[Federal Register Volume 76, Number 87 (Thursday, May 5, 2011)]
[Proposed Rules]
[Pages 25788-26084]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9644]
[[Page 25787]]
Vol. 76
Thursday,
No. 87
May 5, 2011
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 412, 413, and 476
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems for Acute Care Hospitals and the Long-Term
Care Hospital Prospective Payment System and Fiscal Year 2012 Rates;
Proposed Rule
Federal Register / Vol. 76, No. 87 / Thursday, May 5, 2011 / Proposed
Rules
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412, 413, and 476
[CMS-1518-P]
RIN 0938-AQ24
Medicare Program; Proposed Changes to the Hospital Inpatient
Prospective Payment Systems for Acute Care Hospitals and the Long-Term
Care Hospital Prospective Payment System and Fiscal Year 2012 Rates
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: We are proposing to revise the Medicare hospital inpatient
prospective payment systems (IPPS) for operating and capital-related
costs of acute care hospitals to implement changes arising from our
continuing experience with these systems and to implement certain
statutory provisions contained in the Patient Protection and Affordable
Care Act and the Health Care and Education Reconciliation Act of 2010
(collectively known as the Affordable Care Act) and other legislation.
These changes would be applicable to discharges occurring on or after
October 1, 2011. We also are setting forth the proposed update to the
rate-of-increase limits for certain hospitals excluded from the IPPS
that are paid on a reasonable cost basis subject to these limits. The
proposed updated rate-of-increase limits would be effective for cost
reporting periods beginning on or after October 1, 2011.
We are proposing to update the payment policy and the annual
payment rates for the Medicare prospective payment system (PPS) for
inpatient hospital services provided by long-term care hospitals
(LTCHs) and implement certain statutory changes made by the Affordable
Care Act. These changes would be applicable to discharges occurring on
or after October 1, 2011.
DATES: Comment Period: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
EDT on June 20, 2011.
ADDRESSES: When commenting, please refer to file code CMS-1518-P.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation at http://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the file code CMS-1518-P to submit
comments on this proposed rule.
2. By regular mail. You may mail written comments (one original and
two copies) to the following address only: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1518-P, P.O. Box 8011, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address only: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1518-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to either of the following addresses:
a. Room 445-G, Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call 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:
Tzvi Hefter, (410) 786-4487, and Ing-Jye Cheng, (410) 786-4548,
Operating Prospective Payment, MS-DRGs, Hospital Acquired Conditions
(HAC), Wage Index, New Medical Service and Technology Add-On Payments,
Hospital Geographic Reclassifications, Capital Prospective Payment,
Excluded Hospitals, Medicare Disproportionate Share Hospital (DSH), and
Postacute Care Transfer Issues.
Michele Hudson, (410) 786-4487, and Judith Richter, (410) 786-2590,
Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG
Relative Weights Issues.
Bridget Dickensheets, (410) 786-8670, Rebasing and Revising of the
Market Basket for LTCHs Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
James Poyer, (410) 786-2261, Inpatient Quality Reporting--Program
Administration, Validation, and Reconsideration Issues.
Shaheen Halim, (410) 786-0641, Inpatient Quality Reporting--Measures
Issues Except Hospital Consumer Assessment of Healthcare Providers and
Systems Issues; and Readmission Measures for Hospitals Issues.
Elizabeth Goldstein, (410) 786-6665, Inpatient Quality Reporting--
Hospital Consumer Assessment of Healthcare Providers and Systems
Measures Issues.
Mary Pratt, (410) 786-6867, LTCH Quality Data Reporting Issues.
Kim Spaulding Bush, (410) 786-3232, Hospital Value-Based Purchasing
Efficiency Measures Issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions at that Web site to
view public comments.
Comments received timely will also be available for public
inspection, generally beginning approximately 3 weeks after publication
of a document, at the headquarters of the Centers for Medicare &
Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244,
Monday through Friday of each week from 8:30 a.m. to 4:00 p.m. 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
[[Page 25789]]
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 Web page address is http://www.gpoaccess.gov/), 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).
Tables Available Only Through the Internet on the CMS Web Site
In the past, a majority of the tables referred to throughout this
preamble and in the Addendum to this proposed rule were published in
the Federal Register as part of the annual proposed and final rules.
However, beginning in FY 2012, some of the IPPS tables and LTCH PPS
tables will no longer be published as part of the annual IPPS/LTCH PPS
proposed and final rules. Instead, these tables will be available only
through the Internet. The IPPS tables for this proposed rule are
available only through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp. Click on the link
on the left side of the screen titled, ``FY 2012 IPPS Proposed Rule
Home Page'' or ``Acute Inpatient--Files for Download''. The LTCH PPS
tables for this FY 2012 proposed rule are available only through the
Internet on the CMS Web site at: http://www.cms.gov/LongTermCareHospitalPPS/LTCHPPSRN/list.asp under the list item for
Regulation Number CMS-1518-P. For complete details on the availability
of the tables referenced in this proposed rule, we refer readers to
section VI. of the Addendum to this proposed rule. Readers who
experience any problems accessing any of the tables that are posted on
the CMS Web sites identified above should contact Nisha Bhat at (410)
786-4487.
Acronyms
3M 3M Health Information System
AAMC Association of American Medical Colleges
ACGME Accreditation Council for Graduate Medical Education
AHA American Hospital Association
AHIC American Health Information Community
AHIMA American Health Information Management Association
AHRQ Agency for Healthcare Research and Quality
ALOS Average length of stay
ALTHA Acute Long Term Hospital Association
AMA American Medical Association
AMGA American Medical Group Association
AOA American Osteopathic Association
APR DRG All Patient Refined Diagnosis Related Group System
ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-
5
ASC Ambulatory surgical center
ASCA Administrative Simplification Compliance Act of 2002, Public
Law 107-105
ASITN American Society of Interventional and Therapeutic
Neuroradiology
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
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Public Law 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CARE [Medicare] Continuity Assessment Record & Evaluation
[Instrument]
CART CMS Abstraction & Reporting Tool
CBSAs Core-based statistical areas
CC Complication or comorbidity
CCR Cost-to-charge ratio
CDAC [Medicare] Clinical Data Abstraction Center
CDAD Clostridium difficile-associated disease
CIPI Capital input price index
CMI Case-mix index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Public Law
99-272
COLA Cost-of-living adjustment
CoP [Hospital] condition of participation
CPI Consumer price index
CRNA Certified Registered Nurse Anesthetist
CY Calendar year
DPP Disproportionate patient percentage
DRA Deficit Reduction Act of 2005, Public Law 109-171
DRG Diagnosis-related group
DSH Disproportionate share hospital
ECI Employment cost index
EDB [Medicare] Enrollment Database
EHR Electronic health record
EMR Electronic medical record
FAH Federation of Hospitals
FDA Food and Drug Administration
FFY Federal fiscal year
FQHC Federally qualified health center
FTE Full-time equivalent
FY Fiscal year
GAAP Generally Accepted Accounting Principles
GAF Geographic Adjustment Factor
GME Graduate medical education
HACs Hospital-acquired conditions
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCFA Health Care Financing Administration
HCO High-cost outlier
HCRIS Hospital Cost Report Information System
HHA Home health agency
HHS Department of Health and Human Services
HICAN Health Insurance Claims Account Number
HIPAA Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HIPC Health Information Policy Council
HIS Health information system
HIT Health information technology
HMO Health maintenance organization
HPMP Hospital Payment Monitoring Program
HSA Health savings account
HSCRC [Maryland] Health Services Cost Review Commission
HSRV Hospital-specific relative value
HSRVcc Hospital-specific relative value cost center
HQA Hospital Quality Alliance
HQI Hospital Quality Initiative
ICD-9-CM International Classification of Diseases, Ninth Revision,
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
ICR Information collection requirement
IGI IHS Global Insight, Inc.
IHS Indian Health Service
IME Indirect medical education
I-O Input-Output
IOM Institute of Medicine
IPF Inpatient psychiatric facility
IPPS [Acute care hospital] inpatient prospective payment system
IRF Inpatient rehabilitation facility
IQR Inpatient Quality Reporting
LAMCs Large area metropolitan counties
LOS Length of stay
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
MA Medicare Advantage
MAC Medicare Administrative Contractor
MCC Major complication or comorbidity
MCE Medicare Code Editor
MCO Managed care organization
MCV Major cardiovascular condition
MDC Major diagnostic category
MDH Medicare-dependent, small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act, Division B of
the Tax Relief and Health Care Act of 2006, Public Law 109-432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275
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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
MRHFP Medicare Rural Hospital Flexibility Program
MRSA Methicillin-resistant Staphylococcus aureus
MSA Metropolitan Statistical Area
MS-DRG Medicare severity diagnosis-related group
MS-LTC-DRG Medicare severity long-term care diagnosis-related group
NAICS North American Industrial Classification System
NALTH National Association of Long Term Hospitals
NCD National coverage determination
NCHS National Center for Health Statistics
NCQA National Committee for Quality Assurance
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NQF National Quality Forum
NTIS National Technical Information Service
NTTAA National Technology Transfer and Advancement Act of 1991
(Public Law 104-113)
NVHRI National Voluntary Hospital Reporting Initiative
OACT [CMS'] Office of the Actuary
OBRA 86 Omnibus Budget Reconciliation Act of 1996, Public Law 99-509
OES Occupational employment statistics
OIG Office of the Inspector General
OMB Executive Office of Management and Budget
OPM U.S. Office of Personnel Management
O.R. Operating room
OSCAR Online Survey Certification and Reporting [System]
PMSAs Primary metropolitan statistical areas
POA Present on admission
PPACA Patient Protection and Affordable Care Act, Public Law 111-148
PPI Producer price index
PPS Prospective payment system
PRM Provider Reimbursement Manual
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PRTFs Psychiatric residential treatment facilities
PSF Provider-Specific File
PS&R Provider Statistical and Reimbursement (System)
QIG Quality Improvement Group, CMS
QIO Quality Improvement Organization
RCE Reasonable compensation equivalent
RHC Rural health clinic
RHQDAPU Reporting hospital quality data for annual payment update
RNHCI Religious nonmedical health care institution
RPL Rehabilitation psychiatric long-term care (hospital)
RRC Rural referral center
RTI Research Triangle Institute, International
RUCAs Rural-urban commuting area codes
RY Rate year
SAF Standard Analytic File
SCH Sole community hospital
SFY State fiscal year
SIC Standard Industrial Classification
SNF Skilled nursing facility
SOCs Standard occupational classifications
SOM State Operations Manual
SSO Short-stay outlier
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law
97-248
TEP Technical expert panel
TMA TMA [Transitional Medical Assistance], Abstinence Education, and
QI [Qualifying Individuals] Programs Extension Act of 2007, Public
Law 110-90
UHDDS Uniform hospital discharge data set
Table of Contents
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded From the IPPS
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
4. Critical Access Hospitals (CAHs)
5. Payments for Graduate Medical Education (GME)
B. Provisions of the Patient Protection and Affordable Care Act
(Pub. L. 111-148) and the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152) Applicable to FY 2012
C. Major Contents of This Proposed Rule
1. Proposed Changes to MS-DRG Classifications and Recalibrations
of Relative Weights
2. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
3. Other Decisions and Proposed Changes to the IPPS for
Operating Costs and GME Costs
4. Proposed FY 2012 Policy Governing the IPPS for Capital-
Related Costs
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
6. Proposed Changes to the LTCH PPS
7. Proposed Changes to the Electronic Prescribing (eRx)
Incentive Program
8. Determining Proposed Prospective Payment Operating and
Capital Rates and Rate-of-Increase Limits for Acute Care Hospitals
9. Determining Proposed Prospective Payments Rates for LTCHs
10. Impact Analysis
11. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
12. Discussion of Medicare Payment Advisory Commission
Recommendations
II. Proposed Changes to Medicare Severity Diagnosis-Related Group
(MS-DRG) Classifications and Relative Weights
A. Background
B. MS-DRG Reclassifications
1. General
2. Yearly Review for Making MS-DRG Changes
C. Adoption of the MS-DRGs in FY 2008
D. Proposed FY 2012 MS-DRG Documentation and Coding Adjustment,
Including the Applicability to the Hospital-Specific Rates and the
Puerto Rico-Specific Standardized Amount
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
2. Prospective Adjustment to the Average Standardized Amounts
Required by Section 7(b)(1)(A) of Public Law 110-90
3. Recoupment or Repayment Adjustments in FYs 2010 Through 2012
Required by Pub. L. 110-90
4. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data
5. Prospective Adjustment for FY 2010 and Subsequent Years
Authorized by Section 7(b)(1)(A) of Public Law 110-90 and Section
1886(d)(3)(vi) of the Act
6. Recoupment or Repayment Adjustment for FY 2010 Authorized by
Section 7(b)(1)(B) of Public Law 110-90
7. Background on the Application of the Documentation and Coding
Adjustment to the Hospital-Specific Rates
8. Documentation and Coding Adjustment to the Hospital-Specific
Rates for FY 2011 and Subsequent Fiscal Years
9. Application of the Documentation and Coding Adjustment to the
Puerto Rico-Specific Standardized Amount
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
2. Summary of the RTI Study of Charge Compression and CCR
Refinement
3. Summary of Policy Changes Made in FY 2011
4. Discussion for FY 2012
F. Preventable Hospital-Acquired Conditions (HACs), Including
Infections
1. Background
a. Statutory Authority
b. HAC Selection
c. Collaborative Process
d. Application of HAC Payment Policy to MS-DRG Classifications
e. Public Input Regarding Selected and Potential Candidate HACs
f. POA Indicator Reporting
2. Proposed Additions and Revisions to the HAC Policy for FY
2012
a. Contrast-Induced Acute Kidney Injury
b. New Diagnosis Codes Proposed To Be Added to Existing HACs
c. Revision to HAC Subcategory Title
d. Conclusion
3. RTI Program Evaluation Summary
a. Background
b. FY 2009 Data Analysis
c. FY 2010 Data Analysis
G. Proposed Changes to Specific MS-DRG Classifications
1. Pre-Major Diagnostic Categories (Pre-MDCs)
a. Noninvasive Mechanical Ventilation
b. Debridement With Mechanical Ventilation Greater Than 96 Hours
With Major Operating Room (O.R.) Procedure
c. Autologous Bone Marrow Transplant
2. MDC 1 (Diseases and Disorders of the Nervous System):
Rechargeable Dual Array Deep Brain Stimulation System
3. MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth, and
Throat): Skull Based Surgeries
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4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Percutaneous Mitral Valve Repair With Implant
b. Aneurysm Repair Procedure Codes
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. Artificial Discs
b. Major Joint Replacement or Reattachment of Lower Extremities
c. Combined Anterior/Posterior Spinal Fusion
6. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous
Tissue, and Breast): Excisional Debridement of Wound, Infection, or
Burn
7. MDC 10 (Endocrine, Nutritional, and Metabolic Diseases and
Disorders)
a. Nutritional and Metabolic Diseases: Update of MS-DRG Titles
b. Sleeve Gastrectomy Procedure for Morbid Obesity
8. MDC 15 (Newborns and Other Neonates with Conditions
Originating in the Perinatal Period): Discharge Status Code 66
(Discharged/Transferred to Critical Access Hospital (CAH))
9. Proposed Medicare Code Editor (MCE) Changes
10. Surgical Hierarchies
11. Complications or Comorbidity (CC) Exclusions List
a. Background
b. Proposed CC Exclusions List for FY 2012
12. Review of Procedure Codes in MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-
DRGs 987 Through 989 Into MDCs
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
c. Adding Diagnosis or Procedure Codes to MDCs
13. Changes to the ICD-9-CM Coding System, Including Discussion
of the Replacement of the ICD-9-CM System With the ICD-10-CM and
ICD-10-PCS Systems in FY 2014
a. ICD-9-CM Coding System
b. Code Freeze
c. Processing of 25 Diagnosis Codes and 25 Procedure Codes on
Hospital Inpatient Claims
d. ICD-10 MS-DRGs
14. Other Issues
a. O.R./Non-O.R. Status of Procedures
b. IPPS Recalled Device Policy Clarification
H. Recalibration of MS-DRG Weights
I. Proposed Add-On Payments for New Services and Technologies
1. Background
2. Public Input Before Publication of a Notice of Proposed
Rulemaking on Add-On Payments
3. FY 2012 Status of Technologies Approved for FY 2011 Add-On
Payments
a. Spiration[supreg] IBV Valve System
b. Cardio WestTM Temporary Artificial Heart System
(Cardio WestTM TAH-t)
c. Auto Laser Interstitial Thermal Therapy
(AutoLITTTM) System
4. FY 2012 Applications for New Technology Add-On Payments
a. AxiaLIF[supreg] 2L+TM System
b. ChampionTM HF Monitoring System
c. PerfectCLEAN With Micrillon[supreg]
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
B. Core-Based Statistical Areas for the Hospital Wage Index
C. Proposed Occupational Mix Adjustment to the FY 2012 Wage
Index
1. Development of Data for the Proposed FY 2012 Occupational Mix
Adjustment Based on the 2007-2008 Occupational Mix Survey
2. New 2010 Occupational Mix Survey for the FY 2013 Wage Index
3. Calculation of the Proposed Occupational Mix Adjustment for
FY 2012
D. Worksheet S-3 Wage Data for the Proposed FY 2012 Wage Index
1. Included Categories of Costs
2. Proposal for Changes to the Reporting Requirements for
Pension Costs for the Medicare Wage Index
a. Background
b. Proposal for Allowable Pension Cost for the Medicare Wage
Index
3. Excluded Categories of Costs
4. Use of Wage Index Data by Providers Other Than Acute Care
Hospitals Under the IPPS
E. Verification of Worksheet S-3 Wage Data
F. Method for Computing the Proposed FY 2012 Unadjusted Wage
Index
1. Steps for Computation
2. Expiration of the Imputed Floor Policy
3. Proposed FY 2012 Puerto Rico Wage Index
G. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2012 Occupational Mix Adjusted Wage
Index
H. Revisions to the Wage Index Based on Hospital Redesignations
and Reclassifications
1. General
2. Effects of Reclassification/Redesignation
3. FY 2012 MGCRB Reclassifications
a. FY 2012 Reclassification Requirements and Approvals
b. Applications for Reclassifications for FY 2013
4. Redesignations of Hospitals Under Section 1886(d)(8)(B) of
the Act
5. Reclassifications Under Section 1886(d)(8)(B) of the Act
6. Reclassifications Under Section 508 of Public Law 108-173
7. Waiving Lugar Redesignation for the Out-Migration Adjustment
8. Other Geographic Reclassification Issues
a. Requested Reclassification for Single Hospital MSAs
b. Requests for Exceptions to Geographic Reclassification Rules
I. Proposed FY 2012 Wage Index Adjustment Based on Commuting
Patterns of Hospital Employees
J. Process for Requests for Wage Index Data Corrections
K. Labor-Related Share for the Proposed FY 2012 Wage Index
IV. Other Proposed Decisions and Changes to the IPPS for Operating
Costs and GME Costs
A. Hospital Inpatient Quality Reporting Program
1. Background
a. Overview
b. Statutory History and History of Measures Adopted for the
Hospital IQR Program
c. Maintenance of Technical Specifications for Quality Measures
d. Public Display of Quality Measures
2. Retirement of Hospital IQR Program Measures
a. Considerations in Retiring Quality Measures from the Hospital
IQR Program
b. Proposed Retirement of Quality Measures under the Hospital
IQR Program for the FY 2014 Payment Determination and Subsequent
Years
3. Proposed Quality Measures for the FY 2014 and FY 2015 Payment
Determinations
a. Considerations in Expanding and Updating Quality Measures
Under the Hospital IQR Program
b. Proposed Hospital IQR Program Quality Measures for the FY
2014 Payment Determination
c. Proposed Hospital IQR Program Quality Measures for the FY
2015 Payment Determination
4. Possible New Quality Measures and Measure Topics for Future
Years
5. Form, Manner, and Timing of Quality Data Submission
a. Background
b. Proposed Procedural Requirements for FY 2013 and Subsequent
Years
c. Proposed General Data Collection and Submission Requirements
d. Proposed Data Submission Requirements for Chart-Abstracted
Measures
e. Proposed Sampling and Case Thresholds
f. Proposed HCAHPS Requirements for the FY 2013, FY 2014, and FY
2015 Payment Determinations
g. Proposed Procedures for Claims-Based Measures
h. Proposed Data Submission Requirements for Structural Measures
i. Proposed Data Submission and Reporting Requirements for
Healthcare-Associated Infection (HAI) Measures Reported via NHSN
6. Proposed Chart Validation Requirements for Chart-Abstracted
Measures
a. Proposed Chart Validation Requirements and Methods for the FY
2012 Payment Determination
b. Proposed Supplements to the Chart Validation Process for the
FY 2013 Payment Determination and Subsequent Years
7. Proposed QIO Regulation Changes for Provider Medical Record
Deadlines Possibly Including Serious Reportable Events
8. Proposed Data Accuracy and Completeness Acknowledgement
Requirements for the FY 2012 Payment Determination and Subsequent
Years
9. Proposed Public Display Requirements for the FY 2013 Payment
Determination and Subsequent Years
10. Proposed Reconsideration and Appeal Procedures for the FY
2012 Payment Determination
[[Page 25792]]
11. Proposed Hospital IQR Program Disaster Waivers
12. Electronic Health Records
a. Background
b. HITECH Act EHR Provisions
B. Hospital Value-Based Purchasing (VBP) Program
1. Background
2. Overview of the Hospital VBP Program Proposed Rule
3. Proposed FY 2014 Hospital VBP Program Measures
a. Background
b. Proposed Efficiency Measure--Medicare Spending per
Beneficiary Measure--for the FY 2014 Hospital VBP Program
4. Proposed Efficiency Domain (Medicare Spending per Beneficiary
Measure) Performance Period and Baseline Period
C. Hospital Readmission Reduction Program
1. Background
a. Overview
b. Statutory Basis for the Hospital Readmission Reduction
Program
2. Implementation of the Hospital Readmission Reduction Program
a. Overview
b. Proposed Provisions in the FY 2012 IPPS/LTCH PPS Rulemaking
c. Proposed Provisions To Be Included in the FY 2013 IPPS/LTCH
PPS Proposed Rule
d. Proposed Expansion of the Applicable Conditions To Be
Included in the Future Rulemaking
3. Proposed Provisions of the Hospital Readmission Reduction
Program
a. Proposed Applicable Conditions for FY 2013 Hospital
Readmission Reduction Program
b. Proposed Definition of ``Readmissions''
c. Proposed Readmission Measures and Related Methodology
D. Rural Referral Centers (RRCs) (Sec. 412.96)
1. Case-Mix Index (CMI)
2. Discharges
E. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Background
2. Temporary Changes for FYs 2011 and 2012
3. Proposed Discharge Data Source to Identify Qualifying Low-
Volume Hospitals and Calculate the Payment Adjustment (Percentage
Increase) for FY 2012
F. Indirect Medical Education (IME) Adjustment
1. Background
2. IME Adjustment Factor for FY 2012
G. Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) and Indirect Medical Education (IME) (Sec. Sec.
412.105 and 412.106)
1. Background
2. Proposed Policy Change Relating to Exclusion of Hospice Beds
and Patient Days From the Medicare DSH Calculation
H. Medicare-Dependent, Small Rural Hospitals (MDHs) (Sec.
412.108)
1. Background
2. Extension of the MDH Program
I. Certified Register Nurse Anesthetists (CRNA) Services
Furnished in Rural Hospitals and CAHs (Sec. 412.113)
J. Additional Payments for Qualifying Hospitals with Lowest per
Enrollee Medicare Spending
1. Background
2. Method for Identifying Qualifying Hospitals and Eligible
Counties
3. Determination of Annual Payment Amounts
4. Eligible Counties and Qualifying Hospitals
5. Payment Determination and Distributions for FY 2011 and FY
2012
K. Proposed Changes in the Inpatient Hospital Update
1. FY 2012 Inpatient Hospital Update
2. FY 2012 Puerto Rico Hospital Update
3. Productivity Adjustment
L. Additional Payments to Hospitals With High Percentage of End-
Stage Renal Disease (ESRD) Discharges (Sec. 412.104)
M. Proposal for Changes to the Reporting Requirements for
Pension Costs for Medicare Cost-Finding Purposes
1. Background
2. Proposal for Allowable Defined Benefit Pension Plan Cost for
Medicare Cost-Finding Purposes
N. Rural Community Hospital Demonstration Program
1. Background
2. Changes to the Demonstration Program Made by the Affordable
Care Act
3. Proposed FY 2012 Budget Neutrality Adjustment
a. Component of the Proposed FY 2012 Budget Neutrality
Adjustment That Accounts for Estimated Demonstration Program Costs
of the ``Pre-Expansion'' Participating Hospitals
b. Portion of the Proposed FY 2012 Budget Neutrality Adjustment
That Accounts for Estimated FY 2012 Demonstration Program Costs for
Hospitals Newly Selected to Participate in the Demonstration Program
c. Portion of the Proposed FY 2012 Budget Neutrality Adjustment
to Offset the Amount by Which the Costs of the Demonstration Program
in FYs 2007 and 2008 Exceeded the Amount That Was Identified in the
FYs 2007 and 2008 IPPS Final Rules as the Budget Neutrality Offset
for FYs 2007 and 2008
O. Bundling of Payments for Services Provided to Outpatients Who
Later Are Admitted as Inpatients: 3-Day Payment Window
1. Background
2. Establishment of Condition Code 51 (Attestation of Unrelated
Outpatient Nondiagnostic Services)
3. Applicability of the Payment Window Policy to Services
Furnished at Physicians' Practices
P. Proposed Changes to MS-DRGs Subject to the Postacute Care
Transfer Policy
Q. Hospital Services Furnished under Arrangements
V. Proposed Changes to the IPPS for Capital-Related Costs
A. Overview
B. Exception Payments
C. New Hospitals
D. Hospitals Located in Puerto Rico
E. Proposed Changes for FY 2012: MS-DRG Documentation and Coding
Adjustment
F. Other Proposed Changes for FY 2012
VI. Proposed Changes for Hospitals Excluded From the IPPS
A. Excluded Hospitals
B. Critical Access Hospital (CAH) Payment for Ambulance Services
1. Background
2. Requirement for CAH Ambulance Within a 35-Mile Location of a
CAH or Entity
VII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2012
A. Background of the LTCH PPS
1. Legislative and Regulatory Authority
2. Criteria for Classification as a LTCH
a. Classification as a LTCH
b. Hospitals Excluded From the LTCH PPS
3. Limitation on Charges to Beneficiaries
4. Administrative Simplification Compliance Act (ASCA) and
Health Insurance Portability and Accountability Act (HIPAA)
Compliance
B. Proposed Medicare Severity Long-Term Care Diagnosis-Related
Group (MS-LTC-DRG) Classifications and Relative Weights
1. Background
2. Patient Classifications into MS-LTC-DRGs
a. Background
b. Proposed Changes to the MS-LTC-DRGs for FY 2012
3. Development of the Proposed FY 2012 MS-LTC-DRG Relative
Weights
a. General Overview of the Development of the MS-LTC-DRG
Relative Weights
b. Development of the Proposed MS-LTC-DRG Relative Weights for
FY 2012
c. Data
d. Hospital-Specific Relative Value (HSRV) Methodology
e. Proposed Treatment of Severity Levels in Developing the MS-
LTC-DRG Relative Weights
f. Proposed Low-Volume MS-LTC-DRGs--Steps for Determining the
Proposed FY 2012 MS-LTC-DRG Relative Weights
C. Proposed Quality Reporting Program for LTCHs
1. Background and Statutory Authority
2. Proposed Quality Measures for the LTCH Quality Reporting
Program for FY 2014
a. Considerations in the Selection of the Proposed Quality
Measures
b. Proposed LTCH Quality Measures for FY 2014 Payment
Determination
3. Possible LTCH Quality Measures under Consideration for Future
Years
4. Proposed Data Submission Methods and Timelines
a. Proposed Method of Data Submission for HAIs
b. Proposed Timeline for Data Reporting Related to HAIs
c. Proposed Method of Data Collection and Submission for the
Pressure Ulcer Measure Data
d. Proposed Timeline for Data Reporting Related to Pressure
Ulcers
5. Public Reporting and Availability of Data Submitted
D. Proposed Rebasing and Revising of the Market Basket Used
Under the LTCH PPS
1. Background
[[Page 25793]]
2. Overview of the Proposed FY 2008-Based RPL Market Basket
3. Proposed Rebasing and Revising of the RPL Market Basket
a. Development of Cost Categories
b. Final Cost Category Computation
c. Selection of Price Proxies
d. Proposed Methodology for Capital Portion of the RPL Market
Basket
e. Proposed FY 2012 Market Basket Update for LTCHs
f. Proposed Labor-Related Share
E. Proposed Changes to the LTCH Payment Rates and Other Proposed
Changes to the FY 2012 LTCH PPS
1. Overview of Development of the LTCH Payment Rates
2. Proposed FY 2012 LTCH PPS Annual Market Basket Update
a. Overview
b. Revision of Certain Market Basket Updates as Required by the
Affordable Care Act
c. Proposed Market Basket Under the LTCH PPS for FY 2012
d. Productivity Adjustment
e. Proposed Annual Market Basket Update for LTCHs for FY 2012
3. Proposed Budget Neutrality Adjustment for the Changes to the
Area Wage Level Adjustment
4. Proposed Budget Neutrality Adjustment for the Changes to the
Area Wage Level Adjustment
5. Greater Than 25 Day Average Length of Stay Requirement for
LTCHs
a. Determining the Average Length of Stay When There Is a Change
of Ownership
b. Inclusion of Medicare Advantage (MA) Days in the Average
Length of Stay Calculation
F. Proposed Application of LTCH Moratorium on the Increase in
Beds at Section 114(d)(1)(B) of Public Law 110-173 (MMSEA) to LTCHs
and LTCH Satellite Facilities Established or Classified as Such
Under Section 114(d)(2) of Public Law 110-173
VIII. MedPAC Recommendations
IX. Other Required Information
A. Requests for Data From the Public
B. Collection of Information Requirements
1. Legislative Requirement for Solicitation of Comments
2. ICRs for Add-On Payments for New Services and Technologies
3. ICRs for the Hospital Inpatient Quality Reporting (IQR)
Program
4. ICRs for the Occupational Mix Adjustment to the Proposed FY
2012 Index (Hospital Wage Index Occupational Mix Survey)
5. Hospital Applications for Geographic Reclassifications by the
MGCRB
6. ICRs for the Proposed Quality Reporting Program for LTCHs
C. Response to Public Comments
Regulation Text
Addendum--Proposed Schedule of Standardized Amounts, Update Factors,
and Rate-of-Increase Percentages Effective With Cost Reporting
Periods Beginning on or After October 1, 2011
I. Summary and Background
II. Proposed Changes to the Prospective Payment Rates for Hospital
Inpatient Operating Costs for Acute Care Hospitals for FY 2012
A. Calculation of the Proposed Adjusted Standardized Amount
B. Proposed Adjustments for Area Wage Levels and Cost-of-Living
C. Proposed MS-DRG Relative Weights
D. Calculation of the Proposed Prospective Payment Rates
III. Proposed Changes to Payment Rates for Acute Care Hospital
Inpatient Capital-Related Costs for FY 2012
A. Determination of Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update
B. Calculation of the Proposed Inpatient Capital-Related
Prospective Payments for FY 2012
C. Capital Input Price Index
IV. Proposed Changes to Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages for FY 2012
V. Proposed Changes to the Payment Rates for the LTCH PPS for FY
2012
A. Proposed LTCH PPS Standard Federal Rate for FY 2012
B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS
for FY 2012
C. Proposed Adjustment for LTCH PPS High-Cost Outlier (HCO)
Cases
D. Computing the Proposed Adjusted LTCH PPS Federal Prospective
Payments for FY 2012
VI. Tables Referenced in This Proposed Rulemaking and Available
Through the Internet on the CMS Web Site
Appendix A--Regulatory Impact Analysis
I. Overall Impact
II. Objectives of the IPPS
III. Limitations of Our Analysis
IV. Hospitals Included in and Excluded From the IPPS
V. Effects on Hospitals and Hospital Units Excluded From the IPPS
VI. Quantitative Effects of the Proposed Policy Changes Under the
IPPS for Operating Costs
A. Basis and Methodology of Estimates
B. Analysis of Table I
C. Impact Analysis of Table II
VII. Effects of Other Proposed Policy Changes
A. Effects of Proposed Policy on HACs, Including Infections
B. Effects of Proposed Policy Changes Relating to New Medical
Service and Technology Add-On Payments
C. Effects of Requirements for Hospital Inpatient Quality
Reporting (IQR) Program
D. Effects of Additional Proposed Hospital Value-Based
Purchasing (VBP) Program Requirements
E. Effects of Proposed Requirements for Hospital Readmissions
Reduction Program
F. Effects of Proposed Policy Changes Relating to Payment
Adjustments for Medicare Disproportionate Share Hospitals (DSHs) and
Indirect Medical Education (IME)
G. Effects of the FY 2012 Low-Volume Hospital Payment Adjustment
H. Effects of Proposed Changes Relating to MDHs
I. Effects of Proposed Policy Relating to CRNA Services
Furnished in Rural Hospitals and CAHs
J. Effects of Proposed Changes Relating to ESRD Add-On Payment
K. Effects of Proposed Changes Relating to the Reporting
Requirements for Pension Costs for Medicare Cost-Finding and Wage
Reporting Purposes
L. Effects of Implementation of Rural Community Hospital
Demonstration Program
M. Effects of Proposed Changes to List of MS-DRGs Subject to the
Postacute Care Transfer and DRG Special Pay Policy
N. Effects of Proposed Changes Relating to Hospital Services
Furnished Under Arrangements
O. Effects of Proposed Change Relating to CAH Payment for
Ambulance Services
VIII. Effects of Proposed Changes in the Capital IPPS
A. General Considerations
B. Results
IX. Effects of Proposed Payment Rate Changes and Policy Changes
Under the LTCH PPS
A. Introduction and General Considerations
B. Impact on Rural Hospitals
C. Anticipated Effects of Proposed LTCH PPS Payment Rate Change
and Policy Changes
D. Effect on the Medicare Program
E. Effect on Medicare Beneficiaries
X. Alternatives Considered
XI. Overall Conclusion
A. Acute Care Hospitals
B. LTCHs
XII. Accounting Statements
A. Acute Care Hospitals
B. LTCHs
XIII. Executive Order 12866
Appendix B: Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2012
A. Proposed FY 2012 Inpatient Hospital Update
B. Proposed Update for SCHs and MDHs for FY 2012
C. Proposed FY 2012 Puerto Rico Hospital Update
D. Proposed Update for Hospitals Excluded From the IPPS
III. Secretary's Recommendation
IV. MedPAC Recommendation for Assessing Payment Adequacy and
Updating Payments in Traditional Medicare
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system (PPS). Under these PPSs,
Medicare payment
[[Page 25794]]
for hospital inpatient operating and capital-related costs is made at
predetermined, specific rates for each hospital discharge. Discharges
are classified according to a list of diagnosis-related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of certain low-income
patients, it receives a percentage add-on payment applied to the DRG-
adjusted base payment rate. This add-on payment, known as the
disproportionate share hospital (DSH) adjustment, provides for a
percentage increase in Medicare payments to hospitals that qualify
under either of two statutory formulas designed to identify hospitals
that serve a disproportionate share of low-income patients. For
qualifying hospitals, the amount of this adjustment varies based on the
outcome of the statutory calculations.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid under the IPPS, known as
the indirect medical education (IME) adjustment. This percentage
varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a hospital-specific
rate based on their costs in a base year (the highest of FY 1982, FY
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the
standardized amount. Through and including FY 2006, a Medicare-
dependent, small rural hospital (MDH) received the higher of the
Federal rate or the Federal rate plus 50 percent of the amount by which
the Federal rate is exceeded by the higher of its FY 1982 or FY 1987
hospital-specific rate. As discussed below, for discharges occurring on
or after October 1, 2007, but before October 1, 2012, an MDH will
receive the higher of the Federal rate or the Federal rate plus 75
percent of the amount by which the Federal rate is exceeded by the
highest of its FY 1982, FY 1987, or FY 2002 hospital-specific rate.
SCHs are the sole source of care in their areas, and MDHs are a major
source of care for Medicare beneficiaries in their areas. Specifically,
section 1886(d)(5)(D)(iii) of the Act defines an SCH as a hospital that
is located more than 35 road miles from another hospital or that, by
reason of factors such as isolated location, weather conditions, travel
conditions, or absence of other like hospitals (as determined by the
Secretary), is the sole source of hospital inpatient services
reasonably available to Medicare beneficiaries. In addition, certain
rural hospitals previously designated by the Secretary as essential
access community hospitals are considered SCHs. Section
1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is
located in a rural area, has not more than 100 beds, is not an SCH, and
has a high percentage of Medicare discharges (not less than 60 percent
of its inpatient days or discharges in its cost reporting year
beginning in FY 1987 or in two of its three most recently settled
Medicare cost reporting years). Both of these categories of hospitals
are afforded this special payment protection in order to maintain
access to services for beneficiaries.
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining capital prospective payments is set
forth in our regulations at 42 CFR 412.308 and 412.312. Under the
capital IPPS, payments are adjusted by the same DRG for the case as
they are under the operating IPPS. Capital IPPS payments are also
adjusted for IME and DSH, similar to the adjustments made under the
operating IPPS. In addition, hospitals may receive outlier payments for
those cases that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: rehabilitation hospitals and units; long-term
care hospitals (LTCHs); psychiatric hospitals and units; children's
hospitals; and cancer hospitals. Religious nonmedical health care
institutions (RNHCIs) are also excluded from the IPPS. Various sections
of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare,
Medicaid and SCHIP [State Children's Health Insurance Program] Balanced
Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs
for rehabilitation hospitals and units (referred to as inpatient
rehabilitation facilities (IRFs)), LTCHs, and psychiatric hospitals and
units (referred to as inpatient psychiatric facilities (IPFs)). (We
note that the annual updates to the LTCH PPS are now included as part
of the IPPS annual update document. Updates to the IRF PPS and IPF PPS
are issued as separate documents.) Children's hospitals, cancer
hospitals, and RNHCIs continue to be paid solely under a reasonable
cost-based system subject to a rate-of-increase ceiling on inpatient
operating costs per discharge.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)
The Medicare prospective payment system (PPS) for LTCHs applies to
hospitals described in section 1886(d)(1)(B)(iv) effective for cost
reporting periods beginning on or after October 1, 2002. The LTCH PPS
was established under the authority of sections 123(a) and (c) of
Public Law 106-113 and section 307(b)(1) of Public Law 106-554 (as
codified under section 1886(m)(1) of the Act). During the 5-year
(optional) transition period, a LTCH's payment under the PPS was based
on an increasing proportion of the LTCH Federal rate with a
corresponding decreasing proportion based on
[[Page 25795]]
reasonable cost principles. Effective for cost reporting periods
beginning on or after October 1, 2006, all LTCHs are paid 100 percent
of the Federal rate. The existing regulations governing payment under
the LTCH PPS are located in 42 CFR part 412, subpart O. Beginning
October 1, 2009, we issue the annual updates to the LTCH PPS in the
same documents that update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments are
made to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services are generally based on 101 percent of reasonable
cost. Reasonable cost is determined under the provisions of section
1861(v)(1)(A) of the Act and existing regulations under 42 CFR parts
413 and 415.
5. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.
B. Provisions of the Patient Protection and Affordable Care Act (Pub.
L. 111-148) and the Health Care and Education Reconciliation Act of
2010 (Pub. L. 111-152) Applicable to FY 2012
The Patient Protection and Affordable Care Act (Pub. L. 111-148),
enacted on March 23, 2010, and the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), enacted on March 30,
2010, made a number of changes that affect the IPPS and the LTCH PPS.
(Pub. L. 111-148 and Pub. L. 111-152 are collectively referred to as
the ``Affordable Care Act.'') A number of the provisions of the
Affordable Care Act affect the updates to the IPPS and the LTCH PPS and
providers and suppliers. The provisions of the Affordable Care Act that
were applicable to the IPPS and the LTCH PPS for FYs 2010 and 2011 were
implemented in the following documents:
On June 2, 2010, we issued in the Federal Register a notice (75 FR
31118) that contained the final wage indices, hospital
reclassifications, payment rates, impacts, and other related tables,
effective for the FY 2010 IPPS and the RY 2010 LTCH PPS, which were
required by or directly resulted from implementation of provisions of
the Affordable Care Act.
On August 16, 2010, we issued in the Federal Register a final rule
(75 FR 50042) that implemented provisions of the Affordable Care Act
applicable to the IPPS and LTCH/PPS for FY 2011.
In this proposed rule, we are proposing to implement the following
provisions (or portions of the following provisions) of the Affordable
Care Act that are applicable to the IPPS and LTCH PPS for FY 2012:
Section 3001 of Public Law 111-148, which provides for
establishment of a hospital value-based purchasing program and
applicable measures for value-based incentive payments with respect to
discharges occurring during FY 2013.
Section 3004 of Public Law 111-148, which provides for the
submission of quality data for LTCHs in order to receive the full
annual update to the payment rates and the establishment of quality
data measures.
Section 3025 of Public Law 111-148, which provides for a
hospital readmissions reduction program and related quality data
reporting measures.
Section 3124 of Public Law 111-148, which provides for
extension of the Medicare-dependent, small rural hospital (MDH) program
through FY 2012.
Section 3401 of Public Law 111-148, which provides for the
incorporation of productivity improvements into the market basket
updates for IPPS hospitals and LTCHs.
In addition, we are proposing to continue in FY 2012 to implement
the following provisions, which were initiated in FY 2011:
Section 10324 of Public Law 111-148, which provided for a
wage adjustment for hospitals located in frontier States.
Sections 3401 and 10319 of Public Law 111-148 and section
1105 of Public Law 111-152, which revise certain market basket update
percentages for IPPS and LTCH PPS payment rates for FY 2012.
Sections 3125 and 10314 of Public Law 111-148, which
provides for temporary percentage increases in payment adjustments to
low-volume hospitals for discharges occurring in FY 2012.
Section 1109 of Public Law 111-152, which provides for
additional payments in FY 2012 for qualifying hospitals in the lowest
quartile of per capita Medicare spending.
C. Major Contents of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare IPPS for operating costs and for capital-related costs of
acute care hospitals in FY 2012. We also are setting forth proposed
changes relating to payments for IME costs and payments to certain
hospitals that continue to be excluded from the IPPS and paid on a
reasonable cost basis.
In addition, in this proposed rule, we are setting forth proposed
changes to the payment rates, factors, and other payment rate policies
under the LTCH PPS for FY 2012.
Below is a summary of the major changes that we are proposing to
make:
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the proposed rule, we include--
Proposed changes to MS-DRG classifications based on our
yearly review.
Proposed application of the documentation and coding
adjustment for FY 2012 resulting from implementation of the MS-DRG
system.
A discussion of the Research Triangle International, Inc.
(RTI) reports and recommendations relating to charge compression.
Proposed recalibrations of the MS-DRG relative weights.
Proposed changes to hospital-acquired conditions (HACs)
and a listing and discussion of HACs, including infections, that would
be subject to the statutorily required quality adjustment in MS-DRG
payments for FY 2012.
We discussed the FY 2012 status of new technologies approved for
add-on payments for FY 2011 and present our evaluation and analysis of
the FY 2012 applicants for add-on payments for high-cost new medical
services and technologies (including public input, as directed by Pub.
L. 108-173, obtained in a town hall meeting).
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble to this proposed rule, we are
proposing revisions to the wage index for acute care hospitals and the
annual update of the wage data. Specific issues addressed include the
following:
[[Page 25796]]
The proposed FY 2012 wage index update using wage data
from cost reporting periods beginning in FY 2008.
Analysis and implementation of the proposed FY 2012
occupational mix adjustment to the wage index for acute care hospitals,
including discussion of the 2010 occupational mix survey.
A proposal to change the reporting requirements for
pension costs for the Medicare wage index.
Proposed revisions to the wage index for acute care
hospitals based on hospital redesignations and reclassifications.
The proposed adjustment to the wage index for acute care
hospitals for FY 2012 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
The timetable for reviewing and verifying the wage data
used to compute the proposed FY 2012 hospital wage index.
Determination of the labor-related share for the proposed
FY 2012 wage index.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
and GME Costs
In section IV. of the preamble of this proposed rule, we discuss a
number of the provisions of the regulations in 42 CFR parts 412, 413,
and 476, including the following:
The reporting of hospital quality data under the Hospital
Inpatient Quality Reporting (IQR) Program as a condition for receiving
the full annual payment update increase.
The proposed implementation of the Hospital Value-Based
Purchasing Program measures.
The proposed establishment of hospital readmisssion
measures for reporting of hospital quality data.
The proposed updated national and regional case-mix values
and discharges for purposes of determining RRC status.
The statutorily required IME adjustment factor for FY
2012.
Proposed payment adjustment for low-volume hospitals.
Proposal for counting hospice days in the formula for
determining the payment adjustment for disproportionate share
hospitals.
Proposal for making additional payments for qualifying
hospitals with lowest per enrollee Medicare spending for FY 2012.
Proposal to clarify ESRD add-on payment requirements based
on cost report requirements.
Proposal relating to changes to the reporting requirements
for pension costs for Medicare cost-finding purposes.
Proposal to implement statutory change to the hospital
payment update, including incorporation of a productivity adjustment.
Discussion of the Rural Community Hospital Demonstration
Program and a proposal for making a budget neutrality adjustment for
the demonstration program.
Discussion of August 2010 interim final rule with comment
period and further proposed changes relating to the 3-day payment
window for payments for services provided to outpatients who are later
admitted as inpatients.
4. Proposed FY 2012 Policy Governing the IPPS for Capital-Related Costs
In section V. of the preamble to this proposed rule, we discuss the
proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2012 and the proposed MS-DRG
documentation and coding adjustment for FY 2012.
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VI. of the preamble of this proposed rule, we discuss
proposed changes to payments to certain excluded hospitals. In
addition, we discuss proposed changes relating to payment for TEFRA
services furnished under arrangements and payment for ambulance
services furnished by CAH-owned and operated entities.
6. Proposed Changes to the LTCH PPS
In section VII. of the preamble of this proposed rule, we set forth
proposed changes to the payment rates, factors, and other payment rate
policies under the LTCH PPS for FY 2012, including the annual update of
the MS-LTC-DRG classifications and relative weights for use under the
LTCH PPS for FY 2012, the proposed documentation and coding adjustment
under the LTCH PPS for FY 2012, and the proposed rebasing and revising
of the market basket for LTCHs. In addition, we are setting forth
proposals for implementing the quality data reporting program for
LTCHs. We also are proposing to clarify two policies regarding the
calculation of the average length of stay requirement for LTCHs, and
proposing a policy to address a LTCH moratorium issue.
7. Determining Proposed Prospective Payment Operating and Capital Rates
and Rate-of-Increase Limits for Acute Care Hospitals
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2012
prospective payment rates for operating costs and capital-related costs
for acute care hospitals. We also are proposing to establish the
threshold amounts for outlier cases. In addition, we address the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2012 for certain hospitals
excluded from the IPPS.
8. Determining Proposed Prospective Payment Rates for LTCHs
In the Addendum to this proposed rule, we set forth proposed
changes to the amounts and factors for determining the proposed FY 2012
prospective standard Federal rate. We also are proposing to establish
the proposed adjustments for wage levels, the labor-related share, the
cost-of-living adjustment, and high-cost outliers, including the fixed-
loss amount, and the LTCH cost-to-charge ratios (CCRs) under the LTCH
PPS.
9. Impact Analysis
In Appendix A of this proposed rule, we set forth an analysis of
the impact that the proposed changes would have on affected acute care
hospitals and LTCHs.
10. Recommendation of Update Factors for Operating Cost Rates of
Payment for Hospital Inpatient Services
In Appendix B of this proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the
appropriate percentage changes for FY 2012 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs
and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The standard Federal rate for hospital inpatient services
furnished by LTCHs.
11. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 1 of each year, in which MedPAC
reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2011 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and
[[Page 25797]]
capital-related costs under the IPPS, for hospitals and distinct part
hospital units excluded from the IPPS. We address these recommendations
in Appendix B of this proposed rule. For further information relating
specifically to the MedPAC March 2011 report or to obtain a copy of the
report, contact MedPAC at (202) 220-3700 or visit MedPAC's Web site at:
http://www.medpac.gov.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as DRGs) for inpatient
discharges and adjust payments under the IPPS based on appropriate
weighting factors assigned to each DRG. Therefore, under the IPPS,
Medicare pays for inpatient hospital services on a rate per discharge
basis that varies according to the DRG to which a beneficiary's stay is
assigned. The formula used to calculate payment for a specific case
multiplies an individual hospital's payment rate per case by the weight
of the DRG to which the case is assigned. Each DRG weight represents
the average resources required to care for cases in that particular
DRG, relative to the average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources.
B. MS-DRG Reclassifications
1. General
As discussed in the preamble to the FY 2008 IPPS final rule with
comment period (72 FR 47138), we focused our efforts in FY 2008 on
making significant reforms to the IPPS consistent with the
recommendations made by MedPAC in its ``Report to the Congress,
Physician-Owned Specialty Hospitals'' in March 2005. MedPAC recommended
that the Secretary refine the entire DRG system by taking severity of
illness into account and applying hospital-specific relative value
(HSRV) weights to DRGs.\1\ We began this reform process by adopting
cost-based weights over a 3-year transition period beginning in FY 2007
and making interim changes to the DRG system for FY 2007 by creating 20
new CMS DRGs and modifying 32 other DRGs across 13 different clinical
areas involving nearly 1.7 million cases. As described in more detail
below, these refinements were intermediate steps towards comprehensive
reform of both the relative weights and the DRG system as we undertook
further study. For FY 2008, we adopted 745 new Medicare Severity DRGs
(MS-DRGs) to replace the CMS DRGs. We refer readers to section II.D. of
the FY 2008 IPPS final rule with comment period for a full detailed
discussion of how the MS-DRG system, based on severity levels of
illness, was established (72 FR 47141).
---------------------------------------------------------------------------
\1\ Medicare Payment Advisory Commission: Report to the
Congress, Physician-Owned Specialty Hospitals, March 2005, page
viii.
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Currently, cases are classified into MS-DRGs for payment under the
IPPS based on the following information reported by the hospital: The
principal diagnosis, up to eight additional diagnoses, and up to six
procedures performed during the stay. (We refer readers to section
II.G.11.c. of this proposed rule for a discussion of our efforts to
increase our internal systems capacity to process diagnosis and
procedures on hospital claims to 25 diagnosis codes and 25 procedure
codes prior to the use of the International Classification of Diseases,
10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding
and the International Classification of Diseases, 10th Revision,
Procedure Coding System (ICD-10 PCS) for inpatient hospital procedure
coding, effective October 1, 2013.) In a small number of MS-DRGs,
classification is also based on the age, sex, and discharge status of
the patient. The diagnosis and procedure information is reported by the
hospital using codes from the International Classification of Diseases,
Ninth Revision, Clinical Modification (ICD-9-CM) prior to October 1,
2013. We refer readers to section II.G.11.b. of this proposed rule for
a reference to the replacement of ICD-9-CM, Volumes 1 and 2, including
the Official ICD-9-CM Guidelines for Coding and Reporting, Volume 3,
with the ICD-10-CM and ICD-10-PCS, including the Official ICD-10-CM and
ICD-10-PCS Guidelines for Coding and Reporting, effective October 1,
2013 (FY 2014).
The process of developing the MS-DRGs was begun by dividing all
possible principal diagnoses into mutually exclusive principal
diagnosis areas, referred to as Major Diagnostic Categories (MDCs). The
MDCs were formulated by physician panels to ensure that the DRGs would
be clinically coherent. The diagnoses in each MDC correspond to a
single organ system or etiology and, in general, are associated with a
particular medical specialty. Thus, in order to maintain the
requirement of clinical coherence, no final MS-DRG could contain
patients in different MDCs. For example, MDC 6 is Diseases and
Disorders of the Digestive System. This approach is used because
clinical care is generally organized in accordance with the organ
system affected. However, some MDCs are not constructed on this basis
because they involve multiple organ systems (for example, MDC 22
(Burns)). For FY 2011, cases were assigned to one of 747 MS-DRGs in 25
MDCs. The table below lists the 25 MDCs.
[[Page 25798]]
[GRAPHIC] [TIFF OMITTED] TP05MY11.000
In general, cases are assigned to an MDC based on the patient's
principal diagnosis before assignment to an MS-DRG. However, under the
most recent version of the Medicare GROUPER (Version 28.0), there are
13 MS-DRGs to which cases are directly assigned on the basis of ICD-9-
CM procedure codes. These MS-DRGs are for heart transplant or implant
of heart assist systems; liver and/or intestinal transplants; bone
marrow transplants; lung transplants; simultaneous pancreas/kidney
transplants; pancreas transplants; and tracheostomies. Cases are
assigned to these MS-DRGs before they are classified to an MDC. The
table below lists the 13 current pre-MDCs.
[[Page 25799]]
[GRAPHIC] [TIFF OMITTED] TP05MY11.001
Once the MDCs were defined, each MDC was evaluated to identify
those additional patient characteristics that would have a consistent
effect on hospital resource consumption. Because the presence of a
surgical procedure that required the use of the operating room would
have a significant effect on the type of hospital resources used by a
patient, most MDCs were initially divided into surgical DRGs and
medical DRGs. Surgical DRGs are based on a hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. Medical DRGs generally are differentiated on the
basis of diagnosis and age (0 to 17 years of age or greater than 17
years of age). Some surgical and medical DRGs are further
differentiated based on the presence or absence of a complication or
comorbidity (CC) or a major complication or comorbidity (MCC).
Generally, nonsurgical procedures and minor surgical procedures
that are not usually performed in an operating room are not treated as
O.R. procedures. However, there are a few non-O.R. procedures that do
affect MS-DRG assignment for certain principal diagnoses. An example is
extracorporeal shock wave lithotripsy for patients with a principal
diagnosis of urinary stones. Lithotripsy procedures are not routinely
performed in an operating room. Therefore, lithotripsy codes are not
classified as O.R. procedures. However, our clinical advisors believe
that patients with urinary stones who undergo extracorporeal shock wave
lithotripsy should be considered similar to other patients who undergo
O.R. procedures. Therefore, we treat this group of patients similar to
patients undergoing O.R. procedures.
Once the medical and surgical classes for an MDC were formed, each
diagnosis class was evaluated to determine if complications or
comorbidities would consistently affect hospital resource consumption.
Each diagnosis was categorized into one of three severity levels. These
three levels include a major complication or comorbidity (MCC), a
complication or comorbidity (CC), or a non-CC. Physician panels
classified each diagnosis code based on a highly iterative process
involving a combination of statistical results from test data as well
as clinical judgment. As stated earlier, we refer readers to section
II.D. of the FY 2008 IPPS final rule with comment period for a full
detailed discussion of how the MS-DRG system was established based on
severity levels of illness (72 FR 47141).
A patient's diagnosis, procedure, discharge status, and demographic
information is entered into the Medicare claims processing systems and
subjected to a series of automated screens called the Medicare Code
Editor (MCE). The MCE screens are designed to identify cases that
require further review before classification into an MS-DRG.
After patient information is screened through the MCE and further
development of the claim is conducted, the cases are classified into
the appropriate MS-DRG by the Medicare GROUPER software program. The
GROUPER program was developed as a means of classifying each case into
an MS-DRG on the basis of the diagnosis and procedure codes and, for a
limited number of MS-DRGs, demographic information (that is, sex, age,
and discharge status).
After cases are screened through the MCE and assigned to an MS-DRG
by the GROUPER, the PRICER software calculates a base MS-DRG payment.
The PRICER calculates the payment for each case covered by the IPPS
based on the MS-DRG relative weight and additional factors associated
with each hospital, such as IME and DSH payment adjustments. These
additional factors increase the payment amount to hospitals above the
base MS-DRG payment.
The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible MS-DRG
classification changes and to recalibrate the MS-DRG weights. However,
in the FY 2000 IPPS final rule (64 FR 41499 and 41500), we discussed a
process for considering non-MedPAR data in the recalibration process.
We stated that for use of non-MedPAR data
[[Page 25800]]
to be feasible for purposes of DRG recalibration and reclassification,
the data must, among other things: (1) Be independently verified; (2)
reflect a complete set of cases (or a representative sample of cases);
and (3) enable us to calculate appropriate DRG relative weights and
ensure that cases are classified to the ``correct'' DRG, and to one DRG
only, in the recalibration process. Further, in order for us to
consider using particular non-MedPAR data, we must have sufficient time
to evaluate and test the data. The time necessary to do so depend upon
the nature and quality of the non-MedPAR data submitted. Generally,
however, a significant sample of the non-MedPAR data should be
submitted by mid-October for consideration in conjunction with the next
year's proposed rule. This date allows us time to test the data and
make a preliminary assessment as to the feasibility of using the data.
Subsequently, a complete non-MedPAR database should be submitted by
early December for consideration in conjunction with the next year's
proposed rule.
As we indicated above, for FY 2008, we made significant
improvements in the DRG system to recognize severity of illness and
resource usage by adopting MS-DRGs that were reflected in the FY 2008
GROUPER, Version 25.0, and were effective for discharges occurring on
or after October 1, 2007. Our MS-DRG analysis for this FY 2012 proposed
rule is based on data from the September 2010 update of the FY 2010
MedPAR file, which contained hospital bills received through September
30, 2010, for discharges occurring through September 30, 2010.
2. Yearly Review for Making MS-DRG Changes
Many of the changes to the MS-DRG classifications we make annually
are the result of specific issues brought to our attention by
interested parties. We encourage individuals with comments about MS-DRG
classifications to submit these comments no later than early December
of each year so they can be carefully considered for possible inclusion
in the annual proposed rule and, if included, may be subjected to
public review and comment. Therefore, similar to the timetable for
interested parties to submit non-MedPAR data for consideration in the
MS-DRG recalibration process, comments about MS-DRG classification
issues should be submitted no later than early December in order to be
considered and possibly included in the next annual proposed rule
updating the IPPS.
The actual process of forming the MS-DRGs was, and will likely
continue to be, highly iterative, involving a combination of
statistical results from test data combined with clinical judgment. In
the FY 2008 IPPS final rule (72 FR 47140 through 47189), we described
in detail the process we used to develop the MS-DRGs that we adopted
for FY 2008. In addition, in deciding whether to make further
modification to the MS-DRGs for particular circumstances brought to our
attention, we considered whether the resource consumption and clinical
characteristics of the patients with a given set of conditions are
significantly different than the remaining patients in the MS-DRG. We
evaluated patient care costs using average charges and lengths of stay
as proxies for costs and relied on the judgment of our medical advisors
to decide whether patients are clinically distinct or similar to other
patients in the MS-DRG. In evaluating resource costs, we considered
both the absolute and percentage differences in average charges between
the cases we selected for review and the remainder of cases in the MS-
DRG. We also considered variation in charges within these groups; that
is, whether observed average differences were consistent across
patients or attributable to cases that were extreme in terms of charges
or length of stay, or both. Further, we considered the number of
patients who will have a given set of characteristics and generally
preferred not to create a new MS-DRG unless it would include a
substantial number of cases.
C. Adoption of the MS-DRGs in FY 2008
In the FY 2006, FY 2007, and FY 2008 IPPS final rules, we discussed
a number of recommendations made by MedPAC regarding revisions to the
DRG system used under the IPPS (70 FR 47473 through 47482; 71 FR 47881
through 47939; and 72 FR 47140 through 47189). As we noted in the FY
2006 IPPS final rule, we had insufficient time to complete a thorough
evaluation of these recommendations for full implementation in FY 2006.
However, we did adopt severity-weighted cardiac DRGs in FY 2006 to
address public comments on this issue and the specific concerns of
MedPAC regarding cardiac surgery DRGs. We also indicated that we
planned to further consider all of MedPAC's recommendations and
thoroughly analyze options and their impacts on the various types of
hospitals in the FY 2007 IPPS proposed rule.
For FY 2007, we began this process. In the FY 2007 IPPS proposed
rule, we proposed to adopt Consolidated Severity DRGs (CS DRGs) for FY
2008 (if not earlier). Based on public comments received on the FY 2007
IPPS proposed rule, we decided not to adopt the CS DRGs. In the FY 2007
IPPS final rule (71 FR 47906 through 47912), we discussed several
concerns raised by public commenters regarding the proposal to adopt CS
DRGs. We acknowledged the many public comments suggesting the logic of
Medicare's DRG system should continue to remain in the public domain as
it has since the inception of the PPS. We also acknowledged concerns
about the impact on hospitals and software vendors of moving to a
proprietary system. Several commenters suggested that CMS refine the
existing DRG classification system to preserve the many policy
decisions that were made over the last 20 years and were already
incorporated into the DRG system, such as complexity of services and
new device technologies. Consistent with the concerns expressed in the
public comments, this option had the advantage of using the existing
DRGs as a starting point (which was already familiar to the public) and
retained the benefit of many DRG decisions that were made in recent
years. We stated our belief that the suggested approach of
incorporating severity measures into the existing DRG system was a
viable option that would be evaluated.
Therefore, we decided to make interim changes to the existing DRGs
for FY 2007 by creating 20 new DRGs involving 13 different clinical
areas that would significantly improve the CMS DRG system's recognition
of severity of illness. We also modified 32 DRGs to better capture
differences in severity. The new and revised DRGs were selected from 40
existing CMS DRGs that contained 1,666,476 cases and represented a
number of body systems. In creating these 20 new DRGs, we deleted 8
existing DRGs and modified 32 existing DRGs. We indicated that these
interim steps for FY 2007 were being taken as a prelude to more
comprehensive changes to better account for severity in the DRG system
by FY 2008.
In the FY 2007 IPPS final rule (71 FR 47898), we indicated our
intent to pursue further DRG reform through two initiatives. First, we
announced that we were in the process of engaging a contractor to
assist us with evaluating alternative DRG systems that were raised as
potential alternatives to the CMS DRGs in the public comments. Second,
we indicated our intent to review over 13,000 ICD-9-CM diagnosis codes
as part of making further refinements to the current CMS DRGs to better
recognize severity of illness based
[[Page 25801]]
on the work that CMS (then HCFA) did in the mid-1990's in connection
with adopting severity DRGs. We describe below the progress we have
made on these two initiatives and our actions for FYs 2008, 2009, 2010,
and 2011, and our proposed actions for FY 2012 based on our continued
analysis of reform of the DRG system. We note that the adoption of the
MS-DRGs to better recognize severity of illness has implications for
the outlier threshold, the application of the postacute care transfer
policy, the measurement of real case-mix versus apparent case-mix, and
the IME and DSH payment adjustments. We discuss these implications for
FY 2012 in other sections of this preamble and in the Addendum to this
proposed rule.
In the FY 2007 IPPS proposed rule, we discussed MedPAC's
recommendations to move to a cost-based HSRV weighting methodology
using HSRVs beginning with the FY 2007 IPPS proposed rule for
determining the DRG relative weights. Although we proposed to adopt the
HSRV weighting methodology for FY 2007, we decided not to adopt the
proposed methodology in the final rule after considering the public
comments we received on the proposal. Instead, in the FY 2007 IPPS
final rule, we adopted a cost-based weighting methodology without the
HSRV portion of the proposed methodology. The cost-based weights were
adopted over a 3-year transition period in \1/3\ increments between FY
2007 and FY 2009. In addition, in the FY 2007 IPPS final rule, we
indicated our intent to further study the HSRV-based methodology as
well as other issues brought to our attention related to the cost-based
weighting methodology adopted in the FY 2007 final rule. There was
significant concern in the public comments that our cost-based
weighting methodology does not adequately account for charge
compression--the practice of applying a higher percentage charge markup
over costs to lower cost items and services and a lower percentage
charge markup over costs to higher cost items and services. Further,
public commenters expressed concern about potential inconsistencies
between how costs and charges are reported on the Medicare cost reports
and charges on the Medicare claims. In the FY 2007 IPPS final rule, we
used costs and charges from the cost reports to determine departmental
level cost-to-charge ratios (CCRs) which we then applied to charges on
the Medicare claims to determine the cost-based weights. The commenters
were concerned about potential distortions to the cost-based weights
that would result from inconsistent reporting between the cost reports
and the Medicare claims. After publication of the FY 2007 IPPS final
rule, we entered into a contract with RTI International (RTI) to study
both charge compression and the extent, if any, to which our
methodology for calculating DRG relative weights is affected by
inconsistencies between how hospitals report costs and charges on the
cost reports and how hospitals report charges on individual claims.
Further, as part of its study of alternative DRG systems, the RAND
Corporation analyzed the HSRV cost-weighting methodology. We refer
readers to section II.E. of the preamble of this proposed rule for a
discussion of the issue of charge compression and the cost-weighting
methodology for FY 2012.
We believe that revisions to the DRG system to better recognize
severity of illness and changes to the relative weights based on costs
rather than charges are improving the accuracy of the payment rates in
the IPPS. We agree with MedPAC that these refinements should be
pursued. Although we continue to caution that any prospective payment
system based on grouping cases will always present some opportunities
for providers to specialize in cases they believe have higher margins,
we believe that the changes we have adopted and the continuing reforms
we are proposing to make in this proposed rule for FY 2012 will improve
payment accuracy and reduce financial incentives to create specialty
hospitals.
We refer readers to section II.D. of the FY 2008 IPPS final rule
with comment period for a full discussion of how the MS-DRG system was
established based on severity levels of illness (72 FR 47141).
D. Proposed FY 2012 MS-DRG Documentation and Coding Adjustment,
Including the Applicability to the Hospital-Specific Rates and the
Puerto Rico-Specific Standardized Amount
1. Background on the Prospective MS-DRG Documentation and Coding
Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90
As we discussed earlier in this preamble, we adopted the MS-DRG
patient classification system for the IPPS, effective October 1, 2007,
to better recognize severity of illness in Medicare payment rates for
acute care hospitals. The adoption of the MS-DRG system resulted in the
expansion of the number of DRGs from 538 in FY 2007 to 745 in FY 2008.
(Currently, there are 747 MS-DRGs, and we are proposing 4 additional
MS-DRGs for FY 2012.) By increasing the number of MS-DRGs and more
fully taking into account patient severity of illness in Medicare
payment rates for acute care hospitals, MS-DRGs encourage hospitals to
improve their documentation and coding of patient diagnoses.
In the FY 2008 IPPS final rule with comment period (72 FR 47175
through 47186), we indicated that the adoption of the MS-DRGs had the
potential to lead to increases in aggregate payments without a
corresponding increase in actual patient severity of illness due to the
incentives for additional documentation and coding. In that final rule
with comment period, we exercised our authority under section
1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget
neutrality by adjusting the national standardized amount, to eliminate
the estimated effect of changes in coding or classification that do not
reflect real changes in case-mix. Our actuaries estimated that
maintaining budget neutrality required an adjustment of -4.8 percent to
the national standardized amount. We provided for phasing in this -4.8
percent adjustment over 3 years. Specifically, we established
prospective documentation and coding adjustments of -1.2 percent for FY
2008, -1.8 percent for FY 2009, and -1.8 percent for FY 2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007, Public Law 110-90. Section
7(a) of Public Law 110-90 reduced the documentation and coding
adjustment made as a result of the MS-DRG system that we adopted in the
FY 2008 IPPS final rule with comment period to -0.6 percent for FY 2008
and -0.9 percent for FY 2009. Section 7(a) of Public Law 110-90 did not
adjust the FY 2010 -1.8 percent documentation and coding adjustment
promulgated in the FY 2008 IPPS final rule with comment period. To
comply with section 7(a) of Public Law 110-90, we promulgated a final
rule on November 27, 2007 (72 FR 66886) that modified the IPPS
documentation and coding adjustment for FY 2008 to -0.6 percent, and
revised the FY 2008 payment rates, factors, and thresholds accordingly.
These revisions were effective on October 1, 2007.
For FY 2009, section 7(a) of Pub. L. 110-90 required a
documentation and coding adjustment of -0.9 percent instead of the -1.8
percent adjustment established in the FY 2008 IPPS final
[[Page 25802]]
rule with comment period. As discussed in the FY 2009 IPPS final rule
(73 FR 48447) and required by statute, we applied a documentation and
coding adjustment of -0.9 percent to the FY 2009 IPPS national
standardized amount. The documentation and coding adjustments
established in the FY 2008 IPPS final rule with comment period, as
amended by Public Law 110-90, are cumulative. As a result, the -0.9
percent documentation and coding adjustment for FY 2009 was in addition
to the -0.6 percent adjustment for FY 2008, yielding a combined effect
of -1.5 percent.
2. Prospective Adjustment to the Average Standardized Amounts Required
by Section 7(b)(1)(A) of Public Law 110-90
Section 7(b)(1)(A) of Public Law 110-90 requires that, if the
Secretary determines that implementation of the MS-DRG system resulted
in changes in documentation and coding that did not reflect real
changes in case-mix for discharges occurring during FY 2008 or FY 2009
that are different than the prospective documentation and coding
adjustments applied under section 7(a) of Public Law 110-90, the
Secretary shall make an appropriate adjustment under section
1886(d)(3)(A)(vi) of the Act. Section 1886(d)(3)(A)(vi) of the Act
authorizes adjustments to the average standardized amounts for
subsequent fiscal years in order to eliminate the effect of such coding
or classification changes. These adjustments are intended to ensure
that future annual aggregate IPPS payments are the same as the payments
that otherwise would have been made had the prospective adjustments for
documentation and coding applied in FY 2008 and FY 2009 reflected the
change that occurred in those years.
3. Recoupment or Repayment Adjustments in FYs 2010 Through 2012
Required by Public Law 110-90
If, based on a retroactive evaluation of claims data, the Secretary
determines that implementation of the MS-DRG system resulted in changes
in documentation and coding that did not reflect real changes in case-
mix for discharges occurring during FY 2008 or FY 2009 that are
different from the prospective documentation and coding adjustments
applied under section 7(a) of Public Law 110-90, section 7(b)(1)(B) of
Public Law 110-90 requires the Secretary to make an additional
adjustment to the standardized amounts under section 1886(d) of the
Act. This adjustment must offset the estimated increase or decrease in
aggregate payments for FYs 2008 and 2009 (including interest) resulting
from the difference between the estimated actual documentation and
coding effect and the documentation and coding adjustment applied under
section 7(a) of Public Law 110-90. This adjustment is in addition to
making an appropriate adjustment to the standardized amounts under
section 1886(d)(3)(A)(vi) of the Act as required by section 7(b)(1)(A)
of Public Law 110-90. That is, these adjustments are intended to recoup
(or repay, in the case of underpayments) spending in excess of (or less
than) spending that would have occurred had the prospective adjustments
for changes in documentation and coding applied in FY 2008 and FY 2009
precisely matched the changes that occurred in those years. Public Law
110-90 requires that the Secretary make these recoupment or repayment
adjustments for discharges occurring during FYs 2010, 2011, and 2012.
4. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data
In order to implement the requirements of section 7 of Public Law
110-90, we indicated in the FY 2009 IPPS final rule (73 FR 48450) that
we planned a thorough retrospective evaluation of our claims data. We
stated that the results of this evaluation would be used by our
actuaries to determine any necessary payment adjustments to the
standardized amounts under section 1886(d) of the Act to ensure the
budget neutrality of the MS-DRGs implementation for FY 2008 and FY
2009, as required by law. In the FY 2009 IPPS proposed rule (73 FR
23541 through 23542), we described our preliminary plan for a
retrospective analysis of inpatient hospital claims data and invited
public input on our proposed methodology.
In that proposed rule, we indicated that we intended to measure and
corroborate the extent of the overall national average changes in case-
mix for FY 2008 and FY 2009. We expected that the two largest parts of
this overall national average change would be attributable to
underlying changes in actual patient severity of illness and to
documentation and coding improvements under the MS-DRG system. In order
to separate the two effects, we planned to isolate the effect of shifts
in cases among base DRGs from the effect of shifts in the types of
cases within base DRGs.
The MS-DRGs divide the base DRGs into three severity levels (with
MCC, with CC, and without CC); the previously used CMS DRGs had only
two severity levels (with CC and without CC). Under the CMS DRG system,
the majority of hospital discharges had a secondary diagnosis which was
on the CC list, which led to the higher severity level. The MS-DRGs
significantly changed the code lists of what was classified as an MCC
or a CC. Many codes that were previously classified as a CC are no
longer included on the MS-DRG CC list because the data and clinical
review showed these conditions did not lead to a significant increase
in resource use. The addition of a new level of high severity
conditions, the MCC list, also provided a new incentive to code more
precisely in order to increase the severity level. We anticipated that
hospitals would examine the MS-DRG MCC and CC code lists and then work
with physicians and coders on documentation and coding practices so
that coders could appropriately assign codes from the highest possible
severity level. We note that there have been numerous seminars and
training sessions on this particular coding issue. The topic of
improving documentation practices in order to code conditions on the
MCC list was also discussed extensively by participants at the March
11-12, 2009 ICD-9-CM Coordination and Maintenance Committee meeting.
Participants discussed their hospitals' efforts to encourage physicians
to provide more precise documentation so that coders could
appropriately assign codes that would lead to a higher severity level.
Because we expected most of the documentation and coding changes under
the MS-DRG system would occur in the secondary diagnoses, we believed
that the shifts among base DRGs were less likely to be the result of
the MS-DRG system and the shifts within base DRGs were more likely to
be the result of the MS-DRG system. We also anticipated evaluating data
to identify the specific MS-DRGs and diagnoses that contributed
significantly to the documentation and coding payment effect and to
quantify their impact. This step entailed analysis of the secondary
diagnoses driving the shifts in severity within specific base DRGs.
In the FY 2009 IPPS proposed rule, we solicited public comments on
the analysis plans described above, as well as suggestions on other
possible approaches for performing a retrospective analysis to identify
the amount of case-mix changes that occurred in FY 2008 and FY 2009
that did not reflect real increases in patient severity of illness.
A few commenters, including MedPAC, expressed support for the
analytic approach described in the FY
[[Page 25803]]
2009 IPPS proposed rule. A number of other commenters expressed
concerns about certain aspects of the approach and/or suggested
alternate analyses or study designs. In addition, one commenter
recommended that any determination or retrospective evaluation by the
actuaries of the impact of the MS-DRGs on case-mix be open to public
scrutiny prior to the implementation of the payment adjustments
beginning in FY 2010.
We took these comments into consideration as we developed our
proposed analysis plan, and in the FY 2010 IPPS/RY 2010 LTCH PPS
proposed rule (74 FR 24092 through 24101), we solicited public comment
on our methodology and analysis. For the FY 2010 IPPS/RY 2010 LTCH PPS
proposed rule, we performed a retrospective evaluation of the FY 2008
data for claims paid through December 2008. Based on this evaluation,
our actuaries determined that implementation of the MS-DRG system
resulted in a 2.5 percent change due to documentation and coding that
did not reflect real changes in case-mix for discharges occurring
during FY 2008. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43768 through 43772), we responded to comments on our methodology for
the retrospective evaluation of FY 2008 claims data. We refer readers
to that final rule for a detailed description of our analysis and prior
responses to comments.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50057 through
50068), we performed the same analysis for FY 2009 claims data using
the same methodology as we did for FY 2008 claims. We note that, in the
FY 2011 IPPS/LTCH PPS proposed rule, we performed this analysis using
FY 2009 claims paid through December 2009. In the FY 2011 IPPS/LTCH PPS
final rule, we updated the analysis with FY 2009 claims paid through
March 2010, as we discussed in the proposed rule. We note that, for all
IPPS hospitals, other than those in Puerto Rico, the estimates were
unchanged from those in the proposed rule. We refer readers to the FY
2011 IPPS/LTCH PPS final rule (75 FR 50057 through 50068) for a
detailed description of our analysis and prior responses to comments.
The results of the analysis for the FY 2011 proposed and final rules
provided additional support for our conclusion that the proposed 5.4
percent estimate accurately reflected the FY 2009 increases in
documentation and coding under the MS-DRG system.
As in prior years, the FY 2008 and FY 2009 MedPAR files are
available to the public to allow independent analysis of the FY 2008
and FY 2009 documentation and coding effect. Interested individuals may
still order these files through the Web site at: http://www.cms.hhs.gov/LimitedDataSets/ by clicking on MedPAR Limited Data Set
(LDS)-Hospital (National). This Web page describes the file and
provides directions and further detailed instructions for how to order.
Persons placing an order must send the following: A Letter of
Request, the LDS Data Use Agreement and Research Protocol (refer to the
Web site for further instructions), the LDS Form, and a check for
$3,655 to:
Mailing address if using the U.S. Postal Service: Centers for Medicare
& Medicaid Services, RDDC Account, Accounting Division, P.O. Box 7520,
Baltimore, MD 21207-0520.
Mailing address if using express mail: Centers for Medicare & Medicaid
Services, OFM/Division of Accounting--RDDC, 7500 Security Boulevard,
C3-07-11, Baltimore, MD 21244-1850.
5. Prospective Adjustment for FY 2010 and Subsequent Years Authorized
by Section 7(b)(1)(A) of Public Law 110-90 and Section 1886(d)(3)(vi)
of the Act
Based on our evaluation of FY 2008 Medicare claims data that were
most current at the time of the FY 2010 IPPS/RY 2010 LTCH PPS proposed
rule, the estimated 2.5 percent change in FY 2008 case-mix due to
changes in documentation and coding that did not reflect real changes
in case-mix for discharges occurring during FY 2008 exceeded the -0.6
percent prospective documentation and coding adjustment applied under
section 7(a) of Public Law 110-90 by 1.9 percentage points. In the FY
2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24096), we solicited
public comment on our proposal to make a -1.9 percent prospective
adjustment to the standardized amounts under section 1886(d) of the Act
to address the effects of documentation and coding changes unrelated to
changes in real case-mix in FY 2008. In the FY 2010 IPPS/RY 2010 LTCH
PPS final rule, in response to public comments, we indicated that we
fully understood that our proposed adjustment of -1.9 percent would
reduce the increase in payments that affected hospitals would have
received in FY 2009 in the absence of the adjustment, and we determined
that it would be appropriate to postpone adopting documentation and
coding adjustments as authorized under section 7(a) of Public Law 110-
90 and section 1886(d)(3)(A)(vi) of the Act until a full analysis of
case-mix changes could be completed. We refer readers to the FY 2010
IPPS/LTCH PPS final rule (74 FR 43767 through 43777) for a detailed
description of our proposal, responses to comments, and finalized
policy.
After analysis of the FY 2009 claims data for the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50057 through 50073), we found a total
prospective documentation and coding effect of 1.054. After accounting
for the -0.6 percent and the -0.9 percent documentation and coding
adjustments in FYs 2008 and 2009, we found a remaining documentation
and coding effect of 3.9 percent. As we have discussed, an additional
cumulative adjustment of -3.9 percent would be necessary to meet the
requirements of section 7(b)(1)(A) of Public Law 110-90 to make an
adjustment to the average standardized amounts in order to eliminate
the full effect of the documentation and coding changes on future
payments. Unlike section 7(b)(1)(B) of Public Law 110-90, section
7(b)(1)(A) does not specify when we must apply the prospective
adjustment, but merely requires us to make an ``appropriate''
adjustment. Therefore, as we stated in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50061), we believe we have some discretion as to the manner
in which we apply the prospective adjustment of -3.9 percent. We
indicated that applying the full prospective adjustment of -3.9 percent
for FY 2011, in combination with the proposed recoupment adjustment of
-2.9 percent in FY 2011 (discussed below) would require an aggregate
adjustment of -6.8 percent. As we discuss elsewhere in this section
II.D., and more extensively in the FY 2011 IPPS/LTCH PPS final rule, it
has been our practice to moderate payment adjustments when necessary to
mitigate the effects of significant downward adjustments on hospitals,
to avoid what could be widespread, disruptive effects of such
adjustments on hospitals. As we also discuss below in this section
II.D., we are required to implement the remaining adjustment in section
7(b)(1)(B) of Public Law 110-90 no later than the FY 2012 rulemaking
period, and accordingly, in the FY 2011 IPPS/LTCH PPS proposed rule, we
proposed a recoupment adjustment under section 7(b)(1)(B) of -2.9
percent for FY 2011 (75 FR 23870 and 23871). Therefore, we stated that
we believed it was appropriate to not implement any or all of the -3.9
percent prospective adjustment in FY 2011. Accordingly, we did not
propose a prospective
[[Page 25804]]
adjustment under section 7(b)(1)(A) of Public Law 110-90 for FY 2011
(75 FR 23868 through 23870) for FY 2011. We note that, as a result,
payments in FY 2011 (and in each future year until we implement the
requisite adjustment) would be 3.9 percent higher than they would have
been if we had implemented an adjustment under section 7(b)(1)(A) of
Public Law 110-90. Our actuaries estimate that this 3.9 percentage
point increase will result in an aggregate payment of approximately $4
billion. We also noted that payments in FY 2010 were also expected to
be 3.9 percent higher than they would have been if we had implemented
an adjustment under section 7(b)(1)(A) of Public Law 110-90, which our
actuaries estimated increased aggregate payments by approximately $4
billion in FY 2010.
Because further delay of this prospective adjustment will result in
a continued accrual of unrecoverable overpayments, it is imperative
that we propose a prospective adjustment for FY 2012, while recognizing
CMS' continued desire to mitigate the effects of any significant
downward adjustments to hospitals. Therefore, we are proposing a -3.15
percent prospective adjustment to the standardized amount to partially
eliminate the full effect of the documentation and coding changes on
future payments. Due to the offsetting nature of the remaining
recoupment adjustment under section 7(b)(1)(B) of Public Law 110-90
(described below in section II.D.6. of this preamble), and after
considering other payment adjustments to FY 2012 rates proposed
elsewhere within this proposed rule, we believe that the proposed -3.15
percent adjustment will allow for a significant reduction in potential
unrecoverable overpayments, yet will maintain a comparable adjustment
level between FY 2011 and FY 2012, reflecting the applicable percentage
increase with a documentation and coding adjustment. We recognize that
an additional adjustment of -0.75 (3.9 minus 3.15) percent will be
required in future rule making to complete the necessary -3.9
adjustment to meet CMS' statutory requirement under section 7(b)(1)(A)
of Public Law 110-90. We are not at this time proposing a timeline to
implement the remainder of this prospective adjustment.
6. Recoupment or Repayment Adjustment for FY 2010 Authorized by Section
7(b)(1)(B) of Public Law 110-90
As discussed in section II.D.1. of this preamble, section
7(b)(1)(B) of Public Law 110-90 requires the Secretary to make an
adjustment to the standardized amounts under section 1886(d) of the Act
to offset the estimated increase or decrease in aggregate payments for
FY 2008 and FY 2009 (including interest) resulting from the difference
between the estimated actual documentation and coding effect and the
documentation and coding adjustments applied under section 7(a) of
Public Law 110-90. This determination must be based on a retrospective
evaluation of claims data.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43773), we
estimated a 2.5 percent change due to documentation and coding that did
not reflect real changes in case-mix for discharges occurring during FY
2008, exceeding the -0.6 percent prospective documentation and coding
adjustment applied under section 7(a) of Public Law 110-90 by 1.9
percentage points. We stated that our actuaries had estimated that this
1.9 percentage point increase resulted in an increase in aggregate
payments of approximately $2.2 billion in FY 2008. We did not propose
to make an adjustment to the FY 2010 average standardized amounts to
offset, in whole or in part, the estimated increase in aggregate
payments for discharges occurring in FY 2008, but stated in the
proposed rule that we intended to address this issue in future
rulemaking. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43774), we stated that because we would not receive all FY 2009 claims
data prior to publication of the final rule, we would address any
increase or decrease in FY 2009 payments in future rulemaking for FY
2011 and 2012 after we performed a retrospective evaluation of the FY
2009 claims data. In response to public comments in FY 2010, we
indicated that we recognized that any adjustment to account for the
documentation and coding effect observed in the FY 2008 and FY 2009
claims data may result in significant future payment reductions for
providers. However, we indicated that we are required under section
7(b)(1)(B) of Pub. L. 110-90 to recover the difference of actual
documentation and coding effect in FY 2008 and FY 2009 that is greater
than the prior adjustments. We agreed with the commenters who requested
that CMS delay any adjustment and, for the reasons stated above,
indicated that we expected to address this issue in the FY 2011
rulemaking. We refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final
rule (74 FR 43767 through 43777) for a detailed description of our
proposal, responses to comments, and finalized policy.
As we indicated in the FY 2011 IPPS/LTCH PPS final rule, the change
due to documentation and coding that did not reflect real changes in
case-mix for discharges occurring during FY 2008 and FY 2009 exceeded
the -0.6 and -0.9 percent prospective documentation and coding
adjustments applied under section 7(a) of Pub. L. 110-90 for those 2
years, respectively, by 1.9 percentage points in FY 2008 and 3.9
percentage points in FY 2009. In total, this change exceeded the
cumulative prospective adjustments by 5.8 (1.9 plus 3.9) percentage
points. Our actuaries estimated that this 5.8 percentage point increase
resulted in an increase in aggregate payments of approximately $6.9
billion. In the FY 2011 IPPS/LTCH PPS final rule, we noted that there
may be a need to actuarially adjust the recoupment adjustment to
accurately reflect accumulated interest. Therefore, we determined that
an aggregate adjustment of -5.8 percent in FYs 2011 and 2012, subject
to actuarial adjustment to reflect accumulated interest, would be
necessary in order to meet the requirements of section 7(b)(1)(B) of
Public Law 110-90 to adjust the standardized amounts for discharges
occurring in FYs 2010, 2011, and/or 2012 to offset the estimated amount
of the increase in aggregate payments (including interest) in FYs 2008
and 2009. In the FY 2011 IPPS/LTCH PPS proposed rule (75 FR 23871), we
stated that we intended to take into account the need to reflect
accumulated interest in proposing a recoupment adjustment under section
7(b)(1)(B) of Public Law 110-90 for FY 2012.
It is often our practice to phase in rate adjustments over more
than one year in order to moderate the effect on rates in any one year.
Therefore, consistent with the policies that we have adopted in many
similar cases, in the FY 2011 IPPS/LTCH PPS proposed rule, we proposed
to make an adjustment to the standardized amount of -2.9 percent,
representing approximately half of the aggregate adjustment required
under section 7(b)(1)(B) of Public Law 110-90, for FY 2011. An
adjustment of this magnitude would allow us to moderate the effects on
hospitals in one year while simultaneously making it possible to
implement the entire adjustment within the timeframe required under
section 7(b)(1)(B) of Public Law 110-90 (that is, no later than FY
2012).
Unlike the permanent prospective adjustment to the standardized
amounts under section 7(b)(1)(A) of Public Law 110-90 described
earlier, the recoupment adjustment to the standardized amounts under
section 7(b)(1)(B) of Public Law 110-90 is not cumulative, and,
therefore, would be removed for subsequent fiscal years
[[Page 25805]]
once we have completely offset the increase in aggregate payments for
discharges for FY 2008 and FY 2009 expenditures. In keeping with our
practice of moderating payment adjustments when necessary, we stated
that we anticipated that the proposal of phasing in the recoupment
adjustment will have an additional, and significant, moderating effect
on implementing the requirements of section 7(b)(1)(B) of Public Law
110-90 for FY 2012.
In the FY 2011 IPPS/LTCH PPS proposed rule, we sought public
comment on our proposal to offset part of the total 5.8 percent
increase in aggregate payments (including interest) for discharges
occurring in FY 2008 and FY 2009 resulting from the adoption of the MS-
DRGs in FY 2011, noting that this proposal would result in a -2.9
percent adjustment to the standardized amount. We received numerous
comments on our proposal, especially from national and regional
hospital associations, hospital systems, and individual hospitals.
MedPAC also commented on our proposal. We refer readers to the FY 2011
IPPS/LTCH PPS final rule (75 FR 50055 through 50073) for a detailed
description of our analysis and prior responses to comments, and
finalized policy.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50062 through
50068), we finalized the proposed adjustment to the standardized amount
of -2.9 percent, which represented approximately half of the aggregate
recoupment adjustment required under section 7(b)(1)(B) of Public Law
110-90, for FY 2011. We were persuaded by both MedPAC's analysis, and
our own review of the methodologies recommended by various commenters,
that the methodology we employed to determine the required recoupment
adjustment was sound. Since the statute required that we implement the
entire recoupment adjustment no later than FY 2012, we have sought, as
we commonly do, to moderate the potential impact on hospitals by
phasing in the required adjustment over more than one year. As we
stated in prior rulemaking, a major advantage of making the -2.9
percent adjustment to the standardized amount in FY 2011 was that,
because the required recoupment adjustment is not cumulative, we
anticipated removing the FY 2011 -2.9 percent adjustment from the rates
(in other words, making a positive 2.9 percent adjustment to the rates)
in FY 2012, at the same time that the law required us to apply the
remaining approximately -2.9 percent adjustment required by section
7(b)(1)(B) of Public Law 110-90. These two steps in FY 2012, restoring
the FY 2011 -2.9 percent adjustment and then applying the remaining
adjustment of approximately -2.9 percent, would effectively cancel each
other out. The result of these two steps would be an aggregate
adjustment of approximately 0.0 percent. While we stated in the FY 2011
IPPS/LTCH PPS final rule the need to potentially adjust the remaining -
2.9 percent estimate to account for accumulated interest, our actuaries
have determined that there has been no significant interest
accumulation and that no additional adjustment will be required.
Therefore, for FY 2012, pursuant to the timeframes set forth by section
7(b)(1)(B) of Public Law 110-90, and consistent with the discussion in
the FY 2011 IPPS/LTCH PPS final rule, we are proposing to complete the
recoupment adjustment by implementing the remaining -2.9 percent
adjustment, in addition to removing the effect of the -2.9 percent
adjustment to the standardized amount finalized for FY 2011. Because
these adjustments will, in effect, balance out, there will be no year-
to-year change in the standardized amount due to this recoupment
adjustment. As this adjustment will complete the required recoupment
for overpayments due to documentation and coding effects on discharges
occurring in FYs 2008 and 2009, we anticipate removing the effect of
this adjustment by adding 2.9 percent to the standardized amount in FY
2013. We continue to believe that this is a reasonable and fair
approach that satisfies the requirements of the statute while
substantially moderating the financial impact on hospitals.
[GRAPHIC] [TIFF OMITTED] TP05MY11.002
The table above summarizes the proposed adjustments for FY 2012 for
documentation and coding for IPPS hospitals.
7. Background on the Application of the Documentation and Coding
Adjustment to the Hospital-Specific Rates
Under section 1886(d)(5)(D)(i) of the Act, SCHs are paid based on
whichever of the following rates yields the greatest aggregate payment:
The Federal rate; the updated hospital-specific rate based on FY 1982
costs per discharge; the updated hospital-specific rate based on FY
1987 costs per discharge; the updated hospital-specific rate based on
FY 1996 costs per discharge; or the updated hospital-specific rate
based on FY 2006 costs per discharge. Under section 1886(d)(5)(G) of
the Act, MDHs are paid based on the Federal national rate or, if
higher, the Federal national rate plus 75 percent of the difference
between the Federal national rate and the updated hospital-specific
rate based on the greatest of the FY 1982, FY 1987, or FY 2002 costs
per discharge. In the FY 2008 IPPS final rule with comment period (72
FR 47152 through 47188), we established a policy of applying the
documentation and coding adjustment to the hospital-specific rates. In
that final rule with comment period, we indicated that because SCHs and
MDHs use the same DRG system as all other hospitals, we believe they
should be equally subject to the budget neutrality adjustment that we
are applying for adoption of the MS-DRGs to all other hospitals. In
establishing this policy, we relied on section 1886(d)(3)(A)(vi) of the
Act, which provides us with the authority to adjust ``the standardized
amount'' to eliminate the effect of changes in coding or classification
that do not reflect real change in case-mix.
However, in the final rule that appeared in the Federal Register on
November 27, 2007 (72 FR 66886), we rescinded the application of the
[[Page 25806]]
documentation and coding adjustment to the hospital-specific rates
retroactive to October 1, 2007. In that final rule, we indicated that,
while we still believe it would be appropriate to apply the
documentation and coding adjustment to the hospital-specific rates,
upon further review, we decided that the application of the
documentation and coding adjustment to the hospital-specific rates is
not consistent with the plain meaning of section 1886(d)(3)(A)(vi) of
the Act, which only mentions adjusting ``the standardized amount''
under section 1886(d) of the Act and does not mention adjusting the
hospital-specific rates.
In the FY 2009 IPPS proposed rule (73 FR 23540), we indicated that
we continued to have concerns about this issue. Because hospitals paid
based on the hospital-specific rate use the same MS-DRG system as other
hospitals, we believe they have the potential to realize increased
payments from documentation and coding changes that do not reflect real
increases in patient severity of illness. In section 1886(d)(3)(A)(vi)
of the Act, Congress stipulated that hospitals paid based on the
standardized amount should not receive additional payments based on the
effect of documentation and coding changes that do not reflect real
changes in case-mix. Similarly, we believe that hospitals paid based on
the hospital-specific rates should not have the potential to realize
increased payments due to documentation and coding changes that do not
reflect real increases in patient severity of illness. While we
continue to believe that section 1886(d)(3)(A)(vi) of the Act does not
provide explicit authority for application of the documentation and
coding adjustment to the hospital-specific rates, we believe that we
have the authority to apply the documentation and coding adjustment to
the hospital-specific rates using our special exceptions and adjustment
authority under section 1886(d)(5)(I)(i) of the Act. The special
exceptions and adjustment provision authorizes us to provide ``for such
other exceptions and adjustments to [IPPS] payment amounts * * * as the
Secretary deems appropriate.'' In the FY 2009 IPPS final rule (73 FR
48448 through 48449), we indicated that, for the FY 2010 rulemaking, we
planned to examine our FY 2008 claims data for hospitals paid based on
the hospital-specific rate. We further indicated that if we found
evidence of significant increases in case-mix for patients treated in
these hospitals that do not reflect real changes in case-mix, we would
consider proposing application of the documentation and coding
adjustments to the FY 2010 hospital-specific rates under our authority
in section 1886(d)(5)(I)(i) of the Act.
In response to public comments received on the FY 2009 IPPS
proposed rule, we stated in the FY 2009 IPPS final rule that we would
consider whether such a proposal was warranted for FY 2010. To gather
information to evaluate these considerations, we indicated that we
planned to perform analyses on FY 2008 claims data to examine whether
there has been a significant increase in case-mix for hospitals paid
based on the hospital-specific rate. If we found that application of
the documentation and coding adjustment to the hospital-specific rates
for FY 2010 was warranted, we indicated that we would propose to make
such an adjustment in the FY 2010 IPPS proposed rule.
8. Documentation and Coding Adjustment to the Hospital-Specific Rates
for FY 2011 and Subsequent Fiscal Years
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule and final rule
(74 FR 24098 through 24100 and 74 FR 43775 through 43776,
respectively), we discussed our retrospective evaluation of the FY 2008
claims data for SCHs and MDHs using the same methodology described
earlier for other IPPS hospitals. We found that, independently for both
SCHs and MDHs, the change due to documentation and coding that did not
reflect real changes in case-mix for discharges occurring during FY
2008 slightly exceeded the proposed 2.5 percent result discussed
earlier for other IPPS hospitals, but did not significantly differ from
that result. We refer readers to those rules for a more complete
discussion.
Therefore, consistent with our statements in prior IPPS rules, we
proposed to use our authority under section 1886(d)(5)(I)(i) of the Act
to prospectively adjust the hospital-specific rates by the proposed -
2.5 percent in FY 2010 to account for our estimated documentation and
coding effect in FY 2008 that does not reflect real changes in case-
mix. We proposed to leave this adjustment in place for subsequent
fiscal years in order to ensure that changes in documentation and
coding resulting from the adoption of the MS-DRGs do not lead to an
increase in aggregate payments for SCHs and MDHs not reflective of an
increase in real case-mix. The proposed -2.5 percent adjustment to the
hospital-specific rates exceeded the -1.9 percent adjustment to the
national standardized amount under section 7(b)(1)(A) of Public Law
110-90 because, unlike the national standardized rates, the FY 2008
hospital-specific rates were not previously reduced in order to account
for anticipated changes in documentation and coding that do not reflect
real changes in case-mix resulting from the adoption of the MS-DRGs.
In the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74 FR 24100),
we solicited public comment on this proposal. Consistent with our
approach for IPPS hospitals discussed earlier, in the FY 2010 IPPS/RY
2010 LTCH PPS final rule, we also delayed adoption of a documentation
and coding adjustment to the hospital-specific rate until FY 2011. We
refer readers to the FY 2010 IPPS/RY 2010 LTCH PPS final rule for a
more detailed discussion of our proposal, responses to comments, and
finalized policy.
As we have noted previously, because SCHs and MDHs use the same MS-
DRG system as all other IPPS hospitals, we believe they have the
potential to realize increased payments from documentation and coding
changes that do not reflect real increases in patient severity of
illness. Therefore, we believe they should be equally subject to a
prospective budget neutrality adjustment that we are applying for
adoption of the MS-DRGs to all other hospitals. We believe the
documentation and coding estimates for all subsection (d) hospitals
should be the same. While the findings for the documentation and coding
effect for all IPPS hospitals are similar to the effect for SCHs and
slightly different to the effect for MDHs, we continue to believe that
this is the appropriate policy so as to neither advantage or
disadvantage different types of providers. As we discuss in section
II.D.4. of this preamble, our best estimate, based on the most recently
available data, is that a cumulative adjustment of -5.4 percent is
required to eliminate the full effect of the documentation and coding
changes on future payments to SCHs and MDHs. Unlike the case of
standardized amounts paid to IPPS hospitals, prior to FY 2011, we had
not made any previous adjustments to the hospital-specific rates paid
to SCHs and MDHs to account for documentation and coding changes.
Therefore, the entire -5.4 percent recoupment adjustment needed to be
made, as opposed to a -3.9 percent remaining adjustment for IPPS
hospitals.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50068 through
50071), we made an adjustment to the standardized amount for IPPS
hospitals of -2.9 percent under section 7(b)(1)(B) of
[[Page 25807]]
Public Law 110-90, for FY 2011. As we noted in the FY 2011 IPPS/LTCH
PPS final rule, in determining the level and pace of adjustments to
account for such documentation and coding changes, we believe that it
is important to maintain, as much as possible, both consistency and
equity among these classes of hospitals. Therefore, we finalized a
prospective adjustment of -2.9 percent to the hospital-specific rates
paid to SCHs and MDHs. We refer readers to the FY 2011 IPPS/LTCH PPS
final rule for a more detailed discussion of our proposal, responses to
comments, and finalized policy.
As discussed earlier in this section II.D., we are proposing a net
-3.15 percent documentation and coding adjustment for IPPS hospitals in
FY 2012 (-3.15 percent prospective adjustment plus a -2.9 percent
recoupment adjustment in FY 2012, offset by the removal of the -2.9
percent recoupment adjustment for FY 2010). The proposed IPPS
adjustment exceeds the remaining -2.5 percent documentation and coding
adjustment for hospitals receiving a hospital-specific rate (that is,
the entire -5.4 percent adjustment, minus the -2.9 percent adjustment
finalized for FY 2011). As we indicated in the FY 2011 IPPS/LTCH PPS
proposed rule and final rule, we are continuing, as much as possible,
consistent with section 7(b)(1) of Public Law 110-90 and section
1886(d)(5)(I)(i) of the Act, to take such consistency and equity into
account in developing future proposals for implementing documentation
and coding adjustments. We believe that any adjustment to the hospital-
specific rate due to documentation and coding effect should be as
similar as possible to adjustments to the IPPS rate. Accordingly, we
are proposing a -2.5 percent payment adjustment to the hospital-
specific rate. We believe that proposing the entire remaining
prospective adjustment of -2.5 percent allows CMS to maintain, to the
extent possible, similarity and consistency in payment rates for
different IPPS hospitals paid using the MS-DRG. As discussed below, we
took a similar approach in finalizing an adjustment to the Puerto-Rico
specific rate in FY 2011.
9. Application of the Documentation and Coding Adjustment to the Puerto
Rico-Specific Standardized Amount
a. Background
Puerto Rico hospitals are paid based on 75 percent of the national
standardized amount and 25 percent of the Puerto Rico-specific
standardized amount. As noted previously, the documentation and coding
adjustment we adopted in the FY 2008 IPPS final rule with comment
period relied upon our authority under section 1886(d)(3)(A)(vi) of the
Act, which provides the Secretary the authority to adjust ``the
standardized amounts computed under this paragraph'' to eliminate the
effect of changes in coding or classification that do not reflect real
changes in case-mix. Section 1886(d)(3)(A)(vi) of the Act applies to
the national standardized amounts computed under section 1886(d)(3) of
the Act, but does not apply to the Puerto Rico-specific standardized
amount computed under section 1886(d)(9)(C) of the Act. In calculating
the FY 2008 payment rates, we made an inadvertent error and applied the
FY 2008 -0.6 percent documentation and coding adjustment to the Puerto
Rico-specific standardized amount, relying on our authority under
section 1886(d)(3)(A)(vi) of the Act. However, section
1886(d)(3)(A)(vi) of the Act authorizes application of a documentation
and coding adjustment to the national standardized amount and does not
apply to the Puerto Rico specific standardized amount. In the FY 2009
IPPS final rule (73 FR 48449), we corrected this inadvertent error by
removing the -0.6 percent documentation and coding adjustment from the
FY 2008 Puerto Rico-specific rates (that is, we made a positive 0.6
percent adjustment, increasing the Puerto Rico-specific rates).
While section 1886(d)(3)(A)(vi) of the Act is not applicable to the
Puerto Rico-specific standardized amount, we believe that we have the
authority to apply the documentation and coding adjustment to the
Puerto Rico-specific standardized amount using our special exceptions
and adjustment authority under section 1886(d)(5)(I)(i) of the Act.
Similar to SCHs and MDHs that are paid based on the hospital-specific
rate, we believe that Puerto Rico hospitals that are paid based on the
Puerto Rico-specific standardized amount should not have the potential
to realize increased payments due to documentation and coding changes
that do not reflect real increases in patient severity of illness.
Consistent with the approach described for SCHs and MDHs, in the FY
2009 IPPS final rule (73 FR 48449), we indicated that we planned to
examine our FY 2008 claims data for hospitals in Puerto Rico. We
indicated in the FY 2009 IPPS proposed rule (73 FR 23541) that if we
found evidence of significant increases in case-mix for patients
treated in these hospitals, we would consider proposing to apply
documentation and coding adjustments to the FY 2010 Puerto Rico-
specific standardized amount under our authority in section
1886(d)(5)(I)(i) of the Act.
b. Documentation and Coding Adjustment to the Puerto Rico-Specific
Standardized Amount
For the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule, we performed a
retrospective evaluation of the FY 2008 claims data for Puerto Rico
hospitals using the same methodology described earlier for IPPS
hospitals paid under the national standardized amounts under section
1886(d) of the Act. We found that, for Puerto Rico hospitals, the
increase in payments for discharges occurring during FY 2008 due to
documentation and coding that did not reflect real changes in case-mix
for discharges occurring during FY 2008 was approximately 1.1 percent.
However, as we note earlier for IPPS hospitals and hospitals receiving
hospital-specific rates, if the estimated documentation and coding
effect determined based on a full analysis of FY 2009 claims data was
more or less than our then current estimates, it would change, possibly
lessen, the anticipated cumulative adjustments that we had estimated we
would have to make for the FY 2008 and FY 2009 combined adjustment.
Therefore, we believed that it would be more prudent to delay
implementation of the documentation and coding adjustment to allow for
a more complete analysis of FY 2009 claims data for Puerto Rico
hospitals.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43777), we
indicated that, given these documentation and coding increases,
consistent with our statements in prior IPPS rules, we would use our
authority under section 1886(d)(5)(I)(i) of the Act to adjust the
Puerto Rico-specific rate and solicited public comment on the proposed
-1.1 percent prospective adjustment. However, in parallel to our
decision to postpone adjustments to the Federal standardized amount, we
also indicated that we were adopting a similar policy for the Puerto
Rico-specific rate for FY 2010 and would consider the phase-in of this
adjustment over an appropriate time period through future rulemaking.
We noted that, as with the hospital-specific rates, the Puerto Rico-
specific standardized amount had not previously been adjusted based on
estimated changes in documentation and coding associated with the
adoption of the MS-DRGs.
Consistent with our approach for IPPS hospitals for FY 2010, we
indicated that
[[Page 25808]]
we would address in the FY 2011 rulemaking cycle any change in FY 2009
case-mix due to documentation and coding that did not reflect real
changes in case-mix for discharges occurring during FY 2009.
As we have noted above, similar to SCHs and MDHs, hospitals in
Puerto Rico use the same MS-DRG system as all other hospitals and we
believe they have the potential to realize increased payments from
documentation and coding changes that do not reflect real increases in
patient severity of illness. Therefore, we believe they should be
equally subject to the prospective budget neutrality adjustment that we
intend to apply to prospective payment rates for IPPS hospitals,
including SCHs and MDHs, in order to eliminate the full effect of the
documentation and coding changes associated with implementation of the
MS-DRG system.
As discussed in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50071
through 50073), using the same methodology we applied to estimate
documentation and coding changes under IPPS for non-Puerto Rico
hospitals, our best estimate, based on the then most recently available
data (FY 2009 claims paid through March 2010), was that, for
documentation and coding that occurred over FY 2008 and FY 2009, a
cumulative adjustment of -2.6 percent was required to eliminate the
full effect of the documentation and coding changes on future payments
from the Puerto Rico-specific rate. As we stated above, we believe it
important to maintain both consistency and equity among all hospitals
paid on the basis of the same MS-DRG system. At the same time, however,
we recognize that the estimated cumulative impact on aggregate payment
rates resulting from implementation of the MS-DRG system was smaller
for Puerto Rico hospitals as compared to IPPS hospitals and SCHs and
MDHs. Therefore, in the FY 2011 IPPS LTCH PPS proposed rule (75 FR
23876), we proposed an adjustment to eliminate the full effect of the
documentation and coding changes on the portion of future payments to
Puerto Rico hospitals based on the Puerto Rico-specific rate. We stated
that we believed that a full prospective adjustment was the most
appropriate means to take into full account the effect of documentation
and coding changes on payments, while maintaining equity as much as
possible between hospitals paid on the basis of different prospective
rates. We noted that our updated data analysis in the FY 2011 IPPS/LTCH
PPS final rule (75 FR 50072 through 50073) final rule showed that this
adjustment would be -2.6 percent. The previous estimate in the proposed
rule was a -2.4 percent adjustment.
One reason we proposed the full prospective adjustment for the
Puerto Rico-specific rate in FY 2011 was to maintain equity as much as
possible in the documentation and coding adjustments applied to various
hospital rates in FY 2011. Because our proposal was to make an
adjustment that represents the full adjustment that is warranted for
the Puerto Rico-specific rate, we indicated that we did not anticipate
proposing any additional adjustments to the this rate for documentation
and coding effects.
Therefore, because the Puerto Rico-specific rate received a full
prospective adjustment of -2.6 percent in FY 2011, we are proposing no
further adjustment in this proposed rule for FY 2012.
E. Refinement of the MS-DRG Relative Weight Calculation
1. Background
In the FY 2009 IPPS final rule (73 FR 48450), we continued to
implement significant revisions to Medicare's inpatient hospital rates
by completing our 3-year transition from charge-based relative weights
to cost-based relative weights. Beginning in FY 2007, we implemented
relative weights based on cost report data instead of based on charge
information. We had initially proposed to develop cost-based relative
weights using the hospital-specific relative value cost center (HSRVcc)
methodology as recommended by MedPAC. However, after considering
concerns expressed in the public comments we received on the proposal,
we modified MedPAC's methodology to exclude the hospital-specific
relative weight feature. Instead, we developed national CCRs based on
distinct hospital departments and engaged a contractor to evaluate the
HSRVcc methodology for future consideration. To mitigate payment
instability due to the adoption of cost-based relative weights, we
decided to transition cost-based weights over 3 years by blending them
with charge-based weights beginning in FY 2007. (We refer readers to
the FY 2007 IPPS final rule for details on the HSRVcc methodology and
the 3-year transition blend from charge-based relative weights to cost-
based relative weights (71 FR 47882 through 47898).)
In FY 2008, we adopted severity-based MS-DRGs, which increased the
number of DRGs from 538 to 745. Many commenters raised concerns as to
how the transition from charge-based weights to cost-based weights
would continue with the introduction of new MS-DRGs. We decided to
implement a 2-year transition for the MS-DRGs to coincide with the
remainder of the transition to cost-based relative weights. In FY 2008,
50 percent of the relative weight for each DRG was based on the CMS DRG
relative weight and 50 percent was based on the MS-DRG relative weight.
In FY 2009, the third and final year of the transition from charge-
based weights to cost-based weights, we calculated the MS-DRG relative
weights based on 100 percent of hospital costs. We refer readers to the
FY 2007 IPPS final rule (71 FR 47882) for a more detailed discussion of
our final policy for calculating the cost-based DRG relative weights
and to the FY 2008 IPPS final rule with comment period (72 FR 47199)
for information on how we blended relative weights based on the CMS
DRGs and MS-DRGs.
2. Summary of the RTI Study of Charge Compression and CCR Refinement
As we transitioned to cost-based relative weights, some public
commenters raised concerns about potential bias in the weights due to
``charge compression,'' which is the practice of applying a higher
percentage charge markup over costs to lower cost items and services,
and a lower percentage charge markup over costs to higher cost items
and services. As a result, the cost-based weights would undervalue
high-cost items and overvalue low-cost items if a single CCR is applied
to items of widely varying costs in the same cost center. To address
this concern, in August 2006, we awarded a contract to RTI to study the
effects of charge compression in calculating the relative weights and
to consider methods to reduce the variation in the CCRs across services
within cost centers. RTI issued an interim draft report in January 2007
with its findings on charge compression (which was posted on the CMS
Web site at: http://www.cms.hhs.gov/reports/downloads/Dalton.pdf). In
that report, RTI found that a number of factors contribute to charge
compression and affect the accuracy of the relative weights. RTI's
findings demonstrated that charge compression exists in several CCRs,
most notably in the Medical Supplies and Equipment CCR.
In its interim draft report, RTI offered a number of
recommendations to mitigate the effects of charge compression,
including estimating regression-based CCRs to disaggregate the Medical
Supplies Charged to Patients, Drugs Charged to Patients, and Radiology
cost centers, and adding new cost centers to the Medicare cost report,
such as adding a ``Devices, Implants and Prosthetics'' line under
``Medical
[[Page 25809]]
Supplies Charged to Patients'' and a ``CT Scanning and MRI''
subscripted line under ``Radiology-Diagnostics''. Despite receiving
public comments in support of the regression-based CCRs as a means to
immediately resolve the problem of charge compression, particularly
within the Medical Supplies and Equipment CCR, we did not adopt RTI's
recommendation to create additional regression-based CCRs. (For more
details on RTI's findings and recommendations, we refer readers to the
FY 2009 IPPS final rule (73 FR 48452).) RTI subsequently expanded its
analysis of charge compression beyond inpatient services to include a
reassessment of the regression-based CCR models using both outpatient
and inpatient charge data. This interim report was made available in
April 2008 during the public comment period on the FY 2009 IPPS
proposed rule and can be found on RTI's Web site at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200804.pdf . The IPPS-specific chapters, which were
separately displayed in the April 2008 interim report, as well as the
more recent OPPS chapters, were included in the July 3, 2008 RTI final
report entitled, ``Refining Cost-to-Charge Ratios for Calculating APC
[Ambulatory Payment Classification] and DRG Relative Payment Weights,''
that became available at the time of the development of the FY 2009
IPPS final rule. 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.
RTI's final report found that, under the IPPS and the OPPS,
accounting improvements to the cost reporting data reduce some of the
sources of aggregation bias without having to use regression-based
adjustments. In general, with respect to the regression-based
adjustments, RTI confirmed the findings of its March 2007 report that
regression models are a valid approach for diagnosing potential
aggregation bias within selected services for the IPPS and found that
regression models are equally valid for setting payments under the
OPPS.
RTI also noted that cost-based weights are only one component of a
final prospective payment rate. There are other rate adjustments (wage
index, IME, and DSH) to payments derived from the revised cost-based
weights, and the cumulative effect of these components may not improve
the ability of final payment to reflect resource cost. RTI endorsed
short-term regression-based adjustments, but also concluded that more
refined and accurate accounting data are the preferred long-term
solution to mitigate charge compression and related bias in hospital
cost-based weights. For a more detailed summary of RTI's findings,
recommendations, and public comments we received on the report, we
refer readers to the FY 2009 IPPS final rule (73 FR 48452 through
48453).
3. Summary of Policy Changes Made in FY 2011
In the FY 2009 IPPS/LTCH PPS final rule (73 FR 48458 through
48467), in response to the RTI's recommendations concerning cost report
refinements, and because of RAND's finding that regression-based
adjustments to the CCRs do not significantly improve payment accuracy,
we discussed our decision to pursue changes to the cost report to split
the cost center for Medical Supplies Charged to Patients into one line
for ``Medical Supplies Charged to Patients'' and another line for
``Implantable Devices Charged to Patients.'' (We refer readers to the
Web site: http://www.rand.org/pubs/working_papers/WR560/, and the FY
2009 IPPS/LTCH PPS final rule for details on the RAND report (73 FR
48453 through 48457).) We acknowledged, as RTI had found, that charge
compression occurs in several cost centers that exist on the Medicare
cost report. However, as we stated in the FY 2009 IPPS/LTCH PPS final
rule, we focused on the CCR for Medical Supplies and Equipment because
RTI found that the largest impact on the MS-DRG relative weights could
result from correcting charge compression for devices and implants. In
determining what should be reported in these respective cost centers,
we adopted the commenters' recommendation that hospitals should use
revenue codes established by AHA's National Uniform Billing Committee
to determine what should be reported in the ``Medical Supplies Charged
to Patients'' and the ``Implantable Devices Charged to Patients'' cost
centers. Accordingly, a new subscripted line 55.30 for ``Implantable
Devices Charged to Patients'' was created in July 2009 as part of CMS'
Transmittal 20 update to the existing cost report Form CMS-2552-96.
This new subscripted cost center has been available for use for cost
reporting periods beginning on or after May 1, 2009.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through
50080), we finalized our proposal to create standard cost centers for
CT scans, MRI, and cardiac catheterization, and to require that
hospitals report the costs and charges for these services under new
cost centers on the revised Medicare cost report Form CMS 2552-10. As
we discussed in the FY 2009 IPPS/LTCH PPS and CY 2009 OPPS/ASC proposed
and final rules, RTI found that the costs and charges of CT scans, MRI,
and cardiac catheterization differ significantly from the costs and
charges of other services included in the standard associated cost
center. RTI also concluded that both the IPPS and OPPS relative weights
would better estimate the costs of those services if CMS were to add
standard costs centers for CT scans, MRI, and cardiac catheterization
in order for hospitals to report separately the costs and charges for
those services and in order for CMS to calculate unique CCRs to
estimate the cost from charges on claims data. (We refer readers to the
FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a more
detailed discussion on the reasons for the creation of standard cost
centers for CT scans, MRI, and cardiac catheterization.) The new
standard cost centers for MRI, CT scans, and cardiac catheterization
are effective for cost report periods beginning on or after May 1,
2010, on the revised cost report Form CMS-2552-10. CMS issued the new
hospital cost report Form CMS-2552-10 on December 30, 2010. The new
cost report form can be accessed at the CMS Web site at: https://www.cms.gov/Manuals/PBM/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=1&sortOrder=ascending&itemID=CMS021935&intNumPerPage=10.
Once at this Web site, users should double click on ``Chapter 40.''
4. Discussion for FY 2012
In the FY 2009 IPPS/LTCH PPS final rule (73 FR 48468), we stated
that, due to what is typically a 3-year lag between the reporting of
cost report data and the availability for use in ratesetting, we
anticipated that we might be able to use data from the new
``Implantable Devices Charged to Patients'' cost center to develop a
CCR for Implantable Devices Charged to Patients in the FY 2012 or FY
2013 IPPS rulemaking cycle. Specifically, we stated, ``Because there is
approximately a 3-year lag between the availability of cost report data
for IPPS and OPPS rate-setting purposes in a given fiscal year, we may
be able to derive two distinct CCRs, one for medical supplies and one
for devices, for use in calculating the FY 2012 or FY 2013 IPPS
relative weights and the CY 2012 or CY 2013 OPPS relative weights'' (73
FR 48468). However, as noted in the FY 2010 IPPS/LTCH PPS final rule
(74 FR 43782), due to delays in the issuance of the revised cost report
CMS 2552-10,
[[Page 25810]]
a new CCR for Implantable Devices Charged to Patients may not be
available until FY 2013. Similarly, when we finalized the decision in
the FY 2011 IPPS/LTCH PPS final rule to add new cost centers for MRI,
CT scans, and cardiac catheterization, we explained that data from any
new cost centers that may be created will not be available until at
least 3 years after they are first used (75 FR 50077). That is, in the
FY 2011 IPPS/LTCH PPS final rule (75 FR 50077), we stated that the data
from the standard cost centers for MRI, CT scans, and cardiac
catheterization, respectively, would not even be available for possible
use in calculating the relative weights earlier than 3 years after Form
CMS-2552-10 becomes available. We further stated that, 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. We also reassured
public commenters that there was no need for immediate concern
regarding possible negative payment impacts on MRI and CT scans under
the IPPS and the OPPS because the cost report data that would be used
for the calculation of the relative weights were at least 3 years from
being available. We stated that we will first thoroughly analyze and
run impacts on the data and provide the public with the opportunity to
comment before distinct CCRs for MRI and CT scans would be finalized
for use in the calculation of the relative weights. We also urged all
hospitals to properly report their costs and charges for MRI, CT scans,
and all other services so that, in several years' time, we will have
reliable data from all hospitals on which to base a decision as to
whether to incorporate additional CCRs into the relative weight
calculation (75 FR 50077).
Accordingly, in preparation for this FY 2012 IPPS/LTCH PPS proposed
rule, we have assessed the availability of data in the ``Implantable
Devices Charged to Patients'' cost center. In order to develop a robust
analysis regarding the use of cost data from the ``Implantable Devices
Charged to Patients'' cost center, it is necessary to have a critical
mass of cost reports filed with data in this cost center. The cost
center for ``Implantable Devices Charged to Patients'' is effective for
cost reporting periods beginning on or after May 1, 2009. We have
checked the availability of FY 2009 cost reports in the December 31,
2010 quarter ending update of HCRIS, which is the latest upload of FY
2009 cost report data that we could use for this proposed rule. We have
determined that there are only 437 hospitals (out of approximately
3,500 IPPS hospitals) that have completed the ``Implantable Devices
Charged to Patients'' cost center. We do not believe that this is a
sufficient amount of data from which to generate a meaningful analysis
in this particular situation. Therefore, we are not proposing to use
data from the ``Implantable Devices Charged to Patients'' cost center
to create a distinct CCR for Implantable Devised Charged to Patients
for use in calculating the MS-DRG relative weights for FY 2012. We will
reassess the availability of data for the ``Implantable Devices Charged
to Patients'' cost center, and the ``MRI, CT Scans, and Cardiac
Catheterization'' cost centers, for the FY 2013 IPPS rulemaking cycle
and, if appropriate, we will propose to create a distinct CCR at that
time.
F. Preventable Hospital-Acquired Conditions (HACs), Including
Infections
1. Background
a. Statutory Authority
Section 1886(d)(4)(D) of the Act addresses certain hospital-
acquired conditions (HACs), including infections. Section 1886(d)(4)(D)
of the Act specifies that by October 1, 2007, the Secretary was
required to select, in consultation with the Centers for Disease
Control and Prevention (CDC), at least two conditions that: (a) Are
high cost, high volume, or both; (b) are assigned to a higher paying
MS-DRG when present as a secondary diagnosis (that is, conditions under
the MS-DRG system that are CCs or MCCs); and (c) could reasonably have
been prevented through the application of evidence-based guidelines.
Section 1886(d)(4)(D) of the Act also specifies that the list of
conditions may be revised, again in consultation with CDC, from time to
time as long as the list contains at least two conditions.
Section 1886(d)(4)(D)(iii) of the Act requires that hospitals,
effective with discharges occurring on or after October 1, 2007, submit
information on Medicare claims specifying whether diagnoses were
present on admission (POA). Section 1886(d)(4)(D)(i) of the Act
specifies that effective for discharges occurring on or after October
1, 2008, Medicare no longer assigns an inpatient hospital discharge to
a higher paying MS-DRG if a selected condition is not POA. Thus, if a
selected condition that was not POA manifests during the hospital stay,
it is considered a HAC and the case is paid as though the secondary
diagnosis was not present. However, even if a HAC manifests during the
hospital stay, if any nonselected CC/MCC appears on the claim, the
claim will be paid at the higher MS-DRG rate. Under the HAC payment
policy, all CCs/MCCs on the claim must be HACs in order to generate a
lower MS-DRG payment. In addition, Medicare continues to assign a
discharge to a higher paying MS-DRG if a selected condition is POA.
The POA indicator reporting requirement and the HAC payment
provision apply to IPPS hospitals only. Non-IPPS hospitals, including
CAHs, LTCHs, IRFs, IPFs, cancer hospitals, children's hospitals,
hospitals in Maryland operating under waivers, rural health clinics,
federally qualified health centers, RNHCIs, and Department of Veterans
Affairs/Department of Defense hospitals, are exempt from POA reporting
and the HAC payment provision. Throughout this section, the term
``hospital'' refers to an IPPS hospital.
The HAC provision found in section 1886(d)(4)(D) of the Act is part
of an array of Medicare value-based purchasing (VBP) tools that we are
using to promote increased quality and efficiency of care. Those tools
include measuring performance, using payment incentives, publicly
reporting performance results, applying national and local coverage
policy decisions, enforcing conditions of participation, and providing
direct support for providers through Quality Improvement Organization
(QIO) activities. The application of VBP tools, such as this HAC
provision, is transforming Medicare from a passive payer to an active
purchaser of higher value health care services. We are applying these
strategies for inpatient hospital care and across the continuum of care
for Medicare beneficiaries.
These VBP tools are highly compatible with the underlying purposes
as well as existing structural features of Medicare's IPPS. Under the
IPPS, hospitals are encouraged to treat patients efficiently because
they receive the same DRG payment for stays that vary in length and in
the services provided, which gives hospitals an incentive to avoid
unnecessary costs in the delivery of care. In some cases, conditions
acquired in the hospital do not generate higher payments than the
hospital would otherwise receive for cases without these conditions. To
this extent, the IPPS encourages hospitals to avoid complications.
However, the treatment of certain conditions can generate higher
Medicare payments in two ways. First, if a hospital incurs
exceptionally high costs treating a patient, the hospital stay may
[[Page 25811]]
generate an outlier payment. Because the outlier payment methodology
requires that hospitals experience large losses on outlier cases before
outlier payments are made, hospitals have an incentive to prevent
outliers. Second, under the MS-DRG system that took effect in FY 2008
and that has been refined through rulemaking in subsequent years,
certain conditions can generate higher payments even if the outlier
payment requirements are not met. Under the MS-DRG system, there are
currently 259 sets of MS-DRGs that are split into 2 or 3 subgroups
based on the presence or absence of a CC or an MCC. The presence of a
CC or an MCC generally results in a higher payment. However, since we
implemented the HAC provisions, if a secondary diagnosis acquired
during a hospital stay is a HAC and no other CCs or MCCs are present,
the hospital receives a payment under the MS-DRGs as if the HACs were
not present. (We refer readers to section II.D. of the FY 2008 IPPS
final rule with comment period for a discussion of DRG reforms (72 FR
47141).)
b. HAC Selection
Beginning in FY 2007, we have proposed, solicited, and responded to
public comments and have implemented section 1886(d)(4)(D) of the Act
through the IPPS annual rulemaking process. For specific policies
addressed in each rulemaking cycle, we direct readers to the following
publications: the FY 2007 IPPS proposed rule (71 FR 24100) and final
rule (71 FR 48051 through 48053); the FY 2008 IPPS proposed rule (72 FR
24716 through 24726) and final rule with comment period (72 FR 47200
through 47218); the FY 2009 IPPS proposed rule (73 FR 23547) and final
rule (73 FR 48471); the FY 2010 IPPS/RY 2010 LTCH PPS proposed rule (74
FR 24106) and final rule (74 FR 43782); and the FY 2011 IPPS/LTCH PPS
proposed rule (75 FR 23880) and final rule (75 FR 50080). A complete
list of the 10 current categories of HACs is included in section
II.F.2. of this preamble.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50080 through
50101), we did not add any additional HACs or make any changes to
policies already established under the authority of section
1886(d)(4)(D) of the Act.
c. Collaborative Process
In establishing the HAC payment policy under section 1886(d)(4)(D)
of the Act, our experts have worked closely with public health and
infectious disease professionals from across the Department of Health
and Human Services, including CDC, the Agency for Healthcare Research
and Quality (AHRQ), and the Office of Public Health and Science (OPHS),
to identify the candidate preventable HACs, review comments, and select
HACs. CMS and CDC also have collaborated on the process for hospitals
to submit a POA indicator for each diagnosis listed on IPPS hospital
Medicare claims and on the payment implications of the various POA
reporting options. In addition, as discussed below, we have used
rulemaking and Listening Sessions to obtain public input.
d. Application of HAC Payment Policy to MS-DRG Classifications
As described above, in certain cases, application of the HAC
payment policy provisions can result in MS-DRG reassignment to a lower
paying MS-DRG. The following diagram portrays the logic of the HAC
payment policy provision as adopted in the FY 2008 IPPS final rule with
comment period (72 FR 47200) and in the FY 2009 IPPS final rule (73 FR
48471):
[GRAPHIC] [TIFF OMITTED] TP05MY11.003
e. Public Input Regarding Selected and Potential Candidate HACs
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50080 through
50101), we did not add or remove categories of HACs, nor did we make
any changes to previously established policies. However, we continue to
encourage public dialogue about refinement of the HAC list.
Given the timeliness of the HAC discussion, particularly when
considered within the context of recent legislative health care reform
initiatives, we remain eager to engage in an ongoing public dialogue
about the various aspects of this policy. We plan to continue to
include updates and findings from the RTI evaluation on CMS' Hospital-
Acquired Conditions and Present on Admission Indicator Web site
available at: http://www.cms.hhs.gov/HospitalAcqCond/.
[[Page 25812]]
f. POA Indicator Reporting
Collection of POA indicator data is necessary to identify which
conditions were acquired during hospitalization for the HAC payment
provision as well as for broader public health uses of Medicare data.
In the FY 2011 IPPS/LTCH PPS proposed rule, we listed the instructions
and change requests that were issued to IPPS hospitals and also to non-
IPPS hospitals regarding the submission of POA indicator data for all
diagnosis codes on Medicare claims and the processing of non-PPS claims
(75 FR 23381). We also indicated that specific instructions on how to
select the correct POA indicator for each diagnosis code were included
in the ICD-9-CM Official Guidelines for Coding and Reporting, available
on the CDC Web site at: http://www.cdc.gov/nchs/data/icd9/icdguide10.pdf. We reiterate that additional information regarding POA
indicator reporting and application of the POA reporting options is
available on the CMS Web site at: http://www.cms.gov/HospitalAcqCond/.
Historically, we have not provided coding advice. Rather, we
collaborate with the American Hospital Association (AHA) through the
Coding Clinic for ICD-9-CM. We will continue to collaborate with the
AHA to promote the Coding Clinic for ICD-9-CM as the source for coding
advice about the POA indicator.
As discussed in previous IPPS proposed and final rules, there are
five POA indicator reporting options, as defined by the ICD-9-CM
Official Guidelines for Coding and Reporting:
[GRAPHIC] [TIFF OMITTED] TP05MY11.004
In the FY 2009 IPPS final rule (73 FR 48486 through 48487), we
adopted final payment policies to: (1) Pay the CC/MCC MS-DRGs for those
HACs coded with ``Y'' and ``W'' indicators; and (2) not pay the CC/MCC
MS-DRGs for those HACs coded with ``N'' and ``U'' indicators.
Beginning on or after January 1, 2011, hospitals are required to
begin reporting POA indicators using the 5010 electronic transmittal
standards format. The 5010 format removes the need to report a POA
indicator of ``1'' for codes that are exempt from POA reporting.
However, for claims that continue to be submitted using the 4010
electronic transmittal standards format, the POA indicator of ``1'' is
still necessary because of reporting restrictions from the use of the
4010 electronic transmittal standards format.
Hospitals that began reporting with the 5010 format on and after
January 1, 2011, can no longer report a POA indicator of ``1'' for POA
exempt codes. The POA field should instead be left blank for codes
exempt from POA reporting. We have issued CMS instructions on this
reporting change as a One-Time Notification, Pub. No. 100-20,
Transmittal No. 756, Change Request 7024, effective on August 13, 2010.
These instructions, entitled 5010 Implementation-Changes to Present on
Admission (POA) Indicator ``1'' and the K3 Segment, can be located at
the following link on the CMS Web site: http://www.cms.gov/manuals/downloads/Pub100_20.pdf.
We are continuing our efforts to clarify instructions regarding use
of the POA indicator. As discussed in the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50088), we received public comments in response to the FY
2011 IPPS/LTCH PPS proposed rule that expressed concern about the
accuracy of reporting of POA indicators for HACs related to
intracranial injury with loss of consciousness. The codes for loss of
consciousness are listed in the Falls and Trauma HAC category, within
the ``Intracranial Injury'' subcategory. Because loss of consciousness
is a component of intracranial injuries rather than a separate
condition, we agreed that the POA guidelines that instructed coders to
assign an ``N'' indicator if any part of the combination code was not
present on admission did not apply to the loss of consciousness codes.
As a member of the Editorial Advisory Board for the Coding Clinic for
ICD-9-CM, we worked with the American Hospital Association (AHA),
American Health Information Management Association (AHIMA), and the
Centers for Disease Control and Prevention (CDC) to provide additional
clarification on how these conditions should be reported. Additional
guidance on how these cases should be reported can be found in AHA's
Coding Clinic for ICD-9-CM, 2nd Quarter 2010, ``Frequently Asked POA
Questions'' section. That publication clarified the POA reporting for
patients in whom a single code captures the fact that the patient was
admitted as a result of a head injury and then subsequently lost
consciousness after the admission. For these cases, we clarified that
the POA indicator assigned should be ``Y,'' indicating that the head
injury and resulting loss of consciousness occurred prior to (and was
present on) admission.
We expect that this clarification will lead to greater consistency
and accuracy in POA indicator reporting for these conditions. We look
forward to continuing our efforts as part of the AHA's Editorial
Advisory Board for Coding Clinic for ICD-9-CM to provide guidance on
accuracy of coding and the reporting of POA indicators. Hospitals look
to this publication to provide detailed guidance on ICD-9-CM coding and
POA reporting. We encourage
[[Page 25813]]
hospitals to send any other questions about ICD-9-CM codes or POA
indicator selection to the AHA so that the Editorial Advisory Board can
continue its role of providing instruction on the accurate selection
and reporting of both ICD-9-CM codes and POA indicators.
2. Proposed Additions and Revisions to the HAC Policy for FY 2012
a. Contrast-Induced Acute Kidney Injury
We discuss below our analysis for a proposed new condition as a
possible candidate for selection for FY 2012 under section
1886(d)(4)(D) of the Act. As described in more detail in section
II.F.1.a. of this preamble, each HAC must be: (1) High cost, high
volume, or both; (2) assigned to a higher paying MS-DRG when present as
a secondary diagnosis (that is, conditions under the MS-DRG system that
are CCs or MCCs); and (3) could reasonably have been prevented through
the application of evidence-based guidelines. We also discuss other
considerations relating to the selection of a HAC, including any
administrative or operational issues associated with a proposed
condition. For example, the condition may only be able to be identified
by multiple codes, thereby requiring the development of special GROUPER
logic to also exclude similar or related ICD-9-CM codes from being
classified as a CC or an MCC. Similarly, a condition acquired during a
hospital stay may arise from another condition that the patient had
prior to admission, making it difficult to determine whether the
condition was reasonably preventable. We invite public comment on
clinical, coding, and prevention issues on our proposal to add
contrast-induced acute kidney injury as a condition subject to the HAC
payment provision for FY 2012 (for discharges occurring on or after
October 1, 2011).
Contrast-induced acute kidney injury is a significant complication
of the use of iodinated contrast media and accounts for a large number
of cases of hospital-acquired acute kidney injury cases. A published
study has shown that renal failure associated with contrast
administration is correlated with up to 11 percent of cases of renal
failure that occur in hospitals (Nash, et al.: American Journal on
Kidney Disease, 2002, Vol. 39, pp. 930-936). Patients who experience
acute kidney injury have an increased risk of inhospital mortality even
after adjustments for disease comorbidities (McCullough, J.: American
College of Cardiology, 2008, pp. 1419 through 1428). Data suggest that
the risk for mortality extends beyond the period of hospitalization,
resulting in 1-year and 5-year mortality rates significantly higher
than those patients who have not developed acute kidney injury. In
addition, contrast-induced acute kidney injury is associated with an
increased incidence of myocardial infarction, bleeding requiring
transfusion, and prolonged hospital stays (McCullough, J.: American
Journal of Medicine, 1997, Vol. 103, pp. 368 through 375). We note that
``acute kidney injury'' is a new terminology endorsed by the National
Kidney Foundation to replace ``acute renal failure.''
There is not a unique code that identifies kidney injury. However,
kidney injury can be identified as a subset of discharges with ICD-9-CM
diagnosis code 584.9 (Acute kidney failure, unspecified). Our clinical
advisors believe that diagnosis code 584.9, in combination with the
associated procedure codes below, can accurately identify contrast-
induced acute kidney injury:
88.40 (Arteriography using contrast material, unspecified
site)
88.41 (Arteriography of cerebral arteries)
88.42 (Aortography)
88.43 (Arteriography of pulmonary arteries)
88.44 (Arteriography of other intrathoracic vessels)
88.45 (Arteriography of renal arteries)
88.46 (Arteriography of placenta)
88.47 (Arteriography of other intra-abdominal arteries)
88.48 (Arteriography of femoral and other lower extremity
arteries)
88.49 (Arteriography of other specified sites)
88.50 (Angiocardiography, not otherwise specified)
88.51 (Angiocardiography of venae cavae)
88.52 (Angiocardiography of right heart structures)
88.53 (Angiocardiography of left heart structures)
88.54 (Combined right and left heart angiocardiography)
88.55 (Coronary arteriography using a single catheter)
88.56 (Coronary arteriography using two catheters)
88.57 (Other and unspecified coronary arteriography)
88.58 (Negative-contrast cardiac roentgenography)
88.59 (Intra-operative coronary fluorescence vascular
angiography)
88.60 (Phlebography using contrast material, unspecified
site)
88.61 (Phlebography of veins of head and neck using
contrast material)
88.62 (Phlebography of pulmonary veins using contrast
material)
88.63 (Phlebography of other intrathoracic veins using
contrast material)
88.64 (Phlebography of the portal venous system using
contrast material)
88.65 (Phlebography of other intra-abdominal veins using
contrast material)
88.66 (Phlebography of femoral and other lower extremity
veins using contrast material)
88.67 (Phlebography of other specified sites using
contrast material)
87.71 (C.A.T. of kidney)
87.72 (Other nephrotomogram)
87.73 (Intravenous pyelogram)
87.74 (Retrograde pyelogram)
87.75 (Percutaneous pyelogram)
We are proposing to identify contrast-induced acute kidney injury
with diagnosis code 584.9 in combination with one or more of the above
associated procedure codes.
We also considered identifying contrast-induced acute kidney injury
through the use of external injury codes, or E-codes. Code E947.8
(Other drugs and medicinal substances) has an inclusion term ``Contrast
media used for diagnostic x-ray procedures'' to identify the use of
contrast. However, we note that we do not currently require the
reporting of E-codes for the HAC payment provisions under the IPPS.
Therefore, we would be unable to rely on the identification of
contrast-induced acute kidney injury through E-codes on Medicare IPPS
HAC claims.
Section 1886(d)(4)(D) of the Act requires that a HAC be a condition
that is ``high cost, high volume, or both.'' In FY 2009, there were
38,324 inpatient discharges coded with acute renal failure as specified
by ICD-9-CM diagnosis code 584.9 reported as not present on admission
(POA status = N) when reported with one of the above procedure codes
submitted through Medicare claims. The cases had an average charge of
$29,122 for the entire hospital stay. Studies suggest the additional
average cost per day for a patient who has acquired contrast-induced
acute kidney injury is $2,654. Other data report patients stays
increases by 3.75 days once they have acquired the diagnosis
(Subramanian, et al.: Journal of Medical Economics, 2007, Vol. 10, pp.
119 through 134).
There are widely recognized guidelines for the prevention of acute
kidney injury that address the prevention of contrast-induced acute
kidney injury, and we believe the condition is reasonably preventable.
One of these guidelines can be found at: http://www.renal.org/Clinical/
[[Page 25814]]
GuidelineSection/AcuteKidneyInjury.aspx.
The condition of contrast-induced acute kidney injury as specified
in our proposal is a CC under the MS DRGs.
We have not identified any additional administrative or operational
difficulties with proposing this condition as a HAC. We invite public
comment on whether contrast-induced acute kidney injury meets the
requirements set forth under section 1886(d)(4)(D) of the Act, as well
as other coding and prevention issues associated with our proposal to
add this injury as a condition subject to the HAC payment provision for
FY 2012 (for discharges occurring on or after October 1, 2011). We are
particularly interested in receiving comments on the degree to which
contrast-induced acute kidney injury is reasonably preventable through
the application of evidence-based guidelines.
b. New Diagnosis Codes Proposed to be Added to Existing HACs
As changes to diagnosis codes and new diagnosis codes are proposed
and finalized for the list of CCs and MCCs, we modify the list of
selected HACs to reflect these changes. Included in Table 6A, which is
listed in section VI. of the Addendum to this proposed rule and
available via the Internet, are five new ICD-9-CM diagnosis codes that
we are proposing to add to three of the current HAC categories. We are
proposing to add two new codes for the Falls and Trauma HAC category,
two new codes for the Surgical Site Infection (SSI) Following Certain
Bariatric Procedures HAC category, and one new code for the Deep Vein
Thrombosis and Pulmonary Embolism (DVT/PE) Following Certain Orthopedic
Procedures HAC category. The two new diagnosis codes that we are
proposing to add to the Falls and Trauma HAC category are code 808.44
(Multiple closed pelvic fractures without disruption of pelvic circle)
and code 808.54 (Multiple open pelvic fractures without disruption of
pelvic circle). These codes fall within the range of the fracture code
subcategory (800 through 829). The two new diagnosis codes that we are
proposing to add to the Surgical Site Infection (SSI) Following Certain
Bariatric Procedures HAC category are code 539.01 (Infection due to
gastric band procedure) and code 539.81 (Infection due to other
bariatric procedure). We believe these diagnosis codes are appropriate
for inclusion in the existing category when reported as a secondary
diagnosis with the specified principal diagnosis code of morbid obesity
(code 278.01) and one of the designated bariatric procedure codes (code
44.38, 44.39, or 44.95). Lastly, the one new diagnosis code that we are
proposing to add to the Deep Vein Thrombosis and Pulmonary Embolism
(DVT/PE) Following Certain Orthopedic Procedures HAC category is code
415.13 (Saddle embolus of pulmonary artery). Diagnosis code 415.13
would be applicable when reported along with one of the following
procedures codes describing certain orthopedic procedures: 00.85
through 00.87, 81.51, 81.52, or 81.54. Shown in the table below are
these five new diagnosis codes with their corresponding descriptions
and their proposed CC/MCC designations.
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We are inviting public comments on the proposed adoption of theses
five new ICD-9-CM diagnosis codes as CC/MCCs that are listed above,
which, if finalized, would be added to the current Falls and Trauma HAC
category, Surgical Site Infection (SSI) Following Certain Bariatric
Procedures HAC category and Deep Vein Thrombosis and Pulmonary Embolism
(DVT/PE) Following Certain Orthopedic Procedures HAC category and would
be subject to the HAC payment provision for FY 2012.
c. Revision to HAC Subcategory Title
After publication of the FY 2011 IPPS/LTCH PPS final rule, we
received a comment stating that the subcategory title ``Electric
Shock'' that is included in the Falls and Trauma HAC category was
misleading. The commenter stated that this subcategory title did not
accurately describe the CC/MCC ICD-9-CM diagnoses codes (991 through
994) contained within this subcategory. The commenter requested that
CMS develop a new title that would more accurately describe this group
of codes.
We agree with the commenter that the HAC subcategory title
``Electric Shock'' is potentially misleading because the codes included
within these ranges contain a variety of injuries, including the
following:
Category 991 (Effects of Reduced Temperature)
Category 992 (Effects of Heat and Light)
Category 993 (Effects of Air Pressure)
Category 994 (Effects of Other External Causes)
We are proposing to change the title of this HAC subcategory from
``Electric Shock'' to ``Other Injuries'' because it includes a variety
of injury codes. The subcategory will continue to include the codes
within the 991-994 code ranges appearing on the CC/MCC list. We are
proposing no changes to the list of codes in this subcategory; we are
simply proposing to rename the subcategory title. We invite public
comments on this proposed title change to the HAC subcategory from
``Electric Shock'' to ``Other Injuries'' for FY 2012.
d. Conclusion
The following table lists the current HAC categories and the ICD-9-
CM codes that identify the conditions and have been finalized through
FY 2011. For FY 2012, we are proposing that these conditions continue
to be subject to the HAC payment provision, along with the creation of
a new HAC category for Contrast-Induced Acute Kidney Injury as
discussed in section II.F.2.a. of this preamble. In addition, we are
proposing to add five new ICD-9-CM diagnosis codes and to revise the
title of the ``Electric Shock'' subcategory in the Falls and Trauma HAC
category.
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We refer readers to section II.F.6. of the FY 2008 IPPS final rule
with comment period (72 FR 47202 through 47218) and to section II.F.7.
of the FY 2009 IPPS final rule (73 FR 48474 through 48486) for detailed
analyses supporting the selection of each of the HACs selected through
FY 2011.
3. RTI Program Evaluation Summary
a. Background
On September 30, 2009, a contract was awarded to Research Triangle
Incorporated (RTI) to evaluate the impact of the Hospital-Acquired
Condition-Present on Admission (HAC-POA) provisions on the changes in
the incidence of selected conditions, effects on Medicare payments,
impacts on coding accuracy, unintended consequences, and infection and
event rates. This is an intra-agency project with funding and technical
support coming from CMS, OPHS, AHRQ, and CDC. The evaluation will also
examine the implementation of the program and evaluate additional
conditions for future selection.
RTI's evaluation of the HAC-POA provisions is divided into several
parts. In the FY 2011 IPPS/LTCH PPS final rule (50085 through 50101),
we summarized the analyses by RTI that had been completed at that time.
These RTI analyses of POA indicator reporting, frequencies and net
savings associated with current HACs, and frequencies of previously
considered candidate HACs reflected MedPAR claims from October 2008
through September 2009.
b. FY 2009 Data Analysis
As we describe above, we have provided instructions to IPPS
hospitals and non-IPPS hospitals regarding the submission of POA
indicator data for all diagnosis codes on Medicare claims and the
processing of non-PPS claims (75 FR 23381) and note that specific
instructions on how to select the correct POA indicator for each
diagnosis code were included in the ICD-9-CM Official Guidelines for
Coding and Reporting, available on the CDC Web site at: http://www.cdc.gov/nchs/data/icd9/icdguide10.pdf. After publication of the FY
2011 IPPS/LTCH PPS final rule, we identified a discrepancy between the
claims data that hospitals submitted and the CMS data file used to
calculate the HAC measures. Specifically, this error led to incorrect
HAC assignments in cases where a hospital reported an external cause of
injury (E-code). Since then, we have corrected this error in the data
file.
As a result, the RTI analysis of the HAC-POA program that was
conducted using FY 2009 claims data will be updated using the corrected
data file. We do not expect the corrected data to have a material
impact on our previous findings for FY 2009. Revised data tables will
be made publicly available on the CMS Web site at http://www.cms.gov/HospitalAcqCond/01_Overview.asp and the RTI Web site at http://www.rti.org/reports/cms/ soon after publication of this proposed rule.
c. FY 2010 Data Analysis
RTIs analysis of the FY 2010 MedPAR data file for the HAC-POA
program evaluation was not fully complete in time for publication in
this proposed rule. We will provide the results from the study on the
CMS Web site at http://www.cms.gov/HospitalAcqCond/01_Overview.asp and
on the RTI Web site at http://www.rti.org/reports/cms/ when available.
We anticipate that the examination of FY 2010 MedPAR data will be
completed soon after publication of this proposed rule. We invite
public comment on RTI's analysis of the FY 2010 MedPAR data for the
HAC-POA program.
G. Proposed Changes to Specific MS-DRG Classifications
In this proposed rule, we are inviting public comment on each of
the MS-DRG classification proposed changes described below, as well as
our proposals to maintain certain existing MS-DRG classifications,
which are also discussed below. In some cases, we are proposing changes
to the MS-DRG classifications based on our analysis of claims data. In
other cases, we are proposing to maintain the existing MS-DRG
classification based on our analysis of claims data.
1. Pre-Major Diagnostic Categories (Pre-MDCs)
a. Noninvasive Mechanical Ventilation
We received a request from the National Association for Medical
Direction of Respiratory Care (NAMDRC) which suggested that we
[[Page 25817]]
create a new MS-DRG for patients with certain respiratory conditions
who receive noninvasive mechanical ventilation (NIV). The requestor
stated that patients who receive NIV are almost always placed within an
intensive care unit (ICU) or an emergency department and use the
resources available in those areas. The requestor recommended that this
new MS-DRG recognize current practice and allow for appropriate
reimbursement for the technical complexity and monitoring required for
NIV as a form of acute life support. According to the requestor, NIV
has evolved to become first-line supportive therapy for several forms
of acute respiratory failure. Lastly, the requestor recommended that
the new MS-DRG identify NIV usage of approximately 6 to 12 hours to
account for the ``legitimate but very short term use of this therapy.''
Historically, the concept of mechanical ventilation for critically
ill patients included establishment of an artificial airway,
invasively, through endotracheal intubation or a tracheostomy.
According to the requestor, a significant portion of these patients can
now be treated through noninvasive mechanical ventilation with the use
of a face or nasal mask. In the ICD-9-CM classification system, NIV is
described by procedure code 93.90 (Noninvasive mechanical ventilation),
while invasive mechanical ventilation is described by procedure codes
96.70 (Continuous invasive mechanical ventilation of unspecified
duration), 96.71 (Continuous invasive mechanical ventilation for less
than 96 consecutive hours), and 96.72 (Continuous invasive mechanical
ventilation for 96 consecutive hours or more). The requestor submitted
external data to illustrate trends in NIV use over the past decade.
These data were derived from a survey conducted during 2002-2003 of
several hospitals located in Massachusetts and Rhode Island. The
requestor believed that these data indicate patients with exacerbation
of chronic obstructive pulmonary disease (COPD), acute pulmonary edema,
or worsening congestive heart failure are successfully managed with
NIV.
We analyzed FY 2010 MedPAR claims data that are representative of
the respiratory conditions the requestor identified when reported with
NIV. We found 14 MS-DRGs reporting procedure code 93.90 using the above
specifications. The MS-DRGs are as follows:
Pre-MDC MS-DRGs:
MS-DRG 003 (ECMO or Tracheostomy with Mechanical
Ventilation 96+ Hrs or PDX Except Face, Mouth & Neck with Major O.R.)
MS-DRG 004 (Tracheostomy with Mechanical Ventilation 96+
Hrs or PDX Except Face, Mouth & Neck without Major O.R.) MS-DRGs:
MS-DRG 189 (Pulmonary Edema & Respiratory Failure)
MS-DRG 190 (Chronic Obstructive Pulmonary Disease with
MCC)
MS-DRG 191 (Chronic Obstructive Pulmonary Disease with CC)
MS-DRG 192 (Chronic Obstructive Pulmonary Disease without
CC/MCC)
MS-DRG 204 (Respiratory Signs & Symptoms)
MS-DRG 207 (Respiratory System Diagnosis with Ventilator
Support 96+ Hours)
MS-DRG 208 (Respiratory System Diagnosis with Ventilator
Support <96 Hours)
MS-DRG 222 (Cardiac Defibrillator Implant with Cardiac
Catheterization with AMI/HF/Shock with MCC)
MS-DRG 223 (Cardiac Defibrillator Implant with Cardiac
Catheterization with AMI/HF/Shock without MCC)
MS-DRG 291 (Heart Failure & Shock with MCC)
MS-DRG 292 (Heart Failure & Shock with CC)
MS-DRG 293 (Heart Failure & Shock without CC/MCC)
As shown in the list above and in the chart below, the MS-DRGs
identified also include those that describe invasive mechanical
ventilation. The ICD-9-CM coding convention instructs the reporting of
both types of mechanical ventilation when patients are admitted on
noninvasive mechanical ventilation that subsequently requires invasive
mechanical ventilation therapy.
The data demonstrate that, in certain MS-DRGs, for example, MS-DRGs
003, 004, and 222 that the cases with NIV primarily have shorter
lengths of stay and lower average costs compared to all the cases in
those MS-DRGs. Alternatively, the data for MS-DRGs 189, 190, 191, and
192 demonstrate that the cases with NIV have an increased length of
stay and higher average costs, but a relatively low volume compared to
all the cases in those MS-DRGs. Combining the current surgical and
medical MS-DRGs into a single, new MS-DRG would include noninvasive
mechanical ventilation cases with a wide range of costs for several
indications with varying levels of severity. The average costs for
these cases range from a low of $5,794 in MS-DRG 293 to a high of
$95,940 in MS-DRG 003. We believe the cases are more appropriately
assigned and reimbursed in the MS-DRGs to which they are currently
assigned.
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[[Page 25819]]
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As mentioned in the requestor's comments, and our clinical advisors
agree, NIV encompasses a broad range of interventions and utilizes
periods of time that range from a few hours to a few days of continuous
chronic use. Resource requirements are vastly different for the various
intended indications. For example, as also noted by the requestor,
respiratory failure can have many forms. Our clinical advisors provided
three subsets of patients as an example: Those that are given oxygen
support, those that are given pressure (rate) support, and those that
are intubated. There is overlap between the three subsets in that a
patient may require one, two, or all three types of therapy and there
are multiple options for any given patient. Our clinical advisors
stated that these various subsets of patients can require significantly
different resources. Lastly, respiratory failure reflects the severity
of the diagnosis (it is a complication) while NIV is a therapeutic
option. Unlike a major surgical intervention where the intervention
creates morbidity, NIV merely reflects the severity of the underlying
respiratory failure.
The requestor further noted in its comments that a significant
number of patients who receive NIV fail this therapy and must be
intubated and subsequently placed on a ventilator. However, those
patients who require both noninvasive and invasive mechanical
ventilation are already accounted for in the invasive mechanical
ventilation MS-DRGs. Similar to patients with respiratory failure,
patients with heart failure and shock have a comparable severity of
illness where each condition reflects the severity of the diagnosis (it
is a complication). Therefore, the cost is already reflected in the
high resource expenditure estimates for MS-DRGs 222, 223, 291, 292, and
293, as are all other severity-correlated resource costs.
In conclusion, we believe that the data do not support the creation
of a single MS-DRG to identify NIV cases. As stated previously, the
average costs for the NIV cases range from a low of $5,794 in MS-DRG
293 to a high of $95,940 in MS-DRG 003. If created, this single MS-DRG
would include patients with a wide range in average costs. We believe
the cases are more appropriately captured in their current MS-DRGs. In
addition to the clinical points raised by our clinical advisors and
outlined above, the volume and length of stay data for cases where NIV
was reported with the specified respiratory conditions further support
their present MS-DRG assignments. Therefore, we are not proposing to
create a new MS-DRG for patients receiving NIV. We invite public
comment on our proposal not to create a new MS-DRG for patients
receiving NIV for FY 2012.
b. Debridement With Mechanical Ventilation Greater Than 96 Hours With
Major Operating Room (O.R.) Procedure
We received a comment concerning the use of excisional debridement
in cases with complications that lead to the need for extended
mechanical ventilation. The commenter stated that patients undergoing
procedures such as excisional debridement may also develop extensive
complications such as respiratory failure and sepsis. The commenter
indicated that these patients tend to use significant resources. The
commenter stated that these cases are currently assigned to MS-DRG 207
(Respiratory System Diagnosis with Ventilator Support 96+ Hours) or MS-
DRG 870 (Septicemia with or Severe Sepsis with Mechanical Ventilation
96+ Hours). The commenter expressed a concern that the operating room
(OR) procedure of the excisional debridement was not fully recognized
through either of these two medical MS-DRGs. The commenter requested
that a new MS-DRG be created that would include mechanical ventilation
of greater than 96 hours with the presence of an additional major OR
procedure.
We agree that patients with long-term mechanical ventilation
greater than 96 hours and a major OR procedure utilize extensive
resources. However, we point out that these patient cases are not
currently assigned to MS-DRG 207 or MS-DRG 870 as the commenter stated.
Many of these long-term mechanical ventilation patient cases are
instead assigned to MS-DRG 003 (ECMO or Tracheostomy with Mechanical
Ventilation 96+ Hours or PDX, Excluding Face, Mouth & Neck with Major
Operating Room Procedure). Cases that require mechanical ventilation
for greater than 96 hours, that have a tracheostomy performed, and that
have a procedure on the major O.R. list (including excisional
debridement) are assigned to MS-DRG 003. We specifically created MS-DRG
003 to capture these complicated patients on long-term mechanical
ventilation who also have a major O.R. procedure. Therefore, we are not
proposing to create a second MS-DRG to capture these patients at this
time. We welcome public comments on our proposal not to create a new
MS-DRG for these patients for FY 2012.
c. Autologous Bone Marrow Transplant
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50101), effective
October 1, 2011, we deleted MS-DRG 009 (Bone Marrow Transplant) and
created two new MS-DRGs: MS-DRG 014 (Allogeneic Bone Marrow Transplant)
and MS-DRG 015 (Autologous Bone Marrow Transplant). We created new MS-
DRGs 014 and 015 because of differences in costs associated with these
procedures. During the comment period for the FY 2011 IPPS/LTCH PPS
proposed rule, two commenters who supported the proposed
reclassification of the bone marrow transplant MS-DRGs requested
further refinement to account for severity of illness. At that time, we
did not subdivide MS-DRG 014 and MS-DRG 015 based on severity of
illness because they did not meet our criteria for subdivision (75 FR
50102).
As we outlined in our FY 2008 IPPS/LTCH PPS final rule with comment
period (72 FR 47169), in designating an MS-DRG as one that would be
subdivided into subgroups based on the presence of a CC or an MCC, we
developed a set of criteria to facilitate our decision-making process.
The original criteria were based on average charges; we now use average
costs (FY 2007 IPPS final rule, 71 FR 47882). In order to warrant
creation of a CC or an MCC subgroup within a base MS-DRG, the subgroup
must meet all of the following five criteria:
A reduction in variance of cost of at least 3 percent.
At least 5 percent of the patients in the MS-DRG fall
within the CC or MCC subgroup.
At least 500 cases are in the CC or MCC subgroup.
There is at least a 20-percent difference in average cost
between subgroups.
There is a $2,000 difference in average cost between
subgroups.
We examined FY 2010 MedPAR claims data for these newly created MS-
DRGs, and based on these criteria, we identified MS-DRG 015 as a
possible MS-DRG that would require further subdivision. MS-DRG 014 was
not identified, as this MS-DRG did not meet the criteria stated above
for possible subdivision. Autologous bone marrow transplantation
utilizes the patient's own bone marrow or stem cells in the treatment
of certain cancers and bone marrow diseases. These procedures restore
stem cells that have been destroyed either by chemotherapy and/or
radiation treatment.
In our analysis, we found 1,338 total cases assigned to MS-DRG 015
with average costs of approximately $38,608
[[Page 25820]]
and an average length of stay of approximately 18.8 days. There were
1,092 cases that had a secondary diagnosis code reported on the claim
that was designated as a CC or an MCC with average costs of
approximately $40,974 and an average length of stay of approximately
19.7 days. There were 246 cases without a secondary diagnosis code
reported on the claim that had a CC or an MCC designation with average
cost of approximately $28,105 and an average length of stay of
approximately 14.6 days. The following table illustrates our findings:
[GRAPHIC] [TIFF OMITTED] TP05MY11.009
We found that the cases reported with a secondary diagnosis code of
a CC or an MCC were more costly and had a longer average length of stay
than both the overall cases assigned to MS-DRG 015 and the cases
without a CC or an MCC. The cases without a CC or an MCC were less
costly and had a shorter average length of stay than both the cases
with a CC or an MCC and the overall cases assigned to that MS-DRG.
Based on our analysis, all five criteria for a subgroup division were
met, thereby supporting a 2-level severity split for MS-DRG 015.
Therefore, we are proposing to delete MS-DRG 015 and create two new MS-
DRGs:
Proposed MS-DRG 016 (Autologous Bone Marrow Transplant
with MCC/CC); and
Proposed MS-DRG 017 (Autologous Bone Marrow Transplant
without MCC/CC).
We invite public comment on our proposal to delete MS-DRG 015 and
create two new MS-DRGs 016 and 017 for autologous bone marrow
transplant for FY 2012.
2. MDC 1 (Diseases and Disorders of the Nervous System): Rechargeable
Dual Array Deep Brain Stimulation System
We received a public comment in response to the FY 2011 IPPS/LTCH
PPS proposed rule regarding the MS-DRG assignment for rechargeable dual
array deep brain neurostimulators. In the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50128), we indicated that we considered this comment
outside of the scope of the proposed rule as we did not propose any
changes for these procedures for FY 2011. However, we are addressing
this issue in this FY 2012 proposed rule.
Deep brain stimulation is a surgical treatment that involves the
implantation of a neurostimulator, used in the treatment of essential
tremor, Parkinson's disease, dystonia, and chronic pain. The commenter
recommended that CMS assign the combination of procedure codes
representing rechargeable systems for deep brain stimulation therapy,
procedure code 02.93 (Implantation or replacement of intracranial
neurostimulator lead(s)) and procedure code 86.98 (Insertion or
replacement of dual array rechargeable neurostimulator pulse generator)
to MS-DRG 023 (Craniotomy with Major Device Implant/Acute Complex CNS
PDX with MCC or Chemo Implant) and MS-DRG 024 (Craniotomy with Major
Device Implant/Acute Complex CNS PDX without MCC).
The commenter stated that this recommendation would allow all full
system dual array deep brain stimulation cases to be appropriately
grouped to the same MS-DRGs. Currently, procedure codes 02.93 and 86.98
are assigned to MS-DRG 025 (Craniotomy and Endovascular Intracranial
Procedures with MCC), MS-DRG 026 (Craniotomy and Endovascular
Intracranial Procedures with CC), and MS-DRG 027 (Craniotomy and
Endovascular Intracranial Procedures without CC/MCC), while the
procedure codes for the nonrechargeable dual array systems, procedure
codes 02.93 and 86.95 (Insertion or replacement of dual array
neurostimulator pulse generator, not specified as rechargeable), are
already assigned to MS-DRGs 023 and 024. The commenter stated that the
procedures to implant the rechargeable and nonrechargeable dual array
systems are similar clinically as well as comparable in resource
utilization.
We analyzed FY 2010 MedPAR data and found a total of 16 full system
rechargeable dual array deep brain stimulation systems reported with
procedure codes 02.93 and 86.98 assigned to MS-DRGs 025 through 027. We
found one case assigned to MS-DRG 025 and one case assigned to MS-DRG
026. The majority of the cases, 14, were assigned to MS-DRG 027, with
average costs of approximately $23,870 and an average length of stay of
approximately 2.2 days. We found that the deep brain stimulation cases
assigned to MS-DRG 027 had higher average costs than the overall cases
assigned to MS-DRG 027 of approximately $14,200. However, the average
length of stay was shorter for these cases than the overall length of
stay for MS-DRG 027 cases of approximately 3.7 days.
We also examined the data for the nonrechargeable dual array
systems to assess the commenter's assumption that both the rechargeable
and nonrechargeable dual array systems are similar in resource use. We
found 155 total nonrechargeable dual array systems (procedure codes
02.93 and 86.95) assigned to MS-DRGs 023 and 024. There were 5 cases
assigned to MS-DRG 023, with average costs of approximately $36,159 and
an average length of stay of approximately 10 days. We found that the
majority of the cases, 150, were assigned to MS-DRG 024, with average
costs of approximately $25,855 and an average length of stay of
approximately 2.2 days. We believe that these data support the
commenter's statement that, for the majority of these cases, the
resource use is similar for both systems.
For comparison purposes, if we propose the changes that the
commenter suggested, those deep brain stimulation cases currently
assigned to MS-DRG 027 and the one case assigned to MS-DRG 026 (with
average costs of approximately $27,836) would be reassigned to MS-DRG
024. The average costs of approximately $23,870 of these deep brain
stimulation cases assigned to MS-DRG 027 are similar to the overall
average costs of approximately $23,249 for MS-DRG 024. The one case
assigned to MS-DRG 025 (with average costs of approximately $29,361)
would be reassigned to MS-DRG 023 (with average costs of approximately
$34,168). The following table illustrates our findings:
[[Page 25821]]
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Based on our findings, we believe that the data support reassigning
the combination of procedure codes representing rechargeable systems
for deep brain stimulation therapy, code 02.93 and code 86.98, to MS-
DRGs 023 and 024. Our clinical advisors support this reassignment.
Therefore, we are proposing to assign rechargeable dual array systems
for deep brain stimulation cases identified by reporting both procedure
codes 02.93 and 86.98 to MS-DRGs 023 and 024 for FY 2012. We invite
public comment on our proposal to assign these cases to MS-DRG 023 and
024 for FY 2012.
3. MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth, and Throat):
Skull Based Surgeries
We received a request from a commenter recommending that CMS
reclassify skull-based surgical procedures that are currently assigned
to MS-DRGs 135 and 136 (Sinus and Mastoid Procedures with CC/MCC and
without CC/MCC, respectively) and reassign them to MS-DRGs 025, 026,
and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC,
with CC, and without CC/MCC, respectively). The commenter stated that
the current MS-DRG assignment does not reflect the resource utilization
and technical complexity of these difficult procedures when performed
for anterior skull base tumors.
Skull (or cranial) based surgery is performed for a variety of
serious medical conditions including esthesioneuroblastomas, which are
rare, malignant tumors that arise from the epithelium overlying the
olfactory bulb; sinonasal melanomas, which are malignant melanomas that
may develop in the mucosa of the nose and sinuses; and sinonasal
undifferentiated carcinomas, which are rapidly growing malignant tumors
arising in the nasal cavity and/or sinuses. These types of conditions
are generally identified by the following ICD-9-CM diagnosis codes:
160.0 (Malignant neoplasm of nasal cavities)
160.1 (Malignant neoplasm of auditory tube, middle ear,
and mastoid air cells)
160.2 (Malignant neoplasm of maxillary sinus)
160.3 (Malignant neoplasm of ethmoidal sinus)
160.4 (Malignant neoplasm of frontal sinus)
160.5 (Malignant neoplasm of sphenoidal sinus)
160.8 (Malignant neoplasm of other accessory sinuses)
160.9 (Malignant neoplasm of accessory sinus, unspecified)
210.7 (Benign neoplasm of nasopharynx)
212.0 (Benign neoplasm of nasal cavities, middle ear, and
accessory sinuses)
According to the commenter, procedure code 22.63 (Ethmoidectomy)
describes the type of surgery being performed for these patients and is
currently assigned to MS-DRGs 135 and 136.
Using the FY 2010 MedPAR file, we examined data on cases identified
by procedure code 22.63 when reported with one of the above listed
diagnosis codes in MS-DRGs 135 and 136. We found a total of 402 cases
in MS-DRG 135 with an average length of stay of 6.30 days and average
costs of $12,869. We found only 23 cases in MS-DRG 135 identified by
procedure code 22.63 with one of the diagnosis codes listed above with
an average length of stay of 3.96 days and average costs of $10,510. In
MS-DRG 136, there were a total of 320 cases with an average length of
stay of 2.36 days and average costs of $6,683. We found only 27 cases
in MS-DRG 136 identified by procedure code 22.63 with one of the
diagnosis codes listed above with an average length of stay of 2.04
days and average costs of $6,844. As shown in the table below, the
cases reporting procedure code 22.63 in MS-DRGs 135 and 136 have a
lower volume, a shorter length of stay, and primarily lower average
costs compared to all cases in MS-DRGs 135 and 136. The data
demonstrate that these cases are appropriately assigned to their
current MS-DRG classifications.
[[Page 25822]]
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We also analyzed claims data for MS-DRGs 25 through 27. We
determined that if the cases identified by procedure code 22.63 were to
be reassigned to MS-DRGs 25-27, they would be significantly overpaid.
As shown in the table below, we found that the average costs for these
MS-DRGs range from $14,200 to $29,524.
[GRAPHIC] [TIFF OMITTED] TP05MY11.012
In summary, the data do not support moving cases with procedure
code 22.63 when reported with one of the previously listed diagnosis
codes from MS-DRGs 135 and 136 to MS-DRGs 25, 26 and 27. We invite
public comment on our proposal not to make any MS-DRG modifications for
these codes for FY 2012.
4. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Percutaneous Mitral Valve Repair With Implant
Procedure code 35.97 (Percutaneous mitral valve repair with
implant) was created for use beginning October 1, 2010 (FY 2011) after
the concept of a percutaneous valve repair was presented and approved
at the February 2010 ICD-9-CM Coordination and Maintenance Committee
Meeting. Procedure code 35.97 was created at that time to describe the
MitraClip TM device and any other percutaneous mitral valve
repair devices currently on the market. This procedure code is assigned
to the following MS-DRGs: 231 and 232 (Coronary Bypass with PTCA with
MCC and without MCC, respectively); 246 (Percutaneous Cardiovascular
Procedure with Drug-Eluting Stent with MCC or 4+ Vessels/Stents); 247
(Percutaneous Cardiovascular Procedure with Drug-Eluting Stent without
MCC); 248 (Percutaneous Cardiovascular Procedure with Non-Drug-Eluting
Stent with MCC or 4+ Vessels/Stents); 249 (Percutaneous Cardiovascular
Procedure with Non-Drug-Eluting Stent without MCC); 250 (Percutaneous
Cardiovascular Procedure without Coronary Artery Stent or AMI with
MCC); and 251 (Percutaneous Cardiovascular Procedure without Coronary
Artery Stent or AMI without MCC).
According to the Food and Drug Administration's (FDA's) terms of
the clinical trial for MitraClipTM, the device is to be
implanted in patients without any additional surgeries performed.
Therefore, based on these terms, we believe that the most likely MS-DRG
assignments would be MS-DRGs 250 and 251, as described above. However,
because procedure code 35.97 has only been in use since October 1,
2010, there are no claims data in the most recent MedPAR update file
with which to evaluate any alternative MS-DRG assignments. Therefore,
we are not proposing to make any MS-DRG changes for procedure code
35.97 for FY 2012. We are proposing to keep procedure code 35.97 in its
current MS-DRG assignments. We invite public comment on this proposal.
b. Aneurysm Repair Procedure Codes
Thoracic aorta defects, such as aneurysm, dissection, or injury,
are uncommon but serious conditions that may arise from a disease or an
accident. Some patients can be medically managed but most patients are
treated with surgery. Often these defects result in death if they are
not diagnosed and treated promptly. Currently, there are two techniques
used for repair of aortic defects; both are O.R. procedures performed
in an inpatient hospital setting. These two procedures are described by
ICD-9-CM procedure codes 38.45 (Resection of vessel with replacement,
thoracic vessel) and 39.73 (Endovascular implantation of graft in
thoracic aorta). Both procedure codes 38.45 and 39.73 are currently
assigned to MS-DRGs 237 (Major Cardiovascular Procedures with MCC or
Thoracic Aortic Aneurysm Repair) and 238 (Major Cardiovascular
Procedures without MCC).
We received a request that we consider the reassignment of
procedure codes 38.45 and 39.73 within the MS-DRG structure by removing
the procedure codes from MS-DRGs 237 and 238 and adding them to a more
clinically coherent set of MS-DRGs reflecting higher resource
consumption. The requestors believed that, based on their analysis of
MedPAR claims data of
[[Page 25823]]
MS-DRGs 237 and 238, the resource utilization of both the endovascular
and open repairs of the abdominal and thoracic aortas are higher than
the overall average resource utilization for the MS-DRGs to which these
procedures are currently assigned. The requestors also believed that an
unusually high number of cases probably fall into cost outlier status.
We reviewed the MedPAR claims data for these two procedure codes.
Our findings are shown in the following two tables.
[GRAPHIC] [TIFF OMITTED] TP05MY11.013
Our findings of the analysis of the cases with procedure code 39.73
showed that the average costs are substantially higher than those costs
for the cases overall in both MS-DRGs 237 and 238. We found that the
average length of stay for the 1,851 cases identified in MS-DRG 237 is
somewhat lower at 7.73 days than the average length of stay of 10.26
days in cases not containing procedure code 39.73.
Our findings of the analysis of the cases with procedure code 38.45
showed that both the average costs and the average length of stay are
considerably higher than the average costs and the average length of
stay for those cases without procedure code 38.45.
In addition, we reviewed the cases in which both procedure codes
38.45 and 39.73 were documented during the same admission. As can be
seen in the charts below, we found 22 cases in which both procedure
codes 38.45 and 39.73 were reported. Therefore, the sum of the values
in the next two charts below will differ from the charts above because
of the cases containing both procedure codes that have been removed and
the data have been reworked.
[[Page 25824]]
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[GRAPHIC] [TIFF OMITTED] TP05MY11.016
We found in our analysis of the claims data for cases with both
procedure codes 38.45 and 39.73 that the average costs are
substantially higher than those costs for the cases overall in MS-DRG
237. In addition, we found that the average length of stay for the 22
cases with both procedure codes 38.45 and 39.73 is higher at 11.86 days
than the average length of stay of 10.03 days for all cases in MS-DRG
237.
Our analysis of the claims data for the procedure codes in MDC 5
showed that procedure code 34.85 is also assigned to MS-DRGs 228 (Other
Cardiothoracic Procedures with MCC), 229 (Other Cardiothoracic
Procedures with CC), and 230 (Other Cardiothoracic Procedures without
CC/MCC) when it occurs in combination with procedure code 38.44
(Resection of vessel with replacement, aorta, abdominal). We found that
when procedure code 39.73 is not assigned to MS-DRGs 228 through 230,
there are no cases reported.
The table below shows our findings of the average costs and the
average length of stay for procedure code 38.45 in combination with
procedure code 38.44 in MS-DRGs 228 through 230 and the average costs
and the average length of stay in all cases in MS-DRGs 228 through 230
when both procedure codes 38.45 and 38.44 are not assigned.
[[Page 25825]]
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Our findings show that both the average length of stay and average
costs are higher in those cases containing procedure code 34.85 than
those cases without this procedure code in MS-DRGs 228 through 230.
We then analyzed the 1,851 cases containing procedure code 39.73 in
MS-DRGs 237 and 238 and the 912 cases containing procedure code 38.45
in MS-DRGs 237 and 238 to determine if they would meet the established
criteria for a 3-way severity of illness split. This criterion is
described in section III.G.1.c. of this preamble. The chart below shows
our findings, with MS-DRG 237 acting as a severity of illness proxy for
all cases, as there were no cases in MS-DRG 238. In the chart, the
extensions ``-1,'' ``-2,'' and ``-3'' correspond to severity levels,
with ``-1'' representing cases with MCC, ``-2'' representing cases with
CC, and ``-3'' representing cases without CC/MCC.
[GRAPHIC] [TIFF OMITTED] TP05MY11.018
[[Page 25826]]
Our next step was to analyze the claims data for the cases in the
clinically coherent MS-DRGs to which we are proposing to move these
cases. These six MS-DRGs are: 216 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac Catheterization with MCC); 217
(Cardiac Valve & Other Major Cardiothoracic Procedures with Cardiac
Catheterization with CC); 218 (Cardiac Valve & Other Major
Cardiothoracic Procedures with Cardiac Catheterization without CC/MCC);
219 (Cardiac Valve & Other Major Cardiothoracic Procedures without
Cardiac Catheterization with MCC), 220 (Cardiac Valve & Other Major
Cardiothoracic Procedures without Cardiac Catheterization with CC); and
221 (Cardiac Valve & Other Major Cardiothoracic Procedures without
Cardiac Catheterization without CC/MCC). For the sake of the grouping
algorithm, procedure codes 39.73 and 38.45 must also be added to MS-
DRGs 216 through 219. However, if these codes are documented in cases
in which a cardiac catheterization occurs, they will be ``trumped'' by
those catheterizations. Therefore, when we reviewed the data in order
to make length of stay and cost comparisons, we only used the three MS-
DRGs to which procedure codes 39.73 and 38.45 would appear without
cardiac catheterization; that is MS-DRGs 219, 220, and 221. Our
findings describing these three MS-DRGs are displayed in the following
chart:
[GRAPHIC] [TIFF OMITTED] TP05MY11.019
Our evaluation of the severity levels in the cases containing
procedure codes 39.73 and 38.45 using the proxy MS-DRGs 237-1, 237-2,
and 237-3 compared to the claims data in the table above with MS-DRGs
219 through 221 demonstrates that the cases are similar in resource
consumption. In addition, the cases are clinically coherent.
By proposing to move procedure code 38.45 to MS-DRGs 216 through
221, we do not believe that there is a need for combination codes 38.45
plus 38.44 to be specifically assigned to MS-DRGs 228, 229, and 230.
Because MS-DRGs 216 through 221 are higher in the surgical hierarchy
for MDC 5 than MS-DRGs 228 through 230, the result of the proposal
would be that either procedure code 38.45 by itself or in combination
with procedure code 38.44 will always be assigned to MS-DRGs 216
through 221. When reported alone, under our proposal, procedure code
38.44 would continue to be assigned to MS-DRGs 237 and 238, as it has
been in the past.
Therefore, for FY 2012, we are proposing to move procedure codes
38.45 and 39.73 from MS-DRGs 237 and 238 and to add these codes to MS-
DRGs 216, 217, 218, 219, 220, and 221 based on our findings of similar
resource consumption and clinical coherence. To conform to this
proposed change, we also are proposing to change the title of MS-DRG
237 (Major Cardiovascular Procedures with MCC or Thoracic Aortic
Aneurysm Repair) by removing the terms ``or Thoracic Aortic Aneurysm
Repair.'' Therefore, the new proposed title of MS-DRG 237 would be
``Major Cardiovascular Procedures with MCC.'' We invite public comment
on these proposals.
5. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Artificial Discs
In response to the FY 2011 IPPS/LTCH PPS proposed rule, we received
a public comment that was outside of the scope of any proposal in that
proposed rule. The commenter urged CMS to reassign procedure code 84.62
(Insertion of total spinal disc prosthesis, cervical) from MS-DRG 490
(Back and Neck Procedures Except Spinal Fusion with CC/MCC or Disc
Device/Neurostimulator) into MS-DRGs 471 through 473 (Cervical Spinal
Fusion with MCC, with CC, and without CC/MCC, respectively). In
addition, the commenter requested that CMS reassign procedure code
84.65 (Insertion of total spinal disc prosthesis, lumbosacral) from MS-
DRG 490 (Back and Neck Procedures Except Spinal Fusion with CC/MCC or
Disc Device/Neurostimulator) to MS-DRGs 459 and 460 (Spinal Fusion
Except Cervical with MCC and without MCC, respectively). However, the
commenter also provided an alternative option to reassigning the
procedure codes to different MS-DRGs. The commenter suggested the
creation of a new, separate MS-DRG for the two artificial disc
procedures if reassignment to the fusion MS-DRGs was not feasible.
We refer the reader to the FY 2008 IPPS proposed rule and final
rule with comment period (72 FR 24731 through 24735 and 47226 through
47232) for discussion on the comprehensive evaluation of all the spinal
DRGs in the development of the MS-DRG classification system. The
modifications made to the spinal DRGs for FY 2008 recognized the
similar utilization of resources, differences in levels of severity,
and the complexity of the services being performed on patients
undergoing the various types of spinal procedures.
We analyzed FY 2010 MedPAR claims data for procedure codes 84.62
and 84.65 in MS-DRG 490 and compared those results to the claims data
for MS-DRGs 459, 460, 471, 472, and 473. We found a total of 19,840
cases in MS-DRG 490 with an average length of stay of 4.24 days and
average costs of $11,940. As displayed in the chart below, we found 97
cases reporting procedure code 84.62, with an average length of stay of
1.80 days and average costs of $13,194 in MS-DRG 490. We also found 35
cases reporting procedure code 84.65, with an average length of stay of
2.91 days and average costs of $20,753. While average costs for the
artificial disc cases were slightly higher ($1,254 for procedure code
84.62 and $8,813 for procedure code 84.65) compared to the average cost
for all cases in MS-DRG 490, the artificial disc cases were of
extremely low volume and reflected shorter lengths of stay compared to
all the cases in MS-DRG 490.
[[Page 25827]]
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We recognize the disparity in average costs for cases reporting the
insertion of a cervical or lumbar artificial disc in MS-DRG 490
compared to all the cases in that MS-DRG. However, we do not believe
this supports reassignment of procedure codes 84.62 and 84.65 to the
MS-DRGs for spinal fusion as the commenter requested. Even with the
disparity in costs, clinically, the insertion of an artificial disc is
not a spinal fusion. Therefore, reassignment of the artificial disc
cases to the fusion MS-DRGs would be clinically inappropriate. In
addition, for certain Medicare populations, the insertion of an
artificial disc is considered a noncovered procedure.
As stated earlier, the commenter also provided an alternative
option to reassigning procedure codes 84.62 and 84.65. The commenter
suggested the creation of a new, separate MS-DRG for the two artificial
disc procedures if reassignment to the fusion MS-DRGs was not feasible.
In our evaluation of the claims data and as shown above in the data
chart, the artificial disc cases are of extremely low volume;
therefore, we do not believe the findings warrant the creation of a
separate MS-DRG.
We invite public comment on our proposal not to reassign procedure
code 84.62 from MS-DRG 490 to MS-DRGs 471 through 473 and procedure
code 84.65 from MS-DRG 490 to MS-DRGs 459 and 460. We also invite
public comment on our proposal not to create a new, separate MS-DRG for
artificial disc procedures (codes 84.62 and 84.65) for FY 2012.
b. Major Joint Replacement or Reattachment of Lower Extremities
We received a request to add an additional severity level for MS-
DRG 469 (Major Joint Replacement or Reattachment of Lower Extremity
with MCC) and MS-DRG 470 Major Joint Replacement or Reattachment of
Lower Extremity without MCC). We examined FY 2010 MedPAR claims data to
determine if we could subdivide the base MS-DRG into three severity
levels: With MCC, with CC, and without CC/MCC. We applied the criteria
used in the development of the MS-DRGs included in the FY 2008 IPPS
final rule with comment period (72 FR 47169). We refer readers to this
final rule with comment period for a complete description of these
criteria. As discussed earlier, the original criteria were based on
average charges. However, subsequent to the FY 2007 IPPS final rule (71
FR 47882), we now use average costs. The five criteria using costs are
listed below. In order to warrant creation of a CC or an MCC subgroup
within a base MS-DRG, the subgroup must meet all of the following five
criteria:
A reduction in variance of costs of at least 3 percent.
At least 5 percent of the patients in the MS-DRG fall
within the CC or MCC subgroup.
At least 500 cases are in the CC or MCC subgroup.
There is at least a 20-percent difference in average costs
between subgroups.
There is a $2,000 difference in average costs between
subgroups
The following table shows our determination of the number of cases
and average costs by MCC, CC, and non-CC levels.
[GRAPHIC] [TIFF OMITTED] TP05MY11.021
We determined that these cases do not meet our five criteria for
adding a new severity level. The cases failed to meet criterion four
(requiring at least a 20-percent difference in average costs between
subgroups) and criterion five (requiring a $2,000 difference in average
costs between subgroups). Therefore, we are not proposing the addition
of a new severity level for the base MS-DRG. Instead, we are proposing
to maintain the two existing severity levels for MS-DRGs 469 and 470.
We welcome public comments on our proposal not to add an additional
severity level to MS-DRGs 469 and 470.
c. Combined Anterior/Posterior Spinal Fusion
A manufacturer requested that CMS reassign spinal fusion cases
utilizing the AxiaLIF technology from MS-DRGs 459 and 460 (Spinal
Fusion Except Cervical with MCC and without MCC, respectively) to MS-
DRGs 453, 454, and
[[Page 25828]]
455 (Combined Anterior/Posterior Spinal Fusion with MCC, with CC, and
without CC/MCC, respectively). The commenter stated that an anterior
lumbar interbody spinal fusion performed with a lateral approach, the
extreme lateral interbody fusion (XLIF[supreg]), with posterior spinal
fixation, can report two codes resulting in assignment to the combined
fusion MS-DRGs. The commenter also stated that the AxiaLIF technology,
which is also utilized in an anterior lumbar interbody spinal fusion
and uses a pre-sacral approach, can only report one code, resulting in
assignment to the single fusion MS-DRGs. The commenter expressed
concern that the payment incentives are not properly aligned for the
recently available minimally invasive spinal fusion technologies. The
commenter compared the XLIF[supreg] to the AxiaLIF and urged CMS to
consider the AxiaLIF technology similar to the XLIF[supreg] for
purposes of MS-DRG assignment.
Spinal fusion is a surgical procedure that joins two or more
vertebrae by the use of bone graft (or bone graft substitute), with the
goal of maintaining alignment, providing stability, decreasing pain,
and restoring the function of the spinal nerves. Routinely, a spinal
fusion also utilizes internal fixation devices (instrumentation) to
assist in stabilizing the spine. These fixation devices may include
pedicle screws, cages, rods, or plates. Effective October 1, 2010, ICD-
9-CM procedure code 81.06 (Lumbar and lumbosacral fusion of the
anterior column, anterior technique) describes the XLIF[supreg]
procedure, and code 81.08 (Lumbar and lumbosacral fusion of the
anterior column, posterior technique) describes the AxiaLIF technology.
The spinal fusion codes and their corresponding MS-DRG assignment
include the use of bone graft and internal fixation. The requestor's
comment regarding the assignment of one procedure code for one
technology versus assigning two procedure codes for another technology
indicates that the commenter may not fully understand the MS-DRG
GROUPER logic for spinal fusions. For example, if an anterior lumbar
interbody fusion is performed and posterior spinal fixation (or
instrumentation) is also utilized, this requires one code and results
in a single fusion MS-DRG assignment. However, if a posterior spinal
fusion (procedure code 81.07 (Lumbar and lumbosacral fusion of the
posterior column, posterior technique) was performed in addition to an
anterior fusion, for example, the XLIF[supreg] procedure (procedure
code 81.06), that scenario would necessitate the assignment of both
codes, resulting in assignment to the combined spinal fusion MS-DRGs
(453, 454, or 455). MS-DRGs 453, 454, and 455 were created to capture
patients who have both an anterior and posterior fusion. We believe the
requestor may have confused the terms ``fixation'' and ``fusion'' for
MS-DRG assignment in its request.
We analyzed the FY 2010 MedPAR data to evaluate claims reporting
procedure codes 81.06, 81.07, and 81.08 in MS-DRGs 456 through 458
(Spinal Fusion Except Cervical with Spinal Curvature/Malignancy/
Infection or 9+ Fusions with MCC, with CC and without CC/MCC,
respectively) and MS-DRGs 459 and 460. We found a total of 1,115 cases
in MS-DRG 456, with an average length of stay of 13.14 days and average
costs of $63,856. We found 278 cases reporting procedure code 81.08,
with an average length of stay of 12.04 days and average costs of
$56,585. Similar results can be seen for procedure code 81.08 in the
remaining MS-DRGs as shown in the chart below in terms of volume,
length of stay, and average cost. Clearly, the data demonstrate that
the AxiaLIF technology (procedure code 81.08) is appropriately assigned
to its current MS-DRG assignments, as is the XLIF[supreg] procedure
(procedure code 81.06).
[[Page 25829]]
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We also analyzed data for combinations of the spinal fusion codes
that result in assignment to MS-DRGs 453, 454, and 455. We evaluated
the following combinations:
81.06 (Lumbar and lumbosacral fusion of the anterior
column, anterior technique) and 81.07 (Lumbar and lumbosacral fusion of
the posterior column, posterior technique).
81.06 (Lumbar and lumbosacral fusion of the anterior
column, anterior technique) and 81.08 (Lumbar and lumbosacral fusion of
the anterior column, posterior technique).
We further analyzed data with the following combination of spinal
fusion codes in MS-DRGs 456, 457, and 458 and MS-DRGs 459 and 460:
81.07 (Lumbar and lumbosacral fusion of the posterior
column, posterior technique) and 81.08 (Lumbar and lumbosacral fusion
of the anterior column, posterior technique).
The chart below shows the results of the data analysis for the
combination of procedure codes listed above where an anterior and
posterior spinal fusion was performed in the same episode of care.
There were a total of 1,190 cases in MS-DRG 453, with an average length
of stay of 13.08 days and average costs of $71,693. The cases reporting
the combination of procedure codes 81.06 and 81.08 in this same MS-DRG
totaled 431, with an average length of stay of 11.59 days and average
costs of $69,859. Results for the procedure code combination (81.06 and
81.08) in MS-DRGs 454 and 455 with regard to volume of cases, length of
stay, and average costs data also support that these spinal fusion
procedure code combinations are appropriately placed in their current
MS-DRG assignments. Likewise, for MS-DRGs 456, 457, and 458, the data
support that the spinal fusion procedure code combinations of 81.07 and
81.08 are appropriately placed in their current MS-DRG assignments.
There were a total of 1,115 cases in MS-DRG 456 with an average length
of stay of 13.14 days and average costs of $68,856. The cases reporting
the combination of procedure codes 81.07 and 81.08 in this same MS-DRG
totaled 54, with an average length of stay of 14.37 days and average
costs of $52,392. Results for the procedure code combination (81.07 and
81.08) in MS-DRGs 457 and 458 with regard to volume of cases and
average length of stay were lower compared to all the cases in those
two MS-DRGs. While the data show higher average costs for the procedure
code combination of 81.07 and 81.08 in MS-DRGs 457 and 458, as stated
previously, the volume was extremely low.
[[Page 25830]]
[GRAPHIC] [TIFF OMITTED] TP05MY11.023
As the focus of the analysis was to evaluate procedure code 81.08
in comparison to procedure code 81.06, we believe the AxiaLIF
technology (procedure code 81.08) is grouped appropriately in its
current MS-DRG assignments, as is the XLIF[supreg] procedure (procedure
code 81.06). The volume, length of stay, and cost data analyzed
demonstrate that the complexity of services and resources utilized for
each of these technologies are properly accounted for in their
respective MS-DRG assignments. Therefore, the data does not support
making changes for procedure code 81.08. As a result, we are not
proposing to reassign cases reporting this procedure code to the
combined fusion MS-DRGs. We invite public comment on our proposal to
not reassign procedure code 81.08 from MS-DRGs 456 through 460 to MS-
DRGs 453 through 455 for FY 2012.
6. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue, and
Breast): Excisional Debridement of Wound, Infection, or Burn
We received a request that we remove procedure code 86.22
(Excisional debridement of wound, infection, or burn) from the list of
codes considered to be O.R. procedures. The commenter stated that many
inpatient excisional debridements are performed in a patient's room
instead of in an operating room. The commenter believed that the
original assignment of procedure code 86.22 to the O.R. list served to
help reflect the resource intensity required by a patient with wounds
and ulcers that required an excisional debridement. The commenter
stated that, by doing so, the code served as a proxy for severity of
illness in the original CMS DRGs prior to the implementation of MS-DRGs
in FY 2008. The commenter stated that the creation of the most serious
pressure ulcer codes for stage 3 and stage 4 pressure ulcers (codes
707.23 and 707.24) allows these conditions to be classified as MCCs.
Therefore, the commenter stated that the need to use procedure code
86.22 to capture severity of illness was no longer needed. The
commenter also stated that procedure code 86.22 is a non-O.R. code
under the APR-DRGs and does not affect the DRG assignment. The
commenter requested that procedure code 86.22 be changed from an O.R.
procedure code to a non-O.R. procedure code.
As the commenter stated, excisional debridements are currently
captured in procedure code 86.22. Procedure code 88.22 is classified as
an O.R. procedure in the current MS-DRGs and, therefore, leads to a
surgical MS-DRG assignment. We examined MedPAR claims data on all
excisional debridement cases and found that these debridement cases use
appreciably fewer resources than other cases in their current surgical
DRGs. However, we determined that if we were to classify debridement
cases as non-O.R. cases and assign them to medical DRGs, we would
significantly underpay these cases. The following chart shows
differences in average costs for all excisional debridement cases
compared to other cases within their current MS-DRG and compared to
medical DRGs to which the patients would be assigned if the procedure
were reclassified as a non-O.R. procedure.
[[Page 25831]]
[GRAPHIC] [TIFF OMITTED] TP05MY11.024
The chart illustrates that when debridement is the only O.R.
procedure, it is assigned to MS-DRGs that have an average cost that is
approximately $5,000 more than the actual cost of the debridement
($12,427 versus $17,332). Conversely, if the debridement is made a non-
O.R. code, it would, on average, be assigned to MS-DRGs that have an
average cost that is approximately $4,000 less than the actual cost of
the debridement ($8,070 versus $12,427). Therefore, we believe it would
be inappropriate to propose to classify these procedures as a non-O.R.
procedure.
We explored alternative approaches to classifying procedure code
86.22 as a non-O.R. procedure. We evaluated the possibility of removing
excisional debridements from their current MS-DRG assignments within
the following skin-related MS-DRGs, where they are combined with skin
grafts, and creating a new set of debridement MS-DRGs. The current MS-
DRGs that combine skin grafts and debridements into the same MS-DRGs
are as follows:
MS-DRGs 573 through 575 (Skin Graft &/or Debridement for
Skin Ulcer or Cellulitis with MCC, with CC, and without CC/MCC,
respectively).
MS-DRGs 576 through 578 (Skin Graft &/or Debridement
Except for Skin Ulcer or Cellulitis with MCC, with CC, and without CC/
MCC, respectively).
We analyzed MedPAR claims data on the severity level of graft cases
without any debridements in these six MS-DRGs. Our findings are shown
in the chart below.
[GRAPHIC] [TIFF OMITTED] TP05MY11.025
We compared these data to a proposed new set of skin-related MS-
DRGs that would include only debridements. The results of the findings
of the severity levels of debridements without skin grafts in these six
MS-DRGs are shown in the chart below.
[[Page 25832]]
[GRAPHIC] [TIFF OMITTED] TP05MY11.026
Our findings indicate that the graft procedure cases have higher
average costs than the excisional debridement cases. The average costs
for the excisional debridement cases in MS-DRGs 573 through 575
compared to the debridement cases in MS-DRGs 576 through 578 are very
similar. We believe that the data support creating a single set of
skin-related excisional debridement MS-DRGs composed of cases
previously captured in MS-DRGs 573 through 575 as well as MS-DRGs 576
through 578. The following chart illustrates those combined average
costs.
[GRAPHIC] [TIFF OMITTED] TP05MY11.027
We believe that the data support separating skin graft procedures
from excisional debridements by creating a new set of MS-DRGs. This
would result in more accurate payment for both skin grafts and
debridement. Therefore, we are proposing to remove excisional
debridements (procedure code 86.22) from their current MS-DRG
assignments within MS-DRGs 573 through 578 for skin grafts and assign
them to new excisional debridement MS-DRGs. We are proposing to
maintain MS-DRGs 573 through 578 for skin grafts. The following list
describes the proposed new and revised MS-DRG titles:
Proposed new MS-DRGs based on procedure code 86.22:
Proposed MS-DRG 570 (Skin Debridement with MCC)
Proposed MS-DRG 571 (Skin debridement with CC)
Proposed MS-DRG 572 (Skin Debridement without CC/MCC)
Proposed Revised MS-DRGs based on codes currently assigned to MS-
DRGs 573 through 578, excluding procedure code 86.22:
Proposed revised MS-DRG 573 (Skin Graft for Skin Ulcer or
Cellulitis with MCC)
Proposed revised MS-DRG 574 (Skin Graft for Skin Ulcer or
Cellulitis with CC)
Proposed revised MS-DRG 575 (Skin Graft for Skin Ulcer or
Cellulitis without CC/MCC)
Proposed revised MS-DRG 576 (Skin Graft Except for Skin
Ulcer or Cellulitis with MCC)
Proposed revised MS-DRG 577 (Skin Graft except for Skin
Ulcer or Cellulitis with CC)
Proposed revised MS-DRG 578 (Skin Graft Except for Skin
Ulcer or Cellulitis without CC/MCC)
[[Page 25833]]
We welcome public comments on our proposal for FY 2012 to create
three new debridement MS-DRGs 570, 571, and 572 for skin debridement
and to revise MS-DRGs 573 through 578 to include skin grafts only, as
indicated above.
7. MDC 10 (Endocrine, Nutritional, and Metabolic Diseases and
Disorders)
a. Nutritional and Metabolic Diseases: Update of MS-DRG Titles
We received a request to revise the MS-DRG titles for MS-DRGs 640
through 642 to more clearly capture the cases that are currently
assigned to these MS-DRGs. The current titles for these MS-DRGs are:
MS-DRGs 640 (Nutritional & Miscellaneous Metabolic Disorders with MCC);
MS-DRG 641 (Nutritional & Miscellaneous Metabolic Disorders without
MCC); and MS-DRG 642 (Inborn Errors of Metabolism). The requestor
suggested that we change the titles to: MS-DRG 640 (Miscellaneous
Disorders of Nutrition, Metabolism, and Fluids and Electrolytes with
MCC); MS-DRG 641 (Miscellaneous Disorders of Nutrition, Metabolism, and
Fluids and Electrolytes without MCC); and MS-DRG 642 (Inborn and Other
Disorders of Metabolism).
Our clinical advisors support these suggested changes to the
titles, as the suggested changes would provide a better description of
the diagnoses assigned to MS-DRGs 640, 641, and 642. Therefore, we are
proposing to revise the MS-DRG titles for MS-DRGs 640, 641, and 642 as
the requested suggested. We invite public comment on our proposal to
change the MS-DRG titles for MS-DRGs 640, 641, and 642 for FY 2012.
b. Sleeve Gastrectomy Procedure for Morbid Obesity
Sleeve gastrectomy is a 70 percent to 80 percent greater curvature
gastrectomy (sleeve resection of the stomach) with continuity of the
gastric lesser curve being maintained while simultaneously reducing
stomach volume. It may be the first step in a two-stage procedure when
performing Roux-en-Y Gastric Bypass (RYGBP). Sleeve gastrectomy can be
performed either as an open or a laparoscopic procedure. Sleeve
gastrectomy is currently coded using ICD-9-CM procedure code 43.89
(Other total gastrectomy). Procedure code 43.89 is currently assigned
to several MS-DRGs. However, the code is not assigned to MS-DRG 619,
620, or 621 (O.R. Procedures for Obesity with MCC, with CC, and without
CC/MCC, respectively).
We received a request for CMS to review MDC 10 (Endocrine,
Nutritional, and Metabolic Diseases and Disorders) for consistency.
Specifically, the requestor questioned why diagnosis code 278.01
(Morbid obesity), when paired on a claim with procedure code 43.89,
would be assigned to MS-DRG 981, 982, or 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, or without CC/MCC,
respectively) instead of MS-DRG 619, 620, or 621.
Upon review, we determined that diagnosis code 278.01 is assigned
to MDC 10. However, procedure code 43.89 is not assigned to any MS-DRG
set in this MDC. Therefore, the cases are assigned to MS-DRGs 981
through 983, reflecting procedures not related to the principal
diagnosis. This was an inadvertent oversight on CMS' part when the MS-
DRGs were created. Therefore, we are proposing to add a procedure code
or codes identifying sleeve gastrectomy to MS-DRGs 619 through 621 for
FY 2012.
Currently, sleeve gastrectomy is identified in the ICD-9-CM
procedure code Index as follows: Gastrectomy (partial) (subtotal) NEC
43.89. At procedure code 43.89 in the ICD-9-CM procedure code Tabular,
an inclusion note identifies this code as including sleeve resection of
the stomach.
In light of our proposal to add a procedure code or codes to MS-
DRGs 619 through 621, we point out that there is an NCD that has
precluded coverage of sleeve gastrectomy when performed either open or
laparoscopically. This decision may be found in the Medicare National
Coverage Determination Manual, Section 100.1, Nationally Non-Covered
Indications for Bariatric Surgery for Treatment of Morbid Obesity,
effective on February 12, 2009. This manual is available through the
CMS Web site through a link at: http://www.cms.gov/manuals/downloads/mcd103c1_Part2.pdf. This manual entry affirms that treatment for
obesity via use of the open or laparoscopic sleeve gastrectomy is
determined to be noncovered for Medicare beneficiaries.
Noncoverage of these cases is determined by the fiscal intermediary
or MAC because of the nature of procedure code 43.89, which is a code
that identifies several gastrectomy procedures. Therefore, to identify
a code describing many procedures in the MCE would be inappropriately
restricting other procedures which are covered. However, we have
received a request to create specific codes identifying both
laparoscopic sleeve gastrectomy and the open procedure, vertical sleeve
gastrectomy. We addressed this request at the ICD-9-CM Coordination and
Maintenance Committee meeting held on March 9, 2011. Should a code or
codes be created as a result of this request, we will then be able to
add these codes to the MCE as a conforming noncoverage edit when
combined with diagnosis code 278.01. The background information
discussing sleeve gastrectomy coding can be accessed on the CMS Web
site at: http://www.cms.gov/ICD9ProviderDiagnosticcodes/03_meetings.asp#TopOfPage. A summary of the meeting will be available soon
after the meeting is held. This summary can be found on CMS' Web site
for the ICD-9-CM Coordination and Maintenance Committee at: http://www.cms.gov/ICD9ProviderDiagnosticCodes/03_meetings.asp#TopOfPage by
scrolling down to the .pdf zip files containing the meeting agenda and
handouts.
Therefore, for FY 2012, we are proposing to add a procedure code or
codes identifying sleeve gastrectomy to MS-DRGs 619 through 621.
However, we also intend to add any code or codes created at the ICD-9-
CM Coordination and Maintenance Committee on March 9, 2011, to the MCE
as sleeve gastrectomy, whether open or laparoscopic, is not covered for
Medicare beneficiaries. The code or codes would appear in the
``Noncovered Procedures'' edit of the MCE. As the timing of the
development of this proposed rule and the date of the March 2011
meeting of the ICD-9-CM Coordination and Maintenance Committee overlap,
it is not possible to determine what those codes might be, or even if
they will be created. However, should a code or codes be created, we
propose that they will simultaneously be placed in both MS-DRGs 619
through 621 and the MCE. This decision may seem to be counterintuitive,
but CMS realizes that our MS-DRGs and the Medicare GROUPER program are
used for other beneficiaries and insurance plans rather than strictly
for Medicare beneficiaries. A complete description of this issue will
be addressed in the final rule. Any new code or codes created as a
result of the ICD-9-CM Coordination and Maintenance Committee meeting
will only be included in Table 6B, which will be listed in section VI.
of the Addendum to the final rule and available via the Internet; we do
not have a mechanism to make the codes available prior to the final
rule's publication. We invite public comment on this proposal.
[[Page 25834]]
8. MDC 15 (Newborns and Other Neonates With Conditions Originating in
the Perinatal Period): Discharge Status Code 66 (Discharged/Transferred
to Critical Assess Hospital (CAH))
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50236), we finalized
our transfer policy regarding transfer of patients from an acute care
hospital to a CAH. In that final rule, we stated that hospitals are
required to use patient discharge status code 66 on the IPPS claims to
identify transfers to CAHs.
With this new requirement, a discharge from an IPPS hospital to a
CAH equates to a transfer status. However, discharge status code 66 is
currently not included in the MS-DRG GROUPER logic for MS-DRG 789
(Neonate, Died or Transferred to Another Acute Care Facility).
Therefore, in this proposed rule, we are proposing to add discharge
status code 66 to the MS-DRG GROUPER logic for MS-DRG 789. We invite
public comment on our proposal to add discharge status code 66 to the
MS-DRG GROUPER logic for MS-DRG 789 for FY 2012.
9. Proposed Medicare Code Editor (MCE) Changes
As explained under section II.B.1. of the preamble of this proposed
rule, the Medicare Code Editor (MCE) is a software program that detects
and reports errors in the coding of Medicare claims data. Patient
diagnoses, procedure(s), and demographic information are entered into
the Medicare claims processing systems and are subjected to a series of
automated screens. The MCE screens are designed to identify cases that
require further review before classification into a MS-DRG. In this
proposed rule, we discuss our intention to make the following change to
the MCE edits.
In section II.G.7.a. of this preamble, we discuss that the current
ICD-9-CM procedure code for sleeve gastrectomy (43.89 (Other partial
gastrectomy, other)) is a noncovered code when performed for resection
of the stomach in patients with morbid obesity. We also discussed that
noncoverage for Medicare beneficiaries of cases containing procedure
code 43.89 is determined by the fiscal intermediaries or MACs because
of the nature of procedure code 43.89. This code is imprecise and
identifies several other gastrectomy procedures in addition to sleeve
resection. Therefore, to limit coverage by identifying a code that
describes many procedures through the use of the MCE would
inappropriately restrict other procedures that are covered by Medicare.
In this same section, we also stated that we received a request to
create specific codes identifying both laparoscopic sleeve gastrectomy
and the open procedure, vertical sleeve gastrectomy. As we stated
above, we addressed this request at the ICD-9-CM Coordination and
Maintenance Committee meeting held on March 9, 2011. If a code or codes
should be created as a result of this request, we will then be able to
add these codes to the MCE as a conforming noncoverage edit when
combined with diagnosis code 278.01 (Morbid obesity).
As the timing of development of this proposed rule and the holding
of the ICD-9-CM Coordination and Maintenance Committee meeting on March
9, 2011 overlap, it is not possible to determine what those codes might
be, or even if they will be created. However, should a code or codes be
created, we propose that any code or codes for laparoscopic or open
sleeve resection of the stomach be added to the MCE as a noncovered
procedure or procedures, in combination with ICD-9-CM diagnosis code
278.01 (Morbid obesity). The background information discussing sleeve
gastrectomy coding can be accessed on the CMS Web site at: http://www.cms.gov/ICD9ProviderDiagnosticcodes/03_meetings.asp#TopOfPage. A
complete description of this issue will be addressed in the final rule.
Any new code or codes describing sleeve gastrectomy will only be
included in Table 6B, which will be listed in section VI. of the
Addendum to the final rule and available via the Internet; we do not
have a mechanism to make the codes available prior to the final rule's
publication. We invite public comments on this proposal.
10. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different MS-DRG within the MDC to which the principal diagnosis
is assigned. Therefore, it is necessary to have a decision rule within
the GROUPER by which these cases are assigned to a single MS-DRG. The
surgical hierarchy, an ordering of surgical classes from most resource-
intensive to least resource-intensive, performs that function.
Application of this hierarchy ensures that cases involving multiple
surgical procedures are assigned to the MS-DRG associated with the most
resource-intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of MS-DRG reclassification and recalibrations, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications and recalibrations, to determine if the ordering of
classes coincides with the intensity of resource utilization.
A surgical class can be composed of one or more MS-DRGs. For
example, in MDC 11, the surgical class ``kidney transplant'' consists
of a single MS-DRG (MS-DRG 652) and the class ``major bladder
procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one MS-DRG. The methodology for determining the most
resource-intensive surgical class involves weighting the average
resources for each MS-DRG by frequency to determine the weighted
average resources for each surgical class. For example, assume surgical
class A includes MS-DRGs 1 and 2 and surgical class B includes MS-DRGs
3, 4, and 5. Assume also that the average costs of MS-DRG 1 is higher
than that of MS-DRG 3, but the average costs of MS-DRGs 4 and 5 are
higher than the average costs of MS-DRG 2. To determine whether
surgical class A should be higher or lower than surgical class B in the
surgical hierarchy, we would weigh the average costs of each MS-DRG in
the class by frequency (that is, by the number of cases in the MS-DRG)
to determine average resource consumption for the surgical class. The
surgical classes would then be ordered from the class with the highest
average resource utilization to that with the lowest, with the
exception of ``other O.R. procedures'' as discussed below.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but
[[Page 25835]]
are still occasionally performed on patients in the MDC with these
diagnoses. Therefore, assignment to these surgical classes should only
occur if no other surgical class more closely related to the diagnoses
in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has a lower average costs than the class ordered
below it.
Based on the changes that we are proposing to make for FY 2012, as
discussed in sections II.G.1. and 6. of this preamble, we are proposing
to revise the surgical hierarchy for Pre-MDCs and MDC 9 (Diseases and
Disorders of the Skin, Subcutaneous Tissue, and Breast) as follows:
In Pre-MDCs, we are proposing to reorder proposed new MS-DRG 016
(Autologous Bone Marrow Transplant with CC/MCC) and proposed new MS-DRG
017 (Autologous Bone Marrow Transplant without CC/MCC) above MS-DRG 010
(Pancreas Transplant).
In MDC 9, we are proposing to reorder--
MS-DRG 578 (Skin Graft Except for Skin Ulcer or Cellulitis
without CC/MCC) above proposed new MS-DRG 570 (Skin Debridement with
MCC);
Proposed new MS-DRG 570 above proposed new MS-DRG 571
(Skin Debridement with CC);
Proposed new MS-DRG 571 above proposed new MS-DRG 572
(Skin Debridement without CC/MCC; and
Proposed new MS-DRG 572 above MS-DRG 579 (Other Skin,
Subcutaneous Tissue, and Breast Procedures with MCC).
11. Complications or Comorbidity (CC) Exclusions List
a. Background
As indicated earlier in the preamble of this proposed rule, under
the IPPS MS-DRG classification system, we have developed a standard
list of diagnoses that are considered CCs. Historically, we developed
this list using physician panels that classified each diagnosis code
based on whether the diagnosis, when present as a secondary condition,
would be considered a substantial complication or comorbidity. A
substantial complication or comorbidity was defined as a condition
that, because of its presence with a specific principal diagnosis,
would cause an increase in the length of stay by at least 1 day in at
least 75 percent of the patients. We refer readers to section II.D.2.
and 3. of the preamble of the FY 2008 IPPS final rule with comment
period for a discussion of the refinement of CCs in relation to the MS-
DRGs we adopted for FY 2008 (72 FR 47121 through 47152).
b. Proposed CC Exclusions List for FY 2012
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list of CCs would
not be considered valid CCs in combination with a particular principal
diagnosis. We created the CC Exclusions List for the following reasons:
(1) To preclude coding of CCs for closely related conditions; (2) to
preclude duplicative or inconsistent coding from being treated as CCs;
and (3) to ensure that cases are appropriately classified between the
complicated and uncomplicated DRGs in a pair. As we indicated above, we
developed a list of diagnoses, using physician panels, to include those
diagnoses that, when present as a secondary condition, would be
considered a substantial complication or comorbidity. In previous
years, we have made changes to the list of CCs, either by adding new
CCs or deleting CCs already on the list.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another.
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another.
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another.
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another.
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC.\2\
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\2\ See the FY 1989 final rule (53 FR 38485, September 30,
1988), for the revision made for the discharges occurring in FY
1989; the FY 1990 final rule (54 FR 36552, September 1, 1989), for
the FY 1990 revision; the FY 1991 final rule (55 FR 36126, September
4, 1990), for the FY 1991 revision; the FY 1992 final rule (56 FR
43209, August 30, 1991) for the FY 1992 revision; the FY 1993 final
rule (57 FR 39753, September 1, 1992), for the FY 1993 revision; the
FY 1994 final rule (58 FR 46278, September 1, 1993), for the FY 1994
revisions; the FY 1995 final rule (59 FR 45334, September 1, 1994),
for the FY 1995 revisions; the FY 1996 final rule (60 FR 45782,
September 1, 1995), for the FY 1996 revisions; the FY 1997 final
rule (61 FR 46171, August 30, 1996), for the FY 1997 revisions; the
FY 1998 final rule (62 FR 45966, August 29, 1997) for the FY 1998
revisions; the FY 1999 final rule (63 FR 40954, July 31, 1998), for
the FY 1999 revisions; the FY 2001 final rule (65 FR 47064, August
1, 2000), for the FY 2001 revisions; the FY 2002 final rule (66 FR
39851, August 1, 2001), for the FY 2002 revisions; the FY 2003 final
rule (67 FR 49998, August 1, 2002), for the FY 2003 revisions; the
FY 2004 final rule (68 FR 45364, August 1, 2003), for the FY 2004
revisions; the FY 2005 final rule (69 FR 49848, August 11, 2004),
for the FY 2005 revisions; the FY 2006 final rule (70 FR 47640,
August 12, 2005), for the FY 2006 revisions; the FY 2007 final rule
(71 FR 47870) for the FY 2007 revisions; the FY 2008 final rule (72
FR 47130) for the FY 2008 revisions, the FY 2009 final rule (73 FR
48510), the FY 2010 final rule (74 FR 43799); and the FY 2011 final
rule (75 FR 50114). In the FY 2000 final rule (64 FR 41490, July 30,
1999, we did not modify the CC Exclusions List because we did not
make any changes to the ICD-9-CM codes for FY 2000.
---------------------------------------------------------------------------
(1) Proposed Limited Revisions Based on Changes to the ICD-9-CM
Diagnosis Codes
For FY 2012, we are proposing to make limited revisions to the CC
Exclusions List to take into account the changes made in the ICD-9-CM
diagnosis coding system effective October 1, 2011. (We refer readers to
section II.G.13. of the preamble of this proposed rule for a discussion
of ICD-9-CM changes.) We are proposing to make these changes in
accordance with the principles established when we created the CC
Exclusions List in 1987. In addition, we are indicating on the CC
Exclusions List some changes as a result of updates to the ICD-9-CM
codes to reflect the exclusion of codes from being MCCs under the MS-
DRG system that we adopted in FY 2008.
CMS encourages input from our stakeholders concerning the annual
IPPS updates when that input is made available to us by December of the
year prior to the next annual proposed rule update. For example, to be
considered for any updates or changes in FY 2012, comments and
suggestions should have been submitted by early December 2010. The
following comments were submitted in a timely manner, and are therefore
being discussed in this section.
[[Page 25836]]
a. Pressure Ulcer Diagnosis Codes
We received a comment recommending that CMS remove diagnosis codes
707.23 (Pressure ulcer, stage III) and 707.24 (Pressure ulcer, stage
IV) from the CC Exclusion List when reported as a secondary diagnosis
code with a principal diagnosis code for the pressure ulcer site:
Diagnosis code 707.00 (Pressure ulcer, unspecified); diagnosis code
707.01 (Pressure ulcer, elbow); diagnosis code 707.02 (Pressure ulcer,
upper back); diagnosis code 707.03 (Pressure ulcer, lower back);
diagnosis code 707.04 (Pressure ulcer, hip); diagnosis code 707.05
(Pressure ulcer, buttock); diagnosis code 707.06 (Pressure ulcer,
ankle); diagnosis code 707.07 (Pressure ulcer, heel); or diagnosis code
707.09 (Pressure ulcer, other site). Currently, when a patient is
admitted with a pressure ulcer, the CC Exclusion List prevents a
pressure ulcer stage diagnosis code from being designated as an MCC
when reported as a secondary diagnosis. The commenter disagreed with
this approach and contended that a patient admitted for treatment of a
stage III or stage IV pressure ulcer likely requires resources that
would qualify the case as a diagnosis with an MCC or, at a minimum, as
a CC.
Our clinical advisors agree with the commenter. Therefore, we are
proposing to remove diagnosis codes 707.23 and 707.24 from the CC
Exclusion List when a principal diagnosis code of one of codes 707.00
through 707.09 is reported. Under this proposal, diagnosis code 707.23
or diagnosis code 707.24 would be an MCC when reported as a secondary
diagnosis code with a principal diagnosis code of one of codes 707.00
through 707.09.
b. End-Stage Renal Disease Diagnosis Code
We received a suggestion from a commenter that diagnosis code 585.6
(End-stage renal disease) be added to the CC Exclusion List when
reported with a principal diagnosis code of 403.90 (Hypertensive
chronic kidney disease, unspecified, with chronic kidney disease stage
I through stage IV, or unspecified) or diagnosis code 403.91
(Hypertensive chronic kidney disease, unspecified, with chronic kidney
disease stage V or end-stage renal disease). Currently, diagnosis code
585.6 is designated as an MCC.
According to the commenter, diagnosis codes 585.6 and 403.91 are
essentially the same diagnosis but coding guidelines require the
reporting of two codes to identify the stage of chronic kidney disease
when associated with hypertensive chronic kidney disease. The commenter
suggested that there is no need for diagnosis code 585.6 to be
designated as an MCC when reported with a principal diagnosis of
hypertensive chronic kidney disease, stage V or end-stage renal
disease. The commenter also pointed out that, while coding guidelines
would preclude diagnosis codes 403.90 and 585.6 from being reported
together, the MS-DRG GROUPER allows diagnosis code 585.6 to act as an
MCC when reported as a secondary diagnosis with principal diagnosis
code 403.90.
In response to the first issue, our clinical advisors disagree with
the commenter. Diagnosis code 403.91 includes chronic kidney disease
stage V or end-stage renal disease. These are two separate conditions
(or stages) that are identified by two unique codes. Diagnosis code
585.5 identifies stage V chronic kidney disease and is classified as a
CC. Diagnosis code 585.6 identifies end-stage renal disease, is
classified as an MCC, and describes patients who require chronic
dialysis. The patients diagnosed with stage V chronic kidney disease
are a different population who require different resources than those
patients who are diagnosed with end-stage renal disease. Therefore, we
are not proposing to add diagnosis code 585.6 to the CC Exclusion List
when reported with a principal diagnosis of code 403.91.
On the second issue raised by the commenter, our clinical advisors
agree. Diagnosis code 403.90 identifies patients with chronic kidney
disease, stages I through IV or unspecified, and diagnosis code 585.6
identifies end-stage renal disease. Our clinical advisors indicate that
the reporting of diagnosis code 585.6 should not be designated as an
MCC in this case. We agree with the commenter that diagnosis codes
403.90 and 585.6 should not be reported together as instructed by the
Coding Guidelines. Only a code from the 585.1 through 585.4 range
(stages I through IV, or unspecified) should be reported with diagnosis
code 403.90. Diagnosis code 585.6 is the exclusive code that uniquely
identifies end-stage renal disease and should only be reported with
diagnosis code 403.91. Therefore, we are proposing to add diagnosis
code 585.6 to the CC Exclusion List when reported with a principal
diagnosis code of 403.90.
c. Hypertensive Chronic Kidney Disease With Chronic Kidney Disease
Stage V or End-Stage Renal Disease Code
We received a comment recommending the addition of diagnosis code
403.91 (Hypertensive chronic kidney disease, unspecified, with chronic
kidney disease stage V or end-stage renal disease) to the CC Exclusion
List when reported as a secondary diagnosis code with principal
diagnosis code 585.6 (End stage renal disease). The commenter stated
that it would be unlikely that diagnosis code 403.91 would be reported
as a secondary diagnosis code with diagnosis code 585.6 as the
principal diagnosis code due to sequencing rules for end-stage renal
disease with hypertension. Currently, diagnosis code 403.91 is
designated as a CC.
Our clinical advisors agree with the commenter. Therefore, we are
proposing to add diagnosis code 403.91 to the CC Exclusion List when
reported as a secondary diagnosis code with principal diagnosis code
585.6.
We invite public comment on the above three proposals regarding the
CC Exclusion List for FY 2012.
(2) Suggested Changes to Severity Levels for Encephalopathy
We received a request that we consider changing the following
diagnosis codes from an MCC to a CC:
348.30 (Encephalopathy NOS)
348.32 (Metabolic encephalopathy)
348.39 (Encephalopathy NEC)
349.82 (Toxic encephalopathy)
572.2 (Hepatic encephalopathy)
For this FY 2012 IPPS/LTCH PPS proposed rule, we analyzed the
claims data for the diagnosis codes mentioned above related to
encephalopathy. We used the same approach we used in initially creating
the MS-DRGs and classifying secondary diagnosis codes as non-CCs, CCs,
or MCCs. A detailed discussion of the process and criteria we used in
this process is described in the FY 2008 IPPS final rule (72 FR 47158
through 47161). We refer the readers to this discussion for complete
information on our approach to developing the non-CC, CC, and MCC
lists. Each diagnosis for which Medicare data were available was
evaluated to determine its impact on resource use and to determine the
most appropriate CC subclass (non-CC, CC, or MCC) assignment. In order
to make this determination, the average cost for each subset of cases
was compared to the expected cost for cases in that subset. The
following format was used to evaluate each diagnosis:
[[Page 25837]]
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3
----------------------------------------------------------------------------------------------------------------
Count (Cnt) is the number of patients in each subset. C1, C2, and
C3 are a measure of the impact on resource use of patients in each of
the subsets. The C1, C2, and C3 values are a measure of the ratio of
average costs for patients with these conditions to the expected
average cost across all cases. The C1 value reflects a patient with no
other secondary diagnosis or with all other secondary diagnoses that
are non-CCs. The C2 value reflects a patient with at least one other
secondary diagnosis that is a CC but none that is a MCC. The C3 value
reflects a patient with at least one other secondary diagnosis that is
a MCC. A value close to 1.0 in the C1 field would suggest that the
diagnosis code produces the same expected value as a non-CC. A value
close to 2.0 suggests the condition is more like a CC than a non-CC but
not as significant in resource usage as an MCC. A value close to 3.0
suggests the condition is expected to consume resources more similar to
an MCC than a CC or non-CC. For additional details on this analysis, we
refer readers to the FY 2008 IPPS final rule (72 FR 47158 through
47161).
The following chart shows the analysis for each of the
encephalopathy diagnosis codes that are currently classified as MCCs.
[GRAPHIC] [TIFF OMITTED] TP05MY11.028
We ran the following data as described in FY 2008 IPPS final rule
(72 FR 47158 through 47161). The C1 value reflects a patient with no
other secondary diagnosis or with all other secondary diagnoses that
are non-CCs. The C2 value reflects a patient with at least one other
secondary diagnosis that is a CC but none that is a MCC. The C3 value
reflects a patient with at least one other secondary diagnosis that is
a MCC.
The chart above shows that the C1 findings ranged from a low of
1.5448 to a high of 2.3158. As stated earlier, a C1 value close to 2.0
suggests the condition is more like a CC than a non-CC but not as
significant in resource usage as an MCC. The C1 findings suggest that
these codes are more like a CC than a MCC. However, the C2 findings
ranged from a low of 2.5054 to a high of 3.0023. Values close to 3.0
suggests the condition is more similar to an MCC than a CC or non-CC.
The C2 findings support maintaining the encephalopathy codes as an MCC
level. The data are clearly mixed between the C1 and C2 findings, and
does not consistently support a change in the severity level. Our
clinical advisers recommended that these encephalopathy codes remain at
an MCC level because these patients with encephalopathy typically
utilize significant resources and are at a higher severity level. Based
on the clinical analysis and the lack of consistent claims data support
for the severity level change, we believe that the encephalopathy codes
should remain on the MCC list. Therefore, we are proposing to retain
the following encephalopathy codes on the MCC list:
348.30 (Encephalopathy NOS)
348.32 (Metabolic encephalopathy)
348.39 (Encephalopathy NEC)
349.82 (Toxic encephalopathy)
572.2 (Hepatic encephalopathy)
We invite public comment on our proposal not to change the severity
level classification for these codes.
(3) Suggested Changes to Severity Levels for Mechanical Complication
and Infection Due to Device Related Codes
We received a request to change the severity classification from
CCs to MCCs for the following diagnosis codes:
996.01 (Mechanical of cardiac device, implant and graft
due to cardiac pacemaker (electrode)).
996.04 (Mechanical complication of cardiac device,
implant, and graft due to automatic implantable cardiac defibrillator).
996.61 (Infection and inflammatory reaction due to
internal prosthetic device, implant, and graft due to cardiac device,
implant, and graft).
Currently, all three diagnosis codes are classified as a CC. For
this proposed rule, we analyzed claims data using the methodology
described previously in this section for these diagnosis codes. The
following chart shows our findings:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP05MY11.029
We reviewed the findings from these data. The C1 findings ranged
from a low of 1.6723 to a high of 1.9922. As stated earlier, a value
close to 2.0 in the C1 field suggests that the condition is more like a
CC than a non-CC but not as
[[Page 25838]]
significant in resource usage as an MCC. The C1 findings clearly
support the current classification of these three codes on the CC list
and the C2 findings supports this classification. Our clinical advisors
agree that the data findings and their own clinical evaluation of the
severity level of these conditions support the classification of these
three codes on the CC list. Therefore, we are proposing that these
codes remain on the CC list. We invite public comment on this proposal.
Tables 6G and 6H, Additions to and Deletions from the CC Exclusion
List, respectively, which are proposed to be effective for discharges
occurring on or after October 1, 2011, are not being published in the
Addendum to this proposed rule because of the length of the two tables.
Instead, we are making them available through the Internet on the CMS
Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS. Each of these
principal diagnoses for which there is a CC exclusion is shown in
Tables 6G and 6H, which are listed in section VI. of the Addendum to
this proposed rule (and available via the Internet) with an asterisk,
and the conditions that will not count as a CC, are provided in an
indented column immediately following the affected principal diagnosis.
A complete updated MCC, CC, and Non-CC Exclusions List is also
available through the Internet on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS. If finalized in this rulemaking
cycle, beginning with discharges on or after October 1, 2011, the
indented diagnoses will not be recognized by the GROUPER as valid CCs
for the asterisked principal diagnosis.
To assist readers in identifying the changes to the MCC and CC
lists that occurred as a result of updates to the ICD-9-CM codes, as
described in Tables 6A, 6C, and 6E, which are listed in section VI. of
the Addendum to this proposed rule and available via the Internet, we
are providing the following summaries of those MCC and CC changes for
FY 2012.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP05MY11.030
[[Page 25839]]
[GRAPHIC] [TIFF OMITTED] TP05MY11.031
[[Page 25840]]
BILLING CODE 4120-01-C
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with CMS, is
responsible for updating and maintaining the GROUPER program. The
current MS-DRG Definitions Manual, Version 28.0, is available on a CD
for $225.00. Version 29.0 of this manual, which will include the final
FY 2012 MS-DRG changes, will be available on a CD for $225.00. These
manuals may be obtained by writing 3M/HIS at the following address: 100
Barnes Road, Wallingford, CT 06492; or by calling (203) 949-0303, or by
obtaining an order form at the Web site: http://www.3MHIS.com. Please
specify the revision or revisions requested.
12. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through
986; and 987 Through 989
Each year, we review cases assigned to former CMS DRG 468
(Extensive O.R. Procedure Unrelated to Principal Diagnosis), CMS DRG
476 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis), and
CMS DRG 477 (Nonextensive O.R. Procedure Unrelated to Principal
Diagnosis) to determine whether it would be appropriate to change the
procedures assigned among these CMS DRGs. Under the MS-DRGs that we
adopted for FY 2008, CMS DRG 468 was split three ways and became MS-
DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively). CMS DRG
476 became MS-DRGs 984, 985, and 986 (Prostatic O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively). CMS DRG 477 became MS-DRGs 987, 988, and 989
(Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively).
MS-DRGs 981 through 983, 984 through 986, and 987 through 989
(formerly CMS DRGs 468, 476, and 477, respectively) are reserved for
those cases in which none of the O.R. procedures performed are related
to the principal diagnosis. These MS-DRGs are intended to capture
atypical cases, that is, those cases not occurring with sufficient
frequency to represent a distinct, recognizable clinical group. MS-DRGs
984 through 986 (previously CMS DRG 476) are assigned to those
discharges in which one or more of the following prostatic procedures
are performed and are unrelated to the principal diagnosis:
60.0, Incision of prostate
60.12, Open biopsy of prostate
60.15, Biopsy of periprostatic tissue
60.18, Other diagnostic procedures on prostate and
periprostatic tissue
60.21, Transurethral prostatectomy
60.29, Other transurethral prostatectomy
60.61, Local excision of lesion of prostate
60.69, Prostatectomy, not elsewhere classified
60.81, Incision of periprostatic tissue
60.82, Excision of periprostatic tissue
60.93, Repair of prostate
60.94, Control of (postoperative) hemorrhage of prostate
60.95, Transurethral balloon dilation of the prostatic
urethra
60.96, Transurethral destruction of prostate tissue by
microwave thermotherapy
60.97, Other transurethral destruction of prostate tissue
by other thermotherapy
60.99, Other operations on prostate
All remaining O.R. procedures are assigned to MS-DRGs 981 through
983 and 987 through 989, with MS-DRGs 987 through 989 assigned to those
discharges in which the only procedures performed are nonextensive
procedures that are unrelated to the principal diagnosis.\3\
---------------------------------------------------------------------------
\3\ The original list of the ICD-9-CM procedure codes for the
procedures we consider nonextensive procedures, if performed with an
unrelated principal diagnosis, was published in Table 6C in section
IV. of the Addendum to the FY 1989 final rule (53 FR 38591). As part
of the FY 1991 final rule (55 FR 36135), the FY 1992 final rule (56
FR 43212), the FY 1993 final rule (57 FR 23625), the FY 1994 final
rule (58 FR 46279), the FY 1995 final rule (59 FR 45336), the FY
1996 final rule (60 FR 45783), the FY 1997 final rule (61 FR 46173),
and the FY 1998 final rule (62 FR 45981), we moved several other
procedures from DRG 468 to DRG 477, and some procedures from DRG 477
to DRG 468. No procedures were moved in FY 1999, as noted in the
final rule (63 FR 40962); in FY 2000 (64 FR 41496); in FY 2001 (65
FR 47064); or in FY 2002 (66 FR 39852). In the FY 2003 final rule
(67 FR 49999) we did not move any procedures from DRG 477. However,
we did move procedure codes from DRG 468 and placed them in more
clinically coherent DRGs. In the FY 2004 final rule (68 FR 45365),
we moved several procedures from DRG 468 to DRGs 476 and 477 because
the procedures are nonextensive. In the FY 2005 final rule (69 FR
48950), we moved one procedure from DRG 468 to 477. In addition, we
added several existing procedures to DRGs 476 and 477. In the FY
2006 (70 FR 47317), we moved one procedure from DRG 468 and assigned
it to DRG 477. In FY 2007, we moved one procedure from DRG 468 and
assigned it to DRGs 479, 553, and 554. In FYs 2008, 2009, FY 2010,
and FY 2011, no procedures were moved, as noted in the FY 2008 final
rule with comment period (72 FR 46241), the FY 2009 final rule (73
FR 48513), the FY 2010 final rule (74 FR 43796); and the FY 2011
final rule (75 FR 50122).
---------------------------------------------------------------------------
Our review of MedPAR claims data showed that there were no cases
that merited movement or should logically be assigned to any of the
other MDCs. Therefore, for FY 2012, we are not proposing to change the
procedures assigned among these MS-DRGs.
a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987
Through 989 Into MDCs
We annually conduct a review of procedures producing assignment to
MS-DRGs 981 through 983 (Extensive O.R. procedure unrelated to
principal diagnosis with MCC, with CC, and without CC/MCC,
respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. procedure
unrelated to principal diagnosis with MCC, with CC, and without CC/MCC,
respectively) on the basis of volume, by procedure, to see if it would
be appropriate to move procedure codes out of these MS-DRGs into one of
the surgical MS-DRGs for the MDC into which the principal diagnosis
falls. The data are arrayed in two ways for comparison purposes. We
look at a frequency count of each major operative procedure code. We
also compare procedures across MDCs by volume of procedure codes within
each MDC.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical MS-DRGs for the MDC in which the diagnosis falls.
As noted above, there were no cases that merited movement or that
should logically be assigned to any of the other MDCs. Therefore, for
FY 2012, we are not proposing to remove any procedures from MS-DRGs 981
through 983 or MS-DRGs 987 through 989 into one of the surgical MS-DRGs
for the MDC into which the principal diagnosis is assigned.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984
Through 986, and 987 Through 989
We also annually review the list of ICD-9-CM procedures that, when
in combination with their principal diagnosis code, result in
assignment to MS-DRGs 981 through 983, 984 through 986 (Prostatic O.R.
procedure unrelated to principal diagnosis with MCC, with CC, or
without CC/MCC, respectively), and 987 through 989, to ascertain
whether any of those procedures should be reassigned from one of these
three MS-DRGs to another of the three MS-DRGs based on average charges
and the length of stay. We look at the data for trends such as shifts
in treatment practice or reporting practice that would make the
resulting MS-DRG assignment illogical. If we find these shifts, we
would propose to move cases to keep
[[Page 25841]]
the MS-DRGs clinically similar or to provide payment for the cases in a
similar manner. Generally, we move only those procedures for which we
have an adequate number of discharges to analyze the data.
There were no cases representing shifts in treatment practice or
reporting practice that would make the resulting MS-DRG assignment
illogical, or that merited movement so that cases should logically be
assigned to any of the other MDCs. Therefore, for FY 2012, we are not
proposing to move any procedure codes among these MS-DRGs.
c. Adding Diagnosis or Procedure Codes to MDCs
Based on the review of cases in the MDCs as described above in
sections III.G.12.a. and b., we are not proposing to add any diagnosis
or procedure codes to MDCs for FY 2012.
13. Changes to the ICD-9-CM Coding System, Including Discussion of the
Replacement of the ICD-9-CM Coding System With the ICD-10-CM and ICD-
10-PCS Systems in FY 2014
a. ICD-9-CM Coding System
As described in section II.B.1. of the preamble of this proposed
rule, the ICD-9-CM is a coding system currently used for the reporting
of diagnoses and procedures performed on a patient. In September 1985,
the ICD-9-CM Coordination and Maintenance Committee was formed. This is
a Federal interdepartmental committee, co-chaired by the National
Center for Health Statistics (NCHS), the Centers for Disease Control
and Prevention, and CMS, charged with maintaining and updating the ICD-
9-CM system. The Committee is jointly responsible for approving coding
changes, and developing errata, addenda, and other modifications to the
ICD-9-CM to reflect newly developed procedures and technologies and
newly identified diseases. The Committee is also responsible for
promoting the use of Federal and non-Federal educational programs and
other communication techniques with a view toward standardizing coding
applications and upgrading the quality of the classification system.
The Official Version of the ICD-9-CM contains the list of valid
diagnosis and procedure codes. (The Official Version of the ICD-9-CM is
available from the Government Printing Office on CD-ROM for $19.00 by
calling (202) 512-1800.) Complete information on ordering the CD-ROM is
also available at: http://www.cms.hhs.gov/ICD9ProviderDiagnosticCodes/05_CDROM.asp#TopOfPage. The Official Version of the ICD-9-CM is no
longer available in printed manual form from the Federal Government; it
is only available on CD-ROM. Users who need a paper version are
referred to one of the many products available from publishing houses.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
CMS has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed at the public
meetings and in writing, the Committee formulates recommendations,
which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2012 at a public meeting held on September 15-16,
2010 and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 19, 2010. Those
coding changes are announced in Tables 6A through 6F, which are listed
in section VI. of the Addendum to this proposed rule and available via
the Internet.
The Committee held its 2011 meeting on March 9-10, 2011. New codes
for which there was a consensus of public support and for which
complete tabular and indexing changes are made by May 2011 will be
included in the October 1, 2011 update to ICD-9-CM. Code revisions that
were discussed at the March 9-10, 2011 Committee meeting but that could
not be finalized in time to include them in the tables listed in
section VI. of the Addendum to this proposed rule will be included in
Tables 6A through 6F, which will be listed in section VI. of the
Addendum to the final rule and available via the Internet, and will be
marked with an asterisk (*).
Copies of the minutes of the procedure codes discussions at the
Committee's September 15-16, 2010 meeting and March 9-10, 2011 meeting
can be obtained from the CMS Web site at: http://cms.hhs.gov/ICD9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the
diagnosis codes discussions at the September 15-16, 2010 meeting and
March 9-10, 2011 meeting are found at: http://www.cdc.gov/nchs/icd.htm.
These Web sites also provide detailed information about the Committee,
including information on requesting a new code, attending a Committee
meeting, and timeline requirements and meeting dates.
We encourage commenters to address suggestions on coding issues
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-9-CM
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo
Road, Hyattsville, MD 20782. Comments may be sent by E-mail to:
[email protected].
Questions and comments concerning the procedure codes should be
addressed to: Patricia E. Brooks, Co-Chairperson, ICD-9-CM Coordination
and Maintenance Committee, CMS, Center for Medicare Management,
Hospital and Ambulatory Policy Group, Division of Acute Care, C4-08-06,
7500 Security Boulevard, Baltimore, MD 21244-1850. Comments may be sent
by E-mail to: [email protected].
The ICD-9-CM code changes that have been approved will become
effective October 1, 2011. The new ICD-9-CM codes are listed, along
with their MS-DRG classifications, in Tables 6A and 6B (New Diagnosis
Codes and New Procedure Codes, respectively), which are listed in
section VI. of the Addendum to this proposed rule and available via the
Internet. As we stated above, the code numbers and their titles were
presented for public comment at the ICD-9-CM Coordination and
Maintenance Committee meetings. Both oral and written comments were
considered before the codes were approved.
In this proposed rule, we are soliciting comments on the proposed
classification of these new codes, which are shown in Tables 6A and 6B
listed in section VI. of the Addendum to this proposed rule and
available via the Internet.
For codes that have been replaced by new or expanded codes, the
corresponding new or expanded diagnosis codes are included in Table 6A,
which is listed in section VI. of the Addendum to this proposed rule
and available via the Internet. New
[[Page 25842]]
procedure codes are shown in Table 6B, which is listed in section VI.
of the Addendum to this proposed rule and available via the Internet.
Diagnosis codes that have been replaced by expanded codes or other
codes or have been deleted are in Table 6C (Invalid Diagnosis Codes),
which is listed in section VI. of the Addendum to this proposed rule
and available via the Internet. These invalid diagnosis codes will not
be recognized by the GROUPER beginning with discharges occurring on or
after October 1, 2011. Table 6D, which is listed in section VI. of the
Addendum to this proposed rule and available via the Internet contains
invalid procedure codes. These invalid procedure codes will not be
recognized by the GROUPER beginning with discharges occurring on or
after October 1, 2011. Revisions to diagnosis code titles are in Table
6E (Revised Diagnosis Code Titles), which is listed in section VI. of
the Addendum to this proposed rule and available via the Internet, and
also includes the MS-DRG assignments for these revised codes. Table 6F,
which is listed in section VI. of the Addendum to this proposed rule
and available via the Internet includes revised procedure code titles
for FY 2012.
In the September 7, 2001 final rule implementing the IPPS new
technology add-on payments (66 FR 46906), we indicated we would attempt
to include proposals for procedure codes that would describe new
technology discussed and approved at the Spring meeting as part of the
code revisions effective the following October. As stated previously,
ICD-9-CM codes discussed at the March 9-10, 2011 Committee meeting that
received consensus and that are finalized by May 2011 will be included
in Tables 6A through 6F, which will be listed in section VI. of the
Addendum to the final rule and available via the Internet.
Section 503(a) of Public Law 108-173 included a requirement for
updating ICD-9-CM codes twice a year instead of a single update on
October 1 of each year. This requirement was included as part of the
amendments to the Act relating to recognition of new technology under
the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by
adding a clause (vii) which states that the ``Secretary shall provide
for the addition of new diagnosis and procedure codes on April 1 of
each year, but the addition of such codes shall not require the
Secretary to adjust the payment (or diagnosis-related group
classification) * * * until the fiscal year that begins after such
date.'' This requirement improves the recognition of new technologies
under the IPPS system by providing information on these new
technologies at an earlier date. Data will be available 6 months
earlier than would be possible with updates occurring only once a year
on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the
addition of new diagnosis and procedure codes on April 1 of each year
shall not require the Secretary to adjust the payment, or DRG
classification, under section 1886(d) of the Act until the fiscal year
that begins after such date, we have to update the DRG software and
other systems in order to recognize and accept the new codes. We also
publicize the code changes and the need for a mid-year systems update
by providers to identify the new codes. Hospitals also have to obtain
the new code books and encoder updates, and make other system changes
in order to identify and report the new codes.
The ICD-9-CM Coordination and Maintenance Committee holds its
meetings in the spring and fall in order to update the codes and the
applicable payment and reporting systems by October 1 of each year.
Items are placed on the agenda for the ICD-9-CM Coordination and
Maintenance Committee meeting if the request is received at least 2
months prior to the meeting. This requirement allows time for staff to
review and research the coding issues and prepare material for
discussion at the meeting. It also allows time for the topic to be
publicized in meeting announcements in the Federal Register as well as
on the CMS Web site. The public decides whether or not to attend the
meeting based on the topics listed on the agenda. Final decisions on
code title revisions are currently made by March 1 so that these titles
can be included in the IPPS proposed rule. A complete addendum
describing details of all changes to ICD-9-CM, both tabular and index,
is published on the CMS and NCHS Web sites in May of each year.
Publishers of coding books and software use this information to modify
their products that are used by health care providers. This 5-month
time period has proved to be necessary for hospitals and other
providers to update their systems.
A discussion of this timeline and the need for changes are included
in the December 4-5, 2005 ICD-9-CM Coordination and Maintenance
Committee minutes. The public agreed that there was a need to hold the
fall meetings earlier, in September or October, in order to meet the
new implementation dates. The public provided comment that additional
time would be needed to update hospital systems and obtain new code
books and coding software. There was considerable concern expressed
about the impact this new April update would have on providers.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We also established the following process for
making these determinations. Topics considered during the Fall ICD-9-CM
Coordination and Maintenance Committee meeting are considered for an
April 1 update if a strong and convincing case is made by the requester
at the Committee's public meeting. The request must identify the reason
why a new code is needed in April for purposes of the new technology
process. The participants at the meeting and those reviewing the
Committee meeting summary report are provided the opportunity to
comment on this expedited request. All other topics are considered for
the October 1 update. Participants at the Committee meeting are
encouraged to comment on all such requests. There were no requests
approved for an expedited April l, 2011 implementation of an ICD-9-CM
code at the September 15-16, 2010 Committee meeting. Therefore, there
were no new ICD-9-CM codes implemented on April 1, 2011.
Current addendum and code title information is published on the CMS
Web site at: http://www.cms.hhs.gov/icd9ProviderDiagnosticCodes/01_overview.asp#TopofPage. Information on ICD-9-CM diagnosis codes, along
with the Official ICD-9-CM Coding Guidelines, can be found on the Web
site at: http://www.cdc.gov/nchs/icd9.htm. Information on new, revised,
and deleted ICD-9-CM codes is also provided to the AHA for publication
in the Coding Clinic for ICD-9-CM. AHA also distributes information to
publishers and software vendors.
CMS also sends copies of all ICD-9-CM coding changes to its
Medicare contractors for use in updating their systems and providing
education to providers.
These same means of disseminating information on new, revised, and
deleted ICD-9-CM codes will be used to notify providers, publishers,
software vendors, contractors, and others of any changes to the ICD-9-
CM codes that are implemented in April. The code titles
[[Page 25843]]
are adopted as part of the ICD-9-CM Coordination and Maintenance
Committee process. Thus, although we publish the code titles in the
IPPS proposed and final rules, they are not subject to comment in the
proposed or final rules. We will continue to publish the October code
updates in this manner within the IPPS proposed and final rules. For
codes that are implemented in April, we will assign the new procedure
code to the same MS-DRG in which its predecessor code was assigned so
there will be no MS-DRG impact as far as MS-DRG assignment. Any midyear
coding updates will be available through the Web sites indicated above
and through the Coding Clinic for ICD-9-CM. Publishers and software
vendors currently obtain code changes through these sources in order to
update their code books and software systems. We will strive to have
the April 1 updates available through these Web sites 5 months prior to
implementation (that is, early November of the previous year), as is
the case for the October 1 updates.
b. Code Freeze
The International Classification of Diseases, 10th Revision (ICD-
10) coding system applicable to hospital inpatient services will be
implemented on October 1, 2013, as described in the Health Insurance
Portability and Accountability Act (HIPAA) Administrative
Simplification: Modifications to Medical Data Code Set Standards to
Adopt ICD-10-CM and ICD-10-PCS final rule (74 FR 3328 through 3362,
January 16, 2009). The ICD-10 coding system includes the International
Classification of Diseases, 10th Revision, Clinical Modification (ICD-
10-CM) for diagnosis coding and the International Classification of
Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for
inpatient hospital procedure coding, as well as the Official ICD-10-CM
and ICD-10-PCS Guidelines for Coding and Reporting. In the January 16,
2009 ICD-10-CM and ICD-10-PCS final rule (74 FR 3328 through 3362),
there was a discussion of the need for a partial or total freeze in the
annual updates to both ICD-9-CM and ICD-10-CM and ICD-10-PCS codes. The
public comment addressed in that final rule stated that the annual code
set updates should cease l year prior to the implementation of ICD-10.
The commenters stated that this freeze of code updates would allow for
instructional and/or coding software programs to be designed and
purchased early, without concern that an upgrade would take place
immediately before the compliance date, necessitating additional
updates and purchases.
We responded to comments in the ICD-10 final rule that the ICD-9-CM
Coordination and Maintenance Committee has jurisdiction over any action
impacting the ICD-9-CM and ICD-10 code sets. Therefore, we indicated
that the issue of consideration of a moratorium on updates to the ICD-
9-CM, ICD-10-CM, and ICD-10-PCS code sets in anticipation of the
adoption of ICD-10-CM and ICD-10-PCS would be addressed through the
Committee at a future public meeting.
The code freeze was discussed at multiple meetings of the ICD-9-CM
Coordination and Maintenance Committee and public comment was actively
solicited. The Committee evaluated all comments from participants
attending the Committee meetings as well as written comments that were
received. There was an announcement at the September 15-16, 2010 ICD-9-
CM Coordination and Maintenance Committee meeting that a partial freeze
of both ICD-9-CM and ICD-10 codes would be implemented as follows:
The last regular annual update to both ICD-9-CM and ICD-10
code sets will be made on October 1, 2011.
On October 1, 2012, there will be only limited code
updates to both ICD-9-CM and ICD-10 code sets to capture new technology
and new diseases.
There will be no updates to ICD-9-CM on October 1, 2013,
as the system will no longer be a HIPAA standard. There will be only
limited code updates to ICD-10 code sets on October 1, 2013, to capture
new technology and new diseases.
On October 1, 2014, regular updates to ICD-10 will begin.
The ICD-9-CM Coordination and Maintenance Committee announced that
it would continue to meet twice a year during the freeze. At these
meetings, the public will be encouraged to comment on whether or not
requests for new diagnosis and procedure codes should be created based
on the need to capture new technology and new diseases. Any code
requests that do not meet the criteria will be evaluated for
implementation within ICD-10 on or after October 1, 2014, once the
partial freeze is ended.
Complete information on the partial code freeze and discussions of
the issues at the Committee meetings can be found on the ICD-9-CM
Coordination and Maintenance Committee Web site at: http://www.cms.gov/ICD9ProviderDiagnosticCodes/03. A summary of the September 15-16, 2010
Committee meeting, along with both written and audio transcripts of
this meeting, are posted on the ``Download'' section of this Web page.
c. Processing of 25 Diagnosis Codes and 25 Procedure Codes on Hospital
Inpatient Claims
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50127), we discussed
that we had received repeated requests from the hospital community to
process all 25 diagnosis codes and 25 procedure codes submitted on
electronic hospital inpatient claims. Prior to January 1, 2011,
hospitals could submit up to 25 diagnoses and 25 procedures; however,
CMS' system limitations allowed for the processing of only the first 9
diagnoses and 6 procedures. We indicated in that final rule that, as
part of our efforts to update Medicare systems prior to the
implementation of ICD-10 on October 1, 2013, we were undergoing
extensive system updates as part of the move to 5010, which includes
the ability to accept ICD-10 codes. This complicated transition
involved converting many internal systems prior to October 1, 2013,
when ICD-10 will be implemented. We stated that, as one important step
in this planned conversion process, we were planning to complete the
expansion of our internal system capability so that we are able to
process up to 25 diagnoses and 25 procedures on hospital inpatient
claims as part of the HIPAA ASC X12 Technical Reports Type 3, Version
005010 (Version 5010) standards system update. We have not completed
this expansion, and, as a result, we were able to process up to 25
diagnosis codes and 25 procedure codes when received on the 5010 format
starting on January 1, 2011. We continue to recognize the value of the
additional information provided by this coded data for multiple uses
such as for payment, quality measures, outcome analysis, and other
important uses.
d. ICD-10 MS-DRGs
In response to the FY 2011 IPPS/LTCH PPS proposed rule, we received
comments on the creation of the ICD-10 version of the MS-DRGs, which
will be implemented on October 1, 2013 (FY 2014) when we implement the
reporting of ICD-10 codes (75 FR 50127 and 50128). While we did not
propose an ICD-10 version of the MS-DRGs in the FY 2011 IPPS/LTCH PPS
proposed rule, we noted that we have been actively involved in
converting our current MS-DRGs from ICD-9-CM codes to ICD-10 codes and
sharing this information through the ICD-9-CM Coordination and
Maintenance Committee. We undertook this early conversion project
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to assist other payers and providers in understanding how to go about
their own conversion projects. We posted ICD-10 MS-DRGs based on V26.0
(FY 2009) of the MS-DRGs. We also posted a paper that describes how CMS
went about completing this project and suggestions for others to
follow. All of this information can be found on the CMS Web site at:
http://www.cms.gov/ICD10/17_ICD10_MS_DRG_Conversion_Project.asp.
We have continued to keep the public updated on our maintenance efforts
for ICD-10-CM and ICD-10-PCS coding systems as well as the General
Equivalence Mappings that assist in conversion through the ICD-9-CM
Coordination and Maintenance Committee. Information on these committee
meetings can be found at: http://www.cms.gov/ICD9ProviderDiagnosticCodes/03_meetings.asp.
During FY 2011, we developed and posted Version 28.0 of the ICD-10
MS-DRGs based on the FY 2011 MS-DRGs (Version 28.0) that we finalized
in the FY 2011 IPPS/LTCH PPS final rule on the CMS Web site. This ICD-
10 MS-DRG Version 28.0 also includes the CC Exclusion List and the ICD-
10 version of the hospital acquired conditions (HACs), which was not
posted with Version 26.0. We also discussed this update at the
September 15-16, 2010 and the March 9-10, 2011 meetings of the ICD-9-CM
Coordination and Maintenance Committee. The minutes of these two
meetings are posted on the CMS Web site at: http://www.cms.gov/ICD9ProviderDiagnosticCodes/03_meetings.asp. We will continue to work
with the public to explain how we are approaching the conversion of MS-
DRGs to ICD-10 and will post drafts of updates as they are developed
for public review. The final version of the ICD-10 MS-DRGs to be
implemented in FY 2014 will be subject to notice and comment
rulemaking. In the meantime, we will provide extensive and detailed
information on this activity through the ICD-9-CM Coordination and
Maintenance Committee.
14. Other Issues
a. O.R./Non-O.R. Status of Procedures
(1) Brachytherapy Code
We received a request that we add ICD-9-CM procedure code 92.27
(Implantation or Insertion of Radioactive Elements) [Brachytherapy]
into 41 MS-DRGs that are listed below:
129 (Major Head and Neck Procedures with CC/MCC or Major
Device)
130 (Major Head and Neck Procedures without CC/MCC)
163 (Major Chest Procedures with MCC)
164 (Major Chest Procedures with CC)
165 (Major Chest Procedures without CC/MCC)
180 (Respiratory Neoplasms with MCC)
181 (Respiratory Neoplasms with CC)
182 (Respiratory Neoplasms without CC/MCC)
326 (Stomach, Esophageal and Duodenal Procedures with MCC)
327 (Stomach, Esophageal and Duodenal Procedures with CC)
328 (Stomach, Esophageal and Duodenal Procedures without
CC/MCC)
329 (Major Small and Large Bowel Procedures with MCC)
330 (Major Small and Large Bowel Procedures with CC)
331 (Major Small and Large Bowel Procedures without CC/
MCC)
332 (Rectal Resection with MCC)
333 (Rectal Resection with CC)
334 (Rectal Resection without CC/MCC)
344 (Minor Small and Large Bowel Procedures with MCC)
345 (Minor Small and Large Bowel Procedures with CC)
346 (Minor Small and Large Bowel Procedures without CC/
MCC)
347 (Anal and Stomal Procedures with MCC)
348 (Anal and Stomal Procedures with CC)
349 (Anal and Stomal Procedures without CC/MCC)
405 (Pancreas, Liver and Shunt Procedures with MCC)
406 (Pancreas, Liver and Shunt Procedures with CC)
407 (Pancreas, Liver and Shunt Procedures without CC/MCC)
490 (Back and Neck Procedures Except Spinal Fusion with
CC/MCC or Disc Device/Neurostimulator)
491 (Back and Neck Procedures Except Spinal Fusion without
CC/MCC)
500 (Soft Tissue procedures with MCC)
501 (Soft Tissue procedures with CC)
502 (Soft Tissue procedures without CC/MCC)
584 (Breast Biopsy, Local Excision and Other Breast
Procedures with CC/MCC)
585 (Breast Biopsy, Local Excision and Other Breast
Procedures without CC/MCC)
597 (Malignant Breast Disorders with MCC)
598 (Malignant Breast Disorders with CC)
599 (Malignant Breast Disorders without CC/MCC)
653 (Major Bladder Procedures with MCC)
654 (Major Bladder Procedures with CC)
655 (Major Bladder Procedures without CC/MCC)
656 (Kidney and Ureter Procedures for Neoplasm with MCC)
657 (Kidney and Ureter Procedures for Neoplasm with CC)
658 (Kidney and Ureter Procedures for Neoplasm without CC/
MCC)
662 (Minor Bladder Procedures with MCC)
663 (Minor Bladder Procedures with CC)
664 (Minor Bladder Procedures without CC/MCC)
668 (Transurethral Procedures with MCC)
669 (Transurethral Procedures with CC)
670 (Transurethral Procedures without CC/MCC)
671 (Urethral Procedures with CC/MCC)
672 (Urethral Procedures without CC/MCC)
707 (Major Male Pelvic Procedures with CC/MCC)
708 (Major Male Pelvic Procedures without CC/MCC)
736 (Uterine and Adnexa Procedures for Ovarian or Adnexal
Malignancy with MCC)
737 (Uterine and Adnexa Procedures for Ovarian or Adnexal
Malignancy with CC)
738 (Uterine and Adnexa Procedures for Ovarian or Adnexal
Malignancy without CC/MCC)
739 (Uterine and Adnexa Procedures for Nonovarian or
Adnexal Malignancy with MCC)
740 (Uterine and Adnexa Procedures for Nonovarian or
Adnexal Malignancy with CC)
741 (Uterine and Adnexa Procedures for Nonovarian or
Adnexal Malignancy without CC/MCC)
746 (Vagina, Cervix and Vulva Procedures with CC/MCC)
747 (Vagina, Cervix and Vulva Procedures without CC/MCC)
748 (Female Reproductive System Reconstructive Procedures)
749 (Other Female Reproductive System O.R. Procedures with
CC/MCC)
750 (Other Female Reproductive System O.R. Procedures
without CC/MCC)
We examined MedPAR claims data on this request and only found 150
cases throughout these MS-DRGs. Our findings are presented in the table
below.
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The numbers of cases in any of the MS-DRGs listed were minimal.
Many of the MS-DRGs listed had no occurrences of procedure code 92.27.
The highest number of cases found was 52, in MS-DRG 164 (Major Chest
Procedures with CC). Based on these findings, we do not believe that
making a MS-DRG change based on such a minimal number of cases can be
justified. Therefore, we are proposing not to add procedure code 92.27
to any of the 41 MS-DRGs listed above. Further, we are not proposing
any MS-DRG changes for procedure code 92.27. We welcome public comment
on our proposal not to make changes to procedure code 92.27.
(2) Intraoperative Electron Radiation Therapy (IOERT)
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We received a public comment that was outside of the scope of the
FY 2011 IPPS/LTCH PPS proposed rule regarding the MS-DRG assignment for
intraoperative electron radiation therapy (IOERT). This issue was
discussed briefly in the FY 2011 IPPS/LTCH PPS final rule (75 FR
50128). However, we are addressing this issue in this FY 2012 proposed
rule. IOERT is the direct application of radiation to a tumor and/or
tumor bed while the patient is undergoing surgery for cancer. This
technology may be used for cancers of the rectum, head/neck, pancreas,
lung, genitourinary, soft tissue, and breast. IOERT is a secondary
procedure performed during the primary tumor removal surgery.
The commenter requested that CMS update the MS-DRG assignments for
procedure code 92.41 (Intraoperative electron radiation therapy) to
ensure that the cost of this technology is captured in each MS-DRG
involving tumor removal in the rectum, head/neck, pancreas, lung,
genitourinary, soft tissue, and breast. Currently, this code is not
assigned to a specific MS-DRG as the primary procedure performed, the
tumor removal, would determine the appropriate MS-DRG assignment.
The commenter provided a recommended list of MS-DRGs to which IOERT
should be assigned:
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Based on our review of the FY 2010 MedPAR claims data, we found a
total of 12 cases with procedure code 92.41 reported. There were three
cases assigned to MS-DRG 502; two cases each assigned to two different
MS-DRGs: MS-DRG 333 and MS-DRG 501; and one case assigned each to five
MS-DRGs: MS-DRGs 130, 168, 327, 329, and 330.
The IOERT cases were assigned to an MS-DRG that included the tumor
removal of that particular site, which was listed on the table above.
Therefore, the cost of this technology is appropriately identified in
the MS-DRG assignment for the removal of the tumor by specific site,
and no change is warranted at this time. Therefore, we are not
proposing any changes to the assignment for IOERT cases. We invite
public comment on our proposal to not change the assignment for IOERT
cases for FY 2012.
b. IPPS Recalled Device Policy Clarification
In the FY 2008 IPPS final rule with comment period (72 FR 47246
through 47251), we discussed the topic of Medicare payment for devices
that are replaced without cost or where credit for a replaced device is
furnished to the hospital. We implemented a policy to reduce a
hospital's IPPS payment for certain MS-DRGs where the implantation of a
device that has been recalled determined the base MS-DRG assignment. At
that time, we specified that we would reduce a hospital's IPPS payment
for those MS-DRGs where the hospital received a credit equal to 50
percent or more of the cost of the device when a manufacturer provided
a credit for a recalled device.
A similar policy was adopted under the Outpatient Prospective
Payment System (OPPS) in CY 2008 (the ``partial credit'' policy). This
policy can be viewed in its entirety at 72 FR 66743 though 66748. In
general terms, under the partial credit policy, CMS reduces the amount
of payment for an implanted device made under the OPPS for which CMS
determines that a significant portion of the payment is attributable to
the cost of an implanted device when the provider receives partial
credit for the cost of a replaced device, but only where the amount of
the device credit is greater than or equal to 50 percent of the cost of
the new replacement device being implanted.
It has come to our attention that there is a discrepancy between
the IPPS policy and the OPPS partial credit policy for replacement
devices. In particular, the OPPS partial credit policy specifies that
the credit must be 50 percent or greater of the cost of the replacement
device. However, the IPPS policy does not specify whether the credit
should be 50 percent or greater of the replacement device or the
original device. We believe that the OPPS partial credit policy and the
IPPS policy should be consistent with each other on the issue of
whether the 50 percent or more credit is with respect to the
replacement device or the original device. Therefore, we are proposing
to clarify the IPPS policy to state that the policy applies where ``the
hospital received a credit equal to 50 percent or more of the cost of
the replacement device.'' We invite public comment on this proposal.
H. Recalibration of MS-DRG Weights
In developing the proposed FY 2012 system of weights, we used two
data sources: Claims data and cost report data. As in previous years,
the claims data source is the MedPAR file. This file is based on fully
coded diagnostic and procedure data for all Medicare inpatient hospital
bills. The FY 2010 MedPAR data used in this proposed rule include
discharges occurring on October 1, 2009, through September 30, 2010,
based on bills received by CMS through December 31, 2010, from all
hospitals subject to the IPPS and short-term, acute care hospitals in
Maryland (which are under a waiver from the IPPS under section
1814(b)(3) of the Act). The FY 2010 MedPAR file used in calculating the
proposed relative weights includes data for approximately 10,814,950
Medicare discharges from IPPS providers. Discharges for Medicare
beneficiaries enrolled in a Medicare Advantage managed care plan are
excluded from this analysis. These discharges are excluded when the
MedPAR ``GHO Paid'' indicator field on the claim record is equal to
``1'' or when the MedPAR DRG payment field, which represents the total
payment for the claim, is equal to the MedPAR ``Indirect Medical
Education (IME)'' payment field, indicating that the claim was an ``IME
only'' claim submitted by a teaching hospital on behalf of a
beneficiary enrolled in a Medicare Advantage managed care plan. The
data exclude CAHs, including hospitals that subsequently became CAHs
after the period from which the data were taken. The second data source
used in the cost-based relative weighting methodology is the FY 2009
Medicare cost report data files from HCRIS (that is, cost reports
beginning on or after October 1, 2008, and before October 1, 2009),
which represents the most recent full set of cost report data
available. We used the December 31, 2010 update of the HCRIS cost
report files for FY 2009 in setting the relative cost-based weights.
The methodology we used to calculate the DRG cost-based relative
weights from the FY 2010 MedPAR claims data and FY 2009 Medicare cost
report data is as follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2012 MS-DRG classifications discussed in sections
II.B. and G. of the preamble of this proposed rule.
The transplant cases that were used to establish the
relative weights for heart and heart-lung, liver and/or intestinal, and
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively)
were limited to those Medicare-approved transplant centers that have
cases in the FY 2010 MedPAR file. (Medicare coverage for heart, heart-
lung, liver and/or intestinal, and lung transplants is limited to those
facilities that have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis. Because
these acquisition costs are paid separately from the prospective
payment rate, it is necessary to subtract the acquisition charges from
the total charges on each transplant bill that showed acquisition
charges before computing the average cost for each MS-DRG and before
eliminating statistical outliers.
Claims with total charges or total lengths of stay less
than or equal to zero were deleted. Claims that had an amount in the
total charge field that differed by more than $10.00 from the sum of
the routine day charges, intensive care charges, pharmacy charges,
special equipment charges, therapy services charges, operating room
charges, cardiology charges, laboratory charges, radiology charges,
other service charges, labor and delivery charges, inhalation therapy
charges, emergency room charges, blood charges, and anesthesia charges
were also deleted.
At least 96.2 percent of the providers in the MedPAR file
had charges for 10 of the 15 cost centers. Claims for providers that
did not have charges greater than zero for at least 10 of the 15 cost
centers were deleted.
Statistical outliers were eliminated by removing all cases
that were beyond 3.0 standard deviations from the mean of the log
distribution of both the total charges per case and the total charges
per day for each MS-DRG.
Effective October 1, 2008, because hospital inpatient
claims include a POA
[[Page 25850]]
indicator field for each diagnosis present on the claim, only for
purposes of relative weight-setting, the POA indicator field was reset
to ``Y'' for ``Yes'' for all claims that otherwise have an ``N'' (No)
or a ``U'' (documentation insufficient to determine if the condition
was present at the time of inpatient admission) in the POA field.
Under current payment policy, the presence of specific HAC codes,
as indicated by the POA field values, can generate a lower payment for
the claim. Specifically, if the particular condition is present on
admission (that is, a ``Y'' indicator is associated with the diagnosis
on the claim), then it is not a HAC, and the hospital is paid for the
higher severity (and, therefore, the higher weighted MS-DRG). If the
particular condition is not present on admission (that is, an ``N''
indicator is associated with the diagnosis on the claim) and there are
no other complicating conditions, the DRG GROUPER assigns the claim to
a lower severity (and, therefore, the lower weighted MS-DRG) as a
penalty for allowing a Medicare inpatient to contract a HAC. While the
POA reporting meets policy goals of encouraging quality care and
generates program savings, it presents an issue for the relative
weight-setting process. Because cases identified as HACs are likely to
be more complex than similar cases that are not identified as HACs, the
charges associated with HACs are likely to be higher as well. Thus, if
the higher charges of these HAC claims are grouped into lower severity
MS-DRGs prior to the relative weight-setting process, the relative
weights of these particular MS-DRGs would become artificially inflated,
potentially skewing the relative weights. In addition, we want to
protect the integrity of the budget neutrality process by ensuring
that, in estimating payments, no increase to the standardized amount
occurs as a result of lower overall payments in a previous year that
stem from using weights and case-mix that are based on lower severity
MS-DRG assignments. If this would occur, the anticipated cost savings
from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to ``Y''
only for relative weight-setting purposes for all claims that otherwise
have a ``N'' or an ``U'' in the POA field. This resetting ``forced''
the more costly HAC claims into the higher severity MS-DRGs as
appropriate, and the relative weights calculated for each MS-DRG more
closely reflect the true costs of those cases.
Once the MedPAR data were trimmed and the statistical outliers were
removed, the charges for each of the 15 cost groups for each claim were
standardized to remove the effects of differences in area wage levels,
IME and DSH payments, and for hospitals in Alaska and Hawaii, the
applicable cost-of-living adjustment. Because hospital charges include
charges for both operating and capital costs, we standardized total
charges to remove the effects of differences in geographic adjustment
factors, cost-of-living adjustments, and DSH payments under the capital
IPPS as well. Charges were then summed by MS-DRG for each of the 15
cost groups so that each MS-DRG had 15 standardized charge totals.
These charges were then adjusted to cost by applying the national
average CCRs developed from the FY 2009 cost report data.
The 15 cost centers that we used in the relative weight calculation
are shown in the following table. The table shows the lines on the cost
report and the corresponding revenue codes that we used to create the
15 national cost center CCRs.
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We developed the national average CCRs as follows:
Taking the FY 2009 cost report data, we removed CAHs, Indian Health
Service hospitals, all-inclusive rate hospitals, and cost reports that
represented time periods of less than 1 year (365 days). We included
hospitals located in Maryland as we are including their charges in our
claims database. We then created CCRs for each provider for each cost
center (see prior table for line items used in the calculations) and
removed any CCRs that were greater than 10 or less than 0.01. We
normalized the departmental CCRs by dividing the CCR for each
department by the total CCR for the hospital for the purpose of
trimming the data. We then took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that cost center CCR. Once the cost
report data were trimmed, we calculated a Medicare-specific CCR. The
Medicare-specific CCR was determined by taking the Medicare charges for
each line item from Worksheet D-4 and deriving the Medicare-specific
costs by applying the hospital-specific departmental CCRs to the
Medicare-specific charges for each line item from Worksheet D-4. Once
each hospital's Medicare-specific costs were established, we summed the
total Medicare-specific costs and divided by the sum of the total
Medicare-specific charges to produce national average, charge-weighted
CCRs.
After we multiplied the total charges for each MS-DRG in each of
the 15 cost centers by the corresponding national average CCR, we
summed the 15 ``costs'' across each MS-DRG to produce a total
standardized cost for the MS-DRG. The average standardized cost for
each MS-DRG was then computed as the total standardized cost for the
MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The
average cost for each MS-DRG was then divided by the national average
standardized cost per case to determine the relative weight.
The new cost-based relative weights were then normalized by an
adjustment factor of 1.5798292955 so that the average case weight after
recalibration was equal to the average case weight before
recalibration. The normalization adjustment is intended to ensure that
recalibration by itself neither increases nor decreases total payments
under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
The 15 proposed national average CCRs for FY 2012 are as follows:
[GRAPHIC] [TIFF OMITTED] TP05MY11.042
Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. In this FY 2012 IPPS/LTCH PPS proposed
rule, we are proposing to use that same case threshold in recalibrating
the MS-DRG weights for FY 2012. Using the FY 2010 MedPAR data set,
there are 8 MS-DRGs that contain fewer than 10 cases. Under the MS-
DRGs, we have fewer low-volume DRGs than under the CMS DRGs because we
no longer have separate DRGs for patients age 0 to 17 years. With the
exception of newborns, we previously separated some DRGs based on
whether the patient was age 0 to 17 years or age 17 years and older.
Other than the age split, cases grouping to these DRGs are identical.
The DRGs for patients age 0 to 17 years generally have very low volumes
because children are typically ineligible for Medicare. In the past, we
have found that the low volume of cases for the pediatric DRGs could
lead to significant year-to-year instability in their relative weights.
Although we have always encouraged non-Medicare payers to develop
weights applicable to their own patient populations, we have heard
frequent complaints from providers about the use of the Medicare
relative weights in the pediatric population. We believe that
eliminating this age split in the MS-DRGs will provide more stable
payment for pediatric cases by determining their payment using adult
cases that are much higher in total volume. Newborns are unique and
require separate MS-DRGs that are not mirrored in the adult population.
Therefore, it remains necessary to retain separate MS-DRGs for
newborns. All of the low-volume MS-DRGs listed below are for newborns.
In FY 2012, because we do not have sufficient MedPAR data to set
accurate and stable cost weights for these low-volume MS-DRGs, we are
[[Page 25858]]
proposing to compute weights for the low-volume MS-DRGs by adjusting
their FY 2011 weights by the percentage change in the average weight of
the cases in other MS-DRGs. The crosswalk table is shown below:
[GRAPHIC] [TIFF OMITTED] TP05MY11.043
I. Proposed Add-On Payments for New Services and Technologies
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, ``based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate.'' We note that
beginning with discharges occurring in FY 2008, CMS transitioned from
CMS-DRGs to MS-DRGs.
The regulations implementing these provisions specify three
criteria for a new medical service or technology to receive the
additional payment: (1) The medical service or technology must be new;
(2) the medical service or technology must be costly such that the DRG
rate otherwise applicable to discharges involving the medical service
or technology is determined to be inadequate; and (3) the service or
technology must demonstrate a substantial clinical improvement over
existing services or technologies. These
[[Page 25859]]
three criteria are explained below in the ensuing paragraphs in further
detail.
Under the first criterion, as reflected in 42 CFR 412.87(b)(2), a
specific medical service or technology will be considered ``new'' for
purposes of new medical service or technology add-on payments until
such time as Medicare data are available to fully reflect the cost of
the technology in the MS-DRG weights through recalibration. Typically,
there is a lag of 2 to 3 years from the point a new medical service or
technology is first introduced on the market (generally on the date
that the technology receives FDA approval/clearance) and when data
reflecting the use of the medical service or technology are used to
calculate the MS-DRG weights. For example, data from discharges
occurring during FY 2010 are used to calculate the FY 2012 MS-DRG
weights in this proposed rule. Section 412.87(b)(2) of the regulations
therefore provides that ``a medical service or technology may be
considered new within 2 or 3 years after the point at which data begin
to become available reflecting the ICD-9-CM code assigned to the new
medical service or technology (depending on when a new code is assigned
and data on the new medical service or technology become available for
DRG recalibration). After CMS has recalibrated the MS-DRGs, based on
available data to reflect the costs of an otherwise new medical service
or technology, the medical service or technology will no longer be
considered `new' under the criterion for this section.''
The 2-year to 3-year period during which a medical service or
technology can be considered new would ordinarily begin on the date on
which the medical service or technology received FDA approval or
clearance. (We note that, for purposes of this section of this proposed
rule, we generally refer to both FDA approval and FDA clearance as FDA
``approval.'') However, in some cases, there may be few to no Medicare
data available for the new service or technology following FDA
approval. For example, the newness period could extend beyond the 2-
year to 3-year period after FDA approval is received in cases where the
product initially was generally unavailable to Medicare patients
following FDA approval, such as in cases of a national noncoverage
determination or a documented delay in bringing the product onto the
market after that approval (for instance, component production or drug
production has been postponed following FDA approval due to shelf life
concerns or manufacturing issues). After the MS-DRGs have been
recalibrated to reflect the costs of an otherwise new medical service
or technology, the medical service or technology is no longer eligible
for special add-on payment for new medical services or technologies (as
specified under Sec. 412.87(b)(2)). For example, an approved new
technology that received FDA approval in October 2009 and entered the
market at that time may be eligible to receive add-on payments as a new
technology for discharges occurring before October 1, 2012 (the start
of FY 2013). Because the FY 2013 MS-DRG weights would be calculated
using FY 2011 MedPAR data, the costs of such a new technology would be
fully reflected in the FY 2013 MS-DRG weights. Therefore, the new
technology would no longer be eligible to receive add-on payments as a
new technology for discharges occurring in FY 2013 and thereafter.
We do not consider a service or technology to be new if it is
substantially similar to one or more existing technologies. That is,
even if a technology receives a new FDA approval, it may not
necessarily be considered ``new'' for purposes of new technology add-on
payments if it is ``substantially similar'' to a technology that was
approved by FDA and has been on the market for more than 2 to 3 years.
In the FY 2006 IPPS final rule (70 FR 47351), we explained our policy
regarding substantial similarity in detail and its relevance for
assessing if the hospital charge data used in the development of the
relative weights for the relevant DRGs reflect the costs of the
technology. In that final rule, we stated that, for determining
substantial similarity, we consider (1) Whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, and
(2) whether a product is assigned to the same or a different DRG. We
indicated that both of the above criteria should be met in order for a
technology to be considered ``substantially similar'' to an existing
technology. However, in that same final rule, we also noted that, due
to the complexity of issues regarding the substantial similarity
component of the newness criterion, it may be necessary to exercise
flexibility when considering whether technologies are substantially
similar to one another. Specifically, we stated that we may consider
additional factors, depending on the circumstances specific to each
application.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 and
43814), we noted that the discussion of substantial similarity in the
FY 2006 IPPS final rule related to comparing two separate technologies
made by different manufacturers. Nevertheless, we stated that the
criteria discussed in the FY 2006 IPPS final rule also are relevant
when comparing the similarity between a new use and existing uses of
the same technology (or a very similar technology manufactured by the
same manufacturer). In other words, we stated that it is necessary to
establish that the new indication for which the technology has received
FDA approval is not substantially similar to that of the prior
indication. We explained that such a distinction is necessary to
determine the appropriate start date of the newness period in
evaluating whether the technology would qualify for add-on payments
(that is, the date of the ``new'' FDA approval or that of the prior
approval), or whether the technology could qualify for separate new
technology add-on payments under each indication.
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43814), we
added a third factor of consideration to our analysis of whether a new
technology is substantially similar to one or more existing
technologies. Specifically, in making a determination of whether a
technology is substantially similar to an existing technology, we
adopted a policy to consider whether the new use of the technology
involves the treatment of the same or similar type of disease and the
same or similar patient population (74 FR 24130), in addition to
considering the already established factors described in the FY 2006
IPPS final rule (that is, (1) whether a product uses the same or a
similar mechanism of action to achieve a therapeutic outcome; and (2)
whether a product is assigned to the same or a different DRG). As we
noted in the FY 2010 IPPS/RY 2010 LTCH PPS final rule, if all three
components are present and the new use is deemed substantially similar
to one or more of the existing uses of the technology (that is, beyond
the newness period), we would conclude that the technology is not new
and, therefore, is ineligible for the new technology add-on payment.
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to the discharge involving the new medical services or technologies
must be assessed for adequacy. Under the cost criterion, to assess the
adequacy of payment for a new technology paid under the applicable MS-
DRG prospective payment rate, we evaluate whether the charges for cases
involving the new technology exceed certain threshold
[[Page 25860]]
amounts. In the FY 2004 IPPS final rule (68 FR 45385), we established
the threshold at the geometric mean standardized charge for all cases
in the MS-DRG plus 75 percent of 1 standard deviation above the
geometric mean standardized charge (based on the logarithmic values of
the charges and converted back to charges) for all cases in the MS-DRG
to which the new medical service or technology is assigned (or the
case-weighted average of all relevant MS-DRGs, if the new medical
service or technology occurs in more than one MS-DRG).
However, section 503(b)(1) of Public Law 108-173 amended section
1886(d)(5)(K)(ii)(I) of the Act to provide that, beginning in FY 2005,
CMS will apply ``a threshold * * * that is the lesser of 75 percent of
the standardized amount (increased to reflect the difference between
cost and charges) or 75 percent of one standard deviation for the
diagnosis-related group involved.'' (We refer readers to section IV.D.
of the preamble to the FY 2005 IPPS final rule (69 FR 49084) for a
discussion of the revision of the regulations to incorporate the change
made by section 503(b)(1) of Pub. L. 108-173.) Table 10 that was
included in the IPPS/LTCH PPS final rule published in the Federal
Register on August 16, 2010, contained the final thresholds that were
used to evaluate applications for new technology add-on payments for
this proposed rule for FY 2012 (75 FR 50605 through 50613).
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed the
issue of whether the Health Insurance Portability and Accountability
Act (HIPAA) Privacy Rule at 45 CFR Parts 160 and 164 applies to claims
information that providers submit with applications for new technology
add-on payments. Specifically, we explained that health plans,
including Medicare, and providers that conduct certain transactions
electronically, including hospitals that would receive new technology
add-on payments, are required to comply with the HIPAA Privacy Rule. We
further explained how such entities could meet the applicable HIPAA
requirements by discussing how the HIPAA Privacy Rule permitted
providers to share with health plans information needed to ensure
correct payment, if they had obtained consent from the patient to use
that patient's data for treatment, payment, or health care operations.
We also explained that, because the information to be provided within
applications for new technology add-on payment would be needed to
ensure correct payment, no additional consent would be required. The
HHS Office for Civil Rights has since amended the HIPAA Privacy Rule,
but the results remain. The HIPAA Privacy Rule does not require a
covered entity to obtain consent from patients to use or disclose
protected health information for the covered entity's treatment,
payment, or health care operations purposes, and expressly permits such
entities to use or to disclose protected health information for these
purposes and for the treatment purposes of another health care provider
and the payment purposes of another covered entity or health care
provider. (We refer readers to 45 CFR 164.502(a)(1)(ii) and
164.506(c)(1) and (c)(3) and the Standards for Privacy of Individually
Identifiable Health Information published in the Federal Register (67
FR 53208 through 53214) on August 14, 2002, for a full discussion of
consent in the context of the HIPAA Privacy Rule.)
Under the third criterion, Sec. 412.87(b)(1) of our existing
regulations provides that a new technology is an appropriate candidate
for an additional payment when it represents ``an advance that
substantially improves, relative to technologies previously available,
the diagnosis or treatment of Medicare beneficiaries.'' For example, a
new technology represents a substantial clinical improvement when it
reduces mortality, decreases the number of hospitalizations or
physician visits, or reduces recovery time compared to the technologies
previously available. (We refer readers to the September 7, 2001 final
rule for a complete discussion of this criterion (66 FR 46902).)
The new medical service or technology add-on payment policy under
the IPPS provides additional payments for cases with relatively high
costs involving eligible new medical services or technologies while
preserving some of the incentives inherent under an average-based
prospective payment system. The payment mechanism is based on the cost
to hospitals for the new medical service or technology. Under Sec.
412.88, if the costs of the discharge (determined by applying cost to
charge ratios (``CCRs'') as described in Sec. 412.84(h)) exceed the
full DRG payment (including payments for IME and DSH, but excluding
outlier payments), Medicare will make an add-on payment equal to the
lesser of: (1) 50 percent of the estimated costs of the new technology
(if the estimated costs for the case including the new technology
exceed Medicare's payment); or (2) 50 percent of the difference between
the full DRG payment and the hospital's estimated cost for the case.
Unless the discharge qualifies for an outlier payment, Medicare payment
is limited to the full MS-DRG payment plus 50 percent of the estimated
costs of the new technology.
Section 1886(d)(4)(C)(iii) of the Act requires that the adjustments
to annual MS-DRG classifications and relative weights be made in a
manner that ensures that aggregate payments to hospitals are not more
or less than they were in the prior fiscal year (i.e., they are
``budget neutral''). Therefore, in the past, we accounted for projected
payments under the new medical service and technology provision during
the upcoming fiscal year, while at the same time estimating the payment
effect of changes to the MS-DRG classifications and recalibration. The
impact of additional payments under this provision was then included in
the budget neutrality factor, which was applied to the standardized
amounts and the hospital-specific amounts. However, section 503(d)(2)
of Public Law 108-173 provides that there shall be no reduction or
adjustment in aggregate payments under the IPPS due to add-on payments
for new medical services and technologies. Therefore, in accordance
with section 503(d)(2) of Public Law 108-173, add-on payments for new
medical services or technologies for FY 2005 and later years have not
been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulations at Sec. 412.87 to codify our longstanding
practice of how CMS evaluates the eligibility criteria for new medical
service or technology add-on payment applications. That is, we first
determine whether a medical service or technology meets the newness
criteria, and only if so, do we then make a determination as to whether
the technology meets the cost threshold and represents a substantial
clinical improvement over existing medical services or technologies. We
also amended Sec. 412.87(c) to specify that all applicants for new
technology add-on payments must have FDA approval or clearance for
their new medical service or technology by July 1 of each year prior to
the beginning of the fiscal year that the application is being
considered.
The Council on Technology and Innovation (CTI) at CMS oversees the
agency's cross-cutting priority on coordinating coverage, coding and
payment processes for Medicare with respect to new technologies and
procedures, including new drug therapies, as well as promoting the
exchange of information on new technologies between CMS and other
[[Page 25861]]
entities. The CTI, composed of senior CMS staff and clinicians, was
established under section 942(a) of Public Law 108-173. The Council is
co-chaired by the Director of the Office of Clinical Standards and
Quality (OCSQ) and the Director of the Center for Medicare (CM), who is
also designated as the CTI's Executive Coordinator.
The specific processes for coverage, coding, and payment are
implemented by CM, OCSQ, and the local claims-payment contractors (in
the case of local coverage and payment decisions). The CTI supplements,
rather than replaces, these processes by working to assure that all of
these activities reflect the agency-wide priority to promote high-
quality, innovative care. At the same time, the CTI also works to
streamline, accelerate, and improve coordination of these processes to
ensure that they remain up to date as new issues arise. To achieve its
goals, the CTI works to streamline and create a more transparent coding
and payment process, improve the quality of medical decisions, and
speed patient access to effective new treatments. It is also dedicated
to supporting better decisions by patients and doctors in using
Medicare-covered services through the promotion of better evidence
development, which is critical for improving the quality of care for
Medicare beneficiaries.
CMS plans to continue its Open Door forums with stakeholders who
are interested in CTI's initiatives. In addition, to improve the
understanding of CMS' processes for coverage, coding, and payment and
how to access them, the CTI has developed an ``Innovator's Guide'' to
these processes. The intent is to consolidate this information, much of
which is already available in a variety of CMS documents and in various
places on the CMS Web site, in a user-friendly format. This guide was
published in August 2008 and is available on the CMS Web site at:
http://www.cms.gov/CouncilonTechInnov/Downloads/InnovatorsGuide5_10_10.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invite any product developers or manufacturers of new medical
technologies to contact the agency early in the process of product
development if they have questions or concerns about the evidence that
would be needed later in the development process for the agency's
coverage decisions for Medicare.
The CTI aims to provide useful information on its activities and
initiatives to stakeholders, including Medicare beneficiaries,
advocates, medical product manufacturers, providers, and health policy
experts. Stakeholders with further questions about Medicare's coverage,
coding, and payment processes, or who want further guidance about how
they can navigate these processes, can contact the CTI at
[email protected].
We note that applicants for add-on payments for new medical
services or technologies for FY 2013 must submit a formal request,
including a full description of the clinical applications of the
medical service or technology and the results of any clinical
evaluations demonstrating that the new medical service or technology
represents a substantial clinical improvement, along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. Complete application information, along
with final deadlines for submitting a full application, will be posted
as it becomes available on the CMS Web site at: http://www.cms.hhs.gov/AcuteInpatientPPS/08_newtech.asp. To allow interested parties to
identify the new medical services or technologies under review before
the publication of the proposed rule for FY 2013, the Web site also
will post the tracking forms completed by each applicant.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement or advancement. The process for evaluating new
medical service and technology applications requires the Secretary to--
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries;
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending;
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement; and
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2012 prior
to publication of the FY 2012 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on November 29, 2010 (75 FR 73091
through 73094), and held a town hall meeting at the CMS Headquarters
Office in Baltimore, MD, on February 2, 2011. In the announcement
notice for the meeting, we stated that the opinions and alternatives
provided during the meeting would assist us in our evaluations of
applications by allowing public discussion of the substantial clinical
improvement criterion for each of the FY 2012 new medical service and
technology add-on payment applications before the publication of the FY
2012 proposed rule.
Approximately 50 individuals registered to attend the town hall
meeting in person, while additional individuals listened over an open
telephone line. Each of the three FY 2012 applicants presented
information on its technology, including a discussion of data
reflecting the substantial clinical improvement aspect of the
technology. We considered each applicant's presentation made at the
town hall meeting, as well as written comments submitted on the
applications, in our evaluation of the new technology add-on
applications for FY 2012 in this proposed rule.
In response to the published notice and the new technology town
hall meeting, we received three written comments regarding applications
for FY 2012 new technology add-on payments. We summarize these comments
or, if applicable, indicate that there were no comments received, at
the end of each discussion of the individual applications in this
proposed rule.
Comment: A number of attendees at the new technology town hall
meeting provided comments that were unrelated to ``substantial clinical
improvement.''
Response: As explained above and in the Federal Register notice
announcing the meeting (75 FR 73091), the purpose of the new technology
town hall meeting was specifically to discuss substantial clinical
improvement of pending new technology applications for FY 2012.
Therefore, we are not summarizing those comments in this proposed rule.
Commenters are welcome to resubmit these comments in
[[Page 25862]]
response to proposals in this proposed rule.
Comment: One commenter, a major device association, requested that
CMS provide more flexibility for the substantial clinical improvement
criteria by allowing new technologies to demonstrate a substantial
likelihood that clinical improvement will result. The commenter
believed that this request was not unreasonable, given the fact that
conclusive evidence would not necessarily be available in the short
period of time for which an add-on payment would be available. The
commenter also suggested that CMS consider a broader range of evidence
in assessing whether a new technology meets the test of providing
substantial clinical improvement over an older technology.
Response: As stated in the 2001 new technology add-on payment final
rule (66 FR 46913), we believe that the ``substantial clinical
improvement'' criterion is intended ``to limit these special payments
for those technologies that afford clear improvements over the use of
previously available technologies.'' We believe that special payments
for new technology should be limited to those new technologies that
have been demonstrated to represent a substantial clinical improvement
in caring for Medicare beneficiaries, such that there is a clear
advantage to creating a payment incentive for physicians and hospitals
to utilize the new technology. If such an improvement is not
demonstrated, we continue to believe the incentives of the MS-DRG
system provide a useful balance to the introduction of new
technologies. In that regard, we point out that various new
technologies introduced over the years have been demonstrated to have
been less effective than initially thought, or in some cases even
potentially harmful. We believe it is in the best interest of Medicare
beneficiaries for CMS to proceed carefully with respect to the
incentives created to quickly adopt new technologies.
With respect to the comment that CMS should consider a broader
range of evidence in assessing whether a new technology meets the test
of providing substantial clinical improvement over an older technology,
we accept different types of data (for example, peer-reviewed articles,
study results, or letters from major associations, among others) that
demonstrate and support the substantial clinical improvement associated
with the new technology. In addition to clinical data, we will consider
any evidence that would support the substantial clinical improvement
associated with a new technology. Therefore, we believe we already
consider an appropriate range of evidence as the commenter has
requested.
Comment: One commenter stated that, while it appreciated that new
technology add-on payments are intended to encourage innovation, CMS'
application of the substantial clinical improvement criterion fails to
account for how many technological advances may occur in practice. The
commenter expressed confidence that many recent design improvements in
medical devices represent significant advances in clinical utility of
older/established technologies, and indicated CMS may fail to recognize
these improvements in the current context of applying add-on payments.
Response: As discussed above, a service or technology is not
``new'' for purposes of the new technology add-on payment if it is
substantially similar to one or more existing technologies. That is,
even if a technology receives a new FDA approval, it may not
necessarily be considered ``new'' for purposes of new technology add-on
payments if it is ``substantially similar'' to a technology that was
approved by FDA and has been on the market for more than 2 to 3 years.
To determine substantial similarity, we consider (1) Whether a product
uses the same or a similar mechanism of action to achieve a therapeutic
outcome, (2) whether a product is assigned to the same or a different
DRG and (3) whether the new use of the technology involves the
treatment of the same or similar type of disease and the same or
similar patient population. As we noted in the FY 2010 IPPS/RY 2010
LTCH PPS final rule (74 FR 43813 through 43814), if all three
components are present and the new use is deemed substantially similar
to one or more of the existing uses of the technology (that is, beyond
the newness period), we would conclude that the technology is not new
and, therefore, is ineligible for the new technology add-on payment. A
complete discussion of the substantial similarity criteria and policy
can be found in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR
43813 through 43814)
Comment: One commenter believed that CMS has narrowly interpreted
the statutory criteria for granting new technology add-on payments,
which has created a situation in which it has become increasingly
difficult for new technologies to qualify for this add-on payment. The
commenter asserted that the criteria are so steep and the process so
opaque that many companies, especially small companies, cannot afford
to undertake the process at all. The commenter recommended that CMS
continue to engage stakeholders to improve the new technology add-on
payment process. The commenter also recommended that CMS consider
creating additional guidance to further clarify the requirements as to
what qualifies as a new technology. The commenter believed that
additional guidance could provide greater certainty and predictability
for many companies developing novel technologies.
Response: We believe it is important to maintain an open dialogue
on the IPPS new technology add-on payment process, as well as the
broader issue of how new technology is introduced into all of the
Medicare payment systems. As announced in a notice published in the
Federal Register (75 FR 73091 through 73094), on February 2, 2011,
prior to the new technology town hall meeting, we held an informational
workshop for the general public that gave an overview on the processes
of the new technology provisions in both the inpatient hospital and
outpatient hospital settings, in addition to the procedures involved
with ICD-9-CM coding and MS-DRG reassignment under the IPPS. We believe
that our annual new technology town hall meeting and rulemaking process
(including the posting of the applicants' tracking forms on the CMS Web
site) allow for an ongoing dialogue between CMS and the public on the
new technology add-on payment process. Furthermore, we are willing to
meet with potential applicants prior to and after an application has
been submitted in order to ensure an application meets the submission
requirements and to provide technical feedback on an applicant's
application.
In reference to the commenter's general statement that CMS'
interpretation of the statutory criteria has been narrowly cited, we
are interested in and welcome comment on any specific criteria or data
quality standards that commenters believe we should adopt to improve
the new technology add-on application process, or any concerns or
challenges that commenters believe we may encounter in undertaking this
effort. Again, as we stated at the new technology town hall meeting, we
are interested in working with stakeholders to improve the inpatient
new technology add-on payment process. We are interested in ensuring
that the latest medical technology that improves care for the Medicare
patient population continues to be available to our beneficiaries. In
addition, we invite potential applicants to contact CMS with any
specific questions or concerns they may have prior to the submission of
their
[[Page 25863]]
application for new technology add-on payment.
3. FY 2012 Status of Technologies Approved for FY 2011 Add-On Payments
a. Spiration[supreg] IBV[supreg] Valve System
Spiration, Inc. submitted an application for new technology add-on
payments for the Spiration[supreg] IBV[supreg] Valve System
(Spiration[supreg] IBV[supreg]). The Spiration[supreg] IBV[supreg] is a
device that is used to place, via bronchoscopy, small, one-way valves
into selected small airways in the lung in order to limit airflow into
selected portions of lung tissue that have prolonged air leaks
following surgery while still allowing mucus, fluids, and air to exit,
thereby reducing the amount of air that enters the pleural space. The
device is intended to control prolonged air leaks following three
specific surgical procedures: Lobectomy; segmentectomy; or lung volume
reduction surgery (LVRS). According to the applicant, an air leak that
is present on postoperative day 7 is considered ``prolonged'' unless
present only during forced exhalation or cough. In order to help
prevent valve migration, there are five anchors with tips that secure
the valve to the airway. The implanted valves are intended to be
removed no later than 6 weeks after implantation.
With regard to the newness criterion, the Spiration[supreg]
IBV[supreg] received a HDE approval from the FDA on October 24, 2008.
We were unaware of any previously FDA-approved predicate devices, or
otherwise similar devices, that could be considered substantially
similar to the Spiration[supreg] IBV[supreg]. However, the applicant
asserted that the FDA had precluded the device from being used in the
treatment of any patients until the Institutional Review Board (IRB)
granted approvals regarding its study sites. Therefore, the
Spiration[supreg] IBV[supreg] met the newness criterion once it
obtained at least one IRB approval because the device would then be
available on the market to treat Medicare beneficiaries. In the FY 2010
IPPS/RY 2010 LTCH PPS final rule (74 FR 43819), the applicant stated
that the first IRB approval for the Spiration[supreg] IBV[supreg] was
March 12, 2009. In that final rule, based on the information above from
the applicant, we determined that the Spiration[supreg] IBV[supreg]
meets the newness criterion and the newness period for the
Spiration[supreg] IBV[supreg] begins on March 12, 2009.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for the
Spiration[supreg] IBV[supreg] and consideration of the public comments
we received in response to the FY 2010 IPPS/RY 2010 LTCH PPS proposed
rule, including the additional analysis of clinical data and supporting
information submitted by the applicant, we approved the
Spiration[supreg] IBV[supreg] for new technology add-on payments for FY
2010 with a maximum add-on payment of $3,437.50.
In the FY 2011 IPPS/LTCH PPS proposed rule, we did not propose any
changes to the new technology add-on payments for the Spiration[supreg]
IBV[supreg]. We did not receive any public comments on whether to
continue or discontinue the new technology add-on payment for the
Spiration[supreg] IBV[supreg] for FY 2011. Therefore, for FY 2011, we
continued new technology add-on payments for cases involving the
Spiration[supreg] IBV[supreg] in FY 2011, with a maximum add-on payment
of $3,437.50.
The new technology add-on payment regulations provide that ``a
medical service or technology may be considered new within 2 or 3 years
after the point at which data begin to become available reflecting the
ICD-9-CM code assigned to the new medical service or technology'' (42
CFR 412.87(b)(2)). Our practice has been to begin and end new
technology add-on payments on the basis of a fiscal year, and we have
generally followed a guideline that uses a 6-month window before and
after the start of the fiscal year to determine whether to extend the
new technology add-on payment for an additional fiscal year. In
general, we extend add-on payments for an additional year only if the
3-year anniversary date of the product's entry on the market occurs in
the latter half of the fiscal year (70 FR 47362). With regard to the
newness criterion for the Spiration[supreg] IBV[supreg], as stated
above, we consider the beginning of the newness period for the device
to have commenced on the date of the first IRB approval for the
Spiration[supreg] IBV[supreg], which was March 12, 2009. For FY 2012,
as of March 12, 2012, the Spiration[supreg] IBV[supreg] will have been
on the market for 3 years, and is therefore no longer considered
``new'' as of March 12, 2012. Because the 3-year anniversary date of
the Spiration[supreg] IBV[supreg]'s entry onto the market will occur in
the first half of the fiscal year, we are proposing to discontinue its
new technology add-on payment for FY 2012.
b. CardioWestTM Temporary Total Artificial Heart System
(CardioWestTM TAH-t)
SynCardia Systems, Inc. submitted an application for approval of
the CardioWestTM Temporary Total Artificial Heart System
(TAH-t) in FY 2009. The TAH-t is a technology that is used as a bridge
to heart transplant device for heart transplant-eligible patients with
end-stage biventricular failure. The TAH-t pumps up to 9.5 liters of
blood per minute. This high level of perfusion helps improve
hemodynamic function in patients, thus making them better heart
transplant candidates.
The TAH-t was approved by the FDA on October 15, 2004, for use as a
bridge to transplant device in cardiac transplant-eligible candidates
at risk of imminent death from biventricular failure. The TAH-t is
intended to be used in hospital inpatients. One of the FDA's post-
approval requirements is that the manufacturer agrees to provide a
post-approval study demonstrating that success of the device at one
center can be reproduced at other centers. The study was to include at
least 50 patients who would be followed up to 1 year, including (but
not limited to) the following endpoints: Survival to transplant;
adverse events; and device malfunction.
In the past, Medicare did not cover artificial heart devices,
including the TAH-t. However, on May 1, 2008, CMS issued a final
national coverage determination (NCD) expanding Medicare coverage of
artificial hearts when they are implanted as part of a study that is
approved by the FDA and is determined by CMS to meet CMS' Coverage with
Evidence Development (CED) clinical research criteria. (The final NCD
is available on the CMS Web site at: http://www.cms.hhs.gov/mcd/viewdecisionmemo.asp?id=211.)
We indicated in the FY 2009 IPPS final rule (73 FR 48555) that,
because Medicare's previous coverage policy with respect to this device
had precluded payment from Medicare, we did not expect the costs
associated with this technology to be currently reflected in the data
used to determine the relative weights of MS-DRGs. As we have indicated
in the past, and as we discussed in the FY 2009 IPPS final rule,
although we generally believe that the newness period would begin on
the date that FDA approval was granted, in cases where the applicant
can demonstrate a documented delay in market availability subsequent to
FDA approval, we would consider delaying the start of the newness
period. This technology's situation represented such a case. We also
noted that section 1886(d)(5)(K)(ii)(II) of the Act requires that we
provide for the collection of cost data for a new medical service or
technology for a period of at least 2 years and no more than 3 years
``beginning on the date on which an inpatient hospital code is issued
with
[[Page 25864]]
respect to the service or technology.'' Furthermore, the statute
specifies that the term ``inpatient hospital code'' means any code that
is used with respect to inpatient hospital services for which payment
may be made under the IPPS and includes ICD-9-CM codes and any
subsequent revisions. Although the TAH-t has been described by the ICD-
9-CM code(s) since the time of its FDA approval, because the TAH-t had
not been covered under the Medicare program (and, therefore, no
Medicare payment had been made for this technology), this code could
not be ``used with respect to inpatient hospital services for which
payment'' is made under the IPPS, and thus we assumed that none of the
costs associated with this technology would be reflected in the
Medicare claims data used to recalibrate the MS-DRG relative weights
for FY 2009. For this reason, as discussed in the FY 2009 IPPS final
rule, despite the FDA approval date of the technology, we determined
that TAH-t would still be eligible to be considered ``new'' for
purposes of the new technology add-on payment because the TAH-t met the
newness criterion on the date that Medicare coverage began, consistent
with issuance of the final NCD, effective on May 1, 2008.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the TAH-t
and consideration of the public comments we received in response to the
FY 2009 IPPS proposed rule, we approved the TAH-t for new technology
add-on payments for FY 2009 (73 FR 48557). We also continued to make
new technology add-on payments for the TAH-t in FY 2010 and FY 2011.
We describe the new technology add-on payment requirements with
regard to newness above. With regard to the newness criterion for the
TAH-t, as stated above, we consider the beginning of the newness period
for the device to have commenced from the Medicare NCD date of May 1,
2008; it is no longer considered new as of May 11, 2011. Because the 3-
year anniversary date of the TAH-t will occur prior to the start of FY
2012, we are proposing to discontinue the new technology add-on payment
for the TAH-t in FY 2012.
c. Auto Laser Interstitial Thermal Therapy (AutoLITT\TM\) System
Monteris Medical submitted an application for new technology add-on
payments for FY 2011 for the AutoLITT\TM\. AutoLITT\TM\ is a minimally
invasive, MRI-guided laser tipped catheter designed to destroy
malignant brain tumors with interstitial thermal energy causing
immediate coagulation and necrosis of diseased tissue. The technology
can be identified by ICD-9-CM procedure codes 17.61 (Laser interstitial
thermal therapy [LITT] of lesion or tissue of brain under guidance),
and 17.62 (Laser interstitial thermal therapy [LITT] of lesion or
tissue of head and neck under guidance), which became effective on
October 1, 2009.
The AutoLITT\TM\ received a 510K FDA clearance in May 2009. The
AutoLITT\TM\ is indicated for use to necrotize or coagulate soft tissue
through interstitial irradiation or thermal therapy in medicine and
surgery in the discipline of neurosurgery with 1064 nm lasers. The
AutoLITT\TM\ may be used in patients with glioblastoma multiforme brain
(GBM) tumors. The applicant stated in its application and through
supplemental information that, due to required updates, the technology
was actually introduced to the market in December 2009. The applicant
explained that it was necessary to reduce the thermal damage lines from
three to one and complete International Electrotechnical Commission/
Underwriter Laboratory testing, which led to the introduction of the
technology to the market in December 2009, although the technology was
approved by FDA in May 2009. The applicant also stated through
supplementary information to its application that the first sale of the
product took place on March 19, 2010. However, because the product was
already available for use in December 2009, it appears that the newness
date would begin in December 2009. In the FY 2011 IPPS/LTCH PPS
proposed rule, we welcomed public comments on this issue.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology payments for the AutoLITT\TM\
and consideration of the public comments we received in response to the
FY 2011 IPPS/RY 2011 LTCH PPS proposed rule, including the additional
analysis of clinical data and supporting information submitted by the
applicant, we approved the AutoLITT\TM\ for new technology add-on
payments for FY 2011. Consistent with the applicant's clinical trial,
the add-on payment is intended only for use of the device in cases of
Glioblastoma Multiforme. Therefore, we limited the new technology add-
on payment to cases involving the AutoLITT\TM\ in MS-DRGs 025
(Craniotomy and Endovascular Intracranial Procedures with MCC), 026
(Craniotomy and Endovascular Intracranial Procedures with CC), and 027
(Craniotomy and Endovascular Intracranial Procedures without CC or
MCC). Cases involving the AutoLITT\TM\ that are eligible for the new
technology add-on payment are identified by assignment to MS-DRGs 025,
026, and 027 with a procedure code of 17.61 (Laser interstitial
thermotherapy of lesion or tissue of brain under guidance) in
combination with a primary diagnosis code that begins with a prefix of
191 (Malignant neoplasm of brain). We note that using the procedure and
diagnosis codes above and restricting the add-on payment to cases that
map to MS-DRGs 025, 026, and 027 is consistent with information
provided by the applicant, which demonstrated that cases of the
AutoLITT\TM\ would only map to MS-DRGs 025, 026, and 027. Procedure
code 17.62 (Laser interstitial thermotherapy of lesion or tissue of
head and neck under guidance) does not map to MS-DRGs 025, 026, or 027
under the GROUPER software and, therefore, is ineligible for new
technology add-on payment.
The average cost of the AutoLITT\TM\ is reported as $10,600 per
case. Under Sec. 412.88(a)(2) of the regulations, new technology add-
on payments are limited to the lesser of 50 percent of the average cost
of the device or 50 percent of the costs in excess of the MS-DRG
payment for the case. As a result, the maximum add-on payment for a
case involving the AutoLITT\TM\ is $5,300.
We describe the new technology add-on payment requirements with
regard to newness above. With regard to the newness criterion for the
AutoLITT\TM\, as stated above, we consider the beginning of the newness
period for the device to commence from the market release date of
December 2009. Therefore, the device will be considered ``new'' until
December 2012. Because the 3-year anniversary date for the AutoLITT\TM\
will occur after FY 2012, we are proposing to continue to make new
technology add-on payments for the AutoLITT\TM\ in FY 2012.
4. FY 2012 Applications for New Technology Add-On Payments
a. AxiaLIF[supreg] 2L+\TM\ System
TranS1 submitted an application for new technology add-on payments
for the AxiaLIF[supreg] 2L+\TM\ System for FY 2012. The AxiaLIF[supreg]
2L+\TM\ System is an implantable spinal fixation system, delivered
through a pre-sacral approach, facilitating spinal fusion through axial
stabilization of the anterior lumbar spine at Lumbar vertebrae 4
through Sacral vertebrae 1 (L4-S1).
[[Page 25865]]
The AxiaLIF[supreg] 2L+\TM\ System received 510K FDA clearance
(K092124) on January 21, 2010, and the applicant asserts that the
device was available on the market immediately afterward through a
limited market release program. The AxiaLIF[supreg] 2L+\TM\ System is
indicated for use to provide anterior stabilization of the L4-S1 spinal
segments as an adjunct to spinal fusion. It is also indicated for
minimally invasive access to the anterior portion of the lower spine
for assisting in the treatment of degeneration of the lumbar disc,
performing lumbar discectomy, or for assistance in the performance of
L4-S1 interbody fusion. The AxiaLIF[supreg] 2L+\TM\ System may be used
in patients requiring fusion to treat pseudoarthrosis, unsuccessful
previous fusion, spinal stenosis, spondylolisthesis (Grade 1), or
degenerative disc disease as defined as back pain of discogenic origin
with degeneration of the disc confirmed by history and radiographic
studies. The AxiaLIF[supreg] 2L+\TM\ System is coded using ICD-9-CM
procedure code 81.08 (Lumbar and lumbosacral fusion of the anterior
column, posterior technique).
With regard to the newness criterion, we are concerned that the
AxiaLIF[supreg] 2L+\TM\ System may be substantially similar to the
other devices manufactured by the applicant, AxiaLIF[supreg] System and
AxiaLIF[supreg] II\TM\ System, the latter of which is listed as the
predicate device on the AxiaLIF[supreg] 2L+\TM\ System's application
for FDA approval. Specifically, in making a determination of
substantial similarity, we consider the following: (1) Whether a
product uses the same or similar mechanism of action to achieve a
therapeutic outcome; (2) whether a product is assigned to the same or
different DRG; and (3) whether the new use of a technology involves the
treatment of the same or similar type of disease and the same or
similar patient population.
We are particularly concerned that the AxiaLIF[supreg] 2L+\TM\
System uses the same or similar mechanism of action as the
AxiaLIF[supreg] II\TM\ System to achieve a therapeutic outcome.
According to the applicant's 510K summary submitted to the FDA
(K073514), the AxiaLIF[supreg] System is a multicomponent system
including titanium alloy implantable devices and instrumentation for
creating a pre-sacral axial track to the L5-S1 disk space. Similarly,
the AxiaLIF[supreg] II\TM\ System is described in the applicant's 510K
summary submitted to the FDA (K073643) as a system of medical grade
titanium alloy for the anterior stabilization of the L4-S1 spinal
segments as an adjunct to spinal fusion. The applicant states that the
AxiaLIF[supreg] 2L+\TM\ System was created from the AxiaLIF[supreg]
II\TM\ System platform. The applicant submitted the following to
distinguish the AxiaLIF[supreg] 2L+\TM\ System from the AxiaLIF[supreg]
II\TM\ System:
There have been internal thread changes for the 2L+
implant to accompany the Spanning Distraction Rod, which is designed to
create and hold distraction in the L5-S1 disc space and allow for a
higher degree of control over the Rod advancement and distraction;
The design enhancements in the 2L+ System remove the
dependence of distraction on size and placement of the S1 Rod, thus
allowing precise implant placement in the vertebral bodies;
In the 2L+ Implant, the L4 section of the L4-L5 Rod
incorporates a conical design to increase fixation. The outer diameter
(O.D.) of the L5 section is increased to be identical to the O.D. of
the S1 implant to provide more surface area bone contact;
The 2L+ Instrumentation incorporates Dilator Trials as an
opportunity to enhance and simplify the intraoperative measuring
technique by providing a direct visual means of measurement; and
The 2L+ Fixation Rod fills the cannulation to prevent
graft from moving into the rod from the disc space. The Fixation Rod
also fixates the S1 Anchor and L4-L5 Rod together such that these
components cannot passively separate.
Based on indications for use listed by the FDA for the
AxiaLIF[supreg] System (K073514), the AxiaLIF[supreg] II\TM\ System
(K073643), and the AxiaLIF[supreg] 2L+\TM\ System (as described above),
we also are concerned that all of these devices involve the treatment
of the same or similar type of disease and the same or similar patient
population. With respect to whether a product is assigned to the same
or different DRG, we note that currently the AxiaLIF[supreg] System and
the AxiaLIF[supreg] 2L+\TM\ System both generally map to MS-DRGs 459
(Spinal Fusion Except Cervical with MCC) and 460 (Spinal Fusion Except
Cervical without MCC). Though the AxiaLIF[supreg] II\TM\ System is no
longer on the market, it would also map to the same DRGs.
If the AxiaLIF[supreg] 2L+\TM\ System is found to be substantially
similar to the AxiaLIF[supreg] System or the AxiaLIF[supreg] II\TM\
System, the AxiaLIF[supreg] 2L+\TM\ System would no longer qualify for
the new technology add-on payment. Specifically, the appropriate start
date for the AxiaLIF[supreg] 2L+\TM\ System would be the start date of
the device that is found to be substantially similar to the
AxiaLIF[supreg] 2L+\TM\ System. As noted above, the AxiaLIF[supreg]
II\TM\ System received FDA approval on April 28, 2008. The 3-year
newness period for the AxiaLIF[supreg] II\TM\ System ends prior to the
start of FY 2012 (July 28, 2011). Given the length of time since the
AxiaLIF[supreg] II\TM\ System's entry into the market, cost-related
data for the AxiaLIF[supreg] II\TM\ System is already reflected in the
most recent MS-DRG relative weights. Additionally, the AxiaLIF[supreg]
System received multiple FDA approvals, the most recent of which was on
January 11, 2008. The 3-year newness period for the AxiaLIF[supreg]
System also ends prior to the start of FY 2012 (January 11, 2011).
Given the length of time since the AxiaLIF[supreg] System's entry into
the market, cost-related data for the AxiaLIF[supreg] System is already
reflected in the most recent MS-DRG relative weights. However, if the
AxiaLIF[supreg] 2L+\TM\ System is not substantially similar to any of
the predicate devices mentioned above, then the newness period for the
AxiaLIF[supreg] 2L+\TM\ System would begin on January 21, 2010 (the
AxiaLIF[supreg] 2L+\TM\ System's FDA approval date) and would be within
the year newness period for FY 2012. We invite public comment regarding
whether or not the AxiaLIF[supreg] 2L+\TM\ System meets the newness
criteria, and, in particular, whether it is substantially similar to
the AxiaLIF[supreg] System or the AxiaLIF[supreg] II\TM\ System.
In an effort to demonstrate that the AxiaLIF[supreg] 2L+\TM\ System
meets the cost criterion, the applicant used data from the FY 2009
MedPAR file. The applicant explained through supplemental information
to its application that most cases of the AxiaLIF[supreg] 2L+\TM\
System would map to MS-DRGs 459 (Spinal Fusion Except Cervical with
MCC) and 460 (Spinal Fusion Except Cervical without MCC). The applicant
searched the FY 2009 MedPAR file for cases with an ICD-9-CM procedure
code of 81.08 (Lumbar and lumbosacral fusion of the anterior column,
posterior technique). The applicant found 2,533 cases in MS-DRG 459 (5
percent of all cases) and 48,135 cases in MS-DRG 460 (95 percent of all
cases). The average standardized charge per case was $117,847 for MS-
DRG 459 and $84,153 for MS-DRG 460, equating to a case-weighted average
standardized charge per case of $77,195.
This case-weighted standardized charge per case contains charges
related to other implantable devices. Therefore, it is necessary to
remove charges of other implantable devices from the case-weighted
standardized charge per case (before substituting charges for the
AxiaLIF[supreg] 2L+\TM\ System). The applicant used the following
methodology to
[[Page 25866]]
determine the average amount of charges related to other implantable
devices within the case-weighted average standardized charge per case.
The applicant estimated a standardized medical/surgical supplies charge
of $47,860. After searching all claims in the CY 2008 100 percent
inpatient limited data set standardized file, the applicant determined
that, on average, implantable devices (revenue center 0278) accounted
for 75 percent of the of medical/surgical supplies charges, equating to
$36,104 for the cases the applicant found in MS-DRGs 459 and 460. The
applicant then subtracted this amount from the case-weighted average
standardized charge per case, which resulted in a case-weighted average
standardized charge per case, excluding an implantable device, of
$41,090 ($77,195-$36,104).
The applicant then estimated the charges for the AxiaLIF[supreg]
2L+\TM\ System by inflating the expected purchase price of the
AxiaLIF[supreg] 2L+\TM\ System by 2.77 times the purchase price of
defibrillators, resulting in a standardized charge of $51,482 for the
AxiaLIF[supreg] 2L+\TM\ System. The applicant stated that using a
markup based on defibrillators was appropriate because, like the
AxiaLIF[supreg] 2L+\TM\ System, defibrillators are also a high-cost
implantable device. The applicant then added the average standardized
charge for the AxiaLIF[supreg] 2L+\TM\ System to the average
standardized charge per case excluding an implantable device, which
resulted in a total case-weighted average standardized charge per case
of $92,557 ($41,075 + $51,482). The applicant calculated a case-
weighted threshold of $78,354 for MS-DRGs 459 and 460. Because the
total average standardized charge per case ($92,557), as calculated by
the applicant, exceeds the case-weighted threshold ($78,354), the
applicant maintains that it meets the cost criteria.
We have concerns with the applicant's methodology. Specifically, in
determining the projected standardized charge for the AxiaLIF[supreg]
2L+\TM\ System, the applicant relies on a charge markup for
defibrillators because it is also a high-cost implantable device for
which a hospital purchase price is known. We are concerned about
whether more direct data or different proxies are available, including
a charge markup for the AxiaLIF[supreg] System or AxiaLIF[supreg]
II\TM\ System. In reviewing the applicant's charge markup, we also are
concerned about the source data for determining the 2.77 charge markup
ratio for defibrillators. We invite public comment on whether the
AxiaLIF[supreg] 2L+\TM\ System meets the cost criterion for a new
technology add-on payment for FY 2012.
With respect to the substantial clinical improvement criterion, the
applicant asserts that it meets this criterion in its application. The
applicant stated that substantial clinical improvement is demonstrated
by the AxiaLIF[supreg] 2L+\TM\ System's facilitation of spinal fusion
surgery without a laparotomy. By avoiding a laparotomy, the
AxiaLIF[supreg] 2L+\TM\ System reduces blood loss, postoperative pain,
narcotic use, denervation, morbidity, the probability of complications,
and the risk of trauma to the tissue area surrounding the lumbar. The
applicant further stated that the AxiaLIF[supreg] 2L+\TM\ System
reduces morbidity and has reduced risk of injuring vital organs and
important intrinsic stabilizing structures, with a lower complication
profile than traditional open fusion techniques. The applicant noted
that long-term results can include better support of lordosis and
prevention of adjacent level disease. We are concerned that this does
not demonstrate a substantial clinical improvement from the
AxiaLIF[supreg] II\TM\ System, which also facilitated spinal fusion
surgery without a laparotomy.
The applicant has not conducted clinical trials, but the 300 cases
of AxiaLIF[supreg] 2L+\TM\ System's use (through the Limited Market
Release) yielded a complication rate of 0.7 percent. The applicant also
asserts that the pre-sacral approach results in a lower average length
of stay than a non-sacral approach.
The applicant has referred us to several sources of literature
presenting data related to the pre-sacral approach for the applicant's
AxiaLIF[supreg] device. We are concerned that the applicant has
generally repeated the statements made regarding the clinical
improvement of its AxiaLIF[supreg] device and has not provided
information that indicates that the AxiaLIF[supreg] 2L+\TM\ System
offers a substantial clinical benefit over the earlier AxiaLIF[supreg]
or AxiaLIF[supreg] II\TM\ devices. Moreover, the applicant has not
provided any clinical outcomes data for the AxiaLIF[supreg] 2L+\TM\
System to substantiate its assertions regarding substantial clinical
improvement for the AxiaLIF[supreg] 2L+\TM\ System. While the applicant
maintains that data from the AxiaLIF[supreg] device are relevant and
can be used to substantiate its assertions for the AxiaLIF[supreg]
2L+\TM\ System, we are concerned that data directly associated with the
use of the AxialLIF[supreg] 2L+\TM\ System are not available. For
example, it is not clear the degree to which the population that
requires treatment with the AxiaLIF[supreg] 2L+\TM\ System differs from
the population that requires treatment with the AxiaLIF[supreg] device
or the AxiaLIF[supreg] II\TM\ System, and it is also not clear the
degree to which the differences between the devices discussed above may
affect clinical outcomes.
The applicant also believes that an inline placement of the
fixation implant may provide an advantage due to closeness of the
implant to functional axis of the spine and through alignment with the
direction of the compressive forces on the vertebral bodies. The
applicant maintains that evaluation and testing have proven the
AxiaLIF[supreg] 2L+\TM\ System to be a biomechanically sturdy L4-S1
axial construct that significantly reduces the range of motion at the
desired point and achieves decompression by increasing the L4-S1 disc
spaces. We note that the only clinical change from the AxiaLIF[supreg]
device and the AxiaLIF[supreg] 2L+\TM\ System is that the latter
reaches the L4. There is no stated clinical change between the
AxiaLIF[supreg] II\TM\ and the AxiaLIF[supreg] 2L+\TM\ System. We
invite public comment on whether the AxiaLIF[supreg] 2L+\TM\ System
meets the substantial clinical improvement criterion for the new
technology add-on payment for FY 2012.
b. Champion\TM\ HF Monitoring System
CardioMEMS, Inc. submitted an application for new technology add-on
payment for FY 2012 for the Champion\TM\ HF Monitoring System, an
Implantable Hemodynamic Monitor System (IHMS). The IHMS is comprised of
an implantable sensor/monitor placed in the distal pulmonary artery.
Pulmonary artery hemodynamic monitoring is used in the management of
heart failure. The IHMS measures multiple pulmonary artery pressure
parameters for an ambulatory patient to measure and transmit data via a
wireless sensor to a secure Web site. The IHMS utilizes radiofrequency
energy to power the sensor and to measure pulmonary artery pressure.
The data are accessed by clinicians via the Internet. Interpretation of
trend data allows the clinician to make adjustments to therapy while
the patient is at home. Changes in pulmonary artery pressure can be
used along with heart failure signs and symptoms to adjust medications.
There are currently no FDA approved devices performing this IHMS
function. The IHMS consists of three components: (1) A wireless
implantable hemodynamic sensor/monitor which is implanted in the distal
pulmonary artery (sensor); (2) an external patient measurement system;
and (3) a patient data management system.
[[Page 25867]]
CardioMEMS, Inc. believes that a large majority of patients
receiving the sensor will be admitted to an inpatient hospital with a
diagnosis of ``acute or chronic heart failure'' (ICD-9-CM code 428.43
(Acute or chronic combine systolic and diastolic heart failure)) and
the sensor will be implanted during this hospital stay. For safety
considerations, a small portion of these patients may be discharged and
the sensor implanted at a future date in the hospital outpatient
setting. In addition, there will likely be a group of patients in
chronic heart failure who are not currently hospitalized, but who have
been hospitalized in the past few months for whom the treating
physician believes that regular pulmonary artery pressure readings are
necessary to optimize patient management. Depending on the patient's
status, these patients may have the sensor implanted in the hospital
inpatient or outpatient setting.
With respect to the newness criterion, we note that this device is
not currently approved by the FDA, but the manufacturer anticipates
that FDA approval will be granted in the second quarter of 2011. No
ICD-9-CM procedure code exists at this time that uniquely identifies
the System. As noted in Table 6B, which is listed in section VI. of the
Addendum to this proposed rule and available via the Internet, we have
approved the use of new procedure code 38.26 (Insertion of implantable
wireless pressure sensor for intracardiac or great vessel hemodynamic
monitoring), which will identify use of the System. The new ICD-9-CM
procedure code 38.26 will be assigned to MS-DRG 264 (Other Circulatory
System O.R. Procedures).
In an effort to demonstrate that the System meets the cost
criteria, the applicant used data from a clinical trial. Specifically,
the manufacturer used data from the CardioMEMS Heart Sensor Allows
Monitoring of Pressure to Improve Outcomes in NYHA Class III heart
failure patients (CHAMPION) trial \4\ which enrolled 550 patients in 30
hospitals within the United States. We note that there were 575
patients initially enrolled in the trial. Of these 575 patients, 25
underwent a right heart catheterization and did not receive an implant
primarily because of anatomical/physiological conditions identified
during the catheterization. The manufacturer collected 310 hospital
claims from the 550 patients enrolled in the CHAMPION trial. The
applicant eliminated claims with incomplete data or statistical
outliers, and was left with 137 claims for its cost analysis.
CardioMEMS funded the clinical trial and, therefore, did not submit
these 137 claims. The applicant believes that cases eligible for the
System would map to MS-DRG 264. Using the 137 claims from the CHAMPION
trial, the manufacturer determined an average standardized charge per
case without the new technology to equal $12,817. The applicant
indicated that the case-weighted average standardized charge per case
does not include charges related to the System, so it is then necessary
to add the charges related to the device to the average standardized
charge per case to evaluate the cost threshold criterion. To convert
the costs of the technology to charges, CardioMEMS used an average
cost-to-charge ratio (CCR) of 0.311 based on FY 2008 hospital cost
reports from the 30 hospitals who participated in the CHAMPION trial.
Based on this CCR, the manufacturer determined an average charge for
the System to equal $45,016. Using this methodology, the total average
standardized charge per case including the new technology equals
$57,833 ($45,016 + $12,817). This amount exceeds the cost threshold of
$46,546 for MS-DRG 264 (Table 10 of the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50607)). Because the total average standardized charge per
case ($57,833) exceeds the threshold ($46,546), the applicant maintains
that it meets the cost criteria.
---------------------------------------------------------------------------
\4\ Wireless pulmonary artery haemodynamic monitoring in chronic
heart failure: a randomised controlled trial. Abraham WT, Adamson
PB, Bourge RC, Aaron MF, Costanzo MR, Stevenson LW, Strickland W,
Neelagaru S, Raval N, Krueger S, Weiner S, Shavelle D, Jeffries B,
Yadav JS; for the CHAMPION Trial Study Group. Lancet. 2011 Feb
19;377(9766):658-666.
---------------------------------------------------------------------------
In addition to the methodology described above, the manufacturer
searched for claims for patients in the CHAMPION trial that were aged
65 years or older at the time of device implantation as a proxy for
Medicare patients. Out of the original 137 hospital claims, 56 (41
percent) were for patients aged 65 years or older. From these 56 claims
(across 23 hospitals from the CHAMPION study), the applicant calculated
an average standardized charge of $13,031, which did not include
charges for the device. The applicant added the charges related to the
device ($45,016, calculated as described above) to the average
standardized charge per case to evaluate the cost threshold criterion.
Using this methodology, the total average standardized charge per case
including the new technology equals $58,047 ($45,016 + $13,031). This
amount also exceeds the FY 2012 cost threshold of $46,546 for MS-DRG
264. Because the total average standardized charge per case ($58,047)
exceeds the threshold ($46,546), the applicant maintains that it meets
the cost criteria. We invite public comment on whether or not the
Champion\TM\ HF Monitoring System meets the cost criterion.
With regard to substantial clinical improvement, the applicant
cited clinical data from the CHAMPION trial. The trial is a
prospective, multicenter, randomized, single-blinded clinical trial
conducted in the United States, designed to evaluate the safety and
efficacy of the System in reducing heart failure-related
hospitalizations in a subset of subjects suffering from heart failure.
The applicant shared several major findings from the CHAMPION trial \5\
as described below. First, at 6 months, the treatment group exhibited a
30 percent relative risk reduction in the rate of heart failure-related
hospitalization (0.31 vs. 0.44, p < 0.0001). There were 83 heart
failure-related hospitalizations in 270 treatment patients compared to
120 heart failure-related hospitalizations in the 280 control subjects.
The ``number needed to treat'' (NNT) to reduce one heart failure-
related hospitalization was eight patients. Second, during the 6-month
follow-up period, the proportion of subjects hospitalized for one or
more heart failure-related hospitalizations was significantly lower in
the treatment group (54 out of 270 patients) than in the control group
(80 out of 280 patients) (20 percent vs. 28.6 percent; p = 0.0222).
Third, at 6 months, treatment patients had more days alive outside of
the hospital (174.4 vs. 172.1, p = 0.0222) and fewer average days in
the hospital (2.2 vs. 3.8, p = 0.0194) compared to control patients.
Treatment patients spent 472 fewer days in the hospital than the
control patients. Finally, the treatment group was assessed with the
Minnesota Living with Heart Failure Questionnaire, which reported a
greater improvement in quality of life (QOL) than the control group (-
10.6 vs. -7.4, p = 0.0373). The applicant concluded that the CHAMPION
trial demonstrated that, with knowledge of class III heart failure
patients' pulmonary artery pressures, physicians could improve medical
management leading to fewer heart failure-related hospitalizations. The
applicant further stated that the device
[[Page 25868]]
had very few device-related and system-related complications over the
course of the clinical trial, and that primary and secondary study
endpoints were successfully achieved. There was one report of an
``Unanticipated Serious Adverse Device Event'' involving a ``tingling
sensation'' in a control patient, which was adjudicated by the Clinical
Events Committee as not device/system-related. There were two reports
of Serious Adverse Device Events due to hemoptysis and a blood clot,
both of which resolved without permanent sequelae. The Clinical Events
Committee adjudicated both events as device/system-related. The
applicant maintained that during the first 6 months, there were 336
Serious Adverse Events (hospitalizations or deaths due to heart failure
or other common comorbidities seen in this population) in 121 patients
in the treatment group (44.8 percent) versus 385 Serious Adverse Events
in 155 patients in the control group (55.4 percent).
---------------------------------------------------------------------------
\5\ Wireless pulmonary artery haemodynamic monitoring in chronic
heart failure: a randomised controlled trial. Abraham WT, Adamson
PB, Bourge RC, Aaron MF, Costanzo MR, Stevenson LW, Strickland W,
Neelagaru S, Raval N, Krueger S, Weiner S, Shavelle D, Jeffries B,
Yadav JS; for the CHAMPION Trial Study Group. Lancet. 2011 Feb
19;377(9766):658-666
---------------------------------------------------------------------------
In addition, the manufacturer stated that the CHAMPION trial
suggests the safety and effectiveness of the device was maintained
during longer term follow-up. (The primary efficacy endpoint of the
CHAMPION trial was 6 months. However, patients remained in their
assigned groups until the last patient reached 6 months, which is
referred to as ``the entire follow-up.'' The mean time of this entire
follow up was up to 15 months.) Therefore, the manufacturer believes
that the System meets the substantial clinical improvement criterion.
We invite public comment on whether or not the Champion\TM\ HF
Monitoring System technology represents a substantial clinical
improvement in the Medicare population.
c. PerfectCLEAN With Micrillon[supreg]
UMF Corporation (the manufacturer) submitted an application for a
technology called the PerfectCLEAN with Micrillon[supreg]
(PerfectCLEAN). PerfectCLEAN is a cleaning textile product (or cleaning
mat/wipe) with chlorine embedded or bound to the extruded fiber. The
manufacturer asserts that PerfectCLEAN is intended to be used to trap
and eliminate pathogens such as Methicillin-resistant Staphylococcus
aureus (MRSA), Clostridium difficile (C diff.) and the H1N1 flu virus
from surfaces within the hospital (as well as other health care
facilities and locations). The applicant asserts that it can trap and
remove more than 99.99 percent of bacteria on hard surfaces.
The manufacturer stated that the PerfectCLEAN is an Environmental
Protection Agency (EPA) approved antimicrobial/disinfectant that will
be available on the market in the first quarter of 2011. The applicant
maintains that PerfectCLEAN is subject to review and approval by the
EPA per the EPA's Federal Insecticide, Fungicide, Rodenticide Act
(FIFRA) Treated Article Exemption and, therefore, is not subject to
review by the FDA. The applicant states that it was determined in a
pre-registry meeting with the EPA that the underlying chemistries used
to create the chlorine binding effects of Micrillon[supreg] chemistry
are EPA and FDA approved even though no FDA claims are being sought.
With respect to whether the PerfectCLEAN is eligible for new
technology add-on payments, we note that our regulations at Sec.
412.87(c) state, ``CMS will only consider, for add-on payments for a
particular fiscal year, an application for which the new medical
service or technology has received FDA approval or clearance by July 1
prior to the particular fiscal year.'' FDA ``approval,'' refers to the
premarket approval application (PMA) process for most Class III
devices, and FDA ``clearance'' refers to the 510(k) premarket
notification submission process for most Class II devices and some
Class I and Class III devices (section 515 of the Food, Drug and
Cosmetic Act (FDCA) for PMA) and sections 510(k) and 513(i) of the FDCA
(for premarket notification submission process)). Therefore, we believe
our regulations, by requiring applicants to receive an FDA approval or
clearance in order to be eligible for new technology add-on payments,
limit the universe of items and services eligible to receive these
payments to those that require FDA approval or clearance. The applicant
has informed CMS that it is in the process of registering and listing
its product with the FDA under section 510(b) through (d) and (j) and
anticipates this process to be completed prior to the July 1 regulatory
deadline. The registration process that the applicant is currently
pursing will result in neither FDA approval nor clearance, and we are
therefore concerned that the PerfectCLEAN is not eligible for new
technology add-on payments under our existing regulations., which
require ``FDA approval or clearance by July 1 prior to the particular
fiscal year'' (42 CFR Sec. 412.87(c)). We welcome public comments on
whether the PerfectCLEAN is eligible for new technology add-on payments
under the current regulations.
With regard to the cost criterion, the applicant used data from the
FY 2011 After Outliers Removed (AOR) file (posted on the CMS Web site)
for its cost analysis, which is based on the FY 2009 MedPAR file. The
applicant considered MS-DRGs that relate to surgeries, skin abrasions,
open sores, wounds, and similar inflamed tissue conditions where
infection sites are thought to be more likely to occur for inpatient
care situations. This resulted in the applicant determining that the
technology would be most frequently used in 622 different MS-DRGs. The
applicant noted that the charges from the FY 2011 AOR file were not
inflated from FY 2009 to FY 2011; therefore the applicant applied a 2-
year inflation factor of 12 percent (to update the charges from FY 2009
to FY 2011). The applicant based the 2-year inflation factor of 12
percent on a 3-year average of the 2 year rate-of-change in charges
(the 2-year rate-of-change for FY 2009 of 11.841 percent (73 FR 48764);
the 2-year rate-of-change for FY 2010 of 14.184 percent (74 FR 44010);
and the 2-year rate-of-change for FY 2011 of 9.8843 percent (75 FR
50429)) that CMS uses in its outlier threshold calculation as published
in section II. of the Addendum to the annual IPPS final rule. The
applicant computed a case-weighted standardized charge per case of
$40,442 for all 622 MS-DRGs, which did not include any charges related
to the PerfectCLEAN. Therefore, it added the charges related to the
technology to the case-weighted average standardized charge per case in
evaluating the cost threshold criterion. The manufacturer estimates a
charge per patient of $100 per day for the PerfectCLEAN. The applicant
includes in this amount charges for payroll, treated textiles,
packaging and protective gloves, laundering, storage, and distribution.
The applicant multiplied the average length of stay for each MS-DRG (as
found in Table 5 of the Addendum to the FY 2011 IPPS/LTCH PPS final
rule (75 FR 50547 through 50566)) by the charge per patient per day to
determine the total charges per stay by MS-DRG related to the
PerfectCLEAN. The applicant added additional charges per stay for the
PerfectCLEAN to the case-weighted standardized charge per case and
determined a total case-weighted average standardized charge per case
of $41,105. Based on the 622 MS-DRGs to which the technology mapped,
the applicant computed a case-weighted threshold of $40,834. Because
the total case-weighted average standardized charge per case of $41,105
exceeds the case weighted threshold of $40,834, the
[[Page 25869]]
applicant maintains that it meets the cost criteria.
We have several concerns regarding the applicant's cost analysis.
First, although the technology can potentially be used in every single
Medicare case, the application targets specific MS-DRGs. The applicant
did not provide a detailed clinical justification regarding their
selection of MS-DRGs, or a detailed justification for why the
technology could not be used in other MS-DRGs. We believe it would be
more appropriate to target all cases in every MS-DRG when conducting
the cost analysis for this type of non-procedure or condition specific
item. Using the FY 2011 AOR file, we conducted our own analysis with
the same methodology above (and inflated the charges and included the
total charges per stay related to the PerfectCLEAN) across all MS-DRGs.
Based on our analysis, we determined a total case-weighted average
standardized charge per case of $29,535. Using the applicant's
methodology, we also determined a case-weighted threshold of $37,384
across all MS-DRGs. Because the total case-weighted average
standardized charge per case of $29,535 is less than the case-weighted
threshold of $37,384, we believe the PerfectCLEAN may not meet the cost
criteria.
Second, the applicant included in the average charge per day more
general charges unrelated to the specific new technology, such as
payroll, packaging and protective gloves, laundering, storage and
distribution. We do not believe it is appropriate to include charges
for expenses already accounted for in MS-DRG based payments, such as
laundering, storage, and distribution, and supplies already used by
hospital staff such as packaging and protective gloves. We also note
that the applicant states in its substantial clinical improvement
discussion that the PerfectCLEAN represents the first comprehensive
process for the removal and elimination of harmful micro-organisms
responsible for HAIs from patient environments, the elimination of
cross-contamination, and significant savings across many cost centers.
If the PerfectCLEAN is a substitute for other cleaning mechanisms such
as wiping down a hospital room with a spray and can produce significant
savings across many cost centers, then it would be appropriate to
deduct some charges from the average charge per day in order to
accurately reflect the cost to hospitals of this technology. For these
reasons, we remain concerned about the accuracy of the computation of a
charge per patient of $100 per day and whether the PerfectCLEAN meets
the cost criterion.
Thirdly, the applicant based the 12-percent, 2-year rate-of-change
in charges on a 3-year average (FY 2009 through FY 2011) of the 2-year
rate-of-change in charges as published in section II. of the Addendum
to the annual IPPS final rule. We do not believe it is appropriate to
use a 3-year average of the 2-year rate-of-change in charges as the 2-
year rate-of-change in charges already uses the most recent data
available to measure this change and, therefore, does not need to be
averaged with prior years. Specifically, as described in section II. of
the Addendum to this proposed rule, to calculate the proposed FY 2012
2-year rate-of-change in charges, we compared the 1-year average
annualized rate-of-change in charges per case from the last quarter of
FY 2009 in combination with the first quarter of FY 2010 (July 1, 2009
through December 31, 2009) to the last quarter of FY 2010 in
combination with the first quarter of FY 2011 (July 1, 2010 through
December 31, 2010). This rate-of-change was 4.43 percent (1.044394) or
9.07 percent (1.090759) over 2 years. If we substitute the FY 2012
proposed 2-year rate-of-change in charges of 9.07 percent for the 12-
percent 3-year average of the 2-year rate-of-change in charges that the
applicant used in its cost analysis, the total case-weighted average
standardized charge per case would be $40,047 across the 622 MS-DRGs to
which the applicant believes the technology would map. As mentioned
above, the applicant computed a case-weighted threshold of $40,834.
Because the total case-weighted average standardized charge per case of
$40,047 is less than the case-weighted threshold of $40,834, it appears
the applicant would not meet the cost criteria. We invite public
comment on whether the PerfectCLEAN meets the cost criterion.
The applicant maintains that it meets the substantial clinical
improvement criteria for the following reasons: The applicant believes
the PerfectCLEAN significantly improves clinical outcomes for a patient
population as compared to currently available treatments, decreases
rate of subsequent diagnostic or therapeutic interventions, and
decreases the number of future hospitalizations or physician visits.
The applicant cited independent laboratory studies that set forth the
level of removal and elimination of pathogens achieved by the
PerfectCLEAN. The applicant stated that the PerfectCLEAN includes
``more precise and focused patient room procedures that when properly
applied utilize the textile and micro-denier efficacies'' listed in the
product's independent test reports. The applicant states that this
results ``in a safer patient environment where the likelihood of cross
contamination is reasonable.'' The applicant included test report data
for the product, which demonstrated a 99.99 percent effectiveness of
removing pathogens such as MRSA and C diff. The applicant cited
industry and clinical support to demonstrate that improved patient
environment can save lives. The applicant also stated that PerfectCLEAN
represents the first comprehensive process for the removal and
elimination of harmful micro-organisms responsible for hospital
acquired infections from patient environments, the elimination of
cross-contamination, and significant savings across many cost centers.
The applicant stated that this new innovative system delivers reliable
and repeatable results not currently achieved using currently available
protocols and products. The applicant provided the following example: a
traditional method of disinfection is to apply liquid disinfectants,
which the applicant stated typically requires a 10-minute dwell time
(which in most cases is not completed by the hospital) and then wiping
or mopping up the nonevaporated liquids. Compared to this method, the
applicant asserts that the PerfectCLEAN first removes the micro-
organisms from those surfaces using specially designed microscopic
fibers. The applicant asserts that these pathogens are trapped in a
formulation of a chlorine binding technology which eliminates the
pathogens.
The applicant further asserts that the PerfectCLEAN maintains its
disinfecting capability longer than other methods because the chlorine-
binding technology is introduced at the pellet stage of fiber extrusion
so that it is present throughout the fiber, as opposed to a finish or
coating process that wears off as textiles are used and laundered.
Additionally, the applicant asserts that the technology's non-leaching
chlorination system recharges in the wash process by attracting and
binding free molecules of chlorine. The applicant further asserts that
in this way the PerfectCLEAN recharges back to its original strength
and efficacy which allows it to work more rapidly than other
techniques. The applicant asserts that this reduces cross-contamination
by those persons handling soiled textiles after the people contact
surfaces which have been cleaned of harmful micro-organisms. The
applicant added that the training in use of color coated textiles
(different color mats) affords superior monitoring and compliance
supervision of the hygiene specialists charged with
[[Page 25870]]
responsibility to reduce cross-contamination. We invite public comment
on whether the PerfectCLEAN meets the substantial clinical improvement
criterion.
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
A. Background
Section 1886(d)(3)(E) of the Act requires that, as part of the
methodology for determining prospective payments to hospitals, the
Secretary must adjust the standardized amounts ``for area differences
in hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area of
the hospital compared to the national average hospital wage level.'' In
accordance with the broad discretion conferred under the Act, we
currently define hospital labor market areas based on the delineations
of statistical areas established by the Office of Management and Budget
(OMB). A discussion of the proposed FY 2012 hospital wage index based
on the statistical areas, including OMB's revised definitions of
Metropolitan Areas, appears under section III.B. of this preamble.
Beginning October 1, 1993, section 1886(d)(3)(E) of the Act
requires that we update the wage index annually. Furthermore, this
section of the Act provides that the Secretary base the update on a
survey of wages and wage-related costs of short-term, acute care
hospitals. The survey must exclude the wages and wage-related costs
incurred in furnishing skilled nursing services. This provision also
requires us to make any updates or adjustments to the wage index in a
manner that ensures that aggregate payments to hospitals are not
affected by the change in the wage index. The proposed adjustment for
FY 2012 is discussed in section II.B. of the Addendum to this proposed
rule.
As discussed below in section III.H. of this preamble, we also take
into account the geographic reclassification of hospitals in accordance
with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when calculating
IPPS payment amounts. Under section 1886(d)(8)(D) of the Act, the
Secretary is required to adjust the standardized amounts so as to
ensure that aggregate payments under the IPPS after implementation of
the provisions of sections 1886(d)(8)(B) and (C) and 1886(d)(10) of the
Act are equal to the aggregate prospective payments that would have
been made absent these provisions. The proposed budget neutrality
adjustment for FY 2012 is discussed in section II.A.4.b. of the
Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index. A
discussion of the occupational mix adjustment that we are proposing to
apply beginning October 1, 2011 (the FY 2012 wage index) appears under
section III.C. of this preamble.
B. Core-Based Statistical Areas for the Hospital Wage Index
The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. In
accordance with the broad discretion under section 1886(d)(3)(E) of the
Act, beginning with FY 2005, we define hospital labor market areas
based on the Core-Based Statistical Areas (CBSAs) established by OMB
and announced in December 2003 (69 FR 49027). For a discussion of OMB's
revised delineations of CBSAs and our implementation of the CBSA
definitions, we refer readers to the preamble of the FY 2005 IPPS final
rule (69 FR 49026 through 49032).
As with the FY 2011 final rule, in this FY 2012 proposed rule, we
are proposing to provide that hospitals receive 100 percent of their
wage index based upon the CBSA configurations. Specifically, for each
hospital, we are proposing to determine a wage index for FY 2012
employing wage index data from hospital cost reports for cost reporting
periods beginning during FY 2008 and using the CBSA labor market
definitions. We consider CBSAs that are Metropolitan Statistical Areas
(MSAs) to be urban, and CBSAs that are Micropolitan Statistical Areas
as well as areas outside of CBSAs to be rural. In addition, it has been
our longstanding policy that where an MSA has been divided into
Metropolitan Divisions, we consider the Metropolitan Division to
comprise the labor market areas for purposes of calculating the wage
index (69 FR 49029) (regulations at Sec. 412.64(b)(1)(ii)(A)).
In OMB Bulletin No. 10-2, issued on December 1, 2009, OMB announced
that the CBSA changes in that bulletin would be the final update prior
to the 2010 Census of Population and Housing. CMS adopted those changes
in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50162), beginning
October 1, 2010, and they are reflected in this FY 2012 proposed rule.
In 2013, OMB plans to announce new area delineations based on its 2010
standards (75 FR 37246) and the 2010 Census data.
The OMB bulletin is available on the OMB Web site at http://www.whitehouse.gov/OMB--go to ``Agency Information'' and click on
``Bulletins''.
C. Proposed Occupational Mix Adjustment to the FY 2012 Wage Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Development of Data for the Proposed FY 2012 Occupational Mix
Adjustment Based on the 2007-2008 Occupational Mix Survey
As provided for under section 1886(d)(3)(E) of the Act, we collect
data every 3 years on the occupational mix of employees for each short-
term, acute care hospital participating in the Medicare program.
For the FY 2010 hospital wage index, we used occupational mix data
collected on a revised 2007-2008 Medicare Wage Index Occupational Mix
Survey (the 2007-2008 survey) to compute the occupational mix
adjustment for FY 2010. (We refer readers to the FY 2010 IPPS final
rule (74 FR 43827) for a detailed discussion of the 2007-2008 survey.)
Again, for the FY 2011 hospital wage index, we used data from the 2007-
2008 survey (including revised data for 45 hospitals) to compute the FY
2011 adjustment.
For the FY 2012 hospital wage index, we are proposing to again use
occupational mix data collected on the 2007-2008 Medicare Wage Index
Occupational Mix Survey to compute the occupational mix adjustment for
FY 2012. We are including data for 3,165 hospitals that also have wage
data included in the proposed FY 2012 wage index.
[[Page 25871]]
2. New 2010 Occupational Mix Survey for the FY 2013 Wage Index
As stated earlier, section 304(c) of Public Law 106-554 amended
section 1886(d)(3)(E) of the Act to require CMS to collect data every 3
years on the occupational mix of employees for each short-term, acute
care hospital participating in the Medicare program. We used
occupational mix data collected on the 2007-2008 survey to compute the
occupational mix adjustment for FY 2010 and the FY 2011 wage index and
are proposing to use the 2007-2008 occupational mix survey data in this
proposed rule for the FY 2012 wage index. Therefore, a new measurement
of occupational mix will be required for FY 2013.
The new 2010 survey (Form CMS-10079 (2010)) provides for the
collection of hospital-specific wages and hours data for calendar year
2010 (that is, payroll periods ending between January 1, 2010 and
December 31, 2010) and will be applied beginning with the FY 2013 wage
index. The 2010 survey was adopted in the Federal Register on January
15, 2010 (75 FR 2548) and approved by OMB on February 26, 2010 (OMB
control number 0938-0907). The survey is available on the CMS Web site
at: http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp#TopOfPage
and through the fiscal intermediaries/MACs. Hospitals are required to
submit their completed 2010 surveys to their fiscal intermediaries/MACs
by July 1, 2011. The preliminary, unaudited 2010 survey data will be
released in early October 2011, along with the FY 2009 Worksheet S-3
wage data, for the FY 2013 wage index review and correction process.
3. Calculation of the Proposed Occupational Mix Adjustment for FY 2012
For FY 2012 (as we did for FY 2011), we are proposing to calculate
the occupational mix adjustment factor using the following steps:
Step 1--For each hospital, determine the percentage of the total
nursing category attributable to a nursing subcategory by dividing the
nursing subcategory hours by the total nursing category's hours. Repeat
this computation for each of the four nursing subcategories: (1)
Registered nurses; (2) licensed practical nurses; (3) nursing aides,
orderlies, and attendants; and (4) medical assistants.
Step 2--Determine a national average hourly rate for each nursing
subcategory by dividing a subcategory's total salaries for all
hospitals in the occupational mix survey database by the subcategory's
total hours for all hospitals in the occupational mix survey database.
Step 3--For each hospital, determine an adjusted average hourly
rate for each nursing subcategory by multiplying the percentage of the
total nursing category (from Step 1) by the national average hourly
rate for that nursing subcategory (from Step 2). Repeat this
calculation for each of the four nursing subcategories.
Step 4--For each hospital, determine the adjusted average hourly
rate for the total nursing category by summing the adjusted average
hourly rate (from Step 3) for each of the nursing subcategories.
Step 5--Determine the national average hourly rate for the total
nursing category by dividing total nursing category salaries for all
hospitals in the occupational mix survey database by total nursing
category hours for all hospitals in the occupational mix survey
database.
Step 6--For each hospital, compute the occupational mix adjustment
factor for the total nursing category by dividing the national average
hourly rate for the total nursing category (from Step 5) by the
hospital's adjusted average hourly rate for the total nursing category
(from Step 4).
If the hospital's adjusted average hourly rate is less than the
national average hourly rate (indicating the hospital employs a less
costly mix of nursing employees), the occupational mix adjustment
factor is greater than 1.0000. If the hospital's adjusted average
hourly rate is greater than the national average hourly rate, the
occupational mix adjustment factor is less than 1.0000.
Step 7--For each hospital, calculate the occupational mix adjusted
salaries and wage-related costs for the total nursing category by
multiplying the hospital's total salaries and wage-related costs (from
Step 5 of the unadjusted wage index calculation in section III.F. of
this preamble) by the percentage of the hospital's total workers
attributable to the total nursing category (using the occupational mix
survey data, this percentage is determined by dividing the hospital's
total nursing category salaries by the hospital's total salaries for
``nursing and all other'') and by the total nursing category's
occupational mix adjustment factor (from Step 6 above).
The remaining portion of the hospital's total salaries and wage-
related costs that is attributable to all other employees of the
hospital is not adjusted by the occupational mix. A hospital's all
other portion is determined by subtracting the hospital's nursing
category percentage from 100 percent.
Step 8--For each hospital, calculate the total occupational mix
adjusted salaries and wage-related costs for a hospital by summing the
occupational mix adjusted salaries and wage-related costs for the total
nursing category (from Step 7) and the portion of the hospital's
salaries and wage-related costs for all other employees (from Step 7).
To compute a hospital's occupational mix adjusted average hourly
wage, divide the hospital's total occupational mix adjusted salaries
and wage-related costs by the hospital's total hours (from Step 4 of
the unadjusted wage index calculation in section III.F. of this
preamble).
Step 9--To compute the occupational mix adjusted average hourly
wage for an urban or rural area, sum the total occupational mix
adjusted salaries and wage-related costs for all hospitals in the area,
then sum the total hours for all hospitals in the area. Next, divide
the area's occupational mix adjusted salaries and wage-related costs by
the area's hours.
Step 10--To compute the national occupational mix adjusted average
hourly wage, sum the total occupational mix adjusted salaries and wage-
related costs for all hospitals in the Nation, then sum the total hours
for all hospitals in the Nation. Next, divide the national occupational
mix adjusted salaries and wage-related costs by the national hours. The
proposed FY 2012 occupational mix adjusted national average hourly wage
is $36.1406.
Step 11--To compute the occupational mix adjusted wage index,
divide each area's occupational mix adjusted average hourly wage (Step
9) by the national occupational mix adjusted average hourly wage (Step
10).
Step 12--To compute the Puerto Rico specific occupational mix
adjusted wage index, follow Steps 1 through 11 above. The proposed FY
2012 occupational mix adjusted Puerto Rico-specific average hourly wage
is $15.4107.
The table below is an illustrative example of the occupational mix
adjustment.
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Because the occupational mix adjustment is required by statute, all
hospitals that are subject to payments under the IPPS, or any hospital
that would be subject to the IPPS if not granted a waiver, must
complete the occupational mix survey, unless the hospital has no
associated cost report wage data that are included in the proposed FY
2012 wage index. For the FY 2007-2008 survey, the response rate was
90.8 percent.
In computing the proposed FY 2012 wage index, if a hospital did not
respond to the occupational mix survey, or if we determined that a
hospital's submitted data were too erroneous to include in the wage
index, we assigned the hospital the average occupational mix adjustment
for its labor market area. This method has the least impact on the wage
index for other hospitals in the area. For areas where no hospital
submitted data for purposes of calculating the occupational mix
adjustment, we applied the national occupational mix factor of 1.0000
in calculating the area's proposed FY 2012 occupational mix adjusted
wage index. In addition, if a hospital submitted a survey, but that
survey data could not be used because we determined the survey data to
be aberrant, we also assigned the hospital the average occupational mix
adjustment for its labor market area. For example, if a hospital's
individual nurse category average hourly wages were out of range (that
is, unusually high or low), and the hospital did not provide sufficient
documentation to explain the aberrancy, or the hospital did not submit
any registered nurse salaries or hours data, we assigned the hospital
the average occupational mix adjustment for the labor market area in
which it is located.
In calculating the average occupational mix adjustment factor for a
labor market area, we replicated Steps 1 through 6 of the calculation
for the occupational mix adjustment. However, instead of performing
these steps at the hospital level, we aggregated the data at the labor
market area level. In following these steps, for example, for CBSAs
that contain providers that did not submit occupational mix survey
data, the occupational mix adjustment factor ranged from a low of
0.9246 (CBSA 17780, College Station-Bryan, TX), to a high of 1.0761
(CBSA 19, Rural Louisiana). Also, in computing a hospital's
occupational mix adjusted salaries and wage-related costs for nursing
employees (Step 7 of the calculation), in the absence of occupational
mix survey data, we multiplied the hospital's total salaries and wage-
related costs by the percentage of the area's total workers
attributable to the area's total nursing category. For FY 2012, there
are five CBSAs (that include six hospitals) for which we did not have
occupational mix data for any of its hospitals. The CBSAs are:
CBSA 36140, Ocean City, NJ (1 hospital)
CBSA 22140, Farmington, NM (1 hospital)
CBSA 41900, San German-Cabo Rojo, PR (2 hospitals)
CBSA 49500, Yauco, PR (1 hospital)
CBSA 21940, Fajardo, PR (1 hospital)
Since the FY 2007 IPPS final rule, we have periodically discussed
applying a hospital-specific penalty to hospitals that fail to submit
occupational mix survey data (71 FR 48013 through 48014; 72 FR 47314
through 47315; 73 FR 48580; 74 FR 43832, and 75 FR 50167). During the
FY 2008 rulemaking cycle, some commenters suggested a penalty equal to
a 1- to 2-percent reduction in the hospital's wage index value or a set
percentage of the standardized amount. During the FY 2009 and FY 2010
rulemaking cycles, several commenters reiterated their view that full
participation in the occupational mix survey is critical, and that CMS
should develop a methodology that encourages hospitals to report
occupational mix survey data but does not unfairly penalize neighboring
hospitals. We indicated in the FY 2010 IPPS/RY 2010 LTCH PPS proposed
rule that, while we were not proposing a penalty at that time, we would
consider the public comments we previously received, as well as any
public comments on the proposed rule, as we developed the FY 2011 wage
index.
In the FY 2011 IPPS/LTCH PPS proposed and final rules (75 FR 23943
and 50167, respectively), we stated that, in order to gain a better
understanding of why some hospitals are not submitting the occupational
mix data, we will require hospitals that do not submit occupational mix
data to provide an explanation for not complying. This requirement will
be effective beginning with the new 2010 occupational mix survey (the
2010 survey is discussed in section III.C.2. of this preamble). We will
instruct fiscal intermediaries/MACs to begin gathering this information
as part of the FY 2013 wage index desk review process. We note that we
reserve the right to apply a different approach in future years,
including potentially penalizing nonresponsive hospitals.
D. Worksheet S-3 Wage Data for the Proposed FY 2012 Wage Index
The proposed FY 2012 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2008 (the FY 2011 wage index was
based on data from cost reporting periods beginning during FY 2007).
1. Included Categories of Costs
The proposed FY 2012 wage index includes the following categories
of data associated with costs paid under the IPPS (as well as
outpatient costs):
Salaries and hours from short-term, acute care hospitals
(including paid lunch hours and hours associated with military leave
and jury duty)
Home office costs and hours
Certain contract labor costs and hours (which includes
direct patient care, certain top management, pharmacy, laboratory, and
nonteaching physician Part A services, and certain contract indirect
patient care services (as discussed in the FY 2008 final rule with
comment period (72 FR 47315))