Federal Register, Volume 80 Issue 130 (Wednesday, July 8, 2015)

[Federal Register Volume 80, Number 130 (Wednesday, July 8, 2015)]
[Proposed Rules]
[Pages 39200-39375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16577]

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Vol. 80

Wednesday,

No. 130

July 8, 2015

Part II

Department of Health and Human Services

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Center for Medicare & Medicaid Services

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42 CFR Parts 410, 412, 416

Medicare Program: Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems and Quality Reporting
Programs; Short Inpatient Hospital Stays; Transition for Certain
Medicare-Dependent, Small Rural Hospitals Under the Hospital Inpatient
Prospective Payment System; Proposed Rule

Federal Register / Vol. 80 , No. 130 / Wednesday, July 8, 2015 /
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 412, 416, and 419

[CMS-1633-P]
RIN 0938-AS42

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system (OPPS) and the Medicare
ambulatory surgical center (ASC) payment system for CY 2016 to
implement applicable statutory requirements and changes arising from
our continuing experience with these systems. In this proposed rule, we
describe the proposed changes to the amounts and factors used to
determine the payment rates for Medicare services paid under the OPPS
and those paid under the ASC payment system. In addition, this proposed
rule would update and refine the requirements for the Hospital
Outpatient Quality Reporting (OQR) Program and the ASC Quality
Reporting (ASCQR) Program.
Further, this proposed rule includes certain proposals relating to
the hospital inpatient prospective payment system: proposed changes to
the 2-midnight rule under the short inpatient hospital stay policy, as
well as a discussion of the related -0.2 percent payment adjustment;
and a proposed transition for Medicare-dependent, small rural hospitals
located in all-urban States.

DATES: Comment Period: To be assured consideration, comments on all
sections of this proposed rule must be received at one of the addresses
provided in the ADDRESSES section no later than 5 p.m. EST on August
31, 2015.

ADDRESSES: In commenting, please refer to file code CMS-1633-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to http://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1633-P, P.O. Box 8013,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1633-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call the telephone number (410) 786-7195 in advance to schedule
your arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, we refer readers to the
beginning of the ``SUPPLEMENTARY INFORMATION'' section.

FOR FURTHER INFORMATION CONTACT:
Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact
Carol Schwartz at (410) 786-0576.
Ambulatory Surgical Center (ASC) Payment System, contact Erick
Chuang at (410) 786-1816.
Ambulatory Surgical Center Quality Reporting (ASCQR) Program
Administration, Validation, and Reconsideration Issues, contact Anita
Bhatia at (410) 786-7236.
Ambulatory Surgical Center Quality Reporting (ASCQR) Data Measures,
contact Vinitha Meyyur at (410) 786-8819.
Blood and Blood Products, contact Lela Strong at (410) 786-3213.
Cancer Hospital Payments, contact David Rice at (410) 786-6004.
Chronic Care Management (CCM) Services, contact Twi Jackson at
(410) 786-1159.
CPT and Level II Alphanumeric HCPCS Codes, contact Marjorie Baldo
at (410) 786-4617.
CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck
Braver at (410) 786-9379.
Composite APCs (Extended Assessment and Management, Low Dose
Brachytherapy, Multiple Imaging), contact Twi Jackson at (410) 786-
1159.
Comprehensive APCs, contact Elisabeth Daniel at (410) 786-0237.
Hospital Observation Services, contact Twi Jackson at (410) 786-
1159.
Hospital Outpatient Quality Reporting (OQR) Program Administration,
Validation, and Reconsideration Issues, contact Elizabeth Bainger at
(410) 786-0529.
Hospital Outpatient Quality Reporting (OQR) Program and Data
Issues, contact Vinitha Meyyur at (410) 786-8819.
Hospital Outpatient Visits (Emergency Department Visits and
Critical Care Visits), contact Twi Jackson at (410) 786-1159.
Inpatient Only Procedures List, contact Lela Strong at (410) 786-
3213.
New Technology Intraocular Lenses (NTIOLs), contact John McInnes at
(410) 786-0791.
No Cost/Full Credit and Partial Credit Devices, contact Carol
Schwartz at (410) 786-0576.
OPPS Brachytherapy, contact Elisabeth Daniel at (410) 786-0237.
OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier
Payments, and Wage Index), contact David Rice at (410) 786-6004.
OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar
Products, contact Elisabeth Daniel at (410) 786-0237.
OPPS Exceptions to the Two Times Rule, contact Marjorie Baldo at
(410) 786-4617.

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OPPS Packaged Items/Services, contact Elisabeth Daniel at (410)
786-0237.
OPPS Pass-Through Devices and New Technology Procedures/Services,
contact Carol Schwartz at (410) 786-0576.
OPPS Status Indicators (SI) and Comment Indicators (CI), contact
Marina Kushnirova at (410) 786-2682.
Partial Hospitalization Program (PHP) and Community Mental Health
Center (CMHC) Issues, contact Dexter Dickey at (410) 786-6856.
Rural Hospital Payments, contact David Rice at (410) 786-6004.
Stereotactic Radiosurgery Services (SRS), contact Elisabeth Daniel
at (410) 786-0237.
Transition for Medicare-Dependent, Small Rural Hospitals in All-
Urban States, contact Shevi Marciano at (410) 786-4487.
Two-Midnight Policy--General Issues, contact Twi Jackson at (410)
786-1159.
Two-Midnight Policy--Medical Review, contact Steven Rubio at (410)
786-1782.
All Other Issues Related to Hospital Outpatient and Ambulatory
Surgical Center Payments Not Previously Identified, contact Marjorie
Baldo at (410) 786-4617.

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
APU Annual payment update
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
CCM Chronic care management
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
EBRT External beam radiotherapy
ECG Electrocardiogram
ED Emergency department
EDTC Emergency department transfer communication
EHR Electronic health record
E/M Evaluation and management
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
HEU Highly enriched uranium
HH QRP Home Health Quality Reporting Program
HHS Department of Health and Human Services
HIE Health information exchange
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

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ICD Implantable cardioverter defibrillator
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10 International Classification of Diseases, Tenth Revision
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 Program
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
MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public
Law 114-10
MAP Measure Application Partnership
MDH Medicare-dependent, small rural hospital
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
NEMA National Electrical Manufacturers Association
NHSN National Healthcare Safety Network
NOS Not otherwise specified
NPI National Provider Identifier
NPWT Negative Pressure Wound Therapy
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
PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDC Per day cost
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
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RTI Research Triangle Institute, International
RVU Relative value unit
SAD Self-administered drug
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
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 Final Rule
With Comment Period
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Payment Weights
1. Database Construction
a. Database Source and Methodology
b. Proposed Use of Single and Multiple Procedure Claims
c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
2. Proposed Data Development Process and Calculation of Costs
Used for Ratesetting
a. Claims Preparation
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure
Claims
(1) Splitting Claims
(2) Creation of ``Pseudo'' Single Procedure Claims
c. Completion of Claim Records and Geometric Mean Cost
Calculations
(1) General Process
(2) Recommendations of the Panel Regarding Data Development
d. Proposed Calculation of Single Procedure APC Criteria-Based
Costs
(1) Blood and Blood Products
(2) Brachytherapy Sources
e. Proposed Comprehensive APCs (C-APCs) for CY 2016
(1) Background
(2) Proposed C-APCs to be Paid under the C-APC Payment Policy
for CY 2016
(3) Proposed CY 2016 Policies for Specific C-APCs
f. Proposed Calculation of Composite APC Criteria-Based Costs
(1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
(APC 8001)
(2) Mental Health Services Composite APC (APC 0034)
(3) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006,
8007, and 8008)
3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
b. Proposed Packaging Policies for CY 2016
(1) Ancillary Services
(2) Drugs and Biologicals that function as Supplies When Used in
a Surgical Procedure
(3) Clinical Diagnostic Laboratory Tests
4. Proposed Calculation of OPPS Scaled Payment Weights
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default CCRs
E. Proposed Adjustment for Rural SCHs and EACHs under Section
1833(t)(13)(B) of the Act
F. Proposed OPPS Payment to Certain Cancer Hospitals Described
by Section 1886(d)(1)(B)(v) of the Act
1. Background
2. Proposed Payment Adjustment for Certain Cancer Hospitals for
CY 2016

[[Page 39203]]

G. Proposed Hospital Outpatient Outlier Payments
1. Background
2. Proposed Outlier Calculation
H. Proposed Calculation of an Adjusted Medicare Payment from the
National Unadjusted Medicare Payment
I. Proposed Beneficiary Copayments
1. Background
2. Proposed OPPS Copayment Policy
3. Proposed Calculation of an Adjusted Copayment Amount for an
APC Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed OPPS Treatment of New CPT and Level II HCPCS Codes
1. Proposed Treatment of New CY 2015 Level II HCPCS and CPT
Codes Effective April 1, 2015 and July 1, 2015 for Which We Are
Soliciting Public Comments in this CY 2016 OPPS/ASC Proposed Rule
2. Proposed Process for New Level II HCPCS Codes That Will Be
Effective October 1, 2015 and January 1, 2016 for Which We Will Be
Soliciting Public Comments in the CY 2016 OPPS/ASC Final Rule with
Comment Period
3. Proposed Treatment of New and Revised CY 2016 Category I and
III CPT Codes That Will be Effective January 1, 2016 for Which We
Are Soliciting Public Comments in This CY 2016 OPPS/ASC Proposed
Rule
B. Proposed OPPS Changes--Variations Within APCs
1. Background
2. Application of the 2 Times Rule
3. Proposed APC Exceptions to the 2 Times Rule
C. Proposed New Technology APCs
1. Background
2. Additional New Technology APC Groups
3. Proposed Procedures Assigned to New Technology APCs
a. Transprostatic Urethral Implant Procedure
b. Retinal Prosthesis Implant Procedure
D. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
1. Airway Endoscopy Procedures
2. Diagnostic Tests and Related Services
3. Excision/Biopsy and Incision and Drainage Procedures
4. Gastrointestinal (GI) Procedures
5. Imaging Services
6. Orthopedic Procedures
7. Skin Procedures
8. Urology and Related Services Procedures
9. Vascular Procedures (Excluding Endovascular Procedures)
IV. Proposed OPPS Payment for Devices
A. Proposed Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
a. Background
b. Proposed CY 2016 Policy
2. Proposed Annual Rulemaking Process in Conjunction with
Quarterly Review Process for Device Pass-through Payment
Applications
a. Background
b. Proposed Revision to Application Process for Device Pass-
through Payments
c. Criterion for Newness
3. Provisions for Reducing Transitional Pass-Through Payments to
Offset Costs Packaged into APC Groups
a. Background
b. Proposed CY 2016 Policy
B. Proposed Device-Intensive Procedures
1. Background
2. Proposed Changes to Device Edit Policy
3. Proposed Adjustment to OPPS Payment for No Cost/Full Credit
and Partial Credit Devices
a. Background
b. Proposed Policy for CY 2016
4. Proposed Adjustment to OPPS Payment for Discontinued Device-
Intensive Procedures
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Proposed Drugs and Biologicals with Expiring Pass-Through
Status in CY 2015
3. Proposed Drugs, Biologicals, and Radiopharmaceuticals with
New or Continuing Pass-Through Status in CY 2016
4. Proposed Provisions for Reducing Transitional Pass-Through
Payments for Policy-Packaged Drugs and Biologicals to Offset Costs
Packaged into APC Groups
a. Background
b. Proposed Payment Offset Policy for Diagnostic
Radiopharmaceuticals
c. Proposed Payment Offset Policy for Contrast Agents
d. Proposed Payment Offset Policy for Drugs, Biologicals, and
Radiopharmaceuticals That Function as Supplies When Used in a
Diagnostic Test or Procedure (Other Than Diagnostic
Radiopharmaceuticals and Contrast Agents and Drugs and Biologicals
That Function as Supplies When Used in a Surgical Procedure)
B. Proposed OPPS Payment for Drugs, Biologicals, and
Radiopharmaceuticals without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs,
Biologicals, and Radiopharmaceuticals
a. Background
b. Proposed Cost Threshold for Packaging of Payment for HCPCS
Codes That Describe Certain Drugs, Certain Biologicals, and
Therapeutic Radiopharmaceuticals (``Threshold-Packaged Drugs'')
c. Proposed High Cost/Low Cost Threshold for Packaged Skin
Substitutes
d. Proposed Packaging Determination for HCPCS Codes That
Describe the Same Drug or Biological But Different Dosages
3. Proposed Payment for Drugs and Biologicals without Pass-
Through Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs
(SCODs) and Other Separately Payable and Packaged Drugs and
Biologicals
b. Proposed CY 2016 Payment Policy
4. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
5. Proposed Payment Adjustment Policy for Radioisotopes Derived
From Non-Highly Enriched Uranium Sources
6. Proposed Payment for Blood Clotting Factors
7. Proposed Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals with HCPCS Codes but without OPPS Hospital
Claims Data
C. Self-Administered Drugs (SADs) Technical Correction
D. Proposed OPPS Payment for Biosimilar Biological Products
1. Background
2. Proposed Payment Policy for Biosimilar Biological Products
3. Proposed OPPS Transitional Pass-Through Payment Policy for
Biosimilar Biological Products
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Hospital Outpatient Visits
A. Proposed Payment for Hospital Outpatient Clinic and Emergency
Department Visits
B. Proposed Payment for Critical Care Services
C. Proposed Payment for Chronic Care Management Services
VIII. Proposed Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update for CY 2016
1. Proposed PHP APC Geometric Mean Per Diem Costs
2. PHP Ratesetting Process
a. Development of PHP claims
b. Determination of CCRs for CMHCs and Hospital-Based PHPs
(1) Calculation and Assessment of CMHC PHP CCRs
(2) Calculation and Assessment of Hospital-Based PHP CCRs
c. Identification of PHP Allowable Charges
d. Determination of PHP APC Per Diem Costs
e. Development of Service Days and Cost Modeling
f. Issues Regarding Correct Coding and Reasonable Charges
C. Proposed Separate Threshold for Outlier Payments to CMHCs
IX. Proposed Procedures That Would Be Paid Only as Inpatient
Procedures
A. Background
B. Proposed Changes to the Inpatient List
X. Proposed Nonrecurring Policy Changes
A. Changes for Payment for Computed Tomography (CT)
B. Lung Cancer Screening with Low Dose Computed Tomography
C. Payment for Corneal Tissue in the HOPD and the ASC
1. Background
2. Proposed CY 2016 Change to Corneal Tissue Payment Policy in
the HOPD and the ASC

[[Page 39204]]

XI. Proposed CY 2016 OPPS Payment Status and Comment Indicators
A. Proposed CY 2016 OPPS Payment Status Indicator Definitions
B. Proposed CY 2016 Comment Indicator Definitions
XII. Proposed Updates to the Ambulatory Surgical Center (ASC)
Payment System
A. Background
1. Legislative History, Statutory Authority, and Prior
Rulemaking for the ASC Payment System
2. Policies Governing Changes to the Lists of Codes and Payment
Rates for ASC Covered Surgical Procedures and Covered Ancillary
Services
B. Proposed Treatment of New and Revised Codes
1. Background on Current Process for Recognizing New and Revised
Category I and Category III CPT Codes and Level II HCPCS Codes
2. Proposed Treatment of New and Revised Level II HCPCS Codes
and Category III CPT Codes Implemented in April 2015 and July 2015
for Which We Are Soliciting Public Comments in this Proposed Rule
3. Proposed Process for Recognizing New and Revised Category I
and Category III CPT Codes That Will Be Effective January 1, 2016
a. Current Process for Accepting Comments on New and Revised CPT
Codes That Are Effective January 1
b. Proposed Modification of the Current Process for Accepting
Comments on New and Revised Category I and III CPT Codes That Are
Effective January 1
4. Proposed Process for New and Revised Level II HCPCS Codes
That Will Be Effective October 1, 2015 and January 1, 2016 for Which
We Will be Soliciting Public Comments in the CY 2016 OPPS/ASC Final
Rule with Comment Period
C. Proposed Update to the Lists of ASC Covered Surgical
Procedures and Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Covered Surgical Procedures Designated as Office-
Based
b. ASC Covered Surgical Procedures Designated as Device-
Intensive--Finalized Policy for CY 2015 and Proposed Policy for CY
2016
c. Proposed Adjustment to ASC Payments for No Cost/Full Credit
and Partial Credit Devices
d. Proposed Adjustment to ASC Payments for Discontinued Device-
Intensive Procedures
e. Proposed Additions to the List of ASC Covered Surgical
Procedures
f. ASC Treatment of Surgical Procedures Proposed for Removal
from the OPPS Inpatient List for CY 2016
2. Covered Ancillary Services
a. Proposed List of Covered Ancillary Services
b. Proposal to Exclude Corneal Tissue Procurement from the
Covered Ancillary Services List When Used for Nontransplant
Procedures
c. Proposal to Remove Certain Services from the Covered
Ancillary Services List That Are Not Used as Ancillary and Integral
to a Covered Surgical Procedure
D. Proposed ASC Payment for Covered Surgical Procedures and
Covered Ancillary Services
1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
b. Proposed Update to ASC Covered Surgical Procedure Payment
Rates for CY 2016
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. Proposed Payment for Covered Ancillary Services
a. Background
b. Proposed Payment for Covered Ancillary Services for CY 2016
E. New Technology Intraocular Lenses (NTIOLs)
1. NTIOL Application Cycle
2. Requests to Establish New NTIOL Classes for CY 2016
3. Payment Adjustment
4. Proposed Newness Criterion
F. Proposed ASC Payment and Comment Indicators
1. Background
2. Proposed ASC Payment and Comment Indicators
G. Calculation of the Proposed ASC Conversion Factor and the
Proposed ASC Payment Rates
1. Background
2. Proposed Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2016 and
Future Years
b. Updating the ASC Conversion Factor
3. Display of Proposed CY 2016 ASC Payment Rates
XIII. Requirements for the Hospital Outpatient Quality Reporting
(OQR) Program
A. Background
1. Overview
2. Statutory History of the Hospital OQR Program
B. Hospital OQR Program Quality Measures
1. Considerations in the Selection of Hospital OQR Program
Quality Measures
2. Retention of Hospital OQR Program Measures Adopted in
Previous Payment Determinations
3. Removal of Quality Measures from the Hospital OQR Program
Measure Set
a. Considerations in Removing Quality Measures from the Hospital
OQR Program
b. Criteria for Removal of ``Topped-Out'' Measures
4. Hospital OQR Program Quality Measures Adopted in Previous
Rulemaking
5. Proposed Hospital OQR Program Quality Measure for Removal for
CY 2017 Payment Determination and Subsequent Years
6. Proposed New Hospital OQR Program Quality Measures for the CY
2018 and CY 2019 Payment Determinations and Subsequent Years
a. Proposed New Quality Measure for the CY 2018 Payment
Determination and Subsequent Years: OP-33: External Beam
Radiotherapy (EBRT) for Bone Metastases (NQF #1822)
b. Proposed New Hospital OQR Program Quality Measure for the CY
2019 Payment Determination and Subsequent Years: OP-34: Emergency
Department Transfer Communication (EDTC) (NQF #0291)
7. Hospital OQR Program Measures and Topics for Future
Consideration
8. Maintenance of Technical Specifications for Quality Measures
9. Public Display of Quality Measures
C. Administrative Requirements
1. QualityNet Account and Security Administrator
2. Proposed Requirements Regarding Participation Status
D. Form, Manner, and Timing of Data Submitted for the Hospital
OQR Program
1. Proposed Change Regarding Hospital OQR Program Annual
Percentage Update (APU) Determinations
2. Requirements for Chart-Abstracted Measures Where Patient-
Level Data Are Submitted Directly to CMS
3. Claims-Based Measure Data Requirements
4. Proposed Data Submission Requirements for Measure Data
Submitted via a Web-Based Tool
a. Previously Finalized Measures
b. Proposed Data Submission Requirements for Web-Based Measure
OP-33: External Beam Radiotherapy (EBRT) for Bone Metastases (NQF
#1822) for the CY 2018 Payment Determination and Subsequent Years
c. Proposed Data Submission Requirements for Web-Based Measure
OP-34: Emergency Department Transfer Communication (EDTC) Measure
for the CY 2019 Payment Determination and Subsequent Years
5. Population and Sampling Data Requirements for the CY 2018
Payment Determination and Subsequent Years
6. Hospital OQR Program Validation Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS for the CY 2018
Payment Determination and Subsequent Years
7. Extension or Exemption Process for the CY 2018 Payment
Determination and Subsequent Years
8. Hospital OQR Program Reconsideration and Appeals Procedures
for the CY 2018 Payment Determination and Subsequent Years
E. Proposed Payment Reduction for Hospitals That Fail to Meet
the Hospital Outpatient Quality Reporting (OQR) Program Requirements
for the CY 2016 Payment Determination
1. Background
2. Proposed Reporting Ratio Application and Associated
Adjustment Policy for CY 2016
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

[[Page 39205]]

3. Regulatory History of the ASCQR Program
B. ASCQR Program Quality Measures
1. Considerations in the Selection of ASCQR Program Quality
Measures
2. Policies for Retention and Removal of Quality Measures from
the ASCQR Program
3. ASCQR Program Quality Measures Adopted in Previous Rulemaking
4. ASCQR Program Quality Measures for the CY 2018 Payment
Determination and Subsequent Years
5. ASCQR Program Measures for Future Consideration
a. Normothermia Outcome
b. Unplanned Anterior Vitrectomy
6. Maintenance of Technical Specifications for Quality Measures
7. Public Reporting of ASCQR Program Data
C. Administrative Requirements
1. Requirements Regarding QualityNet Account and Security
Administrator
2. Requirements Regarding Participation Status
D. 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
4. Claims-Based Measure Data Requirements for the ASC-12:
Facility Seven-Day Risk-Standardized Hospital Visit Rate after
Outpatient Colonoscopy Measure for the CY 2018 Payment Determination
and Subsequent Years
5. Proposals for Indian Health Service (IHS) Hospital Outpatient
Departments to Not Be Considered ASCs for the Purpose of the ASCQR
Program
6. ASCQR Program Validation of Claims-Based and CMS Web-Based
Measures
7. Extraordinary Circumstances Extensions or Exemptions for the
CY 2018 Payment Determination and Subsequent Years
8. ASCQR Program Reconsideration Procedures
E. Payment Reduction for ASCs That Fail to Meet the ASCQR
Program Requirements
XV. Short Inpatient Hospital Stays
A. Background for the 2-Midnight Rule
B. Proposed Policy Clarification for Medical Review of Inpatient
Hospital Admissions under Medicare Part A
XVI. Proposed Transition for Medicare-Dependent, Small Rural
Hospitals (MDHs) in All-Urban States under the Hospital Inpatient
Prospective Payment System
A. Background on the Medicare-Dependent, Small Rural Hospital
(MDH) Program
B. Implementation of New OMB Delineations and Urban to Rural
Reclassifications
XVII. Files Available to the Public Via the Internet
XVIII. Collection of Information Requirements
A. Legislative Requirements for Solicitation of Comments
B. Proposed Associated Information Collections Not Specified in
Regulatory Text
1. Hospital OQR Program
2. ASCQR Program Requirements
XIX. Response to Comments
XX. 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 Proposed OPPS Changes in this Proposed
Rule
(1) Limitations of Our Analysis
(2) Estimated Effects of Proposed OPPS Changes on Hospitals
(3) Estimated Effects of Proposed OPPS Changes on CMHCs
(4) Estimated Effect of Proposed OPPS Changes on Beneficiaries
(5) Estimated Effects of Proposed OPPS Changes on Other
Providers
(6) Estimated Effects of Proposed OPPS Changes on the Medicare
and Medicaid Programs
(7) Alternative OPPS Policies Considered
b. Estimated Effects of Proposed CY 2016 ASC Payment System
Policies
(1) Limitations of Our Analysis
(2) Estimated Effects of Proposed CY 2016 ASC Payment System
Policies on ASCs
(3) Estimated Effects of Proposed ASC Payment System Policies on
Beneficiaries
(4) Alternative ASC Payment Policies Considered
c. Accounting Statements and Tables
d. Effects of Proposed Requirements for the Hospital OQR Program
e. Effects of Proposed Policies for the ASCQR Program
f. Impact of the Proposed Policy Change for Medical Review of
Inpatient Hospital Admissions Under Medicare Part A
g. Impact of Proposed Transition for MDHs in All-Urban States
under the IPPS
B. Regulatory Flexibility Act (RFA) Analysis
C. Unfunded Mandates Reform Act Analysis
D. Conclusion
XXI. Federalism Analysis

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
In this proposed rule, we are proposing to update the payment
policies and payment rates for services furnished to Medicare
beneficiaries in hospital outpatient departments (HOPDs) and ambulatory
surgical centers (ASCs) beginning January 1, 2016. Section 1833(t) of
the Social Security Act (the Act) requires us to annually review and
update the payment rates for services payable under the Hospital
Outpatient Prospective Payment System (OPPS). Specifically, section
1833(t)(9)(A) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, relative payment weights, and other adjustments that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors. In addition, under section 1833(i) of the Act, we annually
review and update the ASC payment rates. We describe these and various
other statutory authorities in the relevant sections of this proposed
rule. In addition, this proposed rule would update and refine the
requirements for the Hospital Outpatient Quality Reporting (OQR)
Program and the ASC Quality Reporting (ASCQR) Program.
Further, we are proposing certain changes relating to the hospital
inpatient prospective payment system (IPPS): Proposed changes to the 2-
midnight rule under the short inpatient hospital stay policy and a
discussion of the related -0.2 percent payment adjustment; and a
proposed transition for Medicare-dependent, small rural hospitals
(MDHs) in all-urban States.
2. Summary of the Major Provisions
OPPS Update: For CY 2016, we are proposing to increase the
payment rates under the OPPS by an Outpatient Department (OPD) fee
schedule increase factor of 1.9 percent. This proposed increase is
based on the proposed hospital inpatient market basket percentage
increase of 2.7 percent for inpatient services paid under the hospital
inpatient prospective payment system (IPPS), minus the proposed
multifactor productivity (MFP) adjustment of 0.6 percentage point, and
minus a 0.2 percentage point adjustment required by the Affordable Care
Act. In addition, we are proposing to apply a 2.0 percent reduction to
the conversion factor to redress the inflation in OPPS payment rates
resulting from excess packaged payment under the OPPS for laboratory
tests that are excepted from our final CY 2014 laboratory packaging
policy, as discussed in section II.B. of this proposed rule. Under this
proposed rule, we estimate that total payments for CY 2016, including
beneficiary cost-sharing, to the approximate 3,800 facilities paid
under the OPPS (including general acute care hospitals, children's
hospitals, cancer hospitals, and community mental health centers
(CMHCs)), would decrease by approximately $43 million compared to CY
2015 payments, excluding our

[[Page 39206]]

estimated changes in enrollment, utilization, and case-mix.
We are proposing to continue to implement the statutory 2.0
percentage point reduction in payments for hospitals failing to meet
the hospital outpatient quality reporting requirements, by applying a
proposed reporting factor of 0.980 to the OPPS payments and copayments
for all applicable services.
Rural Adjustment: We are proposing to continue the
adjustment of 7.1 percent to the OPPS payments to certain rural sole
community hospitals (SCHs), including essential access community
hospitals (EACHs). This proposed adjustment would 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 2016, we are
proposing to continue to provide additional payments to cancer
hospitals so that the cancer hospital's payment-to-cost ratio (PCR)
after the additional payments is equal to the weighted average PCR for
the other OPPS hospitals using the most recently submitted or settled
cost report data. Based on those data, a proposed target PCR of 0.90
would be used to determine the CY 2016 cancer hospital payment
adjustment to be paid at cost report settlement. That is, the proposed
payment adjustments would be the additional payments needed to result
in a PCR equal to 0.90 for each cancer hospital.
Payment of Drugs, Biologicals, and Radiopharmaceuticals:
For CY 2016, proposed 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.
Payment of Biosimilar Biological Products: For CY 2016, we
are proposing to pay for biosimilar biological products based on the
payment allowance of the product as determined under section 1847A of
the Act. We also are proposing to extend pass-through payment
eligibility to biosimilar biological products and to set payment at the
difference between the amount paid under section 1842(o) of the Act
(that is, the payment allowance of the product as determined under
section 1847A of the Act) and the otherwise applicable HOPD fee
schedule amount.
Packaging Policies: In CY 2015, we conditionally packaged
certain ancillary services when they are integral, ancillary,
supportive, dependent, or adjunctive to a primary service. For CY 2016,
we are proposing to expand the set of conditionally packaged ancillary
services to include three new APCs.
Conditionally Packaged Outpatient Laboratory Tests: For CY
2016, we are proposing to conditionally package laboratory tests
(regardless of the date of service) on a claim with a service that is
assigned status indicator ``S,'' ``T,'' or ``V'' unless an exception
applies or the laboratory test is ``unrelated'' to the other HOPD
service or services on the claim. We are proposing to establish a new
status indicator ``Q4'' for this purpose. When laboratory tests are the
only services on the claim, a separate payment at CLFS payment rates
would be made. The ``L1'' modifier would still be used for
``unrelated'' laboratory tests.
Comprehensive APCs: We implemented the comprehensive APCs
(C-APCs) policy for CY 2015 with a total of 25 C-APCs. In CY 2016, we
are not proposing extensive changes to the already established
methodology used for C-APCs. However, we are proposing to create nine
new C-APCs that meet the previously established criteria.
APC Restructuring: Section 1833(t)(9)(A) of the Act
requires the Secretary to review certain components of the OPPS, not
less often than annually, and to revise the groups, relative payment
weights, and other adjustments that take into account changes in
medical practices, changes in technologies, and the addition of new
services, new cost data, and other relevant information and factors.
For CY 2016, we conducted a comprehensive review of the structure of
the APCs and codes and are proposing to restructure the OPPS APC
groupings for nine APC clinical families based on the following
principles: (1) Improved clinical homogeneity; (2) improved resource
homogeneity; (3) reduced resource overlap in longstanding APCs; and (4)
greater simplicity and improved understandability of the OPPS APC
structure.
New Process for Device Pass-Through Payment: Beginning in
CY 2016, we are proposing to add a rulemaking component to the current
quarterly device pass-through payment application process.
Specifically, we are proposing to supplement the quarterly process by
including a description of applications received (whether they are
approved or denied) as well as our rationale for approving or denying
the application in the next applicable OPPS proposed rule. This
proposed change would help achieve the goals of increased transparency
and stakeholder input. In addition, the proposal would align a portion
of the OPPS device pass-through payment application process with the
already established IPPS application process for new medical services
and new technology add-on payments. We also are proposing that a device
that requires FDA premarket approval or clearance is eligible to apply
for device pass-through payment only if it is ``new,'' meaning that the
pass-through payment application is submitted within 3 years from the
date of the applicable FDA premarket approval, clearance, or
investigational device exemption.
Two-Midnight Rule: The 2-midnight rule was adopted
effective October 1, 2013. Under the 2-midnight rule, an inpatient
admission is generally appropriate for Medicare Part A payment if the
physician (or other qualified practitioner) admits the patient as an
inpatient based upon the expectation that the patient will need
hospital care that crosses at least 2 midnights. In assessing the
expected duration of necessary care, the physician (or other
practitioner) may take into account outpatient hospital care received
prior to inpatient admission. If the patient is expected to need less
than 2 midnights of care in the hospital, the services furnished should
generally be billed as outpatient services. In this proposed rule, we
are proposing to modify our existing ``rare and unusual'' exceptions
policy under which the only exceptions to the 2-midnight benchmark were
cases involving services designated by CMS as inpatient only, and those
rare and unusual circumstances published on the CMS Web site or other
subregulatory guidance, to also allow exceptions to the 2-midnight
benchmark to be determined on a case-by-case basis by the physician
responsible for the care of the beneficiary, subject to medical review.
However, we continue to expect that stays under 24 hours would rarely
qualify for an exception to the 2-midnight benchmark. In addition, we
are revising our medical review strategy and announcing that no later
than October 1, 2015, we are changing the medical review strategy and
have Quality Improvement Organization (QIO) contractors conduct reviews
of short inpatient stays rather than the Medicare administrative
contractors (MACs).
Chronic Care Management (CCM): For CY 2016, we are
proposing additional requirements for hospitals to bill and receive
OPPS payment for CCM services described by CPT code 99490. These
requirements include scope of service elements analogous to the scope
of service elements finalized as

[[Page 39207]]

requirements in the CY 2015 Medicare Physician Fee Schedule (MPFS)
final rule with comment period (79 FR 6715 through 67728).
National Electrical Manufacturers Association (NEMA)
Modifier: Effective for services furnished on or after January 1, 2016,
section 218(a) of the PAMA amended section 1834 of the Act by
establishing a new subsection 1834(p), which reduces payment for the
technical component (TC) (and the TC of the global fee) under the MPFS
and the OPPS (5 percent in 2016 and 15 percent in 2017 and subsequent
years) for applicable computed tomography (CT) services identified by
certain CPT HCPCS codes furnished using equipment that does not meet
each of the attributes of the National Electrical Manufacturers
Association (NEMA) Standard XR-29-2013, entitled ``Standard Attributes
on CT Equipment Related to Dose Optimization and Management.'' The
provision requires that information be provided and attested to by a
supplier and a hospital outpatient department that indicates whether an
applicable CT service was furnished that was not consistent with the
NEMA CT equipment standard. To implement this provision, we are
proposing to establish a new modifier that would be reported with
specific CPT codes, effective January 1, 2016.
New Process for Requesting Comments on New and Revised
Category I and III CPT Codes: In the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66842 through 66844), we finalized a revised
process of assigning APC and status indicators for new and revised
Category I and III CPT codes that would be effective January 1.
Specifically, we stated that we would include 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 if
the AMA provides CMS with the codes in time for the OPPS/ASC proposed
rule. For the CY 2016 OPPS update, we received the CY 2016 CPT codes
from AMA in time for inclusion to this CY 2016 OPPS/ASC proposed rule.
The new and revised CY 2016 Category I and III CPT codes can be found
in OPPS Addendum B and assigned to new comment indicator ``NP'' to
indicate that the code is a new code for the next calendar year or the
code is an existing code with substantial revision to its code
descriptor in the next calendar year as compared to the current
calendar year with a proposed APC assignment and that comments will be
accepted on the proposed APC assignment and status indicator.
Ambulatory Surgical Center Payment Update: For CY 2016, we
are proposing to increase payment rates under the ASC payment system by
1.1 percent. This proposed increase is based on a projected CPI-U
update of 1.7 percent minus a multifactor productivity adjustment
required by the Affordable Care Act that is projected to be 0.6
percentage point. Based on this proposed update, we estimate that
proposed total payments to ASCs (including beneficiary cost-sharing and
estimated changes in enrollment, utilization, and case-mix), for CY
2016 would be approximately $4.293 billion, an increase of
approximately $186 million compared to estimated CY 2015 Medicare
payments. In addition, we are proposing a revised process of assigning
ASC payment indicators for new and revised Category I and III CPT codes
that would be effective January 1, similar to the OPPS process we
finalized in the CY 2015 OPPS/ASC final rule with comment period.
Specifically, we are proposing to include the proposed ASC payment
indicator assignments in the OPPS/ASC proposed rule for the vast
majority of new and revised CPT codes before they are used for payment
purposes under the ASC payment system if the American Medical
Association (AMA) provides CMS with the codes in time for the OPPS/ASC
proposed rule.
Hospital Outpatient Quality Reporting (OQR) Program: For
the Hospital OQR Program, we are making proposals for the CY 2017
payment determination and subsequent years, the CY 2018 payment
determination and subsequent years, and the CY 2019 payment
determination and subsequent years. For CY 2017 and subsequent years,
we are proposing to: (1) Remove the OP-15: Use of Brain Computed
Tomography (CT) in the Emergency Department for Atraumatic Headache
measure, effective January 1, 2016 (no data for this measure will be
used for any payment determination); (2) change the deadline for
withdrawing from the Hospital OQR Program from November 1 to August 31;
(3) shift the quarters on which we base payment determinations; (4)
change the data submission timeframe for measures submitted via the CMS
Web-based tool (QualityNet Web site) from July 1 through November 1 to
January 1 through May 15; (5) rename our extension and exception policy
to extension and exemption policy; (6) change the deadline for
submitting a reconsideration request from the first business day of the
month of February of the affected payment year to the first business
day on or after March 17 of the affected payment year; and (7) amend 42
CFR 419.46(f)(1) and 42 CFR 419.46(e)(2) to replace the term ``fiscal
year'' with the term ``calendar year.''
For CY 2018 and subsequent years, we are proposing a new measure:
OP-33: External Beam Radiotherapy (EBRT) for Bone Metastases (NQF #
1822). For CY 2019 and subsequent years, we also are proposing a new
measure: OP-34: Emergency Department Transfer Communication (EDTC) (NQF
# 0291). In addition, we are exploring electronic clinical quality
measures (eCQMs) and whether, in future rulemaking, we would propose
that hospitals have the option to voluntarily submit data for OP-18:
Median Time from ED Arrival to ED Departure for Discharged ED Patients
electronically beginning with the CY 2019 payment determination.
Ambulatory Surgical Center Quality Reporting (ASCQR)
Program: For the ASCQR Program, we are proposing to align data
submission end dates for data submitted using a Web-based tool, to
align policies regarding paid claims to be included in the calculation
for all claims-based measures, to modify the submission date for
reconsideration requests, to modify our policy for the facility
identifier for public reporting of ASCQR Program data, and to not
consider IHS hospital outpatient departments that bill as ASCs to be
ASCs for purposes of the ASCQR Program. We also are proposing to codify
a number of existing and proposed policies and are soliciting public
comments on the possible inclusion of two measures in the ASCQR Program
measure set in the future.
3. Summary of Costs and Benefits
In sections XX. and XXI. of this proposed rule, we set forth a
detailed analysis of the regulatory and federalism impacts that the
proposed changes would have on affected entities and beneficiaries. Key
estimated impacts are described below.
a. Impacts of the Proposed OPPS Update
(1) Impacts of All OPPS Proposed Changes
Table 65 in section XX. of this proposed rule displays the
distributional impact of all the proposed OPPS changes on various
groups of hospitals and CMHCs for CY 2016 compared to all estimated
OPPS payments in CY 2015. We estimate that the proposed policies in
this proposed rule would result in a 0.2 percent overall decrease in
OPPS payments to providers. We estimate that proposed

[[Page 39208]]

total OPPS payments for CY 2016, including beneficiary cost-sharing, to
the approximate 3,800 facilities paid under the OPPS (including general
acute care hospitals, children's hospitals, cancer hospitals, and
CMHCs) would decrease by approximately $43 million compared to CY 2015
payments, excluding our estimated changes in enrollment, utilization,
and case-mix.
We estimated the isolated impact of our proposed OPPS policies on
CMHCs because CMHCs are only paid for partial hospitalization services
under the OPPS. Continuing the provider-specific structure that we
adopted beginning in CY 2011 and basing payment fully on the type of
provider furnishing the service, we estimate a 14.8 percent increase in
CY 2016 payments to CMHCs relative to their CY 2015 payments.
(2) Impacts of the Proposed Updated Wage Indexes
We estimate that our proposed update of the wage indexes based on
the FY 2016 IPPS proposed rule wage indexes results in a 0.1 percent
increase for urban hospitals and a -0.4 percent decrease for rural
hospitals under the OPPS. These wage indexes include the continued
implementation of the OMB labor market area delineations based on 2010
Decennial Census data.
(3) Impacts of the Proposed Rural Adjustment and the Cancer Hospital
Payment Adjustment
There are no significant impacts of our proposed CY 2016 payment
policies for hospitals that are eligible for the rural adjustment or
for the cancer hospital payment adjustment. We are not proposing to
make any change in policies for determining the rural and cancer
hospital payment adjustments, and the adjustment amounts do not
significantly impact the budget neutrality adjustments for these
policies.
(4) Impacts of the Proposed OPD Fee Schedule Increase Factor
As a result of the proposed OPD fee schedule increase factor, the
proposed 2.0 percent reduction to the conversion factor to redress the
inflation in OPPS payment rates resulting from excess packaged payment
under the OPPS for laboratory tests that are excepted from our final CY
2014 laboratory packaging policy, and other proposed budget neutrality
adjustments, we estimate that urban and rural hospitals would
experience decreases of approximately 0.1 percent for urban hospitals
and 0.3 percent for rural hospitals. Classifying hospitals by teaching
status or type of ownership suggests that these hospitals would receive
similar decreases.
b. Impacts of the Proposed ASC Payment Update
For impact purposes, the surgical procedures on the ASC list of
covered procedures are aggregated into surgical specialty groups using
CPT and HCPCS code range definitions. The proposed percentage change in
estimated total payments by specialty groups under the proposed CY 2016
payment rates compared to estimated CY 2015 payment rates ranges
between 5 percent for auditory system services and -5 percent for
hematologic and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
We do not expect our proposed CY 2016 policies to significantly
affect the number of hospitals that do not receive a full annual
payment update.
d. Impacts of the ASCQR Program
We do not expect our proposed CY 2016 policies to significantly
affect the number of ASCs that do not receive a full annual payment
update.

B. Legislative and Regulatory Authority for the Hospital OPPS

When Title XVIII of the Social Security Act was enacted, Medicare
payment for hospital outpatient services was based on hospital-specific
costs. In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section
1833(t) to the Act authorizing implementation of a PPS for hospital
outpatient services. The OPPS was first implemented for services
furnished on or after August 1, 2000. Implementing regulations for the
OPPS are located at 42 CFR parts 410 and 419.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS.
The following Acts made additional changes to the OPPS: The Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8,
2006; the Medicare Improvements and Extension Act under Division B of
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173),
enacted on December 29, 2007; the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on
March 30, 2010 (these two public laws are collectively known as the
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L.
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93),
enacted on March 27, 2014; and the Medicare Access and CHIP
Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16,
2015.
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 proposed rule. 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 Medicare 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

[[Page 39209]]

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
in Maryland and paid under the Maryland All-Payer Model; 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)(A) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, relative payment weights, and other adjustments that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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

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, and at that time named the APC Panel. This
expert panel is composed of 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 Panel's charter was amended
on November 15, 2011, renaming the Panel and expanding the Panel's
authority to include supervision of hospital outpatient therapeutic
services and to add Critical Access Hospital (CAH) representation to
its membership. The current charter was renewed on November 6, 2014 (80
FR 23009) and the number of panel members was revised from up to 19 to
up to 15 members.

[[Page 39210]]

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/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
The Panel has held multiple meetings, with the last meeting taking
place on March 9, 2015. 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 status indicators to be assigned to
HCPCS codes, including but not limited to whether a HCPCS code or a
category of codes should be packaged or separately paid; and the
appropriate APC placement of HCPCS codes regarding services for which
separate payment is made.
Each of these subcommittees was established by a majority vote from
the full Panel during a scheduled Panel meeting, and the Panel
recommended at the March 9, 2015 meeting that the subcommittees
continue. We accepted this recommendation.
Discussions of the other recommendations made by the Panel at the
March 9, 2015 Panel meeting are included in the sections of this
proposed rule that are specific to each recommendation. For discussions
of earlier Panel meetings and recommendations, we refer readers to
previously published OPPS/ASC proposed and final rules, the CMS Web
site mentioned earlier in this section, and the FACA database at:
http://facadatabase.gov/.

F. Public Comments Received on the CY 2015 OPPS/ASC Final Rule With
Comment Period

We received approximately 38 timely pieces of correspondence on the
CY 2015 OPPS/ASC final rule with comment period that appeared in the
Federal Register on November 10, 2014 (79 FR 66770), as well as in the
correction notice that was published on February 24, 2015 (80 FR 9629),
some of which contained comments on the interim APC assignments and/or
status indicators of new or replacement HCPCS codes (identified with
comment indicator ``NI'' in Addenda B, AA, and BB to that final rule).
Summaries of the public comments on new or replacement codes will be
set forth in the CY 2016 OPPS/ASC final rule with comment period under
the appropriate subject-matter headings.

II. Proposed Updates Affecting OPPS Payments

A. Proposed Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
not less often than annually and revise the relative payment weights
for APCs. In the April 7, 2000 OPPS final rule with comment period (65
FR 18482), we explained in detail how we calculated the relative
payment weights that were implemented on August 1, 2000 for each APC
group.
For this CY 2016 OPPS/ASC proposed rule, we are proposing to
recalibrate the APC relative payment weights for services furnished on
or after January 1, 2016, and before January 1, 2017 (CY 2016), using
the same basic methodology that we described in the CY 2015 OPPS/ASC
final rule with comment period. That is, we are proposing to
recalibrate the relative payment weights for each APC based on claims
and cost report data for hospital outpatient department (HOPD)
services, using the most recent available data to construct a database
for calculating APC group weights. Therefore, for the purpose of
recalibrating the proposed APC relative payment weights for CY 2016, we
used approximately 151 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, 2014, and before January 1, 2015. For exact counts of claims
used, we refer readers to the claims accounting narrative under
supporting documentation for this CY 2016 OPPS/ASC proposed rule on the
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
Of the approximately151 million final action claims for services
provided in hospital outpatient settings used to calculate the CY 2016
OPPS payment rates for this proposed rule, approximately 117 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 117 million claims,
approximately 4 million claims were not for services paid under the
OPPS or were excluded as not appropriate for use (for example,
erroneous cost-to-charge ratios (CCRs) or no HCPCS codes reported on
the claim). From the remaining approximately 113 million claims, we
created approximately 88 million single records, of which approximately
38 million were ``pseudo'' single or ``single session'' claims (created
from approximately 16 million multiple procedure claims using the
process we discuss later in this section). Approximately 3 million
claims were trimmed out on cost or units in excess of +/- 3 standard
deviations from the geometric mean or other trims, yielding
approximately 85 million single bills for ratesetting. As described in
section II.A.2. of this proposed rule, our data development process is
designed with the goal of using appropriate cost information in setting
the APC relative payment weights. The bypass process is described in
section II.A.1.b. of this proposed rule. This section discusses how we
develop ``pseudo'' single procedure claims (as defined below), with the
intention of using more appropriate data from the available claims. In
some cases, the bypass process allows us to use some portion of the
submitted claim for cost estimation purposes, while the remaining
information on the claim continues to be unusable. Consistent with the
goal of using appropriate information in our data development process,
we only use claims (or portions of each claim) that are appropriate for
ratesetting purposes.
The proposed APC relative weights and payments for CY 2016 in
Addenda A and B to this proposed rule (which are available via the
Internet on the CMS Web site) were calculated using

[[Page 39211]]

claims from CY 2014 that were processed through December 31, 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 2016 OPPS, we are proposing to use 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 2016 payment
rates.
b. Proposed Use of Single and Multiple Procedure Claims
For CY 2016, in general, we are proposing to continue to use single
procedure claims to set the costs on which the APC relative payment
weights are based. We generally use single procedure claims to set the
estimated costs for APCs because we believe that the OPPS relative
weights on which payment rates are based should be derived from the
costs of furnishing one unit of one procedure and because, in many
circumstances, we are unable to ensure that packaged costs can be
appropriately allocated across multiple procedures performed on the
same date of service.
It is generally desirable to use the data from as many claims as
possible to recalibrate the APC relative payment weights, including
those claims for multiple procedures. As we have for several years, we
are proposing to continue to use date of service stratification and a
list of codes to be bypassed to convert multiple procedure claims to
``pseudo'' single procedure claims. Through bypassing specified codes
that we believe do not have significant packaged costs, we are able to
use more data from multiple procedure claims. In many cases, this
enables us to create multiple ``pseudo'' single procedure claims from
claims that were submitted as multiple procedure claims spanning
multiple dates of service, or claims that contained numerous separately
paid procedures reported on the same date on one claim. We refer to
these newly created single procedure claims as ``pseudo'' single
procedure claims. The history of our use of a bypass list to generate
``pseudo'' single procedure claims is well-documented, most recently in
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66780
through 66783). 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 2015. Increased packaging and
creation of composite APCs also increased the number of bills that we
were able to use for ratesetting by enabling us to use claims that
contained multiple major procedures that previously would not have been
usable. Further, for CY 2009, we expanded the composite APC model to
one additional clinical area, multiple imaging services (73 FR 68559
through 68569), which also increased the number of bills we were able
to use in developing the OPPS relative weights on which payments are
based. We have continued the composite APCs for multiple imaging
services through CY 2015, and we are proposing to continue this policy
for CY 2016. We refer readers to section II.A.2.f. of the CY 2015 OPPS/
ASC final rule with comment period (79 FR 66810 through 66816) for a
discussion of the use of claims in modeling the costs for composite
APCs and to section II.A.3. of the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66817 through 66823) for a discussion of our
packaging policies for CY 2015. In addition, we are proposing to
establish additional packaging policies for the CY 2016 OPPS, as
discussed in section II.A.3. of this proposed rule.
We are proposing to continue to apply these processes to enable us
to use as much claims data as possible for ratesetting for the CY 2016
OPPS. This methodology enabled us to create, for this proposed rule,
approximately 38 million ``pseudo'' single procedure claims, including
multiple imaging composite ``single session'' bills (we refer readers
to section II.A.2.f.(4) of this proposed rule for further discussion),
to add to the approximately 49 million ``natural'' single procedure
claims.
In addition, we are proposing to continue our broader initiative to
review, revise, and reorganize APCs across the OPPS to collectively
group services that are clinically similar and have similar resource
costs within the same APC. The proposed restructuring of APCs are
discussed in the applicable sections of this proposed rule. In
conjunction with this initiative, we are proposing to renumber the APCs
(except for the composite APCs) primarily to achieve consecutive
numbering of APCs within each clinical family of APCs, as discussed in
section III.D. of this proposed rule. We are providing a crosswalk from
the existing APC numbers to the proposed new APC renumber in Addendum Q
to this proposed rule (which is available via the Internet on the CMS
Web site).
For CY 2016, we are proposing to bypass 178 HCPCS codes that are
identified in Addendum N to this proposed rule (which is available via
the Internet on the CMS Web site). Since the inception of the bypass
list, which is the list of codes to be bypassed to convert multiple
procedure claims to ``pseudo'' single procedure claims, we have
calculated the percent of ``natural'' single bills that contained
packaging for each HCPCS code and the amount of packaging on each
``natural'' single bill for each code. Each year, we generally retain
the codes on the previous year's bypass list and use the updated year's
data (for CY 2016, data available for the March 9, 2015 meeting of the
Advisory Panel on Hospital Outpatient Payment (the Panel) from CY 2014
claims processed through September 30, 2014) to determine whether it
would be appropriate to add additional codes to the previous year's
bypass list. For CY 2016, we are proposing to continue to bypass all of
the HCPCS codes on the CY 2015 OPPS bypass list, with the exception of
HCPCS codes that we are proposing to delete for CY 2016, which are
listed in Table 1 of this proposed rule. (We refer readers to Addendum
N to the CY 2015 OPPS/ASC final rule with comment period for the CY
2015 OPPS bypass list. Addendum N is available via the Internet on the
CMS Web site.) We also are proposing to remove HCPCS codes that are not
separately paid under the OPPS because the purpose of the bypass list
is to obtain more data for those codes relevant to ratesetting. Some of
the codes we are proposing to remove from the CY 2016 bypass list are
affected by the CY 2016 proposed packaging policy, discussed in section
II.A.3. of this proposed rule. Some of the codes we are proposing to
remove have packaged cost patterns associated with their natural single
major claims that would no longer meet the bypass list criterion of 5
percent or fewer of the single major claims having packaged costs on
the claim. In addition, we are proposing to add to the bypass list for
CY 2016 HCPCS codes that are not on the CY 2015 bypass list that, using
the March 9, 2015 Panel data (first 9 months of CY 2014 claims), met
the empirical criteria for the bypass list that are summarized

[[Page 39212]]

below. Finally, to remain consistent with the CY 2016 proposal to
continue to develop OPPS relative payment weights based on geometric
mean costs, we also are proposing that the packaged cost criterion
continue to be based on the geometric mean cost. The entire list
proposed for CY 2016 (including the codes that remain on the bypass
list from prior years) is open to public comment in this CY 2016 OPPS/
ASC proposed rule. Because we must make some assumptions about
packaging in the multiple procedure claims in order to assess a HCPCS
code for addition to the bypass list, we assumed that the
representation of packaging on ``natural'' single procedure claims for
any given code is comparable to packaging for that code in the multiple
procedure claims. The proposed criteria for the bypass list are:
There are 100 or more ``natural'' single procedure claims
for the code. This number of single procedure claims ensures that
observed outcomes are sufficiently representative of packaging that
might occur in the multiple claims.
Five percent or fewer of the ``natural'' single procedure
claims for the code have packaged costs on that single procedure claim
for the code. This criterion results in limiting the amount of
packaging being redistributed to the separately payable procedures
remaining on the claim after the bypass code is removed and ensures
that the costs associated with the bypass code represent the cost of
the bypassed service.
The geometric mean cost of packaging observed in the
``natural'' single procedure claims is equal to or less than $55. This
criterion also limits 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 2015, we are proposing to continue
to establish the CY 2016 OPPS relative payment weights based on
geometric mean costs. To remain consistent in the metric used for
identifying cost patterns, we are proposing to use the geometric mean
cost of packaging to identify potential codes to add to the bypass
list.
In response to public comments on the CY 2010 OPPS/ASC proposed
rule requesting that the packaged cost threshold be updated, we
considered whether it would be appropriate to update the $50 packaged
cost threshold for inflation when examining potential bypass list
additions. As discussed in the CY 2010 OPPS/ASC final rule with comment
period (74 FR 60328), the real value of this packaged cost threshold
criterion has declined due to inflation, making the packaged cost
threshold more restrictive over time when considering additions to the
bypass list. Therefore, adjusting the threshold by the market basket
increase would prevent continuing decline in the threshold's real
value. Based on the same rationale described for the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66781), we are proposing for CY
2016 to continue to update the packaged cost threshold by the market
basket increase. By applying the final CY 2015 market basket increase
of 2.2 percent (79 FR 66825) to the prior nonrounded dollar threshold
of $55.66 (79 FR 66781), we determined that the proposed threshold
would remain for CY 2016 at $55 ($56.88 rounded to $55, the nearest $5
increment). Therefore, we are proposing to set the geometric mean
packaged cost threshold on the CY 2014 claims at $55 for a code to be
considered for addition to the CY 2016 OPPS bypass list.
For inclusion on the bypass list, a code cannot be a code for an
unlisted service. Unlisted codes do not describe a specific service,
and therefore their costs would not be appropriate for bypass list
purposes.
In addition, we are proposing to continue to include on the bypass
list HCPCS codes that we believe have minimal associated packaging,
based on our clinical assessment of the complete CY 2016 OPPS proposal.
Some of these codes were identified by CMS, and some were identified in
prior years by commenters with specialized knowledge of the packaging
associated with specific services. We also are proposing to continue to
include certain HCPCS codes on the bypass list in order to purposefully
direct the assignment of packaged costs to a companion code where
services always appear together and where there would otherwise be few
single procedure claims available for ratesetting. For example, we have
previously discussed our reasoning for adding HCPCS code G0390 (Trauma
response team associated with hospital critical care service) to the
bypass list (73 FR 68513).
As a result of the multiple imaging composite APCs that we
established in CY 2009, the program logic for creating ``pseudo''
single procedure claims from bypassed codes that are also members of
multiple imaging composite APCs changed. When creating the set of
``pseudo'' single procedure claims, claims that contain ``overlap
bypass codes'' (those HCPCS codes that are both on the bypass list and
are members of the multiple imaging composite APCs) were identified
first. These HCPCS codes were then processed to create multiple imaging
composite ``single session'' bills, that is, claims containing HCPCS
codes from only one imaging family, thus suppressing the initial use of
these codes as bypass codes. However, these ``overlap bypass codes''
were retained on the bypass list because, at the end of the ``pseudo''
single processing logic, we reassessed the claims without suppression
of the ``overlap bypass codes'' under our longstanding ``pseudo''
single process to determine whether we could convert additional claims
to ``pseudo'' single procedure claims. (We refer readers to section
II.A.2.b. of this proposed rule for further discussion of the treatment
of ``overlap bypass codes.'') This process also created multiple
imaging composite ``single session'' bills that could be used for
calculating composite APC costs. ``Overlap bypass codes'' that are
members of the proposed multiple imaging composite APCs are identified
by asterisks (*) in Addendum N to this proposed rule (which is
available via the Internet on the CMS Web site).
Addendum N to this proposed rule includes the proposed list of
bypass codes for CY 2016. The proposed list of bypass codes contains
codes that were reported on claims for services in CY 2014 and,
therefore, includes codes that were in effect in CY 2014 and used for
billing but were deleted for CY 2015. We are retaining these deleted
bypass codes on the proposed CY 2016 bypass list because these codes
existed in CY 2014 and were covered OPD services in that period, and CY
2014 claims data are used to calculate CY 2016 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 are members of the proposed
multiple imaging composite APCs are identified by asterisks (*) in the
third column of Addendum N to this proposed rule. HCPCS codes that we
are proposing to add for CY 2016 are identified by asterisks (*) in the
fourth column of Addendum N.
Table 1 below contains the list of codes that we are proposing to
remove from the CY 2016 bypass list.

[[Page 39213]]

Table 1--HCPCS Codes Proposed To Be Removed From the CY 2016 Bypass List
------------------------------------------------------------------------
HCPCS Code HCPCS Short descriptor
------------------------------------------------------------------------
11057..................................... Trim skin lesions over 4.
57454..................................... Bx/curett of cervix w/scope.
88348..................................... Electron microscopy.
92240..................................... Icg angiography.
92546..................................... Sinusoidal rotational test.
------------------------------------------------------------------------

c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
For CY 2016, we are proposing to continue to use the hospital-
specific overall ancillary and departmental cost-to-charge ratios
(CCRs) to convert charges to estimated costs through application of a
revenue code-to-cost center crosswalk. To calculate the APC costs on
which the proposed CY 2016 APC payment rates are based, we calculated
hospital-specific overall ancillary CCRs and hospital-specific
departmental CCRs for each hospital for which we had CY 2014 claims
data by comparing these claims data to the most recently available
hospital cost reports, which, in most cases, are from CY 2013. For the
CY 2016 OPPS proposed rates, we used the set of claims processed during
CY 2014. 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 2014
(the year of claims data we used to calculate the proposed CY 2016 OPPS
payment rates) and found that the National Uniform Billing Committee
(NUBC) did not add any new revenue codes to the NUBC 2014 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.(1) of this proposed rule.
For the CCR calculation process, we used the same general approach
that we used in developing the final APC rates for CY 2007 and
thereafter, using the revised CCR calculation that excluded the costs
of paramedical education programs and weighted the outpatient charges
by the volume of outpatient services furnished by the hospital. We
refer readers to the CY 2007 OPPS/ASC final rule with comment period
for more information (71 FR 67983 through 67985). We first limited the
population of cost reports to only those hospitals that filed
outpatient claims in CY 2014 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 2013. For this proposed rule, we used
the most recently submitted cost reports to calculate the CCRs to be
used to calculate costs for the proposed CY 2016 OPPS payment rates. If
the most recently available cost report was submitted but not settled,
we looked at the last settled cost report to determine the ratio of
submitted to settled cost using the overall ancillary CCR, and we then
adjusted the most recent available submitted, but not settled, cost
report using that ratio. We then calculated both an overall ancillary
CCR and cost center-specific CCRs for each hospital. We used the
overall ancillary CCR referenced above for all purposes that require
use of an overall ancillary CCR. We are proposing to continue this
longstanding methodology for the calculation of costs for CY 2016.
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 through CY 2015, and we are proposing to
continue this practice for the CY 2016 OPPS.

[[Page 39214]]

In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through
50080), we finalized our proposal to create new standard cost centers
for ``Computed Tomography (CT),'' ``Magnetic Resonance Imaging (MRI),''
and ``Cardiac Catheterization,'' and to require that hospitals report
the costs and charges for these services under these new cost centers
on the revised Medicare cost report Form CMS 2552-10. As we discussed
in the FY 2009 IPPS and CY 2009 OPPS/ASC proposed and final rules, RTI
also found that the costs and charges of CT scans, MRIs, and cardiac
catheterization differ significantly from the costs and charges of
other services included in the standard associated cost center. RTI
concluded that both the IPPS and the OPPS relative payment weights
would better estimate the costs of those services if CMS were to add
standard costs centers for CT scans, MRIs, and cardiac catheterization
in order for hospitals to report separately the costs and charges for
those services and in order for CMS to calculate unique CCRs to
estimate the cost from charges on claims data. We refer readers to the
FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a more
detailed discussion on the reasons for the creation of standard cost
centers for CT scans, MRIs, and cardiac catheterization. The new
standard cost centers for CT scans, MRIs, and cardiac catheterization
were effective for cost report periods beginning on or after May 1,
2010, on the revised cost report Form CMS-2552-10.
Using the December 2014 HCRIS update to estimate costs in the
proposed CY 2016 OPPS ratesetting process, we were able to calculate a
valid implantable device CCR for 2,940 hospitals, a valid MRI CCR for
1,978 hospitals, a valid CT scan CCR for 2,069 hospitals, and a valid
Cardiac Catheterization CCR for 1,429 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 final rule with
comment period (78 FR 74847), we 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,
continued in the CY 2015 OPPS, and we are proposing to retain this
practice for the CY 2016 OPPS, to calculate the OPPS relative payment
weights using distinct CCRs for cardiac catheterization, CT scan, MRI,
and implantable medical devices. Section XIX. of this proposed rule
includes the impacts of calculating the proposed CY 2016 OPPS relative
payment weights using these standard cost centers that were adopted in
CY 2014.
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................................... 0.0451 0.0589 0.0890 0.1124
Square Feet Only................................ 0.0364 0.0493 0.0787 0.1019
Direct Assign................................... 0.0641 0.0732 0.1078 0.1286
Dollar Value.................................... 0.0536 0.0692 0.1001 0.1235
Direct Assign and Dollar Value.................. 0.0534 0.0690 0.1004 0.1237
----------------------------------------------------------------------------------------------------------------

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 2016.

[[Page 39215]]

Table 3--Percentage Change in Estimated Cost for CT and MRI APCs When
Excluding Claims From Providers Using ``Square Feet'' as the Cost
Allocation Method
------------------------------------------------------------------------
Proposed CY 2016 APC
Proposed CY 2016 APC descriptor Percent change
------------------------------------------------------------------------
5570 *......................... Computed Tomography 13.2
without Contrast.
5571 *......................... Level 1 Computed 9.3
Tomography with
Contrast and Computed
Tomography Angiography.
5581 *......................... Magnetic Resonance 7.6
Imaging and Magnetic
Resonance Angiography
without Contrast.
5582 *......................... Magnetic Resonance 6.2
Imaging and Magnetic
Resonance Angiography
with Contrast.
8005........................... CT & CTA without 12.1
Contrast Composite.
8006........................... CT & CTA with Contrast 9.0
Composite.
8007........................... MRI & MRA without 7.1
Contrast Composite.
8008........................... MRI & MRA with Contrast 6.8
Composite.
------------------------------------------------------------------------
* Proposed renumbered APC. We refer readers to Addendum Q to this
proposed rule (which is available via the Internet on the CMS Web
site) for a crosswalk of the existing APCs to the proposed renumbered
APCs.

In summary, we are proposing to continue 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 2016 OPPS. For
the ``Magnetic Resonance Imaging (MRI)'' and ``Computed Tomography (CT)
Scan'' APCs identified in Table 3 of this proposed rule, we are
proposing to continue our policy of removing claims from cost modeling
for those providers using ``square feet'' as the cost allocation
statistic for CY 2016.
2. Proposed Data Development Process and Calculation of Costs Used for
Ratesetting
In this section of this proposed rule, we discuss the use of claims
to calculate the proposed OPPS payment rates for CY 2016. The Hospital
OPPS page on the CMS Web site on which this proposed rule is posted
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of claims used
in the development of the proposed payment rates. That accounting
provides additional detail regarding the number of claims derived at
each stage of the process. In addition, below in this section we
discuss the file of claims that comprises the data set that is
available for purchase under a CMS data use agreement. The CMS Web
site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about purchasing
the ``OPPS Limited Data Set,'' which now includes the additional
variables previously available only in the OPPS Identifiable Data Set,
including ICD-9-CM diagnosis codes and revenue code payment amounts.
This file is derived from the CY 2014 claims that were used to
calculate the proposed payment rates for the CY 2016 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 2016, we are proposing to continue to
use geometric mean costs to calculate the relative weights on which the
proposed CY 2016 OPPS payment rates are based.
We used the methodology described in sections II.A.2.a. through
II.A.2.f. of this proposed rule to calculate the costs we used to
establish the proposed relative payment weights used in calculating the
proposed OPPS payment rates for CY 2016 shown in Addenda A and B to
this proposed rule (which are available via the Internet on the CMS Web
site). We refer readers to section II.A.4. of this proposed rule for a
discussion of the conversion of APC costs to scaled payment weights.
a. Claims Preparation
For this proposed rule, we used the CY 2014 hospital outpatient
claims processed through December 31, 2014, to calculate the geometric
mean costs of APCs that underpin the proposed relative payment weights
for CY 2016. To begin the calculation of the proposed relative payment
weights for CY 2016, we pulled all claims for outpatient services
furnished in CY 2014 from the national claims history file. This is not
the population of claims paid under the OPPS, but all outpatient claims
(including, for example, critical access hospital (CAH) claims and
hospital claims for clinical laboratory tests for persons who are
neither inpatients nor outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77
because these are claims that providers submitted to Medicare knowing
that no payment would be made. For example, providers submit claims
with a condition code 21 to elicit an official denial notice from
Medicare and document that a service is not covered. We then excluded
claims for services furnished in Maryland, Guam, the U.S. Virgin
Islands, American Samoa, and the Northern Mariana Islands because
hospitals in those geographic areas are not paid under the OPPS, and,
therefore, we do not use claims for services furnished in these areas
in ratesetting.
We divided the remaining claims into the three groups shown below.
Groups 2 and 3 comprise the 117 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 proposed rule. We then flagged

[[Page 39216]]

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 excluding all claims from 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. We retained the CY 2013 payment policy for
separately payable drugs and biologicals through CY 2015, and we are
proposing to continue this payment policy for CY 2016. We refer readers
to section V.B.3. of this proposed rule for a complete discussion of
our CY 2016 proposed payment policy for separately paid drugs and
biologicals.
We then removed line-items that were not paid during claims
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 2015 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 2016, we are proposing to continue the policy we implemented
for CY 2013 and retained in subsequent years to exclude line-item data
for pass-through drugs and biologicals (status indicator ``G'' for CY
2013) and nonpass-through drugs and biologicals (status indicator ``K''
for CY 2013) where the charges reported on the claim for the line were
either denied or rejected during claims processing. Removing lines that
were eligible for payment but were not paid ensures that we are using
appropriate data. The trim avoids using cost data on lines that we
believe were defective or invalid because those rejected or denied
lines did not meet the Medicare requirements for payment. For example,
edits may reject a line for a separately paid drug because the number
of units billed exceeded the number of units that would be reasonable
and, therefore, is likely a billing error (for example, a line
reporting 55 units of a drug for which 5 units is known to be a fatal
dose). As with our trimming in the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66788) of line-items with a status indicator of
``S,'' ``T,'' or ``V,'' we believe that unpaid line-items represent
services that are invalidly reported and, therefore, should not be used
for ratesetting (we note that the deletion of status indicator ``X''
was finalized in the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66821)). 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 2016 OPPS, as part of our proposal to continue packaging
of clinical diagnostic laboratory tests, we also are proposing to apply
the line item trim to these services if they did not receive payment in
the claims year. Removing these lines ensures that, in establishing the
CY 2016 OPPS relative

[[Page 39217]]

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 2016 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, in the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66819 through 66821), we deleted status indicator ``X''
and revised the title and description of status indicator ``Q1'' to
reflect that deletion. We also finalized the creation of status
indicator ``J1'' in the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66800 through 66809) to reflect the comprehensive APCs (C-APCs).
For CY 2016, we are proposing to define major procedures as any HCPCS
code having a status indicator of ``J1,'' ``J2,'' ``S,'' ``T,'' or
``V,'' to define minor procedures as any code having a status indicator
of ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,'' and to
classify ``other'' procedures as any code having a status indicator
other than one that we have classified as major or minor. For CY 2016,
we are proposing to continue to assign status indicator ``R'' to blood
and blood products; status indicator ``U'' to brachytherapy sources;
status indicator ``Q1'' to all ``STV-packaged codes;'' status indicator
``Q2'' to all ``T-packaged codes;'' and status indicator ``Q3'' to all
codes that may be paid through a composite APC based on composite-
specific criteria or paid separately through single code APCs when the
criteria are not met.
As discussed in the CY 2009 OPPS/ASC final rule with comment period
(73 FR 68709), we established status indicators ``Q1,'' ``Q2,'' and
``Q3'' to facilitate identification of the different categories of
codes. We are proposing to treat these codes in the same manner for
data purposes for CY 2016 as we have treated them since CY 2008.
Specifically, we are continuing to evaluate whether the criteria for
separate payment of codes with status indicator ``Q1'' or ``Q2'' are
met in determining whether they are treated as major or minor codes.
Codes with status indicator ``Q1'' or ``Q2'' are carried through the
data either with status indicator ``N'' as packaged or, if they meet
the criteria for separate payment, they are given the status indicator
of the APC to which they are assigned and are considered as ``pseudo''
single procedure claims for major codes. Codes assigned status
indicator ``Q3'' are paid under individual APCs unless they occur in
the combinations that qualify for payment as composite APCs and,
therefore, they carry the status indicator of the individual APC to
which they are assigned through the data process and are treated as
major codes during both the split and ``pseudo'' single creation
process. The calculation of the geometric mean costs for composite APCs
from multiple procedure major claims is discussed in section II.A.2.f.
of this proposed rule.
Specifically, we are proposing to divide the remaining claims into
the following five groups:
1. Single Procedure Major Claims: Claims with a single separately
payable procedure (that is, status indicator ``S,'' ``T,'' or ``V''
which includes codes with status indicator ``Q3''); claims with status
indicator ``J1'' or ``J2,'' which receive special processing for C-
APCs, as discussed in section II.A.2.e. of this proposed rule; claims
with one unit of a status indicator ``Q1'' code (``STV-packaged'')
where there was no code with status indicator ``S,'' ``T,'' or ``V'' on
the same claim on the same date; or claims with one unit of a status
indicator ``Q2'' code (``T-packaged'') where there was no code with a
status indicator ``T'' on the same claim on the same date.
2. Multiple Procedure Major Claims: Claims with more than one
separately payable procedure (that is, status indicator ``S,'' ``T,''
or ``V'' which includes codes with status indicator ``Q3''), or
multiple units of one payable procedure. These claims include those
codes with a status indicator ``Q2'' code (``T-packaged'') where there
was no procedure with a status indicator ``T'' on the same claim on the
same date of service but where there was another separately paid
procedure on the same claim with the same date of service (that is,
another code with status indicator ``S'' or ``V''). We also include in
this set claims that contained one unit of one code when the bilateral
modifier was appended to the code and the code was conditionally or
independently bilateral. In these cases, the claims represented more
than one unit of the service described by the code, notwithstanding
that only one unit was billed.
3. Single Procedure Minor Claims: Claims with a single HCPCS code
that was assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,''
``R,'' ``U,'' or ``N'' and not status indicator ``Q1'' (``STV-
packaged'') or status indicator ``Q2'' (``T-packaged'') code.
4. Multiple Procedure Minor Claims: Claims with multiple HCPCS
codes that are assigned status indicator ``F,'' ``G,'' ``H,'' ``K,''
``L,'' ``R,'' ``U,'' or ``N;'' claims that contain more than one code
with status indicator ``Q1'' (``STV-packaged'') or more than one unit
of a code with status indicator ``Q1'' but no codes with status
indicator ``S,'' ``T,'' or ``V'' on the same date of service; or claims
that contain more than one code with status indicator ``Q2'' (T-
packaged), or ``Q2'' and ``Q1,'' or more than one unit of a code with
status indicator ``Q2'' but no code with status indicator ``T'' on the
same date of service.
5. Non-OPPS Claims: Claims that contain no services payable under
the OPPS (that is, all status indicators other than those listed for
major or minor status). These claims were excluded from the files used
for the OPPS. Non-OPPS claims have codes paid under other fee
schedules, for example, durable medical equipment, and do not contain a
code for a separately payable or packaged OPPS service. Non-OPPS claims
include claims for therapy services paid sometimes under the OPPS but
billed, in these non-OPPS cases, with revenue codes indicating that the
therapy services would be paid under the Medicare Physician Fee
Schedule (MPFS).
The claims listed in numbers 1, 2, 3, and 4 above are included in
the data file that can be purchased as described above. Claims that
contain codes to which we have assigned status indicators ``Q1''
(``STV-packaged'') and ``Q2'' (``T-packaged'') appear in the data for
the single major file, the multiple major file, and the multiple minor
file used for ratesetting. Claims that contain codes to which we have
assigned status indicator ``Q3'' (composite APC members) appear in both
the data of the single and multiple major files used in this proposed
rule, depending on the specific composite calculation.
In this CY 2016 proposed rule, we are proposing to adjust the
claims sorting process to determine whether a claim has a bilateral
procedure modifier (Modifier 50) before claims are assigned to one of
the five claims categories. This proposed adjustment shifts some claims
that might otherwise be considered a single major procedure claim to
the multiple major procedure claim category due to the presence of the
bilateral modifier. We believe that this proposed adjustment more
accurately sorts claims that have a bilateral modifier.

[[Page 39218]]

(2) Creation of ``Pseudo'' Single Procedure Claims
To develop ``pseudo'' single procedure claims for this proposed
rule, we examined both the multiple procedure major claims and the
multiple procedure minor claims. We first examined the multiple major
procedure claims for dates of service to determine if we could break
them into ``pseudo'' single procedure claims using the dates of service
for all lines on the claim. If we could create claims with single major
procedures by using dates of service, we created a single procedure
claim record for each separately payable procedure on a different date
of service (that is, a ``pseudo'' single procedure claim).
We also are proposing to use the bypass codes listed in Addendum N
to this proposed rule (which is available via the Internet on the CMS
Web site) and discussed in section II.A.1.b. of this proposed rule to
remove separately payable procedures which we determined contained
limited or no packaged costs or that were otherwise suitable for
inclusion on the bypass list from a multiple procedure bill. As
discussed above, we ignore the ``overlap bypass codes,'' that is, those
HCPCS codes that are both on the bypass list and are members of the
multiple imaging composite APCs, in this initial assessment for
``pseudo'' single procedure claims. The proposed CY 2016 ``overlap
bypass codes'' are listed in Addendum N to this proposed rule (which is
available via the Internet on the CMS Web site). When one of the two
separately payable procedures on a multiple procedure claim was on the
bypass list, we split the claim into two ``pseudo'' single procedure
claim records. The single procedure claim record that contained the
bypass code did not retain packaged services. The single procedure
claim record that contained the other separately payable procedure (but
no bypass code) retained the packaged revenue code charges and the
packaged HCPCS code charges. We also removed lines that contained
multiple units of codes on the bypass list and treated them as
``pseudo'' single procedure claims by dividing the cost for the
multiple units by the number of units on the line. If one unit of a
single, separately payable procedure code remained on the claim after
removal of the multiple units of the bypass code, we created a
``pseudo'' single procedure claim from that residual claim record,
which retained the costs of packaged revenue codes and packaged HCPCS
codes. This enabled us to use claims that would otherwise be multiple
procedure claims and could not be used.
We then assessed the claims to determine if the proposed criteria
for the multiple imaging composite APCs, discussed in section
II.A.2.f.(3) of this proposed rule, were met. If the criteria for the
imaging composite APCs were met, we created a ``single session'' claim
for the applicable imaging composite service and determined whether we
could use the claim in ratesetting. For HCPCS codes that are both
conditionally packaged and are members of a multiple imaging composite
APC, we first assessed whether the code would be packaged and, if so,
the code ceased to be available for further assessment as part of the
composite APC. Because the packaged code would not be a separately
payable procedure, we considered it to be unavailable for use in
setting the composite APC costs on which the proposed CY 2016 OPPS
relative payment weights are based. Having identified ``single
session'' claims for the imaging composite APCs, we reassessed the
claim to determine if, after removal of all lines for bypass codes,
including the ``overlap bypass codes,'' a single unit of a single
separately payable code remained on the claim. If so, we attributed the
packaged costs on the claim to the single unit of the single remaining
separately payable code other than the bypass code to create a
``pseudo'' single procedure claim. We also identified line-items of
overlap bypass codes as a ``pseudo'' single procedure claim. This
allowed us to use more claims data for ratesetting purposes.
We also are proposing to examine the multiple procedure minor
claims to determine whether we could create ``pseudo'' single procedure
claims. Specifically, where the claim contained multiple codes with
status indicator ``Q1'' (``STV-packaged'') on the same date of service
or contained multiple units of a single code with status indicator
``Q1,'' we selected the status indicator ``Q1'' HCPCS code that had the
highest CY 2015 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 2015 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 2015 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 2015 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 2015 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 2015 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 2015 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 2015 relative payment weight;
other codes with status indicator ``Q2;'' codes with status indicator
``Q1'' (``STV-packaged''); and other packaged HCPCS codes and packaged
revenue code costs. We selected status indicator ``Q2'' HCPCS codes
instead of ``Q1'' HCPCS codes because ``Q2'' HCPCS codes have higher CY
2015 relative payment weights. If a status indicator ``Q1'' HCPCS code
had a higher CY 2015 relative payment

[[Page 39219]]

weight, it became the primary code for the simulated single bill
process. We changed the status indicator for the selected status
indicator ``Q2'' (``T-packaged'') code from a data status indicator of
``N'' to the status indicator of the APC to which the selected code was
assigned and we considered this claim as a major procedure claim.
We then applied our proposed process for creating ``pseudo'' single
procedure claims to the conditionally packaged codes that do not meet
the criteria for packaging, which enabled us to create single procedure
claims from them, if they met the criteria for single procedure claims.
Conditionally packaged codes are identified using status indicators
``Q1'' and ``Q2,'' and are described in section XI.A. of this proposed
rule.
Lastly, we excluded those claims that we were not able to convert
to single procedure claims even after applying all of the techniques
for creation of ``pseudo'' single procedure claims to multiple
procedure major claims and to multiple procedure minor claims. As has
been our practice in recent years, we also excluded claims that
contained codes that were viewed as independently or conditionally
bilateral and that contained the bilateral procedure modifier (Modifier
50) because the line-item cost for the code represented the cost of two
units of the procedure, notwithstanding that hospitals billed the code
with a unit of one.
We are proposing to continue to apply the methodology described
above for the purpose of creating ``pseudo'' single procedure claims
for the CY 2016 OPPS.
c. Completion of Claim Records and Geometric Mean Cost Calculations
(1) General Process
We then packaged the costs of packaged HCPCS codes (codes with
status indicator ``N'' listed in Addendum B to this proposed rule
(which is available via the Internet on the CMS Web site) and the costs
of those lines for codes with status indicator ``Q1'' or ``Q2'' when
they are not separately paid), and the costs of the services reported
under packaged revenue codes in Table 4 below that appeared on the
claim without a HCPCS code into the cost of the single major procedure
remaining on the claim. For a more complete discussion of our proposed
CY 2016 OPPS packaging policy, we refer readers to section II.A.3. of
this proposed rule.
As noted in the CY 2008 OPPS/ASC final rule with comment period (72
FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation
that CMS should review the final list of packaged revenue codes for
consistency with OPPS policy and ensure that future versions of the I/
OCE edit accordingly. As we have in the past, we are proposing to
continue to compare the final list of packaged revenue codes that we
adopt for CY 2016 to the revenue codes that the I/OCE will package for
CY 2016 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 2016, as we did for CY 2015, we reviewed the changes to
revenue codes that were effective during CY 2014 for purposes of
determining the charges reported with revenue codes but without HCPCS
codes that we would propose to package for CY 2016. We believe that the
charges reported under the revenue codes listed in Table 4 below
continue to reflect ancillary and supportive services for which
hospitals report charges without HCPCS codes. Therefore, for CY 2016,
we are proposing to continue to package the costs that we derive from
the charges reported without HCPCS codes under the revenue codes
displayed in Table 4 below for purposes of calculating the geometric
mean costs on which the proposed CY 2016 OPPS/ASC payment rates are
based.

Table 4--Proposed CY 2016 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

[[Page 39220]]

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
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 are proposing to
continue to exclude: (1) Claims that had zero costs after summing all
costs on the claim; and (2) claims containing packaging flag number 3.
Effective for services furnished after July 1, 2014, the I/OCE assigned
packaging flag number 3 to claims on which hospitals submitted token
charges less than $1.01 for a service with status indicator ``S'' or
``T'' (a major separately payable service under the OPPS) for which the
Medicare Administrative Contractor (MAC) was required to allocate the
sum of charges for services with a status indicator equaling ``S'' or
``T'' based on the relative payment weight of the APC to which each
code was assigned. We do not believe that these charges, which were
token charges as submitted by the hospital, are valid reflections of
hospital resources. Therefore, we deleted these claims. We also deleted
claims for which the charges equaled the revenue center payment (that
is, the Medicare payment) on the assumption that, where the charge
equaled the payment, to apply a CCR to the charge would not yield a
valid estimate of relative provider cost. We are proposing to continue
these processes for the CY 2016 OPPS.
For the remaining claims, we are proposing to then standardize 60
percent of the costs of the claim (which we have previously determined
to be the labor-related portion) for geographic differences in labor
input costs. We made this adjustment by determining the wage index that
applied to the hospital that furnished the service and dividing the
cost for the separately paid HCPCS code furnished by the hospital by
that wage index. The claims accounting that we provide for the proposed
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 are proposing to
use the pre-reclassified wage indices for standardization because we
believe that they better reflect the true costs of items and services
in the area in which the hospital is located than the post-
reclassification wage indices and, therefore, would result in the most
accurate unadjusted geometric mean costs. We are proposing to use these
pre-reclassified wage indices for standardization using the new OMB
labor market area delineations described in section II.C. of this
proposed rule.
In accordance with our longstanding practice, we also are proposing
to exclude single and ``pseudo'' single procedure claims for which the
total cost on the claim was outside 3 standard deviations from the
geometric mean of units for each HCPCS code on the bypass list
(because, as discussed above, we used claims that contain multiple
units of the bypass codes).
After removing claims for hospitals with error CCRs, claims without
HCPCS codes, claims for immunizations not covered under the OPPS, and
claims for services not paid under the OPPS, approximately 113 million
claims were left. Using these approximately 113 million claims, we
created approximately 105 million single and ``pseudo'' single
procedure claims, of which we used approximately 88 million single
bills (after trimming out approximately 17 million claims as discussed
in section II.A.1.a. of this proposed rule) in the CY 2016 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 CYs 2013, 2014, and 2015 OPPS, we calculated the APC
relative payment weights using geometric mean costs, and we are
proposing to continue this practice for CY 2016. 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 2016 OPPS/ASC proposed policy to calculate relative
payment weights based on geometric means, we refer readers to section
II.A.2.c. of this proposed rule.
We are proposing to use these claims to calculate the CY 2016
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

[[Page 39221]]

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 2016 OPPS, we are proposing to
continue to develop the APC relative payment weights based on geometric
mean costs.
We note that, for purposes of identifying significant HCPCS codes
for examination in the 2 times rule, we consider codes that have more
than 1,000 single major claims or codes that have both greater than 99
single major claims and contribute at least 2 percent of the single
major claims used to establish the APC geometric mean cost to be
significant. This longstanding definition of when a HCPCS code is
significant for purposes of the 2 times rule was selected because we
believe that a subset of 1,000 claims is negligible within the set of
approximately 88 million single procedure or single session claims we
use for establishing geometric mean costs. Similarly, a HCPCS code for
which there are fewer than 99 single bills and which comprises less
than 2 percent of the single major claims within an APC will have a
negligible impact on the APC geometric mean. We note that this method
of identifying significant HCPCS codes within an APC for purposes of
the 2 times rule was used in prior years under the median-based cost
methodology. Under our proposed CY 2016 policy to continue to base the
relative payment weights on geometric mean costs, we believe that this
same consideration for identifying significant HCPCS codes should apply
because the principles are consistent with their use in the median-
based cost methodology. Unlisted codes are not used in establishing the
percent of claims contributing to the APC, nor are their costs used in
the calculation of the APC geometric mean. Finally, we reviewed the
geometric mean costs for the services for which we are proposing to pay
separately under this proposed rule, and we reassigned HCPCS codes to
different APCs where it was necessary to ensure clinical and resource
homogeneity within the APCs. The proposed APC geometric means were
recalculated after we reassigned the affected HCPCS codes. Both the
HCPCS code-specific geometric means and the APC geometric means were
weighted to account for the inclusion of multiple units of the bypass
codes in the creation of ``pseudo'' single procedure claims.
As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this
proposed rule, in some cases, APC geometric mean costs are calculated
using variations of the process outlined above. Specifically, section
II.A.2.d. of this proposed rule addresses the proposed calculation of
single APC criteria-based geometric mean costs. Section II.A.2.f. of
this proposed rule discusses the proposed calculation of composite APC
criteria-based geometric mean costs. Section VIII.B. of this proposed
rule addresses the methodology for calculating the proposed geometric
mean costs for partial hospitalization services.
(2) Recommendations of the Panel Regarding Data Development
At the March 9, 2015 meeting of the Panel, we discussed our
standard analysis of APCs, and specifically, those APCs for which
geometric mean costs in the Panel run of CY 2014 claims data varied
significantly from the CY 2013 claims data used for the CY 2015 OPPS/
ASC final rule with comment period. We also discussed the claims
accounting process for the CY 2015 OPPS/ASC final rule with comment
period.
At the March 9, 2015 Panel meeting, the Panel made two
recommendations related to the data process. The Panel's data-related
recommendations and our responses follow.
Recommendation: The Panel recommends that the work of the Data
Subcommittee continue.
CMS Response: We are accepting this recommendation.
Recommendation: The Panel recommends that CMS provide the Panel
with a list of APCs fluctuating significantly in costs at the next
Panel meeting.
CMS Response: We are accepting this recommendation.
d. Proposed Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
Since the implementation of the OPPS in August 2000, we have made
separate payments for blood and blood products through APCs rather than
packaging payment for them into payments for the procedures with which
they are administered. Hospital payments for the costs of blood and
blood products, as well as for the costs of collecting, processing, and
storing blood and blood products, are made through the OPPS payments
for specific blood product APCs.
For CY 2016, we are proposing to continue to establish payment
rates for blood and blood products using our blood-specific CCR
methodology, which utilizes actual or simulated CCRs from the most
recently available hospital cost reports to convert hospital charges
for blood and blood products to costs. This methodology has been our
standard ratesetting methodology for blood and blood products since CY
2005. It was developed in response to data analysis indicating that
there was a significant difference in CCRs for those hospitals with and
without blood-specific cost centers, and past public comments
indicating that the former OPPS policy of defaulting to the overall
hospital CCR for hospitals not reporting a blood-specific cost center
often resulted in an underestimation of the true hospital costs for
blood and blood products. Specifically, in order to address the
differences in CCRs and to better reflect hospitals' costs, we are
proposing to continue to simulate blood CCRs for each hospital that
does not report a blood cost center by calculating the ratio of the
blood-specific CCRs to hospitals' overall CCRs for those hospitals that
do report costs and charges for blood cost centers. We also are
proposing 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 are proposing to calculate the costs upon which the proposed CY 2016
payment rates for blood and blood products are based using the actual
blood-specific CCR for hospitals that reported costs and charges for a
blood cost center and a hospital-specific simulated blood-specific CCR
for hospitals that did not report costs and charges for a blood cost
center.
We continue to believe that the hospital-specific simulated blood-
specific CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into
account the unique charging and cost accounting structure of each
hospital, we believe that it yields more accurate estimated

[[Page 39222]]

costs for these products. We continue to believe that this methodology
in CY 2016 would 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 (78 FR 74861 through 74910) and
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66798
through 66810), 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. Under this policy, we include the costs of blood and blood
products when calculating the overall costs of these C-APCs. We are
proposing to continue to apply the blood-specific CCR methodology
described in this section when calculating the costs of the blood and
blood products that appear on claims with services assigned to the C-
APCs (79 FR 66796). Because the costs of blood and blood products will
be reflected in the overall costs of the C-APCs (and, as a result, in
the final payment rates of the C-APCs), we are proposing to not make
separate payments for blood and blood products when they appear on the
same claims as services assigned to the C-APCs (79 FR 66796).
We are inviting public comments on these proposals. We refer
readers to Addendum B to this proposed rule (which is available via the
Internet on the CMS Web site) for the proposed CY 2016 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).
(2) 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 2015 OPPS/ASC final rule with comment period (79 FR
66796 through 66798) for further discussion of the history of OPPS
payment for brachytherapy sources.
In this proposed rule, for CY 2016, we are proposing to use the
costs derived from CY 2014 claims data to set the proposed CY 2016
payment rates for brachytherapy sources, as we are proposing to use to
set the proposed payment rates for most other items and services that
would be paid under the CY 2016 OPPS. We based the proposed payment
rates for brachytherapy sources on the geometric mean unit costs for
each source, consistent with the methodology proposed for other items
and services paid under the OPPS, as discussed in section II.A.2. of
this proposed rule. We also are proposing to continue the other payment
policies for brachytherapy sources that we finalized and first
implemented in the CY 2010 OPPS/ASC final rule with comment period (74
FR 60537). We are proposing to pay for the stranded and nonstranded not
otherwise specified (NOS) codes, HCPCS codes C2698 and C2699, at a rate
equal to the lowest stranded or nonstranded 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). For
CY 2016 and subsequent years, we also are proposing to continue the
policy we first implemented in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60537) regarding payment for new brachytherapy
sources for which we have no claims data, based on the same reasons we
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR
66786; which was delayed until January 1, 2010 by section 142 of Pub.
L. 110-275). That policy is intended to enable us to assign new HCPCS
codes for new brachytherapy sources to their own APCs, with prospective
payment rates set based on our consideration of external data and other
relevant information regarding the expected costs of the sources to
hospitals.
The proposed CY 2016 payment rates for brachytherapy sources are
included in Addendum B to this proposed rule (which is available via
the Internet on the CMS Web site) and are identified with status
indicator ``U.''
We are inviting public comments on this proposed policy. We also
are requesting recommendations for new HCPCS codes to describe new
brachytherapy sources consisting of a radioactive isotope, including a
detailed rationale to support recommended new sources. Such
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. We will continue to add new
brachytherapy source codes and descriptors to our systems for payment
on a quarterly basis.
e. Proposed Comprehensive APCs (C-APCs) for CY 2016
(1) Background
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 under the OPPS at the
claim level. The policy was finalized in CY 2014, but the effective
date was delayed until January 1, 2015, to allow additional time for
further analysis, opportunity for public comment, and systems
preparation. The comprehensive APC (C-APC) policy was implemented
effective January 1, 2015, with modifications and clarifications in
response to public comments received regarding specific provisions of
the C-APC policy (79 FR 66798 through 66810).
A C-APC is defined as a classification for the provision of a
primary service and all adjunctive services provided to

[[Page 39223]]

support the delivery of the primary service. We established C-APCs as a
category broadly for OPPS payment and implemented 25 C-APCs beginning
in CY 2015 (79 FR 66809 through 66810).
Under this policy, we designated a HCPCS code assigned to a C-APC
as the primary service (identified by a new OPPS status indicator
``J1''). When such a primary service is reported on a hospital
outpatient claim, taking into consideration the few exceptions that are
discussed below, we make payment for all other items and services
reported on the hospital outpatient claim as being integral, ancillary,
supportive, dependent, and adjunctive to the primary service
(hereinafter collectively referred to as ``adjunctive services'') and
representing components of a complete comprehensive service (78 FR
74865 and 79 FR 66799). Payments for adjunctive services are packaged
into the payments for the primary services. This results in a single
prospective payment for each of the primary, comprehensive services
based on the costs of all reported services at the claim level.
Services excluded from the C-APC policy include services that are
not covered OPD services, services that cannot by statute be paid for
under the OPPS, and services that are required by statute that must be
separately paid. This includes certain mammography and ambulance
services that are not ever covered OPD services in accordance with
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also
are required by statute to receive separate payment under section
1833(t)(2)(H) of the Act; pass-through drugs and devices, which also
require separate payment under section 1833(t)(6) of the Act; 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, and certain preventive services (78 FR 74865
and 79 FR 66800 through 66801).
The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period for the C-APCs and modified and
implemented in CY 2015 is summarized as follows (78 FR 74887 and 79 FR
66800):
Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule
with comment period, we define the C-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 are not covered OPD services or that cannot by statute be
paid for under the OPPS. HCPCS codes assigned to status indicator
``J1'' are assigned to C-APCs based on our usual APC assignment
methodology by evaluating the geometric mean costs of the primary
service claims to establish resource similarity and the clinical
characteristics of each procedure to establish clinical similarity
within each APC.
Services included under the C-APC payment packaging policy, that
is, services that are typically 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 represent services that are provided
during the complete comprehensive service, except the excluded services
that are described below (78 FR 74865 and 79 FR 66800).
In addition, payment for outpatient department services that are
similar to therapy services and delivered either by therapists or
nontherapists is included as part of the payment for the packaged
complete 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
for under section 1834(k) of the Act, subject to annual therapy caps as
applicable (78 FR 74867 and 79 FR 66800). However, certain other
services similar to therapy services are considered and paid for as
outpatient department services. Payment for these nontherapy outpatient
department services that are reported with therapy codes and provided
with a comprehensive service is included in the payment for the
packaged complete 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 included in the packaged 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 and 79 FR 66800). We refer readers to
Section 50.2M, Chapter 15, of the Medicare Benefit Policy Manual for a
description of our policy on SADs treated as hospital outpatient
supplies, including lists of SADs that function as supplies and those
that do not function as supplies.
Items and services excluded from the C-APC payment policy include:
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 excluded preventive services. For a description of the
preventive services that are excluded from the C-APC payment policy, we
refer readers to the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66800 through 66801) and the list below in Table 5, which also
includes any new preventive services added for CY 2016.
Other exclusions include brachytherapy services and pass-through
drugs, biologicals, and devices that are required by statute to be
separately payable (78 FR 74868 and 74909 and 79 FR 66801). In
addition, we also excluded services assigned to OPPS status indicator
``F,'' which are services not paid under the OPPS and are instead paid
on a reasonable cost basis (that is, certain certified registered nurse
assistant (CRNA) services, Hepatitis B vaccines, and corneal tissue
acquisition, which is not part of a comprehensive service for CY 2015).
In Table 5 below, we list the services that are excluded from the C-APC
payment policy.

[[Page 39224]]

Table 5--Comprehensive APC Payment Policy Exclusions for CY 2016
------------------------------------------------------------------------

-------------------------------------------------------------------------
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 CFR410.2:
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
Low Dose Computed Tomography
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 (SADs)--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); and
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 Medicare Part B inpatient service (for example, exhausted
Medicare Part A benefits, beneficiaries with Part B only).
------------------------------------------------------------------------

We 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 and 79 FR 66801). We
sum all line item charges for services included on the C-APC claim,
convert the charges to costs, and calculate the ``comprehensive''
geometric mean cost of one unit of each service assigned to status
indicator ``J1.'' (We note that we use the term ``comprehensive'' to
describe the geometric mean cost of a claim reporting ``J1'' service(s)
or the geometric mean cost of a C-APC, inclusive of all of the items
and services included in the C-APC service payment bundle.) Charges for
services that would otherwise be 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 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 establish a
ranking of each primary service (single unit only) to be 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 2014 claims), we 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 use complexity adjustments to provide
increased payment for certain comprehensive services. We 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 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).
After designating a single primary service for a claim, we 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 determine initial C-APC assignments
and complexity adjustments using the best data available, crosswalking
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

[[Page 39225]]

because it is sufficiently costly, frequent, and a subset of the
primary comprehensive service overall according to the criteria
described above, we 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. We do not
create new APCs with a comprehensive geometric mean cost that is higher
than the highest geometric mean 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 (79 FR
66802).
We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service-add-on combinations may qualify
for a complexity adjustment. First, the add-on code must be an eligible
add-on code. The list of add-on codes that are eligible for complexity
adjustment evaluation was included in Table 8 of the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66810), and also is identified as
Addendum J to this proposed rule (which is available via the Internet
on the CMS Web site). For CY 2016, we are not proposing to add any add-
on codes to the list of add-on codes that are evaluated for a
complexity adjustment when performed in conjunction with a primary C-
APC procedure.
To determine which combinations of primary service codes reported
in conjunction with an eligible add-on code may qualify for a
complexity adjustment for CY 2016, we apply the frequency and cost
criteria thresholds 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 thresholds for a complexity adjustment are met, and
reassignment to the next higher cost APC in the clinical family is
appropriate, we make a complexity adjustment for the code combination;
that is, we reassign the primary service code reported in conjunction
with the eligible 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 with the primary service code does not qualify
for a complexity adjustment, payment for these services is packaged
within the payment for the complete comprehensive service. We list the
complexity adjustments proposed for add-on code combinations for CY
2016, along with all of the other proposed complexity adjustments, in
Addendum J to this proposed rule (which is available via the Internet
on the CMS Web site).
We are providing in Addendum J to this proposed rule a breakdown of
cost statistics for each code combination that would qualify for a
complexity adjustment (including primary code and add-on code
combinations). Addendum J to this proposed rule also contains summary
cost statistics for each of the code combinations that describe a
complex code combination that would qualify for a complexity adjustment
and are proposed to be reassigned to the next higher cost C-APC within
the clinical family. 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 proposed
geometric mean cost listed in Addendum J for the code combination
described by complexity adjustment assignment 3208A, which is assigned
to proposed renumbered C-APC 5223 (Level 3 Pacemaker and Similar
Procedures) (existing APC 0089), includes all code combinations that
are proposed to be reassigned to proposed renumbered C-APC 5223 when
CPT code 33208 is the primary code. Providing the information contained
in Addendum J in this proposed rule allows stakeholders the opportunity
to better assess the impact associated with the proposed reassignment
of each of the code combinations eligible for a complexity adjustment.
(2) Proposed C-APCs to be Paid under the C-APC Payment Policy for CY
2016
(a) Proposed CY 2016 C-APCs
For CY 2016, we are proposing to continue to implement the C-APC
payment policy methodology made effective in CY 2015, as described in
detail below. We are proposing to continue 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 also are proposing to continue to follow the C-
APC payment policy methodology of including all covered OPD services on
a hospital outpatient claim reporting a primary service that is
assigned to status indicator ``J1,'' excluding services that are not
covered OPD services or that cannot by statute be paid under the OPPS.
After our annual review of the OPPS, we are proposing nine
additional C-APCs to be paid under the existing C-APC payment policy
beginning in CY 2016. All C-APCs, including those effective in CY 2016
and those being proposed for CY 2016, are displayed in Table 6 below
with the proposed new C-APCs denoted with an asterisk. Addendum J to
this proposed rule (which is available via the Internet on the CMS Web
site) contains all of the data related to the C-APC payment policy
methodology, including the list of proposed complexity adjustments.

Table 6--Proposed CY 2016 C-APCs
----------------------------------------------------------------------------------------------------------------
Proposed CY 2016 C-APC+ Proposed CY 2016 APC descriptor Clinical family New C-APC
----------------------------------------------------------------------------------------------------------------
5222.................................... Level 2 Pacemaker and Similar AICDP..................... .........
Procedures.
5223.................................... Level 3 Pacemaker and Similar AICDP..................... .........
Procedures.
5224.................................... Level 4 Pacemaker and Similar AICDP..................... .........
Procedures.
5231.................................... Level 1 ICD and Similar AICDP..................... .........
Procedures.
5232.................................... Level 2 ICD and Similar AICDP..................... .........
Procedures.
5093.................................... Level 3 Breast/Lymphatic BREAS..................... .........
Surgery and Related Procedures.
5165.................................... Level 5 ENT Procedures......... ENTXX..................... *
5166.................................... Level 6 ENT Procedures......... ENTXX..................... .........
5211.................................... Level 1 Electrophysiologic EPHYS..................... .........
Procedures.
5212.................................... Level 2 Electrophysiologic EPHYS..................... .........
Procedures.
5213.................................... Level 3 Electrophysiologic EPHYS..................... .........
Procedures.

[[Page 39226]]

5492.................................... Level 2 Intraocular Procedures. EYEXX..................... *
5493.................................... Level 3 Intraocular Procedures. EYEXX..................... .........
5494.................................... Level 4 Intraocular Procedures. EYEXX..................... .........
5331.................................... Complex GI Procedures.......... GIXXX..................... .........
5415.................................... Level 5 Gynecologic Procedures. GYNXX..................... .........
5416.................................... Level 6 Gynecologic Procedures. GYNXX..................... *
5361.................................... Level 1 Laparoscopy............ LAPXX..................... *
5362.................................... Level 2 Laparoscopy............ LAPXX..................... *
5462.................................... Level 2 Neurostimulator and NSTIM..................... .........
Related Procedures.
5463.................................... Level 3 Neurostimulator and NSTIM..................... .........
Related Procedures.
5464.................................... Level 4 Neurostimulator and NSTIM..................... .........
Related Procedures.
5123.................................... Level 3 Musculoskeletal ORTHO..................... *
Procedures.
5124.................................... Level 4 Musculoskeletal ORTHO..................... .........
Procedures.
5471.................................... Implantation of Drug Infusion PUMPS..................... .........
Device.
5631.................................... Single Session Cranial RADTX..................... .........
Stereotactic Radiosurgery.
5375.................................... Level 5 Urology and Related UROXX..................... *
Services.
5376.................................... Level 6 Urology and Related UROXX..................... .........
Services.
5377.................................... Level 7 Urology and Related UROXX..................... .........
Services.
5191.................................... Level 1 Endovascular Procedures VASCX..................... .........
5192.................................... Level 2 Endovascular Procedures VASCX..................... .........
5193.................................... Level 3 Endovascular Procedures VASCX..................... .........
5881.................................... Ancillary Outpatient Services N/A....................... *
When Patient Expires.
8011.................................... Comprehensive Observation N/A....................... *
Services.
----------------------------------------------------------------------------------------------------------------
+ We refer readers to section III.D. of this proposed rule for a discussion of the proposed overall
restructuring and renumbering of APCs and to Addendum Q to this proposed rule (which is available via the
Internet on the CMS Web site) for a complete crosswalk of the existing APC numbers to the proposed new APC
numbers.
* Proposed New C-APC for CY 2016.
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
GYNXX = Gynecologic Procedures
LAPXX = Laparoscopic Procedures
NSTIM = Neurostimulators
ORTHO = Orthopedic Surgery
PUMPS = Implantable Drug Delivery Systems
RADTX = Radiation Oncology
UROXX = Urologic Procedures
VASCX = Vascular Procedures

(b) Proposed Observation Comprehensive APC
As part of our proposed expansion of the C-APC payment policy
methodology, we have identified an instance where we believe that
comprehensive payments are appropriate, that is, when a claim contains
a specific combination of services performed in combination with each
other, as opposed to the presence of a single primary service
identified by status indicator ``J1.'' To recognize such instances, for
CY 2016, we are proposing to create a new status indicator ``J2'' to
designate specific combinations of services that, when performed in
combination with each other and reported on a hospital Medicare Part B
outpatient claim, would allow for all other OPPS payable services and
items reported on the claim (excluding all preventive services and
certain Medicare Part B inpatient services) to be deemed adjunctive
services representing components of a comprehensive service and
resulting in a single prospective payment for the comprehensive service
based on the costs of all reported services on the claim. Additional
information about the proposed new status indicator ``J2'' and its
proposed C-APC assignment is provided below.
It has been our longstanding policy to provide payment to hospitals
in certain circumstances when extended assessment and management of a
patient occur (79 FR 66811 through 66812). Currently, payment for all
qualifying extended assessment and management encounters is provided
through APC 8009 (Extended Assessment and Management (EAM) Composite)
(79 FR 66811 through 66812). Under this policy, we allow services
identified by the following to qualify for payment through EAM
composite APC 8009: a 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); a direct referral for observation (G0379), 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 postoperatively) (79 FR 66811 through 66812).
For CY 2016, we are proposing to pay for all qualifying extended
assessment and management encounters through a newly created
``Comprehensive Observation Services'' C-APC (C-APC 8011) and to assign
the services within this APC to proposed new status indicator ``J2,''
as described earlier in this section. Specifically, we are proposing to
make a C-APC payment through the proposed new C-APC 8011 for claims
that meet the following criteria:
The claims do not contain a HCPCS code to which we have
assigned status

[[Page 39227]]

indicator ``T'' that is reported with a date of service on the same day
or 1 day earlier than the date of service associated with HCPCS code
G0378;
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 99284 (Emergency
department visit for the evaluation and management of a patient (Level
4)); CPT code 99285 (Emergency department visit for the evaluation and
management of a patient (Level 5)) or HCPCS code G0384 (Type B
emergency department visit (Level 5)); 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;
The claims do not contain a HCPCS code to which we have
assigned status indicator ``J1.''
We are proposing to utilize all claims that meet the above criteria
in ratesetting for the proposed new C-APC 8011, and to develop the
geometric mean costs of the comprehensive service based on the costs of
all reported OPPS payable services reported on the claim (excluding all
preventive services and certain Medicare Part B inpatient services).
The proposed CY 2016 geometric mean cost resulting from this
methodology is approximately $2,111, based on 1,191,120 claims used for
ratesetting.
With the proposal to establish a new C-APC 8011 to capture
qualifying extended assessment and management encounters that currently
are paid using composite APC 8009, we are correspondingly proposing to
delete APC 8009, as it would be replaced with proposed new C-APC 8011
(Comprehensive Observation Services).
As stated earlier, we are proposing to assign certain combinations
of procedures within proposed new C-APC 8011 to the proposed new status
indicator ``J2,'' to distinguish the new C-APC 8011 from the other C-
APCs. Comprehensive payment would be made through the new
``Comprehensive Observation Services'' C-APC when a claim contains a
specific combination of services performed in combination with each
other, as opposed to the presence of a single primary service
identified by status indicator ``J1.'' We believe that a distinction in
the status indicator is necessary to distinguish between the logic
required to identify when a claim qualifies for payment through a C-APC
because of the presence of a status indicator ``J1'' procedure being
present on the claim versus when a claim qualifies for payment through
a C-APC because of the presence of a specific combination of services
on the claim. Specifically, for proposed new C-APC 8011, we believe the
assignment of certain combinations of services that qualify under
proposed new C-APC 8011 to the new proposed status indicator ``J2'' is
necessary as claims containing status indicator ``T'' procedures on the
same day or day before observation care is provided would not be
payable through the proposed new C-APC 8011 and the initial ``J1''
logic would not exclude claims containing status indicator ``T''
procedures from qualifying for payment.
For claims reporting services qualifying for payment through a C-
APC assigned to status indicator ``J1'' and qualifying for payment
through a C-APC with a status indicator of ``J2,'' we are proposing
that payment would be made through the C-APC with status indicator
``J1'' and all the OPPS payable services would be deemed adjunctive
services to the primary status indicator ``J1'' service, including the
specific combination of services performed in combination with each
other that would otherwise qualify for payment through a C-APC with a
status indicator of ``J2.'' We are proposing that the presence of the
specific combination of services performed in combination with each
other that would otherwise qualify the service for payment through a C-
APC because it is assigned to status indicator ``J2'' on a hospital
outpatient claim would not result in a complexity adjustment for the
service qualifying for payment through a C-APC because it is assigned
to status indicator ``J1.''
Under the C-APC payment policy, we note that, instead of paying
copayments for a number of separate services that are generally,
individually subject to the copayment liability cap at section
1833(t)(8)(C)(i) of the Act, beneficiaries can expect to pay a single
copayment for the comprehensive service that would be subject to the
copayment liability cap. As a result, we expect that this policy likely
reduces the possibility that the overall beneficiary liability exceeds
the cap for most of these types of claims.
(3) Proposed CY 2016 Policies for Specific C-APCs
(a) Stereotactic Radiosurgery (SRS)
With the advent of C-APCs, the OPPS consists of a wide array of
payment methodologies, ranging from separate payment for a single
service to a C-APC payment for an entire outpatient encounter with
multiple services. As described above, our C-APC payment policy
generally provides payment for a primary service and all adjunctive
services provided to support the delivery of the primary service, with
certain exceptions, billed on the same claim regardless of the date of
service. Since implementation of the C-APC policy and subsequent claims
data analyses, we have observed circumstances in which necessary
services that are appropriately included in an encounter payment are
furnished prior to a primary service and billed separately. That is,
our analysis of billing patterns associated with certain procedures
assigned status indicator ``J1'' indicates providers are reporting
planning services, imaging tests, and other ``planning and
preparation'' services that are integrally associated with the direct
provision of the ``J1'' procedure on a separate claim. The physician
practice patterns associated with various stereotactic radiosurgery
(SRS) treatments presents an example of this issue.
Section 634 of the American Taxpayer Relief Act (ATRA) of 2012
(Pub. L. 112-240) amended section 1833(t)(16) of the Act by adding a
new subparagraph (D) to require that OPPS payments for Cobalt-60 based
SRS (also referred to as gamma knife) be reduced to equal that of
payments for robotic linear accelerator-based (LINAC) SRS, for covered
OPD services furnished on or after April 1, 2013. This payment
reduction does not apply to hospitals in rural areas, rural referral
centers, or SCHs. In the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66809), we created C-APC 0067 (proposed to be renumbered
to C-APC 5631 for CY 2016) for single-session cranial stereotactic
radiosurgery (SRS). Because section 1833(t)(16)(D) of the Act requires
equal payment for SRS delivered by Cobalt-60 based or LINAC based
technology, proposed renumbered C-APC 5631 includes two types of SRS
delivery instruments, which are described by HCPCS code 77371
(Radiation treatment delivery, stereotactic radiosurgery [SRS],
complete course of treatment cranial lesion(s) consisting of 1 session;
multi-source Cobalt 60-based) and HCPCS code 77372 (Linear accelerator
based) (79 FR 66862).
Based on our analysis of CY 2014 claims data (the data used to
develop the proposed CY 2016 payment rates), we identified differences
in billing patterns between SRS procedures delivered using Cobalt-60
based and LINAC based technologies. In particular,

[[Page 39228]]

our claims data analysis results revealed that SRS delivered by Cobalt-
60 based technologies (as described by HCPCS code 77371) typically
included SRS treatment planning services (for example, imaging studies,
radiation treatment aids, and treatment planning) and the actual SRS
treatment on the same date of service and reported on the same claim.
In contrast, claims data analysis results revealed that SRS delivered
by LINAC based technologies (as described by HCPCS code 77372)
frequently included services related to SRS treatment (for example,
imaging studies, radiation treatment aids, and treatment planning) that
were provided and reported on different dates of services and billed on
claims separate from the actual SRS treatment. Because Cobalt-60 based
and LINAC based technologies are assigned to proposed renumbered C-APC
5631, the costs of both technologies are reflected in the APC payment
rate.
The policy intent of C-APCs is to bundle payment for all services
related and adjunctive to the primary ``J1'' procedure. In light of
this, we believe that all essential planning and preparation services
should be paid through the C-APC. For clean payment, we would make a
single payment through the C-APC that would include these essential
planning and preparation services, and we would not pay separately for
C-APC services when furnished prior to delivery of the ``J1'' procedure
and reported on separate claims. SRS services are just one example of
where this may be occurring under our C-APC policy.
As a result of our SRS claims data findings, for CY 2016, we are
proposing to change payment for SRS treatment under proposed renumbered
C-APC 5631 by identifying any services that are differentially billed
for HCPCS codes 77371 and 77372 on the same claim and on claims 1 month
prior to delivery of SRS services in proposed renumbered C-APC 5631,
including planning and preparation services, and removing them from our
C-APC geometric mean calculation for CY 2016 and CY 2017 while we
collect data using a modifier, which is discussed in greater detail
below. For any codes that we remove from the C-APC bundle, we are
proposing that those codes would receive separate payment even when
appearing with a ``J1'' procedure code (HCPCS code 77371 or 77372) on
the same claim for both CY 2016 and CY 2017. Specifically, we are
proposing this treatment for the following codes for planning and
preparation services:
CT localization (HCPCS codes 77011 and 77014);
MRI imaging (HCPCS codes 70551, 70552, and 70553);
Clinical treatment planning (HCPCS codes 77280, 77285,
77290, and 77295); and
Physics consultation (HCPCS code 77336).
We are inviting public comments on our proposal to remove planning
and preparation service from our calculation of the CY 2016 and CY 2017
payment rate for proposed renumbered C-APC 5631 and to allow for
separate payment of these same services during CY 2016 and CY 2017
using either modality. As discussed in detail below, our long-term goal
is to create a single encounter payment for C-APC services by packaging
all planning and preparation services that occur prior to the primary
``J1'' procedure.
(b) Proposed Data Collection for Nonprimary Services in C-APCs
As mentioned above, provider practice patterns can create a need
for hospitals to perform services that are integral, ancillary,
supportive, dependent, and adjunctive, hereinafter collectively
referred to as ``adjunctive services'', to a comprehensive service
prior to delivery of that service--for example, testing leads for a
pacemaker insertion or planning for radiation treatment. As the C-APC
policy continues to expand, we need a mechanism to identify these
adjunctive services that are furnished prior to the associated primary
service so that payments under the encounter-based C-APC will be more
accurate.
To meet this objective, for CY 2016, we are proposing to establish
a HCPCS modifier to be reported with every code that is adjunctive to a
comprehensive service, but is billed on a different claim. The modifier
would be reported on UB-04 form (CMS Form 1450) for hospital outpatient
services. Specifically, hospitals would report this modifier for
services that are adjunctive to a primary procedure HCPCS code with
status indicator ``J1'' and that are billed on a different claim than
the primary ``J1'' service. The collection of this information would
allow us to begin to assess the accuracy of the claims data used to set
payment rates for C-APC services. This information would be useful in
refining our C-APC ratesetting process. Based on the collection of
these data, we envision creating a single encounter payment for the
primary ``J1'' services that reflects resources of all the primary
services. Further, we also would discontinue separate payment for any
of these packaged adjunctive services, even when furnished prior to
delivery of the primary service. As noted above, we are proposing to
use the modifier to identify planning and preparation services for SRS
primary procedures with this goal in mind. We are seeking additional
public comment on whether to adopt a condition code as early as CY
2017, which would replace this modifier to be used for CY 2016 data
collection, for collecting this service-level information.
(c) Proposed Policy Regarding Payment for Claims Reporting Inpatient
Only Services Performed on a Patient Who Dies Before Admission
Currently, composite APC 0375 packages payment for all services
provided on the same date as an inpatient only procedure that is
performed emergently on an outpatient who dies before admission
represented by the presence of modifier ``-CA'' on the claim. We are
proposing to renumber APC 0375 to APC 5881 for CY 2016. For CY 2016, we
are proposing to provide comprehensive payment through proposed
renumbered C-APC 5881 for all services reported on the same claim as an
inpatient only procedure billed with modifier ``-CA.'' This proposal
provides for all services provided on the same claim as an inpatient
only procedure billed with modifier ``-CA'' to be paid through a single
prospective payment for the comprehensive service.
f. Proposed 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, mental health services,

[[Page 39229]]

and multiple imaging services. We refer readers to the CY 2008 OPPS/ASC
final rule with comment period for a full discussion of the development
of the composite APC methodology (72 FR 66611 through 66614 and 66650
through 66652) and the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74163) for more recent background.
In this CY 2016 OPPS/ASC proposed rule, for CY 2016, we are
proposing to continue our composite APC payment policies for LDR
prostate brachytherapy services, mental health services, and multiple
imaging services, as discussed below. For CY 2016, we are proposing to
discontinue our composite APC payment policies for qualifying extended
assessment and management services (APC 8009) and to pay for these
services through proposed new C-APC 8011 (Comprehensive Observation
Services), as presented in a proposal included under section II.A.2.e.
of this proposed rule. As a result, we are proposing to delete APC 8009
for CY 2016.
We note that we finalized a policy to discontinue our composite APC
payment policies for cardiac electrophysiologic evaluation and ablation
services (APC 8000), and to pay for these services through C-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
(79 FR 66800 through 66810). As a result, in the CY 2015 OPPS/ASC final
rule with comment period, we deleted APC 8000 for CY 2015 (79 FR
66810). For CY 2016, we are proposing to continue to pay for cardiac
electrophysiologic evaluation and ablation services through existing C-
APC 0086 (proposed to be renumbered C-APC 5213).
(1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
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. (We note that, for CY 2016, we are not
proposing to change the existing number for composite APC 8001 as part
of our overall APC restructuring and renumbering discussed in section
III.D. of this proposed rule.)
In this proposed rule, for CY 2016, we are proposing to continue to
pay for LDR prostate brachytherapy services using the composite APC
payment methodology proposed and implemented for CY 2008 through CY
2015. That is, we are proposing to use CY 2014 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 2015 practice, in this proposed
rule, we are proposing not to use the claims that meet these criteria
in the calculation of the geometric mean costs of procedures or
services assigned to APC 0163 (Level IV Cystourethroscopy and Other
Genitourinary Procedures) (proposed to be renumbered APC 5375 in this
proposed rule) and APC 0651 (Complex Interstitial Radiation Source
Application) (proposed to be renumber APC 5641 in this proposed rule),
the APCs to which CPT codes 55875 and 77778 are assigned, respectively.
We are proposing to continue to calculate the proposed geometric mean
costs of procedures or services assigned to proposed renumbered APCS
5375 and 5641 using single and ``pseudo'' single procedure claims. We
continue to believe that composite APC 8001 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 2014 claims data available for this CY
2016 proposed rule, we were able to use 226 claims that contained both
CPT codes 55875 and 77778 to calculate the proposed geometric mean cost
of approximately $3,807 for these procedures upon which the proposed CY
2016 payment rate for composite APC 8001 is based.
(2) Mental Health Services Composite APC
In this proposed rule, for CY 2016, we are proposing to continue
our longstanding policy of limiting the aggregate payment for specified
less resource-intensive mental health services furnished on the same
date to the payment for a day of partial hospitalization services
provided by a hospital, which we consider to be the most resource-
intensive of all outpatient mental health services. We refer readers to
the April 7, 2000 OPPS final rule with comment period (65 FR 18452
through 18455) for the initial discussion of this longstanding policy
and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74168)
for more recent background.
Specifically, we are proposing that when the aggregate payment for
specified mental health services provided by one hospital to a single
beneficiary on one date of service based on the payment rates
associated with the APCs for the individual services exceeds the
maximum per diem payment rate for partial hospitalization services
provided by a hospital, those specified mental health services would be
assigned to proposed renumbered APC 8010 (Mental Health Services
Composite) (existing APC 0034). We also are proposing to continue to
set the payment rate for proposed renumbered APC 8010 (existing APC
0034) at the same payment rate that we are proposing to establish for
proposed renumbered APC 5862 (Level 2 Partial Hospitalization (4 or
more services) for hospital-based PHPs) (existing APC 0176), which is
the maximum partial hospitalization per diem payment rate for a
hospital, and that the hospital continue to be paid one unit of
proposed renumbered APC 8010. Under

[[Page 39230]]

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 proposed
renumbered APC 5862 (existing 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.
(3) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and
8008)
Effective January 1, 2009, we provide a single payment each time a
hospital bills more than one imaging procedure within an imaging family
on the same date of service, in order to reflect and promote the
efficiencies hospitals can achieve when performing multiple imaging
procedures during a single session (73 FR 41448 through 41450). We
utilize three imaging families based on imaging modality for purposes
of this methodology: (1) Ultrasound; (2) computed tomography (CT) and
computed tomographic angiography (CTA); and (3) magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes
subject to the multiple imaging composite policy and their respective
families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74920 through 74924).
While there are three imaging families, there are five multiple
imaging composite APCs due to the statutory requirement under section
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging
services provided with and without contrast. While the ultrasound
procedures included in the policy do not involve contrast, both CT/CTA
and MRI/MRA scans can be provided either with or without contrast. The
five multiple imaging composite APCs established in CY 2009 are:
APC 8004 (Ultrasound Composite);
APC 8005 (CT and CTA without Contrast Composite);
APC 8006 (CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without Contrast Composite); and
APC 8008 (MRI and MRA with Contrast Composite).
(We note that we are not proposing to renumber these composite APCs
as part of our overall restructuring and renumbering of APCs as
discussed in section III.D. of this proposed rule.)
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 this proposed rule, for CY 2016, we are proposing to continue to
pay for all multiple imaging procedures within an imaging family
performed on the same date of service using the multiple imaging
composite APC payment methodology. We continue to believe that this
policy will reflect and promote the efficiencies hospitals can achieve
when performing multiple imaging procedures during a single session.
The proposed CY 2016 payment rates for the five multiple imaging
composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) are based on
proposed geometric mean costs calculated from a partial year of CY 2014
claims available for this 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 2014 and CY 2015
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, in accordance with our
established methodology as stated in the CY 2014 OPPS/ASC final rule
with comment period (78 FR 74918), are identified by asterisks in
Addendum N to this CY 2016 proposed rule (which is available via the
Internet on the CMS Web site) and are discussed in more detail in
section II.A.1.b. of this proposed rule.
For this CY 2016 proposed rule, we were able to identify
approximately 584,194 ``single session'' claims out of an estimated 1.5
million potential composite APC cases from our ratesetting claims data,
approximately 39 percent of all eligible claims, to calculate the
proposed CY 2016 geometric mean costs for the multiple imaging
composite APCs.
Table 7 of this proposed rule lists the proposed HCPCS codes that
would be subject to the multiple imaging composite APC policy and their
respective families and approximate composite APC proposed geometric
mean costs for CY 2016.

Table 7--Proposed OPPS Imaging Families and Multiple Imaging Procedure
Composite APCs
------------------------------------------------------------------------

------------------------------------------------------------------------
Family 1--Ultrasound
------------------------------------------------------------------------
CY 2016 APC 8004 (Ultrasound CY 2016 Approximate Proposed APC
Composite) 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.
76856............................. Us exam, pelvic, complete.

[[Page 39231]]

76870............................. Us exam, scrotum.
76857............................. Us exam, pelvic, limited.
------------------------------------------------------------------------
Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
CY 2016 APC 8005 (CT and CTA CY 2016 Approximate Proposed APC
without 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 2016 APC 8006 (CT and CTA with CY 2016 Approximate Proposed 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 2016 APC 8007 (MRI and MRA CY 2016 Approximate Proposed APC
without 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 39232]]

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 2016 APC 8008 (MRI and MRA with CY 2016 Approximate Proposed 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 39233]]

3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
Like other prospective payment systems, the OPPS relies on the
concept of averaging to establish a payment rate for services. The
payment may be more or less than the estimated cost of providing a
specific service or a 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 profitable
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 item.
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 were originally paid
separately. 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 two packaging policies that were added in
CY 2015 (79 FR 66819 through 66823). 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 under the OPPS to determine which OPPS services
can be packaged to further achieve the objective of advancing the OPPS
toward a more prospective payment system.
For CY 2016, 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 that 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 this proposed rule, for CY
2016, we are proposing to package the costs of selected newly
identified ancillary services into payment with a primary service where
we believe that the proposed packaged item or service is integral,
ancillary, supportive, dependent, or adjunctive to the provision of
care that was reported by the primary service HCPCS code. Below we
discuss the items and services that we are proposing to package
beginning in CY 2016. 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), the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74925), and the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66817).
b. Proposed Packaging Policies for CY 2016
(1) Ancillary Services
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66819
through 66822), we conditionally packaged payment for ancillary
services assigned to APCs with a geometric mean cost of less than or
equal to $100 (prior to application of the conditional packaging status
indicator). The 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. Under this policy, we assigned the conditionally packaged
services to status indicator ``Q1,'' which indicates that the service
is separately payable when not billed on the same date of service as a
HCPCS code assigned status indicator ``S,'' ``T,'' or ``V.'' Exclusions
to this ancillary service packaging policy include preventive services,
certain psychiatric and counseling-related services, and certain low-
cost drug administration services. The policy adopted in CY 2015 was
proposed in response to public comments on the CY 2014 ancillary
packaging proposal, which 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 in the CY 2015 OPPS/ASC final rule with
comment period that the $100 geometric mean cost limit target was a
selection criterion for the initial set of services in conditionally
packaged ancillary service APCs under this packaging policy. The $100
geometric mean cost target was not intended to be a threshold above
which ancillary services will not be packaged, but was a basis for
selecting the initial set of APCs under the conditional packaging
policy for ancillary services, which would likely be updated and
expanded upon in the future. An increase in the geometric mean cost of
any of those packaged APCs to above $100 in future years does not
change the conditionally packaged status of services assigned to the
APCs selected in CY 2015 in a future year. When we finalized this
policy, we stated that we would continue to consider services in these
APCs to be conditionally packaged and would review the conditionally
packaged status of ancillary services annually. The ancillary services
packaging policy is codified in the regulations at 42 CFR 419.2(b)(7).

[[Page 39234]]

For CY 2016, as we did in CY 2015, we examined categories of
ancillary services that are integral, ancillary, supportive, dependent,
or adjunctive items and services for which we believe payment would be
appropriately packaged into payment of the primary services that they
support. As previously stated, the $100 geometric mean cost target we
adopted in CY 2015 was not intended to be a threshold above which
ancillary services will not be packaged, but was a basis for selecting
the initial set of APCs under the conditional packaging policy for
ancillary services, which would likely be updated and expanded upon in
the future. Accordingly, for CY 2016, we are proposing to not limit our
examination to ancillary service APCs with a geometric mean cost of
$100 or less. We believe there are some ancillary services that are
assigned to APCs with a geometric mean cost above $100, but for which
conditional packaging is appropriate, given the context in which the
service is performed. For CY 2016, we are proposing to evaluate
categories of ancillary services by considering the clinical similarity
of such categories of services to the currently conditionally packaged
ancillary services that have already been determined to be integral,
ancillary, supportive, dependent, or adjunctive to a primary service.
Under this proposal, we identified services in certain APCs that meet
these criteria, and we did not apply the $100 geometric mean cost
threshold that we applied for CY 2015. Specifically, for CY 2016, we
are proposing to expand the set of conditionally packaged ancillary
services to include services in the three APCs listed in Table 8 below.
Ancillary services in the APCs in Table 8 are typically furnished with
a higher paying, separately payable primary procedure.
However, to avoid packaging a subset of high-cost pathology
services into lower cost and nonprimary services (for example, low-cost
imaging services) frequently billed with some of the services assigned
to Level 3 and Level 4 pathology APCs, we are proposing to package
Level 3 and 4 pathology services only when they are billed with a
surgical service. We believe that pathology services are routine tests
that are typically performed ancillary or adjunctive to another primary
service, most commonly surgery. For the Level 3 and 4 pathology APCs
listed below, we are proposing that the assigned status indicator would
be ``Q2'' (``T packaging'').
The HCPCS codes that we are proposing to conditionally package as
ancillary services for CY 2016 are displayed in Addendum B to this CY
2016 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.

Table 8--Proposed APCs for Conditionally Packaged Ancillary Services for CY 2016
----------------------------------------------------------------------------------------------------------------
Proposed CY 2016
Proposed renumbered CY 2016 APC\*\ Proposed CY 2016 APC title OPPS status Proposed CY 2016
indicator payment rate
----------------------------------------------------------------------------------------------------------------
5734....................................... Level 4 Minor Procedures..... Q1 $119.58
5673....................................... Level 3 Pathology............ Q2 229.13
5674....................................... Level 4 Pathology............ Q2 459.96
----------------------------------------------------------------------------------------------------------------
\*\ Addendum Q to this proposed rule (which is available via the Internet on the CMS Web site) contains a
crosswalk of the existing APC numbers to the proposed APC renumbers for CY 2016.

In addition, we are proposing to continue to exclude certain
services from this ancillary services packaging policy. As established
in CY 2015, preventive services, certain psychiatric and counseling-
related services, and certain low-cost drug administration services are
separately payable under the OPPS (79 FR 66819). Preventable services
that would continue to be exempted from the ancillary service packaging
policy for CY 2016 are listed in Table 9 below.

Table 9--Proposed Preventive Services Exempted From the Ancillary
Services Packaging Policy
------------------------------------------------------------------------
Proposed
HCPCS code Short descriptor renumbered CY
2016 APC\*\
------------------------------------------------------------------------
76977............................. Us bone density 5732
measure.
77078............................. Ct bone density 5521
axial.
77080............................. Dxa bone density 5522
axial.
77081............................. Dxa bone density/ 5521
peripheral.
G0117............................. Glaucoma scrn hgh 5732
risk direc.
G0118............................. Glaucoma scrn hgh 5732
risk direc.
G0130............................. Single energy x-ray 5521
study.
G0389............................. Ultrasound exam aaa 5531
screen.
G0404............................. Ekg tracing for 5731
initial prev.
Q0091............................. Obtaining screen pap 5731
smear.
------------------------------------------------------------------------
\*\ Addendum Q to this proposed rule (which is available via the
Internet on the CMS Web site) contains a crosswalk of the existing APC
numbers to the proposed APC renumbers.

(2) Drugs and Biologicals That Function as Supplies When Used in a
Surgical Procedure
In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74930
through 74939), we finalized our policy at 42 CFR 419.2(b)(16) to
unconditionally package all drugs and biologicals that function as
supplies when used in a surgical procedure. As noted in that final rule
with comment period, supplies are a large category of items that
typically are either for single

[[Page 39235]]

patient use or have a shorter life span in use than equipment. Supplies
can be anything that is not equipment and include not only minor,
inexpensive, or commodity-type items but also include a wide range of
products used in the hospital outpatient setting, including certain
implantable medical devices, drugs, biologicals, or
radiopharmaceuticals (78 FR 74390). When evaluating whether a
particular drug may meet the criteria for packaging under this policy,
we do not consider low drug product utilization and/or drug product
cost that exceeds the primary service APC payment to be factors in our
determination (79 FR 66875). We unconditionally package all drugs and
biologicals that function as supplies in a surgical procedure (79 FR
74930).
For CY 2016, we conducted a comprehensive review of CY 2015
separately payable OPPS drugs; that is, drugs with either a status
indicator of ``G'' or ``K.'' For each separately payable drug, we
reviewed the FDA-approved label and conducted a clinical review to
determine whether a drug is indicated for use in a surgical procedure.
Based on our clinical review, for CY 2016, we are proposing to package
payment for the four drugs that are listed in Table 10 below based on
their primary function as a supply in a surgical procedure, which
typically means that the drug or biological is integral to, dependent
on, or supportive of a surgical procedure. We note that one drug,
described by HCPCS code C9447, that would otherwise be packaged in CY
2016 currently has pass-through payment status. Therefore, we are not
proposing to package HCPCS code C9447 for CY 2016. Instead, we are
proposing to package this drug for CY 2018, after its drug pass-through
payment status has expired.

Table 10--Separately Payable Drugs Proposed for Unconditional Packaging
----------------------------------------------------------------------------------------------------------------
Proposed first
HCPCS code Descriptor CY 2015 status Primary use in calendar year
indicator surgical procedure to be packaged
----------------------------------------------------------------------------------------------------------------
J0583.......................... Injection, K Percutaneous 2016
bivalirudin, 1 mg. Coronary
Intervention[PCI]/
PCTA
[percutaneous
transluminal
coronary
angioplasty]
procedures.
J7315.......................... Mitomycin, G Glaucoma surgery.. 2016
ophthalmic, 0.2
mg.
C9447.......................... Injection, G Cataract surgery.. 2018
phenylephrine and
ketorolac, 4 ml
vial.
J0130.......................... Injection K PCI procedure..... 2016
abciximab, 10 mg.
----------------------------------------------------------------------------------------------------------------

(3) Clinical Diagnostic Laboratory Tests
(a) Background
In CY 2014, we finalized a policy to package certain clinical
diagnostic laboratory tests in the OPPS (78 FR 74939 through 74942 and
42 CFR 419.2(b)(17)). Under current policy, certain clinical diagnostic
laboratory tests that are listed on the Clinical Laboratory Fee
Schedule (CLFS) are packaged in the OPPS as integral, ancillary,
supportive, dependent, or adjunctive to the primary service or services
provided in the hospital outpatient setting on the same date of service
as the laboratory test. Specifically, we conditionally package
laboratory tests and only pay separately for a laboratory test when (1)
it is the only service provided to a beneficiary on a given date of
service; or (2) it is conducted on the same date of service as the
primary service, but is ordered for a different purpose than the
primary service ordered by a practitioner different than the
practitioner who ordered the other OPPS services. Also excluded from
this conditional packaging policy are molecular pathology tests
described by CPT codes in the ranges of 81200 through 81383, 81400
through 81408, and 81479 (78 FR 74939 through 74942), which are
assigned status indicator ``A'' in Addendum B to this proposed rule
(which is available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html). When laboratory tests are not packaged under the OPPS and
are listed on the CLFS, they are paid at the CLFS payment rates outside
the OPPS under Medicare Part B.
To implement our packaging policy in CY 2014, we assigned status
indicator ``N,'' which describes unconditionally packaged items and
services, to all laboratory tests paid at the CLFS rates except
molecular pathology tests. We indicated in the CY 2014 OPPS/ASC final
rule with comment period (78 FR 74939) that hospitals should use the
14X bill type for laboratory tests to bill and receive separate payment
for unrelated laboratory tests excluded from the packaging proposal
(except molecular pathology tests, which would still be reported on the
13X bill type), including both: (1) Those laboratory tests that are the
only service provided on a date of service, and (2) laboratory tests
provided on the same date of service as another OPPS service but
ordered for a different purpose than the primary service and by a
different practitioner than the practitioner who ordered the primary
service. Therefore, under our final policy, we relied on hospitals to
identify when laboratory tests should be separately paid and bill those
laboratory tests on a 14X bill type.
Upon implementation of this final policy in January 2014, the
National Uniform Billing Committee (NUBC) expressed concern that the
14X bill type was not an appropriate choice of bill type for billing
for laboratory tests other than for laboratory tests on referred
specimens and requested that CMS find another mechanism for hospitals
to bill for separately payable laboratory tests. (We refer readers to
our Medicare Learning Network article on this issue on the CMS Web site
at: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1412.pdf.) In Transmittal
2971, Change Request 8776, July 2014 Update of the Hospital Outpatient
Prospective Payment System (OPPS), which is available on the CMS Web
site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R2971CP.pdf, we implemented modifier ``L1''
(Separately payable laboratory test) to be used in lieu of the 14X bill
type. Specifically, we stated that hospitals should use the ``L1''
modifier to indicate when laboratory tests meet either of the two
exceptions for separate payment described above.
(b) CY 2016 Laboratory Test Packaging Proposals
For CY 2016 and subsequent years, we are proposing a few revisions
to our

[[Page 39236]]

current laboratory packaging policy. First, with regard to the
particular molecular pathology tests in the code range expressly
excluded from the current policy, we are proposing to expand this
exclusion to exclude all molecular pathology tests from our packaging
policy, including any new codes that also describe molecular pathology
tests. In our rationale for excluding these laboratory tests from our
final packaging policy in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 74939), we stated that we did not propose to package
molecular pathology laboratory tests because we believed that these
relatively new tests may have a different pattern of clinical use,
which may make them generally less tied to a primary service in the
hospital outpatient setting than the more common and routine laboratory
tests that we proposed to package. We believe that this rationale
remains applicable and may be appropriately extended to any new
molecular pathology tests. Therefore, for CY 2016, we are proposing to
assign all laboratory tests that describe molecular pathology tests
status indicator ``A'' in Addendum B to this proposed rule (which is
available via the Internet on the CMS Web site), which means that they
are separately paid at the CLFS rates outside of the OPPS.
Second, we are proposing for CY 2016 to make separate payment for
preventive laboratory tests and assign them a status indicator ``A'' in
Addendum B to this proposed rule. Laboratory tests that are considered
preventive appear in Section 1.2, Chapter 18 of the Medicare Claims
Processing Manual (Pub. 100-04). We currently make an exception to
conditional packaging of ancillary services for ancillary services that
are also preventive services (79 FR 66819). For consistency, we believe
that such an exception should also apply to laboratory tests that are
classified as preventive services.
Finally, for CY 2016, we are proposing to modify our current
conditional packaging policy that laboratory tests are integral,
ancillary, supportive, dependent, or adjunctive to a primary service or
services provided in the hospital outpatient setting when those
services are provided on the same date of service as the primary
service and when they are ordered for the same purpose and by the same
practitioner as the practitioner who ordered the primary service.
Specifically, we are proposing to expand our current conditional
packaging policy and consider laboratory tests provided during the same
outpatient stay (rather than specifically provided on a same date of
service as the primary service) as integral, ancillary, supportive,
dependent, or adjunctive to a primary service or services, except when
a laboratory test is ordered for a different purpose and by a different
practitioner than the practitioner who ordered the other OPPS services.
In some cases, outpatient hospital stays span more than a single date.
For laboratory tests reported on a claim with a primary service, we do
not believe that a different date of service for the laboratory test
affects whether that test is integral, ancillary, supportive,
dependent, or adjunctive to the primary service or services provided in
the HOPD. Further, in reviewing our CY 2014 claims data, we observed
hospitals indicating separate payment by reporting the ``L1'' modifier
for only a few laboratory tests reported on different days than an OPPS
service. We conclude that hospitals generally do not view laboratory
tests occurring on a different day than a primary service during an
outpatient stay as a reason for separate payment. Therefore, we are
proposing to package laboratory tests that are reported on the same
claim with a primary service, regardless of the date of service.
This proposal does not affect our existing policy to provide
separate payment for laboratory tests: (1) If they are the only
services furnished to an outpatient and are the only services on a
claim and have a payment rate on the CLFS; or (2) if they are ordered
for a different purpose than another OPPS service by a practitioner
different than the practitioner who ordered the primary service (78 FR
74942). We also plan to continue to have hospitals report the ``L1''
modifier to identify any clinically ``unrelated'' laboratory tests that
are furnished on the same claim as OPPS services, but are ordered by a
different practitioner and for a different purpose than the primary
OPPS services. However, as we discuss below, for ease of
administration, we also are proposing to implement claims processing
edits through a new conditional packaging status indicator ``Q4'' that
would identify 13X bill type claims where there are only laboratory
HCPCS codes that appear on the CLFS; automatically change their status
indicator to ``A''; and pay them separately at the CLFS payment rates.
For such claims, the ``L1'' modifier would not be used.
Proposed status indicator ``Q4'' is defined as ``packaged APC
payment if billed on the same claim as a HCPCS code assigned status
indicator ``J1,'' ``J2,'' ``S,'' ``T,'' ``V,'' ``Q1,'' ``Q2,'' or
``Q3,'' otherwise separately paid, and would apply to conditionally
packaged laboratory tests. In our CY 2014 claims data, we observe some
claims reporting laboratory services and no other OPPS services that
were not paid because the hospital did not appropriately report the
``L1'' modifier. We further believe that the status indicator ``N'' for
unconditional packaging does not accurately reflect the payment status
of these laboratory tests. These tests may be eligible to receive
separate payment at the CLFS payment rates in several circumstances as
discussed above. Assigning a ``QX'' modifier generally indicates
conditional packaging, where services are packaged, except in certain
circumstances where separate payment can occur. Proposing a distinct
``Q4'' modifier allows for more precise categorization of the payment
status of laboratory services. With the assignment of the proposed
``Q4'' modifier to laboratory tests, we are proposing that modifier
``L1'' would only be used to identify ``unrelated'' laboratory tests
that are ordered for a different purpose and by a different
practitioner than the other OPPS services on the claim.
We are inviting public comments on these proposals.
4. Proposed Calculation of OPPS Scaled Payment Weights
In this CY 2016 proposed rule, we are proposing to calculate the
relative payment weights for each APC shown in Addenda A and B to this
proposed rule (which are available via the Internet on the CMS Web
site) using the APC costs discussed in sections II.A.1. and II.A.2. of
this proposed rule. Prior to CY 2007, we standardized all of 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 an initial unscaled
relative payment weight for each APC.
Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all
of the relative payment weights to the median cost of 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
5 levels). We established a policy in the CY 2013 OPPS/ASC final rule
with comment period (77 FR 68283) of using geometric mean-based APC
costs rather than median-based APC costs to calculate relative payment
weights. We are

[[Page 39237]]

proposing to continue this policy for CY 2016 and subsequent years.
As noted earlier for CY 2012 and CY 2013, outpatient clinic visits
were assigned to one of five levels of clinic visit APCs, with APC 0606
representing a mid-level clinic visit. In the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75036 through 75043), we finalized a
new policy that created alphanumeric HCPCS code G0463 (Hospital
outpatient clinic visit for assessment and management of a patient),
representing any and all clinic visits under the OPPS. HCPCS code G0463
was assigned to APC 0634 (Hospital Clinic Visits). 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.
For the CY 2014 and CY 2015 OPPS final rules with comment period,
we standardized all of the relative payment weights to the geometric
mean cost of APC 0634 as discussed in section VII. of the CY 2015 OPPS/
ASC final rule with comment period (79 FR 66823). As noted in section
VII. of this proposed rule, for CY 2016, we are proposing to delete APC
0634 and to move the outpatient clinic visit HCPCS code G0463 to APC
0632 (Level 2 Examinations and Related Services). Accordingly, for CY
2016 and subsequent years, we are proposing to standardize all of the
relative payment weights to APC 0632. We believe that standardizing
relative payment weights to the geometric mean of the APC to which
HCPCS code G0463 is assigned maintains consistency in calculating
unscaled weights that represent the cost of some of the most frequently
provided OPPS services. For CY 2016, we are proposing to renumber APC
0632 as APC 5012 (Level 2 Examination and Related Services). For CY
2016, we are proposing to assign proposed renumbered APC 5012 a
relative payment weight of 1.00 and to divide the geometric mean cost
of each APC by the proposed geometric mean cost for proposed renumbered
APC 5012 to derive the proposed unscaled relative payment weight for
each APC. The choice of the APC on which to standardize 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 2016 is neither
greater than nor less than the estimated aggregate weight that would
have been made without the changes. To comply with this requirement
concerning the APC changes, we are proposing to compare the estimated
aggregate weight using the CY 2015 scaled relative payment weights to
the estimated aggregate weight using the proposed CY 2016 unscaled
relative payment weights.
For CY 2015, we multiplied the CY 2015 scaled APC relative payment
weight applicable to a service paid under the OPPS by the volume of
that service from CY 2014 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 2016, we
are proposing to apply the same process using the estimated CY 2016
unscaled relative payment weights rather than scaled relative payment
weights. We are proposing to calculate the weight scaler by dividing
the CY 2015 estimated aggregate weight by the unscaled CY 2016
estimated aggregate weight.
For a detailed discussion of the weight scalar 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 2016 OPPS
proposed rule link and open the claims accounting document link at the
bottom of the page.
In this CY 2016 proposed rule, we are proposing to compare the
estimated unscaled relative payment weights in CY 2016 to the estimated
total relative payment weights in CY 2015 using CY 2014 claims data,
holding all other components of the payment system constant to isolate
changes in total weight. Based on this comparison, we are proposing to
adjust the calculated CY 2016 unscaled relative payment weights for
purposes of budget neutrality. We are proposing to adjust the estimated
CY 2016 unscaled relative payment weights by multiplying them by a
weight scaler of 1.3823 to ensure that the proposed CY 2016 relative
payment weights are scaled to be budget neutral. The proposed CY 2016
relative payment weights listed in Addenda A and B to this proposed
rule (which are available via the Internet on the CMS Web site) are
scaled and incorporate the recalibration adjustments discussed in
sections II.A.1. and II.A.2. of this proposed rule.
Section 1833(t)(14) of the Act provides the payment rates for
certain SCODs. Section 1833(t)(14)(H) of the Act provides that
additional expenditures resulting from this paragraph shall not be
taken into account in establishing the conversion factor, weighting,
and other adjustment factors for 2004 and 2005 under paragraph (9), but
shall be taken into account for subsequent years. Therefore, the cost
of those SCODs (as discussed in section V.B.3. of this proposed rule)
is included in the budget neutrality calculations for the CY 2016 OPPS.

B. Proposed Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to
update the conversion factor used to determine the payment rates under
the OPPS on an annual basis by applying the OPD fee schedule increase
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee
schedule increase factor is equal to the hospital inpatient market
basket percentage increase applicable to hospital discharges under
section 1886(b)(3)(B)(iii) of the Act. In the FY 2016 IPPS/LTCH PPS
proposed rule (80 FR 24477), consistent with current law, based on IHS
Global Insight, Inc.'s first quarter 2015 forecast of the FY 2016
market basket increase, the proposed FY 2016 IPPS market basket update
is 2.7 percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv)
of the Act, as added by section 3401(i) of the Patient Protection and
Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section
10319(g) of that law and further amended by section 1105(e) of the
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152),
provide adjustments to the OPD fee schedule increase factor for CY
2016.
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

[[Page 39238]]

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 2016 IPPS/
LTCH PPS proposed rule (80 FR 24478), we discussed the calculation of
the proposed MFP adjustment for FY 2016, which is -0.6 percentage point
reduction.
We are proposing that if more recent data become subsequently
available after the publication of this CY 2016 OPPS/ASC proposed rule
(for example, a more recent estimate of the market basket increase and
the MFP adjustment), we would use such updated data, if appropriate, to
determine the CY 2016 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 the CY 2016
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 2016,
section 1833(t)(3)(G)(iv) of the Act provides a -0.2 percentage point
reduction to the OPD fee schedule increase factor under section
1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the Act, we are proposing to
apply a -0.2 percentage point reduction to the OPD fee schedule
increase factor for CY 2016.
We note that section 1833(t)(3)(F) of the Act provides that
application of this subparagraph may result in the OPD fee schedule
increase factor under section 1833(t)(3)(C)(iv) of the Act being less
than 0.0 percent for a year, and may result in OPPS payment rates being
less than rates for the preceding year. As described in further detail
below, we are proposing to apply an OPD fee schedule increase factor of
1.9 percent for the CY 2016 OPPS (which is 2.7 percent, the proposed
estimate of the hospital inpatient market basket percentage increase,
less the proposed 0.6 percentage point MFP adjustment, and less the 0.2
percentage point additional adjustment).
Hospitals that fail to meet the Hospital OQR Program reporting
requirements are subject to an additional reduction of 2.0 percentage
points from the OPD fee schedule increase factor adjustment to the
conversion factor that would be used to calculate the OPPS payment
rates for their services, as required by section 1833(t)(17) of the
Act. For further discussion of the Hospital OQR Program, we refer
readers to section XIII. of this proposed rule.
In this CY 2016 OPPS/ASC proposed rule, we are proposing to amend
42 CFR 419.32(b)(1)(iv)(B) by adding new paragraph (7) to reflect the
requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2016,
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 2016.
To set the OPPS conversion factor for CY 2016, we are proposing to
increase the CY 2015 conversion factor of $74.173 by 1.9 percent. In
accordance with section 1833(t)(9)(B) of the Act, we are proposing to
further adjust the conversion factor for CY 2016 to ensure that any
revisions made to the wage index and rural adjustment are made on a
budget neutral basis. We are proposing to calculate an overall proposed
budget neutrality factor of 0.9993 for wage index changes by comparing
proposed total estimated payments from our simulation model using the
proposed FY 2016 IPPS wage indexes to those payments using the FY 2015
IPPS wage indexes, as adopted on a calendar year basis for the OPPS.
For CY 2016, we are proposing to maintain the current rural
adjustment policy, as discussed in section II.E. of this proposed rule.
Therefore, the proposed budget neutrality factor for the rural
adjustment would be 1.0000.
For CY 2016, we are proposing to continue previously established
policies for implementing the cancer hospital payment adjustment
described in section 1833(t)(18) of the Act, as discussed in section
II.F. of this proposed rule. We are proposing to calculate a CY 2016
budget neutrality adjustment factor for the cancer hospital payment
adjustment by comparing estimated total CY 2016 payments under section
1833(t) of the Act, including the proposed CY 2016 cancer hospital
payment adjustment, to estimated CY 2016 total payments using the CY
2015 final cancer hospital payment adjustment as required under section
1833(t)(18)(B) of the Act. The CY 2016 proposed estimated payments
applying the proposed CY 2016 cancer hospital payment adjustment are
identical to estimated payments applying the CY 2015 final cancer
hospital payment adjustment. Therefore, we are proposing to apply a
budget neutrality adjustment factor of 1.0000 to the conversion factor
for the cancer hospital payment adjustment.
For this proposed rule, we estimate that proposed pass-through
spending for drugs, biologicals, and devices for CY 2016 would equal
approximately $136.8 million, which represents 0.25 percent of total
projected CY 2016 OPPS spending. Therefore, the proposed conversion
factor would be adjusted by the difference between the 0.13 percent
estimate of pass-through spending for CY 2015 and the 0.25 percent
estimate of proposed pass-through spending for CY 2016, resulting in a
proposed adjustment for CY 2016 of -0.12 percent. Proposed estimated
payments for outliers would be 1.0 percent of total OPPS payments for
CY 2016. We currently estimate that outlier payments will be 0.95
percent of total OPPS payments in CY 2015; the 1.0 percent for proposed
outlier payments in CY 2016 would constitute a 0.05 percent increase in
payment in CY 2016 relative to CY 2015.
We also are proposing to exercise our authority in section
1833(t)(3)(C)(iii) of the Act to further adjust the conversion factor
to eliminate the effect of coding and classification changes that we
believe resulted in a change in aggregate payments that do not reflect
real changes in service-mix related to our final policy to package
certain clinical diagnostic laboratory tests in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 74939 through 74942). Below we
discuss our proposed adjustment to the conversion factor to redress the
inflation in the OPPS payment rates resulting from excess packaged
payment under the OPPS for laboratory tests that we now understand
continue to be paid separately outside the OPPS.
The current clinical diagnostic laboratory test packaging policy
packages payment for laboratory tests in the OPPS when they are
integral, ancillary, supportive, dependent, or adjunctive to a primary
service or services provided in the hospital outpatient setting. Under
current policy, payment for a laboratory test is not packaged when: (1)
A laboratory test is the only service provided to the beneficiary on
that date of service; or (2) a laboratory test is conducted on the same
date of service as the primary service but is ordered for a different
purpose than the primary service by a practitioner different than the
practitioner who ordered the primary service. The laboratory tests
falling under these two exceptions continue to

[[Page 39239]]

be paid separately at the CLFS payment rates outside the OPPS.
In addition, we exclude payment for molecular pathology tests
described by CPT codes in the ranges of 81200 through 81383, 81400
through 81404, and 81479 from packaging (78 FR 74939). In section
II.A.3.b.(3) of this proposed rule, we are proposing to expand this
exclusion to exclude all molecular pathology tests from our packaging
policy, including any new codes that also describe molecular pathology
tests. Finally, we continue to pay separately for referred specimens
billed on a 14X bill type because these services will always consist
only of laboratory services. We also make separate (that is, not
packaged) payment for laboratory tests billed on a 12X (inpatient Part
B) bill type claim when billed for reasons other than rebilling for a
denied Part A claim, such as inpatient Part B coverage following
exhausted Part A benefits. We refer readers to section II.A.3.b.(3) of
this proposed rule for a detailed discussion of our laboratory test
packaging policy exceptions and to review our proposals to modify our
laboratory test packaging policy in light of current experience with
this policy.
In monitoring aggregate payments for CY 2014, we observed that OPPS
spending for hospital outpatient services experienced double digit
growth in 2014 compared to typical growth of 6 to 8 percent, due to our
CY 2014 final policy to package laboratory services, without a
comparable reduction in spending for laboratory services paid at the
CLFS payment rates outside the OPPS. As part of our CY 2014 final
policy to package certain clinical diagnostic laboratory tests, we both
revised the OPPS relative payment weights to reflect packaged
laboratory services, and we increased the OPPS relative weight scaler
to reflect the estimated total cost of packaged laboratory services. In
calculating the appropriate increase to the weight scaler for CY 2014,
we estimated that we spent approximately $2.4 billion on laboratory
services on 13X type bill claims, and we incorporated this aggregate
amount of weight into our estimate of the 2013 relative weight when
calculating the budget neutral weight scaler to scale all relative
weights for CY 2014, except those with a fixed payment amount such as
drugs paid at ASP+6 percent (78 FR 74948 through 74949). An adjustment
to the overall weight scaler has a comparable effect on final payment
as an adjustment to the conversion factor. We also assumed that
separate payment would continue for laboratory services billed on 14X
bill type claims for referred specimens and for select inpatient Part B
claims billed on a 12X bill type claim. Thus, we expect to experience
an increase in OPPS spending due to our final packaging policy and a
commensurate reduction in overall payment for Medicare Part B
laboratory tests paid at the CLFS rates outside the OPPS.
However, upon reviewing actual claims for CY 2014, we observed an
unexpectedly high volume of laboratory tests associated with $1 billion
in spending for exceptions to our packaging policy for laboratory tests
that continued to receive separate payment at the CLFS payment rates
outside the OPPS. We did not observe a significant change in the
overall volume of laboratory services being furnished. Specifically, we
observed a pronounced shift in volume from billing on the 13X bill type
claims to the 14X bill type claims beginning January 1, 2014,
consistent with our final rule policy and then shifting back to the 13X
bill type claims with an ``L1'' modifier when our instructions on
billing for laboratory tests that are excepted from our laboratory
packaging policy were implemented in July 2014. (We refer readers to
Transmittal 2971, Change Request 8776, July 2014 Update of the Hospital
Outpatient Prospective Payment System (OPPS), which is available on the
CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R2971CP.pdf.) Because we do not observe a
significant change in the number of laboratory services in our claims
data, we conclude that the changes in aggregate payments under the OPPS
are a result of changes in pricing alone and do not reflect real
changes in service-mix.
Therefore, we overestimated the adjustment necessary to account for
the new policy to package laboratory tests and underestimated the
amount of spending that would continue for laboratory tests paid at the
CLFS rates outside the OPPS by approximately $1 billion. This $1
billion effectively resulted in inflation in the OPPS payment rates
resulting from excess packaged payment under the OPPS for laboratory
tests for all OPPS services and duplicate payments for certain
laboratory tests because we are paying the laboratory tests through
packaged payment incorporated into the OPPS payment rates as well as
through separate payment at the CLFS payment rates outside the OPPS.
Section 1833(t)(3)(C)(iii) of the Act specifies that if the
Secretary determines the adjustments for service-mix for a previous
year (or estimates that such adjustments for a future year) did (or are
likely to) result in a change in aggregate payments during the year
that are a result of changes in the coding or classification of covered
OPD services that do not reflect real changes in service-mix, the
Secretary may adjust the conversion factor for subsequent years so as
to eliminate the effect of such coding or classification changes. Based
on this authority, we are proposing a reduction of 2.0 percentage
points to the proposed CY 2016 conversion factor to redress
inappropriate inflation in the OPPS payment rates and remove the $1
billion in excess packaged payment. We also used the ``L1'' modifier
information on the CY 2014 claims data that we use to model the OPPS to
identify which laboratory services should be packaged into the
associated OPPS services when establishing the proposed CY 2016
relative weights. We are proposing this reduction in order to eliminate
the effect of the coding and classification changes for payment for
laboratory tests that resulted in changes in aggregate payments, but
which did not result in real changes in service-mix under the OPPS. If
we had been able to accurately forecast the amount of continued
spending on separately payable laboratory tests that would continue in
CY 2014 at the CLFS rates outside the OPPS, we would have incorporated
a reduced amount of estimated spending into our CY 2014 OPPS budget
neutrality calculations in CY 2014 rulemaking.
We conducted several analyses to better understand the derivation
of the overestimated adjustment made in CY 2014. These efforts included
an attempt to determine how much spending at the CLFS payment rates
outside the OPPS should have been packaged in CY 2014 with full
knowledge of the actual volume for exceptions to our final laboratory
tests packaging policy now that CY 2014 claims data are available for
review. This assessment required some assumptions about what payment
would have been at the CY 2014 CLFS payment amounts using the CLFS
national limitation amount (NLA) price or the mode price among
jurisdictions where an NLA did not exist for all laboratory services in
12X, 13X, and 14X bill type claims less actual payments for those same
services and the $2.4 billion in packaged payments. We adjusted our
total estimates for incomplete claims data because the data that we use
to model the proposed rule are data from CY 2014 claims processed as of
December 31, 2014, estimated at 90 percent based on historical claims
data.

[[Page 39240]]

As a result of this analysis, we estimated that we included a gross
estimate of roughly $1.1 billion in excess packaged payment in the CY
2014 OPPS payment rates for laboratory tests that were paid separately,
as demonstrated by actual CY 2014 claims data. We also did a more
straightforward analysis assessing total payment for our exceptions
policy, in which we looked at the change in payment on 14X bill type
claims for the first part of CY 2014 along with any payment for
laboratory services billed with the ``L1'' modifier. This analysis
resulted in a similar estimate of roughly $1.003 billion. Because both
analyses resulted in an approximate $1 billion estimate of spending at
the CLFS rates outside the OPPS that was packaged into the OPPS, we
believe that a prospective adjustment to remove this $1 billion from
the OPPS realigns total aggregate OPPS payments to reflect the
resources associated with OPPS services. When we calculate the $1
billion as a percent of actual total spending for OPPS services in CY
2014 (approximately $50 billion), we determined an estimated 2.0
percent reduction to total spending to be applied to the conversion
factor. Therefore, we are proposing to apply a 2.0 percent adjustment
to the proposed CY 2016 conversion factor to redress the inflation in
the OPPS payment rates resulting from excess packaged payment under the
OPPS for laboratory tests we now understand continue to be paid at the
CLFS rates outside the OPPS for CY 2016 and subsequent years.
For the CY 2017 OPPS rulemaking, we plan to review actual CY 2015
claims data and assess whether our proposed adjustment for CY 2016
accurately adjusted for the inflation in the OPPS payment rates under
current policy.
We provide a summary file of our analysis of separate payment at
the CLFS rates outside the OPPS for laboratory services that are
exceptions to our packaging policy which is available in the
``Downloads'' section of the CMS Web site accompanying this proposed
rule (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html). We note that the ``OPPS limited data set'' that we make
available to accompany each proposed and final rule is not a complete
set of institutional Part B claims, containing only the 12X, 13X, and
14X bill types that we use to model the OPPS rates and excluding claims
weeded or trimmed as discussed in our claims accounting document
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html).
For this proposed rule, we also are proposing 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 are proposing
to make all other adjustments discussed above, but use a reduced OPD
fee schedule update factor of -0.1 percent (that is, the proposed OPD
fee schedule increase factor of 1.9 percent further reduced by 2.0
percentage points). This would result in a proposed reduced conversion
factor for CY 2016 of $72.478 for hospitals that fail to meet the
Hospital OQR requirements (a difference of -1.451 in the conversion
factor relative to hospitals that meet the requirements).
In summary, for CY 2016, we are proposing to amend Sec.
419.32(b)(1)(iv)(B) by adding a new paragraph (7) to reflect the
reductions to the OPD fee schedule increase factor that are required
for CY 2016 to satisfy the statutory requirements of sections
1833(t)(3)(F) and (t)(3)(G)(iv) of the Act. We are proposing to use a
reduced conversion factor of $72.478 in the calculation of payments for
hospitals that fail to meet the Hospital OQR Program requirements (a
difference of -1.451 in the conversion factor relative to hospitals
that meet the requirements).
For CY 2016, we are proposing to continue previously established
policies for implementing the cancer hospital payment adjustment
described in section 1833(t)(18) of the Act, as discussed in section
II.F. of this proposed rule.
As a result of these proposed policies, the proposed OPD fee
schedule increase factor for the CY 2016 OPPS is 1.9 percent (which is
2.7 percent, the estimate of the hospital inpatient market basket
percentage increase, less the proposed 0.6 percentage point MFP
adjustment, and less the 0.2 percentage point additional adjustment).
For CY 2016, we are proposing to use a conversion factor of $73.929 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 proposed OPD fee schedule increase
factor of 1.9 percent for CY 2016, the required wage index budget
neutrality adjustment of approximately 0.9993, the proposed cancer
hospital payment adjustment of 1.0000, the proposed -2.0 percent
adjustment to the conversion factor to redress the inflation in the
OPPS payment rates resulting from excess packaged payment under the
OPPS for laboratory tests we now understand continue to be paid at the
CLFS rates outside the OPPS, and the proposed adjustment of -0.12
percentage point of projected OPPS spending for the difference in the
pass-through spending result in a proposed conversion factor for CY
2016 of $73.929.

C. Proposed Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to
determine a wage adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion
of the OPPS payment rate is called the OPPS labor-related share. Budget
neutrality is discussed in section II.B. of this proposed rule.
The OPPS labor-related share is 60 percent of the national OPPS
payment. This labor-related share is based on a regression analysis
that determined that, for all hospitals, approximately 60 percent of
the costs of services paid under the OPPS were attributable to wage
costs. We confirmed that this labor-related share for outpatient
services is appropriate during our regression analysis for the payment
adjustment for rural hospitals in the CY 2006 OPPS final rule with
comment period (70 FR 68553). Therefore, we are proposing to continue
this policy for the CY 2016 OPPS. We refer readers to section II.H. of
this proposed rule for a description and an example of how the wage
index for a particular hospital is used to determine payment for the
hospital.
As discussed in section II.A.2.c. of this proposed rule, for
estimating APC costs, we standardize 60 percent of estimated claims
costs for geographic area wage variation using the same proposed FY
2016 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 post-reclassified
wage index as the calendar year wage index for adjusting the OPPS
standard payment amounts for labor market

[[Page 39241]]

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). Section 10324 of the
Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act,
which defines a frontier State and amended section 1833(t) of the Act
to add new paragraph (19), which requires a frontier State wage index
floor of 1.00 in certain cases, and states that the frontier State
floor shall not be applied in a budget neutral manner. We codified
these requirements in Sec. 419.43(c)(2) and (c)(3) of our regulations.
For the CY 2016 OPPS, we are proposing to implement this provision in
the same manner as we have since CY 2011. Under this policy, the
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.
Because the HOPD receives a wage index based on the geographic location
of the specific inpatient hospital with which it is associated, the
frontier State wage index adjustment applicable for the inpatient
hospital also would apply for any associated 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 proposed FY 2016 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 2016 IPPS/LTCH PPS proposed rule (80 FR 24463
through 24472) for a detailed discussion of all proposed changes to the
FY 2016 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 final rule (79 FR 49951
through 49963) and the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24463
through 24469), the Office of Management and Budget (OMB) issued
revisions to the labor market area delineations on February 28, 2013
(based on 2010 Decennial Census data), that included a number of
significant changes such as new Core Based Statistical Areas (CBSAs),
urban counties that became rural, rural counties that became urban, and
existing CBSAs that were 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. In the FY 2015 IPPS/LTCH PPS final
rule (79 FR 49950 through 49985), we adopted the use of the OMB labor
market area delineations that were based on the 2010 Decennial Census
data.
For the CY 2016 OPPS/ASC proposed rule, we are proposing to use the
proposed FY 2016 hospital IPPS post-reclassified wage index for urban
and rural areas as the wage index for the OPPS to determine the wage
adjustments for both the OPPS payment rate and the copayment
standardized amount for CY 2016. Thus, any adjustments that were
proposed for the FY 2016 IPPS post-reclassified wage index would be
reflected in the proposed CY 2016 OPPS wage index. (We refer readers to
the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24463 through 24477) and
the proposed FY 2016 hospital wage index files posted on the CMS Web
site.)
Hospitals that are paid under the OPPS, but not under the IPPS, do
not have an assigned hospital wage index under the IPPS. Therefore, for
non-IPPS hospitals paid under the OPPS, it is our longstanding policy
to assign the wage index that would be applicable if the hospital were
paid under the IPPS, based on its geographic location and any
applicable wage index adjustments. We are proposing to continue this
policy for CY 2016. The following is a brief summary of the major
proposed FY 2016 IPPS wage index policies and adjustments that we are
proposing to apply to these hospitals under the OPPS for CY 2016. We
further refer readers to the FY 2016 IPPS/LTCH PPS proposed rule (80 FR
24463 through 24477) for a detailed discussion of the proposed changes
to the FY 2016 wage indexes.
It has been our longstanding policy to allow non-IPPS hospitals
paid under the OPPS to qualify for the out-migration adjustment if they
are located in a section 505 out-migration county (section 505 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA)). Applying this adjustment is consistent with our 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. For CY 2016, we are proposing to continue our policy of allowing
non-IPPS hospitals paid under the OPPS to qualify for the out-migration
adjustment if they are located in a section 505 out-migration county
(section 505 of the MMA). The new Table 2 from the FY 2016 IPPS/LTCH
PPS proposed rule (available via the Internet on the CMS Web site at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) identifies counties eligible for the out-
migration adjustment and IPPS hospitals that would receive the
adjustment for FY 2016. (We note that the new FY 2016 proposed IPPS
Table 2 consolidates information on counties eligible for the out-
migration adjustment that was previously issued as Table 4J.) We are
including the proposed out-migration adjustment information from the
new consolidated Table 2 from the FY 2016 IPPS/LTCH PPS proposed rule
as Addendum L to this proposed rule with the addition of non-IPPS
hospitals that would receive the section 505 out-migration adjustment
under the CY 2016 OPPS. Addendum L is available via the Internet on the
CMS Web site.
As stated earlier, in the FY 2015 IPPS/LTCH PPS final rule, we
adopted the 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

[[Page 39242]]

wage index. For IPPS wage index purposes, for hospitals that were
located in urban CBSAs in FY 2014 but were designated as rural under
these revised OMB labor market area delineations, we generally assigned
them the urban wage index value of the CBSA in which they were
physically located for FY 2014 for a period of 3 fiscal years (79 FR
49957 through 49960). To be consistent, we applied 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 were
physically located for FY 2014 for 3 calendar years (until December 31,
2017). Thus, for the CY 2016 OPPS, consistent with the FY 2016 IPPS/
LTCH PPS proposed rule (80 FR 24467 through 24468), this 3-year
transition will continue for the second year in CY 2016. For CY 2015,
we also finalized a 1-year blended wage index for all hospitals that
experienced any decrease in their actual payment wage index exclusively
due to the implementation of the new OMB delineations. In the CY 2015
OPPS/ASC proposed rule, for purposes of the OPPS, we finalized a policy
to apply this 1-year 50-percent transition blend to hospitals paid
under the OPPS but not under the IPPS. Therefore, this one-year
transition blend does not apply for the CY 2016 OPPS wage index because
it expires at the end of CY 2015.
In addition, for the FY 2016 IPPS, we proposed to extend the
imputed floor policy (both the original methodology and alternative
methodology) for another year, through September 30, 2016 (80 FR 24469
through 24470). For purposes of the CY 2016 OPPS, we also are proposing
to apply the imputed floor policy to hospitals paid under the OPPS but
not under the IPPS so long as the IPPS continues an imputed floor
policy.
For CMHCs, for CY 2016, we are proposing to continue to calculate
the wage index by using the post-reclassification IPPS wage index based
on the CBSA where the CMHC is located. As with OPPS hospitals and for
the same reasons, in CY 2015, we applied a 1-year, 50/50 blended wage
index to CMHCs that would receive a lower wage index due to the new OMB
labor market area delineations. However, this blended wage index does
not apply in CY 2016 because it expires at the end of CY 2015. In
addition, as with OPPS hospitals and for the same reasons, for CMHCs
previously located in urban CBSAs that were designated as rural under
the new OMB labor market area delineations, we finalized a policy to
maintain the urban wage index value of the CBSA in which they were
physically located for CY 2014 for 3 calendar years (until December 31,
2017). Consistent with our current policy, the wage index that applies
to CMHCs includes both the imputed floor adjustment and the rural floor
adjustment, but does not include the out-migration adjustment because
that adjustment only applies to hospitals.
With the exception of the proposed out-migration wage adjustment
table (Addendum L to this proposed rule, which is available via the
Internet on the CMS Web site), which includes non-IPPS hospitals paid
under the OPPS, we are not reprinting the proposed FY 2016 IPPS wage
indexes referenced in this discussion of the wage index. We refer
readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the proposed FY
2016 IPPS wage index tables.

D. Proposed Statewide Average Default CCRs

In addition to using CCRs to estimate costs from charges on claims
for ratesetting, CMS uses overall hospital-specific CCRs calculated
from the hospital's most recent cost report to determine outlier
payments, payments for pass-through devices, and monthly interim
transitional corridor payments under the OPPS during the PPS year. MACs
cannot calculate a CCR for some hospitals because there is no cost
report available. For these hospitals, CMS uses the statewide average
default CCRs to determine the payments mentioned above until a
hospital's MAC is able to calculate the hospital's actual CCR from its
most recently submitted Medicare cost report. These hospitals include,
but are not limited to, hospitals that are new, have not accepted
assignment of an existing hospital's provider agreement, and have not
yet submitted a cost report. CMS also uses the statewide average
default CCRs to determine payments for hospitals that appear to have a
biased CCR (that is, the CCR falls outside the predetermined ceiling
threshold for a valid CCR) or for hospitals in which the most recent
cost report reflects an all-inclusive rate status (Medicare Claims
Processing Manual (Pub. 100-04), Chapter 4, Section 10.11). In this
proposed rule, we are proposing to update the default ratios for CY
2016 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 2016, we are proposing to continue to use our standard
methodology of calculating the statewide average default CCRs using the
same hospital overall CCRs that we use to adjust charges to costs on
claims data for setting the proposed CY 2016 OPPS relative payment
weights. Table 11 below lists the proposed CY 2016 default urban and
rural CCRs by State and compares them to the CY 2015 default CCRs.
These proposed CCRs represent the ratio of total costs to total charges
for those cost centers relevant to outpatient services from each
hospital's most recently submitted cost report, weighted by Medicare
Part B charges. We also are proposing to adjust ratios from submitted
cost reports to reflect the final settled status by applying the
differential between settled to submitted overall CCRs for the cost
centers relevant to outpatient services from the most recent pair of
final settled and submitted cost reports. We then are proposing to
weight each hospital's CCR by the volume of separately paid line-items
on hospital claims corresponding to the year of the majority of cost
reports used to calculate the overall CCRs. We refer readers to the CY
2008 OPPS/ASC final rule with comment period (72 FR 66680 through
66682) and prior OPPS rules for a more detailed discussion of our
established methodology for calculating the statewide average default
CCRs, including the hospitals used in our calculations and our trimming
criteria.
For Maryland, we used an overall weighted average CCR for all
hospitals in the Nation as a substitute for Maryland CCRs. Few
hospitals in Maryland are eligible to receive payment under the OPPS,
which limits the data available to calculate an accurate and
representative CCR. The weighted CCR is used for Maryland because it
takes into account each hospital's volume, rather than treating each
hospital equally. We refer readers to the CY 2005 OPPS final rule with
comment period (69 FR 65822) for further discussion and the rationale
for our longstanding policy of using the national average CCR for
Maryland. In general, observed changes in the statewide average default
CCRs between CY 2015 and CY 2016 are modest and the few significant
changes are associated with areas that have a small number of
hospitals.
Table 11 below lists the proposed statewide average default CCRs
for OPPS services furnished on or after January 1, 2016.

[[Page 39243]]

Table 11--Proposed CY 2016 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
Previous
Proposed CY default CCR
State Urban/Rural 2016 default (CY 2015 OPPS
CCR Final Rule)
----------------------------------------------------------------------------------------------------------------
ALABAMA....................................... RURAL........................... 0.226 0.235
ALABAMA....................................... URBAN........................... 0.172 0.186
ALASKA........................................ RURAL........................... 0.592 0.439
ALASKA........................................ URBAN........................... 0.286 0.294
ARIZONA....................................... RURAL........................... 0.224 0.228
ARIZONA....................................... URBAN........................... 0.176 0.181
ARKANSAS...................................... RURAL........................... 0.261 0.262
ARKANSAS...................................... URBAN........................... 0.222 0.239
CALIFORNIA.................................... RURAL........................... 0.180 0.178
CALIFORNIA.................................... URBAN........................... 0.196 0.196
COLORADO...................................... RURAL........................... 0.381 0.410
COLORADO...................................... URBAN........................... 0.212 0.219
CONNECTICUT................................... RURAL........................... 0.337 0.339
CONNECTICUT................................... URBAN........................... 0.267 0.273
DELAWARE...................................... URBAN........................... 0.316 0.314
DISTRICT OF COLUMBIA.......................... URBAN........................... 0.307 0.299
FLORIDA....................................... RURAL........................... 0.169 0.180
FLORIDA....................................... URBAN........................... 0.154 0.156
GEORGIA....................................... RURAL........................... 0.253 0.256
GEORGIA....................................... URBAN........................... 0.211 0.211
HAWAII........................................ RURAL........................... 0.339 0.337
HAWAII........................................ URBAN........................... 0.310 0.307
IDAHO......................................... RURAL........................... 0.357 0.353
IDAHO......................................... URBAN........................... 0.491 0.463
ILLINOIS...................................... RURAL........................... 0.251 0.252
ILLINOIS...................................... URBAN........................... 0.220 0.217
INDIANA....................................... RURAL........................... 0.332 0.334
INDIANA....................................... URBAN........................... 0.256 0.262
IOWA.......................................... RURAL........................... 0.308 0.321
IOWA.......................................... URBAN........................... 0.259 0.269
KANSAS........................................ RURAL........................... 0.302 0.300
KANSAS........................................ URBAN........................... 0.219 0.231
KENTUCKY...................................... RURAL........................... 0.223 0.231
KENTUCKY...................................... URBAN........................... 0.217 0.212
LOUISIANA..................................... RURAL........................... 0.264 0.272
LOUISIANA..................................... URBAN........................... 0.213 0.209
MAINE......................................... RURAL........................... 0.465 0.430
MAINE......................................... URBAN........................... 0.415 0.432
MARYLAND...................................... RURAL........................... 0.290 0.296
MARYLAND...................................... URBAN........................... 0.241 0.244
MASSACHUSETTS................................. RURAL........................... 0.325 0.326
MASSACHUSETTS................................. URBAN........................... 0.337 0.333
MICHIGAN...................................... RURAL........................... 0.339 0.371
MICHIGAN...................................... URBAN........................... 0.316 0.320
MINNESOTA..................................... RURAL........................... 0.473 0.485
MINNESOTA..................................... URBAN........................... 0.351 0.347
MISSISSIPPI................................... RURAL........................... 0.240 0.247
MISSISSIPPI................................... URBAN........................... 0.177 0.181
MISSOURI...................................... RURAL........................... 0.248 0.267
MISSOURI...................................... URBAN........................... 0.259 0.274
MONTANA....................................... RURAL........................... 0.459 0.501
MONTANA....................................... URBAN........................... 0.386 0.386
NEBRASKA...................................... RURAL........................... 0.280 0.290
NEBRASKA...................................... URBAN........................... 0.245 0.255
NEVADA........................................ RURAL........................... 0.221 0.241
NEVADA........................................ URBAN........................... 0.150 0.149
NEW HAMPSHIRE................................. RURAL........................... 0.383 0.362
NEW HAMPSHIRE................................. URBAN........................... 0.310 0.280
NEW JERSEY.................................... URBAN........................... 0.200 0.202
NEW MEXICO.................................... RURAL........................... 0.267 0.296
NEW MEXICO.................................... URBAN........................... 0.295 0.294
NEW YORK...................................... RURAL........................... 0.331 0.333
NEW YORK...................................... URBAN........................... 0.314 0.340
NORTH CAROLINA................................ RURAL........................... 0.280 0.280
NORTH CAROLINA................................ URBAN........................... 0.245 0.246
NORTH DAKOTA.................................. RURAL........................... 0.443 0.660
NORTH DAKOTA.................................. URBAN........................... 0.357 0.395
OHIO.......................................... RURAL........................... 0.301 0.317
OHIO.......................................... URBAN........................... 0.216 0.222

[[Page 39244]]

OKLAHOMA...................................... RURAL........................... 0.252 0.282
OKLAHOMA...................................... URBAN........................... 0.198 0.203
OREGON........................................ RURAL........................... 0.267 0.287
OREGON........................................ URBAN........................... 0.366 0.352
PENNSYLVANIA.................................. RURAL........................... 0.282 0.283
PENNSYLVANIA.................................. URBAN........................... 0.195 0.197
PUERTO RICO................................... URBAN........................... 0.596 0.577
RHODE ISLAND.................................. URBAN........................... 0.298 0.297
SOUTH CAROLINA................................ RURAL........................... 0.193 0.191
SOUTH CAROLINA................................ URBAN........................... 0.211 0.207
SOUTH DAKOTA.................................. RURAL........................... 0.366 0.286
SOUTH DAKOTA.................................. URBAN........................... 0.225 0.214
TENNESSEE..................................... RURAL........................... 0.203 0.203
TENNESSEE..................................... URBAN........................... 0.180 0.188
TEXAS......................................... RURAL........................... 0.249 0.251
TEXAS......................................... URBAN........................... 0.183 0.203
UTAH.......................................... RURAL........................... 0.476 0.481
UTAH.......................................... URBAN........................... 0.336 0.335
VERMONT....................................... RURAL........................... 0.437 0.439
VERMONT....................................... URBAN........................... 0.352 0.353
VIRGINIA...................................... RURAL........................... 0.205 0.219
VIRGINIA...................................... URBAN........................... 0.258 0.241
WASHINGTON.................................... RURAL........................... 0.351 0.300
WASHINGTON.................................... URBAN........................... 0.323 0.330
WEST VIRGINIA................................. RURAL........................... 0.313 0.312
WEST VIRGINIA................................. URBAN........................... 0.311 0.300
WISCONSIN..................................... RURAL........................... 0.325 0.328
WISCONSIN..................................... URBAN........................... 0.292 0.294
WYOMING....................................... RURAL........................... 0.441 0.429
WYOMING....................................... URBAN........................... 0.311 0.262
----------------------------------------------------------------------------------------------------------------

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

In the CY 2006 OPPS final rule with comment period (70 FR 68556),
we finalized a payment increase for rural SCHs of 7.1 percent for all
services and procedures paid under the OPPS, excluding drugs,
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the
Act, as added by section 411 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173).
Section 1833(t)(13) of the Act provided the Secretary the authority to
make an adjustment to OPPS payments for rural hospitals, effective
January 1, 2006, if justified by a study of the difference in costs by
APC between hospitals in rural areas and hospitals in urban areas. Our
analysis showed a difference in costs for rural SCHs. Therefore, for
the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of
7.1 percent for all services and procedures paid under the OPPS,
excluding separately payable drugs and biologicals, brachytherapy
sources, and devices paid under the pass-through payment policy, in
accordance with section 1833(t)(13)(B) of the Act.
In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010
and 68227), for purposes of receiving this rural adjustment, we revised
Sec. 419.43(g) of the regulations to clarify that EACHs also are
eligible to receive the rural SCH adjustment, assuming these entities
otherwise meet the rural adjustment criteria. Currently, two hospitals
are classified as EACHs, and as of CY 1998, under section 4201(c) of
Public Law 105-33, a hospital can no longer become newly classified as
an EACH.
This adjustment for rural SCHs is budget neutral and applied before
calculating outlier payments and copayments. We stated in the CY 2006
OPPS final rule with comment period (70 FR 68560) that we would not
reestablish the adjustment amount on an annual basis, but we may review
the adjustment in the future and, if appropriate, would revise the
adjustment. We provided the same 7.1 percent adjustment to rural SCHs,
including EACHs, again in CYs 2008 through 2015. Further, in the CY
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated
the regulations at Sec. 419.43(g)(4) to specify, in general terms,
that items paid at charges adjusted to costs by application of a
hospital-specific CCR are excluded from the 7.1 percent payment
adjustment.
For the CY 2016 OPPS, we are proposing to continue our policy of a
7.1 percent payment adjustment that is done in a budget neutral manner
for rural SCHs, including EACHs, for all services and procedures paid
under the OPPS, excluding separately payable drugs and biologicals,
devices paid under the pass-through payment policy, and items paid at
charges reduced to costs.

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

1. Background
Since the inception of the OPPS, which was authorized by the
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid
the 11 hospitals that meet the criteria for cancer hospitals identified
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered
outpatient hospital services. These cancer hospitals are exempted from
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced
Budget Refinement Act

[[Page 39245]]

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 in amount under the OPPS than the
payment amount 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 or 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. For CY 2015, the
target PCR was 0.90, as discussed in the CY 2015 OPPS/ASC final rule
with comment period correction notice (80 FR 9629).
2. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2016
For CY 2016, we are proposing to continue our policy to provide
additional payments to the 11 specified cancer hospitals so that each
cancer hospital's final PCR is equal to the weighted average PCR (or
``target PCR'') for the other OPPS hospitals using the most recent
submitted or settled cost report data that are available at the time of
the development of this proposed rule. To calculate the proposed CY
2016 target PCR, we used the same extract of cost report data from
HCRIS, as discussed in section II.A. of this proposed rule, used to
estimate costs for the CY 2016 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 2014 claims
data that we used to model the impact of the proposed CY 2016 APC
relative payment weights (3,794 hospitals) because it is appropriate to
use the same set of hospitals that we are using to calibrate the
modeled CY 2016 OPPS. The cost report data for the hospitals in this
dataset were from cost report periods with fiscal year ends ranging
from 2013 to 2014. 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 18 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 3,729
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 90 percent of reasonable cost
(weighted average PCR of 0.90). Therefore, we are proposing that the
payment amount associated with the cancer hospital payment adjustment
to be determined at cost report settlement would be the additional
payment needed to result in a proposed target PCR equal to 0.90 for
each cancer hospital. Table 12 below indicates the proposed estimated
percentage increase in OPPS payments to each cancer hospital for CY
2016 due to the cancer hospital payment adjustment policy.
The actual amount of the CY 2016 cancer hospital payment adjustment
for each cancer hospital will be determined at cost report settlement
and will depend on each hospital's CY 2016 payments and costs. We note
that the requirements contained in 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.

[[Page 39246]]

Table 12--Estimated CY 2016 Hospital-Specific Payment Adjustment for Cancer Hospitals To Be Provided at Cost
Report Settlement
----------------------------------------------------------------------------------------------------------------
Estimated
percentage
Provider number Hospital name increase in
OPPS payments
for CY 2016
----------------------------------------------------------------------------------------------------------------
050146................................... City of Hope Comprehensive Cancer Center............. 19.0
050660................................... USC Norris Cancer Hospital........................... 19.3
100079................................... Sylvester Comprehensive Cancer Center................ 22.3
100271................................... H. Lee Moffitt Cancer Center & Research Institute.... 24.5
220162................................... Dana-Farber Cancer Institute......................... 47.8
330154................................... Memorial Sloan-Kettering Cancer Center............... 42.4
330354................................... Roswell Park Cancer Institute........................ 19.2
360242................................... James Cancer Hospital & Solove Research Institute.... 32.5
390196................................... Fox Chase Cancer Center.............................. 21.0
450076................................... M.D. Anderson Cancer Center.......................... 47.7
500138................................... Seattle Cancer Care Alliance......................... 53.9
----------------------------------------------------------------------------------------------------------------

G. Proposed Hospital Outpatient Outlier Payments

1. Background
The OPPS provides outlier payments to hospitals to help mitigate
the financial risk associated with high-cost and complex procedures,
where a very costly service could present a hospital with significant
financial loss. As explained in the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66832 through 66834), 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 2015, 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 $2,775 (the fixed-dollar
amount threshold) (79 FR 66834). If the cost of a service exceeds both
the multiplier threshold and the fixed-dollar threshold, the outlier
payment is calculated as 50 percent of the amount by which the cost of
furnishing the service exceeds 1.75 times the APC payment amount.
Beginning with CY 2009 payments, outlier payments are subject to a
reconciliation process similar to the IPPS outlier reconciliation
process for cost reports, as discussed in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68594 through 68599).
It has been our policy to report the actual amount of outlier
payments as a percent of total spending in the claims being used to
model the proposed OPPS. Our current estimate of total outlier payments
as a percent of total CY 2014 OPPS payment, using available CY 2014
claims and the OPPS expenditure estimate for the FY 2016 President's
Budget, is approximately 0.9 percent of the total aggregated OPPS
payments. Therefore, for CY 2014, we estimate that we paid 1.0 percent
below the CY 2014 outlier target of 1.0 percent of total aggregated
OPPS payments.
Using CY 2014 claims data and CY 2015 payment rates, we currently
estimate that the aggregate outlier payments for CY 2015 will be
approximately 0.95 percent of the total CY 2015 OPPS payments. The
difference between 0.9 percent and the 1.0 percent target is reflected
in the regulatory impact analysis in section XX. of this proposed rule.
We provide estimated CY 2016 outlier payments for hospitals and CMHCs
with claims included in the claims data that we used to model impacts
in the Hospital-Specific Impacts--Provider-Specific Data file on the
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Proposed Outlier Calculation
For CY 2016, we are proposing to continue our policy of estimating
outlier payments to be 1.0 percent of the estimated aggregate total
payments under the OPPS. We are proposing that a portion of that 1.0
percent, an amount equal to 0.49 percent of outlier payments (or 0.0049
percent of total OPPS payments) would be allocated to CMHCs for PHP
outlier payments. This is the amount of estimated outlier payments that
would result from the proposed CMHC outlier threshold as a proportion
of total estimated OPPS outlier payments. As discussed in section
VIII.D. of this proposed rule, for CMHCs, we are proposing to continue
our longstanding policy that if a CMHC's cost for partial
hospitalization services, paid under either proposed renumbered APC
5851 (Level 1 Partial Hospitalization (3 services) for CMHCs) (existing
APC 0172) or proposed renumbered APC 5852 (Level 2 Partial
Hospitalization (4 or more services) for CMHCs) (existing APC 0173),
exceeds 3.40 times the payment rate for proposed renumbered APC 5852,
the outlier payment would be calculated as 50 percent of the amount by
which the cost exceeds 3.40 times the proposed renumbered APC 5852
payment rate. For further discussion of CMHC outlier payments, we refer
readers to section VIII.D. of this proposed rule.
To ensure that the estimated CY 2016 aggregate outlier payments
would equal 1.0 percent of estimated aggregate total payments under the
OPPS, we are proposing that the hospital outlier threshold be set so
that outlier payments would be triggered when a hospital's cost of
furnishing a service exceeds 1.75 times the APC payment amount and
exceeds the APC payment amount plus $3,650.
We calculated the proposed fixed-dollar threshold of $3,650 using
the standard methodology most recently used for CY 2015 (79 FR 66833
through 66834). For purposes of estimating outlier payments for this
proposed rule, we used the hospital-specific overall ancillary CCRs
available in the April 2015 update to the Outpatient Provider-Specific
File (OPSF). The OPSF contains provider-specific data, such as the most
current CCRs, which are

[[Page 39247]]

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 2016 hospital outlier payments for this
proposed rule, we inflated the charges on the CY 2014 claims using the
same inflation factor of 1.0985 that we used to estimate the IPPS
fixed-dollar outlier threshold for the FY 2016 IPPS/LTCH PPS proposed
rule (80 FR 24632 through 24633). We used an inflation factor of 1.0481
to estimate CY 2015 charges from the CY 2014 charges reported on CY
2014 claims. The methodology for determining this charge inflation
factor is discussed in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR
24632). As we stated in the CY 2005 OPPS final rule with comment period
(69 FR 65845), we believe that the use of these charge inflation
factors are appropriate for the OPPS because, with the exception of the
inpatient routine service cost centers, hospitals use the same
ancillary and outpatient cost centers to capture costs and charges for
inpatient and outpatient services.
As noted in the CY 2007 OPPS/ASC final rule with comment period (71
FR 68011), we are concerned that we could systematically overestimate
the OPPS hospital outlier threshold if we did not apply a CCR inflation
adjustment factor. Therefore, we are proposing to apply the same CCR
inflation adjustment factor that we are proposing to apply for the FY
2016 IPPS outlier calculation to the CCRs used to simulate the proposed
CY 2016 OPPS outlier payments to determine the fixed-dollar threshold.
Specifically, for CY 2016, we are proposing to apply an adjustment
factor of 0.9795 to the CCRs that were in the April 2015 OPSF to trend
them forward from CY 2015 to CY 2016. The methodology for calculating
this proposed adjustment is discussed in the FY 2016 IPPS/LTCH PPS
proposed rule (80 FR 24633).
To model hospital outlier payments for this proposed rule, we
applied the overall CCRs from the April 2015 OPSF after adjustment
(using the proposed CCR inflation adjustment factor of 0.9795 to
approximate CY 2016 CCRs) to charges on CY 2014 claims that were
adjusted (using the proposed charge inflation factor of 1.0985 to
approximate CY 2016 charges). We simulated aggregated CY 2016 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 2016 OPPS payments. We
estimated that a proposed fixed-dollar threshold of $3,650, combined
with the proposed multiple threshold of 1.75 times the APC payment
rate, would allocate 1.0 percent of aggregated total OPPS payments to
outlier payments. For CMHCs, we are proposing that, if a CMHC's cost
for partial hospitalization services, paid under either proposed
renumbered APC 5851 (existing APC 0172) or proposed renumbered APC 5852
(existing APC 0173), exceeds 3.40 times the payment rate for proposed
renumbered 5852, the outlier payment would be calculated as 50 percent
of the amount by which the cost exceeds 3.40 times the proposed
renumbered APC 5852 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
section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point
reduction to their OPD fee schedule increase factor; that is, the
annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that will apply to certain outpatient items and services
furnished by hospitals that are required to report outpatient quality
data and that fail to meet the Hospital OQR Program requirements. For
hospitals that fail to meet the Hospital OQR Program requirements, we
are proposing to continue the policy that we implemented in CY 2010
that the hospitals' costs will be compared to the reduced payments for
purposes of outlier eligibility and payment calculation. For more
information on the Hospital OQR Program, we refer readers to section
XIII. of this proposed rule.

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

The basic methodology for determining prospective payment rates for
HOPD services under the OPPS is set forth in existing regulations at 42
CFR part 419, subparts C and D. For this CY 2016 OPPS/ASC proposed
rule, the proposed payment rate for most services and procedures for
which payment is made under the OPPS is the product of the proposed
conversion factor calculated in accordance with section II.B. of this
proposed rule and the proposed relative payment weight determined under
section II.A. of this proposed rule. Therefore, the proposed national
unadjusted payment rate for most APCs contained in Addendum A to this
proposed rule (which is available via the Internet on the CMS Web site)
and for most HCPCS codes to which separate payment under the OPPS has
been assigned in Addendum B to this proposed rule (which is available
via the Internet on the CMS Web site) was calculated by multiplying the
proposed CY 2016 scaled weight for the APC by the proposed CY 2016
conversion factor.
We note that section 1833(t)(17) of the Act, which applies to
hospitals as defined under section 1886(d)(1)(B) of the Act, requires
that hospitals that fail to submit data required to be submitted on
quality measures selected by the Secretary, in the form and manner and
at a time specified by the Secretary, incur a reduction of 2.0
percentage points to their OPD fee schedule increase factor, that is,
the annual payment update factor. The application of a reduced OPD fee
schedule increase factor results in reduced national unadjusted payment
rates that apply to certain outpatient items and services provided by
hospitals that are required to report outpatient quality data and that
fail to meet the Hospital OQR Program (formerly referred to as the
Hospital Outpatient Quality Data Reporting Program (HOP QDRP))
requirements. For further discussion of the payment reduction for
hospitals that fail to meet the requirements of the Hospital OQR
Program, we refer readers to section XIII. of this proposed rule.
We demonstrate below 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,'' ``J2,''
``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V'' (as
defined in Addendum D1 to this proposed rule, which is available via
the Internet on the CMS Web site), in a circumstance in which the
multiple procedure discount does not apply, the procedure is not
bilateral, and conditionally packaged services (status indicator of
``Q1'' and ``Q2'') qualify for separate payment. We note that, although
blood and blood products with status indicator ``R'' and brachytherapy
sources with status indicator ``U'' are not subject to wage adjustment,
they are subject to reduced payments when a hospital fails to meet the
Hospital OQR Program

[[Page 39248]]

requirements. We note that, in the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66799), we created new status indicator ``J1'' to
reflect the comprehensive APCs discussed in section II.A.2.e. of this
proposed rule. We also note that we deleted status indicator ``X'' as
part of the CY 2015 packaging policy for ancillary services, discussed
in section II.A.3. of this proposed rule. We are proposing to create
new status indicator ``J2'' to reflect the new C-APC 8011
(Comprehensive Observation Services) proposed in this CY 2016 proposed
rule, as discussed in section II.A.2.e.(2) of this proposed rule.
Individual providers interested in calculating the payment amount
that they would receive for a specific service from the national
unadjusted payment rates presented in Addenda A and B to this proposed
rule (which are available via the Internet on the CMS Web site) should
follow the formulas presented in the following steps. For purposes of
the payment calculations below, we refer to the proposed national
unadjusted payment rate for hospitals that meet the requirements of the
Hospital OQR Program as the ``full'' national unadjusted payment rate.
We refer to the proposed national unadjusted payment rate for hospitals
that fail to meet the requirements of the Hospital OQR Program as the
``reduced'' national unadjusted payment rate. The reduced national
unadjusted payment rate is calculated by multiplying the reporting
ratio of 0.980 times the ``full'' national unadjusted payment rate. The
proposed national unadjusted payment rate used in the calculations
below is either the full national unadjusted payment rate or the
reduced national unadjusted payment rate, depending on whether the
hospital met its Hospital OQR Program requirements in order to receive
the proposed full CY 2016 OPPS fee schedule increase factor of 1.9
percent.
Step 1. Calculate 60 percent (the labor-related portion) of the
national unadjusted payment rate. Since the initial implementation of
the OPPS, we have used 60 percent to represent our estimate of that
portion of costs attributable, on average, to labor. We refer readers
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496
through 18497) for a detailed discussion of how we derived this
percentage. During our regression analysis for the payment adjustment
for rural hospitals in the CY 2006 OPPS final rule with comment period
(70 FR 68553), we confirmed that this labor-related share for hospital
outpatient services is appropriate.

The formula below is a mathematical representation of Step 1 and
identifies the labor-related portion of a specific payment rate for a
specific service.

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

Step 2. Determine the wage index area in which the hospital is
located and identify the wage index level that applies to the specific
hospital. We note that under the proposed CY 2016 OPPS policy for
continuing to use the OMB labor market area delineations based on the
2010 Decennial Census data for the wage indexes used under the IPPS, a
hold harmless policy for the wage index may apply, as discussed in
section II.C. of this proposed rule. The proposed wage index values
assigned to each area reflect the geographic statistical areas (which
are based upon OMB standards) to which hospitals are proposed to be
assigned for FY 2016 under the IPPS, reclassifications through the
MGCRB, section 1886(d)(8)(B) ``Lugar'' hospitals, reclassifications
under section 1886(d)(8)(E) of the Act, as defined in Sec. 412.103 of
the regulations, and hospitals designated as urban under section 601(g)
of Pub. L. 98-21. (For further discussion of the proposed changes to
the FY 2016 IPPS wage indexes, as applied to the CY 2016 OPPS, we refer
readers to section II.C. of this proposed rule.) We are proposing to
continue to apply a wage index floor of 1.00 to frontier States, in
accordance with section 10324 of the Affordable Care Act of 2010.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index, in accordance with section 505 of Public Law
108-173. Addendum L to this proposed rule (which is available via the
Internet on the CMS Web site) contains the qualifying counties and the
proposed associated wage index increase developed for the FY 2016 IPPS,
which are listed in Table 4J in the FY 2016 IPPS/LTCH PPS proposed rule
and available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. This step is to be followed only if the
hospital is not reclassified or redesignated under section 1886(d)(8)
or section 1886(d)(10) of the Act.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
The formula below is a mathematical representation of Step 4 and
adjusts the labor-related portion of the national unadjusted payment
rate for the specific service by the wage index.

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

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

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

Step 6. If a provider is an SCH, 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
proposed 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 proposed
renumbered APC 5072 (Level 2 Excision/Biopsy/Incision and Drainage)
(existing APC 0019). The proposed CY 2016 full national unadjusted
payment rate for APC 5072 is approximately $486.16. The proposed
reduced national unadjusted payment rate for proposed renumbered APC
5072 for a hospital

[[Page 39249]]

that fails to meet the Hospital OQR Program requirements is
approximately $476.44. This proposed reduced rate is calculated by
multiplying the proposed reporting ratio of 0.980 by the proposed full
unadjusted payment rate for proposed renumbered APC 5072.
The proposed FY 2016 wage index for a provider located in CBSA
35614 in New York is 1.2998. The labor-related portion of the proposed
full national unadjusted payment is approximately $379.15 (.60 *
$486.16 * 1.2998). The labor-related portion of the proposed reduced
national unadjusted payment is approximately $371.57 (.60 * $476.44*
1.2998). The nonlabor-related portion of the proposed full national
unadjusted payment is approximately $194.46 (.40 * $486.16). The
nonlabor-related portion of the proposed reduced national unadjusted
payment is approximately $190.58 (.40 * $476.44). The sum of the labor-
related and nonlabor-related portions of the proposed full national
adjusted payment is approximately $573.61 ($379.15 + $194.46). The sum
of the portions of the proposed reduced national adjusted payment is
approximately $562.15 ($371.57 + $190.58).

I. Proposed Beneficiary Copayments

1. Background
Section 1833(t)(3)(B) of the Act requires the Secretary to set
rules for determining the unadjusted copayment amounts to be paid by
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of
the Act specifies that the Secretary must reduce the national
unadjusted copayment amount for a covered OPD service (or group of such
services) furnished in a year in a manner so that the effective
copayment rate (determined on a national unadjusted basis) for that
service in the year does not exceed a specified percentage. As
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective
copayment rate for a covered OPD service paid under the OPPS in CY
2006, and in calendar years thereafter, shall not exceed 40 percent of
the APC payment rate.
Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered
OPD service (or group of such services) furnished in a year, the
national unadjusted copayment amount cannot be less than 20 percent of
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the
Act limits the amount of beneficiary copayment that may be collected
for a procedure performed in a year to the amount of the inpatient
hospital deductible for that year.
Section 4104 of the Affordable Care Act eliminated the Part B
coinsurance for preventive services furnished on and after January 1,
2011, that meet certain requirements, including flexible
sigmoidoscopies and screening colonoscopies, and waived the Part B
deductible for screening colonoscopies that become diagnostic during
the procedure. Our discussion of the changes made by the Affordable
Care Act with regard to copayments for preventive services furnished on
and after January 1, 2011, may be found in section XII.B. of the CY
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. Proposed OPPS Copayment Policy
For CY 2016, we are proposing to determine copayment amounts for
new and revised APCs using the same methodology that we implemented
beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS
final rule with comment period (68 FR 63458).) In addition, we are
proposing to use the same standard rounding principles that we have
historically used in instances where the application of our standard
copayment methodology would result in a copayment amount that is less
than 20 percent and cannot be rounded, under standard rounding
principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66687) in which we discuss our
rationale for applying these rounding principles.) The proposed
national unadjusted copayment amounts for services payable under the
OPPS that would be effective January 1, 2016, are shown in Addenda A
and B to this proposed rule (which are available via the Internet on
the CMS Web site). As discussed in section XIII.E. of this proposed
rule, for CY 2016, the proposed Medicare beneficiary's minimum
unadjusted copayment and national unadjusted copayment for a service to
which a reduced national unadjusted payment rate applies will equal the
product of the reporting ratio and the national unadjusted copayment,
or the product of the reporting ratio and the minimum unadjusted
copayment, respectively, for the service.
We note that OPPS copayments may increase or decrease each year
based on changes in the calculated APC payment rates due to updated
cost report and claims data, and any changes to the OPPS cost modeling
process. However, as described in the CY 2004 OPPS 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).
In the CY 2004 OPPS final rule with comment period (68 FR 63459),
we adopted a new methodology to calculate unadjusted copayment amounts
in situations including reorganizing APCs, and we finalized the
following rules to determine copayment amounts in CY 2004 and
subsequent years.
When an APC group consists solely of HCPCS codes that were
not paid under the OPPS the prior year because they were packaged or
excluded or are new codes, the unadjusted copayment amount would be 20
percent of the APC payment rate.
If a new APC that did not exist during the prior year is
created and consists of HCPCS codes previously assigned to other APCs,
the copayment amount is calculated as the product of the APC payment
rate and the lowest coinsurance percentage of the codes comprising the
new APC.
If no codes are added to or removed from an APC and, after
recalibration of its relative payment weight, the new payment rate is
equal to or greater than the prior year's rate, the copayment amount
remains constant (unless the resulting coinsurance percentage is less
than 20 percent).
If no codes are added to or removed from an APC and, after
recalibration of its relative payment weight, the new payment rate is
less than the prior year's rate, the copayment amount is calculated as
the product of the new payment rate and the prior year's coinsurance
percentage.
If HCPCS codes are added to or deleted from an APC, and,
after recalibrating its relative payment weight, holding its unadjusted
copayment amount constant results in a decrease in the coinsurance
percentage for the reconfigured APC, the copayment amount would not
change (unless retaining the copayment amount would result in a
coinsurance rate less than 20 percent).
If HCPCS codes are added to an APC, and, after
recalibrating its relative payment weight, holding its unadjusted
copayment amount constant results in an increase in the coinsurance
percentage for the reconfigured APC, the copayment amount would be
calculated as the product of the payment rate of the reconfigured APC
and the lowest coinsurance percentage of the codes being added to the
reconfigured APC.
We noted in that CY 2004 OPPS final rule with comment period that
we would seek to lower the copayment percentage for a service in an APC
from the prior year if the copayment percentage was greater than 20
percent.

[[Page 39250]]

We noted that this principle was consistent with section
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the
national unadjusted coinsurance rate so that beneficiary liability will
eventually equal 20 percent of the OPPS payment rate for all OPPS
services to which a copayment applies, and with section 1833(t)(3)(B)
of the Act, which is consistent with the Congressional goal of
achieving a 20-percent copayment percentage when fully phased in and
gives the Secretary the authority to set rules for determining
copayment amounts for new services. We further noted that the use of
this methodology would, in general, reduce the beneficiary coinsurance
rate and copayment amount for APCs for which the payment rate changes
as the result of the reconfiguration of APCs and/or recalibration of
relative payment weights (68 FR 63459). We believe the proposed
reorganization of APCs discussed in section III.D. of this proposed
rule hastens this movement toward copayments equal to 20 percent of an
APC for reorganized APCs that previously had copayment percentages
greater than 20 percent.
3. Proposed Calculation of an Adjusted Copayment Amount for an APC
Group
Individuals interested in calculating the national copayment
liability for a Medicare beneficiary for a given service provided by a
hospital that met or failed to meet its Hospital OQR Program
requirements should follow the formulas presented in the following
steps.
Step 1. Calculate the beneficiary payment percentage for the APC by
dividing the APC's national unadjusted copayment by its payment rate.
For example, using proposed renumbered APC 5072 (existing APC 0019),
$97.50 is approximately 20 percent of the proposed full national
unadjusted payment rate of $486.16. For APCs with only a minimum
unadjusted copayment in Addenda A and B to this proposed rule (which
are available via the Internet on the CMS Web site), the beneficiary
payment percentage is 20 percent.
The formula below is a mathematical representation of Step 1 and
calculates the national copayment as a percentage of national payment
for a given service.

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

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

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

Step 4. For a hospital that failed to meet its Hospital OQR Program
requirements, multiply the copayment calculated in Step 3 by the
reporting ratio of 0.980.
The proposed unadjusted copayments for services payable under the
OPPS that would be effective January 1, 2016, are shown in Addenda A
and B to this proposed rule (which are available via the Internet on
the CMS Web site). We note that the proposed national unadjusted
payment rates and copayment rates shown in Addenda A and B to this
proposed rule reflect the proposed full CY 2016 OPD fee schedule
increase factor discussed in section II.B. of this proposed rule.
In addition, as noted above, section 1833(t)(8)(C)(i) of the Act
limits the amount of beneficiary copayment that may be collected for a
procedure performed in a year to the amount of the inpatient hospital
deductible for that year.

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

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

CPT and Level II HCPCS codes are used to report procedures,
services, items, and supplies under the hospital OPPS. Specifically,
CMS recognizes the following codes on OPPS claims:
Category I CPT codes, which describe surgical procedures
and medical services;
Category III CPT codes, which describe new and emerging
technologies, services, and procedures; and
Level II HCPCS codes, which are used primarily to identify
products, supplies, temporary procedures, and services not described by
CPT codes.
CPT codes are established by the American Medical Association (AMA)
and the Level II HCPCS codes are established by the CMS HCPCS
Workgroup. These codes are updated and changed throughout the year. CPT
and HCPCS code changes that affect the OPPS are published both through
the annual rulemaking cycle and through the OPPS quarterly update
Change Requests (CRs). CMS releases new Level II HCPCS codes to the
public or recognizes the release of new CPT codes by the AMA and makes
these codes effective (that is, the codes can be reported on Medicare
claims) outside of the formal rulemaking process via OPPS quarterly
update CRs. Based on our review, we assign the new CPT and Level II
HCPCS codes to interim status indicator (SI) and APC assignments. These
interim assignments are finalized in the OPPS/ASC final rules. This
quarterly process offers hospitals access to codes that may more
accurately describe items or services furnished and provides payment or
more accurate payment for these items or services in a timelier manner
than if we waited for the annual rulemaking process. We solicit public
comments on these new codes and finalize our proposals related to these
codes through our annual rulemaking process.
We note that, under the OPPS, the APC assignment determines the
payment rate for an item, procedure, or service. For those items,
procedures, or services not paid separately under the hospital OPPS,
they are assigned to appropriate status indicators. Section XI. of this
proposed rule provides a discussion of the various status indicators
used under the OPPS. Certain payment indicators provide separate
payment while others do not.
In Table 13 below, we summarize our current process for updating
codes through our OPPS quarterly update CRs, seeking public comments,
and finalizing the treatment of these new codes under the OPPS.

[[Page 39251]]

Table 13--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
OPPS Quarterly update CR Type of code Effective date Comments sought When finalized
----------------------------------------------------------------------------------------------------------------
April l, 2015................... Level II HCPCS April 1, 2015..... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
July 1, 2015.................... Level II HCPCS July 1, 2015...... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
Category I July 1, 2015...... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
(certain vaccine proposed rule. final rule with
codes) and III comment period.
CPT codes.
October 1, 2015................. Level II HCPCS October 1, 2015... CY 2016 OPPS/ASC CY 2017 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
January 1, 2016................. Level II HCPCS January 1, 2016... CY 2016 OPPS/ASC CY 2017 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
Category I and III January 1, 2016... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
CPT Codes. proposed rule. final rule with
comment period.
----------------------------------------------------------------------------------------------------------------

This process is discussed in detail below. We have separated our
discussion into two sections based on whether we are soliciting public
comments in this CY 2016 OPPS/ASC proposed rule or whether we will be
soliciting public comments in the CY 2016 OPPS/ASC final rule with
comment period. We note that we sought public comments in the CY 2015
OPPS/ASC final rule with comment period on the interim APC and status
assignments for new CPT and Level II HCPCS codes that were effective
January 1, 2015. We also sought public comments in the CY 2015 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, 2014. These new and revised codes, with an effective date of October
1, 2014, or January 1, 2015, 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 2015
OPPS/ASC final rule with comment period to indicate that we were
assigning them an interim payment status and an APC and payment rate,
if applicable, and were subject to public comment following publication
of the CY 2015 OPPS/ASC final rule with comment period. We will respond
to public comments and finalize our interim OPPS treatment of these
codes in the CY 2016 OPPS/ASC final rule with comment period.
1. Proposed Treatment of New CY 2015 Level II HCPCS and CPT Codes
Effective April 1, 2015 and July 1, 2015 for Which We Are Soliciting
Public Comments in This CY 2016 OPPS/ASC Proposed Rule
Through the April 2015 OPPS quarterly update CR (Transmittal 3217,
Change Request 9097, dated March 13, 2015), and the July 2015 OPPS
quarterly update CR (Transmittal 3280, Change Request 9205, dated June
5, 2015), we recognized several new HCPCS codes for separate payment
under the OPPS.
Effective April 1, 2015, we made effective eight new Level II HCPCS
codes and also assigned them to appropriate interim OPPS status
indicators and APCs. Through the April 2015 OPPS quarterly update CR,
we allowed separate payment for eight new Level II HCPCS codes.
Specifically, as displayed in Table 14 below, we provided separate
payment for HCPCS codes C2623, C9445, C9448, C9449, C9450, C9451,
C9452, and Q9975. We note that HCPCS code C9448 was deleted on June 30,
2015, and replaced with HCPCS code Q9978, effective July 1, 2015.

Table 14--New Level II HCPCS Codes Implemented in April 2015
----------------------------------------------------------------------------------------------------------------
Proposed CY 2016
CY 2015 HCPCS Code CY 2015 Long descriptor Status indicator Proposed CY 2016 APC**
----------------------------------------------------------------------------------------------------------------
C2623................................. Catheter, transluminal H..................... 2623
angioplasty, drug-
coated, non-laser.
C9445................................. Injection, c-1 esterase G..................... 9445
inhibitor (human),
Ruconest, 10 units.
C9448................................ Netupitant 300mg and N/A................... N/A
palonosetron 0.5 mg,
oral.
C9449................................. Injection, blinatumomab, G..................... 9449
1 mcg.
C9450................................. Injection, fluocinolone G..................... 9450
acetonide intravitreal
implant, 0.01 mg.
C9451................................. Injection, peramivir, 1 G..................... 9451
mg.
C9452................................. Injection, ceftolozane G..................... 9452
50 mg and tazobactam,
25 mg.
Q9975*................................ Injection, Factor VIII, G..................... 1656
FC Fusion Protein
(Recombinant), per iu.
----------------------------------------------------------------------------------------------------------------
HCPCS code C9448 was deleted on June 30, 2015, and replaced with HCPCS code Q9978, effective July 1, 2015.
*HCPCS code Q9975 was replaced with HCPCS code C9136 (Injection, factor viii, fc fusion protein, (recombinant),
per i.u.), effective April 1, 2015.
**Addendum Q to this proposed rule (which is available via the Internet on the CMS Web site) contains a
crosswalk of the existing APC numbers to the proposed new APC numbers for CY 2016.

[[Page 39252]]

In this CY 2016 OPPS/ASC proposed rule, we are soliciting public
comments on the proposed APC and status indicator assignments, where
applicable, for the Level II HCPCS codes implemented on April 1, 2015
and listed in Table 14 of this proposed rule. The proposed payment
rates for these codes, where applicable, can be found in Addendum B to
this proposed rule (which is available via the Internet on the CMS Web
site).
Effective July 1, 2015, 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 2015 OPPS quarterly update
CR (Transmittal 3280, Change Request 9205, dated June 5, 2015), we
assigned interim OPPS status indicators and APCs for two new Category
III CPT codes and eight Level II HCPCS codes that were made effective
July 1, 2015. Specifically, as displayed in Table 15 below, we made
interim OPPS status indicators and APC assignments for Category III CPT
codes 0392T and 0393T, and Level II HCPCS codes C2613, C9453, C9454,
C9455, Q5101, Q9976, Q9977, and Q9978. Table 15 below lists the CPT and
Level II HCPCS codes that were implemented on July 1, 2015, along with
the proposed status indicators, proposed APC assignments, and proposed
payment rates, where applicable, for CY 2016.
We note that HCPCS code Q9978 replaced HCPCS code C9448 (Netupitant
300 mg and palonosetron 0.5 mg, oral), beginning July 1, 2015. HCPCS
code C9448 was made effective April 1, 2015, but the code was deleted
June 30, 2015, because it was replaced with HCPCS code Q9978. HCPCS
code C9448 was granted pass-through payment status when the code was
implemented on April 1, 2015. Because HCPCS code Q9978 describes the
same drug as HCPCS code C9448, we are proposing to continue the pass-
through payment status for HCPCS code Q9978, and assign the HCPCS Q-
code to the same APC and status indicator as its predecessor HCPCS C-
code, as shown in Table 15. Specifically, we are proposing to assign
HCPCS code Q9978 to APC 9448 (Netupitant Palonosetron Oral) and status
indicator ``G.''
In addition, the CPT Editorial Panel established CPT codes 0392T
and 0393T, effective July 1, 2015. We note that CPT code 0392T replaced
HCPCS code C9737 (Laparoscopy, surgical, esophageal sphincter
augmentation with device (e.g., magnetic band)), beginning July 1,
2015. Because CPT code 0392T describes the same procedure as HCPCS code
C9737, we are proposing to assign the CPT code to the same APC and
status indicator as its predecessor HCPCS C-code, as shown in Table 15.
In this CY 2016 OPPS/ASC proposed rule, we are soliciting public
comments on the proposed APC and status indicator assignments, where
applicable, for the CPT and Level II HCPCS codes implemented on July 1,
2015 and listed in Table 15 of this proposed rule.

Table 15--New Category III CPT and Level II HCPCS Codes Implemented in
July 2015
------------------------------------------------------------------------
Proposed CY Proposed CY
CY 2015 CPT/HCPCS Code CY 2015 Long 2016 Status 2016
descriptor indicator APC****
------------------------------------------------------------------------
C2613..................... Lung biopsy plug H 2613
with delivery
system.
C9453..................... Injection, G 9453
nivolumab, 1 mg.
C9454..................... Injection, G 9454
pasireotide long
acting, 1 mg.
C9455..................... Injection, G 9455
siltuximab, 10
mg.
Q5101*.................... Injection, E N/A
Filgrastim (G-
CSF),
Biosimilar, 1
microgram.
Q9976..................... Injection, Ferric E N/A
Pyrophosphate
Citrate
Solution, 0.1 mg
of iron.
Q9977..................... Compounded Drug, N N/A
Not Otherwise
Classified.
Q9978**................... Netupitant 300 mg G 9448
and Palonosetron
0.5 mg, oral.
0392T***.................. Laparoscopy, Q2 5362
surgical,
esophageal
sphincter
augmentation
procedure,
placement of
sphincter
augmentation
device (i.e.,
magnetic band).
0393T..................... Removal of Q2 5361
esophageal
sphincter
augmentation
device.
------------------------------------------------------------------------
*HCPCS code Q5101, Zarxio, was approved by the FDA on March 6, 2015. As
the biosimilar is currently not being marketed, pricing information is
not yet available. Once Zarxio is marketed we will make pricing
information available at the soonest possible date on the OPPS payment
files and payment for Zarxio will be retroactive to the date the
product is first marketed.
**HCPCS code C9448 (Netupitant 300 mg and palonosetron 0.5 mg, oral) was
deleted June 30, 2015, and replaced with HCPCS code Q9978, effective
July 1, 2015.
***HCPCS code C9737 (Laparoscopy, surgical, esophageal sphincter
augmentation with device (e.g., magnetic band) was deleted June 30,
2015 and replaced with CPT code 0392T, effective July 1, 2015.
****We refer readers to Addendum Q to this proposed rule (which is
available via the Internet on the CMS Web site) for a crosswalk of the
existing APC numbers to the proposed new APC numbers for CY 2016.

In summary, we are soliciting public comments on the proposed CY
2016 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, 2015, and July 1, 2015. These codes are listed in
Tables 14 and 15 of this proposed rule. We also are proposing to
finalize the status indicator and APC assignments and payment rates for
these codes, if applicable, in the CY 2016 OPPS/ASC final rule with
comment period. The proposed payment rates for these codes, where
applicable, can be found in Addendum B to this proposed rule (which is
available via the Internet on the CMS Web site).
2. Proposed Process for New Level II HCPCS Codes That Will Be Effective
October 1, 2015 and January 1, 2016 for Which We Will Be Soliciting
Public Comments in the CY 2016 OPPS/ASC Final Rule With Comment Period
As has been our practice in the past, we incorporate those new
Level II HCPCS codes that are effective January 1 in the final rule
with comment period, thereby updating the OPPS for the following
calendar year. These codes are released to the public via the CMS HCPCS
Web site, and also through the January OPPS quarterly update CRs. In
the past, we also 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,
thereby updating the OPPS for the following calendar year.
For CY 2016, we are proposing to continue our established policy of
assigning comment indicator ``NI'' in Addendum B to the OPPS/ASC final

[[Page 39253]]

rule with comment period to those new Level II HCPCS codes that are
effective October 1 and January 1 to indicate that we are assigning
them an interim payment status which is subject to public comment.
Specifically, the Level II HCPCS codes that will be effective October
1, 2015 and January 1, 2016 would be flagged with comment indicator
``NI'' in Addendum B to the CY 2016 OPPS/ASC final rule with comment
period to indicate that we have assigned the codes an interim OPPS
payment status for CY 2016. We will be inviting public comments in the
CY 2016 OPPS/ASC final rule with comment period on the status
indicator, APC assignments, and payment rates for these codes, if
applicable, that would be finalized in the CY 2017 OPPS/ASC final rule
with comment period.
3. Proposed Treatment of New and Revised CY 2016 Category I and III CPT
Codes That Will Be Effective January 1, 2016, for Which We Are
Soliciting Public Comments in This CY 2016 OPPS/ASC Proposed Rule
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841
through 66844), we finalized a revised process of assigning APC and
status indicators for new and revised Category I and III CPT codes that
would be effective January 1. Specifically, for the new/revised CPT
codes that we receive in a timely manner from the AMA's CPT Editorial
Panel, we finalized our proposal to include the 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/revised CPT codes that were
received too late for inclusion in the OPPS/ASC proposed rule, we
finalized our proposal to establish 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. Also, we finalized 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.
For the CY 2016 OPPS update, we received the CY 2016 CPT codes from
AMA in time for inclusion in this CY 2016 OPPS/ASC proposed rule. The
new and revised CY 2016 Category I and III CPT codes can be found in
OPPS Addendum B and assigned to new comment indicator ``NP'' to
indicate that the code is new for the next calendar year or the code is
an existing code with substantial revision to its code descriptor in
the next calendar year as compared to current calendar year with a
proposed APC assignment and that comments will be accepted on the
proposed APC assignment and status indicator. We refer readers to
section XI.B. of this CY 2016 OPPS/ASC proposed rule for further
discussion on the new proposed comment indicator ``NP.''
Further, we remind readers that the CPT code descriptors that
appear in Addendum B are short descriptors and do not accurately
describe the complete procedure, service, or item described by the CPT
code. Therefore, we are including the long descriptors for the new and
revised CY 2016 CPT codes in Addendum O to this proposed rule (which is
available via the Internet on the CMS Web site) so that the public can
adequately comment on our proposed APCs and status indicator
assignments. Because CPT procedure codes are 5 alpha-numeric characters
and CMS systems only utilize 5-character HCPCS codes, we have developed
alternative 5-character placeholder codes for this proposed rule. The
placeholder codes can be found in Addendum O, specifically under the
column labeled ``CY 2016 OPPS/ASC Proposed Rule 5-Digit CMS Placeholder
Code,'' to this proposed rule. The final CPT code numbers will be
included in the CY 2016 OPPS/ASC final rule with comment period. We
note that not every code listed in Addendum O is subject to comment.
For the new/revised Category I and III CPT codes, we are requesting
comments on only those codes that are assigned to comment indicator
``NP.'' Comments will not be accepted for new Category I CPT laboratory
codes that are not assigned to ``NP'' comment indicator in Addendum O.
Comments to these codes must be submitted at the Clinical Laboratory
Fee Schedule (CLFS) Public Meeting, which is scheduled for July 16,
2015.
In summary, we are soliciting public comments on the proposed CY
2016 status indicators and APC assignments for the new and revised
Category I and III CPT codes that will be effective January 1, 2016.
The CPT codes are listed in Addendum B to this proposed rule with short
descriptors only. We list them again in Addendum O to this proposed
rule with long descriptors. We also are proposing to finalize the
status indicator and APC assignments for these codes (with their final
CPT code numbers) in the CY 2016 OPPS/ASC final rule with comment
period. The proposed status indicator, and APC assignment and payment
rates for these codes, where applicable, can be found in Addendum B to
this proposed rule (which is available via the Internet on the CMS Web
site).

B. Proposed OPPS Changes--Variations Within APCs

1. Background
Section 1833(t)(2)(A) of the Act requires the Secretary to develop
a classification system for covered hospital outpatient department
services. Section 1833(t)(2)(B) of the Act provides that the Secretary
may establish groups of covered OPD services within this classification
system, so that services classified within each group are comparable
clinically and with respect to the use of resources. In accordance with
these provisions, we developed a grouping classification system,
referred to as Ambulatory Payment Classifications (APCs), as set forth
in Sec. 419.31 of the regulations. We use Level I and Level II HCPCS
codes to identify and group the services within each APC. The APCs are
organized such that each group is homogeneous both clinically and in
terms of resource use. Using this classification system, we have
established distinct groups of similar services. We also have developed
separate APC groups for certain medical devices, drugs, biologicals,
therapeutic radiopharmaceuticals, and brachytherapy devices that are
not packaged into the payment for the procedure.
We have packaged into the payment for each procedure or service
within an APC group the costs associated with those items and services
that are typically ancillary and supportive to a primary diagnostic or
therapeutic modality and, in those cases, are an integral part of the
primary service they

[[Page 39254]]

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 proposed rule.
Under the OPPS, we generally pay for hospital outpatient services
on a rate-per-service basis, where the service may be reported with one
or more HCPCS codes. Payment varies according to the APC group to which
the independent service or combination of services is assigned. For CY
2016, we are proposing that 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 proposed renumbered APC 5012
(Level 2 Examinations and Related Services) (existing APC 0632). The
APC relative payment weights are scaled to proposed renumbered APC 5012
because it is the hospital clinic visit APC and clinic visits are among
the most frequently furnished services in the hospital outpatient
setting. We note that, historically, we have proposed APC relative
payment weights relative to the hospital costs of services included in
existing APC 0634. In this proposed rule, we are proposing to reassign
HCPCS code G0463 (Hospital outpatient clinic visit for assessment and
management of a patient) from existing APC 0634 to proposed renumbered
APC 5012 (for CY 2015, this is existing APC 0632). Proposed new APC
5012 includes other services that are clinically similar with similar
resource costs to the service described by HCPCS code G0463, such as
HCPCS code G0402 (Initial preventive physical examination).
Accordingly, for the CY 2016 OPPS update, we are proposing to delete
existing APC 0634 and replace it with proposed renumbered APC 5012.
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 highest cost for an item or service in the APC group
is more than 2 times greater than the lowest cost for an item or
service within the same APC 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). In determining the
APCs with a 2 times rule violation, 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 claims and
which comprises less than 2 percent of the single major claims within
an APC will have a negligible impact on the APC cost. In this proposed
rule, for CY 2016, we are proposing to make exceptions to this limit on
the variation of costs within each APC group in unusual cases, such as
low-volume items and services.
For the CY 2016 OPPS, we have identified the APCs with violations
of the 2 times rule. Therefore, we are proposing changes to the
procedure codes assigned to these APCs in Addendum B to this proposed
rule. We note that Addendum B does not appear in the printed version of
the Federal Register as part of this CY 2016 OPPS/ASC proposed rule.
Rather, it is published and made available via the Internet on the CMS
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate
a violation of the 2 times rule or to improve clinical and resource
homogeneity, we are proposing to reassign these procedure codes to new
APCs that contain services that are similar with regard to both their
clinical and resource characteristics. In many cases, the proposed
procedure code reassignments and associated APC reconfigurations for CY
2016 included in this proposed rule are related to changes in costs of
services that were observed in the CY 2014 claims data newly available
for CY 2016 ratesetting. We also are proposing changes to the status
indicators for some procedure codes that are not specifically and
separately discussed in this proposed rule. In these cases, we are
proposing to change the status indicators for these procedure codes
because we believe that another status indicator would more accurately
describe their payment status from an OPPS perspective based on the
policies that we are proposing for CY 2016. In addition, we are
proposing to rename existing APCs or create new clinical APCs to
complement the proposed procedure code reassignments. Addendum B to
this CY 2016 OPPS/ASC proposed rule identifies with a comment indicator
``CH'' those procedure codes for which we are proposing a change to the
APC assignment or status indicator, or both, that were initially
assigned in the July 1, 2015 OPPS Addendum B Update (available via the
Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html).
3. Proposed APC Exceptions to the 2 Times Rule
Taking into account the APC changes that we are proposing for CY
2016, 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 2014 claims data available for this CY 2016
proposed rule, we found three APCs with violations of the 2 times rule.
We applied the criteria as described above to identify the APCs that we
are proposing to make exceptions for under the 2 times rule for CY
2016, and identified three APCs that met the criteria for an exception
to the 2 times rule based on the CY 2014 claims data available for this
proposed rule. We did not include in that determination those APCs
where a 2 times rule violation was not a relevant concept, such as
existing APC 0375 (proposed for CY 2016 to be renumbered APC 5881
(Ancillary Outpatient Services When Patient Dies)), which has an APC
cost for a single service of $5,653.37. (We note that, in section
II.A.2.e. of this proposed rule, we are proposing to convert proposed
renumbered APC 5881 to a comprehensive APC for CY 2016. However, the
APC cost is still not relevant to determine whether there is a

[[Page 39255]]

2 times rule violation in that comprehensive APC.)
Therefore, we only identified those APCs, including those with
criteria-based costs, 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 16 of this proposed rule lists the three APCs that we are
proposing to make exceptions for under the 2 times rule for CY 2016
based on the criteria cited above and claims data submitted between
January 1, 2014, and December 31, 2014, and processed on or before
December 31, 2014. For the final rule with comment period, we intend to
use claims data for dates of service between January 1, 2014, and
December 31, 2014, that were processed on or before June 30, 2015, and
updated CCRs, if available.
The geometric mean costs for hospital outpatient services for these
and all other APCs that were used in the development of this proposed
rule can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

Table 16--Proposed APC Exceptions to the 2 Times Rule For CY 2016
------------------------------------------------------------------------
Proposed CY 2016 APC* Proposed CY 2016 APC Title
------------------------------------------------------------------------
5221................................. Level 1 Pacemaker and Similar
Procedures.
5673................................. Level 3 Pathology.
5731................................. Level 1 Minor Procedures.
------------------------------------------------------------------------
* We refer readers to Addendum Q to this proposed rule (which is
available via the Internet on the CMS Web site) for a crosswalk of the
existing APC numbers to the proposed new APC numbers.

C. Proposed New Technology APCs

1. Background
In the November 30, 2001 final rule (66 FR 59903), we finalized
changes to the time period a service was eligible for payment under a
New Technology APC. Beginning in CY 2002, we retain services within New
Technology APC groups until we gather sufficient claims data to enable
us to assign the service to an appropriate clinical APC. This policy
allows us to move a service from a New Technology APC in less than 2
years if sufficient data are available. It also allows us to retain a
service in a New Technology APC for more than 2 years if sufficient
data upon which to base a decision for reassignment have not been
collected.
Currently, there are 37 New Technology APC levels, ranging from the
lowest cost band assigned to APC 1491 (New Technology--Level 1A ($0-
$10)) through the highest cost band assigned to APC 1574 (New
Technology--Level XXXVII ($9,500-$10,000)). In the CY 2004 OPPS final
rule with comment period (68 FR 63416), we restructured the New
Technology APCs to make the cost intervals more consistent across
payment levels and refined the cost bands for these APCs to retain two
parallel sets of New Technology APCs, one set with a status indicator
of ``S'' (Significant Procedures, Not Discounted when Multiple. Paid
under OPPS; separate APC payment) and the other set with a status
indicator of ``T'' (Significant Procedure, Multiple Reduction Applies.
Paid under OPPS; separate APC payment). These current New Technology
APC configurations allow us to price new technology services more
appropriately and consistently. (We note that we are not proposing to
renumber the New Technology APCs in this proposed rule.)
We note that the cost bands for the New Technology APCs,
specifically, APCs 1491 through 1574, vary with increments ranging from
$10 to $500. These cost bands identify the APCs to which new technology
procedures and services with estimated service costs that fall within
those cost bands are assigned under the OPPS. Payment for each APC is
made at the mid-point of the APC's assigned cost band. For example,
payment for New Technology APC 1507 (New Technology--Level VII ($500-
$600)) is made at $550.
Every year we receive several requests for higher payment amounts
under the New Technology APCs for specific procedures paid under the
OPPS because they require the use of expensive equipment. We are taking
this opportunity to reiterate our response in general to the issue of
hospitals' capital expenditures as they relate to the OPPS and
Medicare.
Under the OPPS, one of our goals is to make payments that are
appropriate for the services that are necessary for the treatment of
Medicare beneficiaries. The OPPS, like other Medicare payment systems,
is budget neutral and increases are limited to the annual hospital
inpatient market basket increase. We believe that our payment rates
generally reflect the costs that are associated with providing care to
Medicare beneficiaries, and we believe that our rates are adequate to
ensure access to services.
For many emerging technologies, there is a transitional period
during which utilization may be low, often because providers are first
learning about the techniques and their clinical utility. Quite often,
parties request that Medicare make higher payment amounts under the New
Technology APCs for new procedures in that transitional phase. These
requests, and their accompanying estimates for expected total patient
utilization, often reflect very low rates of patient use of expensive
equipment, resulting in high per use costs for which requesters believe
Medicare should make full payment. However, we believe that it is most
appropriate to set payment rates based on costs that are associated
with providing care to Medicare beneficiaries. As claims data for new
services become available, we use these data to establish payment rates
for new technology.
2. Proposed Additional New Technology APC Groups
Currently, there are 37 levels of New Technology APC groups with
two parallel status indicators; one set with a status indicator of
``S'' and the other set with a status indicator of ``T.'' To improve
our ability to pay appropriately for new technology services and
procedures, we are proposing to expand

[[Page 39256]]

the New Technology APC groups by adding 9 more levels, specifically,
adding New Technology Levels 38 through 46. We are proposing this
expansion to accommodate the assignment of the retinal prosthesis
implantation procedure to a New Technology APC, which is discussed
further below. Therefore, for the CY 2016 OPPS update, we are proposing
to establish a new set of New Technology APCs 1575 through 1583 (for
Levels 38 through 46) with OPPS status indicator ``S'' and a new set of
New Technology APCs 1585 through 1593 (for Levels 38 through 46) with
OPPS status indicator ``T.'' These two new sets of APCs have the same
payment levels with one set subject to the multiple procedure payment
reduction (T) and the other set not subject to the multiple procedure
payment reduction (S). Each proposed set of new technology APC groups
has identical group titles, payment rates, and minimum unadjusted
copayments, but a different status indicator. Table 17 below includes
the complete list of the proposed additional 18 New Technology APC
groups for CY 2016.

Table 17--Proposed Additional New Technology APC Groups for CY 2016
------------------------------------------------------------------------
Proposed CY 2016 APC Status
Proposed new CY 2016 APC Group title indicator
------------------------------------------------------------------------
1575............................. New Technology--Level 38 S
($10,000-$15,000).
1576............................. New Technology--Level 39 S
($15,000-$20,000).
1577............................. New Technology--Level 40 S
($20,000-$25,000).
1578............................. New Technology--Level 41 S
($25,000-$30,000).
1579............................. New Technology--Level 42 S
($30,000-$40,000).
1580............................. New Technology--Level 43 S
($40,000-$50,000).
1581............................. New Technology--Level 44 S
($50,000-$60,000).
1582............................. New Technology--Level 45 S
($60,000-$70,000).
1583............................. New Technology--Level 46 S
($70,000-$80,000).
1585............................. New Technology--Level 38 T
($10,000-$15,000).
1586............................. New Technology--Level 39 T
($15,000-$20,000).
1587............................. New Technology--Level 40 T
($20,000-$25,000).
1588............................. New Technology--Level 41 T
($25,000-$30,000).
1589............................. New Technology--Level 42 T
($30,000-$40,000).
1590............................. New Technology--Level 43 T
($40,000-$50,000).
1591............................. New Technology--Level 44 T
($50,000-$60,000).
1592............................. New Technology--Level 45 T
($60,000-$70,000).
1593............................. New Technology--Level 46 T
($70,000-$80,000).
------------------------------------------------------------------------

The proposed payment rates for New Technology APC groups 1575
through 1583 and 1585 through 1593 can be found in Addendum A to this
proposed rule (which is available via the Internet on the CMS Web
site).
3. Proposed Procedures Assigned to New Technology APC Groups for CY
2016
As we explained in the CY 2002 OPPS final rule with comment period
(66 FR 59902), we generally retain a procedure in the New Technology
APC to which it is initially assigned until we have obtained sufficient
claims data to justify reassignment of the procedure to a clinically
appropriate APC. However, in cases where we find that our initial New
Technology APC assignment was based on inaccurate or inadequate
information (although it was the best information available at the
time), or where the New Technology APCs are restructured, we may, based
on more recent resource utilization information (including claims data)
or the availability of refined New Technology APC cost bands, reassign
the procedure or service to a different New Technology APC that more
appropriately reflects its cost (66 FR 59903).
Consistent with our current policy, for CY 2016, we are proposing
to retain services within New Technology APC groups until we obtain
sufficient claims data to justify reassignment of the service to a
clinically appropriate APC. The flexibility associated with this policy
allows us to reassign a service from a New Technology APC in less than
2 years if sufficient claims data are available. It also allows us to
retain a service in a New Technology APC for more than 2 years if
sufficient claims data upon which to base a decision for reassignment
have not been obtained (66 FR 59902).
a. Transprostatic Urethral Implant Procedure
Currently, in CY 2015, there is one procedure that is receiving
payment through a New Technology APC. Specifically, the procedure
described by HCPCS code C9740 (Cystourethroscopy, with insertion of
transprostatic implant; 4 or more implants) is assigned to New
Technology APC 1564 (New Technology--Level XXVII ($4,500-$5,000)) with
a payment rate of $4,750. This procedure was assigned to New Technology
APC 1564 on April 1, 2014, when the HCPCS C-code was established.
For the CY 2016 OPPS update, based on our review of the claims data
for HCPCS code C9740 from April through December 2014, we found 100
single claims (out of 128 total claims) with a geometric mean cost of
approximately $5,648. Because there is not a full year of claims data
and only 100 single claims are in our database for HCPCS code C9740, we
are proposing to maintain the assignment of HCPCS code C9740 to New
Technology APC 1564 for CY 2016. As described in section IV.B. of this
proposed rule, we note that, based on the costs of the device relative
to the procedure in this APC, the procedures assigned to APC 1564 would
be device-intensive for CY 2016. The proposed CY 2016 payment rate for
HCPCS code C9740 is included in Addendum B to this proposed rule (which
is available via the Internet on the CMS Web site).
b. Retinal Prosthesis Implant Procedure
CPT code 0100T (Placement of a subconjunctival retinal prosthesis
receiver and pulse generator, and implantation of intra-ocular retinal
electrode array, with vitrectomy) describes the implantation of a
retinal prosthesis. This surgical procedure is currently assigned to
APC 0673 that has a CY 2015 payment rate of approximately $3,123. The
retinal prosthesis device that is used in the procedure described by
CPT code 0100T is described by HCPCS code C1841 (Retinal prosthesis,
includes all internal

[[Page 39257]]

and external components). The first retinal prosthesis (Argus[supreg]
II Retinal Prosthesis System) was approved by the FDA in 2013 for adult
patients with advanced retinitis pigmentosa. Pass-through status was
granted for HCPCS code C1841 beginning October 1, 2013, and is proposed
to expire on December 31, 2015. We refer readers to section IV.A.1.b.
of this proposed rule for the discussion of the expiration of pass-
through for HCPCS code C1841.
After pass-through status expires for a medical device, the payment
for the device is packaged into the payment for the associated surgical
procedure. The surgical procedure in which the Argus device (HCPCS code
C1841) is implanted is described by CPT code 0100T. Review of the CY
2014 OPPS claims data used for this CY 2016 OPPS/ASC proposed rule
shows only one single claim for CPT code 0100T with HCPCS code C1841 on
the claim. Due to the newness of this surgical procedure and its
associated implantable device and the extremely low number of CY 2014
HOPD claims for this procedure, we are proposing to reassign CPT code
0100T from existing APC 0673 (Level III Intraocular Procedures) to
proposed newly established New Technology APC 1593 (New Technology--
Level 46 ($70,000-$80,000)). We are proposing a CY 2016 OPPS payment of
approximately $75,000 for proposed new APC 1593, which would be the
payment for CPT code 0100T (not including the retinal prosthesis), plus
the proposed maximum FY 2016 IPPS new technology add-on payment for a
case involving the Argus[supreg] II Retinal Prosthesis System of
$72,028.75 (80 FR 24425). Therefore, we are proposing to reassign CPT
code 0100T to proposed new APC 1593 with a payment of $75,000 for CY
2016. We refer readers to section III.C.2. of this proposed rule for a
discussion of the proposed expansion of the New Technology APC levels.
We believe that, given the newness of this procedure and the severe
paucity of OPPS claims data, this approach provides a reasonable
payment amount that is not significantly dissimilar to the payment for
the same procedure provided in the hospital inpatient setting. Once we
have more claims data, we will reassess the APC placement of the
Argus[supreg] II Retinal Prosthesis System in light of our standard
rate setting methodology. We are inviting public comments on this
proposal.

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

Section 1833(t)(9)(A) of the Act requires the Secretary to review,
not less often than annually, and to revise the groups, relative
payment weights, and the wage and other adjustments to take into
account changes in medical practices, changes in technology, the
addition of new services, new cost data, and other relevant information
and factors. Therefore, every year we review and revise the APC
assignments for many procedure codes and diagnosis codes based on our
evaluation of these factors using the latest OPPS claims data. Although
we do not discuss every APC change in the proposed and final rules,
these changes are listed in the OPPS Addendum B of the proposed and
final rules. Specifically, procedure and diagnosis codes with revised
APC and/or status indicator assignments are identified by comment
indicator ``CH'' (Active HCPCS code in current year and next calendar
year, status indicator and/or APC assignment has changed) in the OPPS
Addendum B payment file.
In our efforts to improve clinical and resource homogeneity among
the APC groupings and update the hospital OPPS, we conducted a
comprehensive review of the current structure of the APCs and codes
assignments for CY 2015. Consequently, as part of our broader efforts
to thoroughly review, revise, and consolidate APCs to improve both
resource and clinical homogeneity, we proposed in the CY 2015 OPPS/ASC
proposed rule (79 FR 40981 through 40983) to restructure the first set
of clinical families, specifically the ophthalmology and gynecology
APCs. We proposed to restructure the APCs for these clinical families
based on the following principles:
Improved clinical homogeneity;
Improved resource homogeneity;
Reduced resource overlap in APCs within a clinical family;
and
Greater simplicity and improved understanding of the
structure of the APCs.
Based on our review, for CY 2015, we finalized the APC
restructuring for the ophthalmology and gynecology APCs. For the
complete discussion on the APC restructuring for the ophthalmology
APCs, we refer readers to the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66857 through 66859). Similarly, for the complete
discussion on the APC restructuring for the gynecology APCs, we refer
readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR
66849 through 66851).
For the CY 2016 update, as a part of our continued review of the
structure of the APCs, we are proposing to restructure nine APC
clinical families based on the same principles used for restructuring
the ophthalmology and gynecology APCs for CY 2015. We discuss below our
proposed restructuring for the nine APC clinical families. We note
that, in conjunction with the proposed restructuring, we are proposing
to renumber several families of APCs to provide consecutive APC numbers
for consecutive APC levels within a clinical family for improved
identification of APCs and ease of understanding the APC groupings. For
example, the seven APC levels for urology procedures are proposed to be
renumbered as APC 5371 (Level 1 Urology and Related Services), APC 5372
(Level 2 Urology and Related Services), APC 5373 (Level 3 Urology and
Related Services), APC 5374 (Level 4 Urology and Related Services), APC
5375 (Level 5 Urology and Related Services), APC 5376 (Level 6 Urology
and Related Services), and APC 5377 (Level 7 Urology and Related
Services). We believe that consecutive numbering of the APCs will
enhance the public understanding of the APC groups and will make it
easier for them to communicate to the agency about issues concerning
APCs. We note that, under this initiative, we are not proposing to
change the numbering of the composite APCs or the New Technology APCs
for CY 2016.
Existing CY 2015 APC numbers and their proposed new CY 2016 APC
numbers can be found in Addendum Q (Crosswalk of CY 2015 APC Numbers to
CY 2016 APC Numbers) to this proposed rule, which is available via the
Internet on the CMS Web site.
1. Airway Endoscopy Procedures
As a part of our CY 2016 comprehensive review of the structure of
the APCs and procedure code assignments, we examined the APCs that
contain airway endoscopy procedures. For CY 2016, we are proposing to
restructure the OPPS APC groupings for airway endoscopy procedures to
more appropriately reflect the costs and clinical characteristics of
the procedures within each APC grouping in the context of the OPPS. The
current APCs for airway endoscopy procedures are divided into upper
airway and lower airway endoscopy APC series. After reviewing these
APCs, we believe that consolidating the current upper airway and lower
airway APC series into a single APC series for airway endoscopy
procedures would result in improved resource homogeneity for the
various airway endoscopy procedures, while maintaining clinical
homogeneity. Therefore, for CY 2016, we are proposing to restructure
and consolidate the APCs that include airway endoscopy

[[Page 39258]]

procedures into a single APC series. Table 18 below lists the current
CY 2015 APCs that contain airway endoscopy procedures, and Table 19
below lists the proposed CY 2016 APCs that result from our proposed
consolidation and restructuring of the current airway endoscopy
procedure APCs into a single APC series. The procedures assigned to
each APC are listed in Addendum B to this proposed rule, which is
available via the Internet on the CMS Web site. We are inviting public
comments on this proposal.

Table 18--CY 2015 Airway Endoscopy APCs
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
------------------------------------------------------------------------
0071............................ Level I Endoscopy Upper Airway.
0072............................ Level II Endoscopy Upper Airway.
0073............................ Level III Endoscopy Upper Airway.
0074............................ Level IV Endoscopy Upper Airway.
0075............................ Level V Endoscopy Upper Airway.
0076............................ Level I Endoscopy Lower Airway.
0415............................ Level II Endoscopy Lower Airway.
------------------------------------------------------------------------

Table 19--Proposed CY 2016 Airway Endoscopy APCs
------------------------------------------------------------------------
Proposed restructured/renumbered CY Proposed CY 2016 APC Group
2016 APC * title
------------------------------------------------------------------------
5151................................... Level 1 Airway Endoscopy.
5152................................... Level 2 Airway Endoscopy.
5153................................... Level 3 Airway Endoscopy.
5154................................... Level 4 Airway Endoscopy.
5155................................... Level 5 Airway Endoscopy.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

2. Diagnostic Tests and Related Services
As a part of our CY 2016 comprehensive review of the structure of
the APCs and procedure code assignments, we examined the APCs that
contain diagnostic tests and related services. For CY 2016, we are
proposing to restructure the OPPS APC groupings for diagnostic tests
and related services to more appropriately reflect the costs and
clinical characteristics of the services within each APC grouping in
the context of the OPPS. The current APCs for diagnostic tests and
related services are divided according to organ system or physiologic
test type. After reviewing these APCs, we believe that the current APC
structure is based on clinical categories that do not necessarily
reflect significant differences in the delivery of these services in
the HOPD. The current level of granularity for these APCs results in
groupings that are unnecessarily narrow for the purposes of a
prospective payment system. Therefore, for CY 2016, we are proposing to
restructure and consolidate the APCs that include diagnostic tests and
related services. We believe that this proposed restructuring and
consolidation of APCs into larger APC groupings would more
appropriately reflect a prospective payment system that is based on
payment groupings and not code-specific payment rates, while
maintaining clinical and resource homogeneity. Table 20 below lists the
current CY 2015 APCs that contain nonimaging diagnostic tests, and
Table 21 below lists the proposed CY 2016 APCs that result from our
proposed consolidation and restructuring of the current diagnostic test
and related services APCs. The procedures assigned to each APC are
listed in Addendum B to this proposed rule, which is available via the
Internet on the CMS Web site. We are inviting public comments on this
proposal.

Table 20--CY 2015 APCs That Contain Diagnostic Tests and Related
Services
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
------------------------------------------------------------------------
0360............................ Level I Alimentary Tests.
0361............................ Level II Alimentary Tests.
0100............................ Cardiac Stress Tests.
0099............................ Electrocardiograms/Cardiography.
0231............................ Level III Eye Tests & Treatments.
0213............................ Level I Extended EEG, Sleep, and
Cardiovascular Studies.
0209............................ Level II Extended EEG, Sleep, and
Cardiovascular Studies.
0435............................ Level III Extended EEG, Sleep, and
Cardiovascular Studies.
0215............................ Level I Nerve and Muscle Services.
0218............................ Level II Nerve and Muscle Services.
0216............................ Level III Nerve and Muscle Services.
0446............................ Level IV Nerve and Muscle Services.
0373............................ Neuropsychological Testing.
0097............................ Level I Noninvasive Physiologic
Studies.
0096............................ Level II Noninvasive Physiologic
Studies.
0363............................ Otorhinolaryngologic and Related
Tests.
0367............................ Level I Pulmonary Tests.
0369............................ Level II Pulmonary Tests.
0126............................ Level I Urinary and Anal Procedures.
------------------------------------------------------------------------

Table 21--Proposed CY 2016 Diagnostic Tests and Related Services APCs
------------------------------------------------------------------------
Proposed restructured/renumbered CY Proposed CY 2016 APC Group
2016 APC * title
------------------------------------------------------------------------
5721................................... Level 1 Diagnostic Tests and
Related Services.
5722................................... Level 2 Diagnostic Tests and
Related Services.
5723................................... Level 3 Diagnostic Tests and
Related Services.
5724................................... Level 4 Diagnostic Tests and
Related Services.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

3. Excision/Biopsy and Incision and Drainage Procedures
As a part of our CY 2016 comprehensive review of the structure of
the APCs and procedure code assignments, we examined the APCs for
incision and drainage procedures as well as excision/biopsy procedures.
The current APC structure for these procedures is organized into two
series: incision and drainage procedures in one series and excision/
biopsy procedures in another series.
Based on our evaluation of the current APC structure and the latest
hospital outpatient claims data available for this proposed rule, we
are proposing to revise these APCs by combining the incision and
drainage procedures with the excision/biopsy procedures to more
accurately reflect the resource costs and clinical characteristics of
the procedures within each APC. Many of the procedures in these two
series are clinically similar. Therefore, we believe that a single
series encompassing incision and drainage procedures and excision/
biopsy procedures groups clinically similar procedures without
unnecessary granularity. We believe that the proposed consolidation and
restructuring of these APCs would more appropriately reflect a
prospective payment system that is based on

[[Page 39259]]

payment for APC groupings with clinically similar procedures while
maintaining resource homogeneity. Moreover, we believe that the
proposed APC groupings would more accurately accommodate and align new
services under the hospital OPPS when assigned to clinical APCs with
services with similar clinical attributes and resource costs.
Therefore, for CY 2016, we are proposing to consolidate and restructure
the APCs that describe incision and drainage procedures as well as the
excision/biopsy procedures by combining these procedures into a single
APC series.
Table 22 below lists the current CY 2015 APCs that contain incision
and drainage as well as excision/biopsy procedures, and Table 23 below
lists the proposed CY 2016 APCs that result from the proposed
consolidating and restructuring of the APCs into a single APC series.
The proposed payment rates for the specific CPT or Level II HCPCS codes
for incision and drainage procedures as well as excision/biopsy
procedures are included in Addendum B to this proposed rule, while the
proposed payment rates for the specific APCs to which these procedures
are assigned are included in Addendum A to this proposed rule. Both
OPPS Addenda A and B are available via the Internet on the CMS Web
site. We are inviting public comments on this proposal.

Table 22--CY 2015 APCs To Which the Incision and Drainage and Excision/
Biopsy Procedures Are Assigned
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC group title
------------------------------------------------------------------------
0006................................ Level I Incision & Drainage.
0007................................ Level II Incision & Drainage.
0008................................ Level III Incision & Drainage.
0019................................ Level I Excision/Biopsy.
0020................................ Level II Excision/Biopsy.
0021................................ Level III Excision/Biopsy.
0022................................ Level IV Excision/Biopsy.
------------------------------------------------------------------------

Table 23--Proposed CY 2016 APCs for Excision/Biopsy/Incision and
Drainage Procedures
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC group title
------------------------------------------------------------------------
5071................................ Level 1 Excision/Biopsy/Incision
and Drainage.
5072................................ Level 2 Excision/Biopsy/Incision
and Drainage.
5073................................ Level 3 Excision/Biopsy/Incision
and Drainage.
5074................................ Level 4 Excision/Biopsy/Incision
and Drainage.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

4. Gastrointestinal (GI) Procedures
As a part of our comprehensive review of the structure of the APCs
and procedure code assignments for CY 2016, we examined the APCs that
contain gastrointestinal (GI) procedures. As explained below, as a
result of our findings from this review, for CY 2016, we are proposing
to restructure the APC groupings for GI procedures to more
appropriately reflect the costs and the clinical characteristics of the
procedures within each APC grouping in the context of the OPPS.
The current APCs for GI procedures are partially organized
according to location in the GI tract and type of surgery performed
(endoscopy versus incisional surgery). After reviewing these APCs for
GI procedures, we believe that the current APC construction is based on
clinical categories that do not appropriately represent a consistent
set of clinical categories throughout the entire spectrum of GI-related
procedures. The current level of granularity for some of the GI APCs
results in groupings that are unnecessarily narrow for the purposes of
a prospective payment system. Therefore, for CY 2016, we are proposing
to restructure and consolidate the APCs that contain GI procedures. We
believe that consolidating these procedures under broader APC groupings
primarily based on separating upper and lower GI procedures into two
series with additional APCs containing abdominal and peritoneal
procedures would more appropriately reflect a prospective payment
system that is based on payment for clinically consistent APC groupings
rather than code-specific payment rates while maintaining resource
homogeneity. Furthermore, we believe that the proposed APC groupings
would more accurately accommodate and align new services within
clinical APCs with similar resource costs.
Table 24 below lists the current CY 2015 APCs that contain GI
procedures, and Table 25 below lists the proposed CY 2016 APCs that
result from the proposed consolidation and restructuring of the current
GI procedure APCs into a single APC series. The procedures assigned to
each APC are listed in Addendum B to this proposed rule, which is
available via the Internet on the CMS Web site. We are inviting public
comments on this proposal.

Table 24--CY 2015 APCs That Contain Gastrointestinal Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
--------------------------------------------------------------------------------------------------------------------------------------------------------
0148.......................................... Level I Anal/Rectal Procedures.
0155.......................................... Level II Anal/Rectal Procedures.
0149.......................................... Level III Anal/Rectal Procedures.
0150.......................................... Level IV Anal/Rectal Procedures.
0151.......................................... Endoscopic Retrograde Cholangio-Pancreaotography.
0384.......................................... GI Procedures with Stents.
0154.......................................... Hernia/Hydrocele Procedures.
0652.......................................... Insertion of Intraperitoneal and Pleural Catheters.
0143.......................................... Lower GI Endoscopy.
0152.......................................... Level I Percutaneous Abdominal and Biliary Procedures.
0423.......................................... Level II Percutaneous Abdominal and Biliary Procedures.
0153.......................................... Peritoneal and Abdominal Procedures.
0146.......................................... Level I Sigmoidoscopy and Anoscopy.
0147.......................................... Level II Sigmoidoscopy and Anoscopy.
0428.......................................... Level III Sigmoidoscopy and Anoscopy.
0142.......................................... Level I Small Intestine Endoscopy.
0424.......................................... Level II Small Intestine Endoscopy.

[[Page 39260]]

0070.......................................... Thoracentesis/Lavage Procedures.
0121.......................................... Level I Tube or Catheter Changes or Repositioning.
0427.......................................... Level II Tube or Catheter Changes or Repositioning.
0141.......................................... Level I Upper GI Procedures.
0419.......................................... Level II Upper GI Procedures.
0422.......................................... Level III Upper GI Procedures.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 25--Proposed CY 2016 APCs for Gastrointestinal Procedures
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC Group title
------------------------------------------------------------------------
5301................................ Level 1 Upper GI Procedures.
5302................................ Level 2 Upper GI Procedures.
5303................................ Level 3 Upper GI Procedures.
5311................................ Level 1 Lower GI Procedures.
5312................................ Level 2 Lower GI Procedures.
5313................................ Level 3 Lower GI Procedures.
5314................................ Level 4 Lower GI Procedures.
5331................................ Complex GI Procedures.
5341................................ Peritoneal and Abdominal
Procedures.
5351................................ Level 1 Percutaneous Abdominal/
Biliary Procedures and Related
Procedures.
5352................................ Level 2 Percutaneous Abdominal/
Biliary Procedures and Related
Procedures.
5391................................ Level 1 Tube/Catheter Changes/
Thoracentesis/Lavage.
5392................................ Level 2 Tube/Catheter Changes/
Thoracentesis/Lavage.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

In addition, we are proposing to accept the Panel's recommendation
with regard to the APC assignment for four lower endoscopy stent
procedures described by HCPCS codes that were established in CY 2015.
The Panel recommended that the four CPT codes listed in Table 26 below
be moved from their currently assigned APC to C-APC 0384 (GI Procedures
with Stents). The Panel's recommendation was based on an analysis of
the similarities in clinical characteristics and resource utilization
between the procedures described by these four CPT codes and the
procedures described by other CPT codes within existing (CY 2015) APCs
0142, 0143 and 0147. (We note that, in section II.A.2.e. of the
preamble of this proposed rule, we are proposing to renumber and
retitle C-APC 0384 as ``C-APC 5331 (Complex GI Procedures)'' for CY
2016.)

Table 26--Gastrointestinal Procedures Proposed for Reassignment to New C-APC 5331 in CY 2016
----------------------------------------------------------------------------------------------------------------
Procedure code
CY 2015 CPT code description CY 2015 APC Proposed CY 2016 APC
----------------------------------------------------------------------------------------------------------------
44384............................ Ileoscopy, through stoma; APC 0142 (Level I Small C-APC 5331 (Complex GI
with placement of Intestine APC). Procedures).
endoscopic stent
(includes pre- and post-
dilation and guide wire
passage, when performed).
44402............................ Colonoscopy through APC 0143................ C-APC 5331
stoma; with endoscopic (Lower GI Endoscopy APC) (Complex GI Procedures).
stent placement
(including pre- and post-
dilation and guide wire
passage, when performed).
45347............................ Sigmoidoscopy, flexible; APC 0147................ C-APC 5331
with placement of (Level II Sigmoidoscopy (Complex GI Procedures).
endoscopic stent and Anoscopy).
(includes pre- and post-
dilation and guide wire
passage, when performed).
45389............................ Colonoscopy, flexible; APC 0143................ C-APC 5331
with endoscopic stent (Lower GI Endoscopy APC) (Complex GI Procedures).
placement (includes pre-
and post-dilation and
guide wire passage, when
performed).
----------------------------------------------------------------------------------------------------------------

5. Imaging Services
As a part of our CY 2016 comprehensive review of the structure of
the APCs and procedure code assignments, we examined the APCs that
contain imaging services. For CY 2016, we are proposing to restructure
the OPPS APC groupings for imaging services to more appropriately
reflect the costs and clinical characteristics of the procedures within
each APC grouping in the context of the OPPS. The current APCs for
imaging services are divided at the highest level between diagnostic
radiology (for example, x-ray, CT, MRI, and ultrasound) and nuclear
medicine imaging. After reviewing these APCs, we believe that the
current APC structure is based on clinical categories that do not
necessarily reflect significant differences in the delivery of these
services in the HOPD. The current level of granularity for these APCs
results in groupings that are unnecessarily narrow for the purposes of
a prospective payment system. This excessive granularity is especially
apparent with the APCs for x-ray based imaging services and nuclear
medicine imaging services. Many of these APCs are currently structured
according to organ or physiologic system that does not necessarily
reflect either significant differences in resources or how these
services are delivered in the HOPD.
Therefore, for CY 2016, we are proposing to restructure and
consolidate the APCs that include radiology and nuclear medicine
services. We believe that this proposed restructuring and consolidation
would result in APC groupings that would more appropriately reflect a
prospective payment system that is based on payment for clinically
consistent APC groupings and not code-specific payment rates, while
maintaining clinical and resource homogeneity. Furthermore, the
proposed APC groupings would more accurately

[[Page 39261]]

accommodate and align new services into clinical APCs with similar
resource costs. Table 27 below lists the current CY 2015 APCs that
contain radiology and nuclear medicine services, and Table 28 below
lists the proposed CY 2016 APCs that result from the proposed
consolidation and restructuring of the current radiology and nuclear
medicine services APCs. The procedures assigned to each APC are listed
in Addendum B to this proposed rule, which is available via the
Internet on the CMS Web site. We are inviting public comments on this
proposal.

Table 27--CY 2015 Imaging-Related Procedures APCs
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
------------------------------------------------------------------------
0668................................ Level I Angiography and
Venography.
0279................................ Level II Angiography and
Venography.
0280................................ Level III Angiography and
Venography.
0275................................ Arthrography.
0396................................ Bone Imaging.
0383................................ Cardiac Computed Tomographic
Imaging.
0398................................ Level I Cardiac Imaging.
0377................................ Level II Cardiac Imaging.
0334................................ Combined Abdomen and Pelvis CT
with Contrast.
0331................................ Combined Abdomen and Pelvis CT
without Contrast.
0283................................ Computed Tomography with Contrast.
0332................................ Computed Tomography without
Contrast.
0333................................ Computed Tomography without
Contrast followed by Contrast.
8006................................ CT and CTA with Contrast
Composite.
8005................................ CT and CTA without Contrast
Composite.
0662................................ CT Angiography.
0265................................ Level I Diagnostic and Screening
Ultrasound.
0266................................ Level II Diagnostic and Screening
Ultrasound.
0267................................ Level III Diagnostic and Screening
Ultrasound.
0278................................ Diagnostic Urography.
0276................................ Level I Digestive Radiology.
0277................................ Level II Digestive Radiology.
0388................................ Discography.
0177................................ Level I Echocardiogram with
Contrast.
0178................................ Level II Echocardiogram with
Contrast.
0269................................ Level I Echocardiogram Without
Contrast.
0270................................ Level II Echocardiogram Without
Contrast.
0390................................ Level I Endocrine Imaging.
0391................................ Level II Endocrine Imaging.
0272................................ Fluoroscopy and Other Radiology
Services.
0395................................ Hepatobiliary Imaging.
0400................................ Hematopoietic Imaging.
0394................................ Hepatobiliary Imaging.
0284................................ Magnetic Resonance Imaging and
Magnetic Resonance Angiography
with Contrast.
0336................................ Magnetic Resonance Imaging and
Magnetic Resonance Angiography
without Contrast.
0337................................ Magnetic Resonance Imaging and
Magnetic Resonance Angiography
without Contrast followed by
Contrast.
0263................................ Level I Miscellaneous Radiology
Procedures.
0317................................ Level II Miscellaneous Radiology
Procedures.
8008................................ MRI and MRA with Contrast
Composite.
8007................................ MRI and MRA without Contrast
Composite.
0274................................ Myelography.
0403................................ Level I Nervous System Imaging.
0402................................ Level II Nervous System Imaging.
0260................................ Level I Plain Film Including Bone
Density Measurement.
0261................................ Level II Plain Film Including Bone
Density Measurement.
0308................................ Positron Emission Tomography (PET)
imaging.
0401................................ Level I Pulmonary Imaging.
0378................................ Level II Pulmonary Imaging.
0404................................ Renal and Genitourinary Studies.
0406................................ Level I Tumor/Infection Imaging.
0414................................ Level II Tumor/Infection Imaging.
0408................................ Level III Tumor/Infection Imaging.
8004................................ Ultrasound Composite.
0393................................ Hematologic Processing & Studies.
------------------------------------------------------------------------

Table 28--Proposed CY 2016 Imaging-Related Procedures APCs
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC Group title
------------------------------------------------------------------------
5521................................ Level 1 X-Ray and Related
Services.
5522................................ Level 2 X-Ray and Related
Services.
5523................................ Level 3 X-Ray and Related
Services.
5524................................ Level 4 X-Ray and Related
Services.
5525................................ Level 5 X-Ray and Related
Services.
5526................................ Level 6 X-Ray and Related
Services.
5531................................ Level 1 Ultrasound and Related
Services.
5532................................ Level 2 Ultrasound and Related
Services.
5551................................ Level 1 Echocardiogram Without
Contrast.
5552................................ Level 2 Echocardiogram Without
Contrast.
5561................................ Level 1 Echocardiogram with
Contrast.
5562................................ Level 2 Echocardiogram with
Contrast.
5570................................ Computed Tomography without
Contrast.
5571................................ Level 1 Computed Tomography with
Contrast and Computed Tomography
Angiography.
5572................................ Level 2 Computed Tomography with
Contrast and Computed Tomography
Angiography.
5581................................ Magnetic Resonance Imaging and
Magnetic Resonance Angiography
without Contrast.
5582................................ Magnetic Resonance Imaging and
Magnetic Resonance Angiography
with Contrast.
5591................................ Level 1 Nuclear Medicine and
Related Services.
5592................................ Level 2 Nuclear Medicine and
Related Services.
5593................................ Level 3 Nuclear Medicine and
Related Services.
8004................................ Ultrasound Composite.
8005................................ CT and CTA without Contrast
Composite.
8006................................ CT and CTA with Contrast
Composite.
8007................................ MRI and MRA without Contrast
Composite.
8008................................ MRI and MRA with Contrast
Composite.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

6. Orthopedic Procedures
As a part of our CY 2016 comprehensive review of the structure of
the APCs and procedure code assignments, we examined the APCs that
contain orthopedic-related procedures. For CY 2016, we are proposing to
restructure the OPPS APC groupings for orthopedic surgery procedures to
more appropriately reflect similar costs and clinical characteristics
of the procedures within each APC grouping in the context of the OPPS.
The current APCs for orthopedic-related procedures are primarily
divided according to anatomy and the type of

[[Page 39262]]

musculoskeletal procedure. After reviewing these APCs, we believe that
the current APC structure is based on clinical categories that do not
necessarily reflect significant differences in the delivery of these
services in the HOPD. The current level of granularity for these APCs
results in groupings that are unnecessarily narrow for the purposes of
a prospective payment system. For example, we see no reason for
purposes of OPPS payment to continue to separate musculoskeletal
procedures that do not involve the hand or foot from procedures that do
include the hand or foot.
Therefore, for CY 2016, we are proposing to restructure and
consolidate the APCs for orthopedic surgery procedures. We believe that
this proposed restructuring and consolidation would result in APC
groupings that would more appropriately reflect a prospective payment
system that is based on payment for clinically consistent APC groupings
and not code-specific payment rates while maintaining clinical and
resource homogeneity. Table 29 below lists the current CY 2015 APCs
that contain orthopedic-related procedures, and Table 30 below lists
the proposed CY 2016 APCs that result from the proposed restructuring
and consolidation of the current orthopedic-related procedures APCs.
The procedures assigned to each APC are listed in Addendum B to this
proposed rule, which is available via the Internet on the CMS Web site.
We are inviting public comments on this proposal.

Table 29--CY 2015 Orthopedic-Related Procedures APCs
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
------------------------------------------------------------------------
0047................................ Arthroplasty.
0041................................ Level I Arthroscopy.
0042................................ Level II Arthroscopy.
0045................................ Bone/Joint Manipulation Under
Anesthesia.
0057................................ Bunion Procedures.
0129................................ Level I Closed Treatment Fracture.
0138................................ Level II Closed Treatment
Fracture.
0139................................ Level III Closed Treatment
Fracture.
0431................................ Level IV Closed Treatment
Fracture.
0055................................ Level I Foot Musculoskeletal
Procedures.
0056................................ Level II Foot Musculoskeletal
Procedures.
0053................................ Level I Hand Musculoskeletal
Procedures.
0054................................ Level II Hand Musculoskeletal
Procedures.
0208................................ Laminotomies and Laminectomies.
0049................................ Level I Musculoskeletal Procedures
Except Hand and Foot.
0050................................ Level II Musculoskeletal
Procedures Except Hand and Foot.
0051................................ Level III Musculoskeletal
Procedures Except Hand and Foot.
0052................................ Level IV Musculoskeletal
Procedures Except Hand and Foot.
0425................................ Level V Musculoskeletal Procedures
Except Hand and Foot.
0058................................ Level II Strapping and Cast
Application.
0059................................ Level I Strapping and Cast
Application.
0062................................ Level I Treatment Fracture/
Dislocation.
0063................................ Level II Treatment Fracture/
Dislocation.
0064................................ Level III Treatment Fracture/
Dislocation.
------------------------------------------------------------------------

Table 30--Proposed CY 2016 Orthopedic-Related Procedures APCs
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC group title
------------------------------------------------------------------------
5101................................ Level 1 Strapping and Cast
Application.
5102................................ Level 2 Strapping and Cast
Application.
5111................................ Level 1 Closed Treatment Fracture
and Related Services.
5112................................ Level 2 Closed Treatment Fracture
and Related Services.
5113................................ Level 3 Closed Treatment Fracture
and Related Services.
5121................................ Level1 Musculoskeletal Procedures.
5122................................ Level 2 Musculoskeletal
Procedures.
5123................................ Level 3 Musculoskeletal
Procedures.
5124................................ Level 4 Musculoskeletal
Procedures.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

7. Skin Procedures
As a part of our CY 2016 comprehensive review of the structure of
the APCs and procedure code assignments, we examined the APCs that
describe skin procedures. Based on our evaluation of the latest
hospital outpatient claims data available for this proposed rule, we
are proposing to restructure all of the skin-related procedure APC
assignments by combining the debridement and skin procedure APCs to
more appropriately reflect the costs and clinical characteristics of
the procedures within each APC. Clinically, the services assigned to
the current debridement APC series are similar to the services assigned
to the current skin procedures APCs. We believe that the services in
these two APC series would be more appropriately represented in a
single APC series described as skin procedures and related services. We
believe that this proposed consolidation and restructuring of APCs more
appropriately categorizes all of the skin procedures and related
services within a series of APCs with different resources, such that
the services within each proposed newly configured APC are comparable
based on its clinical homogeneity and resource costs. Therefore, for CY
2016, we are proposing to consolidate and restructure the skin and
debridement APCs into a single APC series. Table 31 below lists the
current CY 2015 APCs that contain skin and debridement procedures, and
Table 32 below lists the proposed CY 2016 APCs that result from the
proposed consolidation and restructuring of the current skin-related
procedure APCs into a single APC series. The proposed payment rates for
the specific CPT or Level II HCPCS skin procedure codes are specified
in Addendum B to this proposed rule. The proposed payment rates for the
specific APCs to which the skin procedures are proposed to be assigned
are specified in Addendum A to this proposed rule. Both OPPS Addenda A
and B are available via the Internet on the CMS Web site. We are
inviting public comments on this proposal.

Table 31--CY 2015 APCs to Which Debridement and Skin Procedures Are
Assigned
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
------------------------------------------------------------------------
0012................................ Level I Debridement & Destruction.
0015................................ Level II Debridement &
Destruction.
0016................................ Level III Debridement &
Destruction.
0017................................ Level IV Debridement &
Destruction.
0326................................ Level I Skin Procedures.
0327................................ Level II Skin Procedures.
0328................................ Level III Skin Procedures.

[[Page 39263]]

0329................................ Level IV Skin Procedures.
------------------------------------------------------------------------

Table 32--Proposed CY 2016 APCs Assignment for Skin Procedures
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC Group title
------------------------------------------------------------------------
5051................................ Level 1 Skin Procedures.
5052................................ Level 2 Skin Procedures.
5053................................ Level 3 Skin Procedures.
5054................................ Level 4 Skin Procedures.
5055................................ Level 5 Skin Procedures.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

8. Urology and Related Services Procedures
For the CY 2016 OPPS update, based on our evaluation of the latest
hospital outpatient claims data used for this proposed rule, we are
proposing to revise all of the urology and related services APCs to
more appropriately reflect the resource costs and clinical
characteristics of the procedures within each APC. Currently, several
of the urology-related APCs are differentiated based on their resource
costs rather than clinical similarity. We believe that establishing
more inclusive categories of the urology and related procedures is more
appropriate for future ratesetting under the hospital OPPS because the
restructured APCs have a more clinically appropriate granularity, while
improving resource similarity. Further, we believe that this proposed
revision and consolidation of APCs would more appropriately categorize
all of the urology procedures and services within an APC group such
that the services within each proposed newly configured APC are
comparable clinically and with respect to resource use. Therefore, for
CY 2016, we are proposing to restructure and consolidate the urology
and related APCs into a single APC series. Table 33 below shows the CY
2015 urology and related APCs and status indicator assignments, and
Table 34 below lists the proposed CY 2016 APCs that result from the
proposed consolidation and restructuring of the current urology and
related APCs into a single APC series. The proposed payment rates for
the specific CPT or Level II HCPCS urology and related procedure codes
are included in Addendum B to this proposed rule. The proposed payment
rates for the proposed specific APCs to which we are proposing to
assign the urology and related procedures codes are included in
Addendum A to this proposed rule. Both OPPS Addenda A and B are
available via the Internet on the CMS Web site. We are inviting public
comments on this proposal.

Table 33--CY 2015 APCs to Which Urology & Related Services Are Assigned
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
------------------------------------------------------------------------
0160................................ Level I Cystourethroscopy and
other Genitourinary Procedures.
0161................................ Level II Cystourethroscopy and
other Genitourinary Procedures.
0162................................ Level III Cystourethroscopy and
other Genitourinary Procedures.
0163................................ Level IV Cystourethroscopy and
other Genitourinary Procedures.
0183................................ Level I Male Genital Procedures.
0181................................ Level II Male Genital Procedures.
0205................................ Level III Male Genital Procedures.
0184................................ Prostate Biopsy.
0166................................ Level I Urethral Procedures.
0168................................ Level II Urethral Procedures.
0126................................ Level I Urinary and Anal
Procedures.
0164................................ Level II Urinary and Anal
Procedures.
0156................................ Level III Urinary and Anal
Procedures.
0165................................ Level IV Urinary and Anal
Procedures.
0385................................ Level I Urogenital Procedures.
0386................................ Level II Urogenital Procedures.
------------------------------------------------------------------------

Table 34--Proposed CY 2016 APCs Assigned to AL Urology and Related
Services
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC Group title
------------------------------------------------------------------------
5371................................ Level 1 Urology and Related
Services.
5372................................ Level 2 Urology and Related
Services.
5373................................ Level 3 Urology and Related
Services.
5374................................ Level 4 Urology and Related
Services.
5375................................ Level 5 Urology and Related
Services.
5376................................ Level 6 Urology and Related
Services.
5377................................ Level 7 Urology and Related
Services.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

9. Vascular Procedures (Excluding Endovascular Procedures)
For the CY 2016 OPPS update, based on our evaluation of the latest
hospital outpatient claims data available for this proposed rule, we
are proposing to restructure all of the vascular procedure-related APCs
(excluding endovascular procedures) to more appropriately reflect the
costs and clinical characteristics of the procedures within each APC.
We believe that this proposed restructuring of APCs for vascular
procedures more accurately categorizes all of the vascular procedures
within an APC group, such that the services within each proposed newly
configured APC are more comparable clinically and with respect to
resource use. Table 35 below shows the vascular procedures APCs for CY
2015, and Table 36 below shows the proposed vascular procedures APCs
for CY 2016. The proposed payment rates for the vascular procedure
codes are included in Addendum B to this proposed rule (which is
available via the Internet on the CMS Web site). The proposed payment
rates for the proposed specific APCs to which we are proposing to
assign the urology and related procedures codes are included in Addenda
A and B to this proposed rule. Both OPPS Addenda A and B are available
via the Internet on the CMS Web site. We are inviting public comments
on this proposal.

Table 35--CY 2015 Vascular Procedure APCs
[Excluding Endovascular Procedures]
------------------------------------------------------------------------
CY 2015 APC CY 2015 APC Group title
------------------------------------------------------------------------
0103................................ Miscellaneous Vascular Procedures.
0624................................ Phlebotomy and Minor Vascular
Access Device.
0088................................ Thrombectomy.

[[Page 39264]]

0621................................ Level I Vascular Access
Procedures.
0622................................ Level II Vascular Access
Procedures.
0093................................ Vascular Reconstruction/Fistula
Repair.
0219................................ Vascular Ligation.
------------------------------------------------------------------------

Table 36--Proposed CY 2016 Vascular Procedures APCs
[Excluding Endovascular Procedures]
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC Group title
------------------------------------------------------------------------
5181................................ Level 1 Vascular Procedures.
5182................................ Level 2 Vascular Procedures.
5183................................ Level 3 Vascular Procedures.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing CY 2015 APC
numbers to the new proposed CY 2016 numbers.

IV. Proposed OPPS Payment for Devices

A. Proposed Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
Section 1833(t)(6)(B)(iii) of the Act 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. The eligibility period is for at least 2
years but no more than 3 years. We may establish a new device category
for pass-through payment in any quarter. Under our established policy,
we base the pass-through status expiration date for a device category
on the date on which pass-through payment is effective for the
category; 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. Proposed CY 2016 Policy
As stated earlier, section 1833(t)(6)(B)(iii) requires that, under
the OPPS, a category of devices be eligible for transitional pass-
through payments for at least 2 years, but not more than 3 years. There
currently are four device categories eligible for pass-through payment:
HCPCS code C1841 (Retinal prosthesis, includes all internal and
external components) was established effective October 1, 2013. HCPCS
code C2624 (Implantable wireless pulmonary artery pressure sensor with
delivery catheter, including all system components) was established
effective January 1, 2015. HCPCS code C2623 (Catheter, transluminal
angioplasty, drug-coated, non-laser) was established effective April 1,
2015. HCPCS code C2613 (Lung biopsy plug with delivery system) was
established effective July 1, 2015. The pass-through payment status of
the device category for HCPCS code C1841 will end on December 31, 2015.
Therefore, in accordance with our established policy, beginning with CY
2016, we are proposing 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.
If we create any new device categories for pass-through payment
status during the remainder of CY 2015 or during CY 2016, we will
propose future expiration dates in accordance with Sec. 419.66(g).
2. Proposed Annual Rulemaking Process in Conjunction With Quarterly
Review Process for Device Pass-Through Payment Applications
a. Background
Section 1833(t)(6)(B) of the Act requires payment to be made on a
``pass-through'' basis for designated medical devices. As part of
implementing the statute through regulations, we have continued to
believe that 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, we
have noted that the need for additional payments for devices that offer
little or no clinical improvement over previously existing devices is
less apparent. In such cases, these devices can still be used by
hospitals, and hospitals will be paid for them through appropriate APC
payment. Moreover, a goal is to target pass-through payments for those
devices where cost considerations might be most likely to interfere
with patient access (66 FR 55852; 67 FR 66782; and 70 FR 68629).
As specified in regulations at 42 CFR 419.66(b)(1) through (b)(3),
to be eligible for transitional pass-through payment under the OPPS, a
device must meet the following criteria: (1) If required by FDA, the
device must have received FDA premarket approval or clearance (except
for a device that has received an FDA investigational device exemption
(IDE) and has been classified as a Category B device by the FDA), or
meet another FDA exemption from premarket approval or clearance; (2)
the device must be determined reasonable and necessary for the
diagnosis or treatment of an illness or injury or to improve the
functioning of a malformed body part, as provided under section
1862(a)(1)(A) of the Act; and (3) the device must be an integral part
of the service, is used for one patient only, comes in contact with
human tissue, and is surgically implanted or inserted, whether or not
it remains with the patient when the patient is released from the
hospital. A device is not eligible if it is any of the following, as
specified at Sec. 419.66(b)(4): Equipment, an instrument, apparatus,
implement, or item of this type for which depreciation and financing
expenses are recovered as depreciation assets as defined in Chapter 1
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or a
material or supply furnished incident a service (for example, a suture,
customized surgical kit, or clip, other than a radiological site
marker).
Separately, we use the following criteria, as set forth under Sec.
419.66(c), to determine whether a category of devices should be
established: The device must--
Not be appropriately described by an existing category or
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service
as of December 31, 1996;
Have an average cost that is not ``insignificant''
relative to the payment amount for the procedure or service with which
the device is associated as determined under Sec. 416.66(d); and
Demonstrate a substantial clinical improvement, that is,
substantially improve the diagnosis or treatment of an illness or
injury or improve the functioning of a malformed body part compared to
the benefits of a device or devices in a previously established
category or other available treatment.

[[Page 39265]]

More details on the requirements for device pass-through payment
applications are included on the CMS Web site in the application form
itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the
``Downloads'' section.
The current OPPS process for applying for a new device category for
transitional pass-through payment is subregulatory; that is, device or
implantable biological or skin substitute manufacturers, hospitals, or
other interested parties may apply to the agency through an application
process available online. The application determination process is
handled outside of rulemaking. Applications are accepted by CMS on a
rolling basis and determinations are made on a quarterly basis.
Decisions by CMS to approve an application for a device for pass-
through payment under the OPPS are announced quarterly through a
subregulatory process via program transmittal and are communicated
directly to the applicant. Approvals are then referenced in our annual
rulemaking as a means to establish payment periods. Currently, denials
of applications for devices for pass-through payment status under the
OPPS are communicated directly to the applicant and not announced
publicly through rulemaking, program transmittal, or other public
forum. Applicants for pass-through payment for a device whose
application is denied may submit a reconsideration request to CMS. The
applicant must send a written letter that explains the reasons for the
request for reconsideration of CMS' decision, along with any additional
information or evidence that may not have been included with the
original application that may further support the reconsideration
request. Currently, reconsiderations of denials of devices for pass-
through payment under the OPPS are handled similarly to initial denials
through direct communication with the applicant.
Over the years, stakeholders have opined that the current OPPS
device pass-through payment application process lacks transparency and
consistent approval standards. That is, stakeholders have suggested
that the unavailability to the public of specific information about
application decisions makes it difficult to determine if there are
consistent approval standards because there is no public knowledge
regarding which applications are rejected and which criteria are not
met. Likewise, for approved applications, there is a lack of the
specific information available to the public that led to approval of
the application. Some stakeholders have requested that CMS increase
transparency in the device pass-through payment application process by
notifying the public, through rulemaking, of the number of applications
received each year in aggregate and, for each application, include in
rulemaking the preliminary decision, any additional details included in
follow-up with the applicant, and the final decision, including the
rationale for the approval or denial of the application. Stakeholders
also have requested that CMS consult with industry and other
stakeholders during the application review process.
We agree with stakeholders that the current OPPS device pass-
through payment application process could benefit from increased
transparency and stakeholder input. Therefore, for CY 2016, we are
proposing changes to the OPPS device pass-through payment application
process to help achieve the goals of increased transparency and
stakeholder input. We are proposing to align a portion of the OPPS
device pass-through payment application process with the already
established inpatient prospective payment system (IPPS) application
process for new medical services and new technology add-on payments.
(We refer readers to sections 1886(d)(5)(K) and (d)(5)(L) of the Act
and 42 CFR 412.87 and 412.88 for additional information on the IPPS
process for approval of new medical services and technologies for new
technology add-on payment under the IPPS.) Frequently, an applicant
will apply for both device pass-through payments under the OPPS and for
new technology add-on payments under the IPPS. Both the OPPS and the
IPPS require that the applicant demonstrate that the technology
represents a substantial clinical improvement relative to existing
technologies. Approvals and denials of applications for new technology
add-on payments under the IPPS are finalized through annual rulemaking.
We discuss the specific changes that we are proposing for the
transitional medical device pass-through payment application process
under the OPPS in the section below.
b. Proposed Revisions to the Application Process for Device Pass-
Through Payments
Beginning in CY 2016, we are proposing to add a rulemaking
component to the current quarterly device pass-through payment
application process. That is, we are proposing to supplement the
quarterly process by including a description of applications received
(whether they are approved or denied) as well as our rationale for
approving or denying the application in the next applicable OPPS
proposed rule. This proposed revised process would include providing
information related to the establishment of the new device category,
the cost thresholds, and the substantial clinical improvement
criterion. For applications that are approved during the quarterly
review process, based on public comments received in response to
proposed rulemaking, we would either continue to maintain device pass-
through payment status or finalize a policy to discontinue pass-through
payment status. In the rare case in which an applicant is approved
during the quarterly process and then a decision is made in rulemaking
to reverse the approval, the applicant could reapply with new
information, in advance of the following year proposed rule. The
application would be included in the proposed rule, along with a
proposal to approve or deny device pass-through payment status and a
final decision would be provided in the final rule after consideration
of public comments.
For applications that we deny during the quarterly review process,
we are proposing to include the same type of information that we
include for approved devices in the next applicable OPPS proposed rule
and, after consideration of public comments received, could revisit our
decision and either uphold the original decision of denial or approve
the application based on additional evidence submitted through the
rulemaking process. The final decision would be published in the
appropriate final rule. In lieu of the informal reconsideration process
that is currently in place for denied applications; we would only
provide opportunity to reconsider applications that are denied through
the rulemaking process. We are proposing to allow applicants whose
applications are denied through the quarterly review process to
withdraw their applications if they do not wish to go through the
rulemaking process. If such a decision is made, the quarterly review
decision to deny device pass-through payment for the application would
be considered final and there would be no further reconsideration
process available. By providing an opportunity for public comment, we
believe that we would not only make the device pass-through payment
application and review process more transparent, but also would assure
that applicants have the benefit of public input on the ultimate
decision to

[[Page 39266]]

approve or deny an application for device pass-through payments under
the OPPS.
Currently, the deadline for device pass-through payment
applications is the first business day in March, June, September, and
December of a year for consideration for the next quarter (at the
earliest) of the calendar year. For example, under our proposal, CMS'
decision on an application that is submitted by the first business day
in March would likely be presented in that calendar year's OPPS
proposed rule (assuming the application that is submitted is complete).
Decisions on applications received after the first business day in
March would be included in the OPPS proposed rule for the following
calendar year.
In response to requests for more transparency and public input on
the device pass-through payment application process, we considered
moving entirely to a yearly process through rulemaking and eliminating
quarterly submissions. However, in an effort to maintain flexibility
under the OPPS process for device pass-through payment applications, we
believe that maintaining the quarterly process in addition to adding
the annual rulemaking process may be beneficial because applications
approved on a quarterly basis would be granted access to pass-through
payments as soon as possible for approved devices. In addition, all
applications would be considered through the rulemaking process, which
would provide increased transparency and allow public input that would
be considered in making a final determination. We are inviting public
comments on this proposed approach as well as on whether moving to a
rulemaking process entirely would be more helpful to further increase
transparency and further align the review of applications submitted
under both the IPPS and the OPPS.
c. Criterion for Newness
Since the inception of transitional pass-through payments for new
categories of medical devices on April 7, 2000, there has not been any
specific criteria provided to evaluate the newness of the device for
purposes of determining eligibility and receiving device pass-through
payment under the OPPS. Section 1833(t)(6)(B)(ii)(I) of the Act
requires that the Secretary shall establish criteria that will be used
for creation of additional categories other than the initial categories
described by section 1833(t)(6)(B)(i) of the Act through rulemaking. We
believe that one prong of determining whether a new category should be
established is whether or not the device seeking such new category
status is itself new. We believe that the payment adjustment for
transitional pass-through payments for devices under the OPPS was
intended as an interim measure to allow for adequate payment of new
innovative technology while we collected the necessary data to
incorporate the costs for these devices into the base APC rate (66 FR
55861). Typically, there is a lag of 2 to 3 years from the point when a
new device is first introduced on the U.S. market (generally on the
date that the device receives FDA approval) until it is reflected in
our claims data.
Existing regulations at Sec. 419.66(b)(1) specify that, if
required by the FDA, the device must have received FDA premarket
approval or clearance (except for a device that has received an FDA
investigational device exemption (IDE) and has been classified as a
Category B device by the FDA in accordance with Sec. Sec. 405.203
through 405.207 and 405.211 through 405.215 of the regulations), or
meet another appropriate FDA exemption from premarket approval or
clearance. This existing regulatory provision does not address the
issue of how dated these device approvals, clearances, or exemptions
may be. As a result, a device that has received FDA approval,
clearance, or exemption and has been available on the U.S. market for
several years could apply for and possibly be approved for pass-through
payments for a new device category if the device is not described by
any of the existing (either currently active or expired) categories
established for transitional device pass-through payments. Over the
years, we have received applications for device pass-through payment
for devices that have been on the market for several years. We do not
believe that this is the intent of the regulation. Therefore, we are
proposing to modify the medical device eligibility requirement at Sec.
419.66(b)(1) to provide that not only must a device, if required,
receive FDA premarket approval or clearance (except for a device that
has received an FDA investigational device exemption (IDE) and has been
classified as a Category B device by the FDA in accordance with
Sec. Sec. 405.203 through 405.207 and 405.211 through 405.215 of the
regulations) or meet another appropriate FDA exemption from premarket
approval or clearance, but also that beginning with applications
received on or after January 1, 2016, any such device must have
received such approval or clearance, as applicable, within 3 years from
the date of the application for transitional pass-through payment. That
is, we are proposing to add a requirement to ensure that medical
devices falling under Sec. 419.66(b)(1) and seeking creation of a
category for device pass-through payment must be ``new.'' We believe
that the proposed adjustment is consistent with section
1833(t)(6)(B)(ii)(I) of the Act, which allows for establishing criteria
that will be used for the creation of additional categories through
rulemaking. This proposed adjustment also will further align the OPPS
device pass-through process with the IPPS process for new medical
services and new technology add-on payments (42 CFR 412.87(b)(2) and 78
FR 50570) by adding the requirement that the device be new.
Specifically, we are proposing that, beginning with applications
received on or after January 1, 2016, a device will only be eligible
for transitional pass-through payment under the OPPS if, in cases where
the device requires FDA approval, clearance, or exemption, the device
meets the newness criterion; that is, the date of original FDA approval
or clearance and U.S. market availability is within 3 years from the
date of the application for transitional pass-through payment. We are
proposing to revise Sec. 419.66(b)(1) to reflect this proposal. We are
inviting public comments on this proposal.
3. Proposed Provisions for Reducing Transitional Pass-Through Payments
To Offset Costs Packaged Into APC Groups
a. Background
Section 1833(t)(6)(D)(ii) of the Act sets the amount of additional
pass-through payment for an eligible device as the amount by which the
hospital's charges for a device, adjusted to cost (the cost of the
device), exceeds the portion of the otherwise applicable Medicare
outpatient department fee schedule amount (the APC payment amount)
associated with the device. We have an established policy to estimate
the portion of each APC payment rate that could reasonably be
attributed to the cost of the associated devices that are eligible for
pass-through payments (66 FR 59904) for purposes of estimating the
portion of the otherwise applicable APC payment amount associated with
pass-through devices. For eligible device categories, we deduct an
amount that reflects the portion of the APC payment amount that we
determine is associated with the cost of the device, defined as the
device APC offset amount, from the charges adjusted to cost for the
device, as provided by section 1833(t)(6)(D)(ii) of the Act, to
determine the pass-through payment amount for the eligible device. We
have consistently used an

[[Page 39267]]

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. In the unusual
case where the device offset amount exceeds the device pass-through
payment amount, the regular APC rate would be paid.
We published a list of all procedural APCs with the CY 2015
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 January 1, 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). Beginning January 1, 2015, skin
substitutes are evaluated for pass-through status and payment using the
device pass-through evaluation process (79 FR 66888).
b. Proposed CY 2016 Policy
As we did for CY 2015, we are proposing to continue, for CY 2016,
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 also are proposing to continue our established
policies for calculating and setting the device APC offset amounts for
each device category eligible for pass-through payment. In addition, we
are proposing to continue to review each new device category on a case-
by-case basis to determine whether device costs associated with the new
category are already packaged into the existing APC structure. If
device costs packaged into the existing APC structure are associated
with the new category, we are proposing to deduct the device APC offset
amount from the pass-through payment for the device category. As stated
earlier, these device APC offset amounts also would be used in order to
evaluate whether the cost of a device in an application for a new
device category for pass-through payment is not insignificant in
relation to the APC payment amount for the service related to the
category of devices (Sec. 419.66(d)).
In addition, we are proposing to update the list of all procedural
APCs with the final CY 2016 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 2016 device pass-
through payment applications and by CMS in reviewing those
applications.

B. Proposed Device-Intensive Procedures

1. Background
Under the OPPS, device-intensive APCs are defined as those APCs
with a device offset greater than 40 percent (79 FR 66795). In
assigning device-intensive status to an APC, the device costs of all
procedures within the APC are calculated and the geometric mean device
offset of all the procedures must exceed 40 percent. Almost all of the
procedures assigned to device-intensive APCs utilize devices, and the
device costs for the associated HCPCS codes exceed the 40-percent
threshold. The no cost/full credit and partial credit device policy (79
FR 66872 through 66873) applies to device-intensive APCs and is
discussed in detail in section IV.B.3. of this proposed rule. A related
device policy is the requirement that procedures assigned to certain
(formerly device-dependent) APCs require the reporting of a device code
on the claim (79 FR 66795).
2. Proposed Changes to Device Edit Policy
In the CY 2015 OPPS/ASC final rule with comment period, we
finalized a policy and implemented 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 APCs listed below in Table 37 (the formerly device-dependent APCs)
is reported on the claim (79 FR 66795).

Table 37--APCs That Require a Device Code To Be Reported on a Claim When
a Procedure Assigned to One of These APCs Is Reported for CY 2015
------------------------------------------------------------------------
CY 2015 APC CY 2015 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 Gynecologic Procedures.
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.
------------------------------------------------------------------------

There are 10 APCs listed in Table 37 that are not device-intensive
APCs; that is, their device offsets do not exceed 40 percent. We do not
believe that we should continue to require device codes on claims for
procedures that are not assigned to device-intensive APCs, as the
relative device costs do not exceed the device-intensive threshold of
40 percent. Unlike with device-intensive APCs, we believe it is not
necessary to require the reporting of a device code for reporting
device charges on a claim because the relative device costs are much
less significant than those associated with device-intensive APCs. We
believe that device code reporting requirements should only apply to
the device-intensive APCs because these APCs have significant device
costs that are associated with particular devices.

[[Page 39268]]

We note that, in CY 2015 (79 FR 66794 through 66795), we applied the
device code reporting requirements to those formerly device-dependent
APCs that also met the device-intensive APC definition. However, after
further consideration, we no longer believe it is appropriate to
restrict the application of this policy to only the subset of device-
intensive APCs that were formerly device-dependent and now believe the
device code reporting requirements should apply to all device-intensive
APCs, regardless of whether or not the APC was formerly device-
dependent. We believe that the device coding requirement should apply
to procedures assigned to all device-intensive APCs because these are
the APCs with significant device costs. Therefore, we are proposing for
CY 2016 that only the procedures that require the implantation of a
device that are assigned to a device-intensive APC would require a
device code on the claim. The list of device-intensive APCs are listed
in Table 38 below.

Table 38--Proposed CY 2016 Device-Intensive APCs
------------------------------------------------------------------------
Proposed renumbered CY 2016 APC * Proposed CY 2016 APC title
------------------------------------------------------------------------
0039................................ Level III Neurostimulator &
Related Procedures.
0061................................ Level II Neurostimulator & Related
Procedures.
0089................................ Level III Pacemaker & Similar
Procedures.
0090................................ Level II Pacemaker & Similar
Procedures.
0105................................ Level I Pacemaker & Similar
Procedures.
0107................................ Level I ICD & Similar Procedures.
0108................................ Level II ICD & Similar Procedures.
0227................................ Implantation of Drug Infusion
Device.
0229................................ Level II Endovascular Procedures.
0259................................ Level VI ENT Procedures.
0293................................ Level III Intraocular Procedures.
0318................................ Level IV Neurostimulator & Related
Procedures.
0319................................ Level III Endovascular Procedures.
0351................................ Level IV Intraocular Procedures.
0386................................ Level VII Urology & Related
Procedures.
0425................................ Level IV Musculoskeletal
Procedures.
0655................................ Level IV Pacemaker & Similar
Procedures.
1564................................ New Technology--Level 27.
1593................................ New Technology--Level 46.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) provides a crosswalk of the existing APC numbers
to the proposed APC renumbers.

We are proposing that the claims processing edits are such that any
device code, when reported on a claim with a procedure assigned to an
APC listed in Table 38, would satisfy the edit. Claims submitted with a
procedure code requiring a device assigned to an APC listed in Table
38, but without any device code reported on the claim, would be
returned to the provider.
3. Proposed Adjustment to OPPS Payment for No Cost/Full Credit and
Partial Credit Devices
a. 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 were
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, hospitals are 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, hospitals are instructed to report as the device charge
the difference between the hospital's usual charge for the device being
implanted and the hospital's 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 were
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'' modifiers
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. For CY 2015, we continued 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 use 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 (79 FR
66872 through 66873).
b. Proposed Policy for CY 2016
For CY 2016 and subsequent years, we are proposing to continue our
existing policy of reducing OPPS payment for specified APCs when a
hospital furnishes a specified device without cost or with a full or
partial credit. Specifically, for CY 2016, we are proposing to continue
to reduce the OPPS payment, for the device intensive APCs listed in
Table 38 above, 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 value code ``FD'' when the hospital receives a
credit for

[[Page 39269]]

a replaced device that is 50 percent or greater than the cost of the
device. In CY 2015 and prior years, we specified a list of costly
devices to which this APC payment adjustment would apply. Upon further
consideration of our existing value code ``FD'' APC payment adjustment
policy and the ability to deduct the actual amount of the device credit
from the OPPS payment, regardless of the cost of the individual device,
instead of a percentage of the device offset, we no longer believe it
is necessary to restrict the application of this policy to a specific
list of costly devices (most recently listed in Table 27 of the CY 2015
OPPS/ASC final rule with comment period (79 FR 66873)) as was necessary
under the ``FB''/``FC'' modifier payment adjustment policy, which made
APC payment adjustments as a percentage of the applicable device offset
amount. Under the current policy, the actual amount of the device
credit can be appropriately reported in the amount portion of value
code ``FD'' and deducted from OPPS payment for all no cost/full credit
and partial credit devices furnished in conjunction with a procedure
assigned to a device intensive APC. Therefore, for CY 2016 and
subsequent years, we are proposing to no longer specify a list of
devices to which the OPPS payment adjustment for no cost/full credit
and partial credit devices would apply. Instead, we are proposing to
apply this APC payment adjustment to all replaced devices furnished in
conjunction with a procedure assigned to a device-intensive APC when
the hospital receives a credit for a replaced specified device that is
50 percent or greater than the cost of the device.
For CY 2016 and subsequent years, we also are proposing to continue
using the three criteria established in the CY 2007 OPPS/ASC final rule
with comment period for determining the APCs to which our proposed CY
2016 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 APC
must be device intensive; that is, the device offset amount must be
significant, which is defined as exceeding 40 percent of the APC cost.
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. As noted earlier in this section, APCs with a device
offset that exceed the 40-percent threshold are called device-intensive
APCs.
We examined the offset amounts calculated from the CY 2016 proposed
rule claims data and the clinical characteristics of the proposed CY
2016 APCs to determine which APCs meet the criteria for CY 2016. The
full list of device-intensive APCs to which we are proposing that the
payment adjustment policy for no cost/full credit and partial credit
devices would apply in CY 2016 is included in Table 38 above.
4. Proposed Adjustment to OPPS Payment for Discontinued Device-
Intensive Procedures
It has been our longstanding policy to instruct hospitals to
utilize an appropriate modifier on a claim to report when a procedure
is discontinued, partially reduced, or cancelled. Specifically, when
appropriate, hospitals are instructed to append modifiers 73, 74, and
52 to report and be paid for expenses incurred in preparing a patient
for a procedure and scheduling a room for performing the procedure
where the service is subsequently discontinued (Medicare Claims
Processing Manual (Pub. 100-04, Chapter 4, Section 20.6.4). The
circumstances identifying when it is appropriate to append modifier 73,
74, or 52 to a claim are detailed below.
Modifier 73 is used by the hospital to indicate that a procedure
requiring anesthesia was terminated due to extenuating circumstances or
to circumstances that threatened the well-being of the patient after
the patient had been prepared for the procedure (including procedural
pre-medication when provided), and been taken to the room where the
procedure was to be performed, but prior to administration of
anesthesia. For purposes of billing for services furnished in the HOPD,
anesthesia is defined to include local, regional blocks(s), moderate
sedation/analgesia (``conscious sedation''), deep sedation/analgesia,
or general anesthesia. Modifier 73 was created so that the costs
incurred by the hospital to prepare the patient for the procedure and
the resources expended in the procedure room and recovery room (if
needed) could be recognized for payment even though the procedure was
discontinued. Modifier 73 results in a payment rate of 50 percent of
the full OPPS payment for the procedure.
Modifier 74 is used by the hospital to indicate that a procedure
requiring anesthesia was terminated after the induction of anesthesia
or after the procedure was started (for example, the incision made, the
intubation started, and the scope inserted) due to extenuating
circumstances or to circumstances that threatened the well-being of the
patient. This modifier may also be used to indicate that a planned
surgical or diagnostic procedure was discontinued, partially reduced,
or canceled at the physician's discretion after the administration of
anesthesia. For purposes of billing for services furnished in the HOPD,
anesthesia is defined to include local, regional blocks(s), moderate
sedation/analgesia (``conscious sedation''), deep sedation/analgesia,
or general anesthesia. Modifier 74 was created so that the costs
incurred by the hospital to initiate the procedure (preparation of the
patient, procedure room, and recovery room) could be recognized for
payment even though the procedure was discontinued prior to completion.
Modifier 74 results in a payment rate of 100 percent of the full OPPS
payment for the procedure.
Modifier 52 was revised in CY 2012 and is used by the hospital to
indicate partial reduction, cancellation, or discontinuation of
services for which anesthesia is not planned. (We refer readers to the
January 2012 Update of the Hospital Outpatient Prospective Payment
System (OPPS), Transmittal 2386, Change Request 7672, dated January 13,
2012.) The modifier provides a means for reporting reduced services
without disturbing the identification of the basic service. Modifier 52
results in a payment rate of 50 percent of the full OPPS payment for
the procedure.
When a procedure assigned to a device-intensive APC is discontinued
either prior to administration of anesthesia or for a procedure that
does not require anesthesia, we presume that, in the majority of cases,
the device was not used and remains sterile such that it could be used
for another case. In these circumstances, under current policy,
hospitals could be paid twice by Medicare for the same device, once for
the initial procedure that was discontinued and again when the device
is actually used. Accordingly, for CY 2016, we are proposing that, for
procedures involving implantable devices that are assigned to a device-

[[Page 39270]]

intensive APC (defined as those APCs with a device offset greater than
40 percent), we would reduce the APC payment amount for discontinued
device-intensive procedures, where anesthesia has not been administered
to the patient or the procedure does not require anesthesia, by 100
percent of the device offset amount prior to applying the additional
payment adjustments that apply when the procedure is discontinued. We
are proposing to restrict the policy to device-intensive APCs so that
the adjustment would not be triggered by the use of an inexpensive
device whose cost would not constitute a significant portion of the
total payment rate for an APC. At this time, we are not proposing to
deduct the device offset amount from a procedure that was discontinued
after anesthesia was administered (modifier 74) because we believe that
it may be more likely that devices involved with such procedures may no
longer be sterile, such that they could be restocked and used for
another case. However, we are soliciting public comments on how often
the device becomes ineligible for use in a subsequent case and whether
we should deduct the device offset amount from claims with modifier 74
as well.

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

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

1. Background
Section 1833(t)(6) of the Act provides for temporary additional
payments or ``transitional pass-through payments'' for certain drugs
and biologicals. Throughout this proposed rule, the term ``biological''
is used because this is the term that appears in section 1861(t) of the
Act. ``Biological'' as used in this proposed rule includes (but is not
necessarily limited to) ``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. Proposed CY 2016 pass-through drugs and
biologicals and their designated APCs are assigned status indicator
``G'' in Addenda A and B to this proposed rule, which are available via
the Internet on the CMS Web site.
Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through
payment amount, in the case of a drug or biological, is the amount by
which the amount determined under section 1842(o) of the Act for the
drug or biological exceeds the portion of the otherwise applicable
Medicare OPD fee schedule that the Secretary determines is associated
with the drug or biological. If the drug or biological is covered under
a competitive acquisition contract under section 1847B of the Act, the
pass-through payment amount is determined by the Secretary to be equal
to the average price for the drug or biological for all competitive
acquisition areas and the year established under such section as
calculated and adjusted by the Secretary. However, we note that the
Part B drug competitive acquisition program (CAP) has been postponed
since CY 2009, and such a program has not been reinstated for CY 2016.
This methodology for determining the pass-through payment amount is
set forth in regulations at 42 CFR 419.64. These regulations specify
that the pass-through payment equals the amount determined under
section 1842(o) of the Act minus the portion of the APC payment that
CMS determines is associated with the drug or biological. Section 1847A
of the Act establishes the average sales price (ASP) methodology, which
is used for payment for drugs and biologicals described in section
1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP
methodology, as applied under the OPPS, uses several sources of data as
a basis for payment, including the ASP, the wholesale acquisition cost
(WAC), and the average wholesale price (AWP). In this proposed rule,
the term ``ASP methodology'' and ``ASP-based'' are inclusive of all
data sources and methodologies described therein. Additional
information on the ASP methodology can be found on the CMS Web site at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
The pass-through application and review process for drugs and
biologicals is explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Proposed Drugs and Biologicals with Expiring Pass-Through Payment
Status in CY 2015
We are proposing that the pass-through status of 12 drugs and
biologicals would expire on December 31, 2015, as listed in Table 39
below. All of these drugs and biologicals will have received OPPS pass-
through payment for at least 2 years and no more than 3 years by
December 31, 2015. 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, anesthesia drugs;
drugs, biologicals, and radiopharmaceuticals that function as supplies
when used in a diagnostic test or procedure (including diagnostic
radiopharmaceuticals, contrast agents, and stress agents); and drugs
and biologicals that function as supplies when used in a surgical
procedure, our standard methodology for providing payment for drugs and
biologicals with expiring pass-through status in an upcoming calendar
year is to determine the product's estimated per day cost and compare
it with the OPPS drug packaging threshold for that calendar year (which
is proposed at $100 for CY 2016), as discussed further in section
V.B.2. of this proposed rule. If the estimated per day cost for the
drug or biological is less than or equal to the applicable OPPS drug
packaging threshold, we would package payment for the drug or
biological into the payment for the associated procedure in the
upcoming calendar year. If the estimated per day cost of the drug or
biological is greater than the OPPS drug packaging threshold, we would
provide separate payment at the applicable relative ASP-based payment
amount

[[Page 39271]]

(which is proposed at ASP+6 percent for CY 2016, as discussed further
in section V.B.3. of this proposed rule).

Table 39--Proposed Drugs and Biologicals for Which Pass-Through Payment Status Expires December 31, 2015
----------------------------------------------------------------------------------------------------------------
CY 2015 HCPCS code CY 2015 long descriptor CY 2015 SI CY 2015 APC
----------------------------------------------------------------------------------------------------------------
A9520............................... Technetium Tc 99m N N/A
tilmanocept, diagnostic,
up to 0.5 millicuries.
C9132............................... Prothrombin complex K 9132
concentrate (human),
Kcentra, per i.u. of
Factor IX activity.
J1556............................... Injection, immune globulin K 9130
(Bivigam), 500 mg.
J3060............................... Injection, taliglucerase K 9294
alfa, 10 units.
J7315............................... Mitomycin, ophthalmic, 0.2 N N/A
mg.
J7316............................... Injection, Ocriplasmin, K 9298
0.125mg.
J9047............................... Injection, carfilzomib, 1 K 9295
mg.
J9262............................... Injection, omacetaxine K 9297
mepesuccinate, 0.01 mg.
J9354............................... Injection, ado-trastuzumab K 9131
emtansine, 1 mg.
J9400............................... Injection, Ziv-Aflibercept, K 9296
1 mg.
Q4122............................... Dermacell, per square N N/A
centimeter.
Q4127............................... Talymed, per square N N/A
centimeter.
----------------------------------------------------------------------------------------------------------------

3. Proposed Drugs, Biologicals, and Radiopharmaceuticals with New or
Continuing Pass-Through Payment Status in CY 2016
We are proposing to continue pass-through payment status in CY 2016
for 32 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, 2015. These drugs and biologicals,
which were approved for pass-through status between January 1, 2013,
and July 1, 2015, are listed in Table 40 below. The APCs and HCPCS
codes for these drugs and biologicals approved for pass-through status
through July 1, 2015 are assigned status indicator ``G'' in Addenda A
and B to this proposed rule. Addenda A and B to this proposed rule are
available via the Internet on the CMS Web site.
Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through
payment for pass-through drugs and biologicals (the pass-through
payment amount) as the difference between the amount authorized under
section 1842(o) of the Act and the portion of the otherwise applicable
OPD fee schedule that the Secretary determines is associated with the
drug or biological. Payment for drugs and biologicals with pass-through
status under the OPPS is currently made at the physician's office
payment rate of ASP+6 percent. We believe it is consistent with the
statute to propose to continue to provide payment for drugs and
biologicals with pass-through status at a proposed rate of ASP+6
percent in CY 2016, which is the amount that drugs and biologicals
receive under section 1842(o) of the Act.
Therefore, for CY 2016, we are proposing to pay for pass-through
drugs and biologicals at ASP+6 percent, equivalent to the rate these
drugs and biologicals would receive in the physician's office setting
in CY 2016. We are proposing that a $0.00 pass-through payment amount
would be paid for most pass-through drugs and biologicals under the CY
2016 OPPS because the difference between the amount authorized under
section 1842(o) of the Act, which is proposed at ASP+6 percent, and the
portion of the otherwise applicable OPD fee schedule that the Secretary
determines is appropriate, proposed at ASP+6 percent, is $0.
In the case of policy-packaged drugs (which include the following:
contrast agents; diagnostic radiopharmaceuticals; anesthesia drugs;
drugs, biologicals, and radiopharmaceuticals that function as supplies
when used in a diagnostic test or procedure and drugs; and biologicals
that function as supplies when used in a surgical procedure), we are
proposing that their pass-through payment amount would be equal to
ASP+6 percent for CY 2016 because, if not for their pass-through
status, payment for these products would be packaged into the
associated procedure.
In addition, we are proposing to continue to update pass-through
payment rates on a quarterly basis on the CMS Web site during CY 2016
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 2016, as is consistent with our CY 2015 policy for diagnostic
and therapeutic radiopharmaceuticals, we are proposing 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 2016, we are proposing to follow the standard
ASP methodology to determine the pass-through payment rate that drugs
receive under section 1842(o) of the Act, which is proposed at ASP+6
percent. If ASP data are not available for a radiopharmaceutical, we
are proposing to provide pass-through payment at WAC+6 percent, the
equivalent payment provided to pass-through drugs and biologicals
without ASP information. If WAC information also is not available, we
are proposing to provide payment for the pass-through
radiopharmaceutical at 95 percent of its most recent AWP.
As discussed in more detail in section II.A.3. of this proposed
rule, we implemented a policy whereby payment for the following
nonpass-through items is packaged into payment for the associated
procedure: policy-packaged drugs which include contrast agents, stress
agents, diagnostic radiopharmaceuticals, and 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

[[Page 39272]]

or biological. Because payment for a drug that is policy-packaged would
otherwise be packaged if the product did not have pass-through payment
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 proposed rule. It
follows that the copayment for the nonpass-through payment portion (the
otherwise applicable fee schedule amount that we also would 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 2015, we are proposing to
continue to set the associated copayment amount to zero for CY 2016 for
pass-through drugs and biologicals that would otherwise be packaged if
the item did not have pass-through payment status. The 32 drugs and
biologicals that we are proposing to continue to have pass-through
payment status for CY 2016 or have been granted pass-through payment
status as of July 2015 are shown in Table 40 below.

Table 40--Proposed Drugs and Biologicals With Pass-Through Payment Status in CY 2016
----------------------------------------------------------------------------------------------------------------
Proposed CY 2016 CY 2016 Long Proposed new CY
CY 2015 HCPCS code HCPCS code descriptor Proposed CY 2016 SI 2016 APC *
----------------------------------------------------------------------------------------------------------------
A9586......................... A9586........... Florbetapir f18, G 1664
diagnostic, per
study dose, up to 10
millicuries.
C9025......................... C9025........... Injection, G 1488
ramucirumab, 5 mg.
C9026......................... C9026........... Injection, G 1489
vedolizumab, 1 mg.
C9027......................... C9027........... Injection, G 1490
pembrolizumab, 1 mg.
C9349......................... C9349........... PuraPly, and PuraPly G 1657
Antimicrobial, any
type, per square
centimeter.
C9442......................... C9442........... Injection, G 1658
belinostat, 10 mg.
C9443......................... C9443........... Injection, G 1659
dalbavancin, 10 mg.
C9444......................... C9444........... Injection, G 1660
oritavancin, 10 mg.
C9445......................... C9445........... Injection, c-1 G 9445
esterase inhibitor
(human), Ruconest,
10 units.
C9446......................... C9446........... Injection, tedizolid G 1662
phosphate, 1 mg.
C9447......................... C9447........... Injection, G 1663
phenylephrine and
ketorolac, 4 ml vial.
C9449......................... C9449........... Injection, G 9449
blinatumomab, 1 mcg.
C9450......................... C9450........... Injection, G 9450
fluocinolone
acetonide
intravitreal
implant, 0.19 mg.
C9451......................... C9451........... Injection, peramivir, G 9451
1 mg.
C9452......................... C9452........... Injection, G 9452
ceftolozane 50 mg
and tazobactam 25 mg.
C9453......................... C9453........... Injection, nivolumab, G 9453
1 mg.
C9454......................... C9454........... Injection, G 9454
pasireotide long
acting, 1 mg.
C9455......................... C9455........... Injection, G 9455
siltuximab, 10 mg.
C9497......................... C9497........... Loxapine, inhalation G 9497
powder, 10 mg.
C9022......................... J1322........... Injection, elosulfase G 1480
alfa, 1 mg.
Q9970......................... J1439........... Injection, ferric G 9441
carboxymaltose, 1 mg.
J1446......................... J1446........... Injection, TBO- G 1477
Filgrastim, 5
micrograms.
C9023......................... J3145........... Injection, G 1487
testosterone
undecanoate, 1 mg.
C9134......................... J7181........... Factor XIII G 1746
(antihemophilic
factor,
recombinant),
Tretten, per i.u.
C9133......................... J7200........... Factor IX G 1467
(antihemophilic
factor,
recombinant),
Rixubus, per i.u.
C9135......................... J7201........... Factor IX G 1486
(antihemophilic
factor,
recombinant),
Alprolix, per i.u.
J7508......................... J7508........... Tacrolimus, Extended G 1465
Release, Oral, 0.1
mg.
C9021......................... J9301........... Injection, G 1476
obinutuzumab, 10 mg.
J9371......................... J9371........... Injection, G 1466
Vincristine Sulfate
Liposome, 1 mg.
Q4121......................... Q4121........... Theraskin, per square G 1479
centimeter.
C9136......................... Q9975........... Injection, factor G 1656
viii, fc fusion
protein,
(recombinant), per
i.u..
C9448......................... Q9978........... Netupitant (300mg) G 9448
and palonosetron
(0.5 mg), oral.
----------------------------------------------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet on the CMS Web site) contains a
crosswalk of the existing APC numbers to the proposed new APC numbers for CY 2016.

4. Proposed Provisions for Reducing Transitional Pass-Through Payments
for Policy-Packaged Drugs and Biologicals to Offset Costs Packaged into
APC Groups
a. Background
Prior to CY 2008, diagnostic radiopharmaceuticals and contrast
agents were paid separately under the OPPS if their mean per day costs
were greater than the applicable year's drug packaging threshold. In CY
2008 (72 FR 66768), we began a policy of packaging payment for all
nonpass-through diagnostic radiopharmaceuticals and contrast agents as
ancillary and supportive items and services into their associated
nuclear medicine and radiology 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 non-pass-through diagnostic radiopharmaceuticals and
contrast agents were packaged as a matter of policy.
Beginning in CY 2014, in the CY 2014 OPPS/ASC final rule with
comment period (78 FR 74925), we finalized a policy to package nonpass-
through drugs, biologicals, and radiopharmaceuticals that function as
supplies when used in a diagnostic test or procedure. This category
includes diagnostic radiopharmaceuticals, contrast agents, stress
agents, and other diagnostic drugs. In addition, beginning in CY 2014,
we finalized the packaging

[[Page 39273]]

of all drugs and biologicals that function as supplies when used in a
surgical procedure (including but not limited to skin substitutes and
implantable biologicals). These packaging policies are codified at 42
CFR 419.2(b).
b. Proposed Payment Offset Policy for Diagnostic Radiopharmaceuticals
As previously noted, radiopharmaceuticals are considered to be
drugs for OPPS pass-through payment purposes. As described above,
section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
and the otherwise applicable OPD fee schedule amount. Because a payment
offset is necessary in order to provide an appropriate transitional
pass-through payment, we deduct from the pass-through payment for
diagnostic radiopharmaceuticals an amount reflecting the portion of the
APC payment associated with predecessor radiopharmaceuticals in order
to ensure no duplicate radiopharmaceutical payment is made.
In CY 2009, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor diagnostic radiopharmaceuticals when considering a new
diagnostic radiopharmaceutical for pass-through payment (73 FR 68638
through 68641). Specifically, we use the policy-packaged drug offset
fraction for APCs containing 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 2016, as we did in CY 2015,
we are proposing to continue to apply the diagnostic
radiopharmaceutical offset policy to payment for pass-through
diagnostic radiopharmaceuticals. For CY 2016, there will be one
diagnostic radiopharmaceutical with pass-through status under the OPPS,
HCPCS code A9586 (Florbetapir f18, diagnostic, per study dose, up to 10
millicuries). We currently apply the established radiopharmaceutical
payment offset policy to pass-through payment for this product.
Table 41 below displays the proposed APCs to which nuclear medicine
procedures would be assigned in CY 2016 and for which we expect that an
APC offset could be applicable in the case of diagnostic
radiopharmaceuticals with pass-through status.

Table 41--Proposed APCs to Which a Diagnostic Radiopharmaceutical Offset
May Be Applicable in CY 2016
------------------------------------------------------------------------
Proposed Restructured/ Renumbered CY
2016 APC * Proposed CY 2016 APC title
------------------------------------------------------------------------
5591................................ Level 1 Nuclear Medicine and
Related Services.
5592................................ Level 2 Nuclear Medicine and
Related Services.
5593................................ Level 3 Nuclear Medicine and
Related Services.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing APC numbers
to the proposed new APC numbers for CY 2016.

c. Proposed Payment Offset Policy for Contrast Agents
Section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
and the otherwise applicable OPD fee schedule amount. Because a payment
offset is necessary in order to provide an appropriate transitional
pass-through payment, we deduct from the pass-through payment for
contrast agents an amount reflecting the portion of the APC payment
associated with predecessor contrast agents in order to ensure no
duplicate contrast agent payment is made.
In CY 2010, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor contrast agents when considering new contrast agents for
pass-through payment (74 FR 60482 through 60484). Specifically, we use
the policy-packaged drug offset fraction for procedural APCs,
calculated as 1 minus the following: the cost from single procedure
claims in the APC after removing the cost for policy-packaged drugs
divided by the cost from single procedure claims in the APC. To
determine the actual APC offset amount for pass-through contrast agents
that takes into consideration the otherwise applicable OPPS payment
amount, we are proposing to multiply the policy packaged drug offset
fraction by the APC payment amount for the procedure with which the
pass-through contrast agent is used and, accordingly, reduce the
separate OPPS payment for the pass-through contrast agent by this
amount. For CY 2016, as we did in CY 2015, we are proposing to continue
to apply our standard contrast agents offset policy to payment for any
pass-through contrast agents (we refer readers to the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66879) for the final 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 2016 to provide an appropriate transitional
pass-through payment for new contrast agents. We are proposing to
identify procedural APCs for which we expect a contrast offset could be
applicable in the case of a pass-through contrast agent as any
procedural APC with a policy-packaged drug amount greater than $20 that
is not a nuclear medicine APC identified in Table 41 above, and these
APCs are displayed in Table 42 below. The methodology used to determine
a proposed threshold cost for application of a contrast agent offset
policy is described in detail in the CY 2010 OPPS/ASC final rule with
comment period (74 FR 60483 through 60484). For CY 2016 and subsequent
years, we are proposing to continue to recognize that when a contrast
agent with pass-through status is billed with any procedural APC listed
in Table 42 of this proposed rule, a specific offset based on the
procedural APC would be applied to payment for the contrast agent to
ensure that duplicate payment is not made for the contrast agent.

Table 42--Proposed APCs to Which a Contrast Agent Payment Offset May Be
Applicable for CY 2016
------------------------------------------------------------------------
Proposed restructured/renumbered CY
2016 APC * Proposed CY 2016 APC title
------------------------------------------------------------------------
5181................................ Level 1 Vascular Procedures and
Related Services.
5182................................ Level 2 Vascular Procedures and
Related Services.
5183................................ Level 3 Vascular Procedures and
Related Services.

[[Page 39274]]

5188................................ Diagnostic Cardiac
Catheterization.
5191................................ Level 1 Endovascular Procedures.
5192................................ Level 2 Endovascular Procedures.
5193................................ Level 3 Endovascular Procedures.
5351................................ Level 1 Percutaneous Abdominal/
Biliary Procedures and Related
Services.
5523................................ Level 3 X-Ray and Related
Services.
5524................................ Level 4 X-Ray and Related
Services.
5525................................ Level 5 X-Ray and Related
Services.
5526................................ Level 6 X-Ray and Related
Services.
5561................................ Level 1 Echocardiogram With
Contrast.
5562................................ Level 2 Echocardiogram With
Contrast.
5571................................ Computed Tomography With Contrast
and Computed Tomography
Angiography.
5582................................ Magnetic Resonance Imaging and
Magnetic Resonance Angiography
With Contrast.
5881................................ Ancillary Outpatient Service When
Patient Expires.
8006................................ CT and CTA With Contrast
Composite.
8008................................ MRI and MRA With Contrast
Composite.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing APC numbers
to the proposed new APC numbers for CY 2016.

d. Proposed Payment Offset Policy for Drugs, Biologicals, and
Radiopharmaceuticals That Function as Supplies When Used in a
Diagnostic Test or Procedure (Other Than Diagnostic
Radiopharmaceuticals and Contrast Agents and Drugs and Biologicals That
Function as Supplies When Used in a Surgical Procedure)
Section 1833(t)(6)(D)(i) of the Act specifies that the transitional
pass-through payment amount for pass-through drugs and biologicals is
the difference between the amount paid under section 1842(o) of the Act
and the otherwise applicable OPD fee schedule amount. In the CY 2014
OPPS/ASC final rule with comment period (78 FR 74925), we finalized our
policy to package drugs, biologicals, and radiopharmaceuticals that
function as supplies when used in a diagnostic test or procedure and
drugs and biologicals that function as supplies when used in a surgical
procedure. As a part of this policy, we specifically finalized that
skin substitutes and stress agents used in myocardial perfusion imaging
(MPI) be policy packaged in CY 2014, in addition to diagnostic
radiopharmaceuticals, contrast agents, and anesthesia drugs (78 FR
75019). Because a payment offset is necessary in order to provide an
appropriate transitional pass-through payment, we finalized a policy
for CY 2014 to deduct from the pass-through payment for skin
substitutes and stress agents an amount reflecting the portion of the
APC payment associated with predecessor skin substitutes and stress
agents in order to ensure no duplicate skin substitute or stress agent
payment is made (78 FR 75019).
In CY 2014, we established a policy to estimate the portion of each
APC payment rate that could reasonably be attributed to the cost of
predecessor skin substitutes or stress agents when considering a new
skin substitute or stress agent for pass-through payment (78 FR 75019).
Specifically, in the case of pass-through skin substitutes, we use the
policy-packaged drug offset fraction for skin substitute procedural
APCs, calculated as 1 minus the following: the cost from single
procedure claims in the APC after removing the cost for policy-packaged
drugs divided by the cost from single procedure claims in the APC.
Because policy-packaged radiopharmaceuticals also would be included in
the drug offset fraction for the APC to which MPI procedures are
assigned, in the case of pass-through stress agents, we use the policy-
packaged drug offset fraction for the procedural APC, calculated as 1
minus the following: the cost from single procedure claims in the APC
after removing the cost for policy-packaged drugs excluding policy-
packaged diagnostic radiopharmaceuticals divided by the cost from
single procedure claims in the APC. To determine the actual APC offset
amount for pass-through skin substitutes and pass-through stress agents
that takes into consideration the otherwise applicable OPPS payment
amount, we multiply the policy-packaged drug offset fraction by the APC
payment amount for the procedure with which the pass-through skin
substitute or pass-through stress agent is used and, accordingly,
reduce the separate OPPS payment for the pass-through skin substitute
or pass-through stress agent by this amount (78 FR 75019). For CY 2016,
as we did in CY 2015, we are proposing to continue to apply the skin
substitute and stress agent offset policy to payment for pass-through
skin substitutes and stress agents.
For 2016, there will be two skin substitutes (HCPCS codes Q4121 and
C9349) with pass-through payment status under the OPPS. We will apply
the skin substitute payment offset policy to pass-through payment for
these products. Table 43 below displays the proposed APCs to which skin
substitute procedures would be assigned in CY 2016 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 2016 in order to provide an appropriate transitional pass-
through payment for new stress agents. Table 44 below displays the
proposed APCs to which MPI procedures would be assigned in CY 2016 and
for which we expect that an APC offset could be applicable in the case
of a stress agent with pass-through status.

Table 43--Proposed APCs to Which a Skin Substitute Payment Offset May Be
Applicable for CY 2016
------------------------------------------------------------------------
Proposed new CY 2016 APC * Proposed CY 2016 APC title
------------------------------------------------------------------------
5054................................ Level 4 Skin Procedures.
5055................................ Level 5 Skin Procedures.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) contains a crosswalk of the existing APC numbers
to the proposed new APC numbers for CY 2016.

Table 44--Proposed APCs to Which a Stress Agent Payment Offset May Be
Applicable for CY 2016
------------------------------------------------------------------------
Proposed new CY 2016 APC * Proposed CY 2016 APC title
------------------------------------------------------------------------
5722................................ Level 2 Diagnostic Tests and
Related Services.
5593................................ Level 3 Nuclear Medicine and
Related Services.
------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet
on the CMS Web site) for a crosswalk of the existing APC numbers to
the proposed new APC numbers for CY 2016.

We are proposing to continue to post annually on the CMS Web site
at http://

[[Page 39275]]

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

1. Background
Under the policies that we established for 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: (1) As a
packaged payment included in the payment for the associated service, or
(2) as a separate payment (individual APCs). We explained in the April
7, 2000 OPPS final rule with comment period (65 FR 18450) that we
generally package the cost of drugs and radiopharmaceuticals into the
APC payment rate for the procedure or treatment with which the products
are usually furnished. Hospitals do not receive separate payment for
packaged items and supplies, and hospitals may not bill beneficiaries
separately for any packaged items and supplies whose costs are
recognized and paid within the national OPPS payment rate for the
associated procedure or service.
Packaging costs into a single aggregate payment for a service,
procedure, or episode-of-care is a fundamental principle that
distinguishes a prospective payment system from a fee schedule. In
general, packaging the costs of items and services into the payment for
the primary procedure or service with which they are associated
encourages hospital efficiencies and also enables hospitals to manage
their resources with maximum flexibility.
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
As indicated in section V.B.1. of this proposed rule, in accordance
with section 1833(t)(16)(B) of the Act, the threshold for establishing
separate APCs for payment of drugs and biologicals was set to $50 per
administration during CYs 2005 and 2006. In CY 2007, we used the four
quarter moving average Producer Price Index (PPI) levels for
Pharmaceutical Preparations (Prescription) to trend the $50 threshold
forward from the third quarter of CY 2005 (when the Pub. L. 108-173
mandated threshold became effective) to the third quarter of CY 2007.
We then rounded the resulting dollar amount to the nearest $5 increment
in order to determine the CY 2007 threshold amount of $55. Using the
same methodology as that used in CY 2007 (which is discussed in more
detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR
68085 through 68086)), we set the packaging threshold for establishing
separate APCs for drugs and biologicals at $95 for CY 2015 (79 FR
66882).
Following the CY 2007 methodology, for this CY 2016 OPPS/ASC
proposed rule, we used the most recently available four quarter moving
average PPI levels to trend the $50 threshold forward from the third
quarter of CY 2005 to the third quarter of CY 2016 and rounded the
resulting dollar amount ($100.22) to the nearest $5 increment, which
yielded a figure of $100. In performing this calculation, we used the
most recent forecast of the quarterly index levels for the PPI for
Pharmaceuticals for Human Use (Prescription) (Bureau of Labor
Statistics (BLS) series code WPUSI07003) from CMS' Office of the
Actuary (OACT). We refer below to this series generally as the PPI for
Prescription Drugs.
Based on the calculations described above, we are proposing a
packaging threshold for CY 2016 of $100. For a more detailed discussion
of the OPPS drug packaging threshold and the use of the PPI for
Prescription Drugs, we refer readers to the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68085 through 68086).
b. Proposed Cost Threshold for Packaging of Payment for HCPCS Codes
That Describe Certain Drugs, Certain Biologicals, and Therapeutic
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
To determine the proposed CY 2016 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 2014
and were paid (via packaged or separate payment) under the OPPS. We
used data from CY 2014 claims processed before January 1, 2015 for this
calculation. However, we did not perform this calculation for those
drugs and biologicals with multiple HCPCS codes that include different
dosages, as described in section V.B.2.c. of this proposed rule, or for
the following policy-packaged items that we are proposing to continue
to package in CY 2016: anesthesia drugs; contrast agents; stress
agents; diagnostic radiopharmaceuticals; 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 2016, 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 are proposing for separately payable drugs and biologicals for CY
2016, as discussed in more detail in section V.B.3.b. of this proposed
rule) to calculate the CY 2016 proposed rule per day costs. We used the
manufacturer submitted ASP data from the fourth quarter of CY 2014
(data that were used for payment purposes in the physician's office
setting, effective April 1, 2015) to determine the proposed rule per
day cost.
As is our standard methodology, for CY 2016, we are proposing to
use payment rates based on the ASP data from the fourth quarter of CY
2014 for budget neutrality estimates, packaging determinations, impact
analyses, and completion of Addenda A and B to this proposed rule
(which are available via the Internet on the CMS Web site) because
these are the most recent data available for use at the time of
development of this proposed rule. These data also were the basis for
drug payments in the physician's office setting, effective April 1,
2015. 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 2014 hospital claims data to determine their per
day cost.
We are proposing to package items with a per day cost less than or
equal to $100, and identify items with a per day cost greater than $100
as separately payable. Consistent with our past practice, we cross-
walked historical OPPS claims data from the CY 2014

[[Page 39276]]

HCPCS codes that were reported to the CY 2015 HCPCS codes that we
display in Addendum B to this proposed rule (which is available via the
Internet on the CMS Web site) for proposed payment in CY 2016.
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 2016 OPPS/ASC
proposed rule, we are proposing to use ASP data from the first quarter
of CY 2015, 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, 2015, along with updated hospital claims
data from CY 2014. We note that we also are proposing to use these data
for budget neutrality estimates and impact analyses for this CY 2016
OPPS/ASC proposed rule.
Payment rates for HCPCS codes for separately payable drugs and
biologicals included in Addenda A and B to the final rule with comment
period will be based on ASP data from the second quarter of CY 2015.
These data will be the basis for calculating payment rates for drugs
and biologicals in the physician's office setting using the ASP
methodology, effective October 1, 2015. These payment rates would then
be updated in the January 2016 OPPS update, based on the most recent
ASP data to be used for physician's office and OPPS payment as of
January 1, 2016. For items that do not currently have an ASP-based
payment rate, we are proposing to recalculate their mean unit cost from
all of the CY 2014 claims data and updated cost report information
available for the CY 2016 final rule with comment period to determine
their final per day cost.
Consequently, the packaging status of some HCPCS codes for drugs,
biologicals, and therapeutic radiopharmaceuticals in this CY 2016 OPPS/
ASC proposed rule may be different from the same drug HCPCS code's
packaging status determined based on the data used for the CY 2016
OPPS/ASC final rule with comment period. Under such circumstances, we
are proposing to continue to follow the established policies initially
adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably
pay for those drugs whose cost fluctuates relative to the proposed CY
2016 OPPS drug packaging threshold and the drug's payment status
(packaged or separately payable) in CY 2015. Specifically, for CY 2016,
consistent with our historical practice, we are proposing to apply the
following policies to these HCPCS codes for drugs, biologicals, and
therapeutic radiopharmaceuticals whose relationship to the drug
packaging threshold changes based on the updated drug packaging
threshold and on the final updated data:
HCPCS codes for drugs and biologicals that were paid
separately in CY 2015 and that are proposed for separate payment in CY
2016, and that then have per day costs equal to or less than the CY
2016 final rule drug packaging threshold, based on the updated ASPs and
hospital claims data used for the CY 2016 final rule, would continue to
receive separate payment in CY 2016.
HCPCS codes for drugs and biologicals that were packaged
in CY 2015 and that are proposed for separate payment in CY 2016, and
that then have per day costs equal to or less than the CY 2016 final
rule drug packaging threshold, based on the updated ASPs and hospital
claims data used for the CY 2016 final rule, would remain packaged in
CY 2016.
HCPCS codes for drugs and biologicals for which we are
proposing packaged payment in CY 2016 but then have per day costs
greater than the CY 2016 final rule drug packaging threshold, based on
the updated ASPs and hospital claims data used for the CY 2016 final
rule, would receive separate payment in CY 2016.
c. Proposed 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. 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 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 was $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 were assigned to the low cost category until
pricing information was available to compare to the $32 per cm\2\
threshold for CY 2014. Skin substitutes with pass-through payment
status were 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) and final rule with comment period (79 FR 66882 through
66885), 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
contended 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-

[[Page 39277]]

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.
We agreed 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, in
the CY 2015 OPPS/ASC final rule with comment period, we established 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) that we believed may provide more stable
high/low cost categories and resolve the issue associated with large
sized products because the MUC will be derived from hospital outpatient
claims only. We indicated that the threshold was 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.
As discussed in the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66884), after consideration of the public comments we received
on the CY 2015 OPPS/ASC proposed rule, we finalized a policy for CY
2015 to maintain the high cost/low cost APC structure for skin
substitute procedures in CY 2015, and we revised the existing
methodology used to establish the high/low cost threshold with the
alternative MUC methodology. We also finalized for CY 2015 the policies
that skin substitutes with pass-through payment status would be
assigned to the high cost category, and that skin substitutes with
pricing information but without claims data to calculate an MUC would
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
stated 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 finalized
a policy for CY 2015 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. We stated
that 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,
2015 OPPS update and designated as included in the high cost group,
verifiable pricing information must have been provided to CMS no later
than April 15, 2015.
We stated in the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66884) that we would evaluate the per day cost (PDC) methodology
and compare it to the MUC methodology in CY 2016 once CY 2014 claims
data were available. For CY 2016, we analyzed CY 2014 claims data to
calculate a threshold using both the MUC and PDC methods. To calculate
a per patient, per day cost for each skin substitute product, we
multiplied the total units by the mean unit cost and divided the
product by the total number of days. We have posted a file on the CMS
Web site that provides details on the CY 2016 high/low cost status for
each skin substitute product based on a MUC threshold (rounded to the
nearest $1) of $25 per cm\2\ and a PDC threshold (rounded to the
nearest $1) of $1,050.
For CY 2016, based on these calculations, we are proposing to
determine the high/low cost status for each skin substitute product
based on either a product's MUC exceeding the MUC threshold or the
product's PDC exceeding the PDC threshold. Skin substitutes that exceed
either of these thresholds would be assigned to the high cost group and
all other products would be assigned to the low cost group. As
demonstrated in the aforementioned file that we posted on the CMS Web
site, we note that the majority of high cost products remain high cost
under both methodologies. Observing fairly consistent results with both
methodologies, we believe that, together, both thresholds constitute a
more robust methodology for identifying high cost skin substitute
products.
We would continue to assign skin substitutes with pass-through
payment status to the high cost category, and skin substitutes with
pricing information but without claims data to calculate a MUC or PDC
will be assigned to either the high cost or low cost category based on
the product's ASP+6 percent payment rate as compared to the MUC
threshold. 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. New skin substitutes without pricing information would be
assigned to the low cost category until pricing information is
available to compare to the CY 2016 MUC threshold.
For CY 2016, we also are proposing to remove all implantable
biologicals from the skin substitute cost group list because these
products are typically used in internal surgical procedures to
reinforce or repair soft tissue, and are not typically used to promote
healing of wounds on the skin. The implantable biologicals that we are
proposing to remove for the skin cost group are identified in Table 45
below. Implantable biologicals are treated as packaged surgical
supplies under the OPPS, which are captured under 42 CFR 419.2(b)(4).

Table 45--Proposed Implantable Biologicals For Removal From Skin
Substitute Cost Group List
------------------------------------------------------------------------
Proposed CY
Proposed CY 2016 HCPCS code Proposed CY 2016 short 2016 status
descriptor indicator
------------------------------------------------------------------------
C9358.......................... SurgiMend, fetal....... N
C9360.......................... SurgiMend, neonatal.... N
Q4107.......................... Graft Jacket........... N
Q4125.......................... Arthroflex............. N
Q4130.......................... Strattice TM........... N
Q4142.......................... Xcm biologic tiss N
matrix 1cm.
------------------------------------------------------------------------

[[Page 39278]]

Table 46 below shows the CY 2015 high cost/low cost status for each
product based on our combined threshold methodology. As noted earlier,
we have posted a file on the CMS Web site that provides more
information on the high cost/low cost disposition of each product for
each threshold methodology. For the CY 2016 OPPS/ASC final rule with
comment period, we will update the MUC and PDC threshold amounts using
the most recently available CY 2014 claims data and CY 2015 pricing
information.
We are proposing that a skin substitute that is assigned to the
high cost group in CY 2015 and exceeds either the MUC or PDC in this
proposed rule for CY 2016 would be assigned to the high cost group for
CY 2016, even if it no longer exceeds the MUC or PDC CY 2016 thresholds
based on updated claims data and pricing information used in the CY
2016 final rule with comment period.

Table 46--Proposed Skin Substitute Assignments to High Cost and Low Cost Groups for CY 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed CY Proposed CY
CY 2015 High/ 2016 High/Low 2016 High/Low
Proposed CY 2016 HCPCS code CY 2016 Short descriptor HCPCS Code Proposed CY Low status status based status based
dosage 2016 SI based on on proposed on proposed
weighted MUC weighted MUC weighted PDC
--------------------------------------------------------------------------------------------------------------------------------------------------------
Q4100..................................... Skin Substitute, NOS........ N/A N Low Low Low
Q4102..................................... Oasis Wound Matrix.......... 1 cm\2\ N Low Low Low
Q4103..................................... Oasis Burn Matrix........... 1 cm\2\ N Low High High
Q4111..................................... Gammagraft.................. 1 cm\2\ N Low Low Low
Q4115..................................... Alloskin.................... 1 cm\2\ N Low Low Low
Q4117 **.................................. Hyalomatrix................. 1 cm\2\ N Low Low Low
Q4119..................................... Matristem Wound Matrix...... 1 cm\2\ N Low Low Low
Q4120..................................... Matristem Burn Matrix....... 1 cm\2\ N Low Low Low
Q4124..................................... Oasis Tri-layer Wound Matrix 1 cm\2\ N Low Low Low
Q4135..................................... Mediskin.................... 1 cm\2\ N Low Low Low
Q4136..................................... Ezderm...................... 1 cm\2\ N Low Low Low
Q4141..................................... Alloskin ac, 1cm............ 1 cm\2\ N Low Low Low
Q4142..................................... Xcm Biologic Tissue Matrix 1 cm\2\ N Low Low High
1cm.
Q4143**................................... Repriza, 1cm................ 1 cm\2\ N Low Low Low
Q4146..................................... Tensix, 1CM................. 1 cm\2\ N Low Low Low
Q4150**................................... Allowrap DS or Dry 1 sq cm.. 1 cm\2\ N High Low Low
Q4151**................................... AmnioBand, Guardian 1 sq cm. 1 cm\2\ N Low Low Low
Q4153**................................... Dermavest 1 square cm....... 1 cm\2\ N High Low Low
Q4157**................................... Revitalon 1 square cm....... 1 cm\2\ N Low Low Low
Q4158**................................... MariGen 1 square cm......... 1 cm\2\ N Low Low Low
Q4159**................................... Affinity 1 square cm........ 1 cm\2\ N High Low Low
C9349 \*\/ \**\........................... PuraPly/PuraPly 1 cm\2\ G High High High
Antimicrobial.
C9363..................................... Integra Meshed Bil Wound Mat 1 cm\2\ N High High Low
Q4101..................................... Apligraf.................... 1 cm\2\ N High High High
Q4104..................................... Integra BMWD................ 1 cm\2\ N High Low Low
Q4105..................................... Integra DRT................. 1 cm\2\ N High Low High
Q4106..................................... Dermagraft.................. 1 cm\2\ N High High Low
Q4108..................................... Integra Matrix.............. 1 cm\2\ N High Low Low
Q4110..................................... Primatrix................... 1 cm\2\ N High High Low
Q4116..................................... Alloderm.................... 1 cm\2\ N High Low High
Q4121*.................................... Theraskin................... 1 cm\2\ G High High High
Q4122**................................... Dermacell................... 1 cm\2\ N High High High
Q4123..................................... Alloskin.................... 1 cm\2\ N High Low High
Q4126..................................... Memoderm/derma/tranz/....... 1 cm\2\ N High High High
Integup.....................
Q4127..................................... Talymed..................... 1 cm\2\ N High High High
Q4128..................................... Flexhd/Allopatchhd/Matrixhd. 1 cm\2\ N High High High
Q4129**................................... Unite Biomatrix............. 1 cm\2\ N High Low Low
Q4131..................................... Epifix...................... 1 cm\2\ N High High High
Q4132..................................... Grafix Core................. 1 cm\2\ N High High High
Q4133..................................... Grafix Prime................ 1 cm\2\ N High High High
Q4134..................................... hMatrix..................... 1 cm\2\ N High Low Low
Q4137..................................... Amnioexcel or Biodexcel, 1cm 1 cm\2\ N High High Low
Q4138..................................... Biodfence DryFlex, 1cm...... 1 cm\2\ N High High High
Q4140..................................... Biodfence 1cm............... 1 cm\2\ N High High High
Q4147**................................... Architect ecm, 1cm.......... 1 mg N High High High
Q4148..................................... Neox 1k, 1cm................ 1 cm\2\ N High High High
Q4152**................................... Dermapure 1 square cm....... 1 cm\2\ N High High High
Q4154**................................... Biovance 1 square cm........ 1 cm\2\ N High High High
Q4156**................................... Neox 100 1 square cm........ 1 cm\2\ N High High High
Q4160**................................... NuShield 1 square cm........ 1 cm\2\ N High High High
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Pass-through status in CY 2016.
**New HCPCS code. Claims data not available in CY 2014.

[[Page 39279]]

d. Proposed Packaging Determination for HCPCS Codes That Describe the
Same Drug or Biological But Different Dosages
In the CY 2008 OPPS/ASC final rule with comment period (72 FR
66776), we began recognizing, for OPPS payment purposes, multiple HCPCS
codes reporting different dosages for the same covered Part B drugs or
biologicals in order to reduce hospitals' administrative burden by
permitting them to report all HCPCS codes for drugs and biologicals. In
general, prior to CY 2008, the OPPS recognized for payment only the
HCPCS code that described the lowest dosage of a drug or biological.
During CYs 2008 and 2009, we applied a policy that assigned the status
indicator of the previously recognized HCPCS code to the associated
newly recognized code(s), reflecting the packaged or separately payable
status of the new code(s).
In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490
through 60491), we finalized a policy to make a single packaging
determination for a drug, rather than an individual HCPCS code, when a
drug has multiple HCPCS codes describing different dosages because we
believed that adopting the standard HCPCS code-specific packaging
determinations for these codes could lead to inappropriate payment
incentives for hospitals to report certain HCPCS codes instead of
others. We continue to believe that making packaging determinations on
a drug-specific basis eliminates payment incentives for hospitals to
report certain HCPCS codes for drugs and allows hospitals flexibility
in choosing to report all HCPCS codes for different dosages of the same
drug or only the lowest dosage HCPCS code. Therefore, we are proposing
to continue our policy to make packaging determinations on a drug-
specific basis, rather than a HCPCS code-specific basis, for those
HCPCS codes that describe the same drug or biological but different
dosages in CY 2016.
For CY 2016, 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 2014 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 2016 OPPS/ASC proposed rule and, as is our current policy for
determining the packaging status of other drugs, we used the mean unit
cost available from the CY 2014 claims data to make the proposed
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 proposed 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 $100 (so that all HCPCS codes for the same drug
or biological would be packaged) or greater than $100 (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 in CY 2016 is displayed in
Table 47 below.

Table 47--Proposed HCPCS Codes to Which the CY 2016 Drug-Specific
Packaging Determination Methodology Would Apply
------------------------------------------------------------------------
Proposed CY 2016 long Proposed CY
Proposed CY 2016 HCPCS code descriptor 2016 SI
------------------------------------------------------------------------
C9257.......................... Injection, bevacizumab, K
0.25 mg.
J9035.......................... Injection, bevacizumab, K
10 mg.
J1020.......................... Injection, N
methylprednisolone
acetate, 20 mg.
J1030.......................... Injection, N
methylprednisolone
acetate, 40 mg.
J1040.......................... Injection, N
methylprednisolone
acetate, 80 mg.
J1070.......................... Injection, testosterone N
cypionate, up to 100
mg.
J1080.......................... Injection, testosterone N
cypionate, 1 cc, 200
mg.
J1440.......................... Injection, filgrastim K
(g-csf), 300 mcg.
J1441.......................... Injection, filgrastim K
(g-csf), 480 mcg.
J1460.......................... Injection, gamma N
globulin,
intramuscular, 1 cc.
J1560.......................... Injection, gamma N
globulin,
intramuscular over 10
cc.
J1642.......................... Injection, heparin N
sodium, (heparin lock
flush), per 10 units.
J1644.......................... Injection, heparin N
sodium, per 1000 units.
J1850.......................... Injection, kanamycin N
sulfate, up to 75 mg.
J1840.......................... Injection, kanamycin N
sulfate, up to 500 mg.
J2270.......................... Injection, morphine N
sulfate, up to 10 mg.
J2271.......................... Injection, morphine N
sulfate, 100mg.
J2788.......................... Injection, rho d immune N
globulin, human,
minidose, 50
micrograms (250 i.u.).
J2790.......................... Injection, rho d immune N
globulin, human, full
dose, 300 micrograms
(1500 i.u.).
J2920.......................... Injection, N
methylprednisolone
sodium succinate, up
to 40 mg.
J2930.......................... Injection, N
methylprednisolone
sodium succinate, up
to 125 mg.
J3120.......................... Injection, testosterone N
enanthate, up to 100
mg.
J3130.......................... Injection, testosterone N
enanthate, up to 200
mg.
J3471.......................... Injection, N
hyaluronidase, ovine,
preservative free, per
1 usp unit (up to 999
usp units).
J3472.......................... Injection, N
hyaluronidase, ovine,
preservative free, per
1000 usp units.
J7050.......................... Infusion, normal saline N
solution , 250 cc.
J7040.......................... Infusion, normal saline N
solution, sterile (500
ml=1 unit).
J7030.......................... Infusion, normal saline N
solution , 1000 cc.
J7515.......................... Cyclosporine, oral, 25 N
mg.
J7502.......................... Cyclosporine, oral, 100 N
mg.
J8520.......................... Capecitabine, oral, 150 K
mg.
J8521.......................... Capecitabine, oral, 500 K
mg.

[[Page 39280]]

J9250.......................... Methotrexate sodium, 5 N
mg.
J9260.......................... Methotrexate sodium, 50 N
mg.
------------------------------------------------------------------------

3. Proposed Payment for Drugs and Biologicals Without Pass-Through
Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs (SCODs) and
Other Separately Payable and Packaged Drugs and Biologicals
Section 1833(t)(14) of the Act defines certain separately payable
radiopharmaceuticals, drugs, and biologicals and mandates specific
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a
``specified covered outpatient drug'' (known as a SCOD) is defined as a
covered outpatient drug, as defined in section 1927(k)(2) of the Act,
for which a separate APC has been established and that either is a
radiopharmaceutical agent or is a drug or biological for which payment
was made on a pass-through basis on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and
biologicals are designated as exceptions and are not included in the
definition of SCODs. These exceptions are--
A drug or biological for which payment is first made on or
after January 1, 2003, under the transitional pass-through payment
provision in section 1833(t)(6) of the Act.
A drug or biological for which a temporary HCPCS code has
not been assigned.
During CYs 2004 and 2005, an orphan drug (as designated by
the Secretary).
Section 1833(t)(14)(A)(iii) of the Act requires that payment for
SCODs in CY 2006 and subsequent years be equal to the average
acquisition cost for the drug for that year as determined by the
Secretary, subject to any adjustment for overhead costs and taking into
account the hospital acquisition cost survey data collected by the
Government Accountability Office (GAO) in CYs 2004 and 2005, and later
periodic surveys conducted by the Secretary as set forth in the
statute. If hospital acquisition cost data are not available, the law
requires that payment be equal to payment rates established under the
methodology described in section 1842(o), section 1847A, or section
1847B of the Act, as calculated and adjusted by the Secretary as
necessary. Most physician Part B drugs are paid at ASP+6 percent
pursuant to section 1842(o) and section 1847A of the Act.
Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in
OPPS payment rates for SCODs to take into account overhead and related
expenses, such as pharmacy services and handling costs. Section
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead
and related expenses and to make recommendations to the Secretary
regarding whether, and if so how, a payment adjustment should be made
to compensate hospitals for overhead and related expenses. Section
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the
weights for ambulatory procedure classifications for SCODs to take into
account the findings of the MedPAC study.
It has been our longstanding policy to apply the same treatment to
all separately payable drugs and biologicals, which include SCODs, and
drugs and biologicals that are not SCODs. Therefore, we apply the
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs,
as required by statute, but we also apply it to separately payable
drugs and biologicals that are not SCODs, which is a policy
determination rather than a statutory requirement. In this CY 2016
OPPS/ASC proposed rule, we are proposing to apply section
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and
biologicals, including SCODs. Although we do not distinguish SCODs in
this discussion, we note that we are required to apply section
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying
this provision to other separately payable drugs and biologicals,
consistent with our history of using the same payment methodology for
all separately payable drugs and biologicals.
Since CY 2006, we have attempted to establish a drug payment
methodology that reflects hospitals' acquisition costs for drugs and
biologicals while taking into account relevant pharmacy overhead and
related handling expenses. We have attempted to collect more data on
hospital overhead charges for drugs and biologicals by making several
proposals that would require hospitals to change the way they report
the cost and charges for drugs. None of these proposals were adopted
due to significant stakeholder concern, including that hospitals stated
that it would be administratively burdensome to report hospital
overhead charges. We established a payment policy for separately
payable drugs and biologicals, authorized by section
1833(t)(14)(A)(iii)(I) of the Act, based on an ASP+X amount that is
calculated by comparing the estimated aggregate cost of separately
payable drugs and biologicals in our claims data to the estimated
aggregate ASP dollars for separately payable drugs and biologicals,
using the ASP as a proxy for average acquisition cost (70 FR 68642
through 68643). We referred to this methodology as our standard drug
payment methodology. Taking into consideration comments made by the
pharmacy stakeholders and acknowledging the limitations of the reported
data due to charge compression and hospitals' reporting practices, we
added an ``overhead adjustment'' in CY 2010 (an internal adjustment of
the data) by redistributing cost from coded and uncoded packaged drugs
and biologicals to separately payable drugs in order to provide more
appropriate payments for drugs and biologicals in the HOPD. We
continued this methodology, and we further refined it in CY 2012 by
finalizing a policy to update the redistribution amount for inflation
and to keep the redistribution 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

[[Page 39281]]

and, therefore, may result in payment rates that are not as
predictable, accurate, or appropriate as they could be. Section
1833(t)(14)(A)(iii)(II) of the Act requires an alternative methodology
for determining payment rates for SCODS wherein, if hospital
acquisition cost data are not available, payment shall be equal
(subject to any adjustment for overhead costs) to payment rates
established under the methodology described in section 1842(o), 1847A,
or 1847B of the Act. We refer to this alternative methodology as the
``statutory default.'' In the CY 2013 OPPS/ASC final rule with comment
period (77 FR 68386), we noted that section 1833(t)(14)(A)(iii)(II) of
the Act authorizes the Secretary to calculate and adjust, as necessary,
the average price for a drug in the year established under section
1842(o), 1847A, or 1847B of the Act, as the case may be, in determining
payment for SCODs. Pursuant to sections 1842(o) and 1847A of the Act,
Part B drugs are paid at ASP+6 percent when furnished in physicians'
offices. We indicated that we believe that establishing the payment
rates based on the statutory default of ASP+6 percent is appropriate as
it yields increased predictability in payment for separately payable
drugs and biologicals under the OPPS and, therefore, we finalized our
proposal for CY 2013 to pay for separately payable drugs and
biologicals at ASP+6 percent based on section 1833(t)(14)(A)(iii)(II)
of the Act (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). We continued our final policy of
paying the statutory default for both CY 2014 and CY 2015.
b. Proposed CY 2016 Payment Policy
For CY 2016 and subsequent years, we are proposing to continue our
CY 2015 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 are proposing that the ASP+6 percent
payment amount for separately payable drugs and biologicals requires no
further adjustment and represents the combined acquisition and pharmacy
overhead payment for drugs and biologicals. We also are proposing that
payments for separately payable drugs and biologicals are included in
the budget neutrality adjustments, under the requirements in section
1833(t)(9)(B) of the Act, and that the budget neutral weight scaler is
not applied in determining payments for these separately paid drugs and
biologicals.
We note that separately payable drug and biological payment rates
listed in Addenda A and B to this proposed rule (available via the
Internet on the CMS Web site), which illustrate the proposed CY 2016
payment of ASP+6 percent for separately payable non-pass-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 April 1, 2015, or WAC, AWP, or mean unit cost
from CY 2014 claims data and updated cost report information available
for this proposed rule. In general, these published payment rates are
not reflective of actual proposed January 2016 payment rates. This is
because payment rates for drugs and biologicals with ASP information
for January 2016 will be determined through the standard quarterly
process where ASP data submitted by manufacturers for the third quarter
of 2015 (July 1, 2015 through September 30, 2015) will be used to set
the payment rates that are released for the quarter beginning in
January 2016 near the end of December 2015. In addition, proposed
payment rates for drugs and biologicals in Addenda A and B to this
proposed rule for which there was no ASP information available for
April 2015 are based on mean unit cost in the available CY 2014 claims
data. If ASP information becomes available for payment for the quarter
beginning in January 2016, 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 proposed rule (reflecting April 2015 ASP data) that do not
have ASP information available for the quarter beginning in January
2016. These drugs and biologicals would then be paid based on mean unit
cost data derived from CY 2014 hospital claims. Therefore, the proposed
payment rates listed in Addenda A and B to this proposed rule are not
for January 2016 payment purposes and are only illustrative of the
proposed CY 2016 OPPS payment methodology using the most recently
available information at the time of issuance of this proposed rule.
4. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
Beginning in CY 2010 and continuing for CY 2015, 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 2016. Therefore, we are
proposing for CY 2016 to pay all nonpass-through, separately payable
therapeutic radiopharmaceuticals at ASP+6 percent, based on the
statutory default described in section 1833(t)(14)(A)(iii)(II) of the
Act. For a full discussion of ASP-based payment for therapeutic
radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60520 through 60521). We also are
proposing to rely on CY 2014 mean unit cost data derived from hospital
claims data for payment rates for therapeutic radiopharmaceuticals for
which ASP data are unavailable and to update the payment rates for
separately payable therapeutic radiopharmaceuticals according to our
usual process for updating the payment rates for separately payable
drugs and biologicals on a quarterly basis if updated ASP information
is available. For a complete history of the OPPS payment policy for
therapeutic radiopharmaceuticals, we refer readers to the CY 2005 OPPS
final rule with comment period (69 FR 65811), the CY 2006 OPPS final
rule with comment period (70 FR 68655), and the CY 2010 OPPS/ASC final
rule with comment period (74 FR 60524).
The proposed CY 2016 payment rates for nonpass-through separately
payable therapeutic radiopharmaceuticals are included in Addenda A and
B to this proposed rule (which are available via the Internet on the
CMS Web site).

[[Page 39282]]

5. Proposed 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).
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.
As discussed in the CY 2015 OPPS/ASC final rule with comment period (79
FR 66892), we reassessed this payment for CY 2015 and did not identify
any new information that would cause us to modify payment. We stated
that we were continuing the policy of providing an additional $10
payment for radioisotopes produced by non-HEU sources for CY 2015. We
also stated that 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.
We have reassessed this payment for CY 2016 and did not identify
any new information that would cause us to modify payment. Therefore,
for CY 2016, we are proposing to continue to provide an additional $10
payment for radioisotopes produced by non-HEU sources.
6. Proposed Payment for Blood Clotting Factors
For CY 2015, we provided payment for blood clotting factors under
the same methodology as other non-pass-through separately payable drugs
and biologicals under the OPPS and continued paying an updated
furnishing fee (79 FR 66893). That is, for CY 2015, 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 2015 updated furnishing fee was $0.197 per unit.
For CY 2016, we are proposing to pay for blood clotting factors at
ASP+6 percent, consistent with our proposed payment policy for other
nonpass-through separately payable drugs and biologicals, and to
continue our policy for payment of the furnishing fee using an updated
amount. Our policy to pay for a furnishing fee for blood clotting
factors under the OPPS is consistent with the methodology applied in
the physician office and inpatient hospital setting, and first
articulated in the CY 2006 OPPS final rule with comment period (70 FR
68661) and later discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66765). The proposed furnishing fee update is
based on the percentage increase in the Consumer Price Index (CPI) for
medical care for the 12-month period ending with June of the previous
year. Because the Bureau of Labor Statistics releases the applicable
CPI data after the MPFS and OPPS/ASC proposed rules are published, we
are not able to include the actual updated furnishing fee in the
proposed rules. Therefore, in accordance with our policy, as finalized
in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765),
we are proposing to announce the actual figure for the percent change
in the applicable CPI and the updated furnishing fee calculated based
on that figure through applicable program instructions and posting on
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
7. Proposed Payment for Non-Pass-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 2015, 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 non-pass-through drugs
and biologicals for the given year.
For CY 2016, we are proposing to continue this policy and provide
payment for new drugs, biologicals, and therapeutic
radiopharmaceuticals that do not have pass-through status at

[[Page 39283]]

ASP+6 percent, consistent with the proposed CY 2016 payment methodology
for other separately payable non-pass-through drugs, biologicals, and
therapeutic radiopharmaceuticals, which is proposed to be ASP+6 percent
as discussed earlier in this section. 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 2016, we also are proposing to continue to package payment
for all new nonpass-through policy-packaged products (diagnostic radio
pharma ceuticals; contrast agents; stress 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 proposed CY 2016 HCPCS codes
that do not replace predecessor HCPCS codes). This is consistent with
the CY 2014 final packaging policy for all existing nonpass-through
diagnostic radiopharmaceuticals; contrast agents; anesthesia drugs;
drugs, biologicals, and radiopharmaceuticals that function as supplies
when used in a diagnostic test or procedure; and drugs and biologicals
that function as supplies when used in a surgical procedure, as
discussed in more detail in section II.A.3. of this proposed rule.
In accordance with the OPPS ASP methodology, in the absence of ASP
data, for CY 2016 and subsequent years, we are proposing to continue
our policy of using the WAC for the product to establish the initial
payment rate for new nonpass-through drugs and biologicals with HCPCS
codes, but which are without OPPS claims data. However, we note that if
the WAC is also unavailable, we would make payment at 95 percent of the
product's most recent AWP. We also are proposing to assign status
indicator ``K'' (Separately paid nonpass-through drugs and biologicals,
including therapeutic radiopharmaceuticals) to HCPCS codes for new
drugs and biologicals without OPPS claims data and for which we have
not granted pass-through status. With respect to new nonpass-through
drugs and biologicals for which we do not have ASP data, we are
proposing that once their ASP data become available in later quarterly
submissions, their payment rates under the OPPS would be adjusted so
that the rates would be based on the ASP methodology and set to the
proposed ASP-based amount (proposed for CY 2016 at ASP+6 percent) for
items that have not been granted pass-through status. This proposed
policy, which utilizes the ASP methodology for new nonpass-through
drugs and biologicals with an ASP, is consistent with prior years'
policies for these items and would ensure that new nonpass-through
drugs and biologicals would be treated like other drugs and biologicals
under the OPPS, unless they are granted pass-through status.
Similarly, we are proposing to continue to base the initial payment
for new therapeutic radiopharmaceuticals with HCPCS codes, but which do
not have pass-through status and are without claims data, on the WACs
for these products if ASP data for these therapeutic
radiopharmaceuticals are not available. If the WACs also are
unavailable, we are proposing to make payment for new therapeutic
radiopharmaceuticals at 95 percent of the products' most recent AWP
because we would not have mean costs from hospital claims data upon
which to base payment. As we are proposing with new drugs and
biologicals, we are proposing to continue our policy of assigning
status indicator ``K'' to HCPCS codes for new therapeutic
radiopharmaceuticals without OPPS claims data for which we have not
granted pass-through status.
Consistent with other ASP-based payment, for CY 2016, we are
proposing to announce any changes to the payment amounts for new drugs
and biologicals in the CY 2016 OPPS/ASC final rule with comment period
and also on a quarterly basis on the CMS Web site during CY 2016 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 2016 HCPCS codes for drugs,
biologicals, and therapeutic radiopharmaceuticals were not available at
the time of development of this proposed rule. However, these drugs,
biologicals, and therapeutic radiopharmaceuticals will be included in
Addendum B to the CY 2016 OPPS/ASC final rule with comment period
(which will be available via the Internet on the CMS Web site), where
they will be assigned comment indicator ``NI.'' This comment indicator
reflects that their interim final OPPS treatment will be open to public
comment in the CY 2016 OPPS/ASC final rule with comment period.
There are several nonpass-through drugs and biologicals that were
payable in CY 2014 and/or CY 2015 for which we did not have CY 2014
hospital claims data available for this proposed rule and for which
there are no other HCPCS codes that describe different doses of the
same drug, but which have pricing information available for the ASP
methodology. In order to determine the packaging status of these
products for CY 2016, we are proposing to continue our policy to
calculate an estimate of the per day cost of each of these items by
multiplying the payment rate of each product based on ASP+6 percent,
similar to other non-pass-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 1 day in the
hospital outpatient setting. This rationale was first adopted in the CY
2006 OPPS/ASC final rule with comment period (70 FR 68666 through
68667).
We are proposing to package items for which we estimate the per day
administration cost to be less than or equal to $100 and to pay
separately for items for which we estimate the per day administration
cost to be greater than $100 (with the exception of diagnostic
radiopharmaceuticals; contrast agents; stress agents; anesthesia drugs;
drugs, biologicals, and radiopharmaceuticals that function as supplies
when used in a diagnostic test or procedure; and drugs and biologicals
that function as supplies when used in a surgical procedure, which we
are proposing to continue to package regardless of cost) in CY 2016. We
also are proposing that the CY 2016 payment for separately payable
items without CY 2014 claims data would be ASP+6 percent, similar to
payment for other separately payable nonpass-through drugs and
biologicals under the OPPS. In accordance with the ASP methodology paid
in the physician's office setting, in the absence of ASP data, we are
proposing to use the WAC for the product to establish the initial
payment rate and, if the WAC is also unavailable, we would make payment
at 95 percent of the most recent AWP available. The proposed estimated
units per day and status indicators for these items are displayed in
Table 48 of this proposed rule.
Finally, there are 33 drugs and biologicals, shown in Table 49 of
this proposed rule, that were payable in CY 2014 but for which we
lacked CY 2014 claims data and any other pricing information for the
ASP methodology for this CY 2016 OPPS/ASC proposed rule. For CY 2010,
we finalized a policy

[[Page 39284]]

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 2016, as we finalized in CY 2015 (79 FR 66894), we are
proposing to continue to assign status indicator ``E'' to drugs and
biologicals that lack CY 2014 claims data and pricing information for
the ASP methodology. All drugs and biologicals without CY 2014 hospital
claims data or data based on the ASP methodology that are assigned
status indicator ``E'' on this basis at the time of this proposed rule
for CY 2016 are displayed in Table 49 of this proposed rule. We also
are proposing to continue our policy to assign the products status
indicator ``K'' and pay for them separately for the remainder of CY
2016 if pricing information becomes available.

Table 48--Drugs and Biologicals Without CY 2014 Claims Data
----------------------------------------------------------------------------------------------------------------
Estimated
Proposed CY 2016 long average number Proposed CY Proposed New
Proposed CY 2016 HCPCS code descriptor of units per 2016 SI CY 2016 APC *
day
----------------------------------------------------------------------------------------------------------------
90581.............................. Anthrax vaccine, for 1 N N/A
subcutaneous or
intramuscular use.
C9293.............................. Injection, glucarpidase, 10 400 K 9293
units.
J0215.............................. Injection, alefacept, 0.5 29 K 1633
mg.
J0630.............................. Injection, calcitonin 2 K 1433
salmon, up to 400 units.
J0717.............................. Injection, certolizumab 361 K 1474
pegol, 1 mg.
J1324.............................. Injection, enfuvirtide, 1 169 K 1361
mg.
J3355.............................. Injection, urofollitropin, 2 K 1741
75 IU.
J3489.............................. Injection, Zoledronic Acid, 4 K 1356
1 mg.
J7196.............................. Injection, antithrombin 268 K 1332
recombinant, 50 IU.
J8650.............................. Nabilone, oral, 1 mg....... 4 K 1424
J9306.............................. Injection, pertuzumab, 1 mg 450 K 1471
Q2050.............................. Injection, Doxorubicin 7 K 7046
Hydrochloride, Liposomal,
Not Otherwise Specified,
10 mg.
Q3027.............................. Injection, Interferon Beta- 3 K 1472
1a, 1 mcg for
Intramuscular Use.
----------------------------------------------------------------------------------------------------------------
* Addendum Q to this proposed rule (which is available via the Internet on the CMS Web site) contains a
crosswalk of the existing APC numbers to the proposed new APC numbers for CY 2016.

Table 49--Drugs and Biologicals Without CY 2014 Claims Data and Without Pricing Information for the ASP
Methodology
----------------------------------------------------------------------------------------------------------------
Proposed CY 2016 HCPCS code Proposed CY 2016 long descriptor Proposed CY 2016 SI
----------------------------------------------------------------------------------------------------------------
90296................................... Diphtheria antitoxin, equine, any E
route.
90477................................... Adenovirus vaccine, type 7, live, E
for oral use.
90681................................... Rotavirus vaccine, human, E
attenuated, 2 dose schedule, live,
for oral use.
90704................................... Mumps virus vaccine, live, for E
subcutaneous use.
90727................................... Plague vaccine for intramuscular use E
J0190................................... Injection, biperiden lactate, per 5 E
mg.
J0205................................... Injection, alglucerase, per 10 units E
J0350................................... Injection, anistreplase, per 30 E
units.
J0365................................... Injection, aprotonin, 10,000 kiu.... E
J0395................................... Injection, arbutamine hcl, 1 mg..... E
J0710................................... Injection, cephapirin sodium, up to E
1 gm.
J1180................................... Injection, dyphylline, up to 500 mg. E
J1435................................... Injection, estrone, per 1 mg........ E
J1452................................... Injection, fomivirsen sodium, E
intraocular, 1.65 mg.
J1562................................... Injection, immune globulin E
(vivaglobin), 100 mg.
J1655................................... Injection, tinzaparin sodium, 1000 E
iu.
J1835................................... Injection, itraconazole, 50 mg...... E
J2513................................... Injection, pentastarch, 10% E
solution, 100 ml.
J2670................................... Injection, tolazoline hcl, up to 25 E
mg.
J2725................................... Injection, protirelin, per 250 mcg.. E
J2940................................... Injection, somatrem, 1 mg........... E
J3320................................... Injection, spectinomycin E
dihydrochloride, up to 2 gm.
J3400................................... Injection, triflupromazine hcl, up E
to 20 mg.
J7191................................... Factor viii (antihemophilic factor E
(porcine)), per i.u..
J7505................................... Muromonab-cd3, parenteral, 5 mg..... E
J7513................................... Daclizumab, parenteral, 25 mg....... E
J8562................................... Fludarabine phosphate, oral, 10 mg.. E
J9160................................... Injection, denileukin diftitox, 300 E
micrograms.
J9165................................... Injection, diethylstilbestrol E
diphosphate, 250 mg.
J9213................................... Injection, interferon, alfa-2a, E
recombinant, 3 million units.
J9215................................... Injection, interferon, alfa-n3, E
(human leukocyte derived), 250,000
iu.
J9300................................... Injection, gemtuzumab ozogamicin, 5 E
mg.
Q0515................................... Injection, sermorelin acetate, 1 E
microgram.
----------------------------------------------------------------------------------------------------------------

[[Page 39285]]

C. Self-Administered Drugs (SADs) Technical Correction

Sections 1861(s)(2)(A) and (s)(2)(B) of the Act define covered
``medical and other health services'' to include both ``services and
supplies'' and ``hospital services'', which both, in turn, include
drugs and biologicals not usually self-administered by the patient. Our
regulations at 42 CFR 410.29 set forth limitations on payment of drugs
and biologicals under Medicare Part B, and capture the description of
self-administered drugs noted in sections 1861(s)(2)(A) and (s)(2)(B)
of the Act. In our review of Sec. 410.29, which defines exclusions to
Medicare Part B payment for drugs and biologicals, we noted that
paragraph (a), as currently written, excludes payment for any drug or
biological that can be self-administered. We are proposing to make a
technical correction that would amend the description of these drugs
and biologicals at Sec. 410.29(a) to more appropriately reflect the
statutory language. Specifically, we are proposing to delete the phrase
``any drug or biological that can be self-administered'' and replace it
with the phrase ``any drug or biological which is usually self-
administered by the patient''.

D. Proposed OPPS Payment for Biosimilar Biological Products

1. Background
The Affordable Care Act authorized an abbreviated pathway for the
licensing of biosimilar biological products. Under this abbreviated
pathway, a proposed biological product that is demonstrated to be
biosimilar to a reference product can rely on certain existing
scientific knowledge about the safety, purity, and potency of the
reference product to support licensure. Section 3139 of the Affordable
Care Act amended section 1847A of the Act to add the definition of
biosimilar biological product and set forth a payment methodology for
biosimilar biological products. In 2010, CMS published regulations for
the payment for biosimilar biological products that are administered in
a physician's office (75 FR 73393 through 73394). However, at that
time, it was not clear how or when the new Food and Drug Administration
(FDA) approval pathway would be implemented or when biosimilar products
would be approved.
The FDA approved the first biosimilar under the new pathway on
March 6, 2015. By the end of 2015, we anticipate that the FDA may
approve several more biosimilar biological products, including products
that have a common previously licensed reference product. Although we
described our Medicare Part B payment policy for biosimilar biological
products when administered in the physician office setting in the CY
2011 MPFS final rule with comment period, we did not describe how
payment would be made for these products when administered in the
hospital outpatient department.
2. Proposed Payment Policy for Biosimilar Biological Products
Section 1833(t)(14)(A)(iii) of the Act defines payment policy for
separately covered outpatient drugs (SCODs), and currently, CMS pays
for SCODs under the payment methodology set forth at section
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). Through
rulemaking, CMS adopted this payment methodology to apply to separately
payable drugs and biologicals that are not SCODs. Under this authority,
the payment rate for SCODs and applicable separately payable drugs and
biologicals is determined in accordance with sections 1842(o) and 1847A
of the Act, which generally equates to average sales price (ASP) plus 6
percent.
As noted above, the Affordable Care Act amended section 1847A of
the Act to add the definition of biosimilar biological product and set
forth a payment methodology for biosimilar biological products. Since
the statutory authority under section 1833(t)(14)(A)(iii)(II) of the
Act authorizes payment in accordance with section 1847A of the Act, and
provides additional discretionary authority for such payments to be
calculated and adjusted by the Secretary as necessary, we believe that
it is reasonable to adopt a policy to pay for biosimilar biological
products as provided under section 1847A(b)(8) of the Act. Therefore,
we are proposing to extend the application of the methodology for
determining the amount of payment applicable to SCODs authorized by
section 1833(t)(14)(A)(iii)(II) of the Act, which, through rulemaking,
is applicable separately paid drugs and biologicals, to biosimilar
biological products provided under the OPPS. This equates to a payment
determined under section 1847A of the Act. That is, we are proposing to
pay for biosimilar biological products based on the payment allowance
of the product as determined under section 1847A of the Act. In
addition, we are proposing that nonpass-through biosimilar biological
products would be subject to our threshold-packaged policy as described
in section V.B.2. of this proposed rule.
Consistent with our established OPPS drug, biological, and
radiopharmaceutical payment policy, we are proposing that HCPCS coding
and modifiers for biosimilar biological products will be based on
policy established under the CY 2016 MPFS rule. Public comments on
HCPCS codes and modifiers for biosimilar biological products should be
submitted in response to the CY 2016 MPFS proposed rule.
3. Proposed OPPS Transitional Pass-Through Payment Policy for
Biosimilar Biological Products
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 hospital outpatient department fee
schedule amount. Because section 1842(o)(1)(C) of the Act cross
references section 1847A of the Act, we believe that it is reasonable
to infer that biosimilar biological products are eligible for
transitional pass-through payment, and that such payment amount may be
set as the difference between the amount paid under section 1842(o) of
the Act (that is, the payment allowance of the product determined under
section 1847A(b)(8) of the Act) and the otherwise applicable hospital
outpatient department fee schedule amount. Therefore, we are proposing
to extend pass-through payment eligibility to biosimilar biological
products and to establish pass-through payment based on the difference
between the amount paid under section 1842(o) of the Act (that is, the
payment allowance of the product determined under section 1847A(b)(8)
of the Act) and the otherwise applicable hospital outpatient department
fee schedule amount.
We are soliciting public comments on our proposed payment policies
for biosimilar biological products, including whether biosimilar
biological products should be eligible for transitional pass-through
payment, and the appropriate methodologies for determining payment for
biosimilar biological products eligible for transitional pass-through
payment.

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

A. Background

Section 1833(t)(6)(E) of the Act limits the total projected amount
of transitional pass-through payments for drugs, biologicals,
radiopharmaceuticals, and categories of devices for a given year to an
``applicable percentage,'' currently not

[[Page 39286]]

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
2016 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 2016. The CY 2008 OPPS/ASC final rule
with comment period (72 FR 66778) describes the methodology we have
used in previous years to develop the pass-through spending estimate
for known device categories continuing into the applicable update year.
The second group of items consists of items that we know are newly
eligible, or project may be newly eligible, for device pass-through
payment in the remaining quarters of CY 2015 or beginning in CY 2016.
The sum of the CY 2016 pass-through estimates for these two groups of
device categories equals the total CY 2016 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 this proposed rule, for CY 2016, we are proposing to include an
estimate of any implantable biologicals eligible for pass-through
payment in our estimate of pass-through spending for devices.
Similarly, we finalized a policy in CY 2015 that applications for pass-
through payment for skin substitutes and similar products be evaluated
using the medical device pass-through process and payment methodology
(76 FR 66885 to 66888). Therefore, as we did beginning in CY 2015, for
CY 2016, we also are proposing to include an estimate of any skin
substitutes and similar products 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 proposed to be
reinstated for CY 2016. Because, as we are proposing to pay for most
non-pass-through separately payable drugs and biologicals under the CY
2016 OPPS at ASP+6 percent, as we discussed in section V.B.3. of this
proposed rule, which represents the otherwise applicable fee schedule
amount associated with most pass-through drugs and biologicals, and
because, as we are proposing to pay for CY 2016 pass-through drugs and
biologicals at ASP+6 percent, as we discussed in section V.A. of this
proposed rule, our estimate of drug and biological pass-through payment
for CY 2016 for this group of items is $0, as discussed below.
Furthermore, payment for certain drugs, specifically diagnostic
radiopharmaceuticals and contrast agents without pass-through status,
will always be packaged into payment for the associated procedures and
these products will not be separately paid. In addition, we policy-
package all nonpass-through drugs, biologicals, and
radiopharmaceuticals that function as supplies when used in a
diagnostic test or procedure and drugs and biologicals that function as
supplies when used in a surgical procedure, as discussed in section
II.A.3. of this proposed rule. We are proposing that all of these
policy-packaged drugs and biologicals with pass-through status would be
paid at ASP+6 percent, like other pass-through drugs and biologicals,
for CY 2016. Therefore, our estimate of pass-through payment for
policy-packaged drugs and biologicals with pass-through status approved
prior to CY 2016 is not $0, as discussed below. In section V.A.4. of
this proposed rule, we discuss our policy to determine if the costs of
certain policy-packaged drugs or biologicals are already packaged into
the existing APC structure. If we determine that a policy-packaged drug
or biological approved for pass-through payment resembles predecessor
drugs or biologicals already included in the costs of the APCs that are
associated with the drug receiving pass-through payment, we are
proposing to offset the amount of pass-through payment for the policy-
packaged drug or biological. For these drugs or biologicals, the APC
offset amount is the portion of the APC payment for the specific
procedure performed with the pass-through drug or biological, which we
refer to as the policy-packaged drug APC offset amount. If we determine
that an offset is appropriate for a specific policy-packaged drug or
biological receiving pass-through payment, we are proposing to reduce
our estimate of pass-through payments for these drugs or biologicals by
this amount.
Similar to pass-through estimates for devices, the first group of
drugs and biologicals requiring a pass-through payment estimate
consists of those products that were recently made eligible for pass-
through payment and that will continue to be eligible for pass-through
payment in CY 2016. The second group contains drugs and biologicals
that we know are newly eligible, or project will be newly eligible in
the remaining quarters of CY 2015 or beginning in CY 2016. The sum of
the proposed CY 2016 pass-through estimates for these two groups of
drugs and biologicals equals the proposed total CY 2016 pass-through
spending estimate for drugs and biologicals with pass-through status.

B. Proposed Estimate of Pass-Through Spending

We are proposing to set the applicable pass-through payment
percentage limit at 2.0 percent of the total projected OPPS payments
for CY 2016, consistent with section 1833(t)(6)(E)(ii)(II) of the Act,
and our OPPS policy from CY 2004

[[Page 39287]]

through CY 2015 (79 FR 66897 through 66898).
For the first group, consisting of device categories that are
currently eligible for pass-through payment and will continue to be
eligible for pass-through payment in CY 2016, there are three active
categories for CY 2016. For CY 2015, we established one new device
category subsequent to the publication of the CY 2015 OPPS/ASC proposed
rule, HCPCS code C2624 (Implantable wireless pulmonary artery pressure
sensor with delivery catheter, including all system components), that
was effective January 1, 2015. We estimate that HCPCS code C2624 will
cost $50.5 million in pass-through expenditures in CY 2016. Effective
Apri1 1, 2015, we established that HCPCS code C2623 (Catheter,
transluminal angioplasty, drug-coated, non-laser) will be eligible for
pass-through payment. We estimate that HCPCS code C2623 will cost $73
million in pass-through expenditures in CY 2016. Effective July 1,
2015, we established that HCPCS code C2613 (Lung biopsy plug with
delivery system) will be eligible for pass-through payment. We estimate
that HCPCS code C2613 will cost $3.3 million in pass-through
expenditures in CY 2016. Based on the three device categories of HCPCS
codes C2624, C2623, and C2613, we are proposing an estimate for the
first group of devices of $126.8 million.
In estimating our proposed CY 2016 pass-through spending for device
categories in the second group, we include: Device categories that we
knew at the time of the development of this proposed rule will be newly
eligible for pass-through payment in CY 2016; additional device
categories that we estimate could be approved for pass-through status
subsequent to the development of the proposed rule and before January
1, 2016; and contingent projections for new device categories
established in the second through fourth quarters of CY 2016. We are
proposing to use the general methodology described in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66778), while also taking
into account recent OPPS experience in approving new pass-through
device categories. For this proposed rule, the estimate of CY 2016
pass-through spending for this second group of device categories is $10
million.
To estimate proposed CY 2016 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 2016, we are proposing
to use 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 2016 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 2016, 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 are
proposing to include in the CY 2016 pass-through estimate the
difference between payment for the policy-packaged drug or biological
at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC
information is not available) and the policy-packaged drug APC offset
amount, if we determine that the policy-packaged drug or biological
approved for pass-through payment resembles a predecessor drug or
biological already included in the costs of the APCs that are
associated with the drug receiving pass-through payment. For this
proposed rule, using the proposed methodology described above, we
calculated a CY 2016 proposed spending estimate for this first group of
drugs and biologicals of approximately $5.2 million.
To estimate proposed CY 2016 pass-through spending for drugs and
biologicals in the second group (that is, drugs and biologicals that we
knew at the time of development of this proposed rule are newly
eligible for pass through payment in CY 2016, additional drugs and
biologicals that we estimate could be approved for pass-through status
subsequent to the development of the proposed rule and before January
1, 2016, and projections for new drugs and biologicals that could be
initially eligible for pass-through payment in the second through
fourth quarters of CY 2016), we are proposing to use utilization
estimates from pass-through applicants, pharmaceutical industry data,
clinical information, recent trends in the per unit ASPs of hospital
outpatient drugs, and projected annual changes in service volume and
intensity as our basis for making the CY 2016 pass-through payment
estimate. We also are proposing to consider the most recent OPPS
experience in approving new pass-through drugs and biologicals. Using
our proposed methodology for estimating CY 2016 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 $4.6 million.
In summary, in accordance with the methodology described above in
this section, for this proposed rule, we estimate that proposed total
pass-through spending for the device categories and the drugs and
biologicals that are continuing to receive pass-through payment in CY
2016 and those device categories, drugs, and biologicals that first
become eligible for pass-through payment during CY 2016 would be
approximately $146.6 million (approximately $136.8 million for device
categories and approximately $9.8 million for drugs and biologicals),
which represents 0.25 percent of total projected OPPS payments for CY
2016. Therefore, we estimate that proposed pass-through spending in CY
2016 would not amount to 2.0 percent of total projected OPPS CY 2016
program spending.

VII. Proposed OPPS Payment for Hospital Outpatient Visits

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

Since April 7, 2000, we have instructed hospitals to report
facility resources for clinic and emergency department (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

[[Page 39288]]

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.
With respect to outpatient clinic visits, in the CY 2014 OPPS/ASC
final rule with comment period (78 FR 75036 through 75045), we
finalized a policy that created 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 APC 0634 (Hospital Clinic
Visits). 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 (five levels for new patient clinic visits and
five levels for established patient 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.
With respect to ED 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 (78 FR 75036
through 75043).
In this proposed rule, for CY 2016, we are proposing to continue
the current policy, adopted in CY 2014, for clinic and ED visits. HCPCS
code G0463 (for hospital use only) will represent any and all clinic
visits under the OPPS. As part of our broader initiative to restructure
APCs across the OPPS to collectively group services that are clinically
similar and have similar resource costs within the same APC, we are
proposing to reassign HCPCS code G0463 from existing APC 0634 to
proposed renumbered APC 5012 (Level 2 Examinations and Related
Services), former APC 0632. Proposed renumbered APC 5012 includes other
services that are clinically similar with similar resource costs to
HCPCS code G0463, such as HCPCS code G0402 (Initial preventive physical
examination). We are proposing to use CY 2014 claims data to develop
the proposed CY 2016 OPPS payment rates for HCPCS code G0463 based on
the total geometric mean cost of HCPCS code G0463, as CY 2014 is the
first year for which claims data are available for this code. Finally,
as we established in the CY 2014 OPPS/ASC final rule with comment
period (78 FR 75042), there is no longer a policy to recognize a
distinction between new and established patient clinic visits.
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.
Therefore, in this CY 2016 OPPS/ASC proposed rule, we are not proposing
any change in ED visit coding. Rather, as we did for CY 2015 and prior
years, for CY 2016, we are proposing to continue to use our existing
methodology to recognize the existing five 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 proposed CY 2016 OPPS payment rates using our
established standard process. We may propose changes to the coding and
APC assignments for ED visits in future rulemaking.

B. Proposed Payment for Critical Care Services

For the history of the payment policy for critical care services,
we refer readers to the CY 2014 OPPS/ASC final rule with comment period
(78 FR 75043). In the CY 2014 OPPS/ASC final rule with comment period,
we continued to use the methodology established in the CY 2011 OPPS/ASC
final rule with comment period for calculating a payment rate for
critical care services that includes packaged payment of ancillary
services, for example electrocardiograms, chest X-rays, and pulse
oximetry. Critical care services are described by CPT codes 99291
(Critical care, evaluation and management of the critically ill or
critically injured patient; first 30-74 minutes) and 99292 (Critical
care, evaluation and management of the critically ill or critically
injured patient; each additional 30 minutes (List separately in
addition to code for primary service)).
Since CY 2013, we have stated that we would continue to monitor the
hospital claims data for CPT code 99291 in order to determine whether
revisions to our current payment policy for critical care services are
warranted based on changes in hospitals' billing practices. Because the
CY 2011 through CY 2014 claims data (used for CY 2013 through CY 2016
ratesetting, respectively) do not demonstrate any significant change in
hospital billing practices for critical care services, 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. Based on this pattern of billing
practices, we continue to believe that packaging ancillary services
into critical care services is appropriate. Therefore, for CY 2016 and
subsequent years, we are proposing to continue our policy (that has
been in place since CY 2011) to recognize the existing CPT codes for
critical care services and establish a payment rate based on historical
claims data. We also are proposing to continue to implement claims
processing edits that conditionally package payment for the ancillary
services that are reported on the same date of service as critical care
services in order to avoid overpayment.

C. Proposed Payment for Chronic Care Management Services

In the CY 2015 OPPS/ASC final rule with comment period, we assigned
CPT code 99490 to APC 0631 (Level 1 Examinations and Related Services),
with a payable status indicator of ``V,'' under general physician
supervision. (In this proposed rule, for CY 2016 and subsequent years,
we are proposing to renumber APC 0631 as APC 5011.) The current code
descriptor for CPT code 99490 is ``Chronic care management services
(CCM), at least 20 minutes of clinical staff time directed by a
physician or other qualified health care

[[Page 39289]]

professional, per calendar month), with the following required
elements:
Multiple (two or more) chronic conditions expected to last
at least 12 months, or until the death of the patient;
Chronic conditions place the patient at significant risk
of death, acute exacerbation/decompensation, or functional decline; and
Comprehensive care plan established, implemented, revised,
or monitored.''
CPT code 99490 is a physician-directed service, where the physician
is directing the clinical staff time spent on care management for a
specific patient. As a physician-directed service, payment under the
OPPS for CPT code 99490 is made to the hospital when the hospital's
clinical staff furnishes the service at the direction of the physician
(or other appropriate nonphysician practitioner) who meets all the
requirements to bill CPT code 99490 under the MPFS. The billing
physician or nonphysician practitioner directing the CCM services must
meet the requirements to bill CPT code 99490 under the MPFS. These
requirements are the same, regardless of whether the services described
by CPT code 99490 are furnished in the office or in the HOPD.
While CPT code 99490 has been payable under the OPPS since January
1, 2015, we have received questions about specific requirements for
hospitals to bill this code beyond those requirements discussed in the
CY 2015 MPFS final rule with comment period. In response to these
questions, we posted frequently asked questions (FAQs) and answers on
the CMS Web site on May 8, 2015. These FAQs can be accessed on the CMS
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/. In reviewing the questions from
hospitals on billing of CCM services, we identified several issues that
we believe need to be clarified. Therefore, for CY 2016 and subsequent
years, we are proposing additional requirements for hospitals to bill
and receive OPPS payment for CPT code 99490. These proposed
requirements, discussed below, are in addition to those already
required under the OPPS for billing CPT code 99490 in CY 2015.
In accordance with the CPT code descriptor for CPT code 99490, a
hospital can only bill CPT code 99490 and receive payment under the
OPPS for furnishing clinical staff services under a physician's or
other appropriate nonphysician practitioner's direction to a patient
that has multiple (two or more) chronic conditions expected to last at
least 12 months or until the death of the patient, and that place the
patient at significant risk of death, acute exacerbation/
decompensation, or functional decline. While we have always expected
the hospital furnishing the clinical staff portion of CCM services, as
described by CPT code 99490, to have an established relationship with
the patient and to provide care and treatment to the patient during the
course of illness (that is, the chronic conditions that are expected to
last at least 12 months), we have not previously specified through
notice-and-comment rulemaking that the hospital must have an
established relationship with the patient as a requirement for billing
and OPPS payment for CPT code 99490. Therefore, for CY 2016 and
subsequent years, we are proposing that a hospital would be able to
bill CPT code 99490 for CCM services only when furnished to a patient
who has been either admitted to the hospital as an inpatient or has
been a registered outpatient of the hospital within the last 12 months
and for whom the hospital furnished therapeutic services. Section 20.2,
Chapter 4 of the Medicare Claims Processing Manual (Pub. 100-04)
defines a hospital outpatient as a person who has not been admitted by
the hospital as an inpatient but is registered on the hospital records
as an outpatient and receives services (other than supplies alone) from
the hospital. We believe that hospitals furnishing services described
by CPT code 99490 are, in all likelihood, already meeting this
requirement as they are providing CCM services described by CPT code
99490 to patients for whom they already provide care and treatment.
However, we are proposing to adopt the relationship requirement as an
explicit condition for billing and payment of CCM services under the
OPPS.
As outlined in the CY 2015 MPFS final rule with comment period (79
FR 67721 through 67722), practitioners furnishing and billing CCM
services as described by CPT code 99490 under the MPFS are required to
(1) inform the beneficiary about the availability of the CCM services
from the practitioner and obtain his or her written agreement to have
the service(s) provided; (2) document in the beneficiary's medical
record that all elements of the CCM service(s) were explained and
offered to the beneficiary, noting the beneficiary's decision to accept
or decline the service; and (3) inform the beneficiary that only one
practitioner can furnish and be paid for these services during the
calendar month service period. For CY 2016 and subsequent years, we are
proposing to adopt analogous requirements for billing services
described by CPT code 99490 under the OPPS. Specifically, we are
proposing, for CY 2016 and subsequent years, that hospitals furnishing
and billing services described by CPT code 99490 under the OPPS would
be required to have documented in the hospital's medical record the
patient's agreement to have the services provided, or alternatively, to
have the patient's agreement to have the CCM services provided
documented in a beneficiary's medical record that the hospital can
access. In addition, for CY 2016 and subsequent years, we are proposing
to require hospitals furnishing and billing for the CCM services
described by CPT code 99490 under the OPPS to have documented in the
hospital medical record (or beneficiary medical record that the
hospital can access) that all elements of the CCM services were
explained and offered to the beneficiary, including a notation of the
beneficiary's decision to accept or decline the services. If the
hospital is billing for the CCM services, we would expect the physician
or practitioner under whose direction the services are furnished to
have discussed with the beneficiary that hospital clinical staff will
furnish the services and that the beneficiary could be liable for two
separate copayments from both the hospital and physician. Consistent
with the MPFS requirement that only one practitioner can furnish and be
paid for services described by CPT code 99490 during the calendar month
service period, we are proposing, for CY 2016 and subsequent years,
that only one hospital can furnish and be paid for services described
by CPT code 99490 during the calendar month service period. The
physician or other appropriate nonphysician practitioner directing the
CCM services should inform the beneficiary that only one hospital can
furnish and be paid for these services during the calendar month
service period. These proposed requirements are consistent with and
support the MPFS requirements set forth in the CY 2015 MPFS final rule
with comment period (79 FR 67728).
In addition, a number of scope of service elements for CCM services
were finalized as requirements to bill for CCM services described by
CPT code 99490 in the CY 2015 MPFS final rule with comment period (79
FR 67715 through 67728). For CY 2016 and subsequent years, we are
proposing to require analogous scope of service elements for the CCM
services, listed below, to be met in order for hospitals

[[Page 39290]]

to bill and receive OPPS payment for furnishing CCM services described
by CPT code 99490. Specifically, we are proposing to require a hospital
that bills and receives OPPS payment for their clinical staff
furnishing CCM services described by CPT code 99490 under the direction
of a physician or other appropriate nonphysician practitioner to
provide--
Structured recording of demographics, problems,
medications, medication allergies, and the creation of a structured
clinical summary record. A full list of problems, medications, and
medication allergies in the electronic health record (EHR) must inform
the care plan, care coordination, and ongoing clinical care.
Access to care management services 24 hours a day/7 days a
week (providing the beneficiary with a means to make timely contact
with health care providers to address his or her urgent chronic care
needs, regardless of the time of day or day of the week).
Continuity of care with a designated practitioner or
member of the care team with whom the beneficiary is able to get
successive routine appointments.
Care management for chronic conditions, including
systematic assessment of the beneficiary's medical, functional, and
psychosocial needs; system-based approaches to ensure timely receipt of
all recommended preventive care services; medication reconciliation
with review of adherence and potential interactions; and oversight of
beneficiary self-management of medications.
Documentation of the creation of a patient-centered care
plan based on a physical, mental, cognitive, psychosocial, functional,
and environmental assessment or reassessment and an inventory of
resources and supports (a comprehensive care plan for all health
issues). Electronically capture care plan information, make this
information available on a 24 hour/7 day a week basis to all
practitioners furnishing CCM services, and electronically share, as
appropriate, with other practitioners and providers.
A written or electronic copy of the care plan provided to
the beneficiary, and document its provision in the electronic medical
record using certified information technology (IT).
Management of care transitions between and among health
care providers and settings, including referrals to other clinicians;
follow-up after an emergency department visit; and follow-up after
discharges from hospitals, skilled nursing facilities, or other health
care facilities. Electronic transmission of a clinical summary created
using certified health IT to support care transitions.
Coordination with home- and community-based clinical
service providers required to support the patient's psychosocial needs
and functional deficits. Communication to and from home- and community-
based providers regarding these patient needs must be documented in the
patient's medical record.
Enhanced opportunities for the beneficiary and any
caregiver to communicate with the practitioner regarding the
beneficiary's care through not only telephone access, but also through
the use of secure messaging, internet, or other asynchronous non-face-
to-face consultation methods.
Lastly, with respect to the EHR, for CY 2016 and subsequent years,
we are proposing to adopt the requirements set forth in the CY 2015
MPFS final rule with comment period (79 FR 67723 through 67724) and
detailed below for billing services described by CPT code 99490 under
the OPPS. Specifically, for CY 2016 and subsequent years, we are
proposing to require the use of EHR technology that has been certified
under the ONC Health Information Technology (IT) Certification Program
as requisite for hospitals furnishing and receiving payment under the
OPPS for the clinical staff portion of CCM services, to ensure that
hospitals have adequate capabilities to allow members of the
interdisciplinary care team to have timely access to the most updated
information informing the care plan. We are proposing, for hospital
payment under the OPPS, that the CCM services as described by CPT code
99490 must be furnished using, at a minimum, the edition(s) of
certification criteria that is acceptable for purposes of the EHR
Incentive Programs as of December 31 of the calendar year preceding
each MPFS payment year to meet the following core technology
capabilities: Structured recording of demographics, problems,
medications, medication allergies, and the creation of a structured
clinical summary. We also are proposing to require hospitals to use
certified IT to fulfill the CCM scope of service requirements whenever
the requirements reference a health or medical record. This would
ensure that requirements for billing CCM services under the MPFS and
OPPS are consistent throughout each MPFS and OPPS payment year, and are
automatically updated according to the certification criteria required
for the EHR Incentive Programs. For payment for CCM services under the
OPPS in CY 2016, this policy would allow hospitals to use EHR
technology certified to, at a minimum, the 2014 edition of
certification criteria to meet the final core capabilities for CCM
services and to fulfill the scope of service requirements for CCM
services whenever the requirements reference a health or medical
record. The CY 2015 MPFS final rule with comment period (79 FR 67728)
includes a detailed table summarizing when certified health IT is
required to support the scope of service requirements. We remind
stakeholders that, for all electronic sharing of beneficiary
information under our final CCM services policies, HIPAA standards
apply in the usual manner.

VIII. Proposed Payment for Partial Hospitalization Services

A. Background

Partial hospitalization is an intensive outpatient program of
psychiatric services provided to patients as an alternative to
inpatient psychiatric care for individuals who have an acute mental
illness. Section 1861(ff)(1) of the Act defines partial hospitalization
services as the items and services described in paragraph (2)
prescribed by a physician and provided under a program described in
paragraph (3) under the supervision of a physician pursuant to an
individualized, written plan of treatment established and periodically
reviewed by a physician (in consultation with appropriate staff
participating in such program), which sets forth the physician's
diagnosis, the type, amount, frequency, and duration of the items and
services provided under the plan, and the goals for treatment under the
plan. Section 1861(ff)(2) of the Act describes the items and services
included in partial hospitalization services. Section 1861(ff)(3)(A) of
the Act specifies that a partial hospitalization program (PHP) is a
program furnished by a hospital to its outpatients or by a community
mental health center (CMHC) (as defined in subparagraph (B)), and which
is a distinct and organized intensive ambulatory treatment service
offering less than 24-hour-daily care other than in an individual's
home or in an inpatient or residential setting. Section 1861(ff)(3)(B)
of the Act defines a community mental health center for purposes of
this benefit.
Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the
authority to designate the OPD services to be covered under the OPPS.
The Medicare regulations that implement this provision specify, under
42 CFR 419.21, that payments under the OPPS will be made for partial
hospitalization

[[Page 39291]]

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 under APC 0172 (Level
I Partial Hospitalization) and a higher amount for days with 4 or more
services under 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 PHP APC
per diem costs, upon which PHP APC per diem payment rates are based. 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,

[[Page 39292]]

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 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 use data on claims from 1996 and use 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).

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In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66902
through 66908), we continued to apply our established policies to
calculate the four PHP APC per diem payment rates based on PHP APC
geometric mean per diem costs using the most recent claims and cost
data for each provider type.

B. Proposed PHP APC Update for CY 2016

1. Proposed PHP APC Geometric Mean Per Diem Costs
For CY 2016, we are proposing 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 are proposing to compute proposed CMHC
PHP APC geometric mean per diem costs for Level 1 (3 services per day)
and Level 2 (4 or more services per day) PHP services using only CY
2014 CMHC claims data and the most recent cost data, and proposed
hospital-based PHP APC geometric mean per diem costs for Level 1 and
Level 2 PHP services using only CY 2014 hospital-based PHP claims data
and the most recent cost data. These proposed geometric mean per diem
costs are shown in Tables 50 and 51 of this proposed rule. To prevent
confusion, we refer to the per diem information listed in Tables 50 and
51 of this proposed rule as the proposed PHP APC per diem costs or the
proposed PHP APC geometric mean per diem costs, and the per diem
information listed in Addendum A to this proposed rule as the proposed
PHP APC per diem payment rates or the proposed PHP APC geometric mean
per diem payment 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 proposed rule.
As part of the effort to increase the accuracy of the PHP per diem
costs, we completed an extensive analysis of the claims and cost data,
which included provider service usage, coding practices, and the
ratesetting methodology. As part of our analysis, we also identified
aberrant data from several providers that are impacting the calculation
of the proposed PHP geometric mean per diem costs. Aberrant data are
claims and/or cost data that are so abnormal that they skew the
resulting geometric mean per diem costs. For example, we found claims
with excessive CMHC charges resulting in CMHC geometric mean costs per
day that are approximately the same as or more than the daily payment
for inpatient psychiatric facility services. For an outpatient program
like PHP, because it does not incur room and board costs such as an
inpatient stay would, these costs per day are excessive. In addition,
we found some CMHCs had very low costs per day (less than $25 per day).
Without using a trimming process, the data from these providers will
inappropriately skew the geometric mean per diem cost for Level 2 CMHC
PHP services. Without the trim, the CMHC PHP APC geometric mean per
diem cost is $172.62 for Level 2 services, which significantly diverges
from the median cost per day of $148.14. When data are not skewed and
are normally distributed, measures of central tendency such as the
median and geometric mean will be very similar to each other. The
differences between these two measures suggest skewing, and as
previously noted, examination of the data confirmed that there are a
few providers with extreme cost per day values. Level 1 CMHC geometric
mean per diem costs were $103.10 before any trim is performed. Our
proposed trim on total CMHC costs per day is performed before
stratifying the data by payment tiers (Level 1 and Level 2 CMHC PHP
services), and would affect both CMHC payment tiers.
During our claims and cost data analysis, we also found aberrant
data from some hospital-based PHP providers. Nearly all hospital-based
PHPs recorded their costs using cost center 9000 (``Clinic'') as the
source for the CCR for individual or group therapy services,
psychiatric testing, and education/training services. These services
comprise the majority of the PHP services provided. The existing OPPS
3 standard deviation trim removed very extreme CCRs for
cost center 9000, which were less than 0.0206 or greater than 28.3446,
by defaulting two providers that failed this trim to their overall
hospital ancillary CCR. However, the calculation of the 3
standard deviations used to define the trim for cost center 9000 was
influenced by these two providers, which had very extreme CCRs of
178.0224 and 272.4451. Because these two hospital-based PHP providers
remained in the data when we calculated the boundaries of the OPPS
3 standard deviation trim, the upper limit of the trim
boundaries was fairly high, at 28.3446. As such, some aberrant CCRs for
cost center 9000 were not trimmed out, and still had high values
ranging from 6.3840 to 19.996. We note in section II.D. of this
proposed rule that OPPS defines a biased CCR as one that falls outside
the predetermined ceiling threshold for a valid CCR; using CY 2014 cost
report data, that threshold is 1.5. The hospital CCR ceiling thresholds
or upper limits are available online at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files-Items/2015-Annual-Policy-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.
We are concerned that including aberrant data in the calculation of
the proposed hospital-based PHP per diem payment rates would
inappropriately skew these payment rates. When we included these
aberrant CCRs, which ranged from 6.3840 to 19.996, in hospital-based
PHP cost modeling, the geometric mean per diem costs were $267.04 for
Level 1 services and $223.39 for Level 2 services. We note that the
geometric mean per diem cost of the hospital-based PHP Level 1 APC was
greater than that of the hospital-based PHP Level 2 APC, despite fewer
services being provided. This occurred because a relatively higher
share of high-CCR service days was reported for hospital-based PHP
Level 1 services compared to hospital-based PHP Level 2 services. Due
to the low volume of hospital-based PHP Level 1 services, the effect of
the high-CCR service days on the resulting proposed geometric mean per
diem costs is relatively greater than the effect of the high-CCR
service days on the resulting proposed Level 2 geometric mean per diem
costs. As such, the hospital-based Level 1 PHP APC geometric mean per
diem costs are higher than the proposed geometric mean per diem costs
for the hospital-based Level 2 PHP APC.
In order to reduce or eliminate the impact of including aberrant
data received from a few CMHCs and hospital-based PHP providers in the
claims data used for ratesetting, we are proposing to use a 2 standard deviation trim for CMHCs and to apply a CCR greater
than five (CCR>5) hospital service day trim for hospital-based PHP
providers for CY 2016 and subsequent years.
Under the 2 standard deviation trim proposal, we would
exclude any CMHC when the CMHC's cost per day is more than 2 standard deviations from the geometric mean cost per day for
all CMHCs. For example, based on our CY 2014 claims data used for CY
2016 ratesetting, the geometric mean cost per day for all CMHCs before
trimming is $168.16. Using the 2 standard deviation trim,
three providers with geometric mean costs per day ranging

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from as low as $23.50 to as high as $996.71 were excluded from the
ratesetting for CY 2016. Excluding providers with extremely low or
extremely high costs per day protects CMHCs from having those extreme
costs per day inappropriately skew the CMHC PHP APC geometric mean per
diem costs. In addition, we are proposing to use a 2
standard deviation trim because, when we used this methodology, it
aligned the geometric mean and median per diem costs for the CMHC Level
2 PHP APC payment tier, which also indicates that the trim removed the
skewing in the data caused by the inclusion of aberrant data received
from the three providers. We believe that the 2 standard
deviation trim would exclude CMHCs with aberrant data from the
ratesetting process while allowing for the use of as much data as
possible. In addition, implementing a 2 standard deviation
trim on CMHCs would target these aberrancies without limiting overall
per diem cost increases. A 2 standard deviation trim also
is an accepted statistical approach for objectively mitigating extreme
data. For normally distributed data, 2 standard deviations
from the mean capture approximately 95 percent of the data.
We are proposing to apply the 2 standard deviation trim
to the geometric mean cost per day at the CMHC level. This application
would exclude those CMHCs with costs per day 2 standard
deviations from the geometric mean cost per day for all CMHCs. Under
this proposal, three CMHCs with aberrant data would be removed from the
ratesetting calculations. The exclusion of these three CMHCs removed
from modeling 2,296 CMHC claims out of 25,383 total CMHC claims, in
order to prevent inappropriate fluctuations in the payment rates. The
resulting CMHC Level 2 PHP APC geometric mean per diem costs would be
$147.51. The CMHC Level 1 PHP APC geometric mean per diem costs
actually increased slightly when the trim was applied, from $103.10 to
$105.82.
We determined that proposing to use a higher trim level, such as
2.5 or 3 standard deviations from the geometric
mean, did not reduce the skewing caused by the inclusion of data from a
few CMHC providers. In other words, using a higher trim level did not
remove the CMHCs with aberrant data from the ratesetting process.
Further, we believe that using a trim level lower than 2
standard deviations would remove too much data. If a data distribution
is approximately normally distributed, approximately 68 percent of the
data fall within 1 standard deviation of the mean, and
approximately 95 percent of the data fall within 2 standard
deviations of the mean. Our goal was to remove outliers while using as
much of the CMHC data as possible.
We did not consider the CCR >5 service day trim for CMHCs, because
longstanding PHP OPPS methodology defaults any CMHC CCR >1 to the
statewide hospital ancillary CCR (we refer readers to the following
section for a review of the PHP OPPS ratesetting methodology). Hospital
statewide CCRs have been less than 1 and are available on the CMS Web
site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files-Items/2015-Annual-Policy-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. In our
CY 2016 ratesetting process, we identified only one CMHC that had a CCR
>1. That CMHC's CCR was 1.019, and was defaulted to its appropriate
hospital statewide CCR for CY 2016 ratesetting purposes.
We considered applying the 2 standard deviation trim to
hospital-based PHP providers as well. However, the 2
standard deviation trim would have removed 25 hospital-based PHP
providers with aberrant data out of 387 hospital-based PHP providers.
We were concerned about removing data from that many providers, and
sought an alternative that allowed for use of more of the data.
Therefore, we are proposing a trim on CCRs, which we believe would be
more effective in removing aberrant data and allowing the use or
retention of more data. Trims on hospital and CMHC CCRs are already
used with the OPPS system, but due to the two very extreme outlier CCRs
for cost center 9000 previously mentioned, the OPPS 3
standard deviation trim on hospital cost center 9000 CCRs had a higher
upper limit than usual, and therefore did not trim all the claims with
aberrant CCRs. As such, claims with aberrant data remain for some
hospital-based PHPs. Therefore, for hospital-based PHPs, we are
proposing to apply a trim on hospital service days when the CCR is
greater than five (CCR>5) at the cost center level.
Under our proposal, the CCR>5 hospital service day trim would
remove hospital-based PHP service days that use a CCR>5 to calculate
costs for at least one of their component services. Unlike the 2 standard deviation trim, which excludes CMHC providers that
fail the trim, the CCR>5 trim would exclude any hospital-based PHP
service day where any of the services on that day are associated with a
CCR > 5. For example, assume a hospital-based PHP had a claim with a
service day with one individual therapy service, two group therapy
services, and one occupational therapy service. Assume that the
hospital-based PHP's cost center CCRs associated with these services
were 0.6, 0.6, 0.6, and 6.7, respectively. Because the CCR associated
with the occupational therapy service is greater than 5, this
particular day, and all other days for this provider where occupational
therapy services were provided, would be excluded from the data used in
ratesetting. Applying this trim removed service days from seven
hospital-based PHP providers. After applying the CCR>5 trim, the Level
1 hospital-based PHP APC geometric mean per diem cost changed from
$267.04 to $195.73, and the Level 2 hospital-based PHP geometric mean
per diem cost changed from $223.39 to $218.93. As expected, without
including the aberrant CCR service days in the data used to calculate
the proposed hospital-based PHP APC geometric mean per diem costs, the
Level 1 hospital-based PHP APC geometric mean per diem cost is less
than the Level 2 hospital-based PHP APC geometric mean per diem cost.
As an alternative to these proposals for CMHCs and hospital-based
PHPs, we considered proposing a 15-percent cap on changes in the
geometric mean per diem costs. This cap would limit the increase or the
decrease in the geometric mean per diem costs from one year to the next
by capping the change at 15 percent. This cap also would protect
providers from fluctuations in PHP APC per diem payment rates due to
large increases or declines in the geometric mean per diem costs.
However, we are not proposing this alternative because we believe that
establishing such a cap would not specifically target aberrant data
from a minority of providers, which is the purpose of our proposals.
Targeting aberrant data is important in order to help stabilize the
PHP APC geometric mean per diem costs for both CMHCs and hospital-based
PHP services. As we receive updated claims and cost files, and as we
continue analyzing PHP data, it is possible that the PHP trims that we
are proposing may need refinement. We would propose any changes to the
methodology that we finalize later this year through future notice-and-
comment rulemaking.
Therefore, for CY 2016 and subsequent years, we are proposing to
exclude any CMHC when the CMHC's costs per day are more than 2 standard deviations from the geometric mean cost per day for
all CMHCs (Level 1 and Level 2), and to exclude hospital-based PHP
service days when a CCR>5 is used

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to calculate costs for at least one of their component services (Level
1 and Level 2).
The CY 2016 proposed PHP APC geometric mean per diem costs for
CMHCs calculated under the proposed CY 2016 methodology using CY 2014
claims data and the most recent cost data are $105.82 for Level 1 (3
services per day) CMHC PHP services, and are $147.51 for Level 2 (4 or
more services per day) CMHC PHP services.
The CY 2016 proposed PHP APC geometric mean per diem costs for
hospital-based PHPs calculated under the proposed CY 2016 methodology
using CY 2014 claims data and the most recent cost report data are
$195.73 for Level 1 (3 services per day) hospital-based PHP services,
and are $218.93 for Level 2 (4 or more services per day) hospital-based
PHP services.
We recognize that several factors may cause a fluctuation in the
PHP APC 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).
The proposed CY 2016 PHP APC geometric mean per diem costs for the
CMHC and hospital-based PHP APCs are shown in Tables 50 and 51 of this
proposed rule. We note that Tables 50 and 51 below display the proposed
PHP APC renumbering that is part of the proposed reorganization of OPPS
APCs described in section III.D. of this proposed rule. Specifically,
we are proposing to renumber the four PHP APCs, that is, APCs 0172,
0173, 0175, and 0176, as APCs 5851, 5852, 5861, and 5862, respectively.
As noted earlier in this section, we refer readers to Addendum A to
this proposed rule (which is available via the Internet on the CMS Web
site) for the proposed PHP APC payment rates.

Table 50--Proposed CY 2016 PHP APC Geometric Mean Per Diem Costs for
CMHC PHP Services
------------------------------------------------------------------------
Proposed PHP
Proposed renumbered CY APC geometric
2016 APC Group title mean per diem
costs
------------------------------------------------------------------------
5851...................... Level 1 Partial $105.82
Hospitalization (3
services) for CMHCs.
5852...................... Level 2 Partial 147.51
Hospitalization (4 or more
services) for CMHCs.
------------------------------------------------------------------------

Table 51--Proposed CY 2016 PHP APC Geometric Mean Per Diem Costs for
Hospital-Based PHP Services
------------------------------------------------------------------------
Proposed PHP
Proposed renumbered CY APC geometric
2016 APC Group title mean per diem
costs
------------------------------------------------------------------------
5861...................... Level 1 Partial $195.73
Hospitalization (3
services) for hospital-
based PHPs.
5862...................... Level 2 Partial 218.93
Hospitalization (4 or more
services) for hospital-
based PHPs.
------------------------------------------------------------------------

We are inviting public comments on these proposals.
2. PHP Ratesetting Process
While the PHP is part of the OPPS, PHP ratesetting has some unique
aspects. To foster understanding and transparency, we are providing the
following detailed explanation of the PHP APC ratesetting process. The
OPPS ratesetting process includes various steps as part of its data
development process, such as CCR determination and calculation of
geometric mean per diem costs, identification of allowable charges,
development of the APC relative payment weights, calculation of the APC
payment rates, and establishment of outlier thresholds. We refer
readers to section II. of this proposed rule and encourage readers to
review these discussions to increase their overall understanding of the
entire OPPS ratesetting process. We also refer readers to the OPPS
Claims Accounting narrative, which is a supporting document to this
proposed rule available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; click on the link to
this proposed rule to find the Claims Accounting narrative. We
encourage CMHCs and hospital-based PHPs to review their accounting and
billing processes to ensure that they are following these procedures,
which should result in greater accuracy in setting the PHP rates.
We limit our discussion here primarily to the data development
process and calculation of PHP APC geometric mean per diem costs used
for PHP ratesetting. Our discussions focus on five major phases in
modeling the data, which result in the development of PHP APC geometric
mean per diem costs, and on the importance of correct coding and
reasonable charges for PHPs, and include: (a) Development of PHP
claims; (b) determination of CCRs for CMHCs and hospital-based PHPs;
(c) identification of PHP allowable charges; (d) determination of PHP
APC per diem costs; (e) development of service days and cost modeling;
and (f) issues regarding correct coding and reasonable charges.
a. Development of PHP Claims
We use outpatient claims from the national claims history file for
the most recent available calendar year that were processed through
December 31 of that year (that is, the calendar year that is 2 years
before the calendar year at issue) to calculate the geometric mean
costs of APCs that underpin the relative payment weights for the
calendar year at issue. It is important to note that this is not the
population of claims paid under the OPPS, but all outpatient claims as

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explained in further detail in section II.A.2.a. of this proposed rule.
We then exclude the following claims from OPPS ratesetting. These
are claims where:
No payment is made;
There are more than 300 lines; or
Services were furnished in Maryland, Guam, the U.S. Virgin
Islands, American Samoa, or the Northern Mariana Islands (these
providers are not paid under the OPPS).
From these outpatient claims, we extract all hospital outpatient
PHP claims and all CMHC claims. PHP claims are extracted based on their
specific bill types: 12X or 13X, with condition code 41, for hospital-
based PHPs; and 76X for CMHCs. For example, for this proposed rule, we
used data from the CY 2014 hospital outpatient PHP and CMHC PHP claims
from the national claims history file that were processed through
December 31, 2014, to calculate the PHP APC geometric mean per diem
costs that underpin the proposed PHP APC relative payment weights for
CY 2016.
As noted in section II.A.2.c. of this proposed rule and in the
Claims Accounting narrative, we exclude hospital-based PHP claims if--
They were submitted by critical access hospitals;
They reported obviously erroneous units (for example, more
than 100,000 units for a single service);
They reported charge amounts equal to the payment
received;
They did not report at least one HCPCS code, because OPPS
APCs are based upon HCPCS codes; or
They only contained flu or pneumonia vaccine services,
which are paid separately outside of OPPS.
At the end of this process, we have identified the PHP claims that
are appropriate and available to use to calculate PHP APC geometric
mean per diem costs. These claims include dates of service, revenue
codes, HCPCS codes for services provided, charges, and the payments
Medicare made (the PHP APC per diem rates).
b. Determination of CCRs for CMHCs and Hospital-Based PHPs
Next, we determine and assess each provider's CCR. This ratio,
along with the charges from the claims, is used to estimate the costs,
which are then used to determine the geometric mean per diem costs.
There are specific policies we follow in determining which CCR to use
in estimating costs, which differ for CMHCs and for hospital-based
PHPs, largely due to differences in the cost reports for these two
types of PHPs. PHPs should review section II.A.1.c. of this proposed
rule and section 10.11, Chapter 4, of the Medicare Claims Processing
Manual (internet-only manual (IOM), Pub. 100-04), which is available on
the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf) for more specific discussion
of CCRs used in PHP ratesetting.
(1) Calculation and Assessment of CMHC CCRs
As noted in section VIII.A. of this proposed rule and section
10.11.9, Chapter 4 of the Medicare Claims Processing Manual (Pub. 100-
04), the CMHC CCR is calculated using the provider's most recent full
year cost report, Form CMS 2088-92, and Medicare cost and charges from
Worksheet C, Page 2. We divide costs from line 39.01, Column 3 by
charges from line 39.02, Column 3 to calculate an overall CMHC CCR. The
CMHC cost report forms and cost reporting instructions are available 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.
The most recent CMHC CCRs are posted to the Outpatient Provider
Specific File (OPSF). We assess those CMHC CCRs within that file in
preparation for use in cost estimation in the following manner:
We use the most recent CMHC-specific CCR from the OPSF. If
the CCR is not available (for example, the CMHC is a new provider with
less than 12 months data), we use the hospital ancillary CCR associated
with the provider's urban/rural designation and their state location.
The statewide urban and rural hospital CCRs are available on the CMS
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.html.
As described in Section 10.11.9, Chapter 4, of the
Medicare Claims Processing Manual, for any CMHC with a CCR greater than
1, we use the hospital ancillary CCR associated with its urban/rural
designation and its State location.
Once we have a CCR for each CMHC, we calculate the geometric mean
of all CMHC CCRs. As described in the OPPS Claims Accounting narrative,
we apply the OPPS 3 standard deviation trim to the CMHC
CCRs; this trim excludes any CMHC with a CCR that is 3
standard deviations from the geometric mean of all CMHC CCRs. At the
end of this process, we have identified a CCR for all CMHCs that have
not been excluded.
(2) Calculation and Assessment of Hospital-Based PHP CCRs
Unlike CMHCs where there is one CCR calculated for each CMHC,
hospital-based PHPs have CCRs for each cost center that is associated
with PHP services. For hospital-based PHPs, we use the provider's most
recent full year hospital cost report, whether tentatively settled or
final settled, to identify CCRs, using the Healthcare Provider Cost
Report Information System (HCRIS) file. The CCRs for hospital-based
PHPs are calculated by cost center on hospital cost report Worksheet C,
Part I, Column 9. The overall hospital CCR is calculated by the MAC,
and is posted in the Provider-Specific File. The hospital cost report
form CMS-2552-10 and cost reporting instructions are in Chapter 40 of
the Provider Reimbursement Manual--Part 2, which is available 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.
We assess the hospital-based PHP CCRs as described in section
II.A.2.a. of this proposed rule and in the OPPS Claims Accounting
narrative, by applying the OPPS 3 standard deviation trim
to hospital-based PHP CCRs within each cost center and to the overall
hospital ancillary CCR. To perform this 3 standard
deviation trim, we follow the following process. Each PHP revenue code
is associated with particular cost centers on the cost report. The
revenue-to-cost-center crosswalk identifies the primary, secondary (if
any), and tertiary (if any) cost centers that are associated with each
PHP revenue code, and which are the source for the CCRs used in PHP
ratesetting. The PHP portion of that OPPS crosswalk is shown in Table
52 below. Based on the revenue code, we first look for a CCR calculated
from the primary cost center; if none exists or the CCR fails the
3 standard deviation trim, we look for a CCR calculated
from the secondary cost center. If there is no CCR calculated from the
secondary cost center or the CCR fails the 3 standard
deviation trim, we look for a CCR calculated from the tertiary cost
center. If there is no CCR calculated from the tertiary cost center or
the CCR fails the 3 standard deviation trim, we look to the
hospital's overall ancillary CCR. If the hospital's overall ancillary
CCR fails the 3 standard deviation trim, we exclude the
hospital's claims data from ratesetting.

[[Page 39297]]

For example, for revenue code 900, the primary cost center is 3550
``Psychiatric/Psychological Services.'' If the CCR associated with this
cost center passes the 3 standard deviation trim, we retain
that CCR for use in ratesetting. If the CCR associated with primary
cost center 3550 fails the trim, it is deleted, and we then move to
cost center 9000 ``Clinic'' to assess the provider's CCR. If that CCR
passes the 3 standard deviation trim, it is retained for
use in ratesetting. If the CCR fails the 3 standard
deviation trim, it is deleted, and we then would consider the CCR
calculated from the tertiary cost center. However, for revenue code
900, there is no tertiary cost center. If the primary, secondary (if
any), and tertiary (if any) cost centers' CCRs fail the trim, we assess
the hospital's overall ancillary CCR. If that overall ancillary CCR
passes the 3 standard deviation trim, we retain it for use
in ratesetting. If the overall ancillary CCR fails the 3
standard deviation trim, we exclude the provider from ratesetting. This
process of assessing the CCRs with a 3 standard deviation
trim is repeated for each revenue code's associated cost centers. After
applying this 3 standard deviation trim, we obtain a file
with trimmed CCRs for use in ratesetting.
The revenue-to-cost center crosswalk for all services paid under
the OPPS is available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.html. We are providing an excerpt of the PHP portion of
the OPPS crosswalk below.

Table 52--Revenue-to-Cost Center Crosswalk for PHP Allowable Revenue Codes
----------------------------------------------------------------------------------------------------------------
Primary cost Secondary cost
Revenue code Description center source Primary cost center source Secondary cost
for CCR center name for CCR center name
----------------------------------------------------------------------------------------------------------------
0250......................... Pharmacy....... 7300 Drugs Charged .............. ...............
to Patients.
0430......................... Occupational 6700 Occupational .............. ...............
Therapy. Therapy.
0900, 0914, 0915, 0916, or Psychiatric/ 3550 Psychiatric/ 9000 Clinic.
0918. Psychological Psychological
Treatment: Services.
Individual,
Group, and
Family
Therapy;
Psychological
testing.
0904 *....................... Psychiatric/ 3580 Recreational 3550 Psychiatric/
Psychological Therapy. Psychological
Treatment: Services.
Activity
Therapy.
0942......................... Other 9000 Clinic......... .............. ...............
Therapeutic
Services:
Education/
Training.
----------------------------------------------------------------------------------------------------------------
* Although not listed in this table, revenue code 0904 is the only PHP revenue code with a tertiary cost center
serving as a source for the CCR, which is cost center 9000, ``Clinic.''

c. Identification of PHP Allowable Charges
We use the PHP claims derived under the methodology discussed in
section VIII.B.2.a. of this proposed rule to identify which charges are
allowable for PHP ratesetting. Each revenue code line on the PHP claim
must report a HCPCS code and a charge (except for revenue code 0250,
which only requires that the charge be reported). Allowable charges are
those charges for the HCPCS codes which are associated with PHP
allowable revenue codes; PHP allowable revenue codes are revenue codes
allowable for OPPS PHP ratesetting purposes. As discussed in the CY
2013 OPPS/ASC final rule with comment period (77 FR 68412 to 68418), we
updated the PHP allowable revenue codes and PHP allowable HCPCS codes
for CY 2013 and subsequent years. They are included in Section 260,
Chapter 4, of the Medicare Claims Processing Manual (IOM Pub. 100-04),
which is available on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf) and
are shown in Table 53 below:

Table 53--PHP Allowable Revenue and HCPCS Codes
------------------------------------------------------------------------
Revenue code Description HCPCS code
------------------------------------------------------------------------
0250...................... Drugs and Biologicals Not required.
043X...................... Occupational Therapy. G0129.
0900...................... Behavioral Health 90791 or 90792.
Treatment/Services.
0904...................... Activity Therapy G0176.
(Partial
Hospitalization).
0914...................... Individual 90785, 90832, 90833,
Psychotherapy. 90834, 90836, 90837,
90838, 90845, 90865,
or 90880.
0915...................... Group Therapy........ G0410 or G0411.
0916...................... Family Psychotherapy. 90846 or 90847.
0918...................... Psychiatric Testing.. 96101, 96102, 96103,
96116, 96118, 96119,
or 96120.
0942...................... Education Training... G0177.
------------------------------------------------------------------------

The HCPCS codes shown in Table 53 above are those which are used in
the four PHP APCs (existing APCs 0172, 0173, 0175, 0176, which are
proposed to be renumbered APCs 5851, 5852, 5861, and 5862,
respectively), and are also shown in Appendix C-a and Appendix P of the
Integrated Outpatient Code Editor (IOCE) Specifications. As described
in section III.D. of this proposed rule, we are proposing to renumber
some of the OPPS APCs, and have shown both the proposed renumbered APCs
and the existing APCs for partial hospitalization services above. The
IOCE is available on the CMS Web site at: http://www.cms.gov/Medicare/Coding/OutpatientCodeEdit/OCEQtrReleaseSpecs.html.

[[Page 39298]]

d. Determination of PHP APC Per Diem Costs
The PHP CCRs described in section VIII.B.2.b. of this proposed rule
are applied to the PHP claim charges described in section VIII.B.2.c.
of this proposed rule to determine the PHP APC geometric mean per diem
costs. Costs for each service line reported on CMHC claims are
calculated by multiplying each service line charge by the CCR
associated with the claim's provider. Costs for each service line
reported on the hospital-based PHP claims are calculated by multiplying
the service line charge by the CCR associated with the provider's
service line's revenue code (using the revenue-to-cost center crosswalk
hierarchy described in section VIII.B.2.b. of this proposed rule). For
both CMHCs and hospital-based PHPs, charges are set to zero for
services reporting revenue codes which are not included in the listing
of PHP allowable revenue codes shown in Table 53 above.
e. Development of Service Days and Cost Modeling
Only the claims service lines containing PHP allowable HCPCS codes
(shown in Table 53 above) from the remaining hospital-based PHP and
CMHC claims are retained for PHP cost determination. The costs,
payments, and service units for all service lines occurring on the same
service date, by the same provider, and for the same beneficiary are
summed to calculate the PHP APC geometric mean per diem cost, per diem
payment, and per diem service volume for each PHP service day. Any
service days with zero per diem payments are removed.
Because the PHP costs calculated above include the effects of
geographic variation in wages, we use the wage index and county data to
wage neutralize PHP APC per diem costs prior to the APC geometric mean
per diem cost calculation. This removes the effects of geographic
variation in costs used in the OPPS APC ratesetting process. Service
days with no per diem costs or with no wage index values are removed.
PHP service days with fewer than 3 service units are deleted and not
considered for PHP cost modeling.
As discussed in section VIII.B.1. of this proposed rule, there were
several PHP providers with aberrant data. As such, we are proposing to
exclude CMHCs that have a per diem cost that is 2 standard
deviations from the overall CMHC geometric mean per diem cost,
beginning in CY 2016. If implemented as proposed, this trim would
exclude from the ratesetting process any CMHCs with extreme costs per
day. We also are proposing to exclude service days with extreme
hospital-based PHP CCR values which were not removed by the 3 standard deviation trim discussed above, if those service days
have a CCR>5, beginning in CY 2016. Therefore, if our proposal is
implemented, we would exclude hospital-based PHP service days where the
CCR>5.
PHP service days from CMHCs and from hospital-based PHPs with
exactly 3 service units, or with 4 or more service units (based on
allowable HCPCS codes shown in Table 53) are assigned to Level 1 or
Level 2 PHP APCs as follows: (We note that we are proposing to renumber
some of the OPPS APCs, and are showing both the proposed renumbered
APCs and the existing APCs for partial hospitalization services below.)
Level 1 Partial Hospitalization, proposed renumbered APC
5851 (existing APC 0172): CMHC service days with exactly 3 service
units;
Level 2 Partial Hospitalization, proposed renumbered APC
5852 (existing APC 0173): CMHC service days with 4 or more service
units;
Level 1 Partial Hospitalization, proposed renumbered APC
5861 (existing APC 0175): Hospital-based PHP service days with exactly
3 service units; and
Level 2 Partial Hospitalization, proposed renumbered APC
5862 (existing APC 0176): Hospital-based PHP service days with 4 or
more service units.
PHP service days with costs 3 standard deviations from
the geometric mean costs within each APC are deleted and removed from
modeling. The remaining PHP service days are used to calculate the
geometric mean per diem cost for each PHP APC.
These PHP APC geometric mean per diem costs undergo several more
steps, as noted below, before becoming budget neutral PHP APC per diem
payment rates. The PHP APCs are part of the larger OPPS. As proposed in
section II.A. of this proposed rule, OPPS APC geometric mean per diem
costs (including PHP APC geometric mean per diem costs) would be
divided by the geometric mean per diem costs for proposed renumbered
APC 5012 (Level 2 Examinations and Related Services) to calculate each
PHP APC's unscaled relative payment weight. An unscaled relative
payment weight is one that is not yet adjusted for budget neutrality.
Budget neutrality is required under section 1833(t)(9)(B) of the Act,
and ensures that the estimated aggregate weight under the OPPS for a
calendar year is neither greater than nor less than the estimated
aggregate weight that would have been made without the changes. To
adjust for budget neutrality (that is, to scale the weights), we
compare the estimated aggregated weight using the scaled relative
payment weights from the previous calendar year at issue. For example,
to adjust for budget neutrality (that is, to scale the weights) in this
proposed rule, we compared the estimated aggregated weight using the CY
2015 scaled relative payment weights to the estimated aggregate weight
using the proposed CY 2016 unscaled relative payment weights. We refer
readers to the ratesetting procedures described in Part 2 of the OPPS
Claims Accounting narrative and in section II. of this proposed rule
for more information on scaling the weights, and for details on the
final steps of the process that lead to PHP APC per diem rates.
f. Issues Regarding Correct Coding and Reasonable Charges
PHP claims with revenue codes other than those listed as allowable
in Table 53 above, but which are associated with allowable PHP HCPCS
codes, may still be paid, as described in the OPPS Claims Accounting
narrative. The OPPS does not include charges associated with revenue
codes which are not allowable for ratesetting purposes. In reviewing
2013 and 2014 claims, we noticed that CMHCs were using correct revenue
coding for nearly all claims, but that hospital-based PHPs were
sometimes using other revenue codes, particularly revenue codes 0912
and 0913. Revenue codes 0912 and 0913 are not on the allowable list of
PHP revenue codes. As such, the charges associated with those two
revenue codes are not included in ratesetting, even when revenue code
0912 or 0913 is associated with a PHP allowable HCPCS code. For the
most accurate ratesetting, it is imperative that providers follow
coding guidelines for all revenue codes and all CPT and Level II HCPCS
codes in a manner consistent with their descriptors, instructions, and
correct coding principles. We also refer readers to the coding
instructions given in the Claims Processing Manual. Following the
correct coding guidelines will help ensure that we include all PHP
costs in ratesetting.
Finally, it appears that a few PHPs may not be reporting reasonable
charges for their services on their claims. When this occurs with CMHCs
or hospital-based PHPs that provide a high number of services during
the year, the data used for ratesetting may be inappropriately skewed.
Therefore, we remind PHPs of the regulations at 42

[[Page 39299]]

CFR 413.53 and existing CMS guidance related to charges, which is found
in Chapter 22 of the Provider Reimbursement Manual, Part 1, 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.
In section 2202.4, we define ``Charges,'' as the regular rates
established by the provider for services rendered to both beneficiaries
and to other paying patients. Charges should be related consistently to
the cost of the services and uniformly applied to all patients whether
inpatient or outpatient. We also state in section 2204, ``Medicare
Charges,'' that the Medicare charge for a specific service must be the
same as the charge made to non-Medicare patients (including Medicaid,
CHAMPUS, private, etc.) must be recorded in the respective income
accounts of the facility, and must be related to the cost of the
service. In section 2203, ``Provider Charge Structure as Basis for
Apportionment,'' we state that each facility should have an established
charge structure which is applied uniformly to each patient as services
are furnished to the patient, and which is reasonably and consistently
related to the cost of providing the services, so that its charges may
be allowable for use in apportioning costs under the program. The
Medicare program cannot dictate to a provider what its charges or
charge structure may be. However, the program may determine whether or
not the charges are allowable for use in apportioning costs under the
program.

C. Proposed Separate Threshold for Outlier Payments to CMHCs

As discussed in the CY 2004 OPPS final rule with comment period (68
FR 63469 through 63470), after examining the costs, charges, and
outlier payments for CMHCs, we believed that establishing a separate
OPPS outlier policy for CMHCs would be appropriate. A CMHC-specific
outlier policy would direct OPPS outlier payments towards genuine cost
of outlier cases, and address situations where charges were being
artificially increased to enhance outlier payments.
We created a separate outlier policy that would be specific to the
estimated costs and OPPS payments provided to CMHCs. We note that, in
the CY 2009 OPPS/ASC final rule with comment period, we established an
outlier reconciliation policy to comprehensively address charging
aberrations related to OPPS outlier payments (73 FR 68594 through
68599). Therefore, beginning in CY 2004, we designated a portion of the
estimated OPPS outlier target amount specifically for CMHCs, consistent
with the percentage of projected payments to CMHCs under the OPPS each
year, excluding outlier payments, and established a separate outlier
threshold for CMHCs.
The separate outlier threshold for CMHCs resulted in $1.8 million
in outlier payments to CMHCs in CY 2004, and $0.5 million in outlier
payments to CMHCs in CY 2005. In contrast, in CY 2003, more than $30
million was paid to CMHCs in outlier payments. We believe that this
difference in outlier payments indicates that the separate outlier
threshold for CMHCs has been successful in keeping outlier payments to
CMHCs in line with the percentage of OPPS payments made to CMHCs.
In this CY 2016 proposed rule, we are proposing to continue to
designate 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 2016, excluding outlier
payments. CMHCs are projected to receive 0.04 percent of total OPPS
payments in CY 2016, excluding outlier payments. Therefore, we are
proposing to designate 0.49 percent of the estimated 1.0 percent
outlier target amount for CMHCs. Based on our simulations of CMHC
payments for CY 2016, in this proposed rule, we are proposing to
continue to set the threshold for CY 2016 at 3.40 times the highest
CMHC PHP APC payment rate (that is, proposed renumbered APC 5852 (Level
2 Partial Hospitalization) (existing APC 0173). We continue to believe
that this approach would neutralize the impact of inflated CMHC charges
on outlier payments and better target outlier payments to those truly
exceptionally high-cost cases that might otherwise limit beneficiary
access.
In addition, we are proposing to continue to apply the same outlier
payment percentage that applies to hospitals. Therefore, for CY 2016,
we are proposing to continue to pay 50 percent of CMHC APC geometric
mean per diem costs over the threshold. In section II.G. of this
proposed rule, for the hospital outpatient outlier payment policy, we
are proposing to set a dollar threshold in addition to an APC
multiplier threshold. Because the PHP APCs are the only APCs for which
CMHCs may receive payment under the OPPS, we would not expect to
redirect outlier payments by imposing a dollar threshold. Therefore, we
are not proposing to set a dollar threshold for CMHC outlier payments.
In summary, in this CY 2016 proposed rule, we are proposing to
establish that if a CMHC's cost for partial hospitalization services,
paid under either proposed renumbered APC 5851 (existing APC 0172) or
proposed renumbered APC 5852 (existing APC 0173), exceeds 3.40 times
the payment rate for proposed renumbered APC 5852, the outlier payment
would be calculated as 50 percent of the amount by which the cost
exceeds 3.40 times the renumbered APC 5852 payment rate. We are
inviting public comments on these proposals.

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

A. Background

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

B. Proposed Changes to the Inpatient Only List

For the CY 2016 OPPS, we are proposing to use the same methodology
(described in the November 15, 2004 final rule with comment period (69
FR 65835)) of reviewing the current list of procedures on the inpatient
only 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.

[[Page 39300]]

Using this methodology, we identified seven procedures that could
potentially be removed from the inpatient only list for CY 2016. We
have reviewed the clinical characteristics and related evidence for
these procedures for removal from the inpatient only list and found
them to be appropriate candidates.
For CY 2016, we are proposing to remove the following procedures
from the inpatient only list:
CPT code 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);
CPT code 20936 (Autograft for spine surgery only (includes
harvesting the graft); local (e.g., ribs, spinous process, or laminar
fragments) obtained from the same incision);
CPT code 20937 (Autograft for spine surgery only (includes
harvesting the graft); morselized (through separate skin or fascial
incision));
CPT code 20938 (Autograft for spine surgery only (includes
harvesting the graft); structural, bicortical or tricotical (through
separate skin or fascial incision));
CPT code 22552 (Arthrodesis, anterior interbody, including
disc space preparation, discectomy, osteophytectomy and decompression
of spinal cord and/or nerve roots; cervical below C2, each additional
interspace);
CPT code 54411 (Removal and replacement of all components
of a multi-component inflatable penile prosthesis through an infected
field at the same operative session, including the irrigation and
debridement of infected tissue); and
CPT code 54417 (Removal and replacement of non-inflatable
(semi-rigid) or inflatable (self-contained) penile prosthesis through
an infected field at the same operative sessions, including irrigation
and debridement of infected tissue).
The seven procedures we are proposing to remove from the inpatient
only list for CY 2016 and their CPT codes, long descriptors, proposed
APC assignments, and proposed status indictors are displayed in Table
54 below.
The complete list of codes that we are proposing to be paid by
Medicare in CY 2016 only as inpatient procedures is included as
Addendum E to this proposed rule (which is available via the Internet
on the CMS Web site).

Table 54--Procedures Proposed To Be Removed From the Inpatient Only List for CY 2016
----------------------------------------------------------------------------------------------------------------
Proposed CY 2016 Proposed CY 2016
CPT/HCPCS code Long descriptor APC assignment * status indicator
----------------------------------------------------------------------------------------------------------------
0312T.................................. Vagus nerve blocking therapy 5463 J1
(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.
20936.................................. Autograft for spine surgery only N/A N
(includes harvesting the graft);
local (eg, ribs, spinous
process, or laminar fragments)
obtained from same incision.
20937.................................. Autograft for spine surgery only N/A N
(includes harvesting the graft);
morselized (through separate
skin or fascial incision).
20938.................................. Autograft for spine surgery only N/A N
(includes harvesting the graft);
structural bicortical or
tricortical (through separate
skin or fascial incision).
22552.................................. Arthrodesis, anterior interbody, N/A N
including disc space
preparation, discectomy,
osteophytectomy and
decompression of spinal cord and/
or nerve roots; cervical below
C2, each additional interspace.
54411.................................. Removal and replacement of all 5377 J1
components of a multi-component
inflatable penile prosthesis
through an infected field at the
same operative session,
including irrigation and
debridement of infected tissue.
54417.................................. Removal and replacement of non- 5377 J1
inflatable (semi-rigid) or
inflatable (self-contained)
penile prosthesis through an
infected field at the same
operative session, including
irrigation and debridement of
infected tissue.
----------------------------------------------------------------------------------------------------------------
* We refer readers to Addendum Q to this proposed rule (which is available via the Internet on the CMS Web site)
for a crosswalk from the existing APC numbers to the proposed new APC numbers for CY 2016.

X. Proposed Nonrecurring Policy Changes

A. Changes for Payment for Computed Tomography (CT)

Section 218(a)(1) of the Protecting Access to Medicare Act of 2014
(PAMA) (Pub. L. 113-93) amended section 1834 of the Act by establishing
a new subsection 1834(p). Effective for services furnished on or after
January 1, 2016, new section 1834(p) of the Act reduces payment for the
technical component (TC) of applicable computed tomography (CT)
services paid under the MPFS and applicable CT services paid under the
OPPS (a 5-percent reduction in 2016 and a 15-percent reduction in 2017
and subsequent years). The applicable CT services are identified by
HCPCS codes 70450 through 70498; 71250 through 71275; 72125 through
72133; 72191 through 72194; 73200 through 73206; 73700 through 73706;
74150 through 74178; 74261 through 74263; and 75571 through 75574 (and
any succeeding codes) for services furnished using equipment that does
not meet each of the attributes of the National Electrical
Manufacturers Association (NEMA) Standard XR-29-2013, entitled
``Standard Attributes on CT Equipment Related to Dose Optimization and
Management.'' New section 1834(p)(4) of the Act specifies that the
Secretary may apply successor standards through rulemaking.
Section 1834(p)(6)(A) of the Act requires that information be
provided and attested to by a supplier and a hospital outpatient
department that indicates whether an applicable CT service was
furnished that was not consistent with the standard set forth in
section 1834(p)(6) of the Act (currently the NEMA CT equipment
standard) and that such information may be included on a claim and may
be a modifier. Section 1834(p)(6)(A) of the Act also provides that such
information must be verified, as appropriate, as part of the periodic
accreditation of suppliers under section 1834(e) of the Act and

[[Page 39301]]

hospitals under section 1865(a) of the Act. Section 218(a)(2) of the
PAMA makes a conforming amendment to section 1833(t) of the Act by
adding a new paragraph (20), which provides that the Secretary shall
not take into account reduced expenditures that result from the
application of section 1834(p) of the Act in making any budget neutral
adjustments under the OPPS.
To implement this provision, we are proposing to establish a new
modifier to be used on claims that describes CT services furnished
using equipment that does not meet each of the attributes of the NEMA
Standard XR-29-2013. Beginning January 1, 2016, hospitals and suppliers
would be required to use this modifier on claims for CT scans described
by any of the CPT codes identified above (and any successor codes) that
are furnished on non-NEMA Standard XR-29-2013-compliant CT scans. The
use of this proposed modifier would result in the applicable payment
reduction for the CT service, as specified under section 1834(p) of the
Act.

B. Lung Cancer Screening With Low Dose Computed Tomography

On February 5, 2015, CMS issued a national coverage determination
(NCD) for the coverage of lung cancer screening with low dose computed
tomography (LDCT) under Medicare. This coverage includes a lung cancer
screening counseling and shared decision-making visit, and, for
appropriate beneficiaries, annual screening for lung cancer with LDCT
as an additional preventive service under Medicare if certain criteria
are met. The decision memorandum announcing the NCD is available on the
CMS Web site at: http://www.cms.gov/medicare-coverage-database/details/nca-decision-memo.aspx?NCAId=274.
The HCPCS codes that describe these services are HCPCS code GXXX1
(Counseling visit to discuss need for lung cancer screening (LDCT)
using low dose CT scan (service is for eligibility determination and
share decision making)) and HCPCS code GXXX2 (Low dose CT scan (LDCT)
for lung cancer screening). For the CY 2016 OPPS, we are proposing to
assign HCPCS code GXXX1 to proposed renumbered APC 5822 (Level 2 Health
and Behavior Services) (existing APC 0432) and HCPCS code GXXX2 to
proposed renumbered APC 5570 (Computed Tomography without Contrast)
(existing APC 0332).

C. Payment for Corneal Tissue in the HOPD and the ASC

1. Background
In both the HOPD and the ASC, we have a longstanding policy of
making separate payment for corneal tissue. In the HOPD, we make
separate payment outside of the OPPS based on hospitals' reasonable
costs to procure corneal tissue (65 FR 18448 through 18449). In the
ASC, we pay separately for corneal tissue procurement as a covered
ancillary service when it is integral to the performance of an ASC
covered surgical procedure based on invoiced costs for the acquisition
costs of corneal tissue (72 FR 42508 through 42509 and 42 CFR
416.164(b)(3)). HCPCS code V2785 (Processing, preserving and
transporting corneal tissue) is used to report corneal tissue in both
the HOPD and the ASC.
The original use (and currently the primary use) of corneal tissue
is in corneal transplant surgery. Because corneal transplants are the
primary procedures in which corneal tissue is used, in prior rulemaking
discussions of the corneal tissue payment policy in both the HOPD and
the ASC, we focused on the costs associated with corneal tissue when
used in corneal transplants (65 FR 18448 through 18449 and 72 FR 42508
through 42509). However, we have not expressly limited the corneal
tissue payment policy to only corneal tissue used in corneal
transplants. In the HOPD, we have stated that we will make separate
payment, based on the hospital's reasonable costs incurred to acquire
corneal tissue (65 FR 18450). Moreover, corneal tissue acquisition
costs are excluded from the determination of OPPS payment rates under
42 CFR 419.2(c)(8). This regulation was amended in the CY 2002 OPPS
final rule (66 FR 59922) and the phrase ``incurred by hospitals that
are paid on a reasonable cost basis'' was deleted. In the ASC, as
stated above, we include corneal tissue procurement in the scope of ASC
services as a covered ancillary service when it is integral to the
performance of an ASC covered surgical procedure and pay separately for
this service, so payment is not packaged into the ASC payment for the
associated covered surgical procedure (72 FR 42509).
In early 2015, a stakeholder asked whether the acquisition of
corneal tissue used as grafting material in glaucoma shunt surgery
could be reported with HCPCS code V2785 and separately paid under the
ASC payment system. In reviewing our longstanding policy on separate
payment for corneal tissue acquisition when furnished integral to a
covered ASC surgical procedures, we determined that the current
language does not limit separate payment for the acquisition of corneal
tissue to corneal transplants. Accordingly, we included an instruction
in the April 2015 ASC quarterly update (Transmittal 3234, Change
Request 9100) that states that ASCs can bill for the acquisition of
corneal allograft tissue used for coverage (CPT code 66180) or revision
(CPT code 66185) of a glaucoma aqueous shunt with HCPCS code V2785. In
Change Request 9100, we also stated that contractors pay for corneal
tissue acquisition reported with HCPCS code V2785 based on acquisition/
invoice cost. The April 2015 ASC Change Request is available on the CMS
Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R3234CP.pdf. Since the publication of the April
2015 ASC instruction, stakeholders have complained about the different
payment policies for corneal tissue used for patch grafting (which is
paid separately) versus noncorneal tissue (sclera and pericardium,
among others) used for patch grafting (which is packaged).
2. Proposed CY 2016 Change to Corneal Tissue Payment Policy in the HOPD
and the ASC
For CY 2016, we are proposing to limit the separate payment policy
for corneal tissue acquisition costs in the HOPD and the ASC to only
corneal tissue that is used in a corneal transplant procedure. In the
HOPD, corneal tissue acquisition costs would be separately paid only
when the corneal tissue is used in a corneal transplant procedure.
Otherwise, the corneal tissue would be a packaged surgical supply in
the OPPS under the regulation at 42 CFR 419.2(b)(4). In the ASC, we
would include corneal tissue procurement as a covered ancillary service
only when it is integral to the performance of a corneal transplant
procedure that is an ASC covered surgical procedure, and pay separately
for this service under the ASC payment system. We would implement this
proposal as final by providing a specific list of corneal transplant
procedure HCPCS codes with which HCPCS code V2785 may be reported in
the January 2016 OPPS and ASC updates via change requests. This
proposal would mean that, in the HOPD and the ASC, we would not make
separate payment for corneal tissue when used in any nontransplant
procedure (payment for the corneal tissue in that instance will be
packaged with the surgical procedure). This proposal also would

[[Page 39302]]

mean that we would make packaged payment for all tissues used as patch
grafts in glaucoma shunt surgery. We are not proposing to change any
other aspect of the corneal tissue payment policy in either the HOPD or
the ASC.
We believe that limiting separate payment for corneal tissue to
corneal transplants only is warranted for the following reasons:
The public comments summarized in the CY 2000 OPPS final
rule with comment period (65 FR 18448 through 18449) and referenced in
the CY 2008 ASC final rule (72 FR 42508 through 42509) by the Eye Bank
Association of America (EBAA) and the study report submitted the EBAA
focused on corneal tissue acquisition for corneal transplants. These
comments and the study were significant factors in the finalized
corneal tissue separate payment policy that addressed corneal tissue
acquisition costs associated with corneal tissue used in corneal
transplants.
Corneal tissue for transplantation requires more
specialized and more costly processing than corneal tissue used as
glaucoma shunt-tube patch grafts because of the fragility and
importance of the corneal endothelium, of which the health and
preservation are necessary for successful transplantation.
Unlike corneas used for corneal transplantation, in which
there is currently no substitute, there are multiple different tissue
types, each with their own costs and relative benefits and detriments,
available for glaucoma shunt surgery patch grafting.
Given the numerous tissue options for patch grafting, we
believe that Medicare beneficiaries will continue to have access to
patch grafting in glaucoma shunt surgery in both the hospital setting
and the ASC setting.
We also are proposing to revise the related regulations at 42 CFR
416.164(b)(3) and 419.2(c)(8) to specify that payment would be made for
corneal tissue acquisition or procurement costs for corneal transplant
procedures.
We are inviting public comments on these proposals.

XI. Proposed CY 2016 OPPS Payment Status and Comment Indicators

A. Proposed CY 2016 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
payment status indicators and their definitions that we are proposing
for CY 2016 is displayed in Addendum D1 to this proposed rule, which is
available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The proposed
CY 2016 payment status indicator assignments for APCs and HCPCS codes
are shown in Addendum A and Addendum B, respectively, to this proposed
rule, which are available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
For CY 2016, we are proposing to create two new status indicators:
``J2'' to identify certain combinations of services that
we are proposing to pay through new proposed C-APC 8011 (Comprehensive
Observation Services). We refer readers to section II.A.2.e. of this
proposed rule for a detailed discussion of this proposed change.
``Q4'' to identify conditionally packaged laboratory
tests. We refer readers to section II.A.3. of this proposed rule for a
detailed discussion of this proposed new status indicator.

B. Proposed CY 2016 Comment Indicator Definitions

For the CY 2016 OPPS, we are proposing to use three comment
indicators. Two comment indicators, ``CH'' and ``NI,'' which were in
effect in CY 2015 would continue in CY 2016. In this proposed rule, we
are proposing to create new comment indicator ``NP'' that would be used
in the proposed rule to identify a new code for the next calendar year
or an existing code with substantial revision to its code descriptor in
the next calendar year as compared to current calendar year, proposed
APC assignment; and that would indicate that comments will be accepted
on the proposed APC assignment for the new code.
``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.
``NP''--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, proposed APC
assignment; comments will be accepted on the proposed APC assignment
for the new code.
We are proposing to use the ``CH'' comment indicator in this CY
2016 OPPS/ASC proposed rule to indicate HCPCS codes for which the
status indicator or APC assignment, or both, are proposed for change in
CY 2016 compared to their assignment as of June 30, 2015. We believe
that using the ``CH'' indicator in this proposed rule will facilitate
the public's review of the changes that we are proposing for CY 2016.
We are proposing to use the ``CH'' comment indicator in the CY 2016
OPPS/ASC final rule with comment period to indicate HCPCS codes for
which the status indicator or APC assignment, or both, will change in
CY 2016 compared to their assignment as of December 31, 2015. 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 2016 OPPS/ASC final rule with comment period.
For CY 2016, we are proposing that any existing HCPCS codes with
substantial revisions to the code descriptors for CY 2016 compared to
the CY 2015 descriptors would be labeled with comment indicator ``NI''
in Addendum B to the CY 2016 OPPS/ASC final rule with comment period.
However, in order to receive the comment indicator ``NI,'' the CY 2016
revision to the code descriptor (compared to the CY 2015 descriptor)
must be significant such that the new code descriptor describes a new
service or procedure for which the OPPS treatment may change. We are
proposing to use comment indicator ``NI'' to indicate that these HCPCS
codes will be open for comment as part of the CY 2016 OPPS/ASC final
rule with comment period. Like all codes labeled with comment indicator
``NI,'' we will respond to public comments and finalize their OPPS
treatment in the CY 2017 OPPS/ASC final rule with comment period.
In accordance with our usual practice, we are proposing that CPT
and Level II HCPCS codes that are new for CY 2016 and that are included
in Addendum B to the CY 2016 OPPS/ASC final rule with comment period
also would be labeled with comment indicator ``NI'' in Addendum B to
the CY 2016 OPPS/ASC final rule with comment period.
We are proposing that CPT codes that are new for CY 2016 and any
existing HCPCS codes with substantial revisions

[[Page 39303]]

to the code descriptors for CY 2016 compared to the CY 2015 descriptors
that are included in Addendum B to this CY 2016 OPPS/ASC proposed rule
would be labeled with new comment indicator ``NP'' in Addendum B to
indicate that these CPT codes will be open for comment as part of this
CY 2016 OPPS/ASC proposed rule. We will respond to public comments and
finalize their OPPS assignment in the CY 2016 OPPS/ASC final rule with
comment period.
For further discussion on the treatment of new CY 2016 CPT codes
that will be effective January 1, 2016, for which we are soliciting
public comments in this CY 2016 OPPS/ASC proposed rule, we refer
readers to section III. of this proposed rule.
The proposed definitions of the OPPS comment indicators for CY 2016
are listed in Addendum D2 to this proposed rule, which is available on
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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

A. Background

1. Legislative History, Statutory Authority, and Prior Rulemaking for
the ASC Payment System
For a detailed discussion of the legislative history and statutory
authority related to 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), the CY 2014 OPPS/ASC final
rule with comment period (78 FR 75064 through 75090), and the CY 2015
OPPS/ASC final rule with comment period (79 FR 66915 through 66940).
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 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 (72 FR 42495), 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. In the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66932 through 66934), we expanded the scope of ASC
covered ancillary services to include certain diagnostic tests within
the medicine range of CPT codes for which separate payment is allowed
under the OPPS when they are integral to an ASC covered surgical
procedure. Covered ancillary services are specified in Sec. 416.164(b)
and, as stated previously, are eligible for separate ASC payment.
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.C. of this proposed rule, because we
base ASC payment policies for covered surgical procedures, drugs,
biologicals, and certain other covered ancillary services on the OPPS
payment policies, 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 and revised Level II HCPCS codes to the
public or recognizes the release of new and revised 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. CMS releases
new and revised Category III CPT codes in the July and January CRs.
Thus, these updates are to implement newly created and revised 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 and revised Category I CPT codes,
except vaccine codes, are released only once a year and, therefore, are
implemented only through the January quarterly update. New and revised
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 an
example of how this process was used to update 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 codes, and codes with revised descriptors, 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.

[[Page 39304]]

B. Proposed Treatment of New and Revised Codes

1. Background on Current Process for Recognizing New and Revised
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 items, supplies, temporary
procedures, and services not described by CPT codes.
We finalized a policy in the August 2, 2007 final rule (72 FR 42533
through 42535) to evaluate each year all new and revised 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. In
addition, we identify new and revised codes as ASC covered ancillary
services based upon the final payment policies of the revised ASC
payment system. In prior rulemakings, we refer to this process as
recognizing new codes; however, this process has always involved the
recognition of new and revised codes. We consider revised codes to be
new when they have substantial revision to their code descriptors that
necessitate a change in the current ASC payment indicator. To clarify,
we refer to these codes as new and revised in this proposed rule.
We have separated our discussion below based on when the codes are
released and whether we are proposing to solicit public comments in
this proposed rule (and respond to those comments in the CY 2016 OPPS/
ASC final rule with comment period) or whether we will be soliciting
public comments in the CY 2016 OPPS/ASC final rule with comment period
(and responding to those comments in the CY 2017 OPPS/ASC final rule
with comment period).
We note that we sought public comments in the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66918) on the new and revised
Category I and III CPT and Level II HCPCS codes that were effective
January 1, 2015. We also sought public comments in the CY 2015 OPPS/ASC
final rule with comment period (79 FR 66918) on the new and revised
Level II HCPCS codes effective October 1, 2014. These new and revised
codes, with an effective date of October 1, 2014, or January 1, 2015,
were flagged with comment indicator ``NI'' in Addenda AA and BB to the
CY 2015 OPPS/ASC final rule with comment period to indicate that we
were assigning them an interim payment status and payment rate, if
applicable, which were subject to public comment following publication
of the CY 2015 OPPS/ASC final rule with comment period. We will respond
to public comments and finalize the treatment of these codes under the
ASC payment system in the CY 2016 OPPS/ASC final rule with comment
period.
2. Proposed Treatment of New and Revised Level II HCPCS Codes and
Category III CPT Codes Implemented in April 2015 and July 2015 for
Which We Are Soliciting Public Comments in This Proposed Rule
In the April 2015 and July 2015 Change Requests (CRs), we made
effective for April 1, 2015 and July 1, 2015, respectively, a total of
13 new Level II HCPCS codes and two new Category III CPT codes that
describe covered ASC services that were not addressed in the CY 2015
OPPS/ASC final rule with comment period.
In the April 2015 ASC quarterly update (Transmittal 3234, CR 9100,
dated April 15, 2015), we added one new device Level II HCPCS code and
seven new drug and biological Level II HCPCS codes to the list of
covered ancillary services. Table 55 below lists the new Level II HCPCS
codes that were implemented April 1, 2015, along with their proposed
payment indicators for CY 2016.
In the July 2015 ASC quarterly update (Transmittal 3279, CR 9207,
dated June 5, 2015), we added one new device Level II HCPCS code and
four new drug and biological Level II HCPCS codes to the list of
covered ancillary services. Table 56 below lists the new Level II HCPCS
codes that were implemented July 1, 2015. The proposed payment rates,
where applicable, for these April and July codes can be found in
Addendum BB to this proposed rule (which is available via the Internet
on the CMS Web site).
Through the July 2015 quarterly update CR, we also implemented ASC
payment for two new Category III CPT codes as ASC covered surgical
procedures, effective July 1, 2015. These codes are listed in Table 57
below, along with their proposed payment indicators. The proposed
payment rates for these new Category III CPT codes, can be found in
Addendum AA to this proposed rule (which is available via the Internet
on the CMS Web site).
We are inviting public comments 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 2015 and
July 2015 through the quarterly update CRs, as listed in Tables 55, 56,
and 57 below. We are proposing to finalize their payment indicators and
their payment rates in the CY 2016 OPPS/ASC final rule with comment
period.

Table 55--New Level II HCPCS Codes for Covered Surgical Procedures or
Covered Ancillary Services Implemented in April 2015
------------------------------------------------------------------------
Proposed CY
CY 2015 HCPCS code CY 2015 long descriptor 2016 payment
indicator
------------------------------------------------------------------------
C2623..................... Catheter, transluminal J7
angioplasty, drug-coated,
non-laser.
C9445..................... Injection, c-1 esterase K2
inhibitor (recombinant),
Ruconest, 10 units.
C9448 *................... Netupitant 300mg and D5
palonosetron 0.5 mg, oral.
C9449..................... Injection, blinatumomab, 1 K2
mcg.
C9450..................... Injection, fluocinolone K2
acetonide intravitreal
implant, 0.01 mg.
C9451..................... Injection, peramivir, 1 mg.. K2
C9452..................... Injection, ceftolozane 50 mg K2
and tazobactam 25 mg.
Q9975..................... Injection, Factor VIII, FC K2
Fusion Protein
(Recombinant), per iu.
------------------------------------------------------------------------
* HCPCS code C9448 was deleted June 30, 2015 and replaced with HCPCS
code Q9978 effective July 1, 2015.

[[Page 39305]]

Table 56--New Level II HCPCS Codes for Covered Ancillary Services
Implemented in July 2015
------------------------------------------------------------------------
Proposed CY
CY 2015 HCPCS code CY 2015 long descriptor 2016 payment
indicator
------------------------------------------------------------------------
C2613..................... Lung biopsy plug with J7
delivery system.
C9453..................... Injection, nivolumab, 1 mg.. K2
C9454..................... Injection, pasireotide long K2
acting, 1 mg.
C9455..................... Injection, siltuximab, 10 mg K2
Q9978*.................... Netupitant 300 mg and K2
Palonosetron 0.5 mg, oral.
------------------------------------------------------------------------
* HCPCS code Q9978 replaced HCPCS code C9448 effective July 1, 2015.

Table 57--New Category III CPT Codes for Covered Surgical Procedures or
Covered Ancillary Services Implemented in July 2015
------------------------------------------------------------------------
Proposed CY
CY 2015 CPT code CY 2015 long descriptor 2016 payment
indicator
------------------------------------------------------------------------
0392T..................... Laparoscopy, surgical, G2
esophageal sphincter
augmentation procedure,
placement of sphincter
augmentation device (i.e.,
magnetic band).
0393T..................... Removal of esophageal G2
sphincter augmentation
device.
------------------------------------------------------------------------

3. Proposed Process for Recognizing New and Revised Category I and
Category III CPT Codes That Will Be Effective January 1, 2016
a. Current Process for Accepting Comments on New and Revised CPT Codes
That Are Effective January 1
Historically, we have not received new and revised Category I and
Category III CPT codes that take effect at the beginning of a calendar
year in time to include them in the proposed rule for that calendar
year. Therefore, under the ASC payment system, the current process we
have used is to incorporate new and revised Category I and Category III
CPT codes that are effective January 1 in the final rule with comment
period thereby updating the ASC payment system for the following
calendar year. These codes are released to the public by the AMA via
the annual CPT code books and electronic CPT code file. In addition, we
include these codes in the January ASC quarterly update CR, and we list
the codes in ASC Addendum AA and BB of the OPPS/ASC final rule with
comment period. All of the new codes are flagged with comment indicator
``NI'' in Addendum AA and Addendum 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. In addition,
existing CPT codes that have substantial revision to their code
descriptors that necessitate a change in the current ASC payment
indicator are assigned to comment indicator ``NI.'' 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. For example, the new CPT codes that were effective January
1, 2014 were assigned to comment indicator ``NI'' in Addendum AA and
Addendum BB to the CY 2014 OPPS/ASC final rule with comment period. We
responded to public comments received on the CY 2014 OPPS/ASC final
rule with comment period and finalized the payment indicator
assignments for these codes in the CY 2015 OPPS/ASC final rule with
comment period; and we included the final ASC payment indicator
assignments in Addendum AA and Addendum BB to that final rule with
comment period.
Several stakeholders, including consultants, device manufacturers,
drug manufacturers, as well as specialty societies and hospitals, have
expressed concern with the process we use to recognize new and revised
CPT codes. They believe that we should publish proposed ASC payment
indicators for the new and revised CPT codes that will be effective
January 1 in the OPPS/ASC proposed rule for the prior year, and request
public comments prior to finalizing them for the January 1
implementation date. Further, the stakeholders believe that seeking
public input on the ASC payment indicator assignments for these new and
revised codes would assist CMS in assigning the CPT codes to
appropriate payments under the ASC payment system. We were informed of
similar concerns regarding our process for assigning interim payment
values for revalued, and new and revised codes, under the MPFS and the
OPPS. Consequently, we included proposed policies to address those
concerns in the CY 2015 MPFS proposed rule (79 FR 40359 through 40364),
and in the CY 2015 OPPS/ASC proposed rule (79 FR 40977 through 40979).
Based on the comments that we received to the proposed rules, we
finalized the policies in the CY 2015 MPFS final rule (79 FR 67602
through 67609) and the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66841 through 66844).
Like the MPFS and the OPPS, the ASC payment system relies
principally upon the Current Procedural Terminology (CPT[supreg])
coding system maintained by the AMA for billing. CPT[supreg] is the
standard code set adopted under the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) for outpatient services. The AMA CPT
Editorial Panel's coding cycle occurs concurrently with our calendar
year rulemaking cycle for the OPPS and the ASC payment system. The
OPPS/ASC proposed rules have historically been published prior to the
publication of the CPT codes that are generally made public in the
fall, with a January 1 effective date, and therefore, we have not
historically been able to include these codes in the OPPS/ASC proposed
rules.
b. Proposed Modification of the Current Process for Accepting Comments
on New and Revised Category I and III CPT Codes That Are Effective
January 1
In this CY 2016 OPPS/ASC proposed rule, we are proposing to make
changes in the process we use to establish ASC payment indicators for
new and revised Category I and Category III CPT codes. As discussed
above, we finalized similar

[[Page 39306]]

revisions under the MPFS and the OPPS for establishing payment
indicators for new and revised CPT codes that take effect each January
1. Because new and revised codes that are received in time for the
proposed rule are assigned proposed payment indicators and proposed APC
assignments in the OPPS, we also need to propose corresponding payment
rates and payment indicators in the ASC for those codes that are ASC
covered surgical procedures and covered ancillary services. The
proposed revised process would eliminate our current practice of
assigning interim payment indicators for the vast majority of new and
revised CPT codes that take effect on January 1 each year.
Consequently, we are proposing that, for new and revised Category I
and III CPT codes that we receive from the AMA CPT Editorial Panel too
late for inclusion in the proposed rule for a year, we would delay
adoption of the new and revised codes for that year and, instead, adopt
coding policies and payment rates that conform, to the extent possible,
to the policies and payment rates in place for the previous year. We
are proposing to adopt these conforming coding and payment policies on
an interim basis pending the result of our specific proposals for 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 we would not
have established payment indicators for these new or revised codes, it
would not be practicable for Medicare to use those CPT codes. In this
circumstance, we are proposing to create HCPCS G-codes to describe the
predecessor codes for any codes that were revised or deleted as part of
the annual CPT coding changes. However, if certain CPT codes are
revised in a manner that would not affect the cost of inputs (for
example, a grammatical change to CPT code descriptors), we would use
these revised codes and continue to assign those codes to their current
ASC payment indicator. 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 2016, we would assign each of those codes to
proposed payment indicator ``B5'' (Alternative code may be available;
no payment made) in the final rule with comment period, to indicate
that an alternate code is recognized under the ASC payment system. ASCs
could not use those two new CPT codes to bill Medicare for ASC services
the first year after the effective date of the codes. Instead, we would
create a HCPCS G-code with the same description as the single
predecessor CPT code, and continue to use the same ASC payment
indicator for that code during the year. We would propose payment
indicators for the two new CPT codes during rulemaking in CY 2017 for
payment beginning in CY 2018.
For new codes that describe wholly new services, as opposed to new
or revised codes that describe services for which ASC payment indicator
assignments are already established, we would make every effort to work
with the AMA CPT Editorial Panel to ensure that we received the codes
in time to propose payment rates in the proposed rule. However, if we
do not receive the code for a wholly new service in time to include
proposed ASC payment indicator assignments in the proposed rule for a
year, we would need to establish interim ASC payment indicator
assignments for the initial year. We are proposing to establish the
initial ASC payment indicator assignments for wholly new services as
interim final assignments, and to follow our current process to solicit
and respond to public comments and finalize the ASC payment indicator
assignments in the subsequent year.
We recognize that the use of HCPCS G-codes may place an
administrative burden on those ASCs that bill for services under the
ASC payment system. We are hopeful that the AMA CPT Editorial Panel
ultimately will be able to adjust its timelines and processes so that
most, if not all, of the annual coding changes can be addressed in the
proposed rule. We are proposing to finalize and implement the revised
CMS process for establishing ASC payment indicator assignments for new
and revised codes for CY 2016.
In summary, we are proposing to include in the OPPS/ASC proposed
rule the proposed ASC payment indicators for the vast majority of new
and revised CPT codes before they are used for payment purposes under
the 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 ASC payment indicators for the codes. Otherwise, we would
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 ASC payment indicators until the
following year when we would include proposed assignments for the new
and revised codes in the proposed rule. We are proposing 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 ASC payment system.
For codes that describe wholly new services for which we do not receive
timely information from the AMA, we are proposing to establish interim
ASC payment indicators 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 ASC payment indicators for
the vast majority of new and revised CPT codes that take effect on
January 1 each year. We are inviting public comment on these proposals.
For the CY 2016 ASC update, we received the CY 2016 Category I and
Category III CPT codes from AMA in time for inclusion in this CY 2016
OPPS/ASC proposed rule. The new and revised CY 2016 Category I and III
CPT codes can be found in ASC Addendum AA and Addendum BB (which are
available via the Internet on the CMS Web site) and are assigned to
proposed new comment indicator ``NP'' to indicate that the code is new
for the next calendar year or the code is an existing code with
substantial revision to its code descriptor in the next calendar year
as compared to current calendar year with a proposed ASC payment
indicator and that comments will be accepted on the proposed payment
indicator. We refer readers to section XII.F. of this proposed rule for
further discussion on the new proposed comment indicator ``NP.''
Therefore, in this CY 2016 OPPS/ASC proposed rule, we are soliciting
public comments on the proposed CY 2016 ASC payment indicators for the
new and revised Category I and III CPT codes that would be effective
January 1, 2016.
Further, we remind readers that the CPT code descriptors that
appear in ASC Addendum AA and BB are short descriptors and do not
accurately describe the complete procedure, service, or item described
by the CPT code. Therefore, we are including the long descriptors for
the new and revised CY 2016 CPT codes in Addendum O to this proposed
rule (which is available via the Internet on the CMS Web site) so that
the public can adequately comment on our proposed ASC payment
indicators. Because CPT procedure codes are 5 alpha-numeric characters
and CMS systems only utilize 5 characters HCPCS codes, we have
developed alternative 5-character placeholder codes for this proposed
rule. The placeholder codes can be found in Addendum O to this proposed

[[Page 39307]]

rule, specifically under the column labeled ``CY 2016 OPPS/ASC Proposed
Rule 5-Digit CMS Placeholder Code.'' The final CPT code numbers would
be included in the CY 2016 OPPS/ASC final rule with comment period.
4. Proposed Process for New and Revised Level II HCPCS Codes That Will
Be Effective October 1, 2015 and January 1, 2016 for Which We Will Be
Soliciting Public Comments in the CY 2016 OPPS/ASC Final Rule With
Comment Period
Although we are proposing to revise our process for requesting
public comments on the new and revised Category I and III CPT codes, we
are not proposing any change to the process for requesting public
comments on the new and revised Level II HCPCS codes that would be
effective October 1 and January 1.
As has been our practice in the past, we incorporate those new and
revised Level II HCPCS codes that are effective January 1 in the final
rule with comment period, thereby updating the ASC payment system for
the following calendar year. These codes are released to the public via
the CMS HCPCS Web site, and also through the January ASC quarterly
update CRs. In the past, we also released new and revised Level II
HCPCS codes that are effective October 1 through the October ASC
quarterly update CRs and incorporated these new and revised codes in
the final rule with comment period, thereby updating the ASC for the
following calendar year. All of these codes are flagged with comment
indicator ``NI'' in Addenda AA and BB to the OPPS/ASC final rule with
comment period to indicate that we are assigning them an interim
payment status which is subject to public comment. The payment
indicator and payment rate, if applicable, for all such codes flagged
with comment indicator ``NI'' are open to public comment in the OPPS/
ASC final rule with comment period, and we respond to these comments in
the final rule with comment period for the next calendar year's OPPS/
ASC update.
We are proposing to continue this process for CY 2016.
Specifically, the Level II HCPCS codes that will be effective October
1, 2015 and January 1, 2016 would be flagged with comment indicator
``NI'' in Addendum AA and BB to the CY 2016 OPPS/ASC final rule with
comment period to indicate that we have assigned the codes an interim
ASC payment status for CY 2016. We will be inviting public comments on
the proposed payment indicators and payment rates for these codes, if
applicable, that would be finalized in the CY 2017 OPPS/ASC final rule
with comment period.
In Table 58 below, we summarize the CY 2016 process described in
this section XII.B. of this proposed rule for updating codes through
our ASC quarterly update CRs, seeking public comments, and finalizing
the treatment of these new and revised codes under the ASC payment
system.

Table 58--Proposed Comment Timeframe for CY 2016 for New or Revised Category I AND III CPT Codes and Level II
HCPCS Codes
----------------------------------------------------------------------------------------------------------------
ASC quarterly update CR Type of code Effective date Comments sought When finalized
----------------------------------------------------------------------------------------------------------------
April l, 2015................... Level II HCPCS April 1, 2015..... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
July 1, 2015.................... Level II HCPCS July 1, 2015...... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
Codes. proposed rule. final rule with
comment period.
Category I July 1, 2015...... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
(certain vaccine proposed rule. final rule with
codes) and III comment period.
CPT codes.
October 1, 2015................. Level II HCPCS October 1, 2015... CY 2016 OPPS/ASC CY 2017 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
January 1, 2016................. Level II HCPCS January 1, 2016... CY 2016 OPPS/ASC CY 2017 OPPS/ASC
Codes. final rule with final rule with
comment period. comment period.
Category I and III January 1, 2016... CY 2016 OPPS/ASC CY 2016 OPPS/ASC
CPT Codes. proposed rule. final rule with
comment period.
----------------------------------------------------------------------------------------------------------------

We are inviting public comment on this proposed process.

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

1. Covered Surgical Procedures
a. Proposed Covered Surgical Procedures Designated as Office-Based
(1) Background
In the August 2, 2007 ASC final rule, we finalized our policy to
designate as ``office-based'' those procedures that are added to the
ASC list of covered surgical procedures in CY 2008 or later years that
we determine are performed predominantly (more than 50 percent of the
time) in physicians' offices based on consideration of the most recent
available volume and utilization data for each individual procedure
code and/or, if appropriate, the clinical characteristics, utilization,
and volume of related codes. In that rule, we also finalized our policy
to exempt all procedures on the CY 2007 ASC list from application of
the office-based classification (72 FR 42512). The procedures that were
added to the ASC list of covered surgical procedures beginning in CY
2008 that we determined were office-based were identified in Addendum
AA to that rule by payment indicator ``P2'' (Office-based surgical
procedure added to ASC list in CY 2008 or later with MPFS nonfacility
PE RVUs; payment based on OPPS relative payment weight); ``P3''
(Office-based surgical procedures added to ASC list in CY 2008 or later
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on
OPPS relative payment weight), depending on whether we estimated the
procedure would be paid according to the standard ASC payment
methodology based on its

[[Page 39308]]

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 covered surgical procedures eligible for payment in ASCs, each
year we identify covered surgical procedures as either temporarily
office-based (these are new procedure codes with little or no
utilization data that we 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) Proposed Changes for CY 2016 to Covered Surgical Procedures
Designated as Office-Based
In developing this proposed rule, we followed our policy to
annually review and update the covered 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 2014 volume and utilization data and the
clinical characteristics for all covered surgical procedures that are
assigned payment indicator ``G2'' (Nonoffice-based surgical procedure
added in CY 2008 or later; payment based on OPPS relative payment
weight) in CY 2015, as well as for those procedures assigned one of the
temporary office-based payment indicators, specifically ``P2,'' ``P3,''
or ``R2'' in the CY 2015 OPPS/ASC final rule with comment period (79 FR
66921 through 66923).
Our review of the CY 2014 volume and utilization data resulted in
our identification of two covered surgical procedures, CPT codes 43197
(Esophagoscopy, flexible, transnasal; diagnostic, including collection
of specimen(s) by brushing or washing, when performed (separate
procedure)) and 43198 (Esophagoscopy, flexible, transnasal; with
biopsy, single or multiple) that we believe meet the criteria for
designation as office-based. The data indicate that these procedures
are performed more than 50 percent of the time in physicians' offices
and we believe the services are of a level of complexity consistent
with other procedures performed routinely in physicians' offices. The
two CPT codes we are proposing to permanently designate as office-based
are listed in Table 59 below.
We are inviting public comment on this proposal.

Table 59--ASC Covered Surgical Procedures Newly Proposed as Permanently
Office-Based for CY 2016
------------------------------------------------------------------------
Proposed CY
Proposed CY 2016 CPT Proposed CY 2016 CY 2015 ASC 2016 ASC
code long descriptor payment payment
indicator indicator *
------------------------------------------------------------------------
43197................ Esophagoscopy, G2 P3
flexible,
transnasal;
diagnostic,
including
collection of
specimen(s) by
brushing or
washing, when
performed
(separate
procedure).
43198................ Esophagoscopy, G2 P3
flexible,
transnasal; with
biopsy, single
or multiple.
------------------------------------------------------------------------
* Proposed payment indicators are based on a comparison of the proposed
rates according to the ASC standard ratesetting methodology and the
MPFS proposed rates. Current law specifies a 0.5 percent update to the
MPFS payment rates for CY 2016. For a discussion of the MPFS rates, we
refer readers to the CY 2016 MPFS proposed rule.

We also reviewed CY 2014 volume and utilization data and other
information for six procedures finalized for temporary office-based
status in Table 47 in the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66922 through 66923). Among these six procedures, there
were very few claims in our data or no claims data for five 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 (e.g.,
abscess, hematoma, seroma, lymphocele, cyst), soft tissue (e.g.,
extremity, abdominal wall, neck), percutaneous); 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 (e.g., retinopathy of
prematurity), photocoagulation or cryotherapy). Consequently, we are
proposing to maintain the temporary office-based designations for these
five codes for CY 2016. We list all of these codes in Table 60, except
for HCPCS code 0099T. HCPCS code 0099T was assigned payment indicator *
R2 in the CY 2015 OPPS/ASC final rule with comment period (79 FR
66922), but this code is being replaced with a new CPT code currently
identified with a CMS 5-digit placeholder code of 657XG. Table 61
reflects the new CY 2016 codes for ASC covered surgical procedures with
proposed temporary office-based designations.
For CPT code 64617 (Chemodenervation of muscle(s); larynx,
unilateral, percutaneous (e.g., for spasmodic dysphonia), includes
guidance by needle electromyography, when performed), claims data
indicate these procedures are performed more than 50 percent of the
time in physicians' offices and we believe the services are of a level
of complexity consistent with other procedures performed routinely in
physicians' offices. Therefore, we are proposing to make the office-
based designation for CPT code 64617 permanent.
The proposed CY 2016 payment indicator designations for the
procedures that were temporarily designated as office-based in CY 2015
are displayed in Table 60. The procedures for which the proposed
office-based designations for CY 2016 are temporary also are indicated
by asterisks in Addendum AA to this proposed rule (which is available
via the Internet on the CMS Web site).

[[Page 39309]]

Table 60--Proposed CY 2016 Payment Indicators for ASC Covered Surgical
Procedures Designated as Temporarily Office-Based in the CY 2015 OPPS/
ASC Final Rule With Comment Period
------------------------------------------------------------------------
Proposed CY
CY 2015 long CY 2015 ASC 2016 ASC
CY 2015 CPT code descriptor payment payment
indicator indicator * *
------------------------------------------------------------------------
0299T................ Extracorporeal * R2 * R2
shock wave for
integumentary
wound healing,
high energy,
including
topical
application and
dressing care;
initial wound.
C9800................ Dermal injection * R2 * R2
procedure(s) for
facial
lipodystrophy
syndrome (LDS)
and provision of
Radiesse or
Sculptra dermal
filler,
including all
items and
supplies.
10030................ Image-guided * P2 * P2
fluid collection
drainage by
catheter (e.g.,
abscess,
hematoma,
seroma,
lymphocele,
cyst), soft
tissue (e.g.,
extremity
abdominal wall,
neck),
percutaneous.
64617................ Chemodenervation * P3 * P3
of muscle(s);
larynx,
unilateral,
percutaneous
(e.g., for
spasmodic
dysphonia),
includes
guidance by
needle
electromyography
, when performed.
67229................ Treatment of * R2 * R2
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
(e.g.,
retinopathy of
prematurity),
photocoagulation
or cryotherapy.
------------------------------------------------------------------------
* If designation is temporary.
* * Proposed payment indicators are based on a comparison of the
proposed rates according to the ASC standard ratesetting methodology
and the MPFS proposed rates. Current law specifies a 0.5 percent
update to the MPFS payment rates for CY 2016. For a discussion of the
MPFS rates, we refer readers to the CY 2016 MPFS proposed rule.

For CY 2016, we also are proposing to designate certain new CY 2016
codes for ASC covered surgical procedures as temporary office-based,
displayed in Table 61. After reviewing the clinical characteristics,
utilization, and volume of related codes, we determined that the
procedures described by these new CPT codes would be predominantly
performed in physicians' offices. However, because we had no
utilization data for the procedures specifically described by these new
CPT codes, we made the office-based designations temporary rather than
permanent and we will reevaluate the procedures when data become
available. The procedures for which the proposed office-based
designations for CY 2016 are temporary also are indicated by asterisks
in Addendum AA to this proposed rule (which is available via the
Internet on the CMS Web site).
We are inviting public comment on these proposals.

Table 61--Proposed CY 2016 Payment Indicators for New CY 2016 CPT Codes
for ASC Covered Surgical Procedures Designated as Temporarily Office-
Based
------------------------------------------------------------------------
Proposed CY
Proposed CY 2016 OPPS/ASC Proposed CY 2016 long 2016 ASC
proposed rule 5-digit CMS descriptor payment
placeholder code * * * indicator * *
------------------------------------------------------------------------
6446A.......................... Paravertebral block * R2
(PVB) (paraspinous
block), thoracic;
single injection site
(includes imaging
guidance, when
performed).
6446C.......................... Paravertebral block * R2
(PVB) (paraspinous
block), thoracic;
continuous infusion by
catheter (includes
imaging guidance, when
performed).
03XXB.......................... Collagen cross-linking * R2
of cornea (including
removal of the corneal
epithelium and
intraoperative
pachymetry when
performed).
657XG.......................... Implantation of P2 *
intrastromal corneal
ring segments.
------------------------------------------------------------------------
* If designation is temporary.
* * Proposed payment indicators are based on a comparison of the
proposed rates according to the ASC standard ratesetting methodology
and the MPFS proposed rates. Current law specifies a 0.5 percent
update to the MPFS payment rates for CY 2016. For a discussion of the
MPFS rates, we refer readers to the CY 2016 MPFS proposed rule.
* * * New CPT codes (with CMS 5-digit placeholder codes) that will be
effective January 1, 2016. The proposed ASC payment rate for this code
can be found in ASC Addendum AA, which is available via the Internet
on the CMS Web site.

b. ASC Covered Surgical Procedures Designated as Device-Intensive--
Finalized Policy for CY 2015 and Proposed Policy for CY 2016
(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. According to that modified ASC payment methodology, we
apply the device offset percentage based on the standard OPPS APC
ratesetting methodology to the OPPS national unadjusted payment to
determine 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. We then calculate the service portion of the ASC
payment for device-intensive procedures by applying the uniform ASC
conversion factor to the service (nondevice) portion of the OPPS
relative payment weight for the device-intensive procedure. Finally, we
sum the ASC device portion and ASC service portion to establish the
full payment for the device-intensive procedure under the revised ASC
payment system. For CY 2015, we implemented a

[[Page 39310]]

comprehensive APC policy under the OPPS under which we created
comprehensive APCs to replace most of the then-current device-dependent
APCs and a few nondevice-dependent APCs under the OPPS, which
discontinued the device-dependent APC policy (79 FR 66798 through
66810). We did not implement comprehensive APCs in the ASC payment
system.
Therefore, in the CY 2015 OPPS/ASC final rule with comment period
(79 FR 66925), we provided that all separately paid covered ancillary
services that are provided integral to covered surgical procedures that
mapped to comprehensive APCs 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. To avoid duplicating payment we
provided that the CY 2015 ASC payment rates for these comprehensive
APCs are based on the CY 2015 OPPS relative payments weights that had
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 used 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. Because
we implemented the comprehensive APC policy and, therefore, eliminated
device-dependent APCs under the OPPS in CY 2015, we revised our
definition of ASC device-intensive procedures to be those procedures
that are assigned to any APC (not only an APC formerly designated as
device-dependent) with a device offset percentage greater than 40
percent based on the standard OPPS APC ratesetting methodology.
We also provided that we would update the ASC list of covered
surgical procedures that are eligible for payment according to our
device-intensive procedure payment methodology, consistent with our
modified definition of device-intensive procedures, reflecting the APC
assignments of procedures and APC device offset percentages based on
the CY 2013 OPPS claims and cost report data available for the CY 2015
OPPS/ASC proposed rule and final rule with comment period.
(2) Proposed Changes to List of ASC Covered Surgical Procedures
Designated as Device-Intensive for CY 2016
For CY 2016, we are proposing to continue our CY 2015 policies.
Specifically, for CY 2016, we are proposing to update the ASC list of
covered surgical procedures that are eligible for payment according to
our device-intensive procedure payment methodology, consistent with our
proposed modified definition of device-intensive procedures, reflecting
the proposed APC assignments of procedures and APC device offset
percentages based on the CY 2014 OPPS claims and cost report data
available for the proposed rule.
The ASC covered surgical procedures that we are proposing to
designate as device-intensive and that would be subject to the device-
intensive procedure payment methodology for CY 2016 are listed in Table
62 below. The CPT code, the CPT code short descriptor, the proposed CY
2016 ASC payment indicator, the proposed CY 2016 OPPS APC assignment,
the proposed CY 2016 OPPS APC device offset percentage, and an
indication if the full credit/partial credit (FB/FC) device adjustment
policy would apply are also listed in Table 62 below. All of these
procedures are included in Addendum AA to this proposed rule (which is
available via the Internet on the CMS Web site).
We are inviting public comment on these proposals.
(3) Solicitation of Comments on Device-Intensive Policy for ASCs
As discussed previously, prior to CY 2015, ASC device-intensive
procedures were 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 implemented the
comprehensive APC policy and, therefore, eliminated device-dependent
APCs under the OPPS in CY 2015, we redefined ASC device-intensive
procedures for CY 2015 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 (79 FR 66923 through 66925).
Payment rates for ASC device-intensive procedures are based on a
modified payment methodology. As described in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66829), under that modified
payment methodology, we apply the device offset percentage based on the
standard OPPS APC ratesetting methodology to the OPPS national
unadjusted payment to determine the device cost included in the non-
comprehensive OPPS unadjusted 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.
We then calculate the service portion of the ASC payment for device-
intensive procedures by applying the uniform ASC conversion factor to
the service (nondevice) portion of the OPPS relative payment weight for
the device-intensive procedure, which is then scaled for ASC budget
neutrality. Finally, we sum the ASC device portion and the ASC service
portion to establish the full payment for the device-intensive
procedure under the revised ASC payment system.
We recognize that, in some instances, there may be a procedure that
contains high-cost devices but is not assigned to a device-intensive
APC. Where an ASC covered surgical procedure is not designated as
device-intensive, the procedure would be paid under the ASC methodology
established for that covered surgical procedure, through either an MPFS
nonfacility PE RVU-based amount or an OPPS relative payment weight
based methodology, depending on the ASC status indicator assignment.
In response to stakeholder concerns regarding the situation where
procedures with high-cost devices are not classified as device-
intensive under the ASC payment system, we are soliciting public
comments for alternative methodologies for establishing device-
intensive status for ASC covered surgical procedures.
c. Proposed Adjustment to ASC Payments for No Cost/Full Credit and
Partial Credit Devices
Our ASC policy with regard to payment for costly devices implanted
in ASCs at no cost/full credit or partial credit as set forth in Sec.
416.179 is consistent with the OPPS policy that was in effect until CY
2014. The established ASC policy reduces payment to ASCs when a
specified device is furnished without cost or with full credit or
partial credit for the cost of the device for those ASC covered
surgical procedures that are assigned to APCs under the OPPS to which
this policy applies. We refer readers to the CY 2009 OPPS/ASC final
rule with comment period for a full discussion of the ASC payment
adjustment policy for no cost/full credit and partial credit devices
(73 FR 68742 through 68744).
As discussed in section IV.B. of the CY 2014 OPPS/ASC final rule
with

[[Page 39311]]

comment period (78 FR 75005 through 75006), we finalized our proposal
to modify our former policy of reducing OPPS payment for specified APCs
when a hospital furnishes a specified device without cost or with a
full or partial credit. Formerly, under the OPPS, our policy was to
reduce OPPS payment by 100 percent of the device offset amount 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.
We are proposing to update the list of ASC covered device-intensive
procedures, based on the revised device-intensive definition finalized
last year, which would be subject to the no cost/full credit and
partial credit device adjustment policy for CY 2016. Table 62 below
displays the ASC covered device-intensive procedures that we are
proposing would be subject to the no cost/full credit or partial credit
device adjustment policy for CY 2016. Specifically, when a procedure
that is listed in Table 62 is subject to the no cost/full credit or
partial credit device adjustment policy and is performed to implant a
device that is furnished at no cost or with full credit from the
manufacturer, the ASC would append the HCPCS ``FB'' modifier on the
line with the procedure to implant the device. The contractor would
reduce payment to the ASC by the device offset amount that we estimate
represents the cost of the device when the necessary device is
furnished without cost to the ASC or with full credit. We continue to
believe that the reduction of ASC payment in these circumstances is
necessary to pay appropriately for the covered surgical procedure being
furnished by the ASC.
For partial credit, we are proposing to reduce the payment for
implantation procedures listed in Table 62 of this proposed rule 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 62
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. As finalized in the CY 2015 OPPS/ASC final rule
with comment period, 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 apply our
FB/FC policy to all device-intensive procedures (79 FR 66926).
We are inviting public comment on these proposals.

Table 62--ASC Covered Surgical Procedures Proposed for Designation as Device-Intensive for CY 2016, Including
ASC Covered Surgical Procedures for Which the Proposed No Cost/Fill Credit or Partial Credit Device Adjustment
Policy Would Apply
----------------------------------------------------------------------------------------------------------------
Proposed CY
Proposed CY Proposed CY 2016 device Proposed FB/FC
HCPCS code Short descriptor 2016 ASC PI 2016 OPPS offset policy would
APC** percentage apply
----------------------------------------------------------------------------------------------------------------
0100T......................... Prosth retina J8 1593 99.99% Y
receive&gen.
0171T......................... Lumbar spine J8 5124 49.60% Y
proces distract.
0238T......................... Trluml perip J8 5193 60.43% Y
athrc iliac art.
0282T......................... Periph field J8 5462 56.27% Y
stimul trial.
0283T......................... Periph field J8 5464 86.77% Y
stimul perm.
0302T......................... Icar ischm J8 5223 68.50% Y
mntrng sys
compl.
0303T......................... Icar ischm J8 5222 72.88% Y
mntrng sys
eltrd.
0304T......................... Icar ischm J8 5222 72.88% Y
mntrng sys
device.
0307T......................... Rmvl icar ischm J8 5221 45.44% Y
mntrng dvce.
0308T......................... Insj ocular J8 5494 81.62% Y
telescope
prosth.
0316T......................... Replc vagus J8 5463 85.69% Y
nerve pls gen.
0387T......................... Leadless c pm J8 5193 60.43% Y
ins/rpl ventr.
04XX1*........................ Insj/rplc J8 5223 68.50% Y
cardiac modulj
sys.
04XX2*........................ Insj/rplc J8 5223 68.50% Y
cardiac modulj
pls gn.
04XX3*........................ Insj/rplc car J8 5222 72.88% Y
modulj atr elt.
04XX4*........................ Insj/rplc car J8 5222 72.88% Y
modulj vnt elt.

[[Page 39312]]

04XX5*........................ Rmvl cardiac J8 5222 72.88% Y
modulj pls gen.
04XX7*........................ Rmvl & rpl car J8 5224 72.68% Y
modulj pls gn.
19298......................... Place breast rad J8 5093 41.08% Y
tube/caths.
19325......................... Enlarge breast J8 5093 41.08% Y
with implant.
19342......................... Delayed breast J8 5093 41.08% Y
prosthesis.
19357......................... Breast J8 5093 41.08% Y
reconstruction.
22551......................... Neck spine J8 5124 49.60% Y
fuse&remov bel
c2.
22554......................... Neck spine J8 5124 49.60% Y
fusion.
22612......................... Lumbar spine J8 5124 49.60% Y
fusion.
23465......................... Repair shoulder J8 5124 49.60% Y
capsule.
23485......................... Revision of J8 5124 49.60% Y
collar bone.
23491......................... Reinforce J8 5124 49.60% Y
shoulder bones.
23552......................... Treat clavicle J8 5124 49.60% Y
dislocation.
23615......................... Treat humerus J8 5124 49.60% Y
fracture.
23616......................... Treat humerus J8 5124 49.60% Y
fracture.
23680......................... Treat J8 5124 49.60% Y
dislocation/
fracture.
23800......................... Fusion of J8 5124 49.60% Y
shoulder joint.
23802......................... Fusion of J8 5124 49.60% Y
shoulder joint.
24346......................... Reconstruct J8 5124 49.60% Y
elbow med
ligmnt.
24361......................... Reconstruct J8 5124 49.60% Y
elbow joint.
24363......................... Replace elbow J8 5124 49.60% Y
joint.
24365......................... Reconstruct head J8 5124 49.60% Y
of radius.
24366......................... Reconstruct head J8 5124 49.60% Y
of radius.
24370......................... Revise reconst J8 5124 49.60% Y
elbow joint.
24371......................... Revise reconst J8 5124 49.60% Y
elbow joint.
24410......................... Revision of J8 5124 49.60% Y
humerus.
24430......................... Repair of J8 5124 49.60% Y
humerus.
24435......................... Repair humerus J8 5124 49.60% Y
with graft.
24498......................... Reinforce J8 5124 49.60% Y
humerus.
24515......................... Treat humerus J8 5124 49.60% Y
fracture.
24516......................... Treat humerus J8 5124 49.60% Y
fracture.
24545......................... Treat humerus J8 5124 49.60% Y
fracture.
24546......................... Treat humerus J8 5124 49.60% Y
fracture.
24575......................... Treat humerus J8 5124 49.60% Y
fracture.
24579......................... Treat humerus J8 5124 49.60% Y
fracture.
24586......................... Treat elbow J8 5124 49.60% Y
fracture.
24587......................... Treat elbow J8 5124 49.60% Y
fracture.
24666......................... Treat radius J8 5124 49.60% Y
fracture.
24802......................... Fusion/graft of J8 5124 49.60% Y
elbow joint.
25391......................... Lengthen radius J8 5124 49.60% Y
or ulna.
25420......................... Repair/graft J8 5124 49.60% Y
radius & ulna.
25441......................... Reconstruct J8 5124 49.60% Y
wrist joint.
25442......................... Reconstruct J8 5124 49.60% Y
wrist joint.
25444......................... Reconstruct J8 5124 49.60% Y
wrist joint.
25446......................... Wrist J8 5124 49.60% Y
replacement.
25575......................... Treat fracture J8 5124 49.60% Y
radius/ulna.
25800......................... Fusion of wrist J8 5124 49.60% Y
joint.
25810......................... Fusion/graft of J8 5124 49.60% Y
wrist joint.
27279......................... Arthrodesis J8 5124 49.60% Y
sacroiliac
joint.
27415......................... Osteochondral J8 5124 49.60% Y
knee allograft.
27428......................... Reconstruction J8 5124 49.60% Y
knee.
27429......................... Reconstruction J8 5124 49.60% Y
knee.
27438......................... Revise kneecap J8 5124 49.60% Y
with implant.
27440......................... Revision of knee J8 5124 49.60% Y
joint.
27442......................... Revision of knee J8 5124 49.60% Y
joint.
27443......................... Revision of knee J8 5124 49.60% Y
joint.
27446......................... Revision of knee J8 5124 49.60% Y
joint.
27745......................... Reinforce tibia. J8 5124 49.60% Y
27758......................... Treatment of J8 5124 49.60% Y
tibia fracture.
27759......................... Treatment of J8 5124 49.60% Y
tibia fracture.
27823......................... Treatment of J8 5124 49.60% Y
ankle fracture.
27827......................... Treat lower leg J8 5124 49.60% Y
fracture.
27828......................... Treat lower leg J8 5124 49.60% Y
fracture.
27870......................... Fusion of ankle J8 5124 49.60% Y
joint open.
27871......................... Fusion of J8 5124 49.60% Y
tibiofibular
joint.
28320......................... Repair of foot J8 5124 49.60% Y
bones.
28420......................... Treat/graft heel J8 5124 49.60% Y
fracture.

[[Page 39313]]

28705......................... Fusion of foot J8 5124 49.60% Y
bones.
28715......................... Fusion of foot J8 5124 49.60% Y
bones.
28725......................... Fusion of foot J8 5124 49.60% Y
bones.
28730......................... Fusion of foot J8 5124 49.60% Y
bones.
28735......................... Fusion of foot J8 5124 49.60% Y
bones.
28737......................... Revision of foot J8 5124 49.60% Y
bones.
28740......................... Fusion of foot J8 5124 49.60% Y
bones.
29889......................... Knee arthroscopy/ J8 5124 49.60% Y
surgery.
29899......................... Ankle J8 5124 49.60% Y
arthroscopy/
surgery.
29907......................... Subtalar arthro J8 5124 49.60% Y
w/fusion.
33206......................... Insert heart pm J8 5223 68.50% Y
atrial.
33207......................... Insert heart pm J8 5223 68.50% Y
ventricular.
33208......................... Insrt heart pm J8 5223 68.50% Y
atrial & vent.
33210......................... Insert electrd/ J8 5222 72.88% Y
pm cath sngl.
33211......................... Insert card J8 5222 72.88% Y
electrodes dual.
33212......................... Insert pulse gen J8 5222 72.88% Y
sngl lead.
33213......................... Insert pulse gen J8 5223 68.50% Y
dual leads.
33214......................... Upgrade of J8 5223 68.50% Y
pacemaker
system.
33216......................... Insert 1 J8 5222 72.88% Y
electrode pm-
defib.
33217......................... Insert 2 J8 5222 72.88% Y
electrode pm-
defib.
33218......................... Repair lead pace- J8 5221 45.44% Y
defib one.
33220......................... Repair lead pace- J8 5221 45.44% Y
defib dual.
33221......................... Insert pulse gen J8 5224 72.68% Y
mult leads.
33224......................... Insert pacing J8 5223 68.50% Y
lead & connect.
33227......................... Remove&replace J8 5222 72.88% Y
pm gen singl.
33228......................... Remv&replc pm J8 5223 68.50% Y
gen dual lead.
33229......................... Remv&replc pm J8 5224 72.68% Y
gen mult leads.
33230......................... Insrt pulse gen J8 5231 77.49% Y
w/dual leads.
33231......................... Insrt pulse gen J8 5232 80.65% Y
w/mult leads.
33233......................... Removal of pm J8 5221 45.44% Y
generator.
33234......................... Removal of J8 5221 45.44% Y
pacemaker
system.
33235......................... Removal J8 5221 45.44% Y
pacemaker
electrode.
33240......................... Insrt pulse gen J8 5231 77.49% Y
w/singl lead.
33241......................... Remove pulse J8 5221 45.44% Y
generator.
33249......................... Insj/rplcmt J8 5232 80.65% Y
defib w/lead(s).
33262......................... Rmvl& replc J8 5231 77.49% Y
pulse gen 1
lead.
33263......................... Rmvl & rplcmt J8 5231 77.49% Y
dfb gen 2 lead.
33264......................... Rmvl & rplcmt J8 5232 80.65% Y
dfb gen mlt ld.
33270......................... Ins/rep subq J8 5232 80.65% Y
defibrillator.
33271......................... Insj subq J8 5222 72.88% Y
impltbl dfb
elctrd.
33273......................... Repos prev J8 5221 45.44% Y
impltbl subq
dfb.
33282......................... Implant pat- J8 5222 72.88% Y
active ht
record.
36261......................... Revision of J8 5221 45.44% Y
infusion pump.
36262......................... Removal of J8 5221 45.44% Y
infusion pump.
37221......................... Iliac revasc w/ J8 5192 50.56% Y
stent.
37225......................... Fem/popl revas w/ J8 5192 50.56% Y
ather.
37226......................... Fem/popl revasc J8 5192 50.56% Y
w/stent.
37227......................... Fem/popl revasc J8 5193 60.43% Y
stnt & ather.
37228......................... Tib/per revasc w/ J8 5192 50.56% Y
tla.
37229......................... Tib/per revasc w/ J8 5193 60.43% Y
ather.
37230......................... Tib/per revasc w/ J8 5193 60.43% Y
stent.
37231......................... Tib/per revasc J8 5193 60.43% Y
stent & ather.
37236......................... Open/perq place J8 5192 50.56% Y
stent 1st.
37238......................... Open/perq place J8 5192 50.56% Y
stent same.
50080......................... Removal of J8 5376 53.72% Y
kidney stone.
50081......................... Removal of J8 5376 53.72% Y
kidney stone.
53440......................... Male sling J8 5376 53.72% Y
procedure.
53444......................... Insert tandem J8 5376 53.72% Y
cuff.
53445......................... Insert uro/ves J8 5377 70.25% Y
nck sphincter.
53447......................... Remove/replace J8 5377 70.25% Y
ur sphincter.
54112......................... Treat penis J8 5376 53.72% Y
lesion graft.
54400......................... Insert semi- J8 5376 53.72% Y
rigid
prosthesis.
54401......................... Insert self- J8 5377 70.25% Y
contd
prosthesis.
54405......................... Insert multi- J8 5377 70.25% Y
comp penis pros.
54410......................... Remove/replace J8 5377 70.25% Y
penis prosth.
54416......................... Remv/repl penis J8 5377 70.25% Y
contain pros.
55873......................... Cryoablate J8 5376 53.72% Y
prostate.

[[Page 39314]]

57120......................... Closure of J8 5415 19.94% Y
vagina.
57310......................... Repair J8 5416 18.21% Y
urethrovaginal
lesion.
58260......................... Vaginal J8 5415 19.94% Y
hysterectomy.
58262......................... Vag hyst J8 5415 19.94% Y
including t/o.
58543......................... Lsh uterus above J8 5362 16.68% Y
250 g.
58544......................... Lsh w/t/o uterus J8 5362 16.68% Y
above 250 g.
58553......................... Laparo-vag hyst J8 5362 16.68% Y
complex.
58554......................... Laparo-vag hyst J8 5362 16.68% Y
w/t/o compl.
58573......................... Tlh w/t/o uterus J8 5362 16.68% Y
over 250 g.
61885......................... Insrt/redo J8 5463 85.69% Y
neurostim 1
array.
61886......................... Implant J8 5464 86.77% Y
neurostim
arrays.
61888......................... Revise/remove J8 5462 56.27% Y
neuroreceiver.
62360......................... Insert spine J8 5471 79.84% Y
infusion device.
62361......................... Implant spine J8 5471 79.84% Y
infusion pump.
62362......................... Implant spine J8 5471 79.84% Y
infusion pump.
63650......................... Implant J8 5462 56.27% Y
neuroelectrodes.
63655......................... Implant J8 5463 85.69% Y
neuroelectrodes.
63663......................... Revise spine J8 5462 56.27% Y
eltrd perq aray.
63664......................... Revise spine J8 5462 56.27% Y
eltrd plate.
63685......................... Insrt/redo spine J8 5464 86.77% Y
n generator.
64553......................... Implant J8 5462 56.27% Y
neuroelectrodes.
64555......................... Implant J8 5462 56.27% Y
neuroelectrodes.
64561......................... Implant J8 5462 56.27% Y
neuroelectrodes.
64565......................... Implant J8 5462 56.27% Y
neuroelectrodes.
64568......................... Inc for vagus n J8 5464 86.77% Y
elect impl.
64569......................... Revise/repl J8 5462 56.27% Y
vagus n eltrd.
64575......................... Implant J8 5462 56.27% Y
neuroelectrodes.
64580......................... Implant J8 5463 85.69% Y
neuroelectrodes.
64581......................... Implant J8 5462 56.27% Y
neuroelectrodes.
64590......................... Insrt/redo pn/ J8 5463 85.69% Y
gastr stimul.
65770......................... Revise cornea J8 5493 62.97% Y
with implant.
69714......................... Implant temple J8 5124 49.60% Y
bone w/stimul.
69715......................... Temple bne J8 5124 49.60% Y
implnt w/
stimulat.
69718......................... Revise temple J8 5124 49.60% Y
bone implant.
69930......................... Implant cochlear J8 5166 83.03% Y
device.
C9740......................... Cysto impl 4 or J8 1564 63.71% Y
more.
----------------------------------------------------------------------------------------------------------------
* New CPT codes (with CMS 5-digit placeholder codes) that would be effective January 1, 2016. The long
descriptors for these new codes can be found in Addendum O to this proposed rule (which is available via the
Internet on the CMS Web site).
** Addendum Q to this proposed rule (which is available via the Internet on the CMS Web site) contains a
crosswalk of the existing CY 2015 APC numbers to the proposed new CY 2016 APC numbers.

d. Proposed Adjustment to ASC Payments for Discontinued Device-
Intensive Procedures
As discussed in section IV.B.4. of this proposed rule, we are
proposing to modify the calculation of OPPS payment when modifiers
indicating that the procedure was discontinued appear on the claim.
When a procedure assigned to a device-intensive APC is discontinued
either prior to administration of anesthesia or for a procedure that
does not require anesthesia, we presume that, in the majority of cases,
the device was not used and remains sterile such that it could be used
for another case. In these circumstances, under current policy,
providers are being paid twice by Medicare for the same device, once
for the initial procedure that was discontinued and again when the
device is actually used. We believe that in cases where the procedure
was not performed, that it would be appropriate to remove the estimated
cost of the device, since it would have presumably not been used.
We believe these same issues exist in the ASC setting, and thus are
proposing that this alternative payment calculation where the device
offset is removed before applying any standard downward payment
adjustments because a full procedure was not performed would also apply
to device-intensive procedures in the ASC system beginning in CY 2016,
with modifiers 52 (reduced services) and 73 (Discontinued outpatient
procedure prior to anesthesia administration), which are the same
modifiers proposed in the OPPS. Modifier 52 is used to indicate certain
circumstances in which a procedure is partially reduced or eliminated.
Modifier 73 is used when a service is canceled prior to the surgical
preparation due to circumstances that may threaten the well-being of a
patient. Under this proposed methodology, any adjustment policies
reducing payment would only apply to the procedural portion of the
service, based on ASC payment after the device offset is removed. Use
of modifiers 52 or 73 would thus result in 50 percent of ASC payment
for the service, after the device offset has first been subtracted from
the standard ASC payment amount. We are proposing to restrict the
policy to ASC device-intensive procedures so that the adjustment would
not be triggered by the use of an inexpensive device whose

[[Page 39315]]

cost would not constitute a significant portion of the total payment
rate.
Similar to the OPPS, we are not proposing to deduct the device
offset amount from a procedure that was discontinued after anesthesia
was administered (modifier 74) as we believe that it may be more likely
that devices involved with such procedures are more likely to no longer
be sterile such that they could be restocked and used for another case.
However, we are soliciting public comments on how often the device
becomes ineligible for use in a subsequent case and whether we should
deduct the device offset amount from claims with modifier 74 as well.
We are proposing to revise 42 CFR 416.172 to reflect this proposal.
We are inviting public comment on this proposal and this proposed
codification.
e. Proposed Additions to the List of ASC Covered Surgical Procedures
We conducted a review of HCPCS codes that currently are paid under
the OPPS, but not included on the ASC list of covered surgical
procedures, to determine if changes in technology and/or medical
practice affected the clinical appropriateness of these procedures for
the ASC setting. Based on this review, we are proposing to update the
list of ASC covered surgical procedures by adding 11 procedures to the
list for CY 2016. We determined that these 11 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. Therefore, we are proposing to include them on the list
of ASC covered surgical procedures for CY 2016.
The 11 procedures that we are proposing to add to the ASC list of
covered surgical procedures, including their HCPCS code long
descriptors and proposed CY 2016 payment indicators, are displayed in
Table 63 below.
We are inviting public comment on this proposal.

Table 63--Proposed Additions to the List of ASC Covered Surgical
Procedures for CY 2016
------------------------------------------------------------------------
Proposed CY
Proposed CY 2016 long 2016 ASC
Proposed CY 2016 HCPCS code descriptor payment
indicator
------------------------------------------------------------------------
0171T........................ Insertion of posterior J8
spinous process
distraction device
(including necessary
removal of bone or
ligament for insertion
and imaging guidance),
lumbar; single level.
0172T........................ Insertion of posterior N1
spinous process
distraction device
(including necessary
removal of bone or
ligament for insertion
and imaging guidance),
lumbar; each additional
level.
57120........................ Colpocleisis (Le Fort J8
type).
57310........................ Closure of urethrovaginal J8
fistula.
58260........................ Vaginal hysterectomy, for J8
uterus 250 g or less.
58262........................ Vaginal hysterectomy, for J8
uterus 250 g or less;
with removal of tube(s),
and/or ovary(s).
58543........................ Laparoscopy, surgical, J8
supracervical
hysterectomy, for uterus
greater than 250 g.
58544........................ Laparoscopy, surgical, J8
supracervical
hysterectomy, for uterus
greater than 250 g; with
removal of tube(s) and/
or ovary(s).
58553........................ Laparoscopy, surgical, J8
with vaginal
hysterectomy, for uterus
greater than 250 g.
58554........................ Laparoscopy, surgical, J8
with vaginal
hysterectomy, for uterus
greater than 250 g; with
removal of tube(s) and/
or ovary(s).
58573........................ Laparoscopy, surgical, J8
with total hysterectomy,
for uterus greater than
250 g; with removal of
tube(s) and/or ovary(s).
------------------------------------------------------------------------

f. ASC Treatment of Surgical Procedures Proposed for Removal From the
OPPS Inpatient List for CY 2016
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. We evaluated each of the seven procedures we are
proposing to remove from the OPPS inpatient list for CY 2016 according
to the criteria for exclusion from the list of covered ASC surgical
procedures. We believe that these seven procedures should continue to
be excluded from the ASC list of covered surgical procedures for CY
2016 because they would be expected to pose a significant risk to
beneficiary safety or to require an overnight stay in ASCs. The CPT
codes for these seven procedures and their long descriptors are listed
in Table 64 below.
We are inviting public comment on the continued exclusion of these
codes from the ASC list of covered surgical procedures.

Table 64--Procedures Proposed for Exclusion From the ASC List of Covered
Surgical Procedures for CY 2016 That Are Proposed for Removal From the
CY 2016 OPPS Inpatient List
------------------------------------------------------------------------
CPT Code Long descriptor
------------------------------------------------------------------------
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
20936............................. Autograft for spine surgery only
(includes harvesting the graft);
local (eg, ribs, spinous process,
or laminar fragments) obtained from
same incision
20937............................. Autograft for spine surgery only
(includes harvesting the graft);
morselized (through separate skin
or fascial incision)
20938............................. Autograft for spine surgery only
(includes harvesting the graft);
structural bicortical or
tricortical (through separate skin
or fascial incision)
22552............................. Arthrodesis, anterior interbody,
including disc space preparation,
discectomy, osteophytectomy and
decompression of spinal cord and/or
nerve roots; cervical below C2,
each additional interspace

[[Page 39316]]

54411............................. Removal and replacement of all
components of a multi-component
inflatable penile prosthesis
through an infected field at the
same operative session, including
irrigation and debridement of
infected tissue
54417............................. Removal and replacement of non-
inflatable (semi-rigid) or
inflatable (self-contained) penile
prosthesis through an infected
field at the same operative
session, including irrigation and
debridement of infected tissue
------------------------------------------------------------------------

2. Covered Ancillary Services
a. Proposed List of Covered Ancillary Services
Consistent with the established ASC payment system policy, we are
proposing to update the ASC list of covered ancillary services to
reflect the proposed payment status for the services under the CY 2016
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 2016.
For example, a covered ancillary service that was separately paid under
the revised ASC payment system in CY 2015 may be proposed for packaged
status under the CY 2016 OPPS and, therefore, also under the ASC
payment system for CY 2016.
To maintain consistency with the OPPS, we are proposing that these
services also would be packaged under the ASC payment system for CY
2016. We are proposing to continue this reconciliation of packaged
status for subsequent calendar years. Comment indicator ``CH,''
discussed in section XII.F. of this proposed rule, is used in Addendum
BB to this proposed rule (which is available via the Internet on the
CMS Web site) to indicate covered ancillary services for which we are
proposing a change in the ASC payment indicator to reflect a proposed
change in the OPPS treatment of the service for CY 2016.
All ASC covered ancillary services and their proposed payment
indicators for CY 2016 are included in Addendum BB to this proposed
rule. We are inviting public comment on this proposal.
b. Proposal To Exclude Corneal Tissue Procurement From the Covered
Ancillary Services List When Used for Nontransplant Procedures
We refer readers to section X.C. of this proposed rule for a
discussion of our proposal to include corneal tissue procurement as a
covered ancillary service only when it is integral to the performance
of a corneal transplant procedure that is an ASC covered surgical
procedure.
c. Proposal to Remove Certain Services From the Covered Ancillary
Services List That Are Not Used as Ancillary and Integral To a Covered
Surgical Procedure
It has come to our attention that we include codes for services on
our covered ancillary services list that are not used as ancillary and
integral to a covered ASC surgical procedure. In some cases, codes on
the ASC covered ancillary services list are not provided in the ASC
setting due to clinical practice. In examining the current ancillary
services list and claims data available to us for CY 2016 proposed ASC
rulemaking, we noted several services that are not and have not been
historically furnished in the ASC setting. Several radiation therapy
treatment services, including gamma knife stereotactic radiosurgery
(SRS), are most frequently provided in the hospital outpatient setting
and paid through the OPPS and also are infrequently furnished in
freestanding radiation therapy centers and paid under the MPFS. Claims
data indicate that it is not furnished in the ASC setting. Since ASCs
do not appear to be utilizing these services as integral and ancillary
to covered ASC surgical procedures, and given the specialized nature of
the SRS treatment services, we would not expect them to be integral and
ancillary to an ASC covered surgical procedure, we are proposing to
remove radiation treatment codes for SRS services from the list of ASC
covered ancillary services. Specifically, we are proposing to remove
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), 77372
(Radiation treatment delivery, stereotactic radiosurgery (srs),
complete course of treatment of cranial lesion(s) consisting of 1
session; linear accelerator based), and 77373 (Stereotactic body
radiation therapy, treatment delivery, per fraction to 1 or more
lesions, including image guidance, entire course not to exceed 5
fractions) from the list of ASC covered ancillary services for CY 2016
and subsequent years. We note that while we are proposing to remove
these three codes from the list of ancillary covered services for CY
2016 and subsequent years, we will continue to monitor the claims data
to identify services for which clinical practice patterns indicate they
are not provided in the ASC setting.
We are inviting public comment on this proposal.

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

1. Proposed ASC Payment for Covered Surgical Procedures
a. Background
Our ASC payment policies for covered surgical procedures under the
revised ASC payment system are fully described in the CY 2008 OPPS/ASC
final rule with comment period (72 FR 66828 through 66831). Under our
established policy for the revised ASC payment system, we use the ASC
standard ratesetting methodology of multiplying the ASC relative
payment weight for the procedure by the ASC conversion factor for that
same year 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 2015 OPPS/ASC final rule with comment period (79
FR 66915 through 66940), we updated the CY 2014 ASC payment rates for
ASC

[[Page 39317]]

covered surgical procedures with payment indicators of ``A2,'' ``G2,''
and ``J8'' using CY 2013 data, consistent with the CY 2015 OPPS update.
We also updated payment rates for device-intensive procedures to
incorporate the CY 2015 OPPS device offset percentages calculated under
the standard APC ratesetting methodology as discussed earlier in this
section.
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 2016 MPFS proposed rule)
or the amount calculated using the ASC standard ratesetting methodology
for the procedure. In the CY 2015 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 2015 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 2015 payment rate for the procedure under our final policy for the
revised ASC payment system (Sec. 416.171(d)).
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 these
procedures and continued to provide separate payment in CYs 2014 and
2015.
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for
CY 2016
We are proposing to update ASC payment rates for CY 2016 and
subsequent years using the established rate calculation methodologies
under Sec. 416.171 and using our established modified definition of
device-intensive procedures, as discussed above. Because the proposed
OPPS relative payment weights are based on geometric mean costs for CY
2016 and subsequent years, the ASC system will use geometric means to
determine proposed relative payment weights under the ASC standard
methodology. We are proposing to continue to use the amount calculated
under the ASC standard ratesetting methodology for procedures assigned
payment indicators ``A2'' and ``G2.''
We are proposing that payment rates for office-based procedures
(payment indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive
procedures (payment indicator ``J8'') be calculated according to our
established policies and, for device-intensive procedures, using our
established modified definition of device-intensive procedures, as
discussed above. Therefore, we are proposing to update the payment
amount for the service portion of the device-intensive procedures using
the ASC standard ratesetting methodology and the payment amount for the
device portion based on the proposed CY 2016 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 2016 MPFS nonfacility PE RVU-based amount or
the proposed CY 2016 ASC payment amount calculated according to the ASC
standard ratesetting methodology.
As we did for CYs 2014 and 2015, for CY 2016 and subsequent years,
we are proposing to continue our policy for device removal procedures
such that device removal procedures that are conditionally packaged in
the OPPS (status indicators ``Q1'' and ``Q2'') would be assigned the
current ASC payment indicators associated with these procedures and
would continue to be paid separately under the ASC payment system.
We are inviting public comment on these proposals.
c. Waiver of Coinsurance and Deductible for Certain Preventive Services
Section 1833(a)(1) and section 1833(b)(1) of the Act waive the
coinsurance and the Part B deductible for those preventive services
under section 1861(ddd)(3)(A) of the Act as described in section
1861(ww)(2) of the Act (excluding electrocardiograms) that are
recommended by the United States Preventive Services Task Force
(USPSTF) with a grade of A or B for any indication or population and
that are appropriate for the individual. Section 1833(b) of the Act
also waives the Part B deductible for colorectal cancer screening tests
that become diagnostic. In the CY 2011 OPPS/ASC final rule with comment
period, we finalized our policies with respect to these provisions and
identified categories of services and the ASC covered surgical
procedures and covered ancillary services that are preventive services
that are recommended by the USPSTF with a grade of A or B for which the
coinsurance and the deductible are waived. For a complete discussion of
our policies and categories of services, we refer readers to the CY
2011 OPPS/ASC final rule with comment period (75 FR 72047 through
72049). We are not proposing any changes to our policies or the
categories of services for CY 2016. We identify the specific services
with a double asterisk in Addenda AA and BB to this proposed rule
(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

[[Page 39318]]

permanent pacing cardioverter-defibrillator system with transvenous
lead(s), single or dual chamber) are performed on the same date of
service in an ASC.
In the CY 2015 OPPS/ASC final rule with comment period (79 FR
66931), we finalized 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.
We also finalized our proposals under the ASC payment system that 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). We are not proposing any changes to these
policies for CY 2016. We note that, in this proposed rule, we are
proposing to renumber APC 0108 as APC 5232.
e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy Composite
LDR prostate brachytherapy is a treatment for prostate cancer in
which hollow needles or catheters are inserted into the prostate,
followed by permanent implantation of radioactive sources into the
prostate through the needles/catheters. At least two CPT codes are used
to report the treatment service because there are separate codes that
describe placement of the needles/catheters and the application of the
brachytherapy sources: CPT code 55875 (Transperineal placement of
needles or catheters into prostate for interstitial radioelement
application, with or without cystoscopy); and CPT code 77778
(Interstitial radiation source application; complex). Generally, the
component services represented by both codes are provided in the same
operative session on the same date of service to the Medicare
beneficiary being treated with LDR brachytherapy for prostate cancer.
In the CY 2013 OPPS/ASC final rule with comment period, we
finalized our proposal to establish the CY 2013 ASC payment rate for
LDR prostate brachytherapy services based on the OPPS relative payment
weight applicable to APC 8001 when CPT codes 55875 and 77778 are
performed on the same date of service in an ASC. ASCs use the
corresponding HCPCS Level II G-code (G0458) for proper reporting when
the procedures described by CPT codes 55875 and 77778 are performed on
the same date of service, and therefore receive the appropriate LDR
prostate brachytherapy composite payment. When not performed on the
same day as the service described by CPT code 55875, the service
described by CPT code 77778 will be assigned to APC 0651 (in this
proposed rule, proposed to be renumbered APC 5641). 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 (in this
proposed rule, proposed to be renumbered APC 5374). For a complete
discussion of our policy regarding payment for LDR prostate
brachytherapy services in ASCs, we refer readers to the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68457). We are not proposing
any changes to our current policy regarding ASC payment for LDR
prostate brachytherapy services for CY 2016.
2. Proposed Payment for Covered Ancillary Services
a. Background
Our final payment policies under the revised ASC payment system for
covered ancillary services vary according to the particular type of
service and its payment policy under the OPPS. Our overall policy
provides separate ASC payment for certain ancillary items and services
integrally related to the provision of ASC covered surgical procedures
that are paid separately under the OPPS and provides packaged ASC
payment for other ancillary items and services that are packaged or
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'')
under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169; 77 FR
68457 through 68458), we further clarified our policy regarding the
payment indicator assignment of codes that are conditionally packaged
in the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a
conditionally packaged code describes a HCPCS code where the payment is
packaged when it is provided with a significant procedure but is
separately paid when the service appears on the claim without a
significant procedure. Because ASC services always include a surgical
procedure, HCPCS codes that are conditionally packaged under the OPPS
are always packaged (payment indictor ``N1'') under the ASC payment
system. 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.
Similarly, we also finalized our policy 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.

[[Page 39319]]

Devices that are eligible for pass-through payment under the OPPS
are separately paid under the ASC payment system and are 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 also refer to this methodology as
applying a ``device offset'' to the ASC payment for the associated
surgical procedure. This ensures that duplicate payment is not provided
for any portion of an implanted device with OPPS pass-through payment
status.
In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933
through 66934), we finalized that, beginning in CY 2015, certain
diagnostic tests within the medicine range of CPT codes for which
separate payment is allowed under the OPPS are covered ancillary
services when they are integral to an ASC covered surgical procedure.
We finalized 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. In the CY 2015 OPPS/ASC final rule with comment period, we also
finalized our policy 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 (79 FR
66933 through 66934). We finalized that the diagnostic tests for which
the payment is based on the ASC standard ratesetting methodology be
assigned to payment indicator ``Z2'' and revised the definition of
payment indicator ``Z2'' to include reference to diagnostic services
and those for which the payment is based on the MPFS nonfacility PE
RVU-based amount be assigned payment indicator ``Z3,'' and revised the
definition of payment indicator ``Z3'' to include reference to
diagnostic services.
b. Proposed Payment for Covered Ancillary Services for CY 2016
For CY 2016 and subsequent years, we are proposing to update the
ASC payment rates and to make changes to ASC payment indicators as
necessary to maintain consistency between the OPPS and ASC payment
system regarding the packaged or separately payable status of services
and the proposed CY 2016 OPPS and ASC payment rates and subsequent year
payment rates. We also are proposing to continue to set the CY 2016 ASC
payment rates and subsequent year payment rates for brachytherapy
sources and separately payable drugs and biologicals equal to the
proposed OPPS payment rates for CY 2016.
Consistent with established ASC payment policy (72 FR 42497), we
are proposing that the CY 2016 payment for separately payable covered
radiology services be based on a comparison of the proposed CY 2016
MPFS nonfacility PE RVU-based amounts (we refer readers to the CY 2016
MPFS proposed rule) and the CY 2016 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 would make this same proposal for subsequent years. For CY 2016 and
subsequent years, we also are proposing that payment for a radiology
service would be packaged into the payment for the ASC covered surgical
procedure if the radiology service is packaged or conditionally
packaged under the OPPS. The payment indicators in Addendum BB to this
proposed rule (which is available via the Internet on the CMS Web site)
indicate whether the proposed payment rates for radiology services are
based on the MPFS nonfacility PE RVU-based amount or the ASC standard
ratesetting methodology, or whether payment for a radiology service is
packaged into the payment for the covered surgical procedure (payment
indicator ``N1''). Radiology services that we are proposing to pay
based on the ASC standard ratesetting methodology in CY 2016 and
subsequent years are assigned payment indicator ``Z2'' (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''
(Radiology or diagnostic service paid separately when provided integral
to a surgical procedure on ASC list; payment based on MPFS nonfacility
PE RVUs).
As finalized in the CY 2011 OPPS/ASC final rule with comment period
(75 FR 72050), payment indicators for all nuclear medicine procedures
(defined as CPT codes in the range of 78000 through 78999) that are
designated as radiology services that are paid separately when provided
integral to a surgical procedure on the ASC list are set to ``Z2'' so
that payment for these procedures will be based on the OPPS relative
payment weight (rather than the MPFS nonfacility PE RVU-based amount,
regardless of which is lower) and, therefore, will include the cost for
the diagnostic radiopharmaceutical. We are proposing to continue this
modification to the payment methodology for CY 2016 and subsequent
years and, therefore, are proposing to assign the payment indicator
``Z2'' to nuclear medicine procedures.
As finalized in the CY 2012 OPPS/ASC final rule with comment period
(76 FR 74429 through 74430), payment indicators for radiology services
that use contrast agents are set to ``Z2'' so that payment for these
procedures will be based on the OPPS relative payment weight and,
therefore, will include the cost for the contrast agent. We are
proposing to continue this modification to the payment methodology for
CY 2016 and subsequent years and, therefore, are proposing to assign
the payment indicator ``Z2'' to radiology services that use contrast
agents.
We are proposing to not make separate payment as a covered
ancillary service for procurement of corneal tissue when used in any
nontransplant procedure under the ASC payment system. For more detail
on this CY 2016 proposal, we refer readers to section X.C. of this
proposed rule. We are proposing, for CY 2016 ASC payment purposes, to
continue to designate hepatitis B vaccines as contractor-priced based
on the invoiced costs for the vaccine, and corneal tissue acquisition
as contractor-priced based on the invoiced costs for acquiring the
corneal tissue for transplant.
Consistent with our established ASC payment policy, we are
proposing that the CY 2016 payment for devices that are eligible for
pass-through payment under the OPPS are separately paid under the ASC
payment system and would be contractor-priced. Currently, the three
devices that are eligible for pass-through payment in the OPPS are
described by HCPCS code C1841 (Retinal prosthesis, includes all
internal and external components), HCPCS code C2623 (Catheter,
transluminal angioplasty, drug-coated, non-laser) and, beginning on
July 1, HCPCS code C2613 (Lung biopsy plug with delivery system). As
finalized in the CY 2015 OPPS/ASC final rule with comment period, HCPCS
code C1841 will no longer be eligible for pass-through

[[Page 39320]]

payment in the OPPS for CY 2016 (79 FR 66870 through 66871), and thus
the costs for devices described by HCPCS code C1841 would be packaged
into the costs of the procedures with which the devices are reported in
the hospital claims data used in the development of the OPPS relative
payment weights that will be used to establish ASC payment rates for CY
2016. Payment amounts for HCPCS codes C2623 and C2613 under the ASC
payment system would be contractor-priced for CY 2016. Consistent with
our current policy, we are proposing that 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 similar packaged
device costs.
Consistent with our current policy, we are proposing that certain
diagnostic tests within the medicine range of CPT codes (that is, 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) for which
separate payment is allowed under the OPPS are covered ancillary
services when they are integral to an ASC covered surgical procedure.
We would 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 (79 FR 66933
through 66934). As discussed in the CY 2015 OPPS/ASC final rule with
comment period (79 FR 66934), for CY 2015, we 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 added
this code to the list of ASC covered ancillary services and finalized
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 stated that we would expect the procedure
described by CPT code 91035 to be integral to the endoscopic attachment
of the electrode to the esophageal mucosa. There are no additional
codes that meet this criterion for CY 2016.
In summary, for CY 2016, we are proposing to continue the
methodologies for paying for covered ancillary services established for
CY 2015. Most covered ancillary services and their proposed payment
indicators for CY 2016 are listed in Addendum BB to this proposed rule
(which is available via the Internet on the CMS Web site).

E. New Technology Intraocular Lenses (NTIOLs)

1. NTIOL Application Cycle
Our process for reviewing applications to establish new classes of
NTIOLs is as follows:
Applicants submit their NTIOL requests for review to CMS
by the annual deadline. For a request to be considered complete, we
require submission of the information that is found in the guidance
document entitled ``Application Process and Information Requirements
for Requests for a New Class of New Technology Intraocular Lenses
(NTIOLs) or Inclusion of an IOL in an existing NTIOL Class'' posted on
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.
We announce annually, in the proposed rule updating the
ASC and OPPS payment rates for the following calendar year, a list of
all requests to establish new NTIOL classes accepted for review during
the calendar year in which the proposal is published. In accordance
with section 141(b)(3) of Pub. L. 103-432 and our regulations at 42 CFR
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--
++ Provide a list of determinations made as a result of our review
of all new NTIOL class requests and public comments;
++ When a new NTIOL class is created, 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.
++ Set the date of implementation of a payment adjustment in the
case of approval of an IOL as a member of a new NTIOL class
prospectively as of 30 days after publication of the ASC payment update
final rule, consistent with the statutory requirement.
++ 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 2016
We did not receive any requests for review to establish a new NTIOL
class for CY 2016 by March 2, 2015, the due date published in the CY
2015 OPPS/ASC final rule with comment period (79 FR 66935).
3. Payment Adjustment
The current payment adjustment for a 5-year period from the
implementation date of a new NTIOL class is $50 per lens. Since
implementation of the process for adjustment of payment amounts for
NTIOLs in 1999, we have not revised the payment adjustment amount, and
we are not proposing to revise the payment adjustment amount for CY
2016.
4. Proposed Newness Criterion
Since the inception of the NTIOL policy in 1999, there has not been
any specific criterion provided to evaluate the newness of a candidate
IOL for new technology payment under the ASC payment system. Absence of
any specific criterion means that, regardless of when an IOL was
originally FDA approved and available on the U.S. market, the IOL could
be established as a new NTIOL class if it satisfies the requirements of
42 CFR 416.195. We believe that because the NTIOL payment adjustment
under the statute was specifically created for IOLs that are ``new,''
the regulations at Sec. 416.195 should include a newness criterion.
Therefore, we are proposing that, beginning in CY 2016, any application
for a new NTIOL class must fulfill an additional criterion.
Specifically, we are proposing that, beginning January 1, 2016, an
NTIOL application will only be evaluated by CMS for a new IOL class if
the IOL has received initial FDA premarket approval within the 3 years
prior to the NTIOL application submission date. Without this proposed
requirement, there is nothing in the existing regulations that would
preclude an applicant from applying for and possibly being granted
NTIOL status, despite U.S. market entry many years ago, which would be
contrary to the plain meaning of ``new'' technology IOLs. We are
proposing to revise Sec. 416.195(a)(1) of the regulations to reflect
this proposal. We are inviting public comments on this proposal.

[[Page 39321]]

F. Proposed ASC Payment and Comment Indicators

1. Background
In addition to the payment indicators that we introduced in the
August 2, 2007 final rule, we also created final comment indicators for
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment
period (72 FR 66855). We created Addendum DD1 to define ASC payment
indicators that we use in Addenda AA and BB to provide payment
information regarding covered surgical procedures and covered ancillary
services, respectively, under the revised ASC payment system. The ASC
payment indicators in Addendum DD1 are intended to capture policy
relevant characteristics of HCPCS codes that may receive packaged or
separate payment in ASCs, such as whether they were on the ASC list of
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based, and the corresponding ASC payment
methodology; and their classification as separately payable ancillary
services, including radiology services, brachytherapy sources, OPPS
pass-through devices, corneal tissue acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that lists the ASC comment indicators.
The ASC comment indicators used in Addenda AA and BB to the proposed
rules and final rules with comment period serve to identify, for the
revised ASC payment system, the status of a specific HCPCS code and its
payment indicator with respect to the timeframe when comments will be
accepted. The comment indicator ``NI'' is used in the OPPS/ASC final
rule with comment period to indicate new codes for the next calendar
year for which the interim payment indicator assigned is subject to
comment. The comment indicator ``NI'' 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). In the CY
2016 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 2015 OPPS/
ASC final rule with comment period.
The ``CH'' comment indicator is used in Addenda AA and BB to this
proposed rule (which are available via the Internet on the CMS Web
site) to indicate that the payment indicator assignment has changed for
an active HCPCS code in the current year and the next calendar year; an
active HCPCS code is newly recognized as payable in ASCs; or an active
HCPCS code is discontinued at the end of the current calendar year. The
``CH'' comment indicators that are published in the final rule with
comment period are provided to alert readers that a change has been
made from one calendar year to the next, but do not indicate that the
change is subject to comment.
2. Proposed ASC Payment and Comment Indicators
For CY 2016 and subsequent years, we are proposing to continue
using the current comment indicators of ``NI'' and ``CH.'' For CY 2016,
there are new and revised Category I and III CPT codes, as well as new
and revised Level II HCPCS codes. Therefore, we are proposing that
Category I and III CPT codes that are new and revised for CY 2016 and
any new and existing Level II HCPCS codes with substantial revisions to
the code descriptors for CY 2016 compared to the CY 2015 descriptors
that are included in ASC Addendum AA and BB to this CY 2016 OPPS/ASC
proposed rule would be labeled with proposed new comment indicator
``NP'' to indicate that these CPT and Level II HCPCS codes are open for
comment as part of this CY 2016 OPPS/ASC proposed rule. Proposed new
comment indicator ``NP'' means a 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, proposed ASC
payment indicator; comments will be accepted on the proposed ASC
payment indicator for the new code.
For the CY 2016 update, we also are proposing to add ASC payment
indicator ``B5'' (Alternative code may be available; no payment made)
to ASC Addendum DD1 to this proposed rule (which is available via the
Internet on the CMS Web site). This code indicates that an alternative
code is recognized under the ASC payment system. We are proposing to
add this payment indicator for situations where we receive new and
revised Category I and Category III CPT codes too late for inclusion in
a proposed rule, as discussed in section XII.B.3.b. of this proposed
rule regarding our proposed process for accepting comments on new and
revised Category I and III CPT codes that are effective January 1. We
will respond to public comments and finalize their ASC assignment in
the CY 2016 OPPS/ASC final rule with comment period. We refer readers
to Addenda DD1 and DD2 to this proposed rule (which are available via
the Internet on the CMS Web site) for the complete list of ASC payment
and comment indicators proposed for the CY 2016 update.

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

1. Background
In the August 2, 2007 final rule (72 FR 42493), we established our
policy to base ASC relative payment weights and payment rates under the
revised ASC payment system on APC groups and the OPPS relative payment
weights. Consistent with that policy and the requirement at section
1833(i)(2)(D)(ii) of the Act that the revised payment system be
implemented so that it would be budget neutral, the initial ASC
conversion factor (CY 2008) was calculated so that estimated total
Medicare payments under the revised ASC payment system in the first
year would be budget neutral to estimated total Medicare payments under
the prior (CY 2007) ASC payment system (the ASC conversion factor is
multiplied by the relative payment weights calculated for many ASC
services in order to establish payment rates). That is, application of
the ASC conversion factor was designed to result in aggregate Medicare
expenditures under the revised ASC payment system in CY 2008 being
equal to aggregate Medicare expenditures that would have occurred in CY
2008 in the absence of the revised system, taking into consideration
the cap on ASC payments in CY 2007 as required under section
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the
system budget neutral in subsequent calendar years (72 FR 42532 through
42533; 42 CFR 416.171(e)).
We note that we consider the term ``expenditures'' in the context
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of
the Act to mean expenditures from the Medicare Part B Trust Fund. We do
not consider expenditures to include beneficiary coinsurance and
copayments. This distinction was important for the CY 2008 ASC budget
neutrality model that considered payments across the OPPS, ASC, and
MPFS payment systems. However, because coinsurance is almost always 20
percent for ASC services, this interpretation of expenditures has
minimal impact for subsequent budget neutrality adjustments calculated
within the revised ASC payment system.
In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857
through 66858), we set out a step-by-step illustration of the final
budget

[[Page 39322]]

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, 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. of the proposed rule), and certain diagnostic tests
within the medicine range that are covered ancillary services, 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.
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. Therefore, 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.
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.) In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through
49963), we implemented the use of the CBSA delineations issued by OMB
in OMB Bulletin 13-01 for the IPPS hospital wage index beginning in FY
2015. In the CY 2015 OPPS/ASC final rule with comment period (79 FR
66937), we finalized a one-year transition policy that we applied in CY
2015 for all ASCs that experienced any decrease in their actual wage
index exclusively due to the implementation of the new OMB
delineations. This transition does not apply in CY 2016.
For CY 2016, the proposed CY 2016 ASC wage indexes fully reflect
the new OMB labor market area delineations.
We note that, in certain instances, there might be urban or rural
areas for which there is no IPPS hospital that has wage index data that
could 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).
2. Proposed Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2016 and Future
Years
We update the ASC relative payment weights each year using the
national OPPS relative payment weights (and MPFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly
scale the ASC relative payment weights for each update year to make
them budget neutral (72 FR 42533). Consistent with our established
policy, we are proposing to scale the CY 2016 relative payment weights
for ASCs according to the following method. Holding ASC utilization,
the ASC conversion factor, and the mix of services constant from CY
2014, we are proposing to compare the total payment using the CY 2015
ASC relative payment weights with the total payment using the CY 2016
ASC relative payment weights to take into account the changes in the
OPPS relative payment weights between CY 2015 and CY 2016. We are
proposing to use the ratio of CY 2015 to CY 2016 total payment (the
weight scaler) to scale the ASC relative payment weights for CY 2016.
The proposed CY 2016 ASC scaler is 0.9180 and scaling would apply to
the ASC relative payment weights of the covered surgical procedures,
covered ancillary radiology services, and certain diagnostic tests
within the medicine range of CPT codes which are covered ancillary
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

[[Page 39323]]

budget neutrality adjustments. At the time of this proposed rule, we
have available 98 percent of CY 2014 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 2014 ASC claims by ASC and by HCPCS
code. We used the National Provider Identifier for the purpose of
identifying unique ASCs within the CY 2014 claims data. We used the
supplier zip code reported on the claim to associate State, county, and
CBSA with each ASC. This file, available to the public as a supporting
data file for this proposed rule, is posted on the CMS Web site at:
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. Updating the ASC Conversion Factor
Under the OPPS, we typically apply a budget neutrality adjustment
for provider level changes, most notably a change in the wage index
values for the upcoming year, to the conversion factor. Consistent with
our final ASC payment policy, for the CY 2016 ASC payment system and
subsequent years, we are proposing to calculate and apply a budget
neutrality adjustment to the ASC conversion factor for supplier level
changes in wage index values for the upcoming year, just as the OPPS
wage index budget neutrality adjustment is calculated and applied to
the OPPS conversion factor. For CY 2016, we calculated this proposed
adjustment for the ASC payment system by using the most recent CY 2014
claims data available and estimating the difference in total payment
that would be created by introducing the proposed CY 2016 ASC wage
indexes. Specifically, holding CY 2014 ASC utilization and service-mix
and the proposed CY 2016 national payment rates after application of
the weight scaler constant, we calculated the total adjusted payment
using the CY 2015 ASC wage indexes (which reflect the new OMB
delineations and include any applicable transition period) and the
total adjusted payment using the proposed CY 2016 ASC wage indexes
(which would fully reflect the new OMB delineations). 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 2015 ASC wage indexes to the total adjusted payment
calculated with the proposed CY 2016 ASC wage indexes and applied the
resulting ratio of 1.0014 (the proposed CY 2016 ASC wage index budget
neutrality adjustment) to the CY 2015 ASC conversion factor to
calculate the proposed CY 2016 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. Therefore,
the statute 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 examples of how the MFP adjustment is applied to the
ASC payment system.
For this proposed rule, based on IHS Global Insight's (IGI's) 2015
first quarter forecast with historical data through 2014 fourth
quarter, for the 12-month period ending with the midpoint of CY 2016,
the CPI-U update is projected to

[[Page 39324]]

be 1.7 percent. Also, based on IGI's 2015 first quarter forecast, the
MFP adjustment for the period ending with the midpoint of CY 2016 is
projected to be 0.6 percent. 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).
As we discussed in the CY 2011 MPFS final rule with comment period,
section 1833(i)(2)(D)(v) of the Act, as added by section 3401(k) of the
Affordable Care Act, requires that any annual update to the ASC payment
system after application of the quality adjustment 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 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). Historical published data on the
measure of MFP is available on the Bureau of Labor Statistics' (BLS)
Web site at http://www.bls.gov/mfp.
MFP is derived by subtracting the contribution of labor and capital
inputs growth from output growth. The projection of the components of
MFP are currently produced by IHS Global Insight, Inc. (IGI), a
nationally recognized economic forecasting firm with which CMS
contracts to forecast the components of MFP. To generate a forecast of
MFP, IGI replicates the MFP measure calculated by the BLS using a
series of proxy variables derived from IGI's U.S. macroeconomic models.
In the CY 2011 and CY 2012 MPFS final rules with comment period (75 FR
73394 through 73396, 76 FR 73300 through 73301), we set forth the
current methodology to generate a forecast of MFP. We identified each
of the major MFP component series employed by the BLS to measure MFP as
well as provided the corresponding concepts determined to be the best
available proxies for the BLS series.
Beginning with the CY 2016 rulemaking cycle, the MFP adjustment is
calculated using a revised series developed by IGI to proxy the
aggregate capital inputs. Specifically, IGI has replaced the Real
Effective Capital Stock used for Full Employment GDP with a forecast of
BLS aggregate capital inputs recently developed by IGI using a
regression model. This series provides a better fit to the BLS capital
inputs, as measured by the differences between the actual BLS capital
input growth rates and the estimated model growth rates over the
historical time period. Therefore, we are using IGI's most recent
forecast of the BLS capital inputs series in the MFP calculations
beginning with the CY 2016 rulemaking cycle. A complete description of
the MFP projection methodology is available on CMS Web site at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. Although
we discuss the IGI changes to the MFP proxy series in this proposed
rule, in the future, when IGI makes changes to the MFP methodology, we
will announce them on our Web site rather than in the annual
rulemaking.
For CY 2016, we are proposing to reduce the CPI-U update of 1.7
percent by the MFP adjustment of 0.6 percentage point, resulting in an
MFP-adjusted CPI-U update factor of 1.1 percent for ASCs meeting the
quality reporting requirements. Therefore, we are proposing to apply a
1.1 percent MFP-adjusted CPI-U update factor to the CY 2015 ASC
conversion factor for ASCs meeting the quality reporting requirements.
The ASCQR Program affected payment rates beginning in CY 2014 and,
under this program, there is a 2.0 percentage point reduction to the
CPI-U for ASCs that fail to meet the ASCQR Program requirements. We are
proposing to reduce the CPI-U update of 1.7 percent by 2.0 percentage
points for ASCs that do not meet the quality reporting requirements and
then apply the 0.6 percentage point MFP reduction. Therefore, we are
proposing to apply a -0.9 percent quality reporting/MFP-adjusted CPI-U
update factor to the CY 2015 ASC conversion factor for ASCs not meeting
the quality reporting requirements. We also are proposing that if more
recent data are subsequently available (for example, a more recent
estimate of the CY 2016 CPI-U update and MFP adjustment), we would use
such data, if appropriate, to determine the CY 2016 ASC update for the
final rule with comment period.
For CY 2016, we also are proposing to adjust the CY 2015 ASC
conversion factor ($44.058) by the proposed wage index budget
neutrality factor of 1.0014 in addition to the MFP-adjusted CPI-U
update factor of 1.1 percent discussed above, which results in a
proposed CY 2016 ASC conversion factor of $44.605 for ASCs meeting the
quality reporting requirements. For ASCs not meeting the quality
reporting requirements, we are proposing to adjust the CY 2015 ASC
conversion factor ($44.058) by the proposed wage index budget
neutrality factor of 1.0014 in addition to the quality reporting/MFP-
adjusted CPI-U update factor of -0.9 percent discussed above, which
results in a proposed CY 2016 ASC conversion factor of $43.723.
We are inviting public comment on these proposals.
3. Display of Proposed CY 2016 ASC Payment Rates
Addenda AA and BB to this proposed rule (which are available via
the Internet on the CMS Web site) display the proposed updated ASC
payment rates for CY 2016 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 proposed rates under the ASC standard ratesetting methodology and
the MPFS proposed rates, the proposed payment indicators and rates set
forth in this proposed rule are based on a comparison using the
proposed MPFS rates that would be effective January 1, 2016. For a
discussion of the MPFS rates, we refer readers to the CY 2016 MPFS
proposed rule.
The proposed payment rates included in these addenda reflect the
full ASC payment update and not the reduced payment update used to
calculate payment rates for ASCs not meeting the quality reporting
requirements under the ASCQR Program. These addenda contain several
types of information related to the proposed CY 2016 payment rates.
Specifically, in Addendum AA, a ``Y'' in the column titled ``Proposed
to be Subject to Multiple Procedure Discounting'' indicates that the
surgical procedure would be subject to the multiple procedure payment
reduction policy. As discussed in the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66829 through 66830), most covered surgical
procedures are subject to a 50-percent reduction in the ASC payment for
the lower-paying procedure when more than one procedure is performed in
a single operative session.
Display of the comment indicator ``CH'' in the column titled
``Comment Indicator'' indicates a change in payment policy for the item
or service, including identifying discontinued HCPCS codes, designating
items or services newly payable under the ASC payment system, and
identifying items or services with changes in the ASC payment indicator
for CY 2016. Display of the comment indicator ``NI'' in the column
titled ``Comment Indicator'' indicates that the code is new (or
substantially revised) and that

[[Page 39325]]

comments will be accepted on the interim APC assignment for the new
code. Display of the comment indicator ``NP'' in the column titled
``Comment Indicator'' indicates that the code is new (or substantially
revised) and that comments will be accepted on the proposed assignments
for the new code.
The values displayed in the column titled ``Proposed CY 2016
Payment Weight'' are the proposed relative payment weights for each of
the listed services for CY 2016. The proposed relative payment weights
for all covered surgical procedures and covered ancillary services
where the ASC payment rates are based on OPPS relative payment weights
were scaled for budget neutrality. Therefore, scaling was not applied
to the device portion of the device-intensive procedures, services that
are paid at the MPFS nonfacility PE RVU-based amount, separately
payable covered ancillary services that have a predetermined national
payment amount, such as drugs and biologicals and brachytherapy sources
that are separately paid under the OPPS, or services that are
contractor-priced or paid at reasonable cost in ASCs.
To derive the proposed CY 2016 payment rate displayed in the
``Proposed CY 2016 Payment Rate'' column, each ASC payment weight in
the ``Proposed CY 2016 Payment Weight'' column was multiplied by the
proposed CY 2016 conversion factor of $44.605. The proposed 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.G.2.b. of this
proposed rule).
In Addendum BB, there are no relative payment weights displayed in
the ``Proposed CY 2016 Payment Weight'' column for items and services
with predetermined national payment amounts, such as separately payable
drugs and biologicals. The ``Proposed CY 2016 Payment'' column displays
the proposed CY 2016 national unadjusted ASC payment rates for all
items and services. The proposed CY 2016 ASC payment rates listed in
Addendum BB for separately payable drugs and biologicals are based on
ASP data used for payment in physicians' offices in April 2015.
Addendum EE provides the HCPCS codes and short descriptors for
surgical procedures that are proposed to be excluded from payment in
ASCs for CY 2016.

XIII. Requirements for the Hospital Outpatient Quality Reporting (OQR)
Program

A. Background

1. Overview
CMS seeks to promote higher quality and more efficient healthcare
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 (LTCH QRP) 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 several value-based purchasing
programs, including the Hospital Value-Based Purchasing (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 the 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 the 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.

B. Hospital OQR Program Quality Measures

1. Considerations in the Selection of Hospital OQR Program Quality
Measures
We refer readers to the CY 2012 OPPS/ASC final rule with comment
period (76 FR 74458 through 74460) for a detailed discussion of the
priorities we consider for the Hospital OQR Program quality measure
selection. We are not proposing any changes to our measure selection
policy.
2. Retention of Hospital OQR Program Measures Adopted in Previous
Payment Determinations
We previously adopted a policy to retain measures from the previous
year's Hospital OQR Program measure set for subsequent years' measure
sets in the CY 2013 OPPS/ASC final rule with comment period (77 FR
68471). Quality measures adopted in a previous year's rulemaking are
retained in the Hospital OQR Program for use in subsequent years unless
otherwise specified. We refer readers to that rule for more
information. We are not proposing any

[[Page 39326]]

changes to our retention policy for previously adopted measures.
3. Removal of Quality Measures From the Hospital OQR Program Measure
Set
a. Considerations in Removing Quality Measures From the Hospital OQR
Program
In the FY 2010 IPPS/LTCH PPS final rule for the Hospital IQR
Program, 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. We are not proposing any changes to our policy to immediately
remove measures as a result of patient safety concerns.
In the CY 2013 OPPS/ASC final rule with comment period, we
finalized a set of criteria for determining whether to remove measures
from the Hospital OQR Program. We refer readers to the CY 2013 OPPS/ASC
final rule with comment period (77 FR 68472 through 68473) for a
discussion of our policy on removal of quality measures from the
Hospital OQR Program. The benefits of removing a measure from the
Hospital OQR Program will be assessed on a case-by-case basis (79 FR
66941 through 66942). We note that, under this case-by-case approach, a
measure will not be removed solely on the basis of meeting any specific
criterion.
The following criteria will be used to determine whether to remove
a measure from the Hospital OQR Program: (i) Measure performance among
hospitals is so high and unvarying that meaningful distinctions and
improvements in performance can no longer be made (``topped-out''
measures); (ii) performance or improvement on a measure does not result
in better patient outcomes; (iii) a measure does not align with current
clinical guidelines or practice; (iv) the availability of a more
broadly applicable (across settings, populations, or conditions)
measure for the topic; (v) the availability of a measure that is more
proximal in time to desired patient outcomes for the particular topic;
(vi) the availability of a measure that is more strongly associated
with desired patient outcomes for the particular topic; and (vii)
collection or public reporting of a measure leads to negative
unintended consequences such as patient harm. We are not proposing any
changes to our measure removal policy.
b. Criteria for Removal of ``Topped-Out'' Measures
As provided above, quality measures may be removed from the
Hospital OQR Program when they are ``topped-out.'' We refer readers to
CY 2015 OPPS/ASC final rule with comment period where we finalized our
proposal to refine the criteria for determining when a measure is
``topped-out'' (79 FR 66942). We are not proposing any changes to our
``topped-out'' criteria policy.
4. Hospital OQR Program Quality Measures Adopted in Previous Rulemaking
The previously finalized measure set for the Hospital OQR Program
CY 2017 payment determination and subsequent years is listed below.

Hospital OQR Program Measure Set Previously Adopted 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: 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 ED
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: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
** Measure we are proposing for removal.
*** Measure voluntarily collected as set forth in section XIII.D.3.b. of
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
through 6947).

[[Page 39327]]

In the CY 2015 OPPS/ASC final rule with comment period, we
finalized one new measure beginning with the CY 2018 payment
determination: OP-32: Facility 7-Day Risk-Standardized Hospital Visit
Rate after Outpatient Colonoscopy (79 FR 66948 through 66955). The
previously finalized measure set for the Hospital OQR Program CY 2018
payment determination and subsequent years is listed below. We note
that we are proposing one new measure for the CY 2018 payment
determination and subsequent years in section XIII.B.6.a. of this
proposed rule.

Hospital OQR Program Measure Set Previously Adopted 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: 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 ED
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.***
2539.......................... OP-32: Facility 7-Day Risk-Standardized
Hospital Visit Rate after Outpatient
Colonoscopy.
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
** Measure we are proposing for removal.
*** Measure voluntarily collected as set forth in section XIII.D.3.b. of
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
through 66947).

5. Proposed Hospital OQR Program Quality Measure for Removal for CY
2017 Payment Determination and Subsequent Years
We are proposing to remove one measure from the Hospital OQR
Program quality measure set beginning with the CY 2017 payment
determination and subsequent years: OP-15: Use of Brain Computed
Tomography (CT) in the Emergency Department for Atraumatic Headache.
The inclusion of OP-15 in the Hospital OQR Program consistently has
generated concerns from stakeholders since its adoption in the CY 2011
OPPS/ASC final rule with comment period (75 FR 72077 through 72082). 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 68478 and 78 FR 75096). In
addition, as we noted in the CY 2015 OPPS/ASC final rule with comment
period (79 FR 66963), 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 (79 FR 66963).
Since deferring the measure however, we continued to evaluate OP-
15. In CY 2011, we conducted a dry run of the measure and received many
suggestions for refinements to the measure. Our technical expert panel
examined the suggestions we received regarding the measure during the
dry run as well as the comments we received during the maintenance
process for this measure. Based on these comments, CMS refined the
measure specifications for OP-15 to address most stakeholder concerns.
Nevertheless, as discussed below, given the continued inconsistency of
current clinical practice guidelines on which the measure is based, we
are proposing to remove OP-15 for the CY 2017 payment determination and
subsequent years.
Based on our analysis, OP-15 meets the following criterion for
removal: (iii) The measure does not align with current clinical
guidelines or practice. We refer readers to the CY 2013 OPPS/ASC final
rule with comment period (77 FR 68472) and the discussion above for a
list of criteria we consider when determining whether to remove quality
measures from the Hospital OQR Program. In peer-reviewed literature,
headache guidelines have either excluded older adults or recommended a
lower threshold for the use of CT

[[Page 39328]]

scans.\1\ Furthermore, stakeholders have expressed concern that this
measure is influenced significantly by case mix, patient severity, and
clinician behavior, and thus, fails to represent appropriateness or
efficiency accurately.\2\ Based upon guidelines for use of CT scans
published in peer-reviewed literature, we believe that OP-15,\3\ as
currently adopted in the Hospital OQR Program, does not align with the
most updated clinical guidelines or practice, satisfying removal
criterion (iii).
---------------------------------------------------------------------------

\1\ Available at: http://www.acepnow.com/article/proposed-measures-ct-scans-cause-concern/2/.
\2\ Ibid.
\3\ Hartsell W, et al. Randomized Trial of Short- Versus Long-
Course Radiotherapy for Palliation of Painful Bone Metastases.
Journal of the National Cancer Institute, 2005: 97 (11): 798-804.
---------------------------------------------------------------------------

For the reason stated above, we are proposing to remove OP-15: Use
of Brain Computed Tomography (CT) in the Emergency Department for
Atraumatic Headache from the Hospital OQR Program beginning with the CY
2017 payment determination. Set out in the table below is the measure
we are proposing to remove for the CY 2017 payment determination and
subsequent years.

Hospital OQR Program Measure Proposed for Removal for the CY 2017
Payment Determination and Subsequent Years
------------------------------------------------------------------------
NQF No. Measure
------------------------------------------------------------------------
N/A........................... OP-15: Use of Brain Computed Tomography
(CT) in the Emergency Department for
Atraumatic Headache.
------------------------------------------------------------------------

We are inviting public comment on this proposal.
6. Proposed New Hospital OQR Program Quality Measures for the CY 2018
and CY 2019 Payment Determinations and Subsequent Years
We are proposing to adopt a total of two new measures for the
Hospital OQR Program: (1) A Web-based quality measure for the CY 2018
payment determination and subsequent years; and (2) a Web-based quality
measure for the CY 2019 payment determination and subsequent years.
These measures are discussed in detail below.
a. Proposed New Quality Measure for the CY 2018 Payment Determination
and Subsequent Years: OP-33: External Beam Radiotherapy (EBRT) for Bone
Metastases (NQF #1822)
Bone metastases are a common manifestation of malignancy. Some
cancer types have a bone metastasis prevalence as high as 70 to 95
percent.\4\ EBRT is a widely used modality \5\ to provide pain relief
in 50 to 80 percent of patients with painful bone metastases.\6\ In
October 2009, the American Society for Radiation Oncology (ASTRO)
organized a Task Force to perform an assessment of existing
recommendations in order to address a lack of palliative radiotherapy
guidelines. Based on a review of the literature, the Task Force
recommended the following EBRT dosing schedules for patients with
previously unirradiated painful bone metastases: 30 Gy over the course
of 10 fractions; 24 Gy over the course of 6 fractions; 20 Gy over the
course of 5 fractions; and a single 8 Gy fraction.\7\ Despite the
recommendations, the actual doses applied for EBRT continue to include
dosing schedules as high as 25 fractions.\8\ An international survey of
radiation oncologists, of which \3/4\ of the respondents were members
of ASTRO, found more than 100 different dose schedules in use.\9\
Measure testing by ASTRO noted nearly a 20 percent performance gap.
Many studies support the conclusion that shorter EBRT schedules produce
similar pain relief outcomes when compared to longer EBRT schedules,
and that patients prefer shorter EBRT schedules because of their
convenience, increased tolerability, and reduced side effects.\10\ In
addition, the ASTRO Task Force found that the frequency and severity of
side effects associated with a single fraction were the same or less
than those associated with multiple fraction regimens, indicating that
shorter treatment schedules may be preferable.\11\
---------------------------------------------------------------------------

\4\ Coleman RE. Metastatic bone disease: clinical features,
pathophysiology and treatment strategies. Cancer Treat Rev.
2001;27:165-176.
\5\ Chow E, Zeng L, Salvo N, Dennis K, Tsao M, Lutz S. Update on
the Systematic Review of Palliative Radiotherapy Trials for Bone
Metastases. Clin Onc. 2012;24:112-124. doi:10.1016/
j.clon.2011.11.004
\6\ Lutz S, Berk L, Chang E, et al. Palliative radiotherapy for
bone metastases: An ASTRO evidence-based guideline. Int J Radiat
Oncol Biol Phys. 2011;79(4):965-976.
\7\ Ibid.
\8\ Available at: http://www.qualityforum.org/Measure_Evaluation_Form/Cancer_Project/1822.aspx.
\9\ Fairchild A, Barnes E, Ghosh S, et al. International
Patterns of Practice in Palliative Radiotherapy for Painful Bone
Metastases: Evidence-Based Practice? Int J Radiat Oncol Biol Phys.
2009;75(5):1501-1510.
\10\ Available at: http://www.qualityforum.org/Measure_Evaluation_Form/Cancer_Project/1822.aspx.
\11\ Lutz S, Berk L, Chang E, et al. Palliative radiotherapy for
bone metastases: An ASTRO evidence-based guideline. Int J Radiat
Oncol Biol Phys. 2011;79(4):965-976.
---------------------------------------------------------------------------

To address concerns associated with unnecessary exposure to
radiation and a desire for shorter and less painful treatment options,
we are proposing to adopt one new Web-based quality measure for the CY
2018 payment determination and subsequent years: OP-33: External Beam
Radiotherapy for Bone Metastases (NQF #1822). This measure assesses the
``[p]ercentage of patients (all-payer) with painful bone metastases and
no history of previous radiation who receive EBRT with an acceptable
dosing schedule.'' \12\ The measure numerator includes all patients
with painful bone metastases and no previous radiation to the same site
who receive EBRT with any of the following recommended fractionation
schemes: 30Gy/10fxns; 24Gy/6fxns; 20Gy/5fxns; or 8Gy/1fxn. The measure
denominator includes all patients with painful bone metastases and no
previous radiation to the same site who receive EBRT. The following
patients are excluded from the denominator: patients who have had
previous radiation to the same site; patients with femoral axis
cortical involvement greater than 3 cm in length; patients who have
undergone a surgical stabilization procedure; and patients with spinal
cord compression, cauda equina compression, or radicular pain. Detailed
specifications for this proposed measure may be found at: https://www.qualityforum.org/QPS/1822. In the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50278 through 50279), the PCHQR Program adopted the EBRT measure
for the FY 2017 program and subsequent years.
---------------------------------------------------------------------------

\12\ Available at: http://www.qualityforum.org/Measure_Evaluation_Form/Cancer_Project/1822.aspx.
---------------------------------------------------------------------------

We believe that this measure will reduce the rate of EBRT services
overuse, support our commitment to promoting patient safety, and
support the NQS priority of Making Care Safer. Specifically, the
proposed External Beam Radiotherapy for Bone Metastases

[[Page 39329]]

measure seeks to address the performance gap in treatment variation,
ensure appropriate use of EBRT, and prevent the overuse of radiation
therapy. We believe that this measure is necessary to support patient
preferences for shorter EBRT schedules as well as to ensure patient
safety, given that shorter treatment courses show similar or fewer side
effects while producing similar clinical outcomes. The measure also
takes into account the effective schedule for relieving pain from bone
metastases, patient preferences and time and cost effectiveness.\13\
---------------------------------------------------------------------------

\13\ Measure Submission and Evaluation Worksheet. Available at:
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=70374.
---------------------------------------------------------------------------

In compliance with section 1890A(a)(2) of the Act, this measure was
included in the publicly available document: ``List of Measures under
Consideration for December 1, 2014.'' \14\ The MAP, a multi-stakeholder
group convened by the NQF, reviews the measures under consideration for
the Hospital OQR Program, among other Federal programs, and provides
input on those measures to the Secretary. The MAP's 2015
recommendations for quality measures under consideration are captured
in the ``Spreadsheet of MAP 2015 Final Recommendations.'' \15\
---------------------------------------------------------------------------

\14\ ``List of Measures under Consideration for December 1,
2014.'' Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78318.
\15\ ``Spreadsheet of MAP 2015 Final Recommendations.''
Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
---------------------------------------------------------------------------

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. The MAP supported this proposed
measure, stating that ``External beam radiation can help provide
patients with pain relief . . . this measure has a demonstrated
performance gap and would begin to expand cancer care measurement to
settings beyond the PPS-exempt cancer hospitals.'' \16\
---------------------------------------------------------------------------

\16\ Ibid.
---------------------------------------------------------------------------

Furthermore, we believe that this measure meets the requirement
under section 1833(t)(17)(C)(i) of the Act, which 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 it is NQF-endorsed and recommended
by the MAP.
We are inviting public comment on the proposal to include the
following measure in the Hospital OQR Program for the CY 2018 payment
determination and subsequent years.

------------------------------------------------------------------------
Proposed measure for the CY 2018
NQF # payment determination and subsequent
years
------------------------------------------------------------------------
1822.............................. OP-33: External Beam Radiotherapy
for Bone Metastases
------------------------------------------------------------------------

The proposed and previously finalized measures for CY 2018 payment
determination and subsequent years are listed below.

Proposed Hospital OQR Program Measure Set for the CY 2018 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.
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-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.* *
2539.......................... OP-32: Facility 7-Day Risk-Standardized
Hospital Visit Rate after Outpatient
Colonoscopy.
1822.......................... OP-33: External Beam Radiotherapy for
Bone Metastases.* * *
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.

[[Page 39330]]

* * Measure voluntarily collected as set forth in section XIII.D.3.b. of
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
through 66947).
* * * New measure proposed for the CY 2018 payment determination and
subsequent years.

b. Proposed New Hospital OQR Program Quality Measure for the CY 2019
Payment Determination and Subsequent Years: OP-34: Emergency Department
Transfer Communication (EDTC) (NQF #0291)
Communication problems significantly contribute to adverse events
in hospitals, accounting for 65 percent of sentinel events (patient
safety events not primarily related to the natural course of the
patient's illness or underlying condition that result in death,
permanent harm, or severe temporary harm where intervention is required
to sustain life) tracked by The Joint Commission.\17\ Additionally,
information deficits frequently result when patients transfer between
hospitals and primary care physicians in the community \18\ and between
hospitals and long-term care facilities.\19\ According to patient
safety studies,\20\ the highest percentage of preventable and negligent
adverse events within a hospital occur in the Emergency Department.\21\
The prevention of medical errors in the Emergency Department setting is
gaining attention throughout the nation,\22\ but performance measures
for Emergency Department care are lacking.\23\
---------------------------------------------------------------------------

\17\ Available at: http://www.jointcommission.org/Improving_Americas_Hospitals_The_Joint_Commissions_Annual_Report_on_Quality_and_Safety_-_2007/..
\18\ Kripalani, S., LeFevre, F., Phillips, C. et al. Deficits in
Communication and Information Transfer between Hospital-Based and
Primary Care Physicians: Implications for Patient Safety and
Continuity of Care. JAMA 297(8):831-841, 2007.
\19\ Cortes T., Wexler S. and Fitzpatrick J. The transition of
elderly patients between hospitals and nursing homes. Improving
nurse-to-nurse communication. Journal of Gerontological Nursing.
30(6):10-5, 2004.
\20\ Leape, L., Brennan, T., Laird, N. et al. The Nature of
Adverse Events in Hospitalized Patients. Results of the Harvard
Medical Practice Study II. New England Journal of Medicine 324:377-
384, 1991.
\21\ Thomas, E., Studdert, D., Burstin, H. et al. Incidence and
Types of Adverse Events and Negligent Care in Utah and Colorado.
Medical Care 38:261-271, 2000.
\22\ Schenkel, S. Promoting Patient Safety and Preventing
Medical Error in Emergency Departments. Academic Emergency Medicine
7:1204-1222, 2000.
\23\ Welch, S., Augustine, J., Camago, C. and Reese, C.
Emergency Department Performance Measures and Benchmarking Summit.
Academic Emergency Medicine, 13(10):1074-1080, 2006.
---------------------------------------------------------------------------

Effective and timely communication of a patient's clinical status
and other relevant information at the time of transfer from the
hospital is essential for supporting appropriate continuity of care.
Establishment of an effective transition from one treatment setting to
another is enhanced by providing the receiving providers and facilities
with sufficient information regarding treatment during hospitalization.
Studies have shown that readmissions can be prevented by providing
detailed, personalized information about patients at the time they are
transferred to home or any other site.\24\
---------------------------------------------------------------------------

\24\ Jack BW, Chetty VK, Anthony D, et al. A reengineered
hospital discharge program to decrease rehospitalization. Ann Intern
Med 2009; 150:178-187.
---------------------------------------------------------------------------

To address concerns associated with care when patients are
transferred from Emergency Departments to other facilities, we are
proposing to adopt one new Web-based quality measure for the Hospital
OQR Program effective with the CY 2019 payment determination and
subsequent years: OP-34: Emergency Department Transfer Communication
(EDTC) (NQF #0291).
We are proposing to implement this measure beginning with the CY
2019 payment determination and subsequent years instead of the CY 2018
payment determination and subsequent years in order to give hospitals
adequate time to implement the proposed measure. We believe hospitals
will require approximately three to six months in order to familiarize
themselves with the implementation protocol and tools related to the
EDTC measure and to make associated improvements prior to the first
reporting deadline. If we were to propose and finalize this measure
beginning with the CY 2018 payment determination, we believe that
hospitals may not have adequate time to put the processes and
procedures in place necessary to collect this measure.
The EDTC measure captures the ``[p]ercentage of patients
transferred to another healthcare facility whose medical record
documentation indicated that administrative and clinical information
was communicated to the receiving facility in an appropriate time
frame.'' \25\ This measure is designed to prevent gaps in care
transitions caused by inadequate or insufficient information that lead
to avoidable adverse events. Such events cost CMS approximately $15
billion due in part to avoidable patient readmissions.\26\ The measure
has been rigorously peer reviewed and extensively tested with field
tests from 2004 to 2014 across 16 States in 249 hospitals.\27\
---------------------------------------------------------------------------

\25\ Available at: http://www.qualityforum.org/QPS/0291.
\26\ Medicare Payment Advisory Commission. Promoting Greater
Efficiency in Medicare. June 2007. Available at: http://www.medpac.gov/documents/reports/Jun07_EntireReport.pdf.
\27\ Refining and Field Testing a Relevant Set of Quality
Measures for Rural Hospitals Final Report June 30, 2005. Available
at: http://rhrc.umn.edu/wp-content/files_mf/rh_ruralmeasuresfinalreport_063005.pdf.
---------------------------------------------------------------------------

The measure consists of seven subcomponents: (a) Administrative
data; (b) patient information; (c) vital signs; (d) medication; (e)
physician information; (f) nursing information; and (g) procedure and
test results. The subcomponents are further comprised of a total of
twenty-seven elements, illustrated in the table below. We note that the
EDTC measure does not require hospitals to submit patient data on each
of these elements; but rather, hospitals would be required to answer
yes or no as to whether these clinical indicators were recorded and
communicated to the receiving facility prior to departure (Subsection
1) or within 60 minutes of transfer (Subsections 2 through 7).

Numerator Elements for OP-34: Emergency Department Transfer
Communication
(EDTC) Measure (NQF #0291)
------------------------------------------------------------------------

------------------------------------------------------------------------
Administrative communication (EDTC-Subsection 1)......................
------------------------------------------------------------------------
Nurse to nurse communication.
Physician to physician communication.
------------------------------------------------------------------------
Patient information (EDTC-Subsection 2)...............................
------------------------------------------------------------------------
Name.

[[Page 39331]]

Address.
Age.
Gender.
Significant others contact information.
Insurance.
------------------------------------------------------------------------
Vital signs (EDTC-Subsection 3).......................................
------------------------------------------------------------------------
Pulse.
Respiratory rate.
Blood pressure.
Oxygen saturation.
Temperature.
Glasgow score or other neuro assessment for
trauma, cognitively altered or neuro patients
only.
------------------------------------------------------------------------
Medication information (EDTC-Subsection 4)............................
------------------------------------------------------------------------
Medications administered in ED.
Allergies.
Home medications.
------------------------------------------------------------------------
Physician or practitioner generated information (EDTC-Subsection 5)...
------------------------------------------------------------------------
History and physical.
Reason for transfer and/or plan of care.
------------------------------------------------------------------------
Nurse generated information (EDTC-Subsection 6).......................
------------------------------------------------------------------------
Assessments/interventions/response.
Sensory Status (formerly Impairments).
Catheters.
Immobilizations.
Respiratory support.
Oral limitations.
------------------------------------------------------------------------
Procedures and tests (EDTC-Subsection 7)..............................
------------------------------------------------------------------------
Tests and procedures done.
Tests and procedure results sent.
------------------------------------------------------------------------

We are proposing to use a scoring methodology by which the facility
score is reported as the percentage (0-100 percent) of all cases with a
perfect score of ``7.'' To calculate this score, hospitals assign a
value of ``0'' or ``1'' to each of the seven subcomponents for each
case. In order to achieve a value of ``1'' for each subcomponent, the
hospital must have recorded and transferred patient data pertaining to
all of the elements that comprise that particular subcomponent; if data
for any element fails to be recorded or transferred, then the value
assigned to that subcomponent would be ``0.'' Next, subcomponent scores
are added together, for a total ranging from ``0'' to ``7'' per case.
Finally, the facility score is calculated by adding all of the cases
that achieved a perfect score of ``7'' and dividing that number by the
total number of cases to reflect the percentage of all cases that
received a perfect score.
Example 1 below illustrates a case in which all patient data
elements were recorded and transferred to the receiving facility.

Example 1 of Calculation for OP-34: Emergency Department Transfer
Communication
(EDTC) Measure (NQF #0291) by Case
------------------------------------------------------------------------

------------------------------------------------------------------------
Administrative communication (EDTC-Subsection 1)
------------------------------------------------------------------------
Y..................... Nurse to nurse communication.
Y..................... Physician to physician communication.
------------------------------------------------------------------------
Sub-1 Score = 1
------------------------------------------------------------------------
Patient information (EDTC-Subsection 2)
------------------------------------------------------------------------
Y..................... Name.
Y..................... Address.
Y..................... Age.
Y..................... Gender.
Y..................... Significant others contact information.
Y..................... Insurance.
------------------------------------------------------------------------

[[Page 39332]]

Sub-2 Score = 1
------------------------------------------------------------------------
Vital signs (EDTC-Subsection 3)
------------------------------------------------------------------------
Y..................... Pulse.
Y..................... Respiratory rate.
Y..................... Blood pressure.
Y..................... Oxygen saturation.
Y..................... Temperature.
Y..................... Glasgow score or other neuro assessment for
trauma, cognitively altered or neuro patients
only.
------------------------------------------------------------------------
Sub-3 Score = 1
------------------------------------------------------------------------
Medication information (EDTC-Subsection 4)
------------------------------------------------------------------------
Y..................... Medications administered in ED.
Y..................... Allergies.
Y..................... Home medications.
------------------------------------------------------------------------
Sub-4 Score = 1
------------------------------------------------------------------------
Physician or practitioner generated information (EDTC-Subsection 5)
------------------------------------------------------------------------
Y..................... History and physical.
Y..................... Reason for transfer and/or plan of care.
------------------------------------------------------------------------
Sub-5 Score = 1
------------------------------------------------------------------------
Nurse generated information (EDTC-Subsection 6)
------------------------------------------------------------------------
Y..................... Assessments/interventions/response.
Y..................... Sensory Status (formerly Impairments).
Y..................... Catheters.
Y..................... Immobilizations.
Y..................... Respiratory support.
Y..................... Oral limitations.
------------------------------------------------------------------------
Sub-6 Score = 1
------------------------------------------------------------------------
Procedures and tests (EDTC-Subsection 7)
------------------------------------------------------------------------
Y..................... Tests and procedures done.
Y..................... Tests and procedure results sent.
------------------------------------------------------------------------
Sub-7 Score = 1
------------------------------------------------------------------------
(Sub-1 (1) + Sub-2 (1) + Sub-3 (1) + Sub-4 (1) + Sub-5 (1) + Sub-6 (1) +
Sub-7 (1) = 7
------------------------------------------------------------------------
``7'' equals a perfect score; therefore, TOTAL SCORE FOR THIS CASE = 7
------------------------------------------------------------------------

Example 2 below illustrates a case in which some patient data
elements failed to be recorded and/or transferred to the receiving
facility.

Example 2 of Calculation for OP-34: Emergency Department Transfer
Communication
(EDTC) Measure (NQF #0291) by Case
------------------------------------------------------------------------

[[Page 39333]]

Y..................... Insurance.
------------------------------------------------------------------------
Sub-2 Score = 1
------------------------------------------------------------------------
Vital signs (EDTC-Subsection 3)
------------------------------------------------------------------------
Y..................... Pulse.
Y..................... Respiratory rate.
Y..................... Blood pressure.
Y..................... Oxygen saturation.
Y..................... Temperature.
N..................... Glasgow score or other neuro assessment for
trauma, cognitively altered or neuro patients
only.
------------------------------------------------------------------------
Sub-3 Score = 0
------------------------------------------------------------------------
Medication information (EDTC-Subsection 4)
------------------------------------------------------------------------
Y..................... Medications administered in ED.
Y..................... Allergies.
N..................... Home medications.
------------------------------------------------------------------------
Sub-4 Score = 0
------------------------------------------------------------------------
Physician or practitioner generated information (EDTC-Subsection 5)
------------------------------------------------------------------------
Y..................... History and physical.
Y..................... Reason for transfer and/or plan of care.
------------------------------------------------------------------------
Sub-5 Score = 1
------------------------------------------------------------------------
Nurse generated information (EDTC-Subsection 6)
------------------------------------------------------------------------
Y..................... Assessments/interventions/response.
Y..................... Sensory Status (formerly Impairments).
Y..................... Catheters.
Y..................... Immobilizations.
Y..................... Respiratory support.
Y..................... Oral limitations.
------------------------------------------------------------------------
Sub-6 Score = 1
------------------------------------------------------------------------
Procedures and tests (EDTC-Subsection 7)
------------------------------------------------------------------------
Y..................... Tests and procedures done.
Y..................... Tests and procedure results sent.
------------------------------------------------------------------------
Sub-7 Score = 1
------------------------------------------------------------------------
(Sub-1 (1) + Sub-2 (1) + Sub-3 (0) + Sub-4 (0) + Sub-5 (1) + Sub-6 (1) +
Sub-7 (1) = 5
------------------------------------------------------------------------
``5'' does not equal a perfect score of ``7''; therefore, TOTAL SCORE
FOR THIS CASE = 0
------------------------------------------------------------------------

For more information on this measure, including its specifications,
we refer readers to the Current Emergency Department Transfer
Communication Measurement Specifications, Data Definitions, and Data
Collection Tool at: http://rhrc.umn.edu/2012/02/ed-transfer-submission-manual.
Additional information on this measure is also available at: http://www.qualityforum.org/QPS/0291.
As discussed above, the proposed EDTC measure seeks to address gaps
in care coordination, by ensuring that vital patient information is
both recorded and shared with the subsequent provider. We believe that
the EDTC measure would increase the quality of care provided to
patients, reduce avoidable readmissions, and increase patient safety.
More timely communication of vital information results in better care,
reduction of systemic medical errors, and improved patient outcomes. In
addition, we believe that this measure will promote the NQS priority of
Effective Communication and Coordination of Care. As articulated by
HHS, ``Care coordination is a conscious effort to ensure that all key
information needed to make clinical decisions is available to patients
and providers. It is defined as the deliberate organization of patient
care activities between two or more participants involved in a
patient's care to facilitate appropriate delivery of health care
services.'' \28\ Critically, the availability of the transfer record to
the next level provider within 60 minutes after departure supports more
effective care coordination and patient safety, since a delay in
communication can result in medication or treatment errors.
---------------------------------------------------------------------------

\28\ US DHHS. ``National Healthcare Disparities Report 2013.''
Available at: http://www.ahrq.gov/research/findings/nhqrdr/nhdr13/chap7.html.
---------------------------------------------------------------------------

In compliance with section 1890A(a)(2) of the Act, this measure was
included in the publicly available document: ``List of Measures under

[[Page 39334]]

Consideration for December 1, 2014.'' \29\ As stated above, the MAP
reviews the measures under consideration for the Hospital OQR Program,
among other federal programs, and provides input on those measures to
the Secretary. The MAP's 2015 recommendations for quality measures
under consideration are captured in the ``Spreadsheet of MAP 2015 Final
Recommendations.'' \30\
---------------------------------------------------------------------------

\29\ ``List of Measures under Consideration for December 1,
2014.'' Available at: www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78318.
\30\ MAP. February 2015. ``Spreadsheet of MAP 2015 Final
Recommendations''. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=78711.
---------------------------------------------------------------------------

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. The MAP supported this measure,
stating that ``This measure would help to address a previously
identified gap around improving care coordination and would help ensure
vital information is transferred between sites of care. The EDTC
measure set consists of seven components that focus on communication
between facilities around the transfer of patients. The measure set
assists in filling the workgroup identified priority gap of enhancing
care coordination efforts.'' \31\ In addition, as stated above, the
proposed measure addresses the NQS priority of Communication and Care
Coordination.
---------------------------------------------------------------------------

\31\ Ibid.
---------------------------------------------------------------------------

We believe this measure meets the requirement under section
1833(t)(17)(C)(i) of the Act, which 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
this proposed measure reflects consensus among the affected parties,
because it is NQF-endorsed and supported by the MAP.
We are inviting public comment on the proposal to include the
following measure in the Hospital OQR Program for the CY 2019 payment
determination and subsequent years.

------------------------------------------------------------------------
Proposed Measure for the CY 2019
NQF # Payment Determination and
Subsequent Years
------------------------------------------------------------------------
0291............................... OP-34: Emergency Department
Transfer Communication Measure.
------------------------------------------------------------------------

The proposed and previously finalized measures for the CY 2019
payment determination and subsequent years are listed below.

Proposed Hospital OQR Program Measure Set for the CY 2019 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.
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-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.* *
2539............................... OP-32: Facility 7-Day Risk-
Standardized Hospital Visit Rate
after Outpatient Colonoscopy.
1822............................... OP-33: External Beam Radiotherapy
for Bone Metastases.* * * *
0291............................... OP-34: Emergency Department
Transfer Communication Measure.* *
* *
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
* * Measure voluntarily collected as set forth in section XIII.D.3.b. of
the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
through 66947).
* * * New measure proposed for the CY 2018 payment determination and
subsequent years.
* * * * New measure proposed for the CY 2019 payment determination and
subsequent years.

[[Page 39335]]

7. Hospital OQR Program Measures and Topics for Future Consideration
The current measure set for the Hospital OQR Program includes
measures that assess process of care, imaging efficiency patterns, care
transitions, ED throughput efficiency, the use of health information
technology (health IT), care coordination, patient safety, and volume.
For future payment determinations, we are considering expanding these
measure areas and creating measures in new areas. Specifically, we are
exploring electronic clinical quality measures (eCQMs) and whether, in
future rulemaking, we would propose that hospitals have the option to
voluntarily submit data for OP-18: Median Time from ED Arrival to ED
Departure for Discharged ED Patients electronically beginning with the
CY 2019 payment determination. Hospitals would otherwise still be
required to submit data for this measure through chart abstraction.
We believe all patients, their families, and their healthcare
providers should have consistent and timely access to their health
information in a standardized format that can be securely exchanged
between the patient, providers, and others involved in the patient's
care.\32\ To that end, we are committed to accelerating health
information exchange (HIE) through the use of electronic health records
(EHRs) and other types of 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.
---------------------------------------------------------------------------

\32\ HHS August 2013 Statement, ``Principles and Strategies for
Accelerating Health Information Exchange.'' Available at: http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf.
---------------------------------------------------------------------------

We believe that HIE and the use of certified EHR technology can
effectively and efficiently help providers improve internal care
delivery practices, support management of patient care across the
continuum, and support the reporting of electronically specified
clinical quality measures. On March 30, 2015, ONC published in the
Federal Register a proposed rule (80 FR 16804) that proposes a new 2015
Edition Base EHR definition, as well as modifications to the ONC Health
IT Certification Program to make it open and accessible to more types
of health IT and health IT that supports various care and practice
settings. It also proposes to establish the capabilities and
specifications that certified EHR technology (CEHRT) would need to
include to, at a minimum, support the achievement of meaningful use by
eligible professionals and hospitals under the Medicare and Medicaid
EHR Incentive Programs (EHR Incentive Programs) when such edition is
required for use under these programs. More information on the 2015
Edition EHR Certification Criteria proposed rule can be found at:
http://healthit.gov/policy-researchers-implementers/standards-and-certification-regulations.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50807 through
50810), the Hospital IQR Program finalized a policy to allow hospitals
to voluntarily electronically report at least one quarter of CY 2014
quality measure data for each measure in one or more of four measure
sets (STK, VTE, ED, and PC). In the FY 2015 IPPS/LTCH PPS final rule
(79 FR 50241 through 50246 and 50249 through 50253), the Hospital IQR
Program finalized a policy that hospitals may voluntarily report any 16
of 28 Hospital IQR Program electronic clinical quality measures that
align with the Medicare EHR Incentive Program as long as those measures
span three different NQS priority areas. Most recently in the FY 2016
IPPS/LTCH PPS proposed rule (80 FR 24581 through 24582), the Hospital
IQR Program proposed to make reporting of electronic clinical quality
measures required rather than voluntary. Under the proposal, hospitals
would be required to submit both Q3 and Q4 of 2016 data for 16
electronic clinical quality measures (80 FR 24581 through 24582).
We anticipate that as EHR technology evolves and more health IT
infrastructure is operational, we will begin to accept electronic
reporting of many measures from EHR technology certified under the ONC
Health IT Certification Program. We are working diligently toward this
goal. We believe that this progress would significantly reduce the
administrative burden on hospitals under the Hospital OQR Program to
report chart-abstracted measures.
In the CY 2011 OPPS/ASC final rule with comment period (75 FR
72074) we finalized OP-18: Median Time from ED Arrival to ED Departure
for Discharged ED Patients (NQF # 0496), the only measure in our
current measure set which is specified as an eCQM, or e-specified. The
e-specification for this measure is available at: http://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/2014_eCQM_Specs_for_EH.zip in the folder entitled:
EH_CMS32v2_NQF0496_ED3_MedianTime.
Median Time from ED Arrival to ED Departure for Discharged ED
Patients (NQF #0496) was adopted by the Medicare and Medicaid EHR
Incentive Program for Eligible Hospitals and Critical Access Hospitals
(CAHs) as one of 29 clinical quality measures available for reporting
under the program beginning with Federal fiscal year 2014 (77 FR 54086
through 54087).
For the reasons stated above, we believe it is important to
encourage providers to submit this measure electronically. In addition,
allowing submission of OP-18 as an eCQM will begin to align the
Hospital OQR Program with the Medicare EHR Incentive Program for
Eligible Hospitals and CAHs in a manner similar to our proposals for
the Hospital IQR Program (80 FR 24581 through 24582; 24587). Therefore,
we are considering proposing a policy in future rulemaking that would
give hospitals an option to voluntarily submit data for this measure
electronically beginning with the CY 2019 payment determination.
Hospitals that chose not to submit electronically would still be
required to submit data though chart abstraction.
We are inviting public comment on our intention to make this
proposal in the future.
8. Maintenance of Technical Specifications for Quality Measures
CMS maintains technical specifications for p