Federal Register, Volume 79 Issue 217 (Monday, November 10, 2014)

[Federal Register Volume 79, Number 217 (Monday, November 10, 2014)]
[Rules and Regulations]
[Pages 66770-67034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26146]

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Vol. 79

Monday,

No. 217

November 10, 2014

Part II

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: CMS-Identified
Overpayments Associated with Submitted Payment Data; Final Rule

Federal Register / Vol. 79 , No. 217 / Monday, November 10, 2014 /
Rules and Regulations

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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-FC]
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: CMS-
Identified Overpayments Associated with Submitted Payment Data

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period revises the Medicare
hospital outpatient prospective payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment system for CY 2015 to
implement applicable statutory requirements and changes arising from
our continuing experience with these systems. In this final rule with
comment period, we describe the changes to the amounts and factors used
to determine the payment rates for Medicare services paid under the
OPPS and those paid under the ASC payment system. In addition, this
final rule with comment period updates and refines the requirements for
the Hospital Outpatient Quality Reporting (OQR) Program and the ASC
Quality Reporting (ASCQR) Program.
In this document, we also are making changes to the data sources
permitted 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 formal process, including a three-
level appeals process, to recoup overpayments that result from the
submission of erroneous payment data by Medicare Advantage (MA)
organizations and Part D sponsors in the limited circumstances in which
the organization or sponsor fails to correct these data.

DATES: Effective Date: This final rule with comment period is effective
on January 1, 2015.
Comment Period: To be assured consideration, comments on the
payment classifications assigned to HCPCS codes identified in Addenda
B, AA, and BB to this final rule with comment period with the ``NI''
comment indicator, and on other areas specified throughout this final
rule with comment period must be received at one of the addresses
provided in the ADDRESSES section no later than 5 p.m. EST on December
30, 2014.
Application Deadline--New Class of New Technology Intraocular
Lenses: Requests for review of applications for a new class of new
technology intraocular lenses must be received by 5 p.m. EST on March
2, 2015, at the following address: ASC/NTIOL, Division of Outpatient
Care, Mailstop C4-05-17, Centers for Medicare and Medicaid Services,
7500 Security Boulevard, Baltimore, MD 21244-1850.

ADDRESSES: In commenting, please refer to file code CMS-1613-FC.
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-FC, P.O. Box 8013,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1613-FC, 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:
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.
Elizabeth Bainger, (410) 786-0529, for issues related to the Hospital
Outpatient Quality Reporting--Program Administration, Validation, and
Reconsideration Issues.
Anita Bhatia, (410) 786-7236, for issues related to the Ambulatory
Surgical Center Quality Reporting (ASCQR) Program--Program
Administration and Reconsideration Issues.
Chuck Braver, (410) 786-9379, for issues related to the CMS Web posting
of the OPPS and ASC payment files.
Anne Calinger, (410) 786-3396, for issues related to Medicare Advantage
(MA) organizations and Medicare Part D sponsor overpayments.
Elisabeth Daniel, (410) 786-0237, for issues related to OPPS drugs,
radiopharmaceuticals, biologicals, blood clotting factors, packaged
items/services, and brachytherapy sources payment.
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 Vinitha Meyyur, (410) 786-8819, for issues

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related to Hospital OQR Program and ASCQR measures issues and
publication of Hospital OQR Program data issues.
Twi Jackson, (410) 786-1159, for issues related to device-dependent
APCs, composite APCs (extended assessment and management, low dose
brachytherapy, multiple imaging), 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.
John McInnes, (410) 786-0791, for issues related to new technology
intraocular lenses (NTIOLs).
Esther Markowitz, (410) 786-4595, for issues related to comprehensive
APCs and ambulatory surgical center (ASC) payments.
David Rice, (410) 786-6004, for issues related to APC weights, blood
and blood products, cancer hospital payments, conversion factor,
copayments, cost-to-charge ratios (CCRs), data claims, geometric mean
calculation, off-campus provider-based issues, rural hospital payments,
outlier payments, and wage index.
Daniel Schroder, (410) 786-4487, 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) and OPPS pass-through
devices.
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
AMI Acute myocardial infarction
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, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Public
Law 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Public Law 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CAHPS Consumer Assessment of Healthcare Providers and Systems
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
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and Prevention
CED Coverage with Evidence Development
CERT Comprehensive Error Rate Testing
CFR Code of Federal Regulations
CI Comment indicator
CLABSI Central Line [Catheter] Associated Blood Stream Infection
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CPI-U Consumer Price Index for All Urban Consumers
CPT Current Procedural Terminology (copyrighted by the American
Medical Association)
CR Change request
CRC Colorectal cancer
CSAC Consensus Standards Approval Committee
CT Computed tomography
CV Coefficient of variation
CY Calendar year
DFO Designated Federal Official
DIR Direct or indirect remuneration
DME Durable medical equipment
DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and
Supplies
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential access community hospital
EAM Extended assessment and management
ECG Electrocardiogram
ED Emergency department
E/M Evaluation and management
EHR Electronic health record
ESRD End-stage renal disease
ESRD QIP End-Stage Renal Disease Quality Improvement Program
FACA Federal Advisory Committee Act, Public Law 92-463
FDA Food and Drug Administration
FFS [Medicare] Fee-for-service
FY Fiscal year
GAO Government Accountability Office
GI Gastrointestinal
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCERA Health Care and Education Reconciliation Act of 2010, Public
Law 111-152
HCP Health care personnel
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HCUP Healthcare Cost and Utilization Project
HH QRP Home Health Quality Reporting Program
HHS Department of Health and Human Services

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HIE Health information exchange
HEU Highly enriched uranium
HIPAA Health Insurance Portability and Accountability Act of 1996,
Public Law 104-191
HOP Hospital Outpatient Payment [Panel]
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
HPMS Health Plan Management System
IBD Inflammatory bowel disease
ICC Interclass correlation coefficient
ICD Implantable cardioverter defibrillator
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICH In-center hemodialysis
IDTF Independent diagnostic testing facility
IGI IHS Global Insight, Inc.
IHS Indian Health Service
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IORT Intraoperative radiation treatment
IPFQR Inpatient Psychiatric Facility Quality Reporting
IPPS [Hospital] Inpatient Prospective Payment System
IQR [Hospital] Inpatient Quality Reporting
IRF Inpatient rehabilitation facility
IRF QRP Inpatient Rehabilitation Facility Quality Reporting
IT Information technology
LCD Local coverage determination
LDR Low dose rate
LTCH Long-term care hospital
LTCHQR Long-Term Care Hospital Quality Reporting
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MedPAC Medicare Payment Advisory Commission
MEG Magnetoencephalography
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, Public Law 109-
432
MIPPA Medicare Improvements for Patients and Providers Act of 2008,
Public Law 110-275
MLR Medical loss ratio
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173
MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public
Law 110-173
MPFS Medicare Physician Fee Schedule
MR Medical review
MRA Magnetic resonance angiography
MRgFUS Magnetic Resonance Image Guided Focused Ultrasound
MRI Magnetic resonance imaging
MRSA Methicillin-Resistant Staphylococcus Aures
MS-DRG Medicare severity diagnosis-related group
MSIS Medicaid Statistical Information System
MUC Measure under consideration
NCCI National Correct Coding Initiative
NDC National Drug Code
NHSN National Healthcare Safety Network
NOS Not otherwise specified
NPWT Negative Pressure Wound Therapy
NPI National provider identification
NQF National Quality Forum
NQS National Quality Strategy
NTIOL New technology intraocular lens
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act of 1996, Public Law 99-509
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health Information
Technology
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
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDE Prescription Drug Event
PE Practice expense
PEPPER Program Evaluation Payment Patterns Electronic Report
PHP Partial hospitalization program
PHSA Public Health Service Act, Public Law 96-88
PMA Premarket approval
PN Pneumonia
POS Place of service
PPI Producer Price Index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PQRS Physician Quality Reporting System
QDC Quality data code
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RADV Risk Adjustment Data Validation
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RTI Research Triangle Institute, International
RVU Relative value unit
SAMS Secure Access Management Services
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SES Socioeconomic status
SI Status indicator
SIR Standardized infection ratio
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
SSA Social Security Administration
SSI Surgical site infection
TEP Technical Expert Panel
TIP Transprostatic implant procedure
TMS Transcranial Magnetic Stimulation [Therapy]
TOPs Transitional Outpatient Payments
USPSTF United States Preventive Services Task Force
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)
1. Authority of the Panel
2. Establishment of the Panel
3. Panel Meetings and Organizational Structure
F. Public Comments Received on the CY 2015 OPPS/ASC Proposed
Rule
G. Public Comments Received on the CY 2014 OPPS/ASC Final Rule
with Comment Period
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Payment Weights
1. Database Construction
a. Database Source and Methodology
b. Use of Single and Multiple Procedure Claims
c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
2. 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. 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) CY 2015 Policy for C-APCs
(3) Public Comments
(4) Statement of Final Policy and List of CY 2015 C-APCs
f. Calculation of Composite APC Criteria-Based Costs
(1) Extended Assessment and Management Composite APCs (APC 8009)
(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. Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
b. Revision of a Packaging Policy Established in CY 2014--
Procedures Described by Add-On Codes
c. Packaging Policies for CY 2015
(1) Ancillary Services
(2) Prosthetic Supplies
4. Calculation of OPPS Scaled Payment Weights
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default CCRs
E. Adjustment for Rural SCHs and EACHs under Section
1833(t)(13)(B) of the Act

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F. OPPS Payment to Certain Cancer Hospitals Described by Section
1886(d)(1)(B)(v) of the Act
1. Background
2. Payment Adjustment for Certain Cancer Hospitals for CY 2015
G. Hospital Outpatient Outlier Payments
1. Background
2. Outlier Calculation
3. Final Outlier Calculation
H. Calculation of an Adjusted Medicare Payment from the National
Unadjusted Medicare Payment
I. Beneficiary Copayments
1. Background
2. OPPS Copayment Policy
3. Calculation of an Adjusted Copayment Amount for an APC Group
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. OPPS Treatment of New CPT and Level II HCPCS Codes
1. Treatment of New CY 2014 Level II HCPCS and CPT Codes
Effective April 1, 2014 and July 1, 2014 for Which We Solicited
Public Comments in the CY 2015 OPPS/ASC Proposed Rule
2. 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 Are Soliciting Public
Comments in this CY 2015 OPPS/ASC Final Rule with Comment Period
3. Process for Soliciting Public Comments for New and Revised
CPT Codes Released by the AMA
a. Current Process for Accepting Comments on New and Revised CPT
Codes for a Year
b. Modification of Process for New and Revised CPT Codes That
Are Effective January 1
B. OPPS Changes--Variations within APCs
1. Background
2. Application of the 2 Times Rule
3. Exceptions to the 2 Times Rule
C. OPPS APC-Specific Policies
1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC
0213)
2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs
0142, 0361, 0419, and 0422)
3. Genitourinary Services
a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and
0202)
b. Cystourethroscopy, Transprostatic Implant Procedures, and
Other Genitourinary Procedures (APCs 0160, 0161, 0162, 0163, and
1564
c. Level IV Anal/Rectal Procedures (APC 0150)
d. Percutaneous Renal Cryoablation (APC 0423)
4. Nervous System Services
a. Chemodenervation (APC 0206)
b. Epidural Lysis (APCs 0203 and 0207)
c. Transcranial Magnetic Stimulation Therapy (TMS) (APC 0218)
5. Ocular Services: Ophthalmic Procedures and Services
6. Imaging
a. Echocardiography (APCs 0269, 0270, and 0697)
b. Optical Coherence Tomography Procedures of the Breast
c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, 0414)
7. Radiology Oncology
a. Proton Beam Therapy and Magnetoencephalography (MEG) Services
(APCs 0065, 0412, 0446, 0664, and 0667)
b. Stereotactic Radiosurgery Services (SRS) and Magnetic
Resonance Image Guided Focused Ultrasound (MRgFUS) (APC 0066)
8. Respiratory Services: Level II Endoscopy Lower Airway (APC
0415)
9. Other Services
a. Epidermal Autograft (APC 0327)
b. Image-Guided Breast Biopsy Procedures and Image-Guided
Abscess Drainage Procedures (APCs 0005 and 0007)
c. Negative Pressure Wound Therapy (NPWT) (APCs 0012 and 0015)
d. Platelet Rich Plasma (PRP) (APC 0327)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
a. Background
b. CY 2015 Policy
2. Provisions for Reducing Transitional Pass-Through Payments to
Offset Costs Packaged into APC Groups
a. Background
b. CY 2015 Policy
B. Adjustment to OPPS Payment for No Cost/Full Credit and
Partial Credit Devices
1. Background
2. Policy for CY 2015
V. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. OPPS Transitional Pass-Through Payment for Additional Costs
of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Drugs and Biologicals with Expiring Pass-Through Status in CY
2014
3. Drugs, Biologicals, and Radiopharmaceuticals with New or
Continuing Pass-Through Status in CY 2015
4. Provisions for Reducing Transitional Pass-Through Payments
for Policy-Packaged Drugs and Biologicals to Offset Costs Packaged
into APC Groups
a. Background
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
c. Payment Offset Policy for Contrast Agents
d. 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
B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
without Pass-Through Status
1. Background
2. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
b. Cost Threshold for Packaging of Payment for HCPCS Codes That
Describe Certain Drugs, Certain Biologicals, and Therapeutic
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
c. High Cost/Low Cost Threshold for Packaged Skin Substitutes
d. Pass-Through Evaluation Process for Skin Substitutes
e. Packaging Determination for HCPCS Codes That Describe the
Same Drug or Biological But Different Dosages
3. Payment for Drugs and Biologicals without Pass-Through Status
That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and
Other Separately Payable and Packaged Drugs and Biologicals
b. CY 2015 Payment Policy
4. Payment Policy for Therapeutic Radiopharmaceuticals
5. Payment Adjustment Policy for Radioisotopes Derived From Non-
Highly Enriched Uranium Sources
6. Payment for Blood Clotting Factors
7. Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals with HCPCS Codes but without OPPS Hospital
Claims Data
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient Visits
A. Payment for Hospital Outpatient Clinic and Emergency
Department Visits
B. Payment for Critical Care Services
VIII. Payment for Partial Hospitalization Services
A. Background
B. PHP APC Update for CY 2015
C. Separate Threshold for Outlier Payments to CMHCs
IX. Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
B. Changes to the Inpatient List
X. Nonrecurring Policy Changes: Collecting Data on Services
Furnished in Off-Campus Provider-Based Departments of Hospitals
XI. CY 2015 OPPS Payment Status and Comment Indicators
A. CY 2015 OPPS Payment Status Indicator Definitions
B. CY 2015 Comment Indicator Definitions
XII. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
1. Legislative History, Statutory Authority, and Prior
Rulemaking for the ASC Payment System
2. Policies Governing Changes to the Lists of Codes and Payment
Rates for ASC Covered Surgical Procedures and Covered Ancillary
Services
B. Treatment of New Codes
1. Process for Recognizing New Category I and Category III CPT
Codes and Level II HCPCS Codes
2. Treatment of New Level II HCPCS Codes and Category III CPT
Codes Implemented in April 2014 and July 2014 for Which We Solicited
Public Comments in the CY 2015 OPPS/ASC Proposed Rule
3. Process for New Level II HCPCS Codes and Category I and
Category III CPT

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Codes for Which We Are Soliciting Public Comments in this CY 2015
OPPS/ASC Final Rule with Comment Period
C. 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
b. Covered Surgical Procedures Designated as Office-Based
(1) Background
(2) Changes for CY 2015 to Covered Surgical Procedures
Designated as Office-Based
c. ASC Covered Surgical Procedures Designated as Device-
Intensive
(1) Background
(2) Changes to List of Covered ASC Surgical Procedures
Designated as Device-Intensive for CY 2015
d. Adjustment to ASC Payments for No Cost/Full Credit and
Partial Credit Devices
e. ASC Treatment of Surgical Procedures Removed from the OPPS
Inpatient List for CY 2015
2. Covered Ancillary Services
D. ASC Payment for Covered Surgical Procedures and Covered
Ancillary Services
1. ASC Payment for Covered Surgical Procedures
a. Background
b. Update to ASC Covered Surgical Procedure Payment Rates for CY
2015
c. Waiver of Coinsurance and Deductible for Certain Preventive
Services
d. Payment for Cardiac Resynchronization Therapy Services
e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy
Composite
2. Payment for Covered Ancillary Services
a. Background
b. 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
4. Announcement of CY 2015 Deadline for Submitting Requests for
CMS Review of Applications for a New Class of NTIOLs
F. ASC Payment and Comment Indicators
1. Background
2. ASC Payment and Comment Indicators
G. Calculation of the ASC Conversion Factor and the ASC Payment
Rates
1. Background
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2015 and
Future Years
b. Transition Period to New OMB Delineations for ASC Wage Index
c. Updating the ASC Conversion Factor
3. Display of 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. Criteria for Removal of ``Topped-Out'' Measures
3. Removal of Measures from the Hospital OQR Program for the CY
2017 Payment Determination and Subsequent Years
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 Exclusion from the CY
2016 Payment Determination Measure Set
c. Voluntary Collection of Data for OP-31 for the CY 2017
Payment Determination and Subsequent Years
E. New Quality Measure for the CY 2018 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. 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. Reporting Ratio Application and Associated Adjustment Policy
for CY 2015
H. 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 Are
Submitted Directly to CMS for the CY 2017 Payment Determination and
Subsequent Years
c. Claims-Based Measure Data Requirements for the CY 2017 and CY
2018 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. 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. 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. 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. Policy for Removal of Quality Measures from the ASCQR Program
3. Criteria for Removal of ``Topped-Out'' Measures
4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
5. New ASCQR Program Quality Measure for the CY 2018 Payment
Determination and Subsequent Years
6. ASCQR Program Measures for Future Consideration
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

[[Page 66775]]

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 Exclusion for ASC-11 for the CY
2016 Payment Determination and Voluntary Data Collection for ASC-11
for the CY 2017 Payment Determination and Subsequent Years
4. Claims-Based Measure Data Requirements for the New Measure
for the CY 2018 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. Data Collection Timeframes for the CY 2017 Payment
Determination and Subsequent Years and 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. 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
C. Changes to the Physician-Owned Hospital Expansion Exception
Process
1. Supplemental Data Sources
a. Internal Data Sources
b. External Data Sources
c. Completeness of Supplemental Data Sources
d. Other Issues Related to Supplemental Data Sources
e. Summary of Final Provisions Regarding Supplemental Data
Sources
2. Fiscal Year Standard
a. Summary of Public Comments and Our Response Regarding the
Fiscal Year Standard
b. Summary of Final Provisions Regarding the Fiscal Year
Standard
3. Community Input and Timing of a Complete Request
a. Summary of Public Comments and Our Responses Regarding
Community Input and Timing of a Complete Request
b. Final Provisions Regarding Community Input and Timing of a
Complete Request
D. Additional Considerations
E. Summary of the Final Provisions Regarding the Expansion
Exception Process under the Rural Provider and Hospital Ownership
Exceptions to the Physician Self-Referral Law
XVI. 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 (Sec. Sec. 422.330 and 423.352)
A. Background
1. Medicare Part C Payment Background
1. Medicare Part D Payment Background
B. Provisions of the Proposed Rule and Final Policies
1. Definitions of ``Payment Data'' and ``Applicable
Reconciliation Date''
2. Request for Corrections of Payment Data
3. Payment Offset
a. Offset Amount
b. Payment Offset Notification
4. 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 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: 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. Waiver of Proposed Rulemaking and Response to Comments
A. Waiver of Proposed Rulemaking
B. Response to Comments
XXI. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impacts for the OPPS and ASC Payment Provisions
4. Detailed Economic Analyses
a. Estimated Effects of OPPS Changes in this Final Rule with
Comment Period
(1) Limitations of Our Analysis
(2) Estimated Effects of OPPS Changes on Hospitals
(3) Estimated Effects of OPPS Changes on CMHCs
(4) Estimated Effect of OPPS Changes on Beneficiaries
(5) Estimated Effects of OPPS Changes on Other Providers
(6) Estimated Effects of OPPS Changes on the Medicare and
Medicaid Programs
(7) Alternative OPPS Policies Considered
b. Estimated Effects of CY 2015 ASC Payment System Policies
(1) Limitations of Our Analysis
(2) Estimated Effects of CY 2015ASC Payment System Policies on
ASCs
(3) Estimated Effects of ASC Payment System Policies on
Beneficiaries
(4) Alternative ASC Payment Policies Considered
c. Accounting Statements and Tables
d. Effects of Requirements for the Hospital OQR Program
e. Effects of CY 2014 Policies for the ASCQR Program
f. Effects of Changes to the Rural Provider and Hospital
Ownership Exceptions to the Physician Self-Referral Law
g. Effects of 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

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
In this final rule with comment period, we are updating the payment
policies and payment rates for services furnished to Medicare
beneficiaries in hospital outpatient departments and

[[Page 66776]]

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 final rule with
comment period. In addition, this final rule with comment period
updates and refines the requirements for the Hospital Outpatient
Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR)
Program.
In this document, we also are making changes to the data sources
permitted 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 formal process, including a three-
level appeals process, to recoup overpayments that result from the
submission of erroneous payment data by Medicare Advantage (MA)
organizations and Part D sponsors in the limited circumstances in which
the organization or sponsor fails to correct these data.
2. Summary of the Major Provisions
OPPS Update: For CY 2015, we are increasing the payment
rates under the OPPS by an Outpatient Department (OPD) fee schedule
increase factor of 2.2 percent. This increase is based on the final
hospital inpatient market basket percentage increase of 2.9 percent for
inpatient services paid under the hospital inpatient prospective
payment system (IPPS), minus the multifactor productivity (MFP)
adjustment of 0.5 percentage point, and minus a 0.2 percentage point
adjustment required by the Affordable Care Act. Under this final rule
with comment period, we estimate that 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 $56.1 billion, an increase of
approximately $5.1 billion compared to CY 2014 payments, or $900
million excluding our estimated changes in enrollment, utilization, and
case-mix.
We are continuing to implement the statutory 2.0 percentage point
reduction in payments for hospitals failing to meet the hospital
outpatient quality reporting requirements, by applying a reporting
factor of 0.980 to the OPPS payments and copayments for all applicable
services.
Rural Adjustment: We are continuing 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
continuing to provide additional payments to cancer hospitals so that
the cancer hospital's payment-to-cost ratio (PCR) after the additional
payments is equal to the weighted average PCR for the other OPPS
hospitals using the most recently submitted or settled cost report
data. Based on those data, a target PCR of 0.89 will be used to
determine the CY 2015 cancer hospital payment adjustment to be paid at
cost report settlement. That is, the payment adjustments will be the
additional payments needed to result in a PCR equal to 0.89 for each
cancer hospital.
Payment of Drugs, Biologicals, and Radiopharmaceuticals:
For CY 2015, payment for the acquisition and pharmacy overhead costs of
separately payable drugs and biologicals that do not have pass-through
status are set at the statutory default of average sales price (ASP)
plus 6 percent.
Packaging Policies: We are conditionally packaging certain
ancillary services when they are integral, ancillary, supportive,
dependent, or adjunctive to a primary service. The initial set of
services packaged under this ancillary service policy are the services
assigned to APCs having an APC geometric mean cost (prior to
application of status indicator Q1) of less than or equal to $100. This
$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 will not be packaged, but as a basis for
selecting an initial set of APCs that will likely be updated and
expanded in future years.
Implementation of Comprehensive APCs: For CY 2015, we are
implementing, with several modifications, the policy for comprehensive
APCs (C-APCs) that was finalized in the CY 2014 OPPS/ASC final rule
with comment period effective January 1, 2015. We are continuing to
define the services assigned to C-APCs as primary services, and to
define a C-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 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 results 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 establishing a total of 25 C-APCs for CY 2015, including all
of the formerly device-dependent APCs remaining after some
restructuring and consolidation of these APCs (except for APCs 0427,
0622, and 0652) and two C-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 modifying the
complexity adjustment criteria finalized last year by lowering volume
and cost threshold criteria for complexity adjustments. Finally, we are
packaging 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 will be being evaluated with a primary service for a
potential complexity adjustment.
Ambulatory Surgical Center Payment Update: For CY 2015, we
are increasing payment rates under the ASC payment system by 1.4
percent. This increase is based on a projected CPI-U update of 1.9
percent minus a multifactor productivity adjustment required by the
Affordable Care Act that is projected to be 0.5 percentage point. Based
on this update, we estimate that total payments to ASCs (including
beneficiary cost-sharing and estimated changes in enrollment,
utilization, and case-mix), for CY 2015 will be approximately $4.147
billion, an increase of approximately $236 million compared to
estimated CY 2014 Medicare payments.

[[Page 66777]]

Hospital Outpatient Quality Reporting (OQR) Program: For
the Hospital OQR Program, we are adding one claims-based quality
measure for the CY 2018 payment determination and subsequent years
instead of the CY 2017 payment determination and subsequent years as
proposed. However, prior to publicly reporting this measure, we plan to
conduct a dry run (a preliminary analysis) for hospitals to review
their performance and provide feedback using the most recently
available data. There will be no payment impact during this dry-run
period, and the results of the dry run will not be publicly reported.
We are refining the criteria for determining ``topped-out'' measures,
and we are removing the OP-6 and OP-7 measures due to ``topped-out''
status. In addition, we are updating several previously adopted
measures. We are clarifying data submission requirements for OP-27 and
are noting a delayed data collection for OP-29 and OP-30. We are
excluding one previously adopted measure (OP-31) from the measure set
for the CY 2016 payment determination and changing this measure from
required to voluntary for the CY 2017 payment determination and
subsequent years. We will not subject hospitals to payment reductions
with respect to the OP-31 measure for the CY 2016 payment determination
or during the period of voluntary reporting. In addition, we are
formalizing a review and corrections period for chart-abstracted
measures. We also are updating validation procedures and changes to
regulation text to correct typographical errors. We are changing the
eligibility criteria for validation; a hospital will only be eligible
for random selection for validation if it submits at least 12 cases to
the Hospital OQR Program Clinical Data Warehouse during the quarter
with the most recently available data. Hospitals also will have the
option to submit validation data using electronic methods and must
identify the medical record staff responsible for submission of records
to the designated CMS contractor. 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 adopting one new quality measure
(ASC-12) for the CY 2018 payment determination and subsequent years.
This measure will be computed using paid Medicare fee-for-service (FFS)
claims data and will not impose any additional burden on ASCs. We also
are excluding one measure (ASC-11) previously adopted for the CY 2016
payment determination and providing that this measure may be
voluntarily rather than mandatorily reported for the CY 2017 payment
determination and subsequent years. We will 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 establishing a measure removal process and criteria, defining
data collection timeframes and submission deadlines, 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 final rule with comment period,
we set forth a detailed analysis of the regulatory and federalism
impacts that the changes will have on affected entities and
beneficiaries. Key estimated impacts are described below.
a. Impacts of the OPPS Update
(1) Impacts of All OPPS Changes
Table 49 in section XXI. of this final rule with comment period
displays the distributional impact of all the OPPS changes on various
groups of hospitals and CMHCs for CY 2015 compared to all estimated
OPPS payments in CY 2014. We estimate that the policies in this final
rule with comment period will result in a 2.3 percent overall increase
in OPPS payments to providers. We estimate that 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 CMHCs) will be
approximately $56.1 billion, an increase of approximately $5.1 billion
compared to CY 2014 payments, or $900 million, excluding our estimated
changes in enrollment, utilization, and case-mix.
We estimated the isolated impact of our OPPS policies on CMHCs
because CMHCs are only paid for partial hospitalization services under
the OPPS. Continuing the provider-specific structure that we adopted
beginning in CY 2011 and basing payment fully on the type of provider
furnishing the service, we estimate a 1.3 percent increase in CY 2015
payments to CMHCs relative to their CY 2014 payments.
(2) Impacts of the Updated Wage Indexes
We estimate that our update of the wage indexes and application of
the frontier State wage index, including changes resulting from the
adoption of the new OMB labor market area delineations and the
transitional 1-year, 50/50 blended wage index, will mitigate any
negative changes due to the new CBSA delineations.
(3) Impacts of the Rural Adjustment and the Cancer Hospital Payment
Adjustment
There are no significant impacts of our CY 2015 payment policies
for hospitals that are eligible for the rural adjustment or for the
cancer hospital payment adjustment. We are not making any change in
policies for determining the rural and cancer hospital payment
adjustments, and the adjustment amounts do not significantly impact the
budget neutrality adjustments for these policies.
(4) Impacts of the OPD Fee Schedule Increase Factor
We estimate that, for most hospitals, the application of the OPD
fee schedule increase factor of 2.2 percent to the conversion factor
for CY 2015 will 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 urban
and rural hospitals will experience increases of approximately 2.3
percent for urban hospitals and 1.9 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 ASC Payment Update
For impact purposes, the surgical procedures on the ASC list of
covered procedures are aggregated into surgical specialty groups using
CPT and HCPCS code range definitions. The percentage change in
estimated total payments by specialty groups under the CY 2015 payment
rates compared to estimated CY 2014 payment rates ranges between -4.0
percent for ancillary items and services and 14 percent for hematologic
and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
We do not expect our 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 CY 2015 proposed policies to significantly
affect the number of ASCs that do not receive a full annual payment
update.

[[Page 66778]]

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.
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: 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

[[Page 66779]]

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)

1. Authority of the Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113, requires that we consult with an 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 August 25, 2014. Prior to each meeting, we publish a notice in
the Federal Register to announce the meeting and, when necessary, to
solicit nominations for Panel membership 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 August 2014 meeting that the subcommittees continue.
We accepted this recommendation.
Discussions of the other recommendations made by the Panel at the
August 2014 Panel meeting are included in the sections of this final
rule with comment period that are specific to each recommendation. For
discussions of earlier Panel meetings and recommendations, we refer
readers to previously published OPPS/ASC proposed and final rules, the
CMS 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 2015 OPPS/ASC Proposed Rule

We received approximately 719 timely pieces of correspondence on
the CY 2015 OPPS/ASC proposed rule that appeared in the Federal
Register on July 14, 2014 (79 FR 40915). We note that we received some
public comments that are outside the scope of the CY 2015 OPPS/ASC
proposed rule. Out-of-scope public comments are not addressed in this
CY 2015 OPPS/ASC final rule with comment period. Summaries of those
public comments that are within the scope of the proposed rule and our
responses are set forth in the various sections of this final rule with
comment period under the appropriate headings.

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

We received approximately 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 are set
forth in this CY 2015 OPPS/ASC final rule with comment period under the
appropriate subject-matter headings.

[[Page 66780]]

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for APCs. In the April 7, 2000 OPPS final rule with comment period (65
FR 18482), we explained in detail how we calculated the relative
payment weights that were implemented on August 1, 2000 for each APC
group.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40925), for the CY
2015 OPPS, we proposed 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
proposed 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 this final rule with
comment period, for the purpose of recalibrating the final APC relative
payment weights for CY 2015, we used approximately 161 million final
action claims (claims for which all disputes and adjustments have been
resolved and payment has been made) for HOPD services furnished on or
after January 1, 2013, and before January 1, 2014. For exact counts of
claims used, we refer readers to the claims accounting narrative under
supporting documentation for the CY 2015 OPPS/ASC proposed rule and
this final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Of the approximately 161 million final action claims for services
provided in hospital outpatient settings used to calculate the CY 2015
OPPS payment rates for this final rule with comment period,
approximately 123 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 123 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 118 million claims, we created approximately 101 million
single records, of which approximately 50 million were ``pseudo''
single or ``single session'' claims (created from approximately 22
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 101 million single bills for
ratesetting. As described in section II.A.2. of this final rule with
comment period, our data development process is designed with the goal
of using appropriate cost information in setting the APC relative
payment weights. The bypass process is described in section II.A.1.b.
of this final rule with comment period. This section discusses how we
develop ``pseudo'' single procedure claims (as defined below), with the
intention of using more appropriate data from the available claims. In
some cases, the bypass process allows us to use some portion of the
submitted claim for cost estimation purposes, while the remaining
information on the claim continues to be unusable. Consistent with the
goal of using appropriate information in our data development process,
we only use claims (or portions of each claim) that are appropriate for
ratesetting purposes.
The final APC relative weights and payments for CY 2015 in Addenda
A and B to this final rule with comment period (which are available via
the Internet on the CMS Web site) were calculated using claims from CY
2013 that were processed through June 30, 2014. 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 proposed and are using this same methodology, basing payments on
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. Use of Single and Multiple Procedure Claims
For CY 2015, in general, and as we proposed, we are continuing 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 continuing 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

[[Page 66781]]

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
as we proposed, we are continuing 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, as we proposed, we are establishing additional
packaging policies for the CY 2015 OPPS, as discussed in section
II.A.3. of this final rule with comment period.
As we proposed, we are continuing 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 final
rule with comment period, approximately 50 million ``pseudo'' single
procedure claims, including multiple imaging composite ``single
session'' bills (we refer readers to section II.A.2.f.(4) of this final
rule with comment period for further discussion), to add to the
approximately 51 million ``natural'' single procedure claims.
For CY 2015, we proposed to bypass 227 HCPCS codes that were
identified in Addendum N to the CY 2015 OPPS/ASC 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
proposed to continue to bypass all of the HCPCS codes on the CY 2014
OPPS bypass list, with the exception of HCPCS codes that we proposed to
delete for CY 2015, which were listed in Table 1 of the proposed rule
(79 FR 40927 through 40929). We also proposed 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 proposed to remove from the CY 2015
bypass list are affected by the CY 2015 final packaging policy,
discussed in section II.A.3. of this final rule with comment period. In
addition, we proposed 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 with comment period 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
proposed 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) was open to
public comment in the 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 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 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 proposed 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 proposed 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 proposed 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
proposed 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 proposed to continue to include on the bypass list
HCPCS codes that CMS medical advisors believe have minimal associated
packaging based on their clinical assessment of the complete CY 2015
OPPS proposal. Some of these codes were identified by CMS medical

[[Page 66782]]

advisors and some were identified in prior years by commenters with
specialized knowledge of the packaging associated with specific
services. We also proposed to continue to include 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 final rule with comment period for further discussion
of the treatment of ``overlap bypass codes.'') This process also
created multiple imaging composite ``single session'' bills that could
be used for calculating composite APC costs. ``Overlap bypass codes''
that are members of the multiple imaging composite APCs are identified
by asterisks (*) in Addendum N to this final rule with comment period
(which is available via the Internet on the CMS Web site).
Comment: One commenter supported the CY 2015 proposal to remove
certain codes from the bypass list, in particular for the anatomic
pathology procedures, and suggested that the bypass list undervalues
codes and artificially lowers their estimated costs, as evidenced by
the estimated increase in payment for some of those services in the CY
2015 OPPS/ASC proposed rule.
Response: We appreciate the commenter's support. The bypass list
process is used to extract more data from claims that would otherwise
be unusable. We use a variety of information in identifying codes that
could be potentially added to the bypass list each year, including
codes selected based on the empirical criteria, CMS medical advisor
recommendations, and commenter requests. In doing so, we attempt to
ensure that the amount of packaged cost being redistributed as a result
of the process is limited.
After consideration of the public comments we received, we are
adopting as final the proposed ``pseudo'' single claims process. As
discussed earlier in this section, there are interactions between the
application of a bypass list and various other OPPS payment policies.
As a result of modifications to the packaging policies described in
section III. of this final rule with comment period, we are adding
codes that we had originally proposed to remove from the CY 2015 bypass
list back on the CY 2015 final OPPS bypass list.
Addendum N to this final rule with comment period (which is
available via the Internet on the CMS Web site) includes the list of
bypass codes for CY 2015. The 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
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 multiple imaging composite APCs are
identified by asterisks (*) in the third column of Addendum N to this
final rule with comment period. HCPCS codes that we are adding for CY
2015 are identified by asterisks (*) in the fourth column of Addendum
N.
Table 1 of the proposed rule contained the list of codes that we
proposed to remove from the CY 2015 bypass list (79 FR 40927 through
40929). Table 1 below contains the list of codes that we are removing
from the final 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 were not separately payable codes under the
CY 2015 OPPS because these codes are not used for ratesetting through
the bypass process. The list of codes for removal from the bypass list
includes those that will be affected by the CY 2015 OPPS packaging
policy described in section II.A.3. of this final rule with comment
period.

Table 1--HCPCS Codes 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 <4 views.
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.
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.

[[Page 66783]]

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.
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.
96920............................. Laser tx skin < 250 sq cm.
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.
------------------------------------------------------------------------

[[Page 66784]]

c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
In the CY 2015 OPPS/ASC proposed rule (79 FR 40929), we proposed to
continue to use the hospital-specific overall ancillary and
departmental cost-to-charge ratios (CCRs) to convert charges to
estimated costs through application of a revenue code-to-cost center
crosswalk. To calculate the APC costs on which the proposed CY 2015 APC
payment rates were based, we calculated hospital-specific overall
ancillary CCRs and hospital-specific departmental CCRs for each
hospital for which we had CY 2013 claims data by comparing these claims
data to the most recently available hospital cost reports, which, in
most cases, were 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 final rule with comment period.
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 the 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 proposed 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 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, as we proposed, we
are continuing 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

[[Page 66785]]

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 HCRIS update for the CY 2015 final rule cycle, which we
used to estimate costs in the CY 2015 OPPS ratesetting process, as
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40930), we were
able to calculate a valid implantable device CCR for 2,895 hospitals, a
valid MRI CCR for 1,934 hospitals, a valid CT scan CCR for 2,035
hospitals, and a valid Cardiac Catheterization CCR for 1,397 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 proposed 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 XXI. of this final rule with
comment period includes the impacts of calculating the CY 2015 OPPS
relative payment weights using these new standard cost centers.
Comment: A few commenters encouraged CMS to ensure data quality and
continue to test, refine, and improve its CCR analysis for CT scans and
MRI.
Response: We will continue to monitor the CCRs for these services.
After consideration of the public comments we received, we are
finalizing our proposal to calculate the OPPS relative payment weights
using distinct CCRs for cardiac catheterization, CT scan, MRI, and
implantable medical devices for CY 2015 without modification.
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. In Table 2
below, we display CCR values for providers based on various cost
allocation methods.

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................................... 0.0464 0.0608 0.0901 0.1151
Square Feet Only................................ 0.0370 0.0502 0.0787 0.1013
Direct Assign................................... 0.0640 0.0740 0.1063 0.1294
Dollar Value.................................... 0.0555 0.0718 0.1046 0.1298
Direct Assign and Dollar Value.................. 0.0554 0.0715 0.1047 0.1297
----------------------------------------------------------------------------------------------------------------

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 adopted a
policy 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 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. In Table 3 below, we display the impact of
excluding claims based on the ``square feet'' cost allocation method
from estimates of CT and MRI costs in CY 2015.

[[Page 66786]]

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
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Descriptor Percent change
------------------------------------------------------------------------
0283..................... Computed Tomography with 9.6
Contrast.
0284..................... Magnetic Resonance Imaging 4.0
and Magnetic Resonance
Angiography with Contrast.
0331..................... Combined Abdomen and Pelvis 12.1
CT without Contrast.
0332..................... Computed Tomography without 14.5
Contrast.
0333..................... Computed Tomography without 12.3
Contrast followed by
Contrast.
0334..................... Combined Abdomen and Pelvis 10.1
CT with Contrast.
0336..................... Magnetic Resonance Imaging 7.5
and Magnetic Resonance
Angiography without Contrast.
0337..................... Magnetic Resonance Imaging 6.4
and Magnetic Resonance
Angiography without Contrast
f.
0383..................... Cardiac Computed Tomographic 3.6
Imaging.
0662..................... CT Angiography............... 10.3
8005..................... CT and CTA without Contrast 12.8
Composite.
8006..................... CT and CTA with Contrast 9.4
Composite.
8007..................... MRI and MRA without Contrast 6.7
Composite.
8008..................... MRI and MRA with Contrast 6.9
Composite.
------------------------------------------------------------------------

Comment: A few commenters supported CMS' proposal to continue
removing claims from providers that use the ``square feet'' cost
allocation method from the cost model. One commenter suggested that CMS
continue removing claims from providers that use this method in CY 2018
and beyond.
Response: We thank the commenters for their support and are
finalizing this policy as proposed. We will continue to only include
cost data from providers that do not use ``square feet'' as the cost
allocation statistic in relative payment weights through CY 2017. For
CY 2018 and beyond, we will estimate the CT and MRI APC relative
payment weights using cost data from all providers, regardless of the
cost allocation statistic employed.
In summary, as we proposed, we are continuing to use 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 final rule with comment
period, we are continuing our policy of removing claims from cost
modeling for those providers using ``square feet'' as the cost
allocation statistic for CY 2015.
2. Data Development Process and Calculation of Costs Used for
Ratesetting
In this section of this final rule with comment period, we discuss
the use of claims to calculate the OPPS payment rates for CY 2015. The
Hospital OPPS page on the CMS Web site on which this final rule with
comment period is posted (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an
accounting of claims used in the development of the final payment
rates. That accounting provides additional detail regarding the number
of claims derived at each stage of the process. In addition, below in
this section we discuss the file of claims that comprises the data set
that is available 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 final 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, as we proposed, we are continuing
to use geometric mean costs to calculate the relative weights on which
the CY 2015 OPPS payment rates are based.
We used the methodology described in sections II.A.2.a. through
II.A.2.f. of this final rule with comment period to calculate the costs
we used to establish the relative weights used in calculating the OPPS
payment rates for CY 2015 shown in Addenda A and B to this final rule
with comment period (which are available via the Internet on the CMS
Web site). We refer readers to section II.A.4. of this final rule with
comment period for a discussion of the conversion of APC costs to
scaled payment weights.
a. Claims Preparation
For this final rule with comment period, we used the CY 2013
hospital outpatient claims processed through June 30, 2014, to
calculate the geometric mean costs of APCs that underpin the relative
payment weights for CY 2015. To begin the calculation of the 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

[[Page 66787]]

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 123 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 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 final rule with comment period. We then flagged and
excluded CAH claims (which are not paid under the OPPS) and claims from
hospitals with invalid CCRs. The latter included claims from hospitals
without a CCR; those from hospitals paid an all-inclusive rate; those
from hospitals with obviously erroneous CCRs (greater than 90 or less
than 0.0001); and those from hospitals with overall ancillary CCRs that
were identified as outliers (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
continuing this payment policy for CY 2015. We refer readers to section
V.B.3. of this final rule with comment period for a complete discussion
of our CY 2015 final 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, as we proposed, we are continuing 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

[[Page 66788]]

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.
For the CY 2015 OPPS, as part of our continued packaging of
clinical diagnostic laboratory tests, we also are applying 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 payment 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
(79 FR 40933), we proposed 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 final rule
with comment period. We note that we also proposed to create status
indicator ``J1'' to reflect the comprehensive APCs (C-APCs) discussed
in section II.A.2.e. of this final rule with comment period. For CY
2015, we proposed 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 proposed 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. As we proposed, we are treating 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 final rule with comment period.
Specifically, we divided the remaining claims into the following
five groups:
1. Single Procedure Major Claims: Claims with a single separately
payable procedure (that is, status indicator ``S,'' ``T,'' or ``V''
which includes codes with status indicator ``Q3''); claims with status
indicator ``J1,'' which receive special processing for C-APCs, as
discussed in section II.A.2.e. of this final rule with comment period;
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

[[Page 66789]]

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 final rule
with comment period, depending on the specific composite calculation.
(2) Creation of ``Pseudo'' Single Procedure Claims
To develop ``pseudo'' single procedure claims for this final rule
with comment period, we examined both the multiple procedure major
claims and the multiple procedure minor claims. We first examined the
multiple major procedure claims for dates of service to determine if we
could break them into ``pseudo'' single procedure claims using the
dates of service for all lines on the claim. If we could create claims
with single major procedures by using dates of service, we created a
single procedure claim record for each separately payable procedure on
a different date of service (that is, a ``pseudo'' single procedure
claim).
As proposed, we also use the bypass codes listed in Addendum N to
this final rule with comment period (which is available via the
Internet on our Web site) and discussed in section II.A.1.b. of this
final rule with comment period 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 final CY 2015
``overlap bypass codes'' are listed in Addendum N to this final rule
with comment period (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 criteria for the
multiple imaging composite APCs, discussed in section II.A.2.f.(5) of
this final rule with comment period, 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 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.
As we proposed, we also examined the multiple procedure minor
claims to determine whether we could create ``pseudo'' single procedure
claims. Specifically, where the claim contained multiple codes with
status indicator ``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

[[Page 66790]]

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 process for creating ``pseudo'' single
procedure claims to the conditionally packaged codes that do not meet
the 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 final
rule with comment period.
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 proposed to continue to apply the methodology described above
for the purpose of creating ``pseudo'' single procedure claims for the
CY 2015 OPPS.
We did not receive any public comments on this proposal. Therefore,
we are finalizing our proposal 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 final rule with
comment period (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 final CY 2015 OPPS packaging policy, we refer readers
to section II.A.3. of this final rule with comment period.
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, and as we proposed, we
are continuing 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 proposed to package for CY 2015. We believe that the
charges reported under the revenue codes listed in Table 4 of the
proposed rule continue to reflect ancillary and supportive services for
which hospitals report charges without HCPCS codes. Therefore, for CY
2015, we proposed to continue to package the costs that we derive from
the charges reported without HCPCS codes under the revenue codes
displayed in Table 4 of the proposed rule for purposes of calculating
the geometric mean costs on which the final CY 2015 OPPS/ASC payment
rates are based.
Comment: One commenter recommended that CMS include, in the list of
packaged revenue codes, revenue codes 0331 (Radiology--Therapeutic and/
or Chemotherapy Administration; Chemotherapy Admin--Injected), 0332
(Radiology--Therapeutic and/or Chemotherapy Administration;
Chemotherapy Admin--Oral), 0335 (Radiology--Therapeutic and/or
Chemotherapy Administration; Chemotherapy Admin--IV), 0360 (Operating
Room Services; General Classification), 0361 (Operating Room Services;
Minor Surgery), 0362 (Operating Room Services; Organ Transplant--Other
than Kidney), 0369 (Operating Room Services; Other OR Services), 0410
(Respiratory Services; General Classification), 0412 (Respiratory
Services; Inhalation Services), 0413 (Respiratory Services; Hyperbaric
Oxygen Therapy), 0419 (Respiratory Services; Other Respiratory
Services), 0722 (Labor Room/Delivery; Delivery Room), 0724 (Labor Room/
Delivery; Birthing Center), 0729 (Labor Room/Delivery; Other Labor
Room/Delivery), 0760 (Specialty Services; General Classification), 0761
(Specialty Services; Treatment Room), 0762 (Specialty Services;
Observation), 0769 (Specialty Services; Other Specialty Services), 0770
(Preventive Care Services; General Classification). The commenter
stated that charge data on claim lines with these revenue codes is
currently included in OPPS modeling, and including them when they
appear without a HCPCS would more accurately capture the costs from
these lines.
Response: On the OPPS revenue code-to-cost center modeling
crosswalk that we make available online, we indicate which revenue
codes we believe are appropriately used for OPPS ratesetting purposes.
As the commenter noted, coded lines billed using these specific revenue
codes are already currently included for ratesetting purposes. While we
note that including the packaged costs associated with uncoded lines
billed with these revenue codes has a minimal impact on the relative
payment weights, we believe that including them when establishing the
OPPS relative payment weights would better estimate the full range of
costs for services to which these lines are packaged. Including the
uncoded lines and capturing the costs billed using these revenue codes
would generally be appropriate in establishing the OPPS relative
payment weights and our ratesetting methodology. Therefore, we have
updated Table 4 which appeared in the proposed rule (79 FR 40935

[[Page 66791]]

through 40936) (also Table 4 in this final rule with comment period) to
reflect the addition of these packaged revenue codes and incorporated
these changes into our cost modeling logic. We will also ensure that
this list corresponds with that used for I/OCE purposes.
After consideration of the public comments we received, we are
finalizing the proposed packaged revenue codes for CY 2015, which are
identified in Table 4 below, with modification to include the revenue
codes described earlier in this section.

Table 4--CY 2015 Packaged Revenue Codes
------------------------------------------------------------------------
Revenue code Description
------------------------------------------------------------------------
250............................... Pharmacy; General Classification.
251............................... Pharmacy; Generic Drugs.
252............................... Pharmacy; Non-Generic Drugs.
254............................... Pharmacy; Drugs Incident to Other
Diagnostic Services.
255............................... Pharmacy; Drugs Incident to
Radiology.
257............................... Pharmacy; Non-Prescription.
258............................... Pharmacy; IV Solutions.
259............................... Pharmacy; Other Pharmacy.
260............................... IV Therapy; General Classification.
261............................... IV Therapy; Infusion Pump.
262............................... IV Therapy; IV Therapy/Pharmacy
Svcs.
263............................... IV Therapy; IV Therapy/Drug/Supply
Delivery.
264............................... IV Therapy; IV Therapy/Supplies.
269............................... IV Therapy; Other IV Therapy.
270............................... Medical/Surgical Supplies and
Devices; General Classification.
271............................... Medical/Surgical Supplies and
Devices; Non-sterile Supply.
272............................... Medical/Surgical Supplies and
Devices; Sterile Supply.
275............................... Medical/Surgical Supplies and
Devices; Pacemaker.
276............................... Medical/Surgical Supplies and
Devices; Intraocular Lens.
278............................... Medical/Surgical Supplies and
Devices; Other Implants.
279............................... Medical/Surgical Supplies and
Devices; Other Supplies/Devices.
280............................... Oncology; General Classification.
289............................... Oncology; Other Oncology.
331............................... Radiology--Therapeutic and/or
Chemotherapy Administration;
Chemotherapy Admin--Injected.
332............................... Radiology--Therapeutic and/or
Chemotherapy Administration;
Chemotherapy Admin--Oral.
335............................... Radiology--Therapeutic and/or
Chemotherapy Administration;
Chemotherapy Admin--IV.
343............................... Nuclear Medicine; Diagnostic
Radiopharmaceuticals.
344............................... Nuclear Medicine; Therapeutic
Radiopharmaceuticals.
360............................... Operating Room Services; General
Classification.
361............................... Operating Room Services; Minor
Surgery.
362............................... Operating Room Services; Organ
Transplant--Other than Kidney.
369............................... Operating Room Services; Other OR
Services.
370............................... Anesthesia; General Classification.
371............................... Anesthesia; Anesthesia Incident to
Radiology.
372............................... Anesthesia; Anesthesia Incident to
Other DX Services.
379............................... Anesthesia; Other Anesthesia.
390............................... Administration, Processing and
Storage for Blood and Blood
Components; General Classification.
392............................... Administration, Processing and
Storage for Blood and Blood
Components; Processing and Storage.
399............................... Administration, Processing and
Storage for Blood and Blood
Components; Other Blood Handling.
410............................... Respiratory Services; General
Classification.
412............................... Respiratory Services; Inhalation
Services.
413............................... Respiratory Services; Hyperbaric
Oxygen Therapy.
419............................... Respiratory Services; Other
Respiratory Services.
621............................... Medical Surgical Supplies--Extension
of 027X; Supplies Incident to
Radiology.
622............................... Medical Surgical Supplies--Extension
of 027X; Supplies Incident to Other
DX Services.
623............................... Medical Supplies--Extension of 027X,
Surgical Dressings.
624............................... Medical Surgical Supplies--Extension
of 027X; FDA Investigational
Devices.
630............................... Pharmacy--Extension of 025X;
Reserved.
631............................... Pharmacy--Extension of 025X; Single
Source Drug.
632............................... Pharmacy--Extension of 025X;
Multiple Source Drug.
633............................... Pharmacy--Extension of 025X;
Restrictive Prescription.
681............................... Trauma Response; Level I Trauma.
682............................... Trauma Response; Level II Trauma.
683............................... Trauma Response; Level III Trauma.
684............................... Trauma Response; Level IV Trauma.
689............................... Trauma Response; Other.
700............................... Cast Room; General Classification.
710............................... Recovery Room; General
Classification.
720............................... Labor Room/Delivery; General
Classification.
721............................... Labor Room/Delivery; Labor.
722............................... Labor Room/Delivery; Delivery Room.
724............................... Labor Room/Delivery; Birthing
Center.
729............................... Labor Room/Delivery; Other Labor
Room/Delivery.
732............................... EKG/ECG (Electrocardiogram);
Telemetry.
760............................... Specialty Services; General
Classification.
761............................... Specialty Services; Treatment Room.

[[Page 66792]]

762............................... Specialty services; Observation
Hours.
769............................... Specialty Services; Other Specialty
Services.
770............................... Preventive Care Services; General
Classification.
801............................... Inpatient Renal Dialysis; Inpatient
Hemodialysis.
802............................... Inpatient Renal Dialysis; Inpatient
Peritoneal Dialysis (Non-CAPD).
803............................... Inpatient Renal Dialysis; Inpatient
Continuous Ambulatory Peritoneal
Dialysis (CAPD).
804............................... Inpatient Renal Dialysis; Inpatient
Continuous Cycling Peritoneal
Dialysis (CCPD).
809............................... Inpatient Renal Dialysis; Other
Inpatient Dialysis.
810............................... Acquisition of Body Components;
General Classification.
819............................... Acquisition of Body Components;
Other Donor.
821............................... Hemodialysis-Outpatient or Home;
Hemodialysis Composite or Other
Rate.
824............................... Hemodialysis-Outpatient or Home;
Maintenance--100%.
825............................... Hemodialysis-Outpatient or Home;
Support Services.
829............................... Hemodialysis-Outpatient or Home;
Other OP Hemodialysis.
942............................... Other Therapeutic Services (also see
095X, an extension of 094x);
Education/Training.
943............................... Other Therapeutic Services (also see
095X, an extension of 094X),
Cardiac Rehabilitation.
948............................... Other Therapeutic Services (also see
095X, an extension of 094X),
Pulmonary Rehabilitation.
------------------------------------------------------------------------

In accordance with our longstanding policy, we proposed 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 proposed to continue these processes for
the CY 2015 OPPS.
For the remaining claims, we proposed 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
rule and final rule with comment period contains the formula we use to
standardize the total cost for the effects of the wage index. As has
been our policy since the inception of the OPPS, we proposed to use the
pre-reclassified wage indices for standardization because we believe
that they better reflect the true costs of items and services in the
area in which the hospital is located than the post-reclassification
wage indices and, therefore, would result in the most accurate
unadjusted geometric mean costs. We proposed to use these pre-
reclassified wage indices for standardization using the new OMB labor
market area delineations described in section II.C. of this final rule
with comment period.
In accordance with our longstanding practice, we also proposed 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 118 million
claims were left. Using these approximately 118 million claims, we
created approximately 100 million single and ``pseudo'' single
procedure claims, of which we used approximately 51 million single
bills (after trimming out approximately 1 million claims as discussed
in section II.A.1.a. of this final rule with comment period) 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 CY 2013 OPPS and the CY 2014 OPPS, we calculated the APC
relative payment weights using geometric mean costs, and we are
continuing this practice 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
final rule with comment period.
We proposed 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 continuing to develop the APC relative payment weights based on
geometric mean costs.

[[Page 66793]]

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 100 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 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 pay separately under
this final rule with comment period, and we reassigned HCPCS codes to
different APCs where it was necessary to ensure clinical and resource
homogeneity within the APCs. 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.
We did not receive any public comments on our proposed CY 2015
methodology for calculating the geometric mean costs upon which the CY
2015 OPPS payment rates are based, and therefore are finalizing our
methodology as proposed.
As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this
final rule with comment period, in some cases, APC geometric mean costs
are calculated using variations of the process outlined above.
Specifically, section II.A.2.d. of this final rule with comment period
addresses the calculation of single APC criteria-based geometric mean
costs. Section II.A.2.f. of this final rule with comment period
discusses the calculation of composite APC criteria-based geometric
mean costs. Section VIII.B. of this final rule with comment period
addresses the methodology for calculating the geometric mean costs for
partial hospitalization services.
(2) Recommendations of the Panel Regarding Data Development
At the August 2014 meeting of the Panel, we discussed changes in
APC geometric mean cost between the CY 2015 Proposed OPPS and the CY
2014 Final OPPS, the CY 2015 proposed comprehensive APC policy, and a
study examining the packaged codes most commonly appearing with clinic
visit codes.
At the August 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 Jim Nelson serve as the
Chair of the Data Subcommittee.
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 20 percent
relative to the APCs in the most recent prior rulemaking cycle.
CMS Response: We are accepting this recommendation and will provide
this information regarding fluctuating APC costs at the next HOP Panel
meeting.
d. 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 (C-APCs) that provide all-inclusive payments for those services,
but we delayed 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 would
have been converted to C-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 the entire policy was delayed until
CY 2015.
In the CY 2014 OPPS/ASC proposed rule (78 FR 43556 through 43557)
and in the CY 2015 OPPS/ASC proposed rule (79 FR 40937 through 40938),
for CY 2015, we proposed 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

[[Page 66794]]

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 74858), we believe
that this is appropriate because of hospitals' multiyear experience in
coding and reporting charges for medical device implantation
procedures. We also believe that the C-APCs will reliably reflect the
cost of the devices as the C-APCs will include all costs on the claim
(except for the few categories of items and services that are excluded
from the comprehensive APC policy). 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 continue to be necessary. 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 CY 2015 comprehensive APC policy that we proposed in the CY
2015 OPPS/ASC proposed rule consolidates and restructures the 39
current device-dependent APCs into 26 (of the total 28) proposed C-
APCs, which were listed in Table 5 of the proposed rule. The final CY
2015 comprehensive APC policy is discussed in section II.A.2.e. of this
final rule with comment period. As a result of the final CY 2015
comprehensive APC policy, only 3 of the current 39 device-dependent
APCs will remain in the CY 2015 OPPS because all other device-dependent
APCs are being converted to C-APCs. All of the remaining device-
dependent APCs were either deleted due to the consolidation and
restructuring of these APCs or they were converted to C-APCs. In
conjunction with the conversion of almost all of the 39 device-
dependent APCs into C-APCs, and as discussed in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74857 through 74858), in the CY
2015 OPPS/ASC proposed rule, we proposed 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 C-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, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40937 through 40938), we proposed to create
claims processing edits that require any of the device codes used in
the previous device-to-procedure edits for device-dependent APCs to be
present on the claim whenever a procedure code assigned to any of the
former device-dependent APCs (most of which are being converted to C-
APCs) is reported on the claim to ensure that device costs are captured
by hospitals. We stated that 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.
Comment: The majority of commenters requested that CMS maintain
device-to-procedure and procedure-to-device edits in order to ensure
continued complete and accurate cost reporting by hospitals. One
commenter recommended that CMS adopt its proposal to require any
appropriate device code used in the previous device-to-procedure edits
to be present on the claim, if CMS discontinues the current edits and
educates hospitals on the continued need to report the actual device
used in the procedure for accurate ratesetting. One commenter was
cautiously optimistic that CMS' proposal requiring any appropriate
device code used in the previous device-to-procedure edits to be
present on the claim for most comprehensive APCs could promote complete
reporting in a potentially less prescriptive way for hospitals. Another
commenter believed CMS' proposed policy change would result in
``ridiculous'' combinations of device and procedure codes for some
services and thus would result in invalid mean costs for the
procedures. Other commenters recommended that CMS modify its proposed
policy to incorporate edit logic that will allow exceptions for
comprehensive APCs that do not require device codes to be reported with
every assigned procedural code. One commenter recommended that the
claims edits be implemented initially on a 1-year trial/interim basis.
Other commenters suggested that CMS eliminate the device claims
processing edits altogether.
Response: We continue to believe that the elimination of device-to-
procedure edits and procedure-to-device edits is appropriate due to the
experience hospitals now have in coding and reporting these claims
fully. More specifically, for the more costly devices, we believe the
C-APCs will reliably reflect the cost of the device if charges for the
device are included anywhere on the claim. We remind commenters that,
under our proposed policy, hospitals would still be expected to adhere
to the guidelines of correct coding and append the correct device code
to the claim when applicable. We also remind commenters that, as with
all other items and services recognized under the OPPS, we expect
hospitals to code and report their costs appropriately, regardless of
whether there are claims processing edits in place. We do not believe
that our proposed policy will result in ridiculous combinations of
device and procedure codes for some services, as this would require
deliberate miscoding by hospitals, which we do not believe would result
from this change to the device code reporting requirements. We continue
to 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. While we believe that device-
to-procedure edits and procedure-to-device edits are no longer
necessary at this time, we are sensitive to commenters' concerns that
all relevant costs for the APCs currently recognized as device-
dependent APCs are appropriately included in the claims that CMS will
use for ratesetting. In light of those concerns, we believe creating a
claims processing edit requiring a device code to be present on the
claim whenever a procedure code from the APCs currently recognized as a
device-dependent APCs will help to ensure continued complete and
accurate cost reporting by hospitals. Device edits will not apply to
procedures assigned to C-APCs that either do not use implantable
medical devices or procedures that do not have device-to-procedure or
procedure-to-device edits assigned to them currently for CY 2014. This
will ensure that the proposed device edit policy (requiring only that
any device code be reported on a claim containing a procedure assigned
to one of the formerly device-dependent APCs) will only apply to those
procedures that currently have device-to-procedure or

[[Page 66795]]

procedure-to-device edits currently assigned to them.
After consideration of the public comments we received, we are
finalizing our proposal to no longer implement specific procedure-to-
device and device-to-procedure edits for any APC. We also are
finalizing our proposal 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 of
the current device-dependent APCs (that remain after the consolidation
and restructuring of these APCs) listed in Table 5 below is reported on
the claim to ensure that device costs are captured by hospitals. CMS
will monitor the claims data to ensure that hospitals continue
reporting appropriate device codes on the claims for the formerly
device-dependent APCs. We note that while we proposed to make all 26 of
the APCs listed in Table 5 C-APCs for CY 2015, in section II.A.2.e. of
this final rule with comment period, we are not finalizing our proposal
to recognize APCs 0427, 0622, and 0652 as C-APCs. While APCs 0427,
0622, and 0652 will not be recognized as comprehensive APCs for CY
2015, our finalized device edit policy will apply to these 3 APCs, as
these 3 APCs are formerly device-dependent APCs. The term ``device-
dependent APC'' will no longer be employed beginning in CY 2015. We
will refer to APCs with a device offset of more than 40 percent as
``device-intensive'' APCs. Device-intensive APCs will be subject to the
no cost/full credit and partial credit device policy. For a discussion
of device-intensive APCs and the no cost/full credit and partial credit
device policy, we refer readers to section IV.B. of this final rule
with comment period. For a discussion of ASC procedures designated as
device intensive, we refer readers to section XII.C.1.c. of this final
rule with comment period.

Table 5--APCs That Will 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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40938), for CY 2015,
we proposed to continue to establish payment rates for blood and blood
products using our blood-specific CCR methodology, which utilizes
actual or simulated CCRs from the most recently available hospital cost
reports to convert hospital charges for blood and blood products to
costs. This methodology has been our standard ratesetting methodology
for blood and blood products since CY 2005. It was developed in
response to data analysis indicating that there was a significant
difference in CCRs for those hospitals with and without blood-specific
cost centers, and past public comments indicating that the former OPPS
policy of defaulting to the overall hospital CCR for hospitals not
reporting a blood-specific cost center often resulted in an
underestimation of the true hospital costs for blood and blood
products. Specifically, in order to address the differences in CCRs and
to better reflect hospitals' costs, we proposed to continue to simulate
blood CCRs for each hospital that does not report a blood cost center
by calculating the ratio of the blood-specific CCRs to hospitals'
overall CCRs for those hospitals that do report costs and charges for
blood cost centers. We proposed to apply this mean ratio to the overall
CCRs of hospitals not reporting costs and charges for blood cost
centers on their cost reports in order to simulate blood-specific CCRs
for those hospitals. We proposed to calculate the costs upon which the
proposed CY 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.
Comment: Commenters supported the proposal to continue to
separately pay for blood and blood products using a blood-specific CCR
methodology.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal 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.
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 final rule with
comment period, 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 proposed
to continue to apply the blood-specific CCR methodology described in
this

[[Page 66796]]

section when calculating the costs of the blood and blood products that
appear on claims with services assigned to the comprehensive APCs (79
FR 40939). Because the costs of blood and blood products will be
reflected in the overall costs of the comprehensive APCs (and, as a
result, in the final payment rates of the comprehensive APCs), we
proposed to not make separate payments for blood and blood products
when they appear on the same claims as services assigned to the
comprehensive APCs (79 FR 40939).
We did not receive any public comments on this proposal and are
finalizing the policy as proposed. We refer readers to Addendum B to
this final rule with comment period (which is available via the
Internet on the CMS Web site) for the final 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 costs. We believe that the OPPS prospective payment
methodology, as opposed to payment based on hospitals' charges adjusted
to cost, also would provide hospitals with incentives for efficiency in
the provision of brachytherapy services to Medicare beneficiaries.
Moreover, this approach is consistent with our payment methodology for
the vast majority of items and services paid under the OPPS. We refer
readers to the CY 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), the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74160 through 74163), the CY
2013 OPPS/ASC final rule with comment period (77 FR 68240 through
68242), and the CY 2014 OPPS/ASC final rule with comment period (78 FR
74860) for further discussion of the history of OPPS payment for
brachytherapy sources.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40939 through 40940),
for CY 2015, we proposed to use the costs derived from CY 2013 claims
data to set the proposed CY 2015 payment rates for brachytherapy
sources, as we proposed 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 the proposed rule. We also proposed
to continue the other payment policies for brachytherapy sources that
we finalized and first implemented in the CY 2010 OPPS/ASC final rule
with comment period (74 FR 60537). We proposed to pay for the stranded
and 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 proposed to continue the policy
we first implemented in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60537) regarding payment for new brachytherapy sources
for which we have no claims data, based on the same reasons we
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66786; which was delayed until January 1, 2010 by section 142 of Pub.
L. 110-275). 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.
The proposed CY 2015 payment rates for brachytherapy sources were
included in Addendum B to the proposed rule (which is available via the
Internet on the CMS Web site) and were identified with status indicator
``U.''
We invited public comment on this proposed policy and also
requested recommendations for new HCPCS codes to describe new
brachytherapy sources consisting of a radioactive isotope, including a
detailed rationale to support recommended new sources. In the CY 2015
OPPS/ASC proposed rule, we provided an appropriate address for receipt
of these recommendations; the address is repeated at the end of this
section. We indicated that we will continue to add new brachytherapy
source codes and descriptors to our systems for payment on a quarterly
basis.
Comment: Commenters expressed a number of concerns regarding CMS'
outpatient hospital claims data used to set prospective payment rates
for brachytherapy sources. Commenters stated that high dose rate (HDR)
brachytherapy devices decay over a 90-day period and are used to treat
multiple patients during this time period. According to the commenters,
the true cost of brachytherapy sources depends on the number of
patients treated by a hospital within a 90-day period, as well as the
number of treatments required and the intensity of the treatments. For
this reason, the commenters believed that it is difficult to establish
fair and adequate prospective payment rates for brachytherapy sources.
Commenters also noted that the brachytherapy source payment data
continue to show huge variation in per unit cost across hospitals. In
addition, the commenters believed that CMS' claims data contain rank
order anomalies, causing the usual cost relationship between the high
activity palladium-103 source (HCPCS code C2635, Brachytherapy source,
non-stranded, high activity, palladium-103, greater than 2.2 mci (NIST)
per source) and the low activity palladium-103 sources (HCPCS codes
C2640, Brachytherapy source, stranded, palladium-103, per source and
C2641, Brachytherapy source, non-stranded,

[[Page 66797]]

palladium-103, per source) to be reversed. The commenters noted that
the proposed geometric mean costs of the brachytherapy source HCPCS
codes are approximately $26, $69, and $72, respectively. The commenters
stated that stranded palladium-103 sources (HCPCS code C2640) always
cost more than non-stranded palladium-103 sources (HCPCS code C2641),
which is not reflected in the proposed rule claims data.
Response: As stated above, we believe that geometric mean costs
based on hospital claims data for brachytherapy sources have produced
reasonably consistent per-source cost estimates over the past several
years, comparable to the patterns we have observed for many other OPPS
services whose payments are set based upon relative payment weights
from claims data. We believe that our per-source payment methodology
specific to each source's radioisotope, radioactive intensity, and
stranded or non-stranded configuration, supplemented by payment based
on the number of sources used in a specific clinical case, adequately
accounts for the major expected sources of variability across
treatments. (We refer readers to the CY 208 OPPS final rule with
comment period (72 FR 66782); the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60534); the CY 2011 OPPS/ASC final rule with
comment period (75 FR 71979); the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74161); the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68241); and the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74861)). We believe that the CY 2013
brachytherapy source claims data used for CY 2015 ratesetting produce
adequate payment for these services. Also, as we have explained
previously, a prospective payment system relies upon the concept of
averaging, where the payment may be more or less than the estimated
cost of providing a service for a particular patient. With the
exception of outlier cases, the payment for services is adequate to
ensure access to appropriate care. In the case of brachytherapy sources
for which the law requires separate payment groups, without packaging,
the costs of these individual items could be expected to show greater
variation than some other APCs under the OPPS because higher
variability in costs for some component items and services is not
balanced with lower variability in costs for others, and because
relative payment weights are typically estimated using a smaller set of
claims. Nevertheless, we believe that prospective payment for
brachytherapy sources based on geometric mean costs of the services
reported on claims calculated according to the standard OPPS
methodology is appropriate and provides hospitals with the greatest
incentives for efficiency in furnishing brachytherapy treatment.
Under the budget neutral provision for the OPPS, it is the
relativity of costs, not the absolute costs, that is important, and we
believe that brachytherapy sources are appropriately paid according to
the standard OPPS payment approach. Furthermore, some sources may have
geometric mean costs and payment rates based on 50 or fewer providers
because it is not uncommon for OPPS prospective payment rates to be
based on claims from a relatively small number of hospitals that
furnished the service in the year of claims data available for the OPPS
update year. Fifty hospitals may report hundreds of brachytherapy
source services on claims for many cases and comprise the universe of
providers using particular low volume sources, for which we are
required to pay separately by statute. Further, our methodology for
estimating geometric mean costs for brachytherapy sources utilizes all
line-item charges for those sources, which allows us to use all
hospital reported charge and estimated cost information to set payment
rates for these items. Therefore, no brachytherapy source claims are
excluded from the estimate of geometric means costs. We have no reason
to believe that prospective payment rates based on claims data from
those providers furnishing a particular source do not appropriately
reflect the cost of that source to hospitals. As for most other OPPS
services, we note that the geometric mean costs for brachytherapy
sources are based upon the costs of those providers sources in CY 2013.
Hospitals individually determine their charge for an item or service,
and one of Medicare's primary requirements for setting a charge is that
it be reasonably and consistently related to the cost of the item or
service for that facility. (We refer readers to the Medicare Provider
Reimbursement Manual, Part I, Section 2203, which is available on the
CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.html?DLPage=1&DLSort=0&DLSortDir=ascending.) We then estimate
a cost from that charge using the hospital's most recent Medicare
hospital cost report data in our standard OPPS ratesetting process.
We acknowledge that HDR brachytherapy sources such as HDR iridium-
192 have a fixed active life and must be replaced every 90 days. As a
result, a hospital's per treatment cost for the source would be
dependent on the number of treatments furnished per source. The
source's cost must be amortized over the life of the source. Therefore,
when establishing charges for HDR iridium-192, we expect hospitals to
project the number of treatments that would be provided over the life
of the source and establish charges for the source accordingly (72 FR
66783; 74 FR 60535; 75 FR 71980; 76 FR 74162; 77 FR 68242; and 78 FR
74861). For most payable services under the OPPS, our practice is to
establish prospective payment rates based on the geometric mean costs
determined from hospitals' claims data to provide incentives for
efficient and cost effective delivery of these services.
In the case of high-activity and low-activity iodine-125 sources,
our CY 2013 claims data show that the hospitals' relative costs for the
high-activity source are greater than the costs of the low-activity
sources. As we have stated in the past, we do not have any information
about the expected cost differential between high-activity and low-
activity sources of various isotopes other than what is available in
our claims and hospital cost report data (75 FR 71979; 76 FR 74162; 77
FR 68242; and 78 FR 74861). In the case of the relationship between
high-activity and low-activity palladium-103, our claims data
consistently have shown higher average costs for low-activity
palladium-103. For the high-activity palladium-103 sources (HCPCS code
C2635), 8 hospitals reported this service in CY 2013, compared to 104
and 159 hospitals that reported services for the low-activity
palladium-103 sources described by HCPCS codes C2640 and C2641,
respectively. It is clear that fewer hospitals furnished the high-
activity palladium-103 source than the low-activity palladium-103
sources, and we expect that the hospital cost distribution for those
hospitals could be different than the cost distribution of the large
numbers of hospitals reporting the low-activity palladium-103 sources,
as previously stated (74 FR 60535; 75 FR 71979; 76 FR 74162; 77 FR
68242; and 78 FR 74861). These varied cost distributions clearly
contribute to the observed relationship in geometric mean cost between
the different types of sources. However, we see no reason why our
standard ratesetting methodology for brachytherapy sources that relies
on all claims data from all hospitals furnishing brachytherapy sources
would not yield valid geometric

[[Page 66798]]

mean costs for those hospitals furnishing the different brachytherapy
sources upon which CY 2015 prospective payments are based.
Comment: One commenter, a developer of a linear non-stranded
palladium-103 source described by HCPCS code C2636 (Brachytherapy
linear source, nonstranded, palladium-103, per 1 mm), believed that CY
2013 claims data for services furnished prior to November 2013 used to
determine the CY 2015 payment rates are invalid because the claims data
do not reflect the costs of its linear non-stranded palladium-103
source, which became commercially available in November 2013. Further,
the commenter stated that there were no other linear non-stranded
palladium-103 sources commercially available prior to November 2013.
Therefore, the commenter requested that payment for HCPCS code C2636
remain at the current CY 2014 payment rate until claims data for HCPCS
code C2636 become available in CY 2016.
Response: We understand the commenter's claim that its linear non-
stranded palladium-103 source described by HCPCS code C2636 became
commercially available in November 2013. However, we disagree with the
commenter's assertion that there were no other commercially available
linear non-stranded palladium-103 sources described by HCPCS code C2636
prior to November 2013. We also disagree with the commenter that the CY
2013 claims data used to determine the CY 2015 payment rate for HCPCS
code C2636 are invalid. As discussed in the CY 2005 OPPS final rule (69
FR 65840), we established HCPCS code C2636 to uniquely identify linear
non-stranded Palladium-103 brachytherapy sources. Since the HCPCS code
became effective January 1, 2005, we have used historical claims data
to set the prospective payment rates. To determine the CY 2015 OPPS
payment rate for HCPCS code C2636, we used CY 2013 claims data, which
include brachytherapy sources costs for linear non-stranded palladium-
103 sources. Despite the date of commercial availability for the
commenter's linear non-stranded palladium-103 brachytherapy source, we
do have CY 2013 claims data for HCPCS code C2636. Therefore, in
accordance with our above-mentioned methodology and consistent with our
policy used to set the prospective payment rates for brachytherapy
sources, we are finalizing our proposed payment rate for HCPCS code
C2636 based on CY 2013 claims data.
Comment: One commenter expressed concern regarding CMS' CY 2014
payment rate for a new brachytherapy source described by HCPCS code
C2644 (Brachytherapy source, cesium-131 chloride solution, per
millicurrie), which became effective July 1, 2014. In the July 2014
OPPS Change Request (CR) 8776, dated May 23, 2014, CMS established a
payment rate for HCPCS code C2644 of $18.97. The commenter, who also
petitioned for the initial establishment of HCPCS code C2644 to
describe the new brachytherapy source, requested clarification on how
the payment rate was established by CMS, given that the cost of the new
brachytherapy source is $25 per millicurie and claims data are not yet
available.
Response: As discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66786), we assign new HCPCS codes that describe
new brachytherapy sources to their own APCs, with prospective payment
rates set based on consideration of external data and other relevant
information regarding the expected costs of the sources to hospitals.
The commenter provided CMS with clinical information on the
brachytherapy source cesium-131 chloride solution within its petition
for the establishment of the new HCPCS code, and noted the source's
clinical similarities with the liquid iodine-125 solution source, which
is described by HCPCS code A9527 (Iodine I-125 sodium iodide). The
commenter stated that both iodine I-125 sodium iodide and cesium-131
chloride solution ``have similar energies, are capable of delivering
the same radiation dose to the planned treatment volume, are supplied
in liquid form, and are compatible with the GliaSite RTS Catheter''.
Based on clinical information provided by the commenter and a clinical
review by CMS' medical advisors, we believe that the brachytherapy
sources described by HCPCS code C2644 and HCPCS code A9527 are clinical
substitutes. Therefore, we set a payment rate for HCPCS code C2644 that
is equal to the payment rate for HCPCS code A9527 when it became
effective in CY 2014, and proposed to apply the same methodology for CY
2015. We are finalizing our proposal for CY 2015 to set the payment
rate for HCPCS code C2644 as the equivalent of the payment rate for
HCPCS code A9527. (We refer readers to Addendum B of this final rule
with comment period for the CY 2015 OPPS payment rate. Addendum B is
available via the Internet on the CMS Web site.)
After consideration of the public comments we received, we are
finalizing our proposal to continue to set the payment rates for
brachytherapy sources using our established prospective payment
methodology, which is based on geometric mean costs. The CY 2015 final
payment rates for brachytherapy sources are found in Addendum B to this
final rule with comment period (which is available via the Internet on
the CMS Web site).
As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40940), we
continue to invite hospitals and other parties to submit
recommendations to CMS for new HCPCS codes that describe new
brachytherapy sources consisting of a radioactive isotope, including a
detailed rationale to support recommended new sources. Such
recommendations should be directed to the Division of Outpatient Care,
Mail Stop C4-03-27, Centers for Medicare and Medicaid Services, 7500
Security Boulevard, Baltimore, MD 21244.
e. Comprehensive APCs
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861
through 74910), we finalized a comprehensive payment policy that
packages payment for adjunctive and secondary items, services, and
procedures into the most costly primary procedure (primarily medical
device implantation procedures) under the OPPS at the claim level,
effective January 1, 2015. 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 C-APCs to prospectively pay for 167 of
the most costly device-dependent services assigned to these 29 APCs
beginning in CY 2015 (78 FR 74910). Under this policy, we designated
each service described by a HCPCS code assigned to a C-APC as the
primary service and, with few exceptions described below, consider all
other services reported on a hospital outpatient 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 over which the primary service
and all related services are delivered. This comprehensive APC
packaging policy packages payment for all items and services typically
packaged under the OPPS, but also packages payment

[[Page 66799]]

for other items and services that are not typically packaged under the
OPPS (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 policy as if we were
implementing it for CY 2014, but delayed the effective date until
January 1, 2015, to allow additional time for further analysis,
opportunity for public comment, and systems preparation. In the CY 2015
OPPS/ASC proposed rule (79 FR 40941 through 40953), we discussed our
review of the policies finalized in the CY 2014 OPPS/ASC final rule
with comment period for C-APCs, and summarized and responded to public
comments received in response to the CY 2014 OPPS/ASC final rule with
comment period relating to the comprehensive APC payment policy. We
then outlined our proposed policy for CY 2015, which included several
clarifications and proposed modifications in response to public
comments received. 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, that designated certain covered OPD services as
primary services (identified by a new OPPS status indicator of ``J1'')
assigned to C-APCs. When such a primary service is reported on a
hospital outpatient claim, taking into consideration 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 statutorily excluded from 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;
charges for brachytherapy seeds, which must receive separate payment
under section 1833(t)(2)(H) of the Act; charges for pass-through drugs
and devices, which also require separate payment under section
1833(t)(6) of the Act; and charges for 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 policy is
summarized as follows (78 FR 74887):
APC assignment of primary (``J1'') services. HCPCS codes assigned
to status indicator ``J1'' are assigned to C-APCs based on our usual
APC assignment methodology of evaluating the geometric mean cost of the
primary service claims to establish resource similarity and the
clinical characteristics of each procedure to establish clinical
similarity within each APC. Claims reporting multiple procedures
described by HCPCS codes assigned to status indicator ``J1'' are
identified and the procedures are then assigned to a C-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 C-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 use the geometric
mean cost for the APC to which the HCPCS code is assigned.
Complexity adjustments and determination of final C-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 pairs 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 has increased resource
requirements relative to less complex subsets of that primary 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 is more than two times the
comprehensive geometric mean cost of the single major claims reporting
only the primary service;
There are more than 100 claims in the data year reporting
the specific code combination;
The number of claims reporting the specific code
combination exceed 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 C-APC (78 FR 74886).
If a pair of procedure codes reported on claims is identified that
meets these requirements, that is, commonly occurring and exhibiting
materially greater resource requirements, the pair of procedure codes
is further evaluated to confirm clinical validity as a complex subset
of the primary procedure and the pair 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
pair of procedure codes does not meet the requirement for a materially
greater resource requirement or does not occur commonly, the pair of
procedure codes is not considered to be complex, and primary service
claims with that combination of procedure codes are not reassigned. All
pairs of procedures described by HCPCS codes assigned to status
indicator ``J1'' for each primary service are similarly evaluated. Once
all pairs 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 C-APC within a clinical family of C-APCs,
that is, an APC with greater estimated resource requirements than the
initially assigned C-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
information available to us to identify combinations of procedure codes
that represent a more complex form of the primary service and warrant

[[Page 66800]]

reassignment to a higher level APC. In the proposed rule, we stated
that we would reevaluate our APC assignments and identification and APC
placement of complex claims once claims data become available.
(2) CY 2015 Policy for C-APCs
(a) Methodology
Basic C-APC Methodology. After consideration of the public comments
we received on the CY 2014 OPPS/ASC final rule with comment period, in
the CY 2015 OPPS/ASC proposed rule (79 FR 40941 through 40953), we
described our proposed payment methodology for C-APCs for CY 2015. For
CY 2015, we proposed to establish a policy that services assigned to C-
APCs would be designated as the primary services for C-APCs, using new
status indicator ``J1'' as listed in Addendum J and Addendum B to the
CY 2015 OPPS/ASC proposed rule (which are available via the Internet on
the CMS Web site). We stated that the basic steps for calculating the
C-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 proposed 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
proposed to package all add-on codes, consistent with our CY 2014 OPPS
policy to package add-on codes (78 FR 74942), but to allow certain add-
on codes to qualify a primary J1 procedure code-add-on code combination
for a complexity adjustment. For CY 2015, similar to other procedures
described by add-on codes under the OPPS and according to 42 CFR
419.2(b)(18), procedures described by add-on codes furnished in
conjunction with primary comprehensive services would be packaged
instead of being assigned to an APC with a separately payable status
indicator in accordance with the CY 2014 OPPS policy for add-on codes
assigned to device-dependent APCs. However, the add-on codes currently
assigned to device-dependent APCs (that are converted to C-APCs) may
qualify as a secondary code in a complexity adjustment code pair.
Further, we proposed to convert all current device-dependent APCs
remaining after the proposed restructuring and consolidation of some of
these APCs to C-APCs. We also proposed to create two new C-APCs: C-APC
0067 for single-session cranial stereotactic radiosurgery services
(SRS) and C-APC 0351 for intraocular telescope implantation. In
addition, we proposed to reassign CPT codes 77424 and 77425 that
describe intraoperative radiation therapy (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 C-APCs.
As stated in the CY 2014 OPPS/ASC final rule with comment period,
we define the comprehensive APC payment policy as including all covered
OPD services on a hospital outpatient claim reporting a primary service
that is assigned to status indicator ``J1,'' excluding services that
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;
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). In addition, payment for outpatient department
services that are similar to therapy services and delivered either by
therapists or nontherapists is packaged as part of the comprehensive
service. These services that are provided during the perioperative
period are adjunctive services and not therapy services as described in
section 1834(k) of the Act, regardless of whether the services are
delivered by therapists or other nontherapist health care workers. We
have previously noted that therapy services are those provided by
therapists under a plan of care in accordance with section
1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid under
section 1834(k) of the Act subject to annual therapy caps, as
applicable (78 FR 74867). However, certain other services similar to
therapy services are considered and paid as outpatient services.
Payment for these nontherapy outpatient department services that are
reported with therapy codes and provided with a comprehensive service
is packaged with the comprehensive service. We note that these
services, even though they are reported with therapy codes, are
outpatient department services and not therapy services. Therefore, the
requirement for functional reporting under the regulations at 42 CFR
410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply.
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 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

[[Page 66801]]

HCPCS codes in Addendum J to this final rule with comment period 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 policy is consistent with our policy to exclude preventive
services from the 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 and 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 final rule with
comment period. We note that payment for one preventive service (HCPCS
code G0102 (Prostate cancer screening; digital rectal examination))
will continue to be packaged under the OPPS in CY 2015, both broadly
and in the context of comprehensive services. Currently, payment for
the procedure described by 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 and 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 Table 6 below,
we list the services that are excluded from the comprehensive APC
payment policy.

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

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

We proposed to continue to define each hospital outpatient claim
reporting a single unit of a single primary service assigned to status
indicator ``J1'' as a single ``J1'' unit procedure claim (78 FR 74871).
We proposed to sum all line item charges for services included in the
C-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

[[Page 66802]]

use the term ``comprehensive'' to describe the geometric mean cost of a
claim reporting ``J1'' service(s) or the geometric mean cost of a C-
APC, inclusive of all of the items and services in the C-APC payment
bundle). Charges for services that would otherwise have been separately
payable are added to the charges for the primary service. This process
differs from our traditional cost accounting methodology only in that
all such services on the claim are packaged (except certain services as
described above). We proposed to apply our standard data trims,
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 C-APCs. We proposed to
establish a ranking of each primary service (single unit only) assigned
to status indicator ``J1'' according to their comprehensive geometric
mean costs. 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 proposed 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 C-APC to which the
service designated as the primary service is assigned. If the reported
``J1'' services reported on a claim map to different C-APCs, we
designate the ``J1'' service assigned to the C-APC with the highest
comprehensive geometric mean cost as the primary service for that
claim. If the reported multiple ``J1'' services on a claim map to the
same C-APC, we designate the most costly service (at the HCPCS code
level) as the primary service for that claim. This process results in
initial assignments of claims for the primary services assigned to
status indicator ``J1'' to the most appropriate C-APCs based on both
single and multiple procedure claims reporting these services and
clinical and resource homogeneity.
Complexity Adjustments. We proposed to use complexity adjustments
to provide increased payment for certain comprehensive services. We
proposed to apply a complexity adjustment by promoting qualifying
``J1'' service code combinations or code combinations of ``J1''
services and certain add-on codes (as described further below) from the
originating C-APC (the C-APC to which the designated primary service is
first assigned) to a higher paying C-APC in the same clinical family of
C-APCs, if reassignment is clinically appropriate and the reassignment
would not create a violation of the 2 times rule in the receiving APC
(the higher paying C-APC in the same clinical family of C-APCs). We
proposed to implement this type of complexity adjustment when the code
combination represents a complex, costly form or version of the primary
service according to the following criteria:
Frequency of 25 or more claims reporting the code
combination (frequency threshold); and
Violation of the 2 times rule (cost threshold).
In the CY 2015 OPPS/ASC proposed rule (79 FR 40947 through 40948,
we explained in detail in response to a comment to the CY 2014 OPPS/ASC
final rule with comment period the differences between the finalized CY
2014 complexity adjustment criteria and the CY 2015 proposed complexity
adjustment criteria and our rationale for the proposed changes.
After designating a single primary service for a claim, we proposed
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 proposed to
determine initial C-APC assignments and complexity adjustments using
the best data available, cross-walking 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 proposed to promote the complex version of
the primary service as described by the code combination to the next
higher cost C-APC within the clinical family, unless the APC
reassignment is not clinically appropriate, the reassignment would
create a violation of the 2 times rule in the receiving APC, or the
primary service is already assigned to the highest cost APC within the
C-APC clinical family or assigned to the only C-APC in a clinical
family (79 FR 40944). We did not propose to create new APCs with a
geometric mean cost that is higher than the highest cost (or only) C-
APC in a clinical family just to accommodate potential complexity
adjustments. Therefore, the highest payment for any code combination
for services assigned to a C-APC would be the highest paying C-APC in
the clinical family.
As discussed below, we proposed 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. 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 C-APC within the same clinical family of C-APCs. We
provided a proposed list of qualifying code combinations (including
add-on codes) in Addendum J to the proposed rule (which is available
via the Internet on the CMS Web site).
We proposed to package payment for all add-on codes into the
payment for the C-APC. However, we indicated that add-on codes that are
assigned to the current device-dependent APCs listed in Table 5 of the
proposed rule (79 FR 40938) would be evaluated for a possible
complexity adjustment when they are reported in conjunction with a
designated primary service assigned to status indicator ``J1.'' We
proposed to only evaluate the add-on codes that are assigned to the
current device-dependent APCs listed in Table 5 of the proposed rule
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 proposed to apply
the proposed frequency and cost criteria discussed above, testing
claims reporting one unit of a single primary service assigned to
status indicator ``J1'' and any number of units of a single add-on
code. If the frequency and cost criteria for a complexity adjustment
were met, and reassignment to the next higher cost APC in the clinical
family is appropriate, we proposed to make a complexity adjustment for
the code combination; that is, we proposed to reassign the primary
service code reported in conjunction with the add-on code combination
to a higher cost C-APC within the same clinical family of C-APCs. If
any add-on code combination reported in conjunction

[[Page 66803]]

with the primary service code did not qualify for a complexity
adjustment, payment for these services would be packaged. We listed 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 the 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 was not proposed for a complexity adjustment because we
believe that these claims are miscoded. Of the 35 qualifying claims
reporting this code combination, only 3 claims contained the
appropriate base code (CPT code 37228) for CPT add-on code 37233.
We provided in Addendum J to the 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 the proposed rule also contained 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 included all code
combinations that were proposed to be reassigned to C-APC 0655 when CPT
code 33208 is the primary code. Providing the information contained in
Addendum J in the proposed rule allowed 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 C-APCs
Several commenters to the CY 2014 OPPS/ASC proposed rule questioned
why CMS only converted a subset of the device-dependent APCs to C-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 stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40944
through 40945) that 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 C-APC payment because the device-dependent APCs not
included in last year's comprehensive APC payment proposal are similar
to the original 29 device-dependent APCs that were proposed as C-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 were proposed for conversion to C-APCs contain comprehensive
services primarily intended for the implantation of costly medical
devices. Therefore, in the CY 2015 OPPS/ASC proposed rule, we proposed
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 C-APC payment. Stakeholders
recommended that we create C-APCs for these procedures and technologies
or assign them to a previously proposed C-APC. We agreed with the
stakeholders. Similar to the other services designated as comprehensive
in CY 2014, these procedures are comprehensive single-session services
with high-cost implantable devices or high-cost equipment. For CY 2015,
we proposed to convert the following existing APCs into C-APCs: APC
0067 (Single Session Cranial Stereotactic Radiosurgery) and APC 0351
(Level V Intraocular Surgery)). C-APC 0351 only contains one
procedure--CPT code 0308T (Insertion of ocular telescope prosthesis
including removal of crystalline lens). We also proposed 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 proposed to
assign to these C-APCs in CY 2015 would be assigned to status indicator
``J1.''
(c) Reconfiguration and Restructuring of the C-APCs
Based on further examination of the structure of the C-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), in the CY 2015 OPPS/ASC proposed rule (79
FR 40945), we proposed to reorganize, combine, and restructure some of
the C-APCs. The purpose of this APC restructuring is to improve
resource and clinical homogeneity among the services assigned to
certain C-APCs and to eliminate APCs for clinically similar services,
but with overlapping geometric mean costs. The services we proposed to
assign to each of the C-APCs for CY 2015, along with the relevant cost
statistics, were provided in Addendum J to the 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 of the proposed rule (79 FR 40952) listed the additional 28
APCs proposed under the CY 2015 comprehensive APC policy.
In summary, our proposal to reorganize, combine, and restructure
some of the C-APCs included the following proposed changes:
Endovascular clinical family (renamed Vascular Procedures,
VASCX). We proposed 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 proposed to combine C-APCs 0089, 0090,
0106, 0654, 0655, and 0680 as illustrated for CY 2014 to form three
proposed levels of C-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 proposed to delete the clinical family for Event
Monitoring, which only had one C-APC (C-APC 0680 (Insertion of Patient
Activated Event)) with a single CPT code 33282 as illustrated for CY
2014. We also proposed to reassign CPT code 33282 to C-APC 0090, which
contains clinically similar procedures.
In the urogenital family, we proposed 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).

[[Page 66804]]

We proposed to rename the arthroplasty family of APCs to
``Orthopedic Surgery.'' We also proposed to reassign several codes from
APC 0052 to C-APC 0425, which we proposed to rename ``Level V
Musculoskeletal Procedures Except Hand and Foot.''
We proposed 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 to rename
APC 0086 ``Level III Electrophysiologic Procedures.'' In addition, we
proposed 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 proposed 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
Comment: Commenters were generally supportive of the proposed
changes to the comprehensive APC payment policy for CY 2015 when
compared to the CY 2014 final policy, and urged CMS to monitor
implementation for payment adequacy and access to quality care. Some
commenters requested that CMS delay implementation until at least July
1, 2015, to allow time to fully test systems changes. Some commenters
requested that CMS delay implementation for a year or more until CMS
addresses assorted concerns or so that hospitals can continue to
analyze the policy and budget for the financial impact.
Response: We appreciate the commenters' support. We plan to monitor
the implementation of this C-APC payment policy and will consider
future revisions as necessary. We will not further delay implementation
of this policy. We have already delayed implementation of the C-APC
payment policy for a year, which we believe provided ample time for
hospitals to evaluate the policy.
Comment: We received feedback from commenters regarding the data
resources that CMS provided to support the proposed rule. Some
commenters commended CMS for the technical support and assistance
provided that enabled the commenters to replicate CMS' methodology and
match CMS' results. Other commenters expressed concern that the data
resources were insufficient, inconsistent, and unclear. Some commenters
also requested that CMS enhance transparency, expand the data resources
available to the public, and engage stakeholders in future
comprehensive APC payment policy development. Some commenters asked
that CMS provide cost data on all of the code combinations that were
evaluated for the complexity adjustments, including the code
combinations that qualified for a complexity adjustment. One commenter
stated that discrepancies in some of the number entries between
Addendum J and Addendum B violate the Administrative Procedures Act
(APA) because these discrepancies ``make it impossible to understand
what CMS is proposing.''
Response: We appreciate the commenters' support for the proposed
expansion of available data resources related to the comprehensive APC
payment policy methodology. In response to the commenters who expressed
concern regarding the insufficiency of the data files provided, we
understand that the OPPS is technically complex. However, we believe
that the data made available to the public as part of the proposed rule
were appropriate, clear, and sufficient. We acknowledge the commenters'
concerns regarding the transparency of related data and the desire for
additional resources. Therefore, for this final rule with comment
period, we are providing additional data in Addendum J, such as cost
statistics related to code combinations that are not eligible for
complexity adjustments. Regarding any indications of discrepancies in
some of the number entries between Addendum J and Addendum B, as the
commenter suggested, we understand and acknowledge that minor
discrepancies may sometimes occur with complex payment rules that
include various files with many different types of data. However, we do
not believe any such discrepancies would limit commenters' ability to
understand the proposed policies or to evaluate the impacts or effects
of the proposed policy changes. The comprehensive APC payment policy
has been open for public comment during three consecutive OPPS
rulemaking cycles: the CY 2014 OPPS/ASC proposed rule; the CY 2014
OPPS/ASC final rule with comment period; and the CY 2015 OPPS/ASC
proposed rule. Therefore, we do not believe that we provided
insufficient notice of the policies that are a part of the
comprehensive APC payment policy.
Comment: Commenters expressed concern regarding the misalignment
between hospitals' billing practices and systems and the proposal to
package all services (except for the few exceptions noted above) on a
claim into the payment for the comprehensive service. The commenters
observed that a significant number of comprehensive service claims
spanned more than 5 days, with some claims spanning close to 30 days.
The commenters recommended that CMS limit the payment bundle to
services provided within 1 or 2 days of the primary service, or
defining the bundle based on episodes of care. Commenters also
requested that CMS clarify the guidance provided and educate providers
on how to report comprehensive services that fall within the span of a
recurring service claim. Some commenters expressed concern that
policies which reduce or eliminate series billing for recurring
services may create an operational burden for hospitals; increase
claims processing activity for Medicare contractors; and increase the
amount of paperwork sent to a beneficiary.
Response: Our intent is to capture all of the services associated
with the primary service assigned to a C-APC, except those services
that would still be separately paid under the OPPS, even when provided
in conjunction with a comprehensive service. The 219 procedures
assigned to the C-APCs are a small fraction of the total services
provided in HOPDs. We believe that it would not be an undue hardship
for some hospitals to alter their processes such that they file
separate claims for services that are unrelated both clinically and in
regard to time to the comprehensive service. With regard to recurring
services, we have previously issued manual guidance in the Internet
Only Manual, Pub. 100-4, Chapter 1, Section 50.2.2, that provides that
only recurring services should be billed monthly. We also have
specified that, in the event that a recurring service occurs on the
same day as an acute service that falls within the span of the
recurring service claim, hospitals should bill separately for recurring
services on a monthly claim (repetitive billing) and submit a separate
claim for the acute service. We also do not expect that these claims
for comprehensive services in the outpatient setting would extend
beyond a few days because the 219 procedures assigned to the 25 C-APCs
are almost entirely surgical procedures. If a physician determined that
furnishing one of these services would be medically necessary for the
treatment of a Medicare beneficiary and expected the beneficiary to
require hospital care for more than 2 midnights, inpatient admission
would be appropriate.

[[Page 66805]]

Comment: Commenters generally supported the proposed packaging of
all add-on codes reported in conjunction with comprehensive service
claims with the allowance of complexity adjustments for add-on codes
currently assigned to device-dependent APCs in CY 2014. One commenter
requested that CMS assign add-on CPT code 57267 (Insertion of mesh or
other prosthesis for repair of pelvic floor defect, each site
(anterior, posterior compartment), vaginal approach (List separately in
addition to code for primary procedure) to C-APC 0202 because this code
has high device costs.
Response: We appreciate the commenters' support. According to 42
CFR 419.2(b)(18), add-on codes are packaged under the OPPS. Because
implementation of the finalized comprehensive APC payment policy was
delayed until CY 2015, for CY 2014 we maintained the structure and code
assignments for the device-dependent APCs, which continued separate
payment for add-on codes assigned to device-dependent APCs for CY 2014.
We refer readers to Table 7 of the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74859). The add-on code complexity adjustment
policy is limited only to certain add-on codes that were previously
assigned to device-dependent APCs and that, along with a primary
comprehensive service, meet the complexity adjustment criteria. We
refer readers to Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR
40959) for a listing of these add-on codes. Our intent is not to make a
higher payment in every case that an add-on procedure results in higher
costs. Therefore, we are finalizing the CY 2015 proposal to package all
add-on codes reported on a claim in conjunction with a comprehensive
service, and also to allow a limited number of add-on codes to be
evaluated for a complexity adjustment when billed with a primary
comprehensive service. We are not extending the complexity adjustment
policy beyond those add-on codes that were assigned to device-dependent
APCs. The list of add-on codes that we evaluated for a complexity
adjustment is included later in this section in Table 8.
Comment: Some commenters requested that CMS divide the restructured
C-APCs into more discrete groupings to increase clinical coherence and
resource cost homogeneity. Some commenters believed that improved
clinical coherence among the procedures within the C-APCs would
increase the stability of C-APC payments from year-to-year and decrease
opportunities for ``gaming'' the system. Some commenters also expressed
concern with the high variation in geometric mean costs for services
assigned to the C-APCs that do not create a violation of the 2 times
rule, but would result in inadequate payment for the highest cost
procedures assigned to the C-APC.
Response: We disagree with the commenters. We believe that the
categorization of the restructured C-APCs better represents clinical
and resource homogeneity when compared to the CY 2014 structure of the
C-APCs. We also note that the OPPS is a prospective payment system that
relies on groupings of procedures resulting in a weighted-average cost
payment based on all of the procedures in the group. Too much
discretization of APC groupings would move the OPPS more toward a fee
schedule, which would have individual payments for each HCPCS code and
presents an undesirable outcome for the OPPS. In addition, we encourage
all members of the stakeholder public to report all suspected incidents
of fraud and abuse to the Office of Inspector General or the CMS Center
for Program Integrity. As required by statute, we will review and
evaluate, on an annual basis, any year-to-year changes in APC and HCPCS
geometric mean costs.
Comment: A few commenters disagreed with CMS' proposal to expand
the C-APCs to include all of the current device-dependent APCs. The
commenters noted that a significant percentage of claims for some of
the lower paying C-APCs (specifically, C-APCs 0084 (Level I
Electrophysiologic Procedures), 0427 (Level II Tube or Catheter Changes
or Repositioning), 0622 (Level II Vascular Access Procedures), and 0652
(Insertion of Intraperitoneal and Pleural Catheters) report services
assigned to noncomprehensive APCs that are significantly more costly
than the primary service that is motivating the C-APC payment.
Commenters believed that procedures assigned to these APCs are not
infrequently performed as secondary procedures to other more costly
procedures that are assigned to noncomprehensive APCs. Commenters
recommended various approaches for addressing this concern: (1)
Applying complexity adjustments to these claims; (2) excluding high-
cost procedures from the comprehensive APC packaging policy; (3) paying
for the higher-cost service and applying a multiple procedure reduction
to the C-APC; or (4) eliminating the lower paying C-APCs from the
comprehensive APC payment policy methodology.
Response: Our analysis shows a significant number of claims in APCs
0427 and 0622 that contain noncomprehensive services that are more
costly than the procedures assigned to the proposed C-APC. In addition,
similar to APCs 0427 and 0622, APC 0652 contains a total of three
catheter-insertion procedures. These procedures are not similar to the
other major procedures assigned to C-APCs, but are sometimes supportive
of other procedures. For example, APC 0652 includes the procedure that
describes the placement of a pleural catheter that can be used for drug
delivery, but is not a definitive therapeutic procedure similar to most
of the other procedures assigned to that C-APC. Also, APCs 0427, 0622,
and 0652 are not device-intensive APCs, meaning that the device offsets
are not greater than 40 percent. Therefore, we are accepting the
commenters' recommendation. We are not converting APCs 0427, 0622, and
0652 into C-APCs for CY 2015. In addition, because we are not
converting APC 0427 into a C-APC, we will not evaluate add-on CPT code
49435 for complexity adjustments because the APC that contains the base
codes for CPT code 49435 are assigned to APC 0427. However, we are
finalizing the proposal to convert APC 0084 into a C-APC. We did not
find that a significant number of higher cost noncomprehensive
procedures are performed in conjunction with the procedures assigned to
APC 0084. Unlike many of the catheter insertion procedures assigned to
APCs 0427, 0622, and 0652, the electrophysiology procedures assigned to
APC 0084 are not supportive of other services, but are the definitive
therapeutic procedures intended to treat a patient's cardiac condition.
Comment: Commenters urged CMS to develop adjustments to C-APC
payments based on patient acuity or diagnosis to account for clinical
complexity and patient characteristics, which could help mitigate the
negative payment impact of expanding the comprehensive APC payment
policy on hospitals that treat more clinically complex patients, such
as academic medical centers, cancer hospitals, and trauma centers.
Response: As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR
40951), 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 payments
under the IPPS. Therefore, we are unable to make

[[Page 66806]]

payment adjustments based on diagnoses.
Comment: Commenters expressed concern that not implementing C-APCs
in the ASC setting distorts the payment relationship between ASCs and
HOPDs and could result in incentives to direct patients from one
setting to another. Commenters recommended that CMS reprogram the ASC
payment system software, as soon as possible, to allow the system to
perform the complex logic needed to implement and provide adequate
payment for the C-APCs for ASCs.
Response: The commenters are correct that the comprehensive APC
payment policy methodology is not being adopted under the ASC payment
system. However, we do not believe that this policy decision will
result in site-of-service shifts, but we will continue to monitor
procedure volumes in both settings. Although OPPS payments for
individual surgical procedures assigned to C-APCs are higher than ASC
payments for the same procedures, under the standard noncomprehensive
service payment methodology that applies in the ASC for all APCs and in
the OPPS for noncomprehensive services, there remains separate payment
for covered procedures and covered ancillary services that are not
packaged under a general packaging policy. This continuation of
separate payment for covered procedures and covered ancillary services
performed in the ASC (which is not available in the OPPS for procedures
performed in addition to the primary procedures assigned to C-APCs)
should help mitigate any incentive to perform procedures assigned to C-
APCs in the HOPD. However, given the significant difference between ASC
and OPPS payment rates, we do not believe that separate payment (at the
multiple procedure reduction reduced rate) for additional procedures
performed in the ASC setting along with a procedure that is assigned to
a C-APC will draw cases away from the HOPD because, in most cases, the
overall HOPD will be higher than the ASC payment for the same set of
procedures. We will consider the commenters' suggestion that we develop
new payment software for the ASC payment system should an opportunity
to do so arise in the future.
Comment: Commenters requested that CMS provide separate payment for
certain services reported on a comprehensive claim. Some commenters
requested that CMS exclude the following additional services from the
packaging provision under the comprehensive APC payment policy:
Dialysis and emergency dialysis services.
Blood products.
Expensive diagnostic tests, such as angiography.
High-cost drugs and devices that account for a high
percentage of the geometric mean cost of a C-APC.
Outpatient services paid under a payment schedule, such as
laboratory services.
The commenters believed that the C-APC payment would not adequately
cover the cost of these services. One commenter believed that packaging
payment for an otherwise separately payable drug when provided in
conjunction with a comprehensive service may cause hospitals, in
consultation with physicians, to choose a less-expensive alternative
drug.
Response: We responded to similar comments that disagreed with CMS'
proposal to package payment for various items and services into the C-
APC payment in the CY 2014 OPPS/ASC final rule with comment period (78
FR 74865 through 74910). As previously stated, we disagree with the
commenters. We believe that the central attribute of the comprehensive
APC payment policy is the packaging of all adjunctive services, with
the exception of those services described above that, according to the
statute, cannot be packaged or the list of preventive services that
generally would not be provided at the time of a major procedure
assigned to a C-APC. We note that (as stated above in section II.A.3.a.
of this final rule with comment period) 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 routinely using a more expensive item,
which often results if separate payment is provided for the items.
Furthermore, packaging also encourages hospitals to effectively
negotiate with manufacturers and suppliers to reduce the purchase price
of items and services (including drugs) or to explore alternative group
purchasing arrangements, thereby encouraging the most economical health
care delivery.
Comment: Commenters asserted that the reliance on code combinations
based on cost ranking of codes would lead to instability in the
complexity adjustments from year to year, and overlook a large number
of comprehensive claims with three or more ``J1'' services, which is
common for the clinical complexity of procedures assigned to the
endovascular revascularization family of APCs. Commenters suggested
alternative methodologies for determining eligibility, such as applying
a complexity adjustment to any claim that has three or more ``J1''
services or applying the cost and frequency criteria to all
combinations of ``J1'' services.
Response: We disagree with the commenters that assigning complexity
adjustments based on cost ranking of primary and secondary codes is
either insufficient or would result in instability of the complexity
adjustments in future years. We proposed complexity adjustments for
certain code pairs to provide a higher payment in the next higher APC
within a clinical family for high cost procedure pairs consisting of a
primary comprehensive procedure and a secondary comprehensive procedure
that represent sufficiently frequent and sufficiently costly
comprehensive procedure pairs such that they are separated from and
provided a higher payment than all of the cases that are accounted for
in APC assignment of the primary service. We do not believe that
providing a complexity adjustment to any claim that has three or more
``J1'' services or to all claims reporting pairs of ``J1'' services
that meet the cost and frequency criteria would adequately serve the
stated purpose of the policy. The intent of the complexity adjustment
policy is to identify a limited number of costly procedure pairs for a
higher payment at the next higher paying C-APC within the clinical
family, not to unpackage and separately pay for all of the high cost
cases that are associated with the primary ``J1'' procedure. Although
such a policy as the commenters requested could be beneficial to the
procedures assigned to the endovascular C-APC family because of the
high number of codes that can be billed per case, we do not believe
that this approach would serve the other clinical families that do not
rely on component coding to the same extent as endovascular procedures.
Therefore, we are finalizing our proposal to base the complexity
adjustments on code pairs that include the two most costly ``J1''
services reported on the C-APC service claim.
Comment: Commenters believed that the cost threshold is too
restrictive and would cause financial hardship for hospitals and
jeopardize beneficiary access to care. Commenters suggested that CMS
adjust the cost threshold to 1.5, 1.75, or within 2 percent of the 2
times rule limit.
Response: In response to comments to the CY 2014 OPPS/ASC final
rule with comment period, we significantly

[[Page 66807]]

lowered the cost criterion for a complexity adjustment from two times
the cost of the primary procedure to two times the cost of the lowest
cost procedure in the APC to which the primary procedure is assigned.
This change made it significantly easier for code combinations to
qualify for a complexity adjustment based on higher cost. We do not
believe that further lowering of the cost criterion would be consistent
with the objective of the comprehensive APC payment policy. We believe
that lowering the cost criterion would result in effectively
unpackaging too many cases from the primary C-APC assignment and,
therefore, defeat the purpose of the policy, which is to create a
comprehensive prospective payment for major, primary device-intensive
procedures.
Comment: Commenters expressed concern that claims assigned to the
only level or the highest level C-APC within a clinical family are
ineligible to receive a complexity adjustment because there is no
higher paying APC in the clinical family in which to assign these code
combinations. Commenters requested that CMS add an additional C-APC
level to these clinical families to provide for more granular payment
levels and accommodate potential complexity adjustments.
Response: As we stated in the CY 2015 OPPS/ASC proposed rule, we
would not create new APCs with a geometric mean cost that is higher
than the highest cost C-APC in a clinical family just to accommodate
potential complexity adjustments. Therefore, the highest payment for
any code combination for services assigned to a C-APC would be the
highest paying C-APC in the clinical family. We only found 7 code pairs
out of the 219 procedures that are assigned to the 25 final C-APCs that
would qualify for a complexity adjustment if a higher paying APC were
available for assignment of the code combination. We do not believe
that this small number of code combinations from the highest paying
APCs in the final 12 clinical families of C-APCs that satisfy the
complexity adjustment criteria necessitates creating additional APCs,
especially if these APCs would be populated with only a few multiple
procedure claims. In addition, in accordance with section 1833(t)(2)(B)
of the Act, APCs are defined as ``groups of covered OPD services'' that
are comparable clinically and with respect to the use of resources. If
we created an additional new higher level APC within each C-APC
clinical family that did not contain any primary comprehensive services
and instead only contained a very small volume of complexity-adjusted
code pairs, we do not believe that such APCs would constitute
appropriate ``groups of covered OPD services.''
Comment: One commenter urged CMS to finalize the proposal to assign
CPT code 0308T to APC 0351 and to convert APC 0351 into a C-APC.
Response: We appreciate the commenter's support. For this final
rule with comment period, we are finalizing our proposal to assign CPT
code 0308T to APC 0351 and to convert APC 0351 into a C-APC for CY
2015.
Comment: Commenters generally agreed with the proposed structure of
the Automatic Implantable Cardiac Defibrillators, Pacemakers, and
Related Devices (AICDP) C-APCs. One commenter specifically supported
the assignment of CPT code 0319T to C-APC 108.
Response: We appreciate the commenters' support.
Comment: Several commenters supported CMS' proposed assignment of
CPT codes 77424 and 77425 to C-APC 0648. Another commenter believed
that the services assigned to C-APC 0648 are not similar clinically or
similar in resource costs, and suggested that CMS divide this C-APC
into two levels.
Response: We appreciate the commenters' support for our proposal
regarding C-APC 0648. However, we disagree with the commenter that the
services assigned to C-APC 0648 are not similar clinically or in regard
to resource costs. All of the seven services proposed to be assigned to
C-APC 0648 involve the breast. The current clinical application of
intraoperative radiation therapy (IORT CPT codes 77424 and 77425) is
for breast cancer following lumpectomy. In regard to resource costs of
the services assigned to C-APC 0648, the range from the lowest cost
significant procedure to the highest cost significant procedure is
between approximately $5,584 and $9,325, which is well within the 2
times rule limit. In addition, C-APC 0648 is a small APC with only 7
services and a total of approximately 5,000 claims based on CY2013
claims data. To further divide this C-APC would be less consistent with
a prospective payment system than its proposed structure. Therefore, we
are finalizing our proposal to assign CPT codes 77424 and 77425 to C-
APC 0648.
Comment: One commenter requested that CMS exclude C-APC 0259 from
the comprehensive APC payment policy. The commenter believed that the
change in the procedure-to-device claim edits policy would result in
more incorrectly coded claims for the procedure described by CPT code
69930 (Cochlear device implantation, with or without mastoidectomy),
which is the only service assigned to C-APC 0259.
Response: We do not believe that C-APC 0259 should be excluded from
the comprehensive APC payment policy. The discussion of the device
edits policy is in section II.A.2.d.1. of this final rule with comment
period. We believe that hospitals will continue to report the cost of
the cochlear implant when one of these devices is implanted into a
Medicare beneficiary because the cost of this device is 84 percent of
the total cost of the procedure. After consideration of this comment,
we see no reason to exempt C-APC 0259 from the comprehensive APC
payment policy. We are finalizing our proposal to convert APC 0259 into
a C-APC for CY 2015.
Comment: Several commenters agreed with CMS' proposed structure of
the cardiac electrophysiology C-APCs: C-APC 0084 (Level I
Electrophysiologic Procedures); C-APC 0085; and C-APC 0086 (Level III
Electrophysiologic Procedures). One commenter requested that CMS
reassign CPT code 93603 (Right ventricular recording) from C-APC 0084
to C-APC 0085 because the commenter believed that the procedure
described by CPT code 93603 is more similar to the procedures assigned
to C-APC 0085 than the other procedures assigned to C-APC 0084.
Response: We appreciate the commenters' support. However, we
disagree with the commenter that CPT code 93603 should be reassigned
from C-APC 0084 to C-APC 0085. CPT code 93603 is a very low-volume
procedure, with a total of 12 claims for CY 2013. The geometric mean
cost for CPT code 93603 (based on these 12 claims) is $1,807. The
geometric mean cost of the lowest cost significant service in C-APC
0085 is $4,064 (CPT code 93619). Therefore, we believe that CPT code
93603 lacks resource similarity to the procedures assigned to C-APC
0085. We are finalizing the structure of the cardiac electrophysiology
C-APCs, as proposed for CY 2015.
Comment: Several commenters agreed with CMS' proposed structure of
the neurostimulator APCs. Two commenters believed that the difference
in cost between CPT code 61885 (Insertion or replacement of cranial
neurostimulator pulse generator or receiver, direct or inductive
coupling; with connection to a single electrode array) and CPT code
61886 (Insertion or replacement of cranial neurostimulator pulse
generator or receiver, direct or inductive coupling; with connection to
2 or more electrode

[[Page 66808]]

arrays) is too low and that the device costs may not be adequately
captured based on the accuracy of the claims data. Another commenter
recommended that CMS restructure the neurostimulator APCs to improve
clinical coherence by limiting C-APC 0318 to only certain full-system
procedures, assigning all lead placement procedures to C-APC 0061, and
assigning the remaining neurostimulator procedures to C-APC 0039.
Response: We appreciate the commenters' support. Regarding the
commenters' concern about the geometric mean cost of CPT codes 61885
and 61886, the geometric mean cost of CPT code 61886 (dual channel
procedure) is higher than CPT code 61885 (single channel procedure),
which is to be expected. It is important to remember that the C-APC
payment policy packages all procedures performed with the primary
procedure, so the cost for the primary service in a C-APC may be higher
than the cost associated with single claims for the same service. We
note that APC groupings are based on two factors, clinical similarity
and resource similarity. The OPPS requires that we group services into
APCs for payment purposes based on these two factors. Clinical
similarity in the APC grouping context is by definition, and by
necessity, is much broader than the comparisons that distinguish
individual CPT codes. All of the procedures assigned to C-APCs 0061,
0039, and 0318 include the various neurostimulator-related procedures.
The neurostimulator family of C-APCs groups these procedures based on
the geometric mean cost and clinical similarity of the primary service.
In some cases, an APC includes implantation of a complete system of one
type of neurostimulator and the implantation of either a generator
alone or a complete system of other types. This is a function of the
CPT coding system and the prospective nature of the comprehensive APC
payment policy. Overall, we believe that the proposed structure of the
neurostimulator family of C-APCs strikes the proper balance of both
factors for APC construction and resource and clinical similarity. We
are finalizing the proposed structure of the neurostimulator C-APCs, as
proposed, and without modification.
Comment: One commenter requested that CMS divide C-APC 0425 into
two APCs because the range of procedure costs in this APC is too
significant. Another commenter requested that CMS reassign the
following CPT codes from APC 0208 to C-APC 0425 based on more
appropriate resource homogeneity to the other procedures assigned to C-
APC 0425: CPT codes 22551, 22554, 22612, and 22856.
Response: We disagree with the commenters' recommendation to divide
C-APC 0425 into two C-APCs. The cost range for significant procedures
within C-APC 0425 (using the proposed rule code assignments) is between
approximately $9,087 (for CPT code 69714) and $15,740 (for CPT code
24363), which is well within the 2 times rule limit. We agree with the
commenters that CPT codes 22551 (with a geometric mean cost of
$10,052), 22554 (with a geometric mean cost of $8,129), 22612 (with a
geometric mean cost of $8,451), and 22856 (with a geometric mean cost
of $12,958) should be reassigned from APC 0208 (with a geometric mean
cost of $4,267) to C-APC 0425 (with a geometric mean cost of $10,606).
We believe that assigning these four CPT codes to C-APC 0425 supports
more appropriate resource and clinical similarity when compared to the
current assignment to APC 0208. Otherwise, we are finalizing the
proposed structure for C-APC 0425. With these additions to C-APC 0425,
the cost range for significant procedures within C-APC 0425 (using the
final rule code assignments) is between approximately $8,451 (for CPT
code 22612) and $15,740 (for CPT code 24363).
Comment: One commenter believed that the proposed C-APCs that
include drug pumps would provide inadequate payment for its developing
therapy because the therapy uses an advanced technology drug pump and a
very costly drug. The commenter requested that CMS either provide
complexity adjustments for high-cost drugs or unpackage the payment for
certain high-cost drugs.
Response: As we stated in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74908 through 74909), we do not believe that
drugs being supplied to the patient to fill the reservoir of a pump at
the time of pump implantation should be excluded from the comprehensive
APC payment policy because drugs supplied to fill the pump during
implantation of the pump are adjunctive to the procedure. The costs of
costly adjunctive services are included proportionally into the cost
estimation for the primary services through our ability to use almost
all claims for a service and adoption of the geometric mean cost upon
which to establish relative payment weights. In addition, we do not
believe that we should make complexity adjustments for higher cost
drugs. Complexity adjustments are for more complex procedure variations
that differ significantly from the primary ``J1'' procedure. Complexity
adjustments are not intended as a way to provide separate payment for
adjunctive drugs and supplies under the guise of a complexity
adjustment. Therefore, we are not adopting this commenter's suggested
changes to the comprehensive APC payment policy. We will continue to
monitor the development of this technology and consider future
revisions to this policy as needed.
Comment: Commenters opinions varied regarding CMS' proposal to
include C-APCs 0202 (Level V Gynecologic Procedures), 0385 (Level I
Urogenital Procedures), and 0386 (Level II Urogenital Procedures) in
the urogenital procedures clinical family of C-APCs and to allow
complexity adjustments from C-APC 0202 to C-APC 0385 and complexity
adjustments from C-APC 0385 to C-APC 0386. Some commenters agreed with
CMS' proposed structure of the urogenital procedures family of C-APCs,
while other commenters opposed the proposal to reassign complexity
adjustment code combinations from C-APC 0202 to C-APC 0385. The
commenters believed that the procedures assigned to C-APC 0202, which
are related to female urogenital anatomy, are not sufficiently
clinically similar to the primary procedures assigned to C-APC 0385,
which relate to the male urogenital anatomy.
Response: We appreciate the commenters' support for the proposed
structure of the urogenital procedures C-APC clinical family and the
proposed approach for complexity adjustments. However, we disagree with
the commenters that complexity adjustments should not be made from C-
APC 0202 to C-APC 0385 because of insufficient clinical similarity
between the complex procedures with a primary code assigned to C-APC
0202 that have been reassigned according to the complexity adjustment
policy to C-APC 0385 and the primary procedures assigned to C-APC 0385.
Although we acknowledge that there are differences in the male and
female human urogenital anatomy, we believe that many of these
procedures involve relatively complex repairs of the urogenital region
involving implantable medical devices and, therefore, it is appropriate
to assign complexity adjusted code combinations from C-APC 0202 to the
next higher paying APC in the urogenital procedures clinical family,
which is C-APC 0385.
Comment: Some commenters supported the proposed structure of the C-
APCs in the endovascular clinical

[[Page 66809]]

family. Other commenters noted that payments for some endovascular
procedure code combinations would be negatively impacted by the
proposed structure for C-APCs 0083 (Level I Endovascular Procedures),
0229 Level II Endovascular Procedures), and 0319 (Level III
Endovascular Procedures). The commenters recommended reviewing and
revising these C-APCs and creating more levels beyond the proposed
three levels of endovascular C-APCs.
Response: We appreciate the commenters' support for the proposed
structure of the endovascular C-APC clinical family. We do not believe
that additional levels of endovascular C-APCs are necessary at this
time. We believe that the restructured endovascular C-APCs better
reflect resource homogeneity than the CY 2014 final structure of these
C-APCs because the new structure has clearer delineations between the
cost ranges of the procedures assigned to the three levels. In
addition, in response to comments to the CY 2014 OPPS/ASC final rule
with comment period (79 FR 40951), we proposed less stricter complexity
adjustment criteria, which resulted in more code combinations
qualifying for higher payment than would have qualified under the CY
2014 OPPS final rule complexity adjustment criteria. We also proposed
evaluating certain add-on codes that are currently assigned to device-
dependent APCs for complexity adjustments, and the overwhelming
majority of these add-on codes are endovascular add-on codes. We
believe that these two changes to the CY 2014 comprehensive APC payment
policy sufficiently mitigate much of any negative payment impact for
endovascular procedures in this transition from the current payment
methodology to the comprehensive APC payment methodology. As we do
annually, we will reevaluate the need for adjustments to the
endovascular family of C-APCs.
Comment: In the CY 2015 OPPS/ASC proposed rule (79 FR 40950 through
40951) in response to a comment to the CY 2014 OPPS/ASC final rule with
comment period, we proposed to continue to pay for stem cell transplant
procedures as we have done for many years through APCs 0111 (Blood
Product Exchange) and 0112 (Apheresis and Stem Cell Procedures). We
stated that we would not create a C-APC for stem cell transplant
procedures. Some commenters supported this approach. Other commenters
requested that CMS create a C-APC for these procedures.
Response: Based on the rationale discussed in the CY 2015 OPPS/ASC
proposed rule (79 FR 40950 through 40951), we will continue to pay for
stem cell transplant procedures through APCs 0111 and 0112 in CY 2015.
(4) Statement of Final Policy and List of CY 2015 C-APCs.
As we discussed earlier, in the CY 2015 OPPS/ASC proposed rule (79
FR 40941 through 40953), we proposed 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 policy includes 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
proposed to continue to define a clinical family of C-APCs as a set of
clinically related C-APCs that represent different resource levels of
clinically comparable services.
After consideration of the public comments we received, we are
finalizing our proposals, with some minor modifications, for
establishment of C-APCs. In this final rule with comment period, we are
establishing a total of 25 C-APCs within 12 clinical families for CY
2015, as described below in Table 7.
We are establishing 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 changes for
CY 2015:
We are reorganizing and consolidating several of the
current device-dependent APCs and the CY 2014 C-APCs.
We are expanding the comprehensive APC payment policy to
include all device-dependent APCs, except for APCs 0427, 0622, and
0652.
We are creating two other new C-APCs (C-APC 0067 and C-APC
0351).
We are establishing new complexity adjustment criteria:
[ssquf] Frequency of 25 or more claims reporting the HCPCS code
combination (the frequency threshold); and
[ssquf] Violation of the ``2 times'' rule (the cost threshold).
We are establishing a policy to package all add-on codes,
although we evaluate claims reporting a single primary service code
reported in combination with an applicable add-on code (we refer
readers to Table 8 below for the list of applicable add-on codes) for
complexity adjustments.
Addendum J to this final rule with comment period (which is
available via the Internet on the CMS Web site) contains all of the
data related to the comprehensive APC payment policy, including the
list of complexity adjustments.

Table 7--CY 2015 C-APCs
----------------------------------------------------------------------------------------------------------------
CY 2015
Clinical family * C-APC APC title payment
----------------------------------------------------------------------------------------------------------------
AICDP................................... 0090 Level II Pacemaker/Similar Procedures......... $6,542.78
AICDP................................... 0089 Level III Pacemaker/Similar Procedures........ 9,489.74
AICDP................................... 0655 Level IV Pacemaker/Similar Procedures......... 16,400.98
AICDP................................... 0107 Level I ICD and Similar Procedures............ 22,907.64
AICDP................................... 0108 Level II ICD and Similar Procedures........... 30,806.39
BREAS................................... 0648 Level IV Breast and Skin Surgery.............. 7,461.40
ENTXX................................... 0259 Level VII ENT Procedures...................... 29,706.85
EPHYS................................... 0084 Level I Electrophysiologic Procedures......... 872.92
EPHYS................................... 0085 Level II Electrophysiologic Procedures........ 4,633.33
EPHYS................................... 0086 Level III Electrophysiologic Procedures....... 14,356.62
EYEXX................................... 0293 Level IV Intraocular Procedures............... 8,446.54
EYEXX................................... 0351 Level V Intraocular Procedures................ 23,075.30
GIXXX................................... 0384 GI Procedures with Stents..................... 3,173.83
NSTIM................................... 0061 Level II Neurostim./Related Procedures........ 5,288.58
NSTIM................................... 0039 Level III Neurostim./Related Procedures....... 17,099.35
NSTIM................................... 0318 Level IV Neurostim./Related Procedures........ 26,152.16
ORTHO................................... 0425 Level V Musculoskeletal Procedures............ 10,220.00

[[Page 66810]]

PUMPS................................... 0227 Implantation of Drug Infusion Device.......... 15,566.34
RADTX................................... 0067 Single Session Cranial SRS.................... 9,765.40
UROGN................................... 0202 Level V Gynecologic Procedures................ 3,977.63
UROGN................................... 0385 Level I Urogenital Procedures................. 6,822.35
UROGN................................... 0386 Level II Urogenital Procedures................ 13,967.97
VASCX................................... 0083 Level I Endovascular Procedures............... 4,537.45
VASCX................................... 0229 Level II Endovascular Procedures.............. 9,624.10
VASCX................................... 0319 Level III Endovascular Procedures............. 14,840.64
----------------------------------------------------------------------------------------------------------------
* Clinical Family Descriptor Key:
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices.
BREAS = Breast Surgery.
ENTXX = ENT Procedures.
EPHYS = Cardiac Electrophysiology.
EYEXX = Ophthalmic Surgery.
GIXXX = Gastrointestinal Procedures.
NSTIM = Neurostimulators.
ORTHO = Orthopedic Surgery.
PUMPS = Implantable Drug Delivery Systems.
RADTX = Radiation Oncology.
UROGN = Urogenital Procedures.
VASCX = Vascular Procedures.

Table 8--CY 2015 Packaged CPT Add-On Codes That Are Evaluated for a
Complexity Adjustment
------------------------------------------------------------------------
CY 2015 CPT/HCPCS add-on code CY 2015 short descriptor
------------------------------------------------------------------------
19297............................. Place breast cath for rad.
33225............................. L ventric pacing lead add-on.
37222............................. Iliac revasc add-on.
37223............................. Iliac revasc w/stent add-on.
37232............................. Tib/per revasc add-on.
37233............................. Tibper revasc w/ather add-on.
37234............................. Revsc opn/prq tib/pero stent.
37235............................. Tib/per revasc stnt & ather.
37237............................. Open/perq place stent ea add.
37239............................. Open/perq place stent ea add.
92921............................. Prq cardiac angio addl art.
92925............................. Prq card angio/athrect addl.
92929............................. Prq card stent w/angio addl.
92934............................. Prq card stent/ath/angio.
92938............................. Prq revasc byp graft addl.
92944............................. Prq card revasc chronic addl.
92998............................. Pul art balloon repr precut.
C9601............................. Perc drug-el cor stent bran.
C9603............................. Perc d-e cor stent ather br.
C9605............................. Perc d-e cor revasc t cabg b.
C9608............................. Perc d-e cor revasc chro add.
------------------------------------------------------------------------

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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), for CY 2015,
we proposed 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 noted 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. In the CY 2015 OPPS/ASC
proposed rule (79 FR 40953 to 40954), we proposed to pay for qualifying
extended assessment and management services through composite APC 8009.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), we also
proposed 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 the CY 2015 OPPS/ASC proposed rule. As such,
in the CY 2015 OPPS/ASC proposed rule, we proposed to delete APC 8000
for CY 2015 (79 FR 40953).
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

[[Page 66811]]

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, in the CY 2015 OPPS/ASC proposed rule, we proposed 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
the CY 2015 proposed rule (79 FR 40953).
(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, was an integral part
of a 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 code 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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40953 through 40954),
for CY 2015, we proposed 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, in the CY
2015 OPPS/ASC proposed rule, for CY 2015, we proposed 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 proposed 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 also proposed 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 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 services described
by 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; 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 proposed 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 services described
by 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

[[Page 66812]]

(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)); 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 was approximately $1,287.
Comment: One commenter urged CMS to consider options to minimize
the financial burden for the beneficiary associated with self-
administered drugs while the beneficiary is receiving observation
services. The commenter also supported efforts to count outpatient
observation toward the Medicare skilled nursing facility (SNF) 3-day
stay requirement. Another commenter expressed concern that paying for
all qualifying EAM encounters through a single composite APC is likely
to penalize certain outpatient facilities, such as those that are
attached to safety-net or teaching hospitals, which treat more complex
patients and populations. The commenter urged CMS to monitor and accept
provider feedback concerning the impact of this coding change to ensure
that it does not create financial pressure or incentives to admit
borderline cases, deny treatment, or otherwise negatively affect
clinical decision making.
Response: The comments related to beneficiary liability associated
with self-administered drugs and counting outpatient observation toward
the SNF 3-day qualifying stay are outside the scope of the proposed
regulations. We do not believe that paying for all qualifying EAM
encounters through a single composite APC is likely to penalize certain
outpatient facilities that treat more complex patients and populations.
We believe that this proposal accurately accounts for the cost of
providing an extended assessment and management service and that this
proposal does not have any substantial impact on any particular type of
facility or patient type. We also do not believe that paying for all
qualifying EAM encounters through a single composite APC creates any
financial pressure or incentives to admit borderline cases, deny
treatment, or otherwise negatively affect clinical decision making. We
continue to expect hospitals to provide the appropriate medical care to
all beneficiaries.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue our CY 2014
finalized policy to provide payment for all qualifying extended
assessment and management encounters through composite APC 8009 for CY
2015. We also are finalizing our proposal, without modification, to
continue 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
EAM composite APC 8009 (provided the observation is not furnished on
the same day as surgery or post-operatively). The final CY 2015
geometric mean cost resulting from this methodology for EAM composite
APC 8009 is approximately $1,281.
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
LDR prostate brachytherapy is a treatment for prostate cancer in
which hollow needles or catheters are inserted into the prostate,
followed by permanent implantation of radioactive sources into the
prostate through the needles/catheters. At least two CPT codes are used
to report the composite treatment service because there are separate
codes that describe placement of the needles/catheters and the
application of the brachytherapy sources: CPT code 55875 (Transperineal
placement of needles or catheters into prostate for interstitial
radioelement application, with or without cystoscopy) and CPT code
77778 (Interstitial radiation source application; complex), 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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015,
we proposed 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 proposed 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, in the CY 2015 OPPS/ASC proposed rule (79 FR 40955), we
proposed 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 proposed 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

[[Page 66813]]

proposed geometric mean cost of approximately $3,669 for these
procedures upon which the proposed CY 2015 payment rate for composite
APC 8001 is based.
Comment: Several commenters expressed concern that the proposed
payment rate for APC 8001 is based only on 379 claims that reported
both CPT codes 55875 and 77778 on the same date of service, a
significant decrease from the CY 2014 final rule claims data used for
ratesetting when 591 claims were available. Commenters also noted that
the proposed payment rate of $3,504.02 yields an 8.9 percent decrease
in payment compared to the CY 2014 payment rate of $3,844.64. One
commenter opined that the decrease in payment for these services is
partially due to the number of brachytherapy procedures provided in the
hospital outpatient setting. A few commenters urged CMS to closely
monitor the number of claims used to set the payment rate for this APC
and to consider other ratesetting methodologies if the number of claims
continues to decrease. Several commenters expressed that the low volume
of claims reporting outpatient brachytherapy services also affected
other APCs, notably APC 0312 (Radioelement Applications) and APC 0651
(Complex Interstitial Radiation Source Application), and cited
additional decreases in the volume of claims used for ratesetting for
these APCs.
Response: The CY 2015 final rule claims data show that 406 claims
were available and used to set the payment rate for APC 8001, with a
geometric mean cost of approximately $3,745, compared to the proposed
rule claims data that showed 379 claims available and used for
ratesetting, with a geometric mean cost of approximately $3,669. In
response to comments regarding the decrease in the number of claims
available for CY 2015 ratesetting and the geometric mean cost relative
to the number of claims available for CY 2014 ratesetting and the
geometric mean cost, we note that there is typically some fluctuation
in costs from year to year. We acknowledge that the number of claims
available and used for ratesetting for APC 8001 has decreased over
recent years. However, the percentage of single frequency claims
compared to total claims that we were able to use for ratesetting in
this final rule with comment period is comparable to prior years. In
addition, evaluation of the claims data for the 4 years prior to CY
2014 indicated that the mean or median costs used for ratesetting for
APC 8001 were lower in those years than CY 2014 or CY 2015 cost levels.
For APC 0651, based on final rule claims data, there are 62 single
frequency claims out of a total of 3,785 claims, with a geometric mean
cost of approximately $988. For APC 0312, based on final rule claims
data, there are 26 single frequency claims out of a total of 378
claims, with a geometric mean cost of approximately $411. We agree with
the commenters' assertion that it appears that there are an increasing
number of radiation oncological technologies that are competing with
prostate brachytherapy, which may be contributing to a decreased number
of claims available for ratesetting for these APCs. As we stated in the
CY 2014 OPPS/ASC final rule with comment period, we will continue to
evaluate additional refinements and improvements to our ratesetting
methodologies in order to maximize the use of claims data (78 FR
74913). In addition, we will continue to explore means by which we can
use a larger volume of claims to establish the payment rate for APC
0312 and APC 0651.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue use of
composite APC 8001 for CY 2015 and to set the payment rate for this APC
using our established methodology. The final geometric mean cost for
composite APC 8001 for CY 2015 is approximately $3,745.
(3) Mental Health Services Composite APC (APC 0034)
In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015,
we proposed to continue our longstanding policy of limiting the
aggregate payment for specified less resource-intensive mental health
services furnished on the same date to the payment for a day of partial
hospitalization services provided by a hospital, which we consider to
be the most resource-intensive of all outpatient mental health
services. We refer readers to the April 7, 2000 OPPS final rule with
comment period (65 FR 18452 through 18455) for the initial discussion
of this longstanding policy and the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74168) for more recent background.
Specifically, in the CY 2015 OPPS/ASC proposed rule (79 FR 40955),
we proposed 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 also proposed to continue to set the
payment rate for APC 0034 at the same payment rate that we proposed 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 (79 FR 40955). 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.
We did not receive any public comments on this proposal. Therefore,
we are finalizing our CY 2015 proposal, without modification, to
continue our longstanding policy of limiting the aggregate payment for
specified less resource-intensive mental health services furnished on
the same date to a single beneficiary by a hospital to the payment rate
for APC 0176, which is the maximum partial hospitalization per diem
payment for a hospital for CY 2015.
(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

[[Page 66814]]

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 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).
In the CY 2015 OPPS/ASC proposed rule, for CY 2015, we proposed 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 (79 FR 40956). 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)
were 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 the CY 2015 OPPS/ASC 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 that proposed rule.
For the 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 of the proposed rule (79 FR 40956 through 40958) listed 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.
Comment: A few commenters expressed concern that the multiple
imaging composite APCs may undercompensate providers for imaging
procedures. These commenters recommended that CMS provide an analysis
of the effects of reductions in imaging payments due to the composite
APC policy on utilization. The commenters recommended that CMS provide
separate payment for each imaging procedure in light of reductions to
payment for imaging procedures.
Response: We continue to believe that our multiple imaging
composite policies reflect and promote the efficiencies hospitals can
achieve when performing multiple imaging procedures during a single
session, and some of those efficiencies result in lower payments due to
cost savings from furnishing multiple imaging services on the same
date. We will continue to monitor the multiple imaging composite APC
ratesetting methodology and the cost of providing imaging services. If
appropriate, we may report any information to the HOP Panel, or discuss
and propose changes to the multiple imaging composite APCs in
rulemaking in the future.
After consideration of the public comments received, we are
finalizing our proposal to continue the use of multiple imaging
composites without modification. We were able to identify approximately
661,000 million ``single session'' claims out of an estimated 1.68
million potential composite cases from our CY 2013 ratesetting claims
data, approximately 39 percent of all eligible claims, to calculate the
final CY 2015 geometric mean costs for the multiple imaging composite
APCs.
Table 9 below lists the HCPCS codes that will be subject to the
multiple imaging composite APC policy and their respective families and
approximate composite APC geometric mean costs for CY 2015.

Table 9--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 = $296
------------------------------------------------------------------------
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.

[[Page 66815]]

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 = $325
------------------------------------------------------------------------
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 = $548
------------------------------------------------------------------------
70487.................................. Ct maxillofacial w/dye.
70460.................................. Ct head/brain w/dye.
70470.................................. Ct head/brain w/o & w/dye.
70481.................................. Ct orbit/ear/fossa w/dye.
70482.................................. Ct orbit/ear/fossa w/o & w/dye.
70488.................................. Ct maxillofacial w/o & w/dye.
70491.................................. Ct soft tissue neck w/dye.
70492.................................. Ct sft tsue nck w/o & w/dye.
70496.................................. Ct angiography, head.
70498.................................. Ct angiography, neck.
71260.................................. Ct thorax w/dye.
71270.................................. Ct thorax w/o & w/dye.
71275.................................. Ct angiography, chest.
72126.................................. Ct neck spine w/dye.
72127.................................. Ct neck spine w/o & w/dye.
72129.................................. Ct chest spine w/dye.
72130.................................. Ct chest spine w/o & w/dye.
72132.................................. Ct lumbar spine w/dye.
72133.................................. Ct lumbar spine w/o & w/dye.
72191.................................. Ct angiograph pelv w/o & w/dye.
72193.................................. Ct pelvis w/dye.
72194.................................. Ct pelvis w/o & w/dye.
73201.................................. Ct upper extremity w/dye.
73202.................................. Ct uppr extremity w/o & w/dye.
73206.................................. Ct angio upr extrm w/o & w/dye.
73701.................................. Ct lower extremity w/dye.
73702.................................. Ct lwr extremity w/o & w/dye.
73706.................................. Ct angio lwr extr w/o & w/dye.
74160.................................. Ct abdomen w/dye.
74170.................................. Ct abdomen w/o & w/dye.
74175.................................. Ct angio abdom w/o & w/dye.
74262.................................. Ct colonography, w/dye.
75635.................................. Ct angio abdominal arteries.
74177.................................. Ct angio abd & pelv w/contrast.
74178.................................. Ct angio abd & pelv 1+ regns.
------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the
same session as a ``with contrast'' CT or CTA procedure, the I/OCE
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 = $631
------------------------------------------------------------------------
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.

[[Page 66816]]

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 = $945
------------------------------------------------------------------------
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.
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.

[[Page 66817]]

3. Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or 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 the CY 2015
OPPS/ASC proposed rule (79 FR 40958 through 40961), we proposed 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 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 proposed 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. 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
final rule with comment period. In the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74864), we discussed the comprehensive APC
policy, which we adopted, with modification, but delayed the
implementation of, until CY 2015. 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 final rule with comment period, we proposed
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 proposed to package in CY 2015 were
listed in Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR 40959).
Comment: A few commenters disagreed with the proposal to package
payment for the add-on codes listed in Table 9 of the proposed rule for
the following reasons:
Some commenters requested that CMS delay packaging the
device-dependent add-on codes remaining for CY 2015 while additional
data analysis is performed and refinements are adopted to ensure
accurate payment for the full range of add-on procedures, including
those not assigned to comprehensive APCs.
A few commenters suggested that add-on codes are separate
and distinct clinical procedures having unique, independent values
determined by the American Medical Association (AMA)

[[Page 66818]]

and, therefore, should not be treated as ancillary services.
Some commenters requested that CMS establish exceptions to
its proposal to package add-on codes for specific add-on procedures
with high cost supply items that commenters believed would be underpaid
under the policy and impede patient access to care.
Response: We disagree with the commenters that oppose packaging
these remaining add-on codes. We received similar public comments
during the CY 2014 rulemaking cycle and responded to those comments in
the CY 2014 OPPS/ASC final rule with comment period. Generally, we
disagree because add-on codes describe services that are integral,
ancillary, supportive, dependent, or adjunctive to the primary service.
In other words, add-on codes do not represent a stand-alone procedure
and are inclusive to other procedures performed at the same time. For a
full discussion of our response to these public comments, we refer
readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR
74942 through 74943).
We also disagree with commenters' assertion that add-on code
services are separate and distinct clinical procedures and should not
be treated as ancillary services. We received a similar public comment
last year where commenters suggested that procedures described by add-
on codes are not integral, ancillary, supportive, dependent, or
adjunctive to the primary service. As we noted previously (78 FR 74942
through 74943), the fundamental nature of an add-on code procedure is
that it typically describes some form of a related extension of or
addition to the primary procedure or service described by the primary
procedure. The definition of an add-on code is that it is an extension
of a primary, base service. CPT defines add-on codes as codes that
describe ``procedures [that] are commonly carried out in addition to
the primary procedure performed'' (2014 CPT Codebook Professional
Edition, page xiv). Further, CPT states that ``add-on codes describe
additional intra-service work associated with the primary procedure
(emphasis added) (2014 CPT Codebook Professional Edition, page xiv). We
also disagree with commenters that some add-on codes are not related to
the primary procedure but represent a separate procedure that should be
paid separately from the primary procedure. If such procedures were in
fact separate procedures, they would not be described by an add-on
code. Thus, we believe that add-on code procedures are not always
separate and distinct clinical procedures, but rather are related
extensions, supportive, integral, or adjunctive of the primary
procedure and, therefore, it is appropriate to package the cost of the
add-on codes into the payment calculation for the primary procedure.
Finally, in response to commenters who requested that CMS establish
exceptions to its proposal for add-on code with high cost supply items,
we are allowing certain add-on codes to be evaluated for a complexity
adjustment when billed with a comprehensive APC primary procedure. We
refer readers to section II.A.2.e. of this final rule with comment
period for further discussion of that policy. We see no reason to grant
exceptions to the add-on code packaging policy to specifically account
for add-on procedures with high cost supply items, as any associated
costs are accounted for in the payment for the primary procedure. The
only reason we did not package the add-on codes listed in Table 9 of
the proposed rule was that implementation of the comprehensive APC
policy was delayed for 1 year (78 FR 74943). Because the comprehensive
APC policy will be implemented in CY 2015, we are packaging these
remaining add-on codes.
After consideration of the public comments we received, we are
finalizing our proposal 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, as listed in Table 9 of
the CY 2015 OPPS/ASC proposed rule (79 FR 40959) and included in Table
10 below. The current device-dependent add-on codes that are separately
paid in CY 2014 that will be packaged in CY 2015 are included in Table
8 under section II.A.2.e. of this final rule with comment period, which
addresses the comprehensive APC policy.

Table 10--Add-On Codes Assigned to Device-Dependent APCS for CY 2014 That Are Packaged in CY 2015
----------------------------------------------------------------------------------------------------------------
CY 2015 add-on code Short descriptor
----------------------------------------------------------------------------------------------------------------
19297........................................ Place breast cath for rad.
33225........................................ L ventric pacing lead add-on.
37222........................................ Iliac revasc add-on.
37223........................................ Iliac revasc w/stent add-on.
37232........................................ Tib/per revasc add-on.
37233........................................ Tibper revasc w/ather add-on.
37234........................................ Revsc opn/prq tib/pero stent.
37235........................................ Tib/per revasc stnt & ather.
37237........................................ Open/perq place stent ea add.
37239........................................ Open/perq place stent ea add.
49435........................................ Insert subq exten to ip cath.
92921........................................ Prq cardiac angio addl art.
92925........................................ Prq card angio/athrect addl.
92929........................................ Prq card stent w/angio addl.
92934........................................ Prq card stent/ath/angio.
92938........................................ Prq revasc byp graft addl.
92944........................................ Prq card revasc chronic addl.
92998........................................ Pul art balloon repr precut.
C9601........................................ Perc drug-el cor stent bran.
C9603........................................ Perc d-e cor stent ather br.
C9605........................................ Perc d-e cor revasc t cabg b.
C9608........................................ Perc d-e cor revasc chro add.
----------------------------------------------------------------------------------------------------------------

[[Page 66819]]

c. 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.''
As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through
40961), we reviewed all of the covered 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 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 final rule with comment
period, 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 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 the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through 40961),
we proposed to conditionally package certain ancillary services for CY
2015. Specifically, we proposed 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 limited 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 noted 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 HCPCS code G0463, which is
a single payment rate for clinic visits beginning in CY 2014, and had a
CY 2015 OPPS/ASC proposed rule geometric mean cost of approximately
$103. 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. An increase in the geometric mean cost of
any of the proposed APCs to above $100 in future years would not change
the conditionally packaged status of services assigned to the APCs
selected in CY 2015 in a future year. We would continue to consider
these APCs to be conditionally packaged. However, we would review the
conditionally packaged status of ancillary services annually.
We proposed to exclude certain services from this packaging policy
even though they are assigned to APCs with a geometric mean cost of
less than or equal to $100. Preventive services will continue to be
paid separately, and include the following services listed in Table 11
below that would otherwise be packaged under this policy.

Table 11--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/ 0260
peripheral.
G0117.......................... Glaucoma scrn hgh risk 0260
direc.
G0118.......................... Glaucoma scrn hgh risk 0230
direc.
G0130.......................... Single energy x-ray 0230
study.
G0389.......................... Ultrasound exam aaa 0265
screen.
G0404.......................... Ekg tracing for initial 0450
prev.
Q0091.......................... Obtaining screen pap 0450
smear.
------------------------------------------------------------------------

In addition, we did not propose to package certain psychiatry and
counseling-related services as we see similarities to a visit and, at
the time of issuance of the CY 2015 OPPS/ASC proposed rule, did not
consider them to be ancillary services. We also did not propose 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 proposed to delete status indicator ``X'' (Ancillary
Services) because the majority of the services assigned to status
indicator ``X'' were proposed to be assigned to status indicator ``Q1''
(STV-Packaged Codes). For the services that are currently

[[Page 66820]]

assigned status indicator ``X'' that were not proposed to be
conditionally packaged under this policy, we proposed to 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
proposed for conditional packaging as ancillary services in CY 2015
were listed in Table 11 of the CY 2015 OPPS/ASC proposed rule (79 FR
40960 through 40961).
The HCPCS codes that we proposed to conditionally package as
ancillary services for CY 2015 were displayed in Addendum B to the CY
2015 OPPS/ASC proposed rule (which is available via the Internet on the
CMS Web site). 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 proposed 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.
Comment: A number of commenters, which included hospital
associations, health systems, and individual hospitals, supported
conditionally packaging ancillary services with a geometric mean cost
of $100 prior to application of the ``Q1'' status indicator.
Response: We appreciate the commenters' support.
Comment: A few commenters expressed concern that conditionally
packaging ancillary services would disproportionately affect teaching
hospitals because of the types of patients these hospitals serve and
the types of services that they typically provide. One commenter
submitted results from its data analysis that estimated major teaching
hospitals will lose approximately -0.4 percent on average as a result
of this packaging proposal, compared to nonteaching hospitals, which
would gain approximately 0.2 percent. The commenter's concern was that
the negative impact is a direct result of academic medical centers'
caring for unique and complex patient populations, for example, trauma
patients who are seen in teaching hospital emergency departments. The
commenter's analysis suggested that a large proportion of certain APCs
listed on Table 11 of the proposed rule (APCs 0012, 0099, 0260, 0261,
0340, and 0420) are packaged into emergency department visits and
related services.
Response: Conditional packaging of ancillary services results in
packaging of these services when provided with other primary services
and separate payment for the services when they are performed alone. It
is possible that, as the commenter asserted, the case-mix at teaching
hospitals results in greater packaging of ancillary services than at
nonteaching hospitals. This may be due to teaching hospitals being more
likely to provide services in addition to the ancillary service, which
would result in packaging of the ancillary service into the other
primary service or services provided to the patient. Even if the
commenter's observation is reflective of a difference between teaching
and nonteaching hospitals, we do not believe that such an observation
is a sufficient reason to not package ancillary services in the OPPS.
Packaging is a fundamental element of a prospective payment system. As
stated above, in the OPPS, we packaged items and services that are
typically integral, ancillary, supportive, dependent, or adjunctive to
a primary service. We believe that the ancillary services proposed for
conditional packaging are ancillary when provided with other primary
services and, therefore, are appropriately conditionally packaged in
the OPPS. As for the impact of the CY 2015 OPPS policies on teaching
hospitals, we refer the commenter to the impact table (Table 49) in
section XXI. of this final rule with comment period, which shows that
teaching hospitals will receive an overall 2.3 percent payment update
compared to a 2.0 percent payment update for nonteaching hospitals.
Therefore, overall teaching hospitals stand to benefit more than
nonteaching hospitals from the policies adopted in this final rule with
comment period, despite any relative negative impacts from the
ancillary packaging policy.
Comment: Several commenters requested clarification of the
methodology used to identify APCs with a geometric mean cost less than
or equal to $100 prior to application of the ``Q1'' status indicator,
given that the geometric mean cost of some of the APCs listed in Table
11 of the proposed rule exceeds $100. Also, commenters requested that
the $100 threshold be held constant for future years or updated
annually based on inflation akin to the drug threshold methodology.
Response: As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR
40960), the ancillary services APCs proposed for conditional packaging
were those with a geometric mean cost of less than or equal to $100
prior to application of the ``Q1'' status indicator to the APC. In
other words, it was ancillary service APCs with a geometric mean cost
of $100 or less with all of the services assigned to the APC that had
either status indicator ``X'' or ``S.'' Once status indicator ``Q1''
was assigned, some of the geometric mean costs of some of the APCs
increased to above $100 due to conditional packaging according to the
``Q1'' status indicator logic. We remind the commenters that the APCs
listed in Table 11 of the proposed rule (79 FR 40960 through 40961)
displayed the APC geometric mean costs after application of the ``Q1''
status indicator, which resulted in some of the APC geometric mean
costs that were below $100 prior to application of the ``Q1'' status
indicator to exceed $100 after application of the ``Q1'' status
indicator. We also clarify that the $100 geometric mean cost initial
selection criteria for this packaging policy is not a threshold above
which ancillary services will not be conditionally packaged. As we
stated in the CY 2015 OPPS/ASC proposed rule, ``[the $100 limit] 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'' (79 FR
40960). As we stated in the proposed rule, in future years, we may
package additional ancillary services in APCs with a geometric mean
cost (prior to the application of the conditional packaging status
indicator) that exceeds $100.
Comment: One commenter expressed concern regarding the composition
of APC 0077 (Level I Pulmonary Treatment), which was proposed to be
conditionally packaged. The commenter believed that HCPCS code G0424
(Pulmonary rehabilitation, including exercise (includes monitoring),
one hour, per session, up to two sessions per day) is not clinically
similar to HCPCS code G0237 (Therapeutic procedures to increase
strength or endurance of respiratory muscles, face to face, one on one,
each 15 minutes (includes monitoring) and HCPCS code G0238 (Therapeutic
procedures to improve respiratory function, other than described by
G0237, one on one, face to face, per 15 minutes (includes monitoring),
which also are assigned to APC 0077. In addition, the commenter stated
that the assignment of HCPCS code G0424 to APC 0077 would create a 2
times rule violation. The commenter recommended that CMS reassign HCPCS
code G0424 to APC 0078 (Level II Pulmonary Treatment).
Response: We disagree with the commenter's assertion that the
assignment of HCPCS code G0424 to

[[Page 66821]]

APC 0077 would create a 2 times rule violation. Section 1833(t)(9) of
the Act requires that we annually review all the items and services
within an APC group and revise the APC structures accordingly. Included
in this review is the identification of any 2 times rule violations as
provided under section 1833(t)(2) of the Act and, to the extent
possible, rectification of these violations. We review our claims data
and determine whether we need to make changes to the current APC
assignment for the following year. For HCPCS codes G0238 and G0424, we
evaluated their APC assignment for the CY 2015 update and determined
that APC 0340 (Level II Minor Procedures) is the more appropriate
assignment for these services based on resource similarity to the other
services assigned to APC 0340. In addition, with the reassignment of
HCPCS codes G0424 and G0238 to APC 0340, only four HCPCS codes (31270,
94668, 94669, and G0237) remained in APC 0077, one (HCPCS code 94669)
of which did not have any claims volume in CY 2013. The commenter
suggested that we reassign HCPCS code G0424 to APC 0078. APC 0078 has a
mean cost of approximately $90, which is under the $100 initial
selection criteria for conditionally packaged ancillary services. With
the reduced size of APC 0077 and the mean cost of APC 0078 being less
than $100, we are reassigning the procedure codes remaining in APC 0078
to APC 0077 and revising the title of APC 0077 to read ``Pulmonary
Treatment.'' The new combined APC 0077 is assigned status indicator
``Q1'' under the conditional packaging policy. We note that the mean
cost of this revised APC 0077 (after application of the ``Q1'' status
indicator) is approximately $154.
Comment: One commenter requested that CMS continue separate
payment, by assigning status indicator ``S,'' for CPT codes 92557
(comprehensive hearing test), 92601 through 92604 (cochlear implant
programming), and 92640 (auditory brainstem implant programming) which
are assigned to APC 0364, an APC that is proposed for conditional
packaging. The commenter stated that these CPT codes are primary
audiology services and are not dependent or incident to other services
in the hospital.
Response: We do not believe that it is necessary to change the
status indicator to ``S'' as we disagree that these CPT codes represent
primary audiology services. Conditional packaging provides separate
payment when the otherwise packaged services are provided alone without
other primary services. Therefore, these services will continue to be
separately paid when performed without other primary services.
Comment: Some commenters expressed concern that packaging payment
for ancillary services could have a negative impact on patient access
because hospitals will not have an incentive to perform ancillary
services at the time of other therapeutic or evaluation/management
services, even when providing such services at the same encounter would
be efficient and offer patients the most appropriate and complete care.
Commenters cautioned that expanded packaging policies will impede the
accuracy and stability of future ratesetting under the OPPS.
Response: We appreciate stakeholders' concerns and predictions
about the effect that this conditional packaging policy may have on
patient access to ancillary services. We will continue to monitor
service utilization trends in the HOPD. We disagree with commenters
that packaging services impedes the accuracy and stability of future
OPPS ratesetting. As a reminder, hospitals include HCPCS codes and
charges for packaged services on their claims, and the costs associated
with those packaged services are included in the costs of the
separately payable procedure on the claim. We also continue to
emphasize that hospitals should report all HCPCS codes for all
services, including those for packaged services, according to correct
coding principles.
Comment: One commenter disagreed with the proposed assignment of
status indicator ``Q1'' to CPT code 95012 (Expired nitric oxide gas
determination). The commenter requested that CMS assign status
indicator ``S'' to CPT code 95012 because the code describes an
independent, primary procedure that is not ancillary to any other
procedure. The commenter also requested that CMS reassign CPT code
95012 to APC 0078 (Level II Pulmonary Treatment) because of its
clinical homogeneity to other services assigned to that APC.
Response: We disagree with the commenter. We believe the procedure
or service described by CPT code 95012 to be an ancillary diagnostic
test and, therefore, appropriate for conditional packaging under the
ancillary services policy. We believe that existing assignment to APC
0340 (Level II Minor Procedures) is appropriate in that CPT code 95012
is a minor test and that its mean cost of approximately $41 is similar
to the mean cost of APC 0340 of approximately $53. Therefore, we are
finalizing our proposal to maintain assignment of CPT code 95012 to APC
0340 with a ``Q1'' status indicator for CY 2015.
Comment: A few commenters requested that CMS make an exception to
the ancillary packaging policy for pathology services, specifically
those services assigned to APC 0342 (Level I Pathology) and APC 0433
(Level II Pathology). These commenters were concerned about inadequate
payment for pathology services.
Response: We disagree with commenters' concern regarding inadequate
payment for pathology services and do not believe that an exception to
this packaging policy for the pathology services assigned to APCs 0342
and 0433 is appropriate at this time. We remind the commenters that
this policy only affects the facility payment for the technical aspect
of the services and does not affect the physician fee schedule payment
to the pathologist for the physician work in performing pathology
services. We believe that pathology services are some of the best
examples of ancillary services as they typically follow a surgical or
other specimen-generating procedure for the purposes of diagnosis. We
also remind the commenters that in the event a patient receives a
pathology test in isolation from other primary HOPD services, the test
would be separately paid because the ancillary services packaging
policy is a conditional packaging policy. Therefore, we are not
creating an exception to this ancillary packaging policy for pathology
services.
After consideration of the public comments we received, we are
finalizing our ancillary services packaging policy as proposed,
including deletion of status indicator ``X.'' We also are adopting as
final our proposed revision of 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 final packaging
policy for CY 2015.
The APCs that we are conditionally packaging as ancillary services
in CY 2015 are listed in Table 12 below.

[[Page 66822]]

Table 12--APCs for Conditionally Packaged Ancillary Services for CY 2015
----------------------------------------------------------------------------------------------------------------
CY 2015 OPPS Geometric
mean cost (with Final CY 2015 OPPS
APC application of Q1 status SI Group title
indicator)
----------------------------------------------------------------------------------------------------------------
0012............................... $102.18 Q1 Level I Debridement &
Destruction.
0060............................... 20.57 Q1 Manipulation Therapy.
0077............................... 170.77 Q1 Level I Pulmonary
Treatment.
0099............................... 81.40 Q1 Electrocardiograms/
Cardiography.
0215............................... 98.52 Q1 Level I Nerve and Muscle
Services.
0230............................... 54.01 Q1 Level I Eye Tests &
Treatments.
0260............................... 61.59 Q1 Level I Plain Film
Including Bone Density
Measurement.
0261............................... 98.56 Q1 Level II Plain Film
Including Bone Density
Measurement.
0265............................... 95.12 Q1 Level I Diagnostic and
Screening Ultrasound.
0340............................... 54.33 Q1 Level II Minor Procedures.
0342............................... 56.31 Q1 Level I Pathology.
0345............................... 78.91 Q1 Level I Transfusion
Laboratory Procedures.
0364............................... 44.94 Q1 Level I Audiometry.
0365............................... 122.36 Q1 Level II Audiometry.
0367............................... 167.31 Q1 Level I Pulmonary Tests.
0420............................... 136.66 Q1 Level III Minor Procedures.
0433............................... 190.55 Q1 Level II Pathology.
0450............................... 30.33 Q1 Level I Minor Procedures.
0624............................... 81.76 Q1 Phlebotomy and Minor
Vascular Access Device
Procedures.
0690............................... 36.47 Q1 Level I Electronic Analysis
of Devices.
0698............................... 104.61 Q1 Level II Eye Tests &
Treatments.
----------------------------------------------------------------------------------------------------------------

The HCPCS codes that we are conditionally package as ancillary
services for CY 2015 are displayed in Addendum B to this CY 2015 OPPS/
ASC final rule with comment period (which is available via the Internet
on the CMS Web site). The supporting documents for this final rule with
comment period are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
(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, as we
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40961), 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 we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40961)
and 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), in the CY 2015 OPPS/ASC proposed rule (79
FR 40961), we proposed 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 proposed to delete ``prosthetic supplies'' from the
regulations at Sec. 419.22(j) because we proposed 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 proposed to

[[Page 66823]]

package for CY 2015 were displayed in Addendum B to the CY 2015 OPPS/
ASC proposed rule (which is available via the Internet on the CMS Web
site). The supporting documents for the proposed rule, including but
not limited to Addendum B, are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Comment: Many commenters agreed with CMS' proposal to conditionally
package prosthetic supplies furnished in the HOPD.
Response: We appreciate the commenters' support.
Comment: A few commenters requested to be informed of the fund
transfer amount from the DMEPOS Fee Schedule to the OPPS as a result of
this proposed policy.
Response: Our CY 2013 claims analysis shows that packaging payment
for prosthetic supplies under the OPPS would redistribute approximately
$1 million.
Comment: Some commenters recommended that CMS implement an
exception to the ``unbundling'' rule that currently exists for the
inpatient prospective payment systems (IPPS). (We refer readers to the
Medicare Claims Processing Manual, Pub. 100-04, Chapter 20--Durable
Medical Equipment, Prosthetics, Orthotic Devices, and Supplies, Section
110--General Billing Requirements--for DME, Prosthetics, Orthotic
Devices, and Supplies.) The commenters believed that such an exception
would allow DME suppliers to bill Medicare directly for prosthetic
supplies furnished to patients during an outpatient visit when the
supplies are intended primarily for home use.
Response: We do not believe that an additional exception to the
``unbundling'' rule is necessary for the provision of prosthetic
supplies in the HOPD. We remind commenters that DME, prosthetics, and
orthotics can be billed by hospitals for outpatients and are paid
according to the DMEPOS Fee Schedule. Only prosthetic supplies are
packaged in the OPPS. Unlike inpatient stays, hospital outpatient stays
are typically brief and the need for replacement supplies during a
hospital outpatient stay should be minimal. If a hospital wants to
provide a patient with some basic supplies for immediate home use (for
example, tape, a syringe, or gauze), such supplies are packaged into
the payment for whatever service the patient received at the hospital.
DME suppliers can furnish additional or replacement prosthetic supplies
to the patient's home and receive payment under the DMEPOS Fee
Schedule.
After consideration of the public comments we received, we are
adopting as final our proposed deletion of ``prosthetic supplies'' from
the regulations at Sec. 419.22(j) because prosthetic supplies are
packaged covered OPD services in the OPPS for CY 2015. Prosthetic
supplies provided in the HOPD will be included in the packaged category
of ``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 packaging for CY 2015 are
displayed in Addendum B to this CY 2015 OPPS/ASC final rule with
comment period (which is available via Internet on the CMS Web site).
The supporting documents for this final rule with comment period,
including but not limited to Addendum B, are available at the CMS Web
site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
4. Calculation of OPPS Scaled Payment Weights
In the CY 2015 OPPS/ASC proposed rule (79 FR 40961 through 40962),
for CY 2015, we proposed to calculate the relative payment weights for
each APC shown in Addenda A and B to the 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 the 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 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 proposed 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 the CY
2015 OPPS/ASC proposed rule (79 FR 41008). For CY 2015, we proposed to
continue this policy to maintain consistency in calculating unscaled
weights that represent the cost of some of the most frequently provided
services. We proposed 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 proposed 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.
We did not receive any public comments on our proposed policy for
the CY 2015 unscaled relative payment weights. Therefore, we are
finalizing our proposed policy to maintain consistency in calculating
unscaled weights that represent the cost of some of the most frequently
provided services by assigning APC 0634 a relative payment weight of
1.00 and dividing the geometric mean cost of each APC by the geometric
mean cost for APC 0634 to derive the unscaled relative payment weight
for each APC for CY 2015.
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
proposed to apply the same process using the CY 2015 unscaled relative
payment weights rather than scaled relative payment weights. We
proposed to calculate the weight scaler by dividing the CY 2014
estimated aggregate weight by the CY 2015 estimated aggregate weight
(79 FR

[[Page 66824]]

40962). 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. Click on the CY 2015 OPPS
final rule link, then open the claims accounting document link at the
bottom of the page.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40962), we proposed 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 proposed to adjust 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 final rule with
comment period) is included in the budget neutrality calculations for
the CY 2015 OPPS.
Comment: One commenter expressed concern that CMS did not provide
detailed data on the weight scaling process. The commenter noted that
it could not find the claims accounting document to which the proposed
rule referenced.
Response: The direct link to the proposed rule claims accounting
document is located on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/CMS-1613-P-claims-accounting-narrative.pdf.
After consideration of the public comments we received, we are
finalizing our proposed methodology for calculating the OPPS scaled
relative payment weights without modification, including updating of
the budget neutrality scaler for this final rule with comment period.
Under this methodology, the final unscaled relative payment weights
were adjusted by a weight scaler of 1.2977 for this final rule with
comment period. The CY 2015 unscaled relative payment weights listed in
Addenda A and B to this final rule with comment period (which are
available via the Internet on the CMS Web site) incorporate the
recalibration adjustments discussed in sections II.A.1. and II.A.2. of
this final rule with comment period.

B. Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the hospital inpatient market
basket percentage increase applicable to hospital discharges under
section 1886(b)(3)(B)(iii) of the Act. In the FY 2015 IPPS/LTCH PPS
final rule (79 FR 49994), consistent with current law, based on IHS
Global Insight, Inc.'s second quarter 2014 forecast of the FY 2015
market basket increase, the FY 2015 IPPS market basket update is 2.9
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 final rule
(79 FR 49994), we discussed the calculation of the MFP adjustment for
FY 2015, which is 0.5 percentage point.
As we proposed, based on more recent data that became subsequently
available after the publication of the CY 2015 OPPS/ASC proposed rule
(for example, a more recent estimate of the market basket increase and
the MFP adjustment), we are using such updated data, if appropriate, to
determine the CY 2015 market basket update and the MFP adjustment,
components in calculating the OPD fee schedule increase factor under
sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in this CY
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, as we proposed, we
are applying 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 finalizing an OPD fee schedule increase factor of 2.2
percent for the CY 2015 OPPS (which is 2.9 percent, the estimate of the
hospital inpatient market basket percentage increase, less the 0.5
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

[[Page 66825]]

their services, as required by section 1833(t)(17) of the Act. For
further discussion of the Hospital OQR Program, we refer readers to
section XIII. of this final rule with comment period.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40963), we proposed 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.
We did not receive any public comments on our proposed adjustments
to the OPD fee schedule increase factor or the proposed amendment to
Sec. 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. Therefore, for the
reasons discussed above, we are adjusting the OPD fee schedule increase
factor for CY 2015 as proposed. We also are finalizing the amendment to
Sec. 419.32(b)(1)(iv)(B) as proposed.
To set the OPPS conversion factor for CY 2015, we proposed 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 further adjusted
the conversion factor for CY 2015 to ensure that any revisions made to
the wage index and rural adjustment were made on a budget neutral
basis. We proposed a calculated overall budget neutrality factor of
0.9998 for wage index changes by comparing total estimated payments
from our simulation model using the 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 proposed to maintain current rural adjustment
policy, as discussed in section II.E. of this final rule with comment
period. Therefore, the budget neutrality factor for the rural
adjustment would be 1.0000.
For CY 2015, we proposed to continue previously established
policies for implementing the cancer hospital payment adjustment
described in section 1833(t)(18) of the Act, as discussed in section
II.F. of this final rule with comment period. We calculated 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 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
CY 2015 cancer hospital payment adjustment are identical to estimated
payments applying the CY 2014 final cancer hospital payment adjustment.
Therefore, we applied a budget neutrality adjustment factor of 1.0000
to the conversion factor for the cancer hospital payment adjustment.
For the proposed rule, we estimated that pass-through spending for
drugs, biologicals, and devices for CY 2015 would equal approximately
$15.5 million, which represented 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.
For the proposed rule, we proposed that hospitals that fail to meet
the reporting requirements of the Hospital OQR Program would continue
to be subject to a further reduction of 2.0 percentage points to the
OPD fee schedule increase factor. For hospitals that fail to meet the
requirements of the Hospital OQR Program, we would make all other
adjustments discussed above, but use a reduced OPD fee schedule update
factor of 0.2 percent (that is, the OPD fee schedule increase factor of
2.1 percent further reduced by 2.0 percentage points). This resulted 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).
Comment: MedPAC noted that CMS is required by law to implement the
2015 update to the conversion factor as stated in the Affordable Care
Act. In its March 2014 Report to Congress, MedPAC recommended an update
of 3.25 percent and Congressional action to direct the Secretary to
reduce or eliminate differences in payment rates between HOPDs and
physician offices, which is different from the Affordable Care Act
requirement.
Response: As discussed above, 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. Section
1833(t)(3)(C)(iv) provides that the OPD fee schedule increase factor,
subject to sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the Act, is
equal to the hospital inpatient market basket percentage increase
applicable to hospital discharges under section 1886(b)(3)(B)(iii) of
the Act.
After consideration of the public comment we received, we are
finalizing the calculation of the CY 2015 OPPS conversion factor as
proposed. We are finalizing the proposed amendment to 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 using a reduced
conversion factor of $72.661 in the calculation of payments for
hospitals that fail to meet the Hospital OQR Program requirements (a
difference of -$1.483 in the conversion factor relative to hospitals
that met the requirements).
For CY 2015, we are finalizing our proposal 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 final rule with comment period.
For this final rule with comment period, we estimate that pass-
through spending for drugs, biologicals, and devices for CY 2015 will
equal approximately $82.8 million, which represents 0.15 percent of
total projected CY 2015 OPPS spending. Therefore, the conversion factor
is also adjusted by the difference between the 0.02 percent estimate of
pass-through spending for CY 2014 and the 0.15 percent estimate of
pass-through spending for CY 2015, resulting in an adjustment for CY
2015 of -0.13 percent. Finally, estimated payments for outliers remain
at 1.0 percent of total OPPS payments for CY 2015.
As a result of these final policies, the OPD fee schedule increase
factor for the CY 2015 OPPS is 2.2 percent (which is 2.9 percent, the
estimate of the hospital inpatient market basket percentage increase,
less the 0.5 percentage point MFP adjustment, and less the 0.2
percentage point additional adjustment). For CY 2015, we are using a
conversion factor of $74.144 in the calculation of the national
unadjusted payment rates for those items and services for which payment
rates are calculated using geometric mean costs, that is the OPD fee
schedule increase factor of 2.2 percent for CY 2015, the required wage
index budget neutrality adjustment of

[[Page 66826]]

approximately 0.9996, the cancer hospital payment adjustment of 1.0000,
and the adjustment of -0.13 percent of projected OPPS spending for the
difference in the pass-through spending result in a conversion factor
for CY 2015 of $74.144.

C. Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to
``determine a wage adjustment factor to adjust the portion of payment
and coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions
in a budget neutral manner'' (codified at 42 CFR 419.43(a)). This
portion of the OPPS payment rate is called the OPPS labor-related
share. Budget neutrality is discussed in section II.B. of this final
rule with comment period.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, approximately 60 percent of
the costs of services paid under the OPPS were attributable to wage
costs. We confirmed that this labor-related share for outpatient
services is appropriate during our regression analysis for the payment
adjustment for rural hospitals in the CY 2006 OPPS final rule with
comment period (70 FR 68553). Therefore, in the CY 2015 OPPS/ASC
proposed rule (79 FR 40964), we proposed to continue this policy for
the CY 2015 OPPS. We refer readers to section II.H. of this final rule
with comment period for a description and example of how the wage index
for a particular hospital is used to determine payment for the
hospital.
As discussed in section II.A.2.c. of this final rule with comment
period, for estimating APC costs, we standardize 60 percent of
estimated claims costs for geographic area wage variation using the
same 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. Therefore, the wage index that
applies to a particular acute care short-stay hospital under the IPPS
also applies to that hospital under the OPPS. As initially explained in
the September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that
using the IPPS wage index as the source of an adjustment factor for the
OPPS is reasonable and logical, given the inseparable, subordinate
status of the HOPD within the hospital overall. In accordance with
section 1886(d)(3)(E) of the Act, the IPPS wage index is updated
annually.
The Affordable Care Act contained several provisions affecting the
wage index. These provisions were discussed in the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74191). 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. In
the CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed 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
multicampus hospital systems, we proposed that the HOPD would receive a
wage index based on the geographic location of the specific inpatient
hospital with which it is associated. Therefore, if the associated
hospital is located in a frontier State, the wage index adjustment
applicable for the hospital also will apply for the affiliated HOPD. We
refer readers to the following sections in the FY 2011 through FY 2015
IPPS/LTCH PPS final rules for discussions regarding this provision,
including our methodology for identifying which areas meet the
definition of ``frontier States'' as provided for in section
1886(d)(3)(E)(iii)(II) of the Act: For FY 2011, 75 FR 50160 through
50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR
53369 through 53370; for FY 2014, 78 FR 50590 through 50591; and for FY
2015, 79 FR 49971.
In addition to the changes required by the Affordable Care Act, we
note that the 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 and final rule
(79 FR 28054 through 28084 and 79 FR 49950 through 49991, respectively)
for a detailed discussion of all changes to the FY 2015 IPPS wage
indexes. 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 and final
rule (79 FR 28054 through 28055 and 79 FR 49951 through 49957,
respectively), 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 the 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 and the final
changes based on the new OMB delineations in the FY 2015 IPPS/LTCH PPS
final rule at 79 FR 49950 through 49966.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to
use the 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

[[Page 66827]]

refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49850) and
the final FY 2015 hospital wage index files posted on the CMS Web
site.) We note that the final FY 2015 IPPS wage indexes reflect a
number of changes as a result of the new OMB delineations as well as a
1-year extension of the imputed rural floor. We proposed that 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 adjustments, including
the adjustments related to the new OMB delineations, that were
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 did not
propose to change our existing 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
proposed to adopt the final wage index changes from the FY 2015 IPPS/
LTCH PPS final rule for these hospitals. The following is a brief
summary of the major changes in the FY 2015 IPPS wage indexes and any
adjustments that we proposed to apply to these hospitals under the OPPS
for CY 2015. We refer the reader to the FY 2015 IPPS/LTCH PPS final
rule (79 FR 49950 through 49991) for a detailed discussion of the
changes to the wage indexes.
For CY 2015, we proposed to continue our policy of allowing non-
IPPS hospitals paid under the OPPS to qualify for the out-migration
adjustment if they are located in a section 505 out-migration county
(section 505 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173)). We stated in the
proposed rule that 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 would be eligible for the out-migration wage
adjustment if they are located in a section 505 out-migration county.
This is the same out-migration adjustment policy that would apply if
the hospital were paid under the IPPS. Table 4J from the FY 2015 IPPS/
LTCH PPS final 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 will 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 final rule as Addendum L to this final rule with
comment period 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. In
the FY 2015 IPPS/LTCH PPS final rule, we finalized the adoption of the
new OMB delineations. For IPPS wage index purposes, for hospitals that
are designated as rural under the new OMB labor market area
delineations that currently are located in urban CBSAs, we generally
assigned 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 and 79 FR 49957 through 49960). To be consistent,
we proposed to apply the same policy to hospitals paid under the OPPS
but not under the IPPS so that such hospitals will maintain the wage
index of the CBSA in which they are physically located for FY 2014 for
the next 3 calendar years. As stated in the CY 2015 OPPS/ASC proposed
rule (79 FR 40965), this proposed policy would impact six hospitals for
purposes of OPPS payment.
We believe that adopting the new OMB labor market area delineations
creates 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 final rule (79 FR 49960 through 49962), we finalized a 1-
year blended wage index for all hospitals that experience any decrease
in their actual payment wage index exclusively due to the
implementation of the new OMB delineations. Under this final IPPS
policy, a post-reclassified wage index with the rural and imputed
floors applied is 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 is
computed based on the hospital's new FY 2015 CBSA (that is, the FY 2015
constituent county/ies). We then compare these two wage indexes. If the
FY 2015 wage index with FY 2015 CBSAs is lower than the FY 2015 wage
index with FY 2014 CBSAs, we compute a blended wage index consisting of
50 percent of each of the two wage indexes added together. This blended
wage index will be the IPPS hospital's wage index for FY 2015. In the
CY 2015 OPPS/ASC proposed rule, for purposes of the OPPS, we proposed
to apply this 50-percent transition blend to hospitals paid under the
OPPS but not under the IPPS. We stated that we believe a 1-year, 50/50
blended wage index would mitigate the short-term instability and
negative payment impacts due to the 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 are continuing the extension
of the imputed floor policy (both the original methodology and
alternative methodology) for another year, through September 30, 2015
(79 FR 49969 through 49971). For purposes of the CY 2015 OPPS, we also
proposed to apply the imputed floor policy to hospitals paid under the
OPPS but not under the IPPS.
For CMHCs, we proposed to continue to calculate the wage index by
using the post-reclassification IPPS wage index based on the CBSA where
the CMHC is located. As with OPPS hospitals and for the same reasons,
we proposed 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 are designated as rural under the
new OMB labor market area delineations, we proposed to maintain the
urban wage index value of the CBSA in which they are physically located
for

[[Page 66828]]

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 out-migration wage adjustment table
(Addendum L to this final rule with comment period, 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 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 final FY 2015
IPPS wage index tables.
Comment: One commenter suggested that the IPPS rural floor should
utilize State-specific budget neutrality rather than national budget
neutrality to prevent it from being susceptible to gaming by hospitals.
The commenter suggested that, under the current policy, an urban
hospital can reclassify to rural status to improve the rural wage index
in the State, which in some cases is used as a floor for urban
hospitals.
Response: As we stated in the FY 2015 IPPS/LTCH PPS final rule (79
FR 50370), section 3141 of Public Law 111-148 requires that a national
budget neutrality adjustment be applied in implementing the rural floor
policy under the IPPS. Therefore, absent a legislative change enacted
by Congress, we are unable to change the rural floor budget neutrality
adjustment from a national adjustment to a State-specific adjustment.
In this final rule with comment period, we are adopting the final
fiscal year IPPS wage index as the calendar year wage index for
adjusting the OPPS standard payment amounts for labor market
differences. We refer readers to the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50370 through 50372) for further discussion and a detailed
response to a similar comment.
After considering the public comment we received, we are finalizing
our proposals to use the FY 2015 IPPS final wage index as the CY 2015
wage index for OPPS hospitals and CMHCs, as discussed above and as set
forth in the CY 2015 OPPS/ASC proposed rule (79 FR 40963 through
40965), without modification.

D. Statewide Average Default CCRs

In addition to using CCRs to estimate costs from charges on claims
for ratesetting, CMS uses overall hospital-specific CCRs calculated
from the hospital's most recent cost report to determine outlier
payments, payments for pass-through devices, and monthly interim
transitional corridor payments under the OPPS during the PPS year. 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 the CY
2015 OPPS/ASC proposed rule (79 FR 40966), we proposed 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 proposed 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 CY 2015 OPPS relative payment weights.
Table 12 published in the proposed rule (79 FR 40966 through 40968)
listed the proposed CY 2015 default urban and rural CCRs by State and
compared them to the CY 2014 default CCRs. These proposed CCRs
represented the ratio of total costs to total charges for those cost
centers relevant to outpatient services from each hospital's most
recently submitted cost report, weighted by Medicare Part B charges. We
also proposed 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 proposed 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.
We did not receive any public comments on our CY 2015 proposal.
Therefore, we are finalizing our proposal, without modification, to
apply our standard methodology of calculating the statewide average
default CCRs using the same hospital overall CCRs that we used to
adjust charges to costs on claims data for setting the CY 2015 OPPS
relative payment weights. We used this methodology to calculate the
statewide average default CCRs listed in Table 13 below.
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 13 below lists the statewide average default CCRs for OPPS
services furnished on or after January 1, 2015.

[[Page 66829]]

Table 13--CY 2015 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
Previous
CY 2015 default default CCR (CY
State Urban/rural CCR 2014 OPPS final
rule)
----------------------------------------------------------------------------------------------------------------
ALABAMA...................................... RURAL.......................... 0.235 0.229
ALABAMA...................................... URBAN.......................... 0.186 0.188
ALASKA....................................... RURAL.......................... 0.439 0.473
ALASKA....................................... URBAN.......................... 0.294 0.302
ARIZONA...................................... RURAL.......................... 0.228 0.254
ARIZONA...................................... URBAN.......................... 0.181 0.182
ARKANSAS..................................... RURAL.......................... 0.262 0.244
ARKANSAS..................................... URBAN.......................... 0.239 0.220
CALIFORNIA................................... RURAL.......................... 0.178 0.190
CALIFORNIA................................... URBAN.......................... 0.196 0.206
COLORADO..................................... RURAL.......................... 0.410 0.393
COLORADO..................................... URBAN.......................... 0.219 0.221
CONNECTICUT.................................. RURAL.......................... 0.339 0.343
CONNECTICUT.................................. URBAN.......................... 0.273 0.276
DELAWARE..................................... URBAN.......................... 0.314 0.356
DISTRICT OF COLUMBIA......................... URBAN.......................... 0.299 0.279
FLORIDA...................................... RURAL.......................... 0.180 0.160
FLORIDA...................................... URBAN.......................... 0.156 0.160
GEORGIA...................................... RURAL.......................... 0.256 0.260
GEORGIA...................................... URBAN.......................... 0.211 0.205
HAWAII....................................... RURAL.......................... 0.337 0.345
HAWAII....................................... URBAN.......................... 0.307 0.298
IDAHO........................................ RURAL.......................... 0.353 0.359
IDAHO........................................ URBAN.......................... 0.463 0.478
ILLINOIS..................................... RURAL.......................... 0.252 0.252
ILLINOIS..................................... URBAN.......................... 0.217 0.222
INDIANA...................................... RURAL.......................... 0.334 0.326
INDIANA...................................... URBAN.......................... 0.262 0.288
IOWA......................................... RURAL.......................... 0.321 0.308
IOWA......................................... URBAN.......................... 0.269 0.266
KANSAS....................................... RURAL.......................... 0.300 0.313
KANSAS....................................... URBAN.......................... 0.231 0.239
KENTUCKY..................................... RURAL.......................... 0.231 0.221
KENTUCKY..................................... URBAN.......................... 0.212 0.225
LOUISIANA.................................... RURAL.......................... 0.272 0.257
LOUISIANA.................................... URBAN.......................... 0.209 0.222
MAINE........................................ RURAL.......................... 0.430 0.452
MAINE........................................ URBAN.......................... 0.432 0.438
MARYLAND..................................... RURAL.......................... 0.296 0.283
MARYLAND..................................... URBAN.......................... 0.244 0.248
MASSACHUSETTS................................ RURAL.......................... 0.326 0.395
MASSACHUSETTS................................ URBAN.......................... 0.333 0.336
MICHIGAN..................................... RURAL.......................... 0.371 0.341
MICHIGAN..................................... URBAN.......................... 0.320 0.322
MINNESOTA.................................... RURAL.......................... 0.485 0.462
MINNESOTA.................................... URBAN.......................... 0.347 0.349
MISSISSIPPI.................................. RURAL.......................... 0.247 0.233
MISSISSIPPI.................................. URBAN.......................... 0.181 0.200
MISSOURI..................................... RURAL.......................... 0.267 0.263
MISSOURI..................................... URBAN.......................... 0.274 0.280
MONTANA...................................... RURAL.......................... 0.501 0.481
MONTANA...................................... URBAN.......................... 0.386 0.384
NEBRASKA..................................... RURAL.......................... 0.290 0.323
NEBRASKA..................................... URBAN.......................... 0.255 0.243
NEVADA....................................... RURAL.......................... 0.241 0.220
NEVADA....................................... URBAN.......................... 0.149 0.154
NEW HAMPSHIRE................................ RURAL.......................... 0.362 0.326
NEW HAMPSHIRE................................ URBAN.......................... 0.280 0.287
NEW JERSEY................................... URBAN.......................... 0.202 0.213
NEW MEXICO................................... RURAL.......................... 0.296 0.291
NEW MEXICO................................... URBAN.......................... 0.294 0.304
NEW YORK..................................... RURAL.......................... 0.333 0.345
NEW YORK..................................... URBAN.......................... 0.340 0.351
NORTH CAROLINA............................... RURAL.......................... 0.280 0.258
NORTH CAROLINA............................... URBAN.......................... 0.246 0.256
NORTH DAKOTA................................. RURAL.......................... 0.660 0.661
NORTH DAKOTA................................. URBAN.......................... 0.395 0.400
OHIO......................................... RURAL.......................... 0.317 0.327

[[Page 66830]]

OHIO......................................... URBAN.......................... 0.222 0.232
OKLAHOMA..................................... RURAL.......................... 0.282 0.258
OKLAHOMA..................................... URBAN.......................... 0.203 0.205
OREGON....................................... RURAL.......................... 0.287 0.311
OREGON....................................... URBAN.......................... 0.352 0.357
PENNSYLVANIA................................. RURAL.......................... 0.283 0.257
PENNSYLVANIA................................. URBAN.......................... 0.197 0.198
PUERTO RICO.................................. URBAN.......................... 0.577 0.614
RHODE ISLAND................................. URBAN.......................... 0.297 0.295
SOUTH CAROLINA............................... RURAL.......................... 0.191 0.190
SOUTH CAROLINA............................... URBAN.......................... 0.207 0.203
SOUTH DAKOTA................................. RURAL.......................... 0.286 0.287
SOUTH DAKOTA................................. URBAN.......................... 0.214 0.219
TENNESSEE.................................... RURAL.......................... 0.203 0.207
TENNESSEE.................................... URBAN.......................... 0.188 0.190
TEXAS........................................ RURAL.......................... 0.251 0.235
TEXAS........................................ URBAN.......................... 0.203 0.197
UTAH......................................... RURAL.......................... 0.481 0.474
UTAH......................................... URBAN.......................... 0.335 0.334
VERMONT...................................... RURAL.......................... 0.439 0.456
VERMONT...................................... URBAN.......................... 0.353 0.397
VIRGINIA..................................... RURAL.......................... 0.219 0.226
VIRGINIA..................................... URBAN.......................... 0.241 0.238
WASHINGTON................................... RURAL.......................... 0.300 0.330
WASHINGTON................................... URBAN.......................... 0.330 0.360
WEST VIRGINIA................................ RURAL.......................... 0.312 0.283
WEST VIRGINIA................................ URBAN.......................... 0.300 0.319
WISCONSIN.................................... RURAL.......................... 0.328 0.344
WISCONSIN.................................... URBAN.......................... 0.294 0.291
WYOMING...................................... RURAL.......................... 0.429 0.400
WYOMING...................................... URBAN.......................... 0.262 0.269
----------------------------------------------------------------------------------------------------------------

E. 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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for the CY
2015 OPPS, we proposed 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.
Comment: Several commenters supported the proposed continuation of
the 7.1 percent rural SCH adjustment. Several commenters, including
MedPAC, also recommended that CMS update the analysis in the near
future to assess if the 7.1 percent payment adjustment remains a valid
figure.
Response: We appreciate the commenters' support. We agree that it
is appropriate to continue the 7.1 percent

[[Page 66831]]

adjustment for rural SCHs (including EACHs) as we proposed for CY 2015.
As we indicated in the proposed rule (79 FR 40968), we may reassess the
7.1 percent rural adjustment in the near future by examining
differences between urban hospitals' costs and rural hospitals' costs
using updated claims, cost reports, and provider information.
After consideration of the public comments we received, we are
finalizing our CY 2015 proposal 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. 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 OPPS payments to cancer and
children's hospitals based on their pre-BBA payment amount (often
referred to as ``held harmless'').
As required under section 1833(t)(7)(D)(ii) of the Act, a cancer
hospital receives the full amount of the difference between payments
for covered outpatient services under the OPPS and a ``pre-BBA
amount.'' That is, cancer hospitals are permanently held harmless to
their ``pre-BBA amount,'' 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 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. Payment Adjustment for Certain Cancer Hospitals for CY 2015
In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for CY 2015,
we proposed 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 were available at the time of the development of the 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 the 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 used 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

[[Page 66832]]

average, the OPPS payments to other hospitals furnishing services under
the OPPS were approximately 89 percent of reasonable cost (weighted
average PCR of 0.89). Therefore, we proposed that the payment amount
associated with the cancer hospital payment adjustment to be determined
at cost report settlement would be the additional payment needed to
result in a proposed target PCR equal to 0.89 for each cancer hospital.
Table 13 of the proposed rule (79 FR 40969) indicated the estimated
percentage increase in OPPS payments to each cancer hospital for CY
2015 due to the cancer hospital payment adjustment policy.
Comment: Several commenters noted that cancer hospitals have
significantly higher costs than other OPPS hospitals and agreed with
CMS' proposal to provide the proposed payment adjustment.
Response: We appreciate the commenters' support of our proposal. As
described in detail below, we performed the same analysis as in
previous years comparing the PCR for these cancer hospitals relative to
other OPPS hospitals. That study indicates that there is a difference
in PCRs between these hospital types. Accordingly, we are finalizing a
cancer hospital adjustment with a target PCR of 0.89 based on that
analysis.
After consideration of the public comments we received, we are
finalizing our proposal to establish the target PCR equal to 0.89 for
each cancer hospital. For this final rule with comment period, we have
rerun our calculations to determine the target PCR using the latest
available cost data and have determined that 0.89 is still the correct
target PCR. We limited the dataset to the hospitals with CY 2013 claims
data that we used to model the impact of the final CY 2015 APC relative
payment weights (3,808 hospitals). The cost report data for the
hospitals in this dataset were from cost report periods with fiscal
year ends ranging from 2011 to 2013. We removed the cost report data of
the 47 hospitals located in Puerto Rico from our dataset and also
removed the cost report data of 14 hospitals that had cost report data
that were not complete, leading to a final analytic file of 3,747
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 finalizing 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 target PCR equal to 0.89 for each cancer
hospital.
Table 14 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 14--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 15.5
Comprehensive Cancer
Center.
050660......................... USC Norris Cancer 22.0
Hospital.
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- 46.7
Kettering 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 60.1
Center.
500138......................... Seattle Cancer Care 53.9
Alliance.
------------------------------------------------------------------------

G. Hospital Outpatient Outlier Payments

1. Background
The OPPS provides outlier payments to hospitals to help mitigate
the financial risk associated with high-cost and complex procedures,
where a very costly service could present a hospital with significant
financial loss. As explained in the CY 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).

[[Page 66833]]

It has been our policy to report the actual amount of outlier
payments as a percent of total spending in the claims being used to
model the OPPS. Our 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 Mid-Session Review, is approximately 1.4 percent of the total
aggregated OPPS payments. Therefore, for CY 2013, we estimate that we
paid 0.4 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 0.8 percent of the total CY 2014 OPPS payments. The
difference between 0.8 percent and the 1.0 percent target is reflected
in the regulatory impact analysis in section XXII. of this final rule
with comment period. 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. Outlier Calculation
In the CY 2015 OPPS/ASC proposed rule (79 FR 40970), for CY 2015,
we proposed to continue our policy of estimating outlier payments to be
1.0 percent of the estimated aggregate total payments under the OPPS.
We proposed that a portion of that 1.0 percent, an amount equal to 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 the proposed rule,
for CMHCs, we proposed 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 the
proposed rule and this final rule with comment period.
To ensure that the estimated CY 2015 aggregate outlier payments
would equal 1.0 percent of estimated aggregate total payments under the
OPPS, we proposed that the hospital outlier threshold be set so that
outlier payments would be triggered when a hospital's cost of
furnishing a service exceeds 1.75 times the APC payment amount and
exceeds the APC payment amount plus $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 the
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 MACs and used by the OPPS
Pricer to pay claims. The claims that we use to model each OPPS update
lag by 2 years.
In order to estimate the CY 2015 hospital outlier payments for the
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) and
final rule (79 FR 50374). 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 proposed to apply the same CCR
inflation adjustment factor that we proposed 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 proposed 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) and finalized in the FY 2015 IPPS/LTCH PS final rule
(79 FR 50374).
To model hospital outlier payments for the 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 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 proposed 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 proposed to continue the
policy that we implemented in CY

[[Page 66834]]

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 final rule with comment period.
Comment: A few commenters suggested that CMS not increase the
outlier payment fixed dollar threshold from $2,900 to $3,100. One
commenter suggested that CMS maintain the CY 2014 fixed-dollar
threshold of $2,900, while another commenter suggested that CMS lower
the CY 2014 fixed-dollar threshold because CMS' projection of CY 2014
outlier payments in the proposed rule estimated that outlier payments
would be below the target of 1.0 percent of OPPS payments.
Response: We set the proposed CY 2015 outlier payment fixed-dollar
threshold at $3,100 so that projected outlier payments would equal 1.0
percent of total OPPS payments. We projected that CY 2014 outlier
payments would fall below the 1.0 percent target with the $2,900
threshold. However, we estimated that changes to recalibrate APCs and
other payment policy changes would result in outlier payments greater
than the 1.0 percent target in CY 2015 if we did not increase the
fixed-dollar threshold. As discussed below, based on the more recent
data available for this final rule with comment period, the CY 2015
outlier payment fixed-dollar threshold will be $2,775. When combined
with the multiple threshold of 1.75 times the APC payment rate, this
fixed-dollar threshold will allocate an estimated 1.0 percent of
projected total OPPS payments to outlier payments for CY 2015.
3. Final Outlier Calculation
Consistent with historical practice, we used updated data for this
final rule with comment period. For CY 2015, we are applying the
overall CCRs from the July 2014 OPSF file after adjustment (using the
CCR inflation adjustment factor of 0.9821 to approximate CY 2015 CCRs)
to charges on CY 2013 claims that were adjusted (using the charge
inflation factor of 1.1044 to approximate CY 2015 charges). These are
the same CCR adjustment and charge inflation factors that were used to
set the IPPS fixed-dollar threshold for the FY 2015 IPPS/LTCH PPS final
rule (79 FR 50379 through 50380). 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 will continue to be made at 50
percent of the amount by which the cost of furnishing the service would
exceed 1.75 times the APC payment amount, until the total outlier
payments equaled 1.0 percent of aggregated estimated total CY 2015 OPPS
payments. We estimate that a fixed-dollar threshold of $2,775, combined
with the multiple threshold of 1.75 times the APC payment rate, will
allocate 1.0 percent of aggregated total OPPS payments to outlier
payments. For CMHCs, if a CMHC's cost for partial hospitalization
services, paid under either APC 0172 or APC 0173, exceeds 3.40 times
the payment rate for APC 0173, the outlier payment will be calculated
as 50 percent of the amount by which the cost exceeds 3.40 times the
APC 0173 payment rate.

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

The basic methodology for determining prospective payment rates for
HOPD services under the OPPS is set forth in existing regulations at 42
CFR Part 419, Subparts C and D. For this CY 2015 OPPS/ASC final rule
with comment period, the payment rate for most services and procedures
for which payment is made under the OPPS is the product of the
conversion factor calculated in accordance with section II.B. of this
final rule with comment period and the relative payment weight
determined under section II.A. of this final rule with comment period.
Therefore, the national unadjusted payment rate for most APCs contained
in Addendum A to this final rule with comment period (which is
available via the Internet on the CMS Web site) and for most HCPCS
codes to which separate payment under the OPPS has been assigned in
Addendum B to this final rule with comment period (which is available
via the Internet on the CMS Web site) was calculated by multiplying the
CY 2015 scaled weight for the APC by the 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 final rule with
comment period.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40971 through 40972),
we demonstrated the steps on 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 the 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 are finalizing the
methodology as proposed and demonstrate below how to calculate final CY
2015 OPPS payments using the same parameters.
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 creating new status indicator ``J1''
to reflect the comprehensive APCs discussed in section II.A.2.e. of
this final rule with comment period. We also note that we are deleting
status indicator ``X'' as part of the CY 2015 packaging policy for
ancillary services, discussed in section II.A.3. of this final rule
with comment period.
We did not receive any public comments on the proposed calculation
of an adjusted Medicare payment. Therefore, we are finalizing the
calculation of an adjusted Medicare payment, where appropriate, in the
manner described as follows. Individual providers interested in
calculating the payment amount that they will receive for a specific
service from the national unadjusted payment rates presented in Addenda
A and B to this final rule with comment period (which are available via
the Internet on the CMS Web site) should follow the formulas presented
in the following steps. For purposes of the payment calculations below,
we refer to the national unadjusted payment rate for hospitals that
meet the requirements

[[Page 66835]]

of the Hospital OQR Program as the ``full'' national unadjusted payment
rate. We refer to the national unadjusted payment rate for hospitals
that fail to meet the requirements of the Hospital OQR Program as the
``reduced'' national unadjusted payment rate. The reduced national
unadjusted payment rate is calculated by multiplying the reporting
ratio of 0.980 times the ``full'' national unadjusted payment rate. The
national unadjusted payment rate used in the calculations below is
either the full national unadjusted payment rate or the reduced
national unadjusted payment rate, depending on whether the hospital met
its Hospital OQR Program requirements in order to receive the full CY
2015 OPPS fee schedule increase factor of 2.2 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 CY 2015 OPPS policy for transitioning
wage indexes 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 final rule with comment period. The wage index values
assigned to each area reflect the geographic statistical areas (which
are based upon OMB standards) to which hospitals are assigned for FY
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
Public Law 98-21. (For further discussion of the changes to the FY 2015
IPPS wage indices, as applied to the CY 2015 OPPS, we refer readers to
section II.C. of this final rule with comment period.) As we proposed,
we are continuing to apply a wage index floor of 1.00 to frontier
States, in accordance with section 10324 of the Affordable Care Act of
2010.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of Public Law
108-173. Addendum L to this final rule with comment period (which is
available via the Internet on the CMS Web site) contains the qualifying
counties and the associated wage index increase developed for the FY
2015 IPPS and listed as Table 4J in the FY 2015 IPPS/LTCH PPS final
rule (79 FR 49854) 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, as set forth in the regulations at
Sec. 412.92, or an EACH, which is considered to be an SCH under
section 1886(d)(5)(D)(iii)(III) of the Act, and located in a rural
area, as defined in Sec. 412.64(b), or is treated as being located in
a rural area under Sec. 412.103, multiply the wage index adjusted
payment rate by 1.071 to calculate the total payment.
The formula below is a mathematical representation of Step 6 and
applies the rural adjustment for rural SCHs.

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

We are providing examples below of the calculation of both the full
and reduced national unadjusted payment rates that will apply to
certain outpatient items and services performed by hospitals that meet
and that fail to meet the Hospital OQR Program requirements, using the
steps outlined above. For purposes of this example, we used a provider
that is located in Brooklyn, New York that is assigned to CBSA 35614.
This provider bills one service that is assigned to APC 0019 (Level I
Excision/Biopsy). The CY 2015 full national unadjusted payment rate for
APC 0019 is approximately $378.41. The reduced national unadjusted
payment rate for APC 0019 for a hospital that fails to meet the
Hospital OQR Program requirements is approximately $370.84. This
reduced rate is calculated by multiplying the reporting ratio of 0.980
by the full unadjusted payment rate for APC 0019.
The FY 2015 wage index for a provider located in CBSA 35614 in New
York is 1.2973. This is based on the 1-year 50/50 transition blend
between the wage index under the old CBSA 35644 (1.3115) and the wage
index under the new CBSA 35614 (1.2831). The labor-related portion of
the full national unadjusted payment is approximately $294.55 (.60 *
$378.41 * 1.2973). The labor-related portion of the reduced national
unadjusted payment is approximately $288.65 (.60 * $370.84 * 1.2973).
The nonlabor-related portion of the full national unadjusted payment is
approximately $151.36 (.40 * $378.41). The nonlabor-related portion of
the reduced national unadjusted payment is approximately $148.34 (40 *
$370.84). The sum of the labor-related and nonlabor-related portions of
the full national adjusted payment is approximately $445.91 ($294.55 +
$151.36). The sum of the reduced national adjusted payment is
approximately $436.99 ($288.65 + $148.34).

[[Page 66836]]

I. Beneficiary Copayments

1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining the unadjusted copayment amounts to be paid by
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of
the Act specifies that the Secretary must reduce the national
unadjusted copayment amount for a covered OPD service (or group of such
services) furnished in a year in a manner so that the effective
copayment rate (determined on a national unadjusted basis) for that
service in the year does not exceed a specified percentage. As
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective
copayment rate for a covered OPD service paid under the OPPS in CY
2006, and in calendar years thereafter, shall not exceed 40 percent of
the APC payment rate.
Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered
OPD service (or group of such services) furnished in a year, the
national unadjusted copayment amount cannot be less than 20 percent of
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the
Act limits the amount of beneficiary copayment that may be collected
for a procedure 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).
2. OPPS Copayment Policy
In the CY 2015 OPPS/ASC proposed rule (79 FR 40973), for CY 2015,
we proposed to determine copayment amounts for new and revised APCs
using the same methodology that we implemented beginning in CY 2004.
(We refer readers to the November 7, 2003 OPPS final rule with comment
period (68 FR 63458).) In addition, we proposed to use the same
standard rounding principles that we have historically used in
instances where the application of our standard copayment methodology
would result in a copayment amount that is less than 20 percent and
cannot be rounded, under standard rounding principles, to 20 percent.
(We refer readers to the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66687) in which we discuss our rationale for applying
these rounding principles.) The proposed national unadjusted copayment
amounts for services payable under the OPPS that would be effective
January 1, 2015, were shown in Addenda A and B to the proposed rule
(which are available via the Internet on the CMS Web site). As
discussed in section XII.G. of the proposed rule, for CY 2015, the
Medicare beneficiary's minimum unadjusted copayment and national
unadjusted copayment for a service to which a reduced national
unadjusted payment rate applies equals 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).
We did not receive any public comments regarding the proposed
methodology for calculating copayments for CY 2015. Therefore, for the
reasons set forth in this final rule with comment period, we are
finalizing our proposed CY 2015 copayment methodology without
modification.
3. Calculation of an Adjusted Copayment Amount for an APC Group
Individuals interested in calculating the national copayment
liability for a Medicare beneficiary for a given service provided by a
hospital that met or failed to meet its Hospital OQR Program
requirements should follow the formulas presented in the following
steps.
Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its payment rate.
For example, using APC 0019, approximately $75.68 is 20 percent of the
full national unadjusted payment rate of approximately $378.41. For
APCs with only a minimum unadjusted copayment in Addenda A and B to
this final rule with comment period (which are available via the
Internet on the CMS 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 final rule with comment period. Calculate
the rural adjustment for eligible providers as indicated in Step 6
under section II.H. of this final rule with comment period.
Step 3. Multiply the percentage calculated in Step 1 by the payment
rate calculated in Step 2. The result is the wage-adjusted copayment
amount for the APC.
The formula below is a mathematical representation of Step 3 and
applies the beneficiary payment percentage to the adjusted payment rate
for a service calculated under section II.H. of this final rule with
comment period, with and without the rural adjustment, to calculate the
adjusted beneficiary copayment for a given service.
Wage-adjusted copayment amount for the APC = Adjusted Medicare
Payment * B.
Wage-adjusted copayment amount for the APC (SCH or EACH) =
(Adjusted Medicare Payment * 1.071) * B.
Step 4. For a hospital that failed to meet its Hospital OQR Program
requirements, multiply the copayment calculated in Step 3 by the
reporting ratio of 0.980.
The unadjusted copayments for services payable under the OPPS that
will be effective January 1, 2015, are shown in Addenda A and B to this
final rule with comment period (which are available via the Internet on
the CMS Web site). We note that the national unadjusted payment rates
and copayment rates shown in Addenda A and B to this final rule with
comment period reflect the full CY 2015 OPD fee schedule increase
factor discussed in section II.B. of this final rule with comment
period.
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.

[[Page 66837]]

III. OPPS Ambulatory Payment Classification (APC) Group Policies

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

CPT and Level II HCPCS codes are used to report procedures,
services, items, and supplies under the hospital OPPS. Specifically,
CMS recognizes the following codes on OPPS claims:
Category I CPT codes, which describe surgical procedures
and medical services;
Category III CPT codes, which describe new and emerging
technologies, services, and procedures; and
Level II HCPCS codes, which are used primarily to identify
products, supplies, temporary procedures, and services not described by
CPT codes.
CPT codes are established by the American Medical Association (AMA)
and the Level II HCPCS codes are established by 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/or provides payment
or more accurate payment for these items or services in a timelier
manner than if CMS waited for the annual rulemaking process. We solicit
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. Items, procedures, or
services not paid separately under the hospital OPPS are assigned to
the appropriate status indicators. Section XI. of the CY 2015 OPPS/ASC
proposed rule provided a discussion of the various status indicators
used under the OPPS. Assigning procedures to certain status indicators
would generate separate payment for the service furnished, while
assignment to other status indicators would not.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), in Table 14
(Table 15 of this final rule with comment period), we summarized our
process for updating codes through our OPPS quarterly update CRs,
seeking public comments, and finalizing their treatment under the OPPS.
We noted that because the payment rates associated with codes effective
July 1 were not available to us in time for incorporation into the
Addenda to the proposed rule, the Level II HCPCS codes and the Category
III CPT codes implemented through the July 2014 OPPS quarterly update
CR were not included in Addendum B of the proposed rule (which is
available via the Internet on the CMS Web site), while those codes
based upon the April 2014 OPPS quarterly update were included in
Addendum B. Nevertheless, we requested public comments on the codes
included in the July 2014 OPPS quarterly update and included these
codes in the preamble of the proposed rule.

Table 15--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 solicited public
comments in the CY 2015 OPPS/ASC proposed rule or whether we will be
soliciting public comments in this CY 2015 OPPS/ASC final rule with
comment period. We note that we will be seeking public comments in this
CY 2015 OPPS/ASC final rule with comment period on the interim APC and
status indicator assignments for new CPT and Level II HCPCS codes that
will be effective January 1, 2015. In the CY 2015 OPPS/ASC proposed
rule (79 FR 40977), we also noted 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 Level II HCPCS codes that became effective
October 1, 2013, or January 1, 2014. 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

[[Page 66838]]

CY 2014 OPPS/ASC final rule with comment period. We are responding to
public comments and finalizing our interim OPPS treatment of these
codes in this CY 2015 OPPS/ASC final rule with comment period.
We received public comments on some new codes that were assigned to
comment indicator ``NI'' in Addendum B of the CY 2014 OPPS/ASC final
rule with comment period. We respond to those comments in sections
III.C. of this CY 2015 OPPS/ASC final rule with comment period.
1. Treatment of New CY 2014 Level II HCPCS and CPT Codes Effective
April 1, 2014 and July 1, 2014 for Which We Solicited Public Comments
in the 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 in the proposed rule (79
FR 40975), we provided separate payment for HCPCS codes C9021, C9739,
and C9740. HCPCS code Q2052 was assigned to status indicator ``N'' to
indicate the service described by this code is packaged under the OPPS.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), we solicited
public comments on the proposed APC and status indicator assignments,
where applicable, for the Level II HCPCS codes listed in Table 15 of
that proposed rule (HCPCS codes C9021, C9739, C9740, and Q2052). We did
not receive any public comments on the proposed APC and status
indicator assignments for HCPCS codes C9021 and Q2052. Because HCPCS
code Q2052 will only be billed by pharmacy suppliers, we are modifying
our CY 2015 proposal to continue to assign HCPCS code Q2052 to status
indicator ``N.'' Instead, for CY 2015, we are reassigning HCPCS code
Q2052 from OPPS status indicator ``N'' to ``E'' (Not paid by Medicare
when submitted on outpatient claims (any outpatient bill type)). We are
adopting as final, without modification, the proposed APC and status
indicator assignments for HCPCS code C9021 for CY 2015. We note that we
received some public comments on HCPCS codes C9739 and C9740, which we
address in section III.C.3.e. of this final rule with comment period.
Effective for CY 2015, the HCPCS Workgroup replaced HCPCS code
C9021 with HCPCS code J9301. Table 16 below shows the complete long
descriptor for HCPCS code J9301. Consistent with our general policy of
using permanent HCPCS codes (that is, ``J'' codes) rather than using
temporary HCPCS codes (that is, ``C'' codes and ``Q'' codes) for the
reporting of drugs under the OPPS in order to streamline coding, we are
showing the replacement HCPCS code for C9021, which is effective
January 1, 2015, in Table 16.
In this final rule with comment period, we are assigning the Level
II HCPCS codes listed in Table 16 below to the specified APCs and
status indicators for CY 2015. The final payment rates for these codes,
where applicable, can be found in Addendum B to this final rule with
comment period (which is available via the Internet on the CMS Web
site).

Table 16--Final CY 2015 Status Indicators And APC Assignments for the Level II HCPCS Codes That Were Newly
Implemented in April 2014
----------------------------------------------------------------------------------------------------------------
CY 2015 long Final CY 2015 status Final CY 2015
CY 2014 HCPCS Code CY 2015 HCPCS Code descriptor indicator APC
----------------------------------------------------------------------------------------------------------------
C9021.................. J9301.................. Injection, G..................... 1476
obinutuzumab, 10mg.
C9739.................. C9739.................. Cystourethroscopy, T..................... 0162
with insertion of
transprostatic
implant; 1 to 3
implants.
C9740.................. C9740.................. Cystourethroscopy, T..................... 1564
with insertion of
transprostatic
implant; 4 or more
implants.
Q2052.................. Q2052.................. Services, supplies and E..................... N/A
accessories used in
the home under the
Medicare intravenous
immune globulin
(IVIG) demonstration.
----------------------------------------------------------------------------------------------------------------

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 in the proposed rule, 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, in the CY 2015 OPPS/ASC proposed rule (79 FR 40975),
we proposed 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 of the proposed
rule. Specifically, we proposed 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, in
the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we proposed to
continue to assign HCPCS code Q9974 to the same status indicator as its
predecessor HCPCS J-codes. Specifically, we proposed to assign HCPCS
code Q9974 to status indicator ``N,'' effective July 1, 2014.

[[Page 66839]]

In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we also
proposed 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
the proposed rule. This table included 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, did not appear in Addendum B to the
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 were provided in Table 16 of the proposed rule.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we solicited
public comments on the proposed status indicators and APC assignments
for the HCPCS codes that were listed in Table 16 of the proposed rule.
We did not receive any public comments on the proposed APC and status
indicator assignments for HCPCS codes C9022, C9134, Q9970, and Q9974
for CY 2015. Therefore, we are adopting as final, without modification,
the proposed APC and status indicator assignments for these four Level
II HCPCS codes for CY 2015. We note that we received a public comment
on HCPCS code C2644, which is addressed in section II.A.2.d.3. of this
final rule with comment period.
The HCPCS Workgroup replaced HCPCS code C9022 with HCPCS code
J1322, effective January 1, 2015. Because HCPCS code J1322 describes
the same drug with the same dosage descriptor as its predecessor code,
HCPCS code C9022, this drug will continue to receive pass-through
payment status in CY 2015. Therefore, we are assigning HCPCS code J1322
to the same APC and status indicator as its predecessor code, HCPCS
code C9022, as shown in Table 17 below.
In addition, the HCPCS Workgroup replaced HCPCS code C9134 with
HCPCS code J7181, effective January 1, 2015. Because HCPCS code J7181
does not describe the same dosage descriptor as its predecessor code,
HCPCS code J7181 has been assigned to a new APC. Specifically, HCPCS
code C9134 had a dosage descriptor of ``10 i.u.,'' while HCPCS code
J7181 has a dosage descriptor of ``i.u.'' Therefore, effective January
1, 2015, we are assigning HCPCS code J7181 to APC 1746, which is a
different APC assignment than the APC assignment for HCPCS code C9134,
to maintain data consistency for future rulemakings. Because the
predecessor code, HCPCS code C9134, was granted pass-through payment
status, HCPCS code J7181 will continue to be assigned to status
indicator ``G'' for CY 2015.
We also note that the HCPCS Workgroup replaced HCPCS code Q9970
with HCPCS code J1439, effective January 1, 2015. Because HCPCS code
J1439 describes the same drug with the same dosage descriptor as its
predecessor code, HCPCS code Q9970, this drug will continue to receive
pass-through payment status in CY 2015. Therefore, we are assigning
HCPCS code J1439 to the same APC and status indicator as its
predecessor code, HCPCS code Q9970, as shown in Table 17 below.
Further, the HCPCS Workgroup replaced HCPCS code Q9974 with HCPCS
code J2274, effective January 1, 2015. Because HCPCS code J2274
describes the same drug with the same dosage descriptor as its
predecessor code, HCPCS code Q9974, this drug will continue its
packaged status indicator. Therefore, we are assigning HCPCS code J2274
to the same status indicator as its predecessor code, HCPCS code Q9974,
as also shown in Table 17 below.
Table 17 below includes a complete list of the Level II HCPCS codes
that were made effective July 1, 2014, with their final status
indicators and APC assignments for CY 2015. The final payment rates for
these codes, where applicable, can be found in Addendum B to this final
rule with comment period (which is available via the Internet on the
CMS Web site).

Table 17--Final CY 2015 Status Indicators and APC Assignments for the Level II HCPCS Codes That Were Newly
Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
CY 2015 long Final CY 2015 status Final CY 2015
CY 2014 HCPCS Code CY 2015 HCPCS Code descriptor indicator APC
----------------------------------------------------------------------------------------------------------------
C2644.................. C2644.................. Brachytherapy source, U..................... 2644
cesium-131 chloride
solution, per
millicurie.
C9022.................. J1322.................. Injection, elosulfase G..................... 1480
alfa, 1mg.
C9134.................. J7181.................. Factor XIII A-Subunit G..................... 1746
(Recombinant), Per IU.
Q9970.................. J1439.................. Injection, ferric G..................... 9441
carboxymaltose, 1mg.
Q9974.................. J2274.................. Injection, morphine N..................... N/A
sulfate, preservative-
free for epidural or
intrathecal use, 10
mg.
----------------------------------------------------------------------------------------------------------------

In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), for CY 2015,
we proposed to continue our established policy of recognizing Category
I CPT vaccine codes for which FDA approval is imminent and Category III
CPT codes that the AMA releases in January of each year for
implementation in July through the OPPS quarterly update process. Under
the OPPS, Category I 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 the 27 new Category III CPT codes
that were made effective July 1, 2014. Specifically, as displayed in
Table 17 in the proposed rule, 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, 0366T, 0368T,
0370T, 0371T, 0372T, and 0373T. Table 17 of the proposed rule listed
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. We did not
receive any public comments on the proposed APC and status indicator
assignments for Category III CPT codes 0347T, 0348T, 0349T, 0350T,
0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 0368T, 0370T, 0371T,
0372T, and 0373T. Therefore, we are adopting as final, without
modification, the proposed APC and status indicator assignments for
these 16 CPT codes for CY 2015. We received a public comment on CPT
codes 0335T, which we address

[[Page 66840]]

in section III.C.2.6. of this final rule with comment period. We also
received specific public comments on CPT codes 0351T, 0352T, 0353T, and
0354T, which are addressed in section II.C.6.b. of this final rule with
comment period. Table 18 below lists the Category III CPT codes that
were implemented in July 2014, along with their final status indicators
and APC assignments for CY 2015. The final payment rates for these
codes, where applicable, can be found in Addendum B to this final rule
with comment period (which is available via the Internet on the CMS Web
site).

Table 18--New Category III CPT Codes Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
CY 2015 long Final CY 2015 status Final CY 2015
CY 2014 CPT code CY 2015 CPT code descriptor indicator APC
----------------------------------------------------------------------------------------------------------------
0347T.................. 0347T.................. Placement of Q1.................... 0420
interstitial
device(s) in bone
for
radiostereometric
analysis (RSA).
0348T.................. 0348T.................. Radiologic Q1.................... 0261
examination,
radiostereometric
analysis (RSA);
spine, (includes,
cervical, thoracic
and lumbosacral,
when performed).
0349T.................. 0349T.................. Radiologic Q1.................... 0261
examination,
radiostereometric
analysis (RSA);
upper
extremity(ies),
(includes shoulder,
elbow and wrist,
when performed).
0350T.................. 0350T.................. Radiologic Q1.................... 0261
examination,
radiostereometric
analysis (RSA);
lower
extremity(ies),
(includes hip,
proximal femur, knee
and ankle, when
performed).
0351T.................. 0351T.................. Optical coherence N..................... N/A
tomography of breast
or axillary lymph
node, excised
tissue, each
specimen; real time
intraoperative.
0352T.................. 0352T.................. Optical coherence B..................... N/A
tomography of breast
or axillary lymph
node, excised
tissue, each
specimen;
interpretation and
report, real time or
referred.
0353T.................. 0353T.................. Optical coherence N..................... N/A
tomography of
breast, surgical
cavity; real time
intraoperative.
0354T.................. 0354T.................. Optical coherence B..................... N/A
tomography of
breast, surgical
cavity;
interpretation and
report, real time or
referred.
0355T.................. 0355T.................. Gastrointestinal T..................... 0142
tract imaging,
intraluminal (eg,
capsule endoscopy),
colon, with
interpretation and
report.
0356T.................. 0356T.................. Insertion of drug- Q1.................... 0698
eluting implant
(including punctal
dilation and implant
removal when
performed) into
lacrimal
canaliculus, each.
0358T.................. 0358T.................. Bioelectrical Q1.................... 0340
impedance analysis
whole body
composition
assessment, supine
position, with
interpretation and
report.
0359T.................. 0359T.................. Behavior V..................... 0632
identification
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.................. 0360T.................. Observational V..................... 0632
behavioral 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.................. 0361T.................. Observational N..................... N/A
behavioral 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.................. 0362T.................. Exposure behavioral V..................... 0632
follow-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.................. 0363T.................. Exposure behavioral N..................... N/A
follow-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.................. 0364T.................. Adaptive behavior S..................... 0322
treatment by
protocol,
administered by
technician, face-to-
face with one
patient; first 30
minutes of
technician time.
0365T.................. 0365T.................. Adaptive behavior N..................... N/A
treatment 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.................. 0366T.................. Group adaptive S..................... 0325
behavior treatment
by protocol,
administered by
technician, face-to-
face with two or
more patients; first
30 minutes of
technician time.
0367T.................. 0367T.................. Group adaptive N..................... N/A
behavior 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.................. 0368T.................. Adaptive behavior S..................... 0322
treatment with
protocol
modification
administered by
physician or other
qualified health
care professional
with one patient;
first 30 minutes of
patient face-to-face
time.
0369T.................. 0369T.................. Adaptive behavior N..................... N/A
treatment 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).

[[Page 66841]]

0370T.................. 0370T.................. Family adaptive S..................... 0324
behavior treatment
guidance,
administered by
physician or other
qualified health
care professional
(without the patient
present).
0371T.................. 0371T.................. Multiple-family group S..................... 0324
adaptive behavior
treatment guidance,
administered by
physician or other
qualified health
care professional
(without the patient
present).
0372T.................. 0372T.................. Adaptive behavior S..................... 0325
treatment social
skills group,
administered by
physician or other
qualified health
care professional
face-to-face with
multiple patients.
0373T.................. 0373T.................. Exposure adaptive S..................... 0323
behavior 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.................. 0374T.................. Exposure adaptive N..................... N/A
behavior 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).
----------------------------------------------------------------------------------------------------------------

Further, in the CY 2015 OPPS/ASC proposed rule, we solicited 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 were listed in Tables 15, 16, and 17 of the proposed rule. We
also proposed to finalize the status indicator and APC assignments and
payment rates for these codes, if applicable, in this CY 2015 OPPS/ASC
final rule with comment period. Because the new Category III CPT and
Level II HCPCS codes that became effective for July were not available
to us in time for incorporation into the Addenda to the 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 the proposed rule. These codes were listed in Tables 16 and
17, respectively, of the proposed rule. We also proposed to incorporate
these codes into Addendum B to this 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 were included in Addendum B to
the proposed rule (which is available via the Internet on the CMS Web
site), where the proposed CY 2015 payment rates for these codes were
also shown.
We did not receive any additional public comments on this process.
The final APC and status indicator assignments and payment rates, if
applicable, for the Level II HCPCS codes and the Category III CPT codes
that were implemented or modified through the April 2014 or July 2014
OPPS update CR can be found in Tables 16, 17, and 18, or in Addendum B
to this final rule with comment period (which is available via the
Internet on the CMS Web site).
2. Process for New Level II HCPCS Codes That Became Effective October
1, 2014 and New CPT and Level II HCPCS Codes That Will Become Effective
January 1, 2015 for Which We Are Soliciting Public Comments in This 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 are flagged with comment indicator ``NI'' in Addendum B to this
OPPS/ASC final rule with comment period to indicate that we are
assigning them an interim payment status which is subject to public
comment. In addition, the CPT and Level II HCPCS codes that will become
effective January 1, 2015, are flagged with comment indicator ``NI'' in
Addendum B to this 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 this final rule with comment
period, and we will respond to these public comments in the OPPS/ASC
final rule with comment period for the next year's OPPS/ASC update. In
the CY 2015 OPPS/ASC proposed rule (79 FR 40977), we proposed to
continue this process for CY 2015. Specifically, for CY 2015, we
proposed 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 are
flagged with comment indicator ``NI'' in Addendum B to this 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 are
inviting public comments on the interim status indicator and APC
assignments and payment rates for these codes, if applicable, that will
be finalized in the CY 2016 OPPS/ASC final rule with comment period.
3. Process for Soliciting Public Comments for New and Revised CPT Codes
Released by the AMA
We generally incorporate the new CPT codes that are effective
January 1 in the OPPS/ASC final rule with comment period. We establish
interim APC and status indicator assignments for these new codes for
the coming year, and

[[Page 66842]]

request comments on the interim assignments in the OPPS/ASC final rule
with comment period. Similarly, we establish interim APC and status
indicator assignments for existing CPT codes that have substantial
revision to their code descriptors that necessitate a change in the
current APC assignments, and request comments on the interim
assignments in the OPPS/ASC final rule with comment period. 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
for a Year
As described above, under the hospital OPPS, our current process
for both new CPT codes and existing CPT codes with substantial
revisions to the code descriptors that are released by the AMA for use
beginning January 1 is to flag these codes 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 interim APC and status indicator assignments. We
address public comments received and finalize the APC and status
indicator assignments for the codes in the next year's OPPS/ASC final
rule with comment period. For example, the new CPT codes that were
effective January 1, 2014, were assigned to comment indicator ``NI'' in
Addendum B to the CY 2014 OPPS/ASC final rule with comment period. We
respond to public comments received on the CY 2014 OPPS/ASC final rule
with comment period and finalize the APC and status indicator
assignments for these codes in this CY 2015 OPPS/ASC final rule with
comment period. We include the final APC and status indicator
assignments for these codes in Addendum B to this final rule with
comment period (which is available via the Internet on the CMS Web
site).
Many stakeholders have expressed concern with the process we use to
recognize new and revised CPT codes. They believe that CMS should
publish proposed APC and status indicator assignments for the new and
revised CPT codes that will be effective January 1 in the OPPS/ASC
proposed rule for that calendar year, and request public comments prior
to finalizing the assignments. 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. Similar concerns have been expressed regarding our
process for assigning interim payment values for revalued, and new and
revised codes, under the Medicare Physician Fee Schedule (MPFS). We
refer readers to the CY 2015 MPFS proposed rule for a detailed
discussion of this issue as it relates to the MPFS (79 FR 40359 through
40364).
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 to identify specific services for billing and
payment purposes. CPT 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. However, the OPPS/ASC proposed rules are
published prior to the publication of the CPT codes that are 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 in the final rule with comment period
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, while accepting
public comments on the final rule with comment period. We then respond
to those public comments received and make final APC and status
indicator assignments in the next year's final rule with comment
period.
b. Modification of Process for New and Revised CPT Codes That Are
Effective January 1
In the CY 2015 OPPS/ASC proposed rule (79 FR 40977 through 40979),
we proposed to make changes in the process we use to establish APC
assignments and status indicators for new and revised codes. We
proposed that, for new and revised CPT codes that we receive from the
AMA's 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 proposed 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 proposed 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, but that we did not
receive in time to include proposed APC and status indicator
assignments in the proposed rule. However, if certain CPT codes are
revised in a manner that would not affect the cost of inputs (for
example, a minor 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 CPT 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 CPT 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 the new G-code during the year. We would propose APC and status
indicator assignments for the two new CPT codes during rulemaking in CY
2016, accept and respond to public comments on the proposed
assignments, and establish final APC and status indicator assignments
for the codes in the final rule 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 would make every
effort to work with the AMA's 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

[[Page 66843]]

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 because there would be no predecessor code we
could use as a reference to establish a G-code in order to continue
current payment policies for such a service. We proposed to continue to
establish the initial APC and status indicator assignments for these
wholly 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. However, the proposed use of G-
codes would permit us to propose and accept public comment on the APC
and status indicator assignments for the vast majority of new and
revised codes before they take effect. We are hopeful that the AMA's
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 before the new and revised CPT codes
take effect on January 1. If the AMA's CPT Editorial Committee can make
adjustments to its schedule, we would not need to use G-codes as
described above for the purpose of maintaining outdated coding and APC
and status indicator assignments for a year until we can include
proposed APC and status indicator assignments for the new and revised
codes in a proposed rule. We proposed to implement the revised CMS
process for establishing APC and status indicator assignments for new
and revised codes for CY 2016. However, we indicated in the proposed
rule that we would consider alternative implementation dates if that
would allow time for the AMA's 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, in the CY 2015
OPPS/ASC proposed rule (79 FR 40977 through 40979), we proposed to
include in the OPPS/ASC proposed rule the proposed APC and status
indicator assignments for the vast majority of new and revised CPT
codes before they are used for payment purposes under the OPPS and ASC
payment system. We would address new and revised CPT codes for the
upcoming year that are available in time for the proposed rule by
proposing APC and status indicator assignments for the codes.
Otherwise, we will delay adoption of the new and revised codes for a
year while using methods (including creating G-codes that describe the
predecessor codes) to maintain the existing APC and status indicator
assignments until the following year when we would include proposed
assignments for the new and revised codes in the proposed rule. We
proposed to follow this revised process except in the case of a new CPT
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 wholly new services for which we do
not receive timely information from the AMA, we proposed to 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 vast majority of new and
revised CPT codes that take effect on January 1 each year. We invited
public comments on this proposal. We indicated in the proposed rule
that we were 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?
Comment: The majority of the commenters supported the proposal to
modify the current process of recognizing new and revised CPT codes
because it would provide an opportunity for the public to comment on
specific APC and status indicator assignments prior to those
assignments being finalized. However, several commenters disagreed with
our proposed implementation date of CY 2016 and requested that CMS work
with the AMA to determine an appropriate implementation date. Other
commenters suggested that CMS finalize the proposal but urged CMS to
work with the AMA on an appropriate timeline that considers the AMA's
CPT and RUC (Specialty Society Relative Value Update Committee) meeting
dates as well as CMS' OPPS and MPFS regulation schedule. The AMA
supported the proposal but requested that CMS finalize the proposal for
CY 2017 rather than CY 2016 because the CPT codes for the CY 2016
update are almost complete.
Response: We appreciate the commenters' support for our proposal.
We believe that publishing our proposed status indicator and APC
assignments for the new and revised CPT codes in the proposed rule
would alleviate some concerns expressed by stakeholders in the past
that some of our interim APC assignments were not appropriate, and that
the APC assignment process could be improved if we had the benefit of
public comments before adopting final APC and status indicator
assignments for new and revised codes. This new process of proposing
and requesting public comments before finalizing the APC and status
indicator assignments for new and revised codes allows both CMS and
stakeholders the benefit of public notice and comment prior to the use
of the new and revised codes for payment purposes. When we receive
information on the new and revised codes from the AMA in time to
include proposals for new and revised codes in the proposed rule before
the codes are effective the following January 1, the revised process
allows public notice and comment before finalizing APC and status
indicator assignments for the codes during the calendar year before the
CPT codes become effective. In addition, this new process eliminates
the need to make interim APC and status indicator assignments for new
and revised CPT codes, which has been unpopular among some providers
because the interim assignments are used for payment for a year before
we address public comments and make any appropriate changes to an APC
or status indicator assignment in the subsequent year's final rule.
Although the AMA and several commenters requested that we modify
our proposal by finalizing this new process for the CY 2017 OPPS
update, we disagree with this recommendation. We believe the new
process that permits an opportunity for public comment on

[[Page 66844]]

proposed APC and status indicator assignments for the vast majority of
new and revised codes before they are finalized and used for payment
purposes will be beneficial to CMS and to hospitals and other
stakeholders, and we see no reason to delay implementation of this
policy change. Therefore, beginning with the CY 2016 OPPS update, we
will publish proposed APC and status indicator assignments for any new
and revised CPT codes for January 1, 2016 that are publicly released by
the AMA in time for us to consider them for inclusion in the OPPS/ASC
proposed rule. After review of the public comments received on the
proposed rule, we will finalize the status indicator and APC
assignments for those new and revised CPT codes in the CY 2016 OPPS/ASC
final rule. Because the APC assignments would be final, we would no
longer request comments in the OPPS/ASC final rules for these new and
revised CPT codes that are included in the proposed rule. For any new
and revised codes released too late for us to consider them for
inclusion in the CY 2016 OPPS/ASC proposed rule, we will create HCPCS
G-codes that reflect the same description(s), and APC and status
indicator assignments, as their predecessor codes. These HCPCS G-codes
will be used during CY 2016, and then we will include proposals for the
corresponding new and revised codes and APC and status indicator
assignments in the CY 2017 OPPS/ASC proposed rule.
Comment: Most commenters opposed the use of temporary HCPCS G-codes
and requested that CMS not implement the HCPCS G-code process if it
finalizes the proposal to change to process for new and revised CPT
codes. The commenters recommended not establishing temporary HCPCS G-
codes because these codes would be extremely burdensome for providers
to use. The commenters stated that establishing HCPCS G-codes for
services or procedures that are already described by existing CPT codes
would be too confusing for hospitals, physicians, and other third party
insurers to accurately claim costs for these procedures, and that using
two different sets of codes for the same procedure or service could
result in erroneous claims.
Response: As described above, we plan to publish the new and
revised CPT codes that are publicly available and provided to us in
time for evaluation in the CY 2016 OPPS/ASC proposed rule.
Specifically, in the CY 2016 OPPS/ASC proposed rule, we expect to
publish new and revised CPT codes that would be effective January 1,
2016, with the proposed status indicator and APC assignments, and
request public comments on these proposed assignments as long as we
receive them in time for inclusion in the proposed rule. We would
finalize the status indicator and APC assignments for these new and
revised CPT codes in the CY 2016 OPPS/ASC final rule.
However, for those new and revised CPT codes that are not publicly
available in time for the OPPS/ASC proposed rule, we will create HCPCS
G-codes that mirror the predecessor CPT codes and retain the current
APC and status indicator assignments for a year until we can include
proposed status indicator and APC assignments in the following year's
proposed rule. These HCPCS G-codes will be assigned to comment
indicator ``NI'' to indicate that the codes are new and open for
comment for 60 days after display of the OPPS/ASC final rule with
comment period. This is consistent with our current policy of seeking
public comments on new CPT and Level II HCPCS codes with interim APC
and status indicator assignments that were not previously published in
the proposed rule. For new and revised codes, we recognize that there
is a trade-off between the benefit of considering public comments on
the proposed APC and status indicator assignments before they take
effect and the potential confusion caused by the use of HCPCS G-codes.
We anticipate that the use of HCPCS G-codes will be largely a temporary
solution or may not be necessary in the OPPS, and we expect to work
closely with the AMA to minimize the need for them. We note that, under
the MPFS, we generally do not develop values for new and revised CPT
codes until we receive recommendations provided by the AMA's RUC. In
contrast, under the OPPS, we use only the publicly available new and
revised CPT codes and their descriptors to develop APC and status
indicator assignments. As such, we anticipate that the need to use
HCPCS G-codes under the OPPS will be less frequent than under the MPFS.
After consideration of the public comments we received, we are
finalizing our proposal. For the new and revised CPT codes that we
receive timely from the AMA's CPT Editorial Panel, we are finalizing
our proposal to include these codes that would be effective January 1
in the OPPS/ASC proposed rules, along with proposed APC and status
indicator assignments for them, and to finalize the APC and status
indicator assignments in the OPPS/ASC final rules beginning with the CY
2016 OPPS update. For those new and revised CPT codes that we receive
too late for inclusion in the OPPS/ASC proposed rule, we are finalizing
our proposal to 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 can propose APC and status indicator
assignments in the following year's rulemaking cycle. We note that even
if we find that we need to create HCPCS G-codes in place of certain CPT
codes for the MPFS proposed rule, we do not anticipate that these HCPCS
G-codes will always be necessary for OPPS purposes. We will make every
effort to include proposed APC and status indicator assignments for all
new and revised CPT codes that the AMA makes publicly available in time
for us to include them in the proposed rule, and to avoid the resort to
HCPCS G-codes and the resulting delay in utilization of the most
current CPT codes. We also are finalizing our proposal to make interim
APC and status indicator assignments for CPT codes that are not
available in time for the proposed rule and that describe wholly new
services (such as new technologies or new surgical procedures), solicit
public comments, and finalize the specific APC and status indicator
assignments for those codes in the following year's final rule.

B. OPPS Changes--Variations Within APCs

1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient department
services. Section 1833(t)(2)(B) of the Act provides that the Secretary
may establish groups of covered OPD services within this classification
system, so that services classified within each group are comparable
clinically and with respect to the use of resources. In accordance with
these provisions, we developed a grouping classification system,
referred to as Ambulatory Payment Classifications (APCs), as set forth
in 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

[[Page 66845]]

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 Sec. 419.2(b) of the regulations. A further
discussion of packaged services is included in section II.A.3. of this
final rule with comment period.
In CY 2008, we implemented composite APCs to provide a single
payment for groups of services that are typically performed together
during a single clinical encounter and that result in the provision of
a complete service (72 FR 66650 through 66652). 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 final rule with comment period. We note that, as a
consequence of the new comprehensive APC policy, APC 8000 (Cardiac
Electrophysiologic Evaluation and Ablation Composite) is being deleted.
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 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,
no less than annually, and revise the APC 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 final rule with
comment period).
Finally, section 1833(t)(2) of the Act provides that, subject to
certain exceptions, the items and services within an APC group cannot
be considered comparable with respect to the use of resources if the
highest 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 the CY 2015 OPPS/ASC proposed
rule (79 FR 40981), for CY 2015, we proposed to make exceptions to this
limit on the variation of costs within each APC group in unusual cases,
such as low-volume items and services.
In the CY 2015 OPPS/ASC proposed rule, we identified the APCs with
violations of the 2 times rule for CY 2015 (79 FR 40980). Therefore, we
proposed changes to the procedure codes assigned to these APCs in
Addendum B to the CY 2015 OPPS/ASC proposed rule. We noted that
Addendum B did not appear in the printed version of the Federal
Register as part of the CY 2015 OPPS/ASC proposed rule. Rather, it was
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
violation of the 2 times rule or to improve clinical and resource
homogeneity, we proposed to reassign these procedure codes to new APCs
that contain services that are similar with regard to both their
clinical and resource characteristics. In many cases, the proposed
procedure code reassignments and associated APC reconfigurations for CY
2015 included in the 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 proposed changes to the status
indicators for some procedure codes that were not specifically and
separately discussed in the proposed rule. In these cases, we proposed
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 proposed for CY 2015. In addition, we proposed to rename
existing APCs or create new clinical APCs to complement the proposed
procedure code reassignments. Addendum B to the CY 2015 OPPS/ASC

[[Page 66846]]

proposed rule identified with a comment indicator ``CH'' those
procedure codes for which we proposed a change to the APC assignment or
status indicator, or both, that were initially assigned in the 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). In contrast, Addendum B to this
final rule with comment period (available via the Internet on the CMS
Web site) identifies with the ``CH'' comment indicator the final CY
2015 changes compared to the HCPCS codes' status as reflected in the
October 2014 Addendum B update.
3. 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 proposed 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 the CY 2015 OPPS/ASC
proposed rule, we found 9 APCs with violations of the 2 times rule. We
applied the criteria as described above to identify the APCs that we
proposed 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 the proposed rule.
We did not include in that determination those APCs where a 2 times
rule violation was not a relevant concept, such as APC 0375 (Ancillary
Outpatient Services when Patient Expires), which has an APC cost set
based on multiple procedure claims. Therefore, we only identified those
APCs, including those with criteria-based costs, such as device-
dependent APCs, with violations of the 2 times rule. 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, and the quality of
the claims data used to determine the APC payment rates.
Table 18 of the proposed rule (79 FR 40981) listed the 9 APCs that
we proposed to make exceptions for under the 2 times rule for CY 2015
based on the criteria cited above and claims data submitted between
January 1, 2013, and December 31, 2013, and processed on or before
December 31, 2013. For the final rule with comment period, we stated
that 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. Therefore, after considering
the public comments we received on the CY 2015 OPPS/ASC proposed rule
and making changes to APC assignments based on those comments, we
analyzed the CY 2013 claims data used for this final rule with comment
period to identify the APCs with violations of the 2 times rule. Based
on the final CY 2013 claims data, we found 12 APCs with violations of
the 2 times rule for this final rule with comment period, which is 3
more APCs that violated the 2 times rule compared to those indicated in
the proposed rule. We applied the criteria as described earlier to
identify the APCs that are exceptions to the 2 times rule for CY 2015,
and identified three new APCs that meet the criteria for exception to
the 2 times rule for this final rule with comment period, but that did
not meet the criteria using proposed rule claims data. Specifically, we
found that the following three new APCs violated the 2 times rule:
APC 0095 (Cardiac Rehabilitation);
APC 0388 (Discography); and
APC 0420 (Level III Minor Procedures).
After consideration of the public comments we received and our
review of the CY 2013 costs from hospital claims and cost report data
available for this final rule with comment period, we are finalizing
our proposals with some modifications. Specifically, we are finalizing
our proposal to except 7 of the 9 proposed APCs from the 2 times rule
for CY 2015: APCs 0057, 0066, 0330, 0433, 0450, 0634, and 0661. In
contrast, we are not finalizing our proposal to except 2 of the 9
proposed APCs from the 2 times rule: APC 0012 (Level I Debridement &
Destruction) and APC 0015 (Level II Debridement & Destruction). Our
data analysis for this final rule with comment period revealed that
these two APCs no longer violate the 2 times rule. Table 19 below lists
10 APCs that we are excepting from the 2 times rule for CY 2015 based
on the criteria above and a review of updated claims data. We note
that, for cases in which a recommendation by the HOP Panel appears to
result in or allow a violation of the 2 times rule, we generally accept
the Panel's recommendation because those recommendations are based on
explicit consideration of resource use, clinical homogeneity, site of
service, and the quality of the claims data used to determine the APC
payment rates. The geometric mean costs for hospital outpatient
services for these and all other APCs that were used in the development
of this final rule with comment period can be found on the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

TABLE 19--Final APC Exceptions to the 2 Times Rule for CY 2015
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Title
------------------------------------------------------------------------
0057........................... Bunion Procedures.
0066........................... Level V Radiation Therapy.
0095........................... Cardiac Rehabilitation.
0330........................... Dental Procedures.
0388........................... Discography.
0420........................... Level III Minor Procedures.
0433........................... Level II Pathology.
0450........................... Level I Minor Procedures.
0634........................... Hospital Clinic Visits.
0661........................... Level III Pathology.
------------------------------------------------------------------------

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

C. OPPS APC-Specific Policies

1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC 0213)
For CY 2015, we proposed to reassign CPT code 93229 (External
mobile cardiovascular telemetry with electrocardiographic recording,
concurrent computerized real time data analysis and greater than 24
hours of accessible ECG data storage (retrievable with query) with ECG
triggered and patient selected events transmitted to a remote attended
surveillance center for up to 30 days; technical support for connection
and patient instructions for use, attended surveillance, analysis and

[[Page 66847]]

transmission of daily and emergent data reports as prescribed by a
physician or other qualified health care professional) from APC 0209
(Level II Extended EEG, Sleep, and Cardiovascular Studies), with a
proposed rule payment rate of approximately $239 to APC 0213 (Level I
Extended EEG, Sleep, and Cardiovascular Studies), with a proposed
payment rate of approximately $175.
Comment: One commenter opposed CMS' proposal to reassign CPT code
93229 to APC 0213 and stated that the hospital costs used to set the CY
2015 proposed payment rate is based on faulty claims data, which
include miscoded claims reporting the service submitted by hospitals.
The commenter indicated that based on its internal analysis of the CY
2013 hospital claims data, which were used as the basis for the CY 2015
proposed APC reassignment, several hospitals reported costs of under
$100 for the procedure described by CPT code 93229. The commenter
stated that the service described by CPT code 93229 involves the use of
sophisticated technology requiring attended surveillance on a 24-hour,
7 days a week basis by a technician for up to 30 days. According to the
commenter, this particular service requires resources that are greater
than $100. The commenter further explained that the service described
by CPT code 93229 requires up to 30 days of electrocardiogram (ECG)
monitoring through an external device worn by the patient at home that
captures, stores, and transmits ECG data in real-time through wireless
technology to a receiving or monitoring center (the hospital outpatient
facility). These data are then reviewed by certified cardiac
technicians and the ordering physician is provided with daily reports.
The commenter added that this procedure is performed primarily
(approximately 90 percent of the time) by independent diagnostic
testing facilities (IDTFs) and infrequently performed by hospitals,
typically under arrangements with IDTFs. The commenter believed that
the CY 2015 proposed payment rate of approximately $175 for APC 0213 is
significantly lower than the CY 2014 MPFS payment rate of $669. The
commenter stated that the actual cost of providing the service is
approximately $795. Therefore, the commenter recommended that CMS
either reassign CPT code 93229 to APC 0435 (Level III Extended EEG,
Sleep, and Cardiovascular Studies), which has a proposed payment rate
of approximately $853, or establish a new APC for outpatient cardiac
telemetry services that accurately reflects the costs associated with
providing this service.
Response: CPT code 93229 became effective January 1, 2009. We
believe that 5 years is sufficient time to understand what procedure
CPT code 93229 describes and how to appropriately report this service
on hospital claims. Based on our analysis of the CY 2013 hospital
outpatient claims data used for this final rule with comment period, we
are unable to determine whether hospitals are miscoding the claims
reporting this service. For all APCs whose payment rates are based upon
relative payment weights, we note that the quality and accuracy of
reported units and charges influence the geometric mean costs that are
the basis for our payment rates, especially the geometric mean costs
for low volume items and services. Beyond our standard OPPS trimming
methodology (described in section II.A.2. of this final rule with
comment period) that we apply to those claims that have passed various
types of claims processing edits, it is not our general policy to
determine the accuracy of hospital coding and charging practices for
the purposes of ratesetting (75 FR 71838). We rely on hospitals to
accurately report all of the services provided to beneficiaries using
the established HCPCS and CPT codes that appropriately describe the
procedures performed in accordance with their code descriptors and the
CPT Editorial Panel's and CMS' instructions, as applicable, and to
include these charges and costs on their Medicare hospital cost report
appropriately. In addition, we do not specify the methodologies that
hospitals must use to set charges for this or any other service.
We recognize that the MPFS pays separately for CPT code 93229.
However, the MPFS and the OPPS are very different payment systems. Each
system is established under a different set of statutory and regulatory
principles, and the policies established under the MPFS do not
necessarily affect the payment policies under the OPPS. Moreover, we do
not agree with the commenter that CPT code 93229 should be reassigned
to APC 0435. Based on the claims data available for this final rule
with comment period, we believe that APC 0213 is the most appropriate
APC to reassign CPT code 93229 based on the clinical homogeneity and
resource costs in relation to the other procedures assigned to this
APC. Our analysis of the latest hospital outpatient CY 2013 claims data
shows a final geometric mean cost of approximately $105 for CPT code
93229 based on 3,505 single claims (out of 3,579 total claims), which
is not inconsistent with the geometric mean cost of approximately $183
for APC 0213, which is the lowest cost APC in the extended EEG, sleep,
and cardiovascular studies series of APCs.
In response to the commenter's concern regarding miscoding of
hospital claims reporting the service described by CPT code 93229, we
remind hospitals that CPT code 93229 is not the appropriate procedure
code to use to report Holter monitoring (CPT codes 93224 through
93227), or event monitoring (CPT codes 93268 through 93278) procedures.
CPT code 93229 should be used to report continuous outpatient
cardiovascular monitoring that includes up to 30 consecutive days of
real-time cardiac monitoring. In particular, the 2014 CPT Code Book
describes the procedure described by CPT code 93229 as a mobile
cardiovascular telemetry service and defines it as:
``Mobile cardiovascular telemetry (MCT): Continuously records the
electrocardiographic rhythm from external electrodes placed on the
patient's body. Segments of the ECG data are automatically (without
patient intervention) transmitted to a remote surveillance location by
cellular or landline telephone signal. The segments of the rhythm,
selected for transmission, are triggered automatically (MCT device
algorithm) by rapid and slow heart rates or by the patient during a
symptomatic episode. There is continuous real time data analysis by
preprogrammed algorithms in the device and attended surveillance of the
transmitted rhythm segments by a surveillance center technician to
evaluate any arrhythmias and to determine signal quality. The
surveillance center technician reviews the data and notifies the
physician or other qualified health care professional depending on the
prescribed criteria'' (2014 CPT Professional Edition; page 549).
We expect that hospitals would only report CPT code 93229 on
hospital claims for providing the mobile telemetry service that is
described above.
In summary, after consideration of the public comment we received,
we are finalizing our CY 2015 proposal, without modification, to
reassign CPT code 93229 to APC 0213 for CY 2015. Consistent with our
policy of reviewing APC assignments annually, we will reevaluate the
cost of CPT code 93229 and its APC assignment for the CY 2016
rulemaking.

[[Page 66848]]

2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs 0142,
0361, 0419, and 0422)
In the CY 2014 OPPS/ASC final rule with comment period, we assigned
CPT codes 43211 (Esophagoscopy, flexible transoral; with endoscopic
mucosal resection), and 43254 (Esophagogastroduodenoscopy, flexible,
transoral; with endoscopic mucosal resection) to APC 0141 (Level I
Upper GI Procedures) on an interim basis. In addition, we assigned CPT
code 43240 (Upper gastrointestinal endoscopy including esophagus,
stomach, and either the duodenum and/or jejunum as appropriate; with
transmural drainage of pseudocyst) to APC 0419 (Level II Upper GI
Procedures), CPT code 91035 (Esophagus, gastroesophageal reflux test;
with mucosal attached telemetry ph electrode placement, recording,
analysis and interpretation) to APC 0361 (Level II Alimentary Tests),
and CPT code 0355T (Gastrointestinal tract imaging, intraluminal (eg,
capsule endoscopy), colon, with interpretation and report) to APC 0142
(Level I Small Intestine Endoscopy).
For CY 2015, we proposed to reassign CPT codes 43211 and 43254 from
APC 0141 to APC 0419. We also proposed to continue to assign CPT code
43240 to APC 0419; CPT code 91035 to APC 0361; and CPT code 0355T to
APC 0142.
Comment: Several commenters requested that CMS reassign CPT codes
43211 and 43254 from APC 0141 to APC 0419 in response to the CY 2014
OPPS/ASC final rule with comment period. The commenters believed that
the reassignment would be consistent with the resource and clinical
homogeneity principles used to assign services to appropriate
classification groupings. In response to the CY 2015 OPPS/ASC proposed
rule, the same commenters supported CMS' proposal to reassign CPT codes
43211 and 43254 to APC 0419 for the CY 2015 OPPS update, and applauded
CMS for considering the suggestions made in response to the commenters'
concerns. One commenter requested that CMS consider reassigning CPT
codes 43211 and 43254 from APC 0141 to APC 0422 (Level III Upper GI
Procedures) instead of from APC 0141 to APC 0419 as proposed. Based on
an analysis of the CY 2013 OPPS claims data performed by the commenter,
the commenter believed that the geometric mean costs associated with
endoscopic mucosal resection (EMR) procedures are more closely aligned
with the geometric mean cost of APC 0422 than APC 0419.
Response: EMR CPT codes 43211 and 43254 became effective January 1,
2014. As with all new codes, our policy has been to assign the service
to an APC based on input from a variety of sources, including but not
limited to, a review of the clinical similarity of the service in
comparison to existing procedures; input from CMS medical advisors;
information from interested specialty societies; and a review of all
other information available to us. Based on the complexity of these
procedures and input from our medical advisors, we believe that APC
0419 appropriately reflects the clinical homogeneity and resource costs
associated with performing EMR procedures. Therefore, after
consideration of the public comments we received, we are finalizing our
CY 2015 proposal, without modification, to reassign CPT codes 43211 and
43254 from APC 0141 to APC 0419 for the CY 2015 OPPS update. As we do
every year, we will review our claims data for these services for the
CY 2016 OPPS rulemaking.
Comment: Several commenters expressed concern with CMS' proposal to
continue to assign CPT code 43240 to APC 0419, and requested that CMS
reassign the CPT code to APC 0384 (GI Procedures with Stents) based on
the clinical similarity of the service to other procedures assigned to
this APC.
Response: Based on our analysis of the latest hospital outpatient
claims data used for this final rule with comment period, we agree with
the commenters that a more appropriate APC reassignment is necessary
for CPT code 43240. However, we believe that the most appropriate APC
reassignment is APC 0422 (Level III Upper GI Procedures) rather than
APC 0384. Our claims data show a geometric mean cost of approximately
$1,574 for CPT code 43240 based on 44 single claims (out of 142 total
claims), which is more comparable to the geometric mean cost of
approximately $1,987 for APC 0422 than to the geometric mean cost of
approximately $3,294 for APC 0384. Therefore, after consideration of
the public comments we received, we are modifying our proposal
regarding the APC reassignment of CPT code 43240. Specifically, we are
reassigning CPT code 43240 from APC 0419 to APC 0422 for CY 2015.
Comment: Several commenters expressed concern regarding the
inadequate payment rate for CPT code 91035 under Medicare's ASC payment
system, and requested that CMS reassign CPT code 91035 from APC 0361 to
APC 0142 as a means to increase the payment rate in the ASC setting.
The commenters noted that APC 0142 includes other capsule-based
procedures that are clinically similar to the procedure described by
CPT code 91035, such as the procedure described by CPT code 91112
(Gastrointestinal transit and pressure measurement, stomach through
colon, wireless capsule, with interpretation and report). The
commenters further explained that the procedures described by CPT codes
91035 and 91112 both involve the use of a capsule to collect pH and
other data from the patient's gastrointestinal tract over a period of
several days.
Response: Based on our analysis of the latest hospital outpatient
claims data used for this final rule with comment period, we believe
that CPT code 91035 is appropriately assigned to APC 0361 to ensure
adequate payment for the service in any hospital outpatient setting.
Our claims data show a geometric mean cost of approximately $466 for
CPT code 91035 based on 1,272 single claims (out of 5,099 total
claims), while claims data for CPT code 91112 show a geometric mean
cost of approximately $774 based on 353 single claims (out of 412 total
claims). The geometric mean cost of APC 0361 is approximately $341 and
the geometric mean cost of APC 0142 is approximately $884, which is
almost twice the geometric cost of CPT code 91035. In addition,
assigning CPT code 91035 to APC 0142 would create a violation of the 2
times rule within APC 0142 because the geometric mean cost of the
highest cost significant procedure assigned to APC 0142 (CPT code
44361, with a geometric mean cost of approximately $1,019) is 2.2 times
the geometric mean cost of CPT code 91035. Therefore, APC 0142 would
not be an appropriate assignment for CPT code 91035. We are finalizing
our CY 2015 proposal to continue to assign CPT code 91035 to APC 0361.
Comment: In response to the CY 2014 OPPS/ASC final rule with
comment period, several commenters requested that CMS assign CPT code
0355T, which became effective July 1, 2014, to APC 0142 for the CY 2015
OPPS update. The commenters believed that the procedure described by
CPT code 0355T is similar to the procedures described by existing GI
capsule endoscopy CPT codes 91110 (Gastrointestinal tract imaging,
intraluminal (eg, capsule endoscopy), esophagus through ileum, with
interpretation and report), 91111 (Gastrointestinal tract imaging,
intraluminal (eg, capsule endoscopy), esophagus with interpretation and
report), and 91112 (Gastrointestinal transit and pressure measurement,
stomach through colon, wireless capsule, with interpretation and
report), which are all assigned to APC 0142.
Response: As published in Table 17 of the CY 2015 OPPS/ASC proposed
rule (79 FR 40976), we proposed to continue

[[Page 66849]]

to assign this new code to APC 0142. We agree with the commenters that
GI endoscopy CPT codes 0355T, 91110, 91111, and 91112 are clinically
similar. Therefore, we are finalizing our CY 2015 proposal, without
modification, to continue to assign CPT code 0355T to APC 0142, As a
result, all four GI endoscopy procedures described by CPT codes 0355T,
91110, 91111, and 91112 will be assigned to APC 0142 for the CY 2015
OPPS update.
We remind hospitals that because the payment rates associated with
new codes that become effective July 1 are not available to us in time
for incorporation into the Addenda to the proposed rule, the Level II
HCPCS codes and the Category III CPT codes implemented through the July
2014 OPPS quarterly update CR were not included in Addendum B to the
proposed rule (which is available via the Internet on the CMS Web
site). However, we listed the codes and their proposed APC assignments
in the preamble of the proposed rule.
The final CY 2015 payment rate for all of the CPT codes discussed
can be found in Addendum B to this CY 2015 OPPS/ASC final rule with
comment period (which is available via the Internet on the CMS Web
site).
3. Genitourinary Services
a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and 0202)
For the CY 2014 OPPS update, we made several changes to specific
APC assignments, which included the female reproductive APCs; APC 0192,
APC 0193, and APC 0195. These proposed changes were listed in Addendum
B to the CY 2014 OPPS/ASC proposed rule (which is available via the
Internet on the CMS Web site). With respect to these three APCs, based
on claims data available for the CY 2014 OPPS/ASC proposed rule, only
APC 0193 showed a violation of the 2 times rule. 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 the CY 2014
OPPS update because this APC sufficiently reflected the clinical and
resource coherence of the Level V female reproductive procedures.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40982), we discussed
our proposal to make further changes to the existing female
reproductive APCs; APC 0188, APC 0189, APC 0191, APC 0192, APC 0193,
APC 0195, and APC 0202 based on a presentation made at the March 10,
2014 Panel meeting. Specifically, one 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 became effective with the CY 2014 OPPS
update. The presenter stated that the proposed changes would compromise
beneficiary access to pelvic floor repair procedures, and urged the
Panel to request that CMS reconsider its packaging policy for the
procedures assigned to APCs 0193 and 0195 and allow stakeholders the
opportunity to work with CMS to appropriately reassign these procedures
to accurately account for the clinical complexity associated with
providing these services. In addition, the presenter requested that CMS
delay the conversion of existing APC 0202 (Level VII Female
Reproductive Procedures) to a C-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 hospital
outpatient claims data available for the CY 2015 OPPS/ASC proposed
rule, the Panel did not make any recommendations regarding any of the
female reproductive APCs.
For the CY 2015 OPPS update, based on our review of the latest
hospital outpatient claims data available for the CY 2015 OPPS/ASC
proposed rule, there were no violations of the 2 times rule within any
of the female reproductive APCs (79 FR 40982). However, we proposed to
restructure the female reproductive APCs to more appropriately reflect
the resource and clinical characteristics of the procedures assigned to
each APC. The proposed restructuring resulted 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 the proposed five-level APC
structure will provide more accurate payments for the female
reproductive procedures furnished to Medicare beneficiaries.
Tables 21 and 22 of the proposed rule (79 FR 40983) showed the
current CY 2014 and proposed CY 2015 female reproductive APCs.
Specifically, Table 21 showed the female reproductive APCs, APC titles,
and their status indicator assignments for CY 2014, while Table 22
showed the proposed female reproductive APCs, APC titles, and their
status indicator assignments for CY 2015. In the proposed rule, we
noted that one of the five levels of the female reproductive APCs, APC
0202, is proposed to be converted to a C-APC. We refer readers to
section II.A.2.e. of this final rule with comment period for further
discussion of our comprehensive APC policy.
In addition, for CY 2015, we proposed to consolidate the two
existing hysteroscopy APCs; APC 0190 (Level I Hysteroscopy) and APC
0387 (Level II Hysteroscopy). Specifically, we proposed to delete APC
0387 and to reassign the procedures currently assigned to this APC to
APC 0190. In conjunction with this proposed reassignment, we proposed
to rename APC 0190 from ``Level II Hysteroscopy'' to ``Hysteroscopy.''
Based on the hospital outpatient claims data available for the CY 2015
OPPS/ASC proposed rule, we believe that the two-leveled structure of
the hysteroscopy APCs is no longer necessary because the single-leveled
hysteroscopy APC sufficiently reflects the resources and clinical
similarities of all the hysteroscopic procedures. We note that, for CY
2014, the payment rates for APCs 0190 and 0387 are $1,763 and $2,818,
respectively. For CY 2015, the proposed payment rate for APC 0190 was
approximately $2,014.
Comment: Many commenters supported CMS' proposal to reassign
several of the female reproductive procedures to APC 0202 and stated
that the proposed restructuring of these APCs more appropriately
reflects clinical and resource homogeneity among similar procedures.
Response: We appreciate the commenters' support.
Comment: Some commenters opposed CMS' proposal to reassign CPT code
57155 (Insertion of uterine tandem and/or vaginal ovoids for clinical
brachytherapy) from APC 0193 (Level IV Female Reproductive Procedures)
to APC 0192 (Level III Female Reproductive Procedures) for the CY 2015
OPPS update. According to the commenters, the proposed CY 2015 OPPS
payment rate of approximately $501 for CPT code 57155 is significantly
lower than the CY 2014 OPPS payment rate of approximately $1,375, which
represents a 63-percent reduction in the payment for this service. The
commenters noted that the APC assignment for this procedure has varied
between APC 0192 and APC 0193 since the inception of the code, and
recommended that CMS reexamine the procedures assigned to APCs 0192,
0193, and 0202 to ensure that the proposed structure of these APCs
provides the most appropriate payment for the services assigned to each
APC.

[[Page 66850]]

Some commenters requested that CMS continue to assign CPT code 57155 to
APC 0193 for the CY 2015 update. The commenters also recommended that
CMS closely monitor medical practice patterns to ensure beneficiary
access to this treatment if CMS finalizes the proposal to reassign CPT
code 57155 to APC 0192.
Response: CPT code 57155 became effective January 1, 2002. Since
that time, CPT code 57155 has been assigned to either APC 0192 or APC
0193. For CYs 2002, 2003, and 2006 through 2013, CPT code 57155 was
assigned to APC 0192. For CYs 2004, 2005, and 2014, CPT code 57155 was
assigned to APC 0193. Consistent with CMS' statutory requirement under
section 1833(t)(9) of the Act to review and revise APC assignments
annually and to construct the most appropriate APC groupings as well
as, to the extent desirable, correct any 2 times rule violations, we
evaluated the resource consumption and clinical coherence associated
with the female reproductive APCs for the CY 2015 OPPS update. Based on
an analysis of the latest hospital outpatient claims data for this
final rule with comment period, CPT code 57155 has a geometric mean
cost of approximately $731 based on 858 single claims (out of 2,461
total claims). The geometric mean costs for the significant procedures
assigned to APC 0192 range between approximately $398 (for CPT code
56605) and $731 (for CPT code 57155). Therefore, we believe that CPT
code 57155 is appropriately assigned to APC 0192 based on the
comparable resource costs associated with the other procedures assigned
to this APC and are not making any changes to our proposal for this
final rule with comment period. We note that APC 0192 had a proposed
payment rate of approximately $501, which was based on hospital
outpatient claims data submitted between January 1, 2013, and December
31, 2013, and processed on or before December 31, 2013. For this final
rule with comment period, the final payment rate for APC 0192 is
approximately $487, which is based on hospital outpatient claims data
submitted between January 1, 2013, and December 31, 2013, and processed
on or before June 30, 2014.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to reassign CPT code
57155 from APC 0193 to APC 0192 for CY 2015.
Comment: Several commenters requested that CMS not finalize the
proposal to consolidate the two existing hysteroscopy APCs. Instead,
the commenters suggested that CMS maintain the two-leveled structure of
the hysteroscopy APCs to differentiate the less costly diagnostic
hysteroscopic services from the more resource-intensive hysteroscopic
procedures. One commenter stated that the reconfiguration of these APCs
for CY 2015 is premature and warrants more discussion prior to
finalizing a proposal regarding this issue. Another commenter believed
that it is not clinically coherent to combine the diagnostic
hysteroscopy procedure described by CPT code 58555 with a significant
therapeutic procedure, such as a hysteroscopic myomectomy described by
CPT code 58561. The commenter explained that all of the gynecology
specialty societies recommend minimally invasive alternatives to
hysterectomy when available. In addition, the commenter believed that
the proposal to consolidate the hysteroscopy APCs would provide
incentives for hospitals to encourage treatment that is not the
standard of care.
Response: Based on a review of the latest hospital outpatient
claims data for the CY 2015 OPPS update, we believe that restructuring
and consolidating the gynecology APCs is prudent in order to improve
the comparability of resource and clinical similarity of all the
hysteroscopy procedures assigned to a specific APC. In addition, we
disagree with the commenter's assertion regarding hospitals' incentives
to deliver substandard care for the purposes of financial gain. We
believe that hospitals and physicians will offer their patients the
appropriate care and treatment, which may or may not employ an
expensive medical device.
Comment: Several commenters suggested that modifications to the
proposed APC assignments for certain related procedures be considered
if CMS finalizes the proposal to restructure and consolidate the female
reproductive APCs. One commenter suggested that CMS reassign CPT codes
58561 and 58563 to APC 0202 instead of APC 0190 based on the clinical
similarities in relation to the other procedures assigned to APC 0202.
Response: Based on input from our medical advisors, we agree with
the commenter that APC 0202 is the most appropriate APC assignment for
CPT codes 58561 and 58563 based on their clinical similarity in
relation to the other procedures assigned to this APC. We note that APC
0202 is designated as a C-APC for the CY 2015 OPPS update. Further
information on C-APCs can be found in section II.A.2.e. of this final
rule with comment period.
Comment: One commenter suggested that CMS reconsider the proposal
to consolidate the hysteroscopy APCs and establish two separate APCs
for female reproductive procedures; one for the more resource-intensive
hysteroscopic procedures and another for the lower-cost and less
complex hysteroscopic procedures. Specifically, the commenter
recommended assigning the following seven resource-intensive female
reproductive procedures to a higher-paying APC, with a geometric mean
cost ranging between approximately $3,010 and $4,350: CPT codes 58353,
58356, 58561, 58563, 58565, 58559, and 58560. The commenter also
suggested assigning the following four less complex female reproductive
procedures to a lower-paying APC, with a geometric mean cost ranging
between approximately $1,758 and $2,099: CPT codes 58555, 58558, 58562,
and 58579. Another commenter believed that the necessary resources
required to provide the service described by CPT code 58555 are
significantly less than the resources required to provide the service
described by CPT code 58561. The commenter stated that the resource
costs for providing the services described by CPT codes 58353, 58561,
58563, and 58565 are similar and recommended that these procedures be
assigned to the same APC.
Response: We reviewed our latest hospital outpatient claims data
used for this final rule with comment period for all of the
hysteroscopic procedures. Based on our review and after consideration
of the public comments we received, we are modifying our proposal
regarding the proposed APC assignments for several of the hysteroscopic
procedures for the CY 2015 OPPS update. Specifically, we are deleting
APC 0190 and reassigning the eight procedures that were proposed to be
assigned to this APC to APC 0188, APC 0193, or APC 0202.
In summary, after consideration of the public comments received, we
are finalizing our proposals with some modifications. For the
hysteroscopy procedure APCs, we proposed to reassign all of the
procedures assigned to APC 0387 to APC 0190, which resulted in a one-
leveled APC containing all of the hysteroscopy procedures.
Specifically, we proposed to delete APC 0387 (Level II Hysteroscopy),
and to rename APC 0190 ``Hysteroscopy.'' However, based on our analysis
of the hospital outpatient claims data available for this final rule
with comment period, we are modifying our proposal. Instead, we are
reassigning all of the hysteroscopy procedures that we proposed to
assign

[[Page 66851]]

to APC 0190 to one of the female reproductive APCs. That is, we are
reassigning all of the procedures proposed for reassignment to APC 0190
to APC 0188, APC 0193, or APC 0202. Consequently, with no procedures
remaining in APC 0190, we deleted this APC for CY 2015. In addition, we
are finalizing our proposal to restructure the female reproductive APCs
to more appropriately reflect the resource and clinical characteristics
of the procedures assigned to each APC. Specifically, we are finalizing
our proposal to assign all of the female reproductive procedures to
APCs 0188, 0189, 0192, 0193, or 0202. In addition, because of our
revision to the hysteroscopy procedures APCs, we are revising the APC
titles for the five female reproductive APCs; APC 0188, APC 0189, APC
0192, APC 0193, and APC 0202, from ``Female Reproductive Procedures''
to ``Gynecologic Procedures'' to more appropriately describe the
procedures assigned to these APCs. Table 20 below lists the
hysteroscopic procedures CPT codes, along with their long descriptors,
proposed CY 2015 OPPS status indicators and APC assignments, as well as
their final CY 2015 OPPS status indicators and APC assignments. Table
21 below lists the final APC titles and status indicators for the
gynecologic procedure APCs. The final CY 2015 payment rates for the
gynecologic procedures APCs, as well as the hysteroscopic procedures
CPT codes listed in Table 21 can be found in Addendum B to this CY 2015
OPPS/ASC final rule with comment period (which is available via the
Internet on the CMS Web site).

Table 20--Final CY 2015 APC Assignments for the Hysteroscopic Procedures
----------------------------------------------------------------------------------------------------------------
Proposed CY Final CY Final CY
CPT Code Long descriptor Proposed CY 2015 OPPS 2015 OPPS 2015 OPPS
2015 OPPS SI APC SI APC
----------------------------------------------------------------------------------------------------------------
58353..................... Endometrial ablation, thermal, J1 0202 J1 0202
without hysteroscopic
guidance.
58356..................... Endometrial cryoablation with J1 0202 J1 0202
ultrasonic guidance,
including endometrial
curettage, when performed.
58555..................... Hysteroscopy, diagnostic T 0190 T 0193
(separate procedure).
58558..................... Hysteroscopy, surgical; with T 0190 T 0193
sampling (biopsy) of
endometrium and/or
polypectomy, with or without
d & c.
58559..................... Hysteroscopy, surgical; with T 0190 J1 0202
lysis of intrauterine
adhesions (any method).
58560..................... Hysteroscopy, surgical; with T 0190 J1 0202
division or resection of
intrauterine septum (any
method).
58561..................... Hysteroscopy, surgical; with T 0190 J1 0202
removal of leiomyomata.
58562..................... Hysteroscopy, surgical; with T 0190 T 0193
removal of impacted foreign
body.
58563..................... Hysteroscopy, surgical; with T 0190 J1 0202
endometrial ablation (eg,
endometrial resection,
electrosurgical ablation,
thermoablation).
58565..................... Hysteroscopy, surgical; with J1 0202 J1 0202
bilateral fallopian tube
cannulation to induce
occlusion by placement of
permanent implants.
58579..................... Unlisted hysteroscopy T 0190 T 0188
procedure, uterus.
----------------------------------------------------------------------------------------------------------------

Table 21--Final CY 2015 APC Titles for Gynecologic Procedures
----------------------------------------------------------------------------------------------------------------
Final CY
CY 2015 APC Proposed CY 2015 APC title Final CY 2015 APC title 2015 status
indicator
----------------------------------------------------------------------------------------------------------------
0188......................... Level I Female Reproductive Level I Gynecologic Procedures.. T
Procedures.
0189......................... Level II Female Reproductive Level II Gynecologic Procedures. T
Procedures.
0192......................... Level III Female Reproductive Level III Gynecologic Procedures T
Procedures.
0193......................... Level IV Female Reproductive Level IV Gynecologic Procedures. T
Procedures.
0202......................... Level V Female Reproductive Level V Gynecologic Procedures.. J1
Procedures.
----------------------------------------------------------------------------------------------------------------

b. Cystourethroscopy, Transprostatic Implant Procedures, and Other
Genitourinary Procedures (APCs 0160, 0161, 0162, 0163, and 1564)
For the CY 2015 OPPS update, based on our review of the latest
hospital outpatient claims data available for the CY 2015 OPPS/ASC
proposed rule, we proposed to restructure the APCs containing
cystourethroscopy and other genitourinary procedures to more
appropriately reflect the resource costs and clinical characteristics
of the procedures assigned within each APC (79 FR 40987). We note that,
for the CY 2014 OPPS update, there are five levels of APCs that contain
cystourethroscopy and genitourinary procedures. These APCs were listed
in Table 26 of the CY 2015 OPPS/ASC proposed rule (79 FR 40986), along
with their status indicator assignments for CY 2014. The proposed
restructuring resulted 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
available, in the CY 2015 OPPS/ASC proposed rule, we proposed to delete
APC 0429 (Level V Cystourethroscopy and Other Genitourinary Procedures)
and reassign the procedures that were previously assigned to this APC
to either APC 0161 (Level I Cystourethroscopy and Other Genitourinary
Procedures) or APC 0163 (Level IV Cystourethroscopy and Other
Genitourinary Procedures). We believe that the procedures currently
assigned to APC 0429 would be more appropriately assigned to either APC
0161 or APC 0163 based on their geometric mean costs for the CY 2015
OPPS update. Further, we believe that 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. We also proposed to delete
APC 0169 (Lithotripsy) because the one procedure,

[[Page 66852]]

specifically the procedure described by CPT code 50590 (Lithotripsy,
extracorporeal shock wave), that was assigned to this APC was proposed
for reassignment to APC 0163 (79 FR 40987). Table 27 of the CY 2015
OPPS/ASC proposed rule (79 FR 40987) listed the proposed APCs that
contain cystourethroscopy and other genitourinary procedures, the APC
titles, and the proposed status indicator assignments for CY 2015. The
proposed payment rates for the specific APCs listed in Table 27 were
listed in Addendum A to the proposed rule. The proposed payment rates
for the specific cystourethroscopy and other genitourinary procedure
codes were listed in Addendum B to the proposed rule. (Addenda A and B
to the proposed rule are available via the Internet on the CMS Web
site.)
Comment: Several commenters opposed CMS' proposal to delete APC
0169 and reassign the extracorporeal shock wave lithotripsy (ESWL) CPT
code 50590 to APC 0163. The commenters noted that the procedure
described by CPT code 50590 is classified as a noninvasive therapy and
is not similar, clinically or with respect to resource costs, to the
other more invasive surgical urological procedures that are proposed
for assignment to APC 0163. One commenter stated that the ESWL
procedure does not involve the use of an endoscope and, therefore,
should not be assigned to APC 0163. This commenter believed that the
payment rate for APC 0163 would be influenced by dominating the claims
data for CPT code 50590 because ESWL is a commonly performed procedure
resulting in a significant high volume of single frequency claims. The
commenter requested that CMS delay finalizing this proposal or,
alternatively, reassign CPT code 50590 to APC 0162 (Level III
Cystourethroscopy and Other Genitourinary Procedures) because this APC
encompasses a broader and more diverse grouping of procedures than APC
0163.
Response: As part of our standard annual OPPS update process, we
review each APC assignment for the clinical similarity and resource
homogeneity of the procedures assigned to each APC. An analysis of our
latest hospital outpatient claims data available for this final rule
with comment period revealed a geometric mean cost of approximately
$3,094 based on 32,370 single claims (out of 44,816 total claims) for
CPT code 50590, which is comparable to the geometric mean cost of
approximately $3,230 for APC 0163. The significant procedures assigned
to APC 0163 have geometric mean costs ranging between $2,946 and
$4,088. We do not agree with the commenters that APC 0162 is the more
appropriate APC assignment because the geometric mean cost for this
APC, approximately $2,163, is significantly lower than the geometric
mean cost of approximately $3,094 for CPT code 50590. In addition, the
geometric mean cost of APC 0163 (using proposed rule data) and without
CPT code 50590 assigned to this APC was approximately $3,058, which is
close to the final rule geometric mean cost of CPT code 50590 of
$3,094. Although the ESWL procedure does not involve the use of an
endoscope, we note that not every procedure proposed for reassignment,
or ultimately reassigned, to APC 0163 uses an endoscope. In addition,
we do not agree with the commenters that the ESWL procedure is not
clinically similar to the other procedures assigned to APC 0163. There
are no general rules for clinical similarity that apply to all APCs.
Instead, the evaluation of clinical similarity depends upon the
particular characteristics of the services being evaluated for a
particular APC assignment. The use of single procedure APCs, like APC
0169, the APC to which CPT code 50590 is assigned for CY 2014,
generally is not considered appropriate under the OPPS because payment
rates based on a single procedure code's geometric mean cost is more
consistent with a fee schedule than a prospective payment system.
However, there are limited circumstances in which we assign a single
procedure code to an APC; for example, the intraocular procedures
assigned to an APC series. Specifically, APC 0673 (Level III
Intraocular Procedures) has a geometric mean cost of approximately
$3,239. APC 0293 (Level IV Intraocular Procedures) is the next higher
level APC in the intraocular procedures APC series, and it has a single
procedure (CPT code 65770 (Keratoprosthesis)) assigned to it, which has
a geometric mean cost of approximately $8,766. The highest cost
procedure assigned to APC 0673 is CPT code 67113 (Repair of complex
retinal detachment), which has a geometric mean cost of approximately
$4,065. The geometric mean cost of CPT code 65770 is significantly
higher, 2.2 times the geometric mean cost of CPT code 67113. Therefore,
we assigned CPT code 65770 to a different APC because the resource
costs are not similar. Because the procedure described by CPT code
65770 is an intraocular surgery and there are no other APCs that
contain clinically similar procedures, we assigned CPT code 65770 to
APC 0293 without any other procedures. Continuing in this series, we
assigned CPT code 0308T (Insertion of intraocular telescope prosthesis
including removal of crystalline lens) to APC 0351 (Level V Intraocular
Procedures) without any other procedures. CPT code 0308T has a
geometric mean cost of approximately $23,947, which is 2.73 times the
geometric mean cost of the procedure described by CPT code 65770, which
is assigned to APC 0293, which is one level lower than APC 0351 in the
intraocular procedures APC series. CPT code 0308T is the only procedure
code assigned to APC 0351 because there are no other procedures that
are similar in terms of resource costs. We do not believe that similar
APC series assignment is applicable to CPT code 50590. Therefore, we
proposed to reassign CPT code 50590 to APC 0163 and delete APC 0169 (79
FR 40986 through 40987). In summary, based on our review of the latest
hospital outpatient claims data for this final rule with comment
period, we believe that CPT code 50590 would be appropriately assigned
to APC 0163 based on its clinical and resource similarity to the other
procedures assigned to APC 0163, several of which are dedicated to
kidney stone removal. Therefore, we are finalizing our proposal,
without modification, to assign CPT code 50590 to APC 0163 for CY 2015.
Comment: One commenter requested that CMS not finalize the proposal
to delete APC 0429, and suggested that CMS maintain this APC until data
become available for CPT code 52356 (Cystourethroscopy, with
ureteroscopy and/or pyeloscopy; with lithotripsy including insertion of
indwelling ureteral stent (eg., Gibbons or double-J type)), which
became effective January 1, 2014.
Response: We believe that CPT code 52356 is appropriately
categorized by APC 0163 based on its similarity to the other procedures
assigned to this APC. Because CPT code 52356 became effective January
1, 2014, we expect to have claims data for the procedure described by
this code available for the CY 2016 OPPS rulemaking cycle. We note
that, consistent with CMS' policy of reviewing APC assignments annually
in accordance with the statutory requirement, we will reevaluate the
APC assignment for CPT code 52356 for the CY 2016 OPPS update.
Therefore, after consideration of the public comment we received, we
are finalizing our proposals, without modification, to delete APC 0429
and to assign CPT code 52356 to APC 0163 for CY 2015.
Comment: Some commenters disagreed with CMS' proposal to

[[Page 66853]]

reassign CPT code 55875 (Transperineal placement of needles or
catheters into prostate for interstitial radioelement application, with
or without cystoscopy) from APC 0163 to APC 0162. The commenters stated
that the proposal would result in a 28-percent reduction in the payment
for this service when the CY 2014 payment rate of approximately $2,905
for APC 0163 is compared to the CY 2015 proposed payment rate of
approximately $2,091 for APC 0162. The commenters noted that CPT code
55875 has been assigned to APC 0163 since the code's inception in CY
2007, and believed that the proposed payment rate for APC 0163 more
accurately reflects the resources necessary to provide this service.
The commenters urged CMS to maintain the APC assignment of CPT code
55875 to APC 0163.
Response: Analysis of our latest hospital claims data used for this
final rule with comment period revealed a geometric mean cost of
approximately $2,501 for CPT code 55875 based on 703 single claims (out
of 4,681 total claims), which is comparable to the geometric mean cost
of approximately $2,163 for APC 0162. We do not agree with the
commenters that APC 0163 is the more appropriate APC because its
geometric mean cost of approximately $3,230 is significantly higher
than the geometric mean cost of approximately $2,501 for CPT code
55875. We believe that CPT code 55875 is appropriately assigned to APC
0162 based on its clinical homogeneity and resource costs to the
procedures currently assigned to this APC. Therefore, after
consideration of the public comments we received, we are finalizing our
proposal, without modification, to reassign CPT code 55875 to APC 0162
for CY 2015.
Comment: One commenter opposed CMS' proposal to reassign CPT code
53850 (Transurethral destruction of prostate tissue; by microwave
thermotherapy) from APC 0429 to APC 0161. The commenter stated that the
CY 2015 proposed payment rate for APC 0161 is approximately $1,235,
which is significantly lower than the CY 2014 payment rate of
approximately $3,304 for APC 0429. The commenter suggested that CMS
reassign CPT code 53850 to APC 0163, the APC to which CPT code 53852
(Transurethral destruction of prostate tissue; by radiofrequency
thermotherapy) is proposed to be reassigned. The commenter explained
that both procedures are similar in clinical technique because both
procedures use a thermal approach as an alternative to open
prostatectomy or transurethral resection of the prostate for the
treatment of benign prostatic hyperplasia (BPH).
Response: As has been our practice since the implementation of the
OPPS in 2000, we review, on an annual basis, the APC assignments for
the procedures and services paid under the OPPS. Based on the latest
hospital outpatient claims data used for this final rule with comment
period, our analysis does not support the reassignment of CPT code
53850 to APC 0163. Our analysis of the claims data shows a geometric
mean cost of approximately $1,542 for CPT code 53850 based on 107
single claims (out of 142 total claims), which is relatively similar to
the geometric mean cost of approximately $1,273 for APC 0161. While we
acknowledge that both procedures are similar, our analysis of the
claims data shows that the resource costs of providing the procedure
described by CPT code 53852 is significantly higher than the resource
cost of providing the procedure described by CPT code 53850.
Specifically, the geometric mean cost for CPT code 53852 is
approximately $3,339 based on 98 single claims (out of 156 total
claims), which is comparable to the geometric mean cost of APC 0163 of
approximately $3,230. We do not agree with the commenters that APC 0163
is the more appropriate APC assignment because its geometric mean cost
is significantly higher than the geometric mean cost of CPT code 53850
of approximately $1,542. We believe that CPT code 53850 would be
appropriately assigned to APC 0161 based on its clinical homogeneity
and resource costs to the procedures currently assigned to this APC.
Therefore, after consideration of the public comment we received, we
are finalizing our proposal, without modification, to reassign CPT code
53850 from APC 0429 to APC 0161 for CY 2015.
In addition, effective April 1, 2014, we created HCPCS codes C9739
(Cystourethroscopy, with insertion of transprostatic implant; 1 to 3
implants) and C9740 (Cystourethroscopy, with insertion of
transprostatic implant; 4 or more implants) as a result of an
application to assign the transprostatic implant procedures (TIPs) to a
New Technology APC. We assigned HCPCS codes C9739 and C9740 to APCs
0162 (Level III Cystourethroscopy and other Genitourinary Procedures)
and 1564 (New Technology--Level XXVII), respectively, based on the
estimated costs of the procedures, which include 1 to 3 implants in the
case of procedures described by HCPCS code C9739, and 4 or more
implants in the case of procedures described by HCPCS code C9740. We
based the number of implants for HCPCS codes C9739 and C9740 on the
number of implant utilization data per patient that the New Technology
applicant provided within its approved application. The CY 2014 payment
rates for APCs 0162 and 1564 are $2,007.32 and $4,750.00, respectively.
The AMA's CPT Editorial Panel recently created two new codes for
this technology, which become effective on January 1, 2015: CPT codes
52441 (Cystourethroscopy, with insertion of permanent adjustable
transprostatic implant; single implant) and 52442 (Cystourethroscopy,
with insertion of permanent adjustable transprostatic implant; each
additional permanent adjustable transprostatic implant (List separately
in addition to code for primary procedure)).
Comment: One commenter stated that the TIPs described by HCPCS
codes C9739 and C9740 do not receive adequate payment under the OPPS
because of the code descriptors for these procedure codes as they
relate to the number of implants allowed in each respective code (1 to
3 implants for HCPCS code C9739 and 4 or more implants for HCPCS code
C9740), when categorized by the APCs in which these services are
assigned. The commenter also believed that the TIPs are unable to be
performed in the ASC setting because of the inadequate payment rate for
the specific APCs. The commenter believed that the procedures described
by HCPCS codes C9739 and C9740 are device dependent because a majority
of the procedures' costs are associated with the costs of the implants,
with a mean of 4.9 implants per procedure. The commenter also believed
that there is considerable variation in the number of implants used for
each procedure. The commenter believed that the ASC payment is
extremely low because the procedures are not designated as ``device
intensive'' in the ASC setting (that is, the procedures are not
assigned to ASC payment indicator ``J8''), nor are the procedures
assigned to a C-APC under the OPPS, which would most likely allow for
the performance of the device-intensive treatment in the ASC setting,
similar to most of the proposed C-APCs that are defined as device-
intensive APCs. The commenter stated that the proposed OPPS payments
for HCPCS codes C9739 and C9740 are inadequate to cover both the costs
of the number of implants required and the cost of the procedure. The
commenter recommended several possible APC assignments to improve the
payments for TIPs. The commenter recommended using new CPT codes 52441
and 52442

[[Page 66854]]

to report the TIPs under the OPPS, and assigning the procedures to C-
APC 0385 (Level I Urogenital Procedures) because the proposed payment
rate for C-APC 0385 of approximately $7,659 is comparable to the
estimated cost of performing TIPs using 5 implants, which is
approximately $7,519. The commenter's second recommendation was to
continue to report the performance of the TIPs using HCPCS codes C9739
and C9740, and to assign HCPCS code C9740 to APC 0385, as described
previously, and HCPCS code C9739 to APC 0202 (Level V Female
Reproductive Procedures) and remove ``Female'' from the title of APC
0202. According to the commenter, the proposed payment for APC 0202 of
approximately $4,366 is equivalent to the cost of a TIP using 2 or 3
implants. The commenter believed that because APC 0202 is designated as
a C-APC, the ASC payment for the procedure would also prove to be
adequate. The commenter's third recommendation was to use new CPT codes
52441 and 52442 to report TIPs and to assign the procedure codes to APC
0168 (Level II Urethral Procedures) on an interim basis until OPPS
claims data are available for these codes. The commenter believed that
the proposed payment rate for APC 0168 of approximately $2,533 more
appropriately equates to the cost of a single implant procedure
described by CPT code 52441, while additional implant procedures
described by CPT code 52442 would be paid at 50 percent, or
approximately $1,267, because APC 0168 is subject to the multiple
procedure discount (that is, the APC is assigned to status indicator
``T''), which, the commenter claimed, more appropriately equates to the
estimated cost of providing the procedure described by CPT code 52442
of approximately $1,248. However, the commenter noted that, because APC
0168 is not a C-APC, payment for the procedure may not be designated as
``device intensive'' to ensure adequate ASC payment. The commenter
recommended that CMS consider any procedure that has device costs that
are greater than 40 percent as device intensive.
Response: We agree with the commenter that the cost of the implants
associated with the procedures described by HCPCS codes C9739 and C9740
represents the majority of the costs of the procedures. We considered
those costs and the variation in the number of implants per procedure
when we created HCPCS codes C9739 and C9740 and assigned the procedure
codes to APCs 0162 and 1564, respectively. We believe that HCPCS codes
C9739 and C9740 are preferable to the new CPT codes 52441 and 52442
with respect to OPPS and ASC payments because the new codes describe
complete procedures instead of the insertion of individual implants,
which are almost always incomplete procedures because patients usually
receive multiple implants. We do not believe that any of the APCs
recommended by the commenter are appropriate for assignment of HCPCS
codes C9739 and C9740 at this time because our usual policy with new
codes is to wait until we have OPPS claims data available before making
an APC reassignment. In regard to the ASC payment for the procedures,
neither APC 0162 nor APC 1564 is designated as device intensive.
Therefore, the multiple procedure payment reduction under OPPS applies
to the entire payment amount under the ASC payment as well. Currently,
there is no policy regarding designating services that are assigned to
a New Technology APC as device intensive for the ASC setting. We may
consider such a policy in future rulemakings.
We will maintain payment for the cystourethroscopy with insertion
of TIPs using HCPCS codes C9739 and C9740 because we believe that the
code descriptors more appropriately reflect complete procedures and the
distribution of implant utilization per patient. For CY 2015, we are
maintaining our APC assignments for HCPCS codes C9739 and C9740 to APCs
0162 and 1564, respectively. The APC assignments for HCPCS codes C9739
and C9740 are initial APC assignments until we obtain claims data for
these two codes for the CY 2016 OPPS update. The final CY 2015
geometric mean costs for APC 0162 is approximately $2,163, and the
final CY 2015 payment rate (there are no geometric mean costs for New
Technology APCs, only payment bands) for APC 1564 is approximately
$4,750. CPT codes 52441 and 52442 will not be payable under the OPPS
for CY 2015; we are assigning these two CPT codes to status indicator
``B'' (Codes that are not recognized by OPPS when submitted on an
outpatient hospital Part B bill type (12x and 13x)).
After consideration of the public comments we received, we also are
finalizing our proposal to restructure the APCs containing
cystourethroscopy, transprostatic implant procedures, 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 final rule with comment
period. The final payment rates for the cystourethroscopy,
transprostatic implant procedures, and other genitourinary procedure
codes, as well as the specific CPT codes on which we received public
comments and that are discussed in this section, can be found in
Addendum B to this final rule with comment period, which is available
via the Internet on the CMS Web site. The final payment rates for APCs
0160, 0161, 0162, and 0163, which are the final CY 2015
cystourethroscopy, transprostatic implant procedures, and other
genitourinary APCs, can be found in Addendum A to this final rule with
comment period, which is also available via the Internet on the CMS Web
site.
We remind commenters that every year we revise, if necessary, the
APC assignments for procedure codes based on our analysis of the latest
hospital outpatient claims data. We anticipate that there will be
further significant revisions to the urology-related APCs in futures
years because the current overall APC structure is suboptimal and can
be improved with respect to the clinical similarity and resource
similarity of the groupings. In addition, we note that 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. 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 the proposed rule.
c. Level IV Anal/Rectal Procedures (APC 0150)
We created HCPCS code C9735 (Anoscopy; with directed submucosal
injection(s), any substance) effective April 1, 2013, and assigned the
service to APC 0150 (Level IV Anal/Rectal Procedures) for CY 2013,
which had a payment rate of $2,365.97. We maintained the assignment of
HCPCS code C9735 to APC 0150 for CY 2014, with a payment rate of
$2,501.31. HCPCS code C9735 involves injection of a bulking agent,
L8605 (Injectable bulking agent dextranomer/hyaluronic

[[Page 66855]]

acid copolymer implant, anal canal, 1 ml, includes shipping and
necessary supplies). One commenter in response to the CY 2014 OPPS/ASC
proposed rule believed that the proposed assignment for HCPCS code
C9735 to APC 0150 was inappropriate, and asserted that the entire HCPCS
code C9735 procedure costs far more than the proposed payment rate for
APC 0150. The commenter recommended creating a new Level V Anal/Rectal
Procedures APC, composed of HCPCS code C9735, and two other procedures.
CMS responded in the CY 2014 OPPS/ASC final rule with comment period
that HCPCS code C9735 became effective April 1, 2013, so there were no
claims data yet on this procedure, and that our longstanding policy is
to wait until there are claims data on a new procedure before
reassigning the service to another clinical APC (78 FR 74981). We did
not agree with the commenters that creating a Level V Anal/Rectal
Procedures APC was warranted for CY 2014. We believed that the
suggested Level V APC would have a low volume of single frequency
claims, and HCPCS code C9735 had no claims volume at that time. We
stated that the low volume of claims for such an APC would contribute
to APC cost and payment volatility.
For CY 2015, we proposed to maintain the assignment of HCPCS code
C9735 to APC 0150, which had a proposed payment rate of $2,612.71. The
AMA's CPT Editorial Panel created new Category III CPT code 0377T
(Anoscopy with directed submucosal injection of bulking agent for fecal
incontinence), which describes the procedure performed by HCPCS code
C9735, to be effective January 1, 2015.
Comment: A few commenters recommended that CMS divide APC 0150 into
two APCs by creating a higher cost Level V Anal/Rectal Procedures APC.
The commenters stated that there are four procedure codes that have a
geometric mean cost that is more than $500 higher than the proposed
geometric mean cost of APC 0150, which is $2,735.52, and one procedure
code that has a geometric mean cost that is approximately $300 higher
than the proposed geometric mean cost of APC 0150. One commenter
specifically stated that the proposed payment rate for APC 0150 is
insufficient to cover the cost of the procedure described by HCPCS code
C9735, which is one of the five procedure codes recommended for
assignment to the suggested Level V Anal/Rectal Procedures APC, because
the proposed payment rate for APC 0150 is lower than the total cost of
the procedure. The commenter pointed out that the proposed geometric
mean cost of HCPCS code C9735 is $3,241.32, which is considerably
higher that the proposed geometric mean cost of APC 0150, which is
$2,735.52. The commenter also recommended creating a Level V Anal/
Rectal Procedures APC, and assigning HCPCS code C9735 and other codes
to this recommended APC. In addition, the commenter recommended that
CMS use new CPT code 0377T for hospitals to report the anoscopy with
directed submucosal injection of bulking agent for fecal incontinence
procedure, effective January 1, 2015.
Response: The claims data available for this final rule with
comment period, which are used to establish final payment rates for the
CY 2015 OPPS, show a geometric mean cost of approximately $2,698 for
APC 0150, while the geometric mean cost for HCPCS code C9735 is
approximately $2,863 based on 56 single frequency claims. We believe
that the geometric mean cost of HCPCS code C9735 is similar to the
geometric mean cost of APC 0150. Further, the procedure described by
HCPCS code C9735 is no longer one of the five highest cost procedures
assigned to APC 0150 based on claims data available for this final rule
with comment period. Similarly, there are other higher cost, lower
volume procedures with geometric mean costs that are greater than the
geometric mean cost of APC 0150, but do not create a violation of the 2
times rule because of the APC assignment. For instance, CPT code 46762
(Sphincteroplasty, anal, for incontinence, adult; implantation
artificial sphincter) has a final rule geometric mean cost of
approximately $11,873 based on 9 single frequency claims. The volume of
claims for this CPT code is too low to consider this procedure
significant for purposes of evaluating a potential violation of the 2
times rule. Therefore, we do not believe that the range of costs for
the significant procedures assigned to APC 0150 warrants the creation
of a higher level APC. Based on claims data available for this final
rule with comment period, the five highest cost procedures assigned to
APC 0150 have a total number of single frequency claims that equals
less than 220 claims. The suggested Level V Anal/Rectal Procedures APC
would have a low volume of single frequency claims and would contribute
to APC cost and payment volatility, as was the case when based on CY
2014 claims data. As we stated in the CY 2014 OPPS/ASC final rule with
comment period, we are not accepting the commenter's recommendation
because a low volume APC will contribute to the APC's cost volatility,
which in turn contributes to payment volatility for the procedures
assigned to the low volume APC (78 FR 74981).
After consideration of the public comments we received regarding
the composition of APC 0150, we are finalizing our proposal to continue
to assign HCPCS code C9735 to APC 0150 for CY 2015. The CY 2015 final
geometric mean cost of APC 0150 is approximately $2,698. In addition,
new CPT code 0377T also is assigned to APC 0150 for CY 2015 because we
agree with the commenters that HCPCS code C9735 should be deleted after
December 31, 2014. We are instructing hospitals to use CPT code 0377T
to report this service beginning with the code's effective date,
January 1, 2015.
d. Percutaneous Renal Cryoablation (APC 0423)
For CY 2014, we assigned CPT codes 50593 (Ablation, renal tumor(s),
unilateral, percutaneous, cryotherapy) and 0340T (Ablation, pulmonary
tumor(s), including pleura or chest wall when involved by tumor
extension, percutaneous, cryoablation, unilateral, includes imaging
guidance) to APC 0423 (Level II Percutaneous Abdominal and Biliary
Procedures), which has a payment rate of $4,106.19. For CY 2015, we
proposed to continue to assign these two CPT codes to APC 0423, with a
proposed payment rate of $4,053.32.
Comment: One commenter believed that CMS' proposal to continue to
assign CPT codes 50593 and 0340T to APC 0423 does not accurately
reflect the costs incurred when performing these cryoablation
procedures. The commenter noted that APC 0423 includes several other
radiofrequency ablation and endoscopy procedures, which do not include
high-cost device systems like the cryoablation procedures described by
CPT codes 50593 and 0340T. Although the commenter acknowledged that
there is no violation of the 2 times rule, the commenter stated that
the proposed geometric mean cost of CPT code 50593 is significantly
higher than the proposed geometric mean cost of APC 0423. In addition,
the commenter asserted that the cryoablation procedures described by
CPT codes 50593 and 0340T are not clinically similar to other
procedures assigned to APC 0423. The commenter further noted that less
than half of claims used to establish the proposed geometric mean cost
of CPT code 50593 were correctly coded, and did not include the device
HCPCS code C2618 (Probe, cryoablation). The commenter

[[Page 66856]]

recommended that CMS create a new Level III Percutaneous Abdominal and
Biliary Procedures APC, and assign CPT codes 50593 and 0340T to this
APC.
Response: We disagree with the commenter that the proposed
geometric mean cost of CPT code 50593, which is $4,937.12 is
significantly higher than the proposed geometric mean cost of APC 0423,
which is $4,243.84. The claims data available for this final rule with
comment period show a geometric mean cost of approximately $4,249 for
APC 0423, and approximately $4,985 for CPT code 50593, which is based
on 749 single frequency claims. The geometric mean cost of CPT code
50593 is the highest cost procedure assigned to APC 0423, but is well
within a normal range of costs associated with the other procedures
assigned to this APC, and does not approach the 2 times limit that
would create a violation of the 2 times rule. CPT code 0340T has no
claims at this time because the procedure code became effective
beginning in CY 2014. Therefore, we do not believe that a new Level III
Percutaneous Abdominal and Biliary Procedures APC is warranted based on
the geometric mean cost of CPT code 50593 relative to the geometric
mean cost of APC 0423. We also remind the commenter that we typically
do not investigate allegations of hospital cost underreporting or
incorrect coding. As we stated in the CY 2011 OPPS/ASC final rule with
comment period, ``Beyond our standard OPPS trimming methodology . . .
that we apply to those claims that have passed various types of claims
processing edits, it is not our general policy to judge the accuracy of
hospital coding and charging for purposes of ratesetting'' (75 FR
71838). We believe that the cryoablation procedures described by CPT
codes 50593 and 0340T are clinically similar to the other procedures
assigned to APC 0423. Many of the procedures assigned to APC 0423 are
ablative procedures, and all of the procedures assigned to this APC are
abdominal or biliary. Therefore, we are finalizing the CY 2015
proposal, without modification, to continue to assign CPT codes 50593
and 0340T to APC 0423. We will specifically review the APC assignment
of CPT code 0340T when claims data for this service become available.
4. Nervous System Services
a. Chemodenervation (APC 0206)
For CY 2015, we proposed to continue to assign CPT code 64616
(Chemodenervation of muscle(s); neck muscle(s), excluding muscles of
the larynx, unilateral (eg, for cervical dystonia, spasmodic
torticollis)) to APC 0204 (Level I Nerve Injections), with a proposed
payment rate of approximately $218. We note that CPT code 64616 became
effective January 1, 2014.
Comment: One commenter requested that CMS reassign CPT code 64616
from APC 0204 to APC 0206 (Level II Nerve Injections), which had a
proposed payment rate of approximately $375. The commenter noted that
this recommendation for APC reassignment was also submitted in response
to the CY 2014 OPPS/ASC final rule with comment period. The commenter
stated that APC 0206 is the APC that was assigned to CPT code 64613
(Chemodenervation of muscle(s); neck muscle(s) (eg, for spasmodic
torticollis, spasmodic dysphonia), which is the predecessor code for
CPT code 64616 in effect prior to January 1, 2014. Based on the
commenter's analysis of the CY 2013 hospital outpatient claims data
that was used for the CY 2015 OPPS/ASC proposed rule, the commenter
believed that APC 0206 is the most appropriate APC assignment for CPT
code 64616 based on the resource costs and clinical homogeneity of the
predecessor code, CPT code 64613, in relation to the other procedures
assigned to APC 0206.
Response: We reviewed the latest hospital outpatient claims data
reporting the service described by predecessor code, CPT code 64613,
and the replacement code, CPT code 64616. We acknowledge that the
procedure described by CPT code 64616 was previously described by CPT
code 64613. Based on our analysis of the latest hospital outpatient
claims data available for this final rule with comment period, we agree
with the commenter's recommendation that CPT code 64616 should be
reassigned from APC 0204 to APC 0206 for the CY 2015 update.
Specifically, we reviewed the latest hospital outpatient claims data
for CPT code 64613 based on claims submitted by hospitals for dates of
service between January 1, 2013, and December 31, 2013, that were
processed on or before June 30, 2014. Our review of the latest claims
data shows a geometric mean cost of approximately $322 for CPT code
64613 based on 11,177 single claims (out of 13,743 total claims), which
is comparable to the geometric mean cost of approximately $387 for APC
0206. There are 21 procedures assigned to APC 0206 and the geometric
mean costs for the procedures with significant claims data range
approximately between $322 (for CPT code 64613) and $536 (for CPT code
62270). Based on these data, we agree with the commenter that APC 0206
is the most appropriate APC assignment for CPT code 64616 based on
clinical homogeneity to the other procedures assigned to this APC and
the resource similarity of the predecessor code, CPT code 64613, to the
other procedures assigned to APC 0206.
Therefore, after consideration of the public comment we received,
we are not adopting our proposal to continue to assign CPT code 64616
to APC 0204. Instead, we are reassigning CPT code 64616 to APC 0206 for
the CY 2015 OPPS update. The final CY 2015 payment rate for CPT code
64616 can be found in Addendum B to this CY 2015 OPPS/ASC final rule
with comment period (which is available via the Internet on the CMS Web
site).
b. Epidural Lysis (APCs 0203 and 0207)
For CY 2015, we proposed to continue to assign CPT code 62263
(Percutaneous lysis of epidural adhesions using solution injection (eg,
hypertonic saline, enzyme) or mechanical means (eg, catheter) including
radiologic localization (includes contrast when administered), multiple
adhesiolysis sessions; 2 or more days) to APC 0203 (Level IV Nerve
Injections), with a proposed payment rate of approximately $1,524. We
also proposed to continue to assign CPT code 62264 (Percutaneous lysis
of epidural adhesions using solution injection (eg, hypertonic saline,
enzyme) or mechanical means (eg, catheter) including radiologic
localization (includes contrast when administered), multiple
adhesiolysis sessions; 1 day) to APC 0207 (Level III Nerve Injections),
with a proposed payment rate of approximately $683.
Comment: One commenter opposed CMS' proposals to continue to assign
CPT code 62263 to APC 0203 and CPT code 62264 to APC 0207. The
commenter stated that CMS has overcompensated for the cost of providing
the service described by CPT code 62263 by assigning the procedure to
APC 0203. Alternatively, the commenter believed that CMS has
undercompensated the cost of providing the service described by CPT
code 62264 by assigning the procedure to APC 0207. The commenter stated
that the resources utilized during the performance of the services
described by both CPT codes are comparable, and each CPT code should be
reassigned to a more appropriate APC to ensure adequate payment for the
services provided.
Response: We reviewed the latest hospital outpatient claims data
reporting services described by CPT codes 62263 and 62264 for dates of
service between January 1, 2013, and December 31, 2013, that were
processed

[[Page 66857]]

on or before June 30, 2014. For CPT code 62263, our analysis of the
claims data shows a geometric mean cost of approximately $1,215 based
on 70 single claims (out of 88 total claims), which is comparable to
the geometric mean cost of approximately $1,525 for APC 0203. For CPT
code 62264, our analysis of the claims data shows a geometric mean cost
of approximately $798 based on 1,971 single claims (out of 4,174 total
claims), which is comparable to the geometric mean cost of
approximately $697 for APC 0207. Therefore, we believe that the
procedures described by CPT code 66263 and CPT code 62264 are
appropriately assigned to APCs 0203 and 0207, respectively, based on
clinical and resource similarities in relation to the other procedures
assigned to these APCs. We remind the commenter that the OPPS is a
system of averages, in which the costs of services, calculated from the
most recent year's claims data, are weighted relative to the other
services in the system, for that given year. Furthermore, as has been
our practice since the implementation of the OPPS, we annually review
all the items and services within an APC group to determine, with
respect to comparability of the use of resources, any violations of the
2 times rule. In making this determination, we review our claims data
and determine whether we need to make changes to the current APC
assignments for the following year. We will reevaluate the APC
assignment for CPT codes 62263 and 62264 for the CY 2016 OPPS
rulemaking.
After consideration of the public comment that we received, we are
finalizing our CY 2015 proposal, without modification, to continue to
assign CPT code 62263 to APC 0203 and CPT code 62264 to APC 0207. The
final CY 2015 payment rates for the two procedures can be found in
Addendum B to this CY 2015 OPPS/ASC final rule with comment period
(which is available via the Internet on the CMS Web site).
c. Transcranial Magnetic Stimulation (TMS) Therapy (APC 0218)
Since July 2006, CPT codes have existed to describe Transcranial
Magnetic Stimulation (TMS) therapy. The initial CPT codes were
temporary Category III CPT codes, specifically, CPT codes 0160T
(Therapeutic repetitive transcranial magnetic stimulation treatment
planning) and 0161T (Therapeutic repetitive transcranial magnetic
stimulation treatment delivery and management, per session), that
became effective July 1, 2006. For CY 2011, the CPT Editorial Panel
deleted CPT code 0160T on December 31, 2010, and replaced this
procedure code with CPT code 90867 (Therapeutic repetitive transcranial
magnetic stimulation (tms) treatment; initial, including cortical
mapping, motor threshold determination, delivery and management),
effective January 1, 2011. Similarly, CPT code 0161T was deleted on
December 31, 2010, and was replaced with CPT code 90868 (Therapeutic
repetitive transcranial magnetic stimulation (tms) treatment;
subsequent delivery and management, per session), effective January 1,
2011. In CY 2012, the CPT Editorial Panel established an additional TMS
therapy code, specifically, CPT code 90869 (Therapeutic repetitive
transcranial magnetic stimulation (tms) treatment; subsequent motor
threshold re-determination with delivery and management), that became
effective January 1, 2012.
For the CY 2014 update, CPT codes 90867 and 90868 were assigned to
APC 0216 (Level II Nerve and Muscle Tests), with a payment rate of
$216.79, and CPT code 90869 was assigned to APC 0218 (Level II Nerve
and Muscle Tests), with a payment rate of $127.75. For the CY 2015
update, as listed in Addendum B to the CY 2015 OPPS/ASC proposed rule,
we proposed to continue to assign CPT code 90869 to APC 0218, with a
proposed payment rate of approximately $160. In addition, we proposed
to reassign CPT codes 90867 and 90868 from APC 0216 to APC 0218, the
same APC assignment for CPT code 90869.
Comment: One commenter disagreed with CMS' proposal to reassign CPT
codes 90867 and 90868 from APC 0216 to APC 0218, and to continue to
assign CPT code 90869 to APC 0218. The commenter stated that the
proposed addition of certain nerve conduction study codes to APC 0218
for the CY 2015 update has negatively affected the proposed payment
rate for APC 0218. The commenter believed that this proposal resulted
in a decreased payment rate of approximately $160 for APC 0218,
compared to the CY 2014 payment rate of approximately $217; thereby
effectuating a potential financial loss for the provider with each
treatment because a typical course of TMS therapy includes a total of
25 daily treatment sessions. In addition, the commenter stated that
assigning CPT codes 90867, 90868, and 90869 to APC 0218 is clinically
inappropriate because these CPT codes describe therapy services,
whereas the other procedure codes assigned to APC 0218 describe
diagnostic tests (simple nerve conduction and electromyography
studies). To correct the perceived clinical and resource discrepancies,
the commenter suggested that CMS establish a new APC specifically for
the TMS therapy codes, and that CMS title the APC ``Transcranial
Magnetic Stimulation.''
Response: We believe that APC 0218 is the most appropriate APC
assignment for the three TMS therapy CPT codes. The CPT codes
describing the procedures assigned to APC 0218 all describe noninvasive
services that affect the nervous system. Based on the latest hospital
outpatient claims data used for this final rule with comment period,
our analysis revealed that the resources associated with providing the
services described by CPT codes 90867, 90868, and 90869 are comparable
to the other services assigned to APC 0218. Specifically, based on CY
2013 claims data used for this final rule with comment period, the
geometric mean cost for CPT code 90867 is approximately $210 based on
72 single claims (out of 72 total claims), the geometric mean cost for
CPT code 90868 is approximately $201 based on 2,513 single claims (out
of 2,516 total claims), and the geometric mean cost for CPT code 90869
is approximately $194 based on 28 single claims (out of 30 total
claims). In addition, a review of the procedures assigned to APC 0218
shows that the range of geometric mean cost for the services assigned
to APC 0218 is approximately between $95 (for CPT code 95937) and $327
(for CPT code 95875), which is comparable to the geometric mean costs
for all three TMS therapy CPT codes. Based on the clinical and resource
similarities in relation to the other procedures currently assigned to
APC 0218, we believe that the TMS therapy codes would be appropriately
assigned to APC 0218.
After consideration of the public comment we received, we are
finalizing our CY 2015 proposal, without modification, to reassign CPT
codes 90867 and 90868 from APC 0216 to APC 0218, and to continue to
assign CPT code 90869 to APC 0218 for CY 2015.
5. Ocular Services: Ophthalmic Procedures and Services
For the CY 2015 OPPS update, based on our evaluation of the latest
hospital outpatient claims data, we proposed to restructure all of the
ophthalmic APCs to better reflect the costs and clinical
characteristics of the procedures within each APC. This proposed
restructuring resulted 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 that this major

[[Page 66858]]

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 in the proposed rule showed the current CY 2014 and proposed CY 2015
ophthalmology-related APCs. Specifically, Table 19 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40981) showed the CY 2014 ophthalmology-
related APCs and status indicator assignments, while Table 20 showed
the proposed restructured ophthalmology-related APCs and their status
indicator assignments for CY 2015 (79 FR 40981 through 40982). The
proposed payment rates for the ophthalmology-related APCs listed in
Table 20 were listed in Addendum B to the proposed rule (which is
available via the Internet on the CMS Web site).
In the CY 2015 OPPS/ASC proposed rule, we invited public comments
on this proposal.
Comment: Several commenters stated that the proposed restructuring
and consolidation of the CY 2015 ophthalmic APC is substantial, and
requested that CMS not finalize this proposal. The commenters also
stated that CMS has not provided information regarding the criteria
used to differentiate the various levels of treatments or procedures
for the restructured 13 ophthalmic APCs. The commenters stated that the
configuration and structure of the existing 24 APCs do not appear to be
inconsistent with the requirements for clinical coherence or resource
use. The commenters disagreed with CMS' proposal to establish broader
categories within these APCs, and indicated that such a change in APC
groupings has the potential to aggregate procedures that vary
significantly in resource costs and clinical coherence. In addition,
the commenters stated that some of the procedures in the restructured
ophthalmic APCs appear to be inappropriately categorized. For example,
the restructuring of the ophthalmic APCs has resulted in the
consolidation of cornea procedures within one of the restructured APCs,
and the procedures are no longer assigned to a separate classification
grouping based on the previous APC configurations. The commenters
pointed out that the major cornea transplant codes have been reassigned
to restructured APC 0673 (Level III Intraocular Procedures), along with
procedures that treat glaucoma and retina conditions. The commenters
further explained that the equipment used for these services when
performed in alternative settings and the depths of the condition of
the eye and the appropriate treatments vastly differ, as does the time
and other resources necessary to perform these types of surgeries. As a
result, the commenters believed that additional APCs are needed to
appropriately categorize ophthalmic procedures based on clinical
homogeneity and resource consumption. The commenters also requested the
opportunity to work with CMS to make appropriate adjustments to the
restructured ophthalmic APC groupings to ensure clinical coherence and
to minimize payment variances for these procedures.
Response: Consistent with CMS' statutory requirement under section
1833(t)(9) of the Act to review and revise APC assignments annually and
to construct the most appropriate APC groupings, as well as, to the
extent desirable, correct any 2 times rule violations, we evaluated the
resource consumption and clinical coherence associated with the
ophthalmic APCs for the CY 2015 update. Based on our analysis of the
latest hospital outpatient claims data used for this final rule with
comment period and understanding of the clinical aspects of these
procedures, we believe that the restructured and consolidated
ophthalmic APCs more appropriately group these ophthalmology-related
services according to their current resource costs, as well as their
clinical characteristics. The former ophthalmic procedures APC
structure unnecessarily separated, from a clinical and resource
similarity prospective, ophthalmic procedures based on disease state or
traditional subdivisions within ophthalmic surgery. APC groupings were
never intended to precisely track traditional ophthalmology
subspecialty divisions, such as cornea surgery, retina surgery, or
glaucoma surgery, as the commenters suggested. We also believe that
larger APC groupings are more consistent with a prospective payment
system than smaller groupings. We note that we regularly accept
meetings from interested parties throughout the year, and we encourage
stakeholders to continue a dialogue with us during the rulemaking cycle
and throughout the year on our continuing efforts to improve the
coherence of the OPPS APC groupings.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to restructure and
consolidate the ophthalmic APCs. Table 22 below shows the final
ophthalmology-related APCs and their status indicator assignments for
CY 2015. The final payment rates for these APCs can be found in
Addendum B to this CY 2015 OPPS/ASC final rule with comment period
(which is available via the Internet on the CMS Web site). We also
remind the public that we review the OPPS and APC structures and
assignments annually and may propose additional restructurings of the
APCs and procedure code assignments for other clinical areas and APC
groupings in CY 2016 and future rulemakings.

Table 22--Final CY 2015 APC Assignments for the Ophthalmic Procedures
and Services
------------------------------------------------------------------------
Final CY
Final CY 2015 APC Final CY 2015 APC title 2015 status
description 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.

[[Page 66859]]

0698............................ Level II Eye Tests & S
Treatments.
------------------------------------------------------------------------

6. Imaging
a. Echocardiography Services Without Contrast (APCs 0269, 0270, and
0697)
We proposed to continue to use for the CY 2015 update the three
APCs that describe echocardiography services without contrast, APC 0697
(Level I Echocardiogram Without Contrast), APC 0269 (Level II
Echocardiogram Without Contrast), and APC 0270 (Level III
Echocardiogram Without Contrast), and to maintain the CY 2014 HCPCS
code assignments for these APCs.
Comment: One commenter requested that CMS reexamine the services
assigned to the APCs for echocardiography services without contrast. In
particular, the commenter requested that CMS reassign CPT codes 76825
(Echocardiography, fetal, cardiovascular system, real time with image
documentation (2D), with or without M-mode recording); and 76826
(Echocardiography, fetal, cardiovascular system, real time with image
documentation (2D), with or without M-mode recording; follow-up or
repeat study) from APC 0697 to APC 0269 based on the clinical and
resource similarities to the other echocardiography procedures assigned
to APC 0269.
Response: Based on our review of the latest hospital outpatient
claims data available for this final rule with comment period, we agree
with the commenter that CPT codes 76825 and 76826 should be reassigned
to APC 0269, which more appropriately supports the clinical and
resource homogeneity of the APCs rather than reassigning the procedure
codes to APC 0697. The geometric mean cost of CPT code 76825 is
approximately $384, and the geometric mean cost of CPT code 76826 is
approximately $285. These costs are sufficiently close to the geometric
mean cost of CPT code 93306 (Echocardiography, transthoracic, real time
with image documentation (2D), includes M-mode recording, when
performed, complete, with spectral Doppler echocardiography, and with
color flow Doppler echocardiography), which is approximately $430. CPT
code 93306 comprises 93 percent of the service volume within APC 0269.
By reassigning CPT codes 76825 and 76826 to APC 0269, only one
procedure code would remain in APC 0697. Therefore, we also are
reassigning CPT code 93308 (Echocardiography, transthoracic, real time
with image documentation (2D), includes M-mode recording, when
performed, follow-up or limited study) from APC 0697 to APC 0267 (Level
III Diagnostic and Screening Ultrasound) for CY 2015. We are deleting
APC 0697 for the CY 2015 OPPS update because all of the procedure codes
previously assigned to APC 0697 have been reassigned to more
appropriate APCs to ensure adequate payment for the services provided
and the clinical and resource homogeneity of APCs.
b. Optical Coherence Tomography (OCT) Procedures of the Breast
For the July 2014 quarterly update, the CPT Editorial Panel
established four new Category III CPT codes to describe optical
coherence tomography (OCT) procedures of the breast: CPT code 0351T
(Optical coherence tomography of breast or axillary lymph node, excised
tissue, each specimen; real time intraoperative); CPT code 0352T
(Optical coherence tomography of breast or axillary lymph node, excised
tissue, each specimen; interpretation and report, real time or
referred); CPT code 0353T (Optical coherence tomography of breast,
surgical cavity; real time intraoperative); and CPT code 0354T (Optical
coherence tomography of breast, surgical cavity; interpretation and
report, real time or referred). As listed in Table 17 of the CY 2015
OPPS/ASC proposed rule (79 FR 40976), we proposed to assign CPT codes
0351T and 0353T to OPPS status indicator ``N'' (paid under OPPS;
payment is packaged into payment for other services; there is no
separate APC payment), and CPT codes 0352T and 0354T to OPPS status
indicator ``B'' (codes that are not recognized by OPPS when submitted
on an outpatient hospital Part B bill type (12x and 13x)).
Comment: Some commenters expressed concern regarding CMS' proposal
to assign CPT codes 0351T and 0353T to OPPS status indicator ``N'' and
noted that both procedures describe independent, unique services and
should be assigned to specific APCs. The commenters recommended
assigning CPT codes 0351T and 0353T to any one of the following APCs:
APC 0028 (Level I Breast and Skin Surgery), which had a proposed
payment rate of approximately $2,176; APC 0029 (Level II Breast and
Skin Surgery), which had a proposed payment rate of approximately
$3,018; or APC 0030 (Level III Breast and Skin Surgery), which had a
proposed payment rate of approximately $4,150.
Response: Consistent with our packaging policy for intraoperative
procedures, we proposed to assign CPT codes 0351T and 0353T to OPPS
status indicator ``N'' because both procedure codes describe supportive
dependent services that are performed during independent procedures. As
clarified in the CY 2008 OPPS final rule with comment period (72 FR
66627), we define ``intraoperative'' procedures as services that are
provided during and, therefore, on the same date of service as another
procedure that is separately payable under the OPPS. We further define
intraoperative as services that support the performance of an
independent procedure and are provided in the same operative session as
the independent procedure. Both of the procedures described by CPT
codes 0351T and 0353T must always be performed in conjunction with
another procedure; specifically, the surgical procedure is performed
followed by the breast OCT to improve the surgical outcome. We believe
that these procedure codes clearly describe services that conform to
the definition of ``intraoperative'' procedures. For further
information on our policy for intraoperative services under the
hospital OPPS, we refer readers to the CY 2008 OPPS final rule with
comment period (72 FR 66627 through 66630).
In summary, we believe that CPT codes 0351T and 0353T are
procedures that support the performance of an independent procedure and
are provided in the same operative session as the independent
procedure. Specifically, we believe that both procedures are provided
during and, therefore, on the same date of service as another procedure
that is separately payable under the OPPS. In addition, we believe that
CPT codes 0351T and 0353T are always integral to, and dependent upon,
the independent procedure that they support. Therefore, payment for
these services will be

[[Page 66860]]

packaged because the procedures would generally be performed on the
same date as another procedure that is separately payable under the
OPPS. After consideration of the public comments we received, we are
finalizing our proposals to assign CPT codes 0351T and 0353T to OPPS
status indicator ``N'' and CPT codes 0352T and 0354T to OPPS status
indicator ``B'' for CY 2015.
c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, and 0414)
For CY 2015, we proposed to assign CPT code 78071 (Parathyroid
planar imaging (including subtraction, when performed); with
tomographic (SPECT)) to APC 0263 (Level I Miscellaneous Radiology
Procedures), for which we proposed a CY 2015 geometric mean cost of
approximately $357. We also proposed to assign CPT code 78072
(Parathyroid planar imaging (including subtraction, when performed);
with tomographic (SPECT), and concurrently acquired computed tomography
(CT) for anatomical localization) to APC 0317 (Level II Miscellaneous
Radiology Procedures), for which we proposed a CY 2015 geometric mean
cost of approximately $577. In addition, we proposed to change the
status indicators for CPT codes 78071 and 78072 from ``X'' to ``S.''
Comment: Commenters agreed with CMS' proposal to assign CPT codes
78071 and 78072 to status indicator ``S,'' but opposed the proposal to
assign CPT code 78071 to APC 0263. The commenters believed that CPT
codes 78071 and 78072 should be assigned to the nuclear medicine APCs
instead of the radiology APCs because the nuclear medicine APCs are
more representative of the resources utilized in the performance of
these procedures. The commenters suggested that CMS assign CPT codes
78071 and 78072 to either APC 0414 (Level II Tumor/Infection Imaging)
or 0408 (Level III Tumor/Infection Imaging).
Response: We agree with the commenters that the resources utilized
in the performance of the procedures described by CPT codes 78071 and
78072 are more comparable to the procedures assigned to the nuclear
medicine APCs. However, we do not agree with the commenters that CPT
codes 78071 and 78072 are more appropriately assigned to either APC
0408 or APC 0414. We believe that APC 0406 (Level I Tumor/Infection
Imaging) is the most appropriate APC assignment for CPT codes 78071 and
78072 because the procedures currently assigned to APC 0406 are similar
to the procedures described by CPT codes 78071 and 78072 in clinical
nature and resource utilization. The final CY 2015 APC geometric mean
costs of approximately $362 for CPT code 78071 and approximately $427
for CPT code 78072 are similar to the geometric mean costs of the
significant procedures assigned to APC 0406, which range between
approximately $307 and approximately $427.
After consideration of the public comments we received, we are not
finalizing our CY 2015 proposal to assign CPT codes 78071 and 78072 to
APCs 0263 and 0317, respectively. Instead, based on consideration of
the public comments we received, for CY 2015, we are assigning CPT
codes 78071 and 78072 to APC 0406, which has a final CY 2015 APC
geometric mean cost of approximately $391.
7. Radiology Oncology
a. Proton Beam Therapy and Magnetoencephalography (MEG) Services (APCs
0065, 0412, 0446, 0664, and 0667)
In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we proposed
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 proposed 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 proposed 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 proposed to delete APC
0664 for CY 2015 (79 FR 40989). In addition, we proposed 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 proposed to
reassign the following three services to proposed newly renamed APC
0667 for CY 2015: CPT codes 77522, 77523, and 77525.
Comment: Commenters generally supported CMS' proposals regarding
the radiation therapy APCs, with one exception. The commenters
supported the proposal to reassign CPT code 77520 from APC 0664 to APC
0412. However, the commenters expressed concern regarding the proposal
to reassign CPT code 77522 from APC 0664 to proposed newly renamed APC
0667. Commenters disagreed with CMS' determination that the procedure
described by CPT code 77522 is clinically similar and comparable in
geometric mean cost to the other services assigned to APC 0667 in 2014,
specifically the procedures described by CPT codes 77523 and 77525. The
commenters recommended that CMS maintain the assignment of CPT code
77522 to APC 0664 and not delete the classification grouping, which
would result in CPT code 77522 being the only service assigned to this
APC.
Response: We appreciate the commenters' support for our proposals
regarding the radiation therapy APCs, specifically our proposal to
reassign CPT code 77520 from APC 0664 to APC 0412. In regard to the
proposed reassignment of CPT code 77522 from APC 0664 to APC 0667, we
disagree with the commenters for the following reasons. The three CPT
codes, 77522, 77523, and 77525, are similar clinically. All three of
these CPT codes describe procedures that involve proton beam therapy
delivery services with a continuum of complexity. The procedure
described by CPT code 77520 is the least complex. The procedure
described by CPT code 77522 is more complex than the procedure
described by CPT code 77520, and the procedure described by CPT code
77523 is more complex than the procedure described by CPT code 77522.
The procedure described by CPT code 77525 is the most complex procedure
of the series proposed to be reassigned to APC 0667. We proposed to
reassign CPT code 77520 from APC 0664 to APC 0412 because of the
resource comparability with respect to the other procedures involving
proton beam therapy delivery services assigned to APC 0412, not based
on the clinical dissimilarity with respect to the procedures assigned
to APC 0664. In regard to the remaining three procedures involving
proton beam therapy delivery services (the procedures described by CPT
codes 77522, 77523, and 77525), we believe that these procedures are
clinically similar, but each has a slightly varying level of complexity
relative to the others. The proposed configuration of APC 0667 only
contains the three proton beam therapy delivery services described by
CPT codes 77522, 77523, and 77525, and does not include any other
service codes. APC 0667 is the most clinically homogeneous APC

[[Page 66861]]

under the OPPS to assign these services that would ensure adequate
payment, with the exception of single service APCs. With regard to the
resource comparability of the procedures described by CPT codes 77522,
77523 and 77525, the lowest geometric mean cost among these procedures
is associated with the procedure described by CPT code 77522, which is
approximately $1,033, and the highest geometric mean cost is associated
with the procedure described by CPT code 77525, which is approximately
$1,244. The statutory prong that dictates when resources become
dissimilar between two services is the 2 times rule. Based on the
limitations imposed by the 2 times rule, the highest cost significant
service assigned to an APC cannot exceed the lowest cost by greater
than two times. In this case, the geometric mean cost of the procedure
described by CPT code 77525 is only 1.2 times the geometric mean cost
of the procedure described by CPT code 77522, which is well within the
2 times limit. Therefore, we determined that the resource similarity
among the services proposed to be reassigned to APC 0667 is comparable.
In addition, we generally prefer to assign procedures to the most
appropriate APC that would ensure adequate payment, as opposed to using
single-service APCs, which the commenters recommended for the procedure
described by CPT code 77522, unless no other reasonable options exist,
because single-service APCs are more consistent with a fee schedule
than a prospective payment system.
Therefore, we are finalizing the following proposals affecting the
proton beam therapy services for CY 2015: (1) We are reassigning CPT
code 77520 from APC 0664 to APC 0412; (2) we are reassigning CPT code
77522 from 0664 to APC 0667;(3) we are reassigning CPT codes 77523 and
77525 to APC 0667; (4) we are deleting APC 0664; and (5) we are
renaming APC 0667 to ``Level IV Radiation Therapy.''
In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we also
proposed to delete APC 0065 (IORT, MRgFUS, and MEG) because we proposed
to reassign the services assigned to this APC to more appropriate APCs
based on clinical similarities and comparable geometric mean cost. With
respect to MEG services, we proposed to reassign the MEG CPT codes
95965 and 95966 from APC 0065 to APC 0446 (Level IV Nerve and Muscle
Services), which would only contain MEG services.
Comment: One commenter applauded CMS for the establishment of new
APC 0446, the APC to which the MEG procedures are proposed to be
reassigned. The commenter believed that the reassignment of CPT codes
95965 and 95966 would produce more accurate data related to MEG usage.
Alternatively, one commenter expressed concern that the current
proposal does not adequately cover the costs associated with providing
MEG services, and urged CMS to work with hospitals and other
stakeholders to ensure that HOPDs submit claims correctly to capture
the full costs of providing these services.
Response: Based on our analysis of the latest hospital outpatient
claims data used for this final rule with comment period, we believe
that the establishment of APC 0446 is necessary to ensure clinical and
resource homogeneity and adequate payment for MEG services. Therefore,
after consideration of the public comments we received, we are
finalizing our CY 2015 proposal without modification. As we do every
year, we will review our claims data for these services for the CY 2016
OPPS rulemaking.
b. Stereotactic Radiosurgery Services (SRS) and Magnetic Resonance
Image Guided Focused Ultrasound (MRgFUS) (APC 0066)
For CY 2015, for SRS, we proposed to continue to assign CPT code
77373 (Stereotactic body radiation therapy, treatment delivery, per
fraction to 1 or more lesions, including image guidance, entire course
not to exceed 5 fractions) to APC 0066, with a proposed payment rate of
approximately $1,893. We also proposed to rename APC 0066 from ``Level
I Stereotactic Radiosurgery'' to ``Level V Radiation Therapy'' (79 FR
40989).
In addition, we proposed to continue to assign CPT codes 77371
(Radiation treatment delivery, stereotactic radiosurgery (SRS),
complete course of treatment of cranial lesion(s) consisting of 1
session; multi-source cobalt 60 based) and 77372 (Radiation treatment
delivery, stereotactic radiosurgery (SRS), complete course of treatment
of cranial lesion(s) consisting of 1 session; linear accelerator based)
to APC 0067 (Single Session Cranial Stereotactic Radiosurgery), with a
proposed payment rate of approximately $9,768. We also proposed to
rename APC 0067 from ``Level II Stereotactic Radiosurgery'' to ``Single
Session Cranial Stereotactic Radiosurgery,'' which we proposed as a C-
APC. For further discussion regarding C-APCs and SRS CPT codes 77371
and 77372 assigned to C-APC 0067, we refer readers to section II.A.2.e.
of this final rule with comment period.
Comment: Several commenters requested that CMS reinstate the use of
SRS G-codes because the SRS CPT codes do not accurately describe
current clinical practices or adequately cover the cost of providing
fractionated linac-based SRS.
Response: For the CY 2014 update, we finalized our proposal to
adopt the full range of SRS CPT codes and to discontinue the use of the
remaining SRS G-codes under the OPPS. HOPDs must use and report SRS CPT
codes 77371, 77372, and 77371 to describe the delivery of stereotactic
radiosurgery treatment services under the OPPS. For a full discussion
of this issue, we refer readers to the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74989 through 749995). In addition, for the CY
2015 update, HCPCS code G0173 (Linear accelerator based stereotactic
radiosurgery, complete course of therapy in one session), and HCPCS
code G0251 ((Linear accelerator based stereotactic radiosurgery,
delivery including collimator changes and custom plugging, fractionated
treatment, all lesions, per session, maximum five sessions per course
of treatment)) will be deleted, effective December 31, 2014, because
these codes will no longer be used under the MPFS. However, HCPCS code
G0339 (Image-guided robotic linear accelerator-based stereotactic
radiosurgery, complete course of therapy in one session or first
session of fractionated treatment) and HCPCS code G0340 (Image-guided
robotic linear accelerator-based stereotactic radiosurgery, delivery
including collimator changes and custom plugging, fractionated
treatment, all lesions, per session, second through fifth sessions,
maximum five sessions per course of treatment) will continue to be used
under the MPFS and, therefore, will continue to be active codes for the
CY 2015 MPFS update. However, HCPCS codes G0339 and G0340 will not be
active codes for the CY 2015 OPPS update. Instead, HOPDs must use and
report SRS CPT codes 77371, 77372, and 77373 to describe the delivery
of stereotactic radiosurgery treatment services under the OPPS.
Comment: Many commenters requested that CMS reassign HCPCS code
G0251 to a different APC to resolve a violation of the 2 times rule
within APC 0066. Several commenters recommended excluding the claims
data for HCPCS code G0251 prior to determining the final payment rate
for APC 0066. The commenters indicated that HCPCS code G0251 is used
most often for fractionated cranial SRS, not for stereotactic body
radiation therapy (SBRT), as described by CPT code 77373.

[[Page 66862]]

Response: Both HCPCS code G0251 and CPT code 77373 describe
fractionated cranial stereotactic radiosurgery services that involve
between 2 and 5 fractions of treatment. Single-session cranial SRS are
reported using either CPT code 77371 or 77372. Based on the code
descriptor, we believe that the service described by HCPCS code G0251
is appropriately crosswalked to the service described by CPT code
77373. We explained the code crosswalk in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74991).
We note that, under the OPPS, we may make exceptions to the 2 times
rule in unusual cases, such as low-volume items or services. For the CY
2015 update (taking into consideration the APC changes that we proposed
for CY 2015), we reviewed all of the APCs to determine which APCs would
not satisfy the requirement of the 2 times rule. In the case of APC
0066, we believe that it is necessary to make an exception to the 2
times rule for this APC because the three G-codes that caused the
violation of the 2 times rule to occur have been crosswalked to CPT
code 77373. We expect to have claims data for only CPT code 77373
available for the CY 2016 rulemaking. At that time, we will reevaluate
the APC assignments for all of the SRS CPT codes.
In addition to our proposal to continue to assign SRS CPT code
77373 to APC 0066, we proposed to assign all four of the MRgFUS
procedures to APC 0066 because in the past MRgFUS services were
assigned to the same APC as some of the former SRS G-codes for
fractionated linac-based SRS. Specifically, for CY 2015, we proposed to
reassign HCPCS codes 0071T (Focused ultrasound ablation of uterine
leiomyomata, including mr guidance; total leiomyomata volume less than
200 cc of tissue), 0072T (Focused ultrasound ablation of uterine
leiomyomata, including mr guidance; total leiomyomata volume greater or
equal to 200 cc of tissue), C9734 (Focused ultrasound ablation/
therapeutic intervention, other than uterine leiomyomata, with magnetic
resonance (mr) guidance), and 0301T (Destruction/reduction of malignant
breast tumor with externally applied focused microwave, including
interstitial placement of disposable catheter with combined temperature
monitoring probe and microwave focusing sensocatheter under ultrasound
thermotherapy guidance) from APC 0065 (IORT, MRgFUS, and MEG) to APC
0066. We proposed to delete APC 0065 for CY 2015.
Comment: Several commenters stated that the proposed payment rate
for APC 0066 of approximately $1,893 does not adequately reflect the
level of resources required to perform MRgFUS procedures. Instead, the
commenters believed that the MRgFUS procedures are similar to the
stereotactic radiosurgery procedures that are assigned to C-APC 0067 in
terms of treatment set-up, delivery of radiation, and post-procedure
recovery. The commenters further believed that the MRgFUS procedures
would be more appropriately assigned to a C-APC from a clinical and
resource perspective. The commenters explained that certain procedures
are commonly reported in conjunction with MRgFUS procedures, similar to
stereotactic radiosurgery procedures. Therefore, the commenters
recommended that CMS reassign the MRgFUS procedures to C-APC 0067.
Response: CPT codes 0071T and 0072T became effective January 1,
2005. CPT code 0301T became effective January 1, 2012. HCPCS code C9734
became effective April 1, 2013. Currently, we do not have any single
claims reporting any of the four MRgFUS procedures. However, because we
are deleting APC 0065, we believe that reassigning these procedures to
APC 0066 for the CY 2015 update is more appropriate because, in the
past, MRgFUS services were assigned to the same APC as some of the
former fractionated linac-based SRS G-codes. We also believe that the
MRgFUS procedures are clinically dissimilar to single-session cranial
SRS because MRgFUS procedures may involve more than one treatment
session. However, we will review and consider the comments related to
C-APC 0067 in a future annual update.
After consideration of the public comments we received, we are
finalizing our proposal without modification. Specifically, for SRS CPT
code 77373, we are finalizing our proposal to continue to assign this
code to APC 0066 for the CY 2015 update. In addition, we are finalizing
our proposal to reassign MRgFUS HCPCS codes 0071T, 0072T, 0301T, and
C9734 from APC 0065 to APC 0066 for CY 2015. We are deleting APC 0065
for CY 2015. Because we are deleting APC 0065, we are renaming APC 0066
from ``Level I Stereotactic Radiosurgery'' to ``Level V Radiation
Therapy.'' The final payment rates for SRS CPT code 77373 and MRgFUS
HCPCS codes 0071T, 0072T, 0301T, and C9734 can be found in Addendum B
to this final rule with comment period, which is available via the
Internet on the CMS Web site.
8. Respiratory Services: Level II Endoscopy Lower Airway (APC 0415)
In the CY 2015 OPPS/ASC proposed rule, we proposed to continue the
APC assignment of the procedure codes that have been historically
assigned to APC 0415 (Level II Endoscopy Lower Airway). Commenters
responding to the CY 2014 OPPS/ASC proposed rule had recommended that
CMS split the procedure codes assigned to APC 0415 into two levels of
lower airway endoscopy APCs. We did not split APC 0415 into two levels
for CY 2014, as the commenters suggested, because the geometric mean
costs would have been based on a relatively low volume of single
frequency claims and would have potentially effectuated APC and cost
volatility (78 FR 74996). In the CY 2015 OPPS/ASC proposed rule, we did
not propose any changes to the composition of APC 0415. There were not
any violations of the 2 times rule for the services assigned to APC
0415 based on claims data available for the proposed rule. The proposed
geometric mean cost of APC 0415 was approximately $2,368.
Comment: Several commenters recommended that CMS create a Level III
Lower Airway Endoscopy APC and assign the procedure codes currently
assigned and proposed for continued assignment to APC 0415 to this
newly created APC based on geometric mean costs, procedure complexity,
and clinical similarity. Specifically, one commenter recommended that
CMS assign CPT code 31647 (Bronchoscopy, rigid or flexible, including
fluoroscopic guidance, when performed; with balloon occlusion, when
performed, assessment of air leak, airway sizing, and insertion of
bronchial valve(s), initial lobe) to the recommended Level III APC.
Another commenter recommended that CMS assign CPT code 31626
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when
performed; with placement of fiducial markers, single or multiple) to
the recommended Level III APC. One commenter recommended that seven
specific procedure codes be assigned to the newly created Level III
APC, namely: CPT codes 31634 (Bronchoscopy, rigid or flexible,
including fluoroscopic guidance, when performed; with balloon
occlusion, with assessment of air leak, with administration of
occlusive substance (eg, fibrin glue), if performed), 31638
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when
performed; with revision of tracheal or bronchial stent inserted at
previous session (includes tracheal/bronchial dilation as required)),
31626, 31631

[[Page 66863]]

(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when
performed; with placement of tracheal stent(s) (includes tracheal/
bronchial dilation as required)), 31636 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
placement of bronchial stent(s) (includes tracheal/bronchial dilation
as required), initial bronchus), 31660 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
bronchial thermoplasty, 1 lobe), and 31661 (Bronchoscopy, rigid or
flexible, including fluoroscopic guidance, when performed; with
bronchial thermoplasty, 2 or more lobes). The commenters believed that
a new Level III Lower Airway Endoscopy APC would more accurately
reflect the costs of expensive lower airway procedures that utilize new
technologies.
Response: We believe that there is considerable clinical similarity
in regard to the procedures assigned to APC 0415. All of the procedures
are lower airway bronchoscopy procedures and are generally clinically
more complex than the lower airway endoscopy procedures assigned to APC
0076 (Level I Endoscopy Lower Airway). We do not believe that the range
of costs for the significant procedures assigned to APC 0415 warrants
the creation of a Level III lower airway endoscopy APC. The final rule
geometric mean cost for APC 0415 is approximately $2,341. Several of
the procedures that the commenters recommended for assignment to the
recommended Level III APC have final rule geometric mean costs
comparable to the geometric mean cost of APC 0415. For CY 2015, CPT
code 31634 has a final geometric mean cost of approximately $1,539; CPT
code 31638 has a final geometric mean cost of approximately $2,320; and
CPT code 31626 has a final geometric mean cost of approximately $2,897.
The other CPT codes recommended by the commenters have somewhat higher
approximate geometric mean costs, namely: CPT code 31631 (which has a
geometric mean cost of approximately $3,488), CPT code 31661 (which has
a geometric mean cost of approximately $3,789), CPT code 31660 (which
has a geometric mean cost of approximately $3,840), and CPT code 31636
(which has a geometric mean cost of approximately $4,090). Assigning
any of these procedures to APC 0415 does not create a violation of the
2 times rule when compared to the geometric mean cost of the lowest
significant procedure assigned to this APC, CPT code 31629
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when
performed; with transbronchial needle aspiration biopsy(s), trachea,
main stem and/or lobar bronchus(i)), which is approximately $2,186.
Among the procedures discussed above, CPT codes 31626 and 31660
describe the only significant procedures assigned to this APC and are
the procedures that we would normally apply the 2 times rule
provisions. There are not any violations of the 2 times rule in regard
to these procedures' costs. Although CPT code 31647 has a considerably
higher geometric mean cost of approximately $5,373 based on 11 single
frequency claims, it is not a significant procedure. We would not
reassign this procedure to another APC based on a violation of the 2
times rule. Moreover, considering the final rule claims data for the
five highest cost procedures assigned to APC 0415, the total number of
single frequency claims is 649. The possible composition of a Level III
lower airway endoscopy APC would still be based on a low volume of
claims, similar to the low volume of claims in regard to the Level III
lower airway endoscopy APC recommended by the commenters in CY 2014. As
we stated in the CY 2014 OPPS/ASC final rule with comment period, a
low-volume APC would contribute to the APC's cost volatility, which in
turn contributes to payment volatility for the procedures assigned to
the low-volume APC (78 FR 74996).
After consideration of the public comments we received regarding
the composition of APC 0415, we are finalizing our proposal to continue
the assignment of the procedure codes that have been historically
assigned to APC 0415 for CY 2015. However, for CY 2016, we will explore
possible changes to the lower airway endoscopy APCs as a part of our
broader efforts to thoroughly review, revise, and consolidate APCs to
improve both clinical and resource homogeneity. The CY 2015 final
geometric mean cost of APC 0415 is approximately $2,341.
9. Other Services
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. The payment rate for CPT code 15110 was
derived from the latest hospital outpatient claims data used for the CY
2014 ratesetting, which showed a geometric mean cost of approximately
$2,174 based on 10 single claims (out of 29 total claims).
As stated in section III.B. of this final rule with comment period,
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 the CY 2015 OPPS/ASC proposed rule showed a
geometric mean cost for CPT code 15110 of approximately $774 based on
90 single claims (out of 122 total claims). Therefore, in the CY 2015
OPPS/ASC proposed rule (79 FR 40987), we proposed 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 APC assignment for CPT code 15110 when considering
the similarities in relation to the other procedures assigned to this
APC.
In addition, we proposed to revise the APC titles for the four skin
repair APCs (79 FR 40987). Specifically, we proposed 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 of the proposed rule (79 FR 40987) showed 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 the proposed rule (which
is available via the Internet on the CMS Web site).
Comment: Several commenters requested that CMS reevaluate the
claims data for CPT code 15110, and recommended that CMS not finalize
the proposal to reassign the procedure code to APC 0327. The commenters
stated that the procedure described by CPT code 15110 allows patients
with chronic or non-healing wounds to recover much sooner and without
the use of expensive surgical interventions, which has resulted in cost
savings for hospitals, patients, and payers. Other commenters suggested
that CMS reassign CPT code 15110 to APC 0328 (Level III Skin
Procedures), which has a proposed CY 2015 payment rate of approximately
$1,408. The commenters believed that APC 0328 has clinically similar
procedures and is more comparable to the geometric mean costs of CPT
code 15110. Another commenter believed that the low volume of claims
data for CPT code 15110 is attributable to providers and hospitals
miscoding the performance of the service by not including the cost of
the device.
Response: We reviewed the historical claims data for CPT code
15110, dating

[[Page 66864]]

back to CY 2008, which is the first year that claims data for this code
became available. As listed in Table 23 below, for CY 2008 through CY
2013, the payment rate for CPT code 15110 has ranged between $288.30
and $393.38 based on a range of single claims between 3 and 8. In
addition, for the CY 2014 update, which was based on hospital
outpatient claims data that were submitted between January 1, 2012, and
December 31, 2012, and processed on or before June 30, 2013, the
payment rate for CPT code 15110 was significantly higher (approximately
$2,260.46) based on 10 single claims. However, as has been our practice
since the implementation of the OPPS in 2000, we review, on an annual
basis, the APC assignments for the procedures and services paid under
the OPPS. Based on the latest hospital outpatient claims data used for
this final rule with comment period, our analysis does not support the
continued assignment of CPT code 15110 to APC 0329, which is the APC to
which the procedure was assigned during CY 2014, or the suggested APC
0328. We examined the latest hospital outpatient claims data for CPT
code 15110 for dates of service between January 1, 2013, and December
31, 2013, that were processed on or before June 30, 2014. Our analysis
of the claims data shows a geometric mean cost for CPT code 15110 of
approximately $748 based on 127 single claims (out of 165 total
claims). We do not believe that APC 0328 is the most appropriate APC
assignment because the geometric mean cost for this APC is
approximately $1,460, which is significantly higher than the geometric
mean cost for CPT code 15110, which is approximately $748. Assigning
CPT code 15110 to APC 0328 would result in an overpayment for the
service provided. We believe that APC 0327 is the most appropriate APC
assignment for CPT code 15110 based on clinical homogeneity to the
other skin-related procedures assigned to this APC.

Table 23--Historical and Current Opps Claims and Payment Information for CPT Code 15110
----------------------------------------------------------------------------------------------------------------
OPPS payment
Calendar year (CY) rate Single claims Total claims
----------------------------------------------------------------------------------------------------------------
2008............................................................ $288.30 3 16
2009............................................................ 292.68 3 15
2010............................................................ 299.19 8 22
2011............................................................ 319.74 5 16
2012............................................................ 344.98 4 19
2013............................................................ 393.38 4 30
2014............................................................ 2,260.46 10 29
2015............................................................ 429.95 127 165
----------------------------------------------------------------------------------------------------------------

Further, based on our analysis of the CY 2013 hospital outpatient
claims data used for this final rule with comment period, we are unable
to determine whether hospitals are miscoding claims reporting this
service. For all APCs whose payment rates are based upon relative
payment weights, we note that the quality and accuracy of reported
units and charges influence the geometric mean costs that are the basis
for our payment rates, especially for low-volume items and services.
Beyond our standard OPPS trimming methodology (described in section
II.A.2. of this final rule with comment period) that we apply to those
claims that have passed various types of claims processing edits, it is
not our general policy to determine the accuracy of hospital coding and
charging practices for purposes of ratesetting (75 FR 71838). We rely
on hospitals to bill all HCPCS codes accurately in accordance with
their code descriptors and CPT and CMS instructions, as applicable, and
to report charges on claims and charges and costs on their Medicare
hospital cost report appropriately. In addition, we do not specify the
methodologies that hospitals must use to set charges for this or any
other service.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to reassign CPT code
15110 to APC 0327 for CY 2015. The final payment rate for CPT code
15110 can be found in Addendum B to this final rule with comment
period, which is available via the Internet on the CMS Web site.
b. Image-Guided Breast Biopsy Procedures and Image-Guided Abscess
Drainage Procedures (APCs 0005 and 0007)
For the CY 2014 OPPS update, the AMA's CPT Editorial Panel deleted
the image-guided breast biopsy CPT codes 19102 and 19103 and replaced
these procedure codes with six new CPT codes that ``bundled'' payment
for associated imaging services, effective January 1, 2014. As shown in
Table 23 of the proposed rule (79 FR 40983), 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 performance of 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 specific 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 of the proposed rule showed how image-guided breast
biopsy procedures were reported prior to CY 2014. Table 23 of the
proposed rule also showed 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.
For the CY 2014 OPPS update, the AMA's CPT Editorial Panel grouped
the multiple procedures that describe these imaging services into
single comprehensive service codes; specifically, CPT codes 19081,
19082, 19083, 19084, 19085, and 19086. Table 24 of the proposed rule
showed 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

[[Page 66865]]

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. Consistent with our longstanding policy for the treatment of
new codes, we assigned these new replacement CPT codes to interim APCs
for CY 2014. 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. In addition, 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. 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, was packaged for CY 2014.
At the Panel's March 10, 2014 meeting, one presenter requested that
CMS reassign 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. The presenter also requested that CMS maintain the historic
assignment of the predecessor CPT codes cost data until claims data
become available for the new comprehensive CPT codes. The Panel agreed
with the presenter and recommended that CMS reassign the new
replacement comprehensive CPT codes, as the presenter suggested.
In light of the public presentation, 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. In the CY 2015 OPPS/ASC proposed rule (79 FR 40984),
based on our review of the latest hospital outpatient claims data
available for the proposed rule, we proposed 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. If CMS finalizes this
proposed revision, there would be no procedures assigned to APCs 0685
or 0037. Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR
40984), we proposed to delete APCs 0685 and 0037 for CY 2015.
Consequently, for the CY 2015 OPPS update, we proposed to only use
two needle biopsy APCs, specifically, APCs 0004 and 0005. The proposed
reassignment of all of the procedures assigned to APCs 0685 and 0037
results 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. Therefore, we proposed to
continue to assign CPT codes 19081, 19083, and 19085 to APC 0005 for
the CY 2015 OPPS update (79 FR 40985). In addition, we proposed 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
proposed to delete APC 0037 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.
Comment: Commenters supported CMS' proposal to continue to assign
CPT codes 19081, 19083, and 19085 to APC 0005. The commenters stated
that the assignment of these CPT codes to APC 0005 is clinically
coherent and more accurately captures the resource cost associated with
providing these services when compared to the CY 2014 APC assignment.
Response: We appreciate the commenters' support.
Comment: Some commenters expressed concern regarding the inadequate
payment for ancillary services associated with multiple biopsies that
may be performed on the same date of service. The commenters indicated
that patients sometimes present with multiple lesions, which requires a
biopsy of each lesion. According to the commenters, prior to the
establishment of the comprehensive CY 2014 breast biopsy CPT codes,
hospitals would report each biopsy, imaging guidance, and marker or
localization placements separately. The commenters requested that CMS
provide guidance on how to report multiple biopsies performed on the
same date of service.
Response: We expect hospitals to report the performance of breast
biopsies using the comprehensive breast biopsy CPT codes, consistent
with the latest CPT coding guidelines. As stated in the CY 2014 CPT
code book, image-guided breast biopsies, including the placement of
localization devices when performed, are reported using the
comprehensive breast biopsy CPT codes 19081 through 19086. Image-guided
placement of localization devices without the performance of a biopsy
are required to be reported using CPT codes 19281 through 19288. In
addition, when more than one biopsy is performed using the same imaging
modality, hospitals are required to report each biopsy using an add-on
code. However, if more than one biopsy is performed using different
imaging modalities, hospitals are required to report a separate primary
code for each additional imaging modality.
We note that it is extremely important that hospitals use all of
the required HCPCS codes to report the performance of all services they
furnish, consistent with the code descriptors, CPT and/or CMS
instructions, and correct coding principles, whether payment for the
services is made separately or packaged. The accuracy of the OPPS
payment rates depends on the quality and completeness of the claims
data that hospitals submit for the services they furnish to Medicare
beneficiaries.
After consideration of the public comments we received, we are
finalizing our proposal to continue to assign CPT codes 19081, 19083,
and 19085 to APC 0005 for CY 2015. In addition, we are finalizing our
proposal 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. Furthermore, we are finalizing our proposal to delete APC 0037
because 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

[[Page 66866]]

appropriate APC based on resource utilization and clinical coherence.
Table 24 below shows the final status indicators, APC assignments, and
payment rates for the image-guided breast biopsy CPT codes 19081
through 19086.

Table 24--Final CY 2015 APCs to Which Image-Guided Breast Biopsy Procedure Codes are Assigned
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final CY
CPT Code Long descriptor CY 2014 SI CY 2014 APC CY 2014 Final CY Final CY 2015
Payment 2015 SI 2015 APC payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
19081............................ Biopsy, breast, with placement of T 0005 702.08 T 0005 $1,052.22
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 1,052.22
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 1,052.22
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).
--------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the proposal to maintain the APC assignment of the
breast biopsy comprehensive CPT codes to APC 0005, we also discussed in
the CY 2015 OPPS/ASC proposed rule our proposal to reassign CPT code
10030 from APC 0006 (Level I Incision & Drainage) to APC 0007 (Level II
Incision and Drainage). We note that, for the CY 2014 OPPS update, the
AMA's 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 of the CY 2015 OPPS/ASC
proposed rule, which showed 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, with
a payment rate of $159.66 and CPT code 49407 to APC 0685, with a
payment rate of $757.76. 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 public comment.
At the Panel's March 10, 2014 meeting, one presenter requested that
CMS reassign CPT codes 10030 and 49407 from APC 0006 and APC 0685,
respectively, to APC 0037 (Level IV Needle Biopsy/Aspiration Except
Bone Marrow), which has a CY 2014 OPPS payment rate of $1,223.25. The

[[Page 66867]]

commenter noted that similar procedures also are assigned to APC 0037.
Specifically, the presenter indicated that all the image-guided fluid
collection drainage procedures should be treated as one clinically
cohesive group and assigned to APC 0037. 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 presenter that CPT code 10030
would be more appropriately assigned to APC 0037. Rather, the Panel
believed that the most appropriate APC assignment for CPT code 10030
would be APC 0007. We agreed with the Panel's recommendation that CPT
code 10030 should be assigned to APC 0007. Therefore, in the CY 2015
OPPS/ASC proposed rule (79 FR 40986), we proposed 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 APC 0007, respectively,
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, as previously stated,
and proposed to reassign the procedures assigned to APCs 0685 and 0037
to either APC 0004 or APC 0005 based on clinical and resource
homogeneity and to delete APCs 0685 and 0037 for CY 2015. Specifically,
we proposed to reassign CPT code 49407 from APC 0685 to APC 0005 for CY
2015, and to delete APCs 0037 and 0685. Table 25 of the proposed rule
also showed 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).
Comment: Some commenters recommended that CMS reassign CPT code
10030 from APC 0006 to APC 0005. The commenters stated that, according
to an internal analysis, CPT code 10030 is comparable with respect to
clinical and resource characteristics and costs to the other abscess
drainage procedures assigned to APC 0005.
Response: In light of the Panel's recommendation to reassign the
procedure to APC 0007 and because CPT code 10030 is a new code for CY
2014, we are not accepting the commenters' suggestion to assign this
procedure to APC 0005. Rather, we are reassigning CPT code 10030 from
APC 0006 to APC 0007 for the CY 2015 OPPS update, as recommended by the
Panel. We note that we will have CY 2014 hospital claims data available
for CPT codes 10030 and 49407 in preparation for the CY 2016 OPPS
rulemaking. At that time, we will reevaluate the APC assignments for
all the abscess drainage CPT codes.
Therefore, after consideration of the public comments we received,
we are finalizing our proposal, without modification, to reassign CPT
code 10030 from APC 0006 to APC 0007. In addition, we are finalizing
our proposal to reassign the procedures assigned to APCs 0685 and 0037
to either APC 0004 or APC 0005 based on clinical and resource
homogeneity. Because there would be no other procedures assigned to
APCs 0685 and 0037 as a result of this reassignment, we are finalizing
our proposal to delete APCs 0685 and 0037 for CY 2015. The final CY
2015 payment rate for CPT codes 10030 and 49407 can be found in
Addendum B to this CY 2015 OPPS/ASC final rule (which is available via
the Internet on the CMS Web site).
c. Negative Pressure Wound Therapy (NPWT) (APCs 0012, 0013, 0015 and
0016)
For CY 2015, we proposed to assign all of the NPWT services to APC
0015 (Level II Debridement & Destruction), with a proposed payment rate
of $141.66. We proposed to continue to assign CPT code 97606 (Negative
pressure wound therapy (eg, vacuum assisted drainage collection),
including topical application(s), wound assessment, and instruction(s)
for ongoing care, per session; total wound(s) surface area greater than
50 square centimeters) to APC 0015. In addition, for the CY 2015 OPPS
update, we proposed to reassign CPT code 97605 (Negative pressure wound
therapy (eg, vacuum assisted drainage collection), including topical
application(s), wound assessment, and instruction(s) for ongoing care,
per session; total wound(s) surface area less than or equal to 50
square centimeters) from APC 0013 (Level II Debridement & Destruction),
the APC to which the procedure is assigned for CY 2014, to APC 0015. As
listed in Table 29 of the CY 2015 OPPS/ASC proposed rule (79 FR 40916),
we also proposed to reassign HCPCS codes G0456 (Negative pressure wound
therapy (e.g. vacuum 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) and
G0457 (Negative pressure wound therapy (e.g. vacuum 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) from APC 0016 (Level III Debridement & Destruction) to APC
0015.
We note that CPT codes 97605 and 97606 became effective on January
1, 2005, and describe the type of NPWT services that employ durable
medical equipment (DME). Alternatively, HCPCS codes G0456 and G0457,
which are relatively new codes that became effective on January 1,
2013, were established by CMS to provide a payment mechanism for NPWT
services furnished using disposable supplies instead of DME. We
proposed to maintain the assignment of status indicator ``T'' to these
two codes.
For the CY 2013 OPPS update, we assigned CPT code 97605 to APC 0013
(Level II Debridement & Destruction), with a payment rate of $71.54 and
CPT code 97606 to APC 0015 (Level III Debridement & Destruction), with
a payment rate of $106.96. In addition, we assigned HCPCS codes G0456
and G0457 to APC 0016 (Level IV Debridement & Destruction), with a
payment rate of $209.65.
For the CY 2014 OPPS update, we continued to assign CPT code 97605
to APC 0013 and CPT code 97606 to APC 0015. We also continued to assign
HCPCS codes G0456 and G0457 to APC 0016, with a payment rate of
$274.81. We note that 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,
with a payment rate specifically ranging between $450 and $500. The
commenters believed that a higher paying APC would be more reflective
of the cost of providing NPWT services using disposable supplies. We
further stated 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 that time,
we would reevaluate the APC assignments for these services in
preparation for the CY 2015 OPPS update.

[[Page 66868]]

For the CY 2015 OPPS update, we analyzed the latest hospital
outpatient claims data available for the CY 2015 OPPS/ASC proposed
rule, which was based on claims submitted between January 1, 2013 and
December 31, 2013, and processed on or before December 31, 2013. The
data indicated that the geometric mean cost of APC 0013 was comparable
to the geometric mean cost of APC 0015. Therefore, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40988), we proposed to combine these APCs by
reassigning all of the procedures from APC 0013 to APC 0015; delete APC
0013, and retain APC 0015 for the CY 2015 OPPS update. In addition, we
proposed to rename the Debridement and Destruction APC series
(excluding 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).
Furthermore, the CY 2013 claims data available for the proposed
rule also indicated that the geometric mean cost for HCPCS code G0456
was 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). The claims data also showed
that the geometric mean cost for CPT code 97605 was approximately $101
based on 58,901 single claims (out of 75,378 total claims), and
approximately $140 for CPT code 97606 based on 6,722 single claims (out
of 9,063 total claims). The proposed geometric mean costs of HCPCS
codes G0456 and G0457, and CPT codes 97605 and 97606 were all
comparable to the proposed geometric mean cost for APC 0015 of
approximately $148. Based on analysis of the most recent claims data
available for the proposed rule, we stated that we believed that the
most appropriate assignment for all of the NPWT services was APC 0015
based on the clinical and resource homogeneity of the services assigned
to this APC. The next higher cost APC in the series, APC 0016, had a
proposed geometric mean cost of approximately $284, which was
significantly higher than the proposed geometric mean cost of any of
the NPWT services. Therefore, in the CY 2015 OPPS/ASC proposed rule, we
proposed to continue to assign CPT code 97606 to APC 0015, reassign CPT
code 97605 from APC 0013 to APC 0015, and reassign HCPCS codes G0456
and G0457 from APC 0016 to APC 0015 for the CY 2015 OPPS update.
Comment: Most commenters requested that CMS continue to assign the
disposable NPWT HCPCS codes G0456 and G0457 to APC 0016 for the CY 2015
OPPS update, which is the same APC to which these services are assigned
for CY 2014. The commenters believed that hospitals may have miscoded
claims reporting these services and, consequently, the CY 2015 proposed
payment rate of approximately $142 for HCPCS codes G0456 and G0457 is
insufficient because the CY 2013 OPPS claims data do not accurately
capture the cost of the disposable supplies that is included in
providing the service. One commenter stated that the cost of the
disposable NPWT supplies range between $200 and $700 per case. The
commenter provided copies of individual invoices that were forwarded to
various hospitals from the manufacturer that showed a cost of
approximately $220 for one disposable NPWT system. In addition, based
on its analysis of charges reported by hospitals, the commenter
believed that hospitals failed to understand the differences between
the type of NPWT services that employ DME, which are described by CPT
codes 97605 and 97606, and the type of disposable NPWT services
described by HCPCS G-codes. The commenter stated that, according to its
data analysis, there was no difference in hospital charges for the two
types of NPWT services reported on claims. The commenter believed that
hospitals miscoded these claims because they may have believed that the
services described by the CPT codes for the type of NPWT services that
use DME are similar to the services described by the disposable NPWT
HCPCS G-codes. Several commenters explained that the cost of the type
of NPWT services that use DME does not include the cost of the devices
and supplies that are used to provide the services described by the
HCPCS G-codes. The commenter speculated that, although it appeared that
hospitals did not include the cost of the disposable devices when
reporting their charges for the services described by the disposable
NPWT HCPCS G-codes, hospitals should have included such costs.
Therefore, the commenters urged CMS to continue to assign HCPCS codes
G0456 and G0457 to APC 0016 for the CY 2015 OPPS update.
Response: Based on the significant number of claims that are
available for this final rule with comment period, we believe that APC
0015 best reflects the clinical characteristics and resource costs of
HCPCS codes G0456 and G0457. In addition, we do not believe that
continuing to assign HCPCS codes G0456 and G0457 to APC 0016 would be
appropriate for CY 2015. Our analysis of the latest hospital outpatient
claims data available for this CY 2015 OPPS/ASC final rule with comment
period, which is based on claims submitted between January 1, 2013 and
December 31, 2013, and processed on or before June 30, 2014, indicates
that the geometric mean costs for both HCPCS codes (G0456 and G0457)
are very similar to the geometric mean cost of APC 0015. Specifically,
our latest hospital outpatient claims data for this final rule with
comment period show a geometric mean cost of approximately $158 for
HCPCS code G0456 based on 5,198 single claims (out of 6,645 total
claims), which is close to the geometric mean cost of APC 0015, which
is approximately $152. Similarly, our claims data show a geometric mean
cost of approximately $202 for HCPCS code G0457 based on 476 single
claims (out of 676 total claims), which is also closer to the geometric
mean cost of APC 0015, which is approximately $152 than the geometric
mean cost of APC 0016, which is approximately $294.
In addition, we are not convinced that hospitals are reporting the
same charges for the two types of NPWT services (DME-based and
disposable) because a review of the latest claims data shows that the
geometric mean costs for the most highly utilized procedures described
by HCPCS code G0456 (geometric mean cost of approximately $158) and CPT
code 97605 (geometric mean cost of approximately $101) are
significantly different. This difference in costs captured in the
claims data demonstrates that hospitals are not reporting identical
charges for the different types of NPWT services, DME and disposable-
based. Furthermore, we note that for all APCs whose payment rates are
based upon relative payment weights, the quality and accuracy of
reported units and charges influence the geometric mean costs that are
the basis for our payment rates, especially for low volume items and
services. However, beyond our standard OPPS trimming methodology
(described in section II.A.2. of this final rule with comment period)
that we apply to those claims that have passed various types of claims
processing edits, it is not our general policy to judge the accuracy of
hospital coding and charging for purposes of ratesetting (75 FR 71838).
We rely on hospitals to bill all HCPCS codes accurately in accordance
with their code descriptors and CPT and CMS instructions, as
applicable, and to report charges on claims and charges and costs on
their Medicare hospital cost reports appropriately. In addition, we do
not specify the methodologies that hospitals

[[Page 66869]]

must use to set charges for this or any other service. Therefore, based
on the latest hospital outpatient claims data available for this final
rule with comment period, we believe that APC 0015 best reflects the
clinical characteristics and resource costs of HCPCS codes G0456 and
G0457.
Comment: One commenter recommended that CMS make certain changes to
APCs 0015 and 0016. Specifically, the commenter recommended that CMS
lower the geometric mean cost for APC 0016 to $190, which would result
in reassigning certain codes that were in APC 0015 whose geometric mean
cost met or exceeded this amount to APC 0016. This commenter stated
that such reassignment would retain HCPCS codes G0456 and G0457 in APC
0016.
Response: We believe that the proposed structures of APCs 0015 and
0016 (aside from the few code reassignments that are being made for the
purpose of resolving a violation of the 2 times rule in APC 0015 that
are discussed below) are optimal in terms of clinical and resource
homogeneity. The geometric mean cost range for significant procedures
assigned to APC 0015 is between approximately $110 (for CPT code 17250)
and approximately $201 (for CPT code 11100). The geometric mean cost
range for significant procedures assigned to APC 0016 is between
approximately $230 (for CPT code 17282) and approximately $368 (for CPT
code 11043). Reassigning HCPCS code G0456 from APC 0015 to APC 0016
would either violate the 2 times rule in APC 0016 or necessitate
dividing APC 0016 into two APCs, which we do not believe is appropriate
or necessary. Both of these options are undesirable, especially given
that the geometric mean cost of HCPCS code G0456 (approximately $158)
is comparable to the geometric mean cost of APC 0015 (approximately
$152).
In summary, based on the latest claims data used for this final
rule with comment period, we believe that HCPCS codes G0456 and G0457
are appropriately assigned in APC 0015 for the CY 2015 update based on
the clinical and resource similarity to the other procedures in APC
0015. As has been our practice since the implementation of the OPPS in
2000, we review, on an annual basis, the APC assignments for the
procedures and services paid under the OPPS. We will again review the
APC assignments for all the NPWT services in light of the CY 2014
claims data and the proposed APC structures for clinically relevant
APCs and determine whether an APC reassignment for any of the NPWT
codes would be appropriate in the CY 2016 rulemaking.
In addition, in the CY 2015 OPPS/ASC proposed rule, there were
violations of the 2 times rule noted for both APCs 0012 and 0015 (79 FR
40981). Every year we make every effort to minimize the number of APCs
that are listed as exceptions to the 2 times rule. To resolve the
violations of the 2 times rule in APCs 0012 and 0015, we are making the
following code reassignments:
CPT codes 11719, 11720, 11721, 11740, and 17340, and HCPCS
code G0127 from APC 0012 to APC 0340.
CPT codes 11901, 12014, 96920, and 97605 from APC 0015 to
APC 0012.
These code reassignments eliminated the 2 times rule violations
that existed in APCs 0012 and 0015 in the CY 2015 OPPS/ASC proposed
rule. We note that APC 0012 is one of the APCs included in the
ancillary services packaging policy that is discussed in section
II.A.3.c.(1) of this final rule with comment period. Because CPT code
97605 is assigned to APC 0012, the code will be conditionally packaged
and assigned to status indicator ``Q1'' for CY 2015.
After consideration of the public comments we received, we are
finalizing our CY 2015 proposal, with modification. Specifically, we
are finalizing our proposal to assign CPT code 97606 and HCPCS codes
G0456 and G0457 to APC 0015. However, we are reassigning CPT code 97605
from our proposed APC 0015 to APC 0012 for the CY 2015 update to
eliminate the violation of the 2 times rule that existed in APC 0015
based on claims data available for the proposed rule.
In addition, for the CY 2015 update, the CPT Editorial Panel
established two new CPT codes to describe disposable NPWT services and
revised the long descriptors for existing CPT codes 97605 and 97606,
effective January 1, 2015. Consistent with our general policy of using
permanent codes rather than using temporary HCPCS G-codes in order to
streamline coding, we are deleting HCPCS codes G0456 and G0457 because
they are replaced with two new CPT codes effective January 1, 2015.
Table 25 below shows the replacement CPT codes for HCPCS codes G0456
and G0457 as well as the revised long descriptors for existing CPT
codes 97605 and 97606. The final CY 2015 payment rate for the NPWT
services codes can be found in Addendum B to this final rule with
comment period (which is available via the Internet on the CMS Web
site). Like all new codes effective January 1, 2015, the APC
assignments for the new disposable NPWT CPT codes are open for comment
for 60 days after display of this CY 2015 OPPS/ASC final rule with
comment period.

Table 25--Final APC Assignments for the NPWT Services for CY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed CY Final CY
CY 2014 CPT/HCPCS Code CY 2015 CPT Code CY 2015 Long descriptor Proposed CY 2015 OPPS Final CY 2015 OPPS
2015 OPPS SI APC 2015 OPPS SI APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
97605........................... 97605.......................... Negative pressure wound therapy T 0015 Q1 0012
(eg, vacuum assisted drainage
collection), utilizing durable
medical equipment (DME),
including topical
application(s), wound
assessment, and instruction(s)
for ongoing care, per session;
total wound(s) surface area
less than or equal to 50
square centimeters.
97606........................... 97606.......................... Negative pressure wound therapy T 0015 T 0015
(eg, vacuum assisted drainage
collection), utilizing durable
medical equipment (DME),
including topical
application(s), wound
assessment, and instruction(s)
for ongoing care, per session;
total wound(s) surface area
greater than 50 square
centimeters.

[[Page 66870]]

G0456........................... 97607.......................... Negative pressure wound T 0015 T 0015
therapy, (eg, vacuum assisted
drainage collection),
utilizing disposable, non-
durable medical equipment
including provision of exudate
management collection system,
topical application(s), wound
assessment, and instructions
for ongoing care, per session;
total wound(s) surface area
less than or equal to 50
square centimeters.
G0457........................... 97608.......................... Negative pressure wound T 0015 T 0015
therapy, (eg, vacuum assisted
drainage collection),
utilizing disposable, non-
durable medical equipment
including provision of exudate
management collection system,
topical application(s), wound
assessment, and instructions
for ongoing care, per session;
total wound(s) surface area
greater than 50 square
centimeters.
--------------------------------------------------------------------------------------------------------------------------------------------------------

d. Platelet Rich Plasma (PRP) (APC 0327)
For CY 2015, we proposed to continue to assign HCPCS code G0460
(Autologous platelet rich plasma for chronic wounds/ulcers, including
phlebotomy, centrifugation, and all other preparatory procedures,
administration and dressings, per treatment) to APC 0327 (Level II
Debridement & Destruction), with a proposed payment rate of
approximately $431. We note that HCPCS code G0460, which became
effective July 1, 2013, describes both the procedure and product
components associated with the autologous platelet rich plasma service.
Comment: One commenter requested that CMS exempt HCPCS code G0460
from the geographic wage index variations to enable hospitals to more
willingly participate in the AutoloGel Coverage with Evidence
Development (CED) protocols. According to the commenter, HOPDs are
reluctant to enroll in the CED protocols because they are concerned
that the proposed APC payment rate will not cover the cost of the
product, the procedure, the overhead, and the additional administrative
effort associated with CED data collection requirements. In addition,
the commenter requested that CMS establish a final payment rate for APC
0327 based on the geometric mean cost of $496.99 to help achieve some
stability regarding the payment for the procedures assigned to this
APC.
Response: We note that comments related to CED protocols or data
collection are outside the scope of the proposed rule. With regard to
the geographic wage index exemption requested by the commenter, we have
never made such an exception. Under the hospital OPPS, all procedures
and services that include devices are wage adjusted. Moreover, the
payment rates for procedures and APCs are not based on a specific
projected amount. The final payment rate for APC 0327 is based on the
geometric mean cost of all the procedures described by the HCPCS codes
assigned to this APC. We believe that the procedure described by HCPCS
code G0460 is appropriately assigned to APC 0327 for the CY 2015 OPPS
update based on the clinical and resource similarities in relation to
the other procedures assigned to APC 0327. We note that, for this final
rule with comment period, which is based on hospital outpatient claims
submitted between January 1, 2013, and December 31, 2013, that were
processed on or before June 30, 2014, our latest hospital outpatient
claims data show no claims reporting the service described by HCPCS
code G0460. As has been our practice since the implementation of the
OPPS in 2000, we review, on an annual basis, the APC assignments for
the procedures and services paid under the OPPS. We will review the APC
assignment for HCPCS code G0460 when sufficient claims data become
available to determine whether a reassignment to a more appropriate APC
is necessary for the CY 2016 update. After consideration of the public
comment we received, we are finalizing our proposal, without
modification, to continue to assign HCPCS code G0460 to APC 0327 for CY
2015. The final CY 2015 payment rate for HCPCS code G0460 can be found
in Addendum B to this CY 2015 OPPS/ASC final rule (which is available
via the Internet on the CMS Web site).

IV. OPPS Payment for Devices

A. 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 sets forth the period for
which a device category eligible for transitional pass-through payments
under the OPPS may be in effect. The implementing regulation at 42 CFR
419.66(g) provides that this pass-through payment eligibility period
begins on the date CMS establishes a particular transitional pass-
through category of devices. We may establish a new device category for
pass-through payment in any quarter, and 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; that is, the date CMS establishes a particular category of
devices eligible for transitional pass-through payments. 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.
b. CY 2015 Policy
There currently is one device category eligible for pass-through
payment, which we established effective October 1, 2013: HCPCS code
C1841 (Retinal

[[Page 66871]]

prosthesis, includes all internal and external components). Recognizing
that this device category has been eligible for at least 2 years, but
not more than 3 years, of pass-through status by the end of CY 2015, in
the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we proposed the
expiration of pass-through payment for HCPCS code C1841 devices on
December 31, 2015. Therefore, in accordance with our established
policy, beginning with CY 2016, we proposed to package the costs of the
HCPCS code C1841 devices into the costs related to the procedures with
which the device is reported in the hospital claims data (79 FR 40989
through 40990).
Comment: A few commenters requested that CMS extend the pass-
through payment period for the device described by HCPCS code C1841 due
to delay of the first date of sale of the device until January 2014.
The commenters asserted that the delay was due to various regulatory
delays, including the Food and Drug Administration's (FDA's)
Humanitarian Device Exemption (HDE) approval process and Federal
Communications Commission (FCC) regulations regarding utilization of a
radiofrequency (RF) band approval. The commenters therefore requested
that CMS use the date of the first sale or the date of the first HCPCS
code C1841 device implant (January 16, 2014) to ``reset'' the start
date for pass-through payment eligibility, which would result in
another year of pass-through payment status.
Response: According to 42 CFR 419.66(g), ``CMS limits the
eligibility for a pass-through payment established under this section
to a period of at least 2 years, but not more than 3 years, beginning
on the date that CMS establishes a category of devices'' (emphasis
added). We cannot extend the pass-through payment status of HCPCS code
C1841 beyond CY 2015 because such an extension would make the pass-
through payment status effective longer than the maximum 3-year period
permitted under 42 CFR 419.66(g). Moreover, the HCPCS code C1841 device
category was made effective in the OPPS on October 1, 2013. The HCPCS
code C1841 device category will have had more than 2 years of pass-
through payment status as of December 31, 2015. Extending pass-through
payment status through December 31, 2016, as requested by the
commenter, would afford the HCPCS code C1841 device category longer
than the 3-year maximum pass-through payment period. Therefore, after
consideration of the public comments we received, we are finalizing our
proposal to expire HCPCS code C1841 device category from pass-through
payment status after December 31, 2015. We are finalizing our proposal
to package the costs for devices described by HCPCS code C1841 into the
costs of the procedure with which the device is reported in the
hospital claims data used in the development of the OPPS relative
payment weights that will be used to establish the ASC payment rates
for CY 2016.
With the expiration of HCPCS code C1841 device category from pass-
through payment status at the end of CY 2015, there are no other
currently active categories for which we would expire pass-through
status in CY 2015. 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 42 CFR
419.66(g).
2. 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 pass-through payment amount for the eligible device. 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
eligible pass-through device categories through the transmittals that
implement the quarterly OPPS updates.
We published a list of all procedural APCs with the CY 2014
portions (both percentages and dollar amounts) of the APC payment
amounts that we determined 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 a
related APC are used in order to evaluate whether the cost of a device
in an application for a new device category for pass-through payment is
not insignificant in relation to the APC payment amount for the service
related to the category of devices, as specified in our regulations at
Sec. 419.66(d).
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. CY 2015 Policy
In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), we proposed 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 proposed 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,
be the device pass-through process and payment methodology only. The
rationale for this policy is provided in the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60471 through 60477). We also proposed
to continue our established policies for calculating and setting the
device APC offset amounts for each device category eligible for pass-
through payment. In addition, we

[[Page 66872]]

proposed to continue to review each new device category on a case-by-
case basis to determine whether device costs associated with the new
category are already packaged into the existing APC structure. If
device costs packaged into the existing APC structure are associated
with the new category, we proposed 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)).
In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), for CY 2015,
we also proposed to continue our policy established in CY 2010 to
include implantable biologicals in our calculation of the device APC
offset amounts. In addition, we proposed to continue to calculate and
set any device APC offset amount for 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 (79 FR 40990).
In addition, in the CY 2015 OPPS/ASC proposed rule (79 FR 40900),
we proposed 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.
Comment: One commenter objected to CMS' proposal to continue its
policy of evaluating implantable biological pass-through applications
through the device evaluation process. The commenter believed that all
biologicals should be evaluated through the drug and biological pass-
through process, which is intended for the evaluation of drugs and
biologicals.
Response: We have discussed our rationale for this policy in the CY
2010 OPPS/ASC final rule (74 FR 60463). Implantable biologicals
function as implantable medical devices and are used in the HOPD in
surgical procedures in a manner similar to implantable medical devices.
Therefore, since CY 2010, we have treated them as medical devices for
pass-through payment purposes. In addition, like implantable medical
devices, implantable biologicals are treated as packaged surgical
supplies in the OPPS under 42 CFR 419.2(b)(16). For these reasons, we
will continue to treat implantable biologicals as devices for pass-
through payment purposes in CY 2015.
After consideration of the public comment we received, we are
finalizing, without modification, the aforementioned proposed policies
for calculation of the device APC offset amounts for CY 2015. In
addition, we are updating, on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, 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 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. Adjustment to OPPS Payment for No Cost/Full Credit and Partial
Credit Devices

1. Background
To ensure equitable OPPS payment when a hospital receives a device
without cost or with full credit, in CY 2007, we implemented a policy
to reduce the payment for specified device-dependent APCs by the
estimated portion of the APC payment attributable to device costs (that
is, the device offset) when the hospital receives a specified device at
no cost or with full credit (71 FR 68071 through 68077). Hospitals are
instructed to report no cost/full credit cases on the claim using the
``FB'' modifier on the line with the procedure code in which the no
cost/full credit device is used. In cases in which the device is
furnished without cost or with full credit, the hospital is instructed
to report a token device charge of less than $1.01. In cases in which
the device being inserted is an upgrade (either of the same type of
device or to a different type of device) with a full credit for the
device being replaced, the hospital is instructed to report as the
device charge the difference between its usual charge for the device
being implanted and its usual charge for the device for which it
received full credit. In CY 2008, we expanded this payment adjustment
policy to include cases in which hospitals receive partial credit of 50
percent or more of the cost of a specified device. Hospitals are
instructed to append the ``FC'' modifier to the procedure code that
reports the service provided to furnish the device when they receive a
partial credit of 50 percent or more of the cost of the new device. We
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 reduced OPPS payment, for the applicable APCs,
by the full or partial credit a hospital receives for a replaced
device. Specifically, under this modified policy, hospitals are
required to report on the claim the amount of the credit in the amount
portion for value code ``FD'' (Credit Received from the Manufacturer
for a Replaced Medical Device) when the hospital receives a credit for
a replaced device that is 50 percent or greater than the cost of the
device. For CY 2014, we also limited the OPPS payment deduction for the
applicable APCs to the total amount of the device offset when the
``FD'' value code appears on a claim.
2. Policy for CY 2015
In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992),
for CY 2015, we proposed 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 proposed to continue to reduce the OPPS payment, for the
applicable APCs listed in Table 31 of the proposed rule, 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 on
the claim the amount of the credit in the amount portion for ``FD''
when the

[[Page 66873]]

hospital receives a credit for a replaced device listed in Table 32 of
the proposed rule that is 50 percent or greater than the cost of the
device.
In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992),
for CY 2015, we also proposed to continue using the three criteria
established in the CY 2007 OPPS/ASC final rule with comment period for
determining the APCs to which 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 proposed to continue to
restrict the devices to which the APC payment adjustment would apply to
a specific set of costly devices to ensure that the adjustment would
not be triggered by the implantation of an inexpensive device whose
cost would not constitute a significant proportion of the total payment
rate for an APC. We stated that 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.
Comment: One commenter urged CMS to discontinue its current policy
of reducing OPPS payment for specified APCs when a hospital furnishes a
specified device without cost or with a full or partial credit. The
commenter stated that procedures which involve the replacement of a
device are of greater complexity than the original insertion of the
device. The commenter recommended that, because the replacement
procedures are not paid at a higher rate, CMS not further penalize the
hospital by reducing the OPPS payment when the device is furnished
without cost or with a full or partial credit to the hospital.
Response: We do not agree with the commenter and believe that it is
appropriate to reduce the OPPS payment for specified APCs when a
hospital furnishes a specified device without cost or with a full or
partial credit.
After consideration of the public comments we received, we are
finalizing our proposals 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, and to continue
using the three criteria established in the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68072 through 68077) for determining the
APCs to which our CY 2015 policy will apply.
We examined the offset amounts calculated from the CY 2015 final
rule with comment period data and the clinical characteristics of the
final CY 2015 APCs to determine which APCs meet the criteria for CY
2015. Table 26 below lists the APCs to which the payment adjustment
policy for no cost/full credit and partial credit devices will apply in
CY 2015. Table 27 below lists the devices to which the payment
adjustment policy for no cost/full credit and partial credit devices
will apply in CY 2015.
Based on the final CY 2013 claims data available for this CY 2015
OPPS/ASC final rule with comment period, we have updated the lists of
APCs and devices to which the no cost/full credit and partial credit
device adjustment policy will apply for CY 2015, consistent with the
three criteria discussed earlier in this section.

Table 26--APCs to Which the No Cost/Full Credit and Partial Credit
Device Payment Adjustment Policy Will Apply in CY 2015
------------------------------------------------------------------------
CY 2015 APC 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.
0655.............................. Level IV Pacemaker and Similar
Procedures.
------------------------------------------------------------------------

Table 27--Devices to Which the No Cost/Full Credit and Partial Credit
Device Payment Adjustment Policy Will Apply in CY 2015
------------------------------------------------------------------------
CY 2015 Device HCPCS code 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.
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.
------------------------------------------------------------------------

[[Page 66874]]

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

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

1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biologicals. Throughout this final rule with comment period, the
term ``biological'' is used because this is the term that appears in
section 1861(t) of the Act. ``Biological'' as used in this final rule
with comment period 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; current 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
Medicare 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. CY 2015 pass-through drugs and biologicals and
their designated APCs are assigned status indicator ``G'' in Addenda A
and B to this final rule with comment period, which are available via
the Internet on the CMS 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 final rule with
comment period, the term ``ASP methodology'' and ``ASP-based'' are
inclusive of all data sources and methodologies described therein.
Additional information on the ASP methodology can be found on the CMS
Web site at: http://www.cms.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. Drugs and Biologicals With Expiring Pass-Through Payment Status in
CY 2014
In the CY 2015 OPPS/ASC proposed rule (79 FR 40992), we proposed
that the pass-through status of 9 drugs and biologicals would expire on
December 31, 2014, as listed in Table 33 of the proposed rule (79 FR
40993). 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 $95 for
CY 2015), as discussed further in section V.B.2. of this final rule
with comment period. 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 relative ASP-based payment amount (which is ASP+6
percent for CY 2015, as discussed further in section V.B.3. of this
final rule with comment period).
Comment: Commenters, including several hospitals, physicians, and a
manufacturer, requested that CMS continue to pay separately for
Exparel[supreg] (bupivacaine liposome injectable suspension) described
by HCPCS code C9290 (Injection, bupivicaine liposome, 1 mg) once pass-
through payment status expires on December 31, 2014. Commenters
disagreed with CMS' proposal to package Exparel[supreg] as a surgical
supply and stated that the drug is used to control postoperative pain
and is not used in the actual surgical procedure. In addition,
commenters noted that the product cost of Exparel[supreg] exceeds the
proposed CY 2015 packaging threshold of $90 and is not FDA-approved as
a local anesthetic.
Response: We disagree with the commenters' characterization of
Exparel[supreg] as not functioning as a surgical supply because it is
indicated for the alleviation of postoperative pain. The indications
and usage of Exparel[supreg] as listed in the FDA-approved label are as
follows: ``Exparel[supreg] is a liposome injection of bupivacaine, an
amide-type local anesthetic, indicated for administration into the
surgical site to produce postsurgical analgesia.''

[[Page 66875]]

Exparel[supreg] is injected immediately after the surgical procedure
while the patient is still on the operating room table at the surgical
wound site to control postoperative pain, which is an important part of
the surgical care of the patient affecting the surgical outcome. In the
CY 2014 OPPS/ASC final rule with comment period (78 FR 74925 through
74939), we finalized our policy at 42 CFR 419.2(b)(16) to
unconditionally package all drugs and biologicals that function as
supplies in a surgical procedure. According to OPPS policy, drugs,
biologicals, radiopharmaceuticals, implantable medical devices, and
other items and products that are not equipment can be supplies in the
OPPS (78 FR 43571 and 43575). While the commenter stated that the cost
of Exparel[supreg] exceeds the drug packaging threshold, we emphasize
that cost consideration is not a factor in determining whether an item
is a surgical supply. We consider all items related to the surgical
outcome and provided during the hospital stay in which the surgery is
performed, including postsurgical pain management drugs, to be part of
the surgery for purposes of our drug and biological surgical supply
packaging policy. Therefore, for CY 2015, we are finalizing our
proposal to package Exparel[supreg] described by HCPCS code C9290 and
to assign status indicator ``N'' to the code for CY 2015.
Comment: A few commenters recommended that CMS continue pass-
through payment status for new drugs, specifically diagnostic
radiopharmaceuticals and contrast agents, for a full 3 years. The
commenters asserted that providing pass-through payment status for 3
years would help provide a more current and accurate data set on which
to base payment amounts of the procedure when the diagnostic
radiopharmaceutical or contrast agent is subsequently packaged. The
commenters further recommended that CMS expire pass-through payment
status for drugs and biologicals on a quarterly as opposed to an annual
basis.
Response: As we stated in the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74287), the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68363), and the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75010), and as described in section V.A. of this
final rule with comment period, section 1833(t)(6)(c)(i)(II) of the Act
permits CMS to make pass-through payments for a period of at least 2
years, but not more than 3 years, after the product's first payment as
a hospital outpatient service under Medicare Part B OPPS. We continue
to believe that this period of payment appropriately facilitates
dissemination of these new products into clinical practice and
facilitates the collection of sufficient hospital claims data
reflective of their costs for future OPPS ratesetting. Our longstanding
practice has been to provide pass-through payment for a period of 2 to
3 years, with expiration of pass-through payment status proposed and
finalized through the annual rulemaking process. Each year, when
proposing to expire the pass-through payment status of certain drugs
and biologicals, we examine our claims data for these products. We
observe that hospitals typically have incorporated these products into
their chargemasters based on the utilization and costs observed in our
claims data. Under the existing pass-through payment policy, we begin
pass-through payment on a quarterly basis, depending on when
applications are submitted to us for consideration. We are confident
that the period of time for which drugs, biologicals, contrast agents,
and radiopharmaceuticals receive pass-through payment status, which is
at least 2 but no more than 3 years, is appropriate for CMS to collect
the sufficient amount of data to make a packaging determination.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to expire the pass-
through payment status of the nine drugs and biologicals listed in
Table 28 below. Table 28 lists the drugs and biologicals for which
pass-through payment status will expire on December 31, 2014, the
status indicators, and the assigned APCs for CY 2015.

Table 28--Drugs and Biologicals for Which Pass-Through Payment Status Expires December 31, 2014
----------------------------------------------------------------------------------------------------------------
Final CY 2015 Final CY 2015
CY 2015 HCPCS Code CY 2015 Long descriptor SI 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. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing
Pass-Through Payment Status in CY 2015
In the CY 2015 OPPS/ASC proposed rule (79 FR 40993), we proposed to
continue pass-through payment 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, were
listed in Table 34 of the proposed rule (79 FR 40994). The APCs and
HCPCS codes for these drugs and biologicals approved for pass-through
status through July 1, 2014 were assigned status indicator ``G'' in
Addenda A and B to the proposed rule. Addenda A and B to the 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 stated in the proposed rule that we
believe it is

[[Page 66876]]

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 proposed to pay for pass-through drugs
and biologicals at ASP+6 percent, equivalent to the rate these drugs
and biologicals would receive in the physician's office setting in CY
2015. We proposed 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
proposed 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 proposed 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 proposed to provide payment
for both diagnostic and therapeutic radiopharmaceuticals that are
granted pass-through payment 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
payment status during CY 2015, we proposed to follow the standard ASP
methodology to determine the pass-through payment rate that drugs
receive under section 1842(o) of the Act, which is ASP+6 percent. If
ASP data are not available for a radiopharmaceutical, we proposed to
provide pass-through payment at WAC+6 percent, the equivalent payment
provided to pass-through drugs and biologicals without ASP information.
If WAC information also is not available, we proposed to provide
payment for the pass-through radiopharmaceutical at 95 percent of its
most recent AWP.
Comment: Several commenters supported CMS' proposal to provide
payment at ASP+6 percent for drugs, biologicals, contrast agents, and
radiopharmaceuticals that are granted pass-through payment status. A
few commenters requested that CMS provide an additional payment for
radiopharmaceuticals that are granted pass-through payment status.
Response: As discussed above, the statute provides that mandated
pass-through payment for pass-through drugs and biologicals for CY 2015
equals the amount determined under section 1842(o) of the Act minus the
portion of the otherwise applicable APC payment that CMS determines is
associated with the drug or biological. Therefore, the pass-through
payment is determined by subtracting the otherwise applicable payment
amount under the OPPS (ASP+6 percent for CY 2015) from the amount
determined under section 1842(o) of the Act (ASP+6 percent).
Regarding the commenters' request that CMS provide an additional
payment for radiopharmaceuticals that are granted pass-through payment
status, we note that, for CY 2015, consistent with our CY 2014 payment
policy for diagnostic and therapeutic radiopharmaceuticals, we proposed
to provide payment for both diagnostic and therapeutic
radiopharmaceuticals with pass-through payment status based on the ASP
methodology. As stated above, the ASP methodology, as applied under the
OPPS, uses several sources of data as a basis for payment, including
the ASP, the WAC if the ASP is unavailable, and 95 percent of the
radiopharmaceutical's most recent AWP if the ASP and WAC are
unavailable. For purposes of pass-through payment, we consider
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a
diagnostic or therapeutic radiopharmaceutical receives pass-through
payment status during CY 2015, we proposed to follow the standard ASP
methodology to determine its pass-through payment rate under the OPPS
to account for the acquisition and pharmacy overhead costs, including
compounding costs. We continue to believe that a single payment is
appropriate for diagnostic radiopharmaceuticals with pass-through
payment status in CY 2015, and that the payment rate of ASP+6 percent
(or payment based on the ASP methodology) is appropriate to provide
payment for both the radiopharmaceutical's acquisition cost and any
associated nuclear medicine handling and compounding costs. We refer
readers to section V.B.3. of this final rule with comment period for
further discussion of payment for therapeutic radiopharmaceuticals
based on ASP information submitted by manufacturers, and readers also
may refer to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
After consideration of the public comments we received, we are
finalizing our proposal to provide payment for drugs, biologicals,
diagnostic and therapeutic radiopharmaceuticals, and contrast agents
that are granted pass-through payment status based on the ASP
methodology. If a diagnostic or therapeutic radiopharmaceutical
receives pass- through status during CY 2015, we will 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
will provide pass-through payment at WAC+6 percent, the equivalent
payment provided to pass-through drugs and biologicals without ASP
information. If WAC information also is not available, we will 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 final rule
with comment period, 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. 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 payment

[[Page 66877]]

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 utilized.
The calculation of the policy-packaged drug APC offset amounts is
described in more detail in section V.A.4. of this final rule with
comment period. It follows that the copayment for the nonpass-through
payment portion (the otherwise applicable fee schedule amount that we
would also offset from payment for the drug or biological if a payment
offset applies) of the total OPPS payment for those drugs and
biologicals, therefore, would 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, in the CY 2015 OPPS/ASC
proposed rule, we proposed 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
payment status. The 22 drugs and biologicals that we proposed would
continue to have pass-through payment status for CY 2015 or have been
granted pass-through payment status as of January 2015 were shown in
Table 34 of the proposed rule (79 FR 40994).
Comment: Commenters supported the CY 2015 proposal to continue to
set the associated copayment amounts for pass-through diagnostic
radiopharmaceuticals and contrast agents that would otherwise be
packaged if the product did not have pass-through payment status to
zero. The commenters noted that this policy is consistent with
statutory requirements and provides cost-saving benefits to Medicare
beneficiaries.
Response: We appreciate the commenters' support of our proposal. As
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40993 through
40994), we believe that for drugs and biologicals that are ``policy-
packaged,'' the copayment for the nonpass-through payment portion of
the total OPPS payment for this subset of drugs and biologicals is
accounted for in the copayment of the associated clinical APC in which
the drug or biological is used. According to section 1833(t)(8)(E) of
the Act, the amount of copayment associated with pass-through items is
equal to the amount of copayment that would be applicable if the pass-
through adjustment was not applied. Therefore, we believe that the
copayment amount should be zero for drugs and biologicals that are
``policy-packaged,'' including diagnostic radiopharmaceuticals and
contrast agents. We also believe that the copayment amount should be
zero for anesthesia drugs that would otherwise be packaged if the item
did not have pass-through payment status.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue to set the
associated copayment amount for pass-through diagnostic
radiopharmaceuticals, contrast agents, and anesthesia drugs that would
otherwise be packaged if the item did not have pass-through payment
status to zero for CY 2015.
The 35 drugs and biologicals that will continue to have pass-
through payment status for CY 2015 or have been granted pass-through
payment status as of January 1, 2015 are shown in Table 29 below. As is
our standard methodology, we annually review new permanent HCPCS codes
and delete temporary HCPCS C-codes if an alternate permanent HCPCS code
is available for purposes of OPPS billing and payment. Table 29 below
includes those coding changes.

Table 29--Drugs and Biologicals With Pass-Through Payment Status in CY 2015
----------------------------------------------------------------------------------------------------------------
Final CY Final CY
CY 2014 HCPCS code CY 2015 HCPCS code CY 2015 Long descriptor 2015 SI 2015 APC
----------------------------------------------------------------------------------------------------------------
A9520............... A9520.................. Technetium Tc 99m tilmanocept, G 1463
diagnostic, up to 0.5 millicuries.
N/A................. A9586.................. Florbetapir f18, diagnostic, per G 1664
study dose, up to 10 millicuries.
C9021............... J9301.................. Injection, obinutuzumab, 10 mg....... G 1476
C9022............... J1322.................. Injection, elosulfase alfa, 1mg...... G 1480
C9023............... J3145.................. Injection, testosterone undecanoate, G 1487
1 mg.
C9025............... C9025.................. Injection, ramucirumab, 5 mg......... G 1488
C9026............... C9026.................. Injection, vedolizumab, 1 mg......... G 1489
N/A................. C9027.................. Injection, pembrolizumab, 1 mg....... G 1490
C9132............... C9132.................. Prothrombin complex concentrate G 9132
(human), Kcentra, per i.u. of Factor
IX activity.
C9133............... J7200.................. Factor ix (antihemophilic factor, G 1467
recombinant), Rixubus, per i.u.
C9134............... J7181.................. Injection, Factor XIII A-subunit, G 1746
(recombinant), per i.u.
C9135............... J7201.................. Injection, factor ix, fc fusion G 1486
protein (recombinant), per i.u.
N/A................. C9136.................. Injection, factor viii, fc fusion G 1656
protein, (recombinant), per i.u.
C9441............... J1439.................. Injection, ferric carboxymaltose, 1 G 9441
mg.
N/A................. C9349.................. FortaDerm, and FortaDerm G 1657
Antimicrobial, any type, per square
centimeter.
N/A................. C9442.................. Injection, belinostat, 10 mg......... G 1658
N/A................. C9443.................. Injection, dalbavancin, 10 mg........ G 1659
N/A................. C9444.................. Injection, oritavancin, 10 mg........ G 1660
N/A................. C9446.................. Injection, tedizolid phosphate, 1 mg. G 1662
N/A................. C9447.................. Injection, phenylephrine and G 1663
ketorolac, 4 ml vial.
C9497............... C9497.................. Loxapine, inhalation powder, 10 mg... G 9497
J1446............... J1446.................. Injection, tbo-filgrastim, 5 G 1477
micrograms.
J1556............... J1556.................. Injection, immune globulin (Bivigam), G 9130
500 mg.
J3060............... J3060.................. Injection, taliglucerase alfa, 10 G 9294
units.
J7315............... J7315.................. Mitomycin, ophthalmic, 0.2 mg........ G 1448
J7316............... J7316.................. Injection, Ocriplasmin, 0.125 mg..... G 9298
J7508............... J7508.................. Tacrolimus, Extended Release, Oral, G 1465
0.1 mg.
J9047............... J9047.................. Injection, carfilzomib, 1 mg......... G 9295
J9262............... J9262.................. Injection, omacetaxine mepesuccinate, G 9297
0.01 mg.
J9354............... J9354.................. Injection, ado-trastuzumab emtansine, G 9131
1 mg.
J9371............... J9371.................. Injection, Vincristine Sulfate G 1466
Liposome, 1 mg.

[[Page 66878]]

J9400............... J9400.................. Injection, Ziv-Aflibercept, 1 mg..... G 9296
Q4121............... Q4121.................. Theraskin, per square centimeter..... G 1479
Q4122............... Q4122.................. Dermacell, per square centimeter..... G 1419
Q4127............... Q4127.................. Talymed, per square centimeter....... G 1449
----------------------------------------------------------------------------------------------------------------

4. 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
are codified at 42 CFR 419.2(b).
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
As previously noted, radiopharmaceuticals are considered to be
drugs for OPPS pass-through payment purposes. As described above,
section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
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 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 proposed 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 payment status beginning October 1, 2013. We currently apply
the established radiopharmaceutical payment offset policy to pass-
through payment for this product.
Table 35 of the CY 2015 OPPS/ASC proposed rule (79 FR 40995)
displayed 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.
Comment: A few commenters requested that CMS reinstate the ``FB''
modifier to specified nuclear medicine procedures in cases in which the
diagnostic radiopharmaceutical is received at no cost or full credit.
The commenters requested that the policy be maintained for CY 2015 and
beyond.
Response: As we discussed in the CY2014 OPPS/ASC final rule with
comment period (78 FR 75016), our review of claims data showed that
hospitals rarely received diagnostic radiopharmaceuticals at no cost or
full credit. Therefore, we do not believe that the ``FB'' modifier
policy is warranted for diagnostic radiopharmaceuticals.
Comment: A few commenters agreed that pass-through payment status
for HCPCS code A9520 should be extended for CY 2015.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue to apply the
diagnostic radiopharmaceutical offset policy to payment for pass-
through diagnostic radiopharmaceuticals, as described in the CY 2015
OPPS/ASC proposed rule (79 FR 40994 through 40995). We will continue to
reduce the payment amount for procedures in the APCs listed in Table 30
in this final rule with comment period by the full policy-packaged
offset amount appropriate for diagnostic radiopharmaceuticals.
Table 30 below displays the APCs to which nuclear medicine
procedures will 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 payment status.

[[Page 66879]]

Table 30--APCs To Which a Diagnostic Radiopharmaceutical Offset May Be
Applicable in CY 2015
------------------------------------------------------------------------
CY 2015 APC 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. 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, in the CY 2015 OPPS/ASC proposed rule (79 FR 40995), we
proposed 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 proposed to continue to apply our
standard contrast agents offset policy to payment for pass-through
contrast agents (we refer readers to the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75017) for the final CY 2014 policy and the
CY 2015 OPPS/ASC proposed rule (79 FR 40995 through 40996) for the
proposed CY 2015 policy).
Although there are currently no contrast agents with pass-through
payment 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 proposed
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 of the proposed
rule, and these APCs were displayed in Table 36 of the proposed rule.
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 proposed to continue to recognize that
when a contrast agent with pass-through status is billed with any
procedural APC listed in Table 36 of the proposed rule (79 FR 40995
through 40996), 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.
We did not receive any public comments on this proposal. Therefore,
we are finalizing our proposal for CY 2015 without modification. We
will continue to recognize that when a contrast agent with pass-through
payment status is billed with any procedural APC listed in Table 31
below, a specific offset based on the procedural APC will be applied to
the payment for the contrast agent to ensure that duplicate payment is
not made for the contrast agent.

Table 31--APCs To Which a Contrast Agent Offset May Be Applicable for CY
2015
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC title
------------------------------------------------------------------------
0080........................... Diagnostic Cardiac Catheterization.
0083........................... Coronary Angioplasty, Valvuloplasty,
and Level I Endovascular
Revascularization.
0093........................... Vascular Reconstruction/Fistula Repair.
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.
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.
0662........................... CT Angiography.
0668........................... Level I Angiography and Venography.
8006........................... CT and CTA with Contrast Composite.
8008........................... MRI and MRA with Contrast Composite.
------------------------------------------------------------------------

d. 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

[[Page 66880]]

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). In the CY
2015 OPPS/ASC proposed rule (79 FR 40996), for CY 2015, as we did in CY
2014, we proposed 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 payment status under
the OPPS. We currently apply the established skin substitute payment
offset policy to pass-through payment for these products. Table 37 of
the CY 2015 OPPS/ASC proposed rule (79 FR 40996) displayed 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 of the CY 2015 OPPS/ASC
proposed rule (79 FR 40996) displayed 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 did not receive any public comments on these proposals.
Therefore, we are finalizing our proposal, without modification, to
recognize that when a skin substitute with pass-through payment status
is billed with any procedural APC listed in Table 32 below, a specific
offset based on the procedural APC will be applied to the payment for
the skin substitute to ensure that duplicate payment is not made for
the skin substitute. In addition, when a stress agent with pass-through
payment status is billed with any procedural APC listed in Table 33
below, a specific offset based on the procedural APC will be applied to
the payment for the stress agent to ensure that duplicate payment is
not made for the stress agent. Table 32 below displays the APCs to
which skin substitute procedures will 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 payment status. Table 33 below
displays the APCs to which MPI procedures will 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 payment status.

Table 32--APCs To Which a Skin Substitute Offset May Be Applicable For
CY 2015
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC title
------------------------------------------------------------------------
0328.............................. Level III Skin Repair.
0329.............................. Level IV Skin Repair.
------------------------------------------------------------------------

Table 33--APCs To Which a Stress Agent Offset May Be Applicable For CY
2015
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC title
------------------------------------------------------------------------
0100.............................. Cardiac Stress Tests.
0377.............................. Level II Cardiac Imaging.
------------------------------------------------------------------------

As we proposed, we will 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.

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

1. Background
Under the CY 2013 OPPS, we currently pay for drugs, biologicals,
and radiopharmaceuticals that do not have pass-through payment 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

[[Page 66881]]

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. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
As indicated in section V.B.1. of this final rule with comment
period, 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 the CY 2015 OPPS/ASC
proposed rule (79 FR 40997), 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 proposed 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).)
Following the CY 2007 methodology, for this CY 2015 OPPS/ASC final
rule with comment period, we used the most recently available four
quarter moving average PPI levels to trend the $50 threshold forward
from the third quarter of CY 2005 to the third quarter of CY 2015 and
rounded the resulting dollar amount ($93.48) to the nearest $5
increment, which yielded a figure of $95. 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). Therefore, for this CY 2015 OPPS/ASC
final rule with comment period, using the CY 2007 OPPS methodology, we
are establishing a packaging threshold for CY 2015 of $95.
b. Cost Threshold for Packaging of Payment for HCPCS Codes That
Describe Certain Drugs, Certain Biologicals, and Therapeutic
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
In the CY 2015 OPPS/ASC proposed rule (79 FR 40997), 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 the proposed rule, or for the following policy-
packaged items that we proposed 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 68638). For each drug and biological HCPCS code, we used
an estimated payment rate of ASP+6 percent (which is the payment rate
we proposed for separately payable drugs and biologicals for CY 2015,
as discussed in more detail in section V.B.3.b. of the 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 proposed 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 the proposed rule (which
are available via the Internet on the CMS Web site) because these were
the most recent data available for use at the time of development of
the proposed rule. These data also were the basis for drug payments in
the physician's office setting, effective April 1, 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 proposed 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 displayed in Addendum B to
the proposed rule (which is available via the Internet on the CMS Web
site) for payment in CY 2015.
Comment: The majority of the commenters opposed the continuation of
the OPPS packaging threshold of $90 for CY 2015. The commenters
believed that, over the past 5 years, CMS has rapidly increased the
packaging threshold, which contradicts Congressional intent. As such,
the commenters recommended that CMS eliminate the packaging threshold
and provide separate payment for all drugs with HCPCS codes or freeze
the packaging threshold at the current level ($90).

[[Page 66882]]

Response: As stated in the CY 2007 OPPS/ASC final rule with comment
period (71 FR 68086), we believe that packaging certain items is a
fundamental component of a prospective payment system, that updating
the packaging threshold of $50 for the CY 2005 OPPS is consistent with
industry and government practices, and that the PPI for Prescription
Drugs is an appropriate mechanism to gauge Part B drug inflation.
Therefore, because of our continued belief that packaging is a
fundamental component of a prospective payment system that continues to
provide important flexibility and efficiency in the delivery of high
quality hospital outpatient services, we are not adopting commenters'
recommendations to pay separately for all drugs, biologicals, and
radiopharmaceuticals for CY 2015 or to eliminate the packaging
threshold or to freeze the packaging threshold at $90.
Since publication of the CY 2015 OPPS/ASC proposed rule, consistent
with our policy of updating the packaging threshold with more recently
available data for this final rule with comment period, we have again
followed the CY 2007 methodology for CY 2015 and used updated four
quarter moving average PPI index levels provided by the CMS Office of
the Actuary to trend the $50 threshold forward from the third quarter
of CY 2005 to the third quarter of CY 2015. We then rounded the
resulting updated dollar amount ($93.48) to the nearest $5 increment,
which yielded a figure of $95. Therefore, after consideration of the
public comments we received, and consistent with our methodology for
establishing the packaging threshold using the most recent PPI forecast
data, we are adopting a CY 2015 packaging threshold of $95.
Our policy during previous cycles of the OPPS has been to use
updated ASP and claims data to make final determinations of the
packaging status of HCPCS codes for drugs, biologicals, and therapeutic
radiopharmaceuticals for the OPPS/ASC final rule with comment period.
We note that it is also our policy to make an annual packaging
determination for a HCPCS code only when we develop the OPPS/ASC final
rule with comment period for the update year. Only HCPCS codes that are
identified as separately payable in the final rule with comment period
are subject to quarterly updates. For our calculation of per day costs
of HCPCS codes for drugs and biologicals in this CY 2015 OPPS/ASC final
rule with comment period, we used ASP data from the first quarter of 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 used these data for budget
neutrality estimates and impact analyses for this 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 this final rule with comment
period are based on ASP data from the second quarter of CY 2014. These
data are the basis for calculating payment rates for drugs and
biologicals in the physician's office setting using the ASP
methodology, effective October 1, 2014. These payment rates will 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 recalculated their mean unit cost from all of the CY
2013 claims data and updated cost report information available for this
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 the 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 this CY 2015
OPPS/ASC final rule with comment period. Under such circumstances, we
proposed 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 proposed to apply the
following policies to these HCPCS codes for drugs, biologicals, and
therapeutic radiopharmaceuticals whose relationship to the drug
packaging threshold changes based on the updated drug packaging
threshold and on the final updated data:
HCPCS codes for drugs and biologicals that were paid
separately in CY 2014 and that were 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 were 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
proposed 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.
We did not receive any public comments on our proposal to apply 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 CY 2015 OPPS drug packaging threshold and
the drug's payment status (packaged or separately payable) in CY 2013.
Therefore, we are finalizing our proposal, without modification, for CY
2015.
c. High Cost/Low Cost Threshold for Packaged Skin Substitutes
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
74938), we unconditionally packaged skin substitute products into their
associated surgical procedures as part of a broader policy to package
all drugs and biologicals that function as supplies when used in a
surgical procedure. The adoption of this policy, to package all drugs
and biologicals that function as supplies when used in a surgical
procedure, followed these packaging policies: (1) Packaging of medical
and surgical supplies into the related procedure under 42 CFR
419.2(b)(4) (68 FR 18543); (2) packaging of implantable devices (68 FR
18444); and (3) packaging of implantable biologicals (73 FR 68634). As
noted in the CY 2014 OPPS/ASC final rule with comment period, we
believe these policies represented an example of a broader category of
drugs and biologicals that should be packaged in the OPPS, that is,
drugs and biologicals that function as supplies in a surgical procedure
(78 FR 74930). As part of the policy to finalize the packaging of skin
substitutes, we also finalized a methodology that divides the skin
substitutes into a high cost group and a low cost group, in order to
ensure adequate resource homogeneity among APC assignments

[[Page 66883]]

for the skin substitute application procedures (78 FR 74933). For the
CY 2014 update, 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. The weighted average was calculated
using the skin substitute utilization from the CY 2012 claims data and
the July 2013 ASP+6 percent payment amounts. The high cost/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 skin substitutes that
had 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 payment status are assigned
to the high cost category, with an offset applied as described in
section V.A.4.d. of the CY 2015 OPPS/ASC proposed rule (79 FR 40996).
As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40998
through 40999), after the effective date of the CY 2014 packaging
policy, some skin substitute manufacturers brought the following issues
to our attention regarding the CY 2014 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 nonlinear 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 CY 2014 policy, manufacturers
with products on pass-through payment status 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 cost/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.
As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40998), 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 cost/low cost
categories. As an alternative to using ASP data, we believe that
establishing the high cost/low cost threshold using an alternative
methodology (that is, 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 hospital
outpatient claims only. The threshold would be based on costs from
hospital outpatient claims data instead of manufacturer reported sales
prices that would not include larger sizes primarily used for inpatient
burn cases.
Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 40999), we
proposed to maintain the high cost/low cost APC structure for skin
substitute procedures in CY 2015. However, we proposed to revise the
current methodology used to establish the high cost/low cost threshold,
and to establish the high cost/low cost threshold based on the weighted
average MUC for all skin substitutes using CY 2013 claims (which was
proposed to be $27 per cm\2\). Skin substitutes with an MUC above $27
per cm\2\ using CY 2013 claims were proposed to be classified in the
high cost group and those with an MUC at or below $27 per cm\2\ were
proposed to be classified in the low cost group. Table 39 of the CY
2015 OPPS/ASC proposed rule (79 FR 40999) showed the CY 2014 high cost/
low cost status for each skin substitute product and the proposed CY
2015 high cost/low cost status based on the weighted average MUC
threshold of $27. We proposed to continue the CY 2014 policy that skin
substitutes with pass-through payment status would be assigned to the
high cost category for CY 2015. Skin substitutes with pricing
information but without claims data to calculate an MUC would 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 we would use WAC+6
percent or 95 percent of AWP to assign a product to either the high
cost or low cost category. We also proposed that any new skin
substitute without pricing information be assigned to the low cost
category until pricing information is available to compare to the CY
2015 threshold.
Comment: Several commenters supported CMS' proposal to revise the
methodology used to establish the high cost/low cost threshold from an
ASP-based methodology to a methodology based on the weighted average
MUC for all skin substitutes using CY 2013 claims data. The commenters
agreed that the MUC methodology would promote stability of assignments
to the high and low cost categories and not disadvantage certain skin
substitutes that are sold in especially large sizes.
Response: We appreciate the commenters' support.
Comment: Other commenters requested that CMS retain the ASP-based
methodology for calculating the high cost/low cost threshold because,
in their opinion, the ASP is a better metric for skin substitute costs
than hospital outpatient claims data.
Response: We disagree with the assertion that ASP better represents
the hospital costs for skin substitutes than hospital claims data. ASP
is a blend of sales prices from a variety of purchasers, including
various nonhospital entities. ASP also excludes a significant number of
hospital sales, for example sales to 340B hospitals. Hospital claims
data are specific to hospitals, and are used in assessing the costs of
almost all other items and services in the OPPS, including other
similar surgical supplies, such as implantable devices and implantable
biologicals, which we package for payment purposes in the OPPS.
Furthermore, as stated in the CY 2015 OPPS/ASC proposed rule (79 FR
40998), we believe that using MUC will better promote stability versus
ASP for high and low cost category assignments for skin substitutes,
because ASP can be set very high by skin substitute manufacturers and
disproportionally impact the threshold calculation.
Comment: Two commenters recommended an alternative high cost/low
cost threshold calculation methodology. Instead of basing the threshold
on the unit cost the commenters urged CMS to calculate the high cost/
low cost threshold based on the total skin substitute costs per

[[Page 66884]]

patient, per day, which is currently the mechanism used to set the
general OPPS drug, biological, and radiopharmaceutical packaging
threshold, which was proposed as $90 for CY 2015. These commenters
believed that calculating the threshold cost per cm\2\ does not
accurately reflect the true cost of products as they are used
clinically, and could result in displacing larger single-size skin
substitutes approved through a Premarket Approval (PMA) into the low-
cost skin substitute group beginning in CY 2016. They believed that
this is partly a consequence of CMS' broad categorization of products
as skin substitutes that, according to the commenters, includes 510(k)-
cleared wound dressings and human cell, tissue, and cellular and
tissue-based products (HCT/Ps) under section 361 of the Public Health
Service Act (PHSA) (for example, cadaver skin or placental tissue).
According to these commenters, manufacturers of products regulated
through these processes can market different sizes of their skin
substitutes with greater ease than can manufacturers of skin
substitutes approved through a PMA, who must reapply for an updated
label through the FDA to change or add a different product size. The
commenters are concerned that a unit cost threshold may result in large
products with lower per cm\2\ costs, but with higher total costs per
case, being assigned to the low cost category in the future. One of
these commenters, although generally supportive of the change from an
ASP-based methodology to an MUC-based methodology, also submitted a
hypothetical predictive model comparing per unit high cost/low cost
calculations with per day threshold calculations for the various skin
substitutes and requested that CMS adopt a per day high cost/low cost
calculation methodology beginning in CY 2016 to prevent their skin
substitutes from moving from the high cost to the low cost group in CY
2016.
Response: As we explained in the CY 2014 OPPS/ASC final rule with
comment period, the FDA treatment of the various skin substitutes does
not affect how skin substitutes are treated under our policy of
packaging drugs and biologicals that function as supplies in a surgical
procedure (78 FR 74932 through 74933). The 61 skin substitutes listed
in Table 34 below are available in many different sizes. Product
sizing, product packaging, quantity per package, and other such
individual product attributes are manufacturer business decisions that
do not concern the agency. We also believe that the commenters' analogy
between the general drug, biological, and radiopharmaceutical packaging
threshold and the high cost/low cost skin substitute threshold is
imperfect. Per day costs are used for the general drug, biological, and
radiopharmaceutical packaging threshold because this threshold applies
to the entire spectrum of drugs, biologicals, and radiopharmaceuticals,
which have a wide variety of dosing units and dose descriptors, among
others, such that per unit comparisons are not possible and therefore a
total per day dollar amount is calculated. On the contrary, skin
substitutes divided into the high and low cost categories are all dosed
per cm\2\, which is also the standard measurement for sizing wounds.
Therefore, notwithstanding the various sizes of the 61 skin substitutes
listed in Table 34, meaningful unit cost comparisons can be made for
skin substitutes. As discussed earlier, we believe that the MUC
methodology will help mitigate or eliminate the effect of high skin
substitute ASPs on the high cost/low cost threshold. However, using a
per day cost methodology as suggested by the commenters could adversely
affect the majority of products that are tailored to the wound size. We
will evaluate the per day cost methodology and compare it to the MUC
methodology next year once CY 2014 claims data are available.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the high cost/low cost APC
structure for skin substitute procedures in CY 2015, and our proposal
to revise the current methodology used to establish the high/low cost
threshold with the alternative MUC methodology. We also are finalizing
for CY 2015 the policy that skin substitutes with pass-through payment
status would be assigned to the high cost category. Skin substitutes
with pricing information but without claims data to calculate an MUC
will be assigned to either the high cost or low cost category based on
the product's ASP+6 percent payment rate. If ASP is not available, we
will use WAC+6 percent or 95 percent of AWP to assign a product to
either the high cost or low cost category. We also are finalizing our
proposal that any new skin substitutes without pricing information will
be assigned to the low cost category until pricing information is
available to compare to the CY 2015 threshold. New skin substitute
manufacturers must submit pricing information to CMS no later than the
15th of the third month prior to the effective date of the next OPPS
quarterly update. For example, for a new skin substitute with new
pricing information to be included in the July 1 OPPS update and
designated as included in the high cost group, verifiable pricing
information must be provided to CMS no later than April 15. Table 34
below shows the CY 2014 high cost/low cost status for each skin
substitute product and the final CY 2015 high cost/low cost status
based on the weighted average MUC threshold of $25, which decreased
slightly from the proposed $27 threshold due to updated final rule
claims data. Skin substitutes with an MUC above $25 are assigned to the
high cost group for CY 2015. For 2014 there are 16 high cost skin
substitutes and 27 low cost skin substitutes. For CY 2015, there are 62
skin substitute codes, which represent the following products: 30 high
cost skin substitutes; 24 low cost skin substitutes; 7 powdered,
liquid, or micronized skin substitutes; and 1 miscellaneous skin
substitute code.

Table 34--Skin Substitute Assignments to High Cost and Low Cost Groups
----------------------------------------------------------------------------------------------------------------
CY 2014 High/ CY 2015 High/
CY 2015 Short HCPCS Code CY 2015 low status low status
CY 2015 HCPCS Code descriptor dosage SI based on based on
weighted ASP weighted MUC
----------------------------------------------------------------------------------------------------------------
C9358.......................... SurgiMend, fetal....... 0.5 cm\2\... N Low........... Low.
C9360.......................... SurgiMend, neonatal.... 0.5 cm\2\... N Low........... Low.
C9363.......................... Integra Meshed Bil 1 cm\2\..... N Low........... High.
Wound Mat.
Q4100.......................... Skin substitute, NOS... N/A......... N Low........... Low.
Q4101.......................... Apligraf............... 1 cm\2\..... N High.......... High.

[[Page 66885]]

Q4102.......................... Oasis wound matrix..... 1 cm\2\..... N Low........... Low.
Q4103.......................... Oasis burn matrix...... 1 cm\2\..... N Low........... Low.
Q4104.......................... Integra BMWD........... 1 cm\2\..... N Low........... High.
Q4105.......................... Integra DRT............ 1 cm\2\..... N Low........... High.
Q4106.......................... Dermagraft............. 1 cm\2\..... N High.......... High.
Q4107.......................... Graftjacket............ 1 cm\2\..... N High.......... High.
Q4108.......................... Integra Matrix......... 1 cm\2\..... N Low........... High.
Q4110.......................... Primatrix.............. 1 cm\2\..... N High.......... High.
Q4111.......................... Gammagraft............. 1 cm\2\..... N Low........... Low.
Q4112.......................... Cymetra injectable..... 1 cc........ N N/A........... N/A.
Q4113.......................... GraftJacket Xpress..... 1 cc........ N N/A........... N/A.
Q4114.......................... Integra Flowable Wound 1 cc........ N N/A........... N/A.
Matrix.
Q4115.......................... Alloskin............... 1 cm\2\..... N Low........... Low.
Q4116.......................... Alloderm............... 1 cm\2\..... N High.......... High.
Q4117.......................... Hyalomatrix............ 1 cm\2\..... N Low........... Low.
Q4118.......................... Matristem Micromatrix.. 1 mg........ N N/A........... N/A.
Q4119.......................... Matristem Wound Matrix. 1 cm\2\..... N Low........... Low.
Q4120.......................... Matristem Burn Matrix.. 1 cm\2\..... N Low........... Low.
Q4121.......................... Theraskin.............. 1 cm\2\..... G High.......... High.
Q4122.......................... Dermacell.............. 1 cm\2\..... G High.......... High.
Q4123.......................... Alloskin............... 1 cm\2\..... N Low........... High.
Q4124.......................... Oasis Tri-layer Wound 1 cm\2\..... N Low........... Low.
Matrix.
Q4125.......................... Arthroflex............. 1 cm\2\..... N High.......... High.
Q4126.......................... Memoderm/derma/tranz/ 1 cm\2\..... N High.......... High.
integup.
Q4127.......................... Talymed................ 1 cm\2\..... G High.......... High.
Q4128.......................... Flexhd/Allopatchhd/ 1 cm\2\..... N Low........... High.
matrixhd.
Q4129.......................... Unite Biomatrix........ 1 cm\2\..... N Low........... High.
Q4131.......................... Epifix................. 1 cm\2\..... N High.......... High.
Q4132.......................... Grafix core............ 1 cm\2\..... N High.......... High.
Q4133.......................... Grafix prime........... 1 cm\2\..... N High.......... High.
Q4134.......................... HMatrix................ 1 cm\2\..... N High.......... High.
Q4135.......................... Mediskin............... 1 cm\2\..... N Low........... Low.
Q4136.......................... EZderm................. 1 cm\2\..... N Low........... Low.
Q4137.......................... Amnioexcel or 1 cm\2\..... N Low........... High.
Biodexcel, 1cm.
Q4138.......................... BioDfence DryFlex, 1cm. 1 cm\2\..... N Low........... High.
Q4139.......................... Amniomatrix or 1 cc........ N N/A........... N/A.
Biodmatrix, 1cc.
Q4140.......................... Biodfence 1cm.......... 1 cm\2\..... N Low........... High.
Q4141.......................... Alloskin ac, 1 cm...... 1 cm\2\..... N Low........... Low.
Q4142.......................... Xcm biologic tiss 1 cm\2\..... N Low........... Low.
matrix 1cm.
Q4143.......................... Repriza, 1cm........... 1 cm\2\..... N Low........... Low.
Q4145.......................... Epifix, 1mg............ 1 mg........ N N/A........... N/A.
Q4146.......................... Tensix, 1cm............ 1 cm\2\..... N Low........... Low.
Q4147.......................... Architect ecm px fx 1 1 cm\2\..... N High.......... High.
sq cm.
Q4148.......................... Neox 1k, 1cm........... 1 cm\2\..... N High.......... High.
Q4149.......................... Excellagen, 0.1 cc..... 0.1 cc...... N N/A........... N/A.
Q4150.......................... Allowrap DS or Dry 1 sq 1 cm\2\..... N N/A........... Low.
cm.
Q4151.......................... AmnioBand, Guardian 1 1 cm\2\..... N N/A........... Low.
sq cm.
Q4152.......................... Dermapure 1 square cm.. 1 cm\2\..... N N/A........... Low.
Q4153.......................... Dermavest 1 square cm.. 1 cm\2\..... N N/A........... Low.
Q4154.......................... Biovance 1 square cm... 1 cm\2\..... N N/A........... High.
Q4155.......................... NeoxFlo or ClarixFlo 1 1 mg........ N N/A........... N/A.
mg.
Q4156.......................... Neox 100 1 square cm... 1 cm\2\..... N N/A........... High.
Q4157.......................... Revitalon 1 square cm.. 1 cm\2\..... N N/A........... Low.
Q4158.......................... MariGen 1 square cm.... 1 cm\2\..... N N/A........... Low.
Q4159.......................... Affinity 1 square cm... 1 cm\2\..... N N/A........... Low.
Q4160.......................... NuShield 1 square cm... 1 cm\2\..... N N/A........... High.
C9349.......................... Fortaderm, fortaderm 1 cm\2\..... G N/A........... High.
antimic.
----------------------------------------------------------------------------------------------------------------

d. 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 (65 FR 67839). Since mid-2001, skin substitutes have been
evaluated for pass-through payment status through the drug, biological,
and radiopharmaceutical pass-through payment process. In 2001, there
were two distinct HCPCS codes describing skin substitutes. For the CY
2015 update, there are 61 distinct HCPCS codes describing skin
substitutes (not including the not otherwise classified HCPCS code,
Q4100), and of these 61 products, 18

[[Page 66886]]

products that are listed in Table 35 below have had, currently have, or
will have pass-through payment status.

Table 35--Skin Substitutes That Have Had, Currently Have, or Will Have Pass-Through Payment Status
----------------------------------------------------------------------------------------------------------------
Pass-through
CY 2015 HCPCS code CY 2015 short descriptor expiration date
----------------------------------------------------------------------------------------------------------------
C9358............................... SurgiMend, fetal......................................... 12/31/2010
C9360............................... SurgiMend, neonatal...................................... 12/31/2011
C9363............................... Integra Meshed Bil Wound Mat............................. 12/31/2011
C9349............................... FortaDerm, FortaDerm Antimic............................. 12/31/2017
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 matrix............................. 12/31/2013
Q4127............................... Talymed.................................................. 12/31/2015
Q4131............................... Epifix................................................... 12/31/2014
Q4132............................... Grafix core.............................................. 12/31/2014
Q4133............................... Grafix prime............................................. 12/31/2014
----------------------------------------------------------------------------------------------------------------

As discussed earlier, and as we stated in the CY 2015 OPPS/ASC
proposed rule (79 FR 40999 through 41001) and in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74938), we packaged all skin
substitutes not on pass-through payment status under the policy that
packages all drugs and biologicals that function as supplies when used
in a surgical procedure (78 FR 74938), because we consider skin
substitutes to be a type of surgical supply in the HOPD. The adoption
of the policy to package all drugs and biologicals that function as
supplies when used in a surgical procedure, followed the packaging
policies for implantable biologicals, implantable devices, and more
broadly, the policy to package medical and surgical supplies into the
related procedure under 42 CFR 419.2(b)(4). Further, as noted in the CY
2014 OPPS/ASC final rule with comment period, we believe these policies
represented an example of a broader category of drugs and biologicals
that should be packaged in the OPPS, that is, drugs and biologicals
that function as supplies in a surgical procedure (78 FR 74930).
Separately, in the CY 2010 OPPS/ASC final rule with comment period,
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, because implantable biologicals
function as implantable devices (74 FR 60473), which have historically
been considered supplies in the OPPS (65 FR 18443), and have been
evaluated for pass-through payment through the medical device pass-
through evaluation process since CY 2010. As noted earlier, the
finalized packaging policy in the CY 2014 OPPS/ASC final rule with
comment period to package all drugs and biologicals that function as
supplies when used in a surgical procedure included skin substitutes as
a type of surgical supply, and, notably, 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).
We also note that many skin substitutes are FDA-approved or cleared as
devices, even though skin substitutes have traditionally been treated
as biologicals under the OPPS. The similarities between these classes
of products (implantable devices, implantable biologicals, and skin
substitutes) informed our proposal to similarly treat applications for
pass-through payment for skin substitutes using the OPPS device pass-
through process, described below.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41000), we proposed
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 proposed that the last
skin substitute pass-through applications evaluated using the drug and
biological pass-through payment evaluation process would be those with
an application deadline of the first business date in September 2014,
and an effective date of January 1, 2015. In light of this proposal, we
would change the December 1, 2014 pass-through payment application
deadline (for an 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. Any applications submitted
after the first business date in September 2014, through January 15,
2015, would be evaluated for the April 1, 2015 cycle. We believe that
requiring skin substitutes seeking pass-through payment to use the OPPS
device pass-through evaluation process is more appropriate because,
although skin substitutes have characteristics of both surgical
supplies and biologicals, we believe 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 devices and supplies, including
implantable biologicals. Therefore, we stated in the proposed rule that
if this proposal is finalized, beginning with applications seeking
pass-through payment effective April 1, 2014, 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 payment evaluation
process, for which payment is based on charges reduced to cost from
claims. We

[[Page 66887]]

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 payment application requirements and review
criteria that would apply to the evaluation of all skin substitute
product applications for pass-through payment status beginning on or
after January 1, 2015. Those skin substitutes that are approved for
pass-through payment status as biologicals effective on or before
January 1, 2015, would continue to be paid as pass-through biologicals
for the duration of their period of pass-through payment.
We also proposed to revise our regulations at Sec. Sec. 419.64 and
419.66 to reflect this proposed new policy. Specifically, we proposed
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. We proposed 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 proposed to simplify the
language that ``whether or not it remains with the patient when the
patient is released from the hospital'' to read ``either permanently or
temporarily.'' We also proposed 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 invited public comment on these proposals.
Comment: Several commenters supported CMS' proposal to evaluate
skin substitute pass-through applications through the medical device
pass-through process and pay for pass-through skin substitutes
according to the medical device pass-through payment methodology
beginning January 1, 2015. The commenters believed that this policy
change will limit instability in the high cost/low cost groups from
pass-through skin substitutes with very high ASPs. The commenter stated
that instability could occur because manufacturers set ASP and
hospitals are relatively insensitive to price for separately paid pass-
through skin substitutes. Therefore, the commenter added, a new high
priced pass-through skin substitute could gain significant sales and
move the high cost/low cost threshold significantly higher from year to
year.
Response: We agree with the commenters and appreciate their
support.
Comment: Several commenters opposed CMS' proposal to evaluate skin
substitute pass-through applications through the medical device pass-
through process. Some of these commenters argued that CMS lacks the
authority to change the process for evaluating skin substitute pass-
through applications. The commenters also believed that biologicals
approved by the FDA under section 351 of the PHSA (those approved by
the FDA under biologics license applications (BLAs)) cannot be treated
as devices for pass-through payment evaluation purposes according to
the Social Security Act and Congressional intent. The commenters also
claimed that changing the pass-through payment process for skin
substitutes will stifle innovation of new wound care products.
Response: We disagree with the commenters' assertion that the
agency lacks the authority to change the process for evaluating skin
substitutes for pass-through and that biologicals approved by the FDA
under section 351 of the PHSA (BLA process) cannot be treated as
devices for pass-through payment evaluation purposes according to the
Social Security Act and Congressional intent. As we stated in the 2010
OPPS final rule in response to a similar comment on the proposal to
change the pass-through evaluation process for implantable biologicals:
``We do not agree with the commenters who asserted that Congress
intended biologicals approved under BLAs to be paid under the specific
OPPS statutory provisions that apply to SCODs, including the pass-
through provisions'' (74 FR 60476). Similarly, Congress did not specify
that we must pay for skin substitutes as separately payable biologicals
rather than devices or supplies, if they also meet our criteria for
payment as a device. We believe that skin substitutes can satisfy the
definitions applied under the OPPS of a device or supply and a
biological and that, for OPPS payment purposes, it is appropriate for
us to consider skin substitutes as devices or supplies under both pass-
through and nonpass-through payment policies, and not as separately
payable biologicals. For example, beginning in CY 2014, we package the
costs of skin substitutes into the costs of the surgical procedures in
which they are used, as we do for implantable biologicals and other
implantable devices. Therefore, we do not believe that we must pay for
skin substitutes under our OPPS payment methodologies for separately
payable biologicals, rather than our device payment methodologies.
In addition, for the skin substitute packaging policy, in the CY
2014 OPPS/ASC final rule with comment period (78 FR 74933), we stated
the following: ``We do not believe that the FDA approval process should
exempt products from this packaging proposal or factor into the level
of Medicare payment.'' Similarly, regarding our proposal to change the
pass-through payment evaluation process and payment methodology for
skin substitutes from the drug and biological process to the device
process, we also believe that any particular FDA approval process
should not exempt such products that appropriately fall under the
category of skin substitutes under the OPPS from the application of
this pass-through payment proposal or direct which pass-through payment
evaluation process must be used.
Notably, none of the current 61 skin substitute products described
by distinct HCPCS codes and listed in Table 35 above have been approved
by FDA under section 351 of the PHSA. This fact is somewhat
counterintuitive, as biologics or biologicals or biological products
are most commonly understood to be products approved by the FDA under
section 351 of the PHSA. Current skin substitute products' FDA
classifications include a variety of Class III medical devices, Class
II medical devices, and HCT/Ps under section 361 of the PHSA, which are
tissue bank materials not subject to FDA approval requirements. We also
note that whether a future wound healing product is described by the
OPPS packaged category of products described in 42 CFR 419.2(b)(16) as
``skin substitutes and similar products that aid wound healing'' will
depend upon the particular characteristics of the future product. We do
not intend for the category of products described as ``skin substitutes
and similar products that aid wound healing'' to necessarily include
all products with a wound healing indication. However, if a new wound
healing product, regardless of FDA approval or clearance type, fits
with the ``skin substitutes and similar products that aid wound
healing'' category of products, all of the applicable OPPS policies
that apply to ``skin substitutes and similar products that aid wound
healing'' would also apply to the new wound healing product.
Finally, we do not believe that this policy will stifle innovation
of new skin substitutes, as new skin substitutes that can demonstrate a
substantial clinical improvement over current wound treatments could
receive pass-through

[[Page 66888]]

status as a device. In addition, there are currently 61 distinct HCPCS
codes for various skin substitutes. Of these 61 products, only 18 (30
percent) have had, currently have, or will have pass-through payment
status granted through the drug and biological pass-through payment
process. Therefore, pass-through payment does not appear to be
necessary for the commercialization of these products, which have (in
terms of distinct HCPCS codes describing them) expanded significantly
from 2 skin substitutes in CY 2001 to 61 skin substitutes in CY 2015.
Furthermore, we have not restricted access to the high cost skin
substitute group, and we have only required manufacturers of new skin
substitutes to submit pricing information for assignment to the high
cost group of skin substitutes. For these reasons, we do not believe
that any CMS OPPS payment policies will stifle innovation or impede the
development of new skin substitutes.
Comment: One commenter was concerned that the substantial clinical
improvement criterion for medical device pass-through places an unduly
high burden on new skin substitute products. The commenter believed
that this requirement is ``incompatible with skin substitute products,
which are not required to submit efficacy data to the Food and Drug
Administration.'' This commenter also disagreed with CMS' proposal to
not accept any skin substitute applications though the drug and
biological pass-through payment process after September 1, 2014, and to
move the final pass-through payment deadline for drug and biologicals
and devices from December 1, 2014, to January 15, 2015. The commenter
requested that additional guidance on substantial clinical improvement
be provided specifically for application to skin substitute products,
beyond that described in the November 2, 2001, interim final rule with
comment period entitled ``Medicare Program--Prospective Payment System
for Hospital Outpatient Services: Criteria for Establishing Additional
Pass-Through Categories for Medical Devices'' (66 FR 55850).
Response: The comment that FDA does not require submission of
efficacy data for skin substitute products is overly simplified. The
different skin substitute products that have been identified in Table
35 above are subject to different FDA regulatory requirements (that is,
based on review by CBER versus CDRH, regulatory classification and
claims).
FDA/CDRH draws a distinction between wound dressing devices
intended only to serve as a wound covering versus products intended to
promote wound healing. Those devices that are intended to promote wound
healing are subject to Premarket Approval (PMA) and require clinical
data to support safety and effectiveness of the device. Those devices
that are intended to serve as a wound covering are subject to Premarket
Notification (510(k)) and require demonstration of substantial
equivalence (that is, the device demonstrates that it is as safe and
effective as a legally marketed predicate device). Generally,
substantial equivalence in safety and effectiveness is demonstrated
through comparative bench and animal studies and leveraged with
historical clinical effectiveness data for similar devices. The
weakness of the evidence for many skin substitute products has been
documented in two recent technology assessments by the Agency for
Healthcare Research and Quality. However, different pre-market data
requirements for skin substitute products regulated by FDA should not
excuse these products from the substantial clinical improvement pass-
through criterion for device pass-through payment. Pass-through payment
status is not intended to be granted to every new product, but only to
those that satisfy the pass-through payment requirements. As stated in
the CY 2001 OPPS interim final rule: ``We believe it is important for
hospitals to receive pass-through payments for devices that offer
substantial clinical improvement in the treatment of Medicare
beneficiaries to facilitate access by beneficiaries to the advantages
of the new technology. Conversely, the need for additional payments for
devices that offer little or no clinical improvement over a previously
existing device is less apparent'' (66 FR 55852).
Regarding the requirements for satisfying the substantial clinical
improvement criterion, we believe that the list on page 55852 of the CY
2001 OPPS interim final rule suffices. For example, among the items
listed is: ``More rapid beneficial resolution of the disease process
treated because of the use of the device.'' If a new skin substitute
demonstrated improved wound healing compared to existing wound
treatments, it could potentially qualify for pass-through as a medical
device, assuming that the skin substitute is not described by an
expired pass-through payment device category.
Finally, we believe that sufficient notice was provided of this
policy change in the CY 2015 OPPS/ASC proposed rule, and that accepting
drug and biological applications through the first business date of
September 2014 deadline for a January 1, 2015 pass-through payment
effective date is a fair application of a policy that takes effect on
January 1, 2015. The regular December 1, 2014 application deadline,
which is being extended to January 15, 2015 for this cycle, was for
pass-through payment applications with an earliest effective date of
April 1, 2015, which is well past the effective date of this new
policy.
After consideration of the public comments we received, we are
finalizing our proposal for applications seeking pass-through payment
for skin substitute and similar wound healing products effective
beginning April 1, 2015, to apply using the medical device pass-through
evaluation process.
e. 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, in the CY 2015
OPPS/ASC proposed rule (79 FR 41001), we proposed to continue our
policy to make packaging determinations on a drug-specific basis,
rather than a HCPCS code-specific basis, for those HCPCS codes that
describe the

[[Page 66889]]

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 final rule with comment period and, as is our
current policy for determining the packaging status of other drugs, we
used the mean unit cost available from the fourth quarter 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 $95 (so that all HCPCS codes for the same drug or
biological would be packaged) or greater than $95 (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 was displayed in Table 41 of
the CY 2015 OPPS/ASC proposed rule (79 FR 41001 through 41002).
We did not receive any public comments on this proposal. Therefore,
we are finalizing our CY 2015 proposal, without modification, to
continue to make packaging determinations on a drug-specific basis,
rather than a HCPCS code-specific basis, for those HCPCS codes that
describe the same drug or biological but different dosages. Table 36
below displays the packaging status of each drug and biological HCPCS
code to which the methodology applies for CY 2015.

Table 36--HCPCS Codes To Which the CY 2015 Drug-Specific Packaging Determination Methodology Applies
----------------------------------------------------------------------------------------------------------------
CY 2015 HCPCS code CY 2015 long descriptor CY 2015 SI
----------------------------------------------------------------------------------------------------------------
C9257............................... Injection, bevacizumab, 0.25 mg.......................... K
J9035............................... Injection, bevacizumab, 10 mg............................ K
J1020............................... Injection, methylprednisolone acetate, 20 mg............. N
J1030............................... Injection, methylprednisolone acetate, 40 mg............. N
J1040............................... Injection, methylprednisolone acetate, 80 mg............. N
J1070............................... Injection, testosterone cypionate, up to 100 mg.......... N
J1080............................... Injection, testosterone cypionate, 1 cc, 200 mg.......... N
J1440............................... Injection, filgrastim (g-csf), 300 mcg................... N
J1441............................... Injection, filgrastim (g-csf), 480 mcg................... N
J1460............................... Injection, gamma globulin, intramuscular, 1 cc........... N
J1560............................... Injection, gamma globulin, intramuscular over 10 cc...... N
J1642............................... Injection, heparin sodium, (heparin lock flush), per 10 N
units.
J1644............................... Injection, heparin sodium, per 1000 units................ N
J1850............................... Injection, kanamycin sulfate, up to 75 mg................ N
J1840............................... Injection, kanamycin sulfate, up to 500 mg............... N
J2270............................... Injection, morphine sulfate, up to 10 mg................. N
J2271............................... Injection, morphine sulfate, 100mg....................... N
J2788............................... Injection, rho d immune globulin, human, minidose, 50 N
micrograms (250 i.u.).
J2790............................... Injection, rho d immune globulin, human, full dose, 300 N
micrograms (1500 i.u.).
J2920............................... Injection, methylprednisolone sodium succinate, up to 40 N
mg.
J2930............................... Injection, methylprednisolone sodium succinate, up to 125 N
mg.
J3120............................... Injection, testosterone enanthate, up to 100 mg.......... N
J3130............................... Injection, testosterone enanthate, up to 200 mg.......... N
J3471............................... Injection, hyaluronidase, ovine, preservative free, per 1 N
usp unit (up to 999 usp units).
J3472............................... Injection, hyaluronidase, ovine, preservative free, per N
1000 usp units.
J7050............................... Infusion, normal saline solution , 250 cc................ N
J7040............................... Infusion, normal saline solution, sterile (500 ml = 1 N
unit).
J7030............................... Infusion, normal saline solution, 1000 cc................ N
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
----------------------------------------------------------------------------------------------------------------

[[Page 66890]]

3. Payment for Drugs and Biologicals Without Pass-Through Status That
Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other
Separately Payable and Packaged Drugs and Biologicals
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 the CY 2015 OPPS/
ASC proposed rule (79 FR 41002), we proposed to apply section
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and
biologicals, including SCODs. Although we do not distinguish SCODs in
this discussion, we note that we are required to apply section
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying
this provision to other separately payable drugs and biologicals,
consistent with our history of using the same payment methodology for
all separately payable drugs and biologicals.
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 ratio 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 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

[[Page 66891]]

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 (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. CY 2015 Payment Policy
In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), we proposed 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 (the statutory default). We proposed
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 proposed that payments for separately payable drugs and
biologicals are included in the budget neutrality adjustments, under
the requirements in section 1833(t)(9)(B) of the Act, and that the
budget neutral weight scaler is not applied in determining payments for
these separately paid drugs and biologicals.
Comment: Commenters supported CMS' proposal to pay for separately
payable drugs and biologicals based on the statutory default rate of
ASP+6 percent. A few commenters supported CMS' proposal, but
recommended that CMS examine ways to compensate hospitals for the
unique, higher overhead and handling costs associated with therapeutic
radiopharmaceuticals.
Response: We appreciate the commenters' support of our proposal. We
continue to believe that ASP+6 percent based on the statutory default
is appropriate for hospitals for CY 2015 and that this percentage
amount includes payment for acquisition and overhead cost. We see no
evidence that an additional overhead adjustment is required for
separately payable drugs, biologicals, and therapeutic
radiopharmaceuticals for CY 2015.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to pay for separately
payable drugs and biologicals at ASP+6 percent based on section
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). 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 for CY 2015. In
addition, we are finalizing our proposal which states that payment for
separately payable drugs and biologicals be included in the budget
neutrality adjustments, under the requirements of section 1833(t)(9)(B)
of the Act, and that the budget neutral weight scaler is not applied in
determining payment of these separately paid drugs and biologicals. We
note that separately payable drug and biological payment rates listed
in Addenda A and B to this final rule with comment period (available
via the Internet on the CMS Web site), which illustrate the final CY
2015 payment of ASP+6 percent for separately payable nonpass-through
drugs and biologicals and ASP+6 percent for pass-through drugs and
biologicals, reflect either ASP information that is the basis for
calculating payment rates for drugs and biologicals in the physician's
office setting effective October 1, 2014, or WAC, AWP, or mean unit
cost from CY 2013 claims data and updated cost report information
available for this final rule with comment period. In general, these
published payment rates are not reflective of actual January 2015
payment rates. This is because payment rates for drugs and biologicals
with ASP information for January 2015 will be determined through the
standard quarterly process where ASP data submitted by manufacturers
for the third quarter of 2014 (July 1, 2014 through September 30, 2014)
are used to set the payment rates that are released for the quarter
beginning in January 2015 near the end of December 2014. In addition,
payment rates for drugs and biologicals in Addenda A and B to this
final rule with comment period for which there was no ASP information
available for October 2014 are based on mean unit cost in the available
CY 2013 claims data. If ASP information becomes available for payment
for the quarter beginning in January 2015, we will price payment for
these drugs and biologicals based on their newly available ASP
information. Finally, there may be drugs and biologicals that have ASP
information available for this final rule with comment period
(reflecting October 2014 ASP data) that do not have ASP information
available for the quarter beginning in January 2015. These drugs and
biologicals will then be paid based on mean unit cost data derived from
CY 2013 hospital claims. Therefore, the payment rates listed in Addenda
A and B to this final rule with comment period are not for January 2015
payment purposes and are only illustrative of the CY 2015 OPPS payment
methodology using the most recently available information at the time
of issuance of this final rule with comment period.
4. 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, in the CY 2015
OPPS/ASC proposed rule (79 FR 41003), we proposed 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 proposed 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

[[Page 66892]]

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 were included in Addenda A and
B to the proposed rule (which are available via the Internet on the CMS
Web site).
Comment: Several commenters supported CMS' proposal to pay for
separately payable therapeutic radiopharmaceuticals under the statutory
default payment rate of ASP+6 percent, if ASP data are submitted to
CMS.
Response: We appreciate the commenters' support. We continue to
believe that providing payment for therapeutic radiopharmaceuticals
based on ASP or mean unit cost if ASP information is not available
would provide appropriate payment for these products. When ASP data are
not available, we believe that paying for therapeutic
radiopharmaceuticals using mean unit cost will appropriately pay for
the average hospital acquisition and associated handling costs of
nonpass-through separately payable therapeutic radiopharmaceuticals. As
we stated in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60523), although using mean unit cost for payment for therapeutic
radiopharmaceuticals when ASP data are not available is not the usual
OPPS process (the usual process relies on alternative data sources such
as WAC or AWP when ASP information is temporarily unavailable, prior to
defaulting to the mean unit cost from hospital claims data), we
continue to believe that WAC or AWP is not an appropriate proxy to
provide OPPS payment for average therapeutic radiopharmaceutical
acquisition cost and associated handling costs when manufacturers are
not required to submit ASP data. Payment based on WAC or AWP under the
established OPPS methodology for payment of separately payable drugs
and biologicals is usually temporary for a calendar quarter until a
manufacturer is able to submit the required ASP data in accordance with
the quarterly ASP submission timeframes for reporting under section
1847A of the Act. Because ASP reporting for OPPS payment of separately
payable therapeutic radiopharmaceuticals is not required, a
manufacturer's choice to not submit ASP could result in payment for a
separately payable therapeutic radiopharmaceutical based on WAC or AWP
for a full year, a result that we believe would be inappropriate.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to continue to pay all
nonpass-through, separately payable therapeutic radiopharmaceuticals at
ASP+6 percent. We also are finalizing our proposal to continue to rely
on CY 2013 mean unit cost data derived from hospital claims data for
payment rates for therapeutic radiopharmaceuticals for which ASP data
are unavailable. The CY 2015 final rule payment rates for nonpass-
through separately payable therapeutic radiopharmaceuticals are
included in Addenda A and B to this final rule with comment period
(which are available via the Internet on the CMS Web site).
5. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly
Enriched Uranium Sources
Radioisotopes are widely used in modern medical imaging,
particularly for cardiac imaging and predominantly for the Medicare
population. Technetium-99 (Tc-99m), the radioisotope used in the
majority of such diagnostic imaging services, is currently produced in
legacy reactors outside of the United States using highly enriched
uranium (HEU).
The United States would like to eliminate domestic reliance on
these reactors, and is promoting the conversion of all medical
radioisotope production to non-HEU sources. Alternative methods for
producing Tc-99m without HEU are technologically and economically
viable, and conversion to such production has begun and is expected to
be completed within a 3-year time period. We expect this change in the
supply source for the radioisotope used for modern medical imaging will
introduce new costs into the payment system that are not accounted for
in the historical claims data.
Therefore, for CY 2013, we finalized a policy to provide an
additional payment of $10 for the marginal cost for radioisotopes
produced by non-HEU sources (77 FR 68323). Under this policy, hospitals
report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium
source, full cost recovery add-on per study dose) once per dose along
with any diagnostic scan or scans furnished using Tc-99m as long as the
Tc-99m doses used can be certified by the hospital to be at least 95
percent derived from non-HEU sources. The time period for this
additional payment was not to exceed 5 years from January 1, 2013 (77
FR 68321).
Comment: A few commenters requested that CMS extend payment for
HCPCS code Q9969 an additional 3 to 5 years to ensure adequate data are
collected and provide a longer ramp up period for more widespread use
of non-HEU materials since they are not yet widely available. One
commenter believed that the $10 payment is not sufficient and requested
that CMS increase the payment rate. This commenter also requested that
CMS eliminate the copayment.
Response: We stated in our CY 2013 OPPS/ASC final rule with comment
period (77 FR 68316) that our expectation was that the transition to
non-HEU sourced Mo-99 would be completed within 4 to 5 years and that
there might be a need to make differential payments for a period of 4
to 5 years. We further stated that we would reassess, and propose if
necessary, on an annual basis whether such an adjustment continued to
be necessary and whether any changes to the adjustment were warranted.
We have reassessed this payment for CY 2015 and have not identified any
new information that would cause us to modify payment at this time. We
do not agree with the commenter's suggestion to eliminate the
beneficiary's copayment because section 1833(t)(8) of the Act and
Sec. Sec. 419.41 through 419.45 of the regulations require a
beneficiary copayment. We are continuing the policy of providing an
additional $10 payment for radioisotopes produced by non-HEU sources
for CY 2015. Although we will reassess this policy annually, consistent
with the original policy in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68321), we do not anticipate that this additional
payment would extend beyond CY 2017.
6. 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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), for CY 2015,
we proposed to pay for blood clotting factors at ASP+6 percent,
consistent

[[Page 66893]]

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 was based on the percentage increase in the
Consumer Price Index (CPI) for medical care for the 12-month period
ending in 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 were not able to include the actual
updated furnishing fee in the proposed rules. Therefore, in accordance
with our policy, as finalized in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66765), we proposed to announce the actual figure
for the percent change in the applicable CPI and the updated furnishing
fee calculated based on that figure through applicable program
instructions and posting on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
Comment: Commenters supported CMS' proposal to continue to apply
the furnishing fee for blood clotting factors provided in the OPD. The
commenters also supported CMS' proposal to pay for separately payable
drugs at ASP+6 percent based on the statutory default for CY 2015.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to provide payment for
blood clotting factors under the same methodology as other separately
payable drugs and biologicals under the OPPS and to continue payment of
an updated furnishing fee. We will announce the actual figure of the
percent change in the applicable CPI and the updated furnishing fee
calculation based on that figure through the applicable program
instructions and posting on the CMS Web site.
7. 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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41004), for CY 2015,
we proposed 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 was
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 are also continuing 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
CY 2014 finalized policy packaging proposal 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 final
rule with comment period.
In accordance with the OPPS ASP methodology, in the absence of ASP
data, for CY 2015, we proposed 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 proposed 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 proposed 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

[[Page 66894]]

biologicals under the OPPS, unless they are granted pass-through
status.
Similarly, we proposed 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 also are unavailable, we proposed 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 proposed with
new drugs and biologicals, we proposed 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 proposed
to announce any changes to the payment amounts for new drugs and
biologicals in this 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 the proposed rule. However, these agents are
included in Addendum B to this CY 2015 OPPS/ASC final rule with comment
period (which is available via the Internet on the CMS Web site), where
they are assigned comment indicator ``NI.'' This comment indicator
reflects that their interim final OPPS treatment is open to public
comment in this 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 claims data available for the 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 proposed 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 proposed to package items for which we estimated the per day
administration cost to be less than or equal to $90 (although, as
mentioned in section V.B.2. of this final rule with comment period, we
are finalizing a packaging threshold of $95 for CY 2015) 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
proposed to continue to package regardless of cost) in CY 2015. We also
proposed 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 proposed 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 were displayed in Table 42 of the
proposed rule (79 FR 41005).
Finally, there were 35 drugs and biologicals, shown in Table 43 of
the proposed rule (79 FR 41005 through 41006), 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 the CY 2015 OPPS/ASC 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 proposed
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 were assigned status
indicator ``E'' on this basis at the time of the proposed rule for CY
2015 were displayed in Table 43 of the proposed rule (79 FR 41005
through 41006). We also proposed 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.
We did not receive any specific public comments regarding our
proposed payment for nonpass-through drugs, biologicals, and
radiopharmaceuticals with HCPCS codes, but without OPPS hospital claims
data. Many commenters supported our proposal to pay for separately
payable drugs at ASP+6 percent under the statutory default. However,
these comments were not specific to new drugs and biologicals with
HCPCS codes but without OPPS claims data.
After consideration of the public comments we received, we are
finalizing our CY 2015 proposal without modification, including our
proposal to assign drug or biological products status indicator ``K''
and pay for them separately for the remainder of CY 2015 if pricing
information becomes available. The final estimated units per day and
status indicators for drugs and biologicals without CY 2013 claims data
are displayed in Table 37 below.
We did not receive any public comments on our proposal to continue
to assign status indicator ``E'' to drugs and biologicals that lack CY
2013 claims data and pricing information for the ASP methodology and,
therefore, we are finalizing this proposal without modification. All
drugs and biologicals without CY 2013 hospital claims data and without
pricing information for the ASP methodology that are assigned status
indicator ``E'' on this basis at the time of this final rule with
comment period for CY 2015 are displayed in Table 38 below.

[[Page 66895]]

Table 37--Drugs And Biologicals Without CY 2013 Claims Data
----------------------------------------------------------------------------------------------------------------
Estimated
average number
CY 2015 HCPCS code CY 2015 long descriptor of units per CY 2015 SI CY 2015 APC
day
----------------------------------------------------------------------------------------------------------------
90581....................... Anthrax vaccine, for 1 K 1422
subcutaneous or intramuscular
use.
J0215....................... Injection, alefacept, 0.5 mg.... 29 K 1633
J0365....................... Injection, aprotonin, 10,000 kiu 1 N 1439
J0630....................... Injection, calcitonin salmon, up 2 K 1433
to 400 units.
J2670....................... Injection, tolazoline hcl, up to 1 N 1457
25 mg.
J3355....................... Injection, urofollitropin, 75 iu 2 K 1741
J7196....................... Injection, antithrombin 268 K 1332
recombinant, 50 IU.
J7505....................... Muromonab-cd3, parenteral, 5 mg. 1 N 7038
J7513....................... Daclizumab, parenteral, 25 mg... 1 N 1612
J8650....................... Nabilone, oral, 1 mg............ 4 K 1424
J9151....................... Injection, daunorubicin citrate, 10 K 0821
liposomal formulation, 10 mg.
J9215....................... Injection, interferon, alfa-n3, 1 N 1473
(human leukocyte derived),
250,000 iu.
J9300....................... Injection, gemtuzumab 1 K 9004
ozogamicin, 5 mg.
----------------------------------------------------------------------------------------------------------------

Table 38--Drugs and Biologicals Without CY 2013 Claims Data and Without Pricing Information for the ASP
Methodology
----------------------------------------------------------------------------------------------------------------
CY 2015 HCPCS code CY 2015 long descriptor CY 2015 SI
----------------------------------------------------------------------------------------------------------------
90296............................... Diphtheria antitoxin, equine, any route.................. E
90393............................... Vaccina immune globulin, human, for intramuscular use.... E
90477............................... Adenovirus vaccine, type 7, live, for oral use........... E
90644............................... Meningococcal conjugate vaccine, serogroups c & y and E
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, attenuated, 2 dose schedule, E
live, for oral use.
90727............................... Plague vaccine, for intramuscular use.................... E
J0190............................... Injection, biperiden lactate, per 5 mg................... E
J0205............................... Injection, alglucerase, per 10 units..................... E
J0350............................... Injection, anistreplase, per 30 units.................... E
J0364............................... Injection, apomorphine hydrochloride, 1 mg............... E
J0395............................... Injection, arbutamine hcl, 1 mg.......................... E
J0710............................... Injection, cephapirin sodium, up to 1 gm................. E
J1180............................... Injection, dyphylline, up to 500 mg...................... E
J1435............................... Injection estrone per 1 mg............................... E
J1562............................... Injection, immune globulin (vivaglobin), 100 mg.......... E
J1620............................... Injection, gonadorelin hydrochloride, per 100 mcg........ E
J1655............................... Injection, tinzaparin sodium, 1000 iu.................... E
J1730............................... Injection, diazoxide, up to 300 mg....................... E
J1835............................... Injection, itraconazole, 50 mg........................... E
J2460............................... Injection, oxytetracycline hcl, up to 50 mg.............. E
J2513............................... Injection, pentastarch, 10% solution, 100 ml............. E
J2725............................... Injection, protirelin, per 250 mcg....................... E
J2670............................... Injection, tolazoline hcl, up to 25 mg................... E
J2725............................... Injection, protirelin, per 250 mcg....................... E
J2940............................... Injection, somatrem, 1 mg................................ E
J3305............................... Injection, trimetrexate glucuronate, per 25 mg........... E
J3365............................... Injection, iv, urokinase, 250,000 i.u. vial.............. E
J3400............................... Injection, triflupromazine hcl, up to 20 mg.............. E
J8562............................... Fludarabine phosphate, oral, 10 mg....................... E
J9165............................... Injection, diethylstilbestrol diphosphate, 250 mg........ E
J9212............................... Injection, interferon alfacon-1, recombinant, 1 microgram E
J9219............................... Leuprolide acetate implant, 65 mg........................ E
Q0174............................... Thiethylperazine maleate, 10 mg, oral, fda approved E
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 acetate, 1 microgram............... E
----------------------------------------------------------------------------------------------------------------

[[Page 66896]]

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

A. Background

Section 1833(t)(6)(E) of the Act limits the total projected amount
of transitional pass-through payments for drugs, biologicals,
radiopharmaceuticals, and categories of devices for a given year to an
``applicable percentage,'' currently not to exceed 2.0 percent of total
program payments estimated to be made for all covered services under
the OPPS furnished for that year. If we estimate before the beginning
of the calendar year that the total amount of pass-through payments in
that year would exceed the applicable percentage, section
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction
in the amount of each of the transitional pass-through payments made in
that year to ensure that the limit is not exceeded. We estimate the
pass-through spending to determine whether payments exceed the
applicable percentage and the appropriate 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 are currently
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 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), in the CY 2015 OPPS/ASC proposed rule (79
FR 41007), for CY 2015, we proposed to include an estimate of any
implantable biologicals eligible for pass-through payment in our
estimate of pass-through spending for devices. We also proposed 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. We proposed 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
proposed to 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 that will be in effect as of January 1, 2015. We discuss
our proposal to change the pass-through evaluation process for skin
substitutes and address comments to this proposal and the proposal to
change the April 1, 2015 pass-through effective date application
deadline in section V.B.2.d. of this final rule with comment period,
where we explain that we are finalizing this proposal. Therefore,
beginning in CY 2015, we will include an estimate of any skin
substitutes eligible for pass-through payment in our estimate of pass-
through spending for devices.
We did not receive any public comments on our proposed methodology
or proposed estimate for pass-through spending for devices. Therefore,
we are finalizing our proposal to base the pass-through estimate for
devices on our established methodology, as described above. Moreover,
we are finalizing our proposal, beginning in CY 2015 and in future
years, to include an estimate of any skin substitutes eligible for
pass-through payment in our estimate of pass-through spending for
devices.
For drugs and biologicals eligible for pass-through payment,
section 1833(t)(6)(D)(i) of the Act establishes the pass-through
payment amount as the amount by which the amount authorized under
section 1842(o) of the Act (or, if the drug or biological is covered
under a competitive acquisition contract under section 1847B of the
Act, an amount determined by the Secretary equal to the average price
for the drug or biological for all competitive acquisition areas and
year established under such section as calculated and adjusted by the
Secretary) exceeds the portion of the otherwise applicable fee schedule
amount that the Secretary determines is associated with the drug or
biological. We note that the Part B drug CAP program has been postponed
since CY 2009, and such a program has not been reinstated for CY 2015.
Because, as we proposed, we will pay for most nonpass-through
separately payable drugs and biologicals under the CY 2015 OPPS at
ASP+6 percent, as we discuss in section V.B.3. of the proposed rule and
this final rule with comment period, which represents the otherwise
applicable fee schedule amount associated with most pass-through drugs
and biologicals, and because, as we proposed, we will pay for CY 2015
pass-through drugs and biologicals at ASP+6 percent, as we discuss in
section V.A. of the proposed rule and this final rule with comment
period, 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 final rule with comment period. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41007), we proposed 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 final rule with comment
period, we discuss our

[[Page 66897]]

proposed and finalized policy to determine if the costs of certain
policy-packaged drugs or biologicals are already packaged into the
existing APC structure. If we determine that a policy-packaged drug or
biological approved for pass-through payment resembles predecessor
drugs or biologicals already included in the costs of the APCs that are
associated with the drug receiving pass-through payment, we proposed to
offset the amount of pass-through payment for the policy-packaged drug
or biological. For these drugs or biologicals, the APC offset amount is
the portion of the APC payment for the specific procedure performed
with the pass-through drug or biological, which we refer to as the
policy-packaged drug APC offset amount. If we determine that an offset
is appropriate for a specific policy-packaged drug or biological
receiving pass-through payment, we 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,
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. Estimate of Pass-Through Spending

In the CY 2015 OPPS/ASC proposed rule (79 FR 41007), we proposed 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. Based on the one device category, HCPCS
code C1841, we are finalizing our proposed rule estimate for the first
group of devices of $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 the final rule will be newly
eligible for pass-through payment in CY 2015; additional device
categories that we estimate could be approved for pass-through status
subsequent to the development of the final rule and before January 1,
2015; and contingent projections for new device categories established
in the second through fourth quarters of CY 2015. We proposed to use
the general methodology described in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66778), while also taking into account
recent OPPS experience in approving new pass-through device categories.
For the proposed rule, the estimate of CY 2015 pass-through spending
for this second group of device categories was $10.0 million. We did
not receive any public comments regarding our proposed pass-through
estimate for devices. We are establishing one new device category
subsequent to the publication of the proposed rule, HCPCS code C2624
(Implantable wireless pulmonary artery pressure sensor with delivery
catheter, including all system components), that will be effective
January 1, 2015. We estimate that HCPCS code C2624 will cost $50.5
million in pass-through expenditures in CY 2015. Therefore, for this CY
2015 OPPS/ASC final rule with comment period, the estimate of CY 2015
pass-through spending for this second group of device categories is
$60.5 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
payment status for CY 2015, we proposed to utilize the most recent
Medicare physician claims data regarding their utilization, information
provided in the respective pass-through applications, historical
hospital claims data, pharmaceutical industry information, and clinical
information regarding those drugs or biologicals to project the CY 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 payment 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
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
proposed 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 the
proposed rule, using the methodology described above, we calculated a
CY 2015 proposed spending estimate for this first group of drugs and
biologicals of approximately $2.8 million.
We did not receive any public comments on our proposed methodology
for calculating for calculating the spending estimate for the first
group of drugs and biologicals.
For this final rule with comment period, using the methodology
described above, we calculated a final CY 2015 spending estimate for
this first group of drugs and biologicals of approximately $11.7
million.
To estimate proposed CY 2015 pass-through spending for drugs and
biologicals in the second group (that is, drugs and biologicals that we
know are newly eligible, or project will be newly eligible, beginning
in CY 2015), in the CY 2015 OPPS/ASC proposed rule (79 FR 41008), we
proposed to use utilization estimates from pass-through applicants,
pharmaceutical industry data, clinical information, recent trends in
the per unit ASPs of hospital outpatient drugs, and projected annual
changes in service volume and intensity as our basis for making the CY
2015 pass-through payment estimate. We also proposed to consider the
most recent OPPS experience in approving new pass-through drugs and
biologicals. Using our proposed methodology for estimating CY 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.
We did not receive any public comments on our proposed methodology
for calculating for

[[Page 66898]]

calculating the spending estimate for the second group of drugs and
nonimplantable biologicals.
For this final rule with comment period, using our finalized
methodology for estimating CY 2015 pass-through payments for this
second group of drugs, we calculated a spending estimate for this
second group of drugs and biologicals of approximately $10.1 million.
Our CY 2015 estimate for total pass-through spending for drugs and
biologicals (spending for the first group of drugs and biologicals
($11.7 million) plus spending for the second group of drugs and
biologicals ($10.1 million)) equals $21.8 million.
In summary, in accordance with the methodology described above in
this section, for this final rule with comment period, we estimate that
total pass-through spending for the device categories and the drugs and
biologicals that are continuing to receive pass-through payment in CY
2015 and those device categories, drugs, and biologicals that first
become eligible for pass-through payment during CY 2015 will be
approximately $82.8 million (approximately $61.0 million for device
categories and approximately $21.8 million for drugs and biologicals),
which represents 0.15 percent of total projected OPPS payments for CY
2015. Therefore, we estimate that pass-through spending in CY 2015 will
not amount to 2.0 percent of total projected OPPS CY 2015 program
spending.

VII. OPPS Payment for Hospital Outpatient Visits

A. 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.
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 (78 FR 75036
through 75043), 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. 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.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41008 through 41009),
for CY 2015, we proposed 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
proposed to continue to assign HCPCS code G0463 to APC 0634. We
proposed to use CY 2013 claims data to develop the 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.
Comment: Commenters requested that CMS discontinue the single HCPCS
G-code for reporting clinic visits and return to a reporting structure
that recognizes differences in clinical acuity and resource
utilization. The commenters expressed concern that CMS' clinic visit
coding proposal creates a payment bias that unfairly penalizes certain
providers, such as trauma centers, cancer hospitals, and major teaching
hospitals, which provide care for more severely ill Medicare
beneficiaries. One commenter urged CMS to carefully review its
ratesetting process for HCPCS code G0463 to ensure that claims
containing packaged services that are intended to be part of the
hospital clinic rates are not being excluded from the payment
computations, thereby creating artificially low rates. Another
commenter recommended that CMS work with the American Medical
Association (AMA) to develop facility-specific CPT codes for E/M clinic
visits (with no distinction between new and established patients) and
seek input from industry stakeholders to develop descriptions for these
new codes that allow for their consistent application by hospital
outpatient clinics/facilities.
Response: We believe that the spectrum of hospital resources
provided during an outpatient hospital clinic visit is appropriately
captured and reflected in the single level payment for clinic visits.
We also believe that the single visit code is consistent with a
prospective payment system, where payment is based on an average
estimated relative cost for the service, although the cost of
individual cases may be more or less costly than the average. We
believe the proposed payment rate for APC 0634 represents an
appropriate payment for clinic visits, as it is based on the geometric
mean costs of all visits. Although the cost for any given clinic visit
may be higher or lower than the geometric mean cost of APC 0634, the
payment remains appropriate to the hospital delivering a variety of
clinic visits. The high volume of claims from every level of clinic CPT
code that we used for ratesetting for HCPCS code G0463 allows us to
have accurate data upon which to develop appropriate payment rates.
With regard to specific concerns for hospitals that treat patients
with a more

[[Page 66899]]

complex case-mix, we note that the relatively low estimated cost of
clinic visits overall would result in much less underpayment or
overpayment for hospitals that may serve a population with a more
complex case-mix. As we stated in the CY 2015 OPPS/ASC proposed rule
(79 FR 41008), we proposed to use CY 2013 claims data to develop the 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). We note that claims containing
packaged services that are intended to be part of the hospital clinic
rates are not excluded from payment computations for HCPCS code G0463,
consistent with our application of our line-item trim as described in
section II.A.2.a. of this final rule with comment period. The line-item
trim described in section II.A.2.a. of this final rule with comment
period requires the lines to be eligible for payment in both the claims
year and the prospective years. Therefore, the lines that would be
packaged when modeling clinic visits would not be subject to this trim.
For a more detailed discussion of the OPPS data process, we refer
readers to section II.A. of this final rule with comment period.
With regard to the potential for facility-specific CPT codes, as we
have stated in the past (76 FR 74346), if the AMA were to create
facility-specific CPT codes for reporting visits provided in HOPDs
(based on internally developed guidelines), we would consider such
codes for OPPS use.
After consideration of the public comments we received, we are
finalizing our CY 2015 proposal, without modification, to continue to
use HCPCS code G0463 (for hospital use only) to represent any and all
clinic visits under the OPPS for CY 2015. In addition, for CY 2015 we
are finalizing our proposals, without modification, to continue to
assign HCPCS code G0463 to APC 0634 and to use CY 2013 claims data to
develop the 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).
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75040), 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. At this time, we continue to believe that additional study
is needed to assess the most suitable payment structure for ED visits.
In the CY 2015 OPPS/ASC proposed rule, we did not propose any change in
ED visit coding. Rather, for CY 2015, we proposed 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 stated that we intend to further
explore the issues described above related to ED visits, including
concerns about excessively costly patients, such as trauma patients. We
also stated that we may propose changes to the coding and APC
assignments for ED visits in future rulemaking.
Comment: Commenters supported CMS' proposal to continue its current
methodology to recognize the existing five CPT codes for Type A ED
visits, as well as the five HCPCS codes for Type B ED visits, and to
establish the associated CY 2015 OPPS payment rates using its standard
process. Commenters commended CMS for proceeding with caution and
agreed that additional study is needed on the appropriate payment
structure for ED visits. Commenters also expressed their desire to work
with CMS on a future policy proposal to create an appropriate payment
structure for ED visits. Some commenters stated that one level of
hospital ED payment is not appropriate for the various levels of
resources required in ED visits, especially at major teaching
hospitals, and expressed concern that a single level of ED visit
payment would create a payment bias that would unfairly penalize
certain providers, such as trauma centers and major teaching hospitals,
which provide care for more severely ill Medicare beneficiaries. One
commenter requested that CMS continue with its current ED visit payment
policy for the foreseeable future and no longer attempt to make future
changes to the policy in the coming years. Another commenter
recommended that CMS work with the AMA to develop facility-specific CPT
codes for Type A ED visits and Type B ED visits and seek input from
industry stakeholders to develop descriptions for these new codes that
allow for their consistent application by hospital outpatient clinics/
facilities.
Response: We appreciate the commenters' support of our proposal to
continue the current coding structure for ED visits while we continue
to study the most appropriate payment structure for Type A and Type B
ED visits. As discussed above, we received multiple comments that a
single payment for an ED visit might underrepresent resources required
to treat the most complex patients, such as trauma patients. As we have
stated before (78 FR 75040), considering this issue requires additional
study. As we continue to give additional study to this issue, we
continue to welcome stakeholder input on the particular number of visit
levels that would not underrepresent resources required to treat the
most complex patients, such as trauma patients.
With regard to the potential for facility-specific CPT codes, as we
have also stated in the past (76 FR 74346), if the AMA were to create
facility-specific CPT codes for reporting visits provided in HOPDs
(based on internally developed guidelines), we would consider such
codes for OPPS use.
Comment: One commenter recommended, on a short-term basis, that CMS
develop a set of three trauma[hyphen]specific HCPCS codes for all
trauma patients, for whom a trauma team is activated.
Response: We appreciate the alternative presented by the commenter.
We will take this recommendation into consideration as we continue to
study and fully consider the most appropriate payment structure for
Type A and Type B ED visits.
After consideration of the public comments we received, we are
finalizing our proposals, without modification, 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 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 note that we may propose changes
to the coding and APC assignments for ED visits in the future
rulemaking.

B. 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

[[Page 66900]]

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)).
As we discussed in the CY 2015 OPPS/ASC proposed rule (79 FR
41009), 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 stated in the proposed rule that we continue
to believe that it would be inappropriate to pay separately for the
ancillary services that hospitals typically report in addition to CPT
codes for critical care services. Therefore, for CY 2015, we proposed
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
proposed 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 stated that 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.
We did not receive any public comments on this issue. Accordingly,
we are finalizing our proposals, without modification, to continue our
policy to recognize the existing CPT codes for critical care services
and establish a payment rate based on historical claims data, and 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.

VIII. 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 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

[[Page 66901]]

(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 costs and then adding that number to
the CY 2011 final CMHC median costs. A 2-year transition under this
methodology moved us in the direction of our goal, which is to pay
appropriately for 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 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

[[Page 66902]]

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 mean
costs rather than on the median costs. 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 and cost 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. PHP APC Update for CY 2015

In the CY 2015 OPPS/ASC proposed rule (79 FR 41009 through 41012),
for CY 2015, we proposed to continue 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 and cost 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
the most recent cost 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 and the most recent
cost report data. These proposed geometric mean per diem costs were
shown in Table 44 of the CY 2015 OPPS/ASC proposed rule (79 FR 41011).
To prevent confusion, we will refer to the per diem information listed
in Table 44 of the proposed rule and Tables 39 and 40 of this final
rule with comment period as the PHP APC per diem costs or the PHP APC
geometric mean per diem costs, and the per diem information listed in
Addendum A as the PHP APC per diem payment rates or the PHP APC
geometric mean per diem rates. The PHP APC per diem costs are the
provider-specific costs derived from the most recent claims and cost
data. The PHP APC per diem payment rates are the national unadjusted
payment rates calculated after applying the OPPS budget neutrality
adjustments described in sections II.A.4. and II.B of this final rule
with comment period.
For CY 2015, the proposed geometric mean per diem costs for days
with 3 services (Level I) were 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) were
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 and the most recent cost data 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 and the most recent cost report data showed 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

[[Page 66903]]

decreasing from approximately $214 to approximately $190 for CY 2015.
We understand that having little variation in the PHP per diem
payment rates 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 rates, including direct
changes to the PHP APC per diem costs (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 invited public comments on
what causes PHP costs to fluctuate from year to year and on these
proposals.
The proposed CY 2015 geometric mean per diem costs for the CMHC and
hospital-based PHP APCs were shown in Table 44 of the proposed rule. We
invited public comments on these proposals.
Comment: Several commenters opposed the proposed CY 2015 PHP APC
per diem payment rates and raised concerns about a continued decline in
payments for these services. Commenters stated that the proposed per
diem payment rates were inadequate to pay providers for furnishing
these services, and were below most program costs for providing PHP
services. Other commenters suggested that CMS continue to use the CY
2014 payment rates for CY 2015. A few commenters expressed concerns
that the 15-percent reduction in payment rates for Level II services in
hospitals dropped the payment rates too far below providers' costs.
Another commenter asked that CMS provide documentation to support the
proposed payment rates for PHP services.
Response: We acknowledge the concerns raised by the commenters who
believe that reduced payment rates for CY 2015 will not adequately pay
their costs to provide PHP services. However, the per diem payment
rates reflect the cost of what each provider type expends to maintain
such programs. Therefore, we do not believe that the final payment
rates would be inadequate to cover the costs of providing these
services.
Based on the final geometric mean per diem costs derived from CY
2013 claims data and the most recent cost data, CMHCs' geometric mean
per diem costs increased from CY 2014 to CY 2015 for APC 0172 Level I
(3 services per day) from approximately $99 to approximately $100, and
for APC 0173 Level II (4 or more services per day) from approximately
$112 to approximately $119. These per diem cost increases for CMHC APCs
0172 and 0173 are 0.76 percent and 5.7 percent, respectively. Final
hospital-based PHP per diem costs decreased by significantly smaller
amounts than the per diem costs that were proposed, but still declined
when compared to CY 2014 geometric mean per diem costs. The PHP APC
geometric mean per diem costs decreased for hospital-based PHPs from CY
2014 to CY 2015 for APC 0175 Level I (3 services per day) from
approximately $191 to approximately $186, and for APC 0176 Level II (4
or more service per day) from approximately $214 to approximately $203.
These final hospital-based PHP APC geometric mean per diem cost
decreases are 2.6 percent for APC 0175 (instead of the proposed
decrease of 7.1 percent) and 5.3 percent for APC 0176 (instead of the
proposed decrease of 11.3 percent). We believe that the PHP APC per
diem payment rates for both providers accurately reflect the claims and
cost data of each provider type. Again, the resulting PHP APC per diem
payment rates and the APC payment structures reflect the cost of what
providers expend to maintain such programs. At this time, we cannot
establish payment rates that do not accurately reflect the current
claims and cost data. For these reasons, we are not suspending
implementation of the CY 2015 PHP APC per diem payment rates for CMHCs
and hospital-based PHPs.
The PHP APC per diem payment rates are directly related to the
accuracy of the claims and cost data submitted by providers. Therefore,
it is imperative that providers submit accurate claims and cost data in
order for the payment rates to accurately reflect the providers' costs.
Regarding the documentation supporting the proposed PHP per diem
payment rates, for each calendar year update, we explain how the PHP
APC per diem payment rates are calculated in a proposed rule and a
final rule. The industry is welcome to comment during the rulemaking
process. We also make available to the public the OPPS PHP limited data
set (LDS) and the OPPS LDS, which we discussed in the CY 2015 OPPS/ASC
proposed rule (79 FR 40931). The OPPS PHP LDS can be used to recreate
the PHP cost estimates and, when used in conjunction with the OPPS LDS,
can be used to recreate the PHP APC payment rates. Both of these files
are available twice a year, once for the proposed rule and again for
the final rule. The LDSs are available for purchase under a CMS data
use agreement through the CMS Web sites at: http://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPSPHPLDS.html and http://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPS.html.
Comment: A number of commenters noted the difficulty in planning
and budgeting when payment rates for these services fluctuate and asked
that CMS establish consistent and stable payments. Several commenters
stated that they are committed to working with CMS to better understand
and stabilize the payment rates for the PHP benefit, and to determine
the factors driving the fluctuation in rates. One commenter asserted
that the wide variability in PHP APC payment rates from year-to-year
does not allow quality providers to plan for and to maintain services
in a predictable way. Another commenter believed that the erratic
payment rate structure could diminish access to care because providers
may be unable to forecast statistical and financial parameters based on
the proposed PHP APC payment rates.
In response to our solicitation for public comments in the proposed
rule on what the industry believed was causing the fluctuation in
payment rates, a few commenters stated that other types of hospitals
(rehabilitation, long-term acute care, and inpatient psychiatric
facilities) are now providing PHP-like services, and questioned whether
the cost structure of these facilities could be distorting PHP APC
payment rates. Another commenter stated that as providers move away
from PHPs and toward other mental health care options, the sample size
used in calculating payment rates is smaller. The commenter further
stated that volumes of services in a few areas could take on greater
influence in the calculations and affect costs, creating instability in
the PHP APC payment rates and difficulty in planning.
A few commenters mentioned that their PHPs had not experienced
significant operational or clinical protocol changes, and no changes in
the personnel delivering the mix of services that would support a
reduction in the

[[Page 66904]]

geometric mean per diem costs. Several commenters stated that almost
one-third of the proposed PHP APC payment rate reduction could be
explained by the budget neutrality adjustment, which disproportionately
affects PHPs, and which, for CY 2015, may have led to payment rates
that are less than the geometric mean per diem costs.
A few commenters cited a study that they had a contractor conduct
to investigate the fluctuations. The commenters stated that the study
results did not suggest that the tiered payments, the use of a
geometric mean versus a median methodology, the different payments by
site of service, or provider-driver factors, such as service-mix or
patient-mix, were the source of the problem. The commenters noted that
the study found a dramatic decrease in the total volume of PHP services
provided, but an increase in hospital-based PHP days, particularly for
Level II services. The commenters believed that this shift to providing
more hospital-based PHP services has partially offset the decline in
CMHC PHP days and may have caused PHP costs to fluctuate. The
commenters suggested several areas for potential future study,
including the shift of services from CMHCs to hospital-based PHPs, a
different of mix of providers within the hospital category, other types
of hospitals newly offering PHP services, volume, and the size of
hospitals and of PHPs.
Response: We acknowledge the difficulties in planning and budgeting
that can occur when payments fluctuate, or when payment rates decline.
However, we are continuing to pay for PHP services based on provider
data. We also believe that changes in payment rates from one year to
the next are appropriate in a payment system that is annually updated
to more accurately estimate the cost of a service upon which the
relative payment weights are based. We continue to believe that payment
rates for PHP services have fluctuated from year to year based on a
variety of factors, including direct changes to the PHP APC per diem
payment rate, and changes to the OPPS. Over the past several years, we
have made changes to the OPPS methodology for calculating PHP APC per
diem payment rates to more accurately align the payments with costs.
The changes have included establishing two PHP APC payment tiers,
establishing separate APCs and associated per diem payment rates for
CMHCs and hospital-based providers based on each provider's costs, and
basing payments on the geometric mean costs rather than on median
costs.
In addition, the OPPS is a budget neutral payment system and, as a
result, changes in the relative payment weights associated with certain
services may affect those of other services in the payment system.
Furthermore, provider-driven changes, such as a provider's decision to
change its mix of services or to change its charges and clinical
practice for some services, may cause fluctuations in the per diem
payment rates. We provided a detailed discussion of possible reasons
for the fluctuation in the rates in the CY 2015 OPPS/ASC proposed rule
(79 FR 41012) and in section VIII.B. of this final rule with comment
period.
We appreciate the commenters' providing possible reasons for
fluctuations or declines in the payment rates. While several providers
noted that their operations have not changed to support a decline in
payments, we reiterate that our payment rates are based upon claims and
cost data submitted to us by providers and, therefore, reflect the cost
of what providers expend to maintain such programs. We also acknowledge
the variables raised by the commenters that could cause the payment
rate fluctuations and the study that several commenters had
commissioned to look into PHP payments. We are unable to comment
directly on the study results because we are not certain of the
detailed methods used for this study. However, we appreciate the areas
of potential future study suggested by commenters, and will take them
into consideration in future analyses.
Comment: Many commenters stated that the methodology for
calculating payment rates was ``flawed and illogical'' and asked CMS to
reexamine the methodology to determine why payment rates are declining.
The commenters suggested that CMS consider other methods for paying for
PHP services, such as removing PHP services from APC group assignments
and creating PHPs under an independent payment status, such as is done
under the home health benefit. The commenters suggested that CMS
establish a base payment rate for PHP services at a higher level than
the current mean cost, and annually adjust the base rate by an
inflation factor.
A few commenters supported the two-tiered payment methodology.
However, the commenters suggested using only hospital-based data, which
was implemented in CY 2009. Some commenters disagreed with CMS paying
PHPs differently by site of service. One commenter disputed CMS'
assertion that CMHCs generally provide fewer PHP services in a day. The
commenter stated that claims information indicates that CMHCs submit a
greater percentage of their claims for 4 or more services per day. The
commenter added that CMS does not collect wage data on CMHCs in its
costs reports. Several commenters did not support continued use of the
CY 2014 policy, which uses the geometric mean per diem costs to
calculate PHP payment rates.
Many commenters suggested other alternatives to the current payment
system, such as developing oversight strategies for poorly performing
CMHCs if their performance suggests a high risk of fraud, and allowing
top performing CMHCs to admit patients into intensive outpatient
programs similarly structured as PHPs. One commenter noted that some
hospital-based providers are moving away from PHPs and providing
programs that are structured similarly to a PHP, but are not Medicare-
certified PHPs (that is, providing several individual mental health
services in a day that would be similar to a PHP, but providers are not
enrolled as a PHP). The commenter stated that the programs similar to
PHPs would require fewer services and be subject to fewer regulatory
requirements (for example, no certification or recertification, no
physical examination requirement, and no minimum attendance mandate),
and yet have similar payment rates as those established for PHPs. The
commenter suggested that CMS require that these programs bill for
furnishing these services under the mental health services composite
APC under the OPPS, with payment aligned with how commercial insurers
pay for these services. The commenter also suggested that CMS consider
policy levers to ease regulatory requirements for administering PHPs.
Response: The OPPS successfully pays for outpatient services
provided, such as and including partial hospitalization services, and
we disagree that the system is flawed and illogical. This system bases
payment on the geometric mean costs of providing the service or
services using provider data from claims and cost reports. As discussed
above, we believe this system provides appropriate payment for partial
hospitalization services based on provider costs.
Sections 1833(t)(2) and 1833(t)(9) of the Act set forth the
requirements for establishing and adjusting the OPPS payment rates,
including the PHP payment rates. As such, we are directed to pay for
these services under the OPPS (which uses APCs) and may not remove
these PHP services from the OPPS and pay for them separately (such as
by establishing a base rate and annually

[[Page 66905]]

adjusting it for inflation). The estimated costs of the PHP APCs are
based on the most updated cost and claims data. The OPPS conversion
factor used to calculate payments for those PHP APCs is updated by a
market basket each year. While we continuously examine ways in which
the data process could be improved, we also welcome and appreciate
public comment with regard to potential improvements. Similarly, we
appreciate the meaningful comments that stakeholders provided regarding
ways that the cost modeling process could be more accurate or methods
to extract more appropriate data from the claims available for OPPS
cost modeling. For a more detailed discussion of the OPPS ratesetting
process, including PHP payments, we refer readers to the CY 2015 OPPS
Final Rule Claims Accounting document, available on the CMS Web site
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the link for ``Hospital
Outpatient Regulations and Notices'', then on the link to the CY 2015
OPPS final rule, and then on the CY2015 OPPS Claims Accounting
document.
With respect to the commenters' request to return to the two-tiered
payment methodology calculated using only hospital-based data that was
implemented in the CY 2009 OPPS/ASC final rule with comment period (73
FR 68688 through 68693), we refer commenters to the CY 2011 OPPS/ASC
final rule with comment period (75 FR 71991 through 71994). Because the
cost of providing PHP services differs significantly by site of
service, in CY 2011, we implemented differing PHP payment rates for
hospital-based PHPs and CMHCs. 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 blend of CMHC and hospital data. We calculate the PHP APC per diem
payment rates based on the data provided for each type of provider in
order to pay for services. The resulting PHP APC per diem payment rates
reflect the cost of what providers expend to maintain such programs
based on data provided by these types of providers, which we believe is
an improvement over the two-tiered payment methodology calculated using
only hospital-based data.
In regard to the commenters' concerns regarding the use of
geometric mean rather than the median, in the CY 2013 OPPS/ASC final
rule with comment period, we established the geometric mean rather than
the median as the measure upon which to base the relative payment
weights that underpin the OPPS APCs, including the four PHP APCs (77 FR
68406 to 68412). The CY 2015 PHP APC per diem payment rates are based
on geometric mean costs. While a few commenters disagreed with our use
of geometric mean costs, we believe that the use of geometric mean
costs rather than median costs represents an improvement to our cost
estimation process. As we stated in the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68409), we believe that including outlier
observations in developing the relative payment weights and capturing
the full range of service costs lead to more accurate relative payment
weights. In addition to better incorporating those cost values that
surround the median and, therefore, describing a broader range of cost
patterns, basing the relative payment weight on geometric mean costs
also may promote better stability in the payment system by making OPPS
payments more reflective of the range of costs associated with
providing services. Further, applying the geometric mean to the PHP
APCs helps ensure that the relativity of the OPPS payment weights is
properly aligned. We do not believe that paying for some services based
on median costs, while using geometric mean costs for other services is
appropriate or equitable.
We believe that paying providers using the four PHP APC per diem
payment rates based on the methodologies described above supports
continued access to the PHP benefit, while also providing appropriate
payment based on the unique cost structures of CMHCs and hospital-based
PHPs. We also believe that each of these policies enables us to
continue our responsible stewardship of the Medicare Trust Fund by more
accurately matching payments with costs. For a full discussion of each
of these policies implemented in prior rulemaking, including details on
the rationales, we refer readers to the above-mentioned final rules
with comment period, which are available on the CMS OPPS Web site at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.
In response to the commenters' concerns regarding CMS' statement
that CMHCs provide fewer services in a day, as stated in the CY 2014
OPPS/ASC final rule with comment period (78 FR 75047 through 75050), we
are calculating the payment rates for PHP services based on the claims
and cost data submitted by providers. The updated data used for
calculating payments for this CY 2015 OPPS/ASC final rule with comment
period indicate that CMHCs do indeed have a greater percentage of PHP
days with 4 or more services, compared to hospital-based PHPs (94.6
percent of days compared to 88.3 percent of days, respectively).
However, in spite of their providing a greater percentage of days with
4 or more services, our updated cost data continue to show that CMHC
costs per day are lower than those of hospital-based PHPs.
In response to the question about wage data, CMHCs are required to
include wage data for their staff on their cost reports, with certain
exceptions. We direct readers to Medicare's cost reporting instructions
for CMHCs that are available online in the Provider Reimbursement
Manual, Part 2, Chapter 18 on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html?DLPage=1&DLSort=0&DLSortDir=ascending.
With respect to the suggestion that CMS develop oversight
strategies for poor performing CMHCs with conduct that suggests
potential fraud, we already have oversight strategies in place for
providers that operate in a questionable manner. For example, MACs
perform medical reviews of certain PHP claims, and PHP providers with
claims that present ongoing concerns may have their claims placed on
prepayment review. In some cases, CMHC and hospital-based PHP payments
may be suspended or a CMHC's or hospital's billing privileges may be
revoked. Our Office of Financial Management (OFM) has Recovery Audit
Contractors (RACs), which regularly identify and collect overpayments
from Medicare providers. Additionally, the Center for Program Integrity
(CPI) and Zone Program Integrity Contractors (ZPICs) investigate
potential fraud, waste, and abuse across the Medicare program,
including potential concerns within CMHCs. Finally, the Office of
Inspector General (OIG) and other law enforcement agencies continue in
their efforts to address fraud and abuse throughout the Medicare
program, including questionable billing for partial hospitalization
services.
With respect to the commenters' request to allow top performing
CMHCs to admit beneficiaries who require partial hospitalization
services into outpatient programs that are structured similarly to
PHPs, Medicare covers and

[[Page 66906]]

pays for reasonable and necessary PHP services provided by hospitals
and CMHCs under the OPPS. While some private insurers and some State
Medicaid programs recognize other types of intensive outpatient mental
health programs as a distinct benefit like PHP services, the Medicare
program does not. However, hospitals may provide and bill for
individual services that make up various other mental health programs.
Because all Medicare outpatient mental health services are capped
at the hospital-based Level II PHP per diem payment rate, from a
payment standpoint, it does not matter how many of these individual
services are billed to Medicare because payment will never exceed the
hospital-based Level II PHP per diem payment rate. However, CMHCs may
only be paid for partial hospitalization services under the OPPS.
We are constantly monitoring the OPPS in search of potential
refinements that would improve the accuracy and stability of the
payment system. We are unclear about the policy changes that the
commenters suggested that we make regarding easing the regulatory
requirements for administering PHPs. Some of the PHP requirements are
set forth in the statute. For example, physician certification and
recertification requirements for PHP services are set forth in section
1835(a)(2)(F) of the Act and would require Congressional legislation to
change. However, if providers have suggestions for specific policy
changes to improve PHP operations while safeguarding access to PHP
services and paying accurately for these services, we welcome those
suggestions during rulemaking or through other dialogue with the
industry.
Comment: Many commenters described the key role that PHPs play in
the continuum of care for patients with mental health issues. A number
of commenters stated that if CMS moved forward with the proposed
payment rates, much-needed PHP programs would struggle to remain
financially viable. Multiple commenters believed that additional
reductions in payments for CY 2015 would limit the ability of hospitals
and CMHCs to provide these vital psychiatric services, reducing
capacity or leading to closures, especially in rural areas, and thereby
reducing access to care for Medicare patients. Several commenters noted
that, as access to PHP services decreases, the decreases could lead to
patients not receiving any services or to patients receiving services
that are not appropriate for their needs; to use of more expensive
inpatient psychiatric services; or to use of already stressed emergency
departments. One commenter believed that CMS was concerned about the
potential for hospital-based PHP closures, but not about CMHC closures.
Response: In response to commenters' concern about reduced PHP
payment rates leading to decreased capacity and PHP closures, thereby
reducing access to care and further eroding the viability of the safety
net system, we emphasize again that the resulting PHP APC per diem
payment rates for CY 2015 reflect the costs of what providers expend to
maintain PHP programs. Therefore, it continues to be unclear to us why
reduced PHP payment rates would lead to reduced capacity or program or
business closures. As noted previously, the final CY 2015 per diem
costs increased for CMHCs compared to CY 2014, and decreased less than
proposed for hospital-based PHPs. As we stated in the CY 2012 OPPS/ASC
final rule with comment period (76 FR 74350), the closure of PHPs may
be due to any number of reasons, such as poor business management or
marketing decisions, competition, oversaturation of certain geographic
areas, and Federal and State fraud and abuse efforts, among others. It
does not directly follow that closure could be due to reduced per diem
payment rates alone, especially when these per diem payment rates
reflect the costs of PHP providers as stated in claims and cost data.
In response to the commenters' concerns that further reduction in
the CMHC and hospital-based PHP APC per diem payment amounts could
further erode the viability of the safety net system and make it more
difficult for patients to receive needed mental health services, we
take such concerns seriously for both CMHCs and hospital-based PHPs. We
will continue to monitor facility closings and openings for both rural
and urban areas to make sure that access issues do not exist. We also
remain steadfast in our concern regarding access to care for all
beneficiaries, while also providing appropriate payments for such care.
A PHP is not the only program in which a Medicare beneficiary is
able to receive needed mental health care. Access to other forms of
mental health servi