate for APC 0325 of approximately $54 is 10 percent
less than the CY 2010 payment rate for this APC. The commenters
believed that the proposed payment rate would be insufficient to cover
hospitals' costs for providing group mental health services and, as a
result, would threaten Medicare beneficiary access to these services.
Some commenters stated that the utilization of recent cost report data
lags behind the provision of current services by approximately 3 to 5
years, and a stronger level of reimbursement would seem justified and
appropriate.
Response: We set the payment rates for APCs 0322, 0323, 0324, and
0325 using our standard OPPS methodology based on relative costs from
hospital outpatient claims and the most recent cost report data that
are available. We have no reason to believe that our claims and cost
report data, as reported by hospitals, do not accurately reflect
hospitals' costs of the services assigned to these APCs. As we have
stated in the past, specifically with respect to APC 0325 (72 FR 66739
and 73 FR 68627), we cannot speculate as to why the median cost of
group psychotherapy services has decreased significantly in recent
years. We again note that we have robust claims data for the CPT codes
that map to APC 0325. Specifically, we were able to use more than 99
percent of the approximately 1.7 million claims submitted by hospitals
to report group psychotherapy services. It would appear that the
relative cost of providing these mental health services, in comparison
with other HOPD services, has decreased in recent years.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, without modification, to calculate the
payment rate for APCs 0322, 0323, 0324, and 0325 by applying our
standard OPPS ratesetting methodology that relies on all single claims
for all procedures assigned to these APCs, and to continue to assign
CPT codes 90849, 90853, and 90857 to APC 0325, with a final payment
rate of approximately $54.

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
Section 1833(t)(6)(B)(iii) of the Act requires that, under the
OPPS, a category of devices be eligible for transitional pass-through
payments for at least 2, but not more than 3, years. This pass-through
payment eligibility period begins with the first date on which
transitional pass-through payments may be made for any medical device
that is described by the category. We may establish a new device
category for pass-through payment in any quarter. Under our established
policy, we base the pass-through status expiration dates for the
category codes

[[Page 71922]]

on the date on which a category is in effect. The date on which a
category is in effect is the first date on which pass-through payment
may be made for any medical device that is described by such category.
We propose and finalize the dates for expiration of pass-through status
for device categories as part of the OPPS annual update.
We also have an established policy to package the costs of the
devices that are no longer eligible for pass-through payments into the
costs of the procedures with which the devices are reported in the
claims data used to set the payment rates (67 FR 66763). Brachytherapy
sources, which are now separately paid in accordance with section
1833(t)(2)(H) of the Act, are an exception to this established policy.
There currently is one new device category eligible for pass-
through payment, described by HCPCS code C1749 (Endoscope, retrograde
imaging/illumination colonoscope device (implantable), which we
announced in the October 2010 OPPS Update (Transmittal 2050, Change
Request 7117, dated September 17, 2010). There are no categories for
which we proposed expiration of pass-through status in CY 2011. If we
create new device categories for pass-through payment status during the
remainder of CY 2010 or during CY 2011, we will propose future
expiration dates in accordance with the statutory requirement that they
be eligible for pass-through payments for at least 2, but not more than
3, years from the date on which pass-through payment for any medical
device described by the category may first be made.
Comment: Some commenters expressed concern that there currently are
no pass-through categories for new devices, and that there have been
very few new categories approved over the past several years. The
commenters were concerned that CMS may not be recognizing technologies
that demonstrate a substantial clinical improvement for Medicare
beneficiaries, even though the commenters believed that there have been
past applications that have met or exceeded that criterion. One
commenter recommended that CMS reevaluate the criteria and approval
process currently used for device pass-through applications. Another
commenter believed that the need for separate payment for new
technologies is even more acute because of the OPPS policy of increased
packaging and bundled payment into composite APCs. One commenter
recommended that CMS annually publish a list of all devices for which
pass-through status was requested, along with the rationale supporting
its decisions regarding approval or denial of pass-through status.
Response: The criteria for establishing additional pass-through
categories for medical devices are included in the interim final rule
with comment period issued in the November 2, 2001 Federal Register (66
FR 55850), the final rule with comment period issued in the November 1,
2002 Federal Register (67 FR 66781), and the November 10, 2005 OPPS
final rule with comment period (70 FR 68628). We made no proposals
regarding our device pass-through process or criteria for CY 2011.
However, industry members have, from time to time, requested that we
provide additional information on our new technology processes, which
we have attempted to do in the past. We agree with the commenters that
separate payment for new technologies through the device pass-through
process is an important feature of the OPPS, and we continue to review
applications on an ongoing basis using our established process and
criteria and to establish new categories of pass-through devices when
those criteria are met. We disagree with the commenters who believe
that we may not be recognizing technologies that demonstrate a
substantial clinical improvement. We carefully evaluate each
application based on the established criteria, including whether the
device demonstrates a substantial clinical improvement.
We are not making any changes to the device pass-through process or
criteria in this final rule with comment period because we believe any
changes would require public input, including input from affected
parties, and, therefore, should be addressed through our rulemaking
cycle. For example, while some parties may approve of putting specific
information about pass-through applications on our Web site, such as
the basis for an application's denial, others who request that we treat
all or part of their applications as confidential may not support such
a change in the pass-through process. (We note that filing an
application to CMS does not guarantee that CMS is able to treat any
information as confidential because such information is used as part of
the OPPS ratesetting process.) However, we do appreciate the
commenters' perspectives and will take their comments under advisement
as we consider our device pass-through criteria and process in the
future.
2. Provisions for Reducing Transitional Pass-Through Payments to Offset
Costs Packaged into APC Groups
a. Background
We have an established policy to estimate the portion of each APC
payment rate that could reasonably be attributed to the cost of the
associated devices that are eligible for pass-through payments (66 FR
59904). We deduct from the pass-through payments for identified device
categories eligible for pass-through payments an amount that reflects
the portion of the APC payment amount that we determine is associated
with the cost of the device, defined as the device APC offset amount,
as required by section 1833(t)(6)(D)(ii) of the Act. We have
consistently employed an established methodology to estimate the
portion of each APC payment rate that could reasonably be attributed to
the cost of an associated device eligible for pass-through payment,
using claims data from the period used for the most recent
recalibration of the APC rates (72 FR 66751 through 66752). We
establish and update the applicable device APC offset amounts for
eligible pass-through device categories through the transmittals that
implement the quarterly OPPS updates.
We currently have published a list of all procedural APCs with the
CY 2010 portions (both percentages and dollar amounts) of the APC
payment amounts that we determine are associated with the cost of
devices, on the CMS Web site at: http://www.cms.gov/
HospitalOutpatientPPS/01_overview.asp. The dollar amounts are used as
the device APC offset amounts. In addition, in accordance with our
established practice, the device APC offset amounts in a related APC
are used in order to evaluate whether the cost of a device in an
application for a new device category for pass-through payment is not
insignificant in relation to the APC payment amount for the service
related to the category of devices, as specified in our regulations at
Sec. 419.66(d).
As of CY 2009, the costs of implantable biologicals without pass-
through status are packaged into the payment for the procedures in
which they are inserted or implanted because implantable biologicals
without pass-through status are not separately paid (73 FR 68633
through 68636). For CY 2010, we finalized a new policy to specify that
the pass-through evaluation process and pass-through payment
methodology for implantable biologicals that are surgically inserted or
implanted (through a surgical incision or a natural orifice) and that
are newly approved for pass-through status beginning on or after
January 1, 2010, be the device pass-through process and payment
methodology only. As a result, for CY 2010, we included implantable

[[Page 71923]]

biologicals in our calculation of the device APC offset amounts (74 FR
60476). We calculated and set the device APC offset amount for a newly
established device pass-through category, which could include a newly
eligible implantable biological, beginning in CY 2010 using the same
methodology we have historically used to calculate and set device APC
offset amounts for device categories eligible for pass-through payment
(72 FR 66751 through 66752), with one modification. Because implantable
biologicals are considered devices rather than drugs for purposes of
pass-through evaluation and payment under our established policy, the
device APC offset amounts include the costs of implantable biologicals.
For CY 2010, we also finalized a policy to utilize the revised device
APC offset amounts to evaluate whether the cost of an implantable
biological in an application for a new device category for pass-through
payment is not insignificant in relation to the APC payment amount for
the service related to the category of devices. Further, for CY 2010,
we also no longer used the ``policy-packaged'' drug APC offset amounts
for evaluating the cost significance of implantable biological pass-
through applications under review and for setting the APC offset
amounts that would apply to pass-through payment for those implantable
biologicals, effective for new pass-through status determinations
beginning in CY 2010 (74 FR 60463).
b. Proposed and Final CY 2011 Policy
In the CY 2011 OPPS/ASC proposed rule (75 FR 46252), we proposed to
continue our policy that the pass-through evaluation process and pass-
through payment methodology for implantable biologicals that are
surgically inserted or implanted (through a surgical incision or a
natural orifice) and that are newly approved for pass-through status
beginning on or after January 1, 2010, be the device pass-through
process and payment methodology only. The rationale for this policy is
provided in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60471 through 60477). We also proposed to continue our established
policies for calculating and setting the device APC offset amounts for
each device category eligible for pass-through payment. In addition, we
proposed to continue to review each new device category on a case-by-
case basis to determine whether device costs associated with the new
category are already packaged into the existing APC structure. If
device costs packaged into the existing APC structure are associated
with the new category, we would deduct the device APC offset amount
from the pass-through payment for the device category. As stated
earlier, these device APC offset amounts also would be used in order to
evaluate whether the cost of a device in an application for a new
device category for pass-through payment is not insignificant in
relation to the APC payment amount for the service related to the
category of devices (Sec. 419.66(d)).
We also proposed to continue our policy established in CY 2010 to
include implantable biologicals in our calculation of the device APC
offset amounts. In addition, we proposed to continue to calculate and
set any device APC offset amount for a new device pass-through category
that includes a newly eligible implantable biological beginning in CY
2011 using the same methodology we have historically used to calculate
and set device APC offset amounts for device categories eligible for
pass-through payment, and to include the costs of implantable
biologicals in the calculation of the device APC offset amounts, as we
did for CY 2010.
In addition, we proposed to update, on the CMS Web site at http://www.cms. gov/HospitalOutpatientPPS, the list of all procedural APCs
with the final CY 2011 portions of the APC payment amounts that we
determine are associated with the cost of devices so that this
information is available for use by the public in developing potential
CY 2011 device pass-through payment applications and by CMS in
reviewing those applications.
In summary, for CY 2011, consistent with the policy established for
CY 2010, we proposed to continue the following policies related to
pass-through payment for devices: (1) Treating implantable biologicals,
that are surgically inserted or implanted (through a surgical incision
or a natural orifice) and that are newly approved for pass-through
status on or after January 1, 2010, as devices for purposes of the OPPS
pass-through evaluation process and payment methodology; (2) including
implantable biologicals in calculating the device APC offset amounts;
(3) using the device APC offset amounts to evaluate whether the cost of
a device (defined to include implantable biologicals) in an application
for a new device category for pass-through payment is not insignificant
in relation to the APC payment amount for the service related to the
category of devices; and (4) reducing device pass-through payments
based on device costs already included in the associated procedural
APCs, when we determine that device costs associated with the new
category are already packaged into the existing APC structure.
Comment: Some commenters recommended that CMS not continue the
policy it began for CY 2010 to specify that the pass-through evaluation
process and pass-through payment methodology for implantable
biologicals that are surgically inserted or implanted (through a
surgical incision or a natural orifice) be the device pass-through
process and payment methodology only. One commenter asserted that some
implantable biologicals meet the definition of biological under section
1861(t) of the Act, even though they are approved by the FDA as
devices. The commenter recommended that biologicals approved by the FDA
under a biologics license application (BLA) should be eligible for
pass-through payment under the drug and nonimplantable biological pass-
through process, regardless of whether or not they are implanted. The
commenter claimed that Congress intended for biologicals approved under
BLAs to be paid as pass-through drugs because the commenter believed
that Congress intended that biologicals be included under the specific
OPPS statutory provisions that apply to specified covered outpatient
drugs (SCODs). The commenter alternatively requested that if CMS
continues to define implantable biologicals as devices for pass-through
purposes, CMS clarify that it will apply device process and payment
only if the devices are solely surgically implanted according to their
FDA-approved indications. The commenter claimed that the current pass-
through policy is unclear regarding how CMS would evaluate eligibility
for pass-through payment of a biological that has both implantable and
nonimplantable indications.
Another commenter believed that CMS has not sufficiently defined
the term ``surgically inserted or implanted'' regarding applicability
of pass-through device process and payment for implantable biologicals.
The commenter questioned whether biologicals inserted into the body via
catheter (which requires a surgical incision to place a catheter) or an
injection of a biological administered through a natural orifice should
be considered implantable biologicals. The commenter asked whether a
biological that is inserted into the body as a drug administration,
that is, by means of injection or infusion, is considered surgically
inserted or implanted for purposes of pass-through status evaluation
and payment. The commenter also recommended paying for implantable
biologicals using the

[[Page 71924]]

drug payment methodology, proposed at ASP plus 6 percent, rather than
the current methodology of charges adjusted to costs. The commenter
asserted the advantages of the ASP payment methodology are as follows:
there would be identical payment methodologies for biologicals that
function as both implantable and nonimplantable biologicals; the ASP
methodology is well-understood by providers and contractors; the ASP
methodology avoids the problem of hospitals being reluctant to mark up
charges for new implantable biologicals, thereby resulting in charge
compression and an underestimation of costs; and the ASP methodology
assures a consistent payment method, rather than the hospital-specific,
charges-adjusted-to-cost methodology.
Response: As stated in the CY 2010 OPPS/ASC final rule with comment
period, we evaluate implantable biologicals that function as and are
substitutes for implantable devices, regardless of their category of
FDA approval, as devices for OPPS payment purposes (74 FR 60476). We do
not believe it is necessary to make our OPPS payment policies regarding
implantable biologicals dependent on categories of FDA approval, the
intent of which is to ensure the safety and effectiveness of medical
products.
We do not agree with the commenter who asserted that Congress
intended biologicals approved under BLAs to be paid under the specific
OPPS statutory provisions that apply to SCODs, including the pass-
through provisions. Moreover, as we stated in the CY 2010 OPPS/ASC
final rule with comment period, Congress did not specify that we must
pay for implantable biologicals as biologicals rather than devices, if
they also meet our criteria for payment as a device (74 FR 60476). We
continue to believe that implantable biologicals meet the definitions
of a device and a biological and that, for payment purposes, it is
appropriate for us to consider implantable biologicals as implantable
devices in all cases, not as biologicals.
We also do not agree with the commenter's request that we pay for
pass-through implantable biologicals using the ASP payment methodology.
As we stated in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60474), we do not believe that this payment methodology would be
appropriate because payment based on ASP for pass-through implantable
biologicals would not provide similar OPPS payment treatment of
biological and nonbiological implantable devices, which is our goal for
new devices. Given the shared payment methodologies for implantable
biological and nonbiological devices during their nonpass-through
payment periods, as well as their overlapping and sometimes identical
clinical uses and their generally similar regulation by the FDA as
devices, we continue to believe that the most consistent pass-through
payment policy for these different types of items that are surgically
inserted or implanted and that may sometimes substitute for one another
is to evaluate and pay for all of these devices, both biological and
nonbiological, only under the device pass-through payment and
methodology.
Regarding the comment that claimed we have not sufficiently defined
the term ``surgically inserted or implanted'' regarding applicability
of pass-through device process and payment for implantable biologicals,
we believe that infusion or injection of a biological product through a
catheter is generally not considered implantation of a device since
these products are being administered through a catheter rather than
inserted or implanted into the body, in the same way that we have
stated in the past with respect to drug and device combination products
that it is not our intention to consider biologicals under the device
pass-through evaluation process when these products are merely
administered through the implantation of a delivery system for the
biological (74 FR 60476). We believe that applicants seeking pass-
through payment for a particular technology must determine whether to
apply through the drug or device pass-through process based on how the
individual product will be administered.
In response to the comment seeking clarity regarding how CMS would
evaluate eligibility for pass-through payment of a biological that has
both implantable and non-implantable indications, we again note that
applicants for pass-through status must determine whether to apply
through the drug or device pass-through process based on how the
individual product will be used. If we were to receive applications for
the same product for both drug pass-through status and device pass-
through status, and if both applications met the respective criteria
for approval, we would evaluate how it is administered in order to
determine whether it would be appropriate to differentiate the payment
methodology for the product depending on how it is used, as we do for
nonpass-through biologicals that may be sometimes used as drugs, and
sometimes used as devices.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue the policy
to specify that the pass-through evaluation process and pass-through
payment methodology for implantable biologicals that are surgically
inserted or implanted (through a surgical incision or a natural
orifice) and that are newly approved for pass-through status on or
after January 1, 2010, be the device pass-through process and payment
methodology only. We also are finalizing our other proposals, without
modification, to continue the following policies regarding device
offsets: (1) Including implantable biologicals in calculating the
device APC offset amounts; (2) using the device APC offset amounts to
evaluate whether the cost of a device (defined to include implantable
biologicals) in an application for a new device category for pass-
through payment is not insignificant in relation to the APC payment
amount for the service related to the category of devices; and (3)
reducing device pass-through payments based on device costs already
included in the associated procedural APCs, when we determine that
device costs associated with the new category are already packaged into
the existing APC structure.

B. Adjustment to OPPS Payment for No Cost/Full Credit and Partial
Credit Devices

1. Background
In recent years, there have been several field actions on and
recalls of medical devices as a result of implantable device failures.
In many of these cases, the manufacturers have offered devices without
cost to the hospital or with credit for the device being replaced if
the patient required a more expensive device. In order to ensure that
payment rates for procedures involving devices reflect only the full
costs of those devices, our standard ratesetting methodology for
device-dependent APCs uses only claims that contain the correct device
code for the procedure, do not contain token charges, do not contain
the ``FB'' modifier signifying that the device was furnished without
cost or with a full credit, and do not contain the ``FC'' modifier
signifying that the device was furnished with partial credit. As
discussed in section II.A.2.d.(1) of this final rule with comment
period, as we proposed, we are continuing to use our standard
ratesetting methodology for device-dependent APCs for CY 2011.
To ensure equitable payment when the hospital receives a device
without

[[Page 71925]]

cost or with full credit, in CY 2007 we implemented a policy to reduce
the payment for specified device-dependent APCs by the estimated
portion of the APC payment attributable to device costs (that is, the
device offset) when the hospital receives a specified device at no cost
or with full credit (71 FR 68071 through 68077). Hospitals are
instructed to report no cost/full credit cases using the ``FB''
modifier on the line with the procedure code in which the no cost/full
credit device is used. In cases in which the device is furnished
without cost or with full credit, the hospital is instructed to report
a token device charge of less than $1.01. In cases in which the device
being inserted is an upgrade (either of the same type of device or to a
different type of device) with a full credit for the device being
replaced, the hospital is instructed to report as the device charge the
difference between its usual charge for the device being implanted and
its usual charge for the device for which it received full credit. In
CY 2008, we expanded this payment adjustment policy to include cases in
which hospitals receive partial credit of 50 percent or more of the
cost of a specified device. Hospitals are instructed to append the
``FC'' modifier to the procedure code that reports the service provided
to furnish the device when they receive a partial credit of 50 percent
or more of the cost of the new device. We reduce the OPPS payment for
the implantation procedure by 100 percent of the device offset for no
cost/full credit cases when both a specified device code is present on
the claim and the procedure code maps to a specified APC. Payment for
the implantation procedure is reduced by 50 percent of the device
offset for partial credit cases when both a specified device code is
present on the claim and the procedure code maps to a specified APC.
Beneficiary copayment is based on the reduced payment amount when
either the ``FB'' or the ``FC'' modifier is billed and the procedure
and device codes appear on the lists of procedures and devices to which
this policy applies. We refer readers to the CY 2008 OPPS/ASC final
rule with comment period for more background information on the ``FB''
and ``FC'' payment adjustment policies (72 FR 66743 through 66749).
2. APCs and Devices Subject to the Adjustment Policy
In the CY 2011 OPPS/ASC proposed rule (75 FR 46253 through 46256),
we proposed to continue for CY 2011 the existing policy of reducing
OPPS payment for specified APCs by 100 percent of the device offset
amount when a hospital furnishes a specified device without cost or
with a full credit and by 50 percent of the device offset amount when
the hospital receives partial credit in the amount of 50 percent or
more of the cost for the specified device. Because the APC payments for
the related services are specifically constructed to ensure that the
full cost of the device is included in the payment, we stated in the CY
2011 OPPS/ASC proposed rule (75 FR 46253) that we continue to believe
it is appropriate to reduce the APC payment in cases in which the
hospital receives a device without cost, with full credit, or with
partial credit, in order to provide equitable payment in these cases.
(We refer readers to section II.A.2.d.(1) of this final rule with
comment period for a description of our standard rate-setting
methodology for device-dependent APCs). Moreover, the payment for these
devices comprises a large part of the APC payment on which the
beneficiary copayment is based, and we continue to believe it is
equitable that the beneficiary cost sharing reflects the reduced costs
in these cases.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46253), we also
proposed to continue using the three criteria established in the CY
2007 OPPS/ASC final rule with comment period for determining the APCs
to which this policy applies (71 FR 68072 through 68077). Specifically:
(1) All procedures assigned to the selected APCs must involve
implantable devices that would be reported if device insertion
procedures were performed; (2) the required devices must be surgically
inserted or implanted devices that remain in the patient's body after
the conclusion of the procedure (at least temporarily); and (3) the
device offset amount must be significant, which, for purposes of this
policy, is defined as exceeding 40 percent of the APC cost. We proposed
to continue to restrict the devices to which the APC payment adjustment
would apply to a specific set of costly devices to ensure that the
adjustment would not be triggered by the implantation of an inexpensive
device whose cost would not constitute a significant proportion of the
total payment rate for an APC. We stated in the CY 2011 OPPS/ASC
proposed rule (75 FR 46253) that we continue to believe these criteria
are appropriate because free devices and device credits are likely to
be associated with particular cases only when the device must be
reported on the claim and is of a type that is implanted and remains in
the body when the beneficiary leaves the hospital. We believe that the
reduction in payment is appropriate only when the cost of the device is
a significant part of the total cost of the APC into which the device
cost is packaged, and that the 40-percent threshold is a reasonable
definition of a significant cost.
As indicated in the CY 2011 OPPS/ASC proposed rule (75 FR 46253),
we examined the offset amounts calculated from the CY 2011 proposed
rule data and the clinical characteristics of APCs to determine whether
the APCs to which the no cost/full credit and partial credit device
adjustment policy applies in CY 2010 continue to meet the criteria for
CY 2011, and to determine whether other APCs to which the policy does
not apply in CY 2010 would meet the criteria for CY 2011. Based on the
CY 2009 claims data available for the proposed rule, we did not propose
any changes to the APCs and devices to which this policy applies. Table
18 of the CY 2011 OPPS/APC proposed rule (75 FR 46254) listed the
proposed APCs to which the payment adjustment policy for no cost/full
credit and partial credit devices would apply in CY 2011 and displayed
the proposed payment adjustment percentages for both no cost/full
credit and partial credit circumstances. We proposed that the no cost/
full credit adjustment for each APC to which this policy would continue
to apply would be the device offset percentage for the APC (the
estimated percentage of the APC cost that is attributable to the device
costs that are packaged into the APC). We also proposed that the
partial credit device adjustment for each APC would continue to be 50
percent of the no cost/full credit adjustment for the APC. Table 19 of
the CY 2011 OPPS/APC proposed rule (75 FR 46256) listed the proposed
devices to which the payment adjustment policy for no cost/full credit
and partial credit devices would apply in CY 2011. We stated in the CY
2011 proposed rule (75 FR 46253) that we would update the lists of APCs
and devices to which the no cost/full credit and partial credit device
adjustment policy would apply for CY 2011, consistent with the three
selection criteria discussed earlier in this section, based on the
final CY 2009 claims data available for the CY 2011 OPPS/ASC final rule
with comment period.
Comment: One comment supported the 40-percent threshold as a
reasonable definition of significant cost when determining the APCs to
which the no cost/full credit and partial device adjustment policy
applies. However, the commenter expressed concern about the application
of this standard and questioned how CMS determines which

[[Page 71926]]

APCs meet the threshold based on claims data. The commenter also
expressed concern that, for implantable orthopedic devices in
particular, the existing codes do not include all of the devices
currently being used. The commenter stated that currently available
HCPCS codes do not comprehensively describe all implantable devices,
and that this may negatively impact calculations of the device offset.
For example, the commenter indicated that a large number of implantable
devices are reported using HCPCS code C1713 (Anchor/screw for opposing
bone-to-bone or soft tissue-to-bone (implantable)). The commenter
recommended that CMS evaluate the adequacy of the device codes to
facilitate accurate tracking and cost estimation.
Response: We appreciate the commenter's support for the 40 percent
threshold as a reasonable definition of significant cost. As described
in the CY 2007 OPPS final rule with comment period (71 FR 68063 through
68066), we calculate the APC offset amount used to determine which APCs
meet the 40-percent threshold by first calculating an APC median cost
including device costs and then calculating an APC median cost
excluding device costs using single bills that contain devices.
The device cost is estimated from the device HCPCS codes present on
the claims and charges in the lines for four specific revenue codes:
275 (Medical/Surgical Supplies: Pacemaker), 276 (Medical/Surgical
Supplies: Intraocular lens), 278 (Medical/Surgical Supplies: Other
implants), and 624 (Medical/Surgical Supplies: FDA investigational
devices). We then divide the ``without device'' median cost by the
``with device'' median cost and subtract the percent from 100 to
acquire the percent of cost attributable to devices in the APC.
We do not agree with the commenter that the available HCPCS codes
are not sufficiently specific to allow hospitals to accurately report
charges for implantable devices on their claims and for us to derive
accurate device offset amount estimates from those claims. We are aware
that devices of varying description and cost are billed with individual
device category codes, such as HCPCS code C1713, but we do not believe
that this limits hospitals' ability to report accurate costs and
charges for items that may be described by those codes. Hospitals must
determine how best to accurately report costs and charges for all items
and services they provide, such as assigning device charges to a C-code
or an uncoded revenue line. As described above, we use both the C-codes
and uncoded revenue lines to calculate the device offset.
After consideration of the public comment we received, we are
finalizing our CY 2011 proposals, without modification, to continue the
established no cost/full credit and partial credit adjustment policy.
Table 25 below lists the APCs to which the payment adjustment policy
for no cost/full credit and partial credit devices will apply in CY
2011 and displays the final payment adjustment percentages for both no
cost/full credit and partial credit circumstances. Table 26 below lists
the devices to which no cost/full credit and partial credit device
adjustment policy will apply for CY 2011, consistent with the three
selection criteria discussed earlier in this section, based on the
final CY 2009 claims data available for this final rule with comment
period. For CY 2011, OPPS payments for implantation procedures to which
the ``FB'' modifier is appended are reduced by 100 percent of the
device offset for no cost/full credit cases when both a device code
listed in Table 26 below, is present on the claim and the procedure
code maps to an APC listed in Table 25 below. OPPS payments for
implantation procedures to which the ``FC'' modifier is appended are
reduced by 50 percent of the device offset when both a device code
listed in Table 26 is present on the claim and the procedure code maps
to an APC listed in Table 25. Beneficiary copayment is based on the
reduced amount when either the ``FB'' modifier or the ``FC'' modifier
is billed and the procedure and device codes appear on the lists of
procedures and devices to which this policy applies.
We note that we are adding one new APC for CY 2011 to Table 25, APC
0318 (Implantation of Cranial Neurostimulator Pulse Generator and
Electrode), and deleting APC 0225 (Implantation of Neurostimulator
Electrodes, Cranial Nerve). As discussed in section II.A.2.d.9. of this
final rule with comment period, we are making changes to these device-
dependent APCs in order to accommodate revisions to coding in CY 2011.

Table 25--APCs To Which The No Cost/Full Credit and Partial Credit
Device Adjustment Policy Will Apply in CY 2011
------------------------------------------------------------------------
Final CY 2011 Final CY 2011
device offset device offset
Final CY 2011 CY 2011 APC Title percentage for percentage for
APC no cost/full partial credit
credit case case
------------------------------------------------------------------------
0039............ Level I Implantation 86 43
of Neurostimulator
Generator.
0040............ Percutaneous 58 29
Implantation of
Neurostimulator
Electrodes.
0061............ Laminectomy, 64 32
Laparoscopy, or
Incision for
Implantation of
Neurostimulator
Electrodes.
0089............ Insertion/ 71 35
Replacement of
Permanent Pacemaker
and Electrodes.
0090............ Insertion/ 73 36
Replacement of
Pacemaker Pulse
Generator.
0106............ Insertion/ 46 23
Replacement of
Pacemaker Leads and/
or Electrodes.
0107............ Insertion of 88 44
Cardioverter-
Defibrillator.
0108............ Insertion/ 87 44
Replacement/Repair
of Cardioverter-
Defibrillator Leads.
0227............ Implantation of Drug 81 41
Infusion Device.
0259............ Level VII ENT 85 43
Procedures.
0315............ Level II 88 44
Implantation of
Neurostimulator
Generator.
0318............ Implantation of 85 43
Cranial
Neurostimulator
Pulse Generator and
Electrode.
0385............ Level I Prosthetic 61 31
Urological
Procedures.
0386............ Level II Prosthetic 71 36
Urological
Procedures.
0418............ Insertion of Left 73 36
Ventricular Pacing
Elect.
0425............ Level II 59 30
Arthroplasty or
Implantation with
Prosthesis.
0648............ Level IV Breast 46 23
Surgery.
0654............ Insertion/ 74 37
Replacement of a
permanent dual
chamber pacemaker.
0655............ Insertion/ 74 37
Replacement/
Conversion of a
permanent dual
chamber pacemaker.

[[Page 71927]]

0680............ Insertion of Patient 71 35
Activated Event
Recorders.
------------------------------------------------------------------------

Table 26--Devices To Which the No Cost/Full Credit and Partial Credit
Device Adjustment Policy Will Apply in CY 2011
------------------------------------------------------------------------
CY 2011 device HCPCS code CY 2011 short descriptor
------------------------------------------------------------------------
C1721............................. AICD, dual chamber.
C1722............................. AICD, single chamber.
C1728............................. Cath, brachytx seed adm.
C1764............................. Event recorder, cardiac.
C1767............................. Generator, neurostim, imp.
C1771............................. Rep dev, urinary, w/sling.
C1772............................. Infusion pump, programmable.
C1776............................. Joint device (implantable).
C1777............................. Lead, AICD, endo single coil.
C1778............................. Lead, neurostimulator.
C1779............................. Lead, pmkr, transvenous VDD.
C1785............................. Pmkr, dual, rate-resp.
C1786............................. Pmkr, single, rate-resp.
C1789............................. Prosthesis, breast, imp.
C1813............................. Prosthesis, penile, inflatab.
C1815............................. Pros, urinary sph, imp.
C1820............................. Generator, neuro rechg bat sys.
C1881............................. Dialysis access system.
C1882............................. AICD, other than sing/dual.
C1891............................. Infusion pump, non-prog, perm.
C1895............................. Lead, AICD, endo dual coil.
C1896............................. Lead, AICD, non sing/dual.
C1897............................. Lead, neurostim, test kit.
C1898............................. Lead, pmkr, other than trans.
C1899............................. Lead, pmkr/AICD combination.
C1900............................. Lead coronary venous.
C2619............................. Pmkr, dual, non rate-resp.
C2620............................. Pmkr, single, non rate-resp.
C2621............................. Pmkr, other than sing/dual.
C2622............................. Prosthesis, penile, non-inf.
C2626............................. Infusion pump, non-prog, temp.
C2631............................. Rep dev, urinary, w/o sling.
L8600............................. Implant breast silicone/eq.
L8614............................. Cochlear device/system.
L8680............................. Implt neurostim elctr each.
L8685............................. Implt nrostm pls gen sng rec.
L8686............................. Implt nrostm pls gen sng non.
L8687............................. Implt nrostm pls gen dua rec.
L8688............................. Implt nrostm pls gen dua non.
L8690............................. Aud osseo dev, int/ext comp.
------------------------------------------------------------------------

V. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals

A. OPPS Transitional Pass-Through Payment for Additional Costs of
Drugs, Biologicals, and Radiopharmaceuticals

1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biologicals (also referred to as biologics). As enacted by the
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of
1999 (Pub. L. 106-113), this provision requires the Secretary to make
additional payments to hospitals for current orphan drugs, as
designated under section 526 of the Federal Food, Drug, and Cosmetic
Act (Pub. L. 107-186); current drugs and biologicals and brachytherapy
sources used for the treatment of cancer; and current
radiopharmaceutical drugs and biologicals. For those drugs and
biologicals referred to as ``current,'' the transitional pass-through
payment began on the first date the hospital OPPS was implemented.
Transitional pass-through payments also are provided for certain
``new'' drugs and biologicals that were not being paid for as an HOPD
service as of December 31, 1996, and whose cost is ``not
insignificant'' in relation to the OPPS payments for the procedures or
services associated with the new drug or biological. For pass-through
payment purposes, radiopharmaceuticals are included as ``drugs.'' Under
the statute, transitional pass-through payments for a drug or
biological described in section 1833(t)(6)(C)(i)(II) of the Act can be
made for a period of at least 2 years but not more than 3 years after
the product's first payment as a hospital outpatient service under
Medicare Part B. CY 2011 pass-through drugs and biologicals and their
designated APCs are assigned status indicator ``G'' in Addenda A and B
to this final rule with comment period.
Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through
payment amount, in the case of a drug or biological, is the amount by
which the amount determined under section 1842(o) of the Act for the
drug or biological exceeds the portion of the otherwise applicable
Medicare OPD fee schedule that the Secretary determines is associated
with the drug or biological. If the drug or biological is covered under
a competitive acquisition contract under section 1847B of the Act, the
pass-through payment amount is determined by the Secretary to be equal
to the average price for the drug or biological for all competitive
acquisition areas and the year established under such section as
calculated and adjusted by the Secretary.
This methodology for determining the pass-through payment amount is
set forth in regulations at 42 CFR 419.64, which specify that the pass-
through payment equals the amount determined under section 1842(o) of
the Act minus the portion of the APC payment that CMS determines is
associated with the drug or biological. Section 1847A of the Act
establishes the use of the average sales price (ASP) methodology as the
basis for payment for drugs and biologicals described in section
1842(o)(1)(C) of the Act that are furnished on or after January 1,
2005. The ASP methodology, as applied under the OPPS, uses several
sources of data as a basis for payment, including the ASP, the
wholesale acquisition cost (WAC), and the average wholesale price
(AWP). In this final rule with comment period, the term ``ASP
methodology'' and ``ASP-based'' are inclusive of all data sources and
methodologies described therein. Additional information on the ASP
methodology can be found on the CMS Web site at: http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice.
As noted above, section 1833(t)(6)(D)(i) of the Act also provides
that, if a drug or biological is covered under a competitive
acquisition contract under section 1847B of the Act, the payment rate
is equal to the average price for the drug or biological for all
competitive acquisition areas and the year established as calculated
and adjusted by the Secretary. Section 1847B of the Act establishes the
payment methodology for Medicare Part B drugs and biologicals under the
competitive acquisition program (CAP). The Part B drug CAP was
implemented on July 1, 2006, and included approximately 190 of the most
common Part B drugs provided in the physician's office setting. As we
noted in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68633), the Part B drug CAP program was postponed beginning in CY 2009
(Medicare Learning Network (MLN) Matters Special Edition 0833,
available via the Web site: http://www.medicare.gov). As

[[Page 71928]]

of publication of this final rule with comment period, the postponement
of the Part B drug CAP program remains in effect and, there is no
effective CAP program rate for pass-through drugs and biologicals as of
January 1, 2009. Consistent with what we indicated in the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60466), if the program is
reinstituted during CY 2011 and Part B drug CAP rates become available,
we would again use the Part B drug CAP rate for pass-through drugs and
biologicals if they are a part of the Part B drug CAP program.
Otherwise, we would continue to use the rate that would be paid in the
physician's office setting for drugs and biologicals with pass-through
status.
For CYs 2005, 2006, and 2007, we estimated the OPPS pass-through
payment amount for drugs and biologicals to be zero based on our
interpretation that the ``otherwise applicable Medicare OPD fee
schedule'' amount was equivalent to the amount to be paid for pass-
through drugs and biologicals under section 1842(o) of the Act (or
section 1847B of the Act, if the drug or biological is covered under a
competitive acquisition contract). We concluded for those years that
the resulting difference between these two rates would be zero. For CYs
2008 and 2009, we estimated the OPPS pass-through payment amount for
drugs and biologicals to be $6.6 million and $23.3 million,
respectively. For CY 2010, we estimated the OPPS pass-through payment
estimate for drugs and biologicals to be $35.5 million. Our OPPS pass-
through payment estimate for drugs and biologicals in CY 2011 is $15.5
million, which is discussed in section VI.B. of this final rule with
comment period.
The pass-through application and review process for drugs and
biologicals is explained on the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/04_passthrough_payment.asp.
2. Drugs and Biologicals With Expiring Pass-Through Status in CY 2010
In the CY 2011 OPPS/ASC proposed rule (75 FR 46257 through 46258),
we proposed that the pass-through status of 18 drugs and biologicals
would expire on December 31, 2010, as listed in Table 20 of the
proposed rule (75 FR 46258). All of these drugs and biologicals will
have received OPPS pass-through payment for at least 2 years, and no
more than 3 years, by December 31, 2010. These drugs and biologicals
were approved for pass-through status on or before January 1, 2009.
With the exception of those groups of drugs and biologicals that are
always packaged when they do not have pass-through status, specifically
diagnostic radiopharmaceuticals, contrast agents, and implantable
biologicals, our standard methodology for providing payment for drugs
and biologicals with expiring pass-through status in an upcoming
calendar year is to determine the product's estimated per day cost and
compare it with the OPPS drug packaging threshold for that calendar
year (which is $70 for CY 2011), as discussed further in section V.B.2.
of this final rule with comment period. If the drug's or biological's
estimated per day cost is less than or equal to the applicable OPPS
drug packaging threshold, we would package payment for the drug or
biological into the payment for the associated procedure in the
upcoming calendar year. If the estimated per day cost of the drug or
biological is greater than the OPPS drug packaging threshold, we would
provide separate payment at the applicable relative ASP-based payment
amount (which is at ASP+5 percent for CY 2011, as discussed further in
section V.B.3. of this final rule with comment period). Section
V.B.2.d. of this final rule with comment period discusses the packaging
of all nonpass-through contrast agents, diagnostic
radiopharmaceuticals, and implantable biologicals.
Two of the products for which we proposed to expire pass-through
status in CY 2011 are biologicals that are solely surgically implanted
according to their Food and Drug Administration approved indications.
As discussed in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60467), we package payment for those implantable biologicals that
have expiring pass-though status into payment for the associated
surgical procedure. In the CY 2011 OPPS/ASC proposed rule, we proposed
to package payment for two products described by HCPCS codes C9356
(Tendon, porous matrix of cross-linked collagen and glycosaminoglycan
matrix (TenoGlide Tendon Protector Sheet), per square centimeter) and
C9359 (Porous purified collagen matrix bone void filler (Integra Mozaik
Osteoconductive Scaffold Putty, Integra OS Osteoconductive Scaffold
Putty), per 0.5 cc).
To date, for other nonpass-through biologicals paid under the OPPS
that may sometimes be used as implantable devices, we have instructed
hospitals, via Transmittal 1336, Change Request 5718, dated September
14, 2007, to not separately bill for drug and biological HCPCS codes
for the biologicals when they are used as implantable devices
(including as a scaffold or an alternative to human or nonhuman
connective tissue or mesh used in a graft) during surgical procedures.
When using drugs and biologicals during surgical procedures as
implantable devices, hospitals may include the charge for these items
in their charge for the procedure, report the charge on an uncoded
revenue center line, or report the charge under a device HCPCS code if
one exists, so the costs would appropriately contribute to the future
median setting for the associated procedure. In such cases, we consider
payment for the biological used as an implantable device in a specific
clinical case to be included in payment for the surgical procedure.
As we established in the CY 2003 OPPS final rule with comment
period (67 FR 66763), when the pass-through payment period for an
implantable device ends, it is standard OPPS policy to package payment
for the implantable device into payment for its associated surgical
procedure. We consider nonpass-through implantable devices to be
integral and supportive items and services for which packaged payment
is most appropriate. According to our regulations at Sec. 419.2(b), as
a prospective payment system, the OPPS establishes a national payment
rate that includes operating and capital-related costs that are
directly related and integral to performing a procedure or furnishing a
service on an outpatient basis including, but not limited to,
implantable prosthetics, implantable durable medical equipment, and
medical and surgical supplies. Therefore, when the period of
nonbiological device pass-through payment ends, we package the costs of
the devices no longer eligible for pass-through payment into the costs
of the procedures with which the devices were reported in the claims
data used to set the payment rates for the upcoming calendar year. As
described in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68634), we believed that this policy to package payment for implantable
devices that are integral to the performance of separately paid
procedures should also apply to payment for implantable biologicals
without pass-through status, when those biologicals are used as
implantable devices. As stated above, implantable biologicals may be
used in place of other implantable nonbiological devices whose costs
are already accounted for in the associated procedural APC payments for
surgical procedures. If we were to provide separate payment for these
implantable

[[Page 71929]]

biologicals without pass-through status, we would potentially be
providing duplicate device payment, both through the packaged
nonbiological device cost included in the surgical procedure's payment
and separate biological payment. We indicated in the CY 2009 OPPS/ASC
final rule with comment period (73 FR 68634) that we saw no basis for
treating implantable biological and nonbiological devices without pass-
through status differently for OPPS payment purposes because both are
integral to and supportive of the separately paid surgical procedures
in which either may be used.
We did not receive any public comments on our proposal to expire
the 18 drugs and biologicals that were identified in the proposed rule
from pass-through status, effective December 31, 2010. We are
finalizing our proposal, without modification, to expire the pass-
through status of the 18 drugs and biologicals listed in Table 27
below, effective December 31, 2010.

Table 27--Drugs and Biologicals for Which Pass-Through Status Will Expire December 31, 2010
----------------------------------------------------------------------------------------------------------------
Final CY 2011 Final CY 2011
CY 2010 HCPCS Code CY 2011 HCPCS Code CY 2011 long descriptor SI APC
----------------------------------------------------------------------------------------------------------------
A9581 A9581.................. Injection, gadoxetate N N/A
disodium, 1 ml.
C9248 C9248.................. Injection, clevidipien K 9248
butyrate, 1 mg.
C9356 C9356.................. Tendon, porous matrix of N N/A
cross-linked collagen and
glycosaminoglycan matrix
(TenoGlide Tendon Protector
Sheet), per square
centimeter.
C9358 C9358.................. Dermal substitute, native, K 9358
non-denatured collagen,
fetal bovine origin
(SurgiMend Collagen Matrix),
per 0.5 square centimeters.
C9359 C9359.................. Porous purified collagen N N/A
matrix bone void filler
(Integra Mozaik
Osteoconductive Scaffold
Putty, Integra OS
Osteoconductive Scaffold
Putty), per 0.5 cc.
J1267 J1267.................. Injection, doripenem, 10 mg.. N N/A
J1453 J1453.................. Injection, fosaprepitant, 1 K 9242
mg.
J1459 J1459.................. Injection, immune globulin K 1214
(privigen), intravenous, non-
lyophilized (e.g. liquid),
500 mg.
J1571 J1571.................. Injection, hepatitis b immune K 0946
globulin (hepagam b),
intramuscular, 0.5 ml.
J1573 J1573.................. Injection, hepatitis B immune K 1138
globulin (Hepagam B),
intravenous, 0.5 ml.
J1953 J1953.................. Injection, levetiracetam, 10 N N/A
mg.
J2785 J2785.................. Injection, regadenoson, 0.1 K 9244
mg.
J2796 J2796.................. Injection,romiplostim, 10 K 9245
micrograms.
J9033 J9033.................. Injection, bendamustine hcl, K 9243
1 mg.
J9207 J9207.................. Injection, ixabepilone, 1 mg. K 9240
J9225 J9225.................. Histrelin implant (vantas), K 1711
50 mg.
J9226 J9226.................. Histrelin implant (supprelin K 1142
la), 50 mg.
Q4114 Q4114.................. Dermal substitute, granulated K 1251
cross-linked collagen and
glycosaminoglycan matrix
(Flowable Wound Matrix), 1
cc.
----------------------------------------------------------------------------------------------------------------

3. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing
Pass-Through Status in CY 2011
In the CY 2011 OPPS/ASC proposed rule (75 FR 46258), we proposed to
continue pass-through status in CY 2011 for 31 drugs and biologicals.
None of these drugs and biologicals will have received OPPS pass-
through payment for at least 2 years and no more than 3 years by
December 31, 2010. These drugs and biologicals, which were approved for
pass-through status between April 1, 2009 and July 1, 2010, were listed
in Table 21 of the proposed rule. The APCs and HCPCS codes for these
drugs and biologicals were assigned status indicator ``G'' in Addenda A
and B to the proposed rule (75 FR 46259).
Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through
payment for pass-through drugs and biologicals (the pass-through
payment amount) as the difference between the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is covered
under a CAP under section 1847B of the Act, an amount determined by the
Secretary equal to the average price for the drug or biological for all
competitive acquisition areas and the year established under such
section as calculated and adjusted by the Secretary) and the portion of
the otherwise applicable OPD fee schedule that the Secretary determines
is associated with the drug or biological. Payment for drugs and
biologicals with pass-through status under the OPPS is currently made
at the physician's office payment rate of ASP+6 percent. In the
proposed rule, we stated that we believe it is consistent with the
statute to continue to provide payment for drugs and biologicals with
pass-through status at a rate of ASP+6 percent in CY 2011, the amount
that drugs and biologicals receive under section 1842(o) of the Act.
Thus, for CY 2011, we proposed to pay for pass-through drugs and
biologicals at ASP+6 percent, equivalent to the rate these drugs and
biologicals would receive in the physician's office setting in CY 2011.
We proposed that a zero pass-through payment amount would be paid for
most pass-through drugs and biologicals under the CY 2011 OPPS because
the difference between the amount authorized under section 1842(o) of
the Act, which is ASP+6 percent, and the portion of the otherwise
applicable OPD fee schedule that the Secretary determines is
appropriate, proposed at ASP+6 percent, is zero. In the case of pass-
through contrast agents, diagnostic radiopharmaceuticals, and
implantable biologicals, their pass-through payment amount would be
equal to ASP+6 percent because, if not on pass-through status, payment
for these products would be packaged into the associated procedures.
In addition, we proposed to continue to update pass-through payment
rates on a quarterly basis on the CMS Web site during CY 2011, if later
quarter ASP submission (or more recent WAC or AWP information, as
applicable) indicate that adjustments to the payment rates for these
pass-through drugs or biologicals are necessary. For a full description
of this policy, we refer readers to the CY 2006 OPPS/ASC final rule
with comment period (70 FR 42722 and 42723). If the Part B drug CAP is
reinstated during CY 2011, and a drug or biological that has been
granted pass-

[[Page 71930]]

through status for CY 2011 becomes covered under the Part B drug CAP,
we proposed to provide pass-though payment at the Part B drug CAP rate
and to make the adjustments to the payment rates for these drugs and
biologicals on a quarterly basis, as appropriate. As is our standard
methodology, we annually review new permanent HCPCS codes and delete
temporary HCPCS C-codes if an alternate permanent HCPCS code is
available for purposes of OPPS billing and payment.
In CY 2011, as is consistent with our CY 2010 policy for diagnostic
and therapeutic radiopharmaceuticals, we proposed to provide payment
for both diagnostic and therapeutic radiopharmaceuticals that are
granted pass-through status based on the ASP methodology. As stated
above, for purposes of pass-through payment, we consider
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a
diagnostic or therapeutic radiopharmaceutical receives pass-through
status during CY 2011, we proposed to follow the standard ASP
methodology to determine the pass-through payment rate that drugs
receive under section 1842(o) of the Act, which is, ASP+6 percent. If
ASP data are not available for a radiopharmaceutical, we proposed to
provide pass-through payment at WAC+6 percent, the equivalent payment
provided to pass-through drugs and biologicals without ASP information.
If WAC information is also not available, we proposed to provide
payment for the pass-through radiopharmaceutical at 95 percent of its
most recent AWP.
As discussed in more detail in section V.B.2.d. of this final rule
with comment period, over the last 3 years, we implemented a policy
whereby payment for all nonpass-through diagnostic
radiopharmaceuticals, contrast agents, and implantable biologicals is
packaged into payment for the associated procedure. In the CY 2011
OPPS/ASC proposed rule (75 FR 46271), we proposed to continue the
packaging of these items, regardless of their per day cost, in CY 2011.
As stated earlier, pass-through payment is the difference between the
amount authorized under section 1842(o) of the Act (or, if the drug or
biological is covered under a CAP under section 1847B of the Act, an
amount determined by the Secretary equal to the average price for the
drug or biological for all competitive acquisition areas and the year
established under such section as calculated and adjusted by the
Secretary) and the portion of the otherwise applicable OPD fee schedule
that the Secretary determines is associated with the drug or
biological. Because payment for a drug that is either a diagnostic
radiopharmaceutical or a contrast agent (identified as a ``policy-
packaged'' drug, first described in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68639)) or for an implantable biological
(which we consider to be a device when it functions as an implantable
device for all payment purposes, as discussed in sections V.A.4. and
V.B.2.d. of the CY 2010 OPPS/ASC final rule with comment period (74 FR
60458)) would otherwise be packaged if the product did not have pass-
through status, we believe the otherwise applicable OPPS payment amount
would be equal to the ``policy-packaged'' drug or device APC offset
amount for the associated clinical APC in which the drug or biological
is utilized. The calculation of the ``policy-packaged'' drug and device
APC offset amounts are described in more detail in section IV.A.2. of
this final rule with comment period. It follows that the copayment for
the nonpass-through payment portion (the otherwise applicable fee
schedule amount that we would also offset from payment for the drug or
biological if a payment offset applies) of the total OPPS payment for
those drugs and biologicals would, therefore, be accounted for in the
copayment for the associated clinical APC in which the drug or
biological is used.
According to section 1833(t)(8)(E) of the Act, the amount of
copayment associated with pass-through items is equal to the amount of
copayment that would be applicable if the pass-through adjustment was
not applied. Therefore, as we did in CY 2010, we proposed to continue
to set the associated copayment amount for pass-through diagnostic
radiopharmaceuticals, contrast agents, and implantable biologicals that
would otherwise be packaged if the item did not have pass-through
status to zero for CY 2011. The separate OPPS payment to a hospital for
the pass-through diagnostic radiopharmaceutical, contrast agent, or
implantable biological, after taking into account any applicable
payment offset for the item due to the device or ``policy-packaged''
APC offset policy, is the item's pass-through payment, which is not
subject to a copayment according to the statute. Therefore, we proposed
to not publish a copayment amount for these items in Addenda A and B to
the proposed rule.
As is our standard methodology, we annually review new permanent
HCPCS codes and delete temporary HCPCS C-codes if an alternative
permanent HCPCS code is available for purposes of OPPS billing and
payment. We specifically review drugs with pass-through status for CY
2011 that will change from C-code to a permanent J-code for CY 2011.
For our CY 2011 review, we have determined that HCPCS code J2426
(Injection, paliperidone palmitate, extended release, 1 mg) describes
the product reported under HCPCS code C9255 (Injection, paliperidone
palmitate, 1 mg); HCPCS code J7312 (Injection, dexamethasone
intravitreal implant, 0.1 mg) describes the product reported under
HCPCS code C9256 (Injection, dexamethasone intravitreal implant, 0.1
mg); HCPCS code J3095 (Injection, telavancin, 10 mg) describes the
product reported under HCPCS code C9258 (Injection, telavancin, 10 mg);
HCPCS code J9307 (Injection, pralatrexate, 1 mg) describes the product
reported under HCPCS code C9259 (Injection, pralatrexate, 1 mg); HCPCS
code J9302 (Injection, ofatumumab, 10 mg) describes the product
reported under HCPCS code C9260 (Injection, ofatumumab, 10 mg); HCPCS
code J3357 (Injection, ustekinumab, 1 mg) describes the product
reported under HCPCS code C9261 (Injection, ustekinumab, 1 mg); HCPCS
code J1290 (Injection, ecallantide, 1 mg) describes the product
reported under HCPCS code C9263 (Injection, ecallantide, 1 mg); HCPCS
code J3262 (Injection, tocilizumab, 1 mg) describes the product
reported under HCPCS code C9264 (Injection, tocilizumab, 1 mg); HCPCS
code J9315 (Injection, romidepsin, 1 mg) describes the product reported
under HCPCS code C9265 (Injection, romidepsin, 1 mg); HCPCS code J0775
(Injection, collagenase clostridium histolyticum, 0.01 mg) describes
the product reported under HCPCS code C9266 (Injection, collagenase
clostridium histolyticum, 0.1 mg); HCPCS code J7184 (Injection, von
Willebrand factor complex (human), Wilate, per 100 IU VWF: RCO)
describes the product reported under HCPCS code C9267 (Injection, von
Willebrand factor complex (human), Wilate, per 100 IU VWF: RCO); HCPCS
code J7335 (Capsaicin 8% patch, per 10 square centimeters) describes
the product reported under HCPCS code C9268 (Capsaicin, patch, 10cm2);
HCPCS code J0597 (Injection, C-1 Esterase inhibitor (human), Berinert,
10 units) describes the product reported under HCPCS code C9269
(Injection, C-1 Esterase inhibitor (human), Berinert, 10 units); HCPCS
code J3385 (Injection, velaglucerase alfa, 100 units) describes the
product reported under HCPCS code C9271 (Injection, velaglucerase alfa,
100 units); and HCPCS code J8562

[[Page 71931]]

(Fludarabine phosphate, oral, 10 mg) describes the product reported
under HCPCS code Q2025 (Fludarabine phosphate, oral, 1 mg).
Comment: Several commenters supported CMS' proposal to provide
payment at ASP+6 percent for drugs, biologicals, contrast agents, and
radiopharmaceuticals that are granted pass-through status. One
commenter approved of the proposal to use the ASP methodology that
would provide payment based on WAC if ASP information is not available,
and payment at 95 percent of AWP if WAC information is not available.
Some commenters requested that CMS provide an additional payment for
radiopharmaceuticals that are granted pass-through status.
Response: As discussed above, the statutorily mandated pass-through
payment for CY 2011, in general, equals the amount determined under
section 1842(o) of the Act minus the portion of the APC payment that
CMS determines is associated with the drug or biological. Therefore,
the pass-through payment is determined by subtracting the otherwise
applicable payment amount under the OPPS (determined to be ASP+5
percent for CY 2011) from the amount determined under section 1842(o)
of the Act (ASP+6 percent).
For CY 2011, consistent with our CY 2010 payment policy for
diagnostic and therapeutic radiopharmaceuticals, we proposed to provide
payment for both diagnostic and therapeutic radiopharmaceuticals with
pass-through status based on the ASP methodology. As stated above, the
ASP methodology, as applied under the OPPS, uses several sources of
data as a basis for payment, including the ASP, WAC if ASP is
unavailable, and 95 percent of the radiopharmaceutical's most recent
AWP if ASP and WAC are unavailable. For purposes of pass-through
payment, we consider radiopharmaceuticals to be drugs under the OPPS.
Therefore, if a diagnostic or therapeutic radiopharmaceutical receives
pass-through status during CY 2011, we proposed to follow the standard
ASP methodology to determine its pass-through payment rate under the
OPPS. We have routinely provided a single payment for drugs,
biologicals, and radiopharmaceuticals under the OPPS to account for the
acquisition and pharmacy overhead costs, including compounding costs.
We continue to believe that a single payment is appropriate for
diagnostic radiopharmaceuticals with pass-through status in CY 2011 and
that the payment rate of ASP+6 percent (or payment based on the ASP
methodology) is appropriate to provide payment for both the
radiopharmaceutical's acquisition cost and any associated nuclear
medicine handling and compounding costs. We refer reader to section
V.B.3.c. of this final rule with comment period for further discussion
of payment for therapeutic radiopharmaceuticals based on ASP
information submitted by manufacturers and the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/.
Comment: Some commenters expressed concern that a
radiopharmaceutical may receive pass-through payment for a period of
possibly only 2 years. Several commenters recommended providing pass-
through payment for approved radiopharmaceuticals for a full 3 year
time period to allow hospitals time to incorporate new products into
their chargemasters and billing practices.
Response: The statute specifically allows for pass-through payment
for drugs and biologicals to be made for at least 2 years, but no more
than 3 years. We believe this period of payment facilitates
dissemination of these new products into clinical practice and for the
collection of hospital claims data reflective of their costs for future
OPPS ratesetting. Our longstanding practice has been to provide pass-
through payment for a period of 2 to 3 years, with expiration of pass-
through status proposed and finalized through the annual rulemaking
process. Each year, when proposing to expire the pass-through status of
certain drugs and biologicals, we examine our claims data for these
products. We observe that hospitals typically have incorporated these
products into their chargemasters based on the utilization and costs
observed in our claims data. Under the existing pass-through policy,
which has been generally supported by commenters, we begin pass-through
payment on a quarterly basis that depends on when applications are
submitted to us for consideration and we expire pass-through status
only on an annual basis, so there is no way to ensure that all pass-
through drugs and biologicals receive pass-through payment for a full 3
years, while also providing pass-through payment for no more than 3
years as the statute requires. Therefore, we will continue to provide
drug and biologicals pass-through payment for at least 2 years, but no
more than 3 years, as required by the statute.
There is currently one diagnostic radiopharmaceutical, described by
HCPCS code A9582 (Iodine I-123 iobenguane, diagnostic, per study dose,
up to 15 millicuries), that has been granted pass-through status at the
time of issuance of this final rule with comment period. We proposed to
continue pass-through status for this diagnostic radiopharmaceutical as
it would not have received at least 2 years but not more than 3 years
of pass-through payment by December 31, 2010. This is consistent with
the OPPS provision that provides for at least 2 years but not more than
3 years of pass-through payment for drugs and biologicals that are
approved for pass-through payments.
We provide an opportunity through the annual OPPS/ASC rulemaking
cycle for public comment on those drugs and biologicals that are
proposed for expiration of pass-through payment at the end of the next
calendar year. We have often received public comments related to our
proposed expiration of pass-through status for drugs and biologicals in
the future. In this manner, we address specific concerns about the
pass-through payment period for individual drugs, biologicals, and
radiopharmaceuticals.
Comment: One commenter recommended that CMS monitor the cost and
utilization data on HCPCS code A9583 (Injection, gadofosveset
trisodium, 1 ml) on a quarterly basis throughout CY 2010 and CY 2011 to
determine whether a third year of pass-through payment is necessary.
The commenter noted that HCPCS code A9583, as a contrast agent and a
``policy-packaged'' item, would be packaged after its pass-through
status ends.
Response: As stated above, section 1833(t)(6)(C)(i)(II) of the Act
provides transitional pass-through payments for a drug or biological
for at least 2 years, but not more than 3 years, beginning on the first
date on which payment is made as hospital outpatient services under
Medicare Part B. Under our current policy, supported by commenters, we
begin pass-though payment on a quarterly basis that depends on when
applications are submitted to us for consideration, and we expire pass-
through status only on an annual basis through the rulemaking process.
Accordingly, there is no way to ensure that all pass-through drugs and
biologicals receive pass-through payment for a full 3 years, while also
providing pass-through payment for no more than 3 years, as the statute
requires. Although it is our standard practice to monitor and review
the cost and utilization data of all drugs and biologicals, because of
our policy to expire pass-through status only on an annual basis
through rulemaking, we could not use this information to authorize a
full third year of pass-

[[Page 71932]]

through payment for an individual drug or biological. Therefore, once
pass-through status ends for the item described by HCPCS code A9583
(Injection, gadofosveset trisodium, 1 ml) after at least 2 years but
not more than 3 years according to the statute, as a contrast agent, it
will be packaged according to our policy described in section V.B.2.d.
of this final rule with comment period. We are finalizing our proposal
to continue pass-through status for the item described by HCPCS code
A9583 for CY 2011.
Comment: Several commenters supported the CY 2011 proposal to
continue to set the associated copayment amounts for pass-through
diagnostic radiopharmaceuticals, contrast agents, and implantable
biologicals that would otherwise be packaged if the product did not
have pass-through status to zero. The commenters noted that this policy
is consistent with statutory requirements and provides cost-saving
benefits to beneficiaries.
Response: We appreciate the commenters' support of our proposal. As
discussed in the CY 2011 OPPS/ASC proposed rule (75 FR 46259), we
believe that, for drugs and biologicals that are ``policy-packaged,''
the copayment for the nonpass-through payment portion of the total OPPS
payment for this subset of drugs and biologicals is accounted for in
the copayment for the associated clinical APC in which the drug or
biological is used. According to section 1833 (t)(8)(E) of the Act, the
amount of copayment associated with pass-through items is equal to the
amount of copayment that would be applicable if the pass-through
adjustment was not applied. Therefore, we believe that the amount
should be zero for drugs and biologicals that are ``policy-packaged,''
including diagnostic radiopharmaceuticals.
Comment: One commenter noted that CMS omitted 7 of the 31 pass-
through drugs and biologicals proposed to continue on pass-through
status for CY 2011 in Addendum B to the CY 2011 OPPS/ASC proposed rule.
The commenter was concerned that the absence of these drugs and
biologicals in Addendum B could cause hospitals or Medicare contractors
to believe that the products are not paid for under the OPPS as pass-
through drugs.
Response: Table 21 of the CY 2011 OPPS/ASC proposed rule (75 FR
46260) contained 31 drugs, biologicals, and radiopharmaceuticals that
we proposed to continue on pass-through status for CY 2011. This table
included drugs, biologicals, and radiopharmaceuticals approved for
pass-through status for the July 2010 quarterly update. While the
commenter did not specifically mention which codes were omitted from
Addendum B to the proposed rule, we note that HCPCS codes C9264
(Injection, tocilizumab, 1 mg), C9265 (Injection, romidepsin, 1 mg),
C9266 (Injection, collagenase clostridium histolyticum, 0.1 mg), C9267
(Injection, von Willebrand factor complex (human), Wilate, per 100 IU
VWF: RCO), C9268 (Capsaicin, patch, 10cm2), C9367 (Skin substitute,
Endoform Dermal Template, per square centimeter), all approved for
pass-through status for the July 2010 quarterly update, and Q2025
(Fludarabine phosphate, oral, 1 mg) were not included in Addendum B of
the proposed rule.
According to our current practice, we did not include pass-through
payment rates for those drugs, biologicals, and radiopharmaceuticals
that were newly approved for pass-through status for July 2010 in
Addendum B to the CY 2011 OPPS/ASC proposed rule. It has been our
longstanding practice to include only payment rates for pass-through
drugs, biologicals, and radiopharmaceuticals in Addendum B to the
proposed rule that have been approved for payment under the OPPS
through the April quarterly update because of the difficulty of
coordinating production of the Addendum B to the proposed rule
concurrently with decisions about pass-through drugs and biologicals
for the July quarterly update transmittal. Payment rates for all pass-
through drugs, biologicals, and radiopharmaceuticals that are proposed
and finalized to continue on pass-through status for a given calendar
year are included in Addendum B to the final rule with comment period.
Additionally, pass-through payment for the product described by
HCPCS code Q2025 (Fludarabine phosphate, oral, 1 mg) was included in
Addendum B to the CY 2011 OPPS/ASC proposed rule under the now
discontinued HCPCS code C9262 (Fludarabine phosphate, oral, 1 mg).
Beginning in July 2010, HCPCS code C9262 was deleted and replaced with
HCPCS code Q2025. For CY 2011, HCPCS code Q2025 is finalized as HCPCS
code J8562 (Fludarabine phosphate oral, 10mg) and will continue under
pass-through status for CY 2011.
We did not receive any public comments on our proposal to update
pass-through payment rates on a quarterly basis on the CMS Website
during CY 2011 if later quarter ASP submissions (or more recent WAC or
AWP information, as applicable) indicate that adjustments to the
payment rates for these pass-through drugs and biologicals are
necessary.
After consideration of the public comments we received, we are
finalizing our CY 2011 pass-through payment proposals, without
modification. Specifically, we are providing pass-through payment in CY
2011 for those drugs, biologicals, and radiopharmaceuticals listed in
Table 28 below. Payment for drugs, biologicals, and
radiopharmaceuticals granted pass-through status will be made at the
payment rate specified in section 1842(o) of the Act, that is, ASP+6
percent. For drugs and biologicals that are not diagnostic
radiopharmaceuticals, contrast agents, or implantable biologicals, the
pass-through payment amount is equal to the difference between payment
for the otherwise applicable Medicare OPD fee schedule that the
Secretary determines is associated with the drug or biological, which
is payment at ASP+5 percent and the payment rate specified in section
1842(o) of the Act, ASP+6 percent or the Part B drug CAP rate as
applicable. For contrast agents, diagnostic radiopharmaceuticals, and
implantable biologicals, the pass-through payment is equal to the
difference between the policy-packaged offset amount associated with an
APC (discussed in V.A.4. of this final rule with comment period) and
the payment rate specified in section 1842(o) of the Act of ASP+6
percent. If ASP data are not available, payment for these pass-through
drugs and biologicals will be based on the standard OPPS ASP
methodology, that is, payment at WAC+6 percent if ASP data are not
available, and payment at 95 percent of the pass-through drug's,
biological's, or radiopharmaceutical's most recent AWP if WAC
information is not available. We will update pass-through payment rates
on a quarterly basis on the CMS website during CY 2011 if later ASP
submissions (or more recent WAC or AWP information, as applicable)
indicate that adjustments to the payment rates for pass-through drugs
and biologicals are necessary. We will set the associated copayment
amount for pass-through diagnostic radiopharmaceuticals, contrast
agents, and implantable biologicals approved for pass-through as a
biological prior to January 1, 2010 that would otherwise be packaged if
the item did not have pass-through status to zero. The separate OPPS
payment to a hospital for pass-through diagnostic radiopharmaceuticals,
contrast agents, or implantable biologicals, after taking into account
any applicable payment offset for the item due to the device or

[[Page 71933]]

``policy packaged'' APC offset policy, is the item's pass-through
payment, which is not subject to a copayment, according to the statute.
Finally, if a drug or biological that has been granted pass-through
status for CY 2011 becomes covered under the Part B drug CAP if the
program is reinstituted, we will provide pass-through payment at the
Part B drug CAP rate and make the appropriate adjustment to the payment
rates for the drugs and biologicals on a quarterly basis as
appropriate.
The 42 drugs and biologicals that are continuing on pass-through
status for CY 2011 or that have been granted pass-through status as of
January 2011 are displayed in Table 28 below.

Table 28--Drugs and Biologicals With Pass-Through Status in CY 2011
----------------------------------------------------------------------------------------------------------------
CY 2011 HCPCS Final CY 2011 Final CY 2011
CY 2010 HCPCS code code CY 2011 long descriptor SI APC
----------------------------------------------------------------------------------------------------------------
A9582.......................... A9582 Iodine I-123 iobenguane, G 9247
diagnostic, per study dose,
up to 15 millicuries.
A9583.......................... A9583 Injection, gadofosveset G 1299
trisodium, 1 ml.
C9250.......................... C9250 Human plasma fibrin sealant, G 9250
vapor-heated, solvent-
detergent (Artiss), 2 ml.
C9255.......................... J2426 Injection, paliperidone G 9255
palmitate, extended release,
1 mg.
C9256.......................... J7312 Injection, dexamethasone G 9256
intravitreal implant, 0.1 mg.
C9258.......................... J3095 Injection, telavancin, 10 mg.. G 9258
C9259.......................... J9307 Injection, pralatrexate, 1 mg. G 9259
C9260.......................... J9302 Injection, ofatumumab, 10 mg.. G 9260
C9261.......................... J3357 Injection, ustekinumab, 1 mg.. G 9261
C9263.......................... J1290 Injection, ecallantide, 1 mg.. G 9263
C9264.......................... J3262 Injection, tocilizumab, 1 mg.. G 9624
C9265.......................... J9315 Injection, romidepsin, 1 mg... G 9625
C9266.......................... J0775 Injection, collagenase G 1340
clostridium histolyticum,
0.01 mg.
C9267.......................... J7184 Injection, von Willebrand G 9267
factor complex (human),
Wilate, per 100 IU VWF: RCO.
C9268.......................... J7335 Capsaicin 8% patch, per 10 G 9268
square centimeters.
C9269.......................... J0597 Injection, C-1 Esterase G 9269
inhibitor (human), Berinert,
10 units.
C9270.......................... C9270 Injection, immune globulin G 9270
(Gammaplex), intravenous, non-
lyophilized (e.g. liquid),
500 mg.
C9271.......................... J3385 Injection, velaglucerase alfa, G 9271
100 units.
C9272.......................... C9272 Injection, denosumab, 1 mg.... G 9272
C9273.......................... C9273 Sipuleucel-T, minimum of 50 G 9273
million autologous CD54+
cells activated with PAPGM-
CSF in 250 mL of Lactated
Ringer's, including
leukapheresis and all other
preparatory procedures, per
infusion.
C9274 Crotalidae polyvalent immune G 9274
fab (ovine), 1 vial.
C9275 Injection, hexaminolevulinate G 9275
hydrochloride, 100 mg, per
study dose.
C9276 Injection, cabazitaxel, 1 mg.. G 9276
C9277 Injection, alglucosidase alfa G 9277
(Lumizyme), 1 mg.
C9278 Injection, incobotulinumtoxin G 9278
A, 1 unit.
C9279 Injection, ibuprofen, 100 mg.. G 9279
C9360.......................... C9360 Dermal substitute, native, non- G 9360
denatured collagen, neonatal
bovine origin (SurgiMend
Collagen Matrix), per 0.5
square centimeters.
C9361.......................... C9361 Collagen matrix nerve wrap G 9361
(NeuroMend Collagen Nerve
Wrap), per 0.5 centimeter
length.
C9362.......................... C9362 Porous purified collagen G 9362
matrix bone void filler
(Integra Mozaik
Osteoconductive Scaffold
Strip), per 0.5 cc.
C9363.......................... C9363 Skin substitute, Integra G 9363
Meshed Bilayer Wound Matrix,
per square centimeter.
C9364.......................... C9364 Porcine implant, Permacol, per G 9364
square centimeter.
C9367.......................... C9367 Skin substitute, Endoform G 9367
Dermal Template, per square
centimeter.
J0598.......................... J0598 Injection, C1 esterase G 9251
inhibitor (human), 10 units.
J0641.......................... J0641 Injection, levoleucovorin G 1236
calcium, 0.5 mg.
J0718.......................... J0718 Injection, certolizumab pegol, G 9249
1 mg.
J1680.......................... J1680 Injection, human fibrinogen G 1290
concentrate, 100 mg.
J2562.......................... J2562 Injection, plerixafor, 1 mg... G 9252
J8705.......................... J8705 Topotecan, oral, 0.25 mg...... G 1238
J9155.......................... J9155 Injection, degarelix, 1 mg.... G 1296
J9328.......................... J9328 Injection, temozolomide, 1 mg. G 9253
Q0138.......................... Q0138 Injection, Ferumoxytol, for G 1297
treatment of iron deficiency
anemia, 1 mg.
Q2025.......................... J8562 Fludarabine phosphate, oral, G 1339
10 mg.
----------------------------------------------------------------------------------------------------------------

[[Page 71934]]

4. Provisions for Reducing Transitional Pass-Through Payments for
Diagnostic Radiopharmaceuticals and Contrast Agents to Offset Costs
Packaged into APC Groups
a. Background
Prior to CY 2008, diagnostic radiopharmaceuticals and contrast
agents were paid separately under the OPPS if their mean per day costs
were greater than the applicable year's drug packaging threshold. In CY
2008 (72 FR 66768), we began a policy of packaging payment for all
nonpass-through diagnostic radiopharmaceuticals and contrast agents as
ancillary and supportive items and services into their associated
nuclear medicine procedures. Therefore, beginning in CY 2008, nonpass-
through diagnostic radiopharmaceuticals and contrast agents were not
subject to the annual OPPS drug packaging threshold to determine their
packaged or separately payable payment status, and instead all nonpass-
through diagnostic radiopharmaceuticals and contrast agents were
packaged as a matter of policy. In the CY 2011 OPPS/ASC proposed rule
(75 FR 46261), for CY 2011, we proposed to continue to package payment
for all nonpass-through diagnostic radiopharmaceuticals and contrast
agents, as discussed in section V.B.2.d. of the proposed rule and this
final rule with comment period.
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
As previously noted, radiopharmaceuticals are considered to be
drugs for OPPS pass-through payment purposes. As described above,
section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
(or the Part B drug CAP rate) and the otherwise applicable OPD fee
schedule amount. There is currently one radiopharmaceutical with pass-
through status under the OPPS, HCPCS code A9582 (Iobenguane, I-123,
diagnostic, per study dose, up to 10 millicuries). HCPCS code A9582 was
granted pass-through status beginning April 1, 2009 and will continue
on pass-through status in CY 2011. We currently apply the established
radiopharmaceutical payment offset policy to pass-through payment for
this product. As described earlier in section V.A.3. of this final rule
with comment period, new pass-through diagnostic radiopharmaceuticals
will be paid at ASP+6 percent, while those without ASP information will
be paid at WAC+6 percent or, if WAC is not available, payment will be
based on 95 percent of the product's most recently published AWP.
As a payment offset is necessary in order to provide an appropriate
transitional pass-through payment, we deduct from the payment for pass-
through radiopharmaceuticals an amount that reflects the portion of the
APC payment associated with predecessor radiopharmaceuticals in order
to ensure no duplicate radiopharmaceutical payment is made. In CY 2009,
we established a policy to estimate the portion of each APC payment
rate that could reasonably be attributed to the cost of predecessor
diagnostic radiopharmaceuticals when considering a new diagnostic
radiopharmaceutical for pass-through payment (73 FR 68638 through
68641). Specifically, we utilize the ``policy-packaged'' drug offset
fraction for APCs containing nuclear medicine procedures, calculated as
1 minus (the cost from single procedure claims in the APC after
removing the cost for ``policy-packaged'' drugs divided by the cost
from single procedure claims in the APC). In the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60480 through 60484), we finalized a
policy to redefine ``policy-packaged'' drugs as only nonpass-through
diagnostic radiopharmaceuticals and contrast agents, as a result of the
policy discussed in sections V.A.4. and V.B.2.d. of the CY 2010 OPPS/
ASC final rule with comment period (74 FR 60471 through 60477 and 60495
through 60499, respectively) that treats nonpass-through implantable
biologicals that are surgically inserted or implanted (through a
surgical incision or a natural orifice) and implantable biologicals
that are surgically inserted or implanted (through a surgical incision
or a natural orifice) with newly approved pass-through status beginning
in CY 2010 or later as devices, rather than drugs. To determine the
actual APC offset amount for pass-through diagnostic
radiopharmaceuticals that takes into consideration the otherwise
applicable OPPS payment amount, we multiply the ``policy-packaged''
drug offset fraction by the APC payment amount for the nuclear medicine
procedure with which the pass-through diagnostic radiopharmaceutical is
used and, accordingly, reduce the separate OPPS payment for the pass-
through diagnostic radiopharmaceutical by this amount.
The I/OCE processes claims for nuclear medicine procedures only
when they are performed with a radiolabeled product. Therefore, the
radiolabeled product edits in the I/OCE require a hospital to report a
diagnostic radiopharmaceutical with a nuclear medicine scan in order to
receive payment for the nuclear medicine scan. We have received
questions from hospitals on how to bill for a nuclear medicine scan
when they receive a diagnostic radiopharmaceutical free of charge or
with full credit. Currently, if a hospital receives a diagnostic
radiopharmaceutical free of charge or with full credit and uses it to
provide a nuclear medicine scan, the hospital could choose not to bill
for both the nuclear medicine scan and the diagnostic
radiopharmaceutical in order to bypass the radiolabeled product edits,
but the hospital clearly would not receive OPPS payment for the scan or
the diagnostic radiopharmaceutical. The hospital also could report the
diagnostic radiopharmaceutical with the nuclear medicine scan and
receive an APC payment that includes payment for the diagnostic
radiopharmaceutical, but this would lead to inaccurate billing and
incorrect payment. The OPPS should not pay for a free item. We believe
neither of the above alternatives is satisfactory.
In order to ensure that the OPPS is making appropriate and
equitable payments under such circumstances and that a hospital can
comply with the required radiolabeled product edits, in the CY 2011
OPPS/ASC proposed rule (75 FR 46261 through 46262), we proposed for CY
2011 to instruct hospitals to report the ``FB'' modifier on the line
with the procedure code for the nuclear medicine scan in the APCs
listed in Table 22 of the proposed rule in which the no cost/full
credit diagnostic radiopharmaceutical is used. Modifier ``FB'' is
defined as an ``Item Provided Without Cost to Provider, Supplier or
Practitioner, or Credit Received for Replacement Device (Examples, but
not Limited to: Covered Under Warranty, Replaced Due to Defect, Free
Samples).'' Although this modifier is specific to devices, it captures
the concept of the hospital receiving a key component of the service
without cost. In cases in which the diagnostic radiopharmaceutical is
furnished without cost or with full credit, we proposed to instruct the
hospital to report a token charge of less than $1.01. We refer readers
to the CY 2008 OPPS/ASC final rule with comment period for more
background information on the ``FB'' modifier payment adjustment
policies (72 FR 66743 through 66749). We proposed that when a hospital
bills with an ``FB'' modifier with the nuclear medicine

[[Page 71935]]

scan, the payment amount for procedures in the APCs listed in Table 22
of the proposed rule would be reduced by the full ``policy-packaged''
offset amount appropriate for diagnostic radiopharmaceuticals.
As discussed in the CY 2009 OPPS/ASC final rule with comment
period, the ``policy packaged'' offset amount that we calculate
estimates the portion of each APC payment rate that could reasonably be
attributed to the cost of predecessor diagnostic radiopharmaceuticals
when considering a new diagnostic radiopharmaceutical for pass through
payment (73 FR 68638 through 68641). As in our offset policy, discussed
below, we believe it is appropriate to remove the ``policy packaged''
offset amount from payment for a nuclear medicine scan with a
diagnostic radiopharmaceutical received at no cost or full credit which
is billed using one of the APCs appearing in Table 29 below, because it
represents the portion of the APC payment attributable to diagnostic
radiopharmaceuticals used in the performance of a nuclear medicine
scan. Using the ``FB'' modifier with radiolabeled products will allow
the hospital to bill accurately for a diagnostic radiopharmaceutical
received free of charge and will allow the hospital to comply with the
radiolabeled product edits to ensure appropriate payment.
In the CY 2011 OPPS/ASC proposed rule (75 FR 46262), we did not
propose to recognize modifier ``FC,'' which is defined as ``Partial
credit received for replaced device,'' because we were unsure of the
circumstances in which hospitals would receive a diagnostic
radiopharmaceutical at reduced cost to replace a previously provided
diagnostic radiopharmaceutical. We note that most of the questions that
we have received pertain to coding of free sample or trial diagnostic
radiopharmaceuticals received free of charge. We invited public comment
on when a diagnostic radiopharmaceutical is provided for a
significantly reduced price and whether the ``FC'' modifier is
appropriate for radiolabeled products.
Comment: Several commenters supported CMS' proposal to instruct
hospitals to report modifier ``FB'' on the line with the procedure code
for the nuclear medicine scan when a diagnostic radiopharmaceutical is
received free of charge or with full credit. The commenters stated that
implementing this proposal would lead to more accurate billing and
would prevent inappropriate payment for diagnostic radiopharmaceuticals
received free of charge or with full credit. One commenter opposed CMS'
proposal to instruct hospitals to report modifier ``FB'' on the line
with the procedure code for the nuclear medicine scan, stating that a
modifier for radiopharmaceuticals is unnecessary. The commenter further
stated that radiopharmaceuticals cannot be compared to devices because
of their pricing differences, since devices generally constitute a
significant portion of the total procedure charges and
radiopharmaceuticals only make up a small portion of the charge for
radiology services. In addition, the commenter stated that the reasons
for free or partial charge devices are generally manufacturer-related
defects, such as recalls and other failures during the warranty period,
and that radiopharmaceuticals are treated differently, in that when
they are recalled, hospitals do not continue to stock them and,
therefore, they would not be administered or billed.
Response: We appreciate commenter's support for our proposal. As
stated in the CY 2011 OPPS/ASC proposed rule (75 FR 46261 through
46262), instructing hospitals to use the ``FB'' modifier on the line
with the procedure code for the nuclear medicine scan would allow the
hospital to bill accurately for a diagnostic radiopharmaceutical
received free of charge and will allow the hospital to comply with the
radiolabeled product edits to ensure appropriate payment.
We have received questions from hospitals that have asked how to
properly bill for diagnostic radiopharmaceuticals obtained free of
charge. We believe that there is a need for hospitals to properly
account for diagnostic radiopharmaceuticals received free of charge.
Therefore, we disagree with the commenter's assertion that there is no
need for a modifier for diagnostic radiopharmaceuticals received with
no cost or free of charge. In addition, we do not find the argument
compelling that a modifier for radiopharmaceuticals is not necessary
because the cost of a radiopharmaceutical is lower than the cost of a
device and because the cost of a radiopharmaceutical constitutes a
lower percentage of the total charge for the associated primary
procedure. We believe the commenter is making a marginal cost argument,
that coding the ``FB'' modifier for devices makes sense because the
recouped costs to the Medicare program could be significant depending
on the device. While we agree that the device portion of a device-
dependent APC subject to the ``FB'' and ``FC'' policy will have a
higher absolute dollar value than the policy-packaged portion of a
nuclear medicine APC, we do not believe this should preclude a hospital
from being able to bill and be paid correctly for a nuclear medicine
scan when provided with a diagnostic radiopharmaceutical that the
hospital received free of charge or at no cost. We have consistently
emphasized the importance of correct coding for all drugs, biologicals,
and radiopharmaceuticals administered in the, regardless of the cost,
in our instructions to hospitals. Establishing the ``FB'' modifier to
correctly account for diagnostic radiopharmaceuticals received free of
charge allows for the diagnostic radiopharmaceutical to be reported and
coded correctly on the same claim as the nuclear medicine scan,
therefore fulfilling the required radiolabeled product edits. It also
is possible that volume for nuclear medicine scans may result in more
total aggregated savings on free-of-charge radiopharmaceuticals than
devices, but our primary goal in instituting the ``FB'' modifiers for
radiopharmaceuticals received free-of-charge or at no cost is for
accurate billing and payment. With regard to the comment that using the
``FB'' modifier with diagnostic radiopharmaceuticals is not necessary
because hospitals would choose not to stock any radiopharmaceuticals
after they are recalled or identified as having defects, we note that
most of the questions that we have received pertain to coding of free
sample or trial diagnostic radiopharmaceuticals received free of
charge.
Comment: One commenter supported CMS' proposal to require hospitals
to report the ``FB'' modifier but suggested that CMS revise the
description to read ``Item provided without cost to provider, supplier,
or practitioner, or full credit received for replaced device or
radiopharmaceutical (examples, but not limited to, covered under
warranty, replaced due to defect, free sample)'' (emphasis added).
Response: We appreciate the commenter's support. However, we do not
establish HCPCS code modifiers through rulemaking, including this OPPS
final rule with comment period. The CMS HCPCS Workgroup develops,
revises, and deletes Level II HCPCS codes and Level II HCPCS modifiers.
The ``FB'' modifier is a Level II HCPCS modifier. We will consider
taking this request to the CMS HCPCS Workgroup for their consideration.
Comm