Federal Register, Volume 79 Issue 134 (Monday, July 14, 2014)

[Federal Register Volume 79, Number 134 (Monday, July 14, 2014)]
[Proposed Rules]
[Pages 40916-41083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15939]

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Vol. 79

Monday,

No. 134

July 14, 2014

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 411, 412, 416, et al.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment
and Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; Physician-Owned Hospitals: Data Sources for Expansion
Exception; Physician Certification of Inpatient Hospital Services;
Medicare Advantage Organizations and Part D Sponsors: Appeals Process
for Overpayments Associated With Submitted Data; Proposed Rule

Federal Register / Vol. 79 , No. 134 / Monday, July 14, 2014 /
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 411, 412, 416, 419, 422, 423, and 424

[CMS-1613-P]
RIN 0938-AS15

Medicare and Medicaid Programs: Hospital Outpatient Prospective
Payment and Ambulatory Surgical Center Payment Systems and Quality
Reporting Programs; Physician-Owned Hospitals: Data Sources for
Expansion Exception; Physician Certification of Inpatient Hospital
Services; Medicare Advantage Organizations and Part D Sponsors: Appeals
Process for Overpayments Associated With Submitted Data

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment system for CY 2015 to
implement applicable statutory requirements and changes arising from
our continuing experience with these systems. In this proposed rule, we
describe the proposed changes to the amounts and factors used to
determine the payment rates for Medicare services paid under the OPPS
and those paid under the ASC payment system. In addition, this proposed
rule would update and refine the requirements for the Hospital
Outpatient Quality Reporting (OQR) Program and the ASC Quality
Reporting (ASCQR) Program.
In this document, we also are proposing changes to the data sources
used for expansion requests for physician owned hospitals under the
physician self-referral regulations; changes to the underlying
authority for the requirement of an admission order for all hospital
inpatient admissions and changes to require physician certification for
hospital inpatient admissions only for long-stay cases and outlier
cases; and changes to establish a three-level appeals process for
Medicare Advantage (MA) organizations and Part D sponsors that would be
applicable to CMS-identified overpayments associated with data
submitted by these organizations and sponsors.

DATES: Comment Period: To be assured consideration, comments on all
sections of this proposed rule must be received at one of the addresses
provided in the ADDRESSES section no later than 5 p.m. EST on September
2, 2014.

ADDRESSES: In commenting, please refer to file code CMS-1613-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to http://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1613-P, P.O. Box 8013,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address only: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1613-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 before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call the telephone number (410) 786-7195 in advance to schedule
your arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION, CONTACT: Marjorie Baldo, (410) 786-4617, for
issues related to new CPT and Level II HCPCS codes, revised process for
soliciting comments related to new Category I and III CPT codes, and
exceptions to the 2 times rule.
Anita Bhatia, (410) 786-7236, for issues related to the Ambulatory
Surgical Center Quality Reporting (ASCQR) Program--Program
Administration and Reconsideration Issues, and for issues related to
the Hospital Outpatient Quality Reporting--Program Administration,
Validation, and Reconsideration Issues.
Chuck Braver, (410) 786-9379, for issues related to the CMS web
posting of the OPPS & ASC payment files.
Erick Chuang, (410) 786-1816, for issues related to OPPS APC
weights, OPPS data claims, geometric mean calculation, copayments,
rural hospital payments, and wage index.
Dexter Dickey, (410) 786-6856, or Dorothy Myrick, (410) 786-9671,
for issues related to partial hospitalization and community mental
health center (CMHC) issues.
Eva Fung, (410) 786-7539, or Fiona Larbi, (410) 786-7224, or
Felicia Diggs, (410) 786-1591, for issues related to HOQR and ASCQR
measures issues and publication of HOQR program data issues.
Julie Gover, (410) 786-0525, for issues related to Medicare
Advantage (MA) organizations and Medicare Part D sponsor overpayments.
Twi Jackson, (410) 786-1159, for issues related to device-dependent
APCs, extended assessment and management composite APCs, hospital
outpatient visits, inpatient procedures list, and no cost/full credit
and partial credit devices.
Marina Kushnirova, (410) 786-2682, for issues related to OPPS
status indicators and comment indicators.
Barry Levi, (410) 786-4529, for issues related to OPPS pass-through
devices, brachytherapy sources, brachytherapy composite APC, and
multiple imaging composite APCs.
John McInnes, (410) 786-0791, for issues related to comprehensive
APCs, provider-based issues, packaged items/services, OPPS drugs/
radiopharmaceuticals/biologicals payments, new technology intraocular

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lenses (NTIOLs), and ambulatory surgical center (ASC) payments.
David Rice, (410) 786-6004, for issues related to blood and blood
products, cancer hospital payments, conversion factor, cost-to-charge
ratios (CCRs), and outlier payments.
Daniel Schroder, (410) 786-7452, for issues related to physician
certification of hospital inpatient services.
Carol Schwartz, (410) 786-0576, for issues related to the Advisory
Panel on Hospital Outpatient Payment (HOP Panel).
Teresa Walden, (410) 786-3755, or Patricia Taft, (410) 786-4561,
for issues related to the physician self-referral law/physician-owned
hospital expansion exception process.
Marjorie Baldo, (410) 786-4617, for all other issues related to
hospital outpatient and ambulatory surgical center payments not
previously identified.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following Web site as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that Web site to view public comments.
Comments received timely will also be available for public
inspection, generally beginning approximately 3 weeks after publication
of the rule, at the headquarters of the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday
through Friday of each week from 8:30 a.m. to 4:00 p.m. EST. To
schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

This Federal Register document is also available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the internet at http://www.gpo.gov/fdsys/.

Addenda Available Only Through the Internet on the CMS Web site

In the past, a majority of the Addenda referred to in our OPPS/ASC
proposed and final rules were published in the Federal Register as part
of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC
proposed rule, all of the Addenda no longer appear in the Federal
Register as part of the annual OPPS/ASC proposed and final rules to
decrease administrative burden and reduce costs associated with
publishing lengthy tables. Instead, these Addenda are published and
available only on the CMS Web site. The Addenda relating to the OPPS
are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating to the
ASC payment system are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/index.html.

Alphabetical List of Acronyms Appearing in This Federal Register
Document

AHA American Hospital Association
AMA American Medical Association
APC Ambulatory Payment Classification
ASC Ambulatory surgical center
ASCQR Ambulatory Surgical Center Quality Reporting
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L.
106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Pub. L. 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CAP Competitive Acquisition Program
C-APC Comprehensive Ambulatory Payment Classification
CASPER Certification and Survey Provider Enhanced Reporting
CAUTI Catheter-associated urinary tract infection
CBSA Core-Based Statistical Area
CCI Correct Coding Initiative
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and Prevention
CEO Chief executive officer
CERT Comprehensive Error Rate Testing
CFR Code of Federal Regulations
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CPI-U Consumer Price Index for All Urban Consumers
CPT Current Procedural Terminology (copyrighted by the American
Medical Association)
CQM Clinical quality measure
CR Change request
CSAC Consensus Standards Approval Committee
CY Calendar year
DFO Designated Federal Official
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DRG Diagnosis-Related Group
DSH Disproportionate share hospital
EACH Essential access community hospital
eCQM Electronically specified clinical quality measure
ECT Electroconvulsive therapy
ED Emergency department
E/M Evaluation and management
EHR Electronic health record
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Pub. L. 92-463
FDA Food and Drug Administration
FFS [Medicare] Fee-for-service
FY Fiscal year
FFY Federal fiscal year
GAO Government Accountability Office
HAI Healthcare-associated infection
HCERA Health Care and Education Reconciliation Act of 2010, Pub. L.
111-152
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HEU Highly enriched uranium
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
HITECH Health Information Technology for Economic and Clinical
Health [Act] (found in the American Recovery and Reinvestment Act of
2009, Pub. L. 111-5)
HOP Hospital Outpatient Payment [Panel]
HOPD Hospital outpatient department
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD Implantable cardioverter defibrillator
ICU Intensive care unit
IHS Indian Health Service
IMRT Intensity Modulated Radiation Therapy
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IOM Institute of Medicine
IORT Intraoperative radiation treatment
IPPS [Hospital] Inpatient Prospective Payment System
IQR [Hospital] Inpatient Quality Reporting
LDR Low dose rate
LOS Length of stay
LTCH Long-term care hospital
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MFP Multifactor productivity
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act under Division B,
Title I of the Tax Relief Health Care Act of 2006, Pub. L. 109-432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Pub. L. 110-275
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MMEA Medicare and Medicaid Extenders Act of 2010, Pub. L. 111-309
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L.
110-173
MPFS Medicare Physician Fee Schedule
MRA Magnetic resonance angiography

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MRI Magnetic resonance imaging
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NHSN National Healthcare Safety Network
NQF National Quality Forum
NTIOL New technology intraocular lens
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act of 1996, Pub. L. 99-509
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
OPD [Hospital] Outpatient Department
OPO Organ Procurement Organization
OPPS [Hospital] Outpatient Prospective Payment System
OPSF Outpatient Provider-Specific File
OQR [Hospital] Outpatient Quality Reporting
OT Occupational therapy
PBD Provider-Based Department
PCR Payment-to-cost ratio
PE Practice expense
PEPPER Program for Evaluating Payment Patterns Electronic Report
PHP Partial hospitalization program
PHS Public Health Service [Act], Pub. L. 96-88
PPI Producer Price Index
PPS Prospective payment system
PQRS Physician Quality Reporting System
PT Physical therapy
QDC Quality data code
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RTI Research Triangle Institute, International
RVU Relative value unit
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SI Status indicator
SIR Standardized infection ratio
SLP Speech-language pathology
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
TEP Technical Expert Panel
TMS Transcranial Magnetic Stimulation Therapy
TOPs Transitional Outpatient Payments
UR Utilization review
USPSTF United States Preventive Services Task Force
UTI Urinary tract infection
VBP Value-based purchasing
WAC Wholesale acquisition cost

Table of Contents

I. Summary and Background
A. Executive Summary of This Document
1. Purpose
2. Summary of the Major Provisions
3. Summary of Costs and Benefits
B. Legislative and Regulatory Authority for the Hospital OPPS
C. Excluded OPPS Services and Hospitals
D. Prior Rulemaking
E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel
or the Panel), Formerly Named the Advisory Panel on Ambulatory
Payment Classification Groups (APC Panel)
1. Authority of the Panel
2. Establishment of the Panel
3. Panel Meetings and Organizational Structure
F. Public Comments Received in Response to the CY 2014 OPPS/ASC
Final Rule With Comment Period
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Payment Weights
1. Database Construction
a. Database Source and Methodology
b. Proposed Use of Single and Multiple Procedure Claims
c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
2. Proposed Data Development Process and Calculation of Costs
Used for Ratesetting
a. Claims Preparation
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure
Claims
(1) Splitting Claims
(2) Creation of ``Pseudo'' Single Procedure Claims
c. Completion of Claim Records and Geometric Mean Cost
Calculations
(1) General Process
(2) Recommendations of the Panel Regarding Data Development
d. Proposed Calculation of Single Procedure APC Criteria-Based
Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Brachytherapy Source Payment
e. Establishment of Comprehensive APCs
(1) Background
(2) Public Comments
(3) Proposed CY 2015 Policy for Comprehensive APCs
(4) Summary of Proposed CY 2015 Policies for Comprehensive APCs
f. Proposed Calculation of Composite APC Criteria-Based Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002
and 8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
(APC 8001)
(3) Mental Health Services Composite APC (APC 0034)
(4) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006,
8007, and 8008)
3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
b. Proposed Revision of a Packaging Policy Established in CY
2014--Procedures Described by Add-On Codes
c. Proposed Packaging Policies for CY 2015
(1) Ancillary Services
(2) Prosthetic Supplies
4. Proposed Calculation of OPPS Scaled Payment Weights
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default CCRs
E. Proposed Adjustment for Rural SCHs and EACHs Under Section
1833(t)(13)(B) of the Act
F. Proposed OPPS Payment to Certain Cancer Hospitals Described
by Section 1886(d)(1)(B)(v) of the Act
1. Background
2. Proposed Payment Adjustment for Certain Cancer Hospitals for
CY 2015
G. Proposed Hospital Outpatient Outlier Payments
1. Background
2. Proposed Outlier Calculation
H. Proposed Calculation of an Adjusted Medicare Payment From the
National Unadjusted Medicare Payment
I. Proposed Beneficiary Copayments
1. Background
2. Proposed OPPS Copayment Policy
3. Proposed Calculation of an Adjusted Copayment Amount for an
APC Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New CPT and Level II HCPCS Codes
1. Proposed Treatment of New CY 2014 Level II HCPCS and CPT
Codes Effective April 1, 2014 and July 1, 2014 for Which We Are
Soliciting Public Comments in This CY 2015 OPPS/ASC Proposed Rule
2. Proposed Process for New Level II HCPCS Codes That Will Be
Effective October 1, 2014 and New CPT and Level II HCPCS Codes That
Will Be Effective January 1, 2015 for Which We Will Solicit Public
Comments in the CY 2015 OPPS/ASC Final Rule With Comment Period
3. Proposed Process for Soliciting Public Comments for New and
Revised CPT Codes That Would Be Released by AMA Before the January 1
Effective Date
a. Current Process for Accepting Comments on New and Revised CPT
Codes That Are Effective January 1
b. Proposal To Modify the Current Process for Accepting Comments
on New and Revised CPT Codes That Are Effective January 1
B. Proposed OPPS Changes--Variations Within APCs
1. Background
2. Application of the 2 Times Rule
3. Proposed Exceptions to the 2 Times Rule
C. Proposed OPPS APC-Specific Policies
1. Ophthalmic Procedures and Services
2. Female Reproductive Procedures (APCs 0188, 0189, 0192, 0193,
and 0202)
3. Image-Guided Breast Biopsy Procedures (APC 0005)
4. Image-Guided Abscess Drainage Procedures (APCs 0005 and 0007)
5. Cystourethroscopy and Other Genitourinary Procedures (APCs
0160, 0161, 0162, and 0163)
6. Wound Treatments and Services (APCs 0015 and 0327)
a. Epidermal Autograft (APC 0327)
b. Negative Pressure Wound Therapy (NPWT) (APC 0015)
7. Endoscopic Retrograde Cholangiopancreatography (ERCP) With
Stent (APC 0384)
8. Radiation Therapy (APCs 0066, 0067, 0412, 0446, 0648, and
0667)
IV. Proposed OPPS Payment for Devices
A. Proposed Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
a. Background
b. Proposed CY 2015 Policy
2. Provisions for Reducing Transitional Pass-Through Payments to
Offset Costs Packaged Into APC Groups
a. Background
b. Proposed CY 2015 Policy

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B. Proposed Adjustment to OPPS Payment for No Cost/Full Credit
and Partial Credit Devices
1. Background
2. Proposed Policy for CY 2015
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Proposed Drugs and Biologicals With Expiring Pass-Through
Status in CY 2014
3. Proposed Drugs, Biologicals, and Radiopharmaceuticals With
New or Continuing Pass-Through Status in CY 2015
4. Proposed Provisions for Reducing Transitional Pass-Through
Payments for Diagnostic Radiopharmaceuticals; Contrast Agents;
Drugs, Biologicals, and Radiopharmaceuticals That Function as
Supplies When Used in a Diagnostic Test or Procedure; and Drugs and
Biologicals That Function as Supplies When Used in a Surgical
Procedure To Offset Costs Packaged Into APC Groups
a. Background
b. Proposed Payment Offset Policy for Diagnostic
Radiopharmaceuticals
c. Proposed Payment Offset Policy for Contrast Agents
d. Proposed Payment Offset Policy for Products Packaged
According to the Policy to Package Drugs, Biologicals, and
Radiopharmaceuticals That Function as Supplies When Used in a
Diagnostic Test or Procedure and Drugs and Biologicals That Function
as Supplies When Used in a Surgical Procedure
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs,
Biologicals, and Radiopharmaceuticals
a. Background
b. Proposed Cost Threshold for Packaging of Payment for HCPCS
Codes That Describe Certain Drugs, Certain Biologicals, and
Therapeutic Radiopharmaceuticals (``Threshold-Packaged Drugs'')
c. Proposed High/Low Cost Threshold for Packaged Skin
Substitutes
d. Proposed Pass-Through Evaluation Process for Skin Substitutes
e. Proposed Packaging Determination for HCPCS Codes That
Describe the Same Drug or Biological But Different Dosages
3. Proposed Payment for Drugs and Biologicals Without Pass-
Through Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs
(SCODs) and Other Separately Payable and Packaged Drugs and
Biologicals
b. Proposed CY 2015 Payment Policy
4. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
5. Proposed Payment for Blood Clotting Factors
6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital
Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Hospital Outpatient Visits
A. Background
B. Proposed Payment for Hospital Outpatient Clinic and Emergency
Department Visits
C. Proposed Payment for Critical Care Services
VIII. Proposed Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update for CY 2015
C. Proposed Separate Threshold for Outlier Payments to CMHCs
IX. Proposed Procedures That Would Be Paid Only as Inpatient
Procedures
A. Background
B. Proposed Changes to the Inpatient List
X. Proposed Nonrecurring Policy Changes: Collecting Data on Services
Furnished in Off-Campus Provider-Based Departments
XI. Proposed CY 2015 OPPS Payment Status and Comment Indicators
A. Proposed CY 2015 OPPS Payment Status Indicator Definitions
B. Proposed CY 2015 Comment Indicator Definitions
XII. Proposed Updates to the Ambulatory Surgical Center (ASC)
Payment System
A. Background
1. Legislative History, Statutory Authority, and Prior
Rulemaking for the ASC Payment System
2. Policies Governing Changes to the Lists of Codes and Payment
Rates for ASC Covered Surgical Procedures and Covered Ancillary
Services
B. Proposed Treatment of New Codes
1. Proposed Process for Recognizing New Category I and Category
III CPT Codes and Level II HCPCS Codes
2. Proposed Treatment of New Level II HCPCS Codes and Category
III CPT Codes Implemented in April 2014 and July 2014 for Which We
Are Soliciting Public Comments in This Proposed Rule
3. Proposed Process for New Level II HCPCS Codes and Category I
and Category III CPT Codes for Which We Will Be Soliciting Public
Comments in the CY 2015 OPPS/ASC Final Rule With Comment Period
C. Proposed Update to the Lists of ASC Covered Surgical
Procedures and Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Additions to the List of ASC Covered Surgical
Procedures
b. Proposed Covered Surgical Procedures Designated as Office-
Based
(1) Background
(2) Proposed Changes for CY 2015 to Covered Surgical Procedures
Designated as Office-Based
c. Proposed ASC Covered Surgical Procedures Designated as
Device-Intensive
(1) Background
(2) Proposed Changes to List of Covered ASC Surgical Procedures
Designated as Device-Intensive for CY 2015
d. Proposed Adjustment to ASC Payments for No Cost/Full Credit
and Partial Credit Devices
e. ASC Treatment of Surgical Procedures Proposed for Removal
From the OPPS Inpatient List for CY 2015
2. Covered Ancillary Services
D. Proposed ASC Payment for Covered Surgical Procedures and
Covered Ancillary Services
1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
b. Proposed Update to ASC Covered Surgical Procedure Payment
Rates for CY 2015
c. Waiver of Coinsurance and Deductible for Certain Preventive
Services
d. Proposed Payment for Cardiac Resynchronization Therapy
Services
e. Proposed Payment for Low Dose Rate (LDR) Prostate
Brachytherapy Composite
2. Proposed Payment for Covered Ancillary Services
a. Background
b. Proposed Payment for Covered Ancillary Services for CY 2015
E. New Technology Intraocular Lenses (NTIOLs)
1. NTIOL Application Cycle
2. Requests To Establish New NTIOL Classes for CY 2015
3. Payment Adjustment
F. Proposed ASC Payment and Comment Indicators
1. Background
2. Proposed ASC Payment and Comment Indicators
G. Calculation of the Proposed ASC Conversion Factor and the
Proposed ASC Payment Rates
1. Background
2. Proposed Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2015 and
Future Years
b. Updating the ASC Conversion Factor
3. Display of Proposed CY 2015 ASC Payment Rates
XIII. Hospital Outpatient Quality Reporting Program Updates
A. Background
1. Overview
2. Statutory History of the Hospital OQR Program
3. Measure Updates and Data Publication
a. Maintenance of Technical Specifications for Quality Measures
b. Public Display of Quality Measures
B. Process for Retention of Hospital OQR Program Measures
Adopted in Previous Payment Determinations
C. Removal of Quality Measures From the Hospital OQR Program
Measure Set
1. Considerations in Removing Quality Measures From the Hospital
OQR Program
2. Proposed Criteria for Removal of ``Topped-Out'' Measures
3. Proposed Removal of Measures From the Hospital OQR Program
for the CY 2017 Payment Determination and Subsequent Years

[[Page 40920]]

D. Quality Measures Previously Adopted for the CY 2016 Payment
Determination and Subsequent Years
1. Data Submission Requirements for OP-27: Influenza Vaccination
Coverage Among Healthcare Personnel (NQF 0431) Reported via
NHSN for the CY 2017 Payment Determination and Subsequent Years
a. Clarification of Submission Deadline and Data Submitted
b. Clarification on Reporting by CMS Certification Number (CCN)
2. Delayed Data Collection for OP-29 and OP-30
3. OP-31: Cataracts--Improvement in Patient's Visual Function
Within 90 Days Following Cataract Surgery
a. Correction of Response to Public Comments
b. Delayed Data Collection for OP-31 and Proposed Exclusion From
the CY 2016 Payment Determination Measure Set
c. Proposed Voluntary Collection of Data for OP-31 for the CY
2017 Payment Determination and Subsequent Years
E. Proposed New Quality Measure for the CY 2017 Payment
Determination and Subsequent Years
F. Possible Hospital OQR Program Measures and Topics for Future
Consideration
1. Electronic Clinical Quality Measures
2. Partial Hospitalization Program Measures
3. Behavioral Health Measures
4. National Quality Strategy and CMS Quality Strategy Measure
Domains
G. Proposed Payment Reduction for Hospitals That Fail To Meet
the Hospital Outpatient Quality Reporting (OQR) Program Requirements
for the CY 2015 Payment Update
1. Background
2. Proposed Reporting Ratio Application and Associated
Adjustment Policy for CY 2015
H. Proposed Requirements for Reporting Hospital OQR Program Data
for the CY 2017 Payment Determination and Subsequent Years
1. Administrative Requirements for the CY 2017 Payment
Determination and Subsequent Years
2. Form, Manner, and Timing of Data Submitted for the Hospital
OQR Program
a. General Procedural Requirements
b. Requirements for Chart-Abstracted Measures Where Data is
Submitted Directly to CMS for the CY 2017 Payment Determination and
Subsequent Years
c. Claims-Based Measure Data Requirements for the CY 2017
Payment Determination and Subsequent Years
d. Data Submission Requirements for Measure Data Submitted via
the CMS Web-Based Tool for the CY 2017 Payment Determination and
Subsequent Years
e. Population and Sampling Data Requirements for the CY 2017
Payment Determination and Subsequent Years
f. Proposed Review and Corrections Period for Chart-Abstracted
Measures
3. Hospital OQR Program Validation Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS for the CY 2017
Payment Determination and Subsequent Years
a. Background
b. Proposed Selection of Hospitals for Data Validation of Chart-
Abstracted Measures for the CY 2017 Payment Determination and
Subsequent Years
c. Targeting Criteria for Data Validation Selection for the CY
2017 Payment Determination and Subsequent Years
d. Methodology for Encounter Selection for the CY 2017 Payment
Determination and Subsequent Years
e. Proposed Medical Record Documentation Requests for Validation
and Validation Score Calculation for the CY 2017 Payment
Determination and Subsequent Years
I. Hospital OQR Program Reconsideration and Appeals Procedures
for the CY 2017 Payment Determination and Subsequent Years
J. Extension or Exception Process for the CY 2017 Payment
Determination and Subsequent Years
XIV. Requirements for the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program
A. Background
1. Overview
2. Statutory History of the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program
3. Regulatory History of the ASCQR Program
B. ASCQR Program Quality Measures
1. Considerations in the Selection of ASCQR Program Quality
Measures
2. Proposed Policy for Removal of Quality Measures From the
ASCQR Program
3. Proposed Criteria for Removal of ``Topped-Out'' Measures
4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
5. Proposed New ASCQR Program Quality Measure for the CY 2017
Payment Determination and Subsequent Years
6. ASCQR Program Measures for Future Consideration
a. ASCQR Program Measure Domains
b. Accelerating Health Information Exchange
7. Maintenance of Technical Specifications for Quality Measures
8. Public Reporting of ASCQR Program Data
C. Payment Reduction for ASCs That Fail To Meet the ASCQR
Program Requirements
1. Statutory Background
2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet
the ASCQR Program Requirements for a Payment Determination Year
D. Administrative Requirements
1. Requirements Regarding QualityNet Account and Security
Administrator
2. Requirements Regarding Participation Status
E. Form, Manner, and Timing of Data Submitted for the ASCQR
Program
1. Requirements Regarding Data Processing and Collection Periods
for Claims-Based Measures Using Quality Data Codes (QDCs)
2. Minimum Threshold, Minimum Case Volume, and Data Completeness
for Claims-Based Measures Using QDCs
3. Requirements for Data Submitted Via a CMS Online Data
Submission Tool
a. Data Collection for ASC-6 and ASC-7
b. Delayed Data Collection for ASC-9 and ASC-10
c. Delayed Data Collection and Proposed Exclusion for ASC-11 for
the CY 2016 Payment Determination and Proposed Voluntary Data
Collection for ASC-11 for CY 2017 and Subsequent Payment
Determination Years
4. Claims-Based Measure Data Requirements for the Proposed New
Measure for the CY 2017 Payment Determination and Subsequent Years
5. Data Submission Requirements for ASC-8 (Influenza Vaccination
Coverage Among Healthcare Personnel) Reported via the National
Healthcare Safety Network (NHSN) for the CY 2016 Payment
Determination and Subsequent Years
a. Previously Adopted Requirements for the CY 2016 Payment
Determination
b. Proposed Data Collection Timeframes for the CY 2017 Payment
Determination and Subsequent Years and Proposed Submission Deadlines
for the CY 2016 Payment Determination and Subsequent Years
6. ASCQR Program Validation of Claims-Based and CMS Web-Based
Measures
7. Extraordinary Circumstances Extensions or Exemptions for the
CY 2017 Payment Determination and Subsequent Years
8. ASCQR Program Reconsideration Procedures for the CY 2017
Payment Determination and Subsequent Years
XV. Proposed Changes to the Rural Provider and Hospital Ownership
Exceptions to the Physician Self-Referral Law: Expansion Exception
Process
A. Background
1. Statutory Basis
2. Affordable Care Act Amendments to the Rural Provider and
Hospital Ownership Exceptions to the Physician Self-Referral Law
B. Limitations Identified by Stakeholders Regarding the Required
Use of HCRIS Data
1. Medicaid Managed Care Data
2. Hospitals That Lack Filed Cost Reports for the Relevant
Fiscal Years
C. Proposed Changes To Permit Supplemental Data Sources in the
Expansion Exception Process
D. Additional Considerations
XVI. Proposed Revision of the Requirements for Physician
Certification of Hospital Inpatient Services Other Than Psychiatric
Inpatient Services
XVII. CMS-Identified Overpayments Associated With Payment Data
Submitted by Medicare Advantage (MA) Organizations and Medicare Part
D Sponsors (Proposed Sec. Sec. 422.330 and 423.352)
A. Background
1. Medicare Part C Background
2. Medicare Part D Background
B. Provisions of our Proposals
1. Proposed Definitions of ``Payment Data'' and ``Applicable
Reconciliation Date''

[[Page 40921]]

2. Request for Corrections of Payment Data
3. Proposed Payment Offset
a. Offset Amount
b. Payment Offset Notification
4. Proposed Appeals Process for MA Organizations and Part D
Sponsors
a. Reconsideration
b. Informal Hearing
c. Review by Administrator
5. Matters Subject to Appeal and Burden of Proof
6. Effective Date of Proposed Appeals Process Provisions
XVIII. Files Available to the Public Via the Internet
XIX. Collection of Information Requirements
A. Legislative Requirements for Solicitation of Comments
B. Requirements in Regulation Text: Proposed Changes to the
Rural Provider and Hospital Ownership Exceptions to the Physician
Self-Referral Law: Expansion Exception Process (Sec. 411.362)
C. Associated Information Collections Not Specified in
Regulatory Text
1. Hospital OQR Program
a. Revisions to the CY 2016 Payment Determination Estimates
b. Hospital OQR Program Requirements for the CY 2017 Payment
Determination and Subsequent Years
c. Review and Corrections Period Requirements for the CY 2017
Payment Determination and Subsequent Years
d. Hospital OQR Program Validation Requirements for the CY 2017
Payment Determination and Subsequent Years
e. Extraordinary Circumstances Extensions or Exemptions Process
f. Reconsideration and Appeals
2. ASCQR Program Requirements
a. Background
b. Revisions to the CY 2016 Payment Determination Estimates
c. Claims-Based Measures for the CY 2014 Payment Determination
and Subsequent Years
d. Web-Based Measures for the CY 2017 Payment Determination and
Subsequent Years
e. Extraordinary Circumstances Extension or Exemptions Process
f. Reconsiderations and Appeals
XX. Response to Comments
XXI. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impacts for the Proposed OPPS and ASC Payment
Provisions
4. Detailed Economic Analyses
a. Estimated Effects of Proposed OPPS Changes in This Proposed
Rule
(1) Limitations of Our Analysis
(2) Estimated Effects of Proposed OPPS Changes on Hospitals
(3) Estimated Effects of Proposed OPPS Changes on CMHCs
(4) Estimated Effect of Proposed OPPS Changes on Beneficiaries
(5) Estimated Effects of Proposed OPPS Changes on Other
Providers
(6) Estimated Effects of Proposed OPPS Changes on the Medicare
and Medicaid Programs
(7) Alternative OPPS Policies Considered
b. Estimated Effects of CY 2015 ASC Payment System Proposed
Policies
(1) Limitations of Our Analysis
(2) Estimated Effects of CY 2015ASC Payment System Proposed
Policies on ASCs
(3) Estimated Effects of ASC Payment System Proposed Policies on
Beneficiaries
(4) Alternative ASC Payment Policies Considered
c. Accounting Statements and Tables
d. Effects of Proposed Requirements for the Hospital OQR Program
e. Effects of CY 2014 Proposed Policies for the ASCQR Program
f. Effects of Proposed Changes to the Rural Provider and
Hospital Ownership Exceptions to the Physician Self-Referral Law
g. Effects of Proposed Policies Related to CMS-Identified
Overpayments Associated With Payment Data Submitted by Medicare
Advantage (MA) Organizations and Medicare Part D Sponsors
B. Regulatory Flexibility Act (RFA) Analysis
C. Unfunded Mandates Reform Act Analysis
D. Conclusion
XXII. Federalism Analysis

Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
In this proposed rule, we are proposing to update the payment
policies and payment rates for services furnished to Medicare
beneficiaries in hospital outpatient departments and Ambulatory
Surgical Centers (ASCs) beginning January 1, 2015. Section 1833(t) of
the Social Security Act (the Act) requires us to annually review and
update the relative payment weights and the conversion factor for
services payable under the Outpatient Prospective Payment System
(OPPS). Under section 1833(i) of the Act, we annually review and update
the ASC payment rates. We describe these and various other statutory
authorities in the relevant sections of this proposed rule. In
addition, this proposed rule would update and refine the requirements
for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC
Quality Reporting (ASCQR) Program.
In this document, we also are proposing changes to the data sources
used for expansion requests for physician owned hospitals under the
physician self-referral regulations; changes to the underlying
authority for the requirement of an admission order for all hospital
inpatient admissions and changes to require physician certification for
hospital inpatient admissions only for long-stay cases and outlier
cases; and changes to establish a three-level appeals process for
Medicare Advantage (MA) organizations and Part D sponsors that would be
applicable to CMS-identified overpayments associated with data
submitted by these organizations and sponsors.
2. Summary of the Major Provisions
OPPS Update: For CY 2015, we are proposing to
increase the payment rates under the OPPS by an Outpatient Department
(OPD) fee schedule increase factor of 2.1 percent. This proposed
increase is based on the proposed hospital inpatient market basket
percentage increase of 2.7 percent for inpatient services paid under
the hospital inpatient prospective payment system (IPPS), minus the
proposed multifactor productivity (MFP) adjustment of 0.4 percentage
points, and minus a 0.2 percentage point adjustment required by the
Affordable Care Act. Under this proposed rule, we estimate that
proposed total payments for CY 2015, including beneficiary cost-
sharing, to the approximate 4,000 facilities paid under the OPPS
(including general acute care hospitals, children's hospitals, cancer
hospitals, and community mental health centers (CMHCs)), will be
approximately $56.5 billion, an increase of approximately $5.2 billion
compared to CY 2014 payments, or $800 million excluding our estimated
changes in enrollment, utilization, and case-mix.
We are proposing to continue to implement the statutory 2.0
percentage point reduction in payments for hospitals failing to meet
the hospital outpatient quality reporting requirements, by applying a
reporting factor of 0.980 to the OPPS payments and copayments for all
applicable services.
Rural Adjustment: We are proposing to continue the
adjustment of 7.1 percent to the OPPS payments to certain rural sole
community hospitals (SCHs), including essential access community
hospitals (EACHs). This adjustment will apply to all services paid
under the OPPS, excluding separately payable drugs and biologicals,
devices paid under the pass-through payment policy, and items paid at
charges reduced to cost.
Cancer Hospital Payment Adjustment: For CY 2015, we are
proposing to continue to provide additional payments to cancer
hospitals so that the cancer hospital's payment to-cost ratio (PCR)
after the additional payments is equal to the weighted average PCR for
the other OPPS

[[Page 40922]]

hospitals using the most recently submitted or settled cost report
data. Based on those data, a target PCR of 0.89 will be used to
determine the proposed CY 2015 cancer hospital payment adjustment to be
paid at cost report settlement. That is, the proposed payment
adjustments will be the additional payments needed to result in a PCR
equal to 0.89 for each cancer hospital.
Payment of Drugs, Biologicals, and Radiopharmaceuticals:
For CY 2015, proposed payment for the acquisition and pharmacy overhead
costs of separately payable drugs and biologicals that do not have
pass-through status would be set at the statutory default of average
sales price (ASP) plus 6 percent.
Packaging Policies: We are proposing to conditionally
package certain ancillary services when they are integral, ancillary,
supportive, dependent, or adjunctive to a primary service. The initial
set of services proposed to be packaged under this ancillary service
policy are the services assigned to APCs having a proposed APC
geometric mean cost (prior to application of status indicator Q1) of
less than or equal to $100. This proposed $100 geometric mean cost
limit for the APC is part of the methodology of establishing an initial
set of conditionally packaged ancillary service APCs, and is not meant
to represent a threshold above which a given ancillary service would
not be packaged, but as a basis for selecting an initial set of APCs
that would likely be updated and expanded in future years.
Implementation of Comprehensive APCs: For CY 2015, we are
proposing to implement, with several modifications, the policy for
comprehensive APCs that was finalized in the CY 2014 OPPS/ASC final
rule with comment period effective January 1, 2015. We are proposing to
continue to define the services assigned to comprehensive APCs as
primary services, and to define a comprehensive APC as a classification
for the provision of a primary service and all adjunctive services and
supplies provided to support the delivery of the primary service. We
would continue to consider the entire hospital stay, defined as all
services reported on the hospital claim reporting the primary service,
to be one comprehensive service for the provision of a primary service
into which all other services appearing on the claim would be packaged.
This would result in a single Medicare payment and a single beneficiary
copayment under the OPPS for the comprehensive service based on all
included charges on the claim.
We are proposing a total of 28 comprehensive APCs for CY 2015,
including all of the device-dependent APCs remaining after some
restructuring and consolidation of these APCs and two comprehensive
APCs for other procedures that are either largely device dependent or
represent single session services with multiple components (single-
session cranial stereotactic radiosurgery and intraocular telescope
implantation). We are proposing to modify the complexity adjustment
criteria finalized last year, proposing lower volume and cost threshold
criteria for complexity adjustments. Finally, we are proposing to
package all add-on codes furnished as part of a comprehensive service,
which is consistent with our general add-on code packaging policy.
However, the add-on codes assigned to the CY 2014 device-dependent APCs
would be being evaluated with a primary service for a potential
complexity adjustment.
Ambulatory Surgical Center Payment Update: For CY 2015, we
are proposing to increase payment rates under the ASC payment system by
1.2 percent. This proposed increase is based on a projected CPI-U
update of 1.7 percent minus a multifactor productivity adjustment
required by the Affordable Care Act that is projected to be 0.5
percent. Based on this proposed update, we estimate that total payments
to ASCs (including beneficiary cost-sharing and estimated changes in
enrollment, utilization, and case-mix), for CY 2015 would be
approximately $4.086 billion, an increase of approximately $243 million
compared to estimated CY 2014 payments.
Hospital Outpatient Quality Reporting (OQR) Program: For
the Hospital OQR Program, we are proposing to add one claims-based
quality measure for the CY 2017 payment determination and subsequent
years. We are proposing to refine the criteria for determining when to
remove a measure because it is ``topped-out'' and we are proposing to
remove three measures due to ``topped-out'' status. In addition, we are
updating several previously adopted measures. We are proposing to
exclude one previously adopted measure from the measure set for the CY
2016 payment determination and to change this measure from required to
voluntary for the CY 2017 payment determination and subsequent years.
Hospitals would not be subject to payment reductions with respect to
this measure. In addition, we are proposing to formalize a review and
corrections period for chart-abstracted measures. We also are proposing
updates to validation procedures and changes to regulation text to
correct typographical errors. Finally, we are clarifying how we refer
to the extraordinary circumstances extensions or exemptions process.
Ambulatory Surgical Center Quality Reporting (ASCQR)
Program: For the ASCQR Program, we are proposing to adopt one new
quality measure for the CY 2017 payment determination and subsequent
years. The measure would be computed using Medicare claims data and
would not impose any additional burden on ASC facilities. We also are
proposing that one measure previously adopted for the CY 2016 and
subsequent years' payment determinations be excluded from the CY 2016
measure set and that this measure be voluntarily reported for the CY
2017 payment determination and subsequent years, rather than
mandatorily reported. We would not subject ASCs to payment reductions
with respect to this measure for the CY 2016 payment determination or
during the period of voluntary reporting. In addition, we are proposing
to define the data collection timeframes and submission deadlines for
one previously adopted measure, noting the delayed data collection of
two measures for the CY 2016 payment determination, and clarifying how
we refer to the extraordinary circumstances extensions or exemptions
process.
3. Summary of Costs and Benefits
In sections XXI. and XXII. of this proposed rule, we set forth a
detailed analysis of the regulatory and federalism impacts that the
proposed changes would have on affected entities and beneficiaries. Key
estimated impacts are described below.
a. Impacts of the OPPS Update
(1) Impacts of All Proposed OPPS Changes
Table 52 in section XXI. of this proposed rule displays the
distributional impact all the proposed OPPS changes on various groups
of hospitals and CMHCs for CY 2015 compared to all estimated OPPS
payments in CY 2014. We estimate that the proposed policies in this
proposed rule would result in a 2.2 percent overall increase in OPPS
payments to providers. We estimate that proposed total OPPS payments
for CY 2015, including beneficiary cost-sharing, to the approximate
4,000 facilities paid under the OPPS (including general acute care
hospitals, children's hospitals, cancer hospitals, and community mental
health centers (CMHCs)), will be approximately $56.5 billion, an
increase of approximately $5.2 billion compared to CY 2014 payments, or
$800 million, excluding

[[Page 40923]]

our estimated changes in enrollment, utilization, and case-mix.
We estimated the isolated impact of our proposed OPPS policies on
CMHCs because CMHCs are only paid for partial hospitalization services
under the OPPS. Continuing the provider-specific structure that we
adopted beginning in CY 2011 and basing payment fully on the type of
provider furnishing the service, we estimate a -1.6 percent decrease in
CY 2015 payments to CMHCs relative to their CY 2014 payments.
(2) Impacts of the Proposed Updated Wage Indexes
We estimate that our proposal to update the wage indexes and apply
the frontier State wage index, including changes resulting from the
proposed adoption of the new OMB labor market area delineations and the
proposed transitional 1-year, 50/50 blended wage index, would have a
positive impact on payments to hospitals.
(3) Impacts of the Proposed Rural Adjustment and the Cancer Hospital
Payment Adjustment
There are no significant impacts of our proposed CY 2015 payment
policies for hospitals that are eligible for the rural adjustment or
for the cancer hospital payment adjustment. We are not proposing to
make any change in policies for determining the rural and cancer
hospital payment adjustments, and the proposed adjustment amounts do
not significantly impact the budget neutrality adjustments for these
proposed policies.
(4) Impacts of the Proposed OPD Fee Schedule Increase Factor
We estimate that, for most hospitals, the application of the
proposed OPD fee schedule increase factor of 2.1 percent to the
conversion factor for CY 2015 would mitigate the small negative impacts
of the budget neutrality adjustments. As a result of the OPD fee
schedule increase factor and other budget neutrality adjustments, we
estimate that rural and urban hospitals would experience increases of
approximately 2.1 percent for urban hospitals and 2.4 percent for rural
hospitals. Classifying hospitals by teaching status or type of
ownership suggests that these hospitals will receive similar increases.
b. Impacts of the Proposed ASC Payment Update
For impact purposes, the surgical procedures on the ASC list of
covered procedures are aggregated into surgical specialty groups using
CPT and HCPCS code range definitions. The proposed percentage change in
estimated total payments by specialty groups under the proposed CY 2015
payment rates compared to estimated CY 2014 payment rates ranges
between -3.0 percent for cardiovascular system procedures and 12
percent for hematologic and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
We do not expect our proposed CY 2015 policies to significantly
affect the number of hospitals that do not receive a full annual
payment update.
d. Impacts of the ASCQR Program
We do not expect our proposed CY 2015 proposed policies to
significantly affect the number of ASCs that do not receive a full
annual payment update.

B. Legislative and Regulatory Authority for the Hospital OPPS

When Title XVIII of the Social Security Act was enacted, Medicare
payment for hospital outpatient services was based on hospital-specific
costs. In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section
1833(t) to the Act authorizing implementation of a PPS for hospital
outpatient services. The OPPS was first implemented for services
furnished on or after August 1, 2000. Implementing regulations for the
OPPS are located at 42 CFR Parts 410 and 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: The Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on
March 30, 2010 (These two public laws are collectively known as the
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L.
112-96), enacted on February 22, 2012; and the American Taxpayer Relief
Act of 2012 (Pub. L. 112-240), enacted January 2, 2013.
Under the OPPS, we pay for hospital Part B services on a rate-per-
service basis that varies according to the APC group to which the
service is assigned. We use the Healthcare Common Procedure Coding
System (HCPCS) (which includes certain Current Procedural Terminology
(CPT) codes) to identify and group the services within each APC. The
OPPS includes payment for most hospital outpatient services, except
those identified in section I.C. of this final rule with comment
period. Section 1833(t)(1)(B) of the Act provides for payment under the
OPPS for hospital outpatient services designated by the Secretary
(which includes partial hospitalization services furnished by CMHCs),
and certain inpatient hospital services that are paid under Part B.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, items and services within an APC group cannot be
considered comparable with respect to the use of resources if the
highest median cost (or mean cost, if elected by the Secretary) for an
item or service in the APC group is more than 2 times greater than the
lowest median cost (or mean cost, if elected by the Secretary) for an
item or service within the same APC group (referred to as the ``2 times
rule''). In implementing this provision, we generally use the cost of
the item or service assigned to an APC group.

[[Page 40924]]

For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
clinical information and cost data to appropriately assign them to a
clinical APC group, we have established special APC groups based on
costs, which we refer to as New Technology APCs. These New Technology
APCs are designated by cost bands which allow us to provide appropriate
and consistent payment for designated new procedures that are not yet
reflected in our claims data. Similar to pass-through payments, an
assignment to a New Technology APC is temporary; that is, we retain a
service within a New Technology APC until we acquire sufficient data to
assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule. It
also excludes screening mammography, diagnostic mammography, and
effective January 1, 2011, an annual wellness visit providing
personalized prevention plan services. The Secretary exercises the
authority granted under the statute to also exclude from the OPPS
certain services that are paid under fee schedules or other payment
systems. Such excluded services include, for example, the professional
services of physicians and nonphysician practitioners paid under the
Medicare Physician Fee Schedule (MPFS); certain laboratory services
paid under the Clinical Laboratory Fee Schedule (CLFS); services for
beneficiaries with end-stage renal disease (ESRD) that are paid under
the ESRD prospective payment system; and services and procedures that
require an inpatient stay that are paid under the hospital IPPS. We set
forth the services that are excluded from payment under the OPPS in
regulations at 42 CFR 419.22.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals that are excluded from payment under the OPPS. These excluded
hospitals include: Maryland hospitals, but only for services that are
paid under a cost containment waiver in accordance with section
1814(b)(3) of the Act; critical access hospitals (CAHs); hospitals
located outside of the 50 States, the District of Columbia, and Puerto
Rico; and Indian Health Service (IHS) hospitals.

D. Prior Rulemaking

On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, relative payment weights, and other adjustments that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the
Panel)

Authority of the Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Pub. L. 106-113, and redesignated by section 202(a)(2) of Pub. L. 106-
113, requires that we consult with an external advisory panel of
experts to annually review the clinical integrity of the payment groups
and their weights under the OPPS. In CY 2000, based on section
1833(t)(9)(A) of the Act and section 222 of the Public Health Service
(PHS) Act, the Secretary established the Advisory Panel on Ambulatory
Payment Classification Groups (APC Panel) to fulfill this requirement.
In CY 2011, based on section 222 of the PHS Act which gives
discretionary authority to the Secretary to convene advisory councils
and committees, the Secretary expanded the panel's scope to include the
supervision of hospital outpatient therapeutic services in addition to
the APC groups and weights. To reflect this new role of the panel, the
Secretary changed the panel's name to the Advisory Panel on Hospital
Outpatient Payment (the HOP Panel, or the Panel). The Panel is not
restricted to using data compiled by CMS, and in conducting its review
it may use data collected or developed by organizations outside the
Department.
2. Establishment of the Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the HOP Panel, at that time named the APC Panel. This
expert panel, which may be composed of up to 19 appropriate
representatives of providers (currently employed full-time, not as
consultants, in their respective areas of expertise), reviews clinical
data and advises CMS about the clinical integrity of the APC groups and
their payment weights. Since CY 2012, the Panel also is charged with
advising the Secretary on the appropriate level of supervision for
individual hospital outpatient therapeutic services. The Panel is
technical in nature, and it is governed by the provisions of the
Federal Advisory Committee Act (FACA). The current charter specifies,
among other requirements, that: The Panel continues to be technical in
nature; is governed by the provisions of the FACA; may convene up to
three meetings per year; has a Designated Federal Official (DFO); and
is chaired by a Federal Official designated by the Secretary. The
current charter was amended on November 15, 2011 and the Panel was
renamed to reflect expanding the Panel's authority to include
supervision of hospital outpatient therapeutic services and therefore
to add CAHs to its membership.
The current Panel membership and other information pertaining to
the Panel, including its charter, Federal Register notices, membership,
meeting dates, agenda topics, and meeting reports, can be viewed on the
CMS Web site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. Panel Meetings and Organizational Structure
The Panel has held multiple meetings, with the last meeting taking
place on March 10, 2014. Prior to each meeting, we publish a notice in
the Federal Register to announce the meeting and, when necessary, to
solicit nominations

[[Page 40925]]

for Panel membership and to announce new members.
The Panel has established an operational structure that, in part,
currently includes the use of three subcommittees to facilitate its
required review process. The three current subcommittees are the Data
Subcommittee, the Visits and Observation Subcommittee, and the
Subcommittee for APC Groups and Status Indicator (SI) Assignments.
The Data Subcommittee is responsible for studying the data issues
confronting the Panel and for recommending options for resolving them.
The Visits and Observation Subcommittee reviews and makes
recommendations to the Panel on all technical issues pertaining to
observation services and hospital outpatient visits paid under the OPPS
(for example, APC configurations and APC relative payment weights). The
Subcommittee for APC Groups and SI Assignments advises the Panel on the
following issues: The appropriate SIs to be assigned to HCPCS codes,
including but not limited to whether a HCPCS code or a category of
codes should be packaged or separately paid; and the appropriate APC
placement of HCPCS codes regarding services for which separate payment
is made.
Each of these subcommittees was established by a majority vote from
the full Panel during a scheduled Panel meeting, and the Panel
recommended at the March 2014 meeting that the subcommittees continue.
We accepted this recommendation.
Discussions of the other recommendations made by the Panel at the
March 2014 Panel meeting are included in the sections of this proposed
rule that are specific to each recommendation. For discussions of
earlier Panel meetings and recommendations, we refer readers to
previously published OPPS/ASC proposed and final rules, the CMS Web
site mentioned earlier in this section, and the FACA database at:
http://fido.gov/facadatabase/public.asp.

F. Public Comments Received on the CY 2014 OPPS/ASC Final Rule With
Comment Period

We received 490 timely pieces of correspondence on the CY 2014
OPPS/ASC final rule with comment period that appeared in the Federal
Register on December 10, 2013 (78 FR 74826), some of which contained
comments on the interim APC assignments and/or status indicators of new
or replacement HCPCS codes (identified with comment indicator ``NI'' in
Addenda B, AA, and BB to that final rule). Summaries of the public
comments on new or replacement codes will be set forth in the CY 2015
final rule with comment period under the appropriate subject-matter
headings. However, we are summarizing the public comments on the CY
2014 OPPS/ASC final rule with comment period regarding comprehensive
APCs in this proposed rule rather than the CY 2015 final rule with
comment period, as we are proposing several methodological changes in
response to these public comments.

II. Proposed Updates Affecting OPPS Payments

A. Proposed Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for APCs. In the April 7, 2000 OPPS final rule with comment period (65
FR 18482), we explained in detail how we calculated the relative
payment weights that were implemented on August 1, 2000 for each APC
group.
For the CY 2015 OPPS, we are proposing to recalibrate the APC
relative payment weights for services furnished on or after January 1,
2015, and before January 1, 2016 (CY 2015), using the same basic
methodology that we described in the CY 2014 OPPS/ASC final rule with
comment period. That is, we are proposing to recalibrate the relative
payment weights for each APC based on claims and cost report data for
hospital outpatient department (HOPD) services, using the most recent
available data to construct a database for calculating APC group
weights. Therefore, for the purpose of recalibrating the proposed APC
relative payment weights for CY 2015, we used approximately 149 million
final action claims (claims for which all disputes and adjustments have
been resolved and payment has been made) for hospital outpatient
department services furnished on or after January 1, 2013, and before
January 1, 2014. For exact counts of claims used, we refer readers to
the claims accounting narrative under supporting documentation for this
CY 2015 OPPS/ASC proposed rule on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Of the approximately 149 million final action claims for services
provided in hospital outpatient settings used to calculate the CY 2015
OPPS payment rates for this proposed rule, approximately 119 million
claims were the type of bill potentially appropriate for use in setting
rates for OPPS services (but did not necessarily contain services
payable under the OPPS). Of the approximately 119 million claims,
approximately 5 million claims were not for services paid under the
OPPS or were excluded as not appropriate for use (for example,
erroneous cost-to-charge ratios (CCRs) or no HCPCS codes reported on
the claim). From the remaining approximately 114 million claims, we
created approximately 94 million single records, of which approximately
46 million were ``pseudo'' single or ``single session'' claims (created
from approximately 21 million multiple procedure claims using the
process we discuss later in this section). Approximately 1 million
claims were trimmed out on cost or units in excess of 3
standard deviations from the geometric mean, yielding approximately 94
million single bills for ratesetting. As described in section II.A.2.
of this proposed rule, our data development process is designed with
the goal of using appropriate cost information in setting the APC
relative payment weights. The bypass process is described in section
II.A.1.b. of this proposed rule. This section discusses how we develop
``pseudo'' single procedure claims (as defined below), with the
intention of using more appropriate data from the available claims. In
some cases, the bypass process allows us to use some portion of the
submitted claim for cost estimation purposes, while the remaining
information on the claim continues to be unusable. Consistent with the
goal of using appropriate information in our data development process,
we only use claims (or portions of each claim) that are appropriate for
ratesetting purposes.
The proposed APC relative weights and payments for CY 2015 in
Addenda A and B to this proposed rule (which are available via the
Internet on the CMS Web site) were calculated using claims from CY 2013
that were processed through December 31, 2013. While prior to CY 2013
we historically based the payments on median hospital costs for
services in the APC groups, beginning with the CY 2013 OPPS, we
established the cost-based relative payment weights for the OPPS using
geometric mean costs, as discussed in the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68259 through 68271). For the CY 2015 OPPS,
we are proposing to use this same methodology, basing payments on

[[Page 40926]]

geometric mean costs. Under this methodology, we select claims for
services paid under the OPPS and match these claims to the most recent
cost report filed by the individual hospitals represented in our claims
data. We continue to believe that it is appropriate to use the most
current full calendar year claims data and the most recently submitted
cost reports to calculate the relative costs underpinning the APC
relative payment weights and the CY 2015 payment rates.
b. Proposed Use of Single and Multiple Procedure Claims
For CY 2015, in general, we are proposing to continue to use single
procedure claims to set the costs on which the APC relative payment
weights are based. We generally use single procedure claims to set the
estimated costs for APCs because we believe that the OPPS relative
weights on which payment rates are based should be derived from the
costs of furnishing one unit of one procedure and because, in many
circumstances, we are unable to ensure that packaged costs can be
appropriately allocated across multiple procedures performed on the
same date of service.
It is generally desirable to use the data from as many claims as
possible to recalibrate the APC relative payment weights, including
those claims for multiple procedures. As we have for several years, we
are proposing to continue to use date of service stratification and a
list of codes to be bypassed to convert multiple procedure claims to
``pseudo'' single procedure claims. Through bypassing specified codes
that we believe do not have significant packaged costs, we are able to
use more data from multiple procedure claims. In many cases, this
enables us to create multiple ``pseudo'' single procedure claims from
claims that were submitted as multiple procedure claims spanning
multiple dates of service, or claims that contained numerous separately
paid procedures reported on the same date on one claim. We refer to
these newly created single procedure claims as ``pseudo'' single
procedure claims. The history of our use of a bypass list to generate
``pseudo'' single procedure claims is well documented, most recently in
the CY 2014 OPPS/ASC final rule with comment period (78 FR 74849
through 74851). In addition, for CY 2008 (72 FR 66614 through 66664),
we increased packaging and created the first composite APCs, and
continued those policies through CY 2014. Increased packaging and
creation of composite APCs also increased the number of bills that we
were able to use for ratesetting by enabling us to use claims that
contained multiple major procedures that previously would not have been
usable. Further, for CY 2009, we expanded the composite APC model to
one additional clinical area, multiple imaging services (73 FR 68559
through 68569), which also increased the number of bills we were able
to use in developing the OPPS relative weights on which payments are
based. We have continued the composite APCs for multiple imaging
services through CY 2014, and we are proposing to continue this policy
for CY 2015. We refer readers to section II.A.2.f. of the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74910 through 74925) for a
discussion of the use of claims in modeling the costs for composite
APCs and to section II.A.3. of the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74925 through 74948) for a discussion of our
packaging policies for CY 2014. In addition, we are proposing to
establish additional packaging policies for the CY 2015 OPPS, as
discussed in section II.A.3. of this proposed rule.
We are proposing to continue to apply these processes to enable us
to use as much claims data as possible for ratesetting for the CY 2015
OPPS. This methodology enabled us to create, for this proposed rule,
approximately 46 million ``pseudo'' single procedure claims, including
multiple imaging composite ``single session'' bills (we refer readers
to section II.A.2.f.(5) of this proposed rule for further discussion),
to add to the approximately 48 million ``natural'' single procedure
claims.
For CY 2015, we are proposing to bypass 227 HCPCS codes that are
identified in Addendum N to this proposed rule (which is available via
the Internet on the CMS Web site). Since the inception of the bypass
list, which is the list of codes to be bypassed to convert multiple
procedure claims to ``pseudo'' single procedure claims, we have
calculated the percent of ``natural'' single bills that contained
packaging for each HCPCS code and the amount of packaging on each
``natural'' single bill for each code. Each year, we generally retain
the codes on the previous year's bypass list and use the updated year's
data (for CY 2015, data available for the March 10, 2014 meeting of the
Advisory Panel on Hospital Outpatient Payment (the Panel) from CY 2013
claims processed through September 30, 2013, and CY 2012 claims data
processed through June 30, 2013, used to model the payment rates for CY
2014) to determine whether it would be appropriate to add additional
codes to the previous year's bypass list. For CY 2015, we are proposing
to continue to bypass all of the HCPCS codes on the CY 2014 OPPS bypass
list, with the exception of HCPCS codes that we are proposing to delete
for CY 2015, which are listed in Table 1 of this proposed rule. We also
are proposing to remove HCPCS codes that are not separately paid under
the OPPS because the purpose of the bypass list is to obtain more data
for those codes relevant to ratesetting. Some of the codes we are
proposing to remove from the CY 2015 bypass list are affected by the CY
2015 proposed packaging policy, discussed in section II.A.3. of this
proposed rule. In addition, we are proposing to add to the bypass list
for CY 2015 HCPCS codes not on the CY 2014 bypass list that, using
either the CY 2014 final rule data (CY 2012 claims) or the March 10,
2014 Panel data (first 9 months of CY 2013 claims), met the empirical
criteria for the bypass list that are summarized below. Finally, to
remain consistent with the CY 2015 proposal to continue to develop OPPS
relative payment weights based on geometric mean costs, we also are
proposing that the packaged cost criterion continue to be based on the
geometric mean cost. The entire list proposed for CY 2015 (including
the codes that remain on the bypass list from prior years) is open to
public comment in this CY 2015 OPPS/ASC proposed rule. Because we must
make some assumptions about packaging in the multiple procedure claims
in order to assess a HCPCS code for addition to the bypass list, we
assumed that the representation of packaging on ``natural'' single
procedure claims for any given code is comparable to packaging for that
code in the multiple procedure claims. The proposed criteria for the
bypass list are:
There are 100 or more ``natural'' single procedure claims
for the code. This number of single procedure claims ensures that
observed outcomes are sufficiently representative of packaging that
might occur in the multiple claims.
Five percent or fewer of the ``natural'' single procedure
claims for the code have packaged costs on that single procedure claim
for the code. This criterion results in limiting the amount of
packaging being redistributed to the separately payable procedures
remaining on the claim after the bypass code is removed and ensures
that the costs associated with the bypass code represent the cost of
the bypassed service.
The geometric mean cost of packaging observed in the
``natural'' single procedure claims is equal to or less than $55. This
criterion also limits

[[Page 40927]]

the amount of error in redistributed costs. During the assessment of
claims against the bypass criteria, we do not know the dollar value of
the packaged cost that should be appropriately attributed to the other
procedures on the claim. Therefore, ensuring that redistributed costs
associated with a bypass code are small in amount and volume protects
the validity of cost estimates for low cost services billed with the
bypassed service.
We note that, as we did for CY 2014, we are proposing to continue
to establish the CY 2015 OPPS relative payment weights based on
geometric mean costs. To remain consistent in the metric used for
identifying cost patterns, we are proposing to use the geometric mean
cost of packaging to identify potential codes to add to the bypass
list.
In response to public comments on the CY 2010 OPPS/ASC proposed
rule requesting that the packaged cost threshold be updated, we
considered whether it would be appropriate to update the $50 packaged
cost threshold for inflation when examining potential bypass list
additions. As discussed in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60328), the real value of this packaged cost threshold
criterion has declined due to inflation, making the packaged cost
threshold more restrictive over time when considering additions to the
bypass list. Therefore, adjusting the threshold by the market basket
increase would prevent continuing decline in the threshold's real
value. Based on the same rationale described for the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74838), we are proposing for CY
2015 to continue to update the packaged cost threshold by the market
basket increase. By applying the final CY 2014 market basket increase
of 1.7 percent to the prior nonrounded dollar threshold of $54.73 (78
FR 74838), we determined that the threshold remains for CY 2015 at $55
($55.66 rounded to $55, the nearest $5 increment). Therefore, we are
proposing to set the geometric mean packaged cost threshold on the CY
2013 claims at $55 for a code to be considered for addition to the CY
2015 OPPS bypass list.
The code is not a code for an unlisted service. Unlisted
codes do not describe a specific service, and thus their costs would
not be appropriate for bypass list purposes.
In addition, we are proposing to continue to include on the bypass
list HCPCS codes that CMS medical advisors believe have minimal
associated packaging based on their clinical assessment of the complete
CY 2015 OPPS proposal. Some of these codes were identified by CMS
medical advisors and some were identified in prior years by commenters
with specialized knowledge of the packaging associated with specific
services. We also are proposing to continue to include certain HCPCS
codes on the bypass list in order to purposefully direct the assignment
of packaged costs to a companion code where services always appear
together and where there would otherwise be few single procedure claims
available for ratesetting. For example, we have previously discussed
our reasoning for adding HCPCS code G0390 (Trauma response team
associated with hospital critical care service) to the bypass list (73
FR 68513).
As a result of the multiple imaging composite APCs that we
established in CY 2009, the program logic for creating ``pseudo''
single procedure claims from bypassed codes that are also members of
multiple imaging composite APCs changed. When creating the set of
``pseudo'' single procedure claims, claims that contain ``overlap
bypass codes'' (those HCPCS codes that are both on the bypass list and
are members of the multiple imaging composite APCs) were identified
first. These HCPCS codes were then processed to create multiple imaging
composite ``single session'' bills, that is, claims containing HCPCS
codes from only one imaging family, thus suppressing the initial use of
these codes as bypass codes. However, these ``overlap bypass codes''
were retained on the bypass list because, at the end of the ``pseudo''
single processing logic, we reassessed the claims without suppression
of the ``overlap bypass codes'' under our longstanding ``pseudo''
single process to determine whether we could convert additional claims
to ``pseudo'' single procedure claims. (We refer readers to section
II.A.2.b. of this proposed rule for further discussion of the treatment
of ``overlap bypass codes.'') This process also created multiple
imaging composite ``single session'' bills that could be used for
calculating composite APC costs. ``Overlap bypass codes'' that are
members of the proposed multiple imaging composite APCs are identified
by asterisks (*) in Addendum N to this proposed rule (which is
available via the Internet on the CMS Web site).
Addendum N to this proposed rule (which is available via the
Internet on the CMS Web site) includes the proposed list of bypass
codes for CY 2015. The proposed list of bypass codes contains codes
that were reported on claims for services in CY 2013 and, therefore,
includes codes that were in effect in CY 2013 and used for billing but
were deleted for CY 2014. We retained these deleted bypass codes on the
proposed CY 2015 bypass list because these codes existed in CY 2013 and
were covered OPD services in that period, and CY 2013 claims data are
used to calculate CY 2015 payment rates. Keeping these deleted bypass
codes on the bypass list potentially allows us to create more
``pseudo'' single procedure claims for ratesetting purposes. ``Overlap
bypass codes'' that were members of the proposed multiple imaging
composite APCs are identified by asterisks (*) in the third column of
Addendum N to this proposed rule. HCPCS codes that we are proposing to
add for CY 2015 are identified by asterisks (*) in the fourth column of
Addendum N.
Table 1 below contains the list of codes that we are proposing to
remove from the CY 2015 bypass list because these codes were either
deleted from the HCPCS before CY 2013 (and therefore were not covered
OPD services in CY 2013) or are not separately payable codes under the
proposed CY 2015 OPPS because these codes are not used for ratesetting
through the bypass process. The list of codes proposed for removal from
the bypass list includes those that would be affected by the proposed
CY 2015 OPPS packaging policy described in section II.A.3. of this
proposed rule.

Table 1--HCPCS Codes Proposed To Be Removed From the CY 2015 Bypass List
------------------------------------------------------------------------
HCPCS Code HCPCS Short descriptor
------------------------------------------------------------------------
11056............................. Trim skin lesions 2 to 4.
11300............................. Shave skin lesion 0.5 cm/<.
11301............................. Shave skin lesion 0.6-1.0 cm.
11719............................. Trim nail(s) any number.
11720............................. Debride nail 1-5.
11721............................. Debride nail 6 or more.
17000............................. Destruct premalg lesion.
17110............................. Destruct b9 lesion 1-14.
29240............................. Strapping of shoulder.
29260............................. Strapping of elbow or wrist.
29280............................. Strapping of hand or finger.
29520............................. Strapping of hip.
29530............................. Strapping of knee.
51741............................. Electro-uroflowmetry first.
51798............................. Us urine capacity measure.
53601............................. Dilate urethra stricture.
53661............................. Dilation of urethra.
54240............................. Penis study.
67820............................. Revise eyelashes.
69210............................. Remove impacted ear wax uni.
69220............................. Clean out mastoid cavity.
70030............................. X-ray eye for foreign body.
70100............................. X-ray exam of jaw <4views.
70110............................. X-ray exam of jaw 4/> views.
70120............................. X-ray exam of mastoids.
70130............................. X-ray exam of mastoids.
70140............................. X-ray exam of facial bones.
70150............................. X-ray exam of facial bones.

[[Page 40928]]

70160............................. X-ray exam of nasal bones.
70200............................. X-ray exam of eye sockets.
70210............................. X-ray exam of sinuses.
70220............................. X-ray exam of sinuses.
70240............................. X-ray exam pituitary saddle.
70250............................. X-ray exam of skull.
70260............................. X-ray exam of skull.
70320............................. Full mouth x-ray of teeth.
70328............................. X-ray exam of jaw joint.
70330............................. X-ray exam of jaw joints.
70355............................. Panoramic x-ray of jaws.
70360............................. X-ray exam of neck.
71021............................. Chest x-ray frnt lat lordotc.
71022............................. Chest x-ray frnt lat oblique.
71023............................. Chest x-ray and fluoroscopy.
71030............................. Chest x-ray 4/> views.
71035............................. Chest x-ray special views.
71100............................. X-ray exam ribs uni 2 views.
71101............................. X-ray exam unilat ribs/chest.
71110............................. X-ray exam ribs bil 3 views.
71111............................. X-ray exam ribs/chest4/> vws.
71120............................. X-ray exam breastbone 2/>vws.
71130............................. X-ray strenoclavic jt 3/>vws.
72020............................. X-ray exam of spine 1 view.
72040............................. X-ray exam neck spine 2-3 vw.
72050............................. X-ray exam neck spine 4/5vws.
72052............................. X-ray exam neck spine 6/>vws.
72069............................. X-ray exam trunk spine stand.
72070............................. X-ray exam thorac spine 2vws.
72072............................. X-ray exam thorac spine 3vws.
72074............................. X-ray exam thorac spine4/>vw.
72080............................. X-ray exam trunk spine 2 vws.
72090............................. X-ray exam scloiosis erect.
72100............................. X-ray exam l-s spine \2/3\ vws.
72110............................. X-ray exam l-2 spine 4/>vws.
72114............................. X-ray exam l-s spine bending.
72120............................. X-ray bend only l-s spine.
72170............................. X-ray exam of pelvis.
72190............................. X-ray exam of pelvis.
72202............................. X-ray exam si joints 3/< vws.
72220............................. X-ray exam sacrum tailbone.
73000............................. X-ray exam of collar bone.
73010............................. X-ray exam of shoulder blade.
73020............................. X-ray exam of shoulder.
73030............................. X-ray exam of shoulder.
73050............................. X-ray exam of shoulders.
73060............................. X-ray exam of humerus.
73070............................. X-ray exam of elbow.
73080............................. X-ray exam of elbow.
73090............................. X-ray exam of forearm.
73100............................. X-ray exam of wrist.
73110............................. X-ray exam of wrist.
73120............................. X-ray exam of hand.
73130............................. X-ray exam of hand.
73140............................. X-ray exam of finger(s).
73510............................. X-ray exam of hip.
73520............................. X-ray exam of hips.
73540............................. X-ray exam of pelvis & hips.
73550............................. X-ray exam of thigh.
73560............................. X-ray exam of knee 1 or 2.
73562............................. X-ray exam of knee 3.
73564............................. X-ray exam knee 4 or more.
73565............................. X-ray exam of knees.
73590............................. X-ray exam of lower leg.
73600............................. X-ray exam of ankle.
73610............................. X-ray exam of ankle.
73620............................. X-ray exam of foot.
73630............................. X-ray exam of foot.
73650............................. X-ray exam of heel.
73660............................. X-ray exam of toe(s).
74000............................. X-ray exam of abdomen.
74010............................. X-ray exam of abdomen.
74020............................. X-ray exam of abdomen.
74022............................. X-ray exam series abdomen.
76100............................. X-ray exam of body section.
76510............................. Ophth us b & quant a.
76514............................. Echo exam of eye thickness.
76516............................. Echo exam of eye.
76519............................. Echo exam of eye.
76645............................. Us exam breast(s).
76816............................. Ob us follow-up per fetus.
76882............................. Us xtr non-vasc lmtd.
76970............................. Ultrasound exam follow-up.
76977............................. Us bone density measure.
77072............................. X-rays for bone age.
77073............................. X-rays bone length studies.
77074............................. X-rays bone survey limited.
77076............................. X-rays bone survey infant.
77077............................. Joint survey single view.
77078............................. Ct bone density axial.
77079............................. Ct bone density peripheral.
77080............................. Dxa bone density axial.
77081............................. Dxa bone density/peripheral.
77082............................. Dxa bone density vert fx.
77083............................. Radiographic absorptiometry.
80500............................. Lab pathology consultation.
80502............................. Lab pathology consultation.
85097............................. Bone marrow interpretation.
86510............................. Histoplasmosis skin test.
86850............................. Rbc antibody screen.
86870............................. Rbc antibody identification.
86880............................. Coombs test direct.
86885............................. Coombs test indirect qual.
86886............................. Coombs test indirect titer.
86900............................. Blood typing abo.
86901............................. Blood typing rh (d).
86904............................. Blood typing patient serum.
86905............................. Blood typing rbc antigens.
86906............................. Blood typing rh phenotype.
86930............................. Frozen blood prep.
86970............................. Rbc pretx incubatj w/chemicl.
86977............................. Rbc serum pretx incubj/inhib.
88104............................. Cytopath fl nongyn smears.
88106............................. Cytopath fl nongyn filter.
88107............................. Cytopath fl nongyn sm/fltr.
88108............................. Cytopath concentrate tech.
88112............................. Cytopath cell enhance tech.
88120............................. Cytp urne 3-5 probes ea spec.
88160............................. Cytopath smear other source.
88161............................. Cytopath smear other source.
88162............................. Cytopath smear other source.
88172............................. Cytp dx eval fna 1st ea site.
88173............................. Cytopath eval fna report.
88182............................. Cell marker study.
88184............................. Flowcytometry/tc 1 marker.
88189............................. Flowcytometry/read 16 & >.
88300............................. Surgical path gross.
88302............................. Tissue exam by pathologist.
88304............................. Tissue exam by pathologist.
88305............................. Tissue exam by pathologist.
88307............................. Tissue exam by pathologist.
88312............................. Special stains group 1.
88313............................. Special stains group 2.
88321............................. Microslide consultation.
88323............................. Microslide consultation.
88325............................. Comprehensive review of data.
88329............................. Path consult introp.
88331............................. Path consult intraop 1 bloc.
88342............................. Immunohisto antibody slide.
88346............................. Immunofluorescent study.
88347............................. Immunofluorescent study.
88348............................. Electron microscopy.
88358............................. Analysis tumor.
88360............................. Tumor immunohistochem/manual.
88361............................. Tumor immunohistochem/comput.
88365............................. Insitu hybridization (fish).
88368............................. Insitu hybridization manual.
88385............................. Eval molecul probes 51-250.
88386............................. Eval molecul probes 251-500.
89049............................. Chct for mal hyperthermia.
89220............................. Sputum specimen collection.
89230............................. Collect sweat for test.
89240............................. Pathology lab procedure.
92020............................. Special eye evaluation.
92025............................. Corneal topography.
92060............................. Special eye evaluation.
92081............................. Visual field examination(s).
92082............................. Visual field examination(s).
92083............................. Visual field examination(s).
92133............................. Cmptr ophth img optic nerve.
92134............................. Cptr ophth dx img post segmt.
92136............................. Ophthalmic biometry.
92225............................. Special eye exam initial.
92226............................. Special eye exam subsequent.
92230............................. Eye exam with photos.
92250............................. Eye exam with photos.
92285............................. Eye photography.
92286............................. Internal eye photography.
92520............................. Laryngeal function studies.
92541............................. Spontaneous nystagmus test.
92542............................. Positional nystagmus test.
92550............................. Tympanometry & reflex thresh.
92552............................. Pure tone audiometry air.
92553............................. Audiometry air & bone.
92555............................. Speech threshold audiometry.
92556............................. Speech audiometry complete.
92557............................. Comprehensive hearing test.
92567............................. Tympanometry.
92570............................. Acoustic immitance testing.
92582............................. Conditioning play audiometry.
92603............................. Cochlear implt f/up exam 7/>.
92604............................. Reprogram cochlear implt 7/>.
92626............................. Eval aud rehab status.
93005............................. Electrocardiogram tracing.
93017............................. Cardiovascular stress test.
93225............................. Ecg monit/reprt up to 48 hrs.
93226............................. Ecg monit/reprt up to 48 hrs.
93270............................. Remote 30 day ecg rev/report.
93278............................. Ecg/signal-averaged.
93279............................. Pm device progr eval sngl.
93280............................. Pm device progr eval dual.
93281............................. Pm device progr eval multi.
93282............................. Icd device progr eval 1 sngl.
93283............................. Icd device progr eval dual.
93284............................. Icd device progr eval mult.
93285............................. Ilr device eval progr.
93288............................. Pm device eval in person.
93289............................. Icd device interrogate.
93290............................. Icm device eval.
93291............................. Ilr device interrogate.
93292............................. Wcd device interrogate.
93293............................. Pm phone r-strip device eval.
93296............................. Pm/icd remote tech serv.
93299............................. Icm/ilr remote tech serv.
93701............................. Bioimpedance cv analysis.

[[Page 40929]]

93786............................. Ambulatory bp recording.
93788............................. Ambulatory bp analysis.
93875............................. Extracranial study.
94015............................. Patient recorded spirometry.
94690............................. Exhaled air analysis.
95803............................. Actigraphy testing.
95869............................. Muscle test thor paraspinal.
95900............................. Motor nerve conduction test.
95921............................. Autonomic nrv parasym inervj.
95970............................. Analyze neurostim no prog.
96900............................. Ultraviolet light therapy.
96910............................. Photochemotherapy with uv-b.
96912............................. Photochemotherapy with uv-a.
96921............................. Laser tx skin 250-500 sq cm.
98925............................. Osteopath manj 1-2 regions.
98926............................. Osteopath manj 3-4 regions.
98927............................. Osteopath manj 5-6 regions.
98928............................. Osteopath manj 7-8 regions.
98929............................. Osteopath manj 9-10 regions.
98940............................. Chiropract manj 1-2 regions.
98941............................. Chiropract manj 3-4 regions.
98942............................. Chiropractic manj 5 regions.
G0127............................. Trim nail(s).
G0130............................. Single energy x-ray study.
G0166............................. Extrnl counterpulse, per tx.
G0239............................. Oth resp proc, group.
G0389............................. Ultrasound exam aaa screen.
G0404............................. Ekg tracing for initial prev.
G0424............................. Pulmonary rehab w exer.
Q0091............................. Obtaining screen pap smear.
------------------------------------------------------------------------

c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2015, we are proposing to continue to use the hospital-
specific overall ancillary and departmental cost-to-charge ratios
(CCRs) to convert charges to estimated costs through application of a
revenue code-to-cost center crosswalk. To calculate the APC costs on
which the proposed CY 2015 APC payment rates are based, we calculated
hospital-specific overall ancillary CCRs and hospital-specific
departmental CCRs for each hospital for which we had CY 2013 claims
data by comparing these claims data to the most recently available
hospital cost reports, which, in most cases, are from CY 2012. For the
CY 2015 OPPS proposed rates, we used the set of claims processed during
CY 2013. We applied the hospital-specific CCR to the hospital's charges
at the most detailed level possible, based on a revenue code-to-cost
center crosswalk that contains a hierarchy of CCRs used to estimate
costs from charges for each revenue code. That crosswalk is available
for review and continuous comment on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
To ensure the completeness of the revenue code-to-cost center
crosswalk, we reviewed changes to the list of revenue codes for CY 2013
(the year of claims data we used to calculate the proposed CY 2015 OPPS
payment rates) and found that the National Uniform Billing Committee
(NUBC) did not add any new revenue codes to the NUBC 2013 Data
Specifications Manual.
In accordance with our longstanding policy, we calculated CCRs for
the standard and nonstandard cost centers accepted by the electronic
cost report database. In general, the most detailed level at which we
calculated CCRs was the hospital-specific departmental level. For a
discussion of the hospital-specific overall ancillary CCR calculation,
we refer readers to the CY 2007 OPPS/ASC final rule with comment period
(71 FR 67983 through 67985). The calculation of blood costs is a
longstanding exception (since the CY 2005 OPPS) to this general
methodology for calculation of CCRs used for converting charges to
costs on each claim. This exception is discussed in detail in the CY
2007 OPPS/ASC final rule with comment period and discussed further in
section II.A.2.d.(2) of this proposed rule.
For the CCR calculation process, we used the same general approach
that we used in developing the final APC rates for CY 2007 and
thereafter, using the revised CCR calculation that excluded the costs
of paramedical education programs and weighted the outpatient charges
by the volume of outpatient services furnished by the hospital. We
refer readers to the CY 2007 OPPS/ASC final rule with comment period
for more information (71 FR 67983 through 67985). We first limited the
population of cost reports to only those hospitals that filed
outpatient claims in CY 2013 before determining whether the CCRs for
such hospitals were valid.
We then calculated the CCRs for each cost center and the overall
ancillary CCR for each hospital for which we had claims data. We did
this using hospital-specific data from the Hospital Cost Report
Information System (HCRIS). We used the most recent available cost
report data, which, in most cases, were from cost reports with cost
reporting periods beginning in CY 2012. For this proposed rule, we used
the most recently submitted cost reports to calculate the CCRs to be
used to calculate costs for the proposed CY 2015 OPPS payment rates. If
the most recently available cost report was submitted but not settled,
we looked at the last settled cost report to determine the ratio of
submitted to settled cost using the overall ancillary CCR, and we then
adjusted the most recent available submitted, but not settled, cost
report using that ratio. We then calculated both an overall ancillary
CCR and cost center-specific CCRs for each hospital. We used the
overall ancillary CCR referenced above for all purposes that require
use of an overall ancillary CCR. We are proposing to continue this
longstanding methodology for the calculation of costs for CY 2015.
Since the implementation of the OPPS, some commenters have raised
concerns about potential bias in the OPPS cost-based weights due to
``charge compression,'' which is the practice of applying a lower
charge markup to higher cost services and a higher charge markup to
lower cost services. As a result, the cost-based weights may reflect
some aggregation bias, undervaluing high-cost items and overvaluing
low-cost items when an estimate of average markup, embodied in a single
CCR, is applied to items of widely varying costs in the same cost
center. This issue was evaluated in a report by the Research Triangle
Institute, International (RTI). The RTI final report can be found on
RTI's Web site at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_ratios_200807_Final.pdf. For a
complete discussion of the RTI recommendations, public comments, and
our responses, we refer readers to the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68519 through 68527).
We addressed the RTI finding that there was aggregation bias in
both the IPPS and the OPPS cost estimation of expensive and inexpensive
medical supplies in the FY 2009 IPPS final rule (73 FR 48458 through
45467). Specifically, we created one cost center for ``Medical Supplies
Charged to Patients'' and one cost center for ``Implantable Devices
Charged to Patients,'' essentially splitting the then current cost
center for ``Medical Supplies Charged to Patients'' into one cost
center for low-cost medical supplies and another cost center for high-
cost implantable devices in order to mitigate some of the effects of
charge compression. In determining the items that should be reported in
these respective cost centers, we adopted commenters' recommendations
that hospitals should use revenue codes established by the AHA's NUBC
to determine the items that should be reported in the ``Medical
Supplies Charged to Patients'' and the ``Implantable Devices Charged to
Patients'' cost centers. For a complete discussion of the rationale for
the creation of the new cost center for ``Implantable Devices Charged
to

[[Page 40930]]

Patients,'' a summary of public comments received, and our responses to
those public comments, we refer readers to the FY 2009 IPPS final rule.
The cost center for ``Implantable Devices Charged to Patients'' has
been available for use for cost reporting periods beginning on or after
May 1, 2009. In the CY 2013 OPPS/ASC final rule with comment period, we
determined that a significant volume of hospitals were utilizing the
``Implantable Devices Charged to Patients'' cost center. Because a
sufficient amount of data from which to generate a meaningful analysis
was available, we established in the CY 2013 OPPS/ASC final rule with
comment period a policy to create a distinct CCR using the
``Implantable Devices Charged to Patients'' cost center (77 FR 68225).
We retained this policy for the CY 2014 OPPS and are proposing to
continue this practice for the CY 2015 OPPS.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through
50080), we finalized our proposal to create new standard cost centers
for ``Computed Tomography (CT),'' ``Magnetic Resonance Imaging (MRI),''
and ``Cardiac Catheterization,'' and to require that hospitals report
the costs and charges for these services under these new cost centers
on the revised Medicare cost report Form CMS 2552-10. As we discussed
in the FY 2009 IPPS and CY 2009 OPPS/ASC proposed and final rules, RTI
also found that the costs and charges of CT scans, MRIs, and cardiac
catheterization differ significantly from the costs and charges of
other services included in the standard associated cost center. RTI
concluded that both the IPPS and the OPPS relative payment weights
would better estimate the costs of those services if CMS were to add
standard costs centers for CT scans, MRIs, 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, MRIs, and cardiac catheterization. The new
standard cost centers for CT scans, MRIs, and cardiac catheterization
were effective for cost report periods beginning on or after May 1,
2010, on the revised cost report Form CMS-2552-10.
Using the December 2013 HCRIS update which we used to estimate
costs in the CY 2015 OPPS ratesetting process, we were able to
calculate a valid implantable device CCR for 2,895 hospitals, a valid
MRI CCR for 1,886 hospitals, a valid CT scan CCR for 1,976 hospitals,
and a valid Cardiac Catheterization CCR for 1,364 hospitals.
In our CY 2014 OPPS/ASC proposed rule discussion (78 FR 43549), we
noted that, for CY 2014, the estimated changes in geometric mean
estimated APC cost of using data from the new standard cost centers for
CT scans and MRIs appeared consistent with RTI's analysis of cost
report and claims data in the July 2008 final report (pages 5 and 6).
RTI concluded that ``in hospitals that aggregate data for CT scanning,
MRI, or nuclear medicine services with the standard line for Diagnostic
Radiology, costs for these services all appear substantially
overstated, while the costs for plain films, ultrasound and other
imaging procedures are correspondingly understated.'' We also noted
that there were limited additional impacts in the implantable device-
related APCs from adopting the new cost report Form CMS 2552-10 because
we had used data from the standard cost center for implantable medical
devices beginning in CY 2013 OPPS ratesetting, as discussed above.
As we indicated in prior rulemaking (77 FR 68223 through 68225),
once we determined that cost report data for the new standard cost
centers were sufficiently available, we would analyze that data and, if
appropriate, we would propose to use the distinct CCRs for new standard
cost centers described above in the calculation of the OPPS relative
payment weights. As stated in the CY 2014 OPPS/ASC proposed rule (78 FR
43550), we have conducted our analysis and concluded that we should
develop distinct CCRs for each of the new cost centers and use them in
ratesetting. Therefore, we began in the CY 2014 OPPS, and are proposing
to continue for the CY 2015 OPPS, to calculate the OPPS relative
payment weights using distinct CCRs for cardiac catheterization, CT
scan, MRI, and implantable medical devices. Section XXIII. of this
proposed rule includes the impacts of calculating the proposed CY 2015
OPPS relative payment weights using these new standard cost centers.

Table 2--CCR Statistical Values Based on Use of Different Cost Allocation Methods
----------------------------------------------------------------------------------------------------------------
CT MRI
Cost allocation method ---------------------------------------------------------------
Median CCR Mean CCR Median CCR Mean CCR
----------------------------------------------------------------------------------------------------------------
All Providers................................... 0.0480 0.0620 0.0918 0.1164
Square Feet Only................................ 0.0383 0.0503 0.0793 0.1036
Direct Assign................................... 0.0683 0.0761 0.1069 0.1312
Dollar Value.................................... 0.0584 0.0739 0.1055 0.1299
Direct Assign and Dollar Value.................. 0.0584 0.0738 0.1053 0.1294
----------------------------------------------------------------------------------------------------------------

In the CY 2014 OPPS/ASC final rule with comment period (78 FR
74847), we finalized a policy to remove claims from providers that use
a cost allocation method of ``square feet'' to calculate CCRs used to
estimate costs associated with the CT and MRI APCs. This change allows
hospitals additional time to use one of the more accurate cost
allocation methods, and thereby improve the accuracy of the CCRs on
which the OPPS relative payment weights are developed. As part of this
transitional policy to estimate the CT and MRI APC relative payment
weights using only cost data from providers that do not use ``square
feet'' as the cost allocation statistic, we stated in the CY 2014 OPPS/
ASC final rule with comment period that we will sunset this policy in 4
years once the updated cost report data become available for
ratesetting purposes. We stated that we believe that 4 years is
sufficient time for hospitals that have not done so to transition to a
more accurate cost allocation method and for the related data to be
available for ratesetting purposes. Therefore, in CY 2018, we will
estimate the CT and MRI APC relative payment weights using cost data
from all providers, regardless of the cost allocation statistic
employed.

[[Page 40931]]

Table 3--Percentage Change in Estimated Cost for CT and MRI APCs When
Excluding Claims From Providers Using ``Square Feet'' as the Cost
Allocation Method
------------------------------------------------------------------------
Proposed CY 2015 APC
Proposed CY 2015 APC descriptor Percent change
------------------------------------------------------------------------
0283..................... Computed Tomography with 9.3
Contrast.
0284..................... Magnetic Resonance Imaging 4.2
and Magnetic Resonance
Angiography with Contrast.
0331..................... Combined Abdomen and Pelvis 12.0
CT without Contrast.
0332..................... Computed Tomography without 14.1
Contrast.
0333..................... Computed Tomography without 12.1
Contrast followed by
Contrast.
0334..................... Combined Abdomen and Pelvis 10.1
CT with Contrast.
0336..................... Magnetic Resonance Imaging 7.4
and Magnetic Resonance
Angiography without Contrast.
0337..................... Magnetic Resonance Imaging 6.0
and Magnetic Resonance
Angiography without Contrast
f.
0383..................... Cardiac Computed Tomographic 4.3
Imaging.
0662..................... CT Angiography............... 10.3
8005..................... CT and CTA without Contrast 12.7
Composite.
8006..................... CT and CTA with Contrast 9.2
Composite.
8007..................... MRI and MRA without Contrast 6.3
Composite.
8008..................... MRI and MRA with Contrast 6.3
Composite.
------------------------------------------------------------------------

In summary, we are proposing to continue using data from the
``Implantable Devices Charged to Patients'' and ``Cardiac
Catheterization'' cost centers to create distinct CCRs for use in
calculating the OPPS relative payment weights for the CY 2015 OPPS. For
the ``Magnetic Resonance Imaging (MRI)'' and ``Computed Tomography (CT)
Scan'' APCs identified in Table 3 of this proposed rule, we are
proposing to continue our policy of removing claims from cost modeling
for those providers using ``square feet'' as the cost allocation
statistic for the CY 2015 OPPS.
2. Proposed Data Development Process and Calculation of Costs Used for
Ratesetting
In this section of this proposed rule, we discuss the use of claims
to calculate the proposed OPPS payment rates for CY 2015. The Hospital
OPPS page on the CMS Web site on which this proposed rule is posted
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of claims used
in the development of the proposed payment rates. That accounting
provides additional detail regarding the number of claims derived at
each stage of the process. In addition, below in this section we
discuss the file of claims that comprises the data set that is
available for purchase under a CMS data use agreement. The CMS Web
site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about purchasing
the ``OPPS Limited Data Set,'' which now includes the additional
variables previously available only in the OPPS Identifiable Data Set,
including ICD-9-CM diagnosis codes and revenue code payment amounts.
This file is derived from the CY 2013 claims that were used to
calculate the proposed payment rates for the CY 2015 OPPS.
In the history of the OPPS, we have traditionally established the
scaled relative weights on which payments are based using APC median
costs, which is a process described in the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74188). However, as discussed in more detail
in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68259 through 68271), we finalized the use of geometric
mean costs to calculate the relative weights on which the CY 2013 OPPS
payment rates were based. While this policy changed the cost metric on
which the relative payments are based, the data process in general
remained the same, under the methodologies that we used to obtain
appropriate claims data and accurate cost information in determining
estimated service cost. For CY 2015, we are proposing to continue to
use geometric mean costs to calculate the relative weights on which the
proposed CY 2015 OPPS payments rates are based.
We used the methodology described in sections II.A.2.a. through
II.A.2.f. of this proposed rule to calculate the costs we used to
establish the proposed relative weights used in calculating the
proposed OPPS payment rates for CY 2015 shown in Addenda A and B to
this proposed rule (which are available via the Internet on the CMS Web
site). We refer readers to section II.A.4. of this proposed rule for a
discussion of the conversion of APC costs to scaled payment weights.
a. Claims Preparation
For this proposed rule, we used the CY 2013 hospital outpatient
claims processed through December 31, 2013, to calculate the geometric
mean costs of APCs that underpin the proposed relative payment weights
for CY 2015. To begin the calculation of the proposed relative payment
weights for CY 2015, we pulled all claims for outpatient services
furnished in CY 2013 from the national claims history file. This is not
the population of claims paid under the OPPS, but all outpatient claims
(including, for example, critical access hospital (CAH) claims and
hospital claims for clinical laboratory tests for persons who are
neither inpatients nor outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77
because these are claims that providers submitted to Medicare knowing
that no payment would be made. For example, providers submit claims
with a condition code 21 to elicit an official denial notice from
Medicare and document that a service is not covered. We then excluded
claims for services furnished in Maryland, Guam, the U.S. Virgin
Islands, American Samoa, and the Northern Mariana Islands because
hospitals in those geographic areas are not paid under the OPPS, and,
therefore, we do not use claims for services furnished in these areas
in ratesetting.
We divided the remaining claims into the three groups shown below.
Groups 2 and 3 comprise the 119 million claims that contain hospital
bill types paid under the OPPS.
1. Claims that were not bill types 12X (Hospital Inpatient
(Medicare Part B only)), 13X (Hospital Outpatient), 14X (Hospital--
Laboratory Services Provided to Nonpatients), or 76X (Clinic--Community
Mental Health Center). Other bill types are not paid under the OPPS;
therefore, these claims were not used to set OPPS payment.
2. Claims that were bill types 12X, 13X or 14X. Claims with bill
types 12X

[[Page 40932]]

and 13X are hospital outpatient claims. Claims with bill type 14X are
laboratory specimen claims.
3. Claims that were bill type 76X (CMHC).
To convert charges on the claims to estimated cost, we multiplied
the charges on each claim by the appropriate hospital-specific CCR
associated with the revenue code for the charge as discussed in section
II.A.1.c. of this proposed rule. We then flagged and excluded CAH
claims (which are not paid under the OPPS) and claims from hospitals
with invalid CCRs. The latter included claims from hospitals without a
CCR; those from hospitals paid an all-inclusive rate; those from
hospitals with obviously erroneous CCRs (greater than 90 or less than
0.0001); and those from hospitals with overall ancillary CCRs that were
identified as outliers (that exceeded +/-3 standard deviations from the
geometric mean after removing error CCRs). In addition, we trimmed the
CCRs at the cost center (that is, departmental) level by removing the
CCRs for each cost center as outliers if they exceeded +/- 3 standard
deviations from the geometric mean. We used a four-tiered hierarchy of
cost center CCRs, which is the revenue code-to-cost center crosswalk,
to match a cost center to every possible revenue code appearing in the
outpatient claims that is relevant to OPPS services, with the top tier
being the most common cost center and the last tier being the default
CCR. If a hospital's cost center CCR was deleted by trimming, we set
the CCR for that cost center to ``missing'' so that another cost center
CCR in the revenue center hierarchy could apply. If no other cost
center CCR could apply to the revenue code on the claim, we used the
hospital's overall ancillary CCR for the revenue code in question as
the default CCR. For example, if a visit was reported under the clinic
revenue code but the hospital did not have a clinic cost center, we
mapped the hospital-specific overall ancillary CCR to the clinic
revenue code. The revenue code-to-cost center crosswalk is available
for inspection on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Revenue codes that we do not use in establishing relative costs or to
model impacts are identified with an ``N'' in the revenue code-to-cost
center crosswalk.
We applied the CCRs as described above to claims with bill type
12X, 13X, or 14X, excluding all claims from CAHs and hospitals in
Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the
Northern Mariana Islands and claims from all hospitals for which CCRs
were flagged as invalid.
We identified claims with condition code 41 as partial
hospitalization services of hospitals and moved them to another file.
We note that the separate file containing partial hospitalization
claims is included in the files that are available for purchase as
discussed above.
We then excluded claims without a HCPCS code. We moved to another
file claims that contained only influenza and pneumococcal pneumonia
(PPV) vaccines. Influenza and PPV vaccines are paid at reasonable cost;
therefore, these claims are not used to set OPPS rates.
We next copied line-item costs for drugs, blood, and brachytherapy
sources to a separate file (the lines stay on the claim, but are copied
onto another file). No claims were deleted when we copied these lines
onto another file. These line-items are used to calculate a per unit
arithmetic and geometric mean and median cost and a per day arithmetic
and geometric mean and median cost for drugs and nonimplantable
biologicals, therapeutic radiopharmaceutical agents, and brachytherapy
sources, as well as other information used to set payment rates, such
as a unit-to-day ratio for drugs.
Prior to CY 2013, our payment policy for nonpass-through separately
paid drugs and biologicals was based on a redistribution methodology
that accounted for pharmacy overhead by allocating cost from packaged
drugs to separately paid drugs. This methodology typically would have
required us to reduce the cost associated with packaged coded and
uncoded drugs in order to allocate that cost. However, for CY 2013, we
paid for separately payable drugs and biologicals under the OPPS at
ASP+6 percent, based upon the statutory default described in section
1833(t)(14)(A)(iii)(II) of the Act. Under that policy, we did not
redistribute the pharmacy overhead costs from packaged drugs to
separately paid drugs. For the CY 2014 OPPS, we continued the CY 2013
payment policy for separately payable drugs and biologicals, and we are
proposing to continue this payment policy for CY 2015. We refer readers
to section V.B.3. of this proposed rule for a complete discussion of
our CY 2015 proposed payment policy for separately paid drugs and
biologicals.
We then removed line-items that were not paid during claim
processing, presumably for a line-item rejection or denial. The number
of edits for valid OPPS payment in the Integrated Outpatient Code
Editor (I/OCE) and elsewhere has grown significantly in the past few
years, especially with the implementation of the full spectrum of
National Correct Coding Initiative (NCCI) edits. To ensure that we are
using valid claims that represent the cost of payable services to set
payment rates, we removed line-items with an OPPS status indicator that
were not paid during claims processing in the claim year, but have a
status indicator of ``S,'' ``T,'' and ``V'' in the prospective year's
payment system. This logic preserves charges for services that would
not have been paid in the claim year but for which some estimate of
cost is needed for the prospective year, such as services newly removed
from the inpatient list for CY 2014 that were assigned status indicator
``C'' in the claim year. It also preserves charges for packaged
services so that the costs can be included in the cost of the services
with which they are reported, even if the CPT codes for the packaged
services were not paid because the service is part of another service
that was reported on the same claim or the code otherwise violates
claims processing edits.
For CY 2015, we are proposing to continue the policy we implemented
for CY 2013 and CY 2014 to exclude line-item data for pass-through
drugs and biologicals (status indicator ``G'' for CY 2013) and nonpass-
through drugs and biologicals (status indicator ``K'' for CY 2013)
where the charges reported on the claim for the line were either denied
or rejected during claims processing. Removing lines that were eligible
for payment but were not paid ensures that we are using appropriate
data. The trim avoids using cost data on lines that we believe were
defective or invalid because those rejected or denied lines did not
meet the Medicare requirements for payment. For example, edits may
reject a line for a separately paid drug because the number of units
billed exceeded the number of units that would be reasonable and,
therefore, is likely a billing error (for example, a line reporting 55
units of a drug for which 5 units is known to be a fatal dose). As with
our trimming in the CY 2014 OPPS/ASC final rule with comment period (78
FR 74849) of line-items with a status indicator of ``S,'' ``T,'' ``V,''
or ``X,'' we believe that unpaid line-items represent services that are
invalidly reported and, therefore, should not be used for ratesetting.
We believe that removing lines with valid status indicators that were
edited and not paid during claims processing increases the accuracy of
the data used for ratesetting purposes.

[[Page 40933]]

For the CY 2015 OPPS, as part of our proposal to continue packaging
clinical diagnostic laboratory tests, we also are proposing to apply
the line item trim to these services if they did not receive payment in
the claims year. Removing these lines ensures that, in establishing the
CY 2015 OPPS relative payments weights, we appropriately allocate the
costs associated with packaging these services.
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure Claims
(1) Splitting Claims
For the CY 2015 OPPS, we then split the remaining claims into five
groups: single majors; multiple majors; single minors; multiple minors;
and other claims. (Specific definitions of these groups are presented
below.) We note that, under the proposed CY 2015 OPPS packaging policy,
we are proposing to delete status indicator ``X'' and revise the title
and description of status indicator ``Q1'' to reflect that deletion, as
discussed in sections II.A.3. and XI. of this proposed rule. We note
that we also are proposing to create status indicator ``J1'' to reflect
the comprehensive APCs discussed in section II.A.2.e. of this proposed
rule. For CY 2015, we are proposing to define major procedures as any
HCPCS code having a status indicator of ``J1,'' ``S,'' ``T,'' or ``V'';
define minor procedures as any code having a status indicator of ``F,''
``G,'' ``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N''; and classify
``other'' procedures as any code having a status indicator other than
one that we have classified as major or minor. For CY 2015, we are
proposing to continue to assign status indicator ``R'' to blood and
blood products; status indicator ``U'' to brachytherapy sources; status
indicator ``Q1'' to all ``STV-packaged codes''; status indicator ``Q2''
to all ``T-packaged codes''; and status indicator ``Q3'' to all codes
that may be paid through a composite APC based on composite-specific
criteria or paid separately through single code APCs when the criteria
are not met.
As discussed in the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68709), we established status indicators ``Q1,'' ``Q2,'' and
``Q3'' to facilitate identification of the different categories of
codes. We are proposing to treat these codes in the same manner for
data purposes for CY 2015 as we have treated them since CY 2008.
Specifically, we are continuing to evaluate whether the criteria for
separate payment of codes with status indicator ``Q1'' or ``Q2'' are
met in determining whether they are treated as major or minor codes.
Codes with status indicator ``Q1'' or ``Q2'' are carried through the
data either with status indicator ``N'' as packaged or, if they meet
the criteria for separate payment, they are given the status indicator
of the APC to which they are assigned and are considered as ``pseudo''
single procedure claims for major codes. Codes assigned status
indicator ``Q3'' are paid under individual APCs unless they occur in
the combinations that qualify for payment as composite APCs and,
therefore, they carry the status indicator of the individual APC to
which they are assigned through the data process and are treated as
major codes during both the split and ``pseudo'' single creation
process. The calculation of the geometric mean costs for composite APCs
from multiple procedure major claims is discussed in section II.A.2.f.
of this proposed rule.
Specifically, we are proposing to divide the remaining claims into
the following five groups:
1. Single Procedure Major Claims: Claims with a single separately
payable procedure (that is, status indicator ``S,'' ``T,'' or ``V''
which includes codes with status indicator ``Q3''); claims with status
indicator ``J1,'' which receive special processing for comprehensive
APCs, as discussed in section II.A.2.e. of this proposed rule; claims
with one unit of a status indicator ``Q1'' code (``STV-packaged'')
where there was no code with status indicator ``S,'' ``T,'' or ``V'' on
the same claim on the same date; or claims with one unit of a status
indicator ``Q2'' code (``T-packaged'') where there was no code with a
status indicator ``T'' on the same claim on the same date.
2. Multiple Procedure Major Claims: Claims with more than one
separately payable procedure (that is, status indicator ``S,'' ``T,''
or ``V'' which includes codes with status indicator ``Q3''), or
multiple units of one payable procedure. These claims include those
codes with a status indicator ``Q2'' code (``T-packaged'') where there
was no procedure with a status indicator ``T'' on the same claim on the
same date of service but where there was another separately paid
procedure on the same claim with the same date of service (that is,
another code with status indicator ``S'' or ``V''). We also include in
this set claims that contained one unit of one code when the bilateral
modifier was appended to the code and the code was conditionally or
independently bilateral. In these cases, the claims represented more
than one unit of the service described by the code, notwithstanding
that only one unit was billed.
3. Single Procedure Minor Claims: Claims with a single HCPCS code
that was assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,''
``R,'' ``U,'' or ``N'' and not status indicator ``Q1'' (``STV-
packaged'') or status indicator ``Q2'' (``T-packaged'') code.
4. Multiple Procedure Minor Claims: Claims with multiple HCPCS
codes that are assigned status indicator ``F,'' ``G,'' ``H,'' ``K,''
``L,'' ``R,'' ``U,'' or ``N''; claims that contain more than one code
with status indicator ``Q1'' (``STV-packaged'') or more than one unit
of a code with status indicator ``Q1'' but no codes with status
indicator ``S,'' ``T,'' or ``V'' on the same date of service; or claims
that contain more than one code with status indicator ``Q2'' (T-
packaged), or ``Q2'' and ``Q1,'' or more than one unit of a code with
status indicator ``Q2'' but no code with status indicator ``T'' on the
same date of service.
5. Non-OPPS Claims: Claims that contain no services payable under
the OPPS (that is, all status indicators other than those listed for
major or minor status). These claims were excluded from the files used
for the OPPS. Non-OPPS claims have codes paid under other fee
schedules, for example, durable medical equipment, and do not contain a
code for a separately payable or packaged OPPS service. Non-OPPS claims
include claims for therapy services paid sometimes under the OPPS but
billed, in these non-OPPS cases, with revenue codes indicating that the
therapy services would be paid under the Medicare Physician Fee
Schedule (MPFS).
The claims listed in numbers 1, 2, 3, and 4 above are included in
the data file that can be purchased as described above. Claims that
contain codes to which we have assigned status indicators ``Q1''
(``STV-packaged'') and ``Q2'' (``T-packaged'') appear in the data for
the single major file, the multiple major file, and the multiple minor
file used for ratesetting. Claims that contain codes to which we have
assigned status indicator ``Q3'' (composite APC members) appear in both
the data of the single and multiple major files used in this proposed
rule, depending on the specific composite calculation.
(2) Creation of ``Pseudo'' Single Procedure Claims
To develop ``pseudo'' single procedure claims for this proposed
rule, we examined both the multiple procedure major claims and the
multiple procedure minor claims. We first examined the multiple major
procedure claims for dates of service to determine if we could break
them into ``pseudo'' single procedure claims using

[[Page 40934]]

the dates of service for all lines on the claim. If we could create
claims with single major procedures by using dates of service, we
created a single procedure claim record for each separately payable
procedure on a different date of service (that is, a ``pseudo'' single
procedure claim).
We also are proposing to use the bypass codes listed in Addendum N
to this proposed rule (which is available via the Internet on our Web
site) and discussed in section II.A.1.b. of this proposed rule to
remove separately payable procedures which we determined contained
limited or no packaged costs or that were otherwise suitable for
inclusion on the bypass list from a multiple procedure bill. As
discussed above, we ignore the ``overlap bypass codes,'' that is, those
HCPCS codes that are both on the bypass list and are members of the
multiple imaging composite APCs, in this initial assessment for
``pseudo'' single procedure claims. The proposed CY 2015 ``overlap
bypass codes'' are listed in Addendum N to this proposed rule (which is
available via the Internet on the CMS Web site). When one of the two
separately payable procedures on a multiple procedure claim was on the
bypass list, we split the claim into two ``pseudo'' single procedure
claim records. The single procedure claim record that contained the
bypass code did not retain packaged services. The single procedure
claim record that contained the other separately payable procedure (but
no bypass code) retained the packaged revenue code charges and the
packaged HCPCS code charges. We also removed lines that contained
multiple units of codes on the bypass list and treated them as
``pseudo'' single procedure claims by dividing the cost for the
multiple units by the number of units on the line. If one unit of a
single, separately payable procedure code remained on the claim after
removal of the multiple units of the bypass code, we created a
``pseudo'' single procedure claim from that residual claim record,
which retained the costs of packaged revenue codes and packaged HCPCS
codes. This enabled us to use claims that would otherwise be multiple
procedure claims and could not be used.
We then assessed the claims to determine if the proposed criteria
for the multiple imaging composite APCs, discussed in section
II.A.2.f.(5) of this proposed rule, were met. If the criteria for the
imaging composite APCs were met, we created a ``single session'' claim
for the applicable imaging composite service and determined whether we
could use the claim in ratesetting. For HCPCS codes that are both
conditionally packaged and are members of a multiple imaging composite
APC, we first assessed whether the code would be packaged and, if so,
the code ceased to be available for further assessment as part of the
composite APC. Because the packaged code would not be a separately
payable procedure, we considered it to be unavailable for use in
setting the composite APC costs on which the proposed CY 2015 OPPS
relative payment weights are based. Having identified ``single
session'' claims for the imaging composite APCs, we reassessed the
claim to determine if, after removal of all lines for bypass codes,
including the ``overlap bypass codes,'' a single unit of a single
separately payable code remained on the claim. If so, we attributed the
packaged costs on the claim to the single unit of the single remaining
separately payable code other than the bypass code to create a
``pseudo'' single procedure claim. We also identified line-items of
overlap bypass codes as a ``pseudo'' single procedure claim. This
allowed us to use more claims data for ratesetting purposes.
We also are proposing to examine the multiple procedure minor
claims to determine whether we could create ``pseudo'' single procedure
claims. Specifically, where the claim contained multiple codes with
status indicator ``Q1'' (``STV-packaged'') on the same date of service
or contained multiple units of a single code with status indicator
``Q1,'' we selected the status indicator ``Q1'' HCPCS code that had the
highest CY 2014 relative payment weight, and set the units to one on
that HCPCS code to reflect our policy of paying only one unit of a code
with a status indicator of ``Q1.'' We then packaged all costs for the
following into a single cost for the ``Q1'' HCPCS code that had the
highest CY 2014 relative payment weight to create a ``pseudo'' single
procedure claim for that code: additional units of the status indicator
``Q1'' HCPCS code with the highest CY 2014 relative payment weight;
other codes with status indicator ``Q1''; and all other packaged HCPCS
codes and packaged revenue code costs. We changed the status indicator
for the selected code from the data status indicator of ``N'' to the
status indicator of the APC to which the selected procedure was
assigned for further data processing and considered this claim as a
major procedure claim. We used this claim in the calculation of the APC
geometric mean cost for the status indicator ``Q1'' HCPCS code.
Similarly, if a multiple procedure minor claim contained multiple
codes with status indicator ``Q2'' (``T-packaged'') or multiple units
of a single code with status indicator ``Q2,'' we selected the status
indicator ``Q2'' HCPCS code that had the highest CY 2014 relative
payment weight and set the units to one on that HCPCS code to reflect
our policy of paying only one unit of a code with a status indicator of
``Q2.'' We then packaged all costs for the following into a single cost
for the ``Q2'' HCPCS code that had the highest CY 2014 relative payment
weight to create a ``pseudo'' single procedure claim for that code:
additional units of the status indicator ``Q2'' HCPCS code with the
highest CY 2014 relative payment weight; other codes with status
indicator ``Q2''; and other packaged HCPCS codes and packaged revenue
code costs. We changed the status indicator for the selected code from
a data status indicator of ``N'' to the status indicator of the APC to
which the selected code was assigned, and we considered this claim as a
major procedure claim.
If a multiple procedure minor claim contained multiple codes with
status indicator ``Q2'' (``T-packaged'') and status indicator ``Q1''
(``STV-packaged''), we selected the T-packaged status indicator ``Q2''
HCPCS code that had the highest relative payment weight for CY 2014 and
set the units to one on that HCPCS code to reflect our policy of paying
only one unit of a code with a status indicator of ``Q2.'' We then
packaged all costs for the following into a single cost for the
selected (``T-packaged'') HCPCS code to create a ``pseudo'' single
procedure claim for that code: additional units of the status indicator
``Q2'' HCPCS code with the highest CY 2014 relative payment weight;
other codes with status indicator ``Q2''; codes with status indicator
``Q1'' (``STV-packaged''); and other packaged HCPCS codes and packaged
revenue code costs. We selected status indicator ``Q2'' HCPCS codes
instead of ``Q1'' HCPCS codes because ``Q2'' HCPCS codes have higher CY
2014 relative payment weights. If a status indicator ``Q1'' HCPCS code
had a higher CY 2014 relative payment weight, it became the primary
code for the simulated single bill process. We changed the status
indicator for the selected status indicator ``Q2'' (``T-packaged'')
code from a data status indicator of ``N'' to the status indicator of
the APC to which the selected code was assigned and we considered this
claim as a major procedure claim.
We then applied our proposed process for creating ``pseudo'' single
procedure claims to the conditionally packaged codes that do not meet
the

[[Page 40935]]

criteria for packaging, which enabled us to create single procedure
claims from them, if they met the criteria for single procedure claims.
Conditionally packaged codes are identified using status indicators
``Q1'' and ``Q2,'' and are described in section XI.A. of this proposed
rule.
Lastly, we excluded those claims that we were not able to convert
to single procedure claims even after applying all of the techniques
for creation of ``pseudo'' single procedure claims to multiple
procedure major claims and to multiple procedure minor claims. As has
been our practice in recent years, we also excluded claims that
contained codes that were viewed as independently or conditionally
bilateral and that contained the bilateral modifier (Modifier 50
(Bilateral procedure)) because the line-item cost for the code
represented the cost of two units of the procedure, notwithstanding
that hospitals billed the code with a unit of one.
We are proposing to continue to apply the methodology described
above for the purpose of creating ``pseudo'' single procedure claims
for the CY 2015 OPPS.
c. Completion of Claim Records and Geometric Mean Cost Calculations
(1) General Process
We then packaged the costs of packaged HCPCS codes (codes with
status indicator ``N'' listed in Addendum B to this proposed rule
(which is available via the Internet on the CMS Web site) and the costs
of those lines for codes with status indicator ``Q1'' or ``Q2'' when
they are not separately paid), and the costs of the services reported
under packaged revenue codes in Table 4 below that appeared on the
claim without a HCPCS code into the cost of the single major procedure
remaining on the claim. For a more complete discussion of our proposed
CY 2015 OPPS packaging policy, we refer readers to section II.A.3. of
this proposed rule.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation
that CMS should review the final list of packaged revenue codes for
consistency with OPPS policy and ensure that future versions of the I/
OCE edit accordingly. As we have in the past, we are proposing to
continue to compare the final list of packaged revenue codes that we
adopt for CY 2015 to the revenue codes that the I/OCE will package for
CY 2015 to ensure consistency.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68531), we replaced the NUBC standard abbreviations for the revenue
codes listed in Table 2 of the CY 2009 OPPS/ASC proposed rule with the
most current NUBC descriptions of the revenue code categories and
subcategories to better articulate the meanings of the revenue codes
without changing the list of revenue codes. In the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60362 through 60363), we
finalized changes to the packaged revenue code list based on our
examination of the updated NUBC codes and public comment on the CY 2010
proposed list of packaged revenue codes.
For CY 2015, as we did for CY 2014, we reviewed the changes to
revenue codes that were effective during CY 2013 for purposes of
determining the charges reported with revenue codes but without HCPCS
codes that we would propose to package for CY 2015. We believe that the
charges reported under the revenue codes listed in Table 4 below
continue to reflect ancillary and supportive services for which
hospitals report charges without HCPCS codes. Therefore, for CY 2015,
we are proposing to continue to package the costs that we derive from
the charges reported without HCPCS codes under the revenue codes
displayed in Table 4 below for purposes of calculating the geometric
mean costs on which the proposed CY 2015 OPPS/ASC payment rates are
based.

Table 4--Proposed CY 2015 Packaged Revenue Codes
------------------------------------------------------------------------
Revenue code Description
------------------------------------------------------------------------
0250.......................... Pharmacy; General Classification.
0251.......................... Pharmacy; Generic Drugs.
0252.......................... Pharmacy; Non-Generic Drugs.
0254.......................... Pharmacy; Drugs Incident to Other
Diagnostic Services.
0255.......................... Pharmacy; Drugs Incident to Radiology.
0257.......................... Pharmacy; Non-Prescription.
0258.......................... Pharmacy; IV Solutions.
0259.......................... Pharmacy; Other Pharmacy.
0260.......................... IV Therapy; General Classification.
0261.......................... IV Therapy; Infusion Pump.
0262.......................... IV Therapy; IV Therapy/Pharmacy Svcs.
0263.......................... IV Therapy; IV Therapy/Drug/Supply
Delivery.
0264.......................... IV Therapy; IV Therapy/Supplies.
0269.......................... IV Therapy; Other IV Therapy.
0270.......................... Medical/Surgical Supplies and Devices;
General Classification.
0271.......................... Medical/Surgical Supplies and Devices;
Non-sterile Supply.
0272.......................... Medical/Surgical Supplies and Devices;
Sterile Supply.
0275.......................... Medical/Surgical Supplies and Devices;
Pacemaker.
0276.......................... Medical/Surgical Supplies and Devices;
Intraocular Lens.
0278.......................... Medical/Surgical Supplies and Devices;
Other Implants.
0279.......................... Medical/Surgical Supplies and Devices;
Other.Supplies/Devices.
0280.......................... Oncology; General Classification.
0289.......................... Oncology; Other Oncology.
0343.......................... Nuclear Medicine; Diagnostic
Radiopharmaceuticals.
0344.......................... Nuclear Medicine; Therapeutic
Radiopharmaceuticals.
0370.......................... Anesthesia; General Classification.
0371.......................... Anesthesia; Anesthesia Incident to
Radiology.
0372.......................... Anesthesia; Anesthesia Incident to Other
DX Services.
0379.......................... Anesthesia; Other Anesthesia.
0390.......................... Administration, Processing and Storage
for Blood and Blood Components; General
Classification.
0392.......................... Administration, Processing and Storage
for Blood and Blood Components;
Processing and Storage.

[[Page 40936]]

0399.......................... Administration, Processing and Storage
for Blood and Blood Components; Other
Blood Handling.
0621.......................... Medical Surgical Supplies--Extension of
027X; Supplies Incident to Radiology.
0622.......................... Medical Surgical Supplies--Extension of
027X; Supplies Incident to Other DX
Services.
0623.......................... Medical Supplies--Extension of 027X,
Surgical Dressings.
0624.......................... Medical Surgical Supplies--Extension of
027X; FDA Investigational Devices.
0630.......................... Pharmacy--Extension of 025X; Reserved.
0631.......................... Pharmacy--Extension of 025X; Single
Source Drug.
0632.......................... Pharmacy--Extension of 025X; Multiple
Source Drug
0633.......................... Pharmacy--Extension of 025X; Restrictive
Prescription
0681.......................... Trauma Response; Level I Trauma.
0682.......................... Trauma Response; Level II Trauma.
0683.......................... Trauma Response; Level III Trauma.
0684.......................... Trauma Response; Level IV Trauma.
0689.......................... Trauma Response; Other.
0700.......................... Cast Room; General Classification.
0710.......................... Recovery Room; General Classification.
0720.......................... Labor Room/Delivery; General
Classification.
0721.......................... Labor Room/Delivery; Labor.
0732.......................... EKG/ECG (Electrocardiogram); Telemetry.
0762.......................... Specialty services; Observation Hours.
0801.......................... Inpatient Renal Dialysis; Inpatient
Hemodialysis.
0802.......................... Inpatient Renal Dialysis; Inpatient
Peritoneal Dialysis (Non-CAPD).
0803.......................... Inpatient Renal Dialysis; Inpatient
Continuous Ambulatory Peritoneal
Dialysis (CAPD).
0804.......................... Inpatient Renal Dialysis; Inpatient
Continuous Cycling Peritoneal Dialysis
(CCPD).
0809.......................... Inpatient Renal Dialysis; Other
Inpatient Dialysis.
0810.......................... Acquisition of Body Components; General
Classification.
0819.......................... Acquisition of Body Components; Other
Donor.
0821.......................... Hemodialysis--Outpatient or Home;
Hemodialysis Composite or Other Rate.
0824.......................... Hemodialysis--Outpatient or Home;
Maintenance--100%.
0825.......................... Hemodialysis--Outpatient or Home;
Support Services.
0829.......................... Hemodialysis--Outpatient or Home; Other
OP Hemodialysis.
0942.......................... Other Therapeutic Services (also see
095X, an extension of 094x); Education/
Training.
0943.......................... Other Therapeutic Services (also see
095X, an extension of 094X), Cardiac
Rehabilitation.
0948.......................... Other Therapeutic Services (also see
095X, an extension of 094X), Pulmonary
Rehabilitation.
------------------------------------------------------------------------

In accordance with our longstanding policy, we are proposing to
continue to exclude: (1) Claims that had zero costs after summing all
costs on the claim; and (2) claims containing packaging flag number 3.
Effective for services furnished after July 1, 2014, the I/OCE assigned
packaging flag number 3 to claims on which hospitals submitted token
charges less than $1.01 for a service with status indicator ``S'' or
``T'' (a major separately payable service under the OPPS) for which the
Medicare Administrative Contractor (MAC) was required to allocate the
sum of charges for services with a status indicator equaling ``S'' or
``T'' based on the relative payment weight of the APC to which each
code was assigned. We do not believe that these charges, which were
token charges as submitted by the hospital, are valid reflections of
hospital resources. Therefore, we deleted these claims. We also deleted
claims for which the charges equaled the revenue center payment (that
is, the Medicare payment) on the assumption that, where the charge
equaled the payment, to apply a CCR to the charge would not yield a
valid estimate of relative provider cost. We are proposing to continue
these processes for the CY 2015 OPPS.
For the remaining claims, we are proposing to then standardize 60
percent of the costs of the claim (which we have previously determined
to be the labor-related portion) for geographic differences in labor
input costs. We made this adjustment by determining the wage index that
applied to the hospital that furnished the service and dividing the
cost for the separately paid HCPCS code furnished by the hospital by
that wage index. The claims accounting that we provide for the proposed
and final rule contains the formula we use to standardize the total
cost for the effects of the wage index. As has been our policy since
the inception of the OPPS, we are proposing to use the pre-reclassified
wage indices for standardization because we believe that they better
reflect the true costs of items and services in the area in which the
hospital is located than the post-reclassification wage indices and,
therefore, would result in the most accurate unadjusted geometric mean
costs. We are proposing to use these pre-reclassified wage indices for
standardization using the new OMB labor market area delineations
described in section II.C. of this proposed rule.
In accordance with our longstanding practice, we also are proposing
to exclude single and ``pseudo'' single procedure claims for which the
total cost on the claim was outside 3 standard deviations from the
geometric mean of units for each HCPCS code on the bypass list
(because, as discussed above, we used claims that contain multiple
units of the bypass codes).
After removing claims for hospitals with error CCRs, claims without
HCPCS codes, claims for immunizations not covered under the OPPS, and
claims for services not paid under the OPPS, approximately 114 million
claims were left. Using these approximately 114 million claims, we
created approximately 94 million single and ``pseudo'' single procedure
claims, of which we used approximately 94 million single bills (after
trimming out approximately 1 million claims as discussed in section
II.A.1.a. of this proposed rule) in the CY 2015 geometric mean cost
development and ratesetting.
As discussed above, the OPPS has historically developed the
relative weights on which APC payments are based using APC median
costs. For the

[[Page 40937]]

CY 2013 OPPS and the CY 2014 OPPS, we calculated the APC relative
payment weights using geometric mean costs, and we are proposing to do
the same for CY 2015. Therefore, the following discussion of the 2
times rule violation and the development of the relative payment weight
refers to geometric means. For more detail about the CY 2015 OPPS/ASC
policy to calculate relative payment weights based on geometric means,
we refer readers to section II.A.2.f. of this proposed rule.
We are proposing to use these claims to calculate the CY 2015
geometric mean costs for each separately payable HCPCS code and each
APC. The comparison of HCPCS code-specific and APC geometric mean costs
determines the applicability of the 2 times rule. Section 1833(t)(2) of
the Act provides that, subject to certain exceptions, the items and
services within an APC group shall not be treated as comparable with
respect to the use of resources if the highest median cost (or mean
cost, if elected by the Secretary) for an item or service within the
group is more than 2 times greater than the lowest median cost (or mean
cost, if so elected) for an item or service within the same group (the
2 times rule). While we have historically applied the 2 times rule
based on median costs, in the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68270), as part of the CY 2013 policy to develop the OPPS
relative payment weights based on geometric mean costs, we also applied
the 2 times rule based on geometric mean costs. For the CY 2015 OPPS,
we are proposing to continue to develop the APC relative payment
weights based on geometric mean costs.
We note that, for purposes of identifying significant HCPCS codes
for examination in the 2 times rule, we consider codes that have more
than 1,000 single major claims or codes that have both greater than 99
single major claims and contribute at least 2 percent of the single
major claims used to establish the APC geometric mean cost to be
significant. This longstanding definition of when a HCPCS code is
significant for purposes of the 2 times rule was selected because we
believe that a subset of 1,000 claims is negligible within the set of
approximately 94 million single procedure or single session claims we
use for establishing geometric mean costs. Similarly, a HCPCS code for
which there are fewer than 99 single bills and which comprises less
than 2 percent of the single major claims within an APC will have a
negligible impact on the APC geometric mean. We note that this method
of identifying significant HCPCS codes within an APC for purposes of
the 2 times rule was used in prior years under the median-based cost
methodology. Under our proposed CY 2015 policy to continue to base the
relative payment weights on geometric mean costs, we believe that this
same consideration for identifying significant HCPCS codes should apply
because the principles are consistent with their use in the median-
based cost methodology. Unlisted codes are not used in establishing the
percent of claims contributing to the APC, nor are their costs used in
the calculation of the APC geometric mean. Finally, we reviewed the
geometric mean costs for the services for which we are proposing to pay
separately under this proposed rule, and we reassigned HCPCS codes to
different APCs where it was necessary to ensure clinical and resource
homogeneity within the APCs. The APC geometric means were recalculated
after we reassigned the affected HCPCS codes. Both the HCPCS code-
specific geometric means and the APC geometric means were weighted to
account for the inclusion of multiple units of the bypass codes in the
creation of ``pseudo'' single procedure claims.
As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this
proposed rule, in some cases, APC geometric mean costs are calculated
using variations of the process outlined above. Specifically, section
II.A.2.d. of this proposed rule addresses the proposed calculation of
single APC criteria-based geometric mean costs. Section II.A.2.f. of
this proposed rule discusses the proposed calculation of composite APC
criteria-based geometric mean costs. Section VIII.B. of this proposed
rule addresses the methodology for calculating the proposed geometric
mean costs for partial hospitalization services.

(2) Recommendations of the Panel Regarding Data Development

At the March 2014 meeting of the Panel, we discussed the claims
accounting process for the CY 2014 OPPS final rule, the final CY 2014
policy of adopting the new standard cost centers for CT, MRI, and
cardiac catheterization in the new Medicare cost report Form CMS-2552-
10, as well as the calculation of estimated cost for those APCs.
At the March 2014 Panel meeting, the Panel made a number of
recommendations related to the data process. The Panel's data-related
recommendations and our responses follow.
Recommendation: The Panel recommends that the work of the Data
Subcommittee continue.
CMS Response: We are accepting this recommendation.
Recommendation: The Panel recommends that CMS provide the Panel
with a list of APCs for which costs fluctuate by more than 10 percent.
CMS Response: We are accepting this recommendation.
Recommendation: The Panel recommends that CMS provide the Panel
with data on comprehensive APCs as well as the effect of conditional
packaging on visit codes.
CMS Response: We are accepting this recommendation.
d. Proposed Calculation of Single Procedure APC Criteria-Based Costs
(1) Device-Dependent APCs
Historically, device-dependent APCs are populated by HCPCS codes
that usually, but not always, require that a device be implanted or
used to perform the procedure. The standard methodology for calculating
device-dependent APC costs utilizes claims data that generally reflect
the full cost of the required device by using only the subset of single
procedure claims that pass the procedure-to-device and device-to-
procedure edits; do not contain token charges (less than $1.01) for
devices; and, until January 1, 2014, did not contain the ``FB''
modifier signifying that the device was furnished without cost to the
provider, or where a full credit was received; and do not contain the
``FC'' modifier signifying that the hospital received partial credit
for the device. For a full history of how we have calculated payment
rates for device-dependent APCs in previous years and a detailed
discussion of how we developed the standard device-dependent APC
ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66739 through 66742). Overviews of the
procedure-to-device edits and device-to-procedure edits used in
ratesetting for device-dependent APCs are available in the CY 2005 OPPS
final rule with comment period (69 FR 65761 through 65763) and the CY
2007 OPPS/ASC final rule with comment period (71 FR 68070 through
68071).
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74857
through 74859), we finalized a policy to define 29 device-dependent
APCs as single complete services and to assign them to comprehensive
APCs that provide all-inclusive payments for those services, but we
delayed

[[Page 40938]]

implementation of this policy until CY 2015 (78 FR 74862). This policy
is a further step toward improving the prospective nature of our
payments for these services where the cost of the device is relatively
high compared to the other costs that contribute to the cost of the
service. Table 5 of the CY 2014 OPPS/ASC final rule with comment period
provided a list of the 39 APCs recognized as device-dependent APCs and
identified the 29 device-dependent APCs that are converted to
comprehensive APCs. In addition, in the CY 2014 OPPS/ASC final rule
with comment period we finalized a policy for the treatment of the
remaining 10 device-dependent APCs that applied our standard APC
ratesetting methodology to calculate the CY 2014 payment rates for
these APCs, but implementation of this policy was also delayed until CY
2015.
As proposed in the CY 2014 OPPS/ASC proposed rule (78 FR 43556
through 43557), for CY 2015, we are proposing to no longer implement
procedure-to-device edits and device-to-procedure edits for any APC.
Under this proposed policy, which was discussed but not finalized in
the CY 2014 OPPS/ASC final rule with comment period (78 FR 74857
through 74858), hospitals are still expected to adhere to the
guidelines of correct coding and append the correct device code to the
claim, when applicable. However, claims would no longer be returned to
providers when specific procedure and device code pairings do not
appear on a claim. As we stated in both the CY 2014 OPPS/ASC proposed
rule (78 FR 43556 through 43557) and the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74857 through 748598), we believe that this
is appropriate because of the experience hospitals now have had in
coding and reporting these claims fully and, for the more costly
devices, the comprehensive APCs will reliably reflect the cost of the
device if it is included anywhere on the claim. Therefore, we do not
believe that the burden imposed upon hospitals to adhere to the
procedure-to-device edits and device-to-procedure edits and the burden
imposed upon the Medicare program to maintain those edits continued to
be warranted. As with all other items and services recognized under the
OPPS, we expect hospitals to code and report their costs appropriately,
regardless of whether there are claims processing edits in place.
The proposed CY 2015 comprehensive APC policy consolidates and
restructures the 39 current device-dependent APCs into 26 (of the total
28) comprehensive APCs, which are listed below in Table 5. The
comprehensive APC policy is discussed in section II.A.2.e. of this
proposed rule. As a result of the proposed CY 2015 comprehensive APC
policy, device-dependent APCs would no longer exist in CY 2015 because
these APCs will have all been converted to comprehensive APCs. In
conjunction with the proposed termination of device-dependent APCs and
as discussed in the CY 2014 OPPS/ASC final rule with comment period (78
FR 74857 through 74858), we are proposing to no longer use procedure-
to-device edits and device-to-procedure edits for any APC because we
continue to believe that the elimination of device-to-procedure edits
and procedure-to-device edits is appropriate considering the experience
that hospitals now have in coding and reporting these claims fully and,
for the more costly devices, the comprehensive APCs will reliably
reflect the cost of the device if it is included anywhere on the claim.
While we believe that device-to-procedure edits and procedure-to-
device edits are no longer necessary, we are sensitive to the concerns
raised by stakeholders in the past about the costs of devices being
reported and captured. In light of these concerns, we are proposing to
create claims processing edits that require any of the device codes
used in the previous device-to-procedure edits to be present on the
claim whenever a procedure code assigned to any 1 of the 26 proposed
comprehensive APCs (of a total of 28 proposed comprehensive APCs)
listed below in Table 5 is reported on the claim to ensure that device
costs are captured by hospitals. We expect that hospitals would use an
appropriate device code consistent with correct coding in order to
ensure that device costs are always reported on the claim, so that
costs are appropriately captured in claims that CMS uses for
ratesetting.
Table 5 below provides a list of the 26 proposed CY 2015
comprehensive APCs, which we previously recognized as device-dependent
APCs for CY 2014. This proposal would result in the term ``device-
dependent APC'' no longer being employed beginning in CY 2015.

Table 5--Proposed APCs That Would Require a Device Code To Be Reported
on a Claim When a Procedure Assigned to One of These APCs Is Reported
------------------------------------------------------------------------
APC APC Title
------------------------------------------------------------------------
0039.............................. Level III Neurostimulator.
0061.............................. Level II Neurostimulator.
0083.............................. Level I Endovascular.
0084.............................. Level I EP.
0085.............................. Level II EP.
0086.............................. Level III EP.
0089.............................. Level III Pacemaker.
0090.............................. Level II Pacemaker.
0107.............................. Level I ICD.
0108.............................. Level II ICD.
0202.............................. Level V Female Reproductive.
0227.............................. Implantation of Drug Infusion.
0229.............................. Level II Endovascular.
0259.............................. Level VII ENT Procedures.
0293.............................. Level IV Intraocular.
0318.............................. Level IV Neurostimulator.
0319.............................. Level III Endovascular.
0384.............................. GI Procedures with Stents.
0385.............................. Level I Urogenital.
0386.............................. Level II Urogenital.
0425.............................. Level V Musculoskeletal.
0427.............................. Level II Tube/Catheter.
0622.............................. Level II Vascular Access.
0648.............................. Level IV Breast Surgery.
0652.............................. Insertion of IP/Pl. Cath.
0655.............................. Level IV Pacemaker.
------------------------------------------------------------------------

(2) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
For CY 2015, we are proposing to continue to establish payment
rates for blood and blood products using our blood-specific CCR
methodology, which utilizes actual or simulated CCRs from the most
recently available hospital cost reports to convert hospital charges
for blood and blood products to costs. This methodology has been our
standard ratesetting methodology for blood and blood products since CY
2005. It was developed in response to data analysis indicating that
there was a significant difference in CCRs for those hospitals with and
without blood-specific cost centers, and past public comments
indicating that the former OPPS policy of defaulting to the overall
hospital CCR for hospitals not reporting a blood-specific cost center
often resulted in an underestimation of the true hospital costs for
blood and blood products.

[[Page 40939]]

Specifically, in order to address the differences in CCRs and to better
reflect hospitals' costs, we are proposing to continue to simulate
blood CCRs for each hospital that does not report a blood cost center
by calculating the ratio of the blood-specific CCRs to hospitals'
overall CCRs for those hospitals that do report costs and charges for
blood cost centers. We would apply this mean ratio to the overall CCRs
of hospitals not reporting costs and charges for blood cost centers on
their cost reports in order to simulate blood-specific CCRs for those
hospitals. We are proposing to calculate the costs upon which the
proposed CY 2015 payment rates for blood and blood products are based
using the actual blood-specific CCR for hospitals that reported costs
and charges for a blood cost center and a hospital-specific simulated
blood-specific CCR for hospitals that did not report costs and charges
for a blood cost center.
We continue to believe that the hospital-specific simulated blood-
specific CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into
account the unique charging and cost accounting structure of each
hospital, we believe that it yields more accurate estimated costs for
these products. We continue to believe that this methodology in CY 2015
will result in costs for blood and blood products that appropriately
reflect the relative estimated costs of these products for hospitals
without blood cost centers and, therefore, for these blood products in
general.
We note that, as discussed in section II.A.2.e. of the CY 2014
OPPS/ASC final rule with comment period and this proposed rule, we
established comprehensive APCs that will provide all-inclusive payments
for certain device-dependent procedures. Under this policy, we include
the costs of blood and blood products when calculating the overall
costs of these comprehensive APCs. We are proposing to continue to
apply the blood-specific CCR methodology described in this section when
calculating the costs of the blood and blood products that appear on
claims with services assigned to the comprehensive APCs. Because the
costs of blood and blood products would be reflected in the overall
costs of the comprehensive APCs (and, as a result, in the proposed
payment rates of the comprehensive APCs), we are proposing not to make
separate payments for blood and blood products when they appear on the
same claims as services assigned to the comprehensive APCs.
We refer readers to Addendum B to this proposed rule (which is
available via the Internet on the CMS Web site) for the proposed CY
2015 payment rates for blood and blood products (which are identified
with status indicator ``R''). For a more detailed discussion of the
blood-specific CCR methodology, we refer readers to the CY 2005 OPPS
proposed rule (69 FR 50524 through 50525). For a full history of OPPS
payment for blood and blood products, we refer readers to the CY 2008
OPPS/ASC final rule with comment period (72 FR 66807 through 66810).
(3) Brachytherapy Sources
Section 1833(t)(2)(H) of the Act mandates the creation of
additional groups of covered OPD services that classify devices of
brachytherapy consisting of a seed or seeds (or radioactive source)
(``brachytherapy sources'') separately from other services or groups of
services. The statute provides certain criteria for the additional
groups. For the history of OPPS payment for brachytherapy sources, we
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC
final rule with comment period (77 FR 68240 through 68241). As we have
stated in prior OPPS updates, we believe that adopting the general OPPS
prospective payment methodology for brachytherapy sources is
appropriate for a number of reasons (77 FR 68240). The general OPPS
payment methodology uses costs based on claims data to set the relative
payment weights for hospital outpatient services. This payment
methodology results in more consistent, predictable, and equitable
payment amounts per source across hospitals by averaging the extremely
high and low values, in contrast to payment based on hospitals' charges
adjusted to cost. We believe that the OPPS prospective payment
methodology, as opposed to payment based on hospitals' charges adjusted
to cost, would also provide hospitals with incentives for efficiency in
the provision of brachytherapy services to Medicare beneficiaries.
Moreover, this approach is consistent with our payment methodology for
the vast majority of items and services paid under the OPPS. We refer
readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR
66779 through 66787), the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68668 through 68670), the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60533 through 60537), the CY 2011 OPPS/ASC
final rule with comment period (75 FR 71978 through 71981), and the CY
2012 OPPS/ASC final rule with comment period (76 FR 74160 through
74163) for further discussion of the history of OPPS payment for
brachytherapy sources.
For CY 2015, we are proposing to use the costs derived from CY 2013
claims data to set the proposed CY 2015 payment rates for brachytherapy
sources, as we are proposing to use to set the proposed payment rates
for most other items and services that would be paid under the CY 2015
OPPS. We based the proposed payment rates for brachytherapy sources on
the geometric mean unit costs for each source, consistent with the
methodology proposed for other items and services paid under the OPPS,
as discussed in section II.A.2. of this proposed rule. We also are
proposing to continue the other payment policies for brachytherapy
sources that we finalized and first implemented in the CY 2010 OPPS/ASC
final rule with comment period (74 FR 60537). We are proposing to pay
for the stranded and non-stranded not otherwise specified (NOS) codes,
HCPCS codes C2698 and C2699, at a rate equal to the lowest stranded or
non-stranded prospective payment rate for such sources, respectively,
on a per source basis (as opposed to, for example, a per mCi), which is
based on the policy we established in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66785). We also are proposing to continue
the policy we first implemented in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60537) regarding payment for new brachytherapy
sources for which we have no claims data, based on the same reasons we
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66786; which was delayed until January 1, 2010 by section 142 of Pub.
L. 110-275). That policy is intended to enable us to assign new HCPCS
codes for new brachytherapy sources to their own APCs, with prospective
payment rates set based on our consideration of external data and other
relevant information regarding the expected costs of the sources to
hospitals.
We refer readers to Addendum B to this proposed rule (which is
available via the Internet on the CMS Web site) for the proposed CY
2015 payment rates for brachytherapy sources, which are identified with
status indicator ``U.'' We are inviting public comments on this
proposed policy and requesting recommendations for new HCPCS codes to
describe new brachytherapy sources consisting of a radioactive isotope,
including a detailed rationale to support recommended new sources. Such

[[Page 40940]]

recommendations should be directed to the Division of Outpatient Care,
Mail Stop C4-05-17, Centers for Medicare and Medicaid Services, 7500
Security Boulevard, Baltimore, MD 21244. We will continue to add new
brachytherapy source codes and descriptors to our systems for payment
on a quarterly basis through our program transmittals.
e. Establishment of Comprehensive APCs
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), effective January 1, 2015, we finalized a comprehensive
payment policy that bundles or ``packages'' payment for the most costly
medical device implantation procedures under the OPPS at the claim
level. We defined a comprehensive APC (C-APC) as a classification for
the provision of a primary service and all adjunctive services provided
to support the delivery of the primary service. We established
comprehensive APCs as a category broadly for OPPS payment and
established 29 comprehensive APCs to prospectively pay for 167 of the
most costly device-dependent services beginning in CY 2015 (78 FR
74910). Under this policy, we designated each service described by a
HCPCS code assigned to a comprehensive APC as the primary service and,
with few exceptions, consider all other services reported on a hospital
Medicare Part B claim in combination with the primary service to be
related to the delivery of the primary service (78 FR 74869). In
addition, under this policy, we calculate a single payment for the
entire hospital stay, defined by a single claim, regardless of the date
of service span. This comprehensive APC packaging policy ``packages''
payment for all items and services typically packaged under the OPPS,
but also packages payment for other items and services that are not
typically packaged under the OPPS, except in the context of
comprehensive APC payments (78 FR 74909).
Because of the overall complexity of this new policy and our
introduction of complexity adjustments in the CY 2014 OPPS/ASC final
rule with comment period, we modeled the dynamics of the policy as if
we were implementing it for CY 2014, but delayed the effective date
until January 1, 2015, to allow additional time for analysis,
opportunity for public comment, and systems preparation. In this
section of this CY 2015 OPPS/ASC proposed rule, we review the policies
finalized in the CY 2014 OPPS/ASC final rule with comment period for
comprehensive APCs. We then outline our proposed policy for CY 2015,
which includes several clarifications and proposed modifications in
response to public comments received. Finally, we summarize and respond
to the public comments we received in response to the comprehensive APC
policy outlined in the CY 2014 OPPS/ASC final rule with comment period.
In this section, we use the terms ``service'' and ``procedure''
interchangeably.
(1) Background
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), we finalized a policy with a delayed implementation
date of CY 2015, whereby we designated certain covered OPD services as
``primary services'' (identified by a new OPPS status indicator of
``J1'') assigned to comprehensive APCs. When such a primary service is
reported on a hospital Medicare Part B claim, taking into account the
few exceptions that are discussed below, we treat all other items and
services reported on the claim as integral, ancillary, supportive,
dependent, and adjunctive to the primary service (hereinafter
collectively referred to as ``adjunctive services'') and representing
components of a comprehensive service (78 FR 74865). This results in a
single prospective payment for the primary, comprehensive service based
on the cost of all reported services at the claim level. We only
exclude charges for services that are not payable under the OPPS, such
as certain mammography and ambulance services that are never covered
OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act;
brachytherapy seeds, which must receive separate payment under section
1833(t)(2)(H) of the Act; pass-through drugs and devices, which also
require separate payment under section 1833(t)(6) of the Act; and self-
administered drugs (SADs) that are not otherwise packaged as supplies
because they are not covered under Medicare Part B under section
1861(s)(2)(B) of the Act (78 FR 74865).
The ratesetting process set forth in the CY 2014 OPPS/ASC final
rule with comment period for the comprehensive APC payment bundle
policy is summarized as follows(78 FR 74887):
APC assignment of primary (``J1'') services. During ratesetting,
single claims reporting a single procedure described by a HCPCS code
assigned to status indicator ``J1'' are used to establish an APC
assignment for each procedure described by that HCPCS code. The
geometric mean of the total estimated costs on each claim is used to
establish resource similarity for each procedure code's APC assignment
and is evaluated within the context of clinical similarity, with
assignment starting from the APC assignments in effect for the current
payment year. Claims reporting multiple procedures described by HCPCS
codes assigned to status indicator ``J1'' are identified and the
procedures are then assigned to a comprehensive APC based on the
primary HCPCS code that has the highest APC geometric mean cost. This
ensures that multiple procedures described by HCPCS codes assigned to
status indicator ``J1'' reported on claims are always paid through and
assigned to the comprehensive APC that would generate the highest APC
payment. If multiple procedures described by HCPCS codes assigned to
status indicator ``J1'' that are reported on the same claim have the
same APC geometric mean estimated cost, as would be the case when two
different procedures described by HCPCS codes assigned to status
indicator ``J1'' are assigned to the same APC, identification of the
primary service is then based on the procedure described by the HCPCS
code assigned to status indicator ``J1'' with the highest HCPCS-level
geometric mean cost. When there is no claims data available upon which
to establish a HCPCS-level comprehensive geometric mean cost, we model
a HCPCS-level geometric mean cost for the sole purpose of appropriately
assigning the primary service reported on a claim. The comprehensive
APC assignment of each procedure described by HCPCS codes assigned to
status indicator ``J1'' is then confirmed by verifying that the APC
assignment remains appropriate when considering the clinical
similarity, as well as the estimated cost of all claims reporting each
procedure described by HCPCS codes assigned to status indicator ``J1,''
including simple and complex claims, with multiple device-related
procedures (78 FR 74887).
Complexity adjustments and determination of final comprehensive APC
groupings. We then considered reassigning complex subsets of claims for
each primary service described by a HCPCS code assigned to status
indicator ``J1.'' All claims reporting more than one procedure
described by HCPCS codes assigned to status indicator ``J1'' are
evaluated for the existence of commonly occurring combinations of
procedure codes reported on claims that exhibit a materially greater
comprehensive geometric mean cost relative to the geometric mean cost
of the claims reporting that primary service. This indicates that the
subset of procedures identified by the secondary HCPCS code

[[Page 40941]]

has increased resource requirements relative to less complex subsets of
that procedure (78 FR 74887). The CY 2014 complexity adjustment
criteria are as follows:
The comprehensive geometric mean cost of the claims
reporting the combination of procedures was more than two times the
comprehensive geometric mean cost of the single major claims reporting
only the primary service;
There were more than 100 claims in the data year reporting
the specific code combination;
The number of claims reporting the specific code
combination exceeded 5 percent of the volume of all claims reporting
the designated primary service; and
There would be no violation of the ``2 times'' rule within
the receiving comprehensive APC (78 FR 74886).
If a combination of procedure codes reported on claims is
identified that meets these requirements, that is, commonly occurring
and exhibiting materially greater resource requirements, the
combination of procedure codes is further evaluated to confirm clinical
validity as a complex subset of the primary procedure and the
combination of procedure codes is then identified as complex, and
primary service claims with that combination of procedure codes are
subsequently reassigned as appropriate. If a combination of procedure
codes does not meet the requirement for a materially greater resource
requirement or does not occur commonly, the combination of procedure
codes is not considered to be complex, and primary service claims with
that combination of procedure codes are not reassigned. All
combinations of procedures described by HCPCS codes assigned to status
indicator ``J1'' for each primary service are similarly evaluated. Once
all combinations of procedures described by HCPCS codes assigned to
status indicator ``J1'' have been evaluated, all claims identified for
reassignment for each primary service are combined and the group is
assigned to a higher level comprehensive APC within a clinical family
of comprehensive APCs, that is, an APC with greater estimated resource
requirements than the initially assigned comprehensive APC and with
appropriate clinical homogeneity. We assessed resource variation for
reassigned claims within the receiving APC using the geometric mean
cost for all reassigned claims for the primary service relative to
other services assigned to that APC using the 2 times rule criteria (78
FR 74887).
For new HCPCS codes and codes without data, we use the best data
available to us to identify combinations of procedure codes that
represent a more complex form of the primary service and warrant
reassignment to a higher level APC. We will reevaluate our APC
assignments and identification and APC placement of complex claims once
claims data become available.
(2) Proposed CY 2015 Policy for Comprehensive APCs
(a) Proposed Methodology
After consideration of the public comments we received, which are
discussed in detail below, in this section we describe our proposed
payment methodology for comprehensive APCs for CY 2015. The basic steps
for calculating the comprehensive APC payments remain the same as those
finalized in the CY 2014 OPPS/ASC final rule with comment period,
except for the complexity adjustment criteria described briefly above
(78 FR 74885 through 74888). For CY 2015, we are proposing to
restructure and consolidate some of the current device-dependent APCs
to improve both the resource and clinical homogeneity of these APCs. In
addition, instead of assigning any add-on codes to status indicator
``J1'' as finalized in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74873 through 74883), we are proposing to package all
add-on codes, but to allow certain add-on codes to qualify a procedure
code combination for a complexity adjustment.
Further, we are proposing to convert all current device-dependent
APCs remaining after the proposed restructuring and consolidation of
some of these APCs to comprehensive APCs. We also are proposing two new
comprehensive APCs, C-APC 0067 for single-session cranial stereotactic
radiosurgery (SRS) and C-APC 0351 for intraocular telescope
implantation. In addition, we are proposing to reassign CPT codes 77424
and 77425 that describe intraoperative radiation therapy treatment
(IORT) to C-APC 0648 (Level IV Breast and Skin Surgery). We discuss in
detail below our proposed new complexity adjustment criteria and our
proposal to package all add-on codes, but to allow complexity
adjustments for qualifying code combinations of primary codes and add-
on codes currently assigned to device-intensive comprehensive APCs. The
steps are as follows:
Step 1: Select primary (``J1'') services. We continue to believe
that the comprehensive packaging of adjunctive services into a primary
service will further improve cost validity, payment accuracy,
beneficiary transparency, and hospital efficiency (78 FR 74861). As in
CY 2014, for CY 2015, we are proposing that services assigned to
comprehensive APCs be designated as primary services for comprehensive
APCs, using new status indicator ``J1'' as listed in Addendum J and
Addendum B to this proposed rule (which are available via the Internet
on the CMS Web site). We also are proposing to package all add-on
codes, as discussed in detail below, and that none of these add-on
codes will be considered primary services assigned to status indicator
``J1.''
Treatment of add-on codes. We are proposing to assign all add-on
codes status indicator ``N'' (unconditionally packaged). Therefore,
under this proposal no add-on codes will be assigned to status
indicator ``J1.'' However, we are proposing to evaluate a limited set
of add-on codes assigned to the current device-dependent APCs, and to
establish that when these add-on codes are reported in conjunction with
a primary service a potential complexity adjustment under the proposed
complexity adjustment criteria may be warranted (discussed further in
Step 5 below).
Step 2: Definition of the payment package (comprehensive service).
We are proposing the following changes to the comprehensive APCs
payment packaging policy for the services that are assigned to status
indicator ``J1'' or designated as primary services assigned to a
comprehensive APC:
We are proposing to restructure and consolidate the
current device-dependent APCs, including some procedure code
reassignments to improve clinical and resource homogeneity;
We are proposing to package all of the add-on procedure
codes, after we review and evaluate add-on codes reported in
conjunction with primary ``J1'' services under the proposed complexity
adjustment criteria for a potential complexity adjustment;
We are proposing to create more comprehensive APCs,
including converting all device-dependent APCs (including those that
were not included in the CY 2014 policy) and to create new
comprehensive APCs for single session cranial stereotactic radiosurgery
and intraocular telescope implantation.
As stated in the CY 2014 OPPS/ASC final rule with comment period,
we define the comprehensive APC payment packaging policy as including
all covered OPD services on a hospital Medicare Part B claim reporting
a primary service that is assigned to status

[[Page 40942]]

indicator ``J1,'' excluding services that cannot be covered OPD
services or that cannot by statute be paid under the OPPS. Services
packaged for payment under the comprehensive APC payment packaging
policy, that is, services that are typically integral, ancillary,
supportive, dependent, or adjunctive to the primary service, provided
during the delivery of the comprehensive service, include diagnostic
procedures, laboratory tests and other diagnostic tests and treatments
that assist in the delivery of the primary procedure; visits and
evaluations performed in association with the procedure; uncoded
services and supplies used during the service; outpatient department
services that are similar to therapy and delivered either by therapists
or non-therapists as part of the comprehensive service; durable medical
equipment as well as prosthetic and orthotic items and supplies when
provided as part of the outpatient service; and any other components
reported by HCPCS codes that are provided during the comprehensive
service, except excluded services that are described below (78 FR
74865). Items packaged for payment provided in conjunction with the
primary service also include all drugs, biologicals, and
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and those drugs that are usually self-
administered (SADs), unless they function as packaged supplies (78 FR
74868 through 74869 and 74909). We refer readers to the Medicare
Benefit Policy Manual, Chapter 15, Covered Medical and Other Health
Services, Section 50.2.M, for a description of our policy on self-
administered drugs treated as hospital outpatient supplies, including
lists of SADs that function as supplies and those that do not function
as supplies.
Services excluded from the comprehensive APC payment packaging
policy are as follows: SADs that are not considered supplies, because
they are not covered under Medicare Part B under section 1861(s)(2)(B)
of the Act; services excluded from the OPPS according to section
1833(t)(1)(B) of the Act including recurring therapy services, which we
considered unrelated to the comprehensive service (defined as therapy
services reported on a separate facility claim for recurring services),
ambulance services, diagnostic and screening mammography, the annual
wellness visit providing personalized prevention plan services, and
pass-through drugs and devices that are paid according to section
1833(t)(6) of the Act.
We also exclude preventive services defined in 42 CFR 410.2, ``(1)
[t]he specific services listed in section 1861(ww)(2) of the Act, with
the explicit exclusion of electrocardiograms; (2) [t]he Initial
Preventive Physical Examination (IPPE) (as specified by section
1861(ww)(1) of the Act); and (3) Annual Wellness Visit (AWV), providing
Personalized Prevention Plan Services (PPPS) (as specified by section
1861(hhh)(1) of the Act).'' These preventive services are listed by
their HCPCS codes in Addendum J to this proposed rule and include:
annual wellness visits providing personalized prevention plan services;
initial preventive physical examinations; pneumococcal, influenza, and
hepatitis B vaccines and administrations; mammography screenings; pap
smear screenings and pelvic examination screenings; prostate cancer
screening tests; colorectal cancer screening tests; diabetes outpatient
self-management training services; bone mass measurements; glaucoma
screenings; medical nutrition therapy services; cardiovascular
screening blood tests; diabetes screening tests; ultrasound screenings
for abdominal aortic aneurysm; and additional preventive services as
defined in section 1861(ddd)(1) of the Act. We defined and discussed
these services in detail for hospital billing purposes in the CY 2011
OPPS/ASC final rule with comment period pursuant to coverage and
payment provisions in the Affordable Care Act (75 FR 72013 through
72020).
This proposed policy is consistent with our policy to exclude
preventive services from the proposed ancillary services packaging
policy, will encourage the provision of preventive services, and
provide maximum flexibility to beneficiaries across different sites of
service in receiving preventive services. In addition, the statute does
not permit assessment of beneficiary cost-sharing for most preventive
services, and some receive cost-based payment (75 FR 72013 through
72020; 78 FR 74962). While any beneficiary cost-sharing attributable to
preventive services, if they were packaged, would be very small in
relation to the comprehensive service overall, we believe that we
should exclude these services from the OPPS beneficiary copayment
calculations, as discussed in section II.I. of this proposed rule. We
note that one preventive service (HCPCS code G0102 (Prostate cancer
screening; digital rectal examination)) is proposed for continued
packaging under the OPPS in CY 2015, both broadly and in the context of
comprehensive services. Currently, this HCPCS code is packaged because
it is included in evaluation and management services. We note that
beneficiary cost-sharing is not waived for the service described by
HCPCS code G0102.
Consistent with the policy finalized in the CY 2014 OPPS/ASC final
rule with comment period, we exclude brachytherapy services and pass-
through drugs, biologicals and devices that are separately payable by
statute (78 FR 74868, 74909). In addition, we exclude services assigned
to OPPS status indicator ``F'' that are not paid under the OPPS and are
instead paid on a reasonable cost basis (certain CRNA services,
Hepatitis B vaccines, and corneal tissue acquisition, which is not part
of a comprehensive service for CY 2015). In Addendum J to this proposed
rule, we list the HCPCS codes that describe the services proposed for
exclusion from the comprehensive APC payment bundling policy.
As we discussed in the CY 2014 OPPS/ASC final rule with comment
period, we did not model a budget neutrality adjustment for newly
included services that would otherwise be paid under non-OPPS fee
schedules (for example, therapy and DMEPOS) because the policy would
not be implemented until CY 2015, and the estimated costs were very low
(78 FR 74901). We reflect the inclusion of the proposed new costs
(which remain very low) in our annual adjustment for CY 2015 budget
neutrality (we refer readers to section XXI. of this proposed rule).

Table 6--Proposed Comprehensive APC Payment Bundling Policy Exclusions
for CY 2015
------------------------------------------------------------------------

---------------------------------------------------------------------------
Ambulance services.
------------------------------------------------------------------------
Brachytherapy.
------------------------------------------------------------------------
Diagnostic and mammography screenings.
------------------------------------------------------------------------

[[Page 40943]]

Physical therapy, speech-language pathology and occupational therapy
services--Therapy services reported on a separate facility claim for
recurring services.
------------------------------------------------------------------------
Pass-through drugs, biologicals and devices.
------------------------------------------------------------------------
Preventive services defined in 42 CFR 410.2:
Annual wellness visits providing personalized prevention
plan services.
Initial preventive physical examinations.
Pneumococcal, influenza, and hepatitis B vaccines and
administrations.
Mammography Screenings.
Pap smear screenings and pelvic examination screenings.
Prostate cancer screening tests.
Colorectal cancer screening tests.
Diabetes outpatient self-management training services.
Bone mass measurements.
Glaucoma screenings.
Medical nutrition therapy services.
Cardiovascular screening blood tests.
Diabetes screening tests.
Ultrasound screenings for abdominal aortic aneurysm.
Additional preventive services (as defined in section
1861(ddd)(1) of the Act).
------------------------------------------------------------------------
Self-administered drugs--Drugs that are usually self-administered and do
not function as supplies in the provision of the comprehensive service.
------------------------------------------------------------------------
Services assigned to OPPS status indicator ``F'' (Certain CRNA services,
Hepatitis B vaccines and corneal tissue acquisition).
------------------------------------------------------------------------
Services assigned to OPPS status indicator ``L'' (Influenza and
pneumococcal pneumonia vaccines).
------------------------------------------------------------------------
Certain Part B inpatient services--Ancillary Part B inpatient services
payable under Part B when the primary ``J1'' service for the claim is
not a payable Part B inpatient service (for example, exhausted Medicare
Part A benefits, beneficiaries with Part B only).
------------------------------------------------------------------------

Step 3: Ranking of primary services initial comprehensive APC
assignments. We are proposing to continue to define each hospital
Medicare Part B claim reporting a single unit of a single primary
service assigned to status indicator ``J1'' (approximately 80 percent
of the CY 2013 claims) as a single major procedure claim (78 FR 74871).
We would sum all line item charges for services included in the
comprehensive APC payment, convert the charges to costs, and calculate
the ``comprehensive'' geometric mean cost of one unit of each service
assigned to status indicator ``J1.'' (We note that we use the term
``comprehensive'' to describe the geometric mean cost of a claim
reporting ``J1'' service(s) or the geometric mean cost of a
comprehensive APC, inclusive of all of the items and services in the
comprehensive APC payment bundle). Charges for services that would
otherwise have been separately payable subject to longstanding
adjustments, including the multiple procedure reduction (for example,
HCPCS codes assigned to status indicators ``A,'' ``S,'' ``T,'' or
``V'') would be added to the charges for the primary service. This
process differs from our traditional cost accounting methodology only
in that all such services on the claim are packaged (except certain
services as described above). We would apply our standard data trim,
excluding claims with extremely high primary units or extreme costs.
The comprehensive geometric mean costs are used to establish
resource similarity and, along with clinical similarity, dictate the
assignment of the primary services to the comprehensive APCs. We are
proposing to establish a ranking of each primary service (single unit
only) assigned to status indicator ``J1'' according to their
comprehensive geometric mean costs. For CY 2015, we are proposing not
to assign any add-on codes to status indicator ``J1'' because they are
proposed to be packaged.
For the minority of claims reporting more than one primary service
assigned to status indicator ``J1'' or units thereof (approximately 20
percent of CY 2013 claims), we are proposing to continue to identify
one ``J1'' service as the primary service for the claim based on our
cost-based ranking of primary services. We then assign these multiple
``J1'' procedure claims to the comprehensive APC to which the service
designated as the primary service is assigned. If the reported ``J1''
services reported on a claim map to different comprehensive APCs, we
designate the ``J1'' service assigned to the comprehensive APC with the
highest comprehensive geometric mean cost as the primary service for
that claim. If the reported multiple ``J1'' services on a claim map to
the same comprehensive APC, we designate the most costly service as the
primary service for that claim. This process results in initial
assignments of claims for the primary services assigned to status
indicator ``J1'' to the most appropriate comprehensive APCs based on
both single and multiple procedure claims reporting these services and
clinical and resource homogeneity.
Step 4--Complexity adjustments and determination of final
comprehensive APC groupings. We are proposing to use the proposed
complexity adjustments to provide increased payment for certain
comprehensive services. We are proposing to apply a complexity
adjustment by promoting qualifying ``J1'' service code combinations or
code combinations of a ``J1'' services and certain add-on codes (as
described further below) from the originating comprehensive APC (the
comprehensive APC to which the designated primary service is first
assigned) to a higher paying comprehensive APC in the same clinical
family of comprehensive APCs, if reassignment is clinically appropriate
and the reassignment would not create a 2 times rule violation in the
receiving APC (the higher paying comprehensive APC in the same clinical
family of comprehensive APCs). We are proposing to implement this type
of complexity adjustment when the code combination represents a
complex, costly form or version of the primary

[[Page 40944]]

service according to the following criteria:
Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
Violation of the 2 times rule, that is, the comprehensive
geometric mean cost of the complex code combination exceeds the
comprehensive geometric mean cost of the lowest significant HCPCS code
assigned to the comprehensive APC (cost threshold).
After designating a single primary service for a claim, we are
proposing to evaluate that service in combination with each of the
other procedure codes reported on the claim assigned to status
indicator ``J1'' (or certain add-on codes) to determine if they meet
the complexity adjustment criteria. For new HCPCS codes, we are
proposing to determine initial comprehensive APC assignments and
complexity adjustments using the best data available, mapping the new
HCPCS codes to predecessor codes wherever possible.
Once we have determined that a particular code combination of
``J1'' services (or combinations of ``J1'' services reported in
conjunction with certain add-on codes) represents a complex version of
the primary service because it is sufficiently costly, frequent, and a
subset of the primary comprehensive service overall according to the
criteria described above, we are proposing to promote the complex
version of the primary service as described by the code combination to
the next higher cost comprehensive APC within the clinical family,
unless the APC reassignment is not clinically appropriate, the
reassignment would create a 2 times rule violation in the receiving
APC, or the primary service is already assigned to the highest cost APC
within the comprehensive APC clinical family. We are not proposing to
create new APCs with a geometric mean cost that is higher than the
highest cost comprehensive APC in a clinical family just to accommodate
potential complexity adjustments. Therefore, the highest payment for
any code combination for services assigned to a comprehensive APC will
be the highest paying comprehensive APC in the clinical family.
As discussed below, we are proposing that add-on codes reported in
conjunction with a ``J1'' service would receive complexity adjustments
when a qualifying add-on code is reported in conjunction with the
primary service assigned to status indicator ``J1'' and satisfies the
criteria described above for a complexity adjustment (>=25 claims with
the code combination and no violations of the 2 times rule). Any
combinations of HCPCS codes that fail to meet the proposed complexity
adjustment criteria (frequency and cost thresholds) would not be
identified as complex subsets of the primary procedure and would not be
reassigned to a higher paying comprehensive APC within the same
clinical family of comprehensive APCs. We are providing the proposed
list of qualifying code combinations (including add-on codes) in
Addendum J to this proposed rule (which is available via the Internet
on the CMS Web site).
Complexity Test for Eligible Add-On Codes. We are proposing to
package all add-on codes into the payment for the comprehensive APC.
However, add-on codes that are assigned to the current device-dependent
APCs listed in Table 5 of this proposed rule will be evaluated for a
possible complexity adjustment when they are reported in conjunction
with a designated primary service assigned to status indicator ``J1.''
We are proposing to only evaluate the add-on codes that are assigned to
the current device-dependent APCs for potential complexity adjustments
because we believe that, in certain cases, these procedure codes may
represent services with additional medical device costs that result in
significantly more complex and costly procedures. To determine which
combinations of primary service codes reported in conjunction with the
add-on code may qualify for a complexity adjustment for CY 2015, we are
proposing to apply the proposed frequency and cost criteria discussed
above (25 or more claims and no ``2 times'' rule violations), testing
claims reporting one unit of a single primary service assigned to
status indicator ``J1'' and any number of units of a single add-on
code. If the frequency and cost criteria for a complexity adjustment
are met, and reassignment to the next higher cost APC in the clinical
family is appropriate, we are proposing to make a complexity adjustment
for the code combination; that is, we are proposing to reassign the
primary service code reported in conjunction with the add-on code
combination to a higher cost comprehensive APC within the same clinical
family of comprehensive APCs. If any add-on code combination reported
in conjunction with the primary service code does not qualify for a
complexity adjustment, payment for these services will be packaged. We
are listing the complexity adjustments proposed for add-on code
combinations for CY 2015, along with all of the other proposed
complexity adjustments, in Addendum J to this proposed rule (which is
available via the Internet on the CMS Web site). One primary service
code and add-on code combination (CPT code 37225 and 37233) that
satisfied the frequency and cost criteria is not being proposed for a
complexity adjustment because we believe that these claims are
miscoded. Of the 35 qualifying claims reporting this code combination,
only three claims contained the appropriate base code (CPT code 37228)
for CPT add-on code 37233.
We note that, in response to public comments received, we are
providing in Addendum J to this proposed rule a breakdown of cost
statistics for each code combination that would qualify for a
complexity adjustment (including primary code and add-on code
combinations). Addendum J to this proposed rule also contains summary
cost statistics for each of the code combinations proposed to be
reassigned under a given primary code. The combined statistics for all
proposed reassigned complex code combinations are represented by an
alphanumeric code with the last 4 digits of the designated primary
service followed by ``A'' (indicating ``adjustment''). For example, the
geometric mean cost listed in Addendum J for the code combination
described by CPT code 33208A assigned to C-APC 0655 includes all code
combinations that are proposed to be reassigned to C-APC 0655 when CPT
code 33208 is the primary code. Providing the information contained in
Addendum J in this proposed rule will allow stakeholders the
opportunity to better assess the impact associated with the proposed
reassignment of each of the code combinations eligible for a complexity
adjustment.
(b) Additional Proposed Comprehensive APCs
Several commenters to the CY 2014 OPPS/ASC proposed rule questioned
why we only converted a subset of the device-dependent APCs to
comprehensive APCs (78 FR 74864). We responded that while we were
initially adopting a subset of the most costly device-dependent
services, we may extend comprehensive payments to other procedures in
future years as part of a broader packaging initiative (78 FR 74864).
Upon further review for CY 2015, we believe that the entire set of the
currently device-dependent APCs (after the proposed reorganization and
consolidation of the current device-dependent APCs) are appropriate
candidates for comprehensive APC payment because the device-dependent
APCs not included in last year's

[[Page 40945]]

comprehensive APC payment proposal are similar to the original 29
device-dependent APCs that were proposed as comprehensive APCs in CY
2014. Similar to the original 29 device-dependent APCs for CY 2014 that
were converted to C-APCs, the additional device-dependent APCs that are
being proposed for conversion to C-APCs contain comprehensive services
primarily intended for the implantation of costly medical devices.
Therefore, we are proposing to apply the comprehensive APC payment
policy to the remaining device-dependent APCs for CY 2015.
In addition, since the publication of the CY 2014 OPPS/ASC final
rule with comment period, stakeholders brought several services to our
attention as appropriate candidates for comprehensive APC payment.
Stakeholders recommended that we create comprehensive APCs for these
procedures and technologies or assign them to a previously proposed
comprehensive APC. We agree with the stakeholders. Similar to the other
services designated as C-APCs in CY 2014, these procedures are
comprehensive single-session services with high-cost implantable
devices or high-cost equipment. For CY 2015, we are proposing to
convert the following existing APCs into comprehensive APCs: APC 0067
(Single Session Cranial Stereotactic Radiosurgery) and APC 0351 (Level
V Intraocular Surgery)). APC 0351 only contains one procedure--0308T
(Insertion of ocular telescope prosthesis including removal of
crystalline lens). We also are proposing to assign the CPT codes for
IORT (CPT codes 77424 and 77425) to C-APC 0648 (Level IV Breast and
Skin Surgery) because IORT is a single session comprehensive service
that includes breast surgery combined with a special type of radiation
therapy that is delivered inside the surgical cavity but is not
technically brachytherapy. The HCPCS codes that we are proposing to
assign to these APCs in CY 2015 would be assigned to status indicator
``J1.''
(c) Proposed Reconfiguration and Restructuring of the Comprehensive
APCs
Based on further examination of the structure of the comprehensive
APCs illustrated in the CY 2014 OPPS/ASC final rule with comment period
and an evaluation of their comprehensive geometric mean costs (using
the updated CY 2013 claims data), we are proposing to reorganize,
combine, and restructure some of the comprehensive APCs. The purpose of
this APC restructuring is to improve resource and clinical homogeneity
among the services assigned to certain comprehensive APCs and to
eliminate APCs for clinically similar services, but with overlapping
geometric mean costs. The services we are proposing to assign to each
of the comprehensive APCs for CY 2015, along with the relevant cost
statistics, are provided in Addendum J to this proposed rule. Addendum
J is available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Table 7 below lists the additional 28 APCs proposed under the CY 2015
comprehensive APC policy.
In summary, our proposal to reorganize, combine, and restructure
some of the comprehensive APCs includes the following proposed changes:
Endovascular clinical family (renamed Vascular Procedures,
VASCX). We are proposing to combine C-APCs 0082, 0083, 0104, 0229,
0319, and 0656 illustrated for CY 2014 to form three proposed levels of
comprehensive endovascular procedure APCs: C-APC 0083 (Level I
Endovascular Procedures); C-APC 0229 (Level II Endovascular
Procedures); and C-APC 0319 (Level IV Endovascular Procedures).
Automatic Implantable Cardiac Defibrillators, Pacemakers,
and Related Devices (AICDP). We are proposing to combine C-APCs 0089,
0090, 0106, 0654, 0655, and 0680 as illustrated for CY 2014 to form
three proposed levels of comprehensive APCs within a broader series of
APCs for pacemaker implantation and similar procedures as follows: APC
0105 (Level I Pacemaker and Similar Procedures), a non-comprehensive
APC; C-APC 0090 (Level II Pacemaker and Similar Procedures); C-APC 0089
(Level III Pacemaker and Similar Procedures); and C-APC 0655 (Level IV
Pacemaker and Similar Procedures).
We are proposing to delete the clinical family for Event
Monitoring, which only had one comprehensive APC (C-APC 0680 (Insertion
of Patient Activated Event)) with a single CPT code 33282 as
illustrated for CY 2014. We also are proposing to reassign CPT code
33282 to C-APC 0090, which contains clinically similar procedures.
In the urogenital family, we are proposing two levels
instead of three levels for Urogenital Procedures, and to reassign
several codes from APC 0195 to C-APC 0202 (Level V Female Reproductive
Procedures).
We are proposing to rename the arthroplasty family of APCs
to Orthopedic Surgery. We also are proposing to reassign several codes
from APC 0052 to C-APC 0425, which we are proposing to rename ``Level V
Musculoskeletal Procedures Except Hand and Foot.''
We are proposing three levels of electrophysiologic
procedures, using the current inactive APC ``0086'' instead of APC
0444, to have consecutive APC grouping numbers for this clinical family
and renaming APC 0086 ``Level III Electrophysiologic Procedures.'' In
addition, we are proposing to replace composite APC 8000 with proposed
C-APC 0086 as illustrated in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74870).
We also are proposing three new clinical families: Gastrointestinal
Procedures (GIXXX) for gastrointestinal stents, Tube/Catheter Changes
(CATHX) for insertion of various catheters, and Radiation Oncology
(RADTX), which would include C-APC 0067 for single session cranial SRS.
(3) Public Comments
We received nine public comments in response to the CY 2014 OPPS/
ASC final rule with comment period regarding our policy for
comprehensive APCs from device manufacturers, the hospital community,
and others. The commenters generally supported broader payment bundles,
as long as the payment bundles are appropriately and accurately
structured and provide adequate payment. Commenters expressed continued
concern regarding the data provided in support of the comprehensive APC
policy, the ability to replicate the methodology, and the ability of
comprehensive APCs to adequately pay for complex services for patients.
The comments, which were largely provided in the context of specific
devices or drugs, or in regard to a specific clinical family of
comprehensive APCs, are summarized below and accompanied by our
responses.
Endovascular Family
Comment: Several commenters addressed the endovascular family of
comprehensive APCs. The commenters expressed difficulty replicating
CMS' methodology, especially complexity reassignments for procedures in
this family of services that is historically component-based and
include many new codes and add-on codes. The commenters requested
clarification of how CMS determined comprehensive APC assignments and
complexity adjustments associated with add-on codes and other
procedures.
One commenter expressed concern regarding payment levels for
vascular

[[Page 40946]]

procedures involving multiple vessels. The commenter recommended
changes to the complexity adjustment criteria in order to allow for
adjustments and to provide adequate payment for seven code combinations
of lower extremity endovascular revascularization procedures assigned
to C-APCs 0083 (Level I Endovascular Procedures), 0229 (Level II
Endovascular Procedures) and 0445 (Level III Endovascular Procedures).
The code combinations identified by the commenter were CPT code 37221
and 37222; 37229 and 37232; 37230 and 37232; 37231 and 37232; 37229 and
37234; 37231 and 37233; and 37231 and 37234. Procedures described by
add-on codes (CPT codes 37222, 37232, 37233 and 37234) are furnished in
conjunction with each of these code combinations. The commenter stated
that each of the code combinations failed to meet the CY 2014 finalized
cost threshold for a complexity adjustment (for example, the
comprehensive geometric mean cost of the code combination was more than
two times the comprehensive geometric mean cost of the single major
claims reporting only the primary ``J1'' service), but that some of the
code combinations met the CY 2014 frequency of >=100 claims and >=5
percent of the total claims volume for the primary service, including
CPT codes 37221 and 37222 (Iliac artery revascularization (multiple
vessels) with stent), 37229 and 37232 (Tibial/peroneal artery
revascularization (multiple vessels) with atherectomy), and 37230 and
37232 (Tibial/peroneal artery revascularization (multiple vessels) with
stent). The other four code combinations met the >=5 percent volume
threshold for the claims reporting the primary service, but in the
relevant data year the frequency of these code combinations ranged from
13 to 22 cases, including CPT codes 37231 and 37232 (Tibial/peroneal
artery revascularization (multiple vessels) with stent and
atherectomy), 37229 and 37234 (Tibial/peroneal artery revascularization
with atherectomy (multiple vessels) and with stent (multiple vessels)),
37231 and 37233 (Tibial/peroneal artery revascularization with stent
and atherectomy (multiple vessels)), and 37231 and 37234 (Tibial/
peroneal artery revascularization with stent (multiple vessels) and
atherectomy). In no case did the geometric mean cost of the code
combinations exceed the geometric mean cost of the single ``J1'' claims
for the primary service alone by at least two times.
To qualify these code combinations for a complexity adjustment, the
commenter recommended using a 1.5 instead of 2 times rule, patterned
after the 50 percent multiple procedure reduction and based on the
inability of hospitals to garner 100 percent efficiency when performing
multiple procedures. The commenter stated that this slightly lower cost
threshold would still be significant and, therefore, would
appropriately allow complexity reassignment only for cases that are
meaningfully underpaid under the threshold. (We received similar
inquiries from other commenters regarding our application of the
statutory ``2 times'' rule that are discussed below.)
In addition, the commenter recommended that CMS omit the CY 2014
required claim frequency threshold of greater than 100 claims with the
specific combination of procedure codes. The commenter believed that
the frequency threshold requiring that complex claims for a particular
procedure code combination exceed 5 percent of the total volume of
claims reporting the primary service alone is sufficient to ensure
additional payment for only higher volume cases, and that an additional
frequency threshold is not necessary. The commenter believed that the
threshold should not depend on the procedures' frequency in prior
years, which can fluctuate significantly.
The commenter asked for clarification regarding our treatment of
add-on codes, recommending that all add-on codes assigned to the
endovascular comprehensive APCs be equally eligible for complexity
adjustments. The commenter noted that Table 10 of the CY OPPS/ASC 2014
final rule with comment period (78 FR 74889 through 74900) listed
complexity adjustments for only a small number of add-on codes (for
example, certain drug-eluting stent codes), and did not list complexity
adjustments for any of the add-on codes for peripheral artery
revascularization associated with procedures assigned to C-APCs 0083,
0229 and 0445. The commenter could not assess whether only some add-on
code combinations were considered for complexity adjustments, or
whether all combinations were considered but eliminated due to not
meeting the cost or frequency criteria.
Similarly, another commenter requested additional information
regarding application of the complexity criteria to all of the
percutaneous coronary intervention (PCI) related code combinations in
Table 10 of the CY 2014 OPPS/ASC final rule with comment period. In
particular, the commenter was not sure whether the C9600-C9602 code
combination required intervention in an additional vessel, whether a
second stent in a new vessel is required, or whether one stent and
rotational atherectomy together with an additional stent in the same
vessel would qualify the procedure(s) for a complexity adjustment. The
commenter believed that it would not be appropriate to apply an
adjustment only when the second intervention was in a separate vessel,
where a procedure involving placement of a stent in one vessel and a
second stent in a branch of the same vessel would not be eligible for
complexity adjustment, but placement of two stents in two separate
vessels would be eligible because the resources required are
potentially very similar. Regarding claims with more than one unit of
HCPCS code C9606, the commenter was not sure whether the second
revascularization procedure must involve a second episode of acute
myocardial infarction (AMI) in the same outpatient encounter, or
whether the complexity adjustment would apply when there is a single
episode of AMI in two separate vessels or in the same vessel.
Regardless of CMS' intent, the commenter questioned why interventions
involving patients with AMI or total chronic occlusions are mapped to
the same APCs as those that involve patients with lower levels of
complexity.
Response: We begin by clarifying how we treated add-on codes, which
are particularly common in the vascular family of comprehensive APCs,
in modeling the CY 2014 payments for comprehensive APCs. The CPT
Editorial Panel defines add-on codes as codes that describe procedures
that are commonly carried out in addition to the primary procedure
performed, listing add-on codes in Appendix D of the CPT codebook (2014
CPT Codebook Professional Edition, page xiv). The CPT codebook states
that add-on codes are always performed in addition to the primary or
``base'' service or procedure and must never be reported as a stand-
alone code. Add-on codes can also be Level II HCPCS codes, such as
HCPCS codes C9601, C9603, C9605 and C9608, which are the drug-eluting
stent insertion add-on codes that parallel the non-drug eluting stent
insertion add-on CPT codes 92929, 92934, 92938 and 92944, respectively.
In Table 15 of the CY 2014 OPPS/ASC final rule with comment period, we
listed all add-on codes that are currently assigned to device-dependent
APCs (78 FR 74944).
Historically and in most cases, the OPPS assigned add-on codes to
the same APC as the base code and applied a multiple procedure
reduction when

[[Page 40947]]

these codes were reported with the base code. Because add-on codes
represent an extension or continuation of or are adjunctive to a
primary service, beginning in CY 2014, we unconditionally packaged add-
on codes, except for drug administration services, and add-on codes
assigned to device-dependent APCs due to the delayed implementation of
the comprehensive APC policy until CY 2015 (78 FR 74943). We discussed
in that same final rule with comment period how this policy will
improve the accuracy of OPPS ratesetting, as we would no longer be
reliant on incorrectly coded single add-on code claims to set OPPS
payment rates for add-on codes (78 FR 74942).
In the CY 2014 OPPS/ASC proposed rule, we proposed to
unconditionally package add-on codes assigned to comprehensive APCs and
to assign the procedures to status indicator ``N'' (78 FR 43559). They
were not proposed as primary services assigned to status indicator
``J1'' because they would always be furnished adjunctive to another
primary service assigned status indicator ``J1.'' We had not proposed a
complexity adjustment, so there was no need to consider whether the
multiple procedure claims that correctly report an add-on code should
be promoted to a higher comprehensive APC.
In the CY 2014 OPPS/ASC final rule with comment period, we
designated certain especially costly add-on codes as primary services
assigned to status indicator ``J1.'' (We refer readers to Table 9 in
the 2014 OPPS final rule with comment period (78 FR 74873 through
74883), which provided the APC assignments for HCPCS codes proposed to
be assigned to status indicator ``J1'' for CY 2014 and were displayed
for illustration.) Other add-on codes assigned to the device-dependent
APCs illustrated as comprehensive APCs were packaged because of the CY
2014 policy to package most add-on codes under the OPPS. Because these
packaged add-on codes were not sufficiently costly, they were not
designated as primary ``J1'' services. As a result, for example, CPT
codes 37222, 37232, 37233, and 37234 were not assigned status indicator
``J1'' in the CY 2014 OPPS/ASC final rule with comment period and
instead were packaged similar to almost all of the other add-on codes.
However, for CY 2014, because the implementation of the comprehensive
APC policy was delayed until CY 2015, payment for services described by
add-on codes assigned to a device-dependent APC are paid separately
under the OPPS (78 FR 74943).
In response to the comments we received on the CY 2014 OPPS/ASC
final rule with comment period, we considered ways to refine and
simplify the complexity test when add-on codes that are currently
assigned to the device-dependent APCs are reported with primary
services proposed to be assigned to comprehensive APCs for CY 2015 in
this proposed rule. Because services described by add-on codes are by
definition adjunctive and furnished in addition to primary services
assigned status indicator ``J1,'' we believe that the add-on codes
should not be classified as primary services themselves because they
cannot serve as the primary service provided to a patient. However, we
continue to believe that we should recognize the additional cost and
complexity of certain cases involving procedures described by certain
especially costly add-on codes that are currently assigned to a device-
dependent APC in CY 2014 because like certain combinations of ``J1''
procedure codes, primary service code and add-on code combinations can
represent more complex and significantly more costly variations of the
primary service. Therefore, we are proposing to revert to our original
CY 2014 proposal for comprehensive APCs in which we would not consider
any add-on codes that are currently assigned to device-dependent APCs
as primary services assigned to status indicator ``J1'' (78 FR 43559).
For CY 2015, we are proposing to allow certain combinations of primary
service codes and especially costly add-on codes representing a more
costly, complex variation of a procedure to trigger a complexity
adjustment. We refer readers to section II.A.2.e.(3)(a) of this
proposed rule for a detailed description of our proposed new
methodology of evaluating primary service procedures reported in
conjunction with add-on codes for complexity adjustments.
Also, in evaluating the comprehensive APC assignments based on CY
2013 claims data, we are proposing to consolidate and restructure the
vascular comprehensive APCs, in addition to other APCs. We refer
readers to section II.A.2.e.(3)(c) of this proposed rule for a
discussion of the proposed reconfiguration, and to Addendum J to this
proposed rule for the updated cost statistics and proposed complexity
adjustments for the services to address the commenters' concerns. We
are proposing complexity adjustments for several of the services
indicated by the commenters, although some of the services continue to
fail one or both of the proposed complexity criteria even under the
proposed relaxed frequency and cost thresholds.
We agree with the commenters that we should revise the criteria for
complexity adjustments. The delay in implementation afforded additional
time for CMS and commenters to further analyze and consider the cost
data. After further analysis and consideration of the public comments
in response to the CY 2014 OPPS/ASC final rule with comment period, we
believe that the complexity adjustment criteria in that final rule with
comment period were too restrictive. None of the code combinations
illustrated as qualifying for complexity adjustments in the CY 2014
OPPS/ASC final rule with comment period met all of the frequency and
cost thresholds set forth in the CY 2014 OPPS/ASC final rule with
comment period, and no code combinations would qualify under those
criteria in CY 2015 using the CY 2013 cost data. However, we believe
that especially costly and sufficiently frequent code combinations
should qualify for a complexity adjustment.
In calculating the geometric mean costs for comprehensive APC
services using the claims data for CY 2013, we noted that many of the
comprehensive APCs in the same clinical family illustrated in the CY
2014 OPPS/ASC final rule with comment period had similar or overlapping
comprehensive geometric mean costs, meaning that the geometric mean
costs were close to one another or that the range of costs for
procedures assigned to one comprehensive APC significantly overlapped
the range of costs for procedures assigned to another comprehensive APC
in the same clinical family. We are proposing to restructure and
consolidate these comprehensive APCs, as further described in section
II.A.2.e.(3)(c) of this proposed rule, in order to better distinguish
service groups having different resource requirements. The proposed
restructuring and consolidation eliminates the need for many of the
complexity adjustments illustrated in the CY 2014 OPPS/ASC final rule
with comment period because we are proposing to promote the primary
service to a higher cost comprehensive APC for CY 2015 as compared to
its illustrated comprehensive APC assignment for CY 2014. For example,
for CY 2014, we illustrated complexity adjustments for the CPT code
combinations 37228 and 35476, 37228 and 37220, 37228 and 37224, and
multiple units of CPT code 37228 from C-APC 0083, the primary service
CPT code 37228 was assigned with a comprehensive geometric mean cost of

[[Page 40948]]

$4,230 to C-APC 0104 with a comprehensive geometric mean cost of
$8,554. For CY 2015, we are proposing to consolidate C-APCs 0104 and
0229, and to retain C-APC 0229. Considering our proposed initial
assignment of CPT code 37228 to C-APC 0229, CPT code 37228 has a
proposed CY 2015 geometric mean cost of $7,250 and C-APC 0229 has a CY
2015 proposed comprehensive geometric mean cost of approximately
$9,998.
We agree with the commenters that complexity adjustments should be
based upon criteria that demonstrate that the complex combination is
both sufficiently frequent and sufficiently costly such that a payment
adjustment is warranted within a similar clinical family, if possible.
Our reliance on clinical comparisons of each code combination in
determining the complexity adjustments illustrated for CY 2014 likely
contributed to the difficulty experienced by commenters in reproducing
the results of the policy. Accordingly, we further analyzed the cost
data in order to identify viable alternatives for complexity adjustment
criteria. For CY 2015, we are proposing the following new complexity
adjustment criteria to evaluate HCPCS code combinations for complexity
adjustments:
Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
Violation of the ``2 times'' rule; that is, the
comprehensive geometric mean cost of the ``complex'' code combination
exceeds the comprehensive geometric mean cost of the lowest significant
HCPCS code assigned to the originating comprehensive APC by at least 2
times (cost threshold). (``Significant'' means frequency >1000 claims,
or frequency >99 claims and contributing at least 2 percent of the
single major claims used to establish the originating comprehensive
APC's geometric mean cost, including the claims reporting the complex
code pair).
To illustrate how this second criterion is applied, for example,
consider CPT code 33208 as the primary service reported in conjunction
with HCPCS code C9600. CPT code 33208 is assigned to APC 0089. The
lowest cost significant procedure assigned to APC 0089 is CPT code
33228, with a geometric mean cost of $8,669. There are 43 instances of
the code combination of CPT code 33208 and HCPCS code C9600 in the CY
2013 claims data with a geometric mean cost of $21,914, which exceeds
the geometric mean cost of CPT code 33228 ($8,669) by greater than two
times ($21,914 > $17,338). Therefore, the code combination of CPT code
33208 and HCPCS code C9600 is assigned through a complexity adjustment
to APC 0655, which is the next higher cost APC in the AIDCP clinical
family of comprehensive APCs.
Whereas the criteria finalized in the CY 2014 OPPS/ASC final rule
with comment period evaluated the marginal cost contribution of the
additional procedure in comparison to the designated primary service
alone (78 FR 74886), the proposed complexity adjustment criterion would
employ our standard ``2 times'' rule (discussed in section III.B.2. of
this proposed rule), comparing the costs associated with the code
combination to the cost of other services assigned to the same
comprehensive APC. We are proposing to make a complexity adjustment by
reassigning a particular code combination to a higher cost
comprehensive APC if there are 25 or more claims reporting the code
combination in the data year and their comprehensive geometric mean
cost exceeds the geometric mean cost of the lowest significant HCPCS
code in the initial comprehensive APC by more than two times according
to our standard ``2 times'' rule comparison. By ``significant HCPCS
code,'' we mean our standard threshold for volume significance of the
other codes being compared to the complex code combinations requiring a
frequency >1000; or frequency >99 and contributing at least 2 percent
of the single major claims used to establish the comprehensive APC
geometric mean cost, including the claims reporting the complex code
pair). We are proposing to apply the same test in assessing whether the
complexity reassignment would create a ``2 times'' rule violation in
the newly assigned comprehensive APC. However, if the claims comprise
significant volume and violate the ``2 times'' rule cost differential,
we are proposing to consider alternative comprehensive APC assignments,
such as not making a complexity adjustment for the code combination, or
not assigning the case to a higher cost APC within the same clinical
family. In doing so, we also would require the complex code combination
to be clinically similar to other procedures assigned to the
comprehensive APC to which the complex code combination is reassigned.
This is usually the case because complexity adjustments are confined to
higher cost APCs within the same clinical family.
Comment: One commenter questioned the assignment of procedures
within C-APCs 0083 (Level I Endovascular Procedures), 0229 (Level II
Endovascular Procedures) and 0319 (Level IV Endovascular Procedures).
The commenters believed that some of the procedures assigned to C-APC
0083 should be assigned to C-APC 0229, and stated that the adjunctive
service rather than the primary service appeared to be driving the
comprehensive APC mapping, specifically CPT code combinations 35476 and
37205, 35475 and 37205, 35471 and 37205, and 37220 and 37205.
Response: CPT code 37205 was deleted for CY 2014, and we are
proposing to cross-walk CPT code 37205 to CPT code 37236 for CY 2015
based on the code descriptors. Until claims data are available for new
codes, we are proposing to continue to make comprehensive APC
assignments based on our best assessment of clinical and resource
similarity (as we do for standard APC assignments), including examining
the historical cost data for any predecessor code(s). Applying our
proposed CY 2015 complexity adjustment criteria (significant volume of
25 or more complex claims and a ``2 times'' rule violation assessment
relative to the lowest service within the originating comprehensive
APC) would result in several complexity adjustments related to CPT code
37205, which are listed in Addendum J to this proposed rule (which is
available via the Internet on the CMS Web site). We are proposing to
provide these complexity adjustments when CPT code 37236 is reported in
lieu of CPT code 37205 for each of these code combinations.
Comment: One commenter expressed concern regarding payment for
certain anticoagulant and other drugs that are commonly furnished with
services assigned to the endovascular family of comprehensive APCs,
particularly Angiomax, Cleviprex, Recothrom and Agratroban. The
commenter asked CMS to clarify that the proposed definition of a
comprehensive APC includes adjunctive supplies, as well as adjunctive
services. The commenter asserted that the proposed comprehensive APC
payment methodology violates the OPPS statutory requirements for
separate payment of specified covered outpatient drugs (SCODs) and the
``2 times'' rule. The commenter stated that CMS did not discuss
application of the ``2 times'' rule in the statutory context, and noted
that by design CMS selected primary procedures that were far more
costly than the other services included in the comprehensive APC
payment bundle. The commenter also asserted that the comprehensive APC
policy is premature because it lacks clinical quality metrics and other
safeguards for quality of outpatient care. The commenter

[[Page 40949]]

recommended alternative policies to incentivize cost-effectiveness,
such as required data submission on hospital treatment decisions and
making hospitals whole for use of cost-effective items and services
including drugs. The commenter did not believe that Medicare's three
hospital inpatient quality incentive programs include measures that are
relevant for the comprehensive device-dependent procedures when they
are furnished on an outpatient basis.
Response: In finalizing our CY 2014 policy to package drugs and
biologicals that function as surgical supplies, we explained that CMS
has the statutory authority to package the payment of any drugs,
biologicals, and radiopharmaceuticals, including those that meet the
statutory definition of a SCOD (78 FR 74931). Also, in finalizing our
CY 2008 policy packaging all diagnostic radiopharmaceuticals and
contrast agents, except those with pass-through status, we explained
that CMS has the statutory authority to package the payment of any
drugs, biologicals, and radiopharmaceuticals, including those that meet
the statutory definition of a SCOD (72 FR 66766).
Our proposed definition of a comprehensive APC includes adjunctive
supplies, as well as adjunctive services. In the CY 2014 OPPS/ASC final
rule with comment period, we packaged all drugs, biologicals, and
radiopharmaceuticals into the comprehensive APC payment, with the
exception of certain drugs that are usually self-administered (SADs)
and, therefore, not covered under Medicare Part B. We applied our
existing policy that defines certain SADs as hospital supplies paid
under the OPPS, such that these SADs would be included in the
comprehensive APC payment bundle (78 FR 74868). For CY 2015, we are
proposing to retain these aspects of our comprehensive APC policy. We
are proposing to continue to package all drugs, biologicals, and
radiopharmaceuticals into the comprehensive APC payment, including
those SADs defined as hospital supplies, which are packaged in the OPPS
(Medicare Benefit Policy Manual Chapter 15, Section 50.2.M, available
at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf). Therefore, beginning in CY 2015, Angiomax,
Cleviprex, Recothrom, Agratroban, and any other drugs, biologicals, and
radiopharmaceuticals (except for SADs that are not considered hospital
supplies) would be packaged when administered to a patient receiving a
comprehensive service. There would be no separate payment for these
non-pass-through drugs under the OPPS regardless of cost or any other
factors.
We appreciate the commenters' concerns regarding ensuring the
quality of hospital outpatient care. In section XIII. of this proposed
rule, we discuss the Hospital OQR Program for CY 2015. To the extent
that inpatient quality measures would not apply to the comprehensive
services proposed for CY 2015, stakeholders should suggest specific
measures that would be relevant in response to the section of the
proposed rule dealing with hospital outpatient quality measures.
Automatic Implantable Cardiac Defibrillators and Pacemakers and Related
Devices (AICDP)
Comment: One commenter asked CMS to create a comprehensive APC for
Cardiac Resynchronization Therapy Pacemaker (CRT-P) in the absence of
defibrillation (CPT code 33225) because the comprehensive APC packaging
policy decreases payment relative to the multiple procedure reduction
policy. The commenter requested a complexity adjustment when CPT code
33225 is reported in combination with CPT code 33206, 33207, 33208, or
33214 because of their high mean cost relative to all other pacemaker
insertion procedures assigned to C-APC 0089 (Level III Insertion/
replacement of Permanent Pacemaker) and C-APC 0655 (Insertion/
Replacement/Conversion of a Permanent Dual Chamber Pacemaker or Pacing
Electrode).
Response: CPT code 33225 is an add-on code that was not assigned to
status indicator ``J1'' in the CY 2014 OPPS/ASC final rule with comment
period. For CY 2015, we are proposing to continue packaging this
service, but to provide a complexity adjustment when the service is
furnished in conjunction with CPT code 33207, 33208, or 33228 from C-
APC 0089 to C-APC 0655 because these code combinations meet the
proposed complexity adjustment criteria. The code combinations of CPT
33206 and 33225 and 33214 and 33225 meet the proposed cost threshold,
but not the proposed frequency threshold and, therefore, we do not
believe that we should provide complexity adjustments for these code
combinations. Services that are reported fewer than 25 times a year do
not comprise significant volume and are not sufficiently frequent
service combinations in the context of the proposed comprehensive APC
policy and proposed complexity adjustment criteria and, therefore, do
not qualify for a complexity adjustment.
Neurostimulators
Comment: One commenter recommended splitting C-APC 0318 (Level II
Implantation of Neurostimulator) to achieve a narrower cost range,
placing vagal nerve and spinal cord stimulation in its own
comprehensive APC and creating a separate comprehensive APC for other
neurostimulator devices. The commenter also recommended reassigning CPT
code 61886 to C-APC 0039 (Level I Implantation of Neurostimulator) to
place all single generator procedures in the lower APC. In contrast,
another commenter supported the complexity adjustments and the final
comprehensive APC structure proposed for the neurostimulator family.
The commenter stated in response to the CY 2014 OPPS/ASC final rule
with comment period that appropriately differentiating payment rates
for less-intensive pulse generator replacements from the more intensive
initial system implants, which include placement of lead array(s), and
also appropriately distinguishing payment rates between simpler less
resource-intensive nerve stimulation procedures (for example, sacral
nerve stimulation) and more complex resource-intensive nerve
stimulation procedures (for example, spinal cord stimulation) is most
appropriate. This commenter supported mapping the spinal cord
stimulation system implants into C-APC 0318 because these implants have
similar procedural complexity and resource utilization with the other
procedures assigned to C-APC 0318.
Response: Some of the procedure codes assigned to the different
neurostimulator comprehensive APCs illustrated for CY 2014 had similar
or overlapping costs, in particular C-APCs 0040 and 0061, which had
comprehensive geometric mean costs of $4,715 and $6,567 respectively.
Having also updated the APCs based on CY 2013 cost data, for CY 2015,
we are proposing to restructure the neurostimulator comprehensive APCs
from four comprehensive APCs to three comprehensive APCs within a
single series of APCs titled ``Neurostimulator and Related
Procedures.'' We are proposing to begin this series with the non-
comprehensive APC 0688 followed by the three levels of comprehensive
APCs for neurostimulator procedures as follows: C-APC 0061 (Level II
Neurostimulator and Related Procedures); C-APC 0039 (Level III
Neurostimulator and Related Procedures); and C-APC 0318 (Level IV
Neurostimulator and Related

[[Page 40950]]

Procedures). This proposed reconfiguration would establish groups of
neurostimulator device-related services that have different and
nonoverlapping cost ranges while applying the ``2 times'' rule,
including several complexity adjustments for complex code combinations.
We believe that the procedures proposed for assignment to C-APC 0318
for CY 2015 are clinically similar and similar in associated resources
and, therefore, should be assigned to the same comprehensive APC. We
also believe that CPT code 61886 more appropriately belongs in the
higher level C-APC 0318 rather than C-APC 0039 based on its cost and
complexity because it describes implantation of a cranial
neurostimulator with connection to two or more electrode arrays. We do
not believe that CPT code 61886 should be assigned to C-APC 0039 with
less complex procedures.
Urogenital
Comment: Several commenters addressed the urogenital clinical
family of comprehensive APCs. One commenter recommended that CMS exempt
C-APC 0202 (Level VII Female Reproductive Procedures) from the
comprehensive APC policy, due to the variability in geometric mean
costs between cases with a single ``J1'' procedure and cases with
multiple procedures furnished during the same surgical session (not
otherwise specified). Alternatively, the commenter recommended
different complexity criteria that would reassign the claims assigned
to C-APC 0202 (Level VII Female Reproductive Procedures) to C-APC 0385
(Level I Urogenital Procedures) or C-APC 0386 (Level II Urogenital
Procedures). The commenter suggested that we make a complexity
adjustment for any claim with a service assigned to status indicator
``J1'' and at least two additional surgical procedures. The commenter
also suggested the following possible alternative cost criteria: (1)
Using percent of total device costs reported on a claim instead of the
presence of a second service assigned status indicator ``J1'' to assess
costliness; or (2) using a cost threshold of 1.5 instead of 2 times the
cost of single claims for the primary service. The commenter also
suggested a volume threshold of 50 instead of 100 claims. Finally, the
commenter asked CMS to clarify how it determined uncommon clinical
scenarios or extreme resource values for the complexity adjustment, and
what data or information qualifies code combinations for reassignment.
Response: The commenter was not clear regarding which surgical
procedures we should count or consider in determining complexity
adjustments, for example specific services assigned status indicator
``J1'' that do not meet our proposed complexity criteria or surgical
procedures that are not assigned to a comprehensive APC. It was not
clear whether the commenters' recommendations were mutually exclusive,
or recommended in some combination with one another. Also, it was not
clear whether the commenter was suggesting that any two surgical
procedures, even those not assigned to a comprehensive APC, should
qualify a claim for complexity adjustment. As discussed above, for CY
2015, we are proposing different complexity adjustment criteria than
those that were discussed in the CY 2014 OPPS/ASC final rule with
comment period. As discussed above, for CY 2015, we are proposing less
stringent complexity adjustment criteria--codes combinations, either
two ``J1'' service codes or a ``J1'' service code and an add-on code
that is eligible for a complexity adjustment must appear at least 25
times in the claims data and violate the 2 times rule. Extremely few
claims involve the provision of more than two surgical procedures.
Therefore, we do not believe that it is necessary or appropriate to
complicate our proposed methodology by attempting to isolate marginal
costs associated with other packaged surgical procedures. The
complexity adjustment (both in the CY 2014 OPPS/ASC final rule with
comment period and proposed in this CY 2015 OPPS/ASC proposed rule)
would reassign all claims reporting a qualifying code combination,
whether or not additional (third, fourth, or subsequent) services
assigned to a comprehensive APC appear on the claim.
Stem Cell Transplant
Comment: One commenter recommended that CMS apply the comprehensive
service concept to outpatient stem cell transplant (SCT) because the
procedures occur in small volume and, due to their clinical nature, are
almost always multiple procedure claims that are unusable under the
standard ratesetting methodology. Specifically, the commenter requested
that CMS create three comprehensive APCs for autologous outpatient SCT,
where donor and recipient are the same; allogeneic-related outpatient
SCT, where donor and recipient are biologically related; and
allogeneic-unrelated transplants, where donor and recipient are
biologically unrelated. The commenter stated that the costs associated
with these three types of outpatient SCT vary significantly according
to the donor search and acquisition costs, which are relatively modest
for autologous outpatient SCT, $5,000 to $20,000 for allogeneic-related
outpatient SCT, and $30,000 to $80,000 for allogeneic unrelated
outpatient SCT. The commenter discussed how the low CCR associated with
revenue code 0819 (Blood and Blood Products), which must be used to
report donor search and acquisition charges, makes providers hesitant
to report high donor charges and contributes to incorrectly coded
claims.
Due to inaccuracies in cost reporting and exclusion of certain
multiple procedure claims from ratesetting, the commenter believed that
outpatient SCT payment is based on only a handful of incorrectly and
incompletely coded single procedure claims. The commenter also believed
that comprehensive APCs would improve payment adequacy by allowing the
use of multiple procedure claims, provided CMS also create a separate
and distinct CCR for donor search and acquisition charges so that they
are not diluted by lower cost services. Alternatively, the commenter
suggested that CMS require transplant centers to report their actual
costs on outpatient claims for allogeneic SCT, and apply a default CCR
of 1.0 for claims reporting the outpatient allogeneic procedure CPT
code.
Response: For CY 2015, we are proposing to continue to pay
separately for allogeneic transplantation procedures under APC 0111
(Blood Product Exchange) and APC 0112 (Apheresis and Stem Cell
Procedures), with proposed rule geometric mean costs of approximately
$1,127 and $3,064, respectively. Allogeneic harvesting procedures,
which are performed not on the beneficiary but on a donor, cannot be
paid separately under the OPPS because hospitals may bill and receive
payment only for services provided to the Medicare beneficiary who is
the recipient of the SCT and whose illness is being treated with the
transplant. We stated in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60575) and in section 231.11 of Chapter 4 of the Medicare
Claims Processing Manual (Pub. 100-04) that payment for allogeneic stem
cell acquisition services (such as harvesting procedures and donor
evaluation) is packaged into the payment for the transplant procedure
(either the Medicare Severity--Diagnosis Related Group (MS-DRG) when
the transplant is performed inpatient, or the APC when the transplant
is performed outpatient). Hospitals should report all allogeneic

[[Page 40951]]

outpatient SCT acquisition charges on the recipient's outpatient claim
as uncoded charges under revenue code 0819.
While converting the outpatient SCT APCs to comprehensive APCs
would reduce to small degree the differential between the OPPS payment
rate and the costs as represented in the public comment we received, it
would only provide a relatively modest increase in payment, consistent
with our previous data studies on this issue. We believe that we need
to further examine the costs associated with this service and how they
could best be captured for payment ratesetting purposes in the OPPS.
This service remains low volume in the HOPD, but we will continue to
monitor this issue and the volume of outpatient allogeneic transplant
services.
General Comments on Comprehensive APCs
We also received several general comments that were not related to
specific comprehensive APCs, as described below.
Comment: Many of the commenters recommended continued refinement of
the comprehensive APC payment methodology to better identify and
recognize the costs associated with complex services and patients. Some
commenters suggested developing a list similar to the IPPS listing of
complications and comorbidities (CCs) and major complications and
comorbidities (MCCs) to identify complications and comorbidities
associated with higher acuity patients in the outpatient setting. Other
commenters suggested additional reimbursement when additional services,
testing, or drugs are needed for patients with certain diagnoses (for
example, end stage renal disease), or patients needing extended
recovery time following a procedure in order to assess or treat
comorbidities and ensure safe discharge. One commenter asserted that
there is a critical difference between ``complex'' patients and
``complex'' procedures. The commenter stated that because the CY 2014
complexity adjustment test is multiple procedure-based rather than
patient severity-based similar to the MS-DRG system, it is incredibly
difficult for two procedures to meet the complexity test, particularly
the 2 times rule requirement. The commenter believed that the cost
threshold for the complexity test is not commensurate with the marginal
payment increase.
Response: We believe that some of these commenters misunderstood
the complexity adjustment criteria described in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74886). The complexity adjustment
criteria for the illustrated CY 2014 payment rates compared the
comprehensive cost of the complex claims to the comprehensive cost of
the single major claims for the primary service, not the comprehensive
geometric mean cost of the initial comprehensive APC (78 FR 74886).
However, for CY 2015, we believe that it would be more appropriate to
use the 2 times rule, which compares the geometric mean cost of the
code combination to the geometric mean cost of the lowest cost service
assigned to the comprehensive APC with significant claims volume (>1000
single claims or >99 single and at least 2 percent of the total volume
of single claims assigned to the APC). For further description of the 2
times rule, we refer readers to section III.B of this proposed rule. We
agree with the commenter that the CY 2014 complexity adjustment cost
criterion was too high of a threshold. Therefore, we are proposing to
change the cost criterion for the complexity adjustment to twice the
geometric mean cost of the lowest cost service having significant
claims volume (as described above) in the APC.
Section 1833(t)(2) of the Act provides a procedure-based payment
methodology for the OPPS, which is unlike the IPPS that makes payments
based on both diagnoses and procedures. Currently OPPS payments are not
based on patient severity or diagnosis like under the IPPS. The
complexity adjustment test is procedure-based because the current OPPS
payment methodology is procedure-based.
Comment: Several commenters recommended alternative complexity
adjustment criteria, including a cost threshold of 1.5 instead of 2
times; a numeric volume test of 50 claims instead of 100, or omitting
the numeric test; or basing the complexity adjustment on the number of
surgical procedures on a claim (any claim with a service assigned to
status indicator ``J1'' and at least two additional surgical
procedures). Some commenters asserted generally that there should be
tests other than the presence of two or more ``J1'' services on a
claim. In addition, most of the commenters requested further
information regarding how CMS determined complexity reassignments,
including treatment of add-on codes. The commenters requested that CMS
provide an addendum to the OPPS rule containing this information.
Response: As discussed above, for CY 2015, we are proposing less
stringent frequency and cost thresholds for complexity adjustments. In
addition, in response to public comments, we are presenting the
proposed complexity adjustment cost information in a more detailed
format in Addendum J to this proposed rule, rather than in long tables
within the preamble text.
Comment: Several commenters requested that CMS maintain the device-
dependent edits to ensure accurate cost reporting and attribution. One
commenter requested in particular that CMS maintain the device-
dependent edits for prostate cryoablation (CPT code 55873),
percutaneous renal cryoablation, and other urogenital services to
ensure accurate coding and payment. The commenter believed that
comprehensive groupings will exacerbate reporting error if CMS
discontinued the edits.
Response: We appreciate the commenters' concerns regarding accurate
coding, and we understand that providers sometimes fail to itemize
costs for packaged services separately on claims for the primary
service(s). Our policy for comprehensive APCs reduces the need for
separate itemization of packaged services by establishing clear
packaging allocation rules at the hospital claim level. However, as we
have observed in attempting to assess the marginal cost attributable to
add-on codes and other packaged services, it is best if CMS can
reliably identify and isolate these costs using claims data. Therefore,
we are continuing to require hospitals to report all charges, including
packaged charges, on claims to ensure all costs are reported and enable
reliable cost estimation for packaged items and services. It is
important that hospitals report all HCPCS codes consistent with their
descriptors, CPT and/or CMS instructions, and correct coding
principles, and that they report all charges for all services they
furnish. We are proposing to package all device-dependent add-on codes,
although we would evaluate their additional cost for purposes of
applying the proposed complexity adjustment criteria.
Instead of eliminating all device-dependent edits, beginning in CY
2015, we are proposing to continue to require the reporting of a device
code for all procedures that are currently assigned to a device-
dependent APC in CY 2014. However to reduce hospitals' administrative
burden, we are proposing that the device claims edit would be satisfied
by the reporting of any medical device C-code currently listed among
the device edits for the CY 2014 device-dependent APCs. A particular
device C-code or codes would no longer be required for a particular
procedure. We

[[Page 40952]]

refer readers to section IV.B. of this proposed rule for a detailed
discussion of this proposed policy.
Comment: Several commenters recommended that CMS conduct a
demonstration to confirm estimated savings, or delay the comprehensive
APC payment policy pending further study.
Response: The comprehensive APC payment policy was finalized in the
CY 2014 OPPS/ASC final rule with comment period with delayed
implementation until CY 2015, and we do not believe that further delay
is necessary. We also do not believe that a demonstration is necessary.
We delayed implementation until CY 2015, and the public comments we
received on the CY 2014 OPPS/ASC final rule with comment period do not
reflect a need for fundamental changes to the policy or further delay
in implementing the policy. The comprehensive APC policy is another
step towards making the OPPS more of a prospective payment system and
less of a fee schedule-type payment system with separate payment for
each individually coded service. The rationale and statutory authority
for the comprehensive APC policy was fully explained in the CY 2014
OPPS/ASC final rule with comment period (78 FR 74861). The public
comments were largely supportive of the comprehensive APC payment
methodology, provided we improve the transparency and reproducibility
of the methodology and refine the complexity adjustments for the most
costly, complex cases. These complex cases are mostly confined to three
clinical families (endovascular, pacemaker/defibrillator, and
neurostimulator). In response to comments and additional analysis
including the new CY 2013 claims data, we are proposing to refine the
complexity adjustment criteria discussed in section II.A.2.e.(3)(a) of
this proposed rule.
(4) Proposed List of CY 2015 Comprehensive APCs and Summary of Proposed
Policies
In summary, we are proposing to continue to define a comprehensive
service as a classification for the provision of a primary service and
all adjunctive services and supplies reported on the hospital Medicare
Part B claim, with few exceptions, resulting in a single beneficiary
copayment per claim. The comprehensive APC payment bundle would include
all hospital services reported on the claim that are covered under
Medicare Part B, except for the excluded services or services requiring
separate payment by statute as noted above.
We are proposing to continue to define a clinical family of
comprehensive APCs as a set of clinically related comprehensive APCs
that represent different resource levels of clinically comparable
services. We are proposing a total of 28 comprehensive APCs within 13
clinical families for CY 2015, as described below.

Table 7--CY 2015 Proposed Comprehensive APCs
----------------------------------------------------------------------------------------------------------------
Proposed CY
Proposed CY 2015 APC
Clinical family 2015 C-APC APC Title geometric mean
cost
----------------------------------------------------------------------------------------------------------------
AICDP.................................. 0090 Level II Pacemaker and Similar $6,961.45
Procedures.
AICDP.................................. 0089 Level III Pacemaker and Similar 9,923.94
Procedures.
AICDP.................................. 0655 Level IV Pacemaker and Similar 17,313.08
Procedures.
AICDP.................................. 0107 Level I ICD and Similar Procedures..... 24,167.80
AICDP.................................. 0108 Level II ICD and Similar Procedures.... 32,085.90
BREAS.................................. 0648 Level IV Breast and Skin Surgery....... 7,674.20
CATHX.................................. 0427 Level II Tube or Catheter Changes or 1,522.15
Repositioning.
CATHX.................................. 0652 Insertion of Intraperitoneal and 2,764.85
Pleural Catheters.
ENTXX.................................. 0259 Level VII ENT Procedures............... 31,273.34
EPHYS.................................. 0084 Level I Electrophysiologic Procedures.. 922.84
EPHYS.................................. 0085 Level II Electrophysiologic Procedures. 4,807.69
EPHYS.................................. 0086 Level III Electrophysiologic Procedures 14,835.04
EYEXX.................................. 0293 Level IV Intraocular Procedures........ 9,049.66
EYEXX.................................. 0351 Level V Intraocular Procedures......... 21,056.40
GIXXX.................................. 0384 GI Procedures with Stents.............. 3,307.90
NSTIM.................................. 0061 Level II Neurostimulator & Related 5,582.10
Procedures.
NSTIM.................................. 0039 Level III Neurostimulator & Related 17,697.46
Procedures.
NSTIM.................................. 0318 Level IV Neurostimulator & Related 27,283.10
Procedures.
ORTHO.................................. 0425 Level V Musculoskeletal Procedures 10,846.49
Except Hand and Foot.
PUMPS.................................. 0227 Implantation of Drug Infusion Device... 16,419.95
RADTX.................................. 0067 Single Session Cranial Stereotactic 10,227.12
Radiosurgery.
UROGN.................................. 0202 Level V Female Reproductive Procedures. 4,571.06
UROGN.................................. 0385 Level I Urogenital Procedures.......... 8,019.38
UROGN.................................. 0386 Level II Urogenital Procedures......... 14,549.04
VASCX.................................. 0083 Level I Endovascular Procedures........ 4,537.95
VASCX.................................. 0229 Level II Endovascular Procedures....... 9,997.53
VASCX.................................. 0319 Level III Endovascular Procedures...... 15,452.77
VASCX.................................. 0622 Level II Vascular Access Procedures.... 2,635.35
----------------------------------------------------------------------------------------------------------------
Clinical Family Descriptor Key:
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices
BREAS = Breast Surgery
CATHX = Tube/Catheter Changes
ENTXX = ENT Procedures
EPHYS = Cardiac Electrophysiology
EYEXX = Ophthalmic Surgery
GIXXX = Gastrointestinal Procedures
NSTIM = Neurostimulators

[[Page 40953]]

ORTHO = Orthopedic Surgery
PUMPS = Implantable Drug Delivery Systems
RADTX = Radiation Oncology
UROGN = Urogenital Procedures
VASCX = Vascular Procedures

We are proposing a comprehensive APC payment methodology that
adheres to the same basic principles as those finalized in the CY 2014
OPPS/ASC final rule with comment period, with the following proposed
changes for CY 2015:
We are proposing to reorganize and consolidate several of
the current device-dependent APCs and CY 2014 comprehensive APCs;
We are proposing to expand the comprehensive APC policy to
include all device-dependent APCs and to create two other new
comprehensive APCs (C-APC 0067 and C-APC 0351);
We are proposing new complexity adjustment criteria:
Frequency of 25 or more claims reporting the HCPCS code
combination (the frequency threshold); and
Violation of the ``2 times'' rule; that is, the
comprehensive geometric mean cost of the complex code combination
exceeds the comprehensive geometric mean cost of the lowest significant
HCPCS code assigned to the comprehensive APC by more than 2 times (the
cost threshold).
We are proposing to package all add-on codes, although we would
evaluate claims reporting a single primary service code reported in
combination with an applicable add-on code (we refer readers to Table 9
in this proposed rule for the list of applicable add-on codes) for
complexity adjustments. We believe that the proposed criteria would
improve transparency, reduce subjectivity in complexity assignments,
reduce the beneficiary copayment for some cases, and reduce burden on
other stakeholders in analyzing the comprehensive APC assignments. The
proposed policies would result in 52 complexity adjustments listed in
Addendum J to this proposed rule (which is available via the Internet
on the CMS Web site).
f. Calculation of Composite APC Criteria-Based Costs
As discussed in the CY 2008 OPPS/ASC final rule with comment period
(72 FR 66613), we believe it is important that the OPPS enhance
incentives for hospitals to provide necessary, high quality care as
efficiently as possible. For CY 2008, we developed composite APCs to
provide a single payment for groups of services that are typically
performed together during a single clinical encounter and that result
in the provision of a complete service. Combining payment for multiple,
independent services into a single OPPS payment in this way enables
hospitals to manage their resources with maximum flexibility by
monitoring and adjusting the volume and efficiency of services
themselves. An additional advantage to the composite APC model is that
we can use data from correctly coded multiple procedure claims to
calculate payment rates for the specified combinations of services,
rather than relying upon single procedure claims which may be low in
volume and/or incorrectly coded. Under the OPPS, we currently have
composite policies for extended assessment and management services, low
dose rate (LDR) prostate brachytherapy, cardiac electrophysiologic
evaluation and ablation services, mental health services, multiple
imaging services, and cardiac resynchronization therapy services. We
refer readers to the CY 2008 OPPS/ASC final rule with comment period
for a full discussion of the development of the composite APC
methodology (72 FR 66611 through 66614 and 66650 through 66652) and the
CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) for more
recent background.
For CY 2015, we are proposing to continue our composite APC payment
policies for LDR prostate brachytherapy services, mental health
services, and multiple imaging services, as discussed below. In
addition, we note that we finalized a policy in the CY 2014 OPPS/ASC
final rule with comment period to modify our longstanding policy to
provide payment to hospitals in certain circumstances when extended
assessment and management of a patient occur (78 FR 74910 through
74912). For CY 2014, we created one new composite APC, entitled
``Extended Assessment and Management (EAM) Composite'' (APC 8009), to
provide payment for all qualifying extended assessment and management
encounters rather than recognize two levels of EAM composite APCs (78
FR 74910 through 74912). Under this policy, we allow any visits, a
Level 4 or 5 Type A ED visit or a Level 5 Type B ED visit furnished by
a hospital in conjunction with observation services of substantial
duration to qualify for payment through EAM composite APC 8009. For CY
2015, we are proposing to pay for qualifying extended assessment and
management services through composite APC 8009. For CY 2015, we also
are proposing to discontinue our composite APC payment policies for
cardiac electrophysiologic evaluation and ablation services (APC 8000),
and to pay for these services through comprehensive APC 0086 (Level III
Electrophysiologic Procedures), as presented in a proposal included
under section II.A.2.e. of this proposed rule. As such, we are
proposing to delete APC 8000 for CY 2015.
We note that we finalized a policy to discontinue and supersede the
cardiac resynchronization therapy composite APC with comprehensive APC
0108 (Level II Implantation of Cardioverter-Defibrillators (ICDs)), as
discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74902). For CY 2014, APC 0108 is classified as a
composite APC, as discussed in the CY 2014 OPPS/ASC final rule with
comment period, because comprehensive APCs were not made effective
until CY 2015 (78 FR 74925). For CY 2015, with the implementation of
our new comprehensive APC policy, we are proposing to effectuate the
policy finalized in the CY 2014 OPPS/ASC final rule with comment
period, and pay for cardiac resynchronization therapy services through
comprehensive APC 0108 (proposed to be renamed ``Level II ICD and
Similar Procedures''), which is discussed in section II.A.2.e. of this
proposed rule.
(1) Extended Assessment and Management Composite APC (APC 8009)
Beginning in CY 2008, we included composite APC 8002 (Level I
Extended Assessment and Management (EAM) Composite) and composite APC
8003 (Level II Extended Assessment and Management (EAM) Composite) in
the OPPS to provide payment to hospitals in certain circumstances when
extended assessment and management of a patient occur (an extended
visit). In most of these circumstances, observation services are
furnished in conjunction with evaluation and management services as an
integral part of a patient's extended encounter of care. From CY 2008
through CY 2013, in the circumstances when 8 or more hours of
observation care was provided in conjunction with a high level visit,
critical care, or direct referral for observation and is an integral
part of a

[[Page 40954]]

patient's extended encounter of care, and was not furnished on the same
day as surgery or post-operatively, a single OPPS payment was made for
the observation and evaluation and management services through one of
the two composite APCs as appropriate. We refer readers to the CY 2012
OPPS/ASC final rule with comment period (76 FR 74163 through 74165) for
a full discussion of this longstanding policy for CY 2013 and prior
years. In the CY 2014 OPPS/ASC final rule with comment period (78 FR
74910), we created one new composite APC, APC 8009 (Extended Assessment
and Management (EAM) Composite), to provide payment for all qualifying
extended assessment and management encounters rather than recognizing
two levels of EAM composite services. Under the CY 2014 finalized
policy, we no longer recognize composite APC 8002 or APC 8003.
Beginning in CY 2014, we allowed services identified by the new single
clinic visit HCPCS code G0463, a Level 4 or 5 Type A ED visit (CPT
codes 99284 or 99285), a Level 5 Type B ED visit (HCPCS code G0384) or
critical care (CPT code 99291) provided by a hospital in conjunction
with observation services of substantial duration (8 or more hours)
(provided the observation was not furnished on the same day as surgery
or post-operatively) (78 FR 74910 through 74912) to qualify for payment
through EAM composite APC 8009.
For CY 2015, we are proposing to continue our CY 2014 finalized
policy to provide payment for all qualifying extended assessment and
management encounters through composite APC 8009. As we did for CY
2014, for CY 2015, we are proposing to allow a clinic visit and certain
high level ED visits furnished by a hospital in conjunction with
observation services of substantial duration (8 or more hours) to
qualify for payment through the EAM composite APC 8009 (provided the
observation is not furnished on the same day as surgery or post-
operatively). Specifically, we are proposing to continue to allow a
clinic visit, a Level 4 or Level 5 Type A ED visit, or a Level 5 Type B
ED visit furnished by a hospital or a direct referral for observation
(identified by HCPCS code G0379) performed in conjunction with
observation services of substantial duration to qualify for payment
through composite APC 8009 (provided the observation is not furnished
on the same day as surgery or post-operatively). We note that, for CY
2015, we are proposing to continue our current policy where one service
code describes all clinic visits. We refer readers to the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74910 through 74912) for a
full discussion of the creation of composite APC 8009.
As we noted in the CY 2014 OPPS/ASC final rule with comment period,
the historical cost data used annually to calculate the geometric mean
costs and payment rate for composite APC 8009 would not reflect the
single clinic visit code that was new for CY 2014 (HCPCS code G0463)
until our CY 2016 rulemaking cycle. We stated in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74910 through 74912) that when
hospital claims data for the CY 2014 clinic and ED visit codes become
available, we would calculate the geometric mean cost for the EAM
composite APC 8009 using CY 2014 single and ``pseudo'' single procedure
claims that meet each of the following criteria:
The claims do not contain a HCPCS code to which we have
assigned status indicator ``T'' that is reported with a date of service
1 day earlier than the date of service associated with HCPCS code
G0378. (By selecting these claims from single and ``pseudo'' single
claims, we ensure that they would not contain a code for a service with
status indicator ``T'' on the same date of service.)
The claims contain 8 or more units of HCPCS code G0378
(Observation services, per hour.)
The claims contain one of the following codes: HCPCS code
G0379 (Direct referral of patient for hospital observation care) on the
same date of service as HCPCS code G0378; or CPT code 99291 (Critical
care, evaluation and management of the critically ill or critically
injured patient; first 30-74 minutes); or HCPCS code G0463 (Hospital
outpatient clinic visit for assessment and management of a patient)
provided on the same date of service or 1 day before the date of
service for HCPCS code G0378.
Because we have no available cost data for HCPCS code G0463, for CY
2015, we are proposing to calculate the geometric mean cost for
procedures assigned to APC 8009 using CY 2013 single and ``pseudo''
single procedure claims that met each of the following criteria:
The claim did not contain a HCPCS code to which we have
assigned status indicator ``T'' that is reported with a date of service
1 day earlier than the date of service associated with HCPCS code
G0378. (By selecting these claims from single and ``pseudo'' single
claims, we assured that they would not contain a code for a service
with status indicator ``T'' on the same date of service.)
The claim contained 8 or more units of HCPCS code G0378
(Observation services, per hour.)
The claim contained one of the following codes: HCPCS code
G0379 (Direct referral of patient for hospital observation care) on the
same date of service as HCPCS code G0378; or CPT code 99201 (Office or
other outpatient visit for the evaluation and management of a new
patient (Level 1)); CPT code 99202 (Office or other outpatient visit
for the evaluation and management of a new patient (Level 2)); CPT code
99203 (Office or other outpatient visit for the evaluation and
management of a new patient (Level 3)); CPT code 99204 (Office or other
outpatient visit for the evaluation and management of a new patient
(Level 4)); CPT code 99205 (Office or other outpatient visit for the
evaluation and management of a new patient (Level 5)); CPT code 99211
(Office or other outpatient visit for the evaluation and management of
an established patient (Level 1)); CPT code 99212 (Office or other
outpatient visit for the evaluation and management of an established
patient (Level 2)); CPT code 99213 (Office or other outpatient visit
for the evaluation and management of an established patient (Level 3));
CPT code 99214 (Office or other outpatient visit for the evaluation and
management of an established patient (Level 4)); CPT code 99215 (Office
or other outpatient visit for the evaluation and management of an
established patient (Level 5)); CPT code 99284 (Emergency department
visit for the evaluation and management of a patient (Level 4)); CPT
code 99285 (Emergency department visit for the evaluation and
management of a patient (Level 5)); or HCPCS code G0384 (Type B
emergency department visit (Level 5)); or CPT code 99291 (Critical
care, evaluation and management of the critically ill or critically
injured patient; first 30-74 minutes) provided on the same date of
service or 1 day before the date of service for HCPCS code G0378.
The proposed CY 2015 geometric mean cost resulting from this
methodology for EAM composite APC 8009 is approximately $1,287.
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
LDR prostate brachytherapy is a treatment for prostate cancer in
which hollow needles or catheters are inserted into the prostate,
followed by permanent implantation of radioactive sources into the
prostate through the needles/catheters. At least two CPT codes are used
to report the composite treatment service because there are separate
codes that describe placement

[[Page 40955]]

of the needles/catheters and the application of the brachytherapy
sources: CPT code 55875 (Transperineal placement of needles or
catheters into prostate for interstitial radioelement application, with
or without cystoscopy) and CPT code 77778 (Interstitial radiation
source application; complex), which are generally present together on
claims for the same date of service in the same operative session. In
order to base payment on claims for the most common clinical scenario,
and to further our goal of providing payment under the OPPS for a
larger bundle of component services provided in a single hospital
encounter, beginning in CY 2008, we began providing a single payment
for LDR prostate brachytherapy when the composite service, reported as
CPT codes 55875 and 77778, is furnished in a single hospital encounter.
We base the payment for composite APC 8001 (LDR Prostate Brachytherapy
Composite) on the geometric mean cost derived from claims for the same
date of service that contain both CPT codes 55875 and 77778 and that do
not contain other separately paid codes that are not on the bypass
list. We refer readers to the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66652 through 66655) for a full history of OPPS payment
for LDR prostate brachytherapy services and a detailed description of
how we developed the LDR prostate brachytherapy composite APC.
For CY 2015, we are proposing to continue to pay for LDR prostate
brachytherapy services using the composite APC payment methodology
proposed and implemented for CY 2008 through CY 2014. That is, we are
proposing to use CY 2013 claims reporting charges for both CPT codes
55875 and 77778 on the same date of service with no other separately
paid procedure codes (other than those on the bypass list) to calculate
the proposed payment rate for composite APC 8001. Consistent with our
CY 2008 through CY 2014 practice, we are proposing not to use the
claims that meet these criteria in the calculation of the geometric
mean costs of procedures or services assigned to APC 0163 (Level IV
Cystourethroscopy and Other Genitourinary Procedures) and APC 0651
(Complex Interstitial Radiation Source Application), the APCs to which
CPT codes 55875 and 77778 are assigned, respectively. We are proposing
to continue to calculate the geometric mean costs of procedures or
services assigned to APCs 0163 and 0651 using single and ``pseudo''
single procedure claims. We continue to believe that this composite APC
contributes to our goal of creating hospital incentives for efficiency
and cost containment, while providing hospitals with the most
flexibility to manage their resources. We also continue to believe that
data from claims reporting both services required for LDR prostate
brachytherapy provide the most accurate geometric mean cost upon which
to base the proposed composite APC payment rate.
Using a partial year of CY 2013 claims data available for the CY
2015 OPPS/ASC proposed rule, we were able to use 379 claims that
contained both CPT codes 55875 and 77778 to calculate the geometric
mean cost of these procedures upon which the proposed CY 2015 payment
rate for composite APC 8001 is based. The proposed geometric mean cost
for composite APC 8001 for CY 2015 is approximately $3,669.
(3) Mental Health Services Composite APC (APC 0034)
For CY 2015, we are proposing to continue our longstanding policy
of limiting the aggregate payment for specified less resource-intensive
mental health services furnished on the same date to the payment for a
day of partial hospitalization services provided by a hospital, which
we consider to be the most resource-intensive of all outpatient mental
health services. We refer readers to the April 7, 2000 OPPS final rule
with comment period (65 FR 18452 through 18455) for the initial
discussion of this longstanding policy and the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74168) for more recent background.
Specifically, we are proposing that when the aggregate payment for
specified mental health services provided by one hospital to a single
beneficiary on one date of service based on the payment rates
associated with the APCs for the individual services exceeds the
maximum per diem payment rate for partial hospitalization services
provided by a hospital, those specified mental health services would be
assigned to APC 0034 (Mental Health Services Composite). We are
proposing to continue to set the payment rate for APC 0034 at the same
payment rate that we are proposing to establish for APC 0176 (Level II
Partial Hospitalization (4 or more services) for hospital-based PHPs),
which is the maximum partial hospitalization per diem payment rate for
a hospital, and that the hospital continue to be paid one unit of APC
0034. Under this policy, the I/OCE would continue to determine whether
to pay for these specified mental health services individually, or to
make a single payment at the same payment rate established for APC 0176
for all of the specified mental health services furnished by the
hospital on that single date of service. We continue to believe that
the costs associated with administering a partial hospitalization
program at a hospital represent the most resource-intensive of all
outpatient mental health services. Therefore, we do not believe that we
should pay more for mental health services under the OPPS than the
highest partial hospitalization per diem payment rate for hospitals.
(4) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide a single payment each time a
hospital bills more than one imaging procedure within an imaging family
on the same date of service, in order to reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session (73 FR 41448 through 41450). We
utilize three imaging families based on imaging modality for purposes
of this methodology: (1) Ultrasound; (2) computed tomography (CT) and
computed tomographic angiography (CTA); and (3) magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes
subject to the multiple imaging composite policy and their respective
families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74920 through 74924).
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement under section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included in the policy do not involve contrast, both CT/CTA
and MRI/MRA scans can be provided either with or without contrast. The
five multiple imaging composite APCs established in CY 2009 are:
APC 8004 (Ultrasound Composite);
APC 8005 (CT and CTA without Contrast Composite);
APC 8006 (CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without Contrast Composite); and
APC 8008 (MRI and MRA with Contrast Composite).
We define the single imaging session for the ``with contrast''
composite APCs as having at least one or more imaging procedures from
the same family performed with contrast on the same date of service.
For example, if the

[[Page 40956]]

hospital performs an MRI without contrast during the same session as at
least one other MRI with contrast, the hospital will receive payment
for APC 8008, the ``with contrast'' composite APC.
We make a single payment for those imaging procedures that qualify
for composite APC payment, as well as any packaged services furnished
on the same date of service. The standard (noncomposite) APC
assignments continue to apply for single imaging procedures and
multiple imaging procedures performed across families. For a full
discussion of the development of the multiple imaging composite APC
methodology, we refer readers to the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68559 through 68569).
For CY 2015, we are proposing to continue to pay for all multiple
imaging procedures within an imaging family performed on the same date
of service using the multiple imaging composite APC payment
methodology. We continue to believe that this policy will reflect and
promote the efficiencies hospitals can achieve when performing multiple
imaging procedures during a single session. The proposed CY 2015
payment rates for the five multiple imaging composite APCs (APC 8004,
APC 8005, APC 8006, APC 8007, and APC 8008) are based on geometric mean
costs calculated from a partial year of CY 2013 claims available for
the proposed rule that qualified for composite payment under the
current policy (that is, those claims with more than one procedure
within the same family on a single date of service). To calculate the
proposed geometric mean costs, we used the same methodology that we
used to calculate the final CY 2013 and CY 2014 geometric mean costs
for these composite APCs, as described in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74918). The imaging HCPCS codes
referred to as ``overlap bypass codes'' that we removed from the bypass
list for purposes of calculating the proposed multiple imaging
composite APC geometric mean costs, pursuant to our established
methodology as stated in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74918), are identified by asterisks in Addendum N to this
proposed rule (which is available via the Internet on the CMS Web site)
and are discussed in more detail in section II.A.1.b. of this proposed
rule.
For this CY 2015 OPPS/ASC proposed rule, we were able to identify
approximately 636,000 ``single session'' claims out of an estimated 1.6
million potential composite APC cases from our ratesetting claims data,
approximately 40 percent of all eligible claims, to calculate the
proposed CY 2015 geometric mean costs for the multiple imaging
composite APCs.
Table 8 below lists the proposed HCPCS codes that would be subject
to the multiple imaging composite APC policy and their respective
families and approximate composite APC geometric mean costs for CY
2015.

Table 8--Proposed OPPS Imaging Families and Multiple Imaging Procedure
Composite APCs
------------------------------------------------------------------------

------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
CY 2015 APC 8004 (ultrasound composite) CY 2015 approximate APC
geometric mean cost = $299
------------------------------------------------------------------------
76604.................................. Us exam, chest.
76700.................................. Us exam, abdom, complete.
76705.................................. Echo exam of abdomen.
76770.................................. Us exam abdo back wall, comp.
76775.................................. Us exam abdo back wall, lim.
76776.................................. Us exam k transpl w/Doppler.
76831.................................. Echo exam, uterus.
76856.................................. Us exam, pelvic, complete.
76870.................................. Us exam, scrotum.
76857.................................. Us exam, pelvic, limited.
------------------------------------------------------------------------
Family 2--CT and CTA With and Without Contrast
------------------------------------------------------------------------
CY 2015 APC 8005 (CT and CTA without CY 2015 approximate APC
contrast composite)* geometric mean cost = $335
------------------------------------------------------------------------
70450.................................. Ct head/brain w/o dye.
70480.................................. Ct orbit/ear/fossa w/o dye.
70486.................................. Ct maxillofacial w/o dye.
70490.................................. Ct soft tissue neck w/o dye.
71250.................................. Ct thorax w/o dye.
72125.................................. Ct neck spine w/o dye.
72128.................................. Ct chest spine w/o dye.
72131.................................. Ct lumbar spine w/o dye.
72192.................................. Ct pelvis w/o dye.
73200.................................. Ct upper extremity w/o dye.
73700.................................. Ct lower extremity w/o dye.
74150.................................. Ct abdomen w/o dye.
74261.................................. Ct colonography, w/o dye.
74176.................................. Ct angio abd & pelvis.
------------------------------------------------------------------------
CY 2015 APC 8006 (CT and CTA with CY 2015 Approximate APC
contrast composite) geometric mean cost = $558
------------------------------------------------------------------------
70487.................................. Ct maxillofacial w/dye.
70460.................................. Ct head/brain w/dye.
70470.................................. Ct head/brain w/o & w/dye.
70481.................................. Ct orbit/ear/fossa w/dye.
70482.................................. Ct orbit/ear/fossa w/o & w/dye.
70488.................................. Ct maxillofacial w/o & w/dye.
70491.................................. Ct soft tissue neck w/dye.
70492.................................. Ct sft tsue nck w/o & w/dye.
70496.................................. Ct angiography, head.
70498.................................. Ct angiography, neck.
71260.................................. Ct thorax w/dye.

[[Page 40957]]

71270.................................. Ct thorax w/o & w/dye.
71275.................................. Ct angiography, chest.
72126.................................. Ct neck spine w/dye.
72127.................................. Ct neck spine w/o & w/dye.
72129.................................. Ct chest spine w/dye.
72130.................................. Ct chest spine w/o & w/dye.
72132.................................. Ct lumbar spine w/dye.
72133.................................. Ct lumbar spine w/o & w/dye.
72191.................................. Ct angiograph pelv w/o & w/dye.
72193.................................. Ct pelvis w/dye.
72194.................................. Ct pelvis w/o & w/dye.
73201.................................. Ct upper extremity w/dye.
73202.................................. Ct uppr extremity w/o & w/dye.
73206.................................. Ct angio upr extrm w/o & w/dye.
73701.................................. Ct lower extremity w/dye.
73702.................................. Ct lwr extremity w/o & w/dye.
73706.................................. Ct angio lwr extr w/o & w/dye.
74160.................................. Ct abdomen w/dye.
74170.................................. Ct abdomen w/o & w/dye.
74175.................................. Ct angio abdom w/o & w/dye.
74262.................................. Ct colonography, w/dye.
75635.................................. Ct angio abdominal arteries.
74177.................................. Ct angio abd & pelv w/contrast.
74178.................................. Ct angio abd & pelv 1 + regns.
------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the
same session as a ``with contrast'' CT or CTA procedure, the I/OCE would
assign APC 8006 rather than APC 8005.
------------------------------------------------------------------------
Family 3--MRI and MRA With and Without Contrast
------------------------------------------------------------------------
CY 2015 APC 8007 (MRI and MRA without CY 2015 approximate APC
contrast composite) * geometric mean cost = $640
------------------------------------------------------------------------
70336.................................. Magnetic image, jaw joint.
70540.................................. Mri orbit/face/neck w/o dye.
70544.................................. Mr angiography head w/o dye.
70547.................................. Mr angiography neck w/o dye.
70551.................................. Mri brain w/o dye.
70554.................................. Fmri brain by tech.
71550.................................. Mri chest w/o dye.
72141.................................. Mri neck spine w/o dye.
72146.................................. Mri chest spine w/o dye.
72148.................................. Mri lumbar spine w/o dye.
72195.................................. Mri pelvis w/o dye.
73218.................................. Mri upper extremity w/o dye.
73221.................................. Mri joint upr extrem w/o dye.
73718.................................. Mri lower extremity w/o dye.
73721.................................. Mri jnt of lwr extre w/o dye.
74181.................................. Mri abdomen w/o dye.
75557.................................. Cardiac mri for morph.
75559.................................. Cardiac mri w/stress img.
C8901.................................. MRA w/o cont, abd.
C8904.................................. MRI w/o cont, breast, uni.
C8907.................................. MRI w/o cont, breast, bi.
C8910.................................. MRA w/o cont, chest.
C8913.................................. MRA w/o cont, lwr ext.
C8919.................................. MRA w/o cont, pelvis.
C8932.................................. MRA, w/o dye, spinal canal.
C8935.................................. MRA, w/o dye, upper extr.
------------------------------------------------------------------------
CY 2015 APC 8008 (MRI and MRA with CY 2015 Approximate APC
contrast composite) geometric mean cost = $958
------------------------------------------------------------------------
70549.................................. Mr angiograph neck w/o & w/dye.
70542.................................. Mri orbit/face/neck w/dye.
70543.................................. Mri orbt/fac/nck w/o & w/dye.
70545.................................. Mr angiography head w/dye.
70546.................................. Mr angiograph head w/o & w/dye.
70547.................................. Mr angiography neck w/o dye.
70548.................................. Mr angiography neck w/dye.
70552.................................. Mri brain w/dye.
70553.................................. Mri brain w/o & w/dye.
71551.................................. Mri chest w/dye.
71552.................................. Mri chest w/o & w/dye.
72142.................................. Mri neck spine w/dye.
72147.................................. Mri chest spine w/dye.
72149.................................. Mri lumbar spine w/dye.
72156.................................. Mri neck spine w/o & w/dye.
72157.................................. Mri chest spine w/o & w/dye.
72158.................................. Mri lumbar spine w/o & w/dye.
72196.................................. Mri pelvis w/dye.
72197.................................. Mri pelvis w/o & w/dye.
73219.................................. Mri upper extremity w/dye.
73220.................................. Mri uppr extremity w/o & w/dye.

[[Page 40958]]

73222.................................. Mri joint upr extrem w/dye.
73223.................................. Mri joint upr extr w/o & w/dye.
73719.................................. Mri lower extremity w/dye.
73720.................................. Mri lwr extremity w/o & w/dye.
73722.................................. Mri joint of lwr extr w/dye.
73723.................................. Mri joint lwr extr w/o & w/dye.
74182.................................. Mri abdomen w/dye.
74183.................................. Mri abdomen w/o & w/dye.
75561.................................. Cardiac mri for morph w/dye.
75563.................................. Card mri w/stress img & dye.
C8900.................................. MRA w/cont, abd.
C8902.................................. MRA w/o fol w/cont, abd.
C8903.................................. MRI w/cont, breast, uni.
C8905.................................. MRI w/o fol w/cont, brst, un.
C8906.................................. MRI w/cont, breast, bi.
C8908.................................. MRI w/o fol w/cont, breast,
C8909.................................. MRA w/cont, chest.
C8911.................................. MRA w/o fol w/cont, chest.
C8912.................................. MRA w/cont, lwr ext.
C8914.................................. MRA w/o fol w/cont, lwr ext.
C8918.................................. MRA w/cont, pelvis.
C8920.................................. MRA w/o fol w/cont, pelvis.
C8931.................................. MRA, w/dye, spinal canal.
C8933.................................. MRA, w/o&w/dye, spinal canal.
C8934.................................. MRA, w/dye, upper extremity.
C8936.................................. MRA, w/o&w/dye, upper extr.
------------------------------------------------------------------------
* If a ``without contrast'' MRI or MRA procedure is performed during the
same session as a ``with contrast'' MRI or MRA procedure, the I/OCE
would assign APC 8008 rather than APC 8007.
------------------------------------------------------------------------

3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or bundle of specific services for a particular
patient. The OPPS packages payment for multiple interrelated items and
services into a single payment to create incentives for hospitals to
furnish services most efficiently and to manage their resources with
maximum flexibility. Our packaging policies support our strategic goal
of using larger payment bundles in the OPPS to maximize hospitals'
incentives to provide care in the most efficient manner. For example,
where there are a variety of devices, drugs, items, and supplies that
could be used to furnish a service, some of which are more expensive
than others, packaging encourages hospitals to use the most cost-
efficient item that meets the patient's needs, rather than to routinely
use a more expensive item, which often results if separate payment is
provided for the items.
Packaging also encourages hospitals to effectively negotiate with
manufacturers and suppliers to reduce the purchase price of items and
services or to explore alternative group purchasing arrangements,
thereby encouraging the most economical health care delivery.
Similarly, packaging encourages hospitals to establish protocols that
ensure that necessary services are furnished, while scrutinizing the
services ordered by practitioners to maximize the efficient use of
hospital resources. Packaging payments into larger payment bundles
promotes the predictability and accuracy of payment for services over
time. Finally, packaging may reduce the importance of refining service-
specific payment because packaged payments include costs associated
with higher cost cases requiring many ancillary items and services and
lower cost cases requiring fewer ancillary items and services. Because
packaging encourages efficiency and is an essential component of a
prospective payment system, packaging payment for items and services
that are typically integral, ancillary, supportive, dependent, or
adjunctive to a primary service has been a fundamental part of the OPPS
since its implementation in August 2000. Over the last 15 years, as we
have refined our understanding of the OPPS as a prospective payment
system, we have packaged numerous services that we originally paid as
primary services. As we continue to develop larger payment groups that
more broadly reflect services provided in an encounter or episode of
care, we have expanded the OPPS packaging policies. Most, but not
necessarily all, items and services currently packaged in the OPPS are
listed in 42 CFR 419.2(b), including the five packaging policies that
were added in CY 2014 (78 FR 74925). Our overarching goal is to make
OPPS payments for all services paid under the OPPS more consistent with
those of a prospective payment system and less like those of a per
service fee schedule, which pays separately for each coded item. As a
part of this effort, we have continued to examine the payment for items
and services provided in the OPPS to determine which OPPS services can
be packaged to achieve the objective of advancing the OPPS as a
prospective payment system.
We have examined the items and services currently provided under
the OPPS, reviewing categories of integral, ancillary, supportive,
dependent, or adjunctive items and services for which we believe
payment would be appropriately packaged into payment of the primary
service they support. Specifically, we examined the HCPCS code
definitions (including CPT code descriptors) to determine whether there
were categories of codes for which packaging would be appropriate
according to existing OPPS packaging policies or a logical expansion of
those existing OPPS packaging policies. In general, in this CY 2015
OPPS/ASC proposed rule, we are proposing to package the costs of
selected HCPCS codes into payment for services reported with other
HCPCS codes where we believe that one code reported an item

[[Page 40959]]

or service that was integral, ancillary, supportive, dependent, or
adjunctive to the provision of care that was reported by another HCPCS
code. Below we discuss categories and classes of items and services
that we are proposing to package beginning in CY 2015. For an extensive
discussion of the history and background of the OPPS packaging policy,
we refer readers to the CY 2000 OPPS final rule (65 FR 18434), the CY
2008 OPPS/ASC final rule with comment period (72 FR 66580), and the CY
2014 OPPS/ASC final rule with comment period (78 FR 74925).
b. Proposed Revisions of a Packaging Policy Established in CY 2014--
Procedures Described by Add-On Codes
In the CY 2014 OPPS/ASC final rule with comment period, we packaged
add-on codes in the OPPS, with the exception of add-on codes describing
drug administration services (78 FR 74943; 42 CFR 419.2(b)(18)). With
regard to the packaging of add-on procedures that use expensive medical
devices, we stated in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74943) that the most expensive medical devices used in
procedures to insert or implant devices in the hospital outpatient
setting are included in procedures that are assigned to comprehensive
APCs. Comprehensive APCs are discussed in section II.A.2.e. of this
proposed rule. In the CY 2014 OPPS/ASC final rule with comment period,
we discussed the comprehensive APC policy, which we adopted, with
modification, but delayed the implementation of, until CY 2015 (78 FR
74864). We stated that for CY 2014, we would continue to pay separately
for only those add-on codes (except for drug administration add-on
codes) that were assigned to device-dependent APCs in CY 2014, but
that, after CY 2014, these device-dependent add-on codes would be paid
under the comprehensive APC policy. According to the proposed changes
to the comprehensive APC policy described in section II.A.2.e. of this
proposed rule, we are proposing to package all of the procedures
described by add-on codes that are currently assigned to device-
dependent APCs, which will be replaced by comprehensive APCs. The
device-dependent add-on codes that are separately paid in CY 2014 that
we are proposing to package in CY 2015 are listed below in Table 9.

Table 9--Add-On Codes Assigned to Device-Dependent APCS for CY 2014 That
Are Proposed To Be Packaged in CY 2015
------------------------------------------------------------------------
CY 2014 Add-on code Short descriptor CY 2014 APC
------------------------------------------------------------------------
19297...................... Place breast cath for rad.. 0648
33225...................... L ventric pacing lead add- 0655
on.
37222...................... Iliac revasc add-on........ 0083
37223...................... Iliac revasc w/stent add-on 0083
37232...................... Tib/per revasc add-on...... 0083
37233...................... Tib/per revasc w/ather add- 0229
on.
37234...................... Revsc opn/prq tib/pero 0083
stent.
37235...................... Tib/per revasc stnt & ather 0083
37237...................... Open/perq place stent ea 0083
add.
37239...................... Open/perq place stent ea 0083
add.
49435...................... Insert subq exten to ip 0427
cath.
92921...................... Prq cardiac angio addl art. 0083
92925...................... Prq card angio/athrect addl 0082
92929...................... Prq card stent w/angio addl 0104
92934...................... Prq card stent/ath/angio... 0104
92938...................... Prq revasc byp graft addl.. 0104
92944...................... Prq card revasc chronic 0104
addl.
92998...................... Pul art balloon repr precut 0083
C9601...................... Perc drug-el cor stent bran 0656
C9603...................... Perc d-e cor stent ather br 0656
C9605...................... Perc d-e cor revasc t cabg 0656
b.
C9608...................... Perc d-e cor revasc chro 0656
add.
------------------------------------------------------------------------

c. Proposed Packaging Policies for CY 2015
(1) Ancillary Services
Under the OPPS, we currently pay separately for certain ancillary
services. Some of these ancillary services are currently assigned to
status indicator ``X,'' which is defined as ``ancillary services,'' but
some other ancillary services are currently assigned to status
indicators other than ``X.'' This is because the current use of status
indicator ``X'' in the OPPS is incomplete and imprecise. Some
procedures and services that are ancillary, for example, a chest X-ray,
are assigned to an APC with services assigned status indicator ``S.''
We reviewed all of the covered HOPD services provided in the HOPD and
identified those that are commonly performed when provided with other
HOPD services, and also provided as ancillary to a primary service in
the HOPD. These ancillary services that we have identified are
primarily minor diagnostic tests and procedures that are often
performed with a primary service, although there are instances where
hospitals provide such services alone and without another primary
service during the same encounter.
As discussed in section II.A.3.a. of this proposed rule, our intent
is that the OPPS be more of a prospective payment system with expanded
packaging of items and services that are typically integral, ancillary,
supportive, dependent, or adjunctive to a primary service. Given that
the longstanding OPPS policy is to package items and services that are
integral, ancillary, supportive, dependent, or adjunctive to a primary
service, we stated in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74945) that we believe that ancillary services should be
packaged when they are performed with another service, but should
continue to be separately paid when performed alone. We indicated that
this packaging approach is most consistent with a prospective payment
system and the regulation at 42 CFR 419.2(b) that packages many
ancillary services into

[[Page 40960]]

primary services while preserving separate payment for those instances
in which one of these ancillary services is provided alone (not with
any other service paid under the OPPS) to a hospital outpatient. We did
not finalize the ancillary packaging policy for CY 2014 because we
believed that further evaluation was necessary (78 FR 74946).
In this proposed rule, we are proposing to conditionally package
certain ancillary services for CY 2015. Specifically, we are proposing
to limit the initial set of APCs that contain conditionally packaged
services to those ancillary service APCs with a proposed geometric mean
cost of less than or equal to $100 (prior to application of the
conditional packaging status indicator). We are limiting this initial
set of packaged ancillary service APCs to those with a proposed
geometric mean cost of less than or equal to $100 in response to public
comments on the CY 2014 ancillary service packaging proposal in which
commenters expressed concern that certain low volume but relatively
costly ancillary services would have been packaged into high volume but
relatively inexpensive primary services (for example, a visit) (74 FR
74945). We note that the proposed $100 geometric mean cost limit for
selecting this initial group of conditionally packaged ancillary
service APCs is less than the geometric mean cost of APC 0634, which
contains the single clinic visit code G0463, which is a single payment
rate for clinic visits beginning in CY 2014, and has a CY 2015 OPPS/ASC
proposed rule geometric mean cost of $102.68. This proposed $100
geometric mean cost limit is part of the methodology of selecting the
initial set of conditionally packaged ancillary service APCs under this
proposed packaging policy. It is not meant to represent a threshold
above which ancillary services will not be packaged, but as a basis for
selecting this initial set of APCs, which will likely be updated and
expanded in future years. In future years, we may package ancillary
services assigned to APCs with geometric mean costs higher than $100.
In addition, geometric mean costs can change over time. A change in the
geometric mean cost of any of the proposed APCs above $100 in future
years would not change the conditionally packaged status of services
assigned to the APCs selected in 2015 in a future year. We will
continue to consider these APCs to be conditionally packaged. However,
we will review the conditionally packaged status of ancillary services
annually.
We are proposing to exclude certain services from this packaging
policy even though they are assigned to APCs with a geometric mean cost
of <= $100. Preventive services will continue to be paid separately,
and includes the following services listed in Table 10 below that would
otherwise be packaged under this policy.

Table 10--Preventive Services Exempted From the Ancillary Service
Packaging Policy
------------------------------------------------------------------------
HCPCS Code Short descriptor APC
------------------------------------------------------------------------
76977...................... Us bone density measure.... 0340
77078...................... Ct bone density axial...... 0260
77080...................... Dxa bone density axial..... 0261
77081...................... Dxa bone density/peripheral 0260
G0117...................... Glaucoma scrn hgh risk 0260
direc.
G0118...................... Glaucoma scrn hgh risk 0230
direc.
G0130...................... Single energy x-ray study.. 0230
G0389...................... Ultrasound exam aaa screen. 0265
G0404...................... Ekg tracing for initial 0450
prev.
Q0091...................... Obtaining screen pap smear. 0450
------------------------------------------------------------------------

In addition, we are not proposing to package certain psychiatry and
counseling-related services as we see similarities to a visit and, at
this time, do not consider them to be ancillary services. We also are
not proposing to package certain low cost drug administration services
as we are examining various alternative payment policies for drug
administration services, including the associated drug administration
add-on codes.
Finally, we are proposing to delete status indicator ``X''
(Ancillary Services) because the majority of the services assigned to
status indicator ``X'' are proposed to be assigned to status indicator
``Q1'' (STV-Packaged Codes). For the services that are currently
assigned status indicator ``X'' that are not proposed to be
conditionally packaged under this policy, we will assign those services
status indicator ``S'' (Procedure or Service, Not Discounted When
Multiple), indicating separate payment and that the services are not
subject to the multiple procedure reduction. The APCs that we are
proposing for conditional packaging as ancillary services in CY 2015
are listed below in Table 11.

Table 11--APCs for Proposed Conditionally Packaged Ancillary Services for CY 2015
----------------------------------------------------------------------------------------------------------------
Proposed CY
2015 OPPS Proposed CY
APC geometric mean 2015 OPPS SI Group title
cost
----------------------------------------------------------------------------------------------------------------
0012................................... $76.29 Q1 Level I Debridement & Destruction.
0060................................... 20.64 Q1 Manipulation Therapy.
0077................................... 52.08 Q1 Level I Pulmonary Treatment.
0099................................... 81.27 Q1 Electrocardiograms/Cardiography.
0215................................... 104.63 Q1 Level I Nerve and Muscle Services.
0230................................... 55.00 Q1 Level I Eye Tests & Treatments.
0260................................... 62.43 Q1 Level I Plain Film Including Bone
Density Measurement.
0261................................... 99.85 Q1 Level II Plain Film Including Bone
Density Measurement.
0265................................... 96.51 Q1 Level I Diagnostic and Screening
Ultrasound.
0340................................... 64.78 Q1 Level II Minor Procedures.

[[Page 40961]]

0342................................... 56.99 Q1 Level I Pathology.
0345................................... 78.83 Q1 Level I Transfusion Laboratory
Procedures.
0364................................... 42.69 Q1 Level I Audiometry.
0365................................... 123.21 Q1 Level II Audiometry.
0367................................... 166.31 Q1 Level I Pulmonary Tests.
0420................................... 130.93 Q1 Level III Minor Procedures.
0433................................... 190.21 Q1 Level II Pathology.
0450................................... 29.91 Q1 Level I Minor Procedures.
0624................................... 83.61 Q1 Phlebotomy and Minor Vascular Access
Device Procedures.
0690................................... 37.25 Q1 Level I Electronic Analysis of Devices.
0698................................... 106.17 Q1 Level II Eye Tests & Treatments.
----------------------------------------------------------------------------------------------------------------

The HCPCS codes that we are proposing to conditionally package as
ancillary services for CY 2015 are displayed in Addendum B to this CY
2015 OPPS/ASC proposed rule. The supporting documents for the proposed
rule are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
We also are proposing to revise the regulations at 42 CFR
419.2(b)(7) to replace the phrase ``Incidental services such as
venipuncture'' with ``Ancillary services'' to more accurately reflect
the proposed packaging policy discussed above.
We are inviting public comments on these proposals.
(2) Prosthetic Supplies
We have a longstanding policy of providing payment under the OPPS
for implantable DME, implantable prosthetics, and medical and surgical
supplies, as provided at sections 1833(t)(1)(B)(i) and (t)(1)(B)(iii)
of the Act and 42 CFR 419.2(b)(4), (b)(10), and (b)(11). In the CY 2014
OPPS/ASC final rule with comment period, we clarified that medical and
surgical supplies under Sec. 419.2(b)(4) include (but are not limited
to) all supplies on the DMEPOS Fee Schedule except prosthetic supplies
(78 FR 74947). Under 42 CFR 419.22(j), prosthetic supplies are
currently excluded from payment under the OPPS and are paid under the
DMEPOS Fee Schedule, even when provided in the HOPD. However, under
section 1833(t)(1)(B)(i) of the Act, the Secretary has the authority to
designate prosthetic supplies provided in the hospital outpatient
setting as covered OPD services payable under the OPPS.
As mentioned above, implantable prosthetic devices are packaged in
the OPPS under 42 CFR 419.2(b)(11). It is common for implantable
prosthetic devices to be provided as a part of a device system. Such
device systems include the implantable part or parts of the overall
device system and also certain nonimplantable prosthetic supplies that
are integral to the overall function of the medical device, part of
which is implanted and part of which is external to the patient. These
prosthetic supplies are integral to the implantable prosthetic because
typically shortly after the surgical procedure to implant the
implantable prosthetic device in the hospital, the surgeon and/or his
or her colleagues will have to attach, fit, and program certain
prosthetic supplies that are not surgically implanted into the patient
but are a part of a system and that are essential to the overall
function of an implanted device. Because these supplies are integral to
the overall function of the implanted prosthetic, and because, as
mentioned above, we package in the OPPS items and services that are
typically integral, ancillary, supportive, dependent, or adjunctive to
a primary service, we believe that it is most consistent with a
prospective payment system to package the payment of prosthetic
supplies (along with the implantable prosthetic device) into the
surgical procedure that implants the prosthetic device, as all of the
components are typically necessary for the performance of the system
and the hospital typically purchases the system as a single unit.
Patients requiring replacement supplies at a time later than the
initial surgical procedure and outside of the hospital would obtain
them as they typically do from a DMEPOS supplier with payment for such
supplies made under the DMEPOS Fee Schedule.
In addition to prosthetic supplies that are components of device
systems, part of which are implanted, many other prosthetic supplies on
the DMEPOS fee schedule are typical medical and surgical supplies and
of the type that are packaged in the OPPS under Sec. 419.2(b)(4).
Consistent with our change from status indicator ``A'' to ``N'' for all
nonprosthetic DMEPOS supplies in the CY 2014 OPPS final rule with
comment period (78 FR 74947), we are proposing to package and change
the status indicator from ``A'' to ``N'' for all DMEPOS prosthetic
supplies. With this proposed change, all medical and surgical supplies
would be packaged in the OPPS.
Therefore, we are proposing to delete ``prosthetic supplies'' from
the regulations at Sec. 419.22(j) because we are proposing that
prosthetic supplies be packaged covered OPD services in the OPPS for CY
2015. Prosthetic supplies provided in the HOPD would be included in
``medical and surgical supplies'' (as are all other supplies currently
provided in the HOPD) under Sec. 419.2(b)(4). The HCPCS codes for
prosthetic supplies that we are proposing to package for CY 2015 are
displayed in Addendum B to this CY 2015 OPPS/ASC proposed rule. The
supporting documents for the proposed rule, including but not limited
to these Addenda, are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
We are inviting public comments on these proposals.
4. Proposed Calculation of OPPS Scaled Payment Weights
For CY 2015, we are proposing to calculate the relative payment
weights for each APC shown in Addenda A and B to this proposed rule
(which are available via the Internet on the CMS Web site) using the
APC costs discussed in sections II.A.1. and II.A.2. of this proposed
rule. Prior to CY 2007, we standardized all the relative payment
weights to APC 0601 (Mid-Level Clinic Visit) because mid-level clinic
visits

[[Page 40962]]

were among the most frequently performed services in the hospital
outpatient setting. We assigned APC 0601 a relative payment weight of
1.00 and divided the median cost for each APC by the median cost for
APC 0601 to derive the relative payment weight for each APC.
Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all
of the relative payment weights to APC 0606 (Level 3 Clinic Visits)
because we deleted APC 0601 as part of the reconfiguration of the
clinic visit APCs. We selected APC 0606 as the base because it was the
mid-level clinic visit APC (that is, Level 3 of five levels). For the
CY 2013 OPPS (77 FR 68283), we established a policy of using geometric
mean-based APC costs rather than median-based APC costs to calculate
relative payment weights. For CY 2015, we are proposing to continue
this policy.
For the CY 2014 OPPS, we standardized all of the relative payment
weights to clinic visit APC 0634 as discussed in section VII. of this
proposed rule. For CY 2015, we are proposing to continue this policy to
maintain consistency in calculating unscaled weights that represent the
cost of some of the most frequently provided services. We are proposing
to assign APC 0634 a relative payment weight of 1.00 and to divide the
geometric mean cost of each APC by the proposed geometric mean cost for
APC 0634 to derive the proposed unscaled relative payment weight for
each APC. The choice of the APC on which to base the proposed relative
payment weights does not affect payments made under the OPPS because we
scale the weights for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a budget neutral manner. Budget neutrality ensures that the
estimated aggregate weight under the OPPS for CY 2015 is neither
greater than nor less than the estimated aggregate weight that would
have been made without the changes. To comply with this requirement
concerning the APC changes, we are proposing to compare the estimated
aggregate weight using the CY 2014 scaled relative payment weights to
the estimated aggregate weight using the proposed CY 2015 unscaled
relative payment weights.
For CY 2014, we multiplied the CY 2014 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2013 claims to calculate the total relative
payment weight for each service. We then added together the total
relative payment weight for each of these services in order to
calculate an estimated aggregate weight for the year. For CY 2015, we
are proposing to apply the same process using the proposed CY 2015
unscaled relative payment weights rather than scaled relative payment
weights. We are proposing to calculate the weight scaler by dividing
the CY 2014 estimated aggregate weight by the proposed CY 2015
estimated aggregate weight. The service-mix is the same in the current
and prospective years because we use the same set of claims for service
volume in calculating the aggregate weight for each year. We note that
the CY 2014 OPPS scaled relative weights incorporate the estimated
payment weight from packaged laboratory tests previously paid at CLFS
rates.
For a detailed discussion of the weight scaler calculation, we
refer readers to the OPPS claims accounting document available on the
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
We are proposing to include estimated payments to CMHCs in our
comparison of the estimated unscaled relative payment weights in CY
2015 to the estimated total relative payment weights in CY 2014 using
CY 2013 claims data, holding all other components of the payment system
constant to isolate changes in total weight. Based on this comparison,
we adjusted the proposed CY 2015 unscaled relative payment weights for
purposes of budget neutrality. The proposed CY 2015 unscaled relative
payment weights were adjusted by multiplying them by a weight scaler of
1.3220 to ensure that the proposed CY 2015 relative payment weights are
budget neutral.
Section 1833(t)(14) of the Act provides the payment rates for
certain SCODs. Section 1833(t)(14)(H) of the Act states that
``Additional expenditures resulting from this paragraph shall not be
taken into account in establishing the conversion factor, weighting,
and other adjustment factors for 2004 and 2005 under paragraph (9), but
shall be taken into account for subsequent years.'' Therefore, the cost
of those SCODs (as discussed in section V.B.3. of this proposed rule)
is included in the budget neutrality calculations for the CY 2015 OPPS.
The proposed CY 2015 unscaled relative payment weights listed in
Addenda A and B to this proposed rule (which are available via the
Internet on the CMS Web site) incorporate the proposed recalibration
adjustments discussed in sections II.A.1. and II.A.2. of this proposed
rule.

B. Proposed Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the hospital inpatient market
basket percentage increase applicable to hospital discharges under
section 1886(b)(3)(B)(iii) of the Act. In the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28087), consistent with current law, based on IHS
Global Insight, Inc.'s first quarter 2014 forecast of the FY 2015
market basket increase, the proposed FY 2015 IPPS market basket update
is 2.7 percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv)
of the Act, as added by section 3401(i) of the Patient Protection and
Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section
10319(g) of that law and further amended by section 1105(e) of the
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152),
provide adjustments to the OPD fee schedule increase factor for CY
2015.
Specifically, section 1833(t)(3)(F)(i) of the Act requires that,
for 2012 and subsequent years, the OPD fee schedule increase factor
under subparagraph (C)(iv) be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as
equal to the 10-year moving average of changes in annual economy-wide,
private nonfarm business multifactor productivity (MFP) (as projected
by the Secretary for the 10-year period ending with the applicable
fiscal year, year, cost reporting period, or other annual period) (the
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR
51689 through 51692), we finalized our methodology for calculating and
applying the MFP adjustment. In the FY 2015 IPPS/LTCH PPS proposed rule
(79 FR 28087), we discussed the calculation of the proposed MFP
adjustment for FY 2015, which is 0.4 percentage point.
We are proposing that if more recent data become subsequently
available after the publication of this proposed rule (for example, a
more recent estimate of the market basket increase and the MFP
adjustment), we would use such data, if appropriate, to determine the
CY 2015 market basket update and the MFP adjustment, components in

[[Page 40963]]

calculating the OPD fee schedule increase factor under sections
1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in the CY 2015 OPPS/ASC
final rule with comment period.
In addition, section 1833(t)(3)(F)(ii) of the Act requires that,
for each of years 2010 through 2019, the OPD fee schedule increase
factor under section 1833(t)(3)(C)(iv) of the Act be reduced by the
adjustment described in section 1833(t)(3)(G) of the Act. For CY 2015,
section 1833(t)(3)(G)(iv) of the Act provides a 0.2 percentage point
reduction to the OPD fee schedule increase factor under section
1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the Act, we are proposing to
apply a 0.2 percentage point reduction to the OPD fee schedule increase
factor for CY 2015.
We note that section 1833(t)(3)(F) of the Act provides that
application of this subparagraph may result in the OPD fee schedule
increase factor under section 1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year, and may result in OPPS payment rates being
less than rates for the preceding year. As described in further detail
below, we are proposing to apply an OPD fee schedule increase factor of
2.1 percent for the CY 2015 OPPS (which is 2.7 percent, the proposed
estimate of the hospital inpatient market basket percentage increase,
less the proposed 0.4 percentage point MFP adjustment, and less the 0.2
percentage point additional adjustment).
Hospitals that fail to meet the Hospital OQR Program reporting
requirements are subject to an additional reduction of 2.0 percentage
points from the OPD fee schedule increase factor adjustment to the
conversion factor that would be used to calculate the OPPS payment
rates for their services, as required by section 1833(t)(17) of the
Act. For further discussion of the Hospital OQR Program, we refer
readers to section XIII. of this proposed rule.
In this proposed rule, we are proposing to amend 42 CFR
419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the
requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2015,
we reduce the OPD fee schedule increase factor by the MFP adjustment as
determined by CMS, and to reflect the requirement in section
1833(t)(3)(G)(iv) of the Act, as required by section 1833(t)(3)(F)(ii)
of the Act, that we reduce the OPD fee schedule increase factor by an
additional 0.2 percentage point for CY 2015.
To set the OPPS conversion factor for CY 2015, we are proposing to
increase the CY 2014 conversion factor of $72.672 by 2.1 percent. In
accordance with section 1833(t)(9)(B) of the Act, we are proposing to
further adjust the conversion factor for CY 2015 to ensure that any
revisions made to the wage index and rural adjustment are made on a
budget neutral basis. We are proposing to calculate an overall proposed
budget neutrality factor of 0.9998 for wage index changes by comparing
proposed total estimated payments from our simulation model using the
proposed FY 2015 IPPS wage indexes to those payments using the FY 2014
IPPS wage indexes, as adopted on a calendar year basis for the OPPS.
For CY 2015, we are proposing to maintain the current rural
adjustment policy, as discussed in section II.E. of this proposed rule.
Therefore, the proposed budget neutrality factor for the rural
adjustment is 1.0000.
For CY 2015, we are proposing to continue previously established
policies for implementing the cancer hospital payment adjustment
described in section 1833(t)(18) of the Act, as discussed in section
II.F. of this proposed rule. We are proposing to calculate a CY 2015
budget neutrality adjustment factor for the cancer hospital payment
adjustment by comparing estimated total CY 2015 payments under section
1833(t) of the Act, including the proposed CY 2015 cancer hospital
payment adjustment, to estimated CY 2015 total payments using the CY
2014 final cancer hospital payment adjustment as required under section
1833(t)(18)(B) of the Act. The CY 2015 estimated payments applying the
proposed CY 2015 cancer hospital payment adjustment are identical to
estimated payments applying the CY 2014 final cancer hospital payment
adjustment. Therefore, we are proposing to apply a budget neutrality
adjustment factor of 1.0000 to the conversion factor for the cancer
hospital payment adjustment.
For this proposed rule, we estimate that pass-through spending for
drugs, biologicals, and devices for CY 2015 would equal approximately
$15.5 million, which represents 0.03 percent of total projected CY 2015
OPPS spending. Therefore, the proposed conversion factor would be
adjusted by the difference between the 0.02 percent estimate of pass-
through spending for CY 2014 and the 0.03 percent estimate of pass-
through spending for CY 2015, resulting in a proposed adjustment for CY
2015 of 0.01 percent. Finally, estimated payments for outliers would
remain at 1.0 percent of total OPPS payments for CY 2015.
The proposed OPD fee schedule increase factor of 2.1 percent for CY
2015 (that is, the estimate of the hospital inpatient market basket
percentage increase of 2.7 percent less the proposed 0.4 percentage
point MFP adjustment and less the 0.2 percentage point required under
section 1833(t)(3)(F)(ii) of the Act), the required proposed wage index
budget neutrality adjustment of approximately 0.9998, the proposed
cancer hospital payment adjustment of 1.0000, and the proposed
adjustment of 0.01 percent of projected OPPS spending for the
difference in the pass-through spending result in a proposed conversion
factor for CY 2015 of $74.176.
Hospitals that fail to meet the reporting requirements of the
Hospital OQR Program would continue to be subject to a further
reduction of 2.0 percentage points to the OPD fee schedule increase
factor. For hospitals that fail to meet the requirements of the
Hospital OQR Program, we are proposing to make all other adjustments
discussed above, but using a reduced OPD fee schedule update factor of
0.1 percent (that is, the proposed OPD fee schedule increase factor of
2.1 percent further reduced by 2.0 percentage points). This results in
a proposed reduced conversion factor for CY 2015 of $72.692 for
hospitals that fail to meet the Hospital OQR requirements (a difference
of -$1.484 in the conversion factor relative to hospitals that met the
requirements).
In summary, for CY 2015, we are proposing to use a conversion
factor of $74.176 in the calculation of the national unadjusted payment
rates for those items and services for which payment rates are
calculated using geometric mean costs. We are proposing to amend Sec.
419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the
reductions to the OPD fee schedule increase factor that are required
for CY 2015 to satisfy the statutory requirements of sections
1833(t)(3)(F) and (t)(3)(G)(iv) of the Act. We are proposing to use a
reduced conversion factor of $72.692 in the calculation of payments for
hospitals that fail to meet the Hospital OQR Program requirements.

C. Proposed Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to
``determine a wage adjustment factor to adjust the portion of payment
and coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions
in a budget neutral manner'' (codified at 42 CFR 419.43(a)). This
portion of the

[[Page 40964]]

OPPS payment rate is called the OPPS labor-related share. Budget
neutrality is discussed in section II.B. of this proposed rule.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, approximately 60 percent of
the costs of services paid under the OPPS were attributable to wage
costs. We confirmed that this labor-related share for outpatient
services is appropriate during our regression analysis for the payment
adjustment for rural hospitals in the CY 2006 OPPS final rule with
comment period (70 FR 68553). Therefore, we are proposing to continue
this policy for the CY 2015 OPPS. We refer readers to section II.H. of
this proposed rule for a description and example of how the wage index
for a particular hospital is used to determine payment for the
hospital.
As discussed in section II.A.2.c. of this proposed rule, for
estimating APC costs, we standardize 60 percent of estimated claims
costs for geographic area wage variation using the same proposed FY
2015 pre-reclassified wage index that the IPPS uses to standardize
costs. This standardization process removes the effects of differences
in area wage levels from the determination of a national unadjusted
OPPS payment rate and copayment amount.
Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the original
OPPS April 7, 2000 final rule with comment period (65 FR 18495 and
18545)), the OPPS adopted the final fiscal year IPPS wage index as the
calendar year wage index for adjusting the OPPS standard payment
amounts for labor market differences. Thus, the wage index that applies
to a particular acute care short-stay hospital under the IPPS also
applies to that hospital under the OPPS. As initially explained in the
September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that
using the IPPS wage index as the source of an adjustment factor for the
OPPS is reasonable and logical, given the inseparable, subordinate
status of the HOPD within the hospital overall. In accordance with
section 1886(d)(3)(E) of the Act, the IPPS wage index is updated
annually.
The Affordable Care Act contained several provisions affecting the
wage index. These provisions were discussed in the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74191). As discussed in that
final rule with comment period, section 10324 of the Affordable Care
Act added section 1886(d)(3)(E)(iii)(II) to the Act, which defines a
``frontier State,'' and amended section 1833(t) of the Act to add new
paragraph (19), which requires a ``frontier State'' wage index floor of
1.00 in certain cases, and states that the frontier State floor shall
not be applied in a budget neutral manner. We codified these
requirements in Sec. 419.43(c)(2) and (c)(3) of our regulations. For
the CY 2015 OPPS, we are proposing to implement this provision in the
same manner as we have since CY 2011. That is, frontier State hospitals
would receive a wage index of 1.00 if the otherwise applicable wage
index (including reclassification, rural and imputed floor, and rural
floor budget neutrality) is less than 1.00. Similar to our current
policy for HOPDs that are affiliated with multi-campus hospital
systems, the HOPD would receive a wage index based on the geographic
location of the specific inpatient hospital with which it is
associated. Therefore, if the associated hospital is located in a
frontier State, the wage index adjustment applicable for the hospital
would also apply for the affiliated HOPD. We refer readers to the
following sections in the FY 2011 through FY 2014 IPPS/LTCH PPS final
rules for discussions regarding this provision, including our
methodology for identifying which areas meet the definition of frontier
States as provided for in section 1886(d)(3)(E)(iii)(II) of the Act:
For FY 2011, 75 FR 50160 through 50161; for FY 2012, 76 FR 51793,
51795, and 51825; for FY 2013, 77 FR 53369 through 53370; and for FY
2014, 78 FR 50590 through 50591. We also refer readers to the FY 2015
IPPS/LTCH PPS proposed rule (79 FR 28069) for discussion regarding this
provision.
In addition to the changes required by the Affordable Care Act, we
note that the proposed FY 2015 IPPS wage indexes continue to reflect a
number of adjustments implemented over the past few years, including,
but not limited to, reclassification of hospitals to different
geographic areas, the rural and imputed floor provisions, an adjustment
for occupational mix, and an adjustment to the wage index based on
commuting patterns of employees (the out-migration adjustment). We
refer readers to the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054
through 28084) for a detailed discussion of all proposed changes to the
FY 2015 IPPS wage indices. In addition, we refer readers to the CY 2005
OPPS final rule with comment period (69 FR 65842 through 65844) and
subsequent OPPS rules for a detailed discussion of the history of these
wage index adjustments as applied under the OPPS.
As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR
28054 through 28055), the Office of Management and Budget (OMB) issued
revisions to the current labor market area delineations on February 28,
2013, that included a number of significant changes such as new Core
Based Statistical Areas (CBSAs), urban counties that become rural,
rural counties that become urban, and existing CBSAs that are split
apart (OMB Bulletin 13-01). This bulletin can be found at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf.
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50586), in
order to allow for sufficient time to assess the new revisions and
their ramifications, we intended to propose changes to the IPPS wage
index based on the newest CBSA delineations in the FY 2015 IPPS/LTCH
PPS proposed rule. Similarly, in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74951), we stated that we intended to propose
changes in the OPPS, which uses the IPPS wage index, based on the new
OMB delineations in this CY 2015 OPPS/ASC proposed rule, consistent
with any proposals in the FY 2015 IPPS/LTCH PPS proposed rule. We refer
readers to proposed changes based on the new OMB delineations in the FY
2015 IPPS/LTCH proposed rule at 79 FR 28054 through 28084.
In this proposed rule, we are proposing to use the proposed FY 2015
hospital IPPS wage index for urban and rural areas as the wage index
for the OPPS hospital to determine the wage adjustments for the OPPS
payment rate and the copayment standardized amount for CY 2015. (We
refer readers to the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054)
and the proposed FY 2015 hospital wage index files posted on the CMS
Web site.) We note that the proposed FY 2015 IPPS wage indexes reflect
a number of proposed changes as a result of the new OMB delineations as
well as a proposed 1-year extension of the imputed rural floor. The CY
2015 OPPS wage index (for hospitals paid under the IPPS and OPPS) would
be the final FY 2015 IPPS wage index. Thus, any proposed adjustments,
including the adjustments related to the new OMB delineations, that are
finalized for the IPPS wage index would be reflected in the OPPS wage
index. As stated earlier in this section, we continue to believe that
using the IPPS wage index as the source of an adjustment factor for the
OPPS is reasonable and logical, given the inseparable, subordinate
status of the HOPD within the hospital overall. Therefore, we are not
proposing to

[[Page 40965]]

change our current regulations, which require that we use the FY 2015
IPPS wage indexes for calculating OPPS payments in CY 2015.
Hospitals that are paid under the OPPS but not under the IPPS do
not have a hospital wage index under the IPPS. Therefore, for non-IPPS
hospitals paid under the OPPS, we assign the wage index that would be
applicable if the hospital were paid under the IPPS, based on its
geographic location and any applicable wage index adjustments. We are
proposing to adopt the proposed wage index changes from the FY 2015
IPPS/LTCH PPS proposed rule for these hospitals. The following is a
brief summary of the major proposed changes in the FY 2015 IPPS wage
indexes and any adjustments that we are proposing to apply to these
hospitals under the OPPS for CY 2015. We refer the reader to the FY
2015 IPPS/LTCH PPS proposed rule (79 FR 28054 through 28084) for a
detailed discussion of the proposed changes to the wage indexes.
For CY 2015, we are proposing to continue our policy of allowing
non-IPPS hospitals paid under the OPPS to qualify for the out-migration
adjustment if they are located in a section 505 out-migration county
(section 505 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173)). Applying this
adjustment is consistent with our proposed policy of adopting IPPS wage
index policies for hospitals paid under the OPPS. We note that, because
non-IPPS hospitals cannot reclassify, they are eligible for the out-
migration wage adjustment if they are located in a section 505 out-
migration county. This is the same proposed out-migration adjustment
policy that would apply if the hospital were paid under the IPPS. Table
4J from the FY 2015 IPPS/LTCH PPS proposed rule (available via the
Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) identifies
counties eligible for the out-migration adjustment and IPPS hospitals
that would receive the adjustment for FY 2015.
As we have done in prior years, we are including Table 4J from the
FY 2015 IPPS/LTCH PPS proposed rule as Addendum L to this proposed rule
with the addition of non-IPPS hospitals that would receive the section
505 out-migration adjustment under the CY 2015 OPPS. Addendum L is
available via the Internet on the CMS Web site.
In the FY 2015 IPPS/LTCH PPS proposed rule, we proposed to adopt
the new OMB labor market area delineations issued by OMB in OMB
Bulletin No. 13-01 on February 28, 2013, based on standards published
on June 28, 2010 (75 FR 37246 through 37252) and the 2010 Census data
to delineate labor market areas for purposes of the IPPS wage index.
For IPPS wage index purposes, for hospitals that would be designated as
rural under the new OMB labor market area delineations that currently
are located in urban CBSAs, we generally proposed to assign them the
urban wage index value of the CBSA in which they are physically located
for FY 2014 for a period of 3 fiscal years (79 FR 28060 through 28061).
To be consistent, we are proposing to apply the same policy to
hospitals paid under the OPPS but not under the IPPS so that such
hospitals would maintain the wage index of the CBSA in which they are
physically located for FY 2014 for the next 3 calendar years. This
proposed policy would impact six hospitals for purposes of OPPS
payment.
We believe that adopting the new OMB labor market area delineations
would create a more accurate wage index system, but we also recognize
that implementing the new OMB delineations may cause some short-term
instability in hospital payments. Therefore, similar to the policy we
adopted in the FY 2005 IPPS final rule (69 FR 49033), in the FY 2015
IPPS/LTCH PPS proposed rule (79 FR 28062), we proposed a 1-year blended
wage index for all hospitals that would experience any decrease in
their actual payment wage index exclusively due to the proposed
implementation of the new OMB delineations. We proposed that a post-
reclassified wage index with the rural and imputed floors applied would
be computed based on the hospital's FY 2014 CBSA (that is, using all of
its FY 2014 constituent county/ies), and another post-reclassified wage
index with the rural and imputed floors applied would be computed based
on the hospital's new FY 2015 CBSA (that is, the FY 2015 constituent
county/ies). We proposed to compare these two wage indexes. If the
proposed FY 2015 wage index with FY 2015 CBSAs would be lower than the
proposed FY 2015 wage index with FY 2014 CBSAs, we proposed that a
blended wage index would be computed, consisting of 50 percent of each
of the two wage indexes added together. We proposed that this blended
wage index would be the hospital's wage index for FY 2015. For purposes
of the OPPS, we also are proposing to apply this 50-percent transition
blend to hospitals paid under the OPPS but not under the IPPS. We
believe a 1-year, 50/50 blended wage index would mitigate the short-
term instability and negative payment impacts due to the proposed
implementation of the new OMB delineations, providing hospitals with a
transition period during which they may adjust to their new geographic
CBSA. We believe that a longer transition period would reduce the
accuracy of the overall labor market area wage index system, and
generally would not be warranted for hospitals moving from one urban
geographic labor market area to another.
In addition, for the FY 2015 IPPS, we proposed to continue the
extension of the imputed floor policy (both the original methodology
and alternative methodology) for another year, through September 30,
2015 (79 FR 28068 through 28069). For purposes of the CY 2015 OPPS, we
are also proposing to apply the imputed floor policy to hospitals paid
under the OPPS but not under the IPPS.
For CMHCs, we are proposing to continue to calculate the wage index
by using the post-reclassification IPPS wage index based on the CBSA
where the CMHC is located. As with OPPS hospitals and for the same
reasons, we are proposing to apply a 1-year, 50/50 blended wage index
to CMHCs that would receive a lower wage index due to the new CBSA
delineations. In addition, as with OPPS hospitals and for the same
reasons, for CMHCs currently located in urban CBSAs that would be
designated as rural under the new OMB labor market area delineations,
we are proposing to maintain the urban wage index value of the CBSA in
which they are physically located for CY 2014 for the next 3 calendar
years. Consistent with our current policy, the wage index that applies
to CMHCs includes both the imputed floor adjustment and the rural floor
adjustment, but does not include the out-migration adjustment because
that adjustment only applies to hospitals.
With the exception of the proposed out-migration wage adjustment
table (Addendum L to this proposed rule, which is available via the
Internet on the CMS Web site), which includes non-IPPS hospitals paid
under the OPPS, we are not reprinting the proposed FY 2015 IPPS wage
indexes referenced in this discussion of the wage index. We refer
readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the proposed FY
2015 IPPS wage index tables.

[[Page 40966]]

D. Proposed Statewide Average Default CCRs

In addition to using CCRs to estimate costs from charges on claims
for ratesetting, CMS uses overall hospital-specific CCRs calculated
from the hospital's most recent cost report to determine outlier
payments, payments for pass-through devices, and monthly interim
transitional corridor payments under the OPPS during the PPS year. MACs
cannot calculate a CCR for some hospitals because there is no cost
report available. For these hospitals, CMS uses the statewide average
default CCRs to determine the payments mentioned above until a
hospital's MAC is able to calculate the hospital's actual CCR from its
most recently submitted Medicare cost report. These hospitals include,
but are not limited to, hospitals that are new, have not accepted
assignment of an existing hospital's provider agreement, and have not
yet submitted a cost report. CMS also uses the statewide average
default CCRs to determine payments for hospitals that appear to have a
biased CCR (that is, the CCR falls outside the predetermined ceiling
threshold for a valid CCR) or for hospitals in which the most recent
cost report reflects an all-inclusive rate status (Medicare Claims
Processing Manual (Pub. 100-04), Chapter 4, Section 10.11). In this
proposed rule, we are proposing to update the default ratios for CY
2015 using the most recent cost report data. We discuss our policy for
using default CCRs, including setting the ceiling threshold for a valid
CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68594 through 68599) in the context of our adoption of an outlier
reconciliation policy for cost reports beginning on or after January 1,
2009.
For CY 2015, we are proposing to continue to use our standard
methodology of calculating the statewide average default CCRs using the
same hospital overall CCRs that we use to adjust charges to costs on
claims data for setting the proposed CY 2015 OPPS relative payment
weights. Table 12 below lists the proposed CY 2015 default urban and
rural CCRs by State and compares them to last year's default CCRs.
These proposed CCRs represent the ratio of total costs to total charges
for those cost centers relevant to outpatient services from each
hospital's most recently submitted cost report, weighted by Medicare
Part B charges. We also are proposing to adjust ratios from submitted
cost reports to reflect the final settled status by applying the
differential between settled to submitted overall CCRs for the cost
centers relevant to outpatient services from the most recent pair of
final settled and submitted cost reports. We then are proposing to
weight each hospital's CCR by the volume of separately paid line-items
on hospital claims corresponding to the year of the majority of cost
reports used to calculate the overall CCRs. We refer readers to the CY
2008 OPPS/ASC final rule with comment period (72 FR 66680 through
66682) and prior OPPS rules for a more detailed discussion of our
established methodology for calculating the statewide average default
CCRs, including the hospitals used in our calculations and our trimming
criteria.
For Maryland, we used an overall weighted average CCR for all
hospitals in the Nation as a substitute for Maryland CCRs. Few
hospitals in Maryland are eligible to receive payment under the OPPS,
which limits the data available to calculate an accurate and
representative CCR. The weighted CCR is used for Maryland because it
takes into account each hospital's volume, rather than treating each
hospital equally. We refer readers to the CY 2005 OPPS final rule with
comment period (69 FR 65822) for further discussion and the rationale
for our longstanding policy of using the national average CCR for
Maryland. In general, observed changes in the statewide average default
CCRs between CY 2014 and CY 2015 are modest and the few significant
changes are associated with areas that have a small number of
hospitals.
Table 12 below lists the proposed statewide average default CCRs
for OPPS services furnished on or after January 1, 2015.

Table 12--Proposed CY 2015 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
Previous
Proposed CY default CCR
State Urban/rural 2015 default (CY 2014 OPPS
CCR final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA........................................ RURAL........................... 0.463 0.473
ALASKA........................................ URBAN........................... 0.301 0.302
ALABAMA....................................... RURAL........................... 0.246 0.229
ALABAMA....................................... URBAN........................... 0.189 0.188
ARKANSAS...................................... RURAL........................... 0.233 0.244
ARKANSAS...................................... URBAN........................... 0.237 0.220
ARIZONA....................................... RURAL........................... 0.232 0.254
ARIZONA....................................... URBAN........................... 0.186 0.182
CALIFORNIA.................................... RURAL........................... 0.192 0.190
CALIFORNIA.................................... URBAN........................... 0.203 0.206
COLORADO...................................... RURAL........................... 0.426 0.393
COLORADO...................................... URBAN........................... 0.223 0.221
CONNECTICUT................................... RURAL........................... 0.356 0.343
CONNECTICUT................................... URBAN........................... 0.277 0.276
DISTRICT OF COLUMBIA.......................... URBAN........................... 0.295 0.279
DELAWARE...................................... URBAN........................... 0.314 0.356
FLORIDA....................................... RURAL........................... 0.185 0.160
FLORIDA....................................... URBAN........................... 0.160 0.160
GEORGIA....................................... RURAL........................... 0.254 0.260
GEORGIA....................................... URBAN........................... 0.211 0.205
HAWAII........................................ RURAL........................... 0.341 0.345
HAWAII........................................ URBAN........................... 0.300 0.298
IOWA.......................................... RURAL........................... 0.323 0.308
IOWA.......................................... URBAN........................... 0.270 0.266
IDAHO......................................... RURAL........................... 0.361 0.359

[[Page 40967]]

IDAHO......................................... URBAN........................... 0.488 0.478
ILLINOIS...................................... RURAL........................... 0.259 0.252
ILLINOIS...................................... URBAN........................... 0.218 0.222
INDIANA....................................... RURAL........................... 0.348 0.326
INDIANA....................................... URBAN........................... 0.284 0.288
KANSAS........................................ RURAL........................... 0.308 0.313
KANSAS........................................ URBAN........................... 0.233 0.239
KENTUCKY...................................... RURAL........................... 0.231 0.221
KENTUCKY...................................... URBAN........................... 0.220 0.225
LOUISIANA..................................... RURAL........................... 0.271 0.257
LOUISIANA..................................... URBAN........................... 0.212 0.222
MARYLAND...................................... RURAL........................... 0.292 0.283
MARYLAND...................................... URBAN........................... 0.249 0.248
MASSACHUSETTS................................. RURAL........................... 0.300 0.395
MASSACHUSETTS................................. URBAN........................... 0.330 0.336
MAINE......................................... RURAL........................... 0.434 0.452
MAINE......................................... URBAN........................... 0.426 0.438
MICHIGAN...................................... RURAL........................... 0.339 0.341
MICHIGAN...................................... URBAN........................... 0.322 0.322
MINNESOTA..................................... RURAL........................... 0.469 0.462
MINNESOTA..................................... URBAN........................... 0.357 0.349
MISSOURI...................................... RURAL........................... 0.277 0.263
MISSOURI...................................... URBAN........................... 0.274 0.280
MISSISSIPPI................................... RURAL........................... 0.237 0.233
MISSISSIPPI................................... URBAN........................... 0.188 0.200
MONTANA....................................... RURAL........................... 0.520 0.481
MONTANA....................................... URBAN........................... 0.379 0.384
NORTH CAROLINA................................ RURAL........................... 0.255 0.258
NORTH CAROLINA................................ URBAN........................... 0.256 0.256
NORTH DAKOTA.................................. RURAL........................... 0.660 0.661
NORTH DAKOTA.................................. URBAN........................... 0.400 0.400
NEBRASKA...................................... RURAL........................... 0.308 0.323
NEBRASKA...................................... URBAN........................... 0.257 0.243
NEW HAMPSHIRE................................. RURAL........................... 0.272 0.326
NEW HAMPSHIRE................................. URBAN........................... 0.288 0.287
NEW JERSEY.................................... URBAN........................... 0.207 0.213
NEW MEXICO.................................... RURAL........................... 0.307 0.291
NEW MEXICO.................................... URBAN........................... 0.300 0.304
NEVADA........................................ RURAL........................... 0.244 0.220
NEVADA........................................ URBAN........................... 0.172 0.154
NEW YORK...................................... RURAL........................... 0.332 0.345
NEW YORK...................................... URBAN........................... 0.348 0.351
OHIO.......................................... RURAL........................... 0.317 0.327
OHIO.......................................... URBAN........................... 0.227 0.232
OKLAHOMA...................................... RURAL........................... 0.281 0.258
OKLAHOMA...................................... URBAN........................... 0.210 0.205
OREGON........................................ RURAL........................... 0.299 0.311
OREGON........................................ URBAN........................... 0.358 0.357
PENNSYLVANIA.................................. RURAL........................... 0.285 0.257
PENNSYLVANIA.................................. URBAN........................... 0.198 0.198
PUERTO RICO................................... URBAN........................... 0.583 0.614
RHODE ISLAND.................................. URBAN........................... 0.292 0.295
SOUTH CAROLINA................................ RURAL........................... 0.195 0.190
SOUTH CAROLINA................................ URBAN........................... 0.199 0.203
SOUTH DAKOTA.................................. RURAL........................... 0.288 0.287
SOUTH DAKOTA.................................. URBAN........................... 0.214 0.219
TENNESSEE..................................... RURAL........................... 0.207 0.207
TENNESSEE..................................... URBAN........................... 0.189 0.190
TEXAS......................................... RURAL........................... 0.247 0.235
TEXAS......................................... URBAN........................... 0.206 0.197
UTAH.......................................... RURAL........................... 0.474 0.474
UTAH.......................................... URBAN........................... 0.340 0.334
VIRGINIA...................................... RURAL........................... 0.216 0.226
VIRGINIA...................................... URBAN........................... 0.241 0.238
VERMONT....................................... RURAL........................... 0.446 0.456
VERMONT....................................... URBAN........................... 0.401 0.397
WASHINGTON.................................... RURAL........................... 0.300 0.330
WASHINGTON.................................... URBAN........................... 0.365 0.360

[[Page 40968]]

WISCONSIN..................................... RURAL........................... 0.335 0.344
WISCONSIN..................................... URBAN........................... 0.298 0.291
WEST VIRGINIA................................. RURAL........................... 0.320 0.283
WEST VIRGINIA................................. URBAN........................... 0.319 0.319
WYOMING....................................... RURAL........................... 0.403 0.400
WYOMING....................................... URBAN........................... 0.262 0.269
----------------------------------------------------------------------------------------------------------------

E. Proposed Adjustment for Rural SCHs and EACHs Under Section
1833(t)(13)(B) of the Act

In the CY 2006 OPPS final rule with comment period (70 FR 68556),
we finalized a payment increase for rural SCHs of 7.1 percent for all
services and procedures paid under the OPPS, excluding drugs,
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the
Act, as added by section 411 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173).
Section 1833(t)(13) of the Act provided the Secretary the authority to
make an adjustment to OPPS payments for rural hospitals, effective
January 1, 2006, if justified by a study of the difference in costs by
APC between hospitals in rural areas and hospitals in urban areas. Our
analysis showed a difference in costs for rural SCHs. Therefore, for
the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of
7.1 percent for all services and procedures paid under the OPPS,
excluding separately payable drugs and biologicals, brachytherapy
sources, and devices paid under the pass-through payment policy, in
accordance with section 1833(t)(13)(B) of the Act.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010
and 68227), for purposes of receiving this rural adjustment, we revised
Sec. 419.43(g) of the regulations to clarify that EACHs also are
eligible to receive the rural SCH adjustment, assuming these entities
otherwise meet the rural adjustment criteria. Currently, two hospitals
are classified as EACHs, and as of CY 1998, under section 4201(c) of
Public Law 105-33, a hospital can no longer become newly classified as
an EACH.
This adjustment for rural SCHs is budget neutral and applied before
calculating outlier payments and copayments. We stated in the CY 2006
OPPS final rule with comment period (70 FR 68560) that we would not
reestablish the adjustment amount on an annual basis, but we may review
the adjustment in the future and, if appropriate, would revise the
adjustment. We provided the same 7.1 percent adjustment to rural SCHs,
including EACHs, again in CYs 2008 through 2014. Further, in the CY
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated
the regulations at Sec. 419.43(g)(4) to specify, in general terms,
that items paid at charges adjusted to costs by application of a
hospital-specific CCR are excluded from the 7.1 percent payment
adjustment.
For the CY 2015 OPPS, we are proposing to continue our policy of a
7.1 percent payment adjustment that is done in a budget neutral manner
for rural SCHs, including EACHs, for all services and procedures paid
under the OPPS, excluding separately payable drugs and biologicals,
devices paid under the pass-through payment policy, and items paid at
charges reduced to costs.

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

1. Background
Since the inception of the OPPS, which was authorized by the
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid
the 11 hospitals that meet the criteria for cancer hospitals identified
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered
outpatient hospital services. These cancer hospitals are exempted from
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced
Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established
section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit
Decline in Payment,'' to determine cancer and children's hospitals OPPS
payments based on their pre-BBA payment amount (often referred to as
``held harmless'').
As required under section 1833(t)(7)(D)(ii) of the Act, a cancer
hospital receives the full amount of the difference between payments
for covered outpatient services under the OPPS and a ``pre-BBA
amount.'' That is, cancer hospitals are permanently held harmless to
their ``pre-BBA amount,'' and they receive transitional outpatient
payments (TOPs) or hold harmless payments to ensure that they do not
receive a payment that is lower under the OPPS than the payment they
would have received before implementation of the OPPS, as set forth in
section 1833(t)(7)(F) of the Act. The ``pre-BBA amount'' is the product
of the hospital's reasonable costs for covered outpatient services
occurring in the current year and the base payment-to-cost ratio (PCR)
for the hospital defined in section 1833(t)(7)(F)(ii) of the Act. The
``pre-BBA amount,'' including the determination of the base PCR, are
defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet E, Part
B, of the Hospital Cost Report or the Hospital Health Care Complex Cost
Report (Form CMS-2552-96 and Form CMS-2552-10, respectively) as
applicable each year. Section 1833(t)(7)(I) of the Act exempts TOPs
from budget neutrality calculations.
Section 3138 of the Affordable Care Act amended section 1833(t) of
the Act by adding a new paragraph (18), which instructs the Secretary
to conduct a study to determine if, under the OPPS, outpatient costs
incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of
the Act with respect to APC groups exceed outpatient costs incurred by
other hospitals furnishing services under section 1833(t) of the Act,
as determined appropriate by the Secretary. Section 1833(t)(18)(A) of
the Act requires the Secretary to take into consideration the cost of
drugs and biologicals incurred by cancer and other hospitals. Section
1833(t)(18)(B) of the Act provides that if the Secretary determines
that cancer hospitals' costs are greater than other hospitals' costs,
the Secretary shall provide an

[[Page 40969]]

appropriate adjustment under section 1833(t)(2)(E) of the Act to
reflect these higher costs. In 2011, after conducting the study
required by section 1833(t)(18)(A) of the Act, we determined that
outpatient costs incurred by the 11 specified cancer hospitals were
greater than the costs incurred by other OPPS hospitals. For a complete
discussion regarding the cancer hospital cost study, we refer readers
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200
through 74201).
Based on these findings, we finalized a policy to provide a payment
adjustment to the 11 specified cancer hospitals that reflects their
higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74202 through 74206). Specifically, we
adopted a policy to provide additional payments to the cancer hospitals
so that each cancer hospital's final PCR for services provided in a
given calendar year is equal to the weighted average PCR (which we
refer to as the ``target PCR'') for other hospitals paid under the
OPPS. The target PCR is set in advance of the calendar year and is
calculated using the most recent submitted or settled cost report data
that are available at the time of final rulemaking for the calendar
year. The amount of the payment adjustment is made on an aggregate
basis at cost report settlement. We note that the changes made by
section 1833(t)(18) of the Act do not affect the existing statutory
provisions that provide for TOPs for cancer hospitals. The TOPs are
assessed as usual after all payments, including the cancer hospital
payment adjustment, have been made for a cost reporting period. For CYs
2012 and 2013, the target PCR for purposes of the cancer hospital
payment adjustment was 0.91. For CY 2014, the target PCR for purposes
of the cancer hospital payment adjustment was 0.89.
2. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2015
For CY 2015, we are proposing to continue our policy to provide
additional payments to cancer hospitals so that each cancer hospital's
final PCR is equal to the weighted average PCR (or ``target PCR'') for
the other OPPS hospitals using the most recent submitted or settled
cost report data that are available at the time of the development of
this proposed rule. To calculate the proposed CY 2015 target PCR, we
used the same extract of cost report data from HCRIS, as discussed in
section II.A. of this proposed rule, used to estimate costs for the CY
2015 OPPS. Using these cost report data, we included data from
Worksheet E, Part B, for each hospital, using data from each hospital's
most recent cost report, whether as submitted or settled.
We then limited the dataset to the hospitals with CY 2013 claims
data that we used to model the impact of the proposed CY 2015 APC
relative payment weights (3,881 hospitals) because it is appropriate to
use the same set of hospitals that we are using to calibrate the
modeled CY 2015 OPPS. The cost report data for the hospitals in this
dataset were from cost report periods with fiscal year ends ranging
from 2012 to 2013. We then removed the cost report data of the 47
hospitals located in Puerto Rico from our dataset because we do not
believe that their cost structure reflects the costs of most hospitals
paid under the OPPS and, therefore, their inclusion may bias the
calculation of hospital-weighted statistics. We also removed the cost
report data of 27 hospitals because these hospitals had cost report
data that were not complete (missing aggregate OPPS payments, missing
aggregate cost data, or missing both), so that all cost reports in the
study would have both the payment and cost data necessary to calculate
a PCR for each hospital, leading to a proposed analytic file of 3,807
hospitals with cost report data.
Using this smaller dataset of cost report data, we estimated that,
on average, the OPPS payments to other hospitals furnishing services
under the OPPS are approximately 89 percent of reasonable cost
(weighted average PCR of 0.89). Therefore, we are proposing that the
payment amount associated with the cancer hospital payment adjustment
to be determined at cost report settlement would be the additional
payment needed to result in a proposed target PCR equal to 0.89 for
each cancer hospital.
Table 13 below indicates the estimated percentage increase in OPPS
payments to each cancer hospital for CY 2015 due to the cancer hospital
payment adjustment policy. The actual amount of the CY 2015 cancer
hospital payment adjustment for each cancer hospital will be determined
at cost report settlement and will depend on each hospital's CY 2015
payments and costs. We note that the changes made by section
1833(t)(18) of the Act do not affect the existing statutory provisions
that provide for TOPs for cancer hospitals. The TOPs will be assessed
as usual after all payments, including the cancer hospital payment
adjustment, have been made for a cost reporting period.

Table 13--Estimated CY 2015 Hospital-Specific Payment Adjustment for
Cancer Hospitals To Be Provided at Cost Report Settlement
------------------------------------------------------------------------
Estimated
percentage
Provider No. Hospital name increase in
OPPS payments
for CY 2015
------------------------------------------------------------------------
050146..................... City of Hope Comprehensive 15.5
Cancer Center.
050660..................... USC Norris Cancer Hospital. 22.0
100079..................... Sylvester Comprehensive 15.8
Cancer Center.
100271..................... H. Lee Moffitt Cancer 19.9
Center & Research
Institute.
220162..................... Dana-Farber Cancer 47.6
Institute.
330154..................... Memorial Sloan-Kettering 45.7
Cancer Center.
330354..................... Roswell Park Cancer 16.6
Institute.
360242..................... James Cancer Hospital & 35.1
Solove Research Institute.
390196..................... Fox Chase Cancer Center.... 18.5
450076..................... M.D. Anderson Cancer Center 60.1
500138..................... Seattle Cancer Care 53.3
Alliance.
------------------------------------------------------------------------

[[Page 40970]]

G. Proposed Hospital Outpatient Outlier Payments

1. Background
The OPPS provides outlier payments to hospitals to help mitigate
the financial risk associated with high-cost and complex procedures,
where a very costly service could present a hospital with significant
financial loss. As explained in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74958 through 74960), we set our projected target
for aggregate outlier payments at 1.0 percent of the estimated
aggregate total payments under the OPPS for the prospective year.
Outlier payments are provided on a service-by-service basis when the
cost of a service exceeds the APC payment amount multiplier threshold
(the APC payment amount multiplied by a certain amount) as well as the
APC payment amount plus a fixed-dollar amount threshold (the APC
payment plus a certain amount of dollars). In CY 2014, the outlier
threshold was met when the hospital's cost of furnishing a service
exceeded 1.75 times (the multiplier threshold) the APC payment amount
and exceeded the APC payment amount plus $2,900 (the fixed-dollar
amount threshold). If the cost of a service exceeds both the multiplier
threshold and the fixed-dollar threshold, the outlier payment is
calculated as 50 percent of the amount by which the cost of furnishing
the service exceeds 1.75 times the APC payment amount. Beginning with
CY 2009 payments, outlier payments are subject to a reconciliation
process similar to the IPPS outlier reconciliation process for cost
reports, as discussed in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68594 through 68599).
It has been our policy to report the actual amount of outlier
payments as a percent of total spending in the claims being used to
model the proposed OPPS. Our current estimate of total outlier payments
as a percent of total CY 2013 OPPS payment, using available CY 2013
claims and the revised OPPS expenditure estimate for the FY 2015
President's Budget, is approximately 1.2 percent of the total
aggregated OPPS payments. Therefore, for CY 2013, we estimate that we
paid 0.2 percent above the CY 2013 outlier target of 1.0 percent of
total aggregated OPPS payments.
Using CY 2013 claims data and CY 2014 payment rates, we currently
estimate that the aggregate outlier payments for CY 2014 will be
approximately 0.9 percent of the total CY 2014 OPPS payments. The
difference between 0.9 percent and the 1.0 percent target is reflected
in the regulatory impact analysis in section XXII. of this proposed
rule. We provide estimated CY 2015 outlier payments for hospitals and
CMHCs with claims included in the claims data that we used to model
impacts in the Hospital-Specific Impacts--Provider-Specific Data file
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Proposed Outlier Calculation
For CY 2015, we are proposing to continue our policy of estimating
outlier payments to be 1.0 percent of the estimated aggregate total
payments under the OPPS. We are proposing that a portion of that 1.0
percent, an amount equal to 0.47 percent of outlier payments (or 0.0047
percent of total OPPS payments) would be allocated to CMHCs for PHP
outlier payments. This is the amount of estimated outlier payments that
would result from the proposed CMHC outlier threshold as a proportion
of total estimated OPPS outlier payments. As discussed in section
VIII.D. of this proposed rule, for CMHCs, we are proposing to continue
our longstanding policy that if a CMHC's cost for partial
hospitalization services, paid under either APC 0172 (Level I Partial
Hospitalization (3 services) for CMHCs) or APC 0173 (Level II Partial
Hospitalization (4 or more services) for CMHCs), exceeds 3.40 times the
payment rate for APC 0173, the outlier payment would be calculated as
50 percent of the amount by which the cost exceeds 3.40 times the APC
0173 payment rate. For further discussion of CMHC outlier payments, we
refer readers to section VIII.D. of this proposed rule.
To ensure that the estimated CY 2015 aggregate outlier payments
would equal 1.0 percent of estimated aggregate total payments under the
OPPS, we are proposing that the hospital outlier threshold be set so
that outlier payments would be triggered when a hospital's cost of
furnishing a service exceeds 1.75 times the APC payment amount and
exceeds the APC payment amount plus $3,100.
We calculated the proposed fixed-dollar threshold of $3,100 using
the standard methodology most recently used for CY 2014 (78 FR 74959
through 74960). For purposes of estimating outlier payments for this
proposed rule, we used the hospital-specific overall ancillary CCRs
available in the April 2014 update to the Outpatient Provider-Specific
File (OPSF). The OPSF contains provider-specific data, such as the most
current CCRs, which are maintained by the Medicare contractors and used
by the OPPS Pricer to pay claims. The claims that we use to model each
OPPS update lag by 2 years.
In order to estimate the CY 2015 hospital outlier payments for this
proposed rule, we inflated the charges on the CY 2013 claims using the
same inflation factor of 1.1146 that we used to estimate the IPPS
fixed-dollar outlier threshold for the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28321). We used an inflation factor of 1.0557 to estimate
CY 2014 charges from the CY 2013 charges reported on CY 2013 claims.
The methodology for determining this charge inflation factor is
discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321). As
we stated in the CY 2005 OPPS final rule with comment period (69 FR
65845), we believe that the use of these charge inflation factors are
appropriate for the OPPS because, with the exception of the inpatient
routine service cost centers, hospitals use the same ancillary and
outpatient cost centers to capture costs and charges for inpatient and
outpatient services.
As noted in the CY 2007 OPPS/ASC final rule with comment period (71
FR 68011), we are concerned that we could systematically overestimate
the OPPS hospital outlier threshold if we did not apply a CCR inflation
adjustment factor. Therefore, we are proposing to apply the same CCR
inflation adjustment factor that we are proposing to apply for the FY
2015 IPPS outlier calculation to the CCRs used to simulate the proposed
CY 2015 OPPS outlier payments to determine the fixed-dollar threshold.
Specifically, for CY 2015, we are proposing to apply an adjustment
factor of 0.9813 to the CCRs that were in the April 2014 OPSF to trend
them forward from CY 2014 to CY 2015. The methodology for calculating
this proposed adjustment was discussed in the FY 2015 IPPS/LTCH PPS
proposed rule (79 FR 28321).
To model hospital outlier payments for this proposed rule, we
applied the overall CCRs from the April 2014 OPSF file after adjustment
(using the proposed CCR inflation adjustment factor of 0.9813 to
approximate CY 2015 CCRs) to charges on CY 2013 claims that were
adjusted (using the proposed charge inflation factor of 1.1146 to
approximate CY 2015 charges). We simulated aggregated CY 2015 hospital
outlier payments using these costs for several different fixed-dollar
thresholds, holding the 1.75 multiple threshold constant and assuming
that outlier payments would continue to be made at 50 percent of the
amount by which the cost of furnishing the service would exceed 1.75
times the APC payment

[[Page 40971]]

amount, until the total outlier payments equaled 1.0 percent of
aggregated estimated total CY 2015 OPPS payments. We estimated that a
proposed fixed-dollar threshold of $3,100, combined with the proposed
multiple threshold of 1.75 times the APC payment rate, would allocate
1.0 percent of aggregated total OPPS payments to outlier payments. For
CMHCs, we are proposing that, if a CMHC's cost for partial
hospitalization services, paid under either APC 0172 or APC 0173,
exceeds 3.40 times the payment rate for APC 0173, the outlier payment
would be calculated as 50 percent of the amount by which the cost
exceeds 3.40 times the APC 0173 payment rate.
Section 1833(t)(17)(A) of the Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of the Act, requires that hospitals
that fail to report data required for the quality measures selected by
the Secretary, in the form and manner required by the Secretary under
1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to
their OPD fee schedule increase factor, that is, the annual payment
update factor. The application of a reduced OPD fee schedule increase
factor results in reduced national unadjusted payment rates that will
apply to certain outpatient items and services furnished by hospitals
that are required to report outpatient quality data and that fail to
meet the Hospital OQR Program requirements. For hospitals that fail to
meet the Hospital OQR Program requirements, we are proposing to
continue the policy that we implemented in CY 2010 that the hospitals'
costs will be compared to the reduced payments for purposes of outlier
eligibility and payment calculation. For more information on the
Hospital OQR Program, we refer readers to section XIII. of this
proposed rule.

H. Proposed Calculation of an Adjusted Medicare Payment from the
National Unadjusted Medicare Payment

The basic methodology for determining prospective payment rates for
HOPD services under the OPPS is set forth in existing regulations at 42
CFR Part 419, Subparts C and D. For this CY 2015 OPPS/ASC proposed
rule, the payment rate for most services and procedures for which
payment is made under the OPPS is the product of the conversion factor
calculated in accordance with section II.B. of this proposed rule and
the relative payment weight determined under section II.A. of this
proposed rule. Therefore, the proposed national unadjusted payment rate
for most APCs contained in Addendum A to this proposed rule (which is
available via the Internet on the CMS Web site) and for most HCPCS
codes to which separate payment under the OPPS has been assigned in
Addendum B to this proposed rule (which is available via the Internet
on the CMS Web site) was calculated by multiplying the proposed CY 2015
scaled weight for the APC by the proposed CY 2015 conversion factor.
We note that section 1833(t)(17) of the Act, which applies to
hospitals as defined under section 1886(d)(1)(B) of the Act, requires
that hospitals that fail to submit data required to be submitted on
quality measures selected by the Secretary, in the form and manner and
at a time specified by the Secretary, incur a reduction of 2.0
percentage points to their OPD fee schedule increase factor, that is,
the annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that apply to certain outpatient items and services provided by
hospitals that are required to report outpatient quality data and that
fail to meet the Hospital OQR Program (formerly referred to as the
Hospital Outpatient Quality Data Reporting Program (HOP QDRP))
requirements. For further discussion of the payment reduction for
hospitals that fail to meet the requirements of the Hospital OQR
Program, we refer readers to section XIII. of this proposed rule.
We demonstrate in the steps below how to determine the APC payments
that will be made in a calendar year under the OPPS to a hospital that
fulfills the Hospital OQR Program requirements and to a hospital that
fails to meet the Hospital OQR Program requirements for a service that
has any of the following status indicator assignments: ``J1,'' ``P,''
``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V,'' (as
defined in Addendum D1 to this proposed rule), in a circumstance in
which the multiple procedure discount does not apply, the procedure is
not bilateral, and conditionally packaged services (status indicator of
``Q1'' and ``Q2'') qualify for separate payment. We note that, although
blood and blood products with status indicator ``R'' and brachytherapy
sources with status indicator ``U'' are not subject to wage adjustment,
they are subject to reduced payments when a hospital fails to meet the
Hospital OQR Program requirements. We note that we are also proposing
to create new status indicator ``J1'' to reflect the proposed
comprehensive APCs discussed in section II.A.2.e. of this proposed
rule. We also note that we are proposing to delete status indicator
``X'' as part of the CY 2015 packaging proposal for ancillary services,
discussed in section II.A.3. of this proposed rule.
Individual providers interested in calculating the payment amount
that they would receive for a specific service from the national
unadjusted payment rates presented in Addenda A and B to this proposed
rule (which are available via the Internet on the CMS Web site) should
follow the formulas presented in the following steps. For purposes of
the payment calculations below, we refer to the proposed national
unadjusted payment rate for hospitals that meet the requirements of the
Hospital OQR Program as the ``full'' national unadjusted payment rate.
We refer to the proposed national unadjusted payment rate for hospitals
that fail to meet the requirements of the Hospital OQR Program as the
``reduced'' national unadjusted payment rate. The reduced national
unadjusted payment rate is calculated by multiplying the proposed
reporting ratio of 0.980 times the ``full'' national unadjusted payment
rate. The national unadjusted payment rate used in the calculations
below is either the full national unadjusted payment rate or the
reduced national unadjusted payment rate, depending on whether the
hospital met its Hospital OQR Program requirements in order to receive
the proposed full CY 2015 OPPS fee schedule increase factor of 2.1
percent.
Step 1. Calculate 60 percent (the labor-related portion) of the
national unadjusted payment rate. Since the initial implementation of
the OPPS, we have used 60 percent to represent our estimate of that
portion of costs attributable, on average, to labor. We refer readers
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496
through 18497) for a detailed discussion of how we derived this
percentage. During our regression analysis for the payment adjustment
for rural hospitals in the CY 2006 OPPS final rule with comment period
(70 FR 68553), we confirmed that this labor-related share for hospital
outpatient services is appropriate.
The formula below is a mathematical representation of Step 1 and
identifies the labor-related portion of a specific payment rate for a
specific service.
X is the labor-related portion of the national unadjusted payment
rate.
X = .60 * (national unadjusted payment rate).
Step 2. Determine the wage index area in which the hospital is
located and identify the wage index level that applies to the specific
hospital. We note that under the proposed CY 2015 OPPS policy for
transitioning wage indexes

[[Page 40972]]

into the new OMB labor market area delineations, a hold harmless policy
for the wage index may apply, as discussed in section II.C. of this
proposed rule. The wage index values assigned to each area reflect the
geographic statistical areas (which are based upon OMB standards) to
which hospitals are assigned for FY 2015 under the IPPS,
reclassifications through the MGCRB, section 1886(d)(8)(B) ``Lugar''
hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as
defined in Sec. 412.103 of the regulations, and hospitals designated
as urban under section 601(g) of Pub. L. 98-21. (For further discussion
of the proposed changes to the FY 2015 IPPS wage indices, as applied to
the CY 2015 OPPS, we refer readers to section II.C. of this proposed
rule.) We are proposing to continue to apply a wage index floor of 1.00
to frontier States, in accordance with section 10324 of the Affordable
Care Act of 2010.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of Public Law
108-173. Addendum L to this proposed rule (which is available via the
Internet on the CMS Web site) contains the qualifying counties and the
proposed associated wage index increase developed for the FY 2015 IPPS
and listed as Table 4J in the FY 2015 IPPS/LTCH PPS proposed rule and
available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
This step is to be followed only if the hospital is not reclassified or
redesignated under section 1886(d)(8) or section 1886(d)(10) of the
Act.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4 and
adjusts the labor-related portion of the national unadjusted payment
rate for the specific service by the wage index.

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

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

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

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

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

We have provided examples below of the calculation of both the
proposed full and reduced national unadjusted payment rates that would
apply to certain outpatient items and services performed by hospitals
that meet and that fail to meet the Hospital OQR Program requirements,
using the steps outlined above. For purposes of this example, we used a
provider that is located in Brooklyn, New York that is assigned to CBSA
35614. This provider bills one service that is assigned to APC 0019
(Level I Excision/Biopsy). The proposed CY 2015 full national
unadjusted payment rate for APC 0019 is approximately $380.32. The
proposed reduced national unadjusted payment rate for APC 0019 for a
hospital that fails to meet the Hospital OQR Program requirements is
approximately $372.71. This proposed reduced rate is calculated by
multiplying the proposed reporting ratio of 0.980 by the full
unadjusted payment rate for APC 0019.
The proposed FY 2015 wage index for a provider located in CBSA
35614 in New York is 1.3014. This is based on the proposed 1-year 50/50
transition blend between the wage index under the old CBSA 35644
(1.3147) and the wage index under the new CBSA 35614 (1.2881). The
labor-related portion of the proposed full national unadjusted payment
is approximately $296.97 (.60 * $380.32 * 1.3014). The labor-related
portion of the proposed reduced national unadjusted payment is
approximately $291.03 (.60 * $372.71 * 1.3014). The nonlabor-related
portion of the proposed full national unadjusted payment is
approximately $152.13 (.40 * $380.32). The nonlabor-related portion of
the proposed reduced national unadjusted payment is approximately
$149.08 (40 * $372.71). The sum of the labor-related and nonlabor-
related portions of the proposed full national adjusted payment is
approximately $449.10 ($296.97 + $152.13). The sum of the proposed
reduced national adjusted payment is approximately $440.11 ($291.03 +
$149.08).

I. Proposed Beneficiary Copayments

1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining the unadjusted copayment amounts to be paid by
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of
the Act specifies that the Secretary must reduce the national
unadjusted copayment amount for a covered OPD service (or group of such
services) furnished in a year in a manner so that the effective
copayment rate (determined on a national unadjusted basis) for that
service in the year does not exceed a specified percentage. As
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective
copayment rate for a covered OPD service paid under the OPPS in CY
2006, and in calendar years thereafter, shall not exceed 40 percent of
the APC payment rate.
Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered
OPD service (or group of such services) furnished in a year, the
national unadjusted copayment amount cannot be less than 20 percent of
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the
Act limits the amount of beneficiary copayment that may be collected
for a procedure performed in a year to the amount of the inpatient
hospital deductible for that year.
Section 4104 of the Affordable Care Act eliminated the Part B
coinsurance for preventive services furnished on and after January 1,
2011, that meet certain requirements, including flexible
sigmoidoscopies and screening colonoscopies, and waived the Part B
deductible for screening colonoscopies that become diagnostic during
the procedure. Our discussion of the changes made by the Affordable
Care Act with regard to copayments for preventive services furnished on
and after January 1, 2011, may be found in section XII.B. of the CY
2011 OPPS/ASC final rule with comment period (75 FR 72013).

[[Page 40973]]

2. Proposed OPPS Copayment Policy
For CY 2015, we are proposing to determine copayment amounts for
new and revised APCs using the same methodology that we implemented
beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS
final rule with comment period (68 FR 63458).) In addition, we are
proposing to use the same standard rounding principles that we have
historically used in instances where the application of our standard
copayment methodology would result in a copayment amount that is less
than 20 percent and cannot be rounded, under standard rounding
principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66687) in which we discuss our
rationale for applying these rounding principles.) The proposed
national unadjusted copayment amounts for services payable under the
OPPS that would be effective January 1, 2015, are shown in Addenda A
and B to this proposed rule (which are available via the Internet on
the CMS Web site). As discussed in section XII.G. of this proposed
rule, for CY 2015, the proposed Medicare beneficiary's minimum
unadjusted copayment and national unadjusted copayment for a service to
which a reduced national unadjusted payment rate applies will equal the
product of the reporting ratio and the national unadjusted copayment,
or the product of the reporting ratio and the minimum unadjusted
copayment, respectively, for the service.
We note that OPPS copayments may increase or decrease each year
based on changes in the calculated APC payment rates due to updated
cost report and claims data, and any changes to the OPPS cost modeling
process. However, as described in the CY 2004 OPPS/ASC final rule with
comment period, the development of the copayment methodology generally
moves beneficiary copayments closer to 20 percent of OPPS APC payments
(68 FR 63458 through 63459).
3. Proposed Calculation of an Adjusted Copayment Amount for an APC
Group
Individuals interested in calculating the national copayment
liability for a Medicare beneficiary for a given service provided by a
hospital that met or failed to meet its Hospital OQR Program
requirements should follow the formulas presented in the following
steps.
Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its payment rate.
For example, using APC 0019, approximately $76.07 is 20 percent of the
proposed full national unadjusted payment rate of approximately
$380.32. For APCs with only a minimum unadjusted copayment in Addenda A
and B to this proposed rule (which are available via the Internet on
the CMS Web site), the beneficiary payment percentage is 20 percent.
The formula below is a mathematical representation of Step 1 and
calculates the national copayment as a percentage of national payment
for a given service.

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

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

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

Step 4. For a hospital that failed to meet its Hospital OQR Program
requirements, multiply the copayment calculated in Step 3 by the
proposed reporting ratio of 0.980.
The proposed unadjusted copayments for services payable under the
OPPS that would be effective January 1, 2015, are shown in Addenda A
and B to this proposed rule (which are available via the Internet on
the CMS Web site). We note that the proposed national unadjusted
payment rates and copayment rates shown in Addenda A and B to this
proposed rule reflect the proposed full CY 2015 OPD fee schedule
increase factor discussed in section II.B. of this proposed rule.
In addition, as noted above, section 1833(t)(8)(C)(i) of the Act
limits the amount of beneficiary copayment that may be collected for a
procedure performed in a year to the amount of the inpatient hospital
deductible for that year.

III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies

A. OPPS Treatment of New CPT and Level II HCPCS Codes

CPT and Level II HCPCS codes are used to report procedures,
services, items, and supplies under the hospital OPPS. Specifically,
CMS recognizes the following codes on OPPS claims:
Category I CPT codes, which describe surgical procedures
and medical services;
Category III CPT codes, which describe new and emerging
technologies, services, and procedures; and
Level II HCPCS codes, which are used primarily to identify
products, supplies, temporary procedures, and services not described by
CPT codes.
CPT codes are established by the American Medical Association (AMA)
and the Level II HCPCS codes are established by the CMS HCPCS
Workgroup. These codes are updated and changed throughout the year. CPT
and HCPCS code changes that affect the OPPS are published both through
the annual rulemaking cycle and through the OPPS quarterly update
Change Requests (CRs). CMS releases new Level II HCPCS codes to the
public or recognizes the release of new CPT codes by the AMA and makes
these codes effective (that is, the codes can be reported on Medicare
claims) outside of the formal rulemaking process via OPPS quarterly
update CRs. Based on our review, we assign the new CPT and Level II
HCPCS codes to interim status indicator (SI) and APC assignments. These
interim assignments are finalized in the OPPS/ASC final rules. This
quarterly process offers hospitals access to codes that may more
accurately describe items or services furnished and provides payment or
more accurate payment for these items or services in a timelier manner
than if we waited for the annual rulemaking process. We solicit public
comments on these new codes and finalize our proposals related to these
codes through our annual rulemaking process.
We note that, under the OPPS, the APC assignment determines the
payment rate for an item, procedure, or service. For those items,
procedures, or services not paid separately under the hospital OPPS,
they are assigned to appropriate status indicators. Section XI. of this
proposed rule provides a

[[Page 40974]]

discussion of the various status indicators used under the OPPS.
Certain payment indicators provide separate payment while others do
not.
In Table 14 below, we summarize our current process for updating
codes through our OPPS quarterly update CRs, seeking public comments,
and finalizing the treatment of these new codes under the OPPS. We note
that because the payment rates associated with codes that are effective
July 1 are not available to us in time for incorporation into the
Addenda of this proposed rule, the Level II HCPCS codes and the
Category III CPT codes implemented through the July 2014 OPPS quarterly
update CR could not be included in Addendum B to this proposed rule
(which is available via the Internet on the CMS Web site). New and
revised codes that were implemented through the April 2014 OPPS
quarterly update are included in Addendum B. Nevertheless, we are
requesting public comments on the codes included in the July 2014 OPPS
quarterly update and including these codes in the preamble of this
proposed rule (we refer readers to Table 16 for the July 2014 HCPCS
codes).

Table 14--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
OPPS Quarterly update CR Type of code Effective date Comments sought When finalized
----------------------------------------------------------------------------------------------------------------
April l, 2014................... Level II HCPCS April 1, 2014..... CY 2015 OPPS/ASC CY 2015 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
July 1, 2014.................... Level II HCPCS July 1, 2014...... CY 2015 OPPS/ASC CY 2015 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
Category I July 1, 2014...... CY 2015 OPPS/ASC CY 2015 OPPS/ASC
(certain vaccine proposed rule. final rule with
codes) and III comment period.
CPT codes.
October 1, 2014................. Level II HCPCS October 1, 2014... CY 2015 OPPS/ASC CY 2016 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
January 1, 2015................. Level II HCPCS January 1, 2015... CY 2015 OPPS/ASC CY 2016 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
Category I and III January 1, 2015... CY 2015 OPPS/ASC CY 2016 OPPS/ASC
CPT Codes. final rule with final rule with
comment period. comment period.
----------------------------------------------------------------------------------------------------------------

This process is discussed in detail below. We have separated our
discussion into two sections based on whether we are soliciting public
comments in this CY 2015 OPPS/ASC proposed rule or whether we will be
soliciting public comments in the CY 2015 OPPS/ASC final rule with
comment period. We note that we sought public comments in the CY 2014
OPPS/ASC final rule with comment period on the interim APC and status
assignments for new CPT and Level II HCPCS codes that were effective
January 1, 2014. We also sought public comments in the CY 2014 OPPS/ASC
final rule with comment period on the interim APC and status
assignments for new Level II HCPCS codes that became effective October
1, 2013. These new and revised codes, with an effective date of October
1, 2013, or January 1, 2014, were flagged with comment indicator ``NI''
(New code, interim APC assignment; comments will be accepted on the
interim APC assignment for the new code) in Addendum B to the CY 2014
OPPS/ASC final rule with comment period to indicate that we were
assigning them an interim payment status and an APC and payment rate,
if applicable, and were subject to public comment following publication
of the CY 2014 OPPS/ASC final rule with comment period. We will respond
to public comments and finalize our interim OPPS treatment of these
codes in the CY 2015 OPPS/ASC final rule with comment period.
1. Proposed Treatment of New CY 2014 Level II HCPCS and CPT Codes
Effective April 1, 2014 and July 1, 2014 for Which We Are Soliciting
Public Comments in This CY 2015 OPPS/ASC Proposed Rule
Through the April 2014 OPPS quarterly update CR (Transmittal 2903,
Change Request 8653, dated March 11, 2014), and the July 2014 OPPS
quarterly update CR (Transmittal 2971, Change Request 8776, dated May
23, 2014), we recognized several new HCPCS codes for separate payment
under the OPPS.
Effective April 1, 2014, we made effective four new Level II HCPCS
codes and also assigned them to appropriate interim OPPS status
indicators and APCs. Through the April 2014 OPPS quarterly update CR,
we allowed separate payment for three of the four new Level II HCPCS
codes. Specifically, as displayed in Table 15 below, we provided
separate payment for HCPCS codes C9021, C9739, and C9740. HCPCS code
Q2052 was assigned to status indicator ``N'' to indicate that this
service is packaged under the OPPS.

Table 15--New Level II HCPCS Codes Implemented in April 2014
----------------------------------------------------------------------------------------------------------------
Proposed CY
CY 2014 HCPCS Code CY 2014 Long descriptor 2015 status Proposed CY
indicator 2015 APC
----------------------------------------------------------------------------------------------------------------
C9021*................................. Injection, obinutuzumab, 10 mg........ G 1476
C9739.................................. Cystourethroscopy, with insertion of T 0162
transprostatic implant; 1 to 3
implants.
C9740.................................. Cystourethroscopy, with insertion of T 1564
transprostatic implant; 4 or more
implants.

[[Page 40975]]

Q2052.................................. Services, supplies and accessories N N/A
used in the home under the Medicare
intravenous immune globulin (ivig)
demonstration.
----------------------------------------------------------------------------------------------------------------
* The proposed payment rate for HCPCS code C9021 is based on published wholesale acquisition cost (PWAC) +6
percent.

In this CY 2015 OPPS/ASC proposed rule, we are soliciting public
comments on the proposed APC and status indicator assignments, where
applicable, for the Level II HCPCS codes listed in Table 15 of this
proposed rule. The proposed payment rates for these codes, where
applicable, can be found in Addendum B to this proposed rule (which is
available via the Internet on the CMS Web site).
Effective July 1, 2014, we made effective several new CPT and Level
II HCPCS codes and also assigned them to appropriate interim OPPS
status indicators and APCs. Through the July 2014 OPPS quarterly update
CR, we allowed separate payment under the OPPS for four new Level II
HCPCS codes and 17 new Category III CPT codes effective July 1, 2014.
Specifically, as displayed in Table 16 below, we allowed separate
payment for HCPCS codes C2644, C9022, C9134, and Q9970. We note that
HCPCS code Q9970 replaced HCPCS code C9441 (Injection, ferric
carboxymaltose, 1 mg), beginning July 1, 2014. HCPCS code C9441 was
made effective January 1, 2014, but the code was deleted June 30, 2014,
because it was replaced with HCPCS code Q9970. HCPCS code C9441 was
granted pass-through payment status when the code was implemented on
January 1, 2014. Because HCPCS code Q9970 describes the same drug as
HCPCS code C9441, we are proposing to continue the pass-through payment
status for HCPCS code Q9970, and assign the HCPCS Q-code to the same
APC and status indicator as its predecessor HCPCS C-code, as shown in
Table 16. Specifically, we are proposing to assign HCPCS code Q9970 to
APC 9441 (Inj, Ferric Carboxymaltose) and status indicator ``G.''
In addition, the HCPCS Workgroup established HCPCS code Q9974,
effective July 1, 2014, to replace HCPCS codes J2271 (Injection,
morphine sulfate, 100mg) and J2275 (Injection, morphine sulfate
(preservative-free sterile solution), per 10 mg). Both of these HCPCS
J-codes were assigned to status indicator ``N'' (Packaged Services). As
a result of the establishment of new HCPCS code Q9974 as a replacement
for HCPCS codes J2271 and J2275, the payment indicator for HCPCS codes
J2271 and J2275 was changed to ``E'' (Not Payable by Medicare),
effective July 1, 2014. Also, because HCPCS code Q9974 describes the
same services that were described by HCPCS codes J2271 and J2275, we
are proposing to continue to assign HCPCS code Q9974 to the same status
indicator as its predecessor HCPCS J-codes. Specifically, we are
proposing to assign HCPCS code Q9974 to status indicator ``N,''
effective July 1, 2014.
We are proposing to assign the Level II HCPCS codes listed in Table
16 to the specified proposed APCs and status indicators set forth in
Table 16 of this proposed rule. This table, presented below, includes a
complete list of the Level II HCPCS codes that were made effective July
1, 2014. The codes that were made effective July 1, 2014, do not appear
in Addendum B to this proposed rule, and as a result, the proposed
payment rates along with the proposed status indicators and proposed
APC assignments, where applicable, for CY 2015 are provided in Table
16.

Table 16--New Level II HCPCS Codes Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
CY 2014 HCPCS Code CY 2014 Long descriptor 2015 status Proposed CY 2015 payment
indicator 2015 APC rate
----------------------------------------------------------------------------------------------------------------
C2644............................ Brachytherapy source, cesium- U 2644 $18.97
131 chloride solution, per
millicurie.
C9022 *.......................... Injection, elosulfase alfa, G 1480 226.42
1 mg.
C9134 *.......................... Factor XIII (antihemophilic G 1481 14.10
factor, recombinant),
Tretten, per 10 i.u.
Q9970 **......................... Injection, ferric G 9441 1.06
carboxymaltose, 1 mg.
Q9974 ***........................ Injection, morphine sulfate, N N/A N/A
preservative-free for
epidural or intrathecal
use, 10 mg.
----------------------------------------------------------------------------------------------------------------
* The proposed payment rates for HCPCS code C9022 and C9134 are based on ASP+6 percent.
** HCPCS code C9441 (Injection, ferric carboxymaltose, 1 mg) was deleted June 30, 2014, and replaced with HCPCS
code Q9970, effective July 1, 2014.
*** HCPCS codes J2271 (Injection, morphine sulfate, 100mg) and J2275 (Injection, morphine sulfate (preservative-
free sterile solution), per 10 mg) were replaced with HCPCS code Q9974, effective July 1, 2014. Consequently,
the payment indicator assignment for HCPCS codes J2271 and J2275 was changed to ``E'' (Not Payable by
Medicare), effective July 1, 2014.

For CY 2015, we are proposing to continue our established policy of
recognizing Category I CPT vaccine codes for which FDA approval is
imminent and Category III CPT codes that the AMA releases in January of
each year for implementation in July through the OPPS quarterly update
process. Under the OPPS, Category I CPT vaccine codes and Category III
CPT codes that are released on the AMA Web site in January are made
effective in July of the same year through the July quarterly update
CR, consistent with the AMA's implementation date for the codes. For
the July 2014 update, there were no new Category I CPT vaccine codes.
Through the July 2014 OPPS quarterly update CR (Transmittal 2971,
Change Request 8776, dated May 23, 2014), we assigned interim OPPS
status indicators and APCs for 17 of 27 new Category III CPT codes that
were made effective July 1, 2014. Specifically, as displayed in Table
17 below, we made interim OPPS status indicators and APC assignments
for Category III CPT codes 0347T, 0348T, 0349T, 0350T, 0355T, 0356T,
0358T, 0359T, 0360T, 0362T, 0364T,

[[Page 40976]]

0366T, 0368T, 0370T, 0371T, 0372T, and 0373T. Table 17 below lists the
Category III CPT codes that were implemented on July 1, 2014, along
with the proposed status indicators, proposed APC assignments, and
proposed payment rates, where applicable, for CY 2015.

Table 17--New Category III CPT Codes Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
CY 2014 CPT Code CY 2014 Long descriptor 2015 status Proposed CY 2015 payment
indicator 2015 APC rate
----------------------------------------------------------------------------------------------------------------
0347T............................ Placement of interstitial Q2 0420 $125.05
device(s) in bone for
radiostereometric analysis
(RSA).
0348T............................ Radiologic examination, S 0261 95.36
radiostereometric analysis
(RSA); spine, (includes,
cervical, thoracic and
lumbosacral, when
performed).
0349T............................ Radiologic examination, S 0261 95.36
radiostereometric analysis
(RSA); upper
extremity(ies), (includes
shoulder, elbow and wrist,
when performed).
0350T............................ Radiologic examination, S 0261 95.36
radiostereometric analysis
(RSA); lower
extremity(ies), (includes
hip, proximal femur, knee
and ankle, when performed).
0351T............................ Optical coherence tomography N N/A N/A
of breast or axillary lymph
node, excised tissue, each
specimen; real time
intraoperative.
0352T............................ Optical coherence tomography B N/A N/A
of breast or axillary lymph
node, excised tissue, each
specimen; interpretation
and report, real time or
referred.
0353T............................ Optical coherence tomography N N/A N/A
of breast, surgical cavity;
real time intraoperative.
0354T............................ Optical coherence tomography B N/A N/A
of breast, surgical cavity;
interpretation and report,
real time or referred.
0355T............................ Gastrointestinal tract T 0142 857.73
imaging, intraluminal (eg,
capsule endoscopy), colon,
with interpretation and
report.
0356T............................ Insertion of drug-eluting Q1 0698 101.41
implant (including punctal
dilation and implant
removal when performed)
into lacrimal canaliculus,
each.
0358T............................ Bioelectrical impedance Q1 0340 61.88
analysis whole body
composition assessment,
supine position, with
interpretation and report.
0359T............................ Behavior identification V 0632 107.98
assessment, by the
physician or other
qualified health care
professional, face-to-face
with patient and
caregiver(s), includes
administration of
standardized and non-
standardized tests,
detailed behavioral
history, patient
observation and caregiver
interview, interpretation
of test results, discussion
of findings and
recommendations with the
primary guardian(s)/
caregiver(s), and
preparation of report.
0360T............................ Observational behavioral V 0632 107.98
follow-up assessment,
includes physician or other
qualified health care
professional direction with
interpretation and report,
administered by one
technician; first 30
minutes of technician time,
face-to-face with the
patient.
0361T............................ Observational behavioral N N/A N/A
follow-up assessment,
includes physician or other
qualified health care
professional direction with
interpretation and report,
administered by one
technician; each additional
30 minutes of technician
time, face-to-face with the
patient (List separately in
addition to code for
primary service).
0362T............................ Exposure behavioral follow- V 0632 107.98
up assessment, includes
physician or other
qualified health care
professional direction with
interpretation and report,
administered by physician
or other qualified health
care professional with the
assistance of one or more
technicians; first 30
minutes of technician(s)
time, face-to-face with the
patient.
0363T............................ Exposure behavioral follow- N N/A N/A
up assessment, includes
physician or other
qualified health care
professional direction with
interpretation and report,
administered by physician
or other qualified health
care professional with the
assistance of one or more
technicians; each
additional 30 minutes of
technician(s) time, face-to-
face with the patient (List
separately in addition to
code for primary procedure).
0364T............................ Adaptive behavior treatment S 0322 92.61
by protocol, administered
by technician, face-to-face
with one patient; first 30
minutes of technician time.
0365T............................ Adaptive behavior treatment N N/A N/A
by protocol, administered
by technician, face-to-face
with one patient; each
additional 30 minutes of
technician time (List
separately in addition to
code for primary procedure).
0366T............................ Group adaptive behavior S 0325 65.91
treatment by protocol,
administered by technician,
face-to-face with two or
more patients; first 30
minutes of technician time.
0367T............................ Group adaptive behavior N N/A N/A
treatment by protocol,
administered by technician,
face-to-face with two or
more patients; each
additional 30 minutes of
technician time (List
separately in addition to
code for primary procedure).
0368T............................ Adaptive behavior treatment S 0322 92.61
with protocol modification
administered by physician
or other qualified health
care professional with one
patient; first 30 minutes
of patient face-to-face
time.

[[Page 40977]]

0369T............................ Adaptive behavior treatment N N/A N/A
with protocol modification
administered by physician
or other qualified health
care professional with one
patient; each additional 30
minutes of patient face-to-
face time (List separately
in addition to code for
primary procedure).
0370T............................ Family adaptive behavior S 0324 130.28
treatment guidance,
administered by physician
or other qualified health
care professional (without
the patient present).
0371T............................ Multiple-family group S 0324 130.28
adaptive behavior treatment
guidance, administered by
physician or other
qualified health care
professional (without the
patient present).
0372T............................ Adaptive behavior treatment S 0325 65.91
social skills group,
administered by physician
or other qualified health
care professional face-to-
face with multiple patients.
0373T............................ Exposure adaptive behavior S 0323 117.36
treatment with protocol
modification requiring two
or more technicians for
severe maladaptive
behavior(s); first 60
minutes of technicians'
time, face-to-face with
patient.
0374T............................ Exposure adaptive behavior N N/A N/A
treatment with protocol
modification requiring two
or more technicians for
severe maladaptive
behavior(s); each
additional 30 minutes of
technicians' time face-to-
face with patient (List
separately in addition to
code for primary procedure).
----------------------------------------------------------------------------------------------------------------

We are soliciting public comments on the proposed CY 2015 status
indicators, APC assignments, and payment rates for the Level II HCPCS
codes and the Category III CPT codes that were made effective April 1,
2014, and July 1, 2014. These codes are listed in Tables 15, 16, and 17
of this proposed rule. We also are proposing to finalize the status
indicator and APC assignments and payment rates for these codes, if
applicable, in the CY 2015 OPPS/ASC final rule with comment period.
Because the new Category III CPT and Level II HCPCS codes that become
effective for July are not available to us in time for incorporation
into the Addenda to this proposed rule, our policy is to include the
codes, the proposed status indicators, proposed APCs (where
applicable), and proposed payment rates (where applicable) in the
preamble of the proposed rule, but not in the Addenda to this proposed
rule. These codes are listed in Tables 16 and 17, respectively, of this
proposed rule. We are proposing to incorporate these codes into
Addendum B to the CY 2015 OPPS/ASC final rule with comment period,
which is consistent with our annual OPPS update policy. The Level II
HCPCS codes implemented or modified through the April 2014 OPPS update
CR and displayed in Table 15 are included in Addendum B to this
proposed rule (which is available via the Internet on the CMS Web
site), where the proposed CY 2015 payment rates for these codes are
also shown.
2. Proposed Process for New Level II HCPCS Codes That Will Be Effective
October 1, 2014 and New CPT and Level II HCPCS Codes That Will Be
Effective January 1, 2015 for Which We Will Be Soliciting Public
Comments in the CY 2015 OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Category I and III CPT codes and new Level II HCPCS codes that are
effective January 1 in the final rule with comment period updating the
OPPS for the following calendar year. These codes are released to the
public via the CMS HCPCS (for Level II HCPCS codes) and AMA Web sites
(for CPT codes), and also through the January OPPS quarterly update
CRs. In the past, we also have released new Level II HCPCS codes that
are effective October 1 through the October OPPS quarterly update CRs
and incorporated these new codes in the final rule with comment period
updating the OPPS for the following calendar year. For CY 2015, these
codes will be flagged with comment indicator ``NI'' in Addendum B to
the OPPS/ASC final rule with comment period to indicate that we are
assigning them an interim payment status which is subject to public
comment. In addition, the CPT and Level II HCPCS codes that will be
effective January 1, 2015, will be flagged with comment indicator
``NI'' in Addendum B to the CY 2015 OPPS/ASC final rule with comment
period. Specifically, the status indicator and the APC assignment and
payment rate, if applicable, for all such codes flagged with comment
indicator ``NI'' are open to public comment in the final rule with
comment period, and we respond to these public comments in the OPPS/ASC
final rule with comment period for the next calendar year's OPPS/ASC
update. We are proposing to continue this process for CY 2015.
Specifically, for CY 2015, we are proposing to include in Addendum B to
the CY 2015 OPPS/ASC final rule with comment period the following new
HCPCS codes:
New Level II HCPCS codes effective October 1, 2014 that
would be incorporated in the October 2014 OPPS quarterly update CR;
New Category I and III CPT codes effective January 1, 2015
that would be incorporated in the January 2015 OPPS quarterly update
CR; and
New Level II HCPCS codes effective January 1, 2015 that
would be incorporated in the January 2015 OPPS quarterly update CR.
As stated above, the October 1, 2014 and January 1, 2015 codes
would be flagged with comment indicator ``NI'' in Addendum B to the CY
2015 OPPS/ASC final rule with comment period to indicate that we have
assigned the codes an interim OPPS payment status for CY 2015. We will
be inviting public comments on the proposed status indicator and APC
assignments and payment rates for these codes, if applicable, that
would be finalized in the CY 2016 OPPS/ASC final rule with comment
period.
3. Proposed Process for Soliciting Public Comments for New and Revised
CPT Codes That Would Be Released by AMA Before the January 1 Effective
Date
We generally incorporate the new CPT codes that are effective
January 1 in the OPPS/ASC final rule with comment

[[Page 40978]]

period. We establish interim APC and status indicator assignments for
the coming year, and request comments on the interim assignments.
Similarly, in the OPPS/ASC final rule with comment period, we establish
interim APC and status indicator assignments for existing CPT codes
that have substantial revision to their code descriptors, which may
include grammatical changes to the code descriptors that necessitate a
change in the current APC assignments. In both cases, we assign these
new and revised codes to OPPS comment indicator ``NI'' (New code for
the next calendar year or existing code with substantial revision to
its code descriptor in the next calendar year as compared to current
calendar year, interim APC assignment; comments will be accepted on the
interim APC assignment for the new code.) in the OPPS/ASC final rule
with comment period. We respond to comments and finalize the APC and
status indicator assignments for these CPT codes in the following
year's OPPS/ASC final rule with comment period.
a. Current Process for Accepting Comments on New and Revised CPT Codes
That Are Effective January 1
Currently, under the hospital OPPS, new CPT codes that are
effective January 1 are flagged with comment indicator ``NI'' in
Addendum B to the OPPS/ASC final rule with comment period to indicate
that the codes are new for the calendar year and have been assigned
interim APCs and status indicators, and that we are accepting public
comments on the treatment of these new codes. We address public
comments in the next year's OPPS/ASC final rule with comment period and
finalize the APC and status indicator assignments for the codes. For
example, the new CPT codes that were effective January 1, 2013, were
assigned to comment indicator ``NI'' in Addendum B to the CY 2013 OPPS/
ASC final rule with comment period. We responded to public comments
received on the CY 2013 OPPS/ASC final rule with comment period and
finalized the APC and status indicator assignments for these codes in
the CY 2014 OPPS/ASC final rule with comment period; and we included
the final APC and status indicator assignments in Addendum B to that
rule.
Similarly, existing CPT codes with substantial revisions to the
code descriptors are flagged with comment indicator ``NI'' in Addendum
B to the OPPS/ASC final rule with comment period to indicate that these
codes are assigned interim APC and status indicators on which we are
accepting public comments. Public comments regarding these revised CPT
codes are also addressed, and APC and status indicator assignments
finalized, in the next year's OPPS/ASC final rule with comment period.
Several stakeholders, including consultants, device manufacturers,
drug manufacturers, as well as specialty societies and hospitals, have
expressed concern with the process we use to recognize new and revised
CPT codes. They believe that CMS should publish proposed APCs and
status indicators for the new and revised CPT codes that will be
effective January 1 in the OPPS/ASC proposed rule, and request public
comments prior to finalizing them for the January 1 implementation
date. Further, the stakeholders believe that seeking public input on
the APC and status indicator assignments for these new and revised
codes would assist CMS in assigning the CPT codes to appropriate APCs.
We have been informed of similar concerns regarding our process for
assigning interim payment values for revalued, and new and revised
codes, under the Medicare Physician Fee Schedule (MPFS), and include
proposed policies to address those concerns in the CY 2015 MPFS
proposed rule.
Like the MPFS, the OPPS and the ASC payment system rely principally
upon the Current Procedural Terminology (CPT[supreg]) coding system
maintained by the AMA for billing. CPT[supreg] is the standard code set
adopted under the Health Insurance Portability and Accountability Act
of 1996 (HIPAA) for outpatient services. The AMA CPT Editorial Panel's
coding cycle occurs concurrently with our calendar year rulemaking
cycle for the OPPS and the ASC payment system. The OPPS/ASC proposed
rules are published prior to the publication of the CPT codes that are
generally made public in the Fall, with a January 1 effective date, and
we are currently unable to include these codes in the OPPS/ASC proposed
rules. Consequently, we establish interim APC and status indicator
assignments for new and revised CPT codes that have an effective date
of January 1, and we make payment based on those interim designations
for one year.
b. Proposal To Modify the Current Process for Accepting Comments on New
and Revised CPT Codes That Are Effective January 1
In this CY 2015 OPPS/ASC proposed rule, we are proposing to make
changes in the process we use to establish APC assignments and status
indicators for new and revised codes. We are proposing to make similar
revisions under the MPFS to our current process for establishing values
(work and malpractice relative value units and practice expense inputs)
for new and revised CPT codes that take effect each January 1.
For instance, we are proposing that, for new and revised CPT codes
that we receive from the AMA CPT Editorial Panel too late for inclusion
in the proposed rule for a year, we would delay adoption of the new and
revised codes for that year, and instead, adopt coding policies and
payment rates that conform, to the extent possible, to the policies and
payment rates in place for the previous year. We are proposing to adopt
these conforming coding and payment policies on an interim basis
pending the result of our specific proposals for status indicator and
APC assignments for these new and revised codes through notice and
comment rulemaking in the OPPS/ASC proposed rule for the following
year. Because the changes in CPT codes are effective on January 1 of
each year, and CMS would not have established status indicator or APC
assignments for these new or revised codes, it would not be practicable
for Medicare to use those CPT codes. In this circumstance, we are
proposing to create HCPCS G-codes to describe the predecessor codes for
any codes that were revised or deleted as part of the annual CPT coding
changes. However, if certain CPT codes are revised in a manner that
would not affect the cost of inputs (for example, a grammatical change
to CPT code descriptors), we would use these revised codes and continue
to assign those codes to their current APC. For example, under this
proposed process, if a single CPT code was separated into two codes and
we did not receive those codes until May 2015, we would assign each of
those codes to status indicator ``B'' in the final rule with comment
period, to indicate that an alternate code is recognized under the
OPPS. Hospitals could not use those two new CPT codes to bill Medicare
for outpatient services the first year after the effective date of the
codes. Instead, we would create a HCPCS G-code with the same
description as the single predecessor CPT code, and continue to use the
same APC and status indicator assignment for that code during the year.
We would propose status indicator and APC assignments for the two new
CPT codes during rulemaking in CY 2016 for payment beginning in CY
2017.
For new codes that describe wholly new services, as opposed to new
or revised codes that describe services for which APC and status
indicator assignments are already established, we

[[Page 40979]]

would make every effort to work with the AMA CPT Editorial Panel to
ensure that we received the codes in time to propose payment rates in
the proposed rule. However, if we do not receive the code for a wholly
new service in time to include proposed APC and status indicator
assignments in the proposed rule for a year, we would need to establish
interim APC and status indicator assignments for the initial year. We
are proposing to establish the initial APC and status indicator
assignments for new services as interim final assignments, and to
follow our current process to solicit and respond to public comments
and finalize the APC and status indicator assignments in the subsequent
year.
We recognize that the use of HCPCS G-codes may place an
administrative burden on those providers that bill for services under
the OPPS and the ASC payment system. We are hopeful that the AMA CPT
Editorial Panel ultimately will be able to adjust its timelines and
processes so that most, if not all, of the annual coding changes can be
addressed in the proposed rule. We are proposing to implement the
revised CMS process for establishing APC and status indicator
assignments for new and revised codes for CY 2016. However, we will
consider alternative implementation dates to allow time for the AMA CPT
Editorial Panel to adjust its schedule in order to avoid the necessity
to use numerous HCPCS G-codes.
In summary, in conjunction with the proposals presented in the CY
2015 MPFS proposed rule to revise the process used to address new,
revised, and potentially misvalued codes under the MPFS, we are
proposing to include in the OPPS/ASC proposed rule for a year proposed
APC and status indicator assignments for the new and revised CPT codes
that are effective January 1. We would follow this revised process
except in the case of a code that describes a wholly new service (such
as a new technology or new surgical procedure) that has not previously
been addressed under the OPPS. For codes that describe new services, we
would establish interim APC and status indicator assignments in the
OPPS/ASC final rules with comment period, as is our current process.
The proposed revised process would eliminate our current practice of
assigning interim APC and status indicators for the new and revised CPT
codes that take effect on January 1 each year. Instead, when we do not
receive new and revised codes early enough in our ratesetting process
to propose APC and status indicator assignments in the OPPS/ASC
proposed rule for a year, we would create and use HCPCS G-codes that
mirror the predecessor CPT codes and retain the current APC and status
indicator assignments for a year until we could include proposed
assignments in the following year's proposed rule. After proposing APC
and status indicator assignments for the new and revised codes in a
proposed rule, we would accept comments on the proposed assignments,
and respond to the comments and assign the final APC and status
indicator assignments in the OPPS/ASC final rules with comment period.
We are inviting public comments on this proposal. We are specifically
interested in receiving public comments on the following topics:
Is this proposal preferable to the present process? Are
there other alternatives?
If we were to implement this proposal, is it better to
move forward with the changes or is more time needed to make the
transition and, therefore, implementation should be delayed beyond CY
2016?
Are there alternatives other than the use of HCPCS G-codes
that would allow us to address the annual CPT code changes through
notice and comment rather than interim final rulemaking?
Is the process we have proposed for wholly new services
appropriate? How should we define new services?
Are there any classes of services, other than new
services, that should remain on an interim final schedule?

B. Proposed OPPS Changes--Variations Within APCs

1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient department
services. Section 1833(t)(2)(B) of the Act provides that the Secretary
may establish groups of covered OPD services within this classification
system, so that services classified within each group are comparable
clinically and with respect to the use of resources. In accordance with
these provisions, we developed a grouping classification system,
referred to as Ambulatory Payment Classifications (APCs), as set forth
in Sec. 419.31 of the regulations. We use Level I and Level II HCPCS
codes to identify and group the services within each APC. The APCs are
organized such that each group is homogeneous both clinically and in
terms of resource use. Using this classification system, we have
established distinct groups of similar services. We also have developed
separate APC groups for certain medical devices, drugs, biologicals,
therapeutic radiopharmaceuticals, and brachytherapy devices that are
not packaged into the payment for the procedure.
We have packaged into the payment for each procedure or service
within an APC group the costs associated with those items and services
that are typically ancillary and supportive to a primary diagnostic or
therapeutic modality and, in those cases, are an integral part of the
primary service they support. Therefore, we do not make separate
payment for these packaged items or services. In general, packaged
items and services include, but are not limited to the items and
services listed in 419.2(b) of the regulations. Further discussion of
packaged services is included in section II.A.3. of this proposed rule.
In CY 2008, we implemented composite APCs to provide a single
payment for groups of services that are typically performed together
during a single clinical encounter and that result in the provision of
a complete service (72 FR 66650 through 66652). For CY 2014, we
provided composite APC payments for nine categories of services:
Mental Health Services Composite (APC 0034).
Cardiac Electrophysiologic Evaluation and Ablation
Composite (APC 8000).
Low Dose Rate (LDR) Prostate Brachytherapy Composite (APC
8001).
Ultrasound Composite (APC 8004).
CT and CTA without Contrast Composite (APC 8005).
CT and CTA with Contrast Composite (APC 8006).
MRI and MRA without Contrast Composite (APC 8007).
MRI and MRA with Contrast Composite (APC 8008).
Extended Assessment & Management Composite (APC 8009).
A further discussion of composite APCs is included in section
II.A.2.f. of this proposed rule.
Under the OPPS, we generally pay for hospital outpatient services
on a rate-per-service basis, where the service may be reported with one
or more HCPCS codes. Payment varies according to the APC group to which
the independent service or combination of services is assigned. Each
APC relative payment weight represents the hospital cost of the
services included in that APC, relative to the hospital cost of the
services included in APC 0634 (Hospital Clinic Visits). The APC
relative payment weights are scaled to APC 0634 because it is the
hospital clinic visit APC and

[[Page 40980]]

clinic visits are among the most frequently furnished services in the
hospital outpatient setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review,
on a recurring basis occurring no less than annually, and revise the
groups, the relative payment weights, and the wage and other
adjustments to take into account changes in medical practice, changes
in technology, the addition of new services, new cost data, and other
relevant information and factors. Section 1833(t)(9)(A) of the Act also
requires the Secretary to consult with an expert outside advisory panel
composed of an appropriate selection of representatives of providers to
review (and advise the Secretary concerning) the clinical integrity of
the APC groups and the relative payment weights (the Panel
recommendations for specific services for the CY 2015 OPPS and our
responses to them are discussed in the relevant specific sections
throughout this proposed rule).
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest cost for an item or service in the group is more than 2 times
greater than the lowest cost for an item or service within the same
group (referred to as the ``2 times rule''). The statute authorizes the
Secretary to make exceptions to the 2 times rule in unusual cases, such
as low-volume items and services (but the Secretary may not make such
an exception in the case of a drug or biological that has been
designated as an orphan drug under section 526 of the Federal Food,
Drug, and Cosmetic Act).
2. Application of the 2 Times Rule
In accordance with section 1833(t)(2) of the Act and Sec. 419.31
of the regulations, we annually review the items and services within an
APC group to determine, with respect to comparability of the use of
resources, if the cost of the highest cost item or service within an
APC group is more than 2 times greater than the cost of the lowest cost
item or service within that same group. In making this determination,
we consider only those HCPCS codes that are significant based on the
number of claims. We note that, for purposes of identifying significant
procedure codes for examination under the 2 times rule, we consider
procedure codes that have more than 1,000 single major claims or
procedure codes that have both greater than 99 single major claims and
contribute at least 2 percent of the single major claims used to
establish the APC cost to be significant (75 FR 71832). This
longstanding definition of when a procedure code is significant for
purposes of the 2 times rule was selected because we believe that a
subset of 1,000 claims (or less than 1,000 claims) is negligible within
the set of approximately 100 million single procedure or single session
claims we use for establishing costs. Similarly, a procedure code for
which there are fewer than 99 single bills and which comprises less
than 2 percent of the single major claims within an APC will have a
negligible impact on the APC cost. In this proposed rule, for CY 2015,
we are proposing to make exceptions to this limit on the variation of
costs within each APC group in unusual cases, such as low-volume items
and services.
We have identified the APCs with 2 times rule violations for CY
2015. Therefore, we are proposing changes to the procedure codes
assigned to these APCs assignments in Addendum B to this proposed rule.
We note that Addendum B does not appear in the printed version of the
Federal Register as part of the CY 2015 OPPS/ASC proposed rule. Rather,
it is published and made available via the Internet on the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate a 2
times rule violation or to improve clinical and resource homogeneity,
we are proposing to reassign these procedure codes to new APCs that
contain services that are similar with regard to both their clinical
and resource characteristics. In many cases, the proposed procedure
code reassignments and associated APC reconfigurations for CY 2015
included in this proposed rule are related to changes in costs of
services that were observed in the CY 2013 claims data newly available
for CY 2015 ratesetting. We also are proposing changes to the status
indicators for some procedure codes that are not specifically and
separately discussed in this proposed rule. In these cases, we are
proposing to change the status indicators for these procedure codes
because we believe that another status indicator would more accurately
describe their payment status from an OPPS perspective based on the
policies that we are proposing for CY 2015. In addition, we are
proposing to rename existing APCs or create new clinical APCs to
complement the proposed procedure code reassignments. Addendum B to
this CY 2015 OPPS/ASC proposed rule identifies with a comment indicator
``CH'' those procedure codes for which we are proposing a change to the
APC assignment or status indicator, or both, that were initially
assigned in the April 2014 Addendum B Update (available via the
Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html).
3. Proposed Exceptions to the 2 Times Rule
As discussed earlier, we may make exceptions to the 2 times rule
limit on the variation of costs within each APC group in unusual cases
such as low-volume items and services. Taking into account the APC
changes that we are proposing for CY 2015, we reviewed all of the APCs
to determine which APCs would not meet the requirements of the 2 times
rule. We used the following criteria to evaluate whether to propose
exceptions to the 2 times rule for affected APCs:
Resource homogeneity;
Clinical homogeneity;
Hospital outpatient setting utilization;
Frequency of service (volume); and
Opportunity for upcoding and code fragments.
Based on the CY 2013 claims data available for this proposed rule,
we found 9 APCs with 2 times rule violations. We applied the criteria
as described above to identify the APCs that we are proposing to make
exceptions for under the 2 times rule for CY 2015, and identified 9
APCs that met the criteria for an exception to the 2 times rule based
on the CY 2013 claims data available for this proposed rule. We have
not included in this determination those APCs where a 2 times rule
violation was not a relevant concept, such as APC 0375 (Ancillary
Outpatient Services when Patient Expires), which has an APC cost set
based on multiple procedure claims. Therefore, we have only identified
those APCs, including those with criteria-based costs, such as device-
dependent APCs, with 2 times rule violations. For a detailed discussion
of these criteria, we refer readers to the April 7, 2000 OPPS final
rule with comment period (65 FR 18457 and 18458).
We note that, for cases in which a recommendation by the Panel
appears to result in or allow a violation of the 2 times rule, we
generally accept the Panel's recommendation because those
recommendations are based on explicit consideration (that is, a review
of the latest OPPS claims data and group discussion of the issue) of
resource use, clinical homogeneity, site of service,

[[Page 40981]]

and the quality of the claims data used to determine the APC payment
rates.
Table 18 of this proposed rule lists the 9 APCs that we are
proposing to make exceptions for under the 2 times rule for CY 2015
based on the criteria cited above and claims data processed from
January 1, 2013, through December 31, 2013. For the final rule with
comment period, we intend to use claims data for dates of service
between January 1, 2013, and December 31, 2013, that were processed on
or before June 30, 2014, and updated CCRs, if available.

Table 18--Proposed APC Exceptions to the 2 Times Rule for CY 2015
------------------------------------------------------------------------
Proposed CY 2015 APC Proposed CY 2015 APC title
------------------------------------------------------------------------
0012................................. Level I Debridement &
Destruction.
0015................................. Level II Debridement &
Destruction.
0057................................. Bunion Procedures.
0066................................. Level V Radiation Therapy.
0330................................. Dental Procedures.
0433................................. Level II Pathology.
0450................................. Level I Minor Procedures.
0634................................. Hospital Clinic Visits.
0661................................. Level III Pathology.
------------------------------------------------------------------------

The proposed costs for hospital outpatient services for these and
all other APCs that were used in the development of this proposed rule
can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

C. Proposed OPPS APC-Specific Policies

Section 1833(t)(9) of the Act requires that we annually review and
revise, if necessary, the APCs and the procedure code assignments.
Therefore, every year we evaluate and revise, if necessary, the APC
assignments for procedure codes based on evaluation of the latest
hospital outpatient claims data. Although we do not discuss every APC
revision and procedure code reassignment in the proposed and final
rules with comment period, these revisions and/or reassignments are
listed in the OPPS Addendum B to the proposed and final rules with
comment period. Specifically, procedure codes proposed for reassignment
to new APCs and/or status indicators are assigned to comment indicator
``CH'' (Active HCPCS code in current year and next calendar year,
status indicator and/or APC assignment has changed) in the OPPS
Addendum B to the proposed and final rules with comment period.
In accordance with section 1833(t)(2) of the Act, we annually
review all APC assignments to determine if any 2 times rule violations
exist. That is, we review the items and services within an APC group to
determine, with respect to comparability of the use of resources, if
the cost of the highest cost item or service within an APC group is
more than 2 times the cost of the lowest cost item or service within
that same group. In making this determination, we consider only those
HCPCS codes that are significant based on the number of claims.
As stated in section III.B. of this proposed rule, for purposes of
identifying significant procedure codes for examination of possible 2
times rule violations within an APC, we consider procedure codes that
have either more than 1,000 single major claims, or (if less than 1,000
single major claims) procedure codes that have more than 99 single
major claims and contribute at least 2 percent of the single major
claims. This longstanding criterion to determine when a procedure code
is significant for purposes of evaluation of a possible 2 times rule
violation was established because we believe that a subset of 1,000
claims is negligible within the set of approximately 100 million single
procedure or single session claims we use for establishing costs.
Similarly, a procedure code for which there are fewer than 99 single
bills and which comprises less than 2 percent of the single major
claims within an APC will have a negligible impact on the APC cost.
1. Ophthalmic Procedures and Services
For the CY 2015 OPPS update, based on our evaluation of the latest
hospital outpatient claims data available for this proposed rule, we
are proposing to restructure all of the ophthalmic-related APCs to
better reflect the costs and clinical characteristics of the procedures
within each APC. This proposed restructuring results in the use of 13
APCs for the ophthalmology-related procedures for the CY 2015 OPPS
update, as compared to the 24 APCs used for the CY 2014 OPPS update. We
believe this major restructuring and consolidation of APCs more
appropriately categorizes all of the ophthalmology-related procedures
and services within an APC group, such that the services within each
newly-configured APC are more comparable clinically and with respect to
resource use. Tables 19 and 20 below show the current CY 2014 and
proposed CY 2015 ophthalmology-related APCs. Specifically, Table 19
shows the ophthalmology-related APCs and status indicator assignments
used for CY 2014, while Table 20 shows the proposed ophthalmology-
related APCs and their status indicator assignments for CY 2015. The
proposed payment rates for the ophthalmology-related procedure codes
can be found in Addendum B to this proposed rule (which is available
via the Internet on the CMS Web site).

Table 19--CY 2014 Ophthalmology-Related APCs
------------------------------------------------------------------------
CY 2014 status
CY 2014 APC APC Title description indicator
------------------------------------------------------------------------
0035....................... Vascular Puncture and X
Minor Diagnostic
Procedures.
0230....................... Level I Eye Tests & S
Treatments.
0231....................... Level III Eye Tests & S
Treatments.
0232....................... Level I Anterior Segment T
Eye Procedures.
0233....................... Level III Anterior Segment T
Eye Procedures.
0234....................... Level IV Anterior Segment T
Eye Procedures.
0235....................... Level I Posterior Segment T
Eye Procedures.
0237....................... Level II Posterior Segment T
Eye Procedures.
0238....................... Level I Repair and Plastic T
Eye Procedures.
0239....................... Level II Repair and T
Plastic Eye Procedures.
0240....................... Level III Repair and T
Plastic Eye Procedures.
0241....................... Level IV Repair and T
Plastic Eye Procedures.
0242....................... Level V Repair and Plastic T
Eye Procedures.
0243....................... Strabismus/Muscle T
Procedures.
0244....................... Corneal and Amniotic T
Membrane Transplant.
0246....................... Cataract Procedures with T
IOL Insert.

[[Page 40982]]

0247....................... Laser Eye Procedures...... T
0249....................... Cataract Procedures T
without IOL Insert.
0255....................... Level II Anterior Segment T
Eye Procedures.
0293....................... Level VI Anterior Segment T
Eye Procedures.
0672....................... Level III Posterior T
Segment Eye Procedures.
0673....................... Level V Anterior Segment T
Eye Procedures.
0698....................... Level II Eye Tests & S
Treatments.
0699....................... Level IV Eye Tests & T
Treatments.
------------------------------------------------------------------------

Table 20--Proposed CY 2015 Ophthalmology-Related APCs
------------------------------------------------------------------------
Proposed CY
Proposed CY 2015 APC APC Title description 2015 status
indicator
------------------------------------------------------------------------
0230....................... Level I Eye Tests & S
Treatments.
0231....................... Level III Eye Tests & S
Treatments.
0233....................... Level II Intraocular T
Procedures.
0238....................... Level I Extraocular, T
Repair, and Plastic Eye
Procedures.
0239....................... Level II Extraocular, T
Repair, and Plastic Eye
Procedures.
0240....................... Level III Extraocular, T
Repair, and Plastic Eye
Procedures.
0242....................... Level IV Extraocular, T
Repair, and Plastic Eye
Procedures.
0247....................... Laser Eye Procedures...... T
0255....................... Level I Intraocular T
Procedures.
0293....................... Level IV Intraocular J1
Procedures.
0351....................... Level V Intraocular J1
Procedures.
0673....................... Level III Intraocular T
Procedures.
0698....................... Level II Eye Tests & S
Treatments.
------------------------------------------------------------------------

We intend to propose similar major restructures of the APC and
procedure code assignments for other clinical areas in future
rulemakings. We are inviting public comments on this proposal.
2. Female Reproductive Procedures (APCs 0188, 0189, 0192, 0193, and
0202)
At the Panel's March 10, 2014 meeting, a presenter expressed
concern regarding the reassignment of the female reproductive
procedures within existing APCs 0192 (Level IV Female Reproductive
Procedures), 0193 (Level V Female Reproductive Procedures), and 0195
(Level VI Female Reproductive Procedures) that were made effective for
the CY 2014 OPPS update, and stated that the changes would compromise
beneficiary access to pelvic floor repair procedures. The commenter
urged the Panel to request that CMS revisit its packaging policy for
APCs 0193 and 0195 and allow stakeholders the opportunity to work with
CMS to appropriately reassign these procedures in a manner that better
accounts for clinical complexity. In addition, this presenter requested
that CMS postpone converting existing APC 0202 (Level VII Female
Reproductive Procedures) into a comprehensive APC to allow for further
study of the complexity of pelvic floor repair procedures. After review
of the information provided by the presenter and examination of the
latest hospital outpatient claims data available for this proposed
rule, the Panel made no recommendation for any of the female
reproductive APCs.
For the CY 2014 OPPS update, we made several APC changes, which
included changes to the female reproductive APCs 0192, 0193, and 0195.
These changes were listed in Addendum B to the CY 2014 OPPS/ASC
proposed rule. Of these three APCs, only APC 0193 showed a 2 times rule
violation. We note that, under the OPPS, we may make exceptions to the
2 times rule based on the variation of costs within each APC group in
unusual cases such as low-volume items and services. In the case of APC
0193, we believed that it was necessary to make an exception to the 2
times rule for APC 0193 for the CY 2014 OPPS update because this APC
sufficiently reflected the clinical and resource coherence of the Level
V female reproductive procedures.
For the CY 2015 OPPS update, based on our review of the latest
hospital outpatient claims data available for this proposed rule, there
are no 2 times rule violations for any of the female reproductive APCs.
In addition, based on our evaluation of the latest hospital outpatient
claims data, we are proposing to restructure the female reproductive
APCs to more appropriately reflect the resource and clinical
characteristics of the procedures within each APC. This proposed
restructuring results in the use of five APCs for the CY 2015 OPPS
update, as compared to the seven APCs used for the CY 2014 OPPS update.
We believe that this proposed five-level APC structure will provide
more accurate payments for the female reproductive procedures furnished
to Medicare beneficiaries.
In summary, we are proposing to restructure the female reproductive
APCs based on a review of our latest hospital outpatient claims data
available for this proposed rule, which results in the use of five
levels of APCs for CY 2015, as compared to the seven APCs used in CY
2014. Tables 21 and 22 below show the current CY 2014 and proposed CY
2015 female reproductive APCs. Specifically, Table 21 shows the female
reproductive APCs, APC titles, and their status indicator assignments
for CY 2014, while Table 22 shows the proposed female reproductive
APCs, APC titles, and their status indicator assignments for CY 2015.
The proposed payment rates for the female

[[Page 40983]]

reproductive procedure codes can be found in Addendum B to this
proposed rule (which is available via the Internet on the CMS Web
site). We note that one of the five levels of the female reproductive
APCs, APC 0202, is a comprehensive APC. We refer readers to section
II.A.2.e. of this proposed rule for further discussion of our
comprehensive APC policy.

Table 21--CY 2014 Female Reproductive APCs
------------------------------------------------------------------------
CY 2014 Status
CY 2014 APC APC Title description indicator
------------------------------------------------------------------------
0188....................... Level II Female T
Reproductive Proc.
0189....................... Level III Female T
Reproductive Proc.
0191....................... Level I Female T
Reproductive Proc.
0192....................... Level IV Female T
Reproductive Proc.
0193....................... Level V Female T
Reproductive Proc.
0195....................... Level VI Female T
Reproductive Procedures.
0202....................... Level VII Female T
Reproductive Procedures.
------------------------------------------------------------------------

Table 22--Proposed CY 2015 Female Reproductive APCs
------------------------------------------------------------------------
Proposed CY
Proposed CY 2015 APC APC Title description 2015 status
indicator
------------------------------------------------------------------------
0188....................... Level I Female T
Reproductive Procedures.
0189....................... Level II Female T
Reproductive Procedures.
0192....................... Level III Female T
Reproductive Procedures.
0193....................... Level IV Female T
Reproductive Procedures.
0202....................... Level V Female J1
Reproductive Procedures.
------------------------------------------------------------------------

3. Image-Guided Breast Biopsy Procedures (APC 0005)
For the CY 2014 OPPS update, the AMA CPT Editorial Panel deleted
the image-guided breast biopsy CPT codes 19102 and 19103 and replaced
these specific procedure codes with six new CPT codes that ``bundled''
associated imaging services, effective January 1, 2014. As shown in
Table 23 below, CPT codes 19102 and 19103 described percutaneous image-
guided breast biopsies using specific devices. Specifically, CPT code
19102 described a breast biopsy performed using a core needle, and CPT
code 19103 described a breast biopsy performed using either a vacuum-
assisted or rotating device.
In CY 2013, to appropriately report the procedure code for an
image-guided breast biopsy using a core needle, an automated vacuum-
assisted device, or a rotating biopsy device, multiple procedure codes
were required to identify the service performed. That is, a procedure
code describing the device-related breast biopsy procedure was required
to be reported in combination with the procedure code describing the
localization device used during the procedures, as well as the specific
image-guidance procedure codes describing the imaging service. Table 23
below shows how image-guided breast biopsy procedures were reported
prior to CY 2014. Table 23 also shows the CY 2013 OPPS status
indicators, APC assignments, and payment rates for the breast biopsy
procedure codes, the localization devices used during the procedures
and the specific image-guidance procedure codes describing the imaging
service.

Table 23--How Image-Guided Breast Biopsy Procedures Were Reported in CY 2013
----------------------------------------------------------------------------------------------------------------
CY 2013
CY 2013 CPT code Long descriptor CY 2013 SI CY 2013 APC Payment
----------------------------------------------------------------------------------------------------------------
Device-Related Breast Biopsy CPT Codes
----------------------------------------------------------------------------------------------------------------
19102.......................... Biopsy of breast; T 0005 $625.24
percutaneous, needle core,
using imaging guidance.
19103.......................... Biopsy of breast; T 0037 1,118.54
percutaneous, automated
vacuum assisted or rotating
biopsy device, using imaging
guidance.
----------------------------------------------------------------------------------------------------------------
Localization Device CPT Codes Reported with CPT Codes 19102 and 19103
----------------------------------------------------------------------------------------------------------------
19290.......................... Preoperative placement of Q1 0340 49.64
needle localization wire,
breast.
19291.......................... Preoperative placement of N N/A N/A
needle localization wire,
breast; each additional
lesion (List separately in
addition to code for primary
procedure).
19295.......................... Image guided placement, Q1 0340 49.64
metallic localization clip,
percutaneous, during breast
biopsy/aspiration (List
separately in addition to
code for primary procedure).
----------------------------------------------------------------------------------------------------------------
Image Guidance CPT Codes Reported with CPT Codes 19102 and 19103
----------------------------------------------------------------------------------------------------------------
76942.......................... Ultrasonic guidance for needle N N/A N/A
placement (eg, biopsy,
aspiration, injection,
localization device), imaging
supervision and
interpretation.

[[Page 40984]]

77021.......................... Magnetic resonance guidance N N/A N/A
for needle placement (eg, for
biopsy, needle aspiration,
injection, or placement of
localization device)
radiological supervision and
interpretation.
77031.......................... Stereotactic localization N N/A N/A
guidance for breast biopsy or
needle placement (eg, for
wire localization or for
injection), each lesion,
radiological supervision and
interpretation.
77032.......................... Mammographic guidance for N N/A N/A
needle placement, breast (eg,
for wire localization or for
injection), each lesion,
radiological supervision and
interpretation.
----------------------------------------------------------------------------------------------------------------

For the CY 2014 OPPS update, the AMA CPT Editorial Panel grouped
these multiple procedures that describe these imaging services into
single comprehensive service codes; specifically, CPT codes 19081,
19082, 19083, 19084, 19085, and 19086. Table 24 below shows the six new
CPT codes that replaced obsolete CPT codes 19102 and 19103. These
comprehensive breast biopsy procedure codes are differentiated based on
the use of specific imaging-guidance devices-- specifically imaging
services performed using stereotactic guidance, ultrasound guidance, or
magnetic-resonance guidance.
As has been our practice since the implementation of the OPPS in
2000, we review all new procedure codes before assigning the codes to
an APC. Based on our understanding of the resources required to furnish
the service as defined in the code descriptor, as well as input from
our medical advisors, we assigned replacement CPT codes 19081, 19083,
and 19085 to APC 0005 (Level II Needle Biopsy/Aspiration Except Bone
Marrow) for the CY 2014 OPPS update. We note that, for the CY 2014 OPPS
update, we finalized our policy to package all add-on codes (except
those for drug administration), effective January 1, 2014.
Consequently, payment for replacement CPT codes 19082, 19084, and
19086, which describe add-on procedures, were packaged for CY 2014.
In addition, consistent with our longstanding policy for the
treatment of new codes, we assigned these new replacement CPT codes to
interim APCs for CY 2014. Specifically, we assigned new CPT codes
19081, 19083, and 19085 to comment indicator ``NI'' in Addendum B to
the CY 2014 OPPS/ASC final rule with comment period (which is available
via the CMS Web site) to indicate that the codes were new with an
interim APC assignment that was subject to public comment.
At the Panel's March 10, 2014 meeting, a presenter requested the
reassignment of comprehensive CPT codes 19081, 19083, and 19085 from
APC 0005 (Level II Needle Biopsy/Aspiration Except Bone Marrow), which
has a CY 2014 OPPS payment rate of $702.08, to APC 0037 (Level IV
Needle Biopsy/Aspiration Except Bone Marrow), which has a CY 2014 OPPS
payment rate of $1,223.25. The presenter indicated that it is
inappropriate to combine all of the new replacement CPT codes into one
APC without regard for the imaging modality or device used to perform
the procedure. This same presenter also requested that CMS maintain the
historic assignment of the predecessor CPT codes cost data.
The Panel recommended that CMS reassign the APC assignments for the
new replacement CPT codes. Specifically, the Panel recommended the
reassignment of CPT codes 19081, 19083, and 19085 from APC 0005 to APC
0037.
In light of the public presentation and the Panel's recommendation,
and our longstanding policy of reviewing, on an annual basis, the APC
assignments for all services and items paid under the OPPS, we
evaluated the geometric mean costs associated with all of the
procedures assigned to the existing four needle biopsy APCs,
specifically, APCs 0004 (Level I Needle Biopsy/Aspiration Except Bone
Marrow), 0005, 0685 (Level III Needle Biopsy/Aspiration Except Bone
Marrow), and 0037. For this CY 2015 OPPS/ASC proposed rule, based on
our review of the latest hospital outpatient claims data available for
the proposed rule, we are proposing to reassign all of the procedures
assigned to APCs 0685 and 0037 to either APC 0004 or APC 0005 based on
clinical and resource homogeneity. With this proposed revision, there
would be no procedures assigned to APCs 0685 or 0037. Therefore, we are
proposing to delete APCs 0685 and 0037 for CY 2015. Consequently, for
the CY 2015 OPPS update, we are proposing to use only two needle biopsy
APCs, specifically, APCs 0004 and 0005. The proposed reassignment of
the procedures assigned to APCs 0685 and 0037 would result in increased
payment rates for both APCs 0004 and 0005. For CY 2015, the proposed
payment rate for APC 0004 is approximately $494, which is 20 percent
higher than the CY 2014 OPPS payment rate of approximately $411.
Similarly, the proposed payment rate for APC 0005 is approximately $
1,062, which is 51 percent higher than the CY 2014 OPPS payment rate of
approximately $702. With this proposed reassignment, CPT codes 19081,
19083, and 19085 will continue to be assigned to APC 0005.
In summary, we are proposing to continue to assign CPT codes 19081,
19083, and 19085 to APC 0005, which has a proposed payment rate of
approximately $1,062. In addition, we are proposing to continue to
package payment for add-on CPT codes 19082, 19084, and 19086 under the
OPPS for CY 2015, consistent with our packaging policy for add-on codes
that was implemented on January 1, 2014. Because we are proposing to
delete APC 0037 as obsolete for CY 2015, we believe that the proposed
increased payment rate for APC 0005 is consistent with the Panel's
recommendation to reassign CPT codes 19081, 19083, and 19085 to an
appropriate APC based on resource utilization and clinical coherence.
Table 24 below shows the proposed status indicators, APC assignments,
and payment rates for the image-guided breast biopsy CPT codes 19081
through 19086 for the CY 2015 OPPS update.

[[Page 40985]]

Table 24--Proposed APCs To Which Image-Guided Breast Biopsy Procedure Codes Would Be Assigned for CY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed CY
CY 2014 Proposed CY Proposed CY 2015
CY 2014 CPT code Long descriptor CY 2014 SI CY 2014 APC payment 2015 SI 2015 APC payment
rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
19081............................ Biopsy, breast, with placement of T 0005 $702.08 T 0005 $1,062.28
breast localization device(s) (eg,
clip, metallic pellet), when
performed, and imaging of the biopsy
specimen, when performed,
percutaneous; first lesion,
including stereotactic guidance.
19082............................ Biopsy, breast, with placement of N N/A N/A N N/A N/A
breast localization device(s) (eg,
clip, metallic pellet), when
performed, and imaging of the biopsy
specimen, when performed,
percutaneous; each additional
lesion, including stereotactic
guidance (List separately in
addition to code for primary
procedure).
19083............................ Biopsy, breast, with placement of T 0005 702.08 T 0005 1,062.28
breast localization device(s) (eg,
clip, metallic pellet), when
performed, and imaging of the biopsy
specimen, when performed,
percutaneous; first lesion,
including ultrasound guidance.
19084............................ Biopsy, breast, with placement of N N/A N/A N N/A N/A
breast localization device(s) (eg,
clip, metallic pellet), when
performed, and imaging of the biopsy
specimen, when performed,
percutaneous; each additional
lesion, including ultrasound
guidance (List separately in
addition to code for primary
procedure).
19085............................ Biopsy, breast, with placement of T 0005 702.08 T 0005 1,062.28
breast localization device(s) (eg,
clip, metallic pellet), when
performed, and imaging of the biopsy
specimen, when performed,
percutaneous; first lesion,
including magnetic resonance
guidance.
19086............................ Biopsy, breast, with placement of N N/A N/A N N/A N/A
breast localization device(s) (eg,
clip, metallic pellet), when
performed, and imaging of the biopsy
specimen, when performed,
percutaneous; each additional
lesion, including magnetic resonance
guidance (List separately in
addition to code for primary
procedure).
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Image-Guided Abscess Drainage Procedures (APCs 0005 and 0007)
For the CY 2014 OPPS update, the AMA CPT Editorial Panel
established CPT code 10030 to report the bundled service of image-
guided fluid collection drainage by catheter for percutaneous soft
tissue, and CPT code 49407 to report the bundled service of image-
guided fluid collection drainage by catheter for peritoneal,
retroperitoneal, transvaginal or transrectal collections, effective
January 1, 2014. As shown in Table 25, which shows the long descriptors
for CPT codes 10030 and 49407, and as listed in Addendum B to the CY
2014 OPPS/ASC final rule with comment period, we assigned CPT code
10030 to APC 0006 (Level I Incision & Drainage), with a payment rate of
$159.66, and assigned CPT code 49407 to APC 0685 (Level III Needle
Biopsy/Aspiration Except Bone Marrow), with a payment rate of $757.76.
In addition, as listed in Addendum B to the CY 2014 OPPS/ASC final rule
with comment period, both procedure codes were assigned to comment
indicator ``NI'' to indicate that the codes were new codes and assigned
interim APC and status indicator assignments that were subject to
comment.
At the Panel's March 10, 2014 meeting, a presenter requested the
reassignment of both CPT codes 10030 and 49407 to APC 0037 (Level IV
Needle Biopsy/Aspiration Except Bone Marrow), which has a CY 2014 OPPS
payment rate of $1,223.25 and where similar procedures are assigned.
Specifically, the presenter indicated that all the image-guided fluid
collection drainage procedures should be treated as one clinically
cohesive group and should be assigned to APC 0037.
Based on the request, the Panel agreed with the presenter and
recommended that CMS reassign CPT code 49407 to APC 0037. However, the
Panel did not agree with the reassignment of CPT code 10030 to APC
0037. Rather, the Panel

[[Page 40986]]

believed that CPT code 10030 would be more appropriately assigned to
APC 0007 (Level II Incision and Drainage).
We agree with the Panel's recommendation to reassign CPT code 10030
to APC 007. Therefore, we are proposing to reassign CPT code 10030 from
APC 0006 to APC 0007 for the CY 2015 OPPS update. In light of the
Panel's recommendation to reassign CPT code 49407 and the image-guided
breast biopsy procedures to APC 0037, and our longstanding policy of
reviewing, on an annual basis, the APC assignments for all services and
items paid under the OPPS, we evaluated the geometric mean costs
associated with the procedures assigned to the existing four needle
biopsy APCs, specifically, APCs 0004 (Level I Needle Biopsy/Aspiration
Except Bone Marrow), 0005, 0685 (Level III Needle Biopsy/Aspiration
Except Bone Marrow), and 0037. Based on our review of the latest
hospital outpatient claims data available for the proposed rule, we are
proposing to reassign the procedures assigned to APCs 0685 and 0037 to
either APC 0004 or APC 0005 based on clinical and resource homogeneity.
With this proposed revision, there would be no procedures assigned to
APCs 0685 or 0037. Therefore, we are proposing to delete APCs 0685 and
0037 for CY 2015. Consequently, for the CY 2015 OPPS update, we are
proposing to use only two levels of needle biopsy APCs, specifically,
APCs 0004 and 0005. Based on the proposal to reassign all of the
procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC
0005, we are proposing to reassign CPT code 49407 from APC 0685 to APC
0005 for CY 2015. Table 25 below shows the long descriptors for CPT
codes 10030 and 49407, and their proposed status indicator and APC
assignments for the CY 2015 OPPS update. The proposed CY 2015 payment
rate for CPT codes 10030 and 49407 can be found in Addendum B to this
CY 2015 OPPS/ASC proposed rule (which is available via the Internet on
the CMS Web site).

Table 25--Proposed CY 2015 APC Assignments for CPT Codes 10030 and 49407
----------------------------------------------------------------------------------------------------------------
CY 2014 OPPS Proposed CY Proposed CY
CPT Code Long descriptor CY 2014 OPPS SI APC 2015 OPPS SI 2015 OPPS APC
----------------------------------------------------------------------------------------------------------------
10030................. Image-guided fluid T 0006 T 0007
collection drainage
by catheter (eg,
abscess, hematoma,
seroma, lymphocele,
cyst), soft tissue
(eg, extremity,
abdominal wall,
neck), percutaneous.
49407................. Image-guided fluid T 0685 T 0005
collection drainage
by catheter (eg,
abscess, hematoma,
seroma, lymphocele,
cyst); peritoneal or
retroperitoneal,
transvaginal or
transrectal.
----------------------------------------------------------------------------------------------------------------

5. Cystourethroscopy and Other Genitourinary Procedures (APCs 0160,
0161, 0162, and 0163)
Every year we revise, if necessary, the APC assignments for
procedure codes based on our analysis of the latest hospital outpatient
claims data. Although we do not discuss every APC change in the
proposed and final rules with comment period, these changes are listed
in Addendum B to the proposed and final rules with comment period.
Specifically, procedure codes with proposed revisions to the APC and/or
status indicator assignments are assigned to comment indicator ``CH''
(Active HCPCS code in current year and next calendar year, status
indicator and/or APC assignment has changed) in Addendum B to this
proposed rule.
For the CY 2014 OPPS update, there are five levels of APCs that
contain cystourethroscopy and genitourinary procedures. These APCs are
listed in Table 26, along with their status indicator assignments for
CY 2014.

Table 26--CY 2014 APCs Containing Cystourethroscopy and Genitourinary
Procedures
------------------------------------------------------------------------
CY 2014 Status
CY 2014 APC APC Title description indicator
------------------------------------------------------------------------
0160....................... Level I Cystourethroscopy T
and other Genitourinary
Procedures.
0161....................... Level II Cystourethroscopy T
and other Genitourinary
Procedures.
0162....................... Level III T
Cystourethroscopy and
other Genitourinary
Procedures.
0163....................... Level IV Cystourethroscopy T
and other Genitourinary
Procedures.
0429....................... Level V Cystourethroscopy T
and other Genitourinary
Procedures.
------------------------------------------------------------------------

For the CY 2015 OPPS update, based on our review of the latest
hospital outpatient claims data available for this proposed rule, we
are proposing to restructure the APCs containing cystourethroscopy and
other genitourinary procedures to better reflect the resource costs and
clinical characteristics of the procedures within each APC. This
proposed restructuring results in the use of four APCs for the CY 2015
OPPS update, as compared to the five APCs used for the CY 2014 OPPS
update. Specifically, based on our review and evaluation of the
procedures assigned to these APCs and the latest hospital outpatient
claims data, we are proposing to delete APC 0429 (Level V
Cystourethroscopy and Other Genitourinary Procedures). We are proposing
to reassign the procedures that were previously assigned to APC 0429 to
either APC 0161 (Level I Cystourethroscopy and Other Genitourinary
Procedures) or APC 0163 (Level IV Cystourethroscopy and other
Genitourinary Procedures) for the CY 2015 OPPS update because we
believe that these procedures would be more appropriately assigned to
either APC based on their geometric mean costs. Further, we believe
this proposed restructuring appropriately categorizes all of the
cystourethroscopy and other genitourinary procedures that are
comparable clinically and with respect to resource use within an APC
group. In addition, we are proposing to delete APC 0169 (Lithotripsy)
because the one

[[Page 40987]]

procedure, specifically the procedure described by CPT code 50590
(Lithotripsy, extracorporeal shock wave) that was assigned to this APC
is proposed for reassignment to APC 0163.
In summary, we are proposing to restructure the APCs containing
cystourethroscopy and other genitourinary procedures, and to use a
four-level APC grouping to classify the procedures based on our
analysis of the latest hospital outpatient claims data available for
this proposed rule. In addition, we are proposing to delete APC 0169
and reassign CPT code 50590 to APC 0163 where it is more appropriately
assigned based on resource costs and the similarity to the other
procedures assigned to APC 0163. Table 27 shows the proposed APCs that
contain cystourethroscopy and other genitourinary procedures, the APC
titles, and the status indicator assignments for CY 2015. The proposed
payment rates for the specific APCs listed in Table 27 can be found in
Addendum A to this proposed rule, while the proposed payment rates for
the specific cystourethroscopy and other genitourinary procedure codes
can be found in Addendum B to this proposed rule (which are available
via the Internet on the CMS Web site).

Table 27--Proposed CY 2015 APCs Containing Cystourethroscopy and
Genitourinary Procedures
------------------------------------------------------------------------
Proposed CY
Proposed CY 2015 APC APC Title description 2015 Status
indicator
------------------------------------------------------------------------
0160....................... Level I Cystourethroscopy T
and other Genitourinary
Procedures.
0161....................... Level II Cystourethroscopy T
and other Genitourinary
Procedures.
0162....................... Level III T
Cystourethroscopy and
other Genitourinary
Procedures.
0163....................... Level IV Cystourethroscopy T
and other Genitourinary
Procedures.
------------------------------------------------------------------------

6. Wound Treatments and Services (APCs 0015 and 0327)
a. Epidermal Autograft (APC 0327)
In the CY 2014 OPPS/ASC final rule with comment period, we assigned
CPT code 15110 to APC 0329 (Level IV Skin Repair), with a payment rate
of approximately $2,260. This payment rate was derived from the latest
hospital outpatient claims data used for CY 2014 ratesetting, which
showed a geometric mean cost of approximately $2,174 based on 10 single
claims (out of 29 total claims) for CPT code 15110.
As stated in section III.B. of this proposed rule, we review, on an
annual basis, the APC assignments for all services and items paid under
the OPPS. Analysis of the latest hospital outpatient claims data
available for this CY 2015 proposed rule showed a geometric mean cost
of approximately $774 based on 90 single claims (out of 122 total
claims) for CPT code 15110. Based on these recent data, we are
proposing to reassign CPT code 15110 from APC 0329 to APC 0327 (Level
II Skin Procedures), which has a geometric mean cost of approximately
$451. We believe that APC 0327 is the most appropriate assignment for
CPT code 15110 when considering its similarity to the other procedures
in this APC.
In addition, we are proposing to revise the APC titles for the four
skin repair APCs. Specifically, we are proposing to rename APC 0326
from ``Level I Skin Repair'' to ``Level I Skin Procedures,'' APC 0327
from ``Level II Skin Repair'' to ``Level II Skin Procedures,'' APC 0328
from ``Level III Skin Repair'' to ``Level III Skin Procedures,'' and
APC 0329 from ``Level IV Skin Repair'' to ``Level IV Skin Procedures.''
Table 28 below shows the long descriptor, as well as the proposed
CY 2015 APC and status indicator assignment, for CPT code 15110. The
proposed CY 2015 payment rate for CPT code 15110 can be found in
Addendum B to this proposed rule (which is available via the Internet
on the CMS Web site).

Table 28-Proposed CY 2015 APC and Status Indicator for CPT Code 15110
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
Procedure code Long descriptor CY 2014 SI CY 2014 APC 2015 SI 2015 APC
----------------------------------------------------------------------------------------------------------------
15110................. Epidermal autograft, T 0329 T 0327
trunk, arms, legs;
first 100 sq cm or
less, or 1% of body
area of infants and
children.
----------------------------------------------------------------------------------------------------------------

b. Negative Pressure Wound Therapy (NPWT) (APC 0015)
We stated in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75001) that some commenters requested the reassignment of HCPCS
codes G0456 and G0457 to a higher paying APC, specifically within the
range of $450 to $500 because this range in amounts would adequately
pay for the cost of providing negative pressure wound therapy (NPWT).
We further stated in that same final rule with comment period that
because HCPCS codes G0456 and G0457 were new codes for the CY 2013 OPPS
update, we expected to have claims data available for these codes
during the CY 2015 rulemaking cycle, and at which time we would
reevaluate the APC assignments for these services in preparation for
the CY 2015 rulemaking cycle.
We established HCPCS code G0456 and HCPCS code G0457 effective
January 1, 2013, to provide a payment mechanism for NPWT services
furnished through a disposable device. For the CY 2013 OPPS update, we
assigned these services to APC 0016 (Level IV Debridement &
Destruction), which had a CY 2013 payment rate of approximately $210.
For the CY 2014 OPPS update, we continued to assign HCPCS codes G0456
and G0457 to APC 0016, which has a payment rate of approximately $275.
For the CY 2015 OPPS update, our analysis of the latest hospital
outpatient claims data available for this proposed rule, which is based
on claims submitted from January 1, 2013 through December 31, 2013,
indicates that the geometric mean cost of APC 0013 is close to the
geometric mean cost of APC 0015. Therefore, we are proposing to

[[Page 40988]]

combine these APCs by deleting APC 0013 and reassigning all of the
procedures from APC 0013 to APC 0015, thereby retaining APC 0015. We
are proposing to retitle the Debridement and Destruction APC series
(excluding the title of APC 0012) as follows: APC 0015 (Level II
Debridement and Destruction), APC 0016 (Level III Debridement and
Destruction), and APC 0017 (Level IV Debridement and Destruction). The
CY 2013 claims data available for this proposed rule also indicate that
the resource costs for the services described by HCPCS codes G0456 and
G0457 range between $152 and $193. Specifically, the geometric mean
cost for HCPCS code G0456 is approximately $152 based on 4,509 single
claims (out of 5,772 total claims), and approximately $193 for HCPCS
code G0457 based on 386 single claims (out of 591 total claims). Based
on our most recent claims data, we believe that a reassignment of HCPCS
codes G0456 and G0457 from APC 0016 to APC 0015 (Level III Debridement
& Destruction), which has a geometric mean cost of approximately $148,
is most appropriate. Therefore, we are proposing to reassign HCPCS
codes G0456 and G0457 from APC 0016 to APC 0015 for the CY 2015 OPPS
update. Table 29 below shows the long descriptors as well as the
proposed CY 2015 APC and status indicator assignments for HCPCS codes
G0456 and G0457. The proposed CY 2015 payment rates for HCPCS codes
G0456 and G0457 can be found in Addendum B to this proposed rule (which
is available via the Internet on the CMS Web site).

Table 29--Proposed CY 2015 APCs and Status Indicator for HCPCS Codes G0456 and G0457
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
HCPCS Code Long descriptor CY 2014 SI CY 2014 APC 2015 SI 2015 APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0456................................ Negative pressure wound therapy, (eg, vacuum T 0016 T 0015
assisted drainage collection) using a
mechanically-powered device, not durable
medical equipment, including provision of
cartridge and dressing(s), topical
application(s), wound assessment, and
instructions for ongoing care, per session;
total wounds(s) surface area less than or
equal to 50 square centimeters.
G0457................................ Negative pressure wound therapy, (eg, vacuum T 0016 T 0015
assisted drainage collection) using a
mechanically-powered device, not durable
medical equipment, including provision of
cartridge and dressing(s), topical
application(s), wound assessment, and
instructions for ongoing care, per session;
total wounds(s) surface area greater than 50
square centimeters.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Endoscopic Retrograde Cholangiopancreatography (ERCP) With Stent
(APC 0384)
For the CY 2014 OPPS update, the AMA CPT Editorial Panel deleted
CPT codes 43268 and 43269 describing an endoscopic retrograde
cholangiopancreatography (ERCP) with stent placement into the biliary
or pancreatic duct. New CPT codes 43274 and 43276 replaced deleted CPT
codes 43268 and 43269, effective January 1, 2014. New CPT codes 43274
and 43276 describe an ERCP with stent placement into the biliary or
pancreatic duct including dilation, guide wire passage, and
sphincterotomy, when performed. As shown in Table 30, and as listed in
Addendum B to the CY 2014 OPPS/ASC final rule with comment period, we
assigned CPT codes 43274 and 43276 to APC 0151 (Endoscopic Retrograde
Cholangio-Pancreatography (ERCP)), with a payment rate of $1,933.69 for
CY 2014. In addition, as listed in Addendum B, both procedure codes
were assigned to comment indicator ``NI'' to indicate that these codes
were assigned interim APC and status indicator assignments that were
subject to comment.
At the Panel's March 10, 2014 meeting, the Panel recommended that
CMS reassign CPT codes 43274 and 43276 to APC 0384 (GI Procedures with
Stents) at the earliest opportunity. We agree with the Panel's
recommendation that CPT codes 43274 and 43276 should be reassigned to
APC 0384. Therefore, we are proposing to reassign CPT codes 43274 and
43276 from APC 0151 to APC 0384 for the CY 2015 OPPS update. Table 30
below shows the long descriptors for CPT codes 43274 and 43276, and
their proposed APC and status indicator assignments for the CY 2015
OPPS update. We note that APC 0384 is proposed as a comprehensive APC
for CY 2015. We refer readers to section II.A.2.e. of this proposed
rule for additional information on our comprehensive APC policy. The
proposed CY 2015 payment rate for CPT codes 43274 and 43276 can be
found in Addendum B to this CY 2015 OPPS/ASC proposed rule (which is
available via the Internet on the CMS Web site).

Table 30--Proposed CY 2015 APC and Status Indicator Assignments for CPT Codes 43274 and 43276
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2014 OPPS Proposed CY Proposed CY
CPT code Long descriptor CY 2014 OPPS SI APC 2015 OPPS SI 2015 OPPS APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
43274................................ Endoscopic retrograde cholangiopancreatography T 0151 J1 0384
(ERCP); with placement of endoscopic stent
into biliary or pancreatic duct, including pre-
and post-dilation and guide wire passage,
when performed, including sphincterotomy, when
performed, each stent.

[[Page 40989]]

43276................................ Endoscopic retrograde cholangiopancreatography T 0151 J1 0384
(ERCP); with removal and exchange of stent(s),
biliary or pancreatic duct, including pre- and
post-dilation and guide wire passage, when
performed, including sphincterotomy, when
performed, each stent exchanged.
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Radiation Therapy (APCs 0066, 0067, 0412, 0446, 0648, and 0667)
We are proposing several changes to the radiation therapy APCs for
CY 2015. To correct a violation of the 2 times rule within APC 0664
(Level I Proton Beam Radiation Therapy), we are proposing to reassign
CPT code 77520 from APC 0664 to APC 0412 (Level III Radiation Therapy).
We believe that CPT code 77520 is both clinically similar and
comparable in geometric mean cost to the other services assigned to APC
0412. We also are proposing to reassign CPT code 77522 from APC 0664 to
proposed newly renamed APC 0667 (Level IV Radiation Therapy) because we
believe that the procedure described by CPT code 77522 is both
clinically similar and comparable in geometric mean cost to the other
services assigned to APC 0667. Because there would be no other codes
assigned to APC 0664 if these proposed reassignments are finalized, we
also are proposing to delete APC 0664 for CY 2015. In addition, we are
proposing to rename existing APC 0667 to ``Level IV Radiation Therapy''
(instead of using the existing title of ``Level II Proton Beam
Radiation Therapy''), to make the title consistent with other APCs in
the radiation therapy series. In conjunction with this proposed change,
we are proposing to reassign the following three services to proposed
newly renamed APC 0667 for CY 2015: CPT codes 77522, 77523, and 77525.
We also are proposing to delete APC 0065 (IORT, MRgFUS, and MEG)
because we are proposing to reassign the services assigned to this APC
to more appropriate APCs based on clinical similarities and comparable
geometric mean cost. Specifically, we are proposing to reassign the
Magnetoencephalography (MEG) CPT codes 95965 and 95966 from APC 0065 to
APC 0446 (Level IV Nerve and Muscle Services), which would only contain
MEG services. We are proposing to reassign Intraoperative Radiation
Therapy (IORT) CPT codes 77424 and 77425 to comprehensive APC 0648
(Level IV Breast and Skin Surgery). We refer readers to section
II.A.2.e. of this proposed rule for a discussion of comprehensive APCs
and the APC assignment of IORT services. In addition, we are proposing
to reassign the Magnetic Resonance-Guided Focused Ultrasound Surgery
(MRgFUS) HCPCS codes C9734, 0071T, and 0072T, and CPT code 0301T from
APC 0065 to APC 0066, which we are proposing to rename ``Level V
Radiation Therapy.'' We understand that the MRgFUS services are not the
same as radiation therapy, but assigning these services to APC 0066
aligns with the assignment of certain stereotactic radiosurgery
services (namely the procedure described by HCPCS code G0339 and
successor CPT code 77373) that were grouped with MRgFUS services prior
to CY 2014. Finally, we are proposing to rename APC 0067 from ``Level
II Stereotactic Radiosurgery'' to ``Single Session Cranial Stereotactic
Radiosurgery'', which we are proposing as a comprehensive APC. For a
further discussion regarding the services assigned to APC 0067, we
refer readers to section II.A.2.e. of this proposed rule.

IV. Proposed OPPS Payment for Devices

A. Proposed Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
Section 1833(t)(6)(B)(iii) of the Act requires that, under the
OPPS, a category of devices be eligible for transitional pass-through
payments for at least 2, but not more than 3 years. This pass-through
payment eligibility period begins with the first date on which
transitional pass-through payments may be made for any medical device
that is described by the category. We may establish a new device
category for pass-through payment in any quarter. Under our established
policy, we base the pass-through status expiration date for a device
category on the date on which pass-through payment is effective for the
category, which is the first date on which pass-through payment may be
made for any medical device that is described by such category. We
propose and finalize the dates for expiration of pass-through status
for device categories as part of the OPPS annual update.
We also have an established policy to package the costs of the
devices that are no longer eligible for pass-through payments into the
costs of the procedures with which the devices are reported in the
claims data used to set the payment rates (67 FR 66763). Brachytherapy
sources, which are now separately paid in accordance with section
1833(t)(2)(H) of the Act, are an exception to this established policy.
There currently is one device category eligible for pass-through
payment. This device category is described by HCPCS code C1841 (Retinal
prosthesis, includes all internal and external components), which we
made effective for pass-through payment as of October 1, 2013.
b. Proposed CY 2015 Policy
As indicated earlier, a category of devices may be eligible for
transitional pass-through payments for at least 2 years, but not more
than 3 years. There is one device category eligible for pass-through
payment at this time, described by HCPCS code C1841, which we made
effective for pass-through payment as of October 1, 2013. At the end of
CY 2015, the device category described by HCPCS code C1841 will have
been eligible for pass-through payment for more than 2 years.
Therefore, we are proposing an expiration date for pass-through payment
for HCPCS code C1841 of December 31, 2015. We are proposing that,
effective January 1, 2016, HCPCS code C1841 will no longer be eligible
for pass-through payment status. In accordance with our established
policy, we are proposing to package the cost of HCPCS code C1841 after
December 31, 2015, into the costs related to the

[[Page 40990]]

procedures with which it is reported in our claims data.
If we create new device categories for pass-through payment status
during the remainder of CY 2014 or during CY 2015, we will propose
future expiration dates in accordance with the statutory requirement
that they be eligible for pass-through payments for at least 2 years,
but not more than 3 years, from the date on which pass-through payment
for any medical device described by the category may first be made.
2. Proposed Provisions for Reducing Transitional Pass-Through Payments
To Offset Costs Packaged Into APC Groups
a. Background
Section 1833(t)(6)(D)(ii) of the Act sets the amount of additional
pass-through payment for an eligible device as the amount by which the
hospital's charges for a device, adjusted to cost (the cost of the
device) exceeds the portion of the otherwise applicable Medicare
outpatient department fee schedule amount (the APC payment amount)
associated with the device. We have an established policy to estimate
the portion of each APC payment rate that could reasonably be
attributed to the cost of the associated devices that are eligible for
pass-through payments (66 FR 59904) for purposes of estimating the
portion of the otherwise applicable APC payment amount associated with
pass-through devices. For eligible device categories, we deduct an
amount that reflects the portion of the APC payment amount that we
determine is associated with the cost of the device, defined as the
device APC offset amount, from the charges adjusted to cost for the
device, as provided by section 1833(t)(6)(D)(ii) of the Act, to
determine the eligible device's pass-through payment amount. We have
consistently used an established methodology to estimate the portion of
each APC payment rate that could reasonably be attributed to the cost
of an associated device eligible for pass-through payment, using claims
data from the period used for the most recent recalibration of the APC
rates (72 FR 66751 through 66752). We establish and update the
applicable device APC offset amounts for newly eligible pass-through
device categories through the transmittals that implement the quarterly
OPPS updates.
Currently, we have published a list of all procedural APCs with the
CY 2014 portions (both percentages and dollar amounts) of the APC
payment amounts that we determine are associated with the cost of
devices on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The dollar
amounts are used as the device APC offset amounts. In addition, in
accordance with our established practice, the device APC offset amounts
in related APCs are used in order to evaluate whether the cost of a
device in an application for a new device category for pass-through
payment is not insignificant in relation to the APC payment amount for
the service related to the category of devices, as specified in our
regulations at Sec. 419.66(d).
Beginning in CY 2010, we include packaged costs related to
implantable biologicals in the device offset calculations in accordance
with our policy that the pass-through evaluation process and payment
methodology for implantable biologicals that are surgically inserted or
implanted (through a surgical incision or a natural orifice) and that
are newly approved for pass-through status beginning on or after
January 1, 2010, be the device pass-through process and payment
methodology only (74 FR 60476).
b. Proposed CY 2015 Policy
We are proposing to continue, for CY 2015, our established
methodology to estimate the portion of each APC payment rate that could
reasonably be attributed to (that is, reflect) the cost of an
associated device eligible for pass-through payment, using claims data
from the period used for the most recent recalibration of the APC
payment rates. We are proposing to continue our policy, for CY 2015,
that the pass-through evaluation process and pass-through payment
methodology for implantable biologicals that are surgically inserted or
implanted (through a surgical incision or a natural orifice) and that
are newly approved for pass-through status beginning on or after
January 1, 2010, be the device pass-through process and payment
methodology only. The rationale for this policy is provided in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60471 through
60477). We also are proposing to continue our established policies for
calculating and setting the device APC offset amounts for each device
category eligible for pass-through payment. In addition, we are
proposing to continue our established policy to review each new device
category on a case-by-case basis to determine whether device costs
associated with the new category are already packaged into the existing
APC structure. If device costs packaged into the existing APC structure
are associated with the new category, we are proposing to deduct the
device APC offset amount from the pass-through payment for the device
category. As stated earlier, these device APC offset amounts also would
be used in order to evaluate whether the cost of a device in an
application for a new device category for pass-through payment is not
insignificant in relation to the APC payment amount for the service
related to the category of devices (Sec. 419.66(d)).
For CY 2015, we also are proposing to continue our policy
established in CY 2010 to include implantable biologicals in our
calculation of the device APC offset amounts. In addition, we are
proposing to continue to calculate and set any device APC offset amount
for any new device pass-through category that includes a newly eligible
implantable biological beginning in CY 2015 using the same methodology
we have historically used to calculate and set device APC offset
amounts for device categories eligible for pass-through payment, and to
include the costs of implantable biologicals in the calculation of the
device APC offset amounts (78 FR 43596).
In addition, we are proposing to update the list of all procedural
APCs with the final CY 2015 portions of the APC payment amounts that we
determine are associated with the cost of devices on the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html so that this information is available
for use by the public in developing potential CY 2015 device pass-
through payment applications and by CMS in reviewing those
applications.

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

1. Background
To ensure equitable payment when the hospital receives a device
without cost or with full credit, in CY 2007, we implemented a policy
to reduce the payment for specified device-dependent APCs by the
estimated portion of the APC payment attributable to device costs (that
is, the device offset) when the hospital receives a specified device at
no cost or with full credit (71 FR 68071 through 68077). Hospitals are
instructed to report no cost/full credit cases using the ``FB''
modifier on the line with the procedure code in which the no cost/full
credit device is used. In cases in which the device is furnished
without cost or with full credit, the hospital is instructed to report
a token device charge of less than $1.01. In cases in which the device
being inserted is an upgrade (either of the same type of

[[Page 40991]]

device or to a different type of device) with a full credit for the
device being replaced, the hospital is instructed to report as the
device charge the difference between its usual charge for the device
being implanted and its usual charge for the device for which it
received full credit. In CY 2008, we expanded this payment adjustment
policy to include cases in which hospitals receive partial credit of 50
percent or more of the cost of a specified device. Hospitals are
instructed to append the ``FC'' modifier to the procedure code that
reports the service provided to furnish the device when they receive a
partial credit of 50 percent or more of the cost of the new device. We
refer readers to the CY 2008 OPPS/ASC final rule with comment period
for more background information on the ``FB'' and ``FC'' payment
adjustment policies (72 FR 66743 through 66749).
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005
through 75007), beginning in CY 2014, we modified our policy of
reducing OPPS payment for specified APCs when a hospital furnishes a
specified device without cost or with a full or partial credit. For CY
2013 and prior years, our policy had been to reduce OPPS payment by 100
percent of the device offset amount when a hospital furnishes a
specified device without cost or with a full credit and by 50 percent
of the device offset amount when the hospital receives partial credit
in the amount of 50 percent or more of the cost for the specified
device. For CY 2014, we reduce OPPS payment, for the applicable APCs,
by the full or partial credit a hospital receives for a replaced
device. Specifically, under this modified policy, hospitals are
required to report the amount of the credit in the amount portion for
value code ``FD'' (Credit Received from the Manufacturer for a Replaced
Medical Device) when the hospital receives a credit for a replaced
device that is 50 percent or greater than the cost of the device. For
CY 2014, we also limit the OPPS payment deduction for the applicable
APCs to the total amount of the device offset when the ``FD'' value
code appears on a claim.
2. Proposed Policy for CY 2015
For CY 2015, we are proposing to continue our existing policy of
reducing OPPS payment for specified APCs when a hospital furnishes a
specified device without cost or with a full or partial credit.
Specifically, for CY 2015, we are proposing to continue to reduce the
OPPS payment, for the applicable APCs listed below in Table 31, by the
full or partial credit a provider receives for a replaced device. Under
this proposed policy, hospitals would continue to be required to report
the amount of the credit in the amount portion for ``FD'' when the
hospital receives a credit for a replaced device listed in Table 32
that is 50 percent or greater than the cost of the device.
For CY 2015, we also are proposing to continue using the three
criteria established in the CY 2007 OPPS/ASC final rule with comment
period for determining the APCs to which our proposed CY 2015 policy
would apply (71 FR 68072 through 68077). Specifically: (1) All
procedures assigned to the selected APCs must involve implantable
devices that would be reported if device insertion procedures were
performed; (2) the required devices must be surgically inserted or
implanted devices that remain in the patient's body after the
conclusion of the procedure (at least temporarily); and (3) the device
offset amount must be significant, which, for purposes of this policy,
is defined as exceeding 40 percent of the APC cost. We also are
proposing to continue to restrict the devices to which the APC payment
adjustment would apply to a specific set of costly devices to ensure
that the adjustment would not be triggered by the implantation of an
inexpensive device whose cost would not constitute a significant
proportion of the total payment rate for an APC. We continue to believe
these criteria are appropriate because no cost devices and device
credits are likely to be associated with particular cases only when the
device must be reported on the claim and is of a type that is implanted
and remains in the body when the beneficiary leaves the hospital. We
believe that the reduction in payment is appropriate only when the cost
of the device is a significant part of the total cost of the APC into
which the device cost is packaged, and that the 40-percent threshold is
a reasonable definition of a significant cost.
We examined the offset amounts calculated from the CY 2015 proposed
rule data and the clinical characteristics of the proposed CY 2015 APCs
to determine which APCs meet the criteria for CY 2015. Table 31 below
lists the proposed APCs to which the proposed payment adjustment policy
for no cost/full credit and partial credit devices would apply in CY
2015. Table 32 below lists the proposed devices to which the proposed
payment adjustment policy for no cost/full credit and partial credit
devices would apply in CY 2015.
We are proposing to update the lists of APCs and devices to which
the proposed no cost/full credit and partial credit device adjustment
policy would apply for CY 2015, consistent with the three criteria
discussed earlier in this section, based on the final CY 2013 claims
data available for the CY 2015 OPPS/ASC final rule with comment period.

Table 31--Proposed APCs to Which the Proposed No Cost/Full Credit and
Partial Credit Device Payment Adjustment Policy Would Apply in CY 2015
------------------------------------------------------------------------
Proposed CY 2015 APC Proposed CY 2015 APC title
------------------------------------------------------------------------
0039.............................. Level III Neurostimulator & Related
Procedures.
0061.............................. Level II Neurostimulator & Related
Procedures.
0064.............................. Level III Treatment Fracture/
Dislocation.
0089.............................. Level III Pacemaker and Similar
Procedures.
0090.............................. Level II Pacemaker and Similar
Procedures.
0107.............................. Level I ICD and Similar Procedures.
0108.............................. Level II ICD and Similar Procedures.
0227.............................. Implantation of Drug Infusion
Device.
0229.............................. Level II Endovascular Procedures.
0259.............................. Level VII ENT Procedures.
0293.............................. Level IV Intraocular Procedures.
0318.............................. Level IV Neurostimulator & Related
Procedures.
0319.............................. Level III Endovascular Procedures.
0351.............................. Level V Intraocular Procedures.
0385.............................. Level I Urogenital Procedures.
0386.............................. Level II Urogenital Procedures.
0425.............................. Level V Musculoskeletal Procedures
Except Hand and Foot.
0434.............................. Cardiac Defect Repair.
0655.............................. Level IV Pacemaker and Similar
Procedures.
------------------------------------------------------------------------

Table 32--Proposed Devices to Which the Proposed No Cost/Full Credit and
Partial Credit Device Payment Adjustment Policy Would Apply in CY 2015
------------------------------------------------------------------------
Proposed CY 2015 device HCPCS code Proposed CY 2015 short descriptor
------------------------------------------------------------------------
C1721............................. AICD, dual chamber.
C1722............................. AICD, single chamber.
C1728............................. Cath, brachytx seed adm.
C1764............................. Event recorder, cardiac.
C1767............................. Generator, neurostim, imp.
C1771............................. Rep dev, urinary, w/sling.
C1772............................. Infusion pump, programmable.

[[Page 40992]]

C1776............................. Joint device (implantable).
C1777............................. Lead, AICD, endo single coil.
C1778............................. Lead, neurostimulator.
C1779............................. Lead, pmkr, transvenous VDD.
C1785............................. Pmkr, dual, rate-resp.
C1786............................. Pmkr, single, rate-resp.
C1789............................. Prosthesis, breast, imp.
C1813............................. Prosthesis, penile, inflatab.
C1815............................. Pros, urinary sph, imp.
C1818............................. Integrated keratoprosthesis.
C1820............................. Generator, neuro rechg bat sys.
C1840............................. Lens, intraocular (telescopic).
C1881............................. Dialysis access system.
C1882............................. AICD, other than sing/dual.
C1891............................. Infusion pump, non-prog, perm.
C1895............................. Lead, AICD, endo dual coil.
C1896............................. Lead, AICD, non sing/dual.
C1897............................. Lead, neurostim, test kit.
C1898............................. Lead, pmkr, other than trans.
C1899............................. Lead, pmkr/AICD combination.
C1900............................. Lead coronary venous.
C2619............................. Pmkr, dual, non rate-resp.
C2620............................. Pmkr, single, non rate-resp.
C2621............................. Pmkr, other than sing/dual.
C2622............................. Prosthesis, penile, non-inf.
C2626............................. Infusion pump, non-prog, temp.
C2631............................. Rep dev, urinary, w/o sling.
------------------------------------------------------------------------

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

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

1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biologicals. Throughout this proposed rule, the term ``biological''
is used because this is the term that appears in section 1861(t) of the
Act. ``Biological'' as used in this proposed rule includes ``biological
product'' or ``biologic'' as defined in the Public Health Service Act.
As enacted by the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this provision
requires the Secretary to make additional payments to hospitals for:
Current orphan drugs, as designated under section 526 of the Federal
Food, Drug, and Cosmetic Act; urrent drugs and biologicals and
brachytherapy sources used in cancer therapy; and current
radiopharmaceutical drugs and biologicals. ``Current'' refers to drugs
or biologicals that are outpatient hospital services under Part B for
which payment was made on the first date the hospital OPPS was
implemented.
Transitional pass-through payments also are provided for certain
``new'' drugs and biologicals that were not being paid for as an HOPD
service as of December 31, 1996 and whose cost is ``not insignificant''
in relation to the OPPS payments for the procedures or services
associated with the new drug or biological. For pass-through payment
purposes, radiopharmaceuticals are included as ``drugs.'' As required
by statute, transitional pass-through payments for a drug or biological
described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a
period of at least 2 years, but not more than 3 years, after the
payment was first made for the product as a hospital outpatient service
under Medicare Part B. Proposed CY 2015 pass-through drugs and
biologicals and their designated APCs are assigned status indicator
``G'' in Addenda A and B to this proposed rule, which are available via
the Internet on the CMS Web site.
Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through
payment amount, in the case of a drug or biological, is the amount by
which the amount determined under section 1842(o) of the Act for the
drug or biological exceeds the portion of the otherwise applicable
Medicare OPD fee schedule that the Secretary determines is associated
with the drug or biological. If the drug or biological is covered under
a competitive acquisition contract under section 1847B of the Act, the
pass-through payment amount is determined by the Secretary to be equal
to the average price for the drug or biological for all competitive
acquisition areas and the year established under such section as
calculated and adjusted by the Secretary. However, we note that the
Part B drug competitive acquisition program (CAP) has been postponed
since CY 2009, and such a program has not been reinstated for CY 2015.
This methodology for determining the pass-through payment amount is
set forth in regulations at 42 CFR 419.64. These regulations specify
that the pass-through payment equals the amount determined under
section 1842(o) of the Act minus the portion of the APC payment that
CMS determines is associated with the drug or biological. Section 1847A
of the Act establishes the average sales price (ASP) methodology, which
is used for payment for drugs and biologicals described in section
1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP
methodology, as applied under the OPPS, uses several sources of data as
a basis for payment, including the ASP, the wholesale acquisition cost
(WAC), and the average wholesale price (AWP). In this proposed rule,
the term ``ASP methodology'' and ``ASP-based'' are inclusive of all
data sources and methodologies described therein. Additional
information on the ASP methodology can be found on the CMS Web site at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
The pass-through application and review process for drugs and
biologicals is explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Proposed Drugs and Biologicals With Expiring Pass-Through Status in
CY 2014
We are proposing that the pass-through status of 9 drugs and
biologicals would expire on December 31, 2014, as listed in Table 33
below. All of these drugs and biologicals will have received OPPS pass-
through payment for at least 2 years and no more than 3 years by
December 31, 2014. These drugs and biologicals were approved for pass-
through status on or before January 1, 2013. With the exception of
those groups of drugs and biologicals that are always packaged when
they do not have pass-through status (specifically, diagnostic
radiopharmaceuticals; contrast agents; anesthesia drugs; drugs,
biologicals, and radiopharmaceuticals that function as supplies when
used in a diagnostic test or procedure; and drugs and biologicals that
function as supplies when used in a surgical procedure), our standard
methodology for providing payment for drugs and biologicals with
expiring pass-through status in an upcoming calendar year is to
determine the product's estimated per day cost and compare it with the
OPPS drug packaging threshold for that calendar year (which is proposed
at $90 for CY 2015), as discussed further in section V.B.2. of this
proposed rule. If the estimated per day cost for the drug or biological
is less than or equal to the applicable OPPS drug packaging threshold,
we would package payment for the drug or biological into the payment
for the associated procedure in the upcoming calendar year. If the
estimated per day cost of the drug or biological is greater than the
OPPS drug packaging threshold, we would provide separate payment at the
applicable

[[Page 40993]]

relative ASP-based payment amount (which is proposed at ASP+6 percent
for CY 2015, as discussed further in section V.B.3. of this proposed
rule).

Table 33--Proposed Drugs and Biologicals for Which Pass-Through Status Will Expire December 31, 2014
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
Proposed CY 2015 HCPCS Code Proposed CY 2015 long descriptor 2015 SI 2015 APC
----------------------------------------------------------------------------------------------------------------
C9290.................................. Injection, bupivicaine liposome, 1 mg. N N/A
C9293.................................. Injection, glucarpidase, 10 units..... K 9293
J0178.................................. Injection, aflibercept, 1 mg vial..... K 1420
J0716.................................. Injection, centruroides (scorpion) K 1431
immune f(ab)2, up to 120 milligrams.
J9019.................................. Injection, asparaginase (erwinaze), K 9289
1,000 iu.
J9306.................................. Injection, pertuzumab, 1 mg........... K 1471
Q4131.................................. EpiFix, per square centimeter......... N N/A
Q4132.................................. Grafix core, per square centimeter.... N N/A
Q4133.................................. Grafix prime, per square centimeter... N N/A
----------------------------------------------------------------------------------------------------------------

3. Proposed Drugs, Biologicals, and Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY 2015
We are proposing to continue pass-through status in CY 2015 for 22
drugs and biologicals. None of these drugs and biologicals will have
received OPPS pass-through payment for at least 2 years and no more
than 3 years by December 31, 2014. These drugs and biologicals, which
were approved for pass-through status between January 1, 2013 and July
1, 2014, are listed in Table 34 below. The APCs and HCPCS codes for
these drugs and biologicals approved for pass-through status through
April 1, 2014 are assigned status indicator ``G'' in Addenda A and B to
this proposed rule. Addenda A and B to this proposed rule are available
via the Internet on the CMS Web site.
Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through
payment for pass-through drugs and biologicals (the pass-through
payment amount) as the difference between the amount authorized under
section 1842(o) of the Act and the portion of the otherwise applicable
OPD fee schedule that the Secretary determines is associated with the
drug or biological. Payment for drugs and biologicals with pass-through
status under the OPPS is currently made at the physician's office
payment rate of ASP+6 percent. We believe it is consistent with the
statute to propose to continue to provide payment for drugs and
biologicals with pass-through status at a rate of ASP+6 percent in CY
2015, which is the amount that drugs and biologicals receive under
section 1842(o) of the Act.
Therefore, for CY 2015, we are proposing to pay for pass-through
drugs and biologicals at ASP+6 percent, equivalent to the rate these
drugs and biologicals would receive in the physician's office setting
in CY 2015. We are proposing that a $0.00 pass-through payment amount
would be paid for most pass-through drugs and biologicals under the CY
2015 OPPS because the difference between the amount authorized under
section 1842(o) of the Act, which is ASP+6 percent, and the portion of
the otherwise applicable OPD fee schedule that the Secretary determines
is appropriate, proposed at ASP+6 percent, is $0.
In the case of policy-packaged drugs (which include the following:
Contrast agents; diagnostic radiopharmaceuticals; anesthesia drugs;
drugs, biologicals, and radiopharmaceuticals that function as supplies
when used in a diagnostic test or procedure and drugs; and biologicals
that function as supplies when used in a surgical procedure), we are
proposing that their pass-through payment amount would be equal to
ASP+6 percent for CY 2015 because, if not on pass-through status,
payment for these products would be packaged into the associated
procedure.
In addition, we are proposing to continue to update pass-through
payment rates on a quarterly basis on the CMS Web site during CY 2015
if later quarter ASP submissions (or more recent WAC or AWP
information, as applicable) indicate that adjustments to the payment
rates for these pass-through drugs or biologicals are necessary. For a
full description of this policy, we refer readers to the CY 2006 OPPS/
ASC final rule with comment period (70 FR 68632 through 68635).
In CY 2015, as is consistent with our CY 2014 policy for diagnostic
and therapeutic radiopharmaceuticals, we are proposing to provide
payment for both diagnostic and therapeutic radiopharmaceuticals that
are granted pass-through status based on the ASP methodology. As stated
above, for purposes of pass-through payment, we consider
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a
diagnostic or therapeutic radiopharmaceutical receives pass-through
status during CY 2015, we are proposing to follow the standard ASP
methodology to determine the pass-through payment rate that drugs
receive under section 1842(o) of the Act, which is ASP+6 percent. If
ASP data are not available for a radiopharmaceutical, we are proposing
to provide pass-through payment at WAC+6 percent, the equivalent
payment provided to pass-through drugs and biologicals without ASP
information. If WAC information is also not available, we are proposing
to provide payment for the pass-through radiopharmaceutical at 95
percent of its most recent AWP.
As discussed in more detail in section II.A.3. of this proposed
rule, we implemented a policy whereby payment for the following
nonpass-through items is packaged into payment for the associated
procedure: Diagnostic radiopharmaceuticals; contrast agents; anesthesia
drugs; drugs, biologicals, and radiopharmaceuticals that function as
supplies when used in a diagnostic test or procedure; and drugs and
biologicals that function as supplies when used in a surgical
procedure. We are proposing to continue the packaging of these items,
regardless of their per day cost, in CY 2015. As stated earlier, pass-
through payment is the difference between the amount authorized under
section 1842(o) of the Act and the portion of the otherwise applicable
OPD fee schedule that the Secretary determines is associated with the
drug or biological. Because payment for a drug that is policy-packaged
would otherwise be packaged if the product did not have pass-through
status, we believe the otherwise applicable OPPS payment amount would
be equal to the policy-packaged drug APC offset amount for the
associated clinical APC in which the drug or biological is

[[Page 40994]]

utilized. The proposed calculation of the policy-packaged drug APC
offset amounts is described in more detail in section V.A.4. of this
proposed rule. It follows that the copayment for the nonpass-through
payment portion (the otherwise applicable fee schedule amount that we
would also offset from payment for the drug or biological if a payment
offset applies) of the total OPPS payment for those drugs and
biologicals would, therefore, be accounted for in the copayment for the
associated clinical APC in which the drug or biological is used.
According to section 1833(t)(8)(E) of the Act, the amount of
copayment associated with pass-through items is equal to the amount of
copayment that would be applicable if the pass-through adjustment was
not applied. Therefore, as we did in CY 2014, we are proposing to
continue to set the associated copayment amount to zero for CY 2015 for
pass-through drugs and biologicals that would otherwise be packaged if
the item did not have pass-through status.
The 22 drugs and biologicals that we are proposing to continue to
have pass-through status for CY 2015 or have been granted pass-through
status as of July 2014 are shown in Table 34 below.

Table 34--Proposed Drugs and Biologicals With Pass-Through Status in CY 2015
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
Proposed CY 2015 HCPCS code CY 2015 Long descriptor 2015 SI 2015 APC
----------------------------------------------------------------------------------------------------------------
A9520.................................. Technetium Tc 99m tilmanocept, G 1463
diagnostic, up to 0.5 millicuries.
C9021.................................. Injection, obinutuzumab, 10 mg........ G 1476
C9022.................................. Injection, elosulfase alfa, 1mg....... G 1480
C9132.................................. Prothrombin complex concentrate G 9132
(human), Kcentra, per i.u. of Factor
IX activity.
C9133.................................. Factor ix (antihemophilic factor, G 1467
recombinant), Rixubus, per i.u..
C9134.................................. Injection, Factor XIII A-subunit, G 1481
(recombinant), per 10 i.u..
C9441.................................. Injection, ferric carboxymaltose, 1 mg G 9441
C9497.................................. Loxapine, inhalation powder, 10 mg.... G 9497
J1446.................................. Injection, tbo-filgrastim, 5 G 1447
micrograms.
J1556.................................. Injection, immune globulin (Bivigam), G 9130
500 mg.
J3060.................................. Injection, taliglucerase alfa, 10 G 9294
units.
J7315.................................. Mitomycin, ophthalmic, 0.2 mg......... G 1448
J7316.................................. Injection, Ocriplasmin, 0.125mg....... G 9298
J7508.................................. Tacrolimus, Extended Release, Oral, G 1465
0.1 mg.
J9047.................................. Injection, carfilzomib, 1 mg.......... G 9295
J9262.................................. Injection, omacetaxine mepesuccinate, G 9297
0.01 mg.
J9354.................................. Injection, ado-trastuzumab emtansine, G 9131
1 mg.
J9371.................................. Injection, Vincristine Sulfate G 1466
Liposome, 1 mg.
J9400.................................. Injection, Ziv-Aflibercept, 1 mg...... G 9296
Q4121.................................. Theraskin, per square centimeter...... G 1479
Q4122.................................. Dermacell, per square centimeter...... G 1419
Q4127.................................. Talymed, per square centimeter........ G 1449
----------------------------------------------------------------------------------------------------------------
Note: Because the payment rates associated with these codes effective July 1, 2014, are not available to us in
time for incorporation into the Addenda to this proposed rule, the Level II HCPCS codes and the Category III
CPT codes implemented through the July 2014 OPPS quarterly update CR could not be included in Addendum B to
this proposed rule.

4. Proposed Provisions for Reducing Transitional Pass-Through Payments
for Policy-Packaged Drugs and Biologicals To Offset Costs Packaged Into
APC Groups
a. Background
Prior to CY 2008, diagnostic radiopharmaceuticals and contrast
agents were paid separately under the OPPS if their mean per day costs
were greater than the applicable year's drug packaging threshold. In CY
2008 (72 FR 66768), we began a policy of packaging payment for all
nonpass-through diagnostic radiopharmaceuticals and contrast agents as
ancillary and supportive items and services into their associated
nuclear medicine procedures. Therefore, beginning in CY 2008, nonpass-
through diagnostic radiopharmaceuticals and contrast agents were not
subject to the annual OPPS drug packaging threshold to determine their
packaged or separately payable payment status, and instead all nonpass-
through diagnostic radiopharmaceuticals and contrast agents were
packaged as a matter of policy.
For CY 2014, in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 74925), we continued to package payment for all nonpass-through
diagnostic radiopharmaceuticals, contrast agents, and anesthesia drugs
and we began packaging all nonpass-through drugs, biologicals, and
radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure and drugs and biologicals that function as
supplies when used in a surgical procedure. These packaging policies
were codified at 42 CFR 419.2(b) in CY 2014.
b. Proposed Payment Offset Policy for Diagnostic Radiopharmaceuticals
As previously noted, radiopharmaceuticals are considered to be
drugs for OPPS pass-through payment purposes. As described above,
section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
and the otherwise applicable OPD fee schedule amount. Because a payment
offset is necessary in order to provide an appropriate transitional
pass-through payment, we deduct from the pass-through payment for
diagnostic radiopharmaceuticals an amount reflecting the portion of the
APC payment associated with predecessor radiopharmaceuticals in order
to ensure no duplicate radiopharmaceutical payment is made.
In CY 2009, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor diagnostic radiopharmaceuticals when considering a new
diagnostic radiopharmaceutical for pass-through payment (73 FR 68638
through 68641). Specifically, we use the policy-packaged drug offset
fraction for APCs containing

[[Page 40995]]

nuclear medicine procedures, calculated as 1 minus the following: The
cost from single procedure claims in the APC after removing the cost
for policy-packaged drugs divided by the cost from single procedure
claims in the APC. To determine the actual APC offset amount for pass-
through diagnostic radiopharmaceuticals that takes into consideration
the otherwise applicable OPPS payment amount, we multiply the policy-
packaged drug offset fraction by the APC payment amount for the nuclear
medicine procedure with which the pass-through diagnostic
radiopharmaceutical is used and, accordingly, reduce the separate OPPS
payment for the pass-through diagnostic radiopharmaceutical by this
amount. For CY 2015, as we did in CY 2014, we are proposing to continue
to apply the diagnostic radiopharmaceutical offset policy to payment
for pass-through diagnostic radiopharmaceuticals.
There is currently one diagnostic radiopharmaceutical with pass-
through status under the OPPS. HCPCS code A9520 (Technetium Tc 99m
tilmanocept, diagnostic, up to 0.5 millicuries) was granted pass-
through status beginning October 1, 2013. We currently apply the
established radiopharmaceutical payment offset policy to pass-through
payment for this product.
Table 35 below displays the proposed APCs to which nuclear medicine
procedures would be assigned in CY 2015 and for which we expect that an
APC offset could be applicable in the case of diagnostic
radiopharmaceuticals with pass-through status.

Table 35--Proposed APCs to Which a Diagnostic Radiopharmaceutical Offset
May Be Applicable in CY 2015
------------------------------------------------------------------------
Proposed CY 2015 APC Proposed CY 2015 APC title
------------------------------------------------------------------------
0308.............................. Positron Emission Tomography (PET)
Imaging.
0377.............................. Level II Cardiac Imaging.
0378.............................. Level II Pulmonary Imaging.
0389.............................. Level I Non-imaging Nuclear
Medicine.
0390.............................. Level I Endocrine Imaging.
0391.............................. Level II Endocrine Imaging.
0392.............................. Level II Non-imaging Nuclear
Medicine.
0393.............................. Hematologic Processing & Studies.
0394.............................. Hepatobiliary Imaging.
0395.............................. GI Tract Imaging.
0396.............................. Bone Imaging.
0398.............................. Level I Cardiac Imaging.
0400.............................. Hematopoietic Imaging.
0401.............................. Level I Pulmonary Imaging.
0402.............................. Level II Nervous System Imaging.
0403.............................. Level I Nervous System Imaging.
0404.............................. Renal and Genitourinary Studies.
0406.............................. Level I Tumor/Infection Imaging.
0408.............................. Level III Tumor/Infection Imaging.
0414.............................. Level II Tumor/Infection Imaging.
------------------------------------------------------------------------

c. Proposed Payment Offset Policy for Contrast Agents
Section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
and the otherwise applicable OPD fee schedule amount. Because a payment
offset is necessary in order to provide an appropriate transitional
pass-through payment, we deduct from the pass-through payment for
contrast agents an amount reflecting the portion of the APC payment
associated with predecessor contrast agents in order to ensure no
duplicate contrast agent payment is made.
In CY 2010, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor contrast agents when considering new contrast agents for
pass-through payment (74 FR 60482 through 60484). Specifically, we use
the policy-packaged drug offset fraction for procedural APCs,
calculated as 1 minus the following: The cost from single procedure
claims in the APC after removing the cost for policy packaged drugs
divided by the cost from single procedure claims in the APC. To
determine the actual APC offset amount for pass-through contrast agents
that takes into consideration the otherwise applicable OPPS payment
amount, we are proposing to multiply the policy packaged drug offset
fraction by the APC payment amount for the procedure with which the
pass-through contrast agent is used and, accordingly, reduce the
separate OPPS payment for the pass-through contrast agent by this
amount. For CY 2015, as we did in CY 2014, we are proposing to continue
to apply our standard contrast agents offset policy to payment for
pass-through contrast agents (78 FR 75017).
Although there are currently no contrast agents with pass-through
status under the OPPS, we believe that a payment offset is necessary in
the event that a new contrast agent is approved for pass-through status
during CY 2015 in order to provide an appropriate transitional pass-
through payment for new contrast agents. We are proposing to identify
procedural APCs for which we expect a contrast offset could be
applicable in the case of a pass-through contrast agent as any
procedural APC with a policy-packaged drug amount greater than $20 that
is not a nuclear medicine APC identified in Table 35 above, and these
APCs are displayed in Table 36 below. The methodology used to determine
a proposed threshold cost for application of a contrast agent offset
policy is described in detail in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60483 through 60484). For CY 2015, we are
proposing to continue to recognize that when a contrast agent with
pass-through status is billed with any procedural APC listed in Table
36 of this proposed rule, a specific offset based on the procedural APC
would be applied to payment for the contrast agent to ensure that
duplicate payment is not made for the contrast agent.

Table 36--Proposed APCs to Which a Contrast Agent Offset May Be
Applicable for CY 2015
------------------------------------------------------------------------
Proposed CY 2015 APC Proposed CY 2015 APC title
------------------------------------------------------------------------
0080.............................. Diagnostic Cardiac Catheterization.
0082.............................. Coronary or Non-Coronary
Atherectomy.
0083.............................. Coronary Angioplasty, Valvuloplasty,
and Level I Endovascular
Revascularization.
0093.............................. Vascular Reconstruction/Fistula
Repair.
0104.............................. Transcatheter Placement of
Intracoronary Stents.
0152.............................. Level I Percutaneous Abdominal and
Biliary Procedures.
0177.............................. Level I Echocardiogram With
Contrast.
0178.............................. Level II Echocardiogram With
Contrast.
0229.............................. Level II Endovascular
Revascularization of the Lower
Extremity.
0278.............................. Diagnostic Urography.
0279.............................. Level II Angiography and Venography.
0280.............................. Level III Angiography and
Venography.
0283.............................. Computed Tomography with Contrast.

[[Page 40996]]

0284.............................. Magnetic Resonance Imaging and
Magnetic Resonance Angiography with
Contrast.
0333.............................. Computed Tomography without Contrast
followed by Contrast.
0334.............................. Combined Abdomen and Pelvis CT with
Contrast.
0337.............................. Magnetic Resonance Imaging and
Magnetic Resonance Angiography
without Contrast followed by
Contrast.
0375.............................. Ancillary Outpatient Services When
Patient Expires.
0383.............................. Cardiac Computed Tomographic
Imaging.
0388.............................. Discography.
0442.............................. Dosimetric Drug Administration.
0653.............................. Vascular Reconstruction/Fistula
Repair with Device.
0656.............................. Transcatheter Placement of
Intracoronary Drug-Eluting Stents.
0662.............................. CT Angiography.
0668.............................. Level I Angiography and Venography.
8006.............................. CT and CTA with Contrast Composite.
8008.............................. MRI and MRA with Contrast Composite.
------------------------------------------------------------------------

d. Proposed Payment Offset Policy for Drugs, Biologicals, and
Radiopharmaceuticals That Function as Supplies When Used in a
Diagnostic Test or Procedure and Drugs and Biologicals That Function as
Supplies When Used in a Surgical Procedure
Section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
and the otherwise applicable OPD fee schedule amount. In the CY 2014
OPPS/ASC final rule with comment period (78 FR 74925), we finalized our
policy to package drugs, biologicals, and radiopharmaceuticals that
function as supplies when used in a diagnostic test or procedure and
drugs and biologicals that function as supplies when used in a surgical
procedure. As a part of this policy, we specifically finalized that
skin substitutes and stress agents used in myocardial perfusion imaging
(MPI) be policy packaged in CY 2014, in addition to diagnostic
radiopharmaceuticals, contrast agents, and anesthesia drugs (78 FR
75019). Because a payment offset is necessary in order to provide an
appropriate transitional pass-through payment, we finalized a policy
for CY 2014 to deduct from the pass-through payment for skin
substitutes and stress agents an amount reflecting the portion of the
APC payment associated with predecessor skin substitutes and stress
agents in order to ensure no duplicate skin substitute or stress agent
payment is made (78 FR 75019).
In CY 2014, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor skin substitutes or stress agents when considering a new
skin substitute or stress agent for pass-through payment (78 FR 75019).
Specifically, in the case of pass-through skin substitutes, we use the
policy-packaged drug offset fraction for skin substitute procedural
APCs, calculated as 1 minus the following: the cost from single
procedure claims in the APC after removing the cost for policy-packaged
drugs divided by the cost from single procedure claims in the APC.
Because policy packaged radiopharmaceuticals also would be included in
the drug offset fraction for the APC to which MPI procedures are
assigned, in the case of pass-through stress agents, we use the policy-
packaged drug offset fraction for the procedural APC, calculated as 1
minus the following: the cost from single procedure claims in the APC
after removing the cost for policy-packaged drugs excluding policy-
packaged diagnostic radiopharmaceuticals divided by the cost from
single procedure claims in the APC. To determine the actual APC offset
amount for pass-through skin substitutes and pass-through stress agents
that takes into consideration the otherwise applicable OPPS payment
amount, we multiply the policy-packaged drug offset fraction by the APC
payment amount for the procedure with which the pass-through skin
substitute or pass-through stress agent is used and, accordingly,
reduce the separate OPPS payment for the pass-through skin substitute
or pass-through stress agent by this amount (78 FR 75019). For CY 2015,
as we did in CY 2014, we are proposing to continue to apply the skin
substitute and stress agent offset policy to payment for pass-through
skin substitutes and stress agents.
There are currently six skin substitutes (HCPCS codes Q4121, Q4122,
Q4127, Q4131, Q4132, and Q4133) with pass-through status under the
OPPS. We currently apply the established skin substitute payment offset
policy to pass-through payment for these products. Table 37 below
displays the proposed APCs to which skin substitute procedures would be
assigned in CY 2015 and for which we expect that an APC offset could be
applicable in the case of skin substitutes with pass-through status.
Although there are currently no stress agents with pass-through
status under the OPPS, we believe that a payment offset is necessary in
the event that a new stress agent is approved for pass-through status
during CY 2015 in order to provide an appropriate transitional pass
through payment for new stress agents. Table 38 below displays the
proposed APCs to which MPI procedures would be assigned in CY 2015 and
for which we expect that an APC offset could be applicable in the case
of a stress agent with pass-through status.
We are proposing to continue to post annually on the CMS Web site
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html a file that contains the APC offset
amounts that will be used for that year for purposes of both evaluating
cost significance for candidate pass-through device categories and
drugs and biologicals and establishing any appropriate APC offset
amounts. Specifically, the file will continue to provide the amounts
and percentages of APC payment associated with packaged implantable
devices, policy-packaged drugs, and threshold packaged drugs and
biologicals for every OPPS clinical APC.

Table 37--Proposed APCs to Which a Skin Substitute Offset May Be
Applicable for CY 2015
------------------------------------------------------------------------
Proposed CY 2015 APC Proposed CY 2015 APC Title
------------------------------------------------------------------------
0328.............................. Level III Skin Repair.
0329.............................. Level IV Skin Repair.
------------------------------------------------------------------------

TABLE 38--Proposed APCs to Which a Stress Agent Offset May Be Applicable
for CY 2015
------------------------------------------------------------------------
Proposed CY 2015 APC Proposed CY 2015 APC Title
------------------------------------------------------------------------
0100.............................. Cardiac Stress Tests.
0377.............................. Level II Cardiac Imaging.
------------------------------------------------------------------------

B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Status

1. Background
Under the CY 2013 OPPS, we currently pay for drugs, biologicals,
and

[[Page 40997]]

radiopharmaceuticals that do not have pass-through status in one of two
ways: As a packaged payment included in the payment for the associated
service, or as a separate payment (individual APCs). We explained in
the April 7, 2000 OPPS final rule with comment period (65 FR 18450)
that we generally package the cost of drugs and radiopharmaceuticals
into the APC payment rate for the procedure or treatment with which the
products are usually furnished. Hospitals do not receive separate
payment for packaged items and supplies, and hospitals may not bill
beneficiaries separately for any packaged items and supplies whose
costs are recognized and paid within the national OPPS payment rate for
the associated procedure or service.
Packaging costs into a single aggregate payment for a service,
procedure, or episode-of-care is a fundamental principle that
distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of items and services into the payment for
the primary procedure or service with which they are associated
encourages hospital efficiencies and also enables hospitals to manage
their resources with maximum flexibility.
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
As indicated in section V.B.1. of this proposed rule, in accordance
with section 1833(t)(16)(B) of the Act, the threshold for establishing
separate APCs for payment of drugs and biologicals was set to $50 per
administration during CYs 2005 and 2006. In CY 2007, we used the four
quarter moving average Producer Price Index (PPI) levels for
Pharmaceutical Preparations (Prescription) to trend the $50 threshold
forward from the third quarter of CY 2005 (when the Pub. L. 108-173
mandated threshold became effective) to the third quarter of CY 2007.
We then rounded the resulting dollar amount to the nearest $5 increment
in order to determine the CY 2007 threshold amount of $55. Using the
same methodology as that used in CY 2007 (which is discussed in more
detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR
68085 through 68086)), we set the packaging threshold for establishing
separate APCs for drugs and biologicals at $90 for CY 2014.
Following the CY 2007 methodology, for this CY 2015 OPPS/ASC
proposed rule, we used the most recently available four quarter moving
average PPI levels to trend the $50 threshold forward from the third
quarter of CY 2005 to the third quarter of CY 2015 and rounded the
resulting dollar amount ($91.46) to the nearest $5 increment, which
yielded a figure of $90. In performing this calculation, we used the
most recent forecast of the quarterly index levels for the PPI for
Pharmaceuticals for Human Use (Prescription) (Bureau of Labor
Statistics (BLS) series code WPUSI07003) from CMS' Office of the
Actuary (OACT). We refer below to this series generally as the PPI for
Prescription Drugs.
Based on the calculations described above, we are proposing a
packaging threshold for CY 2015 of $90. (For a more detailed discussion
of the OPPS drug packaging threshold and the use of the PPI for
Prescription Drugs, we refer readers to the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68085 through 68086).)
b. Proposed Cost Threshold for Packaging of Payment for HCPCS Codes
That Describe Certain Drugs, Certain Biologicals, and Therapeutic
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
To determine the proposed CY 2015 packaging status for all nonpass-
through drugs and biologicals that are not policy packaged, we
calculated, on a HCPCS code-specific basis, the per day cost of all
drugs, biologicals, and therapeutic radiopharmaceuticals (collectively
called ``threshold-packaged'' drugs) that had a HCPCS code in CY 2013
and were paid (via packaged or separate payment) under the OPPS. We
used data from CY 2013 claims processed before January 1, 2014 for this
calculation. However, we did not perform this calculation for those
drugs and biologicals with multiple HCPCS codes that include different
dosages, as described in section V.B.2.c. of this proposed rule, or for
the following policy-packaged items that we are proposing to continue
to package in CY 2015: Diagnostic radiopharmaceuticals; contrast
agents; anesthesia drugs; drugs, biologicals, and radiopharmaceuticals
that function as supplies when used in a diagnostic test or procedure;
and drugs and biologicals that function as supplies when used in a
surgical procedure.
In order to calculate the per day costs for drugs, biologicals, and
therapeutic radiopharmaceuticals to determine their proposed packaging
status in CY 2015, we used the methodology that was described in detail
in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and
finalized in the CY 2006 OPPS final rule with comment period (70 FR
68636 through 70 FR 68638). For each drug and biological HCPCS code, we
used an estimated payment rate of ASP+6 percent (which is the payment
rate we are proposing for separately payable drugs and biologicals for
CY 2015, as discussed in more detail in section V.B.3.b. of this
proposed rule) to calculate the CY 2015 proposed rule per day costs. We
used the manufacturer submitted ASP data from the fourth quarter of CY
2013 (data that were used for payment purposes in the physician's
office setting, effective April 1, 2014) to determine the proposed rule
per day cost.
As is our standard methodology, for CY 2015, we are proposing to
use payment rates based on the ASP data from the fourth quarter of CY
2013 for budget neutrality estimates, packaging determinations, impact
analyses, and completion of Addenda A and B to this proposed rule
(which are available via the Internet on the CMS Web site) because
these are the most recent data available for use at the time of
development of this proposed rule. These data also were the basis for
drug payments in the physician's office setting, effective April 1,
2014. For items that did not have an ASP-based payment rate, such as
some therapeutic radiopharmaceuticals, we used their mean unit cost
derived from the CY 2013 hospital claims data to determine their per
day cost.
We are proposing to package items with a per day cost less than or
equal to $90, and identify items with a per day cost greater than $90
as separately payable. Consistent with our past practice, we
crosswalked historical OPPS claims data from the CY 2013 HCPCS codes
that were reported to the CY 2014 HCPCS codes that we display in
Addendum B to this proposed rule (which is available via the Internet
on the CMS Web site) for payment in CY 2015.
Our policy during previous cycles of the OPPS has been to use
updated ASP and claims data to make final determinations of the
packaging status of HCPCS codes for drugs, biologicals, and therapeutic
radiopharmaceuticals for the OPPS/ASC final rule with comment period.
We note that it is also our policy to make an annual packaging
determination for a HCPCS code only when we develop the OPPS/ASC final
rule with comment period for the update year. Only HCPCS codes that are
identified as separately payable in the final rule with comment period
are subject to quarterly updates. For our calculation of per day costs
of HCPCS codes for drugs and biologicals in the CY 2015 OPPS/ASC final
rule with comment period, we are proposing to use ASP data from the
first quarter of

[[Page 40998]]

CY 2014, which is the basis for calculating payment rates for drugs and
biologicals in the physician's office setting using the ASP
methodology, effective July 1, 2014, along with updated hospital claims
data from CY 2013. We note that we also are proposing to use these data
for budget neutrality estimates and impact analyses for the CY 2015
OPPS/ASC final rule with comment period.
Payment rates for HCPCS codes for separately payable drugs and
biologicals included in Addenda A and B to the final rule with comment
period will be based on ASP data from the second quarter of CY 2014.
These data will be the basis for calculating payment rates for drugs
and biologicals in the physician's office setting using the ASP
methodology, effective October 1, 2014. These payment rates would then
be updated in the January 2015 OPPS update, based on the most recent
ASP data to be used for physician's office and OPPS payment as of
January 1, 2015. For items that do not currently have an ASP-based
payment rate, we are proposing to recalculate their mean unit cost from
all of the CY 2013 claims data and updated cost report information
available for the CY 2015 final rule with comment period to determine
their final per day cost.
Consequently, the packaging status of some HCPCS codes for drugs,
biologicals, and therapeutic radiopharmaceuticals in this CY 2015 OPPS/
ASC proposed rule may be different from the same drug HCPCS code's
packaging status determined based on the data used for the CY 2015
OPPS/ASC final rule with comment period. Under such circumstances, we
are proposing to continue to follow the established policies initially
adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably
pay for those drugs whose cost fluctuates relative to the proposed CY
2015 OPPS drug packaging threshold and the drug's payment status
(packaged or separately payable) in CY 2014. Specifically, for CY 2015,
consistent with our historical practice, we are proposing to apply the
following policies to these HCPCS codes for drugs, biologicals, and
therapeutic radiopharmaceuticals whose relationship to the drug
packaging threshold changes based on the updated drug packaging
threshold and on the final updated data:
HCPCS codes for drugs and biologicals that were paid
separately in CY 2014 and that are proposed for separate payment in CY
2015, and that then have per day costs equal to or less than the CY
2015 final rule drug packaging threshold, based on the updated ASPs and
hospital claims data used for the CY 2015 final rule, would continue to
receive separate payment in CY 2015.
HCPCS codes for drugs and biologicals that were packaged
in CY 2014 and that are proposed for separate payment in CY 2015, and
that then have per day costs equal to or less than the CY 2015 final
rule drug packaging threshold, based on the updated ASPs and hospital
claims data used for the CY 2015 final rule, would remain packaged in
CY 2015.
HCPCS codes for drugs and biologicals for which we are
proposing packaged payment in CY 2015 but then have per day costs
greater than the CY 2015 final rule drug packaging threshold, based on
the updated ASPs and hospital claims data used for the CY 2015 final
rule, would receive separate payment in CY 2015.
c. Proposed High/Low Cost Threshold for Packaged Skin Substitutes
In the CY 2014 OPPS/ASC final rule, we unconditionally packaged
skin substitute products into their associated surgical procedures as
part of a broader policy to package drugs and biologicals that function
as supplies when used in a surgical procedure (78 FR 74938). We also
finalized a methodology that divides the skin substitutes into a high
cost group and a low cost group, for packaging purposes, in order to
ensure adequate resource homogeneity among APC assignments for the skin
substitute application procedures (78 FR 74933). For CY 2014,
assignment to the high cost or low cost skin substitute group depended
upon a comparison of the July 2013 ASP + 6 percent payment amount for
each skin substitute to the weighted average payment per unit for all
skin substitutes (weighted average was calculated using the skin
substitute utilization from the CY 2012 claims data and the July 2013
ASP + 6 percent payment amounts, which are also the payment amounts in
Addendum B to the CY 2014 OPPS/ASC final rule with comment period). The
high/low cost skin substitute threshold for CY 2014 is $32 per cm\2\.
Skin substitutes that had a July 2013 ASP + 6 percent amount above $32
per cm\2\ were classified in the high cost group and those with a July
2013 ASP + 6 percent amount at or below $32 per cm\2\ were classified
in the low cost group. Any new skin substitutes without pricing
information are assigned to the low cost category until pricing
information is available to compare to the $32 per cm\2\ threshold for
CY 2014. Skin substitutes with pass-through status are assigned to the
high cost category, with an offset applied as described in section
II.C.6. of this proposed rule.
After the effective date of the CY 2014 packaging policy, some skin
substitute manufacturers brought the following issues to our attention
regarding the current methodology for determining the high cost/low
cost threshold:
Using ASP to determine a product's placement in the high
or low cost category may unfairly disadvantage the limited number of
skin substitute products that are sold in large sizes (that is, above
150 cm\2\). Large size skin substitute products are primarily used for
burns that are treated on an inpatient basis. These manufacturers
contend that non-linear pricing for skin substitute products sold in
both large and small sizes results in lower per cm\2\ prices for large
sizes. Therefore, the use of ASP data to categorize products into high
and low cost categories can result in placement of products that have
significant inpatient use of the large, lower-priced (per cm\2\) sizes
into the low cost category, even though these large size products are
not often used in the hospital outpatient department.
Using a weighted average ASP to establish the high/low
cost categories, combined with the drug pass-through policy, will lead
to unstable high/low cost skin substitute categories in the future.
According to one manufacturer, under our current policy manufacturers
with products on pass-through have an incentive to set a very high
price because hospitals are price-insensitive to products paid with
pass-through payments. As these new high priced pass-through skin
substitutes capture more market share, the weighted average ASP high/
low cost threshold could escalate rapidly resulting in a shift in the
assignment of many skin substitutes from the high cost category to the
low cost category.
We agree with stakeholder concerns regarding the potential
instability of the high/low cost categories associated with the drug
pass-through policy, as well as stakeholder concerns about the
inclusion of large-sized products that are primarily used for
inpatients in the ASP calculation, when ASP is used to establish the
high/low cost categories. As an alternative to using ASP data, we
believe that establishing the high/low cost threshold using the
weighted average mean unit cost (MUC) for all skin substitute products
from claims data may provide more stable high/low cost categories and
will resolve the issue associated with large sized products because the
MUC will be derived from outpatient claims only. The threshold would be
based on costs from outpatient claims data instead of manufacturer

[[Page 40999]]

reported sales prices that would not include larger sizes primarily
used for inpatient burn cases.
Therefore, we are proposing to maintain the high/low cost APC
structure for skin substitute procedures in CY 2015 but we are
proposing to revise the current methodology used to establish the high/
low cost threshold. For CY 2015, we are proposing to establish the
high/low cost threshold based on the weighted average MUC for all skin
substitutes using CY 2013 claims (which is proposed to be $27 per
cm\2\). Skin substitutes with a MUC above $27 per cm\2\ using CY 2013
claims are proposed to be classified in the high cost group and those
with a MUC at or below $27 per cm\2\ are proposed to be classified in
the low cost group. Table 39 below shows the current high/low cost
status for each skin substitute product and the proposed 2015 high/low
cost status based on the weighted average MUC threshold of $27. We are
proposing to continue the current policy that skin substitutes with
pass-through status will be assigned to the high cost category for CY
2015. Skin substitutes with pricing information but without claims data
to calculate a MUC will be assigned to either the high or low cost
category based on the product's ASP + 6 percent payment rate. If ASP is
not available then we will use WAC + 6 percent or 95 percent of AWP to
assign a product to either the high or low cost category. We are also
proposing that any new skin substitute without pricing information be
assigned to the low cost category until pricing information is
available to compare to the proposed $27 per cm\2\ threshold for CY
2015.

Table 39--Proposed Skin Substitute Assignments to High Cost and Low Cost Groups
----------------------------------------------------------------------------------------------------------------
Proposed CY 2015
Proposed CY CY 2014 High/low High/low status
CY 2014 HCPCS Code CY 2014 Short descriptor 2015 SI status based on based on weighted
weighted ASP MUC
----------------------------------------------------------------------------------------------------------------
C9358.................... SurgiMend, fetal........ N Low................. Low
C9360.................... SurgiMend, neonatal..... N Low................. Low
C9363.................... Integra Meshed Bil Wound N Low................. High
Mat.
Q4101.................... Apligraf................ N High................ High
Q4102.................... Oasis wound matrix...... N Low................. Low
Q4103.................... Oasis burn matrix....... N Low................. Low
Q4104.................... Integra BMWD............ N Low................. High
Q4105.................... Integra DRT............. N Low................. High
Q4106.................... Dermagraft.............. N High................ High
Q4107.................... Graftjacket............. N High................ High
Q4108.................... Integra matrix.......... N Low................. High
Q4110.................... Primatrix............... N High................ High
Q4111.................... Gammagraft.............. N Low................. Low
Q4115.................... Alloskin................ N Low................. Low
Q4116.................... Alloderm................ N High................ High
Q4117.................... Hyalomatrix............. N Low................. Low
Q4119.................... Matristem wound matrix.. N Low................. Low
Q4120.................... Matristem burn matrix... N Low................. Low
Q4121.................... Theraskin............... G High................ High
Q4122.................... Dermacell............... G High................ High
Q4123.................... Alloskin................ N Low................. Low
Q4124.................... Oasis tri-layer wound N Low................. Low
matrix.
Q4125.................... Arthroflex.............. N High................ High
Q4126.................... Memoderm/derma/tranz/ N High................ High
integup.
Q4127.................... Talymed................. G High................ High
Q4128.................... Flexhd/Allopatchhd/ N Low................. High
matrixhd.
Q4129.................... Unite biomatrix......... N Low................. Low
Q4131.................... Epifix.................. N High................ High
Q4132.................... Grafix core............. N High................ High
Q4133.................... Grafix prime............ N High................ High
Q4134.................... hMatrix................. N High................ High
Q4135.................... Mediskin................ N Low................. High
Q4136.................... EZderm.................. N Low................. Low
Q4137.................... Amnioexcel or biodexcel, N Low................. Low
1cm.
Q4138.................... BioDfence DryFlex, 1cm.. N Low................. Low
Q4140.................... Biodfence 1cm........... N Low................. Low
Q4141.................... Alloskin ac, 1 cm....... N Low................. Low
Q4142.................... Xcm biologic tiss matrix N Low................. Low
1cm.
Q4143.................... Repriza, 1cm............ N Low................. Low
Q4146.................... Tensix, 1cm............. N Low................. Low
Q4147.................... Architect ecm, 1cm...... N High................ High
Q4148.................... Neox 1k, 1cm............ N High................ High
----------------------------------------------------------------------------------------------------------------

d. Proposed Pass-Through Evaluation Process for Skin Substitutes
At the beginning of the OPPS, skin substitutes were originally
evaluated for pass-through status using the medical device pass-through
process. Since 2001, skin substitutes have been evaluated for pass-
through status through the drug, biological, and radiopharmaceutical
pass-through process. There are currently 50 distinct HCPCS codes
describing skin

[[Page 41000]]

substitutes, and of these 50 products 17 products that are listed in
Table 40 have had or currently have pass-through status.

Table 40--Skin Substitutes That Have Had or Currently Have Pass-Through
Status
------------------------------------------------------------------------
Pass- through
CY 2014 HCPCS CY 2014 Short descriptor expiration
date
------------------------------------------------------------------------
C9358...................... SurgiMend, fetal........... 12/31/2010
C9360...................... SurgiMend, neonatal........ 12/31/2011
C9363...................... Integra Meshed Bil Wound 12/31/2011
Mat.
Q4101...................... Apligraf................... 12/31/2002
Q4104...................... Integra BMWD............... 12/31/2006
Q4105...................... Integra DRT................ 12/31/2006
Q4106...................... Dermagraft................. 03/31/2005
Q4107...................... Graftjacket................ 12/31/2006
Q4108...................... Integra matrix............. 12/31/2010
Q4110...................... Primatrix.................. 12/31/2008
Q4121...................... Theraskin.................. 12/31/2016
Q4122...................... Dermacell.................. 12/31/2015
Q4124...................... Oasis tri-layer wound 12/31/2013
matrix.
Q4127...................... Talymed.................... 12/31/2015
Q4131...................... Epifix..................... 12/31/2014
Q4132...................... Grafix core................ 12/31/2014
Q4133...................... Grafix prime............... 12/31/2014
------------------------------------------------------------------------

As discussed above, in CY 2014 we packaged all skin substitutes
under the policy that packages all drugs and biologicals that function
as supplies when used in a surgical procedure (78 FR 74938). Therefore,
we consider skin substitutes to be a type of surgical supply in the
HOPD. This packaging policy was partly based on a comparison to
implantable biologicals, which are similar in composition and clinical
use to skin substitutes (78 FR 74931). In CY 2009, we finalized a
policy to package payment for implantable biologicals into the payment
for the associated surgical procedure (73 FR 68635). In CY 2010, we
finalized a policy to evaluate implantable biologicals that are
surgically inserted or implanted (through a surgical incision or a
natural orifice) for pass-through payment through the medical device
pass-through evaluation process, as implantable biologicals function as
implantable devices (74 FR 60473). Implantable devices are considered
supplies in the OPPS (65 FR 18443), and as noted above, we finalized a
packaging policy in the CY 2014 OPPS/ASC final rule with comment period
that considers skin substitutes a type of surgical supply. Many skin
substitutes are FDA-approved or cleared as devices. The similarities
between implantable biologicals and skin substitutes were a key factor
in packaging (like we did beginning in 2009 with implantable
biologicals) skin substitutes into the associated surgical procedure
(78 FR 74932). These similarities between these classes of products
also support similar treatment under the OPPS device pass-through
process, which has been the evaluation methodology for implantable
biologicals since 2010.
In view of these considerations, we are proposing that applications
for pass-through payment for skin substitutes be evaluated using the
medical device pass-through process and payment methodology. As a
result of this proposal, we are proposing that the last skin substitute
pass-through applications evaluated using the drug and biological pass-
through evaluation process would be those with an application deadline
of September 1, 2014, and an earliest effective date of January 1,
2015. Therefore, in light of this proposal, we would change the
December 1, 2014 pass-through application deadline (for an earliest
effective date of April 1, 2015) for both drugs and biologicals and
devices to January 15, 2015, in order to provide sufficient time for
applicants to adjust to the new policies and procedures in effect as of
January 1, 2015. We believe that this approach is more appropriate
because, although skin substitutes have characteristics of both
surgical supplies and biologicals, we believe that, for pass-through
purposes, skin substitutes are best characterized as surgical supplies
or devices because of their required surgical application and because
they share significant clinical similarity with other surgical
supplies, including implantable biologicals. Thus, if this proposal is
finalized, beginning on and after January 1, 2015, new skin substitutes
would no longer be eligible to submit biological pass-through
applications; rather, such applications for pass-through payment would
be evaluated using the medical device pass-through evaluation process,
for which payment is based on charges reduced to cost from claims. We
refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/ to view the
device pass-through application requirements and review criteria that
would apply to the evaluation of all skin substitute product
applications for pass-through status beginning on or after January 1,
2015. Those skin substitutes that are approved for pass-through status
as biologicals effective on or before January 1, 2015, would continue
to be considered pass-through biologicals for the duration of their
period of pass-through payment.
We also are proposing to revise our regulations at Sec. Sec.
419.64 and 419.66 to reflect this proposed new policy. Specifically, we
are proposing to revise Sec. 419.64 by deleting the existing paragraph
(a)(4)(iv) text because it is currently outdated and adding new text at
paragraph (a)(4)(iv) to exclude skin substitutes from consideration for
drug and biological pass-through payment unless pass-through payment
for a product as a biological is made on or before January 1, 2015, to
allow these products to complete their period of pass-through payment
as biologicals. We are proposing to modify the regulation at Sec.
419.66(b)(3) to add that a pass-through device may be applied in or on
a wound or other skin lesion, and we are simplifying the language that

[[Page 41001]]

``whether or not it remains with the patient when the patient is
released from the hospital'' to read ``either permanently or
temporarily.'' We also are proposing to delete the current example in
Sec. 419.66(b)(4)(iii) of the regulations regarding the exclusion of
materials, for example, biological or synthetic materials, that may be
used to replace human skin from device pass-through payment
eligibility.
We invite public comment on these proposals.
e. Proposed Packaging Determination for HCPCS Codes That Describe the
Same Drug or Biological But Different Dosages
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66776), we began recognizing, for OPPS payment purposes, multiple HCPCS
codes reporting different dosages for the same covered Part B drugs or
biologicals in order to reduce hospitals' administrative burden by
permitting them to report all HCPCS codes for drugs and biologicals. In
general, prior to CY 2008, the OPPS recognized for payment only the
HCPCS code that described the lowest dosage of a drug or biological.
During CYs 2008 and 2009, we applied a policy that assigned the status
indicator of the previously recognized HCPCS code to the associated
newly recognized code(s), reflecting the packaged or separately payable
status of the new code(s).
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490
through 60491), we finalized a policy to make a single packaging
determination for a drug, rather than an individual HCPCS code, when a
drug has multiple HCPCS codes describing different dosages because we
believed that adopting the standard HCPCS code-specific packaging
determinations for these codes could lead to inappropriate payment
incentives for hospitals to report certain HCPCS codes instead of
others. We continue to believe that making packaging determinations on
a drug-specific basis eliminates payment incentives for hospitals to
report certain HCPCS codes for drugs and allows hospitals flexibility
in choosing to report all HCPCS codes for different dosages of the same
drug or only the lowest dosage HCPCS code. Therefore, we are proposing
to continue our policy to make packaging determinations on a drug-
specific basis, rather than a HCPCS code-specific basis, for those
HCPCS codes that describe the same drug or biological but different
dosages in CY 2015.
For CY 2015, in order to propose a packaging determination that is
consistent across all HCPCS codes that describe different dosages of
the same drug or biological, we aggregated both our CY 2013 claims data
and our pricing information at ASP+6 percent across all of the HCPCS
codes that describe each distinct drug or biological in order to
determine the mean units per day of the drug or biological in terms of
the HCPCS code with the lowest dosage descriptor. The following drugs
did not have pricing information available for the ASP methodology for
this CY 2015 OPPS/ASC proposed rule and, as is our current policy for
determining the packaging status of other drugs, we used the mean unit
cost available from the CY 2013 claims data to make the packaging
determinations for these drugs: HCPCS code J3471 (Injection,
hyaluronidase, ovine, preservative free, per 1 usp unit (up to 999 usp
units)) and HCPCS code J3472 (Injection, hyaluronidase, ovine,
preservative free, per 1000 usp units).
For all other drugs and biologicals that have HCPCS codes
describing different doses, we then multiplied the weighted average
ASP+6 percent per unit payment amount across all dosage levels of a
specific drug or biological by the estimated units per day for all
HCPCS codes that describe each drug or biological from our claims data
to determine the estimated per day cost of each drug or biological at
less than or equal to $90 (so that all HCPCS codes for the same drug or
biological would be packaged) or greater than $90 (so that all HCPCS
codes for the same drug or biological would be separately payable).
The proposed packaging status of each drug and biological HCPCS
code to which this methodology would apply is displayed in Table 41
below.

Table 41--Proposed HCPCS Codes to Which the CY 2015 Drug-Specific
Packaging Determination Methodology Would Apply
------------------------------------------------------------------------
Proposed CY 2015 long Proposed CY
Proposed CY 2015 HCPCS code descriptor 2015 SI
------------------------------------------------------------------------
C9257...................... Injection, bevacizumab, K
0.25 mg.
J9035...................... Injection, bevacizumab, 10 K
mg.
J1020...................... Injection, N
methylprednisolone
acetate, 20 mg.
J1030...................... Injection, N
methylprednisolone
acetate, 40 mg.
J1040...................... Injection, N
methylprednisolone
acetate, 80 mg.
J1070...................... Injection, testosterone N
cypionate, up to 100 mg.
J1080...................... Injection, testosterone N
cypionate, 1 cc, 200 mg.
J1460...................... Injection, gamma globulin, N
intramuscular, 1 cc.
J1560...................... Injection, gamma globulin, N
intramuscular over 10 cc.
J1642...................... Injection, heparin sodium, N
(heparin lock flush), per
10 units.
J1644...................... Injection, heparin sodium, N
per 1000 units.
J1850...................... Injection, kanamycin N
sulfate, up to 75 mg.
J1840...................... Injection, kanamycin N
sulfate, up to 500 mg.
J2270...................... Injection, morphine N
sulfate, up to 10 mg.
J2271...................... Injection, morphine N
sulfate, 100 mg.
J2788...................... Injection, rho d immune N
globulin, human,
minidose, 50 micrograms
(250 i.u.).
J2790...................... Injection, rho d immune N
globulin, human, full
dose, 300 micrograms
(1500 i.u.).
J2920...................... Injection, N
methylprednisolone sodium
succinate, up to 40 mg.
J2930...................... Injection, N
methylprednisolone sodium
succinate, up to 125 mg.
J3120...................... Injection, testosterone N
enanthate, up to 100 mg.
J3130...................... Injection, testosterone N
enanthate, up to 200 mg.
J3471...................... Injection, hyaluronidase, N
ovine, preservative free,
per 1 usp unit (up to 999
usp units).
J3472...................... Injection, hyaluronidase, N
ovine, preservative free,
per 1000 usp units.
J7050...................... Infusion, normal saline N
solution, 250 cc.
J7040...................... Infusion, normal saline N
solution, sterile (500 ml
= 1 unit).
J7030...................... Infusion, normal saline N
solution, 1000 cc.

[[Page 41002]]

J7515...................... Cyclosporine, oral, 25 mg. N
J7502...................... Cyclosporine, oral, 100 mg N
J8520...................... Capecitabine, oral, 150 mg K
J8521...................... Capecitabine, oral, 500 mg K
J9250...................... Methotrexate sodium, 5 mg. N
J9260...................... Methotrexate sodium, 50 mg N
------------------------------------------------------------------------

3. Proposed Payment for Drugs and Biologicals Without Pass-Through
Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs (SCODs) and
Other Separately Payable and Packaged Drugs and Biologicals
Section 1833(t)(14) of the Act defines certain separately payable
radiopharmaceuticals, drugs, and biologicals and mandates specific
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a
``specified covered outpatient drug'' (known as a SCOD) is defined as a
covered outpatient drug, as defined in section 1927(k)(2) of the Act,
for which a separate APC has been established and that either is a
radiopharmaceutical agent or is a drug or biological for which payment
was made on a pass-through basis on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and
biologicals are designated as exceptions and are not included in the
definition of SCODs. These exceptions are--
A drug or biological for which payment is first made on or
after January 1, 2003, under the transitional pass-through payment
provision in section 1833(t)(6) of the Act.
A drug or biological for which a temporary HCPCS code has
not been assigned.
During CYs 2004 and 2005, an orphan drug (as designated by
the Secretary).
Section 1833(t)(14)(A)(iii) of the Act requires that payment for
SCODs in CY 2006 and subsequent years be equal to the average
acquisition cost for the drug for that year as determined by the
Secretary, subject to any adjustment for overhead costs and taking into
account the hospital acquisition cost survey data collected by the
Government Accountability Office (GAO) in CYs 2004 and 2005, and later
periodic surveys conducted by the Secretary as set forth in the
statute. If hospital acquisition cost data are not available, the law
requires that payment be equal to payment rates established under the
methodology described in section 1842(o), section 1847A, or section
1847B of the Act, as calculated and adjusted by the Secretary as
necessary. Most physician Part B drugs are paid at ASP+6 percent
pursuant to section 1842(o) and section 1847A of the Act.
Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in
OPPS payment rates for SCODs to take into account overhead and related
expenses, such as pharmacy services and handling costs. Section
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead
and related expenses and to make recommendations to the Secretary
regarding whether, and if so how, a payment adjustment should be made
to compensate hospitals for overhead and related expenses. Section
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the
weights for ambulatory procedure classifications for SCODs to take into
account the findings of the MedPAC study.
It has been our longstanding policy to apply the same treatment to
all separately payable drugs and biologicals, which include SCODs, and
drugs and biologicals that are not SCODs. Therefore, we apply the
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs,
as required by statute, but we also apply it to separately payable
drugs and biologicals that are not SCODs, which is a policy
determination rather than a statutory requirement. In this CY 2015
OPPS/ASC proposed rule, we are proposing to apply section
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and
biologicals, including SCODs. Although we do not distinguish SCODs in
this discussion, we note that we are required to apply section
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying
this provision to other separately payable drugs and biologicals,
consistent with our history of using the same payment methodology for
all separately payable drugs and biologicals.
Since CY 2006, we have attempted to establish a drug payment
methodology that reflects hospitals' acquisition costs for drugs and
biologicals while taking into account relevant pharmacy overhead and
related handling expenses. We have attempted to collect more data on
hospital overhead charges for drugs and biologicals by making several
proposals that would require hospitals to change the way they report
the cost and charges for drugs. None of these proposals were adopted
due to significant stakeholder concern, including that hospitals stated
that it would be administratively burdensome to report hospital
overhead charges. We established a payment policy for separately
payable drugs and biologicals, authorized by section
1833(t)(14)(A)(iii)(I) of the Act, based on an ASP+X amount that is
calculated by comparing the estimated aggregate cost of separately
payable drugs and biologicals in our claims data to the estimated
aggregate ASP dollars for separately payable drugs and biologicals,
using the ASP as a proxy for average acquisition cost (70 FR 68642
through 68643). We referred to this methodology as our standard drug
payment methodology. Taking into consideration comments made by the
pharmacy stakeholders and acknowledging the limitations of the reported
data due to charge compression and hospitals' reporting practices, we
added an ``overhead adjustment'' in CY 2010 (an internal adjustment of
the data) by redistributing cost from coded and uncoded packaged drugs
and biologicals to separately payable drugs in order to provide more
appropriate payments for drugs and biologicals in the HOPD. We
continued this methodology, and we further refined it in CY 2012 by
finalizing a policy to update the redistribution amount for inflation
and to keep the redistribution ration constant between the proposed
rule and the final rule. For a detailed discussion of our OPPS drug
payment policies from CY 2006 to CY 2012, we refer readers to the CY
2013 OPPS/ASC final rule with

[[Page 41003]]

comment period (77 FR 68383 through 68385).
Because of continuing uncertainty about the full cost of pharmacy
overhead and acquisition cost, based in large part on the limitations
of the submitted hospital charge and claims data for drugs, in the CY
2013 OPPS/ASC final rule with comment period (77 FR 68386) we indicated
our concern that the continued use of the standard drug payment
methodology (including the overhead adjustment) still may not
appropriately account for average acquisition and pharmacy overhead
cost and, therefore, may result in payment rates that are not as
predictable, accurate, or appropriate as they could be. Section
1833(t)(14)(A)(iii)(II) of the Act requires an alternative methodology
for determining payment rates for SCODS wherein, if hospital
acquisition cost data are not available, payment shall be equal
(subject to any adjustment for overhead costs) to payment rates
established under the methodology described in section 1842(o), 1847A,
or 1847B of the Act. We refer to this alternative methodology as the
``statutory default.'' In the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68386), we noted that section 1833(t)(14)(A)(iii)(II) of
the Act authorizes the Secretary to calculate and adjust, as necessary,
the average price for a drug in the year established under section
1842(o), 1847A, or 1847B of the Act, as the case may be, in determining
payment for SCODs. Pursuant to sections 1842(o) and 1847A of the Act,
Part B drugs are paid at ASP+6 percent when furnished in physicians'
offices. We indicated that we believe that establishing the payment
rates based on the statutory default of ASP+6 percent is appropriate as
it yields increased predictability in payment for separately payable
drugs and biologicals under the OPPS and, therefore, we finalized our
proposal for CY 2013 to pay for separately payable drugs and
biologicals at ASP+6 percent based on section 1833(t)(14)(A)(iii)(II)
of the Act, referred to as the statutory default. We also finalized our
proposal that the ASP+6 percent payment amount for separately payable
drugs and biologicals requires no further adjustment and represents the
combined acquisition and pharmacy overhead payment for drugs and
biologicals, that payments for separately payable drugs and biologicals
are included in the budget neutrality adjustments under the
requirements in section 1833(t)(9)(B) of the Act, and that the budget
neutral weight scaler is not applied in determining payments for these
separately paid drugs and biologicals for CY 2013 (77 FR 68389).
b. Proposed CY 2015 Payment Policy
For CY 2015, we are proposing to continue our CY 2014 policy and
pay for separately payable drugs and biologicals at ASP+6 percent
pursuant to section 1833(t)(14)(A)(iii)(II) of the Act, referred to as
the ``statutory default.'' We are proposing that the ASP+6 percent
payment amount for separately payable drugs and biologicals requires no
further adjustment and represents the combined acquisition and pharmacy
overhead payment for drugs and biologicals. We also are proposing that
payments for separately payable drugs and biologicals are included in
the budget neutrality adjustments, under the requirements in section
1833(t)(9)(B) of the Act, and that the budget neutral weight scaler is
not applied in determining payments for these separately paid drugs and
biologicals.
4. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
Beginning in CY 2010 and continuing for CY 2014, we established a
policy to pay for separately paid therapeutic radiopharmaceuticals
under the ASP methodology adopted for separately payable drugs and
biologicals. If ASP information is unavailable for a therapeutic
radiopharmaceutical, we base therapeutic radiopharmaceutical payment on
mean unit cost data derived from hospital claims. We believe that the
rationale outlined in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60524 through 60525) for applying the principles of
separately payable drug pricing to therapeutic radiopharmaceuticals
continues to be appropriate for nonpass-through separately payable
therapeutic radiopharmaceuticals in CY 2015. Therefore, we are
proposing for CY 2015 to pay all nonpass-through, separately payable
therapeutic radiopharmaceuticals at ASP+6 percent, based on the
statutory default described in section 1833(t)(14)(A)(iii)(II) of the
Act. For a full discussion of ASP-based payment for therapeutic
radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60520 through 60521). We also are
proposing to rely on CY 2013 mean unit cost data derived from hospital
claims data for payment rates for therapeutic radiopharmaceuticals for
which ASP data are unavailable and to update the payment rates for
separately payable therapeutic radiopharmaceuticals, according to our
usual process for updating the payment rates for separately payable
drugs and biologicals, on a quarterly basis if updated ASP information
is available. For a complete history of the OPPS payment policy for
therapeutic radiopharmaceuticals, we refer readers to the CY 2005 OPPS
final rule with comment period (69 FR 65811), the CY 2006 OPPS final
rule with comment period (70 FR 68655), and the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60524).
The proposed CY 2015 payment rates for nonpass-through separately
payable therapeutic radiopharmaceuticals are included in Addenda A and
B to this proposed rule (which are available via the Internet on the
CMS Web site).
5. Proposed Payment for Blood Clotting Factors
For CY 2014, we provided payment for blood clotting factors under
the same methodology as other nonpass-through separately payable drugs
and biologicals under the OPPS and continued paying an updated
furnishing fee. That is, for CY 2014, we provided payment for blood
clotting factors under the OPPS at ASP+6 percent, plus an additional
payment for the furnishing fee. We note that when blood clotting
factors are provided in physicians' offices under Medicare Part B and
in other Medicare settings, a furnishing fee is also applied to the
payment. The CY 2014 updated furnishing fee was $0.192 per unit.
For CY 2015, we are proposing to pay for blood clotting factors at
ASP+6 percent, consistent with our proposed payment policy for other
nonpass-through separately payable drugs and biologicals, and to
continue our policy for payment of the furnishing fee using an updated
amount. Our policy to pay for a furnishing fee for blood clotting
factors under the OPPS is consistent with the methodology applied in
the physician office and inpatient hospital setting, and first
articulated in the CY 2006 OPPS final rule with comment period (70 FR
68661) and later discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66765). The proposed furnishing fee update is
based on the percentage increase in the Consumer Price Index (CPI) for
medical care for the 12-month period ending with June of the previous
year. Because the Bureau of Labor Statistics releases the applicable
CPI data after the MPFS and OPPS/ASC proposed rules are published, we
are not able to include the actual updated furnishing fee in the
proposed rules. Therefore, in accordance with our policy, as finalized
in the CY 2008 OPPS/ASC final rule with comment

[[Page 41004]]

period (72 FR 66765), we are proposing to announce the actual figure
for the percent change in the applicable CPI and the updated furnishing
fee calculated based on that figure through applicable program
instructions and posting on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims
Data
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173) did not address the OPPS payment in CY 2005
and subsequent years for drugs, biologicals, and radiopharmaceuticals
that have assigned HCPCS codes, but that do not have a reference AWP or
approval for payment as pass-through drugs or biologicals. Because
there was no statutory provision that dictated payment for such drugs,
biologicals, and radiopharmaceuticals in CY 2005, and because we had no
hospital claims data to use in establishing a payment rate for them, we
investigated several payment options for CY 2005 and discussed them in
detail in the CY 2005 OPPS final rule with comment period (69 FR 65797
through 65799).
For CYs 2005 to 2007, we implemented a policy to provide separate
payment for new drugs, biologicals, and radiopharmaceuticals with HCPCS
codes (specifically those new drug, biological, and radiopharmaceutical
HCPCS codes in each of those calendar years that did not crosswalk to
predecessor HCPCS codes) but which did not have pass-through status, at
a rate that was equivalent to the payment they received in the
physician's office setting, established in accordance with the ASP
methodology for drugs and biologicals, and based on charges adjusted to
cost for radiopharmaceuticals. Beginning in CY 2008 and continuing
through CY 2014, we implemented a policy to provide payment for new
drugs and biologicals with HCPCS codes (except those that are policy-
packaged), but which did not have pass-through status and were without
OPPS hospital claims data, at an amount consistent with the final OPPS
payment methodology for other separately payable nonpass-through drugs
and biologicals for the given year.
For CY 2015, we are proposing to continue this policy and provide
payment for new drugs, biologicals, and therapeutic
radiopharmaceuticals that do not have pass-through status at ASP+6
percent, consistent with the proposed CY 2015 payment methodology for
other separately payable nonpass-through drugs, biologicals, and
therapeutic radiopharmaceuticals, which is proposed to be ASP+6
percent. We believe this proposed policy would ensure that new nonpass-
through drugs, biologicals, and therapeutic radiopharmaceuticals would
be treated like other drugs, biologicals, and therapeutic
radiopharmaceuticals under the OPPS.
For CY 2015, we also are proposing to package payment for all new
nonpass-through policy-packaged products (diagnostic
radiopharmaceuticals, contrast agents, anesthesia drugs, drugs,
biologicals, and radiopharmaceuticals that function as supplies when
used in a diagnostic test or procedure, and drugs and biologicals that
function as supplies when used in a surgical procedure) with HCPCS
codes but without claims data (those new CY 2015 HCPCS codes that do
not crosswalk to predecessor HCPCS codes). This is consistent with the
proposed policy packaging of all existing nonpass-through diagnostic
radiopharmaceuticals, contrast agents, anesthesia drugs, drugs,
biologicals, and radiopharmaceuticals that function as supplies when
used in a diagnostic test or procedure, and drugs and biologicals that
function as supplies when used in a surgical procedure, as discussed in
more detail in section II.A.3. of this proposed rule.
In accordance with the OPPS ASP methodology, in the absence of ASP
data, for CY 2015, we are proposing to continue our policy of using the
WAC for the product to establish the initial payment rate for new
nonpass-through drugs and biologicals with HCPCS codes, but which are
without OPPS claims data. However, we note that if the WAC is also
unavailable, we would make payment at 95 percent of the product's most
recent AWP. We also are proposing to assign status indicator ``K''
(Separately paid nonpass-through drugs and biologicals, including
therapeutic radiopharmaceuticals) to HCPCS codes for new drugs and
biologicals without OPPS claims data and for which we have not granted
pass-through status. With respect to new nonpass-through drugs and
biologicals for which we do not have ASP data, we are proposing that
once their ASP data become available in later quarterly submissions,
their payment rates under the OPPS would be adjusted so that the rates
would be based on the ASP methodology and set to the proposed ASP-based
amount (proposed for CY 2015 at ASP+6 percent) for items that have not
been granted pass-through status. This proposed policy, which utilizes
the ASP methodology for new nonpass-through drugs and biologicals with
an ASP, is consistent with prior years' policies for these items and
would ensure that new nonpass-through drugs and biologicals would be
treated like other drugs and biologicals under the OPPS, unless they
are granted pass-through status.
Similarly, we are proposing to continue to base the initial payment
for new therapeutic radiopharmaceuticals with HCPCS codes, but which do
not have pass-through status and are without claims data, on the WACs
for these products if ASP data for these therapeutic
radiopharmaceuticals are not available. If the WACs are also
unavailable, we are proposing to make payment for new therapeutic
radiopharmaceuticals at 95 percent of the products' most recent AWP
because we would not have mean costs from hospital claims data upon
which to base payment. As we are proposing with new drugs and
biologicals, we are proposing to continue our policy of assigning
status indicator ``K'' to HCPCS codes for new therapeutic
radiopharmaceuticals without OPPS claims data for which we have not
granted pass-through status.
Consistent with other ASP-based payment, for CY 2015, we are
proposing to announce any changes to the payment amounts for new drugs
and biologicals in the CY 2015 OPPS/ASC final rule with comment period
and also on a quarterly basis on the CMS Web site during CY 2015 if
later quarter ASP submissions (or more recent WACs or AWPs) indicate
that changes to the payment rates for these drugs and biologicals are
necessary. The payment rates for new therapeutic radiopharmaceuticals
also would be changed accordingly based on later quarter ASP
submissions. We note that the new CY 2015 HCPCS codes for drugs,
biologicals, and therapeutic radiopharmaceuticals were not available at
the time of development of this proposed rule. However, these agents
will be included in Addendum B to the CY 2015 OPPS/ASC final rule with
comment period (which will be available via the Internet on the CMS Web
site), where they will be assigned comment indicator ``NI.'' This
comment indicator reflects that their interim final OPPS treatment will
be open to public comment in the CY 2015 OPPS/ASC final rule with
comment period.
There are several nonpass-through drugs and biologicals that were
payable in CY 2013 and/or CY 2014 for which we did not have CY 2013
hospital

[[Page 41005]]

claims data available for this proposed rule and for which there are no
other HCPCS codes that describe different doses of the same drug, but
which have pricing information available for the ASP methodology. In
order to determine the packaging status of these products for CY 2015,
we are proposing to continue our policy to calculate an estimate of the
per day cost of each of these items by multiplying the payment rate of
each product based on ASP+6 percent, similar to other nonpass-through
drugs and biologicals paid separately under the OPPS, by an estimated
average number of units of each product that would typically be
furnished to a patient during one day in the hospital outpatient
setting. This rationale was first adopted in the CY 2006 OPPS/ASC final
rule with comment period (70 FR 68666 through 68667).
We are proposing to package items for which we estimated the per
day administration cost to be less than or equal to $90 and to pay
separately for items for which we estimated the per day administration
cost to be greater than $90 (with the exception of diagnostic
radiopharmaceuticals, contrast agents, anesthesia drugs, drugs,
biologicals, and radiopharmaceuticals that function as supplies when
used in a diagnostic test or procedure, and drugs and biologicals that
function as supplies when used in a surgical procedure, which we are
proposing to continue to package regardless of cost) in CY 2015. We
also are proposing that the CY 2015 payment for separately payable
items without CY 2013 claims data would be ASP+6 percent, similar to
payment for other separately payable nonpass-through drugs and
biologicals under the OPPS. In accordance with the ASP methodology paid
in the physician's office setting, in the absence of ASP data, we are
proposing to use the WAC for the product to establish the initial
payment rate and, if the WAC is also unavailable, we would make payment
at 95 percent of the most recent AWP available. The proposed estimated
units per day and status indicators for these items are displayed in
Table 42 of this proposed rule.
Finally, there are 35 drugs and biologicals, shown in Table 43 of
this proposed rule that were payable in CY 2013 but for which we lacked
CY 2013 claims data and any other pricing information for the ASP
methodology for this proposed rule. For CY 2010, we finalized a policy
to assign status indicator ``E'' (Not paid by Medicare when submitted
on outpatient claims (any outpatient bill type)) whenever we lacked
claims data and pricing information and were unable to determine the
per day cost of a drug or biological. In addition, we noted that we
would provide separate payment for these drugs and biologicals if
pricing information reflecting recent sales became available mid-year
for the ASP methodology.
For CY 2015, as we finalized in CY 2014 (78 FR 75031), we are
proposing to continue to assign status indicator ``E'' to drugs and
biologicals that lack CY 2013 claims data and pricing information for
the ASP methodology. All drugs and biologicals without CY 2013 hospital
claims data or data based on the ASP methodology that are assigned
status indicator ``E'' on this basis at the time of this proposed rule
for CY 2015 are displayed in Table 43 of this proposed rule. We also
are proposing to continue our policy to assign the products status
indicator ``K'' and pay for them separately for the remainder of CY
2015 if pricing information becomes available.

Table 42--Drugs and Biologicals Without CY 2013 Claims Data
----------------------------------------------------------------------------------------------------------------
Estimated
average Proposed CY Proposed CY
CY 2015 HCPCS Code CY 2015 Long descriptor number of 2015 SI 2015 APC
units per day
----------------------------------------------------------------------------------------------------------------
90581............................ Anthrax vaccine, for 1 K 1422
subcutaneous or
intramuscular use.
J0215............................ Injection, alefacept, 0.5 mg 29 K 1633
J0364............................ Injection, apomorphine 1 N N/A
hydrochloride, 1 mg.
J0630............................ Injection, calcitonin 2 K 1433
salmon, up to 400 units.
J0638............................ Injection, canakinumab, 1 mg 180 K 1311
J3355............................ Injection, urofollitropin, 2 K 1741
75 iu.
J7196............................ Injection, antithrombin 268 K 1332
recombinant, 50 i. U..
J8650............................ Nabilone, oral, 1 mg........ 4 K 1424
J9151............................ Injection, daunorubicin 10 K 0821
citrate, liposomal
formulation, 10 mg.
J9215............................ Injection, interferon, alfa- 1 N N/A
n3, (human leukocyte
derived), 250,000 iu.
J9300............................ Injection, gemtuzumab 1 K 9004
ozogamicin, 5 mg.
----------------------------------------------------------------------------------------------------------------

Table 43--Drugs and Biologicals Without CY 2013 Claims Data and Without
Pricing Information for the ASP Methodology
------------------------------------------------------------------------
Proposed CY
CY 2015 HCPCS Code CY 2015 Long descriptor 2015 SI
------------------------------------------------------------------------
90296...................... Diphtheria antitoxin, E
equine, any route.
90393...................... Vaccina immune globulin, E
human, for intramuscular
use.
90477...................... Adenovirus vaccine, type E
7, live, for oral use.
90644...................... Meningococcal conjugate E
vaccine, serogroups c & y
and hemophilus influenza
b vaccine (hib-mency), 4
dose schedule, when
administered to children
2-15 months of age, for
intramuscular use.
90681...................... Rotavirus vaccine, human, E
attenuated, 2 dose
schedule, live, for oral
use.
90727...................... Plague vaccine, for E
intramuscular use.
J0190...................... Injection, biperiden E
lactate, per 5 mg.
J0205...................... Injection, alglucerase, E
per 10 units.
J0350...................... Injection, anistreplase, E
per 30 units.
J0365...................... Injection, aprotonin, E
10,000 kiu.
J0395...................... Injection, arbutamine hcl, E
1 mg.

[[Page 41006]]

J0710...................... Injection, cephapirin E
sodium, up to 1 gm.
J1180...................... Injection, dyphylline, up E
to 500 mg.
J1435...................... Injection estrone per 1 MG E
J1562...................... Injection, immune globulin E
(vivaglobin), 100 mg.
J1620...................... Injection, gonadorelin E
hydrochloride, per 100
mcg.
J1655...................... Injection, tinzaparin E
sodium, 1000 iu.
J1730...................... Injection, diazoxide, up E
to 300 mg.
J1835...................... Injection, itraconazole, E
50 mg.
J2460...................... Injection, oxytetracycline E
hcl, up to 50 mg.
J2513...................... Injection, pentastarch, E
10% solution, 100 ml.
J2670...................... Injection, tolazoline hcl, E
up to 25 mg.
J2725...................... Injection, protirelin, per E
250 mcg.
J2940...................... Injection, somatrem, 1 mg. E
J3305...................... Injection, trimetrexate E
glucuronate, per 25 mg.
J3365...................... Injection, iv, urokinase, E
250,000 i.u. vial.
J3400...................... Injection, triflupromazine E
hcl, up to 20 mg.
J7505...................... Muromonab-cd3, parenteral, E
5 mg.
J7513...................... Daclizumab, parenteral, 25 E
mg.
J8562...................... Fludarabine phosphate, E
oral, 10 mg.
J9165...................... Injection, E
diethylstilbestrol
diphosphate, 250 mg.
J9212...................... Injection, interferon E
alfacon-1, recombinant, 1
microgram.
J9219...................... Leuprolide acetate E
implant, 65 mg.
Q0174...................... Thiethylperazine maleate, E
10 mg, oral, fda approved
prescription anti-emetic,
for use as a complete
therapeutic substitute
for an iv anti-emetic at
the time of chemotherapy
treatment, not to exceed
a 48 hour dosage regimen.
Q0515...................... Injection, sermorelin E
acetate, 1 microgram.
------------------------------------------------------------------------

VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices

A. Background

Section 1833(t)(6)(E) of the Act limits the total projected amount
of transitional pass-through payments for drugs, biologicals,
radiopharmaceuticals, and categories of devices for a given year to an
``applicable percentage,'' currently not to exceed 2.0 percent of total
program payments estimated to be made for all covered services under
the OPPS furnished for that year. If we estimate before the beginning
of the calendar year that the total amount of pass-through payments in
that year would exceed the applicable percentage, section
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction
in the amount of each of the transitional pass-through payments made in
that year to ensure that the limit is not exceeded. We estimate the
pass-through spending to determine whether payments exceed the
applicable percentage and the appropriate prorata reduction to the
conversion factor for the projected level of pass-through spending in
the following year to ensure that total estimated pass-through spending
for the prospective payment year is budget neutral, as required by
section 1833(t)(6)(E) of the Act.
For devices, developing an estimate of pass-through spending in CY
2015 entails estimating spending for two groups of items. The first
group of items consists of device categories that were recently made
eligible for pass-through payment and that will continue to be eligible
for pass-through payment in CY 2015. The CY 2008 OPPS/ASC final rule
with comment period (72 FR 66778) describes the methodology we have
used in previous years to develop the pass-through spending estimate
for known device categories continuing into the applicable update year.
The second group of items consists of items that we know are newly
eligible, or project may be newly eligible, for device pass-through
payment in the remaining quarters of CY 2014 or beginning in CY 2015.
The sum of the CY 2015 pass-through estimates for these two groups of
device categories equals the total CY 2015 pass-through spending
estimate for device categories with pass-through status. We base the
device pass-through estimated payments for each device category on the
amount of payment as established in section 1833(t)(6)(D)(ii) of the
Act, and as outlined in previous rules, including the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75034 through 75036). We note
that, beginning in CY 2010, the pass-through evaluation process and
pass-through payment for implantable biologicals newly approved for
pass-through payment beginning on or after January 1, 2010, that are
surgically inserted or implanted (through a surgical incision or a
natural orifice) is the device pass-through process and payment
methodology (74 FR 60476). As has been our past practice (76 FR 74335),
for CY 2015, we are proposing to include an estimate of any implantable
biologicals eligible for pass-through payment in our estimate of pass-
through spending for devices. We also are proposing that, beginning in
CY 2015, applications for pass-through payment for skin substitutes and
similar products be evaluated using the medical device pass-through
process and payment methodology. As a result of this proposal, we are
proposing that the last skin substitute pass-through applications
evaluated using the drugs and biologicals pass-through evaluation
process would be those with an application deadline of September 1,
2014, and an earliest effective date of January 1, 2015. Therefore, in
light of this proposal, we would change the December 1, 2014, pass-
through application deadline (for an earliest effective date of April
1, 2015) for both drugs and biologicals and devices to January 15, 2015
in order to provide sufficient time for applicants to adjust to

[[Page 41007]]

the new policies and procedures in effect as of January 1, 2015. We
refer readers to section V.B.2.d of this proposed rule for further
discussion of our proposal to change the pass-through evaluation
process for skin substitutes. If we finalize this proposal, beginning
in CY 2015 and in future years we would include an estimate of any skin
substitutes eligible for pass-through payment in our estimate of pass-
through spending for devices. We refer readers to section V.B.2.d of
this proposed rule for details of the proposal to apply the device
pass-through evaluation process and payment methodology to skin
substitutes and similar products for applications submitted on or after
January 1.
For drugs and biologicals eligible for pass-through payment,
section 1833(t)(6)(D)(i) of the Act establishes the pass-through
payment amount as the amount by which the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is covered
under a competitive acquisition contract under section 1847B of the
Act, an amount determined by the Secretary equal to the average price
for the drug or biological for all competitive acquisition areas and
year established under such section as calculated and adjusted by the
Secretary) exceeds the portion of the otherwise applicable fee schedule
amount that the Secretary determines is associated with the drug or
biological. We note that the Part B drug CAP program has been postponed
since CY 2009, and such a program has not been proposed to be
reinstated for CY 2015. Because we are proposing to pay for most
nonpass-through separately payable drugs and biologicals under the CY
2015 OPPS at ASP+6 percent, as we discussed in section V.B.3. of this
proposed rule, which represents the otherwise applicable fee schedule
amount associated with most pass-through drugs and biologicals, and
because we are proposing to pay for CY 2015 pass-through drugs and
biologicals at ASP+6 percent, as we discussed in section V.A. of this
proposed rule, our estimate of drug and biological pass-through payment
for CY 2015 for this group of items is $0, as discussed below.
Furthermore, payment for certain drugs, specifically diagnostic
radiopharmaceuticals and contrast agents, without pass-through status
will always be packaged into payment for the associated procedures and
these products will not be separately paid. In addition, we policy-
package all nonpass-through drugs, biologicals, and
radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure and drugs and biologicals that function as
supplies when used in a surgical procedure, as discussed in section
II.A.3. of this proposed rule. We are proposing that all of these
policy-packaged drugs and biologicals with pass-through status would be
paid at ASP+6 percent, like other pass-through drugs and biologicals,
for CY 2015. Therefore, our estimate of pass-through payment for
policy-packaged drugs and biologicals with pass-through status approved
prior to CY 2015 is not $0. In section V.A.4. of this proposed rule, we
discuss our policy to determine if the costs of certain policy-packaged
drugs or biologicals are already packaged into the existing APC
structure. If we determine that a policy-packaged drug or biological
approved for pass-through payment resembles predecessor drugs or
biologicals already included in the costs of the APCs that are
associated with the drug receiving pass-through payment, we are
proposing to offset the amount of pass-through payment for the policy-
packaged drug or biological. For these drugs or biologicals, the APC
offset amount is the portion of the APC payment for the specific
procedure performed with the pass-through drug or biological, which we
refer to as the policy-packaged drug APC offset amount. If we determine
that an offset is appropriate for a specific policy-packaged drug or
biological receiving pass-through payment, we are proposing to reduce
our estimate of pass-through payments for these drugs or biologicals by
this amount.
Similar to pass-through estimates for devices, the first group of
drugs and biologicals requiring a pass-through payment estimate
consists of those products that were recently made eligible for pass-
through payment and that will continue to be eligible for pass-through
payment in CY 2015. The second group contains drugs and biologicals
that we know are newly eligible, or project will be newly eligible, in
the remaining quarters of CY 2014 or beginning in CY 2015. The sum of
the CY 2015 pass-through estimates for these two groups of drugs and
biologicals equals the total CY 2015 pass-through spending estimate for
drugs and biologicals with pass-through status.

B. Proposed Estimate of Pass-Through Spending

We are proposing to set the applicable pass-through payment
percentage limit at 2.0 percent of the total projected OPPS payments
for CY 2015, consistent with section 1833(t)(6)(E)(ii)(II) of the Act,
and our OPPS policy from CY 2004 through CY 2014 (78 FR 75034 through
75036).
For the first group of devices for pass-through payment estimation
purposes, there is one device category, HCPCS code C1841 (Retinal
prosthesis, includes all internal and external components), eligible
for pass-through payment as of October 1, 2013, continuing to be
eligible for CY 2014, and that will continue to be eligible for pass-
through payment for CY 2015. We estimate that CY 2015 pass-through
expenditures for the first group of pass-through device categories to
be $0.5 million. In estimating our CY 2015 pass-through spending for
device categories in the second group, we include: Device categories
that we knew at the time of the development of this proposed rule will
be newly eligible for pass-through payment in CY 2015 (of which there
are none); additional device categories that we estimate could be
approved for pass-through status subsequent to the development of the
proposed rule and before January 1, 2015; and contingent projections
for new device categories established in the second through fourth
quarters of CY 2015. We are proposing to use the general methodology
described in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66778), while also taking into account recent OPPS experience in
approving new pass-through device categories. For this proposed rule,
the estimate of CY 2015 pass-through spending for this second group of
device categories is $10.0 million.
To estimate CY 2015 pass-through spending for drugs and biologicals
in the first group, specifically those drugs and biologicals recently
made eligible for pass-through payment and continuing on pass-through
status for CY 2015, we are proposing to utilize the most recent
Medicare physician's office data regarding their utilization,
information provided in the respective pass-through applications,
historical hospital claims data, pharmaceutical industry information,
and clinical information regarding those drugs or biologicals to
project the CY 2015 OPPS utilization of the products.
For the known drugs and biologicals (excluding policy-packaged
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals,
and radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure, and drugs and biologicals that function
as supplies when used in a surgical procedure) that will be continuing
on pass-through status in CY 2015, we estimate the pass-through payment
amount as the difference between ASP+6 percent and the payment rate for
nonpass-through drugs and biologicals that will be separately

[[Page 41008]]

paid at ASP+6 percent, which is zero for this group of drugs. Because
payment for policy-packaged drugs and biologicals is packaged if the
product was not paid separately due to its pass-through status, we are
proposing to include in the CY 2015 pass-through estimate the
difference between payment for the policy-packaged drug or biological
at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC
information is not available) and the policy-packaged drug APC offset
amount, if we determine that the policy-packaged drug or biological
approved for pass-through payment resembles a predecessor drug or
biological already included in the costs of the APCs that are
associated with the drug receiving pass-through payment. For this
proposed rule, using the proposed methodology described above, we
calculated a CY 2015 proposed spending estimate for this first group of
drugs and biologicals of approximately $2.8 million.
To estimate proposed CY 2015 pass-through spending for drugs and
biologicals in the second group (that is, drugs and biologicals that we
knew at the time of development of this proposed rule are newly
eligible for pass-through payment in CY 2015, additional drugs and
biologicals that we estimate could be approved for pass-through status
subsequent to the development of the proposed rule and before January
1, 2015, and projections for new drugs and biologicals that could be
initially eligible for pass-through payment in the second through
fourth quarters of CY 2015), we are proposing to use utilization
estimates from pass-through applicants, pharmaceutical industry data,
clinical information, recent trends in the per unit ASPs of hospital
outpatient drugs, and projected annual changes in service volume and
intensity as our basis for making the CY 2015 pass-through payment
estimate. We also are proposing to consider the most recent OPPS
experience in approving new pass-through drugs and biologicals. Using
our proposed methodology for estimating CY 2015 pass-through payments
for this second group of drugs, we calculated a proposed spending
estimate for this second group of drugs and biologicals of
approximately $2.2 million.
As discussed in section V.A. of this proposed rule,
radiopharmaceuticals are considered drugs for pass-through payment
purposes. Therefore, we include radiopharmaceuticals in our proposed CY
2015 pass-through spending estimate for drugs and biologicals. Our
proposed CY 2015 estimate for total pass-through spending for drugs and
biologicals (spending for the first group of drugs and biologicals
($2.8 million) plus spending for the second group of drugs and
biologicals ($2.2 million)) equals $5.0 million.
In summary, in accordance with the methodology described above in
this section, for this proposed rule, we estimate that total pass-
through spending for the device categories and the drugs and
biologicals that are continuing to receive pass-through payment in CY
2015 and those device categories, drugs, and biologicals that first
become eligible for pass-through payment during CY 2015 would be
approximately $15.5 million (approximately $10.5 million for device
categories and approximately $5.0 million for drugs and biologicals),
which represents 0.03 percent of total projected OPPS payments for CY
2015. Therefore, we estimate that pass-through spending in CY 2015
would not amount to 2.0 percent of total projected OPPS CY 2015 program
spending.

VII. Proposed OPPS Payment for Hospital Outpatient Visits

A. Proposed Payment for Hospital Outpatient Clinic and Emergency
Department Visits

Since April 7, 2000, we have instructed hospitals to report
facility resources for clinic and ED hospital outpatient visits using
the CPT E/M codes and to develop internal hospital guidelines for
reporting the appropriate visit level (65 FR 18451). Because a national
set of hospital-specific codes and guidelines do not currently exist,
we have advised hospitals that each hospital's internal guidelines that
determine the levels of clinic and ED visits to be reported should
follow the intent of the CPT code descriptors, in that the guidelines
should be designed to reasonably relate the intensity of hospital
resources to the different levels of effort represented by the codes.
While many hospitals have advocated for hospital-specific national
guidelines for visit billing since the OPPS started in 2000, and we
have signaled in past rulemaking our intent to develop guidelines, this
complex undertaking has proven challenging. Our work with interested
stakeholders, such as hospital associations, along with a contractor,
has confirmed that no single approach could consistently and accurately
capture hospitals' relative costs. Public comments received on this
issue, as well as our own knowledge of how clinics operate, have led us
to conclude that it is not feasible to adopt a set of national
guidelines for reporting hospital clinic visits that can accommodate
the enormous variety of patient populations and service-mix provided by
hospitals of all types and sizes throughout the country. Moreover, no
single approach has been broadly endorsed by the stakeholder community.
After consideration of public comments we received on the CY 2014
OPPS/ASC proposed rule, in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75036 through 75045), we finalized a new policy which
created an alphanumeric HCPCS code, G0463 (Hospital outpatient clinic
visit for assessment and management of a patient), for hospital use
only representing any and all clinic visits under the OPPS and assigned
HCPCS code G0463 to new APC 0634. We also finalized a policy to use CY
2012 claims data to develop the CY 2014 OPPS payment rates for HCPCS
code G0463 based on the total geometric mean cost of the levels one
through five CPT E/M codes for clinic visits previously recognized
under the OPPS (CPT codes 99201 through 99205 and 99211 through 99215).
In addition, we finalized a policy to no longer recognize a distinction
between new and established patient clinic visits.
In the CY 2014 OPPS/ASC final rule with comment period, we also
stated our policy that we would continue to use our existing
methodology to recognize the existing CPT codes for Type A ED visits as
well as the five HCPCS codes that apply to Type B ED visits, and to
establish the OPPS payment under our established standard process (78
FR 75036 through 75043). We refer readers to the CY 2014 OPPS/ASC final
rule with comment period for a detailed discussion of the public
comments and our rationale for the CY 2014 policies.
For CY 2015, we are proposing to continue the current policy,
adopted in CY 2014, for clinic and ED visits. HCPCS code G0463 for
hospital use only will represent any and all clinic visits under the
OPPS. We are proposing to continue to assign HCPCS code G0463 to APC
0634. We are proposing to use CY 2013 claims data to develop the
proposed CY 2015 OPPS payment rates for HCPCS code G0463 based on the
total geometric mean cost of the levels one through five CPT E/M codes
for clinic visits currently recognized under the OPPS (CPT codes 99201
through 99205 and 99211 through 99215). Finally, as we established in
the CY 2014 OPPS/ASC final rule with comment period, there is no longer
a policy to recognize a distinction between new and established patient
clinic visits.

[[Page 41009]]

At the time of publication of the CY 2014 OPPS/ASC final rule with
comment period, we stated that additional study was needed to fully
assess the most suitable payment structure for ED visits, including the
particular number of visit levels that would not underrepresent
resources required to treat the most complex patients, such as trauma
patients and that we believed it was best to delay any change in ED
visit coding while we reevaluate the most appropriate payment structure
for Type A and Type B ED visits (78 FR 75040). At this time, we
continue to believe that additional study is needed to assess the most
suitable payment structure for ED visits. We are not proposing any
change in ED visit coding, but rather, for CY 2015, we are proposing to
continue to use our existing methodology to recognize the existing CPT
codes for Type A ED visits as well as the five HCPCS codes that apply
to Type B ED visits, and to establish the CY 2015 proposed OPPS payment
rates using our established standard process. We intend to further
explore the issues described above related to ED visits, including
concerns about excessively costly patients, such as trauma patients. We
may propose changes to the coding and APC assignments for ED visits in
future rulemaking.

B. Proposed Payment for Critical Care Services

For the history of the payment policy for critical care services,
we refer readers to the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75043). In the CY 2014 OPPS/ASC final rule with comment period,
we continued to use the methodology established in the CY 2011 OPPS/ASC
final rule with comment period for calculating a payment rate for
critical care services that includes packaged payment of ancillary
services, for example electrocardiograms, chest X-rays, and pulse
oximetry. Critical care services are described by CPT codes 99291
(Critical care, evaluation and management of the critically ill or
critically injured patient; first 30-74 minutes) and 99292 (Critical
care, evaluation and management of the critically ill or critically
injured patient; each additional 30 minutes (List separately in
addition to code for primary service)).
Compared to the CY 2012 hospital claims data used for the CY 2014
OPPS ratesetting, the CY 2013 hospital claims data used for the CY 2015
OPPS ratesetting again show increases in the geometric mean line item
costs as well as the geometric mean line item charges for CPT code
99291, which continue to suggest that hospitals' billing practices for
CPT code 99291 have remained the same. Because the CY 2013 claims data
do not support any significant change in hospital billing practices for
critical care services, we continue to believe that it would be
inappropriate to pay separately the ancillary services that hospitals
typically report in addition to CPT codes for critical care services.
Therefore, for CY 2015, we are proposing to continue our policy (that
has been in place since CY 2011) to recognize the existing CPT codes
for critical care services and establish a payment rate based on
historical claims data. We also are proposing to continue to implement
claims processing edits that conditionally package payment for the
ancillary services that are reported on the same date of service as
critical care services in order to avoid overpayment. We will continue
to monitor the hospital claims data for CPT code 99291 in order to
determine whether revisions to this policy are warranted based on
changes in hospitals' billing practices.

VIII. Proposed Payment for Partial Hospitalization Services

A. Background

Partial hospitalization is an intensive outpatient program of
psychiatric services provided to patients as an alternative to
inpatient psychiatric care for individuals who have an acute mental
illness. Section 1861(ff)(1) of the Act defines partial hospitalization
services as ``the items and services described in paragraph (2)
prescribed by a physician and provided under a program described in
paragraph (3) under the supervision of a physician pursuant to an
individualized, written plan of treatment established and periodically
reviewed by a physician (in consultation with appropriate staff
participating in such program), which sets forth the physician's
diagnosis, the type, amount, frequency, and duration of the items and
services provided under the plan, and the goals for treatment under the
plan.'' Section 1861(ff)(2) of the Act describes the items and services
included in partial hospitalization services. Section 1861(ff)(3)(A) of
the Act specifies that a partial hospitalization program (PHP) is a
program furnished by a hospital to its outpatients or by a community
mental health center (CMHC) (as defined in subparagraph (B)), and
``which is a distinct and organized intensive ambulatory treatment
service offering less than 24-hour-daily care other than in an
individual's home or in an inpatient or residential setting.'' Section
1861(ff)(3)(B) of the Act defines a community mental health center for
purposes of this benefit.
Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the
authority to designate the OPD services to be covered under the OPPS.
The Medicare regulations that implement this provision specify, under
42 CFR 419.21, that payments under the OPPS will be made for partial
hospitalization services furnished by CMHCs as well as Medicare Part B
services furnished to hospital outpatients designated by the Secretary,
which include partial hospitalization services (65 FR 18444 through
18445).
Section 1833(t)(2)(C) of the Act, in pertinent part, requires the
Secretary to ``establish relative payment weights for covered OPD
services (and any groups of such services described in subparagraph
(B)) based on median (or, at the election of the Secretary, mean)
hospital costs'' using data on claims from 1996 and data from the most
recent available cost reports. In pertinent part, subparagraph (B)
provides that the Secretary may establish groups of covered OPD
services, within a classification system developed by the Secretary for
covered OPD services, so that services classified within each group are
comparable clinically and with respect to the use of resources. In
accordance with these provisions, we have developed the PHP APCs.
Section 1833(t)(9)(A) of the Act requires the Secretary to ``review not
less often than annually and revise the groups, the relative payment
weights, and the wage and other adjustments described in paragraph (2)
to take into account changes in medical practice, changes in
technology, the addition of new services, new cost data, and other
relevant information and factors.''
Because a day of care is the unit that defines the structure and
scheduling of partial hospitalization services, we established a per
diem payment methodology for the PHP APCs, effective for services
furnished on or after July 1, 2000 (65 FR 18452 through 18455). Under
this methodology, the median per diem costs have been used to calculate
the relative payment weights for PHP APCs.
From CY 2003 through CY 2006, the median per diem costs for CMHCs
fluctuated significantly from year to year, while the median per diem
costs for hospital-based PHPs remained relatively constant. We were
concerned that CMHCs may have increased and decreased their charges in
response to Medicare payment policies. Therefore, we began efforts to
strengthen the PHP

[[Page 41010]]

benefit through extensive data analysis and policy and payment changes
finalized in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66670 through 66676). We made two refinements to the methodology for
computing the PHP median: The first remapped 10 revenue codes that are
common among hospital-based PHP claims to the most appropriate cost
centers; and the second refined our methodology for computing the PHP
median per diem cost by computing a separate per diem cost for each day
rather than for each bill. We refer readers to a complete discussion of
these refinements in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66670 through 66676).
In CY 2009, we implemented several regulatory, policy, and payment
changes, including a two-tiered payment approach for PHP services under
which we paid one amount for days with 3 services (APC 0172 Level I
Partial Hospitalization) and a higher amount for days with 4 or more
services (APC 0173 Level II Partial Hospitalization). We refer readers
to section X.B. of the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68688 through 68693) for a full discussion of the two-tiered
payment system. In addition, for CY 2009, we finalized our policy to
deny payment for any PHP claims submitted for days when fewer than 3
units of therapeutic services are provided (73 FR 68694).
Furthermore, for CY 2009, we revised the regulations at 42 CFR
410.43 to codify existing basic PHP patient eligibility criteria and to
add a reference to current physician certification requirements under
42 CFR 424.24 to conform our regulations to our longstanding policy (73
FR 68694 through 68695). These changes have helped to strengthen the
PHP benefit. We also revised the partial hospitalization benefit to
include several coding updates. We refer readers to section X.C.3. of
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68695
through 68697) for a full discussion of these requirements.
For CY 2010, we retained the two-tiered payment approach for PHP
services and used only hospital-based PHP data in computing the APC per
diem payment rates. We used only hospital-based PHP data because we
were concerned about further reducing both PHP APC per diem payment
rates without knowing the impact of the policy and payment changes we
made in CY 2009. Because of the 2-year lag between data collection and
rulemaking, the changes we made in CY 2009 were reflected for the first
time in the claims data that we used to determine payment rates for the
CY 2011 rulemaking (74 FR 60556 through 60559).
In CY 2011, in accordance with section 1301(b) of the Health Care
and Education Reconciliation Act of 2010 (HCERA 2010), we amended the
description of a PHP in our regulations to specify that a PHP must be a
distinct and organized intensive ambulatory treatment program offering
less than 24-hour daily care ``other than in an individual's home or in
an inpatient or residential setting.'' In addition, in accordance with
section 1301(a) of HCERA 2010, we revised the definition of a CMHC in
the regulations to conform to the revised definition now set forth
under section 1861(ff)(3)(B) of the Act. We discussed our finalized
policies for these two provisions of HCERA 2010 in section X.C. of the
CY 2011 OPPS/ASC final rule with comment period (75 FR 71990).
In the CY 2011 OPPS/ASC final rule with comment period (75 FR
71994), we also established four separate PHP APC per diem payment
rates, two for CMHCs (for Level I and Level II services) and two for
hospital-based PHPs (for Level I and Level II services), based on each
provider's own unique data. As stated in the CY 2011 OPPS/ASC proposed
rule (75 FR 46300) and the final rule with comment period (75 FR
71991), for CY 2011, using CY 2009 claims data, CMHC costs had
significantly decreased again. We attributed the decrease to the lower
cost structure of CMHCs compared to hospital-based PHP providers, and
not the impact of the CY 2009 policies. CMHCs have a lower cost
structure than hospital-based PHP providers, in part, because the data
showed that CMHCs generally provide fewer PHP services in a day and use
less costly staff than hospital-based PHPs. Therefore, it was
inappropriate to continue to treat CMHCs and hospital-based providers
in the same manner regarding payment, particularly in light of such
disparate differences in costs. We also were concerned that paying
hospital-based PHPs at a lower rate than their cost structure reflects
could lead to hospital-based PHP closures and possible access problems
for Medicare beneficiaries because hospital-based PHPs are located
throughout the country and, therefore, offer the widest access to PHP
services. Creating the four payment rates (two for CMHCs and two for
hospital-based PHPs) based on each provider's data supported continued
access to the PHP benefit, while also providing appropriate payment
based on the unique cost structures of CMHCs and hospital-based PHPs.
In addition, separation of data by provider type was supported by
several hospital-based PHP commenters who responded to the CY 2011
OPPS/ASC proposed rule (75 FR 71992).
For CY 2011, we instituted a 2-year transition period for CMHCs to
the CMHC APC per diem payment rates based solely on CMHC data. For CY
2011, under the transition methodology, CMHC PHP APCs Level I and Level
II per diem costs were calculated by taking 50 percent of the
difference between the CY 2010 final hospital-based PHP median costs
and the CY 2011 final CMHC median and then adding that number to the CY
2011 final CMHC median. A 2-year transition under this methodology
moved us in the direction of our goal, which is to pay appropriately
for PHP services based on each provider type's data, while at the same
time allowing providers time to adjust their business operations and
protect access to care for beneficiaries. We also stated that we would
review and analyze the data during the CY 2012 rulemaking cycle and,
based on these analyses, we might further refine the payment mechanism.
We refer readers to section X.B. of the CY 2011 OPPS/ASC final rule
with comment period (75 FR 71991 through 71994) for a full discussion.
After publication of the CY 2011 OPPS/ASC final rule with comment
period, a CMHC and one of its patients filed an application for a
preliminary injunction, challenging the OPPS payment rates for PHP
services provided by CMHCs in CY 2011 as adopted in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 71995). We refer readers to
the court case, Paladin Cmty. Mental Health Ctr. v. Sebelius, 2011 WL
3102049 (W.D.Tex. 2011), aff'd, 684 F.3d 527 (5th Cir. 2012) (Paladin).
The plaintiffs in the Paladin case challenged the agency's use of cost
data derived from both hospitals and CMHCs in determining the relative
payment weights for the OPPS payment rates for PHP services furnished
by CMHCs, alleging that section 1833(t)(2)(C) of the Act requires that
such relative payment weights be based on cost data derived solely from
hospitals. As discussed above, section 1833(t)(2)(C) of the Act
requires CMS to ``establish relative payment weights for covered OPD
services (and any groups of such services . . .) . . . based on . . .
hospital costs.'' Numerous courts have held that ``based on'' does not
mean ``based exclusively on.'' On July 25, 2011, the District Court
dismissed the plaintiffs' complaint and application for a preliminary
injunction for lack of subject-matter jurisdiction, which the
plaintiffs appealed to the United States

[[Page 41011]]

Court of Appeals for the Fifth Circuit. On June 15, 2012, the Court of
Appeals affirmed the District Court's dismissal for lack of subject-
matter jurisdiction and found that the Secretary's payment rate
determinations for PHP services are not a facial violation of a clear
statutory mandate (Paladin, 684 F.3d at 533).
For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74348 through 74352), we determined the relative
payment weights for PHP services provided by CMHCs based on data
derived solely from CMHCs and the relative payment weights for
hospital-based PHP services based exclusively on hospital data. The
statute is reasonably interpreted to allow the relative payment weights
for the OPPS payment rates for PHP services provided by CMHCs to be
based solely on CMHC data and relative payment weights for hospital-
based PHP services to be based exclusively on hospital data. Section
1833(t)(2)(C) of the Act requires the Secretary to ``establish relative
payment weights for covered OPD services (and any groups of such
services described in subparagraph (B)) based on . . . hospital
costs.'' In pertinent part, subparagraph (B) provides that ``the
Secretary may establish groups of covered OPD services . . . so that
services classified within each group are comparable clinically and
with respect to the use of resources.'' In accordance with subparagraph
(B), we developed the PHP APCs, as set forth in Sec. 419.31 of the
regulations (65 FR 18446 and 18447; 63 FR 47559 through 47562 and 47567
through 47569). As discussed above, PHP services are grouped into APCs.
Based on section 1833(t)(2)(C) of the Act, we believe that the word
``establish'' can be interpreted as applying to APCs at the inception
of the OPPS in 2000 or whenever a new APC is added to the OPPS. In
creating the original APC for PHP services (APC 0033), we did
``establish'' the initial relative payment weight for PHP services,
provided in both hospital-based and CMHC-based settings, only on the
basis of hospital data. Subsequently, from CY 2003 through CY 2008, the
relative payment weights for PHP services were based on a combination
of hospital and CMHC data. For CY 2009, we established new APCs for PHP
services based exclusively on hospital data. Specifically, we adopted a
two-tiered APC methodology (in lieu of the original APC 0033) under
which CMS paid one rate for days with 3 services (APC 0172) and a
different payment rate for days with 4 or more services (APC 0173).
These two new APCs were established using only hospital data. For CY
2011, we added two new APCs (APCs 0175 and 0176) for PHP services
provided by hospitals and based the relative payment weights for these
APCs solely on hospital data. APCs 0172 and 0173 were designated for
PHP services provided by CMHCs and were based on a mixture of hospital
and CMHC data. As the Secretary argued in the Paladin case, the courts
have consistently held that the phrase ``based on'' does not mean
``based exclusively on.'' Thus, the relative payment weights for the
two APCs for PHP services provided by CMHCs in CY 2011 were ``based
on'' hospital data, no less than the relative payment weights for the
two APCs for hospital-based PHP services.
Although we used hospital data to establish the relative payment
weights for APCs 0033, 0172, 0173, 0175, and 0176 for PHP services, we
believe that we have the authority to discontinue the use of hospital
data in determining the OPPS relative payment weights for PHP services
provided by CMHCs. Other parts of section 1833(t)(2)(C) of the Act make
plain that the data source for the relative payment weights is subject
to change from one period to another. Section 1833(t)(2)(C) of the Act
provides that, in establishing the relative payment weights, ``the
Secretary shall [ ] us[e] data on claims from 1996 and us[e] data from
the most recent available cost reports.'' We used 1996 data (in
addition to 1997 data) in determining only the original relative
payment weights for 2000. In the ensuing calendar year updates, we
continually used more recent cost report data.
Moreover, section 1833(t)(9)(A) of the Act requires the Secretary
to ``review not less often than annually and revise the groups, the
relative payment weights, and the wage and other adjustments described
in paragraph (2) to take into account changes in medical practice,
changes in technology, the addition of new services, new cost data, and
other relevant information and factors.'' For purposes of the CY 2012
update, we exercised our authority under section 1833(t)(9)(A) of the
Act to change the data source for the relative payment weights for PHP
services provided by CMHCs based on ``new cost data, and other relevant
information and factors.''
In the CY 2014 OPPS/ASC final rule with comment period, we
finalized our proposal to base the relative payment weights that
underpin the OPPS APCs, including the four PHP APCs, on geometric means
rather than on the medians. For CY 2014, we established the four PHP
APC per diem payment rates based on geometric mean cost levels
calculated using the most recent claims data for each provider type. We
refer readers to the CY 2014 OPPS/ASC final rule with comment period
for a more detailed discussion (78 FR 75047 through 75050).

B. Proposed PHP APC Update for CY 2015

For CY 2015, we are proposing to apply our established policies to
calculate the four PHP APC per diem payment rates based on geometric
mean per diem costs using the most recent claims data for each provider
type. We computed proposed CMHC PHP APC geometric mean per diem costs
for Level I (3 services per day) and Level II (4 or more services per
day) PHP services using only CY 2013 CMHC claims data, and proposed
hospital-based PHP APC geometric mean per diem costs for Level I and
Level II PHP services using only CY 2013 hospital-based PHP claims
data. These proposed geometric mean per diem costs are shown in Table
44 below.

TABLE 44--Proposed CY 2015 Geometric Mean per Diem Costs for CMHC and
Hospital-Based PHP Services, Based on CY 2013 Claims Data
------------------------------------------------------------------------
Proposed
APC Group title geometric mean
per diem costs
------------------------------------------------------------------------
0172....................... Level I Partial $97.43
Hospitalization (3
services) for CMHCs.
0173....................... Level II Partial 114.93
Hospitalization (4 or more
services) for CMHCs.
0175....................... Level I Partial 177.32
Hospitalization (3
services) for hospital-
based PHPs.
0176....................... Level II Partial 190.21
Hospitalization (4 or more
services) for hospital-
based PHPs.
------------------------------------------------------------------------

[[Page 41012]]

For CY 2015, the proposed geometric mean per diem costs for days
with 3 services (Level I) is approximately $97 for CMHCs and
approximately $177 for hospital-based PHPs. The proposed geometric mean
per diem costs for days with 4 or more services (Level II) is
approximately $115 for CMHCs and approximately $190 for hospital-based
PHPs.
The CY 2015 proposed geometric mean per diem costs for CMHCs
calculated under the proposed CY 2015 methodology using CY 2013 claims
data have remained relatively constant when compared to the CY 2014
final geometric mean per diem costs for CMHCs established in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75050), with
geometric mean per diem costs for Level I CMHC PHP services decreasing
from approximately $99 to approximately $97 for CY 2015, and geometric
mean per diem costs for Level II CMHC PHP services increasing from
approximately $112 to approximately $115 for CY 2015.
The CY 2015 proposed geometric mean per diem costs for hospital-
based PHPs calculated under the proposed CY 2015 methodology using CY
2013 claims data show more variation when compared to the CY 2014 final
geometric mean per diem costs for hospital-based PHPs, with geometric
mean per diem costs for Level I hospital-based PHP services decreasing
from approximately $191 to approximately $177 for CY 2015, and
geometric mean per diem costs for Level II hospital-based PHP services
decreasing from approximately $214 to approximately $190 for CY 2015.
We understand that having little variation in the PHP per diem
payment amounts from one year to the next allows providers to more
easily plan their fiscal needs. However, we believe that it is
important to base the PHP payment rates on the claims and cost reports
submitted by each provider type so these rates accurately reflect the
cost information for these providers. We recognize that several factors
may cause a fluctuation in the per diem payment amounts, including
direct changes to the PHP APC per diem payment rate (for example,
establishing separate APCs and associated per diem payment rates for
CMHCs and hospital-based providers based on the provider type's costs),
changes to the OPPS (for example, basing the relative payment weights
on geometric mean costs), and provider-driven changes (for example, a
provider's decision to change its mix of services or to change its
charges and clinical practice for some services). We refer readers to a
more complete discussion of this issue in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75049). We are inviting public comments
on what causes PHP costs to fluctuate from year to year.
The proposed CY 2015 geometric mean per diem costs for the CMHC and
hospital-based PHP APCs are shown in Table 44 of this proposed rule. We
are inviting public comments on these proposals.

C. Proposed Separate Threshold for Outlier Payments to CMHCs

As discussed in the CY 2004 OPPS final rule with comment period (68
FR 63469 through 63470), after examining the costs, charges, and
outlier payments for CMHCs, we believed that establishing a separate
OPPS outlier policy for CMHCs would be appropriate. A CMHC-specific
outlier policy would direct OPPS outlier payments towards genuine cost
of outlier cases, and address situations where charges were being
artificially increased to enhance outlier payments. We created a
separate outlier policy that would be specific to the estimated costs
and OPPS payments provided to CMHCs. We note that, in the CY 2009 OPPS/
ASC final rule with comment period, we established an outlier
reconciliation policy to comprehensively address charging aberrations
related to OPPS outlier payments (73 FR 68594 through 68599).
Therefore, beginning in CY 2004, we designated a portion of the
estimated OPPS outlier target amount specifically for CMHCs, consistent
with the percentage of projected payments to CMHCs under the OPPS each
year, excluding outlier payments, and established a separate outlier
threshold for CMHCs.
The separate outlier threshold for CMHCs resulted in $1.8 million
in outlier payments to CMHCs in CY 2004, and $0.5 million in outlier
payments to CMHCs in CY 2005. In contrast, in CY 2003, more than $30
million was paid to CMHCs in outlier payments. We believe that this
difference in outlier payments indicates that the separate outlier
threshold for CMHCs has been successful in keeping outlier payments to
CMHCs in line with the percentage of OPPS payments made to CMHCs.
We are proposing to continue designating a portion of the estimated
1.0 percent outlier target amount specifically for CMHCs, consistent
with the percentage of projected payments to CMHCs under the OPPS in CY
2015, excluding outlier payments. CMHCs are projected to receive 0.03
percent of total OPPS payments in CY 2015, excluding outlier payments.
Therefore, we are proposing to designate 0.47 percent of the estimated
1.0 percent outlier target amount for CMHCs, and establish a threshold
to achieve that level of outlier payments. Based on our simulations of
CMHC payments for CY 2015, we are proposing to continue to set the
threshold for CY 2015 at 3.40 times the highest CMHC PHP APC payment
rate (that is, APC 0173 (Level II Partial Hospitalization)). We
continue to believe that this approach would neutralize the impact of
inflated CMHC charges on outlier payments and better target outlier
payments to those truly exceptionally high-cost cases that might
otherwise limit beneficiary access. In addition, we are proposing to
continue to apply the same outlier payment percentage that applies to
hospitals. Therefore, for CY 2015, we are proposing to continue to pay
50 percent of CMHC per diem costs over the threshold. In section II.G.
of this proposed rule, for the hospital outpatient outlier payment
policy, we are proposing to set a dollar threshold in addition to an
APC multiplier threshold. Because the PHP APCs are the only APCs for
which CMHCs may receive payment under the OPPS, we would not expect to
redirect outlier payments by imposing a dollar threshold. Therefore, we
are not proposing to set a dollar threshold for CMHC outlier payments.
In summary, we are proposing to establish that if a CMHC's cost for
partial hospitalization services, paid under either APC 0172 or APC
0173, exceeds 3.40 times the payment rate for APC 0173, the outlier
payment would be calculated as 50 percent of the amount by which the
cost exceeds 3.40 times the APC 0173 payment rate. We are inviting
public comments on these proposals.

IX. Proposed Procedures That Would Be Paid Only as Inpatient Procedures

A. Background

We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74352 through 74353) for a full historical discussion of
our longstanding policies on how we identify procedures that are
typically provided only in an inpatient setting (referred to as the
inpatient list) and, therefore, will not be paid by Medicare under the
OPPS; and on the criteria that we use to review the inpatient list each
year to determine whether or not any procedures should be removed from
the list.

[[Page 41013]]

B. Proposed Changes to the Inpatient List

For the CY 2015 OPPS, we are proposing to use the same methodology
(described in the November 15, 2004 final rule with comment period (69
FR 65835)) of reviewing the current list of procedures on the inpatient
list to identify any procedures that may be removed from the list. The
established criteria upon which we make such a determination are as
follows:

1. Most outpatient departments are equipped to provide the
services to the Medicare population.
2. The simplest procedure described by the code may be performed
in most outpatient departments.
3. The procedure is related to codes that we have already
removed from the inpatient list.
4. A determination is made that the procedure is being performed
in numerous hospitals on an outpatient basis.
5. A determination is made that the procedure can be
appropriately and safely performed in an ASC, and is on the list of
approved ASC procedures or has been proposed by us for addition to
the ASC list.

Using this methodology, we did not identify any procedures that
potentially could be removed from the inpatient list for CY 2015.
Therefore, we are proposing to not remove any procedures from the
inpatient list for CY 2015.
After our annual review of APCs and code assignments as required by
section 1833(t)(9) of the Act and further clinical review performed by
CMS medical officers, we are proposing to add CPT code 22222 (Osteotomy
of spine, including discectomy, anterior approach, single vertebral
segment; thoracic) to the CY 2015 inpatient list.
The complete list of codes that we are proposing to be paid by
Medicare in CY 2015 only as inpatient procedures is included as
Addendum E to this proposed rule (which is available via the Internet
on the CMS Web site).

X. Proposed Nonrecurring Policy Changes: Collecting Data on Services
Furnished in Off-Campus Provider-Based Departments

As we discussed in the CY 2014 OPPS/ASC proposed rule and final
rule with comment period (78 FR 43626 and 78 FR 75061, respectively)
and in the CY 2014 Medicare Physician Fee Schedule (MPFS) proposed rule
(78 FR 43301 and 78 FR 74427), in recent years, the research literature
and popular press have documented the increased trend toward hospital
acquisition of physician practices, integration of those practices as a
department of the hospital, and the resultant increase in the delivery
of physicians' services in a hospital setting. When a Medicare
beneficiary receives outpatient services in a hospital, the total
payment amount for outpatient services made by Medicare is generally
higher than the total payment amount made by Medicare when a physician
furnishes those same services in a freestanding clinic or in a
physician's office.
We continue to seek a better understanding of how the growing trend
toward hospital acquisition of physician offices and subsequent
treatment of those locations as off-campus provider-based outpatient
departments affects payments under the MPFS and OPPS, as well as
beneficiary cost-sharing obligations. MedPAC continues to question the
appropriateness of increased Medicare payment and beneficiary cost-
sharing when physician offices become hospital outpatient departments
and to recommend that Medicare pay selected hospital outpatient
services at MPFS rates (MedPAC March 2012 and June 2013 Report to
Congress). In order to understand how this trend is affecting Medicare,
we need information on the extent to which this shift is occurring. To
that end, during the CY 2014 OPPS/ASC rulemaking cycle, we sought
public comment regarding the best method for collecting information and
data that would allow us to analyze the frequency, type, and payment
for physicians' and outpatient hospital services furnished in off-
campus provider-based hospital outpatient departments (78 FR 75061
through 75062 and 78 FR 74427 through 74428). In response to our
solicitation, we received many detailed public comments. However, the
commenters did not present a consensus opinion regarding the options we
presented in last year's proposed rule. Based on our analysis of the
public comments we received, we believe the most efficient and
equitable means of gathering this important information across two
different payment systems would be to create a HCPCS modifier to be
reported with every code for physicians' services and outpatient
hospital services furnished in an off-campus provider-based department
of a hospital on both the CMS-1500 claim form for physicians' services
and the UB-04 form (CMS Form 1450) for hospital outpatient services. We
note that a main provider may treat an off-campus facility as provider-
based if certain requirements in 42 CFR 413.65 are satisfied, and we
define a ``campus'' at 42 CFR 413.65(a)(2) to be the physical area
immediately adjacent to the provider's main buildings, other areas and
structures that are not strictly contiguous to the main buildings but
are located within 250 yards of the main buildings, and any other areas
determined on an individual case basis, by the CMS regional office, to
be part of the provider's campus.
Section 220(a) of the Protecting Access to Medicare Act of 2014
(Pub. L. 113-93) added a new subparagraph (M) under section 1848(c)(2)
of the Act that granted CMS the authority to engage in data collection
to support valuation of services paid under the MPFS. We are seeking
more information on the frequency and type of services furnished in
provider-based departments under this authority to improve the accuracy
of MPFS practice expense payments for services furnished in off-campus
provider-based departments. We discuss this issue in more detail in the
CY 2015 MPFS proposed rule (CMS-1612-P). In that discussion, we note
our concerns that our current MPFS practice expense methodology
primarily distinguishes between the resources involved in furnishing
services in two sites of service: The nonfacility setting and the
facility setting. As more physician practices become hospital-based and
are treated as off-campus provider-based departments, we believe it is
important to develop an understanding of which practice expense costs
typically are incurred by the physicians and practitioners in the
setting, which are incurred by the hospital, and whether the facility
and nonfacility site of service differentials adequately account for
the typical resource costs given these new ownership arrangements.
To understand how this trend is affecting Medicare, including the
accuracy of payments made through the MPFS, we need to develop data to
assess the extent to which this shift toward hospital-based physician
practices is occurring. Therefore, we are proposing to collect
information on the type and frequency of physicians' services and
outpatient hospital services furnished in off-campus provider-based
departments beginning January 1, 2015, in accordance with our authority
under section 1834(c)(2)(M) of the Act (as added by section 220(a) of
Pub. L. 113-93). As noted above, we would create a HCPCS modifier that
is to be reported with every code for physicians' services and
outpatient hospital services furnished in an off-campus provider-based
department of a hospital. The modifier would be reported on both the
CMS-1500 claim form for physicians' services and the UB-04 form (CMS
Form 1450) for hospital outpatient services. We are seeking additional
public comment on whether or not the

[[Page 41014]]

use of a modifier code is the best mechanism for collecting this
service-level data in the hospital outpatient department.

XI. Proposed CY 2015 OPPS Payment Status and Comment Indicators

A. Proposed CY 2015 OPPS Payment Status Indicator Definitions

Payment status indicators (SIs) that we assign to HCPCS codes and
APCs serve an important role in determining payment for services under
the OPPS. They indicate whether a service represented by a HCPCS code
is payable under the OPPS or another payment system and also whether
particular OPPS policies apply to the code. The complete list of the
proposed CY 2015 payment status indicators and their definitions is
displayed in Addendum D1 on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The proposed CY 2015 payment status indicator assignments
for APCs and HCPCS codes are shown in Addendum A and Addendum B,
respectively, on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The
proposed changes to CY 2015 payment status indicators and their
definitions are discussed in detail below.
We note that in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 74869 through 74888), for CY 2014, we created a new status
indicator ``J1'' to identify HCPCS codes that are paid under a
comprehensive APC. However, because we delayed implementation of the
new comprehensive APC policy until CY 2015, we also delayed the
effective date of payment status indicator ``J1'' to CY 2015. A claim
with payment status indicator ``J1'' will trigger a comprehensive APC
payment for the claim. We refer readers to section II.A.2.e. of this
proposed rule for a discussion of implementation of the new
comprehensive APC policy.
For CY 2015, we are proposing to delete payment status indicator
``X,'' and assign ancillary services that are currently assigned
payment status indicator ``X'' to either payment status indicator
``Q1'' or ``S.'' We also are proposing to revise the definition payment
status indicator ``Q1'' by removing payment status indicator ``X'' from
the packaging criteria, so that codes assigned payment status indicator
``Q1'' would be designated as STV-packaged, rather than STVX-packaged
because payment status indicator ``X'' is proposed for deletion. These
proposed changes are discussed in greater detail in section
II.A.3.c.(1) of this proposed rule.
In addition, for CY 2015, we are proposing to clarify the
definition of payment status indicator ``E'' to state that status
indicator ``E'' applies to items, codes, and services--
For which pricing is not available;
Not covered by any Medicare outpatient benefit category;
Statutorily excluded by Medicare; and
Not reasonable and necessary.
Regarding items ``for which pricing is not available,'' this
applies to drugs and biologicals assigned a HCPCS code but with no
available pricing information, for example, WAC.
In reviewing the OPPS status indicators and Addendum D1 for CY
2015, we noticed that there are a few drugs or biologicals that are
currently assigned payment status indicator ``A'' indicating payment
under a non-OPPS fee schedule. These drugs are administered
infrequently in conjunction with emergency dialysis for patients with
ESRD, but when administered in the HOPD, they would be paid under the
standard OPPS drug payment methodology for drugs and biologicals, that
is, at ASP+6 percent unless they are packaged. We refer readers to
section V. of this proposed rule for additional discussion of these
drugs and their status indicators. Based on this proposed change to the
status indicators for these drugs, for CY 2015, we are proposing to
remove the phrase ``EPO for ESRD Patients'' from the list of examples
for status indicator ``A.'' In addition, we are proposing to clarify
the definition of payment status indicator ``A'' by adding the phrase
``separately payable'' to nonimplantable prosthetic and orthotic
devices.

B. Proposed CY 2015 Comment Indicator Definitions

For the CY 2015 OPPS, we are proposing to use the same two comment
indicators that are in effect for the CY 2014 OPPS.
``CH''--Active HCPCS codes in current and next calendar
year; status indicator and/or APC assignment have changed or active
HCPCS code that will be discontinued at the end of the current calendar
year.
``NI''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year as compared to current calendar year, interim APC
assignment; comments will be accepted on the interim APC assignment for
the new code.
We are proposing to use the ``CH'' comment indicator in this CY
2015 OPPS/ASC proposed rule to indicate HCPCS codes for which the
status indicator or APC assignment, or both, are proposed for change in
CY 2015 compared to their assignment as of June 30, 2014. We believe
that using the ``CH'' indicator in this proposed rule will facilitate
the public's review of the changes that we are proposing for CY 2015.
Use of the comment indicator ``CH'' in association with a composite APC
indicates that the configuration of the composite APC is proposed to be
changed in the CY 2015 OPPS/ASC final rule with comment period.
We are proposing to use the ``CH'' comment indicator in the CY 2015
OPPS/ASC final rule with comment period to indicate HCPCS codes for
which the status indicator or APC assignment, or both, would change in
CY 2015 compared to their assignment as of December 31, 2014.
In addition, we are proposing that any existing HCPCS codes with
substantial revisions to the code descriptors for CY 2015 compared to
the CY 2014 descriptors would be labeled with comment indicator ``NI''
in Addendum B to the CY 2015 OPPS/ASC final rule with comment period.
However, in order to receive the comment indicator ``NI,'' the CY 2015
revision to the code descriptor (compared to the CY 2014 descriptor)
must be significant such that the new code descriptor describes a new
service or procedure for which the OPPS treatment may change. We use
comment indicator ``NI'' to indicate that these HCPCS codes will be
open for comment as part of this CY 2015 OPPS/ASC final rule with
comment period. Like all codes labeled with comment indicator ``NI,''
we will respond to public comments and finalize their OPPS treatment in
the CY 2016 OPPS/ASC final rule with comment period.
In accordance with our usual practice, we are proposing that CPT
and Level II HCPCS codes that are new for CY 2015 also would be labeled
with comment indicator ``NI'' in Addendum B to the CY 2015 OPPS/ASC
final rule with comment period.
Only HCPCS codes with comment indicator ``NI'' in the CY 2015 OPPS/
ASC final rule with comment period are subject to comment. HCPCS codes
that do not appear with comment indicator ``NI'' in the CY 2015 OPPS/
ASC final rule with comment period will not be open to public comment,
unless we specifically request additional comments elsewhere in the
final rule with comment period.
We believe that the CY 2014 definitions of the OPPS comment

[[Page 41015]]

indicators continue to be appropriate for CY 2015. Therefore, we are
proposing to continue to use those definitions without modification for
CY 2015. The proposed definitions of the OPPS comment indicators are
listed in Addendum D2 on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

XII. Proposed Updates to the Ambulatory Surgical Center (ASC) Payment
System

A. Background

1. Legislative History, Statutory Authority, and Prior Rulemaking for
the ASC Payment System
For a detailed discussion of the legislative history and statutory
authority related to ASCs, we refer readers to the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74377 through 74378) and the June
12, 1998 proposed rule (63 FR 32291 through 32292). For a discussion of
prior rulemaking on the ASC payment system, we refer readers to the CY
2012 OPPS/ASC final rule with comment period (76 FR 74378 through
74379), the CY 2013 OPPS/ASC final rule with comment period (77 FR
68434 through 68467), and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75064 through 75090).
2. Policies Governing Changes to the Lists of Codes and Payment Rates
for ASC Covered Surgical Procedures and Covered Ancillary Services
Under Sec. 416.2 and Sec. 416.166 of the regulations, subject to
certain exclusions, covered surgical procedures in an ASC are surgical
procedures that are separately paid under the OPPS, that would not be
expected to pose a significant risk to beneficiary safety when
performed in an ASC, and that would not be expected to require active
medical monitoring and care at midnight following the procedure
(``overnight stay''). We adopted this standard for defining which
surgical procedures are covered under the ASC payment system as an
indicator of the complexity of the procedure and its appropriateness
for Medicare payment in ASCs. We use this standard only for purposes of
evaluating procedures to determine whether or not they are appropriate
to be furnished to Medicare beneficiaries in ASCs. We define surgical
procedures as those described by Category I CPT codes in the surgical
range from 10000 through 69999, as well as those Category III CPT codes
and Level II HCPCS codes that directly crosswalk or are clinically
similar to ASC covered surgical procedures (72 FR 42478).
In the August 2, 2007 final rule, we also established our policy to
make separate ASC payments for the following ancillary items and
services when they are provided integral to ASC covered surgical
procedures: (1) Brachytherapy sources; (2) certain implantable items
that have pass-through status under the OPPS; (3) certain items and
services that we designate as contractor-priced, including, but not
limited to, procurement of corneal tissue; (4) certain drugs and
biologicals for which separate payment is allowed under the OPPS; and
(5) certain radiology services for which separate payment is allowed
under the OPPS. These covered ancillary services are specified in Sec.
416.164(b) and, as stated previously, are eligible for separate ASC
payment (72 FR 42495). Payment for ancillary items and services that
are not paid separately under the ASC payment system is packaged into
the ASC payment for the covered surgical procedure.
We update the lists of, and payment rates for, covered surgical
procedures and covered ancillary services in ASCs in conjunction with
the annual proposed and final rulemaking process to update the OPPS and
the ASC payment system (Sec. 416.173; 72 FR 42535). In addition, as
discussed in detail in section XII.B. of this proposed rule, because we
base ASC payment policies for covered surgical procedures, drugs,
biologicals, and certain other covered ancillary services on the OPPS
payment policies, we also provide quarterly update change requests
(CRs) for ASC covered surgical procedures and covered ancillary
services throughout the year (January, April, July, and October). CMS
releases new Level II codes to the public or recognizes the release of
new CPT codes by the AMA and makes these codes effective (that is, the
codes are recognized on Medicare claims) via these ASC quarterly update
CRs. Thus, these quarterly updates are to implement newly created Level
II HCPCS and Category III CPT codes for ASC payment and to update the
payment rates for separately paid drugs and biologicals based on the
most recently submitted ASP data. New Category I CPT codes, except
vaccine codes, are released only once a year and, therefore, are
implemented only through the January quarterly update. New Category I
CPT vaccine codes are released twice a year and, therefore, are
implemented through the January and July quarterly updates. We refer
readers to Table 41 in the CY 2012 OPPS/ASC proposed rule for the
process used to update the HCPCS and CPT codes (76 FR 42291).
In our annual updates to the ASC list of, and payment rates for,
covered surgical procedures and covered ancillary services, we
undertake a review of excluded surgical procedures (including all
procedures newly proposed for removal from the OPPS inpatient list),
new procedures, and procedures for which there is revised coding, to
identify any that we believe meet the criteria for designation as ASC
covered surgical procedures or covered ancillary services. Updating the
lists of ASC covered surgical procedures and covered ancillary
services, as well as their payment rates, in association with the
annual OPPS rulemaking cycle is particularly important because the OPPS
relative payment weights and, in some cases, payment rates, are used as
the basis for the payment of covered surgical procedures and covered
ancillary services under the revised ASC payment system. This joint
update process ensures that the ASC updates occur in a regular,
predictable, and timely manner.

B. Proposed Treatment of New Codes

1. Proposed Process for Recognizing New Category I and Category III CPT
Codes and Level II HCPCS Codes
Category I CPT, Category III CPT, and Level II HCPCS codes are used
to report procedures, services, items, and supplies under the ASC
payment system. Specifically, we recognize the following codes on ASC
claims: (1) Category I CPT codes, which describe surgical procedures
and vaccine codes; (2) Category III CPT codes, which describe new and
emerging technologies, services, and procedures; and (3) Level II HCPCS
codes, which are used primarily to identify products, supplies,
temporary procedures, and services not described by CPT codes.
We finalized a policy in the August 2, 2007 final rule to evaluate
each year all new Category I and Category III CPT codes and Level II
HCPCS codes that describe surgical procedures, and to make preliminary
determinations during the annual OPPS/ASC rulemaking process regarding
whether or not they meet the criteria for payment in the ASC setting as
covered surgical procedures and, if so, whether or not they are office-
based procedures (72 FR 42533 through 42535). In addition, we identify
new codes as ASC covered ancillary services based upon the final
payment policies of the revised ASC payment system.

[[Page 41016]]

We have separated our discussion below into two sections based on
whether we are proposing to solicit public comments in this CY 2015
OPPS/ASC proposed rule (and respond to those comments in the CY 2015
OPPS/ASC final rule with comment period) or whether we will be
soliciting public comments in the CY 2015 OPPS/ASC final rule with
comment period (and responding to those comments in the CY 2016 OPPS/
ASC final rule with comment period).
We note that we sought public comment in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75067) on the new Category I and
Category III CPT and Level II HCPCS codes that were effective January
1, 2014. We also sought public comment in the CY 2014 OPPS/ASC final
rule with comment period on the new Level II HCPCS codes effective
October 1, 2013. These new codes, with an effective date of October 1,
2013, or January 1, 2014, were flagged with comment indicator ``NI'' in
Addenda AA and BB to the CY 2014 OPPS/ASC final rule with comment
period to indicate that we were assigning them an interim payment
status and payment rate, if applicable, which were subject to public
comment following publication of the CY 2014 OPPS/ASC final rule with
comment period. We will respond to public comments and finalize the
treatment of these codes under the ASC payment system in the CY 2015
OPPS/ASC final rule with comment period.
2. Proposed Treatment of New Level II HCPCS Codes and Category III CPT
Codes Implemented in April 2014 and July 2014 for Which We Are
Soliciting Public Comments in This Proposed Rule
In the April 2014 and July 2014 CRs, we made effective for April 1,
2014 and July 1, 2014, respectively, a total of seven new Level II
HCPCS codes and four new Category III CPT codes that describe ASC
covered surgical procedures and covered ancillary services that were
not addressed in the CY 2014 OPPS/ASC final rule with comment period.
In the April 2014 ASC quarterly update (Transmittal 2927, CR 8675,
dated April 10, 2014), we added two new surgical Level II HCPCS codes
and one new drug and biological Level II HCPCS code to the list of
covered surgical procedures and covered ancillary services,
respectively. Table 45 below lists the new Level II HCPCS codes that
were implemented April 1, 2014, along with their proposed payment
indicators for CY 2015.
In the July 2014 quarterly update (Transmittal 2970, CR 8786, dated
May 23, 2014), we added one new brachytherapy Level II HCPCS code and
three new drug and biological Level II HCPCS codes to the list of
covered ancillary services. Table 46 below lists the new Level II HCPCS
codes that were implemented July 1, 2014 along with their proposed
payment indicators and proposed ASC payment rates for CY 2015.
Through the July 2014 quarterly update CR, we also implemented ASC
payment for four new Category III CPT codes as one ASC covered surgical
procedure and three covered ancillary services, effective July 1, 2014.
These codes are listed in Table 47 below, along with their proposed
payment indicators and proposed payment rates for CY 2015.
The HCPCS codes listed in Table 45 are included in Addenda AA or BB
to this proposed rule (which are available via the Internet on the CMS
Web site). Because the payment rates associated with the new Level II
HCPCS codes and Category III CPT codes that became effective July 1,
2014 (listed in Table 46 and Table 47 of this proposed rule) are not
available to us in time for incorporation into the Addenda to this
OPPS/ASC proposed rule, our policy is to include these HCPCS codes and
their proposed payment indicators and payment rates in the preamble to
the proposed rule but not in the Addenda to the proposed rule. These
codes and their final payment indicators and rates will be included in
the appropriate Addendum to the CY 2015 OPPS/ASC final rule with
comment period. Thus, the codes implemented by the July 2014 ASC
quarterly update CR and their proposed CY 2015 payment indicators and
rates that are displayed in Table 46 and Table 47 are not included in
Addenda AA or BB to this proposed rule (which are available via the
Internet on the CMS Web site). The final list of ASC covered surgical
procedures and covered ancillary services and the associated payment
weights and payment indicators will be included in Addenda AA or BB to
the CY 2015 OPPS/ASC final rule with comment period, consistent with
our annual update policy.
We invite public comment on these proposed payment indicators and
the proposed payment rates for the new Category III CPT code and Level
II HCPCS codes that were newly recognized as ASC covered surgical
procedures or covered ancillary services in April 2014 and July 2014
through the quarterly update CRs, as listed in Tables 45, 46, and 47
below. We are proposing to finalize their payment indicators and their
payment rates in the CY 2015 OPPS/ASC final rule with comment period.

Table 45--New Level II HCPCS Codes for Covered Surgical Procedures or
Covered Ancillary Services Implemented in April 2014
------------------------------------------------------------------------
Proposed CY
CY 2014 HCPCS Code CY 2014 Long descriptor 2015 payment
indicator
------------------------------------------------------------------------
C9739...................... Cystourethroscopy, with G2
insertion of
transprostatic implant; 1
to 3 implants.
C9740...................... Cystourethroscopy, with G2
insertion of
transprostatic implant; 4
or more implants.
C9021...................... Injection, obinutuzumab, K2
10 mg.
------------------------------------------------------------------------
G2 = Non office-based surgical procedure added in CY 2008 or later;
payment based on OPPS relative payment weight.
K2 = Drugs and biologicals paid separately when provided integral to a
surgical procedure on ASC list; payment based on OPPS rate.

Table 46--New Level II HCPCS Codes for Covered Ancillary Services Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
CY 2014 HCPCS Code CY 2014 Long descriptor 2015 payment 2015 payment
indicator rate
----------------------------------------------------------------------------------------------------------------
C2644.................................. Brachytherapy source, cesium-131 H2 $18.97
chloride solution, per millicurie.
C9022.................................. Injection, elosulfase alfa, 1mg....... K2 226.42
C9134.................................. Factor XIII (antihemophilic factor, K2 14.10
recombinant), Tretten, per 10 i.u..

[[Page 41017]]

Q9970*................................. Injection, ferric carboxymaltose, 1 mg K2 1.06
----------------------------------------------------------------------------------------------------------------
* HCPCS code Q9970 replaces HCPCS code C9441 effective July 1, 2014.
H2 = Brachytherapy source paid separately when provided integral to a surgical procedure on ASC list; payment
based on OPPS rate.
K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment
based on OPPS rate.

Table 47--New Category III CPT Codes for Covered Surgical Procedures or Covered Ancillary Services Implemented
in July 2014
----------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
CY 2014 CPT Code CY 2014 Long descriptor 2015 payment 2015 payment
indicator rate
----------------------------------------------------------------------------------------------------------------
0348T.................................. Radiologic examination, Z2 $50.21
radiostereometric analysis (RSA);
spine, (includes, cervical, thoracic
and lumbosacral, when performed).
0349T.................................. Radiologic examination, Z2 $50.21
radiostereometric analysis (RSA);
upper extremity(ies), (includes
shoulder, elbow and wrist, when
performed).
0350T.................................. Radiologic examination, Z2 50.21
radiostereometric analysis (RSA);
lower extremity(ies), (includes hip,
proximal femur, knee and ankle, when
performed).
0356T.................................. Insertion of drug-eluting implant R2 42.81
(including punctal dilation and
implant removal when performed) into
lacrimal canaliculus, each.
----------------------------------------------------------------------------------------------------------------
R2 = Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE RVUs;
payment based on OPPS relative payment weight.
Z2 = Radiology service paid separately when provided integral to a surgical procedure on ASC list; payment based
on MPFS nonfacility PE RVUs.

3. Proposed Process for New Level II HCPCS Codes and Category I and
Category III CPT Codes for Which We Will Be Soliciting Public Comments
in the CY 2015 OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Category I and Category III CPT codes and new Level II HCPCS codes that
are effective January 1 in the final rule with comment period updating
the ASC payment system for the following calendar year. These codes are
released to the public via the CMS HCPCS (for Level II HCPCS codes) and
AMA Web sites (for CPT codes), and also through the January ASC
quarterly update CRs. In the past, we also have released new Level II
HCPCS codes that are effective October 1 through the October ASC
quarterly update CRs and incorporated these new codes in the final rule
with comment period updating the ASC payment system for the following
calendar year. All of these codes are flagged with comment indicator
``NI'' in Addenda AA and BB to the OPPS/ASC final rule with comment
period to indicate that we are assigning them an interim payment status
which is subject to public comment. The payment indicator and payment
rate, if applicable, for all such codes flagged with comment indicator
``NI'' are open to public comment in the OPPS/ASC final rule with
comment period, and we respond to these comments in the final rule with
comment period for the next calendar year's OPPS/ASC update.
We are proposing to continue this process for CY 2015.
Specifically, for CY 2015, we are proposing to include in Addenda AA
and BB to the CY 2015 OPPS/ASC final rule with comment period the new
Category I and III CPT codes effective January 1, 2015, that would be
incorporated in the January 2015 ASC quarterly update CR and the new
Level II HCPCS codes, effective October 1, 2014 or January 1, 2015,
that would be released by CMS in its October 2014 and January 2015 ASC
quarterly update CRs. These codes would be flagged with comment
indicator ``NI'' in Addenda AA and BB to the CY 2015 OPPS/ASC final
rule with comment period to indicate that we have assigned them an
interim payment status. Their payment indicators and payment rates, if
applicable, would be open to public comment in the CY 2015 OPPS/ASC
final rule with comment period and would be finalized in the CY 2016
OPPS/ASC final rule with comment period.

C. Proposed Update to the Lists of ASC Covered Surgical Procedures and
Covered Ancillary Services

1. Covered Surgical Procedures
a. Additions to the List of ASC Covered Surgical Procedures
We are proposing to update the list of ASC covered surgical
procedures by adding 10 procedures to the list for CY 2015. These 10
procedures were among those excluded from the ASC list for CY 2014
because we believed they did not meet the definition of a covered
surgical procedure based on our expectation that they would pose a
significant safety risk to Medicare beneficiaries or would require an
overnight stay if performed in ASCs. We conducted a review of all HCPCS
codes that currently are paid under the OPPS, but not included on the
ASC list of covered surgical procedures, to determine if changes in
technology and/or medical practice affected the clinical
appropriateness of these procedures for the ASC setting. We determined
that these 10 procedures could be safely performed in the ASC setting
and would not require an overnight stay if performed in an ASC and,
therefore, we are proposing to include them on the list of ASC covered
surgical procedures for CY 2015.
The 10 procedures that we are proposing to add to the ASC list of
covered surgical procedures, including their HCPCS code long
descriptors and proposed CY 2015 payment indicators, are displayed in
Table 48 below.

[[Page 41018]]

Table 48--Proposed Additions to the List of ASC Covered Surgical
Procedures for CY 2015
------------------------------------------------------------------------
Proposed CY
2015 ASC
CY 2014 HCPCS Code CY 2014 Long descriptor payment
indicator
------------------------------------------------------------------------
22551...................... Arthrodesis, anterior G2
interbody, including disc
space preparation,
discectomy,
osteophytectomy and
decompression of spinal
cord and/or nerve roots;
cervical below c2.
22554...................... Arthrodesis, anterior G2
interbody technique,
including minimal
discectomy to prepare
interspace (other than
for decompression);
cervical below c2.
22612...................... Arthrodesis, posterior or G2
posterolateral technique,
single level; lumbar
(with lateral transverse
technique, when
performed).
22614...................... Arthrodesis, posterior or N1
posterolateral technique,
single level; each
additional vertebral
segment (list separately
in addition to code for
primary procedure).
63020...................... Laminotomy G2
(hemilaminectomy), with
decompression of nerve
root(s), including
partial facetectomy,
foraminotomy and/or
excision of herniated
intervertebral disc; 1
interspace, cervical.
63030...................... Laminotomy G2
(hemilaminectomy), with
decompression of nerve
root(s), including
partial facetectomy,
foraminotomy and/or
excision of herniated
intervertebral disc; 1
interspace, lumbar.
63042...................... Laminotomy G2
(hemilaminectomy), with
decompression of nerve
root(s), including
partial facetectomy,
foraminotomy and/or
excision of herniated
intervertebral disc,
reexploration, single
interspace; lumbar.
63045...................... Laminectomy, facetectomy G2
and foraminotomy
(unilateral or bilateral
with decompression of
spinal cord, cauda equina
and/or nerve root[s],
[eg, spinal or lateral
recess stenosis]), single
vertebral segment;
cervical.
63047...................... Laminectomy, facetectomy G2
and foraminotomy
(unilateral or bilateral
with decompression of
spinal cord, cauda equina
and/or nerve root[s],
[eg, spinal or lateral
recess stenosis]), single
vertebral segment; lumbar.
63056...................... Transpedicular approach G2
with decompression of
spinal cord, equina and/
or nerve root(s) (eg,
herniated intervertebral
disc), single segment;
lumbar (including
transfacet, or lateral
extraforaminal approach)
(eg, far lateral
herniated intervertebral
disc).
------------------------------------------------------------------------

b. Proposed Covered Surgical Procedures Designated as Office-Based
(1) Background
In the August 2, 2007 ASC final rule, we finalized our policy to
designate as ``office-based'' those procedures that are added to the
ASC list of covered surgical procedures in CY 2008 or later years that
we determine are performed predominantly (more than 50 percent of the
time) in physicians' offices based on consideration of the most recent
available volume and utilization data for each individual procedure
code and/or, if appropriate, the clinical characteristics, utilization,
and volume of related codes. In that rule, we also finalized our policy
to exempt all procedures on the CY 2007 ASC list from application of
the office-based classification (72 FR 42512). The procedures that were
added to the ASC list of covered surgical procedures beginning in CY
2008 that we determined were office-based were identified in Addendum
AA to that rule by payment indicator ``P2'' (Office-based surgical
procedure added to ASC list in CY 2008 or later with MPFS nonfacility
PE RVUs; payment based on OPPS relative payment weight); ``P3''
(Office-based surgical procedures added to ASC list in CY 2008 or later
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on
OPPS relative payment weight), depending on whether we estimated it
would be paid according to the standard ASC payment methodology based
on its OPPS relative payment weight or at the MPFS nonfacility PE RVU-
based amount.
Consistent with our final policy to annually review and update the
list of surgical procedures eligible for payment in ASCs, each year we
identify surgical procedures as either temporarily office-based (these
are new procedure codes without utilization data which our Medical
Officers have determined are clinically similar to other procedures
that are permanently office-based), permanently office-based, or non-
office-based, after taking into account updated volume and utilization
data.
(2) Proposed Changes for CY 2015 to Covered Surgical Procedures
Designated as Office-Based
In developing this proposed rule, we followed our policy to
annually review and update the surgical procedures for which ASC
payment is made and to identify new procedures that may be appropriate
for ASC payment, including their potential designation as office-based.
We reviewed CY 2013 volume and utilization data and the clinical
characteristics for all surgical procedures that are assigned payment
indicator ``G2'' (Non-office-based surgical procedure added in CY 2008
or later; payment based on OPPS relative payment weight) in CY 2014, as
well as for those procedures assigned one of the temporary office-based
payment indicators, specifically ``P2*,'' ``P3*,'' or ``R2*'' in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75071 through
75075).
Our review of the CY 2013 volume and utilization data resulted in
our identification of two covered surgical procedures that we believe
meet the criteria for designation as office-based. The data indicate
that these procedures are performed more than 50 percent of the time in
physicians' offices and that our medical advisors believe the services
are of a level of complexity consistent with other procedures performed
routinely in physicians' offices. The two CPT codes we are proposing to
permanently designate as office-based are listed in Table 49 below.

[[Page 41019]]

Table 49--ASC Covered Surgical Procedures Newly Proposed for Permanent Office-Based Designation for CY 2015
----------------------------------------------------------------------------------------------------------------
Proposed CY
CY 2014 ASC 2015 ASC
CY 2014 CPT Code CY 2014 Long descriptor payment payment
indicator indicator *
----------------------------------------------------------------------------------------------------------------
10022................................. Fine needle aspiration; with imaging G2 P3
guidance.
19296................................. Placement of radiotherapy afterloading G2 P2
expandable catheter (single or
multichannel) into the breast for
interstitial radioelement application
following partial mastectomy,
includes imaging guidance; on date
separate from partial mastectomy.
----------------------------------------------------------------------------------------------------------------
* Proposed payment indicators are based on a comparison of the proposed rates according to the ASC standard
ratesetting methodology and the MPFS proposed rates. According to the statutory formula, current law requires
a negative update to the MPFS payment rates for CY 2015. For a discussion of those rates, we refer readers to
the CY 2015 MPFS proposed rule.

We invite public comment on this proposal.
We also reviewed CY 2013 volume and utilization data and other
information for the 8 procedures finalized for temporary office-based
status in Table 52 and Table 53 in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75074 through 75075). Among these 8 procedures,
there were very few claims data or no claims data for six procedures:
CPT code 0099T (Implantation of intrastromal corneal ring segments);
CPT code 0299T (Extracorporeal shock wave for integumentary wound
healing, high energy, including topical application and dressing care;
initial wound); CPT code C9800 (Dermal injection procedure(s) for
facial lipodystrophy syndrome (LDS) and provision of Radiesse or
Sculptra dermal filler, including all items and supplies); CPT code
10030 (Image-guided fluid collection drainage by catheter (eg, abscess,
hematoma, seroma, lymphocele, cyst), soft tissue (eg, extremity,
abdominal wall, neck), percutaneous); CPT code 64617 (Chemodenervation
of muscle(s); larynx, unilateral, percutaneous (eg, for spasmodic
dysphonia), includes guidance by needle electromyography, when
performed); and CPT code 67229 (Treatment of extensive or progressive
retinopathy, one or more sessions; preterm infant (less than 37 weeks
gestation at birth), performed from birth up to 1 year of age (eg,
retinopathy of prematurity), photocoagulation or cryotherapy).
Consequently, we are proposing to maintain their temporary office-based
designations for CY 2015.
We are proposing that one procedure that has a temporary office-
based designation for CY 2014, CPT code 0226T (Anoscopy, high
resolution (HRA) (with magnification and chemical agent enhancement);
diagnostic, including collection of specimen(s) by brushing or washing
when performed), be packaged under the OPPS for CY 2015. Our policy is
to package covered surgical procedures under the ASC payment system if
these procedures are packaged under the OPPS. Consequently, we are
proposing to package, and assign payment indicator ``N1'' to, this
covered surgical procedure code in CY 2015.
HCPCS code 0124T (Conjunctival incision with posterior extrascleral
placement of pharmacological agent (does not include supply of
medication)) was finalized for temporary office-based status in the CY
2014 OPPS/ASC final rule with comment period; however, this code was
deleted effective December 31, 2013.
The proposed CY 2015 payment indicator designations for the 7
remaining procedures that were temporarily designated as office-based
in CY 2014 are displayed in Table 50 below. The procedures for which
the proposed office-based designations for CY 2015 are temporary also
are indicated by asterisks in Addendum AA to this proposed rule (which
is available via the Internet on the CMS Web site).

Table 50--Proposed CY 2015 Payment Indicators for ASC Covered Surgical Procedures Designated as Temporarily
Office-Based in the CY 2014 OPPS/ASC Final Rule With Comment Period
----------------------------------------------------------------------------------------------------------------
Proposed CY
CY 2014 ASC 2015 ASC
CY 2014 CPT Code CY 2014 Long descriptor Payment payment
indicator indicator **
----------------------------------------------------------------------------------------------------------------
0099T................................. Implantation of intrastromal corneal R2* R2*
ring segments.
0226T................................. Anoscopy, high resolution (HRA) (with R2* N1
magnification and chemical agent
enhancement); diagnostic, including
collection of specimen(s) by brushing
or washing when performed.
0299T................................. Extracorporeal shock wave for R2* R2*
integumentary wound healing, high
energy, including topical application
and dressing care; initial wound.
C9800................................. Dermal injection procedure(s) for R2* R2*
facial lipodystrophy syndrome (LDS)
and provision of Radiesse or Sculptra
dermal filler, including all items
and supplies.
10030................................. Image-guided fluid collection drainage P2* P2*
by catheter (eg, abscess, hematoma,
seroma, lymphocele, cyst), soft
tissue (eg, extremity, abdominal
wall, neck), percutaneous.
64617................................. Chemodenervation of muscle(s); larynx, P3* P3*
unilateral, percutaneous (eg, for
spasmodic dysphonia), includes
guidance by needle electromyography,
when performed.
67229................................. Treatment of extensive or progressive R2* R2*
retinopathy, one or more sessions;
preterm infant (less than 37 weeks
gestation at birth), performed from
birth up to 1 year of age (eg,
retinopathy of prematurity),
photocoagulation or cryotherapy.
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Proposed payment indicators are based on a comparison of the proposed rates according to the ASC standard
ratesetting methodology and the MPFS proposed rates. According to the statutory formula, current law requires
a negative update to the MPFS payment rates for CY 2015. For a discussion of those rates, we refer readers to
the CY 2015 MPFS proposed rule.

[[Page 41020]]

We invite public comment on these proposals.
c. Proposed ASC Covered Surgical Procedures To Be Designated as Device-
Intensive
(1) Background
As discussed in the August 2, 2007 final rule (72 FR 42503 through
42508), we adopted a modified payment methodology for calculating the
ASC payment rates for covered surgical procedures that are assigned to
the subset of OPPS device-dependent APCs with a device offset
percentage greater than 50 percent of the APC cost under the OPPS, in
order to ensure that payment for the procedure is adequate to provide
packaged payment for the high-cost implantable devices used in those
procedures.
(2) Proposed Changes To List of ASC Covered Surgical Procedures
Designated as Device-Intensive for CY 2015
As discussed in section II.A.2.e of this proposed rule, for CY
2015, we are proposing to create 28 comprehensive APCs to replace the
current device dependent APCs and a few non-device dependent APCs under
the OPPS; thus, there would be no device dependent APCs. We are
proposing to define a comprehensive APC as a classification for the
provision of a primary service and all adjunctive services provided to
support the delivery of the primary service. Because a comprehensive
APC would treat all individually reported codes as representing
components of the comprehensive service, our OPPS proposal is to make a
single prospective payment based on the cost of all individually
reported codes that represent the provision of a primary service and
all adjunctive services provided to support the delivery of the primary
service.
Unlike the OPPS claims processing system that can be configured to
make a single payment for the encounter-based comprehensive service
whenever a HCPCS code that is assigned to a comprehensive APC appears
on the claim, the ASC claims-processing system does not allow for this
type of conditional packaging. Therefore, we are proposing that all
separately paid covered ancillary services that are provided integral
to covered surgical procedures that would map to comprehensive APCs
would continue to be separately paid under the ASC payment system
instead of being packaged into the payment for the comprehensive APC as
under the OPPS. The OPPS relative payment weights for the comprehensive
APCs would include costs for ancillary services so we could duplicate
payment if we based the ASC payment rate on the OPPS relative payment
weights for the comprehensive APCs. Therefore, to avoid this issue, we
are proposing that the ASC payment rates for these comprehensive APCs
would be based on the CY 2015 OPPS relative payments weights that have
been calculated using the standard APC ratesetting methodology for the
primary service instead of the relative payment weights that are based
on the comprehensive bundled service. For the same reason, under the
ASC payment system, we also are proposing to use the standard OPPS APC
ratesetting methodology instead of the comprehensive methodology to
calculate the device offset percentage for comprehensive APCs for
purposes of identifying device-intensive procedures and to calculate
payment rates for device-intensive procedures assigned to comprehensive
APCs.
Payment rates for ASC device-intensive procedures are based on a
modified payment methodology to ensure that payment for the procedure
is adequate to provide packaged payment for the high-cost implantable
devices used in those procedures. Device-intensive procedures are
currently defined as those procedures that are assigned to device-
dependent APCs with a device offset percentage greater than 50 percent
of the APC cost under the OPPS. Because we are proposing to implement
the comprehensive APC policy and, therefore, eliminate device-dependent
APCs under the OPPS in CY 2015, we need to define ASC device-intensive
procedures for CY 2015. We are proposing to define ASC device-intensive
procedures as those procedures that are assigned to any APC (not only
an APC formerly designated device-dependent) with a device offset
percentage greater than 40 percent based on the standard OPPS APC
ratesetting methodology. We believe that our proposal to lower the
offset threshold from greater than 50 percent to greater than 40
percent better aligns with the OPPS device credit policy finalized for
CY 2014 (78 FR 75006 and 75007) that applies to procedures with a
significant device offset amount, which is defined as exceeding 40
percent of the APC cost. Because the ASC device-intensive methodology
is applied to procedures with significant device costs, we believe that
the definition of ``significant'' with regard to device-intensive
procedures should match that used under the OPPS to determine
``significant'' device costs for the device credit policy. We are
proposing changes to Sec. 416.171(b)(2) to reflect this proposal.
We also are proposing to update the ASC list of covered surgical
procedures that are eligible for payment according to our device-
intensive procedure payment methodology, consistent with our proposed
modified definition of device-intensive procedures, reflecting the
proposed APC assignments of procedures and APC device offset
percentages based on the CY 2013 OPPS claims and cost report data
available for the proposed rule.
The ASC covered surgical procedures that we are proposing to
designate as device-intensive and that would be subject to the device-
intensive procedure payment methodology for CY 2015 are listed in Table
51 below. The CPT code, the CPT code short descriptor, the proposed CY
2015 ASC payment indicator (PI), the proposed CY 2015 OPPS APC
assignment, the proposed CY 2015 OPPS APC device offset percentage, and
an indication if the full credit/partial credit (FB/FC) device
adjustment policy would apply are also listed in Table 51 below. All of
these procedures are included in Addendum AA to this proposed rule
(which is available via the Internet on the CMS Web site).
We invite public comment on these proposals.
d. Proposed Adjustment to ASC Payments for No Cost/Full Credit and
Partial Credit Devices
Our ASC policy with regard to payment for costly devices implanted
in ASCs at no cost/full credit or partial credit as set forth in Sec.
416.179 is consistent with the OPPS policy that was in effect until CY
2014. The established ASC policy reduces payment to ASCs when a
specified device is furnished without cost or with full credit or
partial credit for the cost of the device for those ASC covered
surgical procedures that are assigned to APCs under the OPPS to which
this policy applies. We refer readers to the CY 2009 OPPS/ASC final
rule with comment period for a full discussion of the ASC payment
adjustment policy for no cost/full credit and partial credit devices
(73 FR 68742 through 68744).
As discussed in section IV.B. of the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75005 through 75006), we finalized our
proposal to modify our former policy of reducing OPPS payment for
specified APCs when a hospital furnishes a specified device without
cost or with a full or partial credit. Formerly, under the OPPS, our
policy was to reduce OPPS payment by 100 percent of the device offset
amount

[[Page 41021]]

when a hospital furnishes a specified device without cost or with a
full credit and by 50 percent of the device offset amount when the
hospital receives partial credit in the amount of 50 percent or more of
the cost for the specified device. For CY 2014, we finalized our
proposal to reduce OPPS payment for applicable APCs by the full or
partial credit a provider receives for a replaced device, capped at the
device offset amount.
Although we finalized our proposal to modify the policy of reducing
payments when a hospital furnishes a specified device without cost or
with full or partial credit under the OPPS, in that final rule with
comment period (78 FR 75076 through 75080), we finalized our proposal
to maintain our ASC policy for reducing payments to ASCs for specified
device-intensive procedures when the ASC furnishes a device without
cost or with full or partial credit. Unlike the OPPS, there is
currently no mechanism within the ASC claims processing system for ASCs
to submit to CMS the actual amount received when furnishing a specified
device at full or partial credit. Therefore, under the ASC payment
system, we finalized our proposal to continue to reduce ASC payments by
100 percent or 50 percent of the device offset amount when an ASC
furnishes a device without cost or with full or partial credit,
respectively.
We are proposing to update the list of ASC covered device-intensive
procedures, based on the revised device-intensive definition proposed
above, that would be subject to the no cost/full credit and partial
credit device adjustment policy for CY 2015. Table 51 below displays
the ASC covered device-intensive procedures that we are proposing would
be subject to the no cost/full credit or partial credit device
adjustment policy for CY 2015. Specifically, when a procedure that is
listed in Table 51 is subject to the no cost/full credit or partial
credit device adjustment policy and is performed to implant a device
that is furnished at no cost or with full credit from the manufacturer,
the ASC would append the HCPCS ``FB'' modifier on the line with the
procedure to implant the device. The contractor would reduce payment to
the ASC by the device offset amount that we estimate represents the
cost of the device when the necessary device is furnished without cost
to the ASC or with full credit. We continue to believe that the
reduction of ASC payment in these circumstances is necessary to pay
appropriately for the covered surgical procedure being furnished by the
ASC.
For partial credit, we are proposing to reduce the payment for
implantation procedures listed in Table 51 that are subject to the no
cost/full credit or partial credit device adjustment policy by one-half
of the device offset amount that would be applied if a device was
provided at no cost or with full credit, if the credit to the ASC is 50
percent or more of the cost of the new device. The ASC would append the
HCPCS ``FC'' modifier to the HCPCS code for a surgical procedure listed
in Table 51 that is subject to the no cost/full credit or partial
credit device adjustment policy, when the facility receives a partial
credit of 50 percent or more of the cost of a device. In order to
report that they received a partial credit of 50 percent or more of the
cost of a new device, ASCs would have the option of either: (1)
Submitting the claim for the device replacement procedure to their
Medicare contractor after the procedure's performance but prior to
manufacturer acknowledgment of credit for the device, and subsequently
contacting the contractor regarding a claim adjustment once the credit
determination is made; or (2) holding the claim for the device
implantation procedure until a determination is made by the
manufacturer on the partial credit and submitting the claim with the
``FC'' modifier appended to the implantation procedure HCPCS code if
the partial credit is 50 percent or more of the cost of the replacement
device. Beneficiary coinsurance would continue to be based on the
reduced payment amount.
We currently apply the FB/FC policy to device-intensive procedures
that involve devices that would be amenable to removal and replacement
in a device recall or warranty situation. We are proposing to apply the
FB/FC policy to all device-intensive procedures beginning in CY 2015
because, in addition to receiving devices at no cost/full credit or
partial credit due to a device recall or warranty situation, ASCs also
may receive devices at no cost/full credit or partial credit due to
being part of an investigational device trial. In order to ensure that
our policy covers any situation involving a device-intensive procedure
where an ASC may receive a device at no cost/full credit or partial
credit, we are proposing to apply our FB/FC policy to all device-
intensive procedures.

Table 51--ASC Covered Surgical Procedures Proposed for Device-Intensive Designation for CY 2015, Including ASC
Covered Surgical Procedures for Which We Are Proposing That the No Cost/Full Credit or Partial Credit Device
Adjustment Policy Would Apply
----------------------------------------------------------------------------------------------------------------
Proposed CY
HCPCS Code Short descriptor Proposed CY Proposed CY 2015 device Proposed FB/FC
2015 ASC PI 2015 OPPS APC offset percent policy would apply
----------------------------------------------------------------------------------------------------------------
19298.................. Place breast rad J8 0648 0.4415 Yes.
tube/caths.
19325.................. Enlarge breast J8 0648 0.4415 Yes.
with implant.
19342.................. Delayed breast J8 0648 0.4415 Yes.
prosthesis.
19357.................. Breast J8 0648 0.4415 Yes.
reconstruction.
23515.................. Treat clavicle J8 0064 0.4308 Yes.
fracture.
23585.................. Treat scapula J8 0064 0.4308 Yes.
fracture.
23615.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
23616.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
23630.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
23670.................. Treat dislocation/ J8 0064 0.4308 Yes.
fracture.
24361.................. Reconstruct elbow J8 0425 0.5661 Yes.
joint.
24363.................. Replace elbow J8 0425 0.5661 Yes.
joint.
24365.................. Reconstruct head J8 0425 0.5661 Yes.
of radius.
24366.................. Reconstruct head J8 0425 0.5661 Yes.
of radius.
24370.................. Revise reconst J8 0425 0.5661 Yes.
elbow joint.
24371.................. Revise reconst J8 0425 0.5661 Yes.
elbow joint.
24435.................. Repair humerus J8 0425 0.5661 Yes.
with graft.
24498.................. Reinforce humerus. J8 0425 0.5661 Yes.

[[Page 41022]]

24515.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
24516.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
24545.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
24546.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
24575.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
24579.................. Treat humerus J8 0064 0.4308 Yes.
fracture.
24586.................. Treat elbow J8 0064 0.4308 Yes.
fracture.
24587.................. Treat elbow J8 0064 0.4308 Yes.
fracture.
24615.................. Treat elbow J8 0064 0.4308 Yes.
dislocation.
24635.................. Treat elbow J8 0064 0.4308 Yes.
fracture.
24666.................. Treat radius J8 0064 0.4308 Yes.
fracture.
25441.................. Reconstruct wrist J8 0425 0.5661 Yes.
joint.
25442.................. Reconstruct wrist J8 0425 0.5661 Yes.
joint.
25444.................. Reconstruct wrist J8 0425 0.5661 Yes.
joint.
25446.................. Wrist replacement. J8 0425 0.5661 Yes.
25574.................. Treat fracture J8 0064 0.4308 Yes.
radius & ulna.
25575.................. Treat fracture J8 0064 0.4308 Yes.
radius/ulna.
25607.................. Treat fx rad extra- J8 0064 0.4308 Yes.
articul.
25608.................. Treat fx rad intra- J8 0064 0.4308 Yes.
articul.
25609.................. Treat fx radial 3+ J8 0064 0.4308 Yes.
frag.
26686.................. Treat hand J8 0064 0.4308 Yes.
dislocation.
27415.................. Osteochondral knee J8 0425 0.5661 Yes.
allograft.
27428.................. Reconstruction J8 0425 0.5661 Yes.
knee.
27438.................. Revise kneecap J8 0425 0.5661 Yes.
with implant.
27440.................. Revision of knee J8 0425 0.5661 Yes.
joint.
27442.................. Revision of knee J8 0425 0.5661 Yes.
joint.
27443.................. Revision of knee J8 0425 0.5661 Yes.
joint.
27446.................. Revision of knee J8 0425 0.5661 Yes.
joint.
27745.................. Reinforce tibia... J8 0425 0.5661 Yes.
27759.................. Treatment of tibia J8 0064 0.4308 Yes.
fracture.
27823.................. Treatment of ankle J8 0064 0.4308 Yes.
fracture.
27827.................. Treat lower leg J8 0064 0.4308 Yes.
fracture.
27828.................. Treat lower leg J8 0064 0.4308 Yes.
fracture.
28415.................. Treat heel J8 0064 0.4308 Yes.
fracture.
28715.................. Fusion of foot J8 0425 0.5661 Yes.
bones.
33206.................. Insert heart pm J8 0089 0.6940 Yes.
atrial.
33207.................. Insert heart pm J8 0089 0.6940 Yes.
ventricular.
33208.................. Insrt heart pm J8 0089 0.6940 Yes.
atrial & vent.
33210.................. Insert electrd/pm J8 0090 0.6828 Yes.
cath sngl.
33211.................. Insert card J8 0090 0.6828 Yes.
electrodes dual.
33212.................. Insert pulse gen J8 0090 0.6828 Yes.
sngl lead.
33213.................. Insert pulse gen J8 0089 0.6940 Yes.
dual leads.
33214.................. Upgrade of J8 0089 0.6940 Yes.
pacemaker system.
33216.................. Insert 1 electrode J8 0090 0.6828 Yes.
pm-defib.
33217.................. Insert 2 electrode J8 0090 0.6828 Yes.
pm-defib.
33221.................. Insert pulse gen J8 0655 0.7504 Yes.
mult leads.
33224.................. Insert pacing lead J8 0089 0.6940 Yes.
& connect.
33227.................. Remove&replace pm J8 0090 0.6828 Yes.
gen singl.
33228.................. Remv&replc pm gen J8 0089 0.6940 Yes.
dual lead.
33229.................. Remv&replc pm gen J8 0655 0.7504 Yes.
mult leads.
33230.................. Insrt pulse gen w/ J8 0107 0.7807 Yes.
dual leads.
33231.................. Insrt pulse gen w/ J8 0108 0.8095 Yes.
mult leads.
33233.................. Removal of pm J8 0090 0.6828 Yes.
generator.
33240.................. Insrt pulse gen w/ J8 0107 0.7807 Yes.
singl lead.
33249.................. Nsert pace-defib w/ J8 0108 0.8095 Yes.
lead.
33262.................. Remv&replc cvd gen J8 0107 0.7807 Yes.
sing lead.
33263.................. Remv&replc cvd gen J8 0107 0.7807 Yes.
dual lead.
33264.................. Remv&replc cvd gen J8 0108 0.8095 Yes.
mult lead.
33282.................. Implant pat-active J8 0090 0.6828 Yes.
ht record.
37221.................. Iliac revasc w/ J8 0229 0.4981 Yes.
stent.
37225.................. Fem/popl revas w/ J8 0229 0.4981 Yes.
ather.
37226.................. Fem/popl revasc w/ J8 0229 0.4981 Yes.
stent.
37227.................. Fem/popl revasc J8 0319 0.5796 Yes.
stnt & ather.
37228.................. Tib/per revasc w/ J8 0229 0.4981 Yes.
tla.
37229.................. Tib/per revasc w/ J8 0319 0.5796 Yes.
ather.
37230.................. Tib/per revasc w/ J8 0319 0.5796 Yes.
stent.
37231.................. Tib/per revasc J8 0319 0.5796 Yes.
stent & ather.
37236.................. Open/perq place J8 0229 0.4981 Yes.
stent 1st.

[[Page 41023]]

37238.................. Open/perq place J8 0229 0.4981 Yes.
stent same.
53440.................. Male sling J8 0385 0.5944 Yes.
procedure.
53444.................. Insert tandem cuff J8 0385 0.5944 Yes.
53445.................. Insert uro/ves nck J8 0386 0.6919 Yes.
sphincter.
53447.................. Remove/replace ur J8 0386 0.6919 Yes.
sphincter.
54400.................. Insert semi-rigid J8 0385 0.5944 Yes.
prosthesis.
54401.................. Insert self-contd J8 0386 0.6919 Yes.
prosthesis.
54405.................. Insert multi-comp J8 0386 0.6919 Yes.
penis pros.
54410.................. Remove/replace J8 0386 0.6919 Yes.
penis prosth.
54416.................. Remv/repl penis J8 0386 0.6919 Yes.
contain pros.
55873.................. Cryoablate J8 0385 0.5944 Yes.
prostate.
61885.................. Insrt/redo J8 0039 0.8612 Yes.
neurostim 1 array.
61886.................. Implant neurostim J8 0318 0.8658 Yes.
arrays.
61888.................. Revise/remove J8 0061 0.5642 Yes.
neuroreceiver.
62361.................. Implant spine J8 0227 0.8060 Yes.
infusion pump.
62362.................. Implant spine J8 0227 0.8060 Yes.
infusion pump.
63650.................. Implant J8 0061 0.5642 Yes.
neuroelectrodes.
63655.................. Implant J8 0039 0.8612 Yes.
neuroelectrodes.
63663.................. Revise spine eltrd J8 0061 0.5642 Yes.
perq aray.
63664.................. Revise spine eltrd J8 0061 0.5642 Yes.
plate.
63685.................. Insrt/redo spine n J8 0318 0.8658 Yes.
generator.
64553.................. Implant J8 0061 0.5642 Yes.
neuroelectrodes.
64555.................. Implant J8 0061 0.5642 Yes.
neuroelectrodes.
64561.................. Implant J8 0061 0.5642 Yes.
neuroelectrodes.
64565.................. Implant J8 0061 0.5642 Yes.
neuroelectrodes.
64568.................. Inc for vagus n J8 0318 0.8658 Yes.
elect impl.
64569.................. Revise/repl vagus J8 0061 0.5642 Yes.
n eltrd.
64575.................. Implant J8 0061 0.5642 Yes.
neuroelectrodes.
64580.................. Implant J8 0039 0.8612 Yes.
neuroelectrodes.
64581.................. Implant J8 0061 0.5642 Yes.
neuroelectrodes.
64590.................. Insrt/redo pn/ J8 0039 0.8612 Yes.
gastr stimul.
65770.................. Revise cornea with J8 0293 0.6588 Yes.
implant.
69714.................. Implant temple J8 0425 0.5661 Yes.
bone w/stimul.
69715.................. Temple bne implnt J8 0425 0.5661 Yes.
w/stimulat.
69718.................. Revise temple bone J8 0425 0.5661 Yes.
implant.
69930.................. Implant cochlear J8 0259 0.8316 Yes.
device.
0238T.................. Trluml perip athrc J8 0319 0.5796 Yes.
iliac art.
0282T.................. Periph field J8 0061 0.5642 Yes.
stimul trial.
0283T.................. Periph field J8 0318 0.8658 Yes.
stimul perm.
0302T.................. Icar ischm mntrng J8 0089 0.6940 Yes.
sys compl.
0303T.................. Icar ischm mntrng J8 0090 0.6828 Yes.
sys eltrd.
0304T.................. Icar ischm mntrng J8 0090 0.6828 Yes.
sys device.
0308T.................. Insj ocular J8 0351 0.9004 Yes.
telescope prosth.
0316T.................. Replc vagus nerve J8 0039 0.8612 Yes.
pls gen.
0319T.................. Insert subq defib J8 0108 0.8095 Yes.
w/eltrd.
0320T.................. Insert subq defib J8 0090 0.6828 Yes.
electrode.
0321T.................. Insert subq defib J8 0107 0.7807 Yes.
pls gen.
0323T.................. Rmvl & replc subq J8 0107 0.7807 Yes.
pls gen.
0334T.................. Perq stablj J8 0425 0.5661 Yes.
sacroiliac joint.
----------------------------------------------------------------------------------------------------------------

We invite public comment on these proposals.
e. ASC Treatment of Surgical Procedures Proposed for Removal From the
OPPS Inpatient Only List for CY 2015
As we discussed in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68724), we adopted a policy to include in our annual
evaluation of the ASC list of covered surgical procedures, a review of
the procedures that are being proposed for removal from the OPPS
inpatient only list for possible inclusion on the ASC list of covered
surgical procedures. There are no procedures proposed for removal from
the OPPS inpatient only list for CY 2015, so we are not proposing any
procedures for possible inclusion on the ASC list of covered surgical
procedures under this section.
2. Covered Ancillary Services
Consistent with the established ASC payment system policy, we are
proposing to update the ASC list of covered ancillary services to
reflect the proposed payment status for the services under the CY 2015
OPPS. Maintaining consistency with the OPPS may result in proposed
changes to ASC payment indicators for some covered ancillary services
because of changes that are being proposed under the OPPS for CY 2015.
For example, a covered ancillary service that was separately paid under
the revised ASC payment system in CY 2014 may be proposed for packaged
status under the CY 2015

[[Page 41024]]

OPPS and, therefore, also under the ASC payment system for CY 2015.
To maintain consistency with the OPPS, we are proposing that these
services also would be packaged under the ASC payment system for CY
2015. Comment indicator ``CH,'' discussed in section XII.F. of this
proposed rule, is used in Addendum BB to this proposed rule (which is
available via the Internet on the CMS Web site) to indicate covered
ancillary services for which we are proposing a change in the ASC
payment indicator to reflect a proposed change in the OPPS treatment of
the service for CY 2015.
Except for the Level II HCPCS codes and Level III CPT codes listed
in Table 46 and Table 47 of this proposed rule, all ASC covered
ancillary services and their proposed payment indicators for CY 2015
are included in Addendum BB to this proposed rule.
We invite public comment on this proposal.

D. Proposed ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services

1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
Our ASC payment policies for covered surgical procedures under the
revised ASC payment system are fully described in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66828 through 66831). Under our
established policy for the revised ASC payment system, the ASC standard
ratesetting methodology of multiplying the ASC relative payment weight
for the procedure by the ASC conversion factor for that same year is
used to calculate the national unadjusted payment rates for procedures
with payment indicators ``G2'' and ``A2.'' Payment indicator ``A2'' was
developed to identify procedures that were included on the list of ASC
covered surgical procedures in CY 2007 and were, therefore, subject to
transitional payment prior to CY 2011. Although the 4-year transitional
period has ended and payment indicator ``A2'' is no longer required to
identify surgical procedures subject to transitional payment, we
retained payment indicator ``A2'' because it is used to identify
procedures that are exempted from application of the office-based
designation.
The rate calculation established for device-intensive procedures
(payment indicator ``J8'') is structured so that the packaged device
payment amount is the same as under the OPPS, and only the service
portion of the rate is subject to the ASC standard ratesetting
methodology. In the CY 2014 OPPS/ASC final rule with comment period (78
FR 75064 through 75090), we updated the CY 2013 ASC payment rates for
ASC covered surgical procedures with payment indicators of ``A2,''
``G2,'' and ``J8'' using CY 2012 data, consistent with the CY 2014 OPPS
update. We also updated payment rates for device-intensive procedures
to incorporate the CY 2014 OPPS device offset percentages.
Payment rates for office-based procedures (payment indicators
``P2,'' ``P3,'' and ``R2'') are the lower of the MPFS nonfacility PE
RVU-based amount (we refer readers to the CY 2015 MPFS proposed rule)
or the amount calculated using the ASC standard ratesetting methodology
for the procedure. In the CY 2014 OPPS/ASC final rule with comment
period, we updated the payment amounts for office-based procedures
(payment indicators ``P2,'' ``P3,'' and ``R2'') using the most recent
available MPFS and OPPS data. We compared the estimated CY 2014 rate
for each of the office-based procedures, calculated according to the
ASC standard ratesetting methodology, to the MPFS nonfacility PE RVU-
based amount to determine which was lower and, therefore, would be the
CY 2014 payment rate for the procedure according to the final policy of
the revised ASC payment system (Sec. 416.171(d)).
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for
CY 2015
We are proposing to update ASC payment rates for CY 2015 using the
established rate calculation methodologies under Sec. 416.171 and
using our proposed modified definition of device-intensive procedures,
as discussed above. Because the proposed OPPS relative payment weights
are based on geometric mean costs for CY 2015, the ASC system will use
geometric means to determine proposed relative payment weights under
the ASC standard methodology. We are proposing to continue to use the
amount calculated under the ASC standard ratesetting methodology for
procedures assigned payment indicators ``A2'' and ``G2.''
We are proposing that payment rates for office-based procedures
(payment indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive
procedures (payment indicator ``J8'') be calculated according to our
established policies and, for device-intensive procedures, using our
proposed modified definition of device-intensive procedures, as
discussed above. Thus, we are proposing to update the payment amount
for the service portion of the device-intensive procedures using the
ASC standard ratesetting methodology and the payment amount for the
device portion based on the proposed CY 2015 OPPS device offset
percentages that have been calculated using the standard OPPS APC
ratesetting methodology. Payment for office-based procedures is at the
lesser of the proposed CY 2015 MPFS nonfacility PE RVU-based amount or
the proposed CY 2015 ASC payment amount calculated according to the ASC
standard ratesetting methodology.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75081), we finalized our proposal to calculate the CY 2014 payment
rates for ASC covered surgical procedures according to our established
methodologies, with the exception of device removal procedures. For CY
2014, we finalized a policy to conditionally package device removal
codes under the OPPS. Under the OPPS, a conditionally packaged code
(status indicators ``Q1'' and ``Q2'') describes a HCPCS code where the
payment is packaged when it is provided with a significant procedure
but is separately paid when the service appears on the claim without a
significant procedure. Because ASC services always include a covered
surgical procedure, HCPCS codes that are conditionally packaged under
the OPPS are always packaged (payment indicator ``N1'') under the ASC
payment system. Thus, no Medicare payment would be made when a device
removal procedures is performed in an ASC without another surgical
procedure included on the claim so no Medicare payment would be made if
a device was removed but not replaced. To address this concern, for the
71 device removal procedures that are conditionally packaged in the
OPPS (status indicator ``Q2''), we assigned the current ASC payment
indicators associated with these procedures and continued to provide
separate payment in CY 2014. For CY 2015, we are proposing to continue
this policy for the 71 device removal procedures for these same
reasons.
We invite public comment on these proposals.
c. Waiver of Coinsurance and Deductible for Certain Preventive Services
Section 1833(a)(1) and section 1833(b)(1) of the Act waive the
coinsurance and the Part B deductible for those preventive services
under section 1861(ddd)(3)(A) of the Act as described in section
1861(ww)(2) of the Act (excluding electrocardiograms) that are
recommended by the United States

[[Page 41025]]

Preventive Services Task Force (USPSTF) with a grade of A or B for any
indication or population and that are appropriate for the individual.
Section 1833(b) of the Act also waives the Part B deductible for
colorectal cancer screening tests that become diagnostic. In the CY
2011 OPPS/ASC final rule with comment period, we finalized our policies
with respect to these provisions and identified categories of services
and the ASC covered surgical procedures and covered ancillary services
that are preventive services that are recommended by the USPSTF with a
grade of A or B for which the coinsurance and the deductible are
waived. For a complete discussion of our policies and categories of
services, we refer readers to the CY 2011 OPPS/ASC final rule with
comment period (75 FR 72047 through 72049). We are not proposing any
changes to our policies or the categories of services for CY 2015. We
identify the specific services with a double asterisk in Addenda AA and
BB to this proposed rule.
d. Proposed Payment for Cardiac Resynchronization Therapy Services
Cardiac resynchronization therapy (CRT) uses electronic devices to
sequentially pace both sides of the heart to improve its output. CRT
utilizes a pacing electrode implanted in combination with either a
pacemaker or an implantable cardioverter defibrillator (ICD). CRT
performed by the implantation of an ICD along with a pacing electrode
is referred to as ``CRT-D.'' In the CY 2012 OPPS/ASC final rule with
comment period, we finalized our proposal to establish the CY 2012 ASC
payment rate for CRT-D services based on the OPPS payment rate
applicable to APC 0108 when procedures described by CPT codes 33225
(Insertion of pacing electrode, cardiac venous system, for left
ventricular pacing, at time of insertion of pacing cardioverter-
defibrillator or pacemaker pulse generator (e.g., for upgrade to dual
chamber system) (list separately in addition to code for primary
procedure)) and 33249 (Insertion or replacement of permanent pacing
cardioverter-defibrillator system with transvenous lead(s), single or
dual chamber) are performed on the same date of service in an ASC. ASCs
use the corresponding HCPCS Level II G-code (G0448) for proper
reporting when the procedures described by CPT codes 33225 and 33249
are performed on the same date of service. When not performed on the
same day as the service described by CPT code 33225, ASC payment for
the service described by CPT code 33249 is based on APC 0108 using the
device-intensive methodology. When not performed on the same day as the
service described by CPT code 33249, ASC payment for the service
described by CPT code 33225 is based on APC 0655 using the device-
intensive methodology. For a complete discussion of our policy
regarding payment for CRT-D services in ASCs, we refer readers to the
CY 2012 OPPS/ASC final rule with comment period (76 FR 74427 through
74428).
For CY 2015, we are proposing that CPT code 33249, the primary code
for CRT-D services, continue to be assigned to APC 0108, and that
payment for CPT code 33225 be packaged under the OPPS. Consequently, we
also are proposing that CPT code 33249 would continue to be assigned to
APC 0108 and payment for CPT code 33225 would be packaged into the
payment for the primary covered surgical procedure (for example, CPT
code 33249) under the ASC payment system for CY 2015. Because we are
proposing to package CPT code 33225 packaged under the ASC payment
system and, therefore, it would not receive separate payment, it would
no longer be necessary that ASCs use the HCPCS Level II G-code (G0448)
for proper reporting when the procedures described by CPT codes 33225
and 33249 are performed on the same date of service.
We invite public comment on these proposals.
e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy Composite
LDR prostate brachytherapy is a treatment for prostate cancer in
which hollow needles or catheters are inserted into the prostate,
followed by permanent implantation of radioactive sources into the
prostate through the needles/catheters. At least two CPT codes are used
to report the treatment service because there are separate codes that
describe placement of the needles/catheters and the application of the
brachytherapy sources: CPT code 55875 (Transperineal placement of
needles or catheters into prostate for interstitial radioelement
application, with or without cystoscopy); and CPT code 77778
(Interstitial radiation source application; complex). Generally, the
component services represented by both codes are provided in the same
operative session on the same date of service to the Medicare
beneficiary being treated with LDR brachytherapy for prostate cancer.
In the CY 2013 OPPS/ASC final rule with comment period, we
finalized our proposal to establish the CY 2013 ASC payment rate for
LDR prostate brachytherapy services based on the OPPS relative payment
weight applicable to APC 8001 when CPT codes 55875 and 77778 are
performed on the same date of service in an ASC. ASCs use the
corresponding HCPCS Level II G-code (G0458) for proper reporting when
the procedures described by CPT codes 55875 and 77778 are performed on
the same date of service, and therefore receive the appropriate LDR
prostate brachytherapy composite payment. When not performed on the
same day as the service described by CPT code 55875, the service
described by CPT code 77778 will be assigned to APC 0651. When not
performed on the same day as the service described by CPT code 77778,
the service described by CPT code 55875 will be assigned to APC 0162.
For a complete discussion of our policy regarding payment for LDR
prostate brachytherapy services in ASCs, we refer readers to the CY
2013 OPPS/ASC final rule with comment period (77 FR 68457). We are not
proposing any changes to our current policy regarding ASC payment for
LDR prostate brachytherapy services for CY 2015.
2. Proposed Payment for Covered Ancillary Services
a. Background
Our final payment policies under the revised ASC payment system for
covered ancillary services vary according to the particular type of
service and its payment policy under the OPPS. Our overall policy
provides separate ASC payment for certain ancillary items and services
integrally related to the provision of ASC covered surgical procedures
that are paid separately under the OPPS and provides packaged ASC
payment for other ancillary items and services that are packaged or
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'')
under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169; 77 FR
68457 through 68458), we further clarified our policy regarding the
payment indicator assignment of codes that are conditionally packaged
in the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a
conditionally packaged code describes a HCPCS code where the payment is
packaged when it is provided with a significant procedure but is
separately paid when the service appears on the claim without a
significant procedure. Because ASC services always include a surgical
procedure, HCPCS codes that are conditionally packaged under the OPPS
are always packaged (payment indictor ``N1'') under the ASC payment
system.

[[Page 41026]]

Thus, our final policy generally aligns ASC payment bundles with those
under the OPPS (72 FR 42495). In all cases, in order for those
ancillary services also to be paid, ancillary items and services must
be provided integral to the performance of ASC covered surgical
procedures for which the ASC bills Medicare.
Our ASC payment policies provide separate payment for drugs and
biologicals that are separately paid under the OPPS at the OPPS rates.
We generally pay for separately payable radiology services at the lower
of the MPFS nonfacility PE RVU-based (or technical component) amount or
the rate calculated according to the ASC standard ratesetting
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators
for all nuclear medicine procedures (defined as CPT codes in the range
of 78000 through 78999) that are designated as radiology services that
are paid separately when provided integral to a surgical procedure on
the ASC list are set to ``Z2'' so that payment is made based on the ASC
standard ratesetting methodology rather than the MPFS nonfacility PE
RVU amount, regardless of which is lower. This modification to the ASC
payment methodology for ancillary services was finalized in response to
a comment on the CY 2011 OPPS/ASC proposed rule that suggested it is
inappropriate to use the MPFS-based payment methodology for nuclear
medicine procedures because the associated diagnostic
radiopharmaceutical, although packaged under the ASC payment system, is
separately paid under the MPFS (42 CFR 416.171(d)(1)). We set the
payment indicator to ``Z2'' for these nuclear medicine procedures in
the ASC setting so that payment for these procedures would be based on
the OPPS relative payment weight rather than the MPFS nonfacility PE
RVU-based amount to ensure that the ASC will be compensated for the
cost associated with the diagnostic radiopharmaceuticals.
In addition, because the same issue exists for radiology procedures
that use contrast agents (the contrast agent is packaged under the ASC
payment system but is separately paid under the MPFS), we finalized in
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74429
through 74430) to set the payment indicator to ``Z2'' for radiology
services that use contrast agents so that payment for these procedures
will be based on the OPPS relative payment weight and will, therefore,
include the cost for the contrast agent (42 CFR 416.171(d)(2)).
ASC payment policy for brachytherapy sources mirrors the payment
policy under the OPPS. ASCs are paid for brachytherapy sources provided
integral to ASC covered surgical procedures at prospective rates
adopted under the OPPS or, if OPPS rates are unavailable, at
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs
have been paid for brachytherapy sources provided integral to ASC
covered surgical procedures at prospective rates adopted under the
OPPS.
Our ASC policies also provide separate payment for: (1) Certain
items and services that CMS designates as contractor-priced, including,
but not limited to, the procurement of corneal tissue; and (2) certain
implantable items that have pass-through status under the OPPS. These
categories do not have prospectively established ASC payment rates
according to the final policies for the revised ASC payment system (72
FR 42502 and 42508 through 42509; 42 CFR 416.164(b)). Under the revised
ASC payment system, we have designated corneal tissue acquisition and
hepatitis B vaccines as contractor-priced. Corneal tissue acquisition
is contractor-priced based on the invoiced costs for acquiring the
corneal tissue for transplantation. Hepatitis B vaccines are
contractor-priced based on invoiced costs for the vaccine.
Devices that are eligible for pass-through payment under the OPPS
are separately paid under the ASC payment system and are contractor-
priced. Currently, the one device that is eligible for pass-through
payment in the OPPS is described by HCPCS code C1841 (Retinal
prosthesis, includes all internal and external components). The payment
amount for HCPCS code C1841 under the ASC payment system is contractor-
priced. Under the revised ASC payment system (72 FR 42502), payment for
the surgical procedure associated with the pass-through device is made
according to our standard methodology for the ASC payment system, based
on only the service (non-device) portion of the procedure's OPPS
relative payment weight if the APC weight for the procedure includes
other packaged device costs. (We note that the cost for the new pass-
through device would not be included in the APC weight since historical
claims are used to establish the OPPS relative weights). We also refer
to this methodology as applying a ``device offset'' to the ASC payment
for the associated surgical procedure. This ensures that duplicate
payment is not provided for any portion of an implanted device with
OPPS pass-through status. There are no other device costs included in
the APC for the surgical procedure associated with HCPCS code C1841.
Therefore, payment for the associated surgical procedure is made
according to the standard methodology and no device offset is applied.
HCPCS code C1841 was approved for pass-through payment effective
October 1, 2013, and will continue to be eligible for pass-through
payment in CY 2015.
b. Proposed Payment for Covered Ancillary Services for CY 2015
For CY 2015, we are proposing to update the ASC payment rates and
to make changes to ASC payment indicators as necessary to maintain
consistency between the OPPS and ASC payment system regarding the
packaged or separately payable status of services and the proposed CY
2015 OPPS and ASC payment rates. We also are proposing to continue to
set the CY 2015 ASC payment rates for brachytherapy sources and
separately payable drugs and biologicals equal to the proposed OPPS
payment rates for CY 2015.
Consistent with established ASC payment policy (72 FR 42497), we
are proposing that the proposed CY 2015 payment for separately payable
covered radiology services be based on a comparison of the proposed CY
2015 MPFS nonfacility PE RVU-based amounts (we refer readers to the CY
2015 MPFS proposed rule) and the proposed CY 2015 ASC payment rates
calculated according to the ASC standard ratesetting methodology and
then set at the lower of the two amounts (except as discussed below for
nuclear medicine procedures and radiology services that use contrast
agents). We are proposing that payment for a radiology service would be
packaged into the payment for the ASC covered surgical procedure if the
radiology service is packaged or conditionally packaged under the OPPS.
The payment indicators in Addendum BB to this proposed rule indicate
whether the proposed payment rates for radiology services are based on
the MPFS nonfacility PE RVU-based amount or the ASC standard
ratesetting methodology, or whether payment for a radiology service is
packaged into the payment for the covered surgical procedure (payment
indicator ``N1''). Radiology services that we are proposing to pay
based on the ASC standard ratesetting methodology are assigned payment
indicator ``Z2'' (proposed revised definition, as discussed below:
Radiology or diagnostic service paid

[[Page 41027]]

separately when provided integral to a surgical procedure on ASC list;
payment based on OPPS relative payment weight), and those for which the
proposed payment is based on the MPFS nonfacility PE RVU-based amount
be assigned payment indicator ``Z3'' (proposed revised definition, as
discussed below: Radiology or diagnostic service paid separately when
provided integral to a surgical procedure on ASC list; payment based on
MPFS nonfacility PE RVUs).
As finalized in the CY 2011 OPPS/ASC final rule with comment period
(75 FR 72050), payment indicators for all nuclear medicine procedures
(defined as CPT codes in the range of 78000 through 78999) that are
designated as radiology services that are paid separately when provided
integral to a surgical procedure on the ASC list are set to ``Z2'' so
that payment for these procedures will be based on the OPPS relative
payment weight (rather than the MPFS nonfacility PE RVU-based amount,
regardless of which is lower) and, therefore, will include the cost for
the diagnostic radiopharmaceutical. We are proposing to continue this
modification to the payment methodology in CY 2015 and, therefore, set
the payment indicator to ``Z2'' for nuclear medicine procedures.
As finalized in the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74429 through 74430), payment indicators for radiology services
that use contrast agents are set to ``Z2'' so that payment for these
procedures will be based on the OPPS relative payment weight and,
therefore, will include the cost for the contrast agent. We are
proposing to continue this modification to the payment methodology in
CY 2015 and, therefore, are proposing to assign the payment indicator
``Z2'' to radiology services that use contrast agents.
Covered ancillary services are items and services that are integral
to a covered surgical procedure performed in an ASC for which separate
payment may be made under the ASC payment system (see 42 CFR 416.2).
Covered ancillary services include, among other categories of items and
services, certain radiology services, including diagnostic imaging
services, for which separate payment is allowed under the OPPS when
these services are necessary for the successful completion of a
surgical procedure and are performed in the ASC immediately preceding,
during, or immediately following the covered surgical procedure, as
evidenced by the service being provided on the same day as a covered
surgical procedure (see 42 CFR 416.164(b)(5)). Currently, there are
certain non-imaging diagnostic tests for which payment is not made
under Medicare Part B when provided in an ASC setting although these
tests are paid under the OPPS. Therefore, we believe that certain non-
imaging diagnostic tests for which separate payment is allowed under
the OPPS should be considered covered ancillary services and separately
paid when these tests are required for the successful performance of
the surgery and are performed in the ASC on the same day as a covered
surgical procedure.
Therefore, we are proposing that, beginning in CY 2015, certain
diagnostic tests within the medicine range of CPT codes for which
separate payment is allowed under the OPPS be covered ancillary
services when they are integral to an ASC covered surgical procedure.
We believe that adopting such a payment policy is reasonable and
appropriate to ensure access to these tests in ASCs and is consistent
with the OPPS. We are proposing that diagnostic tests within the
medicine range of CPT codes include all Category I CPT codes in the
medicine range established by CPT, from 90000 to 99999, and Category
III CPT codes and Level II HCPCS codes that describe diagnostic tests
that crosswalk or are clinically similar to procedures in the medicine
range established by CPT.
We are proposing to pay for these tests at the lower of the MPFS
nonfacility PE RVU-based (or technical component) amount or the rate
calculated according to the ASC standard ratesetting methodology,
because this would ensure appropriate and equitable payment for these
diagnostic tests provided integral to covered surgical procedures and
not provide a payment incentive for migration of the tests from
physician offices to ASCs. Further, we believe these diagnostic tests
are similar to the covered ancillary services that are radiology
services and this is the payment methodology we use for those services.
We are proposing that the diagnostic tests for which the proposed
payment is based on the ASC standard ratesetting methodology be
assigned to payment indicator ``Z2'' (proposed revised definition:
Radiology or diagnostic service paid separately when provided integral
to a surgical procedure on ASC list; payment based on OPPS relative
payment weight), and those for which the proposed payment is based on
the MPFS nonfacility PE RVU-based amount be assigned payment indicator
``Z3'' (proposed revised definition: Radiology or diagnostic service
paid separately when provided integral to a surgical procedure on ASC
list; payment based on MPFS nonfacility PE RVUs). We are proposing
changes to the definitions for payment indicators ``Z2'' and ``Z3,'' as
detailed in section XII.F.2 of this preamble below, and are proposing
changes to Sec. Sec. 416.164(a)(11) and (b)(5) as well as Sec.
416.171(b)(1) to reflect these proposals.
We have identified one diagnostic test that is within the medicine
range of CPT codes and for which separate payment is allowed under the
OPPS: CPT code 91035 (Esophagus, gastroesophageal reflux test; with
mucosal attached telemetry pH electrode placement, recording, analysis
and interpretation). We are proposing to add this code to the list of
ASC covered ancillary services and are proposing separate ASC payment
as a covered ancillary service for this code beginning in CY 2015 when
the test is integral to an ASC covered surgical procedure. We would
expect the procedure described by CPT code 91035 to be integral to the
endoscopic attachment of the electrode to the esophageal mucosa.
Most covered ancillary services and their proposed payment
indicators are listed in Addendum BB to this proposed rule (which is
available via the Internet on the CMS Web site).
We invite public comment on these proposals.

E. New Technology Intraocular Lenses (NTIOLs)

1. NTIOL Application Cycle
Our process for reviewing applications to establish new classes of
new technology intraocular lenses (NTIOLs) is as follows:
Applicants submit their NTIOL requests for review to CMS
by the annual deadline. For a request to be considered complete, we
require submission of the information that is found in the guidance
document entitled ``Application Process and Information Requirements
for Requests for a New Class of New Technology Intraocular Lenses
(NTIOLs) or Inclusion of an IOL in an existing NTIOL Class'' posted on
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.
We announce annually in the proposed rule updating the ASC
and OPPS payment rates for the following calendar year, a list of all
requests to establish new NTIOL classes accepted for review during the
calendar year in which the proposal is published. In accordance with
section 141(b)(3) of Pub. L. 103-432 and our regulations at Sec.
416.185(b), the deadline for receipt of public comments is 30 days
following

[[Page 41028]]

publication of the list of requests in the proposed rule.
In the final rule updating the ASC and OPPS payment rates
for the following calendar year, we--
[cir] Provide a list of determinations made as a result of our
review of all new NTIOL class requests and public comments;
[cir] When a new NTIOL class is created, we identify the
predominant characteristic of NTIOLs in that class that sets them apart
from other IOLs (including those previously approved as members of
other expired or active NTIOL classes) and that is associated with an
improved clinical outcome.
[cir] The date of implementation of a payment adjustment in the
case of approval of an IOL as a member of a new NTIOL class would be
set prospectively as of 30 days after publication of the ASC payment
update final rule, consistent with the statutory requirement.
[cir] Announce the deadline for submitting requests for review of
an application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2015
We did not receive any requests for review to establish a new NTIOL
class for CY 2015 by March 3, 2014, the due date published in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75085).
3. Payment Adjustment
The current payment adjustment for a 5-year period from the
implementation date of a new NTIOL class is $50 per lens. Since
implementation of the process for adjustment of payment amounts for
NTIOLs in 1999, we have not revised the payment adjustment amount, and
we are not proposing to revise the payment adjustment amount for CY
2015.

F. Proposed ASC Payment and Comment Indicators

1. Background
In addition to the payment indicators that we introduced in the
August 2, 2007 final rule, we also created final comment indicators for
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66855). We created Addendum DD1 to define ASC payment
indicators that we use in Addenda AA and BB to provide payment
information regarding covered surgical procedures and covered ancillary
services, respectively, under the revised ASC payment system. The ASC
payment indicators in Addendum DD1 are intended to capture policy
relevant characteristics of HCPCS codes that may receive packaged or
separate payment in ASCs, such as whether they were on the ASC list of
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based, and the corresponding ASC payment
methodology; and their classification as separately payable ancillary
services including radiology services, brachytherapy sources, OPPS
pass-through devices, corneal tissue acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that lists the ASC comment indicators.
The ASC comment indicators used in Addenda AA and BB to the proposed
rules and final rules with comment period serve to identify, for the
revised ASC payment system, the status of a specific HCPCS code and its
payment indicator with respect to the timeframe when comments will be
accepted. The comment indicator ``NI'' is used in the OPPS/ASC final
rule with comment period to indicate new codes for the next calendar
year for which the interim payment indicator assigned is subject to
comment. The comment indicator ``NI'' is also assigned to existing
codes with substantial revisions to their descriptors such that we
consider them to be describing new services, as discussed in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60622). In the CY
2015 OPPS/ASC final rule with comment period, we will respond to public
comments and finalize the ASC treatment of all codes that are labeled
with comment indicator ``NI'' in Addenda AA and BB to the CY 2014 OPPS/
ASC final rule with comment period.
The ``CH'' comment indicator is used in Addenda AA and BB to this
proposed rule (which are available via the Internet on the CMS Web
site) to indicate that the payment indicator assignment has changed for
an active HCPCS code in the current year and next calendar year; an
active HCPCS code is newly recognized as payable in ASCs; or an active
HCPCS code is discontinued at the end of the current calendar year. The
``CH'' comment indicators that are published in the final rule with
comment period are provided to alert readers that a change has been
made from one calendar year to the next, but do not indicate that the
change is subject to comment.
2. Proposed ASC Payment and Comment Indicators
We are not proposing any changes to the definitions of the ASC
comment indicators for CY 2015. In order to incorporate changes
associated with our proposal for CY 2015, as detailed above in section
XII.D.2.b. of this proposed rule, that certain diagnostic tests qualify
as covered ancillary services when provided integral to an ASC covered
surgical procedure, we are proposing to revise the definitions for
payment indicators ``Z2'' and ``Z3'' to add the words ``or diagnostic''
after ``Radiology'' so that the proposed definition for payment
indicator ``Z2'' would be ``Radiology or diagnostic service paid
separately when provided integral to a surgical procedure on ASC list;
payment based on OPPS relative payment weight,'' and the proposed
definition for payment indicator ``Z3'' would be ``Radiology or
diagnostic service paid separately when provided integral to a surgical
procedure on ASC list; payment based on MPFS nonfacility PE RVUs.'' We
refer readers to Addenda DD1 and DD2 to this proposed rule (which are
available via the Internet on the CMS Web site) for the complete list
of ASC payment and comment indicators proposed for the CY 2015 update.

G. Calculation of the Proposed ASC Conversion Factor and the Proposed
ASC Payment Rates

1. Background
In the August 2, 2007 final rule (72 FR 42493), we established our
policy to base ASC relative payment weights and payment rates under the
revised ASC payment system on APC groups and the OPPS relative payment
weights. Consistent with that policy and the requirement at section
1833(i)(2)(D)(ii) of the Act that the revised payment system be
implemented so that it would be budget neutral, the initial ASC
conversion factor (CY 2008) was calculated so that estimated total
Medicare payments under the revised ASC payment system in the first
year would be budget neutral to estimated total Medicare payments under
the prior (CY 2007) ASC payment system (the ASC conversion factor is
multiplied by the relative payment weights calculated for many ASC
services in order to establish payment rates). That is, application of
the ASC conversion factor was designed to result in aggregate Medicare
expenditures under the revised ASC payment system in CY 2008 being
equal to aggregate Medicare expenditures that would have occurred in CY
2008 in the absence of the revised system, taking into consideration
the cap on ASC payments in CY 2007 as required under section
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the
system budget

[[Page 41029]]

neutral in subsequent calendar years (72 FR 42532 through 42533; 42 CFR
416.171(e)).
We note that we consider the term ``expenditures'' in the context
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of
the Act to mean expenditures from the Medicare Part B Trust Fund. We do
not consider expenditures to include beneficiary coinsurance and
copayments. This distinction was important for the CY 2008 ASC budget
neutrality model that considered payments across the OPPS, ASC, and
MPFS payment systems. However, because coinsurance is almost always 20
percent for ASC services, this interpretation of expenditures has
minimal impact for subsequent budget neutrality adjustments calculated
within the revised ASC payment system.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857
through 66858), we set out a step-by-step illustration of the final
budget neutrality adjustment calculation based on the methodology
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531)
and as applied to updated data available for the CY 2008 OPPS/ASC final
rule with comment period. The application of that methodology to the
data available for the CY 2008 OPPS/ASC final rule with comment period
resulted in a budget neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS relative payment weights as the
ASC relative payment weights for most services and, consistent with the
final policy, we calculated the CY 2008 ASC payment rates by
multiplying the ASC relative payment weights by the final CY 2008 ASC
conversion factor of $41.401. For covered office-based surgical
procedures and covered ancillary radiology services (excluding covered
ancillary radiology services involving certain nuclear medicine
procedures or involving the use of contrast agents, as discussed in
section XII.D.2.b. of this proposed rule), the established policy is to
set the payment rate at the lower of the MPFS unadjusted nonfacility PE
RVU-based amount or the amount calculated using the ASC standard
ratesetting methodology. Further, as discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66841 through 66843), we also
adopted alternative ratesetting methodologies for specific types of
services (for example, device-intensive procedures).
As discussed in the August 2, 2007 final rule (72 FR 42517 through
42518) and as codified at Sec. 416.172(c) of the regulations, the
revised ASC payment system accounts for geographic wage variation when
calculating individual ASC payments by applying the pre-floor and pre-
reclassified hospital wage indexes to the labor-related share, which is
50 percent of the ASC payment amount based on a GAO report of ASC costs
using 2004 survey data. Beginning in CY 2008, CMS accounted for
geographic wage variation in labor cost when calculating individual ASC
payments by applying the pre-floor and pre-reclassified hospital wage
index values that CMS calculates for payment under the IPPS, using
updated Core Based Statistical Areas (CBSAs) issued by OMB in June
2003. In other words, the wage index for an ASC is the pre-floor and
pre-reclassified hospital wage index under the IPPS of the CBSA that
maps to the CBSA where the ASC is located.
The reclassification provision in section 1886(d)(10) of the Act is
specific to hospitals. We believe that using the most recently
available raw pre-floor and pre-reclassified hospital wage indexes
results in the most appropriate adjustment to the labor portion of ASC
costs. In addition, use of the unadjusted hospital wage data avoids
further reductions in certain rural statewide wage index values that
result from reclassification. We continue to believe that the
unadjusted hospital wage indexes, which are updated yearly and are used
by many other Medicare payment systems, appropriately account for
geographic variation in labor costs for ASCs.
On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which
provides the delineations of all Metropolitan Statistical Areas,
Metropolitan Divisions, Micropolitan Statistical Areas, Combined
Statistical Areas, and New England City and Town Areas in the United
States and Puerto Rico based on the standards published on June 28,
2010 in the Federal Register (75 FR 37246 through 37252) and 2010
Census Bureau data. (A copy of this bulletin may be obtained at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.) The pre-floor and pre-reclassified hospital wage indexes for
FY 2014 do not reflect OMB's new area delineations and, because the ASC
wage indexes are the pre-floor and pre-reclassified hospital wage
indexes, the CY 2014 ASC wage indexes do not reflect the OMB changes.
As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054
through 28068), we are proposing to use the new CBSAs delineations
issued by OMB in OMB Bulletin 13-01 for the IPPS hospital wage index.
Therefore, because the ASC wage indexes are the pre-floor and pre-
reclassified hospital wage indexes, the proposed CY 2015 ASC wage
indexes reflect the new OMB delineations. As discussed in section
XII.G.2.b. of this proposed rule, we are proposing a transition to
these new OMB delineations in certain situations for CY 2015.
We note that in certain instances there might be urban or rural
areas for which there is no IPPS hospital whose wage index data would
be used to set the wage index for that area. For these areas, our
policy has been to use the average of the wage indexes for CBSAs (or
metropolitan divisions as applicable) that are contiguous to the area
that has no wage index (where ``contiguous'' is defined as sharing a
border). For example, for CY 2014, we applied a proxy wage index based
on this methodology to ASCs located in CBSA 25980 (Hinesville-Fort
Stewart, GA) and CBSA 08 (Rural Delaware).
When all of the areas contiguous to the urban CBSA of interest are
rural and there is no IPPS hospital that has wage index data that could
be used to set the wage index for that area, we determine the ASC wage
index by calculating the average of all wage indexes for urban areas in
the State (75 FR 72058 through 72059). In other situations, where there
are no IPPS hospitals located in a relevant labor market area, we will
continue our current policy of calculating an urban or rural area's
wage index by calculating the average of the wage indexes for CBSAs (or
metropolitan divisions where applicable) that are contiguous to the
area with no wage index.
2. Proposed Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2015 and Future
Years
We update the ASC relative payment weights each year using the
national OPPS relative payment weights (and MPFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly
scale the ASC relative payment weights for each update year to make
them budget neutral (72 FR 42533). Consistent with our established
policy, we are proposing to scale the CY 2015 relative payment weights
for ASCs according to the following method. Holding ASC utilization and
the mix of services constant from CY 2013, we are proposing to compare
the total payment using the CY 2014 ASC relative payment weights with
the total payment using the CY 2015 relative payment weights to take
into account the changes in the OPPS relative payment weights between
CY 2014 and CY 2015. We are

[[Page 41030]]

proposing to use the ratio of CY 2014 to CY 2015 total payment (the
weight scaler) to scale the ASC relative payment weights for CY 2015.
The proposed CY 2015 ASC scaler is 0.9142 and scaling would apply to
the ASC relative payment weights of the covered surgical procedures and
covered ancillary radiology services for which the ASC payment rates
are based on OPPS relative payment weights.
Scaling would not apply in the case of ASC payment for separately
payable covered ancillary services that have a predetermined national
payment amount (that is, their national ASC payment amounts are not
based on OPPS relative payment weights), such as drugs and biologicals
that are separately paid or services that are contractor-priced or paid
at reasonable cost in ASCs. Any service with a predetermined national
payment amount would be included in the ASC budget neutrality
comparison, but scaling of the ASC relative payment weights would not
apply to those services. The ASC payment weights for those services
without predetermined national payment amounts (that is, those services
with national payment amounts that would be based on OPPS relative
payment weights) would be scaled to eliminate any difference in the
total payment between the current year and the update year.
For any given year's ratesetting, we typically use the most recent
full calendar year of claims data to model budget neutrality
adjustments. At the time of this proposed rule, we have available 98
percent of CY 2013 ASC claims data.
To create an analytic file to support calculation of the weight
scaler and budget neutrality adjustment for the wage index (discussed
below), we summarized available CY 2013 ASC claims by ASC and by HCPCS
code. We used the National Provider Identifier for the purpose of
identifying unique ASCs within the CY 2013 claims data. We used the
supplier zip code reported on the claim to associate State, county, and
CBSA with each ASC. This file, available to the public as a supporting
data file for this proposed rule, is posted on the CMS Web site at:
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. Proposed Transition Period to New OMB Delineations for ASC Wage
Index
As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR
28054 through 28055), we are proposing to use the new CBSA delineations
issued by OMB in OMB Bulletin 13-01 dated February 28, 2013 for the
IPPS hospital wage index. Therefore, because the ASC wage indexes are
the pre-floor and pre-reclassified hospital wage indexes, the proposed
CY 2015 ASC wage indexes reflect the new OMB delineations. While we
believe that instituting the latest OMB labor market area delineations
would create a more accurate and up-to-date wage index system, we also
recognize that implementing the new OMB delineations may cause some
short-term instability in ASC payments; therefore, we are proposing a
transition to the new OMB delineations similar to what has been
proposed for the IPPS for FY 2015 (79 FR 28062) and the OPPS as
described in section II.C of this proposed rule. Specifically for ASCs,
we are proposing a 1-year blended wage index for all ASCs that would
experience any decrease in their actual wage index exclusively due to
the implementation of the new OMB delineations. For ASCs where the CY
2015 ASC wage index with the CY 2015 CBSAs would be lower than with the
CY 2014 CBSAs, we are proposing that the CY 2015 ASC wage index would
be 50 percent of the ASC wage index based on the CY 2014 CBSA and 50
percent of the ASC wage index based on the new CY 2015 CBSA. We believe
a 1-year 50/50 blended wage index would mitigate the short-term
instability and negative payment impacts due to the proposed
implementation of the new OMB delineations, providing ASCs that would
be negatively impacted by the new OMB delineations with a transition
period during which they may adjust to their new geographic CBSA. We
believe that a longer transition period would reduce the accuracy of
the overall labor market area wage index system.
c. Updating the ASC Conversion Factor
Under the OPPS, we typically apply a budget neutrality adjustment
for provider level changes, most notably a change in the wage index
values for the upcoming year, to the conversion factor. Consistent with
our final ASC payment policy, for the CY 2015 ASC payment system, we
are proposing to calculate and apply a budget neutrality adjustment to
the ASC conversion factor for supplier level changes in wage index
values for the upcoming year, just as the OPPS wage index budget
neutrality adjustment is calculated and applied to the OPPS conversion
factor. For CY 2015, we calculated this proposed adjustment for the ASC
payment system by using the most recent CY 2013 claims data available
and estimating the difference in total payment that would be created by
introducing the proposed CY 2015 ASC wage indexes. Specifically,
holding CY 2013 ASC utilization and service-mix and the proposed CY
2015 national payment rates after application of the weight scaler
constant, we calculated the total adjusted payment using the CY 2014
ASC wage indexes and the total adjusted payment using the proposed CY
2015 ASC wage indexes (which reflect the new OMB delineations and would
include any applicable transition period). We used the 50-percent
labor-related share for both total adjusted payment calculations. We
then compared the total adjusted payment calculated with the CY 2014
ASC wage indexes to the total adjusted payment calculated with the
proposed CY 2015 ASC wage indexes and applied the resulting ratio of
0.9983 (the proposed CY 2015 ASC wage index budget neutrality
adjustment) to the CY 2014 ASC conversion factor to calculate the
proposed CY 2015 ASC conversion factor.
Section 1833(i)(2)(C)(i) of the Act requires that, ``if the
Secretary has not updated amounts established'' under the revised ASC
payment system in a calendar year, the payment amounts ``shall be
increased by the percentage increase in the Consumer Price Index for
all urban consumers (U.S. city average) as estimated by the Secretary
for the 12-month period ending with the midpoint of the year
involved.'' The statute, therefore, does not mandate the adoption of
any particular update mechanism, but it requires the payment amounts to
be increased by the CPI-U in the absence of any update. Because the
Secretary updates the ASC payment amounts annually, we adopted a
policy, which we codified at 42 CFR 416.171(a)(2)(ii), to update the
ASC conversion factor using the CPI-U for CY 2010 and subsequent
calendar years. Therefore, the annual update to the ASC payment system
is the CPI-U (referred to as the CPI-U update factor).
Section 3401(k) of the Affordable Care Act amended section
1833(i)(2)(D) of the Act by adding a new clause (v) which requires that
``any annual update under [the ASC payment] system for the year, after
application of clause (iv), shall be reduced by the productivity
adjustment described in section 1886(b)(3)(B)(xi)(II)'' of the Act
effective with the calendar year beginning January 1, 2011. The statute
defines the productivity adjustment to be equal to the 10-year moving
average of changes in annual economy-wide private nonfarm business
multifactor productivity (MFP) (as projected by the Secretary for the
10-year period ending

[[Page 41031]]

with the applicable fiscal year, year, cost reporting period, or other
annual period) (the ``MFP adjustment''). Clause (iv) of section
1833(i)(2)(D) of the Act authorizes the Secretary to provide for a
reduction in any annual update for failure to report on quality
measures. Clause (v) of section 1833(i)(2)(D) of the Act states that
application of the MFP adjustment to the ASC payment system may result
in the update to the ASC payment system being less than zero for a year
and may result in payment rates under the ASC payment system for a year
being less than such payment rates for the preceding year.
In the CY 2012 OPPS/ASC final rule with comment period (76 FR
74516), we finalized a policy that ASCs begin submitting data on
quality measures for services beginning on October 1, 2012 for the CY
2014 payment determination under the ASCQR Program. In the CY 2013
OPPS/ASC final rule with comment period (77 FR 68499 through 68500), we
finalized a methodology to calculate reduced national unadjusted
payment rates using the ASCQR Program reduced update conversion factor
that would apply to ASCs that fail to meet their quality reporting
requirements for the CY 2014 payment determination and subsequent
years. The application of the 2.0 percentage point reduction to the
annual update factor, which currently is the CPI-U, may result in the
update to the ASC payment system being less than zero for a year for
ASCs that fail to meet the ASCQR Program requirements. We amended
Sec. Sec. 416.160(a)(1) and 416.171 to reflect these policies.
In accordance with section 1833(i)(2)(C)(i) of the Act, before
applying the MFP adjustment, the Secretary first determines the
``percentage increase'' in the CPI-U, which we interpret cannot be a
negative percentage. Thus, in the instance where the percentage change
in the CPI-U for a year is negative, we would hold the CPI-U update
factor for the ASC payment system to zero. For the CY 2014 payment
determination and subsequent years, under section 1833(i)(2)(D)(iv) of
the Act, we would reduce the annual update by 2.0 percentage points for
an ASC that fails to submit quality information under the rules
established by the Secretary in accordance with section 1833(i)(7) of
the Act. Section 1833(i)(2)(D)(v) of the Act, as added by section
3401(k) of the Affordable Care Act, requires that the Secretary reduce
the annual update factor, after application of any quality reporting
reduction, by the MFP adjustment, and states that application of the
MFP adjustment to the annual update factor after application of any
quality reporting reduction may result in the update being less than
zero for a year. If the application of the MFP adjustment to the annual
update factor after application of any quality reporting reduction
would result in an MFP-adjusted update factor that is less than zero,
the resulting update to the ASC payment rates would be negative and
payments would decrease relative to the prior year. We refer readers to
the CY 2011 OPPS/ASC final rule with comment period (75 FR 72062
through 72064) for illustrative examples of how the MFP adjustment is
applied to the ASC payment system.
For this proposed rule, based on IHS Global Insight's (IGI's) 2014
first quarter forecast with historical data through 2013 fourth
quarter, for the 12-month period ending with the midpoint of CY 2015,
the CPI-U update is projected to be 1.7 percent. Also, based on IGI's
2014 first quarter forecast, the MFP adjustment for the period ending
with the midpoint of CY 2015 is projected to be 0.5 percent. IGI is a
nationally recognized economic and financial forecasting firm that
contracts with CMS to forecast the components of CMS' market baskets as
well as the CPI-U and MFP. We finalized the methodology for calculating
the MFP adjustment in the CY 2011 MPFS final rule with comment period
(75 FR 73394 through 73396) as revised in the CY 2012 MPFS final rule
with comment period (76 FR 73300 through 73301). The ASCQR Program
affected payment rates beginning in CY 2014 and, under this program,
there is a 2.0 percentage point reduction to the CPI-U for ASCs that
fail to meet the ASCQR Program requirements.
We are proposing to reduce the CPI-U update of 1.7 percent by the
MFP adjustment of 0.5 percentage point, resulting in an MFP-adjusted
CPI-U update factor of 1.2 percent for ASCs meeting the quality
reporting requirements. Therefore, we are proposing to apply a 1.2
percent MFP-adjusted CPI-U update factor to the CY 2014 ASC conversion
factor for ASCs meeting the quality reporting requirements. We are
proposing to reduce the CPI-U update of 1.7 percent by 2.0 percentage
points for ASCs that do not meet the quality reporting requirements and
then apply the 0.5 percentage point MFP reduction. Therefore, we are
proposing to apply a -0.8 percent quality reporting/MFP-adjusted CPI-U
update factor to the CY 2014 ASC conversion factor for ASCs not meeting
the quality reporting requirements. We also are proposing that if more
recent data are subsequently available (for example, a more recent
estimate of the CY 2015 CPI-U update and MFP adjustment), we would use
such data, if appropriate, to determine the CY 2015 ASC update for the
final rule with comment period.
For CY 2015, we also are proposing to adjust the CY 2014 ASC
conversion factor ($43.471) by the proposed wage index budget
neutrality factor of 0.9983 in addition to the MFP-adjusted update
factor of 1.2 percent discussed above, which results in a proposed CY
2015 ASC conversion factor of $43.918 for ASCs meeting the quality
reporting requirements. For ASCs not meeting the quality reporting
requirements, we are proposing to adjust the CY 2014 ASC conversion
factor ($43.471) by the proposed wage index budget neutrality factor of
0.9983 in addition to the quality reporting/MFP-adjusted update factor
of -0.8 percent discussed above, which results in a proposed CY 2015
ASC conversion factor of $43.050.
We invite public comment on these proposals.
3. Display of Proposed CY 2015 ASC Payment Rates
Addenda AA and BB to this proposed rule (which are available via
the Internet on the CMS Web site) display the proposed updated ASC
payment rates for CY 2015 for covered surgical procedures and covered
ancillary services, respectively. The payment rates included in these
addenda reflect the full ASC payment update and not the reduced payment
update used to calculate payment rates for ASCs not meeting the quality
reporting requirements under the ASCQR Program. These addenda contain
several types of information related to the proposed CY 2015 payment
rates. Specifically, in Addendum AA, a ``Y'' in the column titled
``Proposed to be Subject to Multiple Procedure Discounting'' indicates
that the surgical procedure would be subject to the multiple procedure
payment reduction policy. As discussed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66829 through 66830), most covered
surgical procedures are subject to a 50-percent reduction in the ASC
payment for the lower-paying procedure when more than one procedure is
performed in a single operative session. Display of the comment
indicator ``CH'' in the column titled ``Comment Indicator'' indicates a
change in payment policy for the item or service, including identifying
discontinued HCPCS codes, designating items or services newly payable
under the ASC payment system, and identifying items or services with
changes in the ASC payment indicator

[[Page 41032]]

for CY 2015. Display of the comment indicator ``NI'' in the column
titled ``Comment Indicator'' indicates that the code is new (or
substantially revised) and that the payment indicator assignment is an
interim assignment that is open to comment in the final rule with
comment period.
The values displayed in the column titled ``Proposed CY 2015
Payment Weight'' are the proposed relative payment weights for each of
the listed services for CY 2015. The proposed payment weights for all
covered surgical procedures and covered ancillary services whose ASC
payment rates are based on OPPS relative payment weights were scaled
for budget neutrality. Therefore, scaling was not applied to the device
portion of the device-intensive procedures, services that are paid at
the MPFS nonfacility PE RVU-based amount, separately payable covered
ancillary services that have a predetermined national payment amount,
such as drugs and biologicals and brachytherapy sources that are
separately paid under the OPPS, or services that are contractor-priced
or paid at reasonable cost in ASCs.
To derive the proposed CY 2015 payment rate displayed in the
``Proposed CY 2015 Payment Rate'' column, each ASC payment weight in
the ``Proposed CY 2015 Payment Weight'' column was multiplied by the
proposed CY 2015 conversion factor of $43.918. The conversion factor
includes a budget neutrality adjustment for changes in the wage index
values and the annual update factor as reduced by the productivity
adjustment (as discussed in section XII.H.2.b. of this proposed rule).
In Addendum BB, there are no relative payment weights displayed in
the ``Proposed CY 2015 Payment Weight'' column for items and services
with predetermined national payment amounts, such as separately payable
drugs and biologicals. The ``Proposed CY 2015 Payment'' column displays
the proposed CY 2015 national unadjusted ASC payment rates for all
items and services. The proposed CY 2015 ASC payment rates listed in
Addendum BB for separately payable drugs and biologicals are based on
ASP data used for payment in physicians' offices in April 2014.
Addendum E provides the HCPCS codes and short descriptors for
surgical procedures that are proposed to be excluded from payment in
ASCs for FY 2015.

III. Hospital Outpatient Quality Reporting Program Updates

A. Background

1. Overview
CMS seeks to promote higher quality and more efficient health care
for Medicare beneficiaries. In pursuit of these goals, CMS has
implemented quality reporting programs for multiple care settings
including the quality reporting program for hospital outpatient care,
known as the Hospital Outpatient Quality Reporting (OQR) Program,
formerly known as the Hospital Outpatient Quality Data Reporting
Program (HOP QDRP). The Hospital OQR Program has generally been modeled
after the quality reporting program for hospital inpatient services
known as the Hospital Inpatient Quality Reporting (IQR) Program
(formerly known as the Reporting Hospital Quality Data for Annual
Payment Update (RHQDAPU) Program).
In addition to the Hospital IQR and Hospital OQR Programs, CMS has
implemented quality reporting programs for other care settings that
provide financial incentives for the reporting of quality data to CMS.
These additional programs include reporting for care furnished by:
Physicians and other eligible professionals, under the
Physician Quality Reporting System (PQRS, formerly referred to as the
Physician Quality Reporting Program Initiative (PQRI));
Inpatient rehabilitation facilities, under the Inpatient
Rehabilitation Facility Quality Reporting Program (IRF QRP);
Long-term care hospitals, under the Long-Term Care
Hospital Quality Reporting (LTCHQR) Program;
PPS-exempt cancer hospitals, under the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program;
Ambulatory surgical centers, under the Ambulatory Surgical
Center Quality Reporting (ASCQR) Program;
Inpatient psychiatric facilities, under the Inpatient
Psychiatric Facility Quality Reporting (IPFQR) Program;
Home health agencies, under the Home Health Quality
Reporting Program (HH QRP); and
Hospices, under the Hospice Quality Reporting Program.
In addition, CMS has implemented two value-based purchasing
programs, the Hospital Value-Based Purchasing (Hospital VBP) Program
and the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP),
that link payment to performance.
In implementing the Hospital OQR Program and other quality
reporting programs, we have focused on measures that have high impact
and support national priorities for improved quality and efficiency of
care for Medicare beneficiaries as reflected in the National Quality
Strategy (NQS) and CMS Quality Strategy, as well as conditions for
which wide cost and treatment variations have been reported, despite
established clinical guidelines. To the extent possible under various
authorizing statutes, our ultimate goal is to align the clinical
quality measure requirements of our various quality reporting programs.
As appropriate, we will consider the adoption of measures with
electronic specifications to enable the collection of this information
as part of care delivery.
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68467 through 68469) for a discussion on the principles
underlying consideration for future measures that we intend to use in
implementing this and other quality reporting programs.
2. Statutory History of the Hospital OQR Program
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72064 through 72065) for a detailed discussion of the
statutory history of the Hospital OQR Program.
3. Measure Updates and Data Publication
a. Maintenance of Technical Specifications for Quality Measures
CMS maintains technical specifications for previously adopted
Hospital OQR Program measures. These specifications are updated as we
continue to develop the Hospital OQR Program. The manuals that contain
specifications for the previously adopted measures can be found on the
QualityNet Web site at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244.
Many of the quality measures used in Medicare and Medicaid
reporting programs are endorsed by the National Quality Forum (NQF). We
note that not all of the measures adopted by the Hospital OQR Program
are NQF-endorsed, nor is NQF endorsement a program requirement (section
1833(t)(17)(C)(i) of the Act). As part of its regular maintenance
process for endorsed performance measures, the NQF requires measure
stewards (owners/developers) to submit annual measure maintenance
updates and undergo maintenance of endorsement

[[Page 41033]]

review every 3 years. In the measure maintenance process, the measure
steward is responsible for updating and maintaining the currency and
relevance of the measure and will confirm existing or minor
specification changes with the NQF on an annual basis. The NQF solicits
information from measure stewards for annual reviews, and it reviews
measures for continued endorsement in a specific 3-year cycle.
We note that the NQF's annual or triennial maintenance processes
for endorsed measures may result in the NQF requiring updates to
measures in order to maintain endorsement status. Other non-NQF
measures may undergo maintenance changes as well. We believe that it is
important to have in place a subregulatory process to incorporate
nonsubstantive updates into the measure specifications for measures
that we have adopted for the Hospital OQR Program so that these measure
specifications remain current. We also recognize that some changes to
measures are substantive in nature and might not be appropriate for
adoption using a subregulatory process.
Therefore, in the CY 2013 OPPS/ASC final rule with comment period
(77 FR 68469 through 68470) we finalized our proposal to follow the
same process for updating Hospital OQR Program measures that we adopted
for the Hospital IQR Program measures, including the subregulatory
process for making updates to the adopted measures (77 FR 53504 through
53505). This process expanded upon the subregulatory process for
updating measures that we finalized in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68766 through 68767).
b. Public Display of Quality Measures
We refer readers to the CY 2014 OPPS/ASC proposed rule (78 FR
43645) for a discussion of our policy for the publication of Hospital
OQR Program data on the Hospital Compare Web site and noninteractive
CMS Web sites.
We are not proposing any changes to our policies on the public
display of quality measures.

B. Process for Retention of Hospital OQR Program Measures Adopted in
Previous Payment Determinations

In the CY 2013 OPPS/ASC final rule with comment period (77 FR
68471), we finalized a policy that once a quality measure is adopted
for the Hospital OQR Program, it is retained for use in subsequent
years unless otherwise specified.
We are not proposing any changes to the process for retaining
measures previously adopted.

C. Removal of Quality Measures From the Hospital OQR Program Measure
Set

1. Considerations in Removing Quality Measures From the Hospital OQR
Program
In the FY 2010 IPPS/LTCH PPS final rule, we finalized a process for
immediate retirement, which we later termed ``removal'' (74 FR 43863),
of Hospital IQR Program measures based on evidence that the continued
use of the measure as specified raised patient safety concerns. We
adopted the same immediate measure retirement policy for the Hospital
OQR Program in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60634 through 60635). We refer readers to the CY 2013 OPPS/ASC final
rule with comment period (77 FR 68472 through 68473) for a discussion
of our reasons for changing the term ``retirement'' to ``removal'' in
the Hospital OQR Program.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185), we finalized
a set of criteria for determining whether to remove measures from the
Hospital IQR Program. These criteria are: (1) Measure performance among
hospitals is so high and unvarying that meaningful distinctions and
improvements in performance can no longer be made (``topped-out''
measures); (2) performance or improvement on a measure does not result
in better patient outcomes; (3) a measure does not align with current
clinical guidelines or practice; (4) the availability of a more broadly
applicable (across settings, populations, or conditions) measure for
the topic; (5) the availability of a measure that is more proximal in
time to desired patient outcomes for the particular topic; (6) the
availability of a measure that is more strongly associated with desired
patient outcomes for the particular topic; and (7) collection or public
reporting of a measure leads to negative unintended consequences such
as patient harm. These criteria were suggested through public comment
on proposals for the Hospital IQR Program, and we determined that these
criteria are also applicable in evaluating the Hospital OQR Program
quality measures for removal.
In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68472
through 68473), we finalized our proposal to apply these measure
removal criteria in the Hospital OQR Program as well. In addition to
the Hospital IQR Program's criteria, we consider eliminating measure
redundancy and incorporating the views of the Measures Application
Partnership (MAP) when evaluating measures for removal.
2. Proposed Criteria for Removal of ``Topped-Out'' Measures
In this proposed rule, we are proposing to refine the criteria for
determining when a measure is ``topped-out.'' We had previously
finalized that a measure is ``topped-out'' when measure performance
among hospitals is so high and unvarying that meaningful distinctions
and improvements in performance can no longer be made (``topped-out''
measures) (77 FR 68472). We do not believe that measuring hospital
performance on ``topped-out'' measures provides meaningful information
on the quality of care provided by hospitals. We further believe that
quality measures, once ``topped-out,'' represent care standards that
have been widely adopted by hospitals. We believe such measures should
be considered for removal from the Hospital OQR Program because their
associated reporting burden may outweigh the value of the quality
information they provide.
In order to determine ``topped-out'' status, we are proposing to
apply the following two criteria, the first of which was previously
adopted by the Hospital VBP Program in the Hospital Inpatient VBP
Program final rule (76 FR 26496 through 26497). The second criterion is
a modified version of what was previously adopted by the Hospital VBP
Program in the above mentioned final rule, with the change from the
``less than'' operator (<) to the ``less than or equal to'' operator
(<=). Specifically, we are proposing that a measure under the Hospital
OQR Program is ``topped-out'' when it meets both of the following
criteria:
Statistically indistinguishable performance at the 75th
and 90th percentiles; and
A truncated coefficient of variation less than or equal to
0.10.
To identify if a measure has statistically indistinguishable
performance at the 75th and 90th percentiles, we would determine
whether the difference between the 75th and 90th percentiles for a
measure is within two times the standard error of the full dataset. The
coefficient of variation (CV) is a descriptive statistic that expresses
the standard deviation as a percentage of the sample mean; this
provides a statistic that is independent of the units of observation.
Applied to this analysis, a large CV would indicate a broad
distribution of individual hospital scores, with large and

[[Page 41034]]

presumably meaningful differences between hospitals in relative
performance. A small CV would indicate that the distribution of
individual hospital scores is clustered tightly around the mean value,
suggesting that it is not useful to draw distinctions among individual
hospitals' measure performance. The truncated CV excludes observations
whose rates are below the 5th percentile and above the 95th percentile.
We have proposed these same criteria for when we would consider a
measure to be ``topped-out'' for the Hospital VBP Program (79 FR 28119)
and the Hospital IQR Program (79 FR 28219), and we are also proposing
them for the ASCQR Program in section XIV.B.3. of this proposed rule.
We invite public comment on this proposal.
3. Proposed Removal of Measures From the Hospital OQR Program for the
CY 2017 Payment Determination and Subsequent Years
We are proposing to remove three measures for the CY 2017 payment
determination and subsequent years: OP-4, OP-6, and OP-7. Based on our
analysis of Hospital OQR Program chart-abstracted measure data for
January 1, 2013-June 30, 2013 (Q1-Q2) encounters, the following
measures meet both: (1) The previously finalized criteria for being
``topped-out,'' that is, measure performance among hospitals is so high
and unvarying that meaningful distinctions and improvements in
performance can no longer be made (77 FR 68472), and (2) the two
criteria we are proposing in section XIII.C.2. of this proposed rule
for determining ``topped-out'' status. These measures are:
OP-4: Aspirin at Arrival (NQF 0286);
OP-6: Timing of Antibiotic Prophylaxis; and
OP-7: Prophylactic Antibiotic Selection for Surgical
Patients (NQF 0528).
Therefore, we are proposing to remove these three measures from the
Hospital OQR Program beginning with the CY 2017 payment determination.
We believe that removal is appropriate as there is little room for
improvement for these measures, all of which address standard clinical
care. In addition, by removing these measures, we would alleviate the
maintenance costs and administrative burden to hospitals associated
with retaining them. Should we determine that hospital adherence to
these practices has unacceptably declined, we would repropose these
measures in future rulemaking. In addition, we would comply with any
requirements imposed by the Paperwork Reduction Act before
reinstituting these measures. We have also proposed to remove three
measures under the Hospital IQR Program that are similar to these
measures. We note that the similar measures are called AMI-1, SCIP-Inf-
1, and SCIP-Inf-2, respectively, in the Hospital IQR Program and that
we proposed to retain SCIP-Inf-1 and SCIP-Inf-2 as voluntarily reported
electronic clinical quality measures (79 FR 28219 through 28220 and 79
FR 29242).
We invite public comment on these proposals.

Hospital OQR Program Measures Proposed for Removal for the CY 2017
Payment Determination and Subsequent Years
------------------------------------------------------------------------
NQF No. Measure
------------------------------------------------------------------------
0286..................... OP-4: Aspirin at Arrival.
N/A...................... OP-6: Timing of Prophylactic Antibiotics.
0528..................... OP-7: Prophylactic Antibiotic Selection for
Surgical Patients.
------------------------------------------------------------------------

D. Quality Measures Previously Adopted for the CY 2016 Payment
Determination and Subsequent Years

As previously discussed, in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68471), we finalized a policy that, beginning CY
2013, when we adopt measures for the Hospital OQR Program, these
measures are automatically adopted for all subsequent years' payment
determinations, unless we propose to remove, suspend, or replace the
measures. The table below lists 27 measures that we adopted for the CY
2016 payment determination and subsequent years under the Hospital OQR
Program.

Hospital OQR Program Measure Set Previously Adopted for the CY 2016
Payment Determination and Subsequent Years
------------------------------------------------------------------------
NQF No.. Measure name
------------------------------------------------------------------------
N/A...................... OP-1: Median Time to Fibrinolysis.
0288..................... OP-2: Fibrinolytic Therapy Received Within 30
Minutes of ED Arrival****.
0290..................... OP-3: Median Time to Transfer to Another
Facility for Acute Coronary Intervention.
0286..................... OP-4: Aspirin at Arrival**.
0289..................... OP-5: Median Time to ECG.
N/A...................... OP-6: Timing of Prophylactic Antibiotics**.
0528..................... OP-7: Prophylactic Antibiotic Selection for
Surgical Patients**.
0514..................... OP-8: MRI Lumbar Spine for Low Back Pain.
N/A...................... OP-9: Mammography Follow-up Rates.
N/A...................... OP-10: Abdomen CT--Use of Contrast Material.
0513..................... OP-11: Thorax CT--Use of Contrast Material.
N/A...................... OP-12: The Ability for Providers with HIT to
Receive Laboratory Data Electronically
Directly into their ONC-Certified EHR System
as Discrete Searchable Data.
0669..................... OP-13: Cardiac Imaging for Preoperative Risk
Assessment for Non Cardiac Low Risk Surgery.
N/A...................... OP-14: Simultaneous Use of Brain Computed
Tomography (CT) and Sinus Computed
Tomography (CT).
N/A...................... OP-15: Use of Brain Computed Tomography (CT)
in the Emergency Department for Atraumatic
Headache.
N/A...................... OP-17: Tracking Clinical Results between
Visits.
0496..................... OP-18: Median Time from ED Arrival to ED
Departure for Discharged ED Patients.
N/A...................... OP-20: Door to Diagnostic Evaluation by a
Qualified Medical Professional.

[[Page 41035]]

0662..................... OP-21: Median Time to Pain Management for
Long Bone Fracture.
N/A...................... OP-22: ED--Left Without Being Seen****.
0661..................... OP-23: ED--Head CT or MRI Scan Results for
Acute Ischemic Stroke or Hemorrhagic Stroke
who Received Head CT or MRI Scan
Interpretation Within 45 minutes of Arrival.
N/A...................... OP-25: Safe Surgery Checklist Use.
N/A...................... OP-26: Hospital Outpatient Volume on Selected
Outpatient Surgical Procedures*.
0431..................... OP-27: Influenza Vaccination Coverage among
Healthcare Personnel.
0658..................... OP-29: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for Normal
Colonoscopy in Average Risk Patients.
0659..................... OP-30: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous Polyps--Avoidance of
Inappropriate Use.
1536..................... OP-31: Cataracts--Improvement in Patient's
Visual Function within 90 Days Following
Cataract Surgery***.
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measures we are proposing for removal beginning with the CY 2017
payment determination in section XIII.C.3. of this proposed rule.
*** Measure we are proposing for voluntary data collection in section
XIII.D.3.b. of this proposed rule.
**** Name has been updated to correspond with NQF-endorsed name.

1. Data Submission Requirements for OP-27: Influenza Vaccination
Coverage Among Healthcare Personnel (NQF 0431) Reported via
NHSN for the CY 2017 Payment Determination and Subsequent Years
The Influenza Vaccination Coverage among Healthcare Personnel (HCP)
(NQF 0431) was finalized for the Hospital OQR Program in the
CY 2014 OPPS/ASC final rule with comment period (78 FR 75097 through
75100). We refer readers to the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75116 through 75117) for a discussion of the
previously finalized data submission requirements for this measure.
This measure was previously finalized for the Hospital IQR Program in
the FY 2012 IPPS/LTCH PPS final rule (76 FR 51636). In this proposed
rule, we are making two clarifications: (1) Correcting the previously
stated submission deadline; and (2) clarifying that hospitals should
report the Influenza Vaccination Coverage among HCP (NQF 0431)
measure by CMS Certification Number (CCN) rather than separately
reporting for both the inpatient and outpatient setting.
a. Clarification of Submission Deadline and Data Submitted
We note that there was a typographical error in our discussion in
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75116
through 75117); and we are proposing to remedy that error through this
proposed rule. Specifically, we finalized that the first deadline for
hospitals to submit NHSN HAI measure data would be ``May 15, 2015 with
respect to the October 1, 2015 through March 31, 2015 encounter
period'' (78 FR 75117). We are clarifying here that the beginning of
the encounter period should be ``October 1, 2014'' instead of ``October
1, 2015.'' In addition, we are clarifying here that the data to be
submitted are more specifically referred to as ``health care personnel
influenza vaccination summary reporting data'' instead of ``HAI measure
data.''
b. Clarification on Reporting by CMS Certification Number (CCN)
We received public comment about the burden of separately
collecting HCP influenza vaccination status for both the hospital
inpatient and outpatient settings. We believe that reporting a single
vaccination count for each health care facility enrolled in NHSN will
be less burdensome to facilities. Therefore, in response to these
concerns, we collaborated with CDC to clarify in an Operational
Guidance document, that beginning with the 2014-2015 influenza season
(CY 2014 reporting period and CY 2016 payment determination),
facilities should collect and report a single vaccination count for
each health care facility by CNN, instead of separately reporting by
inpatient or outpatient setting. We are clarifying here that facilities
will report data to NHSN by enrolled facility. CDC will then submit the
data on behalf of the facilities by CNN. The CDC also has produced an
Operational Guidance document regarding reporting for this measure,
which can be found at: http://www.cdc.gov/nhsn/PDFs/HCP/Operational-Guidance-ACH-HCP-Flu.pdf.
Reporting data in this way will allow health care facilities with
multiple care settings to simplify data collection and submit a single
count applicable across the inpatient and outpatient settings. We will
then publicly report the percentage of HCP who received an influenza
vaccination per CCN. This single count per CCN will inform the public
of the percentage of vaccinated HCP at a particular healthcare
facility, which would still provide meaningful data and help to improve
the quality of care. Specific details on data submission for this
measure can be found at: http://www.cdc.gov/nhsn/acute-care-hospital/hcp-vaccination/ and at: http://www.cdc.gov/nhsn/acute-care-hospital/index.html.
This clarification regarding the reporting of a single count
applicable across the inpatient and outpatient settings was also noted
in the FY 2015 IPPS/LTCH PPS proposed rule for the Hospital IQR Program
(79 FR 28221). We note that, in that rule, we refer to reporting
specifically by CNN rather than by ``enrolled facility''.
2. Delayed Data Collection for OP-29 and OP-30
In the CY 2014 OPPS/ASC final rule with comment period, we adopted
OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for
Normal Colonoscopy in Average Risk Patients (NQF 0558) (78 FR
75102) and OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval
for Patients with a History of Adenomatous Polyps--Avoidance of
Inappropriate Use (NQF 0659) (78 FR 75102), both chart-
abstracted measures, and proposed that aggregate data would be
collected via an online Web-based tool (the QualityNet Web site)
beginning with the CY 2016 payment determination. We finalized that,
for the CY 2016 payment determination, hospitals would be required to
submit aggregate-level encounter data between July 1, 2015 and November
1, 2015 for data collected

[[Page 41036]]

during January 1, 2014-December 31, 2014 (78 FR 75114 through 75115).
On December 31, 2013, we issued guidance stating that we would
delay the implementation of OP-29 and OP-30 for 3 months for the CY
2016 payment determination, changing the encounter period from January
1, 2014-December 31, 2014 to April 1, 2014-December 31, 2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228721506778). The data submission window for data collected from April 1,
2014-December 31, 2014 is still July 1, 2015-November 1, 2015. The data
submission windows and the encounter periods for subsequent years
remains as previously finalized (78 FR 75114); hospitals are to submit
Web-based data between July 1 and November 1 of the year prior to a
payment determination with respect to the encounter period of January 1
to December 31 of 2 years prior to a payment determination year.
3. OP-31: Cataracts--Improvement in Patient's Visual Function Within 90
Days Following Cataract Surgery
In the CY 2014 OPPS/ASC final rule with comment period, we adopted
OP-31 Cataracts--Improvement in Patient's Visual Function within 90
Days Following Cataract Surgery (NQF 1536) for the CY 2016
payment determination and subsequent years (78 FR 75103). This measure
assesses the rate of patients 18 years and older (with a diagnosis of
uncomplicated cataract) in a sample who had improvement in visual
function achieved within 90 days following cataract surgery based on
completing both a pre-operative and post-operative visual function
survey.
In this proposed rule, we are: (1) Correcting our response to
public comments, (2) noting our decision to delay data collection for
the CY 2016 payment determination, and, (3) proposing voluntary data
collection for the CY 2017 payment determination and subsequent years
for OP-31: Cataracts: Improvement in Patient's Visual Function within
90 Days Following Cataract Surgery (NQF 1536).
a. Correction of Response to Public Comments
In the CY 2014 OPPS/ASC final rule with comment period, we stated
in response to commenters concerned that the proposed chart-abstracted
measures had not been field-tested, that, ``all three measures that we
are finalizing . . . were field-tested in the HOPD facility setting by
the measure stewards. These three measures are: (1) Endoscopy/Polyp
Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in
Average Risk Patients (NQF 0658); (2) Endoscopy/Polyp
Surveillance: Colonoscopy Interval for Patients with a History of
Adenomatous Polyps--Avoidance of Inappropriate Use (NQF 0659);
and (3) [OP-31] Cataracts: Improvement in Patient's Visual Function
within 90 Days Following Cataract Surgery (NQF 1536)'' (78 FR
75099 through 75100).
We inadvertently misstated that the OP-31: Cataracts: Improvement
in Patient's Visual Function within 90 Days Following Cataract Surgery
(NQF 1536) had been field-tested in the HOPD setting, and we
are clarifying here that this measure has not been field-tested in that
setting. We note that in considering and selecting this measure,
however, we took into account other principles or factors, including:
NQS goals, type of measure, HHS Strategic Plan and Initiatives, NQF
endorsement, MAP support, stakeholder input, alignment with quality
goals and settings, relevance, utility and burden. More information
about these principles can be found in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 43643 through 43644 and 75090 through
75091).
b. Delayed Data Collection for OP-31 and Proposed Exclusion from the CY
2016 Payment Determination Measure Set
Since our adoption of this measure, we have come to believe that it
may be operationally difficult for hospitals to collect and report this
measure. Specifically, we are concerned that the results of the survey
used to assess the pre-operative and post-operative visual function of
the patient may not be shared across clinicians, making it difficult
for hospitals to have knowledge of the visual function of the patient
before and after surgery.
We are also concerned about the use of inconsistent surveys to
assess visual function; the measure specifications allow for the use of
any validated survey and results may be inconsistent should clinicians
use different surveys. Therefore, on December 31, 2013, we issued
guidance stating that we would delay the implementation of OP-31 by 3
months from January 1, 2014 to April 1, 2014 for the CY 2016 payment
determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228721506778). Because of continuing concerns, on April 2, 2014, we issued
additional guidance stating that we would further delay the
implementation of the measure from April 1, 2014 to January 1, 2015 for
the CY 2016 payment determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228721506778). Therefore, we are proposing to exclude OP-31 Cataracts:
Improvement in Patient's Visual Function within 90 Days Following
Cataract Surgery (NQF 1536) from the CY 2016 payment
determination measure set. We will not subject hospitals to a payment
reduction with respect to this measure for the CY 2016 payment
determination.
We invite comment on this proposal.
c. Proposed Voluntary Collection of Data for OP-31 for the CY 2017
Payment Determination and Subsequent Years
We continue to believe that this measure addresses an area of care
that is not adequately addressed in our current measure set and that
the measure serves to drive coordination of care (78 FR 75103).
Further, we believe that HOPDs should be a partner in care with
physicians and other clinicians using their facility, and this measure
provides an opportunity to do so. Therefore, we are continuing to
include this measure in the Hospital OQR Program measure set, but we
are proposing that hospitals have the option to voluntarily collect and
submit OP-31 data for the CY 2015 encounter period/CY 2017 payment
determination and subsequent years. Further, we will not subject
hospitals to a payment reduction with respect to this measure during
the period of voluntary reporting. For hospitals that choose to
voluntarily submit data, we would request that they submit such data
using the means and timelines finalized in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75112 through 75113). Data submitted
voluntarily will be publicly reported as discussed in the CY 2014 OPPS/
ASC proposed rule (78 FR 43645) and final rule (78 FR 75092).
We invite public comment on this proposal.

E. Proposed New Quality Measure for the CY 2017 Payment Determination
and Subsequent Years

We are proposing to adopt one new claims-based measure into the
Hospital OQR Program for the CY 2017 payment determination and
subsequent years: OP-32: Facility 7-Day Risk-Standardized Hospital
Visit Rate after Outpatient Colonoscopy. Colonoscopy is one of the most
frequently performed procedures in the outpatient setting in

[[Page 41037]]

the United States.\1\ The most recent data available indicate that, in
2002 alone, physicians performed an estimated 14 million colonoscopies
in the United States.\2\ Colonoscopies are associated with a range of
well-described and potentially preventable adverse events that can lead
to hospital visits, repeat procedures, or surgical intervention for
treatment, including colonic perforation, gastrointestinal (GI)
bleeding, and cardiopulmonary events such as hypoxia, aspiration
pneumonia, and cardiac arrhythmias. While hospital visits are generally
unexpected after outpatient colonoscopy, the literature suggests that
the majority of these visits occur within the first 7
days.^{3 4 5} Reported hospital visit rates after outpatient
colonoscopy range from 0.8 to 1.0 percent at 7 to 14 days post
procedure, and from 2.4 to 3.8 percent at 30 days post
procedure.^{6 7 8} Some adverse events such as bleeding occur
after the 7th day, but based on input from clinical experts, public
comment, and empirical analyses, we concluded that unplanned hospital
visits within 7 days is the optimal outcome to ensure capture of
procedure-related adverse events and to minimize capture of hospital
visits unrelated to the procedure. This measure provides the
opportunity for providers to improve quality of care and to lower the
rates of adverse events leading to hospital visits after outpatient
colonoscopy; this will encourage providers to achieve the outcome rates
of the best performers.
---------------------------------------------------------------------------

\1\ Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based
Ambulatory Surgery, 2007: Statistical Brief 86. Healthcare
Cost and Utilization Project (HCUP) Statistical Briefs. Rockville
(MD) 2006.
\2\ Seeff LC, Richards TB, Shapiro JA, et al. How many
endoscopies are performed for colorectal cancer screening? Results
from CDC's survey of endoscopic capacity. Gastroenterology. Dec
2004;127(6):1670-1677.
\3\ Rathgaber SW., Wick TM. Colonoscopy completion and
complication rates in a community gastroenterology practice.
Gastrointest Endosc. 2006; 64:556-62.
\4\ Rabeneck L, Saskin R, Paszat LF. Onset and clinical course
of bleeding and perforation after outpatient colonoscopy: a
population-based study. Gastrointest Endosc. 2011; 73:520-3.
\5\ Ko CW, Riffle S, Michael L, et al. Serious complications
within 30 days of screening and surveillance colonoscopy are
uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73.
\6\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor
complications and time lost from normal activities after screening
or surveillance colonoscopy. Gastrointest Endosc. Apr
2007;65(4):648-656.
\7\ Leffler DA, Kheraj R, Garud S, et al. The incidence and cost
of unexpected hospital use after scheduled outpatient endoscopy.
Arch Intern Med. Oct 25 2010;170(19):1752-1757.
\8\ Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A,
Brooks R. Is there a relationship between physician and facility
volumes of ambulatory procedures and patient outcomes? J Ambul Care
Manage. Oct-Dec 2008;31(4):354-369.
---------------------------------------------------------------------------

We believe it is important to reduce adverse patient outcomes
associated with preparation for colonoscopy, the procedure itself, and
follow-up care. Therefore, we are proposing to include OP-32: Facility
7-Day Risk-Standardized Hospital Visit Rate after Outpatient
Colonoscopy, which is based on Medicare FFS claims, in the Hospital OQR
Program for the CY 2017 payment determination and subsequent years. We
expect the measure would promote improvement in patient care over time
because transparency in publicly reporting measure scores will make
patient unplanned hospital visits (emergency department visits,
observation stays, and inpatient admissions) following colonoscopies
more visible to providers and patients and encourage providers to
incorporate quality improvement activities in order to reduce these
visits. Providers are often unaware of complications following
colonoscopy for which patients visit the hospital.\9\ This risk-
standardized quality measure will address this information gap and
promote quality improvement by providing feedback to facilities and
physicians, as well as transparency for patients on the rates and
variation across facilities in unplanned hospital visits after
colonoscopy.
---------------------------------------------------------------------------

\9\ Leffler DA, Kheraj R, Garud S, et al. The incidence and cost
of unexpected hospital use after scheduled outpatient endoscopy.
Arch Intern Med. Oct 25 2010;170(19):1752-1757.
---------------------------------------------------------------------------

The outcome measured in the OP-32 measure is all-cause, unplanned
hospital visits (admissions, observation stays, and emergency
department visits) within 7 days of an outpatient colonoscopy
procedure. The measure score, also referred to as the facility-level
risk-standardized hospital visit rate, is derived from the calculation
of the ratio of the numerator to the denominator multiplied by the
crude rate. The numerator is the number of predicted (meaning adjusted
actual) hospital visits, which is the number of unplanned hospital
visits within seven days of colonoscopy that the facility is predicted
to have based on its case-mix. The denominator is the number of
expected hospital visits, which is the number of unplanned hospital
visits the facility is expected to have based on the nation's
performance with the facility's case-mix. The crude rate is the
national unadjusted number of patients who had a hospital visit post-
colonoscopy among all patients who had a colonoscopy.
Based on discussions with clinical and technical panel experts, the
measure excludes colonoscopies for patients undergoing concomitant
high-risk upper GI endoscopy because these patients are at a higher
risk for hospital visits than patients undergoing a typical
colonoscopy, and patients with a history of inflammatory bowel disease
(IBD) or diverticulitis in the year preceding the colonoscopy because
we likely could not fully characterize and adjust for their pre-
procedure risk of needing a post-procedure hospital visit or identify
whether these admissions are planned or unplanned. The measure also
excludes procedures for patients who lack continuous enrollment in
Medicare FFS Parts A and B in the 1 month after the procedure to ensure
all patients have complete data available for outcome assessment. The
statistical risk adjustment model includes 15 clinically relevant risk-
adjustment variables that are strongly associated with risk of hospital
visits within 7 days following colonoscopy. Additional methodology
details and information obtained from public comments for measure
development are available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html under ``Hospital Outpatient Colonoscopy.''
Section 1890A(a)(2) of the Act outlines the pre-rulemaking process
established under section 1890A of the Act, which requires the
Secretary to make available to the public by December 1 of each year a
list of quality and efficiency measures that the Secretary is
considering. This measure was included on a publicly available document
titled ``MAP Pre-Rulemaking Report: 2014 Recommendations on Measures
for More than 20 Federal Programs'' on the NQF Web site at: http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx (formerly referred to as the ``List of Measures Under
Consideration'') in compliance with section 1890A(a)(2) of the Act. (We
note that at the time the measure was listed on the ``MAP Pre-
Rulemaking Report: 2014 Recommendations on Measures for More than 20
Federal Programs,'' it was named ``High-Acuity Care Visits after
Outpatient Colonoscopy Procedure''.)
The MAP, which represents stakeholder groups, conditionally
supported the measure, ``noting the need to provide outcome information
to inform consumer decisions and drive quality improvement.'' The MAP
further stated that ``[t]his measure addresses an important quality and
safety issue with

[[Page 41038]]

incidence of these events ranging from 10 to 22 per 1,000 after risk
adjustment.'' The MAP, however, also ``recognized the need for the
measure to be further developed and gain NQF endorsement. [The] MAP
expects the endorsement process to resolve questions of the reliability
and validity of the measure as well as with the accuracy of the
algorithm for attributing claims data in light of possible effects of
the Medicare 3-day payment window policy.'' As required under section
1890A(a)(4) of the Act, we considered the input and recommendations
provided by the MAP in selecting measures to propose for the Hospital
OQR Program.
We believe we have addressed the concerns raised by the MAP to the
extent possible. The measure is well defined and precisely specified
for consistent implementation within and between organizations that
will allow for comparability. Reliability testing demonstrated the
measure data elements produced were repeatable; that is, the same
results were produced a high proportion of the time when assessed in
the same population in the same time period. Validity testing
demonstrated that the measure data elements produce measure scores that
correctly reflect the quality of care provided and that adequately
identify differences in quality. In order to ensure the accuracy of the
algorithm for attributing claims data and the comprehensive capture of
HOPD colonoscopies potentially affected by the policy, we identified
physician claims for colonoscopy in the HOPD setting from the Medicare
Part B Standard Analytical Files (SAF) with an inpatient admission
within three days and lacking a corresponding HOPD facility claim. We
then attribute the colonoscopies identified as affected by this policy
to the appropriate HOPD facility using the facility provider ID from
the inpatient claim.
Section 1833(t)(17)(C)(i) of the Act states that, ``The Secretary
shall develop measures . . . that reflect consensus among affected
parties and, to the extent feasible and practicable, shall include
measures set forth by one or more national consensus building
entities.'' We believe that this proposed measure reflects consensus
among the affected parties, because the MAP, which represents
stakeholder groups, reviewed, conditionally supported the measure, and
stated that it ``would provide valuable outcome information to inform
consumer decision and drive quality improvement.'' Further, the measure
was subject to public comment during the MAP and measure development
processes, with some public commenters agreeing with the MAP's
conclusions on the measure (p. 184, MAP Report, January 2014; http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx). We also note that the measure was submitted to NQF for
endorsement on February 21, 2014.
Currently, there are no publicly available quality of care reports
for providers or facilities that conduct outpatient colonoscopies.
Thus, adoption of this measure provides an opportunity to enhance the
information available to patients choosing among providers who offer
this elective procedure. We believe this measure would reduce adverse
patient outcomes associated with preparation for colonoscopy, the
procedure itself, and follow-up care by capturing and making more
visible to providers and patients all unplanned hospital visits
following the procedure. Further, providing outcome rates to providers
will make visible to clinicians meaningful quality differences and
encourage improvement. Although this measure is not NQF-endorsed, it is
currently undergoing the endorsement process, as noted above. Thus, we
believe the statutory requirement for included measures to have, to the
extent feasible and practicable, been set forth by a national
consensus-building entity has been met by the measure being proposed
for adoption.
We invite public comment on the proposal to include the following
measure in the Hospital OQR Program for the CY 2017 payment
determination and subsequent years.

------------------------------------------------------------------------
Proposed measure for the CY 2017 payment
NQF No. determination and subsequent years
------------------------------------------------------------------------
Pending....................... OP-32: Facility 7-Day Risk-Standardized
Hospital Visit Rate after Outpatient
Colonoscopy.
------------------------------------------------------------------------

The proposed and previously finalized measures are listed below.

Proposed Hospital OQR Program Measure Set for the CY 2017 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
NQF No. Measure name
------------------------------------------------------------------------
N/A........................... OP-1: Median Time to Fibrinolysis.
0288.......................... OP-2: Fibrinolytic Therapy Received
Within 30 Minutes of ED Arrival.****
0290.......................... OP-3: Median Time to Transfer to Another
Facility for Acute Coronary
Intervention.
0289.......................... OP-5: Median Time to ECG.
0514.......................... OP-8: MRI Lumbar Spine for Low Back
Pain.
N/A........................... OP-9: Mammography Follow-up Rates.
N/A........................... OP-10: Abdomen CT--Use of Contrast
Material.
0513.......................... OP-11: Thorax CT--Use of Contrast
Material.
N/A........................... OP-12: The Ability for Providers with
HIT to Receive Laboratory Data
Electronically Directly into their ONC-
Certified EHR System as Discrete
Searchable Data.
0669.......................... OP-13: Cardiac Imaging for Preoperative
Risk Assessment for Non Cardiac Low
Risk Surgery.
N/A........................... OP-14: Simultaneous Use of Brain
Computed Tomography (CT) and Sinus
Computed Tomography (CT).
N/A........................... OP-15: Use of Brain Computed Tomography
(CT) in the Emergency Department for
Atraumatic Headache.
N/A........................... OP-17: Tracking Clinical Results between
Visits.
0496.......................... OP-18: Median Time from ED Arrival to ED
Departure for Discharged ED Patients.
N/A........................... OP-20: Door to Diagnostic Evaluation by
a Qualified Medical Professional.
0662.......................... OP-21: Median Time to Pain Management
for Long Bone Fracture.
N/A........................... OP-22: ED--Left Without Being Seen.****

[[Page 41039]]

0661.......................... OP-23: ED--Head CT or MRI Scan Results
for Acute Ischemic Stroke or
Hemorrhagic Stroke who Received Head CT
or MRI Scan Interpretation Within 45
minutes of Arrival.
N/A........................... OP-25: Safe Surgery Checklist Use.
N/A........................... OP-26: Hospital Outpatient Volume on
Selected Outpatient Surgical
Procedures.*
0431.......................... OP-27: Influenza Vaccination Coverage
among Healthcare Personnel.
0658.......................... OP-29: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for
Normal Colonoscopy in Average Risk
Patients.
0659.......................... OP-30: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with
a History of Adenomatous Polyps--
Avoidance of Inappropriate Use.
1536.......................... OP-31: Cataracts--Improvement in
Patient's Visual Function within 90
Days Following Cataract Surgery.**
N/A........................... OP-32: Facility 7-Day Risk-Standardized
Hospital Visit Rate after Outpatient
Colonoscopy.***
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=Mungo Blobs.
** Measure we are proposing for voluntary data collection in section
XIII.D.3.b. of this proposed rule.
*** New measure proposed for the CY 2017 payment determination and
subsequent years.
**** Name has been updated to correspond with NQF-endorsed name.

F. Possible Hospital OQR Program Measures and Topics for Future
Consideration

The current measure set for the Hospital OQR Program includes
measures that assess process of care, imaging efficiency patterns, care
transitions, ED throughput efficiency, the use of health information
technology (health IT), care coordination, patient safety, and volume.
For future payment determinations, we are considering expanding these
measure areas and creating measures in new areas. Specifically, we are
exploring (1) electronic clinical quality measures; (2) partial
hospitalization measures; (3) behavioral health measures; and (4) other
measures that align with the National Quality Strategy and the CMS
Quality Strategy domains.
1. Electronic Clinical Quality Measures
HHS believes all patients, their families, and their healthcare
providers should have consistent and timely access to their health
information in a standardized format that can be securely exchanged
between the patient, providers, and others involved in the patient's
care. (HHS August 2013 Statement, ``Principles and Strategies for
Accelerating Health Information Exchange.'' (http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf)) The
Department is committed to accelerating health information exchange
(HIE) through the use of electronic health records (EHRs) and other
types of health information technology (health IT) across the broader
care continuum through a number of initiatives including: (1) Alignment
of incentives and payment adjustments to encourage provider adoption
and optimization of health IT and HIE services through Medicare and
Medicaid payment policies; (2) adoption of common standards and
certification requirements for interoperable health IT; (3) support for
privacy and security of patient information across all HIE-focused
initiatives; and (4) governance of health information networks.
More information on the governance of health information networks
and its role in facilitating interoperability of health information
systems can be found at: http://www.healthit.gov/sites/default/files/ONC10yearInteroperabilityConceptPaper.pdf.
These initiatives are designed to encourage HIE among health care
providers, including professionals and hospitals eligible for the
Medicare and Medicaid EHR Incentive Programs as well as those who are
not eligible for those programs, and are designed to improve care
delivery and coordination across the entire care continuum. For
example, the Transition of Care Measure 2 in Stage 2 of the
Medicare and Medicaid EHR Incentive Programs requires HIE to share
summary records for more than 10 percent of care transitions. In
addition, to increase flexibility in the Office of the National
Coordinator for Health Information Technology's (ONC's) health IT
Certification Program and expand health IT certification, ONC has
issued a proposed rule concerning a voluntary 2015 Edition of EHR
certification criteria, which would more easily accommodate the
certification of health IT used in health care settings where health
care providers are not typically eligible for incentive payments under
the EHR Incentive Programs, to facilitate greater HIE across the entire
care continuum.
We believe that HIE and the use of certified EHRs can effectively
and efficiently help providers improve internal care delivery
practices, support management of patient care across the continuum, and
support the reporting of electronically specified clinical quality
measures (eCQMs). More information on the Voluntary 2015 Edition EHR
Certification Criteria proposed rule can be found at: http://healthit.gov/policy-researchers-implementers/standards-and-certification-regulations.
We anticipate that as electronic health records (EHR) technology
evolves and more infrastructure is operational, we will begin to accept
electronic reporting of many measures from EHR technology certified
under the ONC health IT Certification Program. We are working
diligently toward this goal. We believe that this progress would
significantly reduce the administrative burden on hospitals under the
Hospital OQR Program to report chart-abstracted measures. We recognize
that considerable work needs to be done by measure owners and health IT
developers and implementers to make this possible with respect to the
clinical quality measures targeted for electronic specifications (e-
specifications). This work includes completing e-specifications for
measures, pilot testing, reliability and validity testing, and
implementing such specifications in certified EHR technology to capture
and calculate the results.
2. Partial Hospitalization Program Measures
We seek to develop a comprehensive set of quality measures to be
available for widespread use for informed decision-making and quality
improvement in the hospital outpatient setting. Therefore, in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75106), we stated
that,

[[Page 41040]]

through future rulemaking, we intend to propose new measures that help
us further our goal of achieving better health care and improved health
for Medicare beneficiaries who receive health care in hospital
outpatient settings, such as partial hospitalization programs (PHPs)
that are part of HOPDs.
Partial hospitalization is an intensive outpatient program of
psychiatric services provided to patients as an alternative to
inpatient psychiatric care for individuals who have acute mental
illness. The PHP was designed to assist individuals with acute
psychiatric illness in managing debilitating symptoms and prevent the
need for hospitalization or re-hospitalization. Behavioral health
treatments and services have improved and evolved through medication
advances, recovery-based therapy, and evidenced-based interventions,
including peer supports. PHP services have had the opportunity to
evolve to provide individuals with a unique setting that can contribute
to maintaining social and community connectivity while focusing on
sustained recovery to prevent initial hospitalization during a given
episode and subsequent re-hospitalization. Currently, the Hospital OQR
Program has not adopted measures applicable to PHPs.
Although we believe that the PHP is an important program offering
an alternative to inpatient stays, we note that PHP utilization has
been declining.\10\ Therefore, as we consider implementing PHP measures
in future years, we invite public comment regarding the utility of
including measures for this care setting in the Hospital OQR Program.
---------------------------------------------------------------------------

\10\ http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/Leung_PHP_PPS_2010.pdf.
---------------------------------------------------------------------------

We specifically request public comment on three PHP measures we
submitted to the MAP for consideration as part of the ``MAP Pre-
Rulemaking Report: 2014 Recommendations on Measures for More than 20
Federal Programs'' (http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx (formerly referred
to as the ``List of Measures Under Consideration'')):
30-Day Readmission;
Group Therapy; and
No Individual Therapy.
These measures are included in the Program for Evaluating Payment
Patterns Electronic Reports (PEPPERs) developed under the Comprehensive
Error Rate Testing (CERT) Program. Further information on these claims-
based measures that provide indicators of quality of care can be found
at http://www.pepperresources.org/LinkClick.aspx?fileticket=stK9uUmQWlM%3d&tabid=148.
We also request public input on other possible quality measures for
partial hospitalization services for inclusion in the Hospital OQR
Program in future years.
3. Behavioral Health Measures
In addition to PHP measures, we are considering other measures
specific to behavioral health in the outpatient setting, including
measures addressing depression and alcohol abuse. Major depression is a
leading cause of disability in the United States, complicates the
treatment of other serious illnesses, and is associated with an
increased risk of suicide. Major depression is a common mental health
condition, affecting 6 to 9 percent of those over 55 years of age.\11\
Along with other serious mental health conditions, it has a higher
Medicare inpatient readmission rate than all other conditions with the
exception of heart failure.\12\ Alcohol use disorders are the most
prevalent type of addictive disorder in individuals ages 65 and
over.\13\ Roughly 6 percent of the elderly are considered to be heavy
users of alcohol.\14\ Alcohol abuse is often associated with depression
and contributes to the etiology of serious medical conditions,
including liver disease and coronary heart disease. Because of the
prevalence of depression and alcohol abuse and their impact on the
Medicare population, we believe that we should consider measures in
these and other behavioral health areas for use in future Hospital OQR
Program payment determination years. Therefore, we invite public
comment on measures applicable to these areas that would be suitable
for the Hospital OQR Program.
---------------------------------------------------------------------------

\11\ O'Connor E, Whitlock E, Beil T, et al. Screening for
depression in adult patients in primary care settings: a systematic
evidence review. Annals of Internal Medicine 2009 December
1:151(11):793-803.
\12\ Stephen F. Jencks, M.D., M.P.H., Mark V. Williams, M.D.,
and Eric A. Coleman, M.D., M.P.H. Rehospitalizations among Patients
in the Medicare Fee-for-Service Program. N Engl J Med 2009;360:1418-
28.
\13\ Stephen Ross. Alcohol Use Disorders in the Elderly.
Psychiatry Weekly (no date) Available at: http://www.psychweekly.com/aspx/article/ArticleDetail.aspx?articleid=19.
\14\ AL Mirand and JW Welte. Alcohol consumption among the
elderly in a general population, Erie County, New York. Am J Public
Health. 1996 July; 86(7): 978-984.
---------------------------------------------------------------------------

4. National Quality Strategy and CMS Quality Strategy Measure Domains
In considering future Hospital OQR Program measures, we are
focusing on the following National Quality Strategy and CMS Quality
Strategy measure domains: Making care safer, strengthen person and
family engagement, promote effective communication and coordination of
care, promote effective prevention and treatment, work with communities
to promote best practices of healthy living, and make care affordable.
We believe measures in these areas will promote better care and align
measures across multiple CMS quality programs, in particular, the
Hospital OQR, Hospital IQR, and ASCQR Programs.
We invite public comment on these possible measures.

G. Proposed Payment Reduction for Hospitals That Fail To Meet the
Hospital Outpatient Quality Reporting (OQR) Program Requirements for
the CY 2015 Payment Update

1. Background
Section 1833(t)(17) of the Act, which applies to subsection (d)
hospitals (as defined under section 1886(d)(1)(B) of the Act), states
that hospitals that fail to report data required to be submitted on the
measures selected by the Secretary, in the form and manner, and at a
time, required by the Secretary will incur a 2.0 percentage point
reduction to their Outpatient Department (OPD) fee schedule increase
factor; that is, the annual payment update factor. Section
1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only
to the payment year involved and will not be taken into account in
computing the applicable OPD fee schedule increase factor for a
subsequent payment year.
The application of a reduced OPD fee schedule increase factor
results in reduced national unadjusted payment rates that apply to
certain outpatient items and services provided by hospitals that are
required to report outpatient quality data in order to receive the full
payment update factor and that fail to meet the Hospital OQR Program
requirements. Hospitals that meet the reporting requirements receive
the full OPPS payment update without the reduction. For a more detailed
discussion of how this payment reduction was initially implemented, we
refer readers to the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68769 through 68772).
The national unadjusted payment rates for many services paid under
the OPPS equal the product of the OPPS conversion factor and the scaled
relative

[[Page 41041]]

payment weight for the APC to which the service is assigned. The OPPS
conversion factor, which is updated annually by the OPD fee schedule
increase factor, is used to calculate the OPPS payment rate for
services with the following status indicators (listed in Addendum B to
this proposed rule, which is available via the Internet on the CMS Web
site): ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``V,'' or
``U.'' We note that we are proposing to delete status indicator ``X'''
as described in sections II.A.3. and X. of this proposed rule. We also
note that we are proposing to develop status indicator ``J1'' as part
of our comprehensive APC policy, effective for CY 2015, discussed in
section II.A.2.e. of the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74861 through 74910) and section II.A.2.e. of this
proposed rule. Payment for all services assigned to these status
indicators will be subject to the reduction of the national unadjusted
payment rates for hospitals that fail to meet Hospital OQR Program
requirements, with the exception of services assigned to New Technology
APCs with assigned status indicator ``S'' or ``T.'' We refer readers to
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68770
through 68771) for a discussion of this policy.
The OPD fee schedule increase factor is an input into the OPPS
conversion factor, which is used to calculate OPPS payment rates. To
reduce the OPD fee schedule increase factor for hospitals that fail to
meet reporting requirements, we calculate two conversion factors--a
full market basket conversion factor (that is, the full conversion
factor), and a reduced market basket conversion factor (that is, the
reduced conversion factor). We then calculate a reduction ratio by
dividing the reduced conversion factor by the full conversion factor.
We refer to this reduction ratio as the ``reporting ratio'' to indicate
that it applies to payment for hospitals that fail to meet their
reporting requirements. Applying this reporting ratio to the OPPS
payment amounts results in reduced national unadjusted payment rates
that are mathematically equivalent to the reduced national unadjusted
payment rates that would result if we multiplied the scaled OPPS
relative payment weights by the reduced conversion factor. For example,
to determine the reduced national unadjusted payment rates that applied
to hospitals that failed to meet their quality reporting requirements
for the CY 2010 OPPS, we multiplied the final full national unadjusted
payment rate found in Addendum B of the CY 2010 OPPS/ASC final rule
with comment period by the CY 2010 OPPS final reporting ratio of 0.980
(74 FR 60642).
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771
through 68772), we established a policy that the Medicare beneficiary's
minimum unadjusted copayment and national unadjusted copayment for a
service to which a reduced national unadjusted payment rate applies
would each equal the product of the reporting ratio and the national
unadjusted copayment or the minimum unadjusted copayment, as
applicable, for the service. Under this policy, we apply the reporting
ratio to both the minimum unadjusted copayment and national unadjusted
copayment for services provided by hospitals that receive the payment
reduction for failure to meet the Hospital OQR Program reporting
requirements. This application of the reporting ratio to the national
unadjusted and minimum unadjusted copayments is calculated according to
Sec. 419.41 of our regulations, prior to any adjustment for a
hospital's failure to meet the quality reporting standards according to
Sec. 419.43(h). Beneficiaries and secondary payers thereby share in
the reduction of payments to these hospitals.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68772), we established the policy that all other applicable adjustments
to the OPPS national unadjusted payment rates apply when the OPD fee
schedule increase factor is reduced for hospitals that fail to meet the
requirements of the Hospital OQR Program. For example, the following
standard adjustments apply to the reduced national unadjusted payment
rates: the wage index adjustment; the multiple procedure adjustment;
the interrupted procedure adjustment; the rural sole community hospital
adjustment; and the adjustment for devices furnished with full or
partial credit or without cost. Similarly, OPPS outlier payments made
for high cost and complex procedures will continue to be made when
outlier criteria are met. For hospitals that fail to meet the quality
data reporting requirements, the hospitals' costs are compared to the
reduced payments for purposes of outlier eligibility and payment
calculation. We established this policy in the OPPS beginning in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60642). For a
complete discussion of the OPPS outlier calculation and eligibility
criteria, we refer readers to section II.G. of this proposed rule.
2. Proposed Reporting Ratio Application and Associated Adjustment
Policy for CY 2015
We are proposing to continue our established policy of applying the
reduction of the OPD fee schedule increase factor through the use of a
reporting ratio for those hospitals that fail to meet the Hospital OQR
Program requirements for the full CY 2015 annual payment update factor.
For the CY 2015 OPPS, the proposed reporting ratio is 0.980, calculated
by dividing the proposed reduced conversion factor of $72.692 by the
proposed full conversion factor of $74.176. We are proposing to
continue to apply the reporting ratio to all services calculated using
the OPPS conversion factor. For the CY 2015 OPPS, we are proposing to
apply the reporting ratio, when applicable, to all HCPCS codes to which
we have assigned status indicators ``P,'' ``Q1,'' ``Q2,'' ``Q3,''
``R,'' ``S,'' ``T,'' ``V,'' and ``U'' (other than new technology APCs
to which we have assigned status indicators ``S'' and ``T''). We note
that we are proposing to delete status indicator ``X'' as described in
sections II.A.3. and X. of this proposed rule. We note that we are
proposing to develop status indicator ``J1'' as part of our CY 2015
comprehensive APC policy, discussed in section II.A.2.e. of this
proposed rule and to apply the reporting ratio to the comprehensive
APCs. We are proposing to continue to exclude services paid under New
Technology APCs. We are proposing to continue to apply the reporting
ratio to the national unadjusted payment rates and the minimum
unadjusted and national unadjusted copayment rates of all applicable
services for those hospitals that fail to meet the Hospital OQR Program
reporting requirements. We also are proposing to continue to apply all
other applicable standard adjustments to the OPPS national unadjusted
payment rates for hospitals that fail to meet the requirements of the
Hospital OQR Program. Similarly, we are proposing to continue to
calculate OPPS outlier eligibility and outlier payment based on the
reduced payment rates for those hospitals that fail to meet the
reporting requirements.
We invite public comment on these proposals.

[[Page 41042]]

H. Proposed Requirements for Reporting Hospital OQR Program Data for
the CY 2017 Payment Determination and Subsequent Years

1. Administrative Requirements for the CY 2017 Payment Determination
and Subsequent Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75108 through 75109) for a discussion of the Hospital OQR
Program procedural requirements for the CY 2015 payment determination
and subsequent years. In that final rule with comment period, we
codified these procedural requirements at 42 CFR 419.46(a).
2. Form, Manner, and Timing of Data Submitted for the Hospital OQR
Program
a. General Procedural Requirements
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75110 through 75111) for a discussion of Hospital OQR
Program general procedural requirements. In that final rule with
comment period, we finalized our proposal to codify these general
procedural requirements at 42 CFR 419.46(c).
We are proposing to correct a typographical error in 42 CFR
419.46(c). This section states, ``Except as provided in paragraph (d)
of this section, hospitals that participate in the Hospital OQR Program
must submit to CMS data on measures selected under section 1833(17)(C)
of the Act . . '' We are proposing to correct the erroneous reference
of ``section 1833(17)(C)'' to ``section 1833(t)(17)(C).'' We invite
public comment on this proposal.
b. Requirements for Chart-Abstracted Measures Where Data Is Submitted
Directly to CMS for the CY 2017 Payment Determination and Subsequent
Years
The following chart-abstracted measures in the Hospital OQR Program
require data to be submitted for the CY 2017 payment determination and
subsequent years:
OP-1: Median Time to Fibrinolysis;
OP-2: Fibrinolytic Therapy Received Within 30 Minutes of
ED Arrival (NQF 0288);
OP-3: Median Time to Transfer to Another Facility for
Acute Coronary Intervention (NQF 0290);
OP-5: Median Time to ECG (NQF 0289);
OP-18: Median Time from ED Arrival to ED Departure for
Discharged ED Patients (NQF 0496);
OP-20: Door to Diagnostic Evaluation by a Qualified
Medical Professional;
OP-21: ED--Median Time to Pain Management for Long Bone
Fracture (NQF 0662);
OP-22: ED--Left Without Being Seen;
OP-23: ED--Head CT Scan Results for Acute Ischemic Stroke
or Hemorrhagic Stroke who Received Head CT Scan Interpretation Within
45 Minutes of Arrival (NQF 0661);
OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up
Interval for Normal Colonoscopy in Average Risk Patients (NQF
0658); and
OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval
for Patients with a History of Adenomatous Polyps--Avoidance of
Inappropriate Use (NQF 1536).
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68481 through 68484) for a discussion of the form and
manner for data submission of these measures.
We are neither proposing new chart-abstracted measures where
patient-level data is submitted directly to CMS nor proposing new
requirements for data submission for chart-abstracted measures.
c. Claims-Based Measure Data Requirements for the CY 2017 Payment
Determination and Subsequent Years
As discussed in section XIII.E. of the preamble of this proposed
rule, we are proposing one additional claims-based measure for the CY
2017 payment determination and subsequent years, OP-32: Facility 7-Day
Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. If
this proposal is finalized, there will be a total of eight claims-based
measures for the CY 2017 payment determination and subsequent years:
OP-8: MRI Lumbar Spine for Low Back Pain (NQF
0514);
OP-9: Mammography Follow-Up Rates;
OP-10: Abdomen CT--Use of Contrast Material;
OP-11: Thorax CT--Use of Contrast Material;
OP-13: Cardiac Imaging for Preoperative Risk Assessment
for Non-Cardiac Low Risk Surgery (NQF 0669);
OP-14: Simultaneous Use of Brain Computed Tomography (CT)
and Sinus Computed Tomography (CT);
OP-15: Use of Brain Computed Tomography (CT) in the
Emergency Department for Atraumatic Headache; and
OP-32: Facility 7-Day Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy.
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75111 through 75112) for a discussion of the claims-based
measure data submission requirements for the CY 2015 payment
determination and subsequent years.
In the CY 2012 OPPS/ASC final rule with comment period, we deferred
the public reporting of OP-15 (76 FR 74456). We extended the
postponement of public reporting for this measure in the CY 2013 and CY
2014 OPPS/ASC final rules with comment period (77 FR 68481, 78 FR
75111). We are not proposing any changes to this policy. Public
reporting for OP-15 continues to be deferred, and this deferral has no
effect on any payment determinations; however, hospitals are still
required to submit data as previously finalized (76 FR 74456).
d. Data Submission Requirements for Measure Data Submitted via the CMS
Web-Based Tool for the CY 2017 Payment Determination and Subsequent
Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75112 through 75115) for a discussion of the requirements
for measure data submitted via the Web-based tool on a CMS Web site
(the QualityNet Web site) for the CY 2016 payment determination and
subsequent years.
We are not proposing any changes to the data submission
requirements for data submitted via the CMS Web-based tool.
e. Population and Sampling Data Requirements for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74482 through 74483) for discussions of our
policy that hospitals may voluntarily submit aggregate population and
sample size counts for Medicare and non-Medicare encounters for the
measure populations for which chart-abstracted data must be submitted.
We are not proposing any changes to this policy.
f. Proposed Review and Corrections Period for Chart-Abstracted Measures
Under the Hospital OQR Program, hospitals submit chart-abstracted
data to CMS on a quarterly basis. This data is typically due 4 months
after the quarter has ended, unless we grant an extension or exception,
as further described in section XIII.J. of this proposed rule. We refer
readers to the CY 2014 OPPS/ASC

[[Page 41043]]

final rule with comment period for a discussion of our previously
finalized policies regarding submissions deadlines for chart-abstracted
measures (78 FR 68482). Hospitals can begin submitting data on the
first discharge day of any reporting quarter and can modify this data
up until the close of the submission period (or 4 months after the
quarter has ended). For example, if a hospital enters data on January
2, it could continue to review, correct, and change this data until
August 1, the first quarter submission deadline. We generally provide
rates for the measures that have been submitted for chart-abstracted,
patient-level data 24-48 hours following submission. Hospitals are
encouraged to submit data early in the submission schedule so that they
can identify errors and resubmit data before the quarterly submission
deadline.
We are proposing to formalize this 4-month period as the review and
corrections period for chart-abstracted data for the Hospital OQR
Program. During this review and corrections period, hospitals can
enter, review, and correct data submitted directly to CMS. After the
submission deadline, however, hospitals would not be allowed to change
these data. We believe that 4 months is sufficient time for hospitals
to perform these activities. We invite public comment on this proposal.
3. Hospital OQR Program Validation Requirements for Chart-Abstracted
Measure Data Submitted Directly to CMS for the CY 2017 Payment
Determination and Subsequent Years
a. Background
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68484 through 68487) for a discussion of finalized
policies regarding our validation requirements. We codified these
policies at 42 CFR 419.46(e). We are proposing three changes to our
validation procedures: (1) We are proposing to change the eligibility
requirements for hospitals selected for validation so that a hospital
would be eligible if it submits at least one case to the Hospital OQR
Program Clinical Data Warehouse during the quarter containing the most
recently available data; (2) we are proposing give hospitals the option
to either submit paper copies of patient charts or securely transmit
electronic versions of medical information for validation; and (3) we
are proposing that a hospital must identify the medical record staff
responsible for submission of records under the Hospital OQR Program to
the designated CMS contractor.
b. Proposed Selection of Hospitals for Data Validation of Chart-
Abstracted Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2012 and CY 2013 OPPS/ASC final rules
with comment period (76 FR 74484 through 74485 and 77 FR 68484 through
68485) for a discussion of finalized policies regarding our sampling
methodology, including sample size, eligibility for validation
selection, and encounter minimums for patient-level data for measures
where data is obtained from chart abstraction and submitted directly to
CMS from selected hospitals.
We are proposing one change to this process. Previously, to be
eligible for random selection for validation, a hospital must have been
coded as ``open'' in the CASPER system at the time of selection and
must have submitted at least 10 encounters to the OPPS Clinical
Warehouse during the data collection period for the applicable payment
determination (76 FR 74484). We are proposing that, beginning with the
CY 2015 encounter period for the CY 2017 payment determination and
subsequent years, a hospital will be eligible for validation if it
submits at least one case to the Hospital OQR Program Clinical Data
Warehouse during the quarter containing the most recently available
data. The quarter containing the most recently available data will be
defined based on when the random sample is drawn. For example, if we
draw a sample in December 2014, the most recent data available would be
that from the second quarter of 2014, which ends June 2014, because the
submission deadline for second quarter data would be November 1, 2014
(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1205442125082; 78 FR 68482). As another example, if a sample is drawn in
October 2014, the most recent available data would be from quarter one,
which ended in March 2014, because data must be submitted by August 1,
2014. We believe this change is necessary because it increases the
probability that selected hospitals have current data in the Warehouse
to be validated. Previously, hospitals that did not have data from the
current year available could still be selected for validation. We
invite public comment on this proposal.
c. Targeting Criteria for Data Validation Selection for the CY 2017
Payment Determination and Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68485 through 68486) for a discussion of our targeting
criteria. We are not proposing any changes to these policies.
d. Methodology for Encounter Selection for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68486) for a discussion of our methodology for encounter
selection. We are not proposing any changes to this policy.
e. Proposed Medical Record Documentation Requests for Validation and
Validation Score Calculation for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68486 through 68487) for a discussion of our previously
finalized procedures for requesting medical record documentation for
validation and validation score calculation. In the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75118), we codified these
procedures at 42 CFR 419.46(e)(1) and (e)(2). We are proposing two
changes to these policies for the CY 2017 payment determination and
subsequent years: (1) We are proposing to give hospitals the option to
either submit paper copies of patient charts or securely transmit
electronic versions of medical information for validation; and (2) we
are proposing that a hospital must identify the medical record staff
responsible for submission of records under the Hospital OQR Program to
the designated CMS contractor.
For records stored electronically, hospitals expend additional
resources printing records onto paper that may be more efficiently
transmitted electronically. In addition, the length of paper charts has
been increasing, and the paper used to submit these records has an
environmental impact. Therefore, we are proposing to give hospitals the
option to either submit copies of paper patient charts or securely
transmit electronic versions of medical information, which has the
potential to significantly reduce administrative burden, cost, and
environmental impact. We have already finalized a similar policy for
the Hospital IQR Program in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50834 through 50836) that allows hospitals for the Hospital IQR Program
to submit electronic records through the mail on a CD, DVD, or flash
drive. In addition, in the FY 2015 IPPS/LTCH PPS proposed rule for the
Hospital IQR Program (79 FR 28251), we have

[[Page 41044]]

proposed to also allow hospitals to submit patient charts using a
Secure File Transfer Portal on the QualityNet Web site.
The current Hospital OQR Program regulation at Sec. 419.46(e)(1)
states: ``Upon written request by CMS or its contractor, a hospital
must submit to CMS supporting medical record documentation that the
hospital used for purposes of data submission under the program. . .
.'' We are proposing that this requirement may be met by employing
either of the following options for the CY 2017 payment determination
and subsequent years: (1) A hospital may submit paper medical records,
the form in which we have historically requested them; or (2) a
hospital may securely transmit electronic versions of medical
information.
For the CY 2017 payment determination and subsequent years, we are
proposing that hospitals that chose to securely transmit electronic
versions of medical information should either: (1) Download or copy the
digital image of the patient chart onto CD, DVD, or flash drive and
ship the electronic media following instructions specified on the
QualityNet Web site; or (2) securely submit digital images (PDFs) of
patient charts using a Secure File Transfer Portal on the QualityNet
Web site. The Secure File Transfer Portal would allow hospitals to
transfer files through either a Web-based portal or directly from a
client application using a secure file transfer protocol. The system
provides a mechanism for securely exchanging documents containing
sensitive information such as Protected Health Information (PHI) or
Personally Identifiable Information (PII). Detailed instructions on how
to use this system are available in the Secure File Transfer 1.0 User
Manual available on QualityNet at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetBasic&cid=1228773343598.
In addition, in the CY 2013 OPPS/ASC final rule with comment period
(77 FR 68486 through 68487), we stated that our validation contractor
would request medical documentation from each hospital selected for
validation via certified mail or other trackable method. This request
would be sent to ``the hospital's medical record staff identified by
the hospital for the submission of records under the Hospital IQR
Program (that is, the hospital's medical records staff identified by
the hospital to the State QIO)'' (77 FR 68487). Quality Improvement
Organizations (QIOs) are CMS contractors required by the Act (section
1152 through 1154) tasked with, among other responsibilities, assisting
hospitals with quality improvement activities. Due to the evolution of
the structure of the QIO program, beginning with CY 2015 for the CY
2017 payment determination and subsequent years, we are proposing that
a hospital must identify the medical record staff responsible for
submission of records under the Hospital OQR Program to the designated
CMS contractor; this CMS contractor may be a contractor other than the
State QIO.
Finally, we note that a typographical error exists in our
validation language in Sec. 419.46(e). This section states, ``CMS may
validate one or more measures selected under section 1833(17)(C) of the
Act . . .'' ``[S]ection 1833(17)(C)'' should instead state ``section
1833(t)(17)(C).'' We are proposing to make this change in the
regulation text.
We invite public comment on these proposals.

I. Hospital OQR Program Reconsideration and Appeals Procedures for the
CY 2017 Payment Determination and Subsequent Years

We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68487 through 68489) and the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75118 through 75119) for a discussion of our
reconsideration and appeals procedures. We codified this process by
which participating hospitals may submit requests for reconsideration
at 42 CFR 419.46(f). We also codified language at Sec. 419.46(f)(3)
stating that a hospital that is dissatisfied with a decision made by
CMS on its reconsideration request may file an appeal with the Provider
Reimbursement Review Board.
We are not proposing any changes to the reconsideration and appeals
procedures.

J. Extension or Exception Process for the CY 2017 Payment Determination
and Subsequent Years

We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75119 through 75120), and 42 CFR 419.46(d) for a complete
discussion of our extraordinary circumstances extension or waiver
process under the Hospital OQR Program. We are not proposing any
substantive changes to these policies or the processes.
However, in the future, we will refer to the process as the
Extraordinary Circumstances Extensions or Exemptions process, instead
of the Extraordinary Circumstances Extensions or Waiver process. We are
in the process of revising the Extraordinary Circumstances/Disaster
Extension or Waiver Request form (CMS-10432), approved under OMB
control number 0938-1171. We are updating the forms and instructions so
that a hospital or facility may apply for an extension for all
applicable quality reporting programs at one time.
In addition, we are proposing to make a conforming change from the
phrase ``extension or waiver'' to the phrase ``extension or exemption''
in 42 CFR 419.46(d). Section 419.46(d) currently states,

Exception. CMS may grant an extension or waiver of one or more data
submission deadlines and requirements in the event of extraordinary
circumstances beyond the control of the hospital, such as when an
act of nature affects an entire region or locale or a systemic
problem with one of CMS' data collection systems directly or
indirectly affects data submission. CMS may grant an extension or
waiver as follows:
(1) Upon request by the hospital. Specific requirements for
submission of a request for an extension or waiver are available on
the QualityNet Web site.
(2) At the discretion of CMS. CMS may grant waivers or
extensions to hospitals that have not requested them when CMS
determines that an extraordinary circumstance has occurred.

We are proposing to revise this language to state,

Exception. CMS may grant an extension or exception of one or more
data submission deadlines and requirements in the event of
extraordinary circumstances beyond the control of the hospital, such
as when an act of nature affects an entire region or locale or a
systemic problem with one of CMS' data collection systems directly
or indirectly affects data submission. CMS may grant an extension or
exception as follows:
(1) Upon request by the hospital. Specific requirements for
submission of a request for an extension or exception are available
on the QualityNet Web site.
(2) At the discretion of CMS. CMS may grant exceptions or
extensions to hospitals that have not requested them when CMS
determines that an extraordinary circumstance has occurred.

XIV. Requirements for the Ambulatory Surgical Center Quality Reporting
(ASCQR) Program

A. Background

1. Overview
We refer readers to section XIII.A.1. of this proposed rule for a
general overview of our quality reporting programs.

[[Page 41045]]

2. Statutory History of the Ambulatory Surgical Center Quality
Reporting (ASCQR) Program
We refer readers to section XIV.K.1. of the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74492 through 74493) for a detailed
discussion of the statutory history of the ASCQR Program.
3. Regulatory History of the ASCQR Program
We refer readers to section XV.A.3. of the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75122) for an overview of the
regulatory history of the ASCQR Program.

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68493 through 68494) for a detailed discussion of
priorities we consider for ASCQR Program quality measure selection.
2. Proposed Policy for Removal of Quality Measures From the ASCQR
Program
We previously adopted a policy to retain measures from the previous
year's ASCQR Program measure set for subsequent years' measure sets
except when they are removed, suspended or replaced as indicated (76 FR
74504; 77 FR 68494 through 68495; 78 FR 75122). In this proposed rule,
we are proposing a process for removing adopted measures.
In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43863 through
43865), we finalized a process for immediate retirement (a term we
later changed to ``removal'') of RHQDAPU Program (now referred to as
the Hospital IQR Program) measures based on evidence that the continued
use of the measure as specified raised patient safety concerns. We
stated that we believe immediate retirement of quality measures should
occur when the clinical evidence suggests that continued collection of
the data may result in harm to patients. For example, we removed the
AMI-6-Beta Blocker at Arrival measure from the Hospital IQR Program
because it encouraged care that raised potential safety concerns
according to newly published research suggesting that beta-blockers
could increase mortality risks for certain patient populations (74 FR
43863). Under such circumstances, we may not be able to wait until the
annual rulemaking cycle or until we have had the opportunity to obtain
input from the public to retire the measure because of the need to
discourage potentially harmful practices which may result from
continued collection of the measure.
In these situations, we would promptly retire the measure and
notify hospitals and the public of the retirement of the measure and
the reasons for its retirement through the usual communication
channels. Further, we would confirm the retirement of the measure that
was the subject of immediate retirement in the next program rulemaking.
Finally, we stated that, in other circumstances where we do not believe
that continued use of a measure raises specific safety concerns, we
intend to use the rulemaking process to retire a measure. For the same
reasons stated for the Hospital IQR Program, we believe that this
process also would be appropriate for the ASCQR Program. Therefore, we
are proposing to adopt this same removal process for the ASCQR Program.
Under this process, we would immediately remove an ASCQR Program
measure based on evidence that the continued use of the measure as
specified raised patient safety concerns. In these situations, we would
promptly remove the measure and notify ASCs and the public of the
removal of the measure and the reasons for its removal through the
ASCQR Program ListServ and the ASCQR Program QualityNet Web site at
http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772879650. Further, we would confirm the removal of the measure that was
the subject of immediate removal in the next OPPS/ASC rulemaking.
For situations where we do not believe that continued use of a
measure raises specific safety concerns, we are proposing to use the
regular rulemaking process to remove a measure to allow for public
comment. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53505 through
53506), we listed the criteria we have used to determine whether to
remove measures from the Hospital IQR Program. These criteria are: (1)
Measure performance among hospitals is so high and unvarying that
meaningful distinctions and improvements in performance can no longer
be made (``topped out'' measures); (2) availability of alternative
measures with a stronger relationship to patient outcomes; (3) a
measure does not align with current clinical guidelines or practice;
(4) the availability of a more broadly applicable (across settings,
populations, or conditions) measure for the topic; (5) the availability
of a measure that is more proximal in time to desired patient outcomes
for the particular topic; (6) the availability of a measure that is
more strongly associated with desired patient outcomes for the
particular topic; and (7) collection or public reporting of a measure
leads to negative unintended consequences other than patient harm.
These criteria were suggested through public comment on proposals for
the Hospital IQR Program and, we agreed that these criteria should be
considered in evaluating the Hospital IQR Program quality measures for
removal (75 FR 53506). We believe that these criteria also are
applicable in evaluating ASCQR Program quality measures for removal,
because we have found them useful for evaluating measures in the
Hospital IQR Program and our other quality reporting programs, which
share similar goals to the ASCQR Program. Accordingly, we are proposing
to adopt these measure removal criteria for the ASCQR Program.
We invite public comment on these proposals.
3. Proposed Criteria for Removal of ``Topped-Out'' Measures
We are proposing to define criteria for when we would consider a
measure to be ``topped-out.'' A measure is ``topped-out'' when measure
performance among ASCs is so high and unvarying that meaningful
distinctions and improvements in performance can no longer be made
(``topped-out'' measures). We do not believe that measuring ASC
performance on ``topped-out'' measures provides meaningful information
on the quality of care provided by ASCs. We further believe that
quality measures, once ``topped-out,'' represent care standards that
have been widely adopted by ASCs. We believe such measures should be
considered for removal from the ASCQR Program because their associated
reporting burden may outweigh the value of the quality information they
provide.
Specifically, we are proposing that a measure under the ASCQR
Program is ``topped-out'' when it meets both of the following criteria:
Statistically indistinguishable performance at the 75th
and 90th percentiles; and
A truncated coefficient of variation less than or equal to
0.10.
To identify if a measure has statistically indistinguishable
performance at the 75th and 90th percentiles, we would determine
whether the difference between the 75th and 90th percentiles for an
ASC's measure is within two times the standard error of the full
dataset. The coefficient of variation (CV) is a descriptive statistic
that expresses the standard deviation as a percentage of the sample
mean; this provides a

[[Page 41046]]

statistic that is independent of the units of observation. Applied to
this analysis, a large CV would indicate a broad distribution of
individual ASC scores, with large and presumably meaningful differences
between ASCs in relative performance. A small CV would indicate that
the distribution of individual hospital scores is clustered tightly
around the mean value, suggesting that it is not useful to draw
distinctions among individual ASCs' measure performance. The truncated
CV excludes observations whose rates are below the 5th percentile and
above the 95th percentile. This was done to avoid undue effects of the
highest and lowest outlier ASCs, which if included, would tend to
greatly widen the dispersion of the distribution and make the measure
appear to be more reliable or discerning. These same criteria for when
we would consider a measure to be ``topped-out'' have been proposed for
adoption in the Hospital VBP Program (79 FR 28119) and the Hospital IQR
Program (79 FR 28219).
We invite public comment on this proposal.
4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492
through 74517), we finalized our proposal to implement the ASCQR
Program beginning with the CY 2014 payment determination. In the CY
2012 OPPS/ASC final rule with comment period, we adopted five claims-
based measures for the CY 2014 payment determination and subsequent
years, two measures with data submission via an online Web page for the
CY 2015 payment determination and subsequent years, and one process of
care measure for the CY 2016 payment determination and subsequent years
(74 FR 74496 to 74511). In the CY 2014 OPPS/ASC final rule with comment
period, we adopted three chart-abstracted measures for the CY 2016
payment determination and subsequent years (78 FR 75124 to 75130).
The quality measures that we have previously adopted are listed
below.

ASC Program Measure Set Previously Adopted for the CY 2016 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
ASC No. NQF No. Measure name
------------------------------------------------------------------------
ASC-1...................... 0263 Patient Burn.
ASC-2...................... 0266 Patient Fall.
ASC-3...................... 0267 Wrong Site, Wrong Side,
Wrong Patient, Wrong
Procedure, Wrong Implant.
ASC-4...................... 0265 Hospital Transfer/
Admission.
ASC-5...................... 0264 Prophylactic Intravenous
(IV) Antibiotic Timing.
ASC-6...................... N/A Safe Surgery Checklist Use.
ASC-7...................... N/A ASC Facility Volume Data on
Selected ASC Surgical
Procedures. Procedure
categories and
corresponding HCPCS codes
are located at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%
2FPage%2FQnetTier2&cid=122
8772475754.
ASC-8...................... 0431 Influenza Vaccination
Coverage among Healthcare
Personnel.
ASC-9...................... 0658 Endoscopy/Polyp
Surveillance: Appropriate
Follow-Up Interval for
Normal Colonoscopy in
Average Risk Patients.
ASC-10..................... 0659 Endoscopy/Polyp
Surveillance: Colonoscopy
Interval for Patients with
a History of Adenomatous
Polyps-Avoidance of
Inappropriate Use.
ASC-11..................... 1536 Cataracts: Improvement in
Patient's Visual Function
within 90 Days Following
Cataract Surgery.*
------------------------------------------------------------------------
* We are proposing voluntary data collection starting in CY 2017 for
this previously adopted measure in section XIV.E.3.c. of this proposed
rule.

5. Proposed New ASCQR Program Quality Measure for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75124) for a detailed discussion of our approach to ASCQR
measure selection. In this proposed rule, we are proposing to adopt one
new claims-based measure into the ASCQR Program for the CY 2017 payment
determination and subsequent years: ASC-12: Facility Seven-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy.
Colonoscopy is the most commonly performed ambulatory surgery in
the United States.\15\ The most recent data available indicate that, in
2002 alone, physicians performed an estimated 14 million colonoscopies
in the United States.\16\ Colonoscopies are associated with a range of
well-described and potentially preventable adverse events that can lead
to hospital visits, repeat procedures, or surgical intervention for
treatment, including colonic perforation, gastrointestinal (GI)
bleeding, and cardiopulmonary events such as hypoxia, aspiration
pneumonia, and cardiac arrhythmias. While hospital visits are generally
unexpected after outpatient colonoscopy, the literature suggests that
the majority of these visits occur within the first 7
days.^{17 18 19} Reported hospital visit rates after outpatient
colonoscopy range from 0.8 to 1.0 percent at 7 to 14 days post
procedure, and from 2.4 to 3.8 percent at 30 days post
procedure.^{20 21 22} Some adverse events such as bleeding
occur after day 7, but based on input from clinical experts, public
comment, and

[[Page 41047]]

empirical analyses, we concluded that unplanned hospital visits within
7 days is the optimal outcome to ensure capture of procedure-related
adverse events and to minimize capture of hospital visits unrelated to
the procedure. This measure provides the opportunity for ASCs to
improve quality of care and to lower the rates of adverse events
leading to hospital visits after outpatient colonoscopy; this would
encourage ASCs to achieve the outcome rates of the best performers.
---------------------------------------------------------------------------

\15\ Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based
Ambulatory Surgery, 2007: Statistical Brief 86. Healthcare
Cost and Utilization Project (HCUP) Statistical Briefs. Rockville
(MD)2006.
\16\ Seeff LC, Richards TB, Shapiro JA, et al. How many
endoscopies are performed for colorectal cancer screening? Results
from CDC's survey of endoscopic capacity. Gastroenterology. Dec
2004;127(6):1670-1677.
\17\ Rathgaber SW, Wick TM. Colonoscopy completion and
complication rates in a community gastroenterology practice.
Gastrointest Endosc. 2006; 64:556-62.
\18\ Rabeneck L, Saskin R, Paszat LF. Onset and clinical course
of bleeding and perforation after outpatient colonoscopy: A
population-based study. Gastrointest Endosc. 2011; 73:520-3.
\19\ Ko CW, Riffle S, Michael L, et al. Serious complications
within 30 days of screening and surveillance colonoscopy are
uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73.
\20\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor
complications and time lost from normal activities after screening
or surveillance colonoscopy. Gastrointest Endosc. Apr
2007;65(4):648-656.
\21\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757.
\22\ Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A,
Brooks R. Is there a relationship between physician and facility
volumes of ambulatory procedures and patient outcomes? J Ambul Care
Manage. Oct-Dec 2008;31(4):354-369.
---------------------------------------------------------------------------

We believe it is important to reduce adverse patient outcomes
associated with preparation for colonoscopy, the procedure itself, and
follow-up care. Therefore, we are proposing to include the ASC-12:
Facility Seven-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy measure, which is based on Medicare FFS claims,
in the ASCQR Program for the CY 2017 payment determination and
subsequent years. We expect the measure would promote improvement in
patient care over time because transparency in publicly reporting
measure scores would make patient unplanned hospital visits (emergency
department visits, observation stays and inpatient admissions)
following colonoscopies more visible to ASCs and patients and
incentivize ASCs to incorporate quality improvement activities in order
to reduce these visits. ASCs are often unaware of complications
following colonoscopy for which patients visit the hospital.\23\ This
risk-standardized quality measure would address this information gap
and promote quality improvement by providing feedback to facilities and
physicians, as well as transparency for patients on the rates and
variation across facilities in unplanned hospital visits after
colonoscopy.
---------------------------------------------------------------------------

\23\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757.
---------------------------------------------------------------------------

The outcome measured in the ASC-12 measure is all-cause, unplanned
hospital visits (admissions, observation stays, and emergency
department visits) within 7 days of an outpatient colonoscopy
procedure. The measure score, also referred to as the facility-level
risk-standardized hospital visit rate, is derived from the calculation
of the ratio of the numerator to the denominator multiplied by the
crude rate. The numerator is the number of predicted (meaning adjusted
actual) hospital visits, which is the number of unplanned hospital
visits within seven days of colonoscopy that the facility is predicted
to have based on its case-mix. The denominator is the number of
expected hospital visits, which is the number of unplanned hospital
visits the facility is expected to have based on the nation's
performance with the facility's case-mix. The crude rate is the
national unadjusted number of patients who had a hospital visit post-
colonoscopy among all patients who had a colonoscopy.
Based on discussions with clinical and technical panel experts, the
measure excludes colonoscopies for patients undergoing concomitant
high-risk upper GI endoscopy because these patients are at a higher
risk for hospital visits than patients undergoing a typical
colonoscopy, and patients with a history of inflammatory bowel disease
(IBD) or diverticulitis in the year preceding the colonoscopy because
we likely could not fully characterize and adjust for their pre-
procedure risk of needing a post-procedure hospital visit or identify
whether these admissions are planned or unplanned. The measure also
excludes procedures for patients who lack continuous enrollment in
Medicare FFS Parts A and B in the first month after the procedure to
ensure all patients have complete data available for outcome
assessment. The statistical risk adjustment model includes 15
clinically relevant risk-adjustment variables that are strongly
associated with risk of hospital visits within seven days following a
colonoscopy. Additional methodology details, and information obtained
from public comment for measure development are available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
Section 1890A of the Act requires the Secretary to establish a pre-
rulemaking process with respect to the selection of certain categories
of quality and efficiency measures. Under section 1890A(a)(2) of the
Act, the Secretary must make available to the public by December 1st of
each year a list of quality and efficiency measures that the Secretary
is considering for the Medicare program. The measure that we are
proposing was reviewed by the MAP and was included on a publicly
available document entitled ``MAP Pre-Rulemaking Report: 2014
Recommendations on Measures for More than 20 Federal Programs''
(formerly referred to as the ``List of Measures Under Consideration'')
on the NQF Web site at: http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx (``MAP Report''). (We note
that at the time the measure was listed on the ``MAP Pre-Rulemaking
Report: 2014 Recommendations on Measures for More than 20 Federal
Programs'' it was named, ``High-Acuity Care Visits after Outpatient
Colonoscopy Procedure.'') The MAP conditionally supported this measure
for the ASCQR Program.
The MAP Report stated that the measure ``[s]hould be submitted for
and receive NQF endorsement; Measure is promising but needs further
development,'' (p. 187, MAP Report). Further, the MAP Report stated
that the measure ``would provide valuable outcome information to inform
consumer decision and drive quality improvement'' and that the ``NQF
endorsement process would resolve questions about the reliability and
validity of the measure.'' The MAP also stated that NQF endorsement
would resolve questions about ``the feasibility of the algorithm for
attributing claims data in light of possible effects of the Medicare
three-day payment window'' (p. 187, MAP Report). However, this concern
with Part A hospital payments relates to the Hospital OQR Program and
not the ASCQR Program. As required under section 1890A(a)(4) of the
Act, we considered the input and recommendations provided by the MAP in
selecting measures to propose for the ASCQR Program.
We believe we have addressed the concerns raised by the MAP to the
extent possible. The measure was submitted to NQF for endorsement on
February 21, 2014. The measure is well-defined and precisely specified
for consistent implementation within and between organizations that
will allow for comparability. Reliability testing demonstrated the
measure data elements produced were repeatable; that is, the same
results were produced a high proportion of the time when assessed in
the same population in the same time. Validity testing demonstrated
that the measure data elements produce measure scores that correctly
reflect the quality of care provided and that adequately identify
differences in quality.
Currently, there are no publicly available quality of care reports
for ASCs that conduct outpatient colonoscopies. Thus, adoption of this
measure provides an opportunity to enhance the information available to
patients choosing among ASCs who offer this elective procedure. We
believe this measure would reduce adverse patient outcomes associated
with preparation for colonoscopy, the procedure itself, and follow-up
care by capturing and making more visible to ASCs and patients all
unplanned hospital visits following the procedure.

[[Page 41048]]

In addition, providing outcome rates to ASCs would make visible to
clinicians meaningful quality differences and incentivize improvement.
Sections 1833(i)(7)(B) and 1833(t)(17)(C)(i) of the Act, when read
together, require the Secretary, except as the Secretary may otherwise
provide, to develop measures appropriate for the measurement of the
quality of care furnished by ASCs, that reflect consensus among
affected parties and, to the extent feasible and practicable, that
include measures set forth by one or more national consensus building
entities. As stated in the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74465 and 74505), we believe that consensus among
affected parties can be reflected through means other than NQF
endorsement, including consensus achieved during the measure
development process, consensus shown through broad acceptance and use
of measures, and consensus through public comment. We believe this
proposed measure meets these statutory requirements. We believe that
this measure is appropriate for the measurement of quality of care
furnished by ASCs because this procedure is commonly performed in ASCs
and, as discussed above, can signify important issues in the care being
provided in ASCs. We also believe this measure reflects consensus among
affected parties, because the MAP, which represents stakeholder groups,
reviewed and conditionally supported the measure, and stated that it
``would provide valuable outcome information to inform consumer
decision and drive quality improvement.'' Further, the measure was
subject to public comment during the MAP and measure development
processes, with some public commenters agreeing with the MAP's
conclusions on the measure (p. 187, MAP Report, January 2014; http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx).
As discussed above, the statute also requires the Secretary, except
as the Secretary may otherwise provide, to include measures set forth
by one or more national consensus building entities to the extent
feasible and practicable. This measure is not NQF-endorsed; however, as
noted above, this measure is currently undergoing the NQF endorsement
process. We note that section 1833(t)(17) of the Act does not require
that each measure we adopt for the ASCQR Program be endorsed by a
national consensus building entity, or by the NQF specifically.
Further, under section 1833(i)(7)(B) of the Act, section
1833(t)(17)(C)(i) of the Act, which contains this requirement, applies
to the ASCQR Program, except as the Secretary may otherwise provide.
Under this provision, the Secretary has further authority to adopt non-
endorsed measures.
In summary, we are proposing to adopt one new measure for the ASCQR
Program for the CY 2017 payment determination and subsequent years.

------------------------------------------------------------------------
Proposed ASCQR measure
for the CY 2017 payment
ASC No. NQF No. determination and
subsequent years
------------------------------------------------------------------------
ASC-12................ Pending.............. Facility Seven-Day Risk-
Standardized Hospital
Visit Rate after
Outpatient Colonoscopy.
------------------------------------------------------------------------

If this proposal is finalized, the measure set for the ASCQR
Program CY 2017 payment determination and subsequent years would be as
listed below.

Proposed ASC Program Measure Set for the CY 2017 Payment Determination
and Subsequent Years
------------------------------------------------------------------------
ASC No. NQF No. Measure name
------------------------------------------------------------------------
ASC-1...................... 0263 Patient Burn.
ASC-2...................... 0266 Patient Fall.
ASC-3...................... 0267 Wrong Site, Wrong Side,
Wrong Patient, Wrong
Procedure, Wrong Implant.
ASC-4...................... 0265 Hospital Transfer/
Admission.
ASC-5...................... 0264 Prophylactic Intravenous
(IV) Antibiotic Timing.
ASC-6...................... N/A Safe Surgery Checklist Use.
ASC-7...................... N/A ASC Facility Volume Data on
Selected ASC Surgical
Procedures.
Procedure categories and
corresponding HCPCS codes
are located at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2
&cid=1228772475754.
ASC-8...................... 0431 Influenza Vaccination
Coverage among Healthcare
Personnel.
ASC-9...................... 0658 Endoscopy/Polyp
Surveillance: Appropriate
Follow-Up Interval for
Normal Colonoscopy in
Average Risk Patients.
ASC-10..................... 0659 Endoscopy/Polyp
Surveillance: Colonoscopy
Interval for Patients with
a History of Adenomatous
Polyps-Avoidance of
Inappropriate Use.
ASC-11..................... 1536 Cataracts: Improvement in
Patient's Visual Function
within 90 Days Following
Cataract Surgery.*
ASC-12..................... Pending Facility Seven-Day Risk-
Standardized Hospital
Visit Rate after
Outpatient Colonoscopy.**
------------------------------------------------------------------------
* We are proposing voluntary data collection for this previously adopted
measure in section XIV.E.3.c. of this proposed rule.
** New measure proposed for CY 2017 payment determination and subsequent
years.

We invite public comment on our proposal to include ASC-12:
Facility Seven-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy in the ASCQR Program beginning with the CY 2017
payment determination.
6. ASCQR Program Measures for Future Consideration
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68493 through 68494), where we finalized our approach to
future measure selection for the ASCQR Program. We seek to develop a
comprehensive set of quality measures to be available for widespread
use for informed ``patient decision-making and quality improvement in
the ASC setting'' (77 FR 68496). We also seek to align these quality
measures with the National Quality Strategy (NQS), the CMS Strategic
Plan (which includes the CMS Quality Strategy), and our other quality
reporting and value-based

[[Page 41049]]

purchasing programs, as appropriate. Accordingly, in considering future
ASCQR Program measures, we are focusing on the following NQS and CMS
Quality Strategy measure domains: Make care safer; strengthen person
and family engagement; promote effective communication and coordination
of care; promote effective prevention and treatment; work with
communities to promote best practices of healthy living; and make care
affordable.
7. Maintenance of Technical Specifications for Quality Measures
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74513 through 74514), where we finalized our proposal to
follow the same process for updating the ASCQR Program measures that we
adopted for the Hospital OQR Program measures, including the
subregulatory process for making updates to the adopted measures. In
the CY 2013 OPPS/ASC final rule with comment period (77 FR 68496
through 68497) and the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75131), we provided additional clarification regarding the ASCQR
Program policy in the context of the previously finalized Hospital OQR
Program policy, including the processes for addressing nonsubstantive
and substantive changes to adopted measures.
We maintain technical specifications for previously adopted ASCQR
Program measures. These specifications are updated as we continue to
develop the ASCQR Program. The manuals that contain specifications for
the previously adopted measures can be found on the QualityNet Web site
at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
Many of the quality measures used in Medicare and Medicaid
reporting programs are NQF-endorsed. We note that two of the measures
previously adopted for the ASCQR Program are not NQF-endorsed, and NQF
endorsement is not a program requirement. However, for those measures
that are NQF-endorsed, the NQF requires measure stewards to submit
annual measure maintenance updates and undergo maintenance of
endorsement review every 3 years as part of its regular maintenance
process for NQF-endorsed performance measures. In the measure
maintenance process, the measure steward (owner/developer) is
responsible for updating and maintaining the currency and relevance of
the measure and will confirm existing or minor specification changes
with the NQF on an annual basis. The NQF solicits information from
measure stewards for annual reviews, and it reviews measures for
continued endorsement in a specific 3-year cycle.
We note that the NQF's annual or triennial maintenance processes
for endorsed measures may result in the NQF requiring updates to
measures in order to maintain endorsement status. Other non-NQF
measures may undergo maintenance changes as well. We believe that it is
important to have in place the subregulatory process that we have
adopted for the ASCQR Program to incorporate nonsubstantive updates
into the measure specifications for measures so that the measure
specifications remain current. We also recognize that some changes to
measures are substantive in nature and might not be appropriate for
adoption using a subregulatory process.
We are not proposing any changes to this policy.
8. Public Reporting of ASCQR Program Data
In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514
through 74515), we finalized a policy to make data that an ASC
submitted for the ASCQR Program publicly available on a CMS Web site
after providing an ASC an opportunity to review the data to be made
public. These data will be displayed at the CCN level. We are not
proposing any changes to this policy.

C. Payment Reduction for ASCs That Fail To Meet the ASCQR Program
Requirements

1. Statutory Background
We refer readers to section XV.C.1. of the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75131 through 75132) for a detailed
discussion of the statutory background regarding payment reductions for
ASCs that fail to meet the ASCQR Program requirements.
2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet the
ASCQR Program Requirements for a Payment Determination Year
The national unadjusted payment rates for many services paid under
the ASC payment system equal the product of the ASC conversion factor
and the scaled relative payment weight for the APC to which the service
is assigned. Currently, the ASC conversion factor is equal to the
conversion factor calculated for the previous year updated by the MFP-
adjusted CPI-U update factor, which is the adjustment set forth in
section 1833(i)(2)(D)(v) of the Act. The MFP-adjusted CPI-U update
factor is the Consumer Price Index for all urban consumers (CPI-U),
which currently is the annual update for the ASC payment system, minus
the MFP adjustment. As discussed in the CY 2011 MPFS final rule with
comment period (75 FR 73397), if the CPI-U is a negative number, the
CPI-U would be held to zero. Under the ASCQR Program, any annual update
would be reduced by 2.0 percentage points for ASCs that fail to meet
the reporting requirements of the ASCQR Program. This reduction would
apply beginning with the CY 2014 payment rates. For a complete
discussion of the calculation of the ASC conversion factor, we refer
readers to section XII.G. of this proposed rule.
In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499
through 68500), in order to implement the requirement to reduce the
annual update for ASCs that fail to meet the ASCQR Program
requirements, we finalized our proposal that we would calculate two
conversion factors: A full update conversion factor and an ASCQR
Program reduced update conversion factor. We finalized our proposal to
calculate the reduced national unadjusted payment rates using the ASCQR
Program reduced update conversion factor that would apply to ASCs that
fail to meet their quality reporting requirements for that calendar
year payment determination. We finalized our proposal that application
of the 2.0 percentage point reduction to the annual update may result
in the update to the ASC payment system being less than zero prior to
the application of the MFP adjustment.
The ASC conversion factor is used to calculate the ASC payment rate
for services with the following payment indicators (listed in Addenda
AA and BB to this proposed rule, which are available via the Internet
on the CMS Web site): ``A2,'' ``G2,'' ``P2,'' ``R2,'' ``Z2,'' as well
as the service portion of device-intensive procedures identified by
``J8.'' We finalized our proposal that payment for all services
assigned the payment indicators listed above would be subject to the
reduction of the national unadjusted payment rates for applicable ASCs
using the ASCQR Program reduced update conversion factor.
The conversion factor is not used to calculate the ASC payment
rates for separately payable services that are assigned status
indicators other than payment indicators ``A2,'' ``G2,'' ``J8,''
``P2,'' ``R2,'' and ``Z2.'' These services include separately payable
drugs and biologicals, pass-through devices that are contractor-priced,
brachytherapy sources that are paid based on the OPPS

[[Page 41050]]

payment rates, and certain office-based procedures and radiology
services where payment is based on the MPFS PE RVU amount and a few
other specific services that receive cost-based payment. As a result,
we also finalized our proposal that the ASC payment rates for these
services would not be reduced for failure to meet the ASCQR Program
requirements because the payment rates for these services are not
calculated using the ASC conversion factor and, therefore, not affected
by reductions to the annual update.
Office-based surgical procedures (performed more than 50 percent of
the time in physicians' offices) and separately paid radiology services
(excluding covered ancillary radiology services involving certain
nuclear medicine procedures or involving the use of contrast agents, as
discussed in section XII.C.1.b. of this proposed rule) are paid at the
lesser of the MPFS nonfacility PE RVU-based amounts and the standard
ASC ratesetting methodology. We finalized our proposal that the
standard ASC ratesetting methodology for this comparison would use the
ASC conversion factor that has been calculated using the full ASC
update adjusted for productivity. This is necessary so that the
resulting ASC payment indicator, based on the comparison, assigned to
an office-based or radiology procedure is consistent for each HCPCS
code regardless of whether payment is based on the full update
conversion factor or the reduced update conversion factor.
For ASCs that receive the reduced ASC payment for failure to meet
the ASCQR Program requirements, we believe that it is both equitable
and appropriate that a reduction in the payment for a service should
result in proportionately reduced copayment liability for
beneficiaries. Therefore, in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68500), we finalized our proposal that the
Medicare beneficiary's national unadjusted copayment for a service to
which a reduced national unadjusted payment rate applies would be based
on the reduced national unadjusted payment rate.
In that final rule with comment period, we finalized our proposal
that all other applicable adjustments to the ASC national unadjusted
payment rates would apply in those cases when the annual update is
reduced for ASCs that fail to meet the requirements of the ASCQR
Program (77 FR 68500). For example, the following standard adjustments
would apply to the reduced national unadjusted payment rates: The wage
index adjustment, the multiple procedure adjustment, the interrupted
procedure adjustment, and the adjustment for devices furnished with
full or partial credit or without cost. We believe that these
adjustments continue to be equally applicable to payment for ASCs that
do not meet the ASCQR Program requirements.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75132), we did not make any changes to these policies. We are not
proposing any changes to these policies.

D. Administrative Requirements

1. Requirements Regarding QualityNet Account and Security Administrator
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75132 through 75133) for a detailed discussion of the
QualityNet security administrator requirements, including setting up a
QualityNet account, and the associated timelines, for the CY 2014
payment determination and subsequent years. We are not proposing any
changes to these policies.
2. Requirements Regarding Participation Status
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75133 through 78 FR 75135) for a complete discussion of
the participation status requirements for the CY 2014 payment
determination and subsequent years. We are not proposing any changes to
these policies.

E. Form, Manner, and Timing of Data Submitted for the ASCQR Program

1. Requirements Regarding Data Processing and Collection Periods for
Claims-Based Measures Using Quality Data Codes (QDCs)
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75135) for a complete summary of the data processing and
collection periods for the claims-based measures using QDCs for the CY
2014 payment determination and subsequent years. We are not proposing
any changes to these policies.
2. Minimum Threshold, Minimum Case Volume, and Data Completeness for
Claims-Based Measures Using QDCs
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75135 through 75137) for a complete discussion of the
minimum thresholds, minimum case volume, and data completeness for
successful reporting for the CY 2014 payment determination and
subsequent years. We are not proposing any changes to these policies.
3. Requirements for Data Submitted Via a CMS Online Data Submission
Tool
a. Data Collection for ASC-6 and ASC-7
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74509) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75137 through 75138) for a complete discussion of the
requirements for data collection and submission for the ASC-6: Safe
Surgery Checklist Use and ASC-7: ASC Facility Volume Data on Selected
ASC Surgical Procedures measures for the CY 2015 payment determination
and subsequent years. We are not proposing any changes to these
policies.
b. Delayed Data Collection for ASC-9 and ASC-10
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124
through 75130), we adopted ASC-9: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk
Patients (NQF 0658) and ASC-10: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a History of Adenomatous
Polyps--Avoidance of Inappropriate Use (NQF 0659), two
additional chart-abstracted measures, and we finalized a policy that
aggregate data (numerators, denominators, and exclusions) on all ASC
patients would be collected via an online Web-based tool that would be
made available to ASCs via the QualityNet Web site.
We finalized that the data collection time period would be the
calendar year (January 1 to December 31) 2 years prior to the affected
payment determination year, and the data collected would be submitted
during the time period of January 1 to August 15 in the year prior to
the affected payment determination year. Thus, for the CY 2016 payment
determination, ASCs would be required to submit aggregate-level
encounter data from January 1, 2014 to December 31, 2014 using our Web-
based tool during the data submission window of January 1, 2015 to
August 15, 2015 (78 FR 75138 through 75139).
On December 31, 2013, we issued guidance stating that we would
delay the implementation of ASC-9 and ASC-10 for 3 months for the CY
2016 payment determination, with a resulting encounter period of April
1, 2014 to December 31, 2014 instead of January 1, 2014 to December 31,
2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036). The data

[[Page 41051]]

submission timeframe and the encounter period for subsequent years
remain as previously finalized (78 FR 75139).
c. Delayed Data Collection and Proposed Exclusion for ASC-11 for the CY
2016 Payment Determination and Proposed Voluntary Data Collection for
ASC-11 for CY 2017 and Subsequent Payment Determination Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period, where we adopted ASC-11: Cataracts--Improvement in Patient's
Visual Function within 90 Days Following Cataract Surgery (NQF
1536) beginning with the CY 2016 payment determination (78 FR
75129), and finalized the data collection and data submission timelines
(78 FR 75138 to 75139). This measure assesses the rate of patients 18
years and older (with a diagnosis of uncomplicated cataract) in a
sample who had improvement in visual function achieved within 90 days
following cataract surgery based on completing both a pre-operative and
post-operative visual function survey.
Since our adoption of this measure, we have come to believe that it
may be operationally difficult at this time for ASCs to collect and
report this measure. Specifically, we are concerned that the results of
the survey used to assess the pre-operative and post-operative visual
function of the patient may not be shared across clinicians and
facilities, making it difficult for ASCs to have knowledge of the
visual function of the patient before and after surgery. We are also
concerned about the surveys used to assess visual function; the measure
allows for the use of any validated survey and results may be
inconsistent should clinicians use different surveys.
Therefore, on December 31, 2013, we issued guidance stating that we
would delay data collection for ASC-11 for 3 months (data collection
would commence with April 1, 2014 encounters) for the CY 2016 payment
determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036). We issued additional guidance on April 2, 2014, stating that we
would further delay the implementation of ASC-11 for an additional 9
months, until January 1, 2015 for the CY 2016 payment determination,
due to continued concerns (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228773811586). Therefore, we are proposing to exclude ASC-11 Cataracts:
Improvement in Patient's Visual Function within 90 Days Following
Cataract Surgery (NQF 1536) from the CY 2016 payment
determination measure set. We would not subject ASCs to a payment
reduction with respect to this measure for the CY 2016 payment
determination.
We continue to believe that this measure addresses an area of care
that is not adequately addressed in our current measure set and the
measure serves to drive coordination of care (78 FR 75129). Further, we
believe ASCs should be a partner in care with physicians and other
clinicians using their facility and that this measure provides an
opportunity to do so. Therefore, we are continuing to include this
measure in the ASCQR Program measure set for the CY 2017 payment
determination and subsequent years. However, we understand the concerns
and, therefore, are proposing that data collection and submission be
voluntary for this measure for the CY 2017 payment determination and
subsequent years. ASCs would not be subject to a payment reduction for
failing to report this measure during the period of voluntary
reporting. For ASCs that choose to submit data, we continue to request
that they submit such data using the means and timelines finalized in
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75138 to
75139). Data submitted voluntarily will be publicly reported as
discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 75138 to 75139).
We invite public comment on this proposal.
4. Claims-Based Measure Data Requirements for the Proposed New Measure
for the CY 2017 Payment Determination and Subsequent Years
We are proposing to adopt the ASC-12: Facility Seven-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy measure,
which is a claims-based measure that does not require any additional
data submission apart from standard Medicare FFS claims. We are
proposing that, for this measure, which uses ASC Medicare claims data
as specified in the ASCQR Specifications Manual and does not require
any additional data submission such as QDCs, we would use paid Medicare
FFS claims from a 12-month period from July 1 of the year 3 years
before the payment determination year to June 30 of the following year.
Thus, for the CY 2017 payment determination for this measure, claims
from July 1, 2014 to June 30, 2015 would be used. We note that we are
proposing to adopt this measure under the Hospital OQR Program, as
described in section XIII.H.2.c. of this proposed rule. This ASCQR
Program time period provides for the timeliest data possible while
aligning the proposed data submission requirements with our Hospital
OQR Program proposal, which would use the claims-based measure data
submission requirements for the CY 2015 payment determination and
subsequent years that we adopted in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75111 through 75112).
We invite public comment on this proposal.
5. Data Submission Requirements for ASC-8 (Influenza Vaccination
Coverage Among Healthcare Personnel) Reported via the National
Healthcare Safety Network (NHSN) for the CY 2016 Payment Determination
and Subsequent Years
a. Previously Adopted Requirements for the CY 2016 Payment
Determination
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74510) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75139 through 75140) for a complete discussion of the
ASC-8 measure (Influenza Vaccination Coverage among Healthcare
Personnel) (NQF 0431), including the data collection timeframe
and the data reporting standard procedures for the CY 2016 payment
determination.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75139
through 75140), we finalized our proposal to use the data submission
and reporting standard procedures that have been set forth by the CDC
for NHSN participation in general and for submission of this measure to
NHSN. We refer readers to the CDC's NHSN Web site for detailed
procedures for enrollment (http://www.cdc.gov/nhsn/ambulatory-surgery/enroll.html), set-up (http://www.cdc.gov/nhsn/ambulatory-surgery/setup.html), and reporting (https://sams.cdc.gov) (user authorization
through Secure Access Management Services (SAMS) is required for access
to NHSN). We note that the reporting link has been updated in this
proposed rule.
b. Proposed Data Collection Timeframes for the CY 2017 Payment
Determination and Subsequent Years and Proposed Submission Deadlines
for the CY 2016 Payment Determination and Subsequent Years
In the CY 2012 OPPS/ASC final rule with comment period (76 FR
74510), we finalized that data collection for the CY 2016 payment
determination would be

[[Page 41052]]

from October 1, 2014 through March 31, 2015 (the 2014-2015 influenza
season data). We are proposing that for the CY 2017 payment
determination and subsequent years, ASCs would collect data from
October 1 of the year 2 years prior to the payment determination year
to March 31 of the year prior to the payment determination year. For
example, the CY 2017 payment determination would require data
collection from October 1, 2015 to March 31, 2016.
In the CY 2014 OPPS/ASC proposed rule, we proposed that ASCs would
have until August 15, 2015 to submit their 2014-2015 influenza season
data (October 1, 2014 through March 31, 2015) to NHSN. We stated that
this date is the latest date possible for data entry that would provide
sufficient time for CMS to make the CY 2016 payment determinations and
is aligned with the data entry deadline for the measures entered via
the CMS online tool (78 FR 43670). While some commenters supported this
proposal, others expressed disagreement with this proposal because it
differed from the May 15 deadline proposed for the Hospital IQR Program
(78 FR 27700, 50822) and the Hospital OQR Program (78 FR 43656, 75116
through 75117) and they believed this difference in deadlines could
cause confusion, thereby disadvantaging ASCs (78 FR 75140). Other
commenters believed that providing ASCs with a later deadline would
provide an unfair advantage because ASCs would have longer to submit
their data. Due to these concerns, we did not finalize the August 15,
2015 deadline. We stated that we intended to propose a submission
deadline for this measure for the CY 2016 payment determination in this
proposed rule.
In this proposed rule, we are proposing that May 15 of the year in
which the influenza season ends be the submission deadline for each
payment determination year, similar to the Hospital IQR and OQR
Programs. For example, for the CY 2016 payment determination, ASCs
would be required to submit their 2014-2015 influenza season data
(October 1, 2014 through March 31, 2015) by May 15, 2015. Similarly,
for the CY 2017 payment determination, ASCs would be required to submit
their 2015-2016 influenza season data (October 1, 2015 through March
31, 2016) by May 15, 2016. We believe a May 15 reporting deadline would
enable ASCs to use data summarizing the results of their previous
influenza vaccination campaign to set targets and make plans for their
influenza vaccination campaigns prior to the next influenza season.
This deadline also would enable us to post and the public to review the
summary data before the start of the next influenza season. Finally,
this date aligns to the May 15 deadline used in the Hospital IQR and
OQR Programs for this measure.
We invite public comment on this proposal.
6. ASCQR Program Validation of Claims-Based and CMS Web-Based Measures
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53641 through 53642) for a complete discussion of our policy not to
require validation of claims-based measures (beyond the usual claims
validation activities conducted by our administrative contractors) or
Web-based measures for the ASCQR Program, which is in alignment with
our requirements for the Hospital IQR and OQR Programs. We are not
proposing any changes to this policy.
7. Extraordinary Circumstances Extensions or Exemptions for the CY 2017
Payment Determination and Subsequent Years
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53642 through 53643) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75140 through 75141) for a complete discussion of our
extraordinary circumstances extension or waiver process under the ASCQR
Program. We are not proposing any substantive changes to these policies
or the processes. However, in the future, we will refer to the process
as the ``Extraordinary Circumstances Extensions or Exemptions'' process
rather than the ``Extraordinary Circumstances Extensions or Waivers''
process.
We also are in the process of revising the Extraordinary
Circumstances/Disaster Extension or Waiver Request form (CMS-10432),
approved under OMB control number 0938-1171. We are updating the
instructions and the form so that a hospital or facility may apply for
an extension for all applicable quality reporting programs at the same
time. In addition, the instructions for the form will be updated.
8. ASCQR Program Reconsideration Procedures for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53643 through 53644) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75141) for a complete discussion of our informal
reconsideration process for the ASCQR Program for the CY 2014 payment
determination and subsequent years. We are not proposing any changes to
the informal reconsideration process.

XV. Proposed Changes to the Rural Provider and Hospital Ownership
Exceptions to the Physician Self-Referral Law: Expansion Exception
Process

A. Background

1. Statutory Basis
Section 1877 of the Act, also known as the ``physician self-
referral law'' prohibits: (1) A physician from making referrals for
certain designated health services payable by Medicare to an entity
with which the physician (or an immediate family member) has a
financial relationship (ownership or compensation), unless an exception
applies; and (2) the entity from submitting claims to Medicare (or to
another individual, entity, or third party payer) for those designated
health services furnished as a result of a prohibited referral. The Act
establishes a number of specific exceptions to the physician self-
referral law and grants the Secretary the authority to create
regulatory exceptions that pose no risk of program or patient abuse.
Since the original enactment of the statute in 1989, we have published
a series of final rules interpreting the statute and promulgating
numerous exceptions.
Section 1877(d) of the Act sets forth exceptions related to
ownership and investment interests held by a physician (or an immediate
family member of a physician) in an entity that furnishes designated
health services. Section 1877(d)(2) of the Act provides an exception
for ownership and investment interests in rural providers. Under the
provision of section 1877(d)(2) of the Act, in order for an ownership
or investment interest to qualify for the exception, the designated
health services must be furnished in a rural area (as defined in
section 1886(d)(2) of the Act), and substantially all of the designated
health services furnished by the entity must be furnished to
individuals residing in a rural area. Section 1877(d)(3) of the Act
provides the hospital ownership exception, often referred to as the
``whole hospital exception,'' for ownership and investment interests in
a hospital located outside of Puerto Rico, provided that the referring
physician is authorized to perform services at the hospital and the
ownership or investment interest is in the hospital itself (and not
merely in a subdivision of the hospital).

[[Page 41053]]

2. Affordable Care Act Amendments to the Rural Provider and Hospital
Ownership Exceptions to the Physician Self-Referral Law
Section 6001(a) of the Affordable Care Act amended the rural
provider and whole hospital exceptions to the physician self-referral
law to impose additional restrictions on physician ownership and
investment in rural providers and hospitals. Section 6001(a) defines a
``physician owner or investor'' as a physician, or immediate family
member of a physician, who has a direct or indirect ownership or
investment interest in a hospital. We refer to hospitals with direct or
indirect physician owners or investors as ``physician-owned
hospitals.''
Section 6001(a)(3) of the Affordable Care Act established new
section 1877(i) of the Act, which imposes additional requirements for
physician-owned hospitals to qualify for the rural provider or whole
hospital exception. In addition to other requirements, section
1877(i)(1) of the Act prohibits a physician-owned hospital from
expanding its facility capacity beyond the number of operating rooms,
procedure rooms, and beds for which the hospital was licensed as of
March 23, 2010, unless an exception is granted by the Secretary.
Section 1877(i)(3) of the Act requires the Secretary to establish
and implement an exception process to the prohibition on expansion of
facility capacity. We refer to this process as the ``expansion
exception process.'' Section 1877(i)(3)(A)(i) of the Act provides that
a hospital qualifying as an ``applicable hospital'' or a ``high
Medicaid facility'' may apply for an expansion exception. Section
1877(i)(3)(E) of the Act sets forth the eligibility criteria for
applicable hospitals, which include criteria concerning inpatient
Medicaid admissions, bed capacity, and bed occupancy. Section
1877(i)(3)(F) of the Act sets forth the eligibility criteria for high
Medicaid facilities, which include a criterion concerning inpatient
Medicaid admissions.
In the CY 2011 OPPS/ASC final rule with comment period (75 FR
72240), we addressed many of the additional requirements that were
established by section 6001(a) of the Affordable Care Act for the rural
provider and whole hospital exceptions, including the prohibition on
expansion of facility capacity. In that final rule with comment period,
we finalized regulations at 42 CFR 411.362(b)(2) that prohibit a
physician-owned hospital from increasing the number of operating rooms,
procedure rooms, and beds beyond that for which the hospital was
licensed on March 23, 2010 (or, in the case of a physician-owned
hospital that did not have a provider agreement in effect as of that
date, but did have a provider agreement in effect on December 31, 2010,
the effective date of such agreement), if the hospital seeks to avail
itself of the rural provider or whole hospital exception.
In the CY 2012 OPPS/ASC final rule with comment period (76 FR
74517), we promulgated regulations under 42 CFR 411.362(c) that govern
the expansion exception process. Section 411.362(c)(2) sets forth the
criteria for a physician-owned hospital to qualify for an expansion
exception as an applicable hospital. Specifically, Sec. 411.362(c)(2)
states that: (1) The hospital's annual percent of total inpatient
admissions under Medicaid must be equal to or greater than the average
percent with respect to such admissions for all hospitals located in
the county in which the hospital is located during the most recent
fiscal year for which data are available as of the date that the
hospital submits its exception request; (2) the hospital must be
located in a State in which the average bed capacity in the State is
less than the national average bed capacity during the most recent
fiscal year for which data are available as of the date that the
hospital submits its request; and (3) the hospital must have an average
bed occupancy rate that is greater than the average bed occupancy rate
in the State in which the hospital is located during the most recent
fiscal year for which data are available as of the date that the
hospital submits its request.
Section 411.362(c)(3) specifies the criteria for a physician-owned
hospital seeking an exception under the expansion exception process on
the basis that it is a high Medicaid facility, including the
requirement that, with respect to each of the 3 most recent fiscal
years for which data are available as of the date that the hospital
submits its exception request, the hospital must have an annual percent
of total inpatient admissions under Medicaid that is estimated to be
greater than such percent with respect to such admissions for any other
hospital located in the county in which the hospital is located.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42350 through 42352),
we proposed that data from the CMS Healthcare Cost Report Information
System (HCRIS) be used to determine whether a hospital satisfies the
inpatient Medicaid admissions, bed capacity, and bed occupancy criteria
for applicable hospitals and the inpatient Medicaid admissions
criterion for high Medicaid facilities. We requested public comments
concerning alternative data sources that could result in more accurate
determinations as to whether a hospital satisfies the relevant criteria
(76 FR 42350). The public comments that we received provided no
persuasive support for a data source more accurate than the filed
hospital cost report data reported to HCRIS and, therefore, we
finalized the requirement to use filed hospital cost report data for
purposes of facility capacity expansion exception requests in the CY
2012 OPPS/ASC final rule with comment period (76 FR 74518). We refer to
the filed hospital cost report data that are required under our
existing regulations as ``HCRIS data'' in this proposal.
As required by section 1877(i)(3)(A) of the Act, the regulations
addressing the expansion exception process in the CY 2012 OPPS/ASC
final rule with comment period were issued by January 1, 2012, and the
process was implemented on February 1, 2012.

B. Limitations Identified by Stakeholders Regarding the Required Use of
HCRIS Data

Following the implementation of the expansion exception process,
industry stakeholders informed us of what they believed to be certain
limitations regarding the required use of HCRIS data, which we describe
in the following two sections.
1. Medicaid Managed Care Data
Existing Sec. 411.362(c)(2)(ii) provides that an applicable
hospital must use filed cost report discharge data to estimate its
annual percent of total inpatient admissions under Medicaid for the
most recent fiscal year for which data are available. Existing Sec.
411.362(c)(3)(ii) similarly provides that a high Medicaid facility must
use filed cost report discharge data to estimate its annual percent of
total inpatient admissions under Medicaid and such percent for every
other hospital located in its county for each of the 3 most recent
fiscal years for which data are available.
Since the issuance and implementation of this rule, several
industry stakeholders have informed us that a correctly completed
hospital cost report does not include Medicaid managed care admissions
or discharges and, therefore, Medicaid managed care admissions and
discharges are not available in HCRIS. The industry stakeholders
claimed that, because HCRIS data does not include Medicaid managed care
admissions or discharges, they are unable to satisfy Sec. Sec.
411.362(c)(2)(ii) and (c)(3)(ii) and,

[[Page 41054]]

thus, cannot qualify for an exception under the existing expansion
exception process, despite claiming to have served a significant number
of total Medicaid patients.
After being notified of this issue, we confirmed that hospitals
cannot report Medicaid managed care admissions or discharges through
their hospital cost reports and that this information is not available
in HCRIS. In addition, we have concluded that the information collected
currently through HCRIS cannot be used to estimate Medicaid managed
care admissions or discharges for purposes of estimating inpatient
Medicaid admissions under Sec. Sec. 411.362(c)(2)(ii) and (c)(3)(ii).
We believe that some physician-owned hospitals that serve a
significant number of Medicaid managed care patients and are interested
in the expansion exception process may fail to qualify for an exception
based on the exclusion of Medicaid managed care data. Accordingly, as
detailed in section XV.C. of this proposed rule, we are proposing to
revise the expansion exception process to permit physician-owned
hospitals to use filed hospital cost report data, data from internal
data sources, or data from external data sources to estimate the
required percentages of inpatient admissions under Medicaid. (We refer
in this proposal to the non-HCRIS internal data sources and external
data sources that we are proposing to permit for purposes of the
expansion exception process as ``supplemental data sources.'') We
believe that our proposal to permit the use of supplemental data
sources is necessary to effectuate section 6001(a) of the Affordable
Care Act for those physician-owned hospitals that are unable to satisfy
the criteria for an expansion exception using only HCRIS data.
2. Hospitals That Lack Filed Cost Reports for the Relevant Fiscal Years
As stated above, existing Sec. 411.362(c)(3)(ii) provides that a
high Medicaid facility must use filed cost report discharge data to
estimate its annual percent of total inpatient admissions under
Medicaid and such percent for every other hospital located in its
county for each of the 3 most recent fiscal years for which data are
available. One industry stakeholder, seeking to avail itself of the
whole hospital exception, stated that it would like to expand its
facility capacity by qualifying as a high Medicaid facility. The
stakeholder claimed that, although it treated Medicaid patients during
the relevant 3-year period, it does not have filed cost report
discharge data available for each of the relevant fiscal years because
it was not a Medicare participating provider during the entire period.
The industry stakeholder further claimed that it is unable to request
an exception as a high Medicaid facility until it has 3 years of the
required filed cost report data.
The stakeholder is correct that a hospital that has not
participated as a provider in the Medicare program for all of the 3
most recent fiscal years for which data are available would be
precluded from seeking a facility expansion exception. It would be
similarly prohibitive if the hospitals in the county in which the
requesting hospital is located were not Medicare participating
providers or were not participating in the Medicare program for the
entire period for which comparisons are required under the statute and
our regulations. We find this to be another persuasive reason to permit
the use of supplemental data sources and, as such, we are proposing to
permit the use of other data sources, as further detailed in section
XV.C. of this proposed rule, for physician-owned hospitals to estimate
the percentages of inpatient admissions under Medicaid for Sec.
411.362(c)(3)(ii). We believe that our proposal will enable physician-
owned hospitals to perform the comparison set forth in Sec.
411.362(c)(3)(ii), even if the requesting hospital and/or another
hospital located in its county lacks filed hospital cost report data
for some or all of the relevant fiscal years. We note that the proposal
would apply regardless of the reason that the requesting hospital and/
or another hospital in its county lacks filed hospital cost report
data.
The industry stakeholder that informed us of this issue would like
to qualify as a high Medicaid facility; therefore, the stakeholder's
comments addressed only the inpatient Medicaid admissions criterion for
high Medicaid facilities. However, as stated above, hospitals seeking
to qualify as an applicable hospital also use filed hospital cost
report data for the inpatient Medicaid admissions, bed capacity, and
bed occupancy criteria set forth in Sec. 411.362(c)(2). We recognize
that these hospitals may also lack filed hospital cost report data or
may be subject to comparisons against other hospitals that lack filed
cost report data for the relevant fiscal year. Therefore, as further
detailed in section XV.C. of this proposed rule, we are proposing to
permit the use of supplemental data sources for the inpatient Medicaid
admissions, bed capacity, and bed occupancy criteria for applicable
hospitals.

C. Proposed Changes To Permit Supplemental Data Sources in the
Expansion Exception Process

Given the limitations regarding the required use of HCRIS data
described in sections XV.B.1. and XV.B.2. of this proposed rule, we are
proposing to revise our regulations at Sec. Sec. 411.362(c)(2)(ii),
(c)(2)(iv), (c)(2)(v), and (c)(3)(ii) to permit physician-owned
hospitals to use data from certain internal data sources or external
data sources, in addition to HCRIS data, in order to estimate the
percentages of inpatient Medicaid admissions, and to determine the bed
capacities and the bed occupancy rates referenced in those sections. We
are not prescribing that hospitals use a specific individual data
source or combination of data sources.
We are proposing that, for purposes of the expansion exception
process, internal data sources are sources generated, maintained, or
under the control of the Department. The following list provides
examples of internal data sources that we are proposing physician-owned
hospitals may use in the expansion exception process:
Healthcare Cost and Utilization Project (HCUP)--HCUP is a
family of health care databases and related software tools and products
developed through a Federal-State-industry partnership and sponsored by
the Agency for Healthcare Research and Quality (AHRQ). HCUP databases
bring together the data collection efforts of State data organizations,
hospital associations, private data organizations, and the Federal
government to create a national information resource of encounter-level
health care data (HCUP Partners).
Medicaid Statistical Information System (MSIS)--States
report Medicaid data through MSIS. Through this system, States submit
raw eligibility and claims data to CMS, which CMS uses to produce
Medicaid program characteristics and utilization information.
Medicaid Analytic Extract (MAX)--MAX data are person-level
data files on Medicaid eligibility, service utilization, and payment
information for all individuals, whether or not they used any Medicaid
services in a given calendar year. The purpose of MAX is to produce
data to support research and policy analysis on Medicaid populations.
We also are seeking public comments that recommend other possible
internal data sources.
We are proposing that, for purposes of the expansion exception
process,

[[Page 41055]]

external data sources are data sources generated, maintained, or under
the control of a State Medicaid agency. We are seeking public comments
that recommend other possible external data sources, including those of
other State agencies or departments.
We are proposing to define the terms ``internal data source'' and
``external data source'' in Sec. 411.351. We recognize the need for an
accurate and consistent expansion exception process. Accordingly, we
are proposing to define ``internal data source'' to include only non-
HCRIS data sources that are reliable and transparent, and that maintain
or generate data that are accurate, complete, and objectively
verifiable for purposes of the expansion exception process. In
addition, we are proposing to define ``external data source'' to
include only data sources that are reliable and transparent, and that
maintain or generate data that are accurate, complete, and objectively
verifiable for purposes of the expansion exception process. Finally, we
are proposing in Sec. 411.351 that internal data sources and external
data sources must maintain data that are readily available and
accessible to the requesting hospital, comparison hospitals, and to CMS
for purposes of the expansion exception process. We note that the
expansion exception process includes both the physician-owned
hospital's completion of its request and CMS' consideration of the
physician-owned hospital's request.
We believe that the supplemental data sources should--
Be transparent regarding what comprises the data, where
the data originated, and the manner and method by which the data source
received the data;
Be maintained on a secure database that prevents
distortion or corruption of data and that ensures the accuracy of the
data;
Contain sufficient information to enable accurate
estimates of the percentages of inpatient Medicaid admissions, and
accurate determinations of bed capacities and bed occupancy rates;
Contain sufficient information to enable the comparisons
required by Sec. Sec. 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and
(c)(3)(ii) for the fiscal year(s) at issue; and
Contain sufficiently clear and detailed data that will
enable multiple users to produce consistent results and outcomes when
using the same data set.
Under the existing expansion exception process, CMS uses HCRIS data
to provide the average percent of total inpatient Medicaid admissions
per county, the average bed capacity per State, the national average
bed capacity, and the average bed occupancy rate per State on the CMS
Web site at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html. If we finalize
our proposal to permit the use of supplemental data sources, we plan to
continue to provide HCRIS-based information and issue guidance on the
potential use of supplemental data sources on the CMS Web site.
We recognize that if a physician-owned hospital uses data from a
supplemental data source, the hospitals may ultimately need to make
estimates or determinations in addition to those referenced in our
existing regulations. Accordingly, we are proposing to revise our
regulations to allow for the additional estimates or determinations
that may be necessary under our revised process. Specifically, we are
proposing to permit a requesting hospital to use data from a
supplemental data source to:
Estimate its own annual percentage of inpatient Medicaid
admissions (Sec. 411.362(c)(2)(ii)).
Estimate the average percentage with respect to such
admissions for all hospitals located in the county in which the
hospital is located (Sec. 411.362(c)(2)(ii)).
Determine the average bed capacity in the State in which
the hospital is located (Sec. 411.362(c)(2)(iv)).
Determine the national average bed capacity (Sec.
411.362(c)(2)(iv)).
Determine its own average bed occupancy rate (Sec.
411.362(c)(2)(v)).
Determine the average bed occupancy rate for the State in
which the hospital is located (Sec. 411.362(c)(2)(v)).
Estimate its annual percentage of total inpatient
admissions under Medicaid for each of the 3 most recent fiscal years
for which data are available (Sec. 411.362(c)(3)(ii)).
Estimate the annual percentages of total inpatient
admissions under Medicaid for every other hospital located in the
county in which the hospital is located for each of the 3 most recent
fiscal years for which data are available (Sec. 411.362(c)(3)(ii)).
We note that section 1877(i)(3)(F) of the Act requires that a high
Medicaid facility use data from the 3 most recent fiscal years for
which data are available. In the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74518), we stated that we consider the most
recent fiscal year for which data are available to be the most recent
year for which HCRIS contains data from at least 6,100 hospitals. We
currently apply this standard to expansion exception requests for both
applicable hospitals and high Medicaid facilities. We are proposing to
revise our standard so that the most recent fiscal year for which data
are available would be the year for which the data source(s) used in an
expansion exception request contain sufficient data to perform the
comparisons required under Sec. Sec. 411.362(c)(2)(ii), (c)(2)(iv),
(c)(2)(v), and (c)(3)(ii). Specifically, we are proposing that data
sources, either alone or in combination with other data sources, would
be considered to contain ``sufficient data'' if they contain all data
from the requesting hospital and each hospital to which the requesting
hospital must compare itself that are necessary to perform the
estimates required in the expansion exception process. In addition,
with respect to a hospital seeking an expansion exception as an
applicable hospital, we are proposing that, in order to be considered
to contain ``sufficient data,'' the data sources, either alone or in
combination with other data sources, must contain the data necessary to
determine the State and national average bed capacity and the average
bed occupancy rate in the State in which the requesting hospital is
located for purposes of the expansion exception process.
Modifying our current interpretation of ``the most recent fiscal
year for which data are available'' would allow physician-owned
hospitals in counties or States where all data necessary to perform the
required estimates and determinations have been filed or otherwise
included in the permissible data source(s) to proceed with an expansion
exception request, even if hospitals unrelated to the request have not
filed or otherwise submitted data to the source(s) being used in the
hospital's request. We also are proposing to require that data from the
same fiscal year be used for the applicable hospital eligibility
criteria at Sec. Sec. 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), even
if the hospital uses multiple data sources for those criteria. We
believe that requiring the use of data from the same fiscal year will
ensure consistency and equitability in the expansion exception process.
We are seeking public comments on our proposal to revise the standard
that determines the most recent fiscal year(s) for which data are
available, as well as other ways to define ``sufficient data'' for
purposes of the expansion exception process.
In addition, we are proposing to require that the requesting
hospital provide actual notification directly to hospitals whose data
are part of the comparisons set forth under

[[Page 41056]]

Sec. Sec. 411.362(c)(2)(ii) and (c)(3)(ii) of the regulations. Under
proposed Sec. 411.362(c)(5), the notification must be in writing, in
either electronic or hard copy form, and must be provided at the same
time that the hospital discloses on any public Web site for the
hospital that it is requesting an exception. This additional safeguard
would ensure that comparison hospitals are aware of the opportunity to
confirm or dispute the accuracy or reliability of the data in the
physician-owned hospital's request.
Finally, our existing regulations at Sec. 411.362(c)(5) set forth
the process for community input and the timing of a complete expansion
exception request. These regulations provide for a 30-day comment
period following publication in the Federal Register of notice of the
physician-owned hospital's expansion exception request and a 30-day
rebuttal period for the requesting hospital to respond, if it chooses,
to any written comments that CMS receives from the community.
Currently, an expansion exception request is considered complete at the
end of the 30-day comment period if CMS does not receive written
comments from the community. If CMS receives written comments from the
community, the request is considered complete at the end of the 30-day
rebuttal period, regardless of whether the requesting hospital submits
a rebuttal statement. We believe that permitting the use of data from
an internal data source or an external data source would likely require
additional time for our review of an expansion exception request,
including any comments submitted with respect to the request. For
example, CMS may need to obtain the data from the original source,
confirm that the data presented in the request are an accurate
representation of the original source data, and objectively verify the
estimates and determinations presented in the request. Therefore, we
are proposing to revise our regulations at Sec. 411.362(c)(5) to
extend the date by which certain expansion exception requests will be
deemed complete. Specifically, we are proposing to revise Sec.
411.362(c)(5) to provide that, where the request, any written comments,
and any rebuttal statement include only HCRIS data, an expansion
exception request will be deemed complete no later than: (1) The end of
the 30-day comment period if no written comments from the community are
received; and (2) the end of the 30-day rebuttal period if written
comments from the community are received, regardless of whether the
physician-owned hospital submitting the request submits a rebuttal
statement. We also are proposing that, where the request, any written
comments, or a rebuttal statement includes data from a supplemental
data source, an expansion exception request will be deemed complete no
later than: (1) 180 days after the end of the 30-day comment period if
no written comments from the community are received; and (2) 180 days
after the end of the 30-day rebuttal period if written comments from
the community are received, regardless of whether the physician-owned
hospital submitting the request submits a rebuttal statement.
We note that additional revisions may be necessary to conform our
regulations at Sec. 411.362(c) if we finalize our proposal to permit
the use of supplemental data sources.

D. Additional Considerations

As stated above, we recognize the need for an accurate and
consistent expansion exception process. We are aware that data sources
have unique characteristics due to their inputs, collection methods,
compilation, and other factors, and will take this into consideration
if we finalize our proposal to permit the use of supplemental data
sources. In an effort to implement an accurate and consistent expansion
exception process, we are seeking public comments on the utility,
appropriateness, and limitations of our proposal to permit the use of
supplemental data sources. Specifically, we are seeking public comments
that:
Address whether permitting the use of supplemental
internal or external data sources would significantly affect the
outcomes for any of the estimates or determinations required in our
regulations.
Address whether permitting the use of supplemental data
sources would materially affect a physician-owned hospital's ability to
request an exception or CMS' determination on an exception request.
Describe the length of time that would be necessary to
obtain or generate the required data from a specific data source.
Address whether and when the data will be available and
accessible per fiscal year.
Address whether the data will be available and accessible
in a format that enables the requesting hospital to perform the
necessary comparisons.
Describe how supplemental data sources could or should be
prioritized, including, but not limited to, rankings related to
accuracy or reliability.
Describe how data from a particular data source could be
used in the expansion exception process. We encourage commenters to
specify whether a particular data source already maintains the
percentages or rates required, or whether calculations will be
necessary to generate the required percentages or rates. If
calculations will be necessary, we are requesting that commenters
describe the calculations.
Describe the cost to industry stakeholders, State
governments, and the Federal government for obtaining or generating
data from any potential data sources. We consider cost to include both
resources (for example, human capital and information technology) and
actual financial burden (for example, fees to use or purchase the
data). We also seek public comments on whether any additional burdens
would affect the quality of care for beneficiaries as a result of
additional costs borne by a requesting hospital.

XVI. Proposed Revision of the Requirements for Physician Certification
of Hospital Inpatient Services Other Than Psychiatric Inpatient
Services

In the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27644 through
27650), we discussed the statutory requirement for certification of
hospital inpatient services for payment under Medicare Part A. The
certification requirement for inpatient services other than psychiatric
inpatient services is found in section 1814(a)(3) of the Act, which
provides that Medicare Part A payment will only be made for such
services ``which are furnished over a period of time, [if] a physician
certifies that such services are required to be given on an inpatient
basis.''
In commenting on our FY 2014 proposal, some commenters argued that
the statutory reference to services furnished ``over a period of time''
and the then-existing regulation's lack of any specific deadline for
physician certifications in nonoutlier cases indicate that no
certification is required for short-stay cases. In support of their
argument, the commenters cited the legislative history of section
1814(a)(3) of the Act, which these commenters interpreted as indicating
that the certification requirements should apply only to certain long-
term stays.
As we indicated in our response to these public comments in the FY
2014 IPPS/LTCH PPS final rule (78 FR 50939), we do not agree with the
assertion that the only possible interpretation of the statute is that
the requirement for physician certification only applies to long-stay
cases. The statute does not define ``over a period of time,'' and
further provides that ``such

[[Page 41057]]

certification shall be furnished only in such cases, and with such
frequency, and accompanied by such supporting material . . . as may be
provided by regulations.'' By this language, Congress explicitly
delegated authority to the agency to elucidate this provision of the
statute by regulation.
In our current regulations, we have interpreted the statute's
requirement of a physician certification for inpatient hospital
services furnished ``over a period of time'' to apply to all inpatient
admissions. While this is not the only possible interpretation of the
statute, we believe that it is a permissible interpretation.
We continue to believe that the requirement of an order from a
physician or other qualified practitioner in order to trigger an
inpatient hospital admission as specified in 42 CFR 412.3 is necessary
for all inpatient admissions. As described more fully in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50938 through 50954), the requirement
for a physician order for a hospital inpatient admission has long been
clear in the Medicare hospital conditions of participation (CoPs), and
we promulgated Sec. 412.3 to make more explicit that admission
pursuant to this order is the means whereby a beneficiary becomes a
hospital inpatient and, therefore, is required for payment of hospital
inpatient services under Medicare Part A. A beneficiary becomes a
hospital inpatient when admitted as such after a physician (or other
qualified practitioner as provided in the regulations) orders inpatient
admission in accordance with the CoPs, and Medicare pays under Part A
for such an admission if the order is documented in the medical record.
The order must be supported by objective medical information for
purposes of the Part A payment determinations. Thus, the physician
order must be present in the medical record and be supported by the
physician admission and progress notes in order for the hospital to be
paid for hospital inpatient services.
As further noted in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50938 through 50954), we believe the additional certification
requirements now specified under 42 CFR 424.13(a)(2), (a)(3), and
(a)(4) (that is, the reason for hospitalization, the estimated time the
patient will need to remain in the hospital, and the plan of
posthospital care, if applicable) generally can be satisfied by
elements routinely found in a patient's medical record, such as
progress notes.
However, as we look to achieve our policy goals with the minimum
administrative requirements necessary, and after considering previous
public comments and our experience with our existing regulations, we
believe that, in the majority of cases, the additional benefits (for
example, as a program safeguard) of formally requiring a physician
certification may not outweigh the associated administrative
requirements placed on hospitals. Therefore, while we continue to
believe that the inpatient admission order is necessary for all
inpatient admissions, we are proposing to require such orders as a
condition of payment based upon our general rulemaking authority under
section 1871 of the Act rather than as an element of the physician
certification under section 1814(a)(3) of the Act. Section 1871 of the
Act authorizes the Secretary ``to prescribe such regulations as may be
necessary to carry out the administration of the insurance programs
under [Title XVIII].'' A clear regulatory definition of when and how a
beneficiary becomes an inpatient is necessary to carry out the
administration of Medicare Part A. Section 1861(b) of the Act defines
``inpatient hospital services'' as certain items and services furnished
to ``an inpatient of a hospital,'' but does not define ``an inpatient
of a hospital.'' Accordingly, 42 CFR 412.3 provides the necessary
definition for purposes of Medicare Part A payment by clarifying when
``an individual is considered an inpatient of a hospital, including a
critical access hospital.'' We are proposing to remove paragraph (c)
from Sec. 412.3. As we are proposing to rely on a different statutory
authority for such regulation, an admission order would no longer be a
required component of physician certification of medical necessity.
As to the physician certification requirement, we maintain that our
existing longstanding policy is based upon a permissible interpretation
of section 1814(a)(3) of the Act pursuant to that provision's express
delegation of authority to the agency to determine the circumstances
under which such certification should be required. Nonetheless, after
consideration of public feedback, our experience under the existing
regulations, and our policy goals, we are proposing to change our
interpretation of section 1814(a)(3) of the Act to require a physician
certification only for long-stay cases and outlier cases.
As noted above, we believe that, in most cases, the admission
order, medical record, and progress notes will contain sufficient
information to support the medical necessity of an inpatient admission
without a separate requirement of an additional, formal, physician
certification. However, we believe that evidence of additional review
and documentation by a treating physician beyond the admission order is
necessary to substantiate the continued medical necessity of long or
costly inpatient stays. While granting the Secretary broad discretion
to determine the circumstances under which a physician certification
should be required, the statute specifies that the certification by a
physician with respect to inpatient hospital services (other than
inpatient psychiatric hospital services) ``shall be furnished no later
than the 20th day'' of the stay. Because the statute specifically
requires that certification must occur no later than the 20th day, we
believe that, at a minimum, Congress intended that physicians should
conduct a more thorough review of such cases to help ensure that all
requirements of medical necessity continue to be met. We also note the
current regulations at Sec. 424.13(f)(2) specify our longstanding
requirement that the physician certification for cost outlier cases
occur no later than 20 days into the hospital stay, and we are not
proposing to change the requirements for these cases. Therefore, we
believe that, for nonoutlier cases, 20 days is also an appropriate
minimum threshold for the physician certification, and we are proposing
to define long-stay cases as cases with stays of 20 days or longer.
Specifically, in this proposed rule, we are proposing to revise
paragraph (a) of Sec. 424.13 to specify that ``Medicare Part A pays
for inpatient hospital services (other than inpatient psychiatric
facility services) for cases that are 20 inpatient days or more, or are
outlier cases under subpart F of Part 412 of this chapter, only if a
physician certifies or recertifies the following:

(1) The reasons for either--
(i) Continued hospitalization of the patient for medical
treatment or medically required diagnostic study; or
(ii) Special or unusual services for cost outlier cases (under
the prospective payment system set forth in subpart F of part 412 of
this chapter).
(2) The estimated time the patient will need to remain in the
hospital.
(3) The plans for posthospital care, if appropriate.''

We also are proposing to revise paragraph (b) of Sec. 424.13 to
specify that certifications for long-stay cases must be furnished no
later than 20 days into the hospital stay.
Because the care furnished in inpatient psychiatric facilities is
often purely custodial and therefore not covered under Medicare and
because the primary purpose of the certification

[[Page 41058]]

of these cases is to help ensure that Medicare pays only for services
of the type appropriate for Medicare coverage, we are not proposing
changes to the certification requirements for inpatient psychiatric
hospital services.
As discussed more fully in the FY 2014 IPPS/LTCH PPS final rule (78
FR 50942 through 50943), there also are inherent differences in the
operation of and beneficiary admission to IRFs. Therefore, we also are
not proposing any changes to the admission requirements for IRFs.
We are inviting public comment on these proposals.

XVII. CMS-Identified Overpayments Associated With Payment Data
Submitted by Medicare Advantage (MA) Organizations and Medicare Part D
Sponsors (Proposed Sec. Sec. 422.330 and 423.352)

A. Background

Medicare Part C and Part D payments to Medicare Advantage (MA)
organizations and Part D sponsors are determined, in part, using data
submitted to CMS by the MA organizations and Part D sponsors. These
``payment data'' include diagnosis data that are used by CMS to risk
adjust Part C and Part D payments, Prescription Dug Event (PDE) data
that are used by CMS to cost reconcile various Part D subsidies, as
well as other types of data discussed below. Through our review and
oversight of payment data submitted by MA organizations and Part D
sponsors, CMS identifies situations where MA organizations and/or Part
D sponsors have submitted payment data to CMS that should not have been
submitted--either because the data submitted are inaccurate or because
the data are inconsistent with Part C and Part D requirements.
(Throughout this section, we refer to these data submissions as
``erroneous payment data.'') If an MA organization or Part D sponsor
submits erroneous payment data to CMS, the MA organization or Part D
sponsor can address errors by submitting corrected data to the CMS
payment systems, and our approach thus far to these kinds of situations
has been to request that MA organizations and Part D sponsors make
these kinds of data corrections voluntarily.
However, in instances in which the MA organization or Part D
sponsor fails to make the requested data correction, the payment amount
calculated for the plan may also be incorrect. As a result, we have
concluded that CMS needs to establish a formal process that allows us
to recoup overpayments that result from the submission of erroneous
payment data by an MA organization or Part D sponsor in the limited
circumstances when the organization fails to correct those data. We
emphasize that, in our experience, the circumstance where an MA
organization or Part D sponsor fails to correct identified erroneous
payment data arises very infrequently.
This proposed new process is not intended to replace established
recovery and appeals processes such as the Risk Adjustment Data
Validation (RADV) audit dispute and appeal process described at 42 CFR
422.311 or the Part D payment appeals process described at 42 CFR
423.350. This proposed process would not constitute a change to the
existing Part C or Part D payment methodologies. Rather, we are merely
proposing to adopt a procedural mechanism for recouping overpayments
that CMS will use in those limited circumstances when an MA
organization or Part D sponsor fails to correct erroneous payment data.
The established recovery and appeals processes do not support this
scenario. Section 1856(b) of the Act establishes authority for us to
add standards for Part C and MA organizations. Section 1853 of the Act
for Part C and sections 1860D-14 and 1860D-15 of the Act for Part D
establish the methodology for computing payments to MA organizations
and Part D sponsors, respectively. We believe that inherent in the
methodology under which payments to MA organizations and Part D
sponsors are calculated is the authority for CMS to establish a process
for identifying and recouping overpayments, in order to ensure that
payments are made consistent with the payment framework established in
the statute. Therefore, we are proposing to implement such a process
through changes to our regulations.
1. Medicare Part C Payment Background
For Medicare Part C, CMS makes prospective monthly payments to MA
organizations for each enrollee in the plan. CMS' monthly Part C
payment for each MA plan enrollee consists of two components: The
capitated payment for each enrollee (calculated as the plan-specific
county payment rate multiplied by the enrollee risk score), plus the
plan rebate amount (if any). The plan-specific county rates and the
plan rebate amount are based on the bid approved by CMS and are set in
advance for a payment year. In addition, payment rates may be adjusted
for enrollees with end-stage renal disease, enrollees in Medical
Savings Account MA plans, and enrollees in religious fraternal benefit
society MA plans under Sec. 422.304. Prospective payments are made
during the year, subject to a reconciliation after the end of the year.
CMS adjusts the plan-specific county payment rate for each enrollee
based on an enrollee risk score. Enrollee risk scores are determined
using the CMS-Hierarchical Condition Category (CMS-HCC) risk adjustment
model in effect for the payment year, plan-submitted diagnoses for the
data collection year, and other data that CMS determines to be
appropriate to perform risk adjustment. The CMS-HCC model is
prospective in that it uses diagnosis information from a base year
(data collection year) to adjust payments for the next year (payment
year or coverage year). For example, the risk adjustment model uses
diagnosis data from 2013 to adjust payments to MA organizations for
coverage in 2014.
To determine the appropriate risk score for each beneficiary, CMS
uses demographic characteristics of beneficiaries and diagnostic
information gathered in the administration of Original Medicare and
submitted by MA organizations. MA organizations are required to submit
an occurrence of an HCC model-relevant diagnosis only once during the
data collection year, even though a beneficiary may have several
service dates in a data collection year associated with a given
diagnosis. The minimum data elements currently collected from MA
organizations under Sec. 422.310 are: Health Insurance Claim (HIC)
Number; provider type (hospital inpatient, hospital outpatient, or
physician); service from date; service through date; and ICD-9 codes at
the level of specificity used by the HCC model. In addition, effective
January 2012, CMS collects more detailed Part C utilization and cost
data from MA organizations (often referred to as encounter data), that
are used in setting the risk score.
CMS allows 13 months after the end of a data collection year for MA
organizations to update the risk adjustment data submitted under Sec.
422.310; this period provides MA organizations an opportunity to
identify and correct errors in data they have submitted for that data
collection year (that is, by deleting diagnoses from CMS' systems) and
to identify and submit additional diagnoses not submitted during the
data collection year. During this 13-month period, CMS uses the
diagnosis data that MA organizations have submitted up to that point to
calculate interim beneficiary risk scores for adjusting prospective
payments made during the payment year. The end of this 13-month period
is called the final risk adjustment data

[[Page 41059]]

submission deadline (Sec. 422.310(g)(2)(ii)).
For each payment year, we apply three sets of risk scores to adjust
payments: Initial and midyear risk scores during the payment year (both
sets are based on incomplete diagnosis data from the data collection
year), and final risk scores after the payment year using data MA
organizations submitted as of the final deadline for risk adjustment
data (which reflect complete data for the data collection year). During
the year, CMS makes monthly prospective payments to the MA organization
based on enrollment information and using interim risk scores
calculated based on the data available before the final risk adjustment
data submission deadline. CMS calculates the preliminary risk scores
before the first payment is made (that is, for January of the payment
year) and again in the middle of the payment year; an interim
reconciliation is made so that the prospective payments to MA
organizations are based on the most recent risk score available for
each enrollee.
After the final risk adjustment data submission deadline, CMS
conducts a reconciliation, in which the prospective Part C payments
made during the coverage year based on interim risk scores are compared
to Part C payments recalculated using final risk scores and the latest
enrollment data. While changes in enrollment data are updated every
month by CMS' systems during the payment year (for example,
disenrollments from MA organizations and dates of death from the Social
Security Administration (SSA)), risk adjustment data are not finalized
until the final risk adjustment data submission deadline.
We note that after the final risk adjustment data submission
deadline, MA organizations are allowed to submit corrected diagnosis
data to correct overpayments they received from CMS. However, after
this deadline, MA organizations are not allowed to submit diagnosis
codes for additional payment, as specified in Sec. 422.310(g)(2)(ii);
this provision was recently adopted in the final rule entitled
``Medicare Program; Contract Year 2015 Policy and Technical Changes to
the Medicare Advantage and the Medicare Prescription Drug Benefit
Programs'' (79 FR 29843). When such corrections are submitted, CMS
conducts another reconciliation to correct the payments made to the MA
organization using the established payment adjustment process. In
addition, under Sec. 422.311, CMS conducts RADV audits of the risk
adjustment data submitted by MA organizations pursuant to Sec.
422.310. Such RADV audits are conducted at the MA organization contract
level and are designed to calculate a contract-level error rate and
payment adjustment amount for a specific payment year under audit.
2. Medicare Part D Payment Background
For Medicare Part D, the Medicare Prescription Drug Benefit,
Improvement, and Modernization Act (MMA), which amended the Act by
adding Part D under Title 18, provides four payment mechanisms: Direct
subsidy (codified at Sec. 423.329(a)); reinsurance subsidy (codified
at Sec. 423.329(c)); low income subsidy (codified at Sec. Sec.
423.780 and 423.782); and risk sharing (codified at Sec. 423.336(b)).
As a condition of payment, section 1860D-15(d)(2)(A) of the Act
requires that Part D sponsors submit data and information necessary for
CMS to carry out those payment provisions. Part D sponsors submit PDE
data, direct and indirect remuneration (DIR) data, and risk adjustment
data to CMS for payment purposes.
Throughout the coverage year, CMS makes prospective payments to
Part D sponsors that cover three subsidies: The direct subsidy; the low
income cost-sharing subsidy; and the reinsurance subsidy. The payment
amounts are based on information in the approved basic bid and on data
received by CMS that are used to update payments throughout the year.
Following the end of the coverage year, the prospective payments are
reconciled against the actual costs of the Part D sponsor.
Reconciliation of the low income cost-sharing subsidy and reinsurance
and the calculation of risk sharing are based on PDE and DIR data
submitted by the Part D sponsor, as well as data captured from other
CMS systems. CMS instructs Part D sponsors that they should continually
monitor their submitted data throughout the year in order to ensure
that the reconciliation and final payment determinations are accurate.
The final payment determination may be reopened and revised at CMS
discretion under Sec. 423.346. In our final rule, ``Medicare Program;
Medicare Prescription Drug Benefit'' published in the Federal Register
on January 28, 2005 (70 FR 4194), we stated that including the Medicare
Part D reopening provision at Sec. 423.346 would ``ensure that the
discovery of any overpayment or underpayments could be rectified'' (70
FR 4316). However, this is only possible to the extent that the data
submitted by Part D sponsors are accurate. Accordingly, prior to making
a payment determination for a coverage year, either through a
reconciliation described at Sec. 423.343 or a reopening described at
Sec. 423.346, CMS periodically makes requests that Part D sponsors
correct payment data that do not comply with program requirements (that
is, what we have defined as ``erroneous payment data''). These may be
general requests to all Part D sponsors to look for a type of payment
issue (for example, the Health Plan Management System (HPMS)
memorandum, ``Correcting Missing, Invalid, and Inactive Prescriber
Identifiers on 2012 Prescription Drug Event (PDE) Records,'' dated
February 4, 2013) or targeted requests to specific Part D sponsors
known to have particular payment issues (as was done in the
``Prescriber NPI Project'' announced in the HPMS memorandum,
``Announcement of Prescriber NPI Project and Web site Release,'' dated
December 4, 2012). If a Part D sponsor fails to correct its payment
data, the erroneous payment data remain in the payment system,
rendering the reopening provision ineffective for rectifying
overpayments as it was intended.

B. Provisions of our Proposals

In this proposed rule, we are proposing to establish regulations at
42 CFR 422.330, relating to MA organizations, and at 42 CFR 423.352,
relating to Part D sponsors, that would specify the procedural
mechanism used by CMS to recoup overpayments associated with errors
identified by CMS in payment data submitted by MA organizations and
Part D sponsors. We also are proposing to create a process whereby an
MA organization or Part D sponsor can appeal the finding that payment
data are erroneous.
We note that our proposal is intended to establish a process to
address errors and payment adjustments that are not addressed by
existing processes such as the RADV audit and appeal process or
overpayments identified by the MA organization or Part D sponsor, which
are subject to separate procedures. If an MA organization or a Part D
sponsor self-identifies an overpayment, that overpayment must be
reported and returned to CMS in accordance with section 1128J(d) of the
Act, which was added by section 6402 of the Affordable Care Act.
Regulations implementing section 1128J(d) have recently been adopted at
Sec. Sec. 422.326 and 423.360 in the final rule entitled ``Medicare
Program; Contract Year 2015 Policy and Technical Changes to the
Medicare Advantage and the Medicare Prescription Drug Benefit
Programs'' (79 FR 29843).

[[Page 41060]]

1. Proposed Definitions of ``Payment Data'' and ``Applicable
Reconciliation Date''
We are proposing to define ``payment data'' to mean data controlled
and submitted to CMS by an MA organization or a Part D sponsor that is
used for payment purposes (proposed Sec. Sec. 422.330(a) and
423.352(a)). The MA organization or Part D sponsor is responsible for
the accuracy of such data. MA organizations and Part D sponsors are
currently required to attest to the accuracy, completeness, and
truthfulness of such data under Sec. 422.504(l) and Sec. 423.505(k),
respectively. For Medicare Part C, the data submitted by the MA
organization to CMS include, for example, enrollment data and risk
adjustment data specified at Sec. 422.310. For Medicare Part D, data
submitted by the Part D sponsor to CMS include enrollment data and data
submitted under Sec. 423.329(b)(3) (risk adjustment data), Sec.
423.336(c)(1) (cost data), Sec. 423.343 (data for retroactive
adjustments and reconciliations), and data provided for purposes of
supporting allowable reinsurance costs and allowable risk corridor
costs as defined in Sec. 423.308, which include data submitted to CMS
regarding direct or indirect remuneration (DIR).
There are additional payment-related data that CMS uses to
calculate Part C and Part D payments that are submitted directly to CMS
by other entities, such as the Social Security Administration (SSA).
These entities are the authoritative source for data that they submit
to CMS, and MA organizations and Part D sponsors are not the official
source for data submitted by these other entities. For example, the SSA
is the authoritative source for date of death of Medicare
beneficiaries. An MA organization or a Part D sponsor generally does
not submit a beneficiary's date of death directly to CMS' systems; such
data come from the SSA data feed. When the SSA submits corrected data
regarding a beneficiary's date of death to CMS, CMS' systems
recalculate the payments made to the plan for that beneficiary and
correct any incorrect payment through a routine retroactive payment
adjustment process. Therefore, the proposed definition of ``payment
data'' refers only to data that the MA organization or Part D sponsor
controls and submits to CMS for payment purposes.
For MA organizations under Part C, we are proposing that the
``applicable reconciliation date'' occurs on the date of the annual
final risk adjustment data submission deadline set under Sec.
422.310(g)(2)(ii). While changes in enrollment data are updated every
month by CMS' systems during the payment year (for example,
disenrollments from MA organizations and dates of death from the SSA),
risk adjustment data are not finalized until the final risk adjustment
data submission deadline. Prior to that deadline, CMS allows the MA
organization to continue submitting corrected and new diagnosis data.
However, once the final risk adjustment data submission deadline has
passed, CMS uses this final diagnosis data to calculate the final risk
scores for the payment year. CMS then uses those final risk scores for
payment reconciliation. By proposing that the applicable reconciliation
date occurs on the risk adjustment data submission deadline, we intend
to signal that the normal payment process for the year has been
concluded.
For Part D sponsors, we are proposing that the ``applicable
reconciliation date'' is the later of either: The annual deadline for
submitting PDE data for the annual Part D payment reconciliations
referenced in Sec. 423.343(c) and (d); or the annual deadline for
submitting DIR data. The annual deadline for submitting PDE data is the
last Federal business day prior to June 30 of the year following the
coverage year being reconciled. The annual deadline for submitting DIR
data is announced annually through subregulatory guidance and generally
occurs around the last business day in June of the year following the
coverage year being reconciled. We selected these events to define the
Part D applicable reconciliation date because data must be submitted by
these deadlines in order to be used for the purposes of the final Part
D payment reconciliation.
We note that the proposed definitions of ``applicable
reconciliation date'' are nearly identical to the definitions of
``applicable reconciliation'' at existing Sec. Sec. 422.326 and
423.360. Similarly, the proposed definitions of ``payment data'' are
nearly identical to the definitions of ``funds'' at existing Sec. Sec.
422.326 and 423.360. Although proposed Sec. Sec. 422.330 and 423.352
address overpayments to MA organizations and Part D sponsors that have
been identified by CMS, whereas Sec. Sec. 422.326 and 423.360 address
overpayments that are identified by the MA organization or Part D
sponsor, we do not believe that the issue of which entity (CMS or the
plan) identified the overpayment is relevant to the question of when
the overpayment occurred or what information is at issue. Both the
current policy regarding overpayments identified by MA organizations
and Part D sponsors and the proposed policy regarding CMS-identified
overpayments are intended to address circumstances in which an
overpayment has been identified; therefore, we believe it would be
appropriate and avoid unnecessary confusion to use similar definitions.
2. Request for Corrections of Payment Data
We are proposing that if CMS identifies an error in payment data
submitted by an MA organization or Part D sponsor that would result in
an overpayment, CMS may request that the organization make corrections
to the applicable payment data (proposed Sec. Sec. 422.330(b) and
423.352(b)). We are proposing that CMS would make the request through a
data correction notice that would contain or make reference to the
specific payment data identified by CMS as erroneous, the reason why
CMS believes that the payment data are erroneous, and the timeframe in
which the MA organization or Part D sponsor must make corrections to
the data. CMS may identify payment data that need to be corrected
through a variety of different mechanisms, including, but not limited
to, CMS analyses of payment data, CMS audits, or communications with
the MA organization or Part D sponsor.
We understand that, at some point, it would no longer be practical
for MA organizations and Part D sponsors to correct payment data for
coverage years that have long since been reconciled. Therefore,
consistent with the look-back period for overpayments that are
identified by the MA organization or Part D sponsor found at existing
Sec. Sec. 422.326 and 423.360, we are proposing that CMS would request
corrections to erroneous payment data only if the erroneous data
affects payments for one or more of the 6 most recently completed
payment years. That would mean, for example, that after the initial
reconciliation takes place for Part D payments under Sec. 423.343
(that is, the determination of the final amount of direct subsidy
described in Sec. 423.329(a)(1), final reinsurance payments described
in Sec. 423.329(c), the final amount of the low income subsidy
described in Sec. 423.329(d), or final risk corridor payments as
described in Sec. 423.336) for contract year 2015 (which would take
place in 2016), CMS may request corrections to erroneous payment data
for contract years 2010 through 2015. We are proposing to use the same
6-year look-back period as applies to plan-identified overpayments
under existing Sec. Sec. 422.326 and 423.360 because both overpayment
policies are

[[Page 41061]]

intended to address circumstances in which an overpayment has been
identified, and we do not believe that the issue of which entity (CMS
or the plan) identified the overpayment is relevant to the length of
the look-back period.
The timeframes for correcting payment data would be the same as
under our current practice for correcting payment data described in
existing procedural rules and subregulatory guidance and would be
explained in additional procedural rules and subregulatory guidance, as
necessary. For example, current Part D guidance states that corrections
to PDE data must be completed within 90 days from discovery of the
issue. We refer readers to the Health Plan Management System (HPMS)
memorandum entitled ``Revision to Previous Guidance Titled `Timely
Submission of Prescription Drug Event (PDE) Records and Resolution of
Rejected PDEs,' '' dated October 6, 2011.
3. Proposed Payment Offset
If the MA organization or Part D sponsor submits corrected payment
data in response to CMS's request pursuant to proposed Sec. 422.330(b)
and Sec. 423.352(b), CMS will perform a reconciliation in the payment
system using the established payment adjustment process. CMS' systems
will conduct a payment reconciliation and determine the associated
payment adjustment based on the corrected data using established
payment procedures. However, if the MA organization of Part D sponsor
fails to correct the erroneous payment data, we are proposing that CMS
would conduct a payment offset from plan payments (proposed Sec. Sec.
422.330(c) and 423.352(c)).
a. Offset Amount
Because the data would not have been corrected in the routine
payment process, we are proposing, to be codified at Sec. Sec.
422.330(c) and 423.352(c), that CMS determine the overpayment offset
amount by applying a payment calculation algorithm to simulate the
payment calculations currently applied by CMS to produce the routine
Part C and Part D payments. The payment calculation algorithm would
apply the Part C or Part D payment rules for the applicable year to
calculate what the correct payment should have been using corrected
payment data. CMS currently simulates payment error amounts for a
variety of different purposes including for the annual Part C and Part
D error rate reporting (required by the Improper Payment Elimination
and Recovery Act (IPERA) and subject to the annual agency's Chief
Financial Officer's (CFO) audit and reported in the annual Agency
Financial Report (AFR)), RADV payment error estimation (subject to
public comment), and the Part C and Part D monthly payment validation
required by CFO auditors. These payment error calculations are all
conducted outside of the suite of payment systems that CMS uses to make
routine payments to MA organizations and Part D sponsors. We believe
that these calculations are reliable and an accurate reflection of what
the routine payment systems would calculate using the corrected data if
the MA organization or Part D sponsor had submitted corrected payment
data.
The actual process for calculating the overpayment will be
different for Part C and Part D due to the different payment rules for
the two programs. The Part C and Part D programs are both subject to
risk adjustment payment error resulting from invalid diagnoses and to
payment error due to inaccurate enrollment data. The Part D program is
further subject to payment reconciliation error resulting from errors
in PDE data and/or DIR data. The two programs also are subject to
different schedules with regard to the applicable reconciliation date
and subsequent payment reconciliation processes.
When new payment-related data are submitted to CMS payment systems,
there is generally a change to the correct amount of payment once CMS
conducts a payment reconciliation using the established payment
adjustment process. However, it is not sufficient for the plan to just
submit the new corrected risk adjustment, PDE, or DIR data to CMS
systems because data submission does not automatically trigger a system
reconciliation and payment adjustment. A change in payment will only
occur if a payment reconciliation is conducted. If the applicable
reconciliation has already been performed, CMS, at its discretion, may
conduct risk adjustment reruns or Part D reopenings to ensure that
payments also are corrected to reflect the newly corrected data.
We are proposing that, under the payment calculation algorithm, CMS
would calculate the payment to the MA organization or Part D sponsor
with and then without the corrected data as of a certain specified
date. The difference in the two amounts would be the payment recovery
or offset amount. The following are examples of how the offset amount
would be calculated for Part C and Part D relative to two different
types of payment data errors.
Part C Offset Calculation. The example for Part C relates
to incorrect diagnosis data identified by CMS in the process of
calculating the national payment error estimate. A beneficiary's final
risk score and annual payment will be recalculated outside of the
routine payment system without the invalid diagnoses but using all the
other data used in the routine payment system. The year-appropriate
CMS-HCC risk adjustment software will be used to produce the revised
risk scores. The difference in payment for the beneficiary pre- and
post-change in the invalid diagnosis will be the offset amount. This
offset amount--generated using the same process for each beneficiary
for whom erroneous payment data are identified by CMS--will be summed
across all beneficiaries.
Part D Offset Calculation. The example for Part D relates
to the situation in which a Part D plan sponsor has submitted PDE
records for a beneficiary that include invalid National Drug Codes
(NDCs). For payment purposes, PDEs are required to reference valid
NDCs. In order to calculate the Part D payment offset amount, all of
the beneficiary's entire post-reconciliation PDE data will be pulled,
and the incorrect PDEs will be deleted or adjusted. The programmed
calculation logic will keep track of a variety of payment-related
information; for example, a beneficiary's benefit phase, gross covered
drug cost, true out-of-pocket (TrOOP) costs, low income cost-sharing
subsidies (if any), and plan payment as the beneficiary progresses
through the Part D coverage benefit. The calculation algorithm will tap
into a variety of different data sets, such as health plan benefit
parameters, beneficiary low income subsidy status, and standard low
income cost-sharing subsidy parameters. Reports will then be produced
on Gross Covered Drug Cost (GCDC) and low income cost-sharing subsidy
payment differentials. These payment differential amounts will be
incorporated into final reinsurance, low income cost-sharing subsidy,
and risk sharing summary totals for a contract. DIR adjustments will be
factored into these calculations to arrive at the related payment
offset amount to be applied at the contract level. The difference in
reinsurance, low income cost-sharing subsidy, and risk sharing dollars
with and without the correction to the PDEs will constitute the payment
offset related to the beneficiaries with the incorrect PDEs.
If the erroneous payment data in question is subsequently corrected
through the CMS payment system, the offset amount will be reversed, and
the payment to the MA organization or Part D sponsor will be updated
through the

[[Page 41062]]

routine payment process. However, if the data in the CMS system are not
corrected and CMS conducts a reconciliation or reopening for the
applicable payment year after the offset has been determined, the data
will not be properly synchronized, and it is possible that the
resulting payment adjustments could be incorrect. In order to resolve
this problem, CMS may reverse the original offset and recalculate the
offset using the more recent data used in the most recent payment
reconciliation or reopening. The new offset amount will replace the
previous offset amount, and CMS would need to evaluate and act on the
resulting overpayment or underpayment.
b. Payment Offset Notification
We are proposing that CMS would provide a payment offset notice to
the MA organization or Part D sponsor (proposed Sec. Sec.
422.330(d)(1) through (d)(3) and 423.352(d)(1) through (d)(3)). The
notice would provide the dollar amount to be offset against a plan's
monthly prospective payments and an explanation of how the erroneous
data were identified and of the calculation of the payment offset
amount. Under our proposal, the payment offset notice would also
explain that, in the event that the MA organization or Part D sponsor
disagrees with the payment offset, it may request an appeal within 30
days of the issuance of the payment offset notice.
4. Proposed Appeals Process for MA Organizations and Part D Sponsors
We are proposing an appeals process for MA organizations and Part D
sponsors with three levels of review, including reconsideration
(described at proposed Sec. Sec. 422.330(e)(1) and 423.352(e)(1)), an
informal hearing (described at proposed Sec. Sec. 422.330(e)(2) and
423.352(e)(2)), and an Administrator review (described at proposed
Sec. Sec. 422.330(e)(3) and 423.352(e)(3)).
a. Reconsideration
We are proposing that an MA organization or Part D sponsor must
file its request for reconsideration within 30 days from the date that
CMS issued the payment offset notice to the MA organization or the Part
D sponsor (proposed Sec. Sec. 422.330(e)(1)(i) and 423.352(e)(1)(i)).
At proposed Sec. Sec. 422.330(e)(1)(ii) and 423.352(e)(1)(ii), we
address the information that must be included in the MA organization's
or Part D sponsor's request for reconsideration. The request must
contain the findings or issues with which the MA organization or Part D
sponsor disagrees, the reasons for its disagreement, and any additional
documentary evidence that the MA organization or Part D sponsor wishes
to submit in support of its position. This additional evidence must be
submitted with the request for reconsideration. Any information
submitted after this time will be rejected as untimely. In conducting
the reconsideration, the CMS reconsideration official reviews the
underlying data that were used to determine the amount of the payment
offset and any additional documentary evidence that the MA organization
or Part D sponsor timely submitted with its reconsideration request
(Sec. Sec. 422.330(e)(1)(iii) and 423.352(e)(1)(iii)). We are
proposing at proposed Sec. Sec. 422.330(e)(1)(iv) and
423.352(e)(1)(iv) that CMS would inform the MA organization or Part D
sponsor of its decision. We are proposing at Sec. Sec.
422.330(e)(1)(v) and 423.352(e)(1)(v) that a reconsideration decision
would be final and binding unless a timely request for an informal
hearing is filed by the MA organization or Part D sponsor.
b. Informal Hearing
Under our proposal, if the MA organization or Part D sponsor is
dissatisfied with CMS' reconsideration decision, it would be entitled
to request an informal hearing (proposed Sec. Sec. 422.330(e)(2) and
423.352(e)(2)). As proposed at Sec. Sec. 422.330(e)(2)(i) and
423.352(e)(2)(i), a request for an informal hearing must be made in
writing and filed within 30 days of the date of CMS' reconsideration
decision. The request must include a copy of CMS' reconsideration
decision and must specify the findings or issues in the decision with
which the MA organization or Part D sponsor disagrees and the reasons
for its disagreement (proposed Sec. Sec. 422.330(e)(2)(ii) and
423.352(e)(2)(ii)).
We set forth the proposed procedures for conducting the informal
hearing at proposed Sec. Sec. 422.330(e)(2)(iii) and
423.352(e)(2)(iii). Under these procedures, CMS would provide written
notice of the time and place of the informal hearing at least 10 days
before the scheduled date of the hearing (proposed Sec.
422.330(e)(2)(iii)(A) and Sec. 423.352(e)(2)(iii)(A)); the informal
hearing would be conducted by a CMS hearing officer. The hearing
officer would be limited to reviewing the record that was before CMS
when CMS made its reconsideration determination (proposed Sec.
422.330(e)(2)(iii)(B) and Sec. 423.352(e)(2)(iii)(B)). Under our
proposal, no new or additional documentation or evidence may be
submitted at this hearing. At proposed Sec. 422.330(e)(2)(iii)(C) and
Sec. 423.352(e)(2)(iii)(C), we are proposing that the CMS hearing
officer would review the record of the proceeding before the CMS
reconsideration official using the clearly erroneous standard of
review. CMS' reconsideration decision would not be reversed unless the
MA organization or Part D sponsor establishes that the decision was
clearly erroneous in light of the evidence in the record before the CMS
reconsideration official.
At proposed Sec. Sec. 422.330(e)(2)(iv) and 423.352(e)(2)(iv), we
are proposing that the CMS hearing officer would send a written
decision of the informal hearing to the MA organization or Part D
sponsor explaining the basis for the decision. The CMS hearing
officer's decision would be final and binding, unless the decision is
reversed or modified by the Administrator (proposed Sec. Sec.
422.330(e)(2)(v) and 423.352(e)(2)(v)).
c. Review by Administrator
We are proposing that the MA organization or Part D sponsor may
request review of the hearing officer's decision by the Administrator
within 30 days of issuance of the hearing officer's decision (proposed
Sec. Sec. 422.330(e)(3)(i) and 423.352(e)(3)(i)). The MA organization
or Part D sponsor may provide written arguments to the Administrator
for review. Under proposed Sec. Sec. 422.330(e)(3)(ii) and
423.352(e)(3)(ii), after receiving the request to review, the
Administrator would have the discretion to elect to review the hearing
determination or decline to review it. At proposed Sec. Sec.
422.330(e)(3)(iii) and 423.352(e)(3)(iii), if the Administrator
declines to review the hearing officer's decision, the hearing
officer's decision would be final and binding. At proposed Sec. Sec.
422.330(e)(3)(iv) and 423.352(e)(3)(iv), we are proposing that if the
Administrator elects to review the hearing officer's decision, the
Administrator would review the hearing officer's decision, as well as
any other information included in the record of the hearing officer's
decision and any written arguments submitted by the MA organization or
Part D sponsor. The Administrator may determine whether to uphold,
reverse, or modify the hearing officer's decision. The Administrator's
determination would be final and binding (proposed Sec. Sec.
422.330(e)(3)(v) and 423.352(e)(3)(v)).

[[Page 41063]]

5. Matters Subject To Appeal and Burden of Proof
At proposed Sec. Sec. 422.330(f)(1) and (2) and 423.352(f)(1) and
(2), we are proposing to limit the subject-matter that an MA
organization or Part D sponsor may appeal under this provision and
establish the burden of proof that the MA organization or Part D
sponsor must meet in its appeal. Under this provision, an MA
organization or Part D sponsor would be able to appeal the notice of
payment offset solely on the grounds that CMS' finding that the MA
organization's or Part D sponsor's payment data were erroneous was
incorrect or otherwise inconsistent with applicable program
requirements. The MA organization or Part D sponsor would bear the
burden of proof by a preponderance of the evidence in demonstrating
that CMS' finding was incorrect or inconsistent with applicable program
requirements.
At proposed Sec. Sec. 422.330(g) and 423.352(g), we are proposing
that the appeals process under paragraph (e) of these sections would
apply only to payment offsets described at proposed Sec. Sec.
422.330(c) and 423.352(c). It would not apply to any other CMS payment
offset process.
6. Effective Date of Proposed Appeals Process Provisions
We are proposing that this new procedural mechanism for a payment
offset at proposed Sec. 422.330 and Sec. 423.352 would apply after
the effective date of any final rule implementing the new payment
offset and appeals process, but that requests to correct payment data
under proposed Sec. Sec. 422.330(b) and 423.352(b) and the payment
offsets under proposed Sec. Sec. 422.330(c) and 423.352(c) may apply
to any payment year, subject to the 6-year limitation under Sec. Sec.
422.330(b) and 423.352(b).
We are inviting public comment on these proposals.

XVIII. Files Available to the Public via the Internet

Addendum J to this proposed rule is a new addendum that we are
proposing for CY 2015, in response to requests by public commenters on
the CY 2014 OPPS/ASC final rule with comment period for additional data
regarding ratesetting for the new comprehensive APCs established in
that final rule with comment period, which are discussed in section
II.A.2.e. of this proposed rule. Addendum J lists the HCPCS code pairs
for which we are proposing complexity adjustments for CY 2015, by
clinical family; the HCPCS codes proposed for exclusion from the
comprehensive APC payment bundle; and the relevant cost statistics.
The Addenda to the OPPS/ASC proposed rules and the final rules with
comment period are published and available only via the Internet on the
CMS Web site. To view the Addenda of this proposed rule pertaining to
CY 2015 payments under the OPPS, we refer readers to the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html;
select ``1613-P'' from the list of regulations. All OPPS Addenda for
this proposed rule are contained in the zipped folder entitled ``2015
OPPS 1613-P Addenda'' at the bottom of the page. To view the Addenda of
this proposed rule pertaining to the proposed CY 2015 payments under
the ASC payment system, we refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html; select ``1613-P'' from the list of
regulations. All ASC Addenda for this proposed rule are contained in
the zipped folders entitled ``Addendum AA, BB, DD1 and DD2,'' and
``Addendum EE'' at the bottom of the page.

XIX. Collection of Information Requirements

A. Legislative Requirements for Solicitation of Comments

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and to solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In this proposed rule, we are soliciting public comments on each of
the issues outlined above for the information collection requirements
discussed below.

B. Requirements in Regulation Text: Proposed Changes to the Rural
Provider and Hospital Ownership Exceptions to the Physician Self-
Referral Law: Expansion Exception Process (Sec. 411.362)

Section XV.C. of the preamble of this proposed rule discusses our
proposal to revise the expansion exception process for physician-owned
hospitals under the rural provider and hospital ownership exceptions to
the physician self-referral law. Specifically, we are proposing to
revise 42 CFR 411.362(c) to permit physician-owned hospitals to use
data from HCRIS, internal data sources, or external data sources to
estimate the percentages of inpatient Medicaid admissions and to
determine the bed capacities and the bed occupancy rates referenced in
that section for the hospitals to demonstrate eligibility for an
expansion exception.
We believe the burden associated with this revision is exempt from
the PRA under 5 CFR 1320.3(c), which defines the agency collection of
information subject to the requirements of the PRA as information
collection imposed on 10 or more persons within any 12-month period. We
do not believe this information collection impacts 10 or more entities
in a 12-month period. We have received four requests since the
expansion exception process was implemented on February 1, 2012; only
one of the four requests was complete and eligible to proceed in the
process. In CYs 2012, 2013, and 2014, we received zero, two, and two
requests, respectively.

C. Associated Information Collections Not Specified in Regulatory Text

In this proposed rule, we make reference to proposed associated
information collection requirements that were not discussed in the
regulation text contained in this proposed rule. The following is a
discussion of those requirements.
1. Hospital OQR Program
As we stated in section XIV. of the CY 2012 OPPS/ASC final rule
with comment period, the Hospital OQR Program has been generally
modeled after the quality data reporting program for the Hospital IQR
Program (76 FR 74451). We refer readers to the CY 2011 OPPS/ASC final
rule with comment period (75 FR 72111 through 72114), the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74549 through 74554), the CY
2013 OPPS/ASC final rule with comment period (77 FR 68527 through
68532) and the CY 2014 OPPS/ASC final rule with comment period (78

[[Page 41064]]

FR 75170 through 75172) for detailed discussions of the Hospital OQR
Program information collection requirements we have previously
finalized.
a. Revisions to the CY 2016 Payment Determination Estimates
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75103), we finalized the adoption of four new measures for the CY 2016
payment determination and subsequent years: (1) OP-27: Influenza
Vaccination Coverage among Healthcare Personnel (NQF 0431);
(2) OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval
for Normal Colonoscopy in Average Risk Patients (NQF 0658);
(3) OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for
Patients with a History of Adenomatous Polyps--Avoidance of
Inappropriate Use (NQF 0659); and (4) OP-31: Cataracts--
Improvement in Patient's Visual Function within 90 Days Following
Cataract Surgery (NQF 1536). In the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75171), we estimated measures OP-29,
OP-30 and OP-31 would require 40 hours of reporting per quarter (96
cases x 0.417 hours). We also estimated that reporting these measures
via our Web-based tool would take 10 minutes (or 0.167 hours) per
measure per year (or 2.5 minutes for each quarter's worth of data,
which is submitted on an annual basis) (78 FR 75171 through 75172).
As stated in section XIII.D.2. of this proposed rule, we delayed
reporting for OP-29 and OP-30 by one quarter. Therefore, we estimate a
reduction in burden of 40 hours for each of these measures (40 hours
per quarter for reporting + 2.5 minutes of reporting via the Web-based
tool) per hospital for the CY 2016 payment determination. In addition,
in section XIII.D.3. of this proposed rule, we are proposing to exclude
this measure from the CY 2016 payment determination measure set.
Therefore, we estimate that there will be no burden for reporting OP-31
for the CY 2016 payment determination, and an overall reduction in
burden of 160 hours ((40 hours per quarter for reporting x 4 quarters)
+ 0.167 hours per year for reporting via the Web-based tool) per
hospital for the CY 2016 payment determination because of this
proposal.
Combining the estimated reductions in burden for all three of these
measures, we estimate a total reduction in burden of 240 hours (40
hours + 40 hours + 160 hours) per hospital for the CY 2016 payment
determination due to delayed data collection and the proposed measure
exclusion. We estimate that approximately 3,300 hospitals will
participate in the Hospital OQR Program for the CY 2016 payment
determination. Therefore, we estimate a total reduction in burden of
792,000 hours (240 hours x 3,300 hospital) for all hospitals
participating in the Hospital OQR Program for the CY 2016 payment
determination based on the data collection delays for OP-29, OP-30, and
OP-31. In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75171), we estimated that these measures would result in a financial
burden of $30 per hour. Therefore, we estimate that the delay of these
three measures will result in a reduction of $23.8 million ($30/hour x
792,000 hours).
b. Hospital OQR Program Requirements for the CY 2017 Payment
Determination and Subsequent Years
As we stated in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75171), we believe there is a burden associated with successful
participation in the Hospital OQR Program, where successful
participation results in a full annual payment update (APU) for the
particular payment determination. For the reasons stated in that rule,
we believe that the burden associated with these requirements is 42
hours per hospital or 138,600 hours for all hospitals. We estimate a
financial burden for these requirements of $4.2 million ($30/hour x
138,600) for all hospitals.
(1) Claims-Based Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68530) for detailed discussions of the information
collection requirements for the previously finalized claims-based
measures (OP-8, OP-9, OP-10, OP-11, OP-13, OP-14, and OP-15). In
section XIII.E. of this proposed rule, we are proposing to adopt one
additional claims-based measure for the CY 2017 payment determination
and subsequent years: OP-32: Facility Seven-Day Risk-Standardized
Hospital Visit Rate after Outpatient Colonoscopy. As we note in the CY
2013 OPPS/ASC final rule with comment period (77 FR 68530), we
calculate the claims-based measures using Medicare FFS claims data that
do not require additional hospital data submissions.
(2) Chart-Abstracted Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68530 through 68531) and the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75171) for detailed discussions of the
information collection requirements for the previously finalized chart-
abstracted measures (OP-1, OP-2, OP-3, OP-4, OP-5, OP-6, OP-7, OP-18,
OP-20, OP-21, OP-22, OP-23, OP-29, OP-30, and OP-31).
In section XIII. of this proposed rule, we are proposing to remove
three chart-abstracted measures from the Hospital OQR Program for the
CY 2017 payment determination and subsequent years: OP-4: Aspirin at
Arrival (NQF 0286); OP-6: Timing of Prophylactic Antibiotics;
and OP-7: Perioperative Care: Prophylactic Antibiotic Selection for
Surgical Patients (NQF 0528). We previously estimated that
each participating hospital will spend 35 minutes (or 0.583 hours) per
case to collect and submit the data required for the chart-abstracted
measures finalized for the CY 2015 payment determination and subsequent
years (OP-1, OP-2, OP-3, OP-4, OP-5, OP-6, OP-7, OP-18, OP-20, OP-21,
OP-22, OP-23) for each case (78 FR 75171). Since we are proposing to
remove three of these measures, we believe that the time to chart-
abstract these measures will be reduced by 25 percent (3 of 12
measures). Therefore, we estimate that hospitals will spend
approximately 26 minutes (0.433 hours) per case to collect and submit
these data.
Data submitted for the CY 2014 payment determination indicate that
a hospital will submit approximately 1,266 cases per year for these
measures. Therefore, we estimate that the time it will take a hospital
to abstract data for all of the chart-abstracted measures will be 549
hours per year (1,266 cases x 0.433 hours). We estimate that there will
be approximately 3,300 hospitals that participate in the Hospital OQR
Program for the CY 2017 payment determination and subsequent years.
Therefore, we estimate that the chart-abstracted measures for the CY
2017 payment determination and subsequent years will result in a burden
of 1.8 million hours (549 hours x 3,300 hospitals) for all
participating hospitals, for a total financial burden of approximately
$54 million (1.8 million hours x $30/hour).
In addition, in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75171), we estimated that OP-29 and OP-30 would require 25
minutes (0.417

[[Page 41065]]

hours) per case per measure to chart-abstract. We also estimated that
hospitals would abstract 384 cases per year for each of these measures.
Our estimate for the CY 2017 payment determination and subsequent years
has not changed from last year's estimate (although, as noted above, we
have changed our estimate for the CY 2016 payment determination based
on the delay of OP-29 and OP-30). Therefore, for the CY 2017 payment
determination and subsequent years, we estimate a burden of 1.1 million
hours (3,300 hospitals x 0.417 hours/case x 384 case/measure x 2
measures) for all participating hospitals for OP-29 and OP-30 for a
total financial burden of approximately $33 million ($30/hour x 1.1
million hours).
In section XIII.D.3. of this proposed rule, we are proposing to
exclude OP-31 from the CY 2016 payment determination measure set and,
for the CY 2017 payment determination and subsequent years, to change
this measure from required to voluntary. Hospitals would not be subject
to a payment reduction with respect to this measure for the CY 2016
payment determination or during the period of voluntary reporting. We
continue to believe this measure addresses an important area of care,
and anticipate that many facilities will report this measure on a
voluntary basis. In the CY 2014 ASC/OPPS final rule with comment period
(78 FR 75171), we estimated that OP-31 would require 25 minutes (0.417
hours) per case to chart-abstract. We also estimated that hospitals
would abstract 384 cases per year for this measure. We estimate that
approximately 20 percent of hospitals (660 hospitals (3,300 hospitals x
0.2)) will elect to report this measure on a voluntary basis.
Therefore, we are revising the estimated burden for this measure to
105,685 hours (660 hospitals x 0.417 hours/case x 384 cases) for
participating hospitals for the CY 2017 payment determination and
subsequent years, for a total financial burden of approximately $3.2
million ($30/hour x 105,685 hours).
Therefore, for the chart-abstracted measures, we estimate a total
burden for all participating hospitals of 3 million hours (1.8 million
hours + 105,685 hours + 1.1 million hours) and $90 million (3 million
hours x $30/hour) for the CY 2017 payment determination and subsequent
years.
(3) Web-Based Measures Submitted Directly to CMS for the CY 2017
Payment Determination and Subsequent Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75171) for detailed discussions of the information
collection requirements for the previously finalized measures submitted
via the Web-based tool. For the reasons stated in that final rule with
comment period, we estimate that each participating hospital would
spend 10 minutes per measure per year to collect and submit the data
for the six measures (OP-12, OP-17, OP-25, OP-26, OP-29, and OP-30)
submitted via the Web-based tool. Therefore, the estimated annual
estimate burden associated with these measures for all participating
hospitals is 3,307 hours (3,300 hospitals x 0.167 hours/measure x 6
measures/hospital) for the CY 2017 payment determination and subsequent
years.
As stated above, in section XIII.D.3. of this proposed rule, we are
proposing to require voluntary reporting for OP-31, meaning that
failing to report this measure would not affect a hospital's CY 2017
and subsequent years' payment determinations. We estimate that
approximately 20 percent of hospitals (660 hospitals (3,300 hospitals x
0.2)) will elect to report this measure on a voluntary basis.
Therefore, we are revising the estimated burden for this measure for
all participating hospitals to 111 hours (660 hospitals x 0.167 hours)
for the CY 2017 payment determination and subsequent years.
Therefore, we estimate that the financial burden incurred for the
Web-based submission of these measures for all participating hospitals
will be $119,070 ($30/hour x (3,858 hours + 111 hours)) for the CY 2017
payment determination and subsequent years.
(4) NHSN HAI Measure for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172) for detailed discussions of the information
collection requirements for OP-27: Influenza Vaccination Coverage among
Healthcare Personnel. In section XIII.D.1. of this proposed rule, we
are proposing to correct a submission deadline for this measure. We do
not believe there will be a change in burden due to this proposal since
it was a typographical error and our previous estimates were based on
the corrected submission timeframe. We also noted that hospitals may
report this measure for both the Hospital IQR Program and the Hospital
OQR Program by CCN. Although we believe an overall reduction in burden
will occur from this guidance because hospitals will only be required
to submit this information once for each program, submitting this
information is still a requirement of the Hospital OQR Program.
Therefore, we do not believe this guidance will result in a reduction
in burden attributable to the Hospital OQR Program. Therefore, for the
reasons discussed in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172), we estimate a total burden for all participating
hospitals of 106,940 hours and a total financial burden of $3,208,203
associated with this measure.
c. Review and Corrections Period Requirements for the CY 2017 Payment
Determination and Subsequent Years
In section XIII.H.2.f. of this proposed rule, we are proposing to
formalize that the time during which hospitals submit chart-abstracted
data is the review and corrections period for that data. Because this
proposal does not require hospitals to submit additional data, we do
not believe it will increase burden for these hospitals.
d. Hospital OQR Program Validation Requirements for the CY 2017 Payment
Determination and Subsequent Years
In section XIII.H.3.d. of this proposed rule, we are proposing
three changes to our validation procedures: (1) We are proposing to
change the eligibility requirements for hospitals selected for
validation so that a hospital would be eligible if it submits at least
one case to the Hospital OQR Program Clinical Data Warehouse during the
quarter containing the most recently available data; (2) we are
proposing to give hospitals the option to either submit paper copies of
patient charts or securely transmit electronic versions of medical
information for validation; and (3) we are proposing that a hospital
must identify the medical record staff responsible for submission of
records under the Hospital OQR Program to the designated CMS
contractor. We do not believe that changing the eligibility
requirements will result in additional burden since the same number of
hospitals will be selected for validation, as discussed below. In
addition, we do not believe that changing to whom a hospital must
identify the medical staff responsible for submission of records will
result in additional burden since hospitals must already submit this
data; that is, only the contractor to whom the data is submitted may
change. We do believe, however, that the second

[[Page 41066]]

requirement may result in a change in burden.
We are proposing that the requirement to submit patient charts for
validation of Hospital OQR Program data may be met by employing either
of the following options: (1) A hospital may submit paper medical
records, the form in which we have historically requested them; or (2)
a hospital may securely transmit electronic versions of medical
information beginning in the CY 2017 payment determination. We are
proposing that hospitals that chose to securely transmit electronic
versions of medical information should either: (1) Download or copy the
digital image of the patient chart onto CD, DVD, or flash drive and
ship the electronic media following instructions specified on the
QualityNet Web site; or (2) securely submit digital images (PDFs) of
patient charts using a Secure File Transfer Portal on the QualityNet
Web site. In the FY 2014 IPPS/LTCH PPS final rule, the Hospital IQR
Program previously finalized a similar policy that also allows
hospitals to submit electronic versions of records for validation using
the first method (78 FR 50834 through 78 FR 50835). The Hospital IQR
Program has proposed the second method, secure submission of digital
images via a Secure File Transfer Portal, in the FY 2015 IPPS/LTCH
proposed rule (79 FR 28251). For the same reasons outlined in the
Hospital IQR Program (78 FR 50956), we are proposing a reimbursement
rate of $3.00 per patient chart submitted electronically (using either
of the proposed methods for electronic submission) for validation for
the CY 2017 payment determination and subsequent years. We will
continue to reimburse hospitals at a rate of 12 cents per page, plus
shipping, for records provided on paper (76 FR 74577).
The burden associated with validation is the time and effort
necessary to submit validation data to the CMS contractor. For some
hospitals, we believe that submitting this data electronically may
result in a reduction in burden; for others we believe that submitting
paper copies will be the least burdensome option. We sample 500
hospitals for validation, and we estimate that it will take each
hospital 12 hours to comply with the data submission requirements.
Therefore, we estimate a total burden of approximately 6,000 hours (500
hospitals x 12 hours/hospital) and a total financial impact of $180,000
($30/hour x 6,000 hours) for the CY 2017 payment determination and
subsequent years.
e. Extraordinary Circumstances Extensions or Exemptions Process
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75119 through 75120), and 42 CFR 419.46(d) for a complete
discussion of our extraordinary circumstances extension or waiver
process under the Hospital OQR Program. In this proposed rule, we are
proposing to make a change from the phrase ``extension or waiver'' to
the phrase ``extension or exemption'' throughout the regulation. We do
not anticipate that this proposed minor change will affect the
collection of information burden estimates for this process.
f. Reconsideration and Appeals
While there is burden associated with filing a reconsideration
request, 5 CFR 1320.4 of the Paperwork Reduction Act of 1995
regulations excludes collection activities during the conduct of
administrative actions such as redeterminations, reconsiderations, or
appeals or all of these actions.
We invite public comment on the burden associated with these
information collection requirements.
2. ASCQR Program Requirements
a. Background
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74554), the FY 2013 IPPS/LTCH final rule (77 FR 53672),
the CY 2013 OPPS/ASC final rule with comment period (77 FR 68532
through 68533), and the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75172 through 75174) for detailed discussions of the ASCQR
Program information collection requirements we have previously
finalized.
b. Revisions to the CY 2016 Payment Determination Estimates
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124
through 75130), we finalized the adoption of three new measures for the
CY 2016 payment determination and subsequent years: ASC-9: Endoscopy/
Polyp Surveillance: Appropriate Follow-up Interval for Normal
Colonoscopy in Average Risk Patients (NQF 0658), ASC-10:
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a
History of Adenomatous Polyps--Avoidance of Inappropriate Use (NQF
0659), and ASC-11: Cataracts--Improvement in Patient's Visual
Function within 90 Days Following Cataract Surgery (NQF 1536).
In that rule, we estimated that each participating ASC would spend 35
minutes per case to collect and submit the data for these measures,
making a total estimated burden for ASCs with a single case per ASC of
3,067 hours (5,260 ASCs x 0.583 hours per case per ASC). We also stated
that we expected ASCs would vary greatly as to the number of cases per
ASC due to ASC specialization (78 FR 75173). As stated in section
XIV.E.3. of this proposed rule, we have delayed reporting for ASC-9 and
ASC-10 by one quarter. Therefore, we estimate a 25-percent reduction in
cases and burden for these measures for the CY 2016 payment
determination. As stated in section XIV.E.3.c. of this proposed rule,
we delayed reporting of ASC-11 by one year and are proposing to exclude
ASC-11 from the CY 2016 payment determination measure set . As a
result, we do not believe there would be any burden associated with
this measure for the CY 2016 payment determination.
c. Claims-Based Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68532) and CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172 through 75174) for detailed discussions of the
information collection requirements for the five previously-adopted
claims-based ASCQR Program measures (four outcome measures and one
process measure). The five previously adopted measures are: ASC-1:
Patient Burn (NQF 0263); ASC-2: Patient Fall (NQF
0266); ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong
Procedure, Wrong Implant (NQF 0267); ASC-4: Hospital Transfer/
Admission (NQF 0265); and ASC-5: Prophylactic Intravenous (IV)
Antibiotic Timing (NQF 0264). For the reasons we discussed in
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75172
through 75173), we estimate that the reporting burden to report Quality
Data Codes (QDCs) for these five claims-based outcome measures would be
nominal for the CY 2017 payment determination and for subsequent years.
In section XIV.B.5. of this proposed rule, we are proposing to add
one additional claims-based measure to the ASCQR Program. The
additional measure, ASC-12: Facility Seven-Day Risk-Standardized
Hospital Visit Rate after Outpatient Colonoscopy, would be computed by
CMS based on Medicare FFS claims, and would not require ASCs to input
QDCs. Therefore, we do not anticipate that this proposed

[[Page 41067]]

measure would add additional burden to ASCs for the CY 2017 payment
determination and for subsequent years.
d. Web-Based Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68532) and CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172 through 75174) for detailed discussions of the
information collection requirements for the five previously-adopted
Web-based measures, excluding ASC-11, which we are proposing for
voluntary inclusion in the ASCQR Program for CY 2017. The five
previously adopted measures are: ASC-6: Safe Surgery Checklist Use;
ASC-7: ASC Facility Volume Data on Selected ASC Surgical Procedures;
ASC-8: Influenza Vaccination Coverage Among Healthcare Personnel (NQF
0431); ASC-9: Endoscopy/Polyp Surveillance: Appropriate
Follow-Up Interval for Normal Colonoscopy in Average Risk Patients (NQF
0658); and ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy
Interval for Patients with a History of Adenomatous Polyps--Avoidance
of Inappropriate Use (NQF 0659).
For the reasons we discussed in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75173 through 75174), we estimate that the
reporting burden for the ASC-6: Safe Surgery Checklist Use and the ASC-
7: ASC Facility Volume measures would be 1,756 hours (5,260 ASCs x 2
measures x 0.167 hours per ASC) and $52,680 (1,756 hours x $30.00 per
hour) annually for the CY 2017 payment determination and for subsequent
years.
For the reasons discussed in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75173 through 75174), we estimate that the
reporting burden for the ASC-8: Influenza Vaccination Coverage Among
Healthcare Personnel (NQF 0431) measure would be 18,005 hours
and $540,150 (18,005 hours x $30.00 per hour) annually for the CY 2017
payment determination and for subsequent years.
For the reasons discussed in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75173 through 75174), we estimate that the
reporting burden for ASCs with a single case per ASC for the chart-
abstracted ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up
Interval for Normal Colonoscopy in Average Risk Patients (NQF
0658) and ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy
Interval for Patients with a History of Adenomatous Polyps--Avoidance
of Inappropriate Use (NQF 0659) measures would be 3,067 hours
and $92,010 (3,067 hours x $30.00 per hour) annually for the CY 2017
payment determination and for subsequent years.
In section XIV.E.3.c. of this proposed rule, we are proposing that
data collection and submission be voluntary for ASC-11: Cataracts:
Improvement in Patient's Visual Function within 90 Days Following
Cataract Surgery (NQF 1536), meaning we would not subject ASCs
to payment reduction with respect to this measure during the period of
voluntary reporting. We continue to believe this measure addresses an
important area of care, and anticipate that many facilities will report
this measure on a voluntary basis. In the CY 2014 ASC/OPPS final rule
with comment period (78 FR 75173), we estimated that each participating
ASC would spend 35 minutes per case to collect and submit the data for
this measure, making the total estimated burden for ASCs with a single
case per ASC of 3,067 hours (5,260 ASCs x 0.583 hours per case per ASC)
annually. We expect that ASCs would vary greatly as to the number of
cases per ASC due to ASC specialization. We estimate that approximately
20 percent of ASCs would elect to report this measure on a voluntary
basis; therefore, we estimate the total estimated burden for ASCs with
a single case per ASC to be 613 hours (1,052 ASCs x 0.583 hours per
case per ASC) and $18,390 (613 hours x $30.00 per hour) annually for
the CY 2017 payment determination and subsequent years.
e. Extraordinary Circumstances Extension or Exemptions Process
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53642 through 53643) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75140) for a complete discussion of our extraordinary
circumstances extension or waiver process under the ASCQR Program. We
are not proposing to make any substantive changes to this process.
However, in the future, we will refer to the process as the
extraordinary circumstances extensions or exemptions process. In
section XIV.E.7. of this proposed rule, we note that we are proposing
to make certain changes to the form to ensure that the form is
consistent across CMS quality reporting programs. We do not anticipate
that these proposed minor changes will affect the burden estimates for
this process.
f. Reconsideration and Appeals
While there is burden associated with filing a reconsideration
request, 5 CFR 1320.4 of the Paperwork Reduction Act of 1995
regulations excludes collection activities during the conduct of
administrative actions such as redeterminations, reconsiderations, or
appeals or all of these actions.
We invite public comment on the burden associated with these
information collection requirements.

XX. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document(s), we will
respond to those comments in the preamble to that document.

XXI. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995
(UMRA) (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Contract with America Advancement
Act of 1996 (Pub. L. 104-121) (5 U.S.C. 804(2)). This section of the
proposed rule contains the impact and other economic analyses for the
provisions that we are proposing.
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This proposed rule has been designated as an economically
significant rule under section 3(f)(1) of Executive Order 12866 and a
major rule under the Contract with America Advancement Act of 1996
(Pub. L. 104-121). Accordingly, this proposed rule has been reviewed by
the Office of Management and Budget. We

[[Page 41068]]

have prepared a regulatory impact analysis that, to the best of our
ability, presents the costs and benefits of this proposed rule. We are
soliciting public comments on the regulatory impact analysis provided.
2. Statement of Need
This proposed rule is necessary to update the Medicare hospital
OPPS rates. It is necessary to make changes to the payment policies and
rates for outpatient services furnished by hospitals and CMHCs in CY
2015. We are required under section 1833(t)(3)(C)(ii) of the Act to
update annually the OPPS conversion factor used to determine the
payment rates for APCs. We also are required under section
1833(t)(9)(A) of the Act to review, not less often than annually, and
revise the groups, the relative payment weights, and the wage and other
adjustments described in section 1833(t)(2) of the Act. We must review
the clinical integrity of payment groups and relative payment weights
at least annually. We are proposing to revise the APC relative payment
weights using claims data for services furnished on and after January
1, 2013, through and including December 31, 2013, and updated cost
report information.
This proposed rule also is necessary to update the ASC payment
rates for CY 2015, enabling CMS to make changes to payment policies and
payment rates for covered surgical procedures and covered ancillary
services that are performed in an ASC in CY 2015. Because ASC payment
rates are based on the OPPS relative payment weights for the majority
of the procedures performed in ASCs, the ASC payment rates are updated
annually to reflect annual changes to the OPPS relative payment
weights. In addition, we are required under section 1833(i)(1) of the
Act to review and update the list of surgical procedures that can be
performed in an ASC not less frequently than every 2 years.
3. Overall Impacts for the Proposed OPPS and ASC Payment Provisions
We estimate that the total increase in Federal government
expenditures under the OPPS for CY 2015 compared to CY 2014 due to the
changes in this proposed rule would be approximately $800 million.
Taking into account our estimated changes in enrollment, utilization,
and case-mix, we estimate that the proposed OPPS expenditures for CY
2015 would be approximately $5.224 billion higher relative to
expenditures in CY 2014. Because this proposed rule is economically
significant as measured by the threshold of an additional $100 million
in expenditures in one year, we have prepared this regulatory impact
analysis that, to the best of our ability, presents its costs and
benefits. Table 52 displays the redistributional impact of the proposed
CY 2015 changes in OPPS payment to various groups of hospitals and for
CMHCs.
We estimate that the proposed update to the conversion factor and
other adjustments (not including the effects of outlier payments, the
pass-through estimates, and the application of the proposed frontier
State wage adjustment for CY 2015) would increase total OPPS payments
by 2.1 percent in CY 2015. The proposed changes to the APC weights, the
proposed changes to the wage indexes, the proposed continuation of a
payment adjustment for rural SCHs, including EACHs, and the proposed
payment adjustment for cancer hospitals would not increase OPPS
payments because these proposed changes to the OPPS are budget neutral.
However, these proposed updates would change the distribution of
payments within the budget neutral system. We estimate that the total
change in payments between CY 2014 and CY 2015, considering all
proposed payments, including proposed changes in estimated total
outlier payments, pass-through payments, and the application of the
frontier State wage adjustment outside of budget neutrality, in
addition to the application of the proposed OPD fee schedule increase
factor after all adjustments required by sections 1833(t)(3)(F),
1833(t)(3)(G), and 1833(t)(17) of the Act, would increase total
estimated OPPS payments by 2.2 percent.
We estimate the total increase (from proposed changes to the ASC
provisions in this proposed rule as well as from enrollment,
utilization, and case-mix changes) in expenditures under the ASC
payment system for CY 2015 compared to CY 2014 to be approximately $243
million. Because the provisions for the ASC payment system are part of
a proposed rule that is economically significant as measured by the
$100 million threshold, we have prepared a regulatory impact analysis
of the proposed changes to the ASC payment system that, to the best of
our ability, presents the costs and benefits of this portion of the
proposed rule. Tables 53 and Table 54 of this proposed rule display the
redistributional impact of the proposed CY 2015 changes on ASC payment,
grouped by specialty area and then grouped by procedures with the
greatest ASC expenditures, respectively.
4. Detailed Economic Analyses
a. Estimated Effects of Proposed OPPS Changes in This Proposed Rule
(1) Limitations of Our Analysis
The distributional impacts presented here are the projected effects
of the proposed CY 2015 policy changes on various hospital groups. We
post on the CMS Web site our proposed hospital-specific estimated
payments for CY 2015 with the other supporting documentation for this
proposed rule. To view the hospital-specific estimates, we refer
readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At the Web
site, select ``regulations and notices'' from the left side of the page
and then select ``CMS-1613-P'' from the list of regulations and
notices. The hospital-specific file layout and the hospital-specific
file are listed with the other supporting documentation for this
proposed rule. We show hospital-specific data only for hospitals whose
claims were used for modeling the impacts shown in Table 52 below. We
do not show hospital-specific impacts for hospitals whose claims we
were unable to use. We refer readers to section II.A. of this proposed
rule for a discussion of the hospitals whose claims we do not use for
ratesetting and impact purposes.
We estimate the effects of the proposed individual policy changes
by estimating payments per service, while holding all other payment
policies constant. We use the best data available, but do not attempt
to predict behavioral responses to our proposed policy changes. In
addition, we do not make adjustments for future changes in variables
such as service volume, service-mix, or number of encounters. In this
proposed rule, we are soliciting public comment and information about
the anticipated effects of our proposed changes on providers and our
methodology for estimating them. Any public comments that we receive
will be addressed in the applicable sections of the final rule with
comment period.
(2) Estimated Effects of Proposed OPPS Changes on Hospitals
Table 52 below shows the estimated impact of this proposed rule on
hospitals. Historically, the first line of the impact table, which
estimates the proposed change in payments to all facilities, has always
included cancer and children's hospitals, which are held harmless to
their pre-BBA amount. We also include CMHCs in the first line that
includes all providers. We now include a second line for all hospitals,
excluding

[[Page 41069]]

permanently held harmless hospitals and CMHCs.
We present separate impacts for CMHCs in Table 52, and we discuss
them separately below, because CMHCs are paid only for partial
hospitalization services under the OPPS and are a different provider
type from hospitals. In CY 2015, we are continuing to pay CMHCs under
APC 0172 (Level I Partial Hospitalization (3 services) for CMHCs) and
APC 0173 (Level II Partial Hospitalization (4 or more services) for
CMHCs), and we are paying hospitals for partial hospitalization
services under APC 0175 (Level I Partial Hospitalization (3 services)
for hospital-based PHPs) and APC 0176 (Level II Partial Hospitalization
(4 or more services) for hospital-based PHPs).
The estimated increase in the total payments made under the OPPS is
determined largely by the increase to the conversion factor under the
statutory methodology. The distributional impacts presented do not
include assumptions about changes in volume and service-mix. The
conversion factor is updated annually by the OPD fee schedule increase
factor as discussed in detail in section II.B. of this proposed rule.
Section 1833(t)(3)(C)(iv) of the Act provides that the OPD fee
schedule increase factor is equal to the market basket percentage
increase applicable under section 1886(b)(3)(B)(iii) of the Act, which
we refer to as the IPPS market basket percentage increase. The proposed
IPPS market basket percentage increase for FY 2015 is 2.7 percent (79
FR 28087). Section 1833(t)(3)(F)(i) of the Act reduces that 2.7 percent
by the multifactor productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act, which is proposed to be 0.4
percentage points for FY 2015 (which is also the proposed MFP
adjustment for FY 2015 in the FY 2015 IPPS/LTCH PPS proposed rule (79
FR 28087); and sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the
Act further reduce the market basket percentage increase by 0.2
percentage points, resulting in the proposed OPD fee schedule increase
factor of 2.1 percent. We are proposing to use the proposed OPD fee
schedule increase factor of 2.1 percent in the calculation of the CY
2015 proposed OPPS conversion factor. Section 10324 of the Affordable
Care Act, as amended by HCERA, further authorized additional
expenditures outside budget neutrality for hospitals in certain
frontier States that have a wage index less than 1.00. The amounts
attributable to this frontier State wage index adjustment are
incorporated in the CY 2015 estimates in Table 52.
To illustrate the impact of the proposed CY 2015 changes, our
analysis begins with a baseline simulation model that uses the CY 2014
relative payment weights, the FY 2014 final IPPS wage indexes that
include reclassifications, and the final CY 2014 conversion factor.
Table 52 shows the estimated redistribution of the proposed increase in
payments for CY 2015 over CY 2014 payments to hospitals and CMHCs as a
result of the following factors: the impact of the APC reconfiguration
and recalibration changes between CY 2014 and CY 2015 (Column 2); the
proposed wage indexes and the provider adjustments (Column 3); the
combined impact of all the proposed changes described in the preceding
columns plus the proposed 2.1 percent OPD fee schedule increase factor
update to the conversion factor (Column 4); the combined impact shown
in Column 4 plus the proposed CY 2015 frontier State wage index
adjustment (Column 5); and the estimated impact taking into account all
proposed payments for CY 2015 relative to all payments for CY 2014,
including the impact of proposed changes in estimated outlier payments
and proposed changes to the pass-through payment estimate (Column 6).
We did not model an explicit budget neutrality adjustment for the
rural adjustment for SCHs because we are proposing to maintain the
current adjustment percentage for CY 2015. Because the updates to the
conversion factor (including the update of the OPD fee schedule
increase factor), the estimated cost of the rural adjustment, and the
estimated cost of projected pass-through payment for CY 2015 are
applied uniformly across services, observed redistributions of payments
in the impact table for hospitals largely depend on the mix of services
furnished by a hospital (for example, how the APCs for the hospital's
most frequently furnished services would change), and the impact of the
wage index changes on the hospital. However, total payments made under
this system and the extent to which this proposed rule would
redistribute money during implementation also would depend on changes
in volume, practice patterns, and the mix of services billed between CY
2014 and CY 2015 by various groups of hospitals, which CMS cannot
forecast.
Overall, we estimate that the proposed rates for CY 2015 would
increase Medicare OPPS payments by an estimated 2.2 percent. Removing
payments to cancer and children's hospitals because their payments are
held harmless to the pre-OPPS ratio between payment and cost and
removing payments to CMHCs results in an estimated 2.2 percent increase
in Medicare payments to all other hospitals. These estimated payments
would not significantly impact other providers.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 52 shows the total number of
facilities (3,947), including designated cancer and children's
hospitals and CMHCs, for which we were able to use CY 2013 hospital
outpatient and CMHC claims data to model CY 2014 and CY 2015 payments,
by classes of hospitals, for CMHCs and for dedicated cancer hospitals.
We excluded all hospitals and CMHCs for which we could not plausibly
estimate CY 2014 or CY 2015 payment and entities that are not paid
under the OPPS. The latter entities include CAHs, all-inclusive
hospitals, and hospitals located in Guam, the U.S. Virgin Islands,
Northern Mariana Islands, American Samoa, and the State of Maryland.
This process is discussed in greater detail in section II.A. of this
proposed rule. At this time, we are unable to calculate a
disproportionate share (DSH) variable for hospitals not participating
in the IPPS. Hospitals for which we do not have a DSH variable are
grouped separately and generally include freestanding psychiatric
hospitals, rehabilitation hospitals, and long-term care hospitals. We
show the total number of OPPS hospitals (3,814), excluding the hold-
harmless cancer and children's hospitals and CMHCs, on the second line
of the table. We excluded cancer and children's hospitals because
section 1833(t)(7)(D) of the Act permanently holds harmless cancer
hospitals and children's hospitals to their ``pre-BBA amount'' as
specified under the terms of the statute, and therefore, we removed
them from our impact analyses. We show the isolated impact on 72 CMHCs
at the bottom of the impact table and discuss that impact separately
below.
Column 2: APC Recalibration--All Proposed Changes
Column 2 shows the estimated effect of APC recalibration. Column 2
also reflects any changes in multiple procedure discount patterns or
conditional packaging that occur as a result of the changes in the
relative magnitude of payment weights. As a result of APC
recalibration, we estimate that urban hospitals would experience a
decrease of -0.1 percent, with the impact ranging from an increase of
0.1 percent to a decrease of -0.3 percent, depending on the number of
beds. Rural hospitals would experience an increase

[[Page 41070]]

of 0.5 percent, with the impact ranging from an increase of 1.2 percent
to a decrease of -0.6 percent, depending on the number of beds. Major
teaching hospitals would experience an increase of 0.6 percent overall.
Column 3: New Wage Indexes and the Effect of the Provider Adjustments
Column 3 demonstrates the combined budget neutral impact of the
proposed APC recalibration; the proposed updates for the wage indexes
with the proposed fiscal year (FY) 2015 IPPS post-reclassification wage
indexes; and the proposed rural adjustment. We modeled the independent
effect of the proposed budget neutrality adjustments and the proposed
OPD fee schedule increase factor by using the relative payment weights
and wage indexes for each year, and using a CY 2014 conversion factor
that included the OPD fee schedule increase and a budget neutrality
adjustment for differences in wage indexes.
Column 3 reflects the independent effects of the proposed updated
wage indexes, including the application of budget neutrality for the
rural floor policy on a nationwide basis. This column excludes the
effects of the proposed frontier State wage index adjustment, which is
not budget neutral and is included in Column 5. We did not model a
budget neutrality adjustment for the rural adjustment for SCHs because
we are proposing to continue the rural payment adjustment of 7.1
percent to rural SCHs for CY 2015, as described in section II.E. of
this proposed rule.
We modeled the independent effect of updating the wage indexes by
varying only the wage indexes, holding APC relative payment weights,
service-mix, and the rural adjustment constant and using the proposed
CY 2015 scaled weights and a CY 2014 conversion factor that included a
budget neutrality adjustment for the effect of changing the wage
indexes between CY 2014 and CY 2015. The proposed FY 2015 wage policy
results in modest redistributions.
There is no difference in impact between the CY 2014 cancer
hospital payment adjustment and the proposed CY 2015 cancer hospital
payment adjustment because we are proposing the same payment-to-cost
ratio target in CY 2015 as in CY 2014.
Column 4: All Proposed Budget Neutrality Changes Combined With the
Proposed Market Basket Update
Column 4 demonstrates the combined impact of all the proposed
changes previously described and the proposed update to the conversion
factor of 2.1 percent. Overall, these changes would increase payments
to urban hospitals by 2.1 percent and to rural hospitals by 2.4
percent. Most classes of hospitals would receive an increase in line
with the proposed 2.1 percent overall increase after the update is
applied to the budget neutrality adjustments.
Column 5: All Proposed Adjustments With the Proposed Frontier State
Wage Index Adjustment
This column shows the impact of all proposed budget neutrality
adjustments, application of the proposed 2.1 percent OPD fee schedule
increase factor, and the nonbudget-neutral impact of applying the
proposed CY 2015 frontier State wage adjustment. Rural hospitals in
West North Central and Mountain States would experience estimated
increases in payment of 3.8 and 4.3 percent, respectively, as a result
of the proposed frontier State wage index adjustment, while urban
hospitals in those States would experience estimated increases of 3.2
and 2.5 percent, respectively.
Column 6: All Proposed Changes for CY 2015
Column 6 depicts the full impact of the proposed CY 2015 policies
on each hospital group by including the effect of all of the proposed
changes for CY 2015 and comparing them to all estimated payments in CY
2014. Column 6 shows the combined budget neutral effects of Column 2
and 3; the proposed OPD fee schedule increase; the impact of the
proposed frontier State wage index adjustment; the impact of estimated
OPPS outlier payments as discussed in section II.G. of this proposed
rule; the proposed change in the Hospital OQR Program payment reduction
for the small number of hospitals in our impact model that failed to
meet the reporting requirements (discussed in section XIII. of this
proposed rule); and the difference in total OPPS payments dedicated to
transitional pass-through payments.
Of those hospitals that failed to meet the Hospital OQR Program
reporting requirements for the full CY 2014 update (and assumed, for
modeling purposes, to be the same number for CY 2015), we included 35
hospitals in our model because they had both CY 2013 claims data and
recent cost report data. We estimate that the cumulative effect of all
proposed changes for CY 2015 would increase payments to all providers
by 2.2 percent for CY 2015. We modeled the independent effect of all
proposed changes in Column 6 using the final relative payment weights
for CY 2014 and the proposed relative payment weights for CY 2015. We
used the final conversion factor for CY 2014 of $72.672 and the
proposed CY 2015 conversion factor of $74.176 discussed in section
II.B. of this proposed rule.
Column 6 contains simulated outlier payments for each year. We used
the 1-year proposed charge inflation factor used in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28321) of 5.57 percent (1.0557) to
increase individual costs on the CY 2013 claims, and we used the most
recent overall CCR in the April 2014 Outpatient Provider-Specific File
(OPSF) to estimate outlier payments for CY 2014. Using the CY 2013
claims and a 5.57 percent charge inflation factor, we currently
estimate that outlier payments for CY 2014, using a multiple threshold
of 1.75 and a proposed fixed-dollar threshold of $2,900 would be
approximately 0.9 percent of total payments. The estimated current
outlier payments of 0.9 percent are incorporated in the comparison in
Column 6. We used the same set of claims and a proposed charge
inflation factor of 11.46 percent (1.1146) and the CCRs in the April
2014 OPSF, with an adjustment of 0.9813, to reflect relative changes in
cost and charge inflation between CY 2013 and CY 2015, to model the CY
2015 proposed outliers at 1.0 percent of estimated total payments using
a multiple threshold of 1.75 and a proposed fixed-dollar threshold of
$3,100. The charge inflation and CCR inflation factors are discussed in
detail in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321).
We estimate that the anticipated change in payment between CY 2014
and CY 2015 for the hospitals failing to meet the Hospital OQR Program
requirements would be negligible. Overall, we estimate that facilities
would experience an increase of 2.2 percent under this proposed rule in
CY 2015 relative to total spending in CY 2014. This projected increase
(shown in Column 6) of Table 52 reflects the proposed 2.1 percent OPD
fee schedule increase factor, less 0.01 percent for the proposed change
in the pass-through estimate between CY 2014 and CY 2015, plus 0.1
percent for the difference in estimated outlier payments between CY
2014 (0.9 percent) and CY 2015 (1.0 percent), less 0.1 percent due to
the frontier adjustment in CY 2014, plus 0.1 percent due to the
proposed frontier State wage index adjustment in CY 2015. We estimate
that the combined effect of all proposed changes for CY 2015 would
increase payments to urban hospitals by 2.2 percent.
Overall, we estimate that rural hospitals would experience a 2.5
percent increase as a result of the

[[Page 41071]]

combined effects of all proposed changes for CY 2015. We estimate that
rural hospitals that bill less than 5,000 lines of OPPS services would
experience a decrease of -3.1 percent and rural hospitals that bill
11,000 or more lines of OPPS services would experience increases
ranging from 1.5 to 3.0 percent.
Among hospitals by teaching status, we estimate that the impacts
resulting from the combined effects of all proposed changes would
include an increase of 2.9 percent for major teaching hospitals and 2.1
percent for nonteaching hospitals. Minor teaching hospitals would
experience an estimated increase of 1.8 percent.
In our analysis, we also have categorized hospitals by type of
ownership. Based on this analysis, we estimate that voluntary hospitals
would experience an increase of 2.4 percent, proprietary hospitals
would experience an increase of 1.7 percent, and governmental hospitals
would experience an increase of 2.2 percent.

Table 52--Estimated Impact of the Proposed CY 2015 Changes for the Hospital Outpatient Prospective Payment System
--------------------------------------------------------------------------------------------------------------------------------------------------------
All proposed
All budget budget neutral
neutral changes and
APC Proposed new changes proposed
Number of Recalibration wage index and (combined cols update (column All proposed
hospitals (all proposed provider 2,3) with 4) with changes
changes) adjustments proposed proposed
market basket frontier wage
update index,
adjustment
(1) (2) (3) (4) (5) (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALL FACILITIES *........................................ 3,947 0.0 0.0 2.1 2.2 2.2
ALL HOSPITALS........................................... 3,814 0.0 0.0 2.1 2.2 2.2
(excludes hospitals permanently held harmless and CMHCs)
URBAN HOSPITALS......................................... 2,953 -0.1 0.0 2.1 2.2 2.2
LARGE URBAN (GT 1 MILL.)............................ 1,616 -0.1 0.1 2.2 2.2 2.3
OTHER URBAN (LE 1 MILL.)............................ 1,337 -0.1 -0.1 1.9 2.2 2.1
RURAL HOSPITALS......................................... 861 0.5 -0.2 2.4 2.7 2.5
SOLE COMMUNITY...................................... 377 0.7 -0.1 2.6 3.0 2.7
OTHER RURAL......................................... 484 0.3 -0.3 2.2 2.3 2.2
BEDS (URBAN):
0-99 BEDS........................................... 1,008 0.1 0.1 2.4 2.6 2.5
100-199 BEDS........................................ 856 0.2 0.0 2.3 2.4 2.4
200-299 BEDS........................................ 462 -0.2 0.1 2.0 2.2 2.2
300-499 BEDS........................................ 412 -0.3 0.0 1.8 2.0 2.0
500 + BEDS.......................................... 215 0.1 0.0 2.1 2.1 2.3
BEDS (RURAL):
0-49 BEDS........................................... 338 0.9 0.0 3.0 3.2 3.0
50-100 BEDS......................................... 319 1.2 -0.2 3.0 3.3 3.1
101-149 BEDS........................................ 117 0.3 -0.1 2.3 2.6 2.4
150-199 BEDS........................................ 47 0.0 -0.5 1.6 2.3 1.7
200 + BEDS.......................................... 40 -0.6 -0.2 1.3 1.3 1.4
VOLUME (URBAN):
LT 5,000 Lines...................................... 500 -2.6 -0.2 -0.8 -0.6 -0.7
5,000-10,999 Lines.................................. 138 -2.7 -0.1 -0.7 -0.1 -0.5
11,000-20,999 Lines................................. 120 -2.4 0.0 -0.3 -0.1 -0.1
21,000-42,999 Lines................................. 237 -0.4 0.1 1.8 1.8 1.9
42,999-89,999 Lines................................. 540 -0.2 0.0 1.9 1.9 2.0
GT 89,999 Lines..................................... 1,418 0.0 0.0 2.1 2.2 2.3
VOLUME (RURAL):
LT 5,000 Lines...................................... 35 -5.1 -0.1 -3.1 -0.3 -3.1
5,000-10,999 Lines.................................. 27 -4.1 0.1 -1.9 -0.7 -1.9
11,000-20,999 Lines................................. 50 -0.2 -0.4 1.5 1.7 1.5
21,000-42,999 Lines................................. 162 1.0 -0.1 3.0 3.5 3.0
GT 42,999 Lines..................................... 587 0.5 -0.2 2.4 2.6 2.5
REGION (URBAN):
NEW ENGLAND......................................... 151 1.3 -0.1 3.3 3.3 3.4
MIDDLE ATLANTIC..................................... 357 0.5 0.5 3.1 3.1 3.2
SOUTH ATLANTIC...................................... 468 -0.2 -0.2 1.6 1.6 1.8
EAST NORTH CENT..................................... 465 0.1 -0.3 1.9 1.9 2.1
EAST SOUTH CENT..................................... 175 -1.0 -0.5 0.6 0.6 0.8
WEST NORTH CENT..................................... 192 -0.1 0.0 2.0 3.2 2.1
WEST SOUTH CENT..................................... 509 -1.1 -0.2 0.8 0.8 1.0
MOUNTAIN............................................ 199 0.0 0.0 2.1 2.5 2.3
PACIFIC............................................. 390 -0.1 1.0 3.1 3.1 3.2
PUERTO RICO......................................... 47 1.0 0.5 3.6 3.6 3.6
REGION (RURAL):
NEW ENGLAND......................................... 23 2.0 -0.1 4.0 4.0 4.1
MIDDLE ATLANTIC..................................... 58 1.4 0.4 3.9 3.9 4.0
SOUTH ATLANTIC...................................... 130 -0.3 -0.5 1.3 1.3 1.4

[[Page 41072]]

EAST NORTH CENT..................................... 120 0.7 0.0 2.8 2.8 2.9
EAST SOUTH CENT..................................... 165 -0.2 -0.4 1.5 1.5 1.6
WEST NORTH CENT..................................... 99 0.7 -0.2 2.6 3.8 2.6
WEST SOUTH CENT..................................... 181 0.1 -0.6 1.6 1.6 1.7
MOUNTAIN............................................ 61 0.9 -0.5 2.6 4.3 2.8
PACIFIC............................................. 24 1.4 0.9 4.4 4.4 4.4
TEACHING STATUS:
NON-TEACHING........................................ 2,793 -0.1 0.0 2.0 2.1 2.1
MINOR............................................... 699 -0.3 -0.1 1.7 1.9 1.8
MAJOR............................................... 322 0.6 0.1 2.8 2.8 2.9
DSH PATIENT PERCENT:
0................................................... 15 0.2 0.5 2.8 3.2 2.8
GT 0-0.10........................................... 334 0.3 0.2 2.6 2.8 2.7
0.10-0.16........................................... 317 0.3 -0.1 2.4 2.5 2.4
0.16-0.23........................................... 681 0.2 -0.1 2.3 2.4 2.4
0.23-0.35........................................... 1,095 0.0 0.0 2.1 2.3 2.2
GE 0.35............................................. 811 -0.2 0.0 1.9 1.9 2.1
DSH NOT AVAILABLE **................................ 561 -6.6 0.1 -4.4 -4.4 -4.5
URBAN TEACHING/DSH:
TEACHING & DSH...................................... 928 0.1 0.0 2.2 2.3 2.3
NO TEACHING/DSH..................................... 1,482 -0.2 0.1 2.0 2.1 2.1
NO TEACHING/NO DSH.................................. 13 0.2 0.5 2.9 2.9 2.9
DSH NOT AVAILABLE **................................ 530 -6.1 0.2 -3.8 -3.8 -3.9
TYPE OF OWNERSHIP:
VOLUNTARY........................................... 2,007 0.1 0.0 2.2 2.4 2.4
PROPRIETARY......................................... 1,255 -0.5 0.0 1.6 1.7 1.7
GOVERNMENT.......................................... 552 0.0 -0.1 2.1 2.1 2.2
CMHCs................................................... 72 -4.0 -0.1 -2.0 -2.0 -1.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all proposed CY 2015 OPPS policies and compares those to the CY 2014 OPPS.
Column (3) shows the budget neutral impact of updating the wage index by applying the proposed FY 2015 hospital inpatient wage index, including all
proposed hold harmless policies and transitional wages. The proposed rural adjustment continues our current policy of 7.1 percent so the budget
neutrality factor is 1. The budget neutrality adjustment for the proposed cancer hospital adjustment is 1.000 because the payment-to-cost ratio target
remains the same as in CY 2014.
Column (4) shows the impact of all budget neutrality adjustments and the addition of the proposed 2.1 percent OPD fee schedule update factor (2.7
percent reduced by 0.4 percentage points for the final productivity adjustment and further reduced by 0.2 percentage point in order to satisfy
statutory requirements set forth in the Affordable Care Act).
Column (5) shows the non-budget neutral impact of applying the frontier State wage adjustment in CY 2015.
Column (6) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, adding estimated outlier
payments, and applying payment wage indexes.
* These 3,947 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs.
** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care
hospitals.

(3) Estimated Effects of Proposed OPPS Changes on CMHCs
The last line of Table 52 demonstrates the isolated impact on
CMHCs, which furnish only partial hospitalization services under the
OPPS. In CY 2014, CMHCs are paid under two APCs for these services: APC
0172 (Level I Partial Hospitalization (3 services) for CMHCs) and APC
0173 (Level II Partial Hospitalization (4 or more services) for CMHCs).
Hospitals are paid for partial hospitalization services under APC 0175
(Level I Partial Hospitalization (3 services) for hospital-based PHPs)
and APC 0176 (Level II Partial Hospitalization (4 or more services) for
hospital-based PHPs). We use our standard ratesetting methodology to
derive the payment rates for each APC based on the cost data derived
from claims and cost reports for the provider-type-specific APC. For CY
2015, we are proposing to continue the provider-type-specific APC
structure that we adopted in CY 2011. We modeled the impact of this
proposed APC policy assuming that CMHCs would continue to provide the
same number of days of PHP care, with each day having either 3 services
or 4 or more services, as seen in the CY 2013 claims data used for this
proposed rule. We excluded days with 1 or 2 services because our policy
only pays a per diem rate for partial hospitalization when 3 or more
qualifying services are provided to the beneficiary. We estimate that
CMHCs would experience an overall -1.6 percent decrease in payments
from CY 2014 (shown in Column 6).

[[Page 41073]]

Column 3 shows that the estimated impact of adopting the proposed
FY 2015 wage index values would result in a small decrease of -0.1
percent to CMHCs. We note that all providers paid under the OPPS,
including CMHCs, would receive a 2.1 percent OPD fee schedule increase
factor. Column 4 shows that combining this proposed OPD fee schedule
increase factor, along with proposed changes in APC policy for CY 2015
and the proposed FY 2015 wage index updates, would result in an
estimated decrease of -2.0 percent. Column 5 shows that adding the
proposed frontier State wage index adjustment would result in no change
to the cumulative -2.0 percent decrease. Column 6 shows that adding the
proposed changes in outlier and pass-though payments would result in an
additional 0.4 percent increase in payment for CMHCs, for a total
decrease of -1.6 percent. This reflects all proposed changes to CMHCs
for CY 2015.
(4) Estimated Effect of Proposed OPPS Changes on Beneficiaries
For services for which the beneficiary pays a copayment of 20
percent of the payment rate, the beneficiary share of payment would
increase for services for which the OPPS payments would rise and would
decrease for services for which the OPPS payments would fall. For
further discussion on the calculation of the national unadjusted
copayments and minimum unadjusted copayments, we refer readers to
section II.I. of this proposed rule. In all cases, the statute limits
beneficiary liability for copayment for a procedure to the hospital
inpatient deductible for the applicable year.
We estimate that the aggregate beneficiary coinsurance percentage
would be 20.1 percent for all services paid under the OPPS in CY 2015.
The estimated aggregate beneficiary coinsurance reflects general system
adjustments, including proposed recalibration of the APC relative
payment weights, proposed change in the portion of OPPS payments
dedicated to pass-through payments, and the CY 2015 comprehensive APC
policy discussed in section II.A.2.e. of this proposed rule.
(5) Estimated Effects of Proposed OPPS Changes on Other Providers
The relative payment weights and payment amounts established under
the OPPS affect the payments made to ASCs as discussed in section XII.
of this proposed rule. No types of providers or suppliers other than
hospitals, CMHCs and ASCs would be affected by the proposed changes in
this proposed rule.
(6) Estimated Effects of Proposed OPPS Changes on the Medicare and
Medicaid Programs
The effect on the Medicare program is expected to be $800 million
in additional program payments for OPPS services furnished in CY 2015.
The effect on the Medicaid program is expected to be limited to
increased copayments that Medicaid may make on behalf of Medicaid
recipients who are also Medicare beneficiaries. We refer readers to our
discussion of the impact on beneficiaries in section XXI.A. of this
proposed rule.
(7) Alternative OPPS Policies Considered
Alternatives to the OPPS changes we are proposing to make and the
reasons for our selected alternatives are discussed throughout this
proposed rule.
Alternatives Considered for the Establishment of Comprehensive
APCs
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74861 through 74910 and 75184 through 75185) for a
discussion of our policy to establish comprehensive APCs for CY 2015
and the alternatives we considered. We note that we published tables in
that final rule with comment period to demonstrate how this policy
would have been implemented in CY 2014, and stated that we would be
considering any additional public comments we receive when we update
the policy for CY 2015 to account for changes that may occur in the CY
2013 claims data.
b. Estimated Effects of CY 2015 ASC Payment System Proposed Policies
Most ASC payment rates are calculated by multiplying the ASC
conversion factor by the ASC relative payment weight. As discussed
fully in section XII. of this proposed rule, we are proposing to set
the CY 2015 ASC relative payment weights by scaling the proposed CY
2015 OPPS relative payment weights by the proposed ASC scaler of
0.9142. The estimated effects of the proposed updated relative payment
weights on payment rates are varied and are reflected in the estimated
payments displayed in Tables 53 and 54 below.
Beginning in CY 2011, section 3401 of the Affordable Care Act
requires that the annual update to the ASC payment system (which
currently is the CPI-U) after application of any quality reporting
reduction be reduced by a productivity adjustment. The Affordable Care
Act defines the productivity adjustment to be equal to the 10-year
moving average of changes in annual economy-wide private nonfarm
business multifactor productivity (MFP) (as projected by the Secretary
for the 10-year period ending with the applicable fiscal year, year,
cost reporting period, or other annual period). For ASCs that fail to
meet their quality reporting requirements, the CY 2015 payment
determinations will be based on the application of a 2.0 percentage
point reduction to the annual update factor, which currently is the
CPI-U. We calculated the proposed CY 2015 ASC conversion factor by
adjusting the CY 2014 ASC conversion factor by 0.9983 to account for
changes in the pre-floor and pre-reclassified hospital wage indexes
between CY 2014 and CY 2015 and by applying the proposed CY 2015 MFP-
adjusted CPI-U update factor of 1.2 percent (projected CPI-U update of
1.7 percent minus a projected productivity adjustment of 0.5 percent).
The proposed CY 2015 ASC conversion factor is $43.918.
(1) Limitations of Our Analysis
Presented here are the projected effects of the proposed changes
for CY 2015 on Medicare payment to ASCs. A key limitation of our
analysis is our inability to predict changes in ASC service-mix between
CY 2013 and CY 2015 with precision. We believe that the net effect on
Medicare expenditures resulting from the proposed CY 2015 changes would
be small in the aggregate for all ASCs. However, such changes may have
differential effects across surgical specialty groups as ASCs continue
to adjust to the payment rates based on the policies of the revised ASC
payment system. We are unable to accurately project such changes at a
disaggregated level. Clearly, individual ASCs would experience changes
in payment that differ from the aggregated estimated impacts presented
below.
(2) Estimated Effects of ASC Payment System Proposed Policies on ASCs
Some ASCs are multispecialty facilities that perform the gamut of
surgical procedures from excision of lesions to hernia repair to
cataract extraction; others focus on a single specialty and perform
only a limited range of surgical procedures, such as eye, digestive
system, or orthopedic procedures. The combined effect on an individual
ASC of the proposed update to the CY 2015 payments would depend on a
number of factors, including, but not limited to, the mix of services
the ASC provides, the volume of specific services provided by the ASC,
the percentage of its patients who are

[[Page 41074]]

Medicare beneficiaries, and the extent to which an ASC provides
different services in the coming year. The following discussion
presents tables that display estimates of the impact of the proposed CY
2015 updates to the ASC payment system on Medicare payments to ASCs,
assuming the same mix of services as reflected in our CY 2013 claims
data. Table 53 depicts the estimated aggregate percent change in
payment by surgical specialty or ancillary items and services group by
comparing estimated CY 2014 payments to estimated CY 2015 payments and
Table 54 shows a comparison of estimated CY 2014 payments to estimated
CY 2015 payments for procedures that we estimate would receive the most
Medicare payment in CY 2014.
Table 53 shows the estimated effects on aggregate Medicare payments
under the ASC payment system by surgical specialty or ancillary items
and services group. We have aggregated the surgical HCPCS codes by
specialty group, grouped all HCPCS codes for covered ancillary items
and services into a single group, and then estimated the effect on
aggregated payment for surgical specialty and ancillary items and
services groups. The groups are sorted for display in descending order
by estimated Medicare program payment to ASCs. The following is an
explanation of the information presented in Table 53.
Column 1--Surgical Specialty or Ancillary Items and
Services Group indicates the surgical specialty into which ASC
procedures are grouped and the ancillary items and services group which
includes all HCPCS codes for covered ancillary items and services. To
group surgical procedures by surgical specialty, we used the CPT code
range definitions and Level II HCPCS codes and Category III CPT codes
as appropriate, to account for all surgical procedures to which the
Medicare program payments are attributed.
Column 2--Estimated CY 2014 ASC Payments were calculated
using CY 2013 ASC utilization (the most recent full year of ASC
utilization) and CY 2014 ASC payment rates. The surgical specialty and
ancillary items and services groups are displayed in descending order
based on estimated CY 2014 ASC payments.
Column 3--Estimated CY 2015 Percent Change is the
aggregate percentage increase or decrease in Medicare program payment
to ASCs for each surgical specialty or ancillary items and services
group that are attributable to proposed updates to ASC payment rates
for CY 2015 compared to CY 2014.
As seen in Table 53, for the six specialty groups that account for
the most ASC utilization and spending, we estimate that the proposed
update to ASC rates for CY 2015 would result in a 2-percent decrease in
aggregate payment amounts for eye and ocular adnexa procedures, a 6-
percent increase in aggregate payment amounts for digestive system
procedures, a 1-percent increase in aggregate payment amounts for
nervous system procedures, a 2-percent increase in aggregate payment
amounts for musculoskeletal system procedures, and a 3-percent increase
in aggregate payment amounts for genitourinary system procedures and
integumentary system procedures.
An estimated increase in aggregate payment for the specialty group
does not mean that all procedures in the group would experience
increased payment rates. For example, the estimated increase for CY
2015 for digestive system procedures is likely due to an increase in
the ASC payment weight for some of the high volume procedures, such as
CPT code 43239 (Upper GI endoscopy biopsy) where estimated payment
would increase by 9 percent for CY 2015.
Also displayed in Table 53 is a separate estimate of Medicare ASC
payments for the group of separately payable covered ancillary items
and services. The payment estimates for the covered surgical procedures
include the costs of packaged ancillary items and services. We estimate
that aggregate payments for these items and services would not change
for CY 2015.

Table 53--Estimated Impact of the Proposed CY 2015 Update to the ASC
Payment System on Aggregate CY 2015 Medicare Program Payments by
Surgical Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
Estimated CY
2014 ASC Estimated CY
Surgical specialty group payments (in 2015 percent
millions) change
(1) (2) (3)
------------------------------------------------------------------------
Total................................... $3,819 1
Eye and ocular adnexa................... 1,556 -2
Digestive system........................ 780 6
Nervous system.......................... 572 1
Musculoskeletal system.................. 474 2
Genitourinary system.................... 167 3
Integumentary system.................... 137 3
Respiratory system...................... 54 1
Cardiovascular system................... 35 -3
Ancillary items and services............ 24 0
Auditory system......................... 14 0
Hematologic & lymphatic systems......... 6 12
------------------------------------------------------------------------

Table 54 below shows the estimated impact of the proposed updates
to the revised ASC payment system on aggregate ASC payments for
selected surgical procedures during CY 2015. The table displays 30 of
the procedures receiving the greatest estimated CY 2014 aggregate
Medicare payments to ASCs. The HCPCS codes are sorted in descending
order by estimated CY 2014 program payment.
Column 1--CPT/HCPCS code.
Column 2--Short Descriptor of the HCPCS code.
Column 3--Estimated CY 2014 ASC Payments were calculated
using CY 2013 ASC utilization (the most recent full year of ASC
utilization) and the CY 2014 ASC payment rates. The estimated CY 2014
payments are expressed in millions of dollars.
Column 4--Estimated CY 2015 Percent Change reflects the
percent differences between the estimated ASC

[[Page 41075]]

payment for CY 2014 and the estimated payment for CY 2015 based on the
proposed update.

Table 54--Estimated Impact of the Proposed CY 2015 Update to the ASC Payment System on Aggregate Payments for
Selected Procedures
----------------------------------------------------------------------------------------------------------------
Estimated CY
2014 ASC Estimated CY
CPT/HCPCS code * Short descriptor payments (in 2015 percent
millions) change
(1) (2).................................... (3) (4)
----------------------------------------------------------------------------------------------------------------
66984.................................. Cataract surg w/iol, 1 stage........... $1,132 -2
43239.................................. Upper GI endoscopy, biopsy............. 170 9
45380.................................. Colonoscopy and biopsy................. 168 6
45385.................................. Lesion removal colonoscopy............. 107 6
66982.................................. Cataract surgery, complex.............. 93 -2
64483.................................. Inj foramen epidural l/s............... 90 0
62311.................................. Inject spine l/s (cd).................. 79 0
45378.................................. Diagnostic colonoscopy................. 72 6
66821.................................. After cataract laser surgery........... 63 2
64493.................................. Inj paravert f jnt l/s 1 lev........... 47 0
64635.................................. Destroy lumb/sac facet jnt............. 45 -3
G0105.................................. Colorectal scrn; hi risk ind........... 45 0
63650.................................. Implant neuroelectrodes................ 41 5
G0121.................................. Colon ca scrn not hi rsk ind........... 41 0
64590.................................. Insrt/redo pn/gastr stimul............. 39 -4
15823.................................. Revision of upper eyelid............... 35 1
63685.................................. Insrt/redo spine n generator........... 35 27
29827.................................. Arthroscop rotator cuff repr........... 34 1
64721.................................. Carpal tunnel surgery.................. 32 -1
29881.................................. Knee arthroscopy/surgery............... 30 -1
29824.................................. Shoulder arthroscopy/surgery........... 28 1
29880.................................. Knee arthroscopy/surgery............... 25 -1
43235.................................. Uppr gi endoscopy diagnosis............ 23 9
62310.................................. Inject spine c/t....................... 23 0
29823.................................. Shoulder arthroscopy/surgery........... 22 1
52000.................................. Cystoscopy............................. 22 1
G0260.................................. Inj for sacroiliac jt anesth........... 21 0
45384.................................. Lesion remove colonoscopy.............. 21 6
67042.................................. Vit for macular hole................... 21 -1
26055.................................. Incise finger tendon sheath............ 20 -1
----------------------------------------------------------------------------------------------------------------

(3) Estimated Effects of ASC Payment System Proposed Policies on
Beneficiaries
We estimate that the proposed CY 2015 update to the ASC payment
system would be generally positive for beneficiaries with respect to
the new procedures that we are adding to the ASC list of covered
surgical procedures and for those that we are proposing to designate as
office-based for CY 2015. First, other than certain preventive services
where coinsurance and the Part B deductible is waived to comply with
sections 1833(a)(1) and (b) of the Act, the ASC coinsurance rate for
all procedures is 20 percent. This contrasts with procedures performed
in HOPDs under the OPPS, where the beneficiary is responsible for
copayments that range from 20 percent to 40 percent of the procedure
payment (other than for certain preventive services). Second, in almost
all cases, the ASC payment rates under the ASC payment system are lower
than payment rates for the same procedures under the OPPS. Therefore,
the beneficiary coinsurance amount under the ASC payment system will
almost always be less than the OPPS copayment amount for the same
services. (The only exceptions would be if the ASC coinsurance amount
exceeds the inpatient deductible. The statute requires that copayment
amounts under the OPPS not exceed the inpatient deductible.)
Beneficiary coinsurance for services migrating from physicians' offices
to ASCs may decrease or increase under the revised ASC payment system,
depending on the particular service and the relative payment amounts
under the MPFS compared to the ASC. However, for those additional
procedures that we are proposing to designate as office-based in CY
2015, the beneficiary coinsurance amount under the ASC payment system
generally would be no greater than the beneficiary coinsurance under
the MPFS because the coinsurance under both payment systems generally
is 20 percent (except for certain preventive services where the
coinsurance is waived under both payment systems).
(4) Alternative ASC Payment Policies Considered
Alternatives to the minor changes that we are proposing to make to
the ASC payment system and the reasons that we have chosen specific
options are discussed throughout this proposed rule. There are no
proposed major changes to ASC policies for CY 2015.
c. Accounting Statements and Tables
As required by OMB Circular A-4 (available on the Office of
Management and Budget Web site at: http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), we have
prepared two accounting statements to illustrate the impacts of this
proposed rule. The first accounting statement, Table 55 (below),
illustrates the classification of expenditures for the CY 2015
estimated hospital OPPS incurred benefit impacts associated with the
proposed CY 2015

[[Page 41076]]

OPD fee schedule increase, based on the 2014 Trustee's Report. The
second accounting statement, Table 56 (below), illustrates the
classification of expenditures associated with the 1.2 percent proposed
CY 2015 update to the ASC payment system, based on the provisions of
this proposed rule and the baseline spending estimates for ASCs in the
2014 Trustee's Report. Lastly, the tables classify most estimated
impacts as transfers.

Table 55--Accounting Statement: CY 2015 Estimated Hospital OPPS
Transfers From CY 2014 to CY 2015 Associated With the Proposed CY 2015
Hospital Outpatient OPD Fee Schedule Increase
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $800 million.
From Whom to Whom...................... Federal Government to
outpatient hospitals and other
providers who receive payment
under the hospital OPPS.
--------------------------------
Total.............................. $800 million.
------------------------------------------------------------------------

Table 56--Accounting Statement: Classification of Estimated Transfers
From CY 2014 to CY 2015 as a Result of the Proposed CY 2015 Update to
the ASC Payment System
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $36 million.
From Whom to Whom...................... Federal Government to Medicare
Providers and Suppliers.
--------------------------------
Total.............................. $36 million.
------------------------------------------------------------------------

d. Effects of Proposed Requirements for the Hospital OQR Program
In section XIII. of this proposed rule, we are proposing to adopt
policies affecting the Hospital OQR Program.
Of 3,325 hospitals that met eligibility requirements for the CY
2014 payment determination, we determined that 88 hospitals did not
meet the requirements to receive the full OPD fee schedule increase
factor. Most of these hospitals (70 of the 88) chose not to participate
in the Hospital OQR Program for the CY 2014 payment determination. We
estimate that approximately 90 hospitals will not receive the full OPD
fee schedule increase factor for the CY 2017 payment determination and
subsequent years.
In sections XIII.E. and XIII.C.3.of this proposed rule, for the CY
2017 payment determination and subsequent years, we are proposing to
add one claims-based quality measure and to remove three measures from
the Hospital OQR Program. In sections XIII.D.3.b. and c. of this
proposed rule we are proposing to remove one measure from the CY 2016
payment determination measure set and to change that measure from
required to voluntary for the CY 2017 payment determination and
subsequent years. Hospitals would not be subject to a payment reduction
with respect to this measure for the CY 2016 payment determination or
during the period of voluntary reporting.
Because the measure we are proposing to add for the CY 2017 payment
determination and subsequent years is claims-based, it will not require
additional burden from data reporting or other action on the part of
the hospitals. Therefore, we do not anticipate that this measure will
cause any additional facilities to fail the Hospital OQR Program
requirements. We anticipate a reduction in burden of approximately
862,077 hours or $25.9 million across participating hospitals from the
three measures we are proposing to remove and the one measure we are
proposing to make voluntary as further detailed in sections XIII.C.3.
and XIII.D.3.c. of this proposed rule, respectively, and the
information collection requirements in section XIX.C.1. of this
proposed rule.
The validation requirements for the CY 2017 payment determination
and subsequent years would result in medical record documentation of
approximately 6,000 cases per quarter (up to 12 cases per quarter for
500 hospitals) submitted to the designated CMS contractor. In section
XIII.H.3.e. of this proposed rule, we are proposing to allow hospitals
to submit medical record documentation for validation using either of
two methods: (1) Through paper medical records; or (2) by securely
transmitting electronic versions of medical information by either (a)
downloading or copying the digital image of the patient chart onto CD,
DVD, or flash drive and shipping the electronic media following
instructions specified on the QualityNet Web site; or (b) securely
submitting digital images (PDFs) of patient charts using a Secure File
Transfer Portal on the QualityNet Web site.
As stated previously (76 FR 74577), we would pay for the cost of
sending paper medical record documentation to the designated CMS
contractor at the rate of 12 cents per page for copying and
approximately $1.00 per case for postage. For both new proposed
electronic methods, we are proposing in the information collection
requirements section of this proposed rule to reimburse hospitals for
sending medical records electronically at a rate of $3.00 per patient
chart.
As we stated in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75192), we have found that an outpatient medical chart is
generally up to 10 pages. However, because we do not yet know how many
hospitals will choose to submit data electronically or through paper,
we cannot estimate the total cost of expenditures and are unable to
estimate the number of hospitals that would fail the validation
documentation submission requirement for the CY 2017 payment
determination. Because we would pay for the data collection effort
though, we believe that a requirement for medical record documentation
for up to 12 cases per quarter for up to 500 hospitals for CY 2015
represents a minimal burden to Hospital OQR Program participating
hospitals.
e. Effects of CY 2015 Proposed Policies for the ASCQR Program
In section XIV. of this proposed rule, we are proposing to adopt
policies affecting the ASCQR Program. Of 5,300 ASCs that met
eligibility requirements, we determined that 116 ASCs did not meet the
requirements to receive the full annual payment update for CY 2014.
In section XIV.B.5. of this proposed rule, for the CY 2017 payment

[[Page 41077]]

determination and subsequent years, we are proposing to add one claims-
based quality measure. The measure we are proposing for CY 2017 and
subsequent years is claims-based and would not require additional data
reporting or other action by ASCs. Therefore, we do not anticipate that
this measure would cause any additional ASCs to fail to meet the ASCQR
Program requirements. We present the time and burdens associated with
our policies and proposals in section XIX.C.2. of this proposed rule.
In section XIV.E.3.b. of this proposed rule, we note a 3-month
delay in data collection for two measures for the CY 2016 payment
determination. We do not believe that this 3-month delay in data
collection would significantly affect the number of ASCs that meet the
ASCQR Program requirements.
In section XIV.E.3.c. of this proposed rule, we are proposing that
one measure which was to be first included in the CY 2016 payment
determination, would not be included in the CY 2016 measure set and
that the measure would be voluntary for the CY 2017 payment
determination and subsequent years. ASCs would not be subject to a
payment reduction for the CY 2016 payment determination, nor would ASCs
be subject to a payment reduction for the CY 2017 payment determination
and subsequent years for failing to report this measure. Because this
measure was not included in the CY 2014 payment determination and has
not yet affected any payment determination, we do not believe that
there will be an impact on the number of ASCs that meet the ASCQR
Program requirements from our proposals not to include this measure in
the measure set for the CY 2016 payment determination and to make this
measure voluntary for the CY 2017 payment determination and subsequent
years.
We do not believe that the other measures we previously adopted
would cause any additional ASCs to fail to meet the ASCQR Program
requirements. (We refer readers to the CY 2014 OPPS/ASC final rule with
comment period for a list of these measures (78 FR 75130).
Further, we do not believe that any of the proposals in this
proposed rule would significantly affect the number of ASCs that do not
receive a full annual payment update for the CY 2017 payment
determination. We are unable to estimate the number of ASCs that would
not receive the full annual payment update based on the CY 2015 and CY
2016 payment determinations (78 FR 75192). For this reason, using the
CY 2014 payment determination numbers as a baseline, we estimate that
approximately 116 ASCs would not receive the full annual payment update
in CY 2017 due to failure to meet the ASCQR Program requirements.
f. Effects of Proposed Changes to the Rural Provider and Hospital
Ownership Exceptions to the Physician Self-Referral Law
Section 6001(a) of the Affordable Care Act amended the rural
provider and hospital ownership exceptions to the physician self-
referral law (sections 1877(d)(2) and (d)(3) of the Act, respectively)
to impose additional restrictions on physician ownership or investment
in hospitals. The amended rural provider and hospital ownership
exceptions provide that a hospital may not increase the number of
operating rooms, procedure rooms, and beds beyond that for which the
hospital was licensed on March 23, 2010 (or, in the case of a hospital
that did not have a provider agreement in effect as of this date, but
did have a provider agreement in effect on December 31, 2010, the date
of effect of such agreement). We issued regulations addressing the
prohibition against facility expansion in the CY 2011 OPPS/ASC final
rule with comment period (75 FR 72240).
Section 6001(a)(3) of the Affordable Care Act added section
1877(i)(3)(A)(i) of the Act to set forth that the Secretary shall
establish and implement an exception process to the prohibition on
expansion of facility capacity. We issued regulations that govern the
expansion exception process in the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74517) at 42 CFR 411.362(c). The regulations
addressing the expansion exception process were issued by January 1,
2012, and the process was implemented on February 1, 2012.
As required by the statute, the expansion exception process
provides that hospitals that qualify as an ``applicable hospital'' or a
``high Medicaid facility'' may request an exception to the prohibition
on facility expansion. The existing expansion exception process
requires the use of filed Medicare cost report data from the Healthcare
Cost Report Information System (HCRIS) for hospitals to demonstrate
that they satisfy the relevant eligibility criteria set forth in Sec.
411.362(c)(2) for applicable hospitals and Sec. 411.362(c)(3) for high
Medicaid facilities (76 FR 42350 through 42352). In section XV. of this
proposed rule, we discuss our proposal to permit hospitals also to use
internal or external data sources, as defined in the proposal, to
demonstrate satisfaction of the eligibility criteria. Under our
proposal, we would continue to require each hospital seeking to qualify
for an expansion exception to access and utilize data for its
estimations or determinations to demonstrate that the hospital meets
the relevant criteria and to provide a detailed explanation regarding
whether and how it satisfies each of the relevant criteria. We believe
the impact of our proposed modification on affected hospitals would be
minimal, given that the use of data from an internal or external source
is voluntary.
Our proposal would require each requesting hospital also to provide
actual notification that it is requesting an expansion exception
directly to hospitals whose data are part of the comparisons set forth
in Sec. Sec. 411.362(c)(2)(ii) and (c)(3)(ii) of the regulations, in
addition to performing the other methods of notification specified in
our existing regulations. We believe the impact of this proposed
additional requirement on physician-owned hospitals would be minimal.
We believe that our proposals would affect a relatively small
number of physician-owned hospitals. We estimate that there are
approximately 265 physician-owned hospitals in the country. Since the
process was implemented in February 2012, we have received only four
requests, only one of which has been considered sufficiently complete
to continue with publication in the Federal Register, under the current
regulations. We anticipate receiving a similar number of requests each
year. We do not believe that we can use the four requests to estimate
accurately the potential increase in operating rooms, procedure rooms,
and beds pursuant to approved expansion exception requests, and we are
not aware of any data that may indicate such an increase. At this time,
we also have no data or projections that may help estimate the number
of physicians that would be affected by these proposals as a result of
their ownership interests in hospitals.
We believe that beneficiaries may be positively impacted by our
proposals. Specifically, an increase in operating rooms, procedure
rooms, and beds may augment the volume or nature of services offered by
physician-owned hospitals. An expansion in the number of hospital beds
may also permit additional inpatient admissions and overnight stays.
Increased operating rooms, procedure rooms, and beds may result in
improved access to health care facilities and services. We believe that
our proposals are necessary to conform our regulations to the
amendments to section 1877 of the Act.

[[Page 41078]]

We are soliciting public comments on each of the issues outlined
above that contain estimates of the costs and benefits of the proposed
rule. We are specifically soliciting comments on the potential impact
on State governments, given that we are proposing to define external
data sources as data sources generated, maintained, or under the
control of a State Medicaid agency.
g. Effects of Proposed Policies Related to CMS-Identified Overpayments
Associated With Payment Data Submitted by Medicare Advantage (MA)
Organizations and Medicare Part D Sponsors
In section XVII. of this proposed rule, we discuss our proposals to
set forth in regulations a formal process, including appeals processes,
that allows us to recoup overpayments in the limited set of
circumstances where CMS makes a determination that an overpayment to an
MA organization or Part D sponsor occurred because the organization or
sponsor submitted erroneous data to CMS. It is difficult to predict how
many times CMS would annually determine an overpayment due to erroneous
data submitted to CMS by the MA organization or Part D sponsor and
that, therefore, would be subject to the proposed offset and appeals
regulations. However, we predict that it would be highly unlikely to
exceed 10 cases a year and would probably be fewer. Further, electing
to appeal a CMS overpayment determination under the proposed
regulations is completely at the discretion of the MA organization or
Part D sponsor. The MA organization or Part D sponsor may agree that
the data require correction and resubmit the data; MA organizations and
Part D sponsors that receive notification of an overpayment are under
no obligation to initiate the appeal process. If the MA organization or
Part D sponsor chooses not to appeal, there are no costs or burden
associated with the appeal. If the MA organization or Part D sponsor
chooses to appeal the overpayment determination, there would be costs
associated with preparing the appeal request.
We are proposing three levels of appeal review (reconsideration,
informal hearing, and Administrator review), each of which the MA
organization or Part D sponsor would have to request. Once the appeal
has been filed, however; there will be little or no cost experienced by
the MA organization or Part D sponsor because the appeal process is on
the record and would not involve oral testimony. The extent to which
there would be costs associated with preparing the appeal request is
subject to preference and choice. We estimate that it would take a plan
5 hours to prepare and file a reconsideration request. In terms of
cost, it has been our experience that most appeals have been prepared
by high-level officials of the plan or lawyers. According to the most
recent wage data provided by the Bureau of Labor Statistics (BLS) for
May 2012, the mean hourly wage for the category of ``Lawyers''--which
we believe, considering the variety of officials who have submitted
appeals, is the most appropriate category--is $62.93. Multiplying this
figure by 50 hours (10 submissions x 5 hours) results in a projected
annual cost burden of $3,147. We estimate the preparation and filing of
a request for a hearing, or for Administrator's review would take 2
hours, at most, because the MA organization or Part D sponsor cannot
submit new evidence. The hearing officer or Administrator is limited to
a review of the record. Multiplying this figure by 40 hours (10
submissions x 4 hours) results in a projected annual cost burden of
$2,517. It is estimated that if the costs of benefits and overhead are
included, the total annual costs for requests at the three levels would
be approximately $11,000.

B. Regulatory Flexibility Act (RFA) Analysis

The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, we estimate that
most hospitals, ASCs and CMHCs are small entities as that term is used
in the RFA. For purposes of the RFA, most hospitals are considered
small businesses according to the Small Business Administration's size
standards with total revenues of $35.5 million or less in any single
year. Most ASCs and most CMHCs are considered small businesses with
total revenues of $14 million or less in any single year. We estimate
that this proposed rule may have a significant impact on approximately
2,007 hospitals with voluntary ownership. For details, see the Small
Business Administration's ``Table of Small Business Size Standards'' at
http://www.sba.gov/content/table-small-business-size-standards.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has 100 or fewer beds. We estimate that this
proposed rule may have a significant impact on approximately 709 small
rural hospitals.
The analysis above, together with the remainder of this preamble,
provides a regulatory flexibility analysis and a regulatory impact
analysis.

C. Unfunded Mandates Reform Act Analysis

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $141 million. This proposed rule does
not mandate any requirements for State, local, or tribal governments,
or for the private sector.

D. Conclusion

The changes we are proposing to make in this proposed rule would
affect all classes of hospitals paid under the OPPS and would affect
both CMHCs and ASCs. We estimate that most classes of hospitals paid
under the OPPS would experience a modest increase or a minimal decrease
in payment for services furnished under the OPPS in CY 2015. Table 52
demonstrates the estimated distributional impact of the OPPS budget
neutrality requirements that would result in a 2.2 percent increase in
payments for all services paid under the OPPS in CY 2015, after
considering all of the proposed changes to APC reconfiguration and
recalibration, as well as the proposed OPD fee schedule increase
factor, proposed wage index changes, including the proposed frontier
State wage index adjustment, estimated payment for outliers, and
proposed changes to the pass-through payment estimate. However, some
classes of providers that are paid under the OPPS would experience more
significant gains and others would experience modest losses in OPPS
payments in CY 2015.
The proposed updates to the ASC payment system for CY 2015 would
affect each of the approximately 5,300 ASCs currently approved for
participation in the Medicare program. The effect on an individual ASC
would depend on its mix of patients, the proportion of the ASC's
patients who are Medicare beneficiaries, the degree to which the
payments for the procedures offered by the ASC are changed under

[[Page 41079]]

the ASC payment system, and the extent to which the ASC provides a
different set of procedures in the coming year. Table 53 demonstrates
the estimated distributional impact among ASC surgical specialties of
the MFP-adjusted CPI-U update factor of 1.2 percent for CY 2015.

XXII. Federalism Analysis

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct costs on State and local
governments, preempts State law, or otherwise has Federalism
implications. We have examined the OPPS and ASC provisions included in
this proposed rule in accordance with Executive Order 13132,
Federalism, and have determined that they would not have a substantial
direct effect on State, local or tribal governments, preempt State law,
or otherwise have a Federalism implication. As reflected in Table 52 of
this proposed rule, we estimate that OPPS payments to governmental
hospitals (including State and local governmental hospitals) would
increase by 2.2 percent under this proposed rule. While we do not know
the number of ASCs or CMHCs with government ownership, we anticipate
that it is small. The analyses we have provided in this section of this
proposed rule, in conjunction with the remainder of this document,
demonstrate that this proposed rule is consistent with the regulatory
philosophy and principles identified in Executive Order 12866, the RFA,
and section 1102(b) of the Act.
This proposed rule would affect payments to a substantial number of
small rural hospitals and a small number of rural ASCs, as well as
other classes of hospitals, CMHCs, and ASCs, and some effects may be
significant.

List of Subjects

42 CFR Part 411

Kidney diseases, Medicare, Physician referral, Reporting and
recordkeeping requirements.

42 CFR Part 412

Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 416

Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 419

Hospitals, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 422

Administrative practice and procedure, Health facilities, Health
maintenance, organizations (HMO), Medicare, Penalties, Privacy,
Reporting and recordkeeping requirements.

42 CFR Part 423

Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Health
professionals, Medicare, Penalties, Privacy, Reporting and
recordkeeping requirements.

42 CFR Part 424

Emergency medical services, Health professions, Medicare.

For reasons stated in the preamble of this document, the Centers
for Medicare & Medicaid Services is proposing to amend 42 CFR Chapter
IV as set forth below:

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATION ON MEDICARE
PAYMENT

0
1. The authority citation for part 411 continues to read as follows:

Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh, and 1395nn).

0
2. Section 411.351 is amended by adding the definitions ``External data
source'' and ``Internal data source'' in alphabetical order to read as
follows:

Sec. 411.351 Definitions.

* * * * *
External data source means a data source that--
(1) Is generated, maintained, or under the control of a State
Medicaid agency;
(2) Is reliable and transparent;
(3) Maintains data that, for purposes of the process described in
Sec. 411.362(c), are readily available and accessible to the
requesting hospital, comparison hospitals, and CMS; and
(4) Maintains or generates data that, for purposes of the process
described in Sec. 411.362(c), are accurate, complete, and objectively
verifiable.
* * * * *
Internal data source means a data source other than the Healthcare
Cost Report Information System that--
(1) Is generated, maintained, or under the control of the
Department;
(2) Is reliable and transparent;
(3) Maintains data that, for purposes of the process described in
Sec. 411.362(c), are readily available and accessible to the
requesting hospital, comparison hospitals, and CMS; and
(4) Maintains or generates data that, for purposes of the process
described in Sec. 411.362(c), are accurate, complete, and objectively
verifiable.
* * * * *
0
3. Section 411.362 is amended by revising paragraphs (c)(2)(ii),
(c)(2)(iv), (c)(2)(v), (c)(3)(ii), and (c)(5) to read as follows:

Sec. 411.362 Additional requirements concerning physician ownership
and investment in hospitals.

* * * * *
(c) * * *
(2) * * *
(ii) Medicaid inpatient admissions. Has an annual percent of total
inpatient admissions under Medicaid that is equal to or greater than
the average percent with respect to such admissions for all hospitals
located in the county in which the hospital is located during the most
recent fiscal year for which data are available as of the date that the
hospital submits its request. A hospital must use only filed Medicare
hospital cost report data, data from an internal data source (as
defined at Sec. 411.351), and/or data from an external data source (as
defined at Sec. 411.351) to estimate its annual percent of total
inpatient admissions under Medicaid and the average percent with
respect to such admissions for all hospitals located in the county in
which the hospital is located:
* * * * *
(iv) Average bed capacity. Is located in a State in which the
average bed capacity in the State is less than the national average bed
capacity during the most recent fiscal year for which data are
available as of the date that the hospital submits its request. A
hospital must use only filed Medicare hospital cost report data, data
from an internal data source (as defined at Sec. 411.351), and/or data
from an external data source (as defined at Sec. 411.351) to determine
the average bed capacity in the State in which the hospital is located
and the national average bed capacity.
(v) Average bed occupancy. Has an average bed occupancy rate that
is greater than the average bed occupancy rate in the State in which
the hospital is located during the most recent fiscal year for which
data are available as of the date that the hospital submits its
request. A hospital must use only filed Medicare hospital cost report
data, data from an internal data source (as defined at Sec. 411.351),
and/or data from an external data source (as defined at Sec. 411.351)
to determine its average bed occupancy rate and the average bed

[[Page 41080]]

occupancy rate for the State in which the hospital is located.
(3) * * *
(ii) Medicaid inpatient admissions. With respect to each of the 3
most recent fiscal years for which data are available as of the date
the hospital submits its request, has an annual percent of total
inpatient admissions under Medicaid that is estimated to be greater
than such percent with respect to such admissions for any other
hospital located in the county in which the hospital is located. A
hospital must use only filed Medicare hospital cost report data, data
from an internal data source (as defined at Sec. 411.351), and/or data
from an external data source (as defined at Sec. 411.351) to estimate
its annual percentage of total inpatient admissions under Medicaid and
the annual percentages of total inpatient admissions under Medicaid for
every other hospital located in the county in which the hospital is
located.
* * * * *
(5) Community input and timing of complete request. Upon submitting
a request for an exception and until the hospital receives a CMS
decision, the hospital must disclose on any public Web site for the
hospital that it is requesting an exception and must also provide
actual notification that it is requesting an exception, in either
electronic or hard copy form, directly to hospitals whose data are part
of the comparisons in paragraphs (c)(2)(ii) and (c)(3)(ii) of this
section. Individuals and entities in the hospital's community may
provide input with respect to the hospital's request no later than 30
days after CMS publishes notice of the hospital's request in the
Federal Register. Such input must take the form of written comments.
The written comments must be either mailed or submitted electronically
to CMS. If CMS receives written comments from the community, the
hospital has 30 days after CMS notifies the hospital of the written
comments to submit a rebuttal statement.
(i) If only filed Medicare hospital cost report data are used in
the hospital's request, the written comments, and the hospital's
rebuttal statement--
(A) A request will be deemed complete at the end of the 30-day
comment period if CMS does not receive written comments from the
community.
(B) A request will be deemed complete at the end of the 30-day
rebuttal period, regardless of whether the hospital submits a rebuttal
statement, if CMS receives written comments from the community.
(ii) If data from an internal data source or external data source
are used in the hospital's request, the written comments, or the
hospital's rebuttal statement--
(A) A request will be deemed complete no later than 180 days after
the end of the 30-day comment period if CMS does not receive written
comments from the community.
(B) A request will be deemed complete no later than 180 days after
the end of the 30-day rebuttal period, regardless of whether the
hospital submits a rebuttal statement, if CMS receives written comments
from the community.
* * * * *

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES

0
4. The authority citation for part 412 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), and sec. 124 of Public Law 106-113 (113
Stat.1501A-332).

Sec. 412.3 [Amended]

0
5. Section 412.3 is amended by--
0
a. Removing paragraph (c).
0
b. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d),
respectively.
0
c. In newly redesignated paragraph (d)(1), removing the cross-reference
``paragraph (e)(2)'' and adding in its place the cross-reference
``paragraph (d)(2)''.

PART 416--AMBULATORY SURGICAL SERVICES

0
6. The authority citation for part 416 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

0
7. Section 416.164 is amended by revising paragraphs (a)(11) and (b)(5)
to read as follows:

Sec. 416.164 Scope of ASC services.

(a) * * *
(11) Radiology services for which separate payment is not allowed
under the OPPS and other diagnostic tests or interpretive services that
are integral to a surgical procedure, except certain diagnostic tests
for which separate payment is allowed under the OPPS;
* * * * *
(b) * * *
(5) Certain radiology services and certain diagnostic tests for
which separate payment is allowed under the OPPS.
* * * * *
0
8. Section 416.171 is amended by revising paragraphs (b)(1) and (2) to
read as follows:

Sec. 416.171 Determination of payment rates for ASC services.

* * * * *
(b) * * *
(1) Covered ancillary services specified in Sec. 416.164(b), with
the exception of radiology services and certain diagnostic tests as
provided in Sec. 416.164(b)(5);
(2) The device portion of device-intensive procedures, which are
procedures assigned to an APC with a device cost greater than 40
percent of the APC costs when calculated according to the standard OPPS
APC ratesetting methodology.
* * * * *

PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES

0
9. The authority citation for part 419 continues to read as follows:

Authority: Secs. 1102, 1833(t), and 1871 of the Social Security
Act (42 U.S.C. 1302, 1395l(t), and 1395hh).

0
10. Section 419.2 is amended by revising paragraphs (b)(7) and (16) to
read as follows:

Sec. 419.2 Basis of payment.

* * * * *
(b) * * *
(7) Ancillary services;
* * * * *
(16) Drugs and biologicals that function as supplies when used in a
surgical procedure (including, but not limited to, skin substitutes and
similar products that aid wound healing and implantable biologicals);
* * * * *
0
11. Section 419.22 is amended by revising paragraph (j) to read as
follows:

Sec. 419.22 Hospital services excluded from payment under the
hospital outpatient prospective payment system.

* * * * *
(j) Except as provided in Sec. 419.2(b)(11), prosthetic devices
and orthotic devices.
* * * * *
0
12. Section 419.32 is amended by adding paragraph (b)(1)(iv)(B)(6) to
read as follows:

Sec. 419.32 Calculation of prospective payment rates for hospital
outpatient services.

* * * * *
(b) * * *
(1) * * *
(iv) * * *

[[Page 41081]]

(B) * * *
(6) For calendar year 2015, a multifactor productivity adjustment
(as determined by CMS) and 0.2 percentage point.
* * * * *

Sec. 419.46 [Amended]

0
13. Section 419.46 is amended by--
0
a. In paragraph (c)(1), removing the phrase ``section 1833(17)(C)'' and
adding in its place the phrase ``section 1833(t)(17)(C)''.
0
b. In paragraph (d) introductory text and paragraph (d)(1), removing
the term ``waiver'' and adding in its place the term ``exception'' each
time it apppears.
0
c. In paragraph (d)(2), removing the term ``waivers'' and adding in its
place the term ``exceptions''.
0
d. In paragraph (e) introductory text, removing the phrase ``section
1833(17)(C)'' and adding in its place the phrase ``section
1833(t)(17)(C)''.
0
14. Section 419.64 is amended by revising paragraph (a)(4)(iv) to read
as follows:

Sec. 419.64 Transitional pass-through payments: Drugs and
biologicals.

* * * * *
(a) * * *
(4) * * *
(iv) A biological that is not a skin substitute or similar product
that aids wound healing, unless pass-through payment for a skin
substitute as a biological is made on or before January 1, 2015.
* * * * *
0
15. Section 419.66 is amended by revising paragraph (b)(3) and removing
paragraph (b)(4)(iii).
The revision reads as follows:

Sec. 419.66 Transitional pass-through payments: Medical devices.

* * * * *
(b) * * *
(3) The device is an integral part of the service furnished, is
used for one patient only, comes in contact with human tissue, and is
surgically implanted or inserted (either permanently or temporarily) or
applied in or on a wound or other skin lesion.
* * * * *

PART 422--MEDICARE ADVANTAGE PROGRAM

0
16. The authority citation for part 422 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

0
17. Section 422.330 is added to subpart G to read as follows:

Sec. 422.330 CMS-identified overpayments associated with payment data
submitted by MA organizations.

(a) Definitions. For purposes of this section--
Payment data means data controlled and submitted by an MA
organization to CMS and used for payment purposes, including enrollment
data and data submitted under Sec. 422.310.
Applicable reconciliation date occurs on the date of the annual
final deadline for risk adjustment data submission described at Sec.
422.310(g)(2)(ii).
(b) Request to correct payment data. If CMS identifies an error in
payment data other than an error identified through the process
described in Sec. 422.311, and the payment error identified affects
payments for any of the 6 most recently completed payment years, CMS
may send a data correction notice to the MA organization requesting
that the MA organization correct the payment data. The notice will
include or make reference to the specific payment data that need to be
corrected, the reason why CMS believes that the payment data are
erroneous, and the timeframe for correcting the payment data.
(c) Payment offset. If the MA organization fails to submit the
corrected payment data within the timeframe as requested in accordance
with paragraph (b) of this section, CMS will conduct a payment offset
against payments made to the MA organization. CMS will calculate the
payment offset amount using a payment algorithm that applies the
payment rules for the applicable year.
(d) Payment offset notification. CMS will issue a payment offset
notice to the MA organization that includes the following:
(1) The dollar amount of the offset from plan payments.
(2) An explanation of how the erroneous data were identified and
used to calculate the payment offset amount.
(3) An explanation that, if the MA organization disagrees with the
payment offset, it may request an appeal within 30 days of issuance of
the payment offset notification.
(e) Appeals process. If an MA organization does not agree with the
payment offset described in paragraph (c) of this section, it may
appeal under the following three-level appeal process:
(1) Reconsideration. An MA organization may request reconsideration
of the payment offset described in paragraph (c) of this section,
according to the following process:
(i) Manner and timing of request. A written request for
reconsideration must be filed within 30 days from the date that CMS
issued the payment offset notice to the MA organization.
(ii) Content of request. The written request for reconsideration
must specify the findings or issues with which the MA organization
disagrees and the reasons for its disagreement. As part of its request
for reconsideration, the MA organization may include any additional
documentary evidence in support of its position. Any additional
evidence must be submitted with the request for reconsideration.
Additional information submitted after this time will be rejected as
untimely.
(iii) Conduct of reconsideration. In conducting the
reconsideration, the CMS reconsideration official reviews the
underlying data that were used to determine the amount of the payment
offset and any additional documentary evidence timely submitted by the
MA organization.
(iv) Reconsideration decision. The CMS reconsideration official
informs the MA organization of its decision on the reconsideration
request.
(v) Effect of reconsideration decision. The decision of the CMS
reconsideration official is final and binding unless a timely request
for an informal hearing is filed in accordance with paragraph (e)(2) of
this section.
(2) Informal hearing. An MA organization dissatisfied with CMS'
reconsideration decision made under paragraph (e)(1) of this section is
entitled to an informal hearing as provided for under paragraphs
(e)(2)(i) through (v) of this section.
(i) Manner and timing for request. A request for an informal
hearing must be made in writing and filed with CMS within 30 days of
the date of CMS' reconsideration decision.
(ii) Content of request. The request for an informal hearing must
include a copy of the reconsideration decision and must specify the
findings or issues in the decision with which the MA organization
disagrees and the reasons for its disagreement.
(iii) Informal hearing procedures. The informal hearing will be
conducted in accordance with the following:
(A) CMS provides written notice of the time and place of the
informal hearing at least 10 days before the scheduled date.
(B) The informal hearing is conducted by a CMS hearing officer who
neither receives testimony nor accepts any new evidence that was not
timely presented with the reconsideration request. The CMS hearing
officer is limited to the review of the record that was before the CMS
reconsideration official when CMS made its reconsideration
determination.

[[Page 41082]]

(C) The CMS hearing officer will review the proceeding before the
CMS reconsideration official on the record made before the CMS
reconsideration official using the clearly erroneous standard of
review.
(iv) Decision of the CMS hearing officer. The CMS hearing officer
decides the case and sends a written decision to the MA organization
explaining the basis for the decision.
(v) Effect of hearing officer's decision. The hearing officer's
decision is final and binding, unless the decision is reversed or
modified by the Administrator in accordance with paragraph (e)(3) of
this section.
(3) Review by the Administrator. The Administrator review will be
conducted in the following manner:
(i) An MA organization that has received a hearing officer's
decision may request review by the Administrator within 30 days of the
date of issuance of the hearing officer's decision under paragraph
(e)(2)(iv) of this section. The MA organization may submit written
arguments to the Administrator for review.
(ii) After receiving a request for review, the Administrator has
the discretion to elect to review the hearing officer's determination
in accordance with paragraph (e)(3)(iii) of this section or to decline
to review the hearing officer's decision.
(iii) If the Administrator declines to review the hearing officer's
decision, the hearing officer's decision is final and binding.
(iv) If the Administrator elects to review the hearing officer's
decision, the Administrator will review the hearing officer's decision,
as well as any information included in the record of the hearing
officer's decision and any written argument submitted by the MA
organization, and determine whether to uphold, reverse, or modify the
hearing officer's decision.
(v) The Administrator's determination is final and binding.
(f) Matters subject to appeal and burden of proof.
(1) The MA organization's appeal is limited to CMS' finding that
the payment data submitted by the MA organization are erroneous.
(2) The MA organization bears the burden of proof by a
preponderance of the evidence in demonstrating that CMS' finding that
the payment data were erroneous was incorrect or otherwise inconsistent
with applicable program requirements.
(g) Applicability of appeals process. The appeals process under
paragraph (e) of this section applies only to payment offsets under
paragraph (c) of this section.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
18. The authority citation for part 423 continues to read as follows:

Authority: Secs. 1102, 1106, 1860D-1 through 1860D-42, and 1871
of the Social Security Act (42 U.S.C. 1302, 1306, 1395w-101 through
1395w-152, and 1395hh.

0
19. Section 423.352 is added to read as follows:

Sec. 423.352 CMS-identified overpayments associated with payment data
submitted by Part D sponsors.

(a) Definitions. For purposes of this section--
Applicable reconciliation date occurs on the later of either the
annual deadline for submitting--
(1) Prescription drug event (PDE) data for the annual Part D
payment reconciliations referred to in Sec. 423.343(c) and (d); or
(2) Direct and indirect remuneration data.
Payment data means data controlled and submitted by a Part D
sponsor to CMS and used for payment purposes, including enrollment data
and data submitted under Sec. Sec. 423.329(b)(3), 423.336(c)(1), and
423.343, and data provided for purposes of supporting allowable
reinsurance costs and allowable risk corridor costs as defined in Sec.
423.308, including data submitted to CMS regarding direct and indirect
remuneration.
(b) Request to correct payment data. If CMS identifies an error in
payment data submitted by a Part D sponsor, and the payment error
identified affects payments for any of the 6 most recently completed
payment years, CMS may send a data correction notice to the Part D
sponsor requesting that the Part D sponsor correct the payment data.
The notice will include or make reference to the specific payment data
that need to be corrected, the reason why CMS believes that the payment
data are erroneous, and the timeframe for correcting the payment data.
(c) Payment offset. If the Part D sponsor fails to submit the
corrected payment data within the timeframe as requested in accordance
with paragraph (b) of this section, CMS will conduct a payment offset
against payments made to the Part D sponsor. CMS will calculate the
payment offset amount using a payment algorithm that applies the
payment rules for the applicable year.
(d) Payment offset notification. CMS will issue a payment offset
notice to the Part D sponsor that includes the following:
(1) The dollar amount of the offset from plan payments.
(2) An explanation of how the erroneous data were identified and
used to calculate the payment offset amount.
(3) An explanation that, if the Part D sponsor disagrees with the
payment offset, it may request an appeal within 30 days of issuance of
the payment offset notification.
(e) Appeals process. If a Part D sponsor does not agree with the
payment offset described in paragraph (c) of this section, it may
appeal under the following three-level appeal process:
(1) Reconsideration. A Part D sponsor may request reconsideration
of the payment offset described in paragraph (c) of this section,
according to the following process:
(i) Manner and timing of request. A written request for
reconsideration must be filed within 30 days from the date that CMS
issued the payment offset notice to the Part D sponsor.
(ii) Content of request. The written request for reconsideration
must specify the findings or issues with which the Part D sponsor
disagrees and the reasons for its disagreement. As part of its request
for reconsideration, the Part D sponsor may include any additional
documentary evidence in support of its position. Any additional
evidence must be submitted with the request for reconsideration.
Additional information submitted after this time will be rejected as
untimely.
(iii) Conduct of reconsideration. In conducting the
reconsideration, the CMS reconsideration official reviews the
underlying data that were used to determine the amount of the payment
offset and any additional documentary evidence timely submitted by the
Part D sponsor.
(iv) Reconsideration decision. The CMS reconsideration official
informs the Part D sponsor of its decision on the reconsideration
request.
(v) Effect of reconsideration decision. The decision of the CMS
reconsideration official is final and binding unless a timely request
for an informal hearing is filed in accordance with paragraph (e)(2) of
this section.
(2) Informal hearing. A Part D sponsor dissatisfied with CMS'
reconsideration decision made under paragraph (e)(1) of this section is
entitled to an informal hearing as provided for under paragraphs
(e)(2)(i) through (v) of this section.
(i) Manner and timing for request. A request for an informal
hearing must be made in writing and filed with CMS

[[Page 41083]]

within 30 days of the date of CMS' reconsideration decision.
(ii) Content of request. The request for an informal hearing must
include a copy of the reconsideration decision and must specify the
findings or issues in the decision with which the Part D sponsor
disagrees and the reasons for its disagreement.
(iii) Informal hearing procedures. The informal hearing will be
conducted in accordance with the following:
(A) CMS provides written notice of the time and place of the
informal hearing at least 10 days before the scheduled date.
(B) The informal hearing is conducted by a CMS hearing officer who
neither receives testimony nor accepts any new evidence that was not
timely presented with the reconsideration request. The CMS hearing
officer is limited to the review of the record that was before the CMS
reconsideration official when CMS made its reconsideration
determination.
(C) The CMS hearing officer will review the proceeding before the
CMS reconsideration official on the record made before the CMS
reconsideration official using the clearly erroneous standard of
review.
(iv) Decision of the CMS hearing officer. The CMS hearing officer
decides the case and sends a written decision to the Part D sponsor
explaining the basis for the decision.
(v) Effect of hearing officer's decision. The hearing officer's
decision is final and binding, unless the decision is reversed or
modified by the Administrator in accordance with paragraph (e)(3) of
this section.
(3) Review by the Administrator. The Administrator review will be
conducted in the following manner:
(i) A Part D sponsor that has received a hearing officer's decision
may request review by the Administrator within 30 days of the date of
issuance of the hearing officer's decision under paragraph (e)(2)(iv)
of this section. The Part D sponsor may submit written arguments to the
Administrator for review.
(ii) After receiving a request for review, the Administrator has
the discretion to elect to review the hearing officer's determination
in accordance with paragraph (e)(3)(iii) of this section or to decline
to review the hearing officer's decision.
(iii) If the Administrator declines to review the hearing officer's
decision, the hearing officer's decision is final and binding.
(iv) If the Administrator elects to review the hearing officer's
decision, the Administrator will review the hearing officer's decision,
as well as any information included in the record of the hearing
officer's decision and any written argument submitted by the Part D
sponsor, and determine whether to uphold, reverse, or modify the
hearing officer's decision.
(v) The Administrator's determination is final and binding.
(f) Matters subject to appeal and burden of proof. (1) The Part D
sponsor's appeal is limited to CMS' finding that the payment data
submitted by the Part D sponsor are erroneous.
(2) The Part D sponsor bears the burden of proof by a preponderance
of the evidence in demonstrating that CMS' finding that the payment
data were erroneous was incorrect or otherwise inconsistent with
applicable program requirements.
(g) Applicability of appeals process. The appeals process under
paragraph (e) of this section applies only to payment offsets under
paragraph (c) of this section.

PART 424--CONDITIONS FOR PAYMENT

0
20. The authority citation for part 424 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

0
21. Section 424.13 is amended by--
0
a. Revising paragraph (a) introductory text.
0
b. Removing paragraph (a)(1).
0
c. Redesignating paragraphs (a)(2), (3), and (4) as paragraphs (a)(1),
(2), and (3), respectively.
0
d. Revising newly redesignated paragraph (a)(1)(i).
0
e. Revising paragraph (b).
The revisions read as follows:

Sec. 424.13 Requirements for inpatient services of hospitals other
than inpatient psychiatric facilities.

(a) Content of certification and recertification. Medicare Part A
pays for inpatient hospital services (other than inpatient psychiatric
facility services) for cases that are 20 inpatient days or more, or are
outlier cases under subpart F of part 412 of this chapter, only if a
physician certifies or recertifies the following:
* * * * *
(1) * * *
(i) Hospitalization of the patient for medical treatment or
medically required diagnostic study; or
* * * * *
(b) Timing of certification. For outlier cases under subpart F of
part 412 of this chapter, the certification must be signed and
documented in the medical record and as specified in paragraphs (e)
through (h) of this section. For all other cases, the certification
must be signed and documented no later than 20 days into the hospital
stay.
* * * * *

Dated: June 24, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Dated: June 27, 2014.
Sylvia M. Burwell,
Secretary.
[FR Doc. 2014-15939 Filed 7-3-14; 4:15 pm]
BILLING CODE 4120-01-P