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 services is also available. Although not equivalent to a
PHP, Medicare provides payment for outpatient mental health services in
addition to PHP services. Many beneficiaries in need of mental health
treatment receive other outpatient services generally from hospital
programs that are available nationwide.
Comment: Many commenters suggested that future payment rates be
tied to quality criteria. One commenter recommended a payment system
that rewards individual providers for outstanding quality and outcomes
while keeping costs under control, and suggested that CMS use value-
based purchasing rather than ``antiquated cost reimbursement-based
purchasing.'' One commenter suggested that CMS conduct an analysis to
determine what quality PHP care entails in terms of costs and staffing,
rather than basing payment rates on reported costs.
Response: We responded to a similar public comment in the CY 2013
OPPS/ASC final rule with comment period (77 FR 68410 through 68411) and
refer readers to a summary of that comment and our response. Sections
1833(t)(2) and 1833(t)(9) of the Act set forth the requirements for
establishing and adjusting OPPS rates, which include PHP rates. Section
1833(t)(17) of the Act authorizes the Hospital OQR Program, which
applies a payment reduction to subsection (d) hospitals that fail to
meet program requirements. In the CY 2015 OPPS/ASC proposed rule (79 FR
41040), we considered future inclusion of, and requested comments on,
the following quality measures addressing PHP issues that would apply
in the hospital outpatient setting: (1) 30-Day Readmissions; (2) Group
Therapy; and (3) No Individual Therapy. We refer readers to section
XIII. of this final rule with comment period for a more detailed
discussion of PHP measures considered for inclusion in the Hospital OQR
Program in future years. The Hospital OQR Program does not apply to
CMHCs. Further, currently, there is no statutory language explicitly
authorizing a value-based purchasing program for PHPs. With respect to
the suggestion of conducting an analysis to determine what quality PHP
care entails in terms of costs and staffing, we will take the
suggestion into consideration in future analyses.
We do not consider the OPPS, the system under which PHPs are paid,
to be ``antiquated.'' Rather, we find the OPPS to be a robust system,
which aligns payments with provider costs. As noted previously, we
regularly monitor the OPPS and, in recent years, have made changes to
further improve the system's ability to pay accurately for services
provided.
Comment: Many commenters noted that they provide services to
Medicare beneficiaries which they cannot bill for on their claims. The
services cited by the commenters included, for example: Assisting
patients in finding appropriate housing; accessing other health care

[[Page 66907]]

services; obtaining medications; working through issues with family
members; accessing transportation to medical and other appointments;
assisting with information and appointments with Social Security;
answering Medicare questions; accessing food banks and food stamps;
obtaining eye and dental services; and integrating highly volatile and
anxious patients into the milieu without upsetting the environment.
Commenters stated that, currently, there is no way to show through the
billing process that these events take place because there are no
billing codes that capture these activities.
Response: Section 1861(ff) of the Act and 42 CFR 410.43 describe
the items and services included in partial hospitalization services. As
set forth in these sections, partial hospitalization services generally
consist of a variety of group, individual, and family psychotherapy
sessions, supplemented with occupational therapy, the services of
social workers, trained psychiatric nurses, and other staff trained to
work with psychiatric patients, drugs and biologicals furnished for
therapeutic purposes that cannot be self-administered, diagnostic
services, education and training, and certain activity therapies
designed to stabilize an acute episode of mental illness. Section
1861(ff)(2)(I) of the Act explicitly excludes meals and transportation
from the items and services included in partial hospitalization
services. The PHP APC per diem payment rate is the bundled payment for
partial hospitalization services. Only the items and services
specifically identified in the statute and regulations are considered
partial hospitalization services. All other items and services are not
paid as part of partial hospitalization services.
Comment: A number of commenters asked that CMS have a dialogue with
the PHP industry, and that the public comments on the proposed rule be
directly addressed by CMS in an open forum where ideas could be
cooperatively shared.
Response: We maintain positive working relationships with various
industry leaders representing both CMHCs and hospital-based PHP
providers with whom we have consistently met over the years to discuss
industry concerns and ideas. These relationships have provided
significant and valuable input regarding PHP ratesetting. We also hold
Hospital Outpatient Open Door Forum calls monthly, in which all
individuals are welcome to participate and/or submit questions
regarding specific issues, including questions related to PHPs.
Furthermore, we initiate rulemaking annually, through which we receive
public comments on proposals set forth in a proposed rule, and we
respond to those comments in a final rule. All individuals are provided
an opportunity to comment, and we give consideration to each comment
that we receive. Given the relationships that we have established with
various industry leaders and the various means for us to receive
comments and recommendations, we believe that we receive adequate input
regarding PHP ratesetting and take that input into consideration when
establishing the PHP per diem payment amounts. We continue to welcome
any input and information that the industry is willing to provide.
Comment: Several commenters requested a better understanding of the
Program for Evaluating Payment Patterns Electronic Report (PEPPER), the
areas of risk it has identified, how the PEPPER fits into fraud and
abuse efforts, and how the PEPPER fits into the benefit in general, and
indicated that this information might be helpful to providers. The
commenters expressed concern regarding various areas of risk cited by
the PEPPER, including ``No individual therapy.'' The commenter stated
that although most providers furnish individual therapy, it is often
not documented or billed as it is not included in the local coverage
determinations (LCDs).
Response: The PEPPER is a data report that contains statistics for
each PHP area identified nationally to be at risk for improper payment
(referred to in the report as ``target areas''). Each PEPPER contains a
single PHP provider's claims data statistics, obtained from claims
submitted to the MAC for these target areas. PEPPER does not identify
the presence of improper payments, but it can be used by the provider
as a guide for auditing and monitoring efforts. A provider can use the
PEPPER to compare its claims data over time to identify areas of
potential concern and to identify changes in billing practices. When a
provider is sent a PEPPER, the report includes a user's guide, which
describes the PEPPER and the target areas, among other things, and
provides contact information for additional questions or information.
Additional information on the PEPPER, including training and resources,
is available at the PEPPER Web site at: http://pepperresources.org/.
Regarding ``individual therapy,'' which is one area of risk that
the PEPPER is assessing, individual therapy is a partial
hospitalization service. For a review of the partial hospitalization
services, we refer readers to section 1861(ff)(2)(A) of the Act and our
regulations at 42 CFR 410.43(a)(4)(i). We expect that providers would
furnish individual therapy services as one of the services provided
within a PHP.
Comment: One commenter noted that new Medicare conditions of
participation (CoPs) are about to become effective for CMHCs, and
stated that most CMHCs are unaware of them. One commenter noted that
complying with the new CoPs would increase its costs. The commenter
also stated that, under a provision of the Affordable Care Act that
became effective October 1, 2014, providers need to be aware that a
CMHC must provide at least 40 percent of its items and services to
individuals who are not eligible for benefits under Medicare.
Response: The Conditions of Participation for Community Mental
Health Centers final rule (78 FR 64604, October 29, 2013) established,
for the first time, CoPs that CMHCs must meet in order to participate
in the Medicare program. The CMHC CoPs are codified in 42 CFR Part 485,
Subpart J, and became effective on October 29, 2014. Prior to the
issuance of this final rule, on June 17, 2011, CMS issued a proposed
rule (76 FR 35684) outlining the CoPs for Medicare-certified CMHCs. The
proposed rule was open to public comment until August 16, 2011. Also,
CMS issued press releases and fact sheets on the CoPs. CMS also has
been working with trade organizations and the States to inform
providers about the CoPs and the implementation date. Therefore, we
believe that all CMHCs should be aware of these new requirements. More
information on the CoPs for CMHCs can be found at 42 CFR Part 485, and
through the link to the final rule at: http://www.gpo.gov/fdsys/pkg/FR-2013-10-29/pdf/2013-24056.pdf. The proposed rule can be accessed
through the following link on the Web site found at: http://www.gpo.gov/fdsys/pkg/FR-2011-06-17/pdf/2011-14673.pdf. The final rule
fact sheets can be accessed through the following link to the Web site
found at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2013-Fact-sheets-items/2013-10-28.html. The proposed rule press
release can be accessed through the following link to the Web site
found at: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2011-Press-releases-items/2011-06-16.html. We believe that the
cost associated with the CoPs is a reasonable and necessary business
expense to

[[Page 66908]]

ensure the health and safety of all CMHC clients. In addition,
effective October 29, 2014, under 42 CFR 485.918(b)(1)(v), pursuant to
section 1861(ff)(3)(B) of the Act, a CMHC must provide at least 40
percent of its items and services to individuals who are not eligible
for benefits under title XVIII of the Social Security Act, as measured
by the total number of CMHC clients treated by the CMHC for whom
services are not paid by Medicare, divided by the total number of
clients treated by the CMHC in the applicable timeframe. Under this
requirement, a newly enrolling or revalidating CMHC must submit to CMS
a certification statement provided by an independent entity (such as an
accounting technician). The document must indicate that (1) the entity
has reviewed the CMHC's client care data, and (2) the CMHC meets the
applicable 40 percent requirement. (We refer readers to 78 FR 64620).
CMS has issued a change request that instructs MACs on the processing
of such CMHC certifications. This requirement implements the provision
of the Affordable Care Act noted by the commenter. For more detailed
information, we refer readers to the Conditions of Participation for
Community Mental Health Centers final rule (78 FR 64604).
Comment: A number of commenters noted the complexities of abiding
by the LCDs on PHPs and believed that such LCDs are making it difficult
for hospital-based PHP providers to continue to provide PHP services.
Some commenters questioned whether the LCDs should be clarified or
updated.
Response: LCDs issued by MACs specify under what clinical
circumstances an item or service is considered to be reasonable and
necessary. They are administrative and educational tools to assist
providers in submitting correct claims for payment. The MACs publish
LCDs to provide guidance to the public and medical community within
their jurisdictions. The MACs develop LCDs by considering medical
literature, the advice of local medical societies and medical
consultants, public comments, and comments from the provider community.
LCDs must be consistent with the statutory requirements for the
Medicare program and with Medicare regulations and guidance. More
information about LCDs can be found in the CMS Program Integrity Manual
(Internet only manual) 100-08, Chapter 13, available at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pim83c13.pdf.
Providers with questions about LCDs should contact their MAC for
clarification or assistance. Inquiries of a clinical nature, such as
the rationale behind coverage or noncoverage of certain items or
services, are handled within the Medical Review (MR) department under
the MAC responsible for the development of the LCD.
Comment: One commenter recommended that the annual payment update
for PHP APCs reflect the market basket update that is applied to all
other OPPS APCs.
Response: The PHP APC payment rates are based on the OPPS
conversion factor, to which the market basket update is applied.
Therefore, the market basket update is applied to the PHP APC payment
rates. The OPPS conversion factor is discussed in further detail in
section II.B. of this final rule with comment period.
Comment: One commenter stated that physicians are billing inpatient
codes rather than PHP codes. The commenter believed that the change in
physician reporting may have altered what facilities reported, which
would have reduced the number of facility fees reported, and skewed the
APC data downward. The commenter recommended that CMS conduct an
analysis of the frequency and type of CPT codes that have been
submitted for PHP over the last 3 years.
Response: As stated in section 1861(ff) of the Act and 42 CFR
410.43, payment for partial hospitalization services generally
represents the provider's overhead costs, support staff, some drugs and
the services of some nurses, clinical social workers, and occupational
therapists, whose professional services are considered to be partial
hospitalization services for which payment is made to the provider.
Physician services that meet the requirements of 42 CFR 415.102(a) are
separately covered and not paid as part of partial hospitalization
services. Therefore, we do not use physician claims in developing the
PHP APC geometric mean per diem costs and it is unclear to us how
physician billing would impact PHP APC payment rates.
Regarding the recommendation that CMS conduct an analysis of the
frequency and type of CPT codes that have been submitted for PHP
services over the last 3 years, we will take the suggestion under
consideration for future rulemaking, as we strengthen the PHP payment
structure.
In summary, after consideration of the public comments we received,
we are finalizing our CY 2015 proposal, without modification, to update
the four PHP APC per diem costs based on geometric mean cost levels
calculated using the most recent claims and cost data for each provider
type. The updated PHP APCs geometric mean per diem costs for PHP
services that we are finalizing for CY 2015 are shown in Table 39 and
40 below. As noted earlier in this section, we refer readers to
Addendum A to this final rule with comment for the final PHP APC
payment rates.

Table 39--CY 2015 Geometric Mean Per Diem Costs for CMHC PHP Services
------------------------------------------------------------------------
Geometric mean
APC Group title per diem costs
------------------------------------------------------------------------
0172....................... Level I Partial $100.15
Hospitalization (3
services) for CMHCs.
0173....................... Level II Partial 118.54
Hospitalization (4 or more
services) for CMHCs.
------------------------------------------------------------------------

Table 40--CY 2015 Geometric Mean Per Diem Costs for Hospital-Based PHP
Services
------------------------------------------------------------------------
Geometric mean
APC Group title per diem costs
------------------------------------------------------------------------
0175....................... Level I Partial $185.87
Hospitalization (3
services) for hospital-
based PHPs.
0176....................... Level II Partial 203.01
Hospitalization (4 or more
services) for hospital-
based PHPs.
------------------------------------------------------------------------

[[Page 66909]]

C. Separate Threshold for Outlier Payments to CMHCs

As discussed in the CY 2004 OPPS final rule with comment period (68
FR 63469 through 63470), after examining the costs, charges, and
outlier payments for CMHCs, we believed that establishing a separate
OPPS outlier policy for CMHCs would be appropriate. A CMHC-specific
outlier policy would direct OPPS outlier payments towards genuine cost
of outlier cases, and address situations where charges were being
artificially increased to enhance outlier payments. We created a
separate outlier policy that would be specific to the estimated costs
and OPPS payments provided to CMHCs. We note that, in the CY 2009 OPPS/
ASC final rule with comment period, we established an outlier
reconciliation policy to comprehensively address charging aberrations
related to OPPS outlier payments (73 FR 68594 through 68599).
Therefore, beginning in CY 2004, we designated a portion of the
estimated OPPS outlier target amount specifically for CMHCs, consistent
with the percentage of projected payments to CMHCs under the OPPS each
year, excluding outlier payments, and established a separate outlier
threshold for CMHCs.
The separate outlier threshold for CMHCs resulted in $1.8 million
in outlier payments to CMHCs in CY 2004, and $0.5 million in outlier
payments to CMHCs in CY 2005. In contrast, in CY 2003, more than $30
million was paid to CMHCs in outlier payments. We believe that this
difference in outlier payments indicates that the separate outlier
threshold for CMHCs has been successful in keeping outlier payments to
CMHCs in line with the percentage of OPPS payments made to CMHCs.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41012), we proposed to
continue designating a portion of the estimated 1.0 percent outlier
target amount specifically for CMHCs, consistent with the percentage of
projected payments to CMHCs under the OPPS in CY 2015, excluding
outlier payments. CMHCs are projected to receive 0.03 percent of total
OPPS payments in CY 2015, excluding outlier payments. Therefore, we
proposed to designate 0.47 percent of the estimated 1.0 percent outlier
target amount for CMHCs, and establish a threshold to achieve that
level of outlier payments. Based on our simulations of CMHC payments
for CY 2015, in the CY 2015 OPPS/ASC proposed rule, we proposed to
continue to set the threshold for CY 2015 at 3.40 times the highest
CMHC PHP APC payment rate (that is, APC 0173 (Level II Partial
Hospitalization)) (79 FR 41012). We stated that we continue to believe
that this approach would neutralize the impact of inflated CMHC charges
on outlier payments and better target outlier payments to those truly
exceptionally high-cost cases that might otherwise limit beneficiary
access. In addition, we proposed to continue to apply the same outlier
payment percentage that applies to hospitals. Therefore, for CY 2015,
we proposed to continue to pay 50 percent of CMHC per diem costs over
the threshold. In section II.G. of the CY 2015 OPPS/ASC proposed rule
(79 FR 41012), for the hospital outpatient outlier payment policy, we
proposed to set a dollar threshold in addition to an APC multiplier
threshold. Because the PHP APCs are the only APCs for which CMHCs may
receive payment under the OPPS, we would not expect to redirect outlier
payments by imposing a dollar threshold. Therefore, we did not propose
to set a dollar threshold for CMHC outlier payments.
In summary, in the CY 2015 OPPS/ASC proposed rule, we proposed to
establish that if a CMHC's cost for partial hospitalization services,
paid under either APC 0172 or APC 0173, exceeds 3.40 times the payment
rate for APC 0173, the outlier payment would be calculated as 50
percent of the amount by which the cost exceeds 3.40 times the APC 0173
payment rate. We invited public comments on these proposals.
We did not receive any public comments regarding our proposed
outlier policy. Therefore, we are finalizing our CY 2015 proposal to
set a separate outlier threshold for CMHCs. As discussed in section
II.G. of this final rule with comment period, using more recent data
for this final rule with comment period, we set the target for hospital
outpatient outlier payments at 1.00 percent of total estimated OPPS
payments. We allocated a portion of the 1.00 percent, an amount equal
to 0.65 percent of outlier payments, or 0.0065 percent of total
estimated OPPS payments, to CMHCs for PHP outlier payments. For CY
2015, as proposed, we are setting the CMHC outlier threshold at 3.40
multiplied by the APC 0173 payment rate and the CY 2015 outlier
percentage applicable to costs in excess of the threshold at 50
percent. In other words, 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.

IX. Procedures That Will Be Paid Only as Inpatient Procedures

A. Background

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

B. Changes to the Inpatient List

In the CY 2015 OPPS/ASC proposed rule (79 FR 41012 through 41013),
for the CY 2015 OPPS, we proposed to use the same methodology
(described in the November 15, 2004 final rule with comment period (69
FR 65835)) of reviewing the current list of procedures on the inpatient
list to identify any procedures that may be removed from the list. The
established criteria upon which we make such a determination are as
follows:
1. Most outpatient departments are equipped to provide the services
to the Medicare population.
2. The simplest procedure described by the code may be performed in
most outpatient departments.
3. The procedure is related to codes that we have already removed
from the inpatient-only list.
4. A determination is made that the procedure is being performed in
numerous hospitals on an outpatient basis.
5. A determination is made that the procedure can be appropriately
and safely performed in an ASC, and is on the list of approved ASC
procedures or has been proposed by us for addition to the ASC list.
Using this methodology, we did not identify any procedures that
potentially could be removed from the inpatient list for CY 2015.
Therefore, we proposed to not remove any procedures from the inpatient
list for CY 2015.
After our annual review of APCs and code assignments as required by
section 1833(t)(9) of the Act and further clinical review performed by
CMS medical officers, we proposed to add CPT code 22222 (Osteotomy of
spine, including discectomy, anterior approach, single vertebral
segment; thoracic) to the CY 2015 inpatient list.
The complete list of codes that we proposed to be paid by Medicare
in CY 2015 only as inpatient procedures was

[[Page 66910]]

included as Addendum E to the proposed rule (which is available via the
Internet on the CMS Web site).
Comment: Several commenters supported CMS' proposal to add CPT code
22222 to the inpatient list.
Response: We appreciate the commenters' support.
Comment: Several commenters requested that CMS remove CPT codes
0312T (Vagus nerve blocking therapy (morbid obesity); laparoscopic
implantation of neurostimulator electrode array, anterior and posterior
vagal trunks adjacent to esophagogastric junction (EGJ), with
implantation of pulse generator, includes programming); 43771
(Laparoscopy, surgical, gastric restrictive procedure; revision of
adjustable gastric restrictive device component only); 43772
(Laparoscopy, surgical, gastric restrictive procedure; removal of
adjustable gastric restrictive device component only); 43773
(Laparoscopy, surgical, gastric restrictive procedure; removal and
revision of adjustable gastric restrictive device component only);
43774 (Laparoscopy, surgical, gastric restrictive procedure; removal of
adjustable gastric restrictive device and subcutaneous port
components); 54411 (Removal and replacement of a multi-component
inflatable penile prosthesis through an infected field at the same
operative session); and 54417 (Removal and replacement of a non-
inflatable (semi-rigid) or inflatable (self-contained) penile
prosthesis through an infected field at the same operative session)
from the CY 2015 inpatient list based on their own experience,
specialty society recommendation, or designation of a procedure as safe
in the outpatient setting under one of the many clinical guidelines
available.
Response: We reevaluated data on CPT codes 0312T, 43771, 43772,
43773, 43774, 54411, and 54417 using recent utilization data and
further clinical review performed by CMS' medical advisors. As a result
of the reevaluation, we have determined that these procedures can be
safely performed only in the inpatient setting. We are not removing
them from the inpatient list for CY 2015.
Comment: Some commenters requested that CPT code 63044 (Laminotomy
(hemilaminectomy), with decompression of nerve root(s), including
partial facetectomy, foraminotomy and/or excision of herniated
intervertebral disc, reexploration, single interspace; each additional
lumbar interspace) be removed from the inpatient list.
Response: We reevaluated data on CPT code 63044 using recent
utilization data and further clinical review performed by CMS medical
advisors. As a result of the reevaluation, we agree with the commenters
that this procedure can be safely performed in the outpatient setting.
In addition, as a result of our reevaluation, we believe that CPT code
63043 (Laminotomy (hemilaminectomy), with decompression of nerve
root(s), including partial facetectomy, foraminotomy and/or excision of
herniated intervertebral disc, reexploration, single interspace; each
additional cervical interspace) can be safely performed in the
outpatient setting. Therefore, we are removing CPT codes 63043 and
63044 from the inpatient list. Because CPT codes 63043 and 63044 are
add-on codes, they are being assigned status indicator ``N'' for CY
2015.
Comment: Other commenters urged CMS to continue reviewing its
inpatient only policy in light of ongoing changes in delivery systems
and procedural safety and technological advances.
Response: We agree with the commenters and will continue to review
the inpatient only policy.
After consideration of the public comments we received, we are
finalizing our proposals for the inpatient only list, with
modifications. We are removing CPT codes 63043 and 63044 from the
inpatient list and adding CPT code 22222 (Osteotomy of spine, including
discectomy, anterior approach, single vertebral segment; thoracic) to
the CY 2015 inpatient list.
The complete list of codes that will be paid by Medicare in CY 2015
only as inpatient procedures is included as Addendum E to this final
rule with comment period (which is available via the Internet on the
CMS Web site.

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

As we discussed in the CY 2014 OPPS/ASC proposed rule and final
rule with comment period (78 FR 43626 and 78 FR 75061) and in the CY
2014 Medicare Physician Fee Schedule (MPFS) proposed rule and final
rule with comment period (78 FR 43301 and 78 FR 74427), in recent
years, the research literature and popular press have documented the
increased trend toward hospital acquisition of physician practices,
integration of those practices as a department of the hospital, and the
resultant increase in the delivery of physicians' services in a
hospital setting. When a Medicare beneficiary receives outpatient
services in a hospital, the total payment amount for outpatient
services made by Medicare is generally higher than the total payment
amount made by Medicare when a physician furnishes those same services
in a freestanding clinic or in a physicians' office.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41013), we stated that
we continue to seek a better understanding of how the growing trend
toward hospital acquisition of physicians' offices and subsequent
treatment of those locations as off-campus provider-based departments
(PBDs) of hospitals affects payments under the MPFS and the OPPS, as
well as beneficiary cost-sharing obligations. We also noted that MedPAC
continues to question the appropriateness of increased Medicare payment
and beneficiary cost-sharing when physicians' offices become hospital
outpatient departments and to recommend that Medicare pay selected
hospital outpatient services at MPFS rates (MedPAC March 2012 and June
2013 Report to Congress). In order to understand how this trend is
affecting Medicare, we need information on the extent to which this
shift is occurring. To that end, during the CY 2014 OPPS/ASC rulemaking
cycle, we sought public comment regarding the best method for
collecting information and data that would allow us to analyze the
frequency, type, and payment for physicians' and outpatient hospital
services furnished in off-campus PBDs of hospitals (78 FR 75061 through
75062 and 78 FR 74427 through 74428). In response to our solicitation,
we received many detailed public comments. However, the commenters did
not present a consensus opinion regarding whether this data collection
was advisable or which data collection method would be preferable.
Based on our analysis of the public comments we received, we proposed
for the CY 2015 OPPS/ASC proposed rule that the most efficient and
equitable means of gathering this important information across two
different payment systems would be to create a HCPCS modifier to be
reported with every code for physicians' services and outpatient
hospital services furnished in an off-campus PBD of a hospital on both
the CMS-1500 claim form for physicians' services and the UB-04 form
(CMS Form 1450) for hospital outpatient services. We noted that a main
provider may treat an off-campus facility as provider-based if certain
requirements in 42 CFR 413.65 are satisfied, and we define a ``campus''
at 42 CFR 413.65(a)(2) to be the physical area immediately adjacent to
the provider's main buildings, other areas and

[[Page 66911]]

structures that are not strictly contiguous to the main buildings but
are located within 250 yards of the main buildings, and any other areas
determined on an individual case basis, by the CMS regional office, to
be part of the provider's campus.
Section 220(a)(1) of the Protecting Access to Medicare Act of 2014
(Pub. L. 113-93) added a new subparagraph (M) under section 1848(c)(2)
of the Act that granted CMS the authority to engage in data collection
to support valuation of services paid under the MPFS. In the CY 2015
OPPS/ASC proposed rule, we indicated that we are seeking more
information on the frequency and type of services furnished in PBDs
under this authority to improve the accuracy of MPFS practice expense
payments for services furnished in off-campus PBDs. We discussed this
issue in more detail in the CY 2015 MPFS proposed rule (79 FR 40333).
In that discussion, we noted our concerns that our current MPFS
practice expense methodology primarily distinguishes between the
resources involved in furnishing services in two sites of service: the
nonfacility setting and the facility setting. As more physician
practices become hospital-based and are treated as off-campus PBDs, we
believe it is important to develop an understanding of which practice
expense costs typically are incurred by the physicians and
practitioners in the setting, which are incurred by the hospital, and
whether the facility and nonfacility site-of-service differentials
adequately account for the typical resource costs, given these new
ownership arrangements.
To understand how this trend is affecting Medicare, including the
accuracy of payments made through the MPFS, we stated in the proposed
rule that we need to develop data to assess the extent to which this
shift toward hospital-based physician practices is occurring.
Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 41013), we
proposed to collect information on the type and frequency of
physicians' services and outpatient hospital services furnished in off-
campus PBDs beginning January 1, 2015, in accordance with our authority
under section 1848(c)(2)(M) of the Act (as added by section 220(a) of
Pub. L. 113-93). As noted above, we proposed to create a HCPCS modifier
that is to be reported with every code for physicians' services and
outpatient hospital services furnished in an off-campus PBD of a
hospital. Under the proposal, the modifier would be reported on both
the CMS-1500 claim form for physicians' services and the UB-04 form
(CMS Form 1450) for hospital outpatient services. In the proposed rule
(79 FR 41013), we sought additional public comments on whether or not
the use of a modifier code is the best mechanism for collecting this
service-level data in the hospital outpatient department.
Comment: Many commenters agreed on the need to collect information
on the frequency, type, and payment of services furnished in off-campus
PBDs of hospitals. However, several commenters expressed concern that
the HCPCS modifier would create additional administrative burden for
providers. Many of these commenters stated that the new modifier would
require significant changes to hospitals' billing systems, including a
separate chargemaster for outpatient off-campus PBDs and training for
staff on how to use the new modifier. Many of these commenters
suggested that CMS should re-propose a detailed data collection
methodology, test it with providers, make adjustments, and allow
additional time for implementation. One commenter suggested that CMS
withdraw the current proposal and ask the Advisory Panel on Hospital
Outpatient Payment (HOP Panel) to develop a proposal for data
collection.
Response: While we understand the commenters' concerns about the
additional administrative burden of reporting a new HCPCS modifier, we
have weighed the burden of reporting the modifier for each service
against the benefit of having data that will allow us to obtain and
assess accurate information on the type and frequency of physicians'
services and outpatient hospital services furnished in off-campus PBDs.
We do not believe that the modifier is excessively burdensome for
providers to report. This is especially the case because, under current
rules, when billing for services, providers must know where services
are performed in order to accurately complete value code 78 of an
outpatient claim or the service location portion of a professional
claim. However, as discussed later in this section, we agree that a
place of service (POS) code on the professional claim allows for the
same type of data collection as a modifier on the hospital claim and
would be less burdensome than the modifier for practitioner billing. We
discuss the timeframe for implementation later in this section. With
respect to bringing this proposal to the HOP Panel, we note that such a
proposal is outside the scope of the HOP Panel, which is generally
charged with advising Medicare on the clinical integrity of APCs and
their associate relative payment weights. The proposed modifier is for
collecting data and, as structured, does not affect APCs and their
associated relative payment weights. Therefore, it would not be
appropriate to solicit HOP Panel discussion or recommendations on this
proposal on data collection.
Comment: Some commenters who were concerned about the
administrative burden of the new HCPCS modifier suggested several
alternative methods for CMS to collect data on services furnished in
off-campus PBDs. Several of these commenters recommended that CMS
consider the establishment of a new POS code for professional claims,
or for both professional claims and hospital claims, because they
believed this approach would be less administratively burdensome than
attaching a modifier to each service reported on the claim that was
furnished in an off-campus PBD. Some commenters preferred identifying
services furnished in off-campus PBDs on the Medicare cost report (CMS-
2552-10). Some commenters suggested using provider numbers and
addresses to identify off-campus PBDs, or changing the provider
enrollment process to be able to track these data. Other commenters
suggested creating a new bill type to track outpatient hospital
services furnished in off-campus PBDs.
Commenters generally recommended that CMS choose the least
administratively burdensome approach that would ensure accurate data
collection, but did not necessarily agree on what approach would
optimally achieve that result. Some commenters believed that a HCPCS
modifier would more clearly identify specific services furnished at
off-campus PBDs, and would provide better information about the type
and level of care furnished. Some commenters believed that a HCPCS
modifier would be the least administratively burdensome approach
because hospitals and physicians already report a number of claims-
based modifiers. Other commenters argued that additional modifiers
would increase administrative burden because this approach would
increase the modifiers that would need to be considered when billing.
Response: With respect to creating a new POS code to obtain data on
services furnished in off-campus PBDs of a hospital, we note that POS
codes are only reported on professional claims and are not included on
hospital claims. Therefore, a POS code could not be easily implemented
for hospital claims. However, POS codes are already required to be
reported on every professional claim and POS 22 is currently used to
report when physicians' services are furnished in an

[[Page 66912]]

outpatient hospital department. (More information on existing POS codes
is available on the CMS Web site at: http://www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.html.)
Although we considered proposing a new POS code for professional
claims to collect data on services furnished in the off-campus PBD
setting, we ultimately did not do so, in part because we were aware
that previous Government Accountability Office and Office of the
Inspector General reports (October 2004, A-05-04-0025; January 2005, A-
06-04-00046; July 2010, A-01-09-00503; September 2011, A-01-10-00516)
have noted frequent inaccuracies in the reporting of POS codes. In
addition, at the time the proposed rule was developed, we had concerns
that using a POS code to report this information might not give us the
reliable data we are looking to collect, especially if such data were
to be crosswalked with hospital claims for the same service, because
the hospital claim would have a modifier, not a POS code. However, we
have been persuaded by public comments suggesting that use of a POS
code would be less administratively burdensome on professional claims
than use of a modifier. Specifically, because a POS code is already
required on every professional claim, we believe that creating a new
POS code to distinguish outpatient hospital services that are furnished
on-campus versus off-campus would require less staff training and
education than would use of a modifier on the professional claim. In
addition, professional claims only have space for four modifiers. While
a very small percentage of professional claims have four modifiers,
required use of an additional modifier for every professional claim
could lead to more occurrences where there would not be space for all
applicable modifiers. Unlike hospital claims, we note that a new
professional claim is required whenever the place of service changes.
That is, even if the same practitioner treats the same patient on the
same day in the office and hospital, the services furnished in the
office setting must be submitted on one claim with the POS 11 (Office)
code, while those furnished in the outpatient hospital department would
be submitted on a separate claim with the POS 22 (Outpatient Hospital)
code (we note that the POS 22 code will be changing under the final
policy). Likewise, if a new POS code were to be created for an off-
campus PBD setting, a separate claim for services furnished in that
setting would be required relative to a claim for services furnished on
the main campus by the same practitioner to the same patient on the
same day. Based on public comments and after further consultation with
Medicare billing experts, we believe that the use of the POS code on
professional claims would be no less accurate than the use of a
modifier on professional claims in identifying services furnished in
off-campus PBDs. In addition, we believe that the POS code would be
less administratively burdensome for practitioners billing using the
professional claim because a POS code is already required for every
professional claim.
With respect to adding new fields to existing claim forms or
creating a new bill type, we do not believe that this data collection
warrants these measures. We believe that those changes would create
greater administrative burden than a HCPCS modifier or POS code,
especially because providers are already accustomed to using modifiers
and POS codes. Revisions to the claim form to add new fields or an
additional bill type would create significant administrative burden to
revise claims processing systems and educate providers, which we
believe is not necessary, given the availability of a modifier and POS
codes. Although providers may not be familiar with this new modifier or
any new POS code; because these types of codes already exist generally
for hospital and professional claims, providers and suppliers should
already have an understanding of these types of codes and how to apply
them. Finally, we do not believe that expansions to the claim form or
use of a new bill type would provide us with detailed information on
exactly which services were furnished in an off-campus PBD versus those
furnished on the main campus when those services are furnished on the
same day.
We also do not believe that we could accurately determine which
services are furnished at off-campus PBDs using currently available
national provider identifier (NPI) and facility address data. Hospitals
are required to report the 9-digit zip code indicating where a service
was furnished for purposes of paying properly for physician and
anesthesia services paid under the MPFS when that zip code differs from
the master address for the hospital on file in CMS claims systems (Pub.
100-04, Transmittal 1681, February 13, 2009). However, the billing zip
code for the hospital main campus could be broad enough to incorporate
on and off-campus PBDs. Further, a zip code reported in value code 78
does not allow CMS to distinguish between services furnished in
different locations on the same date. Therefore, we do not believe that
a comparison of the zip code captured in value code 78 and the main
campus zip code is sufficiently precise.
Finally, while we considered the suggestion that CMS use currently
reported Medicare hospital cost report (CMS-2552-10) data to identify
services furnished at off-campus PBDs, we note that although aggregate
data on services furnished in different settings must be reported
through the appropriate cost center, we would not be able to obtain the
service-specific level of detail that we would be able to obtain from
claims data.
We will take under consideration the suggestion that CMS create a
way for hospitals to report their acquisition of off-campus PBDs
through the enrollment process, although this information, as currently
reported, like many of the suggestions above, would not allow us to
know exactly which services are furnished in off-campus PBDs and which
services are furnished on the hospital's main campus when a hospital
provides both on the same day.
Comment: Commenters noted that the proposed modifier would not
allow CMS to know the precise location of the off-campus PBDs for
billed services or when services are furnished at different off-campus
PBD locations in the same day.
Response: We agree that neither the proposed modifier nor a POS
code provides precise information on the specific location of each off-
campus PBD for each furnished service. However, we believe having
information on the type and frequency of services furnished at all off-
campus locations will assist CMS in better understanding the
distribution of services between on-campus locations and off-campus
locations.
Comment: MedPAC believed there may be some value in collecting data
on services furnished in off-campus PBDs to validate the accuracy of
site-of-service reporting when the physician's office is off-campus but
bills as an outpatient department. MedPAC indicated that any data
collection effort should not prevent the development of policies to
align payment rates across settings. MedPAC encouraged CMS to seek
legislative authority to set equal payment rates across settings for
evaluation and management office visits and other select services.
Response: We thank MedPAC for its support of our data collection
efforts to better inform the frequency and types of services that are
being furnished in off-campus PBDs.

[[Page 66913]]

Comment: Many commenters suggested that providers would not be able
to accurately apply the new modifier by the January 1, 2015
implementation timeline and recommended a 1-year delay before providers
would be required to apply the modifier to services furnished at off-
campus PBDs. Some commenters requested only a 6-month delay in
implementation. Commenters indicated that significant revisions to
internal billing processes would require additional time to implement.
Response: Although we believe that the customary January 1st
effective date that applies to most policies adopted in the final rules
with comment period for both the MPFS and the OPPS would provide
sufficient lead time, we understand the commenters' concerns with the
proposed timeline for implementation, given that the new reporting
requirements may require changes to billing systems as well as
education and training for staff. Accordingly, although we are
finalizing our proposal to create a HCPCS modifier for hospital
services furnished in an off-campus PBD setting, we are adopting a
voluntary reporting period of the new HCPCS modifier for 1 year. That
is, reporting the new HCPCS modifier for services furnished at an off-
campus PBD will not be mandatory until January 1, 2016, in order to
allow providers time to make systems changes, test these changes, and
train staff on use of the new modifier before reporting is required. We
welcome early reporting of the modifier and believe a full year of
preparation should provide hospitals with sufficient time to modify
their systems for accurate reporting. With respect to the POS code for
professional claims, we will request two new POS codes to replace POS
code 22 (Hospital Outpatient) through the POS Workgroup and expect that
it will take some time for these new codes to be established. Once the
new POS codes are ready and integrated into CMS claims systems,
practitioners would be required to use them, as applicable. More
information on the availability of the new POS codes will be
forthcoming in subregulatory guidance. However, we do not expect the
new POS codes to be available prior to July 1, 2015. There will be no
voluntary reporting period of the POS codes for applicable professional
claims because each professional claim requires a POS code in order to
be accepted by Medicare. However, we do not view this to be problematic
because we intend to give prior notice on the POS coding changes and,
as many of the commenters noted, because practitioners are already
accustomed to using a POS code on every claim they submit.
Comment: Many commenters expressed concern that this data
collection would eventually lead to equalizing payment for similar
services furnished in the nonfacility setting and the off-campus PBD
setting. Several commenters noted that the trend of hospitals acquiring
physician practices is due to efforts to better integrate care delivery
and suggested that CMS weigh the benefits of care integration when
deciding payment changes. Some commenters suggested that CMS use these
data to equalize payment for similar services between these two
settings. These commenters suggested that there is little difference in
costs and care between the two settings that would warrant the
difference in payment. Several of these commenters highlighted
beneficiary cost-sharing as one reason for site-neutral payment, noting
that the total payment amount for outpatient services is generally
higher than the total payment amount for those same services when
furnished in a physician's office.
Response: We appreciate these comments. At this time, we are only
finalizing a data collection in this final rule with comment period. We
did not propose and, therefore, are not finalizing any adjustment to
payments furnished in the off-campus PBD setting.
Comment: One commenter noted that the CMS proposal would not
provide additional information on how a physician practice billed prior
to becoming an off-campus PBD, which would be important for analyzing
the impact of this trend.
Response: We agree that understanding physician billing patterns
prior to becoming an off-campus PBD is important in analyzing the
impact of this trend, and we will continue to evaluate ways to analyze
claims data to gather this information. We believe that collecting data
using the additional modifier and POS code finalized in this final rule
with comment period will be an important tool in furthering this
analysis.
Comment: Some commenters suggested that the term ``off-campus'' be
better defined. Commenters asked how billing would occur for hospitals
with multiple campuses because the CMS definition of campus references
main buildings and does not include remote locations. The commenters
maintained that remote locations are not the same as off-campus
departments and that remote campuses furnish both inpatient and
outpatient hospital services, in contrast to individual hospital
departments. The commenters argued that these types of locations are
not ones that were formerly a physician office practice, and furnish
completely different types of services than a physician office. One
commenter also asked whether the modifier is intended to cover services
furnished in freestanding emergency departments.
Response: For purposes of the modifier and the POS codes we are
finalizing in this final rule with comment period, we define ``campus''
using the definition at 42 CFR 413.65(a)(2) to be the physical area
immediately adjacent to the provider's main buildings, other areas and
structures that are not strictly contiguous to the main buildings but
are located within 250 yards of the main buildings, and any other areas
determined on an individual case basis, by the CMS regional office, to
be part of the provider's campus. Our intent is to capture outpatient
services furnished off of the hospital's main campus and off of any
other hospital campuses. The term ``remote location of a hospital'' is
defined at 42 CFR 413.65(a)(2). Under these regulations, a ``remote
location'' includes a hospital campus other than the main hospital
campus. Specifically, a remote location is ``a facility or an
organization that is either created by, or acquired by, a hospital that
is a main provider for the purpose of furnishing inpatient hospital
services under the name, ownership, and financial and administrative
control of the main provider. . . .'' Therefore, we agree with the
commenter that remote locations of the hospital should not be required
to report the modifier nor should practitioners be required to report
the off-campus POS code in these settings. This term ``remote
location'' does not include ``satellite'' locations of a hospital, but
because a satellite facility is one that provides inpatient services in
a building also used by another hospital, or in one or more entire
buildings located on the same campus as buildings used by another
hospital, we also are not requiring satellite facilities to report the
modifier or the POS codes. Satellite facilities are described in the
regulations at 42 CFR 412.22(h). Accordingly, reporting of the modifier
and POS codes would be required for outpatient services furnished in
PBDs beyond 250 yards from the main campus of the hospital, excluding
services furnished in a remote location or satellite facility of the
hospital.
We also appreciate the comment on emergency departments. We do not
intend for hospitals to report the new modifier for services furnished
in an emergency department that is provider-

[[Page 66914]]

based to a hospital. We note that there is already a POS code for the
emergency department, POS 23 (emergency room-hospital), and this code
would continue to be used for emergency department services. That is,
the new off-campus PBD code that will be created for purposes of this
data collection would not apply to hospital emergency department
services. Hospitals that have questions about which departments are
considered to be ``off-campus PBDs'' should review additional guidance
that CMS releases on this policy and work with the appropriate CMS
regional office if individual, specific questions remain.
Comment: Several commenters asked for clarification on when to
report the modifier for services furnished both on-campus and off-
campus on the same day. The commenters provided several scenarios of
visits and diagnostic services furnished on the same day.
Response: The location where the service is actually furnished
would dictate the use of the modifier, regardless of where the order
for services initiated. We expect the modifier and the POS code for
off-campus PBDs to be reported in locations in which the hospital
expends resources to furnish the service in an off-campus PBD setting.
For example, hospitals would not report the modifier for a diagnostic
test that is ordered by a practitioner who is located in an off-campus
PBD when the service is actually furnished on the main campus of the
hospital. This issue does not impact use of the POS codes because
practitioners submit a different claim for each POS where they furnish
services for a specific beneficiary.
Comment: A few commenters asked for clarification on whether their
entity constitutes a PBD.
Response: PBDs are departments of the hospital that meet the
criteria specified in regulations at 42 CFR 413.65. Questions about
PBDs may be directed to the appropriate CMS regional office.
Comment: One commenter recommended that CMS publish the data it
acquires through adoption of this modifier.
Response: Data collected through the new HCPCS modifier would be
part of the Medicare Limited Data Set and would be available to the
public for purchase along with the remainder of the Limited Data Set.
Similarly, professional claims data with revised POS coding would be
available as a standard analytic file for purchase.
In summary, after consideration of the public comments received, we
are finalizing our proposal with modifications. For hospital claims, we
are creating a HCPCS modifier that is to be reported with every code
for outpatient hospital services furnished in an off-campus PBD of a
hospital. This code will not be required to be reported for remote
locations of a hospital defined at 42 CFR 412.65, satellite facilities
of a hospital defined at 42 CFR 412.22(h), or for services furnished in
an emergency department. This 2-digit modifier will be added to the
HCPCS annual file as of January 1, 2015, with the label ``PO,'' the
short descriptor ``Serv/proc off-campus pbd,'' and the long descriptor
``Services, procedures and/or surgeries furnished at off-campus
provider-based outpatient departments.'' Reporting of this new modifier
will be voluntary for 1 year (CY 2015), with reporting required
beginning on January 1, 2016. Additional instruction and provider
education will be forthcoming in subregulatory guidance.
For professional claims, instead of finalizing a HCPCS modifier, in
response to public comments, we will be deleting current POS code 22
(outpatient hospital department) and establishing two new POS codes--
one to identify outpatient services furnished in on-campus, remote, or
satellite locations of a hospital, and one to identify services
furnished in an off-campus PBD hospital setting. We will maintain the
separate POS code 23 (Emergency room-hospital) to identify services
furnished in an emergency department of the hospital. These new POS
codes will be required to be reported as soon as they become available.
However, advanced notice of the availability of these codes will be
shared publicly as soon as practicable.

XI. CY 2015 OPPS Payment Status and Comment Indicators

A. CY 2015 OPPS Payment Status Indicator Definitions

Payment status indicators (SIs) that we assign to HCPCS codes and
APCs serve an important role in determining payment for services under
the OPPS. They indicate whether a service represented by a HCPCS code
is payable under the OPPS or another payment system and also whether
particular OPPS policies apply to the code. The complete list of the CY
2015 payment status indicators and their definitions is displayed in
Addendum D1 to this final rule with comment period, which is available
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The CY 2015 payment
status indicator assignments for APCs and HCPCS codes are shown in
Addendum A and Addendum B, respectively, to this final rule with
comment period, which are available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The changes to CY 2015 payment status
indicators and their definitions are discussed in detail below.
We note that, in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74869 through 74888), for CY 2014, we created a new
status indicator ``J1'' to identify HCPCS codes that are paid under a
comprehensive APC. However, because we delayed implementation of the
new comprehensive APC policy until CY 2015, we also delayed the
effective date of payment status indicator ``J1'' to CY 2015. A claim
with payment status indicator ``J1'' will trigger a comprehensive APC
payment for the claim. We refer readers to section II.A.2.e. of this
final rule with comment period for a discussion of implementation of
the new comprehensive APC policy.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41014), for CY 2015,
we proposed to delete payment status indicator ``X'' and to assign
ancillary services that are currently assigned payment status indicator
``X'' to either payment status indicator ``Q1'' or ``S.'' We also
proposed to revise the definition of payment status indicator ``Q1'' by
removing payment status indicator ``X'' from the packaging criteria, so
that codes assigned payment status indicator ``Q1'' would be designated
as STV-packaged, rather than STVX-packaged, because payment status
indicator ``X'' was proposed for deletion. These proposed changes, the
public comments we received and our responses, and our finalized
policies are discussed in section II.A.3.c.(1) of this final rule with
comment period. Section II.A.3.c.(1) of this final rule with comment
period discusses the ancillary services packaging policy. The ancillary
services packaging policy is the policy that makes maintaining status
indicator ``X'' no longer necessary. After consideration of the public
comments that we received and that are discussed in section
II.A.3.c.(1) of this final rule with comment period, we are finalizing,
without modification, our CY 2015 proposal to delete payment status
indicator ``X'' and to assign ancillary services that are currently
assigned payment status indicator ``X'' to either payment status
indicator ``Q1'' or ``S.''
In addition, for CY 2015, we proposed to clarify the definition of
payment status indicator ``E'' to state that

[[Page 66915]]

payment status indicator ``E'' applies to items, codes, and services in
any of the following cases:
For which pricing is not available;
Not covered by any Medicare outpatient benefit category;
Statutorily excluded by Medicare; or
Not reasonable and necessary.
Regarding items ``for which pricing is not available,'' this
applies to drugs and biologicals assigned a HCPCS code but with no
available pricing information (for example, WAC).
In reviewing the OPPS status indicators and Addendum D1 for CY
2015, we noticed that there are a few drugs or biologicals that are
currently assigned payment status indicator ``A,'' indicating payment
under a non-OPPS fee schedule. These drugs or biologicals are
administered infrequently in conjunction with emergency dialysis for
patients with ESRD, but when administered in the HOPD, they are paid
under the standard OPPS drug payment methodology for drugs and
biologicals, that is, at ASP+6 percent unless they are packaged. (We
refer readers to section V. of this final rule with comment period for
additional discussion of these drugs and their status indicators.) We
proposed to change the status indicators for these drugs or biologicals
for CY 2015 by removing the phrase ``EPO for ESRD Patients'' from the
list of examples for status indicator ``A.'' In addition, we proposed
to clarify the definition of payment status indicator ``A'' by adding
the phrase ``separately payable'' to nonimplantable prosthetic and
orthotic devices.
We did not receive any public comments regarding our proposed
change and clarifications of the definitions of payment status
indicators ``E'' and ``A.'' Therefore, we are finalizing our
clarification and proposed policies, without modifications, for CY
2015.

B. CY 2015 Comment Indicator Definitions

In the CY 2015 OPPS/ASC proposed rule (79 FR 41014), for the CY
2015 OPPS, we proposed to use the same two comment indicators that are
in effect for the CY 2014 OPPS.
``CH''--Active HCPCS code in current and next calendar
year; status indicator and/or APC assignment have changed or active
HCPCS code that will be discontinued at the end of the current calendar
year.
``NI''--New code for the next calendar year or existing
code with substantial revision to its code descriptor in the next
calendar year as compared to current calendar year, interim APC
assignment; comments will be accepted on the interim APC assignment for
the new code.
We proposed to use the ``CH'' comment indicator in the CY 2015
OPPS/ASC proposed rule (79 FR 41014) to indicate HCPCS codes for which
the status indicator or APC assignment, or both, are proposed for
change in CY 2015 compared to their assignment as of June 30, 2014. We
believed that using the ``CH'' indicator in the proposed rule would
facilitate the public's review of the changes that we proposed for CY
2015. We proposed to use the ``CH'' comment indicator in the CY 2015
OPPS/ASC final rule with comment period to indicate HCPCS codes for
which the status indicator or APC assignment, or both, would change in
CY 2015 compared to their assignment as of December 31, 2014. Use of
the comment indicator ``CH'' in association with a composite APC
indicates that the configuration of the composite APC would be changed
in the CY 2015 OPPS/ASC final rule with comment period.
In addition, we proposed that any existing HCPCS codes with
substantial revisions to the code descriptors for CY 2015 compared to
the CY 2014 descriptors would be labeled with comment indicator ``NI''
in Addendum B to the CY 2015 OPPS/ASC final rule with comment period.
However, in order to receive the comment indicator ``NI,'' the CY 2015
revision to the code descriptor (compared to the CY 2014 descriptor)
must be significant such that the new code descriptor describes a new
service or procedure for which the OPPS treatment may change. We use
comment indicator ``NI'' to indicate that these HCPCS codes will be
open for comment as part of the CY 2015 OPPS/ASC final rule with
comment period. In the CY 2015 OPPS/ASC proposed rule, we stated that,
like all codes labeled with comment indicator ``NI,'' we would respond
to public comments and finalize their OPPS treatment in the CY 2016
OPPS/ASC final rule with comment period.
In accordance with our usual practice, we proposed that CPT and
Level II HCPCS codes that are new for CY 2015 also would be labeled
with comment indicator ``NI'' in Addendum B to the CY 2015 OPPS/ASC
final rule with comment period.
We did not receive any public comments on the proposed use of
comment indicators for CY 2015.
We believe that the CY 2014 definitions of the OPPS comment
indicators continue to be appropriate for CY 2015. Therefore, we are
continuing to use those definitions without modification for CY 2015.
Only HCPCS codes with comment indicator ``NI'' in this CY 2015 OPPS/ASC
final rule with comment period are subject to comment. HCPCS codes that
do not appear with comment indicator ``NI'' in this CY 2015 OPPS/ASC
final rule with comment period will not be open to public comment,
unless we specifically request additional comments elsewhere in this
final rule with comment period.
The definitions of the OPPS comment indicators for CY 2015 are
listed in Addendum D2 to this final rule with comment period, which is
available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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
For a detailed discussion of the legislative history and statutory
authority related to payments to ASCs under Medicare, we refer readers
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through
32292). For a discussion of prior rulemaking on the ASC payment system,
we refer readers to the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74378 through 74379), the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68434 through 68467), and the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75064 through 75090).
2. Policies Governing Changes to the Lists of Codes and Payment Rates
for ASC Covered Surgical Procedures and Covered Ancillary Services
Under 42 CFR 416.2 and 416.166 of the Medicare regulations, subject
to certain exclusions, covered surgical procedures in an ASC are
surgical procedures that are separately paid under the OPPS, that would
not be expected to pose a significant risk to beneficiary safety when
performed in an ASC, and for which standard medical practice dictates
that the beneficiary would not typically be expected to require active
medical monitoring and care at midnight following the procedure
(``overnight stay''). We adopted this standard for defining which
surgical procedures are covered under the ASC payment system as an
indicator of the complexity of the procedure and its appropriateness
for

[[Page 66916]]

Medicare payment in ASCs. We use this standard only for purposes of
evaluating procedures to determine whether or not they are appropriate
to be furnished to Medicare beneficiaries in ASCs. We define surgical
procedures as those described by Category I CPT codes in the surgical
range from 10000 through 69999, as well as those Category III CPT codes
and Level II HCPCS codes that directly crosswalk or are clinically
similar to ASC covered surgical procedures (72 FR 42478).
In the August 2, 2007 final rule, we also established our policy to
make separate ASC payments for the following ancillary items and
services when they are provided integral to ASC covered surgical
procedures: (1) Brachytherapy sources; (2) certain implantable items
that have pass-through payment status under the OPPS; (3) certain items
and services that we designate as contractor-priced, including, but not
limited to, procurement of corneal tissue; (4) certain drugs and
biologicals for which separate payment is allowed under the OPPS; and
(5) certain radiology services for which separate payment is allowed
under the OPPS. These covered ancillary services are specified in Sec.
416.164(b) and, as stated previously, are eligible for separate ASC
payment (72 FR 42495). Payment for ancillary items and services that
are not paid separately under the ASC payment system is packaged into
the ASC payment for the covered surgical procedure.
We update the lists of, and payment rates for, covered surgical
procedures and covered ancillary services in ASCs in conjunction with
the annual proposed and final rulemaking process to update the OPPS and
the ASC payment system (Sec. 416.173; 72 FR 42535). In addition, as
discussed in detail in section XII.B. of this final rule with comment
period, because we base ASC payment policies for covered surgical
procedures, drugs, biologicals, and certain other covered ancillary
services on the OPPS payment policies, and we use quarterly change
requests to update services covered under the OPPS, we also provide
quarterly update change requests (CRs) for ASC covered surgical
procedures and covered ancillary services throughout the year (January,
April, July, and October). CMS releases new Level II codes to the
public or recognizes the release of new CPT codes by the AMA and makes
these codes effective (that is, the codes are recognized on Medicare
claims) via these ASC quarterly update CRs. Thus, these quarterly
updates are to implement newly created Level II HCPCS and Category III
CPT codes for ASC payment and to update the payment rates for
separately paid drugs and biologicals based on the most recently
submitted ASP data. New Category I CPT codes, except vaccine codes, are
released only once a year and, therefore, are implemented only through
the January quarterly update. New Category I CPT vaccine codes are
released twice a year and are implemented through the January and July
quarterly updates. We refer readers to Table 41 in the CY 2012 OPPS/ASC
proposed rule for the process used to update the HCPCS and CPT codes
(76 FR 42291).
In our annual updates to the ASC list of, and payment rates for,
covered surgical procedures and covered ancillary services, we
undertake a review of excluded surgical procedures (including all
procedures newly proposed for removal from the OPPS inpatient list),
new procedures, and procedures for which there is revised coding, to
identify any that we believe meet the criteria for designation as ASC
covered surgical procedures or covered ancillary services. Updating the
lists of ASC covered surgical procedures and covered ancillary
services, as well as their payment rates, in association with the
annual OPPS rulemaking cycle is particularly important because the OPPS
relative payment weights and, in some cases, payment rates, are used as
the basis for the payment of covered surgical procedures and covered
ancillary services under the revised ASC payment system. This joint
update process ensures that the ASC updates occur in a regular,
predictable, and timely manner.

B. Treatment of New Codes

1. Process for Recognizing New Category I and Category III CPT Codes
and Level II HCPCS Codes
Category I CPT, Category III CPT, and Level II HCPCS codes are used
to report procedures, services, items, and supplies under the ASC
payment system. Specifically, we recognize the following codes on ASC
claims: (1) Category I CPT codes, which describe surgical procedures
and vaccine codes; (2) Category III CPT codes, which describe new and
emerging technologies, services, and procedures; and (3) Level II HCPCS
codes, which are used primarily to identify products, supplies,
temporary procedures, and services not described by CPT codes.
We finalized a policy in the August 2, 2007 final rule to evaluate
each year all new Category I and Category III CPT codes and Level II
HCPCS codes that describe surgical procedures, and to make preliminary
determinations during the annual OPPS/ASC rulemaking process regarding
whether or not they meet the criteria for payment in the ASC setting as
covered surgical procedures and, if so, whether or not they are office-
based procedures (72 FR 42533 through 42535). In addition, we identify
new codes as ASC covered ancillary services based upon the final
payment policies of the revised ASC payment system.
We have separated our discussion below into two sections based on
whether we proposed to solicit public comments in the CY 2015 OPPS/ASC
proposed rule (and respond to those comments in this CY 2015 OPPS/ASC
final rule with comment period) or whether we are soliciting public
comments in this CY 2015 OPPS/ASC final rule with comment period (and
responding to those comments in the CY 2016 OPPS/ASC final rule with
comment period).
We note that we sought public comment in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75067) on the new Category I and
Category III CPT and Level II HCPCS codes that were effective January
1, 2014. We also sought public comment in the CY 2014 OPPS/ASC final
rule with comment period on the new Level II HCPCS codes effective
October 1, 2013. These new codes, with an effective date of October 1,
2013, or January 1, 2014, were flagged with comment indicator ``NI'' in
Addenda AA and BB to the CY 2014 OPPS/ASC final rule with comment
period to indicate that we were assigning them an interim payment
status and payment rate, if applicable, which were subject to public
comment following publication of the CY 2014 OPPS/ASC final rule with
comment period. In the proposed rule, we stated that we will respond to
public comments and finalize the treatment of these codes under the ASC
payment system in this CY 2015 OPPS/ASC final rule with comment period.
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
In the April 2014 and July 2014 CRs, we made effective for April 1,
2014 and July 1, 2014, respectively, a total of seven new Level II
HCPCS codes and four new Category III CPT codes that describe ASC
covered surgical procedures and covered ancillary services that were
not addressed in the

[[Page 66917]]

CY 2014 OPPS/ASC final rule with comment period.
In the April 2014 ASC quarterly update (Transmittal 2927, CR 8675,
dated April 10, 2014), we added two new surgical Level II HCPCS codes
and one new drug and biological Level II HCPCS code to the list of
covered surgical procedures and covered ancillary services,
respectively. Table 45 of the CY 2015 OPPS/ASC proposed rule (79 FR
41016) listed the new Level II HCPCS codes that were implemented April
1, 2014, along with their proposed payment indicators for CY 2015.
In the July 2014 quarterly update (Transmittal 2970, CR 8786, dated
May 23, 2014), we added one new brachytherapy Level II HCPCS code and
three new drug and biological Level II HCPCS codes to the list of
covered ancillary services. Table 46 of the CY 2015 OPPS/ASC proposed
rule (79 FR 41016 through 41017) listed the new Level II HCPCS codes
that were implemented July 1, 2014 along with their proposed payment
indicators and proposed ASC payment rates for CY 2015.
Through the July 2014 quarterly update CR, we also implemented ASC
payment for four new Category III CPT codes as one ASC covered surgical
procedure and three covered ancillary services, effective July 1, 2014.
These codes were listed in Table 47 of the CY 2015 OPPS/ASC proposed
rule (79 FR 41017), along with their proposed payment indicators and
proposed payment rates for CY 2015.
The HCPCS codes listed in Table 45 of the CY 2015 OPPS/ASC proposed
rule (79 FR 41016) were included in Addenda AA or BB to the proposed
rule (which are available via the Internet on the CMS Web site).
Because the payment rates associated with the new Level II HCPCS codes
and Category III CPT codes that became effective July 1, 2014 (listed
in Table 46 and Table 47 of the proposed rule (79 FR 41016 through
41017)) were not available to us in time for incorporation into the
Addenda to the OPPS/ASC proposed rule, our policy is to include these
HCPCS codes and their proposed payment indicators and payment rates in
the preamble to the proposed rule but not in the Addenda to the
proposed rule. These codes and their final payment indicators and rates
are included in the appropriate Addendum to this CY 2015 OPPS/ASC final
rule with comment period. Therefore, the codes implemented by the July
2014 ASC quarterly update CR and their proposed CY 2015 payment
indicators and rates that were displayed in Table 46 and Table 47 of
the proposed rule were not included in Addenda AA or BB to the proposed
rule (which are available via the Internet on the CMS Web site). The
final list of ASC covered surgical procedures and covered ancillary
services and the associated payment weights and payment indicators are
included in Addenda AA or BB to this CY 2015 OPPS/ASC final rule with
comment period, consistent with our annual update policy.
We invited public comment on these proposed payment indicators and
the proposed payment rates for the new Category III CPT code and Level
II HCPCS codes that were newly recognized as ASC covered surgical
procedures or covered ancillary services in April 2014 and July 2014
through the quarterly update CRs, as listed in Tables 45, 46, and 47 of
the CY 2015 OPPS/ASC proposed rule (79 FR 41016 through 41017). We
proposed to finalize their payment indicators and their payment rates
in this CY 2015 OPPS/ASC final rule with comment period.
We did not receive any public comments regarding these proposed ASC
payment indicators. Therefore, we are adopting as final for CY 2015 the
ASC payment indicators for the ASC covered surgical procedures and
covered ancillary services described by the new Level II HCPCS codes
implemented in April 2014 and July 2014 through the quarterly update
CRs as shown below, in Tables 41 and 42, respectively.
For the new Category III CPT codes implemented in July 2014 through
the quarterly update CR, as shown below in Table 43, we are not
finalizing the ``Z2'' payment indicator that we proposed for CPT codes
0348T, 0349T, and 0350T. For CY 2015, these codes will be conditionally
packaged under the OPPS when provided with a significant procedure
(status indicator ``Q1''). With the exception of device removal
procedures (as discussed in section XII.D.1.b. of this final rule with
comment period), HCPCS codes that are conditionally packaged under the
OPPS are always packaged (payment indicator ``N1'') under the ASC
payment system. Therefore, we are changing the final CY 2015 ASC
payment indicator for CPT codes 0348T, 0349T, and 350T from ``Z2'' to
``N1.'' We are adopting as final the payment indicator proposed for CPT
code 0356T.
These new HCPCS and CPT codes also are displayed in Addenda AA and
BB to this final rule with comment period (which are available via the
Internet on the CMS Web site). We note that after publication of the CY
2015 OPPS/ASC proposed rule, the CMS HCPCS Workgroup created permanent
HCPCS J-codes for CY 2015 to replace certain temporary HCPCS C-codes
and Q-codes made effective for CY 2014. These permanent CY 2015 HCPCS
J-codes are listed alongside the temporary CY 2014 HCPCS C-codes and Q-
codes in Tables 41 and 42 below. We also note that the CMS HCPCS
Workgroup created a long descriptor for J1781 that is slightly
different from the long descriptor listed for HCPCS code C9134 in the
CY 2015 OPPS/ASC proposed rule.

Table 41--New Level II HCPCS Codes for Covered Surgical Procedures or Covered Ancillary Services Implemented in
April 2014
----------------------------------------------------------------------------------------------------------------
Final CY 2015
CY 2014 HCPCS code CY 2015 HCPCS code CY 2015 long descriptor payment
indicator
----------------------------------------------------------------------------------------------------------------
C9739.......................... C9739......................... Cystourethroscopy, with G2
insertion of transprostatic
implant; 1 to 3 implants.
C9740.......................... C9740......................... Cystourethroscopy, with G2
insertion of transprostatic
implant; 4 or more implants.
C9021.......................... J9301......................... Injection, obinutuzumab, 10 mg K2
----------------------------------------------------------------------------------------------------------------
G2 = Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment
weight.
K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment
based on OPPS rate.

[[Page 66918]]

Table 42--New Level II HCPCS Codes for Covered Ancillary Services Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
Final CY 2015
CY 2014 HCPCS code CY 2015 HCPCS code CY 2015 long descriptor payment
indicator
----------------------------------------------------------------------------------------------------------------
C2644.......................... C2644......................... Brachytherapy source, cesium- H2
131 chloride solution, per
millicurie.
C9022.......................... J1322......................... Injection, elosulfase alfa, K2
1mg.
C9134.......................... J7181......................... Injection, Factor XIII A- K2
subunit, (recombinant), per
iu.
Q9970 *........................ J1439......................... Injection, ferric K2
carboxymaltose, 1 mg.
----------------------------------------------------------------------------------------------------------------
* HCPCS code Q9970 replaced HCPCS code C9441 effective July 1, 2014.
H2 = Brachytherapy source paid separately when provided integral to a surgical procedure on ASC list; payment
based on OPPS rate.
K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment
based on OPPS rate.

Table 43--New Category III CPT Codes for Covered Surgical Procedures or Covered Ancillary Services Implemented
in July 2014
----------------------------------------------------------------------------------------------------------------
Final CY 2015
CY 2014 CPT code CY 2015 CPT code CY 2015 long descriptor payment
indicator
----------------------------------------------------------------------------------------------------------------
0348T.......................... .............................. Radiologic examination, N1
radiostereometric analysis
(RSA); spine, (includes,
cervical, thoracic and
lumbosacral, when performed).
0349T.......................... .............................. Radiologic examination, N1
radiostereometric analysis
(RSA); upper extremity(ies),
(includes shoulder, elbow and
wrist, when performed).
0350T.......................... .............................. Radiologic examination, N1
radiostereometric analysis
(RSA); lower extremity(ies),
(includes hip, proximal
femur, knee and ankle, when
performed).
0356T.......................... .............................. Insertion of drug-eluting R2
implant (including punctal
dilation and implant removal
when performed) into lacrimal
canaliculus, each.
----------------------------------------------------------------------------------------------------------------
N1 = Packaged service/item; no separate payment made.
R2 = Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE RVUs;
payment based on OPPS relative payment weight.

3. Process for New Level II HCPCS Codes and Category I and Category III
CPT Codes for Which We Are Soliciting Public Comments in This CY 2015
OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Category I and Category III CPT codes and new Level II HCPCS codes that
are effective January 1 in the final rule with comment period updating
the ASC payment system for the following calendar year. These codes are
released to the public via the CMS HCPCS (for Level II HCPCS codes) and
AMA Web sites (for CPT codes), and also through the January ASC
quarterly update CRs. In the past, we also have released new Level II
HCPCS codes that are effective October 1 through the October ASC
quarterly update CRs and incorporated these new codes in the final rule
with comment period updating the ASC payment system for the following
calendar year. All of these codes are flagged with comment indicator
``NI'' in Addenda AA and BB to the OPPS/ASC final rule with comment
period to indicate that we are assigning them an interim payment status
which is subject to public comment. The payment indicator and payment
rate, if applicable, for all such codes flagged with comment indicator
``NI'' are open to public comment in the OPPS/ASC final rule with
comment period, and we respond to these comments in the final rule with
comment period for the next calendar year's OPPS/ASC update.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41017), we proposed to
continue this process for CY 2015. Specifically, for CY 2015, we
proposed to include in Addenda AA and BB to the CY 2015 OPPS/ASC final
rule with comment period any new Category I and III CPT codes effective
January 1, 2015, that would be incorporated in the January 2015 ASC
quarterly update CR and any new Level II HCPCS codes, effective October
1, 2014 or January 1, 2015, that would be released by CMS in its
October 2014 and January 2015 ASC quarterly update CRs. We stated that
these codes would be flagged with comment indicator ``NI'' in Addenda
AA and BB to this CY 2015 OPPS/ASC final rule with comment period to
indicate that we have assigned them an interim payment status. We also
stated that their payment indicators and payment rates, if applicable,
would be open to public comment in this CY 2015 OPPS/ASC final rule
with comment period and would be finalized in the CY 2016 OPPS/ASC
final rule with comment period.
We did not receive any public comments regarding this proposed
process. Therefore, for CY 2015, we are finalizing our proposal,
without modification, to continue our established process for
recognizing and soliciting public comments on new Level II HCPCS codes
and Category I and III CPT codes that become effective on October 1,
2014, or January 1, 2015, as described above.

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
In the CY 2015 OPPS/ASC proposed rule (79 FR 41017 through 41018),
we proposed to update the list of ASC covered surgical procedures by
adding 10 procedures to the list for CY 2015. These 10 procedures were
among those excluded from the ASC list for CY 2014 because we believed
they did not meet the definition of a covered surgical procedure based
on our expectation that they would be expected to pose a significant
risk to beneficiary safety when performed in an ASC, or would be
expected to require active medical monitoring and care of the
beneficiary at midnight following the procedure. We conducted a review
of all HCPCS codes that currently are paid under the OPPS, but not
included on the ASC list of covered surgical procedures, to determine
if changes in technology and/or medical practice affected the clinical
appropriateness of these procedures for

[[Page 66919]]

the ASC setting. We determined that these 10 procedures would not be
expected to pose a significant risk to beneficiary safety when
performed in an ASC, and would not be expected to require active
medical monitoring and care of the beneficiary at midnight following
the procedure and, therefore, we proposed to include them on the list
of ASC covered surgical procedures for CY 2015.
The 10 procedures that we proposed to add to the ASC list of
covered surgical procedures, including their HCPCS code long
descriptors and proposed CY 2015 payment indicators, were displayed in
Table 48 of the CY 2015 OPPS/ASC proposed rule (79 FR 41018).
Comment: Several commenters supported adding the 10 procedures to
the CY 2015 covered surgical procedures list for ASCs.
Response: We thank the commenters for their support. As indicated
later in this section, we are finalizing our proposal to add these
procedure codes to the ASC list, in addition to two other procedure
codes recommended by commenters.
Comment: Some commenters stated that the APC relative weight for
APC 0208 is too low for the cervical and lumbar fusion procedures (as
described by HCPCS codes 22551, 22554, and 22612) proposed to be added
to the list of ASC covered surgical procedures, and they urged CMS to
reassign these three procedures codes to another APC with a higher
relative weight.
Response: As discussed in detail in section II.A.2.e. of this final
rule with comment period, we agree with the commenters, and we are
reassigning CPT codes 22551, 22554, and 22612 to APC 0425 for CY 2015
because the geometric mean costs of these codes are more similar to the
geometric mean cost of APC 0425, which has a higher geometric mean cost
than APC 0208.
Comment: Some commenters stated that, in order to perform the
procedures proposed to be added to the ASC list of covered surgical
procedures, additional procedure codes needed to be added to the list
because some of the proposed additions to the list could not be
furnished without procedures described by additional codes. Other codes
were requested to be added because they represent procedures that are
commonly furnished in conjunction with procedures described by the
codes that were proposed to be added. Commenters stated that without
adding the additional codes for procedures that must be performed in
conjunction with or are often performed along with the proposed added
procedures, these types of cases will continue to not be furnished in
the ASC setting. Commenters stated that some of the procedures
described by these codes were covered by other carriers and could be
safely performed in the ASC setting for Medicare patients. Some
commenters believed that, because Medicare makes facility payments for
unlisted CPT codes under the OPPS, CMS should provide ASCs with the
same flexibility to use unlisted CPT codes to report procedures. The
list of codes that commenters requested to be added in addition to
those that were proposed to be added is shown in Table 44 below.

Table 44--Procedures Requested for Addition to the CY 2015 List of ASC
Covered Surgical Procedures
------------------------------------------------------------------------
CY 2015 CPT/HCPCS codes CY 2015 short descriptor
------------------------------------------------------------------------
19307............................. Mast mod rad.
20930***.......................... Sp bone algrft morsel add-on.
20931***.......................... Sp bone algrft struct add-on.
20936*............................ Sp bone agrft local add-on.
20937*............................ Sp bone agrft morsel add-on.
20938*............................ Sp bone agrft struct add-on.
22526............................. Idet single level.
22527............................. Idet 1 or more levels.
22532*............................ Lat thorax spine fusion.
22533*............................ Lat lumbar spine fusion.
22534*............................ Lat thor/lumb addl seg.
22552*............................ Addl neck spine fusion.
22558*............................ Lumbar spine fusion.
22585*............................ Additional spinal fusion.
22610*............................ Thorax spine fusion.
22633*............................ Lumbar spine fusion combined.
22830*............................ Exploration of spinal fusion.
22840*............................ Insert spine fixation device.
22842*............................ Insert spine fixation device.
22845*............................ Insert spine fixation device.
22846*............................ Insert spine fixation device.
22849*............................ Reinsert spinal fixation.
22850*............................ Remove spine fixation device.
22851............................. Apply spine prosth device.
22855*............................ Remove spine fixation device.
22856............................. Cerv artific diskectomy.
23470............................. Reconstruct shoulder joint.
28805............................. Amputation thru metatarsal.
31600............................. Incision of windpipe.
32551............................. Insertion of chest tube.
33244............................. Remove eltrd transven.
35471............................. Repair arterial blockage.
35903............................. Excision graft extremity.
37191............................. Ins endovas vena cava filtr.
37193............................. Rem endovas vena cava filter.
39400............................. Mediastinoscopy incl biopsy.
43280............................. Laparoscopy fundoplasty.
43281............................. Lap paraesophag hern repair.
43770............................. Lap place gastr adj device.
44180............................. Lap enterolysis.
44970............................. Laparoscopy appendectomy.
54332............................. Revise penis/urethra.
54336............................. Revise penis/urethra.
54535............................. Extensive testis surgery.
54650............................. Orchiopexy (fowler-stephens).
57120............................. Closure of vagina.
57282............................. Colpopexy extraperitoneal.
57283............................. Colpopexy intraperitoneal.
57310............................. Repair urethrovaginal lesion.
57425............................. Laparoscopy surg colpopexy.
58260............................. Vaginal hysterectomy.
58262............................. Vag hyst including t/o.
58543............................. Lsh uterus above 250 g.
58544............................. Lsh w/t/o uterus above 250 g.
58553............................. Laparo-vag hyst complex.
58554............................. Laparo-vag hyst w/t/o compl.
58573............................. Tlh w/t/o uterus over 250 g.
60252............................. Removal of thyroid.
60260............................. Repeat thyroid surgery.
60271............................. Removal of thyroid.
63011............................. Remove spine lamina 1/2 scrl.
63012............................. Remove lamina/facets lumbar.
63015............................. Remove spine lamina >2 crvcl.
63016............................. Remove spine lamina >2 thrc.
63017............................. Remove spine lamina >2 lmbr.
63035............................. Spinal disk surgery add-on.
63040............................. Laminotomy single cervical.
63046............................. Remove spine lamina 1 thrc.
63048............................. Remove spinal lamina add-on.
63057............................. Decompress spine cord add-on.
63064............................. Decompress spinal cord thrc.
63075............................. Neck spine disk surgery.
63076............................. Neck spine disk surgery.
77002****......................... Needle localization by xray.
L-codes**......................... (L codes for implants--plates and
screws, peek or bone, putty--HCPCS
not specified).
------------------------------------------------------------------------
* CPT codes on the OPPS inpatient list for CY 2015.
** HCPCS codes for prosthetics or prosthetic supplies.
*** CPT codes already on the ASC list of covered surgical procedures.
**** CPT code already on the ASC list of covered ancillary services.

Response: We examined all of the codes that commenters requested
for addition to the ASC list of covered surgical procedures. Of the 75
codes requested for addition to the ASC list, we did not review the 19
procedures that are reported by CPT codes that are on the OPPS
inpatient list (identified with one asterisk in Table 44), or the
unspecified non-surgical HCPCS L-codes (identified with two asterisks
in Table 44) because these codes are not eligible for addition to the
ASC list of covered surgical procedures, consistent with our final
policy which is discussed in detail in the August 2, 2007 final rule
(72 FR 42476 through 42486; 42 CFR 416.166). In addition, we did not
review the 2 procedures reported by CPT codes that are already on the
ASC list of covered surgical procedures (identified with three
asterisks in Table 44), or the 1 procedure reported by a CPT code that
is on the ASC list of covered ancillary

[[Page 66920]]

services (identified with four asterisks in Table 44).
With respect to the remaining procedures described by the 52 codes
in Table 44 that commenters requested be added to the list of ASC
covered surgical procedures, we do not agree that any of the procedures
described by these codes should be added to the list because they do
not meet our criteria for inclusion on this list. Under 42 CFR 416.2
and 416.166, subject to certain exclusions, covered surgical procedures
in an ASC are surgical procedures that are separately paid under the
OPPS, that would not be expected to pose a significant risk to
beneficiary safety when performed in an ASC, and would not be expected
to require active medical monitoring and care of the beneficiary at
midnight following the procedure. The criteria used under the revised
ASC payment system to identify procedures that would be expected to
pose a significant safety risk when performed in an ASC include, but
are not limited to, those procedures that: Generally result in
extensive blood loss; require major or prolonged invasion of body
cavities; directly involve major blood vessels; are generally emergent
or life threatening in nature; commonly require systemic thrombolytic
therapy; are designated as requiring inpatient care under Sec.
419.22(n); can only be reported using a CPT unlisted surgical procedure
code; or are otherwise excluded under Sec. 411.15 (we refer readers to
Sec. 416.166). Procedures that do not meet the criteria set forth in
42 CFR 416.166 would not be added to the list of ASC covered surgical
procedures.
Although the commenters asserted that some of the procedures they
were requesting for addition to the list are as safe as procedures
already on the list, based on our review of the procedures listed in
Table 44, we found that all of the remaining procedures described by
the 52 codes either would be expected to pose a threat to beneficiary
safety or would require active medical monitoring and care of the
beneficiary at midnight following the procedure. Specifically, we found
that prevailing medical practice called for inpatient hospital stays
for beneficiaries undergoing many of the procedures and that some of
the procedures directly involve major blood vessels and/or may result
in extensive blood loss. Therefore, we are not including any of the
procedures suggested by commenters on the list of ASC covered surgical
procedures for CY 2015.
Regarding the comment about unlisted codes being noncovered in the
ASC, we have a longstanding ASC policy that all unlisted codes are
noncovered in the ASC because we are unable to determine (due to the
nondescript nature of unlisted codes) if a procedure that would be
reported with an unlisted code would not be expected to pose a
significant risk to beneficiary safety when performed in an ASC, and
would not be expected to require active medical monitoring and care of
the beneficiary at midnight following the procedure. We continue to
believe it would not be appropriate to provide ASC payment for unlisted
CPT codes in the surgical range, even if payment may be provided under
the OPPS. ASCs do not possess the breadth and intensity of services
that hospitals must maintain to care for patients of higher acuity, and
we would have no way of knowing what specific procedures reported by
unlisted CPT codes were provided to patients in order to ensure that
they are safe for ASC performance.
After consideration of the public comments we received, we are
finalizing the addition of the 10 HCPCS codes that we proposed to the
list of ASC covered surgical procedures for CY 2015. As addressed in
section XII.C.1.e. of this final rule with comment period, we also are
adding CPT code 63044 (Laminotomy (hemilaminectomy), with decompression
of nerve root(s), including partial facetectomy, foraminotomy and/or
excision of herniated intervertebral disc, reexploration, single
interspace; each additional lumbar interspace) to the ASC list of
covered surgical procedures for CY 2015. This code was removed from the
OPPS inpatient-only list in response to comments and, after review of
the procedure described by this code, we believe that the procedure
could be safely performed in an ASC and would not require active
medical monitoring and care of the beneficiary at midnight following
the procedure. The procedure codes, descriptors, and payment indicators
for these 11 new covered surgical procedures for CY 2015 are displayed
in Table 45 below.

Table 45--Additions to the List of ASC Covered Surgical Procedures for
CY 2015
------------------------------------------------------------------------
Final CY 2015
CY 2015 HCPCS code CY 2015 long descriptor ASC payment
indicator
------------------------------------------------------------------------
22551...................... Arthrodesis, anterior J8
interbody, including disc
space preparation,
discectomy,
osteophytectomy and
decompression of spinal
cord and/or nerve roots;
cervical below c2.
22554...................... Arthrodesis, anterior J8
interbody technique,
including minimal
discectomy to prepare
interspace (other than
for decompression);
cervical below c2.
22612...................... Arthrodesis, posterior or J8
posterolateral technique,
single level; lumbar
(with lateral transverse
technique, when
performed).
22614...................... Arthrodesis, posterior or N1
posterolateral technique,
single level; each
additional vertebral
segment (list separately
in addition to code for
primary procedure).
63020...................... Laminotomy G2
(hemilaminectomy), with
decompression of nerve
root(s), including
partial facetectomy,
foraminotomy and/or
excision of herniated
intervertebral disc; 1
interspace, cervical.
63030...................... Laminotomy G2
(hemilaminectomy), with
decompression of nerve
root(s), including
partial facetectomy,
foraminotomy and/or
excision of herniated
intervertebral disc; 1
interspace, lumbar.
63042...................... Laminotomy G2
(hemilaminectomy), with
decompression of nerve
root(s), including
partial facetectomy,
foraminotomy and/or
excision of herniated
intervertebral disc,
reexploration, single
interspace; lumbar.
63044...................... Laminotomy N1
(hemilaminectomy), with
decompression of nerve
root(s), including
partial facetectomy,
foraminotomy and/or
excision of herniated
intervertebral disc,
reexploration, single
interspace; each
additional lumbar
interspace (list
separately in addition to
code for primary
procedure).
63045...................... Laminectomy, facetectomy G2
and foraminotomy
(unilateral or bilateral
with decompression of
spinal cord, cauda equina
and/or nerve root[s],
[eg, spinal or lateral
recess stenosis]), single
vertebral segment;
cervical.
63047...................... Laminectomy, facetectomy G2
and foraminotomy
(unilateral or bilateral
with decompression of
spinal cord, cauda equina
and/or nerve root[s],
[eg, spinal or lateral
recess stenosis]), single
vertebral segment; lumbar.

[[Page 66921]]

63056...................... Transpedicular approach G2
with decompression of
spinal cord, equina and/
or nerve root(s) (eg,
herniated intervertebral
disc), single segment;
lumbar (including
transfacet, or lateral
extraforaminal approach)
(eg, far lateral
herniated intervertebral
disc).
------------------------------------------------------------------------

b. Covered Surgical Procedures Designated as Office-Based
(1) Background
In the August 2, 2007 ASC final rule, we finalized our policy to
designate as ``office-based'' those procedures that are added to the
ASC list of covered surgical procedures in CY 2008 or later years that
we determine are performed predominantly (more than 50 percent of the
time) in physicians' offices based on consideration of the most recent
available volume and utilization data for each individual procedure
code and/or, if appropriate, the clinical characteristics, utilization,
and volume of related codes. In that rule, we also finalized our policy
to exempt all procedures on the CY 2007 ASC list from application of
the office-based classification (72 FR 42512). The procedures that were
added to the ASC list of covered surgical procedures beginning in CY
2008 that we determined were office-based were identified in Addendum
AA to that rule by payment indicator ``P2'' (Office-based surgical
procedure added to ASC list in CY 2008 or later with MPFS nonfacility
PE RVUs; payment based on OPPS relative payment weight); ``P3''
(Office-based surgical procedures added to ASC list in CY 2008 or later
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on
OPPS relative payment weight), depending on whether we estimated the
procedure would be paid according to the standard ASC payment
methodology based on its OPPS relative payment weight or at the MPFS
nonfacility PE RVU-based amount.
Consistent with our final policy to annually review and update the
list of surgical procedures eligible for payment in ASCs, each year we
identify surgical procedures as either temporarily office-based (these
are new procedure codes with little or no utilization data that our
medical advisors have determined are clinically similar to other
procedures that are permanently office-based), permanently office-
based, or nonoffice-based, after taking into account updated volume and
utilization data.
(2) Changes for CY 2015 to Covered Surgical Procedures Designated as
Office-Based
In developing the CY 2015 OPPS/ASC proposed rule, we followed our
policy to annually review and update the surgical procedures for which
ASC payment is made and to identify new procedures that may be
appropriate for ASC payment, including their potential designation as
office-based. We reviewed CY 2013 volume and utilization data and the
clinical characteristics for all surgical procedures that are assigned
payment indicator ``G2'' (Non-office-based surgical procedure added in
CY 2008 or later; payment based on OPPS relative payment weight) in CY
2014, as well as for those procedures assigned one of the temporary
office-based payment indicators, specifically ``P2,'' ``P3,'' or ``R2''
in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75071
through 75075).
Our review of the CY 2013 volume and utilization data resulted in
our identification of two covered surgical procedures, CPT codes 10022
and 19296 that we believe meet the criteria for designation as office-
based. The data indicate these procedures are performed more than 50
percent of the time in physicians' offices and our medical advisors
believe the services are of a level of complexity consistent with other
procedures performed routinely in physicians' offices. The two CPT
codes we proposed to permanently designate as office-based were listed
in Table 49 of the CY 2015 OPPS/ASC proposed rule (79 FR 41019).
We invited public comment on this proposal.
Comment: One commenter stated that CPT code 10022 was performed
only 51 percent of the time in the office setting and recommended that
it temporarily be designated as office-based rather than permanently.
Response: As stated in the proposed rule and above, we designate
new procedure codes as temporarily office-based in situations where we
have little to no utilization data on these procedures and our Medical
Officers have determined these procedures are clinically similar to
other procedures that are permanently office-based. For CPT code 10022,
we have enough volume and utilization data from CY 2013 to indicate
that CPT code 10022 is performed more than 50 percent of the time in
physicians' offices and our medical advisors believe this service is of
a level of complexity consistent with other procedures performed
routinely in physicians' offices. Therefore, we believe that this code
should be designated as permanently office-based.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to designate the
procedures described by CPT codes 10022 and 19296 as permanently
office-based for CY 2015, as set forth in Table 46 below.

Table 46--ASC Covered Surgical Procedures Newly Designated as Permanently Office-Based for CY 2015
----------------------------------------------------------------------------------------------------------------
Proposed CY
CY 2014 ASC 2015 ASC Final CY 2015
CY 2015 CPT code CY 2015 long descriptor payment payment ASC payment
indicator indicator* indicator*
----------------------------------------------------------------------------------------------------------------
10022....................... Fine needle aspiration; with G2 P3 P3
imaging guidance.

[[Page 66922]]

19296....................... Placement of radiotherapy G2 P2 P2
afterloading expandable
catheter (single or
multichannel) into the breast
for interstitial radioelement
application following partial
mastectomy, includes imaging
guidance; on date separate
from partial mastectomy.
----------------------------------------------------------------------------------------------------------------
* Final payment indicators are based on a comparison of the final rates according to the ASC standard
ratesetting methodology and the MPFS final rates effective January 1, 2015. We note that these payment
indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015
under current law. Updates to the ASC rates and payment indicators effective April l, 2015 will be included in
the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer
readers to the CY 2015 MPFS final rule with comment period.

We also reviewed CY 2013 volume and utilization data and other
information for the 8 procedures finalized for temporary office-based
status in Tables 52 and 53 in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75074 through 75075). Among these eight
procedures, there were very few claims data or no claims data for six
procedures: CPT code 0099T (Implantation of intrastromal corneal ring
segments); CPT code 0299T (Extracorporeal shock wave for integumentary
wound healing, high energy, including topical application and dressing
care; initial wound); CPT code C9800 (Dermal injection procedure(s) for
facial lipodystrophy syndrome (LDS) and provision of Radiesse or
Sculptra dermal filler, including all items and supplies); CPT code
10030 (Image-guided fluid collection drainage by catheter (eg, abscess,
hematoma, seroma, lymphocele, cyst), soft tissue (eg, extremity,
abdominal wall, neck), percutaneous); CPT code 64617 (Chemodenervation
of muscle(s); larynx, unilateral, percutaneous (eg, for spasmodic
dysphonia), includes guidance by needle electromyography, when
performed); and CPT code 67229 (Treatment of extensive or progressive
retinopathy, one or more sessions; preterm infant (less than 37 weeks
gestation at birth), performed from birth up to 1 year of age (eg,
retinopathy of prematurity), photocoagulation or cryotherapy).
Consequently, we proposed to maintain their temporary office-based
designations for CY 2015.
We proposed that one procedure that has a temporary office-based
designation for CY 2014, CPT code 0226T (Anoscopy, high resolution
(HRA) (with magnification and chemical agent enhancement); diagnostic,
including collection of specimen(s) by brushing or washing when
performed), be packaged under the OPPS for CY 2015. Our policy is to
package covered surgical procedures under the ASC payment system if
these procedures are packaged under the OPPS. Consequently, we proposed
to package, and assign payment indicator ``N1'' to, this covered
surgical procedure code in CY 2015.
HCPCS code 0124T (Conjunctival incision with posterior extrascleral
placement of pharmacological agent (does not include supply of
medication)) was finalized for temporary office-based status in the CY
2014 OPPS/ASC final rule with comment period. However, this code was
deleted effective December 31, 2013.
The proposed CY 2015 payment indicator designations for the 7
remaining procedures that were temporarily designated as office-based
in CY 2014 were displayed in Table 50 of the CY 2015 OPPS/ASC proposed
rule (79 FR 41019). The procedures for which the proposed office-based
designations for CY 2015 are temporary also were indicated by asterisks
in Addendum AA to the proposed rule (which is available via the
Internet on the CMS Web site).
We invited public comment on these proposals.
Comment: One commenter stated that because CPT code 10030 is new
for CY 2014, it should not be designated as temporarily office-based at
this time.
Response: As stated in the 2014 OPPS/ASC final rule with comment
period (78 FR 75074 through 75075), after reviewing the clinical
characteristics, utilization, and volume of related codes, we
determined that the procedures described by CPT code 10030 would be
predominantly performed in physicians' offices. However, because we had
no utilization data for CPT code 10030, we made the office-based
designation temporary rather than permanent for CY 2014. As discussed
above, we continue to have no claims data for this procedure so we are
continuing to designate the procedures described by CPT code 10030 as
temporarily office-based. We will reevaluate CPT code 10030 in next
year's rulemaking.
After consideration of the public comment we received, for CY 2015
we are finalizing our proposal without modification to designate six
procedures listed in Table 47 below as temporarily office-based. HCPCS
code 0226T (Anoscopy, high resolution (HRA) (with magnification and
chemical agent enhancement); diagnostic, including collection of
specimen(s) by brushing or washing when performed) was included in our
proposal for CY 2015. However, this code will be deleted effective
December 31, 2014.

Table 47--CY 2015 Payment Indicators for ASC Covered Surgical Procedures Designated as Temporarily Office-Based
in the CY 2014 OPPS/ASC Final Rule With Comment Period
----------------------------------------------------------------------------------------------------------------
CY 2014 ASC CY 2015 ASC
CY 2015 CPT code CY 2015 long descriptor payment payment
indicator indicator **
----------------------------------------------------------------------------------------------------------------
0099T................................. Implantation of intrastromal corneal R2* R2*
ring segments.
0226T................................. Anoscopy, high resolution (HRA) (with R2* D5
magnification and chemical agent
enhancement); diagnostic, including
collection of specimen(s) by brushing
or washing when performed.

[[Page 66923]]

0299T................................. Extracorporeal shock wave for R2* R2*
integumentary wound healing, high
energy, including topical application
and dressing care; initial wound.
C9800................................. Dermal injection procedure(s) for R2* R2*
facial lipodystrophy syndrome (LDS)
and provision of Radiesse or Sculptra
dermal filler, including all items
and supplies.
10030................................. Image-guided fluid collection drainage P2* P2*
by catheter (eg, abscess, hematoma,
seroma, lymphocele, cyst), soft
tissue (eg, extremity abdominal wall,
neck), percutaneous.
64617................................. Chemodenervation of muscle(s); larynx, P3* P3*
unilateral, percutaneous (eg, for
spasmodic dysphonia), includes
guidance by needle electromyography,
when performed.
67229................................. Treatment of extensive or progressive R2* R2*
retinopathy, one or more sessions;
preterm infant (less than 37 weeks
gestation at birth), performed from
birth up to 1 year of age (eg,
retinopathy of prematurity),
photocoagulation or cryotherapy.
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Final payment indicators are based on a comparison of the final rates according to the ASC standard
ratesetting methodology and the MPFS final rates effective January 1, 2015. We note that these payment
indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015
under current law. Updates to the ASC rates and payment indicators effective April 1, 2015 will be included in
the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer
readers to the CY 2015 MPFS final rule with comment period.

c. ASC Covered Surgical Procedures To Be Designated as Device-Intensive
(1) Background
As discussed in the August 2, 2007 final rule (72 FR 42503 through
42508), we adopted a modified payment methodology for calculating the
ASC payment rates for covered surgical procedures that are assigned to
the subset of OPPS device-dependent APCs with a device offset
percentage greater than 50 percent of the APC cost under the OPPS, in
order to ensure that payment for the procedure is adequate to provide
packaged payment for the high-cost implantable devices used in those
procedures.
(2) Changes to List of ASC Covered Surgical Procedures Designated as
Device-Intensive for CY 2015
As we discuss in section II.A.2.e of the CY 2015 OPPS/ASC proposed
rule (79 FR 40940 through 40953), for CY 2015, we proposed to implement
28 comprehensive APCs created to replace the current device-dependent
APCs and a few nondevice-dependent APCs under the OPPS, which would
eliminate all device-dependent APCs for CY 2015. We proposed to define
a comprehensive APC as a classification for the provision of a primary
service and all adjunctive services provided to support the delivery of
the primary service. Because a comprehensive APC would treat all
individually reported codes as representing components of the
comprehensive service, our OPPS proposal is to make a single
prospective payment based on the cost of all individually reported
codes that represent the provision of a primary service and all
adjunctive services provided to support the delivery of the primary
service.
Unlike the OPPS claims processing system that can be configured to
make a single payment for the encounter-based comprehensive service
whenever a HCPCS code that is assigned to a comprehensive APC appears
on the claim, the ASC claims processing system does not allow for this
type of conditional packaging. Therefore, we proposed that all
separately paid covered ancillary services that are provided integral
to covered surgical procedures that would map to comprehensive APCs
would continue to be separately paid under the ASC payment system
instead of being packaged into the payment for the comprehensive APC as
under the OPPS. The OPPS relative payment weights for the comprehensive
APCs would include costs for ancillary services; therefore, we could
duplicate payment if we based the ASC payment rate on the OPPS relative
payment weights for the comprehensive APCs. Therefore, to avoid this
issue, we proposed that the ASC payment rates for these comprehensive
APCs would be based on the CY 2015 OPPS relative payments weights that
have been calculated using the standard APC ratesetting methodology for
the primary service instead of the relative payment weights that are
based on the comprehensive bundled service. For the same reason, under
the ASC payment system, we also proposed to use the standard OPPS APC
ratesetting methodology instead of the comprehensive methodology to
calculate the device offset percentage for comprehensive APCs for
purposes of identifying device-intensive procedures and to calculate
payment rates for device-intensive procedures assigned to comprehensive
APCs.
Payment rates for ASC device-intensive procedures are based on a
modified payment methodology to ensure that payment for the procedure
is adequate to provide packaged payment for the high-cost implantable
devices used in those procedures. Device-intensive procedures are
currently defined as those procedures that are assigned to device-
dependent APCs with a device offset percentage greater than 50 percent
of the APC cost under the OPPS. Because we proposed to implement the
comprehensive APC policy and, therefore, eliminate device-dependent
APCs under the OPPS in CY 2015, we need to define ASC device-intensive
procedures for CY 2015. We proposed to define ASC device-intensive
procedures as those procedures that are assigned to any APC (not only
an APC formerly designated device-dependent) with a device offset
percentage greater than 40 percent based on the standard OPPS APC
ratesetting methodology. We believe that our proposal to lower the
offset threshold from greater than 50 percent to greater than 40
percent better aligns with the OPPS device credit policy finalized for
CY 2014 (78 FR 75006 and 75007) that applies to procedures with a
significant device offset amount, which is defined as exceeding 40
percent of the APC cost. Because the ASC device-intensive methodology
is applied to procedures with significant device costs, we believe that
the definition of ``significant'' with regard to device-intensive
procedures should match that used under the OPPS to determine
``significant'' device costs for the device credit policy. We

[[Page 66924]]

proposed changes to Sec. 416.171(b)(2) to reflect this proposal.
We also proposed to update the ASC list of covered surgical
procedures that are eligible for payment according to our device-
intensive procedure payment methodology, consistent with our proposed
modified definition of device-intensive procedures, reflecting the
proposed APC assignments of procedures and APC device offset
percentages based on the CY 2013 OPPS claims and cost report data
available for the final rule with comment period.
The ASC covered surgical procedures that we proposed to designate
as device-intensive and that would be subject to the device-intensive
procedure payment methodology for CY 2015 were listed in Table 51 of
the proposed rule (79 FR 41021 through 41023). The CPT code, the CPT
code short descriptor, the proposed CY 2015 ASC payment indicator (PI),
the proposed CY 2015 OPPS APC assignment, the proposed CY 2015 OPPS APC
device offset percentage, and an indication if the full credit/partial
credit (FB/FC) device adjustment policy would apply also were listed in
Table 51. All of these procedures were included in Addendum AA to the
proposed rule (which is available via the Internet on the CMS Web
site).
We invited public comment on these proposals.
Comment: Some commenters supported the proposal to change the
device offset threshold from 50 percent to 40 percent, citing that the
proposal allowed for greater flexibility in allowing clinical
considerations to determine site-of-care decisions and would likely
lead to a migration of services from HOPDs to ASCs. However, some
commenters urged CMS to monitor volume and to explore the implications
of the expansion of this policy. Other commenters requested that CMS
adopt additional changes to the device-intensive policy to encourage
migration of services to ASCs from other settings. Some commenters
recommended that the device offset percentage be lowered to 30 percent.
Some commenters expressed the same views as CMS received in prior
rulemaking--that the ASC device offset percentages should be based on a
percentage of the total unadjusted ASC cost for a service rather than a
percentage of the HOPD, or that the device offset be applied to all
procedures for which CMS can establish a device cost regardless of the
percentage of the total cost that the device represents. These
commenters suggested that these alternatives would result in savings to
the Medicare program. Some commenters also expressed the same views as
CMS received in prior rulemakings--that CMS should not adjust the
device portion of the ASC payment for device-intensive procedures by
the wage index.
Response: In the August 2, 2007 final rule (72 FR 42503 through
42508), we established a modified payment methodology for calculating
ASC payment rates for device-intensive procedures under the ASC payment
system. We defined device-intensive procedures as those procedures that
are assigned to device-dependent APCs under the OPPS with device costs
of greater than 50 percent of the APC cost under the OPPS (that is, the
device offset percentage is greater than 50 percent). In the CY 2015
OPPS/ASC proposed rule (79 FR 41020), we proposed to define ASC device-
intensive procedures as those procedures that are assigned to any APC
with a device offset percentage greater than 40 percent based on the
standard OPPS APC ratesetting methodology. In that proposed rule, we
stated that we believe that lowering the offset threshold from greater
than 50 percent to greater than 40 percent better aligns with the OPPS
device credit policy finalized for CY 2014 (78 FR 75006 through 75007)
that applies to procedures with a significant device offset amount,
which is defined as exceeding 40 percent of the APC cost. Because the
ASC device-intensive methodology is applied to procedures with
significant device costs, we believe that the definition of
``significant'' with regard to device-intensive procedures should match
that used under the OPPS to determine ``significant'' device costs for
the device credit policy. We do not believe that it should be lowered
to 30 percent, because the intent of the policy change is to align
significant device cost percentage in the OPPS with the device-
intensive procedures in the ASC payment system.
We do not agree with the commenters that the device-intensive
methodology should be applied to all procedures where a device offset
could be established. Nor do we agree with the commenters who suggested
using a threshold to determine device-intensive procedures that is
based on the ASC payment rate instead of the OPPS payment rate. Under
42 CFR 416.167 and 416.171, most ASC payment rates are based on the
OPPS relative payment weights, and our ASC policy is to be consistent
with the OPPS. ``Device intensive'' identifies those procedures
assigned to APCs with significant device costs and applies to services
that are performed both in the HOPD and ASC. Procedures are not device
intensive in one setting and not in another--they either have
significant associated device costs or they do not, based on the
purpose of the surgical procedure. Accordingly, we believe that the
device-intensive methodology for ASCs should align with the device-
intensive policies for OPPS.
We also continue to believe it would not be appropriate to vary the
portion of the national payment that is wage-adjusted for different
services, such as applying the wage index only to the service portion
of the ASC payment for device-intensive procedures, as the commenters
requested. As indicated above, our ASC policy is to be consistent with
the OPPS because ASC payment rates are based on the OPPS relative
payment weights. Therefore, we apply the ASC geographic wage adjustment
to the entire ASC payment rate for device-intensive procedures. We also
refer readers to our responses to similar comments in the CY 2009, CY
2010, CY 2011, CY 2012, CY 2013, and CY 2014 OPPS/ASC final rules with
comment period (73 FR 68735; 74 FR 60608 through 60609; 75 FR 72039; 76
FR 74409; 77 FR 68449; and 78 FR 75076, respectively). We respond to
the commenters' request to monitor volume and to explore the
implications of this policy in the next response.
Comment: Some commenters supported the lowering of the device
offset percentage to 40 percent, but stated that this policy, if
finalized, would make device-intensive procedures more attractive to
ASCs. Commenters suggested that CMS monitor its data to determine
whether the policy results in significant increases in volume of these
services and that CMS explore the implications of further expanding the
list of device-intensive procedures.
Response: We will continue to monitor our data to ensure that our
payment policies do not have the unintended consequence of
inappropriately encouraging shifts in site of service.
Comment: One commenter expressed appreciation that CMS designated
HCPCS code 0334T (Sacroiliac joint stabilization for arthrodesis,
percutaneous or minimally invasive (indirect visualization), includes
obtaining and applying autograft or allograft (structural or
morselized), when performed, includes image guidance when performed
(eg, CT or fluoroscopic)) as device-intensive, but expressed concern
that the device offset percentage was too low, thereby resulting in an
undervalued ASC payment. The commenter stated that

[[Page 66925]]

Medicare patients otherwise eligible for this treatment in the ASC
would be denied access due to the low ASC payment. The commenter
suggested that CMS consider HCPCS-specific device offsets rather than
at the APC level. Alternatively, the commenter suggested that CMS add
``device offset similarity'' (that is, identifying and grouping
procedure codes based on the similarity of their respective device
offsets) as an additional criterion (in addition to clinical and cost
similarity) in APC assignment. Another commenter stated that ASC
payment for transprostatic implant procedures (as described by HCPCS
codes C9739 and C9740) was too low because these procedures were not
designated as device-intensive in the ASC setting, and it is unlikely
that any transprostatic implant procedures would be conducted in the
ASC setting for a Medicare patient.
Response: In the August 2, 2007 ASC final rule (72 FR 42504), we
finalized our policy to apply the OPPS device offset percentage to the
OPPS national unadjusted payment to acquire the device cost included in
the OPPS payment rate for a device-intensive ASC covered surgical
procedure, which we then set as equal to the device portion of the
national unadjusted ASC payment rate for the procedure. The device
offset percentage represents a weighted average for all of the
procedures assigned to the APC. It is not uncommon that, within an APC,
there will be a range of device costs associated with the various
procedures assigned to the APC. The device offset for the APC
represents a weighted average for all of the procedures assigned to the
APC, and the device offset percentage is our best estimate of the
amount of device cost included in an APC payment under the OPPS.
We did not propose calculating offsets at the HCPCS level or
introducing a new criterion for APC code assignments. These would be
significant changes to our longstanding policy of calculating offsets
at the APC level, discussed above, and we believe our current policy
allows for appropriate payment. Moreover, under 42 CFR 416.167 and
416.171, ASC covered surgical procedures are classified using OPPS APC
groups described in 42 CFR 419.31. Under our policy, we cannot assign a
CPT code to a different APC for the ASC setting.
We believe that APC 0425 is an appropriate APC assignment for CPT
code 0334T based on clinical and resource similarity to other
procedures assigned to APC 0425 and have calculated the device offset
for this procedure according to our longstanding policy discussed
above. We believe that payment for this code is appropriate.
With respect to the comment about ASC payment for transprostatic
implant procedures being too low because the procedures do not
currently qualify for a device-intensive offset adjustment, as
addressed in section III.C.3.e. of this final rule with comment period,
for CY 2015, we are maintaining our APC assignments for HCPCS codes
C9739 and C9740 to APCs 0162 and 1564, respectively. As discussed in
section III.C.3.e. of this final rule with comment period, 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. We will reevaluate whether these codes qualify for a device-
intensive adjustment based on their APC assignments for CY 2016 in next
year's rulemaking cycle.
As indicated in section II.A.2.e. of this final rule with comment
period, after consideration of the public comments we received
regarding the proposed OPPS comprehensive APC policy, we are finalizing
our proposal to implement the comprehensive APC policy for CY 2015,
with some minor modifications. With respect to modifications to the
comprehensive APC policy that affect the ASC payment policy, we note
that the finalized comprehensive APC policy includes all device-
dependent APCs, except for APCs 0427, 0622, and 0652, which will become
standard APCs because we are discontinuing the device-dependent APC
policy. This modification does not affect any of our proposals with
respect to the finalized comprehensive APCs or the definition of
device-intensive.
Given the final OPPS comprehensive APC policy and after
consideration of the public comments we received, we are finalizing our
proposal that all separately paid covered ancillary services that are
provided integral to covered surgical procedures that would map to
comprehensive APCs will continue to be separately paid under the ASC
payment system instead of being packaged into the payment for the
comprehensive APC as under the OPPS. Further, the ASC payment rates for
these comprehensive APCs will be based on the CY 2015 OPPS relative
payments weights that have been calculated using the standard APC
ratesetting methodology for the primary service (instead of the
relative payment weights that are based on the comprehensive bundled
service) and use the standard OPPS APC ratesetting methodology instead
of the comprehensive methodology to calculate the device offset
percentage for comprehensive APCs for purposes of identifying device-
intensive procedures and to calculate payment rates for device-
intensive procedures assigned to comprehensive APCs. We also will
define ASC device-intensive procedures as those procedures that are
assigned to any APC with a device offset percentage greater than 40
percent based on the standard OPPS APC ratesetting methodology and
codify this policy in the regulations at 42 CFR 416.171(b)(2). Finally,
we will update the ASC list of covered surgical procedures that are
eligible for payment according to our device-intensive procedure
payment methodology, consistent with our final modified definition of
device-intensive procedures, reflecting the final APC assignments of
procedures and APC device offset percentages based on the CY 2013 OPPS
claims and cost report data available for this final rule with comment
period.
We are designating the ASC covered surgical procedures displayed in
Table 48 below as device-intensive and subject to the device-intensive
procedure payment methodology for CY 2015. The CPT code, the CPT code
short descriptor, the final CY 2015 ASC payment indicator (PI), the
final CY 2014 OPPS APC assignment, the final CY 2015 OPPS APC device
offset percentage, and an indication if the full credit/partial credit
(FB/FC) device adjustment policy will apply, also are listed in Table
48 below. All of these procedures are included in Addendum AA to this
final rule with comment period (which is available via the Internet on
the CMS Web site).
d. Adjustment to ASC Payments for No Cost/Full Credit and Partial
Credit Devices
Our ASC policy with regard to payment for costly devices implanted
in ASCs at no cost/full credit or partial credit as set forth in Sec.
416.179 is consistent with the OPPS policy that was in effect until CY
2014. The established ASC policy reduces payment to ASCs when a
specified device is furnished without cost or with full credit or
partial credit for the cost of the device for those ASC covered
surgical procedures that are assigned to APCs under the OPPS to which
this policy applies. We refer readers to the CY 2009 OPPS/ASC final
rule with comment period for a full discussion of the ASC payment
adjustment policy for no cost/full credit and partial credit devices
(73 FR 68742 through 68744).
As discussed in section IV.B. of the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75005 through 75006), we finalized our
proposal to

[[Page 66926]]

modify our former policy of reducing OPPS payment for specified APCs
when a hospital furnishes a specified device without cost or with a
full or partial credit. Formerly, under the OPPS, our policy was to
reduce OPPS payment by 100 percent of the device offset amount 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 (but less
than 100 percent) of the cost for the specified device. For CY 2014, we
finalized our proposal to reduce OPPS payment for applicable APCs by
the full or partial credit a provider receives for a replaced device,
capped at the device offset amount.
Although we finalized our proposal to modify the policy of reducing
payments when a hospital furnishes a specified device without cost or
with full or partial credit under the OPPS, in that final rule with
comment period (78 FR 75076 through 75080), we finalized our proposal
for CY 2014 to maintain our ASC policy for reducing payments to ASCs
for specified device-intensive procedures when the ASC furnishes a
device without cost or with full or partial credit. Unlike the OPPS,
there is currently no mechanism within the ASC claims processing system
for ASCs to submit to CMS the actual amount received when furnishing a
specified device at full or partial credit. Therefore, under the ASC
payment system, we finalized our proposal for CY 2014 to continue to
reduce ASC payments by 100 percent or 50 percent of the device offset
amount when an ASC furnishes a device without cost or with full or
partial credit, respectively.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41021 through 41023),
we proposed to update the list of ASC covered device-intensive
procedures, based on the revised device-intensive definition proposed
above, that would be subject to the no cost/full credit and partial
credit device adjustment policy for CY 2015. Table 51 of the proposed
rule (79 FR 41021 through 41023) displays the ASC covered device-
intensive procedures that we proposed would be subject to the no cost/
full credit or partial credit device adjustment policy for CY 2015.
Specifically, when a procedure that is listed in Table 51 is subject to
the no cost/full credit or partial credit device adjustment policy and
is performed to implant a device that is furnished at no cost or with
full credit from the manufacturer, the ASC would append the HCPCS
``FB'' modifier on the line with the procedure to implant the device.
The contractor would reduce payment to the ASC by the device offset
amount that we estimate represents the cost of the device when the
necessary device is furnished without cost to the ASC or with full
credit. We continue to believe that the reduction of ASC payment in
these circumstances is necessary to pay appropriately for the covered
surgical procedure being furnished by the ASC.
For partial credit, we proposed to reduce the payment for
implantation procedures listed in Table 51 of the CY 2015 OPPS/ASC
proposed rule (79 FR 41021 through 41023) that are subject to the no
cost/full credit or partial credit device adjustment policy by one-half
of the device offset amount that would be applied if a device was
provided at no cost or with full credit, if the credit to the ASC is 50
percent or more (but less than 100 percent) of the cost of the new
device. The ASC would append the HCPCS ``FC'' modifier to the HCPCS
code for a surgical procedure listed in Table 51 that is subject to the
no cost/full credit or partial credit device adjustment policy, when
the facility receives a partial credit of 50 percent or more (but less
than 100 percent) of the cost of a device. In order to report that they
received a partial credit of 50 percent or more (but less than 100
percent) of the cost of a new device, ASCs would have the option of
either: (1) Submitting the claim for the device replacement procedure
to their Medicare contractor after the procedure's performance but
prior to manufacturer acknowledgment of credit for the device, and
subsequently contacting the contractor regarding a claim adjustment
once the credit determination is made; or (2) holding the claim for the
device implantation procedure until a determination is made by the
manufacturer on the partial credit and submitting the claim with the
``FC'' modifier appended to the implantation procedure HCPCS code if
the partial credit is 50 percent or more (but less than 100 percent) of
the cost of the replacement device. Beneficiary coinsurance would
continue to be based on the reduced payment amount.
We currently apply the ``FB/FC'' modifier policy to device-
intensive procedures that involve devices that would be amenable to
removal and replacement in a device recall or warranty situation. We
proposed to apply the ``FB/FC'' modifier policy to all device-intensive
procedures beginning in CY 2015 because, in addition to receiving
devices at no cost/full credit or partial credit due to a device recall
or warranty situation, ASCs also may receive devices at no cost/full
credit or partial credit due to being part of an investigational device
trial. In order to ensure that our policy covers any situation
involving a device-intensive procedure where an ASC may receive a
device at no cost/full credit or partial credit, we proposed to apply
our FB/FC policy to all device-intensive procedures.
We invited public comment on these proposals.
We did not receive any comments on this proposal. Therefore, we are
finalizing our proposals without modification. Specifically, we will
apply our FB/FC policy to all device-intensive procedures beginning in
CY 2015. The device-intensive procedures for CY 2015 are listed in
Table 48 below. For CY 2015, we will reduce the payment for the
procedures listed in Table 48 below by the full device offset amount if
a device is furnished without cost or with full credit. ASCs must
append the HCPCS modifier ``FB'' to the HCPCS code for a surgical
procedure listed in Table 48 below when the device is furnished without
cost or with full credit. In addition, for CY 2015, we will reduce the
payment for the procedures listed in Table 48 below by one-half of the
device offset amount if a device is provided with partial credit, if
the credit to the ASC is 50 percent or more (but less than 100 percent)
of the device cost. The ASC must append the HCPCS ``FC'' modifier to
the HCPCS code for a surgical procedure listed in Table 48 below when
the facility receives a partial credit of 50 percent or more (but less
than 100 percent) of the cost of a device.

[[Page 66927]]

Table 48--ASC Covered Surgical Procedures Designated as Device-Intensive for CY 2015, Including ASC Covered
Surgical Procedures for Which the No Cost/Full Credit or Partial Credit Device Adjustment Policy Will Apply
----------------------------------------------------------------------------------------------------------------
Final CY 2015
HCPCS code Short descriptor Final CY 2015 Final CY 2015 device offset Final FB/FC policy
ASC PI OPPS APC percentage will apply
----------------------------------------------------------------------------------------------------------------
19298.................. Place breast rad J8 0648 0.4408 Yes.
tube/caths.
19325.................. Enlarge breast J8 0648 0.4408 Yes.
with implant.
19342.................. Delayed breast J8 0648 0.4408 Yes.
prosthesis.
19357.................. Breast J8 0648 0.4408 Yes.
reconstruction.
22551.................. Neck spine J8 0425 0.5565 Yes.
fuse&remov bel c2.
22554.................. Neck spine fusion. J8 0425 0.5565 Yes.
22612.................. Lumbar spine J8 0425 0.5565 Yes.
fusion.
23515.................. Treat clavicle J8 0064 0.4319 Yes.
fracture.
23585.................. Treat scapula J8 0064 0.4319 Yes.
fracture.
23615.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
23616.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
23630.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
23670.................. Treat dislocation/ J8 0064 0.4319 Yes.
fracture.
24361.................. Reconstruct elbow J8 0425 0.5565 Yes.
joint.
24363.................. Replace elbow J8 0425 0.5565 Yes.
joint.
24365.................. Reconstruct head J8 0425 0.5565 Yes.
of radius.
24366.................. Reconstruct head J8 0425 0.5565 Yes.
of radius.
24370.................. Revise reconst J8 0425 0.5565 Yes.
elbow joint.
24371.................. Revise reconst J8 0425 0.5565 Yes.
elbow joint.
24435.................. Repair humerus J8 0425 0.5565 Yes.
with graft.
24498.................. Reinforce humerus. J8 0425 0.5565 Yes.
24515.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
24516.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
24545.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
24546.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
24575.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
24579.................. Treat humerus J8 0064 0.4319 Yes.
fracture.
24586.................. Treat elbow J8 0064 0.4319 Yes.
fracture.
24587.................. Treat elbow J8 0064 0.4319 Yes.
fracture.
24615.................. Treat elbow J8 0064 0.4319 Yes.
dislocation.
24635.................. Treat elbow J8 0064 0.4319 Yes.
fracture.
24666.................. Treat radius J8 0064 0.4319 Yes.
fracture.
25441.................. Reconstruct wrist J8 0425 0.5565 Yes.
joint.
25442.................. Reconstruct wrist J8 0425 0.5565 Yes.
joint.
25444.................. Reconstruct wrist J8 0425 0.5565 Yes.
joint.
25446.................. Wrist replacement. J8 0425 0.5565 Yes.
25574.................. Treat fracture J8 0064 0.4319 Yes.
radius & ulna.
25575.................. Treat fracture J8 0064 0.4319 Yes.
radius/ulna.
25607.................. Treat fx rad extra- J8 0064 0.4319 Yes.
articul.
25608.................. Treat fx rad intra- J8 0064 0.4319 Yes.
articul.
25609.................. Treat fx radial 3+ J8 0064 0.4319 Yes.
frag.
26686.................. Treat hand J8 0064 0.4319 Yes.
dislocation.
27279.................. Arthrodesis J8 0425 0.5565 Yes.
sacroiliac joint.
27415.................. Osteochondral knee J8 0425 0.5565 Yes.
allograft.
27428.................. Reconstruction J8 0425 0.5565 Yes.
knee.
27438.................. Revise kneecap J8 0425 0.5565 Yes.
with implant.
27440.................. Revision of knee J8 0425 0.5565 Yes.
joint.
27442.................. Revision of knee J8 0425 0.5565 Yes.
joint.
27443.................. Revision of knee J8 0425 0.5565 Yes.
joint.
27446.................. Revision of knee J8 0425 0.5565 Yes.
joint.
27745.................. Reinforce tibia... J8 0425 0.5565 Yes.
27759.................. Treatment of tibia J8 0064 0.4319 Yes.
fracture.
27823.................. Treatment of ankle J8 0064 0.4319 Yes.
fracture.
27827.................. Treat lower leg J8 0064 0.4319 Yes.
fracture.
27828.................. Treat lower leg J8 0064 0.4319 Yes.
fracture.
28415.................. Treat heel J8 0064 0.4319 Yes.
fracture.
28715.................. Fusion of foot J8 0425 0.5565 Yes.
bones.
33206.................. Insert heart pm J8 0089 0.6972 Yes.
atrial.
33207.................. Insert heart pm J8 0089 0.6972 Yes.
ventricular.
33208.................. Insrt heart pm J8 0089 0.6972 Yes.
atrial & vent.
33210.................. Insert electrd/pm J8 0090 0.6858 Yes.
cath sngl.
33211.................. Insert card J8 0090 0.6858 Yes.
electrodes dual.
33212.................. Insert pulse gen J8 0090 0.6858 Yes.
sngl lead.
33213.................. Insert pulse gen J8 0089 0.6972 Yes.
dual leads.
33214.................. Upgrade of J8 0089 0.6972 Yes.
pacemaker system.
33216.................. Insert 1 electrode J8 0090 0.6858 Yes.
pm-defib.
33217.................. Insert 2 electrode J8 0090 0.6858 Yes.
pm-defib.
33221.................. Insert pulse gen J8 0655 0.7495 Yes.
mult leads.

[[Page 66928]]

33224.................. Insert pacing lead J8 0089 0.6972 Yes.
& connect.
33227.................. Remove&replace pm J8 0090 0.6858 Yes.
gen singl.
33228.................. Remv&replc pm gen J8 0089 0.6972 Yes.
dual lead.
33229.................. Remv&replc pm gen J8 0655 0.7495 Yes.
mult leads.
33230.................. Insrt pulse gen w/ J8 0107 0.7851 Yes.
dual leads.
33231.................. Insrt pulse gen w/ J8 0108 0.8114 Yes.
mult leads.
33233.................. Removal of pm J8 0090 0.6858 Yes.
generator.
33240.................. Insrt pulse gen w/ J8 0107 0.7851 Yes.
singl lead.
33249.................. Nsert pace-defib w/ J8 0108 0.8114 Yes.
lead.
33262.................. Remv&replc cvd gen J8 0107 0.7851 Yes.
sing lead.
33263.................. Remv&replc cvd gen J8 0107 0.7851 Yes.
dual lead.
33264.................. Remv&replc cvd gen J8 0108 0.8114 Yes.
mult lead.
33270.................. Ins/rep subq J8 0108 0.8114 Yes.
defibrillator.
33271.................. Insj subq impltbl J8 0090 0.6858 Yes.
dfb elctrd.
33282.................. Implant pat-active J8 0090 0.6858 Yes.
ht record.
37221.................. Iliac revasc w/ J8 0229 0.5036 Yes.
stent.
37225.................. Fem/popl revas w/ J8 0229 0.5036 Yes.
ather.
37226.................. Fem/popl revasc w/ J8 0229 0.5036 Yes.
stent.
37227.................. Fem/popl revasc J8 0319 0.5911 Yes.
stnt & ather.
37228.................. Tib/per revasc w/ J8 0229 0.5036 Yes.
tla.
37229.................. Tib/per revasc w/ J8 0319 0.5911 Yes.
ather.
37230.................. Tib/per revasc w/ J8 0319 0.5911 Yes.
stent.
37231.................. Tib/per revasc J8 0319 0.5911 Yes.
stent & ather.
37236.................. Open/perq place J8 0229 0.5036 Yes.
stent 1st.
37238.................. Open/perq place J8 0229 0.5036 Yes.
stent same.
53440.................. Male sling J8 0385 0.5902 Yes.
procedure.
53444.................. Insert tandem cuff J8 0385 0.5902 Yes.
53445.................. Insert uro/ves nck J8 0386 0.6988 Yes.
sphincter.
53447.................. Remove/replace ur J8 0386 0.6988 Yes.
sphincter.
54400.................. Insert semi-rigid J8 0385 0.5902 Yes.
prosthesis.
54401.................. Insert self-contd J8 0386 0.6988 Yes.
prosthesis.
54405.................. Insert multi-comp J8 0386 0.6988 Yes.
penis pros.
54410.................. Remove/replace J8 0386 0.6988 Yes.
penis prosth.
54416.................. Remv/repl penis J8 0386 0.6988 Yes.
contain pros.
55873.................. Cryoablate J8 0385 0.5902 Yes.
prostate.
61885.................. Insrt/redo J8 0039 0.8616 Yes.
neurostim 1 array.
61886.................. Implant neurostim J8 0318 0.8688 Yes.
arrays.
61888.................. Revise/remove J8 0061 0.5625 Yes.
neuroreceiver.
62361.................. Implant spine J8 0227 0.8062 Yes.
infusion pump.
62362.................. Implant spine J8 0227 0.8062 Yes.
infusion pump.
63650.................. Implant J8 0061 0.5625 Yes.
neuroelectrodes.
63655.................. Implant J8 0039 0.8616 Yes.
neuroelectrodes.
63663.................. Revise spine eltrd J8 0061 0.5625 Yes.
perq aray.
63664.................. Revise spine eltrd J8 0061 0.5625 Yes.
plate.
63685.................. Insrt/redo spine n J8 0318 0.8688 Yes.
generator.
64553.................. Implant J8 0061 0.5625 Yes.
neuroelectrodes.
64555.................. Implant J8 0061 0.5625 Yes.
neuroelectrodes.
64561.................. Implant J8 0061 0.5625 Yes.
neuroelectrodes.
64565.................. Implant J8 0061 0.5625 Yes.
neuroelectrodes.
64568.................. Inc for vagus n J8 0318 0.8688 Yes.
elect impl.
64569.................. Revise/repl vagus J8 0061 0.5625 Yes.
n eltrd.
64575.................. Implant J8 0061 0.5625 Yes.
neuroelectrodes.
64580.................. Implant J8 0039 0.8616 Yes.
neuroelectrodes.
64581.................. Implant J8 0061 0.5625 Yes.
neuroelectrodes.
64590.................. Insrt/redo pn/ J8 0039 0.8616 Yes.
gastr stimul.
65770.................. Revise cornea with J8 0293 0.6611 Yes.
implant.
69714.................. Implant temple J8 0425 0.5565 Yes.
bone w/stimul.
69715.................. Temple bne implnt J8 0425 0.5565 Yes.
w/stimulat.
69718.................. Revise temple bone J8 0425 0.5565 Yes.
implant.
69930.................. Implant cochlear J8 0259 0.8283 Yes.
device.
0238T.................. Trluml perip athrc J8 0319 0.5911 Yes.
iliac art.
0282T.................. Periph field J8 0061 0.5625 Yes.
stimul trial.
0283T.................. Periph field J8 0318 0.8688 Yes.
stimul perm.
0302T.................. Icar ischm mntrng J8 0089 0.6972 Yes.
sys compl.
0303T.................. Icar ischm mntrng J8 0090 0.6858 Yes.
sys eltrd.
0304T.................. Icar ischm mntrng J8 0090 0.6858 Yes.
sys device.
0308T.................. Insj ocular J8 0351 0.9066 Yes.
telescope prosth.
0316T.................. Replc vagus nerve J8 0039 0.8616 Yes.
pls gen.

[[Page 66929]]

0387T.................. Leadless c pm ins/ J8 0319 0.5911 Yes.
rpl ventr.
----------------------------------------------------------------------------------------------------------------

e. ASC Treatment of Surgical Procedures Removed From the OPPS Inpatient
List for CY 2015
As we discussed in the CY 2009 OPPS/ASC final rule with comment
period (73 FR 68724), we adopted a policy to include in our annual
evaluation of the ASC list of covered surgical procedures, a review of
the procedures that are being proposed for removal from the OPPS
inpatient list for possible inclusion on the ASC list of covered
surgical procedures. In the CY 2015 OPPS/ASC proposed rule (79 FR
41023), we stated there are no procedures proposed for removal from the
OPPS inpatient list for CY 2015, so we did not propose any procedures
for possible inclusion on the ASC list of covered surgical procedures.
Comment: Some commenters recommended that, if a surgical procedure
was removed from the inpatient list, it be made eligible for payment in
the ASC setting.
Response: As discussed in the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68724), we adopted a policy to include in our
annual evaluation of the ASC list of covered surgical procedures a
review of the procedures that are being proposed for removal from the
OPPS inpatient-only list for possible inclusion on the ASC list of
covered surgical procedures. We review these procedures and include
them on the ASC list of covered surgical procedures only if the
surgical procedure would not be expected to pose a significant risk to
beneficiary safety when performed in an ASC, and would not be expected
to require active medical monitoring and care of the beneficiary at
midnight following the procedure.
Although there were no procedures proposed for removal from the
OPPS inpatient list for CY 2015, we are removing CPT code 63043
(Laminotomy (hemilaminectomy), with decompression of nerve root(s),
including partial facetectomy, foraminotomy and/or excision of
herniated intervertebral disc, reexploration, single interspace; each
additional cervical interspace) and CPT code 63044 (Laminotomy
(hemilaminectomy), with decompression of nerve root(s), including
partial facetectomy, foraminotomy and/or excision of herniated
intervertebral disc, reexploration, single interspace; each additional
lumbar interspace) from the inpatient-only list in response to a public
comment. We refer readers to section IX.B. of this final rule with
comment period for our discussion of the CY 2015 inpatient-only list.
As discussed previously, because these procedures were removed from the
OPPS inpatient-only list, we review them to determine whether they
should be included on the list of ASC covered surgical procedures. We
believe that the procedure described by CPT code 63044 would not be
expected to pose a significant risk to beneficiary safety when
performed in an ASC, and would not be expected to require active
medical monitoring and care of the beneficiary at midnight following
the procedure. Therefore, we are including the procedure described by
CPT code 63044 on the list of ASC covered surgical procedures and list
the procedure code, descriptor, and payment indicator for this new
covered surgical procedure in Table 45 of section XII.C.1.a. of this
final rule with comment period. However, we do not believe that the
procedure described by CPT code 63043 should be added to the ASC list
because we believe that the beneficiary would generally require active
medical monitoring and care at midnight following the procedure, so we
are not adding it to the list of ASC covered surgical procedures.
2. Covered Ancillary Services
Consistent with the established ASC payment system policy, we
proposed to update the ASC list of covered ancillary services to
reflect the proposed payment status for the services under the CY 2015
OPPS. Maintaining consistency with the OPPS may result in proposed
changes to ASC payment indicators for some covered ancillary services
because of changes that are being proposed under the OPPS for CY 2015.
For example, a covered ancillary service that was separately paid under
the revised ASC payment system in CY 2014 may be proposed for packaged
status under the CY 2015 OPPS and, therefore, also under the ASC
payment system for CY 2015.
To maintain consistency with the OPPS, we proposed that these
services also would be packaged under the ASC payment system for CY
2015. Comment indicator ``CH,'' discussed in section XII.F. of the CY
2015 OPPS/ASC proposed rule (79 FR 41028), is used in Addendum BB to
the proposed rule (which is available via the Internet on the CMS Web
site) to indicate covered ancillary services for which we proposed a
change in the ASC payment indicator to reflect a proposed change in the
OPPS treatment of the service for CY 2015.
Except for the Level II HCPCS codes and Level III CPT codes listed
in Table 46 and Table 47 of the proposed rule (79 FR 41016 through
41017), all ASC covered ancillary services and their proposed payment
indicators for CY 2015 were included in Addendum BB to the proposed
rule (which is available via the Internet on the CMS Web site).
We invited public comment on this proposal.
Comment: Commenters were concerned that, because ASC payment rates
are already substantially lower than HOPD rates, packaging these
ancillary services codes would not provide adequate payment for all of
the procedures being performed, and would result in cases shifting from
the ASC to the more expensive HOPD setting. The commenters noted that
this was particularly problematic because there are 244 ancillary and
surgical codes that are separately payable as procedures in CY 2014
under the OPPS but are proposed to be packaged and no longer separately
payable in CY 2015 under the OPPS. The commenters noted that Medicare
currently pay ASCs approximately 55 percent of the hospital rate for
the same service and expressed concern that packaging the payment for
the secondary services will lower the ASC payment even further and
discourage the movement of volume to ASCs. Commenters recommended that
CMS work to ensure that any packaging policies are not structured to

[[Page 66930]]

disproportionately impact the already lower cost provider.
Response: We discuss the OPPS ancillary services packaging policy
for CY 2015 in section II.A.3.c.(1) of this final rule with comment
period. Of the 21 APCs proposed for conditional packaging under this
policy, 17 of the 21 contain services that are not ASC services.
Therefore, for the most part, this packaging policy does not apply to
the ASC. The four remaining APCs contain primarily minor imaging
services, such as a chest X-ray. Most of these diagnostic tests are not
typically performed in the ASC; instead, they are performed pre-
operatively before the patient has surgery at the ASC. Therefore, we do
not believe that ASCs will be adversely impacted by the OPPS ancillary
services packaging policy in CY 2015. In addition, to the extent that
any of the packaged covered ancillary services are performed with
covered surgical procedures, the relative weights of the surgical
procedures will reflect the additional cost of the packaged ancillary
service. We typically consider the potential effect of OPPS payment
policy changes, including new packaging policies, on ASC payments, and
we will continue to do so in the future.
After consideration of the public comments we received, we are
finalizing, without modification, our proposal to update the ASC list
of covered ancillary services to reflect the payment status for the
services under the OPPS. All CY 2015 ASC covered ancillary services and
their final payment indicators are included in Addendum BB to this
final rule with comment period (which is available via the Internet on
the CMS Web site).

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

1. ASC Payment for Covered Surgical Procedures
a. Background
Our ASC payment policies for covered surgical procedures under the
revised ASC payment system are fully described in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66828 through 66831). Under our
established policy for the revised ASC payment system, the ASC standard
ratesetting methodology of multiplying the ASC relative payment weight
for the procedure by the ASC conversion factor for that same year is
used to calculate the national unadjusted payment rates for procedures
with payment indicators ``G2'' and ``A2.'' Payment indicator ``A2'' was
developed to identify procedures that were included on the list of ASC
covered surgical procedures in CY 2007 and, therefore, were subject to
transitional payment prior to CY 2011. Although the 4-year transitional
period has ended and payment indicator ``A2'' is no longer required to
identify surgical procedures subject to transitional payment, we
retained payment indicator ``A2'' because it is used to identify
procedures that are exempted from application of the office-based
designation.
The rate calculation established for device-intensive procedures
(payment indicator ``J8'') is structured so that the packaged device
payment amount is the same as under the OPPS, and only the service
portion of the rate is subject to the ASC standard ratesetting
methodology. In the CY 2014 OPPS/ASC final rule with comment period (78
FR 75064 through 75090), we updated the CY 2013 ASC payment rates for
ASC covered surgical procedures with payment indicators of ``A2,''
``G2,'' and ``J8'' using CY 2012 data, consistent with the CY 2014 OPPS
update. We also updated payment rates for device-intensive procedures
to incorporate the CY 2014 OPPS device offset percentages.
Payment rates for office-based procedures (payment indicators
``P2,'' ``P3,'' and ``R2'') are the lower of the MPFS nonfacility PE
RVU-based amount (we refer readers to the CY 2015 MPFS proposed rule)
or the amount calculated using the ASC standard ratesetting methodology
for the procedure. In the CY 2014 OPPS/ASC final rule with comment
period, we updated the payment amounts for office-based procedures
(payment indicators ``P2,'' ``P3,'' and ``R2'') using the most recent
available MPFS and OPPS data. We compared the estimated CY 2014 rate
for each of the office-based procedures, calculated according to the
ASC standard ratesetting methodology, to the MPFS nonfacility PE RVU-
based amount to determine which was lower and, therefore, would be the
CY 2014 payment rate for the procedure according to the final policy of
the revised ASC payment system (Sec. 416.171(d)).
b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2015
In the CY 2015 OPPS/ASC proposed rule (79 FR 41024), we proposed to
update ASC payment rates for CY 2015 using the established rate
calculation methodologies under Sec. 416.171 and using our proposed
modified definition of device-intensive procedures, as discussed above.
Because the proposed OPPS relative payment weights were based on
geometric mean costs for CY 2015, the ASC system used geometric means
to determine proposed relative payment weights under the ASC standard
methodology. We proposed to continue to use the amount calculated under
the ASC standard ratesetting methodology for procedures assigned
payment indicators ``A2'' and ``G2.''
We proposed that payment rates for office-based procedures (payment
indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive procedures
(payment indicator ``J8'') be calculated according to our established
policies and, for device-intensive procedures, using our proposed
modified definition of device-intensive procedures, as discussed above.
Therefore, we proposed to update the payment amount for the service
portion of the device-intensive procedures using the ASC standard
ratesetting methodology and the payment amount for the device portion
based on the proposed CY 2015 OPPS device offset percentages that have
been calculated using the standard OPPS APC ratesetting methodology.
Payment for office-based procedures is at the lesser of the proposed CY
2015 MPFS nonfacility PE RVU-based amount or the proposed CY 2015 ASC
payment amount calculated according to the ASC standard ratesetting
methodology.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75081), we finalized our proposal to calculate the CY 2014 payment
rates for ASC covered surgical procedures according to our established
methodologies, with the exception of device removal procedures. For CY
2014, we finalized a policy to conditionally package device removal
codes under the OPPS. Under the OPPS, a conditionally packaged code
(status indicators ``Q1'' and ``Q2'') describes a HCPCS code where the
payment is packaged when it is provided with a significant procedure
but is separately paid when the service appears on the claim without a
significant procedure. Because ASC services always include a covered
surgical procedure, HCPCS codes that are conditionally packaged under
the OPPS are always packaged (payment indicator ``N1'') under the ASC
payment system. Therefore, no Medicare payment would be made when a
device removal procedure is performed in an ASC without another
surgical procedure included on the claim; therefore, no Medicare
payment would be made if a device was removed but not replaced. To
address this concern, for the device removal procedures that are
conditionally packaged in the OPPS (status indicator ``Q2''), we
assigned the current ASC payment indicators associated with

[[Page 66931]]

these procedures and continued to provide separate payment in CY 2014.
For CY 2015, we proposed to continue this policy for the device removal
procedures for these same reasons.
We invited public comment on these proposals. We did not receive
any public comments on these proposals. Therefore, we are finalizing
our proposed policies without modification to calculate the CY 2015
payment rates for ASC covered surgical procedures according to our
established methodologies using the modified definition of device-
intensive procedures. For those covered surgical procedures where the
payment rate is the lower of the final rates under the ASC standard
ratesetting methodology and the MPFS final rates, the final payment
indicators and rates set forth in this rule are based on a comparison
using the MPFS rates effective January 1, 2015. These payment rates and
indicators do not include the effect of the negative update to the MPFS
payment rates effective April 1, 2015 under current law. Updates to
these rates and payment indicators effective April l, 2015 will be
included in the April 2015 quarterly ASC addenda posted on the CMS Web
site. For a discussion of the MPFS rates, we refer readers to the CY
2015 MPFS final rule with comment period.
c. Waiver of Coinsurance and Deductible for Certain Preventive Services
Section 1833(a)(1) and section 1833(b)(1) of the Act waive the
coinsurance and the Part B deductible for those preventive services
under section 1861(ddd)(3)(A) of the Act as described in section
1861(ww)(2) of the Act (excluding electrocardiograms) that are
recommended by the United States Preventive Services Task Force
(USPSTF) with a grade of A or B for any indication or population and
that are appropriate for the individual. Section 1833(b) of the Act
also waives the Part B deductible for colorectal cancer screening tests
that become diagnostic. In the CY 2011 OPPS/ASC final rule with comment
period, we finalized our policies with respect to these provisions and
identified categories of services and the ASC covered surgical
procedures and covered ancillary services that are preventive services
that are recommended by the USPSTF with a grade of A or B for which the
coinsurance and the deductible are waived. For a complete discussion of
our policies and categories of services, we refer readers to the CY
2011 OPPS/ASC final rule with comment period (75 FR 72047 through
72049). We did not propose any changes to our policies or the
categories of services for CY 2015. We identify the specific services
with a double asterisk in Addenda AA and BB to this final rule with
comment period (which are available via the Internet on the CMS Web
site).
d. Payment for Cardiac Resynchronization Therapy Services
Cardiac resynchronization therapy (CRT) uses electronic devices to
sequentially pace both sides of the heart to improve its output. CRT
utilizes a pacing electrode implanted in combination with either a
pacemaker or an implantable cardioverter defibrillator (ICD). CRT
performed by the implantation of an ICD along with a pacing electrode
is referred to as ``CRT-D.'' In the CY 2012 OPPS/ASC final rule with
comment period, we finalized our proposal to establish the CY 2012 ASC
payment rate for CRT-D services based on the OPPS payment rate
applicable to APC 0108 when procedures described by CPT codes 33225
(Insertion of pacing electrode, cardiac venous system, for left
ventricular pacing, at time of insertion of pacing cardioverter-
defibrillator or pacemaker pulse generator (eg., for upgrade to dual
chamber system) (list separately in addition to code for primary
procedure)) and 33249 (Insertion or replacement of permanent pacing
cardioverter-defibrillator system with transvenous lead(s), single or
dual chamber) are performed on the same date of service in an ASC. ASCs
use the corresponding HCPCS Level II G-code (G0448) for proper
reporting when the procedures described by CPT codes 33225 and 33249
are performed on the same date of service. When not performed on the
same day as the service described by CPT code 33225, ASC payment for
the service described by CPT code 33249 is based on APC 0108 using the
device-intensive methodology. When not performed on the same day as the
service described by CPT code 33249, ASC payment for the service
described by CPT code 33225 is based on APC 0655 using the device-
intensive methodology. For a complete discussion of our policy
regarding payment for CRT-D services in ASCs, we refer readers to the
CY 2012 OPPS/ASC final rule with comment period (76 FR 74427 through
74428).
In the CY 2015 OPPS/ASC proposed rule (79 FR 41025), for CY 2015,
we proposed that CPT code 33249, the primary code for CRT-D services,
continue to be assigned to APC 0108, and that payment for CPT code
33225 be packaged under the OPPS. Consequently, we also proposed that
CPT code 33249 would continue to be assigned to APC 0108 and payment
for CPT code 33225 would be packaged into the payment for the primary
covered surgical procedure (for example, CPT code 33249) under the ASC
payment system for CY 2015. Because we proposed to package CPT code
33225 packaged under the ASC payment system and, therefore, it would
not receive separate payment, it would no longer be necessary that ASCs
use the HCPCS Level II G-code (G0448) for proper reporting when the
procedures described by CPT codes 33225 and 33249 are performed on the
same date of service.
We invited public comment on these proposals.
We did not receive any public comments on these proposals. Further,
we are finalizing our proposals under the OPPS that CPT code 33249, the
primary code for CRT-D services, continue to be assigned to APC 0108,
and that payment for CPT code 33225 be packaged under the OPPS.
Therefore, we are finalizing our proposals under the ASC payment system
without modification. Specifically, CPT code 33249, the primary code
for CRT-D services, will continue to be assigned to APC 0108, and
payment for CPT code 33225 will be packaged into the payment for the
primary covered surgical procedure (for example, CPT code 33249).
e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy Composite
LDR prostate brachytherapy is a treatment for prostate cancer in
which hollow needles or catheters are inserted into the prostate,
followed by permanent implantation of radioactive sources into the
prostate through the needles/catheters. At least two CPT codes are used
to report the treatment service because there are separate codes that
describe placement of the needles/catheters and the application of the
brachytherapy sources: CPT code 55875 (Transperineal placement of
needles or catheters into prostate for interstitial radioelement
application, with or without cystoscopy); and CPT code 77778
(Interstitial radiation source application; complex). Generally, the
component services represented by both codes are provided in the same
operative session on the same date of service to the Medicare
beneficiary being treated with LDR brachytherapy for prostate cancer.
In the CY 2013 OPPS/ASC final rule with comment period, we
finalized our proposal to establish the CY 2013 ASC payment rate for
LDR prostate brachytherapy services based on the

[[Page 66932]]

OPPS relative payment weight applicable to APC 8001 when CPT codes
55875 and 77778 are performed on the same date of service in an ASC.
ASCs use the corresponding HCPCS Level II G-code (G0458) for proper
reporting when the procedures described by CPT codes 55875 and 77778
are performed on the same date of service, and therefore receive the
appropriate LDR prostate brachytherapy composite payment. When not
performed on the same day as the service described by CPT code 55875,
the service described by CPT code 77778 will be assigned to APC 0651.
When not performed on the same day as the service described by CPT code
77778, the service described by CPT code 55875 will be assigned to APC
0162. For a complete discussion of our policy regarding payment for LDR
prostate brachytherapy services in ASCs, we refer readers to the CY
2013 OPPS/ASC final rule with comment period (77 FR 68457). In the CY
2015 OPPS/ASC proposed rule (79 FR 41025), we did not propose any
changes to our current policy regarding ASC payment for LDR prostate
brachytherapy services for CY 2015.
2. Payment for Covered Ancillary Services
a. Background
Our final payment policies under the revised ASC payment system for
covered ancillary services vary according to the particular type of
service and its payment policy under the OPPS. Our overall policy
provides separate ASC payment for certain ancillary items and services
integrally related to the provision of ASC covered surgical procedures
that are paid separately under the OPPS and provides packaged ASC
payment for other ancillary items and services that are packaged or
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'')
under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169; 77 FR
68457 through 68458), we further clarified our policy regarding the
payment indicator assignment of codes that are conditionally packaged
in the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a
conditionally packaged code describes a HCPCS code where the payment is
packaged when it is provided with a significant procedure but is
separately paid when the service appears on the claim without a
significant procedure. Because ASC services always include a surgical
procedure, HCPCS codes that are conditionally packaged under the OPPS
are always packaged (payment indictor ``N1'') under the ASC payment
system. Thus, our final policy generally aligns ASC payment bundles
with those under the OPPS (72 FR 42495). In all cases, in order for
those ancillary services also to be paid, ancillary items and services
must be provided integral to the performance of ASC covered surgical
procedures for which the ASC bills Medicare.
Our ASC payment policies provide separate payment for drugs and
biologicals that are separately paid under the OPPS at the OPPS rates.
We generally pay for separately payable radiology services at the lower
of the MPFS nonfacility PE RVU-based (or technical component) amount or
the rate calculated according to the ASC standard ratesetting
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators
for all nuclear medicine procedures (defined as CPT codes in the range
of 78000 through 78999) that are designated as radiology services that
are paid separately when provided integral to a surgical procedure on
the ASC list are set to ``Z2'' so that payment is made based on the ASC
standard ratesetting methodology rather than the MPFS nonfacility PE
RVU amount, regardless of which is lower. This modification to the ASC
payment methodology for ancillary services was finalized in response to
a comment on the CY 2011 OPPS/ASC proposed rule that suggested it is
inappropriate to use the MPFS-based payment methodology for nuclear
medicine procedures because the associated diagnostic
radiopharmaceutical, although packaged under the ASC payment system, is
separately paid under the MPFS (42 CFR 416.171(d)(1)). We set the
payment indicator to ``Z2'' for these nuclear medicine procedures in
the ASC setting so that payment for these procedures would be based on
the OPPS relative payment weight rather than the MPFS nonfacility PE
RVU-based amount to ensure that the ASC will be compensated for the
cost associated with the diagnostic radiopharmaceuticals.
In addition, because the same issue exists for radiology procedures
that use contrast agents (the contrast agent is packaged under the ASC
payment system but is separately paid under the MPFS), we finalized in
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74429
through 74430) to set the payment indicator to ``Z2'' for radiology
services that use contrast agents so that payment for these procedures
will be based on the OPPS relative payment weight and, therefore, will
include the cost for the contrast agent (42 CFR 416.171(d)(2)).
ASC payment policy for brachytherapy sources mirrors the payment
policy under the OPPS. ASCs are paid for brachytherapy sources provided
integral to ASC covered surgical procedures at prospective rates
adopted under the OPPS or, if OPPS rates are unavailable, at
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs
have been paid for brachytherapy sources provided integral to ASC
covered surgical procedures at prospective rates adopted under the
OPPS.
Our ASC policies also provide separate payment for: (1) Certain
items and services that CMS designates as contractor-priced, including,
but not limited to, the procurement of corneal tissue; and (2) certain
implantable items that have pass-through payment status under the OPPS.
These categories do not have prospectively established ASC payment
rates according to the final policies for the revised ASC payment
system (72 FR 42502 and 42508 through 42509; 42 CFR 416.164(b)). Under
the revised ASC payment system, we have designated corneal tissue
acquisition and hepatitis B vaccines as contractor-priced. Corneal
tissue acquisition is contractor-priced based on the invoiced costs for
acquiring the corneal tissue for transplantation. Hepatitis B vaccines
are contractor-priced based on invoiced costs for the vaccine.
Devices that are eligible for pass-through payment under the OPPS
are separately paid under the ASC payment system and are contractor-
priced. Currently, the one device that is eligible for pass-through
payment in the OPPS is described by HCPCS code C1841 (Retinal
prosthesis, includes all internal and external components). The payment
amount for HCPCS code C1841 under the ASC payment system is contractor-
priced. Under the revised ASC payment system (72 FR 42502), payment for
the surgical procedure associated with the pass-through device is made
according to our standard methodology for the ASC payment system, based
on only the service (nondevice) portion of the procedure's OPPS
relative payment weight if the APC weight for the procedure includes
other packaged device costs. (We note that the cost for the new pass-
through device would not be included in the APC weight because
historical claims are used to establish the OPPS relative weights). We
also refer to this methodology as applying a ``device offset'' to the
ASC payment for the associated surgical procedure. This ensures that
duplicate payment is not

[[Page 66933]]

provided for any portion of an implanted device with OPPS pass-through
payment status. There are no other device costs included in the APC for
the surgical procedure associated with HCPCS code C1841. Therefore,
payment for the associated surgical procedure is made according to the
standard methodology and no device offset is applied. HCPCS code C1841
was approved for pass-through payment effective October 1, 2013, and
will continue to be eligible for pass-through payment in CY 2015.
b. Payment for Covered Ancillary Services for CY 2015
In the CY 2015 OPPS/ASC proposed rule (79 FR 41026 through 41027),
for CY 2015, we proposed to update the ASC payment rates and to make
changes to ASC payment indicators as necessary to maintain consistency
between the OPPS and ASC payment system regarding the packaged or
separately payable status of services and the proposed CY 2015 OPPS and
ASC payment rates. We also proposed to continue to set the CY 2015 ASC
payment rates for brachytherapy sources and separately payable drugs
and biologicals equal to the proposed OPPS payment rates for CY 2015.
Consistent with established ASC payment policy (72 FR 42497), we
proposed that the proposed CY 2015 payment for separately payable
covered radiology services be based on a comparison of the proposed CY
2015 MPFS nonfacility PE RVU-based amounts (we refer readers to the CY
2015 MPFS proposed rule) and the proposed CY 2015 ASC payment rates
calculated according to the ASC standard ratesetting methodology and
then set at the lower of the two amounts (except as discussed below for
nuclear medicine procedures and radiology services that use contrast
agents). We proposed that payment for a radiology service would be
packaged into the payment for the ASC covered surgical procedure if the
radiology service is packaged or conditionally packaged under the OPPS.
The payment indicators in Addendum BB to the proposed rule indicate
whether the proposed payment rates for radiology services are based on
the MPFS nonfacility PE RVU-based amount or the ASC standard
ratesetting methodology, or whether payment for a radiology service is
packaged into the payment for the covered surgical procedure (payment
indicator ``N1''). Radiology services that we proposed to pay based on
the ASC standard ratesetting methodology are assigned payment indicator
``Z2'' (proposed revised definition, as discussed below: Radiology or
diagnostic service paid separately when provided integral to a surgical
procedure on ASC list; payment based on OPPS relative payment weight),
and those for which the proposed payment is based on the MPFS
nonfacility PE RVU-based amount be assigned payment indicator ``Z3''
(proposed revised definition, as discussed below: Radiology or
diagnostic service paid separately when provided integral to a surgical
procedure on ASC list; payment based on MPFS nonfacility PE RVUs).
As finalized in the CY 2011 OPPS/ASC final rule with comment period
(75 FR 72050), payment indicators for all nuclear medicine procedures
(defined as CPT codes in the range of 78000 through 78999) that are
designated as radiology services that are paid separately when provided
integral to a surgical procedure on the ASC list are set to ``Z2'' so
that payment for these procedures will be based on the OPPS relative
payment weight (rather than the MPFS nonfacility PE RVU-based amount,
regardless of which is lower) and, therefore, will include the cost for
the diagnostic radiopharmaceutical. We proposed to continue this
modification to the payment methodology in CY 2015 and, therefore, set
the payment indicator to ``Z2'' for nuclear medicine procedures.
As finalized in the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74429 through 74430), payment indicators for radiology services
that use contrast agents are set to ``Z2'' so that payment for these
procedures will be based on the OPPS relative payment weight and,
therefore, will include the cost for the contrast agent. We proposed to
continue this modification to the payment methodology in CY 2015 and,
therefore, proposed to assign the payment indicator ``Z2'' to radiology
services that use contrast agents.
Covered ancillary services are items and services that are integral
to a covered surgical procedure performed in an ASC for which separate
payment may be made under the ASC payment system (42 CFR 416.2).
Covered ancillary services include, among other categories of items and
services, certain radiology services, including diagnostic imaging
services, for which separate payment is allowed under the OPPS when
these services are necessary for the successful completion of a
surgical procedure and are performed in the ASC immediately preceding,
during, or immediately following the covered surgical procedure, as
evidenced by the service being provided on the same day as a covered
surgical procedure (42 CFR 416.164(b)(5)). Currently, there are certain
nonimaging diagnostic tests for which payment is not made under
Medicare Part B when provided in an ASC setting although these tests
are paid under the OPPS. Therefore, we believe that certain nonimaging
diagnostic tests for which separate payment is allowed under the OPPS
should be considered covered ancillary services and separately paid
when these tests are required for the successful performance of the
surgery and are performed in the ASC on the same day as a covered
surgical procedure.
Therefore, we proposed that, beginning in CY 2015, certain
diagnostic tests within the medicine range of CPT codes for which
separate payment is allowed under the OPPS be covered ancillary
services when they are integral to an ASC covered surgical procedure.
We believe that adopting such a payment policy is reasonable and
appropriate to ensure access to these tests in ASCs and is consistent
with the OPPS. We proposed that diagnostic tests within the medicine
range of CPT codes include all Category I CPT codes in the medicine
range established by CPT, from 90000 to 99999, and Category III CPT
codes and Level II HCPCS codes that describe diagnostic tests that
crosswalk or are clinically similar to procedures in the medicine range
established by CPT.
We proposed to pay for these tests at the lower of the MPFS
nonfacility PE RVU-based (or technical component) amount or the rate
calculated according to the ASC standard ratesetting methodology
because this would ensure appropriate and equitable payment for these
diagnostic tests provided integral to covered surgical procedures and
not provide a payment incentive for migration of the tests from
physician offices to ASCs. Further, we believe these diagnostic tests
are similar to the covered ancillary services that are radiology
services, and this is the payment methodology we use for those
services. We proposed that the diagnostic tests for which the proposed
payment is based on the ASC standard ratesetting methodology be
assigned to payment indicator ``Z2'' (proposed revised definition:
Radiology or diagnostic service paid separately when provided integral
to a surgical procedure on ASC list; payment based on OPPS relative
payment weight), and those for which the proposed payment is based on
the MPFS nonfacility PE RVU-based amount be assigned payment indicator
``Z3'' (proposed revised definition: Radiology or diagnostic service
paid separately when provided integral to a surgical

[[Page 66934]]

procedure on ASC list; payment based on MPFS nonfacility PE RVUs). We
proposed changes to the definitions for payment indicators ``Z2'' and
``Z3,'' as detailed in section XII.F.2. of this final rule with comment
period, and proposed changes to Sec. 416.164(a)(11) and (b)(5) as well
as Sec. 416.171(b)(1) to reflect these proposals.
We have identified one diagnostic test that is within the medicine
range of CPT codes and for which separate payment is allowed under the
OPPS: CPT code 91035 (Esophagus, gastroesophageal reflux test; with
mucosal attached telemetry pH electrode placement, recording, analysis
and interpretation). We proposed to add this code to the list of ASC
covered ancillary services and proposed separate ASC payment as a
covered ancillary service for this code beginning in CY 2015 when the
test is integral to an ASC covered surgical procedure. We would expect
the procedure described by CPT code 91035 to be integral to the
endoscopic attachment of the electrode to the esophageal mucosa.
Most covered ancillary services and their proposed payment
indicators were listed in Addendum BB to the proposed rule (which is
available via the Internet on the CMS Web site).
We invited public comment on these proposals.
Comment: Several commenters supported CMS' proposals to expand the
scope of ASC covered ancillary services to include certain diagnostic
tests and to add CPT code 91035 to the list of ASC covered ancillary
services and allow separate payment for this code when the test is
integral to an ASC covered surgical procedure. However, these
commenters expressed concern regarding the proposed ASC payment for CPT
code 91035 and requested that CMS reassign the code to a higher-paying
APC.
Response: We thank the commenters for their support for our
proposal. Payment for CPT 91035 is addressed in section III.C.2. of
this final rule with comment period. Briefly, the ASC payment is
dependent upon the APC assignment for this service. 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. 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), and a geometric mean cost of
approximately $341 for APC 0361. Further, the geometric mean cost of
APC 0142 is approximately $884, which is almost twice the geometric
mean cost of CPT code 91035. Also, assignment of 91035 to APC 0142
would create a 2 times violation in APC 0142, because the geometric
mean cost of the highest cost significant procedure in APC 0142 (CPT
code 44361, with a geometric mean cost of $1,019) is 2.2 times the
geometric mean cost of 91035. Therefore, APC 0142 would not be
appropriate for 91035 and we are finalizing our CY 2015 proposal to
continue to assign CPT code 91035 to APC 0361.
After consideration of the public comments we received, we are
finalizing these proposals without modification: to expand the scope of
ASC-covered ancillary services to include certain diagnostic tests for
which separate payment is allowed under the OPPS when provided integral
to covered ASC surgical procedures; to pay for these diagnostic tests
at the lower of the MPFS nonfacility PE RVU based (or technical
component) amount or the rate calculated according to the ASC standard
ratesetting methodology; and to revise Sec. Sec. 416.164(a)(11) and
(b)(5) as well as Sec. 416.171(b)(1) to reflect these finalized
policies. We also are revising the regulation text at Sec. 416.171(d)
to reflect that payment for these tests will be at the lower of the
MPFS nonfacility PE RVU-based amount or the rate calculated according
to the ASC standard ratesetting methodology, as discussed above and in
the CY 2015 OPPS/ASC proposed rule (79 FR 41027). For those covered
ancillary services where the payment rate is the lower of the final
rates under the ASC standard ratesetting methodology and the MPFS final
rates, the final payment indicators and rates set forth in this rule
are based on a comparison using the MPFS rates effective January 1,
2015. These payment rates and indicators do not include the effect of
the negative update to the MPFS payment rates effective April 1, 2015
under current law. Updates to these rates and payment indicators
effective April l, 2015 will be included in the April 2015 quarterly
ASC addenda posted on the CMS Web site. For a discussion of the MPFS
rates, we refer readers to the CY 2015 MPFS final rule with comment
period.

E. New Technology Intraocular Lenses (NTIOLs)

1. NTIOL Application Cycle
Our process for reviewing applications to establish new classes of
new technology intraocular lenses (NTIOLs) is as follows:
Applicants submit their NTIOL requests for review to CMS
by the annual deadline. For a request to be considered complete, we
require submission of the information that is found in the guidance
document entitled ``Application Process and Information Requirements
for Requests for a New Class of New Technology Intraocular Lenses
(NTIOLs) or Inclusion of an IOL in an existing NTIOL Class'' posted on
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.
We announce annually in the proposed rule updating the ASC
and OPPS payment rates for the following calendar year, a list of all
requests to establish new NTIOL classes accepted for review during the
calendar year in which the proposal is published. In accordance with
section 141(b)(3) of Public Law 103-432 and our regulations at Sec.
416.185(b), the deadline for receipt of public comments is 30 days
following publication of the list of requests in the proposed rule.
In the final rule updating the ASC and OPPS payment rates
for the following calendar year, we--
[cir] Provide a list of determinations made as a result of our
review of all new NTIOL class requests and public comments;
[cir] When a new NTIOL class is created, we identify the
predominant characteristic of NTIOLs in that class that sets them apart
from other IOLs (including those previously approved as members of
other expired or active NTIOL classes) and that is associated with an
improved clinical outcome.
[cir] The date of implementation of a payment adjustment in the
case of approval of an IOL as a member of a new NTIOL class would be
set prospectively as of 30 days after publication of the ASC payment
update final rule, consistent with the statutory requirement.
[cir] Announce the deadline for submitting requests for review of
an application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2015
We did not receive any requests for review to establish a new NTIOL
class for CY 2015 by March 3, 2014, the due date published in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75085).
3. Payment Adjustment
The current payment adjustment for a 5-year period from the
implementation date of a new NTIOL class is $50 per lens. Since
implementation of the process for adjustment of payment

[[Page 66935]]

amounts for NTIOLs in 1999, we have not revised the payment adjustment
amount, and we did not propose to revise the payment adjustment amount
for CY 2015.
4. Announcement of CY 2015 Deadline for Submitting Requests for CMS
Review of Applications for a New Class of NTIOLs
In accordance with 42 CFR 416.185(a) of our regulations, CMS
announces that in order to be considered for payment effective
beginning in CY 2016, requests for review of applications for a new
class of new technology IOLs must be received at CMS by 5 p.m. EST, on
March 2, 2015. Send requests to ASC/NTIOL, Division of Outpatient Care,
Mailstop C4-05-17, Centers for Medicare and Medicaid Services, 7500
Security Boulevard, Baltimore, MD 21244-1850. To be considered,
requests for NTIOL reviews must include the information requested on
the CMS Web site at: http://www.cms.gov/ASCPayment/downloads/NTIOLprocess.pdf.

F. ASC Payment and Comment Indicators

1. Background
In addition to the payment indicators that we introduced in the
August 2, 2007 final rule, we also created final comment indicators for
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66855). We created Addendum DD1 to define ASC payment
indicators that we use in Addenda AA and BB to provide payment
information regarding covered surgical procedures and covered ancillary
services, respectively, under the revised ASC payment system. The ASC
payment indicators in Addendum DD1 are intended to capture policy
relevant characteristics of HCPCS codes that may receive packaged or
separate payment in ASCs, such as whether they were on the ASC list of
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based, and the corresponding ASC payment
methodology; and their classification as separately payable ancillary
services including radiology services, brachytherapy sources, OPPS
pass-through devices, corneal tissue acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that lists the ASC comment indicators.
The ASC comment indicators used in Addenda AA and BB to the proposed
rules and final rules with comment period serve to identify, for the
revised ASC payment system, the status of a specific HCPCS code and its
payment indicator with respect to the timeframe when comments will be
accepted. The comment indicator ``NI'' is used in the OPPS/ASC final
rule with comment period to indicate new codes for the next calendar
year for which the interim payment indicator assigned is subject to
comment. The comment indicator ``NI'' also is assigned to existing
codes with substantial revisions to their descriptors such that we
consider them to be describing new services, as discussed in the CY
2010 OPPS/ASC final rule with comment period (74 FR 60622). We
indicated that in the CY 2015 OPPS/ASC final rule with comment period,
we will respond to public comments and finalize the ASC treatment of
all codes that are labeled with comment indicator ``NI'' in Addenda AA
and BB to the CY 2014 OPPS/ASC final rule with comment period.
The ``CH'' comment indicator was used in Addenda AA and BB to the
proposed rule (which are available via the Internet on the CMS Web
site) to indicate that the payment indicator assignment has changed for
an active HCPCS code in the current year and next calendar year; an
active HCPCS code is newly recognized as payable in ASCs; or an active
HCPCS code is discontinued at the end of the current calendar year. The
``CH'' comment indicators that are published in the final rule with
comment period are provided to alert readers that a change has been
made from one calendar year to the next, but do not indicate that the
change is subject to comment.
2. ASC Payment and Comment Indicators
In the CY 2015 OPPS/ASC proposed rule (79 FR 41028), we did not
propose any changes to the definitions of the ASC comment indicators
for CY 2015. In order to incorporate changes associated with our
proposal for CY 2015, as detailed in section XII.D.2.b. of the proposed
rule, that certain diagnostic tests qualify as covered ancillary
services when provided integral to an ASC covered surgical procedure,
we proposed to revise the definitions for payment indicators ``Z2'' and
``Z3'' to add the words ``or diagnostic'' after ``Radiology'' so that
the proposed definition for payment indicator ``Z2'' would be
``Radiology or diagnostic service paid separately when provided
integral to a surgical procedure on ASC list; payment based on OPPS
relative payment weight,'' and the proposed definition for payment
indicator ``Z3'' would be ``Radiology or diagnostic service paid
separately when provided integral to a surgical procedure on ASC list;
payment based on MPFS nonfacility PE RVUs.'' We refer readers to
Addenda DD1 and DD2 to the proposed rule (which are available via the
Internet on the CMS Web site) for the complete list of ASC payment and
comment indicators for the CY 2015 update.
We did not receive any public comments regarding our proposals to
change the definitions of ``Z2'' and ``Z3''. Therefore, we are
finalizing our proposal to revise the definitions for payment
indicators ``Z2'' and ``Z3'' to add the words ``or diagnostic'' after
``Radiology'' so that the revised definition for payment indicator
``Z2'' will be ``Radiology or diagnostic service paid separately when
provided integral to a surgical procedure on ASC list; payment based on
OPPS relative payment weight,'' and the revised definition for payment
indicator ``Z3'' will be ``Radiology or diagnostic service paid
separately when provided integral to a surgical procedure on ASC list;
payment based on MPFS nonfacility PE RVUs.''

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

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

[[Page 66936]]

FR 42532 through 42533; 42 CFR 416.171(e)).
We note that we consider the term ``expenditures'' in the context
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of
the Act to mean expenditures from the Medicare Part B Trust Fund. We do
not consider expenditures to include beneficiary coinsurance and
copayments. This distinction was important for the CY 2008 ASC budget
neutrality model that considered payments across the OPPS, ASC, and
MPFS payment systems. However, because coinsurance is almost always 20
percent for ASC services, this interpretation of expenditures has
minimal impact for subsequent budget neutrality adjustments calculated
within the revised ASC payment system.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857
through 66858), we set out a step-by-step illustration of the final
budget neutrality adjustment calculation based on the methodology
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531)
and as applied to updated data available for the CY 2008 OPPS/ASC final
rule with comment period. The application of that methodology to the
data available for the CY 2008 OPPS/ASC final rule with comment period
resulted in a budget neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS relative payment weights as the
ASC relative payment weights for most services and, consistent with the
final policy, we calculated the CY 2008 ASC payment rates by
multiplying the ASC relative payment weights by the final CY 2008 ASC
conversion factor of $41.401. For covered office-based surgical
procedures and covered ancillary radiology services (excluding covered
ancillary radiology services involving certain nuclear medicine
procedures or involving the use of contrast agents, as discussed in
section XII.D.2.b. of the proposed rule), the established policy is to
set the payment rate at the lower of the MPFS unadjusted nonfacility PE
RVU-based amount or the amount calculated using the ASC standard
ratesetting methodology. Further, as discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66841 through 66843), we also
adopted alternative ratesetting methodologies for specific types of
services (for example, device-intensive procedures).
As discussed in the August 2, 2007 final rule (72 FR 42517 through
42518) and as codified at Sec. 416.172(c) of the regulations, the
revised ASC payment system accounts for geographic wage variation when
calculating individual ASC payments by applying the pre-floor and pre-
reclassified IPPS hospital wage indexes to the labor-related share,
which is 50 percent of the ASC payment amount based on a GAO report of
ASC costs using 2004 survey data. Beginning in CY 2008, CMS accounted
for geographic wage variation in labor cost when calculating individual
ASC payments by applying the pre-floor and pre-reclassified hospital
wage index values that CMS calculates for payment under the IPPS, using
updated Core Based Statistical Areas (CBSAs) issued by OMB in June
2003. In other words, the wage index for an ASC is the pre-floor and
pre-reclassified hospital wage index under the IPPS of the CBSA that
maps to the CBSA where the ASC is located.
The reclassification provision in section 1886(d)(10) of the Act is
specific to hospitals. We believe that using the most recently
available pre-floor and pre-reclassified IPPS hospital wage indexes
results in the most appropriate adjustment to the labor portion of ASC
costs. We continue to believe that the unadjusted hospital wage
indexes, which are updated yearly and are used by many other Medicare
payment systems, appropriately account for geographic variation in
labor costs for ASCs.
On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which
provides the delineations of all Metropolitan Statistical Areas,
Metropolitan Divisions, Micropolitan Statistical Areas, Combined
Statistical Areas, and New England City and Town Areas in the United
States and Puerto Rico based on the standards published on June 28,
2010 in the Federal Register (75 FR 37246 through 37252) and 2010
Census Bureau data. (A copy of this bulletin may be obtained at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.) The pre-floor and pre-reclassified IPPS hospital wage indexes
for FY 2014 do not reflect OMB's new area delineations and, because the
ASC wage indexes are the pre-floor and pre-reclassified IPPS hospital
wage indexes, the CY 2014 ASC wage indexes do not reflect the OMB
changes. As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR
28054 through 28068), we proposed to use the new CBSAs delineations
issued by OMB in OMB Bulletin 13-01 for the IPPS hospital wage index
beginning in FY 2015. Therefore, because the ASC wage indexes are the
pre-floor and pre-reclassified IPPS hospital wage indexes, the proposed
CY 2015 ASC wage indexes reflected the new OMB delineations. In the FY
2015 IPPS/LTCH PPS final rule (79 FR 49950 through 49957), we finalized
our proposal to use these new OMB delineations for the IPPS hospital
wage index. Therefore, the final ASC wage indexes, which are the pre-
floor and pre-reclassified IPPS hospital wage indexes, will reflect the
new OMB delineations. As discussed in section XII.G.2.b. of the CY 2015
OPPS/ASC proposed rule (79 FR 41030), we proposed a transition to these
new OMB delineations for ASCs in certain situations for CY 2015.
We note that, in certain instances, there might be urban or rural
areas for which there is no IPPS hospital whose wage index data would
be used to set the wage index for that area. For these areas, our
policy has been to use the average of the wage indexes for CBSAs (or
metropolitan divisions as applicable) that are contiguous to the area
that has no wage index (where ``contiguous'' is defined as sharing a
border). For example, for CY 2014, we applied a proxy wage index based
on this methodology to ASCs located in CBSA 25980 (Hinesville-Fort
Stewart, GA) and CBSA 08 (Rural Delaware).
When all of the areas contiguous to the urban CBSA of interest are
rural and there is no IPPS hospital that has wage index data that could
be used to set the wage index for that area, we determine the ASC wage
index by calculating the average of all wage indexes for urban areas in
the State (75 FR 72058 through 72059). In other situations, where there
are no IPPS hospitals located in a relevant labor market area, we will
continue our current policy of calculating an urban or rural area's
wage index by calculating the average of the wage indexes for CBSAs (or
metropolitan divisions where applicable) that are contiguous to the
area with no wage index.
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2015 and Future
Years
We update the ASC relative payment weights each year using the
national OPPS relative payment weights (and MPFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly
scale the ASC relative payment weights for each update year to make
them budget neutral (72 FR 42533). In the CY 2015 OPPS/ASC proposed
rule (79 FR 41029 through 41030), consistent with our established
policy, we proposed to scale the CY 2015 relative payment weights for
ASCs according to the following method. Holding ASC utilization and the
mix of services constant from CY 2013, we proposed to compare the total
payment using the CY 2014 ASC

[[Page 66937]]

relative payment weights with the total payment using the CY 2015
relative payment weights to take into account the changes in the OPPS
relative payment weights between CY 2014 and CY 2015. We proposed to
use the ratio of CY 2014 to CY 2015 total payment (the weight scaler)
to scale the ASC relative payment weights for CY 2015. The proposed CY
2015 ASC scaler was 0.9142 and scaling would apply to the ASC relative
payment weights of the covered surgical procedures and covered
ancillary radiology services for which the ASC payment rates are based
on OPPS relative payment weights.
Scaling would not apply in the case of ASC payment for separately
payable covered ancillary services that have a predetermined national
payment amount (that is, their national ASC payment amounts are not
based on OPPS relative payment weights), such as drugs and biologicals
that are separately paid or services that are contractor-priced or paid
at reasonable cost in ASCs. Any service with a predetermined national
payment amount would be included in the ASC budget neutrality
comparison, but scaling of the ASC relative payment weights would not
apply to those services. The ASC payment weights for those services
without predetermined national payment amounts (that is, those services
with national payment amounts that would be based on OPPS relative
payment weights) would be scaled to eliminate any difference in the
total payment between the current year and the update year.
For any given year's ratesetting, we typically use the most recent
full calendar year of claims data to model budget neutrality
adjustments. For this final rule with comment period, we used CY 2013
ASC claims data.
To create an analytic file to support calculation of the weight
scaler and budget neutrality adjustment for the wage index (discussed
below), we summarized available CY 2013 ASC claims by ASC and by HCPCS
code. We used the National Provider Identifier for the purpose of
identifying unique ASCs within the CY 2013 claims data. We used the
supplier zip code reported on the claim to associate State, county, and
CBSA with each ASC. This file, available to the public as a supporting
data file for the proposed rule, is posted on the CMS Web site at:
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. Transition Period to New OMB Delineations for ASC Wage Index
As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR
28054 through 28055), we proposed to use the new CBSA delineations
issued by OMB in OMB Bulletin 13-01 dated February 28, 2013 for the
IPPS hospital wage index. Therefore, because the ASC wage indexes are
the pre-floor and pre-reclassified IPPS hospital wage indexes, the
proposed CY 2015 ASC wage indexes reflected the new OMB delineations.
While we believe that instituting the latest OMB labor market area
delineations would create a more accurate and up-to-date wage index
system, we also recognize that implementing the new OMB delineations
may cause some short-term instability in ASC payments. Therefore, we
proposed a transition to the new OMB delineations similar to what we
proposed for the IPPS for FY 2015 (79 FR 28062) and the OPPS as
described in section II.C of the proposed rule. Specifically, for ASCs,
we proposed a 1-year blended wage index for all ASCs that would
experience any decrease in their actual wage index exclusively due to
the implementation of the new OMB delineations. For ASCs where the CY
2015 ASC wage index with the CY 2015 CBSAs would be lower than with the
CY 2014 CBSAs, we proposed that the CY 2015 ASC wage index would be 50
percent of the ASC wage index based on the CY 2014 CBSA and 50 percent
of the ASC wage index based on the new CY 2015 CBSA. We believe a 1-
year 50/50 blended wage index would mitigate the short-term instability
and negative payment impacts due to the proposed implementation of the
new OMB delineations, providing ASCs that would be negatively impacted
by the new OMB delineations with a transition period during which they
may adjust to their new geographic CBSA. We believe that a longer
transition period would reduce the accuracy of the overall labor market
area wage index system.
Comment: Some commenters objected to CMS continuing to use the pre-
floor and pre-reclassified IPPS hospital wage indexes for the labor
portion of ASC costs. These commenters stated that ASCs and hospitals
compete in the same local markets and provide many of the same services
and require similar staff. Commenters stated that the different wage
index for hospitals than for ASCs increases the gap between the OPPS
and ASC payment rates.
Response: As discussed in the August 2, 2007 final rule (72 FR
42517 through 42518) and as codified at Sec. 416.172(c) of the
regulations, the revised ASC payment system accounts for geographic
wage variation when calculating individual ASC payments by applying the
pre-floor and pre-reclassified IPPS hospital wage indexes to the labor-
related share, which is 50 percent of the ASC payment amount. We have
responded to similar comments in the past and believe our prior
rationale for using unadjusted wage indexes is still a sound one. We
continue to believe that the unadjusted hospital wage indexes, which
are updated yearly and are used by many other Medicare payment systems,
appropriately account for geographic variation in labor costs for ASCs.
We did not propose to change our use of the pre-floor, pre-reclassified
IPPS wage indexes for the ASC wage index. Therefore, in addition to the
reasons stated above, we will continue to apply the pre-floor, pre-
reclassified IPPS hospital wage indexes for the labor portion of ASC
costs. We refer readers to our responses to similar comments in the CY
2010, CY 2011, CY 2012, CY 2013, and CY 2014 OPPS/ASC final rules with
comment period (74 FR 60625; 75 FR 72059; 76 FR 74446; 77 FR 68463; and
78 FR 75086, respectively).
Comment: Commenters supported CMS' proposal to phase in reductions
to the ASC wage indexes that occur as a result of the new OMB labor
market delineations.
Response: We appreciate the commenters' support and, as stated
below, we are finalizing this policy as proposed.
After consideration of the public comments we received, we are
finalizing our proposal to apply a 1-year blended wage index for all
ASCs that would experience any decrease in their actual wage index
exclusively due to the implementation of the new OMB delineations.
Specifically, for ASCs where the CY 2015 ASC wage index with the CY
2015 CBSAs is lower than with the CY 2014 CBSAs, we will calculate the
CY 2015 ASC wage index such that it will be 50 percent of the ASC wage
index based on the CY 2014 CBSA and 50 percent of the ASC wage index
based on the new CY 2015 CBSA.
c. Updating the ASC Conversion Factor
Under the OPPS, we typically apply a budget neutrality adjustment
for provider level changes, most notably a change in the wage index
values for the upcoming year, to the conversion factor. In the CY 2015
OPPS/ASC proposed rule (79 FR 41030 through 41031), consistent with our
final ASC payment policy, for the CY 2015 ASC payment system, we
proposed to calculate and apply a budget neutrality adjustment to the
ASC conversion factor for supplier

[[Page 66938]]

level changes in wage index values for the upcoming year, just as the
OPPS wage index budget neutrality adjustment is calculated and applied
to the OPPS conversion factor. For CY 2015, we calculated this proposed
adjustment for the ASC payment system by using the most recent CY 2013
claims data available and estimating the difference in total payment
that would be created by introducing the proposed CY 2015 ASC wage
indexes. Specifically, holding CY 2013 ASC utilization and service-mix
and the proposed CY 2015 national payment rates after application of
the weight scaler constant, we calculated the total adjusted payment
using the CY 2014 ASC wage indexes and the total adjusted payment using
the proposed CY 2015 ASC wage indexes (which reflect the new OMB
delineations and would include any applicable transition period). We
used the 50-percent labor-related share for both total adjusted payment
calculations. We then compared the total adjusted payment calculated
with the CY 2014 ASC wage indexes to the total adjusted payment
calculated with the proposed CY 2015 ASC wage indexes and applied the
resulting ratio of 0.9983 (the proposed CY 2015 ASC wage index budget
neutrality adjustment) to the CY 2014 ASC conversion factor to
calculate the proposed CY 2015 ASC conversion factor.
Section 1833(i)(2)(C)(i) of the Act requires that, ``if the
Secretary has not updated amounts established'' under the revised ASC
payment system in a calendar year, the payment amounts ``shall be
increased by the percentage increase in the Consumer Price Index for
all urban consumers (U.S. city average) as estimated by the Secretary
for the 12-month period ending with the midpoint of the year
involved.'' The statute, therefore, does not mandate the adoption of
any particular update mechanism, but it requires the payment amounts to
be increased by the CPI-U in the absence of any update. Because the
Secretary updates the ASC payment amounts annually, we adopted a
policy, which we codified at 42 CFR 416.171(a)(2)(ii), to update the
ASC conversion factor using the CPI-U for CY 2010 and subsequent
calendar years. Therefore, the annual update to the ASC payment system
is the CPI-U (referred to as the CPI-U update factor).
Section 3401(k) of the Affordable Care Act amended section
1833(i)(2)(D) of the Act by adding a new clause (v) which requires that
``any annual update under [the ASC payment] system for the year, after
application of clause (iv), shall be reduced by the productivity
adjustment described in section 1886(b)(3)(B)(xi)(II)'' of the Act
effective with the calendar year beginning January 1, 2011. The statute
defines the productivity adjustment to be equal to the 10-year moving
average of changes in annual economy-wide private nonfarm business
multifactor productivity (MFP) (as projected by the Secretary for the
10-year period ending with the applicable fiscal year, year, cost
reporting period, or other annual period) (the ``MFP adjustment'').
Clause (iv) of section 1833(i)(2)(D) of the Act authorizes the
Secretary to provide for a reduction in any annual update for failure
to report on quality measures. Clause (v) of section 1833(i)(2)(D) of
the Act states that application of the MFP adjustment to the ASC
payment system may result in the update to the ASC payment system being
less than zero for a year and may result in payment rates under the ASC
payment system for a year being less than such payment rates for the
preceding year.
In the CY 2012 OPPS/ASC final rule with comment period (76 FR
74516), we finalized a policy that ASCs begin submitting data on
quality measures for services beginning on October 1, 2012 for the CY
2014 payment determination under the ASCQR Program. In the CY 2013
OPPS/ASC final rule with comment period (77 FR 68499 through 68500), we
finalized a methodology to calculate reduced national unadjusted
payment rates using the ASCQR Program reduced update conversion factor
that would apply to ASCs that fail to meet their quality reporting
requirements for the CY 2014 payment determination and subsequent
years. The application of the 2.0 percentage point reduction to the
annual update factor, which currently is the CPI-U, may result in the
update to the ASC payment system being less than zero for a year for
ASCs that fail to meet the ASCQR Program requirements. We amended
Sec. Sec. 416.160(a)(1) and 416.171 to reflect these policies.
In accordance with section 1833(i)(2)(C)(i) of the Act, before
applying the MFP adjustment, the Secretary first determines the
``percentage increase'' in the CPI-U, which we interpret cannot be a
negative percentage. Thus, in the instance where the percentage change
in the CPI-U for a year is negative, we would hold the CPI-U update
factor for the ASC payment system to zero. For the CY 2014 payment
determination and subsequent years, under section 1833(i)(2)(D)(iv) of
the Act, we would reduce the annual update by 2.0 percentage points for
an ASC that fails to submit quality information under the rules
established by the Secretary in accordance with section 1833(i)(7) of
the Act. Section 1833(i)(2)(D)(v) of the Act, as added by section
3401(k) of the Affordable Care Act, requires that the Secretary reduce
the annual update factor, after application of any quality reporting
reduction, by the MFP adjustment, and states that application of the
MFP adjustment to the annual update factor after application of any
quality reporting reduction may result in the update being less than
zero for a year. If the application of the MFP adjustment to the annual
update factor after application of any quality reporting reduction
would result in an MFP-adjusted update factor that is less than zero,
the resulting update to the ASC payment rates would be negative and
payments would decrease relative to the prior year. We refer readers to
the CY 2011 OPPS/ASC final rule with comment period (75 FR 72062
through 72064) for illustrative examples of how the MFP adjustment is
applied to the ASC payment system.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41031), based on IHS
Global Insight's (IGI's) 2014 first quarter forecast with historical
data through 2013 fourth quarter, for the 12-month period ending with
the midpoint of CY 2015, the CPI-U update was projected to be 1.7
percent. Also, based on IGI's 2014 first quarter forecast, the MFP
adjustment for the period ending with the midpoint of CY 2015 was
projected to be 0.5 percent. IGI is a nationally recognized economic
and financial forecasting firm that contracts with CMS to forecast the
components of CMS' market baskets as well as the CPI-U and MFP. We
finalized the methodology for calculating the MFP adjustment in the CY
2011 MPFS final rule with comment period (75 FR 73394 through 73396) as
revised in the CY 2012 MPFS final rule with comment period (76 FR 73300
through 73301). The ASCQR Program affected payment rates beginning in
CY 2014 and, under this program, there is a 2.0 percentage point
reduction to the CPI-U for ASCs that fail to meet the ASCQR Program
requirements.
We proposed to reduce the CPI-U update of 1.7 percent by the MFP
adjustment of 0.5 percentage point, resulting in an MFP-adjusted CPI-U
update factor of 1.2 percent for ASCs meeting the quality reporting
requirements. Therefore, we proposed to apply a 1.2 percent MFP-
adjusted CPI-U update factor to the CY 2014 ASC conversion factor for
ASCs meeting the quality reporting requirements. We proposed to reduce
the CPI-U update of 1.7 percent by 2.0 percentage points for ASCs that
do not meet the quality

[[Page 66939]]

reporting requirements and then apply the 0.5 percentage point MFP
reduction. Therefore, we proposed to apply a -0.8 percent quality
reporting/MFP-adjusted CPI-U update factor to the CY 2014 ASC
conversion factor for ASCs not meeting the quality reporting
requirements. We also proposed that if more recent data are
subsequently available (for example, a more recent estimate of the CY
2015 CPI-U update and MFP adjustment), we would use such data, if
appropriate, to determine the CY 2015 ASC update for the final rule
with comment period.
For CY 2015, we also proposed to adjust the CY 2014 ASC conversion
factor ($43.471) by the proposed wage index budget neutrality factor of
0.9983 in addition to the MFP-adjusted update factor of 1.2 percent
discussed above, which results in a proposed CY 2015 ASC conversion
factor of $43.918 for ASCs meeting the quality reporting requirements.
For ASCs not meeting the quality reporting requirements, we proposed to
adjust the CY 2014 ASC conversion factor ($43.471) by the proposed wage
index budget neutrality factor of 0.9983 in addition to the quality
reporting/MFP-adjusted update factor of -0.8 percent discussed above,
which results in a proposed CY 2015 ASC conversion factor of $43.050.
We invited public comment on these proposals.
Comment: Some commenters stated that CMS should replace the CPI-U
as the update mechanism for ASC payments with the hospital market
basket. Commenters stated that the CPI-U measures inflation in a basket
of consumer goods atypical of what ASCs purchase. In addition, the
commenters stated that the Affordable Care Act requires CMS to reduce
the update by a measure of productivity gains, which inappropriately
subjects ASCs to two productivity adjustments: improvements reflected
in the price of consumer purchased goods and the additional statutorily
required reduction. While the commenters maintained that the hospital
market basket would be the most appropriate update for ASCs, they
suggested that there are various alternatives within the CPI-U that CMS
could explore that more accurately reflect the economic climate in the
ASC environment. For instance, CMS could use subsets of the CPI-U
(medical care, medical care services, and outpatient services) that are
consistent with the services being provided in the ASC setting.
MedPAC commented that, in the CY 2013 rulemaking, CMS requested
public comment on the feasibility of ASC cost information to determine
whether CPI-U or another type of update factor would be more
appropriate, but that CMS did not propose to begin collecting ASC cost
data. MedPAC acknowledged that there may be a burden associated with
requiring ASCs to submit cost reports, but recommended that CMS collect
some sort of ASC cost data, such as through surveys.
Response: As we have stated in response to similar comments in the
past (for example, 77 FR 68465; 78 FR 75088 through 75089), we continue
to believe that, while commenters argue that the items included in the
CPI-U index may not adequately measure inflation for the goods and
services provided by ASCs, the hospital market basket does not align
with the cost structures of ASCs. Hospitals provide a much wider range
of services, such as room and board and emergency services, and the
costs associated with providing these services are not part of the ASC
cost structure. Therefore, at this time, we do not believe that it is
appropriate to use the hospital market basket for the ASC annual
update.
We recognize that the CPI-U is an output price index that accounts
for productivity. However, section 1833(i)(2)(D)(v) of the Act requires
the agency to reduce the annual update factor by the MFP adjustment.
For the reasons stated above, we do not believe that the hospital
market basket appropriately reflects the cost structures of ASCs, and
because we do not have cost data on ASCs, we are continuing to use the
CPI-U which we believe provides a reasonable approximation of the price
increases facing ASCs. We will continue to explore the feasibility of
collecting ASC cost data. However, based on our past experience, we do
not believe that collecting such data through surveys would be
productive. We appreciate the commenter's suggestion to adjust the CPI-
U, such as by using subsets of services within the CPI-U, for
productivity and will take this suggestion into consideration if we
propose changes to the ASC update factor in the future.
After consideration of the public comments we received, we are
applying our established methodology for determining the final CY 2015
ASC conversion factor. Using more complete CY 2013 data for this final
rule with comment period than were available for the proposed rule, we
calculated a wage index budget neutrality adjustment of 0.9998. Based
on IGI's 2014 third quarter forecast, the CPI-U for the 12-month period
ending with the midpoint of CY 2015 is now projected to be 1.9 percent,
while the MFP adjustment (as discussed and finalized in the CY 2012
MPFS final rule with comment period (76 FR 73300 through 73301)) is 0.5
percent, resulting in an MFP-adjusted CPI-U update factor of 1.4
percent for ASCs that meet the quality reporting requirements. The
final ASC conversion factor of $44.071, for ASCs that meet the quality
reporting requirements, is the product of the CY 2014 conversion factor
of $43.471 multiplied by the wage index budget neutrality adjustment of
0.9998 and the MFP-adjusted CPI-U payment update of 1.4 percent. For
ASCs that do not meet the quality reporting requirements, we are
reducing the CPI-U update of 1.9 percent by 2.0 percentage points and
then we are applying the 0.5 percentage point MFP reduction, resulting
in a -0.6 percent quality reporting/MFP-adjusted CPI-U update factor.
The final ASC conversion factor of $43.202 for ASCs that do not meet
the quality reporting requirements is the product of the CY 2014
conversion factor of $43.471 multiplied by the wage index budget
neutrality adjustment of 0.9998 and the quality reporting/MFP-adjusted
CPI-U payment update of -0.6 percent.
3. Display of CY 2015 ASC Payment Rates
Addenda AA and BB to this CY 2015 OPPS/ASC final rule with comment
period (which are available via the Internet on the CMS Web site)
display the final updated ASC payment rates for CY 2015 for covered
surgical procedures and covered ancillary services, respectively. For
those covered surgical procedures and covered ancillary services where
the payment rate is the lower of the final rates under the ASC standard
ratesetting methodology and the MPFS final rates, the final payment
indicators and rates set forth in this rule are based on a comparison
using the MPFS rates effective January 1, 2015. These payment rates and
indicators do not include the effect of the negative update to the MPFS
payment rates effective April 1, 2015 under current law. Updates to
these rates and payment indicators effective April l, 2015 will be
included in the April 2015 quarterly ASC addenda posted on the CMS Web
site. For a discussion of the MPFS rates, we refer readers to the CY
2015 MPFS final rule with comment period. The payment rates included in
these addenda reflect the full ASC payment update and not the reduced
payment update used to calculate payment rates for ASCs not meeting the
quality reporting requirements under the ASCQR Program. These addenda
contain several types of information related to the CY 2015 payment
rates. Specifically, in Addendum AA, a ``Y'' in the column titled
``Subject to Multiple

[[Page 66940]]

Procedure Discounting'' indicates that the surgical procedure will be
subject to the multiple procedure payment reduction policy. As
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66829 through 66830), most covered surgical procedures are subject to a
50-percent reduction in the ASC payment for the lower-paying procedure
when more than one procedure is performed in a single operative
session. Display of the comment indicator ``CH'' in the column titled
``Comment Indicator'' indicates a change in payment policy for the item
or service, including identifying discontinued HCPCS codes, designating
items or services newly payable under the ASC payment system, and
identifying items or services with changes in the ASC payment indicator
for CY 2015. Display of the comment indicator ``NI'' in the column
titled ``Comment Indicator'' indicates that the code is new (or
substantially revised) and that the payment indicator assignment is an
interim assignment that is open to comment in the final rule with
comment period.
The values displayed in the column titled ``CY 2015 Payment
Weight'' are the relative payment weights for each of the listed
services for CY 2015. The payment weights for all covered surgical
procedures and covered ancillary services whose ASC payment rates are
based on OPPS relative payment weights were scaled for budget
neutrality. Therefore, scaling was not applied to the device portion of
the device-intensive procedures, services that are paid at the MPFS
nonfacility PE RVU-based amount, separately payable covered ancillary
services that have a predetermined national payment amount, such as
drugs and biologicals and brachytherapy sources that are separately
paid under the OPPS, or services that are contractor-priced or paid at
reasonable cost in ASCs.
To derive the CY 2015 payment rate displayed in the ``CY 2015
Payment Rate'' column, each ASC payment weight in the ``CY 2015 Payment
Weight'' column was multiplied by the CY 2015 conversion factor of
$44.071. The conversion factor includes a budget neutrality adjustment
for changes in the wage index values and the annual update factor as
reduced by the productivity adjustment (as discussed in section
XII.H.2.b. of this final rule with comment period).
In Addendum BB, there are no relative payment weights displayed in
the ``CY 2015 Payment Weight'' column for items and services with
predetermined national payment amounts, such as separately payable
drugs and biologicals. The ``CY 2015 Payment'' column displays the CY
2015 national unadjusted ASC payment rates for all items and services.
The CY 2015 ASC payment rates listed in Addendum BB for separately
payable drugs and biologicals are based on ASP data used for payment in
physicians' offices in October 2014.
Addendum E provides the HCPCS codes and short descriptors for
surgical procedures that are to be excluded from payment in ASCs for FY
2015.
We did not receive any public comments regarding the continuation
of our policy to provide CY 2015 ASC payment information as detailed in
Addenda AA and BB. Therefore, Addenda AA and BB to this final rule with
comment period (which are available via the Internet on the CMS Web
site) display the updated ASC payment rates for CY 2015 for covered
surgical procedures and covered ancillary services, respectively, and
provide additional information related to the CY 2015 rates.

XIII. Hospital Outpatient Quality Reporting Program Updates

A. Background

1. Overview
CMS seeks to promote higher quality and more efficient health care
for Medicare beneficiaries. In pursuit of these goals, CMS has
implemented quality reporting programs for multiple care settings
including the quality reporting program for hospital outpatient care,
known as the Hospital Outpatient Quality Reporting (OQR) Program,
formerly known as the Hospital Outpatient Quality Data Reporting
Program (HOP QDRP). The Hospital OQR Program has generally been modeled
after the quality reporting program for hospital inpatient services
known as the Hospital Inpatient Quality Reporting (IQR) Program
(formerly known as the Reporting Hospital Quality Data for Annual
Payment Update (RHQDAPU) Program).
In addition to the Hospital IQR and Hospital OQR Programs, CMS has
implemented quality reporting programs for other care settings that
provide financial incentives for the reporting of quality data to CMS.
These additional programs include reporting for care furnished by:
Physicians and other eligible professionals, under the
Physician Quality Reporting System (PQRS, formerly referred to as the
Physician Quality Reporting Program Initiative (PQRI));
Inpatient rehabilitation facilities, under the Inpatient
Rehabilitation Facility Quality Reporting Program (IRF QRP);
Long-term care hospitals, under the Long-Term Care
Hospital Quality Reporting (LTCHQR) Program;
PPS-exempt cancer hospitals, under the PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program;
Ambulatory surgical centers, under the Ambulatory Surgical
Center Quality Reporting (ASCQR) Program;
Inpatient psychiatric facilities, under the Inpatient
Psychiatric Facility Quality Reporting (IPFQR) Program;
Home health agencies, under the Home Health Quality
Reporting Program (HH QRP); and
Hospices, under the Hospice Quality Reporting Program.
In addition, CMS has implemented two value-based purchasing
programs, the Hospital Value-Based Purchasing (Hospital VBP) Program
and the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP),
that link payment to performance.
In implementing the Hospital OQR Program and other quality
reporting programs, we have focused on measures that have high impact
and support national priorities for improved quality and efficiency of
care for Medicare beneficiaries as reflected in the National Quality
Strategy (NQS) and CMS Quality Strategy, as well as conditions for
which wide cost and treatment variations have been reported, despite
established clinical guidelines. To the extent possible under various
authorizing statutes, our ultimate goal is to align the clinical
quality measure requirements of our various quality reporting programs.
As appropriate, we will consider the adoption of measures with
electronic specifications to enable the collection of this information
as part of care delivery.
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68467 through 68469) for a discussion on the principles
underlying consideration for future measures that we intend to use in
implementing this and other quality reporting programs.
2. Statutory History of the Hospital OQR Program
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72064 through 72065) for a detailed discussion of the
statutory history of the Hospital OQR Program.

[[Page 66941]]

3. Measure Updates and Data Publication
a. Maintenance of Technical Specifications for Quality Measures
CMS maintains technical specifications for previously adopted
Hospital OQR Program measures. These specifications are updated as we
continue to develop the Hospital OQR Program. The manuals that contain
specifications for the previously adopted measures can be found on the
QualityNet Web site at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244.
Many of the quality measures used in Medicare and Medicaid
reporting programs are endorsed by the National Quality Forum (NQF). We
note that not all of the measures adopted by the Hospital OQR Program
are NQF-endorsed, nor is NQF endorsement a program requirement (section
1833(t)(17)(C)(i) of the Act). As part of its regular maintenance
process for endorsed performance measures, the NQF requires measure
stewards (owners/developers) to submit annual measure maintenance
updates and undergo maintenance of endorsement review every 3 years. In
the measure maintenance process, the measure steward is responsible for
updating and maintaining the currency and relevance of the measure and
will confirm existing or minor specification changes with the NQF on an
annual basis. The NQF solicits information from measure stewards for
annual reviews, and it reviews measures for continued endorsement in a
specific 3-year cycle.
We note that the NQF's annual or triennial maintenance processes
for endorsed measures may result in the NQF requiring updates to
measures in order to maintain endorsement status. Other non-NQF
measures may undergo maintenance changes as well. We believe that it is
important to have in place a subregulatory process to incorporate
nonsubstantive updates into the measure specifications for measures
that we have adopted for the Hospital OQR Program so that these measure
specifications remain current. We also recognize that some changes to
measures are substantive in nature and might not be appropriate for
adoption using a subregulatory process.
Therefore, in the CY 2013 OPPS/ASC final rule with comment period
(77 FR 68469 through 68470), we finalized our proposal to follow the
same process for updating Hospital OQR Program measures that we adopted
for the Hospital IQR Program measures, including the subregulatory
process for making updates to the adopted measures (77 FR 53504 through
53505). This process expanded upon the subregulatory process for
updating measures that we finalized in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68766 through 68767).
b. Public Display of Quality Measures
We refer readers to the CY 2014 OPPS/ASC proposed rule (78 FR
43645) for a discussion of our policy for the publication of Hospital
OQR Program data on the Hospital Compare Web site and noninteractive
CMS Web sites.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41033), we did not
propose any changes to our policies on the public display of quality
measures.
Comment: One commenter urged CMS to continue to keep stakeholders
such as physicians, hospitals, measure developers, and patient groups
engaged in public reporting to ensure that accurate and beneficial
reporting is performed. This commenter encouraged CMS to establish
streamlined policies and procedures for partnering with nongovernmental
entities that have an interest in posting data through ongoing
communication with these stakeholders, including the rulemaking
process.
Response: We interpret the commenter's suggestion to ``. . .
establish streamlined policies and procedures for partnering with
nongovernmental entities that have an interest in posting data . . .''
to mean that we should establish streamlined policies and procedures to
partner with physicians, hospitals, measure developers, and patient
groups that wish to be involved in our quality data reporting efforts.
To the extent feasible and practical, we work with as many stakeholders
as possible to ensure data are accurately reported and displayed on
Hospital Compare and other CMS Web sites. In the future, we will
continue working with stakeholders to consolidate and streamline
reporting.

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

In the CY 2013 OPPS/ASC final rule with comment period (77 FR
68471), we finalized a policy that once a quality measure is adopted
for the Hospital OQR Program, it is retained for use in subsequent
years unless otherwise specified.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41033), we did not
propose any changes to the process for retaining measures previously
adopted.

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

1. Considerations in Removing Quality Measures From the Hospital OQR
Program
In the FY 2010 IPPS/LTCH PPS final rule, we finalized a process for
immediate retirement, which we later termed ``removal'' (74 FR 43863),
of Hospital IQR Program measures based on evidence that the continued
use of the measure as specified raised patient safety concerns. We
adopted the same immediate measure retirement policy for the Hospital
OQR Program in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60634 through 60635). We refer readers to the CY 2013 OPPS/ASC final
rule with comment period (77 FR 68472 through 68473) for a discussion
of our reasons for changing the term ``retirement'' to ``removal'' in
the Hospital OQR Program.
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185), we finalized
a set of criteria for determining whether to remove measures from the
Hospital IQR Program. These criteria are: (1) Measure performance among
hospitals is so high and unvarying that meaningful distinctions and
improvements in performance can no longer be made (``topped-out''
measures); (2) performance or improvement on a measure does not result
in better patient outcomes; (3) a measure does not align with current
clinical guidelines or practice; (4) the availability of a more broadly
applicable (across settings, populations, or conditions) measure for
the topic; (5) the availability of a measure that is more proximal in
time to desired patient outcomes for the particular topic; (6) the
availability of a measure that is more strongly associated with desired
patient outcomes for the particular topic; and (7) collection or public
reporting of a measure leads to negative unintended consequences such
as patient harm. These criteria were suggested through public comment
on proposals for the Hospital IQR Program, and we determined that these
criteria are also applicable in evaluating the Hospital OQR Program
quality measures for removal.
In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68472
through 68473), we finalized our proposal to apply these measure
removal criteria in the Hospital OQR Program as well. In addition to
the Hospital IQR Program's criteria, we consider eliminating measure
redundancy and incorporating the views of the Measure Applications
Partnership (MAP) when evaluating measures for removal.

[[Page 66942]]

2. Criteria for Removal of ``Topped-Out'' Measures
In the CY 2015 OPPS/ASC proposed rule (79 FR 41033 through 41034),
we proposed to refine the criteria for determining when a measure is
``topped-out.'' We had previously finalized that a measure is ``topped-
out'' when measure performance among hospitals is so high and unvarying
that meaningful distinctions and improvements in performance can no
longer be made (``topped-out'' measures) (77 FR 68472). We do not
believe that measuring hospital performance on ``topped-out'' measures
provides meaningful information on the quality of care provided by
hospitals. We further believe that quality measures, once ``topped-
out,'' represent care standards that have been widely adopted by
hospitals. We believe such measures should be considered for removal
from the Hospital OQR Program because their associated reporting burden
may outweigh the value of the quality information they provide.
In order to determine ``topped-out'' status, we proposed to apply
the following two criteria, the first of which was previously adopted
by the Hospital VBP Program for certain measures in the Hospital
Inpatient VBP Program final rule (76 FR 26510). The second criterion is
a modified version of what was previously adopted by the Hospital VBP
Program in the above mentioned final rule (76 FR 26510), with the
change from the ``less than'' operator (<) to the ``less than or equal
to'' operator (<=). Specifically, we proposed that a measure under the
Hospital OQR Program is ``topped-out'' when it meets both of the
following criteria:
Statistically indistinguishable performance at the 75th
and 90th percentiles; and
A truncated coefficient of variation less than or equal to
0.10.
To identify if a measure has statistically indistinguishable
performance at the 75th and 90th percentiles, we would determine
whether the difference between the 75th and 90th percentiles for a
measure is within two times the standard error of the full dataset. The
coefficient of variation (CV) is a descriptive statistic that expresses
the standard deviation as a percentage of the sample mean; this
provides a statistic that is independent of the units of observation.
Applied to this analysis, a large CV would indicate a broad
distribution of individual hospital scores, with large and presumably
meaningful differences between hospitals in relative performance. A
small CV would indicate that the distribution of individual hospital
scores is clustered tightly around the mean value, suggesting that it
is not useful to draw distinctions among individual hospitals' measure
performance. The truncated CV excludes observations with rates below
the 5th percentile and above the 95th percentile. We adopted the second
of these ``topped-out'' criteria for the Hospital VBP Program (79 FR
50055). Both criteria were adopted for the Hospital IQR Program (79 FR
50204) and are being adopted for the ASCQR Program (section XIV.A.3. of
this final rule with comment period).
We invited public comment on this proposal.
Comment: Many commenters supported CMS' proposed criteria for
identifying ``topped-out'' measures. Some commenters recommended that
CMS proceed cautiously, expressing concern that removal of measures
could disrupt hospitals' quality improvement efforts. Some commenters
believed there is value in collecting data on some topped-out measures,
regardless of national performance scores. Other commenters urged CMS
to assess the topped-out measures individually and in a broader context
before removing them.
Response: We agree that, in some cases, measures that are
quantitatively ``topped-out'' may still be appropriate if, for example,
the specified care topic is important to providers and/or beneficiaries
or if some classes or some hospitals may still have room for
improvement with the measure. We recognize that some measures may not
be appropriate for the topped-out analysis, including measures of
outcomes for which small numbers are desired (for example, hospital-
acquired infection and patient safety oriented measures). We note that
``topped-out'' status is only one of many factors we consider in
removing measures. We consider the removal of each topped-out measure
on a case-by-case basis, as appropriate, and determine whether a
clinical or other quality improvement need for the measure justifies
the retention of a topped-out measure that otherwise meets our
criteria. We refer readers to III.C.1. of this final rule with comment
period, ``Considerations in Removing Quality Measures from the Hospital
OQR Program,'' for a discussion of the different factors we consider in
removing measures.
Comment: Many commenters urged CMS to continue monitoring
performance on ``topped-out'' measures to ensure that high performance
continues and that quality gains are sustained.
Response: We expect hospitals to always follow appropriate
standards-of-care and clinical guidelines regardless of whether a
quality measure exists. We believe that HOPDs are committed to
providing quality care to patients and we do not have any indication
that HOPDs will stop doing so when measures are removed. We currently
monitor the performance of removed measures to ensure that performance
does not decline significantly and will continue to do so. However, we
must balance the costs of continued monitoring of a successful measure
with high levels of performance with the adoption of other measures
where there are opportunities for improvement in clinical quality.
At this time, we believe the two finalized topped-out criteria will
ensure the detection of potential topped-out measures that have high
performance with little variability. However, we will consider the need
for refinement and, if we determine changes may be necessary, we will
propose such changes in future rulemaking.
After consideration of the public comments we received, we are
finalizing the ``topped-out'' criteria as proposed. Specifically, we
are finalizing a policy that a measure under the Hospital OQR Program
is ``topped-out'' when it meets both of the following criteria: (1)
Statistically indistinguishable performance at the 75th and 90th
percentiles; and (2) a truncated coefficient of variation less than or
equal to 0.10. To identify if a measure has statistically
indistinguishable performance at the 75th and 90th percentiles, we will
determine whether the difference between the 75th and 90th percentiles
for a measure is within two times the standard error of the full
dataset. However, consistent with our discussion above at XIII.C.1. of
this final rule with comment period, ``Considerations in Removing
Quality Measures from the Hospital OQR Program,'' we evaluate different
factors in considering the removal of measures. We will assess the
benefits of retaining a measure on a case-by-case basis before
proposing to remove a measure from the Hospital OQR Program.
3. Removal of Measures From the Hospital OQR Program for the CY 2017
Payment Determination and Subsequent Years
In the CY 2015 OPPS/ASC proposed rule (79 FR 41034), we proposed to
remove three measures for the CY 2017 payment determination and
subsequent years: OP-4, OP-6, and OP-7. Based on our analysis of
Hospital OQR Program

[[Page 66943]]

chart-abstracted measure data for January 1, 2013-June 30, 2013 (Q1-Q2)
encounters, the following measures met both: (1) The previously
finalized criteria for being ``topped-out''; that is, measure
performance among hospitals is so high and unvarying that meaningful
distinctions and improvements in performance can no longer be made (77
FR 68472); and (2) the two criteria we finalized in section XIII.C.2.
of this final rule with comment period for determining ``topped-out''
status. These measures are:
OP-4: Aspirin at Arrival (NQF # 0286);
OP-6: Timing of Antibiotic Prophylaxis; and
OP-7: Prophylactic Antibiotic Selection for Surgical
Patients (NQF # 0528).
Therefore, we proposed to remove these three measures from the
Hospital OQR Program beginning with the CY 2017 payment determination.
We believed that removal was appropriate as there appeared little
room for improvement for these measures, all of which address standards
of clinical care. In addition, by removing these measures, we hoped to
alleviate the maintenance costs and administrative burden to hospitals
associated with retaining them. Should we determine that hospital
adherence to these practices has unacceptably declined, we stated that
we would re-propose these measures in future rulemaking. In addition,
we would comply with any requirements imposed by the Paperwork
Reduction Act before reinstituting these measures. We noted that we
removed three measures under the Hospital IQR Program similar to these
measures; the similar measures were AMI-1, SCIP-Inf-1, and SCIP-Inf-2,
respectively. We note that we retained SCIP-Inf-1 and SCIP-Inf-2 as
voluntarily reported electronic clinical quality measures in the
Hospital IQR Program (79 FR 50208).
We invited public comment on these proposals.
Comment: Many commenters supported the proposal to remove OP-4, OP-
6, and OP-7, noting that the removal would reduce administrative burden
on hospitals. Some commenters specifically supported the removal of
these measures to align with the Hospital IQR Program. One commenter
recommended the removal of the three proposed topped-out measures
effective January 2015, to reduce administrative burden for hospitals.
Response: We thank the commenters for their support. We continue to
look for ways to minimize burden as we pursue the quality objectives of
the Hospital OQR Program. We agree that quality of care measures should
be aligned across our quality reporting and value-based purchasing
programs to the extent possible. The patient encounter period for the
CY 2017 payment determination is January 1, 2015 through December 31,
2015. Thus, for patient encounters beginning January 1, 2015, hospitals
would not be required to submit data on any measures that we are
finalizing for removal as discussed below.
Comment: Some commenters inquired about the criteria for resuming
data collection for measures that are removed from the Hospital OQR
Program. One commenter recommended that CMS establish a process,
similar to the one used by NQF, to place a measure in ``reserve
status'' for some time after the measure is determined to be ``topped-
out'' to ensure no ``backsliding'' has occurred. Another commenter
suggested that CMS consider sampling hospitals on their performance on
these removed measures to ensure continued high performance on these
measures.
Response: We thank the commenters for their suggestions to monitor
topped-out measures for continued high performance and we understand
their concerns of backsliding. Should we determine that hospital
adherence to these practices has unacceptably declined; we would
propose to reinstate the measure in future rulemaking to resume data
collection. We expect hospitals to always follow appropriate standards-
of-care and clinical guidelines in exercising positive interventions,
regardless of whether a measure is removed.
Comment: Some commenters urged CMS to retain OP-4 for voluntary
reporting. Some commenters opposed the removal of OP-4, noting that
this measure provides incentives for better care and improves patient
outcomes, and the data help Medicare beneficiaries make informed
choices about their health care options. One commenter recommended that
CMS not remove OP-4 until there are at least 2 years of continued high
performance data.
Response: We agree with the commenters that OP-4 should be
retained. Upon further analysis, we have found that, although
technically ``topped-out,'' the rate distributions for OP-4 indicate
that hospitals with a small number of cases have lower rates. Because
performance for OP-4 is still low in some hospitals, and there is
substantial evidence indicating that aspirin at arrival is associated
with better patient outcomes, we are not finalizing our proposal to
remove OP-4.
Comment: Some commenters opposed the removal of OP-6 and OP-7,
noting that the removal of these measures may cause unnecessary harm to
surgical patients. One commenter recommended that CMS not remove OP-6
and OP-7 until there are at least 2 years of continued high performance
data.
Response: We thank the commenters for expressing their concerns.
Our proposed criteria for topped-out measures did not include a
timeframe for sustained statistical performance; however, we will take
this suggestion into consideration for future rulemaking. Based on our
topped-out analysis, both OP-6 and OP-7 are ``topped-out'' across
hospitals, and we do not believe that removal of these two measures
would cause unnecessary harm to surgical patients because our data show
that hospital performance on OP-6 and OP-7 is high and unvarying,
indicating that HOPDs have been in compliance with OP-6 in exercising
the correct timing as well as with OP-7 in administering the
appropriate antibiotic for surgical patients. In addition, unlike OP-4,
we did not see indications in the measure distributions for OP-6 and
OP-7 that imply outlier hospitals with a small number of cases have
statistically significantly lower rates. Therefore, this leads us to
believe that removal of these two measures would not cause unnecessary
harm to surgical patients. Because our data indicate that hospital
performance on OP-6 and OP-7 is high and unvarying, we believe the
costs associated with the maintenance of our administrative systems and
the costs to hospitals to continue reporting outweigh the benefits of
retaining of these measures in the Hospital OQR Program. We expect
hospitals to follow appropriate standards-of-care and clinical
guidelines in exercising positive interventions, regardless of whether
a measure is removed. Therefore, as noted below, we are finalizing our
proposal to remove the OP-6 and OP-7 measures and will continue to
monitor clinical trends and repropose these measures if we see the
performance gap widening.
Comment: One commenter noted that, beginning with CY 2015
reporting, hospitals will be required to report a new element (Rectal
Culture-Guided Antibiotic) for OP-7. The commenter requested
clarification because CMS proposed to remove this measure.
Response: We clarify that, as stated above, we are removing OP-7
from the Hospital OQR Program beginning with the CY 2017 payment
determination. The patient encounter period for the CY 2017 payment
determination is January 1, 2015 through December 31, 2015. Therefore,
beginning with CY 2015

[[Page 66944]]

patient encounters, hospitals are not required to submit Rectal
Culture-Guided Antibiotic data or other data for OP-7.
After consideration of the public comments we received and for the
reasons we discussed above, we are finalizing our proposal to remove
OP-6 and OP-7 from the Hospital OQR Program as proposed. However, we
are not finalizing our proposal to remove OP-4 and are retaining that
measure in the Hospital OQR Program for reasons discussed above.
Hospitals are to report data on OP-4 as previously required. We refer
readers to the CY 2008 OPPS/ASC final rule with comment period (FR 72
66865), the CY 2013 OPPS/ASC final rule with comment period (77 FR
68482), and the CY 2014 OPPS/ASC final rule with comment period (78 FR
75111 through 75112) for more information about OP-4 and the data
submission requirements. Set out in the table below are the measures we
are removing for the CY 2017 payment determination and subsequent
years.

Hospital OQR Program Measures Removed for the CY 2017 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
NQF # Measure
------------------------------------------------------------------------
N/A.................... OP-6: Timing of Prophylactic Antibiotics
0528................... OP-7: Prophylactic Antibiotic Selection for
Surgical Patients
------------------------------------------------------------------------

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

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

Hospital OQR Program Measure Set Previously Adopted for the CY 2016
Payment Determination and Subsequent Years
------------------------------------------------------------------------
NQF # Measure name
------------------------------------------------------------------------
N/A.................... OP-1: Median Time to Fibrinolysis
0288................... OP-2: Fibrinolytic Therapy Received Within 30
Minutes of ED Arrival ****
0290................... OP-3: Median Time to Transfer to Another
Facility for Acute Coronary Intervention
0286................... OP-4: Aspirin at Arrival
0289................... OP-5: Median Time to ECG
N/A.................... OP-6: Timing of Prophylactic Antibiotics **
528.................... OP-7: Prophylactic Antibiotic Selection for
Surgical Patients **
0514................... OP-8: MRI Lumbar Spine for Low Back Pain
N/A.................... OP-9: Mammography Follow-up Rates
N/A.................... OP-10: Abdomen CT--Use of Contrast Material
0513................... OP-11: Thorax CT--Use of Contrast Material
N/A.................... OP-12: The Ability for Providers with HIT to
Receive Laboratory Data Electronically
Directly into their ONC-Certified EHR System
as Discrete Searchable Data
0669................... OP-13: Cardiac Imaging for Preoperative Risk
Assessment for Non Cardiac Low Risk Surgery
N/A.................... OP-14: Simultaneous Use of Brain Computed
Tomography (CT) and Sinus Computed Tomography
(CT)
N/A.................... OP-15: Use of Brain Computed Tomography (CT) in
the Emergency Department for Atraumatic
Headache
N/A.................... OP-17: Tracking Clinical Results between Visits
0496................... OP-18: Median Time from ED Arrival to ED
Departure for Discharged ED Patients
N/A.................... OP-20: Door to Diagnostic Evaluation by a
Qualified Medical Professional
0662................... OP-21: Median Time to Pain Management for Long
Bone Fracture
N/A.................... OP-22: ED--Left Without Being Seen ****
0661................... OP-23: ED--Head CT or MRI Scan Results for
Acute Ischemic Stroke or Hemorrhagic Stroke
who Received Head CT or MRI Scan
Interpretation Within 45 minutes of Arrival
N/A.................... OP-25: Safe Surgery Checklist Use
N/A.................... OP-26: Hospital Outpatient Volume on Selected
Outpatient Surgical Procedures *
0431................... OP-27: Influenza Vaccination Coverage among
Healthcare Personnel
0658................... OP-29: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for Normal
Colonoscopy in Average Risk Patients
0659................... OP-30: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous Polyps--Avoidance of
Inappropriate Use
1536................... OP-31: Cataracts--Improvement in Patient's
Visual Function within 90 Days Following
Cataract Surgery ***
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measures removed beginning with the CY 2017 payment determination, as
set forth in section XIII.D.3.b. of this final rule with comment
period.
*** Measure collected voluntarily, as set forth in section XIII.D.3.b.
of this final rule with comment period.
**** Name has been updated to correspond with NQF-endorsed name.

Comment: Some commenters expressed views on previously adopted
Hospital OQR Program measures. Some commenters were supportive of
previously adopted measures, and some commenters recommended changing
measure specifications for some measures. Several commenters asked CMS
to consider removing previously

[[Page 66945]]

adopted measures from the Hospital OQR Program, specifically, OP-9, OP-
10, OP-14, OP-15, OP-20, OP-22, and OP-25, because these measures are
no longer NQF-endorsed, are not recommended by the MAP, or are deemed
unsuitable for public reporting.
Response: Because we did not propose to remove OP-9, OP-10, OP-14,
OP-15, OP-20, OP-22, or OP-25 from the Hospital OQR Program, change
their measure specifications, or discuss the related MAP
recommendations in the CY 2015 OPPS/ASC proposed rule, these comments
are beyond the scope of the proposed rule. Therefore, we are not
changing the status of any of the measures referred to by commenters.
However, we will take into consideration commenters' concerns regarding
these measures for future rulemaking.
Regarding removal of measures from the Hospital OQR Program based
upon NQF endorsement, we focus on measures appropriate to the specific
provider category that reflect the level of care and the most important
areas of service and measures for that provider category. Section
1833(t)(17)(C)(i) of the Act requires the Secretary to ``develop
measures that the Secretary determines to be appropriate for the
measurement of the quality of care (including medication errors)
furnished by hospitals in outpatient settings and that reflect
consensus among affected parties and, to the extent feasible and
practicable, shall include measures set forth by one or more national
consensus building entities.'' This provision does not require that the
measures we adopt for the Hospital OQR Program be endorsed by any
particular entity, and we believe that consensus among affected parties
can be achieved by means other than endorsement by a national consensus
building entity, including through the measure development process,
through broad acceptance and use of the measure(s), and through public
comment.
At this time, we continue to believe there is value in collecting
and reporting these measures, but we can consider removal in future
rulemaking. We thank the commenters for the measure suggestions and
will share them with measure stewards.
1. Data Submission Requirements for OP-27: Influenza Vaccination
Coverage Among Healthcare Personnel (NQF # 0431) Reported via NHSN for
the CY 2017 Payment Determination and Subsequent Years
The Influenza Vaccination Coverage among Healthcare Personnel (HCP)
(NQF # 0431) was finalized for the Hospital OQR Program in the CY 2014
OPPS/ASC final rule with comment period (78 FR 75097 through 75099). We
refer readers to the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75116 through 75117) for a discussion of the previously
finalized data submission requirements for this measure. This measure
was previously finalized for the Hospital IQR Program in the FY 2012
IPPS/LTCH PPS final rule (76 FR 51631). In the CY 2015 OPPS/ASC
proposed rule (79 FR 41035), we made two clarifications: (1) correcting
the previously stated submission deadline; and (2) clarifying that
hospitals should report the Influenza Vaccination Coverage among HCP
(NQF # 0431) measure by CMS Certification Number (CCN) rather than
separately reporting for both the inpatient and outpatient setting.
a. Clarification of Submission Deadline and Data Submitted
We noted that there was a typographical error in our discussion in
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75116
through 75117), and we proposed to remedy that error in the proposed
rule. Specifically, we stated that the deadline for hospitals to submit
NHSN hospital-acquired infection (HAI) measure collection data would be
``May 15, 2015, with respect to the October 1, 2015 through March 31,
2015 encounter period'' (78 FR 75117). In the CY 2015 OPPS/ASC proposed
rule, we clarified that the beginning of the encounter period should be
``October 1, 2014'' instead of ``October 1, 2015.'' In addition, we
clarified that the data to be submitted are more specifically referred
to as ``Healthcare Personnel (HCP) Influenza Vaccination summary
reporting data'' instead of ``HAI measure collection data.''
Comment: Commenters supported the CMS clarification of the
reporting deadline for OP-27 because this deadline will align the
reporting for both inpatient and outpatient settings.
Response: We thank commenters for their support. We agree that
measures should be aligned across our quality reporting and value-based
purchasing programs to the extent possible.
As stated above, we are clarifying that the beginning of the
encounter period is October 1, 2014, and that the data to be submitted
are ``Healthcare Personnel Influenza Vaccination summary reporting
data'' instead of ``HAI measure collection data.''
b. Clarification on Reporting by CMS Certification Number (CCN)
We received public comment about the burden of separately
collecting HCP influenza vaccination status for both the hospital
inpatient and outpatient settings (78 FR 75098). We believe that
reporting a single vaccination count for each health care facility
enrolled in NHSN will be less burdensome to facilities. Therefore, in
response to these concerns, we collaborated with CDC and clarified in
an Operational Guidance document that, beginning with the 2014-2015
influenza season (CY 2014 reporting period and CY 2016 payment
determination), facilities will report data to NHSN by enrolled
facility (also known as OrgID). CDC will then translate and submit the
data to CMS on behalf of the facilities by CCN.\1\ The CDC also has
produced an Operational Guidance document regarding reporting for this
measure, which can be found at: http://www.cdc.gov/nhsn/PDFs/HCP/Operational-Guidance-ACH-HCP-Flu.pdf.
---------------------------------------------------------------------------

\1\ We erroneously referred to ``CNN'' in the CY 2015 OPPS/ASC
proposed rule (79 FR 41035). We have corrected that reference in
this final rule with comment period to ``CCN.''
---------------------------------------------------------------------------

Reporting data in this way will allow health care facilities with
multiple care settings to simplify data collection and submit a single
count applicable across the inpatient and outpatient settings. We will
then publicly report the percentage of HCP who received an influenza
vaccination per CCN. This single count per CCN will inform the public
of the percentage of vaccinated HCP at a particular healthcare
facility, which would still provide meaningful data and help to improve
the quality of care. Specific details on data submission for this
measure can be found at: http://www.cdc.gov/nhsn/acute-care-hospital/hcp-vaccination/ and at: http://www.cdc.gov/nhsn/acute-care-hospital/index.html. This clarification was also noted in the FY 2015 IPPS/LTCH
PPS final rule for the Hospital IQR Program (79 FR 50217).
Comment: Many commenters supported CMS' guidance allowing hospitals
to report OP-27 for both the inpatient and outpatient settings using
one single count because it provides a clearer picture of vaccination
rates, reduces provider burden, and aligns the inpatient and outpatient
settings. Some commenters, however, requested further clarification on
this guidance because the Hospital IQR Program clarified in the FY 2015
IPPS/LTCH PPS final rule that hospitals ``should report a single count
per enrolled facility, and not CCN'' and that facilities should
``collect

[[Page 66946]]

and submit a single vaccination count for each health care facility
enrolled in NHSN by facility OrgID.''
Response: We thank commenters for their support of the guidance
issued. Consistent with the Hospital IQR Program in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50217), for OP-27, hospitals should report a
single count per enrolled facility (by OrgID), and not per CCN. We
require facilities to collect and submit a single vaccination count for
each health care facility enrolled in NHSN by facility OrgID.
Comment: One commenter was concerned that viewers of Hospital
Compare will not understand that the measure entails data in both
hospital inpatient and outpatient settings. The commenter believed this
would create confusion among consumers and misinform their decision-
making.
Response: We thank the commenter for its concern. However, we do
not agree that reporting a single vaccination count for each enrolled
health care facility will cause confusion. We believe that it will be
easier for consumers to understand the influenza vaccination rate of a
hospital as a whole when we combine data for both the inpatient and
outpatient settings, and we believe the measure is important enough for
it to be implemented in both the inpatient and outpatient settings.
As stated above, we clarify that, consistent with the Hospital IQR
Program and CDC Operational Guidance, hospitals should report to NHSN a
single count per enrolled facility by the facility OrgID.
2. Delayed Data Collection for OP-29 and OP-30
In the CY 2014 OPPS/ASC final rule with comment period, we adopted
OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for
Normal Colonoscopy in Average Risk Patients (NQF # 0558) (78 FR 75102)
and OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for
Patients with a History of Adenomatous Polyps--Avoidance of
Inappropriate Use (NQF # 0659) (78 FR 75102), both chart-abstracted
measures, and proposed that aggregate data would be collected via an
online Web-based tool (the QualityNet Web site) beginning with the CY
2016 payment determination. We finalized that, for the CY 2016 payment
determination, hospitals would be required to submit aggregate-level
encounter data between July 1, 2015 and November 1, 2015 for data
collected during January 1, 2014 through December 31, 2014 (78 FR
75114).
On December 31, 2013, we issued guidance stating that we would
delay the implementation of OP-29 and OP-30 for 3 months for the CY
2016 payment determination, changing the encounter period from January
1, 2014 through December 31, 2014 to April 1, 2014 through December 31,
2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772854917). The data submission window for data collected from April 1,
2014 through December 31, 2014 is still July 1, 2015 through November
1, 2015. The data submission windows and the encounter periods for
subsequent years remain as previously finalized (78 FR 75114);
hospitals are to submit Web-based data between July 1 and November 1 of
the year prior to a payment determination with respect to the encounter
period of January 1 to December 31 of 2 years prior to a payment
determination year.
Comment: Several commenters noted their support for efforts to
limit the overuse of colonoscopies, but expressed concern that OP-29
and OP-30 are burdensome because they are chart-abstracted measures,
have not been specified or tested at the facility level, and are
measures of physician quality rather than facility quality. Another
commenter stated that these measures are not yet meaningful due to low
sample sizes and the lack of specifications detailed with algorithms
for the measures.
Response: We have previously responded to the commenters' concerns
that the measure is not specified or tested at the facility level and
is a measure of physician quality rather than facility quality. We
refer readers to our responses in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75099 through75103) where we finalized these
measures. We continue to believe the measures are suitable for HOPDs
based on the reasons we discussed in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75100 through 75102). In addition, we
understand the commenters' concerns regarding the administrative effort
associated with chart-abstraction. We will continue to examine options
for less burdensome reporting mechanisms for these and other program
measures in the future.
Comment: Many commenters supported CMS' delayed collection of OP-29
and OP-30, but requested specific rationale for the delay.
Response: Based on feedback from stakeholders, we believed it would
be too burdensome to require hospitals to implement OP-29 and OP-30 by
January 1, 2014 since these measures could require coordination with
other physicians (78 FR 75113). Consequently, we delayed the data
collection period until April 1, 2014. We believe that this 3-month
period was sufficient to allow hospitals to put the necessary
mechanisms in place to collect these data.
3. OP-31: Cataracts--Improvement in Patient's Visual Function within 90
Days Following Cataract Surgery
In the CY 2014 OPPS/ASC final rule with comment period, we adopted
OP-31 Cataracts--Improvement in Patient's Visual Function within 90
Days Following Cataract Surgery (NQF # 1536) for the CY 2016 payment
determination and subsequent years (78 FR 75103). This measure assesses
the rate of patients 18 years and older (with a diagnosis of
uncomplicated cataract) in a sample who had improvement in visual
function achieved within 90 days following cataract surgery based on
completing both a pre-operative and post-operative visual function
survey.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41036), we: (1)
Corrected our response to public comments, (2) noted our decision to
delay data collection for the CY 2016 payment determination, and (3)
proposed voluntary data collection for the CY 2017 payment
determination and subsequent years for OP-31: Cataracts: Improvement in
Patient's Visual Function within 90 Days Following Cataract Surgery
(NQF # 1536).
a. Correction of Response to Public Comments
In the CY 2014 OPPS/ASC final rule with comment period, we stated,
in response to commenters concerned that the proposed chart-abstracted
measures had not been field-tested, that ``all three measures that we
are finalizing . . . were field-tested in the HOPD facility setting by
the measure stewards. These three measures are: (1) Endoscopy/Polyp
Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in
Average Risk Patients (NQF # 0658); (2) Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a History of Adenomatous
Polyps--Avoidance of Inappropriate Use (NQF # 0659); and (3) [OP-31]
Cataracts: Improvement in Patient's Visual Function within 90 Days
Following Cataract Surgery (NQF # 1536)'' (78 FR 75099 through 75100).
We inadvertently misstated that the OP-31: Cataracts: Improvement
in Patient's Visual Function within 90 Days Following Cataract Surgery
(NQF # 1536) had been field-tested in the HOPD

[[Page 66947]]

setting, and we are clarifying here that this measure has not been
field-tested in that setting. However, we note that, in considering and
selecting this measure, we took into account other principles or
factors, including: NQS goals, type of measure, HHS Strategic Plan and
Initiatives, NQF endorsement, MAP support, stakeholder input, alignment
with quality goals and settings, relevance, utility, and burden. More
information about these principles can be found in the CY 2014 OPPS/ASC
proposed rule and final rule with comment period (78 FR 43643 through
43644) and in the CY 2013 OPPS/ASC final rule with comment period (77
FR 68467 through 68468).
b. Delayed Data Collection for OP-31 and Exclusion From the CY 2016
Payment Determination Measure Set
Since our adoption of this measure, we have come to believe that it
can be operationally difficult for hospitals to collect and report this
measure. Specifically, we are concerned that the results of the survey
used to assess the pre-operative and post-operative visual function of
the patient may not be shared across clinicians, making it difficult
for hospitals to have knowledge of the visual function of the patient
before and after surgery.
We also are concerned about the use of inconsistent surveys to
assess visual function; the measure specifications allow for the use of
any validated survey and results may be inconsistent should clinicians
use different surveys. Therefore, on December 31, 2013, we issued
guidance stating that we would delay the implementation of OP-31 by 3
months from January 1, 2014 to April 1, 2014 for the CY 2016 payment
determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772854917). Because of continuing concerns, on April 2, 2014, we issued
additional guidance stating that we would further delay the
implementation of the measure from April 1, 2014 to January 1, 2015 for
the CY 2016 payment determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228721506778). In the CY 2015 OPPS/ASC proposed rule (79 FR 41036), we
proposed to exclude OP-31 Cataracts: Improvement in Patient's Visual
Function within 90 Days Following Cataract Surgery (NQF # 1536) from
the CY 2016 payment determination measure set. We proposed not to
subject hospitals to a payment reduction with respect to this measure
for the CY 2016 payment determination.
We invited comment on this proposal.
Comment: Many commenters commended CMS' recognition of the
associated operational issues and the proposal to exclude OP-31 from
the CY 2016 payment measure determination set. Other commenters
disagreed; they stated that complications following cataract surgery
are not acceptable, and they strongly believed that OP-31 tracks
patient-centered clinical outcomes and improves care coordination among
providers.
Response: We agree that complications following cataract surgery
are not acceptable. While OP-31 does not address complications
following cataract surgery, it does address improvement in visual
function following cataract surgery and tracks an important patient-
centered clinical outcome. Based on stakeholder feedback, we believe
this measure should be excluded from the CY 2016 payment determination
because there are a low number of hospitals ready to operationalize
this measure for the CY 2016 payment determination. As noted below, we
believe that by the CY 2017 payment determination, many more hospitals
will be operationally able to collect the data necessary for this
measure and may choose to do so.
After consideration of the public comments we received, we are
finalizing our proposal to exclude OP-31 from the CY 2016 payment
determination measure set as proposed. Therefore, we will not subject
hospitals to a payment reduction with respect to OP-31 for the CY 2016
payment determination.
c. Voluntary Collection of Data for OP-31 for the CY 2017 Payment
Determination and Subsequent Years
We continue to believe that OP-31 promotes accountability for
Medicare beneficiaries, improve coordination of services, reduce
fragmented care, encouraged redesigned care processes for high quality
and efficient service delivery, and incentivize higher value care (78
FR 75099). Furthermore, we believe that HOPDs should be partners in
care with physicians and other clinicians, and this measure provides an
opportunity to do so. Therefore, we are continuing to include this
measure in the Hospital OQR Program measure set. However, in the CY
2015 OPPS/ASC proposed rule (79 FR 41036), we proposed that hospitals
have the option to voluntarily collect and submit OP-31 data for the CY
2015 encounter period/CY 2017 payment determination and subsequent
years. In addition, we proposed to not subject hospitals to a payment
reduction with respect to this measure during the period of voluntary
reporting. For hospitals that choose to submit data voluntarily, we
would request that they submit such data using the means and timelines
finalized in the CY 2014 OPPS/ASC final rule with comment period (78 FR
75112 through 75113). Data submitted voluntarily will be publicly
reported as discussed in the CY 2014 OPPS/ASC proposed rule (78 FR
43645) and final rule with comment period (78 FR 75092).
We invited public comment on this proposal.
Comment: Many commenters requested that CMS remove the measure from
the program entirely, rather than delaying implementation and allowing
voluntary reporting. The commenters repeated similar concerns expressed
in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75099
through 75103), where this measure was finalized, regarding associated
burden, suitability for the Hospital OQR Program versus the PQRS,
program alignment of this measure, non-standardization of collected
information, NQF endorsement, MAP recommendations, and coordination
challenges faced by facilities.
Response: We do not agree that we should remove the measure
entirely, because we believe OP-31 addresses an area of care that is
not adequately addressed in our current measure set and is an important
area of care coordination between performing physicians, practitioners
that assess visual function, and HOPDs where procedures are performed.
We previously addressed the above concerns in our responses the CY 2014
OPPS/ASC final rule with comment period where we finalized this measure
and refer readers to that final rule with comment period (78 FR 75099
through 75103) for a discussion of these issues.
Comment: Commenters opposed to voluntary reporting of OP-31 were
concerned that incomplete display of data is confusing and not
meaningful to consumers and is hard to validate. Furthermore,
commenters feared that the display of data from some hospitals but not
others would lead some patients to conclude that some hospitals are
more committed to improving cataract surgery.
Response: We appreciate the commenters' concerns, but we do not
agree that voluntary data reporting will result in data that are
confusing, are not meaningful, or cause patients to conclude that some
hospitals are more committed to improving cataract surgery. There are
many situations

[[Page 66948]]

where hospitals do not submit information to the Hospital OQR Program
due to lack of cases or low case volume. Where quality information is
submitted, we make this information publicly available as statutorily
required, and we state when it is not available. Furthermore, reporting
of measure data by some hospitals and not others under voluntary
reporting would not affect the validity of data reported for this Web-
based measure any more so than a required measure where not all
hospitals had cases. We note that at this time, we do not validate
aggregate data submitted to CMS using an online tool, so difficulty to
validate this information is not a program issue. We refer readers to
section XIII.H.3 of this final rule with comment period where we
discuss our validation procedures.
We understand some facilities are capable of reporting data for
this measure at this time, and we believe those facilities should
report if they are operationally able to do so. We believe voluntary
reporting is beneficial for HOPDs because all HOPDs, both participating
and not participating in voluntary reporting, can use the reported data
to gauge their own performance and identify improvement efforts. By
retaining the measure but allowing voluntary reporting, we can continue
to monitor the data submitted to assess further enhancement of the
measure as necessary.
Comment: Commenters expressed support for patient-reported outcome
measures like OP-31 and recommended additional outcome measures for
cataract procedures, such as Complications within 30 Days Following
Cataract Surgery Requiring Additional Procedures (NQF #0564) and Better
Visual Acuity Within 90 Days Following Cataract Surgery (NQF #0565).
Response: We thank the commenters for the support and their input
regarding patient-reported outcome measures. We may consider these
suggestions for future measure selection.
Comment: One commenter suggested that CMS allow voluntary reporting
for all newly adopted measures, given the inconvenience and burden
associated with preparing to report a measure that later may become
suspended or for which we delay implementation.
Response: We thank the commenter for the suggestion. We understand
that hospitals may have been inconvenienced by this measure, but
disagree that all newly adopted measures should be voluntarily
reported. We have retained the vast majority of measures adopted for
the Hospital OQR Program.
After consideration of the public comments we received, we are
finalizing our proposal that hospitals have the option to voluntarily
collect and submit OP-31 data for the CY 2015 encounter period/CY 2017
payment determination and subsequent years as proposed. For hospitals
that choose to submit data, we request that they submit such data using
the means and timelines finalized in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75113 through 75115). We will not subject
hospitals to a payment reduction with respect to this measure during
the period of voluntary reporting. However, data submitted voluntarily
will be publicly reported.

E. New Quality Measure for the CY 2018 Payment Determination and
Subsequent Years

In the CY 2015 OPPS/ASC proposed rule (79 FR 41036 through 41039),
we proposed to adopt one new claims-based measure into the Hospital OQR
Program for the CY 2017 payment determination and subsequent years: OP-
32: Facility 7-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy. Colonoscopy is one of the most frequently
performed procedures in the outpatient setting in the United States.\2\
The most recent data available indicate that, in 2002 alone, physicians
performed an estimated 14 million colonoscopies in the United
States.\3\ Colonoscopies are associated with a range of well-described
and potentially preventable adverse events that can lead to hospital
visits, repeat procedures, or surgical intervention for treatment,
including colonic perforation, gastrointestinal (GI) bleeding, and
cardiopulmonary events such as hypoxia, aspiration pneumonia, and
cardiac arrhythmias. While hospital visits are generally unexpected
after outpatient colonoscopy, the literature suggests that the majority
of these visits occur within the first 7 days.^{4 5 6} Reported
hospital visit rates after outpatient colonoscopy range from 0.8 to 1.0
percent at 7 to 14 days post procedure, and from 2.4 to 3.8 percent at
30 days post procedure.^{7 8 9} Some adverse events such as
bleeding occur after the 7th day, but based on input from clinical
experts, public comment, and empirical analyses, we concluded that
unplanned hospital visits within 7 days is the optimal outcome to
ensure capture of procedure-related adverse events and to minimize
capture of hospital visits unrelated to the procedure. This measure
provides the opportunity for providers to improve quality of care and
to lower the rates of adverse events leading to hospital visits after
outpatient colonoscopy; this measure will encourage providers to
achieve the outcome rates of the best performers.
---------------------------------------------------------------------------

\2\ Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based
Ambulatory Surgery, 2007: Statistical Brief #86. Healthcare Cost and
Utilization Project (HCUP) Statistical Briefs. Rockville (MD) 2006.
\3\ Seeff LC, Richards TB, Shapiro JA, et al. How many
endoscopies are performed for colorectal cancer screening? Results
from CDC's survey of endoscopic capacity. Gastroenterology. Dec
2004; 127(6):1670-1677.
\4\ Rathgaber SW., Wick TM. Colonoscopy completion and
complication rates in a community gastroenterology practice.
Gastrointest Endosc. 2006; 64:556-62.
\5\ Rabeneck L, Saskin R, Paszat LF. Onset and clinical course
of bleeding and perforation after outpatient colonoscopy: A
population-based study. Gastrointest Endosc. 2011; 73:520-3.
\6\ Ko CW, Riffle S, Michael L, et al. Serious complications
within 30 days of screening and surveillance colonoscopy are
uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73.
\7\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor
complications and time lost from normal activities after screening
or surveillance colonoscopy. Gastrointest Endosc. Apr 2007;
65(4):648-656.
\8\ Leffler DA, Kheraj R, Garud S, et al. The incidence and cost
of unexpected hospital use after scheduled outpatient endoscopy.
Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
\9\ Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A,
Brooks R. Is there a relationship between physician and facility
volumes of ambulatory procedures and patient outcomes? J Ambul Care
Manage. Oct-Dec 2008; 31(4):354-369.
---------------------------------------------------------------------------

We believe it is important to reduce adverse patient outcomes
associated with preparation for colonoscopy, the procedure itself, and
follow-up care. Therefore, we proposed to include OP-32: Facility 7-Day
Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy,
which is based on paid Medicare FFS claims, in the Hospital OQR Program
for the CY 2017 payment determination and subsequent years. We expect
that the measure would promote improvement in patient care over time
because transparency in publicly reporting measure scores will make
patient unplanned hospital visits (emergency department visits,
observation stays, and inpatient admissions) following colonoscopies
more visible to providers and patients and encourage providers to
incorporate quality improvement activities in order to reduce these
visits. Providers are often unaware of complications following
colonoscopy for which patients visit the hospital.\10\ This risk-
standardized quality measure will address this information gap and

[[Page 66949]]

promote quality improvement by providing feedback to facilities and
physicians, as well as transparency for patients on the rates and
variation across facilities in unplanned hospital visits after
colonoscopy.
---------------------------------------------------------------------------

\10\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
---------------------------------------------------------------------------

The outcome measured in the OP-32 measure is all-cause, unplanned
hospital visits (admissions, observation stays, and emergency
department visits) within 7 days of an outpatient colonoscopy
procedure. The measure score, also referred to as the facility-level
risk-standardized hospital visit rate, is derived from the calculation
of the ratio of the numerator to the denominator multiplied by the
crude rate. The numerator is the number of predicted (meaning adjusted
actual) hospital visits, which is the number of unplanned hospital
visits within 7 days of colonoscopy that the facility is predicted to
have based on its case-mix. The denominator is the number of expected
hospital visits, which is the number of unplanned hospital visits the
facility is expected to have based on the nation's performance with the
facility's case-mix. The crude rate is the national unadjusted number
of patients who had a hospital visit post-colonoscopy among all
patients who had a colonoscopy.
Based on discussions with clinical and technical panel experts, the
measure excludes colonoscopies for patients undergoing concomitant
high-risk upper GI endoscopy because these patients are at a higher
risk for hospital visits than patients undergoing a typical
colonoscopy, and patients with a history of inflammatory bowel disease
(IBD) or diverticulitis in the year preceding the colonoscopy because
we likely could not fully characterize and adjust for their pre-
procedure risk of needing a post-procedure hospital visit or identify
whether these admissions are planned or unplanned. The measure also
excludes procedures for patients who lack continuous enrollment in
Medicare FFS Parts A and B in the 1 month after the procedure to ensure
all patients have complete data available for outcome assessment. The
statistical risk adjustment model includes 15 clinically relevant risk-
adjustment variables that are strongly associated with risk of hospital
visits within 7 days following colonoscopy. Additional methodology
details and information obtained from public comments for measure
development are available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html under ``Hospital Outpatient Colonoscopy.''
Section 1890A(a)(2) of the Act outlines the pre-rulemaking process
established under section 1890A of the Act, which requires the
Secretary to make available to the public by December 1 of each year a
list of quality and efficiency measures that the Secretary is
considering. This measure was included on a publicly available document
titled ``MAP Pre-Rulemaking Report: 2014 Recommendations on Measures
for More than 20 Federal Programs'' on the NQF Web site at: http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx (formerly referred to as the ``List of Measures Under
Consideration'') in compliance with section 1890A(a)(2) of the Act. (We
note that at the time the measure was listed on the ``MAP Pre-
Rulemaking Report: 2014 Recommendations on Measures for More than 20
Federal Programs,'' it was named ``High-Acuity Care Visits after
Outpatient Colonoscopy Procedure.'')
The MAP, which represents stakeholder groups, conditionally
supported the measure, ``noting the need to provide outcome information
to inform consumer decisions and drive quality improvement.'' The MAP
further stated that ``[t]his measure addresses an important quality and
safety issue with incidence of these events ranging from 10 to 22 per
1,000 after risk adjustment.'' However, the MAP also ``recognized the
need for the measure to be further developed and gain NQF endorsement.
The MAP expects the endorsement process to resolve questions of the
reliability and validity of the measure as well as with the accuracy of
the algorithm for attributing claims data in light of possible effects
of the Medicare 3-day payment window policy.'' As required under
section 1890A(a)(4) of the Act, we considered the input and
recommendations provided by the MAP in selecting measures to propose
for the Hospital OQR Program.
We believe we have addressed the concerns raised by the MAP to the
extent possible. The measure is well-defined and precisely specified
for consistent implementation within and between organizations that
will allow for comparability. Reliability testing demonstrated the
measure data elements produced were repeatable; that is, the same
results were produced a high proportion of the time when assessed in
the same population in the same time period. Validity testing
demonstrated that the measure data elements produce measure scores that
correctly reflect the quality of care provided and that adequately
identify differences in quality. In order to ensure the accuracy of the
algorithm for attributing claims data and the comprehensive capture of
HOPD colonoscopies potentially affected by the policy, we identified
physician claims for colonoscopy in the HOPD setting from the Medicare
Part B Standard Analytical Files (SAF) with an inpatient admission
within 3 days and lacking a corresponding HOPD facility claim. We then
attribute the colonoscopies identified as affected by this policy to
the appropriate HOPD facility using the facility provider ID from the
inpatient claim.
Section 1833(t)(17)(C)(i) of the Act states that, ``The Secretary
shall develop measures . . . that reflect consensus among affected
parties and, to the extent feasible and practicable, shall include
measures set forth by one or more national consensus building
entities.'' We believe that this proposed measure reflects consensus
among the affected parties, because the MAP, which represents
stakeholder groups, reviewed, conditionally supported the measure, and
stated that it ``would provide valuable outcome information to inform
consumer decision and drive quality improvement.'' Further, the measure
was subject to public comment during the MAP and measure development
processes, with some public commenters agreeing with the MAP's
conclusions on the measure (MAP Report, January 2014, p. 184 http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx). We also note that the measure was submitted to NQF
for endorsement on February 21, 2014.
Currently, there are no publicly available quality of care reports
for providers or facilities that conduct outpatient colonoscopies.
Thus, adoption of this measure provides an opportunity to enhance the
information available to patients choosing among providers who offer
this elective procedure. We believe this measure would reduce adverse
patient outcomes associated with preparation for colonoscopy, the
procedure itself, and follow-up care by capturing and making more
visible to providers and patients all unplanned hospital visits
following the procedure. Further, providing outcome rates to providers
will make visible to clinicians meaningful quality differences and
encourage improvement. Although this measure is not NQF-endorsed, it is
currently undergoing the endorsement process, as noted above.
Therefore, we believe the

[[Page 66950]]

statutory requirement for included measures to have, to the extent
feasible and practicable, been set forth by a national consensus-
building entity has been met.
We invited public comment on the proposal to include OP-32 in the
Hospital OQR Program for the CY 2017 payment determination and
subsequent years.
Comment: Several commenters supported the adoption of OP-32,
stating that it will provide patients with important information about
the quality of colonoscopy care furnished in outpatient settings. Some
commenters noted that CMS has appropriately considered the MAP's input
in adopting this measure and that the measure's adoption is a good
first step in the continued evolution of the Hospital OQR Program.
Response: We thank commenters for their support and acknowledgement
that the measure is appropriate for the Hospital OQR Program. We agree
that measuring quality of care associated with colonoscopy procedures
is an important clinical care area to assess for HOPDs.
Comment: Many commenters urged CMS not to adopt OP-32 until it is
NQF-endorsed. Several of these commenters also noted that the MAP
supported this measure on condition of NQF-endorsement, and stated that
the NQF process would resolve a number of questions about the
reliability, validity and feasibility of this measure. The commenters
requested that, in general, CMS only include measures in the Hospital
OQR Program that have been NQF-endorsed in order to avoid subsequent
suspension or removal of these measures.
Response: We note that not all of the measures adopted by the
Hospital OQR Program are NQF-endorsed, and as we stated in our earlier
discussion in this final rule with comment period, NQF endorsement is
not a program requirement, as consensus among affected parties can be
reached through means other than NQF endorsement. Under section
1833(t)(17)(C)(i) of the Act, the Secretary must develop measures that
reflect consensus among affected parties and, to the extent feasible
and practicable, must include measures set forth by one or more
national consensus building entities.
Whenever possible, we strive to adopt NQF-endorsed measures because
these measures will meet these requirements. However, we believe the
requirements that measures reflect consensus among affected parties can
be achieved in other ways, including through the measure development
process, through broad acceptance and use of the measure, and through
public comments. Further, it may not be feasible or practicable to
adopt an NQF-endorsed measure, such as when an NQF-endorsed measure
does not exist. Section 1833(t)(17)(C)(i) of the Act does not require
that each measure we adopt for the OQR Program be endorsed by a
national consensus building entity, or by the NQF specifically. As
discussed below, we believe the measure as developed exhibits
sufficient levels of reliability, validity, and feasibility to be
adopted for the Hospital OQR Program. We have also submitted this
measure to the NQF for endorsement.
Comment: A few commenters noted that the measure is currently being
reviewed by the NQF All-Cause Admissions and Readmissions Standing
Committee. Commenters were disappointed that the Committee's minutes
indicated there were no discussions of consideration of key elements of
the measure's construction and testing.
Response: We thank the commenters for sharing their concerns. We
believe the NQF process is rigorous and transparent. We understand the
NQF All-Cause Admissions and Readmissions Standing Committee applies
the four NQF criteria for measure endorsement \11\ and votes on each
criterion. In addition, our understanding is that the measure was
discussed in detail by NQF working groups prior to the measure
discussion at the All-Cause Admissions and Readmissions Standing
Committee (http://www.qualityforum.org/ProjectMaterials.aspx?projectID=73619).
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\11\ Available at: http://www.qualityforum.org/docs/measure_evaluation_criteria.aspx.
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NQF also seeks public comments on measures before endorsement.
http://www.qualityforum.org/comments_By_Project.aspx?projectID=110&ActivityID=762#p=3. (This link
requires users to log in to the NQF Web site.) For questions related to
NQF internal procedures, we suggest contacting the NQF directly at
http://www.qualityforum.org/About_NQF/Contact_NQF.aspx.
Comment: Many commenters did not support CMS' proposal to finalize
OP-32, stating that complications from colonoscopies are rare and
hospitals already take steps to ensure colonoscopies are conducted in
such a way so as to eliminate preventable complications. Some
commenters specifically noted that the literature indicates the
measured incidence rate is less than 2 percent, and does not rise to
the level of importance needed for a national quality measurement
program.
Response: Given the widespread use of colonoscopy for colorectal
cancer screening in the outpatient setting, we consider measuring the
quality of this high volume procedure to be a priority. We agree that
the incidence of colonoscopy complications is relatively low. However,
serious adverse events, such as perforation of the bowel and bleeding,
may occur following colonoscopies. We view OP-32 as a critical outcome
measure for which the goal is to drive toward and sustain zero harm. In
addition, some literature suggests that many facilities performing
colonoscopies are unaware of patients accessing hospital-based care
with adverse events because patients return to different facilities,
including other hospitals and emergency departments, and would not
return to the same outpatient facility. For example, one study showed
that physicians were unaware of nearly 75 percent of hospital
admissions for adverse events following colonoscopy.\12\ While most
colonoscopies are performed without subsequent complication, we note
that, among Medicare patients aged 65 and older, 1.6 percent of
outpatient colonoscopies resulted in an unplanned hospital visit within
7 days.\13\ This is based on a 20-percent sample of nationwide Medicare
FFS patients. If we were to use full national data (that is, a 100
percent sample), we estimate 1.7 million colonoscopies would have been
performed among Medicare FFS patients and nearly 27,000 unplanned
hospitals visits would have occurred within 7 days of colonoscopy.
These findings suggest that adverse events are not as rare or
inconsequential as many believed and that quality measurement for
colonoscopy procedures in the hospital outpatient setting is important.
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\12\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med. Oct 25 2010; 170(19): 1752-1757.
\13\ 2010 Medicare 20 percent fee-for-service sample. Based on
an analysis of 20 percent sample of Medicare FFS data from 2010
during measure development. The 20 percent sample included 332,391
outpatient colonoscopies meeting the measure inclusion and exclusion
criteria, and 1.6 percent of these colonoscopies were followed by an
unplanned hospital visit. This equates to 5,331 unplanned hospital
visits in the 20 percent sample.
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Comment: Many commenters expressed concern that OP-32 includes
hospital visits unrelated to colonoscopy (counted in the numerator).
Some commenters questioned why the measure uses an all-cause
categorization versus only admissions attributable to colonoscopies.
One commenter suggested that all high-risk colonoscopies (such as
patients with multiple biopsies, patients with

[[Page 66951]]

inflammatory bowel disease, and diverticulitis) should be excluded from
the measure. Commenters recommended that OP-32 should be limited to
low-risk surveillance and screening colonoscopies as well as
nontherapeutic colonoscopies for Medicare patients. One commenter
appreciated that OP-32 includes a mechanism for excluding hospital
visits for certain ``planned'' procedures, but encouraged CMS to expand
that list to also include bone fractures and behavioral health
disorders.
Response: We clarify that this measure is purposely designed to use
a broad outcome of hospital visits following surgery rather than a
narrow set of easily identifiable complications. From a patient and
health care system perspective, the goal of this measure is to
encourage and inform provider efforts to minimize all potential acute
complications, not just those narrowly related to procedural technique.
This is important as the literature ^{14 15 16 17 18} suggests
that hospital visits following colonoscopy occur due to a range of
adverse events relating to the bowel preparation, anesthesia, the
colonoscopy procedure itself, and follow-up care. These adverse events
include a range of symptoms and signs such as abdominal pain, bloating,
dizziness and collapse, electrolyte disturbances, and cardiorespiratory
symptoms (from sedation use) in addition to other complications, such
as bleeding and bowel perforation, that are directly related to
procedural techniques. The broad outcome of unplanned hospital visits
captures all of these potential acute complications of colonoscopy.
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\14\ Day LW, Kwon A, Inadomi JM, et al. Adverse events in older
patients undergoing colonoscopy: a systematic review and meta-
analysis. 2011; 74:885-96.
\15\ Ko CW, Dominitz JA. Complications of colonoscopy: Magnitude
and management. Gastrointest Endosc Clin N Am 2010;20:659-71.
\16\ ASGE Standards of Practice Committee, Fisher DA, Maple JT,
et al. Complications of colonoscopy. Gastrointest Endosc
2011;74:745-52.
\17\ Baudet JS, Diaz-Bethencourt D, Aviles J, et al. Minor
adverse events of colonoscopy on ambulatory patients: The impact of
moderate sedation. Eur J Gastroenterol Hepatol 2009; 21:656-61.
\18\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor
complications and time lost from normal activities after screening
or surveillance colonoscopy. 2007; 65:648-56.
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As to the suggestion of expanding the list to include bone
fractures and behavioral health disorders, we note that inpatient
admissions for bone fracture and behavioral health disorders (such as
depression and anxiety) are typically acute and are not generally
considered as ``planned'' admissions. We do not expect planned
admissions for these conditions within the first 7-days following
colonoscopy. Furthermore, we have adapted the planned readmission
algorithms developed by CMS independent of OP-32. This algorithm has
been validated against medical record (chart-extracted) data to ensure
it only removes planned admissions.
Our goal for including the measure is to encourage providers to be
mindful of reducing post-colonoscopy admission caused by prior
colonoscopy procedures performed at a HOPD. For example, patients may
be at higher risk of falls post-colonoscopy secondary to dehydration
following the bowel preparation for the procedure, and there may be
opportunities for providers to minimize this risk. Furthermore, we
removed planned admissions from the measure outcome by adapting CMS'
Planned Readmission Algorithm version 3.0.\19\ \20\ This algorithm
removes nonacute admissions for scheduled procedures (for example,
total hip replacement) and other types of care always considered
planned (for example, rehabilitation or maintenance chemotherapy) from
the outcome because these admissions do not reflect differences in
colonoscopy quality of care.
---------------------------------------------------------------------------

\19\ Horwitz L, Grady J, Dorsey K, Zhang W, Keenan M, Keshawarz
A, Cohen D, Ngo C, Okai M, Nwosu C, Lin Z, Bhat K, Krumholz H,
Bernheim S. 2014 Measures Updates and Specifications Report:
Hospital-Wide All-Cause Unplanned Readmission--Version 3.0. 2014:
Centers for Medicare & Medicaid Services, 2014.
\20\ Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
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Comment: One commenter noted that CMS stated that the statistical
risk adjustment model includes 15 clinically relevant risk- adjustment
variables (such as number of polyps removed) that are strongly
associated with risk of hospital visits within seven days following
colonoscopy and certain patients receiving colonoscopies that would be
more likely to have a subsequent visit were excluded. The commenter
stated that CMS did not report the variation between hospitals in the
application for NQF-endorsement. The commenter raised the possibility
of no statistically significant difference between a hospital's risk-
adjusted visit rate and the national average. The commenter believed
this scenario would make it impossible to identify poor performers and
good performers for this measure. Without this type of differentiation,
the commenter did not understand how this measure will be actionable
for care improvement. The commenter suggested that CMS conduct a root
cause analysis for specific related readmission after colonoscopy or
test of the variation of the measure between hospital providers. The
commenter also suggested that The Joint Commission's guidelines and
relevant Conditions of Participation standards would enhance care
improvement efforts.
Response: We thank the commenter for their suggestions to enhance
improvement efforts for colonoscopy. We clarify that, in the
application for NQF endorsement, we noted that the measure, following
risk-adjustment, is able to detect statistically significant variation
(good and poor performers) between outpatient facilities by
demonstrating measure score variation using the 2010 Healthcare Cost
and Utilization Project (HCUP) data from four States (California, New
York, Nebraska, and Florida). Using a very conservative bootstrapping
(sampling with replacement) statistical technique, we constructed 95
percent interval estimates (similar to confidence intervals) around the
facility measure score and used the estimates to place facilities into
three performance categories: worse than expected; no different than
expected; and better than expected. Based on this analysis, we
identified 5 outlier facilities among a total of 992 ASCs and HOPDs.
This analysis included only about one-tenth of all outpatient
facilities in the United States, and typically we see greater variation
between facilities when 100 percent of nationwide facilities are
included for actual measure implementation and reporting due to
increased precision related to greater sample size.
We disagree with the notion that there is a possibility of no
statistically significant difference between a hospital's risk-adjusted
visit rate and the national average. Our analysis shows statistically
significant facility variation. Some facilities have a hospital visit
rate that is higher than the expected national average rate and this is
statistically significant. Also, we only tested provider variation
using data from 4 States. We expect greater variation and more outliers
using nationwide data.
We are committed to filling the performance gaps in colonoscopy
performed in the outpatient setting. Therefore, we believe this measure
is appropriate for the outpatient setting. However, in response to
comments, to allow sufficient time to conduct further analysis of this
measure, we are finalizing this measure beginning with the CY 2018
payment determination, rather than the CY 2017 payment determination as
proposed. We plan to perform a dry run of the measure in

[[Page 66952]]

2015. From our perspective, a dry run is a preliminary analysis of data
in which HOPDs may review their measure results, and ask questions
about and become familiar with the measure methodology. Dry runs will
include 3 to 4 years of paid Medicare FFS claims. We will use the most
recent complete claims samples (usually 6 to 9 months prior to the
start date) for dry runs. For example, if the dry run begins in March
2015, the most recent data available may be July 2011 to June 2014
(assuming we use 3 years of data). Because we use paid Medicare FFS
claims, HOPDs will not need to submit any additional data for the dry
run. General information about dry run as well as confidential reports
will be made available for hospitals to review on their accounts at
https://www.qualitynet.org. The dry run will generate confidential
reports at the patient level, indicating whether the patient had a
hospital visit, the type of visit (admission, emergency department
visit, or observational stay), the admitting facility, and the
principal discharge diagnosis. Further, the dry run will enable HOPDs
to see the measure score reports and have the opportunity to receive
individual patient data and information contained within individual
patient records. In addition, we will continue to generate these
reports for HOPDs after we implement the measure beginning with the CY
2018 payment determination. HOPDs can use the information to identify
performance gaps and develop quality improvement strategies.
Dry run results are not linked to public reporting, payment
determinations, or reliability testing. We expect the dry run to take
approximately one month to conduct, during which facilities will be
provided the confidential report and the opportunity to review their
performance and provide feedback to us. The measure will have no
payment impact until the CY 2018 payment determination and subsequent
years. Public display of data will occur on or after December 1, 2017,
but there will be no public display of the dry run data.
We agree that adhering to The Joint Commission's guidelines and
relevant Conditions of Participation standards could enhance care
improvement efforts and hospitals' rates on this measure, and we
encourage hospitals to follow these guidelines and standards. We also
believe that issuing reports to hospitals, such as those that we will
provide during the dry-run, would help hospitals to identify the root
cause (practices and conditions) that could cause hospital visits after
colonoscopy.
Comment: Many commenters expressed concern that OP-32 is not
sufficiently reliable to be included in the Hospital OQR Program;
specifically, the measure developer has indicated that the measure is
only ``fairly'' reliable, with an interclass correlation coefficient
(ICC) of 0.335. These commenters contended that ``fair'' reliability is
not sufficient for publicly reported quality metrics since such
information could misinform the public, and urged CMS to conduct an
analysis on the measure's reliability to understand the amount of data
required to achieve ``good'' reliability. Several commenters argued
that ``good'' reliability should result in an ICC of at least 0.60.
Other commenters believed that reliability will improve with several
years' worth of data. Another commenter requested that data from this
measure be withheld from public reporting until concerns about its
reliability and validity can be thoroughly assessed.
Response: We disagree with commenters and believe that OP-32 is
sufficiently reliable to be included in the Hospital OQR Program. The
ICC value submitted in the initial NQF application (0.335) was
calculated using a split sample of data from 2 years. We randomly split
the patient cohort at each hospital into two equal halves, calculated
the measure using each half, and then calculated the agreement between
these two (the `test' and the `retest'). After submitting the measure
to NQF for endorsement review, we conducted additional calculations of
the reliability testing score, this time using the Spearman-Brown
prophecy formula. The Spearman-Brown prophecy formula is an accepted
statistical method which estimates the ICC if the sample were
increased. Therefore, it allows us to estimate what the reliability
score would be if all observations were used for public reporting
rather than using a split sample. Our Spearman-Brown prophecy formula
calculations resulted in a higher ICC of 0.43.
The NQF considers the ICC values ranging from 0.21 to 0.40 as
``fair'' reliability and values ranging from 0.41 to 0.60 as
``moderate'' reliability. Therefore, the ICC values of 0.335 and 0.43
are interpreted as ``fair'' and ``moderate'' reliability, respectively.
These ICC values are also in line with other NQF-endorsed outcome
measures used in other CMS programs. For example, in the Hospital
Readmissions Reduction Program, the Inpatient Acute Myocardial
Infarction (AMI) 30-day Risk Standardized Readmission measure (NQF
#0505) (76 FR 51667) has an ICC of 0.369, and the Pneumonia (PN) 30-day
Risk Standardized Readmission measure (NQF #0506), also in the Hospital
Readmissions Reduction Program (76 FR 51667), has an ICC of 0.406. Both
measures are NQF-endorsed.
Regarding the concerns that the public may be misinformed and that
we should withhold public reporting until the measure's reliability and
validity is addressed, as stated above, we believe the reliability of
the measure is sufficiently reliable for inclusion in the Hospital OQR
Program and do not agree that the public may be misinformed or that we
should withhold public reporting. In addition to our calculations
above, reliability testing previously conducted by the measure steward
demonstrated the measure data elements produced were repeatable; that
is, the same results were produced a high proportion of the time when
assessed in the same population in the same time period. Also, validity
testing by the measure steward demonstrated that the measure data
elements produce measure scores that correctly reflect the quality of
care provided and that adequately identify differences in quality.
As the commenters suggested, the measure reliability may be further
improved by using several years' worth of data; however, we must
balance the reliability of the measure with the timeliness of the
measure. As discussed, at this time, we believe that 1 year of data
appropriately balances these competing interests for payment
determination purposes, but we will continue to assess this belief
during the dry run. Also, we will consider conducting additional
reliability assessments of the measure using an extended data period.
Moreover, we believe it is important to include this measure in the
program because colonoscopy is a high volume, common procedure
performed at outpatient facilities and is frequently performed on
relatively healthy patients to screen for colorectal cancer (CRC).
Given the widespread use of colonoscopy, understanding and minimizing
procedure-related adverse events is a high priority. These adverse
events, such as abdominal pain, bleeding, and intestinal perforation,
can result in unanticipated hospital visits post procedure. Physicians
performing colonoscopies are often unaware that patients seek acute
care at hospitals following the procedure and the associated adverse
events are potentially preventable. We strongly believe that the
measure would promote improvement in patient care over time because
transparency in publicly

[[Page 66953]]

reporting measure scores would make patient unplanned hospital visits
(emergency department visits, observation stays, and inpatient
admissions) following colonoscopies more visible to HOPDs and patients
and incentivize HOPDs to incorporate quality improvement activities in
order to reduce these visits.
Finally, we believe this measure should be included in the program
because currently, this risk-standardized colonoscopy quality measure
is the only measure available that would address this information gap
and promote quality improvement by providing feedback to facilities and
physicians, as well as transparency for patients on the rates and
variation across facilities in unplanned hospital visits after
colonoscopy. There are no publicly available quality of care reports
for HOPDs that conduct outpatient colonoscopies. Therefore, adoption of
this measure provides an opportunity to enhance the information
available to patients choosing among HOPDs that offer this elective
procedure. We believe this measure would reduce adverse patient
outcomes associated with preparation for colonoscopy, the procedure
itself, and follow-up care by capturing and making more visible to
HOPDs and patients all unplanned hospital visits following the
procedure. In addition, providing outcome rates to HOPDs would make
visible to clinicians meaningful quality differences and incentivize
improvement.
In response to comments, however, to allow sufficient time to
conduct further analysis of this measure, we are finalizing this
measure beginning with the CY 2018 payment determination, rather than
the CY 2017 payment determination as proposed. We plan to perform a dry
run (a preliminary analysis) of the measure in 2015. We refer readers
to our discussion of the dry run above, in response to a previous
comment.
With national implementation of a dry run of this measure, we will
also review the appropriate cutoff volume for facilities, if necessary,
in reporting the measure score. We require a minimum volume (cutoff
volume) of colonoscopies per facility to be able to calculate a
reliable measure score for the facility. We have yet to determine the
minimum volume per facility (that is, the cutoff colonoscopy volume).
Because we used a Medicare 20 percent sample to develop the measure, we
could not estimate this cutoff during measure development. However,
testing during the measure dry-run with 100 percent of the sample per
facility will help us to determine the appropriate cutoff volume of
colonoscopies per facility. HOPDs will be notified via the QualityNet
Web site of the cutoff volume of colonscopies per facility.
While some HOPDs perform too few colonoscopies for us to calculate
a measure score, and we would not publicly report their data, these
facilities would remain in the measure cohort. Typically, for public
reporting of hospital measures on the Hospital Compare Web site, the
measure score is reported as ``Number of cases too small'' for
hospitals with fewer cases than the cutoff. We will use the same
protocol when the measure is publicly reported for the Hospital OQR
Program, and will report a measure score as ``Number of cases too
small'' for HOPDs with fewer cases than the cutoff on the QualityNet
Web site.
Comment: Many commenters were concerned that HOPDs may not have
actionable information generated from OP-32. Specifically, commenters
were concerned that claims would not accurately capture the data of
patients who had initial colonoscopy at a facility but had a subsequent
hospital visit at a different facility. Several of these commenters
questioned whether this measure will benefit facilities or patients if
each facility only receives a report with an aggregate number of claims
based on historical data. Commenters requested that CMS clarify its
plan to report detailed patient-level data confidentially to facilities
that indicate whether the patient had a hospital visit, the type of
visit (admission, emergency department visit, and observational stay),
the admitting facility, and the principal discharge diagnosis. These
reports would enable facilities to understand their performance and
take steps where remediation is needed. One commenter also recommended
that CMS allow at least a two-quarter black-out period so that
hospitals have ample time to review and request corrections to their
data.
Response: We do not believe that claims data will be difficult to
capture at a facility different from where the colonoscopy was
performed. Hospitals are responsible for accurately populating claims,
regardless of where the patient had the procedure done.
In addition, due to commenters' concerns, we intend to conduct a
dry run (discussed in detail above) and provide detailed facility
specific information containing confidential patient-level data to all
HOPDs. The dry run will generate confidential reports at the patient
level, indicating whether the patient had a hospital visit, the type of
visit (admission, emergency department visit, or observational stay),
the admitting facility, and the principal discharge diagnosis. Further,
it will enable HOPDs to see the measure score reports and have the
opportunity to receive individual patient data and information
contained within individual patient records. In addition, we will
continue to generate these reports for HOPDs after we implement the
measure beginning with the CY 2018 payment determination. HOPDs can use
the information to identify performance gaps and develop quality
improvement strategies. As we previously stated, dry runs have no
payment impact and are not linked to public reporting. The main purpose
of the dry run is to provide opportunities for hospitals to review
their measure results and ask questions about measure methodology.
Comment: A few commenters stated that the measure methodology
should include risk adjustment for socioeconomic factors so the results
are accurate and reflect differences in socioeconomic burden and racial
composition of patients across hospitals. Commenters were concerned
that without proper risk adjustment, a hospital that serves a
disproportionate share of low-income patients with confounding
socioeconomic factors may have more unplanned visits following
outpatient procedures. Commenters stated that the measure score can be
skewed by factors such as race, homelessness, cultural and linguistic
barriers, and low literacy. Commenters also stated that the
readmissions of low-income patients with confounding socioeconomic
factors are caused by factors beyond the control of the hospital and,
therefore, do not reflect the quality of care being provided. Several
commenters recommended that, after the NQF has reviewed OP-32, CMS
consider submitting this measure as part of the socioeconomic status
(SES) trial period created by the NQF Board of Directors.
Response: We do not believe that the measure is biased for low-
income patients with confounding socioeconomic factors. When developing
the measure, we tested how the measure score varied among outpatient
facilities with varying proportion of low SES patients. Using patient
dual eligibility status as an indicator of low SES, we noted that the
median measure score, and the measure score distribution, was similar
among facilities with many low SES patients compared to facilities with
a few low SES patients. Based on our testing as well as input from the
measure developer and the national technical expert panel, we concluded
that facilities with a high proportion of low

[[Page 66954]]

SES patients were not biased by this measure and that the measure score
was unaffected by SES status. These findings were presented to the NQF
All-Cause Admissions and Readmissions Measures Standing Committee on
May 6, 2014.\21\
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\21\ Available at: http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_Measures.aspx.
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Also, we thank the commenters for the suggestions to submit the
measure as part of the SES trial period, which is a trial for a defined
period that would assess the impact and implications of risk adjusting
relevant quality measures for sociodemographic factors and was a
recommendation of the Consensus Standards Approval Committee following
its review of the NQF Expert Panel's report Risk Adjustment for
Socioeconomic Status and Other Sociodemographic Factors. (http://www.qualityforum.org/Press_Releases/2014/NQF_Board_Approves_Trial_Risk_Adjustment.aspx). We will take this
suggestion into consideration in future years.
Comment: One commenter requested clarification of how the measure
numerator and denominator for OP-32 are calculated.
Response: The measure score is the ratio of predicted hospital
visits (numerator) over the expected hospital visits (denominator)
multiplied by the crude national rate. The measure score numerator is
the predicted rate, which is the number of unplanned hospital visits
the facility is predicted to have within 7 days of colonoscopy, and it
accounts for the observed unplanned hospital visit rate, the number of
colonoscopies performed at the facility, and the facility's case mix.
This is sometimes referred to as the ``adjusted actual rate.''
The measure score denominator is the expected rate, which is the
number of unplanned hospital visits the facility is expected to have
based on the nation's performance with that facility's case and mix. It
is the sum of all patients' expected probabilities of a hospital visit,
given their risk factors and the risk of readmission at an average
facility. The contribution of each risk factor (for example, age) to
the patient's risk of a hospital admission is calculated based on all
of the patients in the measure cohort. The crude national rate is the
average rate of hospital visits following colonoscopy observed in the
entire measure cohort. We also refer readers to the measure discussion
above and measure specifications (http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=75057) for a more detailed
discussion of how the numerator and denominator are calculated.
Comment: Commenters believed that the Medicare 3-day window payment
policy for hospitals does not allow HOPDs to generate a claim when
there is an inpatient admission during the 3-day window payment policy,
that is, during the 3 days subsequent to the colonoscopy. Commenters
stated that HOPDs may be advantaged with systematic undercounting of
hospital visits while ASCs get a full count of all hospital visits
within 7 days subsequent to outpatient colonoscopy. Commenters did not
believe the methodological solution proposed by the measure developer,
using physician claims with an HOPD Place of Service (POS) code, is
adequate due to the high error rates in POS coding on physician claims.
Commenters were concerned that these challenges would make comparisons
of HOPD and ASC data impossible, and significantly reduce the validity
of the measure in the HOPD setting.
Response: We agree that the ability to detect meaningful variation
is an important indication of the value of a measure. We have shown
facility variation in unplanned hospital visits following colonoscopy
in both nationwide Medicare data from HOPDs and also in the 2010
Healthcare Cost and Utilization Project (HCUP) data. We have also shown
facility variation in unplanned hospital visits among ASCs alone using
HCUP data from California. ASCs are unaffected by the 3-day payment
window policy.\22\ We are confident that the variation shown is a
reflection of facility variation in quality and not as a result of any
issues to do with the 3-day window payment policy. We are aware of the
impact of the 3-day window payment policy and will ensure HOPD
colonoscopies affected by the 3-day window payment policy are included
in the measure cohort and outcome to the fullest extent possible. Based
on our internal testing with claims data, we believe our current
algorithm is appropriate and accurate. However, since we always strive
for improvement, we will evaluate the colonoscopy measure dry run data
and work with HOPDs and ASCs to further review and refine the algorithm
if necessary.
---------------------------------------------------------------------------

\22\ Center for Medicare and Medicaid Services, ``Facility 7-Day
Risk-Standardized Hospital Visit Rate after Outpatient
Colonoscopy,'' National Quality Form Measure Submission Form, 20.
---------------------------------------------------------------------------

We clarify that HOPD colonoscopy claims for calculation of the
measure are identified using both the physician and the facility
claims. We did not intend to imply that colonoscopies performed in
HOPDs are solely identified from physician claims. For both ASCs and
HOPDs, the measure first identifies colonoscopy claims using both the
physician claim and the corresponding facility claim to ensure that
each colonoscopy claim is attributed to the appropriate facility. As a
second step, the measure matches (1) physician claims that contain HOPD
as the POS that do not have a matching facility claim with (2)
inpatient claims to identify potential HOPD colonoscopies that have a
subsequent inpatient admission within the measure's timeframe of
interest. This second step identifies HOPD colonoscopy claims affected
by the 3-day window payment policy.
An OIG review (http://oig.hhs.gov/oas/reports/region10/11000516.pdf), concluded that, based on a sample of 2009 claims,
inaccuracies in physician POS coding often occur where a procedure
occurs at a HOPD or ASC and a facility claim exists, yet the physician
claimed a nonfacility POS. By matching both facility and physician
colonoscopy claims for any given patient, we ensure that we accurately
identify colonoscopy claims to the fullest extent possible and
attribute the colonoscopy to the appropriate provider including HOPD
colonoscopies affected by the 3-day window payment policy.
We also have taken steps to educate providers about the appropriate
POS coding and actively audit providers to improve the accuracy of POS
coding. Beginning in 2012, we also introduced the ``PD'' modifier to
indicate physician claims affected by the 3-day window payment policy.
Regarding the comment concerning challenges in comparing HOPD and
ASC data, the measure includes colonoscopies from all outpatient
settings to ensure that the expected hospital visit rate for any
facility is estimated using the full national experience of colonoscopy
patients. We appreciate the concern that there are structural
differences in claims across HOPD and ASC settings. However, the
measure links claims across multiple settings to identify outpatient
colonoscopy claims, comorbidities for risk-adjustment, and patient
outcomes. Linking patient claims across multiple settings largely
mitigates the impact of potential difference in coding practice among
settings and allows comparisons of colonoscopy quality across settings.
Comment: One commenter was concerned that the low occurrence rate
may make the measure unreportable.
Response: On Hospital Compare, we report measure rates, but may
refrain from publishing numerator and/or

[[Page 66955]]

denominator data if either are less than 11. Consistent with the CMS
Policy for Privacy Act Implementation & Breach Notification, 2007, CMS
statistical, aggregate or summarized information created as a result of
analysis conducted using identifiable CMS data obtained under CMS-
approved projects/studies may only be disclosed if the data are not
individual-specific and the data are aggregated to a level where no
data cells contain 10 or fewer individuals https://www.cms.gov/Research-Statistics-Data-and-Systems/CMS-Information-Technology/SystemLifecycleFramework/downloads/privacypolicy.pdf.
Comment: Many commenters expressed concern that, if finalized, the
OP-32 measure's data collection period would begin July 1, 2014,
several months before adoption of the measure is finalized. These
commenters requested that CMS delay the beginning of the data
submission period until at least 30 days after the rule is finalized.
Response: After consideration of the public comments we received,
we are not finalizing our proposal to use paid Medicare FFS claims from
a 12-month period from July 1 of the year 3 years before the payment
determination year to June 30 of the following year. We will not use
administrative claims data for services that occur prior to January 1,
2015. Instead, after the dry run, we will use paid Medicare FFS claims
from a 12-month period from January 1 to December 31 of the year 2
years before a payment determination year. Specifically, since we are
finalizing this measure beginning with the CY 2018 payment
determination, and we will start with paid Medicare FFS claims from
January 1, 2016 to December 31, 2016.
Comment: Some commenters suggested that CMS consider developing
additional outcomes measures specific to colonoscopies, such as a
measure of whether colonoscopy patients remain cancer free.
Response: We appreciate the commenters' suggestions and will take
them into consideration for future measure selection.
We continue to believe that quality of care measurement in the
clinical area of outpatient colonoscopy is an important gap area with
ample room for improvement and that this measure has sufficient
reliability and validity for use in the Hospital OQR Program.
Therefore, after consideration of the public comments we received, we
are finalizing our proposal to adopt the OP-32: Facility Seven-Day
Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy
measure for the Hospital OQR Program. However, to allow HOPDs
sufficient time to review their measure data from the dry run and
utilize the confidential facility reports with patient-level associated
hospital event information, we are finalizing to make this measure
required beginning with the CY 2018 payment determination and
subsequent years, instead of the CY 2017 payment determination and
subsequent years as proposed.
We plan to perform a dry run of the measure in 2015. Also, with
national implementation of a dry run of this measure, we will also
review the appropriate cutoff volume for facilities, if necessary, in
reporting the measure score. We refer readers to our discussion of the
dry run and the cutoff volume above, in responses to previous comments.
The finalized measure set for the Hospital OQR Program CY 2017
payment determination and subsequent years, which includes previously
finalized measures, is listed below.

Finalized Hospital OQR Program Measure Set for the CY 2017 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
NQF No. Measure name
------------------------------------------------------------------------
N/A......................... OP-1: Median Time to Fibrinolysis.
0288........................ OP-2: Fibrinolytic Therapy Received Within
30 Minutes of ED Arrival. ****
0290........................ OP-3: Median Time to Transfer to Another
Facility for Acute Coronary Intervention.
0286........................ OP-4: Aspirin at Arrival.
0289........................ OP-5: Median Time to ECG.
0514........................ OP-8: MRI Lumbar Spine for Low Back Pain.
N/A......................... OP-9: Mammography Follow-up Rates.
N/A......................... OP-10: Abdomen CT--Use of Contrast
Material.
0513........................ OP-11: Thorax CT--Use of Contrast
Material.
N/A......................... OP-12: The Ability for Providers with HIT
to Receive Laboratory Data Electronically
Directly into their ONC-Certified EHR
System as Discrete Searchable Data.
0669........................ OP-13: Cardiac Imaging for Preoperative
Risk Assessment for Non Cardiac Low Risk
Surgery.
N/A......................... OP-14: Simultaneous Use of Brain Computed
Tomography (CT) and Sinus Computed
Tomography (CT).
N/A......................... OP-15: Use of Brain Computed Tomography
(CT) in the Emergency Department for
Atraumatic Headache.
N/A......................... OP-17: Tracking Clinical Results between
Visits.
0496........................ OP-18: Median Time from ED Arrival to ED
Departure for Discharged ED Patients.
N/A......................... OP-20: Door to Diagnostic Evaluation by a
Qualified Medical Professional.
0662........................ OP-21: Median Time to Pain Management for
Long Bone Fracture.
N/A......................... OP-22: ED--Left Without Being Seen. ***
0661........................ OP-23: ED--Head CT or MRI Scan Results for
Acute Ischemic Stroke or Hemorrhagic
Stroke who Received Head CT or MRI Scan
Interpretation Within 45 minutes of
Arrival.
N/A......................... OP-25: Safe Surgery Checklist Use.
N/A......................... OP-26: Hospital Outpatient Volume on
Selected Outpatient Surgical Procedures.
*
0431........................ OP-27: Influenza Vaccination Coverage
among Healthcare Personnel.
0658........................ OP-29: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for Normal
Colonoscopy in Average Risk Patients.
0659........................ OP-30: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous Polyps--Avoidance
of Inappropriate Use.
1536........................ OP-31: Cataracts--Improvement in Patient's
Visual Function within 90 Days Following
Cataract Surgery. **
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measure voluntarily collected as set forth in section XIII.D.3.b. of
this final rule with comment period.
*** Name has been updated to correspond with NQF-endorsed name.

[[Page 66956]]

The finalized measure set for the Hospital OQR Program CY 2018
payment determination and subsequent years, which includes previously
finalized measures, and which includes the newly adopted measure, OP-
32, is listed below.

Finalized Hospital OQR Program Measure Set for the CY 2018 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
NQF No. Measure name
------------------------------------------------------------------------
N/A......................... OP-1: Median Time to Fibrinolysis.
0288........................ OP-2: Fibrinolytic Therapy Received Within
30 Minutes of ED Arrival. ****
0290........................ OP-3: Median Time to Transfer to Another
Facility for Acute Coronary Intervention.
0286........................ OP-4: Aspirin at Arrival.
0289........................ OP-5: Median Time to ECG.
0514........................ OP-8: MRI Lumbar Spine for Low Back Pain.
N/A......................... OP-9: Mammography Follow-up Rates.
N/A......................... OP-10: Abdomen CT--Use of Contrast
Material.
0513........................ OP-11: Thorax CT--Use of Contrast
Material.
N/A......................... OP-12: The Ability for Providers with HIT
to Receive Laboratory Data Electronically
Directly into their ONC-Certified EHR
System as Discrete Searchable Data.
0669........................ OP-13: Cardiac Imaging for Preoperative
Risk Assessment for Non Cardiac Low Risk
Surgery.
N/A......................... OP-14: Simultaneous Use of Brain Computed
Tomography (CT) and Sinus Computed
Tomography (CT).
N/A......................... OP-15: Use of Brain Computed Tomography
(CT) in the Emergency Department for
Atraumatic Headache.
N/A......................... OP-17: Tracking Clinical Results between
Visits.
0496........................ OP-18: Median Time from ED Arrival to ED
Departure for Discharged ED Patients.
N/A......................... OP-20: Door to Diagnostic Evaluation by a
Qualified Medical Professional.
0662........................ OP-21: Median Time to Pain Management for
Long Bone Fracture.
N/A......................... OP-22: ED--Left Without Being Seen. ***
0661........................ OP-23: ED--Head CT or MRI Scan Results for
Acute Ischemic Stroke or Hemorrhagic
Stroke who Received Head CT or MRI Scan
Interpretation Within 45 minutes of
Arrival.
N/A......................... OP-25: Safe Surgery Checklist Use.
N/A......................... OP-26: Hospital Outpatient Volume on
Selected Outpatient Surgical Procedures.
*
0431........................ OP-27: Influenza Vaccination Coverage
among Healthcare Personnel.
0658........................ OP-29: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for Normal
Colonoscopy in Average Risk Patients.
0659........................ OP-30: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a
History of Adenomatous Polyps--Avoidance
of Inappropriate Use.
1536........................ OP-31: Cataracts--Improvement in Patient's
Visual Function within 90 Days Following
Cataract Surgery. **
N/A......................... OP-32: Facility 7-Day Risk-Standardized
Hospital Visit Rate after Outpatient
Colonoscopy. ****
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measure voluntarily collected as set forth in section XIII.D.3.b. of
this final rule with comment period.
*** Name has been updated to correspond with NQF-endorsed name.
**** New measure finalized for the CY 2018 payment determination and
subsequent years.

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

The current measure set for the Hospital OQR Program includes
measures that assess processes of care, imaging efficiency patterns,
care transitions, ED throughput efficiency, the use of health
information technology (health IT), care coordination, patient safety,
and volume. For future payment determinations, we are considering
expanding these measure areas and creating measures in new areas.
Specifically, we are exploring (1) electronic clinical quality
measures; (2) partial hospitalization measures; (3) behavioral health
measures; and (4) other measures that align with the National Quality
Strategy and the CMS Quality Strategy domains.
1. Electronic Clinical Quality Measures
HHS believes all patients, their families, and their health care
providers should have consistent and timely access to their health
information in a standardized format that can be securely exchanged
between the patient, providers, and others involved in the patient's
care. (HHS August 2013 Statement, ``Principles and Strategy for
Accelerating Health Information Exchange'' (http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf). The
Department is committed to accelerating health information exchange
(HIE) through the use of electronic health records (EHRs) and other
types of health information technology (health IT) across the broader
care continuum through a number of initiatives including: (1) Alignment
of incentives and payment adjustments to encourage provider adoption
and optimization of health IT and HIE services through Medicare and
Medicaid payment policies; (2) adoption of common standards and
certification requirements for interoperable health IT; (3) support for
privacy and security of patient information across all HIE-focused
initiatives; and (4) governance of health information networks.
More information on the governance of health information networks
and its role in facilitating interoperability of health information
systems can be found at: http://www.healthit.gov/sites/default/files/ONC10yearInteroperabilityConceptPaper.pdf.
These initiatives are designed to encourage HIE among health care
providers, including professionals and hospitals eligible for the
Medicare and Medicaid EHR Incentive Programs as well as those who are
not eligible for those programs, and are designed to improve care
delivery and coordination across the entire care continuum. For
example, the Transition of Care Measure #2 in Stage 2 of the Medicare
and Medicaid EHR Incentive Programs (77 FR 54017 through 54020)
requires HIE to share summary records for more than 10 percent of care
transitions.

[[Page 66957]]

We anticipate that as EHR technology evolves and more
infrastructure is operational, we will begin to accept electronic
reporting of many measures from EHR technology certified under the ONC
health IT Certification Program. We are working diligently toward this
goal. We believe that submitting data for the Hospital OQR Program
electronically would significantly reduce the administrative burden
associated with reporting chart-abstracted measures. We recognize that
considerable work needs to be done by measure owners and health IT
developers and implementers to make this possible with respect to the
clinical quality measures targeted for electronic specifications (e-
specifications). This work includes completing e-specifications for
measures, pilot testing, reliability and validity testing, and
implementing such specifications in certified EHR technology to capture
and calculate the results.
We received the following comments on these future measures.
Comment: Many commenters supported CMS' efforts to establish
electronic clinical quality measures after validation and testing, but
expressed concerns and offered suggestions. One commenter specifically
noted the importance of health information exchanges in disseminating
infection prevention and control information across the care continuum.
Some commenters encouraged CMS to obtain input from ONC and hospital
staff, for the purpose of ensuring the maturity of e-specifications and
the ability of certified EHRs to support valid, feasible, and reliable
electronic clinical quality measures for implementation in different
programs. Some commenters urged CMS to proceed in a phased approach to
implementing electronic clinical quality measures.
Response: We agree that health information exchanges are critical
in quality care improvement, including infection prevention and
control. To the greatest extent feasible, we strive to work with ONC
and stakeholders, including hospital staff, to develop and specify
electronic clinical quality measures before their adoption. If we
decide to propose electronic clinical quality measures in the future,
we will consider a phased approach.
Comment: One commenter stated that it is premature to expand the
measure set to include electronic clinical quality measures at this
time because tremendous work in developing or defining e-
specifications, pilot testing, and validity and reliability testing is
still needed.
Response: We recognize that much work needs to be done before the
adoption of electronic clinical quality measures. However, we also
believe that implementation of electronic clinical quality measures
will ultimately reduce provider burden and facilitate care coordination
and patient engagement. We will weigh and balance these concerns when
we propose to adopt electronic clinical quality measures in the future.
Comment: One commenter stated that the additional time needed to
develop electronic clinical quality measures will allow hospitals to
optimize their EHRs and develop information sharing networks.
Response: We thank the commenter for raising this concern. We
believe, to the extent feasible, it is important to ensure that
hospitals are ready to implement EHRs and will continue to work with
them as we implement electronic clinical quality measures.
We thank the commenters for their views and will consider them as
we develop and implement future electronic clinical quality measures.
2. Partial Hospitalization Program Measures
We seek to develop a comprehensive set of quality measures to be
available for widespread use for informed decision-making and quality
improvement in the hospital outpatient setting. Therefore, in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75106), we stated
that, through future rulemaking, we intended to propose new measures
that help us further our goal of achieving better health care and
improved health for Medicare beneficiaries who receive health care in
hospital outpatient settings, such as partial hospitalization programs
(PHPs) that are part of HOPDs.
Partial hospitalization is an intensive outpatient program of
psychiatric services provided to patients as an alternative to
inpatient psychiatric care for individuals who have acute mental
illness. The PHP was designed to assist individuals with acute
psychiatric illness in managing debilitating symptoms and prevent the
need for hospitalization or rehospitalization. Behavioral health
treatments and services have improved and evolved through medication
advances, recovery-based therapy, and evidenced-based interventions,
including peer supports. PHP services have had the opportunity to
evolve to provide individuals with a unique setting that can contribute
to maintaining social and community connectivity while focusing on
sustained recovery to prevent initial hospitalization during a given
episode and subsequent rehospitalization. Currently, the Hospital OQR
Program has not adopted measures applicable to PHPs.
Although we believe that the PHP is an important program offering
an alternative to inpatient stays, we note that PHP utilization has
been declining.\23\ Therefore, as we consider implementing PHP measures
in future years, we invited public comment regarding the utility of
including measures for this care setting in the Hospital OQR Program.
---------------------------------------------------------------------------

\23\ http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/Leung_PHP_PPS_2010.pdf.
---------------------------------------------------------------------------

We specifically requested public comment on three PHP measures we
submitted to the MAP for consideration as part of the ``MAP Pre-
Rulemaking Report: 2014 Recommendations on Measures for More than 20
Federal Programs'' (http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx
(formerly referred to as the ``List of Measures Under
Consideration'')):
30-Day Readmission;
Group Therapy; and
No Individual Therapy.
These measures are included in the Program for Evaluating Payment
Patterns Electronic Reports (PEPPERs) developed under the Comprehensive
Error Rate Testing (CERT) Program. Further information on these claims-
based measures that provide indicators of quality of care can be found
at http://www.pepperresources.org/LinkClick.aspx?fileticket=stK9uUmQWlM%3d&tabid=148.
We also requested public input on other possible quality measures
for partial hospitalization services for inclusion in the Hospital OQR
Program in future years.
Comment: Some commenters supported CMS' consideration of PHP
measures, noting that these measures will encourage hospitals to
monitor their performance over time and identify opportunities for
quality improvement.
Response: We thank the commenters for their support. We agree that
PHPs are an important alternative to inpatient stays and there may be
value in collecting and reporting this data.
Comment: Many commenters did not support PHP quality metrics in the
Hospital OQR Program, stating that there are significant differences
between outpatient and PHP treatment services,

[[Page 66958]]

structure, and supervision, as well as other concerns. Commenters
recommended that CMS adopt PHP measures that have been NQF-endorsed and
are MAP-recommended, noting that the three PHP measures mentioned in
the proposed rule were not recommended by the MAP because they were not
well-defined or required additional evidence relating to their value.
Commenters suggested that CMS address the MAP's concerns before
proposing these measures for use in the Hospital OQR Program.
Response: We disagree that PHP measures are not appropriate for the
Hospital OQR Program based on differences between outpatient and PHP
treatment services, structure, and supervision. Because PHP services
are provided by HOPDs, are an important alternative to inpatient stays,
and are utilized by Medicare beneficiaries, we believe that there may
be value in collecting and reporting quality measure data for these
services. However, at this time, we are not proposing any PHP measures
for the Hospital OQR Program. The PHP measures on which we invited
comment have not been recommended by the MAP. The MAP stated that it
needed further information on the 30-Day Readmission measure and
recommended that the No Individual Therapy and Group Therapy measures
be submitted for NQF endorsement before they are adopted by the
Hospital OQR Program (http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx)
.
If we do consider proposing PHP measures in the future, to the
extent feasible, we intend to propose to adopt measures which are NQF-
endorsed and have been MAP-recommended. Before adopting a measure, we
try to address stakeholder concerns, including the differences in the
outpatient and PHP settings. Finally, if we choose to propose the three
measures discussed in the proposed rule, we will consider the comments
of the MAP and address them to the extent feasible. We note, however,
that not all of the measures adopted by the Hospital OQR Program are
NQF-endorsed, nor is NQF endorsement a program requirement (section
1833(t)(17)(C)(i) of the Act).
Comment: Some commenters believed that using PHP measures in the
Hospital OQR Program would constitute a duplication of efforts because
the measures are already included in PEPPER. Other commenters also
viewed PEPPER measures as auditing tools rather than quality measures.
Response: We will consider the commenters' viewpoint if we propose
to adopt the PEPPER measures in future rulemaking. We note that these
measures, while addressing areas of payment concern, also address areas
of quality of care concern and that the PEPPER measures are not
publicly reported at the facility level.
Comment: Commenters expressed concerns about the 30-day
readmissions measure because this patient population tends to be
readmitted for behavioral conditions due to social issues for which
hospitals have little control. Commenters stated that PHP patients'
clinical needs evolve over time, that readmissions are often needed to
stabilize patients, and that measuring facilities on readmission rates
could cause unintended consequences. Commenters further stated that the
readmission measure is not sufficiently risk-adjusted.
Response: We thank the commenters for raising these concerns. We
will consider these concerns if we propose to adopt the 30-day
readmission PEPPER measure for the Hospital OQR Program in future
rulemaking.
Comment: Some commenters stated that CMS should better understand
the challenges facing PHP and readmissions before imposing PHP quality
measures because quality measures could further destabilize the PHP
rate and threaten access to this service.
Response: We understand that utilization of PHP services has been
decreasing and that many challenges may be unique to the PHP setting.
We will consider these issues before proposing to adopt any PHP
measures in future rulemaking.
Comment: One commenter recommended that CMS include the 60+ Days of
Service measure in the PHP measure suite as well as assessments of
intensive outpatient programs that treat individuals with substance use
disorders.
Response: We thank the commenter for the recommendation and will
consider this measure if we propose to adopt PHP measures in future
rulemaking. We note that Medicare does not cover intensive outpatient
program (IOP) services, and this could affect the usefulness of the
recommended measure for the Hospital OQR Program.
Comment: Some commenters encouraged CMS to develop specific PHP
measures such as: (1) Requiring PHPs to identify a specific appointment
within 14 days; (2) requiring continuing care information be provided
directly to the follow-up provider; and (3) establishing Quality
Service Criteria for use in judging performance, including criteria
relating to access, treatment intensity, discharge planning, and
continuity of care.
Response: We appreciate the commenters' suggestions. We support
coordination of care efforts and will consider developing these types
of measures for the Hospital OQR Program.
Comment: One commenter argued that the Group Therapy measure should
only be adopted as a percentage rating of group therapy as a comparison
to all interventions billed. The commenter also noted that both group
therapy and individual psychotherapy are needed for optimal success.
Response: We thank the commenter for sharing its views. We are
unclear what the commenter means by ``a percentage rating of group
therapy'' and so cannot respond at this time. However, we welcome
clarification and will consider all of the commenter's concerns if we
propose to adopt PHP measures in future rulemaking.
Comment: One commenter voiced support for our efforts in working
toward electronic quality of care measures in the PHP setting of care.
Response: We note that we did not specifically discuss electronic
quality-of-care measures for the PHP setting in the proposed rule.
However, we are working diligently to implement electronic measures
across the quality reporting programs, and we may consider electronic
clinical quality measures for the PHP setting in the future.
We thank the commenters for their views and will consider them as
we develop future policies.
3. Behavioral Health Measures
In addition to PHP measures, we are considering other measures
specific to behavioral health in the outpatient setting, including
measures addressing depression and alcohol abuse. Major depression is a
leading cause of disability in the United States, complicates the
treatment of other serious illnesses, and is associated with an
increased risk of suicide. Major depression is a common mental health
condition, affecting 6 to 9 percent of those over 55 years of age.\24\
Along with other serious mental health conditions, it has a higher
Medicare inpatient readmission rate than all other conditions with the
exception of heart failure.\25\ Alcohol use disorders are the

[[Page 66959]]

most prevalent type of addictive disorder in individuals ages 65 and
over.\26\ Roughly 6 percent of the elderly are considered to be heavy
users of alcohol.\27\ Alcohol abuse is often associated with depression
and contributes to the etiology of serious medical conditions,
including liver disease and coronary heart disease. Because of the
prevalence of depression and alcohol abuse and their impact on the
Medicare population, we believe that we should consider measures in
these and other behavioral health areas for use in future Hospital OQR
Program payment determination years. Therefore, we invited public
comment on measures applicable to these areas that would be suitable
for the Hospital OQR Program.
---------------------------------------------------------------------------

\24\ O'Connor E, Whitlock E, Beil T, et al. Screening for
depression in adult patients in primary care settings: a systematic
evidence review. Annals of Internal Medicine 2009 December
1:151(11):793-803.
\25\ Stephen F. Jencks, M.D., M.P.H., Mark V. Williams, M.D.,
and Eric A. Coleman, M.D., M.P.H. Rehospitalizations among Patients
in the Medicare Fee-for-Service Program. N Engl J Med 2009;360:1418-
28.
\26\ Stephen Ross. Alcohol Use Disorders in the Elderly.
Psychiatry Weekly (no date) Available at: http://www.psychweekly.com/aspx/article/ArticleDetail.aspx?articleid=19.
\27\ AL Mirand and JW Welte. Alcohol consumption among the
elderly in a general population, Erie County, New York. Am J Public
Health. 1996 July; 86(7): 978-984.
---------------------------------------------------------------------------

Comment: Many commenters supported CMS' efforts to develop and
implement quality measurement tools related to alcohol abuse and
depression because of the prevalence of these conditions within the
Medicare population and the need to improve care coordination for these
conditions. Commenters encouraged CMS to incorporate measures that
address the following principles: (1) The patient's readiness for
treatment; (2) the treatment will address mental health issues in
conjunction with the alcohol abuse; and (3) the patient's willingness
to participate in an alcohol abuse program without the need for coerced
efforts.
Response: We thank commenters for their support, and we will
consider these principles if we choose to propose to adopt behavioral
health measures in the future.
Comment: One commenter suggested adopting a measure that evaluates
screening for psychological/physical or sexual trauma, arguing that
trauma informed care is critical to successful recovery and better
engagement and retention in ambulatory care.
Response: We agree that this clinical topic is important, and we
will consider adopting a measure screening for trauma in the future.
Comment: Some commenters argued that behavioral health measures are
more suited to the IPFQR Program.
Response: We disagree with this view. We believe all care settings
should seek to improve the behavioral health outcomes of their
patients.
Comment: One commenter recommended that CMS work with the NQF to
develop appropriate measures related to beneficiary wellness concerns.
The commenter noted that behavioral health quality measures are used in
the nursing home and home health care settings, and that these measures
should be reviewed to determine if they are applicable to the
outpatient setting. The commenter believed that any measures used
should be claims-based and not generated by chart abstraction to
minimize administrative burden.
Response: We interpret ``beneficiary wellness concerns'' to mean
measures of behavioral health. We endeavor to adopt measures that are
NQF-endorsed and believe it is critical to work with stakeholders to
develop measures. However, we note that not all of the measures adopted
by the Hospital OQR Program are NQF-endorsed, nor is NQF endorsement a
program requirement (section 1833(t)(17)(C)(i) of the Act) as consensus
among affected parties can be reflected through means other than NQF
endorsement. In addition, to the extent feasible, we believe it is
important to align measures across all our quality reporting programs,
and we will look to other settings for measures of behavioral health.
Finally, we will continue to examine options for less burdensome
reporting mechanisms for these and other program measures in the
future; this includes claims-based and electronically submitted data.
Comment: Some commenters recommended that behavioral health quality
measures not be considered at this time for the Hospital OQR Program,
arguing that additional research and education needs to be done to
develop helpful behavioral measures.
Response: We will continue to research appropriate measures and
work with stakeholders as we consider behavioral health measures for
the Hospital OQR Program in the future.
Comment: One commenter urged CMS to work with its behavioral health
Technical Experts Panel (TEP) and the MAP to identify and bring forward
behavioral health measures that are suitable for this population and
for consideration by all stakeholders.
Response: We convene TEPs, groups of stakeholders and experts, to
provide technical input on the development, selection, and maintenance
of measures. Convening TEPs is one important step in the measure
development or reevaluation process to ensure transparency and it
provides an opportunity to receive multi-stakeholders input early in
the process. We refer readers to http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TechnicalExpertPanels.html for more information on TEPs. We believe it
is important to work with stakeholders as we develop and adopt
behavioral health measures. We will leverage both TEPs and the MAP as
we consider future measures.
Comment: One commenter recommended that CMS incorporate
standardized behavioral health measures that are currently in
widespread use, such as the National Center for Quality Assurance's
behavioral health measures.
Response: We thank the commenter for its recommendation, and we
will consider these measures for future rulemaking.
Comment: Some commenters supported CMS' efforts to identify
depression and depression-related issues in the Medicare population.
The commenters believed that an identification tool should be used for
any new patient encounter and recommended that every Medicare provider
should be required to use a depression screening tool at any initial
patient screening/encounter. Some commenters, however, noted that
depression screening in the ambulatory setting is nearly universal,
and, therefore, such a measure may be ``topped-out'' even before
adoption.
Response: We thank commenters for their support. We interpret the
commenters' suggestions to mean that we should include measures that
encourage providers to screen patients to identify depression. We will
consider depression screening measures in the future.
We thank the commenters for their views on behavioral health
measures in the outpatient setting and will consider them as we develop
future policies.
4. National Quality Strategy and CMS Quality Strategy Measure Domains
In considering future Hospital OQR Program measures, we are
focusing on the following National Quality Strategy and CMS Quality
Strategy measure domains: make care safer, strengthen person and family
engagement, promote effective communication and coordination of care,
promote effective prevention and treatment, work with communities to
promote best practices of healthy living, and make care affordable. We
believe measures in these areas will promote better care and align
measures across multiple CMS quality programs, in particular, the
Hospital OQR, Hospital IQR, and ASCQR Programs.

[[Page 66960]]

We received the following comments on these future measures.
Comment: Many commenters supported the Hospital OQR Program's
effort to align future measures with the NQS priorities and CMS quality
strategy, noting that doing so will make the Hospital OQR Program more
consistent with the Hospital IQR Program. Commenters urged CMS to
further align our measures with other quality reporting programs. One
commenter stated that CMS should respond to all MAP recommendations as
part of any proposed rule so that stakeholders may gain a better
understanding of our decisions, particularly when a MAP recommendation
is not being followed.
Response: We thank the commenters for their support. To the extent
practicable, we strive to align measures across our quality reporting
programs. We also appreciate the feedback of the MAP and work to
address its concerns before adopting measures in the Hospital OQR
Program. As we stated above, to the extent feasible, we strive to state
and address the MAP concerns when adopting a measure.
Comment: Some commenters recommended that CMS introduce measures to
track and monitor radiation dose exposure and contrast dose exposure,
including organ-specific radiation exposure based on patient weight and
contrast administration, and a meaningful tracking mechanism for
patient longitudinal exposure. One commenter noted that the PQRS
program has included some similar measures giving radiologists an
incentive to track patient exposure. In addition, the commenter noted
that The Joint Commission, the FDA, and the EPA have all issued
guidance recommending that exposure to radiation through medical
devices be minimized.
Response: We thank the commenters for their recommendations, and we
may consider these types of measures in future years.
Comment: One commenter urged CMS to require hospitals to comply
with all manufacturing standards for imaging equipment to facilitate
patient safety and promote the overall quality of patient care in
hospitals. The commenter also recommended a measure tracking the
demonstrated reduction in suboptimal or nondiagnostic echocardiograms
and the resulting improvements in diagnosis and reductions in costs to
Medicare and beneficiaries.
Response: We thank the commenter for its recommendation, and we may
consider these types of measures in future years.
Comment: One commenter encouraged the implementation of a CAHPS
survey used to encourage patient experience improvement across the
ambulatory surgery sector. The commenter urged CMS to continue to
analyze and address the role of the survey and discuss the comparative
roles of surveys across other care settings and quality reporting
programs. Another commenter encouraged CMS to involve consumers and
purchasers in refinement of the CAHPS survey for the outpatient
setting.
Response: We thank the commenters for these suggestions. We intend
to include such survey measures for the outpatient setting on our
December 1, 2014 Measures under Consideration (MUC) List for MAP
review. We currently use patient experience-of-care surveys in a
variety of health care settings. For example, both the ESRD QIP and the
Hospital IQR Program use patient experience-of-care surveys, the In-
center Hemodialysis Consumer Assessment of Healthcare Providers and
Systems (ICH CAHPS) and the Hospital Consumer Assessment of Healthcare
Providers and Systems (HCAHPS), respectively. We agree that, to the
extent feasible, survey instruments should be aligned and coordinated
across settings. The developmental process of CAHPS and patient
experience-of-care surveys involves several opportunities for input
from patients, patient advocates, and stakeholders from the HOPD and
ASC industry, including professional associations, clinicians,
accreditation organizations, and the government. These opportunities
include serving on the TEP, responding to the Federal Register notice
requesting measures, topics, or public domain questionnaires, and
providing comment on the survey through the OMB clearance process.
Comment: One commenter recommended that CMS target high volume
procedures that may be unnecessary at the composite, individual
hospital, and physician levels, including those that are part of the
Choosing Wisely campaign.
Response: We thank the commenter for its recommendation, and we may
consider these types of measures in future years.
Comment: One commenter requested that CMS risk-adjust measures of
clinical outcomes for SES in order to avoid disadvantaging hospitals,
particularly safety-net hospitals that are evaluated on these outcomes.
Response: We thank the commenter for this feedback. We addressed
the topic of risk adjustment with respect to the Hospital IQR and
Hospital Readmissions Reduction Programs in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50219 and 50026 through 50027), and we believe the
same approach would apply to risk adjustment for Hospital OQR Program
measures because the Hospital OQR Program outcome measures are risk-
adjusted, and this approach aligns with outcome measures methodology
used in other programs across settings. The purpose of risk adjustment
when comparing outcome rates for two different outpatient facilities is
to statistically compensate (or adjust) for risk factor differences in
the two facilities so that the outcome rates can be compared
legitimately despite the differences in risk factors.
We appreciate the commenters' suggestions on the importance of
addressing SES in the Hospital OQR Program. We continue to consider and
evaluate stakeholder concerns regarding the impact of patients' SES on
Hospital OQR measures.
Comment: Many commenters urged CMS to adopt only NQF-endorsed
measures for its quality reporting and pay-for-performance programs,
arguing that the consensus-based process validates quality measures'
rigor and ensures that the measures have been are reliable and have
been carefully tested, validated, and scrutinized. Commenters also
commended CMS for considering the MAP's input in selecting measures,
particularly because the MAP considers NQF endorsement, measures'
feasibility of implementation, stakeholder input, and validity.
Response: We thank commenters for their support for the MAP
process. To the extent feasible, we seek to adopt measures that have
been NQF-endorsed. However, we also note that consensus among affected
parties can be reflected through means other than NQF endorsement. We
also refer readers to our discussion above in section XIII.E. of this
final rule with comment period in response to a similar comment.
Comment: Commenters suggested that CMS consider adopting measures
of HAIs, such as SSI, CLABSI, CAUTI, MRSA, and C. difficile, or
infection control process measures, such as MRSA colonization at
admission or hand hygiene adherence, use of barrier precautions, or
other process measures. Commenters noted that infections such as MRSA
and C. difficile are a significant source of morbidity and mortality.
One commenter encouraged CMS to develop composite measures of common
surgical infections; another commenter requested that CMS adopt

[[Page 66961]]

measures that have aligned data elements with the CDC's NHSN.
Response: We agree that it is important to minimize infection
events that present significant health risks to patients. We also
believe that infection prevention measures provide information critical
to quality improvement efforts. We note that several measures that
focus on these infections are already included in the Hospital IQR
Program (79 FR 50202) and are aligned with the CDC's NHSN. We will
consider including these types of measures for the outpatient setting
in the Hospital OQR Program and aligning them with other quality
reporting programs, such as the Hospital IQR Program, to the extent
feasible in future years.
Comment: One commenter suggested that CMS consider measures of
adverse outcomes from high-volume procedures such as cataract removals,
other eye procedures, endoscopies, musculoskeletal procedures, and
colonoscopies.
Response: We thank the commenter for its suggestion and may
consider these types of measures in future years.
We thank the commenters for their views and will consider them as
we develop future policies.

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
Section 1833(t)(17) of the Act, which applies to subsection (d)
hospitals (as defined under section 1886(d)(1)(B) of the Act), states
that hospitals that fail to report data required to be submitted on the
measures selected by the Secretary, in the form and manner, and at a
time, required by the Secretary will incur a 2.0 percentage point
reduction to their Outpatient Department (OPD) fee schedule increase
factor; that is, the annual payment update factor. Section
1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only
to the payment year involved and will not be taken into account in
computing the applicable OPD fee schedule increase factor for a
subsequent payment year.
The application of a reduced OPD fee schedule increase factor
results in reduced national unadjusted payment rates that apply to
certain outpatient items and services provided by hospitals that are
required to report outpatient quality data in order to receive the full
payment update factor and that fail to meet the Hospital OQR Program
requirements. Hospitals that meet the reporting requirements receive
the full OPPS payment update without the reduction. For a more detailed
discussion of how this payment reduction was initially implemented, we
refer readers to the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68769 through 68772).
The national unadjusted payment rates for many services paid under
the OPPS equal the product of the OPPS conversion factor and the scaled
relative payment weight for the APC to which the service is assigned.
The OPPS conversion factor, which is updated annually by the OPD fee
schedule increase factor, is used to calculate the OPPS payment rate
for services with the following status indicators (listed in Addendum B
to this proposed rule, which is available via the Internet on the CMS
Web site): ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``V,''
or ``U.'' We note that we are finalizing our proposal to delete status
indicator ``X''' as described in sections II.A.3. and X. of this final
rule with comment period. We also note that we are finalizing our
proposal to develop status indicator ``J1'' as part of our
comprehensive APC policy, effective for CY 2015, discussed in section
II.A.2.e. of the CY 2014 OPPS/ASC final rule with comment period (78 FR
74861 through 74910) and sections II.A.2.e. of the CY 2015 OPPS/ASC
proposed rule and this final rule with comment period. Payment for all
services assigned to these status indicators will be subject to the
reduction of the national unadjusted payment rates for hospitals that
fail to meet Hospital OQR Program requirements, with the exception of
services assigned to New Technology APCs with assigned status indicator
``S'' or ``T.'' We refer readers to the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68770 through 68771) for a discussion of
this policy.
The OPD fee schedule increase factor is an input into the OPPS
conversion factor, which is used to calculate OPPS payment rates. To
reduce the OPD fee schedule increase factor for hospitals that fail to
meet reporting requirements, we calculate two conversion factors--a
full market basket conversion factor (that is, the full conversion
factor), and a reduced market basket conversion factor (that is, the
reduced conversion factor). We then calculate a reduction ratio by
dividing the reduced conversion factor by the full conversion factor.
We refer to this reduction ratio as the ``reporting ratio'' to indicate
that it applies to payment for hospitals that fail to meet their
reporting requirements. Applying this reporting ratio to the OPPS
payment amounts results in reduced national unadjusted payment rates
that are mathematically equivalent to the reduced national unadjusted
payment rates that would result if we multiplied the scaled OPPS
relative payment weights by the reduced conversion factor. For example,
to determine the reduced national unadjusted payment rates that applied
to hospitals that failed to meet their quality reporting requirements
for the CY 2010 OPPS, we multiplied the final full national unadjusted
payment rate found in Addendum B of the CY 2010 OPPS/ASC final rule
with comment period by the CY 2010 OPPS final reporting ratio of 0.980
(74 FR 60642).
In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771
through 68772), we established a policy that the Medicare beneficiary's
minimum unadjusted copayment and national unadjusted copayment for a
service to which a reduced national unadjusted payment rate applies
would each equal the product of the reporting ratio and the national
unadjusted copayment or the minimum unadjusted copayment, as
applicable, for the service. Under this policy, we apply the reporting
ratio to both the minimum unadjusted copayment and national unadjusted
copayment for services provided by hospitals that receive the payment
reduction for failure to meet the Hospital OQR Program reporting
requirements. This application of the reporting ratio to the national
unadjusted and minimum unadjusted copayments is calculated according to
Sec. 419.41 of our regulations, prior to any adjustment for a
hospital's failure to meet the quality reporting standards according to
Sec. 419.43(h). Beneficiaries and secondary payers thereby share in
the reduction of payments to these hospitals.
In the CY 2009 OPPS/ASC final rule with comment period (73 FR
68772), we established the policy that all other applicable adjustments
to the OPPS national unadjusted payment rates apply when the OPD fee
schedule increase factor is reduced for hospitals that fail to meet the
requirements of the Hospital OQR Program. For example, the following
standard adjustments apply to the reduced national unadjusted payment
rates: the wage index adjustment; the multiple procedure adjustment;
the interrupted procedure adjustment; the rural sole community hospital
adjustment; and the adjustment for devices furnished with full or
partial credit or without cost. Similarly, OPPS outlier payments made
for high cost and complex procedures will continue to be made when
outlier criteria are met. For hospitals that fail to

[[Page 66962]]

meet the quality data reporting requirements, the hospitals' costs are
compared to the reduced payments for purposes of outlier eligibility
and payment calculation. We established this policy in the OPPS
beginning in the CY 2010 OPPS/ASC final rule with comment period (74 FR
60642). For a complete discussion of the OPPS outlier calculation and
eligibility criteria, we refer readers to section II.G. of this final
rule with comment period.
2. Reporting Ratio Application and Associated Adjustment Policy for CY
2015
In the CY 2015 OPPS/ASC proposed rule (79 FR 41017), we proposed to
continue our established policy of applying the reduction of the OPD
fee schedule increase factor through the use of a reporting ratio for
those hospitals that fail to meet the Hospital OQR Program requirements
for the full CY 2015 annual payment update factor. For the CY 2015
OPPS, the proposed reporting ratio is 0.980, calculated by dividing the
proposed reduced conversion factor of $72.692 by the proposed full
conversion factor of $74.176. We proposed to continue to apply the
reporting ratio to all services calculated using the OPPS conversion
factor. For the CY 2015 OPPS, we proposed to apply the reporting ratio,
when applicable, to all HCPCS codes to which we have assigned status
indicators ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``V,''
and ``U'' (other than new technology APCs to which we have assigned
status indicators ``S'' and ``T''). We note that we are finalizing our
proposal to delete status indicator ``X'' as described in sections
II.A.3. and X. of the proposed rule and this final rule with comment
period. We note that we are finalizing our proposal to develop status
indicator ``J1'' as part of our CY 2015 comprehensive APC policy,
discussed in sections II.A.2.e. of the CY 2015 OPPS/ASC proposed rule
and this final rule with comment period and to apply the reporting
ratio to the comprehensive APCs. We proposed to continue to exclude
services paid under New Technology APCs. We proposed to continue to
apply the reporting ratio to the national unadjusted payment rates and
the minimum unadjusted and national unadjusted copayment rates of all
applicable services for those hospitals that fail to meet the Hospital
OQR Program reporting requirements. We also proposed to continue to
apply all other applicable standard adjustments to the OPPS national
unadjusted payment rates for hospitals that fail to meet the
requirements of the Hospital OQR Program. Similarly, we proposed to
continue to calculate OPPS outlier eligibility and outlier payment
based on the reduced payment rates for those hospitals that fail to
meet the reporting requirements.
We did not receive public comments on our proposal. Therefore, we
are finalizing our proposal to apply the Hospital OQR Program reduction
in the manner described above. We also are finalizing our proposal,
with modification, to reflect the CY 2015 OPPS status indicators to
which the adjustment would apply. For the CY 2015 OPPS, the final
reporting ratio is 0.980, calculated by dividing the final reduced
conversion factor of $72.661 by the final full conversion factor of
$74.144.
As a result, for the CY 2015 OPPS, we are applying a reporting
ratio of 0.980 to the national unadjusted payments, minimum unadjusted
copayments, and national unadjusted copayments for all applicable
services for those hospitals failing to meet the Hospital OQR Program
reporting requirements. This reporting ratio applies to HCPCS codes
assigned status indicators ``J1,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,''
``R,'' ``S,'' ``T,'' ``U,'' or ``V,'' excluding services paid under New
Technology APCs. All other applicable standard adjustments to the OPPS
national unadjusted payment rates for hospitals that fail to meet the
requirements of the Hospital OQR Program will continue to apply. We
continue to calculate OPPS outlier eligibility and outlier payment
based on the reduced rates for those hospitals that fail to meet the
reporting requirements.

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
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75108 through 75109) for a discussion of the Hospital OQR
Program procedural requirements for the CY 2015 payment determination
and subsequent years. In that final rule with comment period, we
codified these procedural requirements at 42 CFR 419.46(a).
2. Form, Manner, and Timing of Data Submitted for the Hospital OQR
Program
a. General Procedural Requirements
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75110 through 75111) for a discussion of Hospital OQR
Program general procedural requirements. In that final rule with
comment period, we finalized our proposal to codify these general
procedural requirements at 42 CFR 419.46(c).
In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we proposed to
correct a typographical error in 42 CFR 419.46(c). This section states,
``Except as provided in paragraph (d) of this section, hospitals that
participate in the Hospital OQR Program must submit to CMS data on
measures selected under section 1833(17)(C) of the Act . . .'' We
proposed to correct the erroneous reference of ``section 1833(17)(C)''
to ``section 1833(t)(17)(C).''
We invited public comment on this proposal.
We did not receive any public comments on this proposal. Therefore,
we are finalizing the typographical correction as proposed.
b. Requirements for Chart-Abstracted Measures Where Data Are Submitted
Directly to CMS for the CY 2017 Payment Determination and Subsequent
Years
The following chart-abstracted measures finalized previously and
retained in the Hospital OQR Program require data to be submitted for
the CY 2017 payment determination and subsequent years:
OP-1: Median Time to Fibrinolysis;
OP-2: Fibrinolytic Therapy Received Within 30 Minutes of
ED Arrival (NQF # 0288);
OP-3: Median Time to Transfer to Another Facility for
Acute Coronary Intervention (NQF # 0290);
OP-4: Aspirin at Arrival (NQF# 286)
OP-5: Median Time to ECG (NQF # 0289);
OP-18: Median Time from ED Arrival to ED Departure for
Discharged ED Patients (NQF # 0496);
OP-20: Door to Diagnostic Evaluation by a Qualified
Medical Professional;
OP-21: ED--Median Time to Pain Management for Long Bone
Fracture (NQF # 0662);
OP-22: ED--Left Without Being Seen;
OP-23: ED--Head CT Scan Results for Acute Ischemic Stroke
or Hemorrhagic Stroke who Received Head CT Scan Interpretation Within
45 Minutes of Arrival (NQF # 0661);
OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up
Interval for Normal Colonoscopy in Average Risk Patients (NQF # 0658);
and
OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval
for Patients with a History of Adenomatous

[[Page 66963]]

Polyps--Avoidance of Inappropriate Use (NQF # 1536).
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68481 through 68484) for a discussion of the form and
manner for data submission of these measures.
As we noted in the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we
neither proposed new chart-abstracted measures where patient-level data
is submitted directly to CMS nor proposed new requirements for data
submission for chart-abstracted measures.
c. Claims-Based Measure Data Requirements for the CY 2017 and CY 2018
Payment Determination and Subsequent Years
We proposed one additional claims-based measure for the CY 2017
payment determination and subsequent years, OP-32: Facility 7-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy (79 FR
41036 through 41039). However, as discussed in section XIII.E. of this
final rule with comment period, we are finalizing this measure for the
CY 2018 payment determination and subsequent years instead of the CY
2017 payment determination and subsequent years as proposed. As
discussed in section XIII.E. of this final rule with comment period, we
will use claims data from January 1, 2016-December 31, 2016 to
calculate OP-32 for the CY 2018 payment determination in order to use
the most recently available data. Therefore, we are finalizing that to
calculate OP-32, we will use claims data from January 1--December 31 of
the calendar year 2 years prior to the payment determination year (for
example, for the CY 2018 payment determination, we will use data from
January 1, 2016--December 31, 2016).
Therefore, there will be a total of seven claims-based measures for
the CY 2017 payment determination and subsequent years:
OP-8: MRI Lumbar Spine for Low Back Pain (NQF # 0514);
OP-9: Mammography Follow-Up Rates;
OP-10: Abdomen CT--Use of Contrast Material;
OP-11: Thorax CT--Use of Contrast Material;
OP-13: Cardiac Imaging for Preoperative Risk Assessment
for Non-Cardiac Low Risk Surgery (NQF # 0669);
OP-14: Simultaneous Use of Brain Computed Tomography (CT)
and Sinus Computed Tomography (CT); and
OP-15: Use of Brain Computed Tomography (CT) in the
Emergency Department for Atraumatic Headache.
For the CY 2018 payment determination and subsequent years, there
will be a total of eight claims-based measures:
OP-8: MRI Lumbar Spine for Low Back Pain (NQF # 0514);
OP-9: Mammography Follow-Up Rates;
OP-10: Abdomen CT--Use of Contrast Material;
OP-11: Thorax CT--Use of Contrast Material;
OP-13: Cardiac Imaging for Preoperative Risk Assessment
for Non-Cardiac Low Risk Surgery (NQF # 0669);
OP-14: Simultaneous Use of Brain Computed Tomography (CT)
and Sinus Computed Tomography (CT);
OP-15: Use of Brain Computed Tomography (CT) in the
Emergency Department for Atraumatic Headache; and
OP-32: Facility 7-Day Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy.
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75111 through 75112) for a discussion of the claims-based
measure data submission requirements for the CY 2015 payment
determination and subsequent years.
In the CY 2012 OPPS/ASC final rule with comment period, we deferred
the public reporting of OP-15 (76 FR 74456). We extended the
postponement of public reporting for this measure in the CY 2013 and CY
2014 OPPS/ASC final rules with comment period (77 FR 68481, 78 FR
75111). As we noted in the CY 2015 OPPS/ASC proposed rule (79 FR
41042), we did not propose any changes to this policy. Public reporting
for OP-15 continues to be deferred, and this deferral has no effect on
any payment determinations; however, hospitals are still required to
submit data as previously finalized (76 FR 74456).
Comment: One commenter supported the proposed deferral of the
public reporting of OP-15. The commenter appreciated CMS' concerns
regarding inappropriate use of brain CT imaging and the need for an
established clinical guideline to address this issue. However, the
commenter did not believe older adults or adults on anticoagulant
medications should be included in OP-15, and noted that current
research suggests headaches are a potential contraindication. The
commenter also expressed concern that claims are not detailed enough to
capture the clinical indications needed for appropriate exclusions. As
a result, the commenter was concerned that this measure may discourage
clinically appropriate brain CTs for higher-risk older populations. The
commenter believed that CMS should focus its efforts on other CT
measures, particularly after trauma or suspected pulmonary embolism.
Another commenter asked CMS to remove OP-15 from the measure set.
Response: Given stakeholder concerns, including those of this
commenter, we continue to evaluate whether OP-15 needs to be refined
before being publicly reported. We continue to believe, for the reasons
stated in the CY 2012 OPPS/ASC final rule with comment period (76 FR
74456), that the measure has value, and we will continue to collect
data with regard to this measure. However, we will also continue to
defer public reporting until we have resolved these concerns. Because
the measure is claims-based, this deferral does not affect data
submission requirements for the Hospital OQR Program (that is, HOPDs do
not submit data for claims-based measures other than the actual FFS
claims), and an HOPD's payment determination will not be affected based
on OP-15 while public reporting is deferred.
d. Data Submission Requirements for Measure Data Submitted via the CMS
Web-Based Tool for the CY 2017 Payment Determination and Subsequent
Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75112 through 75115) for a discussion of the requirements
for measure data submitted via the Web-based tool on a CMS Web site
(the QualityNet Web site) for the CY 2016 payment determination and
subsequent years.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we did not
propose any changes to the data submission requirements for data
submitted via the CMS Web-based tool.
e. Population and Sampling Data Requirements for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2011 OPPS/ASC final rule with comment
period (75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule
with comment period (76 FR 74482 through 74483) for discussions of our
policy that hospitals may voluntarily submit aggregate population and
sample size counts for Medicare and non-Medicare encounters for the
measure populations for which chart-abstracted data must be submitted.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we did not propose
any changes to this policy.

[[Page 66964]]

f. Review and Corrections Period for Chart-Abstracted Measures
Under the Hospital OQR Program, hospitals submit chart-abstracted
data to CMS on a quarterly basis. These data are typically due 4 months
after the quarter has ended, unless we grant an extension or exception,
as further described in section XIII.J. of this final rule with comment
period. We refer readers to the CY 2014 OPPS/ASC final rule with
comment period for a discussion of our previously finalized policies
regarding submissions deadlines for chart-abstracted measures (78 FR
68482). Hospitals may begin submitting data on the first discharge day
of any reporting quarter and can modify this data up until the close of
the submission period (or 4 months after the quarter has ended). For
example, if a hospital enters data on January 2, it could continue to
review, correct, and change these data until August 1, the first
quarter submission deadline. We generally provide rates for the
measures that have been submitted for chart-abstracted, patient-level
data 24 to 48 hours following submission. Hospitals are encouraged to
submit data early in the submission schedule so that they can identify
errors and resubmit data before the quarterly submission deadline.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41042 through 41043),
we proposed to formalize this 4-month period as the review and
corrections period for chart-abstracted data for the Hospital OQR
Program. During this review and corrections period, hospitals can
enter, review, and correct data submitted directly to CMS. However,
after the submission deadline, hospitals would not be allowed to change
these data. We believe that 4 months is sufficient time for hospitals
to perform these activities.
We invited public comment on this proposal.
Comment: Many commenters did not support CMS' proposal to have the
data submission period run concurrently with the review and corrections
period, stating that CMS allows a separate time period for review and
corrections for nearly all of CMS' other quality reporting programs.
Commenters specifically stated that, with the proliferation of quality
measures in each of CMS' quality reporting programs, hospitals need all
of the time currently afforded to capture and report data accurately.
Commenters recommended that CMS provide at least 30 days immediately
after the submission deadline to allow hospitals to review and correct
their data.
Response: We disagree with the commenters who believed that our
other quality reporting programs have a separate review and corrections
period. Providers may review their data during the submission period,
but are not afforded time after this period to correct their data. We
note that our proposed review and corrections period is consistent with
the informal review and corrections period of other quality reporting
programs, including the Hospital IQR Program.
As stated in the proposed rule (79 FR 41042-41043), hospitals
typically have 4 months to submit, review, and correct their chart-
abstracted data, and we merely proposed to formalize this time period
as the review and corrections period. We believe that 4 months is
adequate because hospitals have been using this period of time to
submit, view, and correct their chart-abstracted data for the life of
the program. We strongly encourage hospitals to submit their data as
early as possible so they can take full advantage of the time needed
for review and correction. In addition, the length of time for data
submission for chart-abstracted data that is validated affects the
timeliness of the validation process; additional time would further
lengthen the time from when care is rendered to when data can be made
publicly available.
After consideration of the public comments we received, and
consistent with our policy in other quality reporting programs, we are
finalizing the 4 months review and corrections period as proposed. We
strongly encourage hospitals to submit their data to CMS as early as
possible to have the maximum time to review and correct their data.
3. Hospital OQR Program Validation Requirements for Chart-Abstracted
Measure Data Submitted Directly to CMS for the CY 2017 Payment
Determination and Subsequent Years
a. Background
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68484 through 68487) for a discussion of finalized
policies regarding our validation requirements. We codified these
policies at 42 CFR 419.46(e). In the CY 2015 OPPS/ASC proposed rule (79
FR 41043 through 41044), we proposed three changes to our validation
procedures: (1) We proposed to change the eligibility requirements for
hospitals selected for validation so that a hospital would be eligible
if it submits at least one case to the Hospital OQR Program Clinical
Data Warehouse during the quarter containing the most recently
available data; (2) we proposed to give hospitals the option to either
submit paper copies of patient charts or securely transmit electronic
versions of medical information for validation; and (3) we proposed
that a hospital must identify the medical record staff responsible for
submission of records under the Hospital OQR Program to the designated
CMS contractor.
b. Selection of Hospitals for Data Validation of Chart-Abstracted
Measures for the CY 2017 Payment Determination and Subsequent Years
We refer readers to the CY 2012 and CY 2013 OPPS/ASC final rules
with comment period (76 FR 74484 through 74485 and 77 FR 68484 through
68485) for a discussion of finalized policies regarding our sampling
methodology, including sample size, eligibility for validation
selection, and encounter minimums for patient-level data for measures
where data is obtained from chart abstraction and submitted directly to
CMS from selected hospitals.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41043), we proposed
one change to this process. Previously, to be eligible for random
selection for validation, a hospital must have been coded as ``open''
in the CASPER system at the time of selection and must have submitted
at least 10 encounters to the Clinical Data Warehouse during the data
collection period for the applicable payment determination (76 FR
74484). We proposed that, beginning with the CY 2015 encounter period
for the CY 2017 payment determination and subsequent years, a hospital
will be eligible for validation if it submits at least one case to the
Hospital OQR Program Clinical Data Warehouse during the quarter
containing the most recently available data. The quarter containing the
most recently available data will be defined based on when the random
sample is drawn. For example, if we draw a sample in December 2014, the
most recent data available would be that from the second quarter of
2014, which ends June 2014, because the submission deadline for second
quarter data would be November 1, 2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1205442125082; 78 FR 68482). As another example, if a sample is drawn in
October 2014, the most recent available data would be from quarter one,
which ended in March 2014, because data must have been submitted by
August 1, 2014. We believe this change is necessary because it
increases the probability that selected hospitals

[[Page 66965]]

have current data in the Clinical Data Warehouse to be validated.
Previously, hospitals that did not have data from the current year
available could still be selected for validation.
We invited public comment on this proposal.
Comment: Many commenters supported CMS' proposal to allow a
hospital to be eligible for validation if it submits at least one case
to the Hospital OQR Program Clinical Data Warehouse during the quarter
with the most recently available data. One commenter, however,
recommended that CMS change the number of cases for a facility to be
eligible for validation from at least 1 case to at least 12 cases
because up to 12 records are required per hospital per quarter for
validation. Commenters also urged CMS to evaluate the appropriateness
of hospital selection based on this narrower criterion and to propose
refinements, if necessary, in the future.
Response: We thank commenters for their support. We agree with the
suggestion that a hospital should 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. As the commenter noted, currently, when a
hospital is selected for validation, we request up to 12 cases per
quarter per hospital. We stated our rationale for requesting up to 12
cases per quarter in the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74486), where we explained that we attempt to balance
burden to hospitals with data accuracy. Accordingly, we recognize that
allowing a hospital to be eligible for random selection for validation
if it is ``open'' or requiring only one case in the quarter containing
the most recently available data may not allow us an adequate number of
records to ensure data submitted by the hospital is valid and are
modifying our proposal accordingly to align with our validation
procedures and goals.
After consideration of the public comments we received, and for the
reasons stated above, we are finalizing our proposal with a
modification that, beginning with the CY 2015 encounter period for the
CY 2017 payment determination and subsequent years, a hospital will be
eligible for random selection for validation if it submits at least 12
cases, instead of just 1 as proposed, to the Hospital OQR Program
Clinical Data Warehouse during the quarter containing the most recently
available data. The quarter containing the most recently available data
will be defined based on when the random sample is drawn.
c. Targeting Criteria for Data Validation Selection for the CY 2017
Payment Determination and Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68485 through 68486) for a discussion of our targeting
criteria. In the CY 2015 OPPS/ASC proposed rule (79 FR 41043), we did
not propose any changes to these policies.
d. Methodology for Encounter Selection for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68486) for a discussion of our methodology for encounter
selection. In the CY 2015 OPPS/ASC proposed rule (79 FR 41043), we did
not propose any changes to this policy.
e. Medical Record Documentation Requests for Validation and Validation
Score Calculation for the CY 2017 Payment Determination and Subsequent
Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68486 through 68487) for a discussion of our previously
finalized procedures for requesting medical record documentation for
validation and validation score calculation. In the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75118), we codified these
procedures at 42 CFR 419.46(e)(1) and (e)(2). In the CY 2015 OPPS/ASC
proposed rule (79 FR 41043 through 41044), we proposed two changes to
these policies for the CY 2017 payment determination and subsequent
years: (1) We proposed to give hospitals the option to either submit
paper copies of patient charts or securely transmit electronic versions
of medical information for validation; and (2) we proposed that a
hospital must identify the medical record staff responsible for
submission of records under the Hospital OQR Program to the designated
CMS contractor.
For records stored electronically, hospitals expend additional
resources printing records onto paper that may be more efficiently
transmitted electronically. In addition, the length of paper charts has
been increasing, and the paper used to submit these records has an
environmental impact. Therefore, we proposed to give hospitals the
option to either submit copies of paper patient charts or securely
transmit electronic versions of medical information, which has the
potential to significantly reduce administrative burden, cost, and
environmental impact. We have already finalized a similar policy for
the Hospital IQR Program in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50834 through 50836) that allows hospitals for the Hospital IQR Program
to submit electronic records through the mail on a CD, DVD, or flash
drive. In addition, in the FY 2015 IPPS/LTCH PPS final rule for the
Hospital IQR Program (79 FR 50269), we finalized our proposal to also
allow hospitals to submit patient charts using a Secure File Transfer
Portal on the QualityNet Web site.
The current Hospital OQR Program regulation at Sec. 419.46(e)(1)
states: ``Upon written request by CMS or its contractor, a hospital
must submit to CMS supporting medical record documentation that the
hospital used for purposes of data submission under the program . . .
.'' We proposed that this requirement may be met by employing either of
the following options for the CY 2017 payment determination and
subsequent years: (1) A hospital may submit paper medical records, the
form in which we have historically requested them; or (2) a hospital
may securely transmit electronic versions of medical information.
For the CY 2017 payment determination and subsequent years, we
proposed that hospitals that chose to securely transmit electronic
versions of medical information should either: (1) Download or copy the
digital image (that is, PDF) of the patient chart onto CD, DVD, or
flash drive and ship the electronic media following instructions
specified on the QualityNet Web site; or (2) securely submit digital
images (PDFs) of patient charts using a Secure File Transfer Portal on
the QualityNet Web site. The Secure File Transfer Portal would allow
hospitals to transfer files through either a Web-based portal or
directly from a client application using a secure file transfer
protocol. The system provides a mechanism for securely exchanging
documents containing sensitive information such as Protected Health
Information (PHI) or Personally Identifiable Information (PII).
Detailed instructions on how to use this system are available in the
Secure File Transfer 1.0 User Manual available on QualityNet at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetBasic&cid=1228773343598.
In addition, in the CY 2013 OPPS/ASC final rule with comment period
(77 FR 68486 through 68487), we stated that our validation contractor
would request medical documentation from each hospital selected for
validation via certified mail or other trackable method.

[[Page 66966]]

This request would be sent to ``the hospital's medical record staff
identified by the hospital for the submission of records under the
Hospital IQR Program (that is, the hospital's medical records staff
identified by the hospital to the State QIO)'' (77 FR 68487). Quality
Improvement Organizations (QIOs) are CMS contractors required by the
Act (section 1152 through 1154) tasked with, among other
responsibilities, assisting hospitals with quality improvement
activities. Due to the evolution of the structure of the QIO program,
beginning with CY 2015 for the CY 2017 payment determination and
subsequent years, we proposed that a hospital must identify the medical
record staff responsible for submission of records under the Hospital
OQR Program to the designated CMS contractor; this CMS contractor may
be a contractor other than the State QIO.
Finally, we noted that a typographical error exists in our
validation language in Sec. 419.46(e). This section states, ``CMS may
validate one or more measures selected under section 1833(17)(C) of the
Act . . . .'' ``[S]ection 1833(17)(C)'' should instead state ``section
1833(t)(17)(C).'' We proposed to make this change in the regulation
text.
We invited public comment on these proposals.
Comment: Commenters supported CMS' proposal to offer hospitals the
option to submit, for validation purposes, either paper copies of
patient charts or to securely transmit electronic versions of medical
information using either electronic media (for example, CD, DVD, flash
drive) or PDFs submitted using the Secure File Transfer Portal on the
QualityNet Web site. Commenters noted that the prevalence of electronic
medical records lends itself well to electronic submission of records.
Response: We thank commenters for their support and we agree with
their comments.
Comment: Commenters supported CMS' proposal to require hospitals to
identify the medical record staff responsible for submitting validation
records for the Hospital OQR Program, but requested that CMS make every
effort to work with State hospital associations to ensure that the
correct individuals have been identified through this new process.
Commenters also requested that CMS require contractors to update their
lists quarterly to ensure that information is kept current.
Response: We thank commenters for their support. We will consider
commenters' concerns when instructing our contractors to keep
validation contacts up-to-date, and, to the extent feasible, we will
attempt to work with state hospital associations.
After consideration of the public comments we received, we are
finalizing our proposals: (1) To give hospitals the option to either
submit: (a) Paper copies of patient charts; or (b) electronic versions
of medical information by: (i) Downloading or copying the digital image
(that is, PDF) of the patient chart onto encrypted CD, DVD, or flash
drive and shipping the encrypted electronic media following
instructions specified on the QualityNet Web site; or (ii) securely
submitting PDFs of patient charts using a Secure File Transfer Portal
on the QualityNet Web site; (2) that hospitals must identify the
medical record staff responsible for submission of records under the
Hospital OQR Program to the designated CMS contractor as proposed; and
(3) to correct our typographical error in regulation text to read
``section 1833(t)(17)(C)'' as proposed.

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

We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68487 through 68489) and the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75118 through 75119) for a discussion of our
reconsideration and appeals procedures. We codified this process by
which participating hospitals may submit requests for reconsideration
at 42 CFR 419.46(f). We also codified language at Sec. 419.46(f)(3)
stating that a hospital that is dissatisfied with a decision made by
CMS on its reconsideration request may file an appeal with the Provider
Reimbursement Review Board.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41044), we did not
propose any changes to the reconsideration and appeals procedures.

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

We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75119 through 75120), and 42 CFR 419.46(d) for a complete
discussion of our extraordinary circumstances extension or waiver
process under the Hospital OQR Program. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41044), we did not propose any substantive changes
to these policies or the processes.
However, in the future, we will refer to the process as the
Extraordinary Circumstances Extensions or Exemptions process, instead
of the Extraordinary Circumstances Extensions or Waiver process. We are
in the process of revising the Extraordinary Circumstances/Disaster
Extension or Waiver Request form (CMS-10432), approved under OMB
control number 0938-1171. We are updating the forms and instructions so
that a hospital or facility may apply for an extension for all
applicable quality reporting programs at one time.
In addition, we proposed to make a conforming change from the
phrase ``extension or waiver'' to the phrase ``extension or exemption''
in 42 CFR 419.46(d).
We proposed to revise the language in 42 CFR 419.46(d) at 79 FR
41081 (July 14, 2014) to state that CMS may grant an extension or
exception of one or more data submission deadlines and requirements in
the event of extraordinary circumstances beyond the control of the
hospital, such as when an act of nature affects an entire region or
locale or a systemic problem with one of CMS' data collection systems
directly or indirectly affects data submission. CMS may grant an
extension or exception as follows:
Upon request by the hospital. Specific requirements for
submission of a request for an extension or exception are available on
the QualityNet Web site.
At the discretion of CMS. CMS may grant exceptions or
extensions to hospitals that have not requested them when CMS
determines that an extraordinary circumstance has occurred.
We invited comments on this proposal.
Comment: Commenters supported CMS' decision to update the forms and
instructions for the extension or exception process so that a hospital
may apply for an extension for all applicable quality programs at one
time.
Response: We thank commenters for their support.
After consideration of the public comments we received, we are
finalizing our proposal to change the phrase ``extension or waiver'' to
the phrase ``extension or exemption'' at 42 CFR 419.46(d) as proposed.

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

A. Background

1. Overview
We refer readers to section XIII.A.1. of this final rule with
comment period for

[[Page 66967]]

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

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68493 through 68494) for a detailed discussion of the
priorities we consider for ASCQR Program quality measure selection.
2. Policy for Removal of Quality Measures From the ASCQR Program
We previously adopted a policy to retain measures from the previous
year's ASCQR Program measure set for subsequent years' measure sets
except when they are removed, suspended, or replaced as indicated (76
FR 74504; 77 FR 68494 through 68495; 78 FR 75122). In the CY 2015 OPPS/
ASC proposed rule (79 FR 41045), we proposed a process for removing
adopted measures.
In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43863 through
43865), we finalized a process for immediate retirement (a term we
later changed to ``removal'') of RHQDAPU Program (now referred to as
the Hospital IQR Program) measures based on evidence that the continued
use of the measure as specified raised patient safety concerns. We
stated that we believe immediate retirement of quality measures should
occur when the clinical evidence suggests that continued collection of
the data may result in harm to patients. For example, we removed the
AMI-6: Beta Blocker at Arrival measure from the Hospital IQR Program
because it encouraged care that raised potential safety concerns
according to newly published research suggesting that beta-blockers
could increase mortality risks for certain patient populations (74 FR
43863). Under such circumstances, we may not be able to wait until the
annual rulemaking cycle or until we have had the opportunity to obtain
input from the public to retire a measure because of the need to
discourage potentially harmful practices, which may result from
continued collection of the measure.
In these situations, we would promptly retire the measure and
notify hospitals and the public of the retirement of the measure and
the reasons for its retirement through the usual communication
channels. Further, we would confirm the retirement of the measure that
was the subject of immediate retirement in the next program rulemaking.
Finally, we stated that, in other circumstances where we do not believe
that continued use of a measure raises specific safety concerns, we
intend to use the rulemaking process to retire the measure. For the
same reasons stated for the Hospital IQR Program, we believe that this
process also would be appropriate for the ASCQR Program. Therefore, in
the CY 2015 OPPS/ASC proposed rule (79 FR 41045), we proposed to adopt
this same removal process for the ASCQR Program. Under this process, we
would immediately remove an ASCQR Program measure based on evidence
that the continued use of the measure as specified raised patient
safety concerns. In these situations, we would promptly remove the
measure and notify ASCs and the public of the removal of the measure
and the reasons for its removal through the ASCQR Program ListServe and
the ASCQR Program QualityNet Web site at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772879650. Further, we would confirm the removal of the measure that
was the subject of immediate removal in the next OPPS/ASC rulemaking.
For situations where we do not believe the continued use of a
measure raises specific safety concerns, we proposed to use the regular
rulemaking process to remove a measure to allow for public comment. In
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53505 through 53506), we
listed the criteria we have used to determine whether to remove
measures from the Hospital IQR Program. These criteria are: (1) Measure
performance among hospitals is so high and unvarying that meaningful
distinctions and improvements in performance can no longer be made
(``topped out'' measures); (2) availability of alternative measures
with a stronger relationship to patient outcomes; (3) a measure does
not align with current clinical guidelines or practice; (4) the
availability of a more broadly applicable (across settings,
populations, or conditions) measure for the topic; (5) the availability
of a measure that is more proximal in time to desired patient outcomes
for the particular topic; (6) the availability of a measure that is
more strongly associated with desired patient outcomes for the
particular topic; and (7) collection or public reporting of a measure
leads to negative unintended consequences other than patient harm.
These criteria were suggested through public comment on proposals for
the Hospital IQR Program, and we agreed that these criteria should be
considered in evaluating the Hospital IQR Program quality measures for
removal (75 FR 53506). We believe that these criteria also are
applicable in evaluating ASCQR Program quality measures for removal
because we have found them useful for evaluating measures in the
Hospital IQR Program and our other quality reporting programs, which
share similar goals to the ASCQR Program. Accordingly, we proposed to
adopt these measure removal criteria for the ASCQR Program.
We invited public comment on these proposals.
Comment: Many commenters supported CMS' proposed measure removal
policy and commended CMS for fostering an aligned approach for measures
removal criteria across our quality reporting and value-based
purchasing programs.
Response: We thank the commenters for their support. We agree that
for consistency, an approach to removing measures should be aligned
across our quality reporting and value-based purchasing programs to the
extent possible.
Comment: One commenter supported CMS' proposal to immediately
remove measures that raise public safety concerns. The commenter
recommended that CMS notify ASCs by mail and also post notification on
the CMS Web site on the ASCQR Web page under the ``Announcements''
heading, in addition to communication through the ASCQR Program
ListServe and the QualityNet Web site.
Response: We thank the commenter for supporting our proposal and
the suggestions for notifying ASCs. Past experience indicates that the
current notification process using the QualityNet Web site and the
ASCQR Program ListServe is a fast, efficient, and effective means of
publicly communicating information about the ASCQR Program, and using
this process would be consistent with how other ASCQR Program
information is provided. Therefore, we are not including these
additional modes of communication with ASCs for purposes of ASCQR
Program notices at this time.
Comment: One commenter believed that proposed measure removal
criteria (2) (availability of alternative measures

[[Page 66968]]

with a stronger relationship to patient outcomes) and (6) (the
availability of a measure that is more strongly associated with desired
patient outcomes for the particular topic) are duplicative, and that
criterion (2) should read as ``performance or improvement on a measure
does not result in better patient outcomes.'' The commenter also
suggested that criterion (3) (a measure does not align with current
clinical guidelines or practice) and criterion (7) (collection or
public reporting of a measure leads to negative unintended consequences
other than patient harm) should be applied to all measures, but the
remaining criteria should be applied more selectively on a measure-by-
measure basis.
Response: We thank the commenter for these recommendations. We
disagree with the commenter that criterion (2) and criterion (6) are
the same and that criterion (2) should be reworded as suggested.
Criterion (2) applies when there is more than one alternative measure
with a stronger relationship to patient outcomes that is available, and
criterion (6) applies where there is only one measure that is strongly
and specifically associated with desired patient outcomes for the
particular topic that is available. For criterion (2), there may be
different alternative measures available that meet this criterion to
different degrees. The suggestion to rephrase criterion (2) to read
``performance or improvement on a measure does not result in better
patient outcomes'' would change the meaning of criterion (2).
As we discuss earlier, the measure removal criteria have been
developed through public comment on proposals for the Hospital IQR
Program. We believe that these criteria also are applicable in
evaluating the ASCQR Program quality measures for removal, because we
have found them useful for evaluating measures in the Hospital IQR
Program as well as other quality reporting programs, which share
similar goals to the ASCQR Program. We note that we did not propose any
changes to criterion (2) in the CY 2015 OPPS/ASC proposed rule.
Further, based on our experience with the Hospital IQR Program, we
believe criterion (2) is appropriate and do not believe that additional
refinement is necessary. Therefore, we are not revising this criterion.
We thank the commenters for their views and will take them into
consideration as we continuously assess these criteria.
With respect to the commenter's suggestion that criteria (3) and
(7) apply to all measures but the remaining criteria be applied more
selectively on a case-by-case basis, we disagree with respect to
selective application of the criteria. We intend for all the criteria,
including criteria (3) and (7), to apply to all measures to the extent
possible. In any given situation, we will focus only on removal
criteria that are relevant to a particular set of circumstances. If
more than one of the measure removal criteria appears to be relevant,
we intend to take a balanced approach in assessing the value of each of
the different criteria in a given situation before removing any
measure.
After consideration of the public comments we received, we are
finalizing our proposal without modification on the measure removal
process and criteria. Specifically, we will immediately remove an ASCQR
Program measure based on evidence that the continued use of the measure
as specified raises patient safety concerns. In these situations, we
will promptly remove the measure and notify ASCs and the public of the
removal of the measure and the reasons for its removal through the
ASCQR Program ListServe and the ASCQR Program QualityNet Web site.
Further, we will confirm the removal of the measure that was the
subject of immediate removal in the next OPPS/ASC rulemaking.
For situations where we do not believe the continued use of a
measure raises specific safety concerns, we will use the regular
rulemaking process to remove a measure to allow for public comment. In
these situations, we will use the following criteria to determine
whether to remove the measures from the ASCQR Program: (1) measure
performance among ASCs is so high and unvarying that meaningful
distinctions and improvements in performance can no longer be made
(``topped out'' measures); (2) availability of alternative measures
with a stronger relationship to patient outcomes; (3) a measure does
not align with current clinical guidelines or practice; (4) the
availability of a more broadly applicable (across settings,
populations, or conditions) measure for the topic; (5) the availability
of a measure that is more proximal in time to desired patient outcomes
for the particular topic; (6) the availability of a measure that is
more strongly associated with desired patient outcomes for the
particular topic; and (7) collection or public reporting of a measure
leads to negative unintended consequences other than patient harm.
3. Criteria for Removal of ``Topped-Out'' Measures
In the CY 2015 OPPS/ASC proposed rule (79 FR 41045 through 41046),
we proposed to define criteria for when we would consider a measure to
be ``topped-out.'' A measure is ``topped-out'' when measure performance
among ASCs is so high and unvarying that meaningful distinctions and
improvements in performance can no longer be made (``topped-out''
measures). We do not believe that measuring ASC performance on
``topped-out'' measures provides meaningful information on the quality
of care provided by ASCs. We further believe that quality measures,
once ``topped-out,'' represent care standards that have been widely
adopted by ASCs. We believe such measures should be considered for
removal from the ASCQR Program because their associated reporting
burden may outweigh the value of the quality information they provide.
Specifically, we proposed that a measure under the ASCQR Program is
``topped-out'' when it meets both of the following criteria:
Statistically indistinguishable performance at the 75th
and 90th percentiles; and
A truncated coefficient of variation less than or equal to
0.10.
To identify if a measure has statistically indistinguishable
performance at the 75th and 90th percentiles, we would determine
whether the difference between the 75th and 90th percentiles for an
ASC's measure is within two times the standard error of the full
dataset. The coefficient of variation (CV) is a descriptive statistic
that expresses the standard deviation as a percentage of the sample
mean; this provides a statistic that is independent of the units of
observation. Applied to this analysis, a large CV would indicate a
broad distribution of individual ASC scores, with large and presumably
meaningful differences between ASCs in relative performance. A small CV
would indicate that the distribution of individual facility scores is
clustered tightly around the mean value, indicating that it is not
useful to draw distinctions among individual ASCs on measure
performance. The truncated CV excludes observations whose rates are
below the 5th percentile and above the 95th percentile; this avoids
undue effects of the highest and lowest outlier values, which, if
included, can inappropriately widen the dispersion of the distribution.
These same criteria for when we would consider a measure to be
``topped-out'' have been adopted in the Hospital VBP Program (79 FR
50055), the Hospital IQR Program (79 FR 50204), and the Hospital OQR
Program (section XIII.C.2 of this final rule with comment period).

[[Page 66969]]

We invited public comment on this proposal.
Comment: Many commenters supported CMS' proposed ``topped-out''
criteria for measure removal and the alignment of these criteria across
the Hospital IQR and Hospital VBP Programs. One commenter suggested
that CMS refine the first criterion to ensure that measures exhibit
sufficient lack of variability before they are removed. Several
commenters suggested that CMS have a mechanism in place to identify a
significant decline in adherence rates after a measure has been
removed.
Response: We thank the commenters for their support of the proposed
topped-out criteria. We expect ASCs to always follow appropriate
standards-of-care and clinical guidelines, regardless of whether a
quality measure exists. We believe that ASCs are committed to providing
quality care to patients, and we do not have any indication that ASCs
will stop doing so when measures are removed.
While it is possible that removing a measure could result in
reduced performance, we have guarded against this possibility by
setting topped-out criteria that evidence very high, unvarying levels
of performance. Further, we intend to continue to work with quality
measurement stakeholders to ensure that performance does not decline
significantly after removing a measure. However, we must balance the
costs of continued monitoring of a successful measure with high levels
of performance with the adoption of other measures where there are
opportunities for improvement in clinical quality.
Regarding the suggestion to further refine the first criterion,
which refers to determining that a measure exhibits sufficient lack of
variability before removal, we proposed topped-out criteria that
evidence very high, unvarying levels of performance and, at this time,
do not believe additional refinement that would make the criteria more
stringent is necessary. However, we will consider the need for
refinement and, if we determine changes may be necessary, we will
propose such changes in future rulemaking. In addition, we will not use
our topped-out criteria exclusively when evaluating the retention or
removal of a measure; a measure that meets our topped-out criteria
could be retained for other program reasons as discussed below.
Comment: One commenter cautioned against removing measures solely
based on the proposed ``topped out'' criteria, and was concerned that
these criteria might lead to the removal of valuable program measures.
The commenter cited the example of patient safety measures and surgical
site infection rates, which are intended to drive toward and sustain
zero harm. The commenter believed that these types of measures could
have performance scores that meet the topped out criteria over time.
However, the commenter believed they would have enduring value to
consumers and providers. Some commenters urged CMS to assess ``topped-
out'' measures individually, that is, case-by-case, and in a broader
context before removing them from the ASCQR Program.
Response: We agree that some measures that are quantitatively
``topped-out'' may still be appropriate for other reasons. Therefore,
as we do for the Hospital IQR Program and the Hospital VBP Program, and
consistent with our discussion above in section XIV.B.3. of this final
rule with comment period, we will evaluate several factors in
considering the removal of measures for the ASCQR Program. We will
assess the benefits of retaining a measure on a case-by-case basis
before proposing to remove a measure from a quality data reporting
program and will not remove a measure solely on the basis of meeting
any specific criterion.
Comment: One commenter requested clarification whether ASC-5:
Prophylactic IV antibiotic timing is topped-out because this measure is
topped-out in the HOPD setting.
Response: We thank the commenter for this request. In response, we
have reviewed data collected under the ASCQR Program. Our analysis
indicated that performance for the prophylactic IV antibiotic timing
measure is relatively high. However, because we continue to have some
facilities with completeness of reporting issues and data have been
collected for a relatively short time, we do not believe we have
sufficient data to support a topped out analysis for the purposes of
measure removal for the ASCQR Program at this time. Furthermore, we
believe that a prophylactic antibiotic timing measure remains relevant
clinically or for quality improvement purposes under the ASCQR Program.
After consideration of the public comments we received, we are
finalizing the proposed ``topped-out'' criteria. Specifically, we are
finalizing a policy that a measure under the ASCQR Program is ``topped-
out'' when it meets both of the following criteria: (1) Statistically
indistinguishable performance at the 75th and 90th percentiles; and (2)
a truncated coefficient of variation less than or equal to 0.10. To
identify if a measure has statistically indistinguishable performance
at the 75th and 90th percentiles, we will determine whether the
difference between the 75th and 90th percentiles for an ASC's measure
is within two times the standard error of the full dataset.
As we do for the Hospital IQR Program and the Hospital VBP Program,
and consistent with our discussion above in section XIV.B.3. of this
final rule with comment period, we will evaluate several factors in
considering the removal of measures for the ASCQR Program. We will
assess the benefits of retaining a measure on a case-by-case basis
before proposing to remove a measure from the ASCQR Program and will
not remove a measure solely on the basis of meeting any specific
criterion.
4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492
through 74517), we implemented the ASCQR Program beginning with the CY
2014 payment determination. In the CY 2012 OPPS/ASC final rule with
comment period, we adopted five claims-based measures for the CY 2014
payment determination and subsequent years, two measures with data
submission via an online Web page for the CY 2015 payment determination
and subsequent years, and one process of care, healthcare-associated
infection measure for CY 2016 payment determination and subsequent
years (76 FR 74496 to 74511). In the CY 2014 OPPS/ASC final rule with
comment period, we adopted three chart-abstracted measures for the CY
2016 payment determination and subsequent years (78 FR 75124 to 75130).
The quality measures that we previously adopted are listed in the
chart below.

[[Page 66970]]

ASC Program Measure Set Previously Adopted for the CY 2016 Payment
Determination and Subsequent Years
------------------------------------------------------------------------
ASC # NQF # Measure name
------------------------------------------------------------------------
ASC-1......................... 0263............. Patient Burn.
ASC-2......................... 0266............. Patient Fall.
ASC-3......................... 0267............. Wrong Site, Wrong
Side, Wrong Patient,
Wrong Procedure,
Wrong Implant.
ASC-4......................... 0265............. Hospital Transfer/
Admission.
ASC-5......................... 0264............. Prophylactic
Intravenous (IV)
Antibiotic Timing.
ASC-6......................... N/A.............. Safe Surgery
Checklist Use.
ASC-7......................... N/A.............. ASC Facility Volume
Data on Selected ASC
Surgical Procedures.
Procedure categories
and corresponding
HCPCS codes are
located at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754 cid=1228772475754.
ASC-8......................... 0431............. Influenza Vaccination
Coverage among
Healthcare
Personnel.
ASC-9......................... 0658............. Endoscopy/Polyp
Surveillance:
Appropriate Follow-
Up Interval for
Normal Colonoscopy
in Average Risk
Patients.
ASC-10........................ 0659............. Endoscopy/Polyp
Surveillance:
Colonoscopy Interval
for Patients with a
History of
Adenomatous Polyps-
Avoidance of
Inappropriate Use.
ASC-11........................ 1536............. Cataracts:
Improvement in
Patient's Visual
Function within 90
Days Following
Cataract Surgery.*
------------------------------------------------------------------------
* Measure voluntarily collected as set forth in section XIV.E.3.c. of
this final rule with comment period.

The comments we received on these previously adopted measures and
our responses are set forth below.
Comment: Some commenters asked CMS to remove some previously
adopted measures for ASCs, because they believed these measures were
either inappropriate or too burdensome for ASCs.
Response: We thank the commenters for their suggestions. At this
time, we are not removing any of the measures suggested by commenters.
We did not propose to remove any measures from the ASCQR Program in the
CY 2015 OPPS/ASC proposed rule. Further, there is no evidence that
continued use of the measures as specified raises patient safety
concerns that would require immediate removal of the measures based on
the process we are finalizing in this final rule with comment period.
However, we will take these suggestions into consideration in future
years using the measure removal criteria we are adopting in this final
rule with comment period.
5. New ASCQR Program Quality Measure for the CY 2018 Payment
Determination and Subsequent Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75124) for a detailed discussion of our approach to ASCQR
measure selection. In the CY 2015 OPPS/ASC proposed rule (79 FR 41046
through 41048), we proposed to adopt one new claims-based measure into
the ASCQR Program for the CY 2017 payment determination and subsequent
years: ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate
after Outpatient Colonoscopy.
Colonoscopy is the most commonly performed ambulatory surgery in
the United States.\28\ The most recent data available indicate that, in
2002 alone, physicians performed an estimated 14 million colonoscopies
in the United States.\29\ Colonoscopies are associated with a range of
well-described and potentially preventable adverse events that can lead
to hospital visits, repeat procedures, or surgical intervention for
treatment, including colonic perforation, gastrointestinal (GI)
bleeding, and cardiopulmonary events such as hypoxia, aspiration
pneumonia, and cardiac arrhythmias. While hospital visits are generally
unexpected after outpatient colonoscopy, the literature suggests that
the majority of these visits occur within the first 7
days.^{30 31 32} Reported hospital visit rates after outpatient
colonoscopy range from 0.8 to 1.0 percent at 7 to 14 days post
procedure, and from 2.4 to 3.8 percent at 30 days post
procedure.^{33 34 35} Some adverse events such as bleeding
occur after day 7, but based on input from clinical experts, public
comment, and empirical analyses, we concluded that unplanned hospital
visits within 7 days is the optimal outcome to ensure capture of
procedure-related adverse events and to minimize capture of hospital
visits unrelated to the procedure. This measure provides the
opportunity for ASCs to improve quality of care and to lower the rates
of adverse events leading to hospital visits after outpatient
colonoscopy; this would encourage ASCs to achieve the outcome rates of
the best performers.
---------------------------------------------------------------------------

\28\ Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based
Ambulatory Surgery, 2007: Statistical Brief #86. Healthcare Cost and
Utilization Project (HCUP) Statistical Briefs. Rockville (MD) 2006.
\29\ Seeff LC, Richards TB, Shapiro JA, et al. How many
endoscopies are performed for colorectal cancer screening? Results
from CDC's survey of endoscopic capacity. Gastroenterology. Dec
2004; 127(6):1670-1677.
\30\ Rathgaber SW., Wick TM. Colonoscopy completion and
complication rates in a community gastroenterology practice.
Gastrointest Endosc. 2006; 64:556-62.
\31\ Rabeneck L, Saskin R, Paszat LF. Onset and clinical course
of bleeding and perforation after outpatient colonoscopy: a
population-based study. Gastrointest Endosc. 2011; 73:520-3.
\32\ Ko CW, Riffle S, Michael L, et al. Serious complications
within 30 days of screening and surveillance colonoscopy are
uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73.
\33\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor
complications and time lost from normal activities after screening
or surveillance colonoscopy. Gastrointest Endosc. Apr 2007;65
(4):648-656.
\34\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
\35\ Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A,
Brooks R. Is there a relationship between physician and facility
volumes of ambulatory procedures and patient outcomes? J Ambul Care
Manage. Oct-Dec 2008; 31(4):354-369.
---------------------------------------------------------------------------

[[Page 66971]]

measure scores would make patient unplanned hospital visits (emergency
department visits, observation stays, and inpatient admissions)
following colonoscopies more visible to ASCs and patients and
incentivize ASCs to incorporate quality improvement activities in order
to reduce these visits. ASCs are often unaware of complications
following colonoscopy for which patients visit the hospital.\36\ This
risk-standardized quality measure would address this information gap
and promote quality improvement by providing feedback to facilities and
physicians, as well as transparency for patients on the rates and
variation across facilities in unplanned hospital visits after
colonoscopy.
---------------------------------------------------------------------------

\36\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
---------------------------------------------------------------------------

The outcome measured in the ASC-12 measure is all-cause, unplanned
hospital visits (admissions, observation stays, and emergency
department visits) within 7 days of an outpatient colonoscopy
procedure. The measure score, also referred to as the facility-level
risk-standardized hospital visit rate, is derived from the calculation
of the ratio of the numerator to the denominator multiplied by the
crude rate. The numerator is the number of predicted (meaning adjusted
actual) hospital visits, which is the number of unplanned hospital
visits within 7 days of colonoscopy that the facility is predicted to
have based on its case-mix. The denominator is the number of expected
hospital visits, which is the number of unplanned hospital visits the
facility is expected to have based on the nation's performance with the
facility's case-mix. The crude rate is the national unadjusted number
of patients who had a hospital visit post-colonoscopy among all
patients who had a colonoscopy.
Based on discussions with clinical and technical panel experts, the
measure excludes colonoscopies for patients undergoing concomitant
high-risk upper GI endoscopy because these patients are at a higher
risk for hospital visits than patients undergoing a typical
colonoscopy, and patients with a history of inflammatory bowel disease
(IBD) or diverticulitis in the year preceding the colonoscopy because
we likely could not fully characterize and adjust for their pre-
procedure risk of needing a post-procedure hospital visit or identify
whether these admissions are planned or unplanned. The measure also
excludes procedures for patients who lack continuous enrollment in
Medicare FFS Parts A and B in the first month after the procedure to
ensure all patients included in the analysis have complete data
available for outcome assessment. The statistical risk adjustment model
includes 15 clinically relevant risk-adjustment variables that are
strongly associated with risk of hospital visits within 7 days
following a colonoscopy. Additional methodology details and information
obtained from public comment for measure development are available at:
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
Section 1890A of the Act requires the Secretary to establish a pre-
rulemaking process with respect to the selection of certain categories
of quality and efficiency measures. Under section 1890A(a)(2) of the
Act, the Secretary must make available to the public by December 1 of
each year a list of quality and efficiency measures that the Secretary
is considering for the Medicare program. The measure that we proposed
was reviewed by the MAP and was included on a publicly available
document entitled ``MAP Pre-Rulemaking Report: 2014 Recommendations on
Measures for More than 20 Federal Programs'' (formerly referred to as
the ``List of Measures Under Consideration'') on the NQF Web site at:
http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx
(``MAP Report''). We note that, at the time the measure was listed on
the ``MAP Pre-Rulemaking Report: 2014 Recommendations on Measures for
More than 20 Federal Programs,'' it was named ``High-Acuity Care Visits
after Outpatient Colonoscopy Procedure.'' The MAP conditionally
supported this measure for the ASCQR Program.
The MAP Report stated that the measure ``[s]hould be submitted for
and receive NQF endorsement; Measure is promising but needs further
development'' (p. 187). Further, the MAP Report stated that the measure
``would provide valuable outcome information to inform consumer
decision and drive quality improvement'' and that the ``NQF endorsement
process would resolve questions about the reliability and validity of
the measure.'' The MAP also stated that NQF endorsement would resolve
questions about ``the feasibility of the algorithm for attributing
claims data in light of possible effects of the Medicare three-day
payment window'' (p. 187, MAP Report). However, this concern with
Medicare Part A hospital payments relates to the Hospital OQR Program
and not the ASCQR Program. As required under section 1890A(a)(4) of the
Act, we considered the input and recommendations provided by the MAP in
selecting measures to propose for the ASCQR Program.
We believe we have addressed the concerns raised by the MAP to the
greatest extent possible. The measure was submitted to NQF for
endorsement on February 21, 2014. The measure is well-defined and
precisely specified for consistent implementation within and between
organizations that will allow for comparability. Reliability testing
demonstrated the measure data elements produced were repeatable; that
is, the same results were produced a high proportion of the time when
assessed in the same population in the same time period. Validity
testing demonstrated that the measure data elements produce measure
scores that correctly reflect the quality of care provided and that
adequately identify differences in quality.
Currently, there are no publicly available quality of care reports
for ASCs that conduct outpatient colonoscopies. Therefore, adoption of
this measure provides an opportunity to enhance the information
available to patients choosing among ASCs that offer this elective
procedure. We believe this measure would reduce adverse patient
outcomes associated with preparation for colonoscopy, the procedure
itself, and follow-up care by capturing and making more visible to ASCs
and patients all unplanned hospital visits following the procedure. In
addition, providing outcome rates to ASCs would make visible to
clinicians meaningful quality differences and incentivize improvement.
Sections 1833(i)(7)(B) and 1833(t)(17)(C)(i) of the Act, when read
together, require the Secretary, except as the Secretary may otherwise
provide, to develop measures appropriate for the measurement of the
quality of care furnished by ASCs, that reflect consensus among
affected parties and, to the extent feasible and practicable, that
include measures set forth by one or more national consensus building
entities. As stated in the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74465 and 74505), we believe that consensus among
affected parties can be reflected through means other than NQF
endorsement, including consensus achieved during the measure
development process, consensus shown through broad acceptance and use
of measures, and consensus through public comment. We believe this
proposed measure meets these statutory

[[Page 66972]]

requirements. We believe that this measure is appropriate for the
measurement of quality of care furnished by ASCs because this procedure
is commonly performed in ASCs and, as discussed above, can signify
important issues in the care being provided in ASCs. We also believe
this measure reflects consensus among affected parties because the MAP,
which represents stakeholder groups, reviewed and conditionally
supported the measure, and stated that it ``would provide valuable
outcome information to inform consumer decision and drive quality
improvement.'' Further, the measure was subject to public comment
during the MAP and measure development processes, with some public
commenters agreeing with the MAP's conclusions on the measure (p. 187,
MAP Report, January 2014; http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx)
.
As discussed above, the statute also requires the Secretary, except
as the Secretary may otherwise provide, to include measures set forth
by one or more national consensus building entities to the extent
feasible and practicable. This measure is not NQF-endorsed; however, as
noted above, this measure is currently undergoing the NQF endorsement
process. We note that sections 1833(i)(7)(B) and (t)(17) of the Act do
not require that each measure we adopt for the ASCQR Program be
endorsed by a national consensus building entity, or by the NQF
specifically. Further, under section 1833(i)(7)(B) of the Act, section
1833(t)(17)(C)(i) of the Act, which contains this requirement, applies
to the ASCQR Program, except as the Secretary may otherwise provide.
Under this provision, the Secretary has further authority to adopt
nonendorsed measures.
In summary, we proposed to adopt one new measure for the ASCQR
Program for the CY 2017 payment determination and subsequent years.

------------------------------------------------------------------------
Proposed ASCQR
measure for the CY
ASC # NQF # 2017 payment
determination and
subsequent years.
------------------------------------------------------------------------
ASC-12........................ Pending.......... Facility Seven-Day
Risk-Standardized
Hospital Visit Rate
after Outpatient
Colonoscopy.
------------------------------------------------------------------------

We invited public comment on our proposal to include ASC-12:
Facility Seven-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy in the ASCQR Program beginning with the CY 2017
payment determination.
Comment: Several commenters agreed that the ASC-12 measure
addresses an important area to monitor for quality improvement, given
the number of colonoscopy procedures performed annually in ASCs.
Response: We thank the commenters for their support. We agree that
the quality of care associated with colonoscopy procedures is an
important clinical care area to assess quality of care for ASCs.
Comment: Many commenters urged CMS not to adopt ASC-12 until it is
NQF-endorsed. Several of these commenters also noted that the MAP
supported this measure on condition of NQF-endorsement, noting that the
NQF process would resolve a number of questions about the reliability,
validity and feasibility of this measure. These commenters requested
that, in general, CMS only include measures in the ASCQR Program that
have been NQF-endorsed in order to avoid later suspending or removing
these measures.
Response: We appreciate the commenters' concerns. Under sections
1833(i)(7)(B) and (t)(17)(C)(i) of the Act, except as the Secretary may
otherwise provide, the Secretary must develop measures that reflect
consensus among affected parties and, to the extent feasible and
practicable, must include measures set forth by a national consensus
building entity. Whenever possible, we strive to adopt NQF-endorsed
measures because these measures will meet these requirements. However,
we believe the requirements that measures reflect consensus among
affected parties can be achieved in other ways, including through the
measure development process, through broad acceptance and use of the
measure, and through public comments.
Further, it may not be feasible or practicable to adopt an NQF-
endorsed measure, such as when an NQF-endorsed measure does not exist.
Section 1833(t)(17)(C)(i) of the Act does not require that each measure
we adopt for the ASCQR Program be endorsed by a national consensus
building entity, or by the NQF specifically. Moreover, section
1833(i)(7)(B) of the Act states that section 1833(t)(17) of the Act,
which contains this requirement, applies to the ASCQR Program, except
as the Secretary may otherwise provide. Under this provision, the
Secretary has further authority to adopt measures that do not reflect
consensus among affected parties and that are not endorsed by a
national consensus building entity. Therefore, not all of the measures
adopted for the ASCQR Program are required to be NQF-endorsed.
As discussed below, we believe the measure as developed exhibits
sufficient levels of reliability, validity, and feasibility to be
adopted for the ASCQR Program. As noted above, we also have submitted
this measure to NQF for endorsement.
Comment: Many commenters did not support CMS' proposal to finalize
ASC-12 because complications from colonoscopies are very rare and ASCs
already take steps to ensure colonoscopies are conducted to eliminate
preventable complications. Many commenters noted that the literature on
the measure indicates the incidence of complications following
colonoscopy is less than 2 percent. These commenters suggested that
this low incidence meant that the measure should not be included in the
ASCQR Program as it may be topped out or that the quality concern
addressed by the measure does not rise to the level of importance
needed for a national quality measurement program.
Response: Given the widespread use of colonoscopy for colorectal
cancer screening in the outpatient setting, we consider colonoscopy a
high volume procedure and measuring the quality of care associated with
colonoscopies a high priority for us. We commend ASCs that are already
taking steps to ensure colonoscopies are conducted to eliminate
preventable complications. While we agree that the incidence of
colonoscopy complications is relatively low, serious adverse events,
such as perforation of the bowel and bleeding, may occur following
colonoscopies. We view this measure as a critical outcome measure where
the goal is to drive toward and sustain zero harm.
In addition, some literature suggests that many facilities
performing colonoscopies are unaware of patients accessing hospital-
based care with adverse events because patients return to different
facilities, including hospitals and emergency departments, and would
not return to the ASC

[[Page 66973]]

facility. For example, one study showed that physicians were unaware of
nearly 75 percent of hospital admissions for adverse events following
colonoscopy.\37\ While most colonoscopies are performed without
subsequent complication, we note that, in our analysis of Medicare FFS
data, this measure showed that among Medicare patients aged >=65, 1.6
percent of outpatient colonoscopies resulted in an unplanned hospital
visit within 7 days.\38\ This estimate is based on a 20 percent sample
of nationwide Medicare fee-for-service patients. If we were to use full
national data (that is, a 100 percent sample), we estimate 1.7 million
colonoscopies would have been performed among Medicare FFS patients and
nearly 27,000 unplanned hospitals visits would have occurred within 7-
days of the procedure. These findings suggest adverse events are not as
rare or inconsequential as many believed and that quality measurement
for colonoscopy procedures in the outpatient setting is important.
---------------------------------------------------------------------------

\37\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757.
\38\ 2010 Medicare 20 percent fee-for-service sample. Based on
an analysis of 20 percent sample of Medicare FFS data from 2010
during measure development. The 20 percent sample included 332,391
outpatient colonoscopies meeting the measure inclusion and exclusion
criteria, and 1.6 percent of these colonoscopies were followed by an
unplanned hospital visit. This equates to 5,331 unplanned hospital
visits in the 20 percent sample.
---------------------------------------------------------------------------

We agree with the commenters' statement that the low incidence rate
may suggest that the measure is topped-out, but in addition to the
reasons for adopting this measure discussed above, we believe that a
low incidence rate does not conclusively determine whether a measure
has reached topped-out status. After the measure has been implemented,
over time, we will assess it again for topped-out status using the two
topped-out criteria we are finalizing in section XIV.B.3. of this final
rule with comment period.
Comment: Many commenters expressed concern that ASC-12 is not
sufficiently reliable to be included in the ASCQR Program,
specifically, that the measure developer has indicated that the measure
is only ``fairly'' reliable, with an interclass correlation coefficient
(ICC) of 0.335. These commenters contended that ``fair'' reliability is
not sufficient for publicly reported quality metrics because such
information could misinform the public, and urged CMS to conduct an
analysis on the measure's reliability to understand the amount of data
required to achieve ``good'' reliability. Several commenters argued
that ``good'' reliability should result in an ICC of at least 0.60.
Other commenters believed that reliability will improve with several
years' worth of data. Another commenter requested that data from this
measure be withheld from public reporting until concerns about its
reliability and validity can be thoroughly assessed.
Response: We disagree with commenters and believe that ASC-12 is
sufficiently reliable to be included in the ASCQR Program. The ICC
value submitted in the initial NQF application (0.335) was calculated
using a split sample of data from 2 years. We randomly split the
patient cohort at each hospital into two equal halves, calculated the
measure using each half, and then calculated the agreement between
these two (the `test' and the `retest'). After submitting the measure
to NQF for endorsement review, we conducted additional calculations of
the reliability testing score, this time using the Spearman-Brown
prophecy formula. The Spearman-Brown prophecy formula is an accepted
statistical method which estimates the ICC if the sample were
increased. Therefore, it allows us to estimate what the reliability
score would be if all observations were used for public reporting
rather than using a split sample. Our Spearman-Brown prophecy formula
calculations resulted in a higher ICC of 0.43.
The NQF considers the ICC values ranging from 0.21 to 0.40 as
``fair'' reliability and values ranging from 0.41 to 0.60 as
``moderate'' reliability. Therefore, the ICC values of 0.335 and 0.43
are interpreted as ``fair'' and ``moderate'' reliability, respectively.
These ICC values are also in line with other NQF-endorsed outcome
measures used in other CMS programs. For example, in the Hospital
Readmissions Reduction Program (76 FR 51667), the Inpatient Acute
Myocardial Infarction (AMI) 30-day Risk Standardized Readmission
measure (NQF #0505) has an ICC of 0.369 and the Pneumonia (PN) 30-day
Risk Standardized Readmission measure (NQF #0506) has an ICC of 0.406.
Both measures are NQF-endorsed. We consider the reliability of 0.335,
as noted in the proposed rule, acceptable for the ASCQR Program.
Regarding the concerns that we should withhold public reporting
until the measure's reliability and validity is addressed, as stated
above, we believe the reliability of the measure is sufficiently
reliable for inclusion in the ASCQR Program and do not agree that the
public may be misinformed or that we should withhold public reporting.
In addition to our calculations above, reliability testing previously
conducted by the measure steward demonstrated the measure data elements
produced were repeatable; that is, the same results were produced a
high proportion of the time when assessed in the same population in the
same time period. Also, validity testing by the measure steward
demonstrated that the measure data elements produce measure scores that
correctly reflect the quality of care provided and that adequately
identify differences in quality.
As the commenters suggested, the measure reliability may be further
improved by using several years' worth of data; however, we must
balance the reliability of the measure with the timeliness of the
measure. As discussed, at this time, we believe that 1 year of data
appropriately balances these competing interests for payment
determination purposes, but we will continue to assess this belief
during the dry run we discuss below. Also, we will consider conducting
additional reliability assessments of the measure using an extended
data period.
Moreover, we believe it is important to include this measure in the
program because colonoscopy is a high volume, common procedure
performed at outpatient facilities and is frequently performed on
relatively healthy patients to screen for colorectal cancer. Given the
widespread use of colonoscopy, understanding and minimizing procedure-
related adverse events is a high priority. These adverse events, such
as abdominal pain, bleeding, and intestinal perforation, can result in
unanticipated hospital visits post procedure. Physicians performing
colonoscopies are often unaware that patients seek acute care at
hospitals following the procedure and the associated adverse events are
potentially preventable. We strongly believe that the measure would
promote improvement in patient care over time because transparency in
publicly reporting measure scores would make patient unplanned hospital
visits (emergency department visits, observation stays, and inpatient
admissions) following colonoscopies more visible to ASCs and patients
and incentivize ASCs to incorporate quality improvement activities in
order to reduce these visits.
Finally, we believe this measure should be included in the program
because currently this risk-standardized quality measure is the only
measure available that would address this information gap and promote
quality improvement by providing feedback to facilities and physicians,
as well as transparency for patients on the rates

[[Page 66974]]

and variation across facilities in unplanned hospital visits after
colonoscopy. There are no publicly available quality of care reports
for ASCs that conduct outpatient colonoscopies. Therefore, adoption of
this measure provides an opportunity to enhance the information
available to patients choosing among ASCs that offer this elective
procedure. We believe this measure would reduce adverse patient
outcomes associated with preparation for colonoscopy, the procedure
itself, and follow-up care by capturing and making more visible to ASCs
and patients all unplanned hospital visits following the procedure. In
addition, providing outcome rates to ASCs would make visible to
clinicians meaningful quality differences and incentivize improvement.
In response to comments, however, to allow sufficient time to
conduct further analysis of this measure, we are finalizing the
adoption of this measure beginning with the CY 2018 payment
determination, rather than beginning with the CY 2017 payment
determination as proposed. We plan to perform a dry run of the measure
in 2015. From our perspective, a dry run is a preliminary analysis of
data in which ASCs may review their measure results, and ask questions
about and become familiar with the measure methodology. Dry runs will
include three to four years of paid Medicare FFS claims. We will use
the most recent complete claims samples (usually 6 to 9 months prior to
the start date) for dry runs. For example, if the dry run begins in
March 2015, the most recent data available may be July 2011 to June
2014 (assuming 3 years of data). Because we use paid Medicare FFS
claims, ASCs will not need to submit any data for the dry run. The
general information on the dry run as well as the confidential dry run
reports will be available for ASCs to review on their accounts at
https://www.qualitynet.org. The dry run will generate confidential
reports at the patient level, indicating whether the patient had a
hospital visit, the type of visit (admission, emergency department
visit, or observational stay), the admitting facility, and the
principal discharge diagnosis. Further, the dry run will enable ASCs to
see the measure score reports and have the opportunity to receive
individual patient data and information contained within individual
patient records. ASCs can use the information to identify performance
gaps and develop quality improvement strategies. Dry run results are
not linked to public reporting or payment determinations. We expect the
dry run to take approximately 1 month to conduct once data are
obtained, after which facilities will be provided the confidential
report and the opportunity to review their performance and provide
feedback to us.
In addition, we will continue to generate these reports for ASCs
after we implement the measure beginning with the CY 2018 payment
determination. The measure will have no payment impact until the CY
2018 payment determination and subsequent years. Public display of
measure data will occur on or after December 1, 2017, but there will be
no public display of the dry run data.
With national implementation of a dry run of this measure, we also
will review the appropriate cutoff volume for facilities, if necessary,
in reporting the measure score. We require a minimum volume (cutoff
volume) of colonoscopies per facility to be able to calculate a
reliable measure score. We have yet to determine the minimum volume per
facility (that is, the cutoff colonoscopy volume). Because we used a
Medicare 20-percent sample to develop the measure, we could not
estimate this cutoff during measure development. However, testing
during the measure dry-run with 100 percent of the sample per facility
will help us to determine the appropriate cutoff volume of
colonoscopies per facility. ASCs will be notified via the QualityNet
Web site of the cutoff volume of colonoscopies per facility, if any.
While some ASCs perform too few colonoscopies for us to calculate a
measure score and we would not publicly report their data, these
facilities would remain in the measure cohort. Typically, for public
reporting of hospital measures on the CMS Web site Hospital Compare,
the measure score is reported as ``Number of cases too small'' for
hospitals with fewer cases than the cutoff. We will use the same
protocol when the measure is publicly reported for the ASCQR Program,
and will report a measure score as ``Number of cases too small'' for
ASCs with fewer cases than the cutoff on the QualityNet Web site.
Comment: Several commenters pointed out that, from the perspective
of using claims as a data source for this measure, the codes for ASCs
are services rendered-driven, while the codes for HOPDs are diagnosis-
driven. Commenters were concerned that the coded information and the
associated risk-adjustment for this measure may not be able to capture
the sensitivity and specificity of the clinical care following an
outpatient colonoscopy. Given the difference in coding practices and
claims architecture between HOPDs and ASCs, commenters recommended
further testing for a fair performance comparison between HOPDs and
ASCs. One commenter inquired if CMS plans to field test this measure
prior to implementation. Commenters contended that the measure must be
systematically assessed to assure the measure results are attributable
to differences in quality alone. The commenters suggested that the
measure score should be directly validated against outpatient medical
records and measure results across settings must be assessed to ensure
that any comparisons are valid.
Response: We thank the commenters for expressing their concerns
regarding possible effects of coding practices and claims architecture
on the data available through administrative claims in capturing the
sensitivity and specificity of the clinical care following an
outpatient colonoscopy. The measure is designed, however, to mitigate
any differences in coding practices across HOPDs and ASCs. For example,
to capture comorbidities for risk adjustment, the measure uses claims
across care settings, including physician outpatient claims, so
differences in claims submitted during the procedure are not likely to
affect the comorbidities assigned to the patient. In addition, the
outcome counts hospital visits regardless of whether they are billed as
admissions, emergency room visits, or observations stays; therefore, if
there are differences between colonoscopies done at ASCs and HOPDs in
the type of hospital visit a patient with complications incurs (for
example, whether observation stays or ED visits are used), the measure
will be insensitive to these differences.
We recognize that the claims architecture differs for HOPDs and
ASCs because the two facility types utilize different bill forms and
have different payment systems. However, we do not agree that our
measure specifications do not account for differences in claims
architecture and necessary billing codes in discerning hospital events
following colonoscopy. The measure includes colonoscopies from all
outpatient settings to ensure that the expected hospital visit rate for
any facility is estimated using the full national experience of
colonoscopy patients. Specifically, we include all outpatient
colonoscopies to make sure that: (1) The effects that risk factors
exert on the outcome are estimated based on colonoscopies performed
among all outpatient settings; and (2) the national average rate of
hospital visits following colonoscopy is calculated based on all
outpatient colonoscopies. Our approach

[[Page 66975]]

includes all outpatient claims, including HOPD, ASC, and physician
claims. To identify all outpatient colonoscopy claims, including claims
affected by the Medicare 3-day payment window policy, the measure
specifications link claims across multiple care settings (outpatient
and inpatient). Furthermore, the measure specifications link claims
across multiple care settings to derive comorbidity data to ensure the
patient comorbidities are captured to the fullest extent possible for
risk-adjustment and to identify patient outcomes.
Linking patient claims across multiple settings largely mitigates
the impact of potential difference in coding practice among settings
and allows comparisons of colonoscopy quality across settings. For
example, potential variation in the coding of comorbidities in the
index colonoscopy claim may occur based on the setting. However, we
derive comorbidities for risk adjustment from all inpatient and
outpatient claims in the preceding 12 months. By using all claims in
the preceding year, we capture patient comorbidities to the fullest
extent possible and mitigate the impact of potential coding differences
between settings that would occur if we used the index colonoscopy
claim alone.
Further, similar approaches to deriving comorbidities from claims
data are used for other risk-adjusted outcome measures. The measure
developer has validated the accuracy of this approach on multiple
occasions for prior measures developed for the inpatient setting. For
example, in the Hospital Readmissions Reduction Program (76 FR 51667),
the Inpatient Acute Myocardial Infarction (AMI) 30-day Risk
Standardized Readmission measure (NQF #0505) has an ICC of 0.369, and
the Pneumonia (PN) 30-day Risk Standardized Readmission measure (NQF
#0506) has an ICC of 0.406. Both measures are NQF-endorsed.
Regarding the suggestion that the measure score should be directly
validated against outpatient medical records, at this time, we believe
that it would be overly burdensome to validate the reported data,
because of the limited experience that ASCs have with reporting quality
data to CMS coupled with the low incidence of cases for this measure.
In addition, as stated in section XIV.D.6. of this final rule with
comment period, we refer readers to the FY 2013 IPPS/LTCH PPS final
rule (77 FR 53641 through 53642) for a complete discussion of our
policy not to require validation of claims-based measures (beyond the
usual claims validation activities conducted by our Medicare
Administrative Contractors).
We appreciate commenters' concerns regarding factors that may
impact HOPDs and ASCs. In response to comments, to allow sufficient
time to conduct further analysis of this measure, we are finalizing the
adoption of this measure beginning with the CY 2018 payment
determination, rather than beginning with the CY 2017 payment
determination as proposed.
In addition, we plan to perform a dry run (a preliminary analysis)
of the measure in 2015. We refer readers to our discussion of the dry
run above, in response to a previous comment.
Comment: Several commenters disagreed with the statement in the
proposed rule (79 FR 41047) that the ASC-12 measure is ``well-defined
and precisely specified for consistent implementation within and
between organizations that will allow for comparability.'' These
commenters raised the issue that the Medicare payment window policy
that applies to hospitals will result in under-detection of hospital
events for colonoscopies performed by HOPDs; the 3-day (or 1-day)
payment window applies to outpatient services furnished by hospitals
and hospitals that are wholly owned or wholly operated Part B entities.
Hospitals are required to bundle the technical component of all
outpatient diagnostic services and related nondiagnostic services (for
example, therapeutic) with the claim for an inpatient stay when
services are furnished to a Medicare beneficiary in the 3 days (or, in
the case of a hospital that is not a subsection (d) hospital, during
the 1-day) preceding an inpatient admission in compliance with section
1886 of the Act. Commenters expressed their concern that as a result of
this payment policy, HOPDs may have systematic undercounting of
hospital visits while ASCs get a full count of all hospital visits
within 7 days subsequent to outpatient colonoscopy. Commenters did not
believe the methodological solution proposed by the measure developer,
using physician claims with an HOPD Place of Service (POS) code
indicating the colonoscopy was performed at an HOPD, is adequate due to
the high error rates in POS coding on physician claims. Commenters were
concerned that these challenges would make comparison of HOPD and ASC
data impossible, and significantly reduce the validity of the measure
in the HOPD setting.
Response: We disagree with the commenters, and we continue to
believe this measure is ``well-defined and precisely specified for
consistent implementation within and between organizations that will
allow for comparability,'' as we stated in the CY 2015 OPPS/ASC
proposed rule (79 FR 41047).
We agree that the ability to detect meaningful variation is an
important indication of the value of a measure. As the commenter has
correctly noted, we have shown facility variation in unplanned hospital
visits following colonoscopy in both nationwide Medicare data from
HOPDs and also in the 2010 Healthcare Cost and Utilization Project
(HCUP) data. We have also shown facility variation in unplanned
hospital visits among ASCs alone using HCUP data from California.\39\
The observed average hospital visit rate and the variation in unplanned
hospital visit rates among ASCs, which are unaffected by the 3-day
payment window policy, were very similar to HOPDs suggesting that the
measure performs equally well in both settings. Accordingly, we are
confident that the variation shown is a reflection of facility
variation in quality and not as a result of any issues to do with the
3-day payment window policy.
---------------------------------------------------------------------------

\39\ Center for Medicare and Medicaid Services, ``Facility 7-Day
Risk-Standardized Hospital Visit Rate after Outpatient
Colonoscopy,'' National Quality Form Measure Submission Form, 20.
---------------------------------------------------------------------------

Based on our internal testing with claims data, we believe our
current algorithm is appropriate and accurate. However, since we always
strive for improvement, we will evaluate the colonoscopy measure dry
run data and work with HOPDs and ASCs to further review and refine the
algorithm if necessary.
Regarding POS billing, the OIG has found billing errors incorrectly
assigning the service site for both HOPDs and ASC-related claims on
physician claims where there were matching HOPD or ASC claims and that
the percentage of incorrectly billed claims was significantly higher
for ASC-related claims.\40\ Many physicians' services can be furnished
either in a facility setting such as an HOPD or ASC, or in a non-
facility setting such as a physician's office, urgent care center or
independent clinic. For these services, Medicare has two different
payment rates under the physician fee schedule (PFS). The PFS facility
rate is generally lower to reflect the fact that certain resources are
supplied by the facility, and Medicare makes a separate payment to the
facility under another payment system. By matching both facility and
physician colonoscopy claims for any given patient, the current measure
methodology ensures that colonoscopy claims are identified to the
fullest extent

[[Page 66976]]

possible and attribute the colonoscopy to the appropriate provider when
billing is affected by the 3-day window payment policy.
---------------------------------------------------------------------------

\40\ OIG, Physician services processed by Medicare Part B
Contractors during Calendar Year 2009, September 2011, A-01-10-
00516.
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We clarify that HOPD claims for colonoscopy procedures for
calculation of the measure are identified using both physician and
facility claims. We did not intend to imply that HOPD colonoscopy
claims are identified solely from physician claims. For both ASCs and
HOPDs, the measure first identifies colonoscopy claims using both the
physician claim and the corresponding facility claim to ensure the site
of the colonoscopy service is attributed to the appropriate provider.
As a second step, the measure matches: (1) Physician claims that
contain HOPD as the POS that do not have a matching facility claim with
(2) inpatient claims to identify potential HOPD colonoscopies resulting
in an inpatient admission. This second additional step identifies HOPD
colonoscopy claims affected by the 3-day window payment policy.
Therefore, we do not agree that ASCs will be adversely affected by
use of POS billing to locate colonoscopies performed by physicians due
to high levels of coding errors in POS coding on Part B for physician
services because our measure calculation methodology addresses this
concern.
We also have taken steps to educate physicians about the
appropriate POS coding and actively audit physicians to improve the
accuracy of POS coding http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM7502.pdf.
In addition, from 2012 onwards, Medicare billing introduced the ``PD''
modifier to indicate physician claims affected by the 3-day window
payment policy.
Comment: In reference to the statement in the CY 2015 OPPS/ASC
proposed rule (79 FR 41047) that ``there are no publicly available
quality of care reports for ASCs that conduct outpatient
colonoscopies,'' one commenter stated that, on the Physician Compare
Web site, CMS includes data on colonoscopy measures that provide a
detailed look at the quality of colonoscopy services provided. This
commenter suggested that CMS further enhance publicly available data by
including measures captured by Qualified Clinical Data Registries to
increase the robustness of publicly available data on colonoscopy
provided across all sites of service.
Response: We thank the commenter for providing this input, but note
that the cited information is available at the physician level. We
believe that quality of care measure information also should be
reported at the facility level, and that facilities have a role in
monitoring the surgical procedures performed at their facility and
subsequent adverse outcomes. Patients and facilities should be able to
review reported quality of care measure information at the ASC-facility
level. We thank the commenter for the suggestion to include measures
captured by Qualified Clinical Data Registries to further enhance
publicly available data such as the colonoscopy data and we may take
this into consideration in future rule making.
Comment: While some commenters believed that a long collection
period, such as three years, is needed in order to generate measure
scores that are moderately reliable, they also were concerned that the
publicly reported measure score would not be a reflection of current,
or even recent, performance. Commenters were concerned that consumers
could be misled by the outdated data.
Response: As discussed previously, we agree with the commenter that
a longer data collection period may increase measure reliability.
However, we must balance the reliability of the measure with the
timeliness of the measure and, as discussed later, at this time, we
believe that 1 year of data appropriately balances these competing
interests. We will continue to assess this belief during the dry run.
Comment: Several commenters expressed concern that the measure that
was put forth to NQF review retained elements of the inpatient measure.
Commenters stated that including these elements was inappropriate, and
interpreted this action to mean that the measure has not been
thoroughly reviewed and fully adapted for outpatient use. These
commenters gave examples of the alleged inappropriate inpatient
elements: (1) Certain condition categories (CCs) are not included in
risk adjustment if they are only recorded at the time of the
colonoscopy, and yet they are considered to be possible adverse
outcomes; and (2) although end stage renal disease (ESRD) would not be
a complication of colonoscopy diagnosed and recorded at the time of the
procedure, it was included on the list of CCs. Commenters urged CMS to
ensure that revised specifications are developed and then independently
reviewed to ensure outpatient adaptation is complete prior to measure
implementation.
Response: We appreciate the commenters' concerns. In keeping with
good practice, we have continued to review and seek comment on the
measure specifications subsequent to measure development and
implementation to ensure the measure remains up-to-date in view of any
potential new information. As the commenters noted, the measure
technical specifications included a list of CCs that the measure does
not consider for risk adjustment if the CC(s) occurred at the time of
colonoscopy. In view of the comments, we have revised the list of CCs
and updated the measure specifications to ensure only conditions
relevant to colonoscopy are included. Of note, the inclusion of ESRD on
the list was an error; we have revised the list and will use the
revised list in implementing the measure. We corrected the list in
subsequent measure descriptions during the NQF public comment period.
Comment: Many commenters expressed concern that the ASC-12 measure
includes hospital visits unrelated to colonoscopy. Some commenters
requested explanation for why the measure uses an all-cause
categorization rather than only admissions related to colonoscopies.
Response: We clarify that this measure is purposely designed to use
a broad outcome of hospital visits following surgery rather than a
narrow set of easily identifiable complications. From a patient and
health system perspective, the goal of this measure is to encourage and
inform ASC efforts to minimize all potential acute complications, not
just those narrowly related to procedural technique. This is important
as the literature suggests,^{41, 42, 43, 44} that hospital
visits following colonoscopy occur due to a range of adverse events
relating to the bowel preparation, anesthesia, the colonoscopy
procedure itself, and follow-up care. These include a range of symptoms
and signs such as abdominal pain, bloating, dizziness and collapse,
electrolyte disturbances, and cardiorespiratory symptoms (from sedation
use), in addition to complications that are directly related to
procedural technique such as bleeding and bowel perforation. The broad
outcome of unplanned hospital visits captures all of these potential
acute complications of colonoscopy.
---------------------------------------------------------------------------

\41\ Ko CW, Dominitz JA. Complications of colonoscopy: magnitude
and management. Gastrointest Endosc Clin N Am 2010;20:659-71.
\42\ ASGE Standards of Practice Committee, Fisher DA, Maple JT,
et al. Complications of colonoscopy. Gastrointest Endosc
2011;74:745-52.
\43\ Baudet JS, Diaz-Bethencourt D, Aviles J, et al. Minor
adverse events of colonoscopy on ambulatory patients: the impact of
moderate sedation. Eur J Gastroenterol Hepatol 2009;21:656-61.
\44\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor
complications and time lost from normal activities after screening
or surveillance colonoscopy. 2007;65:648-56.

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[[Page 66977]]

Our goal for the measure is to encourage ASCs to be mindful of
reducing post-colonoscopy admissions caused by the prior colonoscopy
procedure performed at their facility. For example, patients may be at
higher risk of falls post-colonoscopy secondary to dehydration
following the bowel preparation for the procedure and there may be
opportunities for ASCs to minimize this risk. We removed planned
admissions from the measure outcome adapting CMS' Planned Readmission
Algorithm version 3.0.^{45 46} This algorithm removes nonacute
admissions for scheduled procedures (for example, total hip
replacement) and other types of care always considered planned (for
example, rehabilitation or maintenance chemotherapy) from the outcome.
That is, we removed planned admissions from the outcome because planned
admissions do not reflect differences in colonoscopy quality of care.
---------------------------------------------------------------------------

\45\ Horwitz L, Grady J, Dorsey K, Zhang W, Keenan M, Keshawarz
A, Cohen D, Ngo C, Okai M, Nwosu C, Lin Z, Bhat K, Krumholz H,
Bernheim S,. 2014 Measures Updates and Specifications Report:
Hospital-Wide All-Cause Unplanned Readmission--Version 3.0. 2014:
Centers for Medicare & Medicaid Services, 2014.
\46\ Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

Comment: One commenter requested that CMS clarify how the numerator
and denominator for ASC-12 are calculated.
Response: The measure score is the ratio of predicted hospital
visits (numerator) over the expected hospital visits (denominator)
multiplied by the crude national rate. The measure score numerator is
the predicted rate, which is the number of unplanned hospital visits
the facility is predicted to have within 7 days of colonoscopy, and it
accounts for the observed unplanned hospital visit rate, the number of
colonoscopies performed at the facility, and the facility's case mix.
This is sometimes referred to as the ``adjusted actual rate.''
The measure score denominator is the expected rate, which is the
number of unplanned hospital visits the facility is expected to have,
based on the nation's performance with that facility's case-mix. It is
the sum of all patients' expected probabilities of a hospital visit,
given their risk factors and the risk of readmission at an average
hospital. The contribution of each risk factor (for example, age) to
the patient's risk of a hospital admission is based on all of the
patients in the measure cohort. The crude national rate is the average
rate of hospital visits following colonoscopy observed in the entire
measure cohort. We also refer readers to the measure discussion above
and measure specifications (http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=75057) for a more detailed
discussion of how the numerator and denominator are calculated.
Comment: Many commenters were concerned that facilities would lack
actionable information generated from ASC-12. Several of these
commenters questioned whether this measure will benefit facilities and
patients because each facility will only receive a report with an
aggregate number of claims that will be based on historical data, which
will make it difficult for the facility to set a course for improvement
if needed. Commenters requested that CMS clarify its plan to report
detailed patient-level data confidentially to ASCs that indicates
whether the patient had a hospital visit, the type of visit (admission,
emergency department visit, or observational stay), the admitting
facility, and the principal discharge diagnosis to assist facilities
with quality improvement, to enable facilities to understand their
performance and take steps where remediation is needed. Several
commenters also noted that ASCs do not provide post-operative follow-up
care after patient discharges and do not have direct access to the
records of other health care facilities. Consequently, this constraint
would limit their ability to identify improvements based on the data
provided by this measure.
Response: The primary purpose of this measure is to illuminate the
quality differences in colonoscopies that are presently not visible to
patients and may not be visible to some facilities. In measure
development, we found the facility variations in the measure score
suggest some facilities provide worse than expected care. We believe
the detailed patient-level data that we will provide confidentially to
ASCs will help them identify areas for improvement efforts. The data
would indicate whether the patient had a hospital visit, the type of
visit (admission, emergency department visit, or observational stay),
the admitting facility, and the principal discharge diagnosis. The dry
run will enable ASCs to see the measure score reports and have the
opportunity to receive individual patient data and information
contained within individual patient records. We will continue to
generate these reports for ASCs after we implement the measure
beginning with the CY 2018 payment determination. ASCs can use the
information to identify performance gaps and develop quality
improvement strategies.
We understand the challenges involved in following up with ASC
patients. The colonoscopy measure addresses these challenges by
providing feedback to facilities and clinicians about the outcomes
experienced by their patients following colonoscopy. Many clinical
experts noted that facilities were often unaware of patients' return
visits to hospitals. They noted that many patients would often return
to a different facility or an emergency department. One study noted
that physicians were unaware of 75 percent of return hospital visits
following colonoscopy at a major tertiary center.\47\
---------------------------------------------------------------------------

\47\ Leffler DA, Kheraj R, Garud S, et al. The incidence and
cost of unexpected hospital use after scheduled outpatient
endoscopy. Arch Intern Med 2010;170:1752-7.
---------------------------------------------------------------------------

Comment: Several commenters expressed concern that ASC-12 does not
include risk-adjustment to account for patient differences, stating
that CMS does not report the variation between ASCs once this risk
adjustment has been applied and that there may be no statistically
significant difference between an ASC's risk-adjusted visit rate and
the national average making it impossible to identify low performers
and high performers. One commenter specifically recommended that
patients with conditions such as inflammatory bowel disease and
diverticulitis should be included with appropriate risk adjustment.
Commenters recommended CMS consider the drawbacks of the current
methodology, conduct analysis to test the variation of the measure
between ASCs, and reconsider this measure for inclusion in future
proposals.
Response: We thank the commenters for all the suggestions to
improve the measure. In the measure application for NQF endorsement, we
note that the measure, following risk-adjustment, is able to detect
statistically significant variation between outpatient facilities by
demonstrating measure score variation using the 2010 HCUP data from
four States (California, New York, Nebraska, and Florida). Using a very
conservative sampling technique (sampling with replacement),\48\ we
constructed 95 percent interval estimates around the facility measure
score (similar to confidence intervals) and used the estimates to place
facilities into three performance categories: Worse than expected; no
different than expected; and better than expected. Based on this
analysis, we identified 5 outlier facilities among a total of 992

[[Page 66978]]

ASCs and HOPDs. This analysis included only about one-tenth of all
outpatient facilities in the United States. Typically, we see greater
variation between facilities when 100 percent of nationwide facilities
are included for actual measure implementation and reporting.
---------------------------------------------------------------------------

\48\ Efron, B. (1979). Bootstrap methods: Another look at
jackknife. Ann. Stat. 7, 1-26.
---------------------------------------------------------------------------

As to the commenter's recommendation to risk-adjust patients with
certain conditions, we excluded patients with inflammatory bowel
disease (IBD) and diverticulitis because it is difficult to assess from
claims data whether these patients have an active or inactive disease
which may alter their risk of the outcome. We determined that we could
not adequately risk-adjust for the risk of the outcome for these
patients. Second, our analysis suggested that nearly half of the
patients with IBD and diverticulitis have post-colonoscopy hospital
visits with a primary diagnosis of IBD and diverticulitis respectively.
We could not tell from the claims data whether these visits were
planned or unplanned. We did test for variation among ASCs and HOPDs
independently using HCUP data from California (see Measure Technical
Report). As we previously discussed, the measure was able to adequately
detect variation in the measure score among ASCs.
As for the inquiry about further testing the measure, we have more
time to further test the measure because, in response to comments, we
are finalizing the adoption of this measure beginning with the CY 2018
payment determination, rather than beginning with the CY 2017 payment
determination as proposed. We plan to perform a dry run (a preliminary
analysis) of the measure in 2015. We refer readers to our discussion of
the dry run above, in response to a previous comment.
Comment: One commenter expressed concern that ASCs would have
difficulty gathering and reporting the information for the proposed
ASC-12 measure.
Response: We thank the commenter for providing this input and note
that this measure will be calculated completely from data obtained from
paid Medicare FFS claims submitted by ASCs, hospitals, and physicians.
For this reason, it will not require any additional information-
gathering on the part of ASCs.
We continue to believe that quality of care measurement in the
clinical area of outpatient colonoscopy is an important gap area with
ample room for improvement and that this measure has sufficient
reliability and validity for use in the ASCQR Program. Therefore, after
consideration of the public comments we received, we are finalizing our
proposal to adopt the ASC-12: Facility Seven-Day Risk-Standardized
Hospital Visit Rate after Outpatient Colonoscopy measure for the ASCQR
Program. However, to allow ASCs sufficient time to review their measure
data from the dry run and utilize the confidential facility reports
with patient-level associated hospital event information, we are
finalizing the adoption of this measure for the CY 2018 payment
determination and subsequent years, instead of the CY 2017 payment
determination and subsequent years as proposed.
We plan to perform a dry run (a preliminary analysis) of the
measure in 2015. Also, with national implementation of a dry run of
this measure, we also will review the appropriate cutoff volume for
facilities, if necessary, in reporting the measure score. We refer
readers to our discussion of the dry run and the cutoff volume above,
in our response to a previous comment.
The finalized measure set for the ASCQR Program CY 2017 payment
determination and subsequent years, is listed below.

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

The finalized measure set for the ASCQR Program CY 2018 payment
determination and subsequent years, which includes previously finalized
measures and the newly-adopted measure, ASC-12, is listed below.

Finalized ASC Program Measure Set for the CY 2018 Payment Determination
and Subsequent Years
------------------------------------------------------------------------
ASC No. NQF No. Measure name
------------------------------------------------------------------------
ASC-1............... 0263 Patient Burn.
ASC-2............... 0266 Patient Fall.
ASC-3............... 0267 Wrong Site, Wrong Side, Wrong
Patient, Wrong Procedure, Wrong
Implant.
ASC-4............... 0265 Hospital Transfer/Admission.
ASC-5............... 0264 Prophylactic Intravenous (IV)
Antibiotic Timing.
ASC-6............... N/A Safe Surgery Checklist Use.

[[Page 66979]]

ASC-7............... N/A ASC Facility Volume Data on
Selected ASC Surgical
Procedures.
Procedure categories and
corresponding HCPCS codes are
located at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754 1228772475754.
ASC-8............... 0431 Influenza Vaccination Coverage
among Healthcare Personnel.
ASC-9............... 0658 Endoscopy/Polyp Surveillance:
Appropriate Follow-Up Interval
for Normal Colonoscopy in
Average Risk Patients.
ASC-10.............. 0659 Endoscopy/Polyp Surveillance:
Colonoscopy Interval for
Patients with a History of
Adenomatous Polyps-Avoidance of
Inappropriate Use.
ASC-11.............. 1536 Cataracts: Improvement in
Patient's Visual Function within
90 Days Following Cataract
Surgery.*
ASC-12.............. Pending Facility Seven-Day Risk-
Standardized Hospital Visit Rate
after Outpatient Colonoscopy.**
------------------------------------------------------------------------
* Measure voluntarily collected starting as set forth in section
XIV.E.3.c. of this final rule with comment period.
** New measure finalized for CY 2018 payment determination and
subsequent years.

6. ASCQR Program Measures for Future Consideration
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68493 through 68494), where we finalized our approach to
future measure selection for the ASCQR Program. We seek to develop a
comprehensive set of quality measures to be available for widespread
use for informed ``patient decision-making and quality improvement in
the ASC setting'' (77 FR 68496). We also seek to align these quality
measures with the National Quality Strategy (NQS), the CMS Strategic
Plan (which includes the CMS Quality Strategy), and our other quality
reporting and value-based purchasing programs, as appropriate.
Accordingly, as we stated in the CY 2015 OPPS/ASC proposed rule (79 FR
41048 through 41049), in considering future ASCQR Program measures, we
are focusing on the following NQS and CMS Quality Strategy measure
domains: Make care safer; strengthen person and family engagement;
promote effective communication and coordination of care; promote
effective prevention and treatment; work with communities to promote
best practices of healthy living; and make care affordable.
Comment: Commenters supported CMS' alignment efforts. One commenter
supported the direction of the ASCQR Program to align future measures
with the NQS priorities, noting that doing so will make the ASCQR
Program more consistent with the Hospital IQR Program. Another
commenter agreed with the goal of aligning measures in the ASCQR
Program with the Hospital OQR Program and the Hospital IQR Program, and
urged that the alignment should eliminate confusion and avoid
disadvantaging ASCs.
Response: We thank the commenters for supporting our alignment
efforts. To the extent practicable, we strive to align measures with
national priorities, including the NQS priorities as well as across our
quality reporting and value-based purchasing programs.
Comment: Several commenters requested that CMS collaborate with
stakeholder communities to develop and implement appropriate ophthalmic
measures for the ASC setting, potentially including measures of
incidence of toxic anterior segment syndrome in cataract surgery
patients, incorrect intraocular lens implantation in cataract surgery
patients, and unplanned anterior vitrectomy in cataract surgery
patients. Another commenter suggested that CMS consider several new
measures in the future, including adverse outcomes from high-volume
procedures such as cataract removals, other eye procedures,
endoscopies, musculoskeletal procedures, and colonoscopies. This
commenter also encouraged CMS to develop composite measures of common
surgical infections and to involve consumers and purchasers in
refinement of the CAHPS survey for the outpatient setting. In addition,
this commenter urged CMS to continue to analyze and address the role of
the survey and discuss the comparative roles of PQRS CAHPS, ACO CAHPS,
S-CAHPS, or the HOSD/ASC CAHPS surveys.
Response: We thank the commenters for these recommendations and
will consider these types of measures in future years. We have included
an unplanned anterior vitrectomy in cataract surgery patients and
patient experience of care survey measures in our Measures under
Consideration (MUC) list for the MAP for the ASC setting. We agree that
the adoption and implementation of appropriate cataract surgery
measures are important for the ASCQR Program, given the number of such
procedures performed on Medicare beneficiaries in this setting.
We use patient experience of care surveys in a variety of health
care settings. We agree that, to the extent feasible, survey
instruments should be aligned and coordinated across settings. The
developmental process of CAHPS and patient experience of care surveys
involves several opportunities for input from patients, patient
advocates, and stakeholders from the HOPD and ASC industry, including
professional associations, clinicians, accreditation organizations, and
the government.
Comment: One commenter requested that CMS provide additional
guidance with respect to the process for suggesting and submitting
future ASCQR Program measures. This commenter further requested that
CMS distinguish, when establishing reporting requirements, between ASCs
that are equipped for the performance of sterile surgical operations
and ambulatory endoscopy centers that are equipped to perform
nonsurgical endoscopy procedures.
Response: We generally request comments on future ASCQR Program
measure topics through the rulemaking process and did so in the CY 2014
OPPS/ASC proposed rule (78 FR 43664). We also accepted measures for
consideration from associations through ONC's measure project tracking
system (http://oncprojectracking.org/); associations were invited via
the CMS Listserv to attend a training session for how to submit
measures into this system. Regarding distinguishing ASCs by the
services provided, we are aware that ASCs vary in the types of services
they provide. This variety presents challenges in devising a measure
set that can glean applicable quality of care information across ASCs.
With respect to current claims-based measures that include surgical
procedures, at this time, we are not able to identify facilities that
would never perform surgical procedures from the

[[Page 66980]]

information on claims. Therefore, we are not able to distinguish
ineligibility for a measure from non-reporting.
Comment: One commenter recommended that CMS consider the following
measure topics for the ASCQR Program: (1) Equipment Reprocessing (for
patient safety, high-level disinfection and sterilization, with a
particular emphasis on endoscope reprocessing); and (2) Sedation
Safety--A possible anesthesia-related measure could include the use of
reversal agents to patients given moderate sedation agents (medications
used to rescue patients from deeper levels of sedation than intended).
Response: We thank the commenter for these recommendations and will
consider these measure topics for the ASCQR Program in future years.
Comment: One commenter noted that the program currently includes a
measure on hospital transfer or admission after a procedure, which
tracks whether patients are transferred or admitted directly to a
hospital (including a hospital emergency room) upon discharge from an
ASC. This commenter believed that this measure could be expanded to
include patients who return home after the ASC procedure, but are
admitted to a hospital shortly thereafter because of a problem related
to the procedure because doing so would enable us to more
comprehensively track patients who experience serious complications or
medical errors related to an ASC procedure.
Response: We thank the commenter for providing this information and
note that the ASC-12: Facility Seven-Day Risk-Standardized Hospital
Visit Rate after Outpatient Colonoscopy measure includes all unplanned
hospital visits (emergency department visits, observation stays and
inpatient admissions) within 7 days following the procedure. We will
continue to consider additional measures that track hospital visits
following ASC procedures as appropriate in the future.
Comment: One commenter recommended that CMS develop a measure to
track surgical site infection rates for ambulatory surgeries in ASCs.
The commenter observed that CMS stated in the CY 2012 OPPS/ASC final
rule with comment period (76 FR 74503 through 74504) that we would
consider proposing an SSI measure and requested an update.
Response: We agree that it is important to encourage the reduction
of SSIs. In the CY 2012 OPPS/ASC rulemaking, we proposed but did not
finalize the Surgical Site Infection Rate measure (NQF #0299), but
stated that we will consider proposing the measure once a suitable set
of procedures and a protocol for ASCs and HOPDs has been developed (76
FR 74504). We are not aware of any updates to this measure, but will
consider these types of measures in future years.
Comment: One commenter recommended that the ASCQR Program should
move to a value-based purchasing model no later than 2016, rewarding
high-performing ASCs and penalizing low-performing ASCs.
Response: We thank the commenter for this recommendation. As we
noted in the CY 2014 OPPS/ASC final rule with comment period (78 FR
75122), we currently do not have express statutory authority to
implement a value-based purchasing program for ASCs.
Comment: One commenter requested that CMS publish each year, as
part of the proposed rule, a 2-year or 3-year timeline of anticipated
changes to the ASCQR Program to facilitate ASC facility planning.
Response: We thank the commenter for the comment and note that we
seek to provide information to ASC facilities in advance whenever
possible to support future planning. For example, in the CY 2012 OPPS/
ASC rulemaking, we finalized measures sets for the CY 2014, CY 2015,
and CY 2016 payment determinations (76 FR 74496 to 74511). Similarly,
in the CY 2013 OPPS/ASC final rule with comment period, we finalized a
data collection and processing period policy for claims-based measures
using QDCs for the CY 2015 payment determination and subsequent years
(77 FR 68497 through 68498), and in the CY 2014 OPPS/ASC final rule
with comment period, we finalized our policy regarding participation
status for the CY 2016 payment determination and subsequent years (78
FR 75134 through 75135). In this year's rulemaking, we also are
finalizing policies that span more than one year, such as including the
ASC-12 measure in the ASCQR Program measure set for the CY 2018 payment
determination and subsequent years, the process for removing measures,
and topped-out criteria. While we cannot commit to providing a 2-year
or 3-year timeline at this point due to the rapidly evolving quality
measurement and program environment, we will continue to provide
information to ASCs through the QualityNet Web site, the ASCQR Program
ListServe, and the rulemaking process as appropriate.
Comment: Several commenters stated that they would welcome
opportunities to work with CMS to explore alternative reporting options
for measures that cut across CMS quality reporting programs,
particularly measures that are included in both the ASCQR Program and
PQRS.
Response: We thank the commenters for their offer to collaborate
with CMS on alternative reporting options. We will continue to look for
opportunities to work with ASC community stakeholders to continuously
improve the ASCQR Program.
Comment: Several commenters expressed concern about the MAP,
specifically the public comment process and the practice of submitting
measure concepts for consideration. These commenters believed that the
MAP does not adequately consider public comments, and stated that the
MAP session agendas scheduled voting activities prior to public
comments, which limited the ability of comments to impact voting, and
that the public could not address the Coordinating Committee until
after deliberations were completed. These commenters also stated that
the public could comment on the draft MAP Pre-Rulemaking Report, but
that these comments were not considered by the Coordinating Committee
and, therefore, did not result in revisions to the final report. These
commenters recommended that public comments be solicited prior to,
rather than, after voting on agenda items, and that the MAP
Coordinating Committee be required to formally consider and respond to
public comments on the draft report. Several other commenters expressed
concern regarding the MAP's review of measure ``concepts'' that have
not been fully developed, saying that recommendations are premature for
measure concepts or measure drafts. These commenters recommended that
when ``concepts'' are presented, the MAP should determine whether the
measure concept/draft would fill a measure gap but reserve further
judgment for the completed measure. These commenters are further
concerned that the inclusion of measure ``concepts'' results in an
unreasonably large number of items for the MAP to consider, which can
limit the time allotted to consider each measure.
Response: We thank the commenters for their comments and concerns,
but note that they do not directly address any proposals included in
the CY 2015 OPPS/ASC proposed rule; rather, they are directed towards
MAP-specific processes. We invite the commenters to submit their MAP-
specific concerns directly to the NQF, which convenes the MAP.
In response to the comments concerning the MAP's review of measure
``concepts'' that have not been fully developed, resulting in
recommendations that are premature for

[[Page 66981]]

measure concepts or measure drafts, we interpret the commenters' use of
the terms ``concept'' and ``draft'' to refer to measures under
development as defined in our legend on page 87 of the List of Measures
under Consideration for December 1, 2013 (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCAQFjAA&url=http%3A%2F%2Fwww.qualityforum.org%2FSetting_Priorities%2FPartnership%2FMeasures_Under_Consideration_List.aspx&ei=aQUuVJrsM6nIsAT61IDQAg&usg=AFQjCNFPjzG9-t7flmf-RFf-7o_rSvpxxQ&sig2=V6Hi_GdCM2OUcP5xkoudcw&bvm=bv.76802529,d.cWc). We
strive to ensure that the pre-rulemaking process allows for thorough
review by the MAP and other stakeholders of all measures under
consideration.
Comment: Some commenters suggested that CMS consider developing
additional outcomes measures specific to colonoscopies and consider
developing a measure of whether or not colonoscopy patients remain
cancer free, specifically suggesting that we work with stakeholders to
improve existing measures.
Response: We thank the commenter for their recommendations and will
consider these types of measures in future years.
We also thank all commenters for providing their views and we will
consider them as we develop future measures for the ASCQR Program.
7. Maintenance of Technical Specifications for Quality Measures
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74513 through 74514), where we finalized our proposal to
follow the same process for updating the ASCQR Program measures that we
adopted for the Hospital OQR Program measures, including the
subregulatory process for making updates to the adopted measures. In
the CY 2013 OPPS/ASC final rule with comment period (77 FR 68496
through 68497) and the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75131), we provided additional clarification regarding the ASCQR
Program policy in the context of the previously finalized Hospital OQR
Program policy, including the processes for addressing nonsubstantive
and substantive changes to adopted measures.
We maintain technical specifications for previously adopted ASCQR
Program measures. These specifications are updated as we continue to
develop the ASCQR Program. The manuals that contain specifications for
the previously adopted measures can be found on the QualityNet Web site
at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
Many of the quality measures used in Medicare and Medicaid
reporting programs are NQF-endorsed. We note that two of the measures
previously adopted for the ASCQR Program are not NQF-endorsed, and NQF
endorsement is not a program requirement. However, for those measures
that are NQF-endorsed, the NQF requires measure stewards to submit
annual measure maintenance updates and undergo maintenance of
endorsement review every 3 years as part of its regular maintenance
process for NQF-endorsed performance measures. In the measure
maintenance process, the measure steward (owner/developer) is
responsible for updating and maintaining the currency and relevance of
the measure and will confirm existing or minor specification changes
with the NQF on an annual basis. The NQF solicits information from
measure stewards for annual reviews, and it reviews measures for
continued endorsement in a specific 3-year cycle.
We note that the NQF's annual or triennial maintenance processes
for endorsed measures may result in the NQF requiring updates to
measures in order to maintain endorsement status. Other non-NQF
measures may undergo maintenance changes as well. We believe that it is
important to have in place the subregulatory process that we have
adopted for the ASCQR Program to incorporate nonsubstantive updates
into the measure specifications for measures so that the measure
specifications remain current. We also recognize that some changes to
measures are substantive in nature and might not be appropriate for
adoption using a subregulatory process.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41049), we did not
propose any changes to this policy.
8. Public Reporting of ASCQR Program Data
In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514
through 74515), we finalized a policy to make data that an ASC
submitted for the ASCQR Program publicly available on a CMS Web site
after providing an ASC an opportunity to review the data to be made
public. When available, these data will be displayed at the CCN level;
we intend to make data collected under the ASCQR program publicly
available in CY 2015. In the CY 2015 OPPS/ASC proposed rule (79 FR
41049), we did not propose any changes to this policy.
Comment: One commenter urged CMS to make the data submitted by ASCs
available to the public after giving ASCs an opportunity to preview the
data.
Response: We thank the commenter for their comment, and note that
in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514
through 74515), we finalized a policy to make data that an ASC
submitted for the ASCQR Program publicly available on a CMS Web site
after providing an ASC an opportunity to review the data to be made
public. These data will be displayed at the CCN level. We did not
propose any changes to this policy (79 FR 41049).

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

1. Statutory Background
We refer readers to section XV.C.1. of the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75131 through 75132) for a detailed
discussion of the statutory background regarding payment reductions for
ASCs that fail to meet the ASCQR Program requirements.
2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet the
ASCQR Program Requirements for a Payment Determination Year
The national unadjusted payment rates for many services paid under
the ASC payment system equal the product of the ASC conversion factor
and the scaled relative payment weight for the APC to which the service
is assigned. Currently, the ASC conversion factor is equal to the
conversion factor calculated for the previous year updated by the MFP-
adjusted CPI-U update factor, which is the adjustment set forth in
section 1833(i)(2)(D)(v) of the Act. The MFP-adjusted CPI-U update
factor is the Consumer Price Index for all urban consumers (CPI-U),
which currently is the annual update for the ASC payment system, minus
the MFP adjustment. As discussed in the CY 2011 MPFS final rule with
comment period (75 FR 73397), if the CPI-U is a negative number, the
CPI-U would be held to zero. Under the ASCQR Program, any annual update
will be reduced by 2.0 percentage points for ASCs that fail to meet the
reporting requirements of the ASCQR Program. This reduction applied
beginning with the CY 2014 payment rates. For a complete discussion of
the calculation of the ASC conversion factor, we refer readers to
section XII.G. of this final rule with comment period.

[[Page 66982]]

In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499
through 68500), in order to implement the requirement to reduce the
annual update for ASCs that fail to meet the ASCQR Program
requirements, we finalized our proposal that we would calculate two
conversion factors: A full update conversion factor and an ASCQR
Program reduced update conversion factor. We finalized our proposal to
calculate the reduced national unadjusted payment rates using the ASCQR
Program reduced update conversion factor that would apply to ASCs that
fail to meet their quality reporting requirements for that calendar
year payment determination. We finalized our proposal that application
of the 2.0 percentage point reduction to the annual update may result
in the update to the ASC payment system being less than zero prior to
the application of the MFP adjustment.
The ASC conversion factor is used to calculate the ASC payment rate
for services with the following payment indicators (listed in Addenda
AA and BB to this final rule with comment period, which are available
via the Internet on the CMS Web site): ``A2,'' ``G2,'' ``P2,'' ``R2,''
``Z2,'' as well as the service portion of device-intensive procedures
identified by ``J8.'' We finalized our proposal that payment for all
services assigned the payment indicators listed above would be subject
to the reduction of the national unadjusted payment rates for
applicable ASCs using the ASCQR Program reduced update conversion
factor.
The conversion factor is not used to calculate the ASC payment
rates for separately payable services that are assigned status
indicators other than payment indicators ``A2,'' ``G2,'' ``J8,''
``P2,'' ``R2,'' and ``Z2.'' These services include separately payable
drugs and biologicals, pass-through devices that are contractor-priced,
brachytherapy sources that are paid based on the OPPS payment rates,
and certain office-based procedures and radiology services where
payment is based on the MPFS PE RVU amount and a few other specific
services that receive cost-based payment. As a result, we also
finalized our proposal that the ASC payment rates for these services
would not be reduced for failure to meet the ASCQR Program requirements
because the payment rates for these services are not calculated using
the ASC conversion factor and, therefore, not affected by reductions to
the annual update.
Office-based surgical procedures (performed more than 50 percent of
the time in physicians' offices) and separately paid radiology services
(excluding covered ancillary radiology services involving certain
nuclear medicine procedures or involving the use of contrast agents, as
discussed in section XII.C.1.b. of this final rule with comment period)
are paid at the lesser of the MPFS nonfacility PE RVU-based amounts or
the amount calculated under the standard ASC ratesetting methodology.
Similarly, in section XII.D.2.b. of this final rule with comment
period, we are finalizing that payment for the new category of covered
ancillary services (that is, certain diagnostic test codes within the
medical range of CPT codes for which separate payment is allowed under
the OPPS and when they are integral to an ASC covered surgical
procedure) will be at the lesser of the MPFS nonfacility PE RVU-based
amounts or the rate calculated according to the standard ASC
ratesetting methodology. In the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68500), we finalized our proposal that the
standard ASC ratesetting methodology for this type of comparison would
use the ASC conversion factor that has been calculated using the full
ASC update adjusted for productivity. This is necessary so that the
resulting ASC payment indicator, based on the comparison, assigned to
these procedures or services is consistent for each HCPCS code
regardless of whether payment is based on the full update conversion
factor or the reduced update conversion factor.
For ASCs that receive the reduced ASC payment for failure to meet
the ASCQR Program requirements, we believe that it is both equitable
and appropriate that a reduction in the payment for a service should
result in proportionately reduced copayment liability for
beneficiaries. Therefore, in the CY 2013 OPPS/ASC final rule with
comment period (77 FR 68500), we finalized our proposal that the
Medicare beneficiary's national unadjusted copayment for a service to
which a reduced national unadjusted payment rate applies would be based
on the reduced national unadjusted payment rate.
In that final rule with comment period, we finalized our proposal
that all other applicable adjustments to the ASC national unadjusted
payment rates would apply in those cases when the annual update is
reduced for ASCs that fail to meet the requirements of the ASCQR
Program (77 FR 68500). For example, the following standard adjustments
would apply to the reduced national unadjusted payment rates: The wage
index adjustment, the multiple procedure adjustment, the interrupted
procedure adjustment, and the adjustment for devices furnished with
full or partial credit or without cost. We believe that these
adjustments continue to be equally applicable to payment for ASCs that
do not meet the ASCQR Program requirements.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75132), we did not make any changes to these policies. In the CY 2015
OPPS/ASC proposed rule (79 FR 41049 through 41050), we did not propose
any changes to these policies.

D. Administrative Requirements

We received a public comment on the ASCQR Program requirements in
general.
Comment: One commenter expressed appreciation that CMS did not
propose any substantial changes to participatory requirements, stating
that this will provide ASCs with valuable time to stabilize the
processes for what is currently required without adding additional
burden on resources.
Response: We interpret the commenter as referring to program
administrative requirements overall, and not to just participation
status as the commenter makes reference to issues of burden. We thank
the commenter for this support. We agree that program administrative
process stability to the extent possible is important in developing the
ASCQR Program. We continue to look for ways to minimize burden as we
pursue the quality objectives of the ASCQR Program.
1. Requirements Regarding QualityNet Account and Security Administrator
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75132 through 75133) for a detailed discussion of the
QualityNet security administrator requirements, including setting up a
QualityNet account, and the associated timelines, for the CY 2014
payment determination and subsequent years. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41050), we did not propose any changes to these
policies.
2. Requirements Regarding Participation Status
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75133 through 78 FR 75135) for a complete discussion of
the participation status requirements for the CY 2014 payment
determination and subsequent years. In the CY 2015 OPPS/ASC proposed
rule (79 FR 41050), we did not propose any changes to these policies.

[[Page 66983]]

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

We received public comments on alternate methods for submitting
data for the ASCQR Program.
Comment: One commenter recommended that CMS allow ASCs to meet the
requirements of the ASCQR Program using registry-based reporting,
noting that using a registry is an option under the PQRS and that other
registries are already in existence. This commenter recommended CMS
issue proposals regarding this option in next year's proposed rule. The
commenter also recommended that ASCs should also have the option of
submitting quality data to CMS through an EHR-based reporting
mechanism, as there are ASCs that have implemented this technology and
could benefit from this option.
Response: We thank the commenter for these suggestions. We agree
that it could reduce burden to have a registry-based mechanism for data
submission. We have not proposed a registry-based reporting option
because currently, there is not a registry in place that is collecting
information on the quality measures that we have adopted for this
program. Should registry-based reporting of the ASC quality measures
adopted for the ASCQR Program become available in the future, we will
explore further the viability of incorporating a registry-based
reporting mechanism in the ASCQR Program.
Regarding the use of EHR systems for reporting quality data, we
agree that reporting by this method could reduce reporting burden.
However, we are not aware of quality measures for ASCs that have been
specified for electronic reporting. If such measures do exist, an
understanding of the level of EHR adoption and capabilities of ASCs to
utilize this method would be necessary before proposing their adoption
by the ASCQR Program. As we discussed in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75124 through 75126), in a recent
environmental scan, which included an assessment of the readiness of
ASC to electronically report quality data, we found evidence of low
levels of EHR use by ASCs. We believe that ASCs continue to be slow to
adopt EHRs because many of these facilities are small and the cost of
EHRs may pose a barrier to adoption. Further, there has been no
incentive program to encourage such adoption by ASCs.
Comment: One commenter requested a batch-processing data submission
option for entities that own multiple ASCs.
Response: We interpret this comment as referring to the ability to
send quality measure data electronically in a format that allows for
data submission for multiple ASCs, rather than requiring individual ASC
data entry as is currently required for data submitted via a CMS online
data submission tool measure data. We thank the commenter for their
request and are considering how to implement this capability into our
data submission processes. In the event this method can be available
for data submission, we would issue proposals through rulemaking for
ASCQR Program implementation.
1. Requirements Regarding Data Processing and Collection Periods for
Claims-Based Measures Using Quality Data Codes (QDCs)
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75135) for a complete summary of the data processing and
collection periods for the claims-based measures using QDCs for the CY
2014 payment determination and subsequent years. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41050), we did not propose any changes to
these policies.
We did not receive any public comments on data submission for
claims-based measures using QDCs.
2. Minimum Threshold, Minimum Case Volume, and Data Completeness for
Claims-Based Measures Using QDCs
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75135 through 75137) for a complete discussion of the
minimum thresholds, minimum case volume, and data completeness for
successful reporting for the CY 2014 payment determination and
subsequent years. In the CY 2015 OPPS/ASC proposed rule (79 FR 41050),
we did not propose any changes to these policies.
We received the following public comments on data collection using
QDCs.
Comment: One commenter recommended that CMS raise the 50 percent
threshold for claims meeting measure specifications containing QDCs,
noting that many of the issues in the early years of the program that
led to this standard have been resolved.
Response: We thank the commenter for the recommendation and, while
we did not propose any changes to our QDC use threshold in this
rulemaking, we will consider this comment as we move forward with
program planning as ASCs now have experience in submitting data in this
manner.
Comment: One commenter supported CMS' decision not to propose any
changes to minimum thresholds, minimum case volume, and data
completeness for successful reporting, noting that program stability is
important. Specifically, the commenter supports maintaining the sample
size requirements for the endoscopy measures, ASC-9 and ASC-10.
Response: We thank the commenter for its support of these data-
related policies, including the maintenance of the sample size
requirements for the endoscopy measures.
3. Requirements for Data Submitted Via a CMS Online Data Submission
Tool
a. Data Collection for ASC-6 and ASC-7
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74509) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75137 through 75138) for a complete discussion of the
requirements for data collection and submission for the ASC-6: Safe
Surgery Checklist Use and ASC-7: ASC Facility Volume Data on Selected
ASC Surgical Procedures measures for the CY 2015 payment determination
and subsequent years. In the CY 2015 OPPS/ASC proposed rule (79 FR
41050), we did not propose any changes to these policies.
b. Delayed Data Collection for ASC-9 and ASC-10
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124
through 75130), we adopted ASC-9: Endoscopy/Polyp Surveillance:
Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk
Patients (NQF #0658) and ASC-10: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a History of Adenomatous
Polyps--Avoidance of Inappropriate Use (NQF #0659), two additional
chart-abstracted measures, and we finalized a policy that aggregate
data (numerators, denominators, and exclusions) on all ASC patients
would be collected via an online Web-based tool that would be made
available to ASCs via the QualityNet Web site.
We finalized that the data collection time period would be the
calendar year (January 1 to December 31) 2 years prior to the affected
payment determination year, and the data collected would be submitted
during the time period of January 1 to August 15 in the year prior to
the affected payment determination year. Thus, for the CY 2016 payment
determination, ASCs would be required to submit aggregate-level
encounter data from January 1, 2014 to December 31, 2014 using our Web-
based tool during

[[Page 66984]]

the data submission window of January 1, 2015 to August 15, 2015 (78 FR
75138 through 75139).
On December 31, 2013, we issued guidance stating that we would
delay the implementation of ASC-9 and ASC-10 for 3 months for the CY
2016 payment determination, with a resulting encounter period of April
1, 2014 to December 31, 2014 instead of January 1, 2014 to December 31,
2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036). The data submission timeframe and the encounter period for
subsequent years remain as previously finalized (78 FR 75139).
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
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period, where we adopted ASC-11: Cataracts--Improvement in Patient's
Visual Function within 90 Days Following Cataract Surgery (NQF #1536)
beginning with the CY 2016 payment determination (78 FR 75129), and
finalized the data collection and data submission timelines (78 FR
75138 to 75139). This measure assesses the rate of patients 18 years
and older (with a diagnosis of uncomplicated cataract) in a sample who
had improvement in visual function achieved within 90 days following
cataract surgery based on completing both a pre-operative and post-
operative visual function survey.
Since our adoption of this measure, we have come to believe that it
can be operationally difficult at this time for ASCs to collect and
report this measure. Specifically, we are concerned that the results of
the survey used to assess the pre-operative and post-operative visual
function of the patient may not be shared across clinicians and
facilities, making it difficult for ASCs to have knowledge of the
visual function of the patient before and after surgery. We are also
concerned about the surveys used to assess visual function; the measure
allows for the use of any validated survey and results may be
inconsistent should clinicians use different surveys.
Therefore, on December 31, 2013, we issued guidance stating that we
would delay data collection for ASC-11 for 3 months (data collection
would commence with April 1, 2014 encounters) for the CY 2016 payment
determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036). We issued additional guidance on April 2, 2014, stating that we
would further delay the implementation of ASC-11 for an additional 9
months, until January 1, 2015 for the CY 2016 payment determination,
due to continued concerns (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228773811586).
In the CY 2015 OPPS/ASC proposed rule (79 FR 41051), we proposed to
exclude ASC-11 Cataracts: Improvement in Patient's Visual Function
within 90 Days Following Cataract Surgery (NQF #1536) from the CY 2016
payment determination measure set. We would not subject ASCs to a
payment reduction with respect to this measure for the CY 2016 payment
determination.
We continue to believe that this measure addresses an area of care
that is not adequately addressed in our current measure set and the
measure serves to drive coordination of care (78 FR 75129). Further, we
believe ASCs should be a partner in care with physicians and other
clinicians using their facility and that this measure provides an
opportunity to do so. Therefore, we are continuing to include this
measure in the ASCQR Program measure set for the CY 2017 payment
determination and subsequent years. However, we understand the concerns
and, therefore, proposed that data collection and submission be
voluntary for this measure for the CY 2017 payment determination and
subsequent years. ASCs would not be subject to a payment reduction for
failing to report this measure during the period of voluntary
reporting. For ASCs that choose to submit data, we continue to request
that they submit such data using the means and timelines finalized in
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75138 to
75139). Data submitted voluntarily will be publicly reported as
discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 75138 to 75139).
We invited public comment on this proposal.
Comment: Some commenters stated that complications following
cataract surgery are not acceptable and believed that ASC-11 tracks
patient-centered clinical outcomes. The commenters stated that the
measure would promote and improve care coordination among providers.
Some commenters commended CMS' recognition of the associated
operational issues and taking the approach to delay implementation of
this measure as well as allowing voluntary collection.
Response: We appreciate the commenters that supported and agreed
with our view and the approach we take for this measure. We agree that
complications following cataract surgery are not acceptable. While ASC-
11 does not address complications following cataract surgery, it does
address improvement in visual function following cataract surgery and
it tracks an important patient-centered clinical outcome.
Comment: Some commenters did not support voluntary data reporting
based on concerns regarding the extent to which ASCs would report data
for ASC-11 if reporting was voluntary. Some commenters stated that
incomplete display of data is not meaningful to consumers. Other
commenters expressed concerns that the display of data from some ASCs
but not others would lead some patients to conclude that some ASCs are
more committed to improving cataract surgery. Several other commenters
predicted that very few ASCs will report data for the ASC-11 measure,
leading to an insufficient sample.
Response: We thank the commenters for their views. We note that the
proposal, which we are finalizing in this final rule with comment
period, is for the measure to be voluntarily reported by ASCs.
Therefore, ASCs would be able to choose whether to implement data
collection and reporting processes for this measure. We continue to
believe the ASC-11 measure has value in this care setting. We do not
agree that an insufficient sample of facilities will report data for
the ASC-11 measure because we also have self-reports from ASCs that
some did put processes in place to collect data for this measure, and
that these ASCs would like to report data for this measure because they
view the measure as an important quality measure for facilities.
We do not agree that ASC-11 data reported on a voluntary basis
would not be meaningful for consumers. There are many situations where
ASCs do not submit information to the ASCQR Program because they do not
have such information due to lack of cases or low case volume. In the
CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 through
74515), we finalized a policy to make data that an ASC submitted for
the ASCQR Program publicly available on a CMS Web site after providing
an ASC an opportunity to review the data to be made public. Therefore,
when ASCs' information is submitted, we will make this information
publicly available. Where this information is not submitted, we will
state that the information is not

[[Page 66985]]

available. We also do not agree that reporting of measure data by some
ASCs and not others under voluntary reporting would affect the validity
of data reported for this Web-based measure because this situation is
no different than any other measure where not all ASCs had cases.
Comment: Many commenters requested that CMS remove the ASC-11
measure from the program entirely, rather than delaying implementation
and allowing voluntary reporting. These commenters reiterated similar
concerns expressed in the CY 2014 OPPS/ASC final rule with comment
period regarding associated burden, suitability for ASCQR Program
versus PQRS, program alignment of this measure, nonstandardization of
collected information, NQF endorsement, MAP recommendation, and
coordination challenges faced by facilities.
Response: We continue to believe this measure addresses the
importance area of care coordination and responsibility for monitoring
patient outcomes between performing physicians, practitioners that
assess visual function, and facilities where procedures are performed;
therefore, we are not removing ASC-11 from the ASCQR Program measure
set for the CY 2017 payment determination and subsequent years.
With respect to the concerns raised by commenters about the
measure, we refer commenters to the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75124 through 75126, 75129, and 75138 through
75139) where we previously have responded to these concerns.
After consideration of the public comments we received, for the
reasons discussed above, we are finalizing our proposal to allow
voluntary data collection and reporting of this measure for the CY 2017
payment determination and subsequent years. We also are finalizing our
proposal to exclude the measure entirely from the CY 2016 payment
determination measure set. ASCs will be able to begin reporting with
January 1, 2015 services as described above in section XIV.E.3. of this
final rule with comment period. For ASCs that choose to submit data, we
request that they submit such data using the means and timelines
finalized in the CY 2014 OPPS/ASC final rule with comment period (78 FR
75138 to 75139). ASCs will not be subject to a payment reduction for
failing to report this measure during the period of voluntary
reporting. Data voluntarily submitted will be publicly reported.
4. Claims-Based Measure Data Requirements for the New Measure for the
CY 2018 Payment Determination and Subsequent Years
In the CY 2015 OPPS/ASC proposed rule (79 FR 41046-41048), we
proposed to adopt the ASC-12: Facility Seven-Day Risk-Standardized
Hospital Visit Rate after Outpatient Colonoscopy measure, which is a
claims-based measure that does not require any additional data
submission apart from standard Medicare FFS claims. In the CY 2015
OPPS/ASC proposed rule (79 FR 41051), we also proposed that, for this
measure, which uses ASC Medicare claims data as specified in the ASCQR
Specifications Manual and does not require any additional data
submission such as QDCs, we would use paid Medicare FFS claims from a
12-month period from July 1 of the year 3 years before the payment
determination year to June 30 of the following year. Thus, we stated,
for the CY 2017 payment determination for this measure, claims from
July 1, 2014 to June 30, 2015 would be used. We noted that we proposed
to adopt this measure under the ASCQR Program as well as the Hospital
OQR Program, as described in section XIII.H.2.c. of the proposed rule.
We stated that this ASCQR Program time period provides for the
timeliest data possible while aligning the proposed data submission
requirements with our Hospital OQR Program proposal, which would use
the claims-based measure data submission requirements for the CY 2015
payment determination and subsequent years that we adopted in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75111 through
75112).
We invited public comment on this proposal.
Comment: Many commenters expressed concern that, if finalized, the
ASC-12 measure's data collection period would begin July 1, 2014,
several months before adoption of the measure is finalized. Several
commenters recommended that data collection begin July 1, 2015.
Response: As we stated above in section XIV.B.5. of this final rule
with comment period, we are finalizing the adoption of ASC-12 for the
CY 2018 payment determination and subsequent years instead of the CY
2017 payment determination and subsequent years as proposed. We are
finalizing the data submission time period for ASC-12 to use paid
Medicare FFS claims from the calendar year 2 years before the payment
determination calendar year. For the CY 2018 payment determination, we
will use paid Medicare FFS claims from January 1, 2016 to December 31,
2016. We believe the reliability of the measure using 1 year of data is
sufficiently reliable. While we believe that measure reliability may be
further improved by using a longer time period, we must balance the
reliability of the measure with the timeliness of the measure. At this
time, we believe that 1 year of data appropriately balances these
competing interests, but we will continue to assess this belief during
the dry run.
After consideration of the public comments we received, we are not
finalizing our proposal to use paid Medicare FFS claims from a 12-month
period from July 1 of the year 3 years before the payment determination
year to June 30 of the following year. Instead, we will use paid
Medicare FFS claims from the calendar year 2 years before the payment
determination calendar year. Specifically, with respect to the CY 2018
payment determination, for calculating ASC-12, we will use paid
Medicare FFS claims from January 1, 2016 to December 31, 2016.
5. Data Submission Requirements for ASC-8 (Influenza Vaccination
Coverage Among Healthcare Personnel) Reported via the National
Healthcare Safety Network (NHSN) for the CY 2016 Payment Determination
and Subsequent Years
a. Previously Adopted Requirements for the CY 2016 Payment
Determination
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74510) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75139 through 75140) for a complete discussion of the
ASC-8 measure (Influenza Vaccination Coverage among Healthcare
Personnel) (NQF #0431), including the data collection timeframe and the
data reporting standard procedures for the CY 2016 payment
determination.
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75139
through 75140), we finalized our proposal to use the data submission
and reporting standard procedures that have been set forth by the CDC
for NHSN participation in general and for submission of this measure to
NHSN. We refer readers to the CDC's NHSN Web site for detailed
procedures for enrollment (http://www.cdc.gov/nhsn/ambulatory-surgery/enroll.html), set-up (http://www.cdc.gov/nhsn/ambulatory-surgery/setup.html), and reporting (https://sams.cdc.gov) (user authorization
through Secure Access Management Services (SAMS) is required for access
to NHSN). We note

[[Page 66986]]

that the reporting link was updated in the CY 2015 OPPS/ASC proposed
rule (79 FR 41051).
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
In the CY 2012 OPPS/ASC final rule with comment period (76 FR
74510), we finalized our policy that data collection for the CY 2016
payment determination would be from October 1, 2014 through March 31,
2015 (the 2014-2015 influenza season data). In the CY 2015 OPPS/ASC
proposed rule (79 FR 41051 through 41052, we proposed that for the CY
2017 payment determination and subsequent years, ASCs would collect
data from October 1 of the year 2 years prior to the payment
determination year to March 31 of the year prior to the payment
determination year. For example, the CY 2017 payment determination
would require data collection from October 1, 2015 to March 31, 2016.
In the CY 2014 OPPS/ASC proposed rule, we proposed that ASCs would
have until August 15, 2015 to submit their 2014-2015 influenza season
data (October 1, 2014 through March 31, 2015) to NHSN. We stated that
this date is the latest date possible for data entry that would provide
sufficient time for us to make the CY 2016 payment determinations and
is aligned with the data entry deadline for the measures entered via
the CMS online tool (78 FR 43670). While some commenters supported this
proposal, others expressed disagreement with this proposal because it
differed from the May 15 deadline proposed for the Hospital IQR Program
(78 FR 27700, 50822) and the Hospital OQR Program (78 FR 43656, 75116
through 75117) and they believed this difference in deadlines could
cause confusion, thereby disadvantaging ASCs (78 FR 75140). Other
commenters believed that providing ASCs with a later deadline would
provide an unfair advantage because ASCs would have longer to submit
their data. Due to these concerns, we did not finalize the August 15,
2015 deadline. We stated that we intended to propose a submission
deadline for this measure for the CY 2016 payment determination in this
proposed rule.
In the proposed rule, we proposed that May 15 of the year in which
the influenza season ends be the submission deadline for each payment
determination year, similar to the Hospital IQR and OQR Programs. For
example, for the CY 2016 payment determination, ASCs would be required
to submit their 2014-2015 influenza season data (October 1, 2014
through March 31, 2015) by May 15, 2015. Similarly, for the CY 2017
payment determination, ASCs would be required to submit their 2015-2016
influenza season data (October 1, 2015 through March 31, 2016) by May
15, 2016. We believe a May 15 reporting deadline would enable ASCs to
use data summarizing the results of their previous influenza
vaccination campaign to set targets and make plans for their influenza
vaccination campaigns prior to the next influenza season. This deadline
also would enable us to post and the public to review the summary data
before the start of the next influenza season. Finally, this date
aligns to the May 15 deadline used in the Hospital IQR and OQR Programs
for this measure.
We invited public comment on this proposal.
Comment: Many commenters supported the proposed submission deadline
of May 15 for ASC-8. One commenter expressed concern that there is a
time lag for reporting this data, and urged that the public should have
access to the data at the time the data is most useful.
Response: We thank the commenters for their support. We believe a
May 15 reporting deadline will enable ASCs to use data summarizing the
results of their previous influenza vaccination campaign to set targets
and make plans for their influenza vaccination campaigns prior to the
next influenza season. This deadline also will enable us to post and
the public to review the summary data before the start of the next
influenza season. Finally, this date aligns with the May 15 deadline
used in the Hospital IQR and OQR Programs for this measure.
Comment: Several commenters opposed setting the submission deadline
for ASC-8 to May 15, arguing that the August 15 deadline considered in
the prior year rule was better aligned with the other measures in the
ASCQR Program and would minimize confusion and reporting burden. One
commenter suggested that the Hospital IQR and Hospital OQR Programs
should move their deadlines to August 15 to support program alignment.
Response: We thank the commenters for supporting last year's
proposal regarding a data submission deadline for the ASC-8 measure. We
proposed an August 15 data submission deadline in the CY 2014 OPPS/ASC
proposed rule (78 FR 43670), but did not finalize this proposal due to
commenters' concerns with nonalignment with other quality reporting
programs (78 FR 75140).
While we seek to align reporting deadlines whenever possible within
the ASCQR Program (78 FR 75140), we believe alignment across programs
with the May 15 reporting deadline will prevent confusion in reporting
across different facilities. We also believe this earlier deadline will
enable us to make the data publicly available in time for ASCs to use
the data summarizing the results of their previous influenza
vaccination campaign to set targets and make plans for their influenza
vaccination campaigns prior to the next influenza season. This would be
very difficult to achieve with an August 15 reporting deadline.
After consideration of the public comments we received, for the
reasons set forth above, we are finalizing our proposal without
modification to adopt May 15 of the year in which the influenza season
ends as the data submission deadline for the ASC-8 measure for each
payment determination year, beginning with the CY 2016 payment
determination. We also are finalizing our proposal without modification
that, for the CY 2017 payment determination and subsequent years, ASCs
will collect data from October 1 of the year 2 years prior to the
payment determination year to March 31 of the year prior to the payment
determination year.
6. ASCQR Program Validation of Claims-Based and CMS Web-Based Measures
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53641 through 53642) for a complete discussion of our policy not to
require validation of claims-based measures (beyond the usual claims
validation activities conducted by our Medicare Administrative
Contractors) or Web-based measures for the ASCQR Program, which is in
alignment with our requirements for the Hospital IQR and OQR Programs.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41052), we did not propose
any changes to this policy.
We received the following comment on data validation for the ASCQR
Program.
Comment: One commenter recommended that CMS develop an ASCQR data
validation program to assure the accuracy and integrity of quality data
that will be publicly reported under the ASCQR Program.
Response: We thank the commenter for the comment, and note that we
continue to evaluate the feasibility of data validation for the ASCQR
Program.

[[Page 66987]]

We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53641
through 53642) for a complete discussion of our policy not to require
validation of claims-based measures (beyond the usual claims validation
activities conducted by our Medicare Administrative Contractors) or
Web-based measures for the ASCQR Program. At this time, we believe that
it would be overly burdensome to validate the reported data given the
inexperience that ASCs have with reporting quality data to CMS coupled
with the low incidence of cases for the claims-based measures. As we
gain more experience with the ASCQR Program, we will reassess whether a
data validation process for claims-based measures and measures where
aggregate data are reported via an online tool is needed.
7. Extraordinary Circumstances Extensions or Exemptions for the CY 2017
Payment Determination and Subsequent Years
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53642 through 53643) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75140 through 75141) for a complete discussion of our
extraordinary circumstances extension or waiver process under the ASCQR
Program. In the CY 2015 OPPS/ASC proposed rule (79 FR 41052), we did
not propose any substantive changes to these policies or the processes.
However, in the future, we will refer to the process as the
``Extraordinary Circumstances Extensions or Exemptions'' process rather
than the ``Extraordinary Circumstances Extensions or Waivers'' process.
We also are in the process of revising the Extraordinary
Circumstances/Disaster Extension or Waiver Request form (CMS-10432),
approved under OMB control number 0938-1171. We are updating the
instructions and the form so that a hospital or facility may apply for
an extension for all applicable quality reporting programs at the same
time. In addition, the instructions for the form will be updated.
8. ASCQR Program Reconsideration Procedures for the CY 2017 Payment
Determination and Subsequent Years
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53643 through 53644) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75141) for a complete discussion of our informal
reconsideration process for the ASCQR Program for the CY 2014 payment
determination and subsequent years. In the CY 2015 OPPS/ASC proposed
rule (79 FR 41052), we did not propose any changes to the informal
reconsideration process.

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

A. Background

1. Statutory Basis
Unless the requirements of an applicable exception are satisfied,
section 1877 of the Act, also known as the ``physician self-referral
law''--(1) prohibits a physician from making referrals for certain
designated health services payable by Medicare to an entity with which
the physician (or an immediate family member) has a financial
relationship (ownership or compensation); and (2) prohibits the entity
from submitting claims to Medicare (or billing another individual,
entity, or third party payer) for those designated health services
furnished as a result of a prohibited referral. The Act establishes a
number of specific exceptions to the physician self-referral law and
grants the Secretary the authority to create regulatory exceptions for
financial relationships that the Secretary determines pose no risk of
program or patient abuse. Since the original enactment of the statute
in 1989, we have published a series of final rules interpreting the
statute and promulgating numerous exceptions.
Section 1877(d) of the Act sets forth exceptions related to
ownership and investment interests held by a physician (or an immediate
family member of a physician) in an entity that furnishes designated
health services. Section 1877(d)(2) of the Act provides an exception
for ownership and investment interests in rural providers. Under the
provision of section 1877(d)(2) of the Act, in order for an ownership
or investment interest to qualify for the exception, the designated
health services must be furnished in a rural area (as defined in
section 1886(d)(2) of the Act), and substantially all of the designated
health services furnished by the entity must be furnished to
individuals residing in a rural area. Section 1877(d)(3) of the Act
provides the hospital ownership exception, often referred to as the
``whole hospital exception,'' for ownership and investment interests in
a hospital located outside of Puerto Rico, provided that the referring
physician is authorized to perform services at the hospital and the
ownership or investment interest is in the hospital itself (and not
merely in a subdivision of the hospital).
2. Affordable Care Act Amendments to the Rural Provider and Hospital
Ownership Exceptions to the Physician Self-Referral Law
Section 6001(a) of the Affordable Care Act amended the rural
provider and whole hospital exceptions to the physician self-referral
law to impose additional restrictions on physician ownership and
investment in rural providers and hospitals. Section 6001(a) defines a
``physician owner or investor'' as a physician, or immediate family
member of a physician, who has a direct or indirect ownership or
investment interest in a hospital. We refer to hospitals with direct or
indirect physician owners or investors as ``physician-owned
hospitals.''
Section 6001(a)(3) of the Affordable Care Act established new
section 1877(i) of the Act, which imposes additional requirements for
physician-owned hospitals to qualify for the rural provider or whole
hospital exception. In addition to other requirements, section
1877(i)(1) of the Act prohibits a physician-owned hospital from
expanding its facility capacity beyond the number of operating rooms,
procedure rooms, and beds for which the hospital was licensed as of
March 23, 2010, unless an exception is granted by the Secretary.
Section 1877(i)(3) of the Act requires the Secretary to establish
and implement an exception process to the prohibition on expansion of
facility capacity. We refer to this process as the ``expansion
exception process.'' Section 1877(i)(3)(A)(i) of the Act provides that
a hospital qualifying as an ``applicable hospital'' or a ``high
Medicaid facility'' may apply for an expansion exception. Section
1877(i)(3)(E) of the Act sets forth the eligibility criteria for
applicable hospitals, which include criteria concerning inpatient
Medicaid admissions, bed capacity, and bed occupancy. Section
1877(i)(3)(F) of the Act sets forth the eligibility criteria for high
Medicaid facilities, which include a criterion concerning inpatient
Medicaid admissions.
In the CY 2011 OPPS/ASC final rule with comment period (75 FR
72240), we addressed many of the additional requirements that were
established by section 6001(a) of the Affordable Care Act for the rural
provider and whole hospital exceptions, including the prohibition on
expansion of facility capacity. In that final rule with comment period,
we finalized regulations at 42 CFR 411.362(b)(2) that prohibit a
physician-owned hospital from increasing the number of operating rooms,
procedure rooms, and beds

[[Page 66988]]

beyond that for which the hospital was licensed on March 23, 2010 (or,
in the case of a physician-owned hospital that did not have a provider
agreement in effect as of that date, but did have a provider agreement
in effect on December 31, 2010, the effective date of such agreement),
if the hospital seeks to avail itself of the rural provider or whole
hospital exception.
In the CY 2012 OPPS/ASC final rule with comment period (76 FR
74517), we promulgated regulations under 42 CFR 411.362(c) that govern
the expansion exception process. Section 411.362(c)(2) sets forth the
criteria for a physician-owned hospital to qualify for an expansion
exception as an applicable hospital. Specifically, Sec. 411.362(c)(2)
states that: (1) The hospital's annual percent of total inpatient
admissions under Medicaid must be equal to or greater than the average
percent with respect to such admissions for all hospitals located in
the county in which the hospital is located during the most recent
fiscal year for which data are available as of the date that the
hospital submits its exception request; (2) the hospital must be
located in a State in which the average bed capacity in the State is
less than the national average bed capacity during the most recent
fiscal year for which data are available as of the date that the
hospital submits its request; and (3) the hospital must have an average
bed occupancy rate that is greater than the average bed occupancy rate
in the State in which the hospital is located during the most recent
fiscal year for which data are available as of the date that the
hospital submits its request.
Section 411.362(c)(3) specifies the criteria for a physician-owned
hospital seeking an exception under the expansion exception process on
the basis that it is a high Medicaid facility, including the
requirement that, with respect to each of the three most recent fiscal
years for which data are available as of the date that the hospital
submits its exception request, the hospital must have an annual percent
of total inpatient admissions under Medicaid that is estimated to be
greater than such percent with respect to such admissions for any other
hospital located in the county in which the hospital is located.
In the CY 2012 OPPS/ASC proposed rule (76 FR 42350 through 42352),
we proposed that filed Medicare hospital cost report data from the CMS
Healthcare Cost Report Information System (HCRIS) be used to determine
whether a hospital satisfies the inpatient Medicaid admissions, bed
capacity, and bed occupancy criteria for applicable hospitals and the
inpatient Medicaid admissions criterion for high Medicaid facilities.
We requested public comments concerning alternative data sources that
could result in more accurate determinations as to whether a hospital
satisfies the relevant criteria (76 FR 42350). The public comments that
we received provided no persuasive support for a data source more
accurate than the filed hospital cost report data reported to HCRIS.
Therefore, we finalized the requirement to use filed hospital cost
report data for purposes of facility capacity expansion exception
requests in the CY 2012 OPPS/ASC final rule with comment period (76 FR
74518). In this final rule with comment period, we refer to the filed
hospital cost report data that are required under our existing
regulations as ``HCRIS data.''
As required by section 1877(i)(3)(A) of the Act, the regulations
addressing the expansion exception process in the CY 2012 OPPS/ASC
final rule with comment period were issued by January 1, 2012, and the
process was implemented on February 1, 2012.

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

Following the implementation of the expansion exception process on
February 1, 2012, industry stakeholders informed us of what they
believed to be certain limitations regarding the required use of HCRIS
data under the regulations at 42 CFR 411.362. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41053), we discussed the existing required use of
HCRIS data and certain limitations of the data that were identified by
stakeholders and CMS. We do not repeat that information here; rather,
we refer readers to the proposed rule for a complete discussion of the
issues. To address the limitations regarding the required use of HCRIS
data, we proposed to modify the expansion exception process to permit
the use of certain non-HCRIS data sources for the inpatient Medicaid
admissions, bed capacity, and bed occupancy criteria.
As of the publication date of the CY 2015 OPPS/ASC proposed rule, a
correctly completed hospital cost report did not include Medicaid
managed care admissions or discharges and, therefore, Medicaid managed
care admissions and discharges were not available in HCRIS. As a
result, the information collected to date through HCRIS cannot be used
to estimate reliably Medicaid managed care admissions or discharges for
purposes of estimating the percentages of inpatient Medicaid admissions
under Sec. Sec. 411.362(c)(2)(ii) and (c)(3)(ii). In addition, a
hospital that has not participated as a provider in the Medicare
program for each of the 3 most recent fiscal years for which data is
available would be precluded from seeking a facility expansion
exception as a high Medicaid facility. It would be similarly
prohibitive if the requesting hospital is seeking an exception as
either an applicable hospital or high Medicaid facility, and the
hospitals in the county in which the requesting hospital is located
were not Medicare participating providers or were not participating in
the Medicare program during each of the years for which comparisons are
required under the statute and our regulations.
We believe that some physician-owned hospitals that serve a
significant number of Medicaid managed care patients and are interested
in the expansion exception process may fail to qualify for an exception
due to the exclusion of Medicaid managed care data. Accordingly, as
detailed in section XV.C. of the CY 2015 OPPS/ASC proposed rule (79 FR
41054), we proposed to revise the expansion exception process to permit
physician-owned hospitals to use filed hospital cost report data, data
from internal data sources, or data from external data sources to
estimate the required percentages of inpatient admissions under
Medicaid. (We referred in the proposal to the non-HCRIS internal data
sources and external data sources that we proposed to permit for
purposes of the expansion exception process as ``supplemental data
sources.'') Also, as explained in section XV.B. of the CY 2015 OPPS/ASC
proposed rule (79 FR 41054), we proposed to revise the expansion
exception process to permit the use of supplemental data sources for
the bed capacity and bed occupancy criteria for applicable hospitals.

C. Changes to the Physician-Owned Hospital Expansion Exception Process

Below we discuss the provisions of the proposed rule and summarize
and respond to the public comments we received in response to our
proposals. For ease of reference, we have divided the comments and
responses into the following categories: supplemental data sources;
fiscal year standard; community input and timing of complete request;
and additional considerations.
1. Supplemental Data Sources
Given the limitations regarding the required use of HCRIS data
(which we described in sections XV.B.1. and XV.B.2. of the CY 2015
OPPS/ASC proposed rule (79 FR 41053 through 41054)), we proposed to
revise our

[[Page 66989]]

regulations at Sec. Sec. 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and
(c)(3)(ii) to permit physician-owned hospitals to use data from certain
internal data sources or external data sources, in addition to HCRIS
data, in order to estimate the percentages of inpatient Medicaid
admissions, and to determine the bed capacities and the bed occupancy
rates referenced in those sections. We stated in the proposed rule that
we were not prescribing that hospitals use a specific individual data
source or combination of data sources.
We proposed that, for purposes of the expansion exception process,
internal data sources would be sources generated, maintained, or under
the control of the Department, and we gave as examples the Healthcare
Cost and Utilization Project (HCUP), the Medicaid Statistical
Information System (MSIS), and the Medicaid Analytic Extract (MAX). We
sought public comments that recommended other possible internal data
sources. We also proposed that, for purposes of the expansion exception
process, ``external data sources'' would be data sources generated,
maintained, or under the control of a State Medicaid agency, and we
sought public comments that recommended other possible external data
sources, including those of other State agencies or departments.
Finally, we proposed to amend 42 CFR 411.351: (1) to define ``internal
data source'' to include only non-HCRIS data sources that are reliable
and transparent, and that maintain or generate data that are accurate,
complete, and objectively verifiable for purposes of the expansion
exception process, and to define ``external data source'' to include
only data sources that are reliable and transparent, and that maintain
or generate data that are accurate, complete, and objectively
verifiable for purposes of the expansion exception process; and (2) to
state that internal data sources and external data sources must
maintain data that are readily available and accessible to the
requesting hospital, comparison hospitals, and to CMS for purposes of
the expansion exception process.
We noted in the proposed rule that the expansion exception process
includes both the physician-owned hospital's completion of its request
and CMS' consideration of the physician-owned hospital's request.
We stated in the proposed rule that we believe that the
supplemental data sources should--
Be transparent regarding what comprises the data, where
the data originated, and the manner and method by which the data source
received the data;
Be maintained on a secure database that prevents
distortion or corruption of data and that ensures the accuracy of the
data;
Contain sufficient information to enable accurate
estimates of the percentages of inpatient Medicaid admissions, and
accurate determinations of bed capacities and bed occupancy rates;
Contain sufficient information to enable the comparisons
required by Sec. 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and
(c)(3)(ii) for the fiscal year(s) at issue; and
Contain sufficiently clear and detailed data that will
enable multiple users to produce consistent results and outcomes when
using the same data set.
In the proposed rule, we recognized that, if a physician-owned
hospital uses data from a supplemental data source, the hospital may
ultimately need to make estimates or determinations in addition to
those referenced in our existing regulations. Accordingly, we proposed
to revise our regulations to allow for the additional estimates or
determinations that may be necessary under our revised process.
Specifically, we proposed to permit a requesting hospital to use data
from a supplemental data source to:
Estimate its own annual percentage of inpatient Medicaid
admissions (Sec. 411.362(c)(2)(ii)).
Estimate the average percentage with respect to such
admissions for all hospitals located in the county in which the
hospital is located (Sec. 411.362(c)(2)(ii)).
Determine the average bed capacity in the State in which
the hospital is located (Sec. 411.362(c)(2)(iv)).
Determine the national average bed capacity (Sec.
411.362(c)(2)(iv)).
Determine its own average bed occupancy rate (Sec.
411.362(c)(2)(v)).
Determine the average bed occupancy rate for the State in
which the hospital is located (Sec. 411.362(c)(2)(v)).
Estimate its annual percentage of total inpatient
admissions under Medicaid for each of the 3 most recent fiscal years
for which data are available (Sec. 411.362(c)(3)(ii)).
Estimate the annual percentages of total inpatient
admissions under Medicaid for every other hospital located in the
county in which the hospital is located for each of the 3 most recent
fiscal years for which data are available (Sec. 411.362(c)(3)(ii)).
We respond below to the specific comments that we received in
response to our proposal.
a. Internal Data Sources
Comment: All of the commenters supported CMS' efforts to permit
physician-owned hospitals to use supplemental data sources in the
expansion exception process because of the limitations of the HCRIS
data, especially with respect to the inpatient Medicaid admissions
criteria. The commenters generally agreed that a more flexible approach
would help ensure that the physician-owned hospitals that satisfy the
statutory criteria are able to expand facility capacity under the CMS
process.
Response: We appreciate the commenters' support. Accordingly, we
are finalizing a number of our proposals to revise the expansion
exception process to provide for the flexibility called for by the
commenters and other industry stakeholders to effectuate the purpose of
section 6001(a) of the Affordable Care Act.
Comment: One commenter stated that it appreciated CMS' efforts to
permit physician-owned hospitals to use supplemental data sources but
also expressed concern that an internal data source as defined in the
proposed rule would have limited utility in the expansion exception
process. With respect to the internal data sources provided as examples
in the proposed rule, the commenter identified limitations concerning
the data sources' completeness for purposes of the expansion exception
process. Specifically, the commenter stated that certain States do not
provide information to the HCUP and that the MSIS does not provide
sufficient detail at the State or county level for purposes of the
expansion exception process. The commenter added that the Medicaid
Analytic Extract (MAX) would not be appropriate for the expansion
exception process because it may not be used for nonresearch purposes.
Response: We share the concerns identified by the commenter. After
publication of the proposed rule, we made additional inquiries into the
utility of internal data sources with respect to the inpatient Medicaid
admissions criteria. As a result of those inquiries and further review,
we agree with the commenter that these data sources contain significant
limitations, including incomplete data for purposes of the exception
process, as well as issues related to timeliness, availability, and
accessibility of the data. Accordingly, we do not believe that the
three sources listed in the proposed rule satisfy all of the standards
that we set forth in the proposed rule for supplemental data sources
(79 FR

[[Page 66990]]

41055), which we continue to believe are critical for any supplemental
data source that could be used in the expansion exception process. None
of the commenters provided information regarding other potentially
acceptable internal data sources, and we are unaware of any other
internal data sources that could be used to estimate accurately and
reliably the percentages of inpatient Medicaid admissions required.
Therefore, we are not finalizing our proposal to permit the use of any
non-HCRIS internal data source for the inpatient Medicaid admissions
criteria required at Sec. Sec. 411.362(c)(2)(ii) and (c)(3)(ii).
We also believe that many of the limitations that the commenter and
our review identified regarding the proposed internal data sources
would also apply to the bed capacity and bed occupancy criteria at
Sec. 411.362(c)(2)(iv) and (c)(2)(v). Specifically, we do not believe
that internal data sources other than HCRIS would include relevant and
adequate information to determine accurately the average bed capacity
for hospitals within a State or nationally; nor do we believe internal
data sources other than HCRIS would include information to determine
accurately bed occupancy rates in a State. Accordingly, we are not
finalizing our proposed revisions to Sec. Sec. 411.362(c)(2)(iv) and
(c)(2)(v) that would permit the use of any non-HCRIS internal data
source for those criteria. Because no internal data source, other than
HCRIS, will be permitted in the expansion exception process under this
final rule with comment period, we are not finalizing our proposal to
add a definition of ``internal data source'' to Sec. 411.351.
Comment: One commenter recommended that physician-owned hospitals
be allowed to use as an internal data source the same Medicaid
eligibility determination process that hospitals use for Medicare
disproportionate share hospital (DSH) determinations.
Response: Medicare DSH determinations are based on Medicaid days,
not admissions (or discharges). Based on our review, we do not believe
that Medicaid days, without additional detailed information for the
requesting and each comparison hospital, could be used in calculations
to estimate accurately or reliably the required percentages of
inpatient Medicaid admissions. The commenter did not explain how
Medicaid eligibility data could be used to estimate inpatient
admissions under Medicaid for the requesting hospital and each
comparison hospital, when required. Without further explanation, we
cannot agree that the Medicaid eligibility determination process that
hospitals use for Medicare DSH determinations should be considered a
data source.
b. External Data Sources
Comment: Most commenters urged CMS to finalize its proposal to
permit the use of data from external data sources for the inpatient
Medicaid admissions criteria. One commenter stated that its State
Medicaid agency's data on inpatient Medicaid admissions includes fee-
for-service and managed care data, and that the data on total patient
admissions are readily available from the Medicaid agency. The
commenter indicated that the State Medicaid agency data could be used
to determine accurately the percentages of inpatient Medicaid
admissions referenced in Sec. 411.362(c)(2)(ii) and (c)(3)(ii). The
commenter also stated that the State did not charge a fee for providing
the necessary data.
Response: We believe that States have a significant interest in
ensuring that data generated, maintained, or under the control of the
State Medicaid agency are accurate and reliable. In general, submission
of data to a State Medicaid agency is not voluntary, and hospitals are
incented to provide accurate data and other information to receive
payment for the services that they provide to the State's Medicaid
enrollees. Accordingly, we are persuaded to finalize our proposal to
permit the use of an external data source for the inpatient Medicaid
admissions criteria at Sec. 411.362(c)(2)(ii) and (c)(3)(ii) with the
modification stemming from the recent revision to the Medicare hospital
cost report described in this response. We also are adopting as final
our proposed definition of ``external data source'' with no
modification. We are adding this definition at Sec. 411.362(a), rather
than at Sec. 411.351 as proposed, because the definition of ``external
data source'' applies only to our regulations at Sec. 411.362.
We note that CMS recently revised the hospital cost report to
require the reporting of Medicaid managed care discharges in addition
to Medicaid fee-for-service discharges. As a result of this revision, a
correctly completed hospital cost report will include Medicaid managed
care discharges and, thus, Medicaid managed care discharges eventually
will be available in HCRIS. At such time, the limitations that led to
our proposal will be resolved, and HCRIS should be sufficiently
complete to estimate the percentages of Medicaid inpatient admissions
required in Sec. 411.362(c)(2)(ii) and (c)(3)(ii). However, we
anticipate that it will take several years before physician-owned
hospitals that are interested in requesting an expansion exception will
be able to utilize the necessary Medicaid managed care data through
HCRIS. Therefore, we are permitting physician-owned hospitals to use
data from an external data source for the inpatient Medicaid admissions
criteria until such time that the Secretary determines that HCRIS
contains sufficiently complete inpatient Medicaid discharge data. At
that time, going forward, physician-owned hospitals may use only filed
Medicare hospital cost report data for the inpatient Medicaid
admissions criteria. For additional information about the recent
revisions to the hospital cost report, we refer readers to Transmittal
6 on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R6P240.html.
We did not receive any public comments regarding whether an
external data source would contain adequate information to determine
the remaining four calculations required for the Secretary to grant an
exception to the facility expansion prohibition for an applicable
hospital (that is, the average bed capacity in the State where the
requesting hospital is located, national average bed capacity, the
requesting hospital's average bed occupancy, and the average bed
occupancy for all hospitals in the State where the requesting hospital
is located). Based on our own review, we do not believe that an
external data source would meet the standards set forth in the proposed
rule when used for the criteria at Sec. 411.362(c)(2)(iv) and
(c)(2)(v). Therefore, we are not finalizing our proposal to permit the
use of external data sources for the four calculations specified in
this paragraph and, thus, we are limiting the use of external data
sources to the estimations of the percentages of inpatient Medicaid
admissions at Sec. 411.362(c)(2)(ii) and (c)(3)(ii).
Comment: One commenter suggested that physician-owned hospitals
seeking an expansion exception be permitted to use the most current
external data available, regardless of source.
Response: We interpret the comment as a suggestion that a
requesting hospital should be able to use multiple external data
sources to achieve the goal of using the ``most current'' data
available when requesting an expansion exception, provided that each
data source meets the criteria for an ``external data source.'' We
disagree with the commenter because we believe that the use of more
than one data

[[Page 66991]]

source would add unnecessary complexity to the Secretary's review and
lead to inconsistent results, including from year to year where
multiple-year comparisons are required. In order to ensure accurate and
consistent estimates and determinations and to facilitate the
Secretary's review of a physician-owned hospital's request for a
facility expansion exception, all of the data necessary for a
physician-owned hospital to estimate or determine the percentages of
inpatient Medicaid admissions referenced in Sec. Sec.
411.362(c)(2)(ii) and (c)(3)(ii) must come from a single data source.
Specifically, the same data source, whether HCRIS or an external data
source, must be used in the numerator and denominator when determining
or estimating the percentages of inpatient admissions under Medicaid
for the requesting hospital and any other comparison hospital required
under Sec. 411.362(c)(2)(ii) and (c)(3)(ii). We will continue to
monitor the use of data sources in the expansion exception process and,
if necessary, we will provide additional guidance on the CMS Web site
regarding how an external data source should be used for the inpatient
Medicaid admissions criteria.
Comment: One commenter identified potential shortcomings in the
data that its State Medicaid agency collects. Specifically, this
commenter stated that its State collects Medicaid inpatient admissions
data from general acute care hospitals but not psychiatric or specialty
hospitals. (The commenter did not define ``specialty hospital.'') For
this reason, the commenter claimed that its State Medicaid agency data
would be incomplete if the requesting hospital is a psychiatric or
specialty hospital or must compare itself to a psychiatric or specialty
hospital.
Response: Although we understand the potential implication of a
State Medicaid agency not requiring a particular type of hospital to
report admissions (or discharges) data to the agency, we note that
HCRIS remains available under the policies set forth in this final rule
with comment period. No Medicare participating hospital is exempt from
reporting cost report data in HCRIS. Hospitals requesting an exception
to the Affordable Care Act's facility expansion prohibition may use
HCRIS data to make the necessary estimates and determinations required
under the statute and our regulations.
Comment: One commenter recommended that physician-owned hospitals
be permitted to use a State-provided listing of Medicaid DSH-eligible
hospitals as an external data source. The commenter suggested that, if
a hospital has been determined by its State Medicaid agency to be
eligible for Medicaid DSH payments, the supporting data that show the
Medicaid inpatient utilization rate or low-income utilization rate
status of the hospital would be an adequate external data source.
Response: We do not believe that a listing of Medicaid DSH-eligible
hospitals, even if developed by a State Medicaid agency, qualifies as
an external data source under our proposed definition. Moreover, we are
not persuaded to expand the definition of ``external data source'' to
include such a listing because we are unclear how a listing, by itself,
could provide the data necessary to estimate the percentages of
inpatient Medicaid admissions required under the statute and our
regulations.
Comment: One commenter suggested that admissions data, which it was
able to obtain from the State health and human services commission,
should be preferred over discharge data for purposes of the inpatient
Medicaid admissions criteria.
Response: In the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74519), we determined that discharge data may be used to
estimate the percentages of inpatient Medicaid admissions. We did not
propose to revise this policy in the CY 2015 OPPS/ASC proposed rule.
However, we are clarifying in this CY 2015 OPPS/ASC final rule with
comment period that either admissions data or discharge data may be
used to either determine or estimate the percentages referenced in
Sec. 411.362(c)(2)(ii) and (c)(3)(ii), provided that the data being
used are from a permitted data source. We are not persuaded to rank or
prioritize these types of data. The Secretary will determine whether an
estimate is accurate or appropriate given the specific facts and
circumstances underlying a physician-owned hospital's expansion
exception request.
c. Completeness of Supplemental Data Sources
Comment: One commenter expressed concern about the utility of an
external data source, as defined in the proposed rule, for purposes of
the expansion exception process. The commenter stated that, in some
States, certain types of hospitals are not required to report any data
to the States in which they are located. The commenter did not provide
information regarding whether State Medicaid agencies can or do
generate on their own (that is, without relying on reported information
from hospitals) inpatient admissions data for those hospitals not
required to report such data. The commenter requested that CMS clarify
whether the State Medicaid sources would be considered ``complete'' for
purposes of the expansion exception process under such circumstances.
Response: We recognize the possibility that a State Medicaid agency
may not generate, maintain, or otherwise control a data source that
would contain sufficient data for the inpatient Medicaid admissions
criteria, the only eligibility criteria for which we are permitting the
use of an external data source in this final rule with comment period.
Thus, the utility of the external data sources that we are permitting
likely will depend on the State in which the physician-owned hospital
is located.
Whether an external data source is considered complete depends on
the facts and circumstances of the particular situation. For example,
if a physician-owned hospital is seeking to qualify as a high Medicaid
facility and the State's data source does not include data on one of
the comparison hospitals, the State's data would not be considered
complete for purposes of the process because a high Medicaid facility
must compare itself against each other hospital in the county in which
it is located.
d. Other Issues Related to Supplemental Data Sources
Comment: One commenter expressed concern that contradictory data
sources could create confusion for requesting physician-owned
hospitals, those who wish to comment on an expansion exception request,
and the Secretary in her review of a request. The commenter provided an
example where a physician-owned hospital chooses to utilize available
HCRIS data for its expansion request, but the available data from the
State Medicaid agency conflict with the HCRIS data, appearing to show
that the physician-owned hospital was not the highest Medicaid facility
in a more recent fiscal year(s). Two commenters recommended that CMS
consider issuing guidance as to how external data sources will be
characterized or measured in comparison to HCRIS data, how CMS and the
Secretary will evaluate comments received from opposing hospitals, and
what criteria the Secretary intends to rely upon to make the ultimate
determinations. Another commenter recommended that CMS not prioritize
or rank additional data sources, given that access to supplemental data
sources will vary based upon the entity requesting an expansion
exception.

[[Page 66992]]

Response: Determinations regarding expansion exception requests
will be made on a case-by-case basis, with consideration given to all
information available to CMS at the time of the review. We are not able
to provide the specific guidance requested by the first commenter
because the example provided is hypothetical in nature and not part of
an actual request for the Secretary's consideration. As we stated in
the proposed rule, we believe that permissible data sources should,
among other things, be transparent, be secure, enable accurate
estimates of the percentages of inpatient Medicaid admissions, and
provide for consistent results in order to enable the Secretary to make
an informed decision regarding whether a requesting physician-owned
hospital satisfies the statutory requirements for an exception to the
facility expansion prohibition. We continue to believe in the
importance of these attributes, and all data sources utilized by a
requesting hospital and any community comments provided during the
exception expansion process will be evaluated with them in mind.
Because each request will be reviewed on a case-by-case basis, we
decline to issue guidance regarding the relative priority of data
sources. The Secretary will make determinations based on the criteria
enumerated in the Affordable Care Act, as set forth in section
1877(i)(3) of the Act and our regulations.
Comment: One commenter recommended that, in addition to considering
other data sources, CMS consider other factors when reviewing an
expansion exception request. The commenter claimed that Medicaid
patient days are a better metric than Medicaid admissions because
Medicaid patient days reflect a hospital's use of resources to care for
a Medicaid patient. The commenter also suggested that CMS consider the
specialty services, such as neonatal intensive care unit (NICU)
services, that a hospital provides. Specifically, the commenter
suggested that CMS consider the bed occupancy of a particular specialty
service if that service treats a very large Medicaid population.
Response: We do not have the authority to revise the expansion
exception process to incorporate the factors that the commenter
recommended. Section 6001(a) of the Affordable Care Act established
criteria that physician-owned hospitals must satisfy in order to
qualify for an expansion exception request, including criteria
concerning inpatient Medicaid admissions. As we understand the comment,
the commenter is recommending that we substitute (or additionally
consider) a hospital's inpatient Medicaid days as a criterion for
granting an exception to the prohibition on facility expansion. The
statute does not provide the Secretary discretion to consider inpatient
Medicaid days in lieu of the inpatient Medicaid admissions criteria.
Similarly, we lack the authority to consider the bed occupancy of
specific specialty services, a factor which, even if permissible, would
complicate our review of an exception request.
e. Summary of Final Provisions Regarding Supplemental Data Sources
After consideration of the public comments we received on the use
of supplemental data sources, we are not finalizing the proposed
revisions to Sec. 411.362(c)(2)(ii) and (c)(3)(ii) that would permit
physician-owned hospitals to use data from an internal data source
other than HCRIS to estimate the percentages of inpatient Medicaid
admissions referenced in those sections. Accordingly, we are not
finalizing our proposal to add a definition of the term ``internal data
source'' under Sec. 411.351. As finalized, Sec. 411.362(c)(2)(ii) and
(c)(3)(ii) reflect modifications from our proposal that would have
permitted physician-owned hospitals to use data from an external data
source to estimate the percentages of inpatient Medicaid admissions
referenced in those sections. Specifically, we are revising these
sections to require the use of HCRIS data once they are complete and
permit the use of data from an external data source only until then. We
also are finalizing the definition of ``external data source'' without
modification, although we are adding the definition at Sec.
411.362(a), rather than at Sec. 411.351 as proposed. Finally, we are
not finalizing the proposed revisions to those sections that would
permit physician-owned hospitals to use data from a non-HCRIS data
source to determine State average bed capacity, national averaged bed
capacity, the requesting physician-owned hospital's average bed
occupancy rate, or the State average bed occupancy rate. We provide the
following chart of the final provisions to assist the reader.

----------------------------------------------------------------------------------------------------------------
Permissible data
Regulation Requirement source(s) Limitations
----------------------------------------------------------------------------------------------------------------
Sec. 411.362(c)(2)(ii)......... Estimate the requesting HCRIS, external data An external data source
hospital's own annual source. may be used only until
percentage of inpatient such time as the
Medicaid admission. Secretary determines that
HCRIS contains
sufficiently complete
inpatient Medicaid
discharge data.
Sec. 411.362(c)(2)(ii)......... Estimate the average HCRIS, external data An external data source
percentage with respect source. may be used only until
to such admissions for such time as the
all hospitals located in Secretary determines that
the county in which the HCRIS contains
requesting hospital is sufficiently complete
located. inpatient Medicaid
discharge data.
Sec. 411.362(c)(2)(iv)......... Determine the average bed HCRIS ..........................
capacity in the State in
which the requesting
hospital is located.
Sec. 411.362(c)(2)(iv)......... Determine the national HCRIS ..........................
average bed capacity.
Sec. 411.362(c)(2)(v).......... Determine the requesting HCRIS ..........................
hospital's own average
bed occupancy rate.
Sec. 411.362(c)(2)(v).......... Determine the average bed HCRIS ..........................
occupancy rate for the
State in which the
requesting hospital is
located.
Sec. 411.362(c)(3)(ii)......... Estimate the requesting HCRIS, external data An external data source
hospital's annual source. may be used only until
percentage of total such time as the
inpatient admissions Secretary determines that
under Medicaid for each HCRIS contains
of the three most recent sufficiently complete
fiscal years for which inpatient Medicaid
data are available. discharge data.

[[Page 66993]]

Sec. 411.362(c)(3)(ii)......... Estimate the annual HCRIS, external data An external data source
percentages of total source. may be used only until
inpatient admissions such time as the
under Medicaid for every Secretary determines that
other hospital located in HCRIS contains
the county in which the sufficiently complete
requesting hospital is inpatient Medicaid
located for each of the discharge data.
three most recent fiscal
years for which data are
available.
----------------------------------------------------------------------------------------------------------------

2. Fiscal Year Standard
Section 1877(i)(3)(F) of the Act requires that a high Medicaid
facility use data from each of the 3 most recent fiscal years for which
data are available. In the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74518), we stated that we consider the most recent fiscal
year for which data are available to be the most recent year for which
HCRIS contains data from at least 6,100 hospitals. We currently apply
this standard to expansion exception requests for both applicable
hospitals and high Medicaid facilities.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41055), we proposed to
revise our standard so that the most recent fiscal year for which data
are available would be the year for which the data source(s) used in an
expansion exception request contain sufficient data to perform the
comparisons required under Sec. 411.362(c)(2)(ii), (c)(2)(iv),
(c)(2)(v), and (c)(3)(ii). Specifically, we proposed that data sources,
either alone or in combination with other data sources, would be
considered to contain ``sufficient data'' if they contain all data from
the requesting hospital and each hospital to which the requesting
hospital must compare itself that are necessary to perform the
estimates required in the expansion exception process. In addition,
with respect to a hospital seeking an expansion exception as an
applicable hospital, we proposed that, in order to be considered to
contain ``sufficient data,'' the data sources, either alone or in
combination with other data sources, must contain the data necessary to
determine the State and national average bed capacity and the average
bed occupancy rate in the State in which the requesting hospital is
located for purposes of the expansion exception process.
We also proposed to require that data from the same fiscal year be
used for the applicable hospital eligibility criteria at Sec.
411.362(c)(2)(ii), (c)(2)(iv) and (c)(2)(v), even if the hospital uses
multiple data sources for those criteria. We stated our belief that
requiring the use of data from the same fiscal year will ensure
consistency and equitability in the expansion exception process. We
sought public comments on our proposal to revise the standard that
determines the most recent fiscal year(s) for which data are available,
as well as other ways to define ``sufficient data'' for purposes of the
expansion exception process.
a. Summary of Public Comments and Our Responses Regarding the Fiscal
Year Standard
Comment: All of the commenters that addressed this issue supported
CMS' proposal to revise the interpretation of the standard ``the most
recent fiscal year for which data are available.'' The commenters
stated generally that external data sources often have more recent data
than the fiscal year for which HCRIS contains data from at least 6,100
hospitals. Two commenters recommended deeming a data source
``sufficient'' and, thus, acceptable for use in an expansion exception
request, if it contains all of the information necessary to complete
the calculations required to determine eligibility for an exception as
a high Medicaid facility or applicable hospital. Another commenter
similarly supported the proposal and suggested that CMS consider the
sufficiency of data on a case-by-case basis.
Response: We agree with the commenters that recommended that we
deem a data source ``sufficient'' and, thus, acceptable for use in an
expansion exception request, if it contains all of the information
necessary to complete the calculations required to determine
eligibility for an exception as a high Medicaid facility or applicable
hospital. Although determining the sufficiency of a data source on a
case-by-case basis could significantly lengthen the period of time
required for a thorough review of an expansion exception request, we
believe that evaluating the sufficiency of data on a modified case-by-
case basis is nonetheless appropriate, as explained more fully below.
We are adopting separate standards to determine the sufficiency of
data sources for the Medicaid inpatient admissions criteria and the bed
capacity and occupancy criteria set forth in our regulations. For
purposes of the Medicaid inpatient admissions estimates required in
Sec. 411.362(c)(2)(ii) and (c)(3)(ii), we are adopting a standard
under which we will consider a data source sufficient when it contains
data from the requesting hospital and every hospital located in the
same county as the requesting hospital. This applies to both external
data sources and HCRIS. The statutory criteria at sections
1877(i)(3)(E)(ii) and (i)(3)(F)(ii) of the Act afford no flexibility to
make these determinations based on data from fewer than all of the
hospitals located in the same county as the requesting hospital. For
purposes of the bed capacity and occupancy determinations required in
Sec. 411.362(c)(2)(iv) and (c)(2)(v), we will consider HCRIS
sufficient for a particular fiscal year on a State-by-State basis,
rather than the current ``6,100 hospitals reporting'' standard.
Specifically, this final rule with comment period requires a requesting
physician-owned hospital to satisfy the bed capacity criterion in Sec.
411.362(c)(2)(iv) during the most recent fiscal year for which HCRIS
contains data from a sufficient number of hospitals in the requester's
State to determine the State's average bed capacity and a sufficient
number of hospitals nationally to determine the national average bed
capacity. In addition, this final rule with comment period requires a
requesting physician-owned hospital to satisfy the bed occupancy
criterion in Sec. 411.362(c)(2)(v) during the most recent fiscal year
for which HCRIS contains data from a sufficient number of hospitals in
the State to determine the requesting hospital's average bed occupancy
rate and the State's average bed occupancy rate. ``Sufficient number''
means that enough hospitals have reported data such that the
determinations in Sec. 411.362(c)(2)(iv) and (c)(2)(v) would not
materially change after additional hospital data are reported.
We will consult with the CMS Office of the Actuary to determine
whether average bed capacity and bed occupancy rates would materially
change upon additional hospital reporting. CMS intends to report on its
Web site each State's average bed capacity, the national average bed
capacity, and each State's average bed occupancy, per fiscal year, as
they become available. A

[[Page 66994]]

requesting physician-owned hospital may use only the averages posted on
the CMS Web site as of the date that the hospital submits its expansion
exception request.
We provide the following examples to illustrate the application of
the standard applicable to the determinations required in Sec.
411.362(c)(2)(iv) and (c)(2)(v). Assume that, for FY 2013, the
requesting hospital is one of 200 Medicare-participating hospitals
located in State A. Assume also that, after consultation with the CMS
Office of the Actuary, we determine that State A's FY 2013 average bed
capacity and bed occupancy rates would not materially change once HCRIS
contains data from at least 85 percent of State A hospitals (170
hospitals). Finally, assume that CMS is able to determine the FY 2013
national average bed capacity rate once 5,500 hospitals have reported
bed capacity data in HCRIS, and that this rate would not materially
change even if the remaining Medicare-participating hospitals reported
data in HCRIS. Under the standard adopted in this final rule with
comment period, the requesting hospital may use FY 2013 HCRIS data to
make the State bed capacity and occupancy determinations required in
Sec. 411.362(c)(2)(iv) and (c)(2)(v) once HCRIS contains data from at
least 170 of the Medicare-participating hospitals in State A for that
fiscal year. The requesting hospital may use FY 2013 HCRIS data to
determine the national average bed capacity required in Sec.
411.362(c)(2)(iv) once HCRIS contains data from at least 5,500
Medicare-participating hospitals for that fiscal year.
In contrast, assume that, for FY 2013, there are only 10 Medicare-
participating hospitals in State B. Assume also that, after
consultation with the CMS Office of the Actuary, we determine that
State B's FY 2013 average bed capacity and bed occupancy rates would
materially change unless HCRIS contains data from all of State B's
hospitals. Thus, a physician-owned hospital located in State B could
not use FY 2013 HCRIS data until all 10 Medicare-participating
hospitals in State B reported their bed capacity and occupancy data in
HCRIS for that fiscal year.
With respect to external data sources, because we recognize that
State Medicaid agencies likely will have varying collection time
periods that may not line up with the Federal fiscal year end for which
HCRIS data are available (for example, calendar year or State fiscal
year), we are permitting the use of any 12-month period for the data,
provided that all 3 years use the same 12-month cycle. For example, a
State Medicaid agency may collect Medicaid inpatient admissions data on
a calendar year cycle. A physician-owned hospital requesting an
expansion exception as a high Medicaid facility may use calendar years
2013, 2012 and 2011 if the external data source, for each of those
years, contains all data from the requesting hospital and every
hospital located in the same county as the requesting hospital.
We note that, if the latest year for which HCRIS contained data
sufficient to determine the average bed capacity in the State in which
the requesting hospital is located and the national bed capacity was FY
2011, but HCRIS contained FY 2012 data sufficient to determine the
requesting hospital's own average bed occupancy and the average bed
occupancy rate for the State in which the requesting hospital is
located, the hospital could use FY 2011 data for the determinations
required in Sec. 411.362(c)(2)(iv) and FY 2012 data for the
determinations required in Sec. 411.362(c)(2)(v). We recognize that
using different years from the same permissible data source to make the
estimates or determinations set forth in the criteria for applicable
hospitals may require additional review of an expansion exception
request by the Secretary. However, in light of our interpretation that
each criterion that a physician-owned hospital seeking a facility
expansion exception must meet is analyzed separately, we believe that
allowing a requesting hospital to use data from 12-month periods that
may be different for each criterion will permit use of the most recent
data, result in more accurate determinations, and best effectuate the
plain meaning of the statutory and regulatory language regarding these
criteria.
b. Summary of Final Provisions Regarding the Fiscal Year Standard
After consideration of the public comments we received on the
standard regarding the most recent available data, we are finalizing
our proposals with several modifications. For purposes of the estimates
required in Sec. 411.362(c)(2)(ii) and (c)(3)(ii), the most recent 12-
month period for which data are available is the most recent 12-month
period for which the data source used contains all data from the
requesting hospital and each hospital to which the requesting hospital
must compare itself. For purposes of the determinations required in
Sec. 411.362(c)(2)(iv), we require a requesting physician-owned
hospital to satisfy the criterion during the most recent fiscal year
for which HCRIS contains data from a sufficient number of hospitals to
determine the relevant State's average bed capacity and the national
average bed capacity. For purposes of the determinations required in
Sec. 411.362 (c)(2)(v), we require a requesting physician-owned
hospital to satisfy the criterion during the most recent fiscal year
for which HCRIS contains data from a sufficient number of hospitals to
determine the requesting hospital's average bed occupancy rate and the
relevant State's average bed occupancy rate. Because we are continuing
to require the use of HCRIS data for the determinations required in
Sec. 411.362(c)(2)(iv) and (c)(2)(v), we believe that this bifurcated
approach is necessary.
Finally, we note that we analyze each estimate or determination
required under Sec. 411.362(c)(2) separately. We interpret the statute
and our regulations to allow the use of different time periods for each
estimate or determination, provided that the data source (or time
period) used to perform the necessary calculation contains: (1) for
purposes of Sec. 411.362(c)(2)(ii) and (c)(3)(ii), all data from the
requesting hospital and each hospital to which the requesting hospital
must compare itself; (2) for purposes of Sec. 411.362(c)(2)(iv), data
from a sufficient number of hospitals to determine the relevant State's
average bed capacity and the national average bed capacity; and (3) for
purposes of Sec. 411.362(c)(2)(v), data from a sufficient number of
hospitals to determine the requesting hospital's average bed occupancy
rate and the relevant State's average bed occupancy rate, respectively.
CMS will continue to determine and make available on its Web site State
bed capacity and occupancy rates and the national average bed capacity
rate. ``Sufficient number'' means that enough hospitals have reported
data such that the determinations in Sec. 411.362(c)(2)(iv) and
(c)(2)(v) would not materially change even if data that may be missing
from comparison hospitals were included.
3. Community Input and Timing of a Complete Request
In the CY 2015 OPPS/ASC proposed rule (79 FR 41055 through 41056),
we proposed to require that a physician-owned hospital requesting an
expansion exception provide actual notification directly to hospitals
whose data are part of the comparisons set forth under Sec.
411.362(c)(2)(ii) and (c)(3)(ii) of the regulations. Under proposed
Sec. 411.362(c)(5), the notification must be in writing, in either
electronic or hard copy form, and must be provided at the same time
that the hospital discloses on

[[Page 66995]]

any public Web site for the hospital that it is requesting an
exception. We stated in the proposed rule that we believe that this
additional safeguard would ensure that comparison hospitals are aware
of the opportunity to confirm or dispute the accuracy or reliability of
the data in the physician-owned hospital's request.
Our existing regulations at Sec. 411.362(c)(5) set forth the
process for community input and the timing of a complete expansion
exception request. These regulations provide for a 30-day comment
period following publication in the Federal Register of notice of the
physician-owned hospital's expansion exception request and a 30-day
rebuttal period for the requesting hospital to respond, if it chooses,
to any written comments that CMS receives from the community.
Currently, an expansion exception request is considered complete at the
end of the 30-day comment period if CMS does not receive written
comments from the community. If CMS receives written comments from the
community, the request is considered complete at the end of the 30-day
rebuttal period, regardless of whether the requesting hospital submits
a rebuttal statement.
In the proposed rule, we explained that permitting the use of non-
HCRIS data in an expansion exception request would likely require
additional time for our review of the request, including any comments
submitted with respect to the request. Therefore, we proposed to revise
our regulations at Sec. 411.362(c)(5) to extend the date by which
certain expansion exception requests will be deemed complete.
Specifically, we proposed to revise Sec. 411.362(c)(5) to provide
that, where the request, any written comments, and any rebuttal
statement include only HCRIS data, the current timeframes would apply.
That is, such an expansion exception request would be deemed complete
no later than: (1) The end of the 30-day comment period if no written
comments from the community are received; and (2) the end of the 30-day
rebuttal period if written comments from the community are received,
regardless of whether the physician-owned hospital submitting the
request submits a rebuttal statement. We also proposed that, where the
request, any written comments, or a rebuttal statement includes data
from a supplemental data source, an expansion exception request would
be deemed complete no later than: (1) 180 days after the end of the 30-
day comment period if no written comments from the community are
received; and (2) 180 days after the end of the 30-day rebuttal period
if written comments from the community are received, regardless of
whether the physician-owned hospital submitting the request submits a
rebuttal statement.
a. Summary of Public Comments and Our Responses Regarding Community
Input and Timing of a Complete Request
Comment: Some commenters encouraged CMS not to finalize the actual
notification requirement, stating that it would impose a burden (both
procedural and financial) on the requesting hospital or could lead to
an increase in comments regarding each request and the complexity of
those comments. One commenter stated that requiring actual notification
to other hospitals located in the same county as the requesting
hospital goes beyond the intent of the Congress in enacting this
provision of the Affordable Care Act.
Response: We believe that an actual notification requirement is
important to ensure that comparison hospitals are aware of the
opportunity to confirm or dispute the accuracy or reliability of the
data in the physician-owned hospital's request, and that any burden on
the requesting hospital is outweighed by the facilitation of robust
community input that can help inform the Secretary's review of an
expansion exception request. We believe that thorough vetting of all
relevant information, both from the requesting hospital and the
community in which the hospital is located, in fact, was the intent of
the Congress. We disagree with the commenter that stated that this
requirement goes beyond the congressional intent or our statutory
authority.
Comment: One commenter opposed CMS' proposal to deem an expansion
exception request that relies on a non-HCRIS data source complete no
later than 180 days after the end of the 30-day comment period if no
written comments from the community are received, and 180 days after
the end of the 30-day rebuttal period if written comments from the
community are received, regardless of whether the physician-owned
hospital submitting the request submits a rebuttal statement. The
commenter stated that the additional time beyond the 30-day period
provided for in our existing regulations is particularly unnecessary if
the requesting hospital uses inpatient admissions data from a State
Medicaid agency that shows the percentage of Medicaid admissions for
all of the hospitals operating in the same county as the requesting
hospital.
Response: The purpose of our proposed policy extending the
timeframe for deeming complete an expansion exception request where the
request itself, any community input, or any rebuttal statement includes
non-HCRIS data is to provide CMS with sufficient time to address any
potential conflicts between data presented by the requesting hospital
and data or other information presented by a commenter or in the
possession of CMS. As we noted in the CY 2012 OPPS/ASC final rule with
comment period, the limitations on data sources that may be used in a
physician-owned hospital's expansion exception request do not apply to
members of the community or to CMS (76 FR 74522). Therefore, it is
possible (if not likely) that, when reviewing an expansion exception
request, CMS would need to verify the data (and other information, if
any) provided by the requesting hospital and any commenters, as well as
consider the data in light of the information otherwise available to
CMS. This review could involve the use of internal experts or
contractors, which will require additional time. We note that the
timeframe for deeming an expansion exception request complete will be
``no later than'' 180 days after the end of the 30-day comment period
(if no written comments from the community are received) and 180 days
after the end of the 30-day rebuttal period (if written comments from
the community are received) does not preclude an earlier timeframe
where the information submitted by the requesting hospital does not
conflict with any community input or information otherwise available to
CMS.
b. Final Provisions Regarding Community Input and Timing of a Complete
Request
After consideration of the public comments we received on community
input and timing of a complete response, we are finalizing our
proposal, without modification, recognizing that, under this final rule
with comment period, the only permissible supplemental data sources are
external data sources, as defined in this final rule with comment
period at Sec. 411.362.

D. Additional Considerations

We recognize the importance of an accurate and consistent expansion
exception process. We stated in the CY 2015 OPPS/ASC proposed rule (79
FR 41056) that we are aware that data sources have unique
characteristics due to their inputs, collection methods, compilation,
and other factors, and that we would take this into consideration if we
finalized our proposal to permit the use of supplemental data sources.
In an effort to implement an accurate and consistent expansion
exception process,

[[Page 66996]]

we solicited comments on the utility, appropriateness, and limitations
of our proposal to permit the use of supplemental data sources.
Specifically, we sought comments that:
Address whether permitting the use of supplemental
internal or external data sources would significantly affect the
outcomes for any of the estimates or determinations required in our
regulations.
Address whether permitting the use of supplemental data
sources would materially affect a physician-owned hospital's ability to
request an exception or CMS' determination on an exception request.
Describe the length of time that would be necessary to
obtain or generate the required data from a specific data source.
Address whether and when the data will be available and
accessible per fiscal year.
Address whether the data will be available and accessible
in a format that enables the requesting hospital to perform the
necessary comparisons.
Describe how supplemental data sources could or should be
prioritized, including, but not limited to, rankings related to
accuracy or reliability.
Describe how data from a particular data source could be
used in the expansion exception process. We encouraged commenters to
specify whether a particular data source already maintains the
percentages or rates required, or whether calculations will be
necessary to generate the required percentages or rates. If
calculations will be necessary, we requested that commenters describe
the calculations.
Describe the cost to industry stakeholders, State
governments, and the Federal government for obtaining or generating
data from any potential data sources. We consider cost to include both
resources (for example, human capital and information technology) and
actual financial burden (for example, fees to use or purchase the
data).
We also solicited comments on whether any additional burdens would
affect the quality of care for beneficiaries as a result of additional
costs borne by a requesting hospital.
We note that our inquiries were limited to solicitations of
comments intended to inform our decision making regarding our actual
proposals and, therefore, do not require a response in this final rule
with comment period. However, we have chosen to summarize and respond
to the comments that addressed ranking or prioritizing data sources and
types of data because we believe discussion of these issues helps
clarify how our revisions to the expansion exception process that we
are finalizing will be implemented.
Comment: A few commenters who addressed the additional
considerations set forth in the proposed rule discussed ranking or
prioritizing permitted data sources. One commenter recommended that CMS
not prioritize or rank additional data sources, given that access to
supplemental data sources will vary based on the hospital seeking the
exception. Another commenter suggested that CMS give the highest
priority to admissions data from State Medicaid agencies for the
inpatient Medicaid admissions criteria. The commenter stated that the
State in which the commenter is located provides an unbiased, reliable,
single source of inpatient Medicaid admissions percentages that would
eliminate the need for independent calculations by the requesting
hospital and individuals and entities in the community in which the
hospital is located. The commenter further suggested that if actual
admissions data are unavailable through the State Medicaid agency, CMS
permit the use of other data, including estimates of Medicaid
admissions based on discharges using supplemental data.
Response: We share the concerns of the commenters that noted that
the external data sources available to requesting hospitals will vary
from State to State. We also believe that the quality and completeness
of the external data sources available to requesting hospitals will
vary in the same manner. We further note the complexity involved in
making a generally applicable policy as to how to rank or prioritize
various data sources. Therefore, we decline to provide guidance
regarding the rank or prioritization of potentially available data
sources for use in the expansion exception process. Our goal remains to
ensure a fair, accurate, and consistent process to implement section
6001 of the Affordable Care Act. As discussed elsewhere in this
preamble, each expansion exception request will be considered on a
case-by-case basis. The Secretary will consider only reliable, credible
information to determine whether a requesting physician-owned hospital
qualifies for an exception to the facility expansion prohibition.

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

In this final rule with comment period, we are finalizing the
following policies related to the expansion exception process for
physician-owned hospitals:
We are permitting the use of external data sources to
estimate a physician-owned hospital's annual percentage of inpatient
admissions under Medicaid (Sec. 411.362(c)(2)(ii) and (c)(3)(ii)), the
average percentage of inpatient admissions under Medicaid of all
hospitals in the county in which a physician-owned hospital requesting
an expansion exception as an ``applicable hospital'' is located (Sec.
411.362(c)(2)(ii)), and the annual percentage of inpatient admissions
under Medicaid of any other hospital in the county in which a
physician-owned hospital requesting an expansion exception as a ``high
Medicaid facility'' is located (Sec. 411.362(c)(3)(ii)). However, on
or after such date that the Secretary determines that HCRIS contains
sufficiently complete inpatient Medicaid discharge data, a hospital may
use only filed Medicare hospital cost report data to estimate the
percentages of inpatient Medicaid admissions referenced in Sec.
411.362(c)(2)(ii) and (c)(3)(ii).
We are defining ``external data source'' at Sec. 411.362
to mean a data source that (1) is generated, maintained, or under the
control of a State Medicaid agency; (2) is reliable and transparent;
(3) maintains data that, for purposes of the process described in Sec.
411.362(c), are readily available and accessible to the requesting
hospital, comparison hospitals, and CMS; and (4) maintains or generates
data that, for purposes of the process described in Sec. 411.362(c),
are accurate, complete, and objectively verifiable. We are not
finalizing our proposed definition of ``internal data source.''
For purposes of Sec. 411.362(c)(2)(ii) and (c)(3)(ii), we
are interpreting the most recent 12-month period for which data are
available as the most recent 12-month period for which the data source
used contains all data from the requesting hospital and each hospital
to which the requesting hospital must compare itself.
For purposes of the determinations required in Sec.
411.362(c)(2)(iv), we require a requesting physician-owned hospital to
satisfy the criterion during the most recent fiscal year for which
HCRIS contains data from a sufficient number of hospitals to determine
a State's average bed capacity and the national average bed capacity.
For purposes of the determinations required in Sec. 411.362 (c)(2)(v),
we require a requesting physician-owned hospital to satisfy the
criterion during the most recent fiscal year for which HCRIS contains
data from a sufficient number of hospitals to determine the requesting
hospital's average bed occupancy rate and the relevant State's average
bed

[[Page 66997]]

occupancy rate. ``Sufficient number of hospitals'' means in this final
rule with comment period that enough hospitals have reported data such
that the determinations in Sec. 411.362(c)(2)(iv) and (c)(2)(v) would
not materially change even if data that may be missing from comparison
hospitals were included.
Where the request, any written comments, and any rebuttal
statement include only HCRIS data, we will consider a request for an
expansion exception complete no later than: (1) The end of the 30-day
comment period if no written comments from the community are received;
and (2) the end of the 30-day rebuttal period if written comments from
the community are received, regardless of whether the physician-owned
hospital submitting the request submits a rebuttal statement (Sec.
411.362(c)(5)(i)).
Where the request, any written comments, or any rebuttal
statement include data from an external data source (as defined in this
final rule with comment period), we will consider a request for an
expansion exception complete no later than: (1) 180 days after the end
of the 30-day comment period if no written comments from the community
are received; and (2) 180 days after the end of the 30-day rebuttal
period if written comments from the community are received, regardless
of whether the physician-owned hospital submitting the request submits
a rebuttal statement (Sec. 411.362(c)(5)(ii)).
We are not finalizing our proposal to revise the bed capacity and
bed occupancy criteria at Sec. 411.362(c)(2)(iv) and (c)(2)(v) to
permit the use of non-HCRIS data sources. However, we are revising
Sec. Sec. 411.362(c)(2)(iv) and (c)(2)(v) to clarify the fiscal year
periods that requesting hospitals must use to make the determinations
required in those sections.

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

In the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27644 through
27650), we discussed the statutory requirement for certification of
hospital inpatient services for payment under Medicare Part A. The
certification requirement for inpatient services other than psychiatric
inpatient services is found in section 1814(a)(3) of the Act, which
provides that Medicare Part A payment will only be made for such
services ``which are furnished over a period of time, [if] a physician
certifies that such services are required to be given on an inpatient
basis.''
As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 41056
through 41058), in commenting on our FY 2014 proposal mentioned above,
some commenters argued that the statutory reference to services
furnished ``over a period of time'' and the then-existing regulation's
lack of any specific deadline for physician certifications in
nonoutlier cases indicated that no certification was required for
short-stay cases. In support of their argument, the commenters cited
the legislative history of section 1814(a)(3) of the Act, which these
commenters interpreted as indicating that the certification
requirements should apply only to certain long-term stays.
As we indicated in our response to these public comments in the FY
2014 IPPS/LTCH PPS final rule (78 FR 50939), we do not agree with the
assertion that the only possible interpretation of the statute is that
the requirement for physician certification only applies to long-stay
cases. The statute does not define ``over a period of time,'' and
further provides that ``such certification shall be furnished only in
such cases, and with such frequency, and accompanied by such supporting
material . . . as may be provided by regulations.'' By this language,
Congress explicitly delegated authority to the agency to elucidate this
provision of the statute by regulation.
In our previous regulations, we interpreted the statute's
requirement of a physician certification for inpatient hospital
services furnished ``over a period of time'' to apply to all inpatient
admissions. While this is not the only possible interpretation of the
statute, we believe that it is a permissible interpretation.
We continue to believe that an order from a physician or other
qualified practitioner in order to trigger an inpatient hospital
admission as specified in 42 CFR 412.3 is necessary for all inpatient
admissions. As described more fully in the FY 2014 IPPS/LTCH PPS final
rule (78 FR 50938 through 50954), the requirement for a physician order
for a hospital inpatient admission has long been clear in the Medicare
hospital conditions of participation (CoPs), and we promulgated Sec.
412.3 to make more explicit that admission pursuant to this order is
the means whereby a beneficiary becomes a hospital inpatient and,
therefore, is required for payment of hospital inpatient services under
Medicare Part A. A beneficiary becomes a hospital inpatient when
admitted as such after a physician (or other qualified practitioner as
provided in the regulations) orders inpatient admission in accordance
with the CoPs, and Medicare pays under Part A for such an admission if
the order is documented in the medical record. The order must be
supported by objective medical information for purposes of the Part A
payment determinations. Thus, the physician order must be present in
the medical record and be supported by the physician admission and
progress notes in order for the hospital to be paid for hospital
inpatient services.
As further noted in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50938 through 50954), we believe the additional certification
requirements now specified under Sec. 424.13(a)(2), (a)(3), and (a)(4)
(that is, the reason for hospitalization, the estimated time the
patient will need to remain in the hospital, and the plan of
posthospital care, if applicable) generally can be satisfied by
elements routinely found in a patient's medical record, such as
progress notes.
However, as we look to achieve our policy goals with the minimum
administrative requirements necessary, and after considering previous
public comments and our experience with our existing regulations, we
believe that, in the majority of cases, the additional benefits (for
example, as a program safeguard) of formally requiring a physician
certification may not outweigh the associated administrative
requirements placed on hospitals. Because we continue to believe that
an inpatient admission order is necessary for all inpatient admissions,
we proposed in the CY 2015 OPPS/ASC proposed rule (79 FR 41057) to
require such orders as a condition of payment based upon our general
rulemaking authority under section 1871 of the Act rather than as an
element of the physician certification under section 1814(a)(3) of the
Act. Section 1871 of the Act authorizes the Secretary to ``prescribe
such regulations as may be necessary to carry out the administration of
the insurance programs under [Title XVIII].'' A clear regulatory
definition of when and how a beneficiary becomes an inpatient is
necessary to carry out the administration of Medicare Part A. Section
1861(b) of the Act defines ``inpatient hospital services'' as certain
items and services furnished to ``an inpatient of a hospital,'' but
does not define ``an inpatient of a hospital.'' Accordingly, Sec.
412.3 provides the necessary definition for purposes of Medicare Part A
payment by clarifying when ``an individual is considered an inpatient
of a hospital, including a critical access hospital.'' We proposed to
remove paragraph (c) from Sec. 412.3. As

[[Page 66998]]

we proposed to rely on a different statutory authority for such
regulation, we proposed that an admission order would no longer be a
required component of physician certification of medical necessity.
As to the physician certification requirement, we maintain that our
prior longstanding policy was based upon a permissible interpretation
of section 1814(a)(3) of the Act pursuant to that provision's express
delegation of authority to the agency to determine the circumstances
under which such certification should be required. Nonetheless, after
consideration of public feedback, our experience under the then-
existing regulations, and our policy goals, in the CY 2015 OPPS/ASC
proposed rule (79 FR 41057), we proposed to change our interpretation
of section 1814(a)(3) of the Act to require a physician certification
only for long-stay cases and outlier cases.
As noted above, we believe that, in most cases, the admission
order, medical record, and progress notes will contain sufficient
information to support the medical necessity of an inpatient admission
without a separate requirement of an additional, formal, physician
certification. However, we believe that evidence of additional review
and documentation by a treating physician beyond the admission order is
necessary to substantiate the continued medical necessity of long or
costly inpatient stays. While granting the Secretary broad discretion
to determine the circumstances under which a physician certification
should be required, the statute specifies that the certification by a
physician with respect to inpatient hospital services (other than
inpatient psychiatric hospital services) ``shall be furnished no later
than the 20th day'' of the stay. Because the statute specifically
requires that certification must occur no later than the 20th day, we
believe that, at a minimum, Congress intended that physicians should
conduct a more thorough review of such cases to help ensure that all
requirements of medical necessity continue to be met. We also note the
regulations at Sec. 424.13(f)(2) specify our longstanding requirement
that the physician certification for cost outlier cases occur no later
than 20 days into the hospital stay, and we did not propose to change
the requirements for these cases. Therefore, we believe that, for
nonoutlier cases, 20 days is also an appropriate minimum threshold for
the physician certification, and we proposed to define long-stay cases
as cases with stays of 20 days or longer.
Specifically, in the CY 2015 OPPS/ASC proposed rule (79 FR 41057),
we proposed to revise paragraph (a) of Sec. 424.13 to specify that
Medicare Part A pays for inpatient hospital services (other than
inpatient psychiatric facility services) for cases that are 20
inpatient days or more, or are outlier cases under subpart F of Part
412 of this chapter, only if a physician certifies or recertifies the
following:
(1) The reasons for either--
(i) Continued hospitalization of the patient for medical treatment
or medically required diagnostic study; or (We note that, in setting
out the corresponding regulation text for this provision in the
proposed rule (79 FR 41083), we inadvertently omitted the word
``Continued'' at the beginning of this paragraph (a)(1)(i). We are
making a conforming correction in this final rule with comment period.
We do not believe that this conforming correction results in any
substantive change in policy.)
(ii) Special or unusual services for cost outlier cases (under the
prospective payment system set forth in subpart F of Part 412 of this
chapter).
(2) The estimated time the patient will need to remain in the
hospital.
(3) The plans for posthospital care, if appropriate.
We also proposed to revise paragraph (b) of Sec. 424.13 to specify
that certifications for long-stay cases must be furnished no later than
20 days into the hospital stay.
Because the care furnished in inpatient psychiatric facilities is
often purely custodial and therefore not covered under Medicare and
because the primary purpose of the certification of these cases is to
help ensure that Medicare pays only for services of the type
appropriate for Medicare coverage, we did not propose changes to the
certification requirements for inpatient psychiatric hospital services.
As discussed more fully in the FY 2014 IPPS/LTCH PPS final rule (78
FR 50942 through 50943), there also are inherent differences in the
operation of and beneficiary admission to IRFs. Therefore, we also did
not propose any changes to the admission requirements for IRFs.
We invited public comment on these proposals. Summaries of the
public comments we received and our responses to those public comments
are set forth below.
Comment: Most commenters were supportive of the proposal to
eliminate physician certification requirements for the majority of
inpatient cases (other than long stay and cost outlier cases). Many
commenters stated that the proposal would improve efficiency and would
reduce the overall administrative burden on hospitals. Several
commenters stated that the proposal would resolve ongoing issues within
hospitals wherein certain practitioners routinely and appropriately
admit patients, but are unable to complete the certification
requirement because they do not meet the statutory definition of a
physician. The commenters indicated that, because these cases rarely
exceed 20 days, and do not typically exceed outlier thresholds, these
practitioners would not be required to seek approval from a physician
to complete a physician certification statement.
Response: We thank the commenters for their support of our proposal
to apply certification requirements at Sec. 424.13 only to long-stay
and outlier cases. We agree that our proposal would reduce
administrative burden in general, and in particular would reduce the
administrative burden associated with the majority of cases involving
an admission order issued by a practitioner qualified to issue the
order but who did not meet the statutory definition of a physician and
therefore could not certify the case.
Comment: Several commenters, while appreciative of the proposal to
limit physician certification requirements, continued to disagree that
CMS has the statutory authority to require signed admission orders for
all inpatient cases. The commenters contended that CMS cannot use its
general rulemaking authority under section 1871 of the Act to require a
signed physician order for every inpatient admission. These commenters
argued that that the continued requirement for admission orders is
essentially the same as the certification requirement and stated that
section 1814(a)(2) of the Act is explicit in requiring physician
certification only for services ``furnished over a period of time'' and
not for all services.
Response: We disagree with these commenters. While the inpatient
admission order was a required component of the physician certification
under our previous policy, the order and the physician certification do
not serve identical policy goals under our proposal, which we are now
finalizing. For all cases, a properly authorized and documented
admission order is necessary because the admission order is integral to
a clear regulatory definition of when and how a beneficiary becomes an
inpatient. Such a definition is necessary to carry out the
administration of Medicare Part A because, as noted previously, section
1861(b) of the Act defines ``inpatient hospital services'' as certain
items and services furnished to ``an inpatient of a hospital,'' but
does not define ``an

[[Page 66999]]

inpatient of a hospital.'' Accordingly, for all cases, our admission
order requirements at Sec. 412.3 provide the necessary definition for
purposes of Medicare Part A payment by clarifying when ``an individual
is considered an inpatient of a hospital, including a critical access
hospital.'' The development of admission order requirements is a
necessary and appropriate use of our general rulemaking authority under
section 1871 of the Act.
In most cases, the admission order, along with the medical record
and progress notes, may also provide sufficient information to support
the medical necessity of an inpatient admission without the separate
requirement of an additional, formal, physician certification. However,
for long or very costly inpatient stays, we believe that additional
review and documentation by a treating physician are necessary to help
substantiate the continued medical necessity of such stays, and a
physician certification provides evidence of such additional review.
The fact that we have determined, in the majority of cases, that the
additional benefits (for example, as a program safeguard) of formally
requiring a physician certification do not outweigh the associated
administrative requirements placed on hospitals in no way changes the
necessity and appropriateness of requiring a signed admission order for
all cases.
Comment: Some commenters requested that CMS require the admission
order to be signed by the time of billing, not before discharge, as is
permitted for CAH certification requirements. The commenters cited the
administrative burden and logistical challenges involved with CMS'
requirements.
Response: We believe that, in most cases, matters relating to the
determination of patient status should be resolved before discharge,
due to the consequences that flow from such a determination. For
example, whether services are billed under Medicare Part A or Part B
can have a significant impact on a beneficiary's financial liability.
Therefore, we do not believe it is appropriate to change our existing
policy which requires that inpatient orders be signed prior to
discharge by a practitioner familiar with the case and authorized by
the hospital to admit inpatients.
In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50163 through
50165), we did finalize a provision to allow CAHs to complete
certification requirements (including completion of the admission
order) no later than 1 day before the date on which the claim for
payment is submitted as they had been allowed to do prior to FY 2014.
However, this policy exists in part to provide CAHs with greater
flexibility in meeting certification requirements unique to CAHs. For
example, CAHs face a statutory requirement that a physician certify
that a patient will be expected to be transferred or discharged within
96 hours of admission. We do not believe it would be appropriate to
apply this historical CAH policy more broadly to hospitals that do not
face the same circumstances as CAHs.
Comment: Several commenters requested that CMS provide additional
guidance regarding the required content and format of the physician
certification statement. Some commenters asked that CMS confirm that
the policy requiring physician certification only for long-stay and
outlier cases did not otherwise alter the inpatient hospital admission
guidelines discussed in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50944 through 50953). Others commenters requested general guidance and
clarification regarding CMS policies in this area.
Response: As discussed previously in the section, the physician
certification requirements at Sec. 424.13 generally may be satisfied
by elements routinely found in a patient's medical record, such as
progress notes. CMS does not require that a physician certification
comply with a specific standard or format--only that it ensures that
the conditions at Sec. 424.13(a) were met. If the medical record
adequately describes the reasons for continued hospitalization, the
estimated time the patient is expected to require inpatient care, and
discharge planning (where appropriate), and the medical record is
signed by a physician involved with and responsible for the patient's
care, this would satisfy certification requirements.
Our proposed policy change regarding the physician certification
requirements does not change unrelated requirements implemented in the
FY 2014 IPPS/LTCH PPS final rule such as the requirements related to
the 2-midnight policy. It also does not alter or remove any
requirements for hospitals regarding admission orders.
We are committed to continuing to work closely with and provide
outreach to stakeholders regarding inpatient admission policies and
certification requirements.
Comment: Some commenters requested that CMS provide guidance on how
MACs will review cases in the interim time period between publication
of this final rule and the effective date of the regulation changes
(January 1, 2015).
Response: Since the effective date of the FY 2014 IPPS/LTCH PPS
final rule, we have worked closely with the MACs to ensure that the 2-
midnight policy and related certification requirements are applied
appropriately. As discussed previously, we believe that physician
certification requirements for a high percentage of inpatient stays can
be readily satisfied by elements routinely found in the medical record.
Hospitals need to comply with all existing certification requirements
until the finalized policy changes in this final rule with comment
period go into effect on January 1, 2015. We are committed to continue
to work with the MACs to prioritize medical review cases.
In summary, after consideration of the public comments we received,
we continue to believe our certification proposal satisfies our policy
goals while reducing the administrative burden on hospitals. Therefore,
we are finalizing the policy as proposed in the CY 2015 OPPS/ASC
proposed rule, which limits the requirement for physician certification
to long-stay (20 days or longer) and outlier cases. We are finalizing
our proposed revisions of paragraph (a) of Sec. 424.13, with one minor
modification. We are adding the word ``Continued'' at the beginning of
paragraph (a)(1)(i), which we inadvertently omitted when we set out the
regulation text in the proposed rule. We note that the preamble
discussion in the proposed rule included this word (79 FR 41057), as
discussed earlier. We also are finalizing our proposed revision of
paragraph (b) of Sec. 424.13, without modification, to specify that
certifications for long-stay cases must be furnished no later than 20
days into the hospital stay.

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

Medicare Part C and Part D payments to Medicare Advantage (MA)
organizations and Part D sponsors are determined, in part, using data
submitted to CMS by the MA organizations and Part D sponsors. These
``payment data'' include diagnosis data that are used by CMS to risk
adjust Part C and Part D payments, Prescription Drug Event (PDE) data
that are used by CMS to cost reconcile various Part D subsidies, as
well as other types of data discussed below. MA organizations and Part
D sponsors are

[[Page 67000]]

obliged to submit accurate, complete, and truthful payment-related
data, as described in regulations at 42 CFR 422.504(l) and 423.505(k).
Through our review and oversight of payment data submitted by MA
organizations and Part D sponsors, CMS identifies situations where MA
organizations and/or Part D sponsors have submitted payment data to CMS
that should not have been submitted either because the data submitted
are inaccurate or because the data are inconsistent with Part C and
Part D requirements. (Throughout this section, we refer to these data
submissions as ``erroneous payment data.'') If an MA organization or
Part D sponsor submits erroneous payment data to CMS, the MA
organization or Part D sponsor can address errors by submitting
corrected data to CMS payment systems. Our approach thus far to these
types of situations has been to request that MA organizations and Part
D sponsors make these data corrections voluntarily.
However, in instances where the MA organization or Part D sponsor
fails to make the requested data correction, the payment amount for the
plan, calculated using that erroneous payment data, may also be
incorrect. As a result, we have concluded that CMS needs to establish a
formal process that allows us to recoup overpayments that result from
the submission of erroneous payment data by an MA organization or Part
D sponsor in the limited circumstances when the organization fails to
correct those data. We emphasize that, in our experience, the
circumstance where an MA organization or Part D sponsor fails to
correct identified erroneous payment data arises very infrequently.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41058 through 41063),
we proposed a new process that is not intended to replace established
recovery and appeals processes such as the Risk Adjustment Data
Validation (RADV) audit dispute and appeal process described at 42 CFR
422.311 or the Part D payment appeals process described at 42 CFR
423.350. We stated that this proposed process would not constitute a
change to the existing Part C or Part D payment methodologies. Rather,
we merely proposed to adopt a procedural mechanism for recouping
overpayments that CMS will use in those limited circumstances when an
MA organization or Part D sponsor fails to correct erroneous payment
data after notice and request from CMS to do so. The established
recovery and appeals processes do not support this scenario. Section
1856(b) of the Act establishes authority for CMS to add standards for
Part C and MA organizations. Section 1853 of the Act for Part C and
sections 1860D-14 and 1860D-15 of the Act for Part D establish the
methodology for computing payments to MA organizations and Part D
sponsors, respectively. We believe that inherent in the methodology
under which we calculate payments to MA organizations and Part D
sponsors is the authority for CMS to establish a process for
identifying and recouping overpayments in order to ensure that payments
are made consistent with the payment framework established in the
statute. Therefore, we proposed to implement such a process through
changes to our regulations.
1. Medicare Part C Payment Background
For Medicare Part C, CMS makes prospective monthly payments to MA
organizations for each enrollee in the plan. CMS' monthly Part C
payment for each MA plan enrollee consists of two components: the
capitated payment for each enrollee (calculated as the plan-specific
county payment rate multiplied by the enrollee risk score), plus the
plan rebate amount (if any). The plan-specific county rates and the
plan rebate amount are based on the bid approved by CMS and are set in
advance for a payment year. In addition, payment rates may be adjusted
for enrollees with end-stage renal disease, enrollees in Medical
Savings Account MA plans, and enrollees in religious fraternal benefit
society MA plans under Sec. 422.304. Prospective payments are made
during the year, subject to a reconciliation after the end of the year.
CMS adjusts the plan-specific county payment rate for each enrollee
based on an enrollee risk score. Enrollee risk scores are determined
using the CMS-Hierarchical Condition Category (CMS-HCC) risk adjustment
model in effect for the payment year, plan-submitted diagnoses for the
data collection year, and other data that CMS determines to be
appropriate to perform risk adjustment. The CMS-HCC model is
prospective in that it uses diagnosis information from a base year
(data collection year) to adjust payments for the next year (payment
year or coverage year). For example, the risk adjustment model uses
diagnosis data from 2013 to adjust payments to MA organizations for
coverage in 2014.
To determine the appropriate risk score for each beneficiary, CMS
uses demographic characteristics of beneficiaries and diagnostic
information gathered in the administration of Original Medicare and
submitted by MA organizations. MA organizations are currently required
to submit an occurrence of an HCC model-relevant diagnosis only once
during the data collection year, even though a beneficiary may have
several service dates in a data collection year associated with a given
diagnosis. The minimum data elements currently collected from MA
organizations under Sec. 422.310 are: Health Insurance Claim (HIC)
Number; provider type (hospital inpatient, hospital outpatient, or
physician); service from date; service through date; and ICD-9 codes at
the level of specificity used by the HCC model. In addition, effective
January 2012, CMS collects more detailed Part C utilization and cost
data from MA organizations (often referred to as encounter data), that
will be used in setting risk scores.
CMS allows 13 months after the end of a data collection year for MA
organizations to update the risk adjustment data submitted under Sec.
422.310; this period provides MA organizations an opportunity to
identify and correct errors in data they have submitted for that data
collection year (that is, by deleting diagnoses from CMS' systems) and
to identify and submit additional diagnoses not submitted during the
data collection year. During this 13-month period, CMS uses the
diagnosis data that MA organizations have submitted up to that point to
calculate interim beneficiary risk scores for adjusting prospective
payments made during the payment year. The end of this 13-month period
is called the final risk adjustment data submission deadline (Sec.
422.310(g)(2)(ii)).
For each payment year, we apply three sets of risk scores to adjust
payments: initial and midyear risk scores during the payment year (both
sets are based on incomplete diagnosis data from the data collection
year) and final risk scores after the payment year using data MA
organizations submitted as of the final deadline for risk adjustment
data (which reflect complete data for the data collection year). During
the year, CMS makes monthly prospective payments to MA organizations
based on enrollment information and using interim risk scores
calculated based on the data available before the final risk adjustment
data submission deadline. CMS calculates the preliminary risk scores
before the first payment is made (that is, for January of the payment
year) and again in the middle of the payment year; an interim
reconciliation is made so that the prospective payments to MA
organizations are based on the most recent risk score available for
each enrollee.
After the final risk adjustment data submission deadline, CMS
conducts a

[[Page 67001]]

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

B. Provisions of the Proposed Rule and Final Policies

In the CY 2015 OPPS/ASC proposed rule (79 FR 41058 through 41063),
we proposed to establish regulations at 42 CFR 422.330, relating to MA
organizations, and at 42 CFR 423.352, relating to Part D sponsors, that
would specify the procedural mechanism for CMS to recoup overpayments
associated with data errors identified by CMS in payment data submitted
by MA organizations and Part D sponsors. We also proposed to create a
process whereby an MA organization or Part D sponsor can appeal the
finding that payment data are erroneous.
We noted that our proposed policy is intended to establish a
process to address data errors and payment adjustments that are not
addressed by existing processes such as the RADV audit and appeal
process or overpayments identified by the MA organization or Part D
sponsor, which are subject to separate procedures. If an MA
organization or a Part D sponsor self-identifies an overpayment, that
overpayment must be reported and returned to CMS in accordance with
section 1128J(d) of the Act, which was added by section 6402 of the
Affordable Care Act. Regulations implementing section 1128J(d) have
recently been adopted at Sec. Sec. 422.326 and 423.360 in the final
rule entitled ``Medicare Program; Contract Year 2015 Policy and
Technical Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs'' (79 FR 29843).
Comment: Several commenters supported the establishment of a formal
overpayment collection and appeals process.
Response: We appreciate the commenters' support.
Comment: Several commenters expressed concern about including Part
C and Part D proposed provisions in the OPPS/ASC proposed rule. The
commenters stated that these proposed provisions are unrelated to the
OPPS and ASC payment systems.
Response: The Secretary generally has discretion to schedule and
group topics for rulemaking, meaning any proposed and final rule
published in the Federal Register, as long as proper public notice is
given that includes an explanation of the proposed policies, the
rationale and basis for the proposal, and the public is given an
opportunity to comment.
Comment: A few commenters requested that CMS make clear that the
proposal regarding CMS-identified overpayments has no relationship to
other CMS overpayment regulations,

[[Page 67002]]

specifically the overpayment regulations that were promulgated to
implement the requirements of section 6402 of the Affordable Care Act,
codified at section 1128J(d) of the Act (79 FR 29847). Commenters
expressed concern that, given the connection between plan-identified
overpayments and the False Claims Act, there is a potential for
confusion and significant unintended consequences.
Response: In the preamble to the CY 2015 OPPS/ASC proposed rule, we
expressly limited the scope of our proposal to establishing a process
to address data errors and payment adjustments that are not addressed
by existing processes. We stated that overpayments identified by an MA
organization or a Part D sponsor are subject to separate procedures and
that if an MA organization or a Part D sponsor self-identifies an
overpayment, the overpayment must be reported and returned to CMS in
accordance with Sec. Sec. 422.326 and 423.360 of the regulations. We
are further clarifying here that the CMS-identified overpayment process
that is being finalized is separate and distinct from the overpayment
rule that implemented the Affordable Care Act requirements regarding
plan-identified overpayments codified at section 1128J(d) of the Act.
Comment: A few commenters provided comments on and questioned the
provisions of Sec. Sec. 422.326 and 423.360 which relate to reporting
and returning of overpayments identified by MA organizations and Part D
sponsors, respectively.
Response: We consider these public comments to be out of the scope
of the provisions of the proposed rule. The proposed rule was limited
to the issue of CMS-identified overpayments arising from the submission
of erroneous payment data. Therefore, we are not addressing these
comments in this final rule.
Comment: A few commenters stated that it is essential that CMS has
overall control over the CMS-identified overpayment process to ensure
proper identification and monitoring of overpayments. The commenters
stated that this control is necessary to ensure that requests from
separate CMS components or the Department's Office of the Inspector
General (OIG) for payment data changes are consistent with CMS-issued
payment regulations and guidance. The commenters recommended that CMS
provide adequate resources to the appropriate staff components in order
to effectively coordinate and manage this process.
Response: In the CY 2015 OPPS/ASC proposed rule, we stated that we
may identify payment data that need to be corrected through a variety
of different mechanisms, including, but not limited to, CMS analyses of
payment data, audits, and/or communications with the MA organization or
Medicare Part D sponsor. Regardless of how a potential overpayment is
identified, CMS will conduct an independent evaluation of the erroneous
data finding, before issuing a data correction notice to an MA
organization or Part D sponsor. Although CMS may utilize OIG reports or
other information to help to identify erroneous payment data, it is
CMS, not the OIG, which will issue the request to correct payment data.
Likewise, other separate CMS components may identify erroneous payment
data, but it is the Medicare Part C and Part D payment components at
CMS that will determine if that erroneous payment data could result in
an overpayment and whether or not the CMS-identified overpayment
process will be used to correct the overpayment. In addition, requests
to correct payment data will only be issued after CMS has thoroughly
reviewed the source or the mechanism that identified the payment data
and has concurred with the findings that the payment data were
erroneous.
We appreciate and agree with the commenters' suggestion that the
CMS administration should provide adequate resources to the payment
staff in order to effectively coordinate and manage this process.
Comment: One commenter asked CMS to clarify whether this regulation
would be used as a means to collect any alleged improper payments
identified through the Recovery Audit Contractors (RAC) process.
Response: As we indicated in the preamble of the proposed rule,
this process is not intended to replace established recovery and
appeals processes. We do not anticipate using this process to collect
any overpayments identified through the RAC process at this time.
Comment: Several commenters expressed concern that the proposed
rule does not address underpayments identified by CMS or the health
plan. A few commenters suggested that CMS add language to the
regulation to explain how health plans recover underpayments that they
or CMS have identified. One commenter suggested that CMS offset
identified underpayments against overpayments before recouping any
overpayments.
Response: The purpose of the proposed provisions is to recover
overpayments identified by CMS and return them to the Medicare Trust
Funds. The offset calculation used to determine the overpayments will
follow the Medicare Part C and Part D payment rules, and, as a result,
the offset calculation may capture some underpayments. The extent to
which underpayments will be recognized in the offset calculation to net
out an overpayment will be limited and will vary depending on the
circumstance surrounding the overpayment. The purpose of the provisions
is not to provide the opportunity for MA organizations and Part D
sponsors to secure additional payment by submitting additional data
after the data submission deadlines. As noted in the preamble of the
proposed rule, MA organizations and Part D sponsors have a period of
time after the end of the data collection and coverage years,
respectively, to update and supplement the payment data submitted
throughout the year. In Part C, that period is 13 months, and in the
Part D context, it is approximately 6 months. We believe that these
periods are adequate for MA organizations and Part D sponsors to ensure
that they have submitted the data necessary to substantiate their
payments.
Comment: One commenter expressed concern that MA organizations' or
Part D sponsors' benefit filings, current business dealings, and
statutory rights and obligations may be affected if the plan's
financial information is rendered uncertain due to an overpayment
recovery by CMS.
Response: While we understand the commenter's concern that the
possibility of returning overpayments may introduce some financial
uncertainty for MA organizations and Part D sponsors, CMS has an
obligation to ensure that payments to MA organizations and Part D
sponsors are made consistent with the applicable program requirements.
Thus, we believe that CMS has the authority to recover, and MA
organizations and Part D sponsors have an obligation to return,
identified overpayments.
Comment: A few commenters stated that overpayment recoupments from
Part D sponsors may negatively impact beneficiaries. Commenters urged
CMS to ensure that any adjustments made to recoup CMS overpayments from
Part D sponsors continue to be appropriate to ensure that beneficiaries
are not financially negatively impacted.
Response: We understand the commenters' concerns that overpayment
recoupments not negatively affect beneficiaries. However, CMS has
previously issued regulations that address this issue. Section
423.466(a) of the regulations states that whenever a Part D sponsor
receives information that

[[Page 67003]]

necessitates a retroactive claims adjustment, the Part D sponsor must
process the adjustment and issue refunds or recovery notices within 45
days of the Part D sponsor's receipt of complete information regarding
the claims adjustment. In addition, Sec. 423.466(b) states that
Medicare Part D sponsors must coordinate benefits with State
Pharmaceutical Assistance Programs (SPAPs), other entities providing
prescription drug coverage, beneficiaries, and other third party
entities paying on the beneficiaries' behalf for a period not to exceed
3 years from the date on which the prescription for a covered Part D
drug was filled.
Comment: A few commenters expressed concern about the burden
imposed on providers. Commenters stated that the overpayment recovery
process might cause financial consequences or penalties for physicians.
Commenters expressed concern over the burden of related documentation
requests. One commenter urged CMS to ensure that any associated
provider record requests are limited to the specific instance of
erroneous data under dispute. The commenter suggested that the plan
requesting medical records be required to provide documentation on the
scope of the erroneous data dispute identified by CMS and to limit the
data request to the specific data issue identified.
Response: These commenters appear to be focused on Part C and risk
adjustment data. We recognize the commenters' concerns that recoupment
of overpayments may entail negative financial consequences for
physicians. However, it is CMS' responsibility to make payments to MA
organizations and Part D sponsors that are consistent with the
applicable statutes and regulations; this includes the authority to
recover overpayments and return them to the Medicare Trust Funds. In
addition, CMS is not allowed to interfere with the financial
arrangements between MA organizations and their providers. Therefore,
CMS is limited in how we can respond to the commenters' concern. While
we recognize there may be some burden relating to the request for
documentation, it is important for the integrity of the payment process
that overpayments are properly identified and documented.
Comment: One commenter suggested that any Medical Loss Ratio (MLR)
remittances paid by the plan to CMS should be considered when computing
the overpayment recovery amount. For example, if a plan had an MLR
below the statutory minimum and paid an MLR remittance to CMS, and
then, at a later date, it was determined that the plan was overpaid for
that year, the remittance would reduce the overpayment recovery amount.
Response: From a conceptual perspective, we believe that the impact
or relationship between an MLR remittance and the overpayment offset
amount is an issue about the payment calculation methodology and MLR
administration, rather than a procedural issue. This regulation
narrowly specifies a procedural mechanism for, first, recovering
overpayments from MA organizations and Part D sponsors and, second,
providing an appeals process related to the accuracy and correctness of
the payment data underlying the offset. Therefore, we believe that
these comments relating to MLR remittances are out of the scope of the
provisions of the proposed rule.
Comment: One commenter expressed concern that there might be a
large number of complications in situations where a contract has been
terminated, or where there have been mergers or acquisitions involving
the sponsor, or where other significant plan changes have occurred. The
commenter requested guidance from CMS on the process in these
situations. The commenter also asked that CMS be flexible in these
scenarios.
Response: We hold entities contracting with CMS responsible for
returning overpayments, regardless of their merger and acquisition
history.
After consideration of the public comments we received, we are
finalizing the proposal to establish a process for recovering CMS-
identified overpayments associated with erroneous payment data
submitted by MA organizations and Part D sponsors.
1. Definitions of ``Payment Data'' and ``Applicable Reconciliation
Date''
In the CY 2015 OPPS/ASC proposed rule (79 FR 41060), we proposed to
define ``payment data'' to mean data controlled and submitted to CMS by
an MA organization or a Part D sponsor that is used for payment
purposes (proposed Sec. Sec. 422.330(a) and 423.352(a)). The MA
organization or Part D sponsor is responsible for the accuracy of such
data. MA organizations and Part D sponsors are currently required to
attest to the accuracy, completeness, and truthfulness of such data
under Sec. 422.504(l) and Sec. 423.505(k), respectively. For Medicare
Part C, the data submitted by the MA organization to CMS include, for
example, enrollment data and risk adjustment data specified at Sec.
422.310. For Medicare Part D, data submitted by the Part D sponsor to
CMS include enrollment data and data submitted under Sec.
423.329(b)(3) (risk adjustment data), Sec. 423.336(c)(1) (cost data),
Sec. 423.343 (data for retroactive adjustments and reconciliations),
and data provided for purposes of supporting allowable reinsurance
costs and allowable risk corridor costs as defined in Sec. 423.308,
which include data submitted to CMS regarding direct or indirect
remuneration (DIR).
There are additional payment-related data that CMS uses to
calculate Part C and Part D payments that are submitted directly to CMS
by other entities, such as SSA. These entities are the authoritative
source for data that they submit to CMS, and MA organizations and Part
D sponsors are not the official source for data submitted by these
other entities. For example, the SSA is the authoritative source for
date of death of Medicare beneficiaries. An MA organization or a Part D
sponsor generally does not submit a beneficiary's date of death
directly to CMS' systems; such data come from the SSA data feed. When
the SSA submits corrected data regarding a beneficiary's date of death
to CMS, CMS' systems recalculate the payments made to the plan for that
beneficiary and correct any incorrect payment through a routine
retroactive payment adjustment process. Therefore, we proposed to
define ``payment data'' as only data that the MA organization or Part D
sponsor controls and submits to CMS for payment purposes.
For MA organizations under Part C, in the CY 2015 OPPS/ASC proposed
rule (79 FR 41060), we proposed that the ``applicable reconciliation
date'' occurs on the date of the annual final risk adjustment data
submission deadline set under Sec. 422.310(g)(2)(ii). While changes in
enrollment data are updated every month by CMS' systems during the
payment year (for example, disenrollments from MA organizations and
dates of death from the SSA), risk adjustment data are not finalized
until the final risk adjustment data submission deadline. Prior to that
deadline, CMS allows the MA organization to continue submitting
corrected and new diagnosis data. However, once the final risk
adjustment data submission deadline has passed, CMS uses this final
diagnosis data to calculate the final risk scores for the payment year.
CMS then uses those final risk scores for payment reconciliation. By
proposing that the applicable reconciliation date occurs on the risk
adjustment data submission deadline, we intend to signal that the
normal payment process for the year has been concluded.

[[Page 67004]]

For Part D sponsors, in the CY 2015 OPPS/ASC proposed rule (79 FR
41060), we proposed that the ``applicable reconciliation date'' is the
later of either: the annual deadline for submitting PDE data for the
annual Part D payment reconciliations referenced in Sec. 423.343(c)
and (d); or the annual deadline for submitting DIR data. The annual
deadline for submitting PDE data is the last Federal business day prior
to June 30 of the year following the coverage year being reconciled.
The annual deadline for submitting DIR data is announced annually
through subregulatory guidance and generally occurs around the last
business day in June of the year following the coverage year being
reconciled. We selected these events to define the Part D applicable
reconciliation date because data must be submitted by these deadlines
in order to be used for the purposes of the final Part D payment
reconciliation.
We noted in the proposed rule that the proposed definitions of
``applicable reconciliation date'' are nearly identical to the
definitions of ``applicable reconciliation'' at existing Sec. Sec.
422.326 and 423.360. Similarly, the proposed definitions of ``payment
data'' are nearly identical to the definitions of ``funds'' at existing
Sec. Sec. 422.326 and 423.360. Although proposed Sec. Sec. 422.330
and 423.352 addressed overpayments to MA organizations and Part D
sponsors that have been identified by CMS, whereas Sec. Sec. 422.326
and 423.360 address overpayments that are identified by the MA
organization or Part D sponsor, we stated in the proposed rule that we
do not believe that the issue of which entity (CMS or the plan)
identified the overpayment is relevant to the question of when the
overpayment occurred or what information is at issue. Both the
regulations regarding overpayments identified by MA organizations and
Part D sponsors finalized earlier this year in the final rule entitled
``Medicare Program; Contract Year 2015 Policy and Technical Changes to
the Medicare Advantage and the Medicare Prescription Drug Benefit
Programs'' and the regulations we proposed in the CY 2015 OPPS/ASC
proposed rule to establish offset and appeal procedures for CMS-
identified overpayments were intended to address circumstances in which
an overpayment has been identified; therefore, we believe it would be
appropriate and avoid unnecessary confusion to use similar definitions.
Comment: A few commenters requested that CMS clarify the definition
of ``payment data.'' Specifically, commenters stated that the
definition of ``payment data'' in the proposed rule is supposed to
correspond to the definition of ``funds'' at Sec. Sec. 422.326 and
423.360. However, the commenters pointed out that, in the proposed
rule, CMS defined ``payment data'' as ``data controlled and submitted
by'' an MA organization or a Part D sponsor. Commenters noted that
definition of ``funds'' omits the word ``controlled.'' Commenters
expressed concern over the inclusion of the word ``controlled'' in the
definition of ``payment data'' because MA organizations and Part D
sponsors do not control all relevant data. Commenters requested that
CMS revise the definition of ``payment data'' to conform to the
definition of ``funds'' at Sec. Sec. 422.326 and 423.360.
Response: We agree with the commenters. Our intent was to align the
definitions of ``payment data'' with the definition of ``funds'' at
Sec. Sec. 422.326 and 423.360 (79 FR 41060). Therefore, we are
removing the word ``controlled'' from the regulatory definition of
``payment data'' in this final rule.
Comment: One commenter requested that CMS define ``erroneous claims
data'' as used in the proposed rule.
Response: We did not use the phrase ``erroneous claims data'' in
the preamble language or regulation text of the proposed rule. In the
preamble of the proposed rule, we used the phrase ``erroneous payment
data'' to mean ``. . .payment data. . .that should not have been
submitted--either because the data submitted are inaccurate or because
the data are inconsistent with Part C and Part D requirements'' (79 FR
41058). We are adding the definition of ``erroneous payment data'' to
the final regulation text at Sec. Sec. 422.330(a) and 423.352(a).
Comment: A few commenters noted that, in the preamble of the
proposed rule, CMS referenced specific provisions of Sec. Sec. 422.504
and 423.505 of the regulations and stated that MA organizations and
Part D sponsors are required to certify the accuracy, completeness, and
truthfulness of their payment data. Commenters were concerned that CMS
did not include the phrase ``based on best knowledge, information, and
belief'' that is included under Sec. Sec. 422.504 and 423.505.
Commenters requested that CMS revise the preamble language of the final
rule to acknowledge the ``best knowledge, information, and belief''
standard articulated at Sec. Sec. 422.504 and 423.505 and to remove
any incorrect references suggesting that MA organizations (or Part D
sponsors) bear unqualified responsibility for data accuracy.
Response: We did not intentionally exclude ``based on best
knowledge, information, and belief'' from the preamble discussion. We
acknowledge that MA organizations and Part D sponsors certify, based on
best knowledge, information, and belief, the accuracy, completeness,
and truthfulness of all data related to payment as stated at Sec. Sec.
422.504 and 423.505. After a review of the preamble language, we do not
believe that additional edits are necessary as a result of the
omission.
After consideration of the public comments we received, we are
finalizing the proposed regulatory definition of ``payment data,'' with
a modification to remove the reference to ``controlled,'' as described
earlier. We also are adding a definition of ``erroneous payment data''
in the final regulation text at Sec. Sec. 422.330(a) and 423.352(a).
2. Request for Corrections of Payment Data
Because MA organizations and Part D sponsors are required to submit
accurate payment data, we have the authority to request that erroneous
data be corrected when errors are discovered. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41060), we proposed a mechanism for recouping
overpayments in situations where CMS has identified an error in payment
data, the MA organization or Part D sponsor has not corrected that
erroneous data upon request, and CMS determines that, as a result of
the erroneous payment data, an overpayment was made. Under proposed
Sec. Sec. 422.330(b) and 423.352(b), we proposed that CMS would make
the request through a data correction notice that would contain or make
reference to the specific payment data identified by CMS as erroneous,
the reason why CMS believes that the payment data are erroneous, and
the timeframe in which the MA organization or Part D sponsor must make
corrections to the data. This proposal was not intended to limit our
authority to request correction of erroneous payment data to only those
narrow circumstances in which an overpayment has already been
identified. CMS may identify payment data that need to be corrected
through a variety of different mechanisms, including, but not limited
to, CMS analyses of payment data, CMS audits, or communications with
the MA organization or Part D sponsor.
We understand that, at some point, it would no longer be practical
for MA organizations and Part D sponsors to correct payment data for
coverage years that have long since been reconciled. Therefore,
consistent with the look-back period for overpayments that are

[[Page 67005]]

identified by the MA organization or Part D sponsor found at existing
Sec. Sec. 422.326 and 423.360, in the CY 2015 OPPS/ASC proposed rule
(79 FR 41060), we proposed that CMS would request corrections to
erroneous payment data only if the erroneous data affects payments for
one or more of the 6 most recently completed payment years. That would
mean, for example, that after the initial reconciliation takes place
for Part D payments under Sec. 423.343 (that is, the determination of
the final amount of direct subsidy described in Sec. 423.329(a)(1),
final reinsurance payments described in Sec. 423.329(c), the final
amount of the low-income subsidy described in Sec. 423.329(d), or
final risk corridor payments as described in Sec. 423.336) for
contract year 2015 (which would take place in 2016), CMS may request
corrections to erroneous payment data for contract years 2010 through
2015. We proposed to use the same 6-year look-back period as applies to
plan-identified overpayments under existing Sec. Sec. 422.326 and
423.360 because both overpayment policies are intended to address
circumstances in which an overpayment has been identified, and we do
not believe that the issue of which entity (CMS or the plan) identified
the overpayment is relevant to the length of the look-back period.
We proposed that the timeframes for correcting payment data would
be the same as under our current practice for correcting payment data
described in existing procedural rules and subregulatory guidance and
would be explained in additional procedural rules and subregulatory
guidance, as necessary. For example, current Part D guidance states
that corrections to PDE data must be completed within 90 days from
discovery of the issue. We refer readers to the Health Plan Management
System (HPMS) memorandum entitled ``Revision to Previous Guidance
Titled `Timely Submission of Prescription Drug Event (PDE) Records and
Resolution of Rejected PDEs,''' dated October 6, 2011.
Comment: A few commenters believed that the proposed rule on CMS-
identified overpayments should only apply to actual overpayments, not
merely the submission of incorrect payment data. These commenters were
concerned that CMS incorrectly assumes that erroneous payment data
equates to an overpayment.
Response: We understand that correcting erroneous payment data
submitted by an MA organization or a Part D sponsor and rerunning the
payment process to determine the payment that should have been made may
reflect an underpayment, overpayment, or no change when comparing the
two results. Consistent with Sec. Sec. 422.504(l) and 423.505(k), MA
organizations and Part D sponsors must submit accurate payment data
(based on best knowledge, information, and belief). We clarify that CMS
may make the request to correct erroneous payment data, regardless of
whether or not that data would result in an overpayment under our
existing and inherent authority related to administration of the
payment processes; this rule does not change or limit that authority.
Rather, this rule provides authority to initiate an offset to recover
overpayments when erroneous payment data have been submitted, the
erroneous payment data resulted in an overpayment, and the erroneous
payment data were not subsequently corrected upon request from CMS. The
intent of the provisions at Sec. Sec. 422.330 and 423.352 is to
provide a process whereby CMS-identified overpayments can be recovered;
this process begins with CMS' request for correction of the erroneous
payment data that caused the overpayment to occur. We will establish
the existence and extent of an overpayment by applying the Part C and
Part D payment rules and formulas applicable to the payment year in
question.
Comment: Commenters requested that CMS clarify that the overpayment
recoupment process would apply only to contract years for which CMS has
completed final reconciliation. Commenters noted that CMS did not link
the proposed regulatory definition of ``applicable reconciliation
date'' to other subsections of the proposed regulations. The commenters
stated that based on the proposed regulations, if CMS identifies an
error in payment data and the payment error identified affects payments
for any of the 6 most recently completed payment years, CMS may send a
data correction notice to the MA organization or the Part D sponsor.
However, CMS does not define ``recently completed'' or correlate the
definition with the phrase ``applicable reconciliation date.''
Commenters requested that CMS clarify its intention to recoup
overpayments only following the ``applicable reconciliation date.''
Response: Our determination that an overpayment has occurred will
be made after the applicable reconciliation date, as defined in this
final rule, for the contract year in which the erroneous payment data
were identified. In addition, the payment error must affect payment in
one of the 6 most recently completed payment years. For example, after
the initial reconciliation takes place for Part D payments under Sec.
423.343 (that is, the determination of the final amount of direct
subsidy described in Sec. 423.329(a)(1), final reinsurance payments
described in Sec. 423.329(c), the final amount of the low-income
subsidy described in Sec. 423.329(d), or final risk corridor payments
as described in Sec. 423.336) for contract year 2015 (which would take
place in 2016), the 6 most recently completed payment years would be
2010 through 2015.
Consistent with our statements above regarding our existing and
inherent authority related to administration of the payment processes
to make the request to correct erroneous payment data, regardless of
whether or not that data would result in an overpayment, we believe we
have authority to request the correction of erroneous data at any time.
Accordingly, we are moving the language that limits CMS to the 6-year
look-back period at Sec. Sec. 422.330(b) and 423.352(b), ``Request to
correct payment data,'' and associating it with Sec. Sec. 422.330(c)
and 423.352(c), ``Payment offset,'' in order to clarify that, while we
may request the correction of erroneous payment data at any time, we
will only use the payment offset procedures established in this rule to
recover overpayments in the 6 most recently completed payment years.
Therefore, we are modifying proposed Sec. Sec. 422.330(c) and
423.352(c) to indicate that when the MA organization or Part D sponsor
fails to correct payment data in response to a request under Sec. Sec.
422.330(b) and 423.352(b), CMS will conduct a payment offset against
payments made to the MA organization or Part D sponsor if: (1) the
payment error affects payments for any of the 6 most recently completed
payment years; and (2) the payment error for a particular payment year
is identified after the applicable reconciliation date for that payment
year.
Comment: One commenter requested that CMS institute a single,
uniform timeframe to correct any payment data errors before CMS
initiates payment-offset procedures. The commenter believed that the
different time periods associated with the resubmission or correction
of various data points can lead to unnecessary confusion and the
potential for missed deadlines. This commenter recommended that CMS
create a uniform timeframe of at least 120 days to submit data
corrections. The commenter expressed concern that the process for
collecting and verifying corrected data will involve numerous steps and
that the process also likely will involve third parties, potentially
including vendors no longer under contract, which would add additional

[[Page 67006]]

steps and time to the process of collecting and validating the data.
The commenter stated that a turnaround time of less than 120 days
creates a risk for not being able to collect the payment data and
conduct a diligent and fulsome analysis before responding to CMS.
Response: We understand that it makes sense to have a uniform
timeframe for submitting corrected payment data in response to a CMS
notification of CMS-identified erroneous payment data. We also
understand that different timeframes for submitting corrected data
could lead to confusion and missed deadlines. However, we disagree with
the commenter that 120 days is necessary to correct all types of
payment data. As we cited in the preamble of the proposed rule, current
Part D guidance in the HPMS memorandum dated October 6, 2011, states
that corrections to PDE data must be completed within 90 days from
discovery of the issue. We have no reason to believe that the 90-day
timeframe for correcting Part D data under this provision is
inadequate. Therefore, we will not be making changes to this policy at
this time. Timeframes for correcting Part C payment data will be
explained in additional procedural rules and subregulatory guidance.
Comment: One commenter requested clarification regarding the
submission of payment data corrections between the final risk
adjustment submission deadline and when a payment reconciliation or
payment rerun is conducted.
Response: This commenter's request appears to be directed at Part C
and risk adjustment data. An overpayment may exist once applicable
reconciliation has occurred, which is the final deadline for the
submission of risk adjustment data for Part C. MA organizations should
submit data corrections to correct an overpayment the MA organization
has identified as soon as the MA organization recognizes the
overpayment has occurred (Sec. 422.326). In the context of that rule
and the process adopted under this rule, the operational action of
conducting a risk adjustment payment rerun will be implemented
according to our policy and schedules. The submission of data
corrections should not be delayed relative to the timing of a risk
adjustment rerun. If the data correction is not submitted, and we have
identified the erroneous risk adjustment payment data, we may move
forward with a payment offset. We agree that additional information on
this issue would be helpful to MA organizations and will be providing
further guidance as needed.
Comment: A few commenters noted that, in the proposed rule, CMS
stated that if the MA organization or Part D sponsor submits corrected
payment data in response to CMS' request, CMS will perform a
reconciliation in the payment system using the established payment
adjustment process. The commenters requested that CMS clarify that the
referenced reconciliation is in reference to the established reopening
of a payment adjustment reconciliation process. The commenter stated
that the current reopening process is well-established and equitable,
balancing the rights and obligations of Part D sponsors and CMS, and,
therefore, there is an appropriate adjustment of both overpayments and
underpayments to the Part D sponsor. The commenters urged CMS to invest
additional operational resources to strengthen the existing reopening
process.
Response: If an MA organization or a Part D sponsor submits
corrected payment data, as requested by CMS, we will recoup any
overpayment amounts by performing a payment reconciliation according to
our payment processing policies and schedules. We appreciate the
commenter's suggestion to invest additional operational resources to
strengthen the existing reopening process, and will take this
suggestion into consideration.
Comment: Several commenters expressed concern regarding the length
of the 6-year look-back period. Some of the commenters indicated the
length of the look-back period would place undue burden on plans and
providers. Another commenter stated that a 6-year timeframe is
typically reserved for fraud and abuse processes and is not considered
appropriate for routine operational processes. A few commenters
recommended that the look-back period be 3 years.
Response: We believe that a 6-year look-back period is an
appropriate timeframe for identifying overpayments. As stated in the
proposed rule, the 6-year look-back period is consistent with the look-
back period established for overpayments that are identified by MA
organizations or Part D sponsors (Sec. Sec. 422.326 and 423.360). Also
as stated in the proposed rule, we proposed to use the same 6-year
look-back period as applies to plan-identified overpayments because
both overpayment policies are intended to address circumstances in
which an overpayment has occurred and has been identified. We do not
believe that the issue of which entity (CMS or the plan) identified the
overpayment is relevant to the length of the look-back period.
Comment: A few commenters recommended that the look-back period be
implemented prospectively. One commenter stated that a 6-year look-back
period could affect many distributed risk arrangements between plans
and providers that cross multiple years and have already been
reconciled. Another commenter asked that CMS phase in the look-back
period, beginning with a 1-year look-back period and each year adding
an additional year to the look-back period, until 2020 when a 6-year
look-back could be applied.
Response: We disagree with the commenters' recommendations to
implement the look-back period prospectively. We proposed 6 years as
the length of the look-back period because we believe that this
timeframe best balances the government's interest in having
overpayments returned with entities' interest in finality. We note that
the statute of limitations related to the False Claims Act is 6 years
from the date of the violation or 3 years from the date the relevant
government official learns of the situation, but in no case more than
10 years from the date of the violation. Furthermore, under Sec.
422.504(d) and Sec. 423.505(d), MA organizations and Part D sponsors
are required to maintain, for 10 years books, records, documents, and
other evidence of accounting procedures and practices related to costs,
financial statements, cash flow, among others.
After consideration of the public comments we received, we are
finalizing proposed Sec. Sec. 422.330(b) and 423.352(b) and proposed
Sec. Sec. 422.330(c) and 423.352(c) with modifications. We are moving
the language regarding the 6-year look-back period from proposed
Sec. Sec. 422.330(b) and 423.352(b) to Sec. Sec. 422.330(c)(1) and
423.352(c)(1) in order to indicate that if the MA organization or Part
D sponsor fails to correct payment data, CMS will conduct a payment
offset if the payment error affects payments for any of the 6 most
recently completed payment years and the payment error for a particular
payment year is identified after the applicable reconciliation date for
that payment year.
3. Payment Offset
If the MA organization or Part D sponsor submits corrected payment
data in response to CMS' request pursuant to proposed Sec. 422.330(b)
and Sec. 423.352(b), CMS will perform a reconciliation in the payment
system using the established payment adjustment process. CMS' systems
will conduct a payment reconciliation and determine the associated
payment adjustment based

[[Page 67007]]

on the corrected data using established payment policies and
procedures. However, if the MA organization or Part D sponsor fails to
correct the erroneous payment data, in the CY 2015 OPPS/ASC proposed
rule (79 FR 41061), we proposed that CMS would conduct a payment offset
from plan payments (proposed Sec. Sec. 422.330(c) and 423.352(c)).
a. Offset Amount
Because the data would not have been corrected in the routine
payment process, in the CY 2015 OPPS/ASC proposed rule (79 FR 41061
through 41062), we proposed, to be codified at Sec. Sec. 422.330(c)
and 423.352(c), that CMS determine the overpayment offset amount by
applying a payment calculation algorithm to simulate the payment
calculations currently applied by CMS to produce the routine Part C and
Part D payments. The payment calculation algorithm would apply the Part
C or Part D payment rules for the applicable year to calculate what the
correct payment should have been using corrected payment data. CMS
currently simulates payment error amounts for a variety of different
purposes, including for the annual Part C and Part D error rate
reporting (required by the Improper Payment Elimination and Recovery
Act (IPERA) and subject to the annual agency's Chief Financial
Officer's (CFO) audit and reported in the annual Agency Financial
Report (AFR)), RADV payment error estimation (subject to public
comment), and the Part C and Part D monthly payment validation required
by CFO auditors. These payment error calculations are all conducted
outside of the suite of payment systems that CMS uses to make routine
payments to MA organizations and Part D sponsors. In the proposed rule,
we stated that we believe that these calculations are reliable and an
accurate reflection of what the routine payment systems would calculate
using the corrected data if the MA organization or Part D sponsor had
submitted corrected payment data.
The actual process for calculating the overpayment will be
different for Part C and Part D because of the different payment rules
for the two programs. The Part C and Part D programs are both subject
to risk adjustment payment error resulting from invalid diagnoses and
to payment error due to inaccurate enrollment data. The Part D program
is further subject to payment reconciliation error resulting from
errors in PDE data and/or DIR data. The two programs also are subject
to different schedules with regard to the applicable reconciliation
date and subsequent payment reconciliation processes.
When new payment-related data are submitted to CMS payment systems,
there is generally a change to the correct amount of payment once CMS
conducts a payment reconciliation using the established payment
adjustment process. However, it is not sufficient for the plan to just
submit the new corrected risk adjustment, PDE, or DIR data to CMS
systems because data submission does not automatically trigger a system
reconciliation and payment adjustment. A change in payment will only
occur if a payment reconciliation is conducted. If the applicable
reconciliation has already been performed, CMS, at its discretion, may
conduct risk adjustment reruns or Part D reopenings to ensure that
payments also are corrected to reflect the newly corrected data.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41061), we proposed
that, under the payment calculation algorithm, CMS would calculate the
payment to the MA organization or Part D sponsor with and without the
corrected data as of a specified date. The difference in the two
amounts--that is, the amount by which the payments already made to the
MA organization or Part D sponsor exceed the payments that should have
been made as reflected in the calculation using the corrected data--
would be the payment recovery or offset amount. We provided the
following examples of how the offset amount would be calculated for
Part C and Part D overpayments relative to two different types of
payment data errors to illustrate our proposal:
Part C Offset Calculation. The example for Part C relates
to incorrect diagnosis data identified by CMS in the process of
calculating the national payment error estimate. A beneficiary's final
risk score and annual payment will be recalculated outside of the
routine payment system without the invalid diagnoses but using all the
other data used in the routine payment system. The year-appropriate
CMS-HCC risk adjustment methodology will be used to produce the revised
risk scores. The difference in payment for the beneficiary pre- and
post-change in the invalid diagnosis will be the offset amount. This
offset amount--generated using the same process for each beneficiary
for whom erroneous payment data are identified by CMS--will be summed
across all beneficiaries.
Part D Offset Calculation. The example for Part D relates
to the situation in which a Part D plan sponsor has submitted PDE
records for a beneficiary that include invalid National Drug Codes
(NDCs). For payment purposes, PDEs are required to reference valid
NDCs. In order to calculate the Part D payment offset amount, all of
the beneficiary's entire post-reconciliation PDE data will be pulled,
and the incorrect PDEs will be deleted or adjusted. The programmed
calculation logic will keep track of a variety of payment-related
information; for example, a beneficiary's benefit phase, gross covered
drug cost, true out-of-pocket (TrOOP) costs, low-income cost-sharing
subsidies (if any), and plan payment as the beneficiary progresses
through the Part D coverage benefit. The calculation algorithm will tap
into a variety of different data sets, such as health plan benefit
parameters, beneficiary low-income subsidy status, and standard low-
income cost-sharing subsidy parameters. Reports will then be produced
on Gross Covered Drug Cost (GCDC) and low-income cost-sharing subsidy
payment differentials. These payment differential amounts will be
incorporated into final reinsurance, low-income cost-sharing subsidy,
and risk sharing summary totals for a contract. DIR adjustments will be
factored into these calculations to arrive at the related payment
offset amount to be applied at the contract level. The difference in
reinsurance, low-income cost-sharing subsidy, and risk sharing dollars
with and without the correction to the PDEs will constitute the payment
offset related to the beneficiaries with the incorrect PDEs.
If the erroneous payment data in question is subsequently corrected
through the CMS payment system, the offset amount will be reversed, and
the payment to the MA organization or Part D sponsor will be updated
through the routine payment process. However, if the data in the CMS
system are not corrected and CMS conducts a reconciliation or reopening
for the applicable payment year after the offset has been determined,
the data will not be properly synchronized, and it is possible that the
resulting payment adjustments could be incorrect. In order to resolve
this problem, CMS may reverse the original offset and recalculate the
offset using the more recent data used in the most recent payment
reconciliation or reopening. The new offset amount will replace the
previous offset amount, and CMS would need to evaluate and act on the
resulting overpayment or underpayment.
Comment: A few commenters expressed concern about the payment
calculation algorithm that will be used to determine the overpayment
amount that should be recouped. Other commenters stated that they could
not understand why CMS cannot simply

[[Page 67008]]

correct the data in the payment systems of record and ``run a
reopening.'' Commenters requested that CMS clarify why the traditional
reopening process cannot adequately address the types of payment issues
outlined in the proposed rule. The commenters noted that CMS has used
its existing authority in the past to remove PDEs it believed should
not have been submitted. One commenter stated that this proposal
creates an environment where the sponsor's records of the PDEs and the
TrOOP accumulators would be out of sync with CMS systems timing and
would pose challenges during the reconciliations of PDEs and payment
data, as well as readjudication of beneficiary claims, and as a result,
recommended that CMS withdraw the proposal and assess whether there are
other current less onerous mechanisms that can be adopted to better
meet its goals.
Response: For the Part C program and the Part D program, we believe
that the traditional risk adjustment rerun and other reopening
processes are the best mechanisms to recoup overpayments. We believe
that these processes will be adequate to recoup overpayments in most
cases because we assume that the majority of MA organizations and Part
D sponsors will adjust their payment data upon request by CMS. However,
as we stated in the preamble to our proposed rule, if an MA
organization or Part D sponsor fails to correct erroneous payment data,
the established risk adjustment rerun and reopening processes are
inadequate. Because the data would not have been corrected in the CMS
payment system, we will have to determine the overpayment amount by
applying a payment calculation algorithm to simulate the payment
calculations currently applied by CMS systems to produce routine Part C
and Part D payments. It is true, as one commenter stated, that, in the
Part D program, CMS has used existing authority to remove PDE data that
should not have been submitted. We use that authority in very limited
circumstances when the erroneous data is PDE data. Part D payment data
also includes, however, direct and indirect remuneration (DIR) data,
for which we do not have a means to ``correct'' erroneous data.
Likewise, we do not have a process in place to ``correct'' erroneous
data in the Part C program. In addition, because we only expect to
conduct these types of data corrections in a limited set of
circumstances, and it would require significant resources to make the
payment system changes to support such corrections, CMS is prepared to
use a more economical process based on running a payment calculation
algorithm to recover the improper payments.
As stated in the proposed rule, CMS already simulates Part C and
Part D payments outside of the core payment systems to accurately
calculate payments and payment errors for a variety of different
purposes. Therefore, we believe that this procedural mechanism is the
least onerous mechanism that can be adopted to recoup overpayments,
return them to the Medicare Trust Funds, and ensure that payments are
made consistent with the payment framework established in statute.
Therefore, we are not withdrawing the proposal, as one commenter
recommended.
Comment: One commenter stated that CMS should not implement any
type of extrapolation methodology when calculating the payment offset
for MA organizations or Part D sponsors. The commenter believed that
CMS may seek to extrapolate the results of erroneous payment data to
all beneficiaries enrolled under a contract if the MA organization or
Part D sponsor does not submit corrected data as requested by CMS. The
commenter believed that the proposed provision could be interpreted to
mean that CMS may apply the offset amount to all beneficiaries, even
though not all beneficiaries may have been affected by the incorrect
data. The commenter opined that it would not be appropriate to
extrapolate payment-offset calculations without providing MA
organizations and Part D sponsors with notice or an explanation of the
methodologies that CMS would employ. Commenters recommended that CMS
expressly state that extrapolation will not be involved in payment
recoupment under the CMS-identified overpayment regulations, and the
payment offsets should be applied based on payment errors that have
been determined for specific beneficiaries.
Response: CMS may identify erroneous payment data submitted by MA
organizations or Part D sponsors through a variety of different means.
In the proposed rule, we discussed the procedures that CMS would
undertake when erroneous payment data are identified, but did not
address the means by which CMS would identify erroneous payment data.
Therefore, this comment is outside the scope of the proposed rule.
Comment: Several commenters raised the issue that, in cases where a
CMS-identified overpayment is a result of errors in diagnosis data
submitted by MA organizations, CMS' determination of the overpayment
amount should take into account the fact that the CMS-HCC risk
adjustment model used to risk-adjust payments to MA organizations is
calibrated on diagnoses from Medicare fee-for-service claims not MA
organizations' claims. Commenters referred to this as the ``data
inconsistency issue.'' Specifically, commenters noted that CMS has
recognized, in the contract-level RADV context, that individual errors
in risk adjustment data cannot be equated with overpayments without
first accounting for the error rate in the fee-for-service (``FFS'')
claims data. Commenters also stated that CMS has acknowledged when
calculating overpayments based on medical record review for RADV audits
that it must ``account for the fact that the documentation standard
used in RADV audits to determine a contract's payment error (medical
records) is different from the documentation standard used to develop
the Part C risk-adjustment model (FFS claims).'' Further, commenters
noted that, to address this problem, CMS implemented a ``FFS Adjuster''
that offsets the payment recovery amount to account for FFS and MA
program differences in documentation standards. These commenters
believed that CMS' application of the ``FFS Adjuster'' in the RADV
context does fulfill the actuarial equivalence requirement under the
risk adjustment provisions in the Act, and failure to maintain logical
consistency by applying this adjuster in the context of the CMS-
identified overpayments addressed by this rule would be contrary to the
actuarial standard in statute.
Response: We understand from these comments that commenters are
specifically recommending that any risk adjustment payment recovery
amounts be adjusted to reflect medical record coding documentation
differentials between FFS providers and MA organizations. We note that
this type of adjustment would not apply to other types of data errors,
such as those that might be found in PDE data. We further interpret the
commenters to be saying that the overpayment amounts should be adjusted
downward to take the medical record coding documentation differential
into account. From a conceptual perspective, we believe that the
application of a FFS adjuster is a payment calculation methodology
issue, rather than a procedural issue. Our proposal was narrowly
tailored to specify a procedure for correcting the inaccurate data that
MA organizations and Part D sponsors have submitted for payment and
providing an appeals process. Therefore, we believe that these

[[Page 67009]]

comments relating to data inconsistency and the application of a FFS
adjuster to overpayments are outside the scope of the proposed
provision.
After consideration of the public comments we received, we are
finalizing our proposal, as proposed, without modification.
b. Payment Offset Notification
In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed
that CMS would provide a payment offset notice to the MA organization
or Part D sponsor (proposed Sec. Sec. 422.330(d)(1) through (d)(3) and
423.352(d)(1) through (d)(3)). The notice would provide the dollar
amount to be offset against a plan's monthly prospective payments and
an explanation of how the erroneous data were identified and of the
calculation of the payment offset amount. Under our proposal, the
payment offset notice would also explain that, in the event that the MA
organization or Part D sponsor disagrees with the payment offset, it
may request an appeal within 30 days of the issuance of the payment
offset notice.
Comment: A number of commenters requested that CMS provide for an
appeals process prior to conducting the payment recovery or offset.
Response: We are concerned that if we allow for appeals prior to
the offset, we are at risk of having an extensive process that
inordinately delays the offset and the recovery of the overpayment.
However, we are willing to engage in a dialogue with plans prior to the
offset. We anticipate that this dialogue will help to resolve data
issues prior to implementing the payment offset and recovery.
Therefore, we are not making the requested changes to the proposed
process for payment offset notification.
After consideration of the public comments we received, we are
finalizing our proposal. However, we are making a minor modification to
the accompanying regulation text at Sec. 422.330(d) and Sec.
423.352(d) to clarify that the payment offset notice will include at
least the information outlined in the regulation, but may include other
information relevant to the payment offset.
4. Appeals Process for MA Organizations and Part D Sponsors
In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed an
appeals process for MA organizations and Part D sponsors with three
levels of review, including reconsideration (described at proposed
Sec. Sec. 422.330(e)(1) and 423.352(e)(1)), an informal hearing
(described at proposed Sec. Sec. 422.330(e)(2) and 423.352(e)(2)), and
an Administrator review (described at proposed Sec. Sec. 422.330(e)(3)
and 423.352(e)(3)).
a. Reconsideration
In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed
that an MA organization or Part D sponsor must file its request for
reconsideration within 30 days from the date that CMS issued the
payment offset notice to the MA organization or the Part D sponsor
(proposed Sec. Sec. 422.330(e)(1)(i) and 423.352(e)(1)(i)). At
proposed Sec. Sec. 422.330(e)(1)(ii) and 423.352(e)(1)(ii), we address
the information that must be included in the MA organization's or Part
D sponsor's request for reconsideration. The request would have to
contain the findings or issues with which the MA organization or Part D
sponsor disagrees, the reasons for its disagreement, and any additional
documentary evidence that the MA organization or Part D sponsor wishes
to submit in support of its position. This additional evidence would
have to be submitted with the request for reconsideration. Under our
proposal, any information submitted after this time would be rejected
as untimely.
Under our proposal, the CMS reconsideration official would review
the underlying data that were used to determine the amount of the
payment offset and any additional documentary evidence that the MA
organization or Part D sponsor timely submitted with its
reconsideration request (Sec. Sec. 422.330(e)(1)(iii) and
423.352(e)(1)(iii)). We note that, in some instances, the CMS
reconsideration official's review of the underlying data may include
review of information identifying or explaining the error in the
payment data, such as information from the source that identified the
erroneous payment data. We proposed at Sec. Sec. 422.330(e)(1)(iv) and
423.352(e)(1)(iv) that the CMS reconsideration official would inform
the MA organization or Part D sponsor of the decision. We proposed at
Sec. Sec. 422.330(e)(1)(v) and 423.352(e)(1)(v) that a reconsideration
decision would be final and binding unless a timely request for an
informal hearing is filed by the MA organization or Part D sponsor.
Comment: Several commenters stated that a 30-day window to submit
an appeal request is too short. A few commenters asked that CMS provide
at least 60 days from the time a data correction notice is issued for
Part D sponsors to appeal the data correction decision. One commenter
suggested a timeframe of 30 days to appeal and an additional 60 days
for researching the issue and gathering supporting documents necessary
for consideration.
Response: We have considered these concerns and suggestions, and we
continue to believe that 30 days is sufficient time to file the appeal,
particularly because the MA organization or Part D sponsor would have
received an earlier notification and request to correct the erroneous
data.
After consideration of the public comments we received, we are
finalizing our proposal without modification.
b. Informal Hearing
In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed
that if the MA organization or Part D sponsor is dissatisfied with CMS'
reconsideration decision, it would be entitled to request an informal
hearing (proposed Sec. Sec. 422.330(e)(2) and 423.352(e)(2)). As
proposed at Sec. Sec. 422.330(e)(2)(i) and 423.352(e)(2)(i), a request
for an informal hearing must be made in writing and filed within 30
days of the date of CMS' reconsideration decision. The request must
include a copy of CMS' reconsideration decision and must specify the
findings or issues in the decision with which the MA organization or
Part D sponsor disagrees and the reasons for its disagreement (proposed
Sec. Sec. 422.330(e)(2)(ii) and 423.352(e)(2)(ii)).
In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we set forth
the proposed procedures for conducting the informal hearing at proposed
Sec. Sec. 422.330(e)(2)(iii) and 423.352(e)(2)(iii). Under these
procedures, CMS would provide written notice of the time and place of
the informal hearing at least 10 days before the scheduled date of the
hearing (proposed Sec. 422.330(e)(2)(iii)(A) and Sec.
423.352(e)(2)(iii)(A)); the informal hearing would be conducted by a
CMS hearing officer. The hearing officer would be limited to reviewing
the record that was before CMS when CMS made its reconsideration
determination (proposed Sec. 422.330(e)(2)(iii)(B) and Sec.
423.352(e)(2)(iii)(B)). Under our proposal, no new or additional
documentation or evidence may be submitted at this hearing. At proposed
Sec. 422.330(e)(2)(iii)(C) and Sec. 423.352(e)(2)(iii)(C), we
proposed that the CMS hearing officer would review the record of the
proceeding before the CMS reconsideration official using the clearly
erroneous standard of review. CMS' reconsideration decision would not
be reversed unless the MA organization or Part D sponsor establishes
that the decision was clearly erroneous in light of the evidence in the

[[Page 67010]]

record before the CMS reconsideration official.
In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), at proposed
Sec. Sec. 422.330(e)(2)(iv) and 423.352(e)(2)(iv), we proposed that
the CMS hearing officer would send a written decision of the informal
hearing to the MA organization or Part D sponsor explaining the basis
for the decision. The CMS hearing officer's decision would be final and
binding, unless the decision is reversed or modified by the
Administrator (proposed Sec. Sec. 422.330(e)(2)(v) and
423.352(e)(2)(v)).
Comment: One commenter recommended that CMS allow plans the
opportunity to present oral arguments during the informal hearing
appeal stage and that written notice addressing the time and location
of the hearing be provided at least 30 days prior, as opposed to the
proposed 10 days.
Response: As proposed and finalized, this rule will permit MA
organizations and Part D sponsors, at the informal hearing stage, to
present oral arguments regarding whether or not the CMS reconsideration
official's decision was clearly erroneous. At the informal hearing, the
hearing officer will review, and the parties may discuss, the contents
of the administrative record, which was before the reconsideration
official. We understand that 10 days' notice of the time and place of
the hearing may be insufficient notice for some MA organizations and
Part D sponsors to arrange for travel to the hearing location.
Therefore, we are accepting the commenters' suggestion to extend the
timeframe for CMS to provide written notice of the time and place of
the hearing, and are extending that timeframe to 30 days before the
scheduled date for the informal hearing.
Comment: A few commenters stated that with the ``clearly
erroneous'' standard, CMS is unfairly placing the burden of proving CMS
wrong completely on the MA organizations and Part D sponsors.
Commenters pointed out that a sponsor may be unable--not unwilling--to
collect the data required to refute CMS' assertions. One commenter
stated that while the burden of proof falls to the sponsors to disprove
CMS' claims, there is no explicit requirement that CMS must be able to
substantiate its concerns regarding data before it triggers the
proposed incorrect payment notification process. The commenter is
concerned that without changes to these standards the possibility
exists for abuse of the process, putting sponsors on a continual
defensive cycle. The commenter suggested that CMS be obligated to
provide reasonable substantiation of its overpayment claim and that the
standard for review be that the MA organization or Part D sponsor
provide reasonable evidence, in light of the available data, that the
CMS claim is not supportable.
Response: The issue of whether or not payment data submitted by an
MA organization or Part D sponsor are erroneous is a factual issue that
is determined by looking at the payment data in relation to the payment
framework established in statute and regulation, which the MA
organizations and Part D sponsors agree to be contractually bound by
when they sign the agreement with CMS to operate a Medicare Advantage
and/or a Voluntary Medicare Prescription Drug Plan. Under the clearly
erroneous standard of review, the hearing officer will only overturn
the reconsideration official's decision if that decision, based on the
record before the reconsideration official, contains plain errors of
fact or law. Because the determination of whether or not payment data
submitted by an MA organization or Part D sponsor are erroneous is a
factual one, we believe that the clearly erroneous standard is
appropriate. The CMS reconsideration official reviews the underlying
data that were submitted by the MA organization or Part D sponsor and
any additional documentary evidence timely submitted by the MA
organization or Part D sponsor, and thus is in the best position to
determine the facts underlying the determination that erroneous payment
data have been submitted. Accordingly, the reconsideration official's
decision should only be disturbed in the case of a clear error.
We believe commenters are concerned that there is no requirement
that CMS substantiate its claims of an overpayment and that could lead
to abuse of the process. To the contrary, paragraph (b) of both Sec.
422.330 and Sec. 423.352 imposes a burden and a requirement on CMS.
Under these provisions, we can request corrections to payment data
through a notice in which we are obligated to include or make reference
to the specific data that need to be corrected and the reason why we
believe that the data are erroneous. ``Erroneous payment data,'' as
stated in the preamble of the proposed rule and the text of the
regulations being adopted in this final rule, are data that should not
have been submitted because the data are either inaccurate or
inconsistent with Part C or Part D requirements. We will determine
payment data to be erroneous based on the applicable statutes and
regulations. Based on the payment framework established in statute and
regulation, we will determine whether or not that erroneous data result
in an overpayment prior to conducting the payment offset.
Commenters are concerned that they will be unable--not unwilling--
to refute CMS' decision that the submission of erroneous payment data
has resulted in an overpayment. As we stated in the preamble to our
proposed rule, we proposed to establish a process for identifying and
recouping overpayments to ensure that payments are made consistent with
the payment framework established by statute. If we determine that an
overpayment has occurred, the MA organization or Part D sponsor must be
able to provide evidence to refute the finding that the underlying
payment data are erroneous in order to succeed on appeal. As stated in
the proposed rule at Sec. Sec. 422.330(f) and 423.352(f), the MA
organization or Part D sponsor must be able to prove by a preponderance
of the evidence that our finding that the payment data are erroneous
was incorrect or otherwise inconsistent with applicable program
requirements. Thus, we believe that it is reasonable to expect that MA
organizations and Part D sponsors provide evidence to support how their
payment data are correct and consistent with program requirements in
order for the CMS hearing officer to reverse both an initial
determination by CMS and a reconsideration decision by the CMS
reconsideration official that erroneous payment data have been
submitted.
After consideration of the public comments we received, we are
finalizing our proposals with respect to the procedures that will apply
to a request for an informal hearing, with a modification to provide
that we will provide written notice of the time and place of the
hearing 30 days before the scheduled date, as described above.
c. Review by Administrator
In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed
that the MA organization or Part D sponsor may request review of the
hearing officer's decision by the Administrator within 30 days of
issuance of the hearing officer's decision (proposed Sec. Sec.
422.330(e)(3)(i) and 423.352(e)(3)(i)). The MA organization or Part D
sponsor may provide written arguments to the Administrator for review.
Under proposed Sec. Sec. 422.330(e)(3)(ii) and 423.352(e)(3)(ii),
after receiving the request for review, the Administrator would have
the discretion to elect to review the hearing determination or decline
to review it. As provided at proposed Sec. Sec. 422.330(e)(3)(iii) and

[[Page 67011]]

423.352(e)(3)(iii), if the Administrator declines to review the hearing
officer's decision, the hearing officer's decision would be final and
binding. At proposed Sec. Sec. 422.330(e)(3)(iv) and
423.352(e)(3)(iv), we proposed that if the Administrator elects to
review the hearing officer's decision, the Administrator would review
the hearing officer's decision, as well as any other information
included in the record of the hearing officer's decision and any
written arguments submitted by the MA organization or Part D sponsor.
The Administrator would be able to uphold, reverse, or modify the
hearing officer's decision. The Administrator's determination would be
final and binding (proposed Sec. Sec. 422.330(e)(3)(v) and
423.352(e)(3)(v)).
We did not receive any public comments on the proposal for review
by the Administrator and are finalizing this proposal without
modification.
5. Matters Subject To Appeal and Burden of Proof
In the CY 2015 OPPS/ASC proposed rule (79 FR 41063), at proposed
Sec. Sec. 422.330(f)(1) and (2) and 423.352(f)(1) and (2), we proposed
to limit the subject-matter that an MA organization or Part D sponsor
may appeal under this provision and establish the burden of proof that
the MA organization or Part D sponsor must meet in its appeal. Under
this provision, an MA organization or a Part D sponsor would be able to
appeal the notice of payment offset solely on the grounds that CMS'
finding that the MA organization's or Part D sponsor's payment data
were either erroneous or otherwise inconsistent with applicable program
requirements. The MA organization or Part D sponsor would bear the
burden of proof by a preponderance of the evidence in demonstrating
that CMS' finding was incorrect or inconsistent with applicable program
requirements.
At proposed Sec. Sec. 422.330(g) and 423.352(g), we proposed that
the appeals process under paragraph (e) of these sections would apply
only to payment offsets described at proposed Sec. Sec. 422.330(c) and
423.352(c). It would not apply to any other CMS payment offset process.
Comment: One commenter noted that, in the proposed rule, CMS stated
that the burden of proof is on the MA organization or Part D sponsor to
prove that the CMS finding was ``incorrect or otherwise inconsistent
with applicable program requirements.'' This commenter asked that CMS
clarify that plans would not be expected to conform to FFS requirements
or business models in coding practices. The commenter stated that in
the past there have been occasions when CMS has relied on the use of
FFS requirements or customary practices in the absence of specific MA
or Part D guidelines. The commenter stated that this creates an
unreasonable burden of regulations, rules, manuals, notices, and
bulletins that must be considered in the process of identifying,
reporting, and appealing matters of data accuracy and potential
overpayment. In addition, the commenter believed that this practice
does not address the fact that an error may have been solely caused by
provider error, over which a plan has no control, and therefore places
an unreasonable burden on the plan.
Response: We are not clear about the commenter's concern. In the
preamble of the proposed rule, the phrase ``applicable program
requirements'' is referring to MA program requirements, not to FFS
program requirements. If the commenter is asking about coding
practices, CMS does not provide specific MA guidelines on how to code,
but instead requires that MA organizations use the code sets and
guidelines in whatever version of the International Classification of
Diseases that is in effect for the classification and reporting of
diseases for all U.S. health care settings (not just Medicare).
Further, we are unsure as to what the commenter is referring in the
statement ``in the past there have been occasions when CMS has relied
on the use of FFS requirements or customary practices in the absence of
specific MA or Part D guidelines.'' The commenter did not provide any
examples, so we are unable to respond to this concern. Regarding the
statement that an MA organization has no control over provider errors
in data submission, we refer readers to the contracting provisions in
the MA regulation at Sec. 422.504 regarding the MA organization's
responsibility for data submissions.
After consideration of the public comments we received, we are
finalizing our proposal without modification.
6. Effective Date of Appeals Process Provisions
In the CY 2015 OPPS/ASC proposed rule (79 FR 41063), we proposed
that this new procedural mechanism for a payment offset at proposed
Sec. 422.330 and Sec. 423.352 would apply after the effective date of
any final rule implementing the new payment offset and appeals process,
but that requests to correct payment data under proposed Sec. Sec.
422.330(b) and 423.352(b) and the payment offsets under proposed
Sec. Sec. 422.330(c) and 423.352(c) may apply to any payment year,
subject to the 6-year limitation under Sec. Sec. 422.330(b) and
423.352(b).
We invited public comments on these proposals regarding the
effective date and application of the rule.
We did not receive any public comments on these proposals, and we
are finalizing our proposals with the modification discussed above to
codify the 6-year limitation in paragraph (c) of Sec. Sec. 422.330 and
423.352.
In summary, we are finalizing the provisions at Sec. Sec. 422.330
and 423.352, with the following modifications. We are removing the
phrase ``controlled and'' from the definition of ``payment data'' at
Sec. Sec. 422.330(a) and 423.352(a). We are adding the definition of
``erroneous payment data'' to the final regulation text at Sec. Sec.
422.330(a) and 423.352(a). At Sec. Sec. 422.330(b) and 423.352(b), we
are moving language regarding the 6-year look-back period to Sec. Sec.
422.330(c)(1) and 423.352(c)(1) to indicate that if the MA organization
or Part D sponsor fails to correct payment data, CMS will conduct a
payment offset if the payment error identified affects payments for any
of the 6 most recently completed payment years and the payment error
for a particular payment year is identified after the applicable
reconciliation date for that payment year. At Sec. Sec. 422.330(c) and
423.352(c), we are adding paragraph (2) to clarify that CMS will
calculate the payment offset amount using the correct payment data. In
addition, we are making a minor modification to the regulation text at
Sec. 422.330(d) and Sec. 423.352(d) to clarify that the payment
offset notice will include at least the information outlined in the
regulation, but may include other information relevant to the payment
offset. Finally, we are revising Sec. Sec. 422.330(e)(2)(iii)(A) and
423.352(e)(2)(iii)(A) to state that we will provide written notice of
the time and place of the informal hearing at least 30 days before the
scheduled date.

XVIII. Files Available to the Public via the Internet

Addendum J to this final rule with comment period is a new addendum
that we proposed for CY 2015, in response to requests by public
commenters on the CY 2014 OPPS/ASC final rule with comment period for
additional data regarding ratesetting for the new comprehensive APCs
established in that final rule with comment period, which are discussed
in section II.A.2.e. of this final rule with comment period. Addendum J
lists the HCPCS code pairs for which we are finalizing complexity
adjustments for

[[Page 67012]]

CY 2015, by clinical family; the HCPCS codes finalized for exclusion
from the comprehensive APC payment bundle; and the relevant cost
statistics.
The public comments that we received related to the proposed
Addendum J to the CY 2015 OPPS/ASC proposed rule are discussed in
detail in section II.A.2.e. of this final rule with comment period. We
are finalizing our proposal to create Addendum J without modification.
The Addenda to the OPPS/ASC proposed rules and the final rules with
comment period are published and available only via the Internet on the
CMS Web site. To view the Addenda to this final rule comment period
pertaining to CY 2015 payments under the OPPS, we refer readers to the
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; select ``1613-FC'' from the list of regulations. All OPPS
Addenda to this final rule with comment period are contained in the
zipped folder entitled ``2015 OPPS 1613-F Addenda'' at the bottom of
the page. To view the Addenda to this final rule with comment period
pertaining to the CY 2015 payments under the ASC payment system, we
refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html; select ``1613-FC'' from the list of regulations. All ASC
Addenda to this final rule with comment period are contained in the
zipped folders entitled ``Addendum AA, BB, DD1 and DD2,'' and
``Addendum EE''.

XIX. Collection of Information Requirements

A. Legislative Requirements for Solicitation of Comments

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and to solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In the CY 2015 OPPS/ASC proposed rule (79 FR 741063 through 41067),
we solicited public comments on each of the issues outlined above for
the information collection requirements discussed below.

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)

As discussed in section XV.C. of the CY 2015 OPPS/ASC proposed rule
(79 FR 41054 through 41056) and in section XV.C. of this final rule
with comment period, we proposed to modify the physician-owned hospital
expansion exception process under the rural provider and hospital
ownership exceptions to the physician self-referral law. Specifically,
we proposed to permit physician-owned hospitals to use certain non-
HCRIS data sources to demonstrate satisfaction of the expansion
exception process eligibility criteria.
In section XIX.B. of the CY 2015 OPPS/ASC proposed rule (79 FR
41063), we stated that we believe the burden associated with our
modifications to the physician-owned hospital expansion exception
process is exempt from the PRA under 5 CFR 1320.3(c) because the
information collection will not impact 10 or more entities in a 12-
month period. We did not receive any public comments on the proposed
stated burden of our proposed modifications to the physician-owned
hospital expansion exception process.
As discussed in section XV.C. of this final rule with comment
period, we are finalizing our proposal with certain modifications. The
provisions are exempt from the PRA under 5 CFR 1320.3(c) because the
information collection will not impact 10 or more entities in a 12-
month period.

C. Associated Information Collections Not Specified in Regulatory Text

In the CY 2015 OPPS/ASC proposed rule, we made reference to
proposed associated information collection requirements that were not
discussed in the regulation text contained in the proposed rule. The
following is a discussion of those requirements, any public comments we
received, and our responses to those public comments.
1. Hospital OQR Program
As we stated in section XIV. of the CY 2012 OPPS/ASC final rule
with comment period, the Hospital OQR Program has been generally
modeled after the quality data reporting program for the Hospital IQR
Program (76 FR 74451). We refer readers to the CY 2011 OPPS/ASC final
rule with comment period (75 FR 72111 through 72114), the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74549 through 74554), the CY
2013 OPPS/ASC final rule with comment period (77 FR 68527 through
68532), and the CY 2014 OPPS/ASC final rule with comment period (78 FR
75170 through 75172) for detailed discussions of Hospital OQR Program
information collection requirements we have previously finalized.
a. Revisions to the CY 2016 Payment Determination Estimates
In the CY 2014 OPPS/ASC final rule with comment period (78 FR
75103), we finalized the adoption of four new measures for the CY 2016
payment determination and subsequent years: (1) OP-27: Influenza
Vaccination Coverage among Healthcare Personnel (NQF # 0431); (2) OP
29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for
Normal Colonoscopy in Average Risk Patients (NQF # 0658); (3) OP 30:
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a
History of Adenomatous Polyps--Avoidance of Inappropriate Use (NQF #
0659); and (4) OP-31: Cataracts--Improvement in Patient's Visual
Function within 90 Days Following Cataract Surgery (NQF # 1536). In the
CY 2014 OPPS/ASC final rule with comment period (78 FR 75171), we
estimated measures OP-29, OP-30, and OP-31 would require 40 hours of
reporting per quarter (96 cases x 0.417 hours). We also estimated that
reporting these measures via our Web-based tool would take 10 minutes
(or 0.167 hours) per measure per year (or 2.5 minutes for each
quarter's data, which are submitted on an annual basis) (78 FR 75171
through 75172).
We noted in section XIII.D.2. of the CY 2015 OPPS/ASC proposed rule
and this final rule with comment period that we have delayed reporting
for OP-29 and OP-30 for the CY 2016 payment determination by one
quarter. Therefore, we estimate a reduction in burden of 40 hours for
each of these measures (40 hours per quarter for reporting + 2.5
minutes of reporting via the Web-based tool) per hospital for the CY
2016 payment determination. In addition, in section XIII.D.3. of the CY
2015 OPPS/ASC proposed rule and this final rule

[[Page 67013]]

with comment period, we are finalizing our proposal to exclude OP-31
from the CY 2016 payment determination measure set. Therefore, we
estimate that there will be no burden for reporting OP-31 for the CY
2016 payment determination, and an overall reduction in burden of 160
hours ((40 hours per quarter for reporting x 4 quarters) + 0.167 hours
per year for reporting via the Web-based tool) per hospital for the CY
2016 payment determination.
Combining the estimated reductions in burden for all three of these
measures, we estimate a total reduction in burden of 240 hours (40
hours + 40 hours + 160 hours) per hospital for the CY 2016 payment
determination due to delayed data collection for OP-29 and OP-30 and
the exclusion of OP-31. We estimate that approximately 3,300 hospitals
will participate in the Hospital OQR Program for the CY 2016 payment
determination. Therefore, we estimate a total reduction in burden of
792,000 hours (240 hours x 3,300 hospitals) for the CY 2016 payment
determination from our original estimate of 1.6 million hours (160
hours/measure x 3 measures x 3,300 hospitals) as discussed in the CY
2014 OPPS/ASC final rule with comment period (78 FR 75171 through
75172) for all hospitals participating in the Hospital OQR Program
based on the data collection delays for OP-29 and OP-30 and the
exclusion of OP-31. In the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75171), we estimated that these measures would result in
a financial burden of $30 per hour. Therefore, we estimate that the
changes to these three measures will result in a reduction in financial
burden of $23.8 million ($30/hour x 792,000 hours) for the CY 2016
payment determination from our original estimate of $76.8 million ($1.6
million x $30) as discussed in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75171 through 75172).
b. Hospital OQR Program Requirements for the CY 2017 Payment
Determination and Subsequent Years
As we stated in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75171), we believe there is a burden associated with successful
participation in the Hospital OQR Program, where successful
participation results in a full annual payment update (APU) for the
particular payment determination. For the reasons stated in that rule,
we believe that the burden associated with these requirements is 42
hours per hospital or 138,600 hours for all hospitals for the CY 2017
payment determination and subsequent years. We estimate a financial
burden for these requirements of $4.2 million ($30/hour x 138,600) for
all hospitals.
(1) Claims-Based Measures for the CY 2017 and CY 2018 Payment
Determinations and Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68530) for detailed discussions of the information
collection requirements for the previously finalized claims-based
measures (OP-8, OP-9, OP-10, OP-11, OP-13, OP-14, and OP-15). In
section XIII.E. of this final rule with comment period, we are
finalizing our proposal to adopt one additional claims-based measure,
OP-32: Facility Seven-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy, but are finalizing its inclusion in the measure
set for the CY 2018 payment determination and subsequent years instead
of for the CY 2017 payment determination and subsequent years as
proposed. Before publicly reporting this measure, however, we will
conduct a dry run (a preliminary analysis) for facilities to review
their performance and provide feedback. For more detailed information
about the dry run, we refer readers to our discussion in section
XIII.E. of this final rule with comment period.
As we noted in the CY 2013 OPPS/ASC final rule with comment period
(77 FR 68530) and consistent with the modifications we are finalizing
in this final rule with comment period, we calculate claims-based
measures using Medicare FFS claims data that do not require additional
hospital data submissions.
(2) Chart-Abstracted Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68530 through 68531) and the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75171) for detailed discussions of the
information collection requirements for the previously finalized chart-
abstracted measures (OP-1, OP-2, OP-3, OP-4, OP-5, OP-6, OP-7, OP-18,
OP-20, OP-21, OP-22, OP-23, OP-29, OP-30, and OP-31).
In the CY 2015 OPPS/ASC proposed rule (79 FR 41034), we proposed to
remove three chart-abstracted measures from the Hospital OQR Program
beginning with the CY 2017 payment determination, OP-4: Aspirin at
Arrival (NQF # 0286); OP-6: Timing of Prophylactic Antibiotics; and OP-
7: Perioperative Care: Prophylactic Antibiotic Selection for Surgical
Patients (NQF # 0528). In section XIII.C.3. of this final rule with
comment period, we are finalizing our proposal to remove two of these
measures (OP-6 and OP-7) from the Hospital OQR Program for the CY 2017
payment determination and subsequent years. We are not finalizing our
proposal to remove OP-4 and refer readers to section XIII.C.3. of this
final rule with comment period for a detailed discussion. We previously
estimated that each participating hospital will spend 35 minutes (or
0.583 hours) per case to collect and submit the data required for the
chart-abstracted measures finalized for the CY 2015 payment
determination and subsequent years (OP-1, OP-2, OP-3, OP-4, OP-5, OP-6,
OP 7, OP-18, OP-20, OP-21, OP-22, and OP-23) (78 FR 75171). Because we
are finalizing our proposals to remove two of these measures, we
believe that the time to chart-abstract measures will be reduced by
16.7 percent (2 of 12 measures) per case. Therefore, we estimate that
hospitals will spend approximately 29 minutes (0.483 hours) per case to
collect and submit these data.
Data submitted for the CY 2014 payment determination indicate that
the average hospital will submit approximately 1,266 cases per year for
these measures. Therefore, as a result of our removal of 2 chart-
abstracted measures, we estimate that the time it will take for the
average hospital to abstract data for all of the chart-abstracted
measures will be 612 hours per year (1,266 cases x 0.483 hours). We
estimate that there will be approximately 3,300 hospitals that
participate in the Hospital OQR Program for the CY 2017 payment
determination and subsequent years. Therefore, we estimate that the
chart-abstracted measures for the CY 2017 payment determination and
subsequent years will result in a burden of 2.02 million hours (612
hours x 3,300 hospitals) for all participating hospitals, for a total
financial burden of approximately $61 million (2.02 million hours x
$30/hour).
In addition, in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75171), we estimated that OP-29 and OP-30 would require 25
minutes (0.417 hours) per case per measure to chart-abstract. We also
estimated that hospitals would abstract 384 cases per year for each of
these measures. Our estimate for the CY 2017 payment determination and
subsequent years has not changed from last year's estimate (although,
as noted above, we have changed our estimate for the CY 2016 payment
determination based on the delay of reporting OP-29 and OP-30).

[[Page 67014]]

Therefore, for the CY 2017 payment determination and subsequent years,
we estimate a burden of 1.1 million hours (3,300 hospitals x 0.417
hours/case x 384 case/measure x 2 measures) for all participating
hospitals for OP-29 and OP-30 for a total financial burden of
approximately $33 million ($30/hour x 1.1 million hours).
In section XIII.D.3. of this final rule with comment period, we are
finalizing our proposal to exclude OP-31 from the CY 2016 payment
determination measure set and, for the CY 2017 payment determination
and subsequent years, to change this measure from required to
voluntary. Hospitals will not be subject to a payment reduction with
respect to this measure for the CY 2016 payment determination or during
the period of voluntary reporting. We continue to believe this measure
addresses an important area of care, and anticipate that many
facilities will report this measure on a voluntary basis. In the CY
2014 ASC/OPPS final rule with comment period (78 FR 75171), we
estimated that OP-31 would require 25 minutes (0.417 hours) per case to
chart-abstract. We also estimated that hospitals would abstract 384
cases per year for this measure. We estimate that approximately 20
percent of hospitals (660 hospitals (3,300 hospitals x 0.2)) will elect
to report this measure on a voluntary basis. Therefore, we are revising
the estimated burden for this measure to 105,685 hours (660 hospitals x
0.417 hours/case x 384 cases) for participating hospitals for the CY
2017 payment determination and subsequent years, for a total financial
burden of approximately $3.2 million ($30/hour x 105,685 hours).
Therefore, for the chart-abstracted measures, we estimate a total
burden for all participating hospitals of 3.23 million hours (2.02
million hours + 105,685 hours + 1.1 million hours) and $96.9 million
(3.23 million hours x $30/hour) for the CY 2017 payment determination
and subsequent years.
(3) Web-Based Measures Submitted Directly to CMS for the CY 2017
Payment Determination and Subsequent Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75171) for detailed discussions of the information
collection requirements for the previously finalized measures submitted
via the Web-based tool. For the reasons stated in that final rule with
comment period, we estimate that each participating hospital would
spend 10 minutes per measure per year to collect and submit the data
for the six measures (OP-12, OP-17, OP-25, OP-26, OP-29, and OP-30)
submitted via the Web-based tool. Therefore, the estimated annual
burden associated with these measures for all participating hospitals
is 3,307 hours (3,300 hospitals x 0.167 hours/measure x 6 measures/
hospital) for the CY 2017 payment determination and subsequent years.
As stated above, in section XIII.D.3. of this final rule with
comment period, we are finalizing our proposal that hospitals have the
option to voluntarily collect and submit OP-31 data beginning with the
CY 2015 encounter period for the CY 2017 payment determination and
subsequent years; failing to report this measure will not affect
hospitals' payment determinations for CY 2017 and subsequent years. We
continue to believe this measure addresses an important area of care
and estimate that approximately 20 percent of hospitals or 660
hospitals (3,300 hospitals x 0.2) will elect to report this measure on
a voluntary basis. Therefore, we are revising the estimated burden for
this measure for all participating hospitals to 111 hours (660
hospitals x 0.167 hours) for the CY 2017 payment determination and
subsequent years.
Moreover, we estimate that the financial burden incurred for the
Web-based submission of these measures for all participating hospitals
will be $119,070 ($30/hour x (3,858 hours + 111 hours)) for the CY 2017
payment determination and subsequent years.
(4) NHSN HAI Measure for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172) for detailed discussions of the information
collection requirements for OP-27: Influenza Vaccination Coverage among
Healthcare Personnel. In section XIII.D.1. of this final rule with
comment period, we are clarifying the submission deadline for this
measure. We do not believe there will be a change in burden due to this
clarification because it was a typographical error and our previous
estimates were based on the correct submission timeframe. We also noted
that facilities should collect and submit a single vaccination count
for each health care facility enrolled in NHSN by the facility OrgID.
Although we believe an overall reduction in burden will occur because
hospitals will only be required to submit this information once for
both the Hospital IQR Program and the Hospital OQR Program, we do not
believe there is a reduction in burden that is directly attributable to
the Hospital OQR Program. That is, this requirement is independent of
the Hospital IQR Program requirements. Therefore, our burden analysis
remains the same. For the reasons discussed in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75172), we estimate a total
burden for all participating hospitals of 106,940 hours and a total
financial burden of $3,208,203 associated with this measure.
c. Review and Corrections Period Requirements for the CY 2017 Payment
Determination and Subsequent Years
In section XIII.H.2.f. of this final rule with comment period, we
are finalizing our proposal to formalize that the time during which
hospitals submit chart-abstracted data is the review and corrections
period for those data. Because this proposal does not require hospitals
to submit additional data, we do not believe it will increase burden
for these hospitals.
d. Hospital OQR Program Validation Requirements for the CY 2017 Payment
Determination and Subsequent Years
In sections XIII.H.3.b. and XIII.H.3.e. of this final rule with
comment period, we are finalizing three changes to our validation
procedures: (1) A hospital will 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 containing the most recently
available data (we note that this is a modification of our proposal
that a hospital would be eligible for random selection for validation
if it submitted 1 case); (2) hospitals will have the option to either
submit paper copies of patient charts or securely transmit electronic
versions of medical information for validation; and (3) hospitals must
identify the medical records staff responsible for submission of
records under the Hospital OQR Program to the designated CMS
contractor. We do not believe that these changes to the eligibility
requirements will result in additional burden because we will continue
to select 500 hospitals for validation consistent with our previous
burden estimates indicate (78 FR 75172). In addition, we do not believe
requiring hospitals to identify the medical records staff responsible
for submission of records will result in additional burden since
hospitals must already submit this information to our designated
contractors (the State QIO), and only the contractor to whom the data
is submitted may change. However, we do believe that the second
requirement regarding the method of submission may result in a change
in burden.

[[Page 67015]]

We are finalizing our proposal that the requirement to submit
patient charts for validation of Hospital OQR Program data may be met
by employing either of the following options: (1) A hospital may submit
paper medical records, the form in which we have historically requested
them; or (2) a hospital may securely transmit electronic versions of
medical information beginning in the CY 2017 payment determination and
for subsequent years. We are finalizing our proposal that hospitals
that choose to securely transmit electronic versions of medical
information should either: (1) download or copy the digital image (that
is., a PDF) of the patient chart onto an encrypted CD, DVD, or flash
drive and ship the encrypted electronic media following instructions
specified on the QualityNet Web site; or (2) securely submit PDFs of
patient charts using a Secure File Transfer Portal on the QualityNet
Web site. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50834 through
50835), the Hospital IQR Program previously finalized a similar policy
that also allows hospitals to submit electronic versions of records for
validation using the first method. In the FY 2015 IPPS/LTCH PPS final
rule, the Hospital IQR Program finalized secure submission of digital
images via a Secure File Transfer Portal (79 FR 50269). For the same
reasons outlined in the Hospital IQR Program (78 FR 50956), we are
finalizing our proposal to set a reimbursement rate of $3.00 per
patient chart submitted electronically (using either of the finalized
methods for electronic submission) for validation for the CY 2017
payment determination and subsequent years. We will continue to
reimburse hospitals at a rate of 12 cents per page, plus shipping, for
records provided on paper (76 FR 74577).
The burden associated with validation is the time and effort
necessary to submit validation data to the CMS contractor. For some
hospitals, we believe that submitting these data electronically may
result in a reduction in burden; for others we believe that submitting
paper copies will be the least burdensome option. As we have previously
stated in the CY 2014 OPPS/ASC final rule with comment period, we
sample 500 hospitals for validation, and we estimate that it will take
each hospital 12 hours to comply with the data submission requirements
(78 FR 75172). Therefore, because the number of hospitals we sample for
validation will remain the same, we estimate a total burden of
approximately 6,000 hours (500 hospitals x 12 hours/hospital) and a
total financial impact of $180,000 ($30/hour x 6,000 hours) for the CY
2017 payment determination and subsequent years.
e. Extraordinary Circumstances Extensions or Exemptions Process
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75119 through 75120), and 42 CFR 419.46(d) for a complete
discussion of our extraordinary circumstances extension or waiver
process under the Hospital OQR Program. In this final rule with comment
period, we are finalizing our proposal to change the phrase ``extension
or waiver'' to ``extension or exemption'' throughout the regulation. In
section XIII.J. of this final rule with comment period, we note that we
intend to make certain changes to the form to ensure that the form is
consistent across CMS quality reporting programs. We do not anticipate
that these minor changes will affect the collection of information
burden estimates for this process.
f. Reconsideration and Appeals
While there is burden associated with filing a reconsideration
request, the regulations at 5 CFR 1320.4 for the PRA (44 U.S.C.
3518(c)(1)(B)) exclude collection activities during the conduct of
administrative actions such as reconsiderations or appeals.
We invited public comment on the burden associated with these
information collection requirements. We did not receive any public
comments on this burden.
2. ASCQR Program Requirements
a. Background
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74554), the FY 2013 IPPS/LTCH PPS final rule (77 FR
53672), the CY 2013 OPPS/ASC final rule with comment period (77 FR
68532 through 68533), and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172 through 75174) for detailed discussions of the
ASCQR Program information collection requirements we have previously
finalized.
b. Revisions to the CY 2016 Payment Determination Estimates
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124
through 75130), we finalized the adoption of three new measures for the
CY 2016 payment determination and subsequent years: ASC-9: Endoscopy/
Polyp Surveillance: Appropriate Follow-up Interval for Normal
Colonoscopy in Average Risk Patients (NQF # 0658); ASC-10: Endoscopy/
Polyp Surveillance: Colonoscopy Interval for Patients with a History of
Adenomatous Polyps--Avoidance of Inappropriate Use (NQF # 0659); and
ASC-11: Cataracts--Improvement in Patient's Visual Function within 90
Days Following Cataract Surgery (NQF # 1536). In that final rule with
comment period, we estimated that each participating ASC would spend 35
minutes per case to collect and submit the data for these measures,
resulting in a total estimated burden for ASCs with a single case per
ASC of 3,067 hours (5,260 ASCs x 0.583 hours per case per ASC). We also
stated that we expected ASCs would vary greatly as to the number of
cases per ASC due to ASC specialization (78 FR 75173).
As we stated in section XIV.E.3. of the CY 2015 OPPS/ASC proposed
rule and this final rule with comment period, we have delayed reporting
for ASC-9 and ASC-10 for the CY 2016 payment determination by one
quarter. Therefore, we estimate a 25-percent reduction in cases and
burden for these measures for the CY 2016 payment determination. As we
stated in section XIV.E.3.c. of the CY 2015 OPPS/ASC proposed rule and
this final rule with comment period, we delayed reporting of ASC-11 by
1 year. We also are finalizing our proposal to exclude ASC-11 from the
CY 2016 payment determination measure set. As a result, we do not
believe there would be any burden associated with this measure for the
CY 2016 payment determination.
c. Claims-Based Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68532) and CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172 through 75174) for detailed discussions of the
information collection requirements for the five previously-adopted
claims-based ASCQR Program measures (four outcome measures and one
process measure). The five previously adopted measures are: ASC-1:
Patient Burn (NQF # 0263); ASC-2: Patient Fall (NQF # 0266); ASC-3:
Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant
(NQF # 0267); ASC-4: Hospital Transfer/Admission (NQF # 0265); and ASC-
5: Prophylactic Intravenous (IV) Antibiotic Timing (NQF # 0264). For
the reasons we discussed in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75172 through 75173), we estimate that the
reporting burden to report Quality Data Codes (QDCs) for these five
claims-

[[Page 67016]]

based outcome measures would be nominal for the CY 2017 payment
determination and for subsequent years.
In section XIV.B.5. of this final rule with comment period, we are
finalizing our proposal to add one additional claims-based measure to
the ASCQR Program, but are finalizing its inclusion in the measure sets
for the CY 2018 payment determination and subsequent years, instead of
the measure set we proposed for the CY 2017 payment determination and
subsequent years. Before publicly reporting this measure, we plan to
perform a dry run (a preliminary analysis) of the measure in 2015. We
refer readers to section XIV.B.5 of this final rule with comment period
for a detailed discussion of the dry run.
Because this measure, ASC-12: Facility Seven-Day Risk-Standardized
Hospital Visit Rate after Outpatient Colonoscopy, will be computed by
CMS based on paid Medicare FFS claims, and will not require ASCs to
submit QDCs, we do not anticipate that this measure would create
additional burden to ASCs during the dry run or for the CY 2018 payment
determination and subsequent years.
d. Web-Based Measures for the CY 2017 Payment Determination and
Subsequent Years
We refer readers to the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68532) and CY 2014 OPPS/ASC final rule with comment
period (78 FR 75172 through 75174) for detailed discussions of the
information collection requirements for the five previously-adopted
Web-based measures, excluding ASC-11, which we proposed for voluntary
inclusion in the ASCQR Program for the CY 2017 payment determination
and subsequent years. The five previously adopted measures are: ASC-6:
Safe Surgery Checklist Use; ASC-7: ASC Facility Volume Data on Selected
ASC Surgical Procedures; ASC-8: Influenza Vaccination Coverage Among
Healthcare Personnel (NQF # 0431); ASC-9: Endoscopy/Polyp Surveillance:
Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk
Patients (NQF # 0658); and ASC-10: Endoscopy/Polyp Surveillance:
Colonoscopy Interval for Patients with a History of Adenomatous Polyps-
Avoidance of Inappropriate Use (NQF # 0659).
For the reasons we discussed in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 75173 through 75174), we estimate that the
reporting burden for the ASC-6: Safe Surgery Checklist Use and the ASC-
7: ASC Facility Volume measures would be 1,756 hours (5,260 ASCs x 2
measures x 0.167 hours per ASC) and $52,680 (1,756 hours x $30.00 per
hour) annually for the CY 2017 payment determination and for subsequent
years.
For the reasons discussed in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75173 through 75174), we estimate that the
reporting burden for the ASC-8: Influenza Vaccination Coverage Among
Healthcare Personnel (NQF #0431) measure would be 18,005 hours and
$540,150 (18,005 hours x $30.00 per hour) annually for the CY 2017
payment determination and for subsequent years.
For the reasons discussed in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 75173 through 75174), we estimate that the
reporting burden for ASCs with a single case per ASC for the chart-
abstracted ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up
Interval for Normal Colonoscopy in Average Risk Patients (NQF # 0658)
and ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for
Patients with a History of Adenomatous Polyps-Avoidance of
Inappropriate Use (NQF # 0659) measures would be 3,067 hours and
$92,010 (3,067 hours x $30.00 per hour) annually for the CY 2017
payment determination and for subsequent years.
In section XIV.E.3.c. of this final rule with comment period, we
are finalizing our proposal that data collection and submission be
voluntary for the CY 2017 payment determination and subsequent years
for ASC-11: Cataracts: Improvement in Patient's Visual Function within
90 Days Following Cataract Surgery (NQF # 1536), meaning we would not
subject ASCs to a payment reduction with respect to this measure during
the period of voluntary reporting. We continue to believe this measure
addresses an important area of care, and anticipate that many
facilities will report this measure on a voluntary basis. In the CY
2014 ASC/OPPS final rule with comment period (78 FR 75173), we
estimated that each participating ASC would spend 35 minutes per case
to collect and submit the data for this measure, making the total
estimated burden for ASCs with a single case per ASC 3,067 hours (5,260
ASCs x 0.583 hours per case per ASC) annually. We expect that ASCs
would vary greatly as to the number of cases per ASC due to ASC
specialization. We estimate that approximately 20 percent of ASCs would
elect to report this measure on a voluntary basis; therefore, we
estimate the total estimated burden for ASCs with a single case per ASC
to be 613 hours (1,052 ASCs x 0.583 hours per case per ASC) and $18,390
(613 hours x $30.00 per hour) annually for the CY 2017 payment
determination and subsequent years.
e. Extraordinary Circumstances Extension or Exemptions Process
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53642 through 53643) and the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75140) for a complete discussion of our extraordinary
circumstances extension or waiver process under the ASCQR Program. In
the CY 2015 OPPS/ASC proposed rule, we did not propose to make any
substantive changes to this process. However, in the future, we will
refer to the process as the extraordinary circumstances extensions or
exemptions process. In section XIV.E.7. of this final rule with comment
period, we note that we intend to make certain changes to the form to
ensure that the form is consistent across CMS quality reporting
programs. We do not anticipate that these minor changes would affect
the burden estimates for this process.
f. Reconsideration
While there is burden associated with filing a reconsideration
request, the regulations at 5 CFR 1320.4 for the PRA (44 U.S.C.
3518(c)(1)(B)) exclude collection activities during the conduct of
administrative actions such as reconsiderations.
We invited public comment on the burden associated with these
information collection requirements. We did not receive any public
comments on this burden.

XX. Waiver of Proposed Rulemaking and Response to Comments

A. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on a proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and substance
of the proposed rule or a description of the subjects and issues
involved. This procedure can be waived, however, if an agency finds
good cause that a notice-and-comment procedure is impracticable,
unnecessary, or contrary to the public interest and incorporates a
statement of the finding and its reasons in the rule issued.
We utilize HCPCS codes for Medicare payment purposes. The HCPCS is
a national coding system comprised of Level I codes (CPT codes) and
Level II codes that are intended to provide uniformity to coding
procedures,

[[Page 67017]]

services, and supplies across all types of medical providers and
suppliers. CPT codes are copyrighted by the AMA and consist of several
categories, including Category I codes which are 5-digit numeric codes,
and Category III codes which are temporary codes to track emerging
technology, services, and procedures. The AMA issues an annual update
of the CPT code set each Fall, with January 1 as the effective date for
implementing the updated CPT codes. The HCPCS, including both CPT codes
and Level II codes, is similarly updated annually on a calendar year
basis. Annual coding changes are not available to the public until the
Fall immediately preceding the annual January update of the OPPS and
the ASC payment system. Because of the timing of the release of these
new codes, it is impracticable for us to provide prior notice and
solicit comment on these codes and the payments assigned to them in
advance of publication of the final rule that implements the OPPS and
the ASC payment system. However, it is imperative that these coding
changes be accounted for and recognized timely under the OPPS and the
ASC payment system for payment because services represented by these
codes will be provided to Medicare beneficiaries in hospital outpatient
departments and ASCs during the calendar year in which they become
effective. Moreover, regulations implementing the HIPAA (42 CFR Parts
160 and 162) require that the HCPCS be used to report health care
services, including services paid under the OPPS and the ASC payment
system. We assign interim payment amounts and status indicators to any
new codes according to our assessment of the most appropriate APC based
on clinical and resource homogeneity with other procedures and services
in the APC. If we did not assign payment amounts to new codes on an
interim basis, the alternative would be to not pay for these services
during the initial calendar year in which the codes become effective.
We believe it would be contrary to the public interest to delay
establishment of payment amounts for these codes.
Therefore, we find good cause to waive the notice of proposed
rulemaking for the establishment of payment amounts for selected HCPCS
codes identified with comment indicator ``NI'' in Addendum B and
Addendum BB to this final rule with comment period. We are providing a
60-day public comment period.

B. Response to Comments

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

XXI. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
We have examined the impacts of this final rule with comment
period, as required by Executive Order 12866 on Regulatory Planning and
Review (September 30, 1993), Executive Order 13563 on Improving
Regulation and Regulatory Review (January 18, 2011), the Regulatory
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section
1102(b) of the Social Security Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA) (March 22, 1995, Pub. L. 104-4),
Executive Order 13132 on Federalism (August 4, 1999), and the Contract
with America Advancement Act of 1996 (Pub. L. 104-121) (5 U.S.C.
804(2)). This section of the final rule with comment period contains
the impact and other economic analyses for the provisions that we are
finalizing.
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This final rule with comment period has been designated as
an economically significant rule under section 3(f)(1) of Executive
Order 12866 and a major rule under the Contract with America
Advancement Act of 1996 (Pub. L. 104-121). Accordingly, this final rule
with comment period has been reviewed by the Office of Management and
Budget. We have prepared a regulatory impact analysis that, to the best
of our ability, presents the costs and benefits of this final rule with
comment period. We solicited comments on the regulatory impact analysis
in the proposed rule, and we address the public comments we received in
this section below and in other sections of this final rule with
comment period as appropriate.
2. Statement of Need
This final rule with comment period is necessary to update the
Medicare hospital OPPS rates. It is necessary to make changes to the
payment policies and rates for outpatient services furnished by
hospitals and CMHCs in CY 2015. We are required under section
1833(t)(3)(C)(ii) of the Act to update annually the OPPS conversion
factor used to determine the payment rates for APCs. We also are
required under section 1833(t)(9)(A) of the Act to review, not less
often than annually, and revise the groups, the relative payment
weights, and the wage and other adjustments described in section
1833(t)(2) of the Act. We must review the clinical integrity of payment
groups and relative payment weights at least annually. We are revising
the APC relative payment weights using claims data for services
furnished on and after January 1, 2013, through and including December
31, 2013 and processed through June 30, 2014, and updated cost report
information.
This final rule with comment period also is necessary to update the
ASC payment rates for CY 2015, enabling CMS to make changes to payment
policies and payment rates for covered surgical procedures and covered
ancillary services that are performed in an ASC in CY 2015. Because ASC
payment rates are based on the OPPS relative payment weights for the
majority of the procedures performed in ASCs, the ASC payment rates are
updated annually to reflect annual changes to the OPPS relative payment
weights. In addition, we are required under section 1833(i)(1) of the
Act to review and update the list of surgical procedures that can be
performed in an ASC not less frequently than every 2 years.
3. Overall Impacts for the OPPS and ASC Payment Provisions
We estimate that the total increase in Federal government
expenditures under the OPPS for CY 2015 compared to CY 2014 due to the
changes in this final rule with comment period, will be approximately
$900 million. Taking into account our estimated changes in enrollment,
utilization, and case-mix, we estimate that the OPPS expenditures for
CY 2015 will be approximately $5.135 billion higher relative to
expenditures in CY 2014. Because this final rule with comment period is
economically significant as measured by the threshold of an additional
$100 million in expenditures in one year, we have prepared this
regulatory impact analysis that, to the best of our ability,

[[Page 67018]]

presents its costs and benefits. Table 49 displays the redistributional
impact of the CY 2015 changes in OPPS payment to various groups of
hospitals and for CMHCs.
We estimate that the update to the conversion factor and other
adjustments (not including the effects of outlier payments, the pass-
through estimates, and the application of the frontier State wage
adjustment for CY 2015) will increase total OPPS payments by 2.2
percent in CY 2015. The changes to the APC weights, the changes to the
wage indexes, the continuation of a payment adjustment for rural SCHs,
including EACHs, and the payment adjustment for cancer hospitals will
not increase OPPS payments because these changes to the OPPS are budget
neutral. However, these updates will change the distribution of
payments within the budget neutral system. We estimate that the total
change in payments between CY 2014 and CY 2015, considering all
payments, including changes in estimated total outlier payments, pass-
through payments, and the application of the frontier State wage
adjustment outside of budget neutrality, in addition to the application
of the OPD fee schedule increase factor after all adjustments required
by sections 1833(t)(3)(F), 1833(t)(3)(G), and 1833(t)(17) of the Act,
will increase total estimated OPPS payments by 2.3 percent.
We estimate the total increase (from changes to the ASC provisions
in this final rule with comment period as well as from enrollment,
utilization, and case-mix changes) in Medicare expenditures under the
ASC payment system for CY 2015 compared to CY 2014 to be approximately
$236 million. Because the provisions for the ASC payment system are
part of a final rule that is economically significant as measured by
the $100 million threshold, we have prepared a regulatory impact
analysis of the changes to the ASC payment system that, to the best of
our ability, presents the costs and benefits of this portion of the
final rule with comment period. Table 50 and Table 51 of this final
rule with comment period display the redistributional impact of the CY
2015 changes on ASC payment, grouped by specialty area and then grouped
by procedures with the greatest ASC expenditures, respectively.
4. Detailed Economic Analyses
a. Estimated Effects of OPPS Changes in This Final Rule With Comment
Period
(1) Limitations of Our Analysis
The distributional impacts presented here are the projected effects
of the CY 2015 policy changes on various hospital groups. As we did for
the proposed rule, we post on the CMS Web site our hospital-specific
estimated payments for CY 2015 with the other supporting documentation
for this final rule with comment period. To view the hospital-specific
estimates, we refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At the Web site, select ``regulations and notices'' from
the left side of the page and then select ``CMS-1613-FC'' from the list
of regulations and notices. The hospital-specific file layout and the
hospital-specific file are listed with the other supporting
documentation for this final rule with comment period. We show
hospital-specific data only for hospitals whose claims were used for
modeling the impacts shown in Table 49 below. We do not show hospital-
specific impacts for hospitals whose claims we were unable to use. We
refer readers to section II.A. of this final rule with comment period
for a discussion of the hospitals whose claims we do not use for
ratesetting and impact purposes.
We estimate the effects of the individual policy changes by
estimating payments per service, while holding all other payment
policies constant. We use the best data available, but do not attempt
to predict behavioral responses to our policy changes. In addition, we
do not make adjustments for future changes in variables such as service
volume, service-mix, or number of encounters. In the CY 2015 OPPS/ASC
proposed rule (79 FR 41068), we solicited public comment and
information about the anticipated effects of our proposed changes on
providers and our methodology for estimating them. Any public comments
that we received are addressed in the applicable sections of the final
rule with comment period that discuss the specific policies.
(2) Estimated Effects of OPPS Changes on Hospitals
Table 49 below shows the estimated impact of this final rule with
comment period on hospitals. Historically, the first line of the impact
table, which estimates the change in payments to all facilities, has
always included cancer and children's hospitals, which are held
harmless to their pre-BBA amount. We also include CMHCs in the first
line that includes all providers. We now include a second line for all
hospitals, excluding permanently held harmless hospitals and CMHCs.
We present separate impacts for CMHCs in Table 49, and we discuss
them separately below, because CMHCs are paid only for partial
hospitalization services under the OPPS and are a different provider
type from hospitals. In CY 2015, we are continuing to pay CMHCs under
APC 0172 (Level I Partial Hospitalization (3 services) for CMHCs) and
APC 0173 (Level II Partial Hospitalization (4 or more services) for
CMHCs), and we are paying hospitals for partial hospitalization
services under APC 0175 (Level I Partial Hospitalization (3 services)
for hospital-based PHPs) and APC 0176 (Level II Partial Hospitalization
(4 or more services) for hospital-based PHPs).
The estimated increase in the total payments made under the OPPS is
determined largely by the increase to the conversion factor under the
statutory methodology. The distributional impacts presented do not
include assumptions about changes in volume and service-mix. The
conversion factor is updated annually by the OPD fee schedule increase
factor as discussed in detail in section II.B. of this final rule with
comment period. Section 1833(t)(3)(C)(iv) of the Act provides that the
OPD fee schedule increase factor is equal to the market basket
percentage increase applicable under section 1886(b)(3)(B)(iii) of the
Act, which we refer to as the IPPS market basket percentage increase.
The IPPS market basket percentage increase for FY 2015 is 2.9 percent
(79 FR 49994). Section 1833(t)(3)(F)(i) of the Act reduces that 2.9
percent by the multifactor productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act, which is 0.5 percentage point for FY
2015 (which is also the MFP adjustment for FY 2015 in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 49994)); and sections 1833(t)(3)(F)(ii) and
1833(t)(3)(G)(iv) of the Act further reduce the market basket
percentage increase by 0.2 percentage point, resulting in the OPD fee
schedule increase factor of 2.2 percent. We are using the OPD fee
schedule increase factor of 2.2 percent in the calculation of the CY
2015 OPPS conversion factor. Section 10324 of the Affordable Care Act,
as amended by HCERA, further authorized additional expenditures outside
budget neutrality for hospitals in certain frontier States that have a
wage index less than 1.00. The amounts attributable to this frontier
State wage index adjustment are incorporated in the CY 2015 estimates
in Table 49.
To illustrate the impact of the CY 2015 changes, our analysis
begins with a baseline simulation model that uses the CY 2014 relative
payment weights, the FY 2014 final IPPS wage indexes that include
reclassifications, and the final CY 2014 conversion factor. Table

[[Page 67019]]

49 shows the estimated redistribution of the increase in payments for
CY 2015 over CY 2014 payments to hospitals and CMHCs as a result of the
following factors: The impact of the APC reconfiguration and
recalibration changes between CY 2014 and CY 2015 (Column 2); the wage
indexes and the provider adjustments (Column 3); the combined impact of
all the changes described in the preceding columns plus the 2.2 percent
OPD fee schedule increase factor update to the conversion factor
(Column 4); the combined impact shown in Column 4 plus the CY 2015
frontier State wage index adjustment (Column 5); and the estimated
impact taking into account all payments for CY 2015 relative to all
payments for CY 2014, including the impact of changes in estimated
outlier payments and changes to the pass-through payment estimate
(Column 6).
We did not model an explicit budget neutrality adjustment for the
rural adjustment for SCHs because we are finalizing our proposal to
maintain the current adjustment percentage for CY 2015. Because the
updates to the conversion factor (including the update of the OPD fee
schedule increase factor), the estimated cost of the rural adjustment,
and the estimated cost of projected pass-through payment for CY 2015
are applied uniformly across services, observed redistributions of
payments in the impact table for hospitals largely depend on the mix of
services furnished by a hospital (for example, how the APCs for the
hospital's most frequently furnished services will change), and the
impact of the wage index changes on the hospital. However, total
payments made under this system and the extent to which this final rule
with comment period will redistribute money during implementation also
will depend on changes in volume, practice patterns, and the mix of
services billed between CY 2014 and CY 2015 by various groups of
hospitals, which CMS cannot forecast.
Overall, we estimate that the rates for CY 2015 will increase
Medicare OPPS payments by an estimated 2.3 percent. Removing payments
to cancer and children's hospitals because their payments are held
harmless to the pre-OPPS ratio between payment and cost and removing
payments to CMHCs results in an estimated 2.3 percent increase in
Medicare payments to all other hospitals. These estimated payments will
not significantly impact other providers.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 49 shows the total number of
facilities (4,006), including designated cancer and children's
hospitals and CMHCs, for which we were able to use CY 2013 hospital
outpatient and CMHC claims data to model CY 2014 and CY 2015 payments,
by classes of hospitals, for CMHCs and for dedicated cancer hospitals.
We excluded all hospitals and CMHCs for which we could not plausibly
estimate CY 2014 or CY 2015 payment and entities that are not paid
under the OPPS. The latter entities include CAHs, all-inclusive
hospitals, and hospitals located in Guam, the U.S. Virgin Islands,
Northern Mariana Islands, American Samoa, and the State of Maryland.
This process is discussed in greater detail in section II.A. of this
final rule with comment period. At this time, we are unable to
calculate a disproportionate share hospital (DSH) variable for
hospitals not participating in the IPPS. Hospitals for which we do not
have a DSH variable are grouped separately and generally include
freestanding psychiatric hospitals, rehabilitation hospitals, and long-
term care hospitals. We show the total number of OPPS hospitals
(3,871), excluding the hold-harmless cancer and children's hospitals
and CMHCs, on the second line of the table. We excluded cancer and
children's hospitals because section 1833(t)(7)(D) of the Act
permanently holds harmless cancer hospitals and children's hospitals to
their ``pre-BBA amount'' as specified under the terms of the statute,
and therefore, we removed them from our impact analyses. We show the
isolated impact on 72 CMHCs at the bottom of the impact table and
discuss that impact separately below.
Column 2: APC Recalibration--All Changes
Column 2 shows the estimated effect of APC recalibration. Column 2
also reflects any changes in multiple procedure discount patterns or
conditional packaging that occur as a result of the changes in the
relative magnitude of payment weights. As a result of APC
recalibration, we estimate that urban hospitals will experience no
change, with the impact ranging from an increase of 0.3 percent to a
decrease of -0.1 percent, depending on the number of beds. Rural
hospitals will experience no change, with the impact ranging from an
increase of 0.3 percent to a decrease of -0.4 percent, depending on the
number of beds. Major teaching hospitals will experience an increase of
0.7 percent overall.
Column 3: New Wage Indexes and the Effect of the Provider Adjustments
Column 3 demonstrates the combined budget neutral impact of the APC
recalibration; the updates for the wage indexes with the fiscal year
(FY) 2015 IPPS post-reclassification wage indexes; and the rural
adjustment. We modeled the independent effect of the budget neutrality
adjustments and the OPD fee schedule increase factor by using the
relative payment weights and wage indexes for each year, and using a CY
2014 conversion factor that included the OPD fee schedule increase and
a budget neutrality adjustment for differences in wage indexes.
Column 3 reflects the independent effects of the updated wage
indexes, including the application of budget neutrality for the rural
floor policy on a nationwide basis. This column excludes the effects of
the frontier State wage index adjustment, which is not budget neutral
and is included in Column 5. We did not model a budget neutrality
adjustment for the rural adjustment for SCHs because we are finalizing
our proposal to continue the rural payment adjustment of 7.1 percent to
rural SCHs for CY 2015, as described in section II.E. of this final
rule with comment period.
We modeled the independent effect of updating the wage indexes by
varying only the wage indexes, holding APC relative payment weights,
service-mix, and the rural adjustment constant and using the CY 2015
scaled weights and a CY 2014 conversion factor that included a budget
neutrality adjustment for the effect of changing the wage indexes
between CY 2014 and CY 2015. The FY 2015 wage policy results in modest
redistributions.
There is no difference in impact between the CY 2014 cancer
hospital payment adjustment and the CY 2015 cancer hospital payment
adjustment because we are finalizing our proposal to use the same
payment-to-cost ratio target in CY 2015 as in CY 2014.
Column 4: All Budget Neutrality Changes Combined With the Market Basket
Update
Column 4 demonstrates the combined impact of all the changes
previously described and the update to the conversion factor of 2.2
percent. Overall, these changes will increase payments to urban
hospitals by 2.3 percent and to rural hospitals by 1.9 percent. Most
classes of hospitals will receive an increase in line with the 2.2
percent overall increase after the update is applied to the budget
neutrality adjustments.

[[Page 67020]]

Column 5: All Adjustments With the Frontier State Wage Index Adjustment
This column shows the impact of all budget neutrality adjustments,
application of the 2.2 percent OPD fee schedule increase factor, and
the nonbudget-neutral impact of applying the CY 2015 frontier State
wage adjustment. Rural hospitals in West North Central and Mountain
States will experience estimated increases in payment of 3.4 and 4.2
percent, respectively, as a result of the frontier State wage index
adjustment, while urban hospitals in those States will experience
estimated increases of 3.2 and 2.5 percent, respectively.
Column 6: All Changes for CY 2015
Column 6 depicts the full impact of the CY 2015 policies on each
hospital group by including the effect of all of the changes for CY
2015 and comparing them to all estimated payments in CY 2014. Column 6
shows the combined budget neutral effects of Column 2 and 3; the OPD
fee schedule increase; the impact of the frontier State wage index
adjustment; the impact of estimated OPPS outlier payments as discussed
in section II.G. of this final rule with comment period; the change in
the Hospital OQR Program payment reduction for the small number of
hospitals in our impact model that failed to meet the reporting
requirements (discussed in section XIII. of this final rule with
comment period); and the difference in total OPPS payments dedicated to
transitional pass-through payments.
Of those hospitals that failed to meet the Hospital OQR Program
reporting requirements for the full CY 2014 update (and assumed, for
modeling purposes, to be the same number for CY 2015), we included 37
hospitals in our model because they had both CY 2013 claims data and
recent cost report data. We estimate that the cumulative effect of all
changes for CY 2015 will increase payments to all facilities by 2.3
percent for CY 2015. We modeled the independent effect of all changes
in Column 6 using the final relative payment weights for CY 2014 and
the relative payment weights for CY 2015. We used the final conversion
factor for CY 2014 of $72.672 and the CY 2015 conversion factor of
$74.144 discussed in section II.B. of this final rule with comment
period.
Column 6 contains simulated outlier payments for each year. We used
the 1-year charge inflation factor used in the FY 2015 IPPS/LTCH PPS
final rule (79 FR 50379) of 5.09 percent (1.0509) to increase
individual costs on the CY 2013 claims, and we used the most recent
overall CCR in the July 2014 Outpatient Provider-Specific File (OPSF)
to estimate outlier payments for CY 2014. Using the CY 2013 claims and
a 5.09 percent charge inflation factor, we currently estimate that
outlier payments for CY 2014, using a multiple threshold of 1.75 and a
fixed-dollar threshold of $2,900 will be approximately 0.8 percent of
total payments. The estimated current outlier payments of 0.8 percent
are incorporated in the comparison in Column 6. We used the same set of
claims and a charge inflation factor of 10.44 percent (1.1044) and the
CCRs in the July 2014 OPSF, with an adjustment of 0.9821, to reflect
relative changes in cost and charge inflation between CY 2013 and CY
2015, to model the CY 2015 outliers at 1.0 percent of estimated total
payments using a multiple threshold of 1.75 and a fixed-dollar
threshold of $2,775. The charge inflation and CCR inflation factors are
discussed in detail in the FY 2015 IPPS/LTCH PPS final rule (79 FR
50379 through 50380).
We estimate that the anticipated change in payment between CY 2014
and CY 2015 for the hospitals failing to meet the Hospital OQR Program
requirements will be negligible. Overall, we estimate that facilities
will experience an increase of 2.3 percent under this final rule with
comment period in CY 2015 relative to total spending in CY 2014. This
projected increase (shown in Column 6) of Table 49 reflects the 2.2
percent OPD fee schedule increase factor, less 0.13 percent for the
change in the pass-through estimate between CY 2014 and CY 2015, plus
0.18 percent for the difference in estimated outlier payments between
CY 2014 (0.82 percent) and CY 2015 (1.0 percent), less 0.1 percent due
to the frontier State wage index adjustment in CY 2014, plus 0.1
percent due to the frontier State wage index adjustment in CY 2015. We
estimate that the combined effect of all changes for CY 2015 will
increase payments to urban hospitals by 2.3 percent.
Overall, we estimate that rural hospitals will experience a 1.9
percent increase as a result of the combined effects of all changes for
CY 2015. We estimate that rural hospitals that bill less than 5,000
lines of OPPS services will experience a decrease of -2.0 percent and
rural hospitals that bill 11,000 or more lines of OPPS services will
experience adjustments ranging from 0.9 to 2.1 percent.
Among hospitals by teaching status, we estimate that the impacts
resulting from the combined effects of all changes will include an
increase of 3.1 percent for major teaching hospitals and 2.0 percent
for nonteaching hospitals. Minor teaching hospitals will experience an
estimated increase of 2.0 percent.
In our analysis, we also have categorized hospitals by type of
ownership. Based on this analysis, we estimate that voluntary hospitals
will experience an increase of 2.4 percent, proprietary hospitals will
experience an increase of 1.7 percent, and governmental hospitals will
experience an increase of 2.1 percent.

Table 49--Estimated Impact of the CY 2015 Changes for the Hospital Outpatient Prospective Payment System
--------------------------------------------------------------------------------------------------------------------------------------------------------
All budget neutral All budget neutral
APC New wage index changes (combined changes and update
Number of Recalibration and provider cols 2, 3) with (column 4) with All changes
hospitals (all changes) adjustments market basket frontier wage
update index adjustment
(1) (2) (3) (4) (5) (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALL FACILITIES *............................... 4,006 0.0 0.0 2.2 2.3 2.3
ALL HOSPITALS.................................. 3,871 0.0 0.0 2.2 2.3 2.3
(excludes hospitals permanently held harmless
and CMHCs)
URBAN HOSPITALS................................ 3,008 0.0 0.0 2.3 2.4 2.3
LARGE URBAN (GT 1 MILL.)................... 1,646 0.1 0.2 2.5 2.5 2.5
OTHER URBAN (LE 1 MILL.)................... 1,362 0.0 -0.1 2.1 2.3 2.1

[[Page 67021]]

RURAL HOSPITALS................................ 863 0.0 -0.3 1.9 2.2 1.9
SOLE COMMUNITY............................. 376 0.1 -0.2 2.2 2.6 2.2
OTHER RURAL................................ 487 -0.2 -0.3 1.6 1.7 1.6
BEDS (URBAN):
0-99 BEDS.................................. 1,067 0.0 0.0 2.3 2.4 2.3
100-199 BEDS............................... 856 0.0 0.0 2.2 2.3 2.2
200-299 BEDS............................... 458 -0.1 0.1 2.2 2.4 2.2
300-499 BEDS............................... 410 -0.1 0.1 2.2 2.4 2.3
500 + BEDS................................. 217 0.3 -0.1 2.4 2.4 2.5
BEDS (RURAL):
0-49 BEDS.................................. 345 0.1 -0.2 2.2 2.4 2.2
50-100 BEDS................................ 315 0.3 -0.3 2.2 2.5 2.2
101-149 BEDS............................... 116 -0.3 -0.1 1.8 2.1 1.8
150-199 BEDS............................... 46 -0.4 -0.4 1.4 2.1 1.4
200 + BEDS................................. 41 -0.3 -0.4 1.5 1.5 1.5
VOLUME (URBAN):
LT 5,000 Lines............................. 544 -1.7 -0.3 0.2 0.4 0.4
5,000-10,999 Lines......................... 135 -0.8 -0.2 1.3 1.3 1.4
11,000-20,999 Lines........................ 117 -1.5 0.0 0.6 1.2 0.9
21,000-42,999 Lines........................ 228 -0.7 0.0 1.5 1.5 1.6
42,999-89,999 Lines........................ 526 -0.3 0.0 1.9 1.9 1.9
GT 89,999 Lines............................ 1,458 0.1 0.0 2.3 2.4 2.4
VOLUME (RURAL):
LT 5,000 Lines............................. 34 -3.8 -0.3 -1.9 1.1 -2.0
5,000-10,999 Lines......................... 27 -1.8 -0.5 -0.1 1.1 0.0
11,000-20,999 Lines........................ 42 -1.1 -0.3 0.8 0.8 0.9
21,000-42,999 Lines........................ 161 0.2 -0.3 2.1 2.7 2.1
GT 42,999 Lines............................ 599 0.0 -0.3 1.9 2.1 1.9
REGION (URBAN):
NEW ENGLAND................................ 152 1.1 0.2 3.5 3.5 3.4
MIDDLE ATLANTIC............................ 361 0.5 0.5 3.2 3.2 3.2
SOUTH ATLANTIC............................. 482 -0.2 -0.3 1.7 1.7 1.7
EAST NORTH CENT............................ 473 0.1 -0.1 2.2 2.1 2.2
EAST SOUTH CENT............................ 179 -0.9 -0.5 0.9 0.9 0.9
WEST NORTH CENT............................ 194 0.0 -0.2 2.0 3.2 2.0
WEST SOUTH CENT............................ 527 -0.7 -0.5 1.0 1.0 1.1
MOUNTAIN................................... 203 0.0 -0.1 2.1 2.5 2.2
PACIFIC.................................... 389 0.3 1.1 3.6 3.6 3.7
PUERTO RICO................................ 48 -0.4 0.3 2.1 2.1 1.9
REGION (RURAL):
NEW ENGLAND................................ 23 1.6 -0.1 3.6 3.6 3.6
MIDDLE ATLANTIC............................ 58 0.8 0.2 3.2 3.2 3.2
SOUTH ATLANTIC............................. 130 -0.6 -0.5 1.0 1.0 1.0
EAST NORTH CENT............................ 120 0.0 0.0 2.2 2.2 2.1
EAST SOUTH CENT............................ 165 -0.8 -0.5 0.9 0.9 0.9
WEST NORTH CENT............................ 101 0.2 -0.2 2.2 3.4 2.1
WEST SOUTH CENT............................ 181 -0.7 -0.8 0.7 0.7 0.7
MOUNTAIN................................... 61 0.7 -0.4 2.5 4.2 2.6
PACIFIC.................................... 24 0.8 0.9 4.0 3.9 3.9
TEACHING STATUS:
NON-TEACHING............................... 2,839 -0.2 0.0 2.0 2.1 2.0
MINOR...................................... 706 -0.2 -0.1 1.9 2.2 2.0
MAJOR...................................... 326 0.7 0.1 3.1 3.0 3.1
DSH PATIENT PERCENT:
0.......................................... 21 0.0 0.3 2.5 2.5 2.5
GT 0-0.10.................................. 328 0.3 0.2 2.7 2.8 2.7
0.10-0.16.................................. 334 0.1 0.0 2.3 2.5 2.3
0.16-0.23.................................. 680 0.1 0.0 2.2 2.3 2.2
0.23-0.35.................................. 1,076 0.0 0.0 2.1 2.3 2.1
GE 0.35.................................... 824 0.1 0.1 2.3 2.3 2.4
DSH NOT AVAILABLE **....................... 608 -3.6 0.0 -1.4 -1.4 -1.5
URBAN TEACHING/DSH:
TEACHING & DSH............................. 938 0.2 0.0 2.4 2.6 2.5
NO TEACHING/DSH............................ 1,477 -0.2 0.1 2.1 2.1 2.1
NO TEACHING/NO DSH......................... 18 -0.1 0.4 2.5 2.5 2.5

[[Page 67022]]

DSH NOT AVAILABLE **....................... 575 -3.3 0.1 -1.0 -0.9 -1.0
TYPE OF OWNERSHIP:
VOLUNTARY.................................. 2,006 0.1 0.0 2.4 2.5 2.4
PROPRIETARY................................ 1,322 -0.4 -0.1 1.7 1.8 1.7
GOVERNMENT................................. 543 -0.1 -0.1 2.1 2.1 2.1
CMHCs.......................................... 72 0.0 -0.5 1.7 1.7 1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all CY 2015 OPPS policies and compares those to the CY 2014 OPPS.
Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2015 hospital inpatient wage index, including all hold harmless
policies and transitional wages. The rural adjustment continues our current policy of 7.1 percent so the budget neutrality factor is 1. The budget
neutrality adjustment for the cancer hospital adjustment is 1.000 because the payment-to-cost ratio target remains the same as in CY 2014.
Column (4) shows the impact of all budget neutrality adjustments and the addition of the 2.2 percent OPD fee schedule update factor (2.9 percent reduced
by 0.5 percentage point for the final productivity adjustment and further reduced by 0.2 percentage point in order to satisfy statutory requirements
set forth in the Affordable Care Act).
Column (5) shows the nonbudget neutral impact of applying the frontier State wage adjustment in CY 2015.
Column (6) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, adding estimated outlier
payments, and applying payment wage indexes.
* These 4,006 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs.
** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care
hospitals.

(3) Estimated Effects of OPPS Changes on CMHCs
The last line of Table 49 demonstrates the isolated impact on
CMHCs, which furnish only partial hospitalization services under the
OPPS. In CY 2014, CMHCs are paid under two APCs for these services: APC
0172 (Level I Partial Hospitalization (3 services) for CMHCs) and APC
0173 (Level II Partial Hospitalization (4 or more services) for CMHCs).
Hospitals are paid for partial hospitalization services under APC 0175
(Level I Partial Hospitalization (3 services) for hospital-based PHPs)
and APC 0176 (Level II Partial Hospitalization (4 or more services) for
hospital-based PHPs). We use our standard ratesetting methodology to
derive the payment rates for each APC based on the cost data derived
from claims and cost data for the provider-type-specific APC. For CY
2015, we are finalizing our proposal to continue the provider-type-
specific APC structure that we adopted in CY 2011. We modeled the
impact of this APC policy assuming that CMHCs will continue to provide
the same number of days of PHP care, with each day having either 3
services or 4 or more services, as seen in the CY 2013 claims data used
for this final rule with comment period. We excluded days with 1 or 2
services because our policy only pays a per diem rate for partial
hospitalization when 3 or more qualifying services are provided to the
beneficiary. We estimate that CMHCs will experience an overall 1.3
percent increase in payments from CY 2014 (shown in Column 6).
Column 3 shows that the estimated impact of adopting the FY 2015
wage index values will result in a small decrease of -0.5 percent to
CMHCs. We note that all providers paid under the OPPS, including CMHCs,
will receive a 2.2 percent OPD fee schedule increase factor. Column 4
shows that combining this OPD fee schedule increase factor, along with
changes in APC policy for CY 2015 and the FY 2015 wage index updates,
will result in an estimated increase of 1.7 percent. Column 5 shows
that adding the frontier State wage index adjustment will result in no
change to the cumulative 1.7 percent increase. Column 6 shows that
adding the changes in outlier and pass-though payments will result in a
-0.4 percent decrease in payment for CMHCs, for a total increase of 1.3
percent. This reflects all changes to CMHCs for CY 2015.
(4) Estimated Effect of OPPS Changes on Beneficiaries
For services for which the beneficiary pays a copayment of 20
percent of the payment rate, the beneficiary share of payment will
increase for services for which the OPPS payments will rise and will
decrease for services for which the OPPS payments will fall. For
further discussion on the calculation of the national unadjusted
copayments and minimum unadjusted copayments, we refer readers to
section II.I. of this final rule with comment period. In all cases,
section 1833(t)(8)(C)(i) of the Act limits beneficiary liability for
copayment for a procedure performed in a year to the hospital inpatient
deductible for the applicable year.
We estimate that the aggregate beneficiary coinsurance percentage
will be 20.0 percent for all services paid under the OPPS in CY 2015.
The estimated aggregate beneficiary coinsurance reflects general system
adjustments, including recalibration of the APC relative payment
weights, change in the portion of OPPS payments dedicated to pass-
through payments, and the CY 2015 comprehensive APC payment policy
discussed in section II.A.2.e. of this final rule with comment period.
(5) Estimated Effects of OPPS Changes on Other Providers
The relative payment weights and payment amounts established under
the OPPS affect the payments made to ASCs as discussed in section XII.
of this final rule with comment period. No types of providers or
suppliers other than hospitals, CMHCs and ASCs will be affected by the
proposed changes in this final rule with comment period.
(6) Estimated Effects of OPPS Changes on the Medicare and Medicaid
Programs
The effect on the Medicare program is expected to be $900 million
in additional program payments for OPPS

[[Page 67023]]

services furnished in CY 2015. The effect on the Medicaid program is
expected to be limited to increased copayments that Medicaid may make
on behalf of Medicaid recipients who are also Medicare beneficiaries.
We refer readers to our discussion of the impact on beneficiaries in
section XXI.A. of this final rule with comment period.
(7) Alternative OPPS Policies Considered
Alternatives to the OPPS changes we proposed and are finalizing and
the reasons for our selected alternatives are discussed throughout this
final rule with comment period. In this section, we discuss some of the
major issues and the alternatives considered.

Alternatives Considered for the Establishment of Comprehensive
APCs

We refer readers to the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74861 through 74910 and 75184 through 75185) for a
discussion of our policy to establish comprehensive APCs for CY 2015
and the alternatives we considered. We note that we published tables in
that final rule with comment period to demonstrate how this policy
would have been implemented in CY 2014, and stated that we would be
considering any additional public comments we receive when we update
the policy for CY 2015 to account for changes that may occur in the CY
2013 claims data.
b. Estimated Effects of CY 2015 ASC Payment System Policies
Most ASC payment rates are calculated by multiplying the ASC
conversion factor by the ASC relative payment weight. As discussed
fully in section XII. of this final rule with comment period, we are
setting the CY 2015 ASC relative payment weights by scaling the CY 2015
OPPS relative payment weights by the ASC scaler of 0.9225. The
estimated effects of the updated relative payment weights on payment
rates are varied and are reflected in the estimated payments displayed
in Tables 50 and 51 below.
Beginning in CY 2011, section 3401 of the Affordable Care Act
requires that the annual update to the ASC payment system (which
currently is the CPI-U) after application of any quality reporting
reduction be reduced by a productivity adjustment. The Affordable Care
Act defines the productivity adjustment to be equal to the 10-year
moving average of changes in annual economy-wide private nonfarm
business multifactor productivity (MFP) (as projected by the Secretary
for the 10-year period ending with the applicable fiscal year, year,
cost reporting period, or other annual period). For ASCs that fail to
meet their quality reporting requirements, the CY 2015 payment
determinations will be based on the application of a 2.0 percentage
point reduction to the annual update factor, which currently is the
CPI-U. We calculated the CY 2015 ASC conversion factor by adjusting the
CY 2014 ASC conversion factor by 0.9998 to account for changes in the
pre-floor and pre-reclassified hospital wage indexes between CY 2014
and CY 2015 and by applying the CY 2015 MFP-adjusted CPI-U update
factor of 1.4 percent (projected CPI-U update of 1.9 percent minus a
projected productivity adjustment of 0.5 percentage point). The CY 2015
ASC conversion factor is $44.071.
(1) Limitations of Our Analysis
Presented here are the projected effects of the changes for CY 2015
on Medicare payment to ASCs. A key limitation of our analysis is our
inability to predict changes in ASC service-mix between CY 2013 and CY
2015 with precision. We believe that the net effect on Medicare
expenditures resulting from the CY 2015 changes will be small in the
aggregate for all ASCs. However, such changes may have differential
effects across surgical specialty groups as ASCs continue to adjust to
the payment rates based on the policies of the revised ASC payment
system. We are unable to accurately project such changes at a
disaggregated level. Clearly, individual ASCs will experience changes
in payment that differ from the aggregated estimated impacts presented
below.
(2) Estimated Effects of ASC Payment System Policies on ASCs
Some ASCs are multispecialty facilities that perform the gamut of
surgical procedures from excision of lesions to hernia repair to
cataract extraction; others focus on a single specialty and perform
only a limited range of surgical procedures, such as eye, digestive
system, or orthopedic procedures. The combined effect on an individual
ASC of the update to the CY 2015 payments will depend on a number of
factors, including, but not limited to, the mix of services the ASC
provides, the volume of specific services provided by the ASC, the
percentage of its patients who are Medicare beneficiaries, and the
extent to which an ASC provides different services in the coming year.
The following discussion presents tables that display estimates of the
impact of the CY 2015 updates to the ASC payment system on Medicare
payments to ASCs, assuming the same mix of services as reflected in our
CY 2013 claims data. Table 50 depicts the estimated aggregate percent
change in payment by surgical specialty or ancillary items and services
group by comparing estimated CY 2014 payments to estimated CY 2015
payments and Table 51 shows a comparison of estimated CY 2014 payments
to estimated CY 2015 payments for procedures that we estimate will
receive the most Medicare payment in CY 2014.
Table 50 shows the estimated effects on aggregate Medicare payments
under the ASC payment system by surgical specialty or ancillary items
and services group. We have aggregated the surgical HCPCS codes by
specialty group, grouped all HCPCS codes for covered ancillary items
and services into a single group, and then estimated the effect on
aggregated payment for surgical specialty and ancillary items and
services groups. The groups are sorted for display in descending order
by estimated Medicare program payment to ASCs. The following is an
explanation of the information presented in Table 50.
Column 1--Surgical Specialty or Ancillary Items and
Services Group indicates the surgical specialty into which ASC
procedures are grouped and the ancillary items and services group which
includes all HCPCS codes for covered ancillary items and services. To
group surgical procedures by surgical specialty, we used the CPT code
range definitions and Level II HCPCS codes and Category III CPT codes
as appropriate, to account for all surgical procedures to which the
Medicare program payments are attributed.
Column 2--Estimated CY 2014 ASC Payments were calculated
using CY 2013 ASC utilization (the most recent full year of ASC
utilization) and CY 2014 ASC payment rates. The surgical specialty and
ancillary items and services groups are displayed in descending order
based on estimated CY 2014 ASC payments.
Column 3--Estimated CY 2015 Percent Change is the
aggregate percentage increase or decrease in Medicare program payment
to ASCs for each surgical specialty or ancillary items and services
group that are attributable to updates to ASC payment rates for CY 2015
compared to CY 2014.
As seen in Table 50, for the six specialty groups that account for
the most ASC utilization and spending, we estimate that the update to
ASC rates for CY 2015 will result in a 1-percent decrease in aggregate
payment amounts for eye and ocular adnexa procedures, a 6-percent
increase in aggregate payment

[[Page 67024]]

amounts for digestive system procedures, a 1-percent increase in
aggregate payment amounts for nervous system procedures, a 2-percent
increase in aggregate payment amounts for musculoskeletal system
procedures, a 3-percent increase in aggregate payment amounts for
genitourinary system procedures, and a 5-percent increase in aggregate
payment amounts for integumentary system procedures.
An estimated increase in aggregate payment for the specialty group
does not mean that all procedures in the group will experience
increased payment rates. For example, the estimated increase for CY
2015 for digestive system procedures is likely due to an increase in
the ASC payment weight for some of the high volume procedures, such as
CPT code 43239 (Upper GI endoscopy biopsy) where estimated payment will
increase by 9 percent for CY 2015.
Also displayed in Table 50 is a separate estimate of Medicare ASC
payments for the group of separately payable covered ancillary items
and services. The payment estimates for the covered surgical procedures
include the costs of packaged ancillary items and services. We estimate
that aggregate payments for these items and services will decrease by 4
percent for CY 2015.

Table 50--Estimated Impact of the CY 2015 Update to the ASC Payment
System on Aggregate CY 2015 Medicare Program Payments by Surgical
Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
Estimated CY
2014 ASC Estimated CY
Surgical specialty group payments (in 2015 percent
millions) change
(1) (2) (3)
------------------------------------------------------------------------
Total................................... $3,819 1
Eye and ocular adnexa................... 1,560 -1
Digestive system........................ 781 6
Nervous system.......................... 568 1
Musculoskeletal system.................. 472 2
Genitourinary system.................... 165 3
Integumentary system.................... 137 5
Respiratory system...................... 53 3
Cardiovascular system................... 36 -1
Ancillary items and services............ 24 -4
Auditory system......................... 14 1
Hematologic & lymphatic systems......... 6 14
------------------------------------------------------------------------

Table 51 below shows the estimated impact of the updates to the
revised ASC payment system on aggregate ASC payments for selected
surgical procedures during CY 2015. The table displays 30 of the
procedures receiving the greatest estimated CY 2014 aggregate Medicare
payments to ASCs. The HCPCS codes are sorted in descending order by
estimated CY 2014 program payment.
Column 1--CPT/HCPCS code.
Column 2--Short Descriptor of the HCPCS code.
Column 3--Estimated CY 2014 ASC Payments were calculated
using CY 2013 ASC utilization (the most recent full year of ASC
utilization) and the CY 2014 ASC payment rates. The estimated CY 2014
payments are expressed in millions of dollars.
Column 4--Estimated CY 2015 Percent Change reflects the
percent differences between the estimated ASC payment for CY 2014 and
the estimated payment for CY 2015 based on the update.

Table 51--Estimated Impact of the CY 2015 Update to the ASC Payment System on Aggregate Payments for Selected
Procedures
----------------------------------------------------------------------------------------------------------------
Estimated CY
2014 ASC Estimated CY
CPT/HCPCS Code Short descriptor payments (in 2015 percent
millions) change
(1) (2).................................... (3) (4)
----------------------------------------------------------------------------------------------------------------
66984.................................. Cataract surg w/iol, 1 stage........... $1,131 -1%
43239.................................. Upper GI endoscopy, biopsy............. 170 10
45380.................................. Colonoscopy and biopsy................. 167 7
45385.................................. Lesion removal colonoscopy............. 107 6
66982.................................. Cataract surgery, complex.............. 93 -1
64483.................................. Inj foramen epidural l/s............... 90 0
62311.................................. Inject spine l/s (cd).................. 79 0
45378.................................. Diagnostic colonoscopy................. 72 6
66821.................................. After cataract laser surgery........... 63 3
64493.................................. Inj paravert f jnt l/s 1 lev........... 47 0
G0105.................................. Colorectal scrn; hi risk ind........... 45 1
64635.................................. Destroy lumb/sac facet jnt............. 45 -5
63650.................................. Implant neuroelectrodes................ 41 4
G0121.................................. Colon ca scrn not hi rsk ind........... 41 1
64590.................................. Insrt/redo pn/gastr stimul............. 38 -1
15823.................................. Revision of upper eyelid............... 35 2

[[Page 67025]]

63685.................................. Insrt/redo spine n generator........... 34 29
29827.................................. Arthroscop rotator cuff repr........... 34 1
64721.................................. Carpal tunnel surgery.................. 32 -1
29881.................................. Knee arthroscopy/surgery............... 30 -1
29824.................................. Shoulder arthroscopy/surgery........... 27 1
29880.................................. Knee arthroscopy/surgery............... 25 -1
43235.................................. Uppr gi endoscopy diagnosis............ 23 10
62310.................................. Inject spine c/t....................... 23 0
29823.................................. Shoulder arthroscopy/surgery........... 22 1
52000.................................. Cystoscopy............................. 22 1
G0260.................................. Inj for sacroiliac jt anesth........... 21 0
45384.................................. Lesion remove colonoscopy.............. 21 7
67042.................................. Vit for macular hole................... 21 1
26055.................................. Incise finger tendon sheath............ 19 -2
----------------------------------------------------------------------------------------------------------------

(3) Estimated Effects of ASC Payment System Policies on Beneficiaries
We estimate that the CY 2015 update to the ASC payment system will
be generally positive for beneficiaries with respect to the new
procedures that we are adding to the ASC list of covered surgical
procedures and for those that we are designating as office-based for CY
2015. First, other than certain preventive services where coinsurance
and the Part B deductible is waived to comply with section 1833(a)(1)
and (b) of the Act, the ASC coinsurance rate for all procedures is 20
percent. This contrasts with procedures performed in HOPDs under the
OPPS, where the beneficiary is responsible for copayments that range
from 20 percent to 40 percent of the procedure payment (other than for
certain preventive services). Second, in almost all cases, the ASC
payment rates under the ASC payment system are lower than payment rates
for the same procedures under the OPPS. Therefore, the beneficiary
coinsurance amount under the ASC payment system will almost always be
less than the OPPS copayment amount for the same services. (The only
exceptions would be if the ASC coinsurance amount exceeds the inpatient
deductible. The statute requires that copayment amounts under the OPPS
not exceed the inpatient deductible.) Beneficiary coinsurance for
services migrating from physicians' offices to ASCs may decrease or
increase under the revised ASC payment system, depending on the
particular service and the relative payment amounts under the MPFS
compared to the ASC. However, for those additional procedures that we
are designating as office-based in CY 2015, the beneficiary coinsurance
amount under the ASC payment system generally will be no greater than
the beneficiary coinsurance under the MPFS because the coinsurance
under both payment systems generally is 20 percent (except for certain
preventive services where the coinsurance is waived under both payment
systems).
(4) Alternative ASC Payment Policies Considered
Alternatives to the minor changes that we are making to the ASC
payment system and the reasons that we have chosen specific options are
discussed throughout this final rule with comment period. There are no
major changes to ASC policies for CY 2015.
c. Accounting Statements and Tables
As required by OMB Circular A-4 (available on the Office of
Management and Budget Web site at: http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), we have
prepared two accounting statements to illustrate the impacts of this
final rule with comment period. The first accounting statement, Table
52 below, illustrates the classification of expenditures for the CY
2015 estimated hospital OPPS incurred benefit impacts associated with
the CY 2015 OPD fee schedule increase, based on the 2014 Trustee's
Report. The second accounting statement, Table 53 below, illustrates
the classification of expenditures associated with the 1.4 percent CY
2015 update to the ASC payment system, based on the provisions of this
final rule with comment period and the baseline spending estimates for
ASCs in the 2014 Trustee's Report. Lastly, the tables classify most
estimated impacts as transfers.

Table 52--Accounting Statement: CY 2015 Estimated Hospital OPPS
Transfers From CY 2014 to CY 2015 Associated With the CY 2015 Hospital
Outpatient OPD Fee Schedule Increase
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $900 million.
From Whom to Whom...................... Federal Government to
outpatient hospitals and other
providers who receive payment
under the hospital OPPS.
--------------------------------
Total.............................. $900 million.
------------------------------------------------------------------------

[[Page 67026]]

Table 53--Accounting Statement: Classification of Estimated Transfers
From CY 2014 to CY 2015 as a Result of the CY 2015 Update to the ASC
Payment System
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers......... $42 million.
From Whom to Whom...................... Federal Government to Medicare
Providers and Suppliers.
--------------------------------
Total.............................. $42 million.
------------------------------------------------------------------------

d. Effects of Requirements for the Hospital OQR Program
In section XIII. of this final rule with comment period, we are
finalizing policies affecting the Hospital OQR Program. Of 3,325
hospitals that met eligibility requirements for the CY 2014 payment
determination, we determined that 88 hospitals did not meet the
requirements to receive the full OPD fee schedule increase factor. Most
of these hospitals (70 of the 88) chose not to participate in the
Hospital OQR Program for the CY 2014 payment determination. We estimate
that approximately 90 hospitals will not receive the full OPD fee
schedule increase factor for the CY 2017 payment determination and
subsequent years.
In section XIII.E. of this final rule with comment period, we are
finalizing our proposal to add one claims-based quality measure, OP-32:
Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient
Colonoscopy, for the Hospital OQR Program for the CY 2018 payment
determination and subsequent years, instead of the CY 2017 payment
determination and subsequent years as proposed. Because this measure is
claims-based, it will not require additional burden from data reporting
or other action on the part of the hospitals. Therefore, we do not
anticipate that this measure will cause any additional facilities to
fail to meet requirements the Hospital OQR Program for the CY 2018
payment determination and subsequent years.
In section XIII.C.3. of this final rule with comment period, for
the CY 2017 payment determination and subsequent years, we are
finalizing our proposal to remove OP-6 and OP-7 from the Hospital OQR
Program. However, we are not finalizing our proposal to remove OP-4 and
are retaining that measure in the Hospital OQR Program for reasons
discussed in section XIII.C.3. In sections XIII.D.3.b. and c. of this
final rule with comment period, we are also finalizing our proposal to
exclude OP-31 from the CY 2016 payment determination measure set and to
change that measure from required to voluntary for the CY 2017 payment
determination and subsequent years. Hospitals will not be subject to a
payment reduction with respect to this measure for the CY 2016 payment
determination or during the period of voluntary reporting.
We anticipate a reduction in burden of approximately 840,517 hours
or $25.2 million across participating hospitals from the two measures
we are removing and the measure we are making voluntary, as further
detailed in sections XIII.C.3. and XIII.D.3.c. of this final rule with
comment period, respectively, and the information collection
requirements in section XIX.C.1. of this final rule with comment
period. We refer readers to the information collection requirements
section of this final rule with comment period (section XIX.C.1. of
this final rule with comment period) for a detailed discussion of the
financial burden of the requirements of the Hospital OQR Program.
The validation requirements that we are finalizing for the CY 2017
payment determination and subsequent years will result in medical
record documentation of approximately 6,000 cases per quarter (up to 12
cases per quarter for 500 hospitals) submitted to the designated CMS
contractor. In section XIII.H.3.e. of this final rule with comment
period, we are finalizing our proposal to allow hospitals to submit
medical record documentation for validation using either of two
methods: (1) Through paper medical records; or (2) by securely
transmitting electronic versions of medical information by either (a)
downloading or copying the digital image (that is, a PDF) of the
patient chart onto CD, DVD, or flash drive and shipping the electronic
media following instructions specified on the QualityNet Web site; or
(b) securely submitting digital images (PDFs) of patient charts using a
Secure File Transfer Portal on the QualityNet Web site.
As stated in prior rulemaking (76 FR 74577), we will pay for the
cost of sending paper medical record documentation to the designated
CMS contractor at the rate of 12 cents per page for copying and
approximately $1.00 per case for postage. For both new electronic
methods, we are finalizing our proposal in the information collection
requirements section of this final rule with comment period to
reimburse hospitals for sending medical records electronically at a
rate of $3.00 per patient chart.
As we stated in the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75192), we have found that an outpatient medical chart generally
contains up to 10 pages. However, because we do not yet know how many
hospitals will choose to submit data electronically or through paper,
we cannot estimate the total cost of expenditures and are unable to
estimate the number of hospitals that will fail the validation
documentation submission requirement for the CY 2017 payment
determination. Because we will pay for the data collection effort, we
believe that a requirement for medical record documentation for up to12
cases per quarter for 500 hospitals for CY 2015 represents a minimal
burden to Hospital OQR Program participating hospitals.
e. Effects of CY 2015 Policies for the ASCQR Program
In section XIV. of this final rule with comment period, we are
adopting policies affecting the ASCQR Program. Of 5,260 ASCs that met
eligibility requirements for CY 2014, we determined that 116 ASCs did
not meet the requirements to receive the full annual payment update.
In section XIV.B.5. of this final rule with comment period, we are
finalizing the adoption of one claims-based quality measure, ASC-12:
Facility Seven-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy, for the ASCQR Program beginning with the CY
2018 payment determination, rather than beginning with the CY 2017
payment determination as proposed. The measure is claims-based and will
not require additional data reporting or other action by ASCs.
Therefore, we do not anticipate that this measure will cause any
additional ASCs to fail to meet the ASCQR Program requirements. We
present the time and burdens associated with our finalized policies and
proposals in section XIX.C.2. of this final rule with comment period.
In section XIV.E.3.b. of this final rule with comment period, we
noted the 3-

[[Page 67027]]

month delay in data collection for ASC-9 and ASC-10 for the CY 2016
payment determination. We do not believe that this 3-month delay in
data collection will significantly affect the number of ASCs that meet
the ASCQR Program requirements.
In section XIV.E.3.c. of this final rule with comment period, we
are finalizing our proposal that ASC-11, which was to be first included
in the CY 2016 payment determination, will not be included in the CY
2016 measure set, and that the measure will be voluntary for the CY
2017 payment determination and subsequent years. ASCs will not be
subject to a payment reduction for the CY 2016 payment determination,
nor will ASCs be subject to a payment reduction for the CY 2017 payment
determination and subsequent years for failing to report this voluntary
measure. Because this measure has not yet affected any payment
determination, we do not believe that there will be any impact on the
number of ASCs that meet the ASCQR Program requirements as a result of
our decision not to include this measure in the measure set for the CY
2016 payment determination and to make this measure voluntary for the
CY 2017 payment determination and subsequent years.
We do not believe that the other measures we previously adopted
will cause any additional ASCs to fail to meet the ASCQR Program
requirements. (We refer readers to the CY 2014 OPPS/ASC final rule with
comment period for a list of these measures (78 FR 75130)).
Further, we do not believe that any of the other proposals we are
finalizing in this final rule with comment period will significantly
affect the number of ASCs that do not receive a full annual payment
update for the CY 2017 payment determination. We are unable to estimate
the number of ASCs that will not receive the full annual payment update
based on the CY 2015 and CY 2016 payment determinations (78 FR 75192).
For this reason, using the CY 2014 payment determination numbers as a
baseline, we estimate that approximately 116 ASCs will not receive the
full annual payment update in CY 2017 due to failure to meet the ASCQR
Program requirements.
We invited public comment on the burden associated with these
information collection requirements. We did not receive any public
comments.
f. Effects of Changes to the Rural Provider and Hospital Ownership
Exceptions to the Physician Self-Referral Law
Section 6001(a) of the Affordable Care Act amended the rural
provider and hospital ownership exceptions to the physician self-
referral law (sections 1877(d)(2) and (d)(3) of the Act, respectively)
to impose additional restrictions on physician ownership or investment
in hospitals. The amended rural provider and hospital ownership
exceptions provide that a hospital may not increase the number of
operating rooms, procedure rooms, and beds beyond that for which the
hospital was licensed on March 23, 2010 (or, in the case of a hospital
that did not have a provider agreement in effect as of this date, but
did have a provider agreement in effect on December 31, 2010, the date
of effect of such agreement). We issued regulations addressing the
prohibition against facility expansion in the CY 2011 OPPS/ASC final
rule with comment period (75 FR 72240).
Section 6001(a)(3) of the Affordable Care Act added section
1877(i)(3)(A)(i) of the Act to set forth that the Secretary shall
establish and implement an exception process to the prohibition on
expansion of facility capacity. We issued regulations that govern the
expansion exception process in the CY 2012 OPPS/ASC final rule with
comment period (76 FR 74517) at 42 CFR 411.362(c). The regulations
addressing the expansion exception process were issued by January 1,
2012, and the process was implemented on February 1, 2012.
As required by the statute, the expansion exception process
provides that hospitals that qualify as an ``applicable hospital'' or a
``high Medicaid facility'' may request an exception to the prohibition
on facility expansion. The existing expansion exception process
requires the use of filed Medicare cost report data from the Healthcare
Cost Report Information System (HCRIS) for hospitals to demonstrate
that they satisfy the relevant eligibility criteria set forth in Sec.
411.362(c)(2) for applicable hospitals and Sec. 411.362(c)(3) for high
Medicaid facilities (76 FR 42350 through 42352). As discussed in
section XV.C. of the CY 2015 OPPS/ASC proposed rule (79 FR 41054
through 41056), we proposed to permit physician-owned hospitals to use
certain non-HCRIS data sources to demonstrate satisfaction of the
expansion exception process eligibility criteria. In section XV.C. of
this final rule with comment period, we are finalizing our proposal
with certain modifications. Under our policy, we will continue to
require each hospital seeking to qualify for an expansion exception to
access and utilize data for its estimations or determinations to
demonstrate that the hospital meets the relevant criteria and to
provide a detailed explanation regarding whether and how it satisfies
each of the relevant criteria. We believe the impact of our
modification on affected hospitals will be minimal, given that the use
of data from a non-HCRIS data source is voluntary.
Our policy will require each requesting hospital also to provide
actual notification that it is requesting an expansion exception
directly to hospitals whose data are part of the comparisons set forth
in Sec. 411.362(c)(2)(ii) and (c)(3)(ii) of the regulations, in
addition to performing the other methods of notification specified in
our existing regulations. We are finalizing this policy, and we believe
the impact of this additional requirement on physician-owned hospitals
will be minimal.
We believe that our policy will affect a relatively small number of
physician-owned hospitals. We estimate that there are approximately 265
physician-owned hospitals in the country. Since the process was
implemented in February 2012, we have received only four requests, only
one of which has been considered sufficiently complete to continue with
publication in the Federal Register, under the current regulations. We
anticipate receiving a similar number of requests each year. We do not
believe that we can use the four requests to estimate accurately the
potential increase in operating rooms, procedure rooms, and beds
pursuant to approved expansion exception requests, and we are not aware
of any data that may indicate such an increase. At this time, we also
have no data or projections that may help estimate the number of
physicians that will be affected by these proposals as a result of
their ownership interests in hospitals.
We believe that beneficiaries may be positively impacted by our
policies. Specifically, an increase in operating rooms, procedure
rooms, and beds may augment the volume or nature of services offered by
physician-owned hospitals. An expansion in the number of hospital beds
may also permit additional inpatient admissions and overnight stays.
Increased operating rooms, procedure rooms, and beds may result in
improved access to health care facilities and services. We believe that
our policies are necessary to conform our regulations to the amendments
to section 1877 of the Act.
We solicited public comments on each of the issues outlined above
that contain estimates of the costs and benefits of the proposed rule.
We specifically solicited comments on the potential impact on State
governments, because we proposed to define external

[[Page 67028]]

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

B. Regulatory Flexibility Act (RFA) Analysis

The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, we estimate that
most hospitals, ASCs and CMHCs are small entities as that term is used
in the RFA. For purposes of the RFA, most hospitals are considered
small businesses according to the Small Business Administration's size
standards with total revenues of $38.5 million or less in any single
year. Most ASCs and most CMHCs are considered small businesses with
total revenues of $15 million or less in any single year. We estimate
that this final rule with comment period may have a significant impact
on approximately 2,006 hospitals with voluntary ownership. For details,
see the Small Business Administration's ``Table of Small Business Size
Standards'' at http://www.sba.gov/content/table-small-business-size-standards.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has 100 or fewer beds. We estimate that this final
rule with comment period may have a significant impact on approximately
709 small rural hospitals.
The analysis above, together with the remainder of this preamble,
provides a regulatory flexibility analysis and a regulatory impact
analysis.

C. Unfunded Mandates Reform Act Analysis

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

D. Conclusion

The changes we are making in this final rule with comment period
will affect all classes of hospitals paid under the OPPS and will
affect both CMHCs and ASCs. We estimate that most classes of hospitals
paid under the OPPS will experience a modest increase or a minimal
decrease in payment for services furnished under the OPPS in CY 2015.
Table 49 demonstrates the estimated distributional impact of the OPPS
budget neutrality requirements that will result in a 2.3 percent
increase in payments for all services paid under the OPPS in CY 2015,
after considering all of the changes to APC reconfiguration and
recalibration, as well as the OPD fee schedule increase factor, wage
index changes, including the frontier State wage index adjustment,
estimated payment for outliers, and changes to the pass-through payment
estimate. However, some classes of providers that are paid under the
OPPS will experience more significant gains and others will experience
modest losses in OPPS payments in CY 2015.
The updates to the ASC payment system for CY 2015 will affect each
of the approximately 5,300 ASCs currently approved for participation in
the Medicare program. The effect on an individual ASC will depend on
its mix of patients, the proportion of the ASC's patients who are
Medicare beneficiaries, the degree to which the payments for the
procedures offered by the ASC are changed under the ASC payment system,
and the extent to which the ASC provides a different set of procedures
in the coming year. Table 50 demonstrates the estimated distributional
impact among ASC surgical specialties of the

[[Page 67029]]

MFP-adjusted CPI-U update factor of 1.4 percent for CY 2015.

XXII. Federalism Analysis

Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct costs on State and local
governments, preempts State law, or otherwise has Federalism
implications. We have examined the OPPS and ASC provisions included in
this final rule with comment period in accordance with Executive Order
13132, Federalism, and have determined that they will not have a
substantial direct effect on State, local or tribal governments,
preempt State law, or otherwise have a Federalism implication. As
reflected in Table 49 of this final rule with comment period, we
estimate that OPPS payments to governmental hospitals (including State
and local governmental hospitals) will increase by 2.1 percent under
this final rule with comment period. While we do not know the number of
ASCs or CMHCs with government ownership, we anticipate that it is
small. The analyses we have provided in this section of this final rule
with comment period, in conjunction with the remainder of this
document, demonstrate that this final rule with comment period is
consistent with the regulatory philosophy and principles identified in
Executive Order 12866, the RFA, and section 1102(b) of the Act.
This final rule with comment period will affect payments to a
substantial number of small rural hospitals and a small number of rural
ASCs, as well as other classes of hospitals, CMHCs, and ASCs, and some
effects may be significant.

List of Subjects

42 CFR Part 411

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

42 CFR Part 412

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

42 CFR Part 416

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

42 CFR Part 419

Hospitals, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 422

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

42 CFR Part 423

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

42 CFR Part 424

Emergency medical services, Health professions, Medicare.
For reasons stated in the preamble of this document, the Centers
for Medicare & Medicaid Services is amending 42 CFR Chapter IV as set
forth below:

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

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

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

0
2. Section 411.362 is amended by--
0
a. Under paragraph (a), adding a definition of ``External data source''
in alphabetical order.
0
b. Revising paragraphs (c)(2)(ii), (c)(2)(iv), (c)(2)(v), (c)(3)(ii),
and (c)(5).
The addition and revisions read as follows:

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

(a) * * *
External data source means a data source that--
(1) Is generated, maintained, or under the control of a State
Medicaid agency;
(2) Is reliable and transparent;
(3) Maintains data that, for purposes of the process described in
paragraph (c) of this section, are readily available and accessible to
the requesting hospital, comparison hospitals, and CMS; and
(4) Maintains or generates data that, for purposes of the process
described in paragraph (c) of this section, are accurate, complete, and
objectively verifiable.
* * * * *
(c) * * *
(2) * * *
(ii) Medicaid inpatient admissions. Has an annual percent of total
inpatient admissions under Medicaid that is equal to or greater than
the average percent with respect to such admissions for all hospitals
located in the county in which the hospital is located during the most
recent 12-month period for which data are available as of the date that
the hospital submits its request. For purposes of this paragraph, the
most recent 12-month period for which data are available means the most
recent 12-month period for which the data source used contains all data
from the requesting hospital and each hospital located in the same
county as the requesting hospital.
(A) Until such time that the Healthcare Cost Report Information
System (HCRIS) contains sufficiently complete inpatient Medicaid
discharge data, a hospital may use filed Medicare hospital cost report
data or data from an external data source (as defined in paragraph (a)
of this section) to estimate its annual percent of total inpatient
admissions under Medicaid and the average percent with respect to such
admissions for all hospitals located in the county in which the
hospital is located.
(B) On or after such date that the Secretary determines that HCRIS
contains sufficiently complete inpatient Medicaid discharge data, a
hospital may use only filed Medicare hospital cost report data to
estimate its annual percent of total inpatient admissions under
Medicaid and the average percent with respect to such admissions for
all hospitals located in the county in which the hospital is located.
* * * * *
(iv) Average bed capacity. Is located in a State in which the
average bed capacity in the State is less than the national average bed
capacity during the most recent fiscal year for which HCRIS, as of the
date that the hospital submits its request, contains data from a
sufficient number of hospitals to determine a State's average bed
capacity and the national average bed capacity. CMS will provide on its
Web site State average bed capacities and the national average bed
capacity. For purposes of this paragraph, ``sufficient number'' means
the number of hospitals, as determined by CMS, that would ensure that
the determination under this paragraph would not materially change
after additional hospital data are reported.
(v) Average bed occupancy. Has an average bed occupancy rate that
is greater than the average bed occupancy rate in the State in which
the hospital is located during the most recent fiscal year for which
HCRIS, as of the date that the hospital submits its request, contains
data from a sufficient number

[[Page 67030]]

of hospitals to determine the requesting hospital's average bed
occupancy rate and the relevant State's average bed occupancy rate. A
hospital must use filed hospital cost report data to determine its
average bed occupancy rate. CMS will provide on its Web site State
average bed occupancy rates. For purposes of this paragraph,
``sufficient number'' means the number of hospitals, as determined by
CMS, that would ensure that the determination under this paragraph
would not materially change after additional hospital data are
reported.
(3) * * *
(ii) Medicaid inpatient admissions. With respect to each of the 3
most recent 12-month periods for which data are available as of the
date the hospital submits its request, has an annual percent of total
inpatient admissions under Medicaid that is estimated to be greater
than such percent with respect to such admissions for any other
hospital located in the county in which the hospital is located. For
purposes of this paragraph, the most recent 12-month period for which
data are available means the most recent 12-month period for which the
data source used contains all data from the requesting hospital and
every hospital located in the same county as the requesting hospital.
(A) Until such time that the Healthcare Cost Report Information
System (HCRIS) contains sufficiently complete inpatient Medicaid
discharge data, a hospital may use filed Medicare hospital cost report
data or data from an external data source (as defined in paragraph (a)
of this section) to estimate its annual percentage of total inpatient
admissions under Medicaid and the annual percentages of total inpatient
admissions under Medicaid for every other hospital located in the
county in which the hospital is located.
(B) On or after such date that the Secretary determines that HCRIS
contains sufficiently complete inpatient Medicaid discharge data, a
hospital may use only filed Medicare hospital cost report data to
estimate its annual percentage of total inpatient admissions under
Medicaid and the annual percentages of total inpatient admissions under
Medicaid for every other hospital located in the county in which the
hospital is located.
* * * * *
(5) Community input and timing of complete request. Upon submitting
a request for an exception and until the hospital receives a CMS
decision, the hospital must disclose on any public Web site for the
hospital that it is requesting an exception and must also provide
actual notification that it is requesting an exception, in either
electronic or hard copy form, directly to hospitals whose data are part
of the comparisons in paragraphs (c)(2)(ii) and (c)(3)(ii) of this
section. Individuals and entities in the hospital's community may
provide input with respect to the hospital's request no later than 30
days after CMS publishes notice of the hospital's request in the
Federal Register. Such input must take the form of written comments.
The written comments must be either mailed or submitted electronically
to CMS. If CMS receives written comments from the community, the
hospital has 30 days after CMS notifies the hospital of the written
comments to submit a rebuttal statement.
(i) If only filed Medicare hospital cost report data are used in
the hospital's request, the written comments, and the hospital's
rebuttal statement--
(A) A request will be deemed complete at the end of the 30-day
comment period if CMS does not receive written comments from the
community.
(B) A request will be deemed complete at the end of the 30-day
rebuttal period, regardless of whether the hospital submits a rebuttal
statement, if CMS receives written comments from the community.
(ii) If data from an external data source are used in the
hospital's request, the written comments, or the hospital's rebuttal
statement--
(A) A request will be deemed complete no later than 180 days after
the end of the 30-day comment period if CMS does not receive written
comments from the community.
(B) A request will be deemed complete no later than 180 days after
the end of the 30-day rebuttal period, regardless of whether the
hospital submits a rebuttal statement, if CMS receives written comments
from the community.
* * * * *

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES

0
3. The authority citation for Part 412 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), sec. 124 of Pub. L. 106-113 (113 Stat.
1501A-332), sec. 1206 of Pub. L. 113-67, and sec 112 of Pub. L. 113-
93.

Sec. 412.3 [Amended]

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

PART 416--AMBULATORY SURGICAL SERVICES

0
5. The authority citation for Part 416 continues to read as follows:

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

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

Sec. 416.164 Scope of ASC services.

(a) * * *
(11) Radiology services for which separate payment is not allowed
under the OPPS and other diagnostic tests or interpretive services that
are integral to a surgical procedure, except certain diagnostic tests
for which separate payment is allowed under the OPPS;
* * * * *
(b) * * *
(5) Certain radiology services and certain diagnostic tests for
which separate payment is allowed under the OPPS.
* * * * *

0
7. Section 416.171 is amended by revising paragraphs (b)(1), (b)(2),
and (d) introductory text to read as follows:

Sec. 416.171 Determination of payment rates for ASC services.

* * * * *
(b) * * *
(1) Covered ancillary services specified in Sec. 416.164(b), with
the exception of radiology services and certain diagnostic tests as
provided in Sec. 416.164(b)(5);
(2) The device portion of device-intensive procedures, which are
procedures assigned to an APC with a device cost greater than 40
percent of the APC costs when calculated according to the standard OPPS
APC ratesetting methodology.
* * * * *
(d) Limitation on payment rates for office-based surgical
procedures and covered ancillary radiology services and certain
diagnostic tests. Notwithstanding the provisions of paragraph (a) of
this section, for any covered surgical procedure under Sec. 416.166
that CMS determines is commonly performed in physicians' offices or for
any covered ancillary radiology service or diagnostic test

[[Page 67031]]

under Sec. 416.164(b)(5), excluding those listed in paragraphs (d)(1)
and (d)(2) of this section, the national unadjusted ASC payment rates
for these procedures and services will be the lesser of the amount
determined under paragraph (a) of this section or the amount calculated
at the nonfacility practice expense relative value units under Sec.
414.22(b)(5)(i)(B) of this chapter multiplied by the conversion factor
described in Sec. 414.20(a)(3) of this chapter.
* * * * *

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

0
8. The authority citation for Part 419 continues to read as follows:

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

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

Sec. 419.2 Basis of payment.

* * * * *
(b) * * *
(7) Ancillary services;
* * * * *
(16) Drugs and biologicals that function as supplies when used in a
surgical procedure (including, but not limited to, skin substitutes and
similar products that aid wound healing and implantable biologicals);
* * * * *

0
10. Section 419.22 is amended by revising paragraph (j) to read as
follows:

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

* * * * *
(j) Except as provided in Sec. 419.2(b)(11), prosthetic devices
and orthotic devices.
* * * * *

0
11. Section 419.32 is amended by adding paragraph (b)(1)(iv)(B)(6) to
read as follows:

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

* * * * *
(b) * * *
(1) * * *
(iv) * * *
(B) * * *
(6) For calendar year 2015, a multifactor productivity adjustment
(as determined by CMS) and 0.2 percentage point.
* * * * *

Sec. 419.46 [Amended]

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

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

* * * * *
(a) * * *
(4) * * *
(iv) A biological that is not a skin substitute or similar product
that aids wound healing.
* * * * *

0
14. Section 419.66 is amended by revising paragraph (b)(3) and removing
paragraph (b)(4)(iii) to read as follows:

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

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

PART 422--MEDICARE ADVANTAGE PROGRAM

0
15. The authority citation for Part 422 continues to read as follows:

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

0
16. A new Sec. 422.330 is added to subpart G to read as follows:

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

(a) Definitions. For purposes of this section--
Applicable reconciliation date occurs on the date of the annual
final deadline for risk adjustment data submission described at Sec.
422.310(g)(2)(ii).
Erroneous payment data means payment data that should not have been
submitted either because the data submitted are inaccurate or because
the data are inconsistent with Medicare Part C requirements.
Payment data means data submitted by an MA organization to CMS and
used for payment purposes, including enrollment data and data submitted
under Sec. 422.310.
(b) Request to correct payment data. (1) When CMS identifies
erroneous payment data submitted by an MA organization (other than an
error identified through the process described in Sec. 422.311), CMS
may send a data correction notice to the MA organization requesting
that the MA organization correct the payment data.
(2) The notice will include or make reference to the specific
payment data that need to be corrected, the reason why CMS believes
that the payment data are erroneous, and the timeframe for correcting
the payment data.
(c) Payment offset. (1) If the MA organization fails to submit the
corrected payment data within the timeframe as requested in accordance
with paragraph (b) of this section, CMS will conduct a payment offset
against payments made to the MA organization if--
(i) The payment error affects payments for any of the 6 most
recently completed payment years; and
(ii) The payment error for a particular payment year is identified
after the applicable reconciliation date for that payment year.
(2) CMS will calculate the payment offset amount using the correct
payment data and a payment algorithm that applies the payment rules for
the applicable year.
(d) Payment offset notification. CMS will issue a payment offset
notice to the MA organization that includes at least the following:
(1) The dollar amount of the offset from plan payments.
(2) An explanation of how the erroneous data were identified and
used to calculate the payment offset amount.
(3) An explanation that, if the MA organization disagrees with the
payment offset, it may request an appeal within 30 days of issuance of
the payment offset notification.
(e) Appeals process. If an MA organization does not agree with the
payment offset described in paragraph (c) of this section, it may
appeal under the following three-level appeal process:
(1) Reconsideration. An MA organization may request reconsideration
of the payment offset described in paragraph (c) of this section,
according to the following process:

[[Page 67032]]

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

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
17. The authority citation for Part 423 continues to read as follows:

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

0
18. A new Sec. 423.352 is added to read as follows:

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

(a) Definitions. For purposes of this section--
Applicable reconciliation date occurs on the later of either the
annual deadline for submitting--
(1) Prescription drug event (PDE) data for the annual Part D
payment reconciliations referred to in Sec. 423.343(c) and (d); or
(2) Direct and indirect remuneration data.
Erroneous payment data means payment data that should not have been
submitted either because the data submitted are inaccurate or because
the data are inconsistent with Medicare Part D requirements.
Payment data means data submitted by a Part D sponsor to CMS and
used for payment purposes, including enrollment data and data submitted
under Sec. 423.329(b)(3), Sec. 423.336(c)(1), and Sec. 423.343, and
data provided for purposes of supporting allowable reinsurance costs
and allowable risk corridor costs as defined in Sec. 423.308,
including data submitted to CMS regarding direct and indirect
remuneration.
(b) Request to correct payment data. (1) When CMS identifies
erroneous payment data submitted by a Part D sponsor, CMS may send a
data correction notice to the Part D sponsor requesting that the Part D
sponsor correct the payment data.
(2) The notice will include or make reference to the specific
payment data that need to be corrected, the reason why CMS believes
that the payment data are erroneous, and the timeframe for correcting
the payment data.
(c) Payment offset. (1) If the Part D sponsor fails to submit the
corrected payment data within the timeframe as requested in accordance
with paragraph (b) of this section, CMS will conduct a payment offset
against payments made to the Part D sponsor if--

[[Page 67033]]

(i) The payment error affects payments for any of the 6 most
recently completed payment years; and
(ii) The payment error for a particular payment year is identified
after the applicable reconciliation date for that payment year.
(2) CMS will calculate the payment offset amount using the correct
payment data and a payment algorithm that applies the payment rules for
the applicable year.
(d) Payment offset notification. CMS will issue a payment offset
notice to the Part D sponsor that includes at least the following:
(1) The dollar amount of the offset from plan payments.
(2) An explanation of how the erroneous data were identified and
used to calculate the payment offset amount.
(3) An explanation that, if the Part D sponsor disagrees with the
payment offset, it may request an appeal within 30 days of issuance of
the payment offset notification.
(e) Appeals process. If a Part D sponsor does not agree with the
payment offset described in paragraph (c) of this section, it may
appeal under the following three-level appeal process:
(1) Reconsideration. A Part D sponsor may request reconsideration
of the payment offset described in paragraph (c) of this section,
according to the following process:
(i) Manner and timing of request. A written request for
reconsideration must be filed within 30 days from the date that CMS
issued the payment offset notice to the Part D sponsor.
(ii) Content of request. The written request for reconsideration
must specify the findings or issues with which the Part D sponsor
disagrees and the reasons for its disagreement. As part of its request
for reconsideration, the Part D sponsor may include any additional
documentary evidence in support of its position. Any additional
evidence must be submitted with the request for reconsideration.
Additional information submitted after this time will be rejected as
untimely.
(iii) Conduct of reconsideration. In conducting the
reconsideration, the CMS reconsideration official reviews the
underlying data that were used to determine the amount of the payment
offset and any additional documentary evidence timely submitted by the
Part D sponsor.
(iv) Reconsideration decision. The CMS reconsideration official
informs the Part D sponsor of its decision on the reconsideration
request.
(v) Effect of reconsideration decision. The decision of the CMS
reconsideration official is final and binding unless a timely request
for an informal hearing is filed in accordance with paragraph (e)(2) of
this section.
(2) Informal hearing. A Part D sponsor dissatisfied with CMS'
reconsideration decision made under paragraph (e)(1) of this section is
entitled to an informal hearing as provided for under paragraphs
(e)(2)(i) through (e)(2)(v) of this section.
(i) Manner and timing for request. A request for an informal
hearing must be made in writing and filed with CMS within 30 days of
the date of CMS' reconsideration decision.
(ii) Content of request. The request for an informal hearing must
include a copy of the reconsideration decision and must specify the
findings or issues in the decision with which the Part D sponsor
disagrees and the reasons for its disagreement.
(iii) Informal hearing procedures. The informal hearing will be
conducted in accordance with the following:
(A) CMS provides written notice of the time and place of the
informal hearing at least 30 days before the scheduled date.
(B) The informal hearing is conducted by a CMS hearing officer who
neither receives testimony nor accepts any new evidence that was not
timely presented with the reconsideration request. The CMS hearing
officer is limited to the review of the record that was before the CMS
reconsideration official when CMS made its reconsideration
determination.
(C) The CMS hearing officer will review the proceeding before the
CMS reconsideration official on the record made before the CMS
reconsideration official using the clearly erroneous standard of
review.
(iv) Decision of the CMS hearing officer. The CMS hearing officer
decides the case and sends a written decision to the Part D sponsor
explaining the basis for the decision.
(v) Effect of hearing officer's decision. The hearing officer's
decision is final and binding, unless the decision is reversed or
modified by the Administrator in accordance with paragraph (e)(3) of
this section.
(3) Review by the Administrator. The Administrator review will be
conducted in the following manner:
(i) A Part D sponsor that has received a hearing officer's decision
may request review by the Administrator within 30 days of the date of
issuance of the hearing officer's decision under paragraph (e)(2)(iv)
of this section. The Part D sponsor may submit written arguments to the
Administrator for review.
(ii) After receiving a request for review, the Administrator has
the discretion to elect to review the hearing officer's determination
in accordance with paragraph (e)(3)(iv) of this section or to decline
to review the hearing officer's decision.
(iii) If the Administrator declines to review the hearing officer's
decision, the hearing officer's decision is final and binding.
(iv) If the Administrator elects to review the hearing officer's
decision, the Administrator will review the hearing officer's decision,
as well as any information included in the record of the hearing
officer's decision and any written argument submitted by the Part D
sponsor, and determine whether to uphold, reverse, or modify the
hearing officer's decision.
(v) The Administrator's determination is final and binding.
(f) Matters subject to appeal and burden of proof. (1) The Part D
sponsor's appeal is limited to CMS' finding that the payment data
submitted by the Part D sponsor are erroneous.
(2) The Part D sponsor bears the burden of proof by a preponderance
of the evidence in demonstrating that CMS' finding that the payment
data were erroneous was incorrect or otherwise inconsistent with
applicable program requirements.
(g) Applicability of appeals process. The appeals process under
paragraph (e) of this section applies only to payment offsets under
paragraph (c) of this section.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
19. The authority citation for Part 424 continues to read as follows:

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

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

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

(a) Content of certification and recertification. Medicare Part A
pays for inpatient hospital services (other than inpatient psychiatric
facility services) for cases that are 20 inpatient days or more, or are
outlier cases under subpart F of part 412 of this chapter, only if a

[[Page 67034]]

physician certifies or recertifies the following:
(1) * * *
(i) Continued hospitalization of the patient for medical treatment
or medically required diagnostic study; or
* * * * *
(b) Timing of certification. For outlier cases under subpart F of
Part 412 of this chapter, the certification must be signed and
documented in the medical record and as specified in paragraphs (e)
through (h) of this section. For all other cases, the certification
must be signed and documented no later than 20 days into the hospital
stay.
* * * * *

Dated: October 22, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Dated: October 26, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-26146 Filed 10-31-14; 4:15 pm]
BILLING CODE 4120-01-P